United States v. Control Systems Specialist, Inc. and Darrold Richard Crites (S.D. Ohio 1998)

• Case Name
• United States v. Control Systems Specialist, Inc. and Darrold Richard Crites (S.D. Ohio 1998)

• Date Filed
• 08/19/1998

• Enforcement Agency
• DOJ

• Countries
• Brazil

• Foreign Official
• BAF/Lt. Col. Z, who was authorized to make purchases of military equipment on behalf of the BAC.

• Date of Conduct
• 1994 to 1996

• Nature of Business
• Purchase, repair and resale of surplus military equipment by Control Systems Specialist, Inc., an Ohio corporation and domestic concern.

• Influence to be Obtained
• To obtain a contract for Control Systems Specialist, Inc. to sell surplus U.S. military equipment, including two gas turbine power units, to the BAC.

• Enforcement
• Control Systems Specialist, Inc. (“CSS”) is an Ohio corporation that buys and repairs surplus military equipment for resale.  Darrold Richard Crites was the President of CSS.  Company Y was another Ohio corporation in the business of buying and repairing surplus military equipment for resale.  Businessman X was the President of Company Y.  Brazilian Air Force Lt. Colonel Z (“Colonel Z”) was an employee of the Brazilian government who was authorized to purchase military equipment.  Command Country Manager for Brazil (“Country Manager”) was an employee of the U.S. Air Force and his official duties involved the sale of U.S. military equipment to foreign countries.  In 1994, CSS and Crites bid on a contract to supply the Brazilian government with repaired military equipment.  CSS and Crites agreed to pay bribes to Colonel Z to ensure that they would be selected for the contract.  Between November 1994 and December 1995, CSS and Crites issued 21 checks to Colonel Z which approximately totaled $189,576.00.  In addition, Crites sought assistance from Businessman X to help make additional payments to Colonel Z.  As a result of this solicitation, Businessman X incorporated company Y in 1995, purchased additional repairable military equipment and paid Colonel Z approximately $67,563.00.  CSS and Crites also agreed to pay bribes to the Country Manager of Brazil in exchange for information about the location of repairable parts that could be sold to the Brazilian Air Force.  Country Manager provided Crites and CSS with this information and in exchange, the Country Manager received $66,000.00.  As a result of these bribes, CSS was awarded the contract with the Brazilian Air Force and received approximately $672,298.00 upon performance.
  
  In 1998, the U.S. Attorney’s office indicted Crites and CSS for conspiracy to violate the Foreign Corrupt Practices Act, violations of the FCPA and bribery of a U.S. public official.  Crites pled guilty to a three count information charging a conspiracy to violate the FCPA, violation of the FCPA and bribery of a U.S. public official.  Pursuant to the plea agreement, Crites must pay a special assessment of $50.00 for the conspiracy and FCPA violation counts and $100.00 for the bribery of a U.S. public official count.  Crites also agreed to make complete restitution for all damage that resulted from his violations.  The plea agreement did not specify the length of a prison term and he was sentenced to three years’ probation and 150 hours of community service.  Crites also entered into a cooperation agreement with the DOJ.
  
  CSS also pled guilty to conspiracy to violate the FCPA, a substantive violation of the FCPA, and bribery of a U.S. public official.  CSS was subsequently ordered to pay a $1,500 Criminal Fine.

• Amount of the Value
• $257,139, disguised as consultant fees, paid to a Brazilian Air Force Lieutenant Colonel (“BAF/Lt. Col. Z”) for each bid accepted by BAF/Lt. Col. Z on behalf of the Brazilian Aeronautical Commission (“BAC”).

• Amount of Business Related to Payment
• At least 44 purchases of surplus U.S. military equipment for repair and resale to the BAC.

• Intermediary
• None

• Total Sanction
• $ 1,500

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 1,500

Control System Specialist

• Date Filed
• 08/19/1998

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• Bribery of a U.S. Public Official.

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Domestic Concern

• Defendant's Citizenship
• United States

• Individual Sanction
• $1,500 Criminal Fine.

Crites, Darrold Richard

• Date Filed
• 08/19/1998

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• Bribery of a U.S. Public Official.

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Domestic Concern, Agent of Domestic Concern

• Defendant's Citizenship
• United States

• Individual Sanction
• 36-Months Probation; $150 Criminal Fine.