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The Case That Just Keeps On Giving – DOJ Announces Additional Charges In PDVSA Bribery Action Against Employees Of Swiss Wealth Management Firm – Previously Charged FCPA Defendant Files Motion To Dismiss


Several prior posts (see hereherehere and here for instance) have highlighted the clustering phenomenon and how a few discreet instances of alleged bribery yield an inordinate amount of Foreign Corrupt Practices Act enforcement activity against individuals.

One such example is the DOJ’s long-standing enforcement action (charges were first brought in late 2015) in connection with alleged corrupt schemes to secure contracts from Venezuela’s state-owned and state-controlled energy company, PDVSA.

In this recently unsealed indictment, Nervis Villalobos Cardenas (a citizen of Venezuela), Daisy Rafoi Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm), and Paulo Caqueiro Murta (a citizen of Portugal and Switzerland and employee in a Swiss Management firm) were charged with conspiracy to violate the FCPA’s anti-bribery provisions as well as other offenses. In the indictment, various former employees of PDVSA entities (alleged to be “foreign officials”) were also charged with money laundering offenses. As highlighted in this prior post, Villalobos was previously charged with FCPA and related offenses in early 2018.

As alleged in the indictment, Villalobos, Rafoi and Murta, along with others, conspired to enrich themselves and others by directing bribes to various PDVSA “foreign officials” to assist others in “obtaining and retaining lucrative energy contracts with PDVSA through corrupt and fraudulent means.”

According to the indictment, Rafoi opened Swiss bank accounts and facilitated financial transactions for various co-conspirators to help facilitate the bribery scheme. According to the indictment, Murta set up Swiss bank accounts to facilitate the bribery scheme.

This original post regarding the Villalobos charges suggested that the FCPA charges conflicted with U.S. v. Castle, 925 F.2d 831 (1991).

This recent motion to dismiss filed by Villalobos states under the heading “Castle and Hoskins Require Dismissal” as follows (internal citations omitted):

“Last year the Second Circuit rendered its landmark decision in Hoskins, which concerned a defendant similarly situated to Mr. Villalobos – a non-citizen who conspired with a U.S. citizen and others to bribe a foreign official abroad. Hoskins held that one who cannot be criminally liable for violating the FCPA as a principal also cannot be prosecuted for aiding and abetting others (complicity) or conspiring to violate the FCPA.

Hoskins found support in the Fifth Circuit’s 1991 decision in Castle. Castle was a Canadian public official who took a bribe from a U.S. businessperson. The FCPA, however, excludes the foreign pubic official “bribee” from liability. Thus, “the question [in Castle was] whether foreign officials, who … cannot [be prosecuted] under the FCPA itself, may be prosecuted under the general conspiracy statute for conspiring to violate the Act.” The Fifth Circuit held a foreign official cannot be prosecuted for conspiracy and affirmed the district court’s dismissal of the indictment.

First, the Fifth Circuit contrasted the FCPA – which excludes the foreign public official who takes bribes from liability – with domestic bribery statutes such as 18 U.S.C. §§ 201 and 210-215, which criminalize both the payment and the receipt of a bribe. Clearly, excluding bribe recipients in the FCPA was intentional. In addition, the legislative history of the FCPA shows that Congress’s “exclusive focus was on the U.S. companies [who pay bribes] and the effects of their conduct within and on the United States,” while limiting the impact on foreign relations.

The Fifth Circuit then held that, because a foreign official who accepts a bribe cannot be prosecuted for FCPA, he also cannot be prosecuted for conspiracy to violate the FCPA. Indeed, the court stated that it would be “absurd” to think that Congress intended the conspiracy statute to reach people who were excluded from the substantive crime. In drafting the law, Congress wanted to avoid the “‘inherent jurisdictional enforcement, and diplomatic difficulties’ raised by the application of the [FCPA] to non-citizens . . . .” This means that some people whose acts are necessary to consummate foreign bribery are not subject to prosecution within the United States. The Fifth Circuit reasoned that, by expressly listing the three categories of the persons whom the government could prosecute under the FCPA, Congress did not intend the conspiracy statute to expand liability to others not listed.


Because so few FCPA cases are litigated, the next logical step in the case law did not come until in 2018, when Hoskins held that the general conspiracy statute, 18 U.S.C. § 371, also could not be applied to a foreign national living abroad who facilitated a bribe to a foreign public official (but was not himself a foreign public official).

Hoskins was a British citizen who worked for a French company in Indonesia. He and others, including people who worked for a U.S. affiliate of the same company with headquarters in Connecticut, bribed government officials in Indonesia so that the company could secure a large contract from the Indonesian government. Some of the bribe money was paid out of bank accounts in the U.S. controlled by Hoskins’s coconspirators. Hoskins personally committed several acts in furtherance of the bribery scheme abroad but none within the United States (nor did he himself control any of the American bank accounts used in the bribery scheme). The relevant portion of the indictment did not charge that Hoskins violated the FCPA as a principal and, instead, alleged that he was liable for conspiring with, and being complicit with, others located in the United States or who were agents of American companies.

Hoskins moved to dismiss the FCPA conspiracy charge on the ground that the FCPA does not permit the exercise of extraterritorial jurisdiction over a non-citizen for conspiracy whose criminal conduct occurred abroad and who was not an agent of an American company. The district court agreed and dismissed the indictment pretrial, and the Second Circuit affirmed. The Second Circuit’s decision focused on three main points – the language of the FCPA, the presumption against extraterritorial application of federal statutes, and the legislative history of the FCPA.

The Three FCPA Categories

Like Messrs. Castle and Hoskins, Mr. Villalobos cannot be charged – and is not charged – with violating the FCPA because he does not fall within the categories of persons that it covers. As the Second Circuit explained:

The FCPA establishes three clear categories of persons who are covered by its provisions: (1) Issuers of securities registered pursuant to 15 U.S.C. § 78l or required to file reports under Section 78o(d), or any officer, director, employee, or agent of such issuer, or any stockholder acting on behalf of the issuer, using interstate commerce in connection with the payment of bribes, 15 U.S.C. § 78dd-1; (2) American companies and American persons using interstate commerce in connection with the payment of bribes, 15 U.S.C. § 78dd-2; and (3) foreign persons or businesses taking acts to further certain corrupt schemes, including ones causing the payment of bribes, while present in the United States.

The Second Circuit observed that, “[t]he single, obvious omission [in the statute] is jurisdiction over a foreign national who acts outside the United States, but not on behalf of an American person or company as an officer, director, employee, agent, or stockholder.” Id. at 85. Mr. Villalobos does not fall within any of the three FCPA categories, and the indictment does not allege that he does.7 Instead, he is “a foreign national who [allegedly] act[ed] outside the United States, but not on behalf of an American person or company as an officer, director, employee, agent, or stockholder.”

For this reason, the indictment presupposes Mr. Villalobos’s criminal liability based on a “theor[y] of conspiracy” with codefendant De Leon, a U.S. citizen. This was the theory of Hoskins. However, “the FCPA’s carefully-drawn limitations do not comport with the government’s use of the complicity or conspiracy” in this way.

Significantly, the Second Circuit explained that Congress “desired that the [FCPA] not overreach in its prohibitions against foreign persons. Protection of foreign nationals who may not be learned in American law is consistent with the central motivations for passing the legislation, particularly foreign policy and the public perception of the United States. And the desire to protect such persons is pressing when considering the conspiracy and complicity statutes: these provisions are among the broadest and most shapeless of American law and may ensnare persons with only a tenuous connection to a bribery scheme.”

Therefore, “the presumption against extraterritoriality bars the government from using the conspiracy . . . statute[] to charge [Mr. Villalobos] with any offense that is not punishable under the FCPA itself because of the statute’s territorial limitations. That includes . . . conspiracy to violate Section[] 78dd-2 . . . – because the FCPA clearly dictates that foreign nationals may only violate the statute outside the United States if they are agents, employees, officers, directors, or shareholders of an American issuer or domestic concern.”

For these reasons set forth in Hoskins and Castle [the FCPA charge should be dismissed].”

See here for the reply brief which suggests that in the DOJ’s response brief (which is not publicly available on the docket) the government alleges that Villalobos attended two business meetings in the United States in furtherance of the indicted crimes and is therefore subject to the court’s jurisdiction because he committed the alleged crimes “within the United States.”

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