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Release No. 11-071
May 10, 2011
SOUTHERN CALIFORNIA COMPANY, TWO EXECUTIVES AND INTERMEDIARY CONVICTED IN SCHEME TO BRIBE OFFICIALS AT STATE-OWNED ELECTRICAL UTILITY IN MEXICO
LOS ANGELES – Azusa-based Lindsey Manufacturing Company, two of its executives and a Mexican intermediary were convicted today on federal charges for their roles in a scheme to pay bribes to Mexican government officials at the Comisión Federal de Electricidad (CFE), a state-owned utility company.
Three of the defendants – Keith E. Lindsey, 66, of La Canada-Flintridge; Steve K. Lee, 60, of Diamond Bar; and Lindsey Manufacturing – were each found guilty of one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and five substantive counts of violating the FCPA.
The fourth defendant who went to trial – Angela Maria Gomez Aguilar, 56, of Cuernavaca, Mexico – was convicted of one money laundering conspiracy charge.
“Today’s guilty verdicts are an important milestone in our Foreign Corrupt Practices Act enforcement efforts,” said Assistant Attorney General Lanny A. Breuer. “Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last. Foreign corruption undermines the rule of law, stifling competition and the health of international markets and American businesses. As this prosecution shows, we are fiercely committed to bringing to justice all the players in these bribery schemes – the executives who conceive of the criminal plans, the people they use to pay the bribes, and the companies that knowingly allow these schemes to flourish. Bribery has real consequences.”
United States Attorney André Birotte Jr. stated: “Bribery is not a victimless crime. Not only does it damage citizens’ confidence in their own government, it also damages the integrity of the global marketplace. The Department of Justice remains committed to prosecuting violations of the FCPA to ensure that the payment of bribes can no longer be viewed simply as the cost of doing business in a foreign nation. Bribery, wherever it occurs, will carry the potential cost of criminal prosecution, hefty fines and prison terms.”
A fifth defendant in this case – Enrique Aguilar, 56, who is Angela Aguilar’s husband, also of Cuernavaca, Mexico – is charged with conspiracy to violate the FCPA, violating the FCPA and money laundering. Enrique Aguilar is a fugitive who is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
CFE is responsible for supplying electricity in Mexico, and the utility contracts with Mexican and foreign companies for goods and services to help supply electricity services to its customers. Angela Aguilar held herself out as an officer of Grupo Internacional de Asesores S.A. (Grupo), which purported to provide sales representation services for companies doing business with CFE.
Lindsey Manufacturing, which makes emergency restoration systems and other equipment used by electrical utility companies, hired Enrique Aguilar to serve as its sales representative in Mexico and to help it obtain contracts from CFE.
According to evidence presented at trial, from early 2002 until March 2009, Lindsey Manufacturing, Lindsey, Lee and others orchestrated a scheme in which Enrique Aguilar was paid a 30 percent commission on all the goods and services Lindsey Manufacturing sold to CFE, and Lindsey and Lee understood that all or part of the 30 percent commission would be used to pay bribes to Mexican officials in exchange for CFE awarding contracts to Lindsey Manufacturing. The costs of goods and services sold to CFE were increased by 30 percent to ensure that the added cost of paying the bribes was absorbed by CFE and not by Lindsey Manufacturing.
The evidence presented at trial showed that Enrique Aguilar used Grupo to submit fraudulent invoices to Lindsey Manufacturing for 30 percent of the CFE contract price. Lindsey and Lee then caused the money requested in the fraudulent invoices to be wired into Grupo’s brokerage account, knowing that at least some of the money was being used as bribes.
The evidence at trial established that in the months leading up to the hiring of Enrique Aguilar, Lindsey and Lee learned that Enrique Aguilar had a corrupt relationship with a top CFE official. In fact, Lindsey and Lee complained to CFE about the way in which contracts were being awarded. The month after their complaint was rebuffed, Lindsey and Lee hired Enrique Aguilar. Within months of hiring Enrique Aguilar, Lindsey Manufacturing began receiving contracts from CFE and received more than $19 million in CFE business over the course of the next seven years. The evidence also showed that Lindsey and Lee wired approximately $5.9 million of that money directly to Grupo.
Angela Aguilar authorized money in the Grupo account to be used to buy a CFE official a $297,500 Ferrari Spyder and a $1.8 million yacht, according to the evidence at trial. She also authorized the transfer of $500,000 to the brother and mother of another CFE official.
“The FBI investigates corruption and allegations of bribery to ensure that U.S.-based companies do business on an even playing field,” said FBI Assistant Director in Charge Steven M. Martinez of the FBI’s Los Angeles Field Office. “The guilty verdicts announced today should send a strong message to large public corporations and small businesses alike, that bribing foreign officials to obtain a competitive advantage is a crime and will be prosecuted.”
The four defendants convicted today were found guilty by a jury that deliberated for one day after hearing evidence for five weeks.
Lindsey Manufacturing, Lindsey and Lee are scheduled to be sentenced on September 16 by United States District Judge A. Howard Matz. Angela Aguilar is scheduled to be sentenced on August 12.
Each FCPA charge carries a statutory maximum penalty of five years in federal prison. The money laundering conspiracy count carries a maximum penalty of 20 years in prison.
The case is being prosecuted by Assistant United States Attorney Douglas M. Miller and DOJ Senior Trial Attorneys Nicola J. Mrazek and Jeffrey A. Goldberg. The case was investigated by the FBI’s Los Angeles Field Office and the IRS-Criminal Investigation’s Los Angeles Field Office. The Department of Homeland Security - Office of Inspector General provided assistance during the investigation. The Department of Justice thanks Mexican authorities for their ongoing assistance in this matter.
Release No. 11-071
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