DOJ Continues to Focus on FCPA Enforcement

DOJ Continues to Focus on FCPA Enforcement

FCPA enforcement continues to be a priority for the Department of Justice. Last week the Department extradited Italian citizen Flavio Ricotti from Germany in a case which centers on claims that California based valve maker Control Components, Inc. violated the FCPA and the Travel Act. Mr. Ricotti is the former vice president and head of sales for Europe, Africa and the Middle East for the company. The sixteen count indictment in which he is named as a defendant includes five other former company executives. U.S. v. Carson, Case No. 8:09-cr-00077 (C.D. CA. Filed April 8, 2009). The other defendants are Stuart Carson, then the CEO of the company, Hong Carson, the former Manger of Sales for China and Taiwan, Paul Cosgrove, former EVP, David Edmonds, former v.p. of Worldwide Customer Service and Han Young Kim, the former President of the Korean office.

Mr. Ricotti is charged with one count of conspiracy to violate the FCA and the Travel Act, one count of violating the FCPA and three counts of violating the Travel Act. According to the indictment, Mr. Ricotti caused company employees and agents to make corrupt payments valued at $750,000 to officers and employees of state owned companies. He is also alleged to have caused an additional $380,000 in corrupt payments to be made to officers and employees of private companies. The payments were made in connection with projects in the UAE, Kazakhstan, India and Qatar.

Previously, the company and two executives pleaded guilty. In July 2009 Contro Components pleaded guilty to a three count information alleging violations of the FCPA and the Travel Act. The charges, discussed here, are based on a scheme which took place over a four year period beginning in 2003. Control Components is alleged to have paid $4.9 million in bribes to officials of various state owned companies in violation of the FCPA and another $1.95 million in violation of the Travel Act.

In January 2009 Mario Covino, the former director of worldwide factory sales for the company, pleaded guilty to one count of conspiracy to violate the FCPA. In connection with that plea he admitted causing payments of about $1 million in bribes to be paid to officers and employees of several foreign state owned companies. In February Richard Morlok, the former finance director of Control Components, pleaded guilty to one count of conspiracy to violate the FCPA. In connection with that plea he admitted to causing the payment of about $628,000 in bribes to officials of state owned entities. Both men are scheduled for sentencing in January 2011.

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