As highlighted in this prior post, in connection with the Cognizant Technology Solutions Foreign Corrupt Practices Act enforcement action concerning obtaining various permits in India, the DOJ (and SEC) also charged Gordon Coburn (former President and CFO of the company) and Steven Schwartz (former Executive Vice President and Chief Legal and Corporate Affairs Officer) with various FCPA offenses.
Coburn and Schwartz are putting the government to its burden of proof and recently U.S. District Court Judge Kevin McNulty (D.N.J. – pictured) denied the defendants’ motion to dismiss. (See here). In doing so, the judge ruled on an FCPA issue of first impression – that being what is the appropriate “unit of prosecution” under the FCPA’s anti-bribery provisions. As discussed below, the judge concluded that separate e-mails – even if in connection with the same alleged bribery scheme – constitute separate violations of the FCPA’s anti-bribery provisions.
In pertinent part, Coburn asserted that Counts 2, 3, and 4 of the indictment (all charging violations of the FCPA’s anti-bribery provisions) were “multiplicitous” that is a single offense was dispersed among three separate counts based upon separate e-mail communications. As stated by Judge McNulty:
“The issue comes down to the appropriate “unit of prosecution.” An impermissibly multiplicitous indictment is one that “charges the same offense in two or more counts and [therefore] may lead to multiple sentences for a single violation.” United States v. Pollen, 978 F.2d 78, 84 (3d Cir. 1992). What constitutes the “same offense” (or a “single violation”) for these purposes, however, depends on the nature of the legislative enactment. Multiple punishments are not impermissible per se; “a defendant may be subject to multiple prosecutions for the same conduct if Congress intended to impose multiple punishments for that conduct.” United States u. Rigas, 605 F.3d 194, 204 (3d Cir. 2010). “Congressional intent dictates the proper unit of prosecution.” United States u. Haddy, 134 F.3d 542, 548 (3d Cir. 1998).”
After restating the FCPA’s actual language, Judge McNulty continued:
“The government proffers that the “unit of prosecution”—the precise act a defendant is prohibited from performing—is (2) to “make use of’ interstate commerce facilities, such as email. Thus Counts 2, 3, and 4 of the Indictment permissibly charge as separate offenses the sending of three interstate emails in furtherance of the same bribery arrangement. The remaining elements, in the government’s view, further define the purpose and surrounding circumstances of the emails.
Defendants respond that this statute is aimed to punish, not the use of email, but the bribery of foreign officials. In identifying the unit of prosecution, they stress, the court must look to the “essence” or “gist” of the offense. See Sanabria u. United States, 437 U.S. 54, 74 (1978). Thus, in their view, the appropriate unit of prosecution would be (4) the “payment of’ a bribe (defined to include an offer, promise, or authorization of payment) to a foreign official. It is irrelevant, they say, that multiple emails were sent in furtherance of the same bribe. The interstate emails, according to defendants, do no more than furnish a federal jurisdictional basis for this bribery offense.
Absent from either side’s presentation is any notion that the use of interstate commerce or the mails may serve more than one function. The reason for their presence in the statute may present a question of degree— Congress going as far as it could to proscribe conduct deemed wrongful. I will analyze these requirements, however, as they bear on the unit-of-prosecution issue.
Here, “[i]t shall be unlawful” for any covered person “to make use of’ interstate facilities such as email. To be sure, the statute contains many other requirements. But “to make use of’ is the operative verb (or verb phrase); using the interstate emails is literally the proscribed act. It is the verb that has the “issuer” (or its “office?’) as its subject. Now, the Third Circuit has warned against any simplistic adoption of the “operative verb” test to identify the unit of prosecution. See United States v. Diaz, 592 F.3d 467, 473 (3d Cir. 2010) (citing United States v. Anderson, 59 F.3d 1323, 1338 (D.C. Cir. 1995) (Ginsburg, J., dissenting, relying on operative verb of statute)). Still, the grammatical structure—the very manner in which the statute is worded— cannot be ignored. If not dispositive, then, the structure of the drafting is surely relevant. Consider, for example, a hypothetical statute providing that “it shall be unlawful to pay a bribe,” and providing in a separate section that the federal courts shall have jurisdiction where such bribery involves interstate communication (or a federally insured bank). Better still, consider a hypothetical federal statute containing a Congressional finding that bribery by its nature affects commerce, and then proscribing bribery simpliciter.’° Either would present a stronger case for the proposition that the bribe itself is the unit of prosecution, and the connection to interstate commerce a mere jurisdictional hook.”
Judge McNulty next observed that neither the Third Circuit – or any court – has “spoken on the issue of the unit of prosecution under the FCPA” and he thus look to analogous criminal statutes as a guide to interpreting the FCPA.
Looking first at the mail and wire fraud statutes, Judge McNulty stated that “it has long been settled that each such mailing or wire transmission, even if in furtherance of the same scheme to defraud, may be indicted as a separate count.” (Emphasis in original). Judge McNulty concluded that the FCPA shares the same “grammatical structure” as the mail and wire fraud statutes. He further found guidance in the Travel Act – which he concluded had the same “grammatical structure” as the FCPA – and stated:
“[T]he unit of prosecution under the Travel Act is the act of interstate travel or use of facilities of interstate commerce. Each may be the subject of a criminal charge, even if all are done to promote or facilitate a single unlawful activity.”
Judge McNulty concluded:
“[T]he interstate emails cited in Counts 2, 3, 4 are permissible, if not inevitable, units of prosecution. The grammatical structure and language of the FCPA suggest as much. The operative verb test, while not dispositive, is highly suggestive. The domestic use of international communications as a means of accomplishing foreign bribery by remote control bears enough earmarks of wrongfulness to suggest that it is central to the offense, and not a mere jurisdictional appendage. The most analogous statutes support the conclusion that each communication is a unit of prosecution. The motion to dismiss Counts 2, 3, or 4 of the Indictment on these grounds is therefore denied.”
Even though Judge McNulty’s conclusion in an FCPA issue of first impression may appear to significantly strengthen the hands of FCPA prosecutors, the judge did state the following in a footnote which seems to lessen the practical impact of his ruling.
“I make no ruling as to whether overcharging of a large number of communications (as opposed to the three here) could confuse a jury or otherwise prejudice a defendant. I will, if requested, instruct the jury that they should not thaw any untoward conclusions from the presence of three counts, rather than one, in connection with a single bribe. And, should convictions be obtained on more than one of these counts, the Court will ensure that multiple punishments are not inflicted for the same scheme.”
In his decision, Judge McNulty also ruled on several other issues that were largely fact specific.
However, in reference to the defendants’ request for a bill of particulars, including as to the “identification of bribe foreign officials or third-party consultants,” the judge passed on ruling on an issue that has divided other trial courts – that being whether the government must specifically state the identify of the person bribed.
Rather, Judge McNulty merely observed the government’s representation that it “does not possess evidence sufficient to identify the specific foreign official or third-party consultant involved in the bribe payment” and stated:
“If that turns out to be a weakness in the government’s case, so be it. But because the government has “no additional information to give the Defendants” (id.), the motion for a bill of particulars on this point must be denied as moot.”
Strategies For Minimizing Risk Under The FCPA
A compliance guide with issue-spotting scenarios, skills exercises and model answers. "This book is a prime example of why corporate compliance professionals and practitioners alike continue to listen to Professor Koehler."