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Entries in William Jefferson (41)


A Russian Crusader Dies

One of Russia's leading anti-corruption journalists died last week from head wounds received two months ago in an attack outside his home. Vyacheslav Yaroshenko, 63, ran the paper Korruptsia i Prestupnost (Corruption and Crime) in Rostov-on-Don. The local media had reported that he either was in a brawl or fell down the stairs. He's pictured left.

A colleague from Yaroshenko's newspaper said it "has eight pages, seven of them were dedicated to corruption in the law enforcement agencies." He didn't "have the slightest doubt" Yaroshenko was attacked for his work. Korruptsiya i Prestupnost had been publishing articles on corruption in the Rostov regional government, police, and the prosecutor's office.

The New York-based Committee to Protect Journalists (CPJ) said in a June 29, 2009 statement that Yaroshenko was found unconscious with a head wound in the entrance of his apartment building early on the morning of April 30. Police did not investigate what happened to Yaroshenko in April, but said they had immediately ruled out criminality.

The CPJ said, "We call on Russian federal authorities to open an independent, thorough, and transparent investigation into the circumstances of the editor's death. The possibility that Yaroshenko may have been targeted because of his newspaper's coverage of alleged corruption in Rostov law enforcement agencies calls for the assignment of outside, independent investigators to this case."

Russia is the third deadliest country in the world for journalists and the ninth worst in solving reporters' killings, according to the CPJ. It wrote to President Obama two weeks ago to urge him to raise the issue of "impunity in violent crimes against the press" in his meetings this week with Russian President Dmitry Medvedev in Moscow.

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From William Jefferson's Trial. We asked two days ago if the government will introduce evidence that the former congressman violated the Foreign Corrupt Practices Act as alleged in the indictment. The answer is yes.

The Times Picayune reports here that prosecutors played tapes Monday in which "Jefferson said that Vice President Atiku Abubakar of Nigeria had agreed to grease the skids for a telecommunications venture the congressman was promoting in Nigeria in exchange for a piece of the action." The report from Bruce Alpert said written transcripts of the tapes were provided to jurors but not to the news media and others.

The taped conversation about Abubakar took place during a car ride Jefferson went on with Lori Mody, the government's confidential witness. An undercover FBI agent drove. Mody wore a wire then and to several other meetings with Jefferson. His lawyers said before the trial that he wasn't really planning to pay any bribes but he made the statements about Abubakar to keep Mody happy.

Read all our posts about William Jefferson here.

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From Frederic Bourke's Trial. The arguments are finished. David Glovin has a nice account here of the prosecution's close delivered Monday. "Connecticut entrepreneur Frederic Bourke stuck 'his head in the sand' to avoid learning whether his partner [Viktor Kozeny] paid bribes to government leaders in Azerbaijan in a 1998 deal to buy the state oil company, a prosecutor charged."

The Litigation Daily's report from Andrew Longstreth is here. He says,

The task [of delivering the closing for the government] fell to assistant U.S. attorney Iris Lan. Lan explained to the jury--which consists of eight women and six men--that in the 1990s Bourke had become close with his Aspen, Colo., neighbor Viktor Kozeny, a Czech national whom Fortune magazine dubbed one of the "Pirates of Prague" in 1996 for his investment activities in his native country as it was transitioning from communism to capitalism. Lan told the jury that Bourke was eager to participate in a plan with Kozeny to invest in Azerbaijan because of his previous success in Czechoslovakia. "This is a story about a few rich men who wanted to become even richer," said Lan.
And Adam Klasfeld at the Courthouse News Service said,
Lan's daylong summation involved extensive use of PowerPoint. Lan projected large portions of court records onto a screen, generously excerpting transcripts of government witness testimony. She flashed images of charts, letters, emails and photographs that prosecutors submitted as evidence.
Bourke's lawyer John Cline closed for the defense. David Glovin says jurors will be instructed that they can convict Bourke on two theories. Either that he learned about the bribes after asking two of the government's witnesses about the payments. Or that he “consciously avoided” learning about the bribes by not asking questions about them. Cline said in his close, “It just doesn’t make sense." The government is simply “throwing something up against the wall and hoping some of it will stick.”

The prosecution has already rebutted. After instructions, the case goes to the jury. A verdict by Friday? Maybe.

Read David Glovin's reports on the trial here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.


In Jefferson's Case, What Gives?

Here's the question: Is William Jefferson still on trial for violating the Foreign Corrupt Practices Act? His indictment included an FCPA count and the cash found in his freezer was supposed to be evidence of an antibribery offense. But the ex-congressman's trial has been going on for a few weeks now and we haven't heard anything about the FCPA. So we're wondering if it's still part of the case.

The FCPA allegations against Jefferson were based on things he said to the feds' confidential witness -- called "CW" in the indictment. That's Lori Mody, a Virginia businesswoman who invested in his deals. According to the government, she soon realized he was crooked and decided to blow the whistle. She went to the FBI and they convinced her to wear a wire to her next meeting with Jefferson and some that followed.

When the trial came around, she was all set to be the government's star witness. Her job, the way we understand it, was to tell her story and narrate the secret tapes she'd made, which in turn would corroborate her testimony. But then she changed her mind and said she wouldn't testify after all. The prosecutors went ahead without her. They played excerpts from her tapes to the jury and an FBI agent provided "authentication" testimony.

The indictment had said that in July 2005 she and Jefferson talked about his plan to bribe "Nigerian Official A." That was about three months after Mody started wearing a wire. But if her tapes didn't record their specific chats about Nigerian Official A, the government might have no way to tell that part of the story without her live testimony.

According to a Louisiana news site, there are problems with most of the tapes:

Jefferson could not be heard on a majority of the tapes played in the courtroom. Clanging and chatter in the restaurants drowned out most of his responses, which he also mumbled. Jurors were given headphones and transcripts of the discussions.
The government had made big deal about the FCPA count before the trial started. The FBI had given Mody $100,000 in marked bills to pass to Jefferson after he allegedly told her about his plan to bribe Nigerian Official A. The money was supposed to be a down payment to the foreign official. It was that cash -- $90,000 of it at least -- that the FBI later found in Jefferson's freezer. (So what? his lawyers said before the trial. If the cash was still in the freezer, it proved he didn't use it to bribe anyone.)

We aren't in the courtroom and haven't heard the tapes or seen any transcripts. We could have missed reports about the prosecution's FCPA-related evidence. But there's another possibility. That Lori Mody's absence blew some serious holes in the government's case, and one of those holes is where the FCPA count used to be.


Enforcement Report For Q2 '09

During the second quarter there were, by our count, eleven Foreign Corrupt Practices Act enforcement actions. They involved four companies -- three firms resolved criminal or civil charges, or both, and one disclosed an investigation -- and 13 individuals who were either indicted, put on trial, pleaded guilty or sentenced. Here's the rundown:

Joseph T. Lukas (June 29, 2009) Guilty plea to a two-count criminal indictment.

Lukas, 60, a partner in Nexus Technologies Inc. until 2005, was indicted in September 2008 on one count of conspiracy to bribe Vietnamese public officials in violation of the Foreign Corrupt Practices Act and one substantive count of violating the FCPA. He admitted in his guilty plea that from 1999 to 2005, he and other Nexus employees agreed to pay, and knowingly paid, bribes to Vietnamese government officials in exchange for contracts with the officials' agencies. At his sentencing scheduled for April 2010, he faces up to 10 years in prison and a possible $350,000 fine.

The 2008 indictment also charged Nexus and alleged co-conspirators Nam Nguyen, Kim Nguyen and An Nguyen, all U.S. citizens, with similar violations. Their cases are still pending.

William Jefferson (June 9, 2009) The start of his federal criminal trial in Alexandria, Virginia.

It's the first time a former member of congress has been prosecuted under the Foreign Corrupt Practices Act. Jefferson, 62, faces up to 20 years in prison. He's accused of violating the FCPA by arranging bribes to African officials to win contracts for his family's companies, and with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He lost an election last year for a 10th term in the House of Representatives from a district that includes New Orleans.

Frederic Bourke (June 1, 2009) The start of his federal criminal trial in Manhattan.

The co-founder of luxury handbag brand Dooney & Bourke is accused of investing in a deal in Azerbaijan in 1998 that he knew involved paying bribes to officials there. He faces up to 30 years in jail for conspiring to violate the FCPA, money laundering and lying to federal investigators. Bourke says he didn't know about the bribery. His co-defendant Viktor Kozeny is a fugitive in the Bahamas.

United Industrial Corporation (UIC) (May 29, 2009) Civil enforcement action resolved.

The Securities and Exchange Commission filed a settled enforcement action against UIC, an aerospace and defense systems contractor. UIC agreed to pay $337,679.42 in disgorgement and prejudgment interest. (See also Thomas Wurzel below.)

Thomas Wurzel (May 29, 2009) Civil enforcement action resolved.

The SEC filed a settled enforcement action against Thomas Wurzel, the former president of UIC's one-time subsidiary, ACL Technologies, Inc.. He agreed to pay a $35,000 civil penalty. The SEC said Wurzel authorized illegal payments to Egyptian Air Force officials in 2001 and 2002 through an agent in return for business related to a military aircraft depot in Cairo.

Wurzel and UIC were charged with violating the antibribery, books and records and internal controls provisions of the Foreign Corrupt Practices Act; Wurzel also faced aiding and abetting violations.

Novo Nordisk A/S (May 11, 2009) Criminal and civil enforcement actions resolved.

Denmark-based Novo Nordisk agreed to pay a $9 million criminal penalty and enter into a deferred prosecution agreement with the DOJ for illegal kickbacks paid to the former Iraqi government under the U.N. oil-for-food program. It also agreed to pay $3,025,066 in civil penalties and $6,005,079 in disgorgement of profits, including pre-judgment interest, to the SEC.

The DOJ charged Novo with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA. In the civil enforcement action, the SEC charged Novo with violating the FCPA's books and records and internal controls provisions.

Sun Microsystems (May 7, 2009) Investigation disclosed.

Sun said in an SEC filing that it may have violated the FCPA. It didn't reveal where the payments might have occurred or how much the bribes amounted to. But it said the potential offenses, which it has reported to U.S. and other authorities, "could possibly have a material effect on our business."

Juan Diaz and Antonio Perez (April 27, 2009) Guilty pleas to a one-count criminal information.

Diaz and Perez, both 51 of Miami, pleaded guilty to a one-count criminal information. They were charged with conspiracy to violate the FCPA by making corrupt payments to officials from Telecommunications D'Haiti. Diaz paid and concealed $1,028,851 in bribes while acting as an intermediary for three private telecommunications companies. Perez arranged bribes of $674,193 to the Haitian officials while he worked as a controller at one of the companies from March 1998 to January 2002.

Stuart Carson, Hong (Rose) Carson, Paul Cosgrove, David Edmonds, Flavio Ricotti, and Han Yong Kim (April 9, 2009) Indicted by a federal grand jury.

The six former executives of Control Components Inc., an Orange County, Calif.-based valve company, were charged with conspiracy to violate the FCPA and the Travel Act, violating the FCPA, and as to Hong (Rose) Carson, one count of obstruction. It was the biggest multi-party indictment of individuals yet under the FCPA.

Earlier this year, two other former executives from Control Components admitted paying bribes to foreign officials and have been cooperating with authorities. Richard Morlok, 55, the former finance director, and Mario Covino, 44, the company's former director of worldwide factory sales, pleaded guilty to one count of conspiracy to violate the FCPA. They're sentencing is set for July 20, 2009.

Shu Quan-Sheng (April 7, 2009) Sentenced to prison.

The Virginia-based physicist who sold controlled space-launch technology to China by bribing government officials there was sentenced to 51 months in prison. Shu, 68, a native of China and naturalized U.S. citizen, pleaded guilty in November 2008 to one count of violating the FCPA and two counts of violating the Arms Export Control Act. Shu had already forfeited $386,740 to the federal government before being sentenced to prison.

Latin Node Inc. (April 7, 2009) Criminal enforcement action resolved.

The former privately held Florida telecommunications company pleaded guilty to a one-count criminal information and agreed to pay a fine of $2 million over the next three years. It was charged with violating the FCPA's antibribery provisions by making improper payments in Honduras and Yemen.

Click on the party names for the original posts, with links to the charging documents, plea agreements, and news and litigation releases.

View our enforcement report for Q1 '09 here.

View our 2008 enforcement index here.


More Journalists Murdered In The Philippines

Anti-corruption journalists in the Philippines are under siege. Two were killed in the same week this month. The latest victim was newspaper commentator Antonio Castillo. He was shot on June 12 by two gunmen on a motorcycle in the central Philippines town of Uson, according to the Center for Media Freedom and Responsibility.

A few days earlier, Crispin Perez Jr., a lawyer and part-time radio commentator at a government-owned station in San Jose City in the central Philippines, was shot to death outside his home. He hosted a weekly public affairs broadcast. His criticism of deals between a local power company and suppliers had earned him enemies.

Last week, gunmen also attacked the offices of another Philippines media group in Bangued, the capital of Abra province. The target appeared to be a Catholic-run community weekly newspaper and two affiliated radio stations. No one was hurt in the drive-by shooting. A priest who runs the paper said he thought the attack was related to articles and editorials about corruption involving another local power company. A journalist working on that story was the target of an earlier drive-by shooting at her family's home last month. No one was harmed.

Five journalists in the Philippines have been murdered this year because of their work. Last year the death toll was six. And since 1986, the total is 80, with 22 of those deaths coming since 2000. The New York-based Committee to Protect Journalists (CPJ) has said the Philippines government isn't doing enough to shield journalist or to bring their attackers to justice.

On the CPJ's Impunity Index -- a list of countries where journalists are killed regularly and governments fail to solve the crimes -- the Philippines ranks as the sixth most dangerous place. The years measured are 1999 through 2008. Other countries among the most dangerous are Iraq, Sierra Leone, Somalia, Sri Lanka, Colombia, Afghanistan, Nepal, Russia and Pakistan.

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From William Jefferson's Trial. Judge T.S. Ellis III is unhappy about the slow going in the federal corruption and FCPA trial of the former congressman from Louisiana.

According to the Times Picayune, "The judge expressed some impatience Monday with the pace of the proceedings, as former iGate CEO Vernon Jackson began his fourth day of testimony in the case. Jefferson, a Democrat, is facing a 16-count indictment that accuses him of seeking and sometimes receiving bribes in exchange for his help in brokering deals in West Africa. 'If this case lasts six weeks it will certainly be contrary to my intentions,' said Ellis, who admonished both sides against getting bogged down in 'minutiae."

Read all our posts about William Jefferson here.


The Friday Round Up

Reports from the BBC and the Straits Times say the Chinese Communist Party (CCP) is trying once again to get rid of secret accounts held by local officials. Known as "little coffers," the money is skimmed from public funds. The CCP directed party and government officials to disclose the accounts or face severe punishment. China often imposes the death penalty in major corruption cases.

"The illegal phenomenon has resulted in inaccuracy in accounting, disturbance in market order, losses in state income and property and corruption," the party said in a document titled "Directions on Deepening the Crackdown of Small Exchequers."

The "little coffers" have become a big problem lately as government budgets at all levels have grown, increasing opportunities to skim funds. The BBC said "audit reports have often found money that has been spent on apartments, cars and trips abroad for staff, and sometimes disappeared in outright embezzlement."

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Bourke's Big Gun. Bloomberg's David Glovin leads his latest dispatch from the federal courthouse in Manhattan with this: George Mitchell, the ex-Democratic Senate majority leader and President Barack Obama’s envoy to the Middle East, is set to testify [Friday] as part of Connecticut entrepreneur Frederic Bourke’s defense to charges that he helped bribe government leaders in Azerbaijan.

Glovin says Mitchell’s name has come up throughout the trial. He writes, "On the recommendation of Bourke, Mitchell put up $200,000 and became a director of a U.S. company formed by Kozeny. Mitchell, a Maine Democrat who left Congress in 1995, was friends with Bourke, who has a home in Maine."

Read David Glovin's reports on the trial for Bloomberg here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

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Jefferson's #%@&!. The BLT's Jordan Weissmann filed this report yesterday from William Jefferson's trial in Alexandria, Virginia:

Jurors listened to a profanity-laced phone call in which Jefferson said he and iGate CEO Vernon Jackson would "end up in the goddamned pokey" if they angered one of the company's chief investors. During the call, Jackson had suggested replacing Virginia businesswoman Lori Mody, with whom he had a strained relationship. Jackson said he had found a new backer willing to step into her place. Jefferson called the idea "crazy," adding, "Lori's going to be filing suits."
Read all our posts about William Jefferson here.

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We never get tired of spending time with E.B. White. He's so cheerful, without being chirpy and irritating. Like this passage from his 1971 essay, "The Winter of the Great Snows:"

"For a while, the barnyard fence was buried under a magnificent drift. This delighted the geese, who promptly walked to freedom on their orange-colored snowshoes. They then took off into the air, snowshoes and all, freedom having gone to their heads, and visited the trout pond, where they spent an enjoyable morning on the ice. On several occasions this winter, we had to shovel a path for the geese, to make it possible for them to get from their pen in the barn to their favorite loitering spot in the barn cellar. Imagine a man's shoveling a path for a goose! So the goose can loiter!"

From the Essays of E.B. White.


Witnesses Hit Bourke And Jefferson

From Frederic Bourke's Trial. Outstanding coverage on the testimony this week of Hans Bodmer, Viktor Kozeny's Swiss lawyer, from the Courthouse News Service here and Bloomberg's David Glovin here.

From Glovin's account:

Bodmer, who is testifying for prosecutors in exchange for leniency and admits knowing of the bribery scheme, testified yesterday that he told Bourke about the payments. . . .

[S]peaking methodically through a thick German accent, [he] told jurors he was surprised when Bourke asked him about the “arrangement” [to pay Azeri officials bribes] because it was a “sensitive matter.” After getting permission from Kozeny, Bodmer said he outlined the scheme. Justice Department lawyer Robertson Park asked Bodmer how Bourke responded.

“No specific response,” Bodmer testified.

And from the Courthouse News Service, which described Bodmer as "the gaunt-faced but handsome witness,"
After receiving permission from Kozeny to reveal the details, Bodmer said he took Bourke on a 15- to 20-minute walk outside the hotel [in Baku, Azerbaijan], fearing that the lobby and the rooms may have been bugged. Bodmer testified that at the time he suspected that Bourke already knew about the scheme.
Frederic Bourke is on trial in Manhattan federal court on charges that he invested $8 million with Viktor Kozeny, knowing about the plan to bribe Azeri leaders in a bid to buy the state oil company. Bourke, 63, denies that he knew about Kozeny's bribery, and says he is among the victims who lost a total of $350 million in the scheme.

Bourke is co-founder of luxury handbag brand Dooney & Bourke. He faces up to 30 years in prison if convicted on all counts, including conspiring to violate the Foreign Corrupt Practices Act, money laundering, and lying to federal investigators. Kozeny, a Czech national who was also charged with violating the FCPA, is a fugitive living in the Bahamas.

Read David Glovin's reports on the trial for Bloomberg here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

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From William Jefferson's Trial. The AP's Matthew Barakat reports on the testimony of the government's first witness here. Vernon Jackson, a Kentucky businessman who already pleaded guilty in the case and was sentenced to 87 months in prison, said he paid hundreds of thousands of dollars in "consulting fees" to Jefferson's wife that were nothing but thinly veiled bribes. Barakat writes,

Jackson is also one of the trial's most important witnesses. Out of numerous bribery schemes that prosecutors allege Jefferson orchestrated, the one involving Jackson was the most advanced and involved the largest payments. . . . He stands to receive a reduction in his sentence in exchange for his testimony against Jefferson.
Jefferson, 62, served nine terms in congress from Louisiana before losing his seat last year. He is charged with soliciting bribes, racketeering, money laundering and violating the Foreign Corrupt Practices Act. Testimony in his trial in federal court in Alexandria, Virginia started this week. He faces up to 20 years in jail.

Jackson sought business help from Jefferson to land army contracts for his company, iGate. Although the relationship was legitimate at first, Jackson said, Jefferson later told Jackson to hire his wife, Andrea, as a consultant. Jackson said he agreed to pay her $90,000 a year in consulting fees, plus a percentage of profits, but she didn't do any work. "I was paying [Jefferson] to use his office on behalf of iGate," Jackson said.

Read all our posts about William Jefferson here.


Jefferson's Judge Keeps Things Moving

Opening arguments start today in the federal criminal trial of former congressman William Jefferson for corruption and violating the Foreign Corrupt Practices Act. During three days of jury selection last week, the tone from the bench was strictly no-nonsense. A Louisiana TV station carried this revealing report:

One potential juror who was interviewed told the court she believed “large sums of money in a freezer is odd.” Jefferson’s Defense Attorney Robert Trout, moved to strike that juror, but Judge T.S. Ellis denied the request, saying the juror’s opinion does not presume guilt or innocence.

Later Trout requested the judge to ask potential jurors if they’re addicted to websites like Facebook and Twitter or online blogs. The judge once again denied the request, saying “I think it’s a silly question, it’s like asking people, ‘do you use a phone?’”

Trout also requested that the judge ask potential jurors whether a congressman can be effective while on private business deals. Ellis denied the request, saying he is not going to start trying the case during jury selection. . . .

Who's that judge? He's Thomas Selby ("T.S.") Ellis III, 69, (Princeton BSE, Harvard JD), a former Naval aviator and hard-charging litigator from Hunton & Williams. He was nominated to the bench by Ronald Reagan and began serving in 1987. He assumed senior status in April 2007 but still hears cases in both the Eastern and Western Districts of Virginia. And he sometimes sits by designation on the United States Court of Appeals for the Fourth Circuit.

The government told Judge Ellis last week that its key witness, Lori Mody, isn't likely to testify unless she's needed for rebuttal. Her complaints to authorities first triggered the investigation into Jefferson. The $90,000 in marked bills found in his freezer came from her. She also made secret recordings of some of their conversations. Those tapes will still be admissible at the trial, along with evidence about the cash in the freezer.

Bruce Alpert at The Times Picayune polled a few former federal prosecutors. They think the government's case isn't airtight. Mody's absence hurts. And Jefferson wasn't always explicit in their taped conversations. His lawyers will also argue that his public role and private acts should be viewed separately. The cash in the freezer? Explaining it is Jefferson's biggest problem. Still, according to Alpert's unscientific results, the most likely outcome is a hung jury. His story is here.

Read all our posts about William Jefferson here.


More On Bourke and Jefferson

First Frederic Bourke. A witness testifying for the government this week at Bourke's trial in New York may have hurt the prosecution's case. Christine Rastas, who worked for Viktor Kozeny in Azerbaijan, said her boss told Egyptian businessman Shafik Gabr about bribing Azeri officials. Kozeny's conversation with his investor took place in a hotel bar in Moscow. Crucially, Bourke wasn't there, the witness said. And she doubted whether Kozeny needed to pay bribes at all. Local officials, she said, typically took legal stakes in privatization projects.

As Bloomberg's David Glovin reported here, her testimony could end up helping Bourke. I had worked on other projects where the government was an equity partner, Rastas, who is testifying for prosecutors in exchange for immunity, told jurors. So if one of Kozeny's insiders didn't know about the bribes, why should Bourke?

Rastas, who worked at the U.S. Defense Department before joining Kozeny, also recalled helping his security chief, John Pulley, flush some meeting notes down a toilet. She thought the notes were about trusts Kozeny was creating for Azeri officials.

Prosecutors say Bourke, 63, invested in the planned privatization of Azerbaijan's state oil company in 1998 despite knowing Kozeny would pay bribes. The privatization didn't happen and the dozen or so investors, including Bourke, lost a combined $350 million. In 2005, Bourke was charged with conspiracy to violate the Foreign Corrupt Practices Act, money laundering and lying to federal investigators. Kozeny was also charged but has stayed in the Bahamas to escape prosecution. New York state prosecutors have also charged him with stealing $180 million from his investors. Bourke faces 30 years in prison if convicted. He denies knowing about the bribes.

Read David Glovin's reports on the trial for Bloomberg here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

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And William Jefferson. His trial started this week with jury selection. Federal district court judge Tim Ellis called about 100 potential jurors to his courtroom in Alexandria, Virginia. The pool will be narrowed to 12 regular jurors and four alternates. The trial of the former congressman, like Bourke's, is expected to last about a month. Judge Ellis said he's not planning to sequester the jury. Bruce Alpert's report for The Times Picayune is here.

Jefferson, 62, faces 16 counts including violating the FCPA, soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He could be sentenced to 20 years in prison if found guilty.

In his report, Alpert said: Before the trial, Jefferson's attorneys had asked Ellis for a change of venue, accusing the Justice Department of trying the case in Virginia because it has a smaller pool of African-American jurors than there would be in either Washington, D.C., or New Orleans, where they argued the case should be heard. Ellis rejected the argument. The pool of potential jurors Tuesday was overwhelmingly white with only a handful of African-Americans. Jefferson is an African-American Harvard-educated lawyer and nine-term member of Congress.

Read all our posts about William Jefferson here.


Big Day For The FCPA

History will be made with today's opening gavel in William Jefferson's federal trial. It will mark the first time a former member of congress has been prosecuted under the Foreign Corrupt Practices Act, and the only time the country has seen two FCPA trials staged simultaneously -- Jefferson's in Alexandria, Virginia and Frederic Bourke's in New York City.

Jefferson, 62, faces up to 20 years in prison. He's accused of violating the FCPA by arranging bribes to African officials to win contracts for his family's companies, and with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He lost an election last year for a 10th term in the House of Representatives from a district that includes New Orleans.

Frederic Bourke's trial started last week. He's accused of investing in a deal in Azerbaijan that he knew involved paying bribes to officials there. He faces up to 30 years in jail for violating the FCPA, money laundering and lying to federal investigators.

Jefferson's case caused a stir when it started in 2005. The FBI's raid on his congressional office was the first one ever. The Washington D.C. Circuit Court of Appeals said the raid was constitutional but the way the FBI reviewed Jefferson's documents wasn't. The tainted evidence can't be used at his trial. It was also the first time U.S. law enforcement agencies had raided the U.S. residence of an elected foreign official -- a home built in Maryland by Nigeria's then vice president, Atiku Abubakar, for his wife Jennifer Douglas.

For Jefferson and his family, these are terrible times. His brother Mose Jefferson, his sister Betty Jefferson, and his niece Angela Coleman, have all pleaded not guilty to federal corruption charges in Louisiana, where they helped run the family's political machine. On top of that, Jefferson's other sister, Brenda Jefferson Foster, has already pleaded guilty in the Louisiana case and will testify against her relatives. A judge has told the other indicted family members not to contact her. Their trial is scheduled to start in August.

Bruce Alpert at The Times-Picayune has a nice run-up to Jefferson's trial here.

Read all our posts about William Jefferson here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

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Resources that work. The James Mintz Group's latest newsletter has a nifty FCPA map. It marks all the countries named in enforcement actions during the past 10 years. Industry segments are depicted, along with the size of the financial penalties imposed. It reveals in a glance compliance red flags around the globe. The newsletter (with the fold-out FCPA map at pages 3 and 4) can be downloaded here.


Jefferson On Trial, Soon

Former Congressman William J. Jefferson's trial for violating the Foreign Corrupt Practices Act and other federal laws will start on June 9 in Alexandria, Virginia. Judge Tim Ellis this week granted Jefferson a one-week delay. He's charged in a 16-count indictment with FCPA violations, soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He could be sentenced to a maximum of 235 years in prison if convicted on all counts.

Jefferson's case is best known for allegations that he hid $90,000 in the freezer at his Washington home. The indictment said it was part of $100,000 provided in August 2005 by the government's cooperating witness. It was supposed to be used to bribe a Nigerian official to steer telephone service-related business to Jefferson's family members. "The cash was separated into $10,000 increments, wrapped in aluminum foil, and concealed inside various frozen food containers," according to prosecutors.

Jefferson's lawyers have said the money "was transmitted to Mr. Jefferson by the government's cooperating witness during the course of the FBI's sting operation so that he would pass it to a foreign government official," the then vice president of Nigeria. "But Mr. Jefferson did not do that. Instead, the marked funds were recovered in his home."

His alleged co-conspirators were Vernon L. Jackson, a Louisville, Ky., businessman, and Brett M. Pfeffer, a former Jefferson congressional staff member. Jackson was sentenced to 87 months in prison after pleading guilty to conspiracy to commit bribery and paying bribes to a public official. Pfeffer was sentenced to 96 months in prison after pleading guilty to conspiracy to commit bribery and aiding and abetting the solicitation of bribes by a member of Congress.

Jefferson had argued last year that except for the two FCPA charges, the grand jury's 16-count indictment violated his rights by relying on evidence protected by the absolute privilege in the Constitution's Speech or Debate Clause (Article I, Section 6, Clause 1). In November, the Fourth Circuit Court of Appeals rejected his arguments. Last month, the Supreme Court refused to hear his appeal, clearing the way for the trial.

Jefferson, 62, lost an election last year for a 10th term in Congress. His district included New Orleans. Before being indicted, he had compiled an outstanding record of public service. He was the first African-American elected to Congress from Louisiana since Reconstruction. He graduated from Southern University A&M College and Harvard Law School, and he also holds an LLM in tax from Georgetown.

He was raised in northeast Louisiana before he moved to New Orleans and rose to power. A great article by Gordon Russell in The Times-Picayune (one of our favorite papers) said this about his childhood:

Life in the Delta during the 1940s wasn't easy: Though the family owned a small farm, the Jefferson children had to pick cotton and the large family was crammed into a five-room house.

In town, racial oppression was rigid, and may have launched [Jefferson's older brother's] flight to Chicago. William Jefferson's recent book, "Dying Is the Easy Part" -- which is billed as fiction but reads like an autobiography -- features a chapter that centers on an older brother of the narrator.

The brother is insulted by a group of racist white men. One throws a pool ball at him but misses, breaking a mirror. Though he is handy with his fists, the brother knows fighting isn't an option, and he runs home.

Nonetheless, that night, deputies come to his house to arrest him. The sheriff tells his mother: "Your boy can't be fighting white boys in this parish. If he wants to fight with white boys, then, by God, he's gotta go up North."

His mother, defiant, refuses to turn over her son. "He's gotta go up North to keep somebody from whipping his ass?" she asks rhetorically. "He ain't going nowhere."

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From Frederic Bourke's trial. Here's the lead from David Glovin's account of the jaw-dropping testimony on day three: Viktor Kozeny’s security chief told a jury how the Czech expatriate brought ex-Senator George Mitchell into a deal to buy Azerbaijan’s oil company, spent $96,000 on a dinner for six, and befriended powerful American investors. There's lots more here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

* * * New York-based writer and business strategist Aimee Barnes keeps an eye on China-related developments in her blog. She asked us about corruption and compliance and has now posted the results. Thanks, Aimee.


The Friday Report

Former Congressman William J. Jefferson says the cash found in his freezer four years ago proves he didn't violate the Foreign Corrupt Practices Act. Yesterday Jefferson filed a petition for certiorari to the Supreme Court, asking for review of the Fourth Circuit's refusal to dismiss most of the corruption-related charges against him. But he's not asking for dismissal of the two Foreign Corrupt Practices Act counts.

Jefferson's case is best known for allegations that in August 2005, he hid $90,000 in the freezer at his Washington home. The New Orleans Times-Picayune reports here that Jefferson's lawyers say the cash in the freezer is not alleged to be a bribe to Jefferson, but rather evidence of a violation of the Foreign Corrupt Practices Act. In an apparent preview of his FCPA defense, his lawyers said the money "was transmitted to Mr. Jefferson by the government's cooperating witness during the course of the FBI's sting operation so that he would pass it to a foreign government official," the then vice president of Nigeria. "But Mr. Jefferson did not do that. Instead, the marked funds were recovered in his home."

Jefferson says that except for the two FCPA charges, the grand jury's 16-count indictment depended on materials protected by the absolute privilege in the Constitution’s Speech or Debate Clause (Article I, Section 6, Clause 1). The evidence concerning the cash in the freezer, he acknowledges, wasn't protected by the privilege. A federal grand jury indicted him in June 2007 for violating the antibribery provisions of the Foreign Corrupt Practices Act, and also for soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He faces a maximum of 235 years in prison if convicted on all counts. His trial is scheduled to start on May 26. Last year he lost an election for a 10th term in Congress from Louisiana.

The always-excellent scotusblog has a full report. It also has links to the Supreme Court petition in Jefferson v. U.S. here and the Fourth Circuit Court's decision from November 2008 rejecting Jefferson’s motion to dismiss here.

* * *

The murder of Russian journalist Anna Politkovskaya in 2006 that we talked about earlier this week (here) remains officially unsolved. Yesterday a jury in Moscow acquitted three men charged in her shooting. The LA Times has the story here. On trial were two Chechen brothers and a former Russian police officer. Another man accused in the murder and being tried separately was also released. He's a member of Russia's FSB, the domestic successor of the KBG.

The LA Times said of the verdict, "Critics say it was no accident that the search for the killers was ultimately fruitless. Even Moskalenko, the lawyer representing the Politkovskaya family, stopped just short of urging jurors to acquit the suspects, throwing blame instead on corrupt authorities."

Another journalist from Politkovskaya's paper, the Novaya Gazeta, was shot and killed in Moscow last month. The Washington Times says four journalists from Novaya Gazeta have been killed in the past eight years. "Since 2000," it says, "16 journalists have died in Russia under suspicious circumstances -- and scores of others have been threatened, intimidated and assaulted."

* * *

Russia dropped to 147th on the 2008 Corruption Perception Index, tied with Bangladesh, Kenya and Syria. On the 2009 Index of Economic Freedom, it ranks 146th. "Corruption remains all-encompassing," according to the Heritage Foundation report, "both in the number of instances and in the size of bribes sought. Manifestations include misuse of budgetary resources, theft of government property, kickbacks in the procurement process, extortion, and official collusion in criminal acts. Customs officials are extremely inconsistent in their application of the law."

In the World Bank's 2009 Doing Business project, Russia ranks near the bottom -- 120th, down eight places from last year. The amount of red tape choking the system is astounding. Building a warehouse in Russia requires 54 procedures and takes an average of 704 days. The OECD-wide averages, by comparison, are about 15 procedures and 161 days.


The Hunt For Overseas Evidence

No corporations and just a few individuals have fought Foreign Corrupt Practices Act charges in court, so only a handful of people have ever seen an FCPA defense up close. But for the first time, we have a chance to follow not one but three pending prosecutions -- in U.S.v. Kozeny (defendant Frederic Bourke, Jr., owner of the luxury handbag brand Dooney & Bourke), U.S. v. Green (husband-and-wife movie producers Gerald and Patricia), and U.S. v. Jefferson (former Rep. William J. Jefferson).

Because alleged FCPA violations usually involve some overseas behavior, prosecution and defense evidence has to be retrieved from beyond U.S. borders. There's no way to compel production from a foreign entity or individual outside the United States. So prosecutors usually work directly with foreign law enforcement agencies to exchange information on a voluntary basis; defendants don't have that option. Their route to foreign evidence is through letters rogatory. In United States usage, according to 22 CFR 92.54, "letters rogatory have been commonly utilized only for the purpose of obtaining [overseas] evidence. Requests rest entirely upon the comity of courts toward each other, and customarily embody a promise of reciprocity."

Mr. Bourke says for his defense he needs stock ownership and transfer records about a Liechtenstein corporation. In his case docket, item 135 is an order directing issuance of a letter rogatory. Attached to the order is the letter rogatory itself, formally called a "Request for International Judicial Assistance (Letter Rogatory) to the appropriate judicial authority of the Principality of Liechtenstein."

Again, a letter rogatory can't compel a foreign individual or entity outside the U.S. to produce evidence; it's only a polite request to a foreign court on behalf of one of the parties, in this case Mr. Bourke. We imagine the normally secretive authorities in Liechtenstein won't be anxious to release corporate ownership information. What happens if Mr. Bourke never sees the company records he's after? Can he describe the "missing" evidence to the jury? Can he argue that his right to a fair trial is somehow violated? We'll keep watching.

For practical advice about how to prepare, obtain and use letters rogatory, the State Department runs an excellent resource site here.

Download the trial court's docket (as reported by Pacer) in U.S. v. Kozeny et al here.

Download the Order Directing Issuance of Letter Rogatory on behalf of Frederic Bourke, Jr., with a copy of the letter rogatory attached (entered October 17, 2008) here.