FBI arrest S&W Exec and 20 others at SHOT Show!!!!!
An FBI agent posed as a representative of an Africa nation. An S&W executive (and others) attempted to bribe the government official!
WASHINGTON, Jan 19 (Reuters) - An executive of Smith & Wesson (SWHC.O) and 21 others have been charged with violating U.S. bribery laws after an undercover sting in which federal agents posed as arms-buying representatives of an African defense minister.
The defendants, including a senior Smith & Wesson sales official Amaro Goncalves, were accused of violating the Foreign Corrupt Practices Act, or FCPA, and conspiracy to commit money laundering tied to the sale of guns, body armor and other law enforcement equipment.
[ Many thanks to Jeffrey for emailing me the link. ]
UPDATE: S&W make a statement ...
SPRINGFIELD, Mass., Jan 19, 2010 /PRNewswire via COMTEX/ -- Smith & Wesson(R) Holding Corporation (Nasdaq: SWHC), parent company of Smith & Wesson Corp., today made the following statement in response to Justice Department enforcement actions that were announced today regarding one of its employees.
Through media reports today, we became aware of the Justice Department enforcement actions which were taken yesterday and which made reference to an employee of our company. We have no information beyond what has been reported and are prepared to cooperate fully with law enforcement in their investigation into this matter.
Hoo Hoo Looks like Obama _is_ moving in on guns.
Just what S&W did not need.
What in the hell? Thats crazy… Not gonna be good PR for Smith.
WOW I wonder if this will hinder any of their future contracts or did they already get damage control on it.
I guess the FBI won’t be buying S&W products anytime soon. I’m sure the competition is happy about this.
Ouch. That’s BAD publicity.
Any idea which African nation they thought they were selling too?
WTF??
Ok read the story & this investigation has been ongoing for a while. My thought is that the FBI decided to make sure it was a high profile arrest & a warning to others by making it a public spectacle at the SHOT show.
Did anyone there actually see them getting walked out in cuffs?
Maybe the S&W guy was just trying to get even for all those email phishing scams…. Dear Sir or Madam, I come to you with many guns, but unfortunately I cannot move them. Would you be so kind as to accept my “Wesson by Smith” revolving bullet thrower?
I hope this isn’t indicative of S&W’s other business practices as one of americas great gunmakers I’d hate to see them take hit for something like this.
Wow. Not good for the firearms community.
Have you seen this guy hanging around the show: http://www.dailyinfo.co.uk/images/cinema/lord-of-war.jpg
This will be the butt of jokes for years to come.
Wow!!!
WTF?? That’s just surreal…
Can’t S&W get bonus points for that integral safety lock thing?
“The FCPA prohibits the payment of bribes to foreign officials in order to secure business contracts.”
Why does this exist, exactly?
This is HUGE. Jesus Christ, this has been a good week for interesting gun news.
From the DOJ:
“Indictment alone can lead to suspension of the right to do business with the government. The President has directed that no executive agency shall allow any party to participate in any procurement or nonprocurement activity if any agency has debarred, suspended, or otherwise excluded that party from participation in a procurement or nonprocurement activity.
In addition, a person or firm found guilty of violating the FCPA may be ruled ineligible to receive export licenses”
So, these companies are basically screwed now. Hope you’re not an investor.
Holy crap!! That’s crazy! S&W’s sales are going to suffer majorly because of this, I’m sure. That really sucks for S&W. Leave it to “the few” to screw “the many.”
Ohhhh….. shit!
I have no idea what to make of this. Never know if it’s a legitimate sting or some kind of entrapment by a government goon with an agenda. :S
Greetings from Texas,
Do the term ‘self inflected wound’ mean anything to these folks? How stupid can you get?
Then again, not sure I want an answer.
Press release here: http://ir.smith-wesson.com/phoenix.zhtml?c=90977&p=irol-newsArticle&ID=1376871&highlight=
Doubt this will help SWHCs ticker much.
Steve, I was talking to someone tonight and he saw FBI agents at the show and apparently the S&W booth was almost deserted this afternoon. But I got no photos
RJG, thanks for the link.
“Why does this exist, exactly?”
I was thinking the same thing. What a totally useless law. And even if there is a legitimate purpose for such a law, this seems like a clear cut case of entrapment. Surely nobody could argue that the S&W people would have offered the bribe if they hadn’t been asked for it by the government agents. And even if you can get past those two issues, doesn’t the FBI have anything better to do? The article mentions 250 agents for over 2.5 years. Even assuming most of those people weren’t working on this full time, it’s a huge amount of resources used to arrest the alleged perpetrators of a non-violent, victimless crime. Shouldn’t the FBI be out there catching murderers and terrorists?
The Foreign Corrupt Practices Act is design to screw US companies out of foreign contracts. In this case it benefits the Russian, European, and Chinese the most.
I thought the LE bureaus don’t do this kind of sting as it gets smack down as entrapment?
Like Kyle and Chris have pointed out, bribery laws are nonsensical. S&W hasn’t committed any real crime. Who is the victim?
The crime, if any, is commited by the buying government officials against the tax payers that employ them when they choose their weapons supplier based on the amount of bribes rather than the performance of the products.
Furthermore, like most people should know by now bribes are standard practice when selling weapons (or anything, frankly) to governments. S&W just happened to get caught.
Government is the fundamental cause of corruption.
Surely you don’t think the FBI won’t claim that by making these arrests that they’ve prevented murderers and terrorist from buying weapons?
Apparently the FBI has nothing else to do now that Barry (aka Barack hussein obama) is occupying the white house.
Fortunately the ft hood terrorist and the underpants bomber are being treated as enemy combatants and being interroated for all their info by the CIA ….. Oh wait – their case in civil coutvis being handles by us prosecuters and the FBI is supposed to provide evidence….
Nope Barry has them posing as his baby daddy chasing S&W guys.
“Shouldn’t the FBI be out there catching murderers and terrorists?”
Who do you think are the recipients of such kickbacks? African kindergarten teachers that use the extra funds to buy extra lunches for the kids?
And as for “victim-less crime”, the victims are the tax payers of the African nation in question – and I doubt they have that much money to begin with.
“The defendants, including a senior Smith & Wesson sales official Amaro Goncalves, were accused of violating the Foreign Corrupt Practices Act, or FCPA, and conspiracy to commit money laundering tied to the sale of guns, body armor and other law enforcement equipment.”
So, in other words, they did what the Federal State does all over the world every day, and got in trouble for it. Maybe this is a good precedent.
Entrapment. Nice. That’s all right.
The FCPA is a law which was enacted in 1977 following a rash of scandals involving companies which paid bribes to foreign officials in order to be allowed to do business in their countries. The real issue was the financial reporting of these bribes. The law essentially dictates that you should not pay bribes. But if you do… they had darn well better be on your financial statements as “Bribery Expense”. This generally does not look good to investors, so it has proven a moderately effective deterrent to these kinds of activities. However, there are apparently still those who try to get around this. As is evidenced by this story.
This reminds me of those case of cop goes to a male restroom, pretends to be gay, ask if somebody wants a blowjob, if the the other dude says “yes”, he gets arrested.
This is just Eric Holder’s way of crashing a party that he didn’t get invited to. Oh, and it’s one big F-U to the firearms community.
The FCPA is total garbage — and not just in the realm of firearms. It’s a law enacted by America to prosecute (primarily) Americans for playing by the same rules that the rest of the world plays by. Anyone who has lived or worked overseas knows what I’m talking about.
S&W has a lot to lose here if they end up unable to do business with the government. IIRC they supply handcuffs and leg-irons to the military and have an ongoing contract supplying M&P 9′s to the Iraqi national police.
I’m shocked at all the racism and ignorant politics being spewed in these comments on a board that’s tagline is “firearms not politics”.
Let’s address a few things:
1. This law is meant to prevent U.S. companies from supporting (even inadvertently) corrupt warlords. Permitting the sort of kickbacks that S&W were busted for promotes corruption and the formation of a governmental elite in these developing countries, which encourages dictatorship and hamstrings democracy.
2. Smith and Wesson was not picked up on some minor technicality by the [insert racist term] president and his [insert different racist term] AG who are trying to discourage American business and American gun owners. S&W blatantly violated a major ethics law, and deserves to be punished for it.
3. If the FBI entrapped the S&W execs in question were entrapped they will have a solid defense at trial. If not, let them rot in prison. The FBI is by no means stupid, and setting up a string is not always the same thing as entrapment. Entrapment is a legal term, not a pejorative.
“Bribery Expense?”
Sheesh. What’s next, “Took Prospective Client to Lunch and Liquored Him Up so He’d Sign the Contract Expense?”
We have bribery here in the US, it’s just more subtle. Unless you’re a politician — then it’s called “campaign contributions.”
I dont think Smith will be held accountable directly for the actions of this individual, until further investigation proves otherwise. It sucks that such a reputable company will be drug through the mud along side the perpetrators. But rest assured, with the A team that is in office right now, any American involved will be crucified and blasted across every media network in the world, while they apologize to the African nation on our behalf.
They were all arrested off site…NOT at the Shot Show. Im an exhibitor and just walked past their booth and it was packed…but that is the entire show!
@Jim Thank you. I too found the notion “Corruption is fine because, you know, the others do it also and it’s a victimless crime anyway.” mildly disturbing.
http://www.thefirearmblog.com/blog/2010/01/20/fbi-arrest-sw-exec-and-20-others-at-shot-show/#comment-24224
” We have bribery here in the US, it’s just more subtle. Unless you’re a politician — then it’s called “campaign contributions.” “
Maybe S&W should have listed the bribes under that….or as “union contributions”….
…so, when will we see FBI busts at the Detroit Auto Show and the AFL/CIO conventions?….
While one Smith and Wesson executive and some others offered money (possibly a share in their bonuses?) to the FBI agents posing as African buyers, I haven’t seen any report – not even in the notoriously anti gun New York Times – that held Smith and Wesson responsible as a company for what happened. In several industries sales agents routinely share their commissions with buyers – who hasn’t seen a realtor’s advertisement offering payback from his / her commission? – and it is possible that the S&W sales representative here was trying to do something similar before falling afoul of the law restricting this practice in foreign contracts. Either the sales representatives here did this knowingly or they were ignorant of the law. The FBI’s investigation of company documentation and of communication between the sales representatives and their superiors will show to what extent the companies concerned were involved in this breaking of the law. Until then, it would be wise not to enter into hasty judgments about any company and its business practices. Calling Smith and Wesson names because one of their salesmen happens to be either an idiot or a crook is as stupid as tarring entire communities with epithets because you don’t like a particular individual who belongs to that community.
I’m not really shocked, although there are some big names there, this kind of thing likely goes on behind closed doors more than we care to think.
It will just help out the other companies a bit now that S&W is knocked down a few more pegs. I’m sure they will appreciate new business.
Hey, they did the crime, they do the time, which is, what, 20 years for bribery?
doesn’t really matter if S&W knew about it or not, if you work there, you are working on their behalf, so you screw up, the company gets in crap for it, just like any other business.
businesses like that better clean up their employee base, get rid of the crooks or go down the toilet in this economy.
wow this thread is strong with the stupidity. interesting how some see violating some laws as ok but see violating other ones unacceptable. if you have a problem with a certain law you should try and get it change instead of moaning and whining like a school girl.
I used to work at Cav and I can tell you that I am glad I got out when I did. I always knew Wayne Weisler was a crook, just did not know how bad it really was. I can assure though this is not the first bribe or illegal transaction committed by Wayne or his companies, US Cavalry or Armorshield. Hey FED’s check their files…U will find more. I am disappointed with S&W but I knew Cav was bad, that is why I left…Hope know ones buys from them again and hope the FEDs throw the book at Wayne and his Execs…
@Jim, where do you get this?:
“This law is meant to prevent U.S. companies from supporting (even inadvertently) corrupt warlords.”
Neither the statute itself, nor the House and Senate reports say anything about warlords. Consider the fact that the FCPA was enacted in the wake of scandals in Japan and western Europe (where there are no warlords).
I know this is treading too far already into politics, but blatant misinformation needs to be addressed.
m4shooter regardless of the original intent that is the purpose that the law is serving here.
The federal site says “Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.” Sounds like a pretty general purpose law.
http://www.justice.gov/criminal/fraud/docs/dojdocb.html