In the words of the DOJ “our recent string of successful prosecutions of corporate executives [in FCPA cases] is worth highlighting.”
In the minds of others, “FCPA prosecutorial overreach by the Department of Justice (DOJ) is a myth.”
And now for some cold-hard facts.
Since September 2011, the DOJ has been put to its burden of proof at trial four times in FCPA enforcement actions. As highlighted in this post, each instance was a trial court debacle for the DOJ.
The most recent debacle of course was U.S. v. Sigelman (the facts and circumstances of which most readers are presumed to know given recent events, but if not see here, here and here for prior posts.)
Sigelman was no aberration and the remainder of this post highlights the other three most recent instances of the DOJ being put to its burden of proof in an FCPA trial.
Africa Sting (2011-2012)
In January 2010, the DOJ announced criminal charges against 22 executives and employees of companies in the military and law enforcement products industry for engaging in a scheme to pay bribes to the minister of defense of an African country. However, there was no actual involvement from any minister of defense, rather it was a manufactured sting operation. Given the number of defendants, four separate trials were scheduled.
The first Africa Sting trial started in May 2011 and involved four defendants. At the close of the DOJ’s case, Judge Richard Leon dismissed a substantive FCPA charge against one defendant (Pankesh Patel), dismissed another substantive FCPA charge against another defendant (Lee Tolleson) and dismissed the money laundering count against all defendants (Patel, Tolleson, Andrew Bigelow, and John Weir). In July 2011, Judge Leon declared a mistrial as to all remaining counts against all defendants.
The second Africa Sting trial began in September 2011. At the close of the DOJ’s case, Judge Leon dismissed the conspiracy charge against all defendants (John Mushriqui, Jeana Mushriqui, Patrick Caldwell, Stephen Giordanella, John Godsey, and Mark Morales). Because Giordanella faced only that conspiracy charge, he was exonerated. The trial proceeded, the charges went to the jury, the jury deliberated, and in January 2012, the jury found two defendants (Caldwell and Godsey) not guilty. The jury hung as to the remaining defendants, and once again Judge Leon declared a mistrial as to all remaining counts against the remaining defendants.
Shortly after conclusion of the second trial, the jury foreman published this guest post on FCPA Professor and shortly thereafter the DOJ moved to dismiss with prejudice the criminal charges against all of the remaining defendants including those initially charged but not yet tried (Helmie Ashiblie, Yochanan Cohen, Amaro Goncalves, Saul Mishkin, David Painter, Lee Wares, Ofer Paz, Israel Weisler and Michael Sacks). The next day, Judge Leon granted the motion to dismiss and stated (see here) “this appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.”
Lindsey Manufacturing et al (2011)
In 2010, the DOJ charged Lindsey Manufacturing Co. and two of its executives (company CEO Keith Lindsey and company CFO Steve Lee) with FCPA offenses for their alleged roles in a conspiracy to pay bribes to alleged Mexican “foreign officials.” In May 2011, Lindsey Manufacturing, Lindsey, and Lee were found guilty of various FCPA charges after a five-week jury trial. (See here).
However, after months of post-trial legal wrangling, in December 2011 Judge Howard Matz (C.D. Cal.) vacated the convictions and dismissed the indictment after finding numerous instances of prosecutorial misconduct. In the words of Judge Matz, 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.” (See here).
John O’Shea (2012)
In November 2009, John O’Shea was charged with FCPA and related offenses for allegedly making improper payments to alleged Mexican “foreign officials.” O’Shea mounted a defense and proceeded to trial. In January 2012, following the DOJ’s case, Judge Lynn Hughes (S.D. Tex.) dismissed the FCPA charges against O’Shea. In doing so, Judge Hughes stated: ”The problem here is that the principal witness against Mr. O’Shea … knows almost nothing.” (See here). During the trial, Judge Hughes also admonished other aspects of the DOJ’s case stating: “I don’t know what was presented to the Grand Jury, but … the Government should have been prepared before they brought the charges to the Grand Jury. It’s something you have to prove. And you shouldn’t indict people on stuff you can’t prove.” (See here).
To read more about the Africa Sting, O’Shea and Lindsey Manufacturing cases see the article “What Percentage of DOJ FCPA Losses Is Acceptable?“
There are numerous civil society organizations devoted to bribery and corruption topics that are vocal about current trends.
Where is the civil society concern about the string of DOJ FCPA trial court debacles? After all, these debacles are effecting real people, with real families, with real reputations.
Does anyone care?