In a notable departure from the hard-hitting stance it often takes on corporate compliance, the Department of Justice (DOJ) recently opted not to prosecute White Deer Management LLC, along with its affiliated acquisition entities, after the firm self-reported sanctions violations by Unicat Catalyst Technologies LLC, a company it acquired. The DOJ's National Security Division (NSD) and the U.S. Attorney’s Office for the Southern District of Texas praised the private equity firm for its transparent handling of the case, according to a press release issued yesterday by the DOJ.
Following the acquisition, White Deer Management uncovered Unicat's undisclosed legacy of breach against U.S. sanctions. The firm acted swiftly, halting the inappropriate activities and voluntarily reporting the findings to NSD. This act of corporate self-policing led to the guilty plea of Mani Erfan, Unicat's former co-founder and CEO, for his role in violating U.S. sanctions and additional offenses. Erfan was charged with conspiring to illegally export products to Iran, Venezuela, and other countries, which went against American sanctions, resulting in him agreeing to a $1.6 million money judgment, as per the DOJ statement.
Assistant Attorney General for National Security John A. Eisenberg commented on the firm’s decisive actions, stating, "After acquiring a company with a hidden history of sanctions violations, this private equity firm uncovered the misconduct, stopped it and quickly reported it to the government, leading to the successful prosecution of a senior executive," as reported by the DOJ. Here, Eisenberg underscored the federal government's positive view of responsible actions taken by corporate entities in such situations. Special Agent in Charge Chad Plantz of Immigration and Customs Enforcement - Homeland Security Investigations (ICE-HSI) Houston also reinforced this sentiment, expressing his agency's unwavering commitment to preventing U.S. businesses or individuals from aiding nations that oppose U.S. foreign policy by securing sensitive technologies or weaponry.
Court documents reveal that from approximately 2014 to 2021, Erfan conspired with others to illegally supply chemical catalysts to sanctioned nations, such as Iran and Syria, which generated roughly $3.33 million. To cloak their actions, conspirators manipulated export documents and financial records. Furthermore, their fraudulent activities included the submitting of falsified invoices to misrepresent the value of imported catalysts, culminating in an estimated $1.66 million loss in duties, taxes and fees, as stated by the DOJ.
As part of its non-prosecution agreement (NPA), Unicat has consented to forfeit over $3 million, which symbolizes the proceeds from their contravention of U.S. sanctions and export laws. On top of this forfeiture, Unicat will also disburse nearly $4 million to the Treasury Department's Office of Foreign Assets Control (OFAC) and a further $391,183 to the Commerce Department's Office of Export Enforcement (OEE) for their respective breaches. The NSD's new Mergers and Acquisitions Policy, which predicates on acquiring companies demonstrating timely and thorough cooperation post-disclosure of misconduct, was decisive in the DOJ's decision to decline White Deer's prosecution – marking a first since the policy's inception in March 2024.
This case emerged from a collaborative effort between ICE-HSI, the Department of Defense Criminal Investigative Service, and the Department of Commerce's Bureau of Industry and Security. U.S. Attorneys S. Mark McIntyre and John Marck, along with Trial Attorneys Adam P. Barry and Yifei Zheng of the NSD's Counterintelligence and Export Control Section, are credited with the prosecution of the case.
