Africa Sting Roundup
When put to its burden of proof in the Africa Sting trials, the DOJ’s record currently stands at 0-10. As detailed in this prior post, in July 2011 Judge Richard Leon declared a mistrial in the first case involving defendants Andrew Bigelow, Pankesh Patel, John Weir and Lee Tolleson. Perhaps even more significant, at the close of the DOJ’s case, Judge Leon dismissed a substantive FCPA count as to Patel, a substantive FCPA count as to Tolleson, and dismissed a money laundering count as to all defendants.
In the second Africa Sting trial, in December 2011 at the close of the DOJ’s case, Judge Leon dismissed the conspiracy charge as to all defendants. See here for the prior post. Because this was the only charge Stephen Giordanella faced, he was exonerated. Earlier this week, the jury found Patrick Caldwell and John Godsey not guilty. See here for the prior post. Yesterday, Judge Leon declared a mistrial on the remaining charges against the other defendants: John Mushriqui, Jeana Mushriqui and Mark Morales.
The recent events in the Africa Sting case have generated significant coverage. Wall Street Journal Corruption Currents (here) calls the recent events a “major setback” for DOJ’s FCPA enforcement program. The FCPA Blog (here) states that “the DOJ’s embattled FCPA unit has suffered a string of high-profile losses.” The Blog of Legal Times (here) says “another setback for the Justice Department as the jurors in the case overwhelmingly supported not guilty verdicts for several defendants.”
Like in the first Africa Sting case, DOJ has reportedly stated its intention to retry the charges it is able to in the second Africa Sting case. Steven McCool, counsel to Morales, is quoted in this Wall Street Journal article as follows. “I am hopeful that, after considering the number of jurors who voted for acquittal and their thoughtful comments about their deliberation, Department of Justice officials will conclude that this case should be dismissed.”
In a Law360 article, various attorneys react to the recent Africa Sting events. Susan Kohn Ross of Mitchell Silberger & Knupp LLP stated as follows. “[The DOJ has] developed a certain arrogance. There was just this feeling on the part of the government that we’re right and screw you.'”
For more, see here from Thomson Reuters and here from Bloomberg.
Judge Leon Declares Mistrial As To Remaining Africa Sting Defendants
Yesterday’s post (here) covered the not guilty verdicts of Patrick Caldwell and Jonathan Godsey in the second Africa Sting trial. The post noted that the jury had yet to reach a verdict as to John Mushriqui, Jeana Mushriqui and Mark Morales, but that Judge Leon was prepared to declare a mistrial today if the jury remained hung.
A knowledgeable source indicates that Judge Leon has declared a mistrial. According to this report from the website Main Justice, the jury foreman indicated in court that the jury vote for the Mushriquis was 9 not guilty, 3 guilty; for Morales 10 not guilty, 2 guilty.
Africa Sting – Caldwell and Godsey Not Guilty – Jury Still Out As To Other Defendants
On January 19, 2010, the DOJ announced (here) a new type of FCPA enforcement action. While not the first use of undercover techniques in an FCPA enforcement action (see here), the new type of case was certainly the largest and most dramatic use of pro-active, undercover investigative techniques in the FCPA’s history.
Twenty-two executives and employees of companies in the military and law enforcement products industry were criminally indicted “for engaging in schemes to bribe foreign government officials to obtain and retain business.” However, there was no real foreign official – just FBI agents posing as representatives of a Gabon foreign official – and the case was manufactured by the government with the assistance of Richard Bistrong (an individual who previously pleaded guilty to separate FCPA violations – see here).
In announcing the indictments, Assistant Attorney General Lanny Breuer called the action a “turning point.”
The cases were assigned to Judge Richard Leon (U.S. District Court for the District of Columbia). Given the number of defendants indicted, the cases were segregated into smaller units for trial.
The first trial, which started in May 2011, involved Andrew Bigelow, Pankesh Patel, John Benson Weir, and Lee Allen Tolleson. As
highlighted in this prior post, at the close of the DOJ’s case, Judge Leon dismissed a substantive FCPA count as to Patel, a substantive FCPA count as to Tolleson, and dismissed a money laundering count as to all defendants. In July 2011, Judge Leon declared a mistrial as to all remaining counts of the DOJ’s “turning point” prosecution. (See here for the prior post).
The second (of four) trials in this manufactured case began in September 2011 (see here for the prior post) and involved the following defendants: John Mushriqui, Jeana Mushriqui, Patrick Caldwell, Stephen Giordanella, John Godsey, and Mark Morales. As noted in this prior post, in late December 2011, Judge Leon ruled on defendants’ Rule 29 acquittal motions and dismissed the conspiracy charge against all defendants. Because Giordanella faced only a conspiracy charge, he was exonerated and Judge Leon stated as follows: “Mr. Giordanella, you are excused […] you are free to go.”
A knowledgeable source confirms that the jury has returned not guilty verdicts on all counts as to Caldwell and Godsey. According to the source, the jury has yet to reach a verdict as to the Mushriqui’s and Morales. According to this report from Main Justice, if the jury remains hung as to the Mushriqui’s and Morales, Judge Leon has indicated he will declare a mistrial tomorrow.
FCPA Compliance At The Shot Show
Tomorrow the Shot Show opens in Las Vegas. Sponsored by the National Shooting Sports Foundation (“NSSF”), the event made headlines two years ago when 21 of the 22 defendants charged in the Africa Sting case were arrested at the show (see here for the DOJ release).
In a previous post, I observed that the Africa Sting case drew the attention of an industry that probably had never thought much about FCPA compliance. Thus, regardless of the ultimate outcome of the cases, it has likely resulted in an industry and small and medium size enterprises thinking more proactively about FCPA compliance and risk assessment.
Pardon me from commenting on my own prediction, but it was on-target.
As noted in this NSSF release, companies exhibiting at the Shot Show this year can take a Global Anti-Corruption Course. The release states as follows. “If your company will be exhibiting at SHOT Show, now is a great time for you and your employees to learn how to steer clear of violating anti-bribery and anti-corruption laws when speaking with potential customers. The penalties for violating the FCPA are too great for you and your employees not to take the course or for your business not to have an FCPA compliance program.
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As to the pending Africa Sting case, on Friday the jury began deliberating and a verdict is possible this week. This is the second trial, the first trial ended in July when Judge Richard Leon declared a mistrial – see here for the previous post.
Africa Sting Development – “Mr. Giordanella, You Are Excused … You Are Free To Go”
In the first Africa Sting trial this past summer, Judge Richard Leon granted defendant Pankesh Patel’s Rule 29 acquittal motion at the end of the DOJ’s case as to a substantive FCPA charge. (See here for the prior post). Judge Leon also dismissed a substantive FCPA violation as to defendant Lee Allen Tolleson and dismissed a money laundering charge as to all four defendants (Patel, Tolleson, Andrew Bigelow, and John Benson Weir). Thereafter, Judge Leon declared a mistrial as to the remaining charges against the defendants. (See here for the prior post). In short, the DOJ’s “turning point” prosecution did not go so well.
Undeterred, the DOJ plowed ahead with the second (of four) trials in its manufactured case against defendants John Mushriqui, Jeana Mushriqui, Patrick Caldwell, Stephen Giordanella, John Godsey, and Mark Morales. Opening arguments were held in September – see here for the prior post. The DOJ’s case is not going so well.
Earlier today, Judge Leon ruled on defendants’ Rule 29 acquittal motions. In a significant rebuke to the DOJ’s conspiracy charge against all defendants, Judge Leon granted defendants’ motion. Judge Leon stated as follows. “[V]iewing the evidence in the light most favorable to the Government, the Court does not believe the Government has produced sufficient evidence to enable a rational trier of fact to conclude beyond a reasonable doubt that each of these six defendants participated in the overarching conspiracy charged in the superseding indictment in this case.
The only charge against Giordanella was the conspiracy charge, thus Judge Leon stated as follows. “Mr. Giordanella, you are excused […] you are free to go.” Giordanella was represented by Paul Calli and Stephen Bronis of Carlton Fields (see here and here). In a firm release, Bronis stated as follows. “The Court found that government had not presented sufficient evidence to establish the existence of the charged crime. We are grateful the Court made the correct and just ruling. Mr. Giordanella is grateful to be exonerated, and can now begin to put this unnecessary and unfortunate experience behind him.” Calli stated as follows. “Mr. Giordanella was innocent and should never have been accused in the conspiracy. In many respects, Mr. Giordanella’s indictment in the DOJ’s fake Gabon sting operation conspiracy represents a prosecution at its most dangerous.”
In addition, Judge Leon granted acquittal motions as to substantive FCPA charges against defendants John and Jeana Mushriqui (counts 5 and 6 of the superseding indictment – see here). Judge Leon stated as follows. “Neither John nor Jeana Mushriqui had, according to the evidence in this case, the requisite knowledge of the corrupt nature of the Gabon deal that would be necessary with regard to the events on May 22nd of ’09 when Ms. Mushriqui had traveled to Washington, D.C. for the pitch meeting and when a call was placed by Mr. Bistrong to Ms. Mushriqui during that meeting to discuss the deal when he was in the Middle East.”
The Mushriqui’s and the other remaining defendants still face certain other FCPA substantive charges and the defense began presenting its case this afternoon.