From the Dockets
This post details developments as to FCPA or related litigation previously reported.
Haiti Teleco Case
Previous posts (here and here) detailed Joe Esquenazi’s and Carlos Rodriguez’s motion for acquittal or a new trial based on statements made (and then seemingly retracted) by Jean Max Bellerive (Prime Minister of Haiti) concerning the ownership of Haiti Teleco – the entity at the middle of the bribery scheme. In the DOJ’s response (here) to the defendants’ motion, the DOJ argues, among other things, that “the Government did not seek the first Bellerive declaration from the Republic of Haiti, and there is no need for an evidentiary hearing as to when or how the Government obtained it.” As to the second Bellerive declaration, the DOJ stated that “the Government assisted Mr. Bellerive in preparing the declaration” in which Bellerive, as noted in the prior post, stated that the first declaration was strictly for internal purposes and he did not know it was going to be used in criminal legal proceedings in the U.S. or that it was going to be used in support of the argument that Teleco was not part of Public Administration of Haiti.
Substantively, the DOJ argues that the first Bellerive declaration does not “contain newly discovered evidence” because the jury “heard most of” the points addressed in the first Bellerive declaration from Garry Lissade, the DOJ’s expert witness, who testified as to the legal status of Haiti Teleco after “he conducted extensive research, including legal research and interviews, in reaching his conclusions.”
The DOJ’s position in many FCPA enforcement actions concerning state-owned or state-controlled entities seems to be that the ownership structure of the entity at issue should be obvious and easily ascertainable to defendants. If so, why did Lissade (Haiti’s former Minister of Justice) have to “conduct extensive research, including legal research and interviews, in reaching his conclusion” that Teleco was a Haitian public entity?
Africa Sting Case
The second Africa Sting trial involving defendants John Mushriqui, Jeana Mushriqui, R. Patrick Caldwell, Stephen Giordanella, John Godsey, and Marc Morales is set to begin on September 22nd. The second trial will be more narrowly focused than the first Africa Sting trial that resulted in a mistrial (as well as dismissal of certain counts including money laundering conspiracy charges).
Why? Because the DOJ did not oppose defendants’ motion to dismiss the money laundering conspiracy charges. In pre-trial briefing, the DOJ stated as follows. “At the conclusion of the government’s case-in-chief in the first trial, the Court granted a motion for judgment of acquittal on Count Forty-Four of the Superseding Indictment with respect to the defendants in the first trial. The government continues to believe that the Court should not have granted the motion and that Count Forty-Four should have been submitted to the jury. But the government understands the Court’s ruling and will not object to the Defendant’s motion. The government’s position in this filing recognizes the Court’s past ruling, and in no way suggests that the government will not seek to bring similar charges in future cases.”
Siriwan “Foreign Official” Case
A previous post (here) detailed how Juthamas Siriwan and Jittisopa Siriwan (the “foreign officials” in the Green FCPA enforcement action) were fighting back against DOJ criminal charges. As noted in the post, the Siriwans argued as follows. “This is the first judicial challenge to a novel prosecutorial approach the Government recently developed to charge foreign officials allegedly involved in corruption. That approach is aimed at overcoming a fundamental FCPA limitation. The FCPA does not criminalize a foreign public official’s receipt of a bribe. Nor can the Government employ an FCPA conspiracy charge against a foreign public official. Accordingly, these new enforcement initiatives require expansive interpretations [of] “promotion money laundering” [under the Money Laundering Control Act].” The Siriwans further argued as follows. “Congress has extensively amended the FCPA, yet it deliberately has not extended FCPA liability to foreign officials. If the Government wishes to extend U.S. criminal penalties to foreign officials accepting a bribe, it must go back to Congress, rather than employ dubious charging tactics to evade the direct and repeated congressional choice not to apply FCPA criminal liability to such officials.”
In its opposition brief (here) filed last week, the DOJ stated as follows. “Upon analysis of defendants’ arguments, it is quickly evident that, in support of their positions, defendants routinely conflate and confuse multiple statutes, interpret and argue the elements of uncharged statutes, and ignore case law relevant to the statutes actually charged.” Among other things, the DOJ stated as follows. “That foreign officials cannot face liability for FCPA offenses does not give foreign officials a free pass to commit other, entirely separate, crimes.” The DOJ noted that the Siriwans are not charged with accepting a bribe, or conspiring to violate the FCPA, but rather with “the separate, and entirely analytically distinct, crime of international transportation money laundering to promote the Greens’ violation of the FCPA.” The DOJ noted that just because Siriwan “was a foreign official at the time of these offenses, and therefore, not charged under the FCPA does not change the analysis.”
As reported by Samuel Rubenfeld at Wall Street Journal Corruption Currents, a hearing on Siriwans’ motion to dismiss is scheduled for Oct. 20.
DOJ – Mistakes Were Made, But Lindsey Defendants Were Fairly Convicted
DOJ attorneys were laboring away over the holiday weekend as it filed (here) its response brief in the Lindsey Manufacturing prosecutorial misconduct motion to dismiss.
By way of review, in May (see here for the prior post), after a five week trial in federal court in the C.D. of California, a jury returned guilty verdicts against Lindsey Manufacturing and its executives Keith Lindsey and Steven Lee for conspiring to violate the FCPA and for violating the FCPA. During a June hearing on the Lindsey defendants’ motion to dismiss for prosecutorial misconduct, Judge Matz made comments suggesting that the DOJ’s only jury trial conviction of a corporate entity in FCPA history may be hanging by a thread. (See here for the prior post). Judge Matz invited the Lindsey defendants to file a supplemental brief, which they did in late July (see here for the prior post), and yesterday the DOJ filed its response brief.
The DOJ’s brief is 91 pages (the nature of the issues in dispute are highly factual) and states, in summary, as follows. “… [A]lthough the government did make some mistakes during its investigation and prosecution of this case, they were inadvertent and non-prejudicial errors made during a complex matter. The defendants not only unfairly and improperly characterize these honest mistakes as ‘misconduct,’ but the defendants often go even further, alleging misconduct where the government made no error at all.” The DOJ further stated as follows. “In short, the defendants stand fairly convicted, and the jury’s unanimous verdict is amply supported by the evidence and free of prejudicial error. Whether assessed individually or cumulatively, the defendants’ claim that ‘[e]very aspect of this case was infected by purposeful prosecutorial misconduct,’ … cannot withstand scrutiny and is simply not true.”
The Lindsey defendants have until September 26th to file their reply brief and a hearing on the motion is set for October 17th.
Haiti Teleco – From Stunning To Strange
A post earlier this week (see here) highlighted the motion by Carlos Rodriguez and Joel Esquenazi for a judgment of acquittal or a new trial based on Jean Max Bellerive’s (Prime Minister of Haiti) July 26, 2011 signed statement that stated, among other things, that “Teleco has never been and until now is not a state enterprise.”
In a strange turn of events, on August 25th, a day after the motion, the Prime Minister penned a declaration that was filed by the DOJ Tuesday in the case. See here. In the declaration, the Prime Minister said that he did not know his July 26th statement “was going to be used in criminal legal proceedings in the United States or that it was going to be used in support of the argument that […] Teleco was not part of the Public Administration of Haiti.” Referring to his July 26th statement, the Prime Minister said “that document had been signed strictly for internal purposes and to be used in support of the on-going modernization process of Teleco.”
In the statement, the Prime Minister continues as follows. “Even though the facts mentioned in the [July 26th statement] are truthful, now that I know the purpose for which they were used, I wish to explain how they might lead to confusion.” Backtracking from his original statement, the Prime Minister says that his prior statement can be “confusing” because “it omits the fact that, after the initial creation of Teleco and prior to its modernization, it was fully funded and controlled by BRH [Bank of the Republic of Haiti], which is a public entity of the Haitian state.”
Among other things, the Prime Minister states as follows. “… [T]he nomination of the Director General and of the Board members of Teleco has always been done by Decision of the President of the Republic and been countersigned by the Prime Minister and other ministers concerned.” “Prior to the modernization process, Teleco’s income was to be used by BRH for public purposes. Teleco’s debts were also borne by BRH. Teleco does not pay taxes or import duties. Teleco also benefits from a State monopoly authorized for land-line telephone services in Haiti. Prior to its modernization, 97% of Teleco belonged to the Haitian State, which nevertheless controlled it in 100%. These facts are all known to the public and to me.”
Does the Prime Minister of Haiti routinely monitor U.S. legal proceedings or was the origin of the Prime Minister’s August 25th declaration the result of government to government communications? The Prime Minister’s declaration includes this final paragraph. “Finally, the Government of Haiti has always supported and will continue to support the Government of the United States in its efforts to fight against corruption, especially in light of the fact that such actions violate Haitian laws. Haiti has been the victim of such illegal actions that have resulted in loss of revenue for Haiti.”
If the Prime Minister’s original July 26th statement was meant “strictly for internal purposes” how did it surface in the Haiti Teleco FCPA proceedings? As this document indicates, the DOJ’s cover letter of August 10th to defense counsel indicates that the DOJ received the statement “from Mr. Paul Calli in connection with the charges pending against Patrick Joseph.” Calli (here) represents Joseph (a former general director for telecommunications at Haiti Teleco) who was criminally charged in July with conspiracy to commit money laundering in connection with the Haiti Teleco matter. (See here for the prior post).
Stunning Haiti Teleco Development
In early August (see here for the prior post) a federal jury convicted defendants Joel Esquenazi and Carlos Rodriguez “on all counts for their roles in a scheme to pay bribes to Haitian government officials” at Haiti Teleco. Specifically, Esquenazi and Rodriguez, were convicted of one count of conspiracy to violate the FCPA and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering. The FCPA counts were based on the theory that Haiti Teleco was an “instrumentality” of the Haitian government and that Haiti Teleco employees were thus “foreign officials” under the FCPA.
In a stunning development last week (first reported by Law360), Rodriguez filed a motion (here – joined by Esquenazi) for judgment of acquittal or a new trial based on newly discovered evidence. The reason? Defendants claim that Haiti Teleco was never a state enterprise. The evidence? A declaration (here) by Jean Max Bellerive on behalf of the Haitian Ministry of Justice on the “Legal Status of Teleco,” The declaration asserts, among other things, that “Teleco has never been and until now is not a state enterprise.” The stunner? The declaration is dated July 26, 2011 – ten days before the jury reached its August 5th verdict. According to defendants’ motion, the declaration was not translated into English until August 5th and was provided to defense counsel by the DOJ on August 10th.
A bit of background.
In December 2009, Esquenazi and Rodriquez (among others) were criminally indicted (see here). The DOJ alleged that Teleco was the “Republic of Haiti’s state owned national telecommunications company” and that certain employees of Teleco were thus “foreign officials” under the FCPA.
In November 2010 (see here for the prior post) Esquenazi launched a greenhorn legal challenge to the DOJ’s “foreign official” theory. Among other things, Esquenazi asserted as follows. “[The DOJ’s] definition of ‘foreign official’ is unsupported by the text or the purpose of the FCPA. The FCPA is a public bribery statute which criminalizes improper payments to officials performing a public function. Mere control or partial control or ownership (or partial ownership) of an entity by a foreign government no more makes that entity’s employees ‘foreign officials’ than control of General Motors by the U.S. Department of the Treasury makes all GM employees U.S. officials.” In response, the DOJ argued that the status of Teleco was an issue for the jury and that Esquenazi’s pre-trial motion was premature. (See here for the prior post). Elsewhere in its response the DOJ stated as follows. “As will be demonstrated in the government’s case-in-chief, whether Haiti Teleco was an instrumentality of the Republic of Haiti is not a close case, a fact the defendants likely understand and therefore attempt to raise this issue before the evidence has been presented.”
Within 48 hours of the DOJ’s response, Judge Jose Martinez (S.D. Fla.) denied Esquenazi’s motion in a cursory opinion devoid of substantive analysis. (See here for the prior post). The substance of Judge Martinez’s decision was as follows. “The Court […] finds that the Government has sufficiently alleged that Antoine and Duperval were foreign officials by alleging that these individuals were directors in the state-owned Haiti Teleco. Any factual arguments Defendant has on this point may be addressed at trial.” “The Court also disagrees that Haiti Teleco cannot be an instrumentality under the FCPA’s definition of foreign official. The plain language of this statute and the plain meaning of this term show that as the facts are alleged in the indictment Haiti Teleco could be an instrumentality of the Haitian government.”
According to defendants’ motion last week, at trial the following occured. “On July 25, 2011, the Government called its expert witness, Gary Lissade, to testify regarding Haitian law and his opinion as to whether Haiti Teleco was a State owned public entity/instrumentality of the Republic of Haiti and whether its employees were, therefore, government officials. Although Mr. Lissade was unable to review the bylaws or stock certificates of Haiti Teleco, or find any document establishing Haiti Teleco as a “S.A.M.” entity, he opined that because the Haitian central bank reportedly owned 97 percent of the stock, plus his observations of “[c]ustom and practice” and “the letterhead of Teleco,” that Teleco was a Haitian government entity/instrumentality. Lissade further opined that because he concluded that Teleco was a public entity, all employees of Teleco were government officials or employees even though no law designated government employees at locations such as Teleco as government employees or agents.”
In their motion, defendants’ argue as follows. “In stark contrast to the trial testimony of the Government’s expert, the Minister of Justice and Public Safety of the Republic of Haiti unequivocally stated in the Declaration that Téléco ‘has never been and until now is not a State enterprise.'” As to the timing of the declaration, defendants state as follows. “The Government’s August 10, 2011 letter offered no explanation or reason why it did not and could not have obtained the Declaration or information contained therein during the Grand Jury proceedings, before trial, or before the jury deliberated and rendered its verdict on August 5, 2011.”
The DOJ’s response is due on September 12th and with the DOJ’s prosecutorial conduct already under the microscope in the Lindsey matter (see here) this will be an interesting development to follow.
Bigger picture, I have long wondered what evidence the DOJ presents to the grand jury in securing FCPA indictments based on the theory that an entity is a state-owned or state-controlled enterprise (“SOE”). Related to this, I have also long wondered what amount of due diligence the DOJ engages in to satisfy themselves – in resolving an FCPA enforcement action via a non-prosecution or deferred prosecution agreement – whether an entity is an SOE. Those with insight are encouraged to share.
A “Foreign Official” Fights Back
The Foreign Corrupt Practices Act addresses the payment of bribes, not the receipt of bribes.
For instance, in U.S. v. Castle, 925 F.2d 831 (5th Cir. 1991), the court was called upon to consider whether “foreign officials” who are excluded from prosecution under the FCPA itself, could nevertheless be prosecuted under the general conspiracy statute (18 USC 371) for conspiring to violate the FCPA. The court held that “foreign officials” could not be prosecuted for conspiring to violate the FCPA and adopted the rationale set forth in the trial court opinion (see 741 F.Supp. 116). That rationale was that Congress, in passing the FCPA, only chose to punish one party to the bribe agreement and the DOJ could not therefore “override the Congressional intent not to prosecute foreign officials for their participation in the prohibited acts” through use of the conspiracy statute. The trial court stated as follows. “The drafters of the [FCPA] knew that they could, consistently with international law, reach foreign officials in certain circumstances. But they were equally well aware of, and actively considered, the ‘inherent jurisdictional, enforcement, and diplomatic difficulties’ raised by the application of the bill to non-citizens of the United States.” The trial court observed that prosecution and punishment of “foreign officials” (in the Castle case alleged Canadian “foreign officials”) “will be accomplished by the government which most directly suffered the abuses allegedly perpetrated by its own officials, and there is no need to contravene Congress’ desire to avoid such prosecutions by the United States.” For those of you scoring at home, Castle represents a DOJ loss in a contested FCPA matter.
In recent years, however, the DOJ has used other laws in an attempt to reach “foreign officials.” This trend has been profiled here and here. For instance, in January 2010, in connection with the Gerald and Patricia Green FCPA enforcement action, a criminal indictment was unsealed against Juthamas Siriwan and Jittisopa Siriwan. According to the indictment, Juthamas “was the senior government officer of the Tourism Authority of Thailand (TAT)” and she is the “foreign official” the Greens were convicted of bribing. Jittisopa is the daughter of the “foreign official” and also alleged to be an “employee of Thailand Privilege Card Co. Ltd.” an entity controlled by TAT and an alleged “instrumentality of the Thai government.” The charges against the Siriwans were not FCPA charges, but largely conspiracy to money launder and “transporting funds to promote unlawful activity.”
As detailed in this Wall Street Journal Corruption Currents story by Joe Palazzolo, the Siriwans are fighting back. On behalf of the Siriwans, lawyers at Kelley Drye & Warren LLP recently field this motion to dismiss to the indictment.
In summary, the Siriwans state as follows. “This is the first judicial challenge to a novel prosecutorial approach the Government recently developed to charge foreign officials allegedly involved in corruption. That approach is aimed at overcoming a fundamental FCPA limitation. The FCPA does not criminalize a foreign public official’s receipt of a bribe. Nor can the Government employ an FCPA conspiracy charge against a foreign public official. Accordingly, these new enforcement initiatives require expansive interpretations [of] “promotion money laundering” [under the Money Laundering Control Act].” The Siriwans state as follows. “Congress has extensively amended the FCPA, yet it deliberately has not extended FCPA liability to foreign officials. If the Government wishes to extend U.S. criminal penalties to foreign officials accepting a bribe, it must go back to Congress, rather than employ dubious charging tactics to evade the direct and repeated congressional choice not to apply FCPA criminal liability to such officials.”
As noted in Palazzolo’s article, the DOJ has yet to respond to Siriwans’ motion and U.S. District Judge George Wu (C.D. of California) has scheduled a hearing on the motion for October 20th.
In a development that goes straight to a point raised by the Castle court, Thailand’s National Counter-Corruption Commission (NCCC) has reportedly found sufficient grounds to believe that Juthamas Siriwan received money from the Greens and that Jittisopa Siriwan was an accomplice in the bribery case. The NCCC has reportedly forwarded its conclusion to the Thai Attorney-General for legal action against the Siriwans. For more, see here from the Bangkok Post.
The Siriwan’s challenge is the latest in “this year of FCPA judicial scrutiny.” Previously this year, there was the first judicial challenge to the DOJ’s “foreign official” interpretation that made extensive use of the FCPA’s legislative history (see here); the first dd-3 judicial challenge (see here); the first victim petition under the FCPA (see here); and the first Travel Act judicial challenge (see here).
*****
In a related development (see here), the DOJ has dropped its appeal of Gerald and Patricia Green’s sentence. As detailed in this prior post, in September 2009, Gerald and Patricia Green were found guilty by a federal jury of substantive FCPA violations, conspiracy to violate the FCPA, and other charges. After several sentencing delays, in August 2010 (see here), Judge Wu rejected the DOJ’s 10 year sentencing request for both Gerald and Patricia Green and sentenced the Greens to six months in prison, followed by three years probation. In its sentencing brief, the DOJ urged the court to “disregard defendants’ efforts to obscure the landscape of FCPA sentencing, which generally reflects significant prison terms for convicted individuals.” I asked at the time whether the “landscape of FCPA sentencing” truly reflected “significant prison terms” as stated by the DOJ – a statement even more true now (see the FCPA Sentences tab under the Search page).
I was surprised to learn that the DOJ was appealing the Green sentences and I am thus not surprised to learn that the DOJ has dropped its appeal. In short, do you think the DOJ wants anything FCPA related before the 9th Circuit?