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FCPA Blog Daily News

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Tuesday
Jul242018

Federal Court: DOJ free to pursue alternate theories for FCPA jurisdiction

Timothy D. Belevetz of Holland & Knight In the closely-watched criminal case against Chi Ping Patrick Ho pending in the Southern District of New York, the court last week rejected the defendant’s argument that an indictment cannot stack FCPA charges by alleging competing bases for jurisdiction. 

Ho, the head of a Hong Kong-based NGO, was indicted (pdf) in November 2017 for allegedly offering $2 million to the president of Chad in order to facilitate oil rights for a Chinese energy company and $500,000 to the foreign minister of Uganda to secure a banking deal for the company.  In April, he filed a motion to dismiss certain of the FCPA counts.

The indictment charged Ho, who has been detained for eight months, with substantive violations of two different FCPA provisions, the domestic concern statute based on actions taken in his role as an agent of an organization located in the United States and the territorial jurisdiction statute based on conduct within the United States. 

The indictment also charged him with conspiring with consultant and former Senegalese minister Cheikh Gadio to violate both statutes.

Ho argued that when the FCPA was expanded to include acts in the United States taken by those other than companies with publicly traded securities (issuers), and U.S. residents (domestic concerns), Congress did not mean to create multiple ways of pursuing the same claims. He claimed that, as a matter of law, it is improper to charge both statutes simultaneously.

The government took the position that the statutes are not mutually exclusive as to Ho, but that even if they were, the government is entitled to charge in the alternative and offer the jury alternative theories. It recognized that while a domestic concern like a U.S. citizen could be charged only under the domestic concern statute, Ho was not a U.S. citizen and, accordingly, could be charged under either or both FCPA statutes.

In last week's decision, Judge Loretta A. Preska adopted the government’s view that although the territorial jurisdiction statute’s prohibition on bribery actions in the United States does not apply to issuers or domestic concerns (which are covered by the domestic concern statute), it does apply to their officers, directors, and agents and that the government was free to charge him under both theories.

The court also rejected Ho’s attempt to toss out evidence in the form of text messages and emails obtained from a search of his iPad and cell phone. The court said Ho’s disclosure of the passwords to the devices in response to agents’ request for that information before he was read his Miranda rights did not require suppression of the evidence found on the devices. Judge Preska said that the only limitation on the use of such statements is that they cannot be introduced as admissions at trial.

Given the scarcity of FCPA cases that are actually litigated, the Ho case has drawn a lot of attention. It will serve as a significant addition to the limited set of case law that governs FCPA prosecutions in place of DOJ (and SEC) policy positions, particularly if there is a conviction that makes its way to an appeal in the Second Circuit.

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Timothy D. Belevetz is a Holland & Knight LLP partner based in the firm’s Washington, D.C. and Tysons offices. He concentrates his practice on white collar criminal defense, SEC enforcement, internal corporate investigations, and compliance counseling. He can be contacted here.