March 18, 2021

Former hedge fund CFO settles bribery charges with the SEC

On March 16, 2021, Joel Frank, the former Chief Financial Officer of Och-Ziff Capital Management Group, LLC (Och-Ziff) and its wholly-owned subsidiary Och-Ziff Management LP (OZM), entered into an administrative resolution with the US Securities and Exchange Commission in connection with Frank’s role in an international bribery scheme.

According to the SEC Order, between 2007 and 2011 Och-Ziff entered into seven relationships and investments in which Och-Ziff and OZM used investor funds to make corrupt payments to government officials in several African countries in order to obtain or retain business for Och-Ziff.  The SEC Order further states that Frank—who had to approve each transaction and expenditure of funds—expressed initial objections to Och-Ziff’s CEO as to certain of these payments, but, after the CEO decided to move forward with these transactions despite Frank’s objections, ultimately authorized and approved each corrupt payment.  According to the Order, Frank also failed to ensure that required information regarding these transactions was documented, that appropriate business partner information was obtained, and that ongoing due diligence and audits were properly performed.  As a result, the SEC found that Frank caused Och-Ziff to violate the FCPA’s books and records and internal controls provisions.  Without admitting or denying the SEC’s findings, Frank agreed to pay a $35,000 civil monetary penalty.

Frank’s March 2021 SEC resolution stems from a prior 2016 administrative resolution Och-Ziff, OZM, Och-Ziff’s CEO, and Frank entered into with the SEC in connection with this same misconduct.  In that resolution, Och-Ziff and OZM agreed to pay $199 million in disgorgement and pre-judgment interest.  Separately, without admitting or denying the SEC’s findings, Och-Ziff’s CEO agreed to pay $2.1 million in disgorgement and pre-judgment interest, and Frank agreed to be subject to additional proceedings to determine what penalties the SEC would levy against him.  Also in 2016, Och-Ziff entered into a deferred prosecution agreement with the US Department of Justice in which it agreed to pay a $213 million criminal penalty.

More recently, in 2019 Michael Leslie Cohen, the former head of Och-Ziff’s European office, received three months in prison and was fined $250,000 for attempts to obstruct the SEC investigation, and in November 2020 an Och-Ziff subsidiary, OZ Africa Management GP, LLC, was ordered to pay over $135 million in restitution to shareholders over allegations that the shareholders had lost their interest in a mine in the Democratic Republic of Congo as a result of Och-Ziff’s bribery. 

SEC Order | DOJ Press Release (2016) | SEC Press Release (2016)