WASHINGTON – Flavio Ricotti, a former executive of Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), has pleaded guilty for his participation in a conspiracy to secure contracts by paying bribes to officials of foreign state-owned companies as well as officers and employees of foreign and domestic private companies.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney André Birotte Jr. of the Central District of California. Ricotti, 49, of Bientina, Italy, was previously arrested on Feb. 14, 2010, in Frankfurt, Germany, and subsequently extradited to the United States.
Ricotti pleaded guilty yesterday before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count superseding information charging him with conspiring to make corrupt payments to foreign government officials, and officers and employees of private companies in several countries, including Saudi Arabia and Qatar, in violation of the Foreign Corrupt Practices Act (FCPA) and the Travel Act. According to court documents, CCI designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide. From 2001 through 2007, Ricotti was CCI’s director and then vice-president of sales for Europe, Africa and the Middle East (EAME). In these positions, Ricotti was responsible for overseeing the marketing and sales of CCI’s products to customers in the EAME region.
In connection with his guilty plea, Ricotti admitted that he conspired with other CCI employees to offer a payment to an official of Saudi Aramco, a Saudi Arabian state-owned oil company, in connection with attempting to obtain a valve contract for CCI in 2003. Ricotti also admitted to conspiring with other CCI employees to make a payment to an employee of a private company so that the employee would assist in awarding to CCI a valve contract in Qatar. Ricotti admitted that during the bidding process, one of his subordinates informed him that an employee of the private company was willing to provide CCI with confidential information about the bids of CCI’s competitors and to exercise influence in CCI’s favor in the awarding of the contract in exchange for a commission. Ricotti admitted that the benefit conferred on CCI as a result of the corrupt payments with which he was directly involved was more than $400,000 but less than $1 million.
On Apr. 8, 2009, Ricotti and five other former executives of CCI were charged in a 16-count indictment for their roles in the foreign bribery scheme. The other five former CCI executives also charged are Stuart Carson, CCI’s former president; Hong (Rose) Carson, CCI’s former director of sales for China and Taiwan; Paul Cosgrove, CCI’s former director of worldwide sales; David Edmonds, CCI’s former vice president of worldwide customer service; and Han Yong Kim, the former president of CCI’s Korean office. Trial is scheduled to begin on Oct. 4, 2011. An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
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 Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. On Feb. 3, 2009, Richard Morlok, the former finance director for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced in February 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 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.
As part of his plea agreement, Ricotti has agreed to cooperate with the department. At sentencing, which is scheduled for March 12, 2012, Ricotti faces a maximum of five years in prison.
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. Attorney Douglas McCormick 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. Significant assistance was provided by the Criminal Division’s Office of International Affairs.