Private Equity Firm Avoids Prosecution After Exposing Sanctions Violations in Acquired Business

White Deer Management LLC has become the first company to benefit from the US Department of Justice’s new M&A self-disclosure policy, following its prompt and voluntary revelation of export control and sanctions violations at recently acquired Unicat Catalyst Technologies.

Landmark Decision Underscores Value of Voluntary Self-Disclosure

In a landmark enforcement outcome, the US Department of Justice (DOJ) has declined to prosecute private equity firm White Deer Management LLC after the company voluntarily self-disclosed sanctions violations committed by its acquisition target, Unicat Catalyst Technologies. The decision, announced by the DOJ’s National Security Division (NSD) and the US Attorney’s Office for the Southern District of Texas, underscores a growing trend towards incentivising compliance and transparency in the mergers and acquisitions (M&A) space.

The case represents the first application of the NSD’s new Mergers and Acquisitions Policy, introduced in March 2024. The policy creates a presumption of declination for acquiring companies that lawfully purchase a business and voluntarily disclose previously unknown criminal violations, provided they fully cooperate and remediate effectively.

Hidden Sanctions Breaches Uncovered Post-Acquisition

White Deer acquired Unicat in 2021, unaware of the extent of the latter’s historical sanctions breaches. Between 2014 and 2021, former CEO Mani Erfan orchestrated the illegal export of chemical catalysts to Iran, Venezuela, Syria, and Cuba in violation of US sanctions and export control laws. These materials were used in oil refining and steel production.

The violations were uncovered shortly after acquisition, when Unicat’s new CEO cancelled a pending transaction with an Iranian customer and initiated a full internal investigation. White Deer disclosed the suspected criminal conduct before the investigation concluded and worked closely with US authorities throughout.

Erfan, who had deceived both his employees and White Deer about Unicat’s compliance posture, pleaded guilty in August 2024 to conspiring to violate sanctions, international money laundering, and falsifying export documents. He agreed to a forfeiture of $1.6 million as part of his plea.

Non-Prosecution Agreement & Financial Penalties

While White Deer avoided charges, Unicat entered into a non-prosecution agreement (NPA) with the DOJ. The company accepted responsibility for 23 unlawful sales, falsification of customs invoices, and misrepresentation of compliance status during its sale to White Deer.

Unicat agreed to forfeit over $3.3 million in illegal proceeds, pay a $3.88 million penalty to the Office of Foreign Assets Control (OFAC), a $391,000 penalty to the Department of Commerce’s Bureau of Industry and Security (BIS), and more than $1.65 million to US Customs and Border Protection for unpaid duties and fees.

These parallel resolutions reflect coordinated inter-agency enforcement and highlight the DOJ’s increasing willingness to credit meaningful compliance efforts.

A Template for Responsible Corporate Conduct in M&A

The DOJ’s decision was based on four key elements: the legality and good faith nature of White Deer’s acquisition, the timeliness of its disclosure, its full cooperation with the government, and its effective remediation. This included the termination and disciplining of employees involved, reimbursement claims against Unicat’s sellers, and the implementation of a robust compliance programme.

Assistant Attorney General for National Security John A. Eisenberg praised White Deer’s actions as an example of “responsible corporate leadership,” while Homeland Security Investigations reaffirmed that aiding sanctioned regimes would not be tolerated.

Implications for Corporate Compliance & Due Diligence

This case sets a precedent for how acquirors can protect themselves from legacy liability by swiftly disclosing misconduct and cooperating with regulators. It also highlights the reputational and financial risks of insufficient due diligence, as well as the need for post-closing compliance integration and audits.

For the private equity sector, this outcome may influence transaction structuring, contract representations, and the prioritisation of export control risk assessments in deal-making, particularly where targets have international operations or high-risk clients.

The Unicat case signals a decisive shift towards incentivised compliance and paves the way for more constructive enforcement interactions between regulators and the private sector.

Read the press release here.