These days, when it comes to enforcement of the Foreign Corrupt Practices Act (FCPA), the buck often stops at an individual executive’s desk, not at the door of the company’s legal department. For those in the prosecutorial crosshairs, personal exposure is uncomfortable and isolating. The US Department of Justice (DOJ), aided by companies looking to mitigate their own exposure, is turning up the heat on individuals. Therefore, each individual subject of an FCPA action needs to focus on building a strong defense to avoid charges or, if necessary, prepare for trial.
While many companies have navigated FCPA investigations, comparatively few individuals have; the consistent targeting of individuals is relatively new. The shift began in 2015, when Deputy Attorney General Sally Yates called for increased individual accountability for civil and criminal misdeeds at business organizations. The DOJ provided companies incentives—including mitigation of corporate prosecution risk—to disclose detailed information regarding suspect employees. Initiatives such as the Pilot Program and the FCPA Corporate Enforcement Policy dangled before businesses the potential for prosecution declinations in return for, inter alia, full cooperation against employees. Many companies have taken advantage of these policies.
The numbers confirm the changed focus: between 2015 and 2019, the DOJ charged 34 individuals with FCPA violations, of whom 26 pled guilty, according to the “Fraud Section 2019 Year in Review.” In a December 2019 speech, Assistant Attorney General Brian Benczkowski noted the FCPA Unit had announced “more charges against individuals than in any other year in history” and “more guilty pleas than ever before.”
Individuals are not feeling the heat just from the DOJ, as the US Securities and Exchange Commission has begun to target individuals in FCPA investigations. Further, foreign government officials are no longer off-limits as the DOJ is employing statutes with broader reach—such as money laundering and mail fraud—to pursue charges against alleged bribe takers. Moreover, increased coordination between US and foreign authorities has created individual exposure in jurisdictions around the world. It is incumbent on those working in this changed environment to prepare coordinated defenses capable of addressing criminal and regulatory exposure in the US and around the globe.
Investigators can help mount an effective defense whether engaged by defense counsel pre-indictment or pre-trial. Their legwork can develop evidence to undercut the credibility of potential government witnesses. Such impeachment material might include documents showing the witness’s involvement in undisclosed misconduct or testimony contradicting the witness’s stated motivation. In one matter Nardello & Co. handled, the government’s main witness testified that his primary motive for cooperating was his wife’s purported ill health. Our investigation identified her membership at a tennis club where she was the reigning club doubles champion. Moreover, our investigator followed her to work where he discovered she had to walk up five flights of stairs to get to her office. Suffice it to say, the withering cross-examination successfully impeached the cooperator’s credibility. In another matter, Nardello & Co. identified bankruptcy court filings in which several government witnesses had perjured themselves: in connection with personal bankruptcy proceedings, they lied under oath about their assets.
Further, investigators can test the support for the allegations and identify facts that differ materially from the government’s theory of the case. In one such matter, where allegations were spelled out in an international press report, Nardello & Co. researchers reverse-engineered the article, conclusively establishing that the purported “facts” upon which the article relied were wrong.
Investigators can also play a crucial role in developing exculpatory evidence. For example, when prosecutors claimed the defendants had to have known that they were operating in a wholly corrupt jurisdiction where businesses would likely succeed only through bribery of government officials, Nardello & Co. researchers showed that the US State Department had actively encouraged investment in that jurisdiction at the time.
Investigators can adduce facts to undercut expert testimony. In a recent trial, Nardello & Co. investigators found evidence that the government expert’s former business partner was the personal lawyer for, and business partner of, an infamous fugitive wanted for tax evasion. This put a significant dent into the expert’s credibility.
Finally, investigators may be able to help counsel illuminate the transactions underlying bribery allegations, explaining practices such as government contracting or permitting processes.
The DOJ devotes extensive resources to its FCPA prosecutions. Accordingly, it behooves each defendant to field a team in which able defense counsel assisted by diligent investigators fight back using every legally-recognized method.