U.S. Department of Justice

The regulatory framework for online gambling recently took a wild turn when the Department of Justice Office of Legal Counsel (“OLC”) announced its view that the Wire Act (18 U.S.C. § 1084) applies to all forms of gambling—not merely sports betting. This marked a 180-degree reversal from the stance the OLC took just seven years earlier. The OLC’s 2011 opinion—which itself departed from public positions the DOJ had previously taken—was the foundation upon which today’s state-regulated online gambling industry is built. Four states—Delaware, Nevada, New Jersey and Pennsylvania—currently allow online gambling, and Michigan came close to legalizing it at the end of last year, although outgoing Governor Snyder vetoed the bipartisan bill in a surprise move. The OLC’s follow-on announcement gives now-unlawful online gambling businesses 90 days to bring their operations into compliance with federal law before Wire Act enforcement will begin under this newly expanded view. Below, we contemplate what enforcement of the industry will look like in light of this recent announcement.

Perhaps we will see a Cole memo-esque enforcement regime, where the feds will exercise discretion not to prosecute well-behaved online gambling businesses operated in accordance with robust state regulatory frameworks. After all, legal online gambling businesses and their service providers are already subject to extensive vetting, and in Delaware, online gambling is state-run. Regardless, we expect the DOJ to publish internal guidelines for how the feds should prosecute cases—this is a model that has been used in other areas, and would presumably outline the specific factors under which proposed enforcement would be reviewed and approved.


Continue Reading DOJ Reverses Course on the Wire Act, Changing the Odds on the State-Regulated Gambling Industry

Deciding whether to voluntarily disclose information to the government is difficult. Any guidance from the government as to what it expects from organizations and how it will reward self-disclosures should thus be welcome.

In a recent appearance at a conference on the Foreign Corrupt Practices Act, Deputy Attorney General Rod Rosenstein announced several changes to DOJ’s corporate enforcement policy. Notably, his statements rolled back some of the requirements set forth in the eponymous “Yates Memo” from 2015. In this blog post, we’ll highlight two key policy differences between the Yates Memo and the updated DOJ policy.

First, DOJ is changing how companies may earn credit for cooperating with civil and criminal investigations. The Yates Memo advanced more of an “all or nothing” approach, where companies had to disclose the wrongdoing of all individuals involved in a corruption scheme. Failure to disclose information related to all individuals precluded companies from earning any cooperation credit.


Continue Reading DOJ Signals Changes to Its Corporate Enforcement Policy

Deputy Attorney General Rod Rosenstein – the second-highest-ranking official at the Department of Justice – recently announced the formation of the Task Force on Market Integrity and Consumer Fraud. The announcement came at a widely publicized press conference, a signal that the Task Force ranks high on the list of the Department’s law enforcement priorities. Given the prominence of the Task Force, all businesses would be well served by understanding what it is and what it seeks to accomplish.

The Task Force has a strikingly broad mandate. According to the Presidential Executive Order that created it, the Task Force is to aid in the “investigation and prosecution of cases involving fraud on the government, the financial markets, and consumers, including cyber-fraud and other fraud targeting the elderly, service members and veterans, and other members of the public; procurement and grant fraud; securities and commodities fraud, as well as other corporate fraud, with particular attention to fraud affecting the general public; digital currency fraud; money laundering, including the recovery of proceeds; health care fraud; tax fraud; and other financial crimes.”

The membership of the Task Force further highlights the breadth of its mandate – and the importance that the Department places on it. The Task Force comprises a wide array of government officials from numerous government bodies. Its Chair is the Deputy Attorney General; its Vice Chair is the Associate Attorney General, the third-highest-ranking official at the Department. Other Department officials on the Task Force are the Assistant Attorneys General for the Criminal, Civil, Tax, and Antitrust Divisions; the Director of the FBI; and designated U.S. Attorneys. What’s more, the Task Force is to invite the participation of no fewer than eight Cabinet Secretaries, the Director of the Bureau of Consumer Financial Protection, the Chairman of the Federal Trade Commission, the Chairman of the Securities and Exchange Commission, and more than 10 other agencies, commissions, and boards.


Continue Reading The Department of Justice Has a New Consumer Task Force – What Does It Mean for You?

busLegal history is replete with stories of persons or companies turning a manageable legal problem into a more serious one by trying to hide or destroy evidence, see Watergate and Arthur Anderson/Enron for two notable examples. A recent case involving a bus company executive provides a good case study in what not to do when facing a government investigation and the consequences of trying to hide or destroy evidence in an investigation.

Ralph Groen worked as a VP for Information Technology for Coach USA, a tour bus company. Beginning in 2009, the NY AG and the US DOJ began investigating Coach USA and another company forming a joint venture to corner the tour bus market in New York City and thereby drive up prices. The DOJ and NY AG sued the companies in 2012 and the companies settled in 2015 by agreeing to pay $7.5 million and breaking up much of the joint venture.


Continue Reading When the Cover Up Is Worse Than the Crime