Haiti Telco Official Pleads Guilty

A former director of state-owned Telecommunications D’Haiti accused of accepting bribes has pleaded guilty in Miami to conspiracy to launder money.

Patrick Joseph, 46, agreed to cooperate with the DOJ in exchange for consideration of a lighter sentence. He faces up to twenty years in prison and already agreed to forfeit $955,000 as part of his plea.

No sentencing date was set.

He appeared Wednesday in federal court before Judge Jose E. Martinez.

In October last year, Judge Martinez sentenced two other defendants in the massive case to long jail terms. Joel Esquenazi, 52, the former president of Terra Telecommunications Corp., received a fifteen year prison term. Carlos Rodriguez, 55, the former executive vice president of Terra, was given an 84-month sentence. They were convicted of multiple FCPA and money laundering counts.

Download a copy of the plea agreement in US v. Patrick Joseph here.

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Four other individuals have been convicted and sentenced for their roles in the Haiti telco case.

In 2009, Antonio Perez, a former controller at Terra, and Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. Last year Perez was sentenced to 24 months in prison and Diaz to 57 months. Both are now serving their jail terms.

In February last year, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty in the case to one count of money laundering for receiving and transmitting bribes. He was sentenced to six months in prison.

Also last year, Robert Antoine, a former director of international affairs for Haiti Telco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted taking more than $1 million in bribes from Miami-based telecommunications companies. He was sentenced to 48 months in prison, which he's now serving.

Other defendants indicted in the case are Washington Vasconez Cruz, Amadeus Richers, Cinergy Telecommunications Inc., Patrick Joseph, Jean Rene Duperval, and Marguerite Grandison. They're charged in a related scheme to commit foreign bribery and money laundering from 2001 through 2006.

Wife Charged in New Haiti Telco Indictment

Sam Rubenfeld of the Wall Street Journal reported Friday that the wife of a current defendant in the Haiti telco case has been indicted.

A second superseding indictment filed in Miami federal court named Cecilia Zurita, a former vice president of Cinergy Telecommunications Inc., as the seventh co-defendant in the case. She allegedly wrote checks for funds later used to bribe officials in Haiti, and covered up the payments with false documentation.

Her lawyer, Joel Hirschhorn, above, told the WSJ he was 'shocked because evidence of criminal conduct is nonexistent. Dismayed because the government tried to blackmail a responsible businessman by trying to indict his wife.'

'You would think the U.S. government has better things to do than chase after legitimate businesspeople,' Hirschhorn said.

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This is the fourth time the DOJ has indicted a husband and wife in an FCPA case.

The first spousal co-defendants were Gerald and Patricia Green. They were convicted and jailed for six months. Stuart Carson and Hong "Rose" Carson of Control Components Inc. are facing trial this summer in California. And Enrique Faustino Aguilar Noriega and Angela Gomez Aguilar were charged in the Lindsey prosecution. She pleaded guilty to money laundering but her plea was vacated after the judge dismissed the indictments against her co-defendants. Her husband didn't appear for trial and was a fugitive in Mexico.

Indicting husbands and wives creates enormous pressure for one of them to cut a plea deal that will make things easier for the other.

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In October,  a defendant in the Haiti telco case, Joel Esquenazi, was sentenced to 15 years in prison -- the longest FCPA-related prison term in history.

A second defendant, Carlos Rodriguez, received an 84-month sentence.

They were convicted by a jury in Miami of bribing officials at state-owned Telecommunications D’Haiti S.A.M. 

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Four other individuals have been convicted and sentenced for their roles in the Haiti telco case.

In 2009, Antonio Perez, a former controller at Terra, and Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. Last year Perez was sentenced to 24 months in prison and Diaz to 57 months. Both are now serving their jail terms.

In February last year, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty in the case to one count of money laundering for receiving and transmitting bribes. He was sentenced to six months in prison.

Also last year, Robert Antoine, a former director of international affairs for Haiti Telco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted taking more than $1 million in bribes from Miami-based telecommunications companies. He was sentenced to 48 months in prison, which he's now serving.

Other defendants indicted in the case are Washington Vasconez Cruz, Amadeus Richers, Cinergy Telecommunications Inc., Patrick Joseph, Jean Rene Duperval, and Marguerite Grandison. They're charged in a related scheme to commit foreign bribery and money laundering from 2001 through 2006. Their trial is set to start next month.

The Week's Best Blog Lit

On his Conflict of Interest Blog, Jeff Kaplan talked this week about people from one company serving on another company's board. He's not always against it. But he flags COI concerns that can come up.

This is always a hard one (ask any risk manager in a big law firm).

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Tom Fox wowed us again with his practical approach. His Ten Compliance Issues from 2011 included this gem: 'With the effective changes in the federal sentencing guidelines from November, 2010 and the DOJ comments this year,' Fox said, 'it has become clear that companies must give a more prominent role to the Chief Compliance Officer and separate that function from that of the General Counsel.'

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On the FCPA Professor, Mike Koehler's discussion about an FCPA appeal stood out. One of the Haiti Telco defendants, Carlos Rodriguez, was sentenced to seven years in prison in October last year. Now he's challenging the jury instruction on who's a 'foreign official.' Koehler thinks Rodriguez has a good shot at winning the appeal.

Incidentally, John O'Shea's 'foreign official' challenge was denied yesterday. Judge Lynn Hughes in Houston adopted the DOJ's view that foreign state-owned enterprises are instrumentalities under the FCPA, which makes their officers and employees 'foreign officials.' As Mike Koehler said today, this was the fifth time the DOJ's interpretation of 'foreign official' was challenged at the trial court level, and all have failed.

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Former federal prosecutor Michael Volkov penned this about wiretaps and the FCPA:

The idea of wiretaps in corporate board rooms sends shivers down every director’s spine. It should. The Justice Department no longer views white collar crime as different than organized crime, gangs or drug trafficking. What that means from a practical standpoint is that federal agents are using the same investigative tactics as they have historically used against organized crime and drug traffickers.

Volkov's Corruption, Crime, and Compliance blog is full of great writing.

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Ever wonder what makes the best news writing?

In a letter to the Washington Post, journalist John B. Holway of  Springfield, Virginia, cited short, simple sentences (and he used a bunch of them to make his point).

He said:

No opening adverbial phrases. No which/who/that subordinate clauses. No phrases between dashes. Throw out every “as” and every gerund. Use concrete nouns and active verbs. Subject-verb-direct object. Drop most adverbs and adjectives; probably the right noun or verb will suffice. Attribution can go in paragraph two. Where and when can also be in paragraph two. Or assume that “when” was “yesterday.”

We're lucky to bat .220 against those fastballs. Plenty of room for improvement. Wish us luck. Later.

Top Stories Of 2011

Some picks for the year's hottest FCPA headlines are these:

#1: Drop in corporate enforcement actions. In 2010, 23 companies settled FCPA cases for $1.8 billion; in 2011, just 15 companies settled for $508.6 million. Reason? The DOJ was distracted by an unprecedented number of FCPA-related trials. But there's no shortage of corporate investigations in the pipeline so look for enforcement to pick up next year. (We'll post our 2011 enforcement index right after the New Year holiday.)

#2: Mistrial in the first Africa sting case. A hung jury in July showed that the DOJ's FCPA unit isn't invincible after all. And in December, the judge dismissed the conspiracy counts against six other defendants in the case, resulting in one defendant's outright acquittal.

#3: Lindsey and Lee dismissals. Why would the government cheat in an FCPA prosecution when it usually wins without breaking a sweat? The judge found the DOJ's tactics so outrageous he dismissed the indictments after the jury heard the case and decided to convict the defendants on all counts. The DOJ is appealing the dismissals. If it loses, will it clean its own house?

#4: Putting the 'foreign' in Foreign Corrupt Practices Act. With the Magyar / Duetsche Telekom settlement this week, nine of the top ten FCPA cases involve non-U.S. companies. We think there's a message there from Washington to the rest of the world.

 #5: The DOJ - SFO partnership is in full bloom. The U.K.'s Serious Fraud Office is prosecuting three former Innospec execs. It charged Alcoa's super agent, Victor Dahdaleh, with corruption and proceeds-of-crimes offenses. And the SFO is leading the global investigation into Paris-based Alstom, a Siemens-sized scandal in the making.

#6: Enforcement actions are getting bigger. The top ten cases now account for criminal and civil penalties and disgorgement of $3.28 billion. Eight were settled in the past two years.

#7: An attitude adjustment at the DOJ? Associate AG Lanny Breuer promised to release detailed FCPA guidance next year, after a thirty-year wait. This month, the DOJ indicted eight former Siemens execs and agents, answering criticism that big companies plead and pay while their people walk.

#8: Fifteen-year prison term. Joel Esquenazi, one of the Haiti telco defendants, took his chances at trial and lost big. His sentence is the longest in FCPA history. Despite the DOJ's missteps in the Africa sting and Lindsey trials, Esquenazi's sentence shows how dangerous and devastating FCPA prosecutions can be.

#9: 'Foreign officials' galore. Motions by FCPA defendants to dismiss based on who's a foreign official failed in the Carson, Lindsey, and Esquenazi cases. The DOJ's view that foreign state-owned enterprises are 'instrumentalities' under the FCPA and their people are therefore 'foreign officials' is the law. Really.

#10: TSKJ keeps on giving. With a mega-settlement this year by JGC and a humongous forfeiture by Jeffrey Tesler, the feds' take on the case climbed to $1.65 billion. No wonder a dozen or so other countries want their own version of the FCPA. There's a fortune to be made in anti-corruption enforcement.

Measuring Naaman's Jail Time

How does the thirty-month prison term Ousama Naaman received last week compare with other FCPA sentences?

It's near the middle.

Here are some shorter sentences:

In January this year, Antonio Perez received two years in prison in the Haiti Telco case. He admitted paying $36,375 in bribes.

Leo Winston Smith was given just six months jail time in December 2010. The former salesman for Pacific Consolidated Industries was 75 and in poor health.

In October 2010, Bobby Jay Elkin Jr., a country manager in Kyrgyzstan for tobacco company Dimon Inc, copped just three years probation. The judge called him a hero for helping his subordinates during local rioting.

In September 2010, Nam Nguyen was sentenced to sixteen months in prison. His brother, An Nguyen, received nine months, and their sister, Kim Nguyen, was sentenced to two years probation.

Joseph Lukas, a co-defendant with the Nguyens, was let off with two years probation.

In August 2010, Hollywood couple Gerald and Patricia Green got six months in jail. Gerald Green, 78, was suffering from emphysema.

Frederic Bourke was sentenced in 2009 to a year and a day in prison. The judge said, “After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”

In all those cases, as in Naaman's, the DOJ had asked for more jail time.

Some longer FCPA-related prison terms are shown below. Five of those defendants, including Joel Esquenazi, were sentenced in the U.S. District Court for the Southern District of Florida (Miami), known as a tough sentencing venue.

In October, Esquenazi received a fifteen-year prison term -- the longest in an FCPA-related case. A jury convicted him on multiple related charges -- one count of conspiracy to violate the FCPA and commit wire fraud, seven substantive FCPA counts, one count of money laundering conspiracy, and twelve counts of money laundering. Each money laundering-related count carried a maximum twenty-year sentence.

Chart courtesy of Michael Volkov of Mayer Brown LLP in Washington, D.C. Volkov is the primary contributor to the Corruption, Crime & Compliance Blog.