When the scalps Richard Bistrong delivered to Federal prosecutors got away, they took his as a consolation prize. He’s out of prison now, but no one will ever trust him again.
Recently, we told a story of how the ATF used a paid felon informant, and an attorney’s own willingness to suspend disbelief that he was being set up, to put the attorney away for years. Despite the high-profile given to undercover work against violent criminal organizations, this use of informants to target people who might be seduced over the line of the law is much more typical of how the Federal anti-gun police work.
You may remember a series of arrests at the 2010 SHOT Show — made with a Barnum blare of publicity, with federal agents helping the media spin the arrests as evidence that the entire show, and indeed the entire industry, were corrupt. We covered the collapse of the case here under the title Remember Those SHOT Show Arrests?, and covered the combined agencies’ full-court press at the 2013 SHOT show under the title To Reach The Stasi: 702-690-9142.
While the case was resolved with its collapse in late 2012 — the prosecution failed to gain any convictions in two trials, and the three executives who took plea bargains had their convictions overturned — one guy did go to prison, the informer; he was the only victim left that the prosecutors had handy, and they screwed him over. As the Wall Street Journal reports (use this Google Search if you’re paywalled out):
Mr. Bistrong, formerly a vice president for international sales at Armor Holdings, later bought by BAE Systems, may hold the distinction of being the longest-ever undercover cooperator in a white-collar criminal investigation, according to prosecutors and defense attorneys. He spent 2½ years as a government witness, monitoring 155 meetings, recording 527 hours of conversations and almost 25,000 telephone conversations, according to trial documents.
Bistrong lost his job, career, family, friends, health, and home, and is now a Federal felon, having been released after completing 12 months of an 18-month prison sentence. His years as a snitch, even if a failed one, are the cornerstone of his plan for a new life: teaching businesses how not to wind up in the sights of the Feds themselves.
The story of his work as an undercover cooperator shows the extent to which investigative methods usually confined to drug and Mafia cases have moved into the executive suite as prosecutors take on crimes like foreign bribery and insider trading. While the case that Mr. Bistrong worked on ultimately fell apart, these days, federal prosecutors in New York have made aggressive use of wiretaps in their yearslong crackdown on insider trading.
Harry Sandick, a former New York federal prosecutor, said that sting operations and other aggressive tactics had been used previously in white-collar cases, most famously in the Abscam case in the 1980s that led to the conviction of a U.S. senator and six congressman. But these tactics have come into common use in the past five years.
Prosecutors came knocking on Mr. Bistrong’s door in the spring of 2007, looking for somebody to work undercover. At the time, the government was ramping up FCPA enforcement, which was historically confined largely to corporate settlements and was rarely used in prosecutions of individuals.
According to people familiar with the matter, prosecutors and FBI agents had long hoped to target individual offenders. They also hoped to send a signal about a crackdown on white-collar crime. “We wanted people to start questioning whether their business partner was wired,” one of the people said.
Mr. Bistrong’s efforts led to bribery charges against 22 executives at more than a dozen medium-sized companies in the arms business over what prosecutors described as a complicated scheme to pay a $1.5 million bribe to the Gabonese defense minister for a contract to outfit the country’s presidential guard, according to court documents.
The government’s case ultimately collapsed after two trials, with all 22 executives walking free.
An estimate of the cost of the sting and investigation, $48,875,000, is far too low, as it assumes the burdened labor cost of a federal agent is $75k and didn’t count the years of post-arrest case-building. However inept it may have been, people still did work on it. The real investigation may have blown over $100 million.
Despite the costly failure of the sting, the Feds are insistent on trying it over and over.
When asked if the collapse of the ‘Africa sting case’ had chastened the agency, assistant FBI Director Ronald Hosko said last year, “We will do it again,” he said.
In order to get the big SHOT Show splash the prosecutors and agents wanted, Bistrong had to entrap not only business acquaintances, but also personal friends.
In 2009, the undercover operation transitioned into a sting, in which Mr. Bistrong invited 22 targets, including friends, to participate in a phony deal with representatives of Gabon—actually FBI agents in disguise. Mr. Bistrong said he knew he would be lying to business associates and friends. “I viewed my obligation as with the U.S. government, not against anyone,” he said.
The businessmen, including a former U.S. Secret Service official, all gathered at Clyde’s restaurant in Washington, D.C., in early 2009 to meet with a purported representative of the Gabonese defense minister and hear about the deal. They were told they could all get a piece of a $15 million contract to outfit the presidential guard if they paid a 20% “commission” to the minister. The 22 men later met in Miami with Mr. Bistrong and another Gabonese agent, and later at trial videotapes would show each executive agreeing to pay the commission during the meeting.
This is a less rare technique than you might think. When corrupt (and since-promoted) ATF agents David Voth and Hope MacAllister, and corrupt (and since resigned-in-disgrace) US Attorney Dennis K. Burke and (since bruited for promotion also) AUSA Emory Hurley secured the cooperation of FFL Andre Howard and his Lone Wolf gun shop, Howard got cold feet and asked for something in writing. Hurley, whose plan was to indict Howard for cooperating under Federal persuasion and against his better judgment, refused; the only reason Howard was never charged is that the whole program collapsed when American agents were killed with the guns that had been killing their Mexican counterparts for months.
The prosecution’s aim was always a splashy show arrest, a rapid trial in the media, and extorted guilty pleas. They made it as far as the splashy arrest:
The businessmen were arrested en masse by an FBI swat team while attending a Las Vegas gun show in January 2010, and were later charged with FCPA violations in federal court in Washington, D.C.
…and the Trial by Media. For example, the dependably anti-gun Paul Barrett at the structurally anti-gun Bloomberg Businessweek crowed:
The FBI used the convention to round up 21 industry executives who allegedly fell for an undercover sting in which they agreed to pay illegal kickbacks to the defense minister of an African nation. In exchange, the small arms marketers thought they were securing the opportunity to sell millions of dollars in weapons and body armor. Unfortunately for them, they were transacting business with FBI operatives posing as middlemen, according to indictments unsealed by a federal judge in Washington. A 22nd suspect was picked up in Miami. “This is one case where what happens in Vegas didn’t stay in Vegas,” said Assistant Attorney General Lanny Breuer at a news conference.
Breuer, of course, is a long-time anti-gunner and Clinton administration retread. (Breuer was also involved in the planning and central control of Mexican gunwalking, and has the blood of murdered US Agents and honest Mexican cops on his hands). It was Breuer’s idea to hold the arrests at SHOT, which had nothing to do with the charges; his (and Barrett’s) hope was, as Barrett put it in the head and subhead of that article, “Big Shots Go Down at Gun Show: FBI arrests in a bribery scandal may leave the firearm industry wounded.” (The subhead has since been erased from the page, but it still shows in Google):
Barrett singled out a Smith & Wesson executive (the only one of the 22 with a high-profile handgun or even firearms nexus, which is probably why he picked him) for opprobrium in the article. To this day, Barrett and Bloomberg have not corrected the story, or apologized to Amaro Goncalves or Smith & Wesson, which were found blameless by the judge in the case.
That’s because Barrett is not a reporter, but a propagandist. In the same article (from 2010, remember) he gloats that the gun-sales spike of 2009 is over. He isn’t right in retrospect, and wasn’t right at the time: NICS checks were down because of supply constraints, not lack of demand. (According to FBI data, not the probably-Breuer-sourced leak Barrett got, 2010′s year-end number was 14.4 million, barely up from 2009′s 14.0m. But 2011-13 were 16.5, 19.6, and 21.1 million NICS checks, respectively, showing continued strength. So far 2014 (for which we have only two months’ data) is falling between the record years of 2013 and 2012. Here’s what the data look like, in millions of NICS checks, in both the FBI and more conservative NSSF-adjusted flavors; remember that in January 2010 Barrett crowed that, “the gun industry still faces the fizzling of the Obama sales rally.”
And the lesson is: Paul Barrett can be trusted — to lie, mislead, and misunderstand, whether he’s emitting sound waves or digital text. Not that he did anything that ABCNBCCBSCNNTimesPost didn’t do with the same case. None of them have apologized or retracted, either. “Journalistic ethics.” Always good for a laugh.
So we know that reporters got ahead for acting as uncritical press release rewriters on this, what about the other players?
So we know that Barrett’s designated villan, a Smith & Wesson sales VP, has been thoroughly and completely cleared by the legal system. That’s what happened to all the designated fall guys whose lives were trashed so that Lanny Breuer could have a press conference. Remember, though, what happened to the snitch?
Yep. Penniless, divorced, addicted, and imprisoned after two years of playing international-crime-guy lifestyle on the Federal Bureau of Investigation’s dime, meaning yours if you’re a chump taxpayer like the rest of us. And they are eager to do more of these cases. Well played, FBI.
And the lesson is: there is no benefit to be had for cooperating with the FBI or ATF. The single most-screwed guy in this whole mess is Richard Bistrong, who did it to himself: he sold his integrity to save his freedom, and wound up without either.
The Institute for Legal Reform notes that the sharp practices of the US Attorneys in the SHOT Show case did not help the government, particularly, before the judge; and the agencies involved certainly damaged their reputation with him:
At the time, the Department of Justice announced the sting was “the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations.”
After two trials, however, the government dropped the case. The judge, according to his transcript, had to “chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom,” adding that it was “the end of a long and sad chapter in the annals of white collar criminal enforcement.”
The judge’s remarks are worth quoting [SCRIBD document] at greater length. He did indeed say that, but he also said all of this:
[L]et me make a few brief remarks. This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement. Unlike takedown day in Las Vegas, however, there will be no front page story in the New York Times or the Post for that matter tomorrow reflecting the government’s decision today to move to dismiss the charges against the remaining defendants in this case. Funny isn’t it what sells newspapers.
The good news, however, is that for these defendants, agents, prosecutors, defense counsel and the Court we can get on with our professional and personal lives without the constant strain and burden of three to four more eight week trials hanging over our heads. I for one hope this very long, and I’m sure very expensive, ordeal will be a true learning experience for both the Department and the FBI as they regroup to investigate and prosecute FCPA cases against individuals in the future.
Two years ago, at the very outset of this case I expressed more than my fair share of concerns on the record regarding the way this case had been charged and was being prosecuted. Later, during the two trials that I presided over I specifically commented again on the record regarding the government’s very, very aggressive conspiracy theory
that was pushing its already generous elasticity to its outer limits. Of course, in the second trial that elastic snapped in the absence of the necessary evidence to sustain it.
In addition, in that same trial, I expressed on a number of occasions my concerns regarding the way this case had been investigated and was conducted especially vis-a-vis the handling of Mr. Bistrong. I even had an occasion, sadly, to chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom.
Notwithstanding all of this water over the dam, and there has been a lot of water, I’m happy to see and I applaud the Department for having the wisdom and the courage of its convictions to face up to the limitations of its case as revealed in the past 26 weeks of trial and the courage to do the right thing under the circumstances.
Having served at the higher levels of the Department, I know that that was not an easy decision. They never are, when so much has been invested, and the agents and the prosecutors are so convinced of the righteousness of their position. I for one however am confident this will be in the end a positive, if not painful, lesson that results in better prosecutions of individuals in the future under the FCPA. As for the defendants, I hope the healing process is a swift one and that they get back to their normal lives in the very near future.
Finally, I would be remiss if I did not comment on the tireless and spirited effort by the defense counsel from all over the country who came here to try these very lengthy and complicated cases under difficult circumstances and some even pro bono. Their hard work and effective advocacy are a testament to how strong our criminal defense Bar is nationwide.
And so without further adieu [sic] I grant the government’s motion to dismiss. The defendants are excused. And I will set hearings in the near future to determine the status of those cases where guilty pleas have already been entered.
As mentioned above, the judge later vacated the guilty pleas of the three defendants who’d pled to a conspiracy count. And he slammed the cooperating informant, Richard Bistrong, with a more serious sentence than anyone had requested. But as you can see, the judge, a former Department of Justice official and one with great sympathy for the prosecutor’s task, knew at the outset that the case was no good; but it still destroyed dozens of lives, and even coerced guilty pleas out of three innocent men.
This is what happens to you if you come to the attention of today’s Federal enforcers.
None of the prosecutors or agents involved in this attempted frame job were disciplined in any way. In fact, many have been promoted despite their misconduct in this case. They are not ever held accountable; much like Hammurabi’s Code had “different spanks for different ranks,” so do our laws today, at least “as implemented”. The Founders saw these kinds of blanket immunity as a feature of patents of nobility; didn’t they say something about that in some document or other?