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DOJ Charges Former Stericycle Executive

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In mid-2022, Stericycle (an Illinois based medical waste disposal company) resolved a net $59 million parallel DOJ and SEC Foreign Corrupt Practices Act enforcement action (see here and here for prior posts).

In the words of the DOJ: “From in or about and between at least 2011 and 2016, Stericycle, through certain of its employees and agents, knowingly and willfully conspired and agreed with others to corruptly offer and pay approximately $10.5 million in bribes to, and for the benefit of, foreign officials in Brazil, Mexico, and Argentina in order to obtain and retain business and other advantages for and on behalf of Stericycle. Stericycle earned approximately $21.5 million in profits from the corrupt scheme and through its corruptly obtained and retained government contracts.”

Last week, the DOJ filed criminal charges against Mauricio Gomez Baez based on the same core conduct. As alleged in the information, Gomez Baez (a Mexican citizen and resident of Miami) worked for Stericycle as the Senior Vice President of Stericycle’s Latin American (LATAM) division whose business responsibilities included oversight and management of Stericycle LATAM and certain of Stericycle subsidiaries, including acquisitions, operations, finance, and sales.

The information charges conspiracy to violate the FCPA’s anti-bribery provisions and alleges that Gomez Baez, LATAM Executive 1 (described as a Mexican citizen based in Mexico and was an executive of Stericycle LATAM who reported to Gomez Baez) and their co-conspirators bribed “Mexican, Brazilian, and Argentinian officials to obtain and retain contracts and other business advantages on behalf of and for the benefit of Stericycle.”

According to the information:

“From in or around at least 2011 and continuing through 2016, Gomez Baez, and other Stericycle employees and agents, including LATAM Executive 1, knowingly and willfully conspired to use, and did use, the mails and means and instrumentalities of interstate commerce to corruptly offer, promise to pay, authorize the payment of, and pay, approximately $10.5 million in bribes to Mexican, Brazilian, and Argentinian government officials, in order to  influence those officials in their official capacities and to secure an improper advantage to assist Gomez Baez, Stericycle, and others, in obtaining government contracts for medical waste collection.

Gomez Baez and other Stericycle employees and agents expanded Stericycle LATAM through acquisitions and implemented and maintained similar methods of bribe payments in Mexico, Brazil, and Argentina. Gomez Baez and his co-conspirators made and caused to be made hundreds of bribe payments to foreign government officials employed by government agencies and instrumentalities in Mexico, Brazil, and Argentina to obtain and retain business advantages and to direct business to Stericycle.

Gomez Baez knowingly approved and directed a scheme by which employees at Stericycle Mexico, Stericycle Brazil, and Stericycle Argentina including LATAM Executive 1, made bribe payments, typically in cash, and calculated the amount of the bribes as a percentage of underlying contract payments made by or owing from a government customer. In each of the three jurisdictions, Gomez Baez and his co-conspirators tracked the bribe payments on spreadsheets using code words such as “IP.”

Approximately 70% of the medical waste collection contracts were with regional government customers. Serving government customers in the various regions throughout Latin America required significant investment from Stericycle and without these customers, Stericycle would not have the necessary volume to support service in each region. The government contracts typically lasted for a one-year period and were re-bid annually. With Gomez Baez’s authorization and at Gomez Baez’s direction, Stericycle LATAM employees, including LATAM Executive 1, paid bribes to the regional government officials responsible for approving the contracts to ensure Stericycle would obtain and retain the medical waste collection contracts each year.

Gomez Baez and other Stericycle executives, employees, and agents utilized the means and instrumentalities of interstate commerce, including the use of wires in the Southern District of Florida. In addition, Mexico, Brazil, and Argentina country managers traveled regularly to Miami for business meetings in furtherance of the conspiracy.”

The information further alleges:

“On or about March 31, 2016, Gomez Baez signed a certification attesting that there were no material or potential material events necessary to be disclosed in order to make Stericycle’s financial reports with the U.S. Securities and Exchange Commission not misleading.

On or about March 31, 2016, LATAM Executive 1, in his then role as Financial Controller for Stericycle Mexico, signed a Stericycle Business Unit Representation letter that stated, in sum and substance, that LATAM Executive 1 had “no knowledge of actual or suspected fraud, bribery, or corrupt payments affecting the Business Unit” the previous quarter. The spreadsheets created by LATAM Executive 1 that detailed payments made to public officials in January 2016 were made prior to this representation and, as such, Gomez Baez and LATAM Executive 1 knew their attestations to be false statements.”

 

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