By Jordan Maglich
As readers of the FCPA Blog know, the past few years have seen a dramatic rise in FCPA prosecutions. In 2010 alone, companies settling FCPA-related charges paid $1.8 billion in monetary penalties, nearly tripling the $641 million paid in 2009.
These monetary penalties paid to resolve FCPA-related charges go directly to the United States Treasury. This result is seemingly in contrast to multiple federal laws that require restitution to victims in federal criminal cases, including the Mandatory Victim Restitution Act (“MVRA”) and the Crime Victims’ Rights Act (“CVRA”). See 18 U.S.C. § 3663A (1996); 18 U.S.C. § 3771 (2004).
The CVRA created a ‘bill of rights’ that expressly recognizes a crime victim’s right to restitution where provided by law. Under the MVRA, restitution is mandatory to victims of offenses prohibited under Title 18 of the United States Code. Yet the DOJ rarely addresses restitution in FCPA prosecutions.
A typical FCPA prosecution includes a count of conspiracy to violate the FCPA in the charging documents and/or plea agreement –- an offense codified at Section 371 of Title 18. The offense of conspiracy falls under the auspices of the MVRA. See U.S. v. Quarrell, 310 F.3d 664, 677 (10th Cir. 2002) (conviction under 18 U.S.C. § 371 satisfies the “under this title” requirement of the MVRA”).
The MVRA affords the trial court no discretion in awarding restitution; restitution is mandatory for an offense charged under Title 18. U.S. v. Futrell, 209 F.3d 1286, 1290 (11th Cir. 2000). Finally, the definition of victim under the MVRA is extremely broad, and has been interpreted to include a wide variety of individuals and entities, including foreign governments. U.S. v. Bengis, 631 F.3d 33 (2d Cir. 2011).
Neither the MVRA nor its sister statute governing enforcement, 18 U.S.C. § 3664, contains any hint that foreign governments or government related entities should not be considered as victims or excluded from restitution in FCPA prosecutions. Under the MVRA and CVRA, simple logic dictates that a conviction or guilty plea to conspiracy to violate the FCPA, a Title 18 offense, would require restitution to any victim. However, this has not been the case. Since the FCPA’s enactment in 1977, awards of restitution to foreign governments have been rare, and remain largely absent from FCPA convictions or plea agreements.
See U.S. v. Kenny Int’l Corp., Cr. No. 79-372 (D.D.C. 1979) (ordering restitution to Cook Islands government for guilty plea to FCPA bribery violations); U.S. v. F.G. Mason Eng’g, Inc., Cr. B-90-29 (D.Conn. 1990) (ordering restitution to West Germany government for guilty plea to FCPA bribery violations); U.S. v. Diaz, No. 09-cr-20346-JEM, Dkt. 37 (S.D. Fla. Aug. 5, 2010) (Defendant ordered to pay restitution to Haitian government resulting from guilty plea to FCPA bribery violations involving state-owned telecommunications company).
The original focus of the FCPA targeted rampant corruption in connection with foreign business of public companies. With the enactment of victims' rights statutes, the DOJ has failed to enforce victims' rights with respect to foreign governments or companies. This approach has stemmed from the DOJ's belief, expressed by former officials, that entities and individuals in lesser-developed countries are inherently corrupt.
Recent FCPA prosecutions have seen companies increasingly target decision makers of state-run or state-owned enterprises, as opposed to executive members of foreign governments. Rather than benefit the entire enterprise, bribes result in an employer losing honest services owed by bribed employees, who place their own personal enrichment ahead of duties owed to the employer. Such actions can have drastic consequences to the employer and the constituents served by the employer, especially when the bribed employee is induced to purchase overpriced, inferior or outdated products and services.
While not the norm, both domestic and foreign government entities have been found to be victims and thus entitled to restitution for bribery of public officials. U.S. v. McNair, 605 F.3d 1152, 1221 (11th Cir. 2010); Bengis, 631 F.3d 33. There appear to be no cases to the contrary. A policy against restitution to foreign victims of FCPA-related crimes makes little sense and is contrary to applicable laws.
Victims of Title 18 offenses, even when the target of FCPA-related crimes, require DOJ officials to use their "best efforts" to ensure that crime victims are accorded their statutorily-mandated rights under the CVRA. 18 U.S.C. § 3771(c)(1). The DOJ's failure to investigate and determine whether third-parties involved in FCPA-related crimes are victims, and thus entitled to restitution, is directly adverse to the statutory intent of the MVRA and CVRA, and against the basic tenets of justice. Indeed, such a position places the entity using the bribes to advance their business on the same level of culpability as the organization harmed by isolated employees taking bribes for personal benefits. As FCPA prosecutions continue at record-breaking pace, victims’ rights must be a foremost, rather than foregone, priority.
Jordan Maglich is an attorney with Wiand Guerra King in Tampa, Florida. He can be contacted here.