(Updates with defense arguments in sixth paragraph.)
June 22 (Bloomberg) -- Four security-industry executives knew they were breaking the law when they agreed to make payments to a Gabonese government minister, prosecutors said at the close of trial in the biggest U.S. prosecution of individuals for bribing foreign officials.
The four men, on trial in federal court in Washington, are part of a 22-defendant kickback conspiracy case resulting from a sting operation and a fake $15 million weapons deal. Prosecutors showed jurors about a dozen video clips today while making their closing arguments in the case.
“The evidence is irrefutable,” Laura Perkins, a U.S. Justice Department trial attorney, told the jury. “The defendants were caught red-handed committing these crimes on audio and videotape.”
Prosecutors allege the men sought to provide guns, grenades and uniforms for the presidential guard of Gabon in violation of the Foreign Corrupt Practices Act. The defendants -- John Wier III, Andrew Bigelow, Lee Tolleson and Pankesh Patel -- have denied any wrongdoing.
Defense lawyers accused the government of engineering the conspiracy, breaking Federal Bureau of Investigation rules about handling informants, and obscuring from their clients that the deal involved a kickback payment by calling it a commission.
“They went out of their way in this case to hide the illegality of the transaction from the participants,” Patel’s lawyer, Matthew Menchel of Kobre & Kim in Miami, told jurors.
Menchel, during closing arguments, said the defendants were separate, independent suppliers who were competing against each other and weren’t engaged in a conspiracy.
Lawyers for the other three defendants are scheduled to make their final arguments tomorrow and jurors may begin deliberating next week.
The charges stem from a three-year investigation involving an informant who pleaded guilty in an earlier bribery case, recorded telephone calls and videotaped meetings with FBI agents posing as representatives of Gabon, sub-Saharan Africa’s fifth- biggest oil producer.
The government said the defendants agreed to pay a $3 million commission for the business, half of which they were told would be paid to the country’s defense minister.
The four defendants on trial in U.S. District Court in Washington each face one conspiracy count and one to two counts of bribery. The FCPA conspiracy and bribery charges carry maximum five-year prison sentences.
Smith & Wesson
Also arrested in what the government said was the biggest prosecution for foreign bribery by number of individuals were Amaro Goncalves, a former sales executive for Smith & Wesson Holding Corp., based in Springfield, Massachusetts, and R. Patrick Caldwell, a former U.S. Secret Service official who was chief executive officer of Protective Products of America Inc., based in Sunrise, Florida. The two men pleaded not guilty.
Three defendants pleaded guilty and agreed to cooperate. U.S. District Judge Richard Leon has grouped the remaining 19 defendants into four trials.
The government’s case was put together through Richard Bistrong, a former executive from Armor Holdings Inc. He pleaded guilty last year to bribing officials of the United Nations and the Netherlands to obtain contracts for body armor and pepper spray, according to court papers.
BAE Systems Plc, Europe’s largest arms company, bought Armor Holdings in 2007 for $4.53 billion. Bistrong began cooperating with prosecutors in 2007, according to court records.
Bistrong identified possible targets for the government, according to court papers. Working with the FBI, he recorded telephone and in-person meetings with the defendants. He also introduced them to Pascal Latour, an FBI agent posing as a representative for Gabon’s defense minister.
Menchel recited a list of crimes that he said the government knew Bistrong had committed, including embezzlement, tax evasion, illegal use of drugs and frequent use of prostitutes.
The FBI allowed Bistrong to remain in business and make more than $1 million while also working as an informant, Menchel told jurors. Bistrong was never called to the witness stand.
“They didn’t care,” Menchel said, “As long as Richard Bistrong was selling ice to Eskimos in this deal, he could do whatever he wanted.”
Perkins told jurors that the FBI used Bistrong as a tool to root out corruption in the industry and said that it was better that he was allowed to earn money “legitimately” than use taxpayer dollars.
Patel, 45, of the U.K., is managing director of Quartermaster’s Ltd., a company that sells military and law enforcement uniforms, according to court papers. Bigelow, 42, of University Park, Florida, was the managing partner and director of government programs for Heavy Metal Armory, a Sarasota, Florida, company that sells machine guns, grenade launchers and other firearms.
Tolleson, 27, of Mountain Home, Arkansas, was director of acquisitions and logistics for ALS Technologies, a company that sells law-enforcement and military equipment. Wier, 48, sold tactical and ballistic equipment through his company in St. Petersburg, Florida, according to court papers.
The case is U.S. v. Goncalves, 09-cr-00335, U.S. District Court, District of Columbia (Washington).
--Editors: Andrew Dunn, Glenn Holdcraft
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