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Former ITXC Execs Settle Civil FCPA Charges

The Securities and Exchange Commission said today that on April 18, 2008 it settled civil proceedings under the Foreign Corrupt Practices Act against Steven J. Ott, Roger Michael Young, and Yaw Osei Amoako. The SEC charged the former executives of ITXC Corp. with violating the antibribery and books and records provisions of the FCPA by bribing senior officials of government-owned telephone companies in Nigeria, Rwanda and Senegal, and concealing and falsely reporting the illegal payments. ITXC was a publicly-held VOIP company based in Princeton, New Jersey. It was acquired by Teleglobe International Holdings Ltd. in May 2004.

In settling the SEC's civil enforcement action, Ott, Young and Amoako each consented to the entry of a final judgment that permanently enjoins them from violating Sections 30A and 13(b)(5) of the Securities Exchange Act of 1934, Rule 13b2-1 thereunder, and from aiding and abetting violations of Exchange Act Section 13(b)(2)(A) and, with respect to Ott and Young, violations of Exchange Act Section 13(b)(2)(B). Amoako also must pay $188,453 in disgorgement and prejudgment interest. He took kickbacks for some of the bribes he paid to the foreign officials.

The three defendants have also been charged by the Department of Justice for criminal violations of the FCPA. In the criminal action, Amoako, 55, of Hillsborough, N.J., was sentenced in December 2006 to 18 months in prison for conspiring to violate the antibribery provisions of the FCPA and to violate the Travel Act. Amoako had pleaded guilty in September 2006 to paying about $266,000 in bribes disguised as ?commissions? to employees of state-owned phones companies in Nigeria, Rwanda and Senegal. In addition to his prison sentence, he was also ordered to pay a $7,500 fine and serve two years of supervised release.

In July 2007, Ott and Young also pleaded guilty to separate one-count criminal informations charging them with conspiring to violate the FCPA and the Travel Act. They haven't been sentenced yet in the criminal proceedings and face up to five years in prison and a $250,000 fine.

Ott was ITXC's former vice president for global sales, Young was its former managing director for the Middle East and Africa, and Amoako was the regional director for sales in Africa. They negotiated and / or approved bribes to foreign officials in Nigeria, Rwanda and Senegal in order to obtain contracts for ITXC to transmit telephone calls to those countries. The three executives paid $267,468.95 in bribes between August 2001 and May 2004. ITXC made $11,509,733 in net profits from the contracts obtained through the bribery.

In the SEC's complaint against Amoako, it said about his bribery in Nigeria: The sole purpose of the payments was to influence the agent, a foreign official, to steer the carrier contract to ITXC and thereby enable it to obtain and retain business with Nitel. There was no legitimate purpose for the payments. In fact, as a result of the agreement with the Nitel Agent, ITXC earned profits of $1,136,618 from selling telephone service to customers calling Nigeria. ITXC could not have made such sales without having the carrier contract with Nitel that resulted from Amoako?s bribes to the agent. Amoako received a kickback of $50,000 from the Nitel Agent in mid- 2004. Amoako concealed the kickback from ITXC and his superiors by having the money deposited at financial institutions in Africa.

View the SEC's Litigation Release No. 20556 / May 6, 2008 here.

View the SEC's Complaint in Securities and Exchange Commission v. Steven J. Ott and Roger Michael Young, Civil Action No. 06-4195 (GEB) (D.N.J.) and Securities and Exchange Commission v. Yaw Osei Amoako Civil Action No. 05-4284 (GEB) (D.N.J.) here.

View the DOJ's July 27, 2007 news release about Ott and Young's guilty pleas here.

View the DOJ's Sept. 6, 2006 news release about Amoako's guilty plea here.

Full post as published by The FCPA Blog on May 07, 2008 (boomark / email).