NOTE: Apologies for the typos and small errors. This is a working document.
What happened today
- The jury was selected.
- The prosecution and defense delivered their opening remarks (see below)
- First witness, Loren Simpson, the former President of Tactical Products Group (TPG), a company that worked with the accused and his company, Atlanco, took the stand.
Key details that surfaced
- The first witness, Loren Simpson, the former President of TPG took the stand. Simpson, who was involved in the arrangements leading to the first contract totalling almost $5 million and the “waterfall” (aka. bribe) payments ($750,000) made to Honduran government officials following that contract. Several emails, a spreadsheet, a contract, and pictures were shown in the court.
- Julian Pacheco Tinoco, the former Honduran Minister of Security was in two of the photos taken during Simpson’s trip to Honduras with other Atlanco and TPG representatives. The photos showed Tinoco looking at the uniforms in a meeting in Honduras when Atlanco and TPG were trying to get the Honduran government to sign off on the multi-million dollar contract with Atlanco.
An email outlined how President Juan Orlando Hernández had to sign a letter approving the purchase of the uniforms from Atlanco, including referring to the contract being awarded without a public bidding process. - An email outlined how President Juan Orlando Hernández had to sign a letter approving the purchase of the uniforms from Atlanco, including referring to the contract being awarded without a public bidding process.
- Julian Pacheco Tinoco, the former Honduran Minister of Security was in two of the photos taken during Simpson’s trip to Honduras with other Atlanco and TPG representatives. The photos showed Tinoco looking at the uniforms in a meeting in Honduras when Atlanco and TPG were trying to get the Honduran government to sign off on the multi-million dollar contract with Atlanco.
What to expect for tomorrow
- Loren Simpson will finish testifying
- Gabriela Salgado, a former Security Tax official is expected to testify
- And if there is time for more, Brian Berkman and Aldo Marchena will also be called to the stand.
Opening Remarks, U.S. government
Prosecutor Eli Rosen
This case is about greed and corruption. The defendant agreed to pay bribes to Honduran government officials and in exchange received millions of dollars in contracts. He also paid the bribes to ensure he was paid in full for the contracts. He hired a known money laundering who sent the money to offshore accounts and to hid the bribes. He was given $11 million in contracts, but that was not the end of his criminal conduct. He tried to receive another contract for $7.5 million. The defendant owned Atlanco based in Atlanta, Georgia. They produced uniforms for mostly police and sold them around the world. The defendant was the CEO.
In March 2015, the defendant agreed to pay bribes to Honduras. Two people, his business partners were involved, they were Brian DeHart and Luis Berkman. Atlanco won the first contract totaling $4.1 million. Then at the end of 2015. It was time to pay the bribes but he was smart & wanted to use an intermediary. He hired Aldo Marchena, a registered wealth advisor who could move a lot of money. The defendant enters a brokerage agreement with Marchena who would aggressively sell Atlanco’s uniforms.
In early 2015–2016, defendant got millions from HN govt. In September 2016, defendant gives money to Marchena to send to Honduran government. $20,000 gets sent to Honduran government. It was sent to Belize in the name of a shell company to benefit a Honduran government official. In Oct 2016, Atlanco won a second contract worth $5.8 million.
At the end of 2016/beginning of 2017, Altanco gets paid, then they pay bribes. The defendant and Marchena sign the sham agreement but they backdate it to October 2016 to give the false impression that Marchena helped win that contract. The money is sent to Marchena and then once received, it is sent to Honduras. In 2018, Marchena tries to win additional contracts.
In 2019, they receive two smaller, $200,000 contracts and use a middle man, but the defendant did not go through Marchena, and instead worked with Berkman. 21% of the contract is sent to Berkman who paid cash bribes to Honduran government officials.
At the end of 2019, they unsuccessfully try to obtain a $7.5 million dollars contract but doesn’t win it because Berkman and DeHart did not pay the bribes.
The defendant is accused of committing three crimes: 1. Conspiracy to violate the Foreign Corrupt Practices Act (FCPA), 2. Violates the FCPA, 3. Conspiracy to commit money laundering. This involves entering into an agreement with others to conceal bribe payments or send money in furtherance of the scheme.
We will use several pieces of evidence in this case:
Documents:
- Contracts between Atlanco and the Honduran government. The Honduran entity is called TASA, which was created at a time of great violence in Honduras to ensure law enforcement had supplies.
- Contracts between Marchena and the defendant.
- Emails
- Bank statements showing millions of dollars from Honduras to Atlanco, and then from Marchena to the defendant.
Witnesses:
- DeHart passed away but we will may hear from Berkman who worked for 15 years with the defendant.
- Two people from TPG who worked with the defendant.
- Marchena – whose job it was to move money.
We want to mention three observations:
1. You will see evidence that attorneys were involved in the 5 years conspiracy. The defendant did not tell them that he was paying bribes. He used attorneys to get the Chief Financial Officer to stop asking about Marchena’s involvement in Atlanco. He used attorneys to sign contracts.
2. The defendant was the CEO of an international business that paid bribes. He used intermediaries to conceal his involvement. And he had the power to make it stop but he didn’t.
3. At its core, this case is about Zaglin knowing that what he was doing was wrong. He concealed information and he tried to conceal his scheme.
That is why at the end of the trial, you will find him guilty of what he is accused.
Opening Remarks, Defense
Attorney Craig Gillen
NOTE: The defense’s attorney was hard to follow in their explanation of the events
Zaglin conspired with no one. He did not violate what he’s charged with. He’s innocent. All this case is about is turning up a rock and looking at slimy things that are underneath it.
[Puts up pictures of individuals involved in Atlanco]. Zaglin is the owner and CEO of Atlanco. DeHart was the President and Berkman was Vice President of International Sales. Zaglin trusted Berkman who was born and raised in Bolivia. Zaglin hired him as his sales manager. But all he did was stole, stole, stole.
[Puts up slides to assist his opening remarks]. In March 2015, this case began. TPG and Berkman referred the deal with the Honduran government to Atlanco because TPG did not have the relationship with the banks. TPG could not obtain the quality bonds for the deal.
Zaglin was a hands-off owner. DeHart was responsible for the transactions.
You are going to hear a lot about the term “waterfall”. You are going to hear that it refers to a bribe, that it’s a code. But “waterfall” is a business term that refers to when money is paid out for business transactions. Money was paid out to lawyers for example. A lawyer in Honduras was involved in the deal and helped negotiate the deal.
In May 2015:
Marchena and DeHart reached out to lawyers in Honduras and the U.S. The intent was that TPG would be customers of Atlanco. The deal would be $750,000 in administrative costs, which includes payments to a broker. TPG’s broker at the time was named ‘Heimi’. Then Atlanco’s counsel asks for the name of the broker, and TPG kept changing the broker’s name: It was Heimi, Jaime Nativi, and Jose Nuñez. Then Atlanco was informed that they don’t need a Honduran broker. The contract is signed in June 2015.
In July 2015:
Haygood (CFO of Atlanco) and Loren Simpson (TPG) talk about a waterfall. There are email communications. Zaglin is copied in the emails because he’s President but the CFO is handling everything.
In August 2015:
Simpson sends an email to Atlanco informing that TPG is withdrawing from the deal. The following day, Berkman recommends Marchena (who is his cousin by marriage) to help broker a deal. Marchena works with Achieve Capital
Then in September 2015:
Zaglin contacts his legal counsel regarding FCPA. He speaks to his lawyer about the FCPA. No one involved in a conspiracy would contact their lawyer and ask about FCPA. Zaglin was told from his lawyers that he could use brokers in deals.
[Defense provides confusing statements about changing brokers and commissions]
October 2015:
There is a brokerage agreement with Achieve GEA. Then there are invoices which Zaglin pays. He honors the contracts and pays the invoices. Then there was an opportunity for a third contract but Atlanco was not successful. If Atlanco “owed” the Honduran authorities like is being claimed, then they would have gotten the third contract!
What we have here is broken trust. Once Atlanco signed the contract, the stealing [by Zaglin’s colleagues] began. And the three people involved are all related (the two Berkmans and Marchena). They start sending invoices to the Vice President asking for wire transfers. We find out that in addition to wire transfers, Marchena gave Luis Berkman money in cash. Zaglin was cheated. And then what is really indignant, is that Achieve wires $209,000 into a Wells Fargo account to Luis Berkman to help him pay his mortgage. Berkman has a relationship with Cosenza. Cosenza had other deals with other clients. Cosenza was taking other kick backs. He received $30,000 in watches.
Now the final point. What did Loren Simpson plead guilty to regarding the Honduran contract? NOTHING.
Did Luis Berkman plead guilty to something? NO, Nothing!
Marchena? He had a prior conviction so he feld to South American then he was arrested.
All of these men thought about getting something better. The Berkmans got a reduced sentence their Bolivian scam.
When you deliberate following this trial, you should arrive at the verdict of not guilty.