White Collar Crime Resource Guide: Statute of Limitations

Grand Jury Target

Some issues in white collar criminal defense arise over and over. I’ll periodically post Resource Guides to cover those issues. Feel free to suggest other Resource Guide topics in the comments.

Click here for a printable version of this statute of limitations Resource Guide.

Default Statute of Limitations

Generally, there is a 5-year statute of limitations for federal criminal matters. 18 U.S.C. § 3282.

Longer Statutes of Limitations

Although five years is the default statute of limitations, many federal crimes have a longer period.

Capital offenses, as an extreme example, have a limitation period that never expires. If a federal crime is punishable by death, the government can bring an indictment on that crime at any time after the crime has been committed. 18 U.S.C. 3281.

Congress has specifically extended the statute of limitations for a number of white-collar crimes.

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Howrey: Antitrust firm’s bankruptcy update – unsecured creditors unlikely to see $$

Understanding the current state of affairs & next steps in the Howrey bankruptcy

The estate of the venerable – and since March 15, 2011 defunct and bankrupt – global antitrust law firm Howrey LLP will likely not be paying out most, if any, of its unsecured creditors.

According to sources familiar with the current state of the bankruptcy proceedings – including the value of settlements to-date, claims made, and so on – the estate’s primary secured creditor, Citibank, is owed around $700,000.  General unsecured claims constitute the bulk of outstanding debt, amounting to about $94.5 million.  Then there are the administrative & priority claims, which technically lie in a gray zone between secured and unsecured claims: “Priority unsecured claims are claims that are not secured by collateral but that have priority over other debts under federal law. These debts have priority typically for public policy reasons — that is, the well-being of the public depends upon these debts being paid.” (Source.) The priority claims are $15 million.

The administrative claims (debts incurred, with court approval, after the March 2011 bankruptcy filing, including items such as  costs of preserving the estate, wages, salaries, court costs, lawyers’ fees, accountants’ fees, trustees’ expenses, etc.) amount to circa $11.3 million.

Prior to any distribution being made to creditors, the administrator will attempt to make further collections of estate assets and to resolve certain creditor claims.

A new status report should be issued by the trustee soon.  There are also public bankruptcy filings that may be consulted by anyone interested.

European Union DG COMP report for FY 2013

The European Commission just published its 2013 competition policy report, commending its own initiatives and their effect on the internal market.

Spoiler alert: according to the horse’s own mouth, the Commission has found that its competition-law accomplishments (cartels/antitrust enforcement, merger control, the EU-specific notion of state aid, etc.) were stellar.  The EU internal market is now — 10 years into the EC’s antitrust regulation no. 1/2002 — a model of competitiveness, according to the Report, available here in PDF.

The Report takes a slightly different tack from prior years, focussing more on IP issues (FRAND, SEPs, yet still no mention of Non-practicing Entities (NPEs)/patent trolls).  It also revels in legislative “milestones,” both historical and current:

2013 saw two important milestones for EU competition policy. Firstly, Regulation 1/2003, when adopted, ushered in a new era in the enforcement of EU antitrust rules and has now, a decade later, led to a stocktaking and reflection for further improvements. Secondly, on 11 June, the Commission adopted a Proposal for a Directive on antitrust damages actions – a long-awaited measure by stakeholders and a policy priority for the current Commission.

U.S. update: FTC’s aggressive scrutiny of generic pharma deals

4-to-3 deals raise level of FTC scrutiny in generic pharma sector

In what should be of interest to pharmaceutical companies’ deal teams and in-house counsel looking for strategic expansion opportunities in the U.S., the Federal Trade Commission has shown a recent tendency of conducting rather meticulous merger reviews in the generic pharma sector, especially where the number of competitors is reduced from 3-to-2 or, occasionally, even in a 4-to-3 deal.

According to the FTC’s analysis (PDF) of the $640 million acquisition by Akorn Enterprises, Inc. (a “niche generic pharmaceutical company engaged in the development, manufacture and marketing of multi-source and branded pharmaceutical products in the areas of ophthalmology, antidotes, anti-infectives, and controlled substances for pain management and anesthesia”) of fellow generic pharmaceutical company Hi-Tech Pharmacal Co., the specialized expertise necessary to produce the generic products at issue (eye drops and creams) required a lengthy development process, thus yielding fewer competitors and potential entrants and, overall, increasing barriers to entry.  The agency also relied on customer impact statements (who pointed out that the merging parties’ separate existence allowed them to play one off against the other and obtain lower prices as a result).  The FTC concluded that generic pharmaceuticals markets are “commodity markets in which the number of generic suppliers has a direct impact on pricing,” and “[i]n generic pharmaceuticals markets, price is heavily influenced by the number of participants with sufficient supply.”  As a result of its Akorn/Hi-Tech investigation, the FTC ordered the parties to divest five of their products, four commercialized and one under development, which will be sold to competitor and Actavis subsidiary Watson Laboratories, even though in two of the overlapping product areas, the number of competitors would only be reduced from 4 to 3.

In conclusion, even relatively low market shares around or below one-third of the overall market do not protect the parties from scrutiny, if the number of competitors is sufficiently reduced – no matter what Commissioner Wright’s dissents may say to the contrary, as the recent Senate confirmation of Terrell McSweeny as 5th Commissioner (and 3rd Democrat) only further amplifies.

FTC Commissioner McSweeny

 

EU Parliament votes in favour of private antitrust damages initiative

The European Parliament gave its green light to the Commission private-damages Directive today:

Brussels, 17 April 2014

Antitrust: Commission welcomes Parliament vote to facilitate damages claims by victims of antitrust violations

The European Parliament has approved a proposal for a Directive which will help citizens and companies claim damages if they are victims of infringements of the EU antitrust rules, such as cartels and abuses of dominant market positions. The Directive is based on a proposal by the Commission of June 2013 (see IP/13/525 and MEMO/13/531), and aims to remove a number of practical difficulties which victims frequently face when they try to obtain compensation for the harm they have suffered. In particular, it will give victims easier access to evidence they need to prove the damage and more time to make their claims. At the same time it ensures that the effectiveness of the tools used by competition authorities to enforce antitrust rules, in particular leniency and settlement programmes, is preserved. The proposal is now sent to the EU Council of Ministers for final approval. See also MEMO/14/310.

Commission VicePresident in charge of competition policy Joaquín Almunia said, “The vote by the European Parliament is great news for European citizens and businesses harmed by antitrust violations. The Directive will help to make the right to full compensation a reality in the EU, by removing the practical obstacles that victims face today. When the Directive is adopted and implemented, obtaining redress will become easier for them, especially after a competition authority has found and sanctioned an infringement.”

The EU Court of Justice has recognised the right for victims of antitrust infringements to be compensated for the harm suffered. However, due to national procedural obstacles and legal uncertainty, only few victims actually obtain compensation. Moreover, national rules are widely diverging across Europe and, as a result, the chances of victims to obtain compensation greatly depend on which Member State they happen to live in. The Directive aims to remove these obstacles. Main improvements include:

  • National courts can order companies to disclose evidence when victims claim compensation. The courts will ensure that such disclosure orders are proportionate and that confidential information is duly protected.
  • A final decision of a national competition authority finding an infringement will automatically constitute proof before courts of the same Member State in which the infringement occurred.
  • Victims will have at least 1 year to claim damages once an infringement decision by a competition authority has become final.
  • If an infringement has caused price increases and these have been “passed on” along the distribution chain, those who suffered the harm in the end will be the ones entitled to claim compensation.
  • Consensual settlements between victims and infringing companies will be made easier by clarifying their interplay with court actions. This will allow a faster and less costly resolution of disputes.

Private damages actions before courts and public enforcement of antitrust rules by competition authorities (whether the Commission or national authorities) are complementary tools. Through the Directive they will reinforce each other, on the one hand to achievefull compensation for victims (including lost profits and interest) and, on the other, to enhance the key role of competition authorities in investigating and sanctioning infringements, thus achieving deterrence. In particular, cooperation between companies and competition authorities under so-called “leniency” programmes plays a key role in the detection and sanctioning of infringements of competition rules. Without such cooperation, many infringements would never be discovered in the first place, and in many cases, it is therefore the successful enforcement of competition rules by a public authority that will enable victims to subsequently seek and obtain compensation. As a result, the Directive contains a number of safeguards to ensure that facilitating damages actions does not diminish the incentives for companies to cooperate with competition authorities (see MEMO/14/310).

Next Steps

Today’s plenary vote in first reading was the European Parliament’s final step in the procedure. Approval by the Council will complete the legislative procedure. Once the Directive has been officially adopted, Member States will have two years to implement the provisions in their legal systems.

The full text of the Directive is available here:

http://ec.europa.eu/competition/antitrust/actionsdamages/documents.html

Background

In June 2013, the Commission submitted its proposal to the European Parliament and the Council (see IP/13/525 and MEMO/13/531). After both co-legislators discussed the proposal and suggested amendments, informal meetings between the three institutions (so-called trilogues) were launched in February to achieve a compromise text. Representatives of Member States’ governments agreed to the final compromise text at the end of March.

 

Price-fixers beware: U.S. DOJ scores first-ever pure antitrust-based extradition from E.U.

From DOJ: First-Ever Pure Antitrust Extradition

In what may well affect African and other international price-fixers going forward, the spectre of U.S. extradition for criminal antitrust charges has been reinforced by the recent successful DOJ extradition request in the “Marine Hose” cartel.  An Italian national was extradited from Germany to face bid-rigging charges.

“First-ever”?! Some readers may recall the carbon products cartel and a certain Mr. Ian Norris, the then-Morgan Crucible chief executive, who had been extradited from the U.K. to the United States back in 2010.  Yet, that was not a pure antitrust charge, but he was rather extradited on a technicality, if you will, namely the “obstruction of justice” charge, given the lack of reciprocal or dual criminality of the underlying price-fixing offense in the two countries at the time the competition offense had been committed in the early 1990s.

The Marine Hose cartel extradition is different: In this case, the DOJ succeeded, for the first time ever, in securing an extradition solely on a competition-law offense being charged.

What follows is the DOJ press release text:

WASHINGTON — Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices and allocating market shares for sales of marine hose sold in the United States and elsewhere, the Department of Justice announced today. This marks the first successfully litigated extradition on an antitrust charge.

Pisciotti, a former executive with Parker ITR Srl, a marine hose manufacturer headquartered in Veniano, Italy, was arrested in Germany on June 17, 2013. He arrived in the Southern District of Florida, in Miami, yesterday and is scheduled to make his initial appearance today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, at 11:00 a.m. EDT.

“This first of its kind extradition on an antitrust charge allows the department to bring an alleged price fixer to the United States to face charges of participating in a worldwide conspiracy,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “This marks a significant step forward in our ongoing efforts to work with our international antitrust colleagues to ensure that those who seek to subvert U.S. law are brought to justice.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to a one-count felony indictment filed under seal on Aug. 26, 2010, and ordered unsealed on Aug. 5, 2013, in U.S. District Court in the Southern District of Florida, Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies. As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. That coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy. The department said the conspiracy began at least as early as 1999 and continued until at least May 2007. Pisciotti was charged with joining and participating in the conspiracy from at least as early as 1999 until at least November 2006.

Pisciotti is charged with violating 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.

As a result of the department’s ongoing marine hose investigation, five companies, including Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd, of the United Kingdom, and nine individuals have pleaded guilty.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation. The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter. The Criminal Division’s Office of International Affairs provided assistance.

How a BRICS country defeats EU Commission & the rule of law

A parallel post from sister blog AfricanAntitrust.com:

South Stream pipeline

South Stream pipeline

According to various reports, the European Commission (specifically, its top management in the energy DG [Oettinger] and its president [Barroso], as well as others) has caved to the Russian energy powerhouse GAZPROM.

How does this relate to competition?  The pending antitrust investigation by Mr. Almunia, already hamstrung, is clearly hampered by this development from its adjacent energy DG. One Commissioner has caved, and another (a lame duck by now, who has already announced his retirement from the entire realm of politics) will not even bring a conclusion to his DG’s investigation into GAZPROM. Putin and his friends at the gas giant have (now successfully) challenged the European energy and competition ministers, effectively saying to them: “We will break your laws, and there isn’t a thing you can do about it.”

This is the story of how a BRICS country state-owned enterprise (or at least de facto SOE) is fully capable of defeating the “rule of law” that European proponents of the superiority of Western legal systems often tout. Is EU law hard and fast? Unbreakable? Strictly enforced? Without exceptions, for special friends (or powerful foes)?

Banana Republic Brussels

The answer to the rhetorical questions posed above is – quite clearly as of today at least – a resounding “no“:

The EU has caved. EU laws can be broken. Without any consequences.

Until recently, the GAZPROM contracts for its “South Stream” Project violated EU law, according to prior statements of the relevant EU Commissioners and their spokespeople. The main concerns (here from the energy perspective, not the competition issues) were:

  • ownership unbundling rules violated by Gazprom being both a producer and a supplier of gas that owns simultaneously production capacity and its own transmission network
  • 3d-party non-discriminatory access endangered by Gazprom being exclusive shipper
  • South Stream’s pricing structure violates EU energy tariff rules

Yet, after some diplomatic prodding and economic threats, the Commission now has changed its tune and is literally giving GAZPROM a “get-out-of-jail-free card.”

“Gunther Oettinger, the European Commissioner for Energy, told Vedomosti newspaper that Moscow and Brussels will find a solution to honor previous intergovernmental agreements Gazprom has made with European transit countries.” (Source: Vedomosti newspaper, as quoted by rt.com)

Contrast this with what Mr. Oettinger said back in 2011 (note that he also (1) called South Stream a “phantom project” and essentially didn’t believe the Russians would go ahead with its construction in 2012, and (2) was quite clear in his understanding of how market participants operate: “money talks,” baby!):

I understand that certain EU Member States entered into bilateral agreements with the Russian Federation which may partially contradict these principles. If this is true, these Member States will nevertheless have to apply the internal market rules and they are under an obligation to bring their IGAs in line with the EU legislation. (Source: His own speech)

Even more tellingly, contrast the green light now given to the project with Mr. Oettinger’s spokespersons’ statements from December 2013 and even August 2013:

“The Commission has looked into these intergovernmental agreements and came to the conclusion that none of the agreements is in compliance with EU law,” Borchardt said.

“That is the reason why we have told these states that they are under the obligation, either coming from the EU treaties, or from the Energy Community treaty, that they have to ask for re-negotiation with Russia, to bring the intergovernmental agreements in line with EU law,” he added. (Source: EurActiv)

Lesson (not) learned

How to wrap up a piece that essentially sounds the death knell of the rule of law in the EU, especially in Brussels? The key take-away here may be this:

Very simply put: any BRICS or BRICS-like country negotiator dealing with an official EU delegate as his or her counterparty should keep the “GAZPROM incident” in mind when faced with a lecture on the superiority and objectivity of EU law over whichever domestic judicial system may be at issue.

Revamped Belgian Competition Authority: A more powerful national enforcer?

Whether or not this month’s revamping of the Belgian Competition Authority will create a more effective enforcer remains to be seen.

From personal experience, Belgian bureaucrats are neither the most efficient, nor the most diligent, as government employees go… And the national authority pales in comparison with the EU’s DG COMP, of course, which is housed only a few kilometers away in the European Quarter of Brussels, yet one of the leading antitrust enforcers worldwide…

Yet, the changes to the watchdog and its powers include several important structural elements that may herald a more streamlined process: for instance, removal from the oversight of the economic ministry, the elimination of the external tribunal that used to have the final say in the agency’s decisions, as well as a new settlement procedure and a potentially shorter investigative process.  In addition, individual financial (not criminal, though) liability may be incurred by participants in hardcore restrictive practices, such as price-fixing cartels or market allocation.

From this month onward, the internal Competition College will not only hear the case but also make a final decision, after the Authority’s separate investigative team has concluded its investigation and made its recommendation for how to dispose of the case.  The NCA body (“Autorité belge de la concurrence” or “Belgische Mededingingsautoriteit“) will, of course, remain on the innately inefficient side of things, as it will have to be multi-lingual, accounting for proceedings to be held French, Flemish/Dutch, and German.

On the personnel front, Jacques Steenbergen will remain the president and Alexis Walckiers the chief economist.  The current in-house counsel and auditor at Dexia bank, Veronique Thirion, will be appointed the NCA’s general prosecutor.

On the wrong side of the tracks: German BKartA Cartel Office fines rail makers anew to tune of EUR 97m

The Bundeskartellamt (German Federal Cartel Office) has determined once again that German rail producers have been on the wrong side of the tracks & spent too much time in a bad neighbourhood, so to speak.

This time around, the eight players in the rail business were fined for a separate, but related, heavy-industry cartel that was targeted at short-haul local/communal German rail customers.

In the first round of the massive investigation — initiated by the leniency application of cartelist Voestalpine — the target had been the federal Deutsche Bahn.  In that case, the FCO imposed total fines of EUR 134.5 million against 4 participants in the illegal agreements.

What’s the total FCO cost of this train ticket?  Almost 1/4 billion Euros, if you include both cartels.  And that’s just the BKartA fines.  Let’s see where the private damages litigation will head, with Deutsche Bahn leading the pack in all likelihood.

Huh? German merger law changes go into effect “unnoticed” by Federal Cartel Office?

Either the Bundeskartellamt is missing something, or yours truly is — …

…but why is the 8. amendment to the German antitrust statute (allegedly in effect since 1 July 2013) not mentioned anywhere on the BKarta/FCO’s web site? A reference to the revised law is nowhere to be found.

For starters, let’s just take one example from the German legislature’s amendments (the “8. GWB-Novelle”): the change-over from the “creation or strengthening of a dominant position” test in German merger control to the common “significant impediment to effective competition” (SIEC) test used by the European Commission since 2004. Arguably, this change is not quite substantive in nature, and the former is still used as a prime example (“Regelbeispiel”) of the latter, but the change is — sorry to say — in the law, and the FCO doesn’t even mention it?! Not even in its “news” archive? Nor does it update its online reprint of the governing law?

If you look at the FCO’s web page dealing directly with its merger control regime, you will see no reference whatsoever to the new SIEC test. Equally (or more) troubling is that its related “Merkblatt” (roughly, guideline) on merger control is completely out of date, being asterisked with a cute “(wird derzeit überarbeitet)” (“is currently being revised”) note, which has been there for at least a year if not more.

Someone, please tell me that I am wrong and that the Bundeskartellamt actually has things under control. What am I missing here?

(Note: this post is valid as of 10 July…)