Last week the DOJ announced in this release the departure of Assistant Attorney General Lanny Breuer. Breuer’s position was obviously not FCPA specific, but he took a great interest in the DOJ’s Foreign Corrupt Practices Act enforcement program and frequently made speeches on the FCPA in which he – to use his own words – “spread the gospel” (see here).
Not surprisingly given the nature and purpose of the release, the DOJ touted Breuer’s enforcement record, including in the FCPA context. The release stated as follows.
“The Criminal Division has also substantially increased enforcement of the Foreign Corrupt Practices Act (FCPA), convicting three dozen individuals for FCPA-related offenses – a record number – and entering into more than 40 corporate resolutions involving eight of the top 10 largest FCPA penalties in history. The Criminal Division also partnered with the Securities and Exchange Commission to publish groundbreaking guidance on FCPA enforcement.”
In the abstract, there is nothing incorrect about the above information. However, against the backdrop of the numerous statistics I published in recent weeks (see here for a summary) a different picture emerges.
A different picture also emerges when one considers the following undeniable facts about FCPA enforcement under Breuer’s criminal division. In short, what follows would have been an equally valid DOJ release concerning Breuer’s departure.
In January 2010, Breuer called the arrest of 22 individuals in the military and law enforcement products industry a “turning point” in the DOJ’s FCPA enforcement program (see here). The DOJ’s “turning point” prosecution in the so-called Africa Sting cases ended the following way. In granting the DOJ’s dismissal of the charges, Judge Richard Leon stated as follows.
“This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement. Unlike takedown day in Las Vegas, however, there will be no front page story in the New York Times or the Post for that matter tomorrow reflecting the government’s decision today to move to dismiss the charges against the remaining defendants in this case. Funny, isn’t it, what sells newspapers? The good news, however, is that for these defendants, agents, prosecutors, defense counsel and the court we can get on with our professional and personal lives without the constant strain and burden of three to four more eight-week trials hanging over our heads. I for one hope this very long, and I’m sure very expensive, ordeal will be a true learning experience for both the department and the FBI as they regroup to investigate and prosecute FCPA cases against individuals in the future. 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. Notwithstanding all of this water over the dam, and there has been a lot of water, I’m happy to see and I applaud the department for having the wisdom and courage of its convictions to face up to the limitations of its case as revealed in the past 26 weeks of trial and the courage to do the right thing under the circumstances. Having served at the higher levels of the department, I know that that was not an easy decision. They never are, when so much has been invested, and the agents and the prosecutors are so convinced of the righteousness of their position. I for one however am confident this will be in the end a positive, if not painful, lesson that results in better prosecutions of individuals in the future under the FCPA. As for the defendants, I hope the healing process is a swift one and that they get back to their normal lives in the very near future. Finally, I would be remiss if I did not comment on the tireless and spirited effort by the defense counsel from all over the country who came here to try these very lengthy and complicated cases under difficult circumstances and some even pro bono. Their hard work and effective advocacy are a testament to how strong our criminal defense bar is nationwide. And so without further adieu I grant the government’s motion to dismiss. The defendants are excused.”
In May 2011 Breuer stated, after a jury found Lindsey Manufacturing and its executives Keith Lindsey and Steve Lee guilty in an FCPA trial, as follows. These verdicts “are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts.” (See here). The”important milestone” ended when Judge Howard Matz vacated the convictions, dismissed the indictment after finding numerous instances of prosecutorial misconduct, and stated as follows.
“[The instances of misconduct were so varied and occurred over such a long time] that they add up to an unusual and extreme picture of a prosecution gone badly awry. […] 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 order, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.”
“Dr. Lindsey and Mr. Lee were put through a severe ordeal. Charges were filed against them as a result of a sloppy, incomplete and notably over-zealous investigation, an investigation that was so flawed that the Government’s lawyers tried to prevent inquiry into it. In some instances motives, statements and conduct were attributed to them that were wholly unfounded or were obtained unlawfully . . . [. . .] The financial costs of the investigation and trial were immense, but the emotional drubbing [Lindsey and Lee] absorbed was even worse. As for [Lindsey Manufacturing], the very survival of that small, once highly respected enterprise has been placed in jeopardy.”
In November 2009, Breuer’s criminal division criminally charged John Joseph O’Shea with FCPA offenses (see here). The case ended when Judge Lynn Hughes granted O’Shea’s motion for acquittal after the DOJ’s case. Judge Hughes stated as follows.
“The problem here is that the principal witness against Mr. O’Shea … knows almost nothing.”
“The government should have been prepared before they brought the charges to the Grand Jury. […] You shouldn’t indict people on stuff you can’t prove.”
The approximate 25 individuals (individuals who had their real lives altered, their real careers sidetracked, their real reputations harmed, and their real wallets emptied) probably have a different perspective on FCPA enforcement under Breuer. And with good and valid reasons.
