Executives and employees of military and law enforcement products manufacturers – 22 individuals in all – have been indicted on federal charges of scheming to bribe foreign government officials to obtain and retain business.
Of these defendants, 21, including several foreign nationals, were arrested Jan. 19, as they gathered for an annual firearms industry convention in Las Vegas. One additional defendant was arrested in Miami. The indictments stem from an FBI undercover operation.
The case represents the largest single prosecution of individuals in the history of the enforcement of the Foreign Corrupt Practices Act, the federal law that prohibits U.S. persons and companies, and foreign persons and companies acting in the United States, from bribing foreign government officials for the purpose of obtaining or retaining business.
The indictments at issue were returned on December 11, 2009, by a grand jury based in Washington, D.C., but the charges remained under seal while federal agents made plans to arrests the defendants once they arrived in Las Vegas for the annual “Shot Show.”
Approximately 150 FBI agents also executed search warrants in 14 locations across the country. In addition, the United Kingdom’s City of London Police executed seven search warrants in connection with a related foreign investigation.
The indictments allege that the defendants engaged in a scheme to pay bribes to the minister of defense for a country in Africa. Unbeknownst to those involved in the alleged scheme, there was no actual involvement by any African official and no bribes were actually paid. Rather, the defendants allegedly agreed to pay a 20 percent “commission” to a sales agent representing the African minister of defense – in reality, an undercover FBI agent – in order to obtain a portion of a $15 million procurement to outfit the African country’s presidential guard.
Each indictment alleges that the defendants conspired to violate the FCPA, conspired to engage in money laundering and engaged in substantive violations of the FCPA. The indictments also seek criminal forfeiture of any ill-gotten gains received by the defendants. Each conspiracy and FCPA count carries a maximum prison sentence of five years. The maximum period of incarceration for the money laundering conspiracy charge is 20 years.
These indictments are significant both for the scope of the prosecution as well as the use of investigative techniques that are typically applied in narcotics and organized crime cases. Further expansion of these innovative investigative methods very well may come as the Department of Justice and FBI focus their attention on other industries. For example, as recently as November 2009, at the 10th Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum, Assistant Attorney General Lanny A. Breuer expressed the view that the level of government involvement in health care systems outside of the United States makes the environment ripe for bribery, corruption and FCPA violations.
These Las Vegas arrests represent the latest in a series of FCPA cases filed against company executives and employees. In 2009, there were three high-profile jury trials resulting in convictions of individuals on FCPA charges. There can be no doubt that the DOJ no longer is satisfied with guilty pleas and convictions of the companies that violate the FCPA and intends to hold the individuals responsible for these violations personally accountable.
According to statistics published by the DOJ, there are currently 140 pending FCPA investigations. A number of these investigations almost certainly will be concluded in 2010, resulting in more round-ups, search warrants and painfully embarrassing media coverage of the kind that occurred in Las Vegas. As Assistant Attorney General Breuer quipped this week, “this is one case where what happened in Vegas didn’t stay in Vegas.”