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DOJ Returns To Russia Nuclear Bribery Scheme And Announces Additional Criminal Charges

By on January 12, 2018 in 2018 Enforcement Actions, Daren Condrey, DOJ Enforcement Action, Individual Enforcement Action, Mark Lambert, Russia, Vadim Mikerin
lambert

Previous posts here and here highlighted the DOJ’s 2015 Foreign Corrupt Practices Act enforcement action concerning a Russian nuclear bribery scheme.

As highlighted in the previous posts, Daren Condrey pleaded guilty to FCPA violations for allegedly bribing Vadim Mikerin.

Mikerin was an alleged Russian “foreign official” because he worked for TENAM Corp. (a Maryland corporation) because TENAM was a wholly-owned subsidiary on TENEX – an entity “indirectly owned and controlled by, and performed functions of, the government of the [Russian government].”

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Reboot – Russian Nuclear Industry Bribery Scheme

By on October 20, 2017 in Boris Rubizhevsky, Daren Condrey, Russia, Vadim Mikerin
reboot

Unfortunately in this day and age it is difficult to analyze the news. It seems that approximately 40% of Americans have their preferred news sources which report (and do not report) certain things, approximately 40% of other Americans have their preferred news sources which report (and do not report) certain things, which leaves approximately 20% Americans trying to figure what is actually going on.

For instance, certain media outlets this week (but not others) have devoted substantial coverage of the Obama administration approving “a controversial deal in 2010 giving Moscow control of a large swath of American uranium” [even though] the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States.”

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Analyzing The DOJ’s Recent “Foreign Official” Enforcement Theory

By on September 15, 2015 in Daren Condrey, Foreign Official
Analysis

In the recently announced Foreign Corrupt Practices Act enforcement action against Daren Condrey (see here for the prior post), the DOJ advanced an extremely broad “foreign official” interpretation.

In short, the DOJ alleged that a Maryland resident (Vadim Mikerin), working for a Maryland corporation (TENAM Corporation), was a Russian “foreign official.”

How?

According to the DOJ, TENAM was a wholly-owned subsidiary on TENEX – an entity “indirectly owned and controlled by, and performed functions of, the government of the Russian Federation.”

The FCPA Guidance addressed the enforcement agencies’ views on whether an entity indirectly owned by a foreign government can be an instrumentality under the FCPA – such that its employees are “foreign officials” under the FCPA – and states: “as a practical matter, an entity is unlikely to qualify as an instrumentality if a government does not own or control a majority of its shares.”

In Esquenazi, the 11th Circuit articulated a control and function test to determine whether a business organization is an instrumentality under the FCPA. The court stated:

“An ‘instrumentality’ [under the FCPA] is an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own. Certainly, what constitutes control and what constitutes a function the government treats as its own are fact-bound questions. It would be unwise and likely impossible to exhaustively answer them in the abstract. […] [W]e do not purport to list all of the factors that might prove relevant to deciding whether an entity is an instrumentality of a foreign government. For today, we provide a list of some factors that may be relevant to deciding the issue.

To decide if the government ‘controls’ an entity, courts and juries should look to the foreign government’s formal designation of that entity; whether the government has a majority interest in the entity; the government’s ability to hire and fire the entity’s principals; the extent to which the entity’s profits, if any, go directly into the governmental fisc, and, by the same token, the extent to which the government funds the entity if it fails to break even; and the length of time these indicia have existed.”

In short, the DOJ’s “foreign official” theory in Condrey is seemingly at odds with its own guidance as well as the only legal decision of precedent to address the “foreign official” issue.

And it is not the first post-Guidance, post-Esquenazi FCPA enforcement action to do so.

As highlighted in this prior post, while a minor component of the overall Alstom enforcement action in late 2014 (see here for the prior post), a noteworthy allegation in the enforcement action was that Asem Elgawhart, who was employed by Bechtel Corporation (a U.S. company) and was assigned by Bechtel to be the General Manager of Power Generation Engineering and Services Company (PGESCo), a joint venture between Bechtel and Egyptian Electricity Holding Company (the alleged “state-owned and state-controlled electricity company in Egypt”) was an Egyptian “foreign official.”

In the Alstom enforcement action, PGESCo and Elgawhart are described as follows:

As to Egypt, the information concerns bidding on various projects with the Egyptian Electricity Holding Company (“EEHC”), the state-owned and state-controlled electricity company in Egypt.  According to the information, “EEHC was not itself responsible for conducting the bidding [on projects], and instead relied on Power Generation Engineering & Services Co. (“PGESCo”), which was controlled by an acted on behalf of EEHC.”

PGESCo was controlled by and acted on behalf of EEHC. PGESCo worked “for or on behalf of’ EEHC, within the meaning of the FCPA, Title 15, United States Code, Section 78dd-l (f)( 1) [the FCPA’s “foreign official” definition].

According to the DOJ, Alstom used a consultant whose primary purpose “was not to provide legitimate consulting services to Alstom and its subsidiaries but was instead to make payments to Egyptian officials, including Asem Elgawhary who oversaw the bidding process.”

As if the DOJ’s “foreign official” enforcement theory was not already broad enough (and in conflict with Congressional intent in passing the FCPA notwithstanding the flawed Esquenazi decision – see this article at pgs. 24-41 to learn more) the DOJ’s “foreign official” theory in the above enforcement actions was extraordinarily broad and has implications for any person (privately employed) working on projects with participation by a foreign government department, agency or instrumentality.

DOJ Announces FCPA And Related Actions In Connection With Russian Nuclear Industry Bribe Scheme – Additional Actions Likely

By on September 2, 2015 in 2015 Enforcement Actions, Boris Rubizhevsky, Daren Condrey, DOJ Enforcement Action, Individual Enforcement Action, Nuclear Industry, Russia, Transport Logistics International, Vadim Mikerin, Westerman Cos, Worthington Cylinders, Worthington Industries
TENEX

It’s not often the DOJ announces a Foreign Corrupt Practices Act enforcement action via a one sentence statement in a press release about another enforcement action.

But that is what the DOJ did earlier this week when it announced in this press release that Daren Condrey (50, of Glenwood, Maryland) pleaded guilty on June 17, 2015, to conspiring to violate the FCPA and conspiring to commit wire fraud.

This June 2015 criminal information sets forth the DOJ’s allegations.

According to the information, Condrey was an owner and executive of Transportation Corporation A (a Maryland headquartered company in the business of providing logistical support services for the transportation of nuclear materials to customers in the United States and to foreign customers) from August 1998 through in or about October 2014.

According to this Wall Street Journal, Transportation Corporation A is Transport Logistics International (TLI).  In November 2014, TLI released this statement concerning the DOJ’s investigation.

The Condrey information alleges various bribe payments made to “Foreign Official One” to secure business with TENEX.

JSC Techsnabexport (“TENEX”) is described as a supplier of “uranium and uranium enrichment services to nuclear power companies throughout the world on behalf of the government of the Russian Federation.”  According to the information, “TENEX was indirectly owned and controlled by, and performed functions of, the government of the Russian Federation, and thus was an “agency” and “instrumentality” of a foreign government, as those terms are used in the FCPA.”  The information further states:

“TENEX established a wholly-owned subsidiary company located in the United States in or about October 2010, TENAM Corporation (“TENAM”). TENAM was TENEX’s official representative office in the United States. TENAM was indirectly owned and controlled by, and performed functions of, the government of the Russian Federation, and thus was an “agency” and “instrumentality” of a foreign government, as those terms are used in the FCPA.”

“Foreign Official One”[Vadim Mikerin – see below] is described in the information as follows:

“[A] national of the Russian Federation, was a Director of TENEX from at least 2004 through in or about October 2010, and was the President of TENAM from in or about October 2010 through in or about October 2014. Foreign Official One was a”foreign official,” as that term is used in the FCPA. From in or about December 2011 through in or about October 2014, Foreign Official One was a resident of Maryland.”

According to the information, Condrey and others:

“with the knowledge of Foreign Official One, caused Transportation Corporation A to provide quotations and invoices to TENEX hiding the cost of the bribe payments promised to Foreign Official One within Transportation Corporation A’s pricing”;

“at the direction of Foreign Official One, attempted to conceal the payments to Foreign Official One by making the bribe payments to bank accounts in Cyprus, Latvia, and Switzerland”;

“sent email communications and used other forms of communication in which they used terms like “lucky figure,” “LF,” “cake,” and “remuneration” as code words to conceal the true nature of the bribe payments, and utilized fraudulent invoices which did not truthfully describe the services provided or the purpose of the payments”;

“caused Transportation Corporation A to act as a conduit for a bribe payment another company made to Foreign Official One in order to conceal that bribe payment;” and

“wired, and caused to be wired, payments from Transportation Corporation A’s bank account in Maryland to bank accounts in Cyprus, Latvia, and Switzerland for the purpose of making bribe payments to Foreign Official One.”

Based on the above allegations, Condrey was charged with conspiracy to violate the FCPA and to commit wire fraud.

In this June plea agreement, Condrey pleaded guilty. The statement of facts attached to the Condrey plea agreement also refers to the following company:

“Cylinder Corporation A was a company, based in Ohio, which engaged in the manufacture of tanks and vessels for the oil and gas, nuclear, and marine markets. Cylinder Corporation A secured contracts with TENEX to supply storage and transportation cylinders. In or about September 2012, Cylinder Corporation A was acquired by another company headquartered in Ohio (“Ohio Corporation”).”

According to this Wall Street Journal article:

“People familiar with the investigation identified that company as Westerman Cos., which was acquired by [publicly traded] Worthington Industries, Inc. in 2012 and now operates as Worthington Cylinders. Court records refer to the company as Cylinder Corporation A and identify its location as Bremen, Ohio.”

According to the DOJ’s release, Condrey will be sentenced on Nov. 2, 2015. Condrey is represented by Robert Bonsib.

Back to the DOJ’s press release earlier this week which made brief mention of the above FCPA enforcement action.  As noted in the release:

“[Vadim Mikerin] a Russian official residing in Maryland pleaded guilty today to conspiracy to commit money laundering in connection with his role in arranging over $2 million in corrupt payments to influence the awarding of contracts with the Russian state-owned nuclear energy corporation. According to court documents, Mikerin was the president of TENAM Corporation and a director of the Pan American Department of JSC Techsnabexport (TENEX).  TENAM, based in Bethesda, Maryland, is a wholly-owned subsidiary and the official representative of TENEX in the United States.  TENEX, based in Moscow, acts as the sole supplier and exporter of Russian Federation uranium and uranium enrichment services to nuclear power companies worldwide.  TENEX is a subsidiary of Russia’s State Atomic Energy Corporation.”

According to the release, Mikerin is to be sentenced on Dec. 8, 2015.  See here for the Mikerin plea agreement.  Mikerin is represented by former FCPA Unit Assistant Chief William Jacobson and Jonathan Lopez (both with Orrick, Herrington & Sutcliffe).

As noted in the release, “Boris Rubizhevsky, 64, of Closter, New Jersey, pleaded guilty on June 15, 2015, to conspiracy to commit money laundering and will be sentenced on Oct. 19, 2015.” Rubinzhevsky is described in the Mikerin plea agreement as the owner and sole employee of “Consulting Corporation Two,” which was based in New Jersey.

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