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Business Crimes Hotline
IOWA
Former CEO Sentenced to 27 Years for Fraud
Sholom Rubashkin, former Chief Executive Officer of Agriprocessors, Inc., was sentenced to 27 years in prison by Chief Judge Linda R. Reade of the U.S. District Court for the Northern District of Iowa. He was also ordered to pay $26.8 million in restitution.
Rubashkin first came under investigation following a May 2008 immigration raid of the company's meat processing plant that identified almost 400 undocumented workers. He was initially charged with immigration violations.
In November 2009, a jury convicted Rubashkin of 86 counts of bank, mail, and wire fraud, making false statements, and money laundering, among other charges.
LOUISIANA
U.S. Attorney Requests Dismissal of Honest Services Indictment
Citing the Supreme Court's recent opinion in Skilling v. United States, the federal government has asked the U.S. District Court to dismiss honest-services charges against William R. Coenen, Jr., Michael L. Thompson, and Terry D. Denmon.
The charges arose from the individuals' involvement in the Poverty Point Reservoir District. The government had alleged that the individuals purchased property next to the reservoir and sought to increase the value of their property significantly through their official actions.
In its June 24, 2010, Skilling opinion, the Supreme Court limited the federal honest services fraud statute to situations involving bribes or kickbacks, and not simple conflicts of interest or self-dealing.
NEW JERSEY
Deferred-Prosecution Agreement Resolves Fraud Cases Against Ex-Bristol
Myers Executives
The U.S. Attorney's Office for the District of New Jersey entered into a deferred-prosecution agreement with former Brisol-Myers Squibb Company executives Frederick Schiff and Richard Lane.
The government had alleged that Schiff, the former CFO, and Lane, the former president of the Worldwide Medicines unit president, were involved in “channel stuffing.” This allegedly consisted of giving wholesalers incentives to over-purchase products, while hiding that fact from investors. Prosecutors had argued that these efforts had created more than $2 billion in false revenue, thus inflating the company's stock price.
Under the one-year agreements, Schiff will pay $225,000 and Lane will pay $175,000. Neither will be permitted to serve as top officer of a public company for two years.
In 2005, Bristol-Myers entered into a deferred-prosecution agreement with two years' probation.
WASHINGTON, DC
DOJ Provides Further Guidance on Use of Monitors
On May 25, 2010, Acting Deputy Attorney General Gary G. Grindler issued a memo providing additional guidance to federal prosecutors on the use of corporate monitors in deferred prosecution and non-prosecution agreements with corporations.
In March 2008, Craig S. Morford issued a memorandum laying out basic principles to be used when drafting monitor provisions. The nine factors identified, however, were non-exclusive. The Grindler memo added a tenth factor: “an agreement should explain what role the Department could play in resolving any disputes between the monitor and the corporation, given the facts and circumstances of the case.”
The Grindler memo explained that the goal of this addition was to increase the Department's visibility on these disputes and bolster confidence in the monitor system. It also noted that the Department's role is necessarily limited ' the Department will not be a party to any monitor agreement and will not address contractual disputes. Rather, the memo seeks to ensure the Department's role in determining whether the corporate entity has complied with the agreement, in light of the law enforcement interests at play.
IOWA
Former CEO Sentenced to 27 Years for Fraud
Sholom Rubashkin, former Chief Executive Officer of Agriprocessors, Inc., was sentenced to 27 years in prison by Chief Judge
Rubashkin first came under investigation following a May 2008 immigration raid of the company's meat processing plant that identified almost 400 undocumented workers. He was initially charged with immigration violations.
In November 2009, a jury convicted Rubashkin of 86 counts of bank, mail, and wire fraud, making false statements, and money laundering, among other charges.
LOUISIANA
U.S. Attorney Requests Dismissal of Honest Services Indictment
Citing the Supreme Court's recent opinion in Skilling v. United States, the federal government has asked the U.S. District Court to dismiss honest-services charges against William R. Coenen, Jr., Michael L. Thompson, and Terry D. Denmon.
The charges arose from the individuals' involvement in the Poverty Point Reservoir District. The government had alleged that the individuals purchased property next to the reservoir and sought to increase the value of their property significantly through their official actions.
In its June 24, 2010, Skilling opinion, the Supreme Court limited the federal honest services fraud statute to situations involving bribes or kickbacks, and not simple conflicts of interest or self-dealing.
NEW JERSEY
Deferred-Prosecution Agreement Resolves Fraud Cases Against Ex-Bristol
Myers Executives
The U.S. Attorney's Office for the District of New Jersey entered into a deferred-prosecution agreement with former Brisol-Myers Squibb Company executives Frederick Schiff and Richard Lane.
The government had alleged that Schiff, the former CFO, and Lane, the former president of the Worldwide Medicines unit president, were involved in “channel stuffing.” This allegedly consisted of giving wholesalers incentives to over-purchase products, while hiding that fact from investors. Prosecutors had argued that these efforts had created more than $2 billion in false revenue, thus inflating the company's stock price.
Under the one-year agreements, Schiff will pay $225,000 and Lane will pay $175,000. Neither will be permitted to serve as top officer of a public company for two years.
In 2005, Bristol-Myers entered into a deferred-prosecution agreement with two years' probation.
WASHINGTON, DC
DOJ Provides Further Guidance on Use of Monitors
On May 25, 2010, Acting Deputy Attorney General Gary G. Grindler issued a memo providing additional guidance to federal prosecutors on the use of corporate monitors in deferred prosecution and non-prosecution agreements with corporations.
In March 2008, Craig S. Morford issued a memorandum laying out basic principles to be used when drafting monitor provisions. The nine factors identified, however, were non-exclusive. The Grindler memo added a tenth factor: “an agreement should explain what role the Department could play in resolving any disputes between the monitor and the corporation, given the facts and circumstances of the case.”
The Grindler memo explained that the goal of this addition was to increase the Department's visibility on these disputes and bolster confidence in the monitor system. It also noted that the Department's role is necessarily limited ' the Department will not be a party to any monitor agreement and will not address contractual disputes. Rather, the memo seeks to ensure the Department's role in determining whether the corporate entity has complied with the agreement, in light of the law enforcement interests at play.
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