DOJ Announces Updated White-Collar Enforcement Priorities and Revised Policies

DOJ Announces Updated White-Collar Enforcement Priorities and Revised Policies

Earlier this week, the Criminal Division of the US Department of Justice (DOJ) introduced a new white-collar enforcement plan, which sets forth its corporate enforcement priorities and announces the introduction of several updated policies. In announcing the plan, entitled “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime,” Matthew Galeotti, head of the DOJ’s Criminal Division, stated it “will focus the Criminal Division’s efforts on the most egregious white-collar crime to make our nation safer and more prosperous, vindicate victims’ rights, maximize the use of the Department’s resources, and provide fairness and transparency to individuals and companies alike.”

The plan identifies the following 10 “high-impact areas” on which the Criminal Division will prioritize its white-collar investigative and prosecutorial efforts:

1. Waste, fraud, and abuse, including health care fraud and federal program and procurement fraud.
2. Trade and customs fraud, including tariff evasion.
3. Market manipulation schemes.
4. Investment fraud, including Ponzi schemes, elder fraud, servicemember fraud, and consumer fraud.
5. Conduct that threatens the national security.
6. Material support by corporations to foreign terrorist organizations, including recently designated cartels and transnational criminal organizations (TCOs).
7. Complex money laundering.
8. Violations of the Controlled Substances Act and the Federal Food, Drug, and Cosmetic Act.
9. Bribery and associated money laundering that impact US national interests, undermine US national security, harm the competitiveness of US businesses, and enrich foreign corrupt officials.
10. Crimes related to digital assets, including investor and consumer fraud, and using digital assets in furtherance of other criminal conduct.

The announcement of the plan was also accompanied by revisions to several DOJ policies implemented during the prior Administration, including the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), the DOJ’s process for selecting corporate monitors, and the Corporate Whistleblower Awards Pilot Program.

Under the updated CEP, the Criminal Division will decline to prosecute a company where, in the absence of aggravating circumstances, it timely self-reported misconduct, fully cooperated, and timely and appropriately remediated. For other circumstances, the new policy provides a path to non-prosecution or more lenient criminal resolutions, with a flow chart of possible outcomes designed to promote transparency.

As part of the Criminal Division’s revisions to its monitor selection policy, which follows the termination earlier this year of monitorships imposed in connection with two corporate criminal Foreign Corrupt Practices Act resolutions, the DOJ outlined four factors that prosecutors must consider in order to align the DOJ and monitor goals, and prevent future misconduct. The four factors are (1) the nature and seriousness of the conduct and the risk that it will happen again; (2) the availability of other effective independent government oversight; (3) the efficacy of the company’s compliance program and culture of compliance at the time of resolution; and (4) the maturity of the company’s controls and ability of the company to test and update its compliance program.

Finally, the DOJ announced updates to its Corporate Whistleblower Awards Pilot Program, providing monetary rewards to encourage the public to report misconduct in the following additional areas: procurement and federal program fraud; trade, tariff, and customs fraud; immigration law; and sanctions violations, material support of foreign terrorist organizations, or those that facilitate cartels and TCOs, including money laundering, narcotics, and Controlled Substances Act violations.

Read our alert on this topic here.

Former Health Care CEO Pleads Guilty to Multi-Million Dollar Investment Fraud Scheme

Parmjit Parmar, former CEO of a publicly traded health care services company (referred to in court documents as Company A), pleaded guilty in the US District Court for the District of New Jersey to conspiracy to commit securities fraud. According to court documents, between 2015 and 2017, Parmar and co-conspirators participated in a multi-million-dollar scheme to defraud a private investment firm and others into funding Company A’s transition from a company publicly traded on the London Stock Exchange’s Alternative Investment Market to a private company, and to fund Company A’s acquisition of various operating subsidiaries, some of which did not even exist.

According to the government, Parmar and co-conspirators made material misrepresentations and omissions to grossly inflate Company A’s value, causing investors to put up over $212 million. Parmer and co-conspirators funneled the proceeds through bank accounts they controlled, used this money for purposes that had nothing to do with the purported acquisitions, and fabricated records to make it appear as though the funds came from customers. They also falsified and fabricated bank records of subsidiary entities. The government uncovered the fraudulent scheme in 2017. Company A and its affiliated entities filed for bankruptcy in 2018.

Parmar faces up to five years in prison and a $250,000 fine. Parmar also agreed to forfeit certain properties and the contents of several bank accounts, as well as to pay restitution to victims of his offense.

Read the DOJ’s press release here.

Community Health System and Affiliate Pay $31.5 Million to Resolve FCA Allegations

Community Health System and affiliate Physician Network Advantage Inc. (PNA) entered into a $31.5 million dollar settlement with the US Attorney’s Office for the Eastern District of California to resolve civil False Claims Act (FCA) allegations. As part of the settlement, whistleblower in the qui tam action Michael Terpening will receive approximately $5 million.

According to the government, Community Health and PNA provided financial and other benefits to physicians in the Fresno, California, area to induce them to refer their patients to Community Health facilities for medical services. They also submitted false claims to government health care programs for medical services referred by physicians.

According to the settlement, Community Health formed and funded health care technology company PNA to support Fresno physicians’ adoption of its electronic health records platform. The government further alleged that Community Health and PNA provided financial subsidies to the physicians who used their electronic records platform, including providing expensive meals, liquor, and cigars to referring physicians in a custom-built PNA lounge. Community Health also allegedly disguised payments to physicians as bonuses for participating in clinical integration activities when they were actually rewards for referrals.

The United States alleged that the financial benefits violated the Anti-Kickback Statute (AKS) and created a financial relationship with referring physicians under the physician Self-Referral Law. In connection with the settlement, Community Health entered into a five-year Corporate Integrity Agreement with the US Department of Health and Human Services Office of Inspector General. The Agreement requires Community Health to perform an internal review of processes and implement a risk-assessment to address compliance risks.

Read the DOJ’s press release here.

Praetorian Shield and Two Individuals Settle FCA and Kickback Allegations in Connection With Small Business Contracts

The US Attorney for the District of Maryland announced a $221,000 settlement agreement with Praetorian Shield Inc. and two individuals, Grady and Ranya Baker, resolving civil allegations that they violated the FCA and AKS in connection with obtaining contracts set aside for small businesses. The government said the settlement was based on the company’s and individuals’ financial condition and ability to pay.

Grady Baker was the vice president of Operations at Paragon Systems Inc., a security guard provider to federal buildings. Together with his wife, Ranya Baker, he controlled Praetorian, which purported to be a small business contractor to Paragon.

According to the government, between 2016 to 2023, the Bakers violated the FCA by fraudulently obtaining government small-business contract awards from the US Department of Homeland Security (DHS) for the provision of security services at federal buildings by falsely representing that Praetorian was a Woman-Owned Small Business and a Service-Disabled Veteran Owned Small Business. However, the government alleged that the Bakers and Paragon executives knew that Praetorian was not a small business eligible for such contracts with DHS.

The settlement also resolved allegations that Praetorian and the Bakers paid over $188,000 in kickbacks to Paragon executives and that Ranya Baker received nearly $100,000 in kickbacks from another Paragon subcontractor. This settlement follows the government’s November 2024 settlement of related civil claims against Paragon, for $52 million, as well as other prior settlements with another small business and its joint venture with Paragon.

Read the DOJ’s press release here.