U.S. Attorney Announces Non-Prosecution Agreement With International Bus Parts Supplier CBM

 

CBM Agrees to Monetary Penalties for Scheme to Mislead U.S. Transit Authority Customers About the Sources of Bus Parts that CBM Contracted to Sell the Transit Authorities

Damian Williams, the United States Attorney for the Southern District of New York; Christopher A. Scharf, the Special Agent in Charge of the Northeast Region of the U.S. Department of Transportation, Office of the Inspector General (“DOT-OIG”); and Daniel Cort, the Inspector General of the Metropolitan Transportation Authority (“MTA-IG”), announced that international bus parts supplier CBM entered into a non-prosecution agreement (the “NPA”) with the U.S. Attorney’s Office.  Under the NPA, CBM agreed to pay significant monetary penalties for engaging in a scheme to defraud U.S. transit authority customers through false and misleading statements about the sources of contracted-for bus parts during the period from approximately 2010 to April 2021.  Specifically, the NPA requires CBM to forfeit $463,243.41 to the United States, representing its profits from the scheme, and pay a fine of $1,500,000.  In addition, CBM has agreed to pay restitution to victims who submit claims and to revert unclaimed funds up to $438,859.52 to the Crime Victims Fund, administered by the Department of Justice’s Office for Victims of Crime.  The NPA also requires that for at least two years from the date of the agreement, CBM will further cooperate with the United States, self-report any future violations of U.S. law, and continue its ongoing efforts to implement and maintain an adequate compliance program.  In the event that CBM violates the NPA, the U.S. Attorney’s Office may prosecute CBM for any newly discovered criminal activity and for the conduct that gives rise to the NPA.

This corporate action reflects a careful weighing of factors relevant to the appropriate corporate resolution.  The NPA recognizes that, although CBM’s serious misconduct was reported to the U.S. Attorney’s Office before CBM self-disclosed it, (i) CBM US cooperated extensively with the U.S. Attorney’s Office, including through detailed disclosures and accountings of conduct not already known when CBM’s cooperation began; (ii) the most serious wrongdoing at CBM was limited to two individuals, though they were at the highest levels of the company; (iii) CBM has no history of criminal conduct, including any resolved through prior NPAs or deferred prosecution agreements; (iv) CBM has undertaken extensive remedial measures to ensure that similar conduct does not occur or go undetected in the future; and (v) CBM has taken full responsibility and agreed to make full restitution to all victims that seek compensation.

U.S. Attorney Damian Williams said: “CBM, primarily through the actions of a limited number of managers outside of the United States, represented to U.S. transit authorities that CBM was providing bus parts from specific suppliers and under specific brand names.  Fortunately, none of the transactions at issue involved parts that bear on the safety of any affected buses.  Since this Office’s investigation came to CBM’s attention, the company has cooperated fully and taken significant and commendable steps to remediate the institutional failures that allowed this situation to occur in the first place.  But this NPA also ensures that CBM is held financially accountable for its conduct and that victims will be made whole.  It should serve as a reminder to all companies that it will lose its profits, and then some, when this Office becomes aware of business practices like CBM’s in this case.”

DOT-OIG Special Agent in Charge Christopher A. Scharf said: “This NPA is an important step in remedying the harm caused by CBM when it misled U.S. transit authority customers.  DOT OIG remains committed to holding transportation industry suppliers accountable for their actions that compromise the integrity of contracted goods and services.”

MTA Inspector General Daniel Cort said: "The MTA must have faith in the integrity of its supply chain, and any breach of that trust is unacceptable.  I thank our federal partners for holding vendors accountable for deceptive behavior."

As part of the NPA, CBM agreed to a statement of facts describing its conduct and the remedial measures that it took in response to learning of that conduct.

Mr. Williams praised the outstanding investigative work of the DOT-OIG and thanked the MTA-IG for its assistance.