Note: Later on May 14, U.S. District Judge James Selna finalized his tentative orders rejecting the motions to dismiss the case and to suppress statements that the defendants, both former executives of Control Components Inc., made to the company’s outside counsel at Steptoe & Johnson LLP.
A federal judge has tentatively rejected assertions by defendants in a Foreign Corrupt Practices Act case that their due process rights had been violated, warranting dismissal of the charges against them.
U.S. District Judge James Selna, in dual tentative orders on May 14, rejected motions to dismiss the case and to suppress statements that the defendants, both former executives of Control Components Inc., made to the company’s outside counsel at Steptoe & Johnson LLP.
A hearing regarding both motions was scheduled for the afternoon of May 14.
In refusing to dismiss the case, Selna set the stage for trial on June 26 against David Edmonds, former vice president for worldwide customer service, and Paul Cosgrove, who was executive vice president for worldwide sales.
Edmonds’ attorney, David Wiechert of the Law Offices of David W. Wiechert in San Clemente, Calif., declined to comment. Calls to Department of Justice spokeswoman Laura Sweeney and Kenneth Miller, a partner at Bienert, Miller & Katzman in San Clemente, Calif., were not returned.
Control Components, or CCI, supplies valves to the nuclear, oil and gas and power-generation industries. The federal government charged Edmonds, Cosgrove and four additional former executives in 2009 with paying $4.9 million in bribes and providing lavish vacations to officials in China, South Korea, Malaysia, the United Arab Emirates and elsewhere to secure contracts in violation of the FCPA and the Travel Act. One executive struck a deal with the government, while another is a fugitive in South Korea.
On April 16, Stuart Carson, the former chief executive officer of CCI, and his wife, Hong “Rose” Carson, who was the company’s director of sales for China and Taiwan, pleaded guilty to one count each of bribing a foreign official in violation of the FCPA.
In their motion to dismiss, Edmonds and Cosgrove argued that their due process rights were being violated in various ways, including that federal prosecutors failed to turn over thousands of relevant documents and company managers told employees not to talk to defense attorneys.
Selna rejected those arguments in his tentative order.
“When the declarations of Defendants’ attorneys and investigators are read, even cursorily, they do not show misconduct,” he wrote. “There has been no systemic or systematic denial of access to evidence enabling the Defendants to present a complete defense.”
As for the employees who were told not to talk to defense attorneys, Selna found that to be the case for only one of 72 individuals contacted. More importantly, there was no evidence that the federal government was behind that action, he said.
Regarding the motion to suppress, Selna tentatively rejected the theory that Steptoe & Johnson, whose lawyers conducted an internal investigation into corrupt payments at CCI, was a “state actor” and that the defendants agreed to participate only because they feared losing their jobs. He relied heavily on e-mails between Steptoe partner Patrick Norton and Mark Mendelsohn, who was deputy chief of the fraud section of the DOJ’s criminal division, in which they discussed Steptoe’s interviews with former CCI executives. Mendelsohn is now a partner at Paul, Weiss, Rifkind, Wharton & Garrison in Washington.
CCI pleaded guilty in 2009 to three counts of conspiracy to violate the FCPA and the Travel Act and two violations of the FCPA, paid an $18.2 million criminal fine and was placed on probation for three years. The company admitted that from 2003 to 2007 it made corrupt payments in more than 30 countries that resulted in $46.5 million in profits.
Although Selna previously ruled that Steptoe must turn over to defense attorneys all e-mails and other communications between its lawyers and federal prosecutors, he concluded in his tentative order that the e-mails showed no evidence that the government had any input in determining who would be interviewed or what they would be asked.
“The facts here do not establish more than a unilateral determination on the part of CCI and its parent to cooperate with the Government,” he wrote. “Surely, it was in the CCI’s interest and a legitimate activity to investigate potential criminal conduct in its business operations. The Government had no involvement with the Defendants’ interviews, and it cannot be said that Steptoe’s actions were so intertwined with the Government that those interviews may be ‘fairly treated’ as the conduct of the Government.”
Contact Amanda Bronstad at [email protected].
