On Friday, September 11, Gerald and Patricia Green were convicted at trial of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and U.S. money laundering laws, as well as nine counts of substantive FCPA violations and six counts of substantive money laundering violations. Patricia Green was also found guilty of two counts of falsifying U.S. tax returns. The Greens, owners of Film Festival Management, Inc., a film company based in Los Angeles, were found to have developed a sophisticated bribery scheme where they arranged payments to the former head of the Tourism Authority of Thailand (TAT), Juthamas Siriwan, in exchange for receiving contracts to manage and operate Thailand’s yearly “Bangkok International Film Festival,” and three other contracts related to promoting tourism. The Greens paid approximately $1.8 million to this official between 2002 and 2006 in exchange for more than $14 million worth of contracts, using fake business names to hide how much money they made from the contracts. The bribes were disguised as “sales commissions” in the books and records of the Greens’ business, and were channeled to bank accounts held in the name of the official’s daughter and also a friend at banks in Singapore, the United Kingdom, and the Isle of Jersey.
The case is notable for the aggressive prosecutorial tactics employed by the Department of Justice. The Government’s 22-count indictment included a multitude of different charges: substantive FCPA, money laundering (both for wiring the bribe money to various bank accounts outside of the U.S., and for spending the proceeds of a contract obtained by bribes), and tax fraud charges; conspiracy to violate the FCPA and to engage in money laundering; obstruction of justice; and criminal forfeiture. The money laundering charges of which the Greens were convicted are particularly damaging for the defendants because they carry a maximum penalty of up to twenty years each in prison, as compared with the FCPA’s 5-year statutory maximum.1 Moreover, although the jury deadlocked as to whether Gerald Green was guilty of obstruction of justice (he had allegedly altered film budget documents after the search warrant was issued), it is worth noting that this charge is one that the DOJ often includes in its FCPA prosecutions. For example, the charges in the pending trials of six individuals in the Control Components, Inc., matter include an obstruction of justice charge against one of the defendants.2 So did the recent FCPA trial involving Frederic Bourke – he was convicted of that charge, for lying to the FBI. Essentially, once a company comes under the Government’s radar, any conduct perceived by the Government as not entirely forthright will be added to the collection of charges.
Also reflective of the Government’s aggressive stance were various techniques employed in the investigation and at trial. Court filings reveal that the matter came to their attention by way of an unidentified informant. Then, however, the Government obtained a significant amount of information through the Greens’ company bookkeeper: they equipped her with a wire and for several months she acted as an informant and recorded conversations for the Government in the Greens’ workplace. She also gave prosecutors statements and documents, including a list of projects distributed at a 2007 meeting. The defendants sought to suppress this evidence as having been obtained in violation of state ethical rules governing prosecutorial conduct, but failed. Also notable is that the Government attempted to make use of the crime fraud exception to get into evidence privileged materials relating to the Greens’ business attorney. There, however, the defendants’ motion to suppress was granted based on an insufficient showing of the crime/fraud exception. The Government, however, was successful in having defendants’ Swiss bank account records admitted as evidence of their wrongdoing.
This case was the first FCPA prosecution involving the entertainment industry. Gerald Green’s career in Hollywood spans more than thirty years, with over fourteen films to his credit.3 Together, the Greens helped transform the Bangkok Film Festival into a rising star on the international circuit for screening new films. The Greens’ prosecution is also the latest illustration of the Government’s targeting of individuals for FCPA prosecutions, with the trials of Congressman William Jefferson and Frederic Bourke occurring earlier this year.4
For the Greens, the outcome of this prosecution is nothing short of disastrous, as their December 17 sentencing brings the prospect of a number of years in prison. For others, it serves as a visceral reminder of the importance of strong FCPA compliance programs so as to avoid running afoul of this statute and possibly facing prosecution down the road. Basic elements of an effective FCPA compliance program include a written FCPA Policy; training and annual certifications of compliance by relevant personnel; diligent and accurate recordkeeping; ongoing monitoring of compliance, including internal audits and at times independent evaluations; careful screening of any thirdparty agents or others that deal with foreign governments or their officials on the company’s behalf; internal investigatory work where there is evidence that a violation may have occurred; and rigorous remediation in the event of any “escapes.” Of course, where the lead members of a small business are themselves leading the illicit conduct, as in the case of the Greens, by definition any protections of a compliance program will be overridden. In other situations, however, including larger and more complex companies, having a rigorous compliance program is critical to preventing, detecting, and correcting this type of conduct, regardless of the level of personnel that might be involved.