FCPA Defendants Face The Verdict Of History

Should anyone be surprised by the guilty verdicts handed down Tuesday in the Lindsey case?

Not at all. History, and the odds, are always against FCPA defendants.

Others who’ve learned that in recent years include Gerald Green and his wife Patricia, Frederic Bourke, William Jefferson, David Kay, Douglas Murphy, and David Mead — all convicted by juries in FCPA cases.

Oil consultant James Giffen beat an FCPA rap and pleaded guilty to a misdemeanor tax charge, but only after the CIA apparently admitted that he and the agency had a close working relationship in Kazakhstan. It wasn’t a typical FCPA enforcement action.

As we digest the tragic result for the Lindsey defendants, there are several FCPA trials looming. One in California of five defendants from Control Components Inc., another in Houston of John O’Shea, formerly of ABB. And in the District of Columbia, 19 of the original 22 shot-show defendants may go to trial. That’s another case that isn’t a typical FCPA enforcement action. It grew out of a government sting, with no real foreign official, and the possibility that some defendants will raise the entrapment defense.

In typical enforcment actions, why is fighting FCPA charges so tough?

Judges interpret the statutue the same way the DOJ does. Courts have upheld the DOJ’s so-called expansive view of the elements of an FCPA offense. “Knowledge” and “intent” were argued about in the Bourke and Meade trials, and prosecutors won the argument. In Kay and Murphy, the so-called business nexus element — the “obtain or retain business” language from the FCPA — was contested, and Kay and Murphy lost. The Lindsey defendants attacked the government’s view of who’s a “foreign official,” and that didn’t work.

As for juries, they don’t like bribes or corrupt foreign officials, and in all FCPA trials there are allegations of both. As someone wisely said to us this week, “If a jury clearly sees that a major crime has been committed, their sense of decency is offended, and someone has to pay.”

In most cases, the alleged foreign bribery is a team effort. Lot’s of people are involved. The evidence trail they leave behind is easy for prosecutors and juries to follow. Phony contracts and dummy invoices, hot money bouncing between banks, cancelled checks, shell companies, two sets of books — it’s all there, like breadcrumbs on the ground.

Finally, the DOJ has lots of arrows in its quiver. A foreign bribery case can start with an FCPA count. But the DOJ might then add conspiracy, money laundering, traveling to commit the offense, aiding and abetting, obstruction, tax-cheating, and so on. Stacking the charges may not seem fair to defendants but that’s the federal system. A case with multiple related charges probably gives jurors the idea there was lots of criminal activity going on. And those same jurors then get several chances to bring in a guilty verdict on some or all of the counts.