US request to detain arms sting defendant denied

* Judge finds defendant no flight risk

* Defendant allegedly discussed bribes to several nations

By Dan Margolies

WASHINGTON, Jan 22 (Reuters) - A U.S. judge refused to revoke the bail of one of 22 defendants arrested this week on bribery charges after they were caught in a sting in which undercover agents posed as arms-buying agents of an African defense minister.

U.S. District Judge Richard Leon disagreed on Friday with government prosecutors who said Saul Mishkin, a Peruvian citizen, posed a substantial flight risk.

Leon allowed him to remain free on bail, but did order Mishkin's wife and children to surrender their passports.

In arguing for his detention, prosecutors cited taped conversations of Mishkin talking about bribes involving government officials in Peru, Columbia, Georgia and Botswana in return for contracts to sell tear gas, armored personnel carriers, Humvees and food rations.

Leon, however, said he was not interested in hearing evidence not cited in the indictment.

Mishkin was not present in federal court in Washington D.C. but was represented over the phone by an attorney in Miami, where he owns a company that sells military and law enforcement products to foreign governments. He is scheduled to make his first appearance before Leon next month.

Mishkin was one of 21 defendants arrested Monday in Las Vegas, where they were attending a sports and hunting convention. The 22nd defendant was arrested in Miami. A magistrate judge in Las Vegas denied the government's motion to detain Mishkin but required him to post 10 percent of a $1 million personal bond.

All of the defendants, including a senior Smith & Wesson Holding Corp (SWHC.O) sales official, worked for companies that sell military and police equipment. None of the companies have been charged. In a statement Tuesday, Smith & Wesson said that it was "prepared to cooperate fully" in the government's investigation.

The arrests followed a 2-1/2-year FBI undercover operation that culminated in the return of 16 indictments in December naming the 22 defendants. The indictments were unsealed on Tuesday.

Posing as representatives of an unnamed African defense minister, an FBI agent and unidentified industry insider allegedly told the defendants they could obtain $15 million contracts to outfit the presidential guard by paying 20 percent commissions. Half the commissions, they said, were to go to the country's defense minister.

Prosecutors said that Mishkin agreed to the proposal in order to obtain a contract to sell riot control gear and created two price quotations in connection with the deal. One showed the true cost of the goods and the other included the so-called commissions.

Arguing for Mishkin's detention, assistant U.S. attorney Laura Perkins said on Friday that Mishkin had claimed on tape to have contacts with the president of Bolivia and with high-level officials in Peru.

Mishkin's attorney, Brittney Horstman, countered that Mishkin had every reason to stay and fight the charges, including meritorious defenses such as entrapment.

Leon agreed, ruling that Mishkin had plenty of incentive not to flee the country, including his family and business in Miami.

The cases are the biggest ever brought against individuals under the Foreign Corrupt Practices Act, according to U.S. Justice Department officials. The act prohibits the payment of bribes to foreign officials in order to obtain or keep business. (Reporting by Dan Margolies; Editing by Tim Dobbyn)