05/11/2011 03:19:00 PM EST
The First Company to Be Tried on FCPA Charges Is Found Guilty
Lindsey Manufacturing, the first company to stand trial
on FCPA charges, was convicted on all counts by a jury in the Central District
of California yesterday. Keith Lindsey, Steve Lee and Angela Aguilar were also
convicted. Mr. Lindsey is the owner and President of the Company and Mr. Lee
served as vice president and CFO. Ms. Aguilar is a Mexican national, married to
Enrique Aguilar of Grupo International which served as an agent for Lindsey to
secure business from a state owned enterprise. Mr. Aguilar is a fugitive. U.S.
v. Noriega, Case No. 2:10-cr-01031 (C.D. CA.).
The charges stem from bribes paid to employees of
Comision Federal de Electricidad or CFE in Mexico. CFE is a state owned utility
company. The company contracts with foreign enterprises for the goods and
services necessary to supply electric power to its customers. Lindsay
manufactures emergency restoration and other equipment used by utilities. Many
of its customers are foreign state owned utilities. CFE eventually became one
of its most significant customers.
Initially, Lindsey was unable to secure contracts from
CFE. The company then retained Grupo based on information suggesting that Mr.
Aguilar had a corrupt relationship with an official at the power company.
Within months of retaining Grupo in 2002, and continuing over the next seven
years, Lindsey secured business from CFE. Over the period the company was paid
more than $19 million by the utility.
To secure the business Lindsey paid a 30% commission to
Grupo with the understanding that all or part of it would go to CFE officials.
To cover the cost of the commission Lindsey raised its prices to CFE thereby
passing on the cost to the electric company. The commissions were paid under
false invoices. Over the years Messrs. Lindsey and Lee wired about $5.9 million
Ms. Aguilar authorized the payment of Grupo funds to CFE
officials. Specifically, she authorized $297,5000 for a Ferrari, $1.8 million
for a yacht and over $170,000 towards the credit card bills of one official.
She also authorized the transfer of $500,000 to the brother and mother of
The company and Messrs. Lindsey and Lee were each
convicted on one count of conspiracy and five counts of FCPA violations. Ms.
Aguilar was convicted on one count of conspiracy to commit money laundering.
Prior to jury deliberations the court granted Ms. Aguilar's motion for a
judgment of acquittal as to one count of money laundering. Earlier in the case the
court denied a motion to dismiss which argued that CFE employees are not
Sentencing is scheduled for the company and defendants
Lindsey and Lee on September 16, 2011. Ms. Aguilar is scheduled to be sentenced
on August 12, 2011.
This is the fourth recent FCPA trial in which DOJ has
prevailed. Later this week the so-called shot-show cases - those arising from a
huge sting operation - are scheduled to begin trial in the District of
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