BNP Paribas to Settle False Claims for $80M
Paris-based global financial institution BNP Paribas has agreed to pay $80 million to settle allegations that it knowingly submitted or caused the submission of false claims for payment guarantees issued by the U.S. Department of Agriculture (USDA), the U.S. Department of Justice announced last week.
The United States filed a lawsuit against BNP Paribas in connection with its receipt of payment guarantees under USDA’s Supplier Credit Guarantee (SCG) Program. The program provided payment guarantees to U.S.-based exporters for their sales of grain and other agricultural commodities to importers in foreign countries. The program encouraged American exporters to sell American agricultural commodities to foreign importers and covered part of the losses if the foreign importers failed to pay. The SCG Program regulations provided that U.S. exporters were ineligible to participate in the SCG Program if the exporter and foreign importer were under common ownership or control.
The judgment entered by the court resolves the government’s allegations that BNP Paribas participated in a sustained scheme to defraud the SCG Program. American exporters and Mexican importers who were under common control improperly obtained SCG Program export credit guarantees for transactions between the affiliated exporters and importers. In some cases, the underlying transactions were shams and did not involve any real shipment of grain. BNP Paribas accepted assignment of the credit guarantees from the American exporters, even though it knew that the affiliated exporters and importers were ineligible for SCG Program financing, and a BNP Paribas vice-president, Jerry Cruz, received bribes from the exporters. When the Mexican importers began defaulting on their payment obligations, BNP Paribas submitted claims to the USDA for the resulting losses.
On Jan. 20, 2012, Cruz pleaded guilty to conspiracy to commit bank fraud, mail fraud and wire fraud, and conspiracy to commit money laundering.
The False Claims Act allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery. Had there been a whistleblower in this case, he or she would have been eligible to receive up to 30 percent of the settlement.
The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments. We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud. Read more about our expertise in False Claims Act cases and how you can take action.