U.S. Court of Appeals for the Second Circuit.
U.S. Court of Appeals for the Second Circuit (Credit: ALM)

Prosecutors are pressing a federal appeals court to reassert their full power to nail bribery conspirators abroad under the Foreign Corrupt Practices Act.

In papers filed with the U.S. Court of Appeals for the Second Circuit, Justice Department lawyers urged reversal of a Connecticut federal judge’s 2015 decision that makes it harder to bring non-resident foreign nationals inside the jurisdictional reach of the act, known as the FCPA.

The foreign national in this case is British citizen Lawrence Hoskins, accused of conspiring to bribe a member of the Indonesian parliament and two executives of a state-run electricity company. The alleged bribe was to secure a $118 million contract for Alstom, a French power and transportation company that has a subsidiary, Alstom Power US, based in Connecticut.

Hoskins, now 66, an Alstom executive based in Paris, never set foot in the United States during the course of the alleged conspiracy from 2002 to 2009. He was arrested in 2014 while stepping off a ferry with his wife in the U.S. Virgin Islands en route to Dallas, Texas to visit their son.

On Friday, the government filed its reply brief in the Hoskins case, U.S. v. Pierucci, 16-1010, insisting the circuit had jurisdiction to hear the appeal and urging the court to adhere to a Supreme Court decision that the exception is “limited.”

They say Hoskins’ “absurd interpretation of the FCPA would punish the foreign national underlings, yet insulate from culpability the top echelons of foreign nationals who, like Hoskins, use their U.S. partners to violate the FCPA.”

Three men have already pleaded guilty in the case, which involves bank accounts in New York and Maryland.

Hoskins’ legal team, led by Clifford Chance partner and former federal prosecutor Christopher Morvillo, scored a victory in 2015 when Judge Janet Arterton held the government could not avoid the jurisdictional requirement that Hoskins violated the FCPA “while in the territory of the United States” by “resort to the conspiracy statute.”

Arterton said prosecutors would have to prove at trial that Hoskins was, in the words of the statute, “an agent of a domestic concern.”

The judge then held that, on six substantive counts of violating the act, Hoskins could still be liable for aiding and abetting other people in the bribery scheme—but only if it could show he was directly liable under the act, again, as “an agent of a domestic concern.”

The ruling sent prosecutors running to the Second Circuit to challenge what they say is Arterton’s erroneous reading of the case law in Gebardi v. United States, 287 U.S. 112 (1932). In Gebardi, the Supreme Court held that Congress explicitly excluded from Mann Act liability women who were being transported across state lines by men “for the purpose of prostitution or debauchery, or for any other immoral purpose.” The government can’t get around that exclusion by charging the woman with conspiracy.

A number of prosecutors, including Sangita Rao of the Criminal Division’s Appellate Section, who will argue the appeal, filed a brief with the Second Circuit saying the Gebardi exception does not apply here.

The act, they say, “casts a wide net” and Hoskins was ensnared in that net, first because he’s an agent of a domestic concern—and, second, even if he’s too high level to be considered an “agent,” he conspired to commit, or aid and abet, a violation of the act.

Included on the brief were Michael Gustafson, First Assistant U.S. Attorney in Connecticut and Assistant Attorney General Leslie Caldwell.

“Non-agents may include individuals who occupy a sufficiently high-level position vis-a-vis the covered individuals such that they are not considered agents of the covered person,” the prosecutors argue. “They may be, for example, the mastermind or the one pulling the strings.”

Arterton, they say, got the “narrow exception” of Gebardi wrong by excluding from “conspirator and accomplice liability those individuals who are not specifically enumerated within a specific FCPA provision.” Congress “repeatedly indicated” those concepts applied to the FCPA both when it was enacted in 1977 and amended in 1998.

Morvillo and his Clifford Chance co-counsel Daniel Silver and Benjamin Peacock answered back in December, saying in their brief the Second Circuit doesn’t even have jurisdiction because Arterton was merely ruling on how she intends to instruct the jury on accessorial liability.

“In no way does the decision below deprive the government of the ability to pursue a conviction on the FCPA-related counts based on conspiracy or aiding-and-abetting liability,” they stated.

And even if the circuit has jurisdiction, they argued, Arterton’s take on Gebardi was sound, as “Congress drafted the FCPA deliberately to exclude from criminal liability certain foreign nationals with insufficient connection to the United States”—a decision that, like the limitation on Mann Act liability, the executive cannot circumvent.

Hoskins’ position drew a supporting amicus brief from the New York Council of Defense Lawyers authored by Hogan Lovells partner Ira Feinberg and senior associate Derek Musa and Cooley partner Jonathan Bach and associate Adam Gershenson.

In their brief, the lawyers asserted that prosecutors’ “attempt to use conspiracy and aiding and abetting charges to expand the extraterritorial reach of the FCPA violates the presumption against extraterritoriality” delineated by the Supreme Court in Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247 (2010).

The council also argued that the U.S. Supreme Court “has repeatedly imposed a clear limit on federal crimes where prosecutors have sought to extend the ambit of a statute’s reach beyond its plain terms,” especially in bribery and corruption cases. It cited the high court’s rejection this year of an overly expansive jury instruction in flipping the conviction of former Virginia Gov. Robert McDonnell this year.

Prosecutors are pressing a federal appeals court to reassert their full power to nail bribery conspirators abroad under the Foreign Corrupt Practices Act.

In papers filed with the U.S. Court of Appeals for the Second Circuit, Justice Department lawyers urged reversal of a Connecticut federal judge’s 2015 decision that makes it harder to bring non-resident foreign nationals inside the jurisdictional reach of the act, known as the FCPA.

The foreign national in this case is British citizen Lawrence Hoskins, accused of conspiring to bribe a member of the Indonesian parliament and two executives of a state-run electricity company. The alleged bribe was to secure a $118 million contract for Alstom, a French power and transportation company that has a subsidiary, Alstom Power US, based in Connecticut.

Hoskins, now 66, an Alstom executive based in Paris, never set foot in the United States during the course of the alleged conspiracy from 2002 to 2009. He was arrested in 2014 while stepping off a ferry with his wife in the U.S. Virgin Islands en route to Dallas, Texas to visit their son.

On Friday, the government filed its reply brief in the Hoskins case, U.S. v. Pierucci, 16-1010, insisting the circuit had jurisdiction to hear the appeal and urging the court to adhere to a Supreme Court decision that the exception is “limited.”

They say Hoskins’ “absurd interpretation of the FCPA would punish the foreign national underlings, yet insulate from culpability the top echelons of foreign nationals who, like Hoskins, use their U.S. partners to violate the FCPA.”

Three men have already pleaded guilty in the case, which involves bank accounts in New York and Maryland.

Hoskins’ legal team, led by Clifford Chance partner and former federal prosecutor Christopher Morvillo, scored a victory in 2015 when Judge Janet Arterton held the government could not avoid the jurisdictional requirement that Hoskins violated the FCPA “while in the territory of the United States” by “resort to the conspiracy statute.”

Arterton said prosecutors would have to prove at trial that Hoskins was, in the words of the statute, “an agent of a domestic concern.”

The judge then held that, on six substantive counts of violating the act, Hoskins could still be liable for aiding and abetting other people in the bribery scheme—but only if it could show he was directly liable under the act, again, as “an agent of a domestic concern.”

The ruling sent prosecutors running to the Second Circuit to challenge what they say is Arterton’s erroneous reading of the case law in Gebardi v. United State s , 287 U.S. 112 ( 1932 ) . In Gebardi, the Supreme Court held that Congress explicitly excluded from Mann Act liability women who were being transported across state lines by men “for the purpose of prostitution or debauchery, or for any other immoral purpose.” The government can’t get around that exclusion by charging the woman with conspiracy.

A number of prosecutors, including Sangita Rao of the Criminal Division’s Appellate Section, who will argue the appeal, filed a brief with the Second Circuit saying the Gebardi exception does not apply here.

The act, they say, “casts a wide net” and Hoskins was ensnared in that net, first because he’s an agent of a domestic concern—and, second, even if he’s too high level to be considered an “agent,” he conspired to commit, or aid and abet, a violation of the act.

Included on the brief were Michael Gustafson, First Assistant U.S. Attorney in Connecticut and Assistant Attorney General Leslie Caldwell.

“Non-agents may include individuals who occupy a sufficiently high-level position vis-a-vis the covered individuals such that they are not considered agents of the covered person,” the prosecutors argue. “They may be, for example, the mastermind or the one pulling the strings.”

Arterton, they say, got the “narrow exception” of Gebardi wrong by excluding from “conspirator and accomplice liability those individuals who are not specifically enumerated within a specific FCPA provision.” Congress “repeatedly indicated” those concepts applied to the FCPA both when it was enacted in 1977 and amended in 1998.

Morvillo and his Clifford Chance co-counsel Daniel Silver and Benjamin Peacock answered back in December, saying in their brief the Second Circuit doesn’t even have jurisdiction because Arterton was merely ruling on how she intends to instruct the jury on accessorial liability.

“In no way does the decision below deprive the government of the ability to pursue a conviction on the FCPA-related counts based on conspiracy or aiding-and-abetting liability,” they stated.

And even if the circuit has jurisdiction, they argued, Arterton’s take on Gebardi was sound, as “Congress drafted the FCPA deliberately to exclude from criminal liability certain foreign nationals with insufficient connection to the United States”—a decision that, like the limitation on Mann Act liability, the executive cannot circumvent.

Hoskins’ position drew a supporting amicus brief from the New York Council of Defense Lawyers authored by Hogan Lovells partner Ira Feinberg and senior associate Derek Musa and Cooley partner Jonathan Bach and associate Adam Gershenson.

In their brief, the lawyers asserted that prosecutors’ “attempt to use conspiracy and aiding and abetting charges to expand the extraterritorial reach of the FCPA violates the presumption against extraterritoriality” delineated by the Supreme Court in Morrison v. Nat’l Austl. Bank Ltd. , 561 U.S. 247 ( 2010 ) .

The council also argued that the U.S. Supreme Court “has repeatedly imposed a clear limit on federal crimes where prosecutors have sought to extend the ambit of a statute’s reach beyond its plain terms,” especially in bribery and corruption cases. It cited the high court’s rejection this year of an overly expansive jury instruction in flipping the conviction of former Virginia Gov. Robert McDonnell this year.