Back to the Bolivian tear gas contract, more misinformation from the FCPA Blog, and surprising.
It’s all here in the Friday roundup.
Back to the Bolivian Tear Gas Contract
This May 2021 post highlighted a DOJ enforcement action against Bryan Berkman, Luis Berkman, Philip Lichtenfeld and Sergio Mendez for their roles in a Bolivian bribery scheme to secure a tear gas contract. Bryan Berkman, a U.S. citizen, was described as owning a Florida company (“Intermediary Company”) that sold tactical equipment including to the Bolivian Ministry of Defense. Sergio Mendez, a citizen of Bolivia, served as an official in the Bolivian Ministry of Government. Luis Berkman, also a U.S. citizen and Bryan’s father, was described as a “close associate” of Mendez as well as an “associate” of co-conspirator 1 (described as a high ranking official in the Bolivian Ministry of Government). Lichtenfeld, a U.S. citizen, is described as an associate of the Berkmans and Mendez.
Yesterday, the DOJ returned to the Bolivian tear gas contract and announced that Arturo Carlos Murillo Prijic (a former Bolivian government minister) pleaded guilty today to conspiracy to launder bribes he received in exchange for corruptly helping a U.S. company win a $5.6 million contract from the Bolivian government. According to the release:
“[Murillo] received at least $532,000 in bribe payments from a Florida-based company in exchange for helping that company secure an approximately $5.6 million contract to provide tear gas and other non-lethal equipment to the Bolivian Ministry of Defense. Murillo and his co-conspirators laundered the proceeds of the bribery scheme through the U.S. financial system, including bank accounts in Miami, Florida, where Murillo received approximately $130,000 in cash bribe payments.”
As to the prior defendants, the release notes: “On June 9, 2022, Mendez was sentenced to 42 months in prison, Luis Berkman was sentenced to 38 months, Bryan Berkman was sentenced to 28 months, and Lichtenfeld was sentenced to 26 months.”
More FCPA Misinformation From the FCPA Blog
For the second day in a row, the FCPA Blog spread FCPA misinformation (see here for the prior post).
In yesterday’s post, the FCPA Blog asserts:
“An FCPA anti-bribery offense requires five essential elements: (1) Corruptly (2) paying or promising to pay (3) anything of value (4) to a foreign official (5) for the purpose of obtaining or retaining business or securing any improper advantage.”
It is obvious – upon reading the FCPA statute – that “securing any improper advantage” is not an independent way to establish an FCPA anti-bribery (assuming all of the other elements have been met). The “obtain or retain business” element must still be satisfied.
This precise issue (whether “securing any improper advantage” is an independent way to establish an FCPA anti-bribery violation) was specifically litigated in the Kay case and both the trial court and the appellate court (while siding with the DOJ on other issues) rejected this position.
In the words of the trial court:
“The OECD Convention had asked Congress to criminalize payments made to foreign officials ‘‘ ‘in order to obtain or retain business or other improper advantage in the conduct of international business.’’ . . . Congress again declined to amend the ‘‘obtain or retain business’’ language in the FCPA . . . . Congress did not insert the ‘‘improper advantage’’ language into the ‘‘obtain or retain business’’ provision of the FCPA.”
In the words of the appellate court:
“When Congress amended the language of the FCPA, however, rather than inserting ‘any improper advantage’ immediately following ‘obtaining or retaining business’ within the business nexus requirement (as does the Convention), it chose to add the ‘improper advantage’ provision to the original list of abuses of discretion in consideration for bribes that the statute proscribes.’’
Once again, the FCPA Blog is flat out wrong regarding a basic issue of FCPA statutory interpretation and FCPA jurisprudence.
FCPA Blog: Please stop spreading FCPA misinformation!
More broadly, the FCPA Blog post (which focuses on the “foreign official” element) suggests that “foreign official” arguments have not succeeded at trial.
This assertion ignores that in the U.S. v Carson case, the “foreign official” challenged moved to the jury instructions and the judge gave a pro-defendant “knowledge of the status of foreign official” jury instruction (see here for the prior post and details). On the brink of the DOJ being put to its ultimate burden of proof on “foreign official” and other elements as well, the DOJ offered plea agreements to substantially reduced charges and the defendants, likely mindful of the high costs of testing their innocence, did what many rationale, risk averse actors in their position would do – agreed to plead guilty.
The FCPA Blog’s assertion also ignores U.S. O’Shea in which the judge granted a motion for acquittal after the DOJ’s case in chief. As discussed in this prior post, during the hearing on O’Shea’s motion for acquittal, it was clear that the judge was troubled by the DOJ’s “foreign official” position and its lack of preparation as to the unique attributes of the alleged SOE relevant in that case. During the hearing, the judge stated that the DOJ “is supposed to know before it brings the indictment that it can prove that it is a governmental entity … in fact you should have to convince the grand jury of it.”
The FCPA Blog’s assertion also ignores a judicial decision in which the court – in a civil dispute – found the term “instrumentality” in the FCPA “unclear” and narrowly construed the “foreign official” element (See here for the prior post).
The FCPA Blog then asserts: ‘various courts have found instrumentalities in aerospace and defense manufacturing, banking and finance, healthcare and life sciences, energy and extractive industries, telecommunications, and transportation” but does not provide a citation. Please, FCPA Blog, amend your post to provide the citation.
The FCPA Blog then asserts that “in 1988, Congress amended the FCPA to expand the definition of “foreign official” to include employees and representatives of public international organizations.” That actually happened in 1998, not 1988, but perhaps this was merely a scrivener’s error.
Surprising
As highlighted in this prior post, New Age Beverage has been under FCPA scrutiny for a few years and as discussed in this prior post earlier this Fall New Age filed for bankruptcy citing (among other things) its FCPA scrutiny.
Yesterday, the SEC released an enforcement action against New Age, but surprisingly it did not involve the FCPA. Instead this administrative order finds:
“From approximately July 2017 through April 2019 (the “relevant period”), NewAge, Inc. (“NewAge” or the “Company”), through its former Chief Executive Officer (“CEO”) and Director Brent D. Willis, made numerous false and misleading public statements concerning NewAge’s business operations and activities. These false and misleading public statements concerned a wide range of matters, including NewAge’s alleged development of a portfolio of CBD-infused beverages and its purported product distribution deals with the U.S. military and a number of large domestic and international distributors and retailers. Willis orchestrated this multiyear fraud and disseminated the false and misleading public statements to create the illusion that NewAge was a pioneer and first mover in the potentially lucrative CBD beverage market and that its overall beverage portfolio was gaining traction with major retailers and distributors around the world. These false and misleading public statements were made knowingly and/or recklessly over a two-year period to artificially inflate NewAge’s stock price, improve its financial position, and financially benefit Willis.”
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