Chinese company convicted of trade secrets theft
On January 24, 2018, the US Department of Justice (“DOJ”) announced that Sinovel, a manufacturer and exporter of wind turbines based in China, was convicted of stealing proprietary wind turbine trade secrets from AMSC, a U.S.-based company, in order to produce its own turbines. At the time of the theft in March 2011, Sinovel had contracted with AMSC for more than $800 million in products and services to be used for the wind turbines that Sinovel manufactured, sold, and serviced. Sinovel was charged along with its employees and a former employee of an AMSC subsidiary, with whom Sinovel conspired with to secret downloading source code on March 7, 2011, from an AMSC computer in Wisconsin.
Trump administration continues Iran sanctions waivers, but signals desire for changes
On January 12, 2018, the Trump administration announced that it will continue to waive the application of certain nuclear sanctions under the Joint Comprehensive Plan of Action (“JCPOA”) as a “last chance.” In a statement, the President states that he intends to pursue a supplemental agreement with European allies of the US, and in the absence of such an agreement, the United States will ultimately withdraw from the JCPOA. Details can be found at our e-bulletin here.
DOJ reports more than two thirds of $4 billion civil fraud recoveries in 2017 are from the health sector
On 21 December 2017, the Department of Justice ("DOJ") reported its fraud recovers for Fiscal Year 2017 which resulted in $3.7 billion in settlements and judgments from civil cases involving allegations of fraud and false claims against the US government. The total settlements for 2017 were approximately $1 billion less in comparison to Fiscal Year 2016. The statistics released by the DOJ however reveal that more than two thirds of recovering in 2017 were from the health sector, making 2017 the eighth consecutive year that healthcare fraud recoveries exceeded $2 billion.
Turkish banker convicted for Iran sanctions violation
On January 3, 2018, the DOJ announced that a Turkish banker was found guilty of conspiring with others, including Reza Zarrab, to use the US financial system to conduct transactions on behalf of the Government of Iran and other Iranian entities, which were barred by US sanctions, and to defraud US financial institutions by concealing these transactions’ true nature. According to the DOJ, the Turkish Banker, Zarrab, and others used deceptive measures to provide access to international financial networks, including US financial institutions, to the Government of Iran, Iranian entities, and entities identified by the Department of the Treasury Office of Foreign Assets Control as Specially Designated Nationals (“SDNs“). They did so by, among other things, using Halk Bank, at which the banker acted as Deputy General Manager of International Banking, to engage in transactions that violated US sanctions against Iran. In particular, they took steps to protect and hide Zarrab’s supply of currency and gold to the Government of Iran, Iranian entities, and SDNs using Halk Bank, and in doing so, shielded the bank from U.S. sanctions. The banker, Zarrab, and others conspired to create and use false and fraudulent documents to disguise prohibited transactions for Iran and make those transactions falsely appear as transactions involving food, thus falling within humanitarian exceptions to the sanctions regime. As a result of this scheme, the co-conspirators induced US banks to unknowingly process international financial transactions in violation of US sanctions.
Court overturns $350 million judgment in FCA case
On 11 January 2018, in United States ex. rel. Ruckh v. CMC II LLC et al, a Florida court overturned a $350 million False Claims Act ("FCA") verdict against a nursing home operator. In the case, it was claimed that a nursing facility and its management company failed to meet Medicare regulations regarding care plans, it was also alleged that the nursing facility ran a corporate-wide scheme to bill for Medicare services that were not provided or required. In February 2017, a jury found that that the defendants had submitted over 200 false claims and a verdict of more than $115 million which pursuant to the FCA, was trebled to approximately $350 million.