In a major setback for the Department of Justice, the first company to fight Foreign Corrupt Practices Act (FCPA) charges in court has won dismissal of its conviction because, in the court's ruling, the prosecution had engaged in "flagrant" misconduct. The convictions of Lindsey Manufacturing Co., as well as its CEO Keith Lindsey and its CFO Steve Lee, were overturned by the decision. The case was dismissed with prejudice, meaning that (absent reversal of the decision on appeal) the defendants cannot be charged again. The Department of Justice filed for an appeal on the same day.

According to a Bloomberg report, Los Angeles-based Federal District Court Judge Howard Matz "said it was 'with deep regret' that he was compelled to find that the government had allowed an Federal Bureau of Investigation agent to testify untruthfully before a grand jury, inserted falsehoods in requests for search warrants, improperly reviewed e-mails between a defendant and her lawyer, and made misrepresentations to the court, among other misconduct."

The prosecution in U.S. v. Aguilar originated with a 30% sales commission paid by Lindsey to a Mexican agent, who used the commission to pay over $5 million in bribes to officials at electric utility Comision Federal de Electricidad. In May this year, the defendants were found guilty by a jury of violating the FCPA paying bribes through the agent in order to win contracts from the utility.

The decision in the Aguilar case may embolden others to fight FCPA charges. The case was the first in which a corporate FCPA target fought the prosecution at trial. The Lindsey defendants mounted an aggressive defense, challenging among other things the government's assertion that executives of the utility, a commercial entity, were "foreign officals" within the meaning of the FCPA. That was unsuccessful, as have been similar arguments in other cases involving state-owned and state-controlled enterprises.

Recently, more FCPA investigation targets have been choosing to face trial rather than plead guilty to criminal charges. Furthermore, the Department of Justice has suffered other very embarrassing reversals through findings of prosecutorial misconduct. In perhaps the most notable recent example, in 2009 a federal district judge overturned the corruption conviction of Senator Ted Stevens, because prosecutors improperly failed to disclose to the defense information helpful to Stevens's case. DOJ investigators recently concluded that the prosecutors had engaged in "significant, widespread and at times intentional misconduct", according to a Reuters report. Furthermore, in 2011, a federal district court declared a mistrial in an FCPA trial against 22 defendants, employees of companies in the military and law enforcement products industry. The case arose from a sting operation engineered by the DOJ; FBI agents posed as representatives of a Gabon foreign official.