DOJ Settles Follow-On FCPA Case: Transport Logistics Pays $2 Million Penalty

Last week, the Justice Department announced its first FCPA enforcement action in 2018 – a follow-on settlement from prior FCPA enforcement actions centering on a bribery scheme involving a Russian government official from a subsidiary of Russia’s State Atomic Energy Corporation.  Three individuals have been charged in connection with the bribery scheme.

Transport Logistics International, a Maryland company, entered into a deferred prosecution agreement and agreed to pay a $2 million penalty.  TLI is a logistics company involved in the transport of nuclear materials.  TLI’s penalty was reduced from $21 million to $2 million because of its inability to pay a fine.

TLI did not voluntarily disclose the conduct to the government but earned credit for its full cooperation and remediation of its compliance program.  Under the Justice Departments FCPA Corporate Enforcement Policy, TLI earned a 25 percent reduction from the bottom of the applicable sentencing guideline range.

TLI and others paid approximately $1.7 million to offshore bank accounts owned by shell companies to pay Vadim Mikerin, a Russian government official.  To disguise the payments, TLI used false invoices that described services that were never provided.  TLI wired payments to the shell company accounts in Latvia, Cyprus and Switzerland.

In 2015, TLI’s Co-President Daren Condrey plead guilty to FCPA conspiracy, while Mikerin plead guilty to money laundering.  Mikerin was sentenced to 48 months imprisonment.

In early 2018, TLI Co-President Mark Lambert was charged in an eleven-count indictment, including charges of FCPA conspiracy and wire fraud, seven counts of FCPA violations, two counts of wire fraud and one count of money laundering.

Mikerin was a director of TENEX, a Russian state-owned company, which supplied uranium and uranium enrichment services to nuclear power companies on behalf of Russia, and was the President of TENAM, a subsidiary of TENEX, and the US representative company.

TENEX routinely contracted with TLI to transport uranium to and from the United States.  Mikerin directed TLI executives to make payments to various offshore accounts in exchange for contracts.  Each payment was set at a percentage amount of an individual contract awarded to TLI.  Fake documents were prepared to record the payments as commissions.

In email messages amongst themselves, the defendants referred to the bribe payments as “cake,” “lucky figure,” “LF,” “remuneration,” or “commission.”  Most of the relevant email communications amongst the conspirators were conducted on personal email accounts.

TLI enhanced its compliance program and specifically focused on its invoice to payment controls.  Specifically, TLI adopted policies prohibiting: (i) payment to bank accounts that are not in the name of the company/vendor who is owed the payment; (ii) payments to a country other than where the individual/company resides or where the services are rendered; and (iii) payments for rebates, discounts, commission or remuneration that are not specified in bids or contracts.  In addition, TLI adopted payment controls requiring multiple reviews for payment requests and two signatures on check registers.

TLI was able to reduce its penalty from $21.4 under the sentencing guidelines to $2 million based on its inability to pay.  TLI retained a forensic accountant who was able to demonstrate that a $21.4 million payment would create a substantial risk that the company would discontinue operations.

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