Client Alert
May 22, 2014
Court of Appeals Hands Down Landmark FCPA
Ruling Defining the Term “Instrumentality”
By Charles E. Duross
Federal appellate court decisions interpreting the Foreign Corrupt Practices Act (FCPA) are rare. Very rare.
Indeed, in the statute’s 36-year history there have been barely more than a handful of appellate court decisions
analyzing the meaning of the different provisions of this complex statute with which multinational corporations and
scores of business executives must grapple on a daily basis.1 On Friday, May 16, 2014, the Eleventh Circuit
Court of Appeals issued a landmark ruling addressing for the first time the definition of the term “instrumentality”
as it appears in the FCPA. That case, captioned United States v. Joel Esquenazi and Carlos Rodriguez,2
affirmed the convictions and sentences of both defendants, and in so doing, upheld the longest sentence in the
FCPA’s history, Esquenazi’s 15-year sentence.3
The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) understandably view this
decision as validating their broad interpretation of who qualifies as a “foreign official” under the FCPA. 4 At a
compliance conference held just after the release of this decision, the heads of the FCPA Units at both the DOJ
and SEC, Patrick Stokes and Kara Brockmeyer, respectively, described the ruling as an “important,” “seminal”
decision on a critical issue and said that they drew comfort from the appellate court embracing the DOJ and
SEC’s approach to this issue.
While this is the first time an appellate court has defined the term “instrumentality,” companies hoping for
additional clarity through the creation of either a bright-line rule or a clearly defined test will be disappointed, as
the Esquenazi court embraced the non-exhaustive multi-factor test endorsed by the government and adopted by
a number of district courts that faced the same issue.5
1 See, e.g., United States v. Kozeny, 667 F.3d 122 (2d Cir. 2011); United States v. Ko zeny, 541 F.3d 166 (2d Cir. 2008); United States v. Kay,
513 F.3d 432 (5th Cir. 2007); United States v. Kay, 359 F.3d 738 (5th Cir. 2004); Stichting Ter Behartiging Van de Belangen Van
Oudaandeelhouders In Het Kapitaal Van Saybolt Int’l B.V. v. Schreiber, 327 F.3d 173 (2d Cir. 2003); United States v. Liebo, 923 F.2d 1308
2 Case No. 11-15331 (11th Cir. May 16, 2014). A copy of the court’s decision is available here.
3 See prior Client Alerts, “Another Successful FCPA Prosecution Against Individuals—More Terra Telecom Execs Appear Headed for Prison
for Haiti Bribes”; “Telecom Exec Sentenced to Record Breaking FCPA Prison Term: 15 years”; “FCPA + Anti-Corruption Developments: 2012
End of Summer Round-Up.”
4 See U.S. DEP’T OF JUSTICE & U.S. SEC. AND EXCH. COMM’N, A Resource Guide to the U.S. Foreign Corrupt Practices Act (Nov. 12, 2012) at
20, available at http://www.justice.gov/criminal/fraud/fcpa/guide.pdf.
5 Jury Instructions, United States v. Esquenazi, No. 09-cr-21010 (S.D. Fla. Aug. 5, 2011), ECF No. 520; Order at 5 and Jury Instructions,
United States v. Carson, 2011 WL 5101701, No. 09-cr-77 (C.D. Cal. May 18, 2011), ECF No. 373 and ECF No. 549; United States v.
Aguilar, 783 F. Supp. 2d 1108, 1115 (C.D. Cal. 2011).
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