Acquittals in Gabon Sting Case Are Latest Setback for U.S. FCPA Enforcement
By Rachel G. Jackson | January 30, 2012 5:57 pm

The federal jury in a Washington, D.C., foreign bribery sting case acquitted two defendants today, declaring itself deadlocked on the remaining counts against three more individuals.

In the latest blow to the Justice Department’s Foreign Corrupt Practices Act enforcement, businessmen R. Patrick Caldwell and John Gregory Godsey were each acquitted on two counts of substantive violations of the anti-corruption statute, which prohibits payments to foreign officials to win business.

Jeana and John Mushriqui enter the federal courthouse in Washington D.C. on Monday.

After accepting the partial verdict, U.S. District Judge Richard J. Leon asked the jury to continue deliberating on a total of eight FCPA counts remaining against siblings John and Jeana Mushriqui and Marc Morales, Godsey’s business partner. Leon gave the jurors an anti-deadlock instruction and told attorneys if they remain hung, he will declare a mistrial. The jury has deliberated for nine days, following a three-and-a-half-month trial.

One defendant, Steve Giordanella, was acquitted in December when Leon threw out a conspiracy charge against the defendants. Giordanella was not charged with any substantive violations of the FCPA.

The six individuals were among 22 suppliers of arms and other military products who were arrested in January 2010 for allegedly agreeing to bribe the minister of defense of Gabon in exchange for contracts to equip the West African country’s presidential guard. The deal was run as a sting by an informant and undercover FBI agents and no members of the Gabonese government were involved.

Caldwell and Godsey both wiped away tears as the jury foreman read the verdict.

“I don’t see how it could have been any other way,” Caldwell told Just Anti-Corruption following the verdict, describing himself as “ecstatic” about the outcome. “We never should have been here anyway.”

Caldwell and Godsey are part of the second round of trials in the case. Leon declared a mistrial for the first four defendants after the jury declared itself hung. Their retrial is scheduled for May.

Caldwell’s attorney, Eric Dubelier, a partner at Reed Smith LLP, painted the former deputy director of the Secret Service as a sympathetic figure during the trial. Dubelier argued that Caldwell, who had only recently been named CEO of Florida-based Protective Products International after leaving public service when he was arrested, had not understood the terms of the deal, being both hard of hearing and new to the industry. Dubelier represented Caldwell pro bono.

Godsey was represented by Michael Madigan, a partner at Orrick, Herrington & Sutcliffe LLP. During the trial, Madigan focused his arguments on attacking the nature of the FBI investigation. Madigan and other attorneys questioned the use of former military products executive Richard Bistrong as an informant to run the deal.

R. Patrick Caldwell

Defense attorneys argued that Bistrong lured their clients into the fake deal while trying to conceal its illicit nature. Bistrong entered into a plea agreement with the government and agreed to run the sting after he was caught by former employer Armor Holdings Inc., a subsidiary of BAE Systems plc, bribing officials at the United Nations in order to win contracts to supply United Nations peacekeepers. Bistrong’s character, his cocaine habit and use of prostitutes were all fodder for defense cross examination when he took the stand.

Dubelier and Madigan both declined to comment while charges are pending against the other defendants. A Justice Department spokesperson declined to comment.

The acquittals on Monday marked another high-profile defeat for the Justice Department, whose muscular enforcement of the FCPA has drawn howls of protest from the business community and led to an effort by the U.S. Chamber of Commerce to scale the law back.

In the last few months, a judge in Los Angeles overturned the FCPA convictions of electrical tower manufacturer Lindsey Manufacturing Co. and two of its executives, citing prosecutor misconduct. A judge in Houston granted an acquittal from the bench of John J. O’Shea, a former manager for a subsidiary of Swiss engineering firm ABB Ltd., who’d been accused of bribing Mexican officials.

Last July, Judge Leon declared a mistrial for the first group of defendants in the Gabon FCPA sting to go to trial. A jury couldn’t reach a verdict.

Facebook Twitter Linkedin Email

Comments are closed.

Ernst & Young LLP
Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succ... more
DLA Piper
ANALYSIS: Charitable contributions and the FCPA – 6 Simple Steps to Help Ensure Your Company is Giving Responsib... more
Barnes & Thornburg LLP
ANALYSIS: News from Down Under - Case Against Leighton Holdings Highlights Problems with Facilitation Payments Exc... more
Bracewell & Giuliani LLP
ANALYSIS: Is There Really an “Offensive” Use of the FCPA? more
Corrs Chambers Westgarth
ANALYSIS: The UK Looks to Create an Offense of Failing to Prevent Economic Crimes more
Greenberg Traurig LLP
ANALYSIS: Practical Issues in Implementing an FCPA Compliance Program Across Multiple Countries more
Davis LLP
ANALYSIS: Lessons from GlaxoSmithKline's Record Bribery Fine in China more

Clip from President Obama and Eric Holder announcement of Holder's resignation.


RACHEL MADDOW SUMS UP HOLDER's TENURE: One of the "most consequential" attorneys generals in history faced irrational conservative hatred, MSNBC host says.