JANET BOND ARTERTON, District Judge.
Defendant Lawrence Hoskins moves [Doc. # 254] to Dismiss Count One of the Third Superseding Indictment [Doc. # 209] on the basis that it charges a legally invalid theory that he could be criminally liable for conspiracy to violate the Foreign Corrupt Practices Act ("FCPA"), 15 U.S.C. § 78dd-1 et seq., even if the evidence does not establish that he was subject to criminal liability as a principal, by being an "agent" of a "domestic concern." Relatedly, the Government moves [Doc. # 232] in limine to preclude Defendant from arguing to the jury that it must prove that he was the agent of a domestic concern because the Government contends that Defendant can also be convicted under theories of accomplice liability. For the reasons that follow, Defendant's Motion to Dismiss Count One of the Third Superseding Indictment will be granted in part to preclude Defendant's FCPA conspiracy prosecution from being de-linked from proof that he was an agent of a domestic concern and the Government's Motion in Limine is denied.
The facts of this case are set forth in detail in the Ruling [Doc. # 190] on Defendant's
From October 2001 through August 2004, Mr. Hoskins was employed as a Senior Vice President for the Asia Region by Alstom UK and assigned to Alstom Resources Management S.A. in France where he is alleged to have "performed functions and support services for and on behalf of various other Alstom subsidiaries, including Alstom Power US." (3d Indictment ¶ 3.) It is alleged that Mr. Hoskins's "responsibilities at Alstom included oversight of the hiring of consultants in connection with Alstom's and Alstom's subsidiaries' efforts to obtain contracts with new customers and to retain contracts with existing customers in Asia, including the Tarahan Project" and "[t]hus HOSKINS was an agent of a `domestic concern,' Alstom Power US, as that term is used in the FCPA." (Id. ¶¶ 3, 13.) It is in this capacity that Mr. Hoskins is alleged to have been responsible for approving and authorizing payments to "consultants" retained for the purpose of "pay[ing] bribes to Indonesian officials who had the ability to influence the award of the Tarahan Project contract." (Id. ¶¶ 7-8.)
On July 31, 2014, Defendant Hoskins moved [Doc. # 149] to dismiss the Second Superseding Indictment [Doc. # 50] in its entirety, contending, in relevant part, that the indictment failed to allege that Mr. Hoskins, as an employee of a non-U.S. Alstom subsidiary, could have been an "agent of a domestic concern" subject to liability under the FCPA. The Court denied [Doc. # 190] Defendant's motion, holding that the indictment alleged that Mr. Hoskins worked as an agent of Alstom Power U.S. despite being employed by an overseas subsidiary and the "existence of an agency relationship is a `highly factual' inquiry" and it was "for a jury at trial in the first instance, and not the Court on a motion to dismiss, to determine whether the Government has proven Defendant to have been an `agent'" of Alstom Power U.S. (Ruling on 1st Mot. Dismiss at 14-16.)
As relevant here, the Third Superseding Indictment altered the charging language of Count One, the FCPA conspiracy count, which originally charged Mr. Hoskins with "being a domestic concern and an employee and agent of [Alstom Power U.S.]" and replaced it with the allegation that Mr. Hoskins conspired by acting "together with" a domestic concern to violate 15 U.S.C. § 78dd-2 (prohibiting domestic concerns from using interstate commerce corruptly to promise, authorize, or give anything of value to a foreign official) and 15 U.S.C. § 78dd-3 (prohibiting any person from taking acts in furtherance of the corrupt scheme while in the United States). (Compare 2d Indictment ¶ 26(a), with 3d Indictment ¶ 26(a).)
Defendant contends that with the Third Superseding Indictment "the government makes plain ... its view of the law" that Mr. Hoskins "could be prosecuted for conspiracy to violate the FCPA even when he himself was not subject to the statute." (Def.'s Mem. Supp. [Doc. # 254-1] at 4.) The Government maintains that the Third Superseding Indictment is adequately pled under the governing pleading standards and faults Defendant for attempting "to assign to the Government a particular `view of the law' based on [the] change" from the Second to Third Superseding Indictments. (Gov't's Opp'n at 8-9.). But the Government acknowledges that its theory is that "even were the jury to find that the defendant was not an `agent' of a domestic concern, [it] may still convict the defendant on one or more of the remaining accomplice theories," i.e., "aiding and abetting, causing, and Pinkerton" liability and moves in limine to preclude Defendant from arguing to the contrary. (Gov't's Mot. to Preclude Def. from Arguing that Agency is Sole Basis for Conviction [Doc. # 232] at 4, 7.)
Therefore, these two motions put before the Court the question of whether a non-resident foreign national could be subject to criminal liability under the FCPA, even where he is not an agent of a domestic concern and does not commit acts while physically present in the territory of the United States, under a theory of conspiracy or aiding and abetting a violation of the FCPA by a person who is within the statute's reach.
As explained in greater detail below, the FCPA in its current form prohibits bribery of foreign governmental officials and has three jurisdictional bases: (1) where a "domestic concern"
Defendant maintains that these provisions demonstrate that "Congress deliberately intended to exclude [non-resident foreign nationals] from the statute's reach so long as they did not act while in the territory of the United States (Section 78dd-3) and did not fall into an enumerated class of persons with threshold ties to a U.S. securities issuer (Section 78dd-1) or U.S. domestic concern (Section 78dd-2)" and "the government cannot nullify that intent by charging such individuals with conspiracy to violate that statute." (Def.'s Mem. Supp. at 5-7.) The Government does not dispute the premise of Defendant's argument — that if Defendant is not proven to be an agent of a domestic concern, he cannot be held liable directly under the FCPA — but it maintains that "[a]s a general rule, the conspiracy and accomplice liability statutes apply to classes of persons who lack the capacity to commit a violation of the underlying substantive crime" and the two narrow exceptions to this rule do not apply in this case. (Gov't's Opp'n at 1.)
Theories of accomplice liability under the general conspiracy statute, 18 U.S.C. § 371, and aiding and abetting statute, 18 U.S.C. § 2, generally apply across the United States Code to impose liability upon those who conspire with or aid and abet in the commission of any federal crime.
In Gebardi, the Supreme Court considered whether a woman could be convicted of conspiracy to violate the Mann Act, which outlaws transporting across state
However, Gebardi reasoned that "Congress set out in the Mann Act to deal with cases which frequently, if not normally, involve consent and agreement on the part of the woman to the forbidden transportation" and "[y]et this acquiescence ... was not made a crime under the Mann Act itself." Id. at 119, 121, 53 S.Ct. 35. Thus, a woman not subject to liability as a principal under the Mann Act could not be charged with conspiracy to violate the Act, because the Supreme Court "perceive[d] in the failure of the Mann Act to condemn the woman's participation in those transportations which are effected with her mere consent, evidence of an affirmative legislative policy to leave her acquiescence unpunished," which would be "contravene[d]" if such "immunity" could be "withdraw[n] by the conspiracy statute." Id. at 123, 53 S.Ct. 35.
Thus, the Gebardi principle is that where Congress chooses to exclude a class of individuals from liability under a statute, "the Executive [may not] ... override the Congressional intent not to prosecute" that party by charging it with conspiring to violate a statute that it could not directly violate. United States v. Castle, 925 F.2d 831, 833 (5th Cir.1991); see also United States v. Bodmer, 342 F.Supp.2d 176, 181 n. 6 (S.D.N.Y.2004) ("In Gebardi, the Supreme Court held that where Congress passes a substantive criminal statute that excludes a certain class of individuals from liability, the Government cannot evade Congressional intent by charging those individuals with conspiring to violate the same statute."). The Gebardi principle also applies to aiding and abetting liability. United States v. Amen, 831 F.2d 373, 381 (2d Cir.1987).
In determining whether the Gebardi principle applies, the question is "not whether Congress could have" reached a certain class of individuals under the conspiracy or aiding and abetting statutes, "but rather whether Congress intended to do so, or more specifically, whether Congress intended the general conspiracy statute" to apply to these individuals.
The Government maintains that Gebardi recognized only a "narrow exception to [the] long-established legal principle" that "the conspiracy and accomplice liability statutes apply to classes of persons who
The Court agrees with Defendant that the Government's interpretation of Gebardi is too narrow and that while the two "[f]actual scenarios ... posited by the government bring Congress's, intent into view and, thereby, make it easier to glean the existence of an affirmative legislative policy," Congressional intent can be evident in other circumstances. (Reply at 12.) For example, in Amen, the Second Circuit applied Gebardi and held that a person who was not the head of a criminal enterprise could not be subject to the drug "kingpin" statute's sentencing enhancement under a theory that he aided and abetted a violation, because "[w]hen Congress assigns guilt to only one type of participant in a transaction, it intends to leave the others unpunished for the offense." 831 F.2d at 381.
The Second Circuit's reasoning was not, as the Government maintains, that a violation of the kingpin statute requires "the participation of two classes of persons — those who lead a criminal enterprise, on the one hand, and those who are led, on the other" and that "Congress chose only to provide for an enhanced punishment of one of those necessary parties." (Gov't's Opp'n at 21-22.) Rather, the Second Circuit reasoned that while the statute's "legislative history makes no mention of aiders and abettors, it makes it clear that the purpose ... was not to catch in the [kingpin] net those who aided and abetted the supervisors' activities." Amen, 831 F.2d at 382.
The clearest indication of legislative intent is the text and structure of the
In United States v. Castle, 925 F.2d 831, 832 (5th Cir.1991), the Fifth Circuit applied Gebardi to conclude that another class of individuals not subject to liability as principals under the FCPA — the foreign officials who accept bribes — could not be prosecuted for conspiracy to violate the FCPA. The Fifth Circuit found an intent in the FCPA to exclude the foreign bribe recipients because, in enacting the FCPA in 1977 in the aftermath of the Watergate scandal, Congress was principally "concerned about the domestic effects of such payments," such as "the distortion of, and resulting lack of confidence in, the free market system within the United States." Id. at 834-35.
Congress was aware that it "could, consistently with international law, reach foreign officials in certain circumstances," but it was also concerned about "the `inherent jurisdictional, enforcement, and diplomatic difficulties' raised by the application of the bill to non-citizens of the United States" and decided not to do so. Id. at 835 (quoting H.R.Conf.Rep. No. 831, 95th Cong., 1st Sess. 14, reprinted in 1977 U.S.Code Cong. & Admin.News 4121, 4126).
Although the text and structure of the FCPA provide strong indication that Congress did not intend for non-resident foreign nationals to be subject to the FCPA unless they were agents of a domestic concern or acted in the territory of the United States, the Court also considers the legislative history of the Act.
While the extensive legislative history of the enactment of the FCPA in 1977 and its amendments in 1998 identified by the parties contain little discussion of accomplice liability, that which does exist is consistent with what the plain text and structure of the final enactment implies regarding the limits of liability for non-resident foreign nationals. The initial version of the Senate bill introduced by the Committee on Banking, Housing and Urban Affairs on June 2, 1976 made it unlawful for any U.S. "issuer" or "domestic concern" to use any means or instrumentality of interstate commerce to authorize or pay a bribe. S. 3664, 94th Cong. (1976) (Ex. 9 to Def.'s Mem. Supp.). "Domestic concern" was defined to include (1) U.S. Citizens and nationals and (2) entities owned or controlled by U.S. citizens and nationals that were either incorporated in or had a principal
An amendment to the Senate bill
A competing House bill introduced on February 22, 1977 provided for broader liability for non-resident foreign nationals than the Senate bill, proposing liability not just for non-U.S. officers, directors, and employees of domestic concerns, but also (1) any "agent" of a U.S. issuer or domestic concern who "carried out" a bribe and (2) officers, directors, and employees of foreign affiliates irrespective of nationality. H.R. 3815 §§ 30A(c)(2), 3(c)(2), 3(f)(2)(A), 95th Cong. (1977) (Ex. 14 to Def.'s Mem. Supp.).
The FCPA as enacted included elements from both the Senate and House bills, extending liability to agents of domestic concerns as the House proposed, but limiting criminal liability of agents and employees of domestic concerns to a person who was a "United States citizen, national, or resident or is otherwise subject to the jurisdiction of the United States,"
The final bill excluded foreign affiliates of U.S. companies, as the Senate proposed, which the House Conference Report described as a "recogni[tion] [of] the inherent jurisdictional, enforcement and diplomatic difficulties raised by the inclusion of foreign subsidiaries of U.S. companies in the direct prohibitions of the bill." H.R. Conf. Rep. No. 95-831, at *14, 1977 U.S.C.C.A.N. at 4126. The Report explained, however, that because U.S. citizens, nationals, and residents were defined as domestic concerns, they could be liable for engaging in bribery "indirectly" through another person and that the "jurisdictional, enforcement and diplomatic difficulties" that applied to extending liability to foreign subsidiaries did not apply
The Government notes that early versions of the Senate and House committee reports discussed accomplice liability:
H.R.Rep. No. 95-640, at 8 (1977); S.Rep. No. 94-1031, at 7 (1976).
As discussed above, this legislative history discussing an early version of the bill was later clarified in response to concerns by the Carter Administration that the extent of individual liability (including for U.S. nationals) was not "crystal clear." Rather than resorting to concepts of accomplice liability, the enacted version specifically delineated the extent of individual liability by "mak[ing] it clear that" the delineated individuals were "covered directly." Markup Session on S. 305, Senate Comm. on Banking, Housing and Urban Affairs, 95th Cong., 8, 12 (Apr. 6, 1977). Therefore, the discussion of accomplice liability cited by the Government does not suggest that Congress intended for those who were excluded from direct liability under the Act to be subject to accomplice liability but only shows that Congress considered imposing individual liability based on concepts of accomplice liability but instead chose to do so directly and carefully delineated the class of persons covered to address concerns of overreaching.
Thus, as in Amen and Gebardi, even absent explicit discussion in the legislative history of accomplice liability, the carefully-crafted final enactment evinces a legislative intent to cabin such liability. See Amen, 831 F.2d at 382; Gebardi, 287 U.S. at 123, 53 S.Ct. 35. As the Fifth Circuit explained, when Congress "listed all the persons or entities who could be prosecuted" under the FCPA, it "intended that these persons would be covered by the Act itself, without resort to the conspiracy statute" and, as in Gebardi, that intent cannot be circumvented by resort to conspiracy and aiding and abetting liability. Castle, 925 F.2d at 836.
While the Government argues that the original version of the FCPA in 1977 provided for accomplice liability, it maintains that after the 1998 amendments to the FCPA "Congress unequivocally provided that it intended the accomplice liability and conspiracy statutes to apply to foreign nationals not otherwise subject to the FCPA as principals." (Gov't's Opp'n at 27.) The 1998 amendments to the FCPA were "enacted to ensure the United States was in compliance with its treaty obligations," United States v. Esquenazi, 752 F.3d 912, 923 (11th Cir.2014), after the United States ratified the Organization for Economic Cooperation and Development's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions ("OECD Convention"). Dec. 17, 1997, S. Treaty Doc. No. 105-43, 37 I.L.M.; International Anti-Bribery and
The OECD Convention required each signatory country to "take such measures as may be necessary to establish that it is a criminal offence under its law for any person intentionally" to bribe foreign officials. OECD Convention art. 1.1. In response, the 1998 amendments expanded the scope of liability in three ways. First, Congress added 15 U.S.C. § 78dd-3(a), which prohibited those individuals or entities that did not already fall under other provisions of the statute from taking action "while in the territory" of the United States in furtherance of corrupt payments. 15 U.S.C. § 78dd-3(a).
The Government maintains that because the OECD Convention required each signatory country to make it a "criminal offense under its law for any person" to pay a foreign bribe, OECD Convention, art. 1.1 (emphasis added), the "1998 amendments expanded the jurisdictional reach of the FCPA to cover any person over whom U.S. courts have jurisdiction" and a contrary interpretation "would place the United States in violation of its treaty obligations" (Gov't's Opp'n at 28, 30). While the Supreme Court has admonished that "courts should be most cautious before interpreting ... domestic legislation in such manner as to violate international agreements," Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 539, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995), this Court does not agree with the Government's contention that the OECD Convention required or even contemplated the extent of liability sought by the Government here by using the term "any person."
Based on the text and structure of the FCPA and the legislative history accompanying its enactment and its amendment, the Court concludes that Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability.
For the reasons set forth above, Defendant's Motion [Doc. # 254] to Dismiss Count One of the Third Superseding Indictment is GRANTED in PART and the Government's Motion [Doc. # 232] in Limine to Preclude Defendant from Arguing that Agency is Sole Basis for Conviction is DENIED.
IT IS SO ORDERED.
