US Attorney – Former Finance Director of California Company Pleads Guilty To Bribing Foreign Government Officials

WASHINGTON – LawFuel – Legal Newswire – The former finance director of an Orange County,
Calif.-based valve company pleaded guilty today in connection with his
role in a conspiracy to pay approximately $628,000 in bribes to numerous
foreign government officials, Acting Assistant Attorney General Rita M.
Glavin of the Criminal Division, U.S. Attorney Thomas P. O’Brien of the
Central District of California, and Joseph Persichini Jr., Assistant
Director in Charge of the FBI’s Washington Field Office, announced.

Richard Morlok, 55, a resident of Rancho Santa Margarita,
Calif., pleaded guilty before U.S. District Judge James V. Selna in
Santa Ana, Calif., to a one-count information charging him with
conspiring to make corrupt payments to foreign government officials for
the purpose of securing business for the Orange County-based valve
company from state-owned enterprises in several countries, including
China, Korea, Romania and Saudi Arabia, in violation of the Foreign
Corrupt Practices Act (FCPA).

According to court documents, the valve company designed and
manufactured service control valves for use in the nuclear, oil and gas,
and power generation industries worldwide. Morlok was the finance
director at the valve company from 2002 through 2007. In this position,
Morlok oversaw the finance department and had responsibility for
approving certain commission payments and signing off on wire transfers
to the recipients of those commission payments.

In connection with his guilty plea, Morlok admitted that from
2003 through 2006, he caused employees and agents of the valve company
to make corrupt payments totaling approximately $628,000 to foreign
officials employed at state-owned enterprises in order to assist in
obtaining and retaining business for the valve company. Morlok also
admitted that the valve company earned approximately $3.5 million in
profits from the contracts it obtained as a result of these corrupt
payments. According to the court documents, the corrupt payments were
made to foreign officials at state-owned entities including, but not
limited to, China National Offshore Oil Company, PetroChina, Jiangsu
Nuclear Power Corporation (China), KHNP (Korea), Rovinari Power
(Romania) and Safco (Saudi Arabia).

Morlok also admitted to providing false and misleading
information to auditors during a 2004 internal audit of the valve
company’s commission payments, and to providing false and misleading
information to external auditors during a 2004 external audit.

As part of his plea agreement, Morlok has agreed to cooperate
with the Department in its ongoing investigation. At sentencing,
scheduled for July 10, 2009, Morlok faces a maximum of five years in

In a related case, Mario Covino pleaded guilty on Jan. 8, 2009,
to conspiring to make corrupt payments totaling approximately $1 million
to numerous foreign government officials for the purpose of securing
business for the same Orange County valve company from state-owned
enterprises in several countries, including Brazil, China, India, Korea,
Malaysia and the United Arab Emirates. Covino, an Italian citizen and
resident of Irvine, Calif., was responsible for overseeing new
construction projects for the valve company and for the replacement of
existing valves made by other companies and installed at customer plants
in more than 30 countries. Covino’s sentencing is scheduled for July
20, 2009.

The case was prosecuted by Assistant Chief Hank Bond Walther 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.

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