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Category Archives: Foreign Corrupt Practices Act

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Supreme Court refuses to review FCPA challenge

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act, Supreme Court

The U.S. Supreme Court on Monday refused to review the first Foreign Corrupt Practices Act (FCPA) case appealed to the highest Court. The appeal sought to limit the scope of the FCPA by narrowing the law’s definition of the term “foreign official.”

Joel Esquenazi and Carlos Rodriguez, former executives of Terra Telecommunications Corp., had challenged their convictions under the FCPA and had asked the Supreme Court to clarify who counted as a foreign official under the law. The Eleventh Circuit had affirmed the conviction and the ruling that defined the term instrumentality as “any entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.”…


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SEC and DOJ Release FCPA Guide

Posted in Foreign Corrupt Practices Act

On November 14, 2012, the Securities and Exchange Commission ("SEC") and the Department of Justice ("DOJ") released A Resource Guide to the U.S. Foreign Corrupt Practices Act. The Resource Guide provides an analysis of the U.S. Foreign Corrupt Practices Act ("FCPA") and reviews how the SEC and DOJ approach FCPA enforcement.

The Resource Guide covers a variety of topics including:

  • who and what is covered by the FCPA’s anti-bribery and accounting provisions;
  • the definition of a "foreign official";
  • what constitute proper and improper gifts, travel, and entertainment expenses;
  • facilitating payments;
  • how successor liability applies in the mergers and acquisitions context;
  • the hallmarks of an effective corporate compliance program; and
  • the different types of civil and criminal resolutions available in the FCPA context.

The Resource Guide incorporates hypotheticals, examples of enforcement actions and matters that the SEC and DOJ have declined to pursue, and summaries of applicable case law and DOJ opinion releases.


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SEC Charges Oracle With FCPA Violations

Posted in Foreign Corrupt Practices Act, SEC Enforcement Cases

On August 16, 2012, in a Complaint filed in the U.S. District Court in the Northern District of California, the Securities and Exchange Commission (“SEC”) charged Oracle Corporation with violating the Foreign Corrupt Practices Act (“FCPA”).  The Complaint alleges that, from 2005 to 2007, employees of an Indian subsidiary of Redwood Shores, a California-based enterprise systems firm, arranged transactions with India’s government in a way that enabled Oracle India Private Limited’s distributors to secretly “park” approximately $2.2 million of transaction proceeds in side funds. The Complaint alleges that Oracle India employees then directed its distributors to make unauthorized payments out of these side funds to local vendors, who operated merely as storefronts that did not provide any services to Oracle. It is further alleged that these payments were documented by Oracle’s subsidiary using fake invoices.

The SEC’s Complaint alleges that (1) Oracle violated the FCPA’s books and records provisions and internal controls provisions by failing to accurately record the side funds that Oracle India maintained with its distributors, and (2) Oracle failed to devise and maintain a system of effective internal controls that would have prevented the improper use of company funds.  Without admitting or denying the SEC’s allegations, Oracle agreed to pay a $2 million penalty to settle the SEC’s charges.…


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“Extraordinary Cooperation” in FCPA Investigation Earns Virginia Corporation a Deferred Prosecution Agreement

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Monday, June 18, 2012, DOJ announced that it had entered into a two-year Deferred Prosecution Agreement with Data Systems & Solutions LLC (“DS&S”), a company that provides design, installation, maintenance and other services at nuclear and fossil fuel power plants, to resolve violations of the Foreign Corrupt Practices Act. The company, which is based in Reston, Virginia, agreed to pay an $8.82 million criminal penalty. DOJ acknowledged DS&S’s “extraordinary cooperation” in resolving the matter.…


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And Then There Were None … The Last U.S. Defendant in the Carson FCPA Case Enters Into Plea Agreement

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On June 14, 2012, David Edmonds, the sole remaining U.S. defendant in the Carson FCPA case entered into a plea agreement. He will plead guilty to a one-count indictment alleging a violation of the FCPA. The case has been closely watched because of a number of the interesting arguments raised the defendants, but as those motions were denied, and the June 26 trial date approached, four defendants pled guilty in a two-month period.…


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FCPA Cooperation: Robert Antoine Receives a Sentence Reduction in Haiti Teleco

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On May 29, 2012, Florida Federal Judge Jose E. Martinez granted a Government Motion to reduce the sentence of Robert Antoine, the former director of international relations for Telecommunications D’Haiti S.A.M. ("Haiti Teleco"), the Haitian state-owned telecommunications company, from 48 months to 18 months, based on his cooperation with the Government’s FCPA investigation into the Haiti Teleco matter. The Government has had its share of difficulties in FCPA cases recently (as discussed here), but this case reflects what may happen when things go well in an FCPA prosecution. The Court papers discuss the cooperation provided by Mr. Antoine both before his plea agreement and during the two trials involving three other defendants.…


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The Government Moves to Dismiss Its Appeal in the Lindsey Manufacturing FCPA Case

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

Back on December 1, 2011, when Judge A. Howard Matz entered an order vacating the convictions and dismissing the Superseding Indictment against Lindsey Manufacturing Company, Keith Lindsey, Steve Lee in the criminal FCPA case, he noted that "Dr. Lindsey and Mr. Lee were put through a severe ordeal. … The financial costs of the investigation and trial were immense, but the emotional drubbing these individuals absorbed undoubtedly was even worse. As for [Lindsey Manufacturing], the very survival of that small, once highly-respected enterprise has been placed in jeopardy." The Government appealed that decision to the Ninth Circuit. However, now, the ordeal for the two men and their company is over – on Friday, May 25, 2012, the Government filed a Motion to Dismiss their appeal.…


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Haitian Foreign Official Jean Rene Duperval Sentenced to Nine Years in Prison For His Role in FCPA Scheme

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Monday, May 21, 2012, Florida Federal Judge Jose E. Martinez sentenced Jean Rene Duperval, the former director of international relations for Telecommunications D’Haiti S.A.M. ("Haiti Teleco"), the Haitian state-owned telecommunications company, to nine years in prison for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies. The sentence is the latest in the very lengthy sentences imposed to the participants in the Haiti Teleco scheme, and marks the second sentence of a foreign official in the case – Mr. Dupreval’s sentence was more than twice as long as his predecessor, Robert Antoine, who was sentenced to 48 months in prison in June 2010.…


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Judge Selna To Deny Two Motions in FCPA Case Which Had Attacked DOJ’s Relationship With Company That Cooperated During Investigation

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

In connection with a May 14, 2012 hearing, Judge James Selna has prepared Tentative Minute Orders which deny two motions in the Carson FCPA cases. In a Motion to Suppress and a Motion to Dismiss, the defendants raised issues regarding DOJ’s relationship with Control Components, Inc. ("CCI"), the employer of defendants, who cooperated with the investigation and provided certain information. In addition to our discussion below, Professor Mike Koehler of The FCPA Professor Blog takes a careful look at the case (which includes copies of the tentative rulings, here and here).…


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Defendants in the Carson FCPA Case File Reply Briefs Attacking Government’s Interaction With The Employer During the Latter’s Internal Investigation and the Government’s Conduct During Discovery

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Monday, April 30, 2012, two of the remaining defendants in the Carson FCPA case submitted Reply Briefs in support of motions that raise significant issues about the impact on the employees when a corporation conducts an internal investigation and ultimately cooperates with the Government. The briefs argued that: (1) certain statements should be suppressed because the Government offered no evidence from the participants in discussions between the corporation’s counsel and DOJ prior to interviews of employees during an internal investigation (thereby failing to rebut defendants’ arguments that their Fifth Amendment rights were violated); and (2) the Government’s tactics during discovery violated defendants’ rights by denying them the opportunity to present a complete defense. The arguments on these issues are set to be heard on May 14, 2012.…


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Former Morgan Stanley Executive Pleads Guilty to Conspiring to Evade Internal Accounting Controls Under the FCPA in China, While Morgan Stanley Avoids Prosecution Due to Internal Controls

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act, SEC Enforcement Cases

On Wednesday, April 25, 2012, DOJ announced that Garth Peterson, a former managing director for Morgan Stanley’s real estate business in China, pled guilty in federal court in Brooklyn, New York for participating in a conspiracy to evade the internal accounting controls which the company was required to maintain under the FCPA. Because Morgan Stanley had a system of internal controls designed to assure that its employees were not bribing government officials, the Government did not prosecute the company. The SEC also announced that it brought and settled a case against Mr. Peterson.…


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Government’s Opposition to Motion to Suppress in Carson FCPA Case Argues That Statements Made To Corporate Counsel During An Internal Investigation Do Not Violate The Employees’ Fifth Amendment Rights

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

In a Brief filed on April 2, 2012, the Government argued that the statements by defendants in an FCPA case that were given to their employer during an internal investigation should not be suppressed because the employer’s "actions were not the result of any pressure or influence from the government sufficient to convert the Company’s lawyers to state actors," and because defendants could not "show that their statements were involuntary." The Government was addressing a Motion to Suppress filed on March 5, 2012 in the Carson case in which defendants argued that because Control Components, Inc. ("CCI") had collaborated with DOJ during the investigation, it was a Government agent whom improperly compelled statements from the defendants during an internal investigation in violation of their Fifth Amendment rights. The Court has scheduled a hearing on the Motion for May 14, 2012.…


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FCPA Sting Case: Government Dismisses Charges Against The Three Defendants Who Already Pled Guilty

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Tuesday, March 27, 2012, the Government filed a motion in the FCPA Sting Case to dismiss the charges against Jonathan M. Spiller, Haim Geri, and Daniel Alvirez, the three defendants who had previously pled guilty to conspiracy charges in the case and were awaiting sentencing. This unusual event occurred after the Court had dismissed the same conspiracy charge against other defendants in the case and the Government dropped all other charges against the other defendants. As a result, the Sting Case, which was announced in January 2010 as a "turning point" in FCPA prosecutions, will end with zero convictions.…


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Haitian Foreign Official Convicted For Money Laundering Related to FCPA Violations

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Monday, March 12, 2012, a federal jury in Florida convicted Jean Rene Duperval on two counts of conspiracy to commit money laundering and 19 counts of money laundering related to an FCPA scheme involving Telecommunications D’Haiti S.A.M. ("Haiti Teleco"), the Haitian state-owned telecommunications company. Following a week-long trial, the jury took only three hours to convict Mr. Duperval, a former director of international relations for Haiti Teleco. The conviction is the latest Government prosecution related to FCPA at Haiti Teleco, and marks the second conviction of a foreign official involved in the scheme.…


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Defendants in Carson FCPA Case File Two New Motions Attacking DOJ’s Relationship With Their Corporation (Who Has Cooperated)

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Monday, March 5, 2012, several of the defendants in the Carson FCPA case in California filed a Motion to Dismiss and a Motion to Suppress, raising a new set of interesting issues in a case where the corporation has already settled with the Government and individual employees face charges. In both motions, the defendants raised issues regarding DOJ’s relationship with Control Components, Inc. ("CCI"), the employer of defendants. In the Motion to Dismiss, defendants argued that "the impact of the cumulative impediments – unique investigation tactics preventing Defendants access" to certain evidence deprived them of their Due Process and Sixth Amendment rights, ("including the right to present a complete defense") and that "dismissal is the only appropriate remedy" for such severe prejudice. In the Motion to Suppress, defendants argued that because CCI had collaborated with DOJ during the investigation, it was a Government agent whom improperly compelled statements from the defendants during an internal investigation in violation of their Fifth Amendment rights. As a result, defendants argue that the statements should be suppressed.…


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Judge Selna Provides More Guidance in the Carson FCPA Case Regarding the Definition of Foreign Official and Instrumentality

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

At an in Chambers hearing on February 16, 2012, Judge James Selna issued an Order in U.S. v. Carson, addressing the jury instructions regarding the terms "foreign official" and "instrumentality." In doing so, Judge Selna rejected a number of the proposed instructions submitted by the defendants, sticking closing to the list of non-exclusive factors he identified in his prior decision on this issue.…


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Three Individuals Are Sentenced For Their Involvement in the Bonny Island / TSKJ Joint Venture FCPA Case

Posted in Criminal Charges in Securities Cases, Executive Officer Matters, Foreign Corrupt Practices Act

Another chapter ended in the series of FCPA criminal prosecutions arising out of the TSKJ Joint Venture this week, when Texas federal Judge Keith P. Ellison sentenced three men for their role in the portion of the case involving Kellogg Brown & Root. On Thursday, February 23, 2012, former KBR executive, Albert "Jack" Stanley was sentenced to 30 months in jail, while Jeffrey Tesler, who controlled an entity through which payments were funneled, was sentenced to 21 months in prison. On Wednesday, February 22, 2012, Wojciech Chodan, the former Vice President of M.W. Kellogg, Ltd., received a sentence of one year unsupervised probation.…


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Government Dismisses Remaining Charges in O’Shea FCPA Case

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On Thursday, February 9 2012, prosecutors filed a motion in federal court in Texas requesting that the remaining charges against John O’Shea be dismissed. On January 16, 2012, the Court dismissed the FCPA charges against Mr. O’Shea, leaving one count of conspiring to violate the FCPA, four counts of money laundering and one count of creating a false document to obstruct the Government’s investigation. Thursday’s motion stated:

In light of the Court’s prior statements and rulings, as well as the resulting collateral estoppels issues associated with the Court’s judgment of acquittal, the government hereby moves pursuant to Rule 48(a) of the Federal Rules of Criminal Procedure to dismiss the remaining counts of the criminal Indictment against Mr. O’Shea with prejudice.

The motion was filed two days after the Government revealed that it was considering dropping charges in another FCPA case – the FCPA Sting case in Washington, DC.…


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Report: DOJ Is Considering Dropping Charges in the FCPA Sting Case

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

A story from the Blog of the Legal Times states that prosecutors "are considering whether to abandon" the charges in the FCPA Sting Case in federal court in Washington, DC. Mike Scarcella’s blog entry (available here) states that prosecutor Joey Lipton reported to Judge Richard Leon at a February 7, 2012 status conference that "Assistant Attorney General Lanny Breuer and U.S. Attorney Ronald Machen Jr. are examining the continued viability of the case," and a decision on whether the cases will continue will be made by February 21, 2012.…


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English Medical Device Company Smith & Nephew plc and U.S. Subsidiary Settles FCPA Investigations With the SEC and DOJ

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act, SEC Enforcement Cases

On Monday, February 6, 2012, the SEC and DOJ resolved their respective investigations with a medical device company and its subsidiary by entering into settlements stemming from alleged bribes paid to doctors in Greece for more than a decade. The U.S. subsidiary, Smith & Nephew Inc., agreed to pay a $16.8 million fine as part of a deferred prosecution agreement with the DOJ, while the English parent company, Smith & Nephew plc, agreed to settle the SEC’s charges by paying more than $5.4 million in disgorgement and prejudgment interest.…


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Jury Foreman in the FCPA Sting Case Speaks

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

For those readers of the blog who are litigators or follow litigation issues, today’s post from Professor Mike Koehler’s FCPA Professor Blog has a real treat: a guest post from the foreman of the recently concluded trial in the FCPA Sting Case. The foreman provides a detailed description of the issues considered by the jurors during their lengthy deliberations in which they (1) reached a partial verdict as to two defendants; and (2) remained deadlocked as to three defendants, resulting in a mistrial. The post provides a rare insight into the deliberations of a jury during a FCPA criminal trial.…


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Hung Jury in Trial of Second Group in the FCPA Sting Cases Means Mistrial For Remaining Three Defendants

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

On January 31, 2012, Judge Richard Leon declared a mistrial in the trial of the second group of defendants in the FCPA Sting case when the jury was unable to reach a verdict as to John and Jeana Mushriqui and Mark Morales. The mistrial occurred the day after the jury returned a partial verdict, finding two of the defendants not guilty.  The result adds to the string of litigated FCPA cases where the Government has failed to secure (or maintain) a conviction in recent weeks.


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FCPA Sting Case – Reports Indicate Jury Has Found Two Defendants Not Guilty, But Remain Deadlocked on Remaining Three

Posted in Criminal Charges in Securities Cases, Foreign Corrupt Practices Act

Four separate websites have reported this afternoon that two of the defendants in the FCPA Sting or "Shot Show" case have been acquitted and Judge Richard Leon has stated that he would declare a mistrial if the jury is unable to reach a verdict as to the remaining three defendants. Specifically, C. M. Matthews and Joseph Palazzolo of the Wall Street Journal, Professor Mike Koehler of the FCPA Professor Blog, Mary Jacoby of Main Justice and Richard Cassin of the FCPA Blog all reported this afternoon that the jury found Patrick Caldwell and John Godsey not guilty, but remained hung as to John and Jeana Mushriqui and Mark Morales.…


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