Worst FCPA Prosecutions Ever

We have enormous respect for those who serve the public, including the prosecutors at the DOJ. Without them, the ‘rule of law’ would just be pretty words.

But everyone is human and stuff happens.

So today we’re looking at the DOJ’s worst five FCPA enforcement actions of all time. Some defendants on the list faced stacked charges. Or the DOJ overreached at the sentencing phase. Or the prosecutions were a mistake to begin with.

Again, we mean no disrespect to anyone. Decisions made at the start of a case can look different later on, when all the facts are in. That’s why hindsight is perfect and real life isn’t.

But our job is to talk about FCPA enforcement, warts and all. And warts there sometimes are, as these five prosecutions show.

We’ve listed them in reverse order, with Number One being the worst FCPA enforcement decision ever.

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Number 5. Gerald and Patricia Green. The government stacked a lot of charges against the Hollywood power couple, and that apparently displeased the judge. There was conspiracy to violate the FCPA, nine substantive FCPA counts, seven money-laundering counts, and a tax charge. The Greens — he’s now 79 and she’s 56 — were facing 30 to 40 years in prison. The government wanted ten years. But the judge sentenced them to just six months in jail. Then, displaying a petty spirit, the DOJ filed a notice of appeal against the ‘short’ sentences. By then the government had seized almost everything the Greens owned, including their company, pension assets, and family home, leaving them indigent.

Number 4. Frederic Bourke. The co-founder of high-end handbag maker Dooney & Bourke was accused of making an investment with Viktor Kozeny, while knowing that Kozeny might bribe foreign officials with some of the money. Bourke wasn’t accused of bribing anyone, or approving any bribes, or helping arrange them. Just investing in a project where he knew or should have known that bribery might happen. That’s a stretch for the FCPA. On top of that, Bourke himself lost his entire $7 million investment he made with Kozeny, and dragged in family and friends, including Senator George Mitchell, who lost $200,000. After being convicted of conspiracy to violate the FCPA, Bourke faced five years in prison. The judge sentenced him to a year and a day, saying Bourke looked like a victim. He’s appealing his conviction.

Number 3. William Jefferson. The former United States Congressman was given $100,000 by an undercover cooperating witness, allegedly for Jefferson to use to bribe a Nigerian official. In a later raid on Jefferson’s house, $90,000 of the cash was found in his freezer, and there was no evidence Jefferson had used any of the money to bribe anyone. But to get the cash-in-the-freezer evidence admitted in court, the DOJ alleged the money was part of a scheme to violate the FCPA. The jury didn’t buy the substantive FCPA charge — the cash was in the freezer, not in the pocket of a Nigerian official. Jefferson, however, was convicted of conspiracy and of being a corrupt politician. He’s appealing.

Number 2. Bobby Jay Elkin was a former country manager in Kyrgyzstan for tobacco company Dimon Inc, now called Alliance One International. He pleaded guilty to a one-count criminal information charging him with conspiracy to violate the FCPA. He paid more than $3 million to officials in Kyrgyzstan, mainly to keep corrupt Kyrgyz Tax Inspection Police off the company’s back. The DOJ wanted him sentenced to 38 months in prison. The judge let him off with no jail time and even let him travel back overseas (with another employer). At sentencing, the judge in Roanoke, Virginia said Elkin faced a choice of “either you do this or lose your job.” The judge called Elkin a hero who protected his workers when rioting broke out.

Number 1. James Giffen. The DOJ indicted Giffen, an oil consultant and middleman, for paying $84 million in bribes to the president of Kazakhstan and other foreign officials. Giffen said, and eventually convinced the judge, that he was keeping the CIA informed about everything he did, and that he always had the agency’s go-ahead. After a six-year prosecution, Giffen was allowed to plead guilty to a misdemeanor tax charge, for which he received no punishment. The judge described him as a “conduit for communications on issues vital to America’s national interest in the region.” In other words, Giffen was a patriot and a hero.