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False Claims Cooperation Credit?

The U.S. Justice Department is considering whether to issue guidance on how it rewards companies for assisting investigations into fraud against the government, a deliberation that comes as the department's leadership increasingly promotes the benefits of cooperation.

Michael Granston, a top Justice Department official overseeing civil fraud enforcement, said the guidance would be specific to the False Claims Act, a federal law that has been used to recover billions of dollars in government funds allegedly lost to fraud. The law empowers whistleblower to sue on behalf of the government and keep a portion of any awarded damages.

Speaking at a recent conference in Washington, Granston said other divisions within the Justice Department “have issued specific guidance tailored to a particular violation, and we are evaluating whether a similar approach would be useful in the False Claims Act context.”

Granston said companies have already benefited from cooperation with investigations involving the False Claims Act. Soon, he said, the Justice Department will announce a settlement with a medical device manufacturer that shared the results of an “extensive internal investigation” and also helped the government assess its losses.

“As a result of its cooperation,” Granston said, “the manufacturer will receive a significant discount off the final damages multiplier agreed in the settlement.” The Justice Department “is prepared to meaningfully reward cooperation in False Claims Act cases,” Granston said.

Compliance Headlines: My Reading List

>> As Uber Prepares to Go Public, Its Lead Lawyer Races to Clean It Up. Tony West (above), chief legal officer at Uber, opens up about navigating the ride-hailing company's many legal issues. Here's what he said on his decision to leave PepsiCo for Uber: “I had a reputation that I was also putting on the table, right?” Also: “There was nothing I was going to do that was going to fundamentally change the trajectory” of PepsiCo. [NYT]

>> Quinn Emanuel Partner Sandra Moser on Prosecuting Corporate Crime Under Trump. Moser, who recently jumped to Quinn Emanuel, resists the notion that white-collar enforcement has taken a dip in the Trump era. “If you look at the statistics side of it, you don't see anything drastically different. If you look at the Fraud Section's year in review from 2018, the vast majority of the numbers—dollars, prosecutions of individuals—are all up. Prosecutions of corporations, if not up, are certainly holding steady.”[Corporate Crime Reporter] If you missed it, my colleague Ryan Lovelace wrote here on Moser's move to Quinn Emanuel.

>> Companies Falsely Labeled Products 'Made in U.S.A.' Their Financial Penalty? $0. “While President Trump has accused China of destroying American jobs and prioritized strengthening United States manufacturing, his appointees at the F.T.C. did little to punish the firms. The companies faced no fines and were not required to admit any wrongdoing or to notify customers of their false marketing.”[NYT]

>> Big Law Builds State Practices as Privacy Enforcement Heats Up.“Companies are turning to big law firms to help navigate the growing enforcement maze, and those firms have responded by expanding their state attorneys general expertise, privacy lawyers and former state AGs said.” [Bloomberg Law]

>> Elon Musk's Mystery Twitter Sitter Has One Wild and Crazy Job. “Tesla Inc. has declined to identify the in-house lawyer who is supposed to watch over Musk's prodigious—and legally contentious—tweeting habit. Now that the billionaire is once again courting trouble with the Securities and Exchange Commission via Twitter, the question of who, if anyone, can reel him in has taken on new urgency.” [Bloomberg]

Who Got the Work

>> The U.S. Court of Appeals for the Second Circuit on Tuesday upheld the Securities and Exchange Commission's $93 million civil penalty against Raj Rajaratnam, former hedge fund manager at Galleon Management LP. David Lisitza, senior litigation counsel at the SEC, argued for the government. Samidh Guha, a Jones Day partner in New York, argued for Rajaratnam. The defense argued the trial court unlawfully allowed the SEC to impose a civil penalty on trade Rajaratnam executed but from which he did not profit. And Rajaratnam also contended that the district court failed to consider Rajaratnam's criminal punishment. Reuters has more on the ruling here, and my colleague Colby Hamilton wrote here on the ruling.

>> Brownstein Hyatt Farber Schreck partner Edward Ayoob, co-chair of the firm's federal relations group in Washington, has registered to lobby for the Vapor Technology Association, a trade group for the vaping industry. Ayoob was formerly counsel to U.S. Sen. Harry Reid, D-Nevada.

>> A team from Holland & Knight has registered to lobby for Teva Pharmaceuticals on drug pricing, a hot topic on Capitol Hill right now. The lobbying team includes Paul Bock, the firm's senior liaison to the U.S. Senate's Democratic caucus, who previously worked as chief of staff to former Sen. Herb Kohl, D-Wisconsin. Also on the team is Kathryn Lehman, a partner at the firm who previously served as chief of staff for the House Republican Conference.

>> Thomas McGonigle, of Murphy & McGonigle, represented BB&T Securities as it reached a settlement with the Securities and Exchange Commission resolving claims related to a firm it acquired, Valley Forge Asset Management. According to the SEC, Valley Forge Asset Management misled retail investors, telling them they could receive full service broker services in-house at a discount when, in fact, other brokerages offered significantly lower commission rates. BB&T Securities agreed to return more than $5 million to retail investors and pay a $500,000 penalty.

>> A team from Ifrah Law and Quinn Emanuel Urquhart & Sullivan has jumped into a challenge to the Justice Department's revised stance toward online gambling. The firms are representing the iDevelopment and Economic Association, an internet gaming trade group, which has sided with the New Hampshire Lottery Commission and an online lottery company in contesting the DOJ's recent—and rare—decision to reverse an earlier opinion that paved the way for online gambling. Gibson, Dunn & Crutcher is representing the lottery company, NeoPollard Interactive, in New Hampshire federal court.

Notable Moves & Announcements

>> Kirk Nahra has left Wiley Rein for Wilmer Cutler Pickering Hale and Dorr, where he will co-chair the firm's cybersecurity and privacy group with Benjamin Powell. Wilmer Hale's co-managing partner, Robert Novick, called Nahra “a longtime pacesetter in privacy and cybersecurity matters.”

>> Daniel Goldman, a former assistant U.S. attorney in the Southern District of New York, is joining the House Intelligence Committee as a senior adviser and director of investigations, The New Yorker reports. Goldman was an AUSA from 2007 to 2017 and at one time led the Manhattan prosecution office's organized crime section. Reuters has more here.

>> Peter Karanjia, a former deputy general counsel at the Federal Communications Commission, has joined DLA Piper as a partner in the firm's telecom and appellate practices. Jeff Lehrer, managing partner of the firm's Washington office, saidKaranjia brings extensive experience in government-facing litigation, including cases involving federal preemption, and his practice will bolster our platform in the region and across the country,”

>> Ilene Jaroslaw and Bradley Simon, two former federal prosecutors in the Eastern District of New York, are joining Phillips Nizer to launch a new white-collar and investigations practice in New York. Jaroslaw arrives from Hoguet Newman Regal & Kenney. Simon had started his own firm Simon & Partners.

>> White & Case has hired partners Tai Park and Douglas Jensen in New York, expanding the firm's white-collar practice. Park and Jensen join the firm from the litigation boutique they founded, Park Jensen Bennett LLP. White & Case said the lawyers are bringing a counsel and two associates to the firm.

>> The U.S. Securities and Exchange Commission has named Gabriel Benincasa, a senior adviser at the financial industry consulting firm Patomak Global Partners LLC, as the agency's first chief risk officer, a move that comes as the regulator seeks to bolster its cyber defenses.

>> Douglas Flaum, the global co-chairman of Paul Hastings' securities litigation practice, is joining to Goodwin Procter as the firm continues its expansion efforts in New York City, my colleague Meghan Tribe reports.