What’s The Message From BizJet? Self-Disclose And Cooperate

by Thomas Fox
Contact

Over the past week there has been a plethora of Foreign Corrupt Practices Act (FCPA) enforcement actions released. One group was the four enforcement actions involving individuals concerning BizJet. While I cannot say that the enforcement actions against the individuals were stunning, perhaps what was surprising were the penalties that two of the individual received. The lineup of those three BizJet executives and one employee involved in these enforcement actions is as follows:

  1. Bernd Kowalewski – President and Chief Executive Officer (CEO);
  2. Peter DuBois – Vice President of Sales and Marketing;
  3. Neal Uhl – Vice President of Finance; and
  4. Jald Jensen – Regional Sales Manager

Defendants DuBois and Uhl pled guilty in January, 2012 and had their pleas unsealed on April 5, 2013. Defendants Kowalewski and Jensen were charged by Criminal Indictment, also in January, 2012 but are still at large today. The Department of Justice (DOJ) Press Release states that “The two remaining defendants are believed to remain abroad.”

BizJet Bribery Box Score

From the previously released Bizjet Deferred Prosecution Agreement (DPA) and the recently released documents, I have updated the “BizJet Bribery Box Score”.

BizJet Executive or Employee Named Payment Made To Amount of Payment Others Involved
Jald Jensen Official 6 Cell Phone and $10K Peter DuBois and Neal Uhl
Jald Jensen Official 3 $2K Peter DuBois
Peter DuBois, Neal Uhl and Jald Jensen Official 2 $20K  
Neal Uhl Official 2 $30K Jald Jensen
Peter DuBois Mexican Federal Police Chief $10K Neal Uhl and Jald Jensen
Neal Uhl Official 5 $18K Jald Jensen
Jald Jensen Official 4 $50K  
Jald Jensen Mexican Federal Police $176 Neal Uhl
Jald Jensen Official 4 $40K  
Jald Jensen Mexican Federal Police $210K Neal Uhl
Jald Jensen Official 5 $6K Neal Uhl
Neal Uhl Official 5 $22K  

The above bribes were characterized as “commission payments” and “referral fees” on the company’s books and records. Payments were made from both international and company bank accounts here in the United States. In other words, this was as clear a case of a pattern and practice of bribery, authorized by the highest levels of the company, paid through US banks and attempts to hide all of the above by mis-characterizing them in the company’s books and records.

Penalty Box Score

As bad as the conduct of the BizJet executives and sales manager was – and it was very bad – the thing that stood out in the enforcement actions announced last week was the sentences. So without further ado here is the “Penalty Box Score” for defendants DuBois and Uhl.

Individual Fine or Disgorgement Potential Incarceration Actual Incarceration
Peter DuBois $159,950 108 to 120 months in jail 8 months home incarceration, 60 month’s probation
Neal Uhl $10,000 60 months in jail 60 month’s probation

The clear import of the BizJet DPA was that a company can make a comeback in the face of very bad facts. In the BizJet DPA, the calculation of the fine, based upon the factors set out in the US Sentencing Guidelines, ranged between a low of $17.1MM to a high of $34.2MM. The final agreed upon monetary penalty was $11.8MM. This was a significant reduction from the suggested low or high end, or as was noted by the FCPA Blog “BizJet’s reduction was 30% off the bottom of the fine range, and a whopping 65% off the top of the fine range.” Finally, BizJet was able to avoid having an external monitor put in place.

Cooperation is the Key

What led to these sentence reductions? Quite simply the answer is full cooperation with the DOJ. The FCPA Professor stated, in a post entitled “Unsealed Documents In Enforcement Acton Against Former BizJet Executives Reveal A Trove Of Information”, that “As part of his plea agreement, DuBois worked in an undercover capacity for the government. The motion specifically states as follows. “As part of his work in an undercover capacity, Mr. DuBois has recorded conversations with former BizJet executives and other subjects of the government’s ongoing investigation.” Later, the motion to seal states that “public identification of Mr. DuBois as a defendant who likely is cooperating with the government may jeopardize the undercover aspect of the government’s investigation.”

In addition to his work as an undercover operative, the Professor quoted from the DOJ Sentencing Memorandum that “assisted in the investigation from the outset and cooperated fully with the government throughout its investigation. DuBois submitted to multiple interviews by the government and has assisted in every way that the government has asked. DuBois told the truth to the government from the outset and continued to do so up until this very day. DuBois’ cooperation not only assisted the government in connection with its investigation into BizJet, but also led to the investigation of another maintenance, repair, and overhaul company engaged in a similar scheme to pay bribes to government officials overseas.”

With regarding to UHL, the Professor quoted from the DOJ Motion for a Downward Departure as follows, “Uhl “agreed to a voluntary proffer session and, when confronted by the government, admitted to the illegal conduct. Throughout the course of the investigation, Uhl was cooperative and provided truthful information that substantially assisted the government in confronting other co-conspirators and witnesses. Uhl offered to assist in any way that he could.”

In another post, entitled “Where Was the BizJet Board?”, the FCPA Professor noted that the conduct engaged in by BizJet was “egregious” and I would certainly second that, perhaps adding that it was about as bad as it could get in the FCPA world. He goes on to state that “Yet, BizJet was allowed to resolve the enforcement action via a deferred prosecution agreement, meaning that should it abide by the terms and conditions of the agreement, BizJet will never be required to plead guilty to anything.” He went on to pose the question, “If that is the DOJ position, then it must be asked – does corporate criminal liability actually mean anything if a company like BizJet – given the DOJ’s allegations – is not actually criminally prosecuted or required to plead guilty?” He ended his post with the following, “In short, the resolution vehicles the DOJ has created and championed has again lead to a “facade of enforcement” – albeit an instance on the opposite end of the spectrum that I normally highlight.”

I think that there is another way to look at the BizJet enforcement action and the individual enforcement actions against DuBois and Uhl. BizJet self-disclosed to the DOJ, engaged in what the DOJ termed “extraordinary cooperation” and remediated the people and conduct in question. Further, DuBois and Uhl not only offered themselves up but actively worked with and assisted the DOJ in its investigation going forward. If one of the goals of the DOJ is to achieve greater compliance with the FCPA, I think that the BizJet cases is a clear demonstration that if a company has FCPA violations they can self-disclose and be given credit for working very diligently in conjunction with the DOJ to remedy the conduct at issue and move the investigation forward.

I believe the same is true for individuals who have engaged in FCPA violations. If a person provides the same level of cooperation as DuBois and Uhl and the DOJ then prosecutes them to the full extent of the US Sentencing Guidelines, how much cooperation do you think the DOJ will engender going forward once the word gets out in the white collar defense bar?

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

Written by:

Thomas Fox
Contact
more
less

Compliance Evangelist on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.