DOJ Launches the Largest Single Investigation and Prosecution Action Against Individuals in the History of the FCPA

"DOJ Launches the Largest Single Investigation and Prosecution Action Against Individuals in the History of the FCPA"
Fulbright Alert
Richard Craig Smith, John E. Kelly, Kimberly Sullivan Walker and Cristina K. Lunders
January 20, 2010

On January 18 and 19, 2010, 16 indictments of executives and employees of companies engaged in the production of goods for military and law enforcement were unsealed and 22 defendants were arrested as part of an FBI investigation into allegations that the individuals had violated the Foreign Corrupt Practices Act (“FCPA”). In connection with the investigation, the FBI executed 14 search warrants across the country, including in Florida, Arkansas, Georgia, Kentucky, Pennsylvania, and Virginia. Also, the United Kingdom’s City of London Police executed seven search warrants related to their own investigation into the same activities at some of the same companies.

The indictments allege that the defendants participated in a scheme to pay a 22% commission to a sales agent who represented the minister of defense for a country in Africa in order to win part of a $15 million deal to provide products to the country’s presidential guard. The defendants were told that half of the commission would be paid directly to the minister. The defendants allegedly agreed to create price quotations that represented the true costs of the goods plus the commission, as well as price quotations that only included the true price of the goods. In addition, according to the indictments, the defendants agreed to participate in “test” deals to show the minister that he would personally receive the 10% bribe. Unbeknownst to the defendants, the sales agent with whom they were arranging payments was an undercover FBI agent, and there was no involvement by any minister of defense.

While the United States Department of Justice's (“DOJ”) press release does not provide the names of the companies that the defendants worked for, from the description of the individuals, it is clear that multiple companies were involved. The DOJ's press release describes the individuals as follows:

Daniel Alvirez, 32, and Lee Allen Tolleson, 25, the president and director of acquisitions and logistics at a company in Bull Shoals, Ark., that manufactures and sells law enforcement and military equipment;
Helmie Ashiblie, 44, the vice president and founder of a company in Woodbridge, Va., that supplies tactical bags and other security-related articles for law enforcement agencies and governments worldwide;
Andrew Bigelow, 40, the managing partner and director of government programs for a Sarasota, Fla., company that sells machine guns, grenade launchers and other small arms and accessories;
R. Patrick Caldwell, 61, and Stephen Gerard Giordanella, 50, the current and former chief executive officers of a Sunrise, Fla., company that designs and manufactures concealable and tactical body armor;
Yochanan R. Cohen, a/k/a Yochi Cohen, 47, the chief executive officer of a San Francisco company that manufactures security equipment, including body armor and ballistic plates;
Haim Geri, 50, the president of a North Miami Beach, Fla., company that serves as a sales agent for companies in the law enforcement and military products industries;
Amaro Goncalves, 49, the vice president of sales for a Springfield, Mass., company that designs and manufactures firearms, firearm safety/security products, rifles, firearms systems and accessories;
John Gregory Godsey, a/k/a Greg Godsey, 37, and Mark Frederick Morales, 37, the owner and agent of a Decatur, Ga., company that sells ammunition and other law enforcement and military equipment;
Saul Mishkin, 38, the owner and chief executive officer of an Aventura, Fla., company that sells law enforcement and military equipment;
John M. Mushriqui, 28, and Jeana Mushriqui, 30, the director of international development and general counsel/U.S. manager of an Upper Darby, Penn., company that manufactures and exports bulletproof vests and other law enforcement and military equipment;
David R. Painter, 56, and Lee M. Wares, 43, the chairman and director of a United Kingdom company that markets armored vehicles;
Pankesh Patel, 43, the managing director of a United Kingdom company that acts as sales agent for companies in the law enforcement and military products industries;
Ofer Paz, 50, the president and chief executive officer of an Israeli company that acts as sales agent for companies in the law enforcement and military products industries;
Jonathan M. Spiller, 58, the owner and president of a Ponte Vedra Beach, Fla., company that markets and sells law enforcement and military equipment;
Israel Weisler, a/k/a Wayne Weisler, 63, and Michael Sachs, 66, owners and co-chief executive officers of a Stearns, Ky., company that designs, manufactures and sells armor products, including body armor; and
John Benson Wier III, 46, the president of a St. Petersburg, Fla., company that sells tactical and ballistic equipment.
Each of the defendants was indicted on charges of conspiracy to violate the FCPA, conspiracy to engage in money laundering, and substantive violations of the FCPA. The indictments also seek criminal forfeiture.

These indictments, searches, and arrests are notable for several reasons. First, the indictments represent the first large-scale use of undercover law enforcement techniques to bring an FCPA enforcement action and the largest single investigation and prosecution against individuals by the DOJ. There is also every indication that more such operations will follow given Assistant Attorney General Lanny A. Breuer’s warning that, “[f]rom now on, would-be FCPA violators should stop and ponder whether the person they are trying to bribe might really be a federal agent.”

Additionally, the indictments possibly mark the beginning of a new focus on the military and law enforcement products industry. In the past, the DOJ has launched industry-wide investigations after it discovered that a few industry players had potential FCPA issues. It is safe to say that this industry should prepare for increased FCPA scrutiny.

Finally, these indictments are yet another example of cooperation between U.S. law enforcement officials and those in the United Kingdom in investigating and enforcing anti-corruption laws.