Mum’s The Word As To Perez Sentence
On January 21st, the DOJ announced (here) that Antonio Perez was sentenced to 2 years in prison in connection with the Haiti Teleco case.
I did not cover the sentence as it happened because, as I hope readers recognize and appreciate, I like to analyze things a bit before posting.
Thus, when it comes to FCPA sentences, the actual sentence only tells part of the story; the complete story requires knowledge of the sentence the DOJ was actually requesting.
For instance, the DOJ sought a 37 month sentence as to Leo Winston Smith, but the judge sentenced him to six months (see here). The DOJ sought a 38 month sentence as to Bobby Elkins, but the judge sentenced him to probation (see here). The DOJ sought a 14-17 year sentence as to Nam Nguyen, but the judge sentenced to him to 16 months (see here).
Numerous other examples abound and I’ve previously noted that the DOJ may be charging more individuals with FCPA violations (although in 2010, 70% of corporate enforcement actions did not involve any related enforcement action against company employees), and those individuals may be pleading guilty (perhaps because of the “carrots” and “sticks” the DOJ possesses), but when it comes time to sentencing, judges are viewing FCPA cases much differently than the DOJ.
Back to Perez.
There is nothing in the publicly filed documents that indicate the sentence the DOJ was seeking in this case.
I contacted Perez’s attorney, Michael Chavies (see here) and asked him – what sentence was the DOJ seeking – the answer – no comment.
I’ve exchanged e-mails with the Public Affairs Office at Justice Department and, after nearly three months, I’ve still yet to learn the answer to the rather simple question of what sentence the DOJ was seeking as to Perez.
Perhaps someday the answer will be known and a more thoughtful analysis of the Perez sentence will be possible.
For now, mum’s the word.
So … in case you had not heard, Antonio Perez was sentenced to two years in prison and ordered to serve two years of supervised release following his prison term, and to forfeit $36,375.
For numerous prior posts on the Haiti Teleco, please visit the Haiti tab on the right.
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A good weekend to all.
Judge Denies Esquenazi’s “Foreign Official” Challenge
In a cursory November 19th opinion (see here) devoid of substantive analysis, Judge Jose Martinez (S.D. Fla.) denied Joel Esquenazi’s “foreign official” challenge. (See here and here for prior posts).
Esquenazi’s challenge was launched by a lawyer with no apparent FCPA expertise and his brief did not even scratch the surface as to the FCPA’s extensive legislative history regarding the “foreign official” element. Esquenazi’s “foreign official” brief was just one of several dismissal motions (such as selective and vindictive prosecution and spoilation of defense favorable evidence) filed over a brief time period – a factor which perhaps influenced Judge Martinez’s view of Esquenazi’s otherwise valid “foreign official” challenge – an issue at the core of a significant number of recent FCPA enforcement actions.
In its November 17th response, the DOJ termed Esquenazi’s challenge premature. The DOJ did offer to provide supplemental briefing on the meaning of “foreign official” “to elaborate on how the FCPA’s plain text, its current interpretation by courts, its legislative history, and U.S. treaty obligations provide no support for the defendants’ novel and confusing definition.”
Against this backdrop, within 48 hours of the DOJ’s response, Judge Martinez denied Esquenazi’s challenge.
The substance of Judge Martinez’s decision is 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.”
As to Esquenazi’s vagueness challenge, the Court stated as follows.
“… the Court also disagrees that the phrase ‘department, agency, or instrumentality’ in the definition of ‘foreign official’ is unconstitutionally vague. ‘Vagueness arises when a statute is so unclear as to what conduct is applicable that persons of common intelligence must necessarily guess at its meaning and differ as to its application.’ Defendant has not met this standard, and the Court find that persons of common intelligence would have fair notice of this statute’s prohibitions.”
DOJ Argues That Esquenazi’s “Foreign Official” Challenge is Premature
The DOJ filed its response brief (here) in the Joel Esquenazi enforcement action – an action which, as described in this prior post, the defendant is challenging the DOJ’s “foreign official” interpretation.
As it did in the Nguyen / Nexus Technologies case (see here – middle of the post) the DOJ asserts as follows. “Although styled as a “motion to dismiss,” the defendants’ submission is instead a premature request for a ruling on the sufficiency of the government’s evidence concerning the status of officers of Telecommunications D’Haiti (“Haiti Teleco”) as a foreign officials of a government instrumentality before the evidence regarding that issue has been presented to the jury. The defendants’ arguments, which are premised on misstatements of both the law and the facts and are premature at best, will be moot after presentation of the government’s case. Therefore the defendants’ motion should be denied.”
The response brief contains a separate section on “the Nature of Haiti Teleco” and states as follows. “At the times relevant to the Indictment, between 2001 and 2004, Haiti Teleco held a state granted monopoly over land line telephone service in Haiti. During that time, Haiti Teleco was 97% state-owned by the Central Bank of Haiti, the Banque de la Republic of Haiti (“BRH”), which held 97% of Haiti Teleco’s shares. No one knows who owned the remaining 3% of Haiti Teleco’s shares, as no records still exist concerning their ownership, yet no person or company has claimed them in institutional memory. Therefore, effectively and functionally, during this period, Haiti Teleco operated with 100% state-ownership. Also during this period, Haiti Teleco was 100% state-controlled.”
The response brief asserts as follows. “… the defendants seek to circumvent the trial process and have the Court determine, before the presentation of any evidence, that the government has not met its burden of proving that Haiti Teleco was a instrumentality of a foreign government as defined by the FCPA. 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. Taken as true, the Indictment is more than sufficient to meet the Hagner standard and the precedent of this Circuit. Therefore, the motion should be denied.”
Under the heading, “Interpretation of the Term Government Instrumentality” the DOJ’s brief states in full as follows.
“The bulk of the defendants’ Motion focuses on suggesting that the Court adopt an insupportably narrow interpretation of government instrumentality that is contradicted by the statute on its face, case law, legislative history, and international treaties. The defendants’ proffered arguments are, in any event, arguments for jury instructions or for the Court after the government’s
case-in-chief pursuant to Federal Rule of Criminal Procedure 29. However, if the Court would like supplemental briefing on the meaning of “foreign official,” the government is more than willing to elaborate on how the FCPA’s plain text, its current interpretation by courts, its legislative history, and U.S. treaty obligations provide no support for the defendants’ novel and confusing definition. These sources confirm that the definition of “foreign official” includes officials of state-owned and state-controlled companies. Further, it is not limited to the narrow and ambiguous restriction that it applies only to “officials performing a public function.” DE 283 at 2. This tortured formulation finds no support, even in the sources the defendants themselves cite. The government stands prepared to brief and argue this issue again, should the defendants raise it, upon a Rule 29 motion or in the context of formulating jury instructions.”
The DOJ response brief also contains a section which argues that the term “foreign official” is not unconstitutionally vague.
Esquenazi Challenges DOJ’s “Foreign Official” Interpretation
Like many FCPA defendants (corporate and individual), Joel Esquenazi allegedly violated the FCPA’s anti-bribery provisions by providing something of value, not to a foreign government official, but to an employee of an alleged state-owned or state-controlled enteprise (“SOE”).
In a December 2009 indictment (here), the DOJ alleged that: (i) “Telecommunications D’Haiti (“Haiti Teleco”) was the Republic of Haiti’s state-owned national telecommunications company;” (ii) Robert Antoine and Jean Rene Duperval were, at various times, “the Director of International Relations of Haiti Teleco” and a “foreign official as that term is defined in the FCPA;” and (iii) Esquenazi, and others provides, things of value to these “foreign officials” in order to obtain or retain business in violation of the FCPA’s anti-bribery provisions.
Unlike most FCPA defendants (corporate and individual), including others charged with Esquenazi in the same indictment, Esquenazi is putting the DOJ to its burden of proof, specifically as to the FCPA’s “foreign official” element.
In a November 2nd motion to dismiss the indictment (here), Esquenazi “respectfully moves the Court to dismiss the indictment for failure to state a criminal offense and, in the alternative, for vagueness with respect to who would constitute a ‘foreign official’ within the meaning of the” FCPA.
The motion states as follows.
“The instant indictment fails to state a criminal offense because it alleges that the recipients of the improper payments were ‘foreign officials’ because they were employees of an entity ‘owned’ by the Republic of Haiti. Such a 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.” (emphasis in original).
Alternatively, the motion states as follows.
“… the Court should dismiss the indictment on the grounds that the FCPA’s definition of ‘foreign official,’ which includes employees of any foreign government ‘department, agency or instumentality,’ is unconstitutionally vague. Especially in the context of third country under a coup such as Haiti was under at the relevant time, a vague definition of ‘foreign official’ to include employees of entities solely based on partial or even full government ‘ownership’ of those entities would unfairly sweep nearly all economic activity within the scope of the statute.”
Richard J. Diaz, an attorney from Coral Gables, Florida, filed the motion on behalf of Esquenazi.
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For prior entries regarding the Haiti Teleco case see here.
As noted in a prior post, an interesting twist is that Haiti Teleco is currently 60% owned by Viettel, a telecommunications company run by Vietnam’s military (see here).
This & That
A bit of catch up with today’s post which discusses the recent sentence of Juan Diaz in the continuing Haiti Teleco saga (including an interesting post-enforcement action twist) and a DOJ release that flew under the radar.
Juan Diaz
Juan Diaz was recently sentenced to 57 months in prison after previously pleading guilty to a one-count information charging him with conspiracy to violate the Foreign Corrupt Practices Act and money laundering. (See here for the DOJ release). As noted in the release, Diaz was also ordered to: (i) serve three years of supervised release following his prison term; (ii) pay $73,824 in restitution; and (iii) forfeit $1,028,851.
In May 2009, (see here) Diaz pleaded guilty for his role in an improper payment scheme involving employees of Haiti Teleco, an alleged state-owned national telecommunications company. In the DOJ’s view, that would make the Director of International Relations and the General Director of Haiti Teleco, persons Diaz and others allegedly bribed, Haitian “foreign officials” under the FCPA.
The interesting twist is this.
If Diaz bribed these same employees today, he would be bribing (presumably in the DOJ’s view) not Haitian “foreign officials” but Vietnamese “foreign officials.”
Why?
Because in May, Viettel, a telecommunications company run by Vietnam’s military, purchased a 60% stake in Haiti Teleco. (See here).
The 57 month sentence Diaz received is similar to the 60 month FCPA sentence Charles Jumet received in April (see here). Jumet was sentenced to 87 months after pleading guilty to a two-count criminal information charging conspiracy to violate the FCPA and making false statements to federal agents. The false statements portion of the sentence was 20 months.
Civil Forfeiture Action Against Properties Owned by Former President of Taiwan
In July, the DOJ issued a release (see here) about a civil forfeiture complaint it filed against certain U.S. properties “that represent a portion of illegal bribes paid to the former president of Taiwan and his wife.”
With Attorney General Eric Holder’s recent announcement of the Kleptocracy Asset Recovery Initiative (see here), the release should be of interest to those who follow this initiative and the general issue of asset recovery.
Bribe recipients can not be prosecuted under the Foreign Corrupt Practices Act, but U.S. based assets (or other assets that flow through U.S. financial institutions) of bribe recipients can be subject to U.S. legal proceedings under other laws.
As noted in this post from November 2009, Attorney General Holder has called asset recovery a “global imperative” and announced a “redoubled commitment on behalf of the United States Department of Justice to recover” funds obtained by foreign officials through bribery.
The prior post discussed the January 2009 civil forfeiture action the DOJ filed in the aftermath of the Siemens enforcement action against bank accounts located in Singapore in the names of Zulfikar Ali, Fazel Selim, and ZASZ Trading and Consulting Pte Ltd. (“ZASZ”) (see here). According to the DOJ’s complaint (see here), these accounts were used by Siemens and another company to bribe foreign officials in violation of the FCPA, specifically Arafat Rahman (“Koko”), the son of former Bangladeshi Prime Minister Khaleda Zia. The DOJ alleges that the illicit funds in these accounts flowed through U.S. financial institutions thereby subjecting them to U.S. jurisdiction.
Similarly, in January 2010, the DOJ unsealed a criminal indictment against Juthamas Siriwan and Jittisopa Siriwan, the foreign official bribe recipient of the Green’s improper payments and her daughter. See here. Among other things, the indictment seeks forfeiture of approximately $1.7 million.
Thus, the DOJ’s July announcement that it is pursuing U.S. based assets of the former president of Taiwan and his wife very much continues a trend.
According to the DOJ release:
“The former president and his wife were convicted in Taiwan on Sept. 11, 2009, for bribery, embezzlement and money laundering. They are currently sentenced to 20 years in prison. Their convictions were upheld on appeal and are now pending before the Supreme Court in Taiwan. […] The former president and his wife are also currently under indictment in Taiwan for additional alleged acts of graft and money laundering.”
Director John Morton of U.S. Immigration and Customs Enforcement (ICE) stated that the enforcement action “serves as a warning to those corrupt foreign officials who abuse their power for personal financial gain and then attempt to place those funds in the U.S. financial system” and that “ICE’s Homeland Security Investigations agents will continue to work with our law enforcement partners both here and abroad to investigate and prosecute those involved in such illicit activities and hold corrupt foreign officials accountable by denying them the enjoyment of their ill ?gotten gains.”
What appears to make this recent civil forfeiture action different than the previously filed Siemens-related forfeiture action and the previously filed Siriwan enforcement action is that the bribe payor may be beyond the reach of the FCPA.
According to the DOJ release, the entity paying the bribes to the president of Taiwan and his wife was Yuanta Securities Co. Ltd. (YSC). The release notes that YSC “was attempting to increase its ownership share of Fuhwa Financial Holding Company Limited” and that “YSC paid a bribe of 200 million New Taiwan dollars, or approximately $6 million U.S. dollars, […] to ensure that the authorities on Taiwan would not interfere with its acquisition of additional shares and to attempt to establish a relationship with the head of the authorities on Taiwan.”
Neither YSC (here), nor its parent company, Yuanta Financial Holdings, appear to be U.S. issuers. Under 78dd-3 of the FCPA, foreign companies can be subject to the FCPA’s jurisdiction. However, this prong of the FCPA requires a U.S. nexus. A quick scan of the forfeiture complaint does not suggest a U.S. nexus in terms of making the bribe payments – although the complaint clearly does allege a U.S. nexus once the payments were received and used by the former president of Taiwan and his wife.
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Curious as to what happened in the above referenced Siemens-related enforcement action? In April 2010, U.S. District Court Judge John Bates granted the DOJ’s motion for default judgment and judgment of forfeiture against the subject properties.
What’s happening in the Siriwan enforcement action? According to the docket, nothing since the indictment was unsealed in January 2010.