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FCPA Defendants Want Less Paper, More Facts

Four former executives of Control Components Inc. indicted under the Foreign Corrupt Practices Act in early April have accused the Justice Department of playing "a game of hide and seek" with its evidence against them. Stuart Carson, his wife Hong "Rose" Carson, Paul Cosgrove and David Edmonds said in a court filing this week that the government has identified only 30 of the 236 illegal payments alleged in the indictment -- not enough for them to plan their defense. That's unfair and unconstitutional, they said.

The former executives were charged with two others in a nine-year conspiracy to win contracts by bribing officials at foreign state-owned companies (see our post here). The indictment alleged bribery "in over thirty countries" with "approximately 236 payments" totaling "approximately $6.85 million" to secure a series of projects that "resulted in net profits to [their employer, CCI] of approximately $46.5 million." In addition to cash, the government said the bribes consisted of "overseas holidays," "extravagant vacations," "lavish sales events," and "expensive gifts."

Prosecutors have turned over to the defendants 33,000 pages of discovery (with more on the way), including 5,000 emails. That sounds like a lot. But Carson and the others said it hardly helps them. For example, they said, the 5,000 pages of emails refer to hundreds of payments to third parties ? many more than the 236 payments mentioned in the indictment. If the government's production is a pile of needles, they said, then the relevant ones are apparently mixed in with thousands of look-a-like -- but wholly irrelevant -- needles. That means the defendants must still try to "divine which payments or transactions the government contends are illegal."

During the nine years of the alleged conspiracy, the defendants said, CCI generated over a billion dollars in revenue through transactions involving thousands of different customers and dozens of commissioned sales agents across the globe. So unless the government provides a "simple and straightforward bill of particulars," the defendants will be forced "to travel the world investigating thousands of transactions that occurred over a decade, any one of which might -- or might not -- be at issue in this case. There simply is no legitimate justification for such a result."

What can the government do? According to the defendants, prosecutors have almost certainly prepared a spreadsheet or other summary identifying the payments used to calculate the dollar amounts referred to in the indictment. While it would only "take seconds for the government to print out this summary," the court filing said, the defendants might "never be able to recreate the same list of transactions, no matter how much time and energy they invest in pretrial preparations."

The government, for its part, said it isn't obligated to spoon feed the defendants an advance copy of its case-in-chief or freeze its proof long before trial, preventing further investigation and pretrial preparations.

Stuart Carson, his wife Rose and the others described their predicament this way:

In a case where the government has alleged that the Defendants are facing what are ? for all practical purposes ? life sentences if they are convicted, the Court should not permit the warped outcome suggested by the prosecution, especially where the government is so clearly in possession of the requested particulars and will bear no burden in sharing the information with the Defendants.

The U.S. district court will decide who's right. There'll be a hearing on May 18. The trial itself is scheduled to start on June 2, 2009 -- a date that's sure to slip.

Download a copy of the defendants' May 11, 2009 reply in support of defendants' joint motion for bill of particulars here.
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Full post as published by The FCPA Blog on May 13, 2009 (boomark / email).