An international jewelry executive and a former diplomat at the U.S. Consulate in Toronto have pleaded guilty to swapping gemstone rings, trips with exotic dancers and other gifts in exchange for expedited work visas.

The scheme was hatched in Toronto, where Mike O'Keefe was the deputy non-immigrant visa chief at the U.S. Consulate.

O'Keefe personally fast-tracked applications for New York-based STS Jewels. In exchange, he received the presents from Sunil Agrawal, chief executive of STS, according to court documents in Washington, D.C.

Prosecutors said O'Keefe approved 21 visas for foreigners sponsored by STS Jewels.

O'Keefe pleaded guilty to accepting an illegal gratuity, a felony that carries up to two years in prison and a $250,000 fine.

His wife and grown children sat in the courtroom, wiping tears from their eyes and clinging to each other during the hearing.

Could be jailed and fined

Agrawal, a native of India, worked out a deal that allowed him to plead guilty to the misdemeanour charge of illegal supplementation of salary, which his lawyer said he hopes will not threaten Agrawal's immigration status in the United States.

The charge carries up to a one-year prison sentence and a $100,000 fine.

Both men had been indicted on bribery and conspiracy charges by a federal grand jury in Washington. They pleaded guilty to lesser offences that carry much shorter maximum prison terms.

The two sat on opposite sides of the defence table before U.S. Judge Paul Friedman and did not speak to one another during the hearing. Afterward, O'Keefe approached Agrawal, shook his hand and exchanged a few private words.

Emails between the two men cited in court documents show that O'Keefe personally handled STS applications and conducted the interviews himself on a fast track.

Since the attacks of Sept. 11, 2001, the United States has tightened controls over non-immigrant visas like those granted to students, tourists and workers.

O'Keefe wrote to Agrawal that after more than 20 years as a State Department worker, he was growing tired of the visa arguments and frustrated with younger subordinates who were "determined to find problems" and reject STS applications.

He overturned their rejections, even when a subordinate noted that terrorists use jewelry to raise money.

As part of the plea deal, O'Keefe must return jewels he received — a ring that Agrawal gave to O'Keefe worth more than $3,000 and a tanzanite ring, ruby necklace and ruby ring for O'Keefe's wife.

O'Keefe also must pay $5,000 to compensate for airfare, hotel rooms and other entertainment that Agrawal funded for the diplomat and two exotic dancers who accompanied him on two trips from Toronto to New York and Las Vegas.

Of the Las Vegas trip, O'Keefe wrote that it was "where I can lose my stiff diplomatic persona and just act like everyone else."

O'Keefe is to be sentenced June 19 so he can finish the semester at Southern New Hampshire University, where he is now a professor.