WASHINGTON — Twenty-two executives at military and law-enforcement supply companies have been arrested in a sting operation by federal authorities. It is billed as the nation’s largest effort to enforce the Foreign Corrupt Practices Act, the Justice Department announced on Tuesday.
The business representatives were charged with attempting to pay bribes to win lucrative overseas contracts worth $15 million.
The defendants were snared in an undercover operation run by the Federal Bureau of Investigation, in which two undercover agents posed as representatives of the ministry of defense of an unidentified African nation.
Under the alleged scheme, the supply company executives agreed to submit invoices inflated by 20 percent to cover agreed upon bribes and kickbacks that were to be paid to the middlemen and the minister of defense.
Rather than walk away from the business opportunity, the charged businessmen allegedly agreed to inflate their invoices and pay the kickbacks.
“This ongoing investigation is the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action every undertaken by the Justice Department against individuals for FCPA violations,” said Assistant Attorney General Lanny Breuer, who called the actions “a turning point.”
How the sting worked
In all, 16 separate indictments have been returned in the case. One of them charges Daniel Alvirez and Lee Allen Tolleson, president and director of acquisitions at a Bull Shoals, Ark., military-equipment supplier.
Mr. Alvirez’s company is not identified by name in the indictment. The indictment says the two men met with the undercover agents in Miami’s Mandarin Orient Hotel in May and agreed to add a 20 percent “commission” to the deal.
The proposed sale by Alvirez involved 25 grenade launchers and 70,000 grenades. According to the indictment, the two men caused a wire transfer for $16,200 from a bank account purported to be controlled by the African country to their company’s bank account. Two days later, the two executives sent a wire transfer of the 20 percent “commission” to a bank account controlled by one of the undercover FBI agents. The indictment says the money was a bribe to the minister of defense and kickbacks to the two undercover agents.
In October, the two executives again met with the undercover agents, this time at Clyde’s restaurant in Washington, DC. The meeting was allegedly conducted to set up a second, more lucrative, transaction.
Twenty-one of the suspects were arrested in Las Vegas where they were set to attend a trade show. One was arrested in Miami. The complete list of the people indicted is available here.
The defendants face up to five years in prison for each FCPA charge and up to 20 years in prison for alleged money laundering.