June 6, 2024

DOJ issues first-ever declination to prosecute a company that self-disclosed possible sanctions or export violations

The U.S. Department of Justice recently announced its first-ever declination to prosecute a company that promptly and voluntarily self-disclosed misconduct involving a scheme to fraudulently procure discounted products from a U.S.-based biochemical company for export to China using falsified export documents.  At the same time, the DOJ reported that Gregory Muñoz, a former salesperson for Massachusetts biochemical company Sigma-Aldrich Inc., doing business as MilliporeSigma, and his alleged accomplice, Pen Yu (also known as Ben Yu) each pleaded guilty to one count of wire fraud for their roles in the scheme.

According to the DOJ, the decision not to prosecute MillporeSigma was made after considering factors set forth in the DOJ’s “Principles of Federal Prosecution of Business Organizations” and the National Security Division (“NSD”) “Enforcement Policy for Business Organizations”, which creates a presumption that companies will receive a non-prosecution agreement if certain factors are met and no aggravating factors are found.  The factors considered by the DOJ include MillporeSigma’s 1) voluntary self-disclosure to the NSD of possible violations of export control or sanctions laws;  2) full cooperation with investigators; and 3) timely and appropriate remediation of the alleged criminal misconduct.  Because of MillporeSigma’s prompt disclosure and “exceptional cooperation” with DOJ investigators, law enforcement officials were able to identify the most culpable individuals and disrupt the scheme.  The disclosures, which were reportedly made before MillporeSigma’s investigation was complete, enabled U.S. authorities to seize multiple illegal shipments before they were exported to China, and helped establish probable cause, which enabled prosecutors to obtain guilty pleas from Yu and Muñoz, the key participants in the scheme.

According to court documents, between July 2016 and at least May 2023, Yu misrepresented that he was affiliated with an academic research lab at an unnamed Florida university in order to procure biochemical products from a MilliporeSigma subsidiary with the help of Muñoz.  Yu’s false persona allegedly enabled him to obtain more than $4.9 million in discounts and other benefits not available to the public.  When the products arrived at the university, a stockroom employee diverted the products to Yu who allegedly repackaged the products and was able to ship them to China by providing false information in export documents regarding the shipments’ value and contents.  Yu purportedly paid Muñoz thousands of dollars in gift cards for his role in the scheme.

DOJ Press Release | DOJ Declination Letter | Criminal Information – Yu | Plea Agreement – Yu | Criminal Information – Muñoz | Plea Agreement – Muñoz   | NSD Enforcement Policy | DOJ Principles of Prosecution