Recently, the DOJ filed this criminal information  against Frank James Lyon, the owner of Lyon Associates Inc. (a privately-held engineering and consulting company headquartered in Hawaii).
The information, to which Lyon subsequently pleaded guilty, charges him with conspiracy to violate the Foreign Corrupt Practices Act (based on things of value provided to officials in the Federated States of Micronesia – FSM) as well as paying bribes to an agent of an organization receiving federal funds (based on things of value provided to officials with a Hawaii governmental agency – State Agency).
As highlighted below, the Lyon action is interesting on several levels.
For starters, the Lyon enforcement action represents a rare (perhaps unprecedented) example of an individual being charged with bribing “foreign officials” as well as U.S. officials.
But then again were the Micronesian Officials (an individual in the FSM Department of Transportation, Communications and Infrastructure who administered aviation programs including the management of airports and an individual in the FSM Congress who served on a congressional committee with oversight over Lyon Associates FSM contracts) even “foreign officials.”
The FCPA defines “foreign official,” in pertinent part, to mean: “any officer or employee of a foreign government or any department, agency, or instrumentality thereof …”.
According to the U.S. government, “the FSM signed a Compact of Free Association with the United States in 1986. An Amended Compact entered into force in June 2004” (see here ).
In any event, the information alleges that Lyon and his co-conspirators:
- “provided bribe payments to FSM officials totaling at least $200,000 in order to obtain approximately $7.8 million in contract payments”
- “provided bribe payments in cash to co-conspirator 3, for distribution to State Agency officials, totaling at least approximately $240,000 in order to obtain a $2.5 million contract.”
In terms of the FCPA related conduct, the information alleges the following things of value:
- “an unrelated side trip to Las Vegas, Nevada including for Micronesian Official 1 and his wife”
- purchasing an “automobile for Micronesian Official 1’s personal use in order to obtain and retain business”
- paying tuition at the University of Hawaii “for a relative of Micronesian Official 1”
- “intend[ing] to pay for an apartment for Micronesian Official 2.”
In terms of the expensive Las Vegas side trip, the information details an e-mail in which Lyon stated: “This is a huge (and very very very critical to get renewed) contract so I am not trying to save money – or god forbid – insult [Micronesian Official 1].”
In terms of the automobile, a Ford Truck, the information details an e-mail in which Lyon stated: “This is an example of things [I] have to do. [I] have to find a car, negotiate a price, figure out how to pay for it, get it on a ship to [FSM]. This is illegal. [I] I can only do these things when people don’t know what I am doing.”
The information also alleges that Lyon “instructed [the company’s] information technology consultant to automatically delete his e-mails after five days.”
According to the information, Lyon and his co-conspirators “falsely classified [company] expenses as “business development” and “marketing” when in fact those funds were being used to pay bribes in the form of gifts and entertainment for FSM officials.”
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