Feds think small in bribery trial (FCPA)

Apr 4, 2011. Business groups and legal observers nationwide are closely monitoring a small family-owned company caught up in a foreign bribery trial that could be lethal for it and precedent-setting for others.

Executives at Lindsey Manufacturing Co. have been charged by U.S. prosecutors with paying off officials at a state-run electric utility in Mexico in order to win sales for their products.

Such cases historically were seldom brought against such small companies. And most end up being settled, but Lindsey has decided to fight and have its case heard by a jury. It is the first of about a half-dozen cases expected to reach trial this year since the government stepped up enforcement of the Foreign Corrupt Practices Act, which regulates U.S. companies overseas.

Analysts say if Lindsey executives are convicted in the trial, which has opening arguments set for Tuesday in Los Angeles federal court, it would put even the smallest companies on notice that they must keep close tabs on overseas operations.

“It’s being watched by folks all across the country,” said Bethany Hengsbach, a partner at downtown law firm Sheppard Mullin Richter & Hampton LLP specializing in FCPA-related matters; she is not involved in the Lindsey case. “I think the outcome is going to be important to determine whether it’s possible to succeed against the government in an FCPA case.”

The company’s president, Keith Lindsey, and chief financial officer, Steve Lee, face felony charges for allegedly authorizing sales reps to buy a Ferrari and a $1.8 million yacht for Nestor Moreno, director of operations for Mexico’s state-run electric utility, a client of Lindsey.

Lindsey’s attorney Jan Handzlik, of Greenberg Traurig LLP, said company executives admit paying their sales reps substantial money, but they deny having any knowledge in how it was used. Lindsey sales reps in Mexico also have been charged, and one is being tried here on felony charges with separate representation.

Read more …

Feds think small, L.A. Business Journal, Apr 4, 2011

Ferrari, Yacht Payoffs Alleged, Bloomberg, Apr 6, 2011