KEVIN McNULTY, U.S.D.J.
This Indictment arises from allegations that the defendants engaged in a scheme to bribe officials of a foreign government on behalf of Cognizant Technology Solutions Corporation ("Cognizant"). Defendant Gordon J. Coburn, formerly the President and CFO of Cognizant, and Steven Schwartz, formerly Cognizant's Executive Vice President and Chief Legal and Corporate Affairs Officer, allegedly conspired to pay a $2 million bribe to obtain a permit to open an office facility in India. They are charged in a twelve-count Indictment:
All substantive counts, as is common, cite 18 U.S.C. § 2, as well.
Before the Court are motions by Defendant Coburn (DE 58, 59) and Defendant Schwartz (DE 57) to dismiss certain counts of the Indictment, for a bill of particulars, and for miscellaneous or alternative relief. The government has filed a consolidated response (DE 61) and the Defendants have filed replies (DE 65, 66). The Court heard oral argument on the motions on January 28, 2020. I decide them as follows.
The era of technical pleading is long past (and was already long past when now-aging jurists began their legal careers). It is worth returning to first principles and reminding ourselves of the simple requirement of Rule 7(c)(1), Fed. R. Crim. P., that the Indictment "be a plain, concise, and definite written statement of the essential facts constituting the offense charged."
Defendant Schwartz asserts that the face of the Indictment does not clearly charge him in Counts 3 and 4, leading him to suspect that the grand jury may not have charged him.
COUNT APPROXIMATE MEANS AND INSTRUMENTALITIES OF DATE INTERSTATE AND INTERNATIONAL Two April 21, 2014 COBURN email to SCHWARTZ, CC#1, and CC#2 requesting a call the next morning to follow up from their discussion in their April 21, 2014 call. Three May 20, 2014 COBURN email to CC#1 and others instructing CC# 1 to continue to freeze certain payments to the Construction Company. Four March 13, 2015 COBURN email to CC#1 and others authorizing Cognizant to pay the Construction Company for certain false change order requests in connection with the KITS Campus. COMMERCE
The Indictment, I find, is clear enough. There is more to it than the chart.
Paragraph 2, the charging language of Counts 2-4, is a single, extended sentence that concludes with the chart. That single sentence begins as follows, charging both defendants:
(Indictment at 19.) The listing of full names, capitalized, in bold type, and set off from the other text, is consistent with drafting conventions in this District. It signifies that those named are the charged defendants. That impression is confirmed by the punctuation. The names Gordon J. Coburn and Steven Schwartz appear between commas, immediately following the words "the defendants." Grammatically, this is an appositive, like "our first President, George Washington, ...." The two
Following the names of Coburn and Schwartz, paragraph 2 alleges "each being an officer, director" (etc.) of an issuer, "did willfully use the mails and means and instrumentalities of interstate commerce corruptly in furtherance of" a bribe to a foreign official. That language, quoted only in part here, tracks the language of the FCPA.
Coburn and Schwartz, then, are the subject of the verb phrase (VP) "did willfully use...." The inclusion of "each" tends to emphasize or clarify that what follows applies to both defendants, not to just one.
The chart, then, does not undermine the initial language of Paragraph 2—clearly charging both defendants—that precedes it. Rather, the chart
(a) fulfills the placeholder promise of Paragraph 2 that the "dates" on which the two named defendants used the means of interstate commerce would be "set forth below" (Indictment at 19 line 3), and
(b) gives content to the statement that Coburn and Schwartz conducted the bribery scheme "as follows." (Id. at 20 line 6.)
All of that said, we arrive at the nub of Schwartz's argument. In the chart, Schwartz is alleged to have personally been a party only to the email in Count 2, and not to those in Counts 3 and 4. The chart is thus allegedly incompatible with— or at least confusing in relation to—the theory that both defendants are charged in all three counts.
Considered against the relevant legal background, however, the allegations of the chart are clear enough. The government soundly argues that "use" of the means of interstate commerce encompasses participation in a bribery scheme where it is reasonably foreseeable that interstate emails would be used—what may be called the Pereira foreseeability rule.
In addition, Counts 2-4 cite 18 U.S.C. § 2, which criminalizes an accomplice's participation by means of aiding, abetting, counseling, commanding, inducing, procuring, or causing the commission of an offense. Any such accomplice stands in the shoes of a principal as a matter of law.
These are principles of law that govern any indictment. Indeed, an indictment need not even cite 18 U.S.C. § 2 (let alone Pinkerton). Its operation, as a matter of law, is one for instruction of the jury. See United States v. Frorup, 963 F.2d 41, 52 n.1 (3d Cir. 1992) (aiding and abetting is implied in every indictment for a substantive offense); United States v. Donahue, 885 F.2d 45, 48 n. 10 (3d Cir. 1989).
For all of these reasons, the Indictment adequately sets forth an offense against defendant Schwartz, and is sufficiently clear in charging Mr. Schwartz in Counts 3 and 4. The motion of defendant Schwartz to dismiss Counts 3 and 4 is therefore denied.
Defendant Coburn asserts that Counts 2, 3, and 4, are multiplicitous—i.e., that a single offense is dispersed among three separate counts. Two of the three, he argues, must be dismissed.
The issue comes down to the appropriate "unit of prosecution." An impermissibly multiplicitous indictment is one that "charges the same offense in two or more counts and [therefore] may lead to multiple sentences for a single violation." United States v. Pollen, 978 F.2d 78, 84 (3d Cir. 1992). What constitutes the "same offense" (or a "single violation") for these purposes, however, depends on the nature of the legislative enactment. Multiple punishments are not impermissible per se; "a defendant may be subject to multiple prosecutions for the same conduct if Congress intended to impose multiple punishments for that conduct." United States v. Rigas, 605 F.3d 194, 204 (3d Cir. 2010). "Congressional intent dictates the proper unit of prosecution." United States v. Haddy, 134 F.3d 542, 548 (3d Cir. 1998).
Thus, Congress could pass a single statute carrying a maximum sentence of ten years; alternatively, it could pass two statutes covering some or all of the same conduct, each carrying a maximum sentence of five years. Multiplicity is not so much a limit on what Congress could do as it is a matter of discerning what Congress did do. That requires a commonsense look at the nature of the prohibition to discern what was intended as the unit of prosecution. Homespun examples abound in the case law. See United States v. Chagra, 653 F.2d 26, 30 (1st Cir. 1981) (discussing, as example, that "the man who steals $100 from a billfold can be prosecuted once for the $100 theft and not ten times for ten $10 thefts"); United States v. Greenspan, No. CR 16-114, 2016 WL 4402822, at *17 D.N.J. Aug. 16, 2016 (suggesting that a baker who bakes four loaves of bread on the sabbath has violated the blue laws
So the issue is one of legislative intent. The starting point—and usually the ending point—is the statutory language. Counts 2-4 charge violations of the anti-bribery provisions of the FCPA. The relevant section reads as follows:
15 U.S.C. § 78dd-1(a) ("Section 1(a)")
Section 1(a) has been schematized as follows: It shall be unlawful for a certain class of actor (here, an officer of a securities "issuer") to
United States v. Kay, 513 F.3d 432, 439-40 (5th Cir. 2007) (line breaks added; numbers, punctuation, and [bracketed] insertions as in the original).
The government proffers that the "unit of prosecution"—the precise act a defendant is prohibited from performing—is (2) to "make use of" interstate commerce facilities, such as email. Thus Counts 2, 3, and 4 of the Indictment permissibly charge as separate offenses the sending of three interstate emails in furtherance of the
Defendants respond that this statute is aimed to punish, not the use of email, but the bribery of foreign officials. In identifying the unit of prosecution, they stress, the court must look to the "essence" or "gist" of the offense. See Sanabria v. United States, 437 U.S. 54, 74, 98 S.Ct. 2170, 57 L.Ed.2d 43 (1978). Thus, in their view, the appropriate unit of prosecution would be (4) the "payment of" a bribe (defined to include an offer, promise, or authorization of payment) to a foreign official. It is irrelevant, they say, that multiple emails were sent in furtherance of the same bribe. The interstate emails, according to defendants, do no more than furnish a federal jurisdictional basis for this bribery offense.
Absent from either side's presentation is any notion that the use of interstate commerce or the mails may serve more than one function. The reason for their presence in the statute may present a question of degree—Congress going as far as it could to proscribe conduct deemed wrongful. I will analyze these requirements, however, as they bear on the unit-of-prosecution issue.
Here, "[i]t shall be unlawful" for any covered person "to make use of" interstate facilities such as email. To be sure, the statute contains many other requirements. But "to make use of" is the operative verb (or verb phrase); using the interstate emails is literally the proscribed act. It is the verb that has the "issuer" (or its "officer") as its subject. Now, the Third Circuit has warned against any simplistic adoption of the "operative verb" test to identify the unit of prosecution. See United States v. Diaz, 592 F.3d 467, 473 (3d Cir. 2010) (citing United States v. Anderson, 59 F.3d 1323, 1338 (D.C. Cir. 1995) (Ginsburg, J., dissenting, relying on operative verb of statute)). Still, the grammatical structure —the very manner in which the statute is worded—cannot be ignored.
If not dispositive, then, the structure of the drafting is surely relevant. Consider, for example, a hypothetical statute providing that "it shall be unlawful to pay a bribe," and providing in a separate section that the federal courts shall have jurisdiction where such bribery involves interstate communication (or a federally insured bank). Better still, consider a hypothetical federal statute containing a Congressional Finding that bribery by its nature affects commerce, and then proscribing bribery simpliciter.
Defendants suggest that an alternative jurisdiction provision found elsewhere in the FCPA, 15 U.S.C. § 78dd-1(g) ("Section 1(g)"), undermines the government's analysis. Section 1(g) provides as follows:
15 U.S.C. § 78dd1-(g).
It is true, as defendants state, that Section 1(g) in many respects "tracks the language of Section 78dd-1(a)." The evident design is to provide a backstop for certain cases of bribery in which the use of the mails or interstate commerce is absent. Id. ("... irrespective of whether such issuer or such officer ... makes use of the mails or any means or instrumentality of interstate commerce....") Like Section 1(a) (and unusually for a mere jurisdictional provision), Section 1(g) begins with the words "It shall be unlawful," and it defines the illegal conduct, in part verbatim and in part by reference to Section 1(a). The covered class of "issuers" and their agents is similar, except that Section 1(g) specifies a U.S. entity.
I am not persuaded that swapping an "act outside the United States" for the use of the mail or emails affects the analysis of the unit of prosecution. Of course, bribery is the overall subject matter, whether of Section 1(a) or 1(g); and the email, the mailing, or the foreign corrupt "act" must be done in furtherance of the bribe in order to be criminal. I do not, however, wholly accept defendants' argument by implication. To the drafters, the deletion of interstate commerce seemingly required the substitution of an act deemed "corrupt." That the corruptly-performed foreign "act" substitutes for the interstate communication suggests that they may function similarly in the statute—as a definition of conduct deemed wrongful. And it might plausibly be argued that if jurisdiction exists with or without interstate commerce, then the interstate communication, whatever its jurisdictional significance, may not be "merely" jurisdictional.
The Third Circuit has not spoken on the issue of the unit of prosecution under the FCPA.
I first consider the mail fraud and wire fraud statutes, 18 U.S.C §§ 1341 and 1343. Both provide that "[w]hoever, having devised a scheme or artifice to defraud ... for the purpose of executing such scheme or artifice ..." either (a) "places in any post office or authorized depository for mail matter, any matter or thing," or (b) "transmits or causes to be transmitted by means of wire ... in interstate or foreign commerce" virtually any sort of material shall be guilty of an offense. It has long been settled that each such mailing or wire transmission, even if in furtherance of the same scheme to defraud, may be indicted as a separate count. See Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 368, 60 S.Ct. 706 (1916).
Mail and wire fraud (like FCPA) are addressed to the use of the mails or interstate communications "in furtherance of" a defined illicit activity. Like the FCPA, they are both expressed in terms of a prohibition on use of the mails or interstate commerce for the prohibited
The analogy to the FCPA is powerful, then, unless some peculiar distinguishing feature of mail or wire fraud can be identified. There is one candidate. The original version of the mail fraud statute was enacted in 1872 "[t]o safeguard the integrity of the postal system," and culpability "was to be based not so much on the degree of the fraud as on the degree of misuse of the mails." Gordon, 875 F.3d at 36 (quoting [future District Judge] Jed S. Rakoff, The Federal Mail Fraud Statute (Part I), 18 Duq. L. Rev. 771, 784 (1980)). The objective —to keep the U.S. mail stream running clean and pure—may sound quaint to modern ears, but the origin and purpose of the statute remain relevant to its interpretation.
The goal of preserving governmental integrity does not apply in the same way to the wire fraud statute; wire communications, for example, have not traditionally been a federal function, like the delivery of mail. Yet the rule that each communication constitutes a separate offense has been extended from mail fraud to wire fraud with little discussion or controversy. See, e.g., United States v. Fermin Castillo, 829 F.2d 1194, 1199 (1st Cir. 1987) ("It is well established that each use of the wires constitutes a separate crime under 18 U.S.C. § 1343, even if the several uses are in pursuance of but one criminal enterprise."); Benmuhar, supra; Kronfeld, supra. That extension from mail fraud to wire fraud might suggest that the separate-offense rule does not rest on some unique feature of the mails. The explanation, however unsatisfactory, may simply be that the mail and wire fraud statutes, because their wording is so similar, have always been construed in pari materia. See, e.g., McLendon v. Cont'l Grp., Inc., 602 F.Supp. 1492, 1507 (D.N.J. 1985) (citing United States v. Giovengo, 637 F.2d 941, 944 (3d Cir. 1980) (wire fraud statute interpreted in pari materia with mail fraud statute)).
The upshot, in my view, is that mail and wire fraud provide a suggestive comparison, but not an inexorable command.
For further guidance, I turn next to the Travel Act, 18 U.S.C. § 1952:
18 U.S.C. § 1952(a). The Act then defines "unlawful activity" with reference to specified violations of federal and state substantive criminal law.
The Travel Act shares some relevant features with the FCPA. It provides that a person who travels in interstate commerce, or uses the mails or facilities of interstate commerce, with intent to promote or further certain unlawful activity, and who then does or attempts to do what was intended, is guilty of an offense. The Travel Act shares with the FCPA a grammatical structure that places the "operative verb," i.e., to travel in or use interstate commerce, front and center. Like the FCPA, the Travel Act is phrased in terms of acting in interstate commerce, with the purpose of facilitating wrongful activity, and it adds the requirement of actually committing or attempting to commit such activity (just as the bribe under the FCPA must be paid, or at least authorized or offered).
The unit of prosecution under the Travel Act is the act of interstate travel or use of facilities of interstate commerce. Each may be the subject of a criminal charge, even if all are done to promote or facilitate a single unlawful activity. See, e.g., United States v. Polizzi, 500 F.2d 856, 897-98 (9th Cir. 1974) (rejecting multiplicity challenge to indictment that separately charged acts of travel to promote the same illegal gambling enterprise); United States v. Alsobrook, 620 F.2d 139, 142 (6th Cir. 1980); United States v. Brown, Crim. No. 90-144, 1991 WL 7378, at *2 (E.D. Pa. Jan. 22, 1991). Defendants do not dispute that this is well-settled law; rather, they suggest a distinction.
The interstate connection may be treated as the "gist" of the Travel Act offense, say Defendants, because the Travel Act was originally designed to reach criminals who evaded law enforcement by residing in one state while carrying on their activities in another. See Rewis v. United States, 401 U.S. 808, 811 n.6, 91 S.Ct. 1056, 28 L.Ed.2d 493 (1971) (citing legislative history to the effect that only the federal government was in a position to reach criminals who "live far from the scene and, therefore, remain immune from the local officials.") The proffered distinction is not a strong one; indeed, it suggests a further analogy. The FCPA, too, was enacted to reach corrupt conduct, formerly untouched by the criminal law because it took place beyond borders. A defendant's use of emails sent from the United States to advance bribery activities abroad would appear to be highly analogous to the conduct at which the Travel Act is directed. It is not merely jurisdictional, but wrongful, in the same way.
To my mind, then, the unit-of-prosecution case law under the Travel Act reinforces the analogy suggested by the mail and wire fraud statutes.
To fill out the discussion, I consider Defendants' strongest example of a statute that does not adopt the use of mails or interstate commerce as the unit of prosecution:
The Gordon court's analysis rested on two key factors:
The first was the legislative history of 18 U.S.C. § 1958, indicating that Congress meant to do no more than exert federal power over particular instances of an existing state offense, while leaving the majority of such cases to the states—i.e., to focus on "a murder plot that had a federal nexus, not the federal nexus itself." Gordon, 875 F.3d at 34. Such federalism concerns are not implicated by the FCPA. It was enacted, not to federally adopt the prosecution of a select few state-law bribes, but rather to extend the reach of the law to foreign bribes that were previously untouched, whether by federal or local criminal law.
The second factor was the murder-for-hire statute's tiered penalty structure of graduated maximum punishments (10 years, 20 years, or life), based on the level of harm to the victim. Id. at 33. To adopt each event of interstate travel or communication as the unit of prosecution would, Gordon reasoned, make a hash of that "victim-centric" scheme. Thus, a defendant who made three phone calls in furtherance of the lowest-tier, 10-year offense would nevertheless face a 30-year maximum. Such victim-based, graduated-punishment factors are not present to anything like the same degree in the FCPA.
Defendants move to dismiss Count 12 on grounds of "repugnance"— i.e., the alleged mutual inconsistency of its allegations. Count 12 charges that the defendants "circumvented and caused to be circumvented, and failed to implement, a system of internal accounting controls of Cognizant ..." in violation of 15 U.S.C. § 78m(b)(5).
The government may charge alternative means of violation that are spelled out in a criminal statute. Criminal statutes generally separate these means with the disjunctive "or"; thus, for example, a statute may brand as a criminal "[w]hoever embezzles, steals, or unlawfully takes, carries away, or conceals ..." things being shipped interstate. 18 U.S.C. § 666. An indictment will typically parrot those statutory verbs. Typically, however, an indictment will charge them with the conjunctive "and," rather than the disjunctive "or." Nevertheless, a conviction may rest on proof of just one, not all, of the alternatives. See United States v. Niederberger, 580 F.2d 63, 68 (3d Cir. 1978) ("it is settled law that where a statute denounces an offense disjunctively, the offense may be charged conjunctively in the indictment.... Moreover, guilt may be established by proof of any one act named disjunctively in the statute.")
The mere presence of alternative verbs in a single count, then, is unobjectionable. To warrant dismissal, as defendants recognize, these alternatives must be so inconsistent as to be mutually repugnant, depriving the defendant of fair notice and confusing the jury. United States v. Cisneros, 26 F.Supp.2d 24, 52 (D.D.C. 1998); United States v. Palo, No. 1:16CR23, 2017 WL 6594196, at *3 (W.D. Pa. Dec. 26, 2017). Examples of dismissal, or even forced election, are rare, however. None of the cases cited involve an indictment's mere parroting of a statutory laundry list of verbs, signifying means of commission of the offense.
No such repugnance is asserted here. Count 12 does no more than quote the actual wording of the statute, as indictments are generally required to do. See United States v. Kemp, 500 F.3d at 280 (generally, "no greater specificity than the statutory language is required....") Defendants' repugnancy argument rests on a false either/or dichotomy. I mean this: These defendants, as high-ranking officers and executives of the company, could have instituted internal controls which, taken collectively, failed to meet the standards of 15 U.S.C. § 78m(b)(2). If so, that shortfall might satisfy one of the alternatives of § 78m(b)(5), i.e., that they "failed to institute" a reasonable set of controls. It does not follow that the company therefore had no accounting controls. (See Coburn MTD
The motion to dismiss Count 12 is therefore denied.
The defendants move for a bill of particulars as to various facts and theories.
Rule 7(f), Fed. R. Crim. P., grants the court the authority to order a bill of particulars. A bill of particulars will be required where "an indictment's failure to provide factual or legal information significantly impairs the defendant's ability to prepare his defense or is likely to lead to prejudicial surprise at trial." United States v. Rosa, 891 F.2d 1063, 1066 (3d Cir. 1989). It is well settled that a bill of particulars "is not intended to be a discovery device." United States v. DePaoli, 41 F. App'x 543, 546 (3d Cir. 2002) (quoting United States v. Smith, 776 F.2d 1104, 1111 (3d Cir. 1985)). Rather, a bill of particulars may be required "when the indictment itself is too vague and indefinite" to fulfill the essential purposes of Criminal Rule 7(c) (discussed at Section I, supra).
On its face, this Indictment is sufficient to fulfill the purposes of Rule 7(c). It identifies the offenses, quotes the statutory language, gives the relevant dates, and specifies both the bribe and the corporate purpose for which it was sought. Count 1, the conspiracy count, in particular relates many of the relevant underlying facts. At paragraphs 1-26, covering 11 pages, it lays out the essential events, civil-complaint style. Paragraphs 28 and 29(a)-(h) set forth the goals and manner and means of the conspiracy. And paragraphs 30(a)-(g) specify overt acts by the defendants in furtherance of it. These factual allegations are incorporated by reference in the substantive counts. It cannot be maintained that the Defendants are in the dark about what they are accused of, or that, if later accused in relation to the same bribe, they could not raise this prosecution as a bar.
The motions here contain requests for clarification or narrowing which are in the nature of contention interrogatories in a civil case. They also contain requests for specification of particular facts or transactions, or the evidence supporting them, which are in the nature of discovery requests in a civil case. It is clear, however, that the defendants have already received discovery far in excess of what is required by Rule 16 or the case law. In addition, they have received or will receive in due course such items as reports of prior statements of government witnesses. The government attorneys seem to have been cooperative in responding to reasonable queries. As noted at oral argument, it is not much of an exaggeration to say that Defendants know, or at least have available to them, most or all of what the government knows. A motion for a bill of particulars cannot be used to compel the government to organize the discovery by topic or to "weave the information at its command into the warp of a fully integrated trial theory for the benefit of the defendants." United States v. Addonizio, 451 F.2d 49, 64 (3d Cir. 1972). If there are gaps in the discovery information, those gaps may or may not point to a potential weakness in the government's case. That, however, is a matter for trial, not for a bill of particulars.
a. Identification of coconspirators and "others." Particularly where discovery, as in this case, has been extensive, identification of coconspirators is not required. See United States v. Torres, 901 F.2d 205, 233-34 (2d Cir. 1990). I would require the disclosure of the persons named in the Indictment as CC #1, CC #2, and CC #3, but the government represents that it has already disclosed their identities. To avoid unfair surprise or delays at trial, however, I will require the following: At least 20 days before trial, the government shall disclose the identities of the declarants of any statements it plans to introduce in evidence via Fed. R. Evid. 801(d)(2)(E). In addition, I will entertain an application to strike the words "and others" from the Indictment before it is published to the jury, if those words appear to serve no further purpose.
b. Identification of bribed foreign officials or third-party consultants. In general, I would be receptive to a request that the government, if accusing someone of bribery, state the identity of the person who was bribed. The government argues that, under the FCPA, identification of specific individuals is not an essential element. (Gov't Br. at 49-50 (citing, inter alia, S.E.C. v. Straub, 921 F.Supp.2d 244, 265 (S.D.N.Y. 2013)).) More fundamental, however, is the government's representation that it "does not possess evidence sufficient to identify the specific foreign official or third-party consultant involved in the bribe payment...." (Id. at 51.) If that turns out to be a weakness in the government's case, so be it. But because the government has "no additional information to give the Defendants" (id.), the motion for a bill of particulars on this point must be denied as moot.
c. Identification of payments. The government, in its brief and at oral argument, represented they already turned over documents on the payments in discovery. Defense counsel responded that they have expended reasonable efforts, but were unable to segregate records that relate to the payments from those that did not. I agree that the government is not required to perform a forensic accounting for defendants' benefit. Nevertheless, I directed the government attorneys to point the defense to records sufficient to identify the relevant payments, and the AUSA at oral argument represented that they would do so. To that extent, the motion is granted.
d. "And elsewhere." Indictments routinely allege that acts occurred in the relevant venue "and elsewhere," and this is no exception. The government represents that discovery, as well as the factual allegations of the conspiracy count, are sufficient to avoid prejudice. I agree; to fulfill its function, this Indictment does not require a bill of particulars listing all locations that might be involved. True, certain of these locations are abroad, and not so readily accessible as domestic ones. Nevertheless, the discovery should be sufficient to give the allegations some geographic focus, and the defendants may tailor their pretrial investigation and defenses accordingly.
e. Aiding and abetting. As noted above, aiding and abetting is one of several means by which a participant in an offense may attain the status of a principal under 18 U.S.C. § 2. Defense counsel argues
There is no indication of potential error in the Hoskins sense—i.e., a charge brought, directly or indirectly, against someone who is not potentially liable under the FCPA. Defendants Coburn and Schwartz, officers and executives of an issuer in the United States, had the legal ability to commit this FCPA offense as charged—i.e., by engaging in interstate emails to further a bribery arrangement in India. A bill of particulars is not required simply because a defendant wishes to make "inquiry" into a speculative legal issue. As noted above, see Section 1.A & n.8, supra, 18 U.S.C. § 2 covers a panoply of direct and indirect means of causing an offense to be committed. One may, as defendant states, aid the efforts of the primary offender. Or one may oneself be a principal, but "cause" the offense to occur through another principal, or even a wholly innocent intermediary. United States v.
f. Particular misstatements in securities filings. These requests focus on Counts 6-11, which allege falsification of books and records which were required to accurately reflect the transactions and dispositions of the assets of Cognizant. The particular record is specified with respect to each count:
COUNT APPROXIMATE DEFENDANT FALSIFIED RECORD DATE Five March 11, 2015 COBURN Spreadsheet and related approvals containing and incorporating false change order requests in connection with the KITS Campus. Six July 24, 2014 COBURN Sarbanes-Oxley Quarterly Global 302 Certification for the Quarter Ended June 30, 2014. Seven August 1, 2014 SCHWARTZ Sarbanes-Oxley Quarterly Global 302 Certification for the Quarter Ended June 30, 2014. Eight April 21, 2015 COBURN Sarbanes-Oxley Quarterly Global 302 Certification for the Quarter Ended March 31, 2015. Nine February 2, 2015 SCHWARTZ Annual Report on Form 10-K and Proxy Statement Disclosure Questionnaire for the Year Ended December 31, 2014. Ten February 9, 2015 COBURN COBURN Annual Report on Form 10-K and Proxy Statement Disclosure Questionnaire for the Year Ended December 31, 2014. Eleven February 6, 2015 COBURN Annual Report on Form 10-K and Proxy Statement Disclosure Questionnaire for the Year Ended December 31, 2015.
If the Indictment simply waved in the direction of some massive SEC filing and alleged that it was false, defendants would have a point. As things stand, however, I see no need for a bill of particulars. These Counts, as pled, particularly in the context of the allegations incorporated from the conspiracy count and the discovery provided, require no amplification to fulfill the
The records involved are not lengthy. They have, moreover, been identified with particularity and turned over in discovery. Also produced are associated documents, such as emails, establishing the process by which the forms were circulated and filled out.
The conspiracy count relates the payment of the bribe and the manner in which it was paid through a Construction Company, concealed, and then reimbursed to the Construction Company in the guise of a legitimate payment. The manner and means paragraphs specifically address the falsification of records in relation to those transactions:
(Indictment, Count 1 ¶ 29(g).) These allegations and others are incorporated by reference in Counts 5-11. (Indictment, Counts 5-11, ¶ 1.)
United States v. Moyer, 674 F.3d 192, 203 (3d Cir. 2012), is instructive. There, the defendant asserted that the indictment, which charged him with falsification of records in a federal investigation, see 28 U.S.C. § 1519, was insufficiently specific. The Court, however, found that the indictment did not merely parrot the "generalities" of a statute; rather, it identified the false documents as police reports prepared between two dates, and incorporated allegations from the conspiracy count that identified the specific police reports and identified the subject matter of the falsehoods, i.e., a racially motivated assault. In every way that matters, this Indictment is similar.
The Indictment's allegations, particularly in the context of the discovery,
g. Accounting Controls. Defendants seek further information about the particular internal accounting controls involved, how they fell short of reasonable standards, which particular controls were circumvented, and so on. As a general matter, these requests far exceed the function of a bill of particulars. Count 12 of the Indictment (discussed further in Section I.C, supra) alleges that the relevant system of internal accounting controls includes "controls relating to payments and approvals for accounts payable." It is readily inferable that the "payments" must primarily refer to the bribe itself and the disguised reimbursement. Count 12 also alleges that the relevant controls relate to "Cognizant's SEC filings, such as Sarbanes-Oxley Quarterly Global 302 Certifications and Annual Report on Form 10-K Proxy Statement Disclosure Questionnaires." Those particular filings and questionnaires, which are required to be accurate, are discussed above, and have been turned over in discovery. That is sufficient. The motion for a bill of particulars is denied in this respect.
h. Personal benefit received by Schwartz and others. Because this is not an express requirement of the FCPA, no bill of particulars is required to identify it. The main benefit referred to in the Indictment is the planning permit for Cognizant's KITS Campus.
i. Miscellaneous. Defendants make further requests that the government identify the particular portions of 15 U.S.C. § 78dd-1 that apply, the names of all persons involved, the statutory "purpose" for which the offense was allegedly committed, and so forth. (See Coburn MBP Br. at 25; Schwartz MTD Br. at 37-38.) This amounts to little more than a sentence-by-sentence reading of the FCPA counts, with "tell me more" appended to each. To some degree, I have disposed of these requests above. To the rest, the general principles governing indictments and bills of particulars, cited above, are a sufficient answer. I reiterate that a bill of particulars is not a general discovery device or a means of obtaining answers to questions the defendant may have. This Indictment, particularly as supplemented by discovery, fulfills its proper purposes under Rule 7(c) and permits the preparation of a defense. The miscellaneous requests are therefore denied.
C. The motion dismiss Count 12 on grounds of repugnance is
D. The motion for a bill of particulars is
Fed. R. Crim. P. 7(c)(1).
I have rejected the reading of the face of the Indictment that is the foundation of defendant Schwartz's suspicion that the grand jury did not indict him in these counts. Nevertheless, in an abundance of caution, I required the government to furnish a copy of the relevant portion of the grand jury transcript in camera. The transcripts are consistent with the face of the Indictment.
Counts 5-11, Paragraph 2 begins identically to the one we have already seen: It charges "the defendants, GORDON J. COBURN and STEVEN SCHWARTZ....." (Indictment at 21.) Just as before, the names are followed by the charging words of the statute, here, "... falsified books, records, and accounts." The sentence concludes with the allegations that the defendants did so "as set forth below" in a chart. That chart (by contrast with the Counts 2-5 chart) has an additional column: "DEFENDANT." Under Counts 5, 6, 8, 10, and 11, the "DEFENDANT" is specified as COBURN; under Counts 7 and 9 the "DEFENDANT" is specified as SCHWARTZ. In each instance, the date and the particular falsified record on which the count is based are described in adjoining columns. (Indictment at 22.) Mr. Schwartz suggests that there is some tension between the initial designation of both defendants together, and the chart's designation of one defendant per count. But if there is not, he suggests, then this mode of interpretation casts doubt on the meaning of Counts 2-5, in which the initial citation of both defendants is distributed over all three counts in the chart.
The significance of the DEFENDANT column in Counts 5-11 is that its entries specify the particular defendant charged in that particular count. I find that the chart, in context, is sufficiently clear. An alternative method of drafting such counts might be to substitute an incorporation by reference (e.g., "the defendant named below") for the names of the defendants ("GORDON J. COBURN and STEVEN SCHWARTZ")—just as was done with the dates and the descriptions of the falsified documents. Still, the defendant's challenge is to Counts 2-5, not to Counts 5-11, and the issue is not whether the Court can think of a different or better drafting strategy.
I believe the Indictment is sufficiently clear, and I find no defect. To remove all doubt, I will require that the government file a formal bill of particulars confirming the defendant(s) charged in each of Counts 2 through 11.
The FCPA case law is very sparse, but favorable to the government's position. SEC v. Straub, Civ. No. 11-9645, 2016 WL 5793398 (S.D.N.Y. Sept. 30, 2016), a civil enforcement action under the anti-bribery provisions of the FCPA, held squarely that the Pereira foreseeability rule applies to the FCPA. Id. at *12. Straub reasoned that courts have interpreted the interstate-transmission element "liberally in other contexts and have held that, in addition to direct use, it is sufficient if the defendant merely `act[s] with knowledge that' the use of an instrumentality of interstate commerce `will follow in the ordinary course of business,' or that `such use can reasonably be foreseen, even though not actually intended.'" Id. at *11 (quoting United States v. Reifler, 446 F.3d 65, 96 (2d Cir. 2006) (wire fraud case)). Straub noted that in an analogous context, the Second Circuit long ago applied the Pereira foreseeability standard to the interstate element of § 5 of the Securities Act of 1933, 15 U.S.C. § 77(e) (use of mails or communication in interstate commerce to sell or deliver unregistered security). Id. at 783-84 (citing United States v. Wolfson, 405 F.2d 779 (2d Cir. 1968)).
It is in light of the foregoing that Mr. Schwartz has partially withdrawn his motion to dismiss Counts 3 and 4 insofar as it argues that the Indictment fails to allege that he personally sent the emails. (DE 67; see also Schwartz Br. at 13 (citing Straub).)
18 U.S.C. § 2. See also 3d Cir. Model Jury Instructions (Criminal) 7.02 (aiding and abetting), 7.05 (causing); Rosemond v. United States, 572 U.S. 65, 134 S.Ct. 1240, 188 L.Ed.2d 248 (2014).
The government suggests that the "in furtherance of" requirement, discussed in Kay, tends to confirm that the interstate communication is part and parcel of the offense, and not a mere jurisdictional appendage. It would be remarkable, of course, if the statute extended to anyone who, for any purpose, had ever sent a letter or an email. That the communication must relate to or further the bribery arrangement does not, for me, help in resolving the unit of prosecution issue.
This District Court and others within the Third Circuit agree. See United States v. Parkin, No. CR 04-162 (GEB), 2005 WL 8159189, at *8 (D.N.J. June 7, 2005) (mail fraud), aff'd, 319 F. App'x 101 (3d Cir. 2009); Kronfeld v. First Jersey Nat. Bank, 638 F.Supp. 1454, 1472 (D.N.J. 1986) (mail and wire fraud); United States v. Tiche, 424 F.Supp. 996, 1003 (W.D. Pa. 1977) (mail fraud); United States v. Bloom, 78 F.R.D. 591, 604 (E.D. Pa. 1977) (mail fraud).
Gordon, supra, observed in dictum that "[s]ome statutes, such as the Securities Act, 15 U.S.C. § 77q(a), feature the familiar Interstate commerce' language, yet have units of prosecution that are distinct from those embodied in the mail and wire fraud statutes." 875 F.3d at 36 (citing United States v. Waldman, 579 F.2d 649, 654 (1st Cir. 1978) (establishing appropriate unit of prosecution for securities fraud under section 77q(a) as each "separate transaction[] accompanied by use of the mails")). But section 77q, by contrast with the FCPA, does not provide that it shall be unlawful for a person to use the mails or interstate commerce in pursuit of some unlawful purpose. It is phrased the other way around, making it unlawful, in connection with a sale of securities and by means of interstate commerce, to perform certain fraudulent acts:
15 U.S.C. § 77q(a). As noted above, the "operative verb" test cannot be applied simplistically or indiscriminately. Still, it is significant mat under this statute, the action it is "unlawful" to do is to "employ," "obtain," or "engage." The use of interstate commerce, like the offer or sale of securities, is stated not as an unlawful act in itself, but a condition under which the prohibited acts must be done. So if the prohibited act, as embodied in the verb, is the unit of prosecution, that is probably sufficient explanation.
The same reasoning applies to Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), which is phrased in the same manner. With regard to Section 10(b), the Third Circuit "declined to adopt an inflexible rule," suggesting that different kinds of violations might entail different units of prosecution. See United States v. Haddy, 134 F.3d 542, 548-49 (3d Cir. 1998). Considering a duplicity challenge, Haddy held that each multipart scheme to manipulate the price of a single company's stock was the unit of prosecution —not each purchase and sale of stock, which were not themselves necessarily fraudulent except insofar as they advanced the scheme. Haddy approvingly cited United States v. Langford, 946 F.2d 798, 803 (11th Cir. 1991), which held that the unit of prosecution under section 10(b) could consist of each false statement, but not each individual mailing.
15 U.S.C. § 78m(b)(5).
The portion of the cross-referenced paragraph (2) cited in the Indictment reads as follows:
15 U.S.C. § 78m(b)(2).
Id. at 84-85.
