- The History of the Largest Criminal Fine
- Recent Cases
- The Largest Criminal Fine Ever Paid
- The Impact of the Largest Criminal Fine
In 2014, Japanese conglomerate Toshiba was fined a record $1.3 billion by the US Department of Justice for violating the Foreign Corrupt Practices Act. The massive fine was the culmination of an investigation that found Toshiba had bribed officials in a number of countries in order to secure business contracts.
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The History of the Largest Criminal Fine
On November 15, 2015, German automaker Volkswagen AG agreed to plead guilty to three felony counts and pay a $2.8 billion criminal fine in the United States. This was the largest criminal fine ever imposed in the United States. The company also agreed to pay $1.5 billion in civil penalties. This case began in September of 2015 when the U.S. Environmental Protection Agency (EPA) issued a notice of violation (NOV) to Volkswagen.
In 2002, the Enron scandal came to light and the company was forced to file for bankruptcy. After an investigation, it was revealed that top executives had been cooking the company’s books in order to hide millions of dollars in debt and inflate stock prices. This led to the largest criminal fine in history, totaling $7.2 billion.
The 2010 Deepwater Horizon oil spill was the largest environmental disaster in U.S. history. Eleven people were killed and nearly five million barrels of oil were released into the Gulf of Mexico over the course of 87 days.
In 2016, BP agreed to pay the largest criminal fine in U.S. history, totaling $20.8 billion, for its role in the disaster. The fine was split between a $5.5 billion penalty to be paid to the Justice Department and a $15.3 billion civil settlement to be paid to various federal and state agencies.
In July of 2009, a U.S. District Judge ordered Johnson & Johnson to pay a $1.4 billion criminal fine for promoting the antipsychotic drug Risperdal for off-label purposes. The case against Johnson & Johnson is one of the largest health care fraud cases in U.S. history.
Takata, the Japanese automaker that produced defective airbags linked to at least 21 deaths and hundreds of injuries, pleaded guilty in a U.S. court on Monday to fraud charges and agreed to pay $1 billion in fines.
The Takata airbag scandal first came to light in 2014, when it was discovered that the company’s airbags could explode with too much force, sending shrapnel flying into the passenger compartment. The problem was linked to at least 21 deaths and hundreds of injuries worldwide, prompting the largest recall in history.
In January 2017, Takata pleaded guilty to one count of wire fraud and agreed to pay $25 million in fines. A few months later, the company filed for bankruptcy protection in the United States and Japan.
Takata’s guilty plea on Monday resolves all criminal charges against the company in the United States. As part of the plea agreement, Takata will pay a $25 million fine and $125 million in restitution to victims of its faulty airbags. In addition, three former Takata executives have been charged with wire fraud and will face up to five years in prison if convicted.
In 2016, Volkswagen AG (VW) agreed to a record-setting $4.3 billion criminal fine as part of a plea agreement. This resolves a multi-year U.S. Justice Department investigation into the company’s scheme to use software to circumvent emissions tests for certain vehicles sold in the United States. The company also agreed to plead guilty to three felony counts related to the scheme, and to pay $2.8 billion in civil settlements with federal and state governments over environmental violations.
The Largest Criminal Fine Ever Paid
In July of 2014, BNP Paribas S.A. was ordered to pay $8.9 billion to the United States for violating sanctions against Sudan, Cuba, and Iran. This is the largest criminal fine that any company has ever paid.
The Largest Criminal Fine Ever Paid
In July of 2009, German automaker Volkswagen AG agreed to pay a then-record $1.3 billion criminal fine to the U.S. Department of Justice. The company pleaded guilty to three federal felony counts related to its use of illegal software that defeated emissions tests for nearly 600,000 VW and Audi vehicles sold in the United States between 2009 and 2015. The software caused the cars’ engines to produce far more pollution on the road than during emissions tests.
The $1.3 billion criminal fine was the largest ever imposed in the United States for violating environmental laws, and it was more than ten times the previous record of $120 million paid by principles in 2000 in connection with a conspiracy to violate the Clean Air Act.
As part of its plea agreement, VW also agreed to three years’ probation and independent monitoring by an environmental compliance counsel approved by the court. In addition, the company was required to take numerous steps to prevent future misconduct, including enhancing internal controls and cooperating fully with ongoing investigations.
Why Was the Largest Criminal Fine Ever Paid?
In July 2009, German bank giant Deutsche Bank agreed to pay $10 billion to settle U.S. and state charges that it misled investors during the sale of mortgage-backed securities. The settlement was the largest criminal fine ever paid, and it came on top of a $550 million settlement the bank had reached with the Securities and Exchange Commission in April of that year.
Deutsche Bank was accused of deliberately misrepresenting the quality of the loans underlying the securities it sold to investors in 2006 and 2007. The bank mislabeled loans as low-risk when they were actually high-risk, and it also failed to adequately disclose its own concerns about the loans. As a result, investors lost billions of dollars when the value of the securities collapsed during the financial crisis.
The $10 billion settlement included a $7.2 billion penalty paid to the Justice Department, as well as $2.5 billion in relief for consumers who were harmed by Deutsche Bank’s actions. The Consumer Financial Protection Bureau (CFPB) used its portion of the settlement to establish a fund that provided relief to more than 220,000 homeowners who had been harmed by Deutsche Bank’s behavior.
The Impact of the Largest Criminal Fine
In July of 2009, pharmaceutical company Pfizer agreed to pay the largest criminal fine in U.S. history. The fine, which totaled $2.3 billion, was the result of an investigation into the company’s illegal promotion of certain drugs. The impact of this fine has been far-reaching.
The Impact of the Largest Criminal Fine on the Company
In July of 2012, GlaxoSmithKline (GSK) reached a $3 billion settlement with the United States Department of Justice (DOJ) over allegations that the company had engaged in fraudulent practices. This is the largest criminal fine ever imposed on a company. The total cost to GSK was actually $4.9 billion when you include the $1 billion civil settlement they reached with the DOJ and $491 million they paid to 37 states and the District of Columbia.
The charges against GSK related to the marketing and promotion of several drugs, including Paxil, Wellbutrin, Advair, and Lamictal. The DOJ alleged that GSK had engaged in off-label marketing of these drugs, meaning they were promoting them for uses that had not been approved by the FDA. Additionally, GSK was accused of giving healthcare professionals kickbacks in exchange for prescribing their drugs.
The total cost of the settlements represents just over 2% of GSK’s annual revenue. For a company with a $76 billion market cap, this is not an insurmountable sum. In fact, shares of GSK actually rose after the announcement of the settlement as investors were relieved that the matter had been resolved and that it was not worse than feared.
Still, such a large fine is not inconsequential. It will likely lead to increased scrutiny from regulators both in the US and abroad. Additionally, it tarnishes the company’s image and could lead to future legal problems down the road.
The Impact of the Largest Criminal Fine on the Individual
In 2014, French bank BNP Paribas was ordered to pay a record $8.9 billion criminal fine for violating U.S. sanctions against Sudan, Iran, and Cuba. The size of the fine had a significant impact on the bank and its shareholders.
The BNP Paribas fine is the largest criminal fine in history. The previous record was set in 2009 when German bank Commerzbank AG was ordered to pay $1.45 billion for its role in the Child pornography case involving Bernie Madoff’s Ponzi scheme.
The BNP Paribas fine is also the largest money laundering-related criminal fine ever imposed in the United States. In addition to the criminal fine, BNP Paribas will forfeit $187 million, which represents the proceeds of its crimes.
The total cost of the BNP Paribas settlement is estimated to be about $9.1 billion. This includes $8.9 billion for the criminal fine, $187 million for forfeiture, and $140 million in disgorgement (a payment that returns ill-gotten gains to their rightful owner).