Enforcement Action

 

Docket or Case Number:    17-cv-00430

Court:    E.D. New York

Initiation Date:    01/26/2017  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:   

  • Alicia M. Reed, SEC Boston Regional Office
  • Neil T. Smith, SEC Boston Regional Office
  • Marc J. Jones, SEC Boston Regional Office
  • Paul Block, SEC Boston Regional Office
  • Martin F. Healey, SEC Boston Regional Office

Assisting Agencies:    U.S. Department of Justice , Switzerland's Law Enforcement Agency , Federal Bureau of Investigation , Internal Revenue Service , Gibraltar Financial Services Commission , Cyprus Securities and Exchange Commission , Jersey's Law Enforcement Agency , Guernsey Law Enforcement Agency , Malta's Law Enforcement Agency , United Kingdom's Financial Services Authority

Type of Action:    SEC Federal Court Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Ongoing


Summary

Och-Ziff Capital Management Group LLC, a hedge fund incorporated in Delaware and headquartered in New York, controlled a variety of investment vehicles through myriad subsidiaries. The company provided investment advisory and management services to those vehicles in return for management fees and incentive income. Och-Ziff’s common stock was registered with the SEC and listed on the New York Stock Exchange.

Michael L. Cohen, a dual US/UK citizen, was a former Och-Ziff partner who, from 2007 through 2012, was the head of Och-Ziff’s European office and a member of Och-Ziff’s management committee. Cohen was also an owner and executive officer of OZ Management, an Och-Ziff subsidiary.

Vanya Baros, an Australian citizen that resided in the UK, was an employee of Och-Ziff Management Europe Limited, a wholly owned subsidiary of Och-Ziff, and an affiliated investment adviser to OZ Management. Baros reported to and worked closely with Cohen on Africa-related deals.

From 2007 through 2012, Cohen and Baros engaged in several large schemes that caused Och-Ziff to pay tens of millions of dollars in bribes to government officials in multiple African countries, including Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo. The payments were largely made through Och-Ziff's South African business partners in its joint venture, Africa Management Limited, and a variety of agents and shell commpanies. Cohen spearheaded and participated in all of the corrupt transactions, and Baros participated in many of them. The bribery schemes were intended to get Och-Ziff special access to investment opportunities as well as to obtain mining rights and other business in African countries and to financially benefit Cohen, Baros, and Och-Ziff's business partners and agents.

On January 26, 2017, the SEC filed a seven claim Complaint in the Eastern District of New York against Cohen and Baros alleging violations of the anti-bribery, books & records, and internal controls provisions of the FCPA as well as violations of the Advisers Act. Prior to the filing of this complaint, Cohen signed two tolling agreements with the SEC and Baros signed one. This case is ongoing.

Country(ies) involved:    Chad, Democratic Republic of the Congo, Guinea, Libya, Niger

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    N/A

Number of Related Enforcement Actions (Including This Enforcement Action):    5

Country(ies) involved:    Chad, Democratic Republic of the Congo, Guinea, Libya, Niger, Zimbabwe

Total $ Bribery Payments:    N/A

Total $ Revenue Generated from Bribery:    N/A

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

Total $ Monetary Sanctions:    $414,274,574

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    N/A

Name:    Michael L. Cohen

Employers & Positions:    Och-Ziff Capital Management Group LLC - Head of European Office ; OZ Management LP - Owner and executive officer

Country:    United States, United Kingdom

FCPA Claims:    Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1) ; Anti-Bribery, Aiding and Abetting (15 U.S.C. § 78dd-1, 15 U.S.C. § 78dd-2, and/or U.S.C. § 78dd-3) ; Books & Records, Aiding and Abetting (15 U.S.C. § 78m (b)(2)(A), and/or 15 U.S.C. § 78m(b)(5)) ; Internal Controls, Primary, Knowing Violation (15 U.S.C. § 78m(b)(5)) ; Books & Records, Primary, Falsification of accounting records (17 C.F.R. § 240.13b2–1) ; Books & Records, Primary, Knowing Violation (15 U.S.C. § 78m (b)(5))

Related Claims:    Advisers Act (15 U.S.C. §§ 80b-1 to 80b-21; 17 C.F.R. § 275.206) ; Aiding and Abetting Violations of the Advisers Act (15 U.S.C. §§ 80b-1 to 80b-21)

Statutory Basis for FCPA Jurisdiction:    Issuer (Employee) ; Issuer (Officer) ; Issuer (Director) ; Issuer (Agent) ; Aider & Abettor/Cause/Control Person


Name:    Vanya Baros

Employers & Positions:    Och-Ziff Capital Management Group LLC - Analyst ; Och-Ziff Management Europe Limited - Employee

Country:    Australia, United Kingdom

FCPA Claims:    Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1) ; Anti-Bribery, Aiding and Abetting (15 U.S.C. § 78dd-1, 15 U.S.C. § 78dd-2, and/or U.S.C. § 78dd-3) ; Books & Records, Aiding and Abetting (15 U.S.C. § 78m (b)(2)(A), and/or 15 U.S.C. § 78m(b)(5)) ; Internal Controls, Primary, Knowing Violation (15 U.S.C. § 78m(b)(5)) ; Books & Records, Primary, Falsification of accounting records (17 C.F.R. § 240.13b2–1) ; Books & Records, Primary, Knowing Violation (15 U.S.C. § 78m (b)(5))

Related Claims:    Aiding and Abetting Violations of the Advisers Act (15 U.S.C. §§ 80b-1 to 80b-21)

Statutory Basis for FCPA Jurisdiction:    Issuer (Employee) ; Issuer (Officer) ; Issuer (Director) ; Issuer (Agent) ; Aider & Abettor/Cause/Control Person

Period of Bribery:   2007 - 2012

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:    Chad, Democratic Republic of the Congo, Guinea, Libya, Niger

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, High-ranking executive officer; Libyan state security services
  • Name N/A, High-ranking official; Guinean government
  • Name N/A, Officials; Chadian government
  • Name N/A, High-ranaking officials; Nigeran government
  • Name N/A, High-ranking officials; Nigeran government
  • Name N/A, Officials; Nigeran government
  • Name N/A, High-ranking executive official; Government of the Democractic Republic of the Congo
  • Name N/A, Son of Colonel Muammar Gaddafi; Libyan government
  • Name N/A, Ambassador-at-Large; Government of the Democractic Republic of the Congo
  • Name N/A, High-ranking executive officer; Libyan Investment Authority
  • Name N/A, High-ranking officials; Guinean government

Defendant-Related Entities Involved in the Misconduct:    Africa Management Limited - Joint Venture ; OZ Africa Management - Subsidiary

Third-Party Intermediary:   

  • "Special Purpose Vehicle" , Shell Company
  • CEO of Africa Management Limited , Agent/Consultant/Broker
  • Gabonese Consultant , Agent/Consultant/Broker
  • Guernsey shell company , Shell Company
  • Israeli businessman with significant interests in the diamond and mining industries in the DRC , Agent/Consultant/Broker
  • London-based businessman with a multi-national network of companies , Agent/Consultant/Broker
  • Mining company controlled by the Israeli businessman , Shell Company
  • Nigeran attorney , Lawyer
  • Private investment company in the Turks & Caicos , Shell Company
  • Shell company controlled by the Israeli businessman , Shell Company
  • South African businessman who founded and controlled the private investment company in the Turks & Caicos , Agent/Consultant/Broker
  • South African businessman who was a former South African government official , Agent/Consultant/Broker
  • Tunisian business associate , Agent/Consultant/Broker
  • Unnamed intermediaries , Agent/Consultant/Broker

Type of Bribe:   Money, Automobile/Vehicle, Charitable Donation

Cash, Wire or Check:    Wire Transfer, No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Libya

Period of Bribery:   2007 – 2007

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:    Libya

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Son of Colonel Muammar Gaddafi; Libyan government;
  • Name N/A, High-ranking executive officer; Libyan Investment Authority;
  • Name N/A, High-ranking executive officer; Libyan state security services;

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

Third Party Intermediary:    "Special Purpose Vehicle" - Shell Company
Guernsey shell company - Shell Company
London-based businessman with a multi-national network of companies - Agent/Consultant/Broker
Tunisian business associate - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer, No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Niger and Chad

Period of Bribery:   2007 – 2012

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:    Chad, Niger

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Chadian government;
  • Name N/A, High-ranaking officials; Nigeran government;
  • Name N/A, High-ranking officials; Nigeran government;
  • Name N/A, Officials; Nigeran government;

Defendant-Related Entities Involved in the Misconduct:    Africa Management Limited - Joint Venture

Third Party Intermediary:    CEO of Africa Management Limited - Agent/Consultant/Broker
Gabonese Consultant - Agent/Consultant/Broker
Nigeran attorney - Lawyer
Private investment company in the Turks & Caicos - Shell Company
South African businessman who founded and controlled the private investment company in the Turks & Caicos - Agent/Consultant/Broker
South African businessman who was a former South African government official - Agent/Consultant/Broker
Unnamed intermediaries - Agent/Consultant/Broker

Type of Bribe:   Money, Automobile/Vehicle, Charitable Donation

Cash, Wire or Check:    No Available, Wire Transfer

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in the Democratic Republic of the Congo

Period of Bribery:   2007 – 2012

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:    Democratic Republic of the Congo

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, High-ranking executive official; Government of the Democractic Republic of the Congo;
  • Name N/A, Ambassador-at-Large; Government of the Democractic Republic of the Congo;

Defendant-Related Entities Involved in the Misconduct:    OZ Africa Management - Subsidiary

Third Party Intermediary:    Israeli businessman with significant interests in the diamond and mining industries in the DRC - Agent/Consultant/Broker
Mining company controlled by the Israeli businessman - Shell Company
Shell company controlled by the Israeli businessman - Shell Company

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Guinea

Period of Bribery:   2011 – 2011

Total Bribery Payments:    $25,150,000

Total Revenue Generated from Bribery:    N/A

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

Country(ies) involved:    Guinea

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, High-ranking officials; Guinean government;
  • Name N/A, High-ranking official; Guinean government;

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

Third Party Intermediary:    Gabonese Consultant - Agent/Consultant/Broker
Private investment company in the Turks & Caicos - Shell Company
South African businessman who founded and controlled the private investment company in the Turks & Caicos - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available, Wire Transfer

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  No


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

N/A

Mitigating Factors Referenced by the Government (Individual Defendants):

Defendant Cooperation
Michael L. Cohen  
Vanya Baros  

Aggravating Factors Referenced by the Government (Individual Defendants):

Defendant Insufficient Cooperation
Michael L. Cohen  
Vanya Baros  

Total Monetary Sanctions for the Action:    $0

Case Status:    Ongoing


Disposition:    Undetermined

Date of Disposition:    N/A

Michael L. Cohen

—  Total Monetary Sanctions for Defendant:    $0


Vanya Baros

—  Total Monetary Sanctions for Defendant:    $0

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