The U.S. Justice Department’s decision to end its high-profile foreign bribery sting case in Washington was met with sharp criticism from the trial judge and relief from defense attorneys who were preparing for another lengthy trial.
DOJ last week abandoned the prosecution of 22 people on violations of the Foreign Corrupt Practices Act, walking away from a case that department leadership trumpeted as a centerpiece in the stepped-up battle against foreign bribery. The prosecution, built around a lengthy undercover sting and a fake $15 million equipment deal with Gabon, marked the largest-ever FCPA case against individuals.
Legal rulings and witness credibility issues doomed the case. Prosecutors announced on Feb. 21 that the government was unwilling to sink any additional resources into the litigation in U.S. District Court for the District of Columbia. Two earlier trials ended in hung juries, with three businessmen acquitted.
U.S. District Judge Richard Leon applauded DOJ for having “the wisdom, the courage, the conviction to face up to the limitations of this case.” Leon also heralded the defense lawyers’ work, saying that “effective advocacy is a testament to how strong our criminal defense bar is nationwide.”
Kobre & Kim partners Eric Bruce in Washington and Matthew Menchel in Miami, who represented Pankesh Patel, a U.K. citizen in the law enforcement and military products industries, played a leading role in challenging the government’s effort to pitch jurors on “other crimes” evidence. The National Law Journal sat down last week with Bruce and Menchel for an hour to discuss trial strategy, key moments in the prosecution and the potential effect the failed case could have on subsequent investigations.
NLJ: Looking at this case from the start, you had thousands of audio and video recordings at the center of the investigation. How did you approach the case?
Bruce: The first thing you are going to do is focus on the materials directly pertaining to your client — where your client is speaking or mentioned. We were able to narrow down first the tapes involving our client and then secondarily the documents. The documents were probably harder to do than the tapes. Then I put them chronologically, listened to it evolve on tape and fit in where the key documents fit. And then crystallize the issues. Early on it was pretty clear to us, I think, that what the government was alleging was prior-bad-acts evidence was going to be a very important issue in the case — and something that we focused on right from the beginning.
NLJ: With 22 defendants, the case featured lawyers from around the country. How did you coordinate with other defense counsel?
Bruce: Early on there was a division of labor as to different motions that the group agreed were important to be filed pretrial. Then, as we got closer to trial, different people took on more factual subject matters — in terms of cross-examination of (cooperating witness) Richard Bistrong, and trying to organize and dissect and make sense of all of the discovery and impeachment material. It was a very strong joint defense group.
Menchel: One of things that was also unusual about this case was even the lawyers that were not in the first trial were actively involved in collecting material for us. Coming up with legal rulings that would be helpful. We had people that weren’t going to have their clients tried for many months later fully engaged in assisting in the defense of the case.
NLJ: I thought we could jump into the trial, the big themes.
Menchel: One of the things that was really unusual about this case was the decision that we made as a team to call the lead case agent on our case. Collectively, Eric and I have over 40 years’ experience as criminal lawyers, either for the government or for the defense. I can tell you that we’ve never seen it done, where the lead case agent is called as your main witness. On occasion you’ll see a defense attorney call an agent maybe to talk about a small slither of the case or the agent has a report that somehow differs from what a witness said on the stand and so the defense attorney wants to bring that out. We were looking for something that we thought was going to be game-changing in terms of the outcome. From our point of view, we did what was considered at the time a very courageous and bold move — by some a very risky move — to call the case agent on our case. Not just any agent, but the guy who was in charge of the whole operation. It was not without risk. There were a lot other members of the joint defense team who thought we shouldn’t do it.
NLJ: What were some of the risks?
Menchel: This is not a civil trial where you’ve deposed your witness in advance of trial and you know what they are going to say. It’s always a risk when you are calling a witness that you don’t have control over and you don’t know what he is going to say who is clearly not your friend and doesn’t want to help you. We felt that the reason why we needed to call him was that the jury did not have a clear picture up to that point about some of the serious flaws in the way the government handled its investigation.
Bruce: The way the case-in-chief went for purposes of our trial, we felt that the government had put on witnesses who were several steps removed from the action and several steps removed from important decisions that were made during the course of the investigation. We would ask questions, and if the answer was ‘I don’t know,’ then the next question was always, ‘Well, who would know that?’ It was always [FBI agent Christopher] Forvour. We did that for two reasons. Number one, to set the stage for possibly calling Forvour ourselves. And number two, even if we decided not to call Forvour, we felt that it would at least possibly create doubt in the minds of the jurors as to why they never got to hear from the government’s own case agent.
NLJ: DOJ vigorously defended the nature of the sting. Should the government have fashioned a more overtly illegal transaction?
Menchel: There were significant problems with the way in which the sting was fashioned in the first instance — the reliance upon Bistrong to really make the decisions, the choice of language, where the language was inserted into the various presentations. They set up a sting operation which, by design, was essentially ambiguous. For example, they chose to use the word commission, which as anybody knows doesn’t inherently sound illegal or suspect as opposed to kickback, payoff, grease payment, butter up or bribe, quite frankly. Having used that language they then intentionally buried it in the middle of a whole bunch of innocuous and perfectly legitimate discussions about the transaction. The DOJ guidelines are very clear in undercover operations, that the illegality of the deal has to be reasonably clear to the targets of the investigation. It was really Bistrong that was devising the language, how these scenarios were going to play out, who was going to say what, and the agents essentially buying into that. As opposed to the agents being the ones constructing it and using the informant in a much more limited role. They got way too close to this guy.
Bruce: What they did not do during the investigation — which I think would have been a better practice and led to a better case for them — they did not introduce an undercover and then let Bistrong’s importance in the case recede. Which they could have done. They could have had Bistrong say, ‘Let me introduce you to Mike Miller, the undercover, he’s my No. 2. Trust him completely.’ Then you’d have the undercover being the key witness. But they didn’t do that. We can only believe that it’s because they sort of started to believe everything Bistrong was telling them and put a lot of weight in it.
NLJ: Every informant comes with baggage. Was Bistrong any different?
Menchel: There’s nothing wrong with using a cooperating witness. The point is: He was running the show. They were deferring to him about judgments and strategic decisions to make. That’s where the danger lies. He is incentivized in a different way than an agent is.
Bruce: In one sense, I can understand why it was done the way it was done. In their view, it was going to be, ‘Well, everything is on tape anyway.’ So, Bistrong’s got all this baggage. I think they were thinking at the time, possibly, ‘We can eventually tell the jury it doesn’t matter if Bistrong has all this baggage, if he’s a liar or if you hate him. You can disregard everything Bistrong said on the stand. We still have the tapes.’ But when you coupled that decision with the decision to have the script be fairly ambiguous — by just using the word commission — two legs then fell off the stool.
NLJ: What role did the legal rulings play in the case?
Bruce: We had some unique arguments, especially on behalf of Pankesh Patel, who was uniquely situated as a U.K. citizen operating a U.K. company that hadn’t done any prior deals in the U.S. What they tried to do is take these comments out of context about alleged deals that they said he was involved in and say, ‘Well, this shows his intent and predisposition to commit FCPA violations.’ Our argument was this doesn’t show anything about the FCPA because here we have someone who is not a U.S. citizen, who is not covered by the FCPA unless he steps foot on American soil. It doesn’t shed any light on his predisposition or his intent to violate the FCPA as a foreigner. On the flip side, it’s extremely prejudicial and would be confusing to the jury, be a huge delay on an already very lengthy trial and just shouldn’t be admitted. I think it was a very important issue in the case. Ultimately, Judge Leon saw it our way and denied the government’s motion to introduce that evidence. Once trimmed down, then we were able to try the case in a very different way. We didn’t have to fight a multifront war on all of this evidence.
NLJ: Describe the extent to which you or other lawyers tried to convince DOJ leadership to end the case.
Menchel: We did not personally do that. There was definitely discussion, though, by some members of the joint defense team. Efforts like that were made. We were under the impression that was essentially not a fruitful way to go. We felt the only way we were going to get results was to go to trial and try the case.
NLJ: Was this a good-faith prosecution?
Bruce: The FCPA is a legitimate law that should be enforced. There is nothing inherently wrong with sting operations. The combination of an FCPA case with a sting operation, I think, presented a lot of challenges for the government.
NLJ: DOJ has enjoyed wide success in the FCPA arena since 2009. What effect will this case will have on FCPA enforcement?
Menchel: Most of the interpretation of the statute has simply come from the Department of Justice unchallenged. In the past, neither companies nor individuals really were willing to take the chance and go to trial. I think this is going have a huge impact on future decisions the department will have to make — in terms of the strength of their cases — and also decisions that potential targets and ultimate defendants have to make about whether or not they want to fight it. I think this was a game-changing prosecution for both the government and the defense.
NLJ: Do you see DOJ changing its way on subsequent sting investigations?
Bruce: If you did an after-action review of this case, the investigation and prosecution, there are a lot of lessons to learn. There’s nothing inherently wrong with a sting operation. But when you embed it with errors of judgment by the FBI along the way, it leads to poor results. I don’t think the FBI is going to stop doing sting operations.
Mike Scarcella can be contacted at email@example.com.