On June 9, the U.S. Senate Judiciary Committee held a committee hearing entitled “COVID-19 Fraud: Law Enforcement’s Response to Those Exploiting the Pandemic” for representatives of the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and the Secret Service to address how they are combatting, investigating, and prosecuting COVID-19-related crimes. The witnesses included DOJ Associate Deputy Attorney General William Hughes, U.S. Attorney for the District Of New Jersey Craig Carpenito, FBI Assistant Director of the Criminal Investigative Division Calvin A. Shivers, and U.S. Secret Service Assistant Director Michael D’Ambrosio.
On Monday, June 1, 2020, the Department of Justice’s (DOJ’s) Criminal Division issued an updated version of the “Evaluation of Corporate Compliance Programs” guidance. The guidance was originally published by the Criminal Division’s Fraud Section in February 2017, and last revised in April 2019. The updated guidance emphasizes the need for companies to ensure that their compliance function is sufficiently resourced and empowered to fulfill its mission, and to engage in continuous improvement—evolving as necessary to meet changing circumstances and challenges. The updated guidance also provides practical takeaways on issues related to training, testing, mergers and acquisitions, and the impact of foreign law on a company’s compliance program. Given the unique stressors and challenges that the coronavirus pandemic has created, this updated guidance is a timely reminder for companies to assess whether their compliance program comports with best practices and DOJ’s expectations.
On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act of 2020, which makes important changes to many aspects of the Paycheck Protection Program (PPP), including extending the minimum maturity period, extending the forgiveness period, reducing the payroll cost limitation on forgiveness, while eliminating forgiveness if such reduced threshold is not met, adding exemptions to employee rehiring requirements, revising the loan deferral period, and lifting the CARES Act’s prohibition on payroll tax deferral. In light of the these changes, particularly with respect to the length of the forgiveness period, we anticipate that the Small Business Administration will update the PPP Loan Forgiveness Application. We discuss the PPP Flexibility Act’s changes in detail here.
Crowell & Moring will continue to monitor and provide updates regarding developments in the PPP.
We are excited to announce our Export Controls Classroom webinar series. This monthly series open to all will cover a range of topics from the nuts and bolts of export compliance, to in-depth analysis of emerging issues, and will be designed for those new to export controls and as well as more experienced compliance and industry professionals. Our attorneys from the International Trade practice group will team up with practitioners from other complementary practices such as Privacy & Cyber, Government Contracts, Corporate, and Labor & Employment to provide full coverage of the issues.
To kick-off the series, our first webinar will be held Tuesday, June 23, titled “China in the Crosshairs: an Overview of the U.S. Approach to Mitigating National Security Concerns.” To register, please click here.
On May 21, 2020, Treasury proposed to change its approach for identifying which foreign investment in a U.S. business will trigger the requirement for mandatory notification to the Committee on Foreign Investment in the U.S. (CFIUS). With respect to covered transactions involving U.S. businesses which produce, design, test, manufacture fabricate or develop those “critical technologies” that are essentially export-controlled items, CFIUS will no longer focus on the nexus of such critical technologies to 27 specific industries (as defined by NAICS codes). Rather, the proposed rule would mandate disclosure of such a covered transaction to CFIUS where U.S. regulatory authorization – without regard to most available regulatory exemptions and exceptions – would be required to export, re-export, transfer (in-country) or retransfer the critical technology to a foreign person that is a party to the transaction (including certain individuals holding a 25% voting interest in the foreign person). Exempted from the new mandatory disclosure rule, however, would be certain covered transactions where export of the critical technology involved could be exported to the foreign person(s) involved under a few specific exceptions available under the Export Administration Regulations.
Crowell & Moring’s “All Things Protest” podcast keeps you up to date on major trends in bid protest litigation, key developments in high-profile cases, and best practices in state and federal procurement. In this episode, hosts Rob Sneckenberg, Olivia Lynch, and Christian Curran discuss the importance of the automatic Competition in Contracting Act stay triggered by the filing of a timely GAO bid protest, and considerations involved when an agency “overrides” the stay to obtain immediate performance.
The Department of Justice (DOJ) on Friday reemphasized its commitment to protecting the federal programs providing COVID-related aid when it announced charges against a Beverly Hills film producer for his allegedly false statements to the Small Business Administration (SBA). Where recent Paycheck Protection Program (PPP) fraud cases focused on false statements in the applications, the recent DOJ charges focus on the inappropriate use of the PPP funds. The DOJ alleges that William Sadleir sought more than $1.7 million dollars in forgivable PPP loans guaranteed by the SBA under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In his application to the SBA, Sadleir certified that he would use the funds for legitimate uses. He allegedly claimed that the funds would be used for payroll expenses for his three film-production and distribution companies. The Southern District of New York United States Attorney’s Office also announced charges against Sadleir relating to two additional, but separate, fraudulent schemes.
On April 8, 2020, the Federal Trade Commission (FTC) published a blog post titled, “Using Artificial Intelligence and Algorithms,” that offers important lessons about the use of AI and algorithms in automated decision-making. The post begins by noting that headlines today tout rapid improvements in AI technology, and the use of more advanced AI has enormous potential to improve welfare and productivity. But more sophisticated AI also presents risks, such as the potential for unfair or discriminatory outcomes. This tension between benefits and risks is a particular concern in “Health AI,” and the tension will continue as AI technologies are deployed to tackle the current COVID-19 crisis.
The FTC post reminds companies that, while the sophistication of AI is new, automated decision-making is not, and the FTC has a long history of dealing with the challenges presented by the use of data and algorithms to make decisions about consumers.
The Occupational Safety and Health Administration (OSHA) issued interim guidance for enforcing the recording of occupational illnesses requirements, specifically for cases of coronavirus (COVID-19). This guidance rescinds OSHA’s earlier guidance providing for enforcement discretion on COVID-19 complaints arising outside of healthcare or emergency response employers. As of May 26, 2020, and until further notice, OSHA will be enforcing the recordkeeping requirements for employee COVID-19 illnesses for all employers.
Federal authorities continue to prioritize and aggressively pursue individuals across the country who seek to exploit coronavirus relief programs meant to aid small businesses and their employees. Over the past week, Muge Ma of New York and Samuel Yates of Texas were arrested, each for submitting multiple fraudulent applications for COVID-19 relief through the Paycheck Protection Program (PPP). Both men obtained loan proceeds before their schemes were uncovered.