Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Division made the announcement.
“We are committed to combating foreign corruption, across the globe and across all industries, through enforcement actions and prosecutions of companies and the individuals who run those companies,” said Assistant Attorney General Caldwell. “As alleged, in this case, the owner and chief executive of a Pennsylvania financial consulting firm secured hundreds of millions of dollars in business by bribing a European banking official. He now faces an indictment for corruption in federal court. Bribery of foreign officials undermines the public trust in government and fair competition in business. The charges returned today reflect the clear message that we will root out corruption and prosecute individuals who violate the Foreign Corrupt Practices Act.”
“We will aggressively investigate and prosecute individuals in our district who use corrupt means like bribery to influence foreign officials,” said U.S. Attorney Memeger. “Our criminal statutes in this arena must be enforced to ensure fair dealing in a competitive global marketplace where foreign officials often hold significant decision-making authority. The alleged conduct here was particularly reprehensible because it undermined the legitimacy of a process designed to support businesses for the citizens of developing nations.”
“This is a great example of the FBI’s ability to successfully coordinate with our international law enforcement partners to tackle corruption,” said Special Agent in Charge Hanko. “Bribery – foreign or domestic – cripples the notion of fair competition in the marketplace.”
Dmitrij Harder, 42, of Huntingdon Valley, Pennsylvania, the former owner and president of the Chestnut Group, was charged with one count of conspiracy to violate the FCPA and Travel Act, five counts of violating the FCPA, five counts of violating the Travel Act, one count of conspiracy to commit international money laundering, and two counts of money laundering.
According to allegations in the indictment, the European Bank for Reconstruction and Development (EBRD) was a multilateral development bank headquartered in London, England, and was owned by over 60 sovereign nations. Among other things, the EBRD provided financing for development projects in emerging economies, primarily in Eastern Europe.
According to allegations in the indictment, Harder and others paid bribes for the benefit of a senior official at the EBRD in exchange for influencing the official’s actions on applications for financing submitted by the Chestnut Group’s clients and for directing business to the Chestnut Group. The EBRD ultimately approved applications for financing from two of the Chestnut Group’s corporate clients; the first resulted in the EBRD providing an $85 million investment and a 90 million Euro loan, while the second resulted in a $40 million investment and a $60 million convertible loan. The Chestnut Group allegedly earned approximately $8 million in “success fees” as a result of the EBRD’s approval of these two applications.
The indictment alleges that Harder made five payments totaling more than $3.5 million to the sister of the EBRD official, in part as an effort to conceal the bribes. These payments were allegedly made for purported consulting and other services provided to the Chestnut Group by the official’s sister, when in fact she provided no such services. Harder also allegedly participated in creating fake documents to justify these payments.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case is being investigated by the FBI’s Philadelphia Division. The Criminal Division’s Office of International Affairs also provided assistance.
The case is being prosecuted by Assistant Chief Leo R. Tsao of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michelle Morgan of the Eastern District of Pennsylvania.