On May 22, 2024, the Department of Justice’s (DOJ) National Security Division (NSD) announced its first-ever prosecution declination under its corporate voluntary self-disclosure (VSD) policy for sanctions and export controls violations. DOJ declined to charge life sciences company MilliporeSigma, which voluntarily disclosed willful export-related violations committed by an employee and customer who were separately charged and pleaded guilty to conspiracy to commit wire fraud. The declination demonstrates that the benefits of self-disclosure and full cooperation are not theoretical, even for national security-related violations.
NSD first issued VSD guidance specific to sanctions and export controls offenses in October 2016. In December 2019, NSD issued a revised policy that introduced a presumption of non-prosecution under certain circumstances and extended the policy to financial institutions, among other updates. NSD has periodically amended the policy since 2019, including most recently in March 2024 when it added a dedicated section on acquisitions.
The MilliporeSigma investigation concerned a scheme whereby a former company salesperson facilitated orders of various biochemicals to a customer who subsequently exported them to an unauthorized purchaser in China. The customer, with the salesperson’s knowledge, purported to purchase the products on behalf of a Florida university lab, which enabled him to purchase them at a discount. Once the biochemicals were shipped to the lab, however, the customer would export them to the purchaser in China using falsified documents. The customer gave the salesperson thousands of dollars in gift cards in exchange for facilitating the orders. Although most of the chemicals did not require a license for export, they included samples of List I chemicals and other controlled substances, which the customer falsely declared as “diluting agents.”
In its declination letter, DOJ explained that MilliporeSigma not only satisfied all requirements for a non-prosecution agreement under NSD’s VSD policy but also for a declination under DOJ’s Principles of Federal Prosecution. First, the company voluntarily disclosed the misconduct to NSD promptly, just a week after retaining counsel to investigate the suspicious orders. Second, DOJ cited the company’s “exceptional and proactive cooperation,” including “identifying evidence establishing probable cause to search for evidence of the crimes in locations not under MilliporeSigma’s control.” Third, the nature and seriousness of the offense was not an aggravating factor, as DOJ determined that “the scheme did not present a significant threat to national security in the quantities and concentrations sold.” Fourth, the company engaged in timely remediation, including terminating the salesperson and bolstering its internal controls. Finally, MilliporeSigma was also a victim of the scheme, as the customer fraudulently obtained the biochemicals at a discount he was not entitled to.
The MilliporeSigma declination, announced on the heels of NSD’s latest revision to its VSD policy and DOJ rolling out a VSD program for all U.S. Attorney’s Offices in February 2024, highlights DOJ’s commitment to providing companies with incentives to report misconduct.
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