Skip to main content

Connecticut Investor Frederic Bourke Sentenced to Prison for Scheme to Bribe Government Officials in Azerbaijan

Frederic A. Bourke Jr., of Greenwich, Conn., was sentenced today in U.S. District Court in Manhattan to one year and one day in prison.

Following a six-week trial, Bourke, 63, was found guilty on July 10, 2009, of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and related prohibitions, and of making false statements to the FBI. The FCPA makes it a crime to pay or offer to pay foreign government officials in order to obtain or retain business. In addition to the prison term, U.S. District Judge Shira A. Scheindlin ordered Bourke to pay a $1 million fine and serve three years of supervised release following the prison term.

According to evidence presented at trial, Bourke participated in a scheme to bribe senior government officials in Azerbaijan with several hundred million dollars in shares of stock, cash and other gifts, to ensure that those officials would privatize the State Oil Company of the Azerbaijan Republic (SOCAR) in a rigged auction that only Bourke, fugitive Czech investor Viktor Kozeny and members of their investment consortium could win, to their massive profit. Kozeny is under indictment in the Southern District of New York for his alleged role in the scheme.

Under the privatization program, citizens of Azerbaijan could use free government-issued vouchers to bid for shares of state-owned industries that were to be privatized. Privatization vouchers were bearer instruments that were freely tradable, and they typically were bought and sold using U.S. currency. Foreigners could also participate in Azerbaijan’s privatization program and own vouchers, but only if they purchased a government-issued "option" for each voucher they held. The vouchers and options were largely purchased with millions of dollars of cash flown into Azerbaijan on private planes, and were intended to be exercised by Oily Rock Ltd., a company Kozeny allegedly controlled.

According to trial evidence, Bourke, a friend and neighbor of Kozeny’s in Aspen, Colo., invested approximately $8 million in Oily Rock, on behalf of himself, family members and friends. Bourke also obtained directorships, salary and stock options with related companies that Kozeny allegedly set up and funded.

The takeover of SOCAR, however, could only take place if the president of Azerbaijan issued a decree directing SOCAR’s privatization. Beginning in August 1997 through fall 1998, Bourke and others conspired to pay or cause to be paid millions of dollars worth of bribes to Azeri government officials to ensure that their investment consortium would gain, in secret partnership with the Azeri officials, a controlling interest in SOCAR and its substantial oil reserves.

For example, in August 1997, Kozeny allegedly agreed to transfer to corrupt Azeri officials two-thirds of the vouchers and options Oily Rock purchased, and to give them two-thirds of all of the profits arising from his investment consortium’s participation in SOCAR’s privatization. In June 1998, Bourke knew that Kozeny allegedly arranged for Oily Rock to increase its authorized share capital from $150 million to $450 million so that the additional $300 million worth of Oily Rock shares could be transferred to one or more of the Azeri officials as a further bribe payment. Bourke also arranged for two of the corrupt officials to receive medical treatment in New York City on different occasions in 1998, for which Oily Rock paid. Thereafter, in interviews with the FBI in April and May of 2002, Bourke falsely stated that he was not aware that Kozeny allegedly had made payments to the Azeri officials.

The charges against Kozeny remain merely accusations, and he is presumed innocent unless and until proven guilty.

The case against Bourke and the related case pending against Kozeny are being prosecuted by Deputy Chief Mark F. Mendelsohn and Assistant Chief Robertson Park of the Criminal Division’s Fraud Section, and Assistant U.S. Attorneys Harry A. Chernoff and Iris Lan of the U.S. Attorney’s Office for the Southern District of New York.

Comments

Popular posts from this blog

15 Gang Members Convicted on Conspiracy, Weapons Possession, Firearms Trafficking Charges Case Follows Recent Convictions of 137th Street Crew and East Harlem Narcotics Trafficking Organization

Manhattan District Attorney Cyrus R. Vance, Jr., announced the results of the investigation and prosecution of one of Central Harlem’s most destructive criminal street gangs, referred to as “ONE TWENTY-NINE” or “GOODFELLAS/THE NEW DONS,” which terrorized the neighborhood surrounding West 129th Street between Lenox and Fifth Avenues. Thirteen members of the gang have previously pleaded guilty to importing, possessing, and using firearms over the course of the conspiracy.

Mortgage Fraud

Manhattan District Attorney Robert M. Morgenthau announced today the indictment of 13 individuals and a mortgage origination company for perpetrating over $100 million in mortgage fraud over a four-year period in the New York City metropolitan area. In addition, 12 individuals have already waived indictment and pleaded guilty to felonies relating to their participation in the mortgage fraud scheme. The indictment charges 13 individuals and the mortgage company, AFG FINANCIAL GROUP, INC., with enterprise corruption, grand larceny, scheme to defraud and conspiracy involving 19 fraudulent mortgage transactions. The defendants include the principals and a number of employees of the mortgage company, as well as bank employees, appraisers, and three attorneys. Two other attorneys are among the defendants who already pleaded guilty. The crimes charged in the indictment occurred between June 2004 and April 2009 with the bulk of the fraudulent closings occurring from mid-2005 through the end of...

DISTRICT ATTORNEY VANCE ANNOUNCES INDICTMENT OF SIX SUBCONTRACTING COMPANIES AND THEIR OWNERS IN MULTIMILLION-DOLLAR FRAUD

Manhattan District Attorney Cyrus R. Vance, Jr., today announced the indictments of six subcontracting companies and their owners for colluding with LEHR CONSTRUCTION CORPORATION (LEHR) in a multimillion dollar scheme that defrauded numerous construction clients over the past decade. See, related story. The announcement comes one day after DA Vance announced LEHR and four executives were indicted on crimes including Enterprise Corruption, the New York State Racketeering law. GODSELL CONSTRUCTION CORPORATION and its owner ARTHUR GODSELL are charged with Grand Larceny in the Second Degree. JT ROSELLE LIGHTING, INC. and its owner JAMES ROSELLE, LIBERTY CONTRACTING CORPORATION and its owners GEORGE FOTIADIS and KEVIN FOTIADIS, PJ MECHANICAL and its owner JAMES PAPPAS, SUPERIOR ACOUSTICS, INC. and its owner KENNETH MCGUIGAN, and SWEENEY & HARKIN CARPENTRY and its owner MICHAEL HAYES are charged with Grand Larceny in the Third Degree.[1] "The defendants in this case cheated clie...