Business Crimes Hotline

According to the DOJ, Parker admitted to conspiring with Daryl Haynor and Jon Flask, the former a tax partner with accounting firm KPMG LLC and the latter a TransCapital attorney. Parker admitted his alleged role in the trio's promotion and implementation of a tax shelter that disguised and concealed finance transactions of KPMG clients from 1998-2006 and led to $240 million in claimed corporate income tax deductions on returns filed with the IRS. Additionally, Parker acknowledged conspiring to mislead IRS agents and attorneys during audits of several of the companies that had claimed deductions. To do so, Parker made false statements to the IRS and concealed aspects of the transactions from the trio's corporate clients.

As a result of his single-count plea, Parker faces a maximum five-year prison sentence and $250,000 fine, while Haynor and Flask both face possible eight-year prison sentences along with a corresponding fine up to $500,000.

NEW YORK

Charges Dismissed Against Statoil

On Nov. 18, 2009, U.S. District Judge Richard C. Howell dismissed with prejudice a three-year-old criminal information against Norway-based oil company Statoil. Judge Howell's ruling came in response to the government's motion to dismiss, which, in turn, was filed upon the company's successful completion of a deferred prosecution agreement for violations of both the anti-bribery and accounting provisions of the FCPA. The criminal information, originally filed on Oct. 13, 2006, alleged that Statoil, a New York Stock Exchange issuer, developed a consulting contract with an offshore intermediary company for the purpose of inducing an Iranian official to assist Statoil in its efforts to secure contracts for the development of natural gas and oil fields in Iran.

The terms of Statoil's deferred-prosecution agreement required the company to admit to making corrupt payments; pay $10.5 million in penalties for its actions; submit to a three-year comprehensive review of its FCPA internal controls and processes by an independent compliance consultant appointed by the government; and implement the consultant's compliance recommendations.

Commenting on the dismissal, U.S. Attorney for the Southern District of New York Preet Bharara said: “This case shows that deferred prosecution agreements against corporations can work as an important middle ground between declining prosecution and obtaining the conviction of a corporation,” adding that the “deferred prosecution in this case helped restore the integrity of Statoil's operations and preserve its financial viability while at the same time ensuring that it improved what was obviously a failed compliance and anti-corruption program.”

In the Courts and Business Crimes Hotline were written by Matthew Alexander, an associate at Kirkland & Ellis LLP, Washington, DC.

OHIO

TransCapital Corporation COO Pleads Guilty in Tax Shelter Conspiracy

For his role in a three-member tax shelter conspiracy, Michael Parker, the chief operating officer of Virginia-based investment company Trans- Capital Corporation, pled guilty to a single count of conspiracy to defraud the United States. Parker entered his plea on Dec. 1, 2009 in a hearing before Judge Sandra S. Beckwith of the U.S. District Court for the Southern District of Ohio in Cincinnati.

According to the DOJ, Parker admitted to conspiring with Daryl Haynor and Jon Flask, the former a tax partner with accounting firm KPMG LLC and the latter a TransCapital attorney. Parker admitted his alleged role in the trio's promotion and implementation of a tax shelter that disguised and concealed finance transactions of KPMG clients from 1998-2006 and led to $240 million in claimed corporate income tax deductions on returns filed with the IRS. Additionally, Parker acknowledged conspiring to mislead IRS agents and attorneys during audits of several of the companies that had claimed deductions. To do so, Parker made false statements to the IRS and concealed aspects of the transactions from the trio's corporate clients.

As a result of his single-count plea, Parker faces a maximum five-year prison sentence and $250,000 fine, while Haynor and Flask both face possible eight-year prison sentences along with a corresponding fine up to $500,000.

NEW YORK

Charges Dismissed Against Statoil

On Nov. 18, 2009, U.S. District Judge Richard C. Howell dismissed with prejudice a three-year-old criminal information against Norway-based oil company Statoil. Judge Howell's ruling came in response to the government's motion to dismiss, which, in turn, was filed upon the company's successful completion of a deferred prosecution agreement for violations of both the anti-bribery and accounting provisions of the FCPA. The criminal information, originally filed on Oct. 13, 2006, alleged that Statoil, a New York Stock Exchange issuer, developed a consulting contract with an offshore intermediary company for the purpose of inducing an Iranian official to assist Statoil in its efforts to secure contracts for the development of natural gas and oil fields in Iran.

The terms of Statoil's deferred-prosecution agreement required the company to admit to making corrupt payments; pay $10.5 million in penalties for its actions; submit to a three-year comprehensive review of its FCPA internal controls and processes by an independent compliance consultant appointed by the government; and implement the consultant's compliance recommendations.

Commenting on the dismissal, U.S. Attorney for the Southern District of New York Preet Bharara said: “This case shows that deferred prosecution agreements against corporations can work as an important middle ground between declining prosecution and obtaining the conviction of a corporation,” adding that the “deferred prosecution in this case helped restore the integrity of Statoil's operations and preserve its financial viability while at the same time ensuring that it improved what was obviously a failed compliance and anti-corruption program.”

In the Courts and Business Crimes Hotline were written by Matthew Alexander, an associate at Kirkland & Ellis LLP, Washington, DC.