31 January 2005 – LAWFUEL – The Law News Network – A former vice president of Vans Inc. pleaded guilty today to four federal charges, admitting that he obtained $4.7 million in bribes and kickbacks from Chinese factories that manufactured Vans shoes and clothing.
Scott Andrew Brabson, 49, of Goleta, California pleaded guilty this morning to charges of conspiracy, foreign travel to promote bribery, “honest services” wire fraud and money laundering.
As part of his plea, Brabson acknowledged that he fabricated e-mails and other communications that purported to be internal Vans documents and which appeared both to exonerate him in the bribery scheme and implicate other Vans executives in allegations of inflated earnings made by shareholders in a class-action against the shoemaker.
In a related action today, federal prosecutors filed a plea agreement in which Brabson’s codefendant agreed to plead guilty to the same four felony charges. Jay William Rosendahl, 47, of Lake Oswego, Oregon, who once worked as a consultant to Vans, is expected to enter his guilty pleas on Thursday.
Between November 1997 and December 2000, Brabson was the vice president of sourcing for the Santa Fe Springs-based Vans, a position that had him overseeing the company’s manufacturing operation. Brabson arranged for Vans to hire Rosendahl as a product development consultant in February 1999.
Brabson and Rosendahl met with owners and managers of Chinese factories and informed them that in order to continue receiving product orders from Vans, the factories would have to send kickbacks amounting to 3 percent of Vans’ orders. The defendants provided the factories with the number of a Hong Kong bank account, and the factories wire-transferred the kickbacks into the account they had established under the name StreamFlow Holdings Limited.
Shortly after Brabson left Vans, he moved almost $3 million of the money into accounts at a Luxembourg bank. Brabson then transferred about $1.3 million into different Hong Kong bank accounts controlled by Rosendahl. Each defendant withdrew hundreds of thousands of dollars in cash along the way.
Brabson, in his plea agreement, admitted fabricating e-mails in attempt to exonerate himself in the spring of 2004 after he and Rosendahl lost an $8 million lawsuit filed by Vans and before he was indicted in August 2004 by a federal grand jury in Los Angeles. Brabson, under a cloak of anonymity, provided the bogus documents to a private investigator who was working for a law firm that had filed a securities class action against Vans. In December 2004, Brabson allowed his attorney to file motions in the criminal case which relied on the fabricated documents.
Brabson pleaded guilty before United States District Judge John F. Walter, who is scheduled to sentence the defendant on April 11. While the four charges he pleaded to carry a maximum possible penalty of 35 years in federal prison, the government and Brabson have agreed that the sentence should be between 57 and 71 months in prison. If Judge Walter believes the sentence should be outside this range, either the government or the defendant is entitled to withdraw from the plea agreement.
Similarly, Rosendahl’s plea agreement, which calls for a sentence of between 46 and 71 months, is binding on the court. If Judge Walter wants to sentence Rosendahl outside the prescribed range, either party can withdraw from the agreement.
This matter was investigated by IRS-Criminal Investigation Division, the United States Postal Inspection Service and the Federal Bureau of Investigation.