United States v. Zimmer Biomet Holdings, Inc. (D.D.C. 2017)
United States v. Jerds Luxembourg Holding S.ÀR.L. (D.D.C. 2017)

• Case Name
• United States v. Zimmer Biomet Holdings, Inc. (D.D.C. 2017)
  United States v. Jerds Luxembourg Holding S.ÀR.L. (D.D.C. 2017)

• Date Filed
• 01/12/2017

• Enforcement Agency
• DOJ

• Countries
• Brazil, Mexico

• Foreign Official
• Unnamed Mexican customs officials; Unnamed Brazilian officials.

• Date of Conduct
• 2010 to 2013

• Nature of Business
• Biomet, Inc. is a medical device company headquartered in Warsaw, Indiana that sells medical devices and dental products.  Prior to 2008, Biomet’s stock was registered with the Commission.  In March 2012, Biomet entered into a deferred prosecution agreement with the DOJ for FCPA violations in Brazil, China, and Argentina.  In June 2015, Biomet was acquired by Zimmer Holdings, Inc. and was renamed Zimmer Biomet. Jerds Luxembourg Holding S.ÀR.L. is a Luxembourg subsidiary of Biomet which, in turn, owns several of Biomet’s subsidiaries, including its Mexican subsidiaries.

• Influence to be Obtained
• According to the DOJ, despite being aware of red flags and prior corruption- related misconduct in Biomet’s Mexican and Brazilian subsidiaries, and despite entering into a 2012 DPA with the DOJ in connection with corruption in Brazil and other countries, Biomet knowingly failed to implement and maintain an adequate system of internal controls designed to detect and prevent bribery by its agents.  As a result, the DOJ alleged that Biomet’s Mexican and Brazilian operations violated the FCPA.
  
  In Mexico, the DOJ alleged that Biomet’s subsidiaries used a customs broker whose subagents bribed Mexican customs officials to allow Biomet to export mislabeled products to Mexico.  According to the DOJ, between 2010 and 2013, Biomet’s Mexican subsidiary paid approximately $980,774 to the customs broker’s subagents, knowing that at least part of this amount would be passed on to customs officials, and falsified corporate records to disguise the bribe payments.
  
  In Brazil, Biomet allegedly knew that a Brazilian distributor it was utilizing had previously paid bribes to win business for Biomet, leading to the 2012 DPA. According to the DOJ, as a result, Biomet prohibited its employees from using all companies affiliated with the Brazilian distributor.  Despite prohibiting Biomet from utilizing the Brazilian distributor, Biomet employees, including an executive, allowed the Brazilian distributor to sell, import, and market Biomet products through a separate, but related, company and took steps to conceal the transactions. 

• Enforcement
• On January 12, 2017, the DOJ announced that it had entered into a deferred prosecution agreement with Biomet for violations of the internal controls provision of the FCPA.  According to the deferred prosecution agreement, Biomet was required to pay a criminal penalty of $17,460,300.  Biomet was also required to engage an independent compliance monitor for a period of three years.  The SEC separately resolved an enforcement action against Biomet wherein the company agreed to pay a civil sanction of $13,022,805.

• Amount of the Value
• Not Stated

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Third-Party Distributors; Customs Brokers; Agents.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 17,460,300

• Compliance Monitor
• Yes

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 30,483,105

• Related Enforcement Actions
• United States v. Biomet, Inc. (D.D.C. 2012)
  In the Matter of Biomet, Inc. (2017)
  SEC v. Biomet, Inc. (D.D.C. 2012)
  

Zimmer Biomet Holdings, Inc. 

• Citation
• United States v. Zimmer Biomet Holdings, Inc., No. 1:12-cr-00080 (D.D.C. 2017); 

• Date Filed
• 01/12/2017

• 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

Jerds Luxembourg Holding S.ÀR.L.

• Citation
• United States v. Jerds Luxembourg Holding S.ÀR.L., No. 1:17-cr-00007 (D.D.C. 2017).

• Date Filed
• 01/12/2017

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records

• Other Statutory Provision
• None

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Agent of Issuer

• Defendant's Citizenship
• Luxembourg