WASHINGTON—Stuart Carson, the former president of Rancho Santa Margarita, California-based valve company Control Components Inc. (CCI), and Hong “Rose” Carson, the former CCI director of sales for China and Taiwan, have pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Central District of California.
The Carsons, who are married and reside in San Clemente, California, each pleaded guilty late yesterday before U.S. District Judge James V. Selna in Santa Ana, California to separate one-count superseding informations charging them with making a corrupt payment to a foreign government official in violation of the FCPA. According to court documents, CCI designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide. At sentencing, Stuart Carson, 73, faces up to 10 months in prison. Rose Carson, 48, faces a sentence of three years’ probation, which may include up to six months of home confinement. Sentencing is scheduled for October 15, 2012.
On April 8, 2009, the Carsons and four other former executives of CCI were charged in a 16-count indictment for their roles in the foreign bribery scheme. The four former CCI executives charged include Paul Cosgrove, CCI’s former director of worldwide sales; David Edmonds, CCI’s former vice president of worldwide customer service; Flavio Ricotti, the former CCI vice president of sales for Europe, Africa, and the Middle East; and Han Yong Kim, the former president of CCI’s Korean office. On April 28, 2011, Ricotti pleaded guilty to one count of conspiracy to violate the FCPA. The trial of Cosgrove and Edmonds is scheduled for June 5, 2012. The charges against Kim are pending as well. An indictment merely contains allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of CCI. On January 8, 2009, Mario Covino, the former director of worldwide factory sales for CCI, pleaded guilty to one count of conspiracy to violate the FCPA. On February 3, 2009, Richard Morlok, the former CCI finance director, also pleaded guilty to one count of conspiracy to violate the FCPA. Covino, Morlok, and Ricotti are scheduled to be sentenced in November and December 2012.
On July 31, 2009, CCI pleaded guilty to a three-count criminal information charging the company with conspiracy to violate the FCPA and the Travel Act and with two substantive violations of the FCPA. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years. CCI admitted that from 2003 through 2007, it made corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.
The case is being prosecuted by Deputy Chief Charles G. La Bella and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Douglas McCormick and Gregory Staples of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases.