Business Crimes Hotline

Specifically, the Detroit-based Ally companies were accused of discriminating against roughly 235,000 borrowers of African-American, Hispanic, and/or Asian/Pacific Islander descent, by charging these borrowers higher interest rates than non-Hispanic white customers. The rates were marked up by car dealers that submitted borrower applications for auto loans to Ally. Ally's payments to the dealers, who had discretion to mark up the rates based on objective, credit-based factors, were tied to the respective interest rate, creating an incentive for the dealers to apply higher rates. These impermissibly higher interest rates resulted in average overpayments of $200-$300 by the victims. The government also criticized Ally's oversight of rate increases ' including after Ally had learned of the CFPB's preliminary discrimination findings in the matter.

The CFPB settled the matter via public administrative agreement, while the DOJ component was filed for judicial approval in the United States District Court for the Eastern District of Michigan. Eighty million dollars of the settlement is set aside to compensate the victims of the conduct, with the remaining amount representing a civil penalty paid to the CFPB.

PENNSYLVANIA

Alcoa Settles Long-Running FCPA Investigation

On Jan. 9, the DOJ announced that Alcoa Inc's subsidiary, Alcoa World Alumina LLC, had agreed to settle FCPA bribery allegations via a guilty plea in the United States District Court for the Western District of Pennsylvania. The plea includes a single count of violating the substantive anti-bribery provisions of the FCPA, along with $223 million in payments. A corresponding settlement with the SEC was also announced for $161 million, resulting in a combined settlement of $384 million. One factor noted by the DOJ in reaching its settlement figure ' $209 million of which is a criminal fine ' is the current state of Alcoa's finances.

The settlement is tied to a 2004 contract that Alcoa World Alumina had with the Kingdom of Bahrain-controlled aluminum smelter company, Aluminum Bahrain B.S.C. (Alba). The contract included a sham distributorship with a London-based consultant who marked-up the price of alumina, a white powder derived from bauxite that is converted to aluminum via smelting, in order to pay kickbacks to government officials in Bahrain ' including Royal Family members. In part, the consultant ' who was not identified by the government in its filings ' concealed the transactions via offshore accounts and shell companies. The consultant was originally recommended by Royal Family members who were part of the tender process for Alcoa of Australia's alumina supply agreement with Alba. The mark-ups, which were made from 2005 through 2009, totaled approximately $188 million.'

MICHIGAN

Largest Auto Lending Agreement in History Includes Refund of Overchargees

On Dec. 20, 2013, the government announced that it had reached a fair lending settlement agreement with Ally Financial Inc. and Ally Bank in connection with discriminatory lending practices that initiated in April 2011, in violation of the Equal Credit Opportunity Act (ECOA). The $98 million settlement was jointly announced by the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB), as their first shared enforcement action. The government noted it as the largest auto lending agreement in history ' as well as the DOJ's third-largest fair lending agreement overall.

Specifically, the Detroit-based Ally companies were accused of discriminating against roughly 235,000 borrowers of African-American, Hispanic, and/or Asian/Pacific Islander descent, by charging these borrowers higher interest rates than non-Hispanic white customers. The rates were marked up by car dealers that submitted borrower applications for auto loans to Ally. Ally's payments to the dealers, who had discretion to mark up the rates based on objective, credit-based factors, were tied to the respective interest rate, creating an incentive for the dealers to apply higher rates. These impermissibly higher interest rates resulted in average overpayments of $200-$300 by the victims. The government also criticized Ally's oversight of rate increases ' including after Ally had learned of the CFPB's preliminary discrimination findings in the matter.

The CFPB settled the matter via public administrative agreement, while the DOJ component was filed for judicial approval in the United States District Court for the Eastern District of Michigan. Eighty million dollars of the settlement is set aside to compensate the victims of the conduct, with the remaining amount representing a civil penalty paid to the CFPB.

PENNSYLVANIA

Alcoa Settles Long-Running FCPA Investigation

On Jan. 9, the DOJ announced that Alcoa Inc's subsidiary, Alcoa World Alumina LLC, had agreed to settle FCPA bribery allegations via a guilty plea in the United States District Court for the Western District of Pennsylvania. The plea includes a single count of violating the substantive anti-bribery provisions of the FCPA, along with $223 million in payments. A corresponding settlement with the SEC was also announced for $161 million, resulting in a combined settlement of $384 million. One factor noted by the DOJ in reaching its settlement figure ' $209 million of which is a criminal fine ' is the current state of Alcoa's finances.

The settlement is tied to a 2004 contract that Alcoa World Alumina had with the Kingdom of Bahrain-controlled aluminum smelter company, Aluminum Bahrain B.S.C. (Alba). The contract included a sham distributorship with a London-based consultant who marked-up the price of alumina, a white powder derived from bauxite that is converted to aluminum via smelting, in order to pay kickbacks to government officials in Bahrain ' including Royal Family members. In part, the consultant ' who was not identified by the government in its filings ' concealed the transactions via offshore accounts and shell companies. The consultant was originally recommended by Royal Family members who were part of the tender process for Alcoa of Australia's alumina supply agreement with Alba. The mark-ups, which were made from 2005 through 2009, totaled approximately $188 million.'