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Judge Significantly Rejects DOJ Sentencing Recommendation – Sentences Hoskins To Approximately One Year For Money Laundering Offenses, DOJ Press Release Omits Material Information

arterton

As highlighted in this previous post, on February 26th Judge Janet Bond Arterton (pictured – D. Conn) granted Lawrence Hoskins’s motion for acquittal on the seven FCPA charges he was convicted of by the jury. However, the judge denied Hoskins’s motion for acquittal on the five money laundering charges he was convicted of by the jury.

Thus, next up in the long history of the case was sentencing on the money laundering convictions.

As highlighted in this post, Judge Arterton significantly rejected the DOJ’s 7-9 year sentencing recommendation and sentenced Hoskins to approximately 1 year. (See here).

In its sentencing memorandum, the DOJ seemingly ignored Judge Arterton’s post-trial dismissal of the FCPA charges (not to mention the Second Circuit’s 2018 decision). In pertinent part, the DOJ stated:

“Here, the predicates for § 2S1.1(a)(1) are met, and so the base offense level is determined by the underlying FCPA violations. Leaving aside whether the Government has proven by a preponderance of the evidence that the defendant “committed” the underlying FCPA offense, at a minimum the Government has proven that he “aided, abetted, counseled, commanded, induced, procured, or willfully caused” others to commit the “acts and omissions” that formed the basis of the underlying violation. §§ 2S1.1(a)(1), 1B1.3(a)(1)(A). There is no question here that others, including domestic concern API, committed the FCPA violations, and that Hoskins aided and abetted the acts and omissions committed by API.

[…]

The Government maintains its position that the jury’s verdict on this score, applying the Court’s carefully crafted instructions, should have been upheld.

The Second Circuit’s decision in Hoskins does not undermine the conclusion that the defendant aided and abetted an FCPA violation for purposes of applying § 2S1.1(a)(1), even assuming Hoskins was not an agent of API and thus not himself criminally liable for substantive FCPA violations. The court in Hoskins was solely concerned with the limits of criminal liability under the FCPA. See 902 F.3d at 85 (“The question thus becomes whether there is . . . a policy basis for Congress to exclude Hoskins’s category of defendants from criminal liability.” (emphasis added)). Conversely, the Guidelines are solely concerned with accountability for sentencing purposes. See § 1B1.3 cmt. n. 1 (“The principles and limits of sentencing accountability under this guideline are not always the same as the principles and limits of criminal liability.”). At this sentencing phase, the question of criminal liability has already been answered—the defendant has been found guilty of causing financial transactions to promote FCPA violations. Thus Congress’s intent to include or exclude certain classes of people in the FCPA is entirely irrelevant. The principal question for Guidelines purposes is simply whether the defendant’s culpability is best measured under provisions regarding “direct” or “third party” laundering. Here, Hoskins was directly engaged with domestic concerns API, David Rothschild, Larry Puckett, Fred Pierucci, William Pomponi, and others to commit FCPA violations, and the charged transactions were directly derived from the proceeds of the FCPA violations, that is, the payments to Sharafi and Aulia were percentages of what API received from PLN as a result of the bribe scheme. Indeed, the specific money laundering provision for which the defendant was convicted is Section 1956(a)(2)(A)—promoting the FCPA violation by transferring money from inside the United States to outside the United States—which as the parties agreed, requires specific intent. Thus, there is no question that his culpability is best assessed under § 2S1.1(a)(1), assuming the offense level for the FCPA offense can be calculated (see below). To hold otherwise would run contrary to the objective of the current § 2S1.1 Guideline, which means to punish defendants according to their wrongdoing. The defendant’s conduct in promoting FCPA violations would be under-punished if the Guidelines treated him as only responsible for the funds that traveled from the United States, rather than the full scope of the criminal activity in which he was actively involved.”

As noted in this article:

“Hoskins had argued that factoring the acquitted FCPA charges into sentencing would run counter to Congress’ intent to limit the law to U.S. stock issuers, domestic companies and their agents and those who take action in the U.S.

The Second Circuit previously ruled in an appeal from Hoskins’ case that prosecutors cannot use an aiding and abetting theory to extend the FCPA to foreign nationals the law does not otherwise cover.

Defense attorney Christopher Morvillo argued Friday that it would be “inappropriate and unfair to give with one hand and take away with the other.”

The judge agreed it would be “inappropriate” to factor the bribery conduct into her calculation under the federal sentencing guidelines, which would have called for life in prison under prosecutors’ estimate.

Yet even without the bribery factored in, the guidelines would still have called for more than 11 years in prison because Alstom and its joint venture partner Marubeni Corp. reaped a multimillion-dollar contract as a result of the money laundering.

The judge found that the guidelines “far exceed” what is necessary to achieve the goals of sentencing and instead imposed 15 months. The month Hoskins served in detention after his arrest in 2014 will count toward his time.”

Shortly after the sentence, the DOJ issued this release.

There is no mention at all in the DOJ release that in 2015 the trial court significantly trimmed the DOJ’s case against Hoskins (see here for the prior post).

There is no mention at all in the DOJ release that in 2018 the Second Circuit rejected the DOJ’s expansive jurisdictional theory of prosecution (see here for the prior post).

There is no mention at all in the DOJ release that Judge Arterton granted Hoskins’s motion for acquittal on all FCPA charges (see here for the prior post).

If a public company would issue a press release containing so many material omissions, the government might open a securities fraud investigation of the company.

Christopher Morvillo and Daniel Silver (both counsel for Hoskins) provided FCPA Professor the following statement.

“After six long years of fighting for justice, Mr Hoskins is very pleased that the court acquitted him of all FCPA charges.  He is also grateful that the court recognized that his culpability for conduct that occurred almost two decades ago and did not benefit him at all, deserved significant leniency.   Although Mr. Hoskins had hoped to return home to England and avoid a sentence of incarceration, the closure this sentence brings allows him to look forward to putting this hardship behind him so he can focus on family and the future.”

As an aside, in its sentencing memorandum the DOJ made the following interesting statement.

“Moreover, despite robust enforcement of the FCPA and other bribery laws over the last several years, criminal prosecutions of these complicated multinational schemes are still relatively rare as compared to other offenses.”

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