Sports Betting and the NCAA: What You Need to Know

“If you put something at risk (such as cash, entry fee, dinner or other tangible item) on any amateur and/or professional sporting event with a chance to win something in return, you violate NCAA sports wagering rules.”[1]

Once the Supreme Court ruled unconstitutional the federal law[2] prohibiting sports betting in Murphy v. Nat’l Collegiate Athletic Ass’n,[3] states quickly enacted legislation to permit this type of betting. Today, 33 states (and the District of Columbia) permit sports betting either through retail or online sportsbooks. Four additional states have legalized sports betting but have not yet set up official sportsbooks (Florida, Kentucky, Maine and Nebraska) while Texas and Vermont have active legislation to legalize sports betting. The remaining 11 states do not permit sports betting.[4]

Notably, four professional sports leagues[5] were named plaintiffs in the underlying district court case in Murphy seeking to prevent New Jersey’s attempt to legalize sports betting. Yet these four leagues—the NBA, NFL, NHL and MLB—have since announced partnerships with official sports betting entities while also implementing reasonable rules for players, coaches and staff.[6] Despite the acceptance of sports betting by the leagues that initially sought to prevent it, the National Collegiate Athletic Association (“NCAA”) remains steadfast in its rules prohibiting athletes, coaches and collegiate athletics employees from placing bets on any sport sponsored by the NCAA at any level.[7]

Investigations Involving Alleged Redlining

By Benjamin Glassman and Derrick Cephas on May 22, 2023 Posted in Department of Justice, Money Service Business, United States

Perhaps the signature initiative of the Department of Justice’s Civil Rights Division under the current Administration has been its Combatting Redlining Initiative. By “redlining,” the Department means that a lender has avoided providing access to home mortgage loans to homeowners and prospective homeowners in majority-minority census tracts, in violation of the Fair Housing and Equal Credit Opportunity Acts. The Department itself calls the initiative its “most aggressive and coordinated enforcement effort to use federal civil rights laws to eradicate redlining,” and it has grabbed headlines and made an impact, including, among other examples, the largest settlement for redlining in the Department’s history and the first resolution with a non-depository mortgage company.

In our view, as explained below, DOJ investigations of financial institutions for redlining will only increase over the foreseeable future. Financial institutions that encounter such an investigation or are contemplating it from a risk perspective should consider at least three things:

“Redlining,” as used by the DOJ in its current initiative, does not necessarily involve any intentional discrimination and, to the contrary, is more likely not intentional;
The fact that an institution’s primary regulator has never raised a concern about redlining should not give that institution comfort that an investigation or lawsuit is unlikely; and
Little is publicly available from authoritative sources about the specific details of DOJ’s approach to alleged redlining, so a proactive approach based in experience is usually best.

We explain each in turn below.

Rule 10b5-1 Application and Enforcement

By Jay Thomas and Marisa Darden on May 16, 2023 Posted in Department of Justice, Government Investigation, U.S. Securities and Exchange Commission, U.S. Securities and Exchange Commission, Uncategorized, United States, US Department of Justice

On March 1, 2023, the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) demonstrated continued interest in investigating insider trading by company executives who possess material non-public information when they unsealed an indictment and filed a civil complaint, respectively, in the Central District of California. Though a Rule 10b5-1 plan—an investment device that allows a corporate insider to set up an investment plan for buying or selling company stock without violating insider trading laws—is intended as a safe harbor, the existence of any such plan cannot be an affirmative defense if the executive possesses material non-public information at the time the plan is implemented.

Women’s Sports on the Rise

By Kathleen McGovern, Lauryn Durham and Marisa Darden on May 10, 2023 Posted in Compliance Program, Courts, Industry Investigations, United States

The 2023 NCAA Division I Women’s Basketball national championship averaged 9.9 million viewers, becoming the most-watched women’s college basketball game and ESPN platforms’ most-viewed college basketball game (men’s or women’s) on record, and it was not even playing in a prime-time slot. This shows a tidal shift in the interest and growing opportunity in women’s sports, and portends ensuing attention on the governing bodies who oversee them.

How we got here

Healthcare Companies and Companies Doing Business with the US Government – Supreme Court Appears Likely to Clarify False Claims Act (FCA) Knowledge Requirements

By Jerrob Duffy and Karen Harbaugh on April 21, 2023 Posted in Compliance Program, corporate compliance, False Claims Act (FCA), Fraud, Government Investigation, Healthcare, U.S. Supreme Court, United States

The Supreme Court recently heard oral argument in the appeal of two False Claims Act (FCA) cases from the Seventh Circuit that called into question the level of intent, or scienter, required to establish corporate liability under the FCA for “knowingly” overbilling the government for goods or services. The Court’s eventual decision may have widespread implications in healthcare, government contracting, and other industries because it may impact how a company can defend against an FCA claim by arguing that its conduct was objectively reasonable, even if, subjectively, the company or its employees may have intended to violate the FCA or did not otherwise take adequate steps to ensure that their conduct was consistent with the statute.

Updates to the Department of Justice Corporate Monitorship Policy: A Potential Increase in New Monitorships

By Marisa Darden, Clark Ervin and Ally Rich on April 18, 2023 Posted in Compliance Program, corporate compliance, Department of Justice, United States, US Department of Justice

At the American Bar Association’s 38th Annual National Institute on White Collar Crime, Assistant Attorney General (“AAG”) Kenneth A. Polite, Jr. announced the Department of Justice’s (“DOJ”) Revised Memorandum on Selection of Monitors in Criminal Division Matters (the “Revised Policy”), the culmination of a two-year process to revise and update policies regarding the selection, appointment process, and oversight of independent corporate monitors. Notably, DOJ has adopted a more neutral stance on the decision of whether to appoint a monitor. As Deputy Attorney General (“DAG”) Lisa Monaco explained in 2021, “[t]o the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance.” DOJ’s guidance now requires prosecutors to consider ten factors when deciding whether to appoint a monitor, but the neutral presumption may cause the number of monitorships to increase in the coming years.

Proposed Changes to Federal Rule of Evidence on Expert Witness Testimony

By Marisa Darden, Ayako Russell and Jay Thomas on April 10, 2023 Posted in Courts, U.S. Supreme Court, United States

Expert testimony can play a crucial role in the trial process. Consequently, parties often file motions to disqualify the opposing side’s expert witnesses. The success of these motions in federal cases is controlled by the Federal Rules of Evidence (“FRE”), which stipulate that expert testimony must meet certain standards of reliability to be admissible. In May 2022, the Advisory Committee on Evidence Rules (“ACER”) approved proposed amendments to Rule 702 of the FRE.[1] The amendments would render “preponderance of evidence” the proper evidentiary standard for evaluating the reliability of expert testimony. Structurally, this change would expand the trial court’s role in overseeing the admissibility of expert testimony. The Supreme Court will review the ACER proposed amendments this fall, and if approved, the changes will take effect at the end of 2023.[2]

Sixth Circuit Limits Anti-Kickback Claims Brought Under False Claims Act

By Colin Jennings, Vipal Patel, Marisa Darden and Shams Hirji on April 3, 2023 Posted in Courts, False Claims Act (FCA), Healthcare, United States

Last week, the Sixth Circuit issued an important decision limiting the scope of claims alleging violations of the Anti-Kickback Statute that are brought under the False Claims Act. See Shannon Martin, M.D., et al. v. Hathaway, et al., No. 22-1463 (March 28, 2023). Chief Judge Sutton wrote the opinion for the Court, which Judge Siler joined in full. Judge Mathis joined in part and in the judgment.

As many of our readers know, the False Claims Act imposes civil liability for “knowingly present[ing], or caus[ing] to be presented, a false or fraudulent claim [to the government] for payment or approval.” 31 U.S.C. § 3729(a)(1)(A). The Act covers many types of false claims, including claims for “items of services resulting from a violation” of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(g). The Anti-Kickback Statute, in turn, prohibits medical providers from making referrals “in return for” “remuneration.” Id. § 1320a-7b(b)(1)(A).

DOJ Announces New Compensation Incentives and Clawbacks Pilot Program

By Marisa Darden, Kathleen McGovern and Lauryn Durham on March 30, 2023 Posted in Compliance Program, corporate compliance, cybersecurity, Department of Justice, Government Investigation, Technology, United States, US Department of Justice

As we recently discussed, the Department of Justice released new guidance covering a multitude of topics, including employees’ use of personal electronic devices and third-party messaging platforms, financial compensation incentives and clawbacks. At the American Bar Association’s 38th Annual National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco announced the launch of the Department of Justice’s (“DOJ”) Compensation incentives and Clawbacks Pilot Program providing further incentives for corporate compliance.

We recently reviewed the DOJ’s Revised Corporate Enforcement Policy where Assistant Attorney General for the Criminal Division Kenneth A. Polite, Jr. announced significant revisions to DOJ’s corporate criminal enforcement policy (“CEP”) including additional incentives to companies for voluntary self-disclosures, cooperation, and remediation. On March 2, 2023, Deputy Attorney General Monaco announced that the Pilot Program, which will be in effect for three years beginning March 15, 2023, is designed to reward corporations by giving compliance professionals another tool to incentivize ethical behavior and punish misconduct.

Another False Claims Act Salvo in DOJ’s “Civil Cyber-Fraud Initiative”

By Vipal Patel on March 28, 2023 Posted in cyberattack, cybersecurity, Department of Justice, False Claims Act (FCA), United States, US Department of Justice

We previously offered insight into two False Claims Act (“FCA”) enforcement actions brought by the U.S. Department of Justice (“DOJ”) as part of its “Civil Cyber-Fraud Initiative” (“CCF Initiative”). Deputy Attorney General Lisa O. Monaco announced the CCF Initiative in October 2021, stating that “[t]he initiative will hold accountable entities or individuals that put U.S. information or systems at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols, or knowingly violating obligations to monitor and report cybersecurity incidents and breaches.” We noted that DOJ “was not bluffing,” and that in addition to the two highlighted cases, “more are expected.” The prediction has come true.