United States v. Hoskins

902 F.3d 69

UNITED STATES of America, Appellant,

v.Lawrence HOSKINS, Defendant - Appellee.^*

Docket No. 16-1010-cr

August Term, 2016

United States Court of Appeals, Second Circuit.

Argued: March 2, 2017

Decided: August 24, 2018

SANGITA K. RAO, Department of Justice (Michael J. Gustafson, First Assistant United States Attorney, Leslie R. Caldwell, Assistant Attorney General, David E. Novick, Assistant United States Attorney, Sung-Hee Suh, Deputy Assistant Attorney General, Andrew Weissmann, Chief, Fraud Section, Daniel S. Kahn and Jeremy Sanders, Attorneys, Fraud Section, on the brief), Washington, D.C., for Appellant United States of America.

CHRISTOPHER J. MORVILLO, Clifford Chance US LLP (Daniel Silver and Benjamin Peacock, on the brief), New York, N.Y., for Defendant-Appellee Lawrence Hoskins.

IRA M. FEINBERG, Hogan Lovells US LLP (Derek Musa, on the brief, New York, N.Y., for Amicus Curiae the New York Council of Defense Lawyers in support of Defendant-Appellee Lawrence Hoskins.

Jonathan Bach and Adam S. Gershenson, on the brief, Cooley LLP, New York, N.Y., for Amicus Curiae the New York Council of Defense Lawyers in support of Defendant-Appellee Lawrence Hoskins.

Before: KATZMANN, Chief Judge, POOLER and LYNCH, Circuit Judges.

JUDGE LYNCH concurs in the opinion and files a separate concurring opinion.

POOLER, Circuit Judge:

In this case, we are asked to decide whether the government may employ theories of conspiracy or complicity to charge a defendant with violating the Foreign Corrupt Practices Act ("FCPA"), even if he is not in the category of persons directly covered by the statute.¹ We determine that the FCPA defined precisely the categories of persons who may be charged for violating its provisions. The statute also stated clearly the extent of its extraterritorial application.

The FCPA establishes three clear categories of persons who are covered by its provisions: (1) Issuers of securities registered pursuant to 15 U.S.C. § 78l or required to file reports under Section 78o (d), or any officer, director, employee, or agent of such issuer, or any stockholder acting on behalf of the issuer, using interstate commerce in connection with the payment of bribes, 15 U.S.C. § 78dd-1 ; (2) American companies and American persons using interstate commerce in connection with the payment of bribes, 15 U.S.C. § 78dd-2 ; and (3) foreign persons or businesses taking acts to further certain corrupt schemes, including ones causing the payment of bribes, while present in the United States, 15 U.S.C. § 78dd–3.

Because we agree with the district court that the FCPA's carefully-drawn limitations do not comport with the government's use of the complicity or conspiracy statutes in this case, we AFFIRM the district court's ruling barring the government from bringing the charge in question. We REVERSE the district court's holding on the Second Object of the Conspiracy, because the government's intention to prove that Hoskins was an agent of a domestic concern places him squarely within the terms of the statute and takes that provision outside our analysis on the other counts.

BACKGROUND

I. The Allegations

The government alleges that several defendants, including Hoskins, were part of a scheme to bribe officials in Indonesia so that their company could secure a $118 million contract from the Indonesian government. Hoskins worked for Alstom S.A. ("Alstom"), a global company headquartered in France that provides power and transportation services During the relevant time, which was from 2002 to 2009, Hoskins was employed by Alstom's UK subsidiary, but was assigned to work with another subsidiary called Alstom Resources Management, which is in France.

The alleged bribery scheme centers on Alstom's American subsidiary, Alstom Power, Inc. ("Alstom U.S."), headquartered in Connecticut. The allegations are that Alstom U.S. and various individuals associated with Alstom S.A. retained two consultants to bribe Indonesian officials who could help secure the $118 million power contract for the company and its associates. Hoskins never worked for Alstom U.S. in a direct capacity. But the government alleges that Hoskins, while working from France for Alstom Resources Management, was "one of the people responsible for approving the selection of, and authorizing payments to, [the consultants], knowing that a portion of the payments to [the consultants] was intended for Indonesian officials in exchange for their influence and assistance in awarding the [contract.]" Third Superseding Indictment (hereinafter "Indictment") ¶¶ 3, 8.

The government alleges that several parts of the scheme occurred within the United States. The indictment alleges that one of the consultants kept a bank account in Maryland.² In some cases, funds for bribes allegedly were paid from bank accounts held by Alstom and its business partners in the United States, and deposited in the consultant's account in Maryland, for the purpose of bribing Indonesian officials. The indictment also states that several executives of Alstom U.S. held meetings within the United States regarding the bribery scheme and discussed the project by phone and email while present on American soil.

The government concedes that, although Hoskins "repeatedly e-mailed and called ... U.S.-based coconspirators" regarding the scheme "while they were in the United States," Hoskins "did not travel here" while the bribery scheme was ongoing. Appellant's Br. at 7.

II. The Indictment

The Third Superseding Indictment, the operative one in the case, brings twelve counts against Hoskins. This appeal concerns the first seven counts of the indictment.

Count one charges Hoskins with conspiring to violate the FCPA. It alleges that Hoskins is liable because he was an agent of Alstom U.S., an American company, and, in that capacity, committed acts that violated the statute. It also alleges that, independently of his agency relationship with an American company, Hoskins conspired with the company and its employees, as well as foreign persons, to violate the FCPA, and also aided and abetted their violations. The Count focuses on two objects of the conspiracy, which correspond to two provisions of the FCPA that Hoskins supposedly violated as an accomplice and also conspired to violate. The first of the two FCPA provisions prohibits American companies and American persons, as well as their agents, from using interstate commerce in connection with the payment of bribes. 15 U.S.C. § 78dd-2. The second prohibits foreign persons or businesses from taking acts to further certain corrupt schemes, including ones causing the payment of bribes, while present in the United States. 15 U.S.C. § 78dd–3.

Counts two through seven charge substantive violations of the FCPA, focusing on particular wire transfers from Alstom U.S.'s bank account to the consultants' accounts. These counts all charge Hoskins with violations of 15 U.S.C. § 78dd-2. The counts allege that Hoskins violated this provision as "an agent" of an American company or person, and also "by aiding and abetting" such a company or person.³

III. Proceedings Below

Before the district court Hoskins moved for dismissal of the first count of the indictment. See United States v. Hoskins , 123 F.Supp.3d 316 (D. Conn. 2015). He noted that the FCPA prescribes liability only for narrowly-circumscribed groups of people—American companies and citizens, and their agents, employees, officers, directors, and shareholders, as well as foreign persons acting on American soil. Hoskins argued that the government could not circumvent those limitations by charging him with conspiring to violate the FCPA, or aiding and abetting a violation of it, if he did not fit into one of the statute's categories of defendants. He thus moved for dismissal of Count One, as it charged that he was liable even if he did not fit into one of the statute's categories. Hoskins , 123 F.Supp.3d at 317, 319.

The government filed a closely-related motion in limine regarding Counts Two through Seven. Id. at 317. The motion sought to preclude Hoskins from arguing at trial that he could only be convicted of violating the statute under a conspiracy or aiding-and-abetting theory if the government first proved that he fell within one of the FCPA's enumerated categories of defendants.

The district court granted Hoskins's motion in part and denied the government's motion. See id. at 327. The court explained that, under Gebardi v. United States , 287 U.S. 112, 53 S.Ct. 35, 77 L.Ed. 206 (1932), "where Congress chooses to exclude a class of individuals from liability under a statute, the Executive may not override the Congressional intent not to prosecute that party by charging it with conspiring to violate a statute that it could not directly violate." Hoskins , 123 F.Supp.3d at 321 (internal quotation marks and alterations omitted). Upon a thorough consideration of the text, structure, and legislative history of the FCPA, the district court concluded that "Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability" under one of the statute's provisions. Id. at 327.

The court thus dismissed Count One of the indictment to the extent that it sought to charge Hoskins with conspiring to violate Section 78dd-2 of the FCPA without demonstrating that Hoskins fell into one of the FCPA's enumerated categories. Id. The court also dismissed Count One to the extent it alleged that Hoskins conspired to violate Section 78dd-3, which prohibits acts "while in the territory of the United States," because Hoskins had never entered the United States during the relevant period. Id. at 327 n.14 ("[I]f Congress intended to limit liability under this section to those within the territory of the United States, the Government cannot circumvent this intention by resort to the conspiracy statute."). The district court denied Hoskins's motion in part, however, because the indictment charged him with conspiring to...