Last week, a judge in the U.S. District Court for the Southern District of Florida sentenced Joel Esquenazi, the former president of Miami-based Terra Telecommunications Corp., to an unprecedented 15 years in prison. In August, Esquenazi and a former executive vice president of Terra, Carlos Rodriguez, were convicted by a jury of conspiracy to violate the U.S. Foreign Corrupt Practices Act (FCPA), substantive FCPA violations, and money laundering associated with paying bribes to officials of Telecommunications D'Haiti (Haiti Teleco). In addition to prison sentences (Rodriguez was sentenced to seven years), the defendants were ordered to forfeit $3.09 million. The indictment alleged that Esquenazi, Rodriguez, and co-conspirators paid over $890,000 in bribes to directors of Haiti Teleco in return for business advantages, bribes that were recorded in the company books and records as "commissions" or "consulting fees" to shell companies, in violation of the FCPA's books and records provisions.
This case is noteworthy not because of the facts alleged — in cases brought under the FCPA, the government frequently alleges bribes and gifts disguised as commissions and consulting fees. Nor is it remarkable because of the number of defendants indicted in the scheme — the number of indicted parties in the Haiti Telco matter (12), while record-breaking at the time, was far surpassed when the government netted 22 defendants in a sting operation in 2010. The roughly $890,000 paid in bribes is downright paltry when compared to contemporaneous enforcement matters, in which the government alleges bribes totaling well into the millions and even the hundreds of millions. Rather, what makes the Haiti Telecom convictions remarkable when compared to other FCPA convictions is the length of the prison sentence imposed.
Before Esquenazi, the longest sentence imposed for FCPA-related violations was seven years and three months. On November 13, 2009, Charles Paul Edward Jumet (Jumet) pled guilty to conspiring to violate the FCPA and making false statements to federal agents in connection with corrupt payments to Panamanian government officials, and was subsequently sentenced on April 19, 2010, to 87 months in prison.1 The 87-month sentence was then the longest prison term ever imposed for an FCPA violation.
Some 18 months later, the Esquenazi prison term dwarfs the incarcerative punishment imposed on Jumet. And while a remarkable leap from 87 months, Esquenazi's sentence could have been much longer. U.S. District Judge Jose Martinez granted Esquenazi's motion for a downward departure from the U.S. Sentencing Guidelines Manual, under which Esquenazi could have been sentenced to 24 years or more.2
After Jumet and Esquenazi, it is clear that the government will continue to push for lengthier sentences for individual defendants in FCPA cases. Announcing Jumet's sentence last year, Assistant Attorney General Lanny Breuer called it "an important milestone" in the effort to deter foreign bribery, and a harsh reminder that "foreign corruption carries with it very serious penalties, which can include substantial prison time for individuals who violate the law." With the new record-breaking Esquenazi sentence, Breuer stated: "This sentence is a stark reminder to executives that bribing government officials to secure business advantages is a serious crime with serious consequences. As today's sentence shows, we will continue to hold accountable individuals and companies who engage in such corruption." These pronouncements by the Department of Justice, substantiated by the growing number of individual prosecutions and increasingly severe penalties for FCPA violators, underscore the importance of effective corporate compliance policies and procedures, particularly training and oversight for individual employees.
Footnotes
1. United States v. Jumet, No. 09-CR-397 (E.D. Va. Nov. 13, 2009).
2 United States v. Esquenazi, No. 09-cr-21010, Motion for Variance/Downward Departure from the Sentencing Guidelines (S.D. Fla. Oct. 22, 2011) (Docket No. 620); Judgment and Re-Sentence (Docket No. 625).
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