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Judge rules FCPA claims against Och-Ziff ‘masterminds’ are time barred

A federal judge in Brooklyn dismissed the SEC’s civil suit against two former executives of fund manager Och-Ziff Capital Management Group that accused them of violating the Foreign Corrupt Practices Act by orchestrating massive bribes across Africa.

Judge Nicholas Garaufis said Thursday in a 32-page opinion (pdf) the SEC’s civil claims against Michael L. Cohen and Vanja Baros were barred by the FCPA’s five-year statute of limitations.

The SEC alleged in a complaint (pdf) filed in January 2017 that the offenses occurred between May 2007 and April 2011.

Judge Garaufis rejected the SEC’s argument that tolling agreements had extended the statute of limitations enough to allow the claims, or that the SEC should be granted more time for discovery.

Cohen, 46, a dual U.S./UK citizen, was an Och-Ziff partner in London and a member of the firm’s management committee.

Baros, 45, an Australian, was an analyst based in London and member of Och-Ziff’s African Special Investment Team.

The SEC alleged that Cohen and Baros directed bribes to officials to win mining deals for Och-Ziff in Chad, Niger, Guinea, and the Democratic Republic of the Congo.

The complaint charged them with violating the FCPA and aiding and abetting Och-Ziff’s violations. Cohen was also charged with violating the Investment Advisers Act.

Kara Brockmeyer, then chief of the SEC’s FCPA unit, described Cohen and Baros as the “masterminds of Och-Ziff’s bribery scheme.”

In September 2016, Och-Ziff paid $412 million in criminal and civil penalties to resolve one of the biggest FCPA enforcement actions ever.

Two other Och-Ziff executives settled SEC charges that they violated the FCPA.

CEO and founder Daniel Och agreed to pay nearly $2.2 million to resolve the SEC action. CFO Joel Frank agreed to settle SEC charges that he caused FCPA violations in Libya and the DR Congo.

Frank and Och settled the SEC’s charges without admitting or denying the agency’s findings.

A former consultant to a mining company owned by an Och-Ziff joint venture was sentenced to two years in prison last year for conspiring to violate the FCPA. Samuel Mebiame, the son of a former Prime Minister of Gabon, admitted bribing officials in Niger, Chad, Guinea, and other countries.

In June last year, the U.S. Supreme Court ruled in Kokesh v. SEC that the SEC’s use of disgorgement as a remedy in enforcement actions is also subject to a five-year statute of limitations. The SEC routinely uses disgorgement in FCPA-related cases to recover ill-gotten profits from defendants.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.

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