No Shortcuts in Retrial for Egypt Bid-Rigging

WASHINGTON (CN) - The U.S. government cannot stipulate that it lost $30 million because of a bid-rigging conspiracy for Egyptian development contracts in a retrial of some purported conspirators, a federal judge ruled.

A jury in May 2007 had found one man and five contractors liable for "repeatedly and extensively fleecing the United States" in a "deceptive scheme to extract excessive funds from an agency that provides aid to third-world and developing countries." Dubbed by prosecutors as the "anti-Robin Hood," contractors won commitments from other bidders on various construction projects in Egypt to either overbid or not bid at all.

Under the False Claims Act, the government stood to collect $90 million in treble damages. On appeal, however, the D.C. Circuit vacated the judgment against Bill Harbert International Construction and its two subsidiaries.

Despite affirming the judgment, the court found the government had prejudiced the Harbert defendants by introducing evidence that contradicted a stipulation about the parent company's formation and eliciting testimony about subsidiaries that the court had peremptorily disallowed.

"With retrial in sight, the government now argues that the circuit court's mandate and opinion, read together, require the court to leave the jury's conclusion that a conspiracy that cost the government more than $30 million undisturbed by limiting the scope of the upcoming proceedings to the sole question of whether defendants joined the conspiracy," Chief U.S. District Judge Royce Lamberth wrote.

The government also asked, alternatively, that the court constrain the retrial.

Lamberth sided with Harbert, saying that the federal appeals court's decision voided all findings of liability and damages.

A more limited retrial could result in an inconsistent verdict, the judge said.

Some of the issues that prompted the order of retrial could not be adequately segregated from issues the government wanted held out of bounds, according to the 18-page decision.

"In all respects, the errors identified by the circuit court permeated the earlier proceeds to a degree requiring a full retrial of all relevant factual issues," Lamberth wrote.

"Can the new jury be asked to determine whether defendants joined a conspiracy without considering the nature, extent or existence of that illegal enterprise?" he asked. "The court does not see how it can."

Lamberth expressed a degree of resignation to the new chapter of a case originally filed in June 1995.

"Having completed one seven-week trial on the underhanded practices of many entities in Egypt in the 1980s, the court is less than enthusiastic at the prospect of having a second jury review the entirety of evidence, particularly where it previously concluded that the evidence was more than sufficient to support the first jury's findings," he wrote. "But when structuring a retrial, the court must remain vigilant to neither confuse nor prejudice the jury, and must provide the defendants a full and fair opportunity to mount an unhindered defense.

"The circuit court has declared the first jury was broadly and unduly prejudiced when BHIC's counsel was undermined and when the wealth of HII and HC was exposed, and it has said that a new trial is the only appropriate remedy," he added, using the initials for each of the three Harbert companies. "The court shall see it done."

About three months ago, Lamberth ordered the conspirators to pay over $7 million in legal fees to the man who blew the whistle on the scheme, Richard Miller.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit