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Judge Finds The Term Instrumentality “Unclear” And Narrowly Construes “Foreign Official” Element Contrary To The DOJ’s Position

By on September 10, 2018 in FCPA Jurisprudence, Foreign Official, Internal Controls, Knowledge, Related Civil Litigation, Rio Tinto
Judicial Decision

There is little substantive Foreign Corrupt Practices Act case law, even fewer judicial decisions of precedent. Nevertheless, in the aftermath of FCPA enforcement actions or merely FCPA scrutiny, plaintiffs counsel (no doubt representing shareholders on a contingent fee basis) frequently file securities fraud class actions hoping some get past the motion to dismiss stage.

In deciding motions to dismiss, federal trial court judges occasionally directly comment upon FCPA issues and this post highlights a recent example in a matter involving Rio Tinto. As discussed below, a federal court judge found the term “instrumentality” in the FCPA’s “foreign official” definition “unclear” and otherwise narrowly construed the term in a way contrary to the DOJ’s current position.

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Motions To Dismiss Fully Briefed In SEC v. Cohen & Baros

By on August 23, 2017 in FCPA Trials, Foreign Nationals, Jurisdiction, Knowledge, Kokesh, Michael Cohen, Och-Ziff Capital, Och-Ziff Capital Management, Statute of Limitations, Vanja Baros
Judicial Decision

As highlighted in this prior post, in January 2017 the SEC filed a civil complaint against former Och-Ziff executives Michael Cohen and Vanja Baros alleging the same core conduct as the DOJ and SEC’s September 2016 enforcement action against Och-Ziff.

The prior post noted that the defendants would be mounting a defense and further noted that the SEC is rarely put to its burden of proof in FCPA enforcement actions (corporate or individual). Indeed, the SEC has never prevailed in FCPA history when put to its ultimate burden of proof.

Late last week, the briefing on the motions to dismiss appeared (all at once) on the court’s docket and this post summarizes the disputed issues which largely center on statute of limitations issues and (as relevant to Baros, a foreign national defendant) general jurisdiction issues as well as FCPA specific jurisdiction issues).

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About That New Yorker Trump Organization Azerbaijan Story

By on March 7, 2017 in Azerbaijan, Knowledge, Media Reporting, Third Parties, Trump Organization
raising hand

On February 23rd, I received an e-mail from Adam Davidson with a re: line “New Yorker Magazine on the FCPA” which stated in pertinent part “I’m writing an article about a fascinating case of potential FCPA violation and would welcome the chance to discuss.”

Since launching FCPA Professor in 2009, I’ve had hundreds of conversations with journalists writing about the Foreign Corrupt Practices Act, but my 45 minute conversation with Davidson on February 23rd was the strangest, most concerning conversation I’ve ever had with a journalist about the FCPA.

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Case Law Of Note

By on March 8, 2016 in Corrupt Intent, Dmitrij Harder, FCPA Jurisprudence, Foreign Official, Knowledge, Public International Organization
Judicial Decision

Judicial opinions construing the Foreign Corrupt Practices Act are rare. Thus, when they occur (even if only a trial court opinion on a pre-trial motion to dismiss) FCPA judicial opinions are worthy of note.

As highlighted in this prior post, in January 2015 the DOJ criminally charged Dmitrij Harder, the former owner and President of Chestnut Consulting Group Inc. and Chestnut Consulting Group Co., for allegedly bribing an official with the European Bank for Reconstruction and Development (“EBRD”).

The enforcement action was notable in that it invoked the rarely used “public international organization” prong of the FCPA’s “foreign official” element.

As highlighted here, in October 2015, Harder filed this motion to dismiss:  In summary fashion it stated:

“The Indictment fails to accurately allege the elements of a violation under the Foreign Corrupt Practices Act (“FCPA”) – it is devoid of any allegations that Mr. Harder paid an allegedly corrupt payment to a “foreign official,” fails to state required allegations when an allegedly corrupt payment is made to a third party, and impermissibly substitutes “public international organization” in the charging language against Mr. Harder. The FCPA counts should also be dismissed because the provision permitting the President to expand the term “foreign official” by identifying “public international organizations” as authorized by 15 U.S.C. § 78dd-2(h)(2)(B) is unconstitutional.”

In an unsurprising development given the procedural posture of the motion, last week Judge Paul Diamond (E.D. Pa.) denied the motion. It is believed to be the first judicial decision in FCPA history construing the rarely implicated “public international organization” prong of the FCPA’s “foreign official” definition.

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Supreme Court Declines To Hear Bourke Case

By on April 16, 2013 in Bourke, Knowledge

It began in 2005 with this indictment against Frederic Bourke and others.

Since then, the case against has had several twists and turns including 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 in favor of conspiracy to violate the Foreign Corrupt Practices Act, among other charges.  (And that’s just the portion of the case dealing with Bourke, see here for a prior post concerning Bourke’s co-defendant Victor Kozney).

Key events during the Bourke case was the summer of 2009 when Bourke was found guilty by a jury for conspiring to pay bribes to Azerbaijan officials in violation of the FCPA and Travel Act and for making false statements.  In November 2009 (see here for the prior post), Judge Shira Scheindin (S.D.N.Y.) sentenced Bourke to 366 days in prison (followed by three years probation) and ordered him to pay $1 million fine.  At sentencing, Judge Scheindin stated “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 Second Circuit appeal followed and prior posts here and here outlined Bourke’s appeal which principally focused on the FCPA’s knowledge element, including the trial court’s conscious avoidance jury instruction.  In December 2011 (see here for the prior post), the Second Circuit affirmed Bourke’s conviction.  Given the nature of the appeal, the Second Circuit decision focused mostly on knowledge issues which are fact specific, although the Second Circuit’s holding on conscious avoidance was 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.

Bourke still kept fighting.  He requested a new trial based on newly discovered evidence.  This request was denied by the trial court and affirmed by the Second Circuit in November 2012 (see here for this prior post).

Bourke next sought review by the Supreme Court.  The questions presented for review concerned (i) willful blindness and the request to resolve circuit splits over the doctrine in aftermath of Supreme Court’s decision in Global-Tech (which addressed willful blindness in the context of a civil patent case); (ii) the request to resolve circuit splits over the need for unanimity on a specific overt act; and (iii) issues concerning Federal Rule of Evidence 106 (which states as follows – “iff a party introduces all or part of a  writing or recorded statement, an adverse party may require the  introduction, at that time, of any other part — or any other writing or  recorded statement — that in fairness ought to be considered at the  same time”).

Yesterday, the Supreme Court declined to hear Bourke’s appeal likely ending a case that has lingered since 2005.

As suggested by the above questions presented, while Bourke’s appeal occurred in the context of an FCPA case, the issues the Supreme Court declined to hear are not unique to the FCPA context.  Indeed, aside from the facts of the Bourke case and its procedural history which obviously necessitated reference to the FCPA, there is little substantive reference to the FCPA in the U.S. Opposition Brief (see here).

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