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(Updates with defense statement in 14th paragraph.)
Sept. 28 (Bloomberg) -- A former Secret Service official is standing trial with five other security-company executives in the first prosecution of alleged foreign bribery based on a government sting operation run inside the U.S.
R. Patrick Caldwell, former chief executive officer of Protective Products of America Inc. and an ex-deputy assistant director at the Secret Service, is accused of joining an illegal business deal by agreeing to make payments to an FBI agent posing as a representative of the west African country of Gabon, prosecutors said today as trial began in federal court in Washington.
“Most corrupt deals are never discovered by law enforcement, but this time someone was watching and someone was recording the deal -- the FBI,” Laura Perkins, a Justice Department trial attorney, told the jury.
The trial that opened today is the second in a 22-defendant kickback conspiracy case stemming from a fake $15 million weapons deal. It’s the biggest U.S. prosecution of individuals accused of violating the Foreign Corrupt Practices Act, or FCPA. A trial of four others arrested in the sting ended in a mistrial in July after a jury failed to agree on a verdict.
The other defendants in the trial are John Mushriqui, Jeana Mushriqui, Stephen Giordanella, John Godsey and Marc Morales. Each is charged with one count of conspiracy and all except Giordanella also face two to five counts of bribery. The FCPA conspiracy and bribery charges carry maximum five-year prison sentences.
All six have pleaded not guilty to the charges.
Assistant U.S. Attorney General Lanny Breuer, who oversees the Justice Department’s criminal division, has cited the Gabon case, along with the Galleon Group LLC insider-trading probe, as examples of the government’s readiness to use wiretaps and other undercover techniques traditionally employed against organized crime to pursue white-collar criminals.
Prosecutors accused the defendants of seeking to funnel payments to Gabon’s defense minister in exchange for contracts to provide ammunition, bulletproof vests and body armor for the country’s presidential guard.
The charges stem from a three-year investigation involving an informant who pleaded guilty in an earlier bribery case, recorded phone calls and videotaped meetings with agents of the Federal Bureau of Investigation 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 defense minister.
Three of the 22 defendants pleaded guilty and agreed to cooperate. U.S. District Judge Richard Leon 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.
Bistrong identified possible targets for the government, according to court papers. Working with the FBI, he recorded phone and face-to-face meetings with the defendants. He also introduced them to Pascal Latour, an FBI agent posing as a representative of Gabon’s defense minister.
“Bistrong was highly motivated, thinking the more people he could get into this phony deal, the less time he would have to spend in prison,” David Krakoff, a lawyer for John Mushriqui, told jurors today.
The FBI allowed Bistrong to remain in business during its investigation and make more than $1.2 million while also working as an informant, said Krakoff, a partner at BuckleySandler in Washington.
“This is the man the government says you must trust in this case,” Krakoff said.
Krakoff told jurors that his client thought the Gabon commission was hatched by Bistrong to get additional money for himself from the deal.
Bistrong wasn’t called to the witness stand in the first trial.
The case is U.S. v. Goncalves, 09-cr-00335, U.S. District Court, District of Columbia (Washington).
--Editors: Fred Strasser, Andrew Dunn
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