Ethics & Compliance

Subscribe to Ethics & Compliance
Photo of Agustin D. OrozcoPhoto of Nimrod AviadPhoto of David Griffith

On May 11, 2023, the Supreme Court issued two opinions limiting the reach of the federal fraud statutes and eliminating often-used theories from the government’s arsenal.

In Ciminelli v. US, 598 U. S. __ (2023), the Supreme Court decided that the “right to control” theory—long used by prosecutors in the Second Circuit—can no longer be used to support wire fraud convictions.  The Court overturned the conviction of Louis Ciminelli, a participant in a scheme to rig bids for New York state-funded projects, known as the “Buffalo Billion” initiative. As part of the scheme, requests for proposals were strategically drafted to give preferential treatment to Ciminelli’s company. At trial, the government argued that Ciminelli and his co-defendants were guilty of wire fraud under the right-to-control theory because they deprived the entity responsible for awarding the state-funded projects of certain information necessary to make an informed decision about the bid awards. The Second Circuit affirmed the conviction and the government’s use of the right-to-control theory.

Writing on behalf of a unanimous court, Justice Clarence Thomas held that the wire fraud statue only reaches traditional property interests and the right to valuable economic information needed to make discretionary economic decisions—known as the “right to control”—is not a traditional property interest. The right-to-control theory, therefore, “cannot form the basis for a conviction under the federal fraud statutes.”…

Continue Reading In Control: Supreme Court Reigns-In Second Circuit Fraud Theories

Photo of Peter J. EyrePhoto of Laura J. Mitchell Baker

The General Services Administration’s (GSA) System for Award Management (SAM) announced its role in an ongoing Inspector General Investigation into alleged, third party fraudulent activity in SAM.

GSA suspects that the alleged fraudulent activity impacted only a limited number of entities.  GSA has since notified the affected entities, and deactivated their SAM registrations.  GSA also required these entities to validate and confirm their registration and bank account information in SAM before reactivating their SAM registrations.…

Continue Reading After Fraudulent Activity in SAM, GSA Implements New Registration Requirements

Photo of Peter J. Eyre

There is a substantial amount of confusion and concern about Section 1045 of the 2018 National Defense Authorization Act (NDAA), entitled “Prohibition on lobbying activities with respect to the Department of Defense by certain officers of the Armed Forces and civilian employees of the Department following separation from military service or employment with the Department.” …

Photo of Lorraine M. CamposPhoto of Sarah Bartle

On February 8, 2017, the Department of Justice Fraud Section posted a new guidance document on its website entitled, “Evaluation of Corporate Compliance Programs”  (“Compliance Guidance”).  This Compliance Guidance, comprised of a number of topics and questions, comes a little over a year after the Fraud Section hired Hui Chen as its resident compliance expert.  Tapping into her experience as both a prosecutor and a compliance professional at several large multinational companies, Ms. Chen has commented that an effective compliance program requires a whole-company commitment, and has emphasized the importance of leadership and key stakeholders in the compliance process.[1]  Her vision is evident in the Fraud Section’s recently released Compliance Guidance, which provides some insights into the mindset of prosecutors tasked with corporate investigations.[2]   The Compliance Guidance itself references two of the ten “Filip Factors,”[3] an enumerated set of factors used by prosecutors in making charging decisions related to corporate entities.  Although the Compliance Guidance cautions that the Fraud Section does not use a “rigid formula” to assess a company’s compliance program, the guidance provides a detailed list of compliance-focused sample topics and questions that the Fraud Section believes are relevant to its analysis.
…
Continue Reading DOJ Issues New Guidance on the Evaluation of Corporate Compliance Programs

Photo of Robert BurtonPhoto of Lorraine M. CamposPhoto of Peter J. EyrePhoto of David J. Ginsberg

On Saturday, January 28, President Trump issued an Executive Order setting forth the ethics regulations governing current and future executive agency appointments, which is both more restrictive and less restrictive than the 2009 Obama Executive Order addressing the same issue.  Specifically, and with respect to the former, President Trump’s order bans all executive agency appointees from engaging in “lobbying activities” with respect to the particular agency in which the appointee served for a period of five years after leaving the Administration, and further prohibits such appointees from lobbying on behalf of a foreign government or political party during the remainder of their lifetimes (if such activities would require registration “under the Foreign Agents Registration Act of 1938”).  See §§ 1.1, 1.4.  These two prohibitions were absent from the Obama-era counterpart and mirror two of Trump’s promises outlined in his Contract with the American Voter.
…
Continue Reading Trump’s Ethics Executive Order More Concerned with Post-Government Employment Activities

Photo of Lorraine M. CamposPhoto of Gail D. ZirkelbachPhoto of Nkechi Kanu

On November 18, 2016, the Office of Government Ethics (OGE) issued a final rule revising the Standards of Ethical Conduct for Employees of the Executive Branch (“Standards”)  applicable to the solicitation and acceptance of gifts from outside sources. See 5 CFR § 2635. The final rule imposes a duty to decline otherwise permissible gifts when the appearance of impropriety is present, adds new examples of how to apply the rules, codifies previous interpretations of the gift rule, and retains the $20 de minimis exception (despite pushback in comments to the proposed rule to raise the standard commensurate with inflation. ) Although Government employees are the primary subject of the final rule, the changes will have a direct impact on how contractors, referred to as “prohibited sources” can interact with Government officials.   It is important for government contractors to understand that being implicated by a Government official’s violation of these Standards can lead to various consequences, such as facing public embarrassment, a tarnished reputation in the marketplace, suspension and debarment, or penalties for violating the bribery or illegal gratuities statutes.

The rule becomes effective on January 1, 2017.
Continue Reading OGE Finalizes Rule Regarding Solicitation and Acceptance of Gifts for Executive Branch Employees

Photo of Peter J. EyrePhoto of Agustin D. Orozco

On November 2, 2016, the Office of Government Ethics (OGE) issued a final rule amending the regulations that set forth the elements and procedures of the executive branch ethics program by defining and describing the executive branch ethics program, delineating the responsibilities of various stakeholders, and enumerating key executive branch ethics procedures.  The final rule …

Photo of Steve McBradyPhoto of Jason CrawfordPhoto of Kris D. MeadePhoto of Robert Burton

On May 4, 2016, the FAR Council’s draft final rules and the Department of Labor’s draft final guidance implementing the “Fair Pay and Safe Workplaces” Executive Order arrived at the White House’s Office of Information and Regulatory Affairs (OIRA) for review, setting in motion the final steps prior to the issuance of burdensome new compliance…

Photo of Peter J. Eyre


There are always clues.

After-action reviews nearly always identify signals that a crisis was about to begin. Small hints, tips, strange comments, or different attitudes from a customer. Something will be there. But these clues can be difficult to spot in the moment by busy in-house counsel or senior executives on the front lines of the business.

While skilled lawyers and professionals are available to support companies in full-blown crises, these teams with their cross-cutting skills are often engaged too late to shape the narrative before an all-consuming defense effort begins.

So the question becomes, how do government contractors get out in front of emerging issues, manage their risk, and mitigate as much of an impending crisis as possible? One possible answer is that systematic risk assessments and response protocols need to evolve to consider the emerging risk of parallel enforcement proceedings—to include suspension and debarment from further government contracting work—as well as the changing dynamics involved in settling a matter with the Department of Justice without a fulsome disclosure of misconduct by individuals.…

Continue Reading Rethinking Government Contracts Crisis Management: Identifying Risk Before a Crisis Begins

Photo of Jason CrawfordPhoto of Charles Baek

On March 22, the comment period is set to close on a new rule proposed by the FAR Council titled, “Federal Acquisition Regulation: Contractor Employee Internal Confidentiality Agreements.” This rule will prohibit federal dollars from going to companies that require employees or subcontractors to sign restrictive confidentiality agreements that could limit the ability of employees…