Last Friday, the Department of Justice (DOJ) secured another trial court conviction in a Foreign Corrupt Practices Act (FCPA) prosecution involving an individual. Following on the heels of the Hoskins guilty verdict, it certainly answers the naysayers who claim the DOJ cannot go to trial and get convictions in FCPA prosecutions involving individuals. According to the DOJ Press Release, “After a three-week trial, Mark Lambert, 56, of Mount Airy, Maryland, was found guilty of four counts of violating the FCPA, two counts of wire fraud, and one count of conspiracy to violate the FCPA and commit wire fraud.”
The Lambert trial was another part of a long-running and multicompany bribery scheme involving “Vadim Mikerin, a Russian official at JSC Techsnabexport (TENEX), a subsidiary of Russia’s State Atomic Energy Corporation, and the sole supplier and exporter of Russian Federation uranium and uranium enrichment services to nuclear power companies worldwide, in order to secure contracts with TENEX.” The Russian state-owned enterprise TENEX was indirectly owned and controlled by, and performed functions of, the government of the Russian Federation, and thus was an “agency” and “instrumentality” of a foreign government for FCPA purposes.
The DOJ previously had a criminal prosecution against Mikerin, who, while residing in the US, was involved with a bribery and corruption scheme to supply Russian uranium to the US, where it was used in nuclear-power plants to generate electricity. Mikerin was not charged with substantive FCPA violations but, according to the Plea Agreement, “Conspiracy to Commit Money Laundering, in violation of 18 U.S.C. § 371.” The bribery scheme was facilitated by payments through shell corporations.
According to the Wall Street Journal (WSJ), the bribery scheme is reported to have begun in 2010 and continued at least through 2014. The article identifies company executive “Barry Keller, a Bremen native who has spent more than three decades at Westerman, working his way up from the shop floor to senior management” as the person involved in paying the bribes. The bribery scheme itself was rather pedestrian, as it involved paying a Russian middleman who “arranged for the bribe payments to be channeled through a maze of secret accounts in Cyprus, Latvia and Switzerland, where they were collected by higher-ranking officials at Rosatom, Tenex’s parent.” The bribes were funded via “5% of a Westerman contract and would be paid through a consulting invoice”.
One defendant who has previously pled guilty was Daren Condrey. His involvement was as the owner and President of a company called Transport Logistics International, Inc. (TLI), which was identified in the Information as “Transportation Company A”. Condrey, in conspiracy with others is alleged to have, in person and through electronic means, paid bribes to “obtain and retain business with TENEX.” He did this by providing false quotations and invoices that hid “the cost of the bribe payments” within his company’s pricing. These payments were made to a series of banks outside the US, to accounts located in Cyprus, Latvia and Switzerland. Some bribe payments were based on the percentage of money a third-party company would receive for a contract to ship the uranium.
The evidence adduced at Lambert’s trial demonstrated that over the course of years, Lambert conspired with others at TLI to make the corrupt and fraudulent bribery and kickback payments to Mikerin through offshore bank accounts associated with shell companies, at Mikerin’s direction. In order to conceal the bribe payments, Lambert and his co-conspirators caused fake invoices to be prepared, purportedly from TENEX to TLI, that described services that were never provided, and then Lambert and others caused TLI to wire the corrupt payments for those purported services to shell companies in Latvia, Cyprus and Switzerland. It was through these fake invoices that the monies were generated to fund the bribes. In other words, TENEX overpaid on the contracts and this funded the pot of money to pay bribes to Mikerin.
Finally, “other evidence further showed that Lambert and other members of the conspiracy used code words like “lucky figures,” “LF,” “lucky numbers” and “cake” to describe the payments in emails to the Russian official via an email account under the alias name “Marvin Jodel.” The reason this is interesting is that it was specifically presented in the Mikerin Criminal Information so was well known to all parties before the trial. When you have the bribe receiver providing information of the code words used by the bribe payor, that can be very powerful evidence for a jury. Moreover, it will go a very long way to upholding the jury verdict, if any appeal is filed.
Coming on the heels of the Hoskins case and with the Boustani case having gone to the jury, it has certainly been a very busy November for the DOJ Criminal Division, Fraud Section and FCPA Unit. With a second conviction this month, it sends quite a strong signal about the DOJ and the focus on individuals since at least the Yates Memo in September 2015. All the work then and since that time may have all come together this month.
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© Thomas R. Fox, 2019