Greens Can't Afford Fines; U.S. Appeals Their Sentences

The DOJ is appealing the six-month prison sentences imposed in August on Gerald Green and his wife Patricia.

The government wanted them to serve at least ten years in prison. Their six-month sentences are among the most lenient in recent FCPA cases.

Gerald Green is 78 and suffers from emphysema. His wife is 53. Judge Wu delayed their sentencing five times. In addition to six months in prison, the judge ordered supervised release for three years and restitution from the Greens jointly and severally of $250,000.

The Hollywood movie producers were convicted in September 2009 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 signing a false U.S. income tax return.

Despite their short prison terms, the Greens didn't get off easy. At the government's request, the judge ordered forfeiture of their property. Their bank accounts, West Hollywood home and most of what's in it, BMW 740, their company, and their pension assets were all seized.

Judge Wu then addressed the Greens as indigents. "All fines are waived," he ruled as to each of them, "as it is found that the defendant does not have the ability to pay."

He asked them to settle the $250,000 restitution they jointly owe by paying $50 a month. That means they'll be square in 5,000 months -- about 416 years.

In April this year, Charles Jumet was sentenced to 87 months in prison after pleading guilty to conspiring to violate the FCPA by making corrupt payments to government officials in Panama and giving a false statement to the FBI about how he paid some of the bribe money. 

Jumet's co-conspirator, John Warwick, was sentenced in June to 37 months in prison. He also received two years of supervised release following his prison term and forfeited $331,000 in proceeds of the crime.

In April last year, the Virginia-based physicist who sold controlled space-launch technology to China by bribing government officials there was sentenced to 51 months in prison. Shu Quan-Sheng pleaded guilty in 2008 to one count of violating the Foreign Corrupt Practices Act and two counts of violating the Arms Export Control Act.

Frederic Bourke was sentenced to a year and a day in prison and fined $1 million for investing in a bribe-tainted deal in Azerbaijan and then lying to FBI agents about it. He was convicted in 2009 by a Manhattan jury of conspiracy to violate the FCPA. He's appealing his conviction.

And Juan Diaz, a Miami businessman at the center of the Haiti telco bribery case, was sentenced to 57 months in prison followed by three years of supervised release. He pleaded guilty in 2009 to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and money laundering.

The Greens' surrender date to the U.S. Marshals in LA, for transport to federal prison, is November 29, 2010.

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Download a copy of the August 13, 2010 forfeiture order against Gerald and Patricia Green here.

Download a copy of the government's October 8, 2010 notice of appeal in US v. Green here.

The Enforcement Rap Sheet

If the DOJ and SEC are prosecuting corporations instead of individuals for FCPA violations -- an idea raised in another post -- the numbers should show it. So let's take a look.

We'll use figures from Shearman & Sterling's latest FCPA Digest to compare prosecutions from 2005 through 2009. For 2010, we'll use our own numbers.

For all the years examined, a joint enforcement action by the DOJ and SEC against a corporate defendant and any its subsidiaries, or any one individual, is counted one time. For each year, only newly initiated enforcement actions are counted.

In 2005, there were eight corporate enforcement actions and eight individual prosecutions.

In 2006, there were eight corporate and nine individual prosecutions.

In 2007, the start of the modern FCPA era, there were 25 corporate and 17 individual enforcement actions.

In 2008, there were 16 corporate and 18 individual actions.

In 2009, there were 15 new corporate actions and 42 individuals charged, including the 22 shot-show defendants indicted in December 2009.

So far in 2010, our count is 13 new corporate actions and 12 individuals charged.

The combined numbers for 2005 through today show 84 corporate actions and 105 individuals charged.

What does that mean? There's a rough equivalency between corporate and individual actions. In most years the ratio is nearly one-to-one if the 22 shot-show defendants aren't counted. If the shot-show defendants are counted, there are five individual actions for every four corporate actions. And the ratio for each of the years, except the shot-show year of 2009, holds quite steady. The raw numbers, then, don't support the idea that corporate enforcement is gaining the upper hand over individual actions.

But the raw numbers don't tell a crucial fact -- who the individual defendants worked for. If a significant number of them worked for companies that weren't charged, or if multiple defendants worked for the same company, that would mean for many corporate enforcement actions, no individuals from those companies faced FCPA prosecutions.

Here's what we know. There are several cases where two or more individual defendants worked for the same company that was itself an FCPA defendant. Examples would be the eight defendants from Control Components Inc., four from Nexus Technologies, four from Alliance One, and three from Willbros. And there are many cases where the employers of individual defendants weren't charged. Included would be Ports Engineering Consultants Corporation, employer of Charles Jumet and John Warwick, AMAC International, employer of Shu Quan-Sheng, and JD Locator Services, employer of Juan Diaz. That leaves lots of corporate enforcement actions since 2005 where no individuals from those companies have been charged.

Which brings us back to the earlier question: Are corporate settlements replacing the prosecution of individuals from the companies involved in the settlements?

Coming up: A look at the enforcement record in a new way.

Greens Get Six Months In Jail

Patricia Green, with her husband Gerald The husband-and-wife Hollywood movie producers convicted of bribing a Thai government official were each sentenced to six months in jail and six months home confinement yesterday by a federal judge in Los Angeles.

Gerald Green, 78, and Patricia Green, 53, were also ordered to each pay $250,000 in restitution.

Judge George H. Wu had delayed the Greens' sentencing five times. Prosecutors first argued that the federal guidelines called for sentences of around 20 years in prison. In a brief filed this week, they asked for ten-year jail terms. The Greens' lawyers had argued for no jail time.

The Greens were convicted last year after a jury trial of paying $1.8 million in bribes from 2003 to 2007 to Juthamas Siriwan, governor of the Tourism Authority of Thailand and the president of the Bangkok film festival. In exchange, prosecutors said, the Greens obtained contracts worth about $13.5 million to produce the film festival.

The couple's six-month prison terms are the most lenient in recent FCPA cases.

In April this year, a Virginia man was sentenced to 87 months in prison after pleading guilty to conspiring to violate the FCPA by making corrupt payments to government officials in Panama and giving a false statement to the FBI about how he paid some of the bribe money. Charles Jumet's sentence is the longest FCPA-related prison term ever imposed.

Jumet's co-conspirator, John Warwick, was sentenced in June to 37 months in prison. He also received two years of supervised release following his prison term and forfeited $331,000 in proceeds of the crime.

In April last year, the Virginia-based physicist who sold controlled space-launch technology to China by bribing government officials there was sentenced to 51 months in prison. Shu Quan-Sheng pleaded guilty in 2008 to one count of violating the Foreign Corrupt Practices Act and two counts of violating the Arms Export Control Act.

Frederic Bourke was sentenced to a year and a day in prison and fined $1 million for investing in a bribe-tainted deal in Azerbaijan and then lying to FBI agents about it. He was convicted in 2009 by a Manhattan jury of conspiracy to violate the FCPA.

And last month, Juan Diaz, a Miami businessman at the center of the Haiti telco bribery case, was sentenced to 57 months in prison followed by three years of supervised release. He pleaded guilty in 2009 to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and money laundering.

The Greens were found 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 signing a false U.S. income tax return. The conspiracy and FCPA charges were 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 carried a maximum penalty of three years in prison.

The Thai official involved in the case, Juthamas Siriwan, and her daughter were indicted by a federal grand jury in LA in January this year. They 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, they each face up to 20 years in prison.

Gerald Green has emphysema and has appeared in court with an oxygen bottle to help him breathe. The judge had ordered production of his medical records. At a series of post-trial hearings, Judge Wu had also asked prosecutors and defense lawyers to talk about penalties handed out in similar cases. 

Enforcement Report For Q2 '10

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.

Longest FCPA Prison Sentence

The Virginia man who pleaded guilty in November to being part of an overseas bribery conspiracy that began in 1996 was sentenced today to 87 months in prison and fined $15,000. Prosecutors said it's the longest sentence ever in an FCPA-related case.

Charles Paul Edward Jumet, 53, had been charged in a two-count criminal information. In his guilty plea, he admitted conspiring with others to violate the FCPA by making corrupt payments to government officials in Panama and giving a false statement to the FBI about how he paid some of the bribe money.

Jumet, an American citizen, was an officer of Ports Engineering Consultants Corporation (PECC), an affiliate of Virginia Beach-based Overman Associates. In December 1997, the Panamanian government awarded PECC a no-bid, 20-year contract to maintain lighthouses and buoys along Panama’s waterway. In exchange, Jumet and others authorized corrupt payments to Panamanian officials.

By 2003, he and his co-conspirators had paid $212,400 to the former administrator and deputy administrator of Panama’s National Maritime Ports Authority and to a former, high-ranking elected official of Panama.

The FCPA conspiracy count carried a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the gross gain or loss from the scheme. The false statement count carried a maximum penalty of five years in prison and a fine of $250,000.

Under the conspiracy law, 18 U.S.C. § 371, the statute of limitations can reach back to FCPA-related criminal behavior more than five years old if the conspiracy ended within the past five years.

A second man has also pleaded guilty in the case. John W. Warwick, 64, of Virginia Beach, Va., admitted in February to allegations in a one-count indictment charging him with conspiring to bribe Panamanian officials. He agreed to forfeit $331,000 that he made through the bribery. He's scheduled to be sentenced on May 14, 2010.

According to the Richmond Times Dispatch, Jumet said at sentencing: "I am truly sorry for what I have done." He said he initially didn't know the deal involved anything illegal, but conceded he didn't withdraw once he did learn.

The DOJ's Lanny Breuer said, "Today’s sentence -- the longest ever imposed for violating the FCPA –- is an important milestone in our effort to deter foreign bribery. As this case confirms, foreign corruption carries with it very serious penalties, which can include substantial prison time for individuals who violate the law."

View the DOJ's April 19, 2010 release here.

Download the November 10, 2009 criminal information in U.S. v. Charles Paul Edward Jumet  here.

Download the DOJ's statement of facts here.

Download Jumet's plea agreement here.

Download John W. Warwick's plea agreement here.