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DOJ Declines Charges Against Merck KGaA's MilliporeSigma Amid Biochemical Scheme
DOJ declines to charge Merck KGaA unit after $4.9M export control scheme disclosure, first under 2019 leniency policy.
Key Takeaway
- DOJ will not charge Merck KGaA's MilliporeSigma after the company proactively disclosed a scheme to divert biochemicals to China.
- Two individuals, Pen Yu and Gregory Muñoz, pleaded guilty to fraudulently obtaining $4.9 million in discounted biochemicals for export.
- This marks the first declination under DOJ’s revised leniency policy, highlighting the importance of voluntary corporate self-disclosure.
Scheme to Divert Biochemicals
Two men, including a former employee of MilliporeSigma, a subsidiary of the German company Merck KGaA, have pleaded guilty to their involvement in a scheme to divert sensitive biochemicals to China. The Justice Department announced on Wednesday that it would not bring charges against Merck KGaA’s North American unit after the company proactively disclosed the scheme. Federal prosecutors revealed that Pen Yu, a U.S. citizen residing in Gibsonton, Florida, and Gregory Muñoz, a MilliporeSigma sales representative, were involved in the fraudulent procurement of biochemicals.
Pen Yu, who went by the name "Ben," fraudulently obtained deeply discounted biochemicals from MilliporeSigma over nearly eight years, from July 2016 to May 2023. Yu falsely represented that he was affiliated with a biology research laboratory at a Florida university. With Muñoz's assistance, Yu secured more than $4.9 million in discounts and other benefits, such as free overnight shipping, which were not available to the general public. Upon arrival at the university’s stockroom, a stockroom employee diverted the biochemicals to Yu, who then repackaged and sent them to China. The products included chemical compounds subject to U.S. export controls regulations, which prohibit the export of sensitive goods, including items with military applications.
DOJ's Leniency Policy
The Justice Department’s decision not to charge Merck KGaA’s life-sciences unit marks the first time a company has been awarded a declination under a leniency policy created by the DOJ’s national security division in 2019 and revised earlier this year. The department’s decision was communicated in a letter to MilliporeSigma, based in Burlington, Massachusetts. The DOJ credited the company for its "exceptional and proactive cooperation" and for disclosing the misconduct only a week after its discovery.
“DOJ’s favorable resolution of this matter with MilliporeSigma reflects our company values and steadfast commitment to a strong culture of compliance that protects our customers, employees, and business,” a MilliporeSigma spokeswoman said in a statement.
Legal Proceedings and Cooperation
Prosecutors stated that the scheme was eventually detected by MilliporeSigma’s compliance personnel, who noticed suspicious orders. A lawyer for Gregory Muñoz mentioned that his client had accepted responsibility for his actions and was cooperating with the government to make amends. A lawyer for Pen Yu did not immediately return a request for comment.
Assistant Attorney General Matthew Olsen, head of the DOJ’s national security division, emphasized the importance of companies voluntarily reporting misconduct. “Today’s announcement reflects the value for companies like MilliporeSigma to quickly self-disclose potential criminal activity and reaffirms our commitment to work in partnership with the private sector to root out conduct that violates the law and jeopardizes our national security,” Olsen said in a statement.
Management Quotes
MilliporeSigma spokeswoman:
"DOJ’s favorable resolution of this matter with MilliporeSigma reflects our company values and steadfast commitment to a strong culture of compliance that protects our customers, employees and business."
Matthew Olsen, Assistant Attorney General, DOJ's national security division:
"Today’s announcement reflects the value for companies like MilliporeSigma to quickly self-disclose potential criminal activity and reaffirms our commitment to work in partnership with the private sector to root out conduct that violates the law and jeopardizes our national security."
