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U.S. v. Latin Node, Inc.

 
:
Latin Node, Inc.
:
DOJ Criminal
:
March 23, 2009
:
U.S. v. Latin Node, Inc.
:
U.S. v. Latin Node, Inc., No. 09-20239 (S.D. Fla. 2009)
:
eLandia International Inc. (eLandia) discovered that bribery had taken place at Latin Node, Inc. ("LatiNode") after it acquired the company. eLandia conducted a post-acquisition internal investigation, terminated the corruptly-obtained agreements, and implemented controls. Within a year of the acquisition, it wound down the LatiNode business, entered the subsidiary into state bankruptcy proceedings, and sold off the remaining assets to cover administrative costs.

Despite eLandia's efforts and the functional non-existence of LatiNode, the government nevertheless charged LatiNode, requiring eLandia to pay the applicable fine. It appears the government was motivated to do so by the lack of effective pre-acquisition due diligence on the part of the eLandia which might have discovered violations pre-closing allowing for immediate implementation of FCPA controls and avoidance of any corrupt agreements post-acquisition.
:
Telecommunications-Other/Multi
:
Honduras, Yemen
:
2004; 2005; 2006; 2007
:
Officials at Hondutel, the Honduran state-owned telecommunications company; the Vice-President of Operations and other officials at TeleYemen, the Yemeni state-owned telecommunications company; and officials from the Yemeni Ministry of Telecommunications.
:
In April 2009, Latin Node, Inc. ("LatiNode") a privately held Florida corporation, pleaded guilty to violating the FCPA in connection with over $2.2 million in bribes to public officials and employees of state-owned telecommunications companies in Honduras and Yemen.

From March 2004 through June 2007, LatiNode paid or caused to be paid approximately $1,099,889 to a third-party consultant, LatiNode employees, and Honduran officials, knowing that some or all of these funds would be passed on as bribes to officials of Hondutel, the Honduran state-owned telecommunications company. LatiNode admitted it made these payments in exchange for obtaining an interconnection agreement with Hondutel as well as reducing the rate per minute under the interconnection agreement. Payments were made from LatiNode's Miami bank account and approved by its senior executives.

From July 2005 to April 2006, LatiNode made payments totaling approximately $1,150,654 either directly to Yemeni officials or to a third-party consultant knowing that some or all of the money would be passed on to Yemeni officials in exchange for favorable interconnection rates in Yemen. Payments were made from LatiNode's Miami bank account and approved by its senior executives.

The improper payments were discovered after eLandia International Inc. ("eLandia") acquired LatiNode. eLandia conducted an internal investigation, terminated the corruptly-obtained agreements, and voluntarily disclosed the unlawful conduct to the DOJ and the SEC. The DOJ cited eLandia's cooperation, internal investigation, and remedial action (including termination of the relevant contracts and management with knowledge and involvement and implementation of internal controls) with approval and charged only a single violation of the FCPA and did not require retention of an independent monitor.

eLandia has written-off its investment and sued LatiNode's former CEO and parent company for misrepresentations made during the sale.

On April 7, 2009, LatiNode pleaded guilty and agreed to pay a fine of $2 million over the next three years to a one-count criminal information in the U.S. District Court for the Southern District of Florida.

Former senior executives Manuel Salvoch, Juan Pablo Vasquez, Manuel Caraceres and Jorge Granados pleaded guilty to conspiracy to violate the FCPA on Jan. 12, 2011, Jan. 21, 2011, May 18, 2011 and May 19, 2011, respectively. On September 8, 2011, Granados was sentenced to 46 months in prison.
:
Anti-bribery (Domestic Concern)
:
Fine, Plea
:
The sanction consisted of a fine of $2,000,000 plus a special assessment of $400.
:
2,000,400
:
0
:
Total Offense Level: 30 (Base Offense of 12 plus More than One Bribe of 2 plus Value of Payments Approximately $2.2 million of 16). Total Culpability Score: 2 (Base Score of 5 plus More than 50 Employees and Individual of Substantial Authority Participated in, Condoned, or was Willfully Ignorant of the Offence of 2 minus Self-reporting, Cooperation, Acceptance of Responsibility of 5).
:
Domestic Concern
:
U.S.
:
Contract Procurement/Retention, Legislation
:
Not stated.
:
Cash, Wire/check
:
Direct, Family Member, Sales Agent/Consultant
:
2,250,543
:
Honduras, Yemen
:
United States
:
Yes
:
Yemen