Corruption: Italian exec extradited from Germany to U.S. to face foreign bribery charges

Source: U.S. Department of Justice - Italian citizen Flavio Ricotti, a former executive of Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), has been extradited to the United States from Germany in connection with his alleged participation in a conspiracy to secure contracts by paying bribes to officials of foreign state-owned companies as well as officers and employees of foreign and domestic private companies, the Department of Justice announced today. Ricotti, 49, of Bientina, Italy, was arrested on Feb. 14, 2010, in Frankfurt, Germany, and arrived in the United States on July 2, 2010.

Ricotti and five other former executives of CCI were charged on April 8, 2009, in a 16-count indictment for their alleged roles in the foreign bribery scheme. According to the indictment, Ricotti, who served as CCI’s vice president and head of sales for Europe, Africa and the Middle East from 2001 through 2007, allegedly caused CCI employees and agents to make corrupt payments totaling approximately $750,000 to officers and employees of state-owned companies, and corrupt payments totaling approximately $380,000 to officers and employees of private companies. According to the indictment, these corrupt payments occurred in connection with CCI projects in various countries around the world, including in the United Arab Emirates, Kazakhstan, India and Qatar. According to court documents, the valve company designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.

The other five former CCI executives also charged are Stuart Carson, CCI’s former chief executive officer; Hong (Rose) Carson, CCI’s former director of sales for China and Taiwan; Paul Cosgrove, CCI’s former director of worldwide sales; David Edmonds, CCI’s former vice president of worldwide customer service; and Han Yong Kim, the former president of CCI’s Korean office. Trial is scheduled to begin Nov. 2, 2010.

Ricotti is charged with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the FCPA, and three counts of violating the Travel Act. The conspiracy count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The Travel Act counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the pecuniary gain or loss.

In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of CCI. On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for CCI, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. On Feb. 3, 2009, Richard Morlok, CCI’s former finance director, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced in January 2011.

On July 31, 2009, CCI pleaded guilty to a three-count criminal information charging the company with conspiracy to violate the FCPA and the Travel Act, and two substantive violations of the FCPA. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years. CCI admitted that from 2003 through 2007 it made approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.

The case is being prosecuted by Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office, and its team of special agents dedicated to the investigation of foreign bribery cases. Significant assistance was provided by the Criminal Division’s Office of International Affairs.

An indictment is merely an accusation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.