Richard Craig Smith, John E. Kelly, Kimberly Sullivan Walker and Paul Simon
March 19, 2010
In keeping with the recent trend of increased FCPA enforcement, on March 16, 2010, the Department of Justice ("DOJ") announced that Nexus Technologies Inc. ("Nexus") pleaded guilty to a superseding indictment charging the company and three individuals with conspiracy to violate the Foreign Corrupt Practices Act ("FCPA"), substantive FCPA anti-bribery violations, and substantive Travel Act violations. According to the DOJ's press release, the Philadelphia-based company's plea agreement included an acknowledgment that the company operated through criminal means and, notably, that it would cease operations.
I. Case Facts
The superseding indictment alleges that Nexus, a Delaware export company with offices in Philadelphia, New Jersey, and Vietnam, paid over $250,000 in bribes. According to the DOJ's press release, these bribes, falsely characterized as "commissions," were admittedly paid to Vietnamese government officials in exchange for contract awards connected to projects in the civil aviation, energy, and defense industries.
The DOJ also reports that, in addition to Nexus itself, three Nexus personnel have also pleaded guilty: siblings Nam Nguyen, the president and owner of Nexus; Kim Nguyen, vice president of Nexus; and An Nguyen. Nam and An Nguyen each pleaded guilty to conspiring to violate the FCPA, violating the FCPA and the Travel Act, and money laundering. Kim Nguyen pleaded guilty to conspiring to violate the FCPA, violating the FCPA, and money laundering.
At sentencing, Nexus faces a maximum fine of $27 million. Nam and An Nguyen each face a maximum 35-year sentence, and Kim Nguyen faces a maximum 30-year sentence. A former partner in Nexus, Joseph T. Lukas, previously pleaded guilty to related charges on June 29, 2009. Lukas faces up to 10 years in prison and a $350,000 fine. His sentencing is scheduled for April 6, 2010.
II. Analysis and Conclusion
The Nexus case is another indication that 2010 may be a landmark year for FCPA enforcement. In the first three months alone, the DOJ and SEC have announced more than $625 million in FCPA-related settlements. Additionally, at least six other companies have publically announced that they have set aside a total of over $1 billion in anticipation of resolving FCPA enforcement actions with the DOJ and/or the Securities and Exchange Commission ("SEC"). It already appears that U.S. enforcement authorities are headed toward an FCPA enforcement year that will include over $2 billion in assessed fines and penalties, and it is only March.
At the same time, individual FCPA enforcement is at an all-time high. The DOJ announced at least 16 FCPA-related indictments of individuals in 2009. By the end of January 2010, the DOJ had already surpassed that number by announcing the indictment and arrest of 22 individuals in a case that represents the single largest use of undercover techniques in an FCPA matter.1 Furthermore, both DOJ and SEC officials have promised that there will be more enforcement actions against individuals. In fact, Lanny Breuer, Assistant Attorney General for the DOJ's Criminal Division, recently stated that the aggressive prosecution of individuals is one of the cornerstones of the DOJ's FCPA enforcement policy.2
Given the increasingly aggressive enforcement environment, U.S. companies or individuals, or companies or individuals doing business in the United States, that participate in international markets must ensure that they and their employees, agents, consultants, or other third-party representatives take steps to comply with the FCPA. Such compliance includes assessing the relevant business environments and establishing a robust compliance program, conducting due diligence on third parties and subsidiaries, training employees and agents to understand and identify red flags, and ensuring transparency and accuracy when recording financial transactions. As Mr. Breuer recently remarked, "internal investigations and remedial measures may be costly. But the costs of not doing the responsible thing can be much higher."3
This article was prepared by Richard C. Smith (firstname.lastname@example.org or 202 662 4795), John Kelly (email@example.com or 202 662 0256), Kimberly S. Walker and Paul Simon from Fulbright's White Collar Crime and International Investigations practices.
Fulbright's White Collar Crime Practice
A brief analysis of this enforcement action is available on Fulbright's website. See Fulbright Client Briefing, "DOJ Launches the Largest Single Investigation and Prosecution Action Against Individuals in the History of the FCPA."
Remarks, pg. 3.
Keynote Address, pg. 3.
Richard Craig Smith
John E. Kelly
Kimberly Sullivan Walker