DOJ Opposition To Sigelman Motion To Dismss

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 1 of 33 PageID: 1363
UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA
v.
JOSEPH SIGELMAN
Crim. No. 14-263 (JEI)
Hon. Joseph E. Irenas
______________________________________________________________________________
MEMORANDUM OF THE UNITED STATES IN OPPOSITION TO
DEFENDANTS SECOND MOTION TO DISMISS (Dkt. No. 112)
______________________________________________________________________________
William J. Stellmach
Acting Chief
United States Department of Justice
Fraud Section
1400 New York Avenue, NW
Washington, DC 20005
(202) 514-2000
Paul J. Fishman
United States Attorney
District of New Jersey
970 Broad Street
Suite 700
Newark, New Jersey 07102
(973) 645-2700
On the Brief:
Tarek Helou
Trial Attorney, Fraud Section
Daniel S. Kahn
Assistant Chief, Fraud Section
Zach Intrater
Assistant United States
Attorney
TABLE OF CONTENTS
Page
I.
Introduction ...1
II.
Background
A. The FCPA .. 2
B. The Indictment ... 4
III.
Legal Standard ... 7
IV.
Analysis
A. Defendants Motion is Premature........9
1. The Indictment Adequately Alleges an
FCPA Violation.......9
2. Each and Every Court That Has Addressed This
Issue Has Concluded That It Is an Issue of Fact
for the Jury 12
3. The Factual Nature of the Inquiry is Particularly
Prevalent Here ..13
B. Defendant Provides an Overly Narrow Interpretation of
Instrumentality .19
C. The FCPA is Not Unconstitutionally Vague as Applied
to Defendant 24
V.
Conclusion ..29
TABLE OF AUTHORITIES
Cases
First Natl City Bank v. Banco Para El Comercio Exterior De Cuba, 462 U.S. 611,
621-22 (1983) ...................................................................................... 14, 19
Kolender v. Lawson, 461 U.S. 352 (1983) ...................................................... 24
Lebron v. Natl R.R. Passenger Corp., 513 U.S. 374 (1995) .............................. 20
Screws v. United States, 325 U.S. 91 (1945) .................................................. 27
Skilling v. United States, 130 S. Ct. 2896 (2010) ...................................... 24, 25
Smith v. City of Jackson, 544 U.S. 228 (2005) ................................................ 22
United States v. Aguilar, 783 F. Supp. 2d 1108 (C.D. Cal. 2011) ................ 6, 13
United States v. Amirnazmi, 645 F.3d 564 (3d Cir. 2011) ......................... 25, 27
United States v. Bergrin, 650 F.3d 257 (3d Cir. 2011) .......................... 7, 10, 12
United States v. Carson, 2011 WL 5101701 (C.D. Cal. May 18, 2011) ..... passim
United States v. Esquenazi, 752 F.3d 912 (11th Cir. 2014) ...................... passim
United States v. Esquenazi, No. 1:09-cr-21010-JEM, Dkt. No. 309 (S.D. Fla.
Nov. 19, 2010) .................................................................................. 6, 12, 13
United States v. Guo, 634 F.3d 1119 (9th Cir. 2011) ...................................... 27
United States v. Hescorp, Heavy Equip. Sales Corp., 801 F.2d 70 (2d Cir. 1986)
.................................................................................................................. 26
United States v. Huet, 665 F.3d 588 (3d Cir. 2012) .............................. 7, 10, 11
United States v. Iverson, 162 F.3d 1015 (9th Cir. 1998) ................................. 27
United States v. Jensen, 532 F. Supp. 2d 1187 (N.D. Cal. 2008) .................... 27
United States v. Kay, 513 F.3d 432 (5th Cir. 2007) ........................................ 26
United States v. Kay, 359 F.3d 738 (5th Cir. 2004) ................................ 2, 3, 23
United States v. Lanier, 520 U.S. 259 (1997) .................................................. 24
United States v. Mazurie, 419 U.S. 544 (1975) ............................................... 27
United States v. Nguyen, No. 2:08-cr-00522-TJS, Dkt. No. 144 (E.D. Pa. Dec.
30, 2009) ......................................................................................... 6, 13, 25
United States v. Ragen, 314 U.S. 513 (1942) .................................................. 26
United States v. Reliant Energy Services, 420 F. Supp. 2d 1043 (N.D. Cal. 2006)
.................................................................................................................. 27
United States v. Rudzavice, 586 F.3d 310 (5th Cir. 2009) ............................... 24
United States v. Stock, 728 F.3d 287 (3d Cir. 2013) ......................................... 8
United States v. Torkington, 812 F.2d 1347 (11th Cir. 1987) .......................... 12
United States v. Vitillo, 490 F.3d 314 (3d Cir. 2007) ......................................... 7
United States v. Welch, 327 F.3d 1081 (10th Cir. 2003) ................................. 14
ii
Statutes
15 U.S.C. 78dd-2............................................................................ 2, 4, 6, 26
15 U.S.C. 78dd-2(h)(2)(A) .............................................................................. 2
18 U.S.C. 1839(1) ....................................................................................... 22
18 U.S.C. 1952 ..................................................................................... 14, 28
28 U.S.C. 1603(b)(2) ...................................................................................... 22
H.R. Rep. No. 95-640 (1977)........................................................................ 2, 3
S. Rep. No. 95-114 (1977) ............................................................................... 2
Rules
Federal Rule of Criminal Procedure 26.1 ....................................................... 13
Federal Rule of Criminal Procedure 12(b)(3)(B)(v) ........................................... 13
iii
I.
Introduction
Defendants latest motion seeks the dismissal of counts corresponding to
the Foreign Corrupt Practices Act (FCPA) charges in this case. Defendant
claims that although the Government included well-pled allegations in the
Indictment that the bribe recipient was a foreign official, as that term is
defined in the FCPA, and was employed by an instrumentality, as that term is
defined in the FCPA, the Court should look to facts outside the Indictment
including, among other things, a 22-page declaration by an individual who
Defendant deems an expert to remove this issue from the purview of the
jury and dismiss the counts pretrial. Defendant is incorrect. As every single
other court which has addressed this very issue has concluded, this is an issue
of fact for the jury to decide after the presentation of all of the evidence.
Indeed, the Government intends to submit substantial evidence at trial to
establish beyond a reasonable doubt that the bribe recipient was a foreign
official under the FCPA.
Moreover, and also as every other court to confront this very issue has
found, the FCPA is not unconstitutionally vague as applied to Defendant.
Importantly, the FCPA requires the Government to prove that Defendant acted
corruptly and willfully, which is wholly inconsistent with the notion that
Defendant did not have fair notice.
Defendants most recent motion to dismiss should be denied.
II.
Background
A.
The FCPA
Defendant is charged with conspiring to violate, and violating, the FCPA,

15 U.S.C. 78dd-2, which prescribes corrupt payments to foreign officials.
The statute defines foreign official as any officer or employee of a foreign
government or any department, agency, or instrumentality thereof. 15 U.S.C.
78dd-2(h)(2)(A). See also United States v. Esquenazi, 752 F.3d 912, 920 (11th
Cir. 2014).
Congress enacted the FCPA in 1977, in response to recently discovered
but widespread bribery of foreign officials by United States business interests.
Congress resolved to interdict such bribery, not just because it is morally and
economically suspect, but also because it was causing foreign policy problems
for the United States. United States v. Kay, 359 F.3d 738, 746 (5th Cir. 2004).
Congress was concerned with the problem of corporate bribery because, among
other reasons, it was bad business. S. Rep. No. 95-114, at 4 (1977). See
also, e.g., id. at 3 (bribery hamper[s] the efficient functioning of our capital
markets); H.R. Rep. No. 95-640, at 4 (1977) (corporate bribery erodes public
confidence in the integrity of the free market system and short-circuits the
marketplace by directing business to those companies too inefficient to
compete . . . or too lazy to engage in honest salesmanship, or too intent upon
unloading marginal products.).
Contrary to Defendants assertion that Congress was primarily concerned
with bribes to high-ranking government officials, Congress was obviously
2
distraught not only about high profile bribes to high ranking foreign officials,
but also by the pervasiveness of foreign bribery by United States businesses
and businessmen. Kay, 359 F.3d at 749. See also id. (noting that the FCPA
cast a[] wide net over foreign bribery); H. Rep. No. 95-640 (1977) at 4 (stating
Congress intent to address bribery throughout the international economy,
including in the oil and gas production and services industry).
Notably, Congress amended the FCPA in 1998 to ensure the United
States was in compliance with its treaty obligations. That year, the United
States ratified the Organization for Economic Cooperation and Developments
Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions (OECD Convention). In joining the OECD Convention,
the United States agreed to take such measures as may be necessary to
establish that it is a criminal offen[s]e under [United States] law for any person
intentionally to bribe a foreign official to obtain or retain business.
Esquenazi, 752 F.3d at 923 (citations omitted).1
The OECD Convention requires the signatories, including the United
States, to criminalize bribes to a foreign public official, Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, Art. 1.1., Dec. 17, 1997, S. Treaty Doc. No. 105-43, 37 I.L.M. 1
(entered into force Feb. 15, 1999), which it defined as, among other things,
1
The Organization for Economic Cooperation and Development (OECD) was founded in 1961
to stimulate economic progress and world trade. The Anti-Bribery Convention requires OECD
parties to criminalize the bribery of foreign public officials in international business
transactions. There are 41 parties to the Convention: 34 OECD member countries (including
the United States) and seven non-OECD member countries (Argentina, Brazil, Bulgaria,
Colombia, Latvia, the Russian Federation, and South Africa).
any person exercising a public function for a foreign country, including for a
public agency or public enterprise, id. art. 1.4(a). The Commentaries to the
Convention, in turn, explain that:
a public enterprise is any enterprise, regardless of its legal form,
over which a government, or governments, may, directly or
indirectly, exercise a dominant influence. This is deemed to be the
case, inter alia, when the government or governments hold the
majority of the enterprises subscribed capital, control the majority
of votes attaching to shares issued by the enterprise or can appoint
a majority of the members of the enterprises administrative or
managerial body or supervisory board.
Id. art 1.4, cmt. 14.
When Congress amended the FCPA in 1998 to comport with its treaty
obligations, it left intact the definition of foreign official. 15 U.S.C. 78dd2(h)(2)(A). See also Esquenazi, 752 F.3d at 920.
B.
The Indictment
The Indictment charges Defendant with conspiring to violate the FCPA

and with three counts of violating the FCPA. Those charges are based on
payments that Defendant and his two co-conspirators, Gregory Weisman and
Knut Hammarskjold, made to David Duran, an employee of Ecopetrol S.A.
(Ecopetrol), Colombias national oil company. Weisman and Hammarskjold
have both pleaded guilty to conspiring with Defendant to violate the FCPA.
The Indictment alleges that Ecopetrol was the state-owned and statecontrolled petroleum company in Colombia and an agency and
instrumentality of a foreign government, as those terms are used in the
FCPA. Indictment (Ind.) 22. The Indictment further alleges that Duran
was an official at Ecopetrol and was a foreign official, as that term is used
in the FCPA Id. 23.
To sustain its burden of proof at trial for the offense of violating the
FCPA, the Government must prove the following seven elements beyond a
reasonable doubt.
First:
Defendant was a domestic concern, or an officer, director,

employee, or agent of a domestic concern;
Second:
Defendant acted corruptly and willfully;
Third:
Defendant made use of the mails or any means or

instrumentality of interstate commerce in furtherance of an
unlawful act under the FCPA, or aided and abetted another
to do the same;
Fourth:
Defendant offered, paid, promised to pay, or authorized the

payment of money or of anything of value, or aided and
abetted another to do the same;
Fifth:
That the payment or gift was to a foreign official or to any

person, while knowing that all or a portion of the payment or
gift would be offered, given, or promised, directly or
indirectly, to a foreign official;
Sixth:
That the payment was for one of four purposes:

to influence any act or decision of the foreign official in his
official capacity;
to induce the foreign official to do or omit to do any act in
violation of that officials lawful duty;
to induce that foreign official to use his influence with a
foreign government or instrumentality thereof to affect or
influence any act or decision of such government or
instrumentality; or
to secure any improper advantage; and
Seventh:
That the payment was made to assist Defendant, or another

whom he aided and abetted, in obtaining or retaining
business for or with, or directing business to, any person.
See 15 U.S.C. 78dd-2.

A number of courts have addressed the question of whether the
government entity involved in a particular case is an instrumentality under
the FCPA (which the FCPA includes in the definition of foreign official under
the fifth element listed above). Each and every court that has addressed the
issue has concluded that (1) this is a fact issue for the jury to decide at trial;
and (2) the determination is based on a non-exclusive list of factors. See, e.g.,
United States v. Carson, 2011 WL 5101701, *3-*4 (C.D. Cal. May 18, 2011);
United States v. Aguilar, 783 F. Supp. 2d 1108, 1110 & n.4 (C.D. Cal. 2011);
United States v. Esquenazi, No. 1:09-cr-21010-JEM, Dkt. No. 309 (S.D. Fla.
Nov. 19, 2010) (attached as Ex. A); United States v. Nguyen, No. 2:08-cr-00522TJS, Dkt. No. 144 (E.D. Pa. Dec. 30, 2009) (attached as Ex. B).
The Government intends to introduce substantial evidence at trial to
prove that Ecopetrol was an instrumentality of the government of Colombia.
III.
Legal Standard
Federal Rule of Criminal Procedure 7(c)(1) requires that an indictment
contain only a plain, concise, and definite written statement of the essential
facts constituting the offense charged. An indictment is facially sufficient if it
(1) contains the elements of the offense intended to be charged, (2) sufficiently
apprises the defendant of what he must be prepared to meet, and (3) allows the
defendant to show with accuracy to what extent he may plead a former
acquittal or conviction in the event of a subsequent prosecution. United
States v. Huet, 665 F.3d 588, 595 (3d Cir. 2012) (quoting United States v.
Vitillo, 490 F.3d 314, 321 (3d Cir. 2007)).
Although a defendant may move to dismiss an indictment for failure to
state an offense, the scope of a district courts review at the Rule 12 stage is
limited. Huet, 665 F.3d at 595. The long-established principle in this and
other Circuits is that a motion to dismiss is not a proper vehicle for challenging
the sufficiency of the Governments evidence. See United States v. Bergrin, 650
F.3d 257, 265 (3d Cir. 2011). Rather, the district court must accept as true all
factual allegations in the indictment and determine whether those facts state
the elements of an offense and could result in a guilty verdict. Id. at 268.
The Government is not required to set forth its entire case in the
indictment. Huet, 665 F.3d at 595. Indeed, Rule 12 does not permit fact
finding into what the Government will be able to prove at trial. Bergrin, 650
F.3d at 271; see id. at 271-73 (reversing dismissal of racketeering counts
because district court, inter alia, considered whether the Government would be
7
able to proffer evidence at trial to meet its burden). As long as a reasonable

jury could find that the specific facts alleged in the indictment fall within the
statute, dismissal under Rule 12(b)(3)(B)(v) is inappropriate. See United States
v. Stock, 728 F.3d 287, 298 (3d Cir. 2013).
IV.
Analysis
A.
Defendants Motion is Premature
The Indictment has set forth facts which, if accepted by the jury, satisfy
each and every element of an FCPA violation. Every single court to confront
the issue has held that the question Defendant poses in his motion is a
question of fact for the jury. Therefore, Defendants motion should be denied.
1.
The Indictment Adequately Alleges an FCPA Violation
The 25-page, 96-paragraph Indictment in this case goes well beyond the
pleading requirements to adequately allege an FCPA violation. The Indictment
not only tracks the statutory language, but provides the factual support to
establish each element. With respect to the statutory element that the
payment was to a foreign official, the Indictment specifically alleges that
Duran, the bribe recipient, was an official at Ecopetrol, an agency and
instrumentality under the FCPA, and that Duran was a foreign official under
the FCPA. Ind. 22-23.
Although these allegations, in and of themselves, sufficiently plead the
foreign official element of the FCPA for purposes of Rule 7(c), the Indictment
provides further factual support, noting that Ecopetrol was the national oil
company in Colombia; that it was created by national law, and that the
Colombian government was required to maintain, at a minimum, 80%
ownership; that during the relevant time period the Colombian government
maintained 89.9% ownership; that Ecopetrols board included the Minister of
Mines and Energy, the Minister of Finance, and the Director of the National
9
Planning Agency of Colombia; and that through its status as a governmental

entity it had the right to approve the Mansarovar contract. Id. 22.
Thus, the Indictment clearly (1) contains the elements of the offense
intended to be charged, (2) sufficiently apprises the defendant of what he must
be prepared to meet, and (3) allows the defendant to show with accuracy to
what extent he may plead a former acquittal or conviction in the event of a
subsequent prosecution. Huet, 665 F.3d at 595 (internal quotes omitted).
Faced with a sufficient Indictment, Defendant is left in the untenable
position of arguing that the allegations in the Indictment are not accurate as a
matter of law. Indeed, Defendant admits that he must accept[] as true all of
the factual allegations in the indictment and concedes that the Courts inquiry
is limited to applying the FCPA to those factual allegations. Def. Mem. at 6
(quotation marks and citation omitted). Therefore, as Defendant must also
concede, and as the Third Circuit has held, the only issue for the Court to
address is whether the Indictment adequately alleges that Ecopetrol was an
instrumentality of the Colombian Government. But in the next breath,
Defendant requests that the Court should consider extraneous evidence
concerning Ecopetrol that, according to Defendant, establishes that the
allegations in the Indictment are factually inaccurate. See Def. Mem. at 6-7.
Labeling a factual argument as a question of law, however, does not
make it so. A similar argument was soundly rejected by the Third Circuit in a
recent case. In United States v. Bergrin, the Third Circuit reversed the district
courts dismissal of RICO charges at the pretrial stage. Just as Defendant asks
10
this Court to do here, the District Court [in Bergin] relied in part on findings
that the indictment failed to allege a common purpose or other commonality
among the predicate acts. On these points, the Court openly weighed the
evidence and questioned the Governments ability to prove that all of the
purported members of the enterprise shared the alleged common purposes.
650 F.3d at 272. The Third Circuit, in reversing the decision, held that the
District Courts principal error was its failure to accept as true all of the facts
alleged in the indictment. The District Court treated Panarella which calls for
courts to determine whether the specific facts alleged in the charging
document fall beyond the scope of the relevant criminal statute, as a matter of
statutory interpretation, as though it allows inquiry into what the Government
will be able to prove at trial. Such factfinding is impermissible at the motion to
dismiss stage. Id. at 271-72 (internal citation omitted). See also, e.g., Huet,
665 F.3d at 595-96 (reversing district courts dismissal of indictment and
stating that [t]he government is entitled to marshal and present its evidence at
trial, and have its sufficiency tested by a motion for acquittal pursuant to
Federal Rule of Criminal Procedure 29. (quotation marks omitted)).
The instrumentality allegations in this case clearly do not fall outside
the scope of the FCPA. As with every other element, the Government intends to
introduce substantial evidence at trial to prove beyond a reasonable doubt that
Ecopetrol was an instrumentality and that Duran was a foreign official. All
of this proof, however, will come as it must at trial. Defendants motion can
only succeed if this Court begins the fact-finding process prematurely, an
11
inquiry that the Bergrin court, among innumerable others, instructs is

improper.
2.
Each and Every Court That Has Addressed This Issue Has
Concluded That It Is an Issue of Fact for the Jury
Every court that has addressed this precise issue has concluded that the
question of whether an entity is an instrumentality under the FCPA is one of
fact for the jury, not a question of law to be decided at the motion to dismiss
stage.
For example, in United States v. Esquenazi, the indictment alleged that
the bribe recipients were employees of the state-owned communications
company, which the Government alleged was an instrumentality under the
FCPA. Esquenazi, No. 1:09-cr-21010-JEM, Dkt. No. 309, at 2 (Ex. A). Just as
Defendant does here, the defendant in Esquenazi discusse[d] a number of
factual issues and argue[d] that the indictment must be dismissed because [the
bribe recipients] are not foreign officials under the FCPA. Id. The court
denied the motion, holding that the Government has sufficiently alleged that
[the bribe recipients] were foreign officials by alleging that these individuals
were directors in the state-owned Haiti Teleco [the entity at issue]. Any factual
arguments Defendant has on this point may be addressed at trial. Id. at 2-3
(citing United States v. Torkington, 812 F.2d 1347, 1354 (11th Cir. 1987)). The
defendants in Esquenazi were convicted at trial, and on appeal raised the same
argument. The Eleventh Circuit rejected the defendants argument and
affirmed that such an inquiry is necessarily fact-bound, and provided several
12
non-exhaustive factors that courts and juries should look to when deciding
this issue. Esquenazi, 752 F.3d at 925 (emphasis added).
Similarly, in United States v. Carson, the defendants filed a motion just
like Defendants here, arguing that the foreign entities at issue in that case
were not instrumentalities as a matter of law. In denying the defendants
motion, the court concluded that the question of whether state-owned
companies qualify as instrumentalities under the FCPA is a question of fact,
Carson, 2011 WL 5101701, at *3, and that Defendants Motion is not entirely
segregable from the evidence to be presented at trial, and therefore must be
denied, id. at *4 (citing Aguilar, 783 F. Supp. 2d 1108; Esquenazi, No. 1:09-cr21010-JEM, Dkt. No. 309 (Ex. A); Nguyen, No. 2:08-cr-00522-TJS, Dkt. No.
144 (Ex. B)).
Indeed, here, the Court has accepted two knowing and voluntary guilty
pleas by Defendants co-conspirators Weisman and Hammarskjold for
committing the very same violation of law that Defendant now urges this Court
to hold is not a crime on its face.
3.
The Factual Nature of the Inquiry Is Particularly Prevalent

Here
Confronted with these clear precedents, and without countervailing

support, Defendant attempts to use Federal Rule of Criminal Procedure 26.1
which uncontroversially states that [i]ssues of foreign law are questions of law
to expand the limited scope of the Courts inquiry under Rule 12(b)(3)(B)(v).
Defendant provides no support or analysis for such an argument because there
13
is none. Closer scrutiny reveals the two fundamental flaws in this argument
(1) whether an entity is an instrumentality under the FCPA is not an issue of
foreign law; and (2) such an inquiry is an issue of fact, not of law.
First, the question of whether Ecopetrol is an instrumentality under the
FCPA cannot be a question of foreign law because the FCPA is a U.S. law. Any
interpretation of an element of this statute is not a question of foreign law for
the purpose that Rule 26.1 was intended. See, e.g., First Natl City Bank v.
Banco Para El Comercio Exterior De Cuba, 462 U.S. 611, 621-22 (1983) (finding
that foreign law did not determine whether a foreign bank was an
instrumentality in connection with matters relating to third parties).
In United States v. Welch, for example, the Tenth Circuit addressed an
analogous argument in the commercial bribery context under the Travel Act
(18 U.S.C. 1952). See 327 F.3d 1081 (10th Cir. 2003). The defendants in
Welch, executives at the Salt Lake City Bid Committee for the 2002 Olympic
Winter Games, were alleged to have paid bribes to members of the
International Olympic Committee (IOC) to influence their vote on the selection
of the Olympic site. The district court granted the defendants motion to
dismiss, but the Tenth Circuit reversed. The appellate court rejected the
defendants argument that it should look to Swiss law (where the IOC was
organized) to determine whether an IOC member is an agent or fiduciary of the
IOC, an element required under the relevant U.S. bribery laws. Id. at 1101.
The court held that Federal law, not Swiss law, governs whether Defendants
alleged conduct violated the Travel Act, and that although [e]vidence that
14
addresses the facts and circumstances of the IOC relationship to its members
under Swiss law would potentially be relevant, as would evidence of the IOCs
and its members understanding of that relationship, ultimately this element
of the commercial bribery statute is one of fact for the jury. Id. at 1101-02.
Second, in addition to the fact that the issue is not one of foreign law, the
determination of whether an entity is an instrumentality is not one of law,
but rather is a factual, case-by-case inquiry. This is aptly demonstrated by the
myriad facts that Defendant asks this Court to consider at the pretrial stage,
including those contained in the 22-page declaration of a lawyer from Colombia
that Defendant attaches to his motion.2 If Defendants motion was actually
amenable to determination at the motion to dismiss stage just through legal
analysis, then Defendant would not have attached this declaration (or any of
his other fact-intensive exhibits) for the Courts necessary consideration.
In Esquenazi, faced with a similar motion by defendants, the district
court concluded that the issue of instrumentality was one of fact for the jury
to consider. At trial in that case (and in a related case, United States v.
Duperval, No. 1:09-cr-21010-JEM-4, S.D. Fla.), several fact witnesses and an
expert testified about the nature and history of the state-owned entity involved
in that case Haiti Teleco. See Esquenazi, 752 F.3d at 917-18 (describing
Governments evidence at trial). Although there was some reference to Haitian
The Government notes that it does not concede the accuracy of the facts in the declaration or
that its affiant is an expert on this topic as Defendant claims.
2
15
laws, the vast majority of the testimony involved facts when and how the
company was created, its ownership, its control, and its functions.3
In this case, the Government likewise intends to proffer substantial
evidence on the facts surrounding the nature of Ecopetrol, including e-mails
sent and received by Defendant, conversations between Defendant and his coconspirators, testimony of current and former PetroTiger employees, and
testimony of at least one expert witness. Some of the facts about Ecopetrol
that the Government may rely on at trial, and that clearly demonstrate that
Ecopetrol is an instrumentality under the FCPA, include:
Ecopetrol was created by the government of Colombia;4
The Colombian government is required to maintain at least an 80%

interest in Ecopetrol, and during the relevant time period Ecopetrol
was 89.9% owned by the Colombian government;5
The Colombian government has the ability to select a majority of

Ecopetrols board of directors, and during the relevant time period
the board of directors included the Minister of Mines and Energy,
the Minister of Finance, and the Director of the National Planning
Agency; 6
The Colombian government has the right and ability to undertake

projects which may not be in [Ecopetrols] best interest but are
instead in the governments interest;7
Similarly, in the present case, to the extent that any issues of law arise in connection with
this (or any other) element at trial, the Court is more than capable of determining those issues
of law at that time, and submitting to the jury all other factual issues.
3
Ecopetrol S.A., Form 20-F, 2009, at 20

(http://www.ecopetrol.com.co/english/documentos/44821_ECOPETROL_S.A._20-F_2009.pdf).
5
Id. at 8.
Id. at 90-91, 94.
Id. at 8.
16
Id. at 19.
Id. at 81.
10
Id. at 8.
11
Id. at 9.
Ecopetrol reserve[s] the right to plead sovereign immunity under

the United States Foreign Sovereign Immunities Act of 1976 with
respect to actions brought against [it] under United States federal
securities laws or any state securities laws by any of Ecopetrols
minority shareholders;8
Ecopetrol prepares its financial statements in accordance with

Colombian Government Entity GAAP;9
Before Ecopetrol can issue any debt in the international and local
capital markets or incur any other type of indebtedness, the
Government [of Colombia], through the Ministry of Finance and
Public Credit, must authorize the issuance of such debt and
[Ecopetrol] must register external debt with the Colombian Central
Bank;10
The Colombian government may require [Ecopetrols] Board of

Directors to declare dividends in an amount that result in
[Ecopetrol] having to reduce [its] capital expenditures thereby
negatively affecting [its] prospects, results of operations and
financial condition;11
Prior to 2004, any oil company wishing to engage in oil-related

services in Colombia had to enter into an agreement with
Ecopetrol. Ecopetrol remains, to this day, as counterparty to the
contracts which [it] signed prior to January 1, 2004 which include
the Mansarovar contract. The contracts on which [Ecopetrol is]
the counterparty all have clauses which provide, at [Ecopetrols]
sole option, for extensions. If [Ecopetrol] do[es] not extend the
contracts, the right to exploit the hydrocarbon reserves which are
the subject of the contract revert to [Ecopetrol], and [Ecopetrol]
ha[s] the right to exploit them for an indefinite period at no
additional cost to [Ecopetrol]. For example, as recently as June
2010 (in the middle of the charged FCPA conspiracy), the
Santiago de las Atalayas Contract, one of the most important
exploration and production contracts due to its amount of crude
17
oil and natural gas reserves, terminated and the right to exploit the
hydrocarbon reserves subject to this Contract reverted back to
[Ecopetrol].;12 and
Employees of Ecopetrol, to this day, are treated as public officials

for purposes of Colombias public corruption laws, and in fact have
been prosecuted for such actions in recent years.13
These are not attributes of a private commercial enterprise they are the
attributes of a foreign government instrumentality. Indeed, the Government
will also introduce evidence that Defendant knew Ecopetrol was an
instrumentality. In addition to testimony by witnesses, the following are just a
few examples of documentary evidence the Government may introduce at trial:
Defendant authored, together with Weisman and Hammarskjold,

an October 12, 2010 memorandum stating that PetroTigers client
base is constituted by smaller, independent companies and the
national oil company, Ecopetrol. (emphasis added);
Defendant authored, together with Hammarskjold, a November 29,

2010 memorandum which refers to Ecopetrol as the state oil
company; and
A PetroTiger presentation from the relevant time period discusses

steps that the Colombian government has taken with respect to
mining and oil infrastructure, and provided a number of examples,
including that Colombias national oil company, Ecopetrol, had a
budget for 2009 alone that included $598 million for
transportation infrastructure.
A jury is entitled to weigh this, and other, evidence that the Government
proffers at trial, together with any evidence Defendant chooses to introduce.
12
Id. at 67.
This is by no means a full proffer of the Governments evidence on this subject. Rather,
these facts are merely illustrative of the factual nature of the inquiry and demonstrate that a
reasonable jury could easily conclude Ecopetrol is an instrumentality under the FCPA.
13
18
Just as all prior courts have done, the Court should deny Defendants motion
to dismiss as premature.
B.
Defendant Provides an Overly Narrow Interpretation of

Instrumentality
Although Defendants motion should be denied based on the reasons

described above, the Government does not want to leave the Court with the
misimpression that Defendant has accurately stated the standard for
determining whether an entity is an instrumentality under the FCPA.
Defendant treats the definition of instrumentality and the concept of
government function as a one-size-fits-all test that can be met only by
satisfying a pre-defined checklist. Yet [t]he Supreme Court has cautioned that
the concept of a usual or a proper governmental function changes over time
and varies from nation to nation. Esquenazi, 752 F.3d at 924 (quoting First
Natl City Bank, 462 U.S. at 634 n.27).
In First National City Bank, the Supreme Court described in detail the
factors that bear on whether an entity is a foreign government instrumentality
in the context of a Foreign Sovereign Immunities Act case. According to the
Court, a foreign government instrumentality is run as a distinct economic
enterprise; often it is not subject to the same budgetary and personnel
requirements with which government agencies must comply. 462 U.S. at 624.
The Court continued, [t]hese distinctive features permit government
instrumentalities to manage their operations on an enterprise basis while
granting them a greater degree of flexibility and independence from close
19
political control than is generally enjoyed by government agencies. These same

features frequently prompt governments in developing countries to establish
separate juridical entities as the vehicles through which to obtain the financial
resources needed to make large-scale national investments. Id. at 624-25.
Moreover, the instrumentalitys assets and liabilities must be treated as
distinct from those of its sovereign in order to facilitate credit transactions with
third parties. Id. at 625-26. As will be shown at trial, all of these
characteristics quite clearly describe Ecopetrol.
The Supreme Court applied these principles in the domestic context in
Lebron v. Natl R.R. Passenger Corp., 513 U.S. 374 (1995). In Lebron, the
Supreme Court concluded that Amtrak, though nominally a private
corporation, (and whose authorizing statute in fact declares that it will not be
an agency or establishment of the United States Government) was a
government instrumentality for First Amendment purposes. Id. at 383 & 391.
The governmental objective at issue in Lebron was decidedly commercial
providing improved railroad services to passengers but the Court nonetheless
concluded it was an instrumentality performing a government function. Id. at
383-85, 397-98, 400. In so holding, the Court gave great weight to the fact
that the U.S. government retains for itself permanent authority to appoint a
majority of the directors of that corporation, id. at 400, just as the Colombian
government retains the right to appoint the majority of Ecopetrols directors.
The Circuit court and district courts that have addressed the issue of
instrumentality under the FCPA have followed the Supreme Courts direction
20
in this regard, each recognizing that such a determination is inherently

intertwined with fact-bound questions and that [i]t would be unwise and
likely impossible to exhaustively answer them in the abstract. Esquenazi, 752
F.3d at 925; see also id. (Because we only have this case before us, we do not
purport to list all of the factors that might prove relevant to deciding whether
an entity is an instrumentality of a foreign government. For today, we provide
a list of some factors that may be relevant to deciding the issue.).
The district court in Carson, for example, identified [s]everal factors
[that] bear on the question of whether a business entity constitutes a
government instrumentality, including:
The foreign states characterization of the entity and
its employees;
The foreign states degree of control over the entity;
The purpose of the entitys activities;
The entitys obligations and privileges under the
foreign states law, including whether the entity
exercises exclusive or controlling power to administer
its designated functions;
The circumstances surrounding the entitys creation;
and
The foreign states extent of ownership of the entity,
including the level of financial support by the state
(e.g., subsidies, special tax treatment, and loans).
Carson, 2011 WL 5101701, at *4.
According to the Carson court, [s]uch factors are not exclusive,
and no single factor is dispositive. As applicable here, their chief utility
21
is simply to point out that several types of evidence are relevant when
determining whether a state-owned company constitutes an
instrumentality under the FCPA with state ownership being only one
of several considerations. Id. at *3-*4.
Defendants definition of instrumentality does not provide room for this
inherently fact-bound inquiry, and runs afoul of the courts and statutes that
have defined instrumentality. Indeed, Congress passed the Foreign Sovereign
Immunities Act (FSIA) one year before it enacted the FCPA and provided a
definition of agency or instrumentality much broader than Defendants
reading. The FSIA provides:
An agency or instrumentality of a foreign state
means any entity (1) which is a separate legal person,
corporate or otherwise, and (2) which is an organ of a
foreign state or political subdivision thereof, or a
majority of whose shares or other ownership interest is
owned by a foreign state or political subdivision
thereof . . . .
28 U.S.C. 1603(b)(2). Similarly, the Economic Espionage Act (EEA), passed in
1996, defines instrumentality much the same way as it was defined by the
FSIA:
any agency, bureau, ministry, component, institution,
association, or any legal, commercial, or business
organization, corporation, firm, or entity that is
substantially owned, controlled, sponsored,
commanded, managed, or dominated by a foreign
government.
18 U.S.C. 1839(1); see Smith v. City of Jackson, 544 U.S. 228, 233 (2005)
(plurality opinion) ([W]hen Congress uses the same language in two statutes
having similar purposes, particularly when one is enacted shortly after the
22
other, it is appropriate to presume that Congress intended that text to have the
same meaning in both statutes.).
Moreover, given that the OECD definition of public enterprise includes
when the government or governments hold the majority of the enterprises
subscribed capital, control the majority of votes attaching to shares issued by
the enterprise or can appoint a majority of the members of the enterprises
administrative or managerial body or supervisory board, OECD Convention
art. 1.4. cmt 14 (emphasis added), Defendants restrictive construction would
put the United States out of compliance with its international obligations
under the OECD. Esquenazi, 752 F.3d at 924 (citation omitted); see also Kay,
359 F.3d at 755 n.68 (noting that defendants interpretation of FCPA would
likely create a conflict with our international treaty obligations, with which we
presume Congress meant to comply fully.) (citations omitted).
In sum, the determination of whether Ecopetrol is an instrumentality
under the FCPA is a fact-bound, case-by-case analysis properly decided by a
jury. Defendants motion is more properly made as a motion for proposed jury
instructions or for a dismissal pursuant to Federal Rule Criminal Procedure 29
after the Government has presented its evidence.
23
C.
The FCPA is Not Unconstitutionally Vague as Applied to

Defendant
Aside from trying to turn the instrumentality issue from an issue of fact
into an issue of law, Defendant also tries again, without citing to a single case
that has issued the ruling he seeks here to find a violation of Defendants
Constitutional rights. He claims that the term instrumentality and thus
foreign official is void for vagueness as applied to him. This argument, too,
should be rejected.
A statute is void for vagueness only if it fails to define the criminal
offense [1] with sufficient definiteness that ordinary people can understand
what conduct is prohibited and [2] in a manner that does not encourage
arbitrary and discriminatory enforcement. Skilling v. United States, 130 S. Ct.
2896, 2927-28 (2010) (quoting Kolender v. Lawson, 461 U.S. 352, 357 (1983)).
The relevant inquiry is whether the statute, either standing alone or as
construed, made it reasonably clear at the relevant time that the defendants
conduct was criminal. United States v. Lanier, 520 U.S. 259, 267 (1997).
Simply because a term is not defined in the statute does not mean that is it
void for vagueness. See, e.g., United States v. Rudzavice, 586 F.3d 310, 314-15
(5th Cir. 2009). In assessing void for vagueness challenges, courts should
construe, not condemn, Congress enactments. Skilling, 130 S. Ct. at 2928
(quotation marks omitted). In the criminal context, since vagueness attacks
are based on lack of notice, they may be overcome in any specific case where
reasonable persons would know their conduct puts [them] at risk of
24
punishment under the statute. Criminal statutes need only give fair warning
that certain conduct is prohibited to survive constitutional challenges. United
States v. Amirnazmi, 645 F.3d 564, 588-89 (3d Cir. 2011) (citations and
quotation marks omitted).
Defendant claims that he had no fair notice of whether payments to
employees of corporations like Ecopetrol are covered by the FCPA. (Def. Mem.
at 20.) According to Defendant, this lack of fair notice means he could not
possibly have known that the approximately $333,000 in bribe payments he
arranged to flow to David Duran, using bogus invoices made out to Durans
wife for phantom consulting services, could possibly have been illegal. This is
simply incorrect.
As an initial matter, no court has held that the definition of foreign
official in the FCPA is unconstitutionally vague. Indeed, in a number of recent
decisions on similar motions, the district courts denied the motions to dismiss
and rejected the defendants void for vagueness arguments. See, e.g., Carson,
2011 WL 5101701, at *11; Esquenazi, No. 1:09-cr-21010-JEM, Dkt. No. 309 at
3 ([T]he Court finds that persons of common intelligence would have fair notice
of this statutes prohibitions); Nguyen, No. 2:08-cr-00522-TJS, Dkt. No. 144.
Additionally, no court has adopted Defendants position since the FCPA was
enacted over three decades ago despite dozens of guilty pleas from
individuals who admitted to bribing foreign officials employed by nations or
instrumentalities (including two in the present case). It is thus plain as a
pikestaff, Skilling, 130 S. Ct. at 2933, that the FCPA prohibits paying bribes to
25
officials who work for foreign governments or their instrumentalities. See, e.g.,
United States v. Kay, 513 F.3d 432, 441 (5th Cir. 2007) (rejecting defendants
claim that FCPA was void for vagueness because [t]he FCPA delineates seven
standards that may lead to a conviction. All are phrased in terms that are
reasonably clear so as to allow the common interpreter to understand their
meaning.); Carson, 2011 WL 5101701, at *11 (rejecting defendants claim that
FCPA was void for vagueness because the meaning of instrumentality in the
FCPA is sufficiently definite that an ordinary person can understand what
conduct is prohibited) (citation omitted).
Moreover, the FCPAs scienter requirement should eliminate any claim
that the statute is unconstitutionally vague as applied to Defendant. For a
violation to occur, Section 78dd-2(a) requires that defendants act corruptly.
Additionally, the penalty provision, Section 78dd-2(g)(2), requires defendants to
act willfully. Courts have routinely held that a requirement of willfulness
makes a vagueness challenge especially difficult to sustain, because [a] mind
intent upon willful evasion is inconsistent with surprised innocence. United
States v. Hescorp, Heavy Equip. Sales Corp., 801 F.2d 70, 77 (2d Cir. 1986)
(quoting United States v. Ragen, 314 U.S. 513, 524 (1942)).
Here, to prove violations of the FCPA, the Government will have to prove
that Defendant knew his conduct making corrupt payments to Duran was
wrong, and such payments would only be wrong in this context if Duran was
an employee of the Colombian government, or an instrumentality thereof.
Thus, because the statute requires corrupt and willful conduct, the statute
26
is not unconstitutionally vague as applied to Defendant. See, e.g., Screws v.

United States, 325 U.S. 91, 102 (1945) ([W]here the punishment imposed is
only for an act knowingly done with the purpose of doing that which the
statute prohibits, the accused cannot be said to suffer from lack of warning or
knowledge that the act which he does is a violation of law.); United States v.
Guo, 634 F.3d 1119, 1123 (9th Cir. 2011); United States v. Jensen, 532 F.
Supp. 2d 1187, 1196 (N.D. Cal. 2008) (rejecting vagueness challenge because
knowing and willful conduct mitigates any vagueness in the statute.).
In addition, when a criminal statute regulates economic activity, it
generally is subject to a less strict vagueness test because its subject matter is
more often narrow and because businesses can be expected to consult relevant
legislation in advance of action. United States v. Reliant Energy Services, 420
F. Supp. 2d 1043, 1054 (N.D. Cal. 2006) (quoting United States v. Iverson, 162
F.3d 1015, 1021 (9th Cir. 1998)); see also Amirnazmi, 645 F.3d at 589 (same).
As described in Section II.A., above, the FCPA is a criminal statute focusing on
economic activity. Indeed, unlike domestic bribery statutes, the FCPA only
addresses corruption that is linked to obtaining or retaining business. This
further belies Defendants vagueness challenge.
Finally, [i]t is well established that vagueness challenges to statutes
which do not involve First Amendment freedoms must be examined in the light
of the facts of the case at hand. United States v. Mazurie, 419 U.S. 544, 550
(1975). In this case, the Government intends to introduce evidence that
Defendant knew Ecopetrol was a government entity and that he considered the
27
payments to Duran to be
including e-mails and memoranda authored
by Defendant
14
In sum, [g]iven the Governments substantial evidentiary burden to

establish that a business entity constitutes a government instrumentality, and
the scienter requirement mentioned above, the definition of a foreign official
does not encourage arbitrary or discriminatory enforcement, Carson, 2011 WL
5101701, at *11, and is not void for vagueness as applied to Defendant.
14
Indeed, Defendants argument ignores the fact that even commercial bribery is unlawful
under the Travel Act, 18 U.S.C. 1952. Thus, his conduct was unlawful whether he was
paying a bribe to a foreign official to obtain business or to a non-government official to secure
such an advantage. He was on notice that his conduct was unlawful
28
V.
Conclusion
For the reasons set forth above, Defendants Motion to Dismiss (Dkt. No.
112) should be denied in its entirety.
Respectfully submitted,
WILLIAM J. STELLMACH
Acting Chief
United States Department of Justice
Fraud Section
PAUL J. FISHMAN
United States Attorney
District of New Jersey
By:
29
/s/ Zach Intrater

DANIEL S. KAHN
Assistant Chief
TAREK HELOU
Trial Attorney
ZACH INTRATER
Assistant U.S. Attorney

DOJ Opposition To Sigelman Motion To Dismss

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Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 1 of 33 PageID: 1363

UNITED STATES DISTRICT COURT

UNITED STATES OF AMERICA

Crim. No. 14-263 (JEI)

Hon. Joseph E. Irenas

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 2 of 33 PageID: 1364

Legal Standard ... 7

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Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 6 of 33 PageID: 1368

Defendant is charged with conspiring to violate, and violating, the FCPA,

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 7 of 33 PageID: 1369

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 8 of 33 PageID: 1370

The Indictment charges Defendant with conspiring to violate the FCPA

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 9 of 33 PageID: 1371

Defendant was a domestic concern, or an officer, director,

Defendant acted corruptly and willfully;

Defendant made use of the mails or any means or

Defendant offered, paid, promised to pay, or authorized the

That the payment or gift was to a foreign official or to any

That the payment was for one of four purposes:

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 10 of 33 PageID: 1372

That the payment was made to assist Defendant, or another

See 15 U.S.C. 78dd-2.

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able to proffer evidence at trial to meet its burden). As long as a reasonable

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 13 of 33 PageID: 1375

Defendants Motion is Premature

The Indictment Adequately Alleges an FCPA Violation

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 14 of 33 PageID: 1376

Planning Agency of Colombia; and that through its status as a governmental

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 15 of 33 PageID: 1377

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 16 of 33 PageID: 1378

inquiry that the Bergrin court, among innumerable others, instructs is

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 17 of 33 PageID: 1379

The Factual Nature of the Inquiry Is Particularly Prevalent

Confronted with these clear precedents, and without countervailing

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 18 of 33 PageID: 1380

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Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 20 of 33 PageID: 1382

Ecopetrol was created by the government of Colombia;4

The Colombian government is required to maintain at least an 80%

The Colombian government has the ability to select a majority of

The Colombian government has the right and ability to undertake

Ecopetrol S.A., Form 20-F, 2009, at 20

Id. at 90-91, 94.

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 21 of 33 PageID: 1383

Ecopetrol reserve[s] the right to plead sovereign immunity under

Ecopetrol prepares its financial statements in accordance with

The Colombian government may require [Ecopetrols] Board of

Prior to 2004, any oil company wishing to engage in oil-related

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 22 of 33 PageID: 1384

Employees of Ecopetrol, to this day, are treated as public officials

Defendant authored, together with Weisman and Hammarskjold,

Defendant authored, together with Hammarskjold, a November 29,

A PetroTiger presentation from the relevant time period discusses

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 23 of 33 PageID: 1385

Defendant Provides an Overly Narrow Interpretation of

Although Defendants motion should be denied based on the reasons

Case 1:14-cr-00263-JEI Document 118 Filed 11/12/14 Page 24 of 33 PageID: 1386

political control than is generally enjoyed by government agencies. These same