Hedge fund firm Och-Ziff to pay $412 million in criminal penalty and damages
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Hedge fund firm Och-Ziff to pay $412 million in criminal penalty and damages

Hedge fund manager Och-Ziff Capital Management Group LLC (Och-Ziff) [official website] has agreed to pay a $412 million settlement, of which up to $213 million are criminal penalties [DOJ press release] imposed in connection with a widespread scheme involving the bribery of officials in the Democratic Republic of Congo (DRC) and Libya—a violation of the Foreign Corrupt Practices Act (FCPA) [text, PDF]. The settlement is considered the largest ever reached under the FCPA. Och-Ziff Chairman and CEO Daniel S. Och and CFO Joel M. Frank [official profiles] have reached a settlement agreement for the charges by the Securities and Exchange Commission (SEC) [official website] in which Och has agreed to pay $2.2 million. Prosecutors claim [WSJ report] Och-Ziff went into business with Dan Gertler [Forbes profile], a billionaire from Israel, despite warnings about his unsavory associates and the fact Gertler had a habit of using his political connections in Africa to defeat his rivals. Aroused by suspicions, the SEC led an investigation which found that Och-Ziff used intermediaries, agents, and business partners to pay bribes to high-level government officials in Africa. The SEC stated [SEC press release] that Och-Ziff’s management ignored red flags and violated the anti-bribery, books and records, and internal controls provisions of the SEC Act of 1934 [text, PDF] permitting the illicit transactions to continue. According to the SEC, additional bribes were paid to secure mining rights and corruptly influence government officials in Libya, Chad, Niger, Guinea and the DRC. Och termed the development of these events as “deeply disappointing,” and “inconsistent with [their] core values and not representative of [their] hundreds of employees world-wide.”

Many fraud cases continue to be litigated eight years after the 2008 financial crisis. Last month the Consumer Financial Protection Bureau (CFPB) [official website] slapped [JURIST report] a $100 million fine against banking giant Wells Fargo for widespread illegal sales practices. In March 2015 the DOJ criticized [JURIST report] the US Sentencing Commission after a federal panel introduced a proposal which would reduce prison time for white-collar criminals. In July 2014 Citigroup, Inc. agreed [JURIST report] to pay USD $7 billion to settle a federal inquiry into mortgage-backed securities sold by the bank prior to the financial crisis. In April 2014 the US Supreme Court granted certiorari [JURIST report] to hear a mortgage lending case in which Countrywide failed to provide required information and the borrowers attempted to rescind the loan. Earlier the same month the CFPB ordered [JURIST report] another banking giant, Bank of America, to pay $727 million for its illegal credit card practices. In February 2014 JPMorgan Chase paid [JURIST report] a USD $614 million settlement to the US government for its role in approving unqualified mortgages for government insurance.