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.
As discussed here, on May 10, 2011, following a five-week trial, a federal jury convicted Lindsey Manufacturing, Mr. Lindsey, and Mr. Lee of one count of conspiracy to violate the FCPA and five counts of actually violating the Act. The charges were based on payments to employees of the Comisión Federal de Electricidad ("CFE"), an electric utility company owned by the government of Mexico, which were made in exchange for the CFE to award contracts to Lindsey Manufacturing. At the time, Assistant Attorney General Lenny Breuer pointed out that "Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations," and commented on how the Government was "fiercely committed to bringing to justice all the players in these bribery schemes."
In a series of briefs filed before and after the trial, the company and Messrs. Lindsey and Lee accused the Government of prosecutorial misconduct. For example, as discussed here, in a motion filed on May 9 (before the verdict), they accused the Government of presenting the Grand Jury with "knowingly false and misleading representations on critical matters" and omitting the "disclosure of material facts" during the testimony of an FBI Special Agent. The defendants further accused the Government of covering up this testimony by refusing to produce the complete Grand Jury transcript of the agent’s testimony until ordered by the Court in the middle of the trial.
After announcing its intention to vacate the conviction and dismiss the Superseding Indictment during a November 29, 2011 hearing (discussed here), Judge Matz issued a December 1, 2011 Order (discussed here) stating that the Government conducted a "sloppy, incomplete and notably over-zealous investigation … that was so flawed that the Government’s lawyers tried to prevent inquiry into it." The Court’s decision was based, in part, on:
• the untruthful testimony of an FBI agent to the grand jury;
• the provision of false information in applications for search and seizure warrants;
• the improper review of e-mail communications between a defendant and her lawyer;
• the failure to comply with discovery obligations and other court rulings; and
• other misrepresentations to the Court.
The Court held that "the multiple acts of misconduct … undoubtedly affected the verdicts and thus substantially prejudiced" the Defendants. He concluded that the defendants were not entitled to a finding of "factual innocence," but that it was necessary to vacate the convictions and dismiss the Superseding Indictment as both a deterrent and to release the defendants "from further anguish and uncertainty."
Following the decision, the Government immediately filed what they referred to last week as "a protective Notice of Appeal" of Judge Matz’s ruling. However, in Friday’s filing before the Ninth Circuit, the Government stated that "[a]fter consideration of this matter within the United States Attorney’s Office, the Criminal Division of the Department of Justice, and the Office of the Solicitor General," it was moving to dismiss the appeal, thereby bringing the case to a close.
The Lindsey Manufacturing case demonstrates just how difficult FCPA cases are for both the prosecution and defense. While in some cases such as the Haiti Teleco matters (most recently discussed here) have resulted in lengthy jail terms for those who paid and received bribes, while cases like the Sting Case (discussed here), the O’Shea case (here) and this one have ended very differently.
