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Judge Broadly Interprets FCPA’s Internal Controls Provision – Concludes That “Circumvention” Does Not Depend On The Falsification Of A Book Or Record

JudgeBrodie

As highlighted here, Roger Ng (a former managing director at Goldman Sachs) was recently convicted by a jury of Foreign Corrupt Practices Act and related offenses for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.

As discussed here, in September 2021 Judge Margo Brodie (E.D.N.Y) denied Ng’s pre-trial motion to dismiss. Among the arguments Ng made in the motion to dismiss was that a count in the indictment should be dismissed because the DOJ failed to that Ng conspired to circumvent a set of internal accounting controls cognizable under the FCPA. As to this issue, Judge Brodie concluded that the FCPA’s internal controls provisions can be implicated even in transactions in which an issuer does not use its own assets to pay an alleged bribe.

During the trial, at the conclusion of the government’s case, Ng moved for a judgment of acquittal of the charge and Judge Brodie denied the motion on the record on March 28, 2022. Recently, Judge Brodie issued this Memorandum and Order explaining her decision.

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Court Dismisses Criminal FCPA (And Related Charges) Against Rafoi-Bleuler For Lack Of Jurisdiction And Also Hints That The Term “Agent” In The FCPA Is Unconstitutionally Vague

Dismissed

As highlighted in this prior post, in 2019 Daisy Rafoi-Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm) became the latest individual to be criminally charged with Foreign Corrupt Practices Act and related offenses for allegedly directing bribes to various individuals at PDVSA (Venezuela’s state-owned and state-controlled energy company).

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

As highlighted in this post, in late October 2020 Rafoi-Bleuler filed a motion to dismiss the criminal charges. In summary fashion, the motion argued: “The indictment of Ms. Rafoi-Bleuler, a citizen and resident of Switzerland, continues the worrisome trend by the Department of Justice to stretch the reach of the United States’ criminal statutes beyond Congress’ intent in an attempt to police the world. Despite having violated no laws in Switzerland and having no contact with the United States …, Ms. Rafoi-Bleuler finds herself hailed into a U.S. court in contravention of clear statutory language, legal precedent, and international norms. Courts have increasingly, and correctly, rejected such attempts by the government and this Court should continue as well …”.

Recently, Judge Kenneth Hoyt (S.D. Tex.) granted the motion to dismiss.

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Ng’s Motion To Dismiss Denied – Judge States That Internal Controls Provisions Can Be Implicated Even In Transactions In Which An Issuer Does Not Use Its Own Assets To Pay An Alleged Bribe

JudgeBrodie

As highlighted in this prior post, in November 2018 the DOJ criminally charged former Goldman Sachs executives Tim Leissner and Ng Chong Hwa (Roger Ng) (along with Low Taek Jho – Jho Low) with Foreign Corrupt Practices Act offenses for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.

Leissner pleaded guilty and in October 2020 Goldman Sachs resolved a net $1.66 billion FCPA enforcement action based on the same conduct. (See additional posts here and here).

Previous posts here, here and here highlighted Ng’s motion to dismiss in which he argues that the DOJ’s case against him suffers from several factual errors and legal deficiencies. Ng also suggested that the DOJ scripted Leissner’s guilty plea and that Goldman’s DPA was entered into for reasons of risk aversion and otherwise compromises his ability to defend himself.

As to FCPA specific issues, Ng argued as follows:

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First Circuit Affirms New Trial For Joseph Baptiste And Roger Boncy Based On Ineffective Assistance Of Counsel

Judicial Decision

In 2017 (in connection with an undercover string) the DOJ unsealed criminal charges against Joseph Baptiste (a retired U.S. Army Colonel, practicing dentist, and founder / president of a Maryland-based Haitian focused non-profit) for alleged Haitian bribery.  In 2018 the DOJ added criminal charges against Roger Boncy in connection with the same core conduct. (See here).

Unlike most individual FCPA defendants, Baptiste and Boncy put the DOJ to its burden of proof and in June 2019, after a two-week trial, a federal jury in Boston found Baptiste guilty of one count of violating the Travel Act and one count of conspiracy to commit money laundering and Boncy guilty of one count of conspiracy to violate the FCPA and the Travel Act. (See here).

Thereafter, in post-trial motions the defendants sought an acquittal or a new trial based on ineffective assistance of counsel. (See here). In March 2020, U.S. District Court Judge Allison Burroughs (D. Mass.) granted Baptiste and Boncy a new trial based on ineffective assistance of counsel. (See here).

As discussed here, the DOJ appealed to the First Circuit and yesterday the court affirmed a new trial for the defendants.

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Second Circuit Affirms Ho’s FCPA And Related Convictions

Ho

As described in this prior post, in late 2018 Chi Ping Patrick Ho was found guilty at trial of Foreign Corrupt Practices Ac and money laundering violations in connection with alleged bribery schemes in Chad and Uganda on behalf of China Energy Fund Committee, an entity funded by CEFC China Energy Company Ltd.

This prior post outlined Ho’s arguments on appeal and the FCPA specific issues were presented as follows:  (1) “Whether the government, which repeatedly argued that Ho paid bribes on behalf of a Chinese company, presented legally sufficient evidence that he acted on behalf of a “domestic concern,” as required for a conviction under 15 U.S.C. § 78dd-2;” and (2) “Whether a defendant may be prosecuted for violating § 78dd-3 where (a) the grand jury determined that he was a “domestic concern,” but § 78dd-3 expressly does not apply to domestic concerns, and (b) the defendant was also indicted for violating § 78dd-2, but §§ 78dd-2 and 78dd-3 are mutually exclusive.”

In this recent decision, the Second Circuit rejected each of Ho’s challenges and affirmed his convictions.

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