Wednesday, May 11, 2011

Guilty Verdicts in Lindsey Case

This past October, I asked (here) what will happen to Lindsey Manufacturing Company?

The company (a privately held manufacturer of electrical transmission towers and related products that employs approximately 100 individuals) was indicted along with its President, Keith Lindsey, and its Chief Financial Officer, Steven Lee. [Others outside the company were charged as well in connection with the case].

The case represented a rare instance of a criminal indictment of a company in the FCPA context.

Yesterday, after a five week trial in federal court in the C.D. of California, a jury returned guilty verdicts.

As noted in this DOJ release, Lindsey Manufacturing, Lindsey and Lee were convicted of one count of conspiracy to violate the FCPA and five counts of FCPA violations. The conduct at issue focused on commission payments made by Lindsey Manufacturing to Enrique and Angela Aguilar (directors of Grupo Internacional de Asesores S.A.) that "would be used to pay bribes to Mexican officials in exchange for [ComisiĆ³n Federal de Electricidad (CFE), a state-owned utility company] awarding contracts to Lindsey Manufacturing." As noted in the DOJ release, Angela Aguilar was convicted of one count of money laundering conspiracy and the court entered a judgment of acquittal prior to the jury’s verdict on one substantive count of money laundering against her. Enrique Aguilar is currently a fugitive.

Sentencing for Lindsey Manufacturing, Lindsey and Lee is scheduled for Sept. 16, 2011. Angela Aguilar’s sentencing is scheduled for Aug. 12, 2011.

Reacting to the guilty verdicts, Assistant Attorney General Lanny Breuer stated as follows. "“Today’s guilty verdicts are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts. Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last. Foreign corruption undermines the rule of law, stifling competition and the health of international markets and American businesses. As this prosecution shows, we are fiercely committed to bringing to justice all the players in these bribery schemes – the executives who conceive of the criminal plans, the people they use to pay the bribes, and the companies that knowingly allow these schemes to flourish. Bribery has real consequences.”

The Lindsey case attracted much interest as it was one of the "foreign official" challenges. See here for the full briefing and here for the written decision.

Prior to the jury verdicts, on Monday, Jan Handzlik (here - attorney for defendants Lindsey Manufacturing and Keith Lindsey) and Janet Levin (here - attorney for defendant Steve Lee) filed a motion to "Dismiss the Indictment with Prejudice due to Repeated and Intentional Government Misconduct." Handzlik is quoted in this story by Samuel Rubenfeld at the Wall Street Journal as saying "we continue to believe in our clients' innocence and will pursue our motion to dismiss the indictment on grounds of prosecutorial misconduct." A hearing on that motion is set for June 6. Aguilar's attorney, Stephen Larson (here) reportedly intends to seek a motion of acquittal as to the one charge his client was found guilty of.

Another case concerning alleged payments to CFE is pending in the Southern District of Texas against John Joseph O'Shea. See here for more.

So the question remains - what will happen to Lindsey Manufacturing?

As a small privately held company, Lindsey Manufacturing was able to aggressively mount a legal defense that publicly traded companies are unwilling, or some would say are logistically unable, to mount. Whether one agrees with certain of the judge's pre-trial rulings or not, or whether one finds arguments about prosecutorial misconduct persuasive or not, the fact is, the Lindsey case, unlike the majority of FCPA enforcement actions, was subject to an adversary proceeding in which someone other than the enforcement agencies weighed in on the issues - and that is a good thing!


  1. As someone who sat in on over half of the trial, all I can say is SHAME ON THE JURY. The jury was anxious to get out of that courtroom and get back to their lives. Anyone sitting through the court and listening to the evidence would agree that the government did not present enough evidence beyond a reasonable doubt.
    On one website a jury stated that the jury was 50/50 prior to closing arguments. In the prosecutions closing arguments, they emphasized that arguments made by lawyers through the trial are not considered evidence - Obviously the jury did not take this mandate (even instructed in the jury instructions). Closing arguments are not evidence, just conjecture.
    Why would two individuals and a company not settle out of court and set a precedent fighting the government long and hard for many months with stacking legal fees? Only if they were fighting for their innocence...

  2. I'm sorry Anonymous above, but fighting the government long and hard and spending big on legal fees is not a legal defense and does not prove innocence.

  3. it is true that mounting a vigorous defense is not proof of innocence, but in this particular case.. the defendants are innocent,and the jury did demonstrate a terrifying negligence. How the DOJ can spend valuable resources trying to justify their usefulness by ruining the lives of demonstrably innocent people is completely beyond me.

  4. With all due respect to the original poster, and with apologies for a response long after the fact, I feel that as a member of the jury, I should comment here.
    For one thing, you said yourself that you 'sat in for over half of the trial' - which, if my limited math skills are correct, means that you weren't present for up to 49% of the evidence presented. Well, I was there for the whole trial (it's one of the prime requsites for being on a jury, apparently) and I believed the verdict to be just that day, and I believe it to be just now.
    I don't know what this 'other website' that claimed the jury was split 50/50 is, but as someone who was in the jury room, I'm pretty certain they didn't get their information from anyone who was there. However, even if they did, what would that prove? Deliberation is a time for reflection on the evidence and the point at which the jury can finally discuss their thoughts with their peers. It's perfectly acceptable to change your opinion during deliberation. Your claim that the jury was tired and just wanted to go home is pretty insulting. Everyone in that room took their responsibility extremely seriously. The relatively quick verdict was a result of the overwhelming evidence against the defendants, not caused by l'ennui and a burning desire to get home before lunchtime.
    Considering you sat in the courtroom for 'more than half of the trial', one can safely assume you had some kind of vested interest in the outcome. The same cannot be said of any single member of the jury - that's another prime requisite - so I'd suggest that your opinion is far less reliable than that of the jury who, by their very nature, must be objective.

  5. to the juror; obviously a reasoned judge took you and your colleagues' assessment and tossed it as trash out the door. my guess is as with other white collar prosecutions the jury contained very few college educated people, none with executive management experience, and assumed guilt rather than innocent. Individuals in our government under the direction of Breuer are committing crimes in order to falsely accuse and convict members of our society and a trusting but ignorant jury system is putty in their hands.