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Prosecutorial Misconduct / Mishaps In FCPA Cases

prosecutorial misconduct

Prosecutorial misconduct has received much attention lately.

Recognizing that the term itself is not crystal clear, this post highlights several instances of prosecutorial misconduct, or at the very least prosecutorial mishaps, in FCPA contested proceedings.

While the examples highlighted below may not seem numerous, keep in mind that DOJ corporate FCPA enforcement actions rarely result in related criminal charges against individuals. In other words, it is not often that the described dynamic even has a chance of playing out.

Before turning to FCPA specifics, some recent writings regarding prosecutorial misconduct.

From a recent New York Times editorial “To Stop Bad Prosecutors, Call the Feds

“Prosecutors are the most powerful players in the American criminal justice system. Their decisions — like whom to charge with a crime, and what sentence to seek — have profound consequences.

So why is it so hard to keep them from breaking the law or violating the Constitution?

The short answer is that they are almost never held accountable for misconduct, even when it results in wrongful convictions. It is time for a new approach to ending this behavior: federal oversight of prosecutors’ offices that repeatedly ignore defendants’ legal and constitutional rights.”

From a recent Wall Street Journal editorial “Bringing Justice to Justice

“Maybe [Justice] needs a new Yates memo that focuses on the consequences for DOJ lawyers who bring cases that never should be brought – with sanctions for legal abuses.”

From another recent Wall Street Journal editorial “Reining in Prosecutorial Misconduct

“The parade of prosecutorial-misconduct cases marches on, to a drumbeat of public outrage and accusation about justice denied.”

For an engaging read on prosecutorial misconduct issues, see a recent article from Professors Bruce Green and Ellen Yaaroshefsky titled “Prosecutorial Accountability 2.0.

Reading the article raised the following issues in my mind.

Why do prosecutors tend to get the benefit of the doubt when prosecutorial misconduct issues arises, but criminal defendants often do not?

When prosecutors engage in misconduct, why does the root cause analysis often tend to focus on the individual and whether the individual was a “rogue” prosecutor instead of prosecutor office culture “that values winning cases or convicting criminal over playing by the rules.” As stated in the article, does such a focus “ignore an examination of office culture that may promote aggressive interpretation of an indifference to ethical obligations.”

As highlighted below, there have been several instances of prosecutorial misconduct, or at the very least prosecutorial mishaps, in FCPA contested proceedings.

Lindsey Manufacturing / Keith Lindsey / Steven Lee

The most egregious instance was the DOJ’s failed prosecution of Lindsey Manufacturing and its executives Keith Lindsey and Steven Lee.

By way of background, in May 2011 the defendants were convicted after a five week trial by a federal jury in the Central District of California of one count of conspiracy to violate the FCPA and five counts of FCPA violations.  Reacting to the guilty verdicts, Assistant Attorney General Lanny Breuer stated: “Today’s guilty verdicts are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts. Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last.”

As detailed in this prior post, in December 2011, the DOJ’s “important milestone” was erased when Judge Howard Matz, after months of legal wrangling, vacated the convictions and dismissed the indictment.   See here for Judge Matz’s ruling.  In his ruling, Judge Matz summed up the government’s conduct as an “unusual and extreme picture of a prosecution gone badly awry.”

In pertinent part, Judge Matz stated:

“In this Court’s experience, almost all of the prosecutors in the Office of the United States Attorney for this district consistently display admirable professionalism, integrity and fairness.  [A footnote states – Two of the three members of the prosecution team in this case were from the Washington, D.C., main office of the Department of Justice, including the lawyer who initiated the investigation. Only one “local” AUSA was involved].  So it is with deep regret that this Court is compelled to find that the Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court’s rulings, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.  Consequently, the Court throws out the convictions of Defendants Lindsey Manufacturing Company, Keith E. Lindsey and Steve K. Lee and dismisses the First Superseding Indictment.”

In reaching his conclusion, Judge Matz  acknowledged that even he was overwhelmed by the pace of the case and thus unable to see sooner the gravity of the DOJ’s misconduct.  The following paragraph from his order was telling.

“… [When a trial judge managing a large docket is required to devote a great deal of time and effort to a fast-moving case that requires numerous rulings, often the judge will miss the proverbial forest for the trees. That is what occurred here.  This Court was confronted with so many motions challenging the Government’s conduct that it was difficult to step back and look into whether what was going on reflected not isolated acts but a pattern of invidious conduct. Although the Court did issue orders granting various of Defendants’ motions to suppress, motions to exclude evidence, motions to compel further discovery, motions for curative instructions, etc., it did not fully comprehend how the various pieces fit together. And fit together they do. The Government has acknowledged making many “mistakes,” as it characterizes them. “Many” indeed. So many in fact, and so varied, and occurring over so lengthy a period (between 2008 and 2011) that they add up to an unusual and extreme picture of a prosecution gone badly awry. To paraphrase what former Senator Everett Dirksen supposedly said, “a few mistakes here and a few mistakes there and pretty soon you’re talking misconduct.””

Africa Sting Cases

While perhaps not as egregious as the above instance, Judge Richard Leon also had harsh words for the DOJ in connection with the DOJ’s failed manufactured Africa Sting.  As highlighted in this post, when dismissing all remaining charges against the defendants (certain defendants were found not guilty), Judge Leon stated in pertinent part:

“This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.


Two years ago, at the very outset of this case I expressed more than my fair share of concerns on the record regarding the way this case has been charged and was being prosecuted.  Later, during the two trials that I presided over I specifically commented again on the record regarding the government’s very, very aggressive conspiracy theory that was pushing its already generous elasticity to its outer limits.  Of course, in the second trial that elastic snapped in the absence of the necessary evidence to sustain it.

In addition, in that same trial, I expressed on a number of occasions my concerns regarding the way this case had been investigated and was conducted especially vis-a-vis the handling of Mr. Bistrong.  I even had an occasion, sadly, to chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom.”

In a rare move, the jury foreperson in one of the failed Africa Sting trials went public. As noted in this post, the jury foreperson stated:

“As noted above, a number of jurors were troubled by the nature of the FBI sting operation. Specifically, some seemed unwilling to convict on the basis of vague language (e.g., “commission” instead of “bribe”) and where the defendants had not sought out the deal. These jurors were largely not participatory in the deliberations and when specifically called upon for their views would typically voice agreement with views expressed by some other juror voting “Not Guilty.” But enough small comments through the course of deliberations lead me to believe that their underlying view was that the defendants had acted in good faith and the FBI/DOJ in bad faith. Along the same lines, more than one juror voiced concern that it would be unjust for the defendants in this case to be convicted when the government relied so heavily on Mr. Bistrong who freely admitted on the stand more illegal acts than the entire group of defendants was accused of, yet was able to plead to only one count of conspiracy to violate the FCPA.”

Joseph Sigelman

As highlighted here, in June 2015 the DOJ’s most recent FCPA criminal trial came to an abrupt halt early in the trial after the DOJ’s star witness admitted to giving false testimony on the stand. Indeed, Judge Joseph Irenas (D.N.J.) asked the witness “did you have a hallucination?” Shortly after this mishap, Sigelman did plead guilty to a substantial reduced charge and as highlighted in this post, in sentencing Sigelman to no jail time Judge Irenas blasted the DOJ.

John O’Shea

In 2009, the DOJ charged John O’Shea with various FCPA and related offenses. O’Shea proceeded to trial, and in January 2012, following DOJ’s case, Judge Lynn Hughes (S.D. Texas) dismissed the FCPA charges against O’Shea. In doing so, Hughes stated, ‘‘The problem here is that the principal witness against Mr. O’Shea . . . knows almost nothing.’’

In addition, during the trial, Judge Hughes criticized the DOJ as follows: “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.”

Harris Corporation / John Iacobucci / Ronald Schultz

In 1990, the DOJ criminally charged Harris Corporation (a company that manufactured telephone switching systems) and two executives John Iacobucci and Ronald Schultz with conspiracy to violate the FCPA. According to the charging documents, the defendants paid and authorized the payment of money to a third-party “while knowing that a portion of such money” would be offered or given, directly or indirectly, to officials of the Government of Colombia in order to influence the officials to award government telecommunications contracts to Harris. According to the indictment, pursuant to the conspiracy Harris retained an agent based upon representations that he had connections with officials in the government that he would use to assist Harris in obtaining telecommunications contracts.

Upon filing of the criminal charges, the Chairman and CEO of Harris stated:

“We believe that these charges are based upon a distorted view of the facts, and they represent a radical departure from existing enforcement policies. We have cooperated fully with the DOJ in its investigation of the allegations, providing clear evidence refuting the charges.”

The company, along with the individuals, put the DOJ to its burden of proof at trial.  In 1991, the trial court judge granted a motion for judgment of acquittal.  Media reports stated:

 “Shortly after the government rested its case, [the trial court judge] ruled from the bench that ‘no reasonable jury’ could convict the company nor its executives on any of the five bribery-related counts for which they were indicted. Citing insufficient evidence, [the judge] said the government had failed to show any intent by the defendants to enter into a criminal conspiracy. [The judge] also said it was the first time in his six years on the federal bench that he had dismissed a criminal case at mid-trial for lack of evidence.”

After the judgment of acquittal, the Chairman and CEO of Harris stated:

“We’re very pleased that [we] have been vindicated, but we believe the charges should never have been brought in the first place. The DOJ’s case was based upon a distorted view of the facts and represented a radical departure from existing enforcement policies. As a result, American taxpayers have been burdened with unnecessary litigation costs, and Harris has incurred more than $3 million in legal fees, spent many hundreds of hours of our people’s time, and suffered a substantial disruption of the corporation’s business to prove an absence of wrongdoing that should have been apparent from the beginning. The case has also placed a heavy strain on our two employees named in the indictment.”

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