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U.S. v. Olympus Latin America, Inc.

 
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Olympus Latin America, Inc.
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DOJ Criminal
:
March 1, 2016
:
U.S. v. Olympus Latin America, Inc.
:
U.S. v. Olympus Latin America, Inc., No. 2:16-mj-03525 (D.N.J. 2016)
:
The FCPA enforcement action against Olympus Latin America, Inc. was coupled with another set of charges against Olympus Latin American, Inc.’s parent company, Olympus Corporation of the Americas, for violations of the Anti-Kickback Statute. In total, Olympus Latin America, Inc. and Olympus Corporation of the Americas paid sanctions totaling $623.2 million. The global kickback scheme at Olympus was originally brought to the attention of the government by the corporation’s compliance officer, John Slowik. As a settlement for his qui tam action under the False Claims Act, Mr. Slowik was awarded $51 million.
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Healthcare-Medical Devices
:
Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Mexico
:
2006; 2007; 2008; 2009; 2010; 2011
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Health care practitioners (“HCPs”) employed at government-owned and private health care facilities who could authorize or influence those facilities’ decisions to purchase Olympus equipment and prevent public institutions from purchasing or converting to the technology of competitors.
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Olympus Latin America (“OLA”) is a Delaware corporation headquartered in Miami, Florida. OLA is a majority owned subsidiary of Olympus Corporation of the Americas, a company headquartered in Pennsylvania which engages in the business distributing medical imaging, photographic, and surgical equipment in the United States, Canada, Central America, and South America.

According to the DOJ, between 2006 and 2011, senior management at OLA developed and implemented a plan to increase medical equipment sales by providing cash, gifts, entertainment and travel to HCPs at various state-owned and private health care facilities. OLA allegedly delivered these improper benefits to HCPs by opening and directing side benefits to “training centers” and selecting certain HCPs, known as “Key Opinion Leaders,” to run and manage the training centers. HCPs, who were best able to influence purchasing decisions at state-owned medical facilities or who sat on public tender boards, were allegedly chosen as Key Opinion Leaders.

As compensation for their management of OLA’s training centers in South America, the DOJ claims that Key Opinion Leaders were provided an annual salary of $65,000 per year, given a 50% discount on Olympus equipment and provided a $130,000 budget for “VIP Management.” In addition, OLA is accused of establishing a “Miles Program” which provided Key Opinion Leaders with free travel for personal, non-business reasons. According to the DOJ, Key Opinion Leaders were provided between 5,000 and 30,000 “miles”, the equivalent of $5,000 to $30,000 in compensation under the Miles Program.

Throughout the relevant period, the DOJ claims that senior management and certain sales representatives from OLA made efforts to hide the improper benefits to HCPs from government agencies and hospital authorities in the United States and across South America. This was allegedly accomplished by omitting any reference to payments, gifts, travel or personal equipment discounts from relevant contact language or entering into side agreements with the HCP.

In total, from 2006 to 2011, the DOJ argues that OLA and certain employees, agents and third-party distributors authorized the payment, directly or indirectly, of at least $2,999,560 to HCPs in South America via cash, gifts and travel. During this period, OLA allegedly recognized at least $7,556,566 in profits as a result of its unlawful payments.

On March 1, 2016, the DOJ announced that it had entered into a deferred prosecution agreement with OLA to settle one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA’s anti-bribery provision. OLA agreed to pay a criminal penalty $22.8 million to settle the FCPA related charges. In addition to the FCPA violations, OLA’s corporate parent, Olympus Corporation of the Americas, entered into a separate three-year deferred prosecution agreement to settle violations of the Anti-Kickback Status, agreeing to pay a $312.4 million criminal penalty and $310.8 million to settle civil claims under the federal and various state False Claims Acts.
:
Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
:
Deferred-prosecution Agreement
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$22.8 million criminal penalty.
:
22,800,000
:
0
:
Domestic Concern
:
Foreign
:
Japan
:
Contract Procurement/Retention
:
7,556,566
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Cash, Gifts, Travel
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Shell entity
:
Not stated.
:
Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Mexico
:
No
:
No