We Repeat, It's The Travel Act

CCI did it. So did Nexus Technologies, Nam Nguyen, Kim Nguyen, and An Nguyen. And now Flavio Ricotti has done it too.

They've all pleaded guilty in FCPA cases to violating or conspiring to violate the Travel Act.

And let's not forget Fredrick Bourke. A federal jury convicted him of conspiring to violate both the FCPA and the Travel Act.

The what? We've talked about the Travel Act before. But because it's now a big deal in FCPA-related cases, let's have another go.

As the name suggests, the Travel Act (18 U.S. C. §1952) prohibits traveling between states or countries or using an interstate facility in aid of any crime, and carries a 5-year jail sentence for most offenses. The underlying crime doesn't have to be a federal offense, such as an FCPA violation. Traveling around or using the mails to violate a state law can also trigger a Travel Act violation.

State law? Right. Which means the Travel Act can be used, as it was in the CCI cases, to prosecute companies and individuals for bribing private parties. The FCPA only applies to bribes to foreign officals. But some state laws prohibit bribery to private parties. And that's also enough to support a Travel Act charge in a federal prosecution.

For example, in the cases of CCI and some of its ex-employees, the federal government alleged they violated or conspired to violate California's anti-bribery law (California Penal Code section 641.3). It bans corrupt payments anywhere of more than $1,000 between any two persons, including private commercial parties. In their federal indictments, the Travel Act charges alleged violations of California's anti-corruption law, including bribes paid overseas to private parties.

This wasn't a brand new approach by the DOJ. But until the past couple of years, there wasn't much history of Travel Act charges in FCPA cases.

In 2004, two former Health South executives, Robert Thompson and James Reilly, were indicted for Travel Act and FCPA books and records violations. The next year, a jury acquitted them of all charges.

And according to the FCPA Digest, the Travel Act was mentioned in a couple of cases in the 1990s as a predicate act in RICO cases that also involved FCPA violations. The cases involved Young & Rubicam and Ashland Oil.

But now, with the Travel Act popping up in more FCPA-related cases, those responsbile for compliance might want to check their programs, looking out not only for the FCPA but also applicable state anti-corruption laws, including those that might apply to private overseas bribery.

Four Sentenced For Vietnam Graft

The DOJ said today that three siblings who were former employees of Nexus Technologies Inc., and a former partner in the Philadelphia-based company, were sentenced late yesterday for their roles in a conspiracy to bribe Vietnamese government officials.

The president and owner of the company, Nam Nguyen, was sentenced to 16 months in prison and ordered to serve two years of supervised release following the prison term. His brother, An Nguyen, was sentenced to nine months in prison, followed by three years of supervised release. His sister, Kim Nguyen, was sentenced to two years of probation and ordered to pay a $20,000 fine.

Joseph Lukas, a former partner with Nexus, also was sentenced to two years of probation and ordered to pay a $1,000 fine. He pleaded guilty in June 2009 to conspiracy and to violating the FCPA and agreed to cooperate with the DOJ.

Nexus, Nam Nguyen, 54, of Houston and Vietnam, Kim Nguyen, 41, of Philadelphia, and An Nguyen, 34, of Philadelphia, were charged in a superseding indictment in October 2009 with conspiracy, violations of the FCPA, violations of the Travel Act in connection with commercial bribes, and money laundering.

Nexus pleaded guilty in March to all the charges filed against the company in the superseding indictment, and agreed to cease operations and dissolve.

Nexus and the Nguyens admitted that from 1999 to 2008 they paid bribes of more than $250,000 to Vietnamese government officials in exchange for contracts. Privately-held Nexus sold third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems.

In March this year, Nam and An Nguyen pleaded guilty to conspiracy, substantive FCPA violations, violating the Travel Act and money laundering, and Kim Nguyen pleaded guilty to conspiracy, substantive FCPA violations, and money laundering.

Four Guilty Pleas In Vietnam Bribe Case

The Justice Department said Philadelphia-based export company Nexus Technologies Inc. and three employees pleaded guilty today to bribing Vietnamese officials.

Nexus pleaded guilty to conspiracy, and to violating the Foreign Corrupt Practices Act, and the Travel Act in connection with commercial bribes and money laundering. Nam Nguyen, 54, of Houston and Vietnam, the president and owner of Nexus, and sibling An Nguyen, 34, of Philadelphia, each pleaded guilty to conspiracy, a substantive FCPA violation, a violation of the Travel Act, and money laundering. Kim Nguyen, 41, another sibling, pleaded guilty to conspiracy, a substantive FCPA violation, and money laundering.

They were arrested in September 2008, along with Joseph T. Lukas, 60, a partner in Nexus until 2005. He pleaded guilty in June 2009 to conspiracy and to violating the FCPA. The DOJ said he admitted in his plea that from 1999 to 2005, he and others at Nexus bribed Vietnamese officials in exchange for contracts with the officials' agencies. The bribes were falsely described in the company's books as "commissions."

Lukas now faces up to 10 years in prison and a possible $350,000 fine. His sentencing is scheduled for April 6, 2010.

Nexus and the Nguyens admitted that from 1999 to 2008 they paid bribes of more than $250,000 to Vietnamese government officials in exchange for contracts. Nexus sold third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems.

The DOJ said Nexus acknowledged as part of its guilty plea that "it operated primarily through criminal means and agreed to cease operations."

Sentencing is scheduled for July 13, 2010. Nexus still faces a maximum fine of $27 million. Nam and An Nguyen each face a maximum sentence of 35 years in prison. Kim Nguyen faces a maximum sentence of 30 years in prison.

The government hasn't released the plea agreements for Nexus and the Nguyens; the plea agreement in U.S. v. Lukas remains under court seal.

A copy of the Justice Department's March 16, 2010 release can be viewed here.

Download a copy of the October 29, 2009 superseding indictment in U.S. v. Nexus Technologies, Inc. et al here.

Guilty Plea In Vietnam Bribery Case

A former executive of a Philadelphia-based export company pleaded guilty Monday to being part of a conspiracy to bribe Vietnamese government officials in violation of the Foreign Corrupt Practices Act.

Joseph T. Lukas, 60, a resident of New Jersey, was a partner in Nexus Technologies Inc. until 2005. He admitted that from 1999 to 2005, he and other Nexus employees agreed to pay, and knowingly paid, bribes to Vietnamese government officials in exchange for contracts with the officials' agencies. The bribes were falsely described in the company's books as "commissions."

Lukas now faces up to 10 years in prison and a possible $350,000 fine. His sentencing is scheduled for April 6, 2010.

He was arrested in September 2008, a day after being indicted by a federal grand jury in Philadelphia on one count of conspiracy to bribe Vietnamese public officials in violation of the Foreign Corrupt Practices Act and one substantive count of violating the FCPA. The indictment also charged the company and alleged co-conspirators Nam Nguyen, Kim Nguyen and An Nguyen, all U.S. citizens, with similar violations. Those cases are still pending.

According to the indictment, Nexus, a privately-held Delaware company with offices in Philadelphia, New Jersey and Vietnam, sold third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems to the government of Vietnam.

The indictment charged that the defendants paid at least $150,000 to officials at Vietnam’s Ministries of Transport, Industry and Public Safety to secure supply contracts. It said Nam Nguyen negotiated contracts and bribes with Vietnamese government officials while Lukas negotiated with vendors in the United States. Kim and An Nguyen allegedly arranged for the transfer of funds at Nam Nguyen’s direction.

The company's website (in English and Vietnamese) says:

Nexus specializes in supplying equipment and consulting / system integrating services for five high-growth, state-funded industries:

* Petroleum
* Power Generation, Transmission and Distribution
* Civil Aviation
* Marine & Sea Ports
* Other Heavy Industries

Doing business in Asia requires relationships, trust, and the time to build them. Nexus is proud to have established, through its consistent presence and reliable performance, trusted relationships with customers.

The three other individual defendants in the case and Nexus are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.

View the DOJ's June 29, 2009 release here.
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Rocket Scientist Sentenced To Prison

The Virginia-based physicist who sold controlled space-launch technology to China by bribing government officials there has been sentenced to 51 months in prison. Shu Quan-Sheng (left), 68, a native of China, naturalized U.S. citizen and PhD physicist, pleaded guilty in November 2008 to one count of violating the Foreign Corrupt Practices Act and two counts of violating the Arms Export Control Act. Shu had already forfeited $386,740 to the federal government before being sentenced to prison.

Shu is the President, Secretary and Treasurer of AMAC International Inc., a high-tech company based in Newport News, with another office in Beijing. AMAC performs research through grants funded by the Small Business Research program on behalf of the Department of Energy and the National Aeronautics and Space Administration (NASA).

Shu violated the FCPA by offering "percentage points" in 2006 worth a total of $189,300 to officials at a research institute affiliated with the China Academy of Launch Vehicle Technology. He was trying to land a contract to develop a liquid hydrogen tank system for a heavy payload launch facility located on Hainan Island in the PRC. In January 2007, the $4 million hydrogen liquefier project was awarded to a French company that Shu represented.

Shu violated the Arms Export Control Act by willfully exporting a defense service from the United States to the PRC without first obtaining the required export license or written approval from the State Department. He provided the PRC with assistance in the design and development of a cryogenic fueling system for space launch vehicles to be used at the heavy payload launch facility on Hainan.

The investigation involved the FBI, U.S. Immigration and Customs Enforcement, and the U.S. Department of Commerce, Office of Export Enforcement.

In a prior post we noted that Shu's arrest in September 2008 was similar to arrests earlier that month of U.S. citizens Nam Nguyen, Joseph Lukas, Kim Nguyen, and An Nguyen, along with their Philadelphia-based company, Nexus Technologies (see our post here). They were charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and four substantive counts of violating the FCPA. They're accused of bribing government officials in Vietnam to secure contracts to supply high-tech items -- including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. That case doesn't yet involve charges under U.S. export laws.

Download the DOJ's April 7, 2009 release here.
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