DOJ Stung By Using FCPA Sting
By Christopher M. Matthews | July 8, 2022 1:46 pm

The Justice Department’s decision to use an undercover sting to encourage executives in the defense products industry to offer bribes may have backfired this week, as jurors couldn’t reach a verdict in a case the Justice Department had called the “turning point” for its fight against foreign bribery.

After more than 16 months of pre-trial hearings, 6 weeks of trial and 7 days of deliberation the case came to unsatisfying and unfinished end Thursday.

U.S. Federal District Judge Richard Leon ordered a mistrial in the case Thursday after a Washington, D.C. jury declared it was “hopelessly hung.” According to interviews with jurors after they were dismissed, the government’s use of an undercover sting operation appeared to be the sticking point that prevented the 12 men and women from reaching a unanimous decision on any of the counts against the four defendants.

Big picture, Thursday’s outcome could raise doubts about the Justice Department’s use of aggressive investigative techniques as it prosecutes the Foreign Corrupt Practices Act. Enforcement of the 33-year-old law, which prohibits bribes to foreign officials to win business, has become a centerpiece of the department’s efforts to fight financial crime and this case was seen as a test.

“I certainly think that having a hung jury in the first prosecution where more aggressive law enforcement techniques were used is sending a powerful message that those techniques have to be adjusted for FCPA prosecutions,” said Danforth Newcomb, a partner at Shearman & Sterling LLP who has been practicing in the FCPA area for over 30 years.

On a more pressing level, the government will have to decide whether it will re-try the four defendants -Pankesh Patel, Andrew Bigelow, John Benson Weir and Lee Allen Tolleson - who will be left preparing for another grueling and expensive trial. The early signs are that the department is committed to seeing the case through. Immediately after Leon declared a mistrial, lead prosecutor Joey Lipton said the government would re-try all four men.

The atmosphere in courtroom was subdued after Leon declared a mistrial, as neither side seemed sure how to react. After Lipton said he planned to re-try the case, Leon suggested he first listen to the jurors, whom Leon brought into the courtroom shortly thereafter. Leon then asked the foreman to read the final vote tally for each defendant on each count, a rare occurrence in federal court.

The case is the culmination of a two-and-a-half year sting operation in which FBI agents, in coordination with an undercover informant, posed as representatives of Gabon, allegedly soliciting $3 million in bribes for a fictitious $15 million deal to supply the Ministry of Defense. Actual representatives of the West African country were not involved in the deal.

Leon’s decision came after two days of mixed signals from the jury. On Wednesday, the courtroom was packed with onlookers after the jury sent a letter to Leon asking how to proceed if they had reached a decision on some of the counts, but not all, giving the expectation of a partial verdict.

But on Thursday, Leon received two separate notes: one from eight jurors, the other from the foreman, saying the jury had voted six times and was deadlocked. After disclosing the notes to counsel, Lipton asked that Leon give the jury a so-called Thomas charge — a formal instruction to continue deliberating.

Defense attorney Eric Bruce asked for a mistrial, arguing that Leon had already given two informal instructions to continue deliberating and a third would create a “coercive” atmosphere that could result in an unfair verdict. Leon ultimately agreed with Bruce, but called it a “close call.”

A spokeswoman for the Justice Department said the prosecution was grateful for the jury’s service but declined to comment further. A lawyer speaking for the defendants said the same.

The case began 19 months ago when 22 defense products executives from multiple companies were charged in 16 sealed indictments with violating and conspiring to violate the FCPA as well as conspiracy to launder money. Leon threw out the money laundering charges. Three of the defendants have pleaded guilty and the group has been broken into four separate trial groups, and defendants Patel, Bigelow, Weir and Tolleson made up the first group.

Most of the jurors voted guilty as to Patel on both the conspiracy and the FCPA counts. But they were split on Bigelow and Weir. The jury voted mostly guilty for Weir on conspiracy, but were divided on the two FCPA counts against him. Nine jurors voted not guilty for Bigelow on the conspiracy count, but most voted guilty on the two FCPA counts. The jury largely rejected the case against Tolleson, registering only one guilty vote for conspiracy, and two for the FCPA violation.  (Click here for the complete counts.)

A rare bit of human theater that could only be seen in a courthouse ensued after the votes were read. In an unusual move, Leon allowed the jurors to return to the courtroom and, if they wished, to speak to the lawyers and the defendants about the case.

About eight jurors returned, making rounds in the courtroom. Some even joked with defense counsel and patted the defendants on the back before leaving.

At one table, Lipton sat asking several jurors about why they were unconvinced about Tolleson’s culpability, as Tolleson stood behind Lipton listening stone-faced. The consensus seemed to be that Tolleson, who was portrayed by his lawyers as a small-town kid along for the ride, did not have enough authority at his company, Arkansas-based ALS Technologies, to make decisions about the Gabon deal.

In an interview outside the courtroom, one juror who declined to be named, said she was convinced that the defendants knew what they were doing was wrong. But while she thought all of the defendants except for Tolleson were guilty, she said that some of the other jurors were hung up by the government’s use of a sting.

Throughout the trial, defense lawyers claimed that the government obscured the legality of the deal during the operation, avoiding use of words like “bribe” or “kickback.” They also attacked the use of the industry-executive turned informant, Richard Bistrong, whom they repeatedly called a “scoundrel,” highlighting is criminal background and use of drugs and prostitutes.

Bistrong pleaded guilty to FCPA charges in September. He was nabbed in an investigation of corrupt arms sales to United Nation’s peacekeeping units.

Another juror, who also declined to be named, said that he felt the defendants would not have entered the deal were it not for the sting.

“I think the investigation needed to be made clearer,” he said. “I don’t think that’s disputable.”

But both jurors agreed that pursuing foreign bribery through the use of stings was a worthwhile exercise for the Justice Department.

“I think it’s a pretty nasty crime,” the female juror said. “It’s not victimless at all.”

Moving forward, the prosecution will have some tough decisions to make. Jeffrey Neiman, a former federal prosecutor, said that if the case is re-tried, the government will be at a serious disadvantage because defense counsel has already seen their case. He also said the jurors’ feedback would be invaluable.

As to the larger question concerning the continued use of FCPA stings, Neiman, who is now a solo practitioner, said the government was between a rock and a hard place.

“The use of stings in FCPA cases is now tested, and quite frankly, they have not succeeded.”

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Mary B. Jacoby

Mary Jacoby is the founder of Main Justice and Editor-in-Chief of Just Anti-Corruption.

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