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.
On July 31, 2009, DOJ announced that CCI, a California company that designs and manufactures valves, had pled guilty to a three-count criminal information for its involvement "in a decade-long scheme to secure contracts in approximately 36 countries [including in China, Korea, Malaysia and the United Arab Emirates] by paying bribes to officials and employees of various foreign state-owned companies as well as foreign and domestic private companies." That plea marked the culmination of an internal investigation by CCI and the company’s cooperation with DOJ. The cooperation led to other CCI executives being indicted even before CCI pled guilty. For example, on April 8, 2009, prosecutors indicted six former executives of CCI, alleging that the group conspired to pay bribes to officials of foreign state-owned companies in order to secure contracts which yielded approximately $46.5 million in profits.
As discussed here, on March 5, 2012, the defendants in that case filed a Motion to Dismiss and a Motion to Suppress regarding DOJ’s relationship with CCI. In the Motion to Suppress, defendants argued that because CCI had collaborated with DOJ during the investigation, CCI and its counsel "were de facto public actors" and acted as "an agent of the government during the interviews." Defendants further argued that "CCI compelled the Defendants’ statements under a classic ‘penalty situation’ – CCI required them to answer all questions regardless of their Fifth Amendment right against self-incrimination or be fired." This conduct, defendants claimed, "violated their Fifth Amendment rights and the statements must be suppressed."
First, in their April 2, 2012 Opposition, the Government argued that "only ‘state actors’ can violate a defendant’s Fifth Amendment rights," but noted that those rights may be violated by a private entity if its actions are found to be "fairly attributable" to the Government. The Government further argued that a violation occurs if the statements are compelled. The Government asserted that the company was not a state actor, arguing that the "actions of a private entity are attributable to the State only if ‘there is a sufficiently close nexus between the State and the challenged action of the … entity.’" The Government further argued that there is no evidence here that anyone from the Government "deliberately coerced" or "significantly encouraged" anything with respect to the Company’s own internal investigation and its interviews of its own employees.
In further defense of its relationship with the corporation, the Government described its principle of corporate prosecution, citing a provision of the McNulty Memorandum, which states: "In gauging the extent of the corporation’s cooperation, the prosecutor may consider, among other things, whether the corporation made a voluntary and timely disclosure, and the corporation’s willingness to provide relevant evidence and to identify the culprits within the corporation, including senior executives."
The Government described its discussions with CCI and its parent corporation IMI plc and the voluntary disclosure of the company’s internal investigation to prosecutors at DOJ and authorities in the United Kingdom. The Government also described the interview process with defendants, pointing out that counsel for the company gave the employees warning under Upjohn Co. v. U.S., 449 U.S. 383 (1981), indicating that the contents of the interview were privileged, but that the privilege and the decision whether to waive it belonged to IMI, not the employee (and that the attorneys represented IMI, not the witness personally).
Second, the Government argued that there was no merit to defendants’ claim that their statements were involuntary. The Government asserted that "to constitute compulsion, defendants must demonstrate that they faced a ‘clear-cut’ choice between asserting their right against self-incrimination or suffering economic hardship." According to the Government, "there is no evidence to show that defendants had an objectively reasonable belief that they faced a ‘clear-cut choice’ between asserting their rights or suffering economic hardship," citing defendants’ own declarations, which do not state that anyone threatened them with termination.
The Government’s Opposition to the Motion to Dismiss (which was filed the same day as the Motion to Suppress and attacked the Government’s unique investigation tactics) is due on April 6, 2012. Both motions are scheduled to be heard on May 14, 2012. The case is presently scheduled to go to trial on June 5, 2012.