Today’s post is from Paul Calli and Chas Short of Calli Law LLC.
As readers of FCPA Professor well know ( see here, here 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.