The DOJ Charges Another Individual With FCPA Violations
FCPA enforcement officials have repeatedly emphasized that a key focus is individuals who violate the Act. This week the Department of Justice announced the filing of a multi-count indictment against the owner of a privately held consulting company, alleging violations of the FCPA and the Travel Act. U.S. v. Harder, Case No. 2:15-cr-00001 (E.D. Pa. Filed Jan. 6, 2015).
Defendant Dmitri Harder is a Russian national, naturalized German citizen who is a permanent resident of the U.S. He is the president and owner of Chestnut Consulting Group, Inc. and Chestnut Consulting Group, Co. Collectively the companies provided consulting services to companies seeking financing from multilateral development banks.
The charges here center on investments and loans secured from the European Bank of Reconstruction and Development, an entity owned by 60 sovereign nations, based in London. The loans were secured for, among others, Company A and Company B. The former is a Russian independent oil and gas company. It retained Chestnut to provide consulting and other services. The latter is a U.K entity that had oil and gas operations in the Russian Federations. It retained Chestnut to provide consulting and other services after initially approaching the EBRD and declining financing.
Company A retained Chestnut in 2007. The Company agreed to pay Chestnut a “success fee” which was a percentage of the funds obtained from the EBRD. In 2008 the EBRD approved an $85 million equity investment in Company A. Chestnut was subsequently paid a success fee of about $1.7 million. The consulting firm then wired over $750,000 in three payments to a bank account in Jersey, Channel Islands through other banks, for the benefit of the sister of the EBRD who Mr. Harder initially contacted by e-mail regarding a proposed arrangement for the company.
The next year the EBRD approved additional project financing for Company A – a senior loan totaling 90 million Euros. In June 2009 Company A paid Chestnut a success fee of about $2.9 million. Over $300,000 was again wired to the Jersey, Channel Islands account for the benefit of the official’s sister. Overall, Chestnut received payments of about $2.9 million from Company A. About $1.06 million was wired to the sister of the ERBD official.
In 2009 Chestnut entered into a consulting agreement with Company B. That arrangement called for the payment of a “success fee.” Later that year, based on the recommendation of the EBRD official who had previously met with representatives of Company B, the bank approved an arrangement for a $40 million equity investment and a $60 million convertible loan. Company B then paid Chestnut a success fee of $4.9 million. Chestnut caused a payment of about $2.4 million to be paid to the sister of the ERBD official.
Mr. Harden and the sister of the EBRD official took steps to conceal the payments. Specifically, false paperwork was created to make it appear the sister had provided services to the Chestnut Group in return for the payments. No work was performed, according to the indictment.
The indictment charges: One count of conspiracy to violate the FCPA and Travel Act; five counts of violating the FCPA; five counts of violating the Travel Act; one count of conspiracy to commit international money laundering; and two counts of money laundering. The case is pending.