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March 24, 2014

The FCPA Probe that Crumbled

Federal prosecutors are using stings, wiretaps, and undercover cooperators in FCPA investigations despite a recent operation that fell apart in what a judge called a “sad chapter” for criminal enforcement.

Richard Bistrong is a former executive who spent time in jail after pleading guilty to FCPA violations. He also went undercover for the government, the Wall Street Journal writes:

Prosecutors came knocking on Mr. Bistrong’s door in the spring of 2007, looking for somebody to work undercover. At the time, the government was ramping up FCPA enforcement, which was historically confined largely to corporate settlements and was rarely used in prosecutions of individuals.

Bistrong arranged a meeting for other executives with “officials” from Gabon – actually undercover FBI agents – offering a $15 million contract if they paid a 20% “commission” fee to the Gabonese defense minister. The businesspeople were eventually arrested.

At the time, the Department of Justice announced the sting was “the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations.”

After two trials, however, the government dropped the case. The judge, according to his transcript, had to “chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom,” adding that it was “the end of a long and sad chapter in the annals of white collar criminal enforcement.”

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