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SEC v. Douglas A. Murphy, David G. Kay and Lawrence H. Theriot

 
:
ARI - Murphy, Douglas
:
SEC Civil
:
July 30, 2002
:
SEC v. Douglas A. Murphy, David G. Kay and Lawrence H. Theriot
:
SEC v. Douglas A. Murphy, David G. Kay and Lawrence H. Theriot, No. H-02-2908 (S.D. Tex. 2002)
:
Agriculture-Food
:
Haiti
:
1998; 1999
:
Undisclosed Haitian customs and tax officials.
:
Between January 1998 and October 1999, David G. Kay, a former vice president of American Rice, Inc. ("ARI"), allegedly directed an ARI employee to prepare false shipping records that underreported the tonnage of rice on relevant vessels to Haiti. Haitian customs officials allegedly used these false records to clear these vessels through customs at a reduced customs tax. In exchange, Kay purportedly directed American Rice employees stationed in Haiti to pay cash bribes to certain customs officials. To hide these payments, Kay allegedly directed ARI's controller in Haiti to improperly record the bribery payments as routine costs of sales. Over this time period, ARI allegedly made at least 12 bribery payments totaling over $500,000 in exchange for avoiding approximately $1.5 million in Haitian import taxes. Douglas A. Murphy, ARI's former president, was purportedly aware of the bribery scheme, but took no action to stop the payments. The reduced import tax allegedly allowed ARI to retain it's competitive price advantage in the face of rice smugglers, who paid no import taxes, and officials who cut similar deals with other competitors.

The Southern District of Texas stayed this action pending sentencing in a parallel criminal trial. In connection with such criminal proceeding, the court announced sentencing on June 29, 2005 and the Supreme Court denied certiorari on Murphy's remaining appeal on October 6, 2008.

The SEC re-opened the case in 2010 and a Final Judgment was entered May 3, 2010. Murphy consented to entry of Final Judgment without admitting or denying the allegations of the Complaint and waived any findings of fact and conclusions of law and waived any right to appeal. Murphy was permanently enjoined from violating several provisions of the Securities Exchange Act of 1934 and the SEC's claims for civil or other monetary penalties were dismissed.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Injunction/Cease and desist
:
Not stated.
:
0
:
Director of Issuer
:
President
:
U.S.
:
Tax
:
1,500,000
:
Wire/check
:
Customs Broker or Agent/Consultant
:
500,000
:
Haiti
:
Haiti
:
No