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Fifth Circuit Court of Appeals Reverses Trial Judge’s Dismissal of Criminal FCPA Charges Against Two Venezuelan Officials

In a recent decision, the Fifth Circuit Court of Appeals handed the U.S. Justice Department a victory in reversing an “out-of-whack” trial judge’s dismissal of two separate criminal indictments that were consolidated on appeal. On occasion, it is evident that some trial judges will reach a result-oriented decision without proper regard for court precedent or the literal terms of a statute.  The Fifth Circuit’s lengthy and perhaps critical decision underscores the failure of a district judge to adhere to the law and relevant precedent.

The criminal case filed by DOJ charged two U.S.-based business persons, Daisy Teresa Rafoi Bleuler and Paulo Jorge Da Costa Casqueiro Murta, for bribing Venezuelan officials at PdVSA for favorable treatment.  The trial judge dismissed the case against the two defendants, ruling that the FCPA and the Anti-Money Laundering statutes did not apply extraterritorially.

The Fifth Circuit reminder the trial judge of the basic legal principle that the dismissal of the case on jurisdictional grounds was wrong because extraterritoriality concerns the merits of the case and not the court’s jurisdiction to hear it.

As alleged in the indictment, Rafoi and Murta worked at two Swiss wealth-management firms and were agents for co-conspirators involved in the laundering of proceeds of the bribery scheme through various financial institutions.  The two allegedly set up accounts to receive bribe payments in order to facilitate the co-conspirators bribery schemes.

The Fifth Circuit emphasized that the money laundering charges did not require that either or both of the defendants commit certain acts in furtherance of the scheme in the United States.  DOJ conceded that point but successfully pointed out that the money laundering statute applies extraterritorially to cases like this where foreign persons engage in money laundering activity in the United States and are not physically present in the United States.

In another interesting part of the ruling, the Fifth Circuit reversed the trial judge’s ruling suppressing an interview statement given by defendant Murta to Portuguese law enforcement at the U.S. government’s request.  Murta claimed that his Miranda rights were violated since he was in “custody” at the time of the interview.  In rejecting that argument, the Fifth Circuit concluded that Murta was not in custody and, more importantly, was represented by his attorney at the interview.

Also, the Fifth Circuit rejected the defendants’ challenge that they were not liable as “agents” of a domestic concern, as alleged in the indictment.  Again, the Fifth Circuit reminder the district court that the dismissal of the indictment is not appropriate when the indictment is valid on its face and there is no reason to go beyond this finding to address the sufficiency of the evidence supporting the allegation.  Since the defendants’ claims were premature, the Fifth Circuit reversed the trial judge.  In doing so, the Fifth Circuit noted that the indictment is adequate because it puts the defendants on fair notice as to the nature of the charges against each defendant and the applicable law.  If the indictment includes the basic facts to establish liability under the applicable law, then the government has met basic constitutional requirements and is entitled to prosecute the charges and conduct a trial to determine the defendants’ guilt or innocence.

Finally, the Fifth Circuit rejected the trial court’s determination that the term “agent” is unconstitutionally vague as used in the FCPA.  In support of its decision, the Fifth Circuit noted that the term “agent” is not vague as applied to the defendants’ conduct.  In the Court’s view, the term “agent” is governed by its common-law meaning and cited the Restatement of Agency, which requires both the principal’s control over the agent and both parties’ consent to the agent’s acting on the principal’s behalf.”

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