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UPDATE 3-U.S. charges 22 with bribery in arms sting
* Defendants netted in phony African arms sale sting
* 250 FBI agents involved in probe
* 21 arrested at Las Vegas gun show
* Investigation continues (Recasts first paragraph to include sting operation; adds official saying investigation continues)
By Dan Margolies and Jeremy Pelofsky
WASHINGTON, Jan 19 (Reuters) - An executive of Smith & Wesson (SWHC.O) and 21 others have been charged with violating U.S. bribery laws after an undercover sting in which federal agents posed as arms-buying representatives of an African defense minister.
The defendants, including a senior Smith & Wesson sales official Amaro Goncalves, were accused of violating the Foreign Corrupt Practices Act, or FCPA, and conspiracy to commit money laundering tied to the sale of guns, body armor and other law enforcement equipment.
The FCPA prohibits the payment of bribes to foreign officials in order to secure business contracts.
Twenty-one of the men were arrested in Las Vegas, where they were attending the SHOT Show, a large shooting-sports and hunting convention. The 22nd defendant was arrested in Miami.
"This is one case where what happens in Vegas didn't stay in Vegas," Assistant Attorney General Lanny Breuer said at a news conference.
Breuer said the investigation was continuing. He declined to say if any of the companies the defendants worked for faced prosecution.
The indictments, returned on Dec. 11, were unsealed by a U.S. judge on Tuesday in U.S. district court in Washington.
Among those charged was the chief executive of Protective Products of America Inc PPA.TO, R. Patrick Caldwell, who previously worked for the U.S. Secret Service for 27 years and was in charge of the division for the vice president's protection. A spokesman for the service declined to say when Caldwell left the agency.
An attempt to reach Protective Products was not successful. Protective Products filed for bankruptcy protection last week and sought approval to be acquired by an affiliate of the private investment firm Sun Capital Partners Inc.
A representative for Smith & Wesson was not available for comment.
Most of the defendants were expected to be arraigned on Tuesday in Las Vegas.
As part of the FBI sting operation, an unidentified business associate who was a former executive for an arms manufacturer arranged a meeting between the arms sales representatives and undercover FBI agents who posed as representatives of an African country's minister of defense.
The agents told the sales representatives that in order to win a contract, they had to add a 20 percent "commission" to price quotes, half of which would go to the purported minister of defense and the rest would be split between the others.
In the case of the Smith & Wesson executive, Goncalves gave price quotes for two sales, a small one of 25 guns and a larger one with 1,800 pistols. He gave two price quotes for the transactions, including one that had its price inflated by 20 percent, the Justice Department said.
The two-and-a-half-year-long investigation involved 250 FBI agents, according to Mark Mendelsohn, deputy chief of the Justice Department's fraud division. In connection with the indictments, 150 agents executed 14 search warrants across the country and British police executed another seven, Justice Department officials said.
Three of the defendants worked for unnamed British companies; another worked for an unnamed Israeli company, according to the indictments. The defendants sought to obtain contracts for the sale of products ranging from grenade and tear gas launchers to pistols, ammunition and explosive detection kits.
Breuer said the investigation was the largest action ever undertaken by the Justice Department against individuals in an FCPA case. He also said it marked the department's first large-scale use of undercover techniques in an FCPA investigation.
"We're steadily pushing this unacceptable practice out of the business playbook by prosecuting companies and individuals who ignore the law, as well as by working with our international counterparts in their efforts to prevent and prosecute foreign bribery," Breuer said.
He said the Justice Department currently has 140 open FCPA investigations. Kevin Perkins, assistant director of the FBI's criminal investigative division, said 20 agents were working on FCPA cases full time.
The cases are in the U.S. District Court for the District of Columbia, Nos. 09-335 through 09-350. (Reporting by Dan Margolies and Jeremy Pelofsky, editing by Gerald E. McCormick and Tim Dobbyn)
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