Connolly’s Cartel Capers “Auto Part Investigation Shifts Gears”

Auto Part Investigation Shifts Gears

In the last several months, the Antitrust Division has obtained indictments of a number of Japanese executives in the auto parts investigation. This is the hallmark of an investigation that is shifting gears. For the most part, but not entirely, the Division has picked the low hanging fruit with amnesty and non-prosecution agreements. It has shaken a few trees and obtained plea agreements with individuals who received substantially reduced 5K sentences in return for the plea and cooperation. Now enters the phase where individuals are indicted, either because the Division believed they were too senior to offer 5K discounts, the Division no longer needed cooperation, or because the individual declined the invitation to come to the United States and submit to US jurisdiction. Now, the investigation enters what could be likened to the “100 Years War,” depending upon the longevity of the fugitive defendant. The hostile parties keep their respective difference, with an occasional battle fought if there is an extradition or voluntary surrender.  

Yesterday Gikou Nakajima, the highest-ranking global sales executive at Takata Corp. was indicted and charged with rigging bids for seat belts sold to various car companies.  Two weeks earlier, A Japanese executive was indicted on one count of bid rigging and also for obstruction of justice in a second count. In April, an indictment was returned against one current executive and two former executives of Bridgestone Corp. for their roles in an international conspiracy to fix prices of automotive anti-vibration rubber parts sold in the United States and elsewhere.  The return of indictments signals that the Division has secured sufficient cooperation from witnesses and reviewed enough documents to be confident enough in their facts to seek indictments.  The auto parts investigation has had many facets involving over many different parts. See USDOJ Chart, Auto Parts Targeted by Conspirators:  As each phase of this investigation wraps up, additional indictments should be forthcoming.

What Happens Next?

Usually, nothing. The Division has foreign fugitives in most of its international cartel cases dating back to ADM. In most cases the indictments, and the defendants’ identity, are public. But, in some cases the indictment of a foreign national may be under seal. (In the 1980’s, the Philadelphia office indicted an Israeli citizen under seal and he was arrested entering the US. That saga of that case is another story.) But, typically, the Division will have a foreign fugitive placed on an Interpol “Red Notice” making travel precarious for that executive for the rest of his life. In most cases, the executives preserved by the Division for indictment are the most senior members of the company involved in the conspiracy. Foreign fugitive defendants will likely retire, fire their travel agent and stay in the home country. The Division will maintain the documents and other evidence needed to try the case should Interpol actually pick up the fugitive. (One Japanese executive was arrested in India and spent some time in an Indian prison before the India authorities decided they would not extradite him on “dual criminality” grounds.). From time to time, Division attorneys may even get false alarms—foreigners with the same or similar name as a fugitive being picked up and held for questioning. The Division will maintain the file on its foreign fugitives indefinitely because unless it is notified, it has no way of knowing if the fugitive is dead or alive.

Sentencing Guidelines Are A Huge Factor

The primary measure of culpability under the US Sentencing Guidelines is volume of commerce.  Not surprisingly, international cartels tend to press the outer boundaries of the maximum ten year prison sentence under the Sherman Act.  A look at the possible Sentencing Guidelines for a fugitive like Mr. Nakajima shows why there is strong incentive for him to say put in Japan. While these figures may be off slightly, if he were convicted of the charged indictment, he would be facing a possible prison sentence under the United States Sentencing Guidelines of 87- 108 months in jail:


Base Offense 2R1.1                           +12

Offense involves Bid Rigging           +1

Volume of Commerce                       +12 (based on likely commerce of more than $500,00   but less than 1 billion

Role in the Offense                           +4

Total Offense Level                           29

Guideline Range                                87 – 108 months

If a foreign fugitive voluntarily submitted to US jurisdiction and plead guilty, he would be eligible for a 3-point reduction for acceptance of responsibility with a resulting guideline range of 63-78 months. (The court would likely depart from the sentencing guidelines over the Division’s objections and impose a lesser sentence. There is, however, no guarantee that this would occur.) The longest sentence one of Mr. Nakajima’s subordinates received was 19 months. It is not likely Mr. Nakajima will ever voluntarily submit to US jurisdiction.


 Yesterday, at an event in New York, Brent Snyder, Antitrust Division DAAG for Criminal Enforcement noted “More jurisdictions are adopting criminal antitrust statutes and what that will do is that it will make extradition easier to obtain. There are going to be fewer and fewer safe havens.” Also, the Division recently obtained what it called the “first of its kind” extradition on an antitrust charge against Romano Pisciotti, an Italian national who was involved in the marine hose global conspiracy.  Once in the U.S., Pisciotti quickly agreed to plead guilty will serve a total of two years in prison with credit for the nine months and 16 days he was held in the custody of the German government pending his extradition.  The Pisciotti extradition has been widely covered. It has been noted that Germany would not have extradited Pisciotti if he were a German citizen. But there are three main takeaways from his extraction journey that are worth repeating:


  • Pisciotti was indicted under seal. Foreign executives involved in a cartel who do not have some kind of agreement with the Antitrust Division may never know whether they are a fugitive
  • Pisciotti spent nine and half months in a German prison awaiting word of whether Germany would extradite him. If Interpol picks up a foreign fugitive, even if not ultimately extradited, the process can be a significant penalty in itself.
  • The Division has used the Pisciotti extradition as a platform to express its intention to work with competition agencies worldwide to shrink safe harbors for fugitives from cartel indictments.
  • To the extent that the Division is able to secure the extradition of more foreign executives to face cartel charges, the significant reductions in sentence that cooperating foreign executives receive in 5K downward departures will likely tick upward.

A Look Ahead
The country that leads the league in most executives as fugitives from US antitrust indictments is Japan. This is true overall and in the auto parts investigation. The US has not extradited any Japanese citizens for an antitrust violation. Because Japan also makes price fixing and bid rigging a criminal offense, the issue of dual criminality may not be an obstacle (though there are certain differences in the statutes of the two countries). An extradition of an executive from Japan would be an enormous development. As noted above, a Japanese auto parts executive was recently indicted on both price-fixing and obstruction. Coincidently, the first successful extradition by the Antitrust Division involved an executive indicted on both Sherman Act and obstruction charges. When I was Chief of the Philadelphia office, we indicted a British executive, Ian Norris, on both a price fixing count and three counts of obstruction. Eventually, he was extradited only on the obstruction counts. Norris was convicted on one count and sentenced to 18 months in prison. Will the Division take a page out of the same playbook here? More developments await.


WASHINGTON — A Detroit federal grand jury returned a one-count indictment against a former top executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of seatbelts, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Gikou Nakajima, a former executive at Takata Corp., with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of, seatbelts sold to Toyota Motor Corp., Honda Motor Company Ltd., Nissan Motor Co. Ltd., Mazda Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and/or certain of their subsidiaries, for installation in vehicles sold in the United States and elsewhere.  Nakajima served as director of customer relations division at Takata, the highest-level global sales executive at the company, from June 2005 until at least June 2009.

“Today’s indictment demonstrates that the Antitrust Division continues to hold accountable executives who collude with their competitors,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The division will not tolerate executives participating in – and directing their subordinates to participate in – conspiracies to raise the prices on automotive parts that are essential to the safety of U.S. consumers.”

The indictment alleges, among other things, that from at least as early as September 2005 and continuing until June 2009, Nakajima and others attended meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices of seatbelts sold to the automobile manufacturers. It alleges that Nakajima participated directly in the conspiratorial conduct, and that he directed, authorized and consented to his subordinates’ participation.

Takata is a Tokyo-based manufacturer of automotive parts, including seatbelts.  Takata supplies automotive parts to automobile manufacturers in the United States, in part, through its U.S. subsidiary, TK Holdings Inc., located in Auburn Hills, Michigan.  Takata pleaded guilty on Dec. 5, 2013, for its involvement in the conspiracy, and was sentenced to pay criminal fine of $71.3 million.  Four other executives from Takata have pleaded guilty and have been sentenced to serve time in a U.S. prison and to pay criminal fines for their roles in the conspiracy.

Including Nakajima, 35 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry, 24 of whom have pleaded guilty or agreed to plead guilty.  Of those, 22 have been sentenced to serve prison terms ranging from a year and one day to two years.  Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.3 billion in fines.

Nakajima is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit or call the FBI’s Detroit Field Office at 313-965-2323.

Robert E. Connolly Launches New Blog: “Cartel Capers:”

Robert E. ConnollyGeyer Gorey Partner Robert E. Connolly Announces the Debut of A New Blog: “Cartel Capers:”

Robert Connolly recently joined GeyerGorey LLP as a partner in its Washington DC office. As with other GeyerGorey “former feds,” Mr. Connolly was a career federal prosecutor in the Antitrust Division. He was Chief of the Middle Atlantic Office of the Antitrust Division from 1994 until early 2013. Mr. Connolly has just launched his blog, Cartel Capers.

While at the Division, and particularly as a senior manager as Chief, Mr. Connolly had a seat at the table as the Division developed and implemented its successful leniency program.   He also had input on all major aspects of policy and procedure in the criminal program such as investigative strategies, charging decisions, trial game plans, sentencing policy issues, and extradition.   Since leaving the Division, Mr. Connolly has been a prolific author writing a number of articles for the ABA Criminal Cartel and Procedure committee, Mlex and Law 360. He has been quoted on cartel issues in Forbes, BusinessWeek, and various trade publications that focus on antitrust. He has decided to try his hand at blogging to provide more real time news, insight and analysis.

The blog, Cartel Capers, will provide current news in the cartel world. The focus will be on matters concerning the Antitrust Division, US Department of Justice, but will also cover major cartel related developments in the civil arena as well as worldwide. Besides reporting current developments, the aim of the blog is to provide insight and perspective from someone who worked at a high level in the Division for most of his career. The blog will analyze what the Division said, and what it did not say; what the Division did, and what it did not do—and what the Division is likely to do in the future. In short, the blog is intended to provide a behind the scenes look at the cartel world based on both personal experience and current contacts in the enforcement and broader antitrust community.

The blog will be enriched by contributions from other career DOJ prosecutors now at GeyerGorey. Hays Gorey, Joan Marshall and Brad Geyer will contribute both as editors and guest bloggers. Each has prosecuted a variety of high profile cartel cases and related violations in their long careers with the Division.

Please give Cartel Capers a try. Hopefully you will benefit form reading the blog and look forward to new entries. Also, any feedback or suggestions to make the blog more useful are most welcome. Cartel Capers:

Los Angeles Physician Indicted in $33 Million Medicare Fraud Scheme

A Los Angeles physician was indicted today for a $33 million scheme to defraud Medicare, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) for the Los Angeles Region and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office.

Robert A. Glazer, 67, of Los Angeles, California, was indicted in the Central District of California and charged with one count of conspiracy to commit health care fraud.

According to court documents, Glazer operated a medical clinic located in Los Angeles.    From approximately January 2006 through May 2014, Glazer allegedly billed Medicare for services that were not medically necessary, and at times were not provided to the Medicare beneficiaries.    In addition, Glazer allegedly signed prescriptions, certifications, and other medical documents for medically unnecessary home health services, hospice services, and power wheelchairs and other durable medical equipment (DME).    Glazer’s co-conspirators then sold the prescriptions and certifications to DME supply companies, home health agencies, and other providers, knowing that the prescriptions and certifications were fraudulent.    Based on these fraudulent prescriptions and certifications, the DME supply companies, home health agencies, and other providers then allegedly submitted false and fraudulent claims to Medicare.
As further alleged in court documents, from approximately January 2006 through May 2014, fraudulent prescriptions and certifications from Glazer were responsible for approximately $33,484,779 in false and fraudulent claims to Medicare, and Medicare paid approximately $22,056,332 on those claims.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.    This case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: .