Business Crimes Hotline

According to the statement of facts in the non-prosecution agreement, Faro employees in China authorized other Faro employees to make corrupt payments to Chinese officials in 2004 and 2005. Over $230,000 in payments were internally referred to and recorded in Faro's books as 'referral fees.' In 2005, certain Faro employees created a shell company to route payments through in order to 'avoid exposure.' A bogus intermediary was then used to pay bribes on behalf of Faro. The payments netted the company approximately $4.9 million in business over two years. The DOJ states that from May 2003 to February 2006, Faro failed to devise and maintain a system of internal controls sufficient to address FCPA compliance.

MINNESOTA

AGA Medical Corp. Agrees to Pay $2 Million for FCPA Violations

In a similar case, medical device manufacturer AGA Medical Corp. agreed to pay a $2 million criminal penalty and retain an independent compliance monitor as part of a deferred prosecution agreement for violation of the FCPA. The privately held, Minnesota-based company made corrupt payments to Chinese doctors who were employed by government-owned hospitals from 1997 to 2005, according to the DOJ Press Release. In return for AGA's payments, Chinese doctors directed the government-owned hospitals to purchase AGA's medical devices over those of competitors. AGA also agreed that it violated the FCPA by making payments to Chinese patent officers who could influence the award of pending patent claims filed by AGA in China. The DOJ recognized AGA's voluntary disclosure of the payments, the company's thorough review, cooperation with the DOJ, and implementation of enhanced compliance policies and procedures.

WASHINGTON, DC

DOJ Modifies Guidelines on Deferred Prosecution Agreements

The DOJ issued a memorandum on May 14, 2008, amending its policies on plea agreements, deferred prosecution agreements, and non-prosecution agreements. Under the new policy, penned by Deputy Attorney General Mark Filip, plea agreements, deferred prosecution agreements, and non-prosecution agreements 'should not include terms requiring the defendant to pay funds to a charitable, educational, community, or other organization or individual that is not a victim of the criminal activity or is not providing services to redress the harm caused by the defendant's criminal conduct.' The memorandum states that the policy is designed to eliminate any perceived and actual conflicts of interest and/or ethical issues that may arise from 'extraordinary restitution.' Although the new policy does not cite any examples of prohibited restitution arrangements, legal commentators have been quick to note that the policy seems directed at agreements that have come under criticism in the past, such as the Bristol-Myers Squibb Co. deferred prosecution agreement. In that case, the U.S. Attorney's Office for the District of New Jersey agreed to a deferred prosecution agreement that required the company to establish a business ethics chair at the U.S. Attorney's alma mater, Seton Hall University School of Law. See Sue Reisinger, New DOJ Policy: Just Call It the Christopher Christie Amendment, Law.com, May 21, 2008, available at http://www.law.com/jsp/article.jsp?id=1202421573691.

FLORIDA

Faro Technologies Inc. Enters into Non-Prosecution Agreement for FCPA Violations

Faro Technologies Inc., a Florida-based public company that specializes in computerized measurement devices and software, agreed to pay $1.1 million in fines for violations of the Foreign Corrupt Practices Act (FCPA). Faro also entered into a cease-and-desist order with the SEC and agreed to pay $1.85 million in disgorgement and pre-judgment interest. The company's two-year, non-prosecution agreement also requires it to design an effective FCPA compliance program and to retain an independent monitor.

According to the statement of facts in the non-prosecution agreement, Faro employees in China authorized other Faro employees to make corrupt payments to Chinese officials in 2004 and 2005. Over $230,000 in payments were internally referred to and recorded in Faro's books as 'referral fees.' In 2005, certain Faro employees created a shell company to route payments through in order to 'avoid exposure.' A bogus intermediary was then used to pay bribes on behalf of Faro. The payments netted the company approximately $4.9 million in business over two years. The DOJ states that from May 2003 to February 2006, Faro failed to devise and maintain a system of internal controls sufficient to address FCPA compliance.

MINNESOTA

AGA Medical Corp. Agrees to Pay $2 Million for FCPA Violations

In a similar case, medical device manufacturer AGA Medical Corp. agreed to pay a $2 million criminal penalty and retain an independent compliance monitor as part of a deferred prosecution agreement for violation of the FCPA. The privately held, Minnesota-based company made corrupt payments to Chinese doctors who were employed by government-owned hospitals from 1997 to 2005, according to the DOJ Press Release. In return for AGA's payments, Chinese doctors directed the government-owned hospitals to purchase AGA's medical devices over those of competitors. AGA also agreed that it violated the FCPA by making payments to Chinese patent officers who could influence the award of pending patent claims filed by AGA in China. The DOJ recognized AGA's voluntary disclosure of the payments, the company's thorough review, cooperation with the DOJ, and implementation of enhanced compliance policies and procedures.

WASHINGTON, DC

DOJ Modifies Guidelines on Deferred Prosecution Agreements

The DOJ issued a memorandum on May 14, 2008, amending its policies on plea agreements, deferred prosecution agreements, and non-prosecution agreements. Under the new policy, penned by Deputy Attorney General Mark Filip, plea agreements, deferred prosecution agreements, and non-prosecution agreements 'should not include terms requiring the defendant to pay funds to a charitable, educational, community, or other organization or individual that is not a victim of the criminal activity or is not providing services to redress the harm caused by the defendant's criminal conduct.' The memorandum states that the policy is designed to eliminate any perceived and actual conflicts of interest and/or ethical issues that may arise from 'extraordinary restitution.' Although the new policy does not cite any examples of prohibited restitution arrangements, legal commentators have been quick to note that the policy seems directed at agreements that have come under criticism in the past, such as the Bristol-Myers Squibb Co. deferred prosecution agreement. In that case, the U.S. Attorney's Office for the District of New Jersey agreed to a deferred prosecution agreement that required the company to establish a business ethics chair at the U.S. Attorney's alma mater, Seton Hall University School of Law. See Sue Reisinger, New DOJ Policy: Just Call It the Christopher Christie Amendment, Law.com, May 21, 2008, available at http://www.law.com/jsp/article.jsp?id=1202421573691.