By Jody Coultas, J.D.
The consumer protection agency voted at an open meeting on the agency’s commitment to continuing to refer potential criminal violations and opportunities for strengthening this work.
As part of its open meeting November 18, the FTC voted unanimously to expand its criminal referral program as part of its work to stop and deter corporate crime, the agency announced. The FTC’s authority is limited to civil enforcement procedures, but works with state, federal, and international criminal agencies to prosecute criminal activity uncovered during consumer protection and antitrust investigations. The new policy statement highlighted recent criminal referrals, and announced plans to take steps to facilitate uptake of criminal cases by appropriate authorities. The FTC will also leverage best practices garnered from the Bureau of Consumer Protection’s Criminal Liaison Unit (CLU) program to enhance criminal referrals related to antitrust investigations.
During its consumer protection and competition investigations, the FTC uncovers criminal frauds and scams warranting both civil and criminal enforcement efforts. Thus, the FTC has relationships with the Department of Justice, FBI, the U.S. Postal Inspection Service, U.S. Attorneys’ Offices, State Attorneys General, and local District Attorneys’ and City Attorneys’ offices. In the last five years, FTC staff worked on 840 new formal requests for cooperation from our criminal law enforcement partners, including 363 federal, 422 state, and 55 local requests. Prosecutors relied on FTC information and support to charge 228 new defendants and obtained 283 new pleas or convictions. During this period, 173 defendants received prison sentences totaling more than 795 years.
The policy statement outlines several ways the agency plans to improve its cooperation with its criminal law enforcement partners to stop and deter consumer protection and competition criminal violations. Going forward, the FTC will continue to support cross-agency efforts and refine best practices to ensure that criminal law violations are identified and promptly referred to criminal enforcers. Also, the agency will be holding regular meetings with its criminal partners to identify “best practices” so that even better coordination will result from communications and referrals. Training for law enforcement partners, though the FTC Consumer Sentinel database system, will also be a focus so that the FTC’s partners can fully utilize this source of key leads for potential criminal investigations. Finally, the Commission will also return to publicly reporting on its criminal referral efforts, detailing the number of referrals, the general nature of the alleged conduct involved, and, when appropriate, more detailed information concerning criminal enforcement actions that stem from Commission actions and investigations.
The FTC also highlighted recent consumer protection cases that the agency worked on with the Department of Justice. The FTC and the Department of Justice jointly brought civil and criminal charges against Western Union alleging consumer fraud, aiding and abetting wire fraud, and failure to have an effective anti-money laundering program. Western Union entered a global settlement that included a $586 million judgment and a permanent injunction. The Justice Department also charged a top former Uber executive with obstruction of justice for allegedly hiding a data breach from FTC staff during an FTC investigation into Uber’s data security practices.
Also noted in the policy statement were recent competition cases in which the FTC collaborated with federal law enforcement. The FTC charged that the companies used a deceptive scheme to thwart lower-priced generic competition to their branded opioid addiction treatment, Suboxone. The Justice Department’s criminal case involving closely related conduct, ultimately resulted in a $1.4 billion settlement with Reckitt, guilty pleas from two former Indivior executives and an Indivior subsidiary, and a civil settlement with Indivior. In another case, the Justice Department filed criminal charges against Bristol-Myers Squibb and one of its executives, charging them with perjury for making false statements to the FTC in an investigation the agency was conducting.
Chair Lina Khan stated that she is interested in the Commission’s efforts to coordinate with criminal authorities around wrongdoing by major corporations. “Large firms have already been the subject of both civil enforcement by the FTC and separate criminal enforcement efforts in a host of matters, including Uber, MoneyGram, Western Union, Reckitt Benckiser, and Bristol-Myers Squibb.” Also, Khan stated that both civil and criminal enforcers must confront critical questions around achieving deterrence.
Commissioner Rebecca Kelly Slaughter also noted the need for deterrence, arguing that criminal consequences may be the only way to stop some bad actors. “[T]here are limits to the deterrent effect of civil enforcement. For some companies and some leaders, particularly those with acute power, the prospect of fines, restrictions, audits, and even public disclosure of harmful unlawful activity does not incentivize compliance with the law. For these actors, the risk of a civil law enforcement action is worth the reward of deceptive, unfair, or anticompetitive acts. When this risk calculation tilts in favor of illegal conduct for major corporations, the effects can be devastating and long-lasting.”
Commissioner Christine S. Wilson thanked the FTC staff, and lauded the leadership of Chair Khan and Commissioner Slaughter on this initiative. “Building on the successful stream of criminal referrals over the years, every CLU chief has added to the criminal referral program. Staff innovations include the development of a library of criminal pleadings, enhanced internal trainings on criminal law, and awards to recognize successful investigation partnerships. Our staff has helped to build a successful program through their creativity and expertise. As the staff presentation demonstrated, we have had notable wins in both the competition and consumer protection missions. I am glad the agency is exploring ways to facilitate greater uptake of our criminal referrals and to boost transparency regarding our work in this area.”
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