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You Don’t Need To Look Far For The Location Resulting In Several Individual FCPA Enforcement Actions

Haiti2

This prior post highlighted the DOJ’s recently announced Foreign Corrupt Practices Act enforcement action against Joseph Baptiste for alleged bribery in Haiti.

The Baptiste enforcement action is just the latest in a long list of FCPA enforcement actions (all of the criminal actions were against individuals associated with small, privately-held companies) alleging improper business conduct in Haiti (a country located a short distance from the U.S.).

What makes this unusual is that Haiti attracts (relatively speaking compared to many other countries) little business activity by those subject to the FCPA. But then again, perhaps one of the reasons for this lack of business activity is the FCPA itself. As highlighted in this 2010 post, some called for the FCPA not to apply to doing business in Haiti arguing: “one of the best way to help Haiti” is to “pass a law stating that the FCPA does not apply to dealings in Haiti. As it stands right now, U.S. businesses are unwilling to take on this legal risk and the result is similar to an embargo. You can’t do business in Haiti without paying bribes.”

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In Connection With Undercover Sting, DOJ Unseals Criminal Charges Against Joseph Baptiste For Alleged Haitian Bribery

Baptiste

Yesterday, the DOJ announced that Joseph Baptiste (pictured – a retired U.S. Army Colonel, practicing dentist, and former founder/president of a Maryland-based Haitian focused non-profit) was criminally charged “for his alleged role in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti.”

According to this FBI Agent affidavit in support of the criminal complaint, during the time period relevant to the complaint Baptiste served as the president of an entity headquartered in Maryland that purported to be a non-profit organization with the stated mission of helping the impoverished in Haiti” and further served as a member of the board of directors of Company A, an LLC organized under Delaware Law. According to the affidavit, Company A’s mission was to promote a port development project in an area of Haiti known as Moles Saint Nicolas.

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Haiti Teleco Roundup

Last week, the DOJ announced (here) that Jean Rene Duperval (a former director of international relations for Haiti Teleco) was “convicted by a federal jury on all counts for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies.”

Assistant Attorney General Lanny Breuer stated as follows.  “Mr. Duperval was convicted by a Miami jury of laundering $500,000 paid to him as part of an elaborate bribery scheme.  As the director of international relations for Haiti’s state-owned telecommunications company, Duperval doled out business in exchange for bribes and then used South Florida shell companies to conceal his crimes.  This Justice Department is committed to stamping out corruption wherever we find it.”  Duperval is scheduled to be sentenced on May 21st.

The Haiti Teleco case (minus the manufactured and now former Africa Sting case) is the largest in FCPA history in terms of defendants charged – 13.  Below is a brief summary of the actions.

Individuals Charged With FCPA and/or Related Offenses

Antonio Perez.  In April 2009, Perez pleaded guilty to conspiracy to violate the FCPA.  As noted in this prior post, in January 2010, he was sentenced to 24 months in prison.

Juan Diaz.  In May 2009, Diaz pleaded guilty to conspiracy to violate the FCPA.  As noted in this prior post, in July 2010, he was sentenced to 57 months in prison.

Jean Fourcand.  As noted in this DOJ release, in February 2010, Fourcand pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the Haiti Teleco scheme.  In May 2010, Fourcard was sentenced to 6 months in prison.

Joel Esquenazi and Carlos Rodriguez.  As noted in this prior post, in August 2011, Esquenazi and Rodriguez were convicted by a jury for conspiracy to violate the FCPA, FCPA violations, and other offenses.  As noted in this prior post, in October 2011, Esquenazi was sentenced to 180 months in prison and Rodriguez was sentenced to 84 months in prison.  As noted below, Esquenazi and Rodriguez are appealing their convictions to the 11th Circuit.

Marguerite Grandison.  As noted in this DOJ release, in December 2009, Grandison was charged with one count of conspiracy to violate the FCPA and commit wire fraud, seven counts of FCPA violations, one count conspiracy to commit money laundering and 12 counts of money laundering.  According to a recent docket search, in February 2012, Grandison entered a not guilty plea and shortly thereafter the docket states as follows – “docket restricted/sealed until further notice.”

Washington Vasconez Cruz, Amadeus Richers and Cecilia Zurita.  These individuals (associated with Cinergy Telecommunications) are fugitives according to the DOJ.

“Foreign Officials” Charged With Non-FCPA Offenses

Duperval – see above.

Patrick Joseph. As noted in this prior post, the former director of international relations at Haiti Teleco pleaded guilty in February 2012 to conspiracy to commit money laundering. In July 2012, he was sentenced to 366 days in prison.

Robert Antoine.  As noted in this prior post, the former director of international affairs at Haiti Teleco pleaded guilty in March 2010 to conspiracy to commit money laundering.  In June 2010, he was sentenced to 48 months in prison.

Entity Charged

Cinergy Telecommunications.  As noted in this prior post, in February the DOJ moved to dismiss charges against Cinergy because it is a non-operational entity with no assets of any real value.

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Carlos Rodriguez and Joel Esquenazi are appealing their convictions to the 11th Circuit.  See here for the prior post regarding Rodriguez and his appellate counsel.  Recently, T. Markus Funk and Michael Sink (here and here of Perkins Coie) began representing Esquenazi in connection the appeal.  Funk, a former federal prosecutor in Chicago and US State Department lawyer co-chairs the ABA’s Global Anti-Corruption Task Force (here).

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This prior post discussed Haiti Teleco’s other preferred providers – namely IDT Corp. and Fusion Telecommunications – and linked to a recent Wall Street Journal article titled the “Looting of Haiti Teleco.”  The WSJ article was shortly countered with this post by Lucy Komisar.

Haiti Teleco’s Other Preferred Providers

In terms of defendants (13), it is the largest FCPA enforcement action in history and its involves Haiti Teleco.  As indicated in a post last week (see here), another individual – and a high-profile individual at that (former Haitian President Jean-Bertrand Aristide), has been mentioned in connection with the enforcement action.

The enforcement action(s) principally allege payments by various defendants to obtain preferred telecommunication rates from Haiti Teleco.  See here for the indictment of Joel Esquenazi, Carlos Rodriguez and others.  See here for the information as to Juan Diaz.  See here for the information as to Antonio Perez.  See here for the superseding indictment of various Cinergy Telecommunications employees and others.

Even though the Haiti Teleco enforcement action(s) are already broad in scope, other companies also obtained preferred telecommunication rates from Haiti Teleco –  and allegations or suspicions have been raised as to how.  However, at present, there have not been any enforcement actions as to the below companies.

Prior SEC filings by IDT Corporation (here), starting in 2008, have stated as follows.  “On April 1, 2004, D. Michael Jewett, a former employee, […] sent a copy of the complaint he had filed against the Company to the United States Attorney’s Office. In the complaint, Jewett had alleged, among other things, that improper payments were made to foreign officials in connection with an IDT Telecom contract. As a result, the Department of Justice (“DOJ”), the SEC and the United States Attorney in Newark, New Jersey conducted an investigation of this matter. The Company and the Audit Committee of the Company’s Board of Directors initiated independent investigations, by outside counsel, regarding certain of the matters raised in the Jewett complaint and in these investigations. Neither the Company’s nor the Audit Committee’s investigations have found any evidence that the Company made any such improper payments to foreign officials.”

The substance of IDT’s disclosure on this issue has not changed since 2008.  In 2010, IDT entered into a confidential settlement agreement with Jewett. In its most recent quarterly filing, IDT stated as follows as to the above issue.  “The Company continues to cooperate with these investigations, which the SEC and DOJ have confirmed are still ongoing.”  For more on the IDT – Haiti Teleco contract, see this 2009 article from Forbes.

This March 2010 editorial in the Wall Street Journal “Democrats and Haiti Telecom” raises questions about a 1999 contract between Fusion Telecommunications (here) and Haiti Teleco (as well as Fusion board member, Joseph P. Kennedy II – the article also states that “numerous [Bill] Clinton cronies were also on Fusion’s board”).   The article asserts that Fusion had access to the Teleco network at a 75% discount from the official rate on file at the Federal Communications Commission.  For additional Wall Street Journal coverage of Fusion’s Haiti Teleco contract – see here and here – from today’s Wall Street Journal titled “The Looting of Haiti Teleco.”

Former Haitian President Jean-Bertrand Aristide Implicated In Haiti Teleco Cases

Besides the manufactured (and now former) Africa Sting cases, the Haiti Teleco related enforcement actions are the largest in FCPA history in terms of individual defendants – 13.   Another individual has been mentioned in connection with the case, and a high-profile individual at that.

Jean-Bertrand Aristide served two stints as Haiti’s President, most recently between 2001-2004.  According to this article over the weekend in the Miami Herald, Aristide is believed to be “Official B” in the second superseding indictment (here) filed in January 2012 against various defendants.  The indictment states that “from in or around 2011 to in or around 2004, Official B was an official in the executive branch of the Haitian Government.”  According to the article, Aristide allegedly pocketed “millions of dollars in bribes from Miami businesses that brokered long-distance phone deals” with Haiti Teleco.

Aristide’s lawyer, Ira Kurzban (here), is quoted in the article as follows.  “I view this as part of the same smear campaign that the United States has orchestrated against Aristide since he was first elected in 1990.”

 

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