As highlighted in this prior post, in 2019 Daisy Rafoi-Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm) and Paulo Caqueiro Murta (a citizen of Portugal and Switzerland and employee in a Swiss Management firm) were 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).
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 …”.
As highlighted here, in November 2021 Judge Kenneth Hoyt (S.D. Tex.) dismissed the FCPA and related charges for lack of jurisdiction and also hinted that the term “agent” in the FCPA was unconstitutionally vague.
As to Murta, the DOJ alleged that he 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. Murta also filed a motion to dismiss and in July 2022 Judge Hoyt granted the motion to dismiss the charges based on lack of jurisdiction, lack of due process, vagueness, and statute of limitation issues.
The DOJ appealed both dismissals and in a consolidated action earlier this week the Fifth Circuit reversed the dismissals. (See here).
As to FCPA issues, the Fifth Circuit’s decision is mostly procedural – not substantive – holding that – at this state of the proceedings – the indictment was sufficient. Even so, the court did hold – as a matter of law – that the term “agent” in the FCPA is not unconstitutionally vague.
The Fifth Circuit’s opinion also discusses (what it states is an issue of first impression in federal courts) the application of 18 U.S.C. § 3292 on statute of limitations issues in a multi-defendant criminal investigation in which the defendants are charged at different times.
The Fifth Circuit opinion begins with setting forth the relevant background.
“According to the indictment, Daisy Teresa Rafoi Bleuler (“Rafoi”), a citizen of Switzerland and a partner in a Swiss wealth-management firm, and Paulo Jorge Da Costa Casqueiro Murta (“Murta”), a citizen of Portugal and Switzerland and an employee of a different Swiss wealth-management firm, (together, “Defendants”), engaged in an international bribery scheme wherein U.S.-based businesses paid bribes to Venezuelan officials for priority payment of invoices and other favorable treatment from Venezuela’s state-owned energy company. The indictment alleges that between 2011 and 2013, Defendants, working as agents for their co-conspirators, laundered the proceeds of the bribery scheme through numerous financial transactions, including through international wire transfers to and from bank accounts that they opened overseas in the names of various companies. Specifically, the indictment provides that in the Southern District of Texas and elsewhere, Defendants communicated with their co-conspirators through e-mail, phone, and various messaging applications to set up bank accounts into which their co-conspirators’ bribe payments could be deposited and created false justifications for those payments to conceal and disguise their nature, source, and ownership. There is no allegation that Rafoi was ever physically present in the United States during the scheme.1 Murta, however, purportedly traveled to Miami, Florida, to meet with co-conspirators in furtherance of the scheme.
A grand jury returned a nineteen-count indictment charging Defendants and others with: (1) conspiring to commit money laundering, in violation of 18 U.S.C. § 1956(h); (2) conspiring to violate the Foreign Corrupt Practices Act (the “FCPA”), in violation of 18 U.S.C. § 371 and 15 U.S.C. §§ 78dd-2(a), 78dd-3(a); and (3) money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i), 2 (Rafoi) and 18 U.S.C. §§ 1956(a)(2)(A), 2 (Murta). Both Defendants moved to dismiss the indictment. In addition, Murta moved to suppress statements made during a March 2018 interview. The district court granted the three motions. This appeal followed.”
As to subject matter jurisdiction, the Fifth Circuit stated and held (certain internal citations omitted):
“We begin by examining subject-matter jurisdiction. We review the district court’s legal determination regarding subject matter jurisdiction de novo. […] The district court concluded that the FCPA and money-laundering statute did not apply extraterritorially to Defendants, and thus the court did not have subject matter jurisdiction. The court reasoned that “[j]urisdiction over [Defendants] under the FCPA rests in whether the government can establish that [he or she] was an ‘officer, director, employee or agent’ of a domestic concern.”
Because there was no “direct or undisputed evidence” of an agency relationship in the United States, the court found that it lacked jurisdiction to adjudicate the case. The money-laundering counts failed as well, said the court, because: (1) Rafoi did not commit some portion of the offenses “while in the United States”; and (2) there were no allegations that (a) Murta was in the United States “at the time the alleged transactions occurred, or that he initiated, or attempted to initiate them, from within the United States,” or (b) “any of the communications or acts … occurred in the United States.” The court’s dismissal on jurisdictional grounds was in error.
“In the criminal context, subject matter jurisdiction is straightforward.” […] Title 18 U.S.C. § 3231 provides that “[t]he district courts of the United States shall have original jurisdiction … of all offenses against the laws of the United States.” “To invoke that grant of subject matter jurisdiction, an indictment need only charge a defendant with an offense against the United States in language similar to that used by the relevant statute.” […] “That is the extent of the jurisdictional analysis: ‘a federal criminal case is within the subject matter jurisdiction of the district court if the indictment charges that the defendant committed a crime described in Title 18 or in one of the other statutes defining federal crimes.’” So, the district court had subject-matter jurisdiction under 18 U.S.C. § 3231.
Moreover, whether a statute reaches extraterritorial acts is not a challenge to the district court’s subject-matter jurisdiction. United States v. Rojas, 812 F.3d 382, 390 (5th Cir. 2016); see also United States v. Vasquez, 899 F.3d 363, 371 (5th Cir. 2018) (“An argument that a statute does not apply extraterritorially is not an argument that the court lacks jurisdiction.”). Rather, “[e]xtraterritoriality ‘is a question on the merits rather than a question of a tribunal’s power to hear the case.’” Vasquez, 899 F.3d at 371 (quoting Rojas, 812 F.3d at 390); see also Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 253-54 (2010) (concluding that the extraterritorial reach of a statute raises a “merits question,” not a question of subject-matter jurisdiction). Therefore, because extraterritoriality concerns the merits of the case, not the court’s power to hear it, the district court erred in concluding that it lacked subject-matter jurisdiction over these counts.”
As to FCPA specific issues, the Opinion states:
“Next, we consider the court’s dismissal of the FCPA-conspiracy charges on the grounds that the indictment did “not establish that the defendant was an ‘agent’ to satisfy the jurisdictional requirements of the statute.” This Court reviews the sufficiency of an indictment de novo. […] The government contends that the FCPA-conspiracy charges are valid under two theories. First, that Rafoi and Murta are directly liable as enumerated actors. And second, that Rafoi and Murta are secondarily liable as conspirators with enumerated actors. We address each in turn.
A. Liability as enumerated actors
In pertinent part, enumerated actors under the FCPA are:
(1) any domestic concern, other than an issuer which is subject to section 78dd-1 of this title, or for any officer, director, employee, or agent of such domestic concern or any stockholder thereof acting on behalf of such domestic concern, 15 U.S.C. § 78dd-2(a) (emphasis added); or
(2) any person other than an issuer that is subject to section 78dd-1 of this title or a domestic concern (as defined in section 78dd-2 of this title), or for any officer, director, employee, or agent of such person or any stockholder thereof acting on behalf of such person, while in the territory of the United States, 15 U.S.C. § 78dd-3(a) (emphasis added).
The government contends that the indictment sufficiently alleges that Rafoi and Murta are agents of a domestic concern under § 78dd-2 and that Murta is liable as a person who acted while in the United States under § 78dd-3. We agree.
i. Rafoi and Murta’s potential liability under § 78dd-2
We first address the indictment’s allegations that Defendants are liable as agents of a domestic concern. “The validity of an indictment is governed by practical, not technical considerations, and the basic purpose behind an indictment is to inform a defendant of the charge against him.” […] “An indictment is legally sufficient if (1) each count contains the essential elements of the offense charged, (2) the elements are described with particularity, and (3) the charge is specific enough to protect the defendant against a subsequent prosecution for the same offense.”
While Defendants argue that the factual allegations in the indictment do not support the government’s conclusion that they are agents of a domestic concern, “[a] defendant may not properly challenge an indictment, sufficient on its face, on the ground that the allegations are not supported by adequate evidence, for an indictment returned by a legally constituted and unbiased grand jury, if valid on its face, is enough to call for trial of the charge on the merits.” […] That is because “a defendant’s constitutional right to know the offense with which he is charged must be distinguished from a defendant’s need to know the evidentiary details establishing the facts of such offense, which can be provided through a motion for bill of particulars.” […] “To comply with Rule 7(c) [of the Federal Rules of Criminal Procedure], an indictment need not provide the evidentiary details of the government’s case.” […] Thus, “[i]n determining whether an indictment is sufficient, [this Court] do[es] not ask whether the indictment could have been better drafted, but whether it conforms to minimal constitutional standards.”
Against this backdrop, Defendants’ contention that the indictment does not sufficiently allege that they are agents of a domestic concern does not lend itself to the conclusion that the indictment is inherently insufficient. The indictment specifically alleges that both Rafoi and Murta acted as “agent[s] of a ‘domestic concern’ as that term is used in the FCPA, Title 15, United States Code, Section 78dd-2(h)(1).” This paragraph is incorporated into every count with which Defendants are charged. Viewed practically, this express characterization of their agent-of-a-domestic-concern status is enough to be put on notice of the charge and agency theory asserted against them such that they may prepare a defense. Apart from meeting this minimum constitutional standard, the government need not describe all evidentiary details establishing the facts of the alleged agency relationship.[…] Therefore, the district court’s grant of Defendants’ motions to dismiss was improper because the indictment adequately conforms to minimal constitutional standards.”
ii. Murta’s potential liability under § 78dd-3
Next, we address the indictment’s allegations that Murta is liable as a person acting while in the United States under § 78dd-3 based on his meeting with co-conspirators in Miami, Florida. The indictment specifically alleges that Murta acted as “a ‘person’ as that term is used in the FCPA, Title 15, United States Code, Section 78dd-3(f)(1).” This paragraph is incorporated into every count with which Defendants are charged. Viewed practically, this express characterization of his status as a person acting while in the United States is enough to be put on notice of the charge asserted against him such that he may prepare a defense.
Murta counters that the charge, which relies on a sole visit to Miami, violates his due-process rights. “In the context of non-U.S. citizens,” like Murta, “‘due process requires the Government to demonstrate that there exists “a sufficient nexus between the conduct condemned and the United States’ such that application of the statute would not be arbitrary or fundamentally unfair to the defendant.”’ […] To examine this nexus, we have looked to the aim of the charged activity and fair-warning principles.
First, “[a] jurisdictional nexus exists when the aim of that activity is to cause harm inside the United States or to U.S. citizens or interests.” […] And here, this nexus is demonstrated because Murta was charged with the intent or knowledge that monies, which were the proceeds of specified unlawful activity, would be unlawfully transmitted from or through a place in the United States to a place outside the United States. This, at the very least, constitutes harm to United States’ interests.
Second, Murta had fair warning that his conduct could be criminally prosecuted. “Fair warning does not require that the defendants understand that they could be subject to criminal prosecution in the United States so long as they would reasonably understand that their conduct was criminal and would subject them to prosecution somewhere.” […] International-bribery schemes and money laundering are condemned universally by law-abiding nations. That international condemnation constitutes fair warning. See Rojas, 812 F.3d at 393 (concluding that no due-process violation existed where the crime was internationally condemned); United States v. Suerte, 291 F.3d 366, 371 (5th Cir. 2002) (same). In sum, the indictment does not violate Murta’s due process rights.
B. Liability as conspirators with enumerated actors
In addition to potential liability as enumerated actors, the government contends that, “[u]nder well-established principles of secondary liability,” Defendants may be liable for conspiracy even though they were incapable of committing the substantive offense. So, says the government, Defendants may be charged as conspirators even if they are not the types of actors subject to principal liability under the FCPA. The parties then ask this Court to rule on conspiracy-related issues that the district court did not consider, including the application of the limited exception created by Gebardi v. United States, 287 U.S. 112 (1932), the implication of the FCPA’s text, history, and purpose, and the presumption against extraterritoriality.
Since they were not ruled upon by the district court, this Court is not required to address these alternative arguments for or against dismissal. […] And we decline to rule on these arguments now. See, e.g., Gil Ramirez Grp., L.L.C. v. Hous. Indep. Sch. Dist., 786 F.3d 400, 411 (5th Cir. 2015) (remanding so district court could consider issues in first instance)); Lone Star Nat. Bank, N.A. v. Heartland Payment Sys., Inc., 729 F.3d 421, 427 (5th Cir. 2013) (“[W]e decline to decide these complex issues as they are better addressed by the district court in the first instance.”); La. Env’t Action Network v. City of Baton Rouge, 677 F.3d 737, 749-50 (5th Cir. 2012) (concluding that the district court should determine in the first instance a complex question of law); United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 381 (5th Cir. 2009) (“The district court did not reach this ground. Because the district court should have the opportunity to address the facts underpinning the claim of public disclosure and original source and make any necessary findings in the first instance, we do not reach this ground.”); Breaux v. Dilsaver, 254 F.3d 533, 537-38 (5th Cir. 2001) (declining to consider issues not ruled upon by the district court). It is proper, then, for the district court to decide these conspiracy-related issues in the first instance.”
In a footnote, the opinion states: “To be clear, at this juncture, this Court neither accepts nor rejects the theory that an individual who falls outside of the actors enumerated in the FCPA can be held liable as a conspirator under a secondary-liability theory.”
The Fifth Circuit next addressed the issue of vagueness.
“Next, we consider whether the term “agent” as used in the FCPA is unconstitutionally vague. A facial challenge to the constitutionality of a statute presents a pure question of law, which this Court reviews de novo. […] The district court determined that the term “agent” as used in the FCPA and the money-laundering statute is unconstitutionally vague when used “as a jurisdictional basis to prosecute a foreign national.” The government argues that the district court’s analysis is incorrect. We agree.
“‘The prohibition of vagueness in criminal statutes is an essential of Fifth Amendment due process.’”[…] “Along that line, the vagueness doctrine requires statutes ‘define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement.’” […] “[T]o be unconstitutionally vague, a statute must be impermissibly vague in all its applications, including its application to the party bringing the vagueness challenge.” […] Further, a criminal statute is unconstitutionally vague if it “either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application.” United States v. Lanier, 520 U.S. 259, 266 (1997); United States v. Kay, 513 F.3d 432, 441 (5th Cir. 2007) (same). “Objections to vagueness under the Due Process Clause rest on the lack of notice and hence may be overcome in any specific case where reasonable persons would know that their conduct is at risk.” […]
The term “agent” is not vague. The district court’s vagueness conclusion, which was rooted in the “novel application” of agency as a means to establish subject-matter jurisdiction, is inherently flawed. The court concluded that because “no court has interpreted the statute or rendered a judicial decision that fairly discloses the manner in which the term [agent] may be applied to establish jurisdiction,” the term agent as “a basis for jurisdiction” is vague. But, considering that Defendants’ statuses as agents implicate the merits of the case, not the court’s subject-matter jurisdiction, the court’s conclusion that the term “agent” is unconstitutionally vague “when used as a basis for jurisdiction” is unsound.
Perhaps tellingly, Defendants do not defend the district court’s vagueness analysis. Instead, the two argue that the term “agent” is vague on a lack-of-fair-warning theory. Rafoi argues that “agent” is unconstitutionally vague as applied to her because she “was not on notice that simply by acting as a service provider, money manager and by communicating about the alleged opening of Swiss bank accounts by a Swiss bank, she would be subject to criminal penalties in the United States.” And so, says Rafoi, “a person of ordinary intelligence would not have understood Rafoi – a foreign national residing and working for a Swiss company in Switzerland performing standard wealth management services – to be an agent of a domestic concern and thus someone who would come within the scope of persons subject to the FCPA.” Similarly, Murta conclusively contends that he did not have fair notice that his alleged conduct could subject him to U.S. prosecution under the FCPA as an “agent” of a domestic concern.
That the term “agent” in the context of the FCPA is not defined and, therefore, is governed by its common-law meaning, “does not draw a line so vague that [Defendants] w[ere] not reasonably aware of [their] potential for engaging in illegal activity under the FCPA.” Kay, 513 F.3d at 441. The indictment alleges that, among other things, Defendants, at the direction of their co-conspirators, set up “a complex web of bank accounts through which to conduct the financial transactions in connection with the scheme and conceal the nature and ownership of the proceeds.” A person of common intelligence would have understood that Defendants, allegedly setting up accounts on behalf of others to obfuscate the source of monies knowingly derived from an illegal bribery scheme, “w[ere] treading close to a reasonably-defined line of illegality” under an agency theory of liability. See Kay, 513 F.3d at 442.11 Accordingly, the term “agent” is not unconstitutionally vague as applied to Defendants.”
After briefly touching on money laundering specific issues, the Fifth Circuit next addressed statute of limitations.
“Next, we consider the government’s challenge to the district court’s dismissal of Murta’s indictment on statute-of-limitations grounds. “The district court’s ultimate decision that the statute of limitations was properly tolled is a legal conclusion reviewed de novo.” […] Factual findings underpinning that ultimate finding, however, are reviewed for clear error. […]
The statute of limitations for Murta’s alleged offenses is five years, see 18 U.S.C. § 3282, and is subject to suspension. The length of the suspension of the statute of limitations is determined by 18 U.S.C. § 3292. […]
Section 3292 provides:
(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.
(b) Except as provided in subsection (c) of this section, a period of suspension under this section shall begin on the date on which the official request is made and end on the date on which the foreign court or authority takes final action on the request.
(c) The total of all periods of suspension under this section with respect to an offense– (1) shall not exceed three years; and (2) shall not extend a period within which a criminal case must be initiated for more than six months if all foreign authorities take final action before such period would expire without regard to this section. ….
18 U.S.C. § 3292 (emphasis added).
The district court found that the 2019 indictment – the first of the indictments to charge Murta – was untimely because the mutual legal assistance treaty (“MLAT”) requests and related tolling orders failed to toll the statutes. The government contends that under § 3292, the second MLAT request and related tolling order suspended the five-year statute of limitations of the offenses charged. We agree.
i. Pertinent facts
Over the course of its five-year investigation, the government submitted multiple MLAT requests to other countries. It filed related applications to toll the statute of limitations in the district court. And the grand jury returned multiple indictments.
In 2014, the government submitted its first MLAT request to Switzerland and filed a related application to toll the statute of limitations in the district court. Neither the MLAT request nor the tolling application identified Murta. A district judge granted the government’s application on September 21, 2015. Approximately two months later, a grand jury returned its first indictment. Murta was not charged.
The government submitted its second MLAT request to Switzerland on November 7, 2016, and filed a related application to toll the statute of limitations in the district court. A district judge granted the government’s application on January 12, 2017. Neither the MLAT request nor the tolling order identified Murta. Months later, on August 23, 2017, a grand jury returned a superseding indictment. Murta was not charged.
The government submitted its third MLAT request on March 5, 2018, this time to Portugal, requesting that Portuguese authorities interview Murta and others as witnesses. Fifteen days later, two U.S. agents interviewed Murta for multiple hours at a local criminal investigation office in Portugal. In 2019, a grand jury returned an indictment charging Murta for offenses allegedly committed between 2011 and 2013.
Section 3292 has four prerequisites that, if present, mandate a court order of tolling: (1) the United States must apply for tolling, (2) the application must be “filed before return of an indictment,” and the court must find by a preponderance of the evidence both that (3) “an official request has been made” for foreign evidence and (4) “it reasonably appears” that such evidence is or was in that foreign nation. 18 U.S.C. § 3292. There is no dispute that, upon (1) an application of the United States, a court found that (3) an official request was made and that (4) it reasonably appeared that evidence was in that foreign nation. Nor is there any dispute that, if the second MLAT’s 2017 Tolling Order was not improvidently granted and did, in fact, apply to Murta, the statute of limitations was tolled sufficiently such that Murta was properly and timely indicted as to these alleged crimes. Thus, the suspension was both warranted and effective unless the application was not (2) “filed before return of an indictment.”
The parties disagree as to whether this statute gives the government only one shot to get it right – that is, whether for any one course of illegal activity, the government may use § 3292 to toll the statute of limitations only once and for all possible participants. This particular dispute is a matter of first impression for any federal court. In order to interpret the statute, it makes sense to consider it in the context of a criminal investigation. As an ordinary matter of course, investigation of an offense is always likely to reveal its participants, perhaps multiple, and the indictment of one participant does not prohibit the subsequent indictment of another – this much is above dispute. It is unclear whether the language of this statute changes the nature of this ordinary course.
In the federal criminal system, tolling of the statute of limitations must be established “by law;” there are no common-law or equitable-tolling provisions for the filing of an indictment. See 18 U.S.C. § 3282(a). Moreover, “criminal limitations statutes are to be liberally interpreted in favor of repose.” […] “The purpose of a statute of limitations is to … protect individuals from having to defend themselves against charges when the basic facts may have become obscured by the passage of time and to minimize the danger of official punishment because of acts in the far-distant past.” […] “Such a time limit may also have the salutary effect of encouraging law enforcement officials promptly to investigate suspected criminal activity.” […] In the case of investigations involving foreign evidence, though, Congress determined that investigators ought to have the opportunity to toll the statute of limitations in certain circumstances “to compensate for ‘delays attendant in obtaining records from other countries.’” […] This accords naturally with the “salutary effect” of a statute of limitations – while domestic investigators faced with a statute of limitations are encouraged to investigate promptly, officials in other nations have no such interest in crimes being investigated and prosecuted by other nations. Congress determined that this fact of life ought not to deter or hinder criminal investigations.
And as the case law indicates, statutes of limitations are designed to “protect individuals,” […] and rightly so, for it is individuals who face the consequences of actions – not offenses. This simple fact also illustrates why the language of “an indictment” in the statute most neatly corresponds to the government’s view of the case here. As the government points out, had Congress intended the statute to refer to “any” indictment relating to the offense in question, it could have done so by use of “any,” “initial,” “first,” or another such word, and Congress has done so in other statutes, see 18 U.S.C. § 3282(b) (“In any indictment for an offense under chapter 109A for which the identity of the accused is unknown…”). Instead, “before return of an indictment” is more naturally read to refer to the indictment charging the specific defendant in question. Thus, it operates as a limitation on the government’s ability to seek additional tolling even after it has received the records from foreign countries and sought an indictment against that particular defendant. In keeping with the general purpose of statutes of limitations, § 3292 is designed to ensure prompt and diligent preindictment investigation.
So, the language of the statute lends itself to the government’s interpretation, especially in light of the manner in which investigations typically proceed. The government is correct that “[p]recluding [it] from tolling the statute of limitations as to newly implicated defendants … even though the process of requesting and receiving evidence from a foreign government often takes substantial time (and longer than the use of subpoenas for U.S.-based evidence), would be inconsistent with the purpose of § 3292.” The district court’s conclusion that § 3292 failed to toll the statute of limitations is erroneous.”
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