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U.S. v. Richard Morlok

 
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Control Components Inc. - Morlok, Richard
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DOJ Criminal
:
January 7, 2009
:
U.S. v. Richard Morlok
:
U.S. v. Morlok, No. 09-05 (C.D. Ca. 2009)
:
As an early cooperator, Morlok's plea was structured to limit his maximum sentence to less than half that of employees who were later indicted. Through his plea, Morlok also avoided being charged with the other employees for a bribery conspiracy involving a greater volume of payments.
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Manufacturing/Engineering
:
China, Romania, Saudi Arabia, South Korea
:
2003; 2004; 2005; 2006
:
employees and agents of state owned enterprises
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Morlok served as finance director 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 the plea agreement, from 2003 to 2006, Morlok caused employees and agents of CCI to make payments totaling approximately $628,000 to officials employed by state-owned companies in exchange for their assistance obtaining sales contracts with profits worth approximately $3.5 million. The payments were received by employees and agents of the following companies: China National Offshore Oil Company, Petrochina, Jiangsu Nuclear Power Corporation (China), Korea Hydro and Nuclear Power ("KHNP"), Rovinari Power (Romania), and Safco (Saudi Arabia).

Morlok plead specifically to approving a corrupt payment in April 2004 of $57,658 to an official of KHNP. Morlok caused CCI to wire the payment from its California bank account to an account with a Korean bank. Later, Morlok provided false and misleading statements to auditors when he denied knowledge of and participation in improper payments. On March 11, 2013, Morlok was sentenced to three years probation and three years home confinement.

On January 8, 2009, CCI's former worldwide sales director, Mario Covino, pleaded guilty to conspiracy to pay $1 million in bribes to employees of state-owned enterprises in several countries, including China, Brazil, India, Malaysia, South Korea, and the United Arab Emirates. On March 11, 2013, Covino 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, Ricotti 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
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Plea, Probation
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Three years probation and three years home confinement.
:
Not stated.
:
0
:
Base offense level: 12More than one bribe: 2Benefit between $2.5 million and $7 million: 18Manager of activity involving 5 or more participants and that was otherwise extensive: 3Acceptance of responsibility: -3TOTAL 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).
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Domestic Concern, Employee of Domestic Concern
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Senior Finance
:
U.S.
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Contract Procurement/Retention
:
Not stated.
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Wire/check
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Direct, Sales Agent/Consultant
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628,000
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China, Romania, Saudi Arabia, South Korea
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South Korea, United States
:
foreign official
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No
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China, South Korea