Category: MIL-OSI

Source: United States Department of Justice

BOSTON – A Brazilian national unlawfully residing in Fall River has been indicted by a federal grand jury for unlawfully reentering the United States after deportation.

Evaldo Ferreira Pinto, 51, was indicted on one count of unlawful reentry of a deported alien. Pinto, who was arrested on Aug. 7, 2025, is currently in custody and will be arraigned in federal court in Boston at a later date.

According to the charging documents, Pinto was allegedly found in the United States on Aug. 7, 2025, after previously having been removed from the United States on or about May 31, 2019.

The charge of unlawful reentry of a deported alien provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of up to $250,000. The defendant is subject to deportation upon completion of any sentence imposed. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

United States Attorney Leah B. Foley and Patricia H. Hyde, Acting Field Office Director, Boston, U.S. Immigration and Customs Enforcement’s Enforcement and Removal Operations made the announcement. Assistant U.S. Attorney Elianna J. Nuzum of the Criminal Division is prosecuting the case.

The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
 

Source: United States Department of Justice

Inserted false deductions, expenses, and dependents to obtain more than $5 million in false refunds

Source: United States Department of Justice

A former Chief Executive Officer of a telecommunications provider in the Northern District of Iowa, who stole over $600,000, was sentenced on September 18, 2025, to more than three years in federal prison.

Anthony James Lang, age 42, a resident of Jesup, Iowa, received the prison term after an April 9, 2025 guilty plea to one count of wire fraud.

From January 2017 through January 2023, Lang devised and executed a scheme to defraud his employer, a telecommunication and internet service provider.  At the time of the scheme, Lang was the CEO of the company and had access to their books and accounts.  Over a six-year time period, Lang stole over $600,000 from the company. At sentencing, Chief Judge C.J. Williams described Lang’s conduct as the product of greed and waste. 

Lang was sentenced in Cedar Rapids by United States District Court Chief Judge C.J. Williams.  Lang was sentenced to 38 months’ imprisonment.  He was ordered to make $662,736.00 in restitution.  He must also serve a three-year term of supervised release after the prison term.  There is no parole in the federal system.

Lang was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.

The case was prosecuted by Assistant United States Attorney Nicole L. Nagin and investigated by the Federal Bureau of Investigations.  

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.

The case file number is 2025-CR-2017.

Follow us on X @USAO_NDIA.

Source: United States Department of Justice

Savannah man sentenced to 37 months imprisonment for the illegal possession of a machinegun

SAVANNAH, GA:  Javon Edwards (31) of Savannah, Georgia, pled guilty to the Illegal Possession of a Machinegun in April 2025.

On September 11, 2025, Edwards was brought before Chief Judge R. Stan Baker for the United States District Court for the Southern District of Georgia for sentencing. Edwards was sentenced to 37 months imprisonment followed by 3 years of supervised release.

“Sadly, we have seen an unfortunate uptick in criminals possessing illegal conversion devices that transform semi-automatic pistols into fully automatic weapons of war.  We will continue to work with our state and federal partners to apprehend these criminals and ensure they are brought to justice,” stated Margaret Heap, United States Attorney.

“The illegal possession of machineguns is not just a violation of the law; it endangers our communities, and we will continue to pursue those who threaten public safety,” said ATF Acting Assistant Special Agent Robert Davis.

This investigation took place under the umbrella of the U.S. Department of Justice’s Project Safe Neighborhoods (“PSN”), a program that has been successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer.

The case was being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives along with the Savannah Police Department. The case is being prosecuted for the United States by Special Assistant United States Attorney Makeia R. Jonese. 

Source: United States Department of Justice

BUFFALO, N.Y.-U.S. Attorney Michael DiGiacomo announced today that Augusto Mateo Francisco, 34, of Dunkirk, NY, who was convicted of two counts of forced labor, and one count of transportation of a minor, was sentenced to serve 30 years in prison and lifetime supervised release by U.S. District Judge John L. Sinatra, Jr. Francisco was also ordered to pay restitution and register as a sex offender.

Assistant U.S. Attorney Douglas A. C. Penrose, and Department of Justice Human Trafficking Prosecution Unit Trial Attorney Meghan Tokash, who handled the case, stated that Francisco, a native of Guatemala and a Legal Permanent Resident, facilitated the illegal entry of Guatemalan migrants into the United States and helped transport them to the Dunkirk area, where he would provide them with housing and work at area farms. Francisco would charge the migrants for their housing, rides to work, and for other items. He would also take a cut of the wages they earned working at the farms. Francisco threatened two of the victims by telling them that if they stopped working for him or if they did not pay back the money they purportedly owed to him, he would harm their families or would call immigration authorities and have them deported.

Francisco also pursued a sexual relationship with a minor victim, who was a 16-year-old Guatemalan migrant who had come to the U.S. with her mother. Francisco repeatedly raped the minor and threatened to harm her family in Guatemala, if she told anyone about what had happened. Francisco also kidnapped the minor victim and took her to a trailer in Ripley, NY, where she was held for nearly two weeks, until being rescued by police. After being rescued, the minor victim and her mother fled to Georgia to escape Francisco. However, he followed them and kidnapped the minor victim again and brought her back to the Western District of New York, where he unlawfully held her for several more days.

“This defendant’s conduct of facilitating the illegal entry of migrants into the United States and then extorting them for his own personal and sexual gratification underscores the evils that can be associated with illegal trafficking,” stated U.S. Attorney DiGiacomo. “My office will continue to pursue and prosecute those individuals who engage in such conduct.”

HSI Special Agent-in-Charge Erin Keegan stated, “This case lays bare the sheer depravity of Francisco’s crimes — perpetrated by a foreign national who not only exploited the vulnerabilities of migrants for profit, but also  subjected a minor to unimaginable abuse. Francisco weaponized his victims’ immigration status through threats, coercion, and violence, including repeated rapes and multiple kidnappings. This significant sentence underscores the seriousness of his heinous actions and demonstrates HSI’s unyielding commitment, together with our law enforcement partners, to holding such predators accountable to the fullest extent of the law.”

The sentencing is the result of by Homeland Security investigations, under the direction of Special Agent-in-Charge Erin Keegan and the Chautauqua County Sherriff’s Office, under the direction of Sheriff James Quattrone.

# # # #

 

Source: United States Department of Justice

BOSTON – An Easton man was convicted today, following an eight-day trial of using Paycheck Protection Program (PPP) funds to secretly purchase a home in the name of a close relative.

Bill Dessaps, 49, was convicted of two counts of wire fraud conspiracy, one count of money laundering, and one count of bank fraud. U.S. District Court Judge Angel Kelley scheduled sentencing for Jan. 15, 2026.In January 2024, five other individuals were charged for their alleged involvement in the PPP fraud scheme.

“Dessaps sought to defraud the American people through his misappropriation of COVID-19 relief loans. He scammed to enrich himself, at the expense of people in need” said United States Attorney Leah B. Foley. “Today’s conviction is another reminder that fraud does not pay.”

“The guilty sentence of Bill Dessaps demonstrates IRS-CI’s continued commitment to prosecuting all those who took advantage of the CARES Act for their own undue self-enrichment,” said Thomas Demeo, Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office. “Dessaps defrauded a federal program designed to help those most in need at the height of the Covid-19 Pandemic with the sole intent of living a lavish lifestyle, while others, who were truly in need, struggled.”

Dessaps – the operator of an Abington-based used car dealership – allegedly conspired with individuals in Massachusetts and Florida to submit a fraudulent PPP application on behalf of Dessaps’ dealership. The application they prepared and submitted for Dessaps’ dealership falsely stated that the dealership had 40 employees and average monthly payroll expenses of $334,720. As a result of the applications, the lender disbursed a PPP loan of $836,800 to Dessaps. After receiving these funds, Dessaps made kickback payments to one or more of the individuals who assisted with the application.

After Dessaps received the PPP loan, he purchased a $750,000 home in the name of a straw buyer—his close relative—because his credit score would have prevented him from obtaining a mortgage on favorable terms, and because he purchased the home using PPP funds, a purchase the PPP prohibits. Dessaps, his close relative, and a real estate agent submitted false mortgage application documents to a lender, including forms and forged records that inflated the relative’s income and assets. For a portion of the home costs, Dessaps transferred PPP proceeds into a joint bank account that he and his relative controlled. After a lender denied the close relative’s application for a secondary loan for the remaining funds, Dessaps and his real estate agent arranged a sham gift of $127,500 from the real estate agent’s girlfriend to the close relative, which Dessaps wired to the girlfriend. Through these and other misrepresentations, Dessaps obtained a $510,000 mortgage on the home and lived in it.

Dessaps also attempted to obtain a “Second Draw” PPP loan through another fraudulent application in March 2021.

The charges of wire fraud and wire fraud conspiracy provide for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or loss from the scheme, whichever is greater. The charge of money laundering provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $500,000 or twice the amount of money involved in the laundering transaction. The charge of bank fraud provides for a sentence of up to 30 years in prison, five years of supervised release and a fine of $1 million, or twice the gross gain or loss from the scheme, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

U.S. Attorney Foley and IRS SAC Demeo made the announcement today. Assistant U.S. Attorneys David M. Holcomb and Meghan C. Cleary of the Criminal Division are prosecuting the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Source: United States Department of Justice

SAVANNAH, GA:  Ra’Quavius Rawls (24) of Savannah, Georgia, has been indicted by a federal grand jury in the Southern District of Georgia for Possession of a Firearm by a Prohibited Person.

On July 24, 2024, officers with the Savannah Police Department responded to an anonymous tip that Ra’Quavius Rawls, an individual on “Savannah’s Top Ten Most Wanted” list was at a local gas station. As officers arrived, Rawls exited the property by vehicle. The officers then conducted a traffic stop and identified Rawls as a passenger. A search of the vehicle revealed a firearm in the passenger side glove box.

“Removing illegally possessed firearms from convicted felons play a key role in reducing violent crime in our communities,” said Margaret Heap, U.S. Attorney for the Southern District of Georgia. “In collaboration with our law enforcement partners, we will continue to prioritize taking these tools of violence out of the hands individuals who are prohibited from possessing them.” 

“The collaboration between the ATF and local law enforcement is essential in identifying and apprehending individuals who pose a threat to public safety, particularly those on lists like ‘Savannah’s Top Ten Most Wanted’,” said Acting Assistant Special Agent Robert Davis.

The case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives along with the Savannah Police Department. The case is being prosecuted for the United States by Special Assistant United States Attorney Makeia R. Jonese.

All indicted defendants are considered innocent unless and until proven guilty.

Source: United States Department of Justice Criminal Division

Remarks as Prepared for Delivery

Thank you, Winston and Patrick, for that kind introduction. Just a few months ago, the Criminal Division laid out an ambitious roadmap for white-collar enforcement to make our nation safe and prosperous, vindicate victims’ rights, and provide fairness and transparency to individuals and corporations.

At the outset, let me underscore the following: white-collar enforcement remains a priority for the Criminal Division. Fraud in U.S. markets and government programs harms hardworking Americans and the public fisc. Illicit financial networks enable transnational criminal organizations, cartels, terrorists, and rogue nation states by allowing them to funnel narcotics and human smuggling proceeds and evade sanctions and tariffs.

Today, I want to speak about where our efforts stand, highlighting specific examples, and tell you where we are going.

My message is simple: A few months ago, I said we would focus on the work of holding white-collar criminals accountable, and we are doing just that. We are identifying, investigating, and prosecuting fraud and corruption, and we are doing so in an effective, focused, fair, and efficient manner. Most importantly, we are focused on protecting the interests of the American people.

As I look back on the past few months, and look to the rest of the year, let me focus on a few key priority areas for the Division: health care fraud, procurement fraud, market integrity, including crimes associated with Chinese variable interest entities, and foreign corruption.

First, health care fraud.

It has been a record-breaking year for health care fraud enforcement. Health care fraud costs American taxpayers billions of dollars a year. It also harms patients, subjecting them to medically unnecessary or contraindicated treatments — all so that criminals can line their pockets.

The Criminal Division’s Health Care Fraud Unit continues to lead the Department’s efforts to disrupt and prosecute the most complex and large-scale health care fraud schemes across the country, holding both individuals and corporations accountable in record numbers.

In June, we announced the largest health care fraud takedown in U.S. history. Around the country, we secured charges against over 300 individuals, including nearly 100 medical professionals. Together, these schemes involved the submission of $14.6 billion in fraudulent claims targeting Medicare, Medicaid, and other essential programs.

As part of the takedown, we announced Operation Gold Rush, where we charged 29 defendants for their alleged role in transnational criminal organizations that submitted over $12 billion in fraudulent claims to U.S. health insurance programs. This operation showcased our team’s innovative and effective approach to preventing health care fraud. The Health Care Fraud Unit’s Data Analytics Team and its partners detected anomalous billing through proactive data analytics, and HHS-OIG and CMS successfully prevented the organizations from receiving all but a small fraction of the approximately $4.45 billion that was scheduled to be paid out by Medicare.

We continue to charge and get significant sentences for health care professionals that abuse the trust of vulnerable victims and have secured significant forfeiture in those cases.

Significantly, as part of our efforts to root out health care fraud, you will also see an emerging focus on corporate enforcement in this space.

Last month, we announced two corporate health care fraud resolutions: a deferred prosecution agreement with Kimberly-Clark Corporation in which it agreed to pay up to $40 million to resolve a criminal charge related to the sale of adulterated surgical gowns, and a non-prosecution agreement with Troy Health, Inc., a provider of Medicare Advantage plans that admitted to fraudulently enrolling Medicare beneficiaries and identify theft. These are the first two corporate resolutions by our Health Care Fraud Unit in nearly a decade.

We continue to investigate corporations involved in similar misconduct and expect to see even more health care fraud-related corporate resolutions in the coming months.

Another high-impact area for the Criminal Division has been fraud that victimizes U.S. investors and undermines U.S. financial markets. Earlier this year, we said that we would pursue cases against those who sought to harm American consumers and investors, and we are doing just that.

In particular, we are actively investigating cases connected to foreign companies listed on U.S. exchanges, specifically variable interest entities (or VIEs) — typically Chinese-affiliated companies listed on U.S. exchanges that present significant risks to U.S. retail investors, whom they target using social media and messaging applications.

Last week, we charged the co-CEO of a Chinese issuer traded on NASDAQ (under the ticker OST), along with a financial advisor, who orchestrated a brazen “ramp and dump” fraud scheme involving non-bona fide securities transactions that placed nearly $80 million of freely tradable OST shares into the hands of co-conspirators for pennies on the dollar. The very same day, as one of the sham securities offerings, a synchronized social media campaign intended to pump OST’s share price was launched. This campaign utilized the stolen identities of many U.S. investment advisors to target retail investors. This coordinated effort allowed the co-conspirators to sell more than $100 million worth of OST shares, victimizing unwitting investors. Many of those victim-investors were ordinary American retail investors, and they suffered significant losses when the stock price collapsed, losing more than 94% of its value in one day.

In addition to bringing these criminal charges against these two individuals, we seized millions in assets from relevant brokerage accounts used by co-conspirators, demonstrating swift action by the Department to prevent American victim funds from being expatriated.

Last week’s criminal charges send a clear message that the Criminal Division is committed to disrupting the rampant exploitation of American retail investors by foreign actors. Make no mistake, this is just the beginning of our aggressive enforcement in this space. We look forward to working in parallel with the SEC’s recently announced Cross-Border Task Force to combat these bad actors looking to con Americans out of their hard-earned dollars.

Our prosecutors’ dedication to holding accountable those responsible for waste, fraud, and abuse that harms the American taxpayer is evident in a recent action we announced in June. We secured the guilty pleas of four defendants, including a government contracting officer for USAID and three executives, for their roles in a decade-long bribery scheme involving at least 14 prime contracts worth over $550 million in U.S. taxpayer dollars. In addition, the two companies that employed those individuals — Apprio and Vistant — admitted criminal liability and entered into three-year deferred prosecution agreements.

Similarly, we see combatting trade and customs fraud as essential to protecting our country’s interests. The Criminal Division is leading the Department’s efforts to investigate and prosecute trade fraud cases—with a particular focus on (1) cases involving long-running efforts to evade hundreds of millions in tariffs, including tariffs on Chinese products, and (2) trade fraud schemes carried out by or with the knowledge of corporate executives. Here too I expect public enforcement actions later this year.

Following the President’s Executive Order in February, the Deputy Attorney General issued FCPA enforcement guidelines in June, which set forth non-exhaustive priority areas for the Department’s prosecutors. As the DAG announced, he led a process reviewing all such matters, and the Division will firmly — but fairly — prosecute foreign bribery cases consistent with the Guidelines.

For example, last month, we charged two Mexican businessmen who resided in Texas with FCPA violations relating to conduct involving PEMEX, the Mexican state-owned oil company.

Last month we also resolved our investigation into Liberty Mutual, the U.S.-based insurance company, for violations of the FCPA relating to conduct by personnel of its subsidiary in India. In that resolution, in light of the Company’s voluntary self-disclosure, we concluded our investigation under Part I of the Corporate Enforcement Policy (CEP) in under 18 months. The resolution required Liberty Mutual to disgorge $4.7 million in profits.

Earlier this week, we secured the conviction at trial of a U.S. businessman for his role in a nearly five-year scheme to bribe Honduran government officials in order to secure business for a Georgia-based manufacturer of law enforcement uniforms and to launder money.

And I expect there will be more activity this year — both with respect to individual and corporate enforcement.

The hallmarks of our enforcement approach are pragmatism, even-handed justice, and putting the right incentive structures in place. This approach is reflected in our revisions to the CEP.

Our revisions to the CEP set forth: (1) a clear path towards resolving corporate investigations without ongoing obligations, (2) the available fine reductions for cooperation and remediation, and (3) the factors that determine the form of a final corporate resolution. Put simply, the CEP crystallizes the benefits to companies that voluntarily self-report, cooperate, and remediate — they will receive a declination, not just a “presumption.”  

While we have maintained some discretion in cases where there are aggravating circumstances, this is not a game of “gotcha.”

Some companies have already seen the CEP’s benefits in action. These efficient resolutions have equally benefitted the American people by taking the profit out of crime and remediating harm caused by bad actors.

In addition to the Liberty Mutual case I mentioned, we expect in the coming weeks, and even in the coming days, several resolutions under Part I of the revised CEP.

Let’s be clear about these Part I resolutions. They are resolutions in which the Division follows through on its promise that, where a company voluntarily self-discloses, fully cooperates with our investigation, and timely and appropriately remediates, we will not bring charges against the company if it disgorges any illicit profits and makes any victim compensation payments. We are focused on incentivizing and rewarding good corporate citizenship and holding others accountable.

The message you can take from these actions is clear: timely, voluntary self-disclosure, cooperation, and taking responsibility for misconduct can help you avoid prolonged investigations and secure the benefits the Criminal Division offers to promote good corporate citizenship.

The Criminal Division is positioned to have an exceptional year in white-collar enforcement. To date, the Fraud Section has charged over 200 individuals with over $16 billion in alleged loss, convicted over 140 individuals, conducted 17 trials, and resolved 6 corporate cases. Notably, the average fraud loss per individual charged in the Criminal Division’s Fraud Section is over $70 million, which is an all-time high, demonstrating the Section’s continued focus on prosecuting the worst offenders.

Let me close by looking ahead to the future. The Criminal Division will continue to focus on vigorous, efficient, and fair white-collar enforcement across our priority areas – health care fraud, market integrity, procurement fraud, and corruption, among others.

I will close by emphasizing that our dedication to holding wrongdoers accountable remains as firm as ever. The fight against fraud, corruption, and corporate misconduct is essential to maintaining the integrity of our financial system and protecting the American public.

This year has been a strong one so far, filled with significant milestones, with more to come in the months ahead. The Criminal Division’s prosecutors remain focused on the work of protecting the American people and upholding the rule of law.

Thank you.

*These remarks were delivered on Thursday, Sept. 18.

Source: United States Department of Justice Criminal Division

The Justice Department Office of Tribal Justice joins the federal, state, local, and Tribal law enforcement family in mourning the passing last week of Edward Reina, a member of the Salt River Pima-Maricopa Indian Community, (Akimel O’odham) and a retired chief law enforcement executive.  During Ed’s many years of public service, he served as a Tribal law enforcement leader in many roles, including as Chief of Police in the Salt River Pima-Maricopa Indian Community, Fort McDowell Yavapai Nation, Reno-Sparks Indian Colony, and Yavapai-Prescott Tribe, and as Director of Public Safety for the Tohono O’odham Nation.

Ed was also the first Tribal Police Chief to serve as President of the Arizona Association of Chiefs of Police.  And he was a member of the International Association of Chiefs of Police, Indian Country Law Enforcement Section.

Ed is perhaps best known as the respondent in the 1990 US Supreme Court case of Duro v. Reina in which he defended Tribal law enforcement authority on his home reservation and across Indian country nationally.

Ed passed away on September 14th in Florida and is survived by his wife Enid.

This week at the Justice Department in Washington, we honored Ed and his family with a moment of silence at a meeting of the Indian Country Federal Law Enforcement Coordination Group.  We are humbled by his legacy and sorely miss his great partnership and contributions to public safety in Indian Country.  We extend heartfelt condolences to his family and friends.

Source: United States Department of Justice

Remarks as Prepared for Delivery, “‘That’s What F/RANDs Are For’ and Antitrust Implications When They’re Gone”

Thank you for that kind introduction and thanks to Concurrences for inviting me to speak at what has become a traditional event adjacent to Fordham’s Annual Conference on International Antitrust Law and Policy. It’s a pleasure to be here with antitrust friends from both the U.S. and around the world to discuss antitrust developments. I also want to thank my colleague, Alice Wang, for her help in drafting today’s remarks.

At the Antitrust Division, we have been thinking a lot about innovation. Earlier this year, President Trump outlined a vision for the “Golden Age of American Innovation.”[1] As the President aptly recognized, “Scientific progress and technological innovation were the twin engines that powered the American century.”[2] Today, policies that promote rather than hinder innovation are more important than ever.

As you may have seen on social media, this week is “Innovation Week” at the Antitrust Division, and we’re celebrating it the nerdy antitrust way through a series of speeches. Assistant Attorney General Gail Slater gave two speeches focusing on innovation, at the Georgetown conference two days ago[3] and this morning at Fordham,[4] and my fellow Deputy Assistant Attorney General Omeed Assefi gave a talk at Cardozo Law School on Tuesday that highlighted our innovative antitrust rewards program.

Competition and innovation are effectively synonymous since competition occurs through both price and non-price channels like innovation. Innovation drives technological progress, generates better quality products, and propels our economy forward. Today, I want to talk about the intersection of two legal frameworks that promote innovation: antitrust and intellectual property (IP).

It has been long recognized that antitrust and IP are aligned and complementary. Antitrust, of course, is the law of competition. Non-price competition, including through quality and innovation, is core to the competitive process and commands solutions. Competition is invigorated by innovative solutions that lead to a wide range of products, services, and solutions. Antitrust law and IP law are thus united in the common goal of fostering innovation (also known sometimes as “dynamic competition”). In addition, IP protection is key to securing mavericks’ ability to enter markets and challenge entrenched incumbents to the benefit of consumers.

Standards development is perhaps the epitome of where antitrust and IP considerations intersect. Collaborative industry standards have generally been recognized as procompetitive — they promote interoperability, health and safety, and innovation. Participants pool their innovative solutions together, often developing new solutions as part of the standards development process. Recognizing the procompetitive attributes of standards development, Congress enacted the Standards Development Organization Advancement Act (SDOAA) in 2004, providing an exemption from per se antitrust liability and treble damages for a “standards development organization” (SDO) while engaged in a “standards development activity” as defined in the statute.[5]

Collaborative standards development assured by contractual F/RAND commitments has been enormously successful, generating great benefits for consumers. These commitments mean that a patent holder has pledged that it will license patents that are or may become essential to implementation of a standard (known as standards essential patents or “SEPs”) on a reasonable and non-discriminatory (RAND) or on a fair, reasonable, and non-discriminatory (FRAND) basis.[6] The development of industry standards, assured by F/RAND commitments, has fueled tremendous innovation in areas like wireless connectivity and video coding. We now all take for granted that we can stream a movie on a small device while sitting on an airplane moving through the sky, but we shouldn’t. All sorts of innovative technologies have been enabled by voluntary F/RAND licensing — all for low costs that have been decreasing year over year. That’s how you can buy a smartphone today, packed with all types of features and functionality, for just $50.

For many years, antitrust enforcers focused on unilateral conduct related to F/RAND assurances, like hold-up and hold-out. For a time, there was a skewed focus on hold-up — a theory endorsed by Big Tech incumbents — under which a patent holder leverages a technology’s inclusion in a standard to demand supracompetitive royalties. That skewed approach was corrected during the first Trump administration, when the Antitrust Division was led by AAG Makan Delrahim, who correctly recognized that “implementer hold-out poses a more serious threat to innovation than innovator hold-up” and advocated acting to prevent hold-out.[7] More recently, the Division’s leadership under the last administration highlighted that anticompetitive conduct can be undertaken by any party, implementer or patent holder, and that a case-by-case approach to scenarios involving standards essential patents is the right approach.[8] I agree with both propositions. Implementer hold-out indeed poses a greater threat to innovation than innovator hold-up, especially since patents are not self-executing rights, so a neutral court determination is always required in order for injunctions to issue. And a case-by-case assessment is indeed the right approach.

Today, I would like to zoom in on two scenarios related to standards development that have received less attention: (1) collaborative industry standards that are not F/RAND assured, and (2) organizations that develop closed, proprietary standards that integrate patented technologies and encourage infringement.

Collaborative Industry Standards That Are Not F/RAND Assured

For years, antitrust enforcers have recognized that F/RAND commitments by essential patent holders serve as safety valves so that in cases where such patents confer market power — which is assessed on a case-by-case basis — the commitments help prevent the exercise of such market power.[9] At the Antitrust Division, we are concerned about scenarios where there is a breakdown of the FRAND-assured standards development ecosystem.

A.  When F/RAND assurances are negative or missing

The first scenario is when supposedly “open” standards are adopted by SDOs despite the lack of F/RAND assurances or even the existence of “negative” F/RAND declarations submitted on them — in other words, when the technology contributor has affirmatively declined to license its patents on F/RAND terms.

F/RAND commitments are voluntary in nature. SDO patent policies typically require owners of patents that are or may become essential to a standard to indicate whether or not they intend to make them available on F/RAND terms. The rationale behind such policies is that, where patent holders declare that they will not offer F/RAND terms (a scenario that has been very rare), or where they decline to submit a F/RAND form indicating their intentions, the SDO would ensure that these proprietary technologies are not included in the standard.

Standards that are rife with missing or negative F/RAND declarations create a concerning opportunity for exclusion because access to the standard, let alone on reasonable competitive terms and conditions, is not assured. When industry standards that are supposed to be open nevertheless incorporate technologies that the patent owner indicated it will refuse to license on F/RAND terms, implementers of that standard cannot use the standard without infringing on essential patents the access to which is not F/RAND assured. This creates considerable competitive risks because of the possibility that, after the standard is adopted and commercially successful, its implementers would be “locked in” to inherently infringing technology, the access to which is not assured on competitive F/RAND terms. As a result, essential patent holders would be able to legitimately charge implementers whatever terms of conditions they deem fit or, worse yet, legitimately exclude implementers (including their competitors) from the marketplace through injunctions. In addition to outright exclusion, such dynamics may lead concerned companies to hesitate to adopt the standards, thus stalling market innovation. Other ramifications may include the need to reopen adopted standards to avoid certain patents, which would lead to huge inefficiencies and waste of significant work that went into standards development. 

Importantly, the same problems apply to missing F/RAND assurances. Antitrust enforcers have not often taken into account scenarios in collaborative standards development when F/RAND commitments are broadly missing. Similar to negative F/RAND declarations, these situations create competitive risk, because there is no clarity around the future licensing terms and patent owners could later legitimately demand excessive licensing fees after a standard becomes widely adopted or exclude future implementers. The cost to innovation of these problems is high, and it is a significant problem that we need to think about how to address.

B.  When proprietary standards development policies are not F/RAND-based

A second scenario is when proprietary standards development consortia policies are not F/RAND-based.

Federal policy like the SDOAA and the OMB Circular A-119, “Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities,” recognize the importance and procompetitive benefits of open collaborative standards development that meets certain safeguards like openness, balance of interests, due process, appeals process, and consensus.[10]  In contrast, there have long been concerns about closed proprietary standards, especially when they are used by dominant players to entrench their market position.

Proprietary consortia, SDOs, or other standards development arrangements that do not have IP rights policies that meet the SDOAA and OMB Circular A-119 standards can raise competitive concerns. Under the OMB Circular A-119, in order to qualify as a “voluntary consensus standard,” standards that include patented technology must be governed by IP rights policies that include “clear rules” and that “take into account the interests of all stakeholders, including the IPR holders and those seeking to implement the standard.”[11] Where proprietary consortia or other collaborative development arrangements fail to be balanced and fairly reflect the interests of all stakeholders and are instead biased in favor of one set of interests, there is cause for antitrust concern.

For example, there are private consortia that impose mandatory, royalty-free cross-licensing obligations on their members. Essentially, these consortia require that all members pool their IP together and allow all other members to cross-license their IP for free. Sometimes, they do so with the express purpose of creating a purportedly royalty-free standard, and they tout the benefits of such royalty-free standards.

Pooling or cross-licensing arrangements can have procompetitive characteristics. But in the context of a proprietary consortium that is made up of dominant implementers that collectively possess market power, such arrangements can be competitively harmful.[12] 

In the example of the private consortium that imposes mandatory, royalty-free cross-licensing, that policy allows a group of dominant implementers to fix the price of royalties at zero. The cadre of dominant implementers can then push for the adoption of this closed standard by adopting the standard themselves. Once the standard becomes widely adopted, companies that need to use the standard are forced to license their patented technologies for free. In such cases, these royalty-free cross-licensing requirements can effectively operate as collusive schemes among dominant players to promote closed, proprietary standards. Importantly, this has the effect of stifling innovation. If adequate royalties reflecting the value of a technology cannot be earned, the incentives for companies to invest in R&D are diminished and, as a result, we can expect market innovation to suffer.[13] Moreover, over time, successful proprietary standards may push out other truly open standards that would better support interoperability and innovation.

We would be particularly concerned where developers of standards, either open or closed, misrepresent their standard as available under F/RAND terms to promote market adoption when that claim is not true because its development was in fact not carried out under a F/RAND IP policy, or because of negative or missing F/RAND declarations, as discussed earlier. This is a misrepresentation of material information to the marketplace ex post after a standards development process has already concluded, and it is a cause for competitive concern that warrants close watch.

Proprietary Standards That Incorporate Patented Technology for Infringement

Finally, I’d like to talk a little bit about the recent Antitrust Division and U.S. Patent and Trademark Office (PTO) joint statement of interest in the Radian v. Samsung case.[14]

In that case, the plaintiff, Radian Memory Systems, filed a complaint for patent infringement against Samsung Electronics and moved for a preliminary injunction. According to Radian, it had developed and patented an innovative technology that improves the management of flash solid-state drives (SSDs), particularly in enterprise and data-center operations.[15] Radian alleged that initially, it was pressured by Samsung and other members of a private consortium to join that consortium.[16] Radian refused to join, because the consortium had an IP rights policy requiring mandatory, royalty-free cross-licenses.[17] That policy would have required Radian to give its patented technology to the members of the consortium — which included Radian’s competitors and customers — for free.

After it refused to join the consortium, Radian alleged, the consortium incorporated its patented technology into the proprietary standard anyway, using information gained from confidential discussions and evaluations with Radian during conferences and product demonstrations.[18] At the same time, Radian alleged that it was excluded by the consortium from meetings and the standards development process, which made it more difficult for Radian to detect infringement of its patents.[19] Radian alleged that it only found out that key aspects of its technology had been incorporated when the consortium’s standard was published.[20]

The Antitrust Division and the PTO’s statement of interest explained that there is serious potential for anticompetitive harm in standards development processes that are dominated by large firms who are implementers of the technology in the standard.[21] These competitive concerns are particularly acute when these dominant implementers can exercise market power.[22] As the statement of interest noted, this dynamic involving dominant implementers with collective market power may evoke monopsony concerns under the antitrust laws.[23] Radian’s story illustrates the ongoing concerns with proprietary standards development processes, and especially the antitrust implications of such processes.

We at the Antitrust Division will continue to remain vigilant about competitive issues that arise at the interface of antitrust and intellectual property, including those involving standards development processes. Competition and innovation drive the U.S. economy and greatly benefit American consumers — it is our mission to ensure that they are alive and well. As President Trump put it: “Surely, there will be challenges on the path ahead, but together, we’ll meet them and transcend them all . . . . [W]e do not shrink from the future or cower at the face of uncertainty. We dominate the future. We conquer new frontiers.”[24] In following these inspiring words, I look forward to conquering new antitrust and innovation frontiers together with my colleagues.

Thank you.