Note: This story has been changed since first published to reflect additional instances where the government has prevailed in FCPA cases at trial and by securing plea bargains.
A third defendant has pleaded guilty in a Foreign Corrupt Practices Act case in California, handing federal prosecutors its latest victory ahead of next month’s trial.
Paul Cosgrove, former executive vice president for worldwide sales at Control Components Inc., pleaded to one count of bribing a foreign official in China in violation of the Foreign Corrupt Practices Act. He entered his plea the third in less than two months in the case during a hearing on May 29.
Cosgrove, who could face up to 15 months in federal prison, is scheduled to be sentenced on Aug. 27.
His lawyer, Kenneth Miller, a partner at Bienert, Miller & Katzman in San Clemente, Calif., declined to comment and referred calls to his firm partner, Tom Bienert. He did not respond to a request for comment.
Federal prosecutors have faced some high-profile failures in terns of winning and sustaining convictions in FCPA cases, but have had more success at reaching plea deals.
For example, on May 30, the U.S. Court of Appeals for the Ninth Circuit granted the government’s request to dismiss its appeal in an FCPA case against Lindsey Manufacturing Co. and two of its executives. The government secured convictions at trial, but U.S. District Judge Howard Matz threw them out on Dec. 1, 2011. Among other problems, he cited false statements by an FBI agent to a grand jury and the government’s submission of false information in affidavits for search-and-seizure warrants.
In a May 25 filing, the government cited no reasons for dropping its appeal. Prosecutors had been scheduled to file their opening brief on June 1.
In February, the U.S. attorney’s office in Washington dropped a large FCPA case that had been based on a sting that led to charges against 22 executives accused of participating in a $15 million conspiracy to bribe the prime minister of Gabon. The case twice produced mistrials.
Justice Department officials now are preparing new guidelines covering the handling of FCPA cases, and Congress and business groups have called for changes in the law.
Still, the government has had some success at trial. On May 21, a former director of a Haitian state-owned telecommunications company was sentenced to nine years in prison following his conviction in an alleged scheme by two Miami telecommunications companies to pay him bribes. He was convicted of money laundering, not FCPA counts. But on Oct. 25, the former president of one of the Miami companies was sentenced to 15 years for wire fraud and conspiracy to violate the FCPA the longest sentence ever imposed in an FCPA case. Four co-defendants reached plea deals.
Plea deals have been more common in FCPA cases. On Feb. 23, Albert “Jack” Stanley, former chairman and chief executive officer of Kellog, Brown & Root Inc., was sentenced to 30 months in prison after pleading guilty in 2008 to conspiring to violate the FCPA and mail and wire fraud for bribing Nigerian government officials.
In the Control Components case, the 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 win 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, former chief executive officer Stuart Carson and his wife, Hong “Rose” Carson, 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. Cosgrove’s plea leaves a lone defendant in the case David Edmonds, former vice president for worldwide customer service, who is scheduled to go to trial on June 26.
Edmonds’ attorney, David Wiechert of the Law Offices of David W. Wiechert in San Clemente, Calif., declined to comment.
The defense had lost recent rulings in the case. On May 22, Selna rejected motions to dismiss and to suppress statements that the defendants made to the company’s outside counsel at Steptoe & Johnson LLP. At that time, the motions were being brought by Edmonds and Cosgrove.
Regarding the motion to suppress, Selna rejected the theory that Steptoe & Johnson was a “state actor” and that the defendants agreed to participate in an internal probe being handled by Steptoe only because they feared losing their jobs. The motion relied heavily on e-mails between Steptoe partner Patrick Norton and Mark Mendelsohn, who was deputy chief of the fraud section of the Justice Department’s criminal division, in which they discussed Steptoe’s interviews with former executives.
On May 23, Selna rejected a motion in limine brought by Edmonds and Cosgrove to exclude certain government witnesses to whom they allegedly had been denied access. He issued tentative orders on May 25 on three motions in limine, among them a move by Edmonds and Cosgrove to exclude evidence relating to entertainment or travel for customers that could be construed as bribes. Selna noted that “there is a difference between a good meal at a top local restaurant and flying a customer half way around the world to attend Wimbledon or Disneyland which a lay juror should be able to easily perceive.”
He rejected a defense move to exclude evidence that allegedly was not in context and e-mails that purportedly lacked details. He also granted several of the government’s motions.
Contact Amanda Bronstad at [email protected].
