Following a five-week jury trial in federal court in the C.D. of California, Lindsey Manufacturing and its owner and president, Keith Lindsey, and vice president and CFO, Steve Lee were each convicted on one count of conspiracy to violate the FCPA and five counts of FCPA violations. The charges stem from payments made by Lindsey to Mexican nationals Angela and Enrique Aguilar, directors of Grupo Internacional de Asesores S.A. The payments were used to pay bribes to secure business from Comision Federal de Electricidad (CFE), a state-owned utility in Mexico. Ms. Aguilar was convicted of one count of conspiracy to commit money laundering. Her husband is currently a fugitive.
Beginning in 2002 and continuing for seven years, Lindsey secured business from CFE receiving more than $19 million from the utility. In order to secure the business, Lindsey paid Grupo a 30% commission, about $5.9 million over the years, with the understanding that all or part of the commission would go to CFE officials. Among other things, the money was used to buy an $1.8 million yacht and a nearly $300,000 Ferrari for a Mexican official. Lindsey passed the cost of the commissions to CFE by raising its prices to the utility. The commissions were paid under false invoices.
Lindsey’s argument that employees of state-owned business enterprises do not fall within the definition of “foreign official” under the FCPA was rejected by Judge Howard Matz. This was the first court opinion to directly address whether the definition of “foreign official” under the FCPA includes employees of state-owned entities. In his April 20, 2011 written order, judge Matz held that “a state-owned corporation having the attributes of CFE may be an ‘instrumentality’ of a foreign government within the meaning of the FCPA, and officers of such a state-owned corporation . . . may therefore be ‘foreign officials’ within the meaning of the FCPA.”
Lindsey is a small privately held manufacturer of emergency power transmission towers that can be used in the event of natural disasters. The company has approximately 100 employees.
It is the first company to be tried and convicted on FCPA violations.