As highlighted towards the end of this post, judicial findings of prosecutorial misconduct and other mishaps have been an all too frequent feature in contested individual FCPA enforcement actions.
In this recent filing, Richard Boncy (an individual added to the Haiti port project enforcement action in October 2018) moves to dismiss the indictment “on the basis that the Government has destroyed and otherwise failed to preserve evidence that would show he is innocent of all charges in indictment based on an alleged bribery scheme.”
According to the motion:
“[T]he government destroyed two recorded telephone calls that Mr. Boncy had with an undercover FBI agent (the UC). Both of these calls occurred on December 19, 2015. In those calls, Mr. Boncy made clear that he did not understand that any bribes were to be paid. Indeed, the calls were so inconsistent with the alleged scheme that the UC called the co-defendant, Dr. Joseph Baptiste, and told him that Mr. Boncy had a ‘different’ understanding than the bribe scheme Dr. Baptiste and the UC were discussing.
These recordings – which showed that Mr. Boncy lacked the requisite intent and exculpate the defendant – are gone. The FBI and Department of Justice – who were in custody of the recordings – destroyed them. Additionally, neither the FBI nor the DOJ otherwise recorded the content, context or even summaries of these calls in any separate contemporaneous writings. Three and one-half years after the calls occurred, it is impossible to now recreate the contents, context and nature of the calls. All because the FBI and DOJ’s actions resulted in the destruction of the exculpatory evidence.
The net result of the FBI and DOJ’s conduct is that there is no meaningful way to convey the exculpatory contents of these calls to the jury. Mr. Boncy has been deprived of his right to present the content of these recordings to the jury. And the jury has been deprived of the opportunity to consider this evidence of Mr. Boncy’s innocence. All because of the government’s conduct. This is a violation of the Constitution. The government is required to preserve and keep exculpatory evidence. And when it destroys irreplaceable, apparently exculpatory evidence – the government must face the consequences – which are severe. California v. Trombetta, 467 U.S. 479, 487 (1984) (“[W]hen evidence has been destroyed in violation of the Constitution, the court must choose between barring further prosecution or suppressing . . . the [government’s] most probative evidence.”). In this case, dismissal is the only just remedy. Accordingly, Mr. Boncy respectfully requests that the indictment be dismissed. Mr. Boncy further requests an evidentiary hearing be held on this matter and that he be permitted to examine all relevant parties, including the FBI agents, FBI technicians and government attorneys that have knowledge on any issue related to the destruction of the evidence.”
As to the underlying theory of the case, the motion states as follows:
“This is an FBI undercover case that alleges Mr. Boncy and Dr. Baptiste engaged in Foreign Corrupt Practices Act (“FCPA”) and money laundering violations related to a purported bribery scheme in Haiti. See D.E. 74, Superseding Indictment. But, here is the hiccup: Mr. Boncy never received any money to pay a bribe. Mr. Boncy never paid a bribe. In fact, there is no evidence that any bribe money ever changed hands. The only alleged “bribe money” in this case was delivered to Dr. Baptiste by the undercover FBI agents – and without Mr. Boncy’s knowledge. And, not one cent of that money was ever used to pay a bribe. Instead, Dr. Baptiste pocketed the money for his own personal gain. And that’s what the indictment and complaint say. E.g., D.E. 3-2, Affidavit in Support of Criminal Complaint, ¶ 30 ( “I have reviewed bank records indicating that [Joseph Baptiste] ultimately used the $50,000 . . . for personal purposes.”). No one can dispute those facts. The bottom line is that the bank records and related documentary evidence all show that this was not a bribery case.
Nevertheless, the government intends to push forward with this prosecution – relying solely on recorded phone calls and a single recorded meeting – that it claims show Mr. Boncy had the intent pay bribes. There is no cooperator that will testify to Mr. Boncy’s participation in a crime and implicate Mr. Boncy. There are no bank records that show a flow of money consistent with a bribery scheme. It all comes down to the recordings. Put simply, the recordings make or break the government’s case.
Unfortunately for the government, the recordings with Mr. Boncy hardly implicate him. In fact, in the sole meeting the FBI had with Mr. Boncy, Mr. Boncy indicates that the bribes the FBI undercovers want to pay are not necessary. This single meeting, which occurred on November 12, 2015, and was attended by Mr. Boncy, Dr. Baptiste, and a third person connected with their project – is at best equivocal evidence regarding Mr. Boncy’s state of mind. For example, when asked by the UC during the meeting, whether any payment was required to secure a letter of support from the Prime Minister – the answer was no. Likewise, when the UC asked if they would need to “pay” people – the answer was no. Of course, this was a long meeting and much was said. But, what is clear at the end of the meeting is that different individuals have different understandings. And, Mr. Boncy never once agreed to the predicate acts necessary to sustain any of the offenses charged – making or accepting a bribe payment.
Indeed, the only in-person meeting was proceeding so poorly for the government in light of Mr. Boncy’s statements, that they felt obliged to pull Dr. Baptiste – and not Mr. Boncy – from the meeting. In this one-on-one meeting with Dr. Baptiste, the UC asked Dr. Baptiste if Mr. Boncy knew “how it works” down there, referring to Dr. Baptiste’s claim that Haiti was some form of “pay to play” environment. As this interchange indicates, it became clear during the meeting that Mr. Boncy was not on-board with any bribery scheme and that a side meeting was necessary. In fact, when the UC pulled Dr. Baptiste away from the meeting, the UC falsely informed the group that it had something to do with Dr. Baptiste’s car – and not additional secret discussions about the purported bribe scheme. Following this side meeting, the UC and Dr. Baptiste returned to the meeting with Mr. Boncy – and bribes were never again discussed.
Aside from this meeting, the UC had only two other interactions with Mr. Boncy. Those were the two destroyed calls. The remainder of the recordings of Mr. Boncy in this matter come from a wiretap. The wiretap calls are equally as equivocal as the meeting in November. And regardless of the contents — the recordings will be paramount to both the government and the defense – as it is the government’s only evidence. Each will draw and argue what they can from the calls – except when it comes to the destroyed calls. No one will be able to argue that evidence.”
As discussed next, judicial findings of prosecutorial misconduct and other mishaps have been an all too frequent feature in contested individual FCPA enforcement actions.
Lindsey Manufacturing / Keith Lindsey / Steven Lee
The most egregious instance was the DOJ’s failed prosecution of Lindsey Manufacturing and its executives Keith Lindsey and Steven Lee.
By way of background, in May 2011 the defendants were convicted after a five week trial by a federal jury in the Central District of California of one count of conspiracy to violate the FCPA and five counts of FCPA violations. Reacting to the guilty verdicts, Assistant Attorney General Lanny Breuer stated: “Today’s guilty verdicts are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts. Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last.”
As detailed in this prior post, in December 2011, the DOJ’s “important milestone” was erased when Judge Howard Matz, after months of legal wrangling, vacated the convictions and dismissed the indictment. See here for Judge Matz’s ruling. In his ruling, Judge Matz summed up the government’s conduct as an “unusual and extreme picture of a prosecution gone badly awry.”
In pertinent part, Judge Matz stated:
“In this Court’s experience, almost all of the prosecutors in the Office of the United States Attorney for this district consistently display admirable professionalism, integrity and fairness. [A footnote states – Two of the three members of the prosecution team in this case were from the Washington, D.C., main office of the Department of Justice, including the lawyer who initiated the investigation. Only one “local” AUSA was involved]. So it is with deep regret that this Court is compelled to find that the Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court’s rulings, engaged in questionable behavior during closing argument and even made misrepresentations to the Court. Consequently, the Court throws out the convictions of Defendants Lindsey Manufacturing Company, Keith E. Lindsey and Steve K. Lee and dismisses the First Superseding Indictment.”
In reaching his conclusion, Judge Matz acknowledged that even he was overwhelmed by the pace of the case and thus unable to see sooner the gravity of the DOJ’s misconduct. The following paragraph from his order was telling.
“… [When a trial judge managing a large docket is required to devote a great deal of time and effort to a fast-moving case that requires numerous rulings, often the judge will miss the proverbial forest for the trees. That is what occurred here. This Court was confronted with so many motions challenging the Government’s conduct that it was difficult to step back and look into whether what was going on reflected not isolated acts but a pattern of invidious conduct. Although the Court did issue orders granting various of Defendants’ motions to suppress, motions to exclude evidence, motions to compel further discovery, motions for curative instructions, etc., it did not fully comprehend how the various pieces fit together. And fit together they do. The Government has acknowledged making many “mistakes,” as it characterizes them. “Many” indeed. So many in fact, and so varied, and occurring over so lengthy a period (between 2008 and 2011) that they add up to an unusual and extreme picture of a prosecution gone badly awry. To paraphrase what former Senator Everett Dirksen supposedly said, “a few mistakes here and a few mistakes there and pretty soon you’re talking misconduct.””
Africa Sting Cases
While perhaps not as egregious as the above instance, Judge Richard Leon also had harsh words for the DOJ in connection with the DOJ’s failed manufactured Africa Sting. As highlighted in this post, when dismissing all remaining charges against the defendants (certain defendants were found not guilty), Judge Leon stated in pertinent part:
“This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.
Two years ago, at the very outset of this case I expressed more than my fair share of concerns on the record regarding the way this case has been charged and was being prosecuted. Later, during the two trials that I presided over I specifically commented again on the record regarding the government’s very, very aggressive conspiracy theory that was pushing its already generous elasticity to its outer limits. Of course, in the second trial that elastic snapped in the absence of the necessary evidence to sustain it.
In addition, in that same trial, I expressed on a number of occasions my concerns regarding the way this case had been investigated and was conducted especially vis-a-vis the handling of Mr. Bistrong. I even had an occasion, sadly, to chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom.”
In a rare move, the jury foreperson in one of the failed Africa Sting trials went public. As noted in this post, the jury foreperson stated:
“As noted above, a number of jurors were troubled by the nature of the FBI sting operation. Specifically, some seemed unwilling to convict on the basis of vague language (e.g., “commission” instead of “bribe”) and where the defendants had not sought out the deal. These jurors were largely not participatory in the deliberations and when specifically called upon for their views would typically voice agreement with views expressed by some other juror voting “Not Guilty.” But enough small comments through the course of deliberations lead me to believe that their underlying view was that the defendants had acted in good faith and the FBI/DOJ in bad faith. Along the same lines, more than one juror voiced concern that it would be unjust for the defendants in this case to be convicted when the government relied so heavily on Mr. Bistrong who freely admitted on the stand more illegal acts than the entire group of defendants was accused of, yet was able to plead to only one count of conspiracy to violate the FCPA.”
As highlighted here, in June 2015 the DOJ’s most recent FCPA criminal trial came to an abrupt halt early in the trial after the DOJ’s star witness admitted to giving false testimony on the stand. Indeed, Judge Joseph Irenas (D.N.J.) asked the witness “did you have a hallucination?” Shortly after this mishap, Sigelman did plead guilty to a substantial reduced charge and as highlighted in this post, in sentencing Sigelman to no jail time Judge Irenas blasted the DOJ.
In 2009, the DOJ charged John O’Shea with various FCPA and related offenses. O’Shea proceeded to trial, and in January 2012, following DOJ’s case, Judge Lynn Hughes (S.D. Texas) dismissed the FCPA charges against O’Shea. In doing so, Hughes stated, ‘‘The problem here is that the principal witness against Mr. O’Shea . . . knows almost nothing.’’
In addition, during the trial, Judge Hughes criticized the DOJ as follows: “the Government should have been prepared before they brought the charges to the Grand Jury. It’s something you have to prove. And you shouldn’t indict people on stuff you can’t prove.”
Harris Corporation / John Iacobucci / Ronald Schultz
In 1990, the DOJ criminally charged Harris Corporation (a company that manufactured telephone switching systems) and two executives John Iacobucci and Ronald Schultz with conspiracy to violate the FCPA. According to the charging documents, the defendants paid and authorized the payment of money to a third-party “while knowing that a portion of such money” would be offered or given, directly or indirectly, to officials of the Government of Colombia in order to influence the officials to award government telecommunications contracts to Harris. According to the indictment, pursuant to the conspiracy Harris retained an agent based upon representations that he had connections with officials in the government that he would use to assist Harris in obtaining telecommunications contracts.
Upon filing of the criminal charges, the Chairman and CEO of Harris stated:
“We believe that these charges are based upon a distorted view of the facts, and they represent a radical departure from existing enforcement policies. We have cooperated fully with the DOJ in its investigation of the allegations, providing clear evidence refuting the charges.”
The company, along with the individuals, put the DOJ to its burden of proof at trial. In 1991, the trial court judge granted a motion for judgment of acquittal. Media reports stated:
“Shortly after the government rested its case, [the trial court judge] ruled from the bench that ‘no reasonable jury’ could convict the company nor its executives on any of the five bribery-related counts for which they were indicted. Citing insufficient evidence, [the judge] said the government had failed to show any intent by the defendants to enter into a criminal conspiracy. [The judge] also said it was the first time in his six years on the federal bench that he had dismissed a criminal case at mid-trial for lack of evidence.”
After the judgment of acquittal, the Chairman and CEO of Harris stated:
“We’re very pleased that [we] have been vindicated, but we believe the charges should never have been brought in the first place. The DOJ’s case was based upon a distorted view of the facts and represented a radical departure from existing enforcement policies. As a result, American taxpayers have been burdened with unnecessary litigation costs, and Harris has incurred more than $3 million in legal fees, spent many hundreds of hours of our people’s time, and suffered a substantial disruption of the corporation’s business to prove an absence of wrongdoing that should have been apparent from the beginning. The case has also placed a heavy strain on our two employees named in the indictment.”
Unrelated to Boncy’s motion to dismiss the indictment, there are pending government motions in limine pending in the matter.
The first seeks a court order “precluding [Boncy] from offering any evidence or making any argument about his charitable acts in Haiti beyond the crimes charged in this case.”
The second seeks a court order “precluding [Boncy] from offering any evidence or making any argument, including in his opening statement, concerning the alleged public benefit of the proposed development of a port and certain industrial operations in Mole St. Nicolas, Haiti, which the defendant pitched to the undercover agents posing as investors in this case.”
In the third, the government states:
“The Court should preclude the defendant from making argument tending to invite the jury to ignore this Court’s instructions on the law and to decide this case based on the jury’s general sense of fairness, justice, or good policy. Specifically, in this case, which centers on a conspiracy to bribe Haitian government officials in relation to an infrastructure project in Haiti, the defendant may argue: (1) that corrupt practices abroad are so widespread and so deeply-ingrained, particularly in Haiti, that the defendant should not be held to account for his efforts to bribe Haitian officials; (2) that the United States government should not interfere in American companies’ or individuals’ business practices in other countries; and (3) that prosecuting small business owners who intend to help their native countries is unfair.”
FCPA Institute - Zoom (Oct. 25-27, 2022)
Elevate your FCPA knowledge and practical skills. Nine hours of integrated and cohesive instruction led by Professor Koehler (an FCPA expert with teaching experience). Learn more, spend less. Professional credential available.Learn More and Register