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FCPA Books And Records Jury Instructions In A Criminal Action


This recent post highlighted the criminal convictions of former ComEd executives and associates on all counts charged, including conspiring to influence and reward the former Speaker of the Illinois House of Representatives in order to assist with the passage of legislation favorable to the electric utility company, in addition to multiple bribery and record falsification charges. (See here for the DOJ release).

It was noted that bribery of a state politician is not ordinarily the type of conduct that results in Foreign Corrupt Practices Act issues; however ComEd (a majority-owned indirect subsidiary of Exelon Corp) was an issuer (as was Exelon) and the most serious (from a sentencing and fine perspective) criminal charges the individuals were found guilty of were record falsification in violation of the FCPA.

Although outside the foreign bribery context, the individual convictions of FCPA books and records offenses is likely one of more high profile instances of criminal convictions of those provisions in the FCPA’s approximate 45 year history.

Set forth below are the relevant jury instructions issued by Judge Harry Leinenweber (N.D. Ill).

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A Closer Look At The Ng Jury Instructions

Closer Look

Foreign Corrupt Practices Act jury trials are rare.

Therefore, FCPA jury instructions are also rare.

Highlighted below are certain portions of the jury instructions from the recent trial of Roger Ng (a former managing director at Goldman Sachs) was who convicted by a jury of FCPA 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.

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Checking In On The Carson Case

After Judge James Selna (C.D. Cal.) denied the “foreign official” motion to dismiss challenge in the Carson case in May 2011 (see here for the prior post) , the “foreign official” issue moved to the jury instructions – see here and here for prior posts.  Last month, Judge Selna issued an order (here) regarding certain jury instructions.  Not surprisingly, Judge Selna carried forward his previous “instrumentality” analysis into the “instrumentality” jury instruction.

As to the “knowledge of status of foreign official,” Judge Selna’s instruction states as follows.


“(4) The defendant offered, paid, promised to pay, or authorized the payment of money, or offered, gave, promised to give, or authorized the giving of anything of value to a foreign official;

(5) The payment or gift at issue in element 4 was to (a) a person the defendant knew or believed was a foreign official or (b) any person and the defendant knew that all or a portion of such money or thing of value would be offered, given, or promised (directly or indirectly) to a person the defendant knew or believed to be a foreign official. Belief that an individual was a foreign official does not satisfy this element if the individual was not in fact a foreign official.

(6) The payment or gift at issue was intended for at least one of four purposes: a. To influence any act or decision of a foreign official in his or her official capacity; b. To induce a foreign official to do or omit to do any act in violation of that official’s lawful duty; c. To secure any improper advantage; or d. To induce a foreign official to use his or her influence with a foreign government or department, agency, or instrumentality thereof to affect or influence any act or decision of such government, department, agency, or instrumentality;


In his order, Judge Selna stated as follows.

“The Government proposes to add the following paragraph to element 5:”

The government need not prove that the defendant knew the legal definition of “foreign official” under the FCPA or knew that the intended recipient of the payment or gift fell within the legal definition. The defendant need not know in what specific official capacity the intended recipient was acting, but the defendant must have known or believed that the intended recipient had authority to act in a certain manner as specified in element 6.”

The Court does not believe that this language is necessary, and it is potentially confusing.”


As previously noted by the Federal Securities Law Blog (see here), earlier this week, the Carson defendants filed a motion to dismiss (here) and a motion to suppress (here).

In summary, the motion to dismiss states as follows.

“The basis for Defendants’ Motion is that the impact of the cumulative impediments – unique investigation tactics preventing Defendants access to millions of pages of evidence they would normally receive under Rule 16, the lack of a meaningful Brady review, CCI’s loss of crucial documents underlying many of the counts and transactions, the inability of Defendants to obtain foreign documents and subpoena foreign witnesses, CCI instructing its employees not to speak with the defense, many of which are pertinent to the counts and transactions, as well as opaque statutes applied in a novel fashion and failure to provide mandated public awareness – in combination, deprived Defendants’ of their Due Process and Sixth Amendment rights, including the right to present a complete defense, and have prejudiced Defendants to such a severe extent that dismissal is the only appropriate remedy.”

Of note, the motion argues that “from the outset of [Control Component Inc’s] CCI’s internal investigation in August 2007, CCI, through its counsel Steptoe & Johnson LLP (“Steptoe”), worked hand-in-hand with DOJ to investigate the matters at issue in this case.”  The motion further argues as follows.  “The DOJ and CCI essentially agreed to a private information-sharing arrangement between them. With this agreement in place, CCI selectively disclosed only information CCI believed inculpated Defendants and DOJ did not seek additional information.”  According to the motion, “the collaborative nature of DOJ’s and CCI’s relationship provided both parties benefits, to the detriment of Defendants …”.

Under the heading “The FCPA and Congressional Efforts for Clarity” the motion states as follows.

“Portions of the FCPA are obscurely written and a key term at issue in this case is the meaning of “instrumentality,” which is not defined in the statute. This Court’s ruling, which involves a non-exclusive, multiple factor test to determine whether a state-owned-enterprise is an “instrumentality,” shows just how complex and unclear the FCPA is. The FCPA’s history reflects Congress’ recognition of the inherent lack of clarity.  Eleven years after Congress enacted the FCPA, Congress adopted amendments via the 1988 Omnibus Trade and Competitiveness Act (“Trade Act”), reflecting an important policy decision: the federal government must make substantial efforts to inform the public about the FCPA. Congress, therefore, required the Attorney General (“AG”) to consult with various federal agencies and departments; obtain the views of interested persons through a public notice and comment procedure; determine based on this combined input “to what extent” FCPA compliance would be enhanced and the business community assisted by further clarification of the FCPA; and then, based on this determination, issue guidelines illustrating allowable and prohibited conduct, clarify Department of Justice’s (“DOJ’s”) enforcement policies and generate precautionary procedures to aide in compliance. The AG’s compliance with Congress’ directive has been minimal.”  [For more on this issue, see this prior guest post].

The motion also asserts that CCI “directed employees not to talk with defense counsel.”  The motion states, in pertinent part, as follows.  “Had the government directly instructed witnesses not to speak with the defense, or even to do so only in the prosecution’s presence, such conduct would violate Defendants’ constitutional right to present a defense.” […] The same constitutional principle should apply here, given CCI cooperated in the government’s investigation, including by sharing witness specific information. […]  Steptoe’s actions against [a former Regional Sales Manager in Asia]  and possibly others would constitute government intimidation of a witness if this Court finds CCI was an agent of the government, which clearly would violate Defendants’ Fifth and Sixth Amendment rights.”

Elsewhere, the motion states as follows.  “Defendants were responsible for oversight of significant international business, yet IMI/CCI provided no FCPA training.”

In summary, the motion to suppress states as follows.

“The basis for this Motion is that CCI and its counsel were de facto public actors when they implicitly threatened to terminate Defendants’ employment if they did not cooperate and participate in interviews with CCI’s investigators. At the time of the interviews, CCI and IMI were not only in contact with law enforcement authorities regarding the investigation, but were collaborating with the Department of Justice (“DOJ”) in how to conduct the investigation and obtain relevant admissions from the Defendants. CCI compelled the Defendants’ statements with the government’s knowledge, certainly at a minimum with the government’s general encouragement, and with the intent to cooperate with the DOJ. As a matter of fact and law CCI was an agent of the government during the interviews. Thereafter and further to published DOJ memoranda, CCI spared no expense in cooperating with the government by identifying purported culprits and disclosing the fruits of its investigation, including interviews of the Defendants, to the DOJ. Thus, CCI’s actions are “fairly attributable to the government.” CCI compelled the Defendants’ statements under a classic “penalty situation” – CCI required them to answer all questions regardless of their Fifth Amendment right against self-incrimination or be fired. Because CCI was a state actor when it compelled the Defendants’ statements, it violated their Fifth Amendment rights and the statements must be suppressed.”

Second Circuit Affirms Bourke’s Conviction

Earlier today the Second Circuit Court of Appeals issued a decision (here) affirming Frederic Bourke’s 2009 conviction of conspiring to violate the FCPA and the Travel Act and of making false statements.

The Bourke appeal was principally based on knowledge issues which present narrow, factually unique issues.   Nevertheless the Second Circuit’s holding on conscious avoidance is noteworthy in terms of FCPA jurisprudence.  Essentially the court held that Bourke enabled himself to participate in a bribery scheme without acquiring actual knowledge of the specific conduct at issue and that such conscious avoidance, even if supported primarily by circumstantial evidence, is sufficient to warrant an FCPA-related charges.  The message to international investors should be clear, if a potential investment results in sleepless nights and fear of asking specific direct questions because of the answers you might receive, there is probably better uses for your money.

Brian Whisler (an FCPA practitioner at Baker & McKenzie – see here) who has been following the case offered the following.  “Despite the considerable speculation surrounding this case, today’s Second Circuit opinion affirming Mr. Bourke’s conviction came with little surprise, as the standard on review is so heavily weighted in favor of the government when defendants challenge the sufficiency of the evidence underlying their convictions.  The Court found that a rational juror could infer from the totality of the evidence that Mr. Bourke deliberately avoided confirming his suspicious aroused by multiple red flags signaling corruption and that the same evidence could establish his knowledge about the crime.  Given DOJ’s aggressive pursuit of individual executives, this precedent is instructive, particularly for purposes of defining willful blindness.”

Before turning to the Second Circuit’s decision, a bit of background.  The Bourke case is arguably the most complex and convoluted case in the history of the FCPA and focuses on the conduct of Bourke and others – including most notably Viktor Kozeny (who is enjoying life in the Bahamas) – in a bribery scheme connected to the privatization of the Azerbaijan state-owned oil company, SOCAR.  The case largely focused on the FCPA’s knowledge element and whether Bourke, as an investor, had sufficient knowledge of the bribery scheme.

As noted in this previous post when Bourke was sentenced to 366 days in November 2009, the case involved a nearly decade long investigation that spanned the globe, dismissal of FCPA substantive charges on statute of limitations grounds, reinstatement of the FCPA substantive charges,  a superseding indictment which then dropped the FCPA substantive charges and a six week jury trial.  For additional background on the case, see this superb piece by Andrew Longstreth that appeared in the American Lawyer.

Bespeaking the complex nature of the case, in November 2009 when Judge Shira Scheindin (S.D.N.Y.)  sentenced Bourke she stated as follows.  “After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”

A previous post (here) outlined Bourke’s appeal.

The Second Circuit’s opinion begins as follows.  “On appeal, Bourke vigorously attacks his conviction on several fronts, including the (1) correctness of the jury instructions given, (2) the propriety of certain evidentiary rulings made by the district court, and (3) the sufficiency of the evidence supporting the false statements conviction. For the reasons given below, we affirm.”

After a detailed discussion of the facts, the Court focused on the jury instructions and stated as follows.  “Bourke challenges the jury instructions on four primary grounds. First, he argues the district court erred in refusing to instruct the jury that it needed to agree unanimously on a single overt act committed in furtherance of the conspiracy. Second, he argues the district court improperly charged the jury on conscious avoidance because (1) there was no factual basis for such a charge; and (2) the government waived its reliance on the conscious avoidance theory. Third, he argues the district court erred by failing to instruct the jury that the government needed to prove Bourke acted “corruptly” and “willfully” to sustain a conviction on FCPA conspiracy. Finally, he argues the district court erred in failing to give the jury Bourke’s proposed good-faith instruction.”

As to overt acts, the Court held that “the jury need not agree on a single overt act to sustain a conspiracy conviction.”  The court stated as follows.  “We conclude, therefore, that although proof of at least one overt act is necessary to prove an element of the crime, which overt act among multiple such acts supports proof of a conspiracy conviction is a brute fact and not itself element of the crime. The jury need not reach unanimous agreement on which particular overt act was committed in furtherance of the conspiracy.”

As to conscious avoidance, the Court disagreed with Bourke’s argument that a conscious avoidance charge lacked a factual predicate and stated as follows.  “While the government’s primary theory at trial was that he had actual knowledge of the bribery scheme, there is ample evidence to support a conviction based on the alternate theory of conscious avoidance. The testimony at trial demonstrated that Bourke was aware of how pervasive corruption was in Azerbaijan generally.   Bourke knew of Kozeny’s reputation as the “Pirate of Prague.”  Bourke created the American advisory companies to shield himself and other American investors from potential liability from payments made in violation of FCPA, and joined the boards of the American companies instead of joining the Oily Rock board.   In so doing, Bourke enabled himself to participate in the investment without acquiring actual knowledge of Oily Rock’s undertakings. The strongest evidence demonstrating that Bourke willfully avoided learning whether corrupt payments were made came from tape recordings of a May 18, 1999 phone conference with Bourke, fellow investor Friedman and their attorneys, during which Bourke voiced concerns about whether Kozeny and company were paying bribes.  […]  Finally, Bourke’s attorney testified that he advised Bourke that if Bourke thought there might be bribes paid, Bourke could not just look the other way. Taken together, a rational juror could conclude that Bourke deliberately avoided confirming his suspicions that Kozeny and his cohorts may be paying bribes.”

The Court further stated as follows.  “It is not uncommon for a finding of conscious avoidance to be supported primarily by circumstantial evidence. Indeed, the very nature of conscious avoidance makes it unlikely that the record will contain directly incriminating statements. Just as it is rare to find direct record evidence of an employer stating, “I am not going to give you a raise because you are a woman,” it is highly unlikely a defendant will provide direct record evidence of conscious avoidance by saying, “Stop! I think you are about to discuss a crime and I want to be able to deny I know anything about it!” Here, the evidence adduced by the government at trial suffices to support the giving of a conscience avoidance charge.”

The Court specifically rejected Bourke’s argument that the conscious avoidance charge improperly allowed the jury to convict him based on negligence, rather than based on evidence that he avoided learning the truth.  The Court stated as follows.  “[T]he record contains ample evidence that Bourke had serious concerns about the legality of Kozeny’s business practices and worked to avoid learning exactly what Kozeny was doing.”  Moreover, the Court stated that the “district court specifically charged the jury not to convict based on negligence [and] there is no reason to suspect that the jury ignored that instruction.”

As to mens rea, the Court found no error in the district court’s jury instruction that to convict the jury had to find that Bourke knew of the conspiracy’s object and that Bourke intended for that object to be accomplished.    The Court found that “the district court properly instructed the jury that it must find Bourke knowingly entered into a conspiracy that had the object of corruptly and willfilly bribing foreign officials and that Bourke intended to aid in achieving this object.”  In so holding, the Court stated that Bourke’s requested jury instruction that would have required the jury to “find Bourke willfully and corruptly joined a conspiracy to willfully and corruptly bribe foreign governments” was an “absurd result unsupported by the law.”

As to Bourke’s proposed good faith instruction, the Court stated as follows.  “Even assuming arguendo that Bourke’s proposed instruction was legally correct with an adequate basis in the record, his argument fails because the theory was effectively presented elsewhere” in the jury instructions and the “failure to give a specific good faith charge does not require reversal.”

Does the Second Circuit’s decision mark the end of the road for Bourke?  Perhaps not, his request for a new trial – based on the theory that a key witness offered false testimony – is still pending.  The Second Circuit’s decision does not address Bourke’s pending request, but in light of its decision, it is unlikely that Judge Scheindin will grant Bourke’s motion.

Guilty Verdict in Haiti Teleco Case

Much of the attention this spring and summer has been on the Africa Sting, Lindsey Manufacturing and Carson cases.  Yet an FCPA trial also took place in Miami – part of the massive Haiti Teleco cases (see here for the prior post).

Today, the DOJ announced (here) that a federal jury (after a two week trial) 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 Telecom.

Assistant Attorney General Lanny Breuer stated as follows. “This verdict is another powerful example that bribery of government officials – whether at home or abroad – has serious consequences. In finding the defendants guilty on all charged counts, the jury sent an unmistakable message that paying off foreign officials does not, in fact, pay off.”

According to the DOJ release, 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.

Sentencing for both defendants currently is scheduled for Oct. 13, 2011.

Previously in the case, Esquenazi challenged the DOJ’s foreign official interpretation (see here for the prior posts) and the DOJ and the defendants also sparred over the “foreign official” jury instructions.

Judge Martinez instructed the jury as follows.

“An ‘instrumentality’ of a foreign government is a means or agency through which a function of the foreign government is accomplished. State-owned or state-controlled companies that provide services to the public may meet this definition. To decide whether [Haiti Telecom] is an instrumentality of the government of Haiti, you may consider factors including but not limited to: (1) whether it provides services to the citizens and inhabitants of Haiti; (2) whether its key officers and directors are government officials or are appointed by government officials; (3) the extent of Haiti’s ownership of Teleco, including whether the Haitian government owns a majority of Teleco’s shares or provides financial support such as subsidies, special tax treatment, loans or revenue from government-mandated fees; (4) Teleco’s obligations and privileges under Haitian law, including whether Teleco exercises exclusive or controlling power to administer its designated functions; and (5) whether Teleco is widely perceived and understood to be performing official or government functions. These factors are not exclusive, and no single factor will determine whether [Teleco] is an instrumentality of a foreign government. In addition, you do not need to find that all the factors listed above weigh in favor of Teleco being an instrumentality in order to find that Teleco is an instrumentality.”

Defendants have a good chance to challenge this instruction on appeal should they so choose.

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