In January 2019, the Justice Department brought an interesting FCPA prosecution involving a Hawaii-based businessman, Frank James Lyon, and Master Halbert, a government official from Micronesia.  DOJ’s prosecution was interesting for two significant reasons – first, it was another example of DOJ enforcement efforts against the payor of the bribe for violating the FCPA and the recipient of the bribe, the foreign official, for money laundering; second, DOJ’s prosecution sets out a variety of bribery techniques, involving a laundry list of schemes and illegal payments identified over numerous enforcement examples.

Frank James Lyon pleaded guilty to conspiracy to violate the FCPA anti-bribery provisions and to commit US federal program fraud.  Lyons was the owner of a construction company which is privately-owned.  He paid bribes to Master Halbert and to Hawaii’s state agency which received federal funding.  Lyons was a double violator – he violated the FCPA and he violated the US bribery prohibition against bribery of state officials. (18 USC Section 666).

Master Halbert, the Micronesia government official was arrested in Honolulu and charged with one count of conspiracy to commit money laundering.  Halbert was a government official in the Federated States of Micronesia (FSM) Department of Transportation, Communications and Infrastructure.  He administered FSM’s aviation programs, including its airports.

Over a ten year period, Lyon paid FSM officials roughly $200,000 in bribes, including Halbert, for FSM contracts worth approximately $8 million.

Lyon also orchestrated bribery payments to Hawaii State Agency officials totaling approximately $240,000 to obtain a $2.5 million contract.  Lyon paid these bribes through a co-conspirator who contracted with Lyon’s engineering company to provide services which were never fulfilled.

DOJ’s factual statement to support Lyon’s guilty plea included a laundry list of bribes, including cash, vehicles, gifts, tuition payments for relatives, travel and entertainment.  Some examples include:

• Lyon purchased a Ford Truck in Hawaii and shipped it to FSM for Halbert’s personal use.  Lyon stated: “This is an example of things [I] have to do. [I] have to find a car, negotiate a price, figure out how to pay for it, get it on a ship to [FSM]. This is illegal. [I] I can only do these things when people don’t know what I am doing.”
• Lyon paid for a trip for Halbert and his wife to Las Vegas, Nevada.  Lyon stated in an email that the trip would be very expensive, but also stated, “ This is a huge (and very very very critical to get renewed) contract so I am not trying to save money – or god forbid – insult Halbert.”
• Lyon paid tuition for a relative of Halbert who attended the University of Hawaii.
• Lyon intended to pay for an apartment for another FSM government official.
• Lyon recorded all these bribes as marketing or business development expenses.

Lyon also attempted to destroy, delete and hide email communications relating to the bribery schemes.   He instructed an information technology consultant to destroy his emails every five days out of concern that the emails could be used against him.