In a rare move targeting an in-house compliance officer, the former Chief Compliance Officer of MoneyGram International Inc. has been assessed a $1 million civil penalty by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) for failing to implement and maintain an effective anti-money laundering (“AML”) program and for failing to file suspicious activity reports (“SARs”) with FinCEN, as required under the Bank Secrecy Act.  The U.S. Attorney’s Office for the Southern District of New York has filed a complaint to enforce the civil penalty and to enjoin the former CCO from employment in the financial industry.

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With nearly 97% of all federal convictions in 2013 secured through plea agreements, the Department of Justice announced yesterday that it will no longer ask criminal defendants who plead guilty to waive their right to appeal on the basis of ineffective assistance of counsel (IAC).  In a memorandum to all federal prosecutors, Deputy Attorney General James Cole instructed prosecutors to curtail the use of IAC waivers in future plea agreements, and to decline enforcement of existing waivers in certain cases—such as when ineffective assistance resulted in prejudice, or the claims raise an issue best resolved by the court. 
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Last week, U.S. District Court Judge Shira Scheindlin of the Southern District of New York ordered disgorgement of $187.7 million in U.S. Securities and Exchange Commission v. Wyly et al, and further estimated that the amount will balloon to between $300 million to $400 million after the SEC recalculates pre-judgment interest.  The award, to be paid by Sam Wyly and the estate of his brother Charles Wyly, was measured in part by calculating the amount of taxes that the Wylys should have paid on unlawful gains.  This is a case of first impression, as no court has ever approved this methodology for calculating unjust profits, and it has resulted in one of the largest SEC awards against individual defendants.
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Last week, the Financial Crimes Enforcement Network (FinCEN) permanently barred former casino staffer George Que from working at financial institutions for willfully violating the reporting requirements of the Bank Secrecy Act (BSA).  Que, the former VIP Services Manager at the Tinian Dynasty Hotel & Casino in the Northern Mariana Islands, also agreed to pay a

A federal grand jury in San Francisco indicted FedEx Corporation, FedEx Express, and FedEx Corporate Services, Inc. (collectively, “FedEx”) for its role in distributing controlled substances and prescription drugs for illegal internet pharmacies.  The 18-count superseding indictment charges FedEx with conspiring with two internet pharmaceutical rings (internet pharmacies, fulfillment centers, doctors) to distribute controlled substances such as Ambien and Diazepam on invalid prescriptions, or based only on the customers’ completion of an online questionnaire, without examination by a physician.  The Government alleges that FedEx knew that it was delivering drugs to dealers and addicts, some of whom overdosed and died, and some of whom were underage. If convicted, FedEx could pay a fine of up to twice the gross gains derived from the offenses, alleged to be approximately $820 million.  The criminal proceedings will help answer when, if ever, the Government can deputize shipping companies to police illegal activity in internet commerce.
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A former agent for mining company BSG Resources Ltd., Frederic Cilins, was sentenced Friday to 24 months in prison for obstructing a federal investigation into an alleged bribery and money laundering scheme.  The charges against Cilins stem from an FBI investigation into efforts to secure lucrative mining concessions in the Republic of Guinea.  According to

With the Second Circuit’s recent reaffirmation of the SEC’s substantial discretion in negotiating the terms of settlement—notably vacating Judge Jed Rakoff’s rejection of the proposed $285 million settlement in SEC v. Citigroup Global Markets, Inc.—eyes are turning to the decision’s immediate impact on at least one other high-stakes case:  a $602 million insider trading settlement between the SEC and CR Intrinsic Investors, an affiliate of S.A.C. Capital Advisors.  Similar to the SEC-Citigroup settlement, CR Intrinsic was not required to admit wrongdoing in settling the SEC’s charges.  Judge Victor Marrero had conditionally approved the settlement pending the outcome of the Citigroup appeal.  
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On June 4, 2014, the Second Circuit Court of Appeals vacated Judge Rakoff’s November 28, 2011 Order that had rejected the Citigroup-SEC settlement on a number of grounds, including that the SEC had allowed Citigroup to avoid admitting guilt. The Appellate Court found that Judge Rakoff abused his discretion and committed “legal error” in requiring

On Monday, U.S. Attorney General Eric Holder publicly addressed mounting criticism of the DOJ’s treatment of financial institutions implicated in potential criminal misconduct:  simply put, “there is no such thing as too big to jail.”  Though Holder noted that some have suggested that the size and influence of certain financial institutions effectively renders them immune from prosecution, Holder maintained that such a view has been rejected by the Department of Justice. Holder’s recent comments signal a markedly sharper tone compared to his Senate testimony last year, when he posited that it becomes difficult for the DOJ to prosecute financial institutions that have become so large that criminal charges would “have a negative impact on the national economy, perhaps even the world economy.”  Holder’s testimony sparked criticism that just as the federal government had deemed some banks “too big to fail” during the financial crisis, so too had the DOJ determined that some banks were “too big to jail.” Putting the “too big” rhetoric aside, the obvious fact is that no corporate entity can literally be “jailed.”  If the DOJ does pursue criminal charges against an entity, a common outcome is a settlement coupled with large fines and remedial undertakings.  For instance, in 2012, HSBC agreed to a deferred prosecution agreement with the DOJ to settle allegations of money laundering.  In that settlement, HSBC was required to pay $1.92 billion in forfeiture and fines, but avoided actual criminal indictment.
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Over 90% of federal criminal cases are resolved by plea agreement, and plea agreements typically require defendants to waive their rights to appeal their sentences.  In many cases, prosecutors also require that defendants agree to pay restitution (compensation for loss) to the victims of the crime.  Practically speaking, the specific amount of restitution to be paid is rarely set forth in the plea agreement.  Rather, restitution is calculated by the court during sentencing. But what if the court errs by miscalculating the amount of restitution?  Does the plea agreement’s waiver of appeal rights apply to the calculation of restitution? According to the Sixth Circuit–it depends.
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