Monday, August 18, 2014

$80 Million Judgment Entered Against BNP Paribas for False Claims to the U.S. Department of Agriculture

BNP Paribas is a global financial institution headquartered in Paris.   
The United States filed a lawsuit against BNP Paribas in connection with its receiving payment guarantees under USDA’s Supplier Credit Guarantee (SCG) Program.  The program provided payment guarantees to U.S.-based exporters. The SCG Program regulations stated that U.S. exporters were ineligible to participate in the SCG Program if the exporter and foreign importer were under common ownership or control because the government insured the shortage if any foreign purchase should decide to not pay.
The judgment entered by the court proves that from 1998 to 2005, BNP Paribas participated in a sustained scheme to defraud the SCG Program. Also the scheme American exporters and Mexican importers who were under common control improperly obtained SCG Program export credit guarantees for transactions between the those exporters and importers.  In some cases, they were blatant shams and did not involve any real shipment of any 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.  Beginning in April 2005, 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.   

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