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. 

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.

New Money-Laundering Allegations Against Bodmer

Bloomberg's David Glovin, who provided outstanding daily coverage of Frederic Bourke's 2009 FCPA-related trial, filed a story yesterday about new money laundering allegations against a key government witness, Hans Bodmer.

The Swiss lawyer was accused in August by Russian billionaire Oleg Deripaska of 'masterminding a scheme last year to loot OJSC MMC Norilsk Nickel, a nickel producer in which Deripaska invests.' The complaint alleged that Bodmer 'orchestrated a $1 billion money-laundering scheme.'

In October 2004, Bodmer pleaded guilty in the U.S. to conspiracy to launder money for Viktor Kozeny. Although facing up to ten years in prison, Bodmer hasn't been sentenced and was allowed to return to Switzerland. In June he was appointed to the board of Hyposwiss Private Bank Zurich.

Bodmer, 56, helped FCPA fugitive Kozeny move money that was used to bribe Azeri officials. Bodmer's testimony supported the DOJ's claim that Bourke invested in Kozeny's Azeri deal while knowing Kozeny planned to bribe officials there.

A jury convicted Bourke in July 2009 of conspiracy to violate the FCPA and lying to FBI agents. He was sentenced to a year and a day in prison. He's free on bail while he appeals his conviction.

Bourke's lawyers have charged that Bodmer lied in his testimony. They said prosecutors knew some of Bodmer's testimony would be false but put him on the stand anyway. Bourke's motion for a new trial will be heard November 10.

Kozeny is a fugitive living in the Bahamas. He won court decisions there blocking his extradition to the U.S. The Bahamas attorney general has appealed to the Privy Council in London, where arguments will be heard on November 23.

Bloomberg's Glovin said the 'new allegations against Bodmer came in an August complaint to Swiss prosecutors by Deripaska and a unit of United Co. Rusal, the world’s largest aluminum producer. Swiss authorities haven't open a criminal case and declined to comment, Glovin said.

Lewis Sentencing: Not This Year

Clayton Lewis -- who pleaded guilty in 2005 to conspiracy to violate the FCPA and launder money -- will wait until at least next February to be sentenced.

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. Prosecutors said he knew Kozeny planned to pay bribes but went ahead with the investment anyway.

The DOJ asked Judge Naomi Reice Buchwald for a delay until February 6, 2012. Sentencing had been set for August 4.

In an August 3 letter to the judge, the DOJ said the government would need Lewis' testimony if Kozeny is ever brought to trial. 

Kozeny is still a fugitive in the Bahamas. A court there decided in January last year 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. The Privy Council, the DOJ said, has accepted the appeal but hasn't yet scheduled a hearing.

Lewis appeared as a cooperating witness for the government in Frederic Bourke's 2009 trial. Bourke was convicted of conspiracy to violate the FCPA and sentenced to a year-and-a-day in prison. He's appealing to the Second Circuit and separately asking the trial court for a new trial.

Download a copy of the DOJ's August 3, 2011 letter requesting the latest delay in Lewis' sentencing here.

The case is U.S. v. Clayton Lewis, criminal docket #: 1:03-cr-00930-NRB-1 (U.S. District Court, Southern District of New York (Foley Square)), filed July 31, 2003, assigned to Judge Naomi Reice Buchwald.