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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.”

Regardless, some have sought business opportunities in Haiti and this post lists enforcement actions (including two notable –  because they were heavily litigated – FCPA enforcement actions) concerning alleged bribery in Haiti.

As highlighted in this prior summary post, by far the largest FCPA enforcement action alleging bribery in Haiti was the so-called Haiti Teleco matter. The following individuals were charged with FCPA and related offenses.

Haiti Teleco Matter

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 in this prior post, in 2014 the 11th Circuit affirmed the trial court convictions and issued its notable “foreign official” opinion.

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.” In February 2012, Grandison (according to a court document) entered into a pretrial diversion agreement with the United States that was subsequently approved by the Court. The term of the pretrial diversion agreement was for 18 months from the date of the execution of the agreement. On or about August 28, 2013, the United States Probation Officer notified the government that Ms. Grandison successfully completed the Pretrial Diversion Program effective August 27, 2013. In September 2013, the DOJ moved to dismiss the case.

Washington Vasconez Cruz, Amadeus Richers and Cecilia Zurita.  These individuals (associated with Cinergy Telecommunications) had long been fugitives. Recently, it was reported that Richers would be pleading guilty.

In connection with the Haiti Teleco enforcement action, Cinergy Telecommunications was also charged with FCPA offenses, but as noted in this prior post, the DOJ moved to dismiss charges against Cinergy because it was a non-operational entity with no assets of any real value.

(Note the above list excludes the alleged “foreign officials” (Jean Rene Duperval, Patrick Joseph, and Robert Antoine) criminally charged with non-FCPA offenses in connection with the Haiti Telco matter).

American Rice / Kay, Murphy Matter

As highlighted here, in 2001 and 2002 the DOJ criminally charged David Kay and Douglas Murphy (the president and vice president of American Rice Inc. (ARI), with FCPA anti-bribery violations based on allegations that the defendants made improper payments to Haitian foreign officials for the purpose of reducing customs duties and sales taxes owed by ARI to the Haitian government.

The defendants mounted a defense and in 2002 the trial court granted the defendants’ motion to dismiss the indictment and held, as a matter of law, that the alleged payments were not payments made to ‘‘obtain or retain business’’ and thus did not fall within the scope of the FCPA’s anti-bribery provisions.

In 2004, the Fifth Circuit reversed and concluded that bribes paid to foreign officials in consideration for unlawful evasion of customs duties and sales taxes could fall within the purview of the FCPA’s proscription. After the appellate court remanded the case back down to the trial court, the defendants were convicted at trial. In 2005, Kay was sentenced to 37 months and Murphy was sentenced to 63 months.

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Based on the same core conduct, in 2002 the SEC filed a civil complaint against Kay and Murphy as well as Lawrence Theriot for aiding and abetting Murphy and Kay’s violations of the FCPA. Kay and Murphy agreed to permanent injunctions and Theriot agreed to resolve the matter by agreeing to a permanent injunction and paying $11,000.

In a related 2002 administrative action, the SEC found that American Rice had violated the FCPA’s anti-bribery, books and records and internal controls provisions.

In addition, the SEC found that:

“Joseph Schwartz, American Rice’s controller in Haiti, authorized 12 bribery payments to Haitian customs officials in order to illegally reduce American Rice’s import taxes. The payments assisted American Rice to obtain or retain business with Haitian rice merchants and consumers. Schwartz thereafter knowingly falsified the books and records of American Rice by recording the bribery payments as routine business expenditures.”

The SEC found that:

“Joel Malebranche, an American Rice employee in Haiti, made 12 bribery payments, directly or indirectly, to Haitian customs officials in order to illegally reduce American Rice’s import taxes. The payments assisted American Rice to obtain or retain business with Haitian rice merchants and consumers.”

The SEC found that:

“Allen Sturdivant participated in the bribery scheme by preparing fake shipping records and sending those records to Malebranche in Haiti. Accordingly, Sturdivant caused American Rice to violate [the FCPA’s anti-bribery provisions].”

Without admitting or denying the SEC’s findings, American Rice, Schwartz, Malebranche and Sturdivant agreed to cease and desist from committing future FCPA violations.

In short, as highlighted in this post Haiti has been the location giving rise to several FCPA enforcement actions even though little (relatively speaking to other countries) business takes place in the country by those subject to the FCPA.

Given the 12 individuals criminally charged in connection with alleged Haitian bribery, Haiti is believed to be the location of the most criminal FCPA enforcement actions against individuals (excluding of course the failed, manufactured Africa Sting action purportedly involving a Gabon official).

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