Former Head of Worldwide Sales at California Valve Company Pleads Guilty to Foreign Bribery Offense

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WASHINGTON—Paul Cosgrove, the formerhead of worldwide sales at Rancho Santa Margarita, California-based valvecompany Control Components Inc. (CCI) pleaded guilty today to violating theForeign Corrupt Practices Act (FCPA), announced the Justice Department’sCriminal Division and the U.S. Attorney’s Office for the Central District ofCalifornia.
Cosgrove, who resides in Laguna Niguel,California, pleaded guilty today before U.S. District Judge James V. Selna inSanta Ana, California, to a one-count superseding information charging him withmaking a corrupt payment to a foreign government official in China in violationof the FCPA. According to court documents, CCI designed and manufacturedservice control valves for use in the nuclear, oil and gas, and powergeneration industries worldwide. At sentencing, Cosgrove, 65, faces up to 15months in prison. Sentencing is scheduled for August 27, 2012.
On April 8, 2009, Cosgrove and fiveother former executives of CCI were charged in a 16-count indictment for theirroles in the foreign bribery scheme. The five other former CCI executivescharged were Stuart Carson, CCI’s former president; Hong “Rose” Carson, CCI’sformer director of sales for China and Taiwan; David Edmonds, CCI’s former vicepresident of worldwide customer service; Flavio Ricotti, the former CCI vicepresident of sales for Europe, Africa, and the Middle East; and Han Yong Kim,the former president of CCI’s Korean office. On April 28, 2011, Ricotti pleadedguilty to one count of conspiracy to violate the FCPA. On April 17, 2012,Stuart Carson and Hong “Rose” Carson each pleaded guilty to one count of makinga corrupt payment to a foreign government official in violation of the FCPA.The trial of Edmonds is scheduled for June 26, 2012. The charges against Kimare pending. An indictment merely contains allegations and defendants arepresumed innocent unless and until proven guilty beyond a reasonable doubt in acourt of law.
In related cases, two defendantspreviously pleaded guilty to conspiring to bribe officers and employees offoreign state-owned companies on behalf of CCI. On January 8, 2009, MarioCovino, the former director of worldwide factory sales for CCI, pleaded guiltyto one count of conspiracy to violate the FCPA. On February 3, 2009, RichardMorlok, the former CCI finance director, also pleaded guilty to one count ofconspiracy to violate the FCPA. Stuart and Rose Carson, Covino, Morlok, andRicotti are scheduled to be sentenced later this year.
On July 31, 2009, CCI pleaded guilty toa three-count criminal information charging the company with conspiracy toviolate the FCPA and the Travel Act and two substantive violations of the FCPA.CCI was ordered to pay an $18.2 million criminal fine, placed on organizationalprobation for three years, and ordered to create and implement a complianceprogram and retain an independent compliance monitor for three years. CCIadmitted that from 2003 through 2007, it made corrupt payments in more than 30countries, which resulted in net profits to the company of approximately $46.5million from sales related to those corrupt payments.
The case is being prosecuted by DeputyChief Charles G. La Bella and Trial Attorney Andrew Gentin of the CriminalDivision’s Fraud Section and Assistant U.S. Attorneys Douglas McCormick andGregory Staples of the U.S. Attorney’s Office for the Central District of California.The case was investigated by the FBI’s Washington Field Office and its team ofspecial agents dedicated to the investigation of foreign bribery cases.