When Michael Madigan of Orrick, Herrington & Sutcliffe delivered
a closing statement two weeks ago in the criminal trial of his
client Greg Godsey, he told the federal jury in Washington,
D.C., that the government had "danced with the devil." In 2007,
Madigan said, the Justice Department set up a "little nest out
in Manassas, Virginia," with the express intention of putting
together Foreign Corrupt Practices Act cases. But when the FBI
first tried to use an informant who appeared right after the
Manassas base was established, it couldn't make out any
traditional cases based on his evidence. So according to
Madigan, the Justice Department instead engineered a 2009 sting
involving alleged bribes to the defense minister of Gabon in
exchange for military supply contracts. That operation netted
Justice 22 FCPA defendants and countless headlines touting its
get-tough policy on foreign corruption.
On Monday, two of the Gabon sting defendants -- including
Madigan's client -- were acquitted by the jury. (Jurors said
they were deadlocked on charges against three other defendants,
but U.S. District Judge Richard Leon ordered them to keep
deliberating.) Monday's repudiation of the Justice Department's
case came a month after Leon entered an acquittal for a sixth
defendant in the Gabon sting case, and two weeks after a federal
judge in Texas dismissed an FCPA case against a former employee
of an ABB Group subsidiary, who was accused of bribing a Mexican
official. The Texas judge wouldn't even let the government's
case go to a jury. The four recent acquittals extend a string of setbacks for the Justice Department in FCPA prosecutions,
including a July mistrial in a previous Gabon sting trial
against four different defendants, as well as the December
dismissal of the Department's case against Lindsey Manufacturing
on prosecutorial misconduct grounds.
Lawyers for two of the acquitted Gabon sting defendants told
me Tuesday that those results are no coincidence. "I think [prosecutors] got caught up in the klieg lights," said Madigan
of Orrick. "They were blinded with the idea of getting to the
goal, and they ignored the means." Stephen Bronis of Carlton
Fields, who represented attorney Stephen Giordanella on the FCPA
conspiracy charges Leon tossed earlier this month, said, "I do
think this is somewhat systemic .... Juries and judges are
troubled by this kind of use of federal resources." Both Madigan
and Bronis told me prosecutors may be overreaching to charge
FCPA violations when they don't have sufficient evidence. (Eric
Dubelier of Reed Smith, who represents acquitted Gabon sting
defendant R. Patrick Caldwell, declined comment.)
It's not easy for U.S. officials to track what happens to
alleged bribes when they disappear into the pockets of foreign
officials. That's why, according to FCPA guru (and former
prosecutor) Philip Urofsky of Shearman & Sterling, the statute
requires only a showing of a defendant's intent to make a
corrupt payment to a foreign official. "It's a perennial problem
in FCPA cases," Urofsky said. "Most of the evidence is not
available. You have to take the evidence as far as you can."
Urofsky said, however, that the recent run of defense wins
doesn't mean that the Justice Department is stretched thin or
that the FCPA is flawed. Instead, he said, "it has more to do
with the difficulty of proving corruption," particularly when
defendants are represented by lawyers who challenge every piece
of government evidence.
Nevertheless, Madigan's image of an "FCPA nest" set up
specifically to charge defendants with illicitly bribing foreign
officials is disquieting, to say the least. So are text messages
that emerged at the latest Gabon sting trial, featuring federal
agents joking about who would play them when Hollywood made a
movie about the case (talk about klieg lights!) and coaching
their informant on how to deceive sting targets with cold feet.
Even Urofsky, the former FCPA prosecutor, said the government's
assertion of a global conspiracy -- which depends heavily on the
Gabon defendants' attendance at a government-arranged meeting --
has been a problem in the case.
So far, the Justice Department has not managed to convict a
single Gabon sting defendant who contested its charges. As of
Tuesday afternoon the jury was still deliberating the fate of
Godsey and Caldwell's co-defendants. The next Gabon sting trial,
featuring four more defendants, is scheduled to begin in
February. If those defendants aren't convicted, the DOJ may want
to rethink its Hollywood ending.
I left a request for comment at the Justice Department's
Office of Public Affairs but didn't hear back.
(Reporting by Alison Frankel)
Follow Alison on Twitter: @AlisonFrankel
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