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FCPA Blog Daily News

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Friday
Oct222010

California Company, Two Execs Charged In Mexico Utility Case

The DOJ on Thursday said California-based Lindsey Manufacturing Company and two of its executives were indicted for their alleged roles in a conspiracy to bribe officials at Mexico's state-owned utility, the Comisión Federal de Electricidad (CFE).
 
Dr. Keith E. Lindsey, 65, of La Canada, California, Steve K. Lee, 60, of Diamond Bar, and Lindsey Manufacturing of Azusa were charged in an eight-count superseding indictment with conspiracy to violate the Foreign Corrupt Practices Act and FCPA violations.

The superseding indictment also charged Enrique Faustino Aguilar Noriega, 56, and his wife Angela Maria Gomez Aguilar, 55, both of Cuernavaca, Mexico. They were first indicted in September. Enrique Aguilar was charged with conspiracy to violate the FCPA and FCPA violations. He and his wife were also charged with conspiracy and substantive money laundering counts.

Lindsey Manufacturing allegedly hired the Aguilars' company, Grupo Internacional de Asesores S.A., as its sales representative in Mexico. Lindsey makes emergency restoration systems and other equipment used by electrical utility companies.  

The superseding indictment alleged that from 2002 until 2009, Lindsey Manufacturing, Lindsey, and Lee paid Enrique Aguilar a 30 percent commission on sales to CFE, with the understanding that part of the commission would be used to pay bribes in exchange for contracts.

The DOJ considers officials of state-owned companies like CFE to be "foreign officials" under the FCPA. It's an offense to pay or promise to pay anything of value to a foreign official to obtain or retain business.

Enrique Aguilar allegedly sent fraudulent invoices from Grupo to Lindsey Manufacturing for 30 percent of the price of contracts with CFE. Lindsey and Lee then wired the money to Grupo’s brokerage account.

The Aguilars allegedly used some of the money to buy a yacht named the Dream Seeker for $1.8 million and a Ferrari for $297,500 for a CFE official. They're also charged with paying more than $170,000 worth of American Express bills and sending about $600,000 to relatives of a CFE official.

The prices to CFE allegedly were increased by 30 percent to ensure that the added cost of paying Enrique Aguilar was absorbed by CFE and not Lindsey Manufacturing.

Angela Gomez Aguilar was arrested in August in Houston. She was moved to the Central District of California, where she's in custody.

A case summary filed by prosecutors with the court in mid-September indicated that Enrique Aguilar was a fugitive. The DOJ asked the court to issue a warrant for his arrest. With the warrant, prosecutors could seek assistance from Mexican or third-country authorities in apprehending him. According to U.S. court records, he's represented in the case by the same lawyer who represents his wife. A filing he made through the lawyer said he's in Mexico.

Defendant Keith Lindsey is listed on Lindsey Manufacturing's website as the company's president. The site says he's recognized worldwide as an expert in electricity transmission and distribution. His father founded the company in 1947.

FCPA conspiracy and substantive charges are punishable by up to five years in prison. The money-laundering conspiracy and substantive counts each carry a maximum penalty of 20 years in prison. The indictment also gives notice of criminal forfeiture against the defendants.
 
As the DOJ says, an indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Earlier this week, Judge A. Howard Matz ordered prosecutors to disclose to the Aguilars' lawyer "materials obtained from [the U.S.] investigation into ABB Ltd. . . . to allow the defendants to adequately prepare for trial."

In September, ABB Ltd of Switzerland reached a $58 million settlement of criminal and civil FCPA charges with the DOJ and SEC. ABB's U.S. subsidiary admitted bribing employees at CFE to win contracts worth $90 million in revenues.

ABB said the bribes to CFE were paid through various intermediaries, including a Mexican company owned by Fernando Maya Basurto. He pleaded guilty in November 2009 to a one-count criminal information charging him for his role in the conspiracy. Basurto admitted that while he acted as a sales representative for ABB, he conspired with others to make corrupt payments to CFE officials, helped launder the bribes, and obstructed the U.S. investigations.

John Joseph O’Shea, a former ABB general manager in the U.S., was charged in November 2009 in an 18-count indictment with conspiracy, FCPA violations, international money laundering and falsification of records related to his alleged role in the bribery scheme. His trial date hasn't been set.

A copy of the DOJ's October 21, 2010 release can be downloaded here.

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