Today's Roster Of Corporate Criminals

While we wait to see whether the Republicans in the House are going to commit what would normally be political suicide, (but these are not normal times), lets’ take a spin round the annals of corporate criminality.

In France, UBS has rejected a settlement in a case in which French authorities accuse the bank of aiding French clients to avoid French tax. UBS had settled similar cases in the US and in Germany, but will now be heading to trial in France. A similar case is also being brought against the bank in Belgium.

The whole unraveling of the secretive Swiss banking laws that allowed wealthy individuals to engage in tax evasion began with just one man, Bradley Birkenfeld. In 2005, Birkenfeld, through his work at the bank, became aware that UBS was blatantly ignoring a prior agreement between the bank and the IRS. Specifically, UBS sent a memorandum that outlined the prohibitions on overseas banking in the US. Birkenfeld felt that the memo was merely designed to provide cover for the bank to blame employees should the violation of the agreement become known. After reporting the bank’s illegal activity up the chain to UBS compliance and then the General Counsel and not receiving any feedback, he resigned from the firm and later decided to inform the DOJ of the violations by UBS in the hopes of receiving a 30% fee on recoveries in the newly passed “whistleblower act”.

Birkenfeld’s revelations led to a $780 million fine for UBS and a deferred prosecution agreement with the DOJ and another $200 million fine with the SEC. Notably, UBS was not prosecuted for these violations nor for any of the subsequent illegal activity associated with the collapse of the financial system in 2008. Birkenfeld did eventually receive a reward of just over $100 million, but that was after having to serve a 40 month sentence for not being forthcoming with the government, despite having provided the information that he was accused of withholding to multiple government agencies. So, UBS simply pays a fine and continues to commit more crimes while Birkenfeld actually serves time. Birkenfeld summed up his opinion of UBS, describing it as “a global criminal enterprise”.

Meanwhile, the NY Times reports today that a jury has convicted the owner and head pharmacist at a place called the New England Compounding Center (NECC) of over 50 counts of mail fraud and racketeering. The owner was acquitted of the more serious charge of 25 counts of murder. The case sprang from a surprising outbreak of fungal meningitis in 2012 that sickened 732 people across the country and killed 64. NECC was engaging in a pretty significant fraud, pretending it was a pharmacy while actually acting as a drug manufacturer. According to the Times, “Officials looking into the New England Compounding Center case said investigators had found dirty mats and hoods, a leaky boiler, dark debris floating in vials of medicine, and evidence that the laboratory was not leaving enough time to properly sterilize some products. They also said that a supposedly clean room was infested with insects and mice.” Prosecutors allege that the owner purposefully neglected regulations in search of higher profits. The bar for conviction on the murder charges was high, needing to show that the owner absolutely knew that people would get sick or die when they shipped the medications. Again, I’m not a lawyer, but this surely looks like manslaughter to me. The 50 counts on which the owner was convicted bring a maximum of 20 years for each count so this man will probably spend quite a while in jail.