With trial set to begin on September 2nd in an FCPA enforcement action against Carl Zaglin, the DOJ recently filed its trial brief.
The brief begins:
“On November 28, 2023, a grand jury in this District returned a five-count Indictment wherein Zaglin was charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA), in violation of 18 U.S.C. § 371 (Count 1); a substantive violation of the FCPA, in violation of 15 U.S.C. § 78dd-2 (Count 2); and conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h) (Count 3).”
The brief continues:
“Two additional defendants, Aldo Nestor Marchena (“Marchena”) and Francisco Roberto Cosenza Centeno (“Cosenza”) were also charged in the Indictment and have pleaded guilty pursuant to cooperation plea agreements. Juan Ramon Molina Rodriguez (“Molina”), a coconspirator, was charged via Information and pleaded guilty pursuant to a plea agreement. United States v. Molina Rodriguez, 24-20297-CR-MD.
The Indictment alleges that the Defendant, the former majority owner and Chief Executive Officer of Atlanco, and his co-conspirators conspired to bribe—and did in fact bribe—Honduran government officials, including Cosenza and Molina, to obtain, and ensure payment on, over $10 million in contracts with the Comité Técnico del Fideicomiso para la Administración del Fondo de Protección y Seguridad Poblacional (TASA), a Honduran governmental agency that procured goods and services for the Honduran National Police and other government agencies. The Indictment describes two contracts won by Atlanco: the “First Uniform Contract,” executed in June 2015, and the “Second Uniform Contract,” executed in October 2016. The Indictment also alleges that the Defendant and others conspired to pay bribes in connection with a third uniform contract in 2019, which was ultimately unsuccessful. The government expects that the evidence at trial will show that the conspiracy began in approximately March 2015 and continued through approximately November 2019.
The Indictment alleges that, in furtherance of the scheme, the Defendant and his coconspirators laundered over $2 million in funds that were used to pay bribes to Honduran officials, including Cosenza and Molina. The evidence at trial will show that Zaglin orchestrated the scheme with his business partner, Brian DeHart (then-President of Atlanco) [who died in 2023] Luis Berkman (Atlanco’s then-Vice President of International Sales), and several others. Beginning in or around early 2015, executives from Atlanco and representatives of a Florida-based distributor of tactical gear and equipment named Tactical Products Group (TPG) sought to win a contract worth approximately $4.8 million to sell uniforms and accessories to the Honduran National Police, which was part of the Honduran Ministry of Security.
The evidence at trial will show that, to create a pool of money for the bribes, and to conceal the scheme, the Defendant and his co-conspirators allocated $750,000 for a so-called “admin” fee. Further, in or about September 2015, the Defendant and his co-conspirators recruited Marchena, who lived and worked in the Southern District of Florida, to launder the bribes and to make payments to Cosenza, Molina, and others on Atlanco’s behalf. To conceal the scheme, the Defendant (on behalf of Atlanco) entered into purported “Brokerage Agreements” with Marchena and paid Marchena through invoices that purported to reflect actual work completed by Marchena on behalf of the Defendant and Atlanco.
Under the Brokerage Agreement, corresponding to the First Uniform Contract, the Defendant paid Marchena approximately 25% of Atlanco’s contract proceeds, or approximately $1.2 million. Under the second Brokerage Agreement, backdated to correspond to the Second Uniform Contract, the Defendant paid Marchena approximately 21% of Atlanco’s contract proceeds, or approximately $1.2 million.
The evidence at trial will show that Marchena did in fact pay bribes to Cosenza and Molina on behalf of the Defendant. Marchena wired bribe payments to bank accounts in Belize and the United States, among other payments. The Defendant and his co-conspirators also paid bribes to Cosenza in cash, and made payments to an individual named Jaime Nativi, knowing that some or all of those payments would be used to pay bribes.
In approximately 2018, the Defendant and Atlanco bid on a third uniform contract, which was ultimately awarded to another manufacturer. However, in 2018 and 2019, the Defendant and Atlanco entered into two additional contracts with TASA. In approximately June 2019, the Defendant wire transferred a portion of the proceeds from the 2019 contracts to International Defense Group, an entity controlled by coconspirator Luis Berkman. Luis Berkman used the proceeds, in part, to pay cash bribes.
Finally, the evidence will show that, in 2019, the Defendant and others agreed to pay bribes to Cosenza and others in connection with the 2019 uniform contracts bid. In furtherance of their corrupt agreement, in or about November 2019, the Defendant aided and abetted and caused DeHart to email a bid for the additional uniform contract to a Florida-based consultant.”
Among the witnesses the DOJ intends to call are Luis and Bryan Berkman.
As highlighted in this prior post, in 2021 Luis and Bryan Berkman (and others) were criminally charged in connection with a bribery scheme to secure a tear gas contract in Bolivia.
The DOJ states in pertinent part:
“Luis Berkman is the former vice president of international sales at Atlanco. In 2021, he pleaded guilty to conspiracy to commit money laundering, in violation of 18 U.S.C. §§ 1956(h) and 1957(a), for bribing the Bolivian Minister of Government and others in connection with a 2020 contract for tear gas. See Plea Agreement (ECF No. 72), United States v. Luis Berkman, 21-CR60258-PCH (S.D. Fla. Sept. 28, 2021). His factual proffer did not specifically cover the Honduran bribery scheme at issue in this case.
Luis Berkman is expected to testify about his and the Defendant’s involvement in the Honduran bribery scheme and his knowledge of actions by members of the conspiracy and others in furtherance of the scheme, including Honduran officials’ receipt of bribe payments. Luis Berkman will also testify regarding his involvement, along with the Defendant, in paying purported broker fees to Marchena, knowing that a portion of those fees would be used to pay bribes in connection with the scheme. The government anticipates that it may seek to introduce a number of photos, emails, business records, and other electronic communications through Luis Berkman. Many of these communications will be offered into evidence as statements of the Defendant or co-conspirator statements pursuant to Federal Rule of Evidence 801(d)(2).
Bryan Berkman is Luis Berkman’s son and a former employee of Atlanco and Tactical Products Group or “TPG.” Bryan Berkman was prosecuted along with his father in connection with the Bolivian tear gas contract. Bryan Berkman pleaded guilty to conspiracy to violate the FCPA. His factual proffer did not specifically cover the Honduran bribery scheme. Plea Agreement (ECF No. 72), United States v. Bryan Samuel Berkman, 21-CR-60255-PCH (S.D. Fla. Sept. 28, 2021).
Bryan Berkman is expected to testify that he had direct involvement in the bribery scheme, both when he worked for TPG and later when he worked for Atlanco. Bryan Berkman will also testify regarding Atlanco’s use of Marchena. The government anticipates that it may seek to introduce a number of photos, emails, business records, and other electronic communications through Bryan Berkman. Many of these communications will be offered into evidence as statements of the Defendant or co-conspirator statements pursuant to Federal Rule of Evidence 801(d)(2).”
