Top Menu

The $300,000 Bogus Invoice

fake

[This post is part of a periodic series regarding “old” FCPA enforcement actions]

In 2001, the DOJ filed this criminal information charging Daniel Ray Rothrock (a Vice President of the Cooper Division of Allied Products Corporation with responsibility for international sales) with knowingly and willfully violating the books and records provisions of the Foreign Corrupt Practices Act.

According to the information, Cooper was engaged in the business of manufacturing and selling workover rigs and other oilfield well servicing equipment and one of its customers was RVO Zarubezhneftestroy (Nestro) and entity owned by the Russian government.

The information alleged that, through a former agent, Cooper entered into a contract to sell approximately 20 workover rigs to Nestro for a total price of approximately $5.5 million. In connection with the transaction, Cooper agreed to pay a sales commission of $282,076 to Trading & Business Services Ltd. (TBS), an entity owned 50% by Nestro and 50% by Comco (a Swiss holding company) for the ultimate benefit of the Director General of Nestro.

The information alleged that Rothrock delivered to TBS for its use a draft invoice, in the amount of $300,000, which invoice purported to be for a “consultation fee and market study” even though Rothrock knew that no consultation fee or market study had been or would be provided by TBS. According to the information, Rothrock received an invoice for $300,000, similar to the one he had drafted for TBS, which purported to come from a company called Educa in Austria and that Rothrock knew that Cooper had no contract or other business relationship with Educa and that the invoice was, in fact, an invoice from TBS.

The information alleged that Rothrock caused Cooper to issue a $300,000 check to Educa utilizing the false invoice from Educa as supporting documentation even though Rothrock: knew that the Educa invoice was bogus; that Educa had no provided no services; and that the entries on the books of Allied, recording the disbursement of the $300,000 would be false.

Based on the above, the DOJ charged Rothrock with violating the FCPA’s books and records provisions. As reflected in this judgment, Rothrock was sentenced to one year probation.

FCPA Institute - Boston (Oct. 3-4)

A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active learning. Learn more, spend less. CLE credit is available.

Learn More & Register

Powered by WordPress. Designed by WooThemes