Mistrial! Gov't Shoots Blanks In Shot-Show Case

The judge in the shot-show case today declared a mistrial.

Here are reports from the Wall Street Journal and Main Justice.

The first four defendants of the original 22 who were charged in the case were Pankesh Patel, Andrew Bigelow, John Benson Weir, and Lee Allen Tolleson. Their trial started in mid May.

The jury deliberated five days without reaching a verdict.

The 22 shot-show defendants were charged in a 44-count superseding indictment with conspiracy to violate the FCPA, violating the FCPA, conspiracy to commit money laundering, and aiding and abetting. They also faced a forfeiture count.

Twenty one of the defendants were arrested two years ago when they were in Las Vegas for an industry event known as the shot show.

The case was the biggest FCPA round up in history. It was also the first time the government used a sting to catch alleged FCPA violators. An FBI agent posed as an official of Gabon who allegedly accepted bribes to award contracts for police and military equipment supply contracts.

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

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.

According to a report in the Blog of the Legal Times, a defense filing before the shot-show trial opened 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."

Following a mistrial, defendants can be put on trial again for the same offenses.

No Verdict Yet In Shot-Show Trial

The Wall Street Journal's Joe Palazzolo reported last night that the jury in the trial of the first four shot-defendants is deadlocked after voting six times in five days, and the judge may declare a mistrial after one more vote by the jury today.

Pankesh Patel, Andrew Bigelow, John Benson Wier III, and Lee Allen Tolleson 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. Their trial opened on May 16.

The 22 shot-show defendants were charged in a 44-count superseding 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.

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.

Guilty Plea By Shot-Show Defendant

Haim Geri, one of the 22 shot-show defendants, pleaded guilty yesterday in the District of Columbia to one count of conspiracy to violate the Foreign Corrupt Practices Act.

He now faces 18 to 24 months in prison and a $250,000 fine. A sentencing date wasn't set.

Geri, 51, who lives in Miami, was charged in a superceding indictment with conspiracy to violate the FCPA, violating the FCPA, conspiracy to commit money laundering, and aiding and abetting. He also faced a forfeiture count.

The government charged the shot-show defendants 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.

Geri agreed to pay a 20 percent "commission" to a sales agent who he believed represented Gabon's minister of defense. The bribe was intended to win a portion of a $15 million deal to outfit the country’s presidential guard. The "sales agent" was an undercover FBI agent.

Last month, Daniel Alvirez, another shot-show defendant, pleaded guilty to two counts of conspiracy to violate the FCPA, and Jonathan Spiller pleaded guilty to one count of conspiracy to violate the FCPA.

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.

Bistrong, a former vice president for international sales at Armor Holdings Inc., faces up to five years in prison and a $250,000 fine. His sentencing is pending.

Download Haim Geri's April 28, 2011 plea agreement here.

Our thanks to a reader in Washington, D.C. for the research for this post.

Enforcement Report For Q1 '11

During the first quarter of 2011, two earlier FCPA-related indictments were disclosed. And there were four corporate actions, four guilty pleas, including two shot-show defendants and the former KBR middleman Jeffrey Tesler, who was hit with the biggest forfeiture order in FCPA history, and two sentencings of individuals to prison. Three issuers announced declinations (decisions not to bring enforcement actions) by the DOJ and SEC.

Here's what happened:

Indicted / Arrested

Jorge Granados, 54, LatiNode's s former CEO, and Manuel Caceres, 64, a former vice president, were indicted on December 14 by a federal grand jury. They face one count of conspiracy to violate the FCPA, 12 counts of violating the FCPA, five counts of money laundering, and one count of conspiracy to commit money laundering. The indictment also asks for criminal forfeiture. Their trial is set to start in September. (Revealed by unsealed court record on January 11.)

DOJ / SEC Enforcement Resolutions

Paul W. Jennings (January 24) a former CFO and CEO at Innospec, Inc. disgorged $116,092 plus prejudgment interest of $12,945 and paid a civil penalty of $100,000 to settled civil charges with the SEC. He was charged with falsely certifying to auditors from 2004 through 2009 that he had complied with Innospec's Foreign Corrupt Practices Act compliance policy. The SEC said he also "signed annual and quarterly personal certifications pursuant to the Sarbanes-Oxley Act of 2002 in which he made false certifications concerning the company's books and records and internal controls.

Maxwell Technologies Inc. (January 31) paid an $8 million criminal penalty to the DOJ and $6.3 million in disgorgement and prejudgment interest to the SEC to resolve bribery that occurred in China. The DOJ gave the company a three-year deferred prosecution agreement. Maxwell can pay the $8 million criminal penalty in three installments over two years.

Tyson Foods Inc. (February 10) paid a $4 million criminal penalty to the DOJ and $1.2 million in disgorgement and pre-judgment interest to the SEC to resolve charges related to illegal payments by company representatives to government-employed inspection veterinarians in Mexico and a cover-up of the payments.

IBM (March 18) disgorged $5.3 million and paid prejudgment interest of $2.7 million, and a $2 million civil penalty to resolve civil charges brought by the SEC for violating the books and records and internal control provisions of the Foreign Corrupt Practices Act. The company admitted making improper cash payments to government officials in South Korea and China, and giving gifts and paying travel and entertainment expenses that violated the FCPA. 

Ball Corporation (March 24) paid a $300,000 penalty to settle civil FCPA books and records and internal control charges brought by the the SEC for bribes in Argentina.

Guilty Pleas

Manuel Salvoch ( January 11) the former CFO of Latin Node Inc. was arrested and pleaded guilty (January 12) to one count of conspiracy to violate the FCPA. 

Daniel Alvirez (March 1), a shot-show defendant, pleaded guilty to two counts of conspiracy to violate the FCPA.

Jeffrey Tesler (March 11) pleaded guilty after extradition from the U.K. of one count of conspiracy and one count of violating the FCPA. Tesler also agreed to forfeit $149 million. He was released on $50,000 cash bond and required to live in the Houston area until he is sentenced on June 22.

Jonathan Spiller (March 29), a shot-show defendant, pleaded guilty to one count of conspiracy to violate the FCPA.

Sentenced

Leo Winston Smith (sentenced in December, not announced by the DOJ or reported until January 7), 75, was sentenced in December to just six months in prison followed by six months of home confinement. The former director of sales and marketing for Pacific Consolidated Industries pleaded guilty in 2009 to conspiracy to violate the FCPA and to a tax charge. He admitted bribing an official from the U.K. Ministry of Defense in return for equipment orders. The government had asked for a 37-month sentence.

Antonio Perez (January 21), 52, of Miami, was sentenced to two years in prison and ordered to forfeit $36,375. He pleaded guilty in April 2009 to conspiring to making corrupt payments to officials of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti, in violation of Foreign Corrupt Practices Act and money laundering laws.

Declinations (decisions not to bring enforcement actions) by the DOJ / SEC

Bristow Group

CB Richard Ellis

Golden Minerals Corp

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Our 2010 FCPA Enforcement Index is here, the 2009 can be found here, and our 2008 index here.

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Special thanks to a reader in D.C. for research assistance in creating this post.

Feds Tidy Up Shot-Show Case

The government yesterday filed a superseding indictment in the prosecution of the 22 shot-show defendants, charging them under a consolidated grand jury indictment with 44 counts, including conspiracy to violate the FCPA, substantive FCPA offenses, conspiracy to commit money laundering, and aiding and abetting.

Prosecutors proposed trying the defendants in four groups:

The first group: Daniel Alvirez, Lee Allen Tolleson, Andrew Bigelow, Pankesh Patel, John Benson Weir III.

The second group: David Painter, Lee Wares, Jonathan Spiller, Michael Sacks, Israel Weisler.

The third group: Patrick Caldwell, Stephen Giordanella, John Mushriqui, Jeana Mushriqui, John Godsey, Mark Morales.

And the fourth group: Helmie Ashiblie, Yochanan Cohen, Haim Geri, Amaro Goncalves, Saul Mishkin, Ofer Paz.

As reported in March, one of the 22 defendants, Daniel Alvirez, is expected to plead guilty soon to charges of conspiracy to violate the FCPA. Although he's included in yesterday's superseding indictment, the government in March released a two-count superseding information against him alone. An information generally indicates a plea bargain is in the works or already agreed.

Alvirez faces up to five years in prison for each of the two conspiracy counts in the information. He could have faced up to 20 years in jail on the money-laundering charge that was dropped, and five years in prison for each substantive FCPA offense he originally faced.

Alvirez and the other shot-show defendants were first charged in 16 separate indictments. They allegedly plotted with an undercover FBI agent to bribe the minister of defense of an African country.

Download a copy of the superseding indictment released April 19, 2010 in U.S. v. Amaro Goncalves et al here.