- Associated Press - Tuesday, February 21, 2012

In an embarrassing setback, the Justice Department gave up Tuesday on its high-profile prosecution of nearly two dozen businessmen charged in the first undercover sting the government used to enforce a 35-year-old law against foreign bribery.

U.S. District Judge Richard Leon granted the department’s motion to dismiss all charges against 16 defendants still facing trial after the case fell apart in its first two courtroom tests in Washington. Ten defendants went through two lengthy trials, but jurors did not convict a single one.

The defendants were military suppliers arrested at a 2010 trade show in Las Vegas where they anticipated picking up checks for sales to outfit Gabon’s presidential guard. But no officials from the central African nation were really involved in the sting concocted by the FBI.

Judge Leon called the dismissal “the end of a long and sad chapter in the annals of white-collar criminal enforcement.” He said he had concerns from the start about the way the men were investigated, charged and prosecuted and the government’s handling of its star witness.

“I, for one, hope that this very long — and I’m sure very expensive — ordeal will be a learning experience” leading to better prosecutions under the 1977 Foreign Corrupt Practices Act, the judge said.

Afterward outside the courtroom, defendant Marc Morales said he was “just happy to move on with my life and spend time with my family” after enduring a four-month trial that ended last month. But he said the case cost him his job as a vice president of ammunitions supplier Allied Defense Group, and that he spent “more [money] than I had” on his defense.

David Krakoff, attorney for Mr. Morales’ co-defendant John Mushriqui, said the Justice Department’s request to dismiss the case despite the substantial resources it invested ends his client’s “two-year nightmare.”

“It’s really hard to take on the government, but when you believe in your innocence and fight for your freedom, these cases can be won,” Mr. Krakoff said.

Mr. Morales and Mr. Mushriqui were two of seven defendants whose trials ended with a hung jury and were facing a second trial. Three others were acquitted, with nine additional defendants awaiting an initial trial. Three other defendants had pleaded guilty in the case, and Judge Leon said he would schedule hearings soon to consider the status of their cases.

Prosecutors did not say much during the brief hearing. In a two-page motion filed earlier in the day, they wrote that the case should end because of the outcome of the first two trials and the substantial resources that would be needed to continue.

“The government respectfully submits that continued prosecution of this case is not warranted under the circumstances,” they concluded.

Their case was based on the Foreign Corrupt Practices Act that was enacted among the reforms after the Watergate era. Enforcement picked up in the last years of President George W. Bush’s administration, and even more so under President Obama — from seven individuals charged and more than $27 million in criminal fines collected in 2004 and 2005 to more than 50 charged and nearly $2 billion collected in 2009 and 2010.

But the sting operation was the largest prosecution yet of individuals under the law and the roundup in Las Vegas got front-page coverage in the nation’s leading newspapers. The FBI captured the businessmen with the help of an inside informant whose credibility came under sharp attack as the court cases dragged on.

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