Bourke Loses Motion For New Trial

Frederic Bourke on Thursday lost what may be his final bid to stay out of prison.

Just a day after a federal appeals court upheld Bourke's conviction in 2009 of conspiring to violate the Foreign Corrupt Practices Act, U.S. district court judge Shira Scheindlin denied Bourke's request for a new trial. He had argued that his first trial was tainted by perjury from Hans Bodmer, a key witness for the prosecution.

Bourke is facing a year and a day in prison and a million dollar fine. He's been out on bail while his appeal was pending. Judge Scheindlin hasn't said when Bourke must begin serving his jail sentence.

In arguing for a new trial, Bourke said some of Hans Bodmer's testimony was false, including the day on which Bodmer said he talked with Bourke about Viktor Kozeny's plans to bribe Azeri government officials to win a privatization deal. Bourke said prosecutors knew or should have known Bodmer would lie on the stand about a crucial date.

Bodmer, a Swiss lawyer who worked for Kozeny, is still waiting to be sentenced more than seven years after pleading guilty to conspiracy to launder money. His cooperation with prosecutors could earn him a lighter sentence.

Judge Scheindlin said Thursday in a 28-page order that prosecutors conceded that Bodmer was 'obviously mistaken in his recollection of the details of the walk and talk' he had with Bourke. But the jury could still credit Bodmer’s testimony about the substance of the conversation, she said.

'The flight records are difficult to read and interpret,' Judge Scheindlin said. She continued:

It is conceivable that the Government did not cross-check the details of Bodmer’s anticipated testimony against these difficult to decipher flight records. Moreover, the flight records do not contradict the substance of Bodmer’s testimony concerning his “walk and talk” with Bourke. Contrary to defendant’s position, the flight records do not prove that Bodmer fabricated the entire event. Rather, the flight records merely show that Bodmer was mistaken about the date and time of the “walk and talk.”

Bourke, 65, is co-founder of well-known handbag brand Dooney & Bourke. He was married to Eleanor Clay Ford, whose mother was Henry Ford's only granddaughter. The jury found that he invested in Czech-born promoter Viktor Kozeny's unsuccessful attempt in 1998 to gain control of Azerbaijan's state oil company, Socar, despite knowing Kozeny planned to bribe Azeri leaders.

Kozeny was also charged in the case but has been a fugitive living in the Bahamas for more than a decade. He beat back an attempt by the Bahamas attorney general to extradite him to the U.S. The Bahamas government has appealed his extradition to the U.K. Privy Council.

Download a copy of Judge Shira Scheindlin's December 15, 2011 opinion and order denying Frederic Bourke's motion for a new trial here.

Are 'Red Flags' Good News For Bourke?

The U.S. Second Circuit Court of Appeals issued an opinion this week that could mean Frederic Bourke has a better chance to win a new trial.

In the appeals court, four executives of General Re and AIG won new trials after being convicted of securities fraud and related charges.

The court's opinion included a warning to prosecutors about ignoring 'red flags' that signal a cooperating witnesses might give false testimony.

Bourke's lawyers wrote about the same kinds of red flags two months ago.

They asked Judge Shira Scheindlin for a new trial, saying Bourke's prosecutors "had access to documentary evidence conclusively showing that the walk talk [Hans] Bodmer described in his well-scripted testimony could not have taken place in February." Prosecutors put Bodmer on the stand anyway.

In the Second Circuit case, Richard Napier, a senior executive of Gen Re, testified against the four defendants. There were warning signs that some of Napier's testimony might be fabicated and that prosecutors knew it.

The Second Circuit said, "No doubt it is dangerous for prosecutors to ignore serious red flags that a witness is lying, and the government will doubtless approach Napier’s revised recollections with a more skeptical eye on remand."

Ellen Podgor discussed the case on her white collar crime prof blog.

Bourke was sentenced to a year and a day in prison following his 2009 conviction for conspiracy to violate the FCPA and the Travel Act.

Prosecutors admitted during Bourke's appeal (in the same Second Circuit) that they knew a crucial government witness might give false testimony. But they said Hans Bodmer's mistake was a harmless error and didn't hurt Bourke.

"[C]ontrary to the government's repeated assertion," Bourke's latest filing said, "Bodmer's false testimony about the 'walk talk' was not just a harmless mistake about dates. The entire event was fabricated. . . . The prosecution's cooperating witness thus invented one of the key events in the case."

Bodmer, a Swiss lawyer who helped Viktor Kozeny move money that was used to bribe Azeri officials, pleaded guilty seven years ago to conspiracy to launder money. His cooperation with prosecutors might earn him a lighter sentence.

Bourke's lawyers said in June:

Because the test is "knew or should have known," this motion [for a new trial] must be granted even if the Court finds that the prosecutors acted in subjective good faith but ignored the red flags that abounded.

Judge Scheindlin hasn't set a hearing date for Bourke's motion. He's free on bail pending his appeal.

Download Frederic Bourke's June 17, 2011 reply memorandum in support of motion for new trial based on newly discovered evidence here.

Bourke Demands New Trial; Says Gov't Witness 'Lied'

Frederic Bourke said prosecutors in his 2009 trial knew a crucial government witness would give false testimony but they let him take the stand anyway. Now Bourke wants a new trial.

He was convicted in the Foley Square federal courthouse in Manhattan (left) of conspiracy to violate the FCPA and the Travel Act and sentenced to a year and a day in prison. He's free on bail during his appeal.

Separate from his appeal, Bourke is asking the trial court to grant him a new trial based on newly discovered evidence about the false testimony.

Bourke's beefed-up defense team, including high-profile lawyer Michael E. Tigar, said prosecutors admitted during oral arguments before the second circuit appeals court in February this year that some of Hans Bodmer's testimony was false. Bourke's lawyers said Bodmer's account about dates crucial to the government's theory of the case was wrong, including the day on which Bodmer said he talked with Bourke about Viktor Kozeny's plans to use bribery.

Bodmer, a Swiss lawyer who helped Kozeny move money that was used to bribe Azeri officials, is still waiting to be sentenced more than six years after pleading guilty to conspiracy to launder money. His cooperation with prosecutors might earn him a lighter sentence.

Bourke's lawyers have also charged that prosecutors knew beforehand that Bodnmer's testimony would be false. In their filing with the trial court asking for a new trial, Bourke's attorneys said:

The recent oral argument in the Second Circuit revealed a startling fact, previously unknown to the defense: The prosecution knew before key government witness Hans Bodmer testified that flight records from Viktor Kozeny's plane refuted Bodmer's account of the February 6, 1998 "walk talk" with defendant Frederic A. Bourke, Jr. Despite this knowledge, the prosecution presented Bodmer's false testimony, buttressed it with his time records and Rolf Schmid's redacted memorandum, and built its theory of the case around a chronology it knew to be wrong.

Bourke's newest lawyer, Michael Tigar, teaches at Duke law school and takes on controversial defense work. Past clients include Sen. Kay Bailey Hutchison, Scott McClellan, Rep. Ronald Dellums, Fernando Chavez, Lynne Stewart, and Terry Lynn Nichols. In April, he was granted permission to appear in the federal court where Bourke was convicted to argue that his client deserves a new trial.

Bourke, 65, is co-founder of well-known handbag brand Dooney & Bourke. He was married to Eleanor Clay Ford, whose mother was Henry Ford's only granddaughter. The jury found that he invested in Czech-born promoter Viktor Kozeny's unsuccessful attempt in 1998 to gain control of Azerbaijan's state oil company, Socar, despite knowing Kozeny planned to bribe Azeri leaders.

Kozeny has also been charged in the case but is a fugitive living in the Bahamas. He beat back an attempt by the Bahamas attorney general to extradite him to the U.S. The Bahamas government has appealed his extradition to the U.K. Privy Council.

In arguing for a new trial, Bourke's lawyers said,

The prosecutor's stunning admission at oral argument leaves little doubt that the government violated Bourke's right to due process through its presentation of Bodmer's testimony. This is a matter of the utmost importance. The United States presented false testimony from a richly rewarded criminal to convict a distinguished American. It rested its theory of the case in opening statement on the falsehood. It sought to corroborate the falsehood during trial with documents and testimony. Confronted by the defense with the cooperator's falsehood, the prosecutors stipulated to the actual facts, but refused to disavow the cooperator's story. Instead, they characterized the falsehood as a mere "mistake," invented a new, equally false story in closing argument, and, when that story collapsed, concocted yet another false story on appeal. In their zeal to convict, the prosecutors have forgotten that they are "officer[s] of the court whose duty is to present a forceful and truthful case to the jury, not to win at any cost.'" Drake v. Portuondo, 553 F.3d 230, 240 (2d Cir. 2009) (quoting Wei Su v. Filion, 335 F.3d 119, 126 (2d Cir. 2003)). The prosecutors' shifting stories--all of which may be imputed to the government as admissions, see, e.g., United States v. GAF Corp., 928 F.2d 1253, 1259-61 (2d Cir. 1991)--represent precisely the kind of "abuse and sharp practice" that the Second Circuit has condemned, e.g., United States v. McKeon, 738 F.2d 26, 31 (2d Cir. 1984).

Bourke's defense team said in the government's "witness prep" of Bodmer, prosecutors "made a deliberate decision not to 'rehabilitate[]" him--that is, not to correct testimony the prosecution knew from the records to be false.'"

Judge Shira A. Scheindlin presided over Bourke's trial and will hear his latest motion. The case is U.S. v. Kozeny et al, (U.S. District Court, Southern District of New York at Foley Square), Case # 1:05-cr-00518-SAS-2.

Download the Memorandum In Support Of Motion Of Frederic A. Bourke, Jr. For New Trial Based On Newly Discovered Evidence here. 

Waiting For Viktor

FCPA fugitive Viktor KozenyClayton Lewis was a partner in Omega Advisors, Inc., a hedge fund that invested and lost about $126 million in Viktor Kozeny’s Azeri privatization scheme.

Lewis,  prosecutors said, knew Kozeny planned to pay bribes but went ahead with the investment anyway. He was arrested in 2003 and two years later pleaded guilty to conspiracy to violate the FCPA and launder money.

But more than five years after pleading guilty, Lewis is still waiting to be sentenced. And that's the way the government wants it.

In a letter to Judge Naomi Reice Buchwald, the DOJ in September asked for another delay, this time until at least February 4, 2011.

Why? Because Lewis, the government said, would be needed for his testimony if Kozeny is ever brought to trial, and will receive sentencing credit for delivering the goods. So until that happens, Lewis should wait.

For how long? If prosecutors have an end date in mind, they aren't saying.

Kozeny is still a fugitive in the Bahamas. Nearly a year ago, he won a decision there to block his extradition to the U.S. The Bahamas government is appealing to the U.K. Privy Council -- the final court of appeal for some Commonwealth members.

Lewis already appeared as a cooperating witness for the government in Frederic Bourke's 2009 trial. Bourke was convicted and sentenced to a year-and-a-day in prison and is appealing.

Here's part of the DOJ's September letter to Judge Buchwald:

The extradition of this fugitive, Viktor Kozeny, is pending in the Commonwealth of the Bahamas. On January 26, 2010, the Court of Appeal in the Bahamas issued a decision denying the Government's extradition request, which had initially been granted by a lower court. The Attorney General of the Bahamas is in the process of litigating the appeal from that decision to the Privy Council in the United Kingdom, which has final jurisdiction over the matter. In the event that Kozeny does ultimately stand trial in this District, Lewis may be called as [a] Government witness. Therefore, an adjournment would benefit both the public, because Lewis will continue to be obligated to cooperate under the terms of his agreement, and the defendant, who will receive the benefit of the Court's consideration of further cooperation he may render.

Download the September 28, 2010 letter from AUSA Harry A. Chernoff to Judge Naomi Reice Buchwald in U.S. v. Clayton Lewis (U.S. District Court Southern District of New York (Foley Square) Case No.: 1:03-cr-00930-NRB-1) here.

The Accidental Felon?

Frederick Bourke, the government says, didn't stumble into Viktor Kozeny's conspiracy to violate the FCPA by accident, as Bourke contends. He either knew the deal was tainted by bribery and ignored the facts, or deliberately avoided learning the truth.

Either way, the government says, Bourke had "knowledge" under the FCPA to support his July 2009 conspiracy conviction.

While Bourke, 63, appeals his conviction to the United States Court of Appeals for the Second Circuit, he's free on bail.

During his trial, prosecutors said if Bourke didn't know Kozeny's deal depended on bribing Azeri officials, it was because he'd stuck his head in sand. But that's no defense, they said, because the FCPA expressly includes the concept of "conscious avoidance" (see 15 U.S.C. § 78dd-2(h)(3)(B)).

Evidence from the trial, the government argues, demonstrates that:

• Bourke was aware of the high level of corruption in Azerbaijan generally. Bourke’s attorney Arnold Levine warned him that Azerbaijan was like the “wild west."

• Bourke had read a Fortune magazine article that described Kozeny’s reliance on illegal business practices such as insider trading, purchase of state secrets from a government official, and fraud, to accomplish the goals of a Czech privatization scheme. This article alerted Bourke that there was a high probability that Kozeny’s latest scheme involving Azerbaijan also included corrupt arrangements, such as bribe payments or offers to pay bribes.

• Bourke defended Kozeny by stating that he had not actually been convicted of a crime.

• Bourke expressed concern to other investors and their attorneys that Kozeny and his employees were paying bribes. “I mean, they’re talking about doing a deal in Iran . . . Maybe they . . . bribed them, . . . with ten million bucks. . . . I’m not saying that’s what they’re going to do, but suppose they do that. What happens if . . . they bribe somebody in Kazakhstan and we’re at dinner and . . . one of the guys [says] ‘Well, you know, we paid some guy ten million bucks to get this now.’ . . . I’m just saying to you in general . . . do you think business is done at arm’s length in this part of the world?”

• Bourke proposed the formation of separate companies to shield himself and other American investors from liability for any corrupt payments.

• Bourke played a role in coordinating United States medical treatments, combined with tourism and shopping excursions, for Azerbaijani officials.

After the trial ended, the jury foreman was quoted as saying about Bourke: "We thought he knew and he definitely should have known."

In its appellate argument, the government puts it more formally: From these facts, it says, "a rational juror could have concluded that Bourke was aware of a high probability of the existence of corrupt arrangements, yet deliberately avoided confirming that fact."

The jury found Bourke guilty of conspiring to violate the FCPA and the Travel Act and making false statements to the FBI. In November 2009, Judge Shira Scheindlin sentenced him to a year and a day in prison and a $1 million fine. She recommended to the Bureau of Prisons that he serve his time at the minimum security camp adjacent to FCI Englewood in Colorado, 15 miles southwest of Denver.

Bourke, though, says there couldn't have been conscious avoidance because there was no evidence that he decided not to learn any specific fact about bribes Kozeny paid or planned to pay. And without that evidence, the jury shouldn't have been instructed on conscious avoidance at all, because the instruction improperly lowered the government's burden of proof. Instead, Bourke argues, the trial should only have been about what he actually knew.

Because Bourke didn't pay any bribes himself, whether he consciously avoided the truth behind Kozeny's deal was at the center of the trial and the jury's deliberations. Judge Scheindlin had instructed them:

When knowledge of existence of a particular fact is an element of the offense, such knowledge may be established when a person is aware of a high probability of its existence, and consciously and intentionally avoided confirming that fact. Knowledge may be proven in this manner if, but only if, the person suspects the fact, realized its high probability, but refrained from obtaining the final confirmation because he wanted to be able to deny knowledge.

On the other hand, knowledge is not established in this manner if the person merely failed to learn the fact through negligence or if the person actually believed that the transaction was legal.

Was the government's evidence specific enough to show Bourke's "conscious avoidance" under the FCPA?

The Second Circuit will soon have a chance to answer the question.

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Download a copy of Bourke's appellate brief here and the government's brief here.

The jury charge in U.S. v. Frederic Bourke (United States District Court for the Southern District of New York, Case #: 1:05-cr-00518-SAS-2) can be downloaded here.