One of the defendants in the failed Africa sting FCPA prosecution was Mark Morales. He worked for a military ordnance maker that was part of the Allied Defense Group.
Morales and all 22 defendants were exonerated last year when the DOJ dismissed all charges and ended the prosecution. But two years earlier, not long after the Africa sting arrests, Morales’ employer had decided to stop doing business and liquidate the company.
Under the plan of dissolution, the $43 million in cash Allied had on hand would be distributed to its shareholders.
There was a catch. After the Africa sting arrests, the SEC and DOJ had launched FCPA investigations of Allied. Until those investigations were resolved, the company had to hold on to any money in case there were civil or criminal penalties.
When the DOJ dismissed the charges against Mark Morales and the others, Allied asked the feds about the status of their investigations — ‘so that it could move forward with the distributions’ of the $43 million to shareholders.
In response, the SEC in November last year sent Allied a declination — a decision not to bring any charges against the company.
But the DOJ wouldn’t budge.
According to Allied,
The discussions with the DOJ are continuing and based upon these discussions it appears likely that resolution of the DOJ inquiry will involve a payment by the company in connection with at least one transaction involving the former employee . . .
Allied said the amount of any payment to the DOJ is unknown, which means none of the $43 million can be released.
Last month, Allied’s representatives ‘met with senior DOJ officials to discuss the company’s status in the ongoing investigation.’
There was no resolution, Allied said. But the meeting was ‘productive’ and ‘moved the company forward in its efforts to resolve this matter and effect a corporate dissolution.’
A May 15 letter to shareholders from two board members said they ‘remain hopeful that we will be able to proceed with the dissolution of the company before the end of 2013.’ (our italics)
Meanwhile, Allied — now with no business activity or stock being traded — is still an ‘issuer’ until its final dissolution and has to file periodic reports with the SEC. And the shareholders have to wait.
* * *
All FCPA-related disclosures by issuers are available from ethiXbase Monitor — the world’s largest anti-corruption compliance database.