The FCPA Blog

The first quarter of 2010 was the busiest ever for FCPA-related enforcement. This past quarter was one of the quietest for new enforcement actions, with just one from the DOJ and three from the SEC.

There were some sentencings -- including the longest prison term ever for an FCPA-related offense -- a few sentencing delays, a guilty plea, and some odds and ends. But during most of the quarter the DOJ was MIA and the SEC barely popped its head out.

Here's what happened:

DOJ / SEC Enforcement Actions

Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams (April 29) The SEC brought a civil enforcement action against the former employees of Dimon, Inc., now Alliance One International, Inc. Defendants Myers and Reynolds agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).

Technip S.A. (June 28) The Paris-based engineering and construction firm resolved FCPA-related charges resulting from bribes to Nigerian officials through the KBR-related TSKJ joint venture. It agreed to pay the DOJ a $240 million criminal penalty. It also settled a civil complaint filed by the SEC by disgorging $98 million in profits. It was charged in a two-count criminal information with one count of conspiracy and one count of violating the FCPA. Its two-year deferred prosecution agreement with the DOJ requires Technip to retain an independent compliance monitor and cooperate in ongoing investigations.

Veraz Networks, Inc. (June 29) paid $300,000 to settle charges brought by the SEC that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) by making illegal payments to foreign officials in China and Vietnam.

Sentenced

Charles Paul Edward Jumet (April 19), 53, was sentenced to 87 months in prison and fined $15,000. Prosecutors said it's the longest sentence ever in an FCPA-related case. He pleaded guilty in November 2009 to being part of a decade-long bribery conspiracy in Panama. A two-count criminal information charged him with conspiring to violate the FCPA and giving a false statement to the FBI about how he paid some of the bribe money.

Robert Antoine (June 2), 62, of Miami and Haiti, a former employee of Haiti’s state-owned national telecommunications company, was sentenced to 48 months in prison for being part of a bribery and money-laundering scheme. He pleaded guilty in March this year to conspiracy to commit money laundering. He was also ordered by a federal judge in Miami to pay $1,852,209 in restitution and to forfeit $1,580,771, and serve three years of supervised release following his prison term.

John Webster Warwick (June 25), 64, was sentenced to 37 months in prison for his role in a conspiracy to pay bribes to former Panamanian government officials to secure maritime contracts. He also received two years of supervised release following his prison term and forfeited $331,000 in proceeds of the crime. The DOJ did not explain why his sentence was five years shorter than his co-defendant, Charles Jumet (see above).

Guilty Plea

Ousama M. Naaman (June 25), 61, a dual citizen of Canada and Lebanon, pleaded guilty to conspiracy and to violating the Foreign Corrupt Practices Act. Innospec's former agent in Iraq was charged in a June 24, 2010 superseding information with engaging in an eight-year conspiracy to defraud the United Nations oil-for-food program and bribing Iraqi officials. No sentencing date was set.

Extradition

Wojciech Chodan (April 21), 71, a U.K. citizen, was ordered extradited from Britain to the U.S. by a London court. He was indicted in February 2009 by a federal grand jury in Houston for helping KBR and its partners bribe Nigerian officials. His fellow countryman Jeffery Tesler, a London lawyer indicted at the same time, also lost his extradition hearing in March this year. With appeals, their extraditions may not be final for at least a year.

Sentencing Delays

Gerald and Patricia Green (April 29 and June 7) Their sentencing was delayed and then removed from the court's calendar. The judge in Los Angeles federal court is examining evidence about Mr. Green's medical condition and sentences in similar cases.

Albert "Jack" Stanley (mid June), 66, had final sentencing delayed until at least September 23, 2010. The former chairman and CEO of KBR pleaded guilty in September 2008 to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and to commit mail and wire fraud. He's free on unsecured bail of $100,000 pending final sentencing, which has been rescheduled a half dozen times. He was sentenced to 84 months in prison and a restitution payment of $10.8 million. The jail term is subject to review based on his cooperation with the government in related prosecutions (see Chodan and Tesler above).

Intervention

Sojitz (May 27) The DOJ intervened in the second civil suit brought by Aluminium Bahrain BSC -- known as Alba -- against a raw material supplier and broker. It asked for a stay in Alba's suit against Japanese trading company Sojitz Corp. More than two years ago, the Justice Department obtained a stay in Alba's civil suit against Alcoa, Inc. The DOJ said discovery in the cases could interfere with the government's own investigation into potential criminal wrongdoing including possible violations of the Foreign Corrupt Practices Act by Alcoa, Sojitz and other parties.

New Charging Document

Shot-show prosecution (April 19) The government 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.

In the Pipeline

Panalpina (April 29) The Swiss logistics giant said it expects settlement "in the near future" with the DOJ and SEC of FCPA-related charges. The case dates back to at least early February 2007. The DOJ noted then in connection with Vetco's FCPA settlement that bribes in Nigeria "were paid through a major international freight forwarding and customs clearance company to employees of the Nigerian Customs Service . . .”

Civil Suit  Private parties have no right of action under the FCPA. Only the DOJ and SEC can enforce it. Plaintiffs bring FCPA-related claims under RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, civil conspiracy, breach of fiduciary duties, and others.

Parker Drilling's directors (early June) were sued in a derivative action in Harris County, Texas after the company's detailed disclosure about a DOJ / SEC investigation of compliance problems in Nigeria and Kazakhstan.

Sheldon Reiss, MD, an internist and pulmonologist with Cedars-Sinai Health Associates, has been ordered to prodice Gerald Green's medical records.A federal judge last week vacated the June 3 sentencing date for Gerald Green and his wife Patricia. He also ordered production of Mr. Green's medical records from his Hollywood doctor, continued the status conference until July 1, and failed to set a new date for sentencing, raising the possibility that the Greens may never spend time behind bars.

Mr. Green, 78, and his wife Patricia, 53, were first scheduled to be sentenced by Judge George H. Wu in Los Angeles in December 2009. The Hollywood movie producers were convicted last year of paying $1.8 million in bribes to a Thai official in exchange for contracts worth about $13.5 million to produce the Bangkok Film Festival.

Sentencing has now been delayed five times. This was the first time the judge continued the case without setting a new date for sentencing.

At last week's status conference, Judge Wu ordered Gerald Green's Wilshire Boulevard doctor, Sheldon Reiss, a pulmonary specialist, to turn over Mr. Green's medical records. Mr. Green has emphysema and appears in court with an oxygen bottle to help him breathe. A copy of the court's order can be downloaded here.

At a series of post-trial hearings, the judge has asked the parties to talk about penalties handed out in similar cases. He's also heard testimony about Mr. Green's medical condition, the legal merits of the Greens' convictions, and arguments for and against their going to jail.

An LA jury in September 2009 found the Greens guilty of conspiring to violate the Foreign Corrupt Practices Act, nine counts of violating the FCPA, and seven counts of money laundering. Patricia Green was also found guilty of two counts of falsely subscribing to a U.S. income tax return. After arguing that the federal guidelines call for sentences of around 20 in prison for each of the Greens, prosecutors are now apparently asking for 10-year jail terms. 

Why would Judge Wu hesitate to sentence the Greens? Mr. Green's age and health are both concerns. Is it also possible the judge wasn't happy with the prosecution in the first place? It was by any measure aggressive and, to some, over the top, with the piling on of multiple bribery counts, money-laundering and tax charges. Did the judge think the government somehow unfairly ambushed the Greens? Is he resentful about the DOJ's handling of the case, which must have sent shivers down the spine of the Hollywood movie industry? We don't know the answers.

But it's clear the judge is in no hurry to send them to jail. Beyond that, he's treating Mr. and Mrs. Green as one defendant even though he could deal with them separately. If the judge believes Gerald Green's age and medical condition prevent his imprisonment, what about Mrs. Green and her sentence? Convicted couples are often handled separately. Why not the Greens? Only the judge knows and for now he's not talking.

Stay tuned for more from this sentencing cliffhanger.

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Here's the docket entry for May 27, 2010 in US v. Green et al, United States District Court, Central District of California (Western Division - Los Angeles), Case #: 2:08-cr-00059-GW-1:

MINUTES OF Status Conference 05/27/2010 held off the record before Judge George H. Wu as to Defendants Gerald Green and Patricia Green. The Court orders counsel for Mr. Green to forward the medical records to the Government by June 3, 2010. The Governments response will be due by June 17, 2010. Defendant Gerald Greens response will be due on June 24, 2010. The Status Conference is continued to July 1, 2010 at 9:30 a.m. The Sentencing hearing as to Defendants Gerald Green and Patricia Green, presently set for June 3, 2010, is vacated and taken off calendar. Court Reporter: n/a. (rs) (Entered: 06/01/2010)

Sentencing for Gerald and Patricia Green was delayed for the fourth time Thursday and rescheduled to June 3rd. The Hollywood producers were convicted last year of paying $1.8 million in bribes to a Thai official in exchange for contracts worth about $13.5 million to produce the Bangkok Film Festival.

Gerald Green, 78, and his wife Patricia, 53, were first scheduled to be sentenced by Judge George H. Wu in federal court in Los Angeles on December 17, 2009. The government and the Greens agreed to wait until January 21, 2010. The judge then reset the hearing to April 1 and then April 29, after asking the parties for information about sentences in similar cases.

Yesterday, according to the Los Angeles Independent, the judge asked lawyers for both sides for more details about Gerald Green's emphysema and what effect federal prison might have on him. The judge said there hadn't been "much in the way of medical evidence'' to support defense arguments that prison would be devastating to Mr. Green's condition.

An LA jury in September 2009 found the Greens guilty of conspiring to violate the Foreign Corrupt Practices Act, nine counts of violating the FCPA, and seven counts of money laundering. Patricia Green was also found guilty of two counts of falsely subscribing to a U.S. income tax return. The conspiracy and FCPA charges are each punishable by up to five years in prison, the money laundering counts by 20 years in prison, and the tax charges against Patricia Green each carry a maximum penalty of three years in prison. Prosecutors apparently are asking for sentences of 10 years for each of the Greens.

The Independent said Patricia Greens' attorney, Marilyn E. Bednarski, is arguing for no jail time. "These people have been destroyed,'' she said. Assistant U.S. Attorney Jonathan E. Lopez argued that the Greens put themselves in the situation and had  shown "no remorse or acceptance of responsibility.''

Assistant U.S. Attorney Bruce H. Searby said a stipulated forfeiture agreement for $1.8 million had been reached between the Greens and the U.S. government.

In January, the Thai official named in the Greens' prosecution was indicted with her daughter in Los Angleles. Juthamas Siriwan, the ex-governor of the Tourism Authority of Thailand, and Jittisopa Siriwan, were charged with one count of conspiracy, seven counts of transporting funds to promote unlawful activity (bribery), and one count of aiding and abetting. If convicted, Siriwan and her daughter each face up to 20 years in prison. Siriwan has said she is innocent.

Gerald and Patricia Green in happier days.Sentencing for Gerald and Patricia Green was delayed for the third time Thursday and rescheduled to April 29. The Hollywood producers were convicted last year of paying $1.8 million in bribes to a Thai official in exchange for contracts to produce the Bangkok Film Festival.

Gerald Green, 78, and his wife Patricia, 53, were first scheduled to be sentenced by Judge George H. Wu in federal court in Los Angeles on December 17, 2009. The government and the Greens agreed to wait until January 21, 2010. The judge then reset the hearing to April 1 after asking the parties for information about sentences in similar cases.

An LA jury in September 2009 found the Greens guilty of conspiring to violate the Foreign Corrupt Practices Act, nine counts of violating the FCPA, and seven counts of money laundering. Patricia Green was also found guilty of two counts of falsely subscribing to a U.S. income tax return. The conspiracy and FCPA charges are each punishable by up to five years in prison, the money laundering counts by 20 years in prison, and the tax charges against Patricia Green each carry a maximum penalty of three years in prison.

The government has asked for a sentence of about 20 to 25 years for Gerald Green. In an earlier court filing, it said:

The [pre-sentence report] calculates defendant Gerald Green’s Total Offense Level as 38, his Criminal History Category as I, and his sentencing range as 235-293 months. With the inclusion of the additional role and obstruction enhancements recommended above, his Total Offense Level would be 44 and his sentencing range would be life in prison.

The Justice Department said evidence presented during their 2½-week trial showed that beginning in 2002 and continuing into 2007, the Greens conspired with others to bribe the former governor of the Tourism Authority of Thailand with $1.8 million. The payments were used to land $13.5 million in film festival contracts and deals for development of a Thai Privilege Card, a website, book, video, calendars, and public relations services. The Greens, prosecutors said, used different business entities, some with dummy addresses and telephone numbers, to hide how much they were receiving under the contracts.

We've said before that Judge Wu may be reluctant to sentence the Greens to long prison terms. After yesterday's hearing, a report by Dominic Patten of The Wrap said:

Watching the 90-minute session today in Judge Wu's in LA's downtown federal courthouse, it would be easy to think this was an April Fool's joke gone off the rails, or that an actual trial and judgment had never happened. Both U.S. attorneys and defense lawyers seemed to re-argue the entire case, point-by-point, on issues of motivation, damages, medical condition, financial loss and gain, and sentencing guideline calculations.

Somberly dressed in black, both Gerald and Patricia Green say silently throughout the proceedings. The 78-year-old Gerald Green, who had an oxygen tune connected to his nose, only spoke once, to confer with his wife and his attorney Jerome Mooney about upcoming court dates. Because of the charges they face and their advanced age, they face the possibility of life in prison. 

In January, the Thai official named in the Greens' prosecution was indicted with her daughter in Los Angleles. Juthamas Siriwan, the ex-governor of the Tourism Authority of Thailand, and Jittisopa Siriwan, were charged with one count of conspiracy, seven counts of transporting funds to promote unlawful activity (bribery), and one count of aiding and abetting. If convicted, Siriwan and her daughter each face up to 20 years in prison. Siriwan has said she is innocent.

A copy of the indictment in U.S. v. Juthamas Siriwan in the U.S. District Court for the Central District of California (Case No.: CR 09 00081) can be downloaded here.

Download a copy of the government's December 14, 2009 response and objections to the pre-sentence report for Gerald Green here.

Photo by walknbostonSentencing for Gerald and Patricia Green was delayed again. Their next hearing is scheduled for April 1, 2010 at 8:00 am.

And Albert "Jack" Stanley's sentencing was rescheduled until May 26, 2010.

The reasons for the delays?

In the Greens' case, Judge George H. Wu in Los Angeles may be reluctant to adopt the government's view that Gerald Green, 76, should spend 20 or more years in prison. The judge has asked for memoranda analyzing sentences in prior cases. The Greens were convicted by a jury of FCPA and related offenses in September 2009.

After Jack Stanley's guilty plea in September 2008, the former KBR CEO was sentenced to seven years in prison. But the sentence is subject to review based on his cooperation with the government. His plea agreement is here.

Stanley's ex-company, KBR, resolved FCPA offenses in February 2009. And as reported, two other companies involved in the case are now discussing settlement with the DOJ -- Technip and ENI. Stanley's testimony about their roles could be important, so his sentencing isn't likely to happen until their enforcement actions are resolved. 

Stanley admitted he helped the four-party TSKJ consortium bribe Nigerian officials. In addition to KBR, Technip, and ENI, the fourth member was Japan's JGC Corporation (once known as Japan Gasoline Co., Ltd.). It hasn't disclosed any FCPA-related investigation or potential enforcement action resulting from its role in the consortium.