Bribery and Bid-Rigging

March 2, 2023

Telefonaktiebolaget LM Ericsson (“Ericsson”) has agreed to pay $206 million for breaching a 2019 Deferred Prosecution Agreement that was signed to settle allegations that the Swedish telecommunications company used third-party agents to bribe government officials in China, Djibouti, Indonesia, Kuwait, and Vietnam, in violation of the Foreign Corrupt Practices Act (FCPA).  Under the terms of the 2019 DPA, Ericsson agreed to pay a $520 million criminal penalty and comply with certain conditions.  However, Ericsson was found to have failed to disclose additional information relating to its conduct in China and Djibouti, as well as promptly report conduct in Iraq that may constitute another violation of the FCPA.  USAO SDNY

February 28, 2023

Seven defendants who previously pleaded guilty to defrauding a federal program that provides technology to underprivileged schools has been sentenced to up to 4 years in prison each and ordered to pay up to $1 million each in restitution.  Four of the defendants—Peretz Klein, Susan Klein, Ben Klein, and Sholem Steinberg—misrepresented themselves and their companies as vendors to schools participating in the federal E-Rate program, receiving over $14 million in federal funds even though they failed to provide much of the equipment ordered.  Two other defendants—Simon Goldbrener and Moshe Schwartz—misrepresented themselves as consultants who helped schools participate in the E-Rate program, when in fact, they took hundreds of thousands of dollars in bribes from the above vendors to circumvent the bidding process.  A final defendant, Aron Melber, was a school official who falsely certified to having obtained E-Rate-funded equipment and services through a fair and open bidding process.  USAO SDNY

January 4, 2023

The former Minister of Government for Bolivia, Arturo Carlos Murillo Prijic, was sentenced to nearly 6 years in prison after pleading guilty to laundering over $500,000 in bribes through bank accounts based in Miami.  Prijic had received the bribes from a Florida-based company in exchange for helping them secure a $5.6 million contract to provide non-lethal equipment, such as tear gas, to the Bolivian Ministry of Defense.  DOJ

October 14, 2022

Illinois Bell Telephone Company, LLC, d/b/a AT&T Illinois, has agreed to pay $23 million under a deferred prosecution agreement to resolve a bribery investigation.  As part of the resolution, AT&T Illinois admitted that it paid an ally of former Illinois Speaker of the House Michael J. Madigan $22,500 through a lobbying firm to unlawfully influence legislation favorable to the company.  USAO NDIL

June 14, 2022

Defense contractor Kellogg Brown & Root Services, Inc. and related entities will pay $13.7 million to resolve allegations that the companies submitted false claims under KBR’s Logistics Civil Augmentation Program (LOGCAP) III contract for the delivery of logistics support to U.S. Army forces in Iraq.  In an action originally brought by a whistleblower, the government alleged that KBR employees rigged bids on certain subcontracts in exchange for kickbacks from the subcontractors, and unlawfully passed on the inflated cost of those subcontracts to the government. DOJ

May 18, 2022

Seven companies in South Korea have agreed to a joint settlement of $3.1 million to resolve allegations that they conspired to suppress and eliminate competition in bidding on 15 contracts for construction and engineering work on U.S. military bases in South Korea awarded by the U.S. Army Corps of Engineers between 2016 and 2019.  The government alleged that as a result of the bid-rigging by the companies, Korea Engineering Consultants Corporation, Yul Lim Construction Co. Ltd., Shin Woo Construction & Industrial Co. Ltd., Seongbo Const. Ind. Co. Ltd., Wooseok Construction Co. Ltd., Yuil Engineering and Construction Co., and Seokwang Development Co. Ltd., the government paid substantially more for services performed under the contracts than it otherwise would have.  DOJ

April 25, 2022

David H. Wright, former general manager of the LA Department of Water and Power, will spend 72 months in federal prison after pleading guilty to one count of bribery. Wright accepted bribes from a lawyer to secure a $30 million no-bid contract for the lawyer’s company, Aventador Utility Services LLC, and thereafter accepted the position of CEO after he retired from LADWP. While still in his official capacity at LADWP, he lobbied the board to vote in favor of Aventador’s contract. CDCA

March 3, 2022

Multiple chemical companies agreed to pay a collective total of $11.7 million to resolve claims by state and local entities that from 1997 through at least 2011, they participated in a nationwide conspiracy to allocate territories and customers, unlawfully rig bids, and fix prices paid by government entities for the purchase of coagulant liquid aluminum sulfate, a chemical used in water treatment and purification.  The defendants include General Chemical entities, GenTek, Inc., Chemtrade entities, GEO Specialty Chemicals, Inc., C&S Chemicals, Inc., USALCO, LLC, Delta Chemical Corporation, and American Securities, LLC.  The Commonwealth of Virginia recovered $1.1 million in a whistleblower case initiated under the Virginia Fraud Against Taxpayers Act by Lawrence McShane.  VA

January 14, 2022

A former official with the Department of Defense’s Office of Inspector General who was accused of accepting bribes on a prime contract and defrauding the government has been sentenced to 7.5 years in prison.  While overseeing a contract that allowed federal agencies in the DC area to order telecommunication services and equipment, Matthew LumHo solicited and received bribes from a co-conspirator, William S. Wilson, in exchange for steering business to Wilson’s company.  Lumho also knowingly authorized fraudulent service orders for marked up services—essentially defrauding the government into paying for the bribes themselves—and repeatedly interfered with the criminal investigation.  USAO EDVA