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Step Up to the Podium Friday

Today’s post includes FCPA excerpts from various speeches/comments made by enforcement officials over the past couple of days.

Stepping to the podium will be Assistant Attorney General Lanny Breuer; Mark Mendelsohn – Deputy Chief of the DOJ Fraud Section; and Cheryl Scarboro – the head of the SEC’s newly formed FCPA unit.

Lanny Breuer

Breuer spoke at the ABA National Institute on White Collar Crime in Miami. See here for his comments.

As to the FCPA, here is what Breuer had to say.

“… As I’m sure many of you are aware, in a recent FCPA investigation, the Criminal Division’s Fraud Section used undercover law enforcement techniques to uncover what we allege to be widespread fraud and corruption. As a result, 22 executives and employees of companies in the military and law enforcement products industry were indicted for their involvement in schemes to bribe foreign government officials. This investigation involved the most expansive use ever of undercover techniques to uncover FCPA violations.”

Note – per the DOJ, there was no actual involvement by any real “foreign government official.” This dynamic raises some legal issues – see here.

Back to Breuer’s comments.

“Let me say a few more words about our very robust FCPA program, because it, in many ways, typifies how we are approaching crime in corporate America.”

“The FCPA investigation I just referenced is the largest single prosecution of individuals in the history of DOJ’s enforcement of the FCPA. It thus vividly illustrates one cornerstone of our FCPA enforcement policy: the aggressive prosecution of individuals. Put simply, the prospect of significant prison sentences for individuals should make clear to every corporate executive, every board member, and every sales agent that we will seek to hold you personally accountable for FCPA violations. As we focus on the prosecution of individuals, we will not shy away from tough prosecutions, and we will not shy away from trials. We are ready, willing, and able to try FCPA cases in any district in the country—as we demonstrated with our three FCPA trial victories just last year.”
Note – In one of the trials, William Jefferson was acquitted of FCPA substantive charges. He was convicted of, among things, conspiracy, a verdict that may or may not have, included conspiracy to violate the FCPA. See here. In another trial, Frederic Bourke was convicted of conspiracy to violate the FCPA. He was sentenced to 366 days in prison. At sentencing, Judge Shira Scheindin said – “After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.” See here.

Back to Breuer’s comments.

“To be sure, we are not focusing on individuals to the exclusion of corporations. We will continue to insist on corporate guilty pleas or to bring criminal charges against corporations in appropriate cases – when the criminal conduct is egregious, pervasive and systemic, or when the corporation fails to implement compliance reforms, changes to its corporate culture, and undertake other measures designed to prevent a recurrence of the criminal conduct. We will continue to insist on appropriately stiff corporate fines, applying a consistent, principled approach that considers the facts and circumstances within the Department’s established framework and that is guided by the Sentencing Guidelines in arriving at an appropriate sanction.”

“I also want to assure you that the Department’s commitment to meaningfully reward voluntary disclosures and full and complete corporate cooperation will continue to be honored in both letter and spirit. I know that many of you often grapple with the difficult question of whether to advise your client to make a voluntary disclosure. I strongly urge any corporation that discovers an FCPA violation – or any other criminal violation, for that matter – to seriously consider making a voluntary disclosure and to cooperate with the Department. The Sentencing Guidelines and the Principles of Federal Prosecution of Business Organizations obviously encourage such conduct, and your clients will receive meaningful credit for that disclosure and cooperation.”

Mark Mendelsohn

Mendelsohn recently spoke at the Dow Jones Global Ethics Summit in New York City. DOJ has not released a transcript of his remarks, but a collection of media sources covered his comments.

See here, here, and here.

As to the Africa Sting case, Main Justice reports the following from Mendelsohn:

That the government is “in a strong position because of the massive volumes of information it has collected. “That should give you an idea of the strength of our case,” he said. Specifically, Mendelsohn said that a simple meeting in a New York hotel to discuss a bribery scheme would fall under the FCPA, even if the rest of the scheme took place entirely outside the U.S. Money and, potentially, e-mails, electronically transferred through the U.S. could bring a bribery scheme under the jurisdiction of the FCPA, he said.”

Cheryl Scarboro

Scarboro, an SEC veteran, was recently appointed to lead the SEC’s new FCPA unit (see here). Jesse Sunenblick at Main Justice recently sat down with Scarboro for a Q&A (see here).

As to the new FCPA unit Scarboro said:

“… [T]he new unit will give us the resources and the ability to do even more going forward. People on the ground will be focusing exclusively [on FCPA investigations], making them smarter about industry practices problem areas. We will be able to leverage resources and leads we get from others. There are ongoing investigations exactly like oil for food: not just concerning one company, but looking beyond into widespread practice in particular areas. I would expect filed cases in the short term, in a matter of months. These cases will be an illustration of what we’ve already been doing. But the new unit will allow us to do even more of it. We have areas and industries we are focusing on—pharmaceutical is one.”

A Wide Net

The seemingly minor case involving Telecommunications D’Haiti (“Haiti Teleco”) keeps on giving.

The DOJ recently announced (here) that Jean Fourcand pleaded guilty “to engaging in monetary transactions involving property derived from a scheme to bribe former Haitian government officials.” According to the criminal information (here) Fourcand “received funds ($18,500) originating from U.S. international telecommunications companies for the benefit of Robert Antoine from in or around November 2001, until in or around August 2002.” The information charges that the “funds Fourcand received were bribery payments” to Antoine (an alleged “foreign official” in the eyes of the DOJ because he worked for state-owned Haiti Teleco) and that the “funds were later used by Fourcand in a real estate transaction that benefited Antoine.”

The Fourcand plea is the most recent news in a case in which the DOJ has cast a wide net.

In May 2009, the DOJ announced (here) that Juan Diaz and Antonio Perez pleaded guilty to a one-count criminal information charging conspiracy to violate the FCPA’s antibribery provisions and money laundering laws for their roles in the same improper payment scheme involving the same Haiti Teleco employees. According to the Diaz criminal information (here), Diaz served as an intermediary for various companies in their business dealings with Haiti Teleco and knowingly conspired and agreed with others to make improper payments to the Haiti Teleco officials. According to the Perez criminal information (here), Perez, a controller for one of the companies seeking business with Haiti Teleco, also knowingly conspired and agreed with others to make improper payments to the Haiti Teleco officials.

In December 2009, the DOJ announced (here) the unsealing of an indictment (here) against Joel Esquenazi, Carlos Rodriguez and Marguerite Grandison charging (among other things) conspiracy to violate the FCPA and substantive FCPA violations for their roles in the same scheme to bribe the same Haiti Teleco employees. As noted in a prior post on this case (here), Esquenazi and Rodriguez are former executives of a privately owned telecommunications company and Grandison served as an intermediary for various companies in their business dealings with Haiti Teleco.

As also noted in the prior post, the same indictment also accomplished what is believed to be an “FCPA” first in that the alleged “foreign officials” Robert Antoine and Jean Rene Duperval were also charged. Because the FCPA only covers “bribe-payers” not “bribe-takers” Antoine and Duperval were charged with money laundering conspiracy and/or substantive money laundering.

The DOJ has clearly cast a wide net in this case and eight individuals, including company employees, intermediaries, and “foreign officials,” have been caught in the net.

Another point to consider is that this case involves a whole lot of fishing based on an untested legal theory that has never been accepted by a court – that being employees of state-owned or state-controlled enterprises are “foreign officials” under the FCPA. For numerous prior posts on this issue (see here and here and here).

If you are new to the FCPA you might be wondering why the DOJ comes out with guns-a-blazing in a case like this, yet in a case that involves seemingly clear-cut instances of corporate bribery and corruption (per the government’s own evidence) the DOJ agrees to resolve such a case without FCPA antibribery charges. See here.

Well, don’t feel bad, even those of us who have followed the FCPA for years wonder the same thing from time to time.

Potpourri

A Friday roundup of recent FCPA events.

An FCPA Sentencing Trend?

As noted in yesterday’s DOJ release (here), two former executives of Willbros International Inc. (a subsidiary of Houston-based Willbros Group Inc.) were sentenced for their roles in a conspiracy to make improper payments to “foreign officials” in Nigeria and Ecuador.

Jason Edward Steph was sentenced to 15 months in prison and Jim Bob Brown was sentenced to 366 days in prison.

For more on the Willbros matter, see here and here.

The DOJ’s sentencing recommendations appear to be sealed, but one can assume, given the “light” sentences, that perhaps the DOJ likely sought sentences greater than those issued by District Court Judge Simeon Lake.

If so, this would appear to continue a trend of judges sentencing FCPA defendants to prison sentences less than those recommended by DOJ.

For instance, in Frederic Bourke case, a case which involved a “massive bribery scheme” according to DOJ, Judge Shira Scheindin rejected the 10-year prison sentence proposed by DOJ and sentenced Bourke to 366 days in prison. (see here). In sentencing Bourke, Judge Scheindin is reported to have said “after years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crok or a little bit of both.”

With several FCPA sentencing dates on the horizon, this apparent trend will be an issue to watch.

See here for local media coverage regarding the sentences.

Kozeny’s Tan Not in Jeopardy

While Bourke (see here) prepares his appeal, Viktor Kozeny, the alleged master-mind of the scheme to bribe officials in Azerbaijan in connection with privatization of the state-owned oil company, will be staying put in The Bahamas as an appellate court again rejected DOJ’s extradition attempts.

As noted in the recent Bahamian Court of Appeals decision (here), Kozeny, a Czech national, has been living in The Bahamas since 1995 and has not departed the country since 1999.

The opinion notes that there is no dispute “that there was a conspiracy to corrupt the Azeri officials and that such officials were paid money, given gifts and provided shares in certain companies under the control of [Kozeny] without payment; and had certain medical procedures paid for them by [Kozeny].

Even so, the court concluded that while The Bahamas did indeed have a bribery/corruption statute, it applied only to bribes within The Bahamas or given to a Bahamian public officer. Thus, because Kozeny’s conduct would not violate Bahamian law, the appellate court upheld the lower court’s denial of the extradition request.

For additional coverage (see here and here and here).

According to these reports, the decision may be appealed to London’s Privy Council pursuant to Bahamian legal procedure. Kozeny’s U.S. lawyer is quoted as saying “enough is enough” and U.S. prosecutors should finally accept the fact that Kozney, a non-U.S. citizen, could not violate the FCPA as it existed in 1998 – the year in which the bribe scheme perhaps ended – although, as noted in the opinion, the U.S. alleges that the bribe scheme continued into 1999.

Why is this relevant?

Because the FCPA was amended in 1998 to include, among other provisions, 78dd-3 which applies the antibribery provisions to “any person” (i.e. foreigners) “while in the territory of the U.S.” from making use of the mails or any other means or instrumentality of interstate commerce in furtherance of an improper payment.

The SFO Continues to “Step-It-Up”

Today, the U.K. Serious Fraud Office (the functional equivalent of the DOJ) issued a release (here) indicating that a former BAE agent has been charged with “conspiracy to corrupt” for “conspiring with others to give or agree to give corrupt payments […] to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAE Systems Plc.”

For local media coverage of the charges (see here).

With a new Bribery Bill expected in the U.K. by years end, the SFO continues to “step-it-up” (see here for more on the SFO).

Disclosing FCPA Compliance

Public companies dislose FCPA issues all the time. Rarely though do the disclosures concern issues other than internal investigations and potential enforcement actions.

Accordingly, two recent SEC filings caught my eye.

China MediaExpress Holdings, Inc. (a Delaware company) recently disclosed (here) that it:

“[e]ntered into a securities purchase agreement with Starr Investments Cayman II, Inc. Under this agreement, Starr will, subject to various terms and conditions, purchase from the Company 1,000,000 shares of Series A Convertible Preferred Stock and warrants to purchase 1,545,455 shares of the Common Stock of the Company for an aggregate purchase price of US$30,000,000.”

One of the conditions was that the company “shall have adopted a program with respect to compliance with the US Foreign Corrupt Practices Act” and a post-closing covenant obligates the company to “implement a program regarding compliance with the US Foreign Corrupt Practices Act not later than April 30, 2010.”

Cardtronics Inc. (an operator of ATM networks around the world) (here) recently disclosed (here) that:

“On January 25, 2010, the Board of Directors by unanimous vote approved three management proposed modifications to the Company’s Code of Business Conduct and Ethics. The modifications as approved by the Board include: (i) adding a section that addressed compliance with the Foreign Corrupt Practices Act and International Anti-Bribery and Fair Competition Act of 1998.”

Costa Rica Joins the Club

Last, but certainly not least, Costa Rica recently announced a first … the first time a foreign corporation has paid the government damages for corruption.

As noted here, telecom company Alcatel-Lucent recently disclosed a $10 million payment to settle a corruption case in Costa Rica in which it was accused of paying kicbacks to former Costa Rican President Miguel Angel Rodriguez (and others government officials) in return for a 2001 contract worth $149 million.

There has been FCPA/corruption issues on both sides “of the hyphen” as noted here in this recent Main Justice article.

And with that, have a nice weekend.

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 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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