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Friday Roundup

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Elevate, a double standard dandy, scrutiny alert, and quotable.

It’s all here in the Friday roundup.

Elevate

Elevate your Foreign Corrupt Practices Act substantive knowledge and practical skills at the FCPA Institute – Nashville on May 2-3. As highlighted here, the FCPA Institute promotes active learning by participants through issue-spotting video exercises, skills exercises, small-group discussions, and the sharing of real-world practices and experiences.

FCPA Institute participants not only gain knowledge, practical skills and peer insight, but can also elect to have their knowledge assessed to earn a certificate of completion upon passing a written assessment tool. In this way, successful completion of the FCPA Institute represents a value-added credential for professional development. In addition, attorneys who complete the FCPA Institute are also eligible to receive Continuing Legal Education (“CLE”) credits and prior FCPA Institute participants have also received continuing education units from the Society of Corporate Compliance and Ethics.

Law firm lawyers, in-house counsel, accounting and auditing professionals and others have already registered for the FCPA Institute – Nashville. To join this group, click here to register.

A Double Standard Dandy

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Friday Roundup

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A reading stack edition of the Friday roundup.

*****

Miller & Chevalier’s FCPA Summer Review 2015 is here.

Regarding the DOJ’s latest FCPA trial court debacle in the Sigelman case (see hereherehere and here for prior posts), the review states:

“The DOJ’s prosecution and trial of Joseph Sigelman deserves special notice, as it was the DOJ’s first trial of an individual on FCPA charges since the acquittal in January 2012 of John Joseph O’Shea. Sigelman’s trial … lasted nine days and ended with prosecutors entering into a negotiated guilty plea with Sigelman on only one of the six counts with which he was charged after a key government witness admitted to lying on the stand. Sigelman’s sentence of probation with no imprisonment was essentially a victory for Sigelman, and the judge was particularly critical of the government’s key witness as well as its sentencing recommendation. The trial adds to a string of recent FCPA prosecutions involving individuals in which the government has failed to secure a conviction or its recommended sentence, highlighting the difficulties the DOJ has sometimes encountered when forced to bear its burden of proof in court.”

*****

Relevant to the double standard issues frequently highlighted on these pages, one interesting side note to come out of the Sigelman trial was testimony about the alleged “commonplace” practice among certain law firms of providing expensive tickets to high-profile sporting events to corporate clients.   (See here from Bloomberg).

Do that with certain other clients or potential clients and the DOJ/SEC would be apt to call that bribery.

*****

My Southern Illinois University School of Law colleague Lucian Dervan co-authored an article with Ellen Podgor (White Collar Crime Prof Blog) titled “White Collar Crime: Still Hazy After All These Years.” The abstract states:

“With a seventy-five year history of sociological and later legal roots, the term “white collar crime” remains an ambiguous concept that academics, policy makers, law enforcement personnel and defense counsel are unable to adequately define. Yet the use of the term “white collar crime” skews statistical reporting and sentencing for this conduct. This Article provides a historical overview of its linear progression and then a methodology for a new architecture in examining this conduct. It separates statutes into clear-cut white collar offenses and hybrid statutory offenses, and then applies this approach with an empirical study that dissects cases prosecuted under hybrid white collar statutes of perjury, false statements, obstruction of justice, and RICO. The empirical analysis suggests the need for an individualized multivariate approach to categorizing white collar crime to guard against broad federal statutes providing either under-inclusive or over-inclusive examination of this form of criminality.”

*****

Bruce Carton (Securities Docket) recently hosted this webinar titled “The U.K. Bribery Act After Five Years – Where Are We Now?” Panelists were Barry Vitou (author of thebriberyact.com) and Anne-Marie Ottaway of the law firm Pinsent Masons; Vivian Robinson QC, former general counsel to the UK’s Serious Fraud Office and now a partner at McGuireWoods; and Julian Glass of FTI Consulting.

*****

A good weekend to all.

Silly DOJ Press Release Belies Government’s Failure in Joseph Sigelman FCPA Prosecution

Laurel and Hardy

Today’s post is from Paul Calli and Chas Short of Calli Law LLC.

*****

As readers of FCPA Professor well know ( see herehere and here for prior posts), in mid-June, the FCPA prosecution of Joseph Sigelman came to an abrupt halt after DOJ’s star witness admitted to giving false testimony on the stand. The case ended in a plea to one conspiracy count and a sentence of probation.  DOJ nonetheless issued a press release crowing as though this were a prosecution victory.

Make no mistake: this is a loss for the government and a win for Mr. Sigelman.

Trial had gone badly for the government. The government’s star witness lied on the stand and admitted to it, prompting the trial judge to ask, “Did you have a hallucination?” The FBI agent (the only other witness who had testified) admitted that the alleged Colombian “foreign official” at the center of the government’s case was allowed to travel from the United States to Colombia without facing arrest. It was a debacle, as many of the government’s prior FCPA prosecutions have been.

DOJ nonetheless issued a press release trumpeting Mr. Sigelman’s plea and the pending related cases.  The press release, and the government’s decision to spin an embarrassing loss, is silly.

By contrast, Mr. Sigelman’s defense team issued their own press release, which actually discussed the events at trial, and is well worth reading.

The government’s approach is even sillier when its collapse at trial is compared to the pomposity in its initial press release (still on the DOJ’s website). When the complaint was unsealed back in early 2014, DOJ’s press release ‘warned,’ “[W]e are not going away.”

This type of overheated press release rhetoric is not new for DOJ, unfortunately. When the Government made arrests in its FCPA Gabon “sting” case, then-Assistant Attorney General Lanny Breuer stated, “[T]hese actions are a turning point.” And he quipped at a press conference, “This is one case where what happens in Vegas didn’t stay in Vegas.” It turns out that the turning point was trial: that case ended in a complete victory for the accused individuals.

Government exaggeration is not limited to FCPA cases of course. Back in 2013, U.S. District Judge Richard Sullivan mockingly read a press release from the United States Attorney’s Office for the Southern District of New York at a conference on white collar crime. Judge Sullivan commented that the press release “sounds like the theme from Mighty Mouse,” and said that the release “seems to be designed for tabloid consumption.” The press release in the government’s failed prosecution of Mr. Sigelman is part of a trend.

But it’s not just that the DOJ release is silly.

It is also offensive to the spirit of justice. The release is written as though all the things that went badly at trial for DOJ never happened. It fails to mention the lies of the cooperator whom the government had decided to embrace. In doing so, it is a clear demonstration that the DOJ press office does not exist to inform the public, but to serve as the propaganda arm of DOJ.

Moreover, consider this: if a publicly traded company issued a press release that contained a material omission, the company may be the subject of criminal prosecution. The release in the Sigelman prosecution unapologetically embraces selective disclosure and deliberate omissions. If we accept the premise that the DOJ ought to do justice (as opposed to simply trying to win), then the DOJ ought to have a duty to keep the public informed about all aspects of its enforcement program.

Just because DOJ alleges it, doesn’t mean it’s true. Reciting it again in a press release doesn’t mean it’s true. Finally, just because the DOJ secures a plea agreement does not necessarily represent a success.  Stated differently, if it smells like a loss, looks like a loss and everyone who followed the case knows it is a loss, it is still a loss.

So why has the DOJ struggled when put to its burden in individual enforcement actions while racking up numerous corporate enforcement actions?

It is one thing for the DOJ to process a corporate voluntary disclosure of an investigation conducted by mid-level associates at FCPA, Inc. As Judge Irenas commented to the DOJ at Mr. Sigelman’s sentencing, “You had PetroTiger through the investigation done by Sidley & Austin, basically dumped – dumped the case in your lap.”

It’s another thing entirely for the DOJ to actually prove up its case against an adversary.

The DOJ’s track record in FCPA cases when held to its burden of proof is poor.  Conversely, the defense’s track record is excellent.

The lesson to be drawn from Sigelman, despite the DOJ’s silly press release, is the reminder that trial is the great equalizer.

In Sentencing Sigelman, Judge Irenas Blasts The DOJ

Judge Irenas

Foreign Corrupt Practices Act sentencing transcripts often make for interesting reads.

After all, sentencing is a judicial function and the transcripts provide a rare glimpse of someone other than the enforcement agencies weighing in on issues relevant to FCPA enforcement.

In sentencing Joseph Sigelman to probation after the DOJ effectively pulled its case early in the trial after its star witness admitted to making false statements on the stand (see here and here for prior posts), Judge Irenas dished up a few zingers.

See here for the sentencing transcript.

For starters, Judge Irenas chided the DOJ for acting inconsistent with the plea agreement it negotiated a day before sentencing in which the DOJ stated that the parties agreed that Sigelman’s sentence should be “a range from a non-custodial term of probation up to 12 months and one day of incarceration.”  Judge Irenas wondered why then the DOJ’s sentencing brief asserted that anything less than a year sentence would be unreasonable.  At one point, Judge Irenas stated “I feel like I am being played.” At pg. 25 of the transcript, Judge Irenas says “probation is appropriate. By def—you agreed to that. You can’t back off that. And your brief really does back off that.”

Of further note, at pgs. 22-23 of the transcript as highlighted below, Judge Irenas  blasted oft-stated DOJ rhetoric about the purported difficulty of prosecuting FCPA cases.  (Note: Mr. Stokes is DOJ FCPA Unit Chief Patrick Stokes and Duran is David Duran the alleged Colombian “foreign official” allegedly bribed).

MR. STOKES: In a complex white-collar case, certainly in a FCPA case, where there are numerous difficulties to obtaining evidence overseas, there are often opinions—we are often—the government is in a position of obtaining evidence from overseas, from years past, obtaining witnesses from overseas, and because of the complex and difficult nature of building these cases, we think that—

THE COURT: Well, I mean, that’s a general statement. The fact of the matter is, Duran was over in this country, in fact, wanted to stay here, if he could have arranged it. And he was, in a sense, in your control. I mean, he was

cooperating with you. Wasn’t cooperating with the defense.

MR. STOKES: Your Honor—

THE COURT: So I don’t know what difficulty you’re exactly talking about. You had PetroTiger through the investigation done by Sidley & Austin, basically dumped—dumped the case in your lap.

MR. STOKES: So—

THE COURT: You know, I mean, so you could talk generally how difficult this is. There may have been certain legal issues, but—what was difficult? What was the particular difficulty here? You had—

MR. STOKES: Sure.

THE COURT: —two co-conspirators pled guilty early on cooperating, alleged co-conspirators. You had Duran, here right in the country talking to you. It was not as if, you know, he was hiding somewhere in the jungle of Colombia to avoid—he actually wanted to be here. And then you had Sidley & Austin, turned over thousands and thousands of—I think it was 4,000 pages. I can’t remember the number, but it was some very large number of documents, and had done—you know, and Sidley does this kind of work in other context. I mean, they know what they’re doing, and they—you know, and they did all this investigation.

You know, you tell me as a general matter, it’s hard to prove Foreign Corrupt Practices Act. I guess as a generic form of—

MR. STOKES: Absolutely, Your Honor.

THE COURT: —that’s difficult. But in this case, what was the difficulty?

MR. STOKES: And, Your Honor, there’s ample Third Circuit case law, Supreme Court case law, and otherwise on the point of general deterrence. And the point I’m making is simply a general point, that the white — complex white-collar financial crimes are difficult to prove, FCPA cases are difficult to prove, and so, therefore, we believe that a sentence of incarceration is — sends an important message in —

THE COURT: Well, I guess they haven’t been in my court because I tried several. I tried a nine and-a-half-month criminal white-collar case, in which I gave the longest tax fraud sentence ever given, twice what Al Capone got, for someone who was engaged in a tax fraud trial. I’ve done three or four —

MR. STOKES: And we certainly support that.

THE COURT: I’ve done three or four big white-collar cases, all resulted in convictions and all resulted in substantial sentences.

MR. STOKES: Absolutely.

THE COURT: I don’t know what you’re talking about.

MR. STOKES: So, Your Honor, the point we’re making is again —

THE COURT: You chose not to complete the trial, not me.

MR. STOKES: Of course. Of course, Your Honor. And the point we’re making is that Mr. Sigelman has admitted the crime —

THE COURT: In some form, you’re going to have to explain why, but maybe not here.

DOJ Prosecution Of Sigelman Ends With No Jail Time

Sigelman

As highlighted in this previous post, the DOJ’s prosecution of Joseph Sigelman came to an abrupt halt early in the trial after the DOJ’s star witness admitted to giving false testimony on the stand.

As further evidence of the DOJ’s failures, earlier today federal court judge Joseph Irenas (D.N.J.) refused to sentence Sigelman to any jail time after Sigelman agreed to a plea agreement involving substantially reduced charges.

Sigelman’s defense team (Sigelman was represented by Quinn Emanuel Urquhardt & Sullivan LLP, William Burck led the defense team with his partners, William Price and Juan Morillo) issued a release which states in full as follows.

“Today Judge Joseph Irenas, Federal District Court Judge for the District of New Jersey, gave Joseph Sigelman probation and no jail time.  This followed on the heels of DOJ’s sudden decision to drop five and a half of six charges against Mr. Sigelman including the most serious charges.  The Government’s decision appears driven in large part by an admission last Thursday by the Government’s star witness, Gregory Weisman, that he made false statements to the jury during his testimony.  It also follows the admission by the only other witness presented thus far, an FBI Agent assigned to the investigation, that the Colombian citizen at the center of the prosecution’s case was allowed to leave the United States to his native Colombia without facing arrest or any charges from the Government.  Indeed, he was permitted to go to Disney World while Mr. Sigelman faced indictment.

Mr. Sigelman’s plea speaks for itself. He recognizes that he failed as a manager to provide stringent oversight of some of his colleagues and employees at PetroTiger. He takes full responsibility for his perosnal failures, including to ensure that all employees at PetroTiger always acted with the highest integrity. Mr. Sigelman has expressed deep regret for not instituting more quickly and forcefully a compliance regime.  Such a regime would have prevented any payments that were not appropriate in the then-two-year old PetroTiger, a company he co-founded that grew organically and through rapid acquisitions of existing companies.

In sentencing Mr. Sigelman, Judge Irenas chastised the Government for asserting that a one-year prison term was the only correct sentence.  He rejected the Government’s position as contrary to the plea agreement negotiated between the Government and Mr. Sigelman’s lawyers — and most importantly contrary to the interests of justice.  Judge Irenas further noted that Mr. Sigelman has employed thousands of people and will continue to do a great deal of good in society, and that Mr. Sigelman is less likely to commit an offense in the future than any other defendant he has seen in his more than two decades on the bench.  Mr. Sigelman is now free to continue his career as an entrepreneur.

Mr. Burck said: “Joe has been through hell.  He accepts full responsibility for his role in all of this.  But the government made the right call in agreeing to a very generous plea deal.  It gives certainty to Joe and his family, and saves the Government from a potentially embarrassing loss at trial.  We thank Judge Irenas for the extraordinary thought and care he brought to every aspect of this case, and ultimately his mercy in sentencing Joe to no jail time, which is the most just result.”

Mr. Price added:  “We are delighted with the result of this deal and believe that all parties can now move on with their respective endeavors.  Mr. Sigelman’s case highlights the unique challenges that building a start-up company in a foreign land can pose even above the normal chaos of a fast-growing company.  We are deeply grateful to Judge Irenas and the devoted members of the jury who dedicated their time, energy and attention to this case.”

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