As recently highlighted, for the first time since its trial court debacles in 2011 and 2012, the DOJ was being put to its burden of proof in an individual Foreign Corrupt Practices Act enforcement action.
U.S. v. Joseph Sigelman (pictured at right) was in the early stages of trial when last Thursday 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. Last year, the SEC did something similar in an enforcement action against Mark Jackson and David Ruehlen – see here.
Yesterday the DOJ effectively pulled its case against Sigelman when it offered the defendant a plea agreement to substantially reduced charges.
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.
As noted in this DOJ release, Sigelman pleaded guilty to a single count of conspiracy to violate the FCPA. The release, which predictably does not mention the debacle that took place last Thursday, states:
“Sigelman admitted to conspiring with co-CEO Knut Hammarskjold, PetroTiger’s former general counsel Gregory Weisman, and others to make illegal payments of $333,500 to David Duran, an employee of the Colombian national oil company, Ecopetrol. Sigelman admitted to making the payments in exchange for Duran’s assistance in securing a $45 million oil services contract for PetroTiger.”
In this plea agreement, the DOJ stated as follows.
“This Office and Joseph Sigelman agree that, pursuant to Federal Rule of Criminal Procedure l l(c)(l)(C), the sentence to be imposed on Joseph Sigelman, should be as follows: (1) a range from a non-custodial term of probation up to 12 months and one day of incarceration; (2) a fine to be determined by the Court; (3) a term of supervised release of not more than three years; (4) a special assessment of $100; and (5) agreed-upon payment in the amount of $239,015.54 pursuant to 18 U.S.C. § 3663(a)(3)” [which represents a restitution payment to PetroTiger].
UPDATE: Sigelman was sentenced today to probation and will not serve any jail time.
Was the DOJ’s prosecution of Sigelman a success?
Or did Sigelman, mindful of the significant adverse consequences under the Sentencing Guidelines for putting the DOJ to its burden of proof and potentially losing, do what most risk-adverse individuals would do?
I have my own conclusion and you can draw your own.
For additional media coverage of Sigelman’s plea see here from the Wall Street Journal. As noted in the article:
“William Jacobson, a former federal FCPA prosecutor, said the plea agreement “sounds quite generous.” “It sounds like the government had proof problems at the end of the day,” said Mr. Jacobson, who is now an attorney at Orrick Herrington & Sutcliffe LLP.”
See also here from Bloomberg:
“The Justice Department claimed victory on Monday in the abruptly concluded foreign-bribery trial of Miami businessman Joseph Sigelman. But a close look at Sigelman’s guilty plea reveals a prosecution in disarray and a defendant who will walk away with minimal punishment.
Sigelman, the founder and former chief executive of a Colombian oil field-services provider called PetroTiger, pleaded guilty in federal court in Camden, N.J., to conspiring to pay bribes to an official of the Colombian national oil company in violation of the Foreign Corrupt Practices Act (FCPA). Or that’s what the Justice Department emphasized in a triumphant-sounding press announcement listing no fewer than seven federal prosecutors, including the assistant U.S. attorney general in charge of the department’s criminal division.
In fact, with its case rapidly deteriorating, the government agreed to let Sigelman plead to a single count of failing to supervise his employees adequately—a felony akin to criminal negligence. At his sentencing Tuesday, Sigelman faces a sentence of up to a year and a day in prison but is more likely to get probation for a period of one to several years.
That’s a striking victory for the defense, given that Sigelman, 43, originally faced a prison sentence of 20 years. Just before the trial began on June 1, the Justice Department offered him a deal that would have included a 10-year prison sentence; Sigelman refused that deal. If he receives a term of probation, he would have to check in regularly with federal authorities but otherwise could return to his international business activities with few if any restrictions.”
Yesterday’s DOJ release further stated:
“The case was brought to the attention of the department through a voluntary disclosure by PetroTiger, which fully cooperated with the department’s investigation. Based on PetroTiger’s voluntary disclosure, cooperation, and remediation, among other factors, the department declined to prosecute PetroTiger.”
