As highlighted in this prior post, in 2019 Daisy Rafoi-Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm) was criminally charged with Foreign Corrupt Practices Act and related offenses for allegedly directing bribes to various individuals at PDVSA (Venezuela’s state-owned and state-controlled energy company). According to the DOJ, Rafoi opened Swiss bank accounts and facilitated financial transactions for various co-conspirators to help facilitate the bribery scheme.
As highlighted in this post, in late October 2020 Rafoi-Bleuler filed a motion to dismiss the criminal charges. In summary fashion, the motion argued: “The indictment of Ms. Rafoi-Bleuler, a citizen and resident of Switzerland, continues the worrisome trend by the Department of Justice to stretch the reach of the United States’ criminal statutes beyond Congress’ intent in an attempt to police the world. Despite having violated no laws in Switzerland and having no contact with the United States …, Ms. Rafoi-Bleuler finds herself hailed into a U.S. court in contravention of clear statutory language, legal precedent, and international norms. Courts have increasingly, and correctly, rejected such attempts by the government and this Court should continue as well …”.
In late 2021, Judge Kenneth Hoyt (S.D. Tex.) granted the motion to dismiss (see here for the prior post) for lack of jurisdiction and in the decision the judge also hinted that the term “agent” in the FCPA was unconstitutionally vague. As discussed here, the DOJ filed a notice of appeal to the Fifth Circuit.
The DOJ recently filed this appellate brief and framed the FCPA issues as follows:
“Whether a foreign person operating abroad can be liable for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) if that individual does not fall within the categories of individuals that the statute enumerates as those who can be punished as principals.
Whether the district court erred in dismissing for lack of subject-matter jurisdiction the FCPA conspiracy charge because the indictment did not allege undisputed facts establishing that defendant acted as an agent of a domestic concern within the United States.
Whether the district court erred in dismissing the FCPA conspiracy, money laundering, and money laundering conspiracy charges based on its conclusion that the term “agent” in the FCPA as applied to defendant is unconstitutionally vague.”
As to the FCPA issues, the DOJ argues in summary fashion:
“The district court erred in dismissing the FCPA conspiracy charge … on two grounds. First, to be culpable of FCPA conspiracy, Rafoi need not be subject to the direct prohibitions of the statute. A normal and regular feature of U.S. criminal law extends conspirator liability to those who would not otherwise be covered under a statute’s direct proscriptions. Moreover, conspirator liability also fully applies to those located abroad who conspire with individuals in the United States, in order to capture their culpability in assisting domestic conduct. In applying the narrow exception set forth in Gebardi v. United States, 287 U.S. 112 (1932), to exclude from conspirator liability those individuals who are not enumerated within the statute, the district court failed to recognize that Gebardi does not apply unless at a minimum the statutory text demonstrates that a participant necessarily or at least typically involved in the transaction is exempt from substantive liability, which the district court did not and could not find in this case. Nor does the FCPA’s text or legislative history demonstrate an affirmative policy to immunize defendants like Rafoi. Indeed, construing the FCPA in that manner frustrates, rather than effectuates, its statutory purpose. Furthermore, the presumption against extraterritorially is not triggered because the indictment alleges a domestic offense, and regardless, the presumption is overcome because the FCPA clearly applies extraterritorially and therefore FCPA conspiracy does as well.
Second, [the FCPA conspiracy charge} was independently valid because it adequately pleaded that Rafoi acted as an agent of a domestic concern, i.e., an enumerated FCPA actor, as part of the conspiracy to violate the FCPA. The district court erred in concluding that this issue concerned the court’s subject-matter jurisdiction. Furthermore, whether Rafoi qualifies as an agent is an issue of fact for the jury to decide at trial, not the court at the pleading stage based on “undisputed facts.” Finally, no legal basis exists for the district court’s conclusion that the agency relationship had to be established in the United States. Moreover, Rafoi is properly charged as an agent of a domestic concern with conspiring to violate not only Section 78dd-2, but also Section 78dd-3. Because agents of domestic concerns are covered under the FCPA’s direct prohibitions, there was no basis under Gebardi or any other principle to dismiss either object of the FCPA conspiracy.
The district court incorrectly held that the FCPA and money laundering statutes were unconstitutionally vague. First, any vagueness in the term “agent” cannot affect the money laundering statute, which does not use that term. Second, the FCPA’s use of the term “agent” incorporates its common-law meaning and therefore is not unconstitutionally vague. That the indictment did not allege that the agency relationship occurred in the United States does not render the FCPA unduly vague as applied to Rafoi.”
Several of the the issues on appeal are very similar to the issues decided by the Second Circuit in U.S. v. Hoskins. As highlighted in this prior post, in 2018 the Second Circuit rejected the DOJ’s expansive prosecution theory against Hoskins (a foreign national). As stated by the Second Circuit:
“[W]e are asked to decide whether the government may employ theories of conspiracy or complicity to charge a defendant with violating the Foreign Corrupt Practices Act (“FCPA”), even if he is not in the categories of persons directly covered by the statute. We determine that the FCPA defines precisely the categories of persons who may be charged for violating its provisions. The statute also states clearly the extent of its extraterritorial application. Because we agree with the district court that the FCPA’s carefully-drawn limitations do not comport with the government’s use of the complicity or conspiracy statutes in this case, we affirm the district court’s ruling barring the government from bringing the charge in question.”
As to Hoskins, the DOJ argues in its Rafoi-Bleuler appeal:
“In rejecting conspiracy liability for Rafoi, the district court primarily relied on an out-of-circuit case, United States v. Hoskins, 902 F.3d 69 (2d Cir. 2018), which expansively applied the Gebardi exception to hold that a non-resident foreign national who does not qualify as an FCPA enumerated actor cannot be prosecuted under conspiracy or aiding and-abetting principles. ROA.424-426. The district court and Hoskins were both incorrect. Indeed, a district court within the Seventh Circuit has correctly rejected Hoskins, upholding an indictment alleging that a non-agent foreign national operating abroad was culpable for FCPA conspiracy. See United States v. Firtash, 392 F.Supp.3d 872, 888-892 (N.D. Ill. 2019). (See here for the prior post summarizing the Firtash decision]. So too should this Court, consistent with its prior decisions in Castle and Falletta that recognize the narrow boundaries of the Gebardi exception.”
Like the Hoskins appeal, there is also much discussion about the FCPA’s legislative history in the Rafoi-Bleuler (demonstrating once again the importance of the FCPA’s legislative history – see here).
In addition, the DOJ’s Rafoi-Bleuler appeal follows an observable trend in DOJ FCPA litigating positions. That being, arguing to the court that a decision contrary to its position will “frustrate” the FCPA’s purpose or “would create a gaping loophole” in the FCPA.
However, when faced with such arguments in FCPA (and other) matters, courts have rightfully concluded that if the DOJ wants a broader FCPA (or other) statute, the remedy is to convince Congress to enact a broader statute.
