February 20, 2023

Fifth Circuit reinstates FCPA and money-laundering charges against extraterritorial defendants

On February 8, 2023, the US Court of Appeals for the Fifth Circuit reinstated money laundering, conspiracy to commit money laundering, and conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”) charges against Daisy Teresa Rafoi Bleuler (“Rafoi”) and Paulo Jorge Da Costa Casquiero Murta (“Murta”). In November 2021, a Texas district court had dismissed all charges against Rafoi, which was followed by a dismissal of the charges against Murta in July 2022. The indictment had accused the pair of participating in an international bribery scheme involving the payment and laundering of bribes to Venezuelan officials. Specifically, the indictment alleged that between 2011 and 2013 Rafoi, a citizen of Switzerland, and Murta, a citizen of Portugal and Switzerland, established a complex web of banking transactions to launder bribes for certain officers, employees and unnamed US-based businesses associated with the Petroleos de Venezuela SA (“PDVSA”), the Venezuelan state-owned and state-controlled oil company.

With respect to the FCPA-conspiracy charges, the Fifth Circuit held that the district court mistakenly concluded that the indictment did not sufficiently allege the defendants were “agents” of a domestic concern. Under the FCPA, domestic concerns, as well as their officers, directors, employees, and agents, can be prosecuted for corruptly making or offering things of value to foreign government officials. Defendants had challenged the charge against them by arguing the indictment did not contain sufficient factual allegations to prove the defendants were agents of a domestic concern. The Fifth Circuit, however, noted this was not the appropriate standard by which to evaluate the sufficiency of an indictment. Rather, an indictment “is legally sufficient if (1) each count contains the essential elements of the offense charged, (2) the elements are described with particularity, and (3) the charge is specific enough to protect the defendant against a subsequent prosecution for the same offense.” The Fifth Circuit held that the indictment clearly said that both defendants were agents of a domestic concern as that term is defined in the FCPA. That statement was sufficient to put the defendants on notice of the charge and the agency theory asserted against them.

In addition, the Fifth Circuit held the indictment sufficiently alleged Murta violated the FCPA under 15 U.S.C. § 78dd-3, which allows for the prosecution of “any person” who, “while in the territory of the United States,” corruptly makes or offers a thing of value to a foreign government official. Murta had argued that his due-process rights were violated by the charge, as there was not a “sufficient nexus” between the charged conduct and the United States, and he lacked fair warning as to the criminality of his actions. The Fifth Circuit held that a sufficient nexus existed when the aim of the crime is to cause harm inside the US or to US interests. Since Murta, as part of the FCPA conspiracy charge, was alleged to have acted with the “intent or knowledge that monies that were the proceeds of specified unlawful activity would be unlawfully transmitted from or through the United States,” that constituted sufficient harm to the US’s interests. Moreover, although Murta may or may not have been aware of the specific provisions of the FCPA because “[i]nternational-bribery schemes and money laundering are condemned universally by law-abiding nations,” that constituted fair warning for due process purposes.

The Fifth Circuit also held that the term “agent” as used in the FCPA was not unconstitutionally vague. As an initial matter, the Fifth Circuit stated that simply because a term is not defined by statute does not make it unconstitutionally vague. A term can be defined by common law and not be vague. Moreover, the Court held that a person of common intelligence would understand that allegedly setting up bank accounts on behalf of others to hide the source of funds knowingly derived from an illegal bribery scheme was “treading close to a reasonably-defined line of illegality under an agency theory of liability.” As such, the Fifth Circuit held agent was not unconstitutionally vague.

The Fifth Circuit also reinstated the money laundering charges against Rafoi and Murta that the district court dismissed after it held that the money laundering statute contained a requirement that defendants be physically present within the United States during a portion of the offense. The Fifth Circuit held that the money-laundering statute has no physical-presence requirement. As long as “conspiratorial conduct occurred in the United States,” the conduct could be prosecuted under 18 U.S.C. § 1956(f).

In addition, the Fifth Circuit reversed the District Court’s ruling that Murta’s indictment should be dismissed on statute-of-limitation grounds.  The government had made mutual legal assistance treaty (“MLAT”) requests, and argued that those, along with the government’s application for tolling, caused the statute of limitations to be tolled.  Murta argued that the specific requirements for tolling a statute of limitations due to MLAT requests were not met.  He noted that individuals, although not Murta, were indicted prior to the relevant MLAT request.  Following the MLAT request, a superseding indictment was eventually filed charging Murta.  Murta argued that the tolling statute’s requirement that the tolling request be submitted before indictment was therefore not met as an indictment was filed prior to the MLAT request.

The Fifth Circuit held that although an indictment had been returned by the grand jury prior to the relevant MLAT request, because the indictment did not charge Murta, it was not relevant to the tolling analysis.  Rather, the relevant indictment was the one that charged Murta specifically.  Because that occurred after the MLAT request, the statute of limitations had been tolled.

The Fifth Circuit also ruled that statements made by Murta to Portuguese authorities should not be suppressed. Murta had not received a Miranda warning prior to making the statements. However, the Fifth Circuit held such a warning was unnecessary because Murta was not “in custody” at the time he made the statements. Lastly, the Fifth Circuit declined to address the question of whether the defendants could be charged with conspiracy to violate the FCPA and money laundering statutes even if they could not be convicted of committing the substantive offenses because the district court had not ruled on this issue.

Fifth Circuit Opinion | Superseding Indictment