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“Get The Business, I Don’t Want To Know How”

Tuesday, May 28th, 2013

[This post is part of a periodic series regarding "old" FCPA enforcement actions]

In 1989 the DOJ charged (see here) Goodyear International Corp., a subsidiary of Goodyear Tire & Rubber Co., with FCPA anti-bribery violations. The two-paragraph information states, in pertinent part, as follows.

“[In 1984] Goodyear International corruptly used the U.S. mails to convey a check, in payment of an invoice for bogus advertising expenses in the amount of $167,429, in furtherance of an offer, payment and promise to pay money in the aggregate amount of $981,124, to an official of the Government of Iraq, to induce said official to use his influence to affect and influence an act of the Government of Iraq, to wit, the purchase of truck tires manufactured by the defendant, in order to obtain and retain business with the Government of Iraq.”

Goodyear International pleaded guilty (see here for the plea agreement) to the information and was ordered to pay a fine of $250,000 (see here).

The “Statement of Facts Supporting the Guilty Plea” (see here) makes for an interesting read.

The conduct at issue focused on David Janasik (a regional export manager for Goodyear International) and his relationships with certain alleged Iraqi officials. According to the statement of facts, an Iraqi official told Janasik that Goodyear International’s competitors “had been willing to pay cash ‘commissions’ to the official in order to ensure a ‘good relationship’ between those companies and the Iraqi government’s purchasing organization. The same official then ”explained to Janasik that absent such payments Goodyear International could hope for only very limited business from” the government. The statement of facts indicate, however, that “Janasik told [the official] that such payments were against [company] policy and that he did not feel that he could do business on those terms.”

Thereafter, according to the statement of facts, Janasik told Goodyear International’s Assistant Director for Export Operations of the payment demand and the Assistant Director for Export Operations, in turn, discussed the payment demand with Goodyear International’s Regional Director for Europe / Vice President who stated, with respect to Janasik’s contact in Iraq, “get the business, I don’t want to know how.”

According to the statement of facts, Janasik then carried out the scheme by using Goodyear International’s advertising manager for Greece – who has once operated an advertising agency in Iraq – to arrange for false invoices to be prepared billing Goodyear for Arab language advertising purportedly placed in Baghdad newspapers.

According to this New York Times article, “Goodyear auditors uncovered the scheme in 1985 and immediately reported it to the Justice Department for prosecution.” Interestingly, according to other media reports, Charles F.C. Ruff, a lawyer for Goodyear, said “I don’t think by any measure the company blesses everything that was said in the statement of facts.”

According to media reports, Janasik pleaded guilty to federal income tax charges in connection with the bribery scheme, cooperated in the DOJ’s investigation, and was sentenced to two years’ probation and a $10,000 fine.

“Our Stellar FCPA Unit Continues To Go Gangbusters, Bringing Case After Case”

Monday, May 6th, 2013

Last Friday, Acting Assistant Attorney General Mythili Raman delivered prepared remarks (here) at a Corporate Crime Reporter sponsored conference in Washington, D.C. The conference focused on DOJ and SEC resolution policies and procedures. While Raman’s remarks were broad in scope, a portion of her remarks focused on the FCPA, and in her first publicly released statements on the FCPA, Raman continued to employ much of the same FCPA rhetoric that defined Lanny Breuer’s tenure as Assistant Attorney General. (See here for an article summarizing Breuer’s many FCPA speeches).

Raman began her FCPA remarks by stating as follows. “Our stellar FCPA Unit continues to go gangbusters, bringing case after case.” [Note, Raman's delivered remarks deviated from her prepared remarks as to this sentence].

Stellar?

The last three times the DOJ has been put to its ultimate burden of proof in FCPA cases, the end results were either acquittals or dismissals, including for prosecutorial misconduct.

In the Africa Sting cases, Judge Richard Leon stated as follows. “This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement. . . . I for one hope this very long, and I’m sure very expensive, ordeal will be a true learning experience for both the [DOJ] and the FBI as they regroup to investigate and prosecute FCPA cases against individuals in the future.”

In the John O’Shea case, Judge Lynn Hughes stated as follows: ‘‘The problem here is that the principal witness against Mr. O’Shea . . . knows almost nothing … [ ] The government should have been prepared before they brought the charges to the Grand Jury. . . . You shouldn’t indict people on stuff you can’t prove.’’

In the Lindsey Manufacturing case, Judge Howard Matz stated as follows. “The instances of misconduct were so varied and occurred over such a long time that they add up to an unusual and extreme picture of a prosecution gone badly awry.”

[For more on the above cases, see my article "What Percentage of DOJ FCPA Losses Is Acceptable?"]

As to the FCPA, Raman further stated as follows [the remainder of the post is from the DOJ's release].

“Just in the last month, we announced charges against several key defendants in ongoing, active FCPA investigations, one case – with the U.S. Attorney’s Office in Manhattan – involving an alleged bribery scheme to secure mining rights in the Republic of Guinea, and another – with the U.S. Attorney’s Office in Connecticut – involving an alleged bribery scheme to secure power contracts in Indonesia.”

[...]

“In our FCPA prosecutions, too, we aggressively use all the tools available to us. As is evident in our many recent foreign bribery cases, individual targets all over the globe are being charged and arrested, and many companies across a variety of industries have entered into guilty pleas and exacting deferred prosecution agreements with the government. In reaching these dispositions, we can and do require companies to remediate their criminal practices – sometimes with the oversight of a corporate monitor. By demanding remediation as part of such a resolution, we can clean up the misdeeds at a corporation in a lasting way. Corporate leadership is often replaced. We frequently require businesses to implement and sustain rigorous internal controls and compliance programs. And the implementation of these sorts of internal controls by one company in a particular industry can often have a cascading, beneficial effect at other companies that follow suit. You need only look to the effects of our FCPA enforcement program on corporate compliance culture to see that this is true.”

“Additionally, it is important to note that no matter how we proceed in any particular case, we always put a premium on securing cooperation from corporate entities, because meaningful cooperation enables us to hold criminally accountable to the fullest extent possible the widest possible range of bad actors, from individuals responsible for the criminal conduct to other business entities. Simply put, a company’s cooperation – which can lead us to critical information about wrongdoing by executives and employees – can absolutely make the difference as we assess whether there is proof beyond a reasonable doubt sufficient to charge an individual. Moreover, the value of this cooperation is only enhanced when our investigations cross international borders, as they frequently do. We routinely face the reality that in many foreign jurisdictions there are legal roadblocks, including data privacy limits, to what U.S. law enforcement can obtain if it seeks to build a case; in those circumstances, the company’s cooperation can be the critical factor in our ability to hold individual wrongdoers to account.”

“Let me give you a recent example from the FCPA context. In March 2012, we announced that we had entered into a DPA with BizJet International Sales and Support Inc., an aircraft services company, and an NPA with its parent company, Lufthansa Technik AG. As part of the resolution, BizJet admitted to bribing Latin American officials in order to secure various services contracts. And, critically for our prosecutors, BizJet also agreed, together with Lufthansa, to cooperate in our ongoing investigation, continue implementing an enhanced compliance program and internal controls, and pay $11.8 million in criminal penalties. Our agreements with BizJet and Lufthansa laid the groundwork for us to bring felony charges against high-ranking corporate executives. Just last month, we announced charges against four former BizJet executives, including the former president and CEO, and the former sales manager. This example, among many others, proves that, no matter what form of criminal resolution we reach with a company, it decidedly does not mean immunity for its culpable employees – indeed, the opposite is true.”

*****

Despite several individual enforcement actions in April, the fact remains that since 2008 approximately 75% of DOJ FCPA enforcement actions, have not (at least yet) resulted in any DOJ charges against company employees. (See here for the prior post with statistics through 2012).

Moreover, as indicated in this prior post, contrary to Raman’s remarks regarding the “form of criminal resolution,” since NPAs and DPAs were first introduced to the FCPA context in 2004, only 6.5% of corporate DOJ FCPA enforcement actions resolved solely with an NPA or DPA have resulted in related criminal charges of company employees. This compares to 83% of corporate DOJ enforcement actions that were the result of a criminal indictment or resulted in a guilty plea by the corporate entity resulting in related criminal charges of company employees.

I presented these numbers at the conference during a panel on NPAs and DPAs. Denis McInerney (DOJ, Deputy Assistant Attorney General) was on the panel and I stated that the ball was now in his court to explain this wide gap. He described two enforcement actions resolved via an NPA or DPA in which there were indeed related individual prosecutions, but otherwise said that he did not know where these numbers are coming from.

The numbers are described in this prior post. It was really quite easy calculating the numbers. One simply takes all DOJ corporate enforcement actions since 2004 and then looks to see if there have been related individual actions against company employees.

During the panel, McInerney made an important acknowledgment. After I discussed Gabrial Markoff’s excellent article “Arthur Anderson and the Myth of the Corporate Death Penalty” (see here for the prior post), McInerney agreed that there is a very small chance that a company would be put out of business as a result of actual DOJ criminal charges. This was a notable acknowledgment in that the so-called “Arthur Anderson” effect has always been a central justification for the DOJ’s frequent use of NPAs and DPAs. For instance, see this prior post regarding Lanny Breuer’s September 2012 NPA / DPA speech. As fellow panelist Professor David Uhlmann (a frequent critic as well on DOJ’s use of NPAs and DPAs – see here) stated, the DOJ’s policy on NPAs and DPAs is a “policy is search of a rationale.”

*****

In other DOJ news, last Friday the DOJ announced (here) that Paul Novak (a former consultant for Willbros International who previously pleaded guilty – see here for the prior post) was sentenced by U.S. District Court Judge Simeon Lake (S.D.Tex.) to 15 months in prison and two years of supervised release.

Of perhaps greater note, Novak was ordered to pay a $1 million fine. This is among the top individual FCPA criminal fines in history.

The DOJ’s release states that in sentencing Novak, “the court took into consideration the assistance Novak provided the government in ongoing investigations.” Novak’s sentencing documents are under seal and not publicly available.

In May 2008, Willbros resolved parallel DOJ (here) and SEC (here) FCPA enforcement actions and agreed to pay approximately $32 million in combined fines and penalties.

Recent Sentencing Activity

Tuesday, April 30th, 2013

Previous posts have highlighted the sentences of various defendants in the so-called Carson / CCI enforcement action. The sentences were as follows.

Stuart Carson (four months in prison, followed by eight months of home detention).

Hong Carson (three years probation to include six months of home detention)
Paul Cosgrove (thirteen months of home detention)
David Edmonds (four months in prison followed by four months of home confinement).

In mid-March, Judge James Selna (C.D. Cal.) sentenced the remaining defendants in the case – Mario Covino, Richard Morlok and Flavio Ricotti.

This post highlights various issues connected to these sentences. Each of these defendants were the first to plead guilty in the case and cooperated with the DOJ in the prosecution of the above defendants – the so-called “Carson” defendants. Much is made in the sentencing memos of this and the fact that Covino, Ricotti, and Morlok did not force the DOJ to prove its case. (For more on the ending of the cases against the ”Carson” defendants as the DOJ was close to being put to its burden of proof, see prior posts here and here). The sentencing memos also shed light on the perceived unfairness from the defendants’ point of view of potentially receiving stiffer sentences than the ”Carson” defendants. This did not happen as Judge Selna sentenced Covino and Morlok to probation and Ricotti to time served.

Covino

Covino was sentenced to three years probation, including a three-month period of home detention.

As explained in the DOJ’s sentencing memorandum, Covino was the first CCI employee to plead guilty. The DOJ stated as follows.

“Beginning in February 2008, during the initial stages of the government’s investigation, defendant provided and subsequently continued to provide the government with invaluable information concerning the bribery practices at CCI. [...] Defendant had a first-hand view of CCI’s “friends in camp” sale model and the improper payments that were an integral part of that model. Defendant gave the government an insider’s view of the company’s sales practices, accounting systems, terminology, executives, employees, and agents, and provided a compelling narrative for the documents that indicated improper payments. Defendant entered into a plea agreement in December 2008 and pleaded guilty in January 2009. [...] The government’s indictment of six individual defendants followed in April 2009.”

The DOJ further stated that “for several of the counts and overt acts in the indictment, defendant’s statements were the only witness testimony the government had available to corroborate payment records and e-mails.”

In its sentencing memo, the DOJ made much of the fact that Covino’s early acceptance of responsibility ”can be contrasted with the much later acceptance of responsibility by the Carsons, Cosgrove, and Edmonds, each of whom pleaded guilty only after approximately three years of hard-fought, protracted litigation.” Elsewhere, the DOJ stated that it is “only fair” that Covino do “no worse than the defendants who resisted the government’s case for three years and only struck deals on the eve (or near eve) of trial.” The DOJ recommended a sentence of probation.

Morlok

Covino was sentenced to three years probation, including a three-month period of home detention.

As explained in the DOJ’s sentencing memorandum, Morlok was the “second CCI employee to plead guilty, doing so just a few weeks after Mario Covino.” The DOJ memo states that Morlok was CCI’s Finance Director from 2002 through 2007 and that in July 2007, ”shortly after a new Chief Financial Officer joined CCI and became defendant’s new boss, defendant precipitated a confrontation with senior sales executives over commission payments to Korea. This confrontation ultimately escalated into the new CFO’s discovery of the systematic corrupt payments made by CCI from 1998 until 2007 as alleged in the indictment. This discovery caused CCI to undertake an internal investigation that led to its voluntary disclosure to the Department of Justice.” In all other respects, the DOJ’s sentencing memorandum is similar to the above Covino sentencing memo.

Morlok’s sentencing memorandum makes much of the fact that the “Guidelines calculations contained in the plea agreements for the Carson Defendants are significantly less severe than those included in the plea agreements for Mr. Morlock and Mr. Covino, the two cooperators in this matter.” The sentencing memo states that “this inconsistency is a result only of a change in the government’s strategic position.” Morlok’s sentencing memo states that he “accepted responsibility for his conduct not only after the government’s investigation began, but well before that, when he took steps in 2004 and in 2007 to bring CCI’s misconduct to the attention of CCI’s parent company.” The memo states, “as the government points out, Mr. Morlok’s whistleblowing ultimately caused the internal investigation that led to CCI’s voluntary disclosure to the Department of Justice.”

Ricotti

Ricotti was sentenced to time served.

As explained in the DOJ’s sentencing memorandum, after the grand jury indictment in the case in April 2009, Ricotti, an Italian citizen and resident, was detained in Germany, subsequently extradicted, and following his guilty plea served nearly 11 months in federal custody. The memo indicates that Ricotti was the third CCI employee to plead guilty after Mario Covino and Richard Morlock, both of whom pleaded guilty pre-indictment. In all other respects, the DOJ’s sentencing memorandum is similar to the above Covino and Morlok sentencing memos. Given Ricotti’s time in custody, the DOJ recommended a sentence of time served.

Ricotti’s sentencing memo makes much of the fact that given his time in custody he “already served the longest sentence in this case despite having cooperated and pleaded guilty long” before the other defendants “some of whom are significantly more culpable than Mr. Ricotti.” Ricotti’s sentencing memo states as follows.

“Most of this time [Ricotti's time in custody] was in the United States, thousands of miles away from any family or friends. Although he speaks English, Mr. Ricotti was completely cut off from Italian life and language. Thus, Mr. Ricotti served ‘harder’ time than most defendants in this jurisdiction who usually have some cultural and family ties to the U.S.”

The sentencing memo also states as follows. “After Mr. Ricotti began to cooperate and pleaded guilty, the remaining defendants continued their pitched litigation campaign against the government’s case for another year and forced the government to prepare for trial. Nonetheless, they received disparately more favorable plea agreements and hence lighter sentences than Mr. Ricotti.”

*****

Thomas Farrell, a defendant in the long-running Bourke/Kozeny matter concerning alleged payments in Azerbaijan, was also recently sentenced. Farrell, according to the DOJ, was involved in various investment vehicles used by Bourke, Kozeny and others in connection with the bribery scheme and pleaded guilty in 2003 to conspiracy to violate the FCPA and a substantive FCPA violation. Judge Shira Scheindlin sentenced Farrell to time served with no period of supervised release.

Unsealed Documents In Enforcement Acton Against Former BizJet Executives Reveal A Trove Of Information

Tuesday, April 9th, 2013

Yesterday’s post (here) summarized the criminal indictments against former BizJet executives Bernd Kowalewski and Jald Jensen. Today’s post discusses the related criminal informations, based on the same core set of conduct, against former BizJet executives Peter DuBois (former Vice President of Sales & Marketing) and Neal Uhl (former Controller, Vice President of Finance). As noted in the prior post, DuBois and Uhl agreed to plead guilty and were sentenced last week.

Today’s post also highlights documents recently unsealed in the DuBois and Uhl action which reveal a trove of information of interest to anyone curious about the inner workings of an FCPA enforcement action and connecting the dots to other FCPA enforcement actions.

DuBois was charged via a criminal information (here) with one count of conspiracy to violate the FCPA’s anti-bribery provisions and one substantive FCPA anti-bribery violation. The conduct at issue is the same core set of conduct at issue in 2012 BizJet corporation action, as well as the criminal indictments against Kowalewski and Jensen. That is a scheme to “obtain aircraft maintenance, repair and overhaul (“MRO”) service contracts and other business [for BizJet] from foreign government customers, including the Mexican Federal Police, the Mexican President’s Fleet, Sinaloa and the Panama Aviation Authority, by paying bribes to government officials employed by the foreign government customers.”

The DuBois information was filed on December 27, 2011 and the related motion by the DOJ to seal the docket (since unsealed) reveals the following.

As part of his plea agreement, DuBois worked in an undercover capacity for the government. The motion specifically states as follows. “As part of his work in an undercover capacity, Mr. DuBois has recorded conversations with former BizJet executives and other subjects of the government’s ongoing investigation.” Later, the motion to seal states that “public identification of Mr. DuBois as a defendant who likely is cooperating with the government may jeopardize the undercover aspect of the government’s investigation.”

In the plea agreement, DuBois agreed to pay a forfeiture amount of $98,950 “representing proceeds derived by defendant in connection with the conspiracy” and to pay an additional $61,000 as the amount DuBois “received … as a result of his participation in the conspiracy.”

The DOJ’s memo in support of a downward departure for sentencing states as follows.

DuBois “assisted in the investigation from the outset and cooperated fully with the government throughout its investigation. DuBois submitted to multiple interviews by the government and has assisted in every way that the government has asked. DuBois told the truth to the government from the outset and continued to do so up until this very day. DuBois’ cooperation not only assisted the government in connection with its investigation into BizJet, but also led to the investigation of another maintenance, repair, and overhaul company engaged in a similar scheme to pay bribes to government officials overseas.”

This last portion of the DOJ’s memo makes clear that the 2012 FCPA enforcement action against NORDAM Group (see here for the prior post) had its origins in the BizJet enforcement action. Both BizJet and NORDAM Group are Tulsa, OK based aircraft maintenance companies. The link and information about DuBois’ undercover role also raises the issue of whether individual prosecutions related to the NORDAM Group corporate enforcement action are also forthcoming.

As noted in the DOJ release, DuBois was sentenced to 60 months probation and eight months home detention.

Uhl was charged via a criminal information (here - filed on December 28, 2011) with one count of conspiracy to violate the FCPA’s anti-bribery provisions. The conduct at issue is the same core set of conduct as indicated above, that is a scheme to “obtain aircraft maintenance, repair and overhaul (“MRO”) service contracts and other business [for BizJet] from foreign government customers, including the Mexican Federal Police, the Mexican President’s Fleet, Sinaloa and the Panama Aviation Authority, by paying bribes to government officials employed by the foreign government customers.” See here for the Uhl plea agreement.

In the Uhl matter, the DOJ’s motion for a downward departure states as follows.

Uhl ”agreed to a voluntary proffer session and, when confronted by the government, admitted to the illegal conduct. Throughout the course of the investigation, Uhl was cooperative and provided truthful information that substantially assisted the government in confronting other co-conspirators and witnesses. Uhl offered to assist in any way that he could.”

As noted in the DOJ release, Uhl was sentenced to 60 months probation, eight months home detention, and was ordered to pay a $10,000 fine.

The motions to seal in both the DuBois and Uhl actions further state as follows. ”BizJet’s corrupt payments were not limited to Mexico. BizJet employees bribed key decision makers in a number of countries, including Panama, Brazil, and Chile.” This is notable in that the 2012 BizJet corporate enforcement action made no mention of conduct in Brazil or Chile. This demonstrates that resolution documents in a corporate FCPA enforcement action are the result of negotiations and that final documents rarely offer the complete picture of the conduct that allegedly occurred.

Both the DuBois and Uhl plea agreements further indicate that BizJet’s bribery scheme was not just in foreign countries. Both plea agreements state that the customers or potential customers BizJet bribed “included customers both in the United States and abroad.

Former BizJet Executives Charged / Sentenced

Monday, April 8th, 2013

This prior post from 2012 discussed the BizJet corporate enforcement action and was titled “BizJet FCPA Enforcement Action Involves Executive Conduct.” In summarizing that action, the post highlighted DOJ allegations as to Executive A, Executive B, Executive C, and Sales Manager A.

If the DOJ’s rhetoric of holding individuals accountable in the context of corporate resolutions is to mean anything (as noted in this prior post, since 2008 approximately 75% of DOJ corporate enforcement have not resulted in any related individual charges against company employees) the BizJet corporate action was one where related individual enforcement actions were to be expected given the DOJ’s prior specific allegations concerning the above individuals.

It turns out that the above individuals were criminally charged some time ago, but last Friday, in this release, the DOJ unsealed the actions and revealed the names of the above individuals.

Executive A is Bernd Kowalewski; Executive B is Peter DuBois; Executive C is Neal Uhl; and Sales Manager A is Jald Jensen.

In the release, the DOJ announced as follows.

“Kowalewski and Jensen were charged by indictment filed in U.S. District Court for the Northern District of Oklahoma on Jan. 5, 2012, with conspiring to violate the Foreign Corrupt Practices Act (FCPA) and to launder money, as well as substantive charges of violating the FCPA and money laundering. The two defendants are believed to remain abroad.”

The DOJ further announced as follows.

“DuBois and Uhl pleaded guilty on Jan. 5, 2012, to criminal informations, and their pleas were unsealed [last Friday]. DuBois pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA. Uhl pleaded guilty to one count of conspiracy to violate the FCPA. Both defendants were sentenced [last Friday] by U.S. District Judge Gregory K. Frizzell in the Northern District of Oklahoma. DuBois’s sentence was reduced from a sentencing guidelines range of 108 to 120 months in prison to probation and eight months home detention based on his cooperation in the government’s investigation. Uhl’s sentence was similarly reduced for cooperation from a guidelines range of 60 months in prison to probation and eight months home detention.”

The conduct at issue in the indictments and informations is the same core set of conduct at issue in the 2012 BizJet corporate enforcement action. That is, DOJ allegations that the individuals ”paid bribes to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa in Mexico, the air fleet for the Estado De Roraima in Brazil, and the Republica de Panama Autoridad Aeronautica Civil in exchange for those officials’ assistance in securing contracts for BizJet to perform MRO [aircraft maintenance, repair and overhaul] services.”

This post summarizes the indictments (here and here) against Kowalewski (the President and CEO of BizJet between 2004 through March 2010) and Jensen (a regional sales manager at BizJet between 2004 and 2010). A future post will summarize the enforcement actions against DuBois and Uhl. The informations in those cases (here and here) have been released, but the plea agreements and sentencing documents are not yet in the public domain.

Kowalewski Indictment

At its core, the indictment alleges a scheme “to obtain and retain MRO service contracts and other business for BizJet and others from foreign government customers, including the Mexican Federal Police, the Mexican President’s Fleet, Sinaloa, the Panama Aviation Authority, the State of Roraima, and other customers, by paying bribes to foreign officials employed by such customers.” According to the indictment, the bribe payments were called ‘commission,’ ‘incentives’ or ‘referral fees.” The indictment also alleges that Kowalewski and others “would and did attempt to conceal the payments to foreign officials by using Avionica [a California company owned by Jensen and located at his personal residence that operated "under the pretense of providing aircraft maintenance brokerage services"] to funnel the payments to the foreign officials by making payments in cash delivered by hand to the foreign officials.”

The six counts of FCPA anti-bribery violations are based on the following:

“check mailed in the amount of $20,000 by BizJet in Tulsa, OK to [Panamanian Official] in return for [the official's] assistance in securing business for BizJet with the Panama Aviation Authority”
“wire transfer in the amount of $30,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe [Mexican Official] in return for [the official's] assistance in securing business for BizJet with the Mexican President’s Fleet”
“wire transfer in the amount of $18,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe [Mexican Official] in return for [the official's] assistance in securing business for BizJet with Sinaola”
“wire transfer in the amount of $176,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe foreign officials employed by the Mexican Federal Police in return for their assistance in securing business for BizJet with the Mexican Federal Police”
“wire transfer in the amount of $210,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe foreign officials employed by the Mexican Federal Police in return for their assistance in securing business for BizJet with the Mexican Federal Police”
“two checks mailed in the amount of $22,912.38 and $6,417.44 by BizJet in Tulsa, OK to [Mexican Official] in return for [the official's] assistance in securing business for BizJet with Sinaloa.”

Like the BizJet corporate enforcement action, the Kowalewski indictment also contains allegations which suggest a complicit board of directors at the company. The indictment states as follows concerning a November 2005 board meeting:

Kowalewski explained at the meeting that “directors of maintenance and chief pilots in the past received ‘commission’ of $3,000 to $5,000 but were now demanding $30,000 to $40,000 in ‘commission.”
In response to a question by a director about how BizJet would survive the next six months without ‘burning cash,’ Kowalewski stated that BizJet expected to gain market share by paying ‘referral fees’ just as the competition was doing.

The indictment also alleges as follows.

“[In January 2010], after receiving an e-mail stating that the internal auditors of BizJet’s parent company would be conducting a detailed audit of BizJet’s incentive payments and requesting that Kowalewski prepare and make available all relevant documents, Kowalewski caused deletion software to be installed and run on his computer that erased content from his computer.”

Based on the above allegations, the DOJ charged Kowalewski with one count of conspiracy to violate the FCPA’s anti-bribery provisions, six counts of FCPA anti-bribery violations. In addition, the indictment charges one count of money laundering conspiracy and three counts of substantive money laundering.

Jensen Indictment

At its core, the indictment alleges the same scheme as in the Kowalewski indictment, including the same six substantive FCPA anti-bribery violations, as well as money laundering conspiracy and three counts of substantive money laundering. The Jensen indictment further alleges FCPA and money laundering forfeiture allegations which state that “upon conviction” of the offenses, Jensen “shall forfeit” to the U.S. “any property, real or personal, which constitutes, or is derived from, proceeds traceable to the offenses.”

Acting Assistant Attorney General Mythili Raman stated in the DOJ release as follows.

“The charges announced today allege a conspiracy by senior executives at BizJet to win contracts in Latin American countries through bribery and illegal tactics. Former BizJet executives, including the former president and chief executive officer, allegedly authorized and caused hundreds of thousands of dollars to be paid directly and indirectly to ranking military officials in various foreign countries, and two former executives have pleaded guilty for their roles in the conspiracy. These charges reflect our continued commitment to holding individuals accountable for violations of the FCPA, including, as in this instance, after entering into a deferred prosecution agreement with their employer.”

Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office stated in the DOJ release as follows.

“Business executives have a responsibility to act appropriately in order to maintain a fair and competitive international market. The unsealing of these bribery charges, and today’s sentencing, demonstrate that the FBI is committed to curbing corruption and will pursue all those who try to advance their businesses through bribery.”

The former BizJet executive enforcement action announced last Friday is the first FCPA enforcement action of 2013. The last DOJ FCPA enforcement action (of any kind – corporate or individual) was in September 2012 and the last time the DOJ brought an FCPA enforcement action against an individual was in April 2012. (See here for the prior post).

For additional coverage, see here from Tulsa World.