In 2024, the DOJ criminally charged various individuals in connection with an alleged Indian bribery scheme. (See here for the prior post).
This recent post highlighted how Judge Nicholas Garaufis (E.D.N.Y.) granted the DOJ’s motion to dismiss various non-FCPA fraud charges against certain defendants.
However, Judge Garaufis denied – for the moment – the motion to dismiss FCPA and obstruction charges against certain other defendants.
Regarding the “FCPA Charges against Non-Appearing Defendants,” Judge Garaufis wrote:
McCotter’s “charge-specific” reason to dismiss Count One is that “the FCPA charges must be dismissed because they do not satisfy the Blanche Memorandum.” (Mccotter Ltr. at 8.) His entire explanation for this reason is as follows:
[T]he alleged conduct did not involve criminal organizations, did not have any effect on U.S. companies, did not in any way implicate national security, was not egregious, and has been the subject of investigations in India. The alleged “payments” in this case were made by Indian nationals, working for Indian companies, to the Indian government, with no U.S. interests implicated in any way. The FCPA charges here do not plausibly satisfy any of the bases given in the Blanche Memorandum for FCPA charges worthy of proceeding. Under the Blanche Memorandum, the FCPA charges should have been dismissed a year ago.
As discussed, the Blanche Memorandum reoriented FCPA enforcement by announcing that the Department “shall focus on cases in which individuals have engaged in criminal misconduct.” (Id.) It also directed prosecutors to consider four “non-exhaustive factors” when evaluating whether to pursue FCPA enforcement actions, including already-pending cases like this one: (1) “total elimination of cartels and transnational criminal organizations [ (”TCOs”) ]” (“Factor 1”); (2) “safeguarding fair opportunities for U.S. companies” (“Factor 2”); (3) “advancing U.S. national security” (“Factor 3”); and ( 4) “prioritizing investigations of serious misconduct” (“Factor 4”). (Id. at 2-3.) For each Factor, the Memorandum also provides guidance regarding the Factor’s meaning and purpose.
Given that McCotter’s explanation does not include specific citations to the Indictment-instead, referring only to “alleged conduct” broadly, (Mccotter Ltr. at 9)-the court identifies the specific allegations that could map onto each Factor to evaluate whether there is sufficient factual information for the proffered reason to dismiss the FCPA charges in Count One.
With respect to Factor 1, the “primary” considerations are whether the alleged misconduct: “(1) is associated with the criminal operations of a cartel or TCO; (2) utilizes money launderers or shell companies that engage in money laundering for cartels or TCOs; or (3) is linked to employees of state-owned entities or other foreign officials who have received bribes from cartels or TCOs.” (Blanche Mem. at 2.) The allegations in the Indictment provide no indication that cartels or TCOs are implicated in this case, which supports McCotter’s conclusion that the alleged conduct “does not satisfy” Factor 1. (McCotter Ltr. at 9.)
With respect to Factor 2, the Blanche Memorandum identifies two considerations. (Blanche Mem. at 2-3.) The first consideration is the vindication of “U.S. national security and economic prosperity” by protecting markets and the rule of law from individuals and companies that ”bribe foreign officials to obtain business,” thereby putting “their law-abiding competitors, including U.S. companies, at a serious economic disadvantage.” (Id. at 2-3.) The Memorandum directs the Department to ”vindicate these interests” by prioritizing the “prosecution of conduct that most undermines these principles.” (Id. at 3.) It specifically states that ”by bribing foreign officials to obtain lucrative contracts” foreign actors “skew markets and disadvantage” U.S. companies. (Id. at 3 & n.4) The second consideration is “whether the alleged misconduct deprived specific and identifiable U.S. entities of fair access to compete and/ or resulted in economic injury to specific and identifiable American companies or individuals.” (Id. at 3.) Although no specific U.S. company is identified in the Indictment, the Indictment contains allegations of ”bribing foreign officials to obtain lucrative contracts.” (Id.) The Blanche Memorandum states that through this conduct foreign companies necessarily “disadvantage law-abiding U.S. companies.” (Id.) Therefore, the Indictment appears to undercut McCotter’s notion that the alleged conduct had no “effect on U.S. companies.” (Mccotter Ltr. at 9).
With respect to Factor 3, the Blanche Memorandum directs the Department to focus FCPA enforcement on the “most urgent threats to U.S. national security resulting from the bribery of corrupt foreign officials involving key infrastructure or assets.” (Blanche Mem. at 3.) Relying on President Trump’s National Security Strategy from 2017, the Memorandum explains that this is the correct focus for FCPA enforcement because when foreign government corruption occurs “in sectors like defense, intelligence, or critical infrastructure, American national security interests may be harmed.” (Id.) The 2017 National Security Strategy defines “critical infrastructure” to include “energy and power,” names energy “dominance” as a key national security goal, and identifies the promotion of energy exports as among the “priority actions” to “embrace” energy dominance.
The allegations in the Indictment involve the payment of hundreds of millions of dollars in bribes to corrupt Indian officials involving energy and power. Thus, under the Blanche Memorandum, the alleged conduct appears to present an “urgent threat[] to U.S. national security,” (id.), undermining McCotter’s assertion that the alleged conduct “did not in any way implicate national security,” (McCotter Ltr. at 9).
For Factor 4, the Memorandum instructs the Department to focus on “alleged misconduct that bears strong indicia of corrupt intent tied to particular individuals, such as substantial bribe payments, proven and sophisticated efforts to conceal bribe payments, fraudulent conduct in furtherance of the bribery scheme, and efforts to obstruct justice” as compared to “routine business practices” or “de minimis or low-dollar, generally accepted business courtesies.” (Blanche Mem. at 3-4.)
A casual reader could be forgiven for mistaking this paragraph of the Blanche Memorandum for a succinct summary of the allegations in the Indictment. Indeed, each bolded clause appears to describe the very conduct alleged in Count One: alleged “misconduct that bears strong indicia of corrupt intent [the intent to bribe Indian government officials for lucrative energy contracts] tied to particular individuals [Defendants, not the corporate entities for which they worked], such as substantial bribe payments [in this case, bribe payments totaling hundreds of millions of dollars], proven and sophisticated efforts to conceal bribe payments, fraudulent conduct in furtherance of the bribery scheme, and efforts to obstruct justice [allegations so numerous in this case, that they give rise to four separate and distinct Counts] .”42 (Id. at 3-4.)
In summary, the current record contradicts McCotter’s reasoning, and therefore fails to support his proffered reason to dismiss Count One on the grounds that the FCPA charges “do not plausibly satisfy any of the bases given in the Blanche Memorandum.” (McCotter Ltr. at 8-9). This conclusion appears to be further supported by the fact that the Department did not move to dismiss these charges by the Executive Order’s 180-day deadline to “take appropriate action” in all existing FCPA cases-including this one. (Blanche Mem. at 1 (quoting Exec. Order § 2).) This fact suggests that either (a) the Department did not meet the deadline to review the FCPA charges set by the President; or (b) consistent with the Executive Order, the Department concluded that the prosecution of the FCPA charges should continue pursuant to the Memorandum, but McCotter-guided by Mr. Giuffra’s “team” and acting as the “sole decisionmaker” within the Department-overruled the Department’s prior decision. Ultimately, whichever is the case here is irrelevant given that the court has already detailed the lack of factual support for McCotter’s stated reason to dismiss Count One-meaning that Rule 48(a)’s procedural requirements are not met.
The court’s conclusion does not mean that additional evidence to support this proffered reason to dismiss does not exist. It means only that the factual support that McCotter has provided is not sufficient.”
