Longest Prison Sentence to Date for Violations of the FCPA

Oct 27, 2011   

On October 25, 2011, the former president and the executive vice president of Terra Telecommunications Corp. (Terra) were sentenced in connection with their convictions at trial for money laundering and violating the Foreign Corrupt Practices Act (FCPA). Discussed here, the U.S. Department of Justice (DOJ) highlights the fifteen year sentence of Jose Esquenazi, Terra’s former president, noting how it is the longest prison sentence for a violation of the FCPA to date.

The Foreign Corrupt Practices Act makes it unlawful for certain classes of U.S. persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit any willful or corrupt offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that such money or thing of value will be offered to a foreign official to influence the foreign official in his or her official capacity to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business.

According to the government, the executives committed several FCPA violations by funneling money into shell companies in order to use these monies to bribe Haitian government officials at the state-owned telecommunications company, Telecommunications D’Haiti S.A.M. (Teleco). In particular, Esquenazi and Terra vice president Carlos Rodriguez bribed Hatian officials in exchange for business advantages, including “the issuance of preferred telecommunications rates, reductions in the number of minutes for which payment was owed, and the continuance of Terra’s telecommunications connection with Haiti.” For more information about the case or the FCPA, see our previous report here

The government is trumpeting the harshest sentence ever against executives for violating the FCPA as a warning and deterrent against others who would violate the FCPA by bribing foreign government officials in return for business advantages. The government has made it a priority to prosecute FCPA violators and allocated substantial resources and created a task force at Department of Justice headquarters in Washington for such prosecutions. In fact, this case is one of the few FCPA prosecutions that proceeded to jury verdict, making the government’s victory and the harsh sentence all the more significant.

Fuerst Ittleman lawyers are experienced with handling white collar investigations and the defense of criminal prosecutions for white collar offenses. In addition, Fuerst Ittleman also can perform due diligence and compliance audits in order to assist businesses in their efforts to comply with the FCPA.