T.S. ELLIS, III, District Judge.
Defendant, Osama Esam Saleem Ayesh, is charged in a two count indictment with abusing his position at the United States Embassy in Baghdad, Iraq to steal and to convert to his own use $243,615 belonging to the United States, in violation of 18 U.S.C. §§ 641 and 208(a). He seeks threshold dismissal of the indictment on jurisdictional grounds, arguing that this prosecution is an impermissible exercise of
This matter, which has a somewhat involved history, has been fully briefed and argued and is now ripe for resolution.
During the period of time relevant to the indictment, 2008-2010, defendant, a primary resident of Jordan, was employed by the Department of State and assigned to the United States Embassy in Baghdad, Iraq ("USEB") as a shipping and customs supervisor when he allegedly abused his USEB position to convert $243,416 from the United States. As a USEB shipping and customs supervisor, defendant was responsible for facilitating shipments of personal property belonging to USEB personnel into and out of Iraq, including ensuring that these items cleared customs. The process of clearing Iraqi customs was typically coordinated by an experienced local vendor with whom USEB contracted, and defendant's role was to oversee and to assist the vendor on behalf of USEB. Each vendor with whom USEB contracted for services generally operated pursuant to a Blanket Purchase Agreement ("BPA") with USEB. To receive payment for services, each vendor was required to submit a Wire Transfer Payment Instruction Form ("WTPIF") specifying the vendor's bank account. When payment was required, money was wired from a U.S. government bank account to the account specified by the vendor in the WTPIF.
Two BPAs are relevant to the charges against defendant. Both BPAs involve the same local vendor, Sukar Al-Zubaidi Company ("SZC"), which USEB engaged for "Delivery Services and Customs Clearance." The first BPA was identified as SIZ100-08-A-0628 and dated September 11, 2008. After several months of operating under this BPA, the $100,000 ceiling established in the BPA was reached, and thus, on May 12, 2009, USEB entered into a second BPA with SZC, identified as SIZ100-09-A-0496. On each of these BPAs, defendant was identified as one of two "BPA callers," meaning that defendant was authorized to contact SZC and to arrange for services on behalf of USEB.
The indictment alleges that defendant used his position as an intermediary between USEB and SZC to divert funds intended for SZC to a Jordanian bank account controlled by his wife. He did so, according to the government, by setting up a fictitious email address, "co.alzubaidi@ yahoo.com," which defendant led USEB officials to believe belonged to SZC. But the government alleges that in fact, defendant controlled this email account and was responsible for all "correspondence" between his Department of State email address and his fictitious SZC email address. Using this fake email address, defendant
Once defendant's scheme was discovered, agents from the FBI and the Department of State Office of the Inspector General began a comprehensive, but covert investigation. Following the issuance of an arrest warrant for defendant, USEB officials lured defendant to the United States by telling him that he was being selected for participation in a training program to be conducted in the United States. When defendant arrived at Dulles International Airport, he was promptly arrested, and soon thereafter indicted.
The three count indictment may be briefly summarized. Count I charges that from approximately November 2008 to April 2009, defendant "did knowingly embezzle, steal, purloin, and convert to his use $116,105 in U.S. Government electronic funds" intended for the payment of services under BPA SIZ100-08-A-0628 but instead transferred to a Jordanian bank account controlled by defendant, in violation of 18 U.S.C. § 641. Count II of the indictment charges that from approximately May 2009 to June 2010, defendant "did knowingly embezzle, steal, purloin, and convert to his use a record, voucher, money, and thing of value of the United States... in that defendant fraudulently caused $121,131 in U.S. Government electronic funds" intended for the payment of services under BPA SIZ100-09-A-0496 to be transferred to a Jordanian bank account controlled by defendant, also in violation of 18 U.S.C. § 641. Finally, Count III of the indictment charges that in violation of 18 U.S.C. § 208(a), defendant, while employed by the Department of State, "participated... personally and substantially" in the BPA contract process despite having a personal financial interest in the bank account associated with the given contracts—a conflict of interest. See Indictment, Counts I-III. At arraignment, defendant pled not guilty and requested a trial by jury.
The government argues that the exercise of jurisdiction in this case is appropriate for two reasons. First, the government asserts that there is no need to reach the question of extraterritorial jurisdiction because defendant's conduct fell within the territorial jurisdiction of the United States, given that the wire transfers in question involved banks or bank accounts based in the United States. Second, the government argues that even assuming defendant's conduct does not satisfy territorial jurisdiction, the statutes themselves must be construed to allow for the exercise of extraterritorial jurisdiction.
Analysis of the jurisdictional issue raised by defendant's motion appropriate begins with two well-settled presumptions concerning the jurisdiction of federal criminal statutes. First, statutes are presumed to apply to offenses committed anywhere in the territorial jurisdiction of the United States. Second, statutes are presumed not to apply extraterritorially, absent the "clearly expressed" intention of Congress to extend jurisdiction beyond our borders. United States v. Mohammad-Omar, 323 Fed.Appx. 259, 261 (4th Cir.2009) (citing EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274
Generally, territorial jurisdiction is proper where "the offense, or part of the offense, occurred within the United States." See United States v. Moncini, 882 F.2d 401, 402-04 (9th Cir.1989). In this regard, "[a]cts done outside a jurisdiction, but intended to produce and producing detrimental effects within it," justify the exercise of territorial jurisdiction. See Strassheim v. Daily, 221 U.S. 280, 285, 31 S.Ct. 558, 55 L.Ed. 735 (1911). Yet, the Fourth Circuit has also noted that "[m]inimal contact with the United States should not automatically render conduct domestic." In re French, 440 F.3d 145, 149 (4th Cir.2006).
While the general principles of territorial jurisdiction are well settled, the parties identify no cases—and none has been found—elucidating precisely what minimum level of contact with United States territory will trigger territorial jurisdiction for the statutes in issue. The leading case in the Fourth Circuit on territorial jurisdiction appears to be In re French, in which the Fourth Circuit applied these principles to determine whether an alleged fraudulent transfer in violation of the Bankruptcy Code was territorial or extraterritorial in nature. As an initial matter, the French opinion noted that the Fourth Circuit had never before defined "extraterritorial" for the purposes of jurisdiction. Id. at 149-50. The Fourth Circuit in French began its analysis with the premise that the analysis should "eschew rigid rules in favor of a more flexible inquiry," and it concluded that the analysis should turn on "whether the participants, acts, targets, and effects involved in the transaction at issue are primarily foreign or primarily domestic." Id. In those circumstances, the French court found the conduct in question was "domestic" because "the perpetrator and most of the victims of the fraudulent transfer [except one] have long been located in the United States," meaning that "the effects of this transfer were (naturally) felt most strongly here, and not in the Bahamas." Id. at 150. Additionally, the allegedly wrongful decision to transfer the property in question for "less than a reasonably equivalent value in exchange" was made in the United States, and that conduct fulfilled a material element under the fraudulent transfer statute. See 11 U.S.C. § 548(a)(1)(B). Accordingly, the French court concluded that because the bulk of the alleged unlawful conduct occurred within the United States, the Bankruptcy Code provisions in issue covered the alleged constructively fraudulent transfer, and it was unnecessary to consider whether the provisions had extraterritorial effect.
The principles in French, applied here, point persuasively to the result opposite of that reached in French. Here, there can be no question that defendant's conduct was primarily foreign, not primarily domestic. Defendant was employed by USEB in Baghdad to engage local vendors in Iraq, and all of the contracts in question were approved, signed, and supervised by Department of State personnel in Baghdad. All of defendant's alleged criminal conduct occurred outside the United States.
Case law considering whether various statutes have extraterritorial effect is not extensive, but the available cases do make clear that the presumption noted earlier— that all federal criminal statutes apply only
United States v. Bowman, 260 U.S. 94, 98, 43 S.Ct. 39, 67 L.Ed. 149 (1922). For this class of offenses, the Supreme Court recognized that "to limit [a given statute's] locus to the strictly territorial jurisdiction would be greatly to curtail the scope and usefulness of the statute and leave open a large immunity for frauds as easily committed by citizens on the high seas and in foreign countries as at home." Id.
Courts analyzing whether statutes apply extraterritorially have consistently proceeded by comparing the statutes and conduct in question to the statutes and conduct in Bowman. See, e.g., Cotten, 471 F.2d 744, 750 (9th Cir.1973) (finding the exercise of extraterritorial jurisdiction appropriate for violations of 18 U.S.C. § 641); United States v. Delgado-Garcia, 374 F.3d 1337, 1345 (D.C.Cir.2004) (same result, analyzing 8 U.S.C. § 1324(a)); United States v. Frank, 599 F.3d 1221 (11th Cir.2010) (same result, analyzing 18 U.S.C. § 2251A). Therefore, the analysis here appropriately begins with the facts and reasoning of Bowman. In that case, three American citizens and one British subject engaged in a scheme to defraud the United States Shipping Board Emergency Fleet Corporation ("Fleet Corporation"), a corporation in which the United States was the sole stockholder. Of the four conspirators, two were sailors aboard the Dio, a federally-owned ship, one was a local merchant in Rio de Janeiro, and the fourth was a Standard Oil Company agent. The conspirators hatched a scheme whereby they arranged to have only six hundred tons of fuel oil delivered to the Dio rather than the one thousand tons ordered by the Fleet Corporation, and because the Fleet Corporation would pay for the one thousand tons ordered, the conspirators could pocket the overpayment. When the scheme was discovered, the conspirators— with the exception of the British subject, who could not be found—were indicted. The statute they were accused of violating, § 35 of the Criminal Code, provided, in pertinent part, that no person may
Bowman teaches that the critical factors for the extraterritoriality analysis are (i) whether the statutes "are, as a class, not logically dependent on their locality for the Government's jurisdiction, but are enacted because of the right of the Government to defend itself against obstruction, or fraud wherever perpetrated," and (ii) whether limiting the statute's "locus to the strictly territorial jurisdiction would be greatly to curtail the scope and usefulness of the statute and leave open a large immunity for frauds as easily committed by citizens on the high seas and in foreign countries as at home." Id. at 98, 43 S.Ct. 39. Courts since Bowman have consistently applied these principles in assessing whether a particular statute has extraterritorial effect. See Cotten, 471 F.2d at 750 (analyzing § 641); United States v. Vasquez-Velasco, 15 F.3d 833, 840-41 (9th Cir. 1994) (analyzing drug smuggling statutes); United States v. Benitez, 741 F.2d 1312, 1316-17 (11th Cir.1984) (analyzing statute punishing murder of agents from the Drug Enforcement Agency) United States v. Layton, 855 F.2d 1388, 1395-96 (9th Cir. 1988) (analyzing statute punishing murder of a United States congressman).
Particularly pertinent here is the Ninth Circuit's opinion in Cotten analyzing 18 U.S.C. § 641, the first of the two statutes under which defendant is charged in this case. That decision is the only case that has been found analyzing either of the statutes charged in this case. In Cotten, the Ninth Circuit held that § 641 applied extraterritorially, noting that it was "inconceivable that Congress, in enacting Section 641, would proscribe only the theft of government property located within the territorial boundaries of the nation." Cotten, 471 F.2d at 750. The Ninth Circuit's analysis closely tracks the analysis in Bowman:
Id. at 750.
Cases following Bowman have consistently found the exercise of extraterritorial
Defendant counters that Bowman involved the prosecution of United States citizens, and the Supreme Court has yet to decide whether the same result would be warranted in a case involving a non-citizen, such as defendant. It is true that the Bowman defendants were United States citizens, but the Supreme Court's analysis did not turn on this fact. A careful reading of Bowman leaves little doubt in this regard. The most direct reference to defendants' citizenship in Bowman came when Chief Justice Taft noted that fraud against the government does not logically call for a territorial limitation "especially if committed by [the government's] own citizens, officers or agents." Id. (emphasis added). As the use of the word "especially" suggests, a defendant's United States citizenship strengthens the justification for extraterritoriality, but is not required for such a finding. Moreover, in determining whether extraterritorial jurisdiction applied, the Bowman opinion focused on the nature of the harms—i.e., government theft and corruption—and not the characteristics or nationalities of the perpetrators. The harms targeted by the statutes in this case are, of course, conversion of government funds, 18 U.S.C. § 641, and malfeasance in government contracts based on conflicts of interest, 18 U.S.C. § 208(a), and like the statutes discussed in Bowman, it is illogical—indeed, it is "inconceivable"—to presume that Congress intended to limit enforcement of these statutes to United States territory. See Cotten, 471 F.2d at 750 (discussing § 641). To hold otherwise—that is, to limit the jurisdictional reach of the statutes as defendant suggests—would be "greatly to curtail the scope and usefulness of the statute and leave open a large immunity for frauds." Bowman, 260 U.S. at 98, 43 S.Ct. 39.
Defendant also argues that extraterritorial enforcement of these statutes would violate the law of nations. Although international law does not bind Congress, it is appropriate to consider such principles inasmuch as the Supreme Court has observed that while "it clearly has constitutional authority to do so, Congress is generally presumed not to have exceeded those customary international-law limits on jurisdiction." Hartford Fire Ins. Co. v. California, 509 U.S. 764, 814-15, 113 S.Ct. 2891,
In sum, based on the nature of the alleged offenses, the statutes under which defendant has been charged are not subject to the presumption against extraterritorial jurisdiction, and instead, these statutes are appropriately construed to extend to defendant's alleged extraterritorial offense conduct.
There is a final constitutional question that neither party addressed but is nevertheless appropriately considered. The
Here, as in Mohammad-Omar, the record facts establish a sufficient nexus between defendant and the United States to warrant prosecuting defendant in this country. The government has alleged more than sufficient facts that, if true, demonstrate that defendant's prosecution in the United States "would not be arbitrary or fundamentally unfair." Mohammad-Omar, 323 Fed.Appx. at 261. Defendant's employment with the Department of State at the United States Embassy in Baghdad was central to the commission of his alleged crimes. Using a fictitious email address, defendant allegedly led embassy officials to believe they were contracting with and purchasing services from a third party vendor when, in fact, the money was being transmitted to a bank account controlled by defendant. Just as the defendant in Mohammad-Omar had ample reason to anticipate being haled into court in the United States on account of his drug trafficking activity abroad, so, too, would defendant here have had ample reason to expect prosecution in the United States. Accordingly, defendant's prosecution in this country does not offend due process.
Accordingly, for the reasons stated, defendant's motions to dismiss for improper exercise of extraterritorial jurisdiction must be denied.
An appropriate Order has already issued, and the Clerk is directed to send a copy of this Memorandum Opinion to all counsel of record.