As noted in this DOJ release, last week several defendants in the Nexus Technologies enforcement action (see here for prior posts) were sentenced. Because many media sources merely regurgitate DOJ releases in such instances, this post may be the first you'll learn that the sentencing judge in the Nexus matter significantly rejected the DOJ's sentencing recommendations.
For instance, and as described more fully below, the DOJ sought a 14-17 year sentence for lead defendant Nam Nguyen, but the judge sentenced him to 16 months (plus 2 years of supervised release).
Further, the DOJ sought multi-year sentences for two defendants, but the judge sentenced them to probation.
The DOJ's sentencing memoranda (see here for the 79 pages of collective material) provide an interesting read and clearly demonstrate the growing divide between how the DOJ views FCPA defendants and how judges view such defendants at sentencing. For instance, Judge Shira Scheindin stated at Frederic Bourke's sentencing (see here) “after years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”
The DOJ stated in Nam Nguyen's sentencing memo that its recommendation (168-210 months) should be accepted "to promote general deterrence" and that conduct such as Nguyen's "will hardly be deterred by sending the message that the consequences of such conduct is at worst several months of imprisonment."
Yet, the judge still sentenced Nam Nguyen to 16 months (plus 2 years of supervised release).
Also of note is that the DOJ criticized Nam Nguyen for "subjectively" looking at the "history of FCPA sentencing, focusing on the statistical outlier of the case U.S. v. Green ... but ignoring the more common cases of significant prison time" such as "Charles Jumet, who paid less than 1/3 of what Nguyen paid in bribes, but received 87 months' imprisonment."
Let me assert that it is the DOJ who is "subjectively" looking at the "history of FCPA sentencing" and that Jumet is the "statistical outlier" - not sentences such as of the Greens.
Indeed, it is very common for FCPA defendants to be sentenced to prison terms measured in days and months, not years.
Consider the following recent sentences:
Greens - 6 months (August 2010)
Frederic Bourke - 366 days (November 2009)
Jim Bob Brown - 366 days (January 2010)
Jason Edward Steph - 15 months (January 2010)
The below post provides an overview of the Nexus sentences as well as the DOJ's sentencing memos.
Nam Nguyen
Sentence: 16 months, 2 years of supervised release
DOJ Recommendation: 168-210 months
In its sentencing memorandum, the DOJ stated that Nguyen "paid bribes to multiple Vietnamese government officials in exchange for contracts for his business" and that "Nguyen literally offered a bribe on every single contract bid over a period of more than nine years ...".
DOJ sought a four-level sentencing enhancement "because the offense involved a public official in a high-level decision-making or sensitive position." Specifically, the DOJ asserted that Nguyen paid bribes to "Nguyen Van Tan, who was the Managing Director of T&T Co. Ltd. ... the procurement arm of Vietnam's Ministry of Public Safety."
Other items of interest from the DOJ's sentencing memorandum.
In a footnote, the DOJ asserts that "the court has ruled in favor of the government" on the "foreign official" issue briefed in the case. However, as noted in this prior post, the DOJ specifically argued throughout its brief that a court decision as to this issue was premature. What actually happened is that the judge denied the defendants' motion to dismiss without comment or analysis. The DOJ stated in the same footnote that because Nguyen's counsel discussed the "foreign official" issue in his sentencing memorandum, that this "raises serious questions as to whether or not he has actually accepted responsibility for his crimes."
The DOJ memo contains "Exhibit A" - a chart detailing the "Sentences of Natural Persons Who Pleaded Guilty to FCPA Violations Since 2001."
The chart is misleading.
Nowhere in the chart does it indicate, nor in the brief referencing the chart is it noted, that the sentences are not just for FCPA violations, but, in many cases, sentences based on other violations of law as well.
For instance, in the longest sentence on the DOJ's chart - Charles Jumet (87 months) nowhere is it noted that the "FCPA" portion of the sentence was actually lower. Jumet pleaded guilty to two counts - conspiracy to violate the FCPA and making false statements to federal agents. The false statements portion of his sentence was 20 months. Thus, Jumet's "FCPA" sentence was 60 months - not 87 months as suggested by the DOJ's chart.
An Nguyen
Sentence: 9 months, 3 years of supervised release (notwithstanding that, per the DOJ's sentencing memorandum, Nguyen was on probation at the time of his offense)
DOJ Recommendation: 87-108 months
In its sentencing memorandum the DOJ stated that Nguyen "paid bribes to multiple Vietnamese government officials in exchange for contracts for his family's business." Elsewhere in the memo, the DOJ states that "Nguyen's bribery was particularly egregious." In connection with its decision not to seek a sentencing enhancement for an offense involving a public official in a high-level decision-making or sensitive position, the DOJ noted that "Nguyen was unaware of the nature, position, or role of the specific officials who received the bribe payments."
Kim Nguyen
Sentence: 2 years probation
DOJ Recommendation: 70-87 months (even after the DOJ's downward departure recommendation)
The DOJ requested a Section 5K1.1 downward departure. The DOJ noted that "even though Kim Nguyen did not begin providing information to the government until shortly before trial" this information nevertheless "appeared to play a role in her siblings' decisions to plead guilty." The DOJ noted that "Nguyen met with the government on approximately two occasions to explain the business practices and financial records of Nexus Technologies" and "explained various entries in the Nexus books which allowed the government accurately to calculate the total amount of bribes paid by the defendants ..."
In its sentencing memo, the DOJ stated that "Nguyen played a critical role in this conspiracy, as she was the person responsible for handling the finances and maintaining the books and records of Nexus." The DOJ stated that Nguyen "funneled the bribe payments to an off-shore company controlled by Nexus, which then forwarded the bribe payments to the Vietnamese officers, and it was Kim Nguyen who falsified the associated wire-transfer documents to cover their tracks." The DOJ further asserted that e-mail correspondence "makes it very clear that Kim Nguyen knew exactly what she was doing, and why." As with An Nguyen, the DOJ did not seek a sentencing enhancement for Kim Nguyen and noted that "Kim Nguyen was unaware of the nature, position, or role of the specific officials who received the bribe payments."
Joseph Lukas
Sentence: 2 years probation
DOJ Recommendation: 37-46 months (even after the DOJ's downward departure recommendation)
The DOJ requested a Section 5K1.1 downward departure. The DOJ noted that Lukas "met with the government on approximately seven separate occasions over the course of approximately 1.5 years and explained everything he knew about his co-defendants, their criminal conduct, their personal histories, and their business records." According to the DOJ, "Lukas also created spreadsheets of information for the government, voluntarily turned over his computer for government analysis, and spent hours upon hours poring through documents in order to explain the business practices of Nexus Technologies and the Nguyen siblings."
In its sentencing memorandum, the DOJ stated that "Lukas helped Nexus Technologies pay bribes to multiple Vietnamese government officials in exchange for contracts." According to the DOJ, "Lukas was responsible for vendor relations and negotiations in the United States (which included identifying vendors who could supply the requested goods at low enough prices to allow the bribe payments.)".
*****
As to the Greens' sentence, the DOJ noted in footnote 8 of Nam Nguyen's sentencing memo that the "DOJ is considering appealing the sentence in that case."
Showing posts with label Greens. Show all posts
Showing posts with label Greens. Show all posts
Monday, September 20, 2010
Friday, August 13, 2010
Six Months For The Greens ... Plus The Friday Roundup
In September 2009, Gerald and Patricia Green were found guilty by a federal jury of substantive FCPA violations, conspiracy to violate the FCPA, and other charges. According to the DOJ release (see here) the Los Angeles-area film executives were found guilty of engaging in "sophisticated bribery scheme that enabled the defendants to obtain a series of Thai government contracts, including valuable contracts to manage and operate Thailand’s yearly film festival."
As noted in the DOJ release:
"The conspiracy and FCPA charges each carry a maximum penalty of five years in prison, and each of the money laundering counts carries a maximum penalty of up to 20years in prison. The false subscription of a U.S. income tax return carries a maximum penalty of three years in prison and a fine of not more than $100,000."
Sentencing was originally set for December 17, 2009, was delayed several times, and, at one point, was removed from the calendar altogether (see here).
U.S. District Court Judge George Wu of the Central District of California reportedly wanted to learn more about other FCPA sentences as well as Mr. Green's health issues.
The DOJ requested a 10 year sentence for both Gerald and Patricia Green.
The DOJ stated that the "court must decline defendants' remarkable invitation to join the wholesale speculation of FCPA 'pundits' as to whether corporate settlements are 'shielding' to corporate executives from punishment."
In closing, the DOJ urged the court to "disregard defendants' efforts to obscure the landscape of FCPA sentencing, which generally reflects significant prison terms for convicted individuals."
According to this report, Judge Wu yesterday sentenced the Greens, before a packed courtroom, to six months in prison, followed by three years probation (six months of which must be served as home confinement).
According to the report, Judge Wu "also set a restitution figure of $250,000" but "if the Greens, who have had their accounts frozen and assets seized since being arrested in 2007, can prove that none of the $1.8 million they paid in bribes to Thai officials can be recovered, then they will only have to pay $3,000 in restitution."
Does the "landscape of FCPA sentencing" truly reflect "significant prison terms" as stated by the DOJ?
True, any prison term is significant for a defendant and his/her family and friends.
But with a top sentence of 60 months (Charles Jumet - see here), the 366 day sentence for Frederic Bourke in November 2009 (see here), the 15 month sentence for Jason Edward Steph and the 366 day sentence for Jim Bob Brown both in January 2010 (see here) and now the 6 month sentence for the Greens - is this yet another instance in which DOJ's FCPA rhetoric does not match reality?
*****
H-P news that does not involve its former CEO, what others are saying about the Giffen Gaffe, SciClone's stock drop, and Siemens $1 billion customer ... it's all here in the Friday roundup.
H-P Inquiry Escalates
According to a story in today's Wall Street Journal by David Crawford, the DOJ "has asked Hewlett-Packard Co. to provide a trove of internal records as part of an international investigation into allegations that H-P executives paid bribes in Russia, according to people familiar with the investigations."
According to the story, the DOJ request "came after German prosecutors complained H-P had refused to provide them with all of the records they requested" and after "H-P initially argued that the German request for bookkeeping records, some of which are five years old, imposed an 'undue hardship' on the company."
The article indicates that the DOJ "asked H-P to comply voluntarily with the request and hasn't subpoenaed the records" and that "H-P has yet to provide some records" but is "cooperating with the investigations." According to H-P, the investigation
"involves people that have largely left the company and matters that happened as much as seven years ago."
What Others Are Saying About Giffen
It's been one week since the Giffen Gaffe (see here).
Here is what others are saying about the enforcement action that began with charges that James Giffen made "more than $78 million in unlawful payments to two senior officials of the Republic of Kazakhstan in connection with six separate oil transactions", yet ended with a misdemeanor tax violation against Giffen and an FCPA anti-bribery charge against a functionally defunct entity (The Mercator Corporation -in which Giffen was the principal shareholder, board chairman, and chief executive officer) focused merely on two snowmobiles.
Scott Horton, writing at Harper's Magazine (see here) noted that "[t]he outcome is a huge embarrassment to federal prosecutors, who had invested a decade in resources in the effort to convict Giffen of FCPA and related violations."
Horton, who has been following the case for years, highlighted how the "case has been the focus of political manipulation concerns for years" and closed with this paragraph:
"Kazakhs have long claimed that their government’s strategy of resolving the Giffen case by using the right levers with the American administration–a process that led them to hire former attorneys general and high-profile retired prosecutors, private investigators, and public-relations experts–would be successful. The outcome in the Giffen case appears to ratify that view. The notion of an independent, politically insulated criminal-justice administration in America has just taken another severe hit."
Steve LeVine, author of The Oil and The Glory page at Foreign Policy, noted (here) that the Giffen resolution is "a considerable comedown for the federal government" and that Giffen's lawyer "understood correctly that he could set up a collision between the Justice Department and the CIA in which the latter would probably prevail."
The FCPA and Stock Price
What affect, if any, does an FCPA disclosure or resolution have on a company's stock price?
It's an issue I've explored before (see here) and best I can tell the evidence is inconclusive and the answer is - it depends.
In the case of a company that does business almost exclusively in China disclosing an FCPA inquiry focused on China, the answer is that disclosure of the FCPA inquiry matters - and quite a bit.
On Monday, SciClone Pharmaceuticals Inc., a Delaware company based in California, disclosed in a 10-Q filing (here) as follows:
"On August 5, 2010 SciClone was contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone. In connection with this investigation, the SEC issued a subpoena to SciClone requesting a variety of documents and other information. The subpoena requests documents relating to a range of matters including interactions with regulators and government-owned entities in China, activities relating to sales in China and documents relating to certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the DOJ indicating that the DOJ was investigating Foreign Corrupt Practices Act issues in the pharmaceutical industry generally, and had received information about the Company’s practices suggesting possible violations."
SciClone's business is focused primarily on China with 90+% of its revenue derived from China sales. Thus, it is not surprising that an FCPA inquiry focused on China had a material impact on the company's stock price.
As noted in this Reuters story, news of the FCPA inquiry sent SciClone's shares, at one point, down 41% to a 52 week low.
Siemens $1 Billion Customer
In December 2008, Siemens agreed to pay $800 million in combined U.S. fines and penalties to settle FCPA charges for a pattern of bribery the DOJ termed “unprecedented in scale and geographic scope.” According to the DOJ, for much of Siemens’ operations around the world, “bribery was nothing less than standard operating procedure.”
The Siemens enforcement action remains the largest FCPA settlement ever (even though Siemens itself was not charged with FCPA anti-bribery violations).
On the one year anniversary of the Siemens enforcement action, I ran a post - Siemens - The Year After (see here) which highlighted how the U.S. government continues to do substantial business with the company it charged with engaging in a pattern of bribery “unprecedented in scale and geographic scope.”
This U.S. government business has helped Siemens outperform its competitors in a difficult recessionary environment and much of the company’s recent success is the direct result of government stimulus programs around the world.
Using Recovery.gov (a U.S. government website designed “to allow taxpayers to see precisely what entities receive Recovery money ..”), I highlighted how several Siemens’ business units have been awarded several dozen contracts funded by U.S. taxpayer stimulus dollars.
It is against this backdrop that Paul Glader's recent piece in the Wall Street Journal "Siemens Seeks More U.S Orders" caught my eye.
According to the article, Siemens Corp. (the U.S. division of Siemens) currently brings in about $1 billion a year from the U.S. government, a figure the division hopes to double by 2015.
Eric Spiegel, chief executive of Siemens Corp., is quoted in the article as saying: "[o]ne of the beauties of the federal-government spending is it didn't drop off during the recession."
To that, I'll add that one of the unfortunate beauties of engaging in bribery the U.S. government terms “unprecedented in scale and geographic scope" is no slow down in U.S. government contracts in the immediate aftermath of the enforcement action.
It's one of the FCPA greatest headscratchers - FCPA violaters are and remain some of the U.S. government's biggest suppliers and contracting partners.
As I've noted in numerous prior posts, efforts are underway to try to change this. See here, here and here.
*****
A good weekend to all.
As noted in the DOJ release:
"The conspiracy and FCPA charges each carry a maximum penalty of five years in prison, and each of the money laundering counts carries a maximum penalty of up to 20years in prison. The false subscription of a U.S. income tax return carries a maximum penalty of three years in prison and a fine of not more than $100,000."
Sentencing was originally set for December 17, 2009, was delayed several times, and, at one point, was removed from the calendar altogether (see here).
U.S. District Court Judge George Wu of the Central District of California reportedly wanted to learn more about other FCPA sentences as well as Mr. Green's health issues.
The DOJ requested a 10 year sentence for both Gerald and Patricia Green.
The DOJ stated that the "court must decline defendants' remarkable invitation to join the wholesale speculation of FCPA 'pundits' as to whether corporate settlements are 'shielding' to corporate executives from punishment."
In closing, the DOJ urged the court to "disregard defendants' efforts to obscure the landscape of FCPA sentencing, which generally reflects significant prison terms for convicted individuals."
According to this report, Judge Wu yesterday sentenced the Greens, before a packed courtroom, to six months in prison, followed by three years probation (six months of which must be served as home confinement).
According to the report, Judge Wu "also set a restitution figure of $250,000" but "if the Greens, who have had their accounts frozen and assets seized since being arrested in 2007, can prove that none of the $1.8 million they paid in bribes to Thai officials can be recovered, then they will only have to pay $3,000 in restitution."
Does the "landscape of FCPA sentencing" truly reflect "significant prison terms" as stated by the DOJ?
True, any prison term is significant for a defendant and his/her family and friends.
But with a top sentence of 60 months (Charles Jumet - see here), the 366 day sentence for Frederic Bourke in November 2009 (see here), the 15 month sentence for Jason Edward Steph and the 366 day sentence for Jim Bob Brown both in January 2010 (see here) and now the 6 month sentence for the Greens - is this yet another instance in which DOJ's FCPA rhetoric does not match reality?
*****
H-P news that does not involve its former CEO, what others are saying about the Giffen Gaffe, SciClone's stock drop, and Siemens $1 billion customer ... it's all here in the Friday roundup.
H-P Inquiry Escalates
According to a story in today's Wall Street Journal by David Crawford, the DOJ "has asked Hewlett-Packard Co. to provide a trove of internal records as part of an international investigation into allegations that H-P executives paid bribes in Russia, according to people familiar with the investigations."
According to the story, the DOJ request "came after German prosecutors complained H-P had refused to provide them with all of the records they requested" and after "H-P initially argued that the German request for bookkeeping records, some of which are five years old, imposed an 'undue hardship' on the company."
The article indicates that the DOJ "asked H-P to comply voluntarily with the request and hasn't subpoenaed the records" and that "H-P has yet to provide some records" but is "cooperating with the investigations." According to H-P, the investigation
"involves people that have largely left the company and matters that happened as much as seven years ago."
What Others Are Saying About Giffen
It's been one week since the Giffen Gaffe (see here).
Here is what others are saying about the enforcement action that began with charges that James Giffen made "more than $78 million in unlawful payments to two senior officials of the Republic of Kazakhstan in connection with six separate oil transactions", yet ended with a misdemeanor tax violation against Giffen and an FCPA anti-bribery charge against a functionally defunct entity (The Mercator Corporation -in which Giffen was the principal shareholder, board chairman, and chief executive officer) focused merely on two snowmobiles.
Scott Horton, writing at Harper's Magazine (see here) noted that "[t]he outcome is a huge embarrassment to federal prosecutors, who had invested a decade in resources in the effort to convict Giffen of FCPA and related violations."
Horton, who has been following the case for years, highlighted how the "case has been the focus of political manipulation concerns for years" and closed with this paragraph:
"Kazakhs have long claimed that their government’s strategy of resolving the Giffen case by using the right levers with the American administration–a process that led them to hire former attorneys general and high-profile retired prosecutors, private investigators, and public-relations experts–would be successful. The outcome in the Giffen case appears to ratify that view. The notion of an independent, politically insulated criminal-justice administration in America has just taken another severe hit."
Steve LeVine, author of The Oil and The Glory page at Foreign Policy, noted (here) that the Giffen resolution is "a considerable comedown for the federal government" and that Giffen's lawyer "understood correctly that he could set up a collision between the Justice Department and the CIA in which the latter would probably prevail."
The FCPA and Stock Price
What affect, if any, does an FCPA disclosure or resolution have on a company's stock price?
It's an issue I've explored before (see here) and best I can tell the evidence is inconclusive and the answer is - it depends.
In the case of a company that does business almost exclusively in China disclosing an FCPA inquiry focused on China, the answer is that disclosure of the FCPA inquiry matters - and quite a bit.
On Monday, SciClone Pharmaceuticals Inc., a Delaware company based in California, disclosed in a 10-Q filing (here) as follows:
"On August 5, 2010 SciClone was contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone. In connection with this investigation, the SEC issued a subpoena to SciClone requesting a variety of documents and other information. The subpoena requests documents relating to a range of matters including interactions with regulators and government-owned entities in China, activities relating to sales in China and documents relating to certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the DOJ indicating that the DOJ was investigating Foreign Corrupt Practices Act issues in the pharmaceutical industry generally, and had received information about the Company’s practices suggesting possible violations."
SciClone's business is focused primarily on China with 90+% of its revenue derived from China sales. Thus, it is not surprising that an FCPA inquiry focused on China had a material impact on the company's stock price.
As noted in this Reuters story, news of the FCPA inquiry sent SciClone's shares, at one point, down 41% to a 52 week low.
Siemens $1 Billion Customer
In December 2008, Siemens agreed to pay $800 million in combined U.S. fines and penalties to settle FCPA charges for a pattern of bribery the DOJ termed “unprecedented in scale and geographic scope.” According to the DOJ, for much of Siemens’ operations around the world, “bribery was nothing less than standard operating procedure.”
The Siemens enforcement action remains the largest FCPA settlement ever (even though Siemens itself was not charged with FCPA anti-bribery violations).
On the one year anniversary of the Siemens enforcement action, I ran a post - Siemens - The Year After (see here) which highlighted how the U.S. government continues to do substantial business with the company it charged with engaging in a pattern of bribery “unprecedented in scale and geographic scope.”
This U.S. government business has helped Siemens outperform its competitors in a difficult recessionary environment and much of the company’s recent success is the direct result of government stimulus programs around the world.
Using Recovery.gov (a U.S. government website designed “to allow taxpayers to see precisely what entities receive Recovery money ..”), I highlighted how several Siemens’ business units have been awarded several dozen contracts funded by U.S. taxpayer stimulus dollars.
It is against this backdrop that Paul Glader's recent piece in the Wall Street Journal "Siemens Seeks More U.S Orders" caught my eye.
According to the article, Siemens Corp. (the U.S. division of Siemens) currently brings in about $1 billion a year from the U.S. government, a figure the division hopes to double by 2015.
Eric Spiegel, chief executive of Siemens Corp., is quoted in the article as saying: "[o]ne of the beauties of the federal-government spending is it didn't drop off during the recession."
To that, I'll add that one of the unfortunate beauties of engaging in bribery the U.S. government terms “unprecedented in scale and geographic scope" is no slow down in U.S. government contracts in the immediate aftermath of the enforcement action.
It's one of the FCPA greatest headscratchers - FCPA violaters are and remain some of the U.S. government's biggest suppliers and contracting partners.
As I've noted in numerous prior posts, efforts are underway to try to change this. See here, here and here.
*****
A good weekend to all.
Thursday, April 22, 2010
Quiz Time Answer
In a prior post (here), I noted that in 2009 there were three FCPA trials - Frederic Bourke, William Jefferson, and Gerald and Patricia Green.
I then posted the question - what is the common thread in these three FCPA enforcement actions - a fact which speaks to the great difficulty individual FCPA defendants generally have in mounting a legal defense?
Before the answer, the background.
Individual FCPA defendants tend to work for companies. Under respondeat superior theories of liability, the company is going to have a very difficult time "distancing" itself from its employees conduct.
Thus, all corporate FCPA enforcement actions tend to be resolved through a non-prosecution agreement, a deferred prosecution agreement, or a plea. Entering into one of these resolution vehicles is often easier, more cost efficient, and more certain than actually mounting a legal defense based on the FCPA's statutory elements. Further, because these resolution vehicles are subject to little or no judicial scrutiny and are entered into the context of the DOJ possessing certain "carrots" and "sticks" they do not necessarily reflect the triumph of one party's legal position over the other.
While these resolution vehicles may indeed avert "another Arthur Anderson" here is the problem.
A key feature of each resolution vehicle is a statement along the following lines:
"[company] admits, accepts, and acknowledges responsibility for the conduct set forth in [the statement of facts] and agrees not to make any public statement contradicting [the statement of facts]" (see UTStarcom NPA here);
"[company] admits, accepts and acknowledges that it is responsible for the acts of its officers, employees and agents as set forth in the Statement of Facts [...] and that the facts described [...] are true and accurate [...] and that should the DOJ initiate prosecution that is deferred by this agreement [company] agrees that it will neither contest the admissibility of, nor contradict, in any such proceeding, the Statement of Facts" (see AGA Medical DPA here); or
"Defendant admits,agrees and stipulates that the factual allegations set forth in the Statement of Facts [...] are true and correct, that it is responsible for the acts of its former officers and employees described in the Statement of Facts, and that the Statement of Facts accurately reflects CCI’s criminal conduct" (see Control Components Inc. Plea Agreement here).
So what can you do if you are the targeted employee of such a company?
More likely than not, your employee has already terminated you (even before all the facts may be known) to demonstrate to the DOJ that it is implementing "prompt remedial actions" - a factor DOJ will consider when making its charging decision (see here).
Then, because of the resolution vehicle your employer entered into to make the DOJ go away, you are stuck with your employer admitting and accepting responsibility for your misconduct, even though there has been no finding that your conduct was even misconduct.
Against this backdrop, it is no surprise that nearly all FCPA individual defendants plead. What choice do they really have?
So that brings us back to the quiz answer.
Perhaps it was pure coincidence, perhaps not, but the three individual FCPA trials all occurred in the context of there being no parallel NPA, DPA or plea with a corporate entity.
I then posted the question - what is the common thread in these three FCPA enforcement actions - a fact which speaks to the great difficulty individual FCPA defendants generally have in mounting a legal defense?
Before the answer, the background.
Individual FCPA defendants tend to work for companies. Under respondeat superior theories of liability, the company is going to have a very difficult time "distancing" itself from its employees conduct.
Thus, all corporate FCPA enforcement actions tend to be resolved through a non-prosecution agreement, a deferred prosecution agreement, or a plea. Entering into one of these resolution vehicles is often easier, more cost efficient, and more certain than actually mounting a legal defense based on the FCPA's statutory elements. Further, because these resolution vehicles are subject to little or no judicial scrutiny and are entered into the context of the DOJ possessing certain "carrots" and "sticks" they do not necessarily reflect the triumph of one party's legal position over the other.
While these resolution vehicles may indeed avert "another Arthur Anderson" here is the problem.
A key feature of each resolution vehicle is a statement along the following lines:
"[company] admits, accepts, and acknowledges responsibility for the conduct set forth in [the statement of facts] and agrees not to make any public statement contradicting [the statement of facts]" (see UTStarcom NPA here);
"[company] admits, accepts and acknowledges that it is responsible for the acts of its officers, employees and agents as set forth in the Statement of Facts [...] and that the facts described [...] are true and accurate [...] and that should the DOJ initiate prosecution that is deferred by this agreement [company] agrees that it will neither contest the admissibility of, nor contradict, in any such proceeding, the Statement of Facts" (see AGA Medical DPA here); or
"Defendant admits,agrees and stipulates that the factual allegations set forth in the Statement of Facts [...] are true and correct, that it is responsible for the acts of its former officers and employees described in the Statement of Facts, and that the Statement of Facts accurately reflects CCI’s criminal conduct" (see Control Components Inc. Plea Agreement here).
So what can you do if you are the targeted employee of such a company?
More likely than not, your employee has already terminated you (even before all the facts may be known) to demonstrate to the DOJ that it is implementing "prompt remedial actions" - a factor DOJ will consider when making its charging decision (see here).
Then, because of the resolution vehicle your employer entered into to make the DOJ go away, you are stuck with your employer admitting and accepting responsibility for your misconduct, even though there has been no finding that your conduct was even misconduct.
Against this backdrop, it is no surprise that nearly all FCPA individual defendants plead. What choice do they really have?
So that brings us back to the quiz answer.
Perhaps it was pure coincidence, perhaps not, but the three individual FCPA trials all occurred in the context of there being no parallel NPA, DPA or plea with a corporate entity.
Thursday, January 21, 2010
Indicting a "Foreign Official" - Part II
Yes, there is FCPA news other than the Africa Sting case.
In connection with the Green case (see here), an indictment was recently unsealed (see here) against Juthamas Siriwan and Jittisopa Siriwan.
According to the indictment, Juthamas "was the senior government officer of the Tourism Authority of Thailand (TAT)" and she is the "foreign official" the Greens were convicted of bribing. Jittisopa is the daughter of the "foreign official" and also alleged to be an "employee of Thailand Privilege Card Co. Ltd." an entity controlled by TAT and an alleged "instrumentality of the Thai government."
Incidentally, the Green's sentencing (which was to occur today) in which the government is essentially seeking a life sentence for Mr. Green based on FCPA, as well as other convictions and factors, was postponed until March. For more on that issue, see here.
As noted in the first Indicting a "Foreign Official" post a month ago (see here), the FCPA only covers "bribe-payers, not "bribe-takers."
Thus, like the prior indictment against the alleged Haiti "foreign officials" (Robert Antoine and Jean Rene Duperval), the charges against the Siriwans are not FCPA charges, but largely conspiracy to money launder and "transporting funds to promote unlawful activity."
However, unlike Antoine and Duperval who are alleged to have U.S. bank accounts which were used in the connection with the bribery scheme, the Siriwan's bank accounts were located in Singapore, the United Kingdom, and the Isle of Jersey.
There are however facts alleged in the Siriwan indictment which suggest a U.S. nexus. The indictment alleges that the Greens did on occasion "arrange for cash payments to be made directly to Juthamas Siriwan, including during her trips to Los Angeles, California." The indictment further alleges that Juthamas Siriwan "sent and caused to be sent to co-conspirator Gerald Green a facsimile on TAT letterhead providing wire instructions for transferring funds." Finally, the indictment also alleges that "co-conspirator Patricia Green received instructions to divide 'commission' payments owed to defendant Juthamas Siriwan into wire transfer to three separate accounts." Although the indictment does not say, it is presumed that the facsimile and instructions were sent to the U.S.
The "transporting funds to promote unlawful activity" charges (two - eight) of the indictment rely on 18 USC 1956(a)(2)(A) which reads in pertinent part:
"(2) Whoever transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States
(A) with the intent to promote the carrying on of specified unlawful activity
shall be sentenced to a fine of not more than $500,000 or twice the value of the monetary instrument or funds involved in the transportation, transmission, or transfer, whichever is greater, or imprisonment for not more than twenty years, or both."
The specified unlawful activity alleged in the indictment is "namely, bribery of a foreign official" in violation of the FCPA; "bribery of a public official of Thailand" in violation of Thai law; and the "misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official" in violation of Thai law.
In November 2009, Attorney General Eric Holder stated (see here) that the U.S. was committed to recovering funds obtained by "foreign officials" through bribery and the indictment seeks forfeiture of approximately $1.7 million in the foreign bank accounts.
In connection with the Green case (see here), an indictment was recently unsealed (see here) against Juthamas Siriwan and Jittisopa Siriwan.
According to the indictment, Juthamas "was the senior government officer of the Tourism Authority of Thailand (TAT)" and she is the "foreign official" the Greens were convicted of bribing. Jittisopa is the daughter of the "foreign official" and also alleged to be an "employee of Thailand Privilege Card Co. Ltd." an entity controlled by TAT and an alleged "instrumentality of the Thai government."
Incidentally, the Green's sentencing (which was to occur today) in which the government is essentially seeking a life sentence for Mr. Green based on FCPA, as well as other convictions and factors, was postponed until March. For more on that issue, see here.
As noted in the first Indicting a "Foreign Official" post a month ago (see here), the FCPA only covers "bribe-payers, not "bribe-takers."
Thus, like the prior indictment against the alleged Haiti "foreign officials" (Robert Antoine and Jean Rene Duperval), the charges against the Siriwans are not FCPA charges, but largely conspiracy to money launder and "transporting funds to promote unlawful activity."
However, unlike Antoine and Duperval who are alleged to have U.S. bank accounts which were used in the connection with the bribery scheme, the Siriwan's bank accounts were located in Singapore, the United Kingdom, and the Isle of Jersey.
There are however facts alleged in the Siriwan indictment which suggest a U.S. nexus. The indictment alleges that the Greens did on occasion "arrange for cash payments to be made directly to Juthamas Siriwan, including during her trips to Los Angeles, California." The indictment further alleges that Juthamas Siriwan "sent and caused to be sent to co-conspirator Gerald Green a facsimile on TAT letterhead providing wire instructions for transferring funds." Finally, the indictment also alleges that "co-conspirator Patricia Green received instructions to divide 'commission' payments owed to defendant Juthamas Siriwan into wire transfer to three separate accounts." Although the indictment does not say, it is presumed that the facsimile and instructions were sent to the U.S.
The "transporting funds to promote unlawful activity" charges (two - eight) of the indictment rely on 18 USC 1956(a)(2)(A) which reads in pertinent part:
"(2) Whoever transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States
(A) with the intent to promote the carrying on of specified unlawful activity
shall be sentenced to a fine of not more than $500,000 or twice the value of the monetary instrument or funds involved in the transportation, transmission, or transfer, whichever is greater, or imprisonment for not more than twenty years, or both."
The specified unlawful activity alleged in the indictment is "namely, bribery of a foreign official" in violation of the FCPA; "bribery of a public official of Thailand" in violation of Thai law; and the "misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official" in violation of Thai law.
In November 2009, Attorney General Eric Holder stated (see here) that the U.S. was committed to recovering funds obtained by "foreign officials" through bribery and the indictment seeks forfeiture of approximately $1.7 million in the foreign bank accounts.
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