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Financial Fraud Law

$8 Billion Collected by Justice Department in Civil and Criminal Cases in Fiscal Year 2013

 The Justice Department collected a lot of money in civil and criminal cases during the last fiscal year. Attorney General Eric Holder totaled it up, and came to at least $8 billion.

“The department’s enforcement actions not only help to ensure justice is served, but also deliver a valuable return to the American people,” said Holder.  “It is critical that Congress provide the resources necessary to match the department’s mounting caseload.  As these figures show, supporting our federal prosecutors is a sound investment.”

The statistics indicate that in FY 2013, approximately $5.9 billion was collected by the department’s litigating divisions and the U.S. Attorneys’ offices in individually and jointly handled civil actions.  The largest civil collections, according to the department, were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct and collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. The Justice Department said that this number included approximately $3.2 billion related to health care fraud and more than $430 million related to environmental cases.  In addition, civil debts were collected on behalf of several federal agencies, including the Department of Housing and Urban Development, the Department of Health and Human Services, the Internal Revenue Service, the Small Business Administration and the Department of Education.

The Justice Department’s litigating divisions and U.S. Attorneys’ offices also collected approximately $2.2 billion in restitution, criminal fines, and felony assessments.  This total included more than $450 million in criminal fines associated with health care fraud, more than $600 million in antitrust violation fines, more than $390 million in fines for environmental violations and more than $42 million in fines for tax fraud violations, according to the Justice Department.

The approximately $8.1 billion taken in by the department as a whole in FY 2013 represents nearly three times the approximately $2.76 billion of the department’s direct appropriations that pay for the 94 U.S. Attorneys’ offices and its main litigating divisions.

The total includes all monies collected as a result of Justice Department-led enforcement actions and negotiated civil settlements.   It includes more than $5.48 billion in payments made directly to the Justice Department, and $2.61 billion in indirect payments made to other federal agencies, states, and other designated recipients.
In measuring collections recovered in FY 2013, the Justice Department said that the figure included some cases that were resolved in previous years but the proceeds of which were collected in FY 2013.   The Justice Department provided the following highlights:

Health Care Fraud

As in previous years, the largest collections related to health care fraud.   For example, the Justice Department collected more than $800 million of its total $1.5 billion settlement with Abbott Laboratories resolving criminal and civil allegations that Abbott illegally promoted the drug Depakote to treat agitation and aggression in elderly dementia patients and schizophrenia when neither of these uses was approved as safe and effective by the FDA. Of the total, Abbott paid a $500 criminal fine in FY 2012 following its guilty plea (the total $1.5 billion settlement also includes nearly $200 million in forfeited assets). In another major pharmaceutical case, the U.S. collected more than $748 million from its total $762 million settlement (including $14 million in forfeited assets) with biotech giant Amgen Inc. to settle allegations including Amgen’s illegal promotion of Aranesp, a drug used to treat anemia, in doses not approved by the FDA and for off-label use to treat non-anemia-related conditions.   

Deepwater Horizon

Among other major collections in FY 2013 were penalties and fines collected from BP Exploration and Production Inc., and Transocean Deepwater Inc., stemming from their roles in the disastrous April 2010 Deepwater Horizon rig explosion in the Gulf of Mexico that cost 11 men their lives and resulted in the largest oil spill in U.S. history.

Out of the $4 billion total criminal settlement with BP, the U.S. collected $256 million in criminal fines in FY 2013 following January 2013 convictions for manslaughter, obstruction of justice and environmental crimes.  The U.S. will recover an additional $1 billion in criminal fines from the resolution over the next four years under the court schedule.  An additional $2.39 billion in non-fine criminal penalties is dedicated to environmental and wildlife conservation efforts in the Gulf, as well as $350 million in spill prevention and response efforts.  During FY 2013, BP made initial payments of $105 million towards these additional obligations, and will pay the rest over the next four years, under the court’s schedule.

In FY 2013, the department collected $100 million in criminal fines owed by Transocean for its role in the oil spill.  Transocean also paid $60 million towards an additional $300 million in non-fine criminal penalties slated for Gulf conservation, spill prevention and response efforts, and it paid $404 million of $1 billion in civil penalties imposed under the Clean Water Act.

Price Fixing and Bid Rigging

Some of the department’s largest collections related to the Antitrust Division’s criminal prosecutions of international conspiracies to fix prices, rig bids and allocate markets.  For example, in FY 2013, the Justice Department collected more than $326 million from its total of $1.39 billion in criminal fines resulting from its investigation into price fixing of thin-film transistor liquid crystal display (LCD) panels.  Two hundred and fifty million dollars was collected in FY 2013 from LCD manufacturer AU Optronics’ $ 500 million total fine for its conviction after an eight-week trial.  In addition, the United States collected more than $124 million in criminal fines in FY 2013 related to the department’s ongoing investigation into price fixing and bid rigging in the automotive parts industry, out of a total of more than $1.6 billion in fines obtained in the investigation through FY 2013. 

Tax Conspiracy

The U.S. collected more than $42 million in restitution and fines in a single tax case involving Wegelin & Co., a Swiss private bank that pleaded guilty to conspiring with U.S. taxpayers and others to hide more than $1.2 billion in secret Swiss bank accounts and the income generated in these accounts from the Internal Revenue Service.   As part of its guilty plea, Wegelin agreed to pay approximately $20 million in restitution to the IRS and to pay a $22.05 million fine.  In addition, Wegelin agreed to the civil forfeiture of an additional $15.8 million, representing the gross fees earned by the bank on the undeclared accounts of U.S. taxpayers.  

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