On May 10th, after a five week trial in the C.D. of California, a jury returned guilty verdicts against Lindsey Manufacturing and its executives Keith Lindsey and Steven Lee on charges of conspiracy to violate the FCPA and five counts of FCPA violations. See here for the prior post.
On June 27th, Judge Matz held a hearing on defendants' prosecutorial misconduct motion. This post summarizes the hearing and contains excerpts from the hearing transcript. Given what transpired in Judge Matz's courtroom and based on his comments during the hearing, it appears that the DOJ's only jury trial conviction of a corporate entity in FCPA history may be hanging by a thread.
For starters, the June 27th hearing on the post-trial motion to dismiss and vacate the guilty verdict due to prosecutorial misconduct was cut short.
Why?
Prior to the hearing the DOJ informed Judge Matz that it had discovered and disclosed to the defendants that morning grand jury testimony by FBI Case Agent Susan Guernsey even though Judge Matz had previously ordered the DOJ to produce Guernsey's grand jury testimony. During the hearing, the DOJ stated that it "was not anything done intentionally" and that it was not anything that "prejudiced the defendants."
Judge Matz said "I'm shocked" but then quickly said "I shouldn't be shocked because it's not the first time that [the DOJ has] come into court trailing all kinds of apologies and benign mea culpas for failures to disclose information, to produce information, to answer questions fully and responsively ...".
Judge Matz then cut short the hearing on the pending motion.
"Without disclosing where [he] was coming out on the pending motions" Judge Matz stated as follows.
"I think this question of whether or not the right of any or both or all three of the remaining defendants to due process was violated, and if so, what remedy has to be perceived -- not perceived but has to be briefed and addressed in a broader context." Judge Matz said that he had already read all of the briefs and that he had reached certain conclusions and he then proceeded to recite "just randomly and anecdotally" things that he found "troubling." He noted that his list was "by no means inclusive" concerning the "at best extraordinarily sloppy investigation and prosecution of this case."
In addition to the "astonishing" and "troubling" disclosure mentioned above, Judge Matz - "speaking off the top of [his] head" - provided a "brief anecdotal list" concerning the "tortured history of this prosecution." He listed the following: (i) "the government searched two buildings without a search warrants;" (ii) the government obtained certain e-mails that were unauthorized; (iii) the "government played games with the inclusion or absence" of an individual on the witness list; (iv) the "inept, evasive, self-serving and incomplete" trial testimony of Guernsey; and (v) "the game playing with the chain of custody testimony."
After this list, Judge Matz stated as follows. "I don't know if there was a stench that developed in this case, but there was a bad odor at times, and so the issue that I'm inviting both sides to address is [...] whether either through a finding of due process violations or in the exercise of my supervisory power, something akin -- and I'm not minimizing the significance of this by using this phrase, but something akin to the whole being greater than the sum of its parts justifies throwing out this conviction, because a lot of the parts that led up to this conviction are extremely troublesome."
Judge Matz then said as follows. "One could look back on the outcome and say there was enough evidence to warrant a conviction. I'm not addressing that question, but the lawyers on both sides, who are smart lawyers, know that that doesn't justify affirming a conviction if there are violations of constitutional rights or if something was such a travesty that it ought not to be permitted and a judge in trying to supervise justice and administer it properly has a right to say enough is enough or this was too much. And I don't have a final view on that, but that's what I wanted to be briefed."
The defendants' brief is due on July 18th, the DOJ's brief August 1st, and the reply brief on August 15th. The hearing is scheduled for September 8th.
Jan Handzlik (Greenberg Traurig - here) counsel for Lindsey Manufacturing and Keith Lindsey commented as follows. "We are deeply troubled by the government's conduct. The trial ended over a month ago and yet we are still uncovering materials that should clearly have been disclosed long before trial. This case continues to be an emotional roller coaster for the clients and the lawyers."
Showing posts with label Steve Lee. Show all posts
Showing posts with label Steve Lee. Show all posts
Wednesday, July 6, 2011
Thursday, April 21, 2011
Judge Matz Issues Narrow "Foreign Official" Decision / Calls DOJ Post-Hearing Request "Astounding"
As noted in an April 1st post (see here), United States District Judge Howard Matz (C.D. of California) issued an oral ruling denying the Lindsey defendants "foreign official" challenge. See here for a transcript of the hearing.
As noted in the hearing transcript, Judge Matz stated that the "foreign official" challenge "warrants and will receive a very considered written ruling."
Yesterday, Judge Matz issued his written decision. See here.
According to Judge Matz, "the question presented by the motion is whether an officer or employee of a state-owned corporation can be a 'foreign official' for purposes of FCPA liability." [In a footnote, Judge Matz noted, "[a]s discussed in the Addendum to this order, the Government never directly challenged that assumption until more than two weeks after the Court had issued its oral ruling denying Defendants' motion to dismiss and trial had commenced." (emphasis added)].
Judge Matz's holding is as follows. "The Court denies the motion to dismiss, because a state-owned corporation having the attributes of CFE may be an 'instrumentality' of a foreign government within the meaning of the FCPA, and officers of such a state-owned corporation, as Messrs. Nestor Moreno and Arturo Hernandez are alleged to be, may therefore be 'foreign officials' within the meaning of the FCPA."
As to the meaning of "instrumentality," Judge Matz stated as follows. "Instrumentality is a noun having an inherently broad scope, but it is unnecessary for this Court to choose a particularly elastic dictionary definition of that word. Instead, the Court will adopt the very definition that Defendants themselves proffer." Judge Matz then analyzed those definitions.
As to the FCPA's legislative history, Judge Matz stated as follows. "It is unnecessary to base this ruling upon the legislative history of the FCPA, given that the meaning of 'instrumentality' under Defendants' definition of the term clearly encompasses CFE. Nevertheless, because legislative history was so central to Defendants' motion, the Court will summarize the parties' contentions."
After providing such a summary, Judge Matz stated in dicta as follows.
"The Court finds that the legislative history of the FCPA is inconclusive. Although it does not demonstrate that Congress intended to include all state-owned corporations within the ambit of the FCPA, neither does it provide support for Defendants' insistence that Congress intended to exclude all such corporations from the ambit of the FCPA." (emphasis in original).
As discussed above, Judge Matz's decision contains an Addendum. It begins as follows.
"After the jury trial had been underway for more than two weeks, and just before this order was to be filed, the Government asked the Court to take judicial notice of what the Government claims is this fact. 'CFE was created by Mexico as a decentralized public entity with its own legal status and assets.' In a footnote the Government added, '... [U]nder Mexican law, CFE is a decentralized public entity, not a corporation.' This request is astounding."
Judge Matz then stated, among other things, that:
"throughout the hundreds of pages of argument and exhibits that were filed as part of motion practice, the Government never stated that CFE is not a corporation;"
"nor did it assert that view at the hearing on this motion;"
"in a lengthy footnote in its opposition papers the Government stressed that in more than a dozen FCPA prosecutions, 'guilty pleas were accepted by U.S. District Courts, involved bribery of officials of state-owned companies'" (emphasis added)
"the Government cited two cases in which state-owned companies were found to fall within the scope of the FCPA" and the Government "cited and attached jury instructions in yet two additional cases, to the effect that 'the definition of government instrumentality includes companies owned or controlled by the state;" (emphasis added)
"still later, the Government continued in this vein, purporting to refute the Defendants' legislative history analysis by stressing that the author of the declaration that the Defendants' cited 'is unable to find a single reference ... that Congress intended to exclude state-owned companies from the definition of instrumentality ...'"; (emphasis added)
"the Government concluded , "from the FCPA's inception, state-owned and state-controlled companies were within Congress's intended definition of instrumentalities of a foreign government.'" (emphasis added).
Judge Matz then ends the Addendum as follows.
"There is nothing in the Government's peculiar request for judicial notice which warrants a change in the foregoing ruling."
As noted in the hearing transcript, Judge Matz stated that the "foreign official" challenge "warrants and will receive a very considered written ruling."
Yesterday, Judge Matz issued his written decision. See here.
According to Judge Matz, "the question presented by the motion is whether an officer or employee of a state-owned corporation can be a 'foreign official' for purposes of FCPA liability." [In a footnote, Judge Matz noted, "[a]s discussed in the Addendum to this order, the Government never directly challenged that assumption until more than two weeks after the Court had issued its oral ruling denying Defendants' motion to dismiss and trial had commenced." (emphasis added)].
Judge Matz's holding is as follows. "The Court denies the motion to dismiss, because a state-owned corporation having the attributes of CFE may be an 'instrumentality' of a foreign government within the meaning of the FCPA, and officers of such a state-owned corporation, as Messrs. Nestor Moreno and Arturo Hernandez are alleged to be, may therefore be 'foreign officials' within the meaning of the FCPA."
As to the meaning of "instrumentality," Judge Matz stated as follows. "Instrumentality is a noun having an inherently broad scope, but it is unnecessary for this Court to choose a particularly elastic dictionary definition of that word. Instead, the Court will adopt the very definition that Defendants themselves proffer." Judge Matz then analyzed those definitions.
As to the FCPA's legislative history, Judge Matz stated as follows. "It is unnecessary to base this ruling upon the legislative history of the FCPA, given that the meaning of 'instrumentality' under Defendants' definition of the term clearly encompasses CFE. Nevertheless, because legislative history was so central to Defendants' motion, the Court will summarize the parties' contentions."
After providing such a summary, Judge Matz stated in dicta as follows.
"The Court finds that the legislative history of the FCPA is inconclusive. Although it does not demonstrate that Congress intended to include all state-owned corporations within the ambit of the FCPA, neither does it provide support for Defendants' insistence that Congress intended to exclude all such corporations from the ambit of the FCPA." (emphasis in original).
As discussed above, Judge Matz's decision contains an Addendum. It begins as follows.
"After the jury trial had been underway for more than two weeks, and just before this order was to be filed, the Government asked the Court to take judicial notice of what the Government claims is this fact. 'CFE was created by Mexico as a decentralized public entity with its own legal status and assets.' In a footnote the Government added, '... [U]nder Mexican law, CFE is a decentralized public entity, not a corporation.' This request is astounding."
Judge Matz then stated, among other things, that:
"throughout the hundreds of pages of argument and exhibits that were filed as part of motion practice, the Government never stated that CFE is not a corporation;"
"nor did it assert that view at the hearing on this motion;"
"in a lengthy footnote in its opposition papers the Government stressed that in more than a dozen FCPA prosecutions, 'guilty pleas were accepted by U.S. District Courts, involved bribery of officials of state-owned companies'" (emphasis added)
"the Government cited two cases in which state-owned companies were found to fall within the scope of the FCPA" and the Government "cited and attached jury instructions in yet two additional cases, to the effect that 'the definition of government instrumentality includes companies owned or controlled by the state;" (emphasis added)
"still later, the Government continued in this vein, purporting to refute the Defendants' legislative history analysis by stressing that the author of the declaration that the Defendants' cited 'is unable to find a single reference ... that Congress intended to exclude state-owned companies from the definition of instrumentality ...'"; (emphasis added)
"the Government concluded , "from the FCPA's inception, state-owned and state-controlled companies were within Congress's intended definition of instrumentalities of a foreign government.'" (emphasis added).
Judge Matz then ends the Addendum as follows.
"There is nothing in the Government's peculiar request for judicial notice which warrants a change in the foregoing ruling."
Friday, April 1, 2011
Lindsey "Foreign Official" Motion Denied
Mike McCollum (Foley & Lardner - here), who was present for today's hearing, and Jaime Guerrero (Foley & Lardner - here) provide this guest post.
*****
This afternoon, United States District Judge Howard Matz issued an oral ruling in the Lindsey case that is scheduled to begin trial on April 5 in the Central District of California. The Court denied defendants’ motion to dismiss the indictment on the “foreign official” issue. The issue presented was whether the officials of Mexico’s state-owned utility company, CFE, were “foreign officials” under the FCPA. Giving his ruling orally from the bench, and emphasizing that his precise reasoning will be spelled out in a written ruling to follow, District Judge Matz held that they were foreign officials, giving some insight into his thinking.
District Judge Matz noted several undisputed facts, including that CFE supplies electricity to all of Mexico except for Mexico City, that the Mexican Constitution provides that the supply of electricity in Mexico is solely a government function, that Mexican statutory law defines CFE as a “decentralized public entity with legal personality and its own patrimony,” that CFE’s Governing Board is composed of Mexican government officials and its Director General is appointed by the President of Mexico, and that CFE’s English language website describes it as an agency of the Federal Government. District Judge Matz further confirmed that it was the defendants’ position, as stated in their briefs, that the issue presented was one of “pristine” undisputed facts and issues of law, and thus no further facts that might be introduced at trial could bear on the issue.
District Judge Matz then presented to counsel for the moving defendants a two-page written hypothetical. Because he only distributed the hypothetical to the attorneys, we can only go from the summary described in open court, which was essentially this: Exxon and Occidental bid for a large oil contract from Pemex, Mexico’s state-owned oil company. It is a public bid, and Occidental offers to pay more than Exxon. At the publicly televised contract award ceremony, however, Exxon hands a $10 million check to Pemex, which thanks Exxon publicly, and then Pemex awards the contract to Exxon instead. Question put to the defense: Is it the case that Congress, in enacting the FCPA, would have said that the FCPA would not have applied to these circumstances? Counsel for the moving defendants argued that what was important was not what Congress would have wanted to say, but what they did say, and Congress did not say that the statute should apply to state-owned-enterprises. In an era (1970s) when states owned large sectors of industry around the world, Congress chose not to include state-owned-enterprises within the reach of the FCPA.
District Judge Matz responded, in essence, that what was most convincing to him, in combination with the undisputed facts regarding CFE noted above, was the definition of the word “instrumentality.” He noted the defendants’ Webster Dictionary definitions (“serving as a means or agency: implemental” and “of, relating to, or done with an instrument or tool”) and American Heritage Dictionary definition (“[a] subsidiary branch, as of a government, by means of which functions or policies are carried out”). Based on this definition of “instrumentality” and on the undisputed facts regarding CFE, District Judge Matz noted that it was unnecessary to delve into the legislative history because it could be determined as a matter of statutory construction that the officials of CFE were “foreign officials.”
Opening statements are set for Tuesday morning, and the trial is expected to go until the end of April.
*****
For additional coverage see here from the FCPA Blog.
For briefing on the "foreign official" issue, see prior posts here, here, and here.
*****
This afternoon, United States District Judge Howard Matz issued an oral ruling in the Lindsey case that is scheduled to begin trial on April 5 in the Central District of California. The Court denied defendants’ motion to dismiss the indictment on the “foreign official” issue. The issue presented was whether the officials of Mexico’s state-owned utility company, CFE, were “foreign officials” under the FCPA. Giving his ruling orally from the bench, and emphasizing that his precise reasoning will be spelled out in a written ruling to follow, District Judge Matz held that they were foreign officials, giving some insight into his thinking.
District Judge Matz noted several undisputed facts, including that CFE supplies electricity to all of Mexico except for Mexico City, that the Mexican Constitution provides that the supply of electricity in Mexico is solely a government function, that Mexican statutory law defines CFE as a “decentralized public entity with legal personality and its own patrimony,” that CFE’s Governing Board is composed of Mexican government officials and its Director General is appointed by the President of Mexico, and that CFE’s English language website describes it as an agency of the Federal Government. District Judge Matz further confirmed that it was the defendants’ position, as stated in their briefs, that the issue presented was one of “pristine” undisputed facts and issues of law, and thus no further facts that might be introduced at trial could bear on the issue.
District Judge Matz then presented to counsel for the moving defendants a two-page written hypothetical. Because he only distributed the hypothetical to the attorneys, we can only go from the summary described in open court, which was essentially this: Exxon and Occidental bid for a large oil contract from Pemex, Mexico’s state-owned oil company. It is a public bid, and Occidental offers to pay more than Exxon. At the publicly televised contract award ceremony, however, Exxon hands a $10 million check to Pemex, which thanks Exxon publicly, and then Pemex awards the contract to Exxon instead. Question put to the defense: Is it the case that Congress, in enacting the FCPA, would have said that the FCPA would not have applied to these circumstances? Counsel for the moving defendants argued that what was important was not what Congress would have wanted to say, but what they did say, and Congress did not say that the statute should apply to state-owned-enterprises. In an era (1970s) when states owned large sectors of industry around the world, Congress chose not to include state-owned-enterprises within the reach of the FCPA.
District Judge Matz responded, in essence, that what was most convincing to him, in combination with the undisputed facts regarding CFE noted above, was the definition of the word “instrumentality.” He noted the defendants’ Webster Dictionary definitions (“serving as a means or agency: implemental” and “of, relating to, or done with an instrument or tool”) and American Heritage Dictionary definition (“[a] subsidiary branch, as of a government, by means of which functions or policies are carried out”). Based on this definition of “instrumentality” and on the undisputed facts regarding CFE, District Judge Matz noted that it was unnecessary to delve into the legislative history because it could be determined as a matter of statutory construction that the officials of CFE were “foreign officials.”
Opening statements are set for Tuesday morning, and the trial is expected to go until the end of April.
*****
For additional coverage see here from the FCPA Blog.
For briefing on the "foreign official" issue, see prior posts here, here, and here.
Wednesday, March 23, 2011
Lindsey Defendants Move to Strike State Department "Foreign Official" Declaration *UPDATE* Judge Strikes State Department Declaration
Monday's post (here) detailed the recent declaration by Clifton Johnson, Assistant Legal Adviser for Law Enforcement and Intelligence in the Legal Adviser's Office of the United States Department of State in the Lindsey "foreign official" challenge pending in the Central District of California.
The Lindsey defendants have moved (here) to strike the State Department declaration. Among other arguments made, the Lindsey defendants state as follows.
"The opinion of one employee of the Department of State, or even of the Department of State as a whole, on the terms of the Convention and what the treaty required of the United States, as well as the meaning of the FCPA, a United States criminal statute, has no bearing on the matter before the Court. In any event, it is the job of the federal courts, not the executive branch, to be the final arbiter of what the FCPA actually provides. See generally Marbury v. Madison, 1 Cranch 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is.”)."
"On the other hand, the foreign policy implications of a particular interpretation, and how to deal with them, are the business of Congress and the President to address. Mr. Johnson’s suggestion to this Court to decide foreign policy is inappropriate. Courts concern themselves with the interpretation of the law as written. Congress is perfectly capable of amending the statute if it decides it is necessary to do so in light of a court’s decision. See generally McNally v. United States, 483 U.S. 350, 360 (1987) superseded by statute, Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690, 102 Stat. 4181 (“If Congress desires to go further, it must speak more clearly.”)."
Alternatively, the Lindsey defendants argue that if the Court is inclinded to consider the State Department declaration, that it should order Mr. Johnson to appear at the March 24th motion hearing. As noted in an exhibit to the motion to strike, the DOJ has stated that it "will not voluntarily produce Mr. Johnson as a witness at that hearing."
*UPDATED*
In an order yesterday, presiding judge Howard Matz ordered (here) the State Department declaration be stricken.
For additional coverage see here.
The Lindsey defendants have moved (here) to strike the State Department declaration. Among other arguments made, the Lindsey defendants state as follows.
"The opinion of one employee of the Department of State, or even of the Department of State as a whole, on the terms of the Convention and what the treaty required of the United States, as well as the meaning of the FCPA, a United States criminal statute, has no bearing on the matter before the Court. In any event, it is the job of the federal courts, not the executive branch, to be the final arbiter of what the FCPA actually provides. See generally Marbury v. Madison, 1 Cranch 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is.”)."
"On the other hand, the foreign policy implications of a particular interpretation, and how to deal with them, are the business of Congress and the President to address. Mr. Johnson’s suggestion to this Court to decide foreign policy is inappropriate. Courts concern themselves with the interpretation of the law as written. Congress is perfectly capable of amending the statute if it decides it is necessary to do so in light of a court’s decision. See generally McNally v. United States, 483 U.S. 350, 360 (1987) superseded by statute, Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690, 102 Stat. 4181 (“If Congress desires to go further, it must speak more clearly.”)."
Alternatively, the Lindsey defendants argue that if the Court is inclinded to consider the State Department declaration, that it should order Mr. Johnson to appear at the March 24th motion hearing. As noted in an exhibit to the motion to strike, the DOJ has stated that it "will not voluntarily produce Mr. Johnson as a witness at that hearing."
*UPDATED*
In an order yesterday, presiding judge Howard Matz ordered (here) the State Department declaration be stricken.
For additional coverage see here.
Monday, March 21, 2011
State Department Declaration in Lindsey "Foreign Official" Challenge
In its opposition brief (here) in the Lindsey "foreign official" challenge, the DOJ states at footnote 5:
"If this Court were to interpret the FCPA in such a way that officials of state-owned and state-controlled enterprises could not be foreign officials, the United States would be out of compliance with its treaty obligations under the OECD Convention. The government has requested a declaration from the State Department confirming this assessment and explaining its implications for U.S. foreign policy. Given the short response period, the declaration could not be finalized, but the government will endeavor to secure the declaration before argument on this motion and will file it if and when it is received."
Last Friday, the DOJ filed a declaration by Clifton Johnson, Assistant Legal Adviser for Law Enforcement and Intelligence in the Legal Adviser's Office of the United States Department of State - see here.
*****
Readers may also be interested in reviewing the OECD Convention (here) including commentary 15; a previous post (here) on the OECD Convention and U.S. positions; and a previous post (here) on how another OECD signatory country views the term "foreign public official."
"If this Court were to interpret the FCPA in such a way that officials of state-owned and state-controlled enterprises could not be foreign officials, the United States would be out of compliance with its treaty obligations under the OECD Convention. The government has requested a declaration from the State Department confirming this assessment and explaining its implications for U.S. foreign policy. Given the short response period, the declaration could not be finalized, but the government will endeavor to secure the declaration before argument on this motion and will file it if and when it is received."
Last Friday, the DOJ filed a declaration by Clifton Johnson, Assistant Legal Adviser for Law Enforcement and Intelligence in the Legal Adviser's Office of the United States Department of State - see here.
*****
Readers may also be interested in reviewing the OECD Convention (here) including commentary 15; a previous post (here) on the OECD Convention and U.S. positions; and a previous post (here) on how another OECD signatory country views the term "foreign public official."
Friday, March 18, 2011
"Foreign Official" Issue Fully Briefed in Lindsey Matter
Yesterday, Lindsey Manufacturing Company, Keith Lindsey, and Steve Lee - defendants in an FCPA case pending in the Central District of California - filed a reply brief (here) to the DOJ's opposition to defendants' motion to dismiss challenging the DOJ's interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA.
See here for the prior post on the defendants' motion to dismiss.
See here for the prior post on the DOJ's opposition brief.
Other "foreign official" challenges pending (although not as far along in terms of briefing) include the Carson matter (also in the C.D. of California - see here) and the O'Shea matter (in the S.D. of Texas - see here).
See here for the prior post on the defendants' motion to dismiss.
See here for the prior post on the DOJ's opposition brief.
Other "foreign official" challenges pending (although not as far along in terms of briefing) include the Carson matter (also in the C.D. of California - see here) and the O'Shea matter (in the S.D. of Texas - see here).
Tuesday, March 1, 2011
Another "Foreign Official" Challenge
In "The Facade of FCPA Enforcement" (here) I noted that "no enforcement agency interpretation contributes more to the facade of FCPA enforcement and no FCPA element is more urgently in need of judicial scrutiny than the FCPA's 'foreign official' element."
Last week, various defendants in the U.S. v. Stuart Carson et al. case filed a motion to dismiss challenging the DOJ's interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA. See here for the prior post.
Yesterday, Lindsey Manufacturing Company, Keith Lindsey, and Steve Lee - defendants in U.S. v. Enrique Faustino Aguilar Noriega, et al. also filed a motion to dismiss challenging the same enforcement theory.
See here for the motion to dismiss.
Last week, various defendants in the U.S. v. Stuart Carson et al. case filed a motion to dismiss challenging the DOJ's interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA. See here for the prior post.
Yesterday, Lindsey Manufacturing Company, Keith Lindsey, and Steve Lee - defendants in U.S. v. Enrique Faustino Aguilar Noriega, et al. also filed a motion to dismiss challenging the same enforcement theory.
See here for the motion to dismiss.
Friday, October 22, 2010
What Will Happen To Lindsey Manufacturing Co.?
The common way for a company to resolve an FCPA enforcement action is via a non-prosecution or deferred prosecution agreement. If the conduct is egregious, yet the company is cooperating, the company will generally plead guilty via a criminal information.
A criminal indictment of a company is rare. According to my records, it has not happened since September 2008.
It happened yesterday.
As noted in this DOJ release, "Lindsey Manufacturing Company (here), an Azusa, Calif., company and two of its executives (Keith E. Lindsey, 65 and Steve Lee, 60) were indicted today for their alleged roles in a conspiracy to pay bribes to Mexican government officials at the Comisión Federal de Electricidad (CFE), a state-owned utility company ...". Lindsey Manufacturing Co., Lindsey, and Lee each were charged in an eight-count superseding indictment with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and FCPA violations
Given the allegations in the recent Enrique Faustino Aguilar Noriega and Angela Maria Gomez Aguilar indictments (see here for the prior post) this is hardly a surprising development.
What is surprising is that Lindsey Manufacturing was criminally indicted. Previous media reports indicated that Lindsey Manufacturing was "cooperating with authorities and wasn't aware that its contracts were being used for bribes" according Lindsey attorney Jan Handzlik (here). According to this report, "attorneys for Lindsey and Lee said their clients had no knowledge of improper payments."
What will happen to Lindsey Manufacturing, a company that has previously secured U.S. Department of Energy contracts?
The conventional wisdom is this post-Arthur Anderson world is that NPAs and DPAs are necessary because a company will fail when it is criminally indicted.
The last company criminally indicted for violating the FCPA was Nexus Technologies Inc. (see here).
It does not exist today (see here).
A criminal indictment of a company is rare. According to my records, it has not happened since September 2008.
It happened yesterday.
As noted in this DOJ release, "Lindsey Manufacturing Company (here), an Azusa, Calif., company and two of its executives (Keith E. Lindsey, 65 and Steve Lee, 60) were indicted today for their alleged roles in a conspiracy to pay bribes to Mexican government officials at the Comisión Federal de Electricidad (CFE), a state-owned utility company ...". Lindsey Manufacturing Co., Lindsey, and Lee each were charged in an eight-count superseding indictment with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and FCPA violations
Given the allegations in the recent Enrique Faustino Aguilar Noriega and Angela Maria Gomez Aguilar indictments (see here for the prior post) this is hardly a surprising development.
What is surprising is that Lindsey Manufacturing was criminally indicted. Previous media reports indicated that Lindsey Manufacturing was "cooperating with authorities and wasn't aware that its contracts were being used for bribes" according Lindsey attorney Jan Handzlik (here). According to this report, "attorneys for Lindsey and Lee said their clients had no knowledge of improper payments."
What will happen to Lindsey Manufacturing, a company that has previously secured U.S. Department of Energy contracts?
The conventional wisdom is this post-Arthur Anderson world is that NPAs and DPAs are necessary because a company will fail when it is criminally indicted.
The last company criminally indicted for violating the FCPA was Nexus Technologies Inc. (see here).
It does not exist today (see here).
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