By Joel Schectman
A federal judge in U.S. District Court in Camden, N.J., on
Tuesday sentenced former PetroTiger Chief Executive Joseph Sigelman
to probation with no jail time, after the defense accepted an
unexpected plea deal in the middle of the trial.
The plea agreement, negotiated over the weekend, represented a
surprising turn of events in the closely watched trial entering its
third week. On Monday, Mr. Sigelman admitted to authorizing
payments to a Colombian employee of state-owned Ecopetrol SA in an
effort to secure an oil-services contract worth more than $39
million.
Mr. Sigelman pleaded guilty to conspiring to violate the Foreign
Corrupt Practices Act, which makes it a crime to bribe overseas
officials to win business. The government dropped its other
charges, including money laundering and kickback violations, which
together with the FCPA charges could have resulted in a 20-year
sentence.
U.S. District Judge Joseph Irenas, who criticized prosecutors,
sentenced Mr. Sigelman to three years of probation and ordered him
to pay $339,000 in fines and restitution to PetroTiger.
Before the sentencing Mr. Sigelman spoke briefly. "I stand
before you today with humility and remorse," he said. "I will
strive to earn back the trust of those around me."
The judge said a felony record and the admission of guilt was
punishment enough for the businessman. "I believe that in the case
of Mr. Sigelman a plea and a conviction here have pretty
devastating consequences," Judge Irenas said. Noting the companies
Mr. Sigelman has started, the judge said he has "the potential and
proven ability to do great good."
But the felony conviction without jail time represented a
lukewarm victory for the U.S. Justice Department. Prosecutors faced
an unexpected setback at the start of the trial after a key
witness, former PetroTiger general counsel Gregory Weisman,
admitted on the stand that he gave false testimony.
In recent years, the government has racked up a series of record
out-of-court settlements with companies accused of foreign bribery.
But the Sigelman case was seen as a test of the government's
ability to win overseas bribery cases before a jury. The trial
marked the first time in years the Justice Department had brought
FCPA charges to trial, after a series of setbacks in earlier
overseas bribery cases.
Over the past two years, observers and federal authorities have
often cited the Sigelman case as an illustration of a tougher
approach to foreign bribery, using investigative tactics more
closely associated with drug or mob trials. For example, the
Federal Bureau of Investigation wired Mr. Weisman with a secret
video camera to record a conversation with Mr. Sigelman.
Mr. Weisman at first had testified that authorities had
pressured him to continue working as a general counsel at another
company run by Mr. Sigelman as part of his cooperation deal. But
last Thursday, under further cross examination, Mr. Weisman
admitted the statement was false. "I had misremembered a couple
days ago," Mr. Weisman said.
Both sides agreed to a break in the trial soon after that
admission and reached an agreement over the weekend.
Prosecutors told the court they agreed to grant Mr. Sigelman a
sentence ranging from probation and one year in jail. But the lead
federal prosecutor, Patrick Stokes, argued that Mr. Sigelman led
the scheme and deserved the maximum punishment for the sake of
deterrence.
The judge, visibly irritated, lashed out at the government for
pushing for incarceration after it had already agreed to a sentence
that could include no jail time. "I have a feeling I'm being played
with, you know, maybe shift to me the criticism [for the
sentence]," the judge said.
The deal struck was considerably better for Mr. Sigelman than
what prosecutors had proposed earlier. In March 2014, prosecutors
offered Mr. Sigelman a sentence of 10 years in exchange for a
guilty plea, according to a copy of proposed plea agreement
documents reviewed by The Wall Street Journal.
Mr. Stokes acknowledged that prosecutors were stymied by the
complexity of the case, which included an extensive overseas
investigation and foreign witnesses, and by Mr. Weisman's
"problematic" testimony. "Complex white-collar crimes are difficult
to prove. FCPA cases are difficult to prove," Mr. Stokes said. "We
believe that a sentence of incarceration...sends an important
message"
The judge bristled at that suggestion. "But in this case, what
was the difficulty?"
Judge Irenas reminded the prosecutor that PetroTiger had
"dumped" thousands of pages of documents from its internal
investigation "in your lap." The judge also pointed out a potential
witness, former Ecopetrol employee David Duran, who was accused of
taking the bribes, voluntarily visited the Justice Department
before the trial and was allowed to return home to Colombia. "You
had Duran, here right in the country talking to you," the judge
said. "It's not as if he was hiding somewhere in the jungle."
An attorney for Mr. Duran has said the former Ecopetrol employee
maintains his innocence and that the payments he received weren't
bribes.
"You chose not to complete the trial, not me," the judge said.
"In some forum, you're going to have to explain why, but maybe not
here."
Write to Joel Schectman at joel.schectman@dowjones.com
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