Government insists 'honest mistakes' don't warrant tossing FCPA convictions
- Government insists 'honest mistakes' don't warrant tossing FCPA convictions
The National Law Journal
U.S. District Judge Howard Matz
Federal prosecutors acknowledged that they made some "honest mistakes" in
a high-profile Foreign Corrupt Practices Act case, but disputed in a brief
filed on Sept. 5 that those oversights rose to the level of misconduct.
The government's filing addressed concerns voiced by U.S. District Judge
Howard Matz in Los Angeles that the government's "astonishing" and
"troublesome" mishandling of the case might warrant dismissing the indictment
against two former executives of Lindsey Manufacturing Co. who were convicted on
Defense lawyers moved to dismiss the charges based on prosecutorial
misconduct one day before a May 10 jury verdict went against their clients.
During a June 27 hearing, Matz ordered both sides to submit supplemental briefs
discussing whether the indictment should be dismissed. The judge acted
after Assistant U.S. Attorney Douglas Miller acknowledged that his team had
failed to produce all the grand jury testimony of an FBI special agent who
investigated the case.
In their brief, prosecutors wrote that the mishandling of FBI Special
Agent Susan Guernsey's testimony was "regrettable" and possibly "negligent,"
but was an accidental mistake that didn't justify throwing out the verdict.
Rather, "the defendants strain to find misconduct where there is none, and
they try to transform honest, non-prejudicial mistakes into something they
are not," they wrote.
The prosecutors argued that the alleged misconduct did not harm the
ability of the accused to present a defense.
The verdict was one of the few that the government has won under the FCPA,
which prohibits individuals and businesses from bribing foreign officials
to secure work.
Lindsey Manufacturing and two executives, Chief Executive Officer Keith
Lindsey and Chief Financial Officer Steve Lee, were convicted of paying
bribes, including a $300,000 red Ferrari, to two officials of a state-owned
electric utility in Mexico. The jury found each man guilty of five FCPA counts
and one count of conspiracy to violate the FCPA. They each face 30 years in
During the recent hearing, Jan Handzlik, a solo practioner in Los Angeles
who represents Lindsey Manufacturing and Keith Lindsey, said he was
preparing to argue his dismissal motion when he discovered that some of Guernsey's
testimony was missing from the transcript provided by the government.
Prosecutors have maintained that they had not planned to produce
Guernsey's testimony because they had no intention of calling her as a witness.
After being asked, however, the government produced 166 pages but inadvertently
failed to identify 19 additional pages until after the trial, according to
Prosecutors quoted Miller's statements to Matz during the hearing, when he
acknowledged for the first time that a portion of Guernsey's grand jury
testimony had not been turned over to the defense because it had
inadvertently been filed with records from another case. The slip was not, however,
"flagrant misconduct or intentional behavior by the government," Miller is
quoted as saying. "It was an oversight and one that should not have been made
given the history of this case. I regret more so than in my career that
this took place, but that I'm dealing with."
Matz described the government's handling of the case as "extraordinarily
sloppy" with a "bad odor at times," citing the search of two buildings
without warrants and the government's unauthorized acquisition of e-mails of a
defendant who was in jail. On March 29, Matz suppressed statements that
Lindsey made during an FBI raid of his office because he hadn't been warned of
his Miranda rights.
Defense attorneys have raised several more instances of potential
prosecutorial misconduct. But prosecutors, in their brief, denied that they "played
games" with the witness list, provided false statements in the drafting of
a search warrant affidavit or belatedly turned over discovery material.
They also defended their decision to call as a summary witness an FBI special
agent who had not participated in the investigation.
"The defendants cite no case, and the government is aware of none, that
says a federal agent must have been involved in the investigation in order to
testify at trial," the prosecution team wrote.
A hearing on the prosecutorial misconduct issue is scheduled for Nov. 17.
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