WASHINGTON – Paul Cosgrove, the former Head of Worldwide Sales at Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI) pleaded guilty today to violating the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Central District of California.
Cosgrove, who resides in Laguna Niguel, Calif., pleaded guilty today before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count superseding information charging him with making a corrupt payment to a foreign government official in China in violation of the FCPA. According to court documents, CCI designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide. At sentencing, Cosgrove, 65, faces up to 15 months in prison. Sentencing is scheduled for Aug. 27, 2012.
On Apr. 8, 2009, Cosgrove and five other former executives of CCI were charged in a 16-count indictment for their roles in the foreign bribery scheme. The five other former CCI executives charged were Stuart Carson, CCI’s former president; Hong “Rose” Carson, CCI’s former director of sales for China and Taiwan; David Edmonds, CCI’s former vice president of worldwide customer service; Flavio Ricotti, the former CCI vice president of sales for Europe, Africa and the Middle East; and Han Yong Kim, the former president of CCI’s Korean office. On Apr. 28, 2011, Ricotti pleaded guilty to one count of conspiracy to violate the FCPA. On Apr. 17, 2012, Stuart Carson and Hong “Rose” Carson each pleaded guilty to one count of making a corrupt payment to a foreign government official in violation of the FCPA. The trial of Edmonds is scheduled for Jun. 26, 2012. The charges against Kim are pending. An indictment merely contains allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of CCI. On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for CCI, pleaded guilty to one count of conspiracy to violate the FCPA. On Feb. 3, 2009, Richard Morlok, the former CCI finance director, also pleaded guilty to one count of conspiracy to violate the FCPA. Stuart and Rose Carson, Covino, Morlok and Ricotti are scheduled to be sentenced later this year.
On July 31, 2009, CCI pleaded guilty to a three-count criminal information charging the company with conspiracy to violate the FCPA and the Travel Act, and two substantive violations of the FCPA. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years. CCI admitted that from 2003 through 2007, it made corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.
The case is being prosecuted by Deputy Chief Charles G. La Bella and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Douglas McCormick and Gregory Staples of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases.