American Rice, Inc. was a Texas corporation with its principal place of business in Houston, Texas. American Rice had a class of securities registered with the SEC. American Rice processed and marketed rice in international and domestic markets under a variety of brand names.
Douglas A. Murphy was American Rice's president and one of its directors from 1993 until he was fired on October 4, 1999. At all relevant times, by virtue of his position in the company and as Kay and Theriot's direct supervisor, Murphy had actual power and influence over Kay, Theriot and other American Rice employees. Murphy also had the ability to cause Kay, Theriot and other employees to engage in the wrongful conduct alleged herein.
David G. Kay was American Rice's vice president of Caribbean operations and reported directly to Murphy at all relevant times. American Rice terminated Kay's employment in January 2002.
Lawrence H. Theriot was American Rice's Caribbean operations consultant from 1989 until he resigned in October 1999. Theriot reported directly to Murphy and Kay.
In January 1998, American Rice employees and agents in Haiti entered into an illicit arrangement with certain Haitian government officials in Port-au-Prince to enable American Rice to retain its business in Haiti. In exchange for bribery payments, the customs officials permitted American Rice to declare less than the full tonnage of rice it shipped to Haiti. By declaring less than the full tonnage of rice on at least 12 rice shipments to Haiti during 1998 and 1999, American Rice avoided paying import taxes on thousands of metric tons of rice. American Rice employees made the bribes because they believed that the tax reductions were essential to American Rice being able to continue to conduct business in Haiti. In any event, the bribes were designed to result in cost reductions that would enable American Rice to maintain or increase the volume of rice it sold in Haiti. The bribery payments, therefore, were made in order to assist American Rice in obtaining or retaining its business of selling rice to Haitian rice merchants and consumers. In total, American Rice made $528,383.52 in bribe payments which saved $1,536,731.82 in import taxes.
On July 29, 2002, the SEC filed a five count Complaint in the Southern District of Texas against Murphy, Kay, and Theriot alleging (1) violations of the anti-bribery provisions of the FCPA, (2) knowing violations of the internal controls provisions of the FCPA and knowingly falsifying the books and records of an issuer, (3-4) aiding and abetting violations of the books & records and internal controls provisions of the FCPA, and (5) aiding and abetting violations of the anti-bribery provisions of the FCPA. Murphy was charged with count 1. Kay was charged with counts 1-4. Theriot was charged with count 5.
On December 30, 2004, the court entered judgment against Theriot. He was permanently enjoined from violating the anti-bribery provisions of the FCPA and ordered to pay a fine of $11,000.
On May 3, 2010, the court entered final judgment against Murphy and Kay. Both were permanently enjoined from violating the FCPA.
