Feds Should Forget The Shot Show Defendants

When Judge Richard Leon declared a mistrial in the first shot-show trial Thursday, sending the jury home after five days of deadlocked deliberations, he handed the DOJ's FCPA unit its biggest setback ever. Against the four defendants who went on trial in mid May on multiple counts, there wasn't a single conviction on a single count.

It may not be such a sweet victory for the first four defendants, though. They're still facing retrials and more huge legal fees. Still, it would have been a lot worse for them if they'd been convicted last week. Today they'd be facing serious prison time and forfeiture of their assets.

For us, the mistrial contains some important lessons. Here are three:

Not all of the shot-show defendants were created equal.

Three of the original 22 may have already pleaded guilty, but that doesn't prove the guilt of the others. The three who copped guilty pleas were likely facing the worse of the evidence -- undercover surveillance tapes with them saying really dumb things ("I love bribery"). But not all of the defendants were on all of the tapes, and some hardly appeared at all. The three guilty pleas may have been the low-hanging fruit for the DOJ. The rest will be a lot harder to reach.

Juries may hate bribery, as we often say, but stings really stink.

Let's remember that in this foreign bribery case, there was no real foreign bribery because there was no real foreign official. The guy 'taking the money,' as the jury heard every day, wasn't a crooked pol from Gabon after all. He was a clever fed doing some play acting. Do juries like to see working people tricked by the government in front of multiple hidden microphones and cameras? Nope. In the best of economic and political times, the government isn't all that loved. These days, people think our government is, well, you know.

Bottom line: stings make sizzling headlines but can also produce creepy evidence unfavorable to the prosecution.

An important government witness with severe credibility problems is a weak foundation.

The shot-show case rests almost entirely on Richard Bistrong, who introduced the undercover FBI team to his friends and colleagues in the military and police equipment industry, who were then sucked into the alleged bribery scheme.

Bistrong was himself on the wrong side of the law before the shot-show sting. In September last year, he pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and other statutes. His charges didn't come from the sting but from his own business practices. He then turned state's evidence (and enabler) in the hope of a lighter sentence.

Bistrong brings a lot of baggage, and with 19 defense teams taking aim, his credibility problems put the feds in a fix. The first four defendants said before the shot-show trial opened that the case against them was "built entirely around an irredeemably corrupt con-man, Richard Bistrong, and that, by mishandling him and by other misconduct, the government allowed Bistrong to contaminate every aspect of the operation."

If that's even half true, the government's case was always a house of cards.

*     *     *

Prosecutors said after Thursday's mistrial that they plan to retry the first four shot-show defendants -- Pankesh Patel, Andrew Bigelow, John Benson Weir, and Lee Allen Tolleson. After that, three more trials are still needed for the remaining 15 defendants. (Judge Leon wisely divided the original 22 defendants into four groups. He didn't want his courtroom to become a mass-trial circus where the rights of defendants are a lot harder to protect.)

Our take? The feds never needed to use their bag of tricks to dig up FCPA defendants. There are plenty of real targets out there and they're easy to find. Just listen to the whistleblowers. Or look inside Tyson Foods, Siemens, BAE, Daimler, and dozens of other companies that have admitted violating the FCPA, paid big fines, but produced no individual FCPA defendants.

Forget future shot-show trials.

Focus instead on the real bad apples who paid real bribes to real foreign officials.

_____________________

Editor's Note: The SHOT Show is owned by the Natioanal Shooting Sports Foundation (NSSF) and is a registered trademark of the NSSF. The SHOT Show has no connection with the arrests made by the FBI in Las Vegas in January 0f 2010. No arrests were made at the SHOT Show and neither the SHOT Show nor the NSSF are in anyway involved in the matter.

Mistrial! Gov't Shoots Blanks In Shot-Show Case

The judge in the shot-show case today declared a mistrial.

Here are reports from the Wall Street Journal and Main Justice.

The first four defendants of the original 22 who were charged in the case were Pankesh Patel, Andrew Bigelow, John Benson Weir, and Lee Allen Tolleson. Their trial started in mid May.

The jury deliberated five days without reaching a verdict.

The 22 shot-show defendants were charged in a 44-count superseding indictment with conspiracy to violate the FCPA, violating the FCPA, conspiracy to commit money laundering, and aiding and abetting. They also faced a forfeiture count.

Twenty one of the defendants were arrested two years ago when they were in Las Vegas for an industry event known as the shot show.

The case was the biggest FCPA round up in history. It was also the first time the government used a sting to catch alleged FCPA violators. An FBI agent posed as an official of Gabon who allegedly accepted bribes to award contracts for police and military equipment supply contracts.

The government divided the original 22 defendants into four groups to make the trials more manageable. 

Three of the defendants have already pleaded guilty. Haim Geri pleaded guilty in April to one count of conspiracy to violate the Foreign Corrupt Practices Act. He faces 18 to 24 months in prison and a $250,000 fine. A sentencing date wasn't set. He lives in Miami.

In March, Daniel Alvirez pleaded guilty to two counts of conspiracy to violate the FCPA, and Jonathan Spiller pleaded guilty to one FCPA conspiracy count. They haven't been sentenced.

In September last year, Richard Bistrong, the key intermediary between the FBI and the shot-show defendants, pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and other statutes. He's waiting to be sentenced.

According to a report in the Blog of the Legal Times, a defense filing before the shot-show trial opened alleged that the “prosecution is built entirely around an irredeemably corrupt con-man, Richard Bistrong, and that, by mishandling him and by other misconduct, the government allowed Bistrong to contaminate every aspect of the operation."

Following a mistrial, defendants can be put on trial again for the same offenses.

Guilty Plea By Shot-Show Defendant

Haim Geri, one of the 22 shot-show defendants, pleaded guilty yesterday 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.

Geri, 51, who lives in Miami, was charged in a superceding indictment with conspiracy to violate the FCPA, violating the FCPA, conspiracy to commit money laundering, and aiding and abetting. He also faced a forfeiture count.

The government charged the shot-show defendants with plotting to bribe the minister of defense for Gabon to sell military and law enforcement products. But the scheme was part of an FBI undercover operation and no foreign official was actually involved.

Geri agreed to pay a 20 percent "commission" to a sales agent who he believed represented Gabon's minister of defense. The bribe was intended to win a portion of a $15 million deal to outfit the country’s presidential guard. The "sales agent" was an undercover FBI agent.

Last month, Daniel Alvirez, another shot-show defendant, pleaded guilty to two counts of conspiracy to violate the FCPA, and Jonathan Spiller pleaded guilty to one count of conspiracy to violate the FCPA.

In September last year, Richard Bistrong, the key intermediary between the FBI and the shot-show defendants, pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and other statutes.

Bistrong, a former vice president for international sales at Armor Holdings Inc., faces up to five years in prison and a $250,000 fine. His sentencing is pending.

Download Haim Geri's April 28, 2011 plea agreement here.

Our thanks to a reader in Washington, D.C. for the research for this post.

Key Witness In Shot-Show Case Pleads Guilty

Richard Bistrong, the key intermediary identified as “Individual 1” in the historic bribery indictment of 22 people from the military and police-equipment industry, pleaded guilty today in federal court in Washington, D.C. to one count of conspiracy to violate the Foreign Corrupt Practices Act and other statutes.

Bistrong, a former vice president for international sales at Armor Holdings Inc., faces up to five years in prison and a $250,000 fine. He reportedly agreed not to request a downward departure from the federal sentencing guidelines. His sentencing date hasn't been set.

Bistrong helped the government build its case against the 22 shot-show defendants over at least two years. In the massive indictment, the biggest ever in an FCPA case, he was identified as "individual 1," and was said to have been instrumental in introducing FBI agents to some of the defendants.

His guilty plea had been expected after he was charged in January in a one-count criminal information under the federal conspiracy statute (18 U.S.C. § 371). The information accused him of conspiring with others to violate the Foreign Corrupt Practices Act's antibribery provisions, 15 U.S.C. §78dd-1, its books and records provisions, 15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5) and 78ff(a), and the Commerce Department's export license rules, 50 U.S.C. §§ 1701-1706 and 15 C.F.R. §§ 736.2, 764.2, and 774.

Bistrong's former employer, Armor Holdings, was a publicly traded military equipment manufacturer based in Jacksonville, Florida. Amor became a subsidiary of BAE Systems after the British firm acquired it in 2007. Bistrong was fired after the acquisition.

The DOJ alleged that from 2001 through 2006, he and others concealed about $4.4 million in payments to agents and other intermediaries who helped Armor Products obtain business from "foreign government customers" in Nigeria and the Netherlands.

Payments for sales to the United Nations for its mission in Iraq were also involved. Representatives of "public international organizations" such as the U.N. are "foreign officials" under the FCPA. 15 U.S.C. §§ 78dd-l(f)(l)(A) and 78dd-l(f)(I)(B).

The information also alleged that in March 2004, Bistrong and another employee authorized the export from the U.S. to the United Arab Emirates for further shipping to Iraq of vests and helmets "without obtaining a required license from the Commerce Department to do so."

View the DOJ's September 16, 2010 release here.

Download a copy of the information in U.S. v. Richard T. Bistrong here.

Shot-Show Prosecution May Expand

As reported Friday, one of the 22 shot-show defendants, Daniel Alvirez, is expected to plead guilty soon to charges of conspiracy to violate the Foreign Corrupt Practices Act. The government's two-count superseding information alleged that he plotted to bribe defense officials in Africa and the Republic of Georgia.

What to expect now? We asked someone familiar with the evidence, who requested anonymity. Here's what he or she told us:

The government's video and audio tapes are of good quality and the confidential informant, Richard Bistrong, should be an effective witness despite some baggage. Overall, the cases appear to be strong and supported by ample evidence.

There are indications of more foreign bribery involving the military-equipment industry; the allegations in the first 16 indictments (available here) and the superseding information may be the tip of the iceberg. 

The Justice Department is seeking to build bigger cases against some current defendants. It may also indict other individuals.

Investigators could also be looking at involvement by some well-known industry leaders -- an Indian military-equipment supplier, three U.S. public companies, and two large private security contractors among them.

Countries and governments involved may include not just Georgia (mentioned in the superseding information) but also Peru, Mexico, Saudi Arabia, Guatemala, the Philippines, Colombia, and others. Representatives from some of the countries could be targeted by the Justice Department.