On June 16, the U.S. Department of Justice’s (DOJ) National Security Division (NSD) and the U.S. Attorney’s Office for the Southern District of Texas (USAO-SDTX) announced their decision to decline prosecution of White Deer Management LLC (White Deer), a private equity firm that voluntarily disclosed export control and sanctions violations committed by its newly acquired portfolio company, Unicat Catalyst Technologies LLC (Unicat).[1] This is the first public declination issued under NSD’s M&A Safe Harbor Policy, which applies to voluntary self-disclosures involving potential violations of export control, sanctions, and national security laws.[2]
The resolution offers a clear example of how acquiring firms can avoid successor liability when they uncover and respond appropriately to inherited misconduct. It also aligns with DOJ’s recent revisions to its Corporate Enforcement Policy (CEP), which guarantee declinations for companies that timely disclose misconduct, fully cooperate, and remediate effectively, so long as no aggravating circumstances exist (and even the presence of aggravating circumstances may not prevent declination).
This resolution comes just one week after DOJ announced updates to its Foreign Corrupt Practices Act (FCPA) enforcement policy, emphasizing DOJ’s focus on serious misconduct impacting U.S. national security or competitiveness.[3]
Key Takeaways for Private Equity
- DOJ issued its first public declination under NSD’s M&A Safe Harbor Policy, reinforcing its commitment to incentivizing and rewarding voluntary, post-acquisition self-disclosure.
- White Deer received a full declination after discovering and voluntarily disclosing the violations by Unicat and fully cooperating with DOJ’s investigation.
- DOJ credited White Deer’s voluntary disclosure, full cooperation, and timely remediation for the favorable resolution.
- The resolution echoes DOJ’s recent CEP update, which guarantees declinations in certain cases, though there are limitations to that guarantee.
- DOJ’s recent FCPA policy revision also reflects a more focused enforcement approach, prioritizing high-impact cases while encouraging prompt disclosure and remediation.
Background: Sanctions and Export Violations Discovered Post-Close
As outlined in DOJ’s June 16 press release, in 2021 White Deer acquired Unicat, a Houston-based manufacturer of chemical catalysts. Following the acquisition, White Deer identified red flags and launched an internal investigation into Unicat’s previous sales, which revealed that Unicat had engaged in more than 20 unlawful transactions with customers in sanctioned jurisdictions, including Iran, Venezuela, Cuba, and Syria between 2014 and 2021.
The transactions, which generated over $3.3 million in revenue, were concealed through falsified export documentation and undervaluation of imports, allowing Unicat to avoid more than $1.6 million in customs duties.
Upon discovering the violations, White Deer initiated an internal investigation and took immediate action to stop the misconduct, including the cancellation of a pending transaction with an Iranian customer. Approximately 10 months after the initial acquisition (notably longer than the 180-day deadline set forth in NSD’s M&A Safe Harbor Policy), White Deer disclosed its findings to DOJ’s NSD and other relevant agencies, and cooperated fully with the government’s multi-agency investigation, which involved NSD, USAO-SDTX, the Treasury Department’s Office of Foreign Assets Control (OFAC), the Department of Commerce’s Bureau of Industry and Security (BIS), and U.S. Customs and Border Protection (CBP). DOJ credited White Deer for acting promptly and transparently following the acquisition.
Enforcement Outcomes: Multi-Level Resolutions
- White Deer received a full declination of prosecution under NSD’s M&A Safe Harbor Policy.
- Acquired entity Unicat entered into a non-prosecution agreement (NPA) and agreed to pay significant penalties, including (1) $3.33 million in forfeiture (2) $3.88 million to OFAC, (3) $391,000 to BIS, and (4) $1.655 million in unpaid customs duties.
- Mani Erfan, former CEO of Unicat, pleaded guilty to conspiracy to violate sanctions, money laundering, and concealment-related offenses, and agreed to pay a money judgment in the amount of $1.6 million.[4]
In support of White Deer’s declination, DOJ further noted that the company’s cooperation was “exceptional and proactive.”[5] The firm disclosed all known relevant facts, identified records on personal devices and foreign messaging apps, produced foreign-located documents in compliance with data privacy laws, and committed to continued cooperation with relevant authorities. DOJ’s declination also confirmed that Unicat’s $3.33 million forfeiture will be credited against its $3.88 million civil penalty to OFAC, and the $391,000 BIS penalty will also be credited against the OFAC amount, underscoring DOJ’s efforts to avoid stacking overlapping penalties, or “piling on” for the same conduct.
NSD’s M&A Safe Harbor Policy in Practice
NSD’s M&A Safe Harbor Policy, announced in March 2024, broadly offers a declination path where an acquiring company:
- Lawfully acquires a company with preexisting misconduct;
- Voluntarily discloses the misconduct within six months of closing;
- Fully cooperates with DOJ’s investigation; and
- Remediates the misconduct within one year of closing.[6]
In this case, DOJ determined that White Deer satisfied all four requirements. The Department highlighted White Deer’s prompt internal investigation, candid communication with prosecutors, strong compliance enhancements, and appropriate disciplinary measures. Although White Deer fully disclosed the misconduct approximately 10 months after acquiring Unicat, DOJ deemed the disclosure timely based on the circumstances, including pandemic-related integration delays, the staged nature of the acquisition strategy, and the sponsor’s rapid preliminary disclosure just one month after discovering the misconduct. DOJ also noted that the violations could not have been reasonably identified through standard pre-close diligence.
This resolution mirrors DOJ’s recently updated CEP, which provides for guaranteed declinations where companies voluntarily self-disclose, fully cooperate, and timely remediate. Notably, DOJ granted the declination despite the presence of aggravating factors at the acquired entity, including the involvement of senior Unicat management in the underlying misconduct, because “the causes of those aggravating factors are no longer present at [Unicat].”[7]
Practical Implications for Sponsors and Acquirers
The White Deer resolution offers a practical roadmap for private equity firms and strategic buyers managing post-close compliance risk:
- Integrate post-close compliance reviews into onboarding and operations. DOJ emphasized that the violations could not have been uncovered through standard diligence. Sponsors should view post-close compliance as essential, particularly for targets with international operations, government-facing contracts, or in heavily regulated industries.
- Establish rapid internal triage and disclosure protocols. Sponsors should ensure they have a clear playbook in place to escalate red flags, initiate internal investigations, and determine when and how to disclose. In this area, time is of the essence as NSD’s M&A Safe Harbor Policy sets a six-month window for disclosure and requires remediation within one year. Similarly, the CEP also sets a 120-day deadline for disclosure following receipt of an internal whistleblower report.
- Maintain thorough documentation. DOJ’s leniency was, in part, based on White Deer’s ability to show the steps it took to investigate, discipline, and remediate. Internal recordkeeping is critical and may directly impact the credibility of your cooperation.
- Expect multi-agency involvement. Violations of federal laws often lead to parallel inquiries from DOJ and other federal, state, and international regulators. Internal investigations and disclosures should be structured with that multi-agency lens in mind.
- Draft agreements accordingly. Acquisition documents should include tailored representations and warranties, indemnities for undisclosed violations, and post-close audit rights. Buyers need the contractual tools to uncover and effectively respond to post-closing compliance issues.
- Consider the totality of timing circumstances. While NSD’s policy sets a six-month deadline for disclosure, this case shows the DOJ may exercise flexibility where external factors, like pandemic delays or multi-stage integration, reasonably impact timing. What matters most is moving quickly once the misconduct is discovered.
- Don’t let aggravating factors discourage disclosure. Even when members of senior management at the target are involved in misconduct, sponsors may still obtain a declination, particularly where those individuals are removed and remediation is robust.
Conclusion
The White Deer–Unicat resolution offers a clear example of how swift and deliberate action can mitigate enforcement risk. It sends a strong message to private equity sponsors and other acquirers: if you uncover misconduct post-close, act quickly, disclose fully, and remediate effectively, a declination is possible and even likely.
Private equity sponsors should view this case as both a compliance roadmap and a strong incentive to prioritize post-acquisition diligence and internal reporting procedures.
McGuireWoods’ Anti-Bribery and Anti-Corruption team is an integral part of our nationally recognized Government Investigations & White Collar Litigation practice. The team includes former senior federal prosecutors with extensive experience handling every stage of complex U.S. Department of Justice (DOJ) investigations and enforcement actions—both criminal and civil. For more information about DOJ enforcement policy or post-acquisition compliance strategies, please contact the authors or any member of McGuireWoods’ Government Investigations & White Collar Litigation team.
[1] See Press Release, U.S. Dep’t of Just., Justice Department Declines Prosecution of Private Equity Firm Following Voluntary Disclosure (June 16, 2025), https://www.justice.gov/opa/pr/justice-department-declines-prosecution-private-equity-firm-following-voluntary-disclosure.
[2] In October 2024, then-Deputy Attorney General Lisa O. Monaco announced a Department-wide safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions, instructing all relevant DOJ components to tailor the application of the policy to their specific enforcement regime. In March 2024, DOJ’s NSD incorporated the M&A Safe Harbor Policy into its Voluntary Self-Disclosure Policy. See U.S. Dep’t. of Just., National Security Division, NSD Enforcement Policy for Business Organizations (Mar. 7, 2024), https://www.justice.gov/nsd/media/1285121/dl?inline=.
[3] See Memorandum from Deputy Att’y Gen. Blanche to All Criminal Div. Components (June 9, 2025), https://www.justice.gov/dag/media/1403031/dl.
[4] See supra note 1.
[5] See In re: White Deer Management LLC, et al, U.S. Dep’t of Just. Declination Ltr. (Dec. 19, 2024), https://www.justice.gov/opa/media/1403771/dl?inline.
[6] See supra note 2.
[7] See supra note 5.