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FCPA Blog Daily News

Entries in William Jefferson (41)

Tuesday
Mar272012

Fourth Circuit Rejects Jefferson's Appeal

A three-judge panel of the 4th U.S. Circuit Court of Appeals sitting in Richmond, Virginia on Monday affirmed former U.S. Representative William Jefferson's convictions for an FCPA conspiracy and nine other corruption counts. The court threw out one wire fraud conviction.

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Wednesday
Sep142011

Cable Reveals 'Foreign Policy' Impact Of Jefferson's FCPA Case

Reporters Bruce Alpert and Jonathan Tilove at the New Orleans Times-Picayune's found a WikiLeaks cable with a tie to ex-Congressman William Jefferson's prosecution for bribery and FCPA-related offenses.

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Monday
Aug082011

More Delay In Jefferson's Appeal

The U.S. Fourth Circuit Court of Appeals won't hear former Congressman William Jefferson's appeal until late October.

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Tuesday
Jul192011

Worst FCPA Prosecutions Ever

We have enormous respect for those who serve the public, including the prosecutors at the DOJ. Without them, the 'rule of law' would just be pretty words.

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Monday
Dec062010

Jefferson Appeals FCPA Conspiracy Charge

In his appeal, former congressman William Jefferson said his conviction on an FCPA conspiracy charge should be retried.

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Friday
Jul092010

Will Jefferson Walk?

Former Congressman William Jefferson's chances of winning his appeal got a big boost from the Supreme Court two weeks ago.

In Skilling v. United States, the justices narrowed the reach of the honest services statute. That law was behind most of the 11 counts Jefferson was convicted on. He was acquitted of the single substantive FCPA charge he faced but was found guilty on a conspiracy count that included both an FCPA and an honest-services element.

Jefferson, 63, was sentenced in November to 13 years in prison. He's free pending appeal.

The former nine-term Congressman from New Orleans was the first and only U.S. public official to be charged under the FCPA since it was enacted in 1977. His case will always be remembered for the $90,000 in cash found in his freezer. The money was part of $100,000 given to him by government informant Lori Mody. Prosecutors said Jefferson planned to use it to bribe Nigeria's then vice president, Atiku Abubakar.

According to a report in the Times Picayune, Judge T.S. Ellis III included in his definition of honest services fraud "concealed conflicts of interest." The Supreme Court ruling narrows the statute's use to exclude conflicts of interest. Jefferson's lawyers are saying there's no way to determine what role the conflicts allegations played in the honest-services guilty verdicts or other fraud counts, which should all be thrown out.

The honest-services object probably also dooms Count 1 of the indictment. It alleged three separate illegal conspiracies -- to solicit bribes, deprive citizens of honest services, and violate the FCPA. We argued before the Skilling ruling that the FCPA-related conspiracy count against Jefferson should be tossed. The jury's verdict form did not require it to specify which of the three illegal conspiracies the panel believed he engaged in. So his conviction on Count 1 may or may not have included a finding that he conspired to violate the FCPA. Jury accountability was lacking, and Judge Ellis himself said after the trial he regretted the way the verdict form was written.

The 4th Circuit Court of Appeals will now decide what to do with Jefferson's case. The most likely scenario is a remand to Judge Ellis, for him to decide how to apply the Supreme Court's ruling and perhaps to modify Jefferson's sentence. The ex-Congressman's lawyers are unlikely to be satisfied with anything less than a new trial. 

Monday
Apr192010

Jefferson's Jury Speaks

Bruce Alpert of the Times-Picayune dissects the jury's deliberations in last summer's trial of former congressman William Jefferson. Alpert's story confirms for the first time that the jury believed Jefferson was guilty of conspiring to violate the Foreign Corrupt Practices Act.

Jefferson, 63, was found guilty on 11 of 16 corruption charges, including one count of conspiracy. He was acquitted of the single substantive FCPA charge he faced. He was sentenced in November to 13 years in prison and is free pending appeal.

Jefferson was the first and only U.S. public official to be charged under the FCPA since it was enacted in 1977. His case will always be remembered for the $90,000 in cash found in his freezer. The money was part of $100,000 given to him by government informant Lori Mody. Prosecutors said Jefferson planned to use it to bribe Nigeria's then vice president, Atiku Abubakar.

But two jurors told the Times Picayune's Alpert there were doubts Jefferson actually intended to use the $100,000 to bribe Abubakar, despite what he told informant Mody.

"I think there was some thought he intended to keep the money himself, and that's not the crime he was accused of," said one juror who added that the remaining 10 jurors eventually went along with the sentiments of their two colleagues.

As the FCPA Blog said before the trial began, "The money so spectacularly found in the freezer -- it was in the freezer; it was not in the bank account of a foreign official." 

Alpert's report, however, confirmed that jurors convicted Jefferson of conspiracy to violate the FCPA. They decided that Jefferson's discussions with Mody about "wanting to keep Abubakar happy was enough to support a charge of conspiracy to violate the Foreign Corrupt Practices Act." Presumably the jury believed Jefferson planned to promise or give Abubakar something other than the cash in his freezer.

Alpert's report is the first confirmation from the jury itself that it convicted Jefferson on an FCPA-related count. Their verdict form alleged three separate illegal conspiracies -- to solicit bribes, deprive citizens of honest services, and violate the FCPA. But the form didn't require the jury to specify which of the three illegal conspiracies it believed Jefferson engaged in.

Judge T.S. Ellis III, who presided over the trial, later said he regretted not making the jury's verdict form more specific.

Thursday
Feb042010

From Ken's Lips To The Senate's Ears

Ken Silverstein's report on this week's Senate hearings about foreign rulers moving huge chunks of money to the U.S. is here.

For Silverstein, Harper's Washington editor and writer of the online Washington Babylon, the Senate investigation is a personal triumph. With help from Global Witness, he exposed the financial maneuverings of African kleptocrats and their U.S. enablers. His story in November about Teodoro Nguema Obiang Mangue, son of the dictator of oil-rich Equatorial Guinea, was a breakthrough.

We mentioned Silverstein's story in a post here, noting it was the first time a mainstream publication had ever talked about Presidential Proclamation 7750 --  the 2004 American law that allows the State Department to deny visas to foreign kleptocrats and their families.

Silverstein wondered then why Obiang -- "a notoriously crooked official" -- was allowed to enter the U.S. and stash millions in cash and assets there. Did the lack of action against Obiang, Silverstein asked, stem from political pressure to ignore the crimes and corruption of a possible future president of an oil-friendly ally?

In Washington, Senator Carl Levin, chairman of the Permanent Subcommittee on Investigations, used Silverstein's reporting to launch an investigation into Obiang and others, culminating in this week's hearings. At a press briefing Tuesday, Silverstein asked Senator Levin why Obiang isn't on a list of corrupt foreign officials barred from the U.S. under Proclamation 7750. “That’s the right question,” Levin replied.

This week, Levin's committee released a 330-page report. Some "findings of fact" were:

Lawyers. Two U.S. lawyers helped Teodoro Obiang circumvent anti-money laundering and PEP (politically exposed person) controls at U.S. banks by allowing him to secretly use a series of attorney-client, law office, and shell company accounts as conduits for his funds.

Realtors. Two realtors helped Obiang buy and sell multi-million-dollar residences in California, and a real estate escrow agent facilitated his purchase of a $30 million property by handling millions of dollars wire transferred from Equatorial Guinea, without verifying the source of the funds, since they had no legal obligation to do so.

Escrow Agents. After one U.S. escrow agent, as an AML precaution, refused to complete the purchase of a Gulfstream jet for Obiang without obtaining information on the source of $38.5 million to be paid for the aircraft, another U.S. escrow agent stepped in and completed the transaction with no questions asked. The escrow agents had no legal obligation under current law to inquire about the source of the funds.

Lobbyist. A U.S. lobbyist helped President Omar Bongo of Gabon obtain six U.S.- built armored cars and U.S. government permission to buy six U.S.-built military cargo aircraft from Saudi Arabia to support his regime, while allowing his U.S. bank accounts to be used as a conduit for $18 million in suspect funds in connection with those transactions, with no questions asked.

Offshore Corporations. Jennifer Douglas, a PEP through her marriage to Atiku Abubakar, former vice president of Nigeria, used a series of U.S. bank accounts to bring over $25 million in suspect funds into the United States via wire transfers from offshore corporations. Douglas was later named in the bribery prosecution of ex-U.S. Congressman William Jefferson and has been linked to corruption admitted by Siemens.

University. A U.S. university accepted over $14 million in wire transfers from unfamiliar offshore shell corporations to pay for consulting services related to development of a university in Nigeria founded by Mr. Abubakar.

Personal Accounts. Pierre Falcone, a PEP through his close association with the President of Angola and appointment as an Angolan Ambassador, was able to use personal, family, and U.S. shell company accounts at a U.S. bank in Arizona to bring millions of dollars in suspect funds into the United States and move those funds among a worldwide network of Falcone accounts, despite his status as an arms dealer and a long history of involvement in criminal proceedings in France. Falcone is now in jail in France.

Silverstein's latest story added these weird details:

Two American attorneys set up shell accounts for Obiang to help him buy a $30 million home in Malibu and a $38.5 million jet. All told, Obiang moved more than more than $110 million into the U.S. from 2004 to 2008. One of the shell companies was called Sweet Pink, named after the rapper Eve Jeffers, who was then Obiang’s girlfriend and the president of Sweet Pink. (Eve later dumped Obiang, reportedly after hearing rumors that his dictator father was a cannibal who ate his political opponents. The senate report neither confirms nor denies that Obiang Sr. is a flesh eater.)

A copy of the proceedings of the Senate Permanent Subcommittee on Investigations -- Keeping Foreign Corruption Out of the United States: Four Case Histories -- along with the full staff report can be downloaded here.

Tuesday
Jan192010

Lessons From FCPAscam 

That's a Smith and Wesson and you've had your six.

        ~ James Bond to an out-of-ammo assailant in "Dr. No"

Twenty-two people from military and law-enforcement supply companies -- including the vice president of sales for American gun-maker Smith & Wesson -- were arrested Tuesday on charges of violating the Foreign Corrupt Practices Act, and conspiracy to violate the FCPA and launder money.

Our six shots. Here's an early look at what the case means:

1. The feds' new playbook. It was an undercover sting operation, the first big one in FCPA history. There was no real foreign official, only an FBI agent posing as "a sales agent who the defendants believed represented the minister of defense for a country in Africa." Can you have an FCPA violation without an actual foreign official? We'll find out.

2. Five plus five plus twenty (years that is). Even if the FCPA charges don't stick, the feds also charged the defendants with conspiracy to violate the FCPA and to commit money laundering. Conspiracy can be easier for the government to prove than substantive FCPA offenses. Just ask William Jefferson and Frederic Bourke. The FCPA count carries a 5-year penalty, as does the FCPA conspiracy charge. But the conspiracy to commit money laundering packs a 20-year punch.

3. Who squeals first, squeals best. When the government indicts en masse, the defendants who offer early cooperation usually make out best, often with much lighter sentences. Having cooperating witnesses makes life a lot easier for the prosecutors. The tactic has been used for years by the Justice Department in price-fixing and antitrust cases.

4. They're everywhere. The DOJ said "approximately 150 FBI agents executed 14 search warrants in locations across the country." How many agents were involved in the actual investigation and sting, we aren't told. Whatever the number, this was a big operation. 

5. The Brits are in the game. The DOJ said the City of London Police "executed seven search warrants in connection with their own investigations" into companies involved in the DOJ busts. The U.K. authorities snoozed for decades on overseas bribery. But lately they've also arrested Jeffrey Tesler at the DOJ's request, launched an investigation into Halliburton, look set to charge BAE, charged a former Johnson & Johnson / DePuy executive, and banned some Kenyan kleptocrats.

 6. Low-hanging fruit. White collar types aren't used to being targeted by investigators. Unlike drug dealers and Mafioso, they haven't had much practice being careful not to get caught. What's that mean for the FCPA? More of the same on the way. As Assistant Attorney General Lanny A. Breuer said Tuesday: "From now on, would-be FCPA violators should stop and ponder whether the person they are trying to bribe might really be a federal agent."

Thursday
Dec032009

Sentencing Watch List

Let's update the list of individuals waiting to be sentenced for violating or conspiring to violate the Foreign Corrupt Practices Act. Since October, Frederic Bourke and William Jefferson have been sentenced and come off the list. Charles Jumet, Paul Novak, and Fernando Maya Basurto have entered guilty pleas are are added to it. Juan Diaz was to be sentenced on November 13 but the court reset his date. A reader also let us know that Si Chan Wooh, the former head of Schnitzer Steel's international subsidiary, who pleaded guilty in June 2007 to conspiracy to violate the FCPA, is scheduled to be sentenced next year in federal court in Oregon. So the list now stands at 18. 

Here they are:

Fernando Maya Basurto -- no date given.

Jim Bob Brown -- January 28, 2010

Joshua Cantor -- no date given.

Mario Covino -- January 25, 2010

Juan Diaz -- January 29, 2010

Thomas Farrell -- no date given.

Gerald and Patricia Green -- December 17, 2009

Charles Paul Edward Jumet -- February 12, 2010

Clayton Lewis -- no date given.

Joseph T. Lukas -- April 6, 2010

Richard Morlok -- January 25, 2010

Paul G. Novak -- February 19, 2010

Antonio Perez -- October 6, 2009. [No sentencing reported and no resetting of the sentencing date shown in the court docket.]

Si Chan Wooh -- April 26, 2010

 Leo Winston Smith -- December 18, 2009

Albert "Jack" Stanley -- February 24, 2010

Jason Edward Steph -- January 28, 2010

Let us know if we're still missing anyone or if other sentencing dates have changed.

*   *   *   

Words we like.  From Abraham Lincoln, October 1858:

It is the eternal struggle between these two principles — right and wrong — throughout the world. They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity, and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, "You toil and work and earn bread, and I'll eat it." No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle.

Wednesday
Dec022009

Tesler Fights Extradition; Jefferson Appeals

The London lawyer accused by the U.S. of being a middleman in KBR's bribery of Nigerian officials appeared in court last week to fight extradition. Jeffrey Tesler, 61, a U.K. citizen, was indicted in February by a federal grand jury in Houston. He was charged with one count of conspiring to violate the Foreign Corrupt Practices Act and ten substantive FCPA offenses. If convicted on all counts, he faces up to 55 years in prison. U.K. police, acting at the request of U.S. authorities, arrested Tesler in March.

According to a Press Association report, Tesler argued in the City of Westminster Magistrates' Court that his case is already under investigation by the U.K.'s Serious Fraud Office and shouldn't be duplicated by American prosecutors.

Tesler's lawyer, Bill Clegg QC, also said Tesler's case isn't linked to the U.S. "No person who was alleged to have received a bribe was promised a bribe in the U.S.A. No money to pay any bribes originated from any U.S. bank account. Mr Tesler, who it is alleged arranged the bribes, had never visited the U.S. in relation to the alleged conspiracy." The alleged bribes, Clegg said, were handled by a Gibraltar company and paid through Swiss bank accounts.

The U.S. indictment charged Tesler with using his Gibraltar company, Tri-Star Investments, to funnel about $132 million in bribes to Nigerian officials. The payments were intended to secure contracts worth more than $6 billion to build liquefied natural gas facilities on Nigeria's Bonny Island. The DOJ said Tesler was acting for a joint venture known as TSKJ, equally owned by KBR, Technip, SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy) and JGC of Japan.

The Crown's lawyer, David Perry QC, said U.S.-based companies were involved and money had been channelled through U.S. bank accounts. According to a report in the Guardian, Perry said the allegations against Tesler could be criminal offenses "in Britain as well as the U.S., so extradition could take place under normal legal rules."

In the indictment, the U.S. made this claim of jurisdiction:

At all times relevant to this Indictment, Tesler was an "agent" of an "issuer" within the meaning of the FCPA, Title 15, United States Code, Section 78dd- 1, an "agent" of a "domestic concern" within the meaning of the FCPA, Title 15, United States Code, Section 78dd-2, and an "agent" of a "person" within the meaning of the FCPA, Title 15, United States Code, Section 78dd-3.

The London court continued Tesler's extradiction hearing.

 *   *   *

Down But Not Out. Former congressman William Jefferson, sentenced last month to 13 years in prison for corruption and conspiring to violate the Foreign Corrupt Practices Act, managed to file his notice of appeal on time. It was touch-and-go after Jefferson, 62, filed for bankruptcy in August, saying he owes his criminal defense lawyers more than $5.7 million. But two of the lawyers are sticking with him.

The Times Picayune reported that attorneys Robert Trout and Amy Jackson received approval last week from the trial judge, T.S. Ellis III, for the court to pay Jefferson's legal fees for the appeal. The lawyers won't get their full rates but a lower amount equivalent to court-appointed public defenders. Ellis also approved their request for the court to pay for a transcript of the six-week trial, probably about $26,000.

Jefferson is free on bail pending his appeal. It's expected to take at least a year. Judge Ellis said he released Jefferson because his defense raised an argument that's untested in the appellate courts. Jefferson says he was acting as a private citizen, while a corruption statute he was convicted under applies only to public acts by elected officials. The judge also said he regretted not making the jury's verdict form more specific. (See our post here.)

Jefferson was convicted on 11 charges -- conspiracy, soliciting and taking bribes, depriving citizens of honest services, money laundering and racketeering. He was acquitted of five charges, including Count 11 of the indictment -- the only substantive FCPA charge he faced.

Thursday
Nov192009

Giving Thanks Once Again

During this season of Thanksgiving, the folks at Norway's Statoil ASA will be celebrating the end of the company's three-year deferred prosecution agreement -- and the Justice Department's public announcement about it here. In 2006, Statoil (which trades on the NYSE under the symbol STO) was charged with violating the anti-bribery and accounting provisions of the Foreign Corrupt Practices Act. It had paid more than $5 million through a middleman to an Iranian official for access to the South Pars natural gas field, one of the world’s largest. In settling with the DOJ, it agreed to pay a $10.5 million penalty and enter into the three-year deferred prosecution agreement. It also agreed with the SEC to pay $10.5 million in disgorgement and retain a monitor.

The case made waves in '06. Statoil's was the earliest criminal enforcement action against a foreign company. The financial penalties the DOJ and SEC imposed set that year's record for an FCPA case. And Statoil had already been punished in Norway for the bribery and fined about $3 million. The U.S. government evidently deemed that inadequate but, in an act of comity, allowed Statoil to deduct the Norwegian fine from the U.S. criminal penalty.

U.S. Attorney Prett Bharara got it right when he said yesterday: "This case shows that deferred prosecution agreements against corporations can work as an important middle ground between declining prosecution and obtaining the conviction of a corporation. The deferred prosecution agreement . . . helped restore the integrity of Statoil's operations and preserve its financial viability while at the same time ensuring that it improved what was obviously a failed compliance and anti-corruption program."

*   *   *

Frederic Bourke and William Jefferson will be thankful to be out on bail pending their appeals. The DOJ may have put too much zeal into Bourke's prosecution, and may have botched part of Jefferson's trial. But both men will have second chances on appeal. Bourke to argue that he never intended to break the law, and that being a criminal in the United States still requires some mens rea. And Jefferson that he was convicted for private acts under a law governing public acts, that he never had a chance to confront the main witness against him -- the government's informant, that her relationship with an FBI agent working on his investigation was evidence the jury should have heard, that the "honest services" statute he was convicted under is too vague to understand, and that the jury's verdict on the conspiracy count should have been tossed. 

*   *   *

We're thankful, as always, for the rule of law. Our system of justice isn't perfect. It can't be. But as we said a few weeks ago, when it works as it should, the guilty are usually punished and the innocent usually go free. And that's a rare blessing at any time and place. We're thankful too for the freedom we and others have to praise the system when it works and criticize it when it doesn't.

*   *   *

We're thankful so many people are at work right now trying to spread the rule of law around the world. People in governments, in NGOs, in universities and private institutions, and on their own. Wherever it goes, the rule of law helps people escape from fear and poverty.

*   *   *

We're thankful for everyone who supported the FCPA Blog during the past year -- our readers, sponsors, contributors, fellow bloggers, and kibitzers. They all help keep us honest and cheerful.

*   *   *

Finally, we give thanks for these words from Walden, written in 1854 by Henry David Thoreau, one of the most thankful and sanest Americans who ever lived:

At length the winter set in good earnest, just as I had finished plastering, and the wind began to howl around the house as if it had not had permission to do so till then. Night after night the geese came lumbering in the dark with a clangor and a whistling of wings, even after the ground was covered with snow, some to alight in Walden, and some flying low over the woods toward Fair Haven, bound for Mexico. . . . The snow had already covered the ground since the 25th of November, and surrounded me suddenly with the scenery of winter. I withdrew yet farther into my shell, and endeavored to keep a bright fire both within my house and within my breast.