A landmark case under the DOJ’s M&A Policy highlights how private equity can avoid liability through fast action and full transparency
When White Deer Management LLC purchased a majority interest in Unicat Catalyst Technologies in 2020, it inherited more than just chemical catalyst production lines. It inherited a sanctions nightmare, one that could have resulted in criminal prosecution, millions in fines, and reputational damage. Instead, White Deer walked away without charges, thanks to a textbook-perfect response: early disclosure, full cooperation, and rapid remediation.
This case marks the first public declination under the US Department of Justice’s Mergers and Acquisitions (M&A) Policy, a policy introduced under the prior administration and thus far maintained under the current DOJ leadership.. It sends a clear message to private equity, venture capital, and strategic acquirers that self-reporting isn’t just ethical, it’s also good risk management.
The sanctions time bomb
In June 2021, White Deer finalised the acquisition of Unicat, a Texas-based chemical catalyst company, and a second firm in the UK. Due to COVID-19 travel restrictions, integration work was delayed. But once operations resumed, Unicat’s new CEO made a shocking discovery: a pending transaction with an Iranian customer.
That red flag triggered an immediate internal investigation. What emerged was a systematic, years-long effort by former Unicat leadership, particularly ex-CEO Mani Erfan, to violate US sanctions and export control laws. According to the DOJ’s press release detailing the decision in the White Deer case, between 2014 and 2021, Unicat:
- Made 23 illegal sales of chemical catalysts to Iran, Venezuela, Syria, and Cuba;
- Generated over $3.3 million in revenue from sanctioned jurisdictions;
- Falsified export documents and financial records to hide its tracks;
- Lied about compliance during the acquisition process.
Even worse, Unicat had underpaid more than $1.6 million in customs duties by submitting falsified invoices for Chinese imports.
How White Deer defused the threat
Crucially, White Deer did not wait for a subpoena or whistleblower. Within weeks of discovery, the firm:
- Hired external counsel and launched a robust internal investigation;
- Voluntarily self-disclosed the violations to the DOJ’s National Security Division (NSD);
- Cooperated extensively, including identifying foreign-language evidence and documents stored overseas;
- Fired responsible employees and implemented a new sanctions compliance programme.
According to the DOJ’s statement, White Deer’s actions stopped ongoing violations, enabled prosecution of the former CEO, and prevented further harm to US national security interests.
The result? No prosecution for White Deer
In a rare but now precedent-setting move, the DOJ issued a formal declination of prosecution to White Deer, citing:
- The lawful nature of the acquisition;
- Timely voluntary self-disclosure;
- Full cooperation with investigators;
- Effective remediation.
Unicat itself entered a non-prosecution agreement (NPA) and agreed to pay $3,882,797 to settle its potential civil liability relating to U.S. sanctions on Iran and Venezuela. Former CEO Mani Erfan pleaded guilty to sanctions violations, concealment, and international money laundering. He will forfeit $1.6 million as part of his plea.
A roadmap for M&A compliance
This case is more than a success story: it’s a compliance blueprint for dealmakers.
The DOJ’s M&A Policy formalises a key principle: buyers won’t be penalised for the crimes of sellers if they take quick, transparent action.
To benefit from a declination, an acquirer must:
- Lawfully acquire the company;
- Voluntarily and promptly disclose potential misconduct;
- Fully cooperate with the investigation;
- Appropriately remediate the violations.
Unicat’s case was the DOJ’s first public application of this framework. But it likely won’t be the last, especially as enforcement continues under the Trump administration’s renewed focus on sanctions evasion, national security threats, and export control violations.
What this means for private equity and venture capital
White Deer’s experience should be a wake-up call for GPs and portfolio managers: sanctions risk is deal risk. And that risk is growing.
OFAC’s enforcement focus now includes professional enablers such as private equity firms, investment advisers, and corporate service providers who fail to identify, stop or report misconduct. The recent GVA Capital sanctions penalty showed what happens when firms look the other way. Under the Trump administration, OFAC and DOJ continue to treat sanctions breaches, particularly those tied to hostile foreign actors, as serious national security violations.
But the DOJ has also made clear: early disclosure will be rewarded.
Practical steps for deal teams
Before the deal:
- Include sanctions compliance and export controls in due diligence;
- Obtain representations on historical compliance—but don’t rely on them blindly;
- Scrutinise red-flag jurisdictions, dual-use goods, and unusual payment routes.
After the deal:
- Audit the target’s operations, client lists, and historical transactions;
- Act fast if you discover potential violations;
- Involve legal counsel immediately and assess disclosure options;
- Engage with DOJ, OFAC or BIS before enforcement comes to you.
The bottom line
White Deer didn’t plan to buy a sanctions violator. But how they responded set them apart. Their swift action turned a liability into a story of accountability, transparency and responsible governance.
For compliance teams, the lesson is clear: the cost of silence is always higher than the cost of disclosure.
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