As highlighted in this prior post, in August 2024 the DOJ announced that a “federal grand jury in the Southern District of Florida returned an indictment … charging three executives of an election voting machine and service provider company and a former Chairman of the Commission on Elections (COMELEC) of the Republic of the Philippines for their roles in an alleged bribery and money laundering scheme to retain and obtain business related to the 2016 Philippine elections. […] These bribes were allegedly paid to obtain and retain business related to providing voting machines and election services for the 2016 Philippine elections and to secure payments on the contracts, including the release of value added tax payments.”
Although not mentioned in the indictment, the company at issue is Smartmatic (and related entities).
The individuals charged with Foreign Corrupt Practices Act offenses were:
- Roger Alejandro Pinate Martinez (a citizen of Venezuela and resident of Florida described as a cofounder, Chief Operating Officer and President of Company 1 who was also and employee of Company 2); and
- Jorge Miguel Vasquez (a citizen of the U.S. and executive for Company 2 in Florida who managed hardware development and manufacturing worldwide for Company 1 who reported to Pinate).
In addition, Pinate, Vasquez and Juan Andres Donate Bautista and Elie Moreno were charged with a variety of money laundering offenses.
- Bautista is described as the Chairman of COMELEC (an independent agency mandated to enforce and administer election laws in the Philippines) from on or about April 28, 2015, to in or around October 2017.
- Moreno is described as follows: “a dual citizen of Venezuela and Israel, was a Company 1 executive involved in managing Companies 1 and 3’s contracts with COMELEC in the Philippines. He served as project director for Company 3 and a Company 1 subsidiary in the Philippines, and he signed and implemented the 2016 Philippine elections contracts with COMELEC.”
As discussed in this prior post, Pinate filed a motion to dismiss the indictment.
The motion relied in large part on the Supreme Court’s recent opinion in which the court concluded that a statute (not the FCPA) only captures bribes not gratuities. (See here for the prior post).
In summary fashion, Pinate’s motion stated:
“Federal and state law distinguish between two kinds of payments to public officials— bribes and gratuities. As a general matter, bribes are payments made or agreed to before an official act in order to influence the official with respect to that future official act.” Snyder v. United States, 603 U.S. 1, 5 (2024). In other words, while a bribe is paid before an official action, a gratuity is paid afterwards. In Snyder, the Supreme Court did not tread new ground; it merely emphasized a core principle of its jurisprudence surrounding criminal corruption enforcement: that allegations of bribery require proof of “a quid pro quo,” and are legally distinguishable from gratuities. United States v. Sun-Diamond Growers of Cal., 526 U.S. 398, 404 (1999).
The indictment in this case charges the defendants with violations of 1) the Foreign Corrupt Practices Act (FCPA); and 2) money laundering statutes whose predicate offenses are the FCPA and Philippine laws barring “bribery of a public official,” 18 U.S.C. § 1956(c)(7)(B)(iv). But in doing so, the government has conflated an alleged gratuities scheme with the legally distinct crime of bribery which requires there be a quid offered or provided before the quo. The indictment alleges payments that occurred after the official actions in question, not bribes paid to induce or secure such actions. Because neither the FCPA nor the money laundering statutes criminalizes the payment of gratuities, the indictment is legally deficient.
Mr. Piñate believes that this is an issue of first impression in the wake of the Supreme Court’s decision in Snyder. But the direction that courts are likely to follow is clear. The Supreme Court has loudly and consistently pronounced its skepticism of the government’s “boundless interpretation” of aggressive corruption prosecutions, McDonnell v. United States, 579 U.S. 550, 581 (2016), and Mr. Piñate requests that this Court heed the Supreme Court’s plain pronouncements. The indictment in this case charges a gratuities scheme, and the government has proffered no evidence that this case involves a quid pro quo. Because, as a matter of law, this is not a bribery case, but something beyond the reach of the implicated statutes, this Court should dismiss the indictment.
Although the indictment is long, the facts relevant to this motion are short. In sum and substance, the indictment alleges that, beginning in late August 2016 and continuing through early 2017, Mr. Piñate and his alleged co-conspirators directed or attempted to direct illicit payments to Andy Bautista, a co-defendant who served as the chair of the Philippine Commission on Elections (COMELEC) beginning in April 2015. The indictment alleges that these payments were somehow connected both to: obtaining COMELEC contracts related to the May 2016 Philippine national elections, all of which were awarded well before the payments; and receiving improperly withheld taxes, which were declared due and owing by the Filipino tax authority, also before any alleged illicit payments.
In other words, whatever the government believes Mr. Bautista may have done in connection with these alleged attempted payments—facts nowhere to be found in the 24-page indictment1 —necessarily happened before the payments in question. Again, COMELEC awarded the contracts for the 2016 elections in 2015 (Indictment p.6 at 21-22), well before any of the payments referenced in the indictment, which allegedly took place in August 2016 or after (id. at pp. 15-18). And while the indictment fails to explain the nature of any illegal agreement, it most certainly does not point to any evidence to suggest that COMELEC’s decisions to award the contracts in 2015 were influenced by a promise to pay Bautista later. Indeed, the elections themselves had concluded months before the first alleged payment to Bautista in August 2016.
Even accepting the premise (for purposes of this motion alone) that Bautista somehow acted corruptly to influence the award of the contracts by the seven member en banc Commission, the indictment’s timeline is clear. The contracts were awarded in 2015, the tax opinion was released in April 2016, and the election itself was concluded in May 2016. But any purported payments to Bautista were initiated, at best, in August 2016. That timeline is critical given the temporal distinctions noted by the Supreme Court on multiple occasions in its public corruption jurisprudence.”
[…]
The Supreme Court has noted that while there is “a sufficiently important governmental interest in preventing corruption or the appearance of corruption, that interest [is] limited to quid pro quo corruption.” Citizens United v. Fed. Elec. Comm’n, 558 U.S. 310, 359 (2010). Where there is no quid pro quo, there is no bribery, and the federal government’s interest in preventing corruption is accordingly limited.”
The motion concludes:
“This may be a question of first impression, which is not particularly surprising given the recency of the Supreme Court’s decision in Snyder and the relative paucity of FCPA prosecutions that proceed to trial. But it is not a close call. Because the FCPA criminalizes only bribes and not the gratuities scheme alleged here, and the money laundering statutes’ definition of “bribery” does not reach gratuities schemes, this Court should dismiss the indictment in full.”
Recently, the DOJ filed its response brief which states in pertinent part:
“The Indictment Sufficiently Charged a Conspiracy to Violate the FCPA and a Substantive Violation of the FCPA.
Snyder was not an FCPA case and did not alter the elements of the FCPA.
As the defendants acknowledge, United States v. Snyder was not an FCPA case. In Snyder, the Supreme Court held that the federal statute criminalizing “theft or bribery concerning programs receiving Federal funds,” criminalizes bribery and not gratuities. The Snyder Court went on to explain that bribes are “typically payments made or agreed to before an official act in order to influence the public official.” Snyder had nothing to do with the FCPA and therefore, as expected, the Supreme Court’s opinion is entirely silent on whether the FCPA criminalizes gratuities as well as bribes. The defendants seek to stretch the holding of Snyder to encompass a statute not before the Snyder court. But Snyder was not an FCPA case and its holding with regard to an entirely different statute — 18 U.S.C. § 666 — has no impact on the elements of the crimes charged in this case. See Report and Recommendation of United States Magistrate Judge Lisette M. Reid in United States v. Wakil, No. 21-cr-20406, 2023 WL 2898510, at *5 (S.D. Fla. 2023) report and recommendation adopted by United States
District Judge Kathleen M. Williams (the defendant “fails to cite to a single case stating
that where payment of a bribe is made after a payor had received the benefit of any bargain struck, no violation of the FCPA occurs. Nor has the Undersigned found any. Further, this argument is in tension with the FCPA’s language, broad application, and the facts alleged in the Indictment. As the Government notes the FCPA ‘contains no provision that the actual payment of a bribe must occur prior to business being awarded … [and if Wakil’s] argument were true, this would create an outsized loophole that would allow bribe payment to occur so long as the payments were delayed.’”).Additionally, and as set out in more detail below, because the indictment sufficiently pleads bribery conduct — a corrupt bargain predating the acts sought to be influenced — there is no basis for the court to issue an advisory opinion regarding whether the FCPA criminalizes gratuities. There is similarly no basis for dismissing the indictment.
The indictment alleges a corrupt bargain predating the acts sought to be influenced.
In an attempt to force this case into Snyder’s orbit, the defendants spend nearly seven pages
arguing that the FCPA does not criminalize gratuities. However, the court does not need to decide that issue for the simple reason that the instant case — as pled — does not rest on a “gratuities” theory. Though the defendants argue that the indictment is devoid of any evidence of a corrupt bargain, pages eleven through fifteen of the indictment make clear that the defendants have been charged with offering, paying, promising, and authorizing the payment of an approximately $1 million bribe to a government official and laundering the proceeds thereof.To wit, the indictment alleges that on March 31, 2016, the co-conspirators were already planning corrupt payments to defendant Bautista, the COMELEC official with ultimate decision-making authority to release payments under the contract. The indictment alleges that nearly two months later, on May 15, 2016, the co-conspirators created the first fake contract to paper over the bribe transfers. The indictment further alleges that nearly three months later, on August 10, 2016, the defendants communicated that there is still no resolution to the outstanding VAT calculation and payments being withheld by COMELEC. But just five days later, as alleged in the indictment, defendant Bautista authorized lowering the VAT from 12% to 5% and authorized release of over $4 million in payments to the co-conspirators’
company. The indictment alleges that beginning that same day, August 15, 2016, defendants Piñate and Vasquez, while in the Southern District of Florida, take steps to initiate, direct, and effectuate $1 million in bribery transfers to defendant Bautista.The indictment sets forth the required “plain, concise, and definite . . . statement of the essential facts constituting the offense charged” and cites the relevant statutes the defendants are alleged to have violated. Fed. R. Crim. P. 7(c)(1). Nothing more is required.”
