U.S. Attorney’s Office for the Southern District of New York Recovers $3.7 Billion in Forfeitures and Civil Actions In Fiscal Year 2016
In Excess of $1.4 Billion Recovered From Criminal and Civil Forfeiture Cases, More Than $2.2 Billion in Civil Actions
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the Office obtained recoveries of more than $1.4 billion in forfeiture actions, more than $2.2 billion in civil actions, and more than $31 million from restitution, criminal fines, and special assessments, between October 1, 2015, and September 30, 2016.
Manhattan Acting U.S. Attorney Joon H. Kim said: “The $3.7 billion in forfeitures, penalties, and fines for fiscal year 2016 recovered by this Office demonstrate that those who break the law or commit civil offenses will not be allowed to profit from their misconduct. We are committed to taking the profit out of crime and compensating victims whenever possible through our prosecutions and civil actions.”
Forfeited funds are generally deposited into the Department of Justice Assets Forfeiture Fund (the “Assets Forfeiture Fund”) and the Department of Treasury Forfeiture Fund. The forfeited funds are used to restore money to crime victims and for a variety of law enforcement purposes.
$900 million forfeited
In September 2015, the General Motors Company (“GM”) entered into a deferred prosecution agreement with this Office based on charges that GM concealed a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration, and, in the process, misled consumers concerning the safety of certain of GM’s cars. Pursuant to the deferred prosecution agreement, GM, among other things, agreed to the forfeiture of $900 million to the United States, which was completed in 2015.
Bank Julius Baer
In February 2016, Bank Julius Baer & Co. Ltd. (“Julius Baer”), a Swiss bank headquartered in Zurich, entered into a deferred prosecution agreement with this Office based on charges that Julius Baer conspired with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts. Pursuant to the deferred prosecution agreement, Julius Baer, among other things, agreed to the forfeiture of $219,250,000 to the United States.
PokerStars and Related Cases
In July 2012, the United States reached an agreement with the two largest online poker companies in the United States, Full Tilt Poker and PokerStars. The United States had brought a civil forfeiture and money laundering action against these companies and their assets. Under the terms of the settlement, Full Tilt Poker forfeited essentially all of its assets to the United States. PokerStars agreed to forfeit $547 million, to be paid in several installments, and to reimburse the approximately $184 million owed by Full Tilt Poker to foreign players. The settlement further provided that PokerStars would acquire the forfeited Full Tilt Poker assets from the United States. Fiscal Year 2016, $48 million was forfeited to the United States by PokerStars and more than $33 million was forfeited by other parties in related actions. To date, in excess of $1.3 billion has been forfeited in the PokerStars civil forfeiture action and related cases.
U.S. v. Tucker et al., and Related Cases
$48 million forfeited
In February 2016, this Office charged Scott Tucker and Jason Muir with violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Truth in Lending Act (“TILA”) for operating a $2 billion nationwide internet payday lending enterprise that systematically evaded state laws in order to charge illegal interest rates as high as 700% on loans. In connection with that investigation, on February 9, 2016, the United States entered into a non-prosecution agreement with two tribal corporations controlled by the Miami Tribe of Oklahoma, a Native American tribe. As part of that agreement, the tribal corporations agreed to the forfeiture of $48 million in criminal proceeds from Tucker’s payday lending enterprise that were held in tribal bank accounts.
$40 million forfeited
In February 2016, VimpelCom Limited, an Amsterdam-based telecommunications company, entered into a deferred prosecution agreement with this Office and the Fraud Section of the Criminal Division of the Department of Justice based on charges that VimpelCom conspired to make bribe payments to a government official in Uzbekistan between 2006 and 2012. Pursuant to the deferred prosecution agreement, VimpelCom, among other things, agreed to forfeit $40 million to the United States.
Civil Actions and Restitution, Criminal Fines, and Special Assessments
U.S. v. Wells Fargo Bank, N.A. et al.
$1.2 billion collected
In April 2016, Wells Fargo Bank, N.A., settled a False Claims Act lawsuit brought by this Office alleging that Wells Fargo had engaged in reckless underwriting of Federal Housing Administration mortgage loans for nearly a decade. As part of the settlement, Wells Fargo paid $1.2 billion and admitted to certain conduct alleged in the complaint, and a Wells Fargo executive also made admissions.
U.S. v. CenterLight Healthcare, Inc. et al.
$46.7 million collected
In January 2016, this Office simultaneously filed a lawsuit against and entered into a settlement with CenterLight Healthcare, Inc., and CenterLight Health System, Inc. (collectively, “CenterLight”), resolving False Claims Act claims arising from the enrollment of ineligible members in CenterLight’s managed long-term care plan. Under the terms of the settlement, CenterLight paid a total of $46,751,086.74 to the Medicaid Program, $18,700,434.70 of which went to the United States. In addition, CenterLight was required to reform its business practices and admit to conduct alleged in the complaint.
U.S. ex rel. Krigstein v. Motives, Inc.
$13.375 million collected
In July 2016, this Office simultaneously filed a False Claims Act lawsuit and entered into a $13.375 million settlement with Motives, Incorporated, an importer of clothing, and Motives Far East and Motives China Limited, foreign manufacturers of clothing (collectively, “Motives”), for conspiring to underpay customs duties. (United States v. Motives, Inc., No. 13 Civ. 9030 (GBD)). As part of the settlement, Motives paid a total of $13.375 million and admitted to allegations in the complaint.
United States ex rel. Peikin et al. v. Salix Pharmaceuticals, Inc. and United States ex rel. Dhaliwal v. Salix Pharmaceuticals, Inc.
$54 million collected
In June 2016, this Office simultaneously sued and settled with Salix Pharmaceuticals, Inc. (“Salix”), a specialty pharmaceutical company. The settlement, in the amount of $54 million, resolved claims that Salix violated the Anti-Kickback Statute and False Claims Act by using its “speaker programs” as a mechanism to pay kickbacks to doctors to induce them to prescribe Salix drugs and medical devices that were reimbursed by federal health care programs. In connection with the settlement, Salix admitted to paying doctors to serve as “speakers” at events that were primarily social in nature, that were held at high-end restaurants, and where the “speakers” spent little or no time discussing the relevant Salix product.