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Case 2:23-cv-20757-SRC-JSA Document 1-1 Filed 09/28/23 Page 1 of 14 PageID: 5
VIKAS KHANNA 1
Attorney for the United States
DAVID V. SIMUNOVICH
Assistant United States Attorney
970 Broad Street, Suite 700
Newark, NJ 07102
Tel. (973) 645-2736
david.simunovich@usdoj.gov
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA
Petitioner, Civil Action No. 23-20757
v.
MWW GROUP LLC d/b/a
MIKEWORLDWIDE,
Respondent.
BRIEF IN SUPPORT OF PETITION FOR SUMMARY ENFORCEMENT OF
CIVIL INVESTIGATIVE DEMAND
On the brief:
DAVID V. SIMUNOVICH
Assistant United States Attorney
1 Acting pursuant to authority conferred by 28 U.S.C. § 515.
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TABLE OF CONTENTS
I. PRELIMINARY STATEMENT ....................................................................... 1
II. BACKGROUND ................................................................................................. 1
A. The Government’s Investigation ................................................................... 1
B. The CID .......................................................................................................... 2
C. MWW Fails to Respond to the CID ............................................................... 3
III. ARGUMENT ..................................................................................................... 3
A. CID Enforcement Proceedings Should be Limited in Scope to
Encourage “Expeditious” False Claims Act Investigations .......................... 5
B. The U.S. Attorney’s Office is Authorized to Conduct this Investigation
and the CID Meets all Procedural Requirements......................................... 5
C. The CID Seeks Evidence Relevant to the Investigation............................... 7
D. The CID is Neither Indefinite nor Unduly Burdensome .............................. 9
IV. CONCLUSION ................................................................................................ 10
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TABLE OF AUTHORITIES
Cases Page(s)
Avco Corp. v. U.S. Dep’t of Justice,
884 F.2d 621 (D.C. Cir. 1989) ............................................................................................... 3
Dole v. Trinity Industries, Inc.,
904 F.2d 867 (3d Cir.), cert. denied, 498 U.S. 998 (1990) ......................................... 7
EEOC v. Karuk Tribe Hous. Auth.,
260 F.3d 1071 (9th Cir. 2001) .................................................................................... 8
FDIC v. Wentz,
55 F.3d 905 (3d Cir. 1995).......................................................................................... 9
FTC v. Invention Submission Corp.,
965 F.2d 1086 (D.C. Cir. 1992) .................................................................................. 4
FTC v. Texaco, Inc.,
555 F.2d 862 (D.C. Cir. 1997) ............................................................................ 5, 8, 9
In re EEOC,
709 F.2d 392 (5th Cir. 1983) ...................................................................................... 5
In re McVane,
44 F.3d 1127 (2d Cir. 1995).................................................................................... 5, 8
Oncology Services Corp.,
60 F.3d 1015 (3rd Cir. 1995) ...................................................................................... 7
Sandsend Fin. Consultants, Ltd. v. Fed. Home Loan Bank Board,
878 F.2d 875 (5th Cir. 1989) ...................................................................................... 8
SEC v. Brigadoon Scotch Distrib. Co.,
480 F.2d 1047 (2d Cir 1973)....................................................................................... 9
UMDNJ v. Corrigan,
347 F.3d 57 (3d Cir. 2003).......................................................................................... 5
United States v. Golden Valley Elec. Ass'n,
689 F.3d 1108 (9th Cir. 2012) .................................................................................... 9
United States v. Hunton & Williams,
952 F. Supp. 843 (D.D.C. 1997) ................................................................................. 8
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United States v. Markwood,
48 F.3d 969 (6th Cir. 1995) .................................................................................... 4, 5
United States v. Morton Salt,
338 U.S. 632 (1950) .................................................................................................... 9
United States v. Neifert-White Co.,
390 U.S. 228 (1968) .................................................................................................... 6
United States v. Stuart,
489 U.S. 353 (1989) .................................................................................................... 5
United States v. Witmer,
835 F. Supp. 208 (M.D. Penn. 1993), aff'd, 30 F.3d 1489 (3d Cir. 1994) ................ 4
Statutes and Regulations
28 CFR Appendix to Subpart Y of Part 0, Civil Division Directive 1-15 § 1(c, d) ....... 6
22 U.S.C. § 611 ............................................................................................................... 1
31 U.S.C. § 3729 ............................................................................................................. 2
31 U.S.C. § 3729(a)(1) ................................................................................................ 2, 3
31 U.S.C. § 3730 ............................................................................................................. 2
31 U.S.C. § 3731 ............................................................................................................. 2
31 U.S.C. § 3732 ............................................................................................................. 2
31 U.S.C. § 3733 ......................................................................................................... 2, 4
31 U.S.C. § 3733(j) ......................................................................................................... 4
31 U.S.C. § 3733(a)(1) ................................................................................................ 4, 6
31 U.S.C. § 3733(a)(2)(A) ............................................................................................... 6
31 U.S.C. § 3733(a)(2)(B)(i) ........................................................................................... 7
31 U.S.C. § 3733(a)(2)(B)(iii) ......................................................................................... 7
31 U.S.C. § 3733(a)(2)(C)(i) ........................................................................................... 7
31 U.S.C. § 3733(a)(2)(C)(iii) ......................................................................................... 7
31 U.S.C. § 3733(a)(2)(E) ............................................................................................... 7
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I. PRELIMINARY STATEMENT
The United States brings this proceeding to enforce a validly-issued civil
investigative demand to MWW Group, LLC d/b/a Mikeworldwide (“MWW”). Nearly
three months have passed since MWW received the demand yet it has not produced
a single document or responded to a single interrogatory. MWW’s delay tactics are
impeding a legitimate law enforcement investigation into whether MWW violated
the False Claims Act when it obtained a $2 million loan under the Paycheck
Protection Program (“PPP”).
The United States is entitled summary enforcement of Civil Investigative
Demand No. NJ-2023-020 (“the CID”) because it meets the three requirements for
enforcing an administrative subpoena: the CID was issued by an authorized official;
it meets all procedural requirements; and it seeks evidence that is relevant to the
investigation.
II. BACKGROUND
A. The Government’s Investigation
MWW is a company based in New Jersey that applied for, and received, a $2
million PPP loan. Declaration of AUSA David V. Simunovich (“Simunovich Decl.”)
¶¶ 3-4. When it applied for the PPP loan, MWW stated that it was not required to
be registered under the Foreign Agents Registration Act of 1938, as amended
(“FARA”), 22 U.S.C. § 611 et seq. Simunovich Decl. ¶4. At the time, however, MWW
was in fact registered under FARA. Id. If MWW had disclosed on its PPP
application that it was registered under FARA, it would have been ineligible to
receive the PPP loan. Id.
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The United States is investigating whether MWW’s certification concerning
its FARA status violated the False Claims Act, 31 U.S.C. §§ 3729-3733. Id. If MWW
violated the False Claims Act, it would be liable for up to treble damages and
additional civil monetary penalties. 31 U.S.C. § 3729(a)(1).
B. The CID
On or about June 22, 2023, a duly-authorized official at the U.S. Attorney’s
Office approved the CID. Id. ¶ 5 & Exhibit 1. The CID was served on MWW,
through counsel, on July 7, 2023. Id. ¶ 6.
The evidence sought by the CID is relevant and material to the Government’s
investigation into whether MWW knowingly made a false statement to obtain a
federal PPP loan. The CID identifies the specific PPP loan at issue and directs
MWW to produce documents and respond to interrogatories within 20 days of
service. Id. Exh. 1. The document requests and interrogatories are focused on the
specific issues at the center of the investigation—namely, whether MWW was
eligible for a PPP loan in light of its FARA registration status and whether MWW
knowingly made a false statement on its PPP loan application concerning that
status. Id. By way of example, the CID seeks documents and answers to
interrogatories concerning MWW’s FARA status (see, e.g., document requests 7, 11-
17; interrogatories 9-14) and any guidance MWW sought or received concerning its
eligibility in light of its FARA status (see, e.g., document requests 5-7 and
interrogatories 4-6). The CID also seeks more fundamental evidence concerning
MWW’s corporate structure, certain personnel files, and document retention policies
(see, e.g., document requests 1-3 and 18-19, and interrogatory 15).
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C. MWW Fails to Respond to the CID
Shortly after receiving the CID on July 7, 2023, MWW’s counsel requested an
extension of time to respond to the CID, moving the response date from July 27th to
September 8th. Id. ¶ 8. The Government consented. Id.
On August 25th, MWW’s counsel requested an additional extension of time,
from September 8th to October 23rd. Id. ¶ 9. The Government agreed to the
extension on the condition that MWW provide responses to five document requests
and seven interrogatories by September 8th. Id. ¶ 8. MWW did not provide any
documents or interrogatory responses by September 8th. Id.
On September 11th, the Government advised counsel that MWW’s failure to
provide any responses to the CID amounted to material noncompliance. Id. ¶ 10.
The Government offered MWW an additional ten business days—to September 22,
2023—to cure the deficiency. Id.
As of the date of this submission, MWW has not furnished any documents or
answers to any interrogatories in response to the CID. Id.
III. ARGUMENT
The False Claims Act is “the government’s primary litigative tool for the
recovery of losses sustained as the result of fraud against the government.” Avco
Corp. v. U.S. Dep’t of Justice, 884 F.2d 621, 622 (D.C. Cir. 1989). The FCA allows
the United States to collect statutory damages and civil penalties from a person
that knowingly submits, or causes to be submitted, a false or fraudulent claim for
payment to the government or, in some cases, to a recipient of federal funds. 31
U.S.C. § 3729(a)(1).
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The False Claims Act expressly provides for the use of civil investigative
demands to obtain answers to interrogatories, documents, and testimony to assist
the United States in investigating possible False Claims Act violations. 31 U.S.C. §
3733. Demands may be issued when the Attorney General or a designee “has reason
to believe that any person may be in possession, custody, or control of any
documentary material or information relevant to a false claims law investigation.”
Id. § 3733(a)(1). The False Claims Act also expressly allows for the enforcement of a
civil investigative demand by a federal district court whenever any person fails to
comply. Id. § 3733(j).
Courts look to three factors in determining whether a civil investigative
demand is enforceable. 2 Specifically, court must ask whether (i) Congress granted
the United States Attorney General (and his designees) the authority to conduct
this False Claims Act investigation, (ii) the CID meets all procedural requirements,
and (iii) the CID seeks evidence that is relevant and material to the United States’
investigation. All three requirements have been met.
2 Courts evaluate the enforceability of civil investigative demands in the same
way that they evaluate the enforceability of administrative subpoenas. United
States v. Markwood, 48 F.3d 969, 976 (6th Cir. 1995) (finding CIDs are
administrative subpoenas); FTC v. Invention Submission Corp., 965 F.2d 1086, 1087
(D.C. Cir. 1992) (acknowledging that a CID issued by the Federal Trade
Commission is an administrative subpoena); United States v. Witmer, 835 F. Supp.
208, 220 (M.D. Penn. 1993) (acknowledging that a CID issued under the FCA is an
administrative subpoena), aff’d, 30 F.3d 1489 (3d Cir. 1994) (Table).
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A. CID Enforcement Proceedings Should be Limited in Scope to
Encourage “Expeditious” False Claims Act Investigations
The Court’s role in reviewing a CID is “strictly limited.” UMDNJ v. Corrigan,
347 F.3d 57, 64 (3d Cir. 2003) (quoting FTC v. Texaco, Inc., 555 F.2d 862, 871-72
(D.C. Cir. 1997) (en banc)). Enforcement proceedings must be limited in scope to
protect “the important governmental interest in the expeditious investigation of
possible unlawful activity.” Markwood, 48 F.3d at 979. The backbone of an “agency’s
effectiveness in carrying out [its] congressionally mandated duties . . . is the rapid
exercise of the power to investigate.” Id. (citation omitted).
To ensure the summary nature of enforcement proceedings, the government
is authorized to rely on affidavits or declarations to demonstrate that the
requirements for enforcement of an administrative subpoena have been satisfied.
United States v. Stuart, 489 U.S. 353, 360 (1989); In re McVane, 44 F.3d 1127, 1136
(2d Cir. 1995); In re EEOC, 709 F.2d 392, 400 (5th Cir. 1983).
Here, the U.S. Attorney’s Office has sufficiently supported its request for
enforcement by submitting the Declaration of AUSA David V. Simunovich, which
demonstrates that the investigation is within the scope of the Office’s authority,
that the CID complies with all procedural requirements, and that the requested
documents are relevant to Government’s investigation.
B. The U.S. Attorney’s Office is Authorized to Conduct this
Investigation and the CID Meets all Procedural Requirements
Congress granted the United States Attorneys General and their designees
authority to investigate potential violations of the False Claims Act. The False
Claims Act provides civil remedies to the Government against “all fraudulent
5
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attempts to cause the Government to pay out sums of money.” United States v.
Neifert-White Co., 390 U.S. 228, 233 (1968). Here, the Attorney General’s designee
is investigating whether MWW violated the False Claims Act by knowingly making
a false statement concerning its eligibility for a $2 million PPP loan. Simunovich
Decl. ¶¶4-5.
Furthermore, the “the Attorney General, or a designee” is statutorily
authorized to issue civil investigative demands to investigate potential violations of
the False Claims Act. 31 U.S.C. § 3733(a)(1). Consistent with § 3733(a)(2), the
Attorney General delegated that authority to United States Attorneys. See 28
C.F.R. Appendix to Subpart Y of Part 0, Civil Division Directive 1-15 § 1(c, d).
Consistent with his regulatory authority, the United States Attorney for the
District of New Jersey delegated his CID-issuing authority to the Chief of the
Health Care Fraud Unit (among certain others within the U.S. Attorney’s Office for
the District of New Jersey). Simunovich Decl. ¶ 5.
Furthermore, the CID complies with all applicable statutory requirements for
CIDs seeking documentary material and answers to interrogatories. The CID
“state[s] the nature of the conduct constituting the alleged violation of a false claims
law which is under investigation, and the applicable provision to be violated.” 31
U.S.C. § 3733(a)(2)(A); see also Simunovich Decl. Exh. A. More specifically, the CID
states that it “is issued pursuant to the False Claims Act, 31 U.S.C.§§ 3729-3733, in
the course of a False Claims Act investigation to determine whether there is or has
been a violation of 31 U.S.C. § 3729.” Simunovich Decl. Exh. A. The CID goes on to
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explain that “investigation focuses on whether MWW Group LLC may have violated
the False Claims Act in making false representations to obtain a loan pursuant to
Paycheck Protection Program, enacted pursuant to the CARES Act, Pub. L. No. 116-
136 (March 27, 2020).” Id.
Schedule A to the CID sets forth nineteen document requests, each of which
describes with “definiteness and certainty” the materials to be produced. 31 U.S.C. §
3733(a)(2)(B)(i); see Simunovich Decl., Exh. A. The CID also includes fifteen
interrogatories. 31 U.S.C. § 3733(a)(2)(C)(i); Simunovich Decl., Exh. A. Consistent
with 31 U.S.C. § 3733(a)(2)(E), the CID prescribes a 20-day return date and
identifies a False Claims Law investigator to receive MWW’s responses. Id. §
3733(a)(2)(B)(iii), (C)(iii); see also Simunovich Decl., Exh. A.
In sum, the U.S. Attorney’s Office has authority to conduct this False Claims
Act investigation, the CID was properly authorized in furtherance of that
investigation, and the CID meets all procedural requirements set forth in the 31
U.S.C. § 3733.
C. The CID seeks Evidence Relevant to the Investigation
Information and documents demanded by a civil investigative demand must
be reasonably relevant to an agency’s investigation. United States ex rel. Oncology
Services Corp., 60 F.3d 1015, 1020 (3rd Cir. 1995) (citations omitted). “‘Reasonably
relevant’ means merely ‘that the information must be relevant to some (any) inquiry
that the [agency] is authorized to undertake.” Id. (quoting Dole v. Trinity Industries,
Inc., 904 F.2d 867, 872 (3d Cir.), cert. denied, 498 U.S. 998 (1990) (emphasis &
alteration in original)). “So long as the material requested touches a matter under
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investigation, an administrative subpoena will survive a challenge that the material
is not relevant.” Sandsend Fin. Consultants, Ltd. v. Fed. Home Loan Bank Board,
878 F.2d 875, 882 (5th Cir. 1989) (internal quotations omitted). Relevance is broadly
interpreted in the context of enforcing administrative subpoenas. Texaco, 555 F.2d
at 872. The agency’s appraisal of relevancy must be accepted “as long as it is not
‘obviously wrong.’” United States v. Hunton & Williams, 952 F. Supp. 843, 854
(D.D.C. 1997) (citations omitted); see also EEOC v. Karuk Tribe Hous. Auth., 260
F.3d 1071, 1076 (9th Cir. 2001) (“[C]ourts must enforce administrative subpoenas
unless the evidence sought by the subpoena is plainly incompetent or irrelevant to
any lawful purpose of the agency.” (internal quotation marks omitted)); In re
McVane, 44 F.3d at 1135 (stating that an agency’s appraisal of relevancy must be
accepted so long as it is not obviously wrong).
The Government satisfies this requirement here. The CID seeks evidence
relevant to the United States’ investigation into whether MWW knowingly made a
false statement in its PPP application to receive a $2 million PPP loan. See
Simunovich Decl., Exh. A. For instance, the CID seeks documents and information
relevant to MWW’s FARA registration and any advice it may have sought or
received pertaining to its eligibility for the PPP in light of that registration (see, e.g.,
document requests 5-7 & 11-16 and interrogatories 4-6, 9, 11-14), and other more
routine, but no less important, requests (see, e.g., document request 19 and
interrogatory number 15 seeking information concerning MWW’s document
retention policy).
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D. The CID is Neither Indefinite nor Unduly Burdensome
If MWW were to object to the breadth of the CID, it would bear the burden of
showing that the CID is indefinite or unduly burdensome. See FDIC v. Wentz, 55
F.3d 905, 908 (3d Cir. 1995) (“The subpoenaed party bears the heavy burden of
establishing an abuse of the court’s process.” (emphasis added)); see also Golden
Valley, 689 F.3d at 1115 (“A subpoena should be enforced unless the party being
investigated proves the inquiry is unreasonable because it is overbroad or unduly
burdensome.” (internal quotations omitted)). Where the investigation “is authorized
by law and the materials sought are relevant to the inquiry, that burden is not
easily met.” SEC v. Brigadoon Scotch Distrib. Co., 480 F.2d 1047, 1056 (2d Cir
1973); see also Wentz, 55 F.3d at 908.
Non-compliance on the grounds of burden is justified only if “compliance
threatens to unduly disrupt or seriously hinder normal operations of a business.”
Texaco, Inc., 555 F.2d at 882. The question is not whether the demand is
burdensome or broad; “[t]he question is whether the demand is unduly burdensome
or unreasonably broad. Some burden on subpoenaed parties is to be expected and is
necessary in furtherance of the agency’s legitimate inquiry and the public interest.”
Id. (emphasis added). Moreover, to establish such a claim, the respondent must
demonstrate “reasonable efforts” to “obtain reasonable conditions” from the issuing
authority. Morton Salt, 338 U.S. at 653.
Here, MWW has not articulated—and cannot articulate—any justification for
refusing to respond to the CID. Nor will MWW suffer an unreasonable burden if it is
compelled to provide documents and interrogatory responses.
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IV. CONCLUSION
The Government has made multiple efforts to gain MWW’s voluntary
compliance with the CID before resorting to judicial enforcement. Those efforts have
been unsuccessful and MWW’s complete failure to respond to the CID is impeding
the Government’s investigation. Accordingly, and for the reasons set forth above
and in the accompanying Petition, the United States respectfully requests that the
Court issue an order enforcing the CID and that requires MWW to produce the
documents and answer the interrogatories in the CID without further delay.
Dated: Newark, New Jersey
September 28, 2023
Respectfully submitted,
VIKAS KHANNA 3
Attorney for the United States
By: /s/ David V. Simunovich
DAVID V. SIMUNOVICH
Assistant United States Attorney
3 Acting pursuant to authority conferred by 28 U.S.C. § 515.
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