Last October, a large group of executives in the defense products industry gathered in bustling Clyde’s restaurant in downtown Washington, D.C., for a celebratory business meeting.
They came from all corners of the United States and as far away as Israel and the United Kingdom. Some of them knew each other. Others had just met. But none of them realized the meeting was being videotaped by the FBI.
At the table that day was a man they knew as an agent for the minister of defense in the central African country of Gabon, according to a person familiar with the matter.
The agent, with whom the men believed they had reached deals to outfit the African country’s presidential guard, conveyed the minister of defense’s compliments.
The minister was pleased with the grenade launchers sent by Arkansas-based Daniel Alvirez and Lee Allen Tolleson, the agent said, according to a federal indictment. And he let Andrew Bigelow know that the M4 rifles his Florida-based company had provided were a big hit, according to another indictment.
Then, all 22 businessmen raised their glasses to toast the man who’d brought them together: Richard T. Bistrong, a well-connected former executive at Armor Holdings, now a subsidiary of BAE, according to the person familiar with the matter.
At the time, none of the 22 executives was aware that the purported representative of Gabon was actually an undercover FBI agent, and that Bistrong had been working with the government to build its case.
A Justice Department spokesperson, Laura Sweeney, declined to comment.
The 22 individuals were named in 16 indictments filed under seal in December and made public last month. The indictments made no mention of a giant conspiracy involving all the defendants, but the government’s more expansive theory of the case emerged in a court hearing last week.
The indictments allege that over two and a half years, the 22 defendants – from both the U.S. and foreign countries — were led to believe they were participating in a bribery scheme to acquire a $15 million contract from the minister of defense of an unnamed African country.
To this point, the Justice Department has declined to identify the country the agent pretended to represent. Justice Department officials have said that the country was unaware of the operation.
Government prosecutors revealed their theory of a giant conspiracy at the arraignment hearings of 19 of the 22 defendants last Wednesday in Washington’s U.S. District Court. Until that morning observers, defense attorneys and even Judge Richard Leon, who is presiding over the cases, were unaware of allegations of a larger conspiracy.
At the arraignments, several defense lawyers said their clients had only glancing acquaintance with the other defendants, or had only informally been introduced to them.
“From my understanding, my clients barely know each other,” Eric Bruce, an attorney at Kobre & Kim who is representing two defendants, said at the arraignment. “I don’t see how this is a conspiracy.”
Leon asked lead prosecutor Hank Bond Walther what evidence he had in support of the conspiracy. Walther said the government was in possession of a number of documents, audio recordings, and video tapes that would be shared with defense attorneys over the next two weeks.
According to the person with knowledge of the matter, one of these tapes is a recording of the meeting at Clyde’s.
All of the 16 indictments describe a meeting at Clyde’s “on or around” Oct. 5, 2009. While the indictments do not say whether the defendants were all present at Clyde’s, the language used to describe the meetings is uniformly similar.
Clyde’s is a Washington institution. Its 13 D.C.-area restaurants are decorated with wood-panels and nostalgic items, like baseball memorabilia. The prices are reasonable - the pan-seared pork chops are only $14.95 – and the comfortable leather couches, oak bars and pictures of the Capitol and other monuments lend it the feel of an insider’s lair.
Although the indictments don’t specify which Clyde’s location was the site of the business meeting, they do say the restaurant was in Washington. There are only two Clyde’s locations inside Washington, and there are indications the chain’s cavernous Chinatown restaurant was where the meeting was recorded.
For example, another indictment describes a meeting between defendant Helmie Ashiblie and the government’s cooperating witness, believed to be Bistrong, at Zatinya, a hip, boisterous Mediterranean bistro just minutes from the Chinatown Clyde’s, in the emerging new center of the city’s law firm community.
Perhaps not coincidentally, the Chinatown Clyde’s is about five blocks from the Department of Justice headquarters and three blocks from the J. Edgar Hoover FBI Building.
The Chinatown Clyde’s has four separate bars, three dining rooms and a private party room that can accommodate 225 guests for a cocktail reception. The restaurant draws a mix of tourists, fans en route to a game at the neighboring Verizon Center, businessmen, and DOJ lawyers. It’s an easy place to go unnoticed.
Waiters and bartenders at Clyde’s said that they serve parties of 30 or more on an almost daily basis. Calls made to Clyde’s corporate offices were not returned. None of the Clyde’s employees with whom Main Justice spoke remembered the October gathering.
A common link among the 22 defendants was Bistrong, the former executive at Armor Holdings. He is the ex-husband of Nancy Soderberg, who was the No. 3 official on President Bill Clinton’s National Security Council. Bistrong is believed to be the government’s cooperating witness, identified as “Individual 1″ in each of the 16 indictments.
Bistrong is himself facing FCPA charges stemming from alleged bribes to acquire contracts with the United Nations. FCPA lawyers say it appears the government flipped Bistrong to pursue the larger case. The indictments portray “Individual 1″ as an intermediary and facilitator between the 22 defendants and the undercover agent from the unnamed African country.
Each of the indictments says that “Individual 1″ was present at Clyde’s. “There’s a videotape of a meeting at Clyde’s with all the defendants and Bistrong, and they’re all toasting him, or something to that effect,” the person familiar with the government’s case told Main Justice.
At this point, it is unknown what other evidence links the defendants to a conspiracy. Legal experts say it would be unusual to allege a large conspiracy based on one meeting.
Richard Dean, a partner at Baker & McKenzie who specializes in the FCPA, said that conspiracy is an issue FCPA lawyers grapple with all the time.
“You don’t have to prove that everybody was aware of the overt act, but you do have to show that there was a basic agreement to conspire to commit a crime, and that usually requires a showing of knowledge,” said Dean.
At last Wednesday’s arraignments, defense lawyers were instructed to provide the government with external hard drives to which the prosecution would transfer its evidence. The next hearing in the case is set for Feb. 17, giving defense attorneys until then to review whatever the Justice Department provides them.
They’re likely to spend extra time scrutinizing the Clyde’s tape.