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In Lindsey Trial, FBI’s Handling Of Grand Jury Questioned

Testimony from the Los Angeles criminal trial of Lindsey Manufacturing, its CEO, CFO, and Mexican agent has raised questions about what an FBI agent told the grand jury that indicted the defendants. 

Transcripts of FBI Special Agent Susan Guernsey’s cross examination on Friday showed that some information she provided to the grand jury may have been wrong and she may have omitted some important facts.

She testified as the government’s summary witness before two grand juries: one that indicted Angela Aguilar last September and a separate grand jury that in October indicted Lindsey Manufacturing Company, CEO Dr. Keith Lindsey, and CFO Steve K. Lee. 

The government alleges that Aguilar and her husband helped arrange millions in bribes from Lindsey Manufacturing to Nestor Moreno, an official at the Mexican state-owned electric utility Comisión Federal de Electridad, called CFE. The bribes were allegedly paid in exchange for contracts from CFE.

The DOJ first charged Aguilar with FCPA offenses, later replaced by conspiracy and money laundering counts. Since her arrest in Houston in August and transfer to California, she’s been held without bail at the Metropolitan Detention Center in Los Angeles.

Aguilar’s husband, Enrique Faustino Aguilar Noriega, has also been indicted but is still at large.

Lindsey Manufacturing, Keith Lindsey, and Steve Lee were charged in an eight-count superseding indictment with conspiracy to violate the Foreign Corrupt Practices Act and FCPA violations.

Agent Guernsey was the FBI’s co-case agent for the Lindsey investigation, along with Special Agent Farrell Binder. Her cross examination on Friday by Jan L. Handzlik of Greenberg Traurig raised these issues, among others, with her statements to the grand jury:

  • The FBI and prosecutors from the DOJ’s FCPA Unit never contacted CFE, the purported victim, or spoke with anyone at CFE about the Lindsey investigation, until February 11, 2011. That was nearly four months after the Lindsey indictment was returned.
  • Agent Guernsey did not inform the grand jury that during 2002-2007, the period covered by the Lindsey indictment, CFE official Nestor Moreno was not in a position to award or directly influence the granting of contracts to Lindsey Manufacturing. In May 2002, Moreno was promoted from assistant manager of CFE’s subdepartment of Transmission to subdirector of CFE’s subdepartment of Generation (of electricity). Lindsey Manufacturing only dealt with CFE’s Transmission subdepartment. It apparently never dealt with or sold products to CFE’s Generation subdepartment.
  • Agent Guernsey told the grand jury that when Lindsey was getting contracts from CFE, its competitor, a Canadian company named SBB (not ABB), was damaged by losing out on contracts with CFE. But SBB, according to defense counsel, had stopped manufacturing its competing components in 2000 or 2001 and had never competed with Lindsey Manufacturing in Mexico.
  • Agent Guernsey told the grand jury that during relevant times, “90 to 95%” of the funds in the bank account of the Aguilar’s company, Grupo, came from Lindsey Manufacturing. Her cross examination indicated that only a small amount of the funds in the Grupo account (and of the deposits to Grupo) came from Lindsey.

Agent Guernsey’s cross examination continues today.

______________

Judge A. Howard Matz is presiding over the Los Angeles case — U.S. v. Noriega et al, U.S. District Court, Central District of California (Western Division – Los Angeles), Case #: 2:10-cr-01031-AHM-4.

Jan L. Handzlik of Greenberg Traurig is defending Lindsey Manufacturing and Dr. Keith Lindsey. Steve K. Lee is represented by Janet Levine of Crowell & Moring. Angela Aguilar is represented by Stephen G. Larson of Garardi Keese.

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2 Comments

  1. Putting aside arguments that CFE may not be the type of entity the FCPA was designed to cover, it would be helpful for the FCPAblog to provide commentary on the relevance of the points raised during cross-examination. For example, the relevance and importance of (i) the Mexican government entity being a "victim," (ii) the existence of any competition for the government contract in question, (iii) a purported competitor actually competing for the work, and (iv) where all the money in a recipient's bank account came from if it is otherwise firmly established that money was paid to the "foreign official."

  2. Thanks for your comment.

    We wouldn't presume to speak for defense counsel in the Lindsey case. But the relevance of the points raised in the post goes mainly to the credibility of the government's witness, in this case the FBI's co-case agent for the investigation. Also, the matters raised in our post go to the conduct of the government before the grand juries that indicted the defendants. It is possible that if the grand juries were not provided accurate or complete information on which to base indictment, the trial judge might decide to dismiss some or all of the charges against the defendants.

    Even if he doesn't dismiss the indictments, defense counsel may use the government's behavior at the grand jury proceedings to argue against the credibility of the government's witnesses in the trial. We'll see what happens in the courtroom and what the defense lawyers and the judge do with the information coming out on cross examination of the government's witnesses.

    So, for example, the victimhood of CFE isn't itself that relevant. But the fact that the investigators / prosecutors didn't talk to CFE until after the indictment perhaps indicates a narrow or shallow investigation that may have gaps in it.

    Moreno's promotion, apparently putting him out of the relevant chain of command, appears contrary to the government's theory of the case.

    The fact that there may have been no competitor to Lindsey for the CFE awards also conflicts with the government's theory of the case. If there was no competitor, why would Lindsey need to pay bribes?

    And the agent's apparent statement to the grand jury that most of the funds in Grupo's account came from Lindsey when very little did is both misleading and potentially prejudicial, going both to credibility and the fairness of the grand jury proceeding.

    Thanks again for the comment.


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