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Boncy Seeks Dismissal Of Indictment – Alleges That Government Destroyed Exculpatory Evidence


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.”

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Gifts And The “Bribery Gaze”

[I originally published this post as a book review on Criminal Law and Criminal Justice Book (a joint project of Rutgers School of Law-Newark and Rutgers School of Criminal Justice) and it is republished below with permission.]

Throughout human history, gifts have been a respected and legitimate form of gratitude and generosity, serving as a social glue important to any cohesive society. Yet at the same time, gifts have been offered to seek influence, have compromised the integrity of the gift recipient, and have thus represented a form of bribery.

These divergent realities are the subject of Professor Malin Akerstrom’s engaging new book “Suspicious Gifts.” Professor Akerstorm, a Swedish sociologist by discipline, examines the everyday dilemmas faced by low-level professionals working in the public sector and the business persons who interact with such public officials to chart the ambiguity between legitimate gifts and illegitimate bribery.

Acknowledging the corrupting power of gifts, Professor Akerstrom is nevertheless critical of contemporary anticorruption efforts that seemingly label all gifts as blameworthy or even criminal. Invoking the phrase the “bribery gaze” on a number of occasions, Professor Akerstorm highlights the following warnings found in anti-corruption literature.

  • When you want to display hospitality – it could be bribery!
  • When you want to be generous – it could be bribery!
  • When you want to be friendly – it could be bribery!
  • When you take self-promoting measures – it could be corrupt marketing!
  • When you allow yourself to be invited – it could be a bribe!
  • When you accept a present or prize – it could be a bribe!
  • If you don’t say no thanks or decline a perk in time – it could be corruption!

These circumstances, of course, are not academic, but present in real-world bribery enforcement actions. While the Swedish examples Professor Akerstrom highlights may be foreign to most readers outside of that region, gifts are also frequently alleged as bribes in U.S. Foreign Corrupt Practices Act enforcement actions. For example, recent FCPA enforcement actions have involved: flowers, cigarettes, bottles of wine; karaoke bars; and tea sets.

As Professor Akerstrom rightly notes however, the current “bribery gaze,” in which everything seems to be transformed into a hazard, a trap or criminal bribery, is not without social and public policy consequences. She persuasively argues:

“Campaigns to eliminate these gift exchanges are at the same time campaigns to restrict the gamut of courtesy or ritual exchanges. The manifestations of courtesy, gratitude, and social bonds, which are so important as social glue in any cohesive society, are not just called into question, but criminalized.”

In this new era of enforcement of bribery and corruption laws, many are pounding the table for more enforcement, as if the quantity of enforcement was an inherent good regardless of enforcement theories, resolution vehicles, or collateral social and public policy considerations.

Regarding gifts as a form of bribery, Professor Akerstorm asks, “should the ideal society be gift-less?” With the current “bribery gaze,” expanding theories of enforcement, and risk-averse business organizations responding by eliminating most forms of gratitude and generosity, this appears to be where the winds are blowing.

Yet in “Suspicious Gifts” Professor Akerstorm reminds those in the anti-corruption space – whether practitioner, policy-maker or scholar – that bribery and corruption is seldom the simple and safe issue it appears to be at first blush.  

Carson Sentencing Issues

As noted in this previous post, this past April, Stuart and Hong Carson (husband and wife) pleaded guilty in the DOJ’s long-standing case against them.  The guilty pleas came after the trial court judge (Judge James Selna – C.D. Cal.) issued a pro-defendant jury instruction relating to knowledge of foreign official.  (See here).  On the brink of the DOJ being put to its ultimate burden of proof on “foreign official” and other elements as well, the DOJ offered plea agreements to substantially reduced charges and the defendants, likely mindful of the high costs of testing their innocence, did what most rationale, risk averse actors in their position would do – agreed to plead guilty.

Last week, Judge Selna sentenced Stuart Carson to four months imprisonment, followed by eight months of home detention, and ordered him to pay a $20,000 fine.  Judge Selena sentenced Hong Carson to three years probation, to include six months of home detention, and ordered her to pay a $20,000 fine.

This post provides an overview of the Carson sentencing issues and highlights two issues from Judge Selna’s H. Carson sentencing memo.

First, Judge Selna stated as follows. “The Court also does not give credit to the fact that she was educated in China, and has spent her career in a business environment that at a minimum raises potential conflicts with the Foreign Corrupt Practices Act.  There is no cultural defense to the present crime or any other under black letter law.”

Second, Judge Selna seemingly questioned the strength of the DOJ’s case.  He stated as follows.  “The Court also takes into account the strength of the Government’s case had the matter gone to trial.  While the Court found no legal impediment to the prosecution in the face of numerous challenges, the ultimate outcome of a number of issues on appeal was uncertain to a greater or lesser degree.”

As many readers know, in February 2011, the Carsons (along with other defendants in the case) filed a “foreign official” challenge (see this prior post) based in part on my “foreign official” declaration (see here).  As noted in this prior post, Judge Selna denied the pre-trial motion and concluded that the question of whether state-owned companies qualify as instrumentalities under the FCPA is a question of fact.

All of the below mentioned original source documents from the Stuart and Hong Carson sentencing can be accessed here.

Stuart Carson

In its sentencing brief, the DOJ recommended a six month sentence and a $20,000 fine.  The six month sentence factored in the DOJ’s request for a downward departure given Stuart Carson’s plea agreement and his cooperation and assistance to the DOJ including his willingness to testify at the trial of co-defendants Cosgrove and Edmonds.  The DOJ stated as follows.  “In the wake of defendant’s guilty plea and disclosure of his willingness to testify, co-defendants Cosgrove and Edmonds each entered into their own plea agreements with the government and subsequently pleaded guilty.  Defendant’s guilty plea and his willingness to testify as a government witness altered the landscape for the remaining defendants.  It enabled the government to focus its trial preparation on the two remaining defendants, wich would have resulted in a better trial presentation if those defendants had gone to trial.  And defendant’s testimony would have aided the government in its chances of obtaining a conviction.”

In its brief, the DOJ acknowledged that a guidelines range of zero to six months normally results in probation without any time in custody, but stated that “such an outcome is not appropriate for this defendant, because a sentence of straight probation or even a sentence that includes a component of home confinement would not adequately address defendant’s offense conduct or deter others from similar conduct.  As the President of CCI from 1989 through 2005, defendant was the highest-ranking CCI executive charged in this case.”

In recommending a six month sentence, the DOJ disagreed with the Probation Officer who concluded that a non-custodial sentence was warranted.  The DOJ stated as follows.  “The government sees a significant problem with the Probation Officer’s analysis, which seems largely driven by an effort to achieve some kind of parity with Cosgrove’s sentence.  It ignores the fact that it was Cosgrove’s serious and well-documented medical condition which compelled the Court to impose home confinement in lieu of imprisonment.”  [As noted in this prior post, in September, Judge Selna sentenced Cosgrove to 13 months home confinement].

In its brief the DOJ stated as follows.  “While the dollar amount involved in defendant’s offense conduct may not be large, it is the government’s view that any violations of the FCPA represents a ‘serious offense’ …”.

Judge Selna sentenced Stuart Carson to four months imprisonment, followed by eight months of home detention and a $20,000 fine.

Judge Selna stated as follows.  “In a typical case [involving a guidelines range of 0-6 months] probation with a term of home detention would be the appropriate sentence.  This case is not typical.  Although S. Carson pled to a single transaction, which was not listed in the Indictment, it is evident that the scheme was far broader, and that as chief executive officer of CCI, he played a major role in crafting and implementing the bribery scheme.  This case has garnered substantial attention in the general press and the business press.  Others in S. Carson’s position will be looking at the sentence which the Court imposes.  Deterrence is the overriding factor in the Court’s conclusion that a term of imprisonment is required here.  The Court needs to make clear that the Foreign Corrupt Practices Act has a serious purpose, and that it will be enforced.  […]  A sentence of probation with home detention would be a minor inconvenience to a person in S. Carson’s circumstances.  It would not reflect the seriousness of the crime, and clearly would fall short of achieving the goal of deterrence.”

Judge Selna ordered that Stuart Carson surrender to the Bureau of Prisons on or before May 31, 2013.

Hong Carson

In its sentencing brief, the DOJ recommended a sentence of three years probation with a term of six months of home confinement.  Its recommendation factored in a two-level variance from the guidelines range of 10 to 16 months based on the same acceptance of responsibility and cooperation factors referenced above in connection with Stuart Carson as well as defendant’s circumstances.

The DOJ’s brief further states as follows.  “Defendant additionally argues that she is differently situated from her c0-defendants, in that she ‘viewed business [in China] through very different lenses based on her upbringing, education, and professional experience.’  The government cannot disagree that defendant, who was born in China and lived there until age 26, lacked the American education and early business training of her co-defendants.”

Judge Selna sentenced Hong Carson to three years probation to include six months of home detention and a $20,000 fine.  However, in his ruling Judge Selna rejected the DOJ’s recommendation of a variance based on Hong Carson’s circumstances.  Judge Selna stated as follows.  “The Court also does not give credit to the fact that she was educated in China, and has spent her career in a business environment that at a minimum raises potential conflicts with the Foreign Corrupt Practices Act.  There is no cultural defense to the present crime or any other under black letter law.”

In his sentencing memo, Judge Selna further stated as follows.  “The Court also takes into account the strength of the Government’s case had the matter gone to trial.  While the Court found no legal impediment to the prosecution in the face of numerous challenges, the ultimate outcome of a number of issues on appeal was uncertain to a greater or lesser degree.”

Judge Selna recommended that H. Carson’s home detention be served either before or after S. Carson’s serves his term of imprisonment so that one parent is available to meet the needs of the Carson children.


A Focus On Chinese Guanxi

The sentencing memos in the Garth Peterson enforcement action provide an interesting back-and-forth between Peterson and the DOJ concerning the issue of cultural context, specifically the concept of Chinese guanxi.

Peterson’s sentencing memo (here) contains a specific section titled “Cultural Context” and stated as follows (redactions in the original).

“Peterson committed an FCPA offense without stepping foot in the United States while working for a Chinese subsidiary of a United States company.  Peterson’s tenuous connection with the United States, despite being a U.S. citizen, makes this case very unusual and makes Chinese cultural considerations relevant.  Peterson admitted at his plea hearing that he helped the Chinese Official to invest personally in a Morgan Stanley investment at a beneficial price and that by misleading Morgan Stanley about this fact with another person, he conspired to violate the FCPA.  The Chinese Official was a close friend of Peterson’s – in many ways a father figure to him – and Peterson helped him in order to repay the help that the Chinese Official had given him through his career.  This type of favor is called ‘guanxi’ in China, a term that describes the exchange of gifts or favors in a professional setting.  Guanxi is the traditional way that business relationships are developed in China.  [Citations Omitted].  Peterson has spent much of his life living in Asia.  He learned Asian cultural traditions, and they are as familiar, if not more familiar to him, than United States cultural traditions.  His childhood friend […] wrote about Peterson’s ‘inexperience with the United States’ and his lack of familiarity with U.S. ‘culture, expectations, and walks of U.S. life.’  […] wrote that Peterson ‘seemed to fit in better on the other side of the Pacific’ and ‘thinks more like an Asian than an American.’  As part of Peterson’s Asian cultural understanding, he learned the Chinese business culture of gift giving, or guanxi.”  […]  We ask the Court to consider … the cultural context of Peterson’s crime when sentencing him.”

The DOJ responded (here) as follows.

“Peterson’s assertion that he gave Chinese Official 1 a $3 million-plus interest in Tower Two [the investment at issue in the enforcement action] as an expression of ‘guanxi’ is also demonstrably false. Peterson says that ‘guanxi’ is ‘a term that describes the exchange of gifts or favors in a professional setting.’  The source upon which Peterson relies, […] describes the parameters of guanxi, which typically involves small tokens: the ‘exchange of gifts, favors, and banquets.’ Here, Peterson stole a $7 million piece of a building and gave a Chinese public official a piece worth more than $3 million. The grant of an ill-gotten, multimillion dollar interest in an apartment building is hardly the type of item one typically exchanges in Chinese culture. Any suggestion to the contrary borders on the offensive. […] Even if Peterson’s […] ‘guanxi’ arguments were based upon a true factual recitation – which they are not – they are legally irrelevant.  […] Corrupting a Chinese official in the course of stealing an interest in a building cannot be dismissed as a symptom of Peterson’s affinity for China or its culture.  If anything, his actions demonstrate quite the opposite.”

In reply (here), Peterson stated as follows.

“The Government argues that Peterson’s inclusion of the Chinese Official was not an expression of ‘guanxi’ because the value of the Chinese Official’s interest was too great to fit within the technical definition of ‘guanxi.’  Whether the term ‘guanxi’ applies misses the point.  Peterson seeks to provide the Court with the full context for his actions, including the cultural and relationship-based motivations for his offense.  Peterson acknowledges that the Chinese culture and Peterson’s own desire to build his relationship with the Chinese Official do not justify his offense.  Cultural context and motivates, however, can be relevant t a defendant’s character for sentencing purposes, and Peterson asks the Court to consider those factors here.”


The DOJ argues that cultural context is legally irrelevant in FCPA enforcement actions.  However, cultural considerations may be one reason for the frequency in which judges sentence below DOJ sentencing recommendations in FCPA cases.  For instance, as noted in this prior post, in sentencing Ousama Naaman, Judge Ellen Huvelle’s (D.D.C.) stated that she has “traveled a lot in this world, and it is very complicated to say that our morality is necessarily that of other peoples.”  She considered the context of Naaman’s conduct (which occurred in Iraq) and refused to make Naaman “the poster” child that the DOJ wanted.


See here for a recent article in Newsweek regarding guanxi and the Foreign Corrupt Practices Act scrutiny of Las Vegas Sands.

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