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Oztemel Motion To Dismiss Denied

Judicial Decision

In February 2023, the DOJ announced that Glenn Oztemel (previously employed by Freepoint Commodities LLC) and Eduardo Innecco (an agent for the company) were charged with FCPA and related offenses for an alleged Brazil bribery scheme. (See here for the prior post).

In summary fashion, the indictment alleged: “Between in or about 2010 and continuing until in or about 2018, Glenn Oztemel and Eduardo Innecco, together and with others, agreed to pay, and did pay, bribes to foreign officials at Brazil’s state-owned and state-controlled oil and gas company, Petroleo Brasileiro S.A. – Petro bras (“Petrobras”), on behalf of Trading Company #1 and Trading Company #2. In exchange for the bribes, foreign officials at Petrobras, including Rodrigo Berkowitz (“Berkowitz”), who has been charged separately, provided Oztemel, Innecco and others with confidential information related to Petrobras’s business. The inside information and other improper assistance Berkowitz provided to Oztemel, Innecco and others gave Trading Company #1 and Trading Company #2 improper business advantages in trades with Petrobras.”

Recently, Judge Kari Dooley (D. Conn) denied Oztemel’s motion to dismiss.

As stated in the opinion:

“Defendant moves to dismiss the various counts of the [superseding indictment – SI] on multiple grounds: The substantive counts are not adequately alleged to be connected to any bribery payments to Berkowitz; the commission payments to Innecco on which the Government relies post-date bribes paid to Berkowitz by years and therefore cannot be “in furtherance of” the illicit payments; the conspiracy counts are untimely; and Berkowitz is not a foreign official for purposes of all counts insofar as Petrobras is not an “Instrumentality” of Brazil. The Government responds that the Indictment adequately tracks the applicable statutory language—it satisfies Rule 7 and is sufficient to put the Defendant on notice as to the charges against him and to allow him to plead double jeopardy in the future—that the conspiracy counts are timely, and that instrumentality is a question for the jury. The Court agrees with the Government.”

As to the instrumentality issue, the opinion states:

“The Court agrees with the Government that this claim is not properly raised in a motion to dismiss. The issue of whether Berkowitz was a foreign official, or more to the point, the nature of the relationship between Petrobras and Brazil, goes to the merits of the case and the evidence to be offered at trial. This argument is therefore not discussed further.”

The bulk of Judge Dooley’s opinion concerns the following language in the FCPA “to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to …” (emphasis added).

The opinion states:

“Defendant’s argument that [the substantive FCPA charges] must be dismissed is premised on an incorrect and narrow reading of the FCPA, which in turn also defeats his arguments as to [the money laundering charges]. Defendant argues that the use of the instrumentality of interstate commerce, must itself facilitate an actual bribery payment, promise to pay, or offer of payment and that because the uses relied upon in the charged counts are not alleged to have done so, and indeed are not connected in the SI to any actual bribery payment, they fail to allege a violation of the FCPA. Relatedly, Defendant also asserts that the last alleged bribe paid to Berkowitz occurred in 2016 and that therefore, the events relied upon in 2018 could not have been “in furtherance of” an offer, promise or payment that had already occurred.

Defendant is alleged to be an employee of a domestic concern, who, with others, made use of instrumentalities of interstate commerce corruptly, in furtherance of an offer, payment, promise to pay or authorization to pay, directly or indirectly, anything of value to a foreign official for the purposes prohibited by the statute. “In furtherance of” is generally afforded a broad and encompassing reading. See e.g., United States v. Kay, 513 F.3d 432, 453–454 (5th Cir. 2007). In Kay, the defendant argued that he could only be convicted of violating the FCPA if he “used the mails or interstate commerce ‘in furtherance of making the bribe itself’ and not for more broad use of interstate commerce for activities that support the bribe payment.” Id. at 453. The Fifth Circuit rejected this argument based upon the plain text of the statute and without any need to consult legislative history. Id. There, even though the bribes were paid in cash, in Haiti, the interstate shipment of bogus invoices from which the amount of the bribes would be calculated, was “in furtherance of” the payment. Id. The Court identified a “reverse causal chain” between the sending of the invoices and the subsequent cash bribes. Id. And although the Fifth Circuit reached its conclusion without resort to the legislative history, such a consideration supports the charges here. As set forth by the Government, a draft of the statute which, at least arguably, would have supported Defendant’s narrow reading of the FCPA was rejected in favor of the broader “in furtherance of” language. Gov Opp’n at 20–21 (citing H.R. Rep. No. 95-640, at 7, 14, 18 (1977); S. Rep. No. 95-114, at 17 (1977); H.R. Conf. Rep. No. 94-831, at 12 (1977)).

Further, in the conspiracy context, whether discussing overt acts or statements of co conspirators, “in furtherance of” is given broad meaning. See e.g. United States v. Malka, 602 F. Supp.3d 510, 533 (2d Cir. 2022) (What qualifies as a statement in furtherance of a conspiracy is not very restrictive and is satisfied if the statement is “designed to promote or facilitate achievement of the goals of that conspiracy.”); United States v. Gupta, 747 F.3d 111, 125 (2d Cir. 2014) (“[s]tatements designed to induce the listener’s assistance with respect to the conspiracy’s goals satisfy the … in-furtherance requirement”). The Court sees no basis upon which to impose the narrow reading of the FCPA urged here.

As to the argument regarding the temporal impossibility of the 2018 activity being “in furtherance of” the illicit bribes, this argument relies upon facts outside the SI. Whether the wire transfers and email were “in furtherance of” the offer, promise, or payment is for the jury to decide. See e.g., United States v. Kozeny, 493 F. Supp. 2d 693, 714–15 (S.D.N.Y. 2007), aff’d, 541 F.3d 166 (2d Cir. 2008), Memorandum and Order on Reconsideration (Rejecting argument for dismissal on statute of limitation grounds that payment on behalf of foreign official could not be “in furtherance of” the bribery scheme because foreign official had already received the promised thing of value.).”

A footnote then states:

“In Kozeny, the defendant sought dismissal of both the FCPA conspiracy charge as well as the substantive FCPA charge as untimely. He argued that the events relied upon for both charges occurred after the object of the conspiracy had been achieved and the FCPA offense completed. Id. In denying the motion, the Court observed that “Whether the conspiratorial agreement was in fact as broad as the Indictment alleges, whether each defendant in fact subscribed to that agreement, and if and when the conspiracy ended are issues for the jury and cannot be decided at this stage.” Id. As to the substantive FCPA charge, the motion to dismiss was denied for substantially the same reason. Id. The defendant’s argument as to the temporal aspects of “in furtherance of” under the FCPA appears to have been poised for consideration. However, on the eve of trial, the Government returned a superseding indictment, which eliminated the substantive FCPA charge. United States v. Kozeny, 664 F. Supp. 2d 369, 372 (S.D.N.Y. 2009).”

The opinion continues:

“The FCPA substantive charges are set forth in substantial detail in the SI. Included among the allegations is that the bribery scheme was concealed through the use of shell companies and foreign bank accounts. Specifically, the allegations include that Innecco, through companies he controlled, submitted pretense invoices for “commissions” or “profit sharing” arrangements which the Defendant would cause the trading companies to pay to Innecco. SI at ¶¶ 4, 28(e). Innecco is alleged to have paid bribes with the funds received. Id. There is no allegation that the communications and wire transfer relied upon in Counts Two, Three and Four were directly linked to any specific payment to Berkowitz or others, but the SI does allege that these wire transfers and communications were “in furtherance of” the offer, promise or payment to foreign officials. While the precise factual basis for the allegation that the 2018 wire transfers from TC2 to Wertech or the email from Innecco to TC2 attaching invoices seeking payment of consulting fees and commissions in 2018 were “in furtherance of” the charged “offer, payment, promise to pay or authorization [to pay]” is unclear, it is sufficient at this stage of the proceedings that such is alleged.”

Oztemel also raised a statute of limitations issue and the opinion states;

“Defendant challenges the timeliness of Counts One (FCPA conspiracy) and Count Five (money laundering conspiracy). Def.’s Mem. at 18, 22. Count One of the SI provides significant detail as to the scope, manner and means of the FCPA conspiracy between 2010 and 2016. The SI includes specifics as to the evidence on which the grand jury relied, i.e., the content of multiple emails sent between co-conspirators which purport to demonstrate how the bribery scheme was executed; dates and amounts of invoices, wire transfers and coded messages; the use of aliases when communicating and other allegations deriving from the documentary proof. See generally SI at ¶ 29. Beyond 2016, the allegations are fewer and less detailed. However, there are twelve (12) overt acts which are alleged to have occurred after February 14, 2018, SI ¶¶ 29(cc) through 29(nn), by either Defendant, Innecco or Gary Oztemel. Similarly, Count Five, which does not require the pleading of overt acts, alleges that the conspiracy occurred “between 2010 and 2018. Id. at ¶ 33. Count Five also incorporates the allegations from Count One, to include the overt acts identified as being in furtherance of the FCPA Conspiracy. Id. at ¶ 32. Notably, the twelve acts which post-date February 14, 2018, are exemplary of the Count Five allegations as to the “Manner and Means” of the money laundering conspiracy. For example, Count Five includes, as part of the “Manner and Means” of the conspiracy that Defendant caused TC1 and TC2 to initiate wire transfers from their accounts in the United States to Innecco company accounts in Uruguay and Switzerland. See id. at ¶ 34. Paragraph 29(ee), incorporated into Count Five, alleges one such wire transfer occurring on May 9, 2018. These allegations render Count One and Count Five timely.

Nonetheless, Defendant argues that none of the timely allegations suffice insofar as they cannot be fairly characterized as “in furtherance of” the FCPA conspiracy or within the scope of the money laundering conspiracy. Def.’s Mem. at 19–20. This argument relies in part on the argument rejected above—that the SI does not adequately connect the 2018 events with bribes paid to Berkowitz for purposes of the FCPA. The argument also raises factual defenses to any claim that the post-February 14, 2018, events were within the scope of the conspiracies as charged. To take up and resolve this argument however, would require the Court look beyond the allegations and decide an issue that is ultimately for the jury. See United States v. Benussi, 216 F. Supp. 2d 299, 311 (S.D.N.Y. 2002), aff’d sub nom; United States v. Salmonese, 352 F.3d 608 (2d Cir. 2003) (“… the precise scope of [a] conspiratorial agreement [is] an issue for the jury…”); see also United States v. Aracri, 968 F.2d 1512, 1517 (2d Cir. 1992).”

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