Set forth below is a summary of the 16 indictments announced yesterday charging 22 individuals in connection with the "Africa Sting."
The Africa Sting case charges individuals across a wide business spectrum.
It involves individuals employed by large companies and small companies; private companies and publicly-traded companies. It involves Chief Executive Officers, Sales Managers, and even a General Counsel. It involves U.S. citizens, U.K. citizens, an Israeli citizen, and a pair of siblings. It involves agents and consultants, and of course, undercover FBI agents posing as representatives of an imaginary Minister of Defense of an African country.
At present, this case only involves individuals.
However, as indicated by Assistant Attorney General Breuer in yesterday's DOJ release (
here) the investigation is "ongoing" and you can bet that many of the companies which employ these individuals are "lawyering up" as past FCPA enforcement actions demonstrate the corporate enforcement actions or investigations often, but not always, precede or follow individual enforcement actions.
As to any potential corporate enforcement action, the websites of several of the companies employing the indicted individuals make specific reference to the company being a U.S. General Services Administration vendor. "Under guidelines issued by the Office of Management and Budget, a person or firm found in violation of the FCPA may be barred from doing business with the Federal government." (see
here).
However, this sanction (to my knowledge) has never been used against an FCPA violator - not even Siemens (see
here). Thus, should corporate enforcement actions ensue, this will be an interesting issue to follow.
Given that one of the individuals indicted is employed by a public-company issuer, the SEC may also be interested in that company from, at the very least, an FCPA books and records and internal control perspective.
Given the number of individuals indicted, and the motivations for pleading under the Sentencing Guidelines, it would seem inevitable that one or more individuals will soon "flip" and cooperate with the government thereby potentially complicating the defenses of the remaining individuals.
All charges have been filed in the U.S. District Court for the District of Columbia and assigned to Judge Richard J. Leon (see
here).
As evident below, each of the indictments generally follow the same template, allege the core conduct, and charge the same offenses, including conspiracy to violate the FCPA and substantive FCPA violations.
At present, the indictments are only allegations and the individuals are presumed innocent. There is, of course, a very human event in this case and the lives of the indicted individuals (and countless more when you include family and friends) were turned upside down this week.
Stay tuned for a future post as to the "questions" raised by these indictments.
Daniel Alvirez and Lee Allen TollesonAlvirez (see
here for his background) is described in the indictment as "the President of Company A, an Arkansas company based in Bull Shoals, Arkansas, that manufactured and sold law enforcement and military equipment."
The company is ALS Technologies, Inc. (see
here for its background and
here for the company's press releases on this issue).
According to the indictment, Tolleson "was the Director of Acquisitions and Logistics."
According to the indictment, between approximately May 2009 - December 2009, Alvirez and Tolleson "would participate in meetings and have discussions" in which Individual 1 (a "business associate of Alvirez and Tolleson" (as well as most the other indicted individuals) and an "former Vice President of International Sales for a company that manufactured and supplied law enforcement and military equipment to law enforcement and military customers around the world") "said that a friend of his, who was a self-employed sales agent" was tasked by the Minister of Defense of an African country "with obtaining various defense articles for outfitting" the country's presidential guard.
According to the indictment, "in reality, the self-employed sales agent" was an undercover FBI special agent "posing as a representative of the Minister of Defense" of the African country.
According to the indictment, an object of the scheme was for Alvirez and Tolleson to obtain and attempt to obtain business for their company and themselves by making corrupt payments to the "sales agent" (the undercover FBI agent) who was "consulting" on a sale by the company to the Minister of Defense.
Pursuant to this arrangement, the indictment alleges that Aliverz and Tolleson would agree to pay the "sales agent" "a 20% 'commission' in connection with two contract to sell grenades and grenade launchers to the Minister of Defense" "knowing that half of the 'commission' was intended to be paid as a bribe to the Minister of Defense" and "half was intended to be split between" Individual 1 and the "sales agent" "as a fee for their corrupt services."
According to the indictment, money for these payments would be generated through inflating the true price of the grenades and grenade launchers by 20%.
As part of the scheme, the indictment alleges that Alvirez and Tolleson would pay this "commission" into the "sales agent" U.S. bank account "knowing that half of the commission was intended to be paid outside of the United States as a bribe to the Minister of Defense."
According to the indictment, the business deal was worth approximately $15 million and "would involve several suppliers." The indictment alleges that on or about May 13, 2009, Alvirez and Tolleson agreed to proceed with the deal per the above-described arrangements and that Alvirez and Tolleson then proceeded to inflate the price quotations, wire the commission, and otherwise take action in furtherance of the deal.
The indictment alleges that on or about October 5, 2009, Alvirez and Tolleson were told by another FBI special agent "posing as a procurement officer" for the African country's Minister of Defense and "who purportedly reported directly to the Minister of Defense" (the Second FBI Agent) that the "Minister of Defense was pleased with the grenade launchers" sent and the "commission the Minister of Defense had received." The FBI special agent then allegedly told Alvirez and Tolleson "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Alvirez and Tolleson then executed two copies "of the corrupt purchase agreement."
Based on this core conduct, the indictment charges Alvirez and Tolleson with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
Helmie AshiblieAshiblie is described in the indictment as the "Vice President and Founder of Company A, a company that was based in Woodbridge, Virginia, and was in the business of supplying tactical bags and other security-related articles for law enforcement agencies and governments worldwide."
That company (see
here) is i-Shot, Inc.
The allegations against Ashiblie are substantively similar to the above allegations against Alvirez and Tolleson, but involved two contracts to sell "tactical bags". The indictment alleges that Ashiblie agreed to proceed with the deal and that he then proceeded between August - November 2009 to inflate the price quotations, wire the commission, and otherwise take action in furtherance of the deal.
The indictment also alleges that on or about October 5, 2009, Ashiblie was also told by the Second FBI Agent that the "Minister of Defense was pleased with the tactical bags" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Ashiblie "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Ashiblie then executed an additional purchase agreement and sent "thirteen tactical bags for the purpose of having the tactical bags forwarded" to the African country.
Based on this core conduct, the indictment charges Ashiblie with, among other things, conspiracy to violate the FCPA and
four substantive FCPA violations.
Ofer PazPaz is described in the indictment as a citizen of Israel and the "President and Chief Executive Officer of Company A, an Israel-based company that acts as a sales agent for companies in the law enforcement and military products industries."
That company is M. Paz Logistics Ltd. (see
here).
The allegations against Paz are substantively similar, but involved two contracts to sell "explosives detection kits." The indictment alleges that Paz agreed to proceed with the deal and that he then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furtherance of the deal.
The indictment also alleges that on or about October 5, 2009, Paz was also told by the Second FBI Agent that the "Minister of Defense was pleased with the explosives detection kits" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Paz "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Paz then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Paz with, among other things, conspiracy to violate the FCPA and
three substantive FCPA violations.
Andrew BigelowBigelow is described in the indictment as the "Managing Partner and Director of Government Programs for Company A, a company that was based in Sarasota, Florida, and was in the business of selling machine guns, grenade launchers, and other small arms and accessories."
That company has been identified in media reports as The Gunsearch.com LLC (see
here).
The allegations against Bigelow are substantively similar, but involved two contracts to sell "M4 carbine rifles." The indictment alleges that Bigelow agreed to proceed with the deal and that he then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Bigelow was also told by the Second FBI Agent that the "Minister of Defense was pleased with the M4 rifles" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Bigelow "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Bigelow then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Bigelow with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
R. Patrick Caldwell and Stephen Gerard GiordanellaCaldwell is described in the indictment as the former "Senior Vice President of Sales and Marketing for Company A, a Florida corporation headquartered in Sunrise, Florida, that designed and manufactured concealable and tactical body armor." According to the indictment, in September 2009, "Caldwell was named Chief Executive Officer of Company A."
That company is Protective Products of America, Inc. (see
here) and (
here) for Caldwell's profile. Of note, Caldwell formerly "served as Deputy Assistant Director, Office of Protective Operations, U.S. Secret Service."
According to the indictment, Giordanella "was the Chief Executive" of Protective Products "until his resignation on or about March 18, 2009" and from then until at least December 2, 2009 he was a "consultant" for the company.
The allegations against Caldwell and Giordanella are substantively similar, but involved two contracts to sell "body armor plates" The indictment alleges that Caldwell and Giordanella agreed to proceed with the deal and that they then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Caldwell was also told by the Second FBI Agent that the "Minister of Defense was pleased with the body armor plates" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Caldwell "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Caldwell then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Caldwell and Giordanella with, among other things, conspiracy to violate the FCPA. Caldwell is additionally charged with
two substantive FCPA violations.
Haim GeriGeri is described in the indictment as "the President of Company A, a company based in North Miami Beach, Florida, that serves as a sales agent for companies in the law enforcement and military products industries."
That company appears to be M.G.S. International Consulting, Inc.
The allegations against Geri are substantively similar, but involved two contracts to sell "the Corner Shot - a special purpose gun accessory that can be used to observe and shoot targets around a corner." The indictment alleges that Geri agreed to proceed with the deal and that he then proceeded between May - June 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Geri was also told by the Second FBI Agent that the "Minister of Defense was pleased with the Corner Shot units" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Geri "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Geri then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Geri with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
Saul MishkinMishkin is described in the indictment as "the owner and Chief Executive Officer of Company A, a Florida company headquartered in Aventura, Florida, that sold law enforcement and military equipment."
That company appears to be International Security and Defence Systems (see
here).
The allegations against Mishkin are substantively similar, but involved two contracts to sell "riot control suits." The indictment alleges that Mishkin agreed to proceed with the deal and that he then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Mishkin was also told by the Second FBI Agent that the "Minister of Defense was pleased with the riot control suits" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Mishkin "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Mishkin then executed the "corrupt purchase agreement."
The Mishkin indictment contains the additional allegation that he was "advised by his attorney that the deal could violate the laws of the United States." The indictment further alleges that Mishkin then tried to sell the riot control suits indirectly through Individual 1's company and also contains the allegation that Mishkin also tried to sell "Ready to Eat Meal kits" to Individual 1 pursuant to the same original deal structure even though Mishkin "previously had been advised by his attorney that such a deal could violate the laws of the United States."
Based on this core conduct, the indictment charges Mishkin with, among other things, conspiracy to violate the FCPA and
one substantive FCPA violations.
John Mushriqui and Jeana MushriquiJohn Mushriqui is described in the indictment as "the owner and Director of International Development for Company A, a Pennsylvania company [located in Upper Darby] that was in the business of manufacturing and exporting bulletproof vests and other law enforcement and military equipment."
Jeana Mushriqui is described as "the General Counsel and United States manager of Company A and the sister of John Mushriqui."
That company is Mushriqui Consulting LLC (see
here).
The allegations against the Mushriquis are substantively similar, but involved two contracts to sell "bulletproof vests." The indictment alleges that Mushriquis agreed to proceed with the deal and that they then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, the Mushriquis were also told by the Second FBI Agent that the "Minister of Defense was pleased with bulletproof vests" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told the Mushriquis "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, the Mushriquis then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges the Mushriquis with, among other things, conspiracy to violate the FCPA and
five substantive FCPA violations.
Jonathan SpillerSpiller is described in the indictment as the "owner and President of Company A, a Florida company that was in the business of providing consulting services for companies in the law enforcement and military equipment industries." According to the indictment, "Spiller was also the owner and manager of Company B, a Florida company that was in the business of marketing and selling law enforcement and military equipment. Company A and B were both located in Ponte Vedra Beach, Florida."
The allegations against Spiller are substantively similar, but involved contracts to sell "rifle-mounted cameras and tactical vehicles." The indictment alleges that Spiller agreed to proceed with the deal and that he then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Spiller was also told by the Second FBI Agent that the "Minister of Defense was pleased" with the equipment sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Spiller "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Spiller then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Spiller with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
John Benson Wier IIIWier is described in the indictment as the "President of Company A, a Florida company headquartered in St. Petersburg, Florida, that sold tactical and ballistic equipment."
That company is SRT Supply Inc. (see
here).
The allegations against Wier are substantively similar, but involved two contracts to sell "laser grips, which are laser sights for handguns." The indictment alleges that Wier agreed to proceed with the deal and that he then proceeded between May - June 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Wier was also told by the Second FBI Agent that the "Minister of Defense was pleased with the laser grips" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Wier "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Wier then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges the Wier with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
Amaro GoncalvesGoncalves is described in the indictment as "the Vice President of Sales for Company A, a United States company headquartered in Springfield, Massachusetts. Company A was a world-wide leader in the design and manufacture of firearms, firearm safety/security products, rifles, firearms systems, and accessories. The shares of Company A were publicly traded on the NASDAQ stock exchange."
That company is Smith and Wesson Holding Corporation (see
here and
here for its press release).
The allegations against Goncalves are substantively similar, but involved two contracts to sell "pistols." The indictment alleges that Goncalves agreed to proceed with the deal and that he then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 6, 2009, Goncalves was also told by the Second FBI Agent that the "Minister of Defense was pleased with the pistols" sent and the "commission the Minister of Defense had received." The FBI special agent then allegedly told Goncalves "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Goncalves then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Goncalves with, among other things, conspiracy to violate the FCPA and
three substantive FCPA violations.
Pankesh PatelPatel is described in the indictment as a United Kingdom citizen and the "Managing Director of Company A, a United Kingdom company that acts as a sales agent for companies in the law enforcement and military products industries."
The allegations against Patel are substantively similar, but involved two contracts to sell "uniforms." The indictment alleges that Patel agreed to proceed with the deal and that he then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Goncalves was also told by the Second FBI Agent that the "Minister of Defense was pleased with the uniforms" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Patel "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Patel then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Patel with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
John Gregory Godsey and Mark Frederick MoralesGodsey is described in the indictment as "the owner of Company A, a Georgia company based in Decatur, Georgia, that was in the business of selling ammunition and other law enforcement and military equipment." Morales is described as "a busines associate of Godsey" who "worked with him on deals involving Company A."
The allegations against Godsey and Morales are substantively similar, but involved two contracts to sell "ammunition." The indictment alleges that Godsey and Morales agreed to proceed with the deal and that they then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Godsey and Morales were also told by the Second FBI Agent that the "Minister of Defense was pleased with the ammunition" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Godsey and Morales "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Godsey then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Godsey and Morales with, among other things, conspiracy to violate the FCPA and
two substantive FCPA violations.
David Painter and Lee WaresPainter is described in the indictment as a United Kingdom citizen and "the Chairman of Subsidiary A, a company based in the United Kingdom that was in the business of marketing armored vehicles." Wares is also described as a United Kingdom citizen and the "Director of Subsidiary A."
According to the indictment, "the parent company of Subsidiary A" is a company based in Cincinnati, Ohio that "produces security products."
The allegations against Painter and Ware are substantively similar, but involved two contracts to sell "night vision goggles (NVGs) and armored vehicles." The indictment alleges that Painter and Ware agreed to proceed with the deal and that they then proceeded between May - September 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Painter and Ware were also told by the Second FBI Agent that the "Minister of Defense was pleased with the NVGs" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Painter and Ware "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Painter and Ware then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Painter and Ware with, among other things, conspiracy to violate the FCPA and
three substantive FCPA violations.
Israel Weisler and Michael SacksWeisler is described in the indictment as an "owner and Chief Executive Officer of Company A, a Kentucky company that was in the business of designing, manufacturing, and selling armor products, including body armor. Company A's business was located in Stearns, Kentucky." Sacks, a citizen of the United Kingdom, is described as a "co-owner and co-Chief Executive Officer of Company A."
That company is U.S. Cavalry Inc. (see
here). Of note, according to the company's website, is that the company "set upon a quest to earn a General Services Administration Contract to ease the procurement process for our customers at GSA-authorized federal, military and state agencies. The GSA Contract allows these customers to ensure they pay a fair, predetermined price for the equipment they need."
The allegations against Weisler and Sacks are substantively similar, but involved two contracts to sell "body armor." The indictment alleges that Weisler and Sacks agreed to proceed with the deal and that they then proceeded between May - June 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Weisler and Sacks were also told by the Second FBI Agent that the "Minister of Defense was pleased with the body armor" sent and the "commission the Minister of Defense had received." The FBI agent then allegedly told Weisler and Sacks "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Weisler and Sacks then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Weisler and Sacks with, among other things, conspiracy to violate the FCPA and
four substantive FCPA violations.
Yochanan CohenCohen is described in the indictment as the "Chief Executive Officer of Company A, a company based in San Francisco, California, that was in the business of manufacturing security equipment, including body armor and hard armor ballistic plates."
That company is Highcom Security Inc. (see
here). The company's website indicates that it is a certified General Services Administrator vendor.
The allegations against Cohen are substantively similar, but involved two contracts to sell "Level IV ballistic plates, which is a type of body armor." The indictment alleges that Cohen agreed to proceed with the deal and that he then proceeded between May - August 2009 to inflate the price quotations, wire the commission, and otherwise take action in furterance of the deal.
The indictment also alleges that on or about October 5, 2009, Cohen was also told by the Second FBI Agent that the "Minister of Defense was pleased with the ballistic plates" sent and the "commission the Minister of Defense had received." The FBI special agent then allegedly told Cohen "that the Minister of Defense had given his approval to proceed" with the second phase of the deal. According to the indictment, Cohen then executed the "corrupt purchase agreement."
Based on this core conduct, the indictment charges Cohen with, among other things, conspiracy to violate the FCPA and
three substantive FCPA violations.
