This article was reprinted with permission
from FCPA Professor
Last week the DOJ announced in this release
the departure of Assistant Attorney General Lanny Breuer. Breuer's
position was obviously not FCPA specific, but he took a great interest in
the DOJ's Foreign Corrupt Practices Act enforcement program and frequently
made speeches on the FCPA in which he - to use his own words - "spread the
gospel" (see here).
Not surprisingly given the nature and purpose of the
release, the DOJ touted Breuer's enforcement record, including in the FCPA
context. The release stated as follows.
"The Criminal Division has also substantially increased
enforcement of the Foreign Corrupt Practices Act (FCPA), convicting three dozen
individuals for FCPA-related offenses - a record number - and entering
into more than 40 corporate resolutions involving eight of the top 10 largest
FCPA penalties in history. The Criminal Division also partnered with
the Securities and Exchange Commission to publish groundbreaking guidance on
In the abstract, there is nothing incorrect about
the above information. However, against the backdrop of the numerous
statistics I published in recent weeks (see here for
a summary) a different picture emerges.
A different picture also emerges when one considers the
following undeniable facts about FCPA enforcement under Breuer's criminal
division. In short, what follows would have been an equally valid DOJ
release concerning Breuer's departure.
In January 2010, Breuer called the arrest of 22
individuals in the military and law enforcement products industry a "turning
point" in the DOJ's FCPA enforcement program (see here).
The DOJ's "turning point" prosecution in the so-called Africa Sting cases ended
the following way. In granting the DOJ's dismissal of the charges, Judge
Richard Leon stated as follows.
"This appears to be the end of a long and sad chapter in
the annals of white collar criminal enforcement. Unlike takedown day in
Las Vegas, however, there will be no front page story in the New York Times or
the Post for that matter tomorrow reflecting the government's decision today to
move to dismiss the charges against the remaining defendants in this case.
Funny, isn't it, what sells newspapers? The good news, however, is that for
these defendants, agents, prosecutors, defense counsel and the court we can get
on with our professional and personal lives without the constant strain and
burden of three to four more eight-week trials hanging over our heads. I for
one hope this very long, and I'm sure very expensive, ordeal will be a true
learning experience for both the department and the FBI as they regroup to
investigate and prosecute FCPA cases against individuals in the future.
Two years ago, at the very outset of this case, I expressed more than my fair
share of concerns on the record regarding the way this case has been charged
and was being prosecuted. Later, during the two trials that I presided over, I
specifically commented again on the record regarding the government's very,
very aggressive conspiracy theory that was pushing its already generous
elasticity to its outer limits. Of course, in the second trial that elastic
snapped in the absence of the necessary evidence to sustain it. In addition, in
that same trial, I expressed on a number of occasions my concerns regarding the
way this case had been investigated and was conducted especially vis-a-vis the
handling of Mr. Bistrong. I even had an occasion, sadly, to chastise the
government in a situation where the government's handling of the discovery
process constituted sharp practices that have no place in a federal courtroom.
Notwithstanding all of this water over the dam, and there has been a lot of
water, I'm happy to see and I applaud the department for having the wisdom and
courage of its convictions to face up to the limitations of its case as
revealed in the past 26 weeks of trial and the courage to do the right thing
under the circumstances. Having served at the higher levels of the department,
I know that that was not an easy decision. They never are, when so much
has been invested, and the agents and the prosecutors are so convinced of the
righteousness of their position. I for one however am confident this will be in
the end a positive, if not painful, lesson that results in better prosecutions
of individuals in the future under the FCPA. As for the defendants, I hope the
healing process is a swift one and that they get back to their normal lives in
the very near future. Finally, I would be remiss if I did not comment on the
tireless and spirited effort by the defense counsel from all over the country
who came here to try these very lengthy and complicated cases under difficult
circumstances and some even pro bono. Their hard work and effective advocacy
are a testament to how strong our criminal defense bar is nationwide. And so
without further adieu I grant the government's motion to dismiss. The
defendants are excused."
In May 2011 Breuer stated, after a jury found Lindsey
Manufacturing and its executives Keith Lindsey and Steve Lee guilty in an
FCPA trial, as follows. These verdicts "are an important milestone
in our Foreign Corrupt Practices Act (FCPA) enforcement efforts." (See here).
The"important milestone" ended when Judge Howard Matz vacated the convictions,
dismissed the indictment after finding numerous instances of prosecutorial
misconduct, and stated as follows.
"[The instances of misconduct were so varied and occurred
over such a long time] that they add up to an unusual and extreme picture
of a prosecution gone badly awry. [...] The Government team allowed a key
FBI agent to testify untruthfully before the grand jury, inserted material
falsehoods into affidavits submitted to magistrate judges in support of
applications for search warrants and seizure warrants, improperly reviewed
e-mail communications between one Defendant and her lawyer, recklessly failed
to comply with its discovery obligations, posed questions to certain witnesses
in violation of the Court's order, engaged in questionable behavior during
closing argument and even made misrepresentations to the Court."
"Dr. Lindsey and Mr. Lee were put through a severe
ordeal. Charges were filed against them as a result of a sloppy, incomplete and
notably over-zealous investigation, an investigation that was so flawed that
the Government's lawyers tried to prevent inquiry into it. In some instances
motives, statements and conduct were attributed to them that were wholly
unfounded or were obtained unlawfully . . . [. . .] The financial costs of the
investigation and trial were immense, but the emotional drubbing [Lindsey and
Lee] absorbed was even worse. As for [Lindsey Manufacturing], the very survival
of that small, once highly respected enterprise has been placed in jeopardy."
In November 2009, Breuer's criminal division criminally
charged John Joseph O'Shea with FCPA offenses (see here).
The case ended when Judge Lynn Hughes granted O'Shea's motion for acquittal
after the DOJ's case. Judge Hughes stated as follows.
"The problem here is that the principal witness against
Mr. O'Shea ... knows almost nothing."
"The government should have been prepared before they
brought the charges to the Grand Jury. [...] You shouldn't indict people
on stuff you can't prove."
The approximate 25 individuals (individuals who had
their real lives altered, their real careers sidetracked, their real
reputations harmed, and their real wallets emptied) probably have a
different perspective on FCPA enforcement under Breuer. And with good and
Read more articles on the FCPA by Mike
Koehler at FCPA
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