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Business Crimes Hotline
VIRGINIA
Analyst Pleads Guilty to $1.5 Billion Fraud
On March 31, 2011, Sean W. Ragland of San Antonio, TX, pleaded guilty to conspiracy to commit bank fraud and wire fraud. Ragland was a former senior financial analyst with Taylor, Bean & Whitaker (“TBW”), which owned and operated Ocala Funding, a mortgage lending facility. Ocala sold asset-backed commercial paper to financial institutions, using the money to purchase the mortgages generated by TBW.
The government alleged that Ragland and others had determined that the paper sold by Ocala was insufficiently backed by assets. Ragland had tracked the status of the asset shortfall and reported it to senior TBW management, including the CEO and CFO. Ragland also prepared documents that overstated the value of the Ocala loans and that understated the amount of paper outstanding. The government alleged that this information was sent to outside investors and auditors in an effort to mislead them. Ultimately, by the time TBW folded, the shortfall of the commercial paper was approximately $1.5 billion.
Four other individuals had previously pleaded guilty as being a part of this conspiracy. At his June 21, 2011 sentencing, Ragland faces a maximum of five years in prison.
WASHINGTON, DC
J&J Pays $70 Million to Resolve Oil for Food Charges
On April 8, 2011, Johnson & Johnson (“J&J”) entered into a deferred prosecution agreement (“DPA”) with the Department of Justice (“DOJ”) to resolve allegations that it had bribed foreign officials in violation of the Foreign Corrupt Practices Act (“FCPA”) and had made improper payments related to the United Nations' Iraqi Oil for Food (“OFF”) program.
The government alleged that J&J had made a number of improper payments to health care providers in Greece, Poland, and Romania, who were employed by the government. As a part of the DPA, J&J admitted that its subsidiaries, employees and agents had bribed government officials in Greece, Poland, and Romania and accepted responsibility for those actions. This included alleged payments made by J&J subsidiary DePuy, Inc., to public physicians in Greece.
The government also resolved claims against J&J related to the OFF. There, the government had alleged that J&J provided kickbacks to the Iraqi government in order to obtain sales of humanitarian goods.
J&J will pay a $21.4 million criminal fine as a part of the resolution. However, the DOJ noted that J&J had “cooperated extensively” and “played an important role in identifying improper practices in the life sciences industry.” In addition, the DOJ lauded J&J's “thorough and wide-reaching self-investigation” and continuing efforts regarding other companies and individuals. As a result of those efforts, J&J received a reduction in its fine. J&J's fine was also reduced as a result of the DOJ's anticipation that J&J would be resolving related claims in the UK.
J&J will have to report to the government every six months on its enhanced compliance efforts but, as a result of its preexisting compliance programs and more recent enhancements, the DOJ did not require that it retain a monitor.
At the same time, J&J resolved related SEC charges, agreeing to pay $48.6 million in disgorgement and interest.
Analyst Pleads Guilty to $1.5 Billion Fraud
On March 31, 2011, Sean W. Ragland of San Antonio, TX, pleaded guilty to conspiracy to commit bank fraud and wire fraud. Ragland was a former senior financial analyst with Taylor, Bean & Whitaker (“TBW”), which owned and operated Ocala Funding, a mortgage lending facility. Ocala sold asset-backed commercial paper to financial institutions, using the money to purchase the mortgages generated by TBW.
The government alleged that Ragland and others had determined that the paper sold by Ocala was insufficiently backed by assets. Ragland had tracked the status of the asset shortfall and reported it to senior TBW management, including the CEO and CFO. Ragland also prepared documents that overstated the value of the Ocala loans and that understated the amount of paper outstanding. The government alleged that this information was sent to outside investors and auditors in an effort to mislead them. Ultimately, by the time TBW folded, the shortfall of the commercial paper was approximately $1.5 billion.
Four other individuals had previously pleaded guilty as being a part of this conspiracy. At his June 21, 2011 sentencing, Ragland faces a maximum of five years in prison.
WASHINGTON, DC
J&J Pays $70 Million to Resolve Oil for Food Charges
On April 8, 2011,
The government alleged that J&J had made a number of improper payments to health care providers in Greece, Poland, and Romania, who were employed by the government. As a part of the DPA, J&J admitted that its subsidiaries, employees and agents had bribed government officials in Greece, Poland, and Romania and accepted responsibility for those actions. This included alleged payments made by J&J subsidiary
The government also resolved claims against J&J related to the OFF. There, the government had alleged that J&J provided kickbacks to the Iraqi government in order to obtain sales of humanitarian goods.
J&J will pay a $21.4 million criminal fine as a part of the resolution. However, the DOJ noted that J&J had “cooperated extensively” and “played an important role in identifying improper practices in the life sciences industry.” In addition, the DOJ lauded J&J's “thorough and wide-reaching self-investigation” and continuing efforts regarding other companies and individuals. As a result of those efforts, J&J received a reduction in its fine. J&J's fine was also reduced as a result of the DOJ's anticipation that J&J would be resolving related claims in the UK.
J&J will have to report to the government every six months on its enhanced compliance efforts but, as a result of its preexisting compliance programs and more recent enhancements, the DOJ did not require that it retain a monitor.
At the same time, J&J resolved related SEC charges, agreeing to pay $48.6 million in disgorgement and interest.
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