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From Securities Regulation Daily, December 31, 2014

Withdrawal-from-conspiracy defense must wait until FCPA trial

By Anne Sherry, J.D.

A defendant could not dismiss an indictment charging conspiracy to violate the Foreign Corrupt Practices Act. His argument that he withdrew from the conspiracy outside the limitations period was an affirmative defense that he would have to prove by a preponderance of the evidence; the court could not dismiss an indictment pretrial on the basis of a fact dispute (U.S. v. Hoskins, December 29, 2014, Arterton, J.). 

Background. Lawrence Hoskins, a citizen of the United Kingdom, was indicted as part of a bribery conspiracy to secure a contract for his employer, Alstom Holdings S.A., in Indonesia. In August 2004, while the conspiracy was still in progress, Hoskins resigned from Alstom. The grand jury returned a 12-count indictment in July 2013. Hoskins maintained that his resignation constituted withdrawal from the conspiracy and, therefore, the five-year statute of limitations expired in 2009.

The other bases for his motion to dismiss the indictment were that the government failed to adequately allege that he was an agent of a domestic concern as required for FCPA liability to attach; that even if he was, the FCPA is unconstitutionally vague as applied; that the FCPA does not apply extraterritorially to non-U.S. citizens; and that venue was not proper in the district for the money-laundering counts or, alternatively, that those counts are duplicative of the FCPA counts.

Withdrawal. Although a statute of limitations defense can be raised pretrial, the district court noted, it may be premature if the indictment is facially sufficient and the defendant’s argument requires a determination of factual issues. Here, there was no dispute that Hoskins resigned his job when he said he did, but that resignation did not establish withdrawal from the charged conspiracy as a matter of law. There is no criminal procedural mechanism analogous to the motion for summary judgment in the civil context; rather, the factual determinations of the merits of the charged offense must be made at trial by the fact finder. Some courts have dismissed an indictment pretrial where the government stipulates to or does not contest the relevant facts, but there was no such stipulation or proffer in this case. Furthermore, the government cited case law in arguing that even if Hoskins could prove his withdrawal from the conspiracy, it would not be a defense to the substantive FCPA and money-laundering counts under an aiding-and-abetting theory. The court required a full examination of the elements of the substantive crimes to apply the reasoning of these cited cases.

Agent of a domestic concern. Hoskins also argued that the government failed to adequately allege that he was an “agent of a domestic concern.” The FCPA does not define the term “agent,” the court noted, and the existence of an agency relationship is a highly factual inquiry. Without any authority to support the defendant’s argument that an employee or executive of a parent company is incapable of functioning as an agent for a subsidiary as a matter of law, these factual questions needed to be brought to a jury at trial in the first instance. Similarly, Hoskins’s vagueness argument, as a corollary to his argument that he does not fall within the definition of “agent,” required a more expansive factual record to be developed at trial.

Other arguments. The court did not have to consider Hoskins’ argument that the FCPA does not apply extraterritorially to non-U.S. citizens because the indictment charged domestic conduct to further the conspiracy. Venue in the District of Connecticut was likewise proper under the money-laundering statute, which bestows venue in any district in which the financial or monetary transaction — here, wire transfers — is conducted. Finally, the indictment would not be dismissed pretrial on the basis of multiplicitous legal theories; the government was free to prosecute the two statutes simultaneously, as long as the defendant was not ultimately punished multiple times for the same offense.

The case is No. 3:12cr238 (JBA).

Attorneys: Alejandra de Urioste (Clifford Chance US LLP) for Lawrence Hoskins. Daniel S. Kahn, U. S. Department of Justice, for the United States of America.

Companies: Alstom Holdings S.A.; Alstom Power U.S.

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