Thirty Months For Naaman

Innospec's former agent who pleaded guilty last year to bribing Iraqi officials and violating the U.N.'s oil for food program was sentenced today to thirty months in federal prison and fined $250,000.

Naaman, 62, a Canadian citizen, is the only individual prosecuted so far in the United States for Innospec's bribery.

The judge didn't say when he has to surrender and start serviing his prison sentence. He's now free on personal recognizance bond.

Innospec, a Delaware-based specialty-chemical maker, reached a $40 million global settlement last year of more than a dozen criminal charges in the U.S. and U.K.

The DOJ had asked that Naaman be jailed for seven and a half years. Based on his guilty plea, he could have been jailed for more than ten years. His lawyers had argued for time served based on his custody after arrest and later under home detention.

Three former Innospec executives -- Dennis Kerrison, Paul Jennings,  and David Turner -- have been charged by the U.K. Serious Fraud Office with overseas bribery. Their next hearing in London is set for January 6, 2012.

Naaman was arrested in July 2009 in Frankfurt, Germany. The Justice Department extradited him to the United States. In a superseding information, he was charged in Count One under 18 U.S.C. §371 with conspiracy to defraud the U.N. oil-for-food program and to violate both the antibribery and books and records provisions of the FCPA. In Count Two, he was charged under 15 U.S.C. §78dd-l with violating the FCPA and under 18 U.S.C. §2 as an aider and abettor.

In his guilty plea, Naaman admitted paying or promising to pay more than $3 million to officials at Iraq's Ministry of Oil and the Trade Bank of Iraq to win business for Innospec. The company makes and markets the anti-knock compound tetraethyl lead (TEL) used in leaded gasoline. Demand for TEL dropped in most Western countries after enactment of the U.S. Clean Air Act. But Innospec's management encouraged bribery to boost sales in other markets, mainly in developing countries.

In August last year, Naaman and David Turner, one of the London defendants, settled civil FCPA charges with the SEC.

Turner agreed to disgorge $40,000 to the SEC. He wasn't required to pay any civil penalty. The SEC said he provided "extensive and ongoing cooperation in the investigation." Naaman agreed to disgorge $810,076 plus prejudgment interest of $67,030, and pay a civil penalty of $438,038. The civil penalty will be reduced by $250,000 -- the amount of his criminal fine.

Feds Drop Green Appeal; Siriwan Facing Prosecution At Home

The government on Tuesday ended efforts to put a Hollywood producer and his wife back in prison.

Gerald Green, 79, and his wife Patricia, 56, were released from federal custody in May after serving six-month jail terms for FCPA and money-laundering violations.

An LA jury convicted them in 2009 of paying $1.8 million in bribes to Juthamas Siriwan, left, then-governor of the Tourism Authority of Thailand, in exchange for $13.5 million in contracts to produce the Bangkok film festival.

In October last year, the government filed a notice of appeal against the Greens' short jail sentences.

Prosecutors had pushed for prison terms of at least ten years. But Judge George Wu gave them each six-months behind bars, followed by three years of supervised release. 

The Justice Department won a forfeiture count, leaving the Greens indigent and needing court-appointed lawyers.

The DOJ's appeal made our list of the worst FCPA prosecution decisions ever.

In Bangkok Tuesday, Thailand's National Anti-Corruption Commission (NACC) ruled against the former tourism official.

The Bangkok Post said Juthamas Siriwan can now be prosecuted in Thailand for accepting bribes from the Greens.

Siriwan, 64, and her daughter, Jittisopa Siriwan, 32, are fugitives from a U.S. indictment. In January last year, a federal grand jury in Los Angeles charged them with eight counts of conspiracy to launder money, transporting funds to promote unlawful activity, and aiding and abetting. The DOJ is also seeking criminal forfeiture against them.

They didn't appear in U.S. court to answer the charges.

Siriwan was found by the NACC to have  'committed criminal offences as a former state official in connection with the case.' Her daughter was found to be complicit. The finding means they can now be prosecuted in a Thai court.

The Bangkok Post said Siriwan was invited to testify at the NACC hearing but didn't appear.

Thailand and the United States have an extradition treaty. But according to the Bangkok Post, the Thai attorney general's office hasn't received any extradition request from the U.S. for Siriwan and her daughter.

Download a copy of the government's August 23, 2011 voluntary dismissal of the appeal against the Greens' sentences here.

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Our thanks to the reader in D.C. who sent the link to the Bangkok Post story about Juthamas Siriwan.

'Classified' Evidence Puts Naaman Sentencing On Hold

Innospec's former agent who pleaded guilty last year to an FCPA conspiracy won't be sentenced until September and maybe a lot later.

According to a recent court filing, Ousama Naaman has raised new evidence that may be classified, and there are new questions about how he spent some of the bribe money. A motion seeking the sentencing delay was signed jointly by Naaman's lawyers and prosecutors.

It's not clear if Naaman's new evidence means the DOJ might prosecute other individuals in connection with the case.

In January, Naaman, 62, argued for a jail term of time-served. He said he'd already spent "just shy of a year in prison [in Germany awaiting extradition], and another seven months under strict conditions of release" in the U.S.

Prosecutors had asked for a jail sentence of seven and a half years, saying the federal sentencing guidelines called for up to ten years in jail.

But prosecutors agreed this month to delay Naaman's sentencing indefinitely. The joint court filing said he "raised issues that the Government has reason to believe makes it necessary to proceed under the Classified Information Procedures Act."

Sentencing had been set for August 4. Prosecutors and Naaman's lawyers asked for a delay of at least thirty days and warned that more delays might follow.

The "parties are working to resolve potential factual discrepancies regarding Mr. Naaman’s claimed expenses," the court filing said, "which could impact the Government’s recommended fine and other sentencing issues."

In January, Naaman admitted that as Innospec's agent he paid $4 million in kickbacks to the Iraqi government and more than $3.5 million in bribes to senior Iraqi government officials. Innospec earned more than $50 million selling a gasoline additive to the Iraqi Ministry of Oil.

Naaman deserved a long jail sentence, the DOJ said earlier this year, because he pocketed $8.8 million from his criminal conspiracy.

In March last year, Innospec reached a $40 million global settlement of more than a dozen criminal charges in the U.S. and U.K.

In late January this year, Innospec's former CFO and CEO settled civil FCPA charges with the SEC by paying about $229,000 in disgorgement and penalties. The SEC charged Paul W. Jennings with falsely certifying to auditors that he'd complied with Innospec's FCPA compliance policy despite knowing about bribery in Iraq and Indonesia and personally approving some of the payments.

Naaman is free on personal recognizance pending his sentencing. He's a citizen of Lebanon and Canada.

He was arrested in 2009 in Frankfurt, Germany and extradited to the U.S. Before pleading guilty to conspiracy, he faced multiple FCPA-related charges, including aiding and abetting.

Download the July 14, 2011 Joint Motion for Continuance of Sentencing Hearing in U.S. v. Ousama M. Naaman here.

Jury Mulls Fate of Four Shot Show Defendants

The first shot-show defendants to be tried in federal court in Washington, D.C. are now waiting for the jury to return its verdict. Their trial opened on May 16.

They were charged in a 44-count superceding indictment with conspiracy to violate the FCPA, violating the FCPA, conspiracy to commit money laundering, and aiding and abetting. They also face a forfeiture count. The judge dismissed the money-laundering conspiracy charges.

They are:

• Pankesh Patel, a British citizen employed by Quartermaster's Ltd., which sells military and law enforcement uniforms.

• John Benson Wier III of St. Petersburg, Florida, the former president of SRT Supply Inc., which sells tactical and ballistic equipment. Wier has not been associated with SRT Supply, Inc. since January of 2010, and the company is under new management and ownership.

• Andrew Bigelow of University Park, Florida, from Heavy Metal Armory, which sells machine guns, grenade launchers and other firearms.

• Lee Tolleson of Mountain Home, Arkansas, from ALS Technologies, a company that sells law-enforcement and military equipment.

The government divided the original 22 defendants into four groups to make the trials more manageable. 

The defendants were charged with plotting to bribe the minister of defense for Gabon to sell military and law enforcement products. But the scheme was part of an FBI undercover operation and no foreign official was actually involved.

Three of the defendants have already pleaded guilty.

Haim Geri pleaded guilty in April to one count of conspiracy to violate the Foreign Corrupt Practices Act. He faces 18 to 24 months in prison and a $250,000 fine. A sentencing date wasn't set. He lives in Miami.

In March, Daniel Alvirez pleaded guilty to two counts of conspiracy to violate the FCPA, and Jonathan Spiller pleaded guilty to one FCPA conspiracy count. They haven't been sentenced.

In September last year, Richard Bistrong, the key intermediary between the FBI and the shot-show defendants, pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and other statutes. He's waiting to be sentenced.

All but one of the defendants were arrested two years ago in Las Vegas. They were there to attend the shot show, a trade fair for military and law-enforcement equipment vendors.

Shot-Show Trial Opens In DC

The first shot-show defendants are in federal court in Washington, D.C., where jury selection started today.

The government divided the original 22 defendants into four groups to make the trials more manageable. In the first group are Pankesh Patel, John Wier III, Andrew Bigelow, and Lee Tolleson.

For background on the defendants, see our post here.

The government charged them with plotting to bribe the minister of defense for Gabon to sell military and law enforcement products. But the scheme was part of an FBI undercover operation and no foreign official was actually involved.

The defendants were charged in a 44-count superceding indictment with conspiracy to violate the FCPA, violating the FCPA, conspiracy to commit money laundering, and aiding and abetting. They also face a forfeiture count.

At least three of the defendants have already pleaded guilty.

Haim Geri pleaded guilty in April to one count of conspiracy to violate the Foreign Corrupt Practices Act. He faces 18 to 24 months in prison and a $250,000 fine. A sentencing date wasn't set. He lives in Miami.

In March, Daniel Alvirez pleaded guilty to two counts of conspiracy to violate the FCPA, and Jonathan Spiller pleaded guilty to one FCPA conspiracy count. They haven't been sentenced.

In September last year, Richard Bistrong, the key intermediary between the FBI and the shot-show defendants, pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and other statutes. He's waiting to be sentenced.

BLT said a defense filing Thursday alleged that the “prosecution is built entirely around an irredeemably corrupt con-man, Richard Bistrong, and that, by mishandling him and by other misconduct, the government allowed Bistrong to contaminate every aspect of the operation."

Prosecutors said Saturday that claims of alleged governmental misconduct in an investigation are matters left to a judge, not a jury, according to BLT.