Bribery Case at Wal-Mart May Widen

May 18, 2012

The New York Times on May 17, 2012 released the following:

“By STEPHANIE CLIFFORD

As Wal-Mart reported higher-than-expected first-quarter earnings on Thursday, it suggested in a regulatory filing that the scope of an internal investigation into bribery accusations had widened beyond the retailer’s subsidiary in Mexico.

The company reported that the audit committee of the Wal-Mart Stores board was examining possible violations of the Foreign Corrupt Practices Act and “other alleged crimes or misconduct in connection with foreign subsidiaries, including Wal-Mart de México.” It was the first public disclosure by the company that the internal inquiry could involve additional subsidiaries, though none was named.

The regulatory filing also confirmed that Wal-Mart is the subject of investigations by the Securities and Exchange Commission and the Justice Department. And while Wal-Mart said in December that it did not expect the bribery accusations and their fallout to hurt the company, it backed away from that assertion on Thursday.

“Although the company does not presently believe that these matters will have a material adverse effect on its business, given the inherent uncertainties in such situations, the company can provide no assurance that these matters will not be material to its business in the future,” the filing said.

A Wal-Mart spokesman, David Tovar, declined to comment further on the filing.

The disclosures on Thursday caught some analysts by surprise. Faye Landes, an analyst with Consumer Edge Research, wrote in a note to clients that the new information was “dramatic.”

“They can’t leave any stone unturned,” Ms. Landes said. “Now they have to make sure that everything is squeaky clean.”

The New York Times reported last month that Wal-Mart had found credible evidence that its Mexican subsidiary had paid bribes and that an internal inquiry into the matter had been suppressed at corporate headquarters in Arkansas.

Also on Thursday, two congressmen who are looking into Wal-Mart’s activities in Mexico said they had internal company documents that showed the company’s former general counsel had pushed for an investigation of some transactions in Mexico before she resigned in 2006.

Representatives Elijah E. Cummings and Henry A. Waxman reiterated a request that Wal-Mart brief them on the bribery accusations, and asked that Wal-Mart authorize the former general counsel to speak to them. Mr. Tovar said Wal-Mart had already scheduled an initial briefing with the congressmen’s staffs, and was working to schedule another session.

Egan-Jones Proxy Services, which advises institutional investors, recommended on Thursday that shareholders vote against re-electing Wal-Mart’s chief executive, Michael T. Duke, and a board member, H. Lee Scott Jr., in June because of accusations that they were involved in the bribery case.

In a call with investors, Mr. Duke said, “We are working aggressively to determine what happened, and we will take appropriate action if violations of the law or our policies occurred.” Asked in a call with reporters to give an update on the timeline of the investigation or expectations about June’s shareholder meeting, Mr. Tovar, the Wal-Mart spokesman, declined to comment.

Wal-Mart also warned in Thursday’s filing that its reputation could be affected by the bribery scandal, with inquiries from the media and law enforcement authorities affecting the “perception among certain audiences of its role as a corporate citizen.”

Possible outcomes include enforcement actions that could lead to fines or criminal convictions; judgments against the company from shareholder lawsuits; and costs from the government’s investigations, from its own investigation and from defending itself against the lawsuits, the filing said.

The company “cannot predict at this time the ultimate amount of all such costs.” Further, the inquiry could involve some senior executives, and that could “could impinge on the time they have available to devote to other matters relating to the business.”

David Strasser, an analyst for Janney Capital Markets, said in a note to clients that the market was getting comfortable with the impact of the bribery accusations. He said he believed the investigations would “be more about fines and perhaps personal repercussions, but the broader implications for the Wal-Mart franchise will remain somewhat modest.”

The new disclosures on Thursday came as Wal-Mart reported its quarterly results, which were higher than analysts had expected.

Profit rose 10 percent to $3.74 billion, or $1.09 a share, 5 cents per share more than analysts had expected. Revenue increased 8.6 percent to $112.3 billion.

In the United States, sales at stores open at least a year rose 2.6 percent versus the same quarter last year. That was the best quarterly same-store sales result in three years.

Charles M. Holley Jr., the chief financial officer, said in a call with reporters that while shoppers continued to be on tight budgets, they were responding to the wider array of merchandise and cheaper prices that Wal-Mart had been bringing in.

“We still see what we call the paycheck cycle,” he said, “where the customer has the cash and will spend money early when they get the paycheck, and as the paycheck runs out, it gets a little harder.”

Wal-Mart said its business in the United States was particularly strong in areas like hunting and fishing and in home and outdoor goods.

Apparel, which the company has long struggled with, posted its first positive comparable-store sales figure in six years. Mr. Holley said that the company’s focus on cheap prices had helped, and that women’s workout apparel, jeans and underwear were popular. “We sold a lot of underwear in the first quarter,” he said.

The company’s Sam’s Club warehouse unit posted a 5.3 percent increase in same-store sales, excluding fuel, helped by extra marketing efforts for its grocery business.

Internationally, sales grew 10.9 percent, adjusted for currency fluctuations.

Mr. Holley said that the Mexico investigation had so far not affected plans for store openings in Mexico and its overseas growth expectations.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

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Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Taking Aim at the Foreign Corrupt Practices Act

May 1, 2012

The New York Times on April 30, 2012 released the following:

“BY PETER J. HENNING

The Foreign Corrupt Practices Act has been at the center of a tug of war between business interests and federal authorities.

The United States Chamber of Commerce has led efforts to change the law, in response to ramped up prosecutions by the Justice Department and the Securities and Exchange Commission in the last few years. While the proposed changes are described as a means to “improve” the law, they would also make it more difficult to pursue cases.

But the revelations in The New York Times that Wal-Mart Stores squelched an investigation into bribery at its Mexican subsidiary may impel prosecutors to be even more forceful in applying the law and put legislative efforts to change it on the back burner.

Business leaders have long contended that the law is overly broad and too aggressively enforced, while federal authorities view it as a powerful means to police the overseas conduct of American companies.

The Foreign Corrupt Practices Act was adopted in 1977 in the wake of revelations of bribery of foreign officials by more than 400 United States companies. This was a time when misconduct by the Central Intelligence Agency and the Watergate scandal were still fresh in the public consciousness, so efforts to clean up business and government were paramount.

The law contains two parts: it prohibits bribing a foreign official for the purpose of “obtaining or retaining business,” and it requires that public companies file proper financial statements and maintain a system of internal controls.

The books and records provision is enforced regularly, most recently in the conspiracy prosecution of a former managing director of Morgan Stanley for hiding deals with a Chinese official. The Justice Department and the S.E.C. share authority over enforcement, which means companies have to deal with two sets of investigators whenever a potential violation comes to light.

For the first 30 years or so after its enactment, the antibribery portion of law was used sporadically. Only a handful of cases were brought each year against companies, almost always ending in settlements involving a modest fine, and even fewer involved individuals.

Prosecutors have now made enforcement of the law a priority, and more industries have been caught up in investigations. The Justice Department has filed cases against pharmaceutical manufacturers, like Pfizer, for dealings with state-run health care programs, and is reported to be pursuing an investigation into the dealings of American movie studios in China.

The push for changes in the statute coincided with its expanded enforcement as companies now have to deal with the vagaries of the law once viewed as a mild nuisance at best.

At a hearing before a House subcommittee last year, a former attorney general, Michael B. Mukasey, represented the United States Chamber of Commerce in supporting changes to restrain use of the law because “more expansive interpretations of the statute may ultimately punish corporations whose connection to improper acts is attenuated or, in some cases, nonexistent.”

The revelations about Wal-Mart’s conduct, however, shows the law’s importance as an anticorruption tool for policing large businesses.

Tinkering with the law could send the wrong signal to other countries about the importance of curbing bribery. Support among Congressional leaders for revisions that would make it harder to prosecute companies may dissolve if they could easily be portrayed as being soft on bribery — something that would become fodder for an opponent in an election campaign.

The Justice Department’s increased enforcement of the Foreign Corrupt Practices Act has also included more charges against individuals rather than just companies. But that shift has also led to problems. In one of its most prominent cases, prosecutors dismissed charges against 22 defendants from the “Africa Sting” case in which the government used an undercover informant to entice suppliers into agreeing to pay bribes to receive contracts with an African government, all of which was fictitious.

The charges foundered over issues regarding the conduct of the informant that raised questions about whether individuals were unfairly enticed into the deals. Federal juries could not reach a verdict after two trials of a group of the defendants, and the Justice Department decided to forgo further prosecutions.

As James B. Stewart wrote in a New York Times column last week, there has been a noticeable absence of corporate employees charged with violations even when it appears that the company condoned foreign bribery.

But while companies have been much more amenable to settling investigations rather than challenging charges in court, prosecuting individuals faces a number of hurdles. Corrupt payments are often made by foreign intermediaries acting on behalf of the company, many of whom have no ties to the United States. It does little good to charge someone when there is not a realistic prospect that the person can be brought to the United States.

Pursuing a case against senior executives for turning a blind eye to questionable payments can be quite difficult. The notion that management “had to be aware of what was going on” may well be true in some instances, but that perception alone is not enough to prove any individual corruptly and willfully violated the Foreign Corrupt Practices Act, which is the required legal intent standard for a conviction.

Foreign bribery can takes years to come to the government’s attention, so the five-year statute of limitations can preclude prosecuting those involved in the payments. As I discussed in an earlier piece, the Wal-Mart payments to Mexican officials from 2003 to 2005 probably cannot be pursued against individuals at the company unless something more recent occurred.

Interestingly, in the Dodd-Frank Act, Congress extended the statute of limitations for securities fraud crimes to six years, apparently leaving out violations of the Foreign Corrupt Practices Act. Even that small increase in the time available to pursue a case can help prosecutors in putting together charges. Congress can alter the limitations period for any offense, and the Justice Department may point to Wal-Mart to ask Congress to extend the time frame in which foreign bribery charges can be filed.

The investigation of Wal-Mart has brought the Foreign Corrupt Practices Act to the attention of the public in a way not seen since the 1970s scandals that led to its adoption. Congress may find it politically impossible to adopt changes to the statute that would arguably make it more difficult to pursue cases as long as the allegations of foreign bribery by a leading American company remain in the headlines.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

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————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Weighing the Legal Ramifications of the Wal-Mart Bribery Case

April 24, 2012

The New York Times on April 23, 2012 released the following:

“BY PETER J. HENNING

The United States government puts a premium on corporate cooperation in foreign bribery cases, relying on companies to conduct thorough internal investigations and voluntarily disclose any wrongdoing.

Indications that Wal-Mart Stores may have taken steps to keep an internal investigation from digging deeper into $24 million in questionable payments — and later promoting an executive who may have been implicated in them — may affect how the government decides to proceed against the giant retailer.

Wal-Mart first disclosed in December that it had started “a voluntary internal review of its policies, procedures and internal controls pertaining to its global anticorruption compliance program.” That review was the result of reporting by The New York Times about bribery by Wal-Mart de México to secure permits and approvals to build new stores.

The company’s disclosures did not give any information about where the foreign bribery issues had arisen, only that the focus was on whether “permitting, licensing and inspections were in compliance with the U.S. Foreign Corrupt Practices Act.” Wal-Mart said it had informed the Justice Department and the Securities and Exchange Commission about the internal investigation, and the company issued a statement in response to the Times article that its outside advisers “have and will continue to meet with the D.O.J. and S.E.C. to report on the progress of the investigation.”

Companies caught up in investigations of foreign bribery often seek to exert a measure of control over the flow of information by meeting early and often with government investigators in an effort to establish credibility regarding the scope and integrity of the investigation, usually sharing the results as quickly as possible. If corporate counsel can demonstrate its reliability, then the Justice Department and the S.E.C. are more likely to accept the findings of the internal investigation without conducting an independent review.

Cooperation is also important because it is a significant factor for prosecutors in deciding how to resolve a case. The Justice Department has allowed companies to pay reduced fines and avoid a guilty plea to criminal charges by entering into deferred or nonprosecution agreements because they came forward voluntarily and readily provided information.

While Wal-Mart may be angling for the same type of resolution, it is questionable whether being prodded by The Times’s reporting to start an internal investigation shows that it took affirmative steps to address a problem. The company had dropped its earlier investigation, and likely would have let that sleeping dog lie if not for potential media scrutiny.

The Times article also raises two significant red flags for investigators that may cause them to take a more aggressive approach in the case. First, the Mexican bribery involved senior management at the subsidiary, not just low-level employees operating on their own. One factor cited in the Justice Department guidelines for deciding whether to charge a business organization is the “pervasiveness of wrongdoing within the corporation,” and the most important consideration “is the role and conduct of management.”

Second, Wal-Mart’s own investigators raised questions about $16 million in “contributions” and “donations” to local governments, but there was no further review of those payments. Simply ignoring these types of transfers is sure to raise questions for the government about whether the company can claim it had an effective compliance program back in 2005 when these issue first came to light, another important consideration in determining whether to file charges.

Wal-Mart also pointed out twice in its statement that the payments in Mexico took place more than six years ago. That may be an effort to explain why it may be unable to conduct a complete investigation. Whether the excuse will fly with the Justice Department and the S.E.C. remains to be seen.

The time lag may present a problem if the Justice Department wants to prosecute any individuals for bribery of Mexican officials. The statute of limitations for a violation of the Foreign Corrupt Practices Act is five years. The limitations period can be extended if the government was seeking evidence from a foreign country, but that does not appear to be the case because Wal-Mart only disclosed the issue in late 2011. So charges related to conduct before 2007 may be lost due to the passage of time.

One way the government can try to avoid the statute of limitations is to charge a conspiracy, which only requires that one act in furtherance of the criminal agreement take place within the last five years. If active steps by Wal-Mart executives to cover up payments to foreign officials occurred in 2007 or later, then prosecutors might be able to pursue that charge.

The statute of limitations will not work as much in Wal-Mart’s favor, however, because the company is required to annually file financial statements covering the previous five years. It is likely that questionable payments were not properly reflected on the company’s books and records. So even if no charges can be brought for any foreign bribery, at a minimum it could be charged with violating the accounting provisions of federal securities law for not properly disclosing the payments made by Wal-Mart de México.

Another potential avenue that prosecutors are likely to investigate is obstruction of justice under 18 U.S.C. § 1519, which was added by the Sarbanes-Oxley Act. If there is evidence that anyone at the company covered up or destroyed records “with the intent to impede, obstruct, or influence” a future investigation, that could be grounds for a criminal charge.

One factor working against Wal-Mart is that the Justice Department may be looking for a prominent case to demonstrate the need for vigorous enforcement of the Foreign Corrupt Practices Act as a response to recent criticisms of the law. The Chamber of Commerce, which hired a former attorney general, Michael B. Mukasey, to lobby for changes to the statute, has argued that aggressive application of the law has caused companies to shy away from overseas investments for fear of being scrutinized.

The Times article makes it clear that Wal-Mart appeared to be more concerned with protecting its fast-growing Mexican operation than with thoroughly investigating allegations that corruption helped fuel its success. Prosecutors can make an example of Wal-Mart to show that the Justice Department will not tolerate foreign bribery, even by a leading American company. That would bolster the argument that revising the statute would send the wrong message to the rest of the world.

The payments at issue are comparatively paltry, perhaps totaling less than $50 million, although that number could increase as the internal investigation moves forward. The ultimate cost to Wal-Mart for the legal and accounting fees for the investigation, along with any monetary penalties the Justice Department and the S.E.C. may seek, will probably far exceed the bribes.”

18 U.S.C. § 1519

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


S.E.C. Told to Share Notes in Insider Trading Case

March 28, 2012

The New York Times on March 27, 2012 released the following:

“BY PETER LATTMAN

A federal judge has ordered Securities and Exchange Commission lawyers to turn over their notes to federal prosecutors handling the criminal case against Rajat K. Gupta, a former director of Goldman Sachs.

The ruling was part of a flurry of pretrial orders from Judge Jed S. Rakoff, who is presiding over the case.

Mr. Gupta, who is charged with leaking Goldman’s boardroom secrets to his friend, the convicted hedge fund manager Raj Rajaratnam, is scheduled to go on trial May 21.

Among the more significant orders, Judge Rakoff said federal prosecutors must review the S.E.C.’s notes about 44 interviews of witnesses during its investigation of Mr. Gupta and disclose any exculpatory evidence to the defense. Federal prosecutors in the United States attorney’s office in Manhattan, who jointly conducted the 44 interviews with the S.E.C., argued that they had no obligation to review the S.E.C.’s notes because the two investigations were separate.

Judge Rakoff disagreed with the government’s position.

“That separate government agencies having overlapping jurisdiction will cooperate in the factual investigation of the same alleged misconduct makes perfect sense; but that they can then disclaim such cooperation to avoid their respective discovery obligations makes no sense at all,” Judge Rakoff wrote.

The S.E.C. and the Justice Department have long run parallel investigations, but the line between them can often become blurred. Judge Rakoff noted that there was a constitutional duty for prosecutors to disclose any exculpatory evidence — called Brady material — to the defense, regardless of whether the notes came from the S.E.C.

“To hold that these memoranda were not created as part of a joint factual investigation would make a mockery of the ‘joint investigation’ standard as applied to the defendant’s constitutional right to receive all information the government has available to it that tends to show his innocence,” Judge Rakoff wrote.

In other rulings, Judge Rakoff ordered that Lloyd C. Blankfein, the chief executive of Goldman Sachs, must sit for an additional two hours of depositions to be taken by Mr. Gupta’s lawyers. Mr. Blankfein was deposed for seven hours last month, and is expected to be a witness at Mr. Gupta’s trial.

The dispute over Mr. Blankfein’s testimony arose when, during the February deposition, Mr. Gupta’s lawyer asked Mr. Blankfein whom he had met with to prepare for the deposition. He responded that he had met with both federal prosecutors, S.E.C. lawyers and an F.B.I. agent. When Mr. Gupta’s lawyer asked Mr. Blankfein what the government asked at these meetings, the S.E.C. objected, citing work product protections.

Judge Rakoff ruled that Mr. Blankfein must answer these questions.

“By asking Blankfein what topics he recalls were discussed, what questions he was asked and what documents he was shown, defendants seek to discover how the preparation sessions affected Blankfein’s testimony, and do not demonstrate a mere naked attempt to obtain the S.E.C.’s and the U.S.A.O.’s legal opinions and strategy,” the judge wrote.

Judge Rakoff also issued several rulings that went against Mr. Gupta. He denied his lawyers’ motion to suppress the use of wiretaps at trial and to dismiss three of the counts in the government’s complaint that were claimed to be either vague or duplicative.

On the wiretap issue, Judge Rakoff said: “The simple truth is that, in both this and numerous other cases, insider trading cannot often be detected, let alone successfully prosecuted, without the aid of wiretaps.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


U.S. presents evidence to grand jury in Avon case: report

February 13, 2012

Reuters on February 13, 2012 released the following:

“(Reuters) – Federal prosecutors have presented evidence to a grand jury against U.S. executives of cosmetics company Avon Products (AVP.N), in a case that probes whether those executives broke foreign bribery laws, the Wall Street Journal said.

In 2008, Avon said that it had started an internal investigation into whether it had violated the Foreign Corrupt Practices Act, which bars U.S.-linked companies from paying bribes to officials of foreign governments.

U.S. authorities are studying a 2005 internal audit report by the company that concluded Avon employees in China may have been bribing officials in violation of the Foreign Corrupt Practices Act, the Journal said, citing three people familiar with the matter.

The federal authorities are probing whether current or former executives ignored the audit’s findings or actively took steps to conceal the problems, both potential offences, the newspaper said.

“We’re not aware that a federal grand jury is investigating this,” an Avon spokeswoman told the Journal.

She declined to confirm to the paper whether there had been an audit in 2005 and declined to discuss how executives handled any such audit.

Avon could not immediately be reached for comment by Reuters outside regular U.S. business hours.

In January, Avon’s former CFO Charles Cramb left the company amidst a probe initiated by the U.S. Securities and Exchange Commission.

(Reporting by Sakthi Prasad; Editing by Muralikumar Anantharaman)”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


A Quick Look At How The FBI Turns Insider Traders Into Informants

January 20, 2012
FBI
Wikimedia Commons

Business Insider on January 19, 2012 released the following:

“Yesterday, three people were arrested and seven people were charged in a hedge fund insider trading scandal that prosecutors are calling, “the circle of friends.”

At the press conference U.S. Attorney General Preet Bharara showed an infographic depicting the circle of four guys in New York, Boston, and San Francisco sharing information about Dell, and then passing that knowledge up to their supervisors at hedge funds Diamondback Capital and Level Global.

It was a “tight knit circle of greed,” said Bharara, where these men got an “illegal inside edge over law abiding investors.”

Okay, tight knit. But if it’s so tight knit, what does the FBI do to get inside?

Business Insider spoke to attorney Jeffrey Smith, a partner at DeCotiis, FitzPatrick & Cole. A former assistant U.S. Attorney, Smith is now in private practice specializing in the defense of individuals in cases against the Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

In short, white collar crime.

“The government’s got a good run here,” said Smith. In this case, “they probably have cooperating witnesses, tapes…” all a defense lawyer can do is go through discovery and try to find the holes in the government’s evidence.”

It’s a tough job that becomes a lot tougher if the FBI has flipped someone on the inside. That’s what happened in this case, as two analysts from the hedge funds (Spyridon “Sam” Adondakis and Jesse Tortora), and the man who was passing them information from Dell (Sandeep Goyal) were/are cooperating with authorities.

Smith explained how that might happen.

“A pair of agents might show up at your house really early in the morning or late at night when no one is around,” he said. “They’ll use a combination of threats and inducements… They’ll say there’s overwhelming evidence against you. Overwhelming force is their first technique.”

Basically, the agents will say, we have such and such information on you, but if you’re willing to help us out we can help you. They may also say they have information on a friend of family member’s insider trading activity, though that’s less common.

Smith also said that the fact that prosecutors are revealing the identities of informants means that the government has probably gotten all the useful information they can out of them.

On the other hand that doesn’t mean that all the information connected to this case is out. There could be more informants who remain unknown because they still have information to share. Specifically, in this case, we still don’t know who was passing Goyal information from inside of Dell — that could be nothing, but its an example of a big, important question that remains unanswered here. When reporters asked about that at the press conference, Bharara just said he wasn’t sharing any information beyond what could be found in the complaint.

“There’s every indication that the government has more in the pipeline,” said Smith. “Things have changed a lot. Five or ten years ago it (insider trading) was little prosecuted, sentences were like tax offenses. I don’t think they (insider traders) have illusions about that anymore.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Executives Facing US Accusations Under FCPA May Be Encouraged to Fight Charges

January 13, 2012

Bloomberg Businessweek on January 13, 2012 released the following:

“(Updates with SEC broker fiduciary rule and Hong Kong ‘professional investor’ in Compliance Policy, French stock-ADRs in Compliance Action, Alliance One in Courts, Keneally and Kerr in Interviews and Vaughan and Kim Hak Heon in Comings and Goings/Notable Passings.)

Jan. 13 (Bloomberg) — Executives facing trial in U.S. courts over accusations of bribing foreign officials may be encouraged to fight charges as prosecutors regroup after two courtroom setbacks and await a verdict in their largest overseas corruption probe targeting individuals.

One of two cases hailed by the government as milestones in its enforcement of the Foreign Corrupt Practices Act was dismissed last year by a judge who said the jury verdict convicting two men at an electricity tower company of bribing Mexican officials was tainted by prosecutor misconduct in “a sloppy, incomplete and notably over-zealous investigation.”

In the first prosecution under the FCPA based on a sting operation, a judge declared a mistrial for four of 22 defendants accused of participating in a fake $15 million weapons deal involving Gabon. A separate trial is under way for a second group of defendants.

The 2011 outcomes will make individual defendants in FCPA cases more confident in contesting charges. This is so in particular because they may face long prison terms under the plea deals the Justice Department offers, even as corporations continue to self-report and settle, said Philip Urofsky, a former FCPA prosecutor who now defends cases at Shearman & Sterling LLP.

In a crackdown on overseas bribery that started during the Bush administration, the government settled 57 cases against companies from 2005 through 2011 without trial, reaping $4.1 billion for the U.S. treasury, according to Justice Department data. A push to prosecute more individual defendants during the same period has produced mixed results, with some beating charges outright and others getting less punishment than prosecutors sought.

Laura Sweeney, a spokeswoman for the Justice Department, said the government has had “great success” against individuals since increasing its enforcement actions in 2009.

The 1977 law bars companies or individuals regulated or based in the U.S. from paying bribes to foreign officials to win business. Foreign companies and nationals also can be prosecuted if their corrupt acts were committed in the U.S.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.