Has More FCPA Enforcement Brought Less Deterrence?

By Joe Cassin

The DOJ ramped up FCPA enforcement over the past five years. But could its aggressive pursuit of prosecutions be hurting attempts to deter corruption? It’s possible.

One criminology theory particularly applicable to white collar crime is neutralization. It postulates that people invoke learned excuses to justify violating legal norms they generally subscribe to. "Condemnation of the Condemners" is one such neutralization. It attempts to shift the focus from the offender’s actions to the actions of the legal authorities –- most commonly achieved by accusing the authorities of corrupt or oppressive behavior. By successfully focusing on the authorities’ actions, a person is able to neutralize the standards that would normally control his or her behavior.

Several high-profile FCPA prosecutions recently ended badly for the DOJ. In two separate Africa sting trials, there were three acquittals and juries deadlocked on all counts as to seven other defendants. The 0-10 result for the DOJ led one defense lawyer in the case to refer to the entire Africa sting prosecution as a “made-up fantasy.”

Last December, a federal judge in California cited prosecutorial misconduct when he threw out the convictions of Keith Lindsey, Steven Lee, and Lindsey Manufacturing. Earlier this year, a judge in Houston acquitted John O'Shea of all substantive FCPA charges due to a lack of evidence. In delivering his ruling, the judge said: "The problem here is that the principal witness against Mr. O'Shea . . . knows almost nothing."

Prior to 2011, the DOJ’s FCPA unit maintained a near spotless record, leaving little rational basis for any condemnation. But “fantasy” cases, unsubstantiated charges, and allegations of blatant prosecutorial misconduct have arguably cast reasonable doubt upon some of the DOJ’s tactics. This doubt may readily serve as a means for future FCPA violators to condemn the DOJ and thus neutralize FCPA deterrence.

Africa sting defense counsel Paul Calli reminded us that “the ends never justify the means." If the DOJ is serious about deterring FCPA violations, it needs to recognize the ramifications of overzealously pursuing suspected violators. Otherwise, its means will not only be unjustified but could actually facilitate future FCPA violations.

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Joe Cassin is a law enforcement officer in Texas. He can be contacted via the FCPA Blog here.

DOJ May End Africa Sting Prosecutions

The boss of the DOJ's criminal division and the U.S. Attorney for the District of Columbia asked Judge Richard Leon Tuesday for time to consider 'whether to continue to go forward' with the Africa sting case.

Judge Leon granted a request from Lanny Breuer and Ronald Machen to delay the pending cases until February 21 while the DOJ decides what to do.

Two Africa sting trials of ten defendants have resulted in three acquittals and hung juries as to seven other defendants.

Twenty-two defendants were arrested after a two-and-a-half year undercover "sting" operation by the DOJ and FBI agents. All but one defendant was arrested in Las Vegas during an annual trade show for military and law enforcement equipment companies.

Prosecutors alleged that the defendants tried to bribe the defense minister of Gabon, Africa to win contracts to provide body armor, weapons, and military gear. U.S. government agents posed as officials from Gabon.

Three defendants in the case have pleaded guilty to FCPA conspiracy or substantive charges. Haim Geri, Daniel Alvirez, and Jonathan Spiller haven't been sentenced yet.

The DOJ's FCPA unit has suffered other trial losses in the past few months.

In January, a judge ordered the acquittal of John O'Shea, a former ABB manager in Texas, on all substantive FCPA counts he faced. The judge said the government's primary witness knew almost nothing about the case.

In December last year, a federal judge in Los Angeles dismissed indictments against Keith Lindsey and Steve K. Lee, and their company Lindsey Manufacturing. The judge said prosecutors had withheld evidence and violated court orders, among other things.

Sting Case Is A DOJ 'Fantasy,' Lawyer Says

The lawyer for one of the acquitted Africa sting defendants said today the DOJ's entire case is a 'made-up fantasy.'

Paul Calli, left, of Carlton Fields represented Stephen Giordanella. Judge Richard Leon acquitted him last month.

“The exoneration of Messrs Giordanella, Caldwell and Godsey," Calli said, "and the inability of two separate juries to reach a unanimous verdict as to any count levied against seven other people, to me represents a complete rejection of the basic theories underlying the Department of Justice’s made-up fantasy that is the Africa sting case.” 

None of Giordanella's five co-defendants were convicted. The jury this week acquitted Patrick Caldwell and John Godsey of violating the Foreign Corrupt Practices Act. Two days later, Judge Leon declared a mistrial as to John and Jeana Mushriqui and Marc Morales. The jury was deadlocked on all counts related to them after deliberating ten days.

The first Africa sting trial last year also ended with a mistrial when the jury deadlocked on all counts. Pankesh Patel, Andrew Bigelow, John Benson Weir, and Lee Allen Tolleson may still be retried, the DOJ said.

“In our system of justice," Calli said, "the ends never justify the means. And this jury, as well as the last jury, apparently appreciated that fundamental tenant."

Twenty-two defendants were arrested after a two and a half year undercover operation. FBI agents posed as officials and representatives of the government of Gabon, Africa. The DOJ said the defendants agreed to pay bribes to the undercover agents to win contracts to sell body armor, weapons, and military gear.

Law enforcement stings can alienate jurors. A commentator said last year on the FCPA Blog: "I’m a cop, and I don’t even like a lot of stings, especially when they almost bait people into committing the crime."

Another obstacle for the DOJ in the second Africa sting trial was Judge Leon's rejection of the government's theory of a grand conspiracy among the defendants. Evidence showed that most hadn't met or spoken with each other.

Second Mistrial In Africa Sting Prosecution

Judge Richard Leon declared a mistrial today in the prosecution of the three remaining defendants in the second Africa sting trial.

After deliberating ten days, the jury failed to reach a verdict on any counts against siblings John and Jeana Mushriqui, and Marc Morales.

Of the six defendants who started in the second Africa sting trial, none were convicted.

On Monday, the jury acquitted Patrick Caldwell and John Godsey of violating the Foreign Corrupt Practices Act.

Stephen G. Giordanella was acquitted by the judge last month before the case went to the jury.

The first Africa sting trial ended in September with a hung jury, forcing Judge Leon to declare a mistrial. The DOJ has said it will retry Pankesh Patel, Andrew Bigelow, John Benson Weir, and Lee Allen Tolleson.

Twenty-two defendants were arrested after a two-and-a-half year undercover "sting" operation by the DOJ and FBI agents. All but one defendant was arrested in Las Vegas during an annual trade show for military and law enforcement equipment companies.

Prosecutors alleged that the defendants tried to bribe the defense minister of Gabon, Africa to win contracts to provide body armor, weapons, and military gear. U.S. government agents posed as officials from Gabon.

Three defendants in the case have pleaded guilty to FCPA conspiracy or substantive charges. Haim Geri, Daniel Alvirez, and Jonathan Spiller haven't been sentenced yet.

After Judge Leon declared the mistrial today, the DOJ said it intends to retry the Mushriquis, who are siblings, and Morales. Their trial had lasted three months before the jury began deliberating.

As early as February last year, Judge Leon expressed doubt about the government's conspiracy theory in the case. "I read all 16 indictments," Judge Leon said, "and I didn't see it. I have zero sense that there was an omnibus grand conspiracy." Prosecutors went ahead anyway.

But last month, Judge Leon dismissed all conspiracy charges against the six defendants in the second trial, leaving only substantive FCPA counts. Those are generally harder to prove than conspiracy charges.

The DOJ's embattled FCPA unit has suffered a string of high-profile losses.

Earlier this month, a judge ordered the acquittal of John O'Shea, a former ABB manager in Texas, on all substantive FCPA counts he faced. The judge said the government's primary witness knew almost nothing about the case.

In December last year, a federal judge in Los Angeles dismissed indictments against Keith Lindsey and Steve K. Lee, and their company Lindsey Manufacturing. After the jury convicted the three defendants on all counts, Judge Howard Matz threw out the verdicts. He said prosecutors had withheld evidence and violated court orders, among other things. The DOJ has said it is appealing Judge Matz's ruling.

Caldwell, Godsey Acquitted In Africa Sting Trial

Two Africa sting defendants were acquitted today in federal court in Washington, D.C.

The jury found R. Patrick Caldwell and John Gregory Godsey not guilty of violating the Foreign Corrupt Practices Act.

The jury hasn't reached a verdict as to John and Jeana Mushriqui and Marc Morales. Judge Richard Leon asked the panel to deliberate more. He said he would declare a mistrial tomorrow if there is no verdict.

The trial took more than three months before the jury started deliberating two weeks ago.

A sixth defendant, Stephen G. Giordanella, was acquitted in the case last month before it went to the jury.

Caldwell is a former secret service agent. He and Giordanella headed Executive Protective Products of America Inc. based in Sunrise, Florida. It designs and manufactures concealable and tactical body armor.

The first Africa sting trial ended in September with a hung jury, forcing Judge Leon to declare a mistrial. The DOJ has said it will retry Pankesh Patel, Andrew Bigelow, John Benson Weir, and Lee Allen Tolleson.

Twenty-two defendants were arrested after a two-and-a-half year undercover "sting" operation by the DOJ and FBI agents. All but one defendant was arrested in Las Vegas during an annual trade show for military and law enforcement equipment companies.

Prosecutors alleged that the defendants tried to bribe the defense minister of Gabon, Africa to win contracts to provide body armor, weapons, and military gear. U.S. government agents posed as officials from Gabon.

Three defendants in the case have pleaded guilty to FCPA conspiracy or substantive charges. Haim Geri, Daniel Alvirez, and Jonathan Spiller haven't been sentenced yet.

The two acquittals today are another setback for the DOJ's FCPA unit.

Earlier this month, a judge ordered the acquittal of John O'Shea, a former ABB manager in Texas, on all substantive FCPA counts he faced. The judge said the government's primary witness knew almost nothing about the case.

In December last year, a federal judge in Los Angeles dismissed indictments against Keith Lindsey and Steve K. Lee, and their company Lindsey Manufacturing. After the jury convicted the three defendants on all counts, Judge Howard Matz threw out the verdicts. He said prosecutors had withheld evidence and violated court orders, among other things. The DOJ has said it is appealing the dismissals.