This is the sixth in a series discussing new trends in SEC enforcement which impact corporate directors and officers and steps that can be taken to avoid future liability.

While increasing corporate fines is a hallmark of the aggressive posture of FCPA enforcement officials, another key focus is on individuals despite the recent set back for the DOJ in the Africa Sting case. That case was based on the largest FCPA sting operation ever conducted. It involved a proposed transaction in which companies were solicited to bid on procuring uniforms for an overseas government. To obtain the contract bribes had to be paid. At the center of the proposed deal was an FBI sting operation. Overall 21 individuals were named in 19 cases. Three individuals pleaded guilty prior to the commencement of what was planned as a series of trial involving groups of defendants. The case collapsed when the first two that proceeded to trial ended with hung juries and acquittals and amid adverse court rulings on key legal issues for the DOJ. Eventually all the cases were dismissed and the DOJ requested that the guilty pleas vacated. U.S. v. Goncalves, No. 09-cr-335 (D.D.C.)

Despite the set back, the prosecution of individuals continues to be a center piece of the New Era. Key to these efforts is the increasing demand for longer prison sentences although that demand has been met with mixed results. For example:

  • U.S. v. Green, No. 2:08-cr-00059 (C.D. Cal. Filed Jan. 16, 2008). The defendants were convicted on nineteen counts which included conspiracy, FCPA and money laundering charges. The government sought sentences of ten years in prison despite the advanced age of the defendants. The court imposed a sentence of six months.
  • U.S. v. Jumet, No. 09-cr-00397 (E.D. Va. Nov. 13, 2009). The defendant was convicted on one count of conspiracy to violate the FCPA and one count of making a false statement. The guideline range was 87-108 months in prison. The Government requested 87 months, which the Court ordered.
  • U.S. v. Warwick, No. 3:09-cr-444 (E.D. Va. Dec. 15, 2009). The defendant was convicted of one count of conspiracy to violate the FCPA. The pre-sentence report contained a sentencing range of 37-46 months. The Government requested 40 months. The Court ordered 37 months.
  • U.S. v. Steph, No. 07-cr-307 (S.D. Tex. Jul. 19, 2007). The defendant pleaded guilty to one count of conspiracy to violate the FCPA. The sentence was 15 months in prison.
  • U.S. v. Nyugen, No. 2:08-cr-00522 (E.D. Pa. Sept. 4, 2008). The defendant was convicted of one count of conspiracy and one count of FCPA charges. The Government sought 37-46 months in prison. The Court ordered 24 months of probation.
  • U.S. v. Esquenazi, No. 09-cr-21010 (S.D. Fla. Filed Dec. 4, 2009). Defendants Joel Esquenazi and Carlos Rodriguiz were sentenced to, respectively, 15 years and 7 years in Haitian Telco related cases.

In the end corporations and their executives are at risk when doing business internationally. Enforcement authorities continue to be aggressive and while many companies have adopted compliance procedures the increasing ability of enforcers to conduct industry sweeps continues to result in FCPA liability. Those efforts are aided by a growing legion of whistleblowers from inside and outside the company, a development which will be discussed later in this series.

Next: The continued criminalization of securities enforcement