Archive for the ‘Joel Esquenazi’ Category

Haiti Teleco Roundup

Thursday, March 22nd, 2012

Last week, the DOJ announced (here) that Jean Rene Duperval (a former director of international relations for Haiti Teleco) was “convicted by a federal jury on all counts for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies.”

Assistant Attorney General Lanny Breuer stated as follows.  “Mr. Duperval was convicted by a Miami jury of laundering $500,000 paid to him as part of an elaborate bribery scheme.  As the director of international relations for Haiti’s state-owned telecommunications company, Duperval doled out business in exchange for bribes and then used South Florida shell companies to conceal his crimes.  This Justice Department is committed to stamping out corruption wherever we find it.”  Duperval is scheduled to be sentenced on May 21st.

The Haiti Teleco case (minus the manufactured and now former Africa Sting case) is the largest in FCPA history in terms of defendants charged – 13.  Below is a brief summary of the actions.

Individuals Charged With FCPA and/or Related Offenses

Antonio Perez.  In April 2009, Perez pleaded guilty to conspiracy to violate the FCPA.  As noted in this prior post, in January 2010, he was sentenced to 24 months in prison.

Juan Diaz.  In May 2009, Diaz pleaded guilty to conspiracy to violate the FCPA.  As noted in this prior post, in July 2010, he was sentenced to 57 months in prison.

Jean Fourcand.  As noted in this DOJ release, in February 2010, Fourcand pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the Haiti Teleco scheme.  In May 2010, Fourcard was sentenced to 6 months in prison.

Joel Esquenazi and Carlos Rodriguez.  As noted in this prior post, in August 2011, Esquenazi and Rodriguez were convicted by a jury for conspiracy to violate the FCPA, FCPA violations, and other offenses.  As noted in this prior post, in October 2011, Esquenazi was sentenced to 180 months in prison and Rodriguez was sentenced to 84 months in prison.  As noted below, Esquenazi and Rodriguez are appealing their convictions to the 11th Circuit.

Marguerite Grandison.  As noted in this DOJ release, in December 2009, Grandison was charged with one count of conspiracy to violate the FCPA and commit wire fraud, seven counts of FCPA violations, one count conspiracy to commit money laundering and 12 counts of money laundering.  According to a recent docket search, in February 2012, Grandison entered a not guilty plea and shortly thereafter the docket states as follows – “docket restricted/sealed until further notice.”

Washington Vasconez Cruz, Amadeus Richers and Cecilia Zurita.  These individuals (associated with Cinergy Telecommunications) are fugitives according to the DOJ.

“Foreign Officials” Charged With Non-FCPA Offenses

Duperval – see above.

Patrick Joseph. As noted in this prior post, the former director of international relations at Haiti Teleco pleaded guilty in February 2012 to conspiracy to commit money laundering. In July 2012, he was sentenced to 366 days in prison.

Robert Antoine.  As noted in this prior post, the former director of international affairs at Haiti Teleco pleaded guilty in March 2010 to conspiracy to commit money laundering.  In June 2010, he was sentenced to 48 months in prison.

Entity Charged

Cinergy Telecommunications.  As noted in this prior post, in February the DOJ moved to dismiss charges against Cinergy because it is a non-operational entity with no assets of any real value.

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Carlos Rodriguez and Joel Esquenazi are appealing their convictions to the 11th Circuit.  See here for the prior post regarding Rodriguez and his appellate counsel.  Recently, T. Markus Funk and Michael Sink (here and here of Perkins Coie) began representing Esquenazi in connection the appeal.  Funk, a former federal prosecutor in Chicago and US State Department lawyer co-chairs the ABA’s Global Anti-Corruption Task Force (here).

*****

This prior post discussed Haiti Teleco’s other preferred providers – namely IDT Corp. and Fusion Telecommunications – and linked to a recent Wall Street Journal article titled the “Looting of Haiti Teleco.”  The WSJ article was shortly countered with this post by Lucy Komisar.

Testing Innocence

Monday, February 27th, 2012

By now you have probably heard that various Bonny Island bribery defendants were sentenced last week.  As noted in this DOJ release:

Albert Stanley (a former chairman and CEO of Kellogg, Brown & Root, Inc.) was sentenced to 30 months in prison, ordered to serve three years of supervised release and to pay $10.8 million in restitution to KBR, the victim of a separate kickback scheme Stanley engaged in;

Jeffrey Tesler (a U.K. citizen and agent of the TSKJ joint venture at the center of the bribery scheme) was sentenced to 21 months in prison, followed by two years of supervised release, and ordered to pay a $25,000 fine in addition to previously forfeiting approximately $149 million.

Wojciech Chodan (a U.K. citizen and former salesman at KBR’s U.K. subsidiary) was sentenced to 1 year of probation and ordered to pay a $20,000 fine in addition to previously forfeiting approximately $727,000.

The Bonny Island bribery conduct the defendants were charged in was massive in scope and involved a decade-long scheme to bribe Nigerian officials to obtain engineering, procurement and construction contracts at Bonny Island Nigeria valued at more than $6 billion.

As detailed in this previous post, the corporate Bonny Island bribery enforcement actions resulted in approximately $1.6 billion in DOJ/SEC fines and penalties.  The DOJ’s press release announcing the sentences states as follows.  “Today’s prison sentences for Mr. Stanley and Mr. Tesler mark another important step in our prosecution of those responsible for a massive bribery scheme involving engineering, procurement and construction contracts in Nigeria.  These sentences reflect not only the defendants’ illegal acts, but also their substantial cooperation with the government. As a result of this investigation, three individuals have been convicted of FCPA-related crimes, and five companies in four countries have paid substantial penalties and undertaken significant efforts to enhance their compliance programs.  This case shows the importance the department places on putting an end to foreign bribery.”

Two people that probably have not heard of last week’s Bonny Island bribery sentences are Joel Esquenazi and Carlos Rodriguez – two of the defendants in the Haiti Teleco enforcement action.  As noted in this prior post, in October 2011, Esquenazi was sentenced to 15 years in prison and Rodriguez was sentenced to 7 years in prison.

Was the conduct that Esquenazi and Rodriguez engaged in more egregious than the Bonny Island bribery conduct engaged in by Stanley, Tesler, and Chodan?

Not even close.  According to the DOJ, Esquenazi and Rodriguez participated in a scheme in which their employer, Terra Telecommunications Inc. paid $890,000 to shell companies to be used for bribes to Haiti Teleco officials to receive preferred telecommunications rates.

So what did Esquenazi and Rodriguez do to receive a significantly longer sentence than the defendants charged in connection with one of the largest bribery schemes ever under the FCPA?

Esquenazi and Rodriguez tested their innocence.  They exercised their constitutional right to a trial, put the DOJ to its burden of proof, and were convicted by a jury (their appeals are pending).

Professor Ellen Podgor notes in White Collar Innocence:  Irrelevant in the High Stakes Risk Game (here) as follows. “Our existing legal system places the risk of going to trial, and in some cases even being charged with a crime so high, that innocence and guilt no longer become the real considerations;” rather, “maneuvering the system to receive the least onerous consequences may ensure the best result for the accused party, regardless of innocence.”  In the article, Professor Podgor details several stories involving disparate criminal sanctions and states “the real moral of these stories is not whether the punishment was warranted, but rather the appropriateness of the level of risk that one has to take to proceed to trial, and the chilling effect of the high risk caused by the ―trial penalty.”  Podgor notes that “iinnocence becomes irrelevant as the real question becomes whether it is worth the risk of testing an innocence claim.”

Esquenazi and Rodriguez were found guilty by a jury.  However, the greatest factor in their sentences is likely that they tested their innocence.  In contrast, Stanley, Tesler, Chodan pleaded guilty and cooperated (although Tesler and Chodan did fight extradition for several years) and received substantially shorter sentences for engaging in much more egregious conduct.

Is this justice or is this merely knowing how to play a game?  Were Stanley, Tesler, and Chodan sentenced too lightly or were Esquenazi and Rodriguez sentenced too harshly?  What is the message sent to future FCPA individual defendants who might want to test their innocence?

Record Setting – Esquenazi Sentenced to 15 Years, Rodriguez to 7 Years

Wednesday, October 26th, 2011

Yesterday, in the Southern District of Florida (a district quickly earning the distinction of handing out the toughest FCPA sentences in the country - see here), Judge Jose Martinez sentenced Joel Esquenazi to a record-setting 15 years (see here) and co-defendant Carlos Rodriguez to 7 years (see here) .   The previous record for an FCPA sentence was in April 2010 when Charles Jumet was sentenced to a then record 7.25 years (67 months on an FCPA charge, 20 months on a false statement charge).

In the DOJ’s release (here), Assistant Attorney General Lanny Breuer stated as follows.  “This sentence – the longest sentence ever imposed in an FCPA case – is a stark reminder to executives that bribing government officials to secure business advantages is a serious crime with serious consequences.  A company’s profits should be driven by the quality of its goods and services, and not by its ability and willingness to pay bribes to corrupt officials to get business.   As today’s sentence shows, we will continue to hold accountable individuals and companies who engage in such corruption.”

Esquenazi and Rodriguez were two of the defendants in the so-called Haiti Teleco case, the largest FCPA enforcement action in history (minus the manufactured Africa Sting case) in terms of individual defendants – 12.  As noted in this prior post, the Haiti Teleco case stands in stark contrast to many corporate FCPA enforcement actions (enforcement actions that sometimes involve tens or hundreds of millions of dollars in bribe payments) that often yield no individual enforcement actions.  Indeed, as noted in this prior post, since 2008 approximately 70% of corporate DOJ FCPA enforcement actions have not (at least yet) resulted in any DOJ charges against company employees.

It is likely that this case will now move to a next stage.   Among other things, the case involved a “foreign official” challenge (see here for the prior post) as well as the baffling declaration / revised declaration of Haiti’s Prime Minister (see here for the prior post).

With several individual FCPA defendants currently exercising their constitutional right to a jury trial (Esquenazi and Rodriguez were convicted by a jury), what effect will this record-setting sentence have?

“Foreign Official” Evidence

Wednesday, October 19th, 2011

Last week, U.S. District Court Judge Jose Martinez (S.D. of Florida) denied (here) Carlos Rodriguez’s and Joel Esquenazi’s motions for judgment of acquittal or a new trial in the Haiti Teleco case.  See here for a prior post regarding the jury verdict.

With sparse caselaw on the FCPA’s ”foreign official” element, anything a court says as to “foreign official” or “instrumentality” is worthy of a read. This post summarizes relevant excerpts from Judge Martinez’s order  including the evidence the court found sufficient to demonstrate that Teleco was an “instrumentality” of the Haitian government and that certain employees of Teleco were thus “foreign officials” under the FCPA.  As detailed below, that evidence mostly (but not exclusively) consisted of “extensive research” a former Haitian Minister of Justice did in connection with a book.

Under the heading “Evidence at Trial Regarding Teleco As A Public Entity,” the order notes that the Government called Gary Lissade to testify regarding Haitian law and public institutions and states (at pages 5-7) as follows.

“In support of the allegations regarding the FCPA and Haitian bribery law, the Government called Gary Lissade, Haiti’s former Minister of Justice and the author of a book on Haiti’s public administration, as an expert in Haitian law and Haitian public institution. [A footnote explains that Lissade conducted extensive researching, including legal research and interviews, in reaching his conclusions] Mr. Lissade explained that Teleco was widely considered to be a Haitian public entity during the relevant time period and that he had classified Teleco as part of the public administration in his 2000 book.”

“Mr. Lissade explained that Teleco was established as a private institution in 1968 but become a public entity when, around 1971-1972, the state-owned National Bank of the Republic of Haiti (“BNRH”) acquired 97% of its shares. Mr. Lissade conceded that the exact time and circumstances of this acquisition were unclear but explained that the Government’s actions and official documents from the time period reflected that the acquisition and assumption of control had occurred. Mr. Lissade also conceded that, although Teleco began to use the term “S.A.M.,” rather than “S.A.” [a footnote says that Mr. Lissade noted that S.A. designates a private corporation in Haiti and that the addition of the initial "M" indicates that the corporation is a mixed public/private enterprise] to reflect its partial state-ownership after the acquisition, Teleco never underwent any legal process to change its name.”

“Mr. Lissade testified that Teleco was 97% owned and 100% controlled by BNRH’s successor, the state-owned Bank of the Republic of Haiti (“BRH”), for many years, including during the time period charged in the indictment.  Teleco was run by a board of directors and a general director, all of whom were appointed by executive order signed by Haiti’s President, Prime Minister, and relevant Ministries.  The people who worked under these political appointees were considered to be ‘public agents’ working for the ’public administration,’ which Mr. Lissade defined as ‘the entities the state uses to perform and to give services to the people living in Haiti’ and ‘as an instrument … for the state to reach it missions and objectives and goals.’  Teleco was entitled to special treatment under Haitian tax laws, and its revenues were controlled by the BRH.”

“Mr. Lissade further testified that Haiti’s bribery laws applied to Teleco officials during the relevant time period.  In 2008, Haiti passed an asset disclosure law, intended to combat public corruption, that required certain employees of Teleco and other public institutions to declare their assets, further confirming Mr. Lissade’s opinion that Teleco had been considered a public entity during the relevant time period.”

“Mr. Lissade also explained that, in 1996, Haiti passed a modernization law intended to privatize certain state-owned companies, including Teleco, but Teleco did not actually become partially privatized until 2009-2010.”

“Mr. Lissade’s testimony that Teleco was owned and controlled by the Haitian government was corroborated by numerous witnesses and voluminous documentary evidence.  For example:  Robert Antoine testified that Teleco was a state-owned company and that, when he worked there, he was a government employee whose supervisor, Patrick Joseph, had been appointed by the President of Haiti; Jean Fourcand testified that the President of Haiti appointed his cousin, Patrick Joseph, as General Director of Teleco, the ‘state owned’ ‘national phone company’ of Haiti; Juan Diaz testified that he learned while living in Haiti that Teleco was a ‘nationalized’ company owned by the Haitian government; Antonio Perez testified that Esquenazi, Dickey, and Terra’s business partners at HAWAI told him that Haiti Teleco was owned and operated by the Haitian government and that he saw an Aon insurance application submitted by Terra to that effect; and John Marsha, who worked at Aon, testified that Esquenazi, Rodriguez, and Dickey told him that the contract they wanted to insure was with a foreign government and that the type of insurance they requested only applied to government contracts.”

Judge Martinez stated, as to the “foreign official” / “instrumentality” issue, and otherwise, that based on the above ”the evidence at trial was sufficient to support the jury’s verdict of guilty beyond a reasonable doubt and also weighed heavily in favor of the jury’s verdict.  This is not a case in which the interests of justice require that the jury’s verdict be set aside.”

Judge Martinez next addressed the defendants’ argument that the “court’s instruction regarding a state-owned enterprise pursuant to the FCPA was incorrect.”  See this prior post for the full instruction.  Judge Martinez merely stated as follows.  “This court properly instructed the jury through a non-exclusive multi-factor definition that permitted the jury to determine whether Teleco was an instrumentality of a foreign government.”

Judge Martinez concluded his order by discussing the declaration of Jean Max Bellerive, the current Prime Minister of Haiti.  As detailed in this prior post, Bellerive stated that “Teleco has never been and until now is not a state enterprise.”  Yet, as detailed in this prior post, the DOJ assisted Bellerive in revising certain statements in his declaration even though the facts in his original declaration were “truthful.”

Judge Martinez stated that the “declaration provides no newly discovered evidence and would not have affected the jury verdict. He stated that  “Mr. Bellerive’s second declaration simply clarified the contents of the first declaration” and that the “contents of the first declaration were established throughout trial and were known to Defendants during trial preparation.”

Sentencing of Rodriguez and Esquenazi is scheduled for October 25th.

From the Dockets

Thursday, September 15th, 2011

This post details developments as to FCPA or related litigation previously reported.

Haiti Teleco Case

Previous posts (here and here)  detailed Joe Esquenazi’s and Carlos Rodriguez’s motion for acquittal or a new trial based on statements made (and then seemingly retracted) by Jean Max Bellerive (Prime Minister of Haiti) concerning the ownership of Haiti Teleco – the entity at the middle of the bribery scheme.  In the DOJ’s response (here) to the defendants’ motion, the DOJ argues, among other things, that “the Government did not seek the first Bellerive declaration from the Republic of Haiti, and there is no need for an evidentiary hearing as to when or how the Government obtained it.”  As to the second Bellerive declaration, the DOJ stated that “the Government assisted Mr. Bellerive in preparing the declaration” in which Bellerive, as noted in the prior post, stated that the first declaration was strictly for internal purposes and he did not know it was going to be used in criminal legal proceedings in the U.S. or that it was going to be used in support of the argument that Teleco was not part of Public Administration of Haiti.

Substantively, the DOJ argues that the first Bellerive declaration does not “contain newly discovered evidence” because the jury “heard most of” the points addressed in the first Bellerive declaration from Garry Lissade, the DOJ’s expert witness, who testified as to the legal status of Haiti Teleco after “he conducted extensive research, including legal research and interviews, in reaching his conclusions.”

The DOJ’s position in many FCPA enforcement actions concerning state-owned or state-controlled entities seems to be that the ownership structure of the entity at issue should be obvious and easily ascertainable to defendants.  If so, why did Lissade (Haiti’s former Minister of Justice) have to “conduct extensive research, including legal research and interviews, in reaching his conclusion” that Teleco was a Haitian public entity?

Africa Sting Case

The second Africa Sting trial involving defendants John Mushriqui, Jeana Mushriqui, R. Patrick Caldwell, Stephen Giordanella, John Godsey, and Marc Morales is set to begin on September 22nd.  The second trial will be more narrowly focused than the first Africa Sting trial that resulted in a mistrial (as well as dismissal of certain counts including money laundering conspiracy charges).

Why?  Because the DOJ did not oppose defendants’ motion to dismiss the money laundering conspiracy charges.  In pre-trial briefing, the DOJ stated as follows.  “At the conclusion of the government’s case-in-chief in the first trial, the Court granted a motion for judgment of acquittal on Count Forty-Four of the Superseding Indictment with respect to the defendants in the first trial. The government continues to believe that the Court should not have granted the motion and that Count Forty-Four should have been submitted to the jury. But the government understands the Court’s ruling and will not object to the Defendant’s motion. The government’s position in this filing recognizes the Court’s past ruling, and in no way suggests that the government will not seek to bring similar charges in future cases.”

Siriwan “Foreign Official” Case

A previous post (here) detailed how Juthamas Siriwan and Jittisopa Siriwan (the “foreign officials” in the Green FCPA enforcement action) were fighting back against DOJ criminal charges.  As noted in the post, the Siriwans argued as follows.  “This is the first judicial challenge to a novel prosecutorial approach the Government recently developed to charge foreign officials allegedly involved in corruption.  That approach is aimed at overcoming a fundamental FCPA limitation.  The FCPA does not criminalize a foreign public official’s receipt of a bribe.  Nor can the Government employ an FCPA conspiracy charge against a foreign public official.  Accordingly, these new enforcement initiatives require expansive interpretations [of] “promotion money laundering” [under the Money Laundering Control Act].”  The Siriwans further argued as follows.  “Congress has extensively amended the FCPA, yet it deliberately has not extended FCPA liability to foreign officials.  If the Government wishes to extend U.S. criminal penalties to foreign officials accepting a bribe, it must go back to Congress, rather than employ dubious charging tactics to evade the direct and repeated congressional choice not to apply FCPA criminal liability to such officials.”

In its opposition brief (here) filed last week, the DOJ stated as follows.  “Upon analysis of defendants’ arguments, it is quickly evident that, in support of their positions, defendants routinely conflate and confuse multiple statutes, interpret and argue the elements of uncharged statutes, and ignore case law relevant to the statutes actually charged.”  Among other things, the DOJ stated as follows.  “That foreign officials cannot face liability for FCPA offenses does not give foreign officials a free pass to commit other, entirely separate, crimes.”  The DOJ noted that the Siriwans are not charged with accepting a bribe, or conspiring to violate the FCPA, but rather with “the separate, and entirely analytically distinct, crime of international transportation money laundering to promote the Greens’ violation of the FCPA.”  The DOJ noted that just because Siriwan ”was a foreign official at the time of these offenses, and therefore, not charged under the FCPA does not change the analysis.”

As reported by Samuel Rubenfeld at Wall Street Journal Corruption Currents, a hearing on Siriwans’ motion to dismiss is scheduled for Oct. 20.