Justia International Law Opinion Summaries

Articles Posted in White Collar Crime
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Following proceedings in district court, the trial court t entered a final judgment, finding Defendant liable, ordering him to disgorge over $4,000,000 in funds, and placing two of his entities under receivership in order to sell and reorganize assets to repay investors. Later, a federal grand jury sitting in Miami returned a superseding indictment that described consistent with the district court’s findings of fact.   After an extradition request was filed by the United States, the Supreme Court of Brazil allowed him to be extradited. He returned to the United States, and on the eve of trial, following over a year of pretrial proceedings, Defendant entered into a plea agreement, agreeing to plead guilty to one count of mail fraud. The district court later sentenced Defendant to 220 months’ imprisonment and ordered him to pay $169,177,338 in restitution.   On appeal, Defendant broadly argues: (1) that the custodial sentence imposed and the order of restitution violate the extradition treaty; and (2) that his guilty plea was not made freely and voluntarily. The Eleventh Circuit affirmed. The court explained that the district court fully satisfied the core concerns of Rule 11, and the court could discern no reason to conclude that the district court plainly erred in finding that Defendant’s guilty plea was entered knowingly and voluntarily. The court explained that in this case, the record fully reflects that Defendant agreed to be sentenced subject to a 20-year maximum term, and his 220-month sentence is near the low end of his agreed-upon 210-to-240-month range. View "USA v. John J. Utsick" on Justia Law

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The City of Almaty, in Kazakhstan, filed suit against defendant and his family under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that they engaged in a scheme to defraud the city of millions of dollars. The City claimed that it was forced to spend money and resources in the United States to trace where its money was laundered. The district court dismissed the City's claim on the basis that it failed to state a domestic injury pursuant to the Supreme Court's recent decision in RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090 (2016).The Ninth Circuit held that the City failed to state any cognizable injury other than the foreign theft of its funds, and its voluntary expenditures were not proximately caused by defendants' acts of money laundering. In this case, the City's expenditure of funds to trace its allegedly stolen funds is a consequential damage of the initial theft suffered in Kazakhstan and is not causally connected to the predicate act of money laundering. View "City of Almaty v. Khrapunov" on Justia Law

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The Ninth Circuit affirmed defendant's conviction for engaging in a monetary transaction of over $10,000 derived from a specified unlawful activity, in violation of 18 U.S.C. 1956. In this case, defendant, a citizen of South Korea employed at a government-funded research institute, solicited and received payments from two seismometer manufacturers in exchange for ensuring that the research institute purchased their products, and gave the companies inside information about their competitors.The panel held that "bribery of a public official" in section 1956 is defined by that phrase's ordinary, contemporary, common meaning and is not constrained by 18 U.S.C. 201, a statute to which section 1956 makes no reference. Because the panel found the crime described in Article 129 of the South Korean Criminal Code fits comfortably within the ordinary meaning of "bribery of a public official" as used in section 1956, the panel held that the indictment was sufficient and that there was no instructional error. View "United States v. Heon-Cheol Chi" on Justia Law

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The Second Circuit affirmed defendant's conviction of paying and conspiring to pay bribes, in violation of 18 U.S.C. 371, 666, and the Foreign Corrupt Practices Act (FCPA), and gratuities to United Nations officials and of related money laundering. Defendant's charges stemmed from his sustained effort to bribe two U.N. officials to designate one of his properties as the permanent site of an annual U.N. convention.The court held that the word "organization" as used in section 666, and defined by 1 U.S.C. 1 and 18 U.S.C. 18, applies to all non‐government legal persons, including public international organizations such as the U.N. The court also held that the "official act" quid pro quo for bribery as proscribed by 18 U.S.C. 201(b)(1), defined by id. section 201(a)(3), and explained in McDonnell v. United States, does not delimit bribery as proscribed by section 666 and the FCPA. Thus, the district court did not err in failing to charge the McDonnell standard for the FCPA crimes of conviction. Insofar as the district court nevertheless charged an "official act" quid pro quo for the section 666 crimes, that error was harmless beyond a reasonable doubt. Finally, the evidence was sufficient to convict defendant, and the jury did not misconstrue the "corruptly" element of section 666 and the FCPA and the "obtaining or retaining business" element of the FCPA. View "United States v. Ng Lap Seng" on Justia Law

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Plaintiffs filed suit alleging that defendants, while located in foreign nations, used the mail or wires to order fraudulent asset transfers from plaintiffs' New York bank accounts to defendants' own accounts. The district court held that all but one of the schemes were impermissibly extraterritorial under either civil RICO, 18 U.S.C. 1964(c), or the mail, wire, and bank fraud statutes plaintiffs cited as predicates to the civil RICO cause of action. The district court found the remaining scheme, standing alone, did not constitute a pattern of racketeering activity under RICO. At issue was whether the conduct violating the predicate statutes was extraterritorial, the application of civil RICO to plaintiff's alleged injuries was extraterritorial, and whether the surviving schemes amounted to a pattern of racketeering activity.The Second Circuit held that each of the schemes to defraud, except for the Sham Management Fees Scheme, calls for domestic applications of 18 U.S.C. 1962(c), 1962(d), 1341, 1343, and 1344(2). The court also held that the district court abused its discretion by dismissing the state law claims for lack of supplemental jurisdiction. Therefore, the court reversed and remanded for further proceedings. View "Bascuñán v. Elsaca" on Justia Law

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Plaintiffs founded ChinaWhys, which assists foreign companies doing business in China with American anti-bribery regulations compliance. Plaintiffs allege that the GSK Defendants engaged in bribery in China, with the approval of Reilly, the CEO of GSK China. In 2011, a whistleblower sent Chinese regulators correspondence accusing GSK of bribery. Defendants tried to uncover the whistleblower’s identity. Plaintiffs met with Reilly. According to Plaintiffs, GSK China representatives stated they believed Shi, a GSK China employee who had been fired, was orchestrating a “smear campaign.” ChinaWhys agreed to investigate Shi under an agreement to be governed by Chinese law, with all disputes subject to arbitration in China. Plaintiffs were arrested, convicted, imprisoned, and deported from China. Reilly was convicted of bribing physicians and was also imprisoned and deported. The Chinese government fined GSK $492 million for its bribery practices; GSK entered a settlement agreement with the U.S. SEC. Plaintiffs sued under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961–1968, contending that their business was “destroyed and their prospective business ventures eviscerated” as a result of Defendants’ misconduct. RICO creates a private right of action for a plaintiff injured in his business or property as a result of prohibited conduct; for racketeering activity committed abroad, section 1964(c)’s private right of action requires that the plaintiff “allege and prove a domestic injury to its business or property.” The Third Circuit held that Plaintiffs did not plead sufficient facts to establish that they suffered a domestic injury under section 1964(c). View "Humphrey v. GlaxoSmithKline PLC" on Justia Law

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The government sought forfeiture (21 U.S.C. 881(a)(4),(6), (7); 18 U.S.C. 981) of bank accounts, real properties, vehicles, and $91,500 in U.S. currency, related to its investigation into Salouha and Sbeih. Salouha allegedly illegally sold prescription drugs through his Ohio pharmacies, 21 U.S.C. 841. Salouha and Sbeih allegedly laundered the receipts through their accounts, 18 U.S.C. 1956. Sbeih and his wife filed verified claims to seven of the personal bank accounts. Sbeih was indicted but failed to appear. The court issued an arrest warrant, lifted the stay on the civil forfeiture case and scheduled a status conference. Sbeih’s counsel sought permission for Sbeih not to attend, as he was in Israel. Sbeih alleged that he was in danger of losing his Jerusalem permanent residency permit if he left Israel. The court granted the motion. The government moved to strike Sbeih’s claim under the fugitive disentitlement statute, 28 U.S.C. 2466. The court waited to see whether the Salouhas, Sbeih’s codefendants, were able to reenter the country, but ultimately granted the government’s motion to strike Sbeih’s claim and ordered forfeiture. While section 2466 requires the government to prove that the claimants had a specific intent of avoiding criminal prosecution in deciding to remain outside the U.S., it does not require that that intent be the sole or principal intent. In this case, however, government did not meet its burden of proving that Sbeih was not returning to the U.S. to avoid prosecution View "United States v. $525,695.24" on Justia Law

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The Fifth Amendment's prohibition on the use of compelled testimony in American criminal proceedings applies even when a foreign sovereign has compelled the testimony.  When the government makes use of a witness who had substantial exposure to a defendant's compelled testimony, it is required under Kastigar v. United States, 406 U.S. 441 (1972), to prove, at a minimum, that the witness's review of the compelled testimony did not shape, alter, or affect the evidence used by the government.  A bare, generalized denial of taint from a witness who has materially altered his or her testimony after being substantially exposed to a defendant’s compelled testimony is insufficient as a matter of law to sustain the prosecution’s burden of proof. In this case involving the London Interbank Offered Rate (LIBOR), defendants were convicted of wire fraud and conspiracy to commit wire fraud and bank fraud. The Second Circuit held that defendants' compelled testimony was "used" against them, and this impermissible use before the petit and grand juries was not harmless beyond a reasonable doubt.  Accordingly, the court reversed the judgments of conviction and dismissed the indictment. View "United States v. Allen" on Justia Law

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From 2004-2008, Georgiou and co-conspirators engaged in a stock fraud scheme resulting in more than $55 million in actual losses. The scheme centered on four stocks, all quoted on the OTC Bulletin Board or the Pink OTC Markets Inc. The conspirators opened brokerage accounts in Canada, the Bahamas, and Turks and Caicos, which they used to trade stocks, artificially inflating prices. They were able to sell their shares at inflated prices and used the shares as collateral to fraudulently borrow millions of dollars from Bahamas brokerage firms. In 2006, Waltzer, a co-conspirator, began cooperating in an FBI sting operation. A jury convicted Georgiou of conspiracy, securities fraud, and wire fraud. The district court sentenced him to 300 months’ imprisonment, ordered him to pay restitution of $55,823,398, ordered a special assessment of $900, and subjected Georgiou to forfeiture of $26,000,000. The Third Circuit affirmed, rejecting an argument that the securities and wire fraud convictions were improperly based upon the extraterritorial application of United States law. The securities were issued by U.S. companies through U.S. market makers acting as intermediaries for foreign entities. The court also rejected claims of Brady and Jencks Act violations and of error on evidentiary and sentencing issues. View "United States v. Georgiou" on Justia Law

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Bokhari is a dual citizen of the U.S. and Pakistan. While living in Wisconsin, Bokhari allegedly conducted a fraudulent scheme with his brothers, bilking a nonprofit entity that administered the E‐Rate Program, a federal project to improve internet and telecommunications services for disadvantaged schools, out of an estimated $1.2 million, by submitting false invoices. In 2001, while the alleged fraud was ongoing, Bokhari moved to Pakistan, where, according to the prosecution, he continued directing the illegal scheme. In 2004, a federal grand jury in Wisconsin indicted the brothers for mail fraud, money laundering, and related charges. The brothers pleaded guilty and were sentenced to more than five years in prison. The government submitted an extradition request to Pakistan in 2005. Bokhari contested the request in Pakistani court, and the Pakistani government sent an attorney to plead the case for extradition. In 2007, following a hearing, a Pakistani magistrate declined to authorize extradition. In 2009, the U.S. secured a “red notice” through Interpol, notifying member states to arrest Bokhari should he enter their jurisdiction. In the U.S., Bokhari’s attorneys moved to dismiss the indictment and quash the arrest warrant. The district court denied Bokhari’s motion pursuant to the fugitive disentitlement doctrine. The Seventh Circuit affirmed, characterizing the appeal as an improper attempt to seek interlocutory review of a non‐final pretrial order. View "United States v. Bokhari" on Justia Law