- FCPA Professor - http://fcpaprofessor.com -

The DOJ’s Seeming Unwillingness To Accept Its Recent FCPA Trial Court Debacles

Failure is a basic element of the human condition.

Thus when a failure occurs, one is often judged by whether one takes ownership of the failure or whether one offers excuses for the failure.

Against the backdrop of yet another DOJ FCPA trial court debacle in the recent Sigelman matter (see here [1] for the prior post), the DOJ seems to have adopted the later approach.

In this [2] recent Bloomberg article titled “Plea Deals Are Easy, Juries Are Hard,” a DOJ spokesman states:

“FCPA cases, by their very nature, often require proof of criminal acts carried out in foreign countries. While obtaining foreign evidence—documents and witnesses—poses particular challenges in FCPA cases, the department remains committed to working with its domestic and foreign law enforcement partners to continue to bring successful prosecutions against the individuals who bribe foreign officials and the companies they work for.”

The inability to obtain foreign evidence to secure an individual FCPA criminal conviction seemingly has little to do with the DOJ’s recent trial court debacles.

For instance, the Sigleman matter originated in a corporate voluntary disclosure (in which a company gift wraps witness statements, relevant e-mails, etc. for the DOJ).  Moreover, during the Sigelman trial it was revealed that the alleged “foreign official” bribe recipient was openly in the United States (he even visited Disney World), but the DOJ made no effort to prevent his exit from the U.S. Moreover, as highlighted in this [3] prior post, the trial court judge in the Sigelman matter blasted the DOJ and its oft-stated rhetoric about the purported difficulty of prosecuting FCPA cases.

The Sigelman matter was not the only recent DOJ FCPA trial court debacle in which the inability to obtain foreign evidence seemingly had little to do with the DOJ’s failure.

For instance, the Africa Sting enforcement action resulted from a multiple-year undercover investigation with a cooperator that had pleaded guilty to real-world FCPA offenses.  During the course of its investigation, the DOJ amassed, among other things, the following evidence according to its discovery filing [4].

“615 audio and video recordings of more than 150 meetings;”

“5,287 recorded telephone calls between the defendants and the cooperating witness … and between the defendants and undercover FBI agents;”

“nearly 3,000 pages of text messages from the telephone [the cooperator] used in connection with the undercover operation;”

“materials seized during the 13 search warrants executed in connection with the undercover investigation relating to the defendants” including a total of “approximately 242,000 pages of documents,” “electronic media, including desktop computers, laptop computers, USB drives, zip discs, memory cards and DVDs, among other items, seized during the searches,” and “photographs taken in connection with the search warrants and logs of those photographs, as well as search diagrams and seizure inventories.”

The reason the Africa Sting enforcement failed was not because of any difficulty in obtaining foreign evidence, but rather the quality of the evidence the DOJ obtained, the DOJ’s legal theories and – in the words of the jury foreperson [5] – a belief among the jury that the “defendants had acted in good faith and the FBI/DOJ in bad faith.” Indeed, in the words of the presiding judge [6], part of the DOJ’s failure was attributable to conduct “that [has] no place in a federal courtroom.”

Similarly, the DOJ’s FCPA trial court debacle in the Lindsey Manufacturing enforcement action (in which the company and two executives were criminally charged) was not due to the inability to secure foreign evidence.  Indeed, the DOJ offered sufficient evidence to secure a trial court conviction, a conviction that was short lived though because of numerous instances of prosecutorial misconduct.  In the words of the presiding judge [7] the misconduct was “so varied and occur[ed] over so lengthy a period … that they add up to an unusual and extreme picture of a prosecution gone badly awry.”

Like the recent Sigelman action, the DOJ’s 2012 trial against John O’Shea also originated in a corporate voluntary disclosure with the DOJ also having the assistance of a cooperating witness.  However, that trial ended with the judge granting a defense motion of acquittal after the DOJ’s case.  In doing so, the trial court judge stated:  “the problem here is that the principal witness against Mr. O’Shea … knows almost nothing.”

In short, the recent DOJ FCPA trial court debacles seemingly had little to do with the purported difficulties of obtaining foreign evidence, but rather were the result of aggressive legal theories, sloppy and unprofessional investigations, and jury resentment.

The notion that the DOJ is somehow disadvantaged in a criminal FCPA trial vis-a-vis the defense is outlandish.  The DOJ has the full information gathering resources of the government and among other things benefits from mutual legal assistance treaties, government to government cooperation, and often corporate voluntary disclosures and cooperating witnesses.

Rather, it is the individual defendant who is often disadvantaged as the defense does not have access or the same type of access to the above information and materials. Indeed, in most FCPA trials individuals are facing two adversaries – the DOJ and the cooperating company.

The concern that individual defendants would be disadvantaged in FCPA criminal trials was so prominent during the FCPA’s legislative history that Representative Bob Eckhardt (a leader on the FCPA in the House) insisted on the original FCPA containing the so-called Eckhardt Amendment.

As explained in this [8] prior post, the Eckhardt Amendment basically stated that an individual could only be found liable for FCPA violations to the extent his corporate employer was also found liable.

After the DOJ lost an individual enforcement action against George McLean in the early 1980’s (the first time the DOJ was put to its burden of proof in an FCPA enforcement action) the DOJ convinced Congress to eliminate the Eckhardt Amendment in the 1988 amendments to the FCPA.