Freepoint Commodities LLC (Freepoint), a commodities trading company based in Stamford, Connecticut, agreed to pay more than $98 million to resolve a U.S. Department of Justice investigation into violations of the Corrupt Practices Act in (FCPA) arising from the company's participation in a corrupt scheme to pay bribes to Brazilian government officials.
Freepoint also agreed to return more than $7.6 million to the Commodity Futures Trading Commission (CFTC) in a related matter.
"As today's resolution demonstrates, the Criminal Division remains steadfast in our fight against bribery and corruption," said Acting Assistant Attorney General Nicole M. Argentieri of the Department of Justice's Criminal Division. โOur dedicated prosecutors are working tirelessly to hold both guilty corporations and individuals accountable. โLet this case also send a reminder that our policies offer the greatest benefits to companies that are proactive and act with urgency.โ
According to court documents, Freepoint entered into a three-year deferred prosecution agreement (DPA) with the department in connection with a criminal information filed in the District of Connecticut. The information accuses the company of conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Brazilian government officials to secure business with Brazil's state-controlled oil company, Petrรณleo Brasileiro SA โ Petrobras (Petrobras ). .
"This office and our federal law enforcement partners are monitoring not only those involved in the financial industry, but also all American companies operating abroad, to ensure they comply with our nation's laws," said U.S. Attorney Vanessa Roberts Avery. for the District of Connecticut. โThis strong financial penalty and deferred prosecution agreement should serve as a deterrent to illegal conduct in the United States and abroad, and as a reminder that the Department of Justice incentivizes those who report illegal conduct and work with us to correct wrongdoing.โ
Between approximately 2012 and 2018, Freepoint and its co-conspirators paid bribes to Petrobras officials in exchange for confidential information about prices and offers submitted by Freepoint's competitors. Freepoint and its accomplices concealed the scheme by communicating using keywords and encrypted messaging apps, engaging in sham negotiations, and funneling bribes through an intermediary using offshore bank accounts and shell companies. Freepoint made more than $30 million in profits related to the plan.
"This case exemplifies the FBI's relentless fight against corruption and our commitment to holding companies accountable for criminal business practices," said Assistant Director Michael Nordwall of the FBI's Criminal Investigation Division. "The FBI, along with our domestic and international partners, will continue to aggressively combat these crimes and work to level the playing field in the global marketplace."
"This resolution and the indictment of three individuals demonstrate the commitment of the FBI and the Department of Justice to holding both companies and corrupt actors, wherever they are, accountable for their illicit business activities," said Deputy Director in Charge Donald Alway of the FBI in Los Angeles. Angeles Field Office. "Our tireless work with partners around the world ensures companies win their contracts and consumers are protected from inflated prices."
Pursuant to the DPA, Freepoint agreed to pay a criminal fine of $68 million and administrative forfeiture in the amount of $30,551,150. Freepoint also agreed to continue cooperating with the department in any ongoing or future criminal investigation related to this conduct. The department will credit up to one-third of the criminal penalty against amounts Freepoint pays to resolve an investigation by law enforcement authorities in Brazil for related conduct. The department will also credit up to 25% of the forfeited amount against the refund Freepoint pays to the CFTC in a related matter.
The department reached this resolution with Freepoint based on a number of factors, including, but not limited to, the nature and severity of the crime. Freepoint was credited for its cooperation with the department's investigation, which included (i) responding quickly and thoroughly to the department's requests by producing and summarizing relevant documents and other information; (ii) undertake significant efforts to aggregate and analyze complex financial information and trading data from more than 4,000 transactions; (iii) make company officers and employees available for interviews and retain separate counsel where appropriate; (iv) provide all relevant facts known to you, including information about the persons involved in the conduct. However, in the initial phases, Freepoint's cooperation was limited in degree and impact, and largely reactive.
Freepoint also engaged in corrective actions, including: (i) conducting an analysis of the causes of the underlying conduct and undertaking appropriate remediation to address those root causes and taking additional steps to improve its compliance program, including engaging an advisory firm to evaluate your third-party compliance program; (ii) review its third-party compliance and risk management program, including by implementing enhanced risk-based due diligence procedures, ongoing screening, monitoring and oversight, and implementing FCPA training for third-party agents; (iii) reduce the use of third party intermediaries; (iv) implement a global procedure for incorporating and monitoring agents; (v) strengthen its corporate governance and risk management structures, including by utilizing data and metrics to assess risk, improve the independence and stature of its compliance function, and hire additional experienced compliance personnel; (vi) update the company's global anti-bribery and corruption policy to include FCPA red flags; (vii) implement a process to report and investigate allegations of misconduct; and (viii) conduct testing of your third-party compliance program.
In light of these considerations, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 15% reduction from the lower end of the fine range of the applicable guidelines.
The department recently loaded three people in connection with the Freepoint bribery scheme, including:
- Glenn Oztemel, who allegedly worked as a high-level oil trader at Freepoint and caused Freepoint to make corrupt payments to an intermediary, which were disguised as purported consulting fees and commissions, and which were used to pay bribes to Petrobras officials.
- Gary Oztemel, brother of Glenn Oztemel, who allegedly used his company Oil Trade & Transport SA to corruptly help Freepoint obtain or retain business in Brazil.
- Eduardo Innecco, who worked as an agent for Freepoint and received alleged consulting fees and commissions that he allegedly used to pay bribes to Petrobras officials on behalf of Freepoint.
The case against Glenn Oztemel, Gary Oztemel and Eduardo Innecco is pending.
The FBI Los Angeles Field Office is investigating the case, with assistance from the FBI's International Corruption Unit.
Trial Attorneys Allison L. McGuire and Clayton P. Solomon and Deputy Chiefs Derek J. Ettinger and Jonathan P. Robell of the Criminal Division's Fraud Section and Assistant U.S. Attorney Michael McGarry for the District of Connecticut are prosecuting the case. . The United States Attorney's Office for the Eastern District of New York also provided significant assistance.
The Department of Justice's Office of International Affairs and authorities from Brazil, Latvia, Switzerland and Uruguay provided assistance in the matter.
The Criminal Division's Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Department of Justice's FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
An accusation is simply an accusation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
