As highlighted in this prior post in September 2019 the DOJ announced the unsealing of a criminal indictment against (among others) Paulo Casqueiro-Murta in connection with an alleged bribery scheme involving Venezuela’s state-owned and state-controlled energy company, PDVSA.
According to the DOJ, Murta (a citizen of Portugal and Switzerland) provided financial services to various co-defendants (including former employees of PDVSA) in connection with various bribery schemes and he was charged with directly violating or assisting others in violating the FCPA and money laundering laws.
Recently, Judge Kenneth Hoyt (S.D. Tex) granted Murta’s motion to dismiss the charges based on lack of jurisdiction, lack of due process, vagueness, and statute of limitation issues.
As stated in Judge Hoyt’s decision:
“To establish a jurisdictional basis to prosecute Murta, the SSI charges that he, although a citizen of Portugal and Switzerland, was an agent of Swiss Company B, various foreign co-defendants and one or more U.S.-based companies – “domestic concerns” – and is a “person” as that term is used in the FCPA, § 78dd-3(f)(1).”
In his first motion, the defendant seeks dismissal of all of the government’s counts against him, asserting: lack of jurisdiction; failure to state a claim; violation of Fifth Amendment due process; and unconstitutional vagueness of the FCPA and MLCA.”
Judge Hoyt summarized the relevant factual background as follows:
“Counts 13 and 14 of the SSI [Superseding Indictment] charge that the defendant set up offshore bank accounts at BES [Banco Espirito Santo S.A. of Portugal] for the benefit of Venezuelan officials, knowing that such would be used to receive bribe payments from the companies and accounts of Rincon and Shiera. These acts, contends the government, were acts of conspiracy violating the FCPA and the MLCA. In February 2012, the defendant allegedly traveled to Miami, Florida to meet with Shiera and his associate to discuss the alleged money laundering scheme. Between January 25, 2012, and March 18, 2013, the defendant, at Shiera’s request, sent Shiera information relating to the opening of the BES accounts through email and text message.
The defendant also allegedly communicated with Rincon, Shiera, the PDVSA defendants, and their co-conspirators through email, phone, and text message regarding the BES accounts, the documentation necessary to “justify” the payments, and the structure of the wire transfers. In May 2012, the defendant allegedly emailed Shiera’s associates an allegedly fake loan agreement that would be used to justify a $4.8 million wire transfer to the officials’ accounts. The SSI does not state, however, that the defendant sent or received any of the alleged communications while in the United States.
As to Counts 18 and 19, the SSI alleges that, on March 25, 2013 and May 8, 2013, the defendant transferred, or aided and abetted others in transferring, funds totaling almost $8.5 million from Rincon Company 2 (a United States-based company) to Rincon Company 8 (a Venezuela-based company), with the intent of promoting the bribery of the Venezuelan officials.”
Judge Hoyt then summarized the parties’ positions as follows:
“The defendant contends that the Court should dismiss Count 14 for lack of jurisdiction, asserting that the SSI does not sufficiently plead either that the defendant was an “agent” of a domestic concern under § 77dd-2(a), or that he was a “person” who committed criminal acts in the United States under § 77dd-3(a). Likewise, the defendant argues that Counts 18 and 19 should be dismissed for lack of jurisdiction, since the SSI alleges no facts to support that the defendant committed any part of a money laundering offense in the United States.
According to the defendant, Counts 13 and 14 should also be dismissed because (1) the government cannot extend the extraterritorial reach of the FCPA or the MCLA by charging conspiracy offenses and (2) the SSI’s allegations as to his conduct in the United States do not state a charge for conspiracy. The defendant further asserts that the government’s prosecution of him violates his Fifth Amendment “due process” rights and that the FCPA and MLCA are unconstitutionally vague as to his alleged conduct.
The government responds that, as to Count 14, the SSI sufficiently alleges criminal conduct by the defendant in the United States, both as an “agent” under § 77dd-2(a) and as a “person” under § 77dd-3(a). Concerning the same count, the government contends that the SSI pleads a conspiracy charge against the defendant under general conspiracy principles. As to Counts 18 and 19, the government argues that the defendant’s alleged acts in the United States support substantive money laundering and aiding-and-abetting charges under the MLCA. As well, the defendant’s conduct in the United States subjects him to conspiracy liability under Count 13. Finally, the government denies that its prosecution of the defendant violates due process, and that either the FCPA or the MLCA are unconstitutionally vague as to the defendant.”
Regarding Count 14 (conspiracy to violate the FCPA), Judge Hoyt concluded (certain internal citations omitted):
“The Court determines that Count 14 of the SSI should be dismissed based on lack of jurisdiction, lack of due process, and vagueness. In Count 14 of the SSI, the government alleges that the defendant violated 18 U.S.C § 371 by conspiring with Rincon, Shiera, and others to violate the FCPA, specifically 15 U.S.C. §§ 77dd-(2)(a) and 77dd-(3)(a). The government alleges that, under § 77-dd(2)(a), the defendant was an “agent” of Rincon, Shiera, and their United States-based companies. To the extent the government alleges “agency” based on the defendant’s conduct abroad, the Court determines that it lacks extraterritorial jurisdiction over the defendant under § 77-dd(2)(a) and, therefore, under the conspiracy statute, as well. As an independent basis for dismissal, the Court reiterates its prior ruling that the term “agency” is constitutionally vague as to this foreign defendant.
[Regarding the “prior ruling” as highlighted in this prior post, in Fall 2021 Judge Kenneth Hoyt (S.D. Tex.) also granted co-defendant Daisy Rafoi-Bleuler’s motion to dismiss for lack of jurisdiction while also hinting that the term “agent” in the FCPA is unconstitutionally vague. As highlighted in this prior post, the DOJ is appealing the dismissal to the Fifth Circuit.]
[In a footnote, Judge Hoyt stated: None of the SSI’s allegations establish that Rincon, Shiera, or any other “domestic concern” (i.e., United States-based entity) had a “right to control” the defendant’s actions. Therefore, the government’s allegations do not establish that the defendant was an “agent” to satisfy the jurisdictional requirements of the statute. Nor can the government use the conspiracy statute to charge the defendant when his conduct is “not punishable under the FCPA itself because of the statute’s territorial limitations.” United States v. Hoskins, 902 F.3d 69, 97 (2nd Cir. 2018) (“Hoskins II”)]
Nor can the SSI support a conspiracy charge predicated on § 77dd-(3)(a), which must be based on the defendant’s conduct in the United States. A federal conspiracy charge requires evidence of “an overt act by one or more of the members of the conspiracy in furtherance of the objective of the conspiracy.” To satisfy this requirement, the government first relies on the defendant’s alleged travel to Miami in 2012 to meet with Shiera’s representatives regarding the alleged money laundering scheme. That the defendant attended a meeting in the United States is, in the Court’s judgment, insufficient to prove a conspiracy element beyond discussions or conversations. The government also cites as potential overt acts email communications between the defendant and other co-conspirators, dating from January 2012 to March 2013. However, the SSI does not allege that the defendant either sent these communications from, or received them in, the United States. Therefore, the communications are not overt acts that support a conspiracy to violate § 77dd-3(a).
Relatedly, neither the alleged Miami meeting, nor the defendant’s email communications with co-conspirators establish a “sufficient nexus” between the defendant’s alleged conduct and the United States to satisfy the due process requirement of the Fifth Amendment. For the foregoing reasons, Count 14 should be dismissed.”
Next, Judge Hoyt dismissed Counts 18, 19 and 13 (substantive money laundering violations as well as aiding and abetting and conspiracy to commit money laundering) for lack of jurisdiction.
Next, Judge Hoyt discussed statute of limitations issues and set forth the following relevant background.
“In January 2012, the Department of Homeland Security (“DHS”) commenced an investigation into the business dealing of Rincon and his business partner, Shiera, their affiliates and associates concerning the approval process of PDVSA contracts. The investigation revealed that by 2013, Rincon and Shiera and their associates had received millions of dollars in bribery/kickback proceeds from PDVSA-related energy and/or equipment contracts, and had used the proceeds to open bank accounts in Switzerland and other countries. As a result, on December 15, 2014, the government issued a MLAT to authorities in Switzerland seeking bank records from several Swiss banks. According to the government, when Swiss authorities did not promptly respond to the government’s request, the government secured a tolling order from the Court on September 21, 2015, that suspended the “running” of the statute of limitations regarding possible crimes committed by Rincon, Shiera and their associates.
On December 10, 2015, a federal grand jury returned a multiple-count indictment against Rincon and Shiera for conspiracy, violations of the FCPA, and violating the MLCA. In addition to Rincon and Shiera, four other individuals were charged by criminal information with related offenses. They were charged in November 2015 and January 2016. However, based on the MLAT request and the criminal charges returned against Rincon, Shiera and others, it is clear that the records received permitted the grand jury to identify various entities and banks that were the depositories of the alleged ill-gotten gains and return an indictment on December 2015.
The government then turned its attention to documents and records, presumably, located in the Republic of Panama. It issued a MLAT to Panamanian authorities on March 14, 2016, specifically identifying documents and persons of interest. On June 17, 2016, the government, sought and obtained a separate tolling order concerning the Panamanian MLAT. Like the Swiss MLAT, the Panama MLAT sought records concerning any Rincon/Shiera activities with banks in Panama through which they and their co-conspirators had channeled their ill-gotten gains. The MLAT requested records for the period of January 1, 2009 to March 14, 2016.
The record shows that the government did not consider the defendant a target or subject of these two investigations. In fact, the government does not argue that the September 2015 tolling order, which tolled the statute of limitations for Rincon, Shiera, and others unnamed, tolled the statute of limitations for the defendant.
On January 12, 2017, the government requested and received a tolling order concerning a MLAT, directed to Swiss authorities, seeking what the government later called supplemental or additional evidence. The evidence does not show when Swiss authorities complied with the request. However, the grand jury returned an indictment on August 23, 2017,13 and had previously returned an indictment against others based on the same charges on December 10, 2015.
On March 5, 2018 … another MLAT was issued by the government, but on this occasion to Portuguese authorities, seeking interviews with the defendant, Joao Alexandre Rodrigues Silva, and Paula Nacif. Silva and Macif were employees of Banco Espirito Santo S.A. (“BES”). The defendant, although not an employee of BES worked, for a company that managed certain accounts held by BES.
The Portuguese MLAT sought information regarding a June 10, 2012, email, presumably from the defendant to Shiera employees identified in the email as “nuestros Amigos”. Additionally, the government sought information concerning a March 21, 2013, diagram – a hand-drawn diagram – where the defendant altogether referenced “Amigo” 1, 2, and 3. As well, the MLAT identified the subject matter of the interview. DHS agents sought to connect names to information previously received from various banks and/or entities, and information concerning entities and individuals who allegedly received bribes.
The interview was conducted and completed on March 20, 2018. On April 24, 2019, the government brought charges against the defendant under the SSI.”
Regarding the relevant legal standard, Judge Hoyt stated:
“The statute of limitations for the crimes charged against the defendant is five years. However, the government may move to suspend the tolling of the statute of limitations during a request of foreign authorities for documents or records that might aid a grand jury in its determination whether there is evidence to indict a person. 18 U.S.C. § 3292. The relevant portions of the statute state:
(a)(1) Upon application of the United States, filed before return of an indictment, indicating that evidence of an offense is in a foreign country, the district court before which a grand jury is impaneled to investigate the offense shall suspend the running of the statute of limitations for the offense if the court finds by a preponderance of the evidence that an official request has been made for such evidence and that it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country. (Emphasis added.)”
Judge Hoyt summarized the parties’ positions as follows:
“The defendant argues that: (a) the government failed to give him fair notice that he was facing charges for his alleged conduct; (b) § 3292 was abused in the manner and method of its use; (c) the tolling order of January 2017, that permitted the government to extend the statute of limitations, was improvidently granted because, among other reasons: (i) it was entered after an indictment was returned; (ii) the government misled the defendant and his counsel stating that he was merely a witness, causing him to waive his right to remain silent, and; (iii) the offenses for which the defendant was indicted were not the subject of the grand jury investigation at the time; and (d) the government failed, intentionally or otherwise, to account for the duration of the delay in seeking an indictment against him.
In response to the defendant’s motion and contentions, the government asserts that the charges against the defendant were timely filed pursuant to § 3292. It asserts that an “official request” was timely made; that § 3292 is “offense-specific, not person-specific; and, that the government “continued to receive materials from Swiss authorities in response to [the 2017 MLAT] through at least August 20, 2018 . . .” Hence, the government argues that the government’s November 2017, MLAT tolled the statute of limitations into 2020, well after the 2017 indictment was superseded on April 24, 2019, naming the defendant.”
Judge Hoyt then concluded and stated (certain internal citations omitted):
The Court is of the opinion that the defendant’s motion to dismiss based on the statute of limitations should be granted. The record is undisputed in many respects. The Court is of the opinion that its discussion should start with the application of § 3292 to the 2014 MLAT and the indictment returned on December 10, 2015.
In response to the defendant’s limitation claim, the government posits that its 2015 investigation sought records specific to Rincon and Shiera, among others, concerning violations of the FCPA, the MLCA, and for conspiracy to violate these statutes. On December 10, 2015, a grand jury returned indictments against Rincon and Shiera based on, among other things, the records and documents requested of Swiss authorities in the government’s December 15, 2014 MLAT. Hence, the Court concludes the government received the requested document as evinced by the return of an indictment. On this basis, the Court concludes that the period of suspension dictated by a tolling order ended on a date before the indictment was returned on December 10, 2015.
Under § 3292(b), a tolling period is satisfied when the foreign authority takes “final action” on the MLAT request. 18 U.S.C. § 3292(b). Hence, the statute of limitations tolling ended prior to the December 10, 2015.
Nevertheless, on November 7, 2016, the government issued a second MLAT to Swiss authorities. It describes this second MLAT as a “supplemental MLAT” in its brief. However, it was not presented to the Court as such. In fact, it came about a year after the first MLAT was satisfied. The subject matter and the persons targeted in the second MLAT are the same. From the government’s perspective, the tolling order issued in relation to the 2014 MLAT continued even after an indictment was returned. This procedure may be appropriate where there is confusion concerning the nature or scope of the MLAT. However, there is no evidence that Swiss authorities sought clarification or additional information regarding the December 14, 2014 MLAT, or that they misunderstood the request, necessitating a supplementation.
The Court also concludes that no evidence has been proffered that the grand jury needed clarification or supplementation concerning the MLAT. Importantly, nothing in the statute permits the government to issue multiple MLATs simply as a tool to extend tolling, or as a discovery stratagem. While the statute does not restrict the number of MLATs that the government may issue, it does restrict instances when tolling is authorized. See § 3292(a)(1) and (c); Based on its massive investigation, the government not only had the ability to be as specific as it desired with its MLATs, it had, in fact, received what it sought.
Therefore, the Court concludes that the permitted period of tolling covers the dates of December 15, 2014, when the MLAT issued, and an undetermined date prior to December 10, 2015, when the grand jury returned an indictment. In other words, Swiss authorities took “final action” on the government’s 2014 MLAT at some point prior to the grand jury’s return of an indictment.
The Court concludes that the tolling order pertaining to the January 2017 MLAT was improvidently issued; but even if it was not, it failed to toll the statute concerning the defendant. An indictment had been returned against Rincon, Sheira and others concerning crimes charged prior to the 2017 indictment. The record also shows that the grand jury returned even a second indictment charging Rincon and others with violating the FCPA, the MLCA, and conspiracy to violate the Acts —same as the first indictment.
Section 3292 is offense-specific, not person-specific; therefore, the statutory purpose for tolling was exhausted by the 2015 Indictment. Alternatively, the MLAT did not apply to the defendant. The MLAT issued to Portuguese authorities on March 5, 2018, was person-specific and was concluded in two weeks. Hence, it did not toll § 3292 as to the defendant. Even if it did, that tolling is inconsequential in light of the fact that final action was completed in two weeks. The policy behind section 3292 cannot be shaded to favor the government anymore than to disfavor an accused. Accordingly, indicting the defendant in April 2019 means that the indictment was brought outside the statute of limitations and, therefore, Counts 13, 14, 18 and 19 should be and are hereby, dismissed.”
Shortly after Judge Hoyt granted Murta’s motion to dismiss, the DOJ filed a motion to stay the dismissal order. In the motion to stay, the DOJ states (certain internal citations omitted):
“The government respectfully requests that this Court stay execution of its order dismissing the charges against Paulo Jorge Da Costa Casqueiro Murta (“Murta” or the “Defendant”) in the Superseding Indictment pending resolution of the United States’ anticipated appeal of that dismissal to the Fifth Circuit. Alternatively, the United States respectfully requests that this Court stay execution of the dismissal order for 14 days in order to allow it adequate time to request a longer stay from the Fifth Circuit.
“Given the drastic consequences if [a] Court erred in granting” dismissal of an indictment, it is appropriate to stay a dismissal order “in order to give the Government an opportunity to consider its options” regarding potential appeal. Indeed, district courts dismissing indictments over the government’s objection frequently enter such stays to allow for appellate review. For example, after ordering dismissal of an indictment on selective prosecution grounds, the United States District Court for the Eastern District of Virginia stayed its order “pending the United States’ appeal to the United States Court of Appeals for the Fourth Circuit.” Similarly, after dismissing an indictment on statute of limitations grounds, the United States District Court for the Western District of Tennessee stayed dismissal for approximately 60 days. Likewise, the United States District Court for the Southern District of New York stayed its dismissal order for approximately 18 days “[i]n order to give the Court of Appeals a reasonable opportunity to schedule the [anticipated] appeal” by the United States. A stay pending appeal “simply suspends judicial alteration of the status quo.”
Here, as in the cases above, the “drastic consequences” if this Court erred in ordering dismissal of the charges against Murta militate in favor of a stay. Murta is charged for his role in a sprawling foreign bribery and money laundering scheme. Society has a significant interest in those charges being adjudicated. If this Court erred in dismissing the indictment and no stay is granted, those societal interests will be thwarted. Murta was extradited to the United States by Portugal after a lengthy process of appeals to multiple European courts – a process that took over two years. He has no legal status in the United States. If the dismissal order is not stayed, he is likely to leave of his own volition or be deported to Switzerland or Portugal in the near future. In the event that Murta returns to Switzerland, it is unlikely that the Swiss authorities would extradite him to the United States. If Murta returns to Switzerland, and the Fifth Circuit ultimately rules that this Court erred in dismissing the charges against Murta, the societal interest in his prosecution will be frustrated.
This Court should stay execution of its dismissal order pending any appeal by the United States to the Fifth Circuit or, alternatively, stay execution of the order for 14 days to allow adequate time for the United States to seek a longer stay from the Court of Appeals.”
The motion to stay remains pending.
Murta is represented by Samy Khalil and Joshua Lake (Khalil Law PLLC) and Josh Schaffer (Schaffer Law Offices).
Elevate Your FCPA Research
There are several subject matter tags in this post. However, only subscribers to FCPA Professor's premium search feature can see and use them in research. Efficient and cost-effective FCPA research is just a click away.