As highlighted in this prior post, earlier this week Carl Zaglin was found guilty at trial in connection with a bribery scheme involving Honduran officials.
One of the issues at trial was whether Zaglin – in engaging in the conduct – was following the advice of counsel.
The jury instructions stated: “Good-faith reliance upon advice of counsel is a complete defense to the charges in the indictment because the Government must prove beyond a reasonable doubt that the Defendant acted with intent to commit the offense. Evidence that the Defendant in good-faith followed the advice of counsel would be inconsistent with such an unlawful intent. Unlawful intent has not been proved if the Defendant, before acting: made a full and complete good-faith report of all material facts to an attorney he or she considered competent; received the attorney’s advice as to the specific course of conduct that was followed; and reasonably relied upon that advice in good-faith.”
The defense obviously did not work and it was notable that Zaglin did not testify at trial.
A few other FCPA trials (there have only been 24 in history) have involved advice of counsel issues.
As highlighted in this prior post, in 1998 the DOJ criminally charged David Mead (the President and CEO of Saybolt) in connection with alleged bribery scheme involving officials in Panama.
In a motion to dismiss, Mead argued (among other things) that the indictment was devoid of any allegation that he acted “willfully” (i.e. with the specific intent to violate the law) because he followed the legal advice of counsel in making the alleged payments. The motion was denied.
At trial, Mead argued that the DOJ failed to meet its burden of proof and that he acted in good faith belief that the payment to the Panamanian officials was lawful. The relevant jury instructions stated:
“If the evidence shows you that the defendant actually believed that the transaction was legal, he cannot be convicted. Nor can he be convicted for being stupid or negligent or mistaken. More is required than that. But a defendant’s knowledge of a fact may be inferred from “willful blindness” to the knowledge or information indicating there was a high probability that there was something forbidden or illegal about the contemplated transaction and payment. It is the jury’s function to determine whether or not the defendant deliberately closed his eyes to the inferences and the conclusions to be drawn from the evidence here.”
Mead’s trial occurred in October 1998 and he was found guilty of all charges.
Advice of counsel issue was also relevant in the Frederic Bourke FCPA trial.
In 2009, Bourke was convicted of trial of conspiracy to violate the FCPA (among other charges) in connection with a bribery scheme involving Azerbaijan. Thereafter, Bourke moved for entry of a judgment of acquittal or alternatively for a new trial based on a variety of issues.
Judge Shira Scheindlin (S.D.N.Y.) denied the motions and her decision, as relevant to the advice of counsel issues, states under the heading “Failure to Include a Good Faith Charge” as follows:
“Bourke next asserts that the Court erroneously failed to instruct the jury on Bourke’s good faith defense. He argues that the Court should have adopted his requested charge, that “[i]f [] Bourke believed in good faith that he was acting properly in connection with the matters alleged in those counts, even if he was mistaken in that belief, and even if others were injured by his conduct, there would be no crime.”
As noted, however, I specifically instructed the jury that “knowledge is not established [] if the person merely failed to learn the fact through negligence or if the person actually believed that the transaction was legal.” I also charged the jury – in the intent portion of the conspiracy charge – that “the government must prove beyond a reasonable doubt that the defendant knew that he was a member of an operation or conspiracy that committed or was going to commit a crime, and that his action of joining such an operation or conspiracy was not due to carelessness, negligence or mistake.”
This principle was repeated again when I instructed the jury that it “must first find that [Bourke] knowingly joined in the unlawful agreement or plan.” I then continued by defining the term “knowingly” as “deliberately and voluntarily,” rather than the product of a “mistake or accident or mere negligence or some other innocent reason.” […]
Bourke further argues that the Second Circuit has approved the use of a conscious avoidance charge where “there was a genuine issue as to the defendant’s good-faith ignorance of the illegality of his conduct,” but notes that “in those circumstances, [] courts have given specific instructions on both conscious avoidance and the good-faith defense (or an equivalent, such as advice of counsel).” As noted above, the jury was in fact instructed on both conscious avoidance and the good faith defense. Furthermore, Bourke specifically objected to the Government’s request for an advice of counsel instruction. Although the Court considered including an advice of counsel instruction in the charge, it ultimately denied the Government’s request for such instruction after the defense failed to make the argument in its closing that it was relying on such defense.”
