FCPA Defendants Accuse Prosecutors of Misusing Grand Jury


FCPA Defendants Accuse Prosecutors of Misusing Grand Jury

Posted By Aruna Viswanatha On February 9, 2011 @ 3:11 pm In Latin AmericaUSA | No Comments

Defendants in a foreign bribery case scheduled for trial next month accused prosecutors of overstepping their bounds and improperly using new grand jury subpoenas to obtain evidence for trial, according to documents filed in court on Monday.

Lawyers for Lindsey Manufacturing Co. asked a federal judge in Los Angeles to throw out subpoenas issued last week seeking testimony from several of the company’s employees, and said the government was attempting to “misuse its power” through the grand jury process.

While prosecutors can use a grand jury to investigate potential crimes related to a previously charged case or to issue a superseding indictment, they are not allowed to use it to prepare for trial. Lindsey’s defense team said the timing of the new subpoenas suggested that the government’s lawyers are doing the latter.

The Justice Department served the subpoenas last Friday, according to the filing, two days after the employees said they would not participate in pre-trial interviews with prosecutors.

“It is clear that the government is using the grand jury to obtain discovery and preserve current evidence for a trial on an earlier indictment. And it is also clear that this is not proper,” defense lawyers said in the filing.

A DOJ spokeswoman did not respond to a request for comment. According to the filing, Assistant U.S. Attorney Douglas Miller told a defense lawyer the government would file a response under seal.

In an area of the law subject to little judicial scrutiny since few cases proceed to trial, the Lindsey case is a closely watched one. It involves millions of dollars worth of luxury goods, including a yacht and a Ferarri, allegedly provided to an official at a state-owned electric utility in Mexico, the Comisión Federal de Electridad, in violation of the Foreign Corrupt Practices Act.

Power company ABB Ltd., agreed [1] last year to pay $58 million to settle charges that it paid kickbacks to officials at CFE and elsewhere in order to obtain contracts. One of the company’s former employees, John O’Shea, is also preparing [2] for trial on similar charges in Houston later this year.

Last fall, the government expanded the case and indicted [3] Lindsey Manufacturing, two of its executives, and a husband and wife who served as its sales agents.

A judge denied [4] bail for one of the sales agents, who is a Mexican national, in January, setting the stage for a trial that is scheduled to begin on March 29.

Several employees of the company, which makes emergency towers that transmit electricity when the permanent towers are knocked down, previously testified before the federal grand jury investigating the conduct in exchange for immunity.

In the past two months, according to the filings, the government asked to interview the employees again in preparation for their testimony as government witnesses at trial.

DOJ lawyers Nicola Mrazek and Jeffrey Goldberg exchanged phone calls about the additional interviews with a lawyer for the employees, Stephen Jones.

(Goldberg, who joined [5] the Justice Department’s FCPA team last month, took over for Mrazek because she is preparing for the Houston trial.)

Last Wednesday, the Lindsey employees declined to be interviewed.

Two days later, according to court documents, they received the grand jury subpoenas.

The subpoenas seek testimony from them next Tuesday, Feb. 15, a day after the deadline for all pre-trial motions in the case.

The motion to quash the subpoenas was filed by Jan Handzlik, a partner at Greenberg Traurig LLP [6], who represents Lindsey Manufacturing and its president, Keith Lindsey, and Janet Levine at Crowell & Moring LLP [7], who represents Lindsey executive Steve K. Lee.