Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Buckley Sandler Continues Expansion With Addition of Andrew W. Schilling, Former Chief of the Civil Division of the U.S. Attorney's Office for the Southern District of New York
BuckleySandler LLP today announced the addition of Andrew W. Schilling, former Chief of the Civil Division of the U.S. Attorney's Office for the Southern District of New York. Mr. Schilling joins as a partner in the firm's New York office. The arrival of Schilling coincides with that of Thomas A. Sporkin, Chief of the Office of Market Intelligence (OMI) at the Securities and Exchange Commission. Mr. Schilling and Mr. Sporkin bring significant expertise to the firm, particularly with respect to federal civil and criminal enforcement and securities investigations, the False Claims Act, Dodd-Frank and other whistleblower qui tam actions.
As Chief of the Civil Division, Mr. Schilling supervised one of the largest Civil Divisions in the country, with 57 Assistant U.S. Attorneys in eight specialized units. In this role, Mr. Schilling established the Office's new Civil Frauds Unit, which investigates and prosecutes complex financial fraud cases, including mortgage fraud and health care fraud cases. Schilling directly supervised several nationally significant financial fraud lawsuits and investigations against major financial institutions and coordinated all parallel civil investigations with the Office's Criminal Division. An experienced trial attorney both in private practice and in his 12 years as an Assistant United States Attorney, Mr. Schilling has tried cases before juries and the bench in civil rights, organized crime, bankruptcy, employment discrimination, First Amendment and official misconduct cases, and represented the United States in more than a dozen appeals before the United States Court of Appeals for the Second Circuit.
"As financial services and other corporate entities continue to grapple with increased scrutiny and regulations, it is important for our clients to have a team with broad experience in defending against complex enforcement and criminal prosecutions working on their behalf," explained BuckleySandler Chairman and Executive Partner, Andrew L. Sandler. "Andrew and Tom have unique, in-depth knowledge and understanding of complex civil, criminal and enforcement matters and our clients will have the added benefit of access to the invaluable insights they both have to offer as former senior leaders in key government enforcement agencies."
"Joining BuckleySandler was a natural choice for me given its nationally recognized and highly regarded government enforcement practice," noted Schilling. "I look forward to joining the firm's New York office and using my 20 years of experience litigating in the federal and state courts of New York to help the firm's financial services and corporate clients navigate through sensitive investigations and complex litigations."
BuckleySandler LLP and eight of its partners have received top rankings in Chambers USA, which ranks leading firms and lawyers in a range of practice areas throughout the United States based on in-depth client and peer research. This year, Chambers USA recognized BuckleySandler as “one of the preeminent legal brands in the consumer finance market,” and ranked it highly in both Financial Services Regulation: Banking (Enforcement & Investigations) and Financial Services Regulation: Consumer Finance (Compliance). Chambers USA provided individual attorney recognition to seven partners in one or more of these Financial Services categories, recognized Andrew L. Sandler as a “Star Individual” in Financial Services Regulation: Consumer Finance (Litigation), and recognized David S. Krakoff in District of Columbia Litigation: White-Collar Crime & Government Investigations.
According to Chambers USA, BuckleySandler is noted for “its impressive enforcement and litigation talent, and represents some of the world's most high-profile financial institutions in a host of enforcement actions.” Chambers further highlights BuckleySandler’s regulatory work by saying “[the firm] was recently commissioned by a number of national banks to produce an exhaustive 50-state survey of all state and federal laws affecting lending businesses.”
“We are pleased that Chambers USA has once again ranked our firm and so many of our partners. This recognition is all the more meaningful because Chambers’ research methodology focuses on peer and client review and thereby validates our commitment to outstanding legal work and client service,” said BuckleySandler Chairman and Executive Partner, Andrew L. Sandler.
Specifically, their Chambers USA designations are as follows:
Financial Services Regulation: Banking (Enforcement & Investigations)
- Firm Ranked Band 2
- Andrew L. Sandler (Band 1)
- Benjamin B. Klubes (Band 3)
Financial Services Regulation: Consumer Finance (Compliance)
- Firm Ranked Band 1
- Jeremiah S. Buckley (Band 1)
- Joseph M. Kolar (Band 1)
- Andrew L. Sandler (Band 1)
- John P. Kromer (Band 3)
- Jeffrey P. Naimon (Band 3)
- Clinton Rockwell (Band U – Up and Coming)
District of Columbia
Litigation: White-Collar Crime & Government Investigations
- David S. Krakoff (Band 2)
Jeremiah S. Buckley is ranked as Band 1 in Financial Services Regulation: Consumer Finance (Compliance). Chambers says Mr. Buckley “is another example of the firm's astonishing bench strength in the mortgage space. He is praised as "a reliable, quality counsel who is straightforward, candid and energetic."
Benjamin B. Klubes is ranked as Band 3 in Financial Services Regulation: Banking (Enforcement & Investigations). Clients say Mr. Klubes is a "very talented litigation and enforcement expert” and "one of the real leaders in this space."
Joseph M. Kolar is ranked as Band 1 in Financial Services Regulation: Consumer Finance (Compliance). Clients say that he “is singled out as one of the leading mortgage banking lawyers in the country, and noted for his strategic advice and encyclopedic knowledge of federal regulations. He assists mortgage lenders, servicers and insurers, and is ‘extraordinarily good at research and analysis.’"
David S. Krakoff is ranked as Band 2 in DC Litigation: White-Collar Crime & Government Investigations. According to Chambers, “clients describe him as ‘a superb lawyer who is very dedicated.’”
John P. Kromer is ranked as Band 3 in Financial Services Regulation: Consumer Finance (Compliance). Clients report that "he is a joy to work with," with one hailing him as "a true expert in the industry."
Jeffrey P. Naimon is ranked as Band 3 in Financial Services Regulation: Consumer Finance (Compliance). Chambers quotes sources as saying Mr. Naimon is "certainly a thought leader" in the mortgage servicing space, with "his finger on the pulse of what is going on in the mortgage industry.”
Clinton R. Rockwell is ranked as “Up and Coming” in Financial Services Regulation: Consumer Finance (Compliance). Sources are quoted as saying, "it is one thing to provide strict legal advice but it is another to provide practical solutions, and [Mr. Rockwell] does a great job of that."
Andrew L. Sandler is ranked as a Band 1 lawyer in Financial Services Regulation: Consumer Finance (Compliance), as a Band 1 lawyer in Financial Services Regulation: Banking (Enforcement & Investigations), and as a “Star Individual” in Financial Services Regulation: Consumer Finance (Litigation). Chambers says that he “has consolidated his position as one of the leading financial services attorneys in the USA. His broad practice covers enforcement, litigation and compliance, with a focus on consumer finance and the mortgage industry. Sources consider him to be ‘probably the best fair lending lawyer in the country.’"
On April 23, the Financial Crimes Enforcement Network (FinCEN) released an update on mortgage loan fraud suspicious activity reports (SARs) for 2011. The report indicates that mortgage fraud SARs increased 31 percent in 2011 compared to 2010, a spike that FinCEN states is directly attributable to mortgage repurchase demands and special filings generated by several institutions. Based on a sample analysis, FinCEN found that in 40 percent of cases resulting in a SAR, the institution turned down the subject’s loan application, short sale request, or debt elimination because of the suspected fraud, indicating improvement in mortgage lending due diligence. Among other things, the report highlights short sales, appraisals, and identity theft as new fraud patterns in 2011 SARs.
On July 28, NCR Corporation, a leading global provider of ATM machines, announced that the SEC had decided not to pursue an enforcement action following an investigation of the company’s FCPA compliance. In 2013, the company disclosed that an anonymous whistleblower had alleged various FCPA and other violations in China, the Middle East (including Syrian sanctions issues), and Africa. The company stated that it had investigated internally and determined the allegations to be without merit. The company then disclosed the matter to the SEC and the DOJ, both of whom requested additional information. The company did not provide an update regarding the status of the DOJ’s inquiries.
On March 29, the Financial Crimes Enforcement Network (FinCEN) announced that it is accepting the new Currency Transaction Report (CTR) and Suspicious Activity Report (SAR) into FinCEN’s BSA E-Filing System. FinCEN issued guidance to assist institutions in filing the new reports and indicated that the new forms will replace the existing forms (legacy reports), but do not create any new obligations or otherwise change existing statutory and regulatory expectations for financial institutions. The new forms are now accepted for electronic filing and their use becomes mandatory on March 31, 2013. Until that date institutions may electronically file either the new reports or the legacy reports. In a separate action FinCEN had already mandated the electronic filing of most reports through the BSA E-Filing System beginning on July 1, 2012. FinCEN has recommended that institutions file electronically before that date, but until then they may continue to file via paper or by use of the legacy report form. The new CTR and SAR report forms may only be submitted electronically.
On March 30, FinCEN issued advisory FIN-2012-A005 to assist financial institutions with identifying tax refund fraud and filing SARs. The Advisory lists multiple “red flag” activities that could indicate tax refund fraud. When completing SARs on suspected tax refund fraud, financial institutions should use the term “tax refund fraud” in the narrative section of the SAR and provide a detailed description of the activity.
On July 14, the SEC moved for leave to file an Amended Complaint in its FCPA enforcement action against three former executives of Magyar Telekom, a Hungarian telecommunications company. The Amended Complaint dropped allegations that the defendants bribed officials in Montenegro, while maintaining allegations of bribery in Macedonia.
While this sort of pre-trial narrowing of the allegations is not unusual, the development is still notable for those willing to litigate FCPA cases against the government. Magyar previously settled with both the SEC and the Department of Justice based on both sets of bribery allegations, even admitting to a detailed statement of facts regarding the alleged bribes in Montenegro in its Deferred Prosecution Agreement. Yet those allegations evidently did not stand up to scrutiny in contested litigation against the individual defendants. As with the SEC’s recent enforcement action against two Noble Corp. executives (one of whom was represented by BuckleySandler LLP), it is often the case that individual defendants may have more success defending FCPA charges even where related corporate entities have already admitted or settled those same charges.
On May 7, the DOJ charged two employees of a U.S. broker-dealer and a senior official in Venezuela’s state economic development bank for their alleged roles in what the DOJ describes as a “massive international bribery scheme.” According to an unsealed criminal complaint, the DOJ accuses the broker-dealer employees and the foreign official of violating the FCPA by conspiring to pay $5 million in bribes to the foreign official in exchange for her directing the economic development bank’s trading business to the broker-dealer, which yielded millions more in mark-ups and mark-downs for the broker-dealer. The government alleges that commissions paid on the directed trades were split with the foreign official through monthly kickbacks and that some of the trades executed for the bank had no discernible business purpose. To further conceal the scheme, the government claims, the kickbacks often were paid using intermediary corporations and offshore accounts, the assets of which the government is pursuing through a separate civil forfeiture action. On the same day, the SEC announced a parallel civil action against the two broker-dealer employees and two other individuals who allegedly participated in and profited from the scheme. The investigations and subsequent criminal and civil charges stemmed from a routine periodic SEC examination of the broker-dealer. The DOJ warned others in the financial services industry, particularly brokers, about engaging in similar activities, and the SEC’s conduct in this case suggests its examiners are focused on conduct that potentially violates the FCPA.
- United States of America v. Clarke et al. Complaint
- Securities and Exchange Commission v. Clarke et al. Complaint
On March 2, the Financial Crimes Enforcement Network (FinCEN) advised financial institutions and their lawyers that the contents of Suspicious Activity Reports (SARs) must remain confidential. Private parties increasingly are attempting to obtain SARs in civil litigation and other matters, but financial institutions, as well as their current and former directors, officers, employees, agents, and contractors are prohibited from disclosing SARs or any information that would reveal the existence of a SAR. FinCEN reminded covered financial institutions and individuals that unauthorized disclosure could subject them to civil and criminal penalties.
On February 29, the Financial Crimes Enforcement Network (FinCEN) released an advance notice of proposed rulemaking (ANPRM) to obtain stakeholder input regarding a proposed customer due diligence regulation that would require covered financial institutions to institute defined programs to identify the real or beneficial owners of customer accounts. The proposed regulation is designed to enhance federal anti-money laundering and counterterrorism efforts. According to FinCEN, financial institutions are not addressing beneficial ownership in a uniform and consistent manner. As a result, FinCEN is beginning a regulatory process that could eventually require banks, broker-dealers, mutual funds, futures commission merchants, and introducing brokers in commodities to develop customer due diligence programs. The programs would include requirements to (i) conduct initial due diligence and verify customer identities at the time of account opening, (ii) understand the purpose and intended nature of the account, (iii) identify and verify all customers’ beneficial owners, and (iv) monitor the customer relationship and conduct additional due diligence as needed. In the ANPRM, FinCEN states that it will consider extending such a program in the future to cover all financial institutions currently subject to FinCEN’s anti-money laundering requirements, including casinos, money services businesses, nonbank mortgage lender and originators, and others. Consequently, in addition to input from the types of institutions that would be subject to an initial rulemaking, FinCEN is specifically requesting comments from these additional institutions that may later become subject to the rules. FinCEN is accepting comments on the ANPRM for sixty days from the date of publication in the Federal Register.
On the same day, FinCEN published a final rule mandating electronic filing of nearly all Bank Secrecy Act filings. The rule takes effect July 1, 2012. Although it largely mirrors a September 2011 proposal, it was modified in response to comments received, including a change to provide certain limited hardship exemptions for institutions that cannot begin electronic filing on time.
Today, U.S. federal prosecutors abandoned one of the highest profile Foreign Corrupt Practices Act cases ever brought by the DOJ. Judge Richard Leon of the U.S. District Court for the District of Columbia granted the government’s motion to dismiss foreign bribery charges against all remaining defendants facing charges from an FBI sting operation. The defendants were charged with paying bribes to a purported government official from the country of Gabon in connection with contracts to supply Gabon with military and law enforcement products. The government sting operation resulted in the arrests of twenty-two individuals at an industry trade show in Las Vegas in 2010.
BuckleySandler represented John Mushriqui in the case, and in January successfully obtained a mistrial for Mr. Mushriqui following a nearly four-month jury trial after a federal jury failed to reach a unanimous verdict for Mr. Mushriqui and two other defendants, including his sister Jeana Mushriqui.
The mistrial ruling followed the same jury’s acquittal of two other defendants, Judge Leon’s acquittal of another defendant in December 2011, and a July 2011 mistrial involving four other defendants involved in the sting. Between the two Gabon sting trials to date, three defendants were acquitted and seven proceeded to a hung jury. In the face of these outcomes, the government decided to abandon the case with regard to all remaining defendants and will not seek to re-try the defendants whose previous trials ended in a mistrial. The government stated in its motion that it had "carefully considered (1) the outcomes of the first two trials in which, after extensive deliberations, the juries remained hung as to seven defendants and acquitted two defendants, and one defendant was acquitted on the sole charge against him pursuant to Fed. R. Crim. P. 29; (2) the impact of certain evidentiary and other legal rulings in the first two trials and the implications of those rulings for future trials, including with respect to Rule 404(b) and other knowledge and intent evidence the government proposed to introduce; and (3) the substantial governmental resources, as well as judicial, defense, and jury resources, that would be necessary to proceed with another four or more trials, given that the first two trials combined lasted approximately six months. In light of all of the foregoing, the government respectfully submits that continued prosecution of this case is not warranted under the circumstances."
BuckleySandler’s David Krakoff, who represented Mr. Mushriqui at trial along with counsel Lauren Randell, responded to the dismissal stating, “We are extremely pleased that the Department of Justice has decided to do the right thing by moving to dismiss the Indictment against our client John Mushriqui, ending his two year nightmare. We recognize that this was a difficult decision given the substantial resources that the government invested in this case. It's really hard to take on the government, but when you believe in your innocence and fight for your freedom, these cases can be won. Ultimately, the system worked for John Mushriqui. John can start the rest of his life today with his good name intact.”
- Kathryn L. Ryan to discuss "Industry open forum session on NMLS usage" at the NMLS Annual Conference & Training
- Tim Lange to discuss "State legislative update - MSBs and consumer finance" at the NMLS Annual Conference & Training
- Kathryn L. Ryan to discuss "Regulating innovative consumer lending products" at the NMLS Annual Conference & Training
- Daniel P. Stipano to moderate "Washington update" at the Puerto Rican Symposium of Anti Money Laundering
- Melissa Klimkiewicz to discuss "Private flood insurance updates" at the Mortgage Bankers Association Servicing Solutions Conference & Expo
- Jonice Gray Tucker and H Joshua Kotin to discuss regulatory compliance issues in the fintech industry at Protiviti's Risk & Compliance Innovation Roundtable
- APPROVED Checkpoint Webcast: CFL overview
- Amanda R. Lawrence and Sherry-Maria Safchuk to discuss "California privacy rule" on an NAFCU webinar
- Sasha Leonhardt to discuss "MLA & SCRA" on a NAFCU webinar
- Daniel P. Stipano to discuss "Pathway of the SARs: Tracking trajectories of suspicious activity reports from alerts to prosecution" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Which bud’s for you? A deep-dive into evolving marijuana laws" at the ACAMS International AML & Financial Crime Conference
- John P. Kromer to discuss "Navigating the multi-state fintech regulatory regime" at the American Conference Institute Legal, Regulatory and Compliance Forum on Fintech & Emerging Payment Systems