In 2010 the BATFE arrested 21 people, including Smith & Wesson executives for beaching the Foreign Corrupt Practices Act, a law which prohibits US corporations, citizens and residents from bribing foreign officials. Those arrested were charged with conspiring to bribe officials in the African state of Gabon as part of a deal to sell $15 million of equipment to the 1,800 man strong Gabon Presidential (Republican) Guard.
Washington, D.C. law firm Miller & Chevalier have published a number of reports on the sting. Their first report on the case appeared shortly after the arrests …
The operation also stands out as the first acknowledged use of undercover tactics on a large scale in an FCPA investigation, and one of the few times enforcement agencies are known to have used undercover operatives to solicit illicit payments. As noted by Assistant Attorney General Lanny Breuer when announcing the indictments, this operation was meant to signal that companies and individuals should consider the possibility that intended recipients of bribes, or their intermediaries, may in fact be undercover federal agents.
The indictments allege that 22 executives and employees representing 19 companies engaged in a scheme to bribe the minister of defense of an unnamed African country in connection with a contract to outfit the country’s presidential guard. The scheme actually was part of an undercover operation conducted by the Federal Bureau of Investigation (“FBI”), with undercover FBI agents posing as intermediaries for the fictitious defense minister.
Likely with an eye to dramatic impact, law enforcement officials arrested 21 of the defendants on January 18, 2010, in Las Vegas, where they were scheduled to attend the SHOT Show, an annual industry trade show for the shooting, hunting and firearms industry. Law enforcement officials simultaneously arrested the remaining defendant in Miami. According to officials at the January 19 press briefing, the arrests were the culmination of a two-and-a-half year investigation targeting the defense and law enforcement products industry. With approximately 150 FBI agents executing search warrants across the United States and the City of London Police executing search warrants throughout the United Kingdom — a total of 21 search warrants in all — the operation involved large-scale cooperation between U.S. law enforcement agencies and their U.K. counterparts.
In February (unbeknownst to us at TFB) the FBI dropped the charges. Miller & Chevalier wrote in their Spring Review, published in April of this year, that the FBI informant central to the case was described by the defense as “a cocaine addict, tax cheat, and admitted thief of millions of dollars” …
On February 21, 2012, the DOJ ended what U.S. District Court Judge Richard J. Leon called “a long and sad chapter of white-collar criminal enforcement,” by filing a motion to dismiss the charges against the remaining defendants in the African sting investigation, also known as the “SHOT Show” trials. As reported in our FCPA Winter Review 2012 and other past Reviews, 22 individuals were arrested in January 2010 — 21 while attending the SHOT Show convention in Las Vegas — and charged with allegedly engaging in schemes to bribe an undercover FBI agent they believed was acting on behalf of the government of Gabon in order to win a $15 million contract to provide law enforcement and defense equipment to the Gabonese presidential guard.
The government’s motion follows on the heels of two consecutive mistrials. Initially, three defendants pled guilty, but the others decided to test the government’s case in front of a jury. Four of the defendants successfully avoided conviction during the first of a series of trials in September 2011 when Judge Leon was forced to declare a mistrial in the face of a hung jury. During the second trial, Judge Leon dismissed conspiracy charges against six other defendants, which led to the acquittal of one; two other defendants in that trial were cleared by the jury; and Judge Leon declared a second mistrial for the remaining three defendants when the jury became deadlocked.
The SHOT Show investigation was the first of its kind to pursue violations of the FCPA using traditional undercover tactics, such as informants, wiretaps, and hidden cameras. However, the government’s primary informant, Richard Bistrong, was repeatedly attacked by defense counsel as a cocaine addict, tax cheat, and admitted thief of millions of dollars from his prior employer. In addition, defense counsel highlighted examples of what they called “vulgar” and “unprofessional” text messages between FBI agents and Bistrong, which, according to Judge Leon, raised “concerns about the way this case had been investigated and was conducted especially vis-à-vis the handling of Mr. Bistrong.
Miller & Chevalier’s recently published Autumn Review revealed that Richard Bistrong was sentenced for 18 months in prison for bribery of foreign officials while he worked for Armor Holdings Products, which is now part of BAE Systems …
On July 31, 2012, U.S. District Judge for the District of Columbia Richard Leon sentenced Richard Bistrong, the principal informant in the DOJ’s SHOT Show prosecution, to 18 months in federal prison, followed by three years of supervised release.
As discussed in prior FCPA Reviews, Bistrong, the former Vice-President for International Sales at Armor Holdings Products, LLC (“AHP”), was arrested in 2007 for helping AHP to illegally secure contracts through the payment of bribes. He was charged with conspiracy to violate the FCPA, the International Emergency Economic Powers Act, and the Export Administration Regulations. After his arrest, Bistrong agreed to cooperate with the FBI in an undercover sting operation aimed at the defense and law enforcement industry. Bistrong acted as an informant and participated in hundreds of recorded meetings and phone calls. The information he gathered was central to the DOJ’s charges against 22 individuals for FCPA violations, in relation to a supposed $15 million dollar equipment sales contract to the government of Gabon. (See Historic FCPA Sting Operation Nets 22 Individuals, January 20, 2010; FCPA Autumn Review 2011.) However, after two consecutive mistrials and multiple acquittals and dismissals, the DOJ dismissed all charges against all 22 defendants earlier this year. (See FCPA Summer Review 2012.)
Bistrong pleaded guilty on September 16, 2010, and according to his plea agreement, he faced a maximum of five years in prison, a fine of up to $250,000, and up to three years supervised release. (See FCPA Autumn Review 2010.) DOJ prosecutors urged Judge Leon to sentence Bistrong to probation, arguing that his extensive assistance to the SHOT Show cases warranted leniency, despite the seriousness of the charges against him. However, Judge Leon disagreed that a sentence of only probation would send an appropriate message, and instead noted that prison was the best deterrent against corruption.
The FCPA Professor blog reports that Richard Bistrong began his prison sentence in October and is expected to be released in January 2014 (emphasis added) …
Bistrong’s lifetime of **drug transactions, bribery, tax evasion, prostitution crimes, predilection for “hard core pornography” (you can’t truly appreciate the impact of that phrase until you hear Mike Madigan from Orrick articulate it to a jury)**, is second to none and turned out to be merely a lead-in to his staggering moral transgressions and self-inflicted personal failures, all of which came out during the trial or in trial preparation.
Against this backdrop, it was not without drama when sometime in November 2011 during the second trial , after two years of pretrial litigation and DOJ’s unsuccessful prosecution that resulted in no convictions and a hung jury in the first Africa Sting trial (during which the government elected to not call its star witness), Bistrong entered the court room to begin a month of testimony. It really was “all eyes” in the court room on the person about whom everyone had heard so much, and you could hear a pin drop. After all, in a text message later introduced into evidence Bistrong wrote to Chris Farvour, his FBI handler, “tell Hank (Bond Walther) that I’m an ace on cross exam!”
So in summery, the BATFE and FBI made a high profile raid during SHOT Show to arrest a 21 gun industry people. Their case was hinged on the word of a thief, druggie and all round morally bankrupt individual. Bistrong got just 18 months while the accused spent two years fighting their case.Related