Bourke Free For Appeals, Previews SCOTUS Pitch

Frederic Bourke can remain free during his appeals, even while he asks the United States Supreme Court to review his case.

That means he won't go to prison anytime soon and may never spend time behind bars.

Judge Shira Scheindlin released Bourke on bail until all his new appeals are finished. She issued her ruling on December 28. Bourke had been scheduled to start serving his jail time on January 3.

He was given a year and a day in prison after a jury convicted him in 2009 of conspiracy to violate the FCPA. Judge Scheindlin presided at the trial and decided on his sentence.

In mid December last year, Bourke lost his appeal to the U.S. Court of Appeals for the Second Circuit. The next day, Judge Scheindlin denied his motion for a new trial. A few days later she set the date for him to report to prison.

But Bourke's release during any new appeals came after his lawyer, Michael Tigar, wrote a letter to Judge Scheindlin. Tigar said an issue for further appeals is 'conscious avoidance' and Judge Scheindlin's instruction to the jury about it. Tigar called it the 'ostrich instruction.'

Bourke's case, Tigar wrote, presents the conscious avoidance issue in a way 'that merits consideration on rehearing, rehearing en banc and certiorari.'

En banc refers to a fresh review by a larger panel of judges from the federal appeals court. Certiorari means a request to the U.S. Supreme Court for review. Exhausting the entire appeal process can take years.

Tigar's letter said:

Ever since Judge, later Justice, Kennedy's opinion in United States v. Jewell, 532 F.2d 697 (9th Cir. 1976), judges, lawyers and academic commentators have been awaiting a Supreme Court decision on the ostrich instruction. . . . For decades, the Supreme Court has been strengthening the law of mens rea, particularly for statutory crimes. See, e.g., Cheek v. United States, 498 US. 192 (1991); Ratzlaffv. United States, 510 US. 135 (1994); Staples v. United States, 511 US. 600 (1994). See also Liparota v. United States, 471 U.S. 419 (1985). At the same time, prosecutors have been working to relax the proof required to sustain the burden that the Court has carefully erected.

Bourke has been free on $20 million bond since his conviction in 2009. He's not allowed to travel overseas.

Tigar said the conscious avoidance standard Judge Scheindlin used at Bourke's trial 'allows juries to convict upon a finding of negligence for crimes that require intent.' He was quoting Judge Posner in U.S. v. Giovanetti, 919 F.2d 1223 (7th Cir. 1990).

After his sentencing, Bourke was assigned to the Federal Correctional Institution of Englewood. It's a low security prison in Littleton, Colorado (15 miles southwest of Denver). There's also a minimum security camp next door. Records at the Federal Bureau of Prisons show Bourke, 65, as prisoner number 58333-054. His status was marked as 'in transit.' But the recent ruling meant he never reported to the prison.

Judge Scheindlin's December 28 order was hand written in the margins of Tigar's letter. The judge said: 'For the reasons previously explained by this Court, bail is continued for the remainder of the appellate process -- including disposition of rehearing and rehearing en banc and disposition of any petition for certiorari to the U.S. Supreme Court.'

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Download a copy of Michael Tigar's December 22, 2011 letter to Judge Judge Shira A. Scheindlin endorsed and ordered on December 28, 2011 in U.S. v. Kozeny et al, U.S. District Court, Southern District of New York (Foley Square), Case #: 1:05-cr-00518-SAS-2 here. 

Measuring Naaman's Jail Time

How does the thirty-month prison term Ousama Naaman received last week compare with other FCPA sentences?

It's near the middle.

Here are some shorter sentences:

In January this year, Antonio Perez received two years in prison in the Haiti Telco case. He admitted paying $36,375 in bribes.

Leo Winston Smith was given just six months jail time in December 2010. The former salesman for Pacific Consolidated Industries was 75 and in poor health.

In October 2010, Bobby Jay Elkin Jr., a country manager in Kyrgyzstan for tobacco company Dimon Inc, copped just three years probation. The judge called him a hero for helping his subordinates during local rioting.

In September 2010, Nam Nguyen was sentenced to sixteen months in prison. His brother, An Nguyen, received nine months, and their sister, Kim Nguyen, was sentenced to two years probation.

Joseph Lukas, a co-defendant with the Nguyens, was let off with two years probation.

In August 2010, Hollywood couple Gerald and Patricia Green got six months in jail. Gerald Green, 78, was suffering from emphysema.

Frederic Bourke was sentenced in 2009 to a year and a day in prison. The judge said, “After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”

In all those cases, as in Naaman's, the DOJ had asked for more jail time.

Some longer FCPA-related prison terms are shown below. Five of those defendants, including Joel Esquenazi, were sentenced in the U.S. District Court for the Southern District of Florida (Miami), known as a tough sentencing venue.

In October, Esquenazi received a fifteen-year prison term -- the longest in an FCPA-related case. A jury convicted him on multiple related charges -- one count of conspiracy to violate the FCPA and commit wire fraud, seven substantive FCPA counts, one count of money laundering conspiracy, and twelve counts of money laundering. Each money laundering-related count carried a maximum twenty-year sentence.

Chart courtesy of Michael Volkov of Mayer Brown LLP in Washington, D.C. Volkov is the primary contributor to the Corruption, Crime & Compliance Blog.

Frederic Bourke And The Four Bad Facts

By Matthew T. Reinhard

The Second Circuit Court of Appeals recently released its long-awaited opinion in the appeal of hand-bag mogul turned FCPA defendant Frederic Bourke.

Bourke advanced a number of issues on appeal, but from an FCPA perspective none were as interesting as his contention that the trial court erred in giving a “conscious avoidance” instruction to the jury. A number of commentators, myself included, believed Bourke had potentially strong arguments in this regard and many were looking forward to some judicial guidance on the contours of the Government’s ability to sustain a conviction based on a defendant consciously avoiding learning bad facts.

Defying the punditry, the Court of Appeals ultimately took a very workmanlike approach in rejecting this argument. The Court found a sufficient factual predicate to support the instruction based on what I’m calling the “Evidence of the Four Bads” -- bad place, bad person, bad actions, and bad thoughts. Specifically, the Court found a sufficient factual predicate for the instruction in evidence:

i) That Bourke was aware Azerbaijan was a corrupt place generally (bad place);

ii) That Bourke knew Kozeny had a corrupt reputation (bad person);

iii) That Bourke took affirmative steps to attempt to shield himself from FCPA liability by creating US advisory companies to hold his place (and investment) on the Oily Rock board (bad actions); and

iv) Most damning, Bourke's recorded phone conversations with another investor and their attorneys where he mused about whether Kozeny was paying bribes and the appropriate response if one became aware Kozeny and his crew were paying bribes (bad thoughts).

The Court acknowledged that this evidence could also be used to show actual knowledge of bribery, but decided that it was not error to give a conscious avoidance jury instruction, noting that the same evidence may often be used to support actual knowledge or conscious avoidance.

All in all, the opinion from the Second Circuit in Bourke’s case is slightly anti-climactic in that it failed to significantly change the landscape of FCPA-jurisprudence. In the wake of this opinion there is little to stop the DOJ from continuing to prosecute individuals for FCPA-violations based on accumulated circumstantial evidence. More importantly, it serves as judicial notice that companies and individuals must be on especially high alert for corrupt activity when operating in areas with reputations for corruption or dealing with parties with unsavory reputations, as such evidence could be used to later support a finding they consciously avoided gaining knowledge of corrupt activity.

Mr. Bourke did not fare any better in the trial court either. The day after the Court of Appeals issued its decision the District Court denied Bourke’s motion for a new trial based on his allegation that the Government knowingly presented perjured testimony during Bourke’s trial. The District Court ordered Bourke to surrender himself to U.S. Marshals on January 3, 2012 to begin his sentence.

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Matthew T. Reinhard, above, is a member of the law firm of Miller & Chevalier in Washington, D.C. He focuses his practice on white collar crime, internal investigations, and complex civil litigation, including the Foreign Corrupt Practices Act. He can be reached here.

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.

Updated: Bourke Conviction Upheld On Appeal

Frederic Bourke's conviction on an FCPA conspiracy was upheld by the Second Circuit Court of Appeals.

Bourke was found guilty by a federal jury in Manhattan in July 2009 of investing in an oil privatization scheme in Azerbaijan despite knowing officials there would be bribed.

He was sentenced to a year and a day in prison and fined $1 million.

In his appeal, Bourke argued that the trial court judge gave a wrong jury instruction on the issue of 'conscious disregard,' part of the knowledge element under the FCPA.

An excellent account of Bourke's case and the appeal was reported by Bloomberg's David Glovin and Patricia Hurtado.

“A rational juror could conclude that Bourke deliberately avoided confirming his suspicions” about bribes, two judges wrote in a 27-page ruling. “This same evidence may also be used to infer that Bourke actually knew about the crimes.”

Bourke's lawyers are also asking the trial court to grant a new trial. They have argued that the DOJ knowingly allowed a key witness, Hans Bodmer, to testify falsely about when he and Bourke allegedly discussed bribes to officials in Azerbaijan. The appellate court didn't mention that issue.

Bourke has been free on bail of $10 million pending the outcome of his appeal.