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FCPA Blog Daily News

Entries in Panama (55)

Monday
Apr192010

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.

Wednesday
Feb102010

Second Guilty Plea For Panama Bribes

DOJ Release February 10, 2010 -- A Virginia resident pleaded guilty today in connection with his role in a conspiracy to pay bribes to former Panamanian government officials.

John W. Warwick, 64, of Virginia Beach, Va., pleaded guilty before U.S. District Court Judge Henry E. Hudson in Richmond, Va., to a one-count indictment charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for Ports Engineering Consultants Corporation (PECC) in violation of the Foreign Corrupt Practices Act (FCPA).

Warwick was indicted on Dec. 15, 2009. PECC, a company incorporated under the laws of Panama, was affiliated with an engineering firm based in Virginia Beach. According to the indictment, PECC was created so that Warwick, co-conspirator Charles Jumet, the engineering firm and others could corruptly obtain certain maritime contracts from the Panamanian government.

According to court documents, Warwick and Jumet participated in a conspiracy to pay money secretly to Panamanian government officials for awarding contracts to PECC to maintain lighthouses and buoys along Panama’s waterway. In December 1997, the Panamanian government awarded PECC a no-bid 20-year concession to perform these duties. Upon receipt of the concession, Warwick, Jumet and others authorized corrupt payments to be made to the Panamanian government officials.

In connection with his guilty plea, Warwick admitted that at least from 1997 through approximately July 2003, he, Jumet and others conspired to make corrupt payments totaling more than $200,000 to the former administrator and deputy administrator of the Panama Maritime Authority and to a former, high-ranking elected executive official of the Republic of Panama.

As part of his plea agreement, Warwick has agreed to forfeit $331,000, which represents the proceeds of this crime. At sentencing, scheduled for May 14, 2010, at 10:30 a.m. before Judge Hudson, Warwick faces a maximum of five years in prison and a fine of the greater of $250,000 or twice the gain or loss.

Jumet pleaded guilty on Nov. 13, 2009, to a two-count criminal information charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for PECC, in violation of the FCPA, and making a false statement. Jumet is scheduled to be sentenced on March 26, 2010.

A copy of the plea agreement in U.S. v. Warwick can be downloaded here.

Wednesday
Dec162009

Another Indictment In Panama Bribes Case

A Virginia man yesterday became the second person charged with bribing former Panamanian government officials in exchange for maritime contracts. John W. Warwick, 63, was indicted by a federal grand jury in Richmond for conspiracy to violate the Foreign Corrupt Practices Act. He allegedly plotted with others to pay foreign officials to obtain business for Ports Engineering Consultants Corporation (PECC). The company was a Panama affiliate of Overman Associates, a Virginia Beach engineering firm.

Last month in the same case, Charles Paul Edward Jumet, 53, pleaded guilty to a two-count criminal information. He admitted conspiring to violate the FCPA by making corrupt payments to government officials in Panama on behalf of PECC and giving a false statement to the FBI about how he paid some of the bribe money. He's scheduled to be sentenced on February 12, 2010. See our post here.

Warwick's indictment alleges that he, Jumet and others conspired to make corrupt payments totaling more than $200,000 to the former administrator and deputy administrator of the Panama Maritime Authority and to "a former, high-ranking elected executive official" of Panama. In December 1997, Panama awarded PECC a no-bid, 20-year contract to maintain lighthouses and buoys. Warwick was the company's former president.

If convicted, Warwick faces a maximum of five years in prison and a fine of the greater of $250,000 or twice the gain or loss. The indictment seeks forfeiture of the proceeds Warwick and Overman Associates received from PECC's Panama contracts.

As the DOJ says, an indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.

View the Justice Department's December 16, 2009 release here.

Download a copy of the December 15, 2009 indictment in U.S. v. Warwick here.

Sunday
Nov152009

Guilty Plea In (Old) Panama Bribes Case

A Virginia man pleaded guilty on Friday, November 13th to being part of an overseas bribery conspiracy that began in 1996 and ended in 2003. Charles Paul Edward Jumet, 53, was charged in federal court in Richmond, Virginia under a two-count criminal information. He admitted conspiring with others to violate the Foreign Corrupt Practices Act 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 Virignia 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 more than $200,000 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 bribery plot started in 1996 and was first uncovered by the U.S. Department of Homeland Security in 2004. The FBI later joined the investigation.

As in Frederic Bourke's case, the DOJ charged Jumet not with a substantive FCPA offense but under the conspiracy statute, 18 U.S.C. § 371. For conspiracy, the statute of limitations can reach back to criminal behavior more than five years old if the conspiracy ended within the past five years. Here's what the U.S. Attorneys Criminal Resource Manual says

Conspiracy is a continuing offense. For statutes such as 18 U.S.C. § 371, which require an overt act in furtherance of the conspiracy, the statute of limitations begins to run on the date of the last overt act. See Fiswick v. United States, 329 U.S. 211 (1946); United States v. Butler, 792 F.2d 1528 (11th Cir. 1986).

Jumet is scheduled to be sentenced February 12, 2010. The FCPA conspiracy count carries 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 carries a maximum penalty of five years in prison and a fine of $250,000.

A copy of the DOJ's November 13, 2009 release is 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 the plea agreement here.

Our thanks to Matthew Reinhard and Cody Worthington for helping us with this post.

Tuesday
Sep082009

The Face Of A Fugitive

He's the only FCPA fugitive with his own wanted poster. That's how we know Frerik Pluimers is a big guy -- six three, two hundred thirty-five pounds. Brown hair, brown eyes. Born September 30, 1946. Netherlands passport number W118268941. Indicted in April 1998, when he was president and CEO of New Jersey-based Saybolt International -- charged with violating the Foreign Corrupt Practices Act, the Travel Act, aiding and abetting and conspiracy. He was in Rotterdam, Holland when indicted and didn't come back to the U.S. to face prosecution.

A decade passed with no sign of Pluimers. Then, in March 2008, a Washington, D.C. lawyer appeared in federal court on his behalf. The lawyer, J. Sedwick Sollers, III, had some big news. His client, he said, was "scheduled to appear before the Court for arraignment, guilty plea and sentencing on March 28, 2008."

What happened next? Nothing. There's no record of Pluimers appearing in court on that day or any other. In fact, there's nothing in the docket after Sollers' notice. Pluimers had said, through the lawyer, that he'd be there. But he never showed up. Strange.

And about Pluimers' wanted poster. It's not from the Justice Department or the FBI, as you'd expect in an FCPA case, but the Environmental Protection Agency. Why the EPA? Here's what we know.

In the mid-1990s, Pluimers' former company, Saybolt, falsified results for gasoline it tested by understating lead emissions. In January 1999, the company pleaded guilty in U.S. federal court to conspiracy to violate the Clean Air Act and wire fraud. It paid a $4.9 million fine and spent five years on probation. A former Saybolt vice president, Thomas M. Hayes, was also convicted under the Clean Air Act and sentenced to 57 months in prison.

While digging into Saybolt, the EPA’s Criminal Investigation Division had discovered a $50,000 bribe in 1995 to a Panamanian government official. In exchange, Saybolt won tax concessions and access to a prime business location along the Panama Canal. Indicted in 1998 for the bribe were Pluimers, along with his colleague David H. Mead. Mead went to trial and was found guilty. He served four months in prison and paid a $20,000 fine (here). But Pluimers ran.

Why, though, is the EPA chasing him? His indictment relates only to the Panama bribe. That's not the EPA's turf. So maybe there's something more. Maybe the EPA also indicted him along the way for criminal violations of the Clean Air Act, but decided to keep the indictment sealed until the day of his arrest, which hasn't come yet.

The lawyer who said in March 2008 that Pluimers would turn himself in defends both environmental and FCPA cases. Was Pluimers ready to cut a deal with the DOJ and EPA? Looks like it. Did something or someone spook him at the last minute? Could be. Whatever happened, Frerik Pluimers, the man on the wanted poster, is still an FCPA fugitive.

Download the November 1, 2008 U.S. EPA / CID Wanted Poster of Frerik Pluimers here.

Download the March 24, 2008 Notice of Appearance: J. Sedwick Sollers, III, appearing for Frerik Pluimers in USA v. MEAD, et al , U.S. District Court District of New Jersey, Case No.: 3:98-cr-00240-AET-2 here.

A special thanks to Cody Worthington in Washington, D.C. for his research for this post.
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Tuesday
Apr282009

Catching Corrupt Lawyers, Part II

A lawyer with his briefcase can steal more than a hundred men with guns. -- Mario Puzo

With that street-smart aphorism in mind, we went looking for Foreign Corrupt Practices Act-related cases where lawyers were alleged to be on the wrong side of the law.

Turns out there aren't many. Here's the rundown:

Jeffrey Tesler -- indicted by a Houston grand jury in February. Prosecutors say he was a middleman who handled or arranged corrupt payments from KBR to Nigerian officials. The London lawyer was arrested by British police in March at the request of American authorities, who are trying to extradite him to stand trial in the U.S.

Two American law firms were mentioned in November 2008 during an anti--corruption sweep in China. Avon had disclosed possible FCPA violations involving payments to Chinese regulators. Authorities there were reported to be reviewing foreign investment cases in which the two U.S. firms with offices in Hong Kong and Beijing played a role. The firms (and their lawyers) haven't been named.

J. Bryan Williams, a lawyer in Virginia, was an executive at Mobil Oil. He was also a friend of James H. Giffen, an American businessman arrested in New York in 2003 for paying $78 million in bribes to an adviser of Kazakhstan's president and former oil and gas minister. Williams took a $2 million kickback from Giffen for helping negotiate a deal involving Kazakhstan's Tengiz oil field. Williams pleaded guilty in September 2003 to tax charges and was sentenced to 46 months in prison. Giffen is awaiting trial.

Hans Bodmer, a Swiss lawyer, represented Viktor Kozeny, the Czech-born fugitive charged with Frederic Bourke with bribing government officials in Azerbaijan. Bodmer was indicted by a New York federal grand jury in August 2003 on single counts of conspiracy to violate the FCPA and to launder money. The court dismissed the FCPA charge, ruling that before being amended in 1998, the FCPA didn't apply to non-U.S.-resident foreign nationals who served as agents of domestic concerns. Bodmer then pleaded guilty to conspiracy to launder money. He's never been sentenced.

Attorney Philippe S.E. Schreiber represented Saybolt Inc. It's president, David Mead, said during his 1998 trial that he paid a $50,000 bribe to government officials in Panama only after Schreiber said it wouldn't violate the FCPA. That advice was wrong. Saybolt and Mead were charged with violating the FCPA. Mead was convicted and sentenced to four months in prison, home detention and probation, and a $20,000 fine; Saybolt's FCPA offenses resulted in five-years probation and a $1,500,000 fine. And Schreiber? Saybolt's shareholders sued him for legal malpractice (the case was settled in 2005); and the government never indicted him.

Alfredo Duran, a Miami lawyer, was charged in 1989 with arranging a bribe to officials in the Dominican Republic. The government said a $20,000 to $30,000 payment was intended to secure release of an airplane confiscated in a drug case. Duran's co-defendant jumped bail and returned to the Dominican Republic. At Duran's federal trial in Florida on FCPA charges, the court excluded evidence concerning the fugitive co-defendant, resulting in Duran's acquittal.

In 1994, attorney Harold Katz was indicted for bribing an Israeli Air Force officer to induce the purchase and maintenance of GE aircraft engines worth $300 million. The bribes, paid into Swiss bank accounts, totaled $7.8 million. A co-defendant was charged under the FCPA, while Katz faced mail and wire fraud and money laundering charges. He was never apprehended and remains a fugitive.

* * *
That's it, then. Pretty thin record, isn't it? So the verdict on Mr. Puzo's wisdom about that briefcase? Well, either he's wrong when it comes to the FCPA and lawyers aren't the culprits after all. Or he's right and they don't get caught.
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Wednesday
Oct032007

The "I Didn't Know" Defense

As defenses against the U.S. Foreign Corrupt Practices Act go, "I didn't know" is among the most popular. I didn't know it was against the law. I didn't know our agent would give money to foreign officials. I didn't know our partner's brother-in-law works for the prime minister. Often the defense has no visible means of support and is only a handy excuse. Other times, though, the defense is sincere and looks strong. But even then it probably won't work, as David H. Mead discovered the hard way back in 1998.

Mead, the former president of Saybolt Inc., was charged with violating and conspiring to violate the FCPA's anti-bribery provisions by making a $50,000 corrupt payment to government officials in Panama. Mead pleaded not guilty and went to trial. His defense rested in part on evidence that Saybolt's former outside counsel had advised that the $50,000 payment might not violate the FCPA if it came from Saybolt's Dutch affiliate. That advice was wrong, and Saybolt and Mead were indicted. Saybolt -- which later sued its former lawyer for legal malpractice -- pleaded guilty and paid a $1.5 million fine.

At Mead's trial, prosecutors had the burden of proving Mead acted with "knowledge" that the $50,000 payment was illegal under U.S. law. In his instructions to the jury, the judge explained the concept of legal "knowledge" and how the jury could determine what Mead knew:
_____________

Ladies and Gentlemen of the Jury:

The element of knowledge may be satisfied by inferences you may draw if you find that the defendant deliberately closed his eyes to what otherwise would have been obvious to him. When knowledge of the existence of a particular fact is an element of the offense, such knowledge may be established if a person is aware of a high probability of its existence and then fails to take action to determine whether it is true or not.

If the evidence shows you that the defendant actually believed that the transaction was legal, he cannot be convicted. Nor can he be convicted for being stupid or negligent or mistaken; more is required than that. But a defendant’s knowledge of a fact may be inferred from willful blindness to the knowledge or information indicating that there was a high probability that there was something forbidden or illegal about the contemplated transaction and payment. It is the jury’s function to determine whether or not the defendant deliberately closed his eyes to the inferences and the conclusions to be drawn from the evidence here.
_____________

The jury, for some reason, didn't believe that Mead believed the payment was legal. Nor did the jury believe he had been stupid or negligent or mistaken. Had he been willfully blind? That would mean he knew more than Saybolt's own lawyer. Unfortunately for Mead, in the face of the evidence the jury somehow found that he had "knowledge" the payment would violate the law. He was convicted and sentenced to four months in prison, home detention and probation, and a $20,000 fine. The best explanation is that the New Jersey jury simply didn't want a $50,000 bribe to a government official in Panama to go unpunished.

If the "I didn't know" defense didn't work back then for David H. Mead -- who violated the FCPA on the advice of counsel -- then it's unlikely to work now in most other cases.

See U.S. v. David H. Mead and Frerik Pluimers (Cr. No. 98-240-01), D.N.J., 1998. See also Stichting Ter Behartiging Van De Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. (Foundation of the Former Shareholders of Saybolt International B.V.) v. Philippe S.E. Schreiber and Walter, Conston, Alexander & Green P.C. (S.D.N.Y.) (99 Civ. 114411, Memorandum Order, Filed June 13, 2001) and U.S. v. Saybolt North America Inc. (Cr. No. 98CR10266WGY), D. Mass., Aug. 18, 1998.

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