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Africa Sting – Entrapment?

As previously indicated (here) a key FCPA issue presented in the Africa Sting indictments is whether offering to bribe or paying a bribe to a fictitious “foreign official” or a real, but non-participating “foreign official” can constitute a substantive FCPA violation given the influence and induce language in the statute.

Another obvious legal issue raised by the Africa Sting indictments is entrapment.

This is an area of law that is a bit “outside of my strike zone” so I went to the bullpen.

On the mound, Dru Stevenson, a Professor of Law at South Texas College of Law (here). With several entrapment publications (here), Professor Stevenson drops in today for a guest post on the law of entrapment and the legal landscape facing the Africa Sting defendants.

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There are two versions of the entrapment defense, the “subjective test” (which is the majority rule, and focuses on the defendant’s predisposition) and the “objective test,” (favored by the Model Penal Code and about 15 states, and focused on the egregiousness of the government’s conduct). Given that this “Africa Sting” case is in federal court (brought under a federal statute, the FCPA), the court will have to apply the subjective test, because the United States Supreme Court adopted this rule in a series of five cases spread over several decades.

All federal courts use the subjective test; so this case will focus on the defendant’s “predisposition” rather than the actual government conduct in the case. The conduct of the FBI or their agents (including non-agency individuals recruited to act as informants or recruiters for the sting operation) will matter only to the extent that it sheds light on how much persuasion was necessary to convince the defendant(s) to violate the law, because this is one factor in showing “predisposition.” The same is true for the “inducement” or enticement (in this case, substantial kickbacks or bribes) involved – it will not really matter except to the extent that it suggests the defendant would never have committed the crime “but for” the undercover agent’s inducement.

Other factors that can show “predisposition” by the defendant are a history of committing similar acts, the alacrity/resistance with which the defendant responded to the undercover agent’s proposition, and the amount of time it took to entangle the defendant in the illegal activity. The subjective test is really a “but-for” test: “but for” the government’s inducement, the defense must show, the culprit would never have pursued such a course of action. It is important to keep this idea distinct from the notion of opportunity. The subjective test does not ask whether it was wrong for the government to provide an opportunity, or even if the undercover agents were deceptive or somewhat unethical in the approach that they used. It is a question of the defendant’s predisposition, which relates to both character and willingness, not opportunity. The subjective test looks at the defendant’s subjective preferences, choices, and history.

This is an uphill battle for defendants in sting operations, because the sting itself was planned out ahead of time to catch the defendant “in the act” with plenty of documentation about the time, place, and manner in which the crime occurred (stings are often on video!). It takes a lot of creativity and charisma to convince a jury that the defendant was actually not inclined to commit the act that he did in fact commit. The conventional wisdom among defense attorneys and legal scholars is that the entrapment defense usually does not work, and there is empirical evidence suggesting that fewer and fewer defendants use it each year.

There is also a significant hazard with raising the entrapment defense in federal court: the defendant’s criminal history becomes admissible evidence at the trial, where it otherwise might be excluded completely. Normally, the federal rules of evidence prohibit prosecutors from introducing the defendant’s prior convictions, because this could be so prejudicial for jurors (they might punish the defendant again for his previous crimes, regardless of his guilt under the present charges). With the entrapment defense, however, the defendant has put his own “predisposition” into issue in the case, arguing that he would never have committed the crime but for the government’s pressure. This opens the door for the prosecutor to submit the defendant’s “rap sheet” or “priors” to rebut his assertion that he lacked the predisposition to commit the crime.

The entrapment defense is, in fact, our country’s primary way of regulating sting operations. On a secondary level, the internal, administrative regulation of sting operations comes from the U.S. Attorney General’s Guidelines on Federal Bureau of Investigation Undercover Operations, which set rules for sting operations that the Federal Bureau of Investigation (the “FBI”) may conduct. The rules (see here) are the subject of modifications every few years, at the discretion of the Attorney General, and the last modification occurred in 2002, under John Ashcroft, mostly in response to the 9/11 terrorist attacks and the reactionary “War on Terror” that ensued thereafter. These Guidelines help illuminate the type of planning that went into this sting operation, but provide no remedies whatsoever for a defendant who is the victim of entrapment. The Guidelines, however, are a contributing factor to the difficulty of prevailing with an entrapment defense – the FBI knows the rules, is required to plan the sting operation carefully before proceeding or obtaining funding, and will generally plan the operation so that they steer clear of providing a potential entrapment defense to their targets.

A final note that may be relevant for these FCPA cases: there is no such thing as “private entrapment,” and even the notion of “vicarious entrapment” gets little traction in the federal courts. By private entrapment, I mean solicitation to commit a crime by someone who is not working for the government – that is, a false friend setting you up to get caught committing a crime, or even a fellow criminal who makes an “offer you cannot refuse.” If the defendant was induced to commit the crime by a private actor, not working for the FBI, no entrapment defense is available. “Vicarious entrapment” is similar: this is the situation where a defendant was recruited to commit a crime by another defendant, who might actually have a valid entrapment defense. In other words, suppose the FBI really crossed the line and recruited otherwise-innocent Defendant A, who was not predisposed to commit the crime but was overwhelmed by the undercover agent’s pressure or enticements; Defendant A might have a valid entrapment defense. If, however, Defendant A went and recruited his ever-willing colleague, Defendant B, into the conspiracy, Defendant B does NOT have a valid entrapment defense. Defendant A’s entrapment claim is non-transferable.

FCPA Undercover

The Africa Sting case is indeed the largest and most dramatic use of pro-active, undercover investigative techniques in an FCPA investigation.

However, contrary to numerous reports and even statements attributed to DOJ officials, the Africa Sting case is not the first time that pro-active, undercover investigative techniques have been used in an FCPA investigation. In other words, this is not a new development as demonstrated below.

Shu Quan-Sheng

In September 2008, Shu Quan-Sheng (a naturalized U.S. citizen and President, Secretary, and Treasurer of AMAC International (“AMAC”), a high tech company located in Virginia with an office in Beijing, China) was charged in a criminal complaint (see here and here) with, among other things, offering bribes to Chinese “foreign officials” in violation of the FCPA.

An affidavit (see here) in support of the criminal complaint by an FBI special agent describes several pro-active, undercover investigative methods including court authorized electronic surveillance and physical surveillance. Among other things, the affidavit describes several phone conversations Shu participated in connection with the bribery scheme.

Shu plead guilty to FCPA violations (among other charges) and was sentenced to 51 months in prison. (see here).

Gerald and Patricia Green

In January 2008, Gerald and Patricia Green, owners and operators of Film Festival Management (a private Los Angeles based private entertainment company) were criminally indicted for conspiring to bribe an official with the Tourism Authority of Thailand (TAT) and for making improper payments to the TAT official in violation of the FCPA. (see here and here).

The criminal charges were supported by an affidavit (see here) from an FBI special agent which describes several pro-active undercover investigative methods, including a multiple agent trip to Thailand to witness Mr. Green meeting with the Thai “foreign official.”

In September 2009 (see here), the Greens were found guilty by a federal jury of substantive FCPA violations, conspiracy to violate the FCPA, and other charges. The Greens are scheduled to be sentenced in March 2010.

William Jefferson

In June 2007, then U.S. Congressman William Jefferson was criminally indicted (see here and here). The charges included substantive FCPA violations and conspiracy.

According to numerous media sources (see here), the FBI affidavit released in connection with the investigation describes several pro-active, undercover investigative techniques including cooperating witnesses wearing FBI wires and video surveillance.

In August 2009, Jefferson was acquitted of substantive FCPA charges by a federal jury, but convicted of a wide range of other charges. (see here for more on the Jefferson case). In November 2009, Jefferson was sentenced to 13 years in prison and he remains free on bail pending his appeal.

WrageBlog (see here) has also identified two other previous instances of pro-active, undercover investigative techniques employed in connection with FCPA investigations.

Africa Sting – “Individual 1” Identified … and Charged … In a Different Case

“Individual 1” – a key player in each of the Africa Sting indictments (see here) has been identified by the New York Times (see here) as Richard T. Bistrong, a former employee of Armor Holdings. (Armor Holdings, a former publicly-traded company, is currently a subsidiary of BAE Systems).

In an ironic twist, Bistrong was charged today in a criminal information (see here) with conspiracy – not for his role in the Africa Sting case – but a wholly separate bribe scheme.

The information charges Bistrong with conspiracy to violate the FCPA’s antibribery provisions, books and records provisions, and the International Emergency Economic Powers Act and related Export Administration Regulations.

The conspiracy is broad in scope and includes charges that Bistrong conspired with others: (i) to obtain for his employer, United Nations body armor contracts (valued at $6 million) by causing his employer to pay $200,000 in commissions to an agent while knowing that the agent would pass along a portion of that money to a United Nations procurement officer (a “foreign official” per the FCPA) to cause the officer to award the contracts; (ii) to obtain for his employer, a $2.4 million pepper spray contract with the National Police Services Agency of the Netherlands by paying a Dutch agent approximately $15,000 while knowing that the agent would pass along some of that money to a procurement officer with the Police Services Agency to influence the contract; (iii) to obtain for his employer (although it was never obtained), a contract to sell fingerprint ink pads to the Independent National Elections Commission of Nigeria by making kickback payments to a commission official indirectly through an intermediary company.

As the New York times notes, a “criminal information is typically filed when the defendant has waived indictment and is negotiating a plea agreement.”

The New York Times story concludes by describing the abrupt end to today’s court hearing.

Africa Sting – The Big Question

There is a big question raised by the Africa Sting indictments.

As explained in the indictments, one FBI special agent posed “as a representative of the Minister of Defense of a country in Africa (Country A)” and another FBI special agent posed “as a procurement officer for Country A’s Ministry of Defense who purportedly reported directly to the Minister of Defense.”

The DOJ release (here) notes that there was “no actual involvement from any minister of defense.”

According to an individual who attended the DOJ press conference announcing the charges, DOJ officials: did not identify the African country; did say (as indicated in the release) that the African country was not involved in the investigation; but would not say whether the African country had knowledge or was aware of the investigation.

Given the above, two scenarios seem possible.

The first is that the Minister of Defense was purely fictitious (for instance John Doe, the Minister of Defense of Uganda, when in reality there is no John Doe Minister of Defense of Uganda). This would seem unlikely as the indicted individuals could have easily figured out that John Doe was not the Minister of Defense of Uganda – thereby compromising the entire sting operation.

The second, and more plausible scenario, is that John Doe was indeed the Minister of Defense of Uganda, but (as noted in the DOJ release) he was not involved, did not participate, and was not actually seeking bribe payments. It would seem though that to avoid compromising the entire sting operation, John Doe may have known that his name was being used.

Why is this a big question?

Because a key element of an FCPA violation is the existence of a “foreign official.”

Whether a fictitious “foreign official” (the first scenario) or a real, but non-participating “foreign official” (the second scenario) the big question is: can offering to bribe or paying a bribe to such a “foreign official” constitute a substantive FCPA violation?

One can only assume that DOJ thought through this obvious legal issue before seeking the indictments and that it presumably concluded that the answer is yes.

But is that the right answer? What does the FCPA actually say?

The key statutory language is the FCPA’s so-called “third-party payment provisions” because, as alleged in the indictments, the bribe payments were paid not directly to the “foreign official,” but rather to the FBI agent the defendants believed to be the sales agent representative of the “foreign official.”

In pertinent part, these provisions prohibit the payment, offer of payment, etc.

to “any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official […] for purposes of —

(A) (i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such foreign official, or (iii) securing any improper advantage; or

(B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality.” (emphasis added).

On this issue, the U.S. Attorneys Manual (here) says:

“The payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person. The FCPA prohibits any corrupt payment intended to influence any act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official improperly to use his or her influence with other government officials or agencies to affect or influence any act or decision.” (emphasis added).

Thus, the key statutory language (as indicated in the US Attorneys Manual) requires that the payment or offer of payment influence or induce the “foreign official” to do something.

It’s an open question whether one can or seek to influence or induce a fictitious “foreign official” or a real, but non-participating “foreign official.”

Could the “securing any improper advantage” be the hook the DOJ is “hanging its hat on?”

That clause was added to the FCPA in 1998. The legislative history of the 1998 amendments (see here) is not illuminating as to what precisely that clause means. It is clear though that this clause was added to the FCPA to conform the statute to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, specifically Art. 1, para. 1.

Art. 1, Par. 1 of the OECD Convention(see here) would seem to hinge on a foreign official “acting or refraining from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business.”

Thus, it would still seem to be an open question whether a fictitious “foreign official” or a real, but non-participating “foreign official” can act or refrain from acting in relation to the performance of official duties in order to obtain or retain business or other improper advantage.

Of course this big question is only relevant to the FCPA charges in the indictment and of course the indictments contain non-FCPA charges as well.

Africa Sting – The Charges

Set forth below is a summary of the 16 indictments announced yesterday charging 22 individuals in connection with the “Africa Sting.”

The Africa Sting case charges individuals across a wide business spectrum.

It involves individuals employed by large companies and small companies; private companies and publicly-traded companies. It involves Chief Executive Officers, Sales Managers, and even a General Counsel. It involves U.S. citizens, U.K. citizens, an Israeli citizen, and a pair of siblings. It involves agents and consultants, and of course, undercover FBI agents posing as representatives of an imaginary Minister of Defense of an African country.

At present, this case only involves individuals.

However, as indicated by Assistant Attorney General Breuer in yesterday’s DOJ release (here) the investigation is “ongoing” and you can bet that many of the companies which employ these individuals are “lawyering up” as past FCPA enforcement actions demonstrate the corporate enforcement actions or investigations often, but not always, precede or follow individual enforcement actions.

As to any potential corporate enforcement action, the websites of several of the companies employing the indicted individuals make specific reference to the company being a U.S. General Services Administration vendor. “Under guidelines issued by the Office of Management and Budget, a person or firm found in violation of the FCPA may be barred from doing business with the Federal government.” (see here).

However, this sanction (to my knowledge) has never been used against an FCPA violator – not even Siemens (see here). Thus, should corporate enforcement actions ensue, this will be an interesting issue to follow.

Given that one of the individuals indicted is employed by a public-company issuer, the SEC may also be interested in that company from, at the very least, an FCPA books and records and internal control perspective.

Given the number of individuals indicted, and the motivations for pleading under the Sentencing Guidelines, it would seem inevitable that one or more individuals will soon “flip” and cooperate with the government thereby potentially complicating the defenses of the remaining individuals.

All charges have been filed in the U.S. District Court for the District of Columbia and assigned to Judge Richard J. Leon (see here).

As evident below, each of the indictments generally follow the same template, allege the core conduct, and charge the same offenses, including conspiracy to violate the FCPA and substantive FCPA violations.

At present, the indictments are only allegations and the individuals are presumed innocent. There is, of course, a very human event in this case and the lives of the indicted individuals (and countless more when you include family and friends) were turned upside down this week.

Stay tuned for a future post as to the “questions” raised by these indictments.

Daniel Alvirez and Lee Allen Tolleson

Alvirez (see here for his background) is described in the indictment as “the President of Company A, an Arkansas company based in Bull Shoals, Arkansas, that manufactured and sold law enforcement and military equipment.”

The company is ALS Technologies, Inc. (see here for its background and here for the company’s press releases on this issue).

According to the indictment, Tolleson “was the Director of Acquisitions and Logistics.”

According to the indictment, between approximately May 2009 – December 2009, Alvirez and Tolleson “would participate in meetings and have discussions” in which Individual 1 (a “business associate of Alvirez and Tolleson” (as well as most the other indicted individuals) and an “former Vice President of International Sales for a company that manufactured and supplied law enforcement and military equipment to law enforcement and military customers around the world”) “said that a friend of his, who was a self-employed sales agent” was tasked by the Minister of Defense of an African country “with obtaining various defense articles for outfitting” the country’s presidential guard.

According to the indictment, “in reality, the self-employed sales agent” was an undercover FBI special agent “posing as a representative of the Minister of Defense” of the African country.

According to the indictment, an object of the scheme was for Alvirez and Tolleson to obtain and attempt to obtain business for their company and themselves by making corrupt payments to the “sales agent” (the undercover FBI agent) who was “consulting” on a sale by the company to the Minister of Defense.

Pursuant to this arrangement, the indictment alleges that Aliverz and Tolleson would agree to pay the “sales agent” “a 20% ‘commission’ in connection with two contract to sell grenades and grenade launchers to the Minister of Defense” “knowing that half of the ‘commission’ was intended to be paid as a bribe to the Minister of Defense” and “half was intended to be split between” Individual 1 and the “sales agent” “as a fee for their corrupt services.”

According to the indictment, money for these payments would be generated through inflating the true price of the grenades and grenade launchers by 20%.

As part of the scheme, the indictment alleges that Alvirez and Tolleson would pay this “commission” into the “sales agent” U.S. bank account “knowing that half of the commission was intended to be paid outside of the United States as a bribe to the Minister of Defense.”

According to the indictment, the business deal was worth approximately $15 million and “would involve several suppliers.” The indictment alleges that on or about May 13, 2009, Alvirez and Tolleson agreed to proceed with the deal per the above-described arrangements and that Alvirez and Tolleson then proceeded to inflate the price quotations, wire the commission, and otherwise take action in furtherance of the deal.

The indictment alleges that on or about October 5, 2009, Alvirez and Tolleson were told by another FBI special agent “posing as a procurement officer” for the African country’s Minister of Defense and “who purportedly reported directly to the Minister of Defense” (the Second FBI Agent) that the “Minister of Defense was pleased with the grenade launchers” sent and the “commission the Minister of Defense had received.” The FBI special agent then allegedly told Alvirez and Tolleson “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Alvirez and Tolleson then executed two copies “of the corrupt purchase agreement.”

Based on this core conduct, the indictment charges Alvirez and Tolleson with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

Helmie Ashiblie

Ashiblie is described in the indictment as the “Vice President and Founder of Company A, a company that was based in Woodbridge, Virginia, and was in the business of supplying tactical bags and other security-related articles for law enforcement agencies and governments worldwide.”

That company (see here) is i-Shot, Inc.

The allegations against Ashiblie are substantively similar to the above allegations against Alvirez and Tolleson, but involved two contracts to sell “tactical bags”. The indictment alleges that Ashiblie agreed to proceed with the deal and that he then proceeded between August – November 2009 to inflate the price quotations, wire the commission, and otherwise take action in furtherance of the deal.

The indictment also alleges that on or about October 5, 2009, Ashiblie was also told by the Second FBI Agent that the “Minister of Defense was pleased with the tactical bags” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Ashiblie “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Ashiblie then executed an additional purchase agreement and sent “thirteen tactical bags for the purpose of having the tactical bags forwarded” to the African country.

Based on this core conduct, the indictment charges Ashiblie with, among other things, conspiracy to violate the FCPA and four substantive FCPA violations.

Ofer Paz

Paz is described in the indictment as a citizen of Israel and the “President and Chief Executive Officer of Company A, an Israel-based company that acts as a sales agent for companies in the law enforcement and military products industries.”

That company is M. Paz Logistics Ltd. (see here).

The allegations against Paz are substantively similar, but involved two contracts to sell “explosives detection kits.” The indictment alleges that Paz agreed to proceed with the deal and that he then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furtherance of the deal.

The indictment also alleges that on or about October 5, 2009, Paz was also told by the Second FBI Agent that the “Minister of Defense was pleased with the explosives detection kits” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Paz “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Paz then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Paz with, among other things, conspiracy to violate the FCPA and three substantive FCPA violations.

Andrew Bigelow

Bigelow is described in the indictment as the “Managing Partner and Director of Government Programs for Company A, a company that was based in Sarasota, Florida, and was in the business of selling machine guns, grenade launchers, and other small arms and accessories.”

That company has been identified in media reports as The Gunsearch.com LLC (see here).

The allegations against Bigelow are substantively similar, but involved two contracts to sell “M4 carbine rifles.” The indictment alleges that Bigelow agreed to proceed with the deal and that he then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Bigelow was also told by the Second FBI Agent that the “Minister of Defense was pleased with the M4 rifles” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Bigelow “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Bigelow then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Bigelow with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

R. Patrick Caldwell and Stephen Gerard Giordanella

Caldwell is described in the indictment as the former “Senior Vice President of Sales and Marketing for Company A, a Florida corporation headquartered in Sunrise, Florida, that designed and manufactured concealable and tactical body armor.” According to the indictment, in September 2009, “Caldwell was named Chief Executive Officer of Company A.”

That company is Protective Products of America, Inc. (see here) and (here) for Caldwell’s profile. Of note, Caldwell formerly “served as Deputy Assistant Director, Office of Protective Operations, U.S. Secret Service.”

According to the indictment, Giordanella “was the Chief Executive” of Protective Products “until his resignation on or about March 18, 2009” and from then until at least December 2, 2009 he was a “consultant” for the company.

The allegations against Caldwell and Giordanella are substantively similar, but involved two contracts to sell “body armor plates” The indictment alleges that Caldwell and Giordanella agreed to proceed with the deal and that they then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Caldwell was also told by the Second FBI Agent that the “Minister of Defense was pleased with the body armor plates” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Caldwell “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Caldwell then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Caldwell and Giordanella with, among other things, conspiracy to violate the FCPA. Caldwell is additionally charged with two substantive FCPA violations.

Haim Geri

Geri is described in the indictment as “the President of Company A, a company based in North Miami Beach, Florida, that serves as a sales agent for companies in the law enforcement and military products industries.”

That company appears to be M.G.S. International Consulting, Inc.

The allegations against Geri are substantively similar, but involved two contracts to sell “the Corner Shot – a special purpose gun accessory that can be used to observe and shoot targets around a corner.” The indictment alleges that Geri agreed to proceed with the deal and that he then proceeded between May – June 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Geri was also told by the Second FBI Agent that the “Minister of Defense was pleased with the Corner Shot units” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Geri “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Geri then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Geri with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

Saul Mishkin

Mishkin is described in the indictment as “the owner and Chief Executive Officer of Company A, a Florida company headquartered in Aventura, Florida, that sold law enforcement and military equipment.”

That company appears to be International Security and Defence Systems (see here).

The allegations against Mishkin are substantively similar, but involved two contracts to sell “riot control suits.” The indictment alleges that Mishkin agreed to proceed with the deal and that he then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Mishkin was also told by the Second FBI Agent that the “Minister of Defense was pleased with the riot control suits” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Mishkin “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Mishkin then executed the “corrupt purchase agreement.”

The Mishkin indictment contains the additional allegation that he was “advised by his attorney that the deal could violate the laws of the United States.” The indictment further alleges that Mishkin then tried to sell the riot control suits indirectly through Individual 1’s company and also contains the allegation that Mishkin also tried to sell “Ready to Eat Meal kits” to Individual 1 pursuant to the same original deal structure even though Mishkin “previously had been advised by his attorney that such a deal could violate the laws of the United States.”

Based on this core conduct, the indictment charges Mishkin with, among other things, conspiracy to violate the FCPA and one substantive FCPA violations.

John Mushriqui and Jeana Mushriqui

John Mushriqui is described in the indictment as “the owner and Director of International Development for Company A, a Pennsylvania company [located in Upper Darby] that was in the business of manufacturing and exporting bulletproof vests and other law enforcement and military equipment.”

Jeana Mushriqui is described as “the General Counsel and United States manager of Company A and the sister of John Mushriqui.”

That company is Mushriqui Consulting LLC (see here).

The allegations against the Mushriquis are substantively similar, but involved two contracts to sell “bulletproof vests.” The indictment alleges that Mushriquis agreed to proceed with the deal and that they then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, the Mushriquis were also told by the Second FBI Agent that the “Minister of Defense was pleased with bulletproof vests” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told the Mushriquis “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, the Mushriquis then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges the Mushriquis with, among other things, conspiracy to violate the FCPA and five substantive FCPA violations.

Jonathan Spiller

Spiller is described in the indictment as the “owner and President of Company A, a Florida company that was in the business of providing consulting services for companies in the law enforcement and military equipment industries.” According to the indictment, “Spiller was also the owner and manager of Company B, a Florida company that was in the business of marketing and selling law enforcement and military equipment. Company A and B were both located in Ponte Vedra Beach, Florida.”

The allegations against Spiller are substantively similar, but involved contracts to sell “rifle-mounted cameras and tactical vehicles.” The indictment alleges that Spiller agreed to proceed with the deal and that he then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Spiller was also told by the Second FBI Agent that the “Minister of Defense was pleased” with the equipment sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Spiller “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Spiller then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Spiller with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

John Benson Wier III

Wier is described in the indictment as the “President of Company A, a Florida company headquartered in St. Petersburg, Florida, that sold tactical and ballistic equipment.”

That company is SRT Supply Inc. (see here).

The allegations against Wier are substantively similar, but involved two contracts to sell “laser grips, which are laser sights for handguns.” The indictment alleges that Wier agreed to proceed with the deal and that he then proceeded between May – June 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Wier was also told by the Second FBI Agent that the “Minister of Defense was pleased with the laser grips” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Wier “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Wier then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges the Wier with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

Amaro Goncalves

Goncalves is described in the indictment as “the Vice President of Sales for Company A, a United States company headquartered in Springfield, Massachusetts. Company A was a world-wide leader in the design and manufacture of firearms, firearm safety/security products, rifles, firearms systems, and accessories. The shares of Company A were publicly traded on the NASDAQ stock exchange.”

That company is Smith and Wesson Holding Corporation (see here and here for its press release).

The allegations against Goncalves are substantively similar, but involved two contracts to sell “pistols.” The indictment alleges that Goncalves agreed to proceed with the deal and that he then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 6, 2009, Goncalves was also told by the Second FBI Agent that the “Minister of Defense was pleased with the pistols” sent and the “commission the Minister of Defense had received.” The FBI special agent then allegedly told Goncalves “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Goncalves then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Goncalves with, among other things, conspiracy to violate the FCPA and three substantive FCPA violations.

Pankesh Patel

Patel is described in the indictment as a United Kingdom citizen and the “Managing Director of Company A, a United Kingdom company that acts as a sales agent for companies in the law enforcement and military products industries.”

The allegations against Patel are substantively similar, but involved two contracts to sell “uniforms.” The indictment alleges that Patel agreed to proceed with the deal and that he then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Goncalves was also told by the Second FBI Agent that the “Minister of Defense was pleased with the uniforms” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Patel “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Patel then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Patel with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

John Gregory Godsey and Mark Frederick Morales

Godsey is described in the indictment as “the owner of Company A, a Georgia company based in Decatur, Georgia, that was in the business of selling ammunition and other law enforcement and military equipment.” Morales is described as “a busines associate of Godsey” who “worked with him on deals involving Company A.”

The allegations against Godsey and Morales are substantively similar, but involved two contracts to sell “ammunition.” The indictment alleges that Godsey and Morales agreed to proceed with the deal and that they then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Godsey and Morales were also told by the Second FBI Agent that the “Minister of Defense was pleased with the ammunition” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Godsey and Morales “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Godsey then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Godsey and Morales with, among other things, conspiracy to violate the FCPA and two substantive FCPA violations.

David Painter and Lee Wares

Painter is described in the indictment as a United Kingdom citizen and “the Chairman of Subsidiary A, a company based in the United Kingdom that was in the business of marketing armored vehicles.” Wares is also described as a United Kingdom citizen and the “Director of Subsidiary A.”

According to the indictment, “the parent company of Subsidiary A” is a company based in Cincinnati, Ohio that “produces security products.”

The allegations against Painter and Ware are substantively similar, but involved two contracts to sell “night vision goggles (NVGs) and armored vehicles.” The indictment alleges that Painter and Ware agreed to proceed with the deal and that they then proceeded between May – September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Painter and Ware were also told by the Second FBI Agent that the “Minister of Defense was pleased with the NVGs” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Painter and Ware “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Painter and Ware then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Painter and Ware with, among other things, conspiracy to violate the FCPA and three substantive FCPA violations.

Israel Weisler and Michael Sacks

Weisler is described in the indictment as an “owner and Chief Executive Officer of Company A, a Kentucky company that was in the business of designing, manufacturing, and selling armor products, including body armor. Company A’s business was located in Stearns, Kentucky.” Sacks, a citizen of the United Kingdom, is described as a “co-owner and co-Chief Executive Officer of Company A.”

That company is U.S. Cavalry Inc. (see here). Of note, according to the company’s website, is that the company “set upon a quest to earn a General Services Administration Contract to ease the procurement process for our customers at GSA-authorized federal, military and state agencies. The GSA Contract allows these customers to ensure they pay a fair, predetermined price for the equipment they need.”

The allegations against Weisler and Sacks are substantively similar, but involved two contracts to sell “body armor.” The indictment alleges that Weisler and Sacks agreed to proceed with the deal and that they then proceeded between May – June 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Weisler and Sacks were also told by the Second FBI Agent that the “Minister of Defense was pleased with the body armor” sent and the “commission the Minister of Defense had received.” The FBI agent then allegedly told Weisler and Sacks “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Weisler and Sacks then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Weisler and Sacks with, among other things, conspiracy to violate the FCPA and four substantive FCPA violations.

Yochanan Cohen

Cohen is described in the indictment as the “Chief Executive Officer of Company A, a company based in San Francisco, California, that was in the business of manufacturing security equipment, including body armor and hard armor ballistic plates.”

That company is Highcom Security Inc. (see here). The company’s website indicates that it is a certified General Services Administrator vendor.

The allegations against Cohen are substantively similar, but involved two contracts to sell “Level IV ballistic plates, which is a type of body armor.” The indictment alleges that Cohen agreed to proceed with the deal and that he then proceeded between May – August 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.

The indictment also alleges that on or about October 5, 2009, Cohen was also told by the Second FBI Agent that the “Minister of Defense was pleased with the ballistic plates” sent and the “commission the Minister of Defense had received.” The FBI special agent then allegedly told Cohen “that the Minister of Defense had given his approval to proceed” with the second phase of the deal. According to the indictment, Cohen then executed the “corrupt purchase agreement.”

Based on this core conduct, the indictment charges Cohen with, among other things, conspiracy to violate the FCPA and three substantive FCPA violations.

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