DOJ: Undercover Sting Nets 22 Arrests in Large Scale FCPA Case

Updated 5:10 p.m.

Nearly two dozen corporate executives and employees were arrested Monday in Las Vegas and in Miami in the first large-scale foreign bribery investigation using undercover federal agents, the Justice Department announced today.

Sixteen indictments were unsealed today in the U.S. District Court for the District of Columbia charging executives and employees in the military and law enforcement equipment industry with violations of the Foreign Corrupt Practices Act. Twenty-one people were arrested Monday at a convention in Las Vegas. The indictments were returned in federal court in Washington in December.

Justice Department officials said the defendants, including Amaro Goncalves, vice president of sales at the firearm manufacturer Smith & Wesson in Springfield, Mass., believed they were bribing the minister of defense of a foreign country through a sales agent to obtain contracts. The ongoing investigation began more than two years ago, Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division said today.

“Indeed the undercover techniques used in this case should cause all would-be FCPA fraudsters to pause and to ask: am I really paying off a foreign government official or could this be a federal agent?” Breuer said. “Of course, if you even have to ask yourself this question in all likelihood you shouldn’t be doing whatever it is that you are doing.”

Breuer and Kevin Perkins, the FBI’s assistant director of criminal investigations in Washington, said there are 140 pending FCPA investigations. “There should be and can be no place for foreign bribery in any business model or corporate culture,” Breuer said today.

Breuer declined to comment about whether the military and law enforcement equipment industry was targeted. Recently, Justice officials said they were turning their sights on the pharmaceutical industry for FCPA investigations.

In the latest case, more than 150 FBI agents executed search warrants in several cities in Florida—including Miami, St. Petersburg and Sarasota—in addition to San Francisco and Woodbridge, Va. Click here for copies of the indictments in the case.

Justice officials said the defendants agreed to pay a 20 percent commission to a sales agent in order to win part of a $15 million deal to outfit the African country’s presidential guard. The sales agent was undercover for the FBI. The fictitious defense minister was supposed to personally receive a 10 percent bribe, according to the Justice Department.

Alexandra Wrage, an expert in corporate compliance with the FCPA, said in a statement that the undercover prosecution "changes the whole landscape" of enforcement of anti-bribery laws.

"More typical cases involve investigations of allegations by whistleblowers, competitors and disgruntled employees or settlements with companies that come in the DOJ’s front door, hat in hand," said Wrage, president of TRACE International, a non-profit membership association that works with companies to bolster compliance. "In this case, the DOJ trumped up a greedy African official and his (FBI) front man to snare 22 executives."

Wrage said the prosecution of the executives goes to company officials who have opted to play "compliance roulette." Justice officials declined to say whether any of the executives or employees are cooperating with the investigation and prosecution.

Comments

[Larry Rubinoff]

@Andrew:
The US has the most corrupt business practices in the entire world. Did not our banking industry bring down the economies of most countries? Did Wall Street not perpetrate the largest fraud the world has ever seen?

We should focus our justice system domestically. Are we still so arrogant as to think we are the protector of the world when we can't even protect our own people.

We can't control our own laws within our own borders. We do not belong outside our borders looking to imprison "our" citizens for doing business abroad. If they commit a crime elsewhere then it is up to that country and their laws to prosecute.

This is not justice...this is just another example of the police state powers our government is imposing their will against the people of this "free, democratic, constitutional society".

Stop the real crooks, the "banksters" from robbing not only our own people but those around the world. These "banksters" are operating from the shores of the United States skirting, bypassing and even worse, blatantly violating our domestic laws.

Have you not noticed that we are in a Great Depression? Highest unemployment in decades, the erosion of our middle class, foreclosures in the millions, homelessness increasing, hunger and starvation in this country all caused by the wanton actions of our "too big to fail" and need to be bailed out Bankers.

What has happened and is happening here in "our" country truly is a crime.

I don't understand how we can pass laws that involve actions in other countries. Unless you have clean hands here don't use those dirty hands abroad.
Editor/Publisher
www.GoldmanSachs666.com

[Andrew]

NR, it is a US law and is increasingly getting onto the statute books of other countries. And no, just saying it's local culture does not get you off the hook. The fact that corruption is rampant in these other countries and that no prosecution for bribery would be brought is one of the reasons it has been made illegal in the US. And quite rightly too, IMO. We are saying to other countries, do whatever you want at home, but our corporations will not be permitted to participate. If that means "the other guy" gets the business the answer is to introduce laws and enforcement in the other guy's country, not simply to drop your moral standards just because there's a buck in it. Well done, DoJ, this will scare the bribers like it should.

[Keven Barnes]

Breuer and Kevin Perkins, the FBI’s assistant director of criminal investigations in Washington, said there are 140 pending FCPA investigations. “There should be and can be no place for foreign bribery in any business model or corporate culture,” Breuer said today.

What a crock. In Kuwait, we have seen 20 contracting officers go to jail for taking kick-backs and bribes with documentation on the companies giving the bribes and the DOJ and FBI do nothing except let them keep conducting business.

It is time to shut down U.S. Bases in Kuwait as a place that is hopelessly corrupt and Obama will do nothing about.

[Marsha Maines]

Agreed and well stated Larry. Attorney Fine and Sherry Jackson are HEROES for the American Public that recognizes where this country is headed at an avalanche pace. Both deserve to have their stories told - and the bought and paid for "media" elites at the Private Central Bankers beck and call need to be flogged for reporting the opinionated crap they label "news" these days. Since when did Ted Kennedy "own" a Senate seat - I thought members of Congress were representatives Of The People...

[NR]

entrapment

[gayat1]

soooo is it illegal to accept or issue brribes as part of international law or is it just a US law? I know a lot of foreign countries do accept bribery as their business model. So if someone from the US follows that model can they argue: Hey I am just following the standard business protocol for ABC country?

[Larry Rubnoff]

Here is the link to the story I refer to in my comment above.

http://www.huffingtonpost.com/victoria-fine/my-dad-tried-to-right-a-w_b_398322.html
My Dad Tried to Right a Wrong, Now He's Behind Bars Unjustly

[Larry Rubnoff]

Great case against domestic corporations for actions with foreign countries and/or entities. DOJ is on the job internationally but how about their efforts domestically.

Take Wall Street for instance. There appears to be a great deal of illegal activities going on there - some involving government officials. Where is the DOJ when it comes to domestic crimes of fraud, deceit, cover-up and corruption?

In the case subject of this story, is paying a commission to a sales agent a crime? If so then anyone paying referral fees ln so many instances are performing illegally. When the pharmaceutical industry hands out "free" samples to doctors then is that not a "bribe" to get that doctor to prescribe that drug"

All to often these days we see more and more evidence of a "police" state where the certain privileged "elite" can commit crimes that are simply overlooked by regulators and law enforcement.

Wall Street is wrought with fraud as are the rating agencies like Fitch, Moody's and Standard and Poors who falsely rated securities AAA so that Wall Street could peddle this disaster worldwide.

I refer also to a case of a Huffington Post reporter whose father - an attorney - has been in solitary confinement in a California prison for 9 months for contempt because he was defending his client and challenged the judge as to his impartiallity in the case. Is this justice when your rights of a good defense by a 40 year legal veteran (age 69) is imprisoned, lost his home, his health insurance, his livlihood and his freedom? He has not been charged with anything other then "contempt of court" by a contemptuous judge who along with many others in law enforcement feel that they are the "ruling" class in a tyranical not democratic society.

There is so much more that the DOJ should be doing to catch real domestic criminal of all flavors that have and continue to ruin the American way of life.

As a legal community you should be puruing "justice for all".

As for the DOJ sting, it is not our business as to how our business people conduct their business overseas. It is up to the foreign governments to determine guilt or innocense as to "their" generally accepted methods of doing business.

One last question for DOJ. How about Halliburton and Blackwater (or what ever they call themselves now)?