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What You Need to Know 

  • Key takeaway #1In the event that an entity discovers a potential criminal sanctions, export control, or other national security violation, submitting a voluntary self-disclosure to the U.S. Department of Justice or other relevant agencies can be a significant mitigating factor. 
  • Key takeaway #2Regardless of whether a voluntary self-disclosure is submitted, engaging in an internal review to understand the scope of the violations and compliance program breaches is a crucial step to determine the parties’ risk exposure. 
  • Key takeaway #3Companies that have access to, or develop, export-controlled items and emerging technologies should ensure they have strong enough compliance measures in place to prevent outside parties from accessing those items. 

On May 22, 2024, the U.S. Department of Justice’s National Security Division (NSD) announced its first declination to prosecute a company under its Enforcement Policy for Business Organizations (Enforcement Policy). 

An employee of the biochemical company Sigma-Aldrich, Inc., doing business as MilliporeSigma, conspired to fraudulently procure discounted products and export them to China using falsified export documents, in conjunction with another individual who falsely represented that he was affiliated with a U.S. university research lab.  The products contained chemical compounds subject to the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). 

While the employee and a third-party purchaser each pleaded guilty to one count of wire fraud conspiracy for their involvement in the scheme, DOJ declined to prosecute MilliporeSigma, citing the company’s prompt disclosure of the misconduct and cooperation with NSD.  Under  the recently updated Enforcement Policy, NSD will generally not seek a guilty plea, and a company will presumptively receive a non-prosecution agreement without paying a fine, when a company: 

  1. Voluntarily self-discloses potential criminal violations arising out of or relating to the enforcement of export control or sanctions laws; 
  1. Fully cooperates; and 
  1. Timely and appropriately remediates. 

In the declination letter, NSD cited five key facts that informed its decision not to prosecute MilliporeSigma. 

  • First, the company self-disclosed the misconduct “a week after retaining outside counsel to conduct an internal investigation and before obtaining a complete understanding of the nature and full extent of the misconduct.” 
  • Second, the company provided “exceptional and proactive cooperation,” disclosing all relevant facts about the misconduct of individuals and agreeing to provide ongoing cooperation. 
  • Third, the products did not pose a “significant threat to national security,” and, in some instances, did not require an U.S. export license. 
  • Fourth, the company terminated the involved salesperson and improved its internal controls and compliance program. 
  • Finally, the company itself was a victim to the scheme. 

In addition, because the company did not unlawfully obtain any gains from the offenses for which it was potentially liable, NSD did not require the company to pay any disgorgement, forfeiture, or restitution. 

The declination, the first of its kind, signals that DOJ will continue to incentivize companies to come forward voluntarily upon learning of misconduct, and that it will continue to prioritize the enforcement of export controls and sanctions violations.  DOJ has consistently messaged that “sanctions are the new FCPA” and that it will seriously consider a company’s actions following the discovery of the unlawful activity as part of its enforcement decisions. 

As Deputy Attorney General Lisa Monaco emphasized at the American Bar Association’s 39th National Institute on White Collar Crime in March 2024, “no matter how good a company’s cooperation, a resolution will always be more favorable with voluntary self-disclosure.” 

After the publication of DOJ’s decision to decline to prosecute, Assistant Secretary for Export Enforcement Matt Axelrod reminded the public that the “announcement provides yet another fact pattern for universities to beware of — the misuse of academic institutions by outsiders who seek to obscure the actual customer of controlled items.” 

Accordingly, if and when companies, universities, or other entities discover potential violations, they should retain counsel with expertise in the respective area of law to conduct an internal investigation, identify underlying causes or vulnerabilities that may have contributed to the violation, help determine whether to self-disclose (and to whom), and assist with remediation of compliance programs. 

WRITTEN BY

For further information, please contact:

Caroline E. Brown – Partner,
cbrown@crowell.com

Overview

Caroline E. Brown is a partner in Crowell & Moring’s Washington, D.C. office and a member of the firm’s White Collar and Regulatory Enforcement and International Trade groups and the steering committee of the firm’s National Security Practice. She provides strategic advice to clients on national security matters, including anti-money laundering (AML) and economic sanctions compliance and enforcement challenges, investigations, and cross border transactions, including review by the Committee on Foreign Investment in the United States (CFIUS) and the Committee on Foreign Investment in the U.S. Telecommunications Services Sector (Team Telecom).

Caroline brings over a decade of experience as a national security attorney at the U.S. Departments of Justice and the Treasury. At the U.S. Department of Justice’s National Security Division, she worked on counterespionage, cybersecurity, and counterterrorism matters and investigations, and gained unique insight into issues surrounding data privacy and cybersecurity. In that role, she also sat on both CFIUS and Team Telecom and made recommendations to DOJ senior leadership regarding whether to mitigate, block, or allow transactions under review by those interagency committees. She also negotiated, drafted, and reviewed mitigation agreements, monitored companies’ compliance with those agreements, and coordinated and supervised investigations of breaches of those agreements.

Most recently, she served as an Attorney-Advisor in the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), where she developed an in-depth understanding of AML regulation and enforcement and FinCEN’s role in guarding the U.S. financial system against money laundering and terrorist financing. Before joining FinCEN, she served as an attorney in the Treasury Department’s Office of General Counsel, Enforcement and Intelligence, which provides counsel to the Undersecretary for Terrorism and Financial Intelligence. There, Caroline advised on sanctions, AML, and various other national security issues relevant to the nation’s financial system.

While at DOJ, Caroline was detailed to the White House for a year, where she coordinated communications strategy focused on national security. She previously worked on the 2008 Obama Presidential Campaign and served on the Obama Presidential Transition Team from 2008 to 2009. Her time at the White House as well as at Treasury and DOJ has given her significant experience managing rapid response and crisis communications.

Caroline’s time in government has enabled her to build strong relationships at senior levels across a number of U.S. government agencies, including DOJ, the FBI, the National Intelligence Council and other components of the Intelligence Community, the FCC, and the Departments of Defense, Homeland Security, State, Energy, Commerce, and the Treasury.

Caroline began her legal career as a law clerk for the Honorable Jon McCalla in the U.S. District Court for the Western District of Tennessee before joining the litigation group of a global law firm in Washington, D.C. She is a former term member on the Council on Foreign Relations, a National Security Fellow at the Foundation for the Defense of Democracies, an Aspen Institute Socrates Scholar, and a Young Leader of the transatlantic organization Atlantik-Brucke.   

Career & Education

Government Experience

Department of the Treasury
Attorney-Advisor, Financial Crimes Enforcement Network
Attorney-Advisor, Office of the General Counsel, Enforcement and Intelligence, 2015 – 2019

The White House
Detailed from DOJ to the White House Office of Communications, 2010 – 2011

Department of Justice: National Security Division
Attorney-Advisor, 2009 – 2015

Education

Duke University, B.A., 1998

University of Michigan Law School, J.D., 2002

Admissions

District of Columbia

New York

Affiliations / Professional Activities and Memberships

Council on Foreign Relations, Term Member (former)

National Security Fellow, Foundation for the Defense of Democracies

Socrates Scholar, Aspen Institute

Atlantik-Brucke

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