United States v. Orthofix International, N.V. (E.D. Tex. 2012)

• Case Name
• United States v. Orthofix International, N.V. (E.D. Tex. 2012)

• Date Filed
• 07/10/2012

• Enforcement Agency
• DOJ

• Countries
• Mexico

• Foreign Official
• Employees of state-owned hospitals; officials employed by the Mexican state social-services agency, the Instituto Mexicano del Seguro Social (“IMSS”).

• Date of Conduct
• 2003 to 2010

• Nature of Business
• Orthofix International, N.V. is a multinational corporation involved in the design, development, manufacture, marketing, and distribution of medical devices.  Although incorporated in Curaçao, it is based in Lewisville, Texas, and operates in multiple countries around the world including the U.S., the U.K., Italy, and Mexico.  Orthofix is publicly traded on the NASDAQ stock exchange.

• Influence to be Obtained
• According to the criminal information, Orthofix and its Mexican subsidiary Promeca, S.A de C.V. (“Promeca”) sought to secure agreements from Mexican officials employed by state-owned hospitals as well as the IMSS that guaranteed the sale of Orthofix products.  In return for the agreements, the Mexican officials would receive a percentage of the collected revenue generated as a result of the sales in addition to various other gifts which Orthofix officials commonly referred to as “chocolates.”  The Orthofix official overseeing Promeca was aware of the conduct but failed to stop or report the scheme to Orthofix.  These payments were disguised as “promotional expenses” on Promeca’s books and records.

• Enforcement
• On July 10, 2012, the DOJ filed a criminal information alleging that Orthofix violated the FCPA’s internal control provisions by failing to maintain an effective anti-corruption compliance program and adequate financial controls.  As an example, the DOJ cited Orthofix’s failure to translate its anti-corruption policy into Spanish and its failure to train both Orthofix and Promeca employees on these anti-corruption policies.  Orthofix settled the DOJ’s charges through a deferred prosecution agreement where it agreed to pay $2.22 million in monetary penalties, undertake various improvements in its anti-corruption compliance program, and perform an “independent review” as part of a self-monitoring requirement.
  
  In a related civil settlement with the SEC, Orthofix agreed to pay approximately $5.2 million in disgorgement and prejudgment interest.
   

• Amount of the Value
• Approximately $300,000

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Subsidiary

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 2,220,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 7,445,701

• Related Enforcement Actions
• In the Matter of Orthofix International N.V. (2017)
  SEC v. Orthofix International N.V. (E.D. Tex. 2012)
  

Orthofix International, N.V. 

• Citation
• United States v. Orthofix Int’l, N.V., No. 4:12-cr-150 (E.D. Tex. 2012).

• Date Filed
• 07/10/2012

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Deferred Prosecution Agreement

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States