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On May 9, pursuant to an indictment filed in federal court in Miami without announcement by DOJ, two Ecuadorian citizens were charged with conspiracy to violate FCPA, conspiracy to commit money laundering, and nine counts of money laundering. The indictment was first reported on July 1 by the Financial Times.
The charges against Armengol Alfonso Cevallos Diaz and Jose Melquiades Cisneros Alarcon, who both live in Florida, relate to the ongoing investigation and prosecution of bribery and money laundering at Ecuador’s state oil company, PetroEcuador. To date, the investigation has yielded four guilty pleas. One additional defendant has pleaded not guilty; his case is pending.
See prior FCPA Scorecard coverage here.
On April 3, the DOJ announced that a Micronesian government official, Master Halbert, pleaded guilty in the District of Hawaii to a money laundering conspiracy “involving bribes made to corruptly secure engineering and project management contracts from the government of the Federated States of Micronesia (FSM), in violation of the” FCPA. Halbert was arrested in February after Frank James Lyon, a Hawaiian executive, pleaded guilty to a related FCPA conspiracy charge the prior month (see previous FCPA Scorecard coverage here).
According to the DOJ, “Halbert was a government official in the FSM Department of Transportation, Communications and Infrastructure who administered FSM’s aviation programs, including the management of its airports.” Halbert admitted that, between 2006 and 2016, Lyon’s engineering and consulting company “paid bribes to FSM officials, including Halbert, to obtain and retain contracts with the FSM government valued at nearly $8 million.” Halbert’s sentencing is scheduled for July 29.
According to the DOJ, on March 25 a Hong Kong executive, Chi Ping Patrick Ho, was sentenced in the SDNY to a 36-month prison sentence. Ho headed up CEFC China Energy Company Limited and was sentenced “for his role in a multi-year, multimillion-dollar scheme to bribe top officials of Chad and Uganda in exchange for business advantages.”
Ho was convicted of money laundering, violating the FCPA, and conspiracy after a week-long trial in December 2018. The DOJ alleged that starting in the fall of 2014, Ho used his US-based NGO to cover up a scheme in which Ho offered $2 million in cash to Idriss Déby, the President of Chad, concealed in gift boxes, in exchange for CEFC receiving oil rights from the government; the President rejected the bribe. In Uganda, the DOJ alleged that Ho gave $1,000,000 in cash payments to Sam Kutsea, the Foreign Minister of Uganda, and Yoweri Museveni, the President of Uganda.
In an indictment unsealed on February 26, the DOJ charged a former sales representative and the president of a U.S.-based company with conspiracy to commit bribery, wire fraud, and money laundering, and substantive wire fraud, for their alleged roles in “a scheme to corruptly secure business advantages, including contracts and payment on past due invoices, from Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA).” The indictment alleges that from approximately 2009 to 2013, the sales representative, Rafael Enrique Pinto Franceschi, and the president of the company, Franz Herman Muller Huber, conspired to bribe three PDVSA officials in exchange for providing advantages to the unnamed company, including through the creation of fictitious invoices from Panamanian shell companies.
According to the indictment, in exchange for the bribes the PDVSA officials allegedly assisted the company in obtaining additional PDVSA contracts, inside information, and payment on past due invoices. The defendants are also alleged to have received kickbacks in connection with the scheme. In total, Pinto is alleged to have received over $985,000 and Muller over $258,000 in kickback payments. Two of the three officials that the defendants are accused of bribing have pleaded guilty in connection with the case and are pending sentencing.
Micronesian official charged with money laundering conspiracy after guilty plea to bribery by Hawaiian executive
On February 11, the Department of Justice (DOJ) unsealed conspiracy to commit money laundering charges against a Micronesian government official alleged to have taken bribes to secure engineering and project management contracts from the government of the Federated States of Micronesia (FSM). The charges follow the recent guilty plea by Frank James Lyon, a Hawaiian executive, to a charge of conspiracy to bribe the Micronesian official in violation of the FCPA.
According to the DOJ, Master Halbert was a government official in the FSM Department of Transportation, Communications and Infrastructure who administered FSM’s aviation programs. Between 2006 and 2016, Lyon’s Hawaii-based engineering and consulting company allegedly paid around $440,000 in bribes in the form of cash, vehicles, and entertainment to FSM officials, including Halbert, to obtain and retain contracts with the FSM government valued at nearly $8 million. The complaint unsealed on Monday contains specific examples of requests by Halbert to Lyon for cash gifts and a 2014 Chevy Silverado. According to Lyon’s guilty plea, he fulfilled Halbert’s requests and sent wire transfers and the automobile internationally for Halbert’s personal use.
On February 6, the U.K. SFO announced that a former sales executive, David Lufkin, of an oil-services company, Petrofac PLC, had pleaded guilty in the U.K. to 11 counts of bribery regarding payments made in exchange for winning oil-services contracts in Iraq and Saudi Arabia. Lufkin – a British citizen and the former global head of sales for a subsidiary of Petrofac – pleaded guilty to participating in payments of more than $6 million to agents to win contracts worth more than $4 billion in Iraq and Saudi Arabia. The SFO’s investigation of Petrofac regarding suspected bribery and money laundering, which was announced in May 2017, is ongoing, but no other officers or employees are currently charged.
On January 28, DOJ announced charges against the former chief executive and a former senior vice president of a Barbados-based insurance company, Insurance Corporation of Barbados Limited (ICBL). The indictment alleges that the ICBL executives, Ingrid Innes and Alex Tasker, participated in a scheme to launder approximately $36,000 in bribes to the then-Minister of Industry of Barbados in exchange for his assistance in securing government contracts for ICBL. According to the indictment, the bribes were laundered through a United States bank account in the name of a dental company located in New York. The former Minister of Industry, Donville Inniss, was arrested in August 2018 and the indictment against him referenced, but did not name, his alleged co-conspirators. The superseding indictment against the three co-defendants and another still unnamed former insurance executive was unsealed on January 18, 2019. Prior Scorecard coverage of the arrest and indictment of the former Minister of Industry can be found here.
ICBL voluntarily self-disclosed the case to DOJ and received a declination letter from DOJ for its cooperation pursuant to the FCPA Corporate Enforcement Policy. The declination letter required ICBL to disgorge $93,940.19 in profits received through the conduct at issue. The declination was based, in part, on ICBL’s termination of all executives and employees involved in the alleged misconduct and in helping DOJ identify the culpable individuals. Prior Scorecard coverage of the declination letter can be found here.
On January 8, the Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Venezuelan individuals and companies, including billionaire news network Globovision owner Raul Gorrin Belisario and former Venezuelan National Treasurer Claudia Patricia Diaz Guillen, for their participation in a bribery scheme involving bribes to members of the Venezuelan government. According to the Treasury Department, OFAC designated or blocked seven individuals, including Diaz and Gorrin, and 23 entities, including Globovision, pursuant to Executive Order 13850, for their roles in bribing the Venezuelan Office of the National Treasury in exchange for the right to conduct illicit foreign currency exchanges in Venezuela.
As a result of the designation, all property and interests in property of the designated individuals and entities “subject to or transiting U.S. jurisdiction are blocked,” and any U.S. transactions with them are prohibited. However, two Globovision companies owned by Gorrin and his business partner will be permitted to continue to conduct U.S. business for a one-year period. This period is intended to allow the Venezuelan-based Globovision news network to continue operating while Gorrin and his business partner divest their holdings in the company.
As FCPA Scorecard previously reported, Gorrin was indicted under seal in August for conspiracy to violate the FCPA, conspiracy to commit money laundering, and nine counts of money laundering.
On December 17 and 19, press reports indicate Malaysian prosecutors filed criminal charges against a New York-based financial institution and numerous individuals, including former executives of the financial institution, in connection with their alleged roles in a multi-billion bribery and money laundering scheme involving Malaysia sovereign wealth fund 1Malaysia Development Berhad (1MDB).
Malaysian prosecutors charged the financial institution with making false and misleading statements when raising money for 1MDB. Among individuals, Tim Leissner, a former participating managing director of the financial institution, and Ng Chong Hwa (also known as Roger Ng), a former managing director, also were charged. These charges follow the U.S. government’s investigation and charges related to the same 1MDB scheme.
As detailed in prior FCPA Scorecard coverage, Leissner pleaded guilty in November to Conspiracy to Violate the FCPA and Conspiracy to Commit Money Laundering and agreed to forfeit $43.7 million. The DOJ charged NG with similar offenses and, according to press reports, is fighting extradition to the United States.
According to press reports, in response to the filing of the criminal charges in Malaysia, the financial institution stated: “Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest. These charges do not affect our ability to conduct our current business globally.”
The DOJ has not charged or reached a resolution with the financial institution, which previously announced that it was cooperating with the DOJ’s and all regulators’ investigations. The announcement of the Malaysian charges suggests that the U.S. DOJ and Malaysian prosecutors may not be coordinating efforts.
On December 10, a former procurement officer of Petroleos de Venezuela S.A. (PDVSA), Venezuela’s state-owned and state-controlled energy company, pleaded guilty to one count of obstructing an investigation into bribes paid by the owner of U.S.-based companies to Venezuelan government officials in exchange for securing additional business with PDVSA and payment priority on outstanding issues. Alfonso Eliezer Gravina Munoz (Gravina), who previously worked for PDVSA in Houston, Texas, pleaded guilty to one count of conspiracy to obstruct an official proceeding.
The charge stems from a guilty plea Gravina entered on December 10, 2015, to one count of conspiracy to launder money and one count of making false statements on his federal income tax return. Under the terms of a plea agreement in that case, Gravina agreed to cooperate with the investigation by being interviewed by the United States, and to providing “truthful, complete and accurate information” to government agents and attorneys. In the latest plea, though, Gravina admitted that after his earlier plea, he concealed facts about bribes paid to PDVSA by a target of the investigation, referred to as Co-Conspirator 1 in the indictment. Additionally, Gravina informed Co-Conspirator 1 that U.S. government authorities were investigating Co-Conspirator 1, and provided Co-Conspirator 1 with information about the investigation, including the topics discussed in Gravina’s meetings with the government. Consequently, Co-Conspirator 1 destroyed evidence and attempted to flee the country in July 2018. Gravina is scheduled to be sentenced on Feb. 19, 2019.
- Sherry-Maria Safchuk to speak on the "California Consumer Privacy Act (CCPA) Workshop" panel at the California Mortgage Banker's 2019 Legal Issues & Regulatory Compliance Conference
- Jon David D. Langlois to discuss "Legal and operational considerations" at the Mortgage Bankers Association's Whole Loan Trading Workshop
- Daniel P. Stipano to discuss “Connecting the dots on your CDD program” at the ABA/ABA Financial Crimes Enforcement Conference
- Daniel P. Stipano to discuss “Beneficial Ownership: You have questions – We have quick answers” at the ABA/ABA Financial Crimes Enforcement Conference
- Daniel P. Stipano to discuss "Risk management in enforcement actions: Managing risk or micromanaging it" at an American Bar Association webinar
- Kari K. Hall and Christopher M. Walczyszyn to speak on the "Understanding updates to Regulation CC to ensure effective check processing" at a National Association of Federal Credit Unions webinar