DOJ Employs Aggressive Tactics to Win 5th Straight Trial Victory, Highlighting the Risks for Executives in FCPA Cases
On June 20, 2019, a federal jury in Boston returned guilty verdicts against two high-level executives for their role in a conspiracy to bribe foreign government officials in Haiti, in violation of the Foreign Corrupt Practices Act (FCPA) and related money laundering and Travel Act offenses.1 After a two-week trial in the U.S. District Court for the District of Massachusetts, the jury found that Richard Boncy, the Chairman and CEO of an investment firm focused on development projects in Haiti, and Joseph Baptiste, a director on the investment firm’s board, solicited bribes from undercover FBI agents posing as potential investors for a port project in Haiti, while also promising to use that money to bribe various officials throughout the Haitian government. This marks the fifth straight trial victory for the Department of Justice’s (DOJ’s) FCPA Unit, placing executives and companies on notice that compliance with the FCPA is more critical than ever.
The Evidence and Issues at Trial
DOJ employed significant investigative resources and aggressive tactics to build its criminal case and present the case at trial. Among other things, the government deployed undercover FBI agents to engage in covert recordings of both Boncy and Baptiste, and the recordings documented both men saying that they would use Baptiste’s non-profit organization to direct payments to Haitian officials in exchange for government approval of a port project in Haiti. The defendants also discussed offering a job to a high-level official’s aide in exchange for that aide’s help in obtaining the official’s authorization for the project. The government’s case was not without flaws, however, as the government apparently lost evidence and failed to preserve at least two phone calls with the defendants. Boncy first sought dismissal of the case, and later argued to the jury that the content of the recordings, were they to have been available for the jury to review, would have established reasonable doubt and shown that the money at issue were not bribes, but rather were intended to help fund certain charitable social programs. The defense also argued that the agents were biased and had “sought to manufacture a crime.”2 In the end, the jury took only a few hours to return guilty verdicts against both men.
DOJ’s Increased Emphasis on Enforcement of the FCPA
Only five years ago, DOJ suffered a series of stinging defeats in FCPA trials, and the common refrain among observers and practitioners was that FCPA cases were too hard to build and try because they lacked jury appeal. American jurors, it was argued, simply did not care about cases involving bribes to foreign officials, often on foreign land. However, with its fifth consecutive trial victory, DOJ has adapted its tactics and proven to be fully capable at building and trying FCPA cases. Since 2016, DOJ now has also secured trial victories in United States v. Ho, United States v. Ng,3 United States v. Chi,4 and United States v. Thiam.5 The most recent trial victory also shows that DOJ continues to prosecute executives and companies for violations of white collar crimes, including the FCPA. Last year, the DOJ FCPA Section charged 31 individuals,6 a significant increase from the 24 individuals charged in 2017,7 which itself represented the highest number of people charged since 2013. If current trends hold, this year DOJ will break all previous records and prosecute even more individuals, including senior executives and in-house counsel, for violations of the FCPA and related offenses like money laundering and wire fraud.
DOJ’s recent successes are the natural result of the Department’s concerted effort to put more time, money and resources into investigating and prosecuting international corruption and money laundering cases. Over the past five years, DOJ’s FCPA Unit has almost doubled in size, from 19 to 35 full-time prosecutors,8 and the Unit has recruited a number of prosecutors from other parts of the government into the Unit so that it can help present and win cases at trial. In fact, the lead prosecutor from the FCPA Unit on the Boncy/Baptiste trial team had recently joined the FCPA Unit after serving several years trying cases as an Assistant United States Attorney in Miami.9 These anti-corruption prosecutors also are now joined by a host of law enforcement agents, including four fully staffed FBI international corruption squads operating all over the country, and several other law enforcement agencies who receive substantial resources to investigate and fight corruption around the world.
What This Means for You
Given the current law enforcement landscape, it is critical that you and your company know and understand the FCPA, especially if you are operating or expanding your business operations in a foreign country. While it has always been helpful to have an effective and experienced advocate on your side, it is now more important than ever that you have counsel with the requisite investigative and trial experience, along with FCPA and compliance expertise, to conduct adequate risk assessments and develop well-tailored compliance systems on the front end, and advise how best to respond to a government investigation when needed.
Fry Wernick previously served as Assistant Chief of the FCPA Unit within the Department of Justice, Criminal Division, Fraud Section. The FCPA Unit prosecuted this case along with the U.S. Attorney’s Office for the District of Massachusetts, but Fry had no personal or substantive role in this matter.
1 DOJ, Two Businessmen Convicted of International Bribery Offenses (June 20, 2019), https://www.justice.gov/opa/pr/two-businessmen-convicted-international-bribery-offenses-0.
2 Aaron Leibowitz, FBI ‘Engineered’ Bribery Case In Haiti, Jury Hears, Law360 (June 11, 2019), https://www.law360.com/articles/1167519.
3 DOJ, Chairman of a Macau Real Estate Development Company Convicted on All Counts for Role in Scheme to Bribe United Nations Ambassadors to Build a Multi-Billion Dollar Conference Center (July 28, 2017), https://www.justice.gov/opa/pr/chairman-macau-real-estate-development-company-convicted-all-counts-role-scheme-bribe-united.
4 DOJ, Director of South Korea’s Earthquake Research Center Convicted of Money Laundering in Million Dollar Bribe Scheme (July 18, 2017), https://www.justice.gov/opa/pr/director-south-koreas-earthquake-research-center-convicted-money-laundering-million-dollar.
5 DOJ, Former Guinean Minister of Mines Convicted of Receiving and Laundering $8.5 Million in Bribes from China International Fund and China Sonangol (May 4, 2017), https://www.justice.gov/opa/pr/former-guinean-minister-mines-convicted-receiving-and-laundering-85-million-bribes-china.
6 DOJ, Fraud Section Year in Review 5 (2018), https://www.justice.gov/criminal-fraud/file/1123566/download.
7 DOJ, Fraud Section Year in Review 4 (2017), https://www.justice.gov/criminal-fraud/file/1026996/download.
8 DOJ, Fraud Section Year in Review 5 (2018), https://www.justice.gov/criminal-fraud/file/1123566/download; DOJ, Fraud Section Year in Review 4 (2015), https://www.justice.gov/criminal-fraud/file/833301/download.
9 Global Investigations Review, Just Anti-Corruption, Meet the Foreign Corrupt Practice Act unit prosecutors (June 8, 2018), https://globalinvestigationsreview.com/editorial/jac/1170388/elina-rubin-smith.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.