Six South Florida residents have been indicted for their alleged participation in a $6.2 million Medicare fraud scheme involving defunct home health care company Professional Medical Home Health LLC (Professional Home Health).
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
On Sept. 25, 2014, a federal grand jury in Miami returned a 14-count indictment charging Ernesto Fernandez, 48, Dennis Hernandez, 32, Jose Alvarez, 47, and Joel San Pedro, 44, all of Miami; Alina Hernandez, 38, of West Palm Beach; and Juan Valdes, 37, of Palm Springs, for their roles in defrauding Medicare and soliciting and receiving health care kickbacks.
According to allegations in the indictment, the defendants recruited patients for Professional Home Health, a Miami home health care agency. As part of the scheme, the defendants solicited and received kickbacks from the owners and operators of Professional Home Health in exchange for providing beneficiaries for home health services that were not medically necessary or not provided. The defendants and their co-conspirators also allegedly falsified patient documentation to support the fraudulent billing. From December 2008 through February 2014, Medicare paid Professional Home Health more than $6.2 million for these fraudulent home health care claims.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Two other individuals have already pleaded guilty for their roles in the scheme. Annarella Garcia, an owner of Professional Home Health, pleaded guilty to one count of conspiracy to commit health care fraud, and on Aug. 26, 2014, she was sentenced to serve 70 months in prison and ordered to pay $6,257,142 in restitution. Annilet Dominguez, an administrator of Professional Home Health, pleaded guilty to one count of conspiracy to commit health care fraud and three counts of false statements related to health care matters. On Sept. 29, 2014, she was sentenced to serve 68 months in prison and ordered to pay $6,257,149 in restitution.
This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorneys Anne P. McNamara and A. Brendan Stewart 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 2,000 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 the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
An administrator of a Miami home health care company, Professional Medical Home Health LLC, was sentenced to serve 68 months in prison and ordered to pay $6,257,142 million in restitution today for her participation in a $6 million health care fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement. U.S. District Judge Federico A. Moreno of the Southern District of Florida imposed the sentence.
According to court documents, Annilet Dominguez, 28, of Hialeah, Florida, was an administrator at Professional Home Health. Dominguez and her co-conspirators paid kickbacks to patient recruiters in return for providing patients to Professional Home Health. Dominguez and her co-conspirators falsified patient documentation to make it appear that beneficiaries qualified for and received home health care services, when, in fact, many of the beneficiaries did not actually qualify for or receive such services. Dominguez and her co-conspirators then caused the submission of false claims to Medicare for services that were not medically necessary or not provided.
From December 2008 through February 2014, Medicare paid Professional Home Health approximately $6.25 million for fraudulent claims for home health care services.
On June 25, 2014, Dominguez pleaded guilty to one count of conspiracy to commit health care fraud and three counts of making false statements related to health care matters. On Aug. 26, 2014, co-defendant Annarella Garcia was sentenced to serve 70 months in prison and ordered to pay $6,257,142 million in restitution.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorneys Anne P. McNamara and A. Brendan Stewart 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 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
WASHINGTON — Toyoda Gosei Co. Ltd., an automotive parts manufacturer based in Aichi, Japan, has agreed to plead guilty and to pay a $26 million criminal fine for its role in conspiracies to fix prices and rig bids for automotive hoses, airbags and steering wheels sold to automobile manufacturers, the Department of Justice announced today.
According to a two-count felony charge filed today in the U.S. District Court for the Northern District of Ohio in Toledo, Toyoda Gosei conspired to fix the prices of certain automotive hoses sold to Toyota Motor Corp. and certain of its subsidiaries, affiliates and suppliers (collectively Toyota), in the United States; and conspired to fix the prices of automotive airbags and steering wheels sold to Toyota and Fuji Heavy Industries Ltd. and certain of its subsidiaries, affiliates and suppliers, and certain of their subsidiaries, affiliates and suppliers (collectively Subaru), in the United States and elsewhere. In addition to the criminal fine, Toyoda Gosei has agreed to cooperate in the department’s ongoing investigation. The plea agreement will be subject to court approval.
“When purchasing an automobile, American consumers should feel confident that the sticker price is based on fair market costs to manufacture the vehicle,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The Antitrust Division will continue to prosecute cases in the auto parts industry to ensure fair and competitive prices are maintained.”
Toyoda Gosei and its co–conspirators, according to the charges, conspired through meetings and conversations in which they discussed and agreed upon bids and price quotations to be submitted to certain automakers and to allocate the supply of the products to those automakers. In furtherance of the agreements, Toyoda Gosei sold certain automotive hoses at noncompetitive prices to Toyota in the United States, and sold airbags and steering wheels at noncompetitive prices to Toyota and Subaru in the United States and elsewhere. Toyoda Gosei’s involvement in the automotive hoses conspiracy lasted from at least as early as February 2004 until at least September 2010 and its involvement in the automotive airbags and steering wheels conspiracy lasted from at least as early as September 2003 until at least September 2010.
Toyoda Gosei manufactures and sells a variety of automotive parts, including certain automotive hoses, airbags and steering wheels. The charges against Toyoda Gosei are the latest in the department’s ongoing investigation into anticompetitive conduct in the automotive parts industry. These are the first charges filed relating to automotive hoses sold to automobile manufacturers.
To date, 43 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Twenty-nine companies, including Toyoda Gosei, have pleaded guilty or agreed to plead guilty and have agreed to pay a total of nearly $2.4 billion in fines.
Toyoda Gosei is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty for corporations of $100 million for each violation. 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 charge 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 the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, Lima Resident Agency, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio. 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 1-888-647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at 216-522-1400.
WASHINGTON — Kawasaki Kisen Kaisha Ltd. (K-Line), a Japanese corporation, has agreed to plead guilty and to pay a $67.7 million criminal fine for its involvement in a conspiracy to fix prices, allocate customers, and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, K-Line conspired to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. K-Line participated in the conspiracy from at least as early as February 1997 until at least September 2012. K-Line has agreed to cooperate with the Department’s ongoing antitrust investigation. The plea agreement is subject to court approval.
Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and rolled off of an ocean-going vessel. Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.
“Our efforts exposed a long-running global conspiracy that operated globally, affecting the shipping costs of staggering numbers of cars, into and out of the Port of Baltimore, and other ports in the United States and across the globe. Today’s announcement demonstrates our continuing resolve to bring the members of this conspiracy to justice.” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “We are continuing our efforts to ensure that both the corporations and individuals involved in this cartel are held accountable for their acts and the harm they inflicted on American consumers.”
According to the charge, K-Line and its co-conspirators conspired by, among other things, agreeing – during meetings and communications – on prices, allocating customers, agreeing to refrain from bidding against one another and exchanging customer pricing information. The department said the companies then charged rates in accordance with those agreements for international ocean shipping services for certain roll-on, roll-off cargo to and from the United States and elsewhere at collusive and non-competitive prices.
K-Line is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. 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 charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit. Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html, or call the FBI’s Baltimore Field Office at 410-265-8080.
An Army sergeant pleaded guilty today to bribery and conspiracy to defraud the government for his role in a scheme to steal more than one million gallons of fuel from the U.S. military for resale on the black market in Afghanistan.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina, Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service (DCIS) Southeast Field Office, Special Agent in Charge John A. Strong of the FBI’s Charlotte Division, Director Frank Robey of the U.S. Army Criminal Investigation Command (CID) Major Procurement Fraud Unit (MPFU) and Special Inspector General for Afghanistan Reconstruction John F. Sopko made the announcement.
Christopher Ciampa, 32, of Lillington, North Carolina, entered his guilty plea before U.S. District Court Judge Terrence W. Boyle of the Eastern District of North Carolina. The sentencing hearing was scheduled for the week of December 15, 2014.
“Sergeant Ciampa took bribes to help steal millions of dollars’ worth of fuel meant to support U.S. military operations in Afghanistan,” said Assistant Attorney General Caldwell. “His greed put his fellow soldiers at greater risk, and his actions stand in stark contrast to the integrity and sacrifice demonstrated every day by the men and women of our Armed Forces.”
“The DCIS, with our investigative partners, continues to aggressively pursue those who deprive the Department of Defense of much needed resources, such as fuel, critical to accomplishing its global missions,” said DCIS Special Agent in Charge Khin. “Corruption and theft in a combat environment, especially on such a large scale, degrade the effectiveness of the U.S. armed forces, and increases the danger to our warfighters by diverting those resources to our enemies
“Sergeant Christopher Ciampa betrayed his unit and nation for personal profit by entering into illegal relationships in order to personally profit from the sale and transport of fuel valued at millions of dollars,” said FBI Special Agent in Charge Strong. “These actions, especially in a wartime environment, damage the reputation of all soldiers and impede the success of coalition war efforts. Those who put the reputation and lives of their fellow servicemen and women at risk will be aggressively pursued by the FBI and our military partners dedicated to upholding justice.”
“Our highly-trained special agents are experts in fraud investigations and untangling webs of lies and deceit,” said CID MPFU Director Robey. “Whether an individual is in or out of uniform, it makes no difference, we will do everything in our investigative power to see those who defraud the Army brought to justice.”
“The crimes alleged in this case are serious and describe actions that undermine our mission in Afghanistan,” said Special Inspector General Sopko. “SIGAR will continue to work tirelessly to protect the American taxpayers’ hard earned money and bring the full weight of the justice system to bear on anyone who seeks to rob the U.S. government.”
According to his plea agreement, Ciampa was deployed to Afghanistan with the 3rd Special Forces Group Service Detachment and was assigned to Camp Brown at Kandahar Air Field between February 2011 and January 2012. During the deployment, one of Ciampa’s chief responsibilities was management of the Transportation Movement Requests (TMRs) for fuel and other items in support of military units in Afghanistan paid for by the U.S. government.
Over the course of the conspiracy, Ciampa and others created and submitted false TMRs for the purchase of thousands of gallons of fuel that were neither necessary nor used by military units. Instead, Ciampa and his co-conspirators stole the fuel and resold it on the black market in neighboring towns. Between February 2011 and December 2011, they created false TMRs for 114 large fuel tanker trucks, which could each carry approximately 10,000 gallons of fuel. All of the TMRs were awarded to a single Afghan trucking company, despite significantly higher rates charged by this company.
As a result of the criminal conduct, the United States suffered a total loss of $10,812,000. The loss resulted from stolen fuel and payments on the fraudulent TMRs in the following amounts: $9,120,000 in lost fuel and $1,692,000 in fraudulent TMRs for the 114 large tanker trucks.
Ciampa admitted that he and his co-conspirators sent some of the illicit proceeds back to the United States via wire transfer and carried some of the cash in their luggage, and Ciampa hid $180,000 of stolen funds inside stereo equipment that he shipped back to North Carolina with his unit’s gear. He used his share of the proceeds from the scheme to purchase a truck and other personal items.
The case was investigated by DCIS, FBI, CID MPFU and the Special Inspector General for Afghanistan Reconstruction (SIGAR). The case is being prosecuted by Trial Attorney Wade Weems on detail to the Criminal Division’s Fraud Section from SIGAR and Assistant U.S. Attorney Banumathi Rangarajan of the Eastern District of North Carolina.
Today’s guest post is by James Musgrove and Joshua Chad. Jim is Co-Chair, Competition and Antitrust practice at McMillan LLP, a leading Canadian law firm. Jim and Joshua are well versed in international cartel matters and will be keeping us up to date on key developments in Canada.
We are delighted to contribute to the “Reports from Around the World” section of the Cartel Capers Blog. We look forward to providing readers with regular updates on Canadian cartel developments.
Our first couple of posts will provide a general introduction to Canadian cartel legislation, its enforcement and related private actions. Thereafter, we expect to delve into specific points of interest and new developments as they arise. But, first things first.
The Antitrust Division, through a federal grand jury, indicted seven Japanese executives for conspiring to fix prices in the long running auto parts investigation. There were two separate indictments. One charged executives from Mitsubishi Electric Corp. with conspiring to fix the prices of starter motors, alternators and ignition coils from at least 2000 through 2010. In the second indictment, four executives from Hitachi Automotive Systems were charged with conspiring to fix prices of multiple auto parts including starter motors, fuel injection systems, and ignition coils.
Atsushi Ueda, Minoru Kurisaki, and Hideyuki Saito of Mitsubishi Electric Corp. were charged with conspiring to fix the prices of certain automotive products sold to Ford Motor Company, General Motors LLC, Chrysler Group LLC, Fuji Heavy Industries Ltd., Nissan Motor Company Ltd., and Honda Motor Company Ltd. in the United States and elsewhere. This indictment also charged Kurisaki and Saito with knowingly conspiring to obstruct justice by destroying documents and corruptly persuading, and attempting to persuade others, to destroy documents. Saito was charged in an additional count with knowingly and corruptly persuading, and attempting to persuade, executives to destroy documents and delete electronic data that may contain evidence of antitrust crimes.
Problems With Volume Of Commerce In Antitrust Sentencing
By Robert E. Connolly and Joan E. Marshall
Law360, New York (September 15, 2014, 10:28 AM ET)
The recent sentencing of Mathew Martoma for insider trading focused the debate over the severity of white collar crime sentences driven by mechanical calculations in the federal sentencing guidelines. The probation department had recommended 20 years in jail based on the fraud guidelines profit calculations. Martoma was sentenced on Sept. 8 to nine years in prison. Last month the U.S. Sentencing Commission, which sets the federal guidelines, announced it was considering changes to its policies on white collar sentences, specifically addressing the issue of profit and considering whether “there are ways the economic crime guidelines could work better.” While profit is certainly a factor in sentencing, the steep and severe sentences based on profit calculations are under question. ____________________________________________________________________ Subscribe to Connolly’s Cartel Capers Blog Here ____________________________________________________________________
Even more questionable, however, is the antitrust sentencing guideline U.S.S.G §2R1.1, where individual jail sentences are swiftly driven upward to the Sherman Act 10-year maximum, not by any defendant’s personal profit, but by the volume of commerce. The volume of commerce is the most significant upward adjustment and can more than double the base offense level of 12. The relationship between volume of commerce and culpability is at best tenuous. The weight placed on the volume of commerce in calculating prison sentences has led to great uncertainty, departures by judges in contested sentences, and routine departures by the Antitrust Division in plea agreements.
In this article, we look at the defects in using volume of commerce as a significant component of determining prison sentences for individual antitrust defendants. We also recommend reforms that would insert more meaningful measures of culpability into the sentencing process.
The Guidelines Volume of Commerce Is Not a Reasonable Measure of Individual Culpability
Due to the weight given volume of commerce, a defendant with no prior criminal history in an international antitrust cartel can find himself close to 10-year Sherman Act maximum regardless of his role in the offense. The volume of commerce can add up to 16 levels to the base offense level of 12. An offense level of 28 results in a guidelines calculation of 78-97 months in prison before any other adjustments. While Congress did raise the Sherman Act maximum to 10 years, maximums are only appropriate when there are aggravating circumstances — not for a typical, but large cartel. While unintentional, in practice the guidelines harshly punish foreign executives since the most severe penalties are reserved for international cartels with large volumes of commerce.
There is little correlation between the volume of commerce in a cartel and individual culpability. For example, an owner of a concrete company that rigs bids on $5 million worth of contracts on public projects and personally pockets the conspiratorial overcharge is more culpable than a lower level employee in a $1 billion international cartel that is ordered to attend cartel meetings. Yet, the concrete company owner would get a two-level upward adjustment resulting in a guidelines range of 18 to 24 months while the lower level employee in the international cartel would get a 14-level adjustment and be facing close to the Sherman Act maximum of 10 years. These are not extreme hypotheticals — they are essentially the guidelines results in United States v. VandeBrake and United States v.AU Optronics.
In VandeBrake the court departed upward from the guidelines and imposed a four-year sentence on the concrete company owner. In AU Optronics several lower level executives were acquitted, but even the president and vice president received downward departures to sentences of three years. When rejecting the government’s 10-year guideline prison recommendation in AU Optronics, the court said, “The defendants thought they were doing the right thing vis-a-vis their industry and their companies. They weren’t, but that’s what they thought at the time.”
On the other hand, the judge in VandeBrake found the defendant was motivated by greed. The commentary to the antitrust guidelines states: “The offense levels are not based directly on damage caused or profit made by the defendant because damages are difficult and time consuming to establish.” While a blunt proxy like volume of commerce may be suitable for assessing a corporate fine, when individual liberty is at stake, more relevant culpability factors are needed.
There is another major flaw in the application of the volume-of-commerce adjustment to individual sentences. Under U.S.S.G. §2R1.1 (b)(2), “the volume of commerce attributable to an individual participant in a conspiracy is the volume of commerce done by him or his principal in goods and services that were affected by the violation.” This means that if the CEO of Company A decides to form or join a cartel and at the same time directs his sales manager to coordinate price and volume data with competitors, both are tagged with the same volume of commerce. This isn’t right.
There used to be a principle of big fish/little fish by which prosecutors and courts differentiated between the role a person played in the offense, including seniority, motivation for, and benefit received from the crime. Cartel members themselves make this distinction, often referring to cartel meetings as “top guy” or “working group guy” meetings. But, the volume-of-commerce adjustment contains no such distinction. The guidelines do provide for a mitigating role in the offense adjustment, but in an antitrust case, this makes only a slight difference in the recommended guidelines range.
There are two other drawbacks with using the volume of commerce to determine an individual’s jail sentence. First, the volume of commerce is usually determined through very lengthy and complex negotiations between the Antitrust Division and the corporate defendant. The negotiations cover variables such as the duration of the conspiracy, the geographic scope of the conspiracy, the products involved and the customers affected. An individual defendant is often later sentenced using a volume of commerce he had no input in calculating and insufficient resources to challenge. Finally, courts have taken an expansive view of what commerce should be included in the guidelines calculation. Courts have uniformly held that all sales made by a defendant corporation during the price fixing conspiracy should be presumed affected by the conspiracy.
Some Suggestions for Reform
1. Reserve the Sherman Act Maximum for Egregious Cases
The maximum prison sentence of 10 years under the Sherman Act should be reserved for the most egregious cases. These cases would include aggravating factors such as recidivism, economic coercion of competitors or subordinates to join the cartel, or extraordinary steps to prevent detection or reporting of the cartel.
2. Increase the Base Offense Level
Rather than adjust the offense level dramatically based on volume of commerce, we suggest that the base offense level be raised to a level 17 with a resulting sentencing range of 24-30 months. This captures the philosophy that short but certain jail sentences are crucial to deterring antitrust crimes — with “short” being redefined in light of the increase in the Sherman Act maximum to 10 years in jail. The recommended guidelines prison sentences should begin within this range, but allow for more culpable senior executives to face longer jail sentences based on enhancements.
3. Eliminate Volume of Commerce Except for the Most Senior Member of the Conspiracy
If the volume of commerce has a relationship to culpability, it should be limited to the senior executive responsible for engaging the company in a cartel. Even here, however, we would limit the extreme sentences for large international cartels by lowering the upward adjustment for individuals.
4. Eliminate the Aggravating Role Adjustment for the Number of Participants
While not related to volume of commerce, we propose eliminating the aggravating-role adjustment for the number of participants in the offense. U.S.S.G. §3B1.1 provides for an up to four level enhancement if the conspiracy involved five or more participants. There should be no enhancement based on the number of participants in the cartel. It is simply double counting. By their very nature, price fixing cartels involve numerous participants. Participants in smaller antitrust cartels are not more or less culpable than individuals in larger industries.
5. New Enhancements Should Be Added to the Guidelines Based on Individual Characteristics
To compensate for eliminating or reducing the role of the volume of commerce adjustment, the base offense level could be increased by a rage of one to four levels if the court finds that the defendant was motived by personal gain in the form of increased salary, bonuses or stock options. There is no difference in liability if an agreement was reached to try to prevent layoffs in a distressed industry, as opposed to increasing prices to boost stock options or pay, but there is a difference in culpability.
Courts will consider these factors whether they are mentioned in the guidelines or not, so to maintain some consistency, some sentencing discretion should be added based on these factors. Other personal characteristics, such as whether the defendant helped initiate the cartel or ordered subordinates to participate, are also relevant to culpability and should be taken into account by the guidelines.
6. Add an Enhancement for Failure to Have an Effective Antitrust and Ethics Compliance Program
While not related to the volume of commerce, we suggest a revision to encourage strong and effective ethics and compliance programs. The Sentencing Commission should consider enhanced punishment for any individual defendant who was in a leadership position and failed to implement a compliance program as set forth in the Sentencing Guidelines. U.S.S.G. §8B2.1(b) lists the seven factors that must exist for a compliance and ethics program to be considered “effective.” A senior executive who had the authority to implement, or at least advocate for an antitrust compliance program (typically c-suite executives) and failed to do so is more culpable than an executive who violated a compliance program. These executives fail to give their subordinates the training they need to identify and resist involvement in the criminal activity and fail to inform them of the “whistleblower” mechanisms available to stop the activity.
This proposal is based on our collective experience in sitting across the table from lower level foreign executives who have only a vague notion about the U.S. antitrust laws and do not have an appreciation for the consequences of what they are being told to do by their superiors. Antitrust and ethics training can reduce the incidence of these scenarios.
These Suggested Reforms Will Benefit Antitrust Enforcement
These reforms are not suggested to go “soft” on criminal antitrust offenders. As former career Antitrust Division prosecutors, we have urged courts to imprison convicted antitrust defendants. We don’t presume to have all the answers on antitrust guidelines reform, but we think we have identified the most pressing issue. As the Sentencing Commission reviews the antitrust guidelines, we urge that consideration be given to reforming the way volume of commerce escalates an individual’s recommended prison guidelines range. When an individual’s liberty is at stake, it is important to get it right.
—By Robert E. Connolly and Joan E. Marshall, GeyerGorey LLP
Robert Connolly is a partner in the Washington, D.C., office of GeyerGorey and former chief of the Middle Atlantic Field Office of the U.S. Department of JusticeAntitrust Division. His blog, Cartel Capers, covers price-fixing, bid-rigging and market-allocation issues. Joan Marshall is a partner in the firm’s Dallas office and a former trial attorney for the Antitrust Division.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
 “For purposes of this guideline, the volume of commerce attributable to an individual participant in a conspiracy is the volume of commerce done by him or his principal in goods or services that were affected by the violation.” U.S.S.G §2R1.1 (b) (2).
 United States. v. VandeBrake, 771 F. Supp. 2d 961 (N.D. Iowa 2011).
 United States v. AU Optronics Corp. et al., CR-09-0110 (SI)(filed June 10, 2010).
 United States v. AU Optronics Corporation, CR-09-0110 (N.D. Cal. Sept 20, 2012)(sentencing hearing).
 See e.g., United States v. Andreas, 216 F.3d 645, 678 (7th Cir. 2000); United States v. Hayter Oil. Co, 51 F.3d 1265, 1273 (6th Cir. 1995).
 Although Congress raised the Sherman Act maximum prison sentence to ten years to indicate the seriousness of antitrust offenses, it is still true that some offenses are more egregious than others and the maximum penalty should be reserved for such cases.
Antitrust enforcement, or competition law as it is known elsewhere, is international in scope. Cartels (“the supreme evil of antitrust”) are the top priority of all the major enforcement agencies worldwide. While I occasionally comment on enforcement actions in other countries, I’ve always wondered what the leading practioneers in those countries thought. So, I asked them! And, the idea grew to post occasional comments on Cartel Capers from experienced cartel defense attorneys from around the globe. As you can see below, it is my good fortune to know some pretty accomplished international colleagues. Today, I am posting short bios, and soon (as soon as I can figure out the software) I will have a drop down tab as a home for their bios and their insights.
Disclaimer: We have all worked on and continue to work on major international cartel matters. Ethics and good judgment limit us from commenting on cases we are working on and prevent us from disclosing non-pubic/sensitive information. The information posted is not intended to be legal advice. We are not offering legal opinions, just our personal insights on major cartel developments. But, let me introduce my friends. I am sure you will be anxious to read their take on important cartel practice and procedure developments in the jurisdictions where they practice. Guest posts will begin appearing in the near future.
Mauro Grinberg is a partner at Grinberg Cordovil. He is one of the leading competition lawyers in Brazil with an incredible range of experience. Mr. Grinberg is a former Commissioner of CADE, the Brazilian antitrust agency; Former Attorney of the National Treasury of Brazil; Founder, Former Head and presently member of the Board of IBRAC (the main Brazilian antitrust think tank); Member of IBA (Antitrust Committee) and of ABA (Section of Antitrust Law); and author of many articles and frequent speaker on antitrust issues.
James Musgrove is the Co-Chair, Competition and Antitrust Practice of the Canadian law firm, McMillan. Mr. Musgrove is recognized as a leading competition lawyer by various organizations, including Chamber Global, GCR, Lexpert, Best Lawyers and Who’s Who Legal, amongst others. He is active in national and international antitrust organizations, is Past Chair of the Canadian Bar Association National Competition Law Section, and currently serves on Council of the American Bar Association Section on Antitrust Law. In 2014 he won the GCR award for Behavioural Matter of the Year – Americas for his successful defence of MasterCard, and was recently named Advertising and Marketing Lawyer of the Year—Toronto—by Best Lawyers’.
Jingwen Zhu leads DLA Piper’s Asia competition practice. She is experienced in advising Chinese and international clients on multi-jurisdictional merger notifications, antitrust investigations, private antitrust litigations, antitrust counseling and compliance. She also has experience in state owned monopolies, privatisation of infrastructure and subsequent sector regulation, especially in cases concerning essential facilities.
Ms. Zhu is qualified as a lawyer in the People’s Republic of China. Ms. Zhu speaks Chinese (Cantonese), Chinese (Mandarin), English and German.
Markus Röhrig is a partner at the European law firm Hengeler Mueller. Hengeler Mueller is a partnership of lawyers with offices in Berlin, Düsseldorf, Frankfurt, Munich, Brussels and London. Mr. Röhrig joined Hengeler Mueller in 2004 and has been a partner since 2009. He is based in the Brussels office.
Mr. Röhrig has received his legal education at the University of Cologne and Georgetown University. He is admitted to the German and the New York bars. Mr. Röhrig specialises in German and European competition law. Mr. Röhrig frequently advises clients with respect to European and German cartel investigations, behavioral issues (abuse of dominance) and merger control cases. Recently, he has been involved in major international cartel cases that are being pursued by the European Commission, the US Department of Justice and the Japanese JFTC in the automotive and other sectors.
Avinash Amarnath is an associate at ‘Vinod Dhall and TT&A’ in New Delhi, India. Prior to his current position, Mr. Amarnath was an associate at the competition team in Amarchand & Mangaldas & Suresh A Shroff & Co. He has advised clients across various sectors such as automobiles, financial services, pharmaceuticals, steel, private equity, petrochemicals and electronic lab equipment on Indian competition law. Mr. Amarnath has written numerous articles on the Competition Commission of India and competition law in India. Mr. Amarnath is a graduate of Kings College London with an LLM in Competition Law.
Yesterday I had the good fortune to attend the8thAnnual Georgetown University Law Center Global Antitrust Enforcement Symposium.I was invited to attend byBates White, a leading economic consulting firm. Bates White is a sponsor of the program. The agenda covered all areas of antitrust enforcement including merger enforcement, abuse of dominance and IP and high-tech issues. But in keeping with the theme of this blog, I’d like to comment on the star of the program—Cartel Enforcement—”the supreme evil of antitrust.”
Bill Baer, Assistant Attorney General for the Antitrust Division was the keynote speaker. Baer focused his remarks completely on cartel enforcement. A copy of his speech is availablehere.
Compliance was in the air. Both Baer, and another Antitrust Division leader, Brent Snyder, Deputy Assistant Attorney General for Criminal Enforcement, emphasized the need for corporations to have strong and effective compliance programs. Baer pointed out that the average jail term for an individual convicted of price fixing or bid rigging is now at 25 months. And, courts have fined corporations as much as $1.4 billion in a single year. Baer emphasized, “effective compliance programs minimize the chance that companies will conspire to fix prices. And they maximize the chance for a company guilty of price fixing to find out about the conspiracy early enough to qualify for corporate leniency or otherwise cooperate with our investigation.”
What Baer did not say, that may disappoint many corporate counsel, is that the Antitrust Division would change its policy of not giving credit to corporate defendants for having an antitrust compliance program. In the view of the Antitrust Division, the cases they prosecute involve senior executives of a company—executives in the plural. In these situations, the company has a failed compliance program according to the guidelines set out in the United States Sentencing Guidelines. The Division considers its leniency policy the benefit for those companies whose compliance efforts fall short in preventing a violation, but are able to detect the violation as a result of an effective compliance program. Leniency provides a complete pass for the first company to self-report and cooperating executives can also gain immunity through cooperation.
There may have been a slight shift, however, in the Antitrust Division’s policy regarding compliance programs. The Division has been criticized for never giving credit to a convicted company for a compliance program because, by definition, the program has failed. In his remarks yesterday, Baer said “It is unlikely that a corporate defendant’s pre-existing compliance and ethics program will be considered effective enough to warrant a slap on the wrist when it failed to prevent the company from violating the antitrust laws.” “It is unlikely” is a step (a very small one) from never.
Brent Snyder was on a panel “Cartel Enforcement and Policy” and echoed the remarks regarding the importance of ethics and compliance programs. A day earlier, Snyder had given a talk to the International Chamber of Commerce and US Council of International Business(here). He empathized that international companies have to worry not only about prosecution by the USDOJ, but enforcement agencies world-wide, many of which have adopted US–styled leniency programs. Snyder remarked: “The existence of a compliance programalmost neverallows the company to avoid criminal antitrust charges. Why? Because a truly effective compliance program would have prevented the crime in the first place or resulted in its early detection. This has been the Division’s position for at least the last twenty years, and it isn’t likely to change.” (my emphasis).
In another interesting comment is his speech, Snyder said “In addition, we are actively considering ways in which we can credit companies that proactively adopt or strengthen compliance programs after coming under investigation. Although we have not finalized our thinking in this area, any crediting of compliance will require a company to demonstrate that its program or improvements are more than just a facade.” The speeches Division officials give are carefully thought out and vetted so this is a serious remark. One thing Snyder could be alluding to is that a defendant company in this position will not face the burden of being put on probation and having an external court appointed compliance monitor imposed. The Division has sought external motors only in rare cases but it may be considering seeking that remedy more often. Companies with a strong compliance program would be spared this additional penalty.