Case 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 1 of 13 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION UNITED STATES OF AMERICA, 8 Plaintiff, § § § v. § CRIMINAL NO. Cr-H-09-629 § JOHN JOSEPH O’SHEA, § Defendant. § DEFENDANT 0’SHEA’S REPLY TO THE RESPONSE OF THE UNITED STATES TO DEFENDANT'S MOTION TO DISMISS COUNTS ONE THROUGH SEVENTEEN OF ‘THE INDICTMENT I. Inrropuction On March 7, 2011, Mr. O'Shea filed his Motion to Dismiss Counts One through Seventeen of the Indictment (“Motion”) (Docket No. 47) because each of these counts rests entirely or in part on an incorrect legal conclusion that a state-owned entity is per se @ “department, agency and instrumentality of a foreign government,” and that its officers and employees are “foreign officials’ within the meaning of the FCPA.” Indictment, {f] 5-6. On ‘March 28, 2011, the government filed its Response. (Docket No. 50). I. ARGUMENT A. The Government Relies on “Prosecutorial Common Law” and Rulings from Cases ‘That Did Not Consider or Inadequately Considered the Meaning of Foreign Official ‘To support its expansive interpretation of the Foreign Cormupt Practices Act (“FCPA”), the government notes that thirty-five individuals have entered guilty pleas after being accused of violating the FCPA. Response at 14. The Court should give no weight to these guilty pleas because each individual had his or her own reasons for entering into a plea agreement with the government. As long as FCPA defendants—both individuals and corporations—enter into non- prosecution agreements, deferred prosecution agreements, and plea agreements, the governmentCase 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 2 of 13 will continue to build its arsenal of “prosecutorial common law” to support its aggressive and slanted interpretation of the FCPA.' Yet court acceptance of plea agreements does not convert the government’s pronunciations on the law into sources of legal authority. Indeed, the government's strategy of creating its own would-be common law threatens to strip the federal courts of their judicial power to interpret the FCPA. ‘The federal courts, and not the Department of Justice nor any other division of the executive branch, are the final arbiters of what the FCPA actually provides. See U.S. Const. art. IIL, § 1; Marbury v. Madison, 1 Ctanch 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is.”); United States v. Nixon, 418 U.S. 683, 704 (1974) (Judicial power “can no more be shared with the Executive Branch than the Chief Executive, for example, can share with the Judiciary the veto power, or the Congress share with the Judiciary the power to override a Presidential veto,” and sharing of powers “would be contrary to the basic concept of separation of powers and the checks and balances that flow from the scheme of a tripartite govemment”). The Court should reject the government's attempt to bootstrap its own expansive interpretation of the FCPA into the statute through “prosecutorial common law.” The denial of two past motions to dismiss similarly provides no support for the government’s broad reading of “instrumentality” in the FCPA’s foreign official provision. ‘The government cites to orders issued by the district courts in the Eastern District of Pennsylvania ‘and the Souther District of Florida on challenges to the FCPA’s “foreign official” provision. Response at 14. But these orders denied the motions to dismiss with little or no substantive analysis of the FCPA and its foreign official provision, and without the benefit of the analysis of " See Bingham's Michael Levy on the Rise of Prosecutorial Common Lav, 25 Corporate Crime Reporter 6, Feb. 7, 2011, avallable at bupilwww.comporatecrimereportercom/michaelevy030711 him (describing. what author bas called “prosecutorial common law") (hereinafter refered tas “Levy Interview")Case 4:09-cr-00629 Document 8 Filed in TXSD on 04/18/11 Page 3 of 13, legislative history offered in the parties’ briefing in this case. Response Exs. H, J. A more recent denial of a motion to dismiss, issued by the Honorable A. Howard Matz in United States v. Aguilar Noriega, et al., No. 10-1031 (C.D. Ca. 2011), was apparently tied to the court’s understanding that a fact dispute existed with regard to Comisién Federal de Eleotricidad (CFE")'s “governmental function.” That ruling, far-from endorsing the government's position on the scope of “foreign official” in the FCPA, supports the inquiry that Mr. O'Shea requests into the nature and role of CFE within the Mexican government, Similarly, while jury instructions are irrelevant when the issue at hand was not considered by the issuing court, Mr. O’Shea has located jury instructions submitted to the jury in a trial in the Southern District of Texas after the issue was well-argued and associated facts presented in the district court. In United States v. MeLean, Cr. H-82-224 (SD. Tex. 1985), the jury instructions defined “instrumentality of a foreign government” to mean “any entity created, owned, or controlled by a foreign government to achieve a governmental purpose or function.” Ex. 1, Excerpt from Rudolf B. Schlesinger et al., Comparative Law: Cases, Text, and Materials 78 (New York, Foundation Press, 6th ed. 1998) (quoting the jury instructions given in McLean). ‘Thus, the government's attempt at creating a prosecutorial common law aside, it can cite no authorities in support for its position, while the courts that have looked closely at the issue have adopted analyses focused on sovereignty or government function B. The Government Takes Conflicting Positions on How to Define “Instrumentality,” But Apparently Accepts a “Governmental Function” Test ‘The government asserts on the one hand that in order to show that CFE is an instrumentality, itis entitled to the opportunity to present further facts related to the nature of CFE and the government’s ownership and/or control over the utility. Response at 2. It assertsCase 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 4 of 13 con the other hand that it need only plead, as it has, that CFE is an electric utility owned by the government of Mexico that supplies electricity to the public, Response at 5. In the end, the government does not and cannot provide a concrete definition for “instrumentality” as used in the FPA; it never articulates the test to make such determinations. It never defines what makes something a “state-owned enterprise,” sufficient to render it an “instrumentality” under the FCPA. It asks instead that the Court accept its judgment that in any case, CFE employees are within the definition of foreign official. This is deliberate ambiguity on the government's part, and flies in the face of Skilling v. United States, 130 S. Ct. 2896, 2927 (2010), which holds that the statute must be construed in a manner that does not render it unconstitutionally vague, something that can only be done if “instrumentality” is construed to encompass bona fide government entities. Just as the government's position within this case is uncertain, the government has a history in suits in which the sovereign status of an entity becomes an issue of taking the most advantageous position in each suit. In fact, while the government has since indicted defendants for paying bribes to employees of Pemex, in the past, the government has successfully argued the opposite position that this Mexican state-owned corporation similar to CFE was not an “nstrumentality” under common law and the Restrictive Theory of Sovereign Immunity (superceded in the 1970’s by the Foreign Sovereign Immunities Act), See Ex. 2, United States v. Tug Pemex XV, 1 AMC 896, 1960 WL 99004 (S.D. Tex. Jan. 14, 1960). C. Officers and Employees of a State-Owned Entity Are Not “Foreign Officials” Where the Entity is a Commercial Enterprise Whose Function is not Governmental ‘The government attempts to refute the canon that “instrumentality” is best understood by noticing what the other words in the series—department and agency—have in common with each other (noscitur a soctis). It does so by arguing that state-owned corporations are really veryCase 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 5 of 13 much like government agencies and departments, and any line drawn between a commercial enterprise and an entity with a governmental mission would be “illusory” where the services provided by CFE are a “public service.” But departments and agencies (and commissions as that term is known in United States, but not, apparently, “comisién” in Spanish, to judge by its use in CFE’s name) typically exercise sovereign authority, whether legislative or executive in nature, State-owned corporations like CFE do not. ‘The government nevertheless points out that under the Mexican Constitution and the Public Service Act of Electricity of 1975, the distribution of electricity as a public service (but no longer its generation) is reserved to the Mexican government, But the government omits the fact that CFE provides the electricity for sale to its customers, See Comisién Federal de Electricidad, The Company, http://www.cfe.gob.mx/lang/en/Pages/thecompany.aspx (last visited Apr. 12, 2011) (describing the distribution of its sales to customers). Further, any profits are distributed to CFE employees, And while those constitutional and statutory provisions mandate a government monopoly as to distribution of electricity, they do not specifically create sovereign authority in the form of administrative or executive powers in CFE. In fact, governmental authority related to electricity is reserved to the centralized government, while CFE, as the government points out, is a “decentralized public entity with legal personality and its own patrimony.” Response at 2 (citing Exhibit B, the Mexican Public Service Act of Electricity of 1975). Thus, the Secretaria de Hacienda y Crédito Piblico (“SHCP”) (the equivalent of the United States Treasury Department) sets tariffs on imports of electricity, while the Secretaria de Energia (the equivalent of the United States Department of Energy), along with SHCP, sets electricity rates.” CFE’s participation in determining tariffs and 2 See The North American Energy Working Group, Guide To Federal Regulation of Sales of Imported Electricity in Canada, Mexico, ands the’~—~«United =—=«Staves,, «at, SS, =, Tam. 2008,Case 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 6 of 13 rates is strictly limited to membership on boards that make pertinent recommendations, subject to approval. CFE makes the determination to shut off a customer’s electricity for non-payment, but ‘Mexican courts have determined that such an act is not a state action (“acto de autoridac), and a suit against CFE complaining of such action sounds in contract, not in civil rights law (“amparo”)? D. The FCPA’s Legislative History Supports a Narrow Reading of “Instrumentality,” or the Application of the Rule of Lenity The government asserts that the legislative history surrounding the FCPA does not expressly adopt Defendant’s narrow reading of “instrumentality,” but it misses the point. Legislative history sources reflect that in passing the statute, Congress was concerned with bribes paid directly to a state or to a political party, not to state-owned corporations. None of those materials explicitly adopts state-owned corporations as instrumentalities, and under the rule of lenity, a tie of this nature goes to the defendant. The government argues that the rule of lenity is reserved for “grievous” ambiguities, but here, where long sentences ate at stake despite the scarcity of judicial interpretation of the FCPA, the ambiguity surrounding the meaning of “instrumentality” is indeed grievous. The government’s quote from legislative materials on pages 15 and 16 does not support, its position. The quotation discusses the great number of corporations involved in offering bribes, not corporations faking such payments. The market sectors named in this material as Ingpdwwrn-p.energy govldocumentsNAEWGERGuideFina pdf (discussing tariff); Response Ex. B at 1 (discusing elect ates), ‘See Ex. 3, Translation of "Federal Electicty Commission. A Receipt Notice of Electical Power Supply, Even ‘When Containing a Service Diseonnection Warning, Is Not an Act of Authority for The Purposes OF ‘Amparo Proceedings,” Institute for Legal Research in Mexico, Aug. 2010, available ar innpsvwwjuridicas unam mvingurlepirajrsVer htm ?ide-29433 (explaining a Mexican court ruling. that a disconnection of power service by CFE is not an act of authority that can be pursued through civil rights law—in Spanish, amparo—it is a matter of private contact), “Federal Electiity Commission. the Disconnection or Suspension of Electrical Power Supply Is Not an Act of Authority for the Purposes of Amparo Proceedings,” Insitute for Legal Research in Mexico, Aug. "2010, = savailable— a Intp:hvwwuridicas nam mov/infuleg/ srs Ver htmidt-294S4 (same).Case 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 7 of 13 Justifying the FCPA are less a list of sectors in which the government ownership is common, and more a list of sectors that are heavily regulated, such as oil and gas, pharmaceuticals, and the manufacture of food products. E. The Government’s Counterarguments in Support of a Broad Reading of “Instrumentality” Fail 1. The government’s attempts to opine on the “plain and ordinary” meaning of FCPA’s “instrumentality” or to rely on other statutes’ definitions is unavailing. The government states that “{iJnstrumentality is not an uncommon word in the law.” Response at 4 (emphasis added). But the legal definition of “instrumentality” cannot be the source for determining a word’s ordinary meaning because a criminal statute must have a meaning capable of being understood clearly by “ordinary people,” not lawyers. See Mot. at 8. The government argues alternatively that “instrumentality” should be given the meaning that is defined in the Foreign Sovereign Immunities Act (“FSIA"), passed in 1976, and the Economic Espionage Act. Response at 10-11. But these two definitions are themselves different: one is about majority ownership, while the other mentions substantial ownership and control. See Mot. at 4, Moreover, the FSIA contains an important exception for commercial activity that prohibits its application when an entity is acting more like a corporation; while approaching the problem differently, it therefore reflects the same interest that Mr. O’Shea has argued is incorporated into the FCPA in separating the “commercial” from the governmental. 28 U.S.C. § 1605(a)(2) (2008). The Dodd-Frank Act, meanwhile, specifically refers to state-owned entities, and distinguishes them from “instrumentalities.” See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L, 111-203, 124 Stat. 1376 (July 21, 2010). Indeed, as the government mentions, “instrumentality” is used in the Code 1,492 times (at 4). And itis evident that the word “instrumentality” simply does not have an accepted legal definition.Case 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 8 of 13 2, The FCPA’s grease payment exception does not support a broad reading of “instrumentality” ‘The FCPA’s “routine governmental action” or “grease payment” exception provides that routine governmental action “means only an action which is ordinarily and commonly performed by a foreign official in” among other things, “providing phone service, power and water supply[.]” 15 U.S.C. § 78dd-2(h)(4) and 2(b) (the latter permitting payments to foreign official and others to “secure the performance of a routine governmental action by a foreign official,” among others). The government reasons that this provision of the FCPA proves that Congress intended entities that provide power supply to be foreign officials; otherwise, the mention of power supply would be superfluous. Response at 7. But the Court need not disagree with this in order to also conclude that commercial entities that provide power supply are nevertheless not “instrumentalities,” and their employees not “foreign officials.” ‘The focus of the “foreign official” definition is not the nature of the service provided by the entity in question, but rather the nature of the entity in question. Nothing in the text of the FCPA suggests that state-owned corporations that are commercial enterprises can be instrumentalities—no matter what their business is. U.S.C. § 78dd-2()(4) Further, to the extent that the concem is reading portions of the FCPA in such a way as to render them superfluous, the FCPA provides that it shall not constitute a violation of the statute if the person charged can prove that the payment in question constituted “a reasonable and bona fide expenditure, such as travel and lodging expenses,” and that it was “directly related to (A) the promotion, demonstration, or explanation of products or services; or (B) the execution or performance of a contract with a foreign government or agency thereof.” 15 U.S.C. § 78dd-2(b) and (¢). The government says the statute must be construed to give meaning to all of its parts, but it never explains why the “bona fide expenditure” affirmative defense does not extend toCase 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 9 of 13 payments made to employees of government instrumentalities, but just to agencies. If state- ‘owned corporations are included within the definition of “instrumentality,” this omission makes no sense. 3. The Charming Betsy argument is inapplicable. ‘The government also makes a Charming Betsy argument' that the Court must accept the ‘government’s interpretation of “instrumentality” because otherwise, the United States will not be in compliance with its treaty obligations under the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in Intemational Business Transactions (“OECD Convention”). In this case, the government's contention that its interpretation is more consistent with the OECD Convention is not supported by the text of the FCPA, and there is no legislative history suggesting Congress intended to adopt this interpretation when it amended the FCPA. Indeed, the government's interpretation distorts the FCPA and its history, rendering the Charming Betsy canon inapplicable. Munoz v. Ashcroft, 339 F.3d 950, 958 (9th Cir. 2003) (refusing to apply the Charming Betsy doctrine because the statute in question could not be fairly construed consistently with the treaty the plaintiff cited because “[t]he language of the statute provides absolutely no support for such a construction” and “Congress never suggested or hinted that” it meant for the statute to conform). ‘The “instrumentality” language on which the government hangs its hat has been in the statute (and has remained unchanged) since 1977. Therefore, it is the intent of that 1977 Congress, and not any subsequent Congress (none of which revised that language or otherwise * Murray v. The Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804) (*[AJn act of Congress ought never to ‘be construed to violate the law of nations if any other possible construction remains(_]") (emphasis added). Nori the OECD Convention without comment on the subject. Commentary 15 to the OECD Convention provides that “[a]n official of public enterprise shall be deemed to perform a public function unless the enterprise operates ‘on a normal commercial basis in the relevant market, ie., on 2 basis which is substantially equivalent to that of a private enterprise, without preferential subsidies or other privileges.” See Convention on Combating Bribery of Foreign Public Officials in ‘Intemational Business Transactions, available a ttp.//www.o2ed.org/dataoecd/4/18/38028044 pal; Response Ex. D. (emphasis added).Case 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 10 of 13 included state-owned entities) that matters. See Bruesewite v. Wyeth LLC, 131 8. Ct. 1068, 1081 (2011) (“Post-enactment legislative history (a contradiction in terms) is not a legitimate tool of statutory interpretation.”) (citing Jones v. United States, 526 U.S. 227, 238 (1999); United States y, Mine Workers, 330 U.S. 258, 281-82 (1947)). “Real (pre-enactment) legislative history” is persuasive because it sheds light on what legislators understood the text of an ambiguous statute to mean when voting to enact it into law. Id. at 1081-82 (citing Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005)). On the other hand, post-enactment legislative history by definition “could have had no effect on the congressional vote.” Id. (quoting District of Columbia v. Heller, $54 U.S. 570, 605 (2008). ‘The government offers no “real legislative history” in support. In any case it is certain that the FCPA does not completely conform to the OECD Convention. The OECD Convention does not contain an express facilitating payment exception like the FCPA’s. Instead, commentary 9 to the OECD Convention states that the Convention ‘views facilitating payments as not relevant to obtaining or retaining business. See Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, available at hitp://www.oecd.org/datavecd/4/18/38028044 pdf, Response Ex. D. Even this concession to business needs is becoming less accepted by the OECD,' but the FCPA’s provision remains unchanged, Further, other signatories to the treaty do not accept the inclusion of state-owned corporations. The United Kingdom’s new foreign bribery act does not include employees of state-owned corporations to be “foreign public officials.”” ‘The Court should therefore determine that Congress could have, but deliberately did not, © See The End of the FCPA Facilitation Payment Exception?, htp:/tfoxlaw.wordpress.com/2010/11//the-eud-of- the-fopa-facilittion-payment-exception (Nov. 11,2010). 1 See An Ocean Apar,htp:/epaprofessr blogspot.com/2011/01/ocean-apart html (Jan. 16, 2011) 10Case :09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 11 of 13, bring the FCPA into perfect conformity with the OECD Convention because it chose not to adopt the “state owned enterprise” language from the OECD Convention in 1998, just as it chose not to incorporate state-owned entities in the 1977 and 1988 amendments to the FCPA.* 4. The Use of “Any” in the FCPA Provision Does Not Support a Broader Reading of “Instrumentality” The government also argues that Congress intended the FCPA to be interpreted broadly because it did not provide a definition of “instrumentality” and the word “any” exists in the FCPA, both of which supposedly indicate that instrumentalities include state-owned entities. See Response at 10, But the word “any” merely signals that once the limits of “instrumentality” are discemed, anything within those limits is within the statute. Further, “any” appears before “department, agency or instrumentality,” and not directly before “instrumentality.” “Any” therefore modifies the entire list within which “instrumentality” falls. ‘And as to the lack of a definition for “instrumentality,” as seen in other statutes, Congress knows how to define “instrumentality” to include state-owned entities. Mot. at 4. For example, as the government mentioned in the Response, the Foreign Sovereign Immunities Act (“FSIA") was passed the year before the FCPA’s enactment. Response at 11. If Congress wanted to define instrumentality to include state-owned entities, as it did in the FSIA, surely it did not forget how to do so one year later. 5. Absurdities flowing from the government’s broad readings of “instrumentality” and “foreign official” are far from “hypothetical” The government argues that the absurd results flowing from its broad reading of the FCPA are “irrelevant” and “imaginary”. Response at 13-14, To the contrary, the federal * Sismultaneously with the fling of this Reply, Mr. O'Shee files a Motion fo Strike the Declaration of Clifton M. Johnson because the government uses the declaration to introduce into evidence inadmissible hearsay, expert testimony, and irrelevant information related to the OECD Convention and other issues. See Response Ex. G. uCase 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 12 of 13 government's substantial ownership in American corporations such as General Motors is far from imaginary. And in Houston, the legal and business communities are keenly aware of highly visible foreign energy companies such as CITGO (a wholly-owned subsidiary of a Venezuelan- state-owned oil corporation, Petrdleos de Venezuela S.A.) with substantial numbers of employees in the city, many of whom are American citizens and American-bom, The government's position would make foreign officials of such employees. III. CoNc.usion For all the reasons set forth in the Motion and in this Reply, Mr. O'Shea respectfully requests that the Court dismiss Counts One through Seventeen of the Indictment. Respectfully submitted, /s/ Joel Androphy Joel Androphy State Bar No. 01254700 S.D. Tex. 53457 Sarah M. Frazier State Bar No. 24027320 S.D. Tex. 27980 Ashley Gargour State Bar No. 24065272 S.D, Tex. 1040478 Berg & Androphy 3704 Travis Street Houston, Texas 77002 Telephone (713) 529-5622 Facsimile (713) 529-3785, Email: jandrophy@bafirm.com Email: sfrazier@bafirm.com Email: agargour@bafirm.com ATTORNEYS FOR DEFENDANT. JOHN JOSEPH O’SHEA 2Case 4:09-cr-00629 Document 58 Filed in TXSD on 04/18/11 Page 13 of 13 CERTIFICATE OF SERVICE On April 18, 2011, a true and correct copy of the foregoing document was served on counsel electronically through the CM/ECF System. /s/ Sarah M. Frazier BCase 4:09-cr-00629 Document 58-1 Filed in TXSD on 04/18/11 Page 1 of 6 Exhibit 1Case 4:09-cr-00629 Document 58-1 Filed in TXSD on 04/18/11 Page 2 of 6 { | | CASES — TEXT — MATERIALS i COMPARATIVE LAW SIXTH EDITION by i } i ‘ | Rupotr B. ScHLESINGER Late Professor of Law Emetitus, University of California Hlastings Collge of the Law Lats William Nelaon Cromwell Profesur of International and Comparative Law Smevitus Cornell University Hans W. BAADE Hugh Lease Stone Professor of Civil Law Univercity of Texas Prrer E, HErzoc Crandall Melvin Proféesor of Law Emeritus Syracuse University College of Law Epwarp M. Wisk Professor of Law Wayne State University Law Sehool N2W YORK, NEW YORE FOUNDATION PRESS 1908Case 4:09-cr-00629 Document 58-1 Filed in TXSD on 04/18/11 Page 3 of 6 % PART ONE Negus or « Fomon Law Poca ‘ ‘The Court, howaver, affined the defendants’ conviction op tho ecnapiracy cout, holding that with reqpect to tbat eount the trial judge's error was oy Ibermless# boomuse the eanopiraey clearly olmed at legally coating with sutifats exported (and to bo exported) from Morlco after the offesive dato af ye 1972 statate® (8) As is frequent in forsignlaw tigation, the MeClain ease, mpra, bites vith question of prosedure and procedural facie Could the prosevstar, as appellee, heve aycided the reversal of the eanvice . ‘ion om th mubstntive count if be bad ngued thet, ex a mater of eonstitation- i slew, the lamas conoeming Marionn law had to be submitted tothe jury, a i that, consequent, the til judge committed no err? [Noither pert ohjécted to the instruction by whieh the tial judge left the {anus of Mexican law to the jury. Did their fllure to raise a thnaly cbection preshude the defendants from attacking thet instraction on appeal?™ Had this, ‘oon 0 clvl case, FRCP Rale 61 arguably would have mandated euch prechi- sion In aerial ease, however, one mast note tha interplay betwean File 80 i ‘and Rule 52(0) of the Feder) Rules of Oriminal Procedure. Ovininal Rule $0 is ry similar to Civil Sle 51; but Czhminal Rule 62(8) provides that “Plain errors i «affecting substantial vights may be noticed although they were not brought i, fo the attention ofthe court,” (4) Inthe Fitth Cteuty, har boon held that tho proper consteustion of algal pk term describing on easenta) clement ofa federal offen is izelf an ecentil ‘ leront of that offans, and has to be aubmitted to the my. United States v, wa Uehnoon, 718 F.2d 1811, 1892-29 (Sth Cir. 1868) (security ae uae in foderel ‘scutes legislation). Under this approach, itis ravernible exror to ep expert i tvidence on the meaning even of damestic-law terms from the jury. Unibed State ¥, Ger, 607 F.24 92 (th G.1979) (remuneration for taxpayer's blood a “income fo federal income tex purposes). In United States y. MeLeon, Cr. ft 1H-82-924 (GDMex. 1986), bob the prosecution and the defonse presonted i expert tetimny tothe jury onthe question whether Pemex (Petraloo Mesicn- ‘not ya an “Inetrumentalty” of the Mexican stot for purposes of tho Forelzn ua Corrupt Practices Act, 15 US.CA. 4 7844-2. As the dnfondant wea aomuitod, ‘here was no appelate sequel. For background, see United State v. MeLenn, 788 F.2d 655 (Sth Ci.1980), Via United States v. McLean i ‘ala ate Deva: Cot, oan Ditto a 8 I ced B2-236, COURT'S INSTRUCTIONS 10 THE JURY 4, Shades of Fig Bee gopen fe fll ct he Bee pide wen jn rela, ‘iene. Tay ed mre 12 Avasier wha Seam aloneds of 19, Hear wht happmned > the see Calusian ar of le or of ting epeant st Miatnck eae? See aE : weCase 4:09-cr-00629 Document 58-1 Filed in TXSD on 04/18/11 Page 4 of 6 OHAPTIR Zt Ponmoy Las’ me Oux Cours m p, EXSERD WITNESS p18) ‘os have heed the testimony of Ms, Dard end Pofeeant Baad, who tested experta in thelr Fld. You may condor thar tatimany to termine whether Pemex vas fac et te tie eegd in the indicat Sorsiqn govornmant or Tooirumentaty thereof, 26 dafned in these Festeuclons, The timony of an expert witnes i adrimble where the subject roalerSnvaled requires ape: etd, traning, or abl not within fhe prin ofthe ovdinaryexpereces of layman However, te fact tha fr eapert opinion ingen doesnot azean tht such opinion ining upon tha jn thatthe juty in obligted to accept tho exper’ onion a to Irhol the fact aa, Ita the province of tho jury to determine tho eredibty {el weight hat shoo be given fo an expert opinion In Uh ight ofa the trideac. Although tho jury may not exbitraydargard the teaimony of fh expert itn, if th jury find that his opinion Ss ot baaed on the {hota is conteary to or ontwelghed by the evidence, or that the reasona aren in support of the opinion are not sound, such opinion may be sbaregarded. 2, BLEMENTS OF THE OFFENSE (pp. 16-18) ‘wl now semmses the essential clorents of th offense charged ia ‘his cao, In onder fo coi the doftndants in this cate of conepzacy to iolata the FOPA [Foreign Corrupt Practica A], the goverment mast Y rove beyond & reasonable doube ell of the following thingy ax to Rim: ‘ict, the government must prove beyond « retsnable doubt that a single continuing conspivacy was wilfully formed aod vas existing abo Gout Deoersber 29, 1977, the effoctive date of the FCPA. That is, « onepiracy by denis concar ee aero to onkepeyromnta of mona to : Goro ofeias of w foreign government or insiimentality thereof, fr the torrupe purpons of inden them to use thelr inuanee with the foreign govocoment or fstranenality theea to award gas compression equlp- {Bunt omiecia fo the defendant or his coooapiratrs and that inlerite ommerca was used i furehorance ofthat conspiracy. Tip uGBeiont if te ; tridonce shows beyond « ressoncle doubt thak the offense charged was ; ommited during the tine or reoenably neat the tine allaged nthe indletent ‘Second, before you may find the defendant guily of conapirasy, the sorernment must prove beyond « reusinable doo hat the defindant + eeame a metaber of the eonspitacy charged in the indictment, a sage conning conspiracy ta maake peyments of money to fo Pemex offal for the ptrpoeo of indusing them to use their sume with Pemex to trrord gu comprorsion equipment contri this employer or the explo tr of cooonpirators during the period Ihave debsbed to you i ‘Thind the Goverment must prove Doyo a zenonable doubt chat ha delendant knowing’, voluntary, and intantionaly beste & member of be alleged consists.Case 4:09-cr-00629 Document 58-1 alloyed tion, of communeation tality. the United States, i ‘wicked purpose, Fons 1a Prone Filed in TXSD on 04/18/11 Page 5 of 6 Fou the rovericent most prove beyond w reasons doubt thet ue of the contrzatorethoreaar know in EEE 8 Shand in the indeticent at or about the nw eo Once committed at leant oue of ; : {Rts the goverament must prove beyond a reasonable doubt shat such Ferreatt fet Howingly undertskon in furtherance of sone ahjee oe [Purpote ofthe eonepiracy deserbed in the indictment, racer oven ofc” reana any offer or emploee of x friga Sra eae hy Copeman, agency, or Ssstrumentalliy Theat ce ee re atin 32 offal capacity fr ox on behalf of aay auch gover ra sae ibbattment, agency or instramentality, Such torm does nat Rene Senor of 4 forsien government or any deparimest, apenee se ‘natrumentlity thereof whose duties are essentially minatered fe ae Snatumantaiy of «frien goecnmest” moss any entity seat onal contolled by a foreign government to achieves Gora oF clerical, ‘The wim “intertatecommores” mana fade, commer, tranapacs Piigiat® meane of eomminication, or) anyother intesate ates [i term "domes concern” mtans (A) any individual yo fy @ Gitn, rational, o ein! ofthe Wald Stata, or) ty saherasee Borate steoaton,joinbetock company, ines tut unirorery, fi przmictine, cx ole popietorhip whioh beets petedpa oe : basins nthe Usiod Stats, or which i onanived ino the ear i State ofthe United States ov a tanitory, pomesion, or caren ae ip form “eoerspliy or with corrupt intext” means fot an evil or i tis the Government must prove beyond & resonable doubt thet Mf * Ffnacio DeLeon andor Mr Jos Ohevarea ware infact fvign alia i T defined that term for you; and that Pemex wos inneCase 4:09-cr-00629 Document 58-1 Filed in TXSD on 04/18/11 Page 6 of 6 CHAPTER It Fomwoy Law m Ou Cours 2 { you, Ifyou do not find that each of tho facta has been proved by the ‘idence beyond a reasonable doubt, then you must eoquit the defendant NOTE: See also, for background. md father developments, United Stator v. Intemational Harvester Co, 120 F.2d 418 (Sth Cir 3089); MoLeen v, Interne tone) Harvester Co, 817 Fd 1244 (6th ir.1987), Fruonmer v, Hilton Hotels International, Inc. Nor York Supe Cori Term, ns Coty, 16%, stead af, 00028386 ‘1 Mason, J. I. this negligence ction the jny has returned a verdict favor ofthe dafondant, and the court has been asked by the plain tose aside that determination and grant anew tral (The opinion then outlines the evidence recsived at the ttl, which showed that plaiatift, while « registered. guost at defendant's hotel ia London, England, was the victim ofan accident. Ashe was taking a shower, pllntiff sipped end fll im the bethiub, and as a result uffered serioos {njuriea, Plaintiff contonda thet the accident was due to defendant’ fiture to provide a robber shower mat (although plalntiff hed aaked for such « rat), and to cerlain defects in the facies provided by the defendant] = A serious questicin of thie court's Jursdetion over thie defendant ‘was raised and ultimately resolved in favor of jurisdiction by the Court of Appeals (19 N-¥.2d 583, 281 N.Y 8.24 4i, 227 NB. B61). ‘The motion to set aside the judgment entered upon the jorfa verdict is based upon. two grounds. The frst is thet the court fled to f charge properly the relevant provisions of English law, pavtiouasly the Oncupiers' Lisbiity Act of 1967 (6 and 6 Elis. 2,33), and seeond, that certain photographie evidence was improperly excluded, {he ooart found both ofthese axgunents Yo e withott merit.) ‘During the course of the courte neearch on the Ocoupiars' Libility ‘et, the court became amaze ofan iamve not raised by pnts eoxnoel. It : Se that contsibutory nogliguace ia not a defens» to this action under English Jaw, That country has adopted ® comparative negligence siatute which : reduces a plainifs damages to th extent that plaintiff can be sid to be Yesponsiiie for hie own injuries, Tho statate—entitied the Law Reform (Contributory Negligence) Act (@ md 9 Geo. VI, c. 28}—became law ix 1945, and provides in pertinont pert (8.1) a fellows: (whore any person suifers damage es the resi partly of his own ‘null and partly of the feat of aay other person or peroons, a claim it seapect of that damage shall not be defestad by rescon of the fault of : ‘the person auflering the damoge, but the damages recovorable in respect thereof shell be reduced to such extent as the cour thinks justCase 4:09-cr-00629 Document 58-2 Filed in TXSD on 04/18/11 Page 1 of 3 Exhibit 2Case 4:09-cr-00629 Document 58-2 Filed in TXSD on 04/18/11 Page 2 of 3 UNITED STATES, Libellant, vs. TUG PEMEX XV, IN REM..., 1960 WL 99004 (1960) TOAMC. 898 1960 AM.C. 896 American Maritime Cases UNITED STATES DISTRICT COURT, SOUTHERN: DISTRICT OF TEXAS GALVESTON DIVISION UNITED STATES, Libellant, vs. ‘TUG PEMEX XV, IN REM AND BARGE PEMEX 559, IN REM, AND PETROLEOS MEXICANOS, IN PERSONAM, AND THE HOUSTON PILOT BOAT NO. 3, IN REM, Respondents, IN ADMIRALTY - 2067January 14,1960 JURISDICTION - 135, Sovereign States, Sovereign Immunity. Under the current executive policy adhering to the “restrictive theory" of sovereign immunity, a government- ‘owned corporation, engaged in the production, refining, and distribution of petroleum, and its vessels are not ‘entitled to the defense of sovereign immunity in the courts of the United States. JURISDICTION - 1423, Foreign Government Merchant Vessels. Vessels owned and operated by 2 Goverment-owned corporation, engaged in the production, refining, and distribution of petroleum products, are not in the possession and ovmership of the foreign sovereign, and, accordingly, are not entitled to the defense of sovereign immunity inthe cours of the United States. Attorneys and Law Firms CARL C. DAVIS and ALAN RAYWID, Attys., Admiralty end Shipping Section, Dept. of Justice, for Libellant, E. V. GREENWOOD (FULBRIGHT, CROOKER, FREEMAN, BATES & JAWORSKI, on Brief), for Respondent ‘STATEMENT, This suit, brought against Petroleos Mexicanos, a Mexican government-owned corporation, and its vessels Tug Pemex XV and Barge Pemex 559 seeks damages of $50,000.00 arising out of a collision on Februsry 12, 1958, between the Pemex vessels and 2 United States Coast Guard vessel in Galveston Bay, Texas, an area -Next © 2011 Thomson Reuters. No im to original U.S. Government ¥ within the territorial waters of the United States. At the time of the collision Pemex XV was towing astem the Barge Pemex 559 on a voyage from Houston, Texas, to Tampico, Mexico, Transporting a cargo of steel drill pipe purchased in the United States and for use in one of Pemex's new installations. ‘The respondent Petroleos Mexicanos is a corporation which was created by executive order of the Mexican Government in 1938, and %897 is engaged in the production, refining, and distribution of petroleum products. Pettoleos Mexicanos appeared specially and excepted to jurisdiction claiming sovereign immunity on the ground that the corporation was a branch of the Mexican Government, a friendly foreign sovereign, and as such, is not amenable to suit in the court of the United States. The United States answered the exception to jurisdiction asserting that Petroleos Mexicanos and its vessels are not entitled to sovereign immunity, since the vessels at the time of the collision were not in the ownership or possession of the Mexican Government but were owned and operated by the independent corporation Petroleos Mexicanos, and, moreover, the granting of sovereign ‘immunity is governed by the current executive policy, which adheres to the “restrictive theory" of sovereign immunity, ie, distinguishes between vessels engaged in public and governmental function and vessels employed in private commercial activity, allowing immunity only in cases in the public, governmental category. BEN C. CONNALLY, DJ. INTERLOCUTORY ORDER Jn Rem AND In Personam, ‘The above-entited cause, having come on regulatly for decision upon motion of respondent Petroleos Mexicanos for an order of dismissal based on allegation of sovereign immunity, and the Court having considered said motion together with the affidavit of counsel for respondent, the attached documents submitted by the respective partes, as well as the briefs submitted on behalf of libellant United States and respondent Petroleos Mexicanos, and being otherwise fully informed of the matters involved. ‘And, after due deliberation, the Court having entered its finding on the Motion Calendar on December 30, 1959, NOW, THEREFORE, IT IS HEREBY ORDERED that the motion of respondent Petroleos Mexicanos to dismiss oon the basis of sovereign immunity is denied, and IT 18 FURTHER ORDERED that respondent Petroleas Mexicanos is directed to file its written claims to the Tug. Pemex XV and the Barge Pemer 559, and plead to the libel herein by February 15, 1960.Case 4:09-cr-00629 Document 58-2 Filed in TXSD on 04/18/11 Page 3 of 3 UNITED STATES, Libeltant, vs. TUG PEMEX XV, IN REM... 1960 WL 99004 (1960) TSBOAM.C. 686 Done at Houston, Texas, this 14th day of January, 1960. Parallel Citations (NOTE: The claim stated in the libel for collision was 1960 AM.C. 896 settled. - EDS.] Copyright () 1960 by American Maritime Cases, Ine. Footnotes fal See Stat Department Bulletin which immediately follows. - End of Document {© 2011 Thomson Reuters, No claim to oat U.S. Government Works. ‘VYiestlawNext © 2011 Thomson Reuters. No claim fo original U.S. Gavernment Works.Case 4:09-cr-00629 Document 58-3 Filed in TXSD on 04/18/11 Page 1 of 5 Exhibit 3Case 4:09-cr-00629 Document 58-3 Filed in TXSD on 04/18/11. Page 2 of 5 = 4100 Spring Valley Rat, Suite 203 Ako rbi Dallas, Tx 75244 Telephone: (214)-256-9222 LANGUAGE CONSULTING Fax: (214)-256-9301 www.akorbi.com April 18, 2011 CERTIFICATE OF ACCURACY “The undersigned certify tht to the best of our knowledge, the translation provided by Akorbi Language ‘Consulting into English, ofthe Spanish document provided by Berg & Andophy is true, complete, and accurale. All traislations have been performed following our ISO 9001:2000 certified quality assurance process that includes professional and qualified translators, editors and proofteaders. ‘This certification pertains to the followin Instituto de Investigaciones Juridicas 2 ENGLISH_FINAL Instituto de Investigaciones Juridicas (2) ENGLISH_FINAL Akorbi job number: BY0001T0417, Authorized Signature 1 ~ Rachel Cagle Akorbi Language Consulting STATE OF TEXAS DALLAS COUNTY This instrument was acknowledged before me on April 18th, 2011 by Rachel Cagle of Elahi Enterprises, Ine. dba, Akorbi, 4 Texas Corporation on behalf of said corporation: - ; Settee BS 3 Notary TLUALSEM W 39M NaeCase 4:09-cr-00829 Document 58-3. Filed in TXSD on 04/18/11 Page 3 of 5 INSTITUTE FOR LEGAL RESEARCH, Further reflection leads this Court to abandon the opinion that the Federal Electricity Commission is an authority for the purposes of amparo proceedings regarding the determination and collection of electrical power supply services, due to the fact that: 1) the relationship between the parties originates from a meeting of minds whereby the service provider and the user acquire reciprocal rights; this is governed by private law, which regulates the relationship between the provider and the individual; 2) the legal relationship existing between the parties is not that of an authority and the governed (superordinate/subordinate), but rather a relationship of coordination between the decentralized agency and the individual service user; and 3) shutting off the electrical power supply due to noncompliance by the user does not convert the relationship of coordination into that of superordinate/subordinate; it merely implies the possibility that the party being affected may discontinue the contract service, exercising the legitimate right to suspend the performance of their obligation to which such party is entitled under any contractual relationship when the other party fails to comply (as it happens in private law contracts, in matters of insurance, telephone services, credit cards and others), without this entailing an ‘enforcement procedure intended to collect the debt through coercive mechanisms (e.g. seizure of property), for which it would be necessary to turn to the ordinary courts of justice. In that sense, not every action taken by public administration agency or the application of contractual clauses suspending obligations in the event of noncompliance by the other party constitute an act of authority for the purposes of amparo proceedings, but rather only those that entail the exercise of administrative power, which grants the authority some attributes of such magnitude that they trigger a ‘superordinate/subordinate relationship in that matter. In that sense, the receipt notice of electrical power supply issued by the Federal Electricity ‘Commission, even when containing a service disconnection warning, is not an act of authority for the purposes of amparo proceedings. Code: 2a./J., No.: 112/2010 Contradiction of opinion 318/2009. Among those upheld by the Sixteenth Circuit Second Associate Court of Administrative and Labor Matters, the Twenty-First Circuit First Associate Court of Criminal and Administrative Matters, the Twenty-First Circuit Second Associate Court of Criminal and Administrative Matters, and the Ninth Circuit First Associate Court. October 7, 2009. Majority of four votes. Dissenting judge: Genaro David Géngora Pimentel. Court opinion written by Judge: Margarita Beatriz Luna Ramos. Clerk: Femando Silva Garcia. * Appeal for rele under the Constitution, wit ro drect equivalent in the American Jucal system.Case 4:09-cr-00629 Document 58-3. Filed in TXSD on 04/18/11 Page 4 of § Case law opinion 112/2010. Approved by the Second Chamber of this High Court in private session on August eighteen, two thousand and ten. Type: Case Law by Contradiction Subjects: Administrative Law, Procedural Law. Copyright, (C)2011 IlJ-UNAM Institute for Legal Research of UNAM? Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, CP. 04510, México, D.F, Ph. (52) (55) 56-22-74-74, Fax. (52) (55) 56-65.21-93 * Nationa Autonomous University of MexicoCase 4:09-cr-00629 Document 58-3 Filed in TXSD on 04/18/11. Page 5 of 5 INSTITUTE FOR LEGAL RESEARCH Upon further reflection, this Second Chamber concludes that shutting off or suspending the contracted flow of electrical power due to lack of timely payment cannot be considered, on its own, an act of authority for the purposes of amparo proceedings. This is because, when dealing with contractual relationships, it is common to agree that the party injured by the other party's noncompliance shall cease to perform its obligations. Generally speaking, contracts are governed by the parties’ will and by bilateralism whereby one party's noncompliance triggers the other party's right to set aside their own obligation as long as the noncompliance with the meeting of minds persists. Therefore, disconnection of the electrical power supply by the Federal Electricity Commission does not convert the contract relationship between the user and said agency into an act of authority. Code: 2a./J., No.: 11/2010 Contradiction of opinion 318/2009. Among those upheld by the Sixteenth Circuit Second Associate Court of Administrative and Labor Matters, the Twenty-First Circuit First Associate Court of Criminal and Administrative Matters, the Twenty-First Circuit Second Associate Court of Criminal and Administrative Matters, and the Ninth Circuit First Associate Court. October 7, 2009. Majority of four votes. Dissenting judge: Genaro David Géngora Pimentel. Court opinion written by Judge: Margarita Beatriz Luna Ramos. Clerk: Fernando Silva Garcia. Case law opinion 113/2010. Approved in private session by the Second Chamber of this High Court on August eighteen, two thousand and ten. Type: Case law by Contradiction Subjects: Administrative Law. Procedural Law. Copyright, (C)2011 IN-UNAM Inetitute for Legal Research of UNAM? Cireulto Maestro Mari de la Cueva s/n, Ciudad Universitaria, CP. 04510, México, O.F. Ph. (62) (55) 56-22-74-74, Fax. (52) (55) 56-65-21-93 “Apnea for relief under the Constitution, with no dec equvalent nthe American juscal system. = National Aufonamous Universtiy of Mexico