Episode 448: Caremark in 2026 — Where Delaware Draws the Line Between Bad Judgment and Bad Faith

In this episode of Corruption, Crime and Compliance, Michael Volkov examines how Delaware's Caremark doctrine has matured through a recent run of decisions involving Teligent, Regions Financial, and Boeing, all centered on the question of when a board's failure to prevent corporate misconduct crosses from ordinary mismanagement into an actual breach of the duty of loyalty. He walks through Teligent's officer-level oversight failures in FDA compliance, Regions Financial's lesson that a whistleblower investigation without genuine follow-through and remediation doesn't satisfy Caremark's good-faith standard, and the pivotal 2026 Boeing dismissal, where extensive board and committee engagement on safety protected directors even after another serious incident. The episode closes with practical guidance for compliance officers on identifying mission-critical risks, building real escalation and follow-up procedures, and documenting board oversight, since Caremark, as these cases confirm, does not demand perfection, only a good-faith effort to oversee the risks that genuinely matter.

Are you rubbing elbows with criminals?When OFAC designates someone a specially designated national, or SDN, it’s not a warning label. It’s a legal wall.Every asset that party has anywhere in U.S. jurisdiction, or in the hands of a U.S. person, is frozen. Every U.S. person is barred from transacting with them, directly or indirectly.The trap is OFAC’s 50% rule, which means any entity owned 50% or more in aggregate by blocked persons is automatically blocked too, even if it never appears on the published list.A clean name screen doesn’t mean a clean counterparty if you haven’t traced the ownership behind it.Enforcement is ratcheting up hard right now: Iran-related designations, cartel terrorism, Russia sanctions and evasion networks. The stakes are real - civil penalties in the tens of millions, frozen wires, correspondent banking risk, and secondary sanctions that can cut even non-U.S. companies off from the dollar system entirely.Sanctions screening can’t be a one-time check-the-box exercise.You need ongoing, ownership-aware screening that re-screens existing counterparties as the list evolves and actually traces beneficial ownership, not just the name on the contract.The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov breaks down Veloxis Pharmaceuticals' more than $46 million settlement with DOJ and HHS-OIG over a years-long kickback scheme involving its kidney transplant drug Envarsus XR, a scheme the DPA says was directed in part by the company's own former CEO. He examines why Veloxis avoided prosecution and instead secured a deferred prosecution agreement under DOJ's Corporate Enforcement and Voluntary Self-Disclosure Policy despite executive-level involvement in the misconduct, crediting the company's disclosure, cooperation, and termination of the responsible executives. The episode also unpacks the financial breakdown across civil, criminal, and Sunshine Act penalties, and closes with a detailed look at the structural compliance overhaul required under Veloxis's five-year Corporate Integrity Agreement, including a compliance officer mandated to report independently of legal and finance directly to the CEO and board.

At $125 million, breaking the law can never be a cost of doing business.UBS Bank was hit with a $125 million FinCEN penalty, the largest ever against a broker-dealer under the Bank Secrecy Act.This is UBS’s second Bank Secrecy Act action in less than a decade. In 2018, regulators told UBS: fix your foreign currency wire monitoring. It never did.The same gap stayed open for years, letting more than $10 billion in transactions move through unchecked.Layered on top, UBS failed to properly vet high-risk customers tied to Russia and Latin America, even after one of its own affiliates raised internal concerns about their sources of wealth.That warning went nowhere. UBS admitted it acted willfully and intentionally.Now, what’s the lesson? A prior enforcement action isn’t the end of the story. Regulators check whether you actually fixed what they flagged, and unfixed gaps read as willful the second time.High-risk geography demands ongoing monitoring, not a one-time onboarding check, and no institution’s size or reputation buys protection.UBS is one of the most respected private banks in the world, and that bought it nothing here but headaches.The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov examines L3Harris Technologies' abrupt ouster of chairman and CEO Christopher Kubasik over a code-of-conduct violation, and why the story is really a board governance cautionary tale rather than a typical enforcement matter. He traces Kubasik's earlier, similar departure from Lockheed Martin in 2012 alongside comparable cases involving Brian Krzanich at Intel and Mark Hurd at Hewlett-Packard, both of whom went on to lead other companies despite prior conduct violations, to explore why boards keep extending second chances to executives with this kind of history. The episode unpacks the distinction boards draw between personal-conduct issues and conduct that creates genuine enterprise risk, and argues that thorough vetting must translate into a documented, ongoing risk-mitigation plan rather than a one-time pass/fail judgment made during the hiring process, since, as L3Harris just learned, history has a way of repeating itself.

Is your routine payment actually a bribe?Scolar, an Omaha agricultural company, resolved an FCPA case for over $10 million after using customs brokers to bribe Mexican officials, about $2,000 for each train that crossed the border. It was invoiced as reinspection fees paid routinely for six years.Nobody asked what the money actually bought.Stop treating customs brokers, freight forwarders, and logistics providers like ordinary vendors. They interact directly with foreign officials on your behalf, and that makes them high-risk third parties, deserving the same scrutiny as a sales agent or government relations consultant.Test your recurring fees, your routine fees. Any charge that repeats, described in vague language - reinspection, expediting, special handling - should trigger one question every time: can we prove exactly what the payment was for?If not, that’s your red flag, regardless of the dollar amount.Small, consistent, unexplained fees at the border are exactly how bribery hides.Go look at your own customs and logistics payments this week.The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov makes the case that every organization needs a written AI Acceptable Use Policy now, not eventually, because employees are already using AI tools with or without formal governance. He walks through the three core risk categories driving that urgency: confidentiality exposure when employees submit sensitive data to ungoverned tools, hallucination risk from AI-generated content that can be fabricated yet fully convincing, and vendor risk from the multi-layered data relationships that come with adopting a third-party AI product. He then breaks down what a genuinely effective policy needs to include: clear governance ownership, a real (not rubber-stamp) vendor due diligence process reassessed at least annually, data classification tied directly to tool approval, verification requirements built into actual workflows rather than left as aspirational language, and a no-retaliation incident reporting process that surfaces problems early instead of driving them underground.

Have you heard about the Goldman Sachs banker who bribed his way to a conviction?A federal jury in Brooklyn last week convicted Asante Berko, a former Goldman Sachs executive, on FCPA conspiracy, a substantive FCPA violation, and money laundering conspiracy.Berko managed a deal between a Turkish energy company and the government of Ghana to build a new power plant in Ghana. To win the bid, he and his co-conspirators paid more than a million dollars in bribes to Ghanaian officials, including a planned payment to the Minister of Power using the code word “Holy Reign” in their communications for the payoffs.Berko didn’t need an outside fixer. He lied directly to Goldman’s own compliance team and moved his real conversations to a personal email account.He laundered the money through shell companies, sham invoices, and nominee accounts.The lesson: your biggest FCPA risk isn’t always the outsider, the third party who hasn’t been vetted. Sometimes it’s the trusted insider lying straight to your compliance function.Goldman wasn’t charged and cooperated fully, but this shows why verification, not just trust, has to be built into how you vet high-value cross-border deals.The Ethics and Compliance Q and A show is produced by One Stone Creative.

If you think your company can smuggle and fly under the radar screen, think again.When your company touches imports, customs, or tariffs, you need to know this.The Justice Department stood up a dedicated trade fraud task force in August of last year. Its first settlement came three months later.This past May, it delivered the largest customs-related False Claims Act recovery ever: $550 million from aluminum companies and their warehouses.A week later, two steel companies paid $19 million for misrepresenting Chinese, Indonesian, Italian, Turkish, and Vietnamese steel as Canadian or American-made.Underpaying customs duties you legitimately owe is a reverse false claim, meaning it’s a False Claims Act case with triple damages and whistleblowers ready to report you.As tariffs climb, so does the incentive to misdeclare country of origin, and DOJ now has a dedicated task force and a whistleblower bar ready and good at spotting those situations.If trade compliance isn’t in your risk assessment right now, fix that immediately.The Ethics and Compliance Q and A show is produced by One Stone Creative.

In this episode of Corruption, Crime and Compliance, Michael Volkov breaks down the State Department's $36 million settlement with BAE Systems, Inc. over more than 100 alleged violations of the International Traffic in Arms Regulations and Arms Export Control Act spanning 2019 through March 2025, including unlicensed technical data exports to China, Canada, the U.K., and Germany, unauthorized defense services in Italy, France, and Indonesia, and a shipping mix-up that sent a fully controlled engine component to Switzerland in place of a properly licensed part. Despite BAE self-disclosing the vast majority of violations and cooperating fully with DDTC's investigation, avoiding debarment as a result, Volkov highlights the agency's pointed finding that BAE's compliance program lacked the integration to translate earlier corrective actions into lasting fixes, with violations continuing to recur even after a 2021 internal audit prompted real remediation efforts. The episode walks through specific fact patterns showing how insufficient training, high compliance staff turnover, inadequate export management software, and reliance on junior personnel for high-risk judgment calls combined to produce a sprawling pattern of violations, and closes with practical lessons for any export-controlled company: build control warnings directly into operational systems, treat compliance staff turnover as an enterprise risk, route licensing judgment calls to genuinely experienced personnel, extend verification controls all the way to the shipping dock, and ensure remediation after an audit addresses root causes rather than just visible symptoms.