Four security industry executives knew they were joining an illegal business deal by agreeing to make payments to a Gabonese official, a prosecutor said at the start of the biggest prosecution of individuals for bribery of foreign officials.
“This was a corrupt pay-to-play business deal and they all jumped into it,” Assistant U.S. Attorney Jonathan Haray said today in opening statements in U.S. District Court in Washington.
The four executives are part of a 22-defendant kickback conspiracy case resulting from a government sting operation and a fake $15 million weapons deal.
Prosecutors allege the defendants sought to provide guns, grenades and uniforms for the presidential guard of Gabon in violation of the Foreign Corrupt Practices Act and laws against money laundering.
The defendants -- John Wier III, Andrew Bigelow, Lee Tolleson and Pankesh Patel -- have denied any wrongdoing. Lawyers for the men accused the government of engineering the conspiracy and breaking FBI rules about handling informants.
“The FBI’s zeal to make arrests in this case compromised this investigation,” said Eric Bruce, a lawyer for Patel.
The charges stem from a three-year investigation involving an informant who pleaded guilty in an earlier bribery case, recorded telephone calls and videotaped meetings with Federal Bureau of Investigation agents posing as representatives of Gabon, sub-Saharan Africa’s fifth-biggest oil producer.
The government said the defendants agreed to pay $3 million in kickbacks for the business, half of which they were told would be paid to the African nation’s defense minister.
Also arrested in what the government said was the biggest prosecution for foreign bribery by number of individuals were Amaro Goncalves, a former sales executive for Smith & Wesson Holding Corp. (SWHC), based in Springfield, Massachusetts, and R. Patrick Caldwell, a former U.S. Secret Service official who was chief executive officer of Protective Products of America Inc., based in Sunrise, Florida. The two men pleaded not guilty.
The FCPA prosecution has been nicknamed the “Shot Show case” because the FBI arrested 21 of the defendants while they were attending the annual Shooting, Hunting, Outdoor Trade Show and Conference in Las Vegas in January 2010.
They were charged in a 44-count indictment of FCPA conspiracy, money laundering conspiracy and violating the FCPA.
The FCPA conspiracy and bribery charges carry maximum five-year prison sentences. The maximum sentence for money laundering conspiracy is 20 years in prison.
Three of the defendants pleaded guilty and agreed to cooperate. U.S. District Judge Richard Leon has grouped the remaining 19 defendants into four trials.
The government’s case was put together through Richard Bistrong, a former executive from Armor Holdings Inc. He pleaded guilty last year to bribing officials of the United Nations and the Netherlands to obtain contracts for body armor and pepper spray, according to court papers.
BAE Systems Plc (BA/), Europe’s largest arms company, bought Armor Holdings in 2007 for $4.53 billion. Bistrong, who said his conspiracy took place from 2001 to 2006, began cooperating with prosecutors in 2007, according to court records.
Bistrong identified possible targets for the government, according to court papers. Working with the FBI, he recorded telephone and in-person meetings with the defendants. He also introduced them to Pascal Latour, an FBI agent posing as a representative for Gabon’s defense minister.
Defense lawyers said the lead FBI agent shared cigars, gifts, and meals with Bistrong, compromising the government’s investigation.
“Richard Bistrong was such a scoundrel that they want to pretend he never existed,” Bruce told the jury, adding that it is unlikely the government will use Bistrong as trial witness.
The government did not say today whether it will call Bistrong to the witness stand.
Patel, 45, of the U.K., is managing director of Quartermaster’s Ltd., a company that sells military and law-enforcement uniforms, according to court papers. Bigelow, 42, of University Park, Florida, was the managing partner and director of government programs for Heavy Metal Armory, a Sarasota, Florida, company that sells machine guns, grenade launchers and other firearms.
Tolleson, 27, of Mountain Home, Arkansas, was director of acquisitions and logistics for ALS Technologies, a company that sells law-enforcement and military equipment. Wier, 48, sold tactical and ballistic equipment through his company in St. Petersburg, Florida, according to court papers.
Joseph Passanise, a lawyer for Tolleson, described his client as a home-schooled man from a small town in Arkansas who was working for a business owned by the family of Daniel Alvirez, who earlier pleaded guilty in the case.
“The government says he’s some international arms dealer and a partner,” said Passanise, referring to Tolleson. “He’s an employee.”
The case is U.S. v. Goncalves, 09-cr-00335, U.S. District Court, District of Columbia (Washington).
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