* Defendants netted in phony African arms sale sting
* 250 FBI agents involved in probe
* 21 arrested at Las Vegas gun show
(Adds further details of alleged scheme, quotes from
By Dan Margolies and Jeremy Pelofsky
WASHINGTON, Jan 19 An executive for Smith &
Wesson Holding Corp (SWHC.O) and 21 others have been charged
with violating federal bribery laws involving the sale of
weapons and protective gear, the U.S. Justice Department said
The indictments accused the individuals, including Smith &
Wesson Vice President for Sales Amaro Goncalves, with violating
the Foreign Corrupt Practices Act, or FCPA, and conspiracy to
commit money laundering involving the sale of items including
guns and body armor.
The FCPA prohibits the payment of bribes to foreign
officials in order to secure business contracts.
The Federal Bureau of Investigation set up sting operations
that ensnared the 22 individuals on charges that they tried to
bribe a purported African defense minister to win 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
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
An attempt to reach Protective Products was not immediately
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 immediately
available for comment.
Most of the defendants were expected to be arraigned later
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
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
"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)