Entries in Mario Covino (14)
David Edmonds is the seventh former CCI executive to plead guilty to FCPA charges.
Two former executives of Control Components Inc. became the second husband and wife convicted of FCPA offenses when they pleaded guilty Monday in federal court in Santa Ana, California.
There could be a lot of reasons for the latest order in the Carson case.
An Italian citizen extradited in July last year to face FCPA charges was released from jail two weeks after his arraignment in California. But he can't leave home.
Federal sentencing dates often slip. But if theirs hold, four defendants in FCPA cases will learn their fates this month:
Gerald and Patricia Green -- January 21, 2010.Jim Bob Brown -- January 28, 2010.
Jason Edward Steph -- January 28, 2010.
If all of them are sentenced on schedule, this will be the biggest sentencing month ever for individuals in cases involving the Foreign Corrupt Practices Act.
This month could also see the longest sentence handed out to an FCPA defendant. Under the federal guidelines, Gerald Green, 77, is facing between 20 and 25 years in prison; the government wants him sentenced to life in prison.
And this may be the month when the first married couple -- Gerald Green and his wife Patricia -- are sentenced for FCPA violations. (Stuart Carson and his wife, Hong Rose Carson, face FCPA charges in another pending case.)
Let's update the list of individuals waiting to be sentenced for violating or conspiring to violate the Foreign Corrupt Practices Act. Since October, Frederic Bourke and William Jefferson have been sentenced and come off the list. Charles Jumet, Paul Novak, and Fernando Maya Basurto have entered guilty pleas are are added to it. Juan Diaz was to be sentenced on November 13 but the court reset his date. A reader also let us know that Si Chan Wooh, the former head of Schnitzer Steel's international subsidiary, who pleaded guilty in June 2007 to conspiracy to violate the FCPA, is scheduled to be sentenced next year in federal court in Oregon. So the list now stands at 18.
Here they are:
Joshua Cantor -- no date given.
Thomas Farrell -- no date given.
Gerald and Patricia Green -- December 17, 2009
Charles Paul Edward Jumet -- February 12, 2010
Paul G. Novak -- February 19, 2010
Antonio Perez -- October 6, 2009. [No sentencing reported and no resetting of the sentencing date shown in the court docket.]Si Chan Wooh -- April 26, 2010
Jason Edward Steph -- January 28, 2010
Let us know if we're still missing anyone or if other sentencing dates have changed.
* * *
Words we like. From Abraham Lincoln, October 1858:
It is the eternal struggle between these two principles — right and wrong — throughout the world. They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity, and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, "You toil and work and earn bread, and I'll eat it." No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle.
We count at least thirteen people waiting to be sentenced for violating or conspiring to violate the Foreign Corrupt Practices Act. Both offenses carry a prison term of up to five years. And for substantive offenses the fine can be up to $250,000 or twice the gross gain produced by the bribes. Those on our list either pleaded guilty or were convicted at trial. Their names (linked to posts describing their guilty pleas or convictions) are followed by current sentencing dates. The dates often slip, so we'll try to stay on top of any changes.
Who are they? A former congressman, a famous entrepreneur, husband-and-wife movie producers, c-level executives and top managers. Real people who are probably going to jail. Yes, the FCPA is serious, and the consequences of not complying with it can be tragic.
Frederic Bourke -- November 10, 2009.
Jim Bob Brown -- January 28, 2010.
Mario Covino -- January 25, 2010.
Juan Diaz -- November 13, 2009.
Gerald and Patricia Green -- December 17, 2009.
William Jefferson -- November 13, 2009.
Joseph T. Lukas -- April 6, 2010.
Richard Morlok -- January 25, 2010.
Antonio Perez -- October 6, 2009. [No sentencing reported and no resetting of the sentencing date shown in the court docket.]
Leo Winston Smith -- December 18, 2009.
Albert "Jack" Stanley -- February 24, 2010.
Jason Edward Steph -- January 28, 2010.
Let us know if there are others who belong on the list.
Valve-maker Control Components Inc. (CCI) of Rancho Santa Margarita, California pleaded guilty Friday to violating the anti-bribery provisions of the Foreign Corrupt Practices Act (15 U.S.C. §78dd-2) and the Travel Act (18 U.S. C. §1952). It admitted bribing foreign officials in a decade-long scheme to secure contracts in about 36 countries. CCI's plea agreement requires it to pay a criminal fine of $18.2 million, implement an anti-bribery compliance program, retain a compliance monitor for three years, serve a three-year term of organizational probation, and cooperate with the DOJ's ongoing investigation.
CCI designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries. Its website is here. It's owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.
The corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia) and National Petroleum Construction Company (United Arab Emirates).
From 2003 through 2007, CCI made about 236 corrupt payments to foreign officials in more than 30 countries amounting to $4.9 million. The bribes resulted in sales that produced net profits of about $46.5 million.
Two former executives of CCI pleaded guilty earlier this year to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the valve company. Mario Covino, CCI’s former director of worldwide factory sales, pleaded guilty on Jan. 8, 2009 to one count of conspiracy to violate the FCPA and admitted to causing the payment of $1 million in bribes to officers and employees of several foreign state-owned companies. Richard Morlok, CCI’s former finance director, pleaded guilty on Feb. 3, 2009 to one count of conspiracy to violate the FCPA and admitted to causing the payment of $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced on Jan. 25, 2010.
On April 8, 2009, six former CCI executives were charged in a 16-count indictment with violating the FCPA and the Travel Act (here). They're Stuart Carson, CCI’s former chief executive officer, Hong (Rose) Carson, CCI’s former director of sales for China and Taiwan, Paul Cosgrove, CCI’s former director of worldwide sales, David Edmonds, CCI’s former vice president of worldwide customer service, Flavio Ricotti, CCI’s former vice-president and head of sales for Europe, Africa and the Middle East, and Han Yong Kim, the former president of CCI’s Korean office. Hong (Rose) Carson was also charged with one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States. Their trial is currently scheduled for Dec. 8, 2009.
As the DOJ says, an indictment is merely an accusation and the defendants are presumed innocent until and unless found guilty at trial beyond a reasonable doubt.
Download the DOJ's July 31, 2009 release here.
Download a copy of CCI's July 22, 2009 plea agreement here.
Download the July 22, 2009 criminal information against CCI here.
Download Mario Covino's plea agreement here.
Download Richard Morlok's plea agreement here.
Download the indictment of the six former executives of CCI here.
In the biggest multi-party indictment of individuals yet under the Foreign Corrupt Practices Act, six more former executives of Control Components Inc., an Orange County, Calif.-based valve company, were charged yesterday with a decade-long conspiracy to win contracts by bribing officials at foreign state-owned companies.
The six individuals charged in the indictment are:
- Stuart Carson, 70, of San Clemente, Calif., the former chief executive officer of Control Compenents. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA;
- Hong (Rose) Carson, 45, of San Clemente, Calif., the former director of sales for China and Taiwan of the company (Stuart Carson's wife). She's charged with one count of conspiracy to violate the FCPA and the Travel Act, five counts of violating the FCPA, and one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States;
- Paul Cosgrove, 61, of Laguna Niguel, Calif., the former director of worldwide sales for Control Components. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, six counts of violating the FCPA and one count of violating the Travel Act;
- David Edmonds, 56, of San Clemente, Calif., the former vice president of worldwide customer service at the company. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, three counts of violating the FCPA and two counts of violating the Travel Act;
- Flavio Ricotti, 47, of Italy, the former vice-president and head of sales for Europe, Africa and the Middle East. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the FCPA and three counts of violating the Travel Act; and
- Han Yong Kim, 47, of Korea, the former president of the company's Korean office. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA.
The alleged conspiracy involving the six newly indicted executives stretched from at least 1998 to 2007. The indictment charges that from 2003 to 2007, they caused Control Components to make at least 236 corrupt payments in more than 30 countries. The Justice Department says the company earned net profits of $46.5 million from sales gained by the alleged corrupt payments.
For all of the defendants, the FCPA and Travel Act counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The destruction of records count against Hong (Rose) Carson carries a maximum penalty of 20 years in prison and a fine of $250,000.
The alleged corrupt payments were made to officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia), and National Petroleum Construction Company (United Arab Emirates).
Control Components designs and makes valves for the oil, gas, nuclear, coal and power plant industries. It is owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.
An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
View the DOJ's April 8, 2009 release here.
Download the indictment here.
We count seven Foreign Corrupt Practices Act enforcement actions since the start of the year, including indictments, pleas and settlements, along with one newly disclosed investigation. Four of the enforcement actions involve individuals, and four relate to KBR. By this time last year, there had been just a couple of new enforcement actions (2008 finished with eleven organizations and twenty-six individuals being either charged with new FCPA offenses, settling enforcement actions, or having charges amended, reinstated or affirmed). Here's this year's rundown so far:
Jeffrey Tesler and Wojciech Chodan (March 5, 2009) Indicted by a Federal Grand Jury
Two U.K. citizens who allegedly helped Houston-based Kellogg Brown & Root (KBR) bribe Nigerian officials were indicted for violating the FCPA. Jeffrey Tesler, 60, of London, England, and Wojciech Chodan, 71, of Maidenhead, England, were indicted on Feb. 17, 2009 by a federal grand jury sitting in Houston. The Justice Department unsealed the indictments after Tesler's March 5 arrest by British police, who acted at the request of U.S. authorities. Chodan hasn't been arrested but faces an outstanding U.S. warrant. The DOJ said it will try to extradite Tesler and Chodan from the U.K. to stand trial in the U.S.
Tesler, a lawyer in London, and Chodan, a former employee and consultant of KBR's U.K subsidiary, were charged with one count of conspiracy to violate and ten counts of violating the FCPA. They face up to 55 years in prison if convicted on all counts. The indictment also seeks forfeiture from them of more than $132 million.
Morgan Stanley (February 13, 2009) Investigation Disclosed
The bank said in a short statement that "it has recently uncovered actions initiated by an employee based in China in an overseas real estate subsidiary that appear to have violated the Foreign Corrupt Practices Act. Morgan Stanley terminated the employee, reported the activity to appropriate authorities and is continuing to investigate the matter."
In December 2008, the China-based managing director of Morgan Stanley Real Estate in Shanghai, Garth Peterson, left the bank. And Morgan Stanley's global head of property investing, Sonny Kalsi, was placed on administrative leave. Some of Morgan Stanley's property projects involved investments with government-linked Chinese enterprises. Several high-ranking Chinese officials from Shanghai have been arrested in recent years for corruption in connection with deals in the property market.
KBR and Halliburton (February 11, 2009) Criminal and Civil Enforcement Actions Resolved
Houston-based global engineering firm Kellogg Brown & Root LLC (KBR) pleaded guilty to a five-count criminal information, with one conspiracy count and four substantive counts of violating the Foreign Corrupt Practices Act. KBR agreed to pay a $402 million fine, the second largest criminal fine for an FCPA violation, following Siemens' $450 million penalty in December 2008. KBR’s parent company, KBR Inc., and its former parent company, Halliburton Company, also settled civil FCPA charges with the Securities and Exchange Commission, agreeing to be jointly liable to pay $177 million in disgorgement. The SEC's complaint alleged that Halliburton's internal controls failed to detect or prevent the bribery, and that its records were falsified to cover up the illegal payments.
KBR admitted paying Nigerian officials at least $182 million in bribes for engineering, procurement and construction contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The contracts to an international joint venture led by KBR were worth more than $6 billion. KBR's former CEO, Albert "Jack" Stanley, pleaded guilty in September 2008 to conspiring to violate the FCPA. His sentencing is scheduled for August 2009.
ITT Corporation (February 11, 2009) Civil Enforcement Action Resolved
The SEC filed a settled civil injunctive action in the U.S. District Court for the District of Columbia against New York-based ITT. The complaint alleged violations of the FCPA's books and records and internal controls provisions. ITT agreed to disgorge $1,041,112, together with prejudgment interest of $387,538.11, and pay a $250,000 civil penalty. The SEC said ITT self-reported the violations, cooperated with the SEC's investigation, and instituted remedial measures.
The violations resulted from payments to Chinese government officials by ITT's wholly-owned Chinese subsidiary, Nanjing Goulds Pumps Ltd. (NGP). From 2001 through 2005, NGP paid about $200,000 in bribes to employees of Chinese state-owned enterprises. ITT generated over $4 million in sales through the bribes and made profits of more than $1 million.
Richard Morlok (February 3, 2009) Guilty Plea to a One-Count Criminal Information
Richard Morlok, 55, the former finance director of California-based Control Components Inc., admitted that from 2003 through 2006, he arranged corrupt payments to foreign officials of about $628,000. The payments, usually made through agents, went to employees at state-owned enterprises in order to assist in obtaining and retaining business for his company. He was charged in a one-count information with conspiring to violate the FCPA. He faces up to five years in prison. His sentencing is scheduled for July 2009.
Morlok said in his plea agreement that Control Components, which designs and makes valves for the oil, gas, nuclear, coal and power plant industries, earned about $3.5 million in profits from contracts obtained through the bribes. Illegal payments, he said, went to employees at China National Offshore Oil Company, PetroChina, Jiangsu Nuclear Power Corporation (China), KHNP (Korea), Rovinari Power (Romania) and Safco (Saudi Arabia), among others.
Morlok said that during a 2004 audit he provided false and misleading information about Control Component's commission payments to agents. The company is owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.
Mario Covino (January 8, 2009) Guilty Plea to a One-Count Criminal Information
Mario Covino, 44, an Italian citizen living in Irvine, California and formerly the worldwide sales director for Control Components Inc. (see Richard Morlok above), pleaded guilty in federal court in Santa Ana to a single count of conspiring to violate the FCPA by paying at least $1 million in bribes to foreign officials in several countries. He's cooperating in an ongoing federal investigation and waiting to be sentenced in July 2009. He faces up to five years in prison.
Covino arranged for company employees and agents to pay about $1 million to employees at state-owned foreign enterprises from March 2003 through August 2007. He said his company made about $5 million in profits from the business obtained through the bribes. According to the plea agreement, some of the corrupt payments went to officials at Petrobras (Brazil), Dingzhou Power (China), Datang Power (China), China Petroleum, China Resources Power, China National Offshore Oil Company, PetroChina, Maharashtra State Electricity Board (India), KHNP (Korea), Petronas (Malaysia), Dolphin Energy (UAE) and Abu Dhabi Company for Oil Operations (UAE).
Click on the party names for the original posts, with links to the charging documents, settlements, and news and litigation releases.