DOJ Declines Prosecution of Private Equity Acquiror Following Sanctions and Export Controls Self-Disclosure: A Roadmap for M&A Risk Management

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Jun 30

On June 16, 2025, the U.S. Department of Justice’s National Security Division (“NSD”) announced its first-ever application of the Mergers & Acquisitions Voluntary Self-Disclosure Policy (“NSD’s M&A Policy”), declining to prosecute White Deer Management LLC (“White Deer”), a U.S.-based private equity firm. White Deer had voluntarily disclosed sanctions and export control violations committed by its newly acquired portfolio company, Unicat Catalyst Technologies LLC (“Unicat”), prior to the acquisition.

This landmark resolution underscores a critical point: post-acquisition discovery of compliance violations does not have to result in criminal liability—if addressed swiftly and effectively.

NSD’s M&A Policy: A Safe Harbor for Responsible Acquirors

Originally previewed in October 2023, and formally adopted in March 2024, NSD’s M&A Policy creates a presumption of declination for acquiring companies that:

Voluntarily and promptly disclose potential criminal violations committed by the acquired entity;
Fully cooperate with DOJ investigations; and
Timely and appropriately remediate the underlying misconduct.

When these conditions are met, the acquiror will generally receive certain protections including:

Presumption that NSD will not prosecute the acquiror;
Will not be required to pay a criminal fine or forfeit assets; and
Will not have the disclosed misconduct considered as part of the company’s recidivism record (i.e., history of past criminal conduct) in future enforcement matters.

White Deer’s Internal Investigation and Self-Disclosure

Between 2014 and 2021, Unicat’s former CEO, Mani Erfan, conspired with at least one Unicat employee to conduct 23 unlawful exports of chemical catalysts to Iran, Venezuela, Syria, and Cuba. The conspirators used falsified documents, indirect shipping routes through China, and false assurances to employees to disguise the sanctions and export control violations.

Although White Deer’s pre-acquisition due diligence flagged a potential issue involving a sales agent in Iran, DOJ stated that the concern was “overlooked by a junior attorney.”

The violations came to light in June 2021—nine months post-acquisition—when Unicat’s new CEO learned of a pending transaction with an Iranian customer. White Deer’s response was swift and included:

Immediately cancelling the transaction;
Engaging outside counsel to conduct an internal investigation; and
Voluntarily self-disclosing potential violations to DOJ, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”), and the Department of Commerce’s Bureau of Industry and Security (“BIS”).

White Deer’s full cooperation with authorities also contributed to the successful prosecution of Unicat’s former CEO who pled guilty to conspiracy, sanctions violations, and money laundering. At the same time, the White Deer took remedial actions, including terminating culpable staff and implementing enhanced compliance controls.

As a result, DOJ declined prosecution of White Deer and entered into a Non-Prosecution Agreement (“NPA”) with Unicat. Under the NPA, Unicat agreed to pay $3.3 million in forfeiture, along with additional penalties, duties, taxes, and fees.

Assistant Attorney General for National Security John A. Eisenberg stated: “After acquiring a company with a hidden history of sanctions violations, this private equity firm uncovered the misconduct, stopped it, and quickly reported it to the government, leading to the successful prosecution of a senior executive.” According to Eisenberg, this outcome reflects NSD’s “strong commitment to rewarding responsible corporate leadership.”

This marks DOJ’s first ever declination under the NSD’s M&A policy, offering a clear roadmap for how acquirors can responsibly and effectively manage post-closing enforcement risks.

Key Takeaways for Clients

Post-closing discovery of violations is not fatal—if companies act promptly.
NSD’s M&A Policy is real and actionable. Voluntary disclosure protects acquirors when the criteria are met.
Pre-acquisition due diligence is critical, but post-close integration and monitoring are equally essential—particularly for businesses operating in high-risk sectors or geographies.
Experienced outside counsel is essential—to conduct credible investigations, coordinate disclosures, manage regulatory relationships, and preserve privilege during high stakes enforcement matters.
Inaction has consequences. U.S. sanctions and export control laws carry 10-year statutes of limitations and strong penalties—up to $1 million per violation criminally.
DOJ is rewarding proactive compliance—in line with national security enforcement priorities.

How Mitchell Sandler Can Help

At Mitchell Sandler PLLC, we have deep experience guiding clients through internal investigations, sanctions and export control issues, and M&A-related liability. We help clients:

Conduct risk-informed due diligence;
Conduct internal investigations;
Engage with criminal and other enforcement authorities;
Navigate voluntary self-disclosures; and
Build and enhance compliance programs and controls to mitigate risk and protect enterprise value.

If you have questions or would like to discuss these issues, please contact Seth Waxman, Bree Murphy, Chloé Dolsenhe, or Sean Hennessy.

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