Recently, Wisconsin Governor Tony Evers (D) signed into law a bill relating to among other things “name, image, and likeness rights for University of Wisconsin System student athletes.”

Technically, the law allocates nearly $15 million to the University of Wisconsin to help fund facility debt service with the goal of freeing up funds for the University to pay athletes through new revenue-sharing agreements.

In signing the bill, Governor Evers said “I believe that greater flexibility is necessary to ensure this funding can be used effectively and allow the [University] system to maximize the state’s investment.”

Does this mean that a 21 year-old University of Wisconsin athlete who receives taxpayer money is a Wisconsin public official on par with the Governor and other traditional bona fide state government officials?

This seems preposterous and in fact the law specifically states: “A student athlete who enters into an agreement … to receive compensation for use of the student-athlete’s name, image, or likeness is not an employee of the [University] system because of the agreement.”

Moreover, the law states: “To protect competitive interests and student privacy, records relating to [NIL agreements or the “generation, deployment, or allocation of revenue generated by an intercollegiate athletic program] are not subject to public inspection, copying, or disclosure” under the state’s open records laws.

In other words, the University doesn’t want the golden ground squirrels of Minnesota (or any other competitor) to have access to this information.

In the FCPA context, the DOJ and SEC consider various entities such as state-owned or state-controlled enterprises to be “instrumentalities” of a foreign government such that employees of such entities are deemed “foreign officials” under the FCPA.

It’s a position that has no support in the FCPA’s extensive legislative history. (See here). Moreover, the only appellate court decision on the issue – U.S. v. Esquenazi which articulated a control and function test – is flawed in many respects. (See here).

If the above example concerning the University of Wisconsin is not enough of a Friday teaser for you, consider as well.

According to reports, “St. Louis University received a significant NIL donation from Saudi Aramco CEO Amin Nasser that enabled them to retain head coach Josh Schertz, per source. […] Schertz was close to accepting an offer from Kansas State before SLU stepped in with a more lucrative offer.”

Gautam Adani (a citizen of India and founder of the Adani Group which includes numerous portfolio companies including Adani Green Energy – and Indian energy company) was charged with securities fraud conspiracy and wire fraud conspiracy.

Sagar Adani (a citizen of India and Gautam Adani’s nephew and Executive Director of Adani Green’s Board of Directors) was charged with securities fraud conspiracy and wire fraud conspiracy.

Vneet Jaain (a citizen of India who was the CEO of Adani Green and who is currently the Managing Director of Adani Green’s Board of Directors) was charged with securities fraud conspiracy and wire fraud conspiracy.

Ranjit Gupta (a citizen of India who was the CEO of Azure Power Global Limited and CEO and Managing Director of an Azure subsidiary) was charged with conspiracy to violate the FCPA’s anti-bribery provisions.

Cyril Cabanes (a citizen of Australia and France who was previously a member of the board of directors of Azure served as a representative of the company’s largest stockholder, Caisse de dépôt et placement du Québec (“CDPQ”) was charged with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to obstruct justice.

Saurabh Agarwal (a citizen of India employed by CDPQ who reported to Cabanes) was charged with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to obstruct justice.

Deepak Malhotra (a citizen of India employed by CDPA who was a member of the board of directors of Azure) was with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to obstruct justice.

Rupesh Agarwal (a citizen of India who served as a consultant for Azure and then as Chief Strategy and Commercial Officer for Azure) was charged with conspiracy to violate the FCPA’s anti-bribery provisions and and conspiracy to obstruct justice.

The docket for this matter does not indicate any meaningful activity since.

In connection with the same core conduct alleged by the DOJ, the SEC also charged Cabanes with violating the FCPA’s anti-bribery provisions. (See here for the prior post). The docket for this matter does not indicate any meaningful activity since. The November 2024 SEC FCPA enforcement action against Cabanes was the first SEC FCPA enforcement action against an individual since October 2020 and remains the only SEC FCPA individual enforcement action since October 2020.

As highlighted in the prior post, the SEC also charged Gautam Adani and Sagar Adani with securities fraud (non-FCPA) in connection with the same alleged bribery scheme.

Recently, counsel for the Adani’s informed the judge in the case (Nicholas Garaufis – E.D.N.Y.) of an upcoming motion to dismiss. The letter to Judge Garaufis summarizes the case as follows:

“In September 2021, Adani Green, which is not a U.S. registrant, conducted a $750 million bond offering pursuant to SEC Rule 144A and SEC Regulation S, which are registration exemptions for private resales to qualified institutional buyers (“QIBs”) and for non-U.S. sales, respectively. Adani Green sold all of the Notes from the Offering outside the United States, via a Subscription Agreement, to non-U.S.
underwriters, who later resold the Notes to QIBs. A fraction of those resales— in transactions to which Adani Green was not a party—are alleged to have been made to “investors in the United States.”

The SEC claims that certain general ESG and anti-bribery statements in the Offering Circular and Subscription Agreement were materially false and misleading because Defendants failed to disclose an alleged scheme to bribe Indian state government officials in India. Because the SEC could not charge Defendants under the Foreign Corrupt Practices Act, it instead recast its charges as a securities fraud case. Although not relevant to this motion, Defendants dispute that there is any credible evidence supporting the purported bribery scheme. Notably, the SEC does not allege that there were any investor losses, and there were none. The bonds have matured, and Adani Green repaid all principal and interest in full to investors in 2024.”

The letter to Judge Garaufis then previews the motion to dismiss as follows.

Motion to Dismiss for Lack of Personal Jurisdiction

“At the threshold, this Court should dismiss the claims against Defendants under Rule 12(b)(2) for lack of personal jurisdiction. As relevant here, the SEC must plead that Defendants had sufficient “minimum contacts” with the United States—that is, they “purposefully directed” their activities at the United States—and that the claims against them arose out of those activities. […] With respect to Gautam Adani, the Complaint does not come close. As Chairman of India’s largest integrated infrastructure group, Gautam Adani was not involved in Adani Green’s Offering. Fatally, the Complaint does not allege that Gautam Adani authorized the issuance of the bonds or otherwise personally directed any relevant conduct at the United States.

Instead, the Complaint impermissibly relies on Gautam Adani’s position as Chairman of Adani Green and his membership on its Management Committee. But personal jurisdiction must be predicated on “his activities,” not those of a company. […] As such, the alleged conduct of Adani Green’s Management Committee, including that it “reviewed and approved” the Offering Circular […] is not sufficient to establish personal jurisdiction over Gautam Adani. […]  In fact, Gautam Adani did not attend a single Management Committee meeting of Adani Green from 2020 to 2024 at which the Offering or any statement made in the Offering Circular was discussed or approved, and he did not otherwise approve the Offering or any statement made in the Offering Circular.

Similarly, the Complaint’s general allegations […] that Sagar Adani was authorized to take action with respect to the Offering documents, chaired certain Adani Green committees, and received drafts of the Subscription Agreement purport to show a connection to the challenged statements that is too attenuated to demonstrate purposeful availment of a U.S. forum. The Complaint fails to tie Sagar Adani to a single allegedly false or misleading statement, much less one directed at U.S. investors.”

Motion to Dismiss for Failure to State a Claim

The SEC’s Claims Are Impermissibly Extraterritorial.

As the Supreme Court has made clear, Section 10(b) and Rule 10b-5 do not apply extraterritorially. […] Thus, to invoke Section 10(b), the SEC must plausibly allege a “domestic transaction[]” involving the Notes. Id. at 267. In the Second Circuit, the SEC must plead that “irrevocable liability was incurred or title was transferred within the United States.” […] The SEC has not done so. The Complaint claims that “Adani Green sold at least $175 million [in] Notes to investors in the United States.” But that allegation says nothing about where irrevocable liability was incurred. The mere fact, taken as true, that some downstream investors were located “in the United States” is “irrelevant” to this inquiry. […] omitted). Relatedly, the Complaint alleges that the Notes were “deposited with the Depository Trust Company (‘DTC’)[,]” and that “title to the Notes [was] registered in the name of Cede & Co. . . . as nominee for DTC . . . . in New York.” (Compl. ¶ 129.) Writing for the Second Circuit, Your Honor “reject[ed] [the] argument that a securities transaction
is ‘domestic’ . . . if it settles through the DTC.”

Moreover, a domestic transaction alone “would not suffice” if, as the Complaint alleges, there is a “dominance of . . . foreign elements.” […] The SEC’s claims here solely involve Indian Defendants, an Indian issuer, securities not registered with the SEC and not traded on any U.S. exchange, and underlying conduct alleged to have occurred exclusively in India. […] Tellingly, the Complaint does not allege that the underwriters who purchased the Notes from Adani Green were U.S. institutions (they were not), or that the Subscription Agreement underlying the purchases was governed by U.S. law (it was not). This case is thus conclusively beyond the reach of the U.S. securities laws. Indeed, we are aware of just one other litigated case brought by the SEC challenging a Rule 144A offering, which, unlike this one, involved a U.S. issuer and, in any event, ended with no finding of liability.

None of the Alleged Misstatements Is Actionable

The Complaint also challenges statements that the Second Circuit has repeatedly held are inactionable as a matter of law. These include statements about Adani Green’s ESG and anti-bribery commitments, reputation and competitive strengths, and risk factor disclosures acknowledging potential exposure to anti-corruption laws. […] In this Circuit, it is “well-established” that aspirational, “general statements about reputation, integrity, and compliance with ethical norms are inactionable ‘puffery.’”

To be material, a statement “must be sufficiently specific for an investor to reasonably rely on that statement as a guarantee of some concrete fact or outcome.” That is especially true where, as in this case, the only U.S. purchasers of the Notes were a limited number of sophisticated QIBs, which must own and invest at least $100 million in securities. Here, the general ESG-related statements—such as that “Adani Green’s major objectives . . . included . . . ‘to integrate Sustainability and ESG . . . aspects into [its] business’” and about adopting an “ESG Framework”—provided no such concrete, measurable benchmarks.

The Second Circuit has repeatedly rejected similar statements as inactionable puffery. […]. The same is true of the challenged statements about competitive strengths, such as that “[Adani Green] benefit[s] from the support, vision, resources and experience of Adani Group . . . [and its] strong track record of executing large-scale projects.” These vague claims are inactionable. […]

Similarly, the challenged risk factor disclosures, such as that Adani Green’s “employees might take actions that could expose us to liability under anti-bribery laws,” are inactionable. Indeed, those disclosures “expressly cautioned” that compliance measures could fall short and, therefore, could not have been misleading, let alone material.

Defendants’ Lack of Involvement in the Offering Bars the SEC’s Claims Against Them

Nor can the SEC show that Defendants were responsible for the challenged statements. Under Janus Capital Group v. First Derivative Traders, 564 U.S. 135, 142 (2011), Defendants “must have actually exercised control over” a challenged statement in order for them to have “made” it and thus be held liable for such a statement. […] The Complaint contains no plausible allegation that Gautam Adani was involved in drafting, reviewing, or approving any document containing any alleged misstatement. Indeed, the SEC does not allege that Gautam Adani even knew these statements were being made. Although the Complaint alleges that the Adani Green Management Committee approved versions of the Offering Circular, the SEC fails to allege (because it cannot) that Gautam Adani attended the relevant meetings or approved the statements in the Offering Circular. Because there are no allegations tying him to any alleged misstatement, the SEC’s claims against Gautam Adani fail as a matter of law. […] And any argument that he had “ultimate authority” over the statements by virtue of his position with Adani Green similarly fails. […]

The allegations against Sagar Adani are also deficient. Even if “multiple drafts” of the Offering Circular “were provided to [him]”, these allegations do not tie him to specific misstatements, much less show that he had “ultimate authority” over their content.

For similar reasons, the SEC fails to state a claim under Rule 10b-5(a) and (c)’s scheme liability provisions. Under those provisions, Defendants must have “(1) committed a deceptive or manipulative act; (2) in furtherance of the alleged scheme to defraud; (3) with scienter.” […] In this Circuit, scheme liability requires the SEC to plead “something extra” beyond mere misstatements. […] Here, the SEC relies merely on misstatements. That fails. As this Court explained in Eden Alpha CI LLP v. Polished.com Inc., “where the core misconduct alleged is in fact a misstatement, it is improper to impose liability by designating the alleged fraud a manipulative device rather than a misstatement.” […]

The SEC also fails to adequately plead that Defendants acted with the requisite intent. Besides conclusory allegations, the SEC makes no plausible allegation that Defendants acted with knowledge or recklessness […] or aided and abetted any violation. Indeed, the SEC has not even sued the alleged primary violator, Adani Green. And the SEC’s negligence-based theories brought under Sections 17(a)(2) and (a)(3) fare no better. The SEC alleges no facts demonstrating that Defendants failed to use “the degree of care that a reasonably careful person would use under like circumstances” with respect to the Offering.”

Yesterday, the SEC released its enforcement report for FY 2025 and it contains some zingers.

The SEC’s release begins: “Central to an effective enforcement program is determining which cases to bring and responsibly stewarding Commission resources. Regrettably, such resources have been misapplied in prior years to pursue media headlines and run up numbers, and in turn, led to misguided expectations on what constitutes effective enforcement.”

The release continues:

“FY 2025 was a unique period of transition for the enforcement division never experienced before in modern SEC history. It was characterized by an unprecedented rush to bring a significant number of cases in advance of the presidential inauguration and the aggressive pursuit of novel legal theories under the prior Commission.

This period brought about the current Commission’s resolution of prior cases that were not sufficiently grounded in the federal securities laws. The current Commission deliberately refocused the enforcement program on matters of fraud—cases that inherently require more time and resources to develop and bring, often requiring up to two or more years to manifest results.

Since fiscal year 2022, the prior Commission brought 95 actions and $2.3 billion in penalties against firms for book-and-record violations, specifically failing to maintain and preserve off-channel communications. Together with seven crypto firm registration-related and six ‘definition of a dealer’ cases, these cases identified no direct investor harm from those violations, produced no investor benefit or protection, and demonstrate what the current Commission views as a misinterpretation of the federal securities laws, a misallocation of Commission resources, and a bias for volume of cases brought versus matters of investor protection. This year’s enforcement results clarify the flaws of these actions and their respective penalties and re-establish the definition and measure of enforcement effectiveness, grounded in Congress’s original intent and focused on bringing actions that actually prevent investor harm instead of headlines and inflated numbers.

Going forward, enforcement priorities and results will be linked to the Commission’s and the Division’s core mandate, and will thus contemplate the following elements to fulfill its mission: Standing up to fraud in its many forms and those market participants engaged in such misconduct; addressing the fraudulent and manipulative conduct of the parties in question through appropriate remediation; and repaying investors’ losses when harmed.”

In the release, SEC Chairman Paul Atkins stated:

“Over the past year, the Commission has put a stop to regulation by enforcement and recentered its enforcement program on the Commission’s core mission by prioritizing cases that provide meaningful investor protection and strengthen market integrity. We have redirected resources toward the types of misconduct that inflict the greatest harm—particularly fraud, market manipulation, and abuses of trust—and away from approaches that prioritized volume and record-setting penalties over true investor protection. A key part of this course correction is a renewed emphasis on holding individual wrongdoers accountable, which promotes stronger deterrence and better safeguards investors. I am proud of the staff’s work in advancing an enforcement program grounded in sound judgment, clear legal authority, and the real-world needs of the investing public.”

SEC Commissioner Mark Uyeda stated:

“I fully support the move away from using enforcement as a tool for policymaking, and the return to the Commission’s historical norms. We will remain focused on coherent and transparent policymaking, as well as meaningful engagement with market participants to promote compliance, and wield the authority of enforcement in a more appropriate manner, guided by investor protection above all.”

As reported here, the trial featured no fact witnesses which led the judge to block the government from introducing most of its evidence until their closing argument.

Soon after the verdict, Rovirosa was taken into custody and has been in prison since.

Post-trial, Rovirosa filed a motion for a judgement of acquittal and among the reasons stated were the following:

(i) “the Government presented evidence to the jury that was either not properly admitted into evidence and/or that should not have been admitted into evidence;”

(ii) “the jury was provided with text messages to and from alleged co-conspirators that were never properly admitted into evidence, and the Government never offered evidence to satisfy any legal exception to the hearsay rule;” and

(iii) “the jury was provided with testimonial translations of text messages with no testimony by the translator, despite defense counsel’s request and objection, in violation of the Confrontation Clause.”

With that motion pending Rovirosa also filed a “Motion to Dismiss Case with Prejudice Based on the Court’s Supervisory Powers.” Among the reasons stated were the following: “the Government attorneys in this case (1) made misrepresentations to the Court and/or to the jury that willfully mispresented both the record and the legal standards; (2) failed to provide evidence to defense counsel, and (3) failed to present any witnesses at trial with actual knowledge of the facts. Even more alarming, the case was under the legal supervision of a Department of Justice supervisory attorney, who apparently allowed such conduct to occur.”

Today in a conference with counsel, Judge Kenneth Hoyt (S.D. Texas) informed the parties that he will be granting both motions in the coming days.

The docket states: “the Court conducted a telephone conference in this matter and announced that a Memorandum Opinion and appropriate Order of Dismissal will issue in this case in ten (10) days.”

Rovirosa’s attorney Ryan McConnell (R. McConnell Group PLLC) stated:

“Today, Judge Hoyt held a status conference in Mr. Rovirosa’s case and informed the parties that he has determined the case should be dismissed and Mr. Rovirosa acquitted. The court indicated it will issue a memorandum opinion within the coming days. Judge Hoyt acknowledged the seriousness and complexity of the motions filed by both sides, and noted the significant effort this case has required. We are grateful for the court’s careful consideration and look forward to the written opinion. Our focus now is on bringing Alex home to wife and children.”

Many assumed that the dismissal was solely based on the Executive Order issued by President Trump approximately 45 days prior to the dismissal which, among other things, directed the Attorney General to “review in detail all existing FCPA investigations or enforcement actions and take appropriate action with respect to such matters to restore proper bounds on FCPA enforcement …”.

Indeed, the DOJ’s short letter motion to dismiss the action stated the motion was “based on the recent assessment of the Executive Order’s application to this matter.”

However, linking the dismissal solely to the Executive Order was not warranted – as these pages mentioned at the time. In fact, in the weeks and months after the Coburn/Schwartz matter was dismissed, several other FCPA defendants tried unsuccessfully to dismiss actions based on the Executive Order.

A year later, it seems as if mention of the Executive Order in the DOJ’s motion to dismiss was just a convenient off-ramp for a case that should never have been brought in the first place.

First some background.

This is a long post. But then again this is a long multi-year story.

Like other legal actions, DOJ FCPA enforcement actions don’t just fall from the sky. The actions are sometimes brought in the context of other events, objectives, and policy goals.

For many years leading up to 2015, the DOJ faced various criticisms (from politicians, commentators, and others) over its lack of individual enforcement actions in connection with most corporate DOJ enforcement actions. In September 2015, DOJ Deputy Attorney General Sally Yates released a memo titled “Individual Accountability for Corporate Wrongdoing” (the so-called “Yates Memo”) restating the DOJ’s long-standing rhetoric about the importance of individual accountability. The Yates Memo began:

“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”

In the FCPA context, a short time later in April 2016 the DOJ released an FCPA specific policy document that “buil[t] on” the Yates Memo. Titled the “FCPA Pilot Program,” the DOJ stated that it was “designed to motivate companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs.” According to the DOJ, “increased transparency in our FCPA charging decisions should encourage voluntary corporate self-disclosure of overseas bribery, and thus more prosecutions of the individuals responsible for those crimes.”

A few months later, in September 2016 Cognizant made the following disclosure:

“The Company is conducting an internal investigation into whether certain payments relating to facilities in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act and other applicable laws. The investigation is being conducted under the oversight of the Audit Committee, with the assistance of outside counsel, and is currently focused on a small number of Company-owned facilities. The Company has voluntarily notified the United States Department of Justice (the “DOJ”) and United States Securities and Exchange Commission (the “SEC”) and is cooperating fully with both agencies. The internal investigation is in its early stages, and the Company is not able to predict what, if any, action may be taken by the DOJ, SEC or any governmental authority in connection with the investigation or the effect of the matter on the Company’s results of operations, cash flows or financial position.”

Cognizant’s disclosure, approximately five months after the April 2016 Pilot Program, occurred during the one-year period of the Pilot Program and thus, per the DOJ, the Pilot Program factors would be applied to Cognizant – even if the Pilot Program thereafter expired.

The timing of Cognizant’s disclosure presented the DOJ with a convenient test case.

In November 2017, at FCPA Inc.’s annual FCPA conference, Deputy Attorney General Rod Rosenstein stated:

“We analyzed the Pilot Program and concluded that it proved to be a step forward in fighting corporate crime.  We also determined that there were opportunities for improvement. So today, I am announcing a revised FCPA Corporate Enforcement Policy.”

[…]

We expect the new policy to reassure corporations that want to do the right thing.  It will increase the volume of voluntary disclosures, and enhance our ability to identify and punish culpable individuals.”

Rosenstein highlighted a few of the “policy’s enhancements” and stated:

“First, the FCPA Corporate Enforcement Policy states that when a company satisfies the standards of voluntary self-disclosure, full cooperation, and timely and appropriate remediation, there will be a presumption that the Department will resolve the company’s case through a declination.  That presumption may be overcome only if there are aggravating circumstances related to the nature and seriousness of the offense, or if the offender is a criminal recidivist.

It makes sense to treat corporations differently than individuals, because corporate liability is vicarious; it is only derivative of individual liability.”

A key difference between the April 2016 Pilot Program and the November 2017 CEP is that the Pilot Program stated that if its provisions were satisfied the DOJ “will consider a declination of prosecutor” whereas the CEP stated that if its provisions were satisfied “there will be a presumption that the company will receive a declination absent aggravating factors.”

Despite years of talking about individual accountability in the FCPA context and years of encouraging companies to make voluntary disclosures of FCPA issues, the DOJ was still missing a “signature” case demonstrating its policy objectives and promises.

That changed on February 15, 2019 when the DOJ announced enforcement actions against Cognizant as well as Coburn and Schwartz.

In the DOJ release announcing the indictments of Coburn and Schwartz, Assistant Attorney General Brian Benczkowski stated:

“The allegations in the indictment filed yesterday describe a sophisticated international bribery scheme authorized and concealed by C-suite executives of a publicly-traded multinational company. The indictment of Gordon Coburn and Steven Schwartz demonstrates the Department’s commitment to relentlessly pursuing corporate fraud and corruption wherever it is found.”

As to Cognizant, the DOJ release stated:

“The Department of Justice and the U.S. Attorney’s Office for the District of New Jersey also announced today that they have declined prosecution of Cognizant after considering the factors set forth in the Department of Justice’s Principles of Prosecution of Business Organizations and the Corporate Enforcement Policy, including Cognizant’s prompt voluntary self-disclosure, cooperation and remediation, as well as Cognizant’s disgorgement to the Department and the U.S. Securities and Exchange Commission (SEC) of the cost savings that resulted from the bribery scheme.”

Even though the DOJ’s Cognizant “declination” letter was one of several since 2016 pursuant to the Pilot Program or the CEP, the letter made the most explicit mention of high-level executive involvement in the alleged misconduct compared to prior DOJ “declination” letters. Specifically, the Cognizant declination occurred “despite” in the words of the DOJ “the fact that certain members of senior management participated in and directed the criminal conduct at issue …”.

In the weeks and months that followed, the DOJ’s Cognizant declination was marketed in DOJ speeches and received a substantial amount of FCPA Inc. coverage.

In a speech approximately three weeks after DOJ declination of Cognizant, Assistant Attorney General Benczkowski stated:

“To further promote transparency, we have made publicly available all of our case declinations to date under the FCPA Corporate Enforcement Policy.  There currently are 12 declination letters published on the Department’s website.  Each sheds additional light on how we apply the Corporate Enforcement Policy to different facts and circumstances and the determinative factors in our resolution.

The most recent of those 12 letters involves our decision just last month to not prosecute Cognizant Technology Solutions Corporation, a publicly traded Fortune 200 company, for FCPA violations.  Certain high-level employees and agents of Cognizant allegedly participated in a scheme through which they authorized a third-party construction company to pay approximately $2 million in bribes to Indian officials for help in securing a planning permit relating to an office park project.  Notwithstanding the fact that the misconduct reached the highest levels of the company, we declined prosecution.  And we have made it clear why:  The company voluntarily self-disclosed the conduct within two weeks of when the company’s board learned of it.  As a result, the Department was able to identify the culpable individuals – and indeed, we have announced charges against the former president and the former chief legal officer of the company for their alleged involvement in the scheme.”

Thereafter, in an October 2019 speech at the SEC’s “Criminal Coordination Conference,” Attorney General William Barr stated:

“The Justice Department, of course, recently announced revisions to its FCPA Corporate Enforcement Policy. The new iteration of the Policy incentivizes good corporate behavior, expands transparency for companies seeking corporate resolutions, and increases the effectiveness of related individual prosecutions.

The Policy achieves these goals by encouraging companies to voluntarily bring misconduct to our attention at an earlier stage and to fully cooperate with investigations. This way, the Justice Department can take more investigative steps and gather more evidence without having to go through as many formal processes, including Mutual Legal Assistance Treaty requests.

Critically, this Policy also makes it clear that, if a company meets the benchmarks of good corporate behavior, the DOJ can use its discretion to act in deference to an SEC parallel resolution. For example, Cognizant, a technology-solutions company, authorized a third-party construction firm to pay approximately 2 million dollars in bribes to government officials in India. Yet in light of the company’s voluntary self-disclosure, internal reforms, full cooperation, active remediation, and a simultaneous SEC resolution – the DOJ declined prosecution. We disgorged approximately 19 million dollars in profits and credited the company for the amount already paid to the Commission.”

Cognizant’s counsel also marketed its representation of the company. As stated in the Latham & Watkins marketing piece, the firm “persuaded” the DOJ that the facts and circumstances relevant to the Cognizant declination “would send a powerful signal to the business community that DOJ was serious about rewarding cooperation.” The law firm even won certain “awards” for its representation of Cognizant.

Everything was going well for the DOJ and others involved: the DOJ got a declination, the DOJ charged individuals (high-level executive at that), Cognizant’s law firm touted its representation and mounds of FCPA client alerts, marketing materials, etc. were published.

Everyone that is except Coburn and Schwartz.

Their life was turned upside down by high-profile criminal charges and they fought back.

In fighting back, slowly and steadily it became apparent how weak the DOJ’s case actually was.

As highlighted on these pages in February 2019 (see here and here), it was an open question whether Cognizant, Coburn or Schwartz even violated the FCPA based on the allegations in the resolution documents. This prior post noted: “If the defendants choose to put the DOJ/SEC to its burden of proof, disputed issues will likely focus on corrupt intent, obtain or retain business and the facilitating payments exception.”

Let’s start with the basics.

There are generally two types of enforcement actions in which the DOJ has alleged violations of the FCPA’s anti-bribery provisions.

• (1) Those in which the DOJ alleges that improper conduct was to obtain or retain a contract (a Procurement Case for lack of a better term); and
• (2) Those in which the DOJ alleges that improper conduct occurred outside the context of procurement (a Non-Procurement Case for lack of a better term) such as in connection with a foreign license or permit.

The Coburn / Schwartz prosecution was a Non-Procurement Case in that the DOJ alleged that the individuals authorized a third party to make payment to an Indian official to obtain a permit in connection with an office campus project in India.

In enacting the FCPA, Congress learned of a wide range of foreign corporate payments to a variety of recipients for a variety of reasons. Congress could have – and still could today – legislate as to this wide range of foreign corporate payments.

However, Congress accepted in passing the FCPA to capture only a narrow category of such payments. As stated by a key Senator during passage of the FCPA:

“[W]e define [a bribe] as a payment to an official of a foreign government for the purpose of inducing him to use his influence to secure business for the issuer or influence legislation or regulations of his government.”

Senate and House Reports evidence the limited nature of the FCPA and that it would not capture all foreign corporate payments Congress learned of during its multi-year investigation.

A Senate Report stated:

“In drafting the bill . . . the Committee deliberately cast the language narrowly, in order to differentiate between such payments [to a foreign official corruptly intended to induce the recipient to use his influence to secure business, influence legislation or regulations] and low-level facilitating payments sometimes called ‘grease payments.’ Thus, [the bill] would not reach a small gratuity paid to expedite shipment through Customs or the placement of a trans-Atlantic telephone call, to secure required permits, or to ensure that a corporation’s warehouses were not put to the torch. In other words, payments made to expedite the proper performance of duties may be reprehensible, but it does not appear feasible for the United States to attempt unilaterally to eradicate all such payments. However, where the payment is made to influence the placement of government contracts or to influence the formulation of legislation or regulations, such payment is prohibited. …. The Committee fully recognizes that the proposed law will not reach all corrupt payments overseas.”

A House Report likewise stated:

“The scope . . . is limited by the requirement that the offer, promise, authorization, payment, or gift must have as a purpose inducing the recipient to use influence with the foreign government or instrumentality, or to refrain from performing any official responsibilities, so as to direct business to any person, maintain an established business opportunity with any person, divert any business opportunity from any person or influence the enactment or promulgation of legislation or regulations of that government or instrumentality. . . . The bill’s coverage does not extend to so-called grease or facilitating payments. . . . The language of the bill is deliberately cast in terms which differentiate between such payments and facilitating payments, sometimes called ‘grease payments’. In using the word ‘corruptly’, the committee intends to distinguish between payments which cause an official to exercise other than his free will in acting or deciding or influencing an act or decision and those payments which merely move a particular matter toward an eventual act or decision or which do not involve any discretionary action. […] Nor would it reach payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature which must of necessity by performed in any event.  While payments made to assure or to speed the proper performance of a foreign official’s duties may be reprehensible in the United States, the committee recognizes that they are not necessarily so viewed elsewhere in the world and that it is not feasible for the United States to attempt unilaterally to eradicate all such payments. As a result, the committee has not attempted to reach such payments. However, where the payment is made to influence the passage of law, regulations, the placement of government contracts, the formulation of policy or other discretionary governmental functions, such payments would be prohibited. The committee fully recognizes that the proposed law will not reach all corrupt payments overseas.”

Consistent with this clearly articulated Congressional intent, the FCPA’s anti-bribery provisions have various elements including “obtain or retain business” and corrupt intent as well as an express facilitating payment exception which specifically mentions licenses and permits.

Generally speaking, the “obtain or retain business” element captures:

an offer, payment, promise to pay, or authorization of the payment of any money; directly or indirectly; to a foreign official; for purposes of:

“influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or

inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist … in obtaining or retaining business for or with, or directing business to, any person.”

However, as previously noted, the Coburn / Schwartz enforcement action was a Non-Procurement Case in which the DOJ was seemingly ignoring the “obtain or retain business” element and advancing a theory of liability explicitly rejected by Congress in enacting the FCPA.

As stated in the Conference Report prior to the passage of the FCPA:

“The scope of the prohibition [in the Senate bill] was limited by the requirement that the offer, promise, authorization, payment, or gift must have as a purpose inducing the recipient to use his influence with the foreign government or instrumentality, influencing the enactment or promulgation of legislation or regulations of that government or instrumentality or refraining from performing any official responsibilities, so as to direct business to any person, maintain an established business opportunity with any person or divert a business opportunity from any person.

The House amendment was similar to the Senate bill; however, the scope of the House amendment was not limited by the “business purpose” test […] The conferees clarified the scope of the prohibition by requiring that the purpose of the payment must be to influence any act or decision of a foreign official (including a decision not to act) or to induce such official to use his influence to affect a government act or decision so as to assist an issuer in obtaining, retaining or directing business to any person.””

That Cognizant (and several other companies prior) agreed to resolve Non-Procurement Cases through resolution vehicles not subjected to judicial scrutiny does establish much of anything other than business organizations subject to FCPA scrutiny are risk averse.

Indeed, Cognizant’s counsel (Latham & Watkins) stated in an August 24, 2018 letter to the DOJ (a document included as an Exhibit to a filing in the Coburn / Schwartz matter) the following:

• “The payments did not result in increased revenue …”
• “Cognizant’s improper payments did not cause a revenue stream. Cognizant’s revenue, generated from moving human capital, would have accrued regardless of these payments;”
• “Here there is no evidence that the payments at issue resulted in any additional business for Cognizant. To the contrary, the record is clear that Cognizant could have provided all the services to its clients absent the payments at issue”
• “The alleged improper payments in the Cognizant matter were not made to secure a contract, build a customer relationship, or gain a competitive advantage with respect to potential contracts, customers, or sales. There is no evidence that the payments at issue resulted in any additional revenue to the Company.”
• “Cognizant was already actively operating across the Indian market at the time the payments were made, and the payments at issue were not made to enter the country or to operate in a specialized market.”
• “The payments did not result in the Company getting any business or receiving additional revenue. We are aware of no record evidence indicating that any new contracts, sales, work, business relationships, or customer-advantages came to Cognizant as a result of these payments.”

The Government’s expansive theory of liability that the FCPA’s anti-bribery provisions are violated by payments to foreign officials outside the context of foreign government procurement (such as to secure a license or permit) has been subjected to judicial scrutiny four times in the FCPA’s nearly 50 year history. The government has an overall losing record.

Because of this limited judicial scrutiny, each case is discussed below.

In 1989, the DOJ criminally charged various individuals associated with AEA Aircraft Recovery (a company in the business of recovery of seized aircraft) including Alfredo Duran. According to the indictment, the defendants conspired to make payments to officials of the Dominican Republic in order to obtain the release of two aircraft seized by the government in violation of the FCPA’s anti-bribery provisions.  After the DOJ presented its evidence at trial, Duran filed a motion for judgment of acquittal and argued that “no reasonable jury could find that the purpose of any of the alleged intended payments was to assist […] in obtaining or retaining business” and that the government “has failed to adduce sufficient evidence to prove any intended payments were not facilitating or expediting payments for the purpose of expediting or securing routine governmental action (i.e. grease payments).”  The court granted a judgment of acquittal.

In 2002, the DOJ criminally charged David Kay and Douglas Murphy (the president and vice president of American Rice Inc. (ARI), with FCPA anti-bribery violations based on allegations that the defendants made improper payments to Haitian foreign officials for the purpose of reducing customs duties and sales taxes owed by ARI to the Haitian government. The indictment, while specific as to other items, merely tracked the FCPA’s ‘‘obtain or retain business’’ language and did not specifically allege how the alleged payments assisted ARI in obtaining or retaining business in Haiti or what business was obtained or retained.  The court granted the defendants’ motion to dismiss the indictment and held, as a matter of law, that the alleged payments were not payments made to ‘‘obtain or retain business’’ and thus did not fall within the scope of the FCPA’s anti-bribery provisions.

The third judicial decision to consider whether payments to foreign officials outside the context of foreign government procurement violate the FCPA’s anti-bribery provisions was SEC v. Mattson in which the Government alleged that Baker Hughes Inc. employees Eric Mattson and James Harris violated the FCPA in making goodwill payments to an Indonesian tax official for a reduction in a tax assessment. However, in granting the defendants’ motion to dismiss the court held that the payments to the Indonesian tax official did not violate the FCPA because they did not help Mattson’s and Harris’s employer ‘‘obtain or retain business.’’

The fourth judicial decision to consider whether payments to foreign officials outside the context of foreign government procurement violate the FCPA’s anti-bribery provisions was the DOJ’s appeal of the trial court dismissal of the criminal indictment in Kay. One issue on appeal to the Fifth Circuit was whether payments to foreign officials to obtain favorable tax and customs treatment can come within the scope of the FCPA’s anti-bribery provisions. The appellate court found the FCPA’s “obtain or retain business” ambiguous and stated:

“Perhaps our most significant statutory construction problem results from the failure of the language of the FCPA to give a clear indication of the exact scope of the business nexus element; that is, the proximity of the required nexus between, on the one hand, the anticipated results of the foreign official’s bargained-for action or inaction, and, on the other hand, the assistance provided by or expected from those results in helping the briber to obtain or retain business. Stated differently, how attenuated can the linkage be between the effects of that which is sought from the foreign official in consideration of a bribe (here, tax minimization) and the briber’s goal of finding assistance or obtaining or retaining foreign business with or for some person, and still satisfy the business nexus element of the FCPA?”

The appellate court concluded “that bribes paid to foreign officials in consideration for unlawful evasion of customs duties and sales taxes could fall within the purview of the FCPA’s proscription.” However, the court cautioned:

“We hasten to add, however, that this conduct does not automatically constitute a violation of the FCPA: It still must be shown that the bribery was intended to produce an effect—here, through tax savings—that would ‘assist in obtaining or retaining business.’”

Indeed, the appellate court emphatically stated that not all such payments to a foreign official outside the context of foreign government procurement violate the FCPA; it merely held that such payments ‘‘could’’ violate the FCPA.  According to the court, the key question of whether the defendants’ alleged payments constituted an FCPA violation depended on whether the payments were intended to lower ARI’s costs of doing business in Haiti enough to assist ARI in obtaining or retaining business in Haiti and the court stated:

“There are bound to be circumstances in which such a cost reduction does nothing other than increase the profitability of an already-profitable venture or ensure profitability of some start-up venture. Indeed, if the government is correct that anytime operating costs are reduced the beneficiary of such advantage is assisted in getting or keeping business, the FCPA’s language that expresses the necessary element of assisting is obtaining or retaining business would be unnecessary, and thus surplusage—a conclusion that we are forbidden to reach.”

For a long time, the Government has argued that FCPA’s 1998 amendments expanded the FCPA’s anti-bribery provisions to include payments made to independently “secure any improper advantage” regardless of whether a payment also satisfies the “obtain or retain business” element.

However, this position is clearly contradicted by placement of the term “secure any improper advantage” in the FCPA’s statutory text.

Moreover, this precise issue was litigated in the Kay case and the Government’s position was rejected by both the trial court and appellate court. The trial court stated:

“The OECD Convention had asked Congress to criminalize payments made to foreign officials ‘‘ ‘in order to obtain or retain business or other improper advantage in the conduct of international business.’’ . . . Congress again declined to amend the ‘‘obtain or retain business’’ language in the FCPA . . . . Congress did not insert the ‘‘improper advantage’’ language into the ‘‘obtain or retain business’’ provision of the FCPA.”

The appellate likewise court stated:

“When Congress amended the language of the FCPA, however, rather than inserting ‘any improper advantage’ immediately following ‘obtaining or retaining business’ within the business nexus requirement (as does the Convention), it chose to add the ‘improper advantage’ provision to the original list of abuses of discretion in consideration for bribes that the statute proscribes.’’

Even if the FCPA’s required “obtain or retain business” element is satisfied in a Non-Procurement Case involving a foreign license or permit, the FCPA still has an express facilitating payment exception.

In enacting the FCPA, Congress stated that the anti-bribery provisions would not reach “payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature …”.

Consistent with this legislative intent, the FCPA specifically states that the anti-bribery provisions “shall not apply to any facilitating or expediting payment to a foreign official … the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official” and defined “routine governmental action” to include “obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign country.”

The FCPA’s express exception for facilitating or expediting payments in connection with obtaining permits in a foreign country is consistent with Congressional intent in excluding such payments from the reach of the FCPA’s anti-bribery provisions.

As stated by a key Senator during passage of the FCPA, the anti-bribery provisions are not intended to capture payments “to speed needed documents on their way through the bureaucratic labyrinth.”

Other Congressional leaders likewise stated during hearings that the anti-bribery provisions are “not concerned with so-called grease or facilitating payments … to speed documents through a bureaucracy.”

A Senate Report specifically stated that the anti-bribery provisions “would not reach” payments “to secure required permits.” A House Report likewise specifically stated:

“The bill’s coverage does not extend to so-called grease or facilitating payments. . . . The language of the bill is deliberately cast in terms which differentiate between such payments and facilitating payments, sometimes called ‘grease payments’. In using the word ‘corruptly’, the committee intends to distinguish between payments which cause an official to exercise other than his free will in acting or deciding or influencing an act or decision and those payments which merely move a particular matter toward an eventual act or decision …”

“[The anti-bribery provisions would not reach] payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature which must of necessity by performed in any event.  While payments made to assure or to speed the proper performance of a foreign official’s duties may be reprehensible in the United States, the committee recognizes that they are not necessarily so viewed elsewhere in the world and that it is not feasible for the United States to attempt unilaterally to eradicate all such payments. As a result, the committee has not attempted to reach such payments.”

The only judicial decision to substantively construe the facilitating payments exception is SEC v. Jackson in which the Government alleged that Mark Jackson and James Ruehlen (individuals associated with Nobel Corporation) violated the FCPA by approving payments to Nigerian officials to influence or induce them to grant temporary import permits and extensions for oil and gas equipment.

In a motion to dismiss, the defendants argued that the SEC had the burden of pleading the inapplicability of the facilitating payments exception, whereas the SEC argued that the defendants had the burden of pleading the inapplicability of the exception.

In an issue of first impression, the Court held that the SEC “must bear the burden of negating the facilitating payments exception” and that the “exception is best understood as a threshold requirement to pleading that a defendant acted ‘corruptly.’”

Later in the pre-trial proceedings, even the SEC acknowledged that the facilitating payments exception is “a difficult area to understand, largely because of the wording of the exception and the statute overall.” In denying competing motions for summary judgment, the judge stated: “I have such trouble understanding the facilitating payment exception. […] I mean, it almost swallows the rest of the statute.  And I know it’s in the legislative history that these, I think reference is made to grease payments, somehow to grease the skids.  How do I separate those payments, which do seem to be contemplated, from the payments that [the SEC] alleges were made in this case, which you think are squarely within the FCPA’s prohibition?  […] And I don’t understand it.  Whether we make the distinction based on size of payments, regularity of payments, purpose of payments, nature of the — of the favorable conduct elicited.  I just really struggle with it.”

On the eve of trial and facing the prospect of having to negate the facilitating payments exception and otherwise prove its case, the SEC agreed to settle the matter on very favorable terms for the defendants.

In addition to the above legal deficiencies in the DOJ’s prosecution of Coburn and Schwartz there were various factual issues evident from documents in the public domain which further made the prosecution unusual.

Again, the DOJ’s theory of prosecution is that Coburn / Schwartz authorized a third party to make a bribe payment to an Indian official to obtain a permit in connection with an office campus project in India.

However, in the immediate aftermath of the February 2019 enforcement action, the third party (Larsen & Toubro (L&T) – one of the largest construction companies in India) released a statement to the National Stock Exchange of India stating that it was “not aware of any evidence that supported the Company’s involvement in making the alleged improper payments.”

Several months later, L&T released another statement to the National Stock Exchange of India after its Audit Committee appointed external experts to review the matter stating: “The Audit Committee has concluded that there was no sufficient evidence to support the allegations of the Company’s involvement in making alleged improper payments at the direction of Cognizant Technology Solutions.”

In addition, during pre-trial proceedings the government seemingly acknowledged that it:

• did not know if the alleged bribe was even paid;
• did not know who paid the alleged bribe;
• did not know which Indian official received the alleged bribe; and
• did not know which Indian government agency the alleged bribe recipient worked for.

It is against this legal and factual background that one year ago the DOJ dismissed criminal charges against Coburn and Schwartz.

The question remains: why were the individuals even charged?

Perhaps the answer(s) were addressed above.

The Equipment Company (described as a company based in Texas) is believed to be Drillmec. 

The Foreign Official is described as a senior executive at PEMEX Exploración y Producción (“PEP” – a wholly owned exploration and production subsidiary of PEMEX) between 2018 and 2021.

According to the Information, Equipment Company supplied equipment to PEMEX and other customers and in or around December 2021 PEMEX awarded Equipment Company a contract for approximately $540 million to supply equipment to PEMEX.

According to the Information, in or around 2020, Wilson and other co-conspirators agreed that Equipment Company would offer to pay Foreign Official millions of dollars in bribes in exchange for Foreign Official using his official position to assist Equipment Company obtain and retain business with PEMEX, including the December 2021 Contract. Subsequently, having agreed to do so with co conspirators, Wilson, for the benefit of Equipment Company, offered a substantial amount in bribes to Foreign Official. The bribes would be paid to Foreign Official through” various intermediary companies.

According to the information, Wilson was paid a total of $415,800 in commissions in connection with the December 2021 Contract.

Earlier this week, Wilson pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions. Sentencing is set for for June 26, 2026.

A Sentencing Data Sheet on the court docket states the following.

• The amount of the corrupt payments that were actually paid was more than $1,500,000 but less than $3,500,000.
• The DOJ agrees to recommend to the Court and Probation Office that Wilson does not quality for an Aggravating Role enhancement and that the defendant is an average participant.
• The DOJ “agrees not to oppose the defendant’s request for acceptance of responsibility and to request an additional one level decrease for early acceptance.
• The defendant agrees that he received $383,896 and stipulates to a money judgement in that amount.

This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related developments from the first quarter of 2026.

DOJ Enforcement (Corporate)

The DOJ announced one corporate enforcement action in the first quarter.

Balt (March 19)

See here for the prior post.

Charges: None (reference made to violations of the FCPA’s anti-bribery provisions).

Resolution Vehicle: Declination with disgorgement.

Guidelines Range: Not mentioned in the resolution document.

Settlement: $1.2 million.

Origin: Voluntary disclosure.

Monitor: No

Individuals Charged: Yes

DOJ Enforcement (Individual)

In the first quarter, the DOJ announced FCPA charges against three individuals in two core actions.

As highlighted here, a few weeks prior to the Balt enforcement action and based on the same alleged core conduct, the DOJ charged David Ferrera and Marc Tilman with FCPA and related offenses. Ferrera has pleaded not guilty – see here. As highlighted in the prior post, this matter is believed to be the first time the DOJ has ever charged individuals with FCPA offenses based on the theory that employees of certain foreign health care systems are “foreign officials” under the FCPA and thus occupy a status akin to a President or Prime Minister. This enforcement theory has been used approximately 35 times in corporate enforcement actions but has never been subjected to judicial scrutiny.

As highlighted here, the DOJ filed a criminal information against Alfonso Wilson (CEO of Oil Technologies Consortium) alleging that he and others obtained and retained a December 2021 Contract with PEMEX for an Equipment Company through corrupt and fraudulent means, including by offering and paying bribes to a Foreign Official.

SEC Enforcement (Corporate)

The SEC did not bring an FCPA enforcement action in the first quarter.

Other Developments or Items of Interest

During the first quarter, there were several developments in FCPA enforcement actions filed prior to 2026.

As discussed here, Charles Hunter Hobson (who served in a variety of roles at Corsa Coal from 2013 to 2018) was found guilty by a jury for various Foreign Corrupt Practices Act and related offenses in connection with an Egyptian bribery scheme. As highlighted here, the “foreign official” jury instruction in the Hobson case was flawed.

In the on-going FCPA enforcement action against Smartmatic, the company filed a motion to dismiss on the basis of “vindictive and selective prosecution.” (See here and here). As highlighted in this post, Smartmatic separately filed a motion for a bill of particulars asserting that the “the Constitution protects defendants … from having to defend against such opaque charges.”

As highlighted in this prior post, in September 2025 a jury found Carl Zaglin guilty of FCPA and related offenses for his role in bribery schemes involving Honduran government officials to secure contracts to provide uniforms and other goods to the Honduran National Police. As discussed in this post, a judge recently granted Zaglin’s request for a federal prisoner to appear as a witness during a hearing on a new trial.

In December 2025, Ramon Alexandro Rovirosa Martinez was found guilty after a bizarre trial of various charges in connection with an alleged Mexican bribery scheme. (See here for the prior post). Post-trial, Rovirosa filed a motion for a judgement of acquittal as well as a “Motion to Dismiss Case with Prejudice Based on the Court’s Supervisory Powers.” Among the reasons stated were the following: “the Government attorneys in this case (1) made misrepresentations to the Court and/or to the jury that willfully mispresented both the record and the legal standards; (2) failed to provide evidence to defense counsel, and (3) failed to present any witnesses at trial with actual knowledge of the facts. Even more alarming, the case was under the legal supervision of a Department of Justice supervisory attorney, who apparently allowed such conduct to occur.”

In September 2024, Glenn Oztemel (previously employed by Arcadia Fuels Ltd. and Freepoint Commodities LLC) was found guilty at trial of FCPA and related offenses in connection with a Brazil bribery scheme. (See here for the prior post). Recently, a judge allowed Oztemel to remain free on bond pending appeal stating that the “case presents several novel issues of law which, frankly, should be addressed by [the appellate court].”

As discussed here, various Democratic Senators introduced a short bill titled “The FCPA Reinforcement Act” seeking to temporarily extend the statute of limitations for criminal FCPA anti-bribery offenses. For additional reading, see prior posts here and here.

As discussed here, the DOJ released yet another non-binding policy document titled “Corporate Enforcement and Voluntary Self-Disclosure Policy.”

The allegations involved the same core conduct alleged in a 2024 FCPA enforcement action (still pending) involving two company executives, among others.

This recent post highlighted the DOJ’s response to Smartmatic’s motion to dismiss the indictment on the basis of “vindictive and selective prosecution.”

Prior to filing this motion, Smartmatic filed a motion for a bill of particulars (generally speaking a request for the DOJ to provide more specific information about the criminal charges).

Recently, Smartmatic filed its reply brief which states in summary fashion:

“For the first time in over a decade, the government has charged a corporation with violating the FCPA, and it has done so by relying on mutually exclusive statutes set out in a charging document that is as opaque as it is unsupported. Apparently preferring that SGO head to trial with as little information as possible, the government now opposes SGO’s request for the particulars needed to prepare its defense at trial. Citing the Court’s prior denial of defendant Roger Piñate’s motion for bill of particulars, the government suggests the Court should do the same as to SGO. But SGO is differently situated than an individual defendant; it is a foreign corporate entity that the government has conflictingly alleged to be both a “domestic concern” and a “person other than a domestic concern.”

While the opposition spends considerable time on the government’s ability to allege these conflicting theories, it wholly ignores the import of doing so and the reason SGO requires particulars to avoid surprise at trial. Specifically, without more, SGO is left to guess whether the government intends to prove that SGO was a person other than a domestic concern whose agents violated the FCPA while in the territory of the United States or that SGO was itself a domestic concern. As a corporate entity with countless employees and agents who act for it, SGO must also guess which of those employees or agents the government believes acted with authority when violating the FCPA and how they did so to benefit SGO. The government’s competing theories implicate different evidence, different witnesses, and raise different legal questions that SGO must be permitted to evaluate, challenge, and prepare a defense against well in advance of trial.

The Constitution protects defendants, including corporate defendants like SGO—a going concern with employees who are entirely unconnected to the charges at issue and whose livelihoods would be destroyed as a result of a criminal conviction of their employer—from having to defend against such opaque charges. The government should not be entitled to leave SGO to speculate as to how it can defend itself at trial. SGO’s Motion for Bill of Particulars should therefore be granted in its entirety.”

The matter was highlighted on these pages because it was example of a so-called non-FCPA, FCPA enforcement action (that is an action that charged violations of the FCPA’s books and records and internal controls provisions yet had nothing to do with alleged foreign bribery).

It is extremely rare for a publicly traded company to force the Department of Justice to prove a criminal case in court. The vast majority of issuers opt to resolve a matter through alternative resolution vehicles such as a non-prosecution agreement, deferred prosecution, etc.

It is also very rare for a publicly traded company to force the SEC to prove a civil case in court as the vast majority of issuers under scrutiny opt to resolve through an administrative order rather than force the SEC to prove its court in court.

Fat Brands and the individuals choose the path least traveled.

In July 2025, the DOJ moved to dismiss the indictment (which charged various tax offenses, wire fraud, and false statements). See here for the company’s press release.

Recently, the SEC moved to dismiss the action against all defendants and stated: “in the exercise of its discretion, and based on the facts and circumstances of this case and in light of the evidence developed in discovery, the Commission believes dismissal of this case is appropriate.”

The allegations involved the same core conduct alleged in a 2024 FCPA enforcement action (still pending) involving two company executives, among others.

The criminal indictment against Smartmatic was notable in that 2010 was the last time a business organization was criminally indicted for FCPA offenses (as opposed to a criminal information / complaint resolved through a plea agreement or deferred prosecution agreement; non-prosecution agreement; or declination with disgorgement).

Earlier this month, Smartmatic moved to dismiss the indictment on the basis of “vindictive and selective prosecution.”

Recently, the DOJ responded to the motion and states in pertient part:

“Defendant SGO’s motion to dismiss relies on a fundamentally flawed premise and on speculative assumptions devoid of any factual or evidentiary basis. Because SGO’s prosecution is neither vindictive nor selective, its motion should be denied. SGO’s indictment came at the conclusion of an appropriate and regular process. That process was managed by career prosecutors, beginning in the previous Administration and continuing in the current Administration. It followed
the format and cadence typical of many corporate FCPA cases over the years, featuring discussions between prosecutors and counsel for the Smartmatic entities (“Smartmatic” or “SGO”) regarding the scope of criminal corporate liability, and how to resolve such liability through a pre-indictment criminal resolution.

First, contrary to defendant SGO’s assertion, it is demonstrably false that the government had concluded its investigation into Smartmatic when it charged four individual defendants in August 2024. Defendant SGO knows this is false because the government and SGO engaged in regular communications and had multiple meetings before and after the Indictment against the individual defendants in an effort to seek a negotiated pre-indictment resolution. Only when those negotiations proved unfruitful did the government exercise its prosecutorial discretion and seek a superseding indictment that added SGO as a corporate defendant. In order to respond to defendant SGO’s false assertions, set forth below is a timeline of some of the relevant communications and interactions between the government and Smartmatic’s outside counsel, which unequivocally repudiates defendant SGO’s claim that “the government appeared to have concluded the investigation of 2016 events with its August 2024 indictment.”

Second, defendant SGO claims in its motion that its indictment is the product of a longrunning campaign against Smartmatic by the current Administration and certain political allies. Specifically, defendant SGO suggests that its role in the 2020 election and the defamation suit it filed against a private media company in 2021 were precipitating events leading to SGO’s prosecution, thereby purportedly demonstrating vindictiveness and discriminatory selectiveness by the government. These accusations are utterly false. The government’s investigation into the facts of this case began in 2018 and continued through 2025. Neither the 2020 U.S. election nor Smartmatic’s civil dispute with private litigants had any bearing on this prosecution. Instead, this is a case about the bribery and money laundering scheme that defendant SGO and its coconspirators allegedly engaged in vis-à-vis the 2016 Philippine election.

Because the prosecution of defendant SGO is not vindictive or selective, the motion to dismiss should be denied.”

The DOJ’s response sets forth the following timeline.

“In the months preceding and following the Indictment of the individual defendants, the government and counsel for Smartmatic engaged in sustained discussions about corporate liability and potential resolution. The process by which career prosecutors engaged in those discussions — led by the trial team with support from their supervisory chains — did not deviate from the long-established practice for corporate FCPA cases.

Following years of investigation and consistent engagement with company counsel, the government invited Smartmatic to present its views on whether and how the case should be criminally resolved consistent with the Justice Manual’s Principles of Prosecuting Business Organizations. That meeting took place in July 2024, approximately one month before the initial Indictment of the four individuals. Any experienced counsel would understand that this meeting and the content and scope of the government’s requests during this time suggested a desire by the government to move the case against Smartmatic towards a criminal disposition.

On August 8, 2024, a federal grand jury returned an Indictment against senior Smartmatic executives and a foreign official in connection with the bribery and money laundering scheme. Within one week of the Indictment, on August 15, 2024, the government wrote to SGO’s lawyers to make clear that the individual charges did not end the government’s investigation of the company and asked to discuss next steps regarding the company. The Indictment of the three Smartmatic executives in August 2024, who are alleged to have acted on behalf of Smartmatic entities, only increased the likelihood of an imposition of corporate liability in light of the principle of respondeat superior. With that awareness, Smartmatic engaged with the
government in the latter half of 2024. For example, in September and October 2024, the government requested information from Smartmatic relating to its code of business conduct, charitable donation and gift policies, and other information, and Smartmatic produced documents relating to the email accounts of defendants Piñate, Vasquez, and others, purportedly in the spirit of cooperation. The company also informed the government that two individuals had been placed on paid administrative leave pending the outcome of the criminal charges.

The parties continued to discuss outstanding matters, including a video conference in November 2024, and, in December 2024, the government sent a tolling agreement extension for Smartmatic’s consideration, which the company declined to sign. The government and Smartmatic continued discussions into the new year, with a January 6, 2025, video conference, followed by additional requests from the government, and Smartmatic’s indication through counsel that it was considering “the opportunity to present additional information” to the government.

On February 10, 2025 — the same day as the President’s Executive Order relating to the enforcement of the Foreign Corrupt Practices Act (the “FCPA Executive Order”) — Smartmatic’s outside counsel presented the government with information that Smartmatic believed should factor into the government’s charging decision. The next day, at outside counsel’s request, the government agreed to provide Smartmatic with a limited reverse proffer of certain evidence. In April 2025, after an initial postponement by Smartmatic, and after the government confirmed that the matter had been reviewed under the FCPA Executive Order and — at the recommendation of the line prosecutors — approved to continue, the government provided a reverse proffer to Smartmatic’s outside counsel. The government made clear to outside counsel and Smartmatic’s General Counsel that the purpose of the proffer was to present evidence of the company’s criminal liability.

On July 2, 2025, the undersigned line prosecutors, having requested and received the necessary approvals from their offices, offered Smartmatic the terms of a criminal pre-indictment resolution in which a Smartmatic subsidiary entity would plead guilty in light of, among other things, senior executives’ commission of a significant foreign bribery scheme. Thereafter, counsel for Smartmatic appealed the offer, and between August 2025 and October 2025, made multiple presentations to Department leadership. In consultation with career prosecutors, Department leadership declined to overrule the line prosecutors’ plea offer. This decision was based on the nature and circumstances of the bribery and money laundering offenses committed by high-ranking Smartmatic executives, the company’s extremely limited cooperation and remediation, and the other factors set forth in the Justice Manual and Department of Justice policy.

Following multiple extensions of the plea offer, Smartmatic’s outside counsel offered several counter proposals. At the recommendation of the line prosecutors, Department leadership rejected those proposals as 1) inadequate given the nature and seriousness of conduct and 2) inconsistent with past practice and Department policy. On October 16, 2025, a federal grand jury returned a Superseding Indictment against the four previously indicted individuals and SGO.”