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U.S. v. Mario Covino

 
:
Control Components Inc. - Covino, Mario
:
DOJ Criminal
:
December 17, 2008
:
U.S. v. Mario Covino
:
U.S. v. Covino, No. 08-336 (C.D. Ca. 2008)
:
As an early cooperator, Covino's plea was structured to limit his maximum sentence to less than half that of employees who were later indicted. Through his plea, Covino also avoided being charged with the other employees for a bribery conspiracy involving a greater volume of payments.
:
Manufacturing/Engineering
:
Brazil, China, India, Malaysia, South Korea, United Arab Emirates
:
2003; 2004; 2005; 2006; 2007
:
Employees and agents of state owned enterprises
:
Covino served as Director of Worldwide Factory Sales for Control Components Inc. ("CCI"), a California based manufacturer of severe service control valves used in the nuclear, oil and gas, and power generation industries.

According to his plea agreement, Covino caused CCI employees and agents to make payments totaling approximately $1 million to officials employed by state-owned companies in exchange for their assistance in obtaining sales contracts earning profits of approximately $5 million.

The payments were received by employees and agents of the following companies: Petrobras (Brazil), Dingzhou Power (China), Datang Power (China), China Petroleum, China Resources Power, China National Offshore Oil Company, PetroChina, Maharashtra State Electricity Board (India), Korea Hydro and Nuclear Power ("KHNP"), Petronas (Malaysia), Dolphin Energy (UAE), and Abu Dhabi Company for Oil Operations (UAE).

Covino plead specifically to approving a payment of $15,000 to an official of PetroChina in March 2004 in exchange for assistance in awarding the valve manufacturer PetroChina's business. Covino caused CCI to wire the payment to Bank of China. Covino later provided false and misleading statements to auditors denying knowledge of corrupt payments and obstructed the audit by deleting emails referencing the payments and instructing other employees to do the same. On March 11, 2013, Covino was sentenced to three years of probation and three years of home confinement.

On February 3, 2009, the former CCI finance director, Richard Morlok, pleaded guilty to conspiracy to pay $628,000 in bribes to employees of state-owned enterprises in several countries, including China, South Korea, Romania, and Saudi Arabia. On March 11, 2013, Morlok was sentenced to three years probation and three years home confinement.

Following the Morlok and Covino pleas, the South Korean government announced plans to expand a probe of KHNP kickbacks for CCI contracts.

On April 8, 2009, a grand jury indicted six additional former CCI executives for Travel Act and FCPA violations related to an alleged $4.9 million foreign bribery scheme. One of these defendants, Flavio Ricotti, pleaded guilty on April 28, 2011, and on March 18, 2013, was sentenced to time served (11 months previously spent in U.S. custody) and a $100 special assessment but no fine. Two other defendants, Stuart and Hong Carson, pleaded guilty on April 16, 2012 to separate one-count superseding informations charging them with making a corrupt payment to a foreign government official in violation of the FCPA. Stuart Carson was sentenced to four months imprisonment and ordered to pay a fine of $20,000. Hong Carson was sentenced to three years probation and ordered to pay a fine of $20,000. Cosgrove pleaded guilty on May 29, 2012, and on September 14, 2012 was sentenced to 13 months home confinement and a $20,000 fine. Edmonds pleaded guilty on June 15, 2012, and on December 17, 2012, was sentenced to 4 months in prison followed by 4 months home confinement, with a $20,000 fine.

On July 24, 2009, CCI pleaded guilty to charges stemming from the conduct of the aforementioned former employees.
:
Conspiracy - Anti-Bribery
:
Plea, Probation
:
Three years probation and three years home confinement.
:
Not stated.
:
0
:
Base offense level: 12
More than one bribe: 2
Benefit between $2.5 million and $7 million: 18
Manager of activity involving 5 or more participants and that was otherwise extensive: 3
Acceptance of responsibility: -3
TOTAL OFFENSE LEVEL: 32

For this offense level the sentencing guidelines indicate a sentence of 121 to 151 months. However, by charging only conspiracy and no substantive counts, the DOJ effectively ensured that the Defendant cannot be sentenced to more than the statutory maximum for conspiracy of five years (60 months).
:
Domestic Concern, Employee of Domestic Concern
:
Senior Sales
:
Foreign
:
Contract Procurement/Retention
:
Not stated.
:
Wire/check
:
Direct, Sales Agent/Consultant
:
1,000,000
:
Brazil, China, India, Malaysia, South Korea, United Arab Emirates
:
China, United States
:
No
:
China, South Korea