For the first time in FCPA history, “foreign official” is headed to an appellate court.
Yesterday, Carlos Rodriguez and Joel Esquenazi filed appeals (here) and (here) in the 11th Circuit challenging their convictions. As noted in this previous post, in August 2011 a federal jury (after a two week trial) convicted Esquenazi and Rodriguez on all counts for their roles in a scheme to pay bribes to alleged Haitian officials at Haiti Telecom. In the prior post discussing the verdict, I noted that given the “foreign official” jury instructions at trial, the defendants have a good chance to challenge the instruction on appeal should they so choose. This was before the strange developments concerning the existence of Haiti Teleco – see here, here and here for prior posts.
As noted in this DOJ release announcing the jury verdict, Esquenazi and Rodriguez were convicted of one count of conspiracy to violate the FCPA and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering. In October 2011, Esquenazi was sentenced to an FCPA record 15 years in prison and Rodriguez was sentenced to 7 years in prison – see here for the prior post.
The remainder of this post summarizes the initial briefs of Rodriguez and Esquenazi.
Representing Rodriguez in his appeal are Foley & Lardner attorneys David Simon (here), Michael Halfenger (here), James Cirincione (here), Pamela Johnson (here), Jaime Guerrero (here), Kenneth Winer (here), and Lauren Valiente (here).
The brief presents the following issues.
“1. Whether the District Court erred as a matter of law in its jury instruction regarding what constitutes an “instrumentality” of a foreign government for purposes of construing the counts, including the money laundering counts, that were dependent upon the Foreign Corrupt Practices Act (“FCPA”).
2. Whether the District Court abused its discretion when it refused to hold an evidentiary hearing concerning the circumstances and history regarding a declaration from the current Haitian Minister of Justice that stated that Telecommunications D’Haiti (“Teleco”) was not an “instrumentality” of the Haitian government that the Government turned over just after the jury’s verdict followed by a second declaration that the United States Government was involved in procuring that reversed the first declaration, which contained clear exculpatory evidence .
3. Whether the District Court erred as a matter of law in its “knowledge” jury instruction regarding the FCPA-dependent counts, including the money laundering counts.
4. Whether there was sufficient evidence to support jury’s verdicts as to the FCPA counts.
5. Whether the District Court plainly erred when it submitted the wire fraud-dependent counts, including the money laundering counts, to the jury based on an erroneous jury instruction that failed to require proof that of the jurisdictional facts necessary for federal wire fraud, that is that the wire communications crossed state lines (i.e., inter-state communications).
6. Whether the District Court plainly erred in its mens rea instruction to the jury regarding the wire fraud-dependent counts, including the money laundering counts, because the jury was not asked to find intent to defraud for the wire fraud-dependent counts.
7. Whether there was sufficient evidence to support the jury’s verdicts as to the wire fraud-dependent counts.
8. Whether the Government’s attempt to change the basis of its wire fraud theory from wire transfers to facsimiles constitutes an impermissible variance from its initial theory of the case.
9. Whether the District Court erred as a matter of law in its jury instruction of what constituted a violation of the Haitian bribery law as proper predicate for the money laundering counts.
10. Whether the District Court abused its discretion in not granting a motion to dismiss the money laundering counts where the “proceeds” of the predicate crimes were the same transfers of money that were charged as the money laundering transactions, thereby violating the merger rule, and whether there was sufficient evidence to support jury’s verdicts as to the money laundering counts for the same reason.
11. Whether Mr. Rodriguez’s sentence must be vacated.
12. Whether the forfeiture order and the forfeiture aspect of the amended judgment and commitment order must be vacated because the oral sentence pronounced by the District Court did not order forfeiture.”
In summary, the brief argues as follows (internal citations omitted).
“1. The District Court abused its discretion by refusing to charge the jury using Mr. Rodriguez’s proposed instructions as to the terms “foreign official” and “instrumentality.” The interpretation of these terms under the FCPA is an issue of first impression in this Court. However, the District Court’s instructions conflict with this Court’s existing precedent. The District Court instructed the jury that an instrumentality of the Haitian government “is a means or agency through which a function of the foreign government is accomplished.” This Court explicitly rejected such a definition while interpreting another statute that contains the term “instrumentality” in a virtually identical statutory context. Addressing whether a private corporation that operated a prison system on behalf of the State of Florida was an “instrumentality of a state,” this Court held that the term “instrumentality of a state” referred to “governmental units or units created by them,” and rejected the functionality test incorporated into the instructions given by the District Court.. Mr. Rodriguez’s proposed instructions were consistent with this Court’s precedent. Because this Court rejected the functionality test in the context of another statute, the District Court abused its discretion by giving such an instruction in this case, in which Mr. Rodriguez may lose his liberty for seven years.
2. The District Court abused its discretion by denying Mr. Rodriguez’s motion for an evidentiary hearing regarding two contradictory declarations executed by Jean Max Bellerive, the Minister of Justice and Public Safety for Haiti (the Haitian government’s analog to the United States Attorney General). During the course of Mr. Rodriguez’s trial, Bellerive signed a declaration stating that Teleco “has never been and until now is not a State enterprise. Since its formation to date, it has and remains a Company under common law.” The Government disclosed this declaration five days after Mr. Rodriguez had been convicted. In opposing Mr. Rodriguez’s motion for an evidentiary hearing, the Government produced a second declaration signed by Bellerive that “clarified”several of the declarations key statements about Teleco’s status under Haitian law. The United States government substantially assisted the Minister in preparing the second, “clarifying” declaration. Despite the confusion created by the conflicting declarations, the District Court declined to hold an evidentiary hearing on the potential Brady issues posed by these events. That was an abuse of discretion.
3. The District Court also abused its discretion by rejecting Mr. Rodriguez’s requested jury instructions as to the “knowledge” requirement of the FCPA and by giving a deliberate ignorance instruction with no basis in the evidence.
4. The District Court erred by denying Mr. Rodriguez’s motion for acquittal, because the evidence is insufficient to support the jury’s determination that Teleco was an “instrumentality” of the Haitian government under the FCPA, and because no evidence was admitted at trial establishing that Teleco performed a function of the Haitian government.
5. The District Court erred by denying Mr. Rodriguez’s motion for acquittal based on the insufficiency of the evidence. Most of the trial testimony centered on Mr. Rodriguez’s co-defendant, Esquenazi, who had been the CEO of the small telecommunications company at issue here. He, not Mr. Rodriguez, had direct contacts with Haitian citizens. The Government’s evidence against Mr. Rodriguez amounted to the fact that he signed Terra’s checks and Terra’s former Comptroller, Perez, thought Mr. Rodriguez was in one meeting where bribes were discussed. Perez’s testimony was uncorroborated, contradicted by his earlier statements to the Government, and inherently unreliable. The evidence is insufficient to support the jury’s verdict that Mr. Rodriguez conspired to violate any federal law.
6. The District Court erroneously instructed the jury as to the jurisdictional element for the interstate wire fraud communication counts and the elements of money laundering, because the jury was not instructed that the wires must cross state lines, and the jury was not instructed that Government had to prove that the proceeds of the specified unlawful activity resulted from a felony under Haitian law to support a money laundering conviction.
7. The evidence does not support the jury’s determination that Mr. Rodriguez committed wire fraud, because there is no evidence that any interstate wires were sent. The District Court evidence adduced at trial does not support the jury’s verdict as to any count of conviction, even when the evidence is construed in favor of the Government.
8. Finally, the District Court’s Amended Judgment and Commitment Order imposed an invalid sentence by including forfeiture because the District Court did not announce an order of forfeiture as part of Mr. Rodriguez’s orallyimposed sentence.”
Esquenazi adopted portions of co-appellant Rodriguez’s brief relating to the FCPA, intra-state wire fraud issues, and the Haitian bribery and in addition the brief presents the following issues.
1. “Whether the district court erred by refusing to conduct an evidentiary hearing on Brady issues.”
2. “Whether Esquenazi is entitled to an acquittal because employees of Haiti Teleco were not “foreign officials” within the meaning of FCPA simply because the National Bank of Haiti owned shares of Haiti Teleco and the Haitian government appoints board members and directors.”
3. “Whether the FCPA jury instructions adequately conveyed the requisite governmental function necessary to establish that Haiti Teleco was an “instrumentality” of the Haitian government and Esquenazi’s knowledge of the same.”
4. “Whether the district court erred by improperly applying the sentencing guidelines as to leadership role, perjury and loss amount.”
In summary, the brief argues as follows (internal citations omitted).
“Although the FCPA is aimed at corrupt payments made to “foreign officials,” the Government never established that Haiti Teleco performed government functions similar to a governmental department or agency, such that Haiti Teleco’s employees would qualify as “foreign officials.” Instead, the Government relied on the National Bank of Haiti’s ownership of stock in Haiti Teleco and the Haitian government’s appointment board members and directors. Six days after the jury reached its verdict, however, the Government disclosed the existence of a declaration from the then-current Prime Minister of Haiti, Jean Max Bellerive, prepared ten days prior to the case going to the jury. The declaration stated that Haiti Teleco “has never been and is not a State enterprise,” and that the by-laws of the company had never been changed as required by law to make Haiti Teleco a government-owned entity.
Under Brady v. Maryland, the Government has an affirmative obligation under the Due Process Clause of the Fifth Amendment to “learn of any favorable evidence known to others acting on the government’s behalf in the case” and disclose any potentially exculpatory evidence to the defendant. Esquenazi requested a Brady hearing to determine if and when the Government knew of the contents of this critical declaration. The district court erred in refusing to hold an evidentiary hearing under the circumstances.
Esquenazi is also entitled to an acquittal on all FCPA-based counts because the term “instrumentality” in the FCPA should be construed to encompass only foreign entities performing governmental functions similar to departments or agencies. Here, the Government failed to establish that Haiti Teleco performed a governmental function. Despite the Government’s continued reliance on the premise that state-ownership or state-control of a business entity makes that entity and “instrumentality” of the government under the FCPA, that theory was explicitly considered by the drafters of the FCPA, but not included in the statute, and is inconsistent with the language of the statute as drafted. Because so many individuals and companies prosecuted by the Government prefer to resolve their cases prior to trial, the validity of the Government’s theory has seldom been tested in court, and never before by a United States Court of Appeals. This case presents an opportunity to review the Government’s aggressive enforcement of a less-than-clear federal statute and properly limit its scope to corrupt payments made to “foreign officials,” including employees of “instrumentalities” that perform governmental functions similar to governmental departments and agencies.
Esquenazi is also entitled to an acquittal or a new trial because the jury instructions failed to require that the jury determine whether Haiti Teleco ever exercised a government function akin to a department or agency, or even define “governmental function.” Because the jury could have reached its verdict without any consideration of the function of Haiti Teleco, the jury instructions were deficient.
Finally, the district court improperly calculated Esquenazi’s sentence. Esquenazi’s leadership role should have been that of an organizer or manager rather than a leader. Further, his enhanced sentence for perjury was improper both as to the substance of the district court’s findings and the procedure by which it made the determination.”