Monday, March 7, 2011

Salvoch Enforcement Action Flies Under The Radar

It is not every day that a former chief financial officer is criminally charged with conspiracy to violate the FCPA.

On December 17, 2010 a criminal information (here) was filed under seal against Manuel Salvoch, the former CFO of LatiNode. On January 11, 2011 Salvoch was arrested, the case unsealed, and a plea agreement (here) was executed on January 12, 2011.

This is likely the first you have heard of the Salvoch enforcement action. The DOJ did not issue a press release and, to my knowledge, this enforcement action has never been reported.

Salvoch was charged in connection with payments to Hondutel (see here), according to the charging documents a state-owned telecommunications company in Honduras responsible for providing telecommunications services in Honduras. The Hondutel payments have also resulted in criminal charges against Jorge Granados (the founder and former CEO and Chairman of the Board of LatiNode) and Manuel Caceres (a former Vice President of Business Development) (see here).

The theory of prosecution in these cases is the same theory of prosecution being challenged in the Carson and Lindsey cases (see here and here) - that employees of alleged state-owned or state-controlled enterprises are "foreign officials" under the FCPA.

This theory of prosecution was also the support for the March 2009 enforcement action against LatiNode (see here) a former privately held Florida telecommunications company that agreed to a pay a $2 million criminal penalty for violating the FCPA in connection with alleged Hondutel payments as well as payments to officials of Tele Yemen, the Yemeni government-owned telecommunications company. LatiNode was acquired by eLandia International Inc. (an issuer) in June 2007.

The conduct at issue in the Salvoch criminal information and plea agreement is similar to the conduct at issue in the Granados and Caceres indictment (see here for the prior post).

The Granados and Caceres case remains open (their trial is set for September 26, 2011) and in his plea agreement Salvoch agreed to "cooperate fully" with the DOJ including by "providing truthful and complete information and testimony" at any trial, or other Court proceeding. According to the docket, Salvoch is to be sentenced on March 23rd, but it is likely that his sentencing will be delayed until after the Granados and Caceres trial.

Thanks to Gregory Bates (here - Squire Sanders) who stumbled upon this case while wandering around on the DOJ's FCPA website. Bates is a contributor to Squire Sanders' Anticorruption blog (see here).

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