NAVY OFFICER PLEADS GUILTY TO BRIBERY CHARGES IN EXPANDING PROBE

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, April 15, 2015
U.S. Navy Officer Pleads Guilty to Selling Classified Ship Schedules as Part of Expanding Navy Bribery Probe

A lieutenant commander in the U.S. Navy pleaded guilty to bribery charges in federal court today, admitting that he accepted cash, hotel expenses and the services of a prostitute in return for providing classified U.S. Navy ship schedules and other internal Navy information to an executive of a defense contracting firm.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS), Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of the Defense Contract Audit Agency (DCAA) made the announcement.

“Another Navy officer has now pleaded guilty and admitted to taking bribes to reveal classified military information to a major supplier,” said Assistant Attorney General Caldwell.  “It is both troubling and disappointing how many Navy officers we have exposed as willingly falling prey to GDMA’s corruption, and our investigation remains active and ongoing.  Those who serve in our nation’s military must uphold the public’s trust or pay the consequences for their crimes.”

“The receipt of envelopes of cash and lavish hotel stays by our public officials at whatever level erodes the public’s trust in our institutions and our government,” said U.S. Attorney Duffy.  “Today’s guilty plea reflects the next step in our ongoing effort to regain that public trust.”

Todd Dale Malaki, 44, of San Diego, pleaded guilty before U.S. Magistrate Judge Mitchell D. Dembin of the Southern District of California to one count of conspiracy to commit bribery.  A sentencing hearing is scheduled for July 6, 2015.

As part of his guilty plea, Malaki admitted that in 2006, while he was working as a supply officer for the U.S. Navy’s Seventh Fleet, he began a corrupt relationship with Leonard Glenn Francis, the former president and chief executive officer of Glenn Defense Marine Asia (GDMA), a company that provided services to the U.S. Navy.  As part of the scheme, Malaki provided Francis with classified U.S. Navy ship schedules and proprietary invoicing information about GDMA’s competitors.  In exchange, Malaki admitted that Francis provided him with luxury hotel stays in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute.  Malaki admitted that the total value of the benefits he received was approximately $15,000.

Malaki is the eighth individual to plead guilty in this expanding probe into corruption and fraud in the U.S. Navy.  GDMA pleaded guilty in January.  Two other individuals, Paul Simpkins, formerly a Department of Defense (DOD) contracting officer, and Michael Misiewicz, a Captain-select in the U.S. Navy, have been charged and entered pleas of not guilty.

The ongoing investigation is being conducted by NCIS and DCIS, with substantial assistance from the DCAA.  The case is being prosecuted by Senior Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California.

SEC CHARGES COMPANY WITH VIOLATING FCPA BY OFFERING TRAVEL, GIFTS TO FOREIGN OFFICIALS IN THE MIDDLE EAST

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
04/08/2015 11:05 AM EDT

The Securities and Exchange Commission charged Oregon-based FLIR Systems Inc. with violating the Foreign Corrupt Practices Act (FCPA) by financing what an employee termed a “world tour” of personal travel for government officials in the Middle East who played key roles in decisions to purchase FLIR products.  FLIR earned more than $7 million in profits from sales influenced by the improper travel and gifts.

FLIR, which develops infrared technology for use in binoculars and other sensing products and systems, agreed to settle the SEC’s charges by paying more than $9.5 million and reporting its FCPA compliance efforts to the agency for the next two years.  The SEC previously charged two FLIR employees in the case.

“FLIR’s deficient financial controls failed to identify and stop the activities of employees who served as de facto travel agents for influential foreign officials to travel around the world on the company’s dime,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.

According to the SEC’s order instituting a settled administrative proceeding against FLIR, the company had few internal controls over gifts and travel out of its foreign sales offices.  Two employees in its Dubai office provided expensive watches to government officials with the Saudi Arabia Ministry of Interior in 2009, and they arranged for the company to pay for a 20-night excursion by Saudi officials that included stops in Casablanca, Paris, Dubai, Beirut, and New York City.  The value of the gifts and the extent and nature of the travel were falsely recorded in FLIR’s books and records as legitimate business expenses, and the company’s internal controls failed to catch the improper payments despite documentation suggesting that extravagant gifts and travel were being provided.  

The SEC’s order finds that from 2008 to 2010, FLIR paid approximately $40,000 for additional travel by Saudi government officials, including multiple New Year’s Eve trips to Dubai with airfare, hotel, and expensive dinners and drinks.  FLIR also accepted cursory invoices from a FLIR company partner without any supporting documentation to pay extended travel of Egyptian officials in mid-2011.

The SEC’s order finds that FLIR violated the anti-bribery provisions of Section 30A of the Securities Exchange Act of 1934 and the internal controls and books-and-records provisions of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  FLIR self-reported the misconduct to the SEC and cooperated with the SEC’s investigation.  FLIR consented to the order without admitting or denying the findings and agreed to pay disgorgement of $7,534,000, prejudgment interest of $970,584 and a penalty of $1 million for a total of $9,504,584.

The SEC’s investigation was conducted by FCPA Unit members Cameron P. Hoffman and Tracy L. Davis in the San Francisco office.  The SEC appreciates the assistance of the Justice Department’s Fraud Section, the U.S. Attorney’s Office for the District of Massachusetts, the Federal Bureau of Investigation, and the United Arab Emirates Securities and Commodities Authority.

RALPH LAUREN CORPORATION SETTLES FCPA ALLEGTIONS WITH JUSTICE DEPARTMENT

FROM: U.S. DEPARTMENT OF JUSTICE
Monday, April 22, 2013

Ralph Lauren Corporation Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $882,000 Monetary Penalty

Ralph Lauren Corporation (RLC), a New York based apparel company, has agreed to pay an $882,000 penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by bribing government officials in Argentina to obtain improper customs clearance of merchandise, announced Mythili Raman, the Acting Assistant Attorney General for the Criminal Division, and Loretta E. Lynch, the United States Attorney for the Eastern District of New York.

According to the agreement, the manager of RLC’s subsidiary in Argentina bribed customs officials in Argentina over the span of five years to improperly obtain paperwork necessary for goods to clear customs; permit clearance of items without the necessary paperwork and/or the clearance of prohibited items; and on occasion, to avoid inspection entirely. RLC’s employee disguised the payments by funneling them through a customs clearance agency, which created fake invoices to justify the improper payments. During these five years, RLC did not have an anti-corruption program and did not provide any anti-corruption training or oversight with respect to its subsidiary in Argentina.

In addition to the monetary penalty, RLC agreed to cooperate with the Department of Justice, to report periodically to the department concerning RLC’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If RLC abides by the terms of the agreement, the Department will not prosecute RLC in connection with the conduct.

The agreement acknowledges RLC’s extensive, thorough, and timely cooperation, including self-disclosure of the misconduct, voluntarily making employees available for interviews, making voluntary document disclosures, conducting a worldwide risk assessment, and making multiple presentations to the Department on the status and findings of the internal investigation and the risk assessment. In addition, RLC has engaged in early and extensive remediation, including conducting extensive FCPA training for employees worldwide, enhancing the company’s existing FCPA policy, implementing an enhanced gift policy and other enhanced compliance, control and anti-corruption policies and procedures, enhancing its due diligence protocol for third-party agents, terminating culpable employees and a third-party agent, instituting a whistleblower hotline, and hiring a designated corporate compliance attorney.

In a related matter, the U.S. Securities and Exchange Commission today announced a non-prosecution agreement with RLC , in which RLC agreed to pay $$734,846 in disgorgement and prejudgment interest.

The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Sarah Coyne, Chief of the Business and Securities Fraud Section of the Eastern District of New York. The case was investigated by the FBI’s New York Field Office. The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.