U.S. v. Kozeny, 05 Cr. 518(SAS).

664 F.Supp.2d 369

UNITED STATES of America v. Viktor KOZENY and Frederic Bourke, Jr., Defendants.

No. 05 Cr. 518(SAS).

United States District Court, S.D. New York.

October 13, 2009.

COPYRIGHT MATERIAL OMITTED

Harry Chernoff, Iris Lan, Assistant United States Attorneys, New York, NY, for the Government.

Harold A. Haddon, Esq., Saskia A. Jordan, Esq., Haddon Morgan Mueller Jordan Mackey & Foreman P.C., Denver, CO, John D. Cline, Esq., K.C. Maxwell, Esq., Jones Day LLP, San Francisco, CA, James David Reich, Jr., Esq., Christopher Paolella, Esq., Winston & Strawn LLP, New York, NY, for Defendant Bourke.

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

I. INTRODUCTION

After a five-week trial, defendant Frederic Bourke was convicted of conspiring to violate the Foreign Corrupt Practices Act ("FCPA") under 18 U.S.C. § 371 and making false statements in violation of 18 U.S.C. § 1001.¹ He now moves pursuant to Federal Rule of Criminal Procedure 29 for entry of a judgment of acquittal on both counts, or alternatively, pursuant to Rule 33 for a new trial. For the reasons that follow, his motions are denied.

II. BACKGROUND

A. Facts²

SOCAR is the state-owned oil company of the Republic of Azerbaijan ("Azerbaijan").³ In the mid-1990s, Azerbaijan began a program of privatization.⁴ The program gave the President of Azerbaijan, Heydar Aliyev, discretionary authority as to whether and when to privatize SOCAR.⁵ Bourke, co-defendant Viktor Kozeny, and others conspired to violate the FCPA by agreeing to make payments to Azeri officials to encourage the privatization of SOCAR and to permit them to participate in that privatization.⁶ The payments included, among other things, cash bribes, the gift of a two-thirds interest in the privatization venture, and assistance with obtaining a medical appointment, visas, and college admission in the United States.⁷

B. Procedural History

On May 12, 2005, in a sealed indictment, the Government charged Bourke with various offenses related to the payment of bribes to Azeri officials. In an Opinion and Order dated June 21, 2007, this Court granted Bourke's motion to dismiss certain of the counts against him on the ground that they were time-barred.⁸ In a Memorandum Opinion and Order dated July 16, 2007, the Court reinstated the conspiracy to violate the FCPA count, the substantive FCPA count, and the money laundering conspiracy count.⁹ The false statements count against Bourke was not dismissed in the June Opinion and Order and therefore also remained.¹⁰ On May 5, 2009, a grand jury returned a superseding indictment that omitted the charges that the Court had dismissed.¹¹ On the eve of trial, after the Government decided not to proceed with the substantive FCPA count, a grand jury returned a second superseding indictment that omitted the substantive FCPA charge.¹²

Trial on the three remaining counts— conspiracy to violate the FCPA, conspiracy to engage in money laundering, and the making of false statements—commenced on June 1, 2009 and lasted approximately five weeks. In a July 6, 2009 Opinion and Order, this Court denied Bourke's Rule 29 motion for judgment of acquittal, finding that the Government had presented sufficient evidence to enable a reasonable juror to conclude beyond a reasonable doubt that Bourke was guilty of all counts.¹³

On July 10, 2009, the jury convicted Bourke of the conspiracy to violate the FCPA count and the false statements charge.¹⁴ Bourke was acquitted, however, of the money laundering conspiracy count.¹⁵ Bourke now moves the Court to enter a judgment of acquittal with respect to the counts upon which he was convicted or, in the alternative, to grant him a new trial.

III. LEGAL STANDARD

A. Rule 29

To prevail on a Rule 29 motion, a defendant must show that "the evidence is insufficient to sustain a conviction."¹⁶ "[A] defendant making an insufficiency claim bears a very heavy burden."¹⁷ "The ultimate question is not whether [the court] believe[s] the evidence adduced at trial established [the defendant's guilt beyond a reasonable doubt], but whether any rational trier of fact could so find."¹⁸ "In other words, the court may enter a judgment of acquittal only if the evidence that the defendant committed the crime is nonexistent or so meager that no reasonable jury could find guilt beyond a reasonable doubt."¹⁹

A court must grant a motion under Rule 29 if there is "no evidence upon which a reasonable mind might fairly conclude guilt beyond a reasonable doubt."²⁰ "[I]f the evidence viewed in the light most favorable to the prosecution gives equal or nearly equal circumstantial support to a theory of guilt and a theory of innocence, then a reasonable jury must necessarily entertain a reasonable doubt."²¹

In considering the sufficiency of the evidence, the court must "view all of the evidence in the light most favorable to the government, crediting every inference that could have been drawn in the government's favor."²² A court must analyze the pieces of evidence not separately, in isolation, but together, in conjunction with one another.²³ Accordingly, a court must apply the sufficiency test "to the totality of the government's case and not to each element, as each fact may gain color from the others."²⁴

"The assessment of witness credibility lies solely within the province of the jury, and the jury is free to believe part and disbelieve part of any witness's testimony ...,"²⁵ "`[T]he task of choosing among competing, permissible inferences is for the fact-finder, not for the reviewing court.'"<sup>26</sup> Furthermore, "`the jury's verdict may be based on entirely circumstantial evidence.'"²⁷ Because the jury is entitled to choose which inferences to draw, the Government, in presenting a case based on circumstantial evidence, "need not `exclude every reasonable hypothesis other than that of guilt.'"<sup>28</sup> But "`a conviction based on speculation and surmise alone cannot stand.'"²⁹

B. Rule 33

Rule 33(a) provides that "[u]pon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires."³⁰ "This rule `confers broad discretion upon a trial court to set aside a jury verdict and order a new trial to avert a perceived miscarriage of justice.'"<sup>31</sup> "[B]efore ordering a new trial pursuant to Rule 33, a district court must find that there is `a real concern that an innocent person may have been convicted.'"³² "The test is whether `it would be a manifest injustice to let the guilty verdict stand.'"³³

IV. DISCUSSION

A. Insufficiency of Evidence

1. Count One—Conspiracy to Violate the FCPA or Travel Act

Bourke argues that the Government presented insufficient evidence to establish beyond a reasonable doubt that he had actual knowledge of the bribery.³⁴ However, Bourke misconstrues the knowledge that a jury must find he had in order to be convicted of the crime of conspiracy. The Government must prove that Bourke had knowledge of the object of the conspiracy, which was to violate the FCPA, not that bribes had, in fact, been paid. Indeed, a defendant can be convicted of conspiracy even if the object of the conspiracy—in this case, the making of corrupt payments in return for the privatization of SOCAR— is never fully consummated.³⁵

There was ample circumstantial evidence that Bourke had actual knowledge of the object of the conspiracy. For instance, Amir Farman-Farma, who was employed by Minaret³⁶ and became familiar with Bourke during the course of the privatization venture, testified that he had asked Bourke in a December 1998 conversation how Kozeny had justified the dilution of Oily Rock shares as a result of the capital share increase.³⁷ Bourke had replied that he had been told by Kozeny that the dilution was "a necessary cost of doing business" and that "he had issued or sold shares to new partners who would maximize the chances of the deal going through, the privatization being a success."³⁸ Robert Evans, another investor in the venture, also testified that Kozeny had told him and Bourke during a trip to Azerbaijan that they would not be receiving the "full value" of their investments because of a "split with local interests."³⁹ It can be inferred from both of these conversations that Bourke was aware that "new partners" or "local interests" were receiving shares of the venture without consideration and in exchange for assistance in encouraging the Azeri Government to privatize SOCAR.

In addition, the Government introduced a tape recording of a May 1998 teleconference in which Bourke and Richard Friedman, another investor in Oily Rock, discussed with their attorneys how to limit any liability that may result from their participation on the boards of Kozeny's companies.⁴⁰ During this call, Bourke indicated strongly that he knew Kozeny and others were engaged in bribing state officials.⁴¹

Despite this knowledge, Bourke and Friedman proposed the formation of companies affiliated with Oily Rock and Minaret that would shield them from liability and limit their knowledge of the affairs of Kozeny's Oily Rock and Minaret.⁴² Bourke joined the board of directors of Oily Rock U.S. Advisors and Minaret U.S. Advisors on July 1, 1998.⁴³ He made an additional investment in the privatization scheme after his appointments to these positions.⁴⁴

There is also substantial direct evidence of Bourke's knowledge. Hans Bodmer, co-defendant and attorney to Kozeny during the period of the scheme, testified that he had a conversation with Bourke in February 1998 regarding the bribery of Azeri officials.⁴⁵ Bodmer testified that on February 5, 1998 during a trip to Azerbaijan, Bourke asked him, "what is the arrangement, what are the Azeri interests."⁴⁶ After obtaining Kozeny's approval to speak to Bourke about the specifics of the "arrangement," Bodmer then met with Bourke the following day, February 6.⁴⁷ He testified that he then told Bourke that two-thirds of the vouchers had been issued to the Azeri officials under credit...