United States v. Hoskins

Citations: 123 F. Supp. 3d 316; 2015 U.S. Dist. LEXIS 106802; 2015 WL 4774918Docket: Criminal No. 3:12cr238 (JBA)

Court: District Court, D. Connecticut; August 13, 2015; Federal District Court

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Defendant Lawrence Hoskins seeks to dismiss Count One of the Third Superseding Indictment, asserting that it is based on a legally invalid theory of conspiracy under the Foreign Corrupt Practices Act (FCPA), which he claims does not allow for liability without proving he was an agent of a domestic concern. The Government argues that Hoskins can still be convicted under accomplice liability theories and seeks to prevent him from arguing the necessity of proving agency to the jury. The Court partially grants Hoskins's motion, ruling that his FCPA conspiracy prosecution cannot be separated from the requirement of proving he was an agent of a domestic concern. Consequently, the Government's motion in limine is denied. 

The case involves allegations against Hoskins for participating in a bribery scheme from 2002 to 2009 related to a $118 million project for Indonesia's state-owned electricity company, Perusahaan Listrik Negara. Hoskins served as Senior Vice President for Alstom UK and worked for Alstom Resources Management S.A. in France, where he oversaw hiring consultants to secure contracts in Asia, including for the Tarahan Project. The indictment previously alleged he was an agent of Alstom Power U.S., despite being employed by a foreign subsidiary. The most recent indictment has changed the language to indicate Hoskins conspired with a domestic concern rather than being directly labeled as an agent.

Defendant argues that the Third Superseding Indictment indicates the government's position that Mr. Hoskins can be charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) even if he is not directly subject to the statute. The Government counters that the indictment meets the necessary pleading standards and asserts that the defendant may still be convicted under various theories of accomplice liability, such as aiding and abetting, even if he is not an agent of a domestic concern. The Court addresses whether a nonresident foreign national can face criminal liability under the FCPA in the absence of direct actions within U.S. territory or designation as an agent of a domestic concern. The Court concludes that such liability does not extend to the Defendant under these circumstances, granting part of the Defendant’s Motion to Dismiss Count One and denying the Government's Motion in Limine.

The FCPA prohibits bribery of foreign officials and establishes three jurisdictional bases: (1) actions by a domestic concern or U.S. issuer using U.S. interstate commerce, (2) U.S. citizens acting abroad in furtherance of corrupt payments, and (3) any person acting within U.S. territory regarding corrupt payments, irrespective of nationality. The Defendant asserts that Congress intended to exclude non-resident foreign nationals from the statute’s reach unless they acted within the U.S. or belonged to a specified class of individuals. While the Government agrees that without being an agent of a domestic concern, the Defendant cannot be directly liable under the FCPA, it maintains that conspiracy and accomplice liability can apply even to those who cannot commit the underlying substantive crime, except in narrow circumstances that do not apply here.

The principles of accomplice liability under the conspiracy statute (18 U.S.C. 371) and aiding and abetting statute (18 U.S.C. 2) are generally applicable to federal crimes, allowing for liability of those who aid or conspire in such offenses. Historically, provisions for aiding and abetting have automatically applied to new criminal statutes since 1909, with the conspiracy statute similarly criminalizing conspiracy to commit any federal offense.

Conspiracy is defined as an inchoate offense involving an agreement to commit an unlawful act. In Gebardi v. United States, the Supreme Court addressed whether a woman could be convicted of conspiracy under the Mann Act, which prohibits the transportation of women for immoral purposes, when she consented to her own transport. The Court clarified that conspiracy statutes prohibit planning criminal conduct, regardless of an individual's capacity to commit the substantive offense. However, it noted that the Mann Act does not criminalize a woman's acquiescence to such transport, indicating a legislative intent to leave her consent unpunished. Consequently, a woman not liable as a principal under the Mann Act cannot be charged with conspiracy to violate that Act, as doing so would undermine Congressional intent.

The Gebardi principle asserts that if Congress excludes a class of individuals from liability under a statute, the Executive cannot circumvent that intent by charging them with conspiracy. This principle also extends to aiding and abetting liability, focusing on Congressional intent rather than the Government's ability to prosecute. The Government argues that Gebardi represents a narrow exception to the general principle that conspiracy and accomplice liability apply to individuals lacking the capacity to commit the underlying crime.

The exception to criminal liability outlined applies in two specific scenarios: (1) when a necessary party to the crime is explicitly excluded from prosecution by Congress, such as a foreign official receiving a bribe under the FCPA or a woman transported under the Mann Act, and (2) when the substantive statute is designed to protect a particular class of individuals, like victims. The defendant argues that the Gebardi precedent applies whenever Congress intentionally excludes a class from liability. The Court concurs that the Government's interpretation of Gebardi is overly restrictive, noting that Congressional intent may be evident in various scenarios beyond those identified by the Government.

In a relevant case, Amen, the Second Circuit ruled that a non-leader in a criminal enterprise could not face enhanced sentencing under the drug kingpin statute for aiding and abetting, reasoning that Congress's omission of aiders and abettors indicated an intention to leave them unpunished. The legislative intent is most clearly illustrated through the FCPA's text and structure, which specifies liable parties and excludes nonresident foreign nationals unless they are agents of a domestic entity or engaged in corrupt activities within U.S. territory.

In the case of United States v. Castle, the Fifth Circuit applied Gebardi to determine that foreign officials accepting bribes under the FCPA could not be prosecuted for conspiracy. The Court highlighted Congress's primary focus on the domestic ramifications of foreign bribery, indicating that while it could extend jurisdiction to foreign officials, it chose not to do so due to international law concerns and the complexities of enforcement. The legislative history reflects a policy of intentionally leaving certain individuals unpunished, paralleling the findings in Gebardi.

The legislative history of the Foreign Corrupt Practices Act (FCPA) of 1977 indicates that Congress did not intend for non-resident foreign nationals to be held liable under the FCPA unless they acted as agents of a domestic concern or conducted activities within U.S. territory. The initial Senate bill prohibited U.S. issuers and domestic concerns from using interstate commerce to facilitate bribery, defining "domestic concern" to include U.S. citizens, nationals, and entities controlled by them. An amendment in 1977 clarified that individuals acting on behalf of U.S. issuers or domestic concerns would be liable for bribery, regardless of their nationality. Despite requests to include foreign subsidiaries of U.S. companies, the Senate declined to extend liability to them. A competing House bill proposed broader liability for non-resident foreign nationals, including agents of U.S. issuers and foreign affiliates. Ultimately, the enacted FCPA incorporated elements from both bills, allowing for liability of agents of domestic concerns but restricting it to individuals who were U.S. citizens or subject to U.S. jurisdiction, necessitating a finding of violation by the domestic concern itself. The final legislation explicitly excluded foreign affiliates, acknowledging the complexities of jurisdiction and enforcement.

U.S. citizens, nationals, and residents are defined as domestic concerns, making them potentially liable for indirect bribery through another person. Unlike foreign subsidiaries, they do not face jurisdictional or enforcement challenges for such liabilities. Early legislative discussions acknowledged that the proposed law would not cover all international bribery, particularly actions taken independently by foreign nationals. However, in most SEC-investigated bribery cases, U.S. company officials were often aware of and approved the bribery, making them prosecutable under the proposed law. The bill included concepts of aiding and abetting, applicable as in SEC civil actions and private securities law actions. Legislative history indicates that the Carter Administration raised concerns about the clarity of individual liability, leading Congress to specify that certain individuals would be directly covered, rather than relying on accomplice liability. The final enactment reflects an intent to limit accomplice liability, as Congress explicitly listed who could be prosecuted under the FCPA, intending these individuals to be covered without invoking conspiracy statutes. The 1998 amendments to the FCPA aimed to align with U.S. treaty obligations and have been interpreted to apply accomplice liability and conspiracy statutes to foreign nationals not covered as principals under the original act.

The OECD Convention mandates that signatory countries criminalize the act of bribing foreign officials. Responding to this requirement, the 1998 amendments to the Foreign Corrupt Practices Act (FCPA) expanded liability in three significant ways: 

1. 15 U.S.C. 78dd-3(a) makes it illegal for individuals or entities not covered by existing provisions to engage in corrupt payments while in the U.S.
2. The amendments removed previous penalties disparity, allowing for the criminal prosecution of foreign nationals acting as agents of U.S. concerns if they used interstate commerce.
3. The law established nationality jurisdiction, making it unlawful for U.S. persons to engage in bribery outside the U.S.

The government argues that the amendments broadened the FCPA's jurisdiction to include any person under U.S. court jurisdiction to comply with treaty obligations. However, the court disagrees, asserting that the term "any person" is limited by Article 4 of the OECD Convention, which specifies jurisdictional conditions. The Convention does not obligate the U.S. to prosecute foreign bribery by non-resident foreign nationals. The court further concludes that Congress did not intend for non-resident foreign nationals to face accomplice liability if they are not directly liable. Nonetheless, Count One of the charges will not be dismissed entirely as the government may proceed under the theory that Mr. Hoskins is an agent of a domestic concern, which would allow for his direct liability under the FCPA. The government cannot assert conspiracy liability for Mr. Hoskins without proving his agency status.

Defendant’s Motion to Dismiss Count One of the Third Superseding Indictment is partially granted, while the Government’s Motion in Limine to prevent the Defendant from arguing that agency is the sole basis for conviction is denied. The Third Superseding Indictment continues to allege that the Defendant, Hoskins, acted as an agent of a domestic concern, specifically Alstom Power US, under the Foreign Corrupt Practices Act (FCPA). The indictment includes charges for substantive violations of the FCPA (Counts 2-7), conspiracy to launder money (Count 8), and substantive money laundering (Counts 9-12). The Government asserts its intention to prove that the Defendant is liable as a principal for the FCPA counts, arguing that Count One meets the liberal pleading standards of Federal Rule of Criminal Procedure 7(c), particularly regarding conspiracy. The Defendant contends that Count One is legally deficient, a claim appropriate for a pretrial motion. The Court clarifies that this motion does not re-litigate prior issues but addresses whether the Defendant can be convicted under an accomplice liability theory even if the agency is not established. Definitions of "domestic concern" and relevant statutes regarding conspiracy and aiding and abetting are provided, emphasizing that conspiracy involves two or more persons working toward a criminal objective and that aiding and abetting involves assisting or inducing the commission of an offense.

Defendant accepts that conspiracy and aiding-and-abetting offenses do not require the ability to commit the underlying crime, focusing his argument on legislative intent. The Government counters with over 20 cases, asserting that Defendant seeks to overturn established Second Circuit precedents by claiming that Gebardi applies to exemptions from principal liability under substantive statutes. However, this does not accurately represent Defendant’s position. The Seventh Circuit's ruling in United States v. Pino-Perez criticized the Second Circuit’s interpretation, suggesting that without explicit legislative intent to exclude aiders and abettors, they should be held liable. The Seventh Circuit favored a legislative policy that presumes aiding and abetting liability unless explicitly exempted, finding no indication in the legislative history that such liability is precluded. Furthermore, even applying the Seventh Circuit's reasoning would lead to the same conclusion regarding the FCPA, which indicates an intent to exclude certain non-resident foreign nationals from liability. The case of United States v. Bodmer established that prior to the 1998 amendments, foreign agents of domestic entities could not be prosecuted under the FCPA if the statute's penalties did not apply to them directly. The 1998 amendments removed ambiguous language regarding jurisdiction that had previously created confusion, thereby clarifying that it does not pertain to Defendant. The Bodmer court deemed the removed phrase unnecessary, as personal jurisdiction is typically not an issue in criminal law.

Officers or directors of a domestic concern face criminal liability without regard to nationality under 15 U.S.C. 78dd-2(b)(1)(B). Similarly, civil liability applies to all directors, employees, and agents of a domestic concern regardless of nationality (15 U.S.C. 78dd-2(b)(1)(A)). The Senate Committee Report for 15 U.S.C. 78dd-3 clarifies that jurisdiction over foreign nationals and companies is limited to actions taken within the U.S., but this does not restrict U.S. criminal jurisdiction over foreign nationals under other statutes, such as 18 U.S.C. 2 and 371. The report emphasizes that while 15 U.S.C. 78dd-3 imposes limitations, 15 U.S.C. 78dd-2 does not impose similar territorial restrictions for foreign nationals associated with domestic concerns. Nationality jurisdiction allows a nation to claim jurisdiction over extraterritorial acts of its citizens. The Government's argument that criminal sanctions under the FCPA could apply to foreign nationals based on conspiracy charges is challenged by the fact that the defendant, Mr. Hoskins, never entered the U.S., thus preventing direct prosecution under 78dd-3. The principle established in Gebardi suggests that if Congress intended to limit liability for violations of this section to actions within the U.S., the Government cannot bypass this limitation through conspiracy charges, as the extraterritorial reach of ancillary offenses aligns with that of the primary statute.