AUCTION HOUSE, PRESIDENT PLEAD GUILTY FOR ROLES IN WILDLIFE SMUGGLING CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, January 14, 2015

Auction House and Company’s President Plead Guilty to Wildlife Smuggling Conspiracy

Elite Estate Buyers Inc., doing business as Elite Decorative Arts, an auction house located in Boynton Beach, Florida, and the company’s president and owner, Christopher Hayes, pleaded guilty today in U.S. District Court in Miami to an illegal wildlife trafficking and smuggling conspiracy in which  the auction house sold rhinoceros horns and objects made from rhino horn, elephant ivory and coral that were smuggled from the United States to China.

The guilty plea was announced today by Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division, U.S. Attorney Wifredo Ferrer for the Southern District of Florida and Director Dan Ashe of the U.S. Fish and Wildlife Service (FWS).  The prosecution of Elite and Hayes is part of Operation Crash, a continuing effort by the Special Investigations Unit of the FWS’ Office of Law Enforcement in coordination with the Department of Justice to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.

According to records filed in court, Hayes and his company sold six endangered black rhino horns.  Two of the horns were sold for $80,500 to a Texas resident involved in smuggling the horns to China.  Two more rhino horns were purchased by an undercover FWS special agent.  Another undercover agent with the FWS consigned two horns for auction.

As part of today’s plea agreement, Hayes and Elite have admitted to being part of a far reaching felony conspiracy in which the company helped smugglers traffic in endangered and protected species in interstate and foreign commerce, and falsified records and shipping documents related to the wildlife purchases in order to avoid the scrutiny of the FWS and U.S. Customs and Border Protection.  Elite aided foreign buyers by directing them to third-party shipping stores that were willing to send the wildlife out of the country with false paperwork.  

“In pleading guilty this auction house is admitting that it played a key role in the supply chain of rhino horn and elephant ivory to wildlife smugglers and foreign markets,” said Assistant Attorney General Cruden.  “Auction houses and art galleries should be especially mindful of abiding by the laws designed to prevent the extinction of these species rather than devoting their expertise to help smugglers evade the law.  This prosecution is the result of a sophisticated and long-ranging investigation into every aspect of the illegal wildlife trade and we will hold all law violators fully accountable for their actions.”

“Not only did Hayes and his company illegally profit from obtaining rhinoceros horns and elephant ivory, but his greed and indifference contributed to the senseless slaughter of these animals,” said U.S. Attorney Ferrer.  “Trafficking in endangered and threatened species is illegal.  Together with our law enforcement partners, we will strictly enforce the laws that protect our environment and our wildlife.”

“As this guilty plea demonstrates, ivory and rhino horn trafficking is not just a problem for other countries to solve,” said Director Ashe.  “The ongoing slaughter of rhinos and elephants in Africa is driven by rising consumer demand and United States citizens like Christopher Hayes are intimately involved in illegal trade both here and abroad.  We will continue to work with international law enforcement agencies and the international community to apprehend and bring to justice those whose callous disregard threatens the survival of the world’s wildlife heritage.”

Elite and Hayes also admitted to selling items made from rhinoceros horn, elephant ivory and coral to an antiques dealer in Canada, who they then directed to a local shipper that agreed to mail the items in Canada without required permits.  The defendants also admitted to selling raw rhinoceros horns, which they believed were from a black rhinoceros, to a person in Texas.

Hayes, 55, of Wellington, Florida, will be sentenced by Judge Daniel T. K. Hurley on a date yet to be determined.  The maximum penalty is five years in prison and a maximum fine of $500,000 for Elite and $250,000 for Hayes, or up to twice the gross gain.  Elite has agreed to pay a $1.5 million fine and to no longer engage in the receipt, consignment or sale of endangered or protected wildlife, or items containing endangered or protected wildlife, including items containing rhinoceros horn, elephant ivory and red coral.    

The investigation is continuing and is being handled by the FWS Office of Law Enforcement, the U.S. Attorney’s Office for the Southern District of Florida and the Environment and Natural Resources Division’s Environmental Crimes Section.  The government is represented by Assistant U.S. Attorney Thomas Watts-FitzGerald for the Southern District of Florida and Trial Attorney Gary N. Donner of the Environmental Crimes Section.

SEC ALLEGES AVON PRODUCTS INC. VIOLATED FOREIGN CORRUPT PRACTICES ACT

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

December 17, 2014

The Securities and Exchange Commission today charged global beauty products company Avon Products Inc. with violating the Foreign Corrupt Practices Act (FCPA) by failing to put controls in place to detect and prevent payments and gifts to Chinese government officials from employees and consultants at a subsidiary.

Avon entities agreed to pay a total of $135 million to settle the SEC’s charges and a parallel case announced today by the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York.

The SEC alleges that Avon’s subsidiary in China made $8 million worth of payments in cash, gifts, travel, and entertainment to gain access to Chinese officials implementing and overseeing direct selling regulations in China.  Avon sought to be among the first allowed to test the regulations, and eventually received the first direct selling business license in China in March 2006.  The improper payments also were made to avoid fines or negative news articles that could have impacted Avon’s clean corporate image required to retain the license.  Examples of improper payments alleged in the SEC’s complaint include paid travel for Chinese government officials within China or to the U.S. or Europe as well as such gifts as Louis Vuitton merchandise, Gucci bags, Tiffany pens, and corporate box tickets to the China Open tennis tournament.

“Avon’s subsidiary in China paid millions of dollars to government officials to obtain a direct selling license and gain an edge over their competitors, and the company reaped substantial financial benefits as a result,” said Scott W. Friestad, an Associate Director in the SEC’s Division of Enforcement.  “Avon missed an opportunity to correct potential FCPA problems at its subsidiary, resulting in years of additional misconduct that could have been avoided.”

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, the improper payments occurred from 2004 to 2008.  Avon management learned about potential FCPA problems at the subsidiary through an internal audit report in late 2005.  Avon management consulted an outside law firm, directed that reforms be instituted at the subsidiary, and sent an internal audit team to follow up.  Ultimately, however, no such reforms were instituted at the Chinese subsidiary.  Avon finally began a full-blown internal investigation in 2008 after its CEO received a letter from a whistleblower.

The SEC alleges that Avon’s books and records failed to accurately record the details and purpose of the payments.  In some instances, payments were concealed by falsely recording the transactions as employee business expenses or as reimbursement of a third-party vendor.  In other instances, the records for the payments set forth almost no detail at all.  The resulting books and records did not allow a reviewer to ascertain the government official or state-owned entities that received the payments or the purpose for which the payments were made.

The SEC’s complaint charges Avon with violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.  Avon, which neither admitted nor denied the allegations, agreed to pay disgorgement of $52,850,000 in benefits resulting from the alleged misconduct plus prejudgment interest of $14,515,013.13 for a total of more than $67.36 million.  In the parallel criminal matter, Avon entities agreed to pay $67,648,000 in penalties.  Avon also is required to retain an independent compliance monitor to review its FCPA compliance program for a period of 18 months, followed by an 18-month period of self-reporting on its compliance efforts.  Avon would be permanently enjoined from violating the books and records and internal controls provisions of the federal securities laws.  In reaching the proposed settlement, which is subject to court approval, the SEC considered Avon’s cooperation and significant remedial measures.

The SEC’s investigation was conducted by Paul W. Sharratt and Roger Paszamant and supervised by David Frohlich.  The SEC appreciates the assistance of the Fraud Section of the Department of Justice, the U.S. Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation.

FORMER OFFICERS OF OIL/GAS COMPANY CHARGED WITH FRAUD AND MAKING FALSE STATEMENTS

FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, May 28, 2013

Former Corporate Officers of China-Based Oil and Gas Company Charged with Fraud and False Statements

WASHINGTON – The former president and CEO, and the former vice president of corporate finance of China North East Petroleum Holdings Limited (CNEP), an oil and gas company whose stock is traded in the United States, have been charged with defrauding investors in connection with public offerings of stock.


Acting Assistant Attorney General Mythili Raman of the Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Assistant Director in Charge George Venizelos of the FBI’s New York Field Office; and Chief Richard Weber of the Internal Revenue Service’s Criminal Investigation (IRS-CI), made the announcement.


Wang Hongjun, 41, and Chao Jiang, 32, both Chinese citizens residing in California and New York, respectively, were indicted on May 23, 2013, with one count of conspiracy to commit wire and securities fraud and four counts of securities fraud, which each carry a maximum penalty of 25 years in prison. Jiang is also charged with two counts of false statements to the U.S. Securities and Exchange Commission (SEC) during sworn testimony, which each carry a maximum penalty of five years in prison. The indictment was made public today.

According to the indictment, Hongjun served as the president and CEO of CNEP from 2009 to 2010, and as the chairman of the Board of Directors beginning in 2010. Jiang served as the vice president of corporate finance and corporate secretary of CNEP from 2008 until approximately 2011. The charges allege that in June of 2009, CNEP registered a shelf offering with the SEC proposing to sell up to $40 million of CNEP common stock in the United States on the New York Stock Exchange. In September and December of 2009, CNEP made two separate offerings pursuant to the June registration. In documents filed with the SEC related to the offerings, and in other public statements to investors, Hongjun and Jiang informed investors that CNEP intended to use the funds raised from the securities offerings for general corporate purposes and to repay a prior corporate debt.

The indictment alleges that, instead of using the offering proceeds as represented to CNEP’s investors, Hongjun and Jiang misappropriated approximately $1,265,000 of the proceeds by wiring the money to bank accounts in the name of their family members – approximately $965,000 to Jiang’s father and approximately $300,000 to Hongjun’s wife – which was used, in part, to purchase a home in California, jewelry and a Mercedes-Benz.

In addition, the indictment alleges that Jiang testified falsely under oath to the SEC in Washington, D.C., about these transactions. In that testimony, Jiang stated that none of his family members had received anything of value over $500 from CNEP, despite having wired $965,000 from CNEP’s bank account to the account of his father. Jiang also testified falsely regarding the use of proceeds from the securities offerings.

An indictment is merely an accusation, and defendants are presumed innocent until proven guilty in a court of law.

In a related action, the SEC had previously filed a civil enforcement action against Hongjun, Jiang and others in the Southern District of New York.

The case was investigated by the FBI’s New York Field Office and IRS-CI. The department wishes to thank the SEC for its significant assistance in this case. The investigation is continuing.


This case is being prosecuted by Trial Attorneys Daniel Kahn and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Johnson for the District of Columbia.

EPA VOIDS CERTIFICATES APPROVING IMPORT OF 70,000 VEHICLES FROM CHINA DUE TO INCOMPLETE OR FALSIFIED CERTIFICATION INFORMATION

FROM: U.S. EVIRONMENTAL PROTECTION AGENCY
EPA Voids Certificates Approving Import of Over 70,000 Small Recreational Vehicles

WASHINGTON -- The U.S. Environmental Protection Agency (EPA) announced today that it is withdrawing approval of the import and sale of up to 74,000 gas-powered on- and off-road motorcycles and all-terrain vehicles from China. The agency believes that it received either incomplete or falsified certification information.

EPA issued the vehicle certificates from 2006 to 2012 to two companies which operate as Snyder Technology, Inc. and Snyder Computer Systems, Inc. (doing business as Wildfire Motors Corporation). As a result of a lengthy investigation, the agency believes that the applications for the certificates contained misleading information and must be voided.

All vehicles imported into or manufactured in the United States are required to have certificates of conformity. Manufacturers or importers must submit an application to EPA that describes the vehicle and its emission control system. It must also provide emissions data demonstrating that the vehicle will meet federal emission standards for certain pollutants, including oxides of nitrogen (NOx), carbon monoxide (CO), and total hydrocarbons (HC)--all of which can harm public health and the environment. These pollutants can contribute to soot (fine particles) and smog (ground-level ozone), which are associated with asthma and heart attacks, increased emergency room visits and premature death.

In the cases of Snyder and Wildfire, EPA believes the manufacturers failed to accurately test the emissions from their own products, all of which were imported from China. Without proper emission controls, these vehicles can emit substantially more pollution than allowable under Clean Air Act standards.