The US Department of Justice has declined to prosecute White Deer Management after the Houston-based private equity firm voluntarily disclosed criminal violations by its portfolio company, Unicat Catalyst Technologies, marking the first use of DOJ’s latest Mergers and Acquisitions Safe Harbor policy.
White Deer acquired Unicat in September 2020. In June 2021, Unicat’s new leadership discovered a pending sale to an Iranian customer, immediately cancelled the deal and retained outside counsel.
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Within one month, White Deer and Unicat submitted a voluntary self-disclosure to DOJ’s National Security Division (NSD), Office of Foreign Assets Control (OFAC), and the Commerce Department’s Bureau of Industry and Security (BIS).
Subsequent DOJ investigations found that under former CEO Mani Erfan, Unicat made 23 illegal sales of chemical catalysts to Iran, Syria, Venezuela, and Cuba, bringing in around $3.33 million in revenue. Erfan had also directed employees to falsify export documents and invoices to evade tariffs, avoiding another $1.66 million in duties that should have been paid.
He has pleaded guilty to conspiracy to violate sanctions and money laundering charges, alongside another former Unicat executive who was prosecuted separately.
Under NSD’s Voluntary Self-Disclosures in Connection with Acquisitions Policy, rolled out in March 2024, acquirors that complete a bona fide acquisition, make a timely self-disclosure of national-security-related misconduct, unreservedly cooperate, and remediate are generally presumed not to face prosecution.
According to the declination letter, DOJ considered White Deer’s disclosure timely despite occurring ten months after closing, citing COVID-19 delays, a two-stage merger strategy, and immediate cancellation of the Iran transaction.
DOJ credited White Deer’s “exceptional and proactive” cooperation, which included an extensive self-investigation: the firm voluntarily flagged archived communications on personal devices, internal chat messages, and various foreign-located documents.
Within one year of discovery, Unicat had fired multiple employees, disciplined others, and revamped its compliance function.
While White Deer was not prosecuted, the sponsor still took a financial hit. Voluntary disclosure may help avoid criminal penalties, but does not prevent civil liability.
Unicat entered a non-prosecution agreement and forfeited the $3.3 million in illicit revenue, and agreed to $4.3 million in combined OFAC and BIS settlements (with the DOJ forfeiture credited against the OFAC fine). Unicat also paid $1.7 million in restitution to Customs and Border Protection.
A McDermott, Will & Emery brief warns that this year’s US trade policy changes mean sponsors now face greater risk of possible trade-related violations.
In instances of wrongdoing, it can also be easy for problems to quickly cascade into a host of related tax, customs, anti-money laundering, or fraud concerns—broadening the scope of post-acquisition risk.
Buyers who insist on strong seller reps and warranties around trade and sanctions compliance can reduce some exposure, or at least secure a possible claim. Indemnities or escrow holdbacks tied to regulatory violations discovered post-closing can also help.
Neither can prevent regulatory actions, but they can offset potential fines or penalties.