Source: http://www.fcpablog.com/blog/tag/david-h-mead
Timestamp: 2019-04-19 16:50:49+00:00

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In Los Angeles this week, the trial of Lindsey Manufacturing, Dr. Keith Lindsey, Steve K. Lee, and Angela Aguilar opened in federal court. On Friday, they lost their motion to dismiss the case when the judge ruled that officers of the Mexican electric utility CFE, who the defendants allegedly bribed, aren't foreign officials under the FCPA.
Compliance officers will want to keep a copy of the table below close at hand. What better way to answer those who insist that the FCPA is small potatoes, after all, when you look at the relatively few enforcement actions over the past 33 years.
Here are the 22 men (no women so far), most of them former company executives, who've spent time in prison for FCPA-related convictions. Each name that follows represents a terrible tragedy, often with permanent damage extending to families. As the compiler of the list said: "By my count there have been 187 people charged with violating the FCPA. This list will look a little different at the end of the year."
We'd like to thank the generous individual responsible for this post, but that's not possible. He or she has asked to remain anonymous, making this contribution pro bono publico.
The information is compiled from the Federal Bureau of Prisons' inmate locator. Readers with suggestions and corrections are welcome to let us know.
An LA jury needed not days but hours to convict the husband-and-wife movie producers of violating the Foreign Corrupt Practices Act. They were also found guilty on related charges, including conspiracy, money laundering, and tax cheating. Gerald Green, 77, and Patricia, 52, are facing at least ten years behind bars and maybe a lot more for bribing a Thai official in exchange for contracts to produce the Bangkok Film Festival.
The trial's tragic outcome shouldn't surprise anyone. There hasn't been an acquittal in an FCPA prosecution since 1991. Not one. That's why comments from Patricia Green's lawyer are hard to understand. Marilyn Bednarski told the LA Times here, "To me it’s a case of circumstantial evidence . . . the people of Thailand were not victimized in any way" because the Greens provided "top notch services." Really?
Gerald Green's lawyer, Jerome Mooney, was more in touch. The DOJ used the case, he said, partly to send a warning to the entertainment industry: clean up the way you deal with "community relations" in foreign countries, or else. "We understand the government taking a shot across the bow of Hollywood," Mooney said. "We just wish the shell hadn't landed on our clients' boat."
Juries hate graft. FCPA cases are about bribes to corrupt foreign officials. They're about sophisticated and often wealthy people looking for shortcuts, hoping to subvert foreign governments for personal or corporate gain. Wheeling and dealing in exotic places. Flashing cash and pulling strings. Juries lap it up. As we've said before, even if the government's evidence isn't rock solid on all the elements of an FCPA offense, the jury will still get the picture that people stepped over the line of acceptable business behavior. And they'll convict.
There are clouds of witnesses. Forget lone wolves and rogue employees. Foreign bribery is usually a team effort. When the government gets a whiff of the plot, it hauls in everyone -- from those who might have had a hand in it to anyone who could have overheard talk at the water cooler. If it's early in the investigation, the bit players can be persuaded to turn, to become the government's cooperating witnesses or confidential informants. Supporting actors are given immunity or offered the hope of lighter sentences. So they sing about their bosses, colleagues, friends. They have extra incentive if they blame the aforementioned for dragging them into the criminal activity.
Evidence is everywhere. Bribes have to be planned, funded, paid, and covered up. There's always someone on the receiving end, so the complications multiply. It all takes a lot of work and usually leaves behind a trail that's easy to find and follow. Phony contracts and dummy invoices, hot money bouncing from bank to bank, fake agents and distributors, shell companies as fronts, two sets of books, and so on.
Show and tell. These days the government is likely to show up for trial with audio tapes of the accused discussing the bribes or videos showing the actual handover of cash. "Wearing a wire" once meant strapping to your torso an awkward piece of electronic gear the size of a croissant. Not any more. A cell phone on the table can be an open mic. A spy pen in the breast pocket can capture or broadcast sound and pictures. Scary stuff. And once the feds have tapes, they may not even need the cooperating witnesses or informants at the trial.
Related charges a-plenty. In foreign bribery cases, the government might start with FCPA charges. But remember: bribes to foreign officials need to be planned, funded, paid, and covered up. So there's usually a conspiracy, money laundering, traveling to commit the offense, fraud and obstruction in the cover-up, and tax-cheating to boot. What a mess. The government can throw a lot of mud at the wall. If some doesn't stick, so what? Prosecutors can drop weak charges later and plow ahead with the rest.
Examples: Frederic Bourke was convicted of conspiracy to violate the FCPA and a Travel Act offense, but not the FCPA itself. William Jefferson was acquitted of a substantive FCPA charge but found guilty of conspiracy to violate the FCPA, soliciting and taking bribes, depriving citizens of honest services, money laundering and racketeering, and conspiracy to solicit bribes. Gerald Green beat the obstruction rap -- the government ended up dropping the charge -- but he and his wife were convicted of conspiracy to violate the FCPA, eight violations of the FCPA and seven counts of money laundering. Mrs. Green was also found guilty of two counts of falsely subscribing a U.S. tax return.
Not everyone accused of violating the FCPA is guilty. And certainly those accused and awaiting trial are presumed innocent unless and until found guilty in a court of law. But with no acquittals in an FCPA trial since 1991, defendants and their counsel should have their eyes wide open about their chances in court.
We enjoy a good argument just as much as the next lawyer. Stare decisis, analogy, plain meaning, ambiguity -- bring 'em on. Which is why it took us awhile -- the better part of two decades, but who's counting -- to firmly grasp this simple idea: When it comes to the Foreign Corrupt Practices Act, forget the fancy lawyer stuff.
If the few reported FCPA criminal trials have taught anything, it's that legalistic quibbling and the FCPA don't mix. David H. Mead learned that in 1998. Mead, it has to be said, had a great-looking defense. Evidence at trial showed he'd paid a bribe in Panama on the advice of counsel. His company's lawyer, whom he trusted, told him a payment via a Dutch subsidiary to a Panamanian official wouldn't violate the FCPA. So, he argued, if he was acting on the advice of trusted counsel, how could he have had any corrupt intent to violate the FCPA? It must have shocked Mead and his lawyers when the jury convicted him anyway.
David Kay and Douglas Murphy, in their 2002 criminal trial on FCPA charges, argued that bribes to reduce their company's taxes in Haiti couldn't violate the FCPA. Those bribes, they said, weren't about "obtaining or retaining business" and so aren't covered by the antibribery provisions. The trial court bought the argument and dismissed the case. But the appellate court shot them down, and hard. "A man of common intelligence," it ruled, "would have understood that . . . in bribing foreign officials, [Kay and Murphy were] treading close to a reasonably-defined line of illegality. . . . Defendants took this risk, and splitting hairs . . . does not allow them to argue successfully that the FCPA’s standards were vague."
It's not every day that a United States appellate court describes defendants as hairsplitters, an epithet which shouldn't encourage anyone to put the FCPA under a microscope and begin dissecting it with tiny scalpels. By doing just that, Kay and Murphy landed prison terms of 37 months and 63 months respectively. Meade, meanwhile, was sentenced to four months in federal prison for his counsel-induced FCPA violation.
Years before Meade, Kay and Murphy took their chances in court and lost, another defendant had come up short in an FCPA criminal case. Although a jury acquitted Richard H. Liebo on seventeen FCPA-related counts, it convicted him of one count of violating the antibribery provisions, 15 U.S.C. §§ 78dd-1(a)(1), (3); 78dd-2(a)(1), (3); 78dd-2(b)(1)(B) and 78ff(c)(2) (1988), and making a false statement to a government agency, 18 U.S.C. § 1001 (1988). U.S. v. Richard H. Liebo (Cr. No. 4-89-76) (D. Minn., Mar. 1989); 923 F.2d, 1308 (8th Cir. Minn., Jan. 15, 1991).
In 1985, Liebo bought airplane tickets (Niger - Paris - Stockholm - London - Niger; cost - $2,028) for a honeymooning government official from Niger. Liebo was then the vice-president in charge of the Aerospace division of NAPCO International, Inc., located in Hopkins, Minnesota. NAPCO's primary business consisted of selling military equipment and supplies. In Niger, it wanted to service two Lockheed C-130 cargo planes for the Ministry of Defense. The honeymooning Niger official receiving the air tickets was a cousin of another official who could (and did) influence the award of the contract to NAPCO.
Liebo appealed his conviction, arguing that his gift-giving couldn't support the jury's findings. Lawyers at the time thought Liebo's arguments were strong. True, the FCPA prohibits "gifts" that are given "corruptly" for the purpose of "obtaining or retaining business." But, Liebo argued, his gift was just . . . a gift. And the recipient himself said he understood the tickets were from Liebo personally and not from NAPCO. How then, Liebo argued, could the jury find that he acted "corruptly" within the meaning of the FCPA? Such a result would kill gift-giving practices in the commercial world forever, and that couldn't be what the FCPA intended.
The United States Court of Appeals for the Eighth Circuit not only rejected Liebo's arguments, it did so with a decisiveness and brevity that took the defense bar's breath away. With minimal discussion about the evidence itself, the court said, "There is sufficient evidence that the airplane tickets were given to obtain or retain business. . . .We are satisfied that sufficient evidence existed from which a reasonable jury could find that the airline tickets were given 'corruptly.'" That was that.
Liebo, however, did win a new trial on another issue. There was newly discovered evidence, he said -- a memo from his corporate superior showing that Liebo's payment for the honeymoon travel was approved by NAPCO. The appellate court ruled that the jury, with the benefit of that evidence, might have found that Liebo didn't act “corruptly” in giving the tickets, if he'd acted at his supervisor’s direction. That looked promising for Liebo, but it didn't change anything. He was sentenced to 18 months in prison, suspended with three years’ probation, with 60 days of home confinement and 600 hours of community service.
The lesson from all these cases? The elements of an antibribery offense may look to a 1L as though they're riddled with loopholes. And it's tempting to argue that "gift" and "corruptly" and "obtaining or retaining business" are ambiguous and vulnerable to legal attack. But while lawyers should always think like lawyers, they should also remember that most juries and appellate courts haven't been sympathetic. Jurors and judges, it appears, just don't like it when people pay bribes to foreign officials. That's why, in FCPA trials, lots of smart lawyers have been sent to the showers before anyone even worked up a good sweat.
U.S. v. Liebo, 923 F.2d, 1308 (8th Cir. Minn., Jan. 15, 1991), can be viewed at the Public Library of Law (by free registration) here.
Two weeks from now, in a Los Angeles federal district court, the husband-and-wife Hollywood movie producers charged with violating the U.S. Foreign Corrupt Practices Act will go on trial. Gerald and Patricia Green were arrested last December and are out on bail. They're accused of bribing a Thai government official with kickbacks of more than $1.7 million in exchange for a film festival contract worth $10 million.
-- CW-1 and CW-2. According to the FBI's 28-page affidavit, at least two former insiders identified as Confidential Witnesses One and Two are giving evidence against the Greens, and it's juicy. The FBI says the CWs prepared the budgets, arranged the meetings, wrote the checks and ran the bank accounts that are now at the center of the case. The government says it has physical evidence too. When the police raided the Greens' office, among the goods seized was a spreadsheet showing the details of each kickback. And earlier in the investigation, FBI agents even jetted to Thailand to watch (and perhaps listen?) as Mr. Green met with the Thai government official to seal their allegedly corrupt deal. The Greens' defense lawyers, it appears, will have an armory full of smoking guns to deal with at the trial.
-- War on multiple fronts. In addition to the FCPA charges, the government might raise allegations of fraud and obstruction. That's important because the elements of an FCPA offense can be complicated to prove. When prosecutors think they can obtain a conviction based on other charges, as they did in Oscar Wyatt's trial, they'll usually try to do that. Paragraph 12 of the FBI's affidavit is a potential blueprint. It says, "The defendants attempted to conceal their bribery of the Thai official in a variety of ways, among other things, by: (a) employing different business entities, some with dummy business addresses and telephone numbers, in their dealings with the [Tourism Authority of Thailand] in order to hide the large amount of money they were being paid under the contracts; (b) making 'commission' payments to the Thai official through the foreign bank accounts of intermediaries; and (c) once the government's investigation became known to the defendants, attempting to manufacture evidence in support of false, exculpatory explanations for the corrupt payments."
-- There's something rotten in Denmark. The Greens' story as the government is telling it sounds like an Elmore Leonard movie script. Here's the pitch: A high-powered Hollywood couple befriend a Thai government official who controls a prestigious film festival in exotic Bangkok. She's crooked, so she and the Greens hatch a plan. She'll give them the exclusive no-bid right to promote the festival, and they'll kick back a part of every dollar they make. Together the plotters create shell companies and phony invoices. They use borrowed bank accounts, and so much more. The plan works perfectly. But one day someone close to the Greens betrays them and calls the feds. It's a great story, and that's probably bad news for the Greens. Even if the government's evidence isn't rock solid on all the elements of an FCPA offense, the jury will still get the picture that people stepped over the line of acceptable business behavior. To understand the significance, consider what happened to poor David H. Mead, the former president of Saybolt Inc. In 1998, a jury in New Jersey convicted him of paying a $50,000 bribe to government officials in Panama in violation of the FCPA. Mead had admitted making the payment but pleaded not guilty. He only paid the bribe, he said, because the company's outside lawyer assured him it could be done legally from Saybolt's Dutch affiliate. So his defense was that he didn't act "knowingly" to violate the FCPA, which the statute requires. His defense looked great on paper but the jury convicted him anyway. Why? Probably because they just didn't want a $50,000 bribe to a corrupt government official in Panama to go unpunished. Will the government's version of a similarly sordid tale in U.S. v. Green have the same effect on the jury?
-- For better or for worse. Any time family members appear as co-defendants in a criminal case, the defense has a problem. The FBI affidavit separates Mrs. Green's role from her husband's somewhat by indicating that she was part of the conspiracy but less involved in the substantive FCPA violation. But just by bringing her into the case, the government is putting enormous pressure on Mr. Green. He'll want to spare her a trial and possible jail time. And presumably Mrs. Green, who's in her early 50s, will be desperately trying to keep her 75-year-old husband out of jail. Will these terrible worries convince the Greens either to cop a plea before trial or to shape their defense to save one of them from prison?
-- Looking at the numbers. Perry Mason's lucky clients were assured of a successful outcome in their criminal trials. But real-life FCPA defendants have fared much worse. Most accused individuals have plea bargained to avoid jail time -- FCPA convictions carry a prison term of up to five years. Of the few people who've gone to trial since 1991, none have been acquitted. Dan Newcomb, in his invaluable 2007 FCPA Digest, sorts the numbers out this way: "Since, 1990, DOJ prosecutions under the FCPA against seventy-one individual defendants and corporations have been resolved. Of those seventy-one, forty-three were resolved through plea agreements. In only four of those cases was there a conviction after trial. In the cases where a plea was taken or a defendant was convicted, defendants were sentenced to a term in prison, fined, or both. Sentences have been imposed in 26 of those cases, and sentencing has been deferred in two others. Recently, the defendants in U.S. v. David Kay and Douglas Murphy received terms of 37 months and 63 months, respectively. In 1990, seven prosecutions ended in a dismissal of the charges. Since then, only one case (in 2004) has been dismissed. Also, during the years 1990 and 1991 there were five acquittals after trial. There have not been any since. In addition, at least four individuals have failed to appear in court to answer the charges against them." There's not much there to cheer the Greens as their trial date approaches.
View the FBI's Affidavit here.
View the 2007 FCPA Digest here.
As defenses against the U.S. Foreign Corrupt Practices Act go, "I didn't know" is among the most popular. I didn't know it was against the law. I didn't know our agent would give money to foreign officials. I didn't know our partner's brother-in-law works for the prime minister. Often the defense has no visible means of support and is only a handy excuse. Other times, though, the defense is sincere and looks strong. But even then it probably won't work, as David H. Mead discovered the hard way back in 1998.
Mead, the former president of Saybolt Inc., was charged with violating and conspiring to violate the FCPA's anti-bribery provisions by making a $50,000 corrupt payment to government officials in Panama. Mead pleaded not guilty and went to trial. His defense rested in part on evidence that Saybolt's former outside counsel had advised that the $50,000 payment might not violate the FCPA if it came from Saybolt's Dutch affiliate. That advice was wrong, and Saybolt and Mead were indicted. Saybolt -- which later sued its former lawyer for legal malpractice -- pleaded guilty and paid a $1.5 million fine.
The element of knowledge may be satisfied by inferences you may draw if you find that the defendant deliberately closed his eyes to what otherwise would have been obvious to him. When knowledge of the existence of a particular fact is an element of the offense, such knowledge may be established if a person is aware of a high probability of its existence and then fails to take action to determine whether it is true or not.
If the evidence shows you that the defendant actually believed that the transaction was legal, he cannot be convicted. Nor can he be convicted for being stupid or negligent or mistaken; more is required than that. But a defendant’s knowledge of a fact may be inferred from willful blindness to the knowledge or information indicating that there was a high probability that there was something forbidden or illegal about the contemplated transaction and payment. It is the jury’s function to determine whether or not the defendant deliberately closed his eyes to the inferences and the conclusions to be drawn from the evidence here.
The jury, for some reason, didn't believe that Mead believed the payment was legal. Nor did the jury believe he had been stupid or negligent or mistaken. Had he been willfully blind? That would mean he knew more than Saybolt's own lawyer. Unfortunately for Mead, in the face of the evidence the jury somehow found that he had "knowledge" the payment would violate the law. He was convicted and sentenced to four months in prison, home detention and probation, and a $20,000 fine. The best explanation is that the New Jersey jury simply didn't want a $50,000 bribe to a government official in Panama to go unpunished.
If the "I didn't know" defense didn't work back then for David H. Mead -- who violated the FCPA on the advice of counsel -- then it's unlikely to work now in most other cases.
See U.S. v. David H. Mead and Frerik Pluimers (Cr. No. 98-240-01), D.N.J., 1998. See also Stichting Ter Behartiging Van De Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. (Foundation of the Former Shareholders of Saybolt International B.V.) v. Philippe S.E. Schreiber and Walter, Conston, Alexander & Green P.C. (S.D.N.Y.) (99 Civ. 114411, Memorandum Order, Filed June 13, 2001) and U.S. v. Saybolt North America Inc. (Cr. No. 98CR10266WGY), D. Mass., Aug. 18, 1998.

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