Enforcement Action

 

Docket or Case Number:    16-mj-03525

Court:    D. New Jersey

Initiation Date:    03/01/2016  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Andrew Weissman, Chief, Fraud Section, Criminal Division
  • James P. McDonald, Trial Attorney, Fraud Section, Criminal Division
  • Paul J. Fishman, United States Attorney
  • Deborah J. Gannett, Assistant United States Attorney
  • R. David Walk, Jr., Assistant United States Attorney

Assisting Agencies:    Federal Bureau of Investigation , Department of Justice- Criminal Division’s Office of International Affairs , Department of Health and Human Services, Office of Counsel to the Inspector General , Department of Health and Human Services, OIG Office of Criminal Investigations , National Association of Medicaid Fraud Control Units

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    Whistleblower

Whistleblower:    Yes (Compliance officer)

Case Status:    Resolved


Summary

Olympus Corporation (“Olympus”), a Japanese corporation headquartered in Tokyo, Japan, manufactured and distributed commercial photographic equipment and specialized medical imaging and surgical equipment, including endoscopes and microscopes.

Olympus Corporation of the Americas (“OCA”), a New York corporation headquartered in Center Valley, Pennsylvania, distributed Olympus’ products in the Americas.

Olympus Latin America, Inc. (“OLA”), a Delaware corporation headquartered in Miami, Florida, was a majority owned subsidiary of OCA and distributed Olympus’ medical imaging equipment in the Caribbean and Latin America. OLA's customers included both government and private entities, and OLA typically worked with third-party distributors in sales to those customers.

Olympus Optical do Brasil Ltda. (“OBL”), a Brazilian corporation headquartered in Sao Paolo, Brazil, was a majority owned subsidiary of OLA, which distributed Olympus medical imaging and surgical equipment in Brazil. OBL was supervised and managed by OLA.

From 2006 through about August 2011, OLA’s senior management instituted a plan to make improper payments and gifts to certain health care practitioners (“HCPs”) employed at government-owned and private health care facilities in Central and South America in order to influence those facilities's decisions to purchase Olympus equipment or to prevent the purchase of competitors' products. The improper payments took the form of cash, money transfers, non-business related travel, free or heavily discounted equipment, and other things of value. In total during that time, OLA made at least $2,999,560 in hundreds of unlawful payments and recognized at least $7,556,566 in profits as a result of its unlawful payments.

On March 1, 2016, OLA and OCA entered into a three-year Deferred Prosecution Agreement (DPA) with the DOJ. Under the terms of the DPA, OLA agreed to pay a monetary fine of $22.8 million. OLA received credit of 20% for its cooperation, including conducting an extensive internal investigation, translating documents as necessary, and collecting, analyzing, and organizing voluminous evidence and information for the Offices. OLA and OCA also agreed to hire an independent monitor for a term of three years to report to the DOJ on the status of OLA and OCA's implementation of enhanced anti-corruption compliance policies and procedures.

The improper payments were brought to the attention of the government by a whistleblower, John Slowik, who was a former compliance officer for Olympus. Slowik filed a federal lawsuit under the qui tam or "whistleblower" provisions of the False Claims Act, which allows private persons to file lawsuits against individuals and businesses that have defrauded the federal government and to get a share of any recovery received by the government. Slowik will receive $51 million for his part in the Olympus prosecution, which is one of the largest whistleblower awards in history.

OCA was also the subject of a related investigation by the U.S. Attorney for the District of New Jersey into allegations that the company violated the U.S. Anti-Kickback Statute and the U.S. False Claims Act. The DOJ and OCA settled, resolving the parallel criminal and civil investigations, and OCA agreed to pay $612 million plus interest.

Country(ies) involved:    Argentina, Bolivia, Brazil, Colombia, Costa Rica, Mexico

Sanction to Bribe Ratio:    $22,800,000 / $2,999,560 = 760.11 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $22,800,000 / $7,556,566 = 301.72 %

Number of Related Enforcement Actions (Including This Enforcement Action):    1

Country(ies) involved:    Argentina, Bolivia, Brazil, Colombia, Costa Rica, Mexico

Total $ Bribery Payments:    $2,999,560

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $7,556,566

Total $ Monetary Sanctions:    $22,800,000

Sanction to Bribe Ratio:    $22,800,000 / $2,999,560 = (760.11 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $22,800,000 / $7,556,566 = (301.72 %)

Name:    Olympus Latin America, Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Subsidiary

FCPA Claims:    Anti-Bribery, Conspiracy (18 U.S.C. 371) ; Anti-Bribery, Primary, Domestic Concern (15 U.S.C. § 78dd-2)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Domestic Concern ; Conspirator


Name:    Olympus Corporation of the Americas

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Subsidiary

FCPA Claims:    N/A

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    N/A

Period of Bribery:   2007 - 2011

Total Bribery Payments:    $2,999,560

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $7,556,566

Country(ies) involved:    Argentina, Bolivia, Brazil, Colombia, Costa Rica, Mexico

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Officials; Mexico Hospital System
  • Name N/A, Official; Brazilian health ministry
  • Name N/A, Health Care Practitioner; Brazil Hospital 1
  • Name N/A, Physician 1; Brazil Hospital 2
  • Name N/A, Physician 2; Brazil Hospital 2
  • Name N/A, Physician; Bolivian Hospital
  • Physician 2; Physician; Colombia hospital
  • Physician 3; Physician; Argentina Hospital
  • Physician 4; Physician; Costa Rican health ministry

Defendant-Related Entities Involved in the Misconduct:    Mexico JV - Joint Venture

Third-Party Intermediary:   

  • Brazil-based distributor , Agent/Consultant/Broker
  • Mexico Agent , Agent/Consultant/Broker

Type of Bribe:   Money, Non-Cash Gifts, Travel/Lodging, Tools/Machinery/Equipment

Cash, Wire or Check:    No Available, Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business, Prevent/reduce competition

TRANSACTION OVERVIEW
Misconduct in Brazil

Period of Bribery:   2007 – 2009

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Brazil

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Official; Brazilian health ministry;
  • Name N/A, Health Care Practitioner; Brazil Hospital 1;
  • Name N/A, Physician 1; Brazil Hospital 2;
  • Name N/A, Physician 2; Brazil Hospital 2;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Brazil-based distributor - Agent/Consultant/Broker

Type of Bribe:   Money, Non-Cash Gifts, Travel/Lodging

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business, Prevent/reduce competition

TRANSACTION OVERVIEW
Misconduct in Bolivia

Period of Bribery:   2009 – 2010

Total Bribery Payments:    $25,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Bolivia

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Physician; Bolivian Hospital;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Tools/Machinery/Equipment, Travel/Lodging, Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Misconduct in Colombia

Period of Bribery:   2008 – 2010

Total Bribery Payments:    $24,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Colombia

Officials Potentially Influenced (Name; Title; Organization):  

  • Physician 2; Physician; Colombia hospital;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Travel/Lodging, Money

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business, Prevent/reduce competition

TRANSACTION OVERVIEW
Misconduct in Argentina

Period of Bribery:   2008 – 2009

Total Bribery Payments:    $20,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Argentina

Officials Potentially Influenced (Name; Title; Organization):  

  • Physician 3; Physician; Argentina Hospital;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Travel/Lodging

Cash, Wire or Check:    N/A

Purpose of Bribe:    Obtain/retain business, Prevent/reduce competition

TRANSACTION OVERVIEW
Misconduct in Mexico

Period of Bribery:   2008 – 2011

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Mexico

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Mexico Hospital System;

Defendant-Related Entities Involved in the Misconduct:    Mexico JV - Joint Venture

Third Party Intermediary:    Mexico Agent - Agent/Consultant/Broker

Type of Bribe:   N/A

Cash, Wire or Check:    N/A

Purpose of Bribe:    Obtain/retain business, Prevent/reduce competition

TRANSACTION OVERVIEW
Misconduct in Costa Rica

Period of Bribery:   2010 – 2010

Total Bribery Payments:    $3,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Costa Rica

Officials Potentially Influenced (Name; Title; Organization):  

  • Physician 4; Physician; Costa Rican health ministry;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Travel/Lodging

Cash, Wire or Check:    N/A

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Olympus Corporation of the Americas; Olympus Corporation; Olympus Latin America, Inc.

Subsidiary:  Olympus Latin America, Inc.

  • Percentage of Ownership:   
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Olympus Optical do Brasil Ltda.

  • Percentage of Ownership:   
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Olympus Corporation of the Americas

  • Percentage of Ownership:    N/A
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Olympus Corporation of the Americas    
Olympus Latin America, Inc.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Olympus Corporation of the Americas  
Olympus Latin America, Inc.  

Total Monetary Sanctions for the Action:    $22,800,000

Case Status:    Resolved


Disposition:    Deferred Prosecution Agreement

Date of Disposition:    03/01/2016

Olympus Latin America, Inc.

—  Total Monetary Sanctions for Defendant:    $22,800,000

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Independent monitor

—  Admission of Guilt/Acceptance of Responsibility:    Yes


Olympus Corporation of the Americas

—  Total Monetary Sanctions for Defendant:    $0

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Independent monitor

—  Admission of Guilt/Acceptance of Responsibility:    Yes

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