At least 90 percent of all federal criminal defendants plead guilty to reduced charges that carry a lighter sentence, and that holds true for individuals facing FCPA-related charges.
But some defendants fight FCPA charges by demanding a jury trial. Most are then convicted, but a few — a tiny percentage of individual FCPA defendants — win acquittals. So, why would an FCPA defendant risk a harsher outcome by going to trial?
Reason #1. The government can’t prove its case. Long-time FCPA Blog readers may remember the prosecution of former ABB manager John O’Shea. The DOJ charged him with a dozen substantive FCPA counts and an FCPA conspiracy for alleged bribes in Mexico.
In 2012, a federal judge acquitted him on all charges and dismissed the jury. Judge Lynn Hughes said O’Shea’s conduct was reasonably explained by lawful motives, and no witness could tie his conduct to any alleged bribery or coverup. One of O’Shea’s defense attorneys, Joel Androphy, said after the acquittal, “Deflecting blame for bribery in corruption-ridden countries onto unknowing business executives is both Cervantian and unfair.”
The DOJ’s FCPA prosecution of Lawrence Hoskins was also factually impaired. Hoskins, a UK citizen who worked for Alstom SA in France and had never visited the United States, was charged with FCPA violations based on his acting as an agent of Alstom’s Connecticut subsidiary.
After a jury convicted Hoskins on one count of conspiracy to violate the Foreign Corrupt Practices Act and six counts of substantive FCPA violations, Judge Janet Bond Arterton tossed the convictions and acquitted Hoskins. She said prosecutors didn’t prove he acted as an agent of his employer’s U.S. subsidiary. She let stand the jury’s guilty verdict on related money laundering charges and sentenced him to 15 months in prison for those offenses.
Reason #2. The prosecution’s theory of the case is flawed. More than once, the DOJ indicted FCPA defendants on faulty legal theories. The best-known example is the Africa sting prosecution against 22 individual defendants. FBI agents had posed as officials and representatives of the government of Gabon, Africa. The DOJ said the defendants agreed to bribe undercover agents to win contracts to sell body armor, weapons, and military gear.
The main charge against the group was conspiracy to violate the FCPA. However, most of the defendants had never met or talked with each other, prompting Judge Richard Leon to say he doubted they were part of a single grand conspiracy, as the government alleged. Judge Leon eventually dismissed conspiracy charges against six early defendants, crippling the government’s case.
After the DOJ lost two trials involving multiple defendants, it dropped all charges against the 22 defendants, including three who had pleaded guilty. Judge Leon called the prosecution “a long and sad chapter in the annals of white-collar criminal enforcement.”
Reason #3. Defendants believe prosecutors cheated. It can happen. In 2011, a jury in Los Angeles convicted three FCPA defendants — two corporate officers and their company, Lindsey Manufacturing — of violating the FCPA by bribing officials in Mexico. But after the jury verdicts, trial judge Howard Matz dismissed the DOJ’s indictments with prejudice, thereby wiping out the guilty verdicts.
Based on the defendants’ post-trial submissions, Judge Matz ruled that their prosecution had been tainted by a pervasive pattern of flagrant government misconduct at virtually every stage of the case. He said prosecutors provided false information to obtain a search warrant, misled a grand jury, withheld exculpatory evidence, and violated pre-trial production orders. The DOJ filed a notice of appeal but didn’t follow through, which ended the prosecution.
Defense counsel Jan Handzlik said his clients (the two individual defendants) “were steadfast in their belief that the government had not played fair and that the truth would come out.”
Those aren’t the only reasons why FCPA defendants might assert their right to a trial. And those aren’t the only FCPA defendants who’ve won full or partial acquittals or new trials because they fought the charges against them.
As mentioned earlier, though, federal criminal defendants, including FCPA defendants, face astoundingly long odds. Still, in a tiny percentage of cases, they risk trial and win vindication.
Why does it matter? Those very few victorious defendants offer a glimmer of hope. Their rare victories, I think, are an underlying reason why other FCPA defendants sometimes risk so much by going to trial.
And who can argue against hope?