In an August 30, 2019 opinion, the US Court of Appeals for the Ninth Circuit affirmed the money laundering conviction of a South Korean man formerly employed as principal researcher and director of a South Korean government-funded research institute. The conviction of Heon-Cheol Chi, pursuant to 18 USC § 1957, required that the illicit money transaction be derived from a “specified unlawful activity.” The trial court defined the underlying specific unlawful activity as the bribery of a public official under the South Korean Criminal Code.
According to the evidence presented at trial, Chi had solicited and received payments from seismometer manufacturers in exchange for a promise that the institute he headed, the Korea Institute of Geoscience and Mineral Resources, would purchase the companies’ products. The corrupt payments, totaling over $1 million, were routed through a US bank account.
The investigation into Chi’s conduct was initiated when the executive chairman of one of the seismometer manufacturers, Güralp Systems Ltd, a UK company, became suspicious and confronted Chi about the payments. Eventually, the seismometer executive reported Chi’s conduct to the UK Serious Fraud Office, and the US Federal Bureau of Investigation and US Department of Justice also became involved in the ensuing investigation, which implicated a US seismometer company as well. Three individuals have been charged in the UK in connection with payments to Chi by Güralp Systems. In August 2018 the DOJ informed Güralp that it did not intend to pursue enforcement action against the company.
On appeal, Chi contended that the crime described in the South Korean Criminal Code must fall within the ambit of crimes described in 18 USC § 201. However, the Ninth Circuit rejected that argument, holding that the crime described by the South Korean law fits comfortably within the ordinary meaning of “bribery of a public official” as used in 18 USC § 1956(c)(7)(B), and that no statutory basis exists for applying 18 USC § 201. The Court also rejected Chi’s arguments concerning the jury instructions and sufficiency of the evidence, and affirmed the conviction, which was limited to one count of the six counts presented at trial.