LatiNode CEO Jailed For Bribery

Jorge Granados, who once headed Florida-based telecommunications company Latin Node Inc. (LatiNode),  was sentenced Wednesday in federal court in Miami to 46 months in prison for bribing government officials in Honduras.

He pleaded guilty in May to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act by paying more than $500,000 in bribes.

Four senior executives of LatiNode, the DOJ said, have pleaded guilty to FCPA conspiracy charges.

Granados, 55, admitted authorizing bribes to officials from Honduras’s state-owned telecommunications company, Empresa Hondureña de Telecomunicaciones (Hondutel). In 2005, LatiNode won an exclusive “interconnection agreement” with Hondutel for long-distance phone service between Honduras and the U.S.

Granados, Manuel Salvoch, LatiNode's chief financial officer, Manuel Caceres, the vice president for business development, and Juan Pablo Vasquez, the chief commercial officer, agreed in 2006 and 2007 to bribe a general manager at Hondutel, a senior attorney, and a Honduran government minister who served on Hondutel's board.

The defendants laundered the $500,000 bribe money through LatiNode subsidiaries in Guatemala and accounts in Honduras controlled by the Honduran officials.

LatiNode pleaded guilty in 2009 to a criminal information with one count of violating the FCPA. It agreed to pay a $2 million fine. LatiNode's parent, eLandia International Inc., discovered the bribery when it acquired Latinode in 2007. It self-disclosed the payments to the DOJ.

Salvoch and Vasquez pleaded guilty in January this year and are scheduled to be sentenced on December 7 and 8 respectively. Caceres pleaded guilty in May and is scheduled to be sentenced on November 28. They all face up to five years in prison for conspiracy to violate the FCPA.

View the DOJ's September 8, 2011 release here.

Enforcement Report For Q-2 '11

There were two mega settlements during the quarter. Both JGC and Johnson & Johnson made our top-ten list. And there were three other corporate resolutions under $10 million.

The Lindsey defendants -- the company and two officers -- were convicted during the quarter. Their sentencings, originally set for September 16, were vacated after the judge learned about more undisclosed grand jury tesitmony. The defendants' motion to dismiss will be heard on September 8.

There were four guilty pleas by individual defendants. And Gerald and Patricia Green, now indigent, were released after serving their six-month prison sentences. The government may be appealing their 'short' jail terms.

Here's a complete rundown for Q-2:

DOJ / SEC Enforcement Resolutions

JGC Corporation (April 6) -- the last of four TSKJ partners who together paid $180 million in bribes to Nigerian officials -- agreed to a $218.8 million criminal penalty to resolve FCPA-related charges. JGC's settlement is the sixth biggest Foreign Corrupt Practices Act case of all time on the current top ten list.

Comverse Technology Inc. (April 7) settled FCPA violations with the DOJ and SEC for $2.8 million, including a criminal penalty of $1.2 million and $1.6 million in disgorgement and pre-judgment interest. Comverse also received a non-prosecution agreement from the DOJ that expires in two years.

Johnson & Johnson (April 8) agreed to a $77 million resolution of FCPA-related offenses. It will pay a $21.4 million penalty to resolve criminal FCPA charges with the DOJ and $48.6 million in disgorgement and prejudgment interest to settle the SEC’s civil charges. The settlement also made our top ten list.

Rockwell Automation Inc. (May 3) settled an administrative proceeding with the SEC for bribes it paid in China. The company agreed to pay $2.8 million for the settlement, with disgorgement and interest of $2.4 million and a civil penalty of $400,000.

Tenaris (May 17) agreed to a $9 million settlement of FCPA charges, with $5.4 million in disgorgement and prejudgment interest to the SEC and a $3.5 million criminal penalty to the DOJ. The company became the first to enter into a deferred prosecution agreement with the Securities and Exchange Commission in any kind of enforcement action. 

Convicted

Lindsey Manufacturing (May 10) was convicted by a jury of one count of conspiracy to violate the Foreign Corrupt Practices Act and five substantive FCPA violations.

Dr. Keith Lindsey (May 10), 66, CEO of Lindsey Manufacturing, was convicted by a jury of one count of conspiracy to violate the Foreign Corrupt Practices Act and five substantive FCPA violations.

Steve K. Lee (May 10), 60, CFO of Lindsey Manufacturing, was convicted by a jury trial of one count of conspiracy to violate the Foreign Corrupt Practices Act and five substantive FCPA violations. All of the Lindsey defendants have a pending motion to dismiss, scheduled to be heard on September 8.

Guilty Pleas

Flavio Ricotti (April 29), 51, a former FCPA fugitive and Italian citizen, pleaded guilty in federal court in Santa Ana, California to a single count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act. The former vice president for sales of Control Components Inc. was arrested in February last year in Frankfurt, Germany and extradited to the United States. He faces up to five years in prison.

Haim Geri (April 28), 51, one of the 22 shot-show defendants, pleaded guilty 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.

Manuel Caceres (May 18), Latinode's former vice president for business development, pleaded guilty to conspiracy to violate the FCPA.

Jorge Granados (May 19), 54, Latinode's former CEO, pleaded guilty to conspiracy to violate the FCPA's anti-bribery provisions. He's scheduled to be sentenced on August 22.

Released

Gerald Green (May 29), 79, and his wife Patricia, 56, were released from federal custody after serving their six-month jail sentences. They were convicted by an LA jury in 2009 of paying $1.8 million in bribes to Juthamas Siriwan, then-governor of the Tourism Authority of Thailand, in exchange for $13.5 million in contracts to produce the Bangkok film festival. The Greens were the first husband-and--wife to be convicted of FCPA violations.

_______________

Our Enforcement Report for Q-1 '11 is here.

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

More Guilty Pleas In Honduras Bribe Case

The DOJ said today that Jorge Granados, the former CEO of Miami-based Latin Node Inc. (LatiNode), pleaded guilty to conspiring to pay bribes to government officials in Honduras.

Four former senior executives of LatiNode have now pleaded guilty in the case.

Granados, 54, appeared in federal district court in Miami to plead to conspiracy to violate the FCPA's anti-bribery provisions.

He's scheduled to be sentenced on August 22. He faces up to five years in prison and a fine of $250,000 or more.

The DOJ said today that three other LatiNode executives -- Manuel Salvoch, the chief financial officer, Juan Pablo Vasquez, the chief commercial officer, and Manuel Caceres, the vice president for business development -- pleaded guilty to conspiracy to violate the FCPA this year.

Salvoch and Vasquez pleaded in January. Caceres entered his plea yesterday (May 18). They all face prison sentences of up to five years. The DOJ didn't make a separate announcement about Caceres' plea.

In April 2009, LatiNode pleaded guilty to a one-count information charging it with a criminal violation of the FCPA. The company paid a $2 million fine. 

In 2006 and 2007, the DOJ said, the LatiNode executives paid more than $500,000 in bribes to officials at Empresa Hondureña de Telecomunicaciones (Hondutel), Honduras' the state-owned telecommunications authority. The defendants concealed the payments by laundering the money through LatiNode subsidiaries in Guatemala and to accounts in Honduras controlled by the Honduran government officials. Granados admitted that he authorized bribe payments.

View the DOJ's May 19, 2011 release here.

Download the indictment in U.S. v. Granados here.

Download the plea agreement in U.S. v. Salvoch here.

Download the plea agreement in U.S. v. Vasquez here.

Download the plea agreement in US v. Latinode here.

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

*     *     *

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

____________

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

Former Latin Node Execs Charged

The DOJ announced the arrest today of two former executives of Miami-based telecommunications company Latin Node Inc. (LatiNode). They're charged with paying more than $500,000 in bribes to government officials in Honduras.
 
Jorge Granados, 54, the company's former CEO, and Manuel Caceres, 64, a former vice president, were indicted on December 14 by a federal grand jury. They made their court appearance today. They're each charged with with 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.

The DOJ alleged the defendants and others at LatiNode agreed to bribe a manager of the state-owned telecommunications company Empresa Hondureña de Telecomunicaciones, known as Hondutel, and a senior attorney for Hondutel who acted as the manager’s “straw man,” and a minister of the Honduran government who became a representative on the Hondutel board of directors.

In 2006 and 2007, the defendants allegedly paid more than $500,000 in bribes, concealing some of the payments by laundering the money through LatiNode subsidiaries in Guatemala and accounts in Honduras controlled by the Hondutel officials.  

In early 2007, eLandia International Inc. announced an agreement to acquire LatiNode. The indictment alleges that during the due diligence for the acquisition, the defendants hid the bribery by creating phony consulting contracts.

After it acquired LatiNode and discovered the bribes, eLandia self disclosed potential FCPA violations to the DOJ and fired some senior executives.

In April 2009, LatiNode pleaded guilty to a one-count information charging the company with a criminal violation of the FCPA. It paid a $2 million fine. A copy of the plea agreement is here.

Before most of its business was discontinued by eLandia, LatiNode provided wholesale telecommunications services to a number of developing countries by leasing lines from local phone companies.

Granados and Caceres face up to five years in prison on the conspiracy and FCPA counts, and up to 20 years on the money-laundering charges. 

View the DOJ's December 20, 2010 release here.