Judge rules trustee for bankrupt biometrics company cannot recover alleged bribery costs

A trustee for bankrupt biometric scanner maker CryptoMetrics has lost a court case to recover money allegedly paid by the company to another company, with the intention of bribing foreign officials, Law360 reports.

Federal Texas District Judge Royce Lamberth ruled against the claim brought by trustee Chris Quinn under the Racketeer Influenced and Corrupt Organizations (RICO) Act against Scantech Identifications Beam Systems LLC, saying the payments were illegal, and that CryptoMetrics was an intended beneficiary of the scheme. Scantech is a startup manufacturer of security cargo scanners.

CryptoMetrics filed for bankruptcy in 2010, and Quinn filed his action against CEO Robert Barra, executive Joel Shaw, and others, accusing them of bankrupting the company with waste, mismanagement, and self-dealing. Quinn claims Barra and Shaw attempted to win contracts in the Middle East by bribing government officials and others, through ScanTech’s regional representatives. Barra and another executive were charged with bribing Indian government officials and executives of Air India by Canadian authorities.

Lamberth said in the ruling that many of the claims in the action had already been settled or dismissed, and agreed with a Scantech argument that Quinn was making claims based on its alleged RICO violations in order to recover funds from CryptoMetrics’ RICO violations. Quinn stated in court documents that CryptoMetrics did, in fact, secure a contract through the bribes, which Lamberth said clears Scantech of RICO claims by CryptoMetrics.

Quinn introduced the claim that the bribes were meant to benefit a separate startup company owned by Barra and Shaw in response to Scantech’s argument. Lamberth ruled that his complaint not only did not prove the point, but actually contradicted it.

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