Today’s post is from Mike Dearington, an associate at Arent Fox LLP in Washington, D.C. Dearington previously authored several FCPA Professor guest posts as a law student regarding the prosecution of corrupt foreign officials. (see here, here, here, here, and here).
In recent years, the Department of Justice has ratcheted up its efforts to pursue corrupt foreign officials who accept bribes in return for improper business advantages. By my count, since 2009 alone, federal prosecutors have charged at least eleven foreign officials with crimes related to bribery schemes, netting numerous guilty pleas and convictions. These prosecutions appear to be part of DOJ’s broader strategy of targeting the “demand side” of foreign bribery, rather than focusing only on bribe-payers.
Despite these convictions, prosecutors have not charged any of these officials with actual FCPA violations. The anti‑bribery provisions of the FCPA criminalize only the payment of bribes to foreign officials—not an official’s receipt of bribe payments. Moreover, DOJ has long abided by the Fifth Circuit’s seminal decision in United States v. Castle, where the court held that prosecutors cannot charge bribe-taking foreign officials under the general federal conspiracy statute (18 U.S.C. § 371) with conspiracy to violate the FCPA. See United States v. Castle, 925 F.2d 831 (5th Cir. 1991) (per curiam). The court in Castle concluded, based on the “Gebardi principle,” that, in enacting the FCPA, “Congress affirmatively chose to exempt this small class of persons from prosecution,” and thus did not mean to make them liable for conspiracy to violate the FCPA. Id. at 836.
As a result, federal prosecutors have had to pursue other, more creative prosecution theories when charging bribe-taking foreign officials. For instance, prosecutors have repeatedly charged these officials, where appropriate, with substantive or conspiracy violations of the Money Laundering Control Act and the Travel Act. But investigators must typically uncover additional conduct beyond the mere receipt of bribes in order to support these charges, which likely limits prosecutors’ ability to pursue certain bribe-taking foreign officials.
Last year, however, the Supreme Court decided a Hobbs Act case that may call all that into question. In Ocasio v. United States, 136 S. Ct. 1423, 1427 (2016), the Court held that, under “age-old principles of conspiracy law,” a police officer could conspire with shop owners to extort those very same shop owners in violation of the Hobbs Act. The corollary is that a shop owner can, in theory, conspire to extort himself. If a shop owner can conspire to extort himself, why can’t a bribe-taking foreign official conspire to pay himself bribes in violation of the FCPA?
In an article I recently published with the Washington & Lee Law Review Online, I posit that Ocasio may open the door for federal prosecutors to charge bribe-taking foreign officials with conspiracy to violate the FCPA, contrary to the Fifth Circuit’s decision in Castle. See Michael F. Dearington, Ocasio v. United States: The Supreme Court’s Sudden Expansion of Conspiracy Liability (And Why Bribe-Taking Foreign Officials Should Take Note), 74 Wash. & Lee L. Rev. Online 204 (2017) (available here).
The article proceeds in two parts. First, the article closely examines the Ocasio decision and argues that the Supreme Court in Ocasio seems to have misinterpreted and misapplied two of its early conspiracy‑law cases—Gebardi v. United States, 287 U.S. 112, 120 (1932), and United States v. Holte, 236 U.S. 140, 145 (1915)—in reaching its anomalous holding. Second, the article turns its focus to a logical extension of the Ocasio decision: Although the Fifth Circuit’s longstanding Castle decision previously precluded federal prosecutors from charging bribe‑taking foreign officials with conspiracy to violate the FCPA—leaving them to pursue other, more creative charges—Ocasio’s holding and its apparent evisceration of the “Gebardi principle” cast doubt on Castle and could enable prosecutors to charge bribe‑taking foreign officials with FCPA conspiracy.
Only time will tell whether federal prosecutors will challenge the Castle decision—proceeding along the lines outlined in my article—or whether they will instead stay the course and continue to employ other prosecution theories when charging bribe‑taking foreign officials. This tactical decision could depend in part on how lower courts interpret Ocasio’s principles and holding in the years to come. Irrespective of DOJ’s tactical approach, however, one thing remains clear: Notwithstanding the FCPA’s statutory focus on the “supply side” of the foreign-bribery equation, federal prosecutors have shown no sign of scaling back their strategy of pursuing bribe-taking foreign officials and the “demand side” of foreign bribery.
The views expressed in this post are personal views and do not represent the views of Arent Fox LLP, its partners, employees, or clients. The information provided is not intended to be legal advice and does not create an attorney-client relationship.
FCPA Institute - Houston (March 26-27, 2020)
A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active learning. Learn more, spend less. CLE credit is available.