PAMELA K. CHEN, District Judge.
The Superseding Indictment (Dkt. 102) alleges ninety-two criminal counts against twenty-seven individuals based on their alleged involvement in conspiratorial racketeering, wire fraud, money laundering and other offenses allegedly undertaken to enrich themselves by virtue of their various positions in the Federation Internationale de Football Association ("FIFA"), its continental, regional, and national affiliates, and certain sports marketing companies.
The following pre-trial motions are before the Court: (1) Defendant José Maria Marin's motion to dismiss Count One of the Superseding Indictment (Dkt. 487), (2) Defendant Juan Angel Napout's motion to dismiss all charges against him for lack of extraterritorial jurisdiction (Dkt. 491), and (3) Defendant Napout's motion for a bill of particulars (Dkt. 490). The Court heard oral argument on Defendants' motions on February 14, 2017.
For the reasons stated below, the Court denies Marin's motion to dismiss Count One, denies Napout's motion to dismiss the counts against him, and denies in part and grants in part Napout's motion for a bill of particulars. The Government shall file the bill of particulars required by this Order no later than March 10, 2017.
Defendant Marin moves to dismiss Count One of the Superseding Indictment on the grounds that (1) the indictment does not adequately plead an "enterprise," an essential element of a charge under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(d), (2) even assuming the indictment adequately alleges an enterprise, the indictment does not adequately allege that Marin knowingly participated in that enterprise, and (3) Count One is duplicitous of the other counts against Marin. (Dkts. 487-1, 519.) For the reasons stated below, the Court disagrees with Marin on each of these grounds.
First, the Superseding Indictment adequately alleges an association-in-fact enterprise with respect to Count One. The Supreme Court has explained that "an association-in-fact enterprise is simply a continuing unit that functions with a common purpose," and "need not have a hierarchical structure or a `chain of command.'" Boyle v. United States, 556 U.S. 938, 948 (2009); accord United States v. Pierce, 785 F.3d 832, 838 (2d Cir. 2015). With respect to Count One, the very first paragraph of the Superseding Indictment expressly alleges an enterprise consisting of FIFA, specified continental confederations, specified regional federations, specified national associations, specified sports marketing companies, and certain related persons and entities. (SI ¶ 1.) Subsequent paragraphs in the Superseding Indictment provide additional detail on the constituents of this enterprise (SI ¶¶ 4-93), and various other paragraphs specifically allege collaboration among the constituents in the enterprise (e.g., SI ¶¶ 15 (alleging that the continental confederations work closely with "one another" to organize international soccer competitions), 22 (similar), 98 (alleging that the constituents of the enterprise "became increasingly intertwined with one another" over time)).
Marin's argument that these allegations are insufficient because they "do[] not fit" the other factual allegations set forth in the indictment (Dkt. 487-1 at 8), which is the thrust of his challenge to the "enterprise" element of Count One (see Dkt. 487-1 at 8-10, Dkt. 519 at 1-4)
Second, the Superseding Indictment adequately alleges Marin's involvement in the enterprise alleged with respect to Count One. As the parties agree (Dkt. 487-1 at 11; Dkt. 516 at 20), to allege a defendant's involvement in a RICO conspiracy, an indictment need allege only that a defendant agreed to further "the general criminal objective of a jointly undertaken scheme." Yannotti, 541 F.3d at 122; see also United States v. Ciccone, 312 F.3d 535, 542 (2d Cir. 2002) ("[I]t suffices that [the defendant] adopted the goal of furthering or facilitating the criminal endeavor" (quoting Salinas v. United States, 522 U.S. 52, 65 (1997) (brackets omitted)). The Superseding Indictment satisfies this requirement by alleging, inter alia, that Marin and others "conspired with one another to use their positions within the enterprise to engage in schemes involving the solicitation, offer, acceptance, payment, and receipt of undisclosed and illegal payments, bribes, and kickbacks." (SI ¶ 95; see also SI ¶¶ 50, 364.) Marin's claim that these allegations are insufficient because they "fall far short of establishing that Marin could have joined the conspiracy" (Dkt. 487-1 at 11 (emphasis added)) is premised on the incorrect notion that the indictment's allegation of Marin's involvement in the conspiracy must be demonstrated through specific factual allegations. The law simply does not require that kind of factual substantiation in an indictment. See Flaharty, 295 F.3d at 198; see also, e.g., United States v. Frias, 521 F.3d 229, 235-36 (2d Cir. 2008).
Third, Count One is not duplicitous of other counts against Marin.
For the foregoing reasons, the Court denies Marin's motion to dismiss Count One of the Superseding Indictment.
Napout moves to dismiss all charges against him as impermissible extraterritorial applications of the federal wire fraud statute (Counts 9 and 83), the federal money laundering statute (Counts 10 and 84), and the federal RICO statute (Count 1).
Just last year, in RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090 (2016), the Supreme Court clarified the "two-step framework for analyzing extraterritoriality issues": At the first step, we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially. We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction. If the statute is not extraterritorial, then at the second step we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute's "focus." If the conduct relevant to the statute's focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory.
136 S. Ct. at 2101 (two-step framework as reflected in Morrison v. Nat'l Aus. Bank Ltd., 561 U.S. 247 (2010) and Kioebel v. Royal Dutch Petroleum Co., 133 S.Ct. 1659 (2013)). Where there is a clear indication at step one that the statute applies extraterritorially, the court should not proceed to step two or consider the statute's focus. Id. at 2103.
Reviewing the Second Circuit's decision in a civil RICO action,
With these legal principles in mind, the Court turns to Napout's challenge to Counts One, Nine, Ten, Eighty-Three and Eighty-Four of the Superseding Indictment.
As the parties recognize, the federal wire fraud statute, 18 U.S.C. § 1343, does not apply extraterritorially. (See Dkt. 491-1 at 11 (citing RJR Nabisco, 764 F.3d at 140-41); Dkt. 516 at 26-31.) It does apply "domestically," however, to certain schemes to defraud, even if those schemes also involve foreign conduct. See RJR Nabisco, 764 F.3d at 141-43; see also Petroleos Mexicanos v. SK Eng'g & Constr. Co., 572 F. App'x 60, 61 (—) (summary order). With respect to Napout's motion to dismiss the wire fraud conspiracy counts in which he is charged, the central inquiry therefore is whether the Superseding Indictment sufficiently alleges that Napout participated in a conspiracy to commit a "domestic" violation of the wire fraud statute.
As the Supreme Court instructed in RJR Nabisco, in determining whether a case involves a domestic or extraterritorial application of a given law, a court should "look[] to the statute's focus," and "[i]f the conduct relevant to the statute's focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory." 136 S. Ct. at 2101. As further guidance, the Second Circuit instructed in RJR Nabisco that, "[i]f domestic conduct satisfies every essential element to prove a violation of a United States statute that does not apply extraterritorially, that statute is violated even if some further conduct contributing to the violation occurred outside the United States." 764 F.3d at 142.
The Government does not argue that the Superseding Indictment alleges a fraudulent scheme in which domestic conduct satisfies "every essential element" to prove the wire fraud underlying the conspiracy charges of Counts Nine and Eighty-Three.
As a preliminary matter, the Court does not accept Napout's proposed test for determining the bounds of a domestic application of the wire fraud statute. Contrary to Napout's construction, step two of the RJR Nabisco framework clearly requires the Court to determine the focus of the statute in question, not the focus of the alleged course of criminal conduct. 136 S. Ct. at 2101. At the same time, the Court is skeptical of the Government's position that "nothing more" than a single transmission across U.S. wires is sufficient to sustain a "domestic" application of the wire fraud statute. This extreme position appears to be foreclosed by the Second Circuit's decision in Petroleos Mexicanos, which held that "three minimal contacts" with the United States—including the use of U.S. wires to transfer of illicit funds—were insufficient to establish a domestic application of the wire fraud statute. 572 F. App'x at 61. The natural implication of Petroleos Mexicanos is that, in determining whether the wire fraud statute is being applied "domestically" or "extraterritorially" in a given case, a court must conduct a more holistic assessment of the conduct that constitutes the alleged fraud scheme, including consideration of whether the scheme involves only incidental or minimal use of U.S. wires. Id.
During oral argument, the Government maintained that its proposed test for determining the bounds of the wire fraud statute is established in a long line of criminal cases, including most notably United States v. Kim, 246 F.3d 186 (2d Cir. 2001), and that Petroleos Mexicanos should not be construed to disturb that line of cases because (i) Petroleos Mexicanos was a civil RICO case that did not closely analyze the wire-fraud predicate underlying the RICO claim in that case, and (ii) the Second Circuit's extraterritoriality analysis in Petroleos Mexicanos resembles a "conduct and effects" analysis that, according to the Government, is forbidden by the Supreme Court's recent extraterritoriality decisions. The Court finds some merit to the Government's arguments on this front. The Court also observes, however, that notwithstanding the Government's effort to distinguish it, Petroleos Mexicanos appears to be the most recent Second Circuit decision passing upon the "domestic" reach of the wire fraud statute, albeit in the course of analyzing a RICO claim, and the Court does not believe the Supreme Court's decision in RJR Nabisco—which expressly declined to address the domestic reach of the wire fraud statute, 136 S. Ct. at 2105—undermines the force or vitality of Petroleos Mexicanos. The Court further observes that, were the Government correct that the domestic reach of the wire fraud statute was firmly established in a long line of criminal cases, the Second Circuit presumably would have followed that line of cases in RJR Nabisco, rather than stating, as it did, that it "need not now decide precisely how to draw the line between domestic and extraterritorial applications of the wire fraud statute." 764 F.3d at 141.
Given the nature and extent of the Superseding Indictment's allegations of conduct in the United States, at this stage the Court need not, and declines to, articulate a general test for whether a given application of the wire fraud statute is extraterritorial or domestic. As explained below, regardless of whether the correct test is the bright-line test proposed by the Government or the more holistic analysis implied by Petroleos Mexicanos, the Superseding Indictment more than adequately alleges Napout's involvement in a conspiracy to commit a domestic violation of the wire fraud statute.
Count Nine charges Napout with participating in a conspiracy to commit wire fraud in connection with a fraudulent scheme described in the Superseding Indictment as "CONMEBOL Copa Libertadores Scheme #2." According to the Superseding Indictment, this scheme involved various bribe and kickback arrangements between sports marketing companies and officers of CONMEBOL (including Napout) relating to CONMEBOL's sale of broadcasting rights to the Copa Libertadores, an international soccer tournament that CONMEBOL has organized annually since 1960. As relevant to Napout's motion, the Superseding Indictment alleges that this scheme involved sales of broadcasting rights in the United States (SI ¶ 174), the organizing of soccer matches in the United States (SI ¶ 175), the holding of meetings in the United States (SI ¶ 185), and the use of wire facilities and financial institutions located in the United States, among other countries, to make and receive bribe payments and to transfer payments related to contracts secured through bribery (SI ¶ 185).
The Superseding Indictment also alleges significant conduct related to this scheme without identifying the location where the conduct occurred, including conversations concerning bribery and kickback arrangements (SI ¶¶ 179, 183), the solicitation and receipt of bribery payments (SI ¶¶ 182-84), entering into contracts concerning broadcasting rights (SI ¶ 180), and transfers of funds in connection with bribes and kickbacks (SI ¶¶ 178-79).
Count Eighty-Three charges Napout with participating in a conspiracy to commit wire fraud in connection with a fraudulent scheme described in the Superseding Indictment as "CONMEBOL/CONCACAF Copa America Centenario Scheme." According to the Superseding Indictment, this scheme involved various bribes paid to officers of CONMEBOL (including Napout) relating to CONMEBOL's distribution of commercial rights with respect to the annual Copa America tournament. As relevant to Napout's motion, the Superseding Indictment alleges that this scheme involved sales of broadcasting and other commercial rights in the United States (SI ¶¶ 155-57, 341), the use of financial institutions in the United States to transfer funds associated with paying bribes to CONMEBOL officers (SI ¶ 349), holding the centennial edition of the Copa America in the United States (SI ¶ 352), announcing in the United States the decision to hold the centennial edition of the Copa America in the United States (SI ¶ 353), and phone calls and meetings in the United States related to the bribery of CONMEBOL officials (SI ¶¶ 356, 360).
The Superseding Indictment also alleges that significant conduct related to this scheme occurred outside the United States, including meetings in Buenos Aires and London (SI ¶¶ 345, 347), wire transfers from banks located in Switzerland to other banks located outside the United States (SI ¶ 350), and negotiations conducted in foreign countries concerning broadcasting and other commercial rights in foreign countries (see, e.g., SI ¶¶ 347-48).
Considered in their entirety, these allegations are more than sufficient to allege conspiracies to commit domestic violations of the wire fraud statute, as to both the CONMEBOL Copa Libertadores Scheme #2 (Count Nine) and the CONMEBOL/CONCACAF Copa America Centenario Scheme (Count Eighty-Three). As detailed above, with respect to Counts Nine and Eighty-Three, the Superseding Indictment alleges significantly more than an incidental or minimal use of U.S. wires in furtherance of otherwise foreign schemes to defraud. The wire fraud schemes charged in Counts Nine and Eighty-Three involved conspiracies for sports marketing companies (some of which were based in the United States) to pay bribes (some of which were transmitted through U.S. wires) to Napout and other FIFA officials in exchange for commercial rights to televise and host FIFA soccer matches in various countries, including the United States. To be sure, the alleged fraud schemes extended beyond the United States—and may very well have had their centers of gravity outside the United States—but the schemes' contacts with the United States were substantial, and the U.S. wires were an integral part of the overall schemes. The Court therefore holds that Counts Nine and Eighty-Three sufficiently plead domestic applications of the wire fraud statute. See RJR Nabisco, 764 F.3d 129, 142 (finding allegations that defendants "hatched schemes to defraud in the United States, and that they used the U.S. mails and wires in furtherance of those schemes and with the intent to do so" clearly stated domestic cause of action for wire fraud).
Napout's contention that the Superseding Indictment fails to allege a domestic wire fraud violation as to him because it does not specifically allege his involvement in any act in the United States (Dkt. 491-1 at 15-17)
Napout argues that even applying the "focus" analysis, the domestic wire fraud charges are not sufficiently alleged because "the government references only three transfers from United States banks, while averring that banks all over the world were used." (Dkt. 491-1 at 17 (citing Petroleos Mexicanos, 572 F. App'x. at 61).) The Court disagrees. Indeed, the Second Circuit's reasoning in Petroleos Mexicano supports the conclusion that the Superseding Indictment adequately states the domestic wire fraud violations with which Napout is charged. In Petroleos Mexicano, the Circuit found that the "three minimal contacts with the United States" alleged as part of the wire fraud scheme were insufficient due to the "absen[ce] [of] . . . any allegations that the scheme was directed from (or to) the United States." Id. Here, there are numerous allegations about the wire fraud conspiracies charged in Counts Nine and Eighty-Three being directed from or to the United States. (See, e.g., SI ¶¶ 3, 177, 185, 342, 344, 345, 349, 352, 353, 356-58.)
Accordingly, Napout's motion is denied with respect to Counts Nine and Eighty-Three.
Napout is charged in Counts Ten and Eighty-Four with participating in two separate money laundering conspiracies, in violation of 18 U.S.C. § 1956(a)(2)(A).
Title 18, United States Code, Section 1956(a)(2)(A) provides that:
Thus, unlike the wire fraud statute, the federal money laundering statute contains a provision specifying the circumstances in which it can be applied extraterritorially, and thus overcomes the presumption against extraterritoriality. 18 U.S.C. § 1956(f); see RJR Nabisco, 764 F.3d at 139 ("Applying Morrison's presumption against extraterritoriality to [money laundering and material support] statutes, we conclude that . . . both apply extraterritorially under specified circumstances . . . .").
While the government primarily argues that the money laundering conspiracy charges against Napout in Counts Ten and Eighty-Four constitute domestic applications of Section 1956(a)(2) (Dkt. 516 at 40-42), the Court does not adopt this interpretation of the statute
Napout argues that "[n]otwithstanding [the] [c]ongressional directive" in 18 U.S.C. § 1956(f), the money laundering statute cannot be applied to him extraterritorially because the "specified unlawful activity" that allegedly gave rise to the allegedly laundered funds—i.e., wire fraud (SI ¶¶ 379, 502)—is extraterritorial conduct that is beyond the reach of the wire fraud statute. (Dkt. 491-1 at 12-14 (citing United States v. Prevezon Holdings Ltd., 122 F.Supp.3d 57 (S.D.N.Y. 2015)).) However, having concluded that the Superseding Indictment adequately alleges domestic violations of the wire fraud statute, supra, the Court has no trouble finding that those domestic violations qualify as "specified unlawful activity" for purposes of the money laundering counts against Napout.
Lastly, the Court rejects Napout's argument (Dkt. 491-1 at 19-20) that an extraterritorial application of the money laundering statute would be unreasonable in the circumstances, both because Congress expressly commanded such an application, see 18 U.S.C. § 1956(f), and because Napout has not made a showing of unreasonableness under the governing legal test, see Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 140 (2d Cir. 2014).
Accordingly, the Court denies Napout's motion to dismiss Counts Ten and Eighty-Four.
As discussed, in RJR Nabisco, 136 S.Ct. 2090 (2016), the Supreme Court clarified the extent to which the federal RICO statute applies extraterritorially. As relevant to Napout's motion, RJR Nabisco held that "the prohibitions in 18 U.S.C. §§ 1962(b) and (c) . . . apply extraterritorially in tandem with the underlying predicates, without regard to the locus of the enterprise." 136 S. Ct. at 2105. Although the Supreme Court deferred ruling on whether the same principle of extraterritoriality applies to the conspiracy provisions of the federal RICO statute, see 136 S. Ct. at 2103, this Court discerns no reason to apply a different rule.
The Supreme Court in RJR Nabisco also rejected the argument that while RICO applies to some foreign racketeering activity, it does not apply to foreign enterprises, and requires a "domestic enterprise." 136 S. Ct. at 2104. As RJR Nabisco made clear, the domestic and extraterritorial bounds of the federal RICO statute are coextensive with the underlying predicate statutes relied upon in a given case, and "the location of the affected enterprise does not impose an independent constraint." Id. However, as previously discussed, the Supreme Court found that the alleged RICO enterprise "must engage in, or affect in some significant way, commerce directly involving the United States—e.g., commerce between the United States and a foreign country." Id. at 2105.
The principles of extraterritoriality for RICO offenses articulated by the Supreme Court in RJR Nabisco dictate a finding that Count One of the Superseding Indictment is a permissible application of the RICO statute as to Napout. (SI ¶¶ 362-64.)
As discussed, the domestic and extraterritorial reach of the RICO statute is coterminous with that of the underlying predicate offenses in a given case. Here, the money laundering conspiracies charged against Napout as predicates to the RICO conspiracy in Count One have extraterritorial application, and the wire fraud conspiracies charged against Napout constitute domestic applications of the wire fraud statute. See supra. Thus, Count One properly charges a RICO conspiracy as to Napout based on extraterritorial applications of the money laundering statute and domestic applications of the wire fraud statute, as predicate offenses. See RJR Nabisco, 136 S. Ct. at 2106 (finding no "impermissibly extraterritorial application of RICO" where pattern of racketeering activity consisted of predicate offenses either committed in the United States in violation of a statute that applies domestically—i.e., domestic applications of the wire fraud, mail fraud, and Travel Act statutes—or committed in a foreign country in violation of a predicate statute that applies extraterritorially—i.e., extraterritorial applications of the money laundering and material support statutes); see also RJR Nabisco, 764 F.3d at 140-41 (finding that complaint alleged sufficient domestic conduct for mail fraud, wire fraud, and Travel Act violations to sustain application of RICO, despite predicates not applying extraterritorially, and finding that complaint alleged conduct satisfying extraterritorial requirements of money laundering statute to support extraterritorial application of RICO).
Napout's argument that insufficient minimal contacts were alleged in the Superseding Indictment to establish jurisdiction for the RICO conspiracy charge relies on case law that has been rendered obsolete by the Supreme Court's decision in RJR Nabisco. (Dkt. 491-1 at 17-18.) As noted above, in RJR Nabisco, the Supreme Court clarified that the criminal prohibitions of the RICO statute "apply extraterritorially in tandem with the underlying predicates, without regard to the locus of the enterprise." 136 S. Ct. at 2105. Having found that the predicate wire-fraud and money-laundering underlying Count One extend to Napout's alleged conduct, supra, the Court correspondingly finds, under RJR Nabisco, that the RICO statute also extends to that alleged conduct.
Accordingly, the Court denies Napout's motion to dismiss Count One of the Superseding Indictment as to him.
Napout also moves under Fed. R. Crim. P. 7(f), for an order requiring the government to file a bill of particulars specifying certain details of the charges pending against him. (Dkt. 490 at 1; Dkt. 490-1 at 2.)
An order requiring a bill of particulars is appropriate where the information requested is necessary to the preparation of the defense, and to avoid unfair surprise at trial. United States v. Torres, 901 F.2d 205, 234 (2d Cir. 1990). This Court has wide discretion in deciding whether to grant Napout's motion based on its consideration of the charges and allegations pleaded in the indictment, the discovery produced thus far in the case, Napout's and his counsel's interest in preparing a defense, and the government's concern that a bill of particulars may be used unfairly to obtain pre-trial discovery or a preview of its case. See United States v. Bortnovsky, 820 F.2d 572, 574 (2d Cir. 1987); United States v. Bin Laden, 92 F.Supp.2d 225, 233-34 (S.D.N.Y. 2000).
In consideration of these factors, the Court denies in part and grants in part Napout's motion, as follows. No later than March 10, 2017, the Government shall file a bill of particulars specifying the transactions—for example, the marketing contracts, broadcasting contracts, tournament hosting designations, etc.—that the Government will seek to prove were tainted by an unlawful conspiracy of which Napout was a part. Without a detailed list of those allegedly tainted transactions, Napout and his counsel will be in the same position as the criminal defendants who were deemed entitled to bills of particulars in United States v. Bortnovsky, 820 F.2d 572 (2d Cir. 1987), and United States v. Nachamie, 92 F.Supp.2d 565 (S.D.N.Y. 2000): accused of having committed unlawful acts in connection with a category of transactions, but without being given notice of which specific transactions falling within that category are alleged to have been tainted by unlawful conduct. See Bortnovsky, 820 F.2d at 574-75 (vacating convictions for insurance fraud where Government did not identify before trial "which of some fifteen" insurance submissions "would be demonstrated to be [false]"); Nachamie, 91 F. Supp. 2d at 574 (granting request for bill of particulars specifying which of more than 2,000 Medicare claims the Government would seek to prove were false).
Napout's motion for a bill of particulars is otherwise denied as seeking information beyond that required to prepare a defense. Although Napout might like to know now what witnesses and documents the Government intends to present at trial, the Federal Rules of Criminal Procedure do not entitle him to that information at this juncture. Likewise, the Court holds that, so long as the Government complies with this Order, Napout will have sufficient information to prepare a defense even without identification of the unnamed co-conspirators who, according to the Government, were involved in conspiracies affecting the same transactions.
For the foregoing reasons, the Court denies Marin's motion to dismiss Count One, denies Napout's motion to dismiss the counts against him, and denies in part and grants in part Napout's motion for a bill of particulars. The Government shall file the bill of particulars required by this Order no later than March 10, 2017.
SO ORDERED.