The Stings Before The Sting
A post that will increase your chance of capturing the office FCPA Jeopardy title.
As frequently reported, the Africa Sting case was the first time in the FCPA’s history that undercover investigative techniques were used. As detailed in this prior post, not true, undercover investigative techniques have been used in several other FCPA enforcement actions.
As frequently reported, the Africa Sting case was the first time in the FCPA’s history that a full-blown sting operation was used in connection with an enforcement action. This too is not true as detailed in this post which provides an overview of prior DOJ FCPA sting operations.
Hebert Tannenbaum
In 1996 an FBI spent agent received information from a confidential informant that Tannenbaum (the principal of Long Island based Tanner Management Corporation – a garbage incinerator manufacturer) “had previously made payments to foreign government officials to induce them to purchase garbage incinerators from the defendant.” (See here for the complaint). The informant further advised the FBI that Tannenbaum “had offered to make payments to government officials of various foreign countries in order to sell garbage incinerators in those countries” and during a recorded meeting with the informant Tannenbaum confirmed that he “had previously made a $75,000 cash payment to an official of the Government of Barbados, as an inducement for the purchase by his government of a garbage incinerator.” Thereafter, the informant, acting at the FBI’s direction, recorded a call with Tannenbaum during which Tannenbaum “admitted that he was willing to make payments to sell his garbage incinerators” and the complaint references specific payments in Taiwan and Argentina. During a meeting at the Park Lane Hotel in New York, the informant introduced Tannenbaum to the FBI special agent who was posing “as an Argentine government procurement official who wanted to purchase a garbage incinerator.” During the meeting, Tannenbaum offered to sell the Argentine “procurement official” an incinerator and stated “that he was willing to make a payment to facilitate the deal.” According to the complaint, Tannenbaum, on the way to a bank to open an account to faciliate the deal, told the undercover FBI agent posing as the “procurement official” that “for all he knew [“procurement official”] could have been an FBI agent” and that Tannenbaum was “in his seventies, and did not want to get in trouble.”
Well, Tannebaum did get in trouble.
Based on the above information, Tannenbaum was charged in 1998 via a one count criminal information (here) with conspiracy to violate the FCPA. The information is signed by then U.S. Attorney for the S.D. of New York Mary Jo White currently a partner at Debevoise & Plimpton (here).
Tannenbaum pleaded guilty (see here and here for the DOJ release) and was sentenced to 366 days plus three years of supervised release.
Richard Novak
In 2006, Richard Novak was charged (here) with, among other counts, violating the FCPA. It remains one of the more unusual FCPA enforcement actions ever. Novak and others owned and operated several internet businesses using the names “Saint Regis University,” “Robertstown University” and “James Monroe University.” According to the superseding information “they were diploma mills in that these ‘universities’ had no legitimate faculty members; offered no legitimate academic curriculum or services; required no course work or class work; and were not recognized by the United States Department of Education.” According to the superseding information, Novak made a bribe payment to the “Consult and First Secretary at the Liberian Embassy in Washington D.C. in order to assist Saint Regis University and its owners in fraudulently selling diplomas through their internet businesses.” Elsewhere, the superseding information states that “various foreign government officials who received the bribes held various positions at the Liberian Embassy in Washington, D.C., the Liberian Embassy in Accra, Ghana, and at the Ministry of Education for the Republic of Liberia in Monrovia, Liberia” and that these individuals, among other things, “were in a position to: issue certificates of accreditation and recognition; issue notarial certificates; issue letters claiming that Saint Regis University was fully accredited and recognized by the Ministry of Education in the Republic of Liberia; and cause staff at the Liberian Embassy in Washington D.C. to answer the telephone calls in a positive way when inquiries regarding the legitimacy [of the Universities] were made.”
Although not specifically mentioned in the superseding information, a component of the original indictment (here) against Novak and several others was U.S. Secret Service agents posing as high school dropouts seeking degrees.
Novak pleaded guilty (see here) and was sentenced to three years probation.
Mum’s The Word As To Perez Sentence
On January 21st, the DOJ announced (here) that Antonio Perez was sentenced to 2 years in prison in connection with the Haiti Teleco case.
I did not cover the sentence as it happened because, as I hope readers recognize and appreciate, I like to analyze things a bit before posting.
Thus, when it comes to FCPA sentences, the actual sentence only tells part of the story; the complete story requires knowledge of the sentence the DOJ was actually requesting.
For instance, the DOJ sought a 37 month sentence as to Leo Winston Smith, but the judge sentenced him to six months (see here). The DOJ sought a 38 month sentence as to Bobby Elkins, but the judge sentenced him to probation (see here). The DOJ sought a 14-17 year sentence as to Nam Nguyen, but the judge sentenced to him to 16 months (see here).
Numerous other examples abound and I’ve previously noted that the DOJ may be charging more individuals with FCPA violations (although in 2010, 70% of corporate enforcement actions did not involve any related enforcement action against company employees), and those individuals may be pleading guilty (perhaps because of the “carrots” and “sticks” the DOJ possesses), but when it comes time to sentencing, judges are viewing FCPA cases much differently than the DOJ.
Back to Perez.
There is nothing in the publicly filed documents that indicate the sentence the DOJ was seeking in this case.
I contacted Perez’s attorney, Michael Chavies (see here) and asked him – what sentence was the DOJ seeking – the answer – no comment.
I’ve exchanged e-mails with the Public Affairs Office at Justice Department and, after nearly three months, I’ve still yet to learn the answer to the rather simple question of what sentence the DOJ was seeking as to Perez.
Perhaps someday the answer will be known and a more thoughtful analysis of the Perez sentence will be possible.
For now, mum’s the word.
So … in case you had not heard, Antonio Perez was sentenced to two years in prison and ordered to serve two years of supervised release following his prison term, and to forfeit $36,375.
For numerous prior posts on the Haiti Teleco, please visit the Haiti tab on the right.
*****
A good weekend to all.
Picking and Choosing?
The sentencing memos in the Ousama Naaman matter are interesting reads. Naaman’s memo (here), submitted by Abbe Lowell of McDermott Will & Emery (here), provides a glimpse into cooperation by an individual FCPA defendant.
The DOJ’s memo (here), while requesting a downward departure, details how Naaman’s cooperation was not great at all and how Naaman is seemingly contesting various facts and issues he agreed to in pleading guilty.
The DOJ seeks a recommended sentence of 90 months (7.5 years) which would result in 79 months of additional incarceration given that Naaman has already 11 months of time served.
As previously reported (here), Naaman’s sentencing has been delayed until April 18th.
One aspect of the DOJ’s sentencing memo I found interesting is where the DOJ warns the judge that a “minimal sentence could not only possible be construed as a violation of U.S. treaty obligations […] but could do much to undermine the efforts by the United States Departments of Commerce and State to educate U.S. businesses about the harm caused by and risk of engaging in transnational bribery.” (See pgs. 34-36).
The treaty reference is to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (see here) and the DOJ specifically cites Art. 3 Sec. 1 – “The bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties. The range of penalties shall be comparable to that applicable to the bribery of the Party’s own public officials.”
Is the DOJ picking and choosing which articles of the OECD Convention it wants to abide by?
Article 5 of the same OECD Convention, under the heading “Enforcement,” states that investigation and prosecution of bribery offenses “shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”
Are we to believe that the Giffen prosecution (see here for prior posts) was not influenced by considerations on the “potential effect upon relations with another state.”?
Are we to believe that the BAE prosecution and the lack of FCPA charges (see here for the prior post) was not influenced by “considerations of national economic interest” or the “identity of the natural or legal persons involved.”
It would seem that every time the DOJ specifically states in a sentencing memo (i.e. Siemens, BAE, Daimler, etc.) that, in deciding how to resolve a case, it considered the collateral consequences – including the risk of debarment and exclusion from government contracts – that prosecution of the offense is being “influenced by considerations of national economic interest” or the “identity of the natural or legal persons involved.”
In an effort to avoid yet another rejection of its FCPA sentencing recommendation, the DOJ is now warning a judge that a “minimal sentence” could be “construed as a violation of U.S. treaty obligations.”
In doing so, is the DOJ picking and choosing which articles of the OECD Convention it will abide by?
Friday Roundup
FCPA enforcement down 100% and some items for the weekend watch/read list.
Enforcement Down 100%
Last year at this time there were already 23 FCPA enforcement actions (22 defendants in the Africa Sting case and the Natco Group enforcement action).
So far this year there have been 0.
Thus, FCPA enforcement is down 100%.
I don’t expect you to take this statistic seriously and I don’t intend it to be. Rather, it is meant as a commentary on the often times odd obsession some have with FCPA enforcement statistics (misleading as they may be in many cases).
On to more meaningful commentary by others.
For Your Viewing Pleasure
Two titans of the FCPA bar, Homer Moyer (here) and Martin Weinstein (here) were recently the focus of separate interviews on the BulletProofBlog as to various FCPA topics.
Informative views here and here.
For Your Reading Pleasure
Gary Stein (here – Schulte Roth & Zable) has an informative overview (here) of “Sentencing of Individuals in FCPA Cases.”
I’ve been documenting the growing trend of judges significantly rejecting DOJ sentencing recommendations in FCPA cases (see here) and Stein “hits the nail on the head” with this paragraph:
“The DOJ exercises virtually unlimited discretion in deciding who gets charged in FCPA cases and, for all practical purposes, in deciding the amount of the financial penalty imposed against corporate violators. But sentencing of individual defendants, particularly after U.S. v. Booker, is ultimately a matter of judicial, not prosecutorial discretion. And it has become apparent that there is a wide and growing rift between the views of the DOJ and the courts as to the appropriate sentences for individual violators in FCPA cases.”
Tired of all the “are you ready” hysteria surrounding the U.K. Bribery Act?
If so, you will want to read “Keep Calm and Carry On” (here) by Alexandra Wrage (President of Trace) recently published by In Compliance Magazine. Among other things, Wrage states that “the argument that companies that have navigated FCPA waters for a decade or more are unprepared for the new UK Act is unfounded.”
See here for my “bold” prediction that implementation of the U.K. Bribery Act (whenever that occurs) is not that big of deal for most companies and that U.K. enforcement of the Bribery Act is likely to be measured and disciplined.
*****
A good weekend to all.
Friday Roundup
FCPA enforcement down 100% and some items for the weekend watch/read list.
Enforcement Down 100%
Last year at this time there were already 23 FCPA enforcement actions (22 defendants in the Africa Sting case and the Natco Group enforcement action).
So far this year there have been 0.
Thus, FCPA enforcement is down 100%.
I don’t expect you to take this statistic seriously and I don’t intend it to be. Rather, it is meant as a commentary on the often times odd obsession some have with FCPA enforcement statistics (misleading as they may be in many cases).
On to more meaningful commentary by others.
For Your Viewing Pleasure
Two titans of the FCPA bar, Homer Moyer (here) and Martin Weinstein (here) were recently the focus of separate interviews on the BulletProofBlog as to various FCPA topics.
Informative views here and here.
For Your Reading Pleasure
Gary Stein (here – Schulte Roth & Zable) has an informative overview (here) of “Sentencing of Individuals in FCPA Cases.”
I’ve been documenting the growing trend of judges significantly rejecting DOJ sentencing recommendations in FCPA cases (see here) and Stein “hits the nail on the head” with this paragraph:
“The DOJ exercises virtually unlimited discretion in deciding who gets charged in FCPA cases and, for all practical purposes, in deciding the amount of the financial penalty imposed against corporate violators. But sentencing of individual defendants, particularly after U.S. v. Booker, is ultimately a matter of judicial, not prosecutorial discretion. And it has become apparent that there is a wide and growing rift between the views of the DOJ and the courts as to the appropriate sentences for individual violators in FCPA cases.”
Tired of all the “are you ready” hysteria surrounding the U.K. Bribery Act?
If so, you will want to read “Keep Calm and Carry On” (here) by Alexandra Wrage (President of Trace) recently published by In Compliance Magazine. Among other things, Wrage states that “the argument that companies that have navigated FCPA waters for a decade or more are unprepared for the new UK Act is unfounded.”
See here for my “bold” prediction that implementation of the U.K. Bribery Act (whenever that occurs) is not that big of deal for most companies and that U.K. enforcement of the Bribery Act is likely to be measured and disciplined.
*****
A good weekend to all.