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Jefferson Jurors Speak

In August 2009, former Congressman William Jefferson (D-LA) was found guilty by a federal jury of a variety of charges (solicitation of bribes, honest services wire fraud, money laundering, racketeering, and conspiracy).

The jury found Jefferson not guilty of a substantive FCPA charge, a charge principally based on allegations that Jefferson attempted to bribe Nigerian officials (including the former Nigerian Vice President) to assist himself and others obtain or retain business for a Nigerian telecommunications joint venture. The famous “cash in the freezer” was allegedly part of the bribery scheme. (See here for prior post).

Just what conspiracy charge the jury found Jefferson guilty of was unclear.

The indictment charged conspiracy to solicit bribes, to commit honest services wire fraud, and to violate the FCPA.

Problem is, the jury was instructed, that to convict on this charge, it only needed to find Jefferson guilty on two out of three of those counts.

In announcing the jury verdict, the court did not specify which counts the jury agreed on (see here and here).

A recent article in the New Orleans Times-Picayune (here) contains statements by “three jurors who spoke to The Times-Picayune on the condition they remain anonymous to avoid angering federal Judge T.S. Ellis III, who advised against talking to the news media.”

These anonymous juror statements, while clearly not official in any sense, may shed some light on Jefferson’s FCPA verdict.

For instance, why didn’t the jury convict Jefferson of the substantive FCPA offense?

According to the article, “because two members of the 12-member panel believed that the congressman planned to keep the money for himself rather than to bribe the vice president of Nigeria as alleged by federal prosecutors.”

The article states: “Two of the jurors explained the jury’s decision to return an innocent verdict on a single charge of violating the Foreign Corrupt Practices Act. Jefferson was the first elected official ever charged with violating the law, which is intended to block payments of bribes by U.S. citizens to foreign officials. According to the interviews, two jurors expressed doubts that Jefferson actually intended to use the $100,000 in cash given to him by Mody to bribe Atiku Abubakar, then the vice president of Nigeria, as he said he would in the taped conversations. ‘I think there was some thought he intended to keep the money himself, and that’s not the crime he was accused of,’ said one juror who added that the remaining 10 jurors eventually went along with the sentiments of their two colleagues.”

What about the conspiracy conviction – did that conviction include conspiracy to violate the FCPA?

According to the jurors comments – yes.

The article states: “But jurors decided that his discussion about wanting to keep Abubakar happy was enough to support a charge of conspiracy to violate the Foreign Corrupt Practices Act.”

As the article notes: “The question about whether the jury found Jefferson guilty of conspiracy to solicit bribes domestically or internationally is important because, as part of Jefferson’s appeal, his attorneys contend that influencing foreign officials isn’t part of a congressional member’s official duties and therefore can’t be prosecuted under federal bribery laws.”

In November 2009, Jefferson was sentenced to 13 years in federal prison. He remains free on bail while his appeal is pending.

Jefferson Sentenced / When a Jury Verdict is Relegated to a Footnote

[Please scroll down, there are three posts today]

Today, former Congressman William Jefferson was sentenced to 13 years in federal prison. He was convicted in early August of a variety of charges (solicitation of bribes, honest services wire fraud, money laundering, racketeering, and conspiracy)(see here for the DOJ release).

However, he was acquitted on the substantive FCPA antibribery charge.

As mentioned above, Jefferson was convicted of conspiracy, but what conspiracy was unclear as the indictment charged conspiracy to solicit bribes, to commit honest services wire fraud, and to violate the FCPA.

Problem is, the jury was instructed that to convict it only needed to find Jefferson guilty on two out of three of those counts.

In announcing the jury verdict, the court did not specify which counts the jury agreed on … the jury may have concluded that Jefferson conspired to violate the FCPA or it may have not. (See here for my prior post). See here for what others have said.

This uncertainty / ambiguity, it would seem, matters little to the DOJ as its sentencing memorandum in the Jefferson case says that “… as egregious and illegal as [Jefferson’s] bribe solicitations were, Congressman Jefferson further compounded his criminal culpability by conspiring with others to pay a bribe to the then-sitting Vice President of Nigeria.” (p. 6).

Given the above, this statement would seem to be a bit of a stretch based on the jury’s verdict.

Sure, the DOJ sentencing memorandum mentions the jury’s verdict on this issue, but it relegates the verdict to a mere footnote. Here is the footnote in its entirety:

“The government recognizes that the jury returned a verdict of “not guilty” to the charge contained in Count 11 of the indictment, a substantive violation of the Foreign Corrupt Practices Act. The government believes that the jury found Congressman Jefferson not guilty on Count 11, at least in part, because he ultimately failed to deliver the $100,000.00 in cash to the Nigerian Vice President before the Vice President departed the United States on July 31, 2005. However, the evidence fully supports the proposition that the jury, nevertheless, found that the defendant conspired to bribe the Vice President of Nigeria, an object of the conspiracy charged in Count 1, a count on which the jury returned a guilty verdict. Such a verdict would not require proof of the actual delivery of the cash to the Vice President (front end) or actual payment of the percentage of the proceeds of the joint venture (back end). The government believes that the evidence supports such a split finding by the jury as to Counts 1 and 11. Although delivery of the cash to the Vice President of Nigeria was not a legal pre-requisite to finding Congressman Jefferson guilty of Count 11, it offers a compelling explanation for the jury’s split verdict. Finally, the government recognizes that such a split verdict can never be completely confirmed because the conspiracy charged in Count 1 contained three objects, one of them being the charge related to the bribe of the Vice President of Nigeria. The verdict form completed by the jury on August 5, 2009 did not require the jury to delineate which, if not all, of the objects charged in the conspiracy in Count 1 were found to have been proved, only that at least one of the objects was proven by the government beyond a reasonable doubt.”

As if relegating a jury verdict to a footnote is not unsettling enough, yesterday Assistant Attorney General Breuer in his speech (see here for the post) was so bold as to say this:

“In the past few months, we have the completed the trials of the Greens in California, of Mr. Bourke in New York and of former Congressman William Jefferson in Virginia. In each of these cases, individuals were found guilty of FCPA violations and face jail time.”

Verdict In … Greens Found Guilty

The third FCPA trial of the summer has concluded and Gerald and Patricia Green (two Los Angeles area film executives) have been found guilty by a federal jury of conspiracy to violate the FCPA, substantive FCPA violations, and other charges (see here for the DOJ New Release).

According to the DOJ release, evidence introduced at trial showed that “beginning in 2002 and continuing into 2007, the Greens conspired with others to bribe the former governor of the [Tourism Authority of Thailand] in order to get lucrative film festival contracts as well as other TAT contracts.” According to the release, the evidence also established that the Green’s attempted to disguise the bribe payments by labeling them “sale commissions” and by making the payments “for the benefit of the former governor through the foreign bank accounts of intermediaries, including bank accounts in the name of the former governor’s daughter and friend.”

Reacting to the verdict, Assistant Attorney General Breuer stated that the DOJ “will not waiver in its fight against corruption, whether perpetrated within our borders or abroad” and that the FCPA “is a powerful tool that the [DOJ] will continue to use in an effort to stop individuals like the Greens who seek to further their own business interests through bribes paid to foreign officials.”

The Greens are to be sentenced in December and the conspiracy and FCPA charges each carry a maximum penalty of five years in prison.

As mentioned, the Green trial was the third FCPA trial of the summer.

The other two were the Bourke matter (see here) and the Jefferson matter (see here).

Leading up to these trials, the FCPA bar and the enforcement officials themselves, predicted that one result of these trials would be greater clarity of some of the FCPA’s murky elements.

While the verdicts were, on balance, pro-DOJ verdicts, the verdicts reached in these trials were not exactly uniform.

Bourke was convicted of conspiracy to violate the FCPA (the case did not proceed to trial on a substantive FCPA violation).

Jefferson was also convicted of conspiracy (although it is not entirely clear if the jury found him guilty of conspiracy to violate the FCPA). However, Jefferson was found not guilty on the substantive FCPA charge (the charge predicated on the “cash in the freezer” allegations).

Have these trials provided any greater clarity as to various FCPA elements as widely predicted?

I think it is far to say that as a result of the Bourke verdict (even though it was not a substantive FCPA trial), the FCPA’s knowledge standard has never been broader, and can be satisfied even when an investor, like Bourke, does not actually pay a bribe, but is merely aware that others may be making bribe payments in a widely viewed corrupt country for the potential benefit of an entity in which he is an investor (see here and here).

Beyond this, I’m not sure that any further clarity as to substantive FCPA elements has resulted from these trials, but I would be interested to hear what others have to say.

Will these trials and the largely pro-DOJ verdicts send a “proceed with caution” message to any individual or corporation faced with an FCPA enforcement action and stiffle legitimate defense theories based on the FCPA’s elements?

I expect so, yet that is indeed unfortunate as a significant portion of FCPA enforcements are based largely on DOJ/SEC’s untested and unchallenged interpretations of the law.

Mixed FCPA Verdict (It Would Seem) in Former Congressman Jefferson Trial

You may have forgotten his name, but you likely have not forgotten the headline grabbing “cash in the freezer” allegations against former Congressman William Jefferson (Louisiana), the first member of Congress ever charged with FCPA violations.

This week, a federal jury delivered a split-verdict on the FCPA charges – or so it would seem (see below).

While Jefferson was found guilty of a variety of other charges (solicitation of bribes, honest services wire fraud, money laundering, racketeering, and conspiracy)(see here for the DOJ release), he was acquitted on the substantive FCPA antibribery charge. That charge, according to the indictment (see here), was principally based on allegations that Jefferson attempted to bribe Nigerian officials (including the former Nigerian Vice President) to assist himself and others obtain or retain business for a Nigerian telecommunications joint venture. The famous “cash in the freezer” was allegedly part of the bribery scheme.

However, the jury did convict Jefferson on a conspiracy count that the indictment charged as conspiracy to solicit bribes, to commit honest services wire fraud, and to violate the FCPA. As reported by Jefferson’s home-state newspaper, the Times-Picayune (see here), “the law only require[d][that] the jury find [Jefferson] guilty on two out of three of those counts — solicit bribes, deprive honest services and violate the Foreign Corrupt Practices Act– and in announcing the verdict, the deputy clerk did not specify which counts the jury agreed on. It may or may not have included conspiracy to violate the Foreign Corrupt Practices Act.”

Perhaps the FCPA portion of the Jefferson verdict will become more clear in the days to come.

The Bourke Jury Instructions

As those who follow the FCPA are already aware, Frederic Bourke, Jr. was recently found guilty by a federal jury of (among other charges) conspiracy to violate the FCPA for his role in a scheme to bribe “foreign officials” in Azerbaijan in connection with the privatization of the State Oil Company of Azerbaijan. See here for the DOJ News Release.

Contrary to numerous media reports, Bourke was not on trial for “violating the FCPA” (the original indictment against Bourke contained substantive FCPA charges, however the superseding indictment removed the substantive FCPA charges in favor of conspiracy charges).

Regardless, the Bourke trial was closely followed by the FCPA bar as FCPA trials are very rare. Because FCPA trials are rare, so too are FCPA jury instructions. The Bourke jury instructions (see here) provide for an interesting, albeit frustrating, read. In instructing the jury on the conspiracy counts, the jury was instructed on the seven elements of an FCPA violation.

“Big picture” these FCPA instructions (which begin on Pg. 23 and which the jury was duty-bound to accept) are a mess.

The problem starts with the second element “interstate commerce” and contains a fundamental misstatement of the law. The instructions say (on pg. 24) that a “domestic concern” (as Bourke is under FCPA-speak) “must have intended to make use of the mails or a means or instrumentality of interstate commerce” in order to violate the FCPA. This is the so-called “territorial” jurisdictional provision found at 78dd-2. However, the 1998 amendments to the FCPA expanded the jurisdictional reach of the FCPA, as applied to “domestic concerns,” by adding an alternative “nationality” jurisdictional provision found at 78dd-2(i) which removes the interstate commerce / U.S. territorial nexus requirements. Thus, a “domestic concern” can be charged and found liable for a substantive FCPA violation even if the prohibited activity took place entirely outside of the U.S. The jury instruction that the “domestic concern” “must have intended to make use of the mails or a means or instrumentality of interstate commerce” is thus just plain wrong.

The second problem is found in what the instructions say is the fifth element of a substantive FCPA violation – the knowledge of payment to a foreign official. The instructions say (on pg. 26-27) that a “foreign official” is: (1) an officer or employee of a foreign government; (2) any department, agency, or instrumentality of such foreign government, or (3) any person acting in an official capacity for or on behalf of such government or department, agency, or instrumentality. So far so good as the instruction merely tracks the language of 78dd-2(h)(2). The problem is the next sentence of the instruction – “[a]n ‘instrumentality’ of a foreign government includes government-owned or government-controlled companies” (see pg. 27).

Where did that come from? Certainly not the text of the FCPA, as the statute does not define the term “instrumentality.” While it is true the the Department of Justice and the Securities and Exchange Commission take the position that government-owned or government-controlled companies are “instrumentalities” of a foreign government and that all employees of such companies (regardless of rank or title) are thus “foreign officials” under the FCPA, this is an unchallenged and untested legal theory.

As I am exploring in a current work-in-progress, DOJ/SEC’s aggressive interpretation of the “foreign official” element – to include employees of government-owned or government-controlled companies – is ripe for challenge in that it is, among other things, not supported by the FCPA’s extensive legislative history and is undermined by reference to other U.S. statutes which cover foreign or domestic government instrumentalities. Another way to look at it is this way – if the DOJ/SEC’s interpretation were to be applied in an intellectually honest fashion, would not all GM or AIG employees be considered U.S. “foreign officials” because the U.S. government owns or controls those companies?

A further problem with the instructions, is that even accepting the broadness by which the instructions define “foreign official” that term is not used consistently throughout the instructions. For instance, in discussing the sixth element of an FCPA violation – purpose of payment, the instructions interchangeably use the terms “foreign official” and “foreign public official.” (see Pg. 28). Even more confusing is that the instructions, when discussing that solicitation of a bribe is not a defense, (see Pg. 29) say that “[i]t is not a defense that the payment was demanded by a government official as a price for gaining entry into a market or to obtain a contract or other beneift.” Thus, literally in the span of three pages, the instructions refer to the key “foreign official” element of an FCPA violation three different ways – “foreign official,” “foreign public official,” and “government official” even though the later two terms appear nowhere in the statute.

What a mess!

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