Welcome to the August 2026 edition of The BR Investigations and Enforcement Forum ("B.R.I.E.F."), Blank Rome's monthly newsletter highlighting enforcement priorities and compliance risk issues impacting businesses domestically and abroad. B.R.I.E.F. delivers concise insights into boardroom resilience, regulatory and sanctions developments, internal investigations, enforcement trends, and evolving financial crime risks.
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Recent Developments
DOJ Restructures Fraud Enforcement: National Fraud Enforcement Division Issues Priorities, Final Rule Formalizes Jurisdiction Transfer from Criminal Division
The U.S. Department of Justice (“DOJ”) continued building out its new National Fraud Enforcement Division ("Fraud Division") this month, with Assistant Attorney General (“AAG”) Colin M. McDonald issuing an August 13 memorandum outlining the Fraud Division's enforcement priorities and structure. The memorandum identifies five principal enforcement priorities: (1) public trust and financial integrity, including government-procurement fraud, bid rigging, defective pricing, bribery, and billing schemes; (2) health care fraud; (3) internal revenue and tax fraud; (4) global trade and commerce; and (5) corporate misconduct. DOJ is reallocating personnel to bring the Fraud Division to approximately 500 attorneys and staff by August 24, 2026, with further growth expected over the next two years.
A related final rule published August 18, 2026, formalizes the transfer of healthcare and tax fraud jurisdiction from the Criminal Division to the Fraud Division and delegates authority to AAG McDonald to open special grand juries anywhere in the country. The rule also permits the Division to prosecute non-fraud criminal offenses that arise during its fraud investigations.
The practical significance of this restructuring is substantial: the Fraud Division now consolidates and substantially expands the resources, statutory authority, and data-analytics capabilities previously distributed across multiple DOJ components. Companies in healthcare, government contracting, financial services, tax, and international trade should expect more coordinated, technology-driven, and nationwide fraud investigations.
SEC Creates New Financial Reporting and Accounting Unit
On August 5, 2026, the U.S. Securities and Exchange Commission (“SEC”) announced that it is establishing a new Financial Reporting and Accounting Unit within the Division of Enforcement to focus on accounting and financial reporting fraud, as well as general misconduct in the accounting and auditing practices. Staffed by attorneys and accountants with securities reporting expertise, the unit will be led by Timothy Zimmerman, who joined the Division in May 2026 as a senior advisor. Osman Nawaz, Principal Deputy Director and head of specialized units, will also work closely with the new unit.
Public companies, private companies preparing for capital markets transactions, audit committees, accounting firms, and executives should expect closer scrutiny of revenue recognition, reserves, impairment analyses, internal controls, auditor independence, related-party transactions, and disclosures around liquidity or financial condition. The new unit also suggests that companies should revisit how accounting concerns are escalated, investigated, documented, and remediated when identified internally.
FinCEN Imposes Historic $125 Million Penalty Against UBS Financial Services for Recidivist BSA Violations; CFTC, SEC, and FINRA Announce Parallel Actions
On August 3, 2026, the Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN") assessed a $125 million civil money penalty against UBS Financial Services Inc. ("UBS FSI") for willful Bank Secrecy Act ("BSA")violations—the largest BSA penalty ever imposed against a broker-dealer to date.
This was FinCEN's second enforcement action against UBS FSI. In December 2018, FinCEN imposed a $14.5 million penalty on UBS FSI for, among other things, failing to adequately monitor foreign currency wires. UBS FSI did not remediate the underlying issues and subsequently failed to appropriately monitor over 50,000 foreign currency wires with an aggregate value of more than $10 billion. FinCEN also found that UBS FSI failed to comply with its customer due diligence obligations.
On the same day, the U.S. Commodity Futures Trading Commission (“CFTC”) ordered UBS FSI to pay $8 million for supervision failures impacting its anti-money laundering (“AML”) transaction monitoring systems for foreign exchange (“FX”) wires.. The CFTC's order found that from January 2019 through June 2023, due to deficiencies in the configuration of UBS FSI's surveillance tools and data governance practices, thousands of FX wires sent or received through retail customer commodity accounts were either insufficiently monitored or omitted from transaction monitoring for AML compliance. The SEC and the Financial Industry Regulatory Authority (“FINRA”) also announced related settlements.
The coordinated multi-agency enforcement action underscores several critical compliance themes. Regulators will treat recidivist institutions far more harshly, and prior assurances of remediation that are not followed through will be treated as aggravating factors. AML and surveillance failures can create exposure from multiple regulators simultaneously—FinCEN, the SEC, the CFTC, and FINRA—all acted in concert. Financial institutions must ensure that data governance, system configuration, alert calibration, escalation protocols, independent testing, post-implementation validation, and board-level reporting around AML and suspicious activity monitoring are robust and ongoing—not one-time efforts. Broker-dealers, futures commission merchants, swap dealers, introducing brokers, and investment advisers should treat this case as a compliance benchmark.
SEC Brings Major Fraud Case Connected to $1.9 Billion Subprime Auto Lender Collapse
On August 18, 2026, the SEC charged three former executives of Texas-based Tricolor Holdings, LLC (“Tricolor”) in connection with the company's alleged multi-year fraud and $1.9 billion collapse. The SEC alleged that from at least 2020 through Tricolor's bankruptcy in September 2025, the defendants raised more than $1.9 billion through asset-backed securities ("ABS") offerings while misrepresenting the company’s financial health and the collateral backing those offerings, including by "double pledging" loan collateral and manipulating loan. More than $945 million of principal associated with the ABS offerings remained outstanding at the time of Tricolor's bankruptcy.
The U.S. Attorney's Office for the Southern District of New York announced criminal charges against Chu, Kollar, and Seibold in December 2025 in a parallel criminal action.
The case is a reminder that private credit, structured finance, warehouse lending, and asset-backed securitization remain important enforcement areas. Companies that rely on receivables, loans, inventory, or other asset pools as collateral should ensure that collateral reporting, lien tracking, double-pledging controls, and representations to investors and lenders are independently tested.
SEC Targets Pre-IPO Retail Investment Fraud and Hidden Fees
On August 14, 2026, the SEC charged a New York resident and three related entities with operating an alleged $74 million pre-initial public offering (“IPO”) investment fraud. The defendants raised money from more than 800 mostly retail investors for private funds that purportedly gave investors access to shares of pre-IPO companies. The SEC alleged that investors were charged hidden markups and that the defendants used high-pressure sales tactics through more than 100 sales agents. Investors were told they would pay either no upfront fees or limited upfront fees, while the prices paid were, on average, approximately 46 percent higher than the prices the defendant paid for the investments. The SEC further alleged that the defendants collected approximately $23 million in upfront fees, including more than $12 million paid to sales agents and approximately $4 million paid to the principal defendant personally.
Even as the SEC's broader enforcement agenda shifts, the agency continues to prioritize retail investor protection, undisclosed fees, unregistered broker activity, private fund offerings, and high-pressure sales practices. Firms involved in private placements, pre-IPO access products, secondary transactions, finders, placement agents, or retail-facing private funds should review fee disclosures, sales scripts, compensation arrangements, and broker-dealer registration risks.
SEC Charges Private Fund Adviser and Toms River Trio in Additional Fraud Cases
On August 10, 2026, the SEC charged New York-based investment adviser Adit Ventures Management LLC, its CEO Eric Munson, and three affiliated general partners with allegedly defrauding investors and client funds in connection with investments in pre-IPO shares, including SpaceX and Klarna. The SEC alleged that the defendants misappropriated advisory client assets and charged millions in undisclosed fees, bought pre-IPO shares, and then resold them to client funds at higher prices without disclosure, and improperly pledged client assets as collateral for a $10 million line of credit.
On August 13, 2026, the SEC charged three New Jersey residents in connection with an alleged $47 million fraud targeting Orthodox Jewish communities. The SEC brought the case in coordination with the U.S. Attorney's Office for the District of New Jersey.
Taken together with the boiler room case, these cases underscore the SEC's continued enforcement focus on private fund fraud, pre-IPO investment schemes, affinity fraud, and fiduciary duty violations. Investment advisers and fund sponsors should review their principal transaction, fee disclosure, valuation, custody, and registration practices.
SEC Proposes Crypto Assets Rules
On August 18, 2026, the SEC proposed new rules titled Regulation Crypto Assets, which would create a tailored securities offering regime for certain investment contracts involving crypto assets. SEC Chairman Paul S. Atkins stated that the proposal seeks to "provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws." The proposal follows the SEC's March 2026 interpretation clarifying how federal securities laws apply to certain crypto assets and transactions.
The proposed rules include two exemptions from Securities Act registration specifically tailored to certain investment contracts involving crypto assets: a one-time "startup exemption" for offerings up to $5 million during a four-year period, and a "fundraising exemption" for offerings up to $75 million during each 12-month period. The proposal also includes a conditional safe harbor from the term "investment contract" in the definitions of "security" under the Securities Act and Exchange Act. If the conditions are satisfied, a crypto asset would be deemed not to be subject to an investment contract for purposes of those definitions. The proposal would also preempt state securities law registration requirements with respect to qualifying offerings.
The proposal is part of the SEC's effort to move crypto regulation toward clearer rulemaking rather than enforcement-only guidance. Market participants should not treat the proposal as a safe harbor that is already available. Issuers, trading platforms, funds, custodians, and intermediaries should track the 60-day comment period and evaluate how token offerings, staking programs, airdrops, wrapped assets, and secondary market activity may be treated under the evolving federal framework.
CFTC Charges Goliath Ventures and CEO with $400 Million Crypto Fraud; Resolves FTX/Alameda Actions
On August 11, 2026, the CFTC filed a complaint against Goliath Ventures Inc. and its CEO, Christopher Delgado, alleging a $400 million Ponzi scheme that fraudulently solicited and accepted funds from approximately 1,600 customers for purported crypto asset trading in bitcoin and ether. The CFTC alleged that the defendants misappropriated all customer funds, paid fictitious profits to existing customers, funded Delgado's lifestyle, and issued false account statements. CFTC Chairman Michael S. Selig stated: "We will continue to aggressively police fraud, abuse, and manipulation in the crypto asset markets." In June 2026, Delgado pleaded guilty to federal criminal charges. The SEC also filed a parallel civil action on August 11.
On August 19, 2026, the CFTC announced supplemental consent orders resolving its actions against former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang, bringing those long-running matters closer to final resolution.
The Goliath Ventures case demonstrates the CFTC's continued aggressive posture in crypto fraud enforcement, while the resolution of the FTX/Alameda actions reflects a milestone in one of the most consequential enforcement proceedings in digital asset history. Companies and intermediaries in the crypto space should expect continued parallel civil and criminal enforcement across the SEC, CFTC, DOJ, and FinCEN.
OFAC Announces Sanctions Settlement with Rice Lake Weighing Systems
On August 12, 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") announced a $60,764 settlement with Rice Lake Weighing Systems, Inc. ("Rice Lake"), a Wisconsin-based manufacturer of weighing equipment. Rice Lake agreed to settle its and its Italian subsidiary's potential civil liability for eight apparent violations of OFAC sanctions on Iran. Specifically, between July 2019 and November 2021, Rice Lake's Italian subsidiary, Dini Argeo S.r.l. ("Dini"), exported weighing equipment to a distributor located in the United Arab Emirates (“UAE”) with the knowledge that those goods were ultimately destined for an end-user in Iran. OFAC determined that these apparent violations were voluntarily self-disclosed and non-egregious.
While the settlement amount is modest, the case carries important compliance lessons. OFAC noted that foreign subsidiaries owned or controlled by U.S. persons are subject to Iran sanctions obligations nearly identical to their U.S. parent, and compliance failures at the subsidiary level create direct liability for the U.S. parent. The case also flagged the UAE as a known high-risk jurisdiction for diversion and highlighted aggravating factors including reckless disregard for sanctions requirements and failure to translate compliance guidance for non-U.S. personnel. Companies with foreign subsidiaries should ensure that sanctions compliance policies, training, and screening procedures are implemented and understood in all relevant languages and locations.
BIS Reaches Administrative Enforcement Settlement with Plexon, Inc. for Entity List Exports to Chinese Military Research Entity
On August 14, 2026, the Department of Commerce's Bureau of Industry and Security ("BIS") announced an administrative enforcement settlement with Plexon, Inc. ("Plexon"), a small neuroscience technology company. BIS charged Plexon with eight violations of the Export Administration Regulations for exporting Neural Recording Data Acquisition Systems ("OmniPlex systems") and accessories, valued at approximately $178,721, to the Academy of Military Medical Sciences ("AMMS") in China—an entity on the BIS Entity List since December 2021 due to its alleged support for Chinese military end uses, including purported brain-control weaponry. The exports occurred between February 2022 and August 2023 without the required BIS license or authorization.
Export enforcement remains a high-risk area because civil, criminal, sanctions, customs, and national security authorities can overlap. The Plexon case is particularly notable because it involves emerging technology—brain-computer interfaces and neural recording systems—that BIS has identified as potentially essential to U.S. national security. Companies selling controlled products, technology, software, sensors, semiconductor-related items, defense-adjacent tools, or goods with potential diversion risk should ensure that export classification, Entity List and denied party screening, end-use/end-user diligence, deemed export controls, and escalation procedures are documented and tested.
DOJ Continues Focus on Cyber Theft, Money Laundering, and FCPA
On August 18, 2026, DOJ announced a 14-count superseding indictment charging 17 Iranians for conducting a massive cyber theft campaign on behalf of the Islamic Revolutionary Guard Corps and other Iranian entities. The Mabna Institute defendants allegedly conducted cyber intrusions into 144 U.S.-based universities, 178 foreign universities, at least 42 U.S.-based private sector companies, and at least five U.S. government agencies, stealing more than 31 terabytes of academic data and intellectual property.
Also on August 18, DOJ announced a 15-year sentence for a Chinese national for laundering over $92 million in illicit funds through a Chinese money laundering organization. Separately, a Colombian national pleaded guilty on August 17, 2026, to a seven-year money laundering conspiracy involving consumer electronics purchased with drug proceeds.
On August 6, 2026, a federal jury convicted a former banker for a scheme to bribe Ghanaian officials in connection with the development and financing of a multi-million-dollar power project—reflecting continued Foreign Corrupt Practices Act (“FCPA”) enforcement by the Criminal Division's White Collar and Corporate Enforcement Section.
The Fraud Division also continued its aggressive pace following its July 30, 2026 announcement of unprecedented fraud enforcement actions across the Southeastern United States, encompassing 17 cases spanning seven states with over $350 million in intended losses and the formation of new federal-state anti-fraud task forces in North Carolina, Mississippi, and Florida.
Companies with international operations should continue to assume that sanctions, export controls, cyber intrusions, FCPA, narcotics-linked laundering, and procurement networks may be investigated through coordinated criminal, civil, regulatory, and intelligence channels. The compliance function should be connected to cybersecurity, trade compliance, finance, procurement, logistics, and legal so that red flags are not reviewed in silos.
Forced Labor and Customs Compliance Remain Active Trade Enforcement Priorities
U.S. Customs and Border Patrol (“CBP”) continues to emphasize forced labor enforcement under 19 U.S.C. § 1307, the Uyghur Forced Labor Prevention Act ("UFLPA"), Withhold Release Orders ("WROs"), Findings, and Countering America’s Adversaries Through Sanctions Act (“CAATSA”). As of mid-August 2026, CBP reports 58 active WROs and nine active Findings. Recent WRO activity has included enforcement actions against garment manufacturers Needle Craft Ltd. and Casual Wear Apparel L.L.C. and a notable WRO against Serbia Zijin Copper D.O.O., which extended forced labor enforcement beyond traditional sectors into copper mining and demonstrated that CBP will follow an entity across jurisdictions—even when production is relocated to a country outside the UFLPA's Xinjiang focus.
CBP's new Forced Labor Enforcement Operational Guidance for Importers provides a consolidated overview of all three enforcement authorities, process maps, step-by-step guidance on responding to detentions and exclusions, and appendices with recommended supply chain documentation for UFLPA high-priority sectors.
Importers should not wait for a detention notice to begin supply chain tracing. CBP expects companies to be able to produce credible documentation quickly, including supplier information, production records, transportation records, purchase orders, invoices, bills of material, and evidence regarding upstream raw materials. Companies in apparel, solar, electronics, automotive, agriculture, seafood, metals, copper, and other high-risk sectors should treat forced labor diligence as both a customs compliance issue and an investigations readiness issue.
U.S. Sanctions Delisting Litigation Rebounds After Year-Long Slowdown
After a notable slowdown during the first year of the second Trump administration, sanctions delisting litigation in U.S. federal courts is rebounding, according to an analysis by Global Investigations Review (“GIR”). GIR's review of delisting lawsuits filed over the past five years found that sanctions targets are returning to court in increasing numbers, making delisting challenges a growing practice area.
The uptick comes as OFAC itself has taken steps to modernize its administrative reconsideration process. In June 2026, OFAC launched an online Reconsideration Portal for delisting petitions and requests for "courtesy documents" explaining the basis for a listing. OFAC has also conducted significant Specially Designated Nationals (“SDN”) delistings as part of a broader "sanctions modernization" initiative, including the removal of 76 targets from the SDN List earlier this year. At the same time, OFAC continues to issue new designations across counterterrorism, counter-narcotics, Iran, Cuba, and non-proliferation programs at a steady pace.
For companies and individuals subject to OFAC designations, the administrative and judicial landscape is evolving. The availability of the Reconsideration Portal, the publication of best-practices guides for delisting petitions, and the continued viability of federal court challenges under the Administrative Procedure Act together expand the toolkit for parties seeking removal from sanctions lists. Companies should evaluate whether changed circumstances, remediation, or governance reforms may support a delisting petition or license application.
Spotlight: Blank Rome's Trade Enforcement Practice
Blank Rome's Trade Enforcement practice brings together attorneys from the firm's White Collar Defense & Investigations, International Trade, Maritime, and Compliance & Investigations groups to address the growing complexity and frequency of government investigations related to trade enforcement.
In August 2025, Blank Rome announced the formal launch of its cross-practice Trade Enforcement team in response to the increasing volume and sophistication of federal trade enforcement activity—including investigations by DOJ, CBP, BIS, OFAC, and the interagency Trade Fraud Task Force, which has now surpassed $1 billion in recoveries and charged losses in less than one year. The team advises companies, boards of directors, senior executives, and individuals on criminal and civil trade enforcement matters, including customs fraud, export control violations, sanctions compliance and enforcement, forced labor supply chain risks, False Claims Act investigations, FCPA matters, and AML.
Key contacts for the Trade Enforcement practice include partners Bradley L. Henry, Anthony Rapa, Jennifer A. Short, William E. Lawler III, Kierstan L. Carlson, and Shawn M. Wright. The team also includes associates Michael J. Schmandt and Layla S. Najjar, among others.
As the enforcement landscape covered in this edition of B.R.I.E.F. illustrates—from BIS export enforcement and OFAC sanctions settlements to CBP forced labor actions and DOJ's new Global Trade & Commerce Enforcement Section—trade enforcement risk is increasing across industries. Blank Rome's cross-practice team is positioned to advise clients on the full spectrum of trade-related criminal, civil, regulatory, and compliance matters.
Blank Rome News & Notes
Blank Rome Recognized in The American Lawyer's 2026 A-List. On August 13, 2026, Blank Rome was recognized in The American Lawyer's prestigious 2026 A-List, reflecting the firm's continued growth, financial performance, and commitment to pro bono service and diversity.
© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.+