Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.
On October 30, the DOJ charged Roger Richard Bouncy, a dual U.S.-Haitian citizen, with conspiracy to violate the FCPA, commit money laundering, and violate the Travel Act, as well as substantive Travel Act violations. Bouncy is a licensed attorney and the CEO of Haiti Invest, LLC, a Haitian development and reconstruction company. The indictment is part of an ongoing case against retired U.S. Army Colonel, Joseph Baptiste, who was indicted in 2017 related to an alleged plan to solicit bribes from potential investors for infrastructure projects in Haiti. (For prior coverage of the charges against Baptiste, please see here.) According to the indictment, at a meeting in 2015, Bouncy and Baptiste met with undercover FBI agents posing as potential investors in the development project, and allegedly asked the agents to invest $84 million in the project. Baptiste told them that 5% of that total would be paid to Haitian officials to secure approval for the project. Baptiste allegedly planned to disguise the funds through a non-profit he controlled. The FBI then wired money to the non-profit.
The relatively sparse judicial caselaw on the FCPA expanded last week with a new opinion interpreting the "public international organization" language in the statute. In an opinion denying the defense's Motion to Dismiss an indictment originally brought in 2015, Judge Paul Diamond of the United States District Court for the Eastern District of Pennsylvania found that the FCPA "plainly" applies to public international organizations. United States v. Dmitrij Harder, No. 2:15-cr-00001 (E.D. Pa. Mar. 2, 2016). Combined with the Eleventh Circuits 2014 opinion in Esquenazi, the contours of the types of foreign government entities subjecting defendants to FCPA sanctions are beginning to be fleshed out. (Previous FCPA Scorecard coverage of the Esquenazi case can be found here.) Dmitrij Harder - a Russian national, German citizen, and U.S. permanent resident - owned and operated two consulting companies that, in 2007 and 2009, assisted two different independent energy companies in obtaining financing from the European Bank for Regional Development (the "EBRD"). The EBRD is a multilateral development bank founded in 1991 to foster the growth of businesses operating in the former Soviet Union. Today it invests throughout Europe and is jointly owned by sixty-four countries. The DOJ charged Harder in 2015 with 14 counts of violating the FCPA, the Travel Act, and money laundering. The government alleged that the energy companies entered into agreements with Harder whereby they agreed to pay him success fees upon receiving financing from the EBRD. After both companies obtained sizable investments from the EBRD - one company received an $85 million investment; the other a $40 million investment and $60 million loan - they allegedly paid Harder success fees totaling almost $8 million. Shortly after the success fees were paid, Harder allegedly wired payments totaling almost $3.5 million to the sister of an EBRD official. The government alleged that the sister of the EBRD official entered into sham consulting agreements with Harder's companies, making it appear that the payments were made for services rendered under the agreements, but no such services were actually performed. In arguing for dismissal of the FCPA counts of the indictment, Harder challenged the sufficiency of the Indictment on several bases, including a failure to plead the involvement of a "foreign official," and that the Indictment impermissibly substituted the phrase "foreign government or instrumentality thereof" with "public international organization" in reciting the fourth of the FCPA's proscribed corrupt purposes: "inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality." 15 USC 78dd-2(a)(3)(B). On the first challenge, Judge Diamond rejected the idea that officials of EBRD could not qualify as "foreign official[s]" within the FCPA's prohibitions. Op. at 6; see also Op. at 8 (noting that "whether EBRD falls within the FCPA's ambit is necessarily a 'fact-bound question' properly decided by a jury"). On the second challenged, Harder had maintained that permitting the government to substitute "public international organization" into the statute would create an entirely new offense with no basis in the statute. Rejecting this argument, Judge Diamond pointed out that public international organizations are themselves "an association of foreign governments." Op. at 7. He reasoned that refusing to allow this substitution in the language of indictments where a public international organization, rather than a foreign government, is involved would "make it impossible to prosecute any public international organization employee who unlawfully used his position," calling this "an absurd result" in light of Congress' decision to include public international organizations within the scope of the FCPA. Op. at 7. Harder also raised two challenges to the constitutionality of the FCPA's inclusion of the EBRD. In 1998, the FCPA was amended to include employees of public international organizations within the scope of the Act's prohibition on certain corrupt payments. The 1998 amendments brought employees of two groups of public international organizations within the scope of the FCPA; (1) those organizations that the President declares by Executive order are covered by the FCPA, and (2) those organizations identified pursuant to the International Organization Immunities Act ("the IOIA"), 22 USC 288. The IOIA allows the President, acting by executive order, to provide public international organizations in which the US participates with legal capacity, certain immunities, and privileges under US law. In 1991, the EBRD was designated a public international organization under the IOIA, and so it became subject to the FCPA after the 1998 amendments. First, Harder argued that the FCPAs inclusion of the EBRD and other public international organizations violates the non-delegation doctrine, which provides that where Congress delegates legislative authority it must do so with "an intelligible principle" to guide the exercise of the delegated authority. United States v. Cooper, 750 F.3d 263, 270 (3d Cir. 2014). Harder argued that Congress, by allowing the President to expand the list of public international organizations covered by the FCPA by executive order, impermissibly delegated its legislative function to the executive branch. Judge Diamond rejected this argument, finding that the legislative scheme enacted by Congress constrains the President's ability to add public international organizations to the scope of the FCPA, and that the clearly stated purposes of the FCPA provide sufficient guidance. Op. at 9-11. Second, Harder argued that the FCPA's inclusion of the EBRD violates the void-for-vagueness doctrine, which provides that a criminal law is void if it fails to define the offense in a way that "ordinary people can understand what conduct is prohibited" and in a way that does not encourage "arbitrary and discriminatory enforcement." Skilling v. United States, 561 U.S. 358, 402-403 (2010). Harder argued that the somewhat circuitous route by which the EBRD was made subject to the FCPA renders the law unconstitutionally vague because it would require individuals to monitor whether a particular public international organization has been the subject of an executive order that subjects it to the FCPA. Judge Diamond rejected this argument also, finding that an ordinary person could research the status of a public international organization. Judge Diamond also pointed out that there is a publicly available list of all public international organizations subject to the FCPA, and that the FCPAs knowledge requirement alleviated any concern that a defendant might unwittingly violate the FCPA. Op. at 13.
- Kathryn L. Ryan to discuss "Industry open forum session on NMLS usage" at the NMLS Annual Conference & Training
- Tim Lange to discuss "State legislative update - MSBs and consumer finance" at the NMLS Annual Conference & Training
- Kathryn L. Ryan to discuss "Regulating innovative consumer lending products" at the NMLS Annual Conference & Training
- Daniel P. Stipano to moderate "Washington update" at the Puerto Rican Symposium of Anti Money Laundering
- Melissa Klimkiewicz to discuss "Private flood insurance updates" at the Mortgage Bankers Association Servicing Solutions Conference & Expo
- Jonice Gray Tucker and H Joshua Kotin to discuss regulatory compliance issues in the fintech industry at Protiviti's Risk & Compliance Innovation Roundtable
- APPROVED Checkpoint Webcast: CFL overview
- Amanda R. Lawrence and Sherry-Maria Safchuk to discuss "California privacy rule" on an NAFCU webinar
- Sasha Leonhardt to discuss "MLA & SCRA" on a NAFCU webinar
- Daniel P. Stipano to discuss "Pathway of the SARs: Tracking trajectories of suspicious activity reports from alerts to prosecution" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Which bud’s for you? A deep-dive into evolving marijuana laws" at the ACAMS International AML & Financial Crime Conference
- John P. Kromer to discuss "Navigating the multi-state fintech regulatory regime" at the American Conference Institute Legal, Regulatory and Compliance Forum on Fintech & Emerging Payment Systems