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DOJ Announces Criminal Charges And Plea Agreements In Connection With Mexican Aviation Bribery Scheme

This recent post [1] highlighted the many Foreign Corrupt Practices Act enforcement actions involving the aviation industry.

Add another to this long list as yesterday, the DOJ announced [2] that criminal charges “were unsealed against six individuals, all of whom have pleaded guilty for their involvement in schemes to bribe Mexican officials in order to secure aircraft maintenance and repair contracts with government-owned and controlled entities, and two for conspiring to launder the proceeds of the schemes.”

The criminal FCPA conspiracy charges were against four individuals: Daniel Perez, Kamta Ramnarine, Victor Valdez, and Douglas Ray.

All of the individuals are associated with what the resolution documents refer to as Aviation Corporation A which appears to be Hunt Pan Am Aviation Inc. [3] (see here [4] and here [5]).

Ramnarine is described as the General Manager of Aviation Corporation A; Perez is described as the Director of Maintenance for Aviation Corporation A; Ray is described as the President of Aviation Corporation A;  and Valdez, a citizen of Mexico, is described as an agent for Aviation Corporation A.

All four criminal informations (here [6], here [7], here [8] and here [9]) allege the same core conduct, namely that individuals conspired to pay bribes to various Mexican “foreign officials” to obtain and retain business for Aviation Corporation A from various Mexican government agencies and instrumentalities.

The Mexican officials are described as:

In addition, the Ray information makes reference to:

Specifically, the informations allege that Ramnarine, Perez and others discussed in person, and through other means, making the bribe payments – which they sometimes called “commissions” to the “foreign officials.”

The Ramnarine and Perez informations make reference to the following corrupt payments to the “foreign officials'” bank accounts in Texas: (i) $140,000; (ii) $55,000; (iii) $45,000; (iv) $35,000; (v) $2,240; and (vi) $2,347.

In addition, the informations allege that Ramnarine, Perez, Foreign Official 1 & 2, and others “took steps to conceal the bribe scheme, including by hiding the amount of the bribe payments in invoices sent to The Foreign State Government and instrumentalities of The Foreign State Government.

The Ray information makes reference to the following corrupt payments: (i) $9,748; (ii) $10,000; (iii) $155,000; (iv) $3,299; and (v) $19,754.

In addition to conspiracy to violate the FCPA’s anti-bribery provisions, Ray was also charged with conspiracy to commit wire fraud with a stated purpose of “obtain[ing] money from privately owned entities in the United States and in Mexico by means of materially false and fraudulent pretenses, representations, and promises.”

In pertinent part, the information alleges that Ray and others “agreed that Aviation Corporation A would pay bribes and kickbacks to employees, agents, and representatives of privately owned entities located in the United States and Mexico in order to obtain and retain business with those entities.”

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According to the information, Ray and others caused Aviation Corporation A to send invoices to privately owned entities located in the United States and Mexico “that hid the cost of the bribe and kickback payments promised to employees, agents and representatives of those entities within Aviation Corporation A’s pricing” which then caused the privately owned entities “to make wire payments from bank accounts located in the United States and Mexico to the bank account of Aviation Corporation A for goods and services procured as a result of the bribery and kickback scheme.”

Further, the information alleges that Ray and others “agreed with employees of privately owned entities … to share the proceeds of the bribery and kickback scheme and to conceal the bribery and kickback scheme from those entities.”

This August 16, 2016 criminal complaint [11] from an HSI Special Agent references “audio and video recordings of conversation between Valdez and a cooperating witness.”

According to the DOJ’s release:

Ray and Valdez Pinon pleaded guilty on Oct. 28 and Oct. 26, 2016, respectively, before U.S. District Judge Alfred H. Bennett of the Southern District of Texas to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit wire fraud.

Ramnarine and Perez both pleaded guilty on Nov. 2, 2016, before U.S. District Judge Ricardo H. Hinojosa of the Southern District of Texas to one count of conspiring to violate the FCPA.  Ramnarine and Perez are scheduled to be sentenced on Jan. 30, 2017.  Ray and Valdez Pinon are scheduled to be sentenced Feb. 23, 2016.

In addition, the DOJ’s release notes that two Mexican “foreign officials” – Ernesto Hernandez Montemayor and Ramiro Ascencio Nevarez (both of whom are citizens of Mexico and were previous officials of Mexican state government entities) each pleaded guilty to one count of conspiracy to commit money laundering.  According to the DOJ’s release:

“Hernandez Montemayor pleaded guilty before Judge Bennett on Dec. 9, 2015, and is scheduled to be sentenced on Jan. 12, 2017.  Nevarez pleaded guilty before Judge Hinojosa on March 4, 2016, and was sentenced to 15 months in prison on May 27, 2016.”

In this criminal information [12], Ascencio is described as an “employee of The Foreign Public University [a public state university of ‘Foreign State’ one of the thirty-one states that comprise Mexico, The Foreign Public University was controlled by Foreign State and performed a public function of Foreign State] with responsibility for maintaining The Foreign Public University’s aircraft.”

In the DOJ’s release Assistant Attorney General Leslie Caldwell stated:

“The six convictions announced today demonstrate the department’s commitment to holding accountable those who further official corruption through bribery. These convictions are the result of a coordinated effort by prosecutors and agents who built the cases brick by brick using traditional law enforcement techniques.”

Special Agent in Charge Shane Folden of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) stated:

“HSI special agents and our law enforcement partners will continue to aggressively investigate financial crimes committed by corrupt foreign officials. This case serves as a reminder that HSI will use all its resources to identify, investigate and dismantle these criminal networks wherever they operate.”

Special Agent in Charge Rick Goss of Internal Revenue Service-Criminal Investigation’s (IRS-CI) stated:

“The individuals involved in this scheme paid millions of dollars in bribes to foreign officials in exchange for aviation contracts that placed legitimate businesses at a significant competitive disadvantage. IRS-CI’s role in unraveling this scheme assisted in facilitating the guilty pleas that were announced today.”