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Friday Roundup

Friday, June 8th, 2012

Chevron and others get the front-page treatment, the Aguilar prosecution is officially over as well, some additional FCPA compliance survey data, Wal-Mart civil suits continue to pile up, and Chinese state-owned enterprises continue their global M&A push, it’s all here in the Friday roundup.

Kazakhstan Customs Inquiry

In yesterday’s Wall Street Journal, Christopher Matthews and Joe Palazzolo broke a story (“Oil Giants Launch Bribe Probes”) about an apparent investigation regarding Kazakh customs issues involving members of Karachaganka Petroleum Operating BV (“KPO”) including Chevron Corp. and Eni SpA, as well as a logistics arm of Deutsche Post AG, DHL, which handles freight shipments for the group. (For more on KPO see here). According to tips discussed in the WSJ article, the “KPO joint venture authorized DHL to bribe Kazakh customs officials to ignore paperwork irregularities that could have delayed shipments.” The WSJ article discusses “the difficult choices companies face operating in developing countries” and notes that, according to a knowledgeable source, when KPO logistics officials ordered DHL representatives to “stop payments to customs officials” in March 2011 the “customs inspectors found problems with virtually very KPO shipment” and “nothing was cleared to pass” until DHL resumed the payments.

Payments in connection with foreign customs, licenses, permits and the like have been fertile ground for FCPA enforcement activity, although as noted in this recent post in connection with Wal-Mart’s potential FCPA exposure, it is an open question in many cases whether the conduct at issue is the type of conduct Congress sought to capture in passing the FCPA.

In 2007, Chevron resolved an enforcement action (here) involving Iraqi Oil for Food conduct and in 2010 Eni (and related entities) resolved an enforcement action (see here for the prior post) involving Bonny Island, Nigeria conduct. In addition, as highlighted in this recent post, Eni is also reportedly under investigation concerning its conduct in Libya.

Aguilar Conviction Vacated

This recent post highlighted the official end to the Lindsey Manufacturing prosecution. The prosecution of Angela Maria Gomez Aguilar, who was tried along with the Lindsey defendants, is officially over as well. As noted in this previous post, Aguilar (a purported agent of Lindsey Manufacturing) was granted a judgment of acquittal after the DOJ’s case as to one substantive count of money laundering, but the jury convicted her of one count of money laundering conspiracy. After the conviction, Aguilar negotiated an agreement with the DOJ for a time-served sentence and immediate release from custody. Following Judge Matz’s dismissal of the indictment last December based on numerous instances of prosecutorial misconduct (see here for the prior post), Aguilar obtained an agreement from the DOJ to stipulate to a motion vacating the one count of conviction, an agreement which took effect upon the DOJ’s recent decision not to further pursue its appeal.

As noted in this recent release, Judge Matz this week signed an order vacating Aguilar’s conviction. In the release, Aguilar’s counsel, Stephen Larson (Arent Fox – here) stated as follows. “The government overreached in its efforts to press this case. It is bittersweet whenever a prosecution is terminated for misconduct. Although Ms. Aguilar is greatly relieved by Judge Matz’s decision to end this ordeal, it is tragic that it was permitted to go this far. I am pleased that the Department of Justice has recognized as much by opting not to pursue its appeal in this case.”

Kroll’s 2012 FCPA Benchmarking Report

This post discussed recent FCPA survey data. Add Kroll’s recent FCPA Benchmarking Report (here) to the list.

As noted in the Report, the study was “designed to take the pulse of corporate compliance officers at U.S. based multinationals and to provide benchmarks for the current state of anti-bribery preparedness.”

Survey results that caught my eye include the following.

“Sixty-nine percent of all respondents said their companies were either moderately or highly exposed to bribery risk; this number jumps to 100 percent in the pharmaceutical industry and drops to 46 percent in the financial services industry. [...] 85 percent believe [such risk] will increase or stay the same in the future.”

“Fifty-three percent of respondents said their compliance departments have increased their budgets in the last year; 49 percent said they have increased hiring; and 22 percent said they have experienced a centralization of compliance decision-making.”

“The most frequently cited challenges to anti-bribery compliance include the inability to anticipate regulators’ next moves (21 percent) and ensuring that employee training is taken seriously and is used when a risky situation presents itself (20 percent).”

“Seventy-nine percent of respondents characterized their compliance efforts as a strategic advantage in addition to being a strong defensive tactic.”

“[T]he weakest link among survey respondents was how they handled third party relationships. While 99 percent of respondents said they had anti-bribery provisions for employees in their companies’ codes of conduct, that number fell to 73 percent when compliance officers were asked about anti-bribery provisions for third parties. [...] The scope of [FCPA risk by using third parties] is exacerbated by the fact that approximately three in four U.S. companies (77 percent) report that they partner with foreign companies to do business abroad. Thirty-seven percent of respondents said they do business with between 100 and 1,000 third parties; 27 percent said they work with between 1,000 and 10,000 third parties; and 17 percent said they work with between 10,000 and 100,000 different third parties. A small number said they worked with more than 100,000 different third parties.”

It’s a third-party world.

The Report was based on responses from “139 senior corporate compliance executives from companies ranging in size from $100 million to over $10 billion in revenues per year” who were interviewed by phone from July 2011 to February 2012. Survey respondents were drawn mainly from four industries: financial services, IT/telecommunications, energy, and pharmaceuticals.

The report was published by Kroll Advisory Solutions (here), a company that assists clients mitigate and respond to risks, including FCPA issues.

Wal-Mart Civil Suits

One of my earliest Wal-Mart posts (here) noted that not only will the DOJ and SEC likely be examining the conduct of Wal-Mart executives, but so too will plaintiff law firms representing shareholders who will likely scour Wal-Mart’s SEC filings and other statements to the market in bringing derivative claims alleging breach of fiduciary duty and potential Section 10(b) claims based on material omissions concerning Wal-Mart Mexico.

Sure enough.

Wal-Mart’s recent quarterly SEC filing stated as follows.

“The Company is a defendant in several recently-filed lawsuits in which the complaints closely track the allegations set forth in a news story that appeared in the New York Times on April 21, 2012. One of these is a securities lawsuit that was filed on May 7, 2012 in the United States District Court for the Middle District of Tennessee, in which the plaintiff alleges various violations of the U.S. Foreign Corrupt Practices Act (the “FCPA”) beginning in 2005, and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, relating to certain prior disclosures of the Company. The plaintiff seeks to represent a class of shareholders who purchased or acquired stock of the Company between December 8, 2011, and April 20, 2012, and seeks damages and other relief based on allegations that the defendants’ conduct affected the value of such stock. In addition, eleven derivative complaints were filed in April and May 2012, in Delaware and Arkansas, also tracking the allegations of the Times story, and naming various current and former officers and directors as additional defendants. The plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants who are or were directors or officers of the Company breached their fiduciary duties in connection with oversight of FCPA compliance. While management cannot predict the outcome of these matters, management does not believe the outcome will have a material effect on the Company’s financial condition or results of operations.”

Chinese SOEs

This recent post focused on China SOEs and provided links to data and analysis concerning the ever increasing global push of Chinese SOEs. Yesterday, the Wall Street Journal ran an article titled “China Buys Overseas Assets” that discusses a recent report from A Capital, a private equity firm based in China and Paris (see here for A Capital’s report). As indicated in the article, “China’s overseas investment surged in the first quarter [of 2012] to $21.4 billion as state-owned companies snapped up resource-related assets around the globe.” According to the report, state-owned companies accounted for 98% of all deal value in the first quarter, a new high.

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A good weekend to all.

Lindsey Manufacturing Case Officially Over

Friday, May 25th, 2012

As detailed in this prior post, in May 2011, Lindsey Manufacturing Company (a privately held manufacturer of electrical transmission and related products that employs approximately 100 individuals) and Keith Lindsey (President) and Steven Lee (Chief Financial Officer) were convicted after a five week trial by a federal jury in the Central District of California of one count of conspiracy to violate the FCPA and five counts of FCPA violations. Reacting to the guilty verdicts, Assistant Attorney General Lanny Breuer stated in this release as follows. “Today’s guilty verdicts are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts. Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last.”

As detailed in this prior post, in December 2011, the DOJ’s “important milestone” was erased when Judge Howard Matz, after months of legal wrangling, vacated the convictions and dismissed the indictment. See here for Judge Matz’s ruling. In his ruling, Judge Matz summed up the government’s conduct as an “unusual and extreme picture of a prosecution gone badly awry.”

The DOJ appealed Judge’s Matz’s ruling to the 9th Circuit. Earlier today, the DOJ filed a motion for voluntary dismissal of the appeal.

Jan Handzlik (Venable – here) represented Lindsey Manufacturing and Lindsey and Janet Levine (Crowell & Moring – here) represented Lee.

In an e-mail statement, Handzlik stated as follows. “By filing today’s dismissal motion, the government has dropped its prosecution of the Company and its officers, and will also end its efforts to forfeit about $24 million from the Company. By deciding not to pursue its appeal of Judge Matz’ dismissal order, the government has ended the case.” Handzlik further stated as follows. “This is a great day for the fair administration of justice. We couldn’t be happier for Keith, Steve and the 110 loyal, hard-working employees of Lindsey Manufacturing Company. This dismissal further vindicates Dr. Lindsey’s belief in our system of justice and in his innocence. Keith and Steve were steadfast in their belief that the government had not played fair and that the truth would come out.”

Judge Selna Rejects State Actor Theory

Wednesday, May 16th, 2012

Prior posts (here, here, and here) discussed a motion to suppress and a motion to dismiss brought by various defendants in the Carson matter. Given the recent guilty pleas of Stuart Carson and Hong Carson (see here), as a practical matter the motions only affected the remaining defendants – Paul Cosgrove and David Edmonds.

In the motion to suppress, defendants moved to suppress statements which they made to attorneys from Steptoe & Johnson during the course of Steptoe’s internal investigation on behalf of Control Components, Inc. and its parent IMI plc. The theory of the motion was that the Steptoe attorneys were part of the Government’s investigation and therefore state actors.

Judge Selna rejected the state actor theory – see here for his tentative order. Judge Selna stated as follows. “As a matter of fact finding, there is no basis to conclude on the basis of events that transpired prior to the interviews or in the aftermath that the Steptoe lawyers were acting as agents of the Government.” The tentative order states as follows. “Steptoe contacted the Department of Justice. [...] There is no evidence that the Government had any input in the determination of which employees to interview or what they should be asked. Although [Mark] Mendelsohn [former DOJ FCPA Unit Chief] was advised of the first day of interviews via e-mail, he did not provide guidance or input for the next day’s interviews, and put off discussing the ‘specifics’ of the interviews until the following week.”

Judge Selna further stated as follows. “The facts here do not establish more than a unilateral determination on the part of CCI and its parent to cooperate with the Government. Surely, it was in CCI’s interest and a legitimate activity to investigate potential criminal conduct in its business operations. The Government had no involvement with the Defendants’ interviews, and it cannot be said that Steptoe’s action were so intertwined with the Government that those interviews may be ‘fairly treated’ as the conduct of the Government. [...] The record is clear that CCI through its parent IMI had made a decision to conduct an internal investigation before Steptoe contacted the Government.”

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Judge Selna also issued a tentative ruling (here) denying defendants’ motion to dismiss the indictment “on a series on individual grounds upon which they claim to have been denied due process and on the basis of the cumulative effect of these individual deficiencies.”

Judge Selna noted that “a number of claims [were] predicated on the theory that Steptoe & Johnson … was the agent of the Government and joint investigator” and that such issues were properly resolved in the above-described tentative order.

As to the Defendants’ assertion that the FCPA and Travel Act lacked clarity, Judge Selna stated that “this is simply a cameo reprise of their earlier attacks on these statutes which the Court addressed at length, and rejected.”

As to the Defendants’ theories regarding denial of access to witnesses, missing documents, and foreign documents, Judge Selna concluded that none of these issues were “attributable to unilateral government action.” As to Brady issues, Judge Selna concluded that “the Government has used its reasonable efforts to secure materials in the possession of CCI.”

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During Monday’s hearing on the motions, Judge Selna indicated that he will soon be issuing formal denials of the motions. The remaining defendants in the Carson matter – Paul Cosgrove and David Edmonds – are scheduled to stand trial in late June.

SEC To Be Put To Its Burden – Motion To Dismiss Filed In Jackson And Ruehlen Enforcement Action

Wednesday, May 9th, 2012

In February, the SEC announced here charges against “three oil services executives [associated with Noble Corporation] with violating the FCPA by participating in a bribery scheme to obtain illicit permits for oil rigs in Nigeria in order to retain business under lucrative drilling contracts.” Previously Noble Corporation (along with several other companies in an enforcement action I dubbed CustomsGate) resolved an FCPA enforcement action involving both a DOJ and SEC component (total settlement amount was approximately $8.2 million ($2.6 million criminal fine via a non-prosecution agreement; $5.6 million in disgorgement and interest via a SEC complaint) – see here for the prior post.

Like the vast majority of FCPA defendants in SEC enforcement actions, one of the individual defendants, Thomas O’Rourke (the former controller and head of internal audit at Noble Corporation), chose to settle the SEC’s complaint without admitting or denying the SEC allegations.

Not so with the other two individual defendants: Mark Jackson (former Noble Corporation CEO) and James Ruehlen (current Director and Division Manager of Noble’s subsidiary in Nigeria). This prior post contained the comments of Jackson’s lawyer, David Krakoff (here - BuckleySandler) who stated as follows: “We unequivocally deny the SEC’s baseless allegations. Mr. Jackson will vigorously defend himself in court where the evidence will show what the SEC already knows, that at all times Mr. Jackson acted in good faith at Noble. He looks forward to clearing his good name in this proceeding.” The prior post also contained the comments of Ruehlen’s lawyer F. Joseph Warin (here - Gibson Dunn & Crutcher) who stated that “the claims against Mr. Ruehlen are wrong and they will be proven so at trial.”

I noted in the prior post that this could get interesting as the SEC is rarely put to its burden of proof in FCPA enforcement actions (or any of its actions for that matter).

Yesterday Jackson and Ruehlen filed separate motions to dismiss (see here and here).

To my knowledge, this is the first time since the SEC lost the Mattson and Harris individual enforcement actions in 2002 (see here for a prior post discussing the case) that the Commission will be put to its burden of proof in an FCPA enforcement action.

Thus, yesterday’s motion is a significant event in terms of the SEC’s FCPA enforcement program.

The remainder of this post summarizes the motion to dismiss (internal citations omitted).

Ruehlen Motion to Dismiss

Ruehlen was charged in the SEC complaint (here) with Count 1 - FCPA anti-bribery violations; Count 2 – aiding and abetting Noble Corp’s FCPA anti-bribery violations; Count 3 - aiding and abetting Noble Corp’s failures to make and keep accurate books, records, and accounts and to devise and maintain internal accounting controls; and Claim 4 knowingly circumventing Noble’s internal controls and falsifying or causing to be falsified Noble’s books, records, and accounts in violations of FCPA’s books and records provisions.

In summary, the motion states as follows.

“Despite the repetition of the word “bribe” fifty-three times in its Complaint, Plaintiff fails to allege a violation of law. The FCPA distinguishes between prohibited corrupt payments made to obtain or retain business (i.e., bribes), and permissible payments to “secure the performance of a routine governmental action,” such as “obtaining permits, licenses, or other official documents” or for “processing governmental papers” (i.e., facilitation payments). The Complaint assumes that all payments to foreign officials are per se illegal bribes, never acknowledging the FCPA’s exception for facilitation payments.

The distinction between a permissible facilitation payment and an unlawful bribe turns on the purpose and effect of the payment, namely whether it is being made to induce the recipient to act improperly based on his or her particular role, duties, or responsibilities in order to obtain or retain business—facts that the SEC must allege to state a claim. Despite investigating this matter for nearly five years, the SEC apparently does not know—and therefore cannot allege—the identity, role, duties, or responsibilities of any “Nigerian government officials” to whom Noble or Mr. Ruehlen allegedly authorized payments. By failing to identify the particular foreign officials to whom Noble and Mr. Ruehlen allegedly authorized payments, Mr. Ruehlen and this Court are simply left to guess whether the alleged unidentified government officials had the power to assist Noble in obtaining or retaining business by engaging in non-routine governmental action, as the statute requires. Accordingly, the SEC fails to satisfy its burden of pleading plausible facts under Federal Rule of Civil Procedure 8 and Twombly that the payments at issue were prohibited bribes under the FCPA, rather than lawful facilitation payments.

Second, without identifying the intended recipients of the alleged payments or alleging facts showing how these officials abused their authority on Noble’s behalf, Plaintiff fails to allege that Mr. Ruehlen acted “corruptly,” that is, with “a bad purpose or evil motive,” or with the “intent to influence a foreign official to misuse his official position.” To the contrary, the Complaint shows that Mr. Ruehlen reasonably believed that the payments were proper because, among other things, they had been reviewed and approved by Noble’s senior management who were tasked with ensuring Noble’s compliance with the FCPA and approving facilitation payments. The failure to plausibly allege facts showing corrupt intent provides an independent basis to dismiss the claims against Mr. Ruehlen.

Third, to the extent that Plaintiff’s first and second claims against Mr. Ruehlen survive these challenges, the Court must nevertheless dismiss them because the law in effect at the time failed to give Mr. Ruehlen “fair notice” of the interpretation now being advanced by the SEC in this case. In addition, the SEC’s strained and subjective interpretation of the FCPA’s facilitation payment exception makes it impossible for well-intentioned individuals to navigate between lawful and unlawful conduct and, therefore, is unconstitutionally vague as applied to Mr. Ruehlen.

Fourth, Claims 3 and 4 must be dismissed because the SEC fails to specify the particular book, record, or account that it claims Mr. Ruehlen knowingly falsified (or unreasonably caused to be false) or the particular internal control that he allegedly knowingly circumvented. Additionally, to the extent that the alleged violations refer to Noble’s decision to treat the special handling fees as facilitation payments rather than bribes, these violations are entirely predicated on the underlying FCPA violations alleged in Claims 1 and 2. Finally, this action is governed by the five-year statute of limitations. Because the claims against Mr. Ruehlen are principally based on alleged conduct that occurred outside the limitations period and because the SEC raises no basis for tolling, they are time-barred and must be dismissed.”

Jackson Motion to Dismiss

Jackson was charged in the SEC complaint (here) with Count 1 – FCPA anti-bribery violations; Count 2 – aiding and abetting Noble Corp’s FCPA anti-bribery violations; Count 3 – aiding and abetting Noble Corp’s failures to make and keep accurate books, records, and accounts and to devise and maintain internal accounting controls; Count 4 knowingly circumventing Noble’s internal controls and falsifying or causing to be falsified Noble’s books, records, and accounts in violations of FCPA’s books and records provisions and Rule 13b2-1; Count 5 – misleading auditors; Count 6 – signing false certifications; and Count 7 – control person liability.

In summary the motion states as follows.

“The Complaint against Jackson must be dismissed under Rule 12(b)(6) because it fails to state a claim that is plausible on its face. Only factual allegations—not unsupported conclusions or accusations of legal violations—may sustain a Complaint. But, stripped of its conclusions about what Jackson “knew,” the Complaint comes up woefully short in pleading several essential elements of Claim I, a Foreign Corrupt Practices Act (“FCPA”) anti-bribery violation—that Jackson acted with corrupt intent, and that he knew payments would be made to a foreign official to obtain sought-after unlawful acts from that foreign official. Instead, the factual allegations in the Complaint regarding alleged bribes are equally consistent, if not more, with wholly legal actions under the “facilitating payments” exception to the FCPA. The bribery claim therefore must be dismissed as implausible under controlling Supreme Court precedent. And because the other claims in the Complaint are entirely dependent on the existence of illegal bribes, they too must be dismissed. Finally, because the vast majority of the conduct alleged in the Complaint took place well over five years before the Complaint was filed, the bribery claim and many of the derivative claims are barred by the statute of limitations.”

An Important FCPA Case You’ve Likely Never Heard About

Monday, May 7th, 2012

Last week (here) I noted, in connection with Wal-Mart’s potential FCPA exposure, that the enforcement theory that payments outside the context of foreign government procurement fall under the FCPA’s anti-bribery provisions has been subjected to judicial scrutiny three times. After summarizing those three instances, I noted that the scorecard was as follows: US – 1; Defendants – 2; or if you prefer US – .5; Defendants – 2.5 (recognizing that the 5th Circuit decision in Kay is equivocal).

Last week in doing some research, I stumbled upon a fourth instance where this enforcement theory was subjected to judicial scrutiny.

The result? DOJ lost.

Thus, the scorecard is as follows when an enforcement agency is put to its burden of proof on the enforcement theory that payments outside the context of foreign government procurement fall under the FCPA’s anti-bribery provisions: US – 1; Defendants – 3; or if you prefer US – .5; Defendants – 3.5 (again recognizing that the 5th Circuit decision in Kay is equivocal).

This 1990 FCPA enforcement action is so obscure it was not even cited in any of the decisions of the other challenges which occurred between 2002-2004. For instance, in the Kay trial court decision in 2002, the court stated that it was confronting an issue of first impression in the federal courts.

Below is a summary of U.S. v. Alfredo Duran.

AEA Aircraft Recovery (“AEA”) was a division of Summerland Engineering Corp. (a Florida corporation) and engaged in the business of recovery of seized aircraft. The sole shareholder of Summerland was Robert Gurin.

In 1989, the DOJ charged Joaquin Pou (a Dominican Republic citizen and an agent of AEA, Summerland and Gurin), Alfredo Duran (a U.S. citizen and agent of AEA, Summerland, and Gurin) and Jose Guasch (a U.S. citizen and agent of AEA, Summerland, and Gurin) with conspiracy to violate the FCPA’s anti-bribery provisions. See here for the criminal indictment. In a criminal information (see here) the DOJ also charged Robert Gurin.

According to the charging documents, the defendants conspired to make payments to officials of the Dominican Republic in order to obtain the release of two aircraft seized by the government of the Dominican Republic. The charging documents then proceed to set forth various acts in furtherance of the conspiracy.

Gurin and Guasch pleaded guilty and Pou (a citizen of the Dominican Republic) became a fugitive. Gurin was sentenced to 5 years probation and 100 hours of community services and Guasch was sentenced to 4 years probation, 1 month of house arrest and 75 hours of community service.

Duran, a former Florida state Democratic Party chairman, pleaded not guilty and put the DOJ to its burden of proof at trial. At the close of the DOJ’s case, he filed a motion for judgment of acquittal (see here). Duran argued that “no reasonable jury could find that the purpose of any of the alleged intended payments was to assist [...] in obtaining or retaining business” and that the government “has failed to adduce sufficient evidence to prove any intended payments were not facilitating or expediting payments for the purpose of expediting or securing routine governmental action (i.e. grease payments).”

The motion stated that “the legislative history to the 1977 Act makes clear that the evil redressed by the Act was the use of bribery by U.S. corporations to obtain contracts for the sale of good or services to foreign countries.” The motion then referenced that in 1988 Congress “created an exception for expediting or facilitating payments for the purpose of securing routine governmental action.” The motion stated, “by clear implication, payments in respect of the awarding of procurement contracts of the foreign government are the type of payments targeted” by the FCPA.

The motion then stated as follows. “The evidence, taken in the light most favorable to the government, shows at best that payments were to be made to Joaquin Pou and, through him, to unidentified Dominican government officials for the purpose of obtaining the release of a single aircraft to its owner. Clearly, this is not what Congress intended by the phrase obtaining or retaining business … The fact that this intended payment may have indirectly benefited Gurin’s business by facilitating the release of an aircraft does not establish the type of direct business purpose contemplated by the statute.” Duran argued that “the government has failed to establish that the intended payments in this case were for the specific purpose of obtaining or retaining business … and, accordingly, a judgment of acquittal should be entered.

Turning next to facilitating payments, the motion argued that “the government bears the burden of disapproving that the payment was not a ‘facilitating or expediting payment” and that had “Congress intended the ‘facilitating or expediting payment exception’ to be an affirmative defense, it would have placed it” in the portion of the FCPA containing affirmative defenses. The motion stated as follows. “By its nature, therefore, the exception creates an additional element which the government must disprove beyond a reasonable doubt to establish the crime.” The motion then goes through the legislative history of facilitating payments and how in the original FCPA the concept was imbedded in the definition of “foreign official” and how in 1988 Congress created the stand-alone facilitating payment exception.

As to the evidence at trial, the motion stated as follows. “Here the evidence introduced by the prosecution is only consistent with a finding that the purpose of the alleged intended payments was to facilitate or expedite the release of an aircraft. The Defendant had been told by an undercover government informant that there was no legal holds upon the aircraft. He was led to believe that neither the Dominican Republic nor any other government held any legal claim to or right in the aircraft. He understood that it was simply a straightforward matter of expediting the release of an aircraft on behalf of the owner. Any intended payment was simply for the purpose of hurrying along a bureaucratic process. The purpose of the alleged intended payment was to expedite a routine governmental action. Consequently, no reasonable jury could conclude that the Defendant agreed upon an illegal objective.”

Elsewhere, the motion stated as follows. “The facts simply show that the army of the Dominican Republic had no discretion in the matter of the release of the aircraft, and that some government officials were simply trying to line their pockets outside of their official capacities.” Further the motion stated as follows. “There was no decision-making process in this case, the facts merely demonstrate a ministerial or clerical matter involving the processing of government papers and the automatic release of the aircraft.”

On April 17, 1990, U.S. District Court Judge Jame Kehoe granted a judgment of acquittal (see here).

Original source media accounts note that Judge Kehoe said “the government failed to prove the charges against [Duran] were a crime under the Foreign Corrupt Practices Act.” According to media reports, Judge Kehoe refused a government request to stay acquittal while prosecutors appealed. Duran is reported as stating, “I feel that I have been throughly vindicated. I was ready to take the stand in my own defense. I am very happy.”

An additional dynamic in the case was that Pou fled the U.S. and Judge Kehoe agreed with the defense that all evidence concerning Pou should be excluded from the case.

According to media reports, the case began when the Government used an informant to pose as an agent for the owner of a drug plane seized by the Dominican military. Media reports suggest that the government was investigating Gurin in light of allegations he had bribed high-ranking military officials in the Dominican Republic and other Caribbean countries to recover drug planes.