Bloomberg News

Lindsey Manufacturing Wins Dismissal of Foreign Bribery Case

December 02, 2011

(Updates with notice of appeal in sixth paragraph.)

Dec. 1 (Bloomberg) -- Lindsey Manufacturing Co., the first corporation to go to trial on charges it violated the U.S. Foreign Corrupt Practices Act, won dismissal of its conviction after the judge found the prosecution had engaged in “flagrant” misconduct.

U.S. District Judge Howard Matz in Los Angeles today threw out the convictions of the Azusa, California-based maker of emergency electricity towers; Keith Lindsey, the closely held company’s president; and Steve Lee, its finance chief, and he dismissed the indictment.

Matz said it was “with deep regret” that he was compelled to find that the government had allowed an Federal Bureau of Investigation agent to testify untruthfully before a grand jury, inserted falsehoods in requests for search warrants, improperly reviewed e-mails between a defendant and her lawyer, and made misrepresentations to the court, among other misconduct.

“Dr. Lindsey and Mr. Lee were put through a severe ordeal,” the judge said in his ruling. “Charges were filed against them as a result of a sloppy, incomplete and notably over-zealous investigation, an investigation that was so flawed that the government’s lawyers tried to prevent inquiry into it.”

‘Honest Mistakes’

At a Nov. 29 hearing, where the judge had issued his tentative decision to dismiss the case, Jeffrey Goldberg, a Justice Department lawyer, argued that the government had made only “honest mistakes” that didn’t warrant a finding of misconduct.

The government is appealing the ruling, according to a notice of appeal filed today.

A jury in May found the company and the two executives guilty of paying bribes, through an intermediary, to executives with a state-owned Mexican utility to win contracts. Lindsey and Lee faced as long as five years in prison for each of five counts of bribing a foreign official, as well as five years for a conspiracy count.

Prosecutors said the men knew that a 30 percent sales commission they paid Enrique Aguilar, a Mexican company representative, was used to cover more than $5 million in bribes to officials at Comision Federal de Electricidad.

The case is U.S. v. Aguilar, 10-1031, U.S. District Court, Central District of California (Los Angeles).

--Editors: Peter Blumberg, Charles Carter

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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