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Enforcement Action Dataset

 

Initiation Date:    06/21/2016  Information

Prosecuting Agency:    U.S. Department of Justice

Name of Prosecuting Attorneys:   

  • Andrew Weissman, Chief, Fraud Section, Criminal Division
  • Aisling O'Shea, Trial Attorney, Fraud Section, Criminal Division
  • Carmen M. Ortiz, United States Attorney
  • Ryan DiSantis, Assistant United States Attorney

Assisting Agencies:    U.S. Securities and Exchange Commission , Federal Bureau of Investigation , Department of Justice- Criminal Division’s Office of International Affairs

Type of Action:    DOJ Criminal Proceeding

Docket or Case Number:    N/A

Court:    N/A

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Analogic Corporation was a Massachusetts corporation that designed and manufactured advanced medical imaging, ultrasound, and security technology systems. The company's shares were registered with the SEC and traded on the NASDAQ under the symbol “ALOG.” Analogic had multiple subsidiaries, including BK Medical Aps, a wholly-owned Danish subsidiary that Analogic acquired in 1996 and which focused on the manufacture and sale of ultrasound systems.

From about 2001 to 2011, BK Medical participated in hundreds of suspicious transactions in Russia, Ghana, Israel, Kazakhstan, Ukraine, and Vietnam at the direction of its distributors in those countries. These transactions posed a significant risk of bribery or other improper conduct because of the way they were structured, which involved overpayments to BK Medical by its distributers based on inflated invoices. The excess funds from these overpayments were then funneled to unknown third parties all over the world for unknown reasons. Approximately $20 million flowed through BK Medical from these distributors, with over $16 million from BK Medical’s Russian distributor alone.

On June 21, 2016, the DOJ entered into a Non-Prosecution Agreemet with BK Medical. Under the terms of the agreement, the DOJ would not prosecute BK Medical for its knowing and willful violations of the books & records provisions of the FCPA, and BK Medical agreed to pay a criminal fine of $3,402,000, implement an enhanced anti-corruption compliance program, and self-report the status of that program to the DOJ for a term of 3 years. The DOJ specifically cited Analogic's voluntary self-disclosure and extensive remediation as factors in agreeing to the NPA with BK Medical; however, the DOJ also noted that BK Medical did not receive full cooperation credit because it did not disclose all relevant facts initially. Taking into consideration these factors, among others, the DOJ imposed a fine that was 30% below the bottom of the sentencing guidelines range.

In a related administrative action settled on the same day, the SEC ordered Analogic and former BK Medical CFO Lars Frost to cease and desist violations of the books & records and internal controls provisions of the FCPA. Analogic was ordered to pay disgorgement of $7,672,651 plus prejudgment interest of $3,810,311, but in light of the criminal fine levied against BK Medical in its Non-Prosecution Agreement with the DOJ, the SEC imposed no civil fine on Analogic. The SEC further acknowledged Analogic's self-reporting, cooperation, and remedial measures. Frost was ordered to pay a civil fine of $20,000.

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