Commercial Litigation Update

• Several areas of federal criminal prosecution, including health care fraud, have been pulled under the umbrella of the new National Fraud Enforcement Division (“NFED”) of the Department of Justice (“DOJ”), with the stated goal of “rapidly and substantially” increasing resources and creating a robust litigating division.
• DOJ is centralizing enforcement priorities by deputizing local U.S. Attorney’s Offices, and encouraging state and local governmental fraud-fighting authorities to align with the NFED.
• Priority areas of the NFED are yet to be announced, although we expect them to align with the priorities targeted by the Trump Administration in its other enforcement capacities, including “illegal” DEI, weaponization, and others.

In a rebuke of the Department of Justice, the Third Circuit recently overturned money laundering conspiracy convictions for a reverse distributor pharmaceutical company, Devos Ltd., and two of its former executives, CEO Dean Volkes and CFO Donna Fallon. The Third Circuit’s opinion, United States v. Fallon, affirmed other convictions against the company and individuals but ordered a resentencing and a recalculation of the sums subject to forfeiture.

Last week, FINRA published its 2022 Report on its Examination and Risk Monitoring Program (the “Report”), identifying key areas of focus for broker-dealer exams this year. The Report contains many of the same areas of focus as last year’s report, including anti-money laundering, cybersecurity, Reg BI and Form CRS, communications with the public, best execution and segregation of customer funds. Although the Report again identifies these general areas, it identifies new concerns and recent examination findings in those areas. In an effort to be user friendly, the Report highlights that new content in bold and identifies new areas for 2022. A key takeaway from the Report is the continued challenges posed by technology.

Our colleague Lauren Petrin of Epstein Becker Green has a new post on Health Law Advisor that will be of interest to our readers:  "DOJ's Recent Telehealth Enforcement Action Highlights Increased Abuse of COVID-19 Waivers."

The following is an excerpt:

On May 26, 2021, the Department of Justice (“DOJ”) announced a coordinated law enforcement action against 14 telehealth executives, physicians, marketers, and healthcare business owners for their alleged fraudulent COVID-19 related Medicare claims resulting in over $143 million in false billing.[1] This coordinated ...

Over the past 15 years, chief compliance officers (“CCOs”) for financial services firms have come under increased scrutiny as the Securities and Exchange Commission (“SEC”) and Financial Industry Regulatory Authority (“FINRA”) have brought more frequent enforcement actions seeking to hold CCOs personally liable. CCOs understandably have been concerned about this trend and financial service firms have focused on the chilling effect that the enforcement actions may have on the vital role CCOs play in their organizations and the quality of the COO applicant pool.