Category Archives: Antitrust Division

Patricia Davis, former Assistant Director, Fraud Section, Civil Division, joins GeyerGorey LLP

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Patricia Davis, a twenty-year veteran of the Department of Justice, has joined GeyerGorey LLP as of counsel.  She previously served as Assistant Director, Fraud Section, Civil Division, U.S. Department of Justice, where she was responsible for investigating and prosecuting hundreds of cases involving fraud on government healthcare, procurement and grant/loan programs.  Prior to joining the Department, Ms. Davis was Deputy Counsel to the Inspector General at the General Services Administration.  She is the eleventh former DOJ prosecutor to join the boutique law firm in less than a year.

(See the firm’s Representative Matters by clicking here [this is not a comprehensive list and does not yet incorporate any of Ms. Davis’s experience])

 “The scope and breadth of Pat’s experience is unparalleled.  Much of the Civil Division’s enforcement program focusing on Defense Department contracts and pharmaceuticals rested squarely on her shoulders,” said Brad Geyer, one of the firm’s founding partners.  “We are delighted that Pat has decided to join us.”

Robert Zastrow, who was Verizon’s Assistant General Counsel for 15 years before co-founding the firm in October 2012, added,“ Pat Davis is an excellent addition to our corporate compliance and white collar practice.”

 “I believe that Pat brings our firm to a new level in terms of our ability to get cases placed appropriately and to enhance the chances that our qui tam (False Claims Act) cases will be adopted by the government,” said Hays Gorey, a firm co-founder.  “With Pat’s terrific background and deep legal knowledge, we are uniquely positioned to develop cases so that they are ready, when filed, to be transitioned immediately to the appropriate U.S. Attorney’s Office or the Civil Division of the Department of Justice.”

Headquartered in Washington, D.C., with offices in New York, Boston, Philadelphia and Dallas, GeyerGorey LLP specializes in white collar criminal defense, particularly investigations and cases involving allegations of economic crimes, including violations of the federal antitrust laws (price fixing, bid rigging, territorial and customer allocation agreements), the procurement and grant fraud statutes, the securities laws, the Foreign Corrupt Practices Act, the False Claims Act and other whistleblower actions.  The firm also conducts internal investigations of possible criminal conduct and provides advice regarding compliance with antitrust, anti-bribery and other laws and regulations, in addition to advising on voluntary and mandatory disclosure issues. For further information, please call Patricia Davis at (202) 559-1456 or email [email protected].

A Response to Commissioner Wright’s Proposed Policy Statement Regarding Unfair Methods of Competition

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Maurice E. Stucke

Abstract:      

Federal Trade Commissioner Joshua Wright recently proposed a new legal standard to evaluate “unfair methods of competition” under Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45(a) (2012). 

This essay raises several concerns. First, Wright’s proposed legal standard does not go as far as Congress intended. Moreover it conflates unfair methods of competition with acts and practices that significantly harm consumer welfare. A second concern is that the proposed legal standard goes the other direction and permits conduct that is otherwise illegal under the Sherman and Clayton Acts. Third, the proposed standard reduces accuracy, is hard to administer in connection with the traditional antitrust standards, and increases the risk of inconsistent outcomes for behavior outside the well-forged antitrust case law, but within the Sherman and Clayton Acts’ reach.

AMR Scores Win as Home State Texas Quits US Airways Merger Suit

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The decision by the Texas Attorney General to settle should not affect the litigation.

http://www.bloomberg.com/news/2013-10-02/amr-scores-win-as-home-state-texas-quits-us-airways-merger-suit.html

FORMER PROJECT MANAGER CONVICTED FOR ROLE IN CONSPIRACY SCHEMES INVOLVING TWO EPA SUPERFUND SITES IN NEW JERSEY

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WASHINGTON — A New Jersey jury convicted a former project manager for his  central role in conspiracies that spanned seven years and involved kickbacks in  excess of $1.5 million at two Environmental Protection Agency (EPA) Superfund  sites in New Jersey, the Department of Justice announced today.  The jury returned guilty verdicts on 10  counts charged in the indictment against Gordon D. McDonald, which was filed on  Aug. 31, 2009.

In addition to today’s conviction,  to date, eight individuals and three companies have pleaded guilty to charges  arising out of this investigation.

After a two-week trial, McDonald, a former project manager for a prime contractor, was convicted  of engaging in separate bid-rigging, kickback and/or fraud conspiracies with  three subcontractors at two New Jersey Superfund sites – Federal Creosote in  Manville, N.J., and Diamond Alkali in Newark, N.J.  He was also convicted of engaging in an  international money laundering scheme, major fraud against the United States,  accepting illegal kickbacks, committing two tax violations and obstruction of  justice. The various conspiracies took  place at different time periods from approximately December 2000 until approximately April 2007.  McDonald was acquitted on counts eight and nine involving certain fraud and kickback charges.

“Today’s guilty verdict sends a clear message that  corrupt purchasing officials will be held accountable for engaging in  fraudulent schemes designed to undermine the government’s competitive  contracting practices,” said Bill Baer, Assistant Attorney General in charge of  the Department of Justice’s Antitrust Division.   “The Antitrust Division is committed to ensuring there is fair play and competition  in our markets.”

As part of  the conspiracies, McDonald and co-conspirators at his former company accepted  kickbacks from sub-contractors in exchange for the award of sub-contracts at  Federal Creosote.  McDonald provided  co-conspirators at Bennett Environmental Inc., a Canadian-based company that  treats and disposes of contaminated soil, with bid prices of their competitors,  which allowed them to submit higher bid prices and still be awarded the  sub-contracts.  In exchange for  McDonald’s assistance, Bennett Environmental, Inc. provided him with over $1.5  million in kickback payments.

According to court documents, McDonald also  accepted kickbacks in exchange for the award of sub-contracts at the Federal  Creosote and Diamond Alkali sites from the owner of JMJ Environmental Inc., a  wastewater treatment and chemical supply company, and the co-owner of National  Industrial Supply LLC, an industrial pipes supplier.  He participated in a conspiracy with the  owner of JMJ and co-conspirators to rig bids and allocate sub-contracts at  inflated prices for wastewater treatment supplies and services at Federal Creosote.

The cleanup at Federal Creosote was  primarily funded by the EPA.  An  interagency agreement between the EPA and the U.S. Army Corps of Engineers designated that the U.S. Army Corps of Engineers hire the prime contractors at Federal Creosote.  According to a settlement with the EPA and  the New Jersey Department of Environmental Protection, Tierra Solutions was  required to fund remedial action and maintenance of Diamond Alkali.  Tierra Solutions hired the prime contractor  for the remedial action and maintenance of Diamond Alkali.

Sentencing is  scheduled for Jan. 6, 2014, before Judge Susan D. Wigenton.  To date, more than $6 million in criminal  fines and restitution have been imposed, and five individuals have been  sentenced to serve more than 10 years in total prison time.

Today’s  conviction is the result of an ongoing federal antitrust investigation being  conducted by the Antitrust Division’s New York Office, the EPA Office of  Inspector General and the Internal Revenue Service-Criminal Investigation.  Anyone with information concerning bid  rigging, kickbacks, tax offenses or fraud relating to subcontracts awarded at  the Federal Creosote Superfund site or Diamond Alkali Superfund site should  contact the Antitrust Division’s New York Office at 212-335-8000

Former Employee of Florida Property Management Company Sentenced to Serve Time in Prison for Wire Fraud

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A former residential sales manager of a Florida property management company was sentenced to serve 24 months in prison today in the U.S. District Court for the Middle District of Florida, in Orlando, for his participation in a wire fraud scheme involving housing repair contracts for the U.S. Department of Veterans Affairs (VA), the Department of Justice announced.

Ryan J. Piana pleaded guilty on July 16, 2013, to two wire fraud counts of a 10-count indictment. In addition to his prison sentence, U.S. District Court Judge Roy B. Dalton Jr. also sentenced Piana to pay $147,285 in restitution to the VA.

The indictment, originally filed in January 2012, in the U.S. District Court for the Northern District of Illinois, in Rockford, charged Piana, Ronald B. Hurst and Bryant A. Carbonell with conspiring to commit bribery and wire fraud from beginning at least as early as January 2006 continuing until as late as September 2007.  Piana, Hurst and Carbonell were also charged with bribery and wire fraud.  As part of the plea agreement, the United States agreed to dismiss the remaining counts against Piana at the time of his sentencing.

“Steering contracts to a company in return for kickbacks distorts the competitive process and harms consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division will not tolerate anticompetitive activity that defrauds the Department of Veterans Affairs.”

Piana is a former residential sales manager at West Palm Beach, Fla.-based Ocwen Loan Servicing LLC, and Hurst and Carbonell are former contractors for Ocwen.  According to court documents, Ocwen managed foreclosed properties under contract with the VA, which guaranteed qualifying residential mortgages for veterans.  Under the contract between the VA and Ocwen, if a veteran defaulted, Ocwen completed necessary repairs and re-sold the property.  Proceeds from the re-sale of VA-acquired properties directly benefit the VA by reducing the cost of guaranteeing residential mortgages to veterans.

According to the charges, Hurst and Carbonell paid Piana to steer housing repair work to companies affiliated with Hurst and Carbonell.  Piana recruited other Ocwen employees into the scheme and paid them on behalf of himself and the other conspirators.  The department said in order to execute the scheme, the conspirators sent, or caused to be sent, various transmissions via wire communication.

Carbonell pleaded guilty to the wire fraud counts on Sept. 21, 2012.  Hurst pleaded guilty to the same counts on Feb. 15, 2013.  Both Hurst and Carbonell entered their guilty pleas in the U.S. District Court in Rockford. Their sentencing dates are scheduled for Dec. 5 and 6, 2013, respectively.

This is the third case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando to wire fraud in connection with the VA contract.  On Jan. 25, 2012, Joshua R. Nusbaum, another a former Ocwen employee, and Andrew J. Nusbaum, a former Ocwen contractor, pleaded guilty in U.S. District Court in Orlando to wire fraud in connection with the same VA contract.

The sentence announced today resulted from an ongoing federal investigation of housing repair contracts performed under contract with the VA.  The investigation is being conducted by the Antitrust Division’s Chicago Office and the Central Field Office of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, located in Hines, Ill.

Two New Jersey Investors Plead Guilty for Their Roles in Bid-rigging Schemes at Municipal Tax Lien Auctions

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Two financial investors who purchased municipal tax liens pleaded guilty today for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of those tax liens, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Robert U. Del Vecchio Sr., of Hawthorne, N.J. According to the charge, from in or about 2000 until approximately December 2008, Del Vecchio Sr. participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.  Additionally, a felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, against Michael Mastellone, of Cedar Knolls, N.J. for participating in a similar conspiracy from in or about 2000 until approximately February 2009.  The department said that Del Vecchio Sr. and Mastellone proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

“By conspiring to rig the bids of municipal tax liens, the conspirators profited at the expense of those already struggling financially,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Protecting Americans from these types of bid-rigging schemes remains a high priority for the division.”

The department said the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Del Vecchio Sr. and Mastellone were involved in the conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey.  Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the $1 million statutory maximum.

Today’s pleas are the 13th and 14th guilty pleas resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.  Nine individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler and Norman T. Remick – and three companies –  DSBD LLC, Crusader Servicing Corp. and Mercer S.M.E. Inc. – have previously pleaded guilty as part of this investigation.    Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

This ongoing investigation is being conducted by the Antitrust Division’s New York Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

NINE AUTOMOBILE PARTS MANUFACTURERS AND TWO EXECUTIVES AGREE TO PLEAD GUILTY TO FIXING PRICES ON AUTOMOBILE PARTS SOLD TO U.S. CAR MANUFACTURERS AND INSTALLED IN U.S. CARS

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WASHINGTON — Nine Japan-based companies and two executives have agreed to  plead guilty and to pay a total of more than $740 million in criminal fines for  their roles in separate conspiracies to fix the prices of more than 30 different  products sold to U.S. car manufacturers and installed in cars sold in the  United States and elsewhere, the Department of Justice announced today.  The department said that price-fixed automobile  parts were sold to Chrysler, Ford and General Motors, as well as to the  U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota and Fuji Heavy  Industries–more commonly known by its brand name, Subaru.

“These international price-fixing conspiracies affected more  than $5 billion in automobile parts sold to U.S. car manufacturers, and more  than 25 million cars purchased by American consumers were affected by the  illegal conduct,” said Attorney General Eric Holder.  “The Department of Justice will continue to  crack down on cartel behavior that causes American consumers and businesses to  pay higher prices for the products and services they rely upon in their  everyday lives.”

“Some of the price-fixing conspiracies  lasted for a decade or longer, and many car models were fitted with multiple  parts that were fixed by the auto parts suppliers,” said Scott D. Hammond, Deputy  Assistant Attorney General of the Antitrust Division’s criminal enforcement  program.  “The Antitrust Division has  worked hand in hand with its international competition colleagues who have  provided invaluable assistance to the Justice Department in breaking up these worldwide  price-fixing cartels.”

“Today’s  charges should send a message to companies who believe they don’t need to  follow the rules,” said Ronald Hosko, Assistant Director of the FBI’s Criminal  Division.  “If you violate the laws of  this country, the FBI will investigate and put a stop to the threat you pose to  our commercial system.  The integrity of  our markets is a part of the foundation of a free society.”

Including those announced today, 20 companies and 21 executives have been charged in the Antitrust Division’s  ongoing investigation into price fixing and bid rigging in the auto parts  industry.  All 20 companies have either  pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.6  billion in criminal fines.  Seventeen of  the 21 executives have been sentenced to serve time in U.S. prisons or have  entered into plea agreements calling for significant prison sentences.

Each of the companies and executives  charged today has agreed to cooperate with the department’s ongoing antitrust investigation.  The plea agreements are subject to court approval.  The companies’ and executives’ agreed-upon fines and sentences are:

  • Hitachi Automotive Systems Ltd. to pay a $195 million criminal fine;
  • Jtekt Corporation to pay a $103.27 million criminal fine;
  • Mitsuba Corporation to pay a $135 million criminal fine;
  • Mitsubishi Electric Corporation (MELCO) to pay a $190 million criminal fine;
  • Mitsubishi Heavy Industries Ltd. to pay a $14.5 million criminal fine;
  • NSK Ltd. to pay a $68.2 million criminal fine;
  • T.RAD Co. Ltd. to pay a $13.75 criminal fine;
  • Valeo Japan Co. Ltd. to pay a $13.6 million criminal fine;
  • Yamashita Rubber Co. Ltd. to pay a $11 million criminal fine;
  • Tetsuya Kunida, a Japanese citizen and former executive of a U.S. subsidiary of a Japan-based automotive       anti-vibration rubber products supplier to serve 12 months and one day in a U.S. prison, and to pay a $20,000 criminal fine; and
  • Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier to serve 14 months in a U.S. prison, and to pay a $20,000 criminal fine.

MELCO and Hitachi conspired with each other and other  co-conspirator firms not charged today on sales of certain auto parts,  including starter motors, alternators, and ignition coils, the department said. Mitsuba and Mitsubishi Electric conspired together and with other  co-conspirators not charged today on certain sales of starter motors.  Each of the other companies charged today  colluded with other unnamed co-conspirators.

Generally, the companies, executives and co-conspirators  engaged in the various price-fixing schemes by attending meetings and  communicating by telephone in the United States and Japan to reach collusive  agreements to rig bids, set prices and allocate the supply of auto parts sold  to the car manufacturers.  They took  measures to keep their conduct secret by using code names and meeting in remote  locations.  Those charged also had  further communications to monitor and enforce the collusive agreements.

The multiple conspiracies also harmed U.S. automobile plants  in 14 states: Alabama; California; Georgia; Illinois; Indiana; Kansas;  Kentucky; Michigan; Mississippi; Missouri; Ohio; Tennessee; Texas and  Wisconsin, the department said.

The department has coordinated  its investigation with the Japanese Fair Trade Commission, the European  Commission, Canadian Competition Bureau, Korean Fair Trade Commission, Mexican Federal  Economic Competition Commission and Australian Competition and Consumer  Commission.

The following charges were filed today in U.S. District Court  for the Eastern District of Michigan in Detroit:

Hitachi Automotive Systems Ltd.

According to a one-count  felony charge, Hitachi and co-conspirators engaged in a conspiracy, by agreeing  during meetings and conversations, to rig bids for, and to fix, stabilize and  maintain the prices of auto parts it sold to Ford, General Motors, Honda,  Nissan and Toyota, in the United States and elsewhere. The affected auto  parts include starter motors, alternators, air flow meters, valve timing  control devices, fuel injection systems, electronic throttle bodies, ignition  coils, inverters and motor generators. According to the charge, Hitachi and its  co-conspirators carried out the conspiracy from at least as early as January 2000  until at least February 2010.

Hitachi manufactures and sells auto parts to automobile manufacturers  throughout the world. The affected auto parts perform an array of  functions in automobile engines, from regulating air and fuel flow to starting  the engine to controlling the timing of engine valves.

Mitsuba  Corporation

According to a two-count felony charge,  Mitsuba and co-conspirators engaged in a conspiracy, by agreeing during  meetings and conversations, to rig bids for, and to fix, stabilize and maintain  the prices of windshield washer systems and components, windshield wiper  systems and components, starter motors, power window motors, and fan motors it  sold to Chrysler, Honda, Subaru, Nissan and  Toyota in the United States and elsewhere. According to the charge,  Mitsuba and its co-conspirators carried out the conspiracy from January 2000  until February 2010.  Mitsuba also agreed  to plead guilty to one count of obstruction of justice, because of the  company’s efforts to destroy evidence ordered by a high-level U.S.-based  executive after learning of the U.S. investigation of collusion in the auto  parts industry.

Mitsuba manufactures and sells numerous automotive parts to automobile  manufacturers throughout the world.  The  affected auto parts perform an array of functions in automobiles.  Windshield washer and wiper systems include a  number of components and are designed to clear water or snow from vehicle  windows.  Starter motors are small  electric motors used in starting internal combustion engines.  Power window motors are small electric motors  used to raise and lower vehicle windows.   Fan motors are small electric motors used to turn radiator cooling fans.

Mitsubishi  Electric Corporation (MELCO)

According to a one-count felony charge, MELCO and co-conspirators engaged  in a conspiracy, by agreeing during meetings and conversations, to rig bids  for, and to fix, stabilize and maintain the prices of automotive parts,  including starter motors, alternators and ignition coils, it sold to Chrysler, Ford,  General Motors, Honda, Fuji Heavy Industries Ltd. (Subaru), Nissan, and certain  of their subsidiaries in the United States and elsewhere. According to  the charge, MELCO and its co-conspirators carried out the conspiracy from at  least as early as January 2000 until at least February 2010.

MELCO manufactures and sells automotive parts, including starter  motors, alternators, and ignition coils. Starter motors are small  electric motors used in starting internal combustion engines. Alternators  generate an electric current while the engine is in operation.  Ignition coils are part of the fuel ignition  system and release electric energy suddenly to ignite a fuel mixture.

Mitsubishi  Heavy Industries Ltd.

According to a one-count felony charge, Mitsubishi Heavy Industries  Ltd. (MHI) and co-conspirators engaged in a conspiracy, by agreeing during  meetings and conversations, to rig bids for, and to fix, stabilize and maintain  the prices of compressors and condensers it sold to General Motors and  Mitsubishi Motors North America in the United States and elsewhere.  According to the charge, MHI and its co-conspirators carried out the conspiracy  from at least as early as January 2001 until at least February 2010.

MHI manufactures and sells compressors and condensers. A  compressor produces and circulates highly pressurized refrigerant gas  throughout the car air conditioning system. A condenser cools the engine  by condensing the refrigerant gas into liquid and releasing heat.

T.RAD  Co. Ltd.

According to a  one-count felony charge, T.RAD Co. Ltd. and co-conspirators engaged in a  conspiracy, by agreeing during meetings and conversations, to rig bids for, and  to fix, stabilize and maintain the prices of radiators it sold to Toyota and  Honda and the prices of automatic transmission fluid warmers (ATF warmers) sold  to Toyota in the United States and elsewhere. According to the charge, T.RAD  and its co-conspirators carried out the conspiracy from November 2002 until  February 2010.

T.RAD manufactures and sells heat exchangers, including radiators and  ATF Warmers. Radiators are devices  located in the engine compartment of a vehicle that cool the engine. ATF warmers are devices located in the engine compartment of  a vehicle that warm the automatic transmission fluid.

Valeo  Japan Co. Ltd.

According to a  one-count felony charge, Valeo Japan Co. Ltd. and co-conspirators engaged in a  conspiracy, by agreeing during meetings and conversations, to allocate the  supply of, rig bids for, and to fix, stabilize and maintain the prices of air  conditioning systems it sold to Nissan North America Inc., Suzuki Motor  Corporation and Subaru, in the United States and elsewhere.  According to the charge, Valeo and its  co-conspirators carried out the conspiracy from April 2006 until February 2010.

Valeo was engaged in the manufacture and sale of automotive air conditioning  systems, which are systems that cool the interior environment of a  vehicle. Air conditioning systems, whether sold together or separately,  are defined as automotive compressors, condensers, HVAC units (typically  consisting of a blower motor, actuators, flaps, evaporator, heater core, and  filter embedded in a plastic housing), control panels, sensors and associated  hoses and pipes.

Gary  Walker

According to a  one-count felony charge, Gary Walker, a U.S. citizen and former executive of a  U.S. subsidiary of a Japan-based automotive products supplier, engaged in a  conspiracy to rig bids for, and to fix, stabilize and maintain the prices of  seatbelts sold to Honda, Mazda, Nissan, Subaru and Toyota in the United States  and elsewhere. According to the charge, Walker and his co-conspirators  carried out the conspiracy from at least Jan. 1, 2003 until at least February  2010.

The  following charges were filed today in U.S. District Court for the Southern  District of Ohio in Cincinnati:

Jtekt  Corporation

According to  a two-count felony charge, Jtekt and co-conspirators engaged in a  conspiracy, by agreeing during meetings and conversations, to allocate  markets, to rig bids for, and to fix, stabilize and maintain the prices of bearings it  sold to Toyota and electric powered steering assemblies it sold to Nissan,  in the United States and elsewhere. According to the charge, Jtekt and its  co-conspirators carried out the bearings conspiracy from 2000 until July 2011  and the steering assemblies conspiracy from 2005 until October 2011.

Jtekt manufactures and sells bearings and steering assemblies.  Bearings are widely used in industry in numerous  applications for many products. Bearings reduce friction and help  components to roll smoothly past on another.   Electric powered steering assemblies provide electric power to  help the driver more easily steer the automobile. Electric powered  steering assemblies link the steering wheel to the tires, and include the  column, intermediate shaft and electronic control unit, among other parts, but  do not include the steering wheel or tires.

NSK  Ltd.

According to a one-count felony  charge, NSK and co-conspirators engaged in a conspiracy, by agreeing during  meetings and conversations, to allocate markets, to rig bids for, and to  fix, stabilize and maintain the prices of bearings it sold to Toyota, in the United States and  elsewhere.  NSK manufactures and sells bearings.  According to the charge, NSK and its  co-conspirators carried out the conspiracy from 2000 until July 2011.

The  following charges were filed today in U.S. District Court for the Northern  District of Ohio in Toledo:

Yamashita  Rubber Co. Ltd.

According to a one-count felony charge, Yamashita Rubber Co. Ltd. and  co-conspirators engaged in a conspiracy, by agreeing during meetings and  conversations, to rig bids for, and to fix, raise, and maintain the prices of  automotive anti-vibration rubber products it sold in the United States and  elsewhere to Honda Motor Co. Ltd., American Honda Motor Company Inc. and Suzuki  Motor Corporation.  According to the  charge, Yamashita Rubber Co. and its co-conspirators carried out the  conspiracy from at least April 2003 until May 2012.

Automotive anti-vibration rubber products are comprised primarily of  rubber and metal, and are installed in automobiles to reduce engine and road  vibration.

Tetsuya  Kunida

According to a  one-count felony charge, Tetsuya Kunida, a former executive of a U.S.  subsidiary of a Japan-based automotive anti-vibration rubber products supplier,  engaged in a conspiracy, by agreeing during meetings and conversations, to rig  bids for, and to fix, raise, and maintain the prices of automotive  anti-vibration rubber products.  The  conspiracy affected sales of automotive anti-vibration rubber products to  Toyota Motor Corporation and other automakers in the United States and  elsewhere.  ccording to the charge,  Kunida and his co-conspirators carried out the conspiracy from at least  November 2001 until May 2012.

DENSO Corporation, Nippon Seiki Ltd., Tokai Rika Co. Ltd.,  Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd.,  Autoliv Inc., TRW Deutschland Holding GmbH, Diamond Electric Mfg. Co. Ltd., and  Panasonic Corporation have already pleaded guilty. Fifteen individuals  have been sentenced to pay criminal fines and to serve prison sentences ranging  from a year and a day to two years each.

The companies and individuals are charged with price fixing  in violation of the Sherman Act, which carries maximum penalties of a $100  million criminal fine for corporations and a $1 million criminal fine and 10  years in prison 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.  Additionally, Mitsuba was also  charged with obstruction of justice, which carries a maximum penalty of a $500,000  criminal fine.

The charges are 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 each of the Antitrust Division’s criminal enforcement sections and  the FBI. Today’s charges were brought by the Antitrust Division’s Chicago  Office, New York Office, the National Criminal Enforcement Section, and the  FBI’s Cincinnati, Cleveland, Detroit, New York and Washington Field Offices,  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 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

Nine Automobile Parts Manufacturers and Two Executives Agree to Plead Guilty to Fixing Prices on Automobile Parts Sold to U.S. Car Manufacturers and Installed in U.S. Cars Companies Agree to Pay a Total of More Than $740 Million in Criminal Fines

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Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Thursday, September 26, 2013
Nine Automobile Parts Manufacturers and Two Executives Agree to Plead Guilty to Fixing Prices on Automobile Parts Sold to U.S. Car Manufacturers and Installed in U.S. Cars
Companies Agree to Pay a Total of More Than $740 Million in Criminal Fines

Nine Japan-based companies and two executives have agreed to plead guilty and to pay a total of more than $740 million in criminal fines for their roles in separate conspiracies to fix the prices of more than 30 different products sold to U.S. car manufacturers and installed in cars sold in the United States and elsewhere, the Department of Justice announced today.  The department said that price-fixed automobile parts were sold to Chrysler, Ford and General Motors, as well as to the U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota and Fuji Heavy Industries–more commonly known by its brand name, Subaru.

“These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufacturers, and more than 25 million cars purchased by American consumers were affected by the illegal conduct,” said Attorney General Eric Holder.  “The Department of Justice will continue to crack down on cartel behavior that causes American consumers and businesses to pay higher prices for the products and services they rely upon in their everyday lives.”

“Some of the price-fixing conspiracies lasted for a decade or longer, and many car models were fitted with multiple parts that were fixed by the auto parts suppliers,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “The Antitrust Division has worked hand in hand with its international competition colleagues who have provided invaluable assistance to the Justice Department in breaking up these worldwide price-fixing cartels.”

“Today’s charges should send a message to companies who believe they don’t need to follow the rules,” said Ronald Hosko, Assistant Director of the FBI’s Criminal Division.  “If you violate the laws of this country, the FBI will investigate and put a stop to the threat you pose to our commercial system.  The integrity of our markets is a part of the foundation of a free society.”

Including those announced today, 20 companies and 21 executives have been charged in the Antitrust Division’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  All 20 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.6 billion in criminal fines.  Seventeen of the 21 executives have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.

Each of the companies and executives charged today has agreed to cooperate with the department’s ongoing antitrust investigation.  The plea agreements are subject to court approval. The companies’ and executives’ agreed-upon fines and sentences are:

• Hitachi Automotive Systems Ltd. to pay a $195 million criminal fine;
• Jtekt Corporation to pay a $103.27 million criminal fine;
• Mitsuba Corporation to pay a $135 million criminal fine;
• Mitsubishi Electric Corporation (MELCO) to pay a $190 million criminal fine;
• Mitsubishi Heavy Industries Ltd. to pay a $14.5 million criminal fine;
• NSK Ltd. to pay a $68.2 million criminal fine;
• T.RAD Co. Ltd. to pay a $13.75 criminal fine;
• Valeo Japan Co. Ltd. to pay a $13.6 million criminal fine;
• Yamashita Rubber Co. Ltd. to pay a $11 million criminal fine;
• Tetsuya Kunida, a Japanese citizen and former executive of a U.S. subsidiary of a Japan-based automotive anti-vibration rubber products supplier to serve 12 months and one day in a U.S. prison, and to pay a $20,000 criminal fine; and
• Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier to serve 14 months in a U.S. prison, and to pay a $20,000 criminal fine.

MELCO and Hitachi conspired with each other and other co-conspirator firms not charged today on sales of certain auto parts, including starter motors, alternators, and ignition coils, the department said.  Mitsuba and Mitsubishi Electric conspired together and with other co-conspirators not charged today on certain sales of starter motors.  Each of the other companies charged today colluded with other unnamed co-conspirators.

Generally, the companies, executives and co-conspirators engaged in the various price-fixing schemes by attending meetings and communicating by telephone in the United States and Japan to reach collusive agreements to rig bids, set prices and allocate the supply of auto parts sold to the car manufacturers.  They took measures to keep their conduct secret by using code names and meeting in remote locations.  Those charged also had further communications to monitor and enforce the collusive agreements.

The multiple conspiracies also harmed U.S. automobile plants in 14 states: Alabama; California; Georgia; Illinois; Indiana; Kansas; Kentucky; Michigan; Mississippi; Missouri; Ohio; Tennessee; Texas and Wisconsin, the department said.

The department has coordinated its investigation with the Japanese Fair Trade Commission, the European Commission, Canadian Competition Bureau, Korean Fair Trade Commission, Mexican Federal Economic Competition Commission and Australian Competition and Consumer Commission.

The following charges were filed today in U.S. District Court for the Eastern District of Michigan in Detroit:

Hitachi Automotive Systems Ltd.

According to a one-count felony charge, Hitachi and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of auto parts it sold to Ford, General Motors, Honda, Nissan and Toyota, in the United States and elsewhere.  The affected auto parts include starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils, inverters and motor generators. According to the charge, Hitachi and its co-conspirators carried out the conspiracy from at least as early as January 2000 until at least February 2010.

Hitachi manufactures and sells auto parts to automobile manufacturers throughout the world.  The affected auto parts perform an array of functions in automobile engines, from regulating air and fuel flow to starting the engine to controlling the timing of engine valves.

Mitsuba Corporation

According to a two-count felony charge, Mitsuba and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of windshield washer systems and components, windshield wiper systems and components, starter motors, power window motors, and fan motors it sold to Chrysler, Honda, Subaru, Nissan and Toyota in the United States and elsewhere.  According to the charge, Mitsuba and its co-conspirators carried out the conspiracy from January 2000 until February 2010.  Mitsuba also agreed to plead guilty to one count of obstruction of justice, because of the company’s efforts to destroy evidence ordered by a high-level U.S.-based executive after learning of the U.S. investigation of collusion in the auto parts industry.

Mitsuba manufactures and sells numerous automotive parts to automobile manufacturers throughout the world.  The affected auto parts perform an array of functions in automobiles.  Windshield washer and wiper systems include a number of components and are designed to clear water or snow from vehicle windows.  Starter motors are small electric motors used in starting internal combustion engines.  Power window motors are small electric motors used to raise and lower vehicle windows.  Fan motors are small electric motors used to turn radiator cooling fans.

Mitsubishi Electric Corporation (MELCO)

According to a one-count felony charge, MELCO and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of automotive parts, including starter motors, alternators and ignition coils, it sold to Chrysler, Ford, General Motors, Honda, Fuji Heavy Industries Ltd. (Subaru), Nissan, and certain of their subsidiaries in the United States and elsewhere.  According to the charge, MELCO and its co-conspirators carried out the conspiracy from at least as early as January 2000 until at least February 2010.

MELCO manufactures and sells automotive parts, including starter motors, alternators, and ignition coils.  Starter motors are small electric motors used in starting internal combustion engines.  Alternators generate an electric current while the engine is in operation.  Ignition coils are part of the fuel ignition system and release electric energy suddenly to ignite a fuel mixture.

Mitsubishi Heavy Industries Ltd.

According to a one-count felony charge, Mitsubishi Heavy Industries Ltd. (MHI) and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of compressors and condensers it sold to General Motors and Mitsubishi Motors North America in the United States and elsewhere.  According to the charge, MHI and its co-conspirators carried out the conspiracy from at least as early as January 2001 until at least February 2010.

MHI manufactures and sells compressors and condensers.  A compressor produces and circulates highly pressurized refrigerant gas throughout the car air conditioning system.  A condenser cools the engine by condensing the refrigerant gas into liquid and releasing heat.

T.RAD Co. Ltd.

According to a one-count felony charge, T.RAD Co. Ltd. and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of radiators it sold to Toyota and Honda and the prices of automatic transmission fluid warmers (ATF warmers) sold to Toyota in the United States and elsewhere. According to the charge, T.RAD and its co-conspirators carried out the conspiracy from November 2002 until February 2010.

T.RAD manufactures and sells heat exchangers, including radiators and ATF Warmers.  Radiators are devices located in the engine compartment of a vehicle that cool the engine.  ATF warmers are devices located in the engine compartment of a vehicle that warm the automatic transmission fluid.

Valeo Japan Co. Ltd.

According to a one-count felony charge, Valeo Japan Co. Ltd. and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to allocate the supply of, rig bids for, and to fix, stabilize and maintain the prices of air conditioning systems it sold to Nissan North America Inc., Suzuki Motor Corporation and Subaru, in the United States and elsewhere.  According to the charge, Valeo and its co-conspirators carried out the conspiracy from April 2006 until February 2010.

Valeo was engaged in the manufacture and sale of automotive air conditioning systems, which are systems that cool the interior environment of a vehicle.  Air conditioning systems, whether sold together or separately, are defined as automotive compressors, condensers, HVAC units (typically consisting of a blower motor, actuators, flaps, evaporator, heater core, and filter embedded in a plastic housing), control panels, sensors and associated hoses and pipes.

Gary Walker

According to a one-count felony charge, Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of seatbelts sold to Honda, Mazda, Nissan, Subaru and Toyota in the United States and elsewhere.  According to the charge, Walker and his co-conspirators carried out the conspiracy from at least Jan. 1, 2003 until at least February 2010.

The following charges were filed today in U.S. District Court for the Southern District of Ohio in Cincinnati:

Jtekt Corporation

According to a two-count felony charge, Jtekt and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to allocate markets, to rig bids for, and to fix, stabilize and maintain the prices of bearings it sold to Toyota and electric powered steering assemblies it sold to Nissan, in the United States and elsewhere. According to the charge, Jtekt and its co-conspirators carried out the bearings conspiracy from 2000 until July 2011 and the steering assemblies conspiracy from 2005 until October 2011.

Jtekt manufactures and sells bearings and steering assemblies.  Bearings are widely used in industry in numerous applications for many products.  Bearings reduce friction and help components to roll smoothly past on another.  Electric powered steering assemblies provide electric power to help the driver more easily steer the automobile.  Electric powered steering assemblies link the steering wheel to the tires, and include the column, intermediate shaft and electronic control unit, among other parts, but do not include the steering wheel or tires.

NSK Ltd.

According to a one-count felony charge, NSK and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to allocate markets, to rig bids for, and to fix, stabilize and maintain the prices of bearings it sold to Toyota, in the United States and elsewhere.  NSK manufactures and sells bearings.  According to the charge, NSK and its co-conspirators carried out the conspiracy from 2000 until July 2011.

The following charges were filed today in U.S. District Court for the Northern District of Ohio in Toledo:

Yamashita Rubber Co. Ltd.

According to a one-count felony charge, Yamashita Rubber Co. Ltd. and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, raise, and maintain the prices of automotive anti-vibration rubber products it sold in the United States and elsewhere to Honda Motor Co. Ltd., American Honda Motor Company Inc. and Suzuki Motor Corporation.  According to the charge, Yamashita Rubber Co. and its co-conspirators carried out the conspiracy from at least April 2003 until May 2012.

Automotive anti-vibration rubber products are comprised primarily of rubber and metal, and are installed in automobiles to reduce engine and road vibration.

Tetsuya Kunida

According to a one-count felony charge, Tetsuya Kunida, a former executive of a U.S. subsidiary of a Japan-based automotive anti-vibration rubber products supplier, engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, raise, and maintain the prices of automotive anti-vibration rubber products.  The conspiracy affected sales of automotive anti-vibration rubber products to Toyota Motor Corporation and other automakers in the United States and elsewhere.  ccording to the charge, Kunida and his co-conspirators carried out the conspiracy from at least November 2001 until May 2012.

DENSO Corporation, Nippon Seiki Ltd., Tokai Rika Co. Ltd., Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc., TRW Deutschland Holding GmbH, Diamond Electric Mfg. Co. Ltd., and Panasonic Corporation have already pleaded guilty.  Fifteen individuals have been sentenced to pay criminal fines and to serve prison sentences ranging from a year and a day to two years each.

The companies and individuals are charged with price fixing in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations and a $1 million criminal fine and 10 years in prison 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.  Additionally, Mitsuba was also charged with obstruction of justice, which carries a maximum penalty of a $500,000 criminal fine.

The charges are 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 each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Chicago Office, New York Office, the National Criminal Enforcement Section, and the FBI’s Cincinnati, Cleveland, Detroit, New York and Washington Field Offices, with the assistance of the FBI headquarters’ International Corruption Unit.

ICAP Brokers Face Felony Charges for Alleged Long-Running Manipulation of LIBOR Interest Rates

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Two former derivatives brokers and a former cash broker employed by London-based brokerage firm ICAP were charged as part of the ongoing criminal investigation into the manipulation of the London Interbank Offered Rate (LIBOR), the Justice Department announced today.

Darrell Read, who resides in New Zealand, and Daniel Wilkinson and Colin Goodman, both of England, were charged with conspiracy to commit wire fraud and two counts of wire fraud in a criminal complaint unsealed in Manhattan federal court earlier today.  They each face a maximum penalty of 30 years in prison for each count upon conviction.

“By allegedly participating in a scheme to manipulate benchmark interest rates for financial gain, these defendants undermined the integrity of the global markets,” said Attorney General Eric Holder. “They were supposed to be honest brokers, but instead, they put their own financial interests ahead of that larger responsibility.  And as a result, transactions and financial products around the world were compromised, because they were tied to a rate that was distorted due to the brokers’ dishonesty.  These charges underscore the Justice Department’s determination to hold accountable all those whose conduct threatens the integrity of our financial markets.”

“These three men are accused of repeatedly and deliberately spreading false information to banks and investors around the world in order to fraudulently move the market and help their client fleece his counterparties,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.  “Our criminal investigation of the manipulation of LIBOR by some of the largest banks in the world has led us from New York to London, to Tokyo, and other financial hubs around the globe.  These important charges are just the latest law-enforcement action in the Criminal Division and Antitrust Division’s global LIBOR investigation, and reflect the Department’s continued dedication to detecting, and prosecuting, financial fraudsters who affect U.S. markets, whether they work at a bank, or a brokerage, and whether they carry out their fraud from a desk in the United States, or abroad.”

“The complaint unsealed today charges Colin Goodman, Daniel Wilkinson and Darrell Read for conspiring to manipulate benchmark interest rates that determined the profitability of their client’s trades,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “In exchange for bigger bonus checks, the three defendants undermined financial markets around the world by compromising the integrity of globally used interest rate benchmarks.  The Department continues to demonstrate its commitment to protecting the interest of American citizens in free and fair financial markets.”

“Corporate and securities fraud involving the manipulation of these rates causes a worldwide impact on trading positions and erodes the integrity of the market and confidence in Wall Street,” said Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office.  “Unraveling such complex financial schemes is difficult and time consuming.  Today’s charges are the result of the hard work of the FBI special agents and forensic accountants who dedicated significant time and resources to investigating this case.”

According to the criminal complaint, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR is published by the British Bankers’ Association (BBA), a trade association based in London.  At the time relevant to the criminal complaint, LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The published LIBOR “fix” for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the contributor panel) selected by the BBA.

LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were estimated at approximately $450 trillion.

According to allegations in the criminal complaint filed in this case, between July 2006 and September 2010, Wilkinson was a desk director employed in the London office of ICAP, where he supervised a group of derivatives brokers – including Read – specializing in Yen-based financial products.  Generally, the desk’s clients were derivatives traders at large financial institutions, and the transactions brokered by Wilkinson, Read and others on the desk essentially consisted of bets between traders on the direction in which Yen LIBOR would move.  Between July 2006 and September 2009, the desk’s largest client was a senior trader at UBS (UBS Trader) in Tokyo, to whom Read spoke almost daily.  Because of the large size of the client’s trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits.  For example, UBS Trader once told Read that a 0.01 percent – or one basis point – movement in the final Yen LIBOR fixing on a specific date could result in $3 million profit for his trading positions.  A significant part of both Read’s and Wilkinson’s compensation was tied to the brokerage fees generated by UBS Trader and paid to ICAP.

Goodman was a cash broker at ICAP’s London office during the relevant time period.  In addition to brokering cash transactions, Goodman distributed a daily email to individuals outside of ICAP, including derivatives traders at several large banks as well as those responsible for providing the BBA with LIBOR submissions at certain banks.  Goodman’s email contained what was termed his “SUGGESTED LIBORS,” purported predictions of where Yen LIBOR ultimately would fix each day across eight specified borrowing periods.  Read and Wilkinson, along with Goodman himself, often referred to Goodman as “lord libor.”

The complaint alleges that Read, Wilkinson and Goodman, together with UBS Trader, executed a sustained and systematic scheme to move Yen LIBOR in a direction favorable to UBS Trader’s trading positions.

According to the criminal complaint, the primary strategy employed by Read, Wilkinson and Goodman to execute the scheme was to use Goodman’s “SUGGESTED LIBORS” email to disseminate misinformation to Yen LIBOR panel banks in hopes that the banks would rely on the misinformation when making their own respective Yen LIBOR submissions to the BBA for inclusion in the published fix.  Rather than providing good faith predictions as to where Yen LIBOR would fix, Goodman instead often used his daily email to set forth predictions which benefitted UBS Trader’s trading positions.

Beginning in or about June 2007, Goodman was paid a bonus through the desk Wilkinson supervised, allegedly intended, at least in part, to reward Goodman for his role in their effort to influence and manipulate the published Yen LIBOR fix.

As a second strategy, Read and Wilkinson allegedly further agreed to contact interest rate derivatives traders and submitters employed at Yen LIBOR panel banks in an effort to cause them to make false and misleading submissions to the BBA at UBS Trader’s behest.

As alleged in the charging document, Read, Wilkinson, Goodman, UBS Trader, and other co-conspirators often executed their scheme through electronic chats and email exchanges.  For example, on June 28, 2007, in an email message, Read told Wilkinson: “DAN THIS IS GETTING SERIOUS [UBS TRADER] IS NOT HAPPY WITH THE WAY THINGS ARE PROGRESSING . . . CAN YOU PLEASE GET HOLD OF COLIN AND GET HIM TO SEND OUT 6 MOS LIBOR AT 0.865 AND TO GET HIS BANKS SETTING IT HIGH. THIS IS VERY IMPORTANT BECA– — USE [UBS TRADER] IS QUESTIONING MY (AND OUR) WORTH.”

The complaint alleges that the defendants were aware of the effects that Goodman’s false and fraudulent “SUGGESTED LIBORS” had on submissions by Yen LIBOR panel banks.  For example, on Nov. 20, 2008, Read asked UBS Trader, “you have a really big fix tonight I believe? if Colin sends out 6m at a more realistic level than 1.10 [%] i reckon [the two panel banks] will parrot him, it might mean 6m coming down a bit.” On the following day, Nov. 21, 2008, Goodman moved his suggestion for 6-month Yen LIBOR down by nine basis points.  The two other banks mirrored Goodman’s suggestion, moving their 6-month Yen LIBOR submissions down by nine basis points.

According to allegations in the complaint, Read counseled UBS Trader how to most effectively manipulate Yen LIBOR.  For example, UBS Trader told Read in a July 22, 2009, electronic chat that “11th aug is the big date…i still have lots of 6m fixings till the 10th.”   Read responded to UBS Trader, “if you drop [UBS’s] 6m dramatically on the 11th mate, it will look v fishy… .  I’d be v careful how you play it, there might be cause for a drop as you cross into a new month but a couple of weeks in might get people questioning you.”  UBS Trader replied, “don’t worry will stagger the drops…ie 5bp then 5bp,” and Read told UBS Trader, “ok mate, don’t want you getting into [expletive].”  UBS Trader again assured Read that UBS and two additional panel banks would stagger their drops in coordination, and Read concluded, “great the plan is hatched and sounds sensible.”

A criminal complaint is a formal accusation of criminal conduct, not evidence.  A defendant is presumed innocent unless and until convicted.

The investigation is being conducted by special agents, forensic accountants, and intelligence analysts of the FBI’s Washington Field Office.  The prosecution is being handled by Deputy Chief William Stellmach and Trial Attorney Sandra L. Moser of the Criminal Division’s Fraud Section and Trial Attorneys Eric Schleef and Kristina Srica of the Antitrust Division.  Trial Attorneys Alexander Berlin and Thomas B.W. Hall, Law Clerk Andrew Tyler, and Paralegal Specialist Kevin Sitarski of the Criminal Division’s Fraud Section, along with Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, and former Trial Attorney Luke Marsh have also provided valuable assistance.  The Criminal Division’s Office of International Affairs has provided assistance in this matter as well.

The broader investigation relating to LIBOR and other benchmark rates has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the Department and, along with the U.K. Financial Conduct Authority, has played a major role in the investigation.  The Securities and Exchange Commission has also provided valuable assistance for which the Department is grateful.  The Department also expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation, and the Department is grateful for their cooperation and assistance as well.

Finally, the Department acknowledges ICAP’s continuing cooperation in the Department’s ongoing investigation.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

Panasonic Executive Indicted for Role in Fixing Prices on Automobile Parts Sold to Toyota to Be Installed in U.S. Cars

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A Detroit federal grand jury returned an indictment against a Panasonic Automotive Systems Corporation executive for his role in an international conspiracy to fix prices of switches and steering angle sensors sold to Toyota and installed in U.S. cars, the Department of Justice announced today.

The indictment, filed today in U.S. District Court for the Eastern District of Michigan, in Detroit, charges that Shinichi Kotani, a Japanese national, participated 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, switches and steering angle sensors sold to Toyota Motor Corporation and Toyota Motor Engineering & Manufacturing North America Inc. for installation in vehicles manufactured and sold in the United States and elsewhere.   Kotani is the Director of Global Automotive Marketing and Sales at Panasonic.

Panasonic is an Osaka, Japan-based manufacturer of automotive parts, including steering wheel switches, turn switches, wiper switches, combination switches, and steering angle sensors  .  Panasonic pleaded guilty in August 2013, to its role in the conspiracy and was sentenced to pay a $45.8 million criminal fine.

The indictment alleges, among other things, that from at least as early as January 2004 until at least February 2010, Kotani and his co-conspirators attended meetings to reach collusive agreements to rig bids, allocate the supply and fix the prices of switches and steering angle sensors sold to Toyota.  The indictment alleges that Kotani and his co-conspirators had further communications to monitor and enforce the collusive agreement.

“The Antitrust Division remains vigilant in its ongoing efforts to hold executives accountable when they engage in anticompetitive conduct that harms American consumers,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “As a result of the Antitrust Division’s ongoing investigation into bid rigging and price fixing in the auto parts industry, 19 executives have been charged.”

“I am proud of the hard work done by the FBI agents and the Department of Justice attorneys who worked on this case,” said John Robert Shoup, Acting Special Agent in Charge, FBI Detroit Division.  “The global resources of the FBI are always ready to respond when these complex financial conspiracies threaten our national economy.”

Kotani 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.
Including Kotani, 11 companies and 19 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry.  To date, more than $874 million in criminal fines have been imposed and 14 individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each.  One other executive has agreed to serve time in prison and is scheduled to be sentenced on Sept. 25, 2013.

The charges are 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 each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.