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For The First Time In Six Years, The DOJ Prevails In A Contested FCPA Proceeding When Put To Its Ultimate Burden Of Proof

Justice Dept

Last week, for the first time in six years, the DOJ prevailed in a contest FCPA proceeding when put to its burden of proof.

As highlighted in this DOJ release, after a four week trial a federal jury convicted Ng Lap Seng of two counts of violating the Foreign Corrupt Practices Act, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

The DOJ’s release states:

“According to the evidence presented at trial, Ng, the chairman of the Sun Kian Ip Group, conspired with and paid bribes to Francis Lorenzo, a former UN Ambassador from the Dominican Republic, and John W. Ashe, the late former Permanent Representative of Antigua and Barbuda to the UN and the 68th President of the UN General Assembly (“UNGA”).  With the assistance of Jeff C. Yin, an accountant and co-conspirator who worked with Ng and others and previously pleaded guilty, Ng orchestrated a scheme with the principal objective of obtaining the formal support of the UN for a multi-billion dollar facility that Ng hoped to build in Macau using the Macau Real Estate Development Company (the “Macau Conference Center”).  Ng wanted the Macau Conference Center to serve as a location for meetings, discussions, forums, and other events associated with the UN.  In particular, he wanted it to serve as the permanent home of the annual “Global South-South Development Expo,” which is run by the UN Office for South-South Cooperation, and is hosted in a different country or city every year.

The trial evidence further showed that Ng bribed Ambassador Ashe and Ambassador Lorenzo (together, the “Ambassadors”) in exchange for their agreement to use their official positions to advance Ng’s interest in obtaining formal UN support for the Macau Conference Center.  As the evidence demonstrated at trial, Ng paid the Ambassadors in a variety of forms.  For example, Ng appointed Ambassador Lorenzo as the President of South-South News, a New York-based organization — funded by Ng — which described itself as a media platform dedicated to advancing the implementation of the UN’s Millennium Development Goals, a set of philanthropic goals.  Ng provided bribe payments to Ambassador Lorenzo through South-South News by transmitting payments from Macau to a company in the Dominican Republic affiliated with Ambassador Lorenzo’s brother (the “Dominican Company”).  Through South-South News, Ng also made payments to Ambassador Ashe, including to Ambassador Ashe’s wife, who was paid in her capacity as a “consultant” to South-South News, and to an account that Ambassador Ashe had established, purportedly to raise money for his role as President of UNGA.  Ng also provided bribes through cash and wire payments to the Ambassadors.

According to the trial evidence, one of the actions that the Ambassadors took in exchange for bribe payments, to advance Ng’s objectives, was to submit an official document to the then-UN Secretary-General in support of the Macau Conference Center (the “UN Document”).  The UN Document claimed that there was a need to build the Macau Conference Center to support the UN’s global development goals.  Ambassador Ashe, aided by Ambassador Lorenzo, initially submitted the UN Document to the UNGA in or about late February 2012.  More than a year later, at Ng’s behest, the Ambassadors revised the UN Document to refer specifically to Ng’s company, the Macau Real Estate Development Company, as a partner in the Macau Conference Center project.  The UN Document requested that the Secretary-General circulate the UN Document “as a document of the sixty-sixth session of the General Assembly,” under a specific item of the official UNGA agenda.  The Secretary-General followed this request, thereby making the UN Document an official part of the UNGA record.”

In the release, Acting Assistant Attorney General Kenneth Blanco stated:

“The defendant’s corrupt activities were all the more egregious and shameful as he tried to hide his bribes as philanthropy. Corruption is a disease that has a corrosive effect on the rule of law everywhere and harms good people throughout the world.  The Department is steadfast in its mission to aggressively investigate and prosecute bribery in all its forms, and vigorously protect the rule of law.”

Acting U.S. Attorney Joon Kim of the Southern District of New York stated:

“In his unbridled pursuit of even greater personal fortune, billionaire Ng Lap Seng corrupted the highest levels of the United Nations. Through bribes and no show jobs, Ng turned leaders of the league of nations into his private band of profiteers.  Ng’s journey from a Macau real estate mogul to convicted felon should serve as a cautionary tale to all tempted to follow his path.  If you bring corruption to New York – whether to the State Capitol in Albany or to the halls of the U.N. General Assembly – your journey may very well end in a Manhattan federal courtroom, with a unanimous jury announcing your guilt.

William Sweeney, Jr. (Assistant Director in Charge of the FBI’s New York Field Office) stated:

“Seng’s bribery scheme began at the intersection where business and government overlap. But as this conviction proves, even a suitcase full of cash couldn’t deliver him to his destination of choice. This case is nothing more than an example of corruption in its purest form, and we have proven once again that no individual or organization is powerful enough to be immune from prosecution.”

Don Fort (Chief of the Internal Revenue Service Criminal Investigation) stated:

“Today’s conviction is a result of untangling a global labyrinth of complex financial transactions used by Seng to facilitate bribes to foreign officials. IRS-CI has become a trusted leader in pursuit of those who use corruption as their business model to circumvent the law. CI is committed to maintaining fair competition, free of corrupt practices, through a dynamic synthesis of global teamwork and our robust financial investigative talents.”

The Seng trial was the fifth instance since 2011 of the DOJ being put to its ultimate burden of proof in a contested FCPA proceeding. As highlighted in the remainder of this post, the prior four instances were all trial court debacles for the DOJ.

Joseph Sigelman (2015)

In January 2014, the DOJ announced FCPA and related charges against former executives of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, “for their alleged participation in a scheme to pay bribes to foreign government officials in violation of the FCPA, to defraud PetroTiger, and to launder proceeds of those crimes.” The individuals charged were former co-CEOs of PetroTiger Joseph Sigelman and Knut Hammarskjold and former general counsel Gregory Weisman.

Hammarskjold and Weisman pleaded guilty, but Sigelman mounted a defense.

In its superseding indictment, the DOJ charged Sigelman with six criminal charges (conspiracy, money laundering, and several substantive FCPA charges) as well as various forfeiture counts.  Sigelman, the father of young children, faced up to 20 years in prison if convicted on all counts.

The trial was in the early stages when the DOJ’s star witness Gregory Weisman (an individual who previously pleaded guilty to the same core conduct and was cooperating with the DOJ in the hopes of achieving a lower sentence) ran into some problems on the witness stand. In short, Weisman acknowledged giving false testimony during the trial (see here for the transcript and here and here for additional media coverage) prompting federal court judge Joseph Irenas (D.N.J.) to ask Weisman “did you have a hallucination?”

The trial ended for the week as the DOJ contemplated what to do next. The DOJ of course can control if it is ultimately put to its burden of proof and can effectively pull a case if it feels it will not prevail. This is what the DOJ did in the so-called Carson cases (see here and here) after the trial court judge issued a pro-defense jury instruction concerning knowledge of status of foreign official. The SEC did something similar in an FCPA enforcement action against Mark Jackson and David Ruehlen – see here.

The trial never started up again, as the DOJ effectively pulled its case against Sigelman when it offered the defendant a plea agreement to substantially reduced charges (a single FCPA conspiracy charge) which Sigelman accepted. However, Judge Irenas refused to sentence Sigelman to any jail time and he was sentenced to probation.

John O’Shea (2012)

In November 2009, John O’Shea was charged with FCPA and related offenses for allegedly making improper payments to alleged Mexican “foreign officials.”  O’Shea mounted a defense and proceeded to trial.  In January 2012, following the DOJ’s case, Judge Lynn Hughes (S.D. Tex.) dismissed the FCPA charges against O’Shea.  In doing so, Judge Hughes stated:  ”The problem here is that the principal witness against Mr. O’Shea … knows almost nothing.”  (See here).  During the trial, Judge Hughes also admonished other aspects of the DOJ’s case stating:   “I don’t know what was presented to the Grand Jury, but … the Government should have been prepared before they brought the charges to the Grand Jury. It’s something you have to prove. And you shouldn’t indict people on stuff you can’t prove.”  (See here).

Africa Sting (2011-2012)

In January 2010, the DOJ announced criminal charges against 22 executives and employees of companies in the military and law enforcement products industry for engaging in a scheme to pay bribes to the minister of defense of an African country.  However, there was no actual involvement from any minister of defense, rather it was a manufactured sting operation.  Given the number of defendants, four separate trials were scheduled.

The first Africa Sting trial started in May 2011 and involved four defendants.  At the close of the DOJ’s case, Judge Richard Leon dismissed a substantive FCPA charge against one defendant (Pankesh Patel), dismissed another substantive FCPA charge against another defendant (Lee Tolleson) and dismissed the money laundering count against all defendants (Patel, Tolleson, Andrew Bigelow, and John Weir).  In July 2011, Judge Leon declared a mistrial as to all remaining counts against all defendants.

The second Africa Sting trial began in September 2011.  At the close of the DOJ’s case, Judge Leon dismissed the conspiracy charge against all defendants (John Mushriqui, Jeana Mushriqui, Patrick Caldwell, Stephen Giordanella, John Godsey, and Mark Morales).  Because Giordanella faced only that conspiracy charge, he was exonerated.  The trial proceeded, the charges went to the jury, the jury deliberated, and in January 2012, the jury found two defendants (Caldwell and Godsey) not guilty.  The jury hung as to the remaining defendants, and once again Judge Leon declared a mistrial as to all remaining counts against the remaining defendants.

Shortly after conclusion of the second trial, the jury foreman published this guest post on FCPA Professor and shortly thereafter the DOJ moved to dismiss with prejudice the criminal charges against all of the remaining defendants including those initially charged but not yet tried (Helmie Ashiblie, Yochanan Cohen, Amaro Goncalves, Saul Mishkin, David Painter, Lee Wares, Ofer Paz, Israel Weisler and Michael Sacks).  The next day, Judge Leon granted the motion to dismiss and stated (see here) “this appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.”

Lindsey Manufacturing et al (2011)

In 2010, the DOJ charged Lindsey Manufacturing Co. and two of its executives (company CEO Keith Lindsey and company CFO Steve Lee) with FCPA offenses for their alleged roles in a conspiracy to pay bribes to alleged Mexican “foreign officials.”  In May 2011, Lindsey Manufacturing, Lindsey, and Lee were found guilty of various FCPA charges after a five-week jury trial.  (See here).

However, after months of post-trial legal wrangling, in December 2011 Judge Howard Matz (C.D. Cal.) vacated the convictions and dismissed the indictment after finding numerous instances of prosecutorial misconduct.  In the words of Judge Matz, the instances of misconduct were so varied and occurred over such a long time “that they add up to an unusual and extreme picture of a prosecution gone badly awry.”  (See here).

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