As highlighted in this prior post, in February 2024 Javier Aguilar was convicted by a federal jury “for his role in a scheme to bribe Ecuadorean and Mexican government officials and to launder money to secure contracts worth hundreds of millions of dollars for his then-employer, Vitol Inc. (Vitol), the U.S. affiliate of the largest independent energy trading firm in the world.” Aguilar was convicted of one count of conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), one count of violating the FCPA, and one count of conspiracy to commit money laundering.
Thereafter, Aguilar filed a motion for judgment of acquittal, or in the alternative, for a new trial. Recently, Judge Eric Vitaliano (E.D.N.Y.) denied the motion and in doing so touched upon the FCPA’s “foreign official,” element, knowledge, and the FCPA’s local law affirmative defense.
Regarding the FCPA’s “foreign official” element, the Judge concluded: (1) that whether an individual is a “public servant” for purposes of Mexican law does not foreclose a jury from concluding that an individual is a “foreign official” for purposes of the FCPA – these inquiries are separate; and (2) the so-called Esquenazi framework (see here for a prior post) “does not require that every evidentiary box must be checked in favor of the prosecution to sustain a conviction. Bluntly, the mere fact that some testimony could weigh against an instrumentality finding does not mean that no rational trier of fact could find that [an entity] is an instrumentality …”.
Regarding knowledge, the Judge concluded that the evidence introduced at trial was sufficient for a jury to conclude to that Aguilar was involved in a corrupt scheme to bribe foreign officials and that a court may not “substitute [its] own determinations of credibility or relative weight of the evidence for that of the jury.”
Regarding the FCPA’s local law affirmative defense, the Judge concluded that just because an act may “not be unlawful” under one specific provision of a foreign country’s law, does not therefore mean that the act is “lawful under the written laws” of the foreign country.
“Foreign Official”
As to the FCPA’s “foreign official” element, the decision states (certain internal citations omitted):
“In the first of an assortment of claimed evidentiary insufficiencies, Aguilar contends that, upon the evidence the government produced at trial, no rational trier of fact could, as charged in Count Three, conclude that he conspired to launder money in order to promote the specified unlawful activity of violating the FCPA in connection with the charged Mexico scheme. In this regard, Aguilar takes aim at the proof offered by the government to establish the status of Gonzalo Guzman or Carlos Espinosa under the FCPA’s definition of “foreign official,” either resulting from their employment by PEMEX Procurement International (“PPI”), or as a result of direct actions either of them may have taken on behalf of PEMEX. Fundamental to an examination of this defense claim, it must be kept in mind that, so long as the evidence was sufficient for a jury to convict Aguilar on either one of the theories, acquittal notwithstanding the verdict is beyond the reach of Rule 29.
This inquiry is keyed to the FCPA’s use of the term “instrumentality,” which, definitionally, provides one available hook by which to satisfy “foreign official” status. But first, to tamp down potential confusion, a prefatory note about a separate and independent finding by the Court is in order. The Court’s conclusion as to whether Guzman and Espinosa are “public servants” for purposes of Article 222(II) of Mexico’s penal code [see here for the prior post discussing this decision] does not foreclose a jury from concluding that PPI is an instrumentality of Mexico and therefore Espinosa and Guzman were “foreign officials” for FCPA purposes. The inquiries are separate.
Although “instrumentality” is not defined by the statute, all agree that the five non exhaustive factors outlined in United States v. Esquenazi, 752 F.3d 912, 925–26 (11th Cir. 2014) are to be considered by a jury when determining instrumentality status.
[Those factors include: (1) “the foreign government’s formal designation of th[e] entity”; (2) “whether the government has a majority interest in the entity”; (3) “the government’s ability to hire and fire the entity’s principals”; (4) “the extent to which the entity’s profits, if any, go directly into the governmental fisc, and, by the same token, the extent to which the government funds the entity if it fails to break even,” and (5) “the length of time these indicia have existed.”]
Aguilar contends that, balancing these factors, no rational juror could conclude that PPI met the test.
Notwithstanding Aguilar’s argument that the Court’s conclusion regarding Mexican law is dispositive of the FCPA instrumentality inquiry, it is undisputed that Mexico’s formal designation of PPI is merely one Esquenazi factor to be weighed by a jury in determining instrumentality status. At any rate, on this factor and the others, the government adduced sufficient evidence permitting a reasonable jury to conclude that PPI is an instrumentality, and therefore Guzman and Espinosa are “foreign officials” within the meaning of the FCPA. To start, the evidence established that, although PPI is designated as an “affiliate” entity under Mexican law, it is a wholly-owned affiliate of PEMEX, itself indisputably a state-owned entity. Accordingly, in the face of that designation, coupled with testimony of Guzman and Espinosa of the close relationship between PPI and PEMEX, a jury could certainly conclude that “affiliate” designation weighs in favor of instrumentality status. (“[PPI] is part of the Dirección Operativa de Procura Abastecimiento [(“DOPA”)], which is the domestic buying department for PEMEX.”); (“[E]verything that [] is done in Pemex Procurement International is reported back to . . . the DOPA department in PEMEX. So, they would kind of be the bosses of – our office here in Houston.”).
Similarly, with respect to whether the Mexican government has a majority interest in the entity, the jury likewise could well have concluded that PEMEX, a state-owned entity, which in turn wholly owns PPI, favors instrumentality status under the FCPA.
[Contrary to Aguilar’s contention, the Court’s note in its previous Order that PEMEX’s 100% ownership of PPI did not render PPI a majority state-owned entity under Mexico’s penal code, and its citation to Del Castillo v. PMI Holdings N. Am. Inc., No. 4:14-CV-03435, 2016 WL 3745953, at *10 (S.D. Tex. July 13, 2016), does not mean, on the mixed FCPA question of law and fact for the jury, that no rational juror could conclude that the government had a majority interest in PPI for FCPA instrumentality purposes. To be sure, the Court noted in its previous Order that Del Castillo, which interpreted a similar but different statute, was persuasive, not binding, authority.]
Espinosa testified that PPI was part of the “domestic buying department for PEMEX,” and both Guzman and Espinosa testified that PPI operates, in part, out of PEMEX offices in Mexico City (in addition to its headquarters in Houston).
Evidence supporting the jury’s verdict on this issue did not end there. With respect to the Mexican government’s ability to hire and fire PPI principals, Espinosa testified that PPI’s board of directors is comprised of “high position executives [] in PEMEX . . . [l]ike the director of PEMEX Exploración, PEMEX Refinanción, PEMEX Etileno.” Additionally, Espinosa testified that where the Mexican administration changes, so too did the PPI board structure. As for non-board members of PPI, Espinosa testified that PEMEX has the ability to hire and fire those employees.
Furthermore, Espinosa testified that PPI exclusively received its funding from the DOPA, PEMEX’s domestic buying department. Indeed, Espinosa testified that PPI received funding from no other source. This testimony was corroborated by Guzman, who explained that PEMEX, which is funded by the Mexican government, funds PPI.
In the final analysis, the Esquenazi framework does not require that every evidentiary box must be checked in favor of the prosecution to sustain a conviction. Bluntly, the mere fact that some testimony could weigh against an instrumentality finding does not mean that no rational trier of fact could find that PPI is an instrumentality and that Aguilar was guilty beyond a reasonable doubt as charged in Count Three. See United States v. Rivera, 546 F.3d 245, 250 (2d Cir. 2008) (affirming conviction where jury, weighing six-factor non-exhaustive test, convicted defendant, and evidence “arguably satisf[ied] several [] factors”). Because the government introduced ample evidence permitting the jury to conclude that PPI is an instrumentality under the FCPA, the Court cannot and will not “substitute [its] own determinations of credibility or relative weight of the evidence for that of the jury.” Autuori, 212 F.3d at 114. On this reasoning, that branch of Aguilar’s Rule 29 motion seeking entry of a judgment of acquittal on Count Three is denied.
[As noted earlier, where there is argument that multiple theories of law and evidence warrant conviction, sufficient evidence supporting any one of those theories is all that is required to uphold the conviction. As a consequence, even if the government had come up short in its evidentiary showing on the second “foreign official” theory, Aguilar would not be entitled to acquittal. Here, in any case, there was no shortcoming on the second theory; the government carried its burden there as well. As outlined, the proof showed that Guzman and Espinosa acted on behalf of PEMEX. Frankly, the testimony of Guzman and Espinosa on their job-related entanglements with PEMEX satisfactorily established that. (“I [(Espinosa)] was responsible for buying goods and services on behalf of PEMEX.”); (“[PPI] is part of the Dirección Operativa de Procura Abastecimiento, which is the domestic buying department for PEMEX.”); (“[E]verything that [] is done in Pemex Procurement International is reported back to . . . the DOPA department in PEMEX. So, they would kind of be the bosses of – our office here in Houston.”); (“[PPI is] the goods and services arm of procurement [] for PEMEX.”). Indeed, their testimony about the procurement of products on behalf of PEMEX was supported by documentary evidence, including, for example, the buying orders, and finalized supply contracts awarded in connection with bribes paid by Aguilar. While Aguilar contends that Guzman and Espinosa were actually working for PEMEX Etileno, another PEMEX subsidiary, particularly when construed in favor of the government, as it must be, such evidence, if accepted as true, certainly supports conviction by any rational trier of fact.].
Knowledge
Regarding knowledge, the decision states (certain internal citations omitted):
“Defendant does not fare better on the balance of his Rule 29 motion. Rooted in very soft soil, Aguilar contends that the evidence was woefully insufficient to establish his knowledge that bribes were being paid to foreign officials in Ecuador and therefore to convict him of conspiring to violate or violating the FCPA under Counts One and Two. It is an argument that asks the Court and jury to turn a blind eye to the commonplace use by co-conspirators of coded language. In short, Aguilar principally targets the fact that no one directly testified to using the word “bribe,” so there was insufficient proof that he knew the Pere brothers—intermediaries through which bribe payments from Aguilar and Vitol passed—were forwarding bribes to foreign officials. For example, Aguilar pinpoints Antonio Pere’s statement that he told Aguilar he “worked with” Nilsen Arias, the International Trade Manager at Petroecuador, during the relevant period. But, taking this evidence that puts him in an ostensibly corrupt relationship with an official at the very center of Ecuador’s international petroleum trading business, Aguilar doubles down on the proffer of the relationship as one of innocence not guilt, contending that Arias himself never used the word “bribe” with him.
But, even if true, without borrowing defendant’s pruning shears to cherry pick this nugget of evidence and toss away the balance of the evidence offered about Aguilar’s relationship with Arias, the evidence Aguilar clutches has minimal exculpatory value. On this point, the unvarnished evidence in its totality included thousands of pages of documentary evidence, hours of phone recordings, and the testimony of numerous witnesses, including various co-conspirators, supporting his conviction on Counts One and Two. For example, Nilsen Arias, indisputably an Ecuadorian foreign official, testified that he received bribe payments from Aguilar. Arias likewise testified that another foreign official, Xavier Rodriguez, the then Undersecretary of Hydrocarbons of Ecuador, introduced Arias to Aguilar and communicated to Arias that Aguilar was willing to pay bribes to secure business for Vitol. Arias gave detailed testimony about how the deals would be effectuated, including his direction to Rodriguez that he and Aguilar should meet with the Pere brothers to discuss bribe payments. Further, when payments were being made, Arias testified that Antonio Pere, the conduit for the bribes to be paid from Aguilar and Vitol, confirmed the scheme.
Acknowledging, as he must, that a conviction can hang on the testimony of a single witness, even a cooperating co-conspirator, Aguilar goes headlong against the damning testimony that Arias gave against him establishing his knowledge and involvement. While the attack might have been headlong, it was merely an assemblage of conclusions. Aguilar, for instance, simply calls that testimony “incredible on its face,” but what the argument concedes is that Arias’s testimony was corroborated by documentary evidence, including financial records tracking payments made at Aguilar’s behest to Nilsen Arias, recordings of Aguilar himself acknowledging that officials would “earn some money,” and emails sent by Aguilar to Lionel Hanst, a Curaçao-based intermediary involved in moving money from Vitol to the Pere brothers, directing Hanst to make payments. Defendant’s urging rings hollow, of course, for this evidence too hardly stands alone. Beyond the documentary evidence, the government elicited testimony from several other co-conspirators, including both Pere brothers, who testified that they conspired with Aguilar to pay bribes to foreign officials in Ecuador. Additionally, Antonio Pere corroborated Arias’s testimony about the meeting in Mexico City between Aguilar, Rodriguez, and himself to negotiate the terms of the deal, including bribe payments.
The spreadsheet of corroborating evidence does not end there. Some of it takes the form of words uttered by defendant himself. Specifically, evidence was received regarding Aguilar’s acknowledgement to federal agents that he believed the Peres to be paying money to foreign officials in Ecuador. Then, there was Aguilar’s concession that in the course of his international trading on behalf of Vitol, he had occasion to use alias email accounts and sham offshore companies and invoices; Aguilar, however, in the absence of an outright admission, urges the Court—as it did the jury—to discount this circumstantial evidence as insufficient to support a guilty verdict.
As long as it is, the evidence catalogued here is not exhaustive of the record. Adding to the catalog would be pointless; Aguilar does not challenge the existence of evidence, rather merely that the evidence lacks sufficient credibility to sustain conviction. That is, the evidence was insufficient to show that Aguilar was involved in the corrupt scheme to bribe officials of the Ecuadorian owned oil company. The task that argument embraces is Herculean. As noted earlier, a court may not “substitute [its] own determinations of credibility or relative weight of the evidence for that of the jury.” It was for the jury to credit or discredit this evidence. The return of the guilty verdict stands as testament to the voluminous competent evidence they chose to credit. Consequently, the jury’s verdict finding Aguilar guilty on Count One and Count Two for his involvement in the bribery of officials responsible for Ecuador’s international oil trading must be sustained and this aspect of his Rule 29 motion for a judgment of acquittal on those counts must be denied.”
Local Law Affirmative Defense
Regarding the FCPA’s local law affirmative defense, the decision states (certain internal citations omitted):
“After the close of evidence, Aguilar requested that the Court in its charge instruct the jury on the FCPA’s affirmative defense. He now contends that the Court’s refusal to do so constitutes error requiring a new trial on all counts. At trial, Aguilar linked his charge request to the Court’s finding, as a matter of law, that Espinosa and Guzman were not “public servants” within Article 222(II) of Mexico’s penal code, to his entitlement to an instruction that it is an affirmative defense to the FCPA where “the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s . . . country.” Rejected at trial, Aguilar renews his arguments now.
Defendant’s argument essentially asks the Court to conflate its finding that Espinosa and Guzman were not public servants for purposes of violating a single section of Mexico’s criminal law into a finding that the conduct was lawful under all sections of Mexican law.
[To be clear, contrary to Aguilar’s reading of the Court’s Order regarding Article 222(II), the Court did not hold that Mexican antibribery law “did not proscribe the payments.” The Court’s Order answered the narrow question before it: whether Guzman and Espinosa were “public servants” within the meaning of Article 212 as that term is used in Article 222(II). The Court did not make any pronouncement of whether the payments were lawful generally under Mexico law.]
His reading falsely equates “not unlawful under a written law” with “lawful under the written laws.” But just because the conduct was not unlawful under Article 222(II) does not mean it was lawful under Mexico’s written laws. Indeed, in United States v. Ng Lap Seng, court in the Southern District rejected a defendant’s similar interpretation of the affirmative defense—that, if he could show that no law in Antigua or the Dominican Republic proscribed the payments, he was entitled to the affirmative defense. The court held such an interpretation to be “inconsistent with the plain meaning of the language” of the statute. That logic applies equally here. In Ng Lap Seng, pointing to the absence of laws making conduct unlawful was insufficient to show that the payments were lawful. Here, pointing to one law that does not make the conduct unlawful is equally insufficient to show that it is lawful.
Nor can Aguilar’s reading be squared with congressional intent. As courts within and outside this circuit have recognized, when construing the FCPA’s affirmative defenses, Congress “narrowly defin[ed] exceptions and affirmative defenses against a backdrop of broad applicability.” See United States v. Kay, 359 F.3d 738, 756 (5th Cir. 2004); see also United States v. Kozeny, 493 F. Supp. 2d 693, 705 (S.D.N.Y. 2007). That much is confirmed by the legislative history. When Congress amended the FCPA to add the written laws affirmative defense, the conference report emphasized that “[t]he Conferees wish to make clear that the absence of written laws in a foreign official’s country would not by itself be sufficient to satisfy this defense.” H.R. Conf. Rep. 100-576, 922, 1988 U.S.C.C.A.N. 1547, 1955. The conference report thus reinforces the statutory text: whether Aguilar’s payments were not unlawful under one—or any—provision of Mexican law does not entitle him to the affirmative defense that the payments were lawful.
[For all of its irony, defendant accepts, as he must, that it is his burden to prove the affirmative defense. Acceptance of that burden rings the death knell for his argument: beyond contending that the payments to Guzman and Espinosa were not unlawful under Article 222(II), Aguilar makes no effort to argue that they were not unlawful under other provisions of Mexican law—an argument that would still be insufficient under the statute. This is perhaps due to his earlier concessions that “Article 212 . . . is not the only law that proscribes bribery, it is just the one that applies to public servants,” and “PPI employees are subject to the same criminal, civil, and employment sanctions that apply to all private-company employees who steal from or defraud their employers by engaging in bribery, embezzlement, or other forms of corrupt conduct.” It is most compelling, to be sure, that Aguilar does not, for he cannot, point to any provision of Mexican law making the payments lawful.]
Moreover, Aguilar’s reading is atextual in that it imports an additional element into the FCPA: under his theory, prosecution under the FCPA would necessarily be tethered to the existence of a provision of foreign law that criminalizes the defendant’s specific conduct at issue. Practically speaking, under Aguilar’s interpretation, the affirmative defense would be redrawn as a pleading obligation to show, presumably after an exhausting examination of the laws of the country victimized by corruption, that the payments could be punishable under at least one provision of that country’s law before the government could charge a violation of domestic law. The statute’s text does not contain such a requirement. Were the Court to adopt Aguilar’s approach, the statutory language—“lawful under the written laws”—would be meaningless. Aguilar’s argument is no more meritorious this time around, and he is accordingly not entitled to a new trial on this basis.”
