Wednesday, January 27, 2010

Africa Sting - Press Release Parade

As indicated in a prior post (here), the Africa Sting charges, at this point, only involve individuals.

However, these individuals are employees, executives, and in some cases owners of business organizations and under respondeat superior principles the organization can be accountable for the illegal acts of its employees and agents.
This is not to suggest that prosecution of the organizations employing the indicted individuals is likely or even probable; rather the ultimate issue will be one of prosecutorial discretion applying the Principles of Federal Prosecution of Business Organizations (see here).

With that in mind, it is interesting to see the different ways in which the various business organizations are "publicly speaking" on this issue. Many of the business organizations involved are small and the websites do not have a separate news or press release tab or otherwise address the issue.

In the public statements available, you will see that the organizational responses fall across a wide spectrum from solemn yet forceful, to combative and rambling, to short and diplomatic.

ALS Technologies Inc.

Employer of Daniel Alvirez and Lee Allen Tolleson.

Yesterday, the company released this statement (here).

"A Message from Founder, Owner, and Chairman of the Board, David Alvirez"

I would first like to say thank you to all those who know Linda and me for your continuing support.

As everyone in our community knows, A.L.S. has been a good corporate citizen and a strong contributor to the community and the economic well being of Arkansas citizens. A.L.S. has always – and will continue – to operate and support the fine people of this community. It was my intention to share the facts of the case but I have been instructed that I cannot because they are facts in an on going investigation but when the facts are revealable we will prevail.

The federal government has alleged that a manager at our company engaged in illegal activity. These charges will be dealt with in a court of law.

For years A.L.S. has sold its products to many foreign governments and businesses and has conducted these transactions in compliance with all federal, state and local laws. Each international transaction requires State Department or Department of Commerce approval and without exception, every transaction conducted by A.L.S has had proper authorization to move forward.

The management of A.L.S Technologies had no information that there was anything questionable about any of their transactions with the foreign governments. A.L.S. is a law-abiding family business, and having faith in our judicial system will see our people back in good standing soon.

We appreciate your continued support, encouragement, and prayers as we navigate through this situation."

Heavy Metal Armory / / The Gun LLC

Entities associated with Andrew Bigelow.

Last weekend, the entities released this statement (here).

"Statement on FBI Sting Operation

Heavy Metal Armory has operated legally and within the confines of the law for many many years. Look around this site for yourself. Here you'll find information everywhere on the correct and legal manner in which we and this industry should operate within the law. We have always taken great pride in doing things correctly and is the only way we believe defense exports should be accomplished, within the law.

While we cannot comment on the details of the case, we can say the following:

The recent FBI / DOJ undercover sting operation which entrapped many executives from many different countries is a clear-cut case of overzealous law enforcement looking to grandstand by targeting law abiding citizens who have no history whatsoever of this sort of alleged activity and in many cases actually fought to improve accountability in the industry to the benefit of law enforcement.

The person who caused this entire mess is Richard Bistrong who is a former Armor Holdings vice president. Mr Bistrong was caught providing more than $4.4 million in bribes to foreign officials including officials of the UN in an ongoing pattern for many many years. His subsequent firing by Armor Holdings and law enforcement contact was never reported. During due diligence process before meeting with Mr. Bistrong, there was no record of his known criminal activities on any of the debarred persons lists nor through background checks which would have alerted industry to a potential issue with this individual such as on the 7 debarred persons/entities lists here on our site. Had law enforcement acted on criminal prosecution of this individual as they should have, this information would have caused his listing on one of the aforementioned alert lists and we are doubtful anyone indicted would have even spoken to Mr. Bistrong for any reason. Mr. Bistrong, then a known criminal and con-man was engaged by law enforcement to spend the next years, yes YEARS, setting up anyone he could come into contact with in the industry.

We thank everyone who has shown support during these difficult times and trust that everyone will listen closely to what is said in court and not believe the media hype. There is so much more to this than most can possibly imagine."

Protective Products of America, Inc.

Employers of R. Patrick Caldwell and Stephen Gerard Giordanella.

Last week, the company released this statement (here) (relevant portions only).

"Protective Products of America, Inc., a leading manufacturer and
distributor of advanced products in ballistics protection, announced today an internal investigation into certain allegations against its Chief Executive Officer, R. Patrick Caldwell, being brought by the U.S. government. Mr. Caldwell was one of 22executives and employees of different companies in the military and law enforcement products industry charged in a criminal indictment with violating the Foreign Corrupt Practices Act. The Company noted that no charges have been filed against PPA, and Mr. Caldwell is the only present employee of PPA to be implicated in the investigation. An internal investigation regarding the allegations has been commenced by the Company's Audit Committee, which is comprised solely of independent directors.

Pending the outcome of its internal investigation, Mr. Caldwell will be on administrative leave from his position as Chief Executive Officer and as a member of the Board of Directors."

Smith and Wesson Holding Corporation

Employer of Amaro Goncalves.

On the day the indictments were announced, the company, a public-company issuer, released this statement (here).

"Smith & Wesson(R) Holding Corporation, parent company of Smith & Wesson Corp., today made the following statement in response to Justice Department enforcement actions that were announced today regarding one of its employees.

Through media reports today, we became aware of the Justice Department enforcement actions which were taken yesterday and which made reference to an employee of our company. We have no information beyond what has been reported and are prepared to cooperate fully with law enforcement in their investigation into this matter."


The organizations employing the indicted individuals are not the only ones with a float in this press release parade.

Yesterday, the FBI released a statement (here) equating the undercover operation to a "ruse [that] played out with all the intrigue of a spy novel."


  1. Do you think anyone will take this to court and get a formal legal decision on the boundaries of FCPA?

  2. Your guess is as good as mine. The vast, vast majority of criminal cases are never tried or result in a judicial decision, same is true in the FCPA context. Even so, last summer there were three FCPA or FCPA related trials. (Bourke, Jefferson, and the Greens). Given the entrapment issue as well as substantive FCPA issues raised by this case, I think we will see various motions to dismiss the indictment which likely will lead to some decisions (whether on the FCPA's elements or more generally) by Judge Leon.

  3. Except for Smith & Wesson, that obviously has a big corp spokesperson, the other entities do not seem to have a lot of sophistication or understanding of the FCPA. The sting shows that the enforcement authorities are not limiting their efforts to large or medium entities. Small companies should take warning and take appropriate compliance action.

    It will be interesting to see how this develops.

  4. According to media reports, it developed into a hung jury with no convictions whatsoever after a six week trial.

    So I guess it may tbe the Department of Justice that does not have a lot of sophistication or understanding of the FCPA, eh?