In early August (see here for the prior post)  a federal jury convicted defendants Joel Esquenazi and Carlos Rodriguez “on all counts for their roles in a scheme to pay bribes to Haitian government officials” at Haiti Teleco.  Specifically, Esquenazi and Rodriguez, were convicted of one count of conspiracy to violate the FCPA and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering.  The FCPA counts were based on the theory that Haiti Teleco was an “instrumentality” of the Haitian government and that Haiti Teleco employees were thus “foreign officials” under the FCPA.

In a stunning development last week (first reported by Law360), Rodriguez filed a motion (here - joined by Esquenazi) for judgment of acquittal or a new trial based on newly discovered evidence.  The reason?  Defendants claim that Haiti Teleco was never a state enterprise.  The evidence?  A declaration (here) by Jean Max Bellerive on behalf of the Haitian Ministry of Justice on the “Legal Status of Teleco,”  The declaration asserts, among other things, that “Teleco has never been and until now is not a state enterprise.”  The stunner?  The declaration is dated July 26, 2011 – ten days before the jury reached its August 5th verdict.  According to defendants’ motion, the declaration was not translated into English until August 5th and was provided to defense counsel by the DOJ on August 10th.

A bit of background.

In December 2009, Esquenazi and Rodriquez (among others) were criminally indicted (see here).  The DOJ alleged that Teleco was the “Republic of Haiti’s state owned national telecommunications company” and that certain employees of Teleco were thus “foreign officials” under the FCPA.

In November 2010 (see here for the prior post) Esquenazi launched a greenhorn legal challenge to the DOJ’s “foreign official” theory.  Among other things, Esquenazi asserted as follows.  “[The DOJ's] definition of ‘foreign official’ is unsupported by the text or the purpose of the FCPA. The FCPA is a public bribery statute which criminalizes improper payments to officials performing a public function. Mere control or partial control or ownership (or partial ownership) of an entity by a foreign government no more makes that entity’s employees ‘foreign officials’ than control of General Motors by the U.S. Department of the Treasury makes all GM employees U.S. officials.”   In response, the DOJ argued that the status of Teleco was an issue for the jury and that Esquenazi’s pre-trial motion was premature.  (See here for the prior post).  Elsewhere in its response the DOJ stated as follows.  “As will be demonstrated in the government’s case-in-chief, whether Haiti Teleco was an instrumentality of the Republic of Haiti is not a close case, a fact the defendants likely understand and therefore attempt to raise this issue before the evidence has been presented.”

Within 48 hours of the DOJ’s response, Judge Jose Martinez (S.D. Fla.) denied Esquenazi’s motion in a cursory opinion devoid of substantive analysis.  (See here for the prior post).  The substance of Judge Martinez’s decision was as follows.  “The Court [...] finds that the Government has sufficiently alleged that Antoine and Duperval were foreign officials by alleging that these individuals were directors in the state-owned Haiti Teleco. Any factual arguments Defendant has on this point may be addressed at trial.”  “The Court also disagrees that Haiti Teleco cannot be an instrumentality under the FCPA’s definition of foreign official. The plain language of this statute and the plain meaning of this term show that as the facts are alleged in the indictment Haiti Teleco could be an instrumentality of the Haitian government.”

According to defendants’ motion last week, at trial the following occured.  “On July 25, 2011, the Government called its expert witness, Gary Lissade, to testify regarding Haitian law and his opinion as to whether Haiti Teleco was a State owned public entity/instrumentality of the Republic of Haiti and whether its employees were, therefore, government officials. Although Mr. Lissade was unable to review the bylaws or stock certificates of Haiti Teleco, or find any document establishing Haiti Teleco as a “S.A.M.” entity, he opined that because the Haitian central bank reportedly owned 97 percent of the stock, plus his observations of “[c]ustom and practice” and “the letterhead of Teleco,” that Teleco was a Haitian government entity/instrumentality.  Lissade further opined that because he concluded that Teleco was a public entity, all employees of Teleco were government officials or employees even though no law designated government employees at locations such as Teleco as government employees or agents.”

In their motion, defendants’ argue as follows.  “In stark contrast to the trial testimony of the Government’s expert, the Minister of Justice and Public Safety of the Republic of Haiti unequivocally stated in the Declaration that Téléco ‘has never been and until now is not a State enterprise.’”  As to the timing of the declaration, defendants state as follows.  “The Government’s August 10, 2011 letter offered no explanation or reason why it did not and could not have obtained the Declaration or information contained therein during the Grand Jury proceedings, before trial, or before the jury deliberated and rendered its verdict on August 5, 2011.”

The DOJ’s response is due on September 12th and with the DOJ’s prosecutorial conduct already under the microscope in the Lindsey matter (see here) this will be an interesting development to follow.

Bigger picture, I have long wondered what evidence the DOJ presents to the grand jury in securing FCPA indictments based on the theory that an entity is a state-owned or state-controlled enterprise (“SOE”).  Related to this, I have also long wondered what amount of due diligence the DOJ  engages in to satisfy themselves –  in resolving an FCPA enforcement action via a non-prosecution or deferred prosecution agreement – whether an entity is an SOE.  Those with insight are encouraged to share.