Flickr photo via jennifer durban.
Here are three important takeaways from the past week in corporate crime news:
Another corporation has been prosecuted for breaching its leniency agreement with the DOJ. This time it’s NatWest, formerly RBS, a big bank based in the UK with a history of lawbreaking. This is the fifth time that a corporation has been prosecuted for breaching one of these agreements.
A federal judge has overturned the Purdue Pharma settlement because it immunizes Sackler family members from future civil liability. A former DOJ official and a reporter who covered Purdue Pharma for years are calling for the DOJ to appoint a special prosecutor to resume the criminal investigation into the billionaires behind the bankrupt opioid business.
A new Texas Law Review article – co-authored by a legal scholar who is now a Biden official in the Treasury Department – finds corporate crime and recidivism are on the rise and recommends policy reforms to strengthen enforcement agencies’ ability to hold executives accountable.
Big Business Blotter news roundup:
FRAUD / FINANCE
The Securities and Exchange Commission today announced charges against J.P. Morgan Securities LLC (JPMS), a broker-dealer subsidiary of JPMorgan Chase & Co., for widespread and longstanding failures by the firm and its employees to maintain and preserve written communications. JPMS admitted the facts set forth in the SEC’s order and acknowledged that its conduct violated the federal securities laws, and agreed to pay a $125 million penalty and implement robust improvements to its compliance policies and procedures to settle the matter.
Nikola Corporation to Pay $125 Million to Resolve Fraud Charges - SEC
The Securities and Exchange Commission today announced that Nikola Corporation, a publicly traded company created through a special purpose acquisition company transaction, has agreed to pay $125 million to settle charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects. The settlement follows the SEC’s litigated action filed earlier this year against Trevor Milton, the company’s founder and former Chief Executive Officer and Executive Chairman.
CFPB Report Highlights Supervisory Findings of Wide-Ranging Violations of Law in 2021 - CFPB
“Today’s report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic," said CFPB Director Rohit Chopra. "We will continue to supervise firms to halt harmful practices before they become widespread."
WORKER SAFETY
The lawsuit, filed in the Graves Circuit Court in Kentucky by Elijah Johnson on behalf of 109 other "similarly situated employees," alleges that the candle factory required them to continue working, even with the threat of an expected dangerous tornado. One employee claimed she was threatened with disciplinary action if she went home early on the night tornadoes were expected.
Lawmakers demand answers from Amazon after warehouse deaths - The Verge
A group of progressive Democratic lawmakers, led by Sen. Elizabeth Warren (D-MA) and Reps. Cori Bush and Alexandria Ocasio-Cortez, is demanding answers from Amazon after six people were killed in a tornado strike at one of its warehouses in Illinois. [...] A separate letter, signed by Sens. Marco Rubio (R-FL) and Sherrod Brown (D-OH), was sent Monday afternoon to labor secretary Martin Walsh, asking him to use the powers of his department to “ensure that Amazon is treating its workers fairly and with dignity.” The Occupational Safety and Health Agency (OSHA), a subsidiary of the department of labor, launched an investigation into the warehouse co on Friday.
BOEING
Boeing 737 Max Families Seek to Reopen Deferred Prosecution Agreement - Corporate Crime Reporter
The victims’ families are seeking relief that includes an order for the government to confer with them and provide evidence related to Boeing’s crimes, require Boeing to appear for a public arraignment where the victims can be heard, and for the court to exercise its supervisory powers over the deferred prosecution agreement which may include rescinding the immunity provision.
Prosecutors say Italian firm produced 4,000 flawed parts for Boeing - Reuters
An Italian supplier at the centre of recent industrial snags on the 787 Dreamliner airplane produced more than 4,000 non-compliant parts destined for Boeing Co over five years, a preliminary report from Italian prosecutors shows. Initial results of an investigation launched earlier this year suggest that Manufacturing Process Specification (MPS), or its now-bankrupt predecessor company Processi Speciali, produced flawed parts between 2016 and 2021, according to the document.
ANTITRUST
The lawsuit alleges that Biglari Holdings violated the pre-transaction notification and waiting period requirements of the Hart-Scott-Rodino Act of 1976 (HSR Act) for two acquisitions of Cracker Barrel Old Country Store Inc. voting securities made on March 16, 2020. At the same time, the department filed a proposed settlement, subject to approval by the court, under which Biglari Holdings has agreed to pay a $1,374,190 civil penalty to resolve the lawsuit.
Judge Declares Mistrial In Chicken Antitrust Case - AG Web
Jurors told U.S. District Judge Philip Brimmer on Thursday they were deadlocked after a seven-week trial of men who had worked for U.S. chicken producers, including Tyson Foods Inc., Pilgrim’s Pride Corp. and Perdue Farms LLC. They failed to reach a verdict after almost four days of deliberations. [...] The Justice Department had brought the suit and the trial was the first after a years-long investigation into the $95 billion chicken market.
POLLUTERS
California Attorney General Rob Bonta today, joined by the California Department of Toxic Substances Control (DTSC) and twelve district attorneys, filed a statewide lawsuit against Walmart for the illegal disposal of hazardous waste. Over the past six years, Walmart is alleged to have violated California’s environmental laws and regulations by disposing of hazardous waste products at local landfills that are not equipped or authorized to receive this type of waste. The waste includes alkaline and lithium batteries, insect killer sprays and other pesticides, aerosol cans, toxic cleaning supplies, electronic waste, latex paints, and LED lightbulbs, as well as confidential customer information. According to results from Walmart’s own inspections, the California Department of Justice estimates the company unlawfully disposes of approximately 159,600 pounds – or more than one million items – of hazardous waste in California each year.
Under the proposed consent decree, Taylor Energy will transfer to the Department of the Interior (DOI) a $432 million trust fund dedicated to plugging the subsea oil wells, permanently decommissioning the facility, and remediating contaminated soil. The consent decree further requires Taylor Energy to pay over $43 million for civil penalties, removal costs and natural resource damages (NRD). The State of Louisiana is a co-trustee for natural resources impacted by the spill and the NRD money is a joint recovery by the federal and state trustees.
A federal grand jury today accused three companies with illegally discharging oil during a pipeline break in early October by acting negligently in at least six ways, including failing to properly respond to eight separate leak alarms over the span of more than 13 hours and improperly restarting the pipeline that had been shut down following the leak alarms. An indictment filed this afternoon charges the companies that own and operate the 17-mile-long San Pedro Bay Pipeline with one misdemeanor count of negligent discharge of oil. The charged defendants are Amplify Energy Corp.; Beta Operating Co. LLC (a wholly owned subsidiary of Amplify doing business as Beta Offshore); and San Pedro Bay Pipeline Co. (a wholly owned subsidiary of Amplify).
Alcoa Corporation and Howmet Aerospace, successors to Alcoa Incorporated, and the City of East St. Louis, Illinois, will clean up hazardous waste disposal sites surrounding Alcoa’s former aluminum manufacturing plant in East St. Louis to resolve federal liability. The settlement will require the companies to clean up radium, arsenic, chromium, lead and other hazardous substances detected in soils at an estimated cost of $4.1 million and reimburse all future costs incurred by the United States in overseeing the cleanup. The complaint filed simultaneously with the proposed consent decree alleges that defendants are liable for the cleanup of hazardous wastes generated by and disposed of on and around the site of the Aluminum Company of America’s aluminum manufacturing and production plant that operated from 1903 until 1957.