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FCPA Blog Daily News

Entries in Travel Act (37)


Are Stuart And Rose Carson Planning To Plead?

There could be a lot of reasons for the latest order in the Carson case.

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FCPA Defendants Face The Verdict Of History

Should anyone be surprised by the guilty verdicts handed down Tuesday in the Lindsey case? Not at all. History, and the odds, are always against FCPA defendants.

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We Repeat, It's The Travel Act

CCI did it. So did Nexus Technologies, Inc, Nam Nguyen, Kim Nguyen, and An Nguyen. And now Flavio Ricotti has done it too. They've all pleaded guilty in FCPA cases to violating or conspiring to violate the Travel Act.

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Italian Citizen Pleads Guilty

Former fugitive Flavio Ricotti pleaded guilty yesterday in federal court in Santa Ana, California to a single count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.

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FCPA Defendants Face Long Odds

In Los Angeles this week, the trial of Lindsey Manufacturing, Dr. Keith Lindsey, Steve K. Lee, and Angela Aguilar opened in federal court. On Friday, they lost their motion to dismiss the case when the judge ruled that officers of the Mexican electric utility CFE, who the defendants allegedly bribed, aren't foreign officials under the FCPA.

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You're Grounded

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.

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The Accidental Felon?

Frederick Bourke, the government says, didn't stumble into Viktor Kozeny's conspiracy to violate the FCPA by accident, as Bourke contends. He either knew the deal was tainted by bribery and ignored the facts, or deliberately avoided learning the truth.

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Are GM Employees Government Officials?

The end came last month for a privately-held American company called Nexus Technologies. It pleaded guilty to conspiracy and violating the Foreign Corrupt Practices Act and the Travel Act. As part of its plea, Nexus admitted to operating "primarily through criminal means" -- and it agreed to cease operations.

After being indicted in 2008 with its owner and three other individuals, Nexus tried to mount a defense. In October 2009, the company and its owner and president Nam Nguyen sought more information about who the defendants allegedly bribed, and they filed a motion to dismiss the entire indictment.

An FCPA violation needs an offer, payment, or promise to pay anything of value to a “foreign official." The original indictment claimed that employees of six entities –- the Vung Tau Airport, the Southern Flight Management Center, an aviation industry business, a Vietsovpetro Joint Venture, the Petro Vietnam Gas Company, and the Tourism and Trading Company -– were "foreign officials" because the entities were controlled by Vietnamese government agencies.

The defendants said:

The instant indictment fails to state a criminal offense because it alleges that the recipients of the improper payments were “foreign officials” because they were employees of entities “controlled” by various Vietnamese ministries of the government. Such a definition of “foreign official” is unsupported by the text or the purpose of the FCPA. The FCPA is a public bribery statute which criminalizes improper payments to officials performing a public function. Mere control of an entity by a foreign government no more makes that entity’s employees “foreign officials” than control of General Motors by the U.S. Department of the Treasury makes all GM employees U.S. officials. [our emphasis]

They also said the FCPA’s definition of “foreign official” -- which includes employees of any foreign government “department, agency or instrumentality” -- is unconstitutionally vague. Especially in the context of socialist and communist states like Vietnam, they argued, defining a “foreign official” to include employees of entities solely based on government “control” of those entities would unfairly sweep nearly all economic activity within the scope of the statute.

The government responded two weeks later with a superseding indictment. It was directed to the "foreign official" issues and it escalated the charges from five to 28 counts -- one count of conspiracy, nine counts each of violating the FCPA, the Travel Act, and money-laundering.

The new indictment revised the descriptions of the six Vietnamese entities in question -- saying they were "agencies and instrumentalities" of the Vietnamese government instead of merely being “controlled” by departments, agencies or instrumentalities of the government.

In November 2009, the defendants filed a motion to dismiss the new indictment. They said it still didn't allege that the six entities performed government functions which would make their employees "foreign officials."

In December 2009, the judge denied the defendants’ motion to dismiss without addressing the substantive issue of who's a "foreign official" under the FCPA. After the motion failed, Nexus and the three remaining co-defendants reportedly started serious discussions with the DOJ about plea deals.

It was too late for Nexus; the company was forced out of existence.

What's the case mean?

First, that the government isn't going to budge on its view of who's a "foreign official."

Second, the cost of challenging an FCPA action in court can be enormous. Nexus and co-defendant Nguyen sought dismissal with a frontal assault on the government’s interpretation of a “foreign official.” The DOJ then reached into its arsenal, increasing the charges from five to 28 counts. The nine FCPA charges, nine Travel Act charges, and nine money laundering charges were all based on the same nine transactions. But they multiplied the risk of long-term jail sentences for the individual defendants if convicted.

Third, the trial judge, if he felt strongly about it, could have looked at the issue of who's a "foreign official." He side-stepped it instead, handing the government a victory and the defendants a defeat.

Download a copy of defendants' first motion to dismiss here.

Download a copy of the superseding indictment here.

Download a copy of defendants' second motion to dismiss here.

Download a copy of the government's memorandum in opposition to second motion to dismiss here.


Pulling The Strings

The criminal informations against Innospec and Daimler AG contained counts based on 18 U.S.C. §2. That's not the FCPA, the Travel Act, money laundering, or the conspiracy statute. What is it?

It's the aider and abettor law. Whoever causes someone else to commit a federal crime -- counsels, commands, induces, or procures its commission -- is punishable as a principal

As a principal means the aider and abettor is subject to the same penalties for the crime committed by its agent, as though the principal -- the puppet-master -- had committed the crime itself. Innospec and Daimler each caused a subsidiary to violate the FCPA; therefore they were charged as an aider an abettor of those FCPA violations.

Aiding and abetting isn't an independent crime. The statute provides no penalty; it only abolishes the distinction between common law notions of "principal" and "accessory." United States v. Kegler, 724 F.2d 190, 200 (D.C. Cir. 1983).

Because 18 U.S.C. §2 applies to all crimes under U.S. law, the FCPA doesn't contain an explicit aiding and abetting provision. As mentioned, a person convicted of aiding and abetting is punishable to the same extent as if he had committed the crime himself. So aiding and abetting an FCPA antibribery offense, for example, is punishable by up to five years in prison.

It's not necessary in an aiding and abetting offense that the bribe be actually paid or that it be successful, only that the third party (the puppet) violated the FCPA by offering, promising, or authorizing the unlawful payment or gift. See 18 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a).


Bourke Injured, Sentencing Delayed

Frederic Bourke's sentencing has been rescheduled to November 10, 2009 at 2:30 pm. Judge Shira Scheindlin in the federal district court in Manhattan ordered the four week delay last week. Bourke underwent surgery almost two weeks ago to repair a "ruptured distal biceps tendon in his left arm." The cause of the injury, which happened on September 22, isn't specified in the court record.

Bourke, 63, was convicted in July of conspiring to violate the Foreign Corrupt Practices Act and the Travel Act, and lying to FBI agents. The jury said he invested in Viktor Kozeny's 1998 scheme to take over Azerbaijan's state oil company despite knowing Kozeny planned to bribe Azeri leaders. Then he lied to federal agents during their investigation. Bourke faces up to ten years in prison. Kozeny, meanwhile, is a fugitive living in the Bahamas.

Without the surgery, according to his doctor, Bourke, who's left-handed, risked permanent loss of mobility in his left arm, including turning a doorknob or looking at his wristwatch. After the surgery, his arm will be in a splint for six weeks at a ninety degree angle. He'll then need physical therapy twice a week for about three months. His doctor is David S. Ruch, MD, a professor at Duke University and director of its hand, upper extremity and microvascular surgery fellowship program.

According to, "The people most likely to get a biceps tendon rupture are strength athletes, bodybuilders and heavy manual workers. Generally, males over the age of 35 years. . . . After the injury there is usually localized pain at the front of the elbow, with bruising and swelling. The biceps muscle may retract up the upper arm crating a prominent bump, known as the 'Popeye' sign. This is often visibly different to the other biceps when contracting the muscle."

The government agreed to postpone Bourke's sentencing until his splint is removed. Judge Scheindlin signed the rescheduling order last Wednesday, two days after receiving a request from Bourke's lead trial lawyer, Harold Haddon, accompanied by a letter to the judge from Bourke's doctor.

Bourke's attorneys have asked for a new trial and are also appealing his conviction. He's now free on bail.

Download a copy of Judge Scheindlin's handwritten order here.


No Hollywood Ending

An LA jury needed not days but hours to convict the husband-and-wife movie producers of violating the Foreign Corrupt Practices Act. They were also found guilty on related charges, including conspiracy, money laundering, and tax cheating. Gerald Green, 77, and Patricia, 52, are facing at least ten years behind bars and maybe a lot more for bribing a Thai official in exchange for contracts to produce the Bangkok Film Festival.

The trial's tragic outcome shouldn't surprise anyone. There hasn't been an acquittal in an FCPA prosecution since 1991. Not one. That's why comments from Patricia Green's lawyer are hard to understand. Marilyn Bednarski told the LA Times here, "To me it’s a case of circumstantial evidence . . . the people of Thailand were not victimized in any way" because the Greens provided "top notch services." Really?

Gerald Green's lawyer, Jerome Mooney, was more in touch. The DOJ used the case, he said, partly to send a warning to the entertainment industry: clean up the way you deal with "community relations" in foreign countries, or else. "We understand the government taking a shot across the bow of Hollywood," Mooney said. "We just wish the shell hadn't landed on our clients' boat."

From the convictions this year of the Greens, Frederic Bourke and William Jefferson, and those from prior years of David Kay, Douglas Murphy and David Mead, and all the prosecutions and guilty pleas in between, here are some things that every FCPA defendant should keep in mind before their trial starts:

Juries hate graft. FCPA cases are about bribes to corrupt foreign officials. They're about sophisticated and often wealthy people looking for shortcuts, hoping to subvert foreign governments for personal or corporate gain. Wheeling and dealing in exotic places. Flashing cash and pulling strings. Juries lap it up. As we've said before, even if the government's evidence isn't rock solid on all the elements of an FCPA offense, the jury will still get the picture that people stepped over the line of acceptable business behavior. And they'll convict.

There are clouds of witnesses. Forget lone wolves and rogue employees. Foreign bribery is usually a team effort. When the government gets a whiff of the plot, it hauls in everyone -- from those who might have had a hand in it to anyone who could have overheard talk at the water cooler. If it's early in the investigation, the bit players can be persuaded to turn, to become the government's cooperating witnesses or confidential informants. Supporting actors are given immunity or offered the hope of lighter sentences. So they sing about their bosses, colleagues, friends. They have extra incentive if they blame the aforementioned for dragging them into the criminal activity.

Evidence is everywhere. Bribes have to be planned, funded, paid, and covered up. There's always someone on the receiving end, so the complications multiply. It all takes a lot of work and usually leaves behind a trail that's easy to find and follow. Phony contracts and dummy invoices, hot money bouncing from bank to bank, fake agents and distributors, shell companies as fronts, two sets of books, and so on.

Show and tell. These days the government is likely to show up for trial with audio tapes of the accused discussing the bribes or videos showing the actual handover of cash. "Wearing a wire" once meant strapping to your torso an awkward piece of electronic gear the size of a croissant. Not any more. A cell phone on the table can be an open mic. A spy pen in the breast pocket can capture or broadcast sound and pictures. Scary stuff. And once the feds have tapes, they may not even need the cooperating witnesses or informants at the trial.

Related charges a-plenty. In foreign bribery cases, the government might start with FCPA charges. But remember: bribes to foreign officials need to be planned, funded, paid, and covered up. So there's usually a conspiracy, money laundering, traveling to commit the offense, fraud and obstruction in the cover-up, and tax-cheating to boot. What a mess. The government can throw a lot of mud at the wall. If some doesn't stick, so what? Prosecutors can drop weak charges later and plow ahead with the rest.

Examples: Frederic Bourke was convicted of conspiracy to violate the FCPA and a Travel Act offense, but not the FCPA itself. William Jefferson was acquitted of a substantive FCPA charge but found guilty of conspiracy to violate the FCPA, soliciting and taking bribes, depriving citizens of honest services, money laundering and racketeering, and conspiracy to solicit bribes. Gerald Green beat the obstruction rap -- the government ended up dropping the charge -- but he and his wife were convicted of conspiracy to violate the FCPA, eight violations of the FCPA and seven counts of money laundering. Mrs. Green was also found guilty of two counts of falsely subscribing a U.S. tax return.

Not everyone accused of violating the FCPA is guilty. And certainly those accused and awaiting trial are presumed innocent unless and until found guilty in a court of law. But with no acquittals in an FCPA trial since 1991, defendants and their counsel should have their eyes wide open about their chances in court.

View prior posts about the Greens here.


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.