Carson - Foreign Official Challenge - Reply Brief

Case 8:09-cr-00077-JVS Document 354 Filed 05/02/11 Page 1 of 29 Page ID #:6080
1 NICOLA T. HANNA, SBN 130694, nhanna@gibsondunn.com

GIBSON, DUNN & CRUTCHER LLP
2 3161 Michelson Drive, Suite 1200
Irvine, CA 92612
3 Telephone: (949) 451-3800
Facsimile: (949) 451-4220
4 Attorneys for Defendant STUART CARSON
5 KIMBERLY A. DUNNE, SBN 142721, kdunne@sidley.com
SIDLEY AUSTIN LLP
6 555 W. Fifth Street, Suite 4000
Los Angeles, CA 90013-1010
7 Telephone: (213) 896-6000
Facsimile: (213) 896-6600
8 Attorneys for Defendant HONG CARSON
9 THOMAS H. BIENERT, JR., SBN 135311, tbienert@bmkattorneys.com
BIENERT, MILLER & KATZMAN, PLC
10 903 Calle Amanecer, Suite 350
San Clemente, CA 92673
11 Telephone: (949) 369-3700
Facsimile: (949) 369-3701
12 Attorneys for Defendant PAUL COSGROVE
13 DAVID W. WIECHERT, SBN 94607, dwiechert@aol.com
LAW OFFICES OF DAVID W. WIECHERT
14 115 Avenida Miramar
San Clemente, CA 92672
15 Telephone: (949) 361-2822
Facsimile: (949) 496-6753
16 Attorneys for Defendant DAVID EDMONDS
17 UNITED STATES DISTRICT COURT
18 CENTRAL DISTRICT OF CALIFORNIA
19 SOUTHERN DIVISION
20
UNITED STATES OF AMERICA, CASE NO. SA CR 09-00077-JVS
21
Plaintiff, DEFENDANTS’ REPLY IN SUPPORT
22 OF AMENDED MOTION TO
DISMISS COUNTS ONE THROUGH
23 v. TEN OF THE INDICTMENT
24 STUART CARSON, et al.,
Hearing
25 Defendants. Date: May 9, 2011
Time: 3:00 p.m.
26
Courtroom: 10C
27 Trial Date: October 4, 2011
28
The Honorable James V. Selna
1 TABLE OF CONTENTS
2
Page
3
4 I. INTRODUCTION ................................................................................................ 1
5 II. ARGUMENT........................................................................................................ 2
6 A. Defendants’ Motion Is Not Premature ....................................................... 2
7
B. Whether “Instrumentality” Generically Can Include SOEs Is
8 Irrelevant; The Issue Before The Court Is The FCPA’s Meaning
9
Of The Term............................................................................................... 4
10 1. The Term “Instrumentality” Does Not Have “An

Accepted Legal Definition,” And The Term As Used In
11
The FCPA Does Not Mean “An Entity Through Which A
12 Government Achieves An End Or Purpose” ................................... 5
13 2. The Government’s Proposed “Factors” Do Not Cure The
14 Vagueness Of Its Proposed Definition Of Instrumentality.............. 9
15 3. The Government’s Reliance On A Handful Of

Distinguishable Court Decisions And On Prior Guilty
16
Pleas Is Misplaced.......................................................................... 11
17
C. The Government’s Remaining Arguments Regarding The
18 Meaning Of “Instrumentality” Fail .......................................................... 12
19
1. There Is No Support For The Proposition That “Foreign
20 Official” Or “Instrumentality” Should Be Construed
21
Broadly........................................................................................... 12
22 2. Giving Meaning To All Parts Of The Statute Supports

Defendants’ Interpretation, Not The Government’s...................... 12
23
24 3. The Fact That Other Statutes Expressly Define

“Instrumentality” To Include SOEs Supports Defendants,
25 Not The Government ..................................................................... 13
26
4. The Charming Betsy Doctrine Is Of No Help To The
27 Government.................................................................................... 14
28
TABLE OF CONTENTS (continued)
1 Page
2
3 5. The FCPA’s Legislative History Supports Defendants’
Interpretation.................................................................................. 17
4
D. The Rule of Lenity Mandates Dismissal of Counts One
5
Through Ten............................................................................................. 19
6
E. If The Term “Instrumentality” In The FCPA Is Construed To
7 Encompass SOEs, The Statute Is Unconstitutionally Vague As
8 Applied To Defendants ............................................................................ 19
9 III. CONCLUSION .................................................................................................. 20
10
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12
13
14
15
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17
18
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20
21
22
23
24
25
26
27
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ii
1 TABLE OF AUTHORITIES
2
Page(s)
3
4 Cases
5 Am. Textile Mfrs. Inst. v. Donovan,
452 U.S. 490 (1981).............................................................................................. 7
6
Berger v. City of Seattle,
7 569 F.3d 1029 (9th Cir. 2009) ............................................................................ 10
8 Bruesewitz v. Wyeth LLC,
131 S. Ct. 1068 (2011)........................................................................................ 16
9
Carter v. Welles-Bowen Realty, Inc.,
10 719 F. Supp. 2d 846 (N.D. Ohio 2010) .............................................................. 10
11 Corley v. United States,
129 S. Ct. 1558 (2009).......................................................................................... 7
12
Dole Food Co. v. Patrickson,
13 538 U.S. 468 (2003)........................................................................................ 3, 14
14 Forbes v. Napolitano,
236 F.3d 1009 (9th Cir. 2000) ............................................................................ 20
15
Forbes v. Woods,
16 71 F. Supp. 2d 1015 (D. Ariz. 1999) .................................................................. 19
17 Hall v. American National Red Cross,
86 F.3d 919 (9th Cir. 1996) ........................................................................ 6, 7, 14
18
Hopson v. Kreps,
19 622 F.2d 1375 (9th Cir. 1980) ............................................................................ 15
20 Hunt v. City of L.A.,
2011 U.S. App. LEXIS 5721 (9th Cir. Mar. 22, 2011) ...................................... 20
21
In re Rath,
22 402 F.3d 1207 (Fed. Cir. 2005) .......................................................................... 15
23 Kolender v. Lawson,
461 U.S. 352 (1983)............................................................................................ 20
24
Marbury v Madison,
25 5 U.S. (1 Cranch) 137 (1803) ............................................................................... 2
26 McBoyle v. United States,
283 U.S. 25 (1931).......................................................................................... 5, 18
27
Paris v. Federal Power Com.,
28 399 F.2d 983 (D.C. Cir. 1968).............................................................................. 6
iii
1 TABLE OF AUTHORITIES (continued)

Page(s)
2
3 Pedroza v. BRB,
624 F.3d 926 (9th Cir. 2010) .............................................................................. 15
4
Record Head Corp. v. Sachen,
5 682 F.2d 672 (7th Cir. 1982) .............................................................................. 10
6 Screws v. United States,
325 U.S. 91 (1945).............................................................................................. 19
7
Serra v. Lappin,
8 600 F.3d 1191 (9th Cir. 2010) ...................................................................... 16, 17
9 Skilling v. United States,
561 U.S. ___, 130 S. Ct. 2896 (2010) ......................................................2, 12, 20
10
United States v. Alkhabaz,
11 104 F.3d 1492 (6th Cir. 1997) ............................................................................ 12
12 United States v. City of Spokane,
918 F.2d 84 (9th Cir. 1990) .................................................................................. 6
13
United States v. Giffen,
14 326 F. Supp. 2d 497 (S.D.N.Y. 2004) ................................................................ 11
15 United States v. Kay,
359 F.3d 738 (5th Cir. 2004) ........................................................................ 16, 20
16
United States v. Loy,
17 237 F.3d 251 (3d Cir. 2001) ............................................................................... 19
18 United States v. Santos,
553 U.S. 507 (2008)..................................................................................7, 18, 19
19
20 Statutes
21 15 U.S.C. § 78dd-2(h)(4)(A) ........................................................................................ 13
22
23
24
25
26
27
28
iv
1 I. INTRODUCTION
2 In 1977, Congress could have enacted a general anti-bribery statute that made it
3 a crime to pay a commercial bribe to any foreign national, but it did not. Rather, the
4 FCPA criminalizes improper payments only to a “foreign official.” Thus, making an
5 improper payment to a “foreign official” violates the FCPA; making that same
6 payment to someone who is not a “foreign official” does not. This is undisputed.
7 The Government argues that “[s]tate-owned business enterprises [‘SOEs’] may,
8 in appropriate circumstances, be considered instrumentalities of a foreign government
9 and their officers and employees to be foreign officials.” But Congress (i) knew about
10 SOEs when it enacted the FCPA, (ii) knew that some of the questionable payments in
11 the pre-FCPA era may have been made to employees of SOEs, and (iii) knew how to
12 include SOEs in the definition of “foreign official” if it had wanted to do so. Clearly,
13 Congress did not do so, and contrary to the Government’s arguments, there is no
14 evidence that Congress intended SOEs to be covered by this criminal statute, or
15 intended the word “instrumentality” to encompass broadly anything through which a
16 foreign government achieves an “end or purpose.” In fact, the plain language of the
17 statute and its history illustrate that the FCPA was aimed at preventing improper
18 payments to traditional government officials.1 If Congress had wanted SOEs to be
19 included in the definition of “instrumentality,” it would have expressly said so – just as
20 it did in 1976 when it enacted the Foreign Sovereign Immunities Act (“FSIA”).
21 Having no statutory authority for its sweeping position, the Government is thus
22 unable to define the “appropriate circumstances” when an SOE allegedly falls within
23 the FCPA. The Government states only that it is a “fact-based determination.” Opp. at
24 1. But facts in isolation are irrelevant unless analyzed in the context of a legal
25
26 1 The Government contends that Defendants’ Motion is premised on the
“insupportable legal conclusion that an entity cannot engage in both
27 governmental and commercial activity.” Opp. at 1. That has never been
Defendants’ argument. Rather, Defendants’ contention is that the FCPA is
28 directed to payments made to traditional government officials.
1
1 framework. And for over two hundred years it has been “emphatically the province
2 and duty of the judicial department” – not the jury – “to say what the law is.” Marbury
3 v Madison, 5 U.S. (1 Cranch) 137 (1803). Thus, while a jury may decide disputed
4 issues of fact, this Court must first decide the law.
5 Defendants’ Motion squarely challenges the Government’s unsupported legal
6 interpretation of the FCPA by arguing that the term “instrumentality” simply does not
7 include SOEs, and thus employees of SOEs are not, as a matter of law, “foreign
8 officials.” The Government labels Defendants’ position as extreme, insisting that it “is
9 not asking for a legal conclusion that all SOEs are instrumentalities,” Opp. at 8, only
10 for a ruling that “the term instrumentality . . . can include SOEs.” Id. at 7 (emphasis
11 added). But it is the Government’s position that is unreasonable, because the
12 Government cannot articulate any principled test – and there is no test, other than one
13 invented from whole cloth – for what would make one SOE, but not another, a
14 government “instrumentality” under the FCPA. Accordingly, the Government’s
15 concession, that some SOEs fall within and some outside the statute, coupled with the
16 complete lack of any meaningful or discernable standards for deciding which is which,
17 undermines the Government’s position and requires that it be rejected because it would
18 render the FCPA unconstitutionally vague as applied.
19 Accordingly, the Court should hold that employees of SOEs are not “foreign
20 officials” under the FCPA and should dismiss Counts One through Ten of the
21 Indictment. Contrary to the Government’s overblown rhetoric, the sky will not fall
22 upon such a ruling; rather, the issue will be returned to its proper forum: Congress.
23 See Skilling v. United States, 561 U.S. ___, 130 S. Ct. 2896, 2933 (2010) (“If Congress
24 desires to go further . . . it must speak more clearly than it has.”).
25 II. ARGUMENT
26 A. Defendants’ Motion Is Not Premature
27 The Government argues that Defendants’ purely legal challenges are
28 “premature.” Opp. at 8. But Defendants’ Motion does not mount a “challenge to the
2
1 sufficiency of the evidence,” nor is it “substantially founded upon and intertwined with
2 evidence concerning the alleged offense.” Id. at 9-10. Just the opposite, the Motion
3 states that “[f]or the purpose of deciding Defendants’ Motion, the Court can assume
4 that the entities named in the Indictment are 100% state-owned.” Mot. at 11.
5 Notwithstanding this assumption for purposes of the Motion, the Government,
6 by its own admission, concedes that at least seven of the nine entities named in the
7 Indictment are not even directly owned by a foreign government; rather, they are
8 subsidiaries of entities wholly or partially owned by a foreign government. See Smith
9 Decl., ¶¶ 13-25, 28-29. The entities therefore do not qualify as “instrumentalities”
10 under the FSIA, a 1976 statute the Government says this Court should look to in
11 ascertaining the meaning of “instrumentality” in the FCPA. See Mot. at 31 n.17; Dole
12 Food Co. v. Patrickson, 538 U.S. 468, 473 (2003). Therefore, based on the
13 Government’s own legal arguments and factual representations, at a minimum the
14 counts involving those subsidiaries (Counts 2-7 and 9) should be dismissed.
15 The Government also is incorrect that Defendants’ Motion is rendered
16 premature by the Government’s eleventh-hour request that Defendants “stipulate to
17 certain facts so that there would be no disputed issues for purposes of this motion.”
18 Opp. at 9. Contrary to its representations, the Government never asked Defendants to
19 stipulate to actual facts; rather, the Government asked Defendants to stipulate to a
20 vague and undefined pseudo-legal conclusion – to wit, that each of the entities
21 identified in the Indictment was an “entity through which the government of [a foreign
22 country] achieved an end or purpose.”2 McCormick Decl., Exh. D. In other words, the
23 Government asked Defendants to stipulate that each of the entities identified in the
24 Indictment was a foreign government “instrumentality” under the Government’s
25
26 2 The Government initially also asked Defendants to stipulate to seven “factors”
supposedly “relevant in determining whether” a given entity achieved a
27 governmental “end or purpose.” McCormick Decl., Exh. D. When challenged,
the Government refused to identify the source of the factors or any legal
28 authority supporting their use, and abandoned them entirely. See id.
3
1 preferred definition of that term. The proposed stipulation does not moot the legal
2 issues raised by Defendants’ Motion, although it does illustrate the Government’s
3 gamesmanship.
4 The so-called Hagner test is similarly beside the point. If the Government
5 charged a convenience store robber with bank robbery, the Hagner test presumably
6 would be satisfied because the defendant (1) would be on notice of the charge and (2)
7 would have a sufficient basis to make a claim of double jeopardy. But the indictment
8 still would be subject to pretrial dismissal because the charge would not state a federal
9 bank robbery offense. So too here, the Indictment does not state an offense because, as
10 a matter of law, the FCPA does not proscribe corrupt payments made to officers and
11 employees of SOEs. See Indictment, ¶ 12.
12 Finally, the Government’s assertion that the Motion is premature because it
13 “focuses only on the definition of ‘instrumentality,’” and not “department” or
14 “agency,” is not serious. Opp. at 11-12; see also id. at 14 n.6. The Government told
15 the OECD that it considers SOEs to be “instrumentalities of a foreign government,”
16 Hanna Decl., Exh. B (emphasis added) – not “departments” or “agencies” – and the
17 Government cannot colorably argue here that any of the entities identified in the
18 substantive FCPA counts is a “department” or an “agency.” The Government’s focus
19 on the European Agency for Reconstruction is a red herring. Opp. at 11-12. That
20 entity is not identified in the Indictment (and it is unlikely the grand jury heard
21 anything about it) and is only relevant to the alleged conspiracy count, which fails
22 because the legally defective substantive FCPA counts infect it. See Mot. at 6.
23 B. Whether “Instrumentality” Generically Can Include SOEs Is Irrelevant;
24 The Issue Before The Court Is The FCPA’s Meaning Of The Term
25 The Government states that “defendants’ argument turn[s] the ordinary canons
26 of statutory construction on their head by starting with the legislative history rather
27 than the language of the statute.” Opp. at 14. The Government is incorrect. As
28 Defendants noted in their Motion, “[w]here the meaning of the statutory text is clear,
4
1 there is no need to resort to legislative history to discern the text’s meaning.” Mot. at
2 22. Indeed, since a criminal statute must give “fair warning . . . to the world in
3 language that the common world will understand, of what the law intends to do if a
4 certain line is passed,” McBoyle v. United States, 283 U.S. 25, 27 (1931), Defendants
5 explained that “there is some debate as to the propriety of considering legislative
6 history in criminal cases even when the text is unclear.” Mot. at 22 n.15. Although
7 the legislative history supports Defendants’ position that Congress intended the FCPA
8 to cover only improper payments to traditional government officials, Defendants’
9 Motion has never hinged on the FCPA’s legislative history.
10 In any event, if the Court determines that a consideration of the legislative
11 history is unnecessary, it can only be because the term “instrumentality” “as it is used
12 in the [FCPA] . . . plainly does not encompass state-owned enterprises.” Mot. at 12
13 (emphasis added). The Government’s contrary argument that the plain meaning of the
14 term “instrumentality” in the FCPA definitely can include SOEs – and thus no resort to
15 the legislative history is necessary – does not withstand critical scrutiny.
16 1. The Term “Instrumentality” Does Not Have “An Accepted Legal
17 Definition,” And The Term As Used In The FCPA Does Not Mean
“An Entity Through Which A Government Achieves An End Or
18
Purpose”
19 To arrive at its conclusion that an “SOE could be an instrumentality,” Opp. at 16
20 (emphasis added), the Government contends that the term “instrumentality” has “an
21 accepted legal definition,” id., which, according to the Government, is “an entity
22 through which a government achieves an end or purpose.” Id. at 8; see also id. at 16
23 (relying on a definition of “instrumentality” contained in the 2009 edition of Black’s
24 Law Dictionary). The Government is incorrect on both counts.
25 First, although the term “instrumentality” is used widely in federal statutes, the
26 term plainly does not have “an accepted legal definition.” In fact, as the Government’s
27 brief acknowledges, different federal statutes contain different definitions of the term
28 (or, as in the case of the FCPA, no definition). See Opp. at 24-25. The Government
5
1 also concedes that “U.S. courts and regulatory agencies often struggle with whether a
2 U.S. entity is an instrumentality of the United States for a certain purpose,” id. at 40
3 (emphasis added), illustrating that there simply is no uniform, “one-size-fits-all”
4 definition of the term in the civil context, much less in the criminal one.
5 Moreover, the Ninth Circuit has held that an entity may be considered a
6 government “instrumentality” under one statute but not another. In Hall v. American
7 National Red Cross, 86 F.3d 919 (9th Cir. 1996), the Court squarely rejected the
8 contention that the Red Cross was a government “instrumentality” for First
9 Amendment purposes even though it was an “instrumentality” for tax-immunity
10 purposes. Id. at 922. The Court held that the contrary assumption was a “serious
11 logical and semantic error . . . based on the fallacy that a word which has a meaning in
12 one context must have the selfsame meaning when transplanted into an entirely
13 different context.” Id. (quoting United States v. City of Spokane, 918 F.2d 84, 88 (9th
14 Cir. 1990)); see also Paris v. Federal Power Com., 399 F.2d 983, 986 (D.C. Cir. 1968)
15 (“[O]f course, while an entity may be considered a government instrumentality for
16 certain purposes, it need not be so considered for all purposes.”). In fact, in Hall, the
17 Ninth Circuit observed:
18 [C]ourts sometimes use the phrase “agency or instrumentality” when they
19 are actually asking whether a particular institution is part of the
20 government itself. See, e.g., Lebron v. National R.R. Passenger Corp.,
21 115 S. Ct. 961, 972, 130 L. Ed. 2d 902 (1995). Because the language
22 used by courts to refer to entities which are actually part of the
23 government itself is not always precise, Congress’s incorporation of
24 words which are sometimes used to refer to those entities simply indicates
25 a desire to encompass all parts of the government itself within the Act.
26 Thus, the use of the word “instrumentality” in a general, inclusionary
27 definition does not indicate an intention to encompass entities which are
28
6
1 not a part of the government, even though they may be governmental

2 “instrumentalities” in some sense.
3 Hall, 86 F.3d at 921 (emphasis added). Thus, contrary to the Government’s bald
4 assertion, there is no uniform meaning of “instrumentality.”3 Moreover, modern
5 definitions of the term cannot inform the Court what Congress meant in 1977. While
6 the current version of Black’s Law Dictionary contains definitions of
7 “instrumentality,” the version in effect in 1977 had no entry for the word, undermining
8 the Government’s claim that the word had a uniform and established legal meaning at
9 that time. See Reply Declaration of Nicola T. Hanna (“Hanna Reply Decl.”), Exh. 1.
10 Accordingly, the Court must construe the term as it is “used in the statute, ” United
11 States v. Santos, 553 U.S. 507, 512 (2008), not as it might be defined today.
12 Second, just as there is no uniform definition of the term “instrumentality,” the
13 Government’s cherry-picked definition of the term is not correct because, among other
14 things, the definition would render the terms that precede it mere surplusage. See, e.g.,
15 Am. Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 513 (1981) (It is a “well-settled rule
16 that all parts of a statute, if possible, are to be given effect.”). Specifically, both a
17 “department” and an “agency” are obviously “[a]n entity through which a government
18 achieves an end or purpose.” Opp. at 8. “Instrumentality” cannot be construed in a
19 manner that would swallow those other terms. See Corley v. United States, 129 S. Ct.
20 1558, 1560 (2009).
21 Furthermore, the Government’s preferred definition must be rejected because it
22 effectively would convert the FCPA into a general commercial bribery statute by
23 sweeping within its scope companies that have no government ownership whatsoever.
24 Indeed, as the Government correctly notes, “Government purposes and policies can be
25
26 3 As noted in Defendants’ Motion, however, Congress can and does expressly
define “instrumentality” to include state-owned enterprises when it wants to do
27 so. See Mot. at 30-33. And certain statutes, such as Dodd-Frank, expressly
differentiate between an “instrumentality of a foreign government” and “a
28 company owned by a foreign government.” See id. at 32.
7
1 myriad,” including things like “redistributing wealth through welfare systems.” Opp.
2 at 16. The first step in “redistributing wealth” is collecting the wealth by levying
3 taxes. Since governments collect taxes from corporations that have no government
4 ownership, those corporations would be considered governmental “instrumentalities”
5 under the Government’s definition because they are “entities through which a
6 government achieves an end or purpose” – namely, the collection of revenue. To take
7 another example, any entity that contracts with a foreign government to “achieve an
8 end or purpose” – whether it is Bechtel to build a power plant for the government, IBM
9 or Microsoft to supply software to the government, or a U.S.-based law firm to provide
10 legal advice to the government – would be captured by the Government’s definition.
11 Congress could not have intended such a boundless and unchecked definition.4
12 Confronted with defining “instrumentality” in United States v. Aguilar, a case
13 that involved the Mexican Comisión Federal de Electricidad (“CFE”) (which described
14 itself as an “agency” on its website, and which the Government later admitted, in what
15 Judge Matz characterized as an “astounding” admission, was not an SOE, but rather
16 was a “public entity”), Judge Matz declined to adopt a “particularly elastic dictionary
17 definition” of “instrumentality” and instead held that the definition proffered by the
18 defendants themselves, which expressly included “commissions,” encompassed CFE.5
19 Supp. McCormick Decl., Exh. H.4. Defendants agree that the term “instrumentality”
20 as used in the FCPA encompasses “governmental boards, bureaus, commissions, and
21 other department-like and agency-like governmental entities,” Mot. at 2, but
22
23 4 Moreover, if Congress intended “instrumentality” to have a meaning beyond
traditional government components, it is logical to expect that there would have
24 been at least some discussion about its scope during the two-and-a-half years
that Congress considered the issue before enacting the FCPA. As demonstrated
25 by Professor Koehler’s declaration, there was none.
26 5 Ironically, while the Government places on citizens the burden of knowing what
foreign entities might qualify as “instrumentalities,” the Government itself,
27 using the full powers of the FBI and State Department, apparently could not
determine the true character of CFE, i.e., that it was in fact a public entity, until
28 after trial started.
8
1 Defendants do not agree, and Judge Matz did not hold, that the term “instrumentality”
2 means any “entity through which a [foreign] government achieves an end or purpose.”
3 2. The Government’s Proposed “Factors” Do Not Cure The Vagueness
4 Of Its Proposed Definition Of Instrumentality
5 Well aware that an amorphous definition of “instrumentality” would never pass
6 constitutional muster, the Government has at various times listed non-exclusive
7 “factors” that it may consider in determining whether a particular entity qualifies as an
8 FCPA SOE. The Government has never explained what all of the factors are, how
9 much weight each is accorded, whether any factor is dispositive, or where the factors
10 come from. The Government even proposed new factors as recently as last month.
11 For example, the Government informed the OECD in 1998 that “among the
12 factors that it considers are the foreign state’s own characterization of the enterprise
13 and its employees, i.e., whether it prohibits and prosecutes bribery of the enterprise’s
14 employees as public corruption, the purpose of the enterprise, and the degree of control
15 exercised over the enterprise by the foreign government.” See Hanna Decl., Exh. B.
16 The OECD itself noted that these non-exclusive “factors” provide scant guidance to
17 companies and individuals as to which SOEs qualify as foreign government
18 “instrumentalities.” See Mot. at 9; Hanna Decl., Exh. G.
19 Moreover, whenever a particular “factor” favors the Government’s expansive
20 position, it cites that factor to support its “instrumentality” argument; but when that
21 same factor disfavors its position, the Government contends the factor is not
22 dispositive. This proclivity is illustrated in the Smith Declaration. For example, Agent
23 Smith fails to inform the Court that under Korean law, as made clear by the
24 Declaration of In Gyu Lee (filed in support of Defendant Han Yong Kim’s Motion to
25 Dismiss), “employees of KHNP [the entity named in Counts 2 and 3 of the Indictment]
26 are not considered as public officials in relation to the crime of bribery.” Hanna Reply
27 Decl., Exh. 2 (emphasis added). The Government’s “heads I win, tails you lose”
28
9
1 application of its self-proclaimed “factors” highlights the dangers of arbitrary

2 enforcement inherent in such ill-defined “standards.”
3 Additionally, right before it filed its Opposition, the Government sent
4 Defendants a proposed stipulation identifying seven factors (many of which were
5 different from the factors DOJ identified to the OECD) the Government contended
6 were “relevant in determining whether” an entity was “an entity through which a
7 foreign government achieved an end or purpose.” McCormick Decl., Exh. D. The
8 Government could not provide any authority in support of these factors, and there is
9 none. The Court should not follow the Government’s bouncing-ball approach to
10 statutory interpretation or place its imprimatur on this “prosecutor-made common
11 law,” which has no basis in the statute and is a violation of the separation of powers.6
12 Finally, even if the Government’s various factors had a legal basis, they cannot
13 save the Government’s vague and amorphous definition of “instrumentality” from
14 rendering the FCPA unconstitutionally vague as applied. See, e.g., Record Head Corp.
15 v. Sachen, 682 F.2d 672, 677 (7th Cir. 1982) (holding that the vagueness of the word
16 “instruments” in a criminal ordinance was not cured by a list of legislatively-declared
17 factors; “[f]ar from curing vagueness, these factors seem to us to exacerbate it . . . .”);
18 see also id. at 678 (further holding that the ordinance “leaves to the arresting or
19 prosecuting authorities the job of determining, essentially without legislative guidance,
20 what the prohibited offense is”); Berger v. City of Seattle, 569 F.3d 1029, 1047 (9th
21 Cir. 2009) (rejecting government’s proposed construction of regulation where it would
22 have required police officers to examine myriad factors); Carter v. Welles-Bowen
23 Realty, Inc., 719 F. Supp. 2d 846, 853 (N.D. Ohio 2010) (rejecting 10-factor test for
24 interpreting statutory provision because “[t]he vagueness of the individual factors is
25
26 6 In Aguilar, Judge Matz came up with a third and completely different set of
“non-exclusive” factors to decide whether an entity was an “instrumentality”
27 under the FCPA. See Supp. McCormick Decl., Exh. H.4 at 9. The
Government’s various iterations of its proposed factors and Judge Matz’s factors
28 are contained in a chart attached hereto as Exhibit A.
10
1 compounded by the subjective balancing process inherent in the test”; the test provided
2 “no indication how many factors might be determinative, or which factors might weigh
3 more heavily in the analysis,” and companies were “thus confronted with a massive
4 gray area”).7
5 3. The Government’s Reliance On A Handful Of Distinguishable Court
6 Decisions And On Prior Guilty Pleas Is Misplaced
7 The Government attempts to convince the Court that its position is a fait
8 accompli by arguing that “every court that has confronted the issue and examined the
9 meaning of instrumentality in the FCPA has determined that it can include SOEs.”
10 Opp. at 17. This is a significant overstatement. In Nguyen and Esquenazi, defendants
11 made arguments that appeared to hinge on disputed issues of fact, and neither court
12 undertook a plenary analysis (much less with the benefit of the full legislative history)
13 of the issues raised by the present Motion. The Aguilar decision is also readily
14 distinguishable because the entity at issue was not an SOE, but rather was a “public
15 entity,” and the court merely accepted Defendants’ own proposed definition of
16 “instrumentality” in concluding that CFE could qualify.
17 The Government’s assertion that “district courts have accepted more than 35
18 guilty pleas by individuals who have admitted to violating the FCPA by bribing
19 officials of SOEs,” Opp. at 18, is similarly irrelevant. Indeed, this is “not the kind or
20 quality of precedent this Court need consider.” United States v. Giffen, 326 F. Supp.
21 2d 497, 505 (S.D.N.Y. 2004). District court judges routinely accept guilty pleas, but
22 the acceptance of such pleas does not mean courts have closely interpreted each
23 statute, much less placed their stamp of approval on the Government’s interpretations.
24 Indeed, before Skilling, many defendants pled guilty to honest services fraud not
25
26 7 There is no evidence that Congress envisioned that individuals would be
required to undertake a detailed factual and legal inquiry to determine whether a
27 foreign company was an “ instrumentality.” Had Congress wanted such a far-
reaching inquiry, especially where access to reliable information in the foreign
28 nation could not be assured, it would have said so.
11
1 involving a bribe or kickback, but that did not prevent the Supreme Court from holding
2 unanimously that the statute simply did not extend to such conduct.
3 C. The Government’s Remaining Arguments Regarding The Meaning Of
4 “Instrumentality” Fail
5 1. There Is No Support For The Proposition That “Foreign Official” Or
6 “Instrumentality” Should Be Construed Broadly
7 The Government contends that Congress intended for the FCPA to be construed
8 broadly, but the “broadly” language it cites relates to the types of transactions that are
9 prohibited, not to the definition of “foreign official.” Opp. at 19. The Government has
10 cited no authority – and there is none – that Congress intended the terms “foreign
11 official” or “instrumentality” to be construed broadly. In fact, the authority is to the
12 contrary. See Mot. at 16 (citing cases). Further, the government’s “any” argument,
13 Opp. at 19, only begs the question. See, e.g., United States v. Alkhabaz, 104 F.3d
14 1492, 1495 (6th Cir. 1997) (“To emphasize the use of the term ‘any’ without
15 acknowledging the limitations imposed by the term ‘threat’ ignores the intent of
16 Congress . . . .”). If the term “instrumentality” does not encompass SOEs, the use of
17 the modifier “any” does not change this outcome.
18 2. Giving Meaning To All Parts Of The Statute Supports Defendants’

Interpretation, Not The Government’s
19
The parties agree that “courts should not interpret a statute in such a way that
20
portions of the statute have no effect.” Opp. at 20. But that is precisely what the
21
Government’s proposed definition of “instrumentality” would do: it would swallow
22
“department” and “agency.”
23
The Government is also incorrect that the “routine governmental action”
24
exception favors its position. Logically, it does not follow that SOEs are included
25
within the definition of “instrumentality” merely because they might perform a small
26
fraction of the items defined as “routine governmental action,” such as “mail pick-up,”
27
or “providing phone service, power and water supply.” 15 U.S.C. § 78dd-2(h)(4)(A).
28
12
1 The Government’s position would lead to absurd results because it would mean that
2 grease payments could legally be made to employees of certain SOEs (e.g., those
3 hooking up consumers to the “power and water supply”), but not to employees of other
4 SOEs (e.g., those scheduling treatment at a state-funded hospital). Plainly, Congress
5 was focused on corrupt payments to traditional government officials, which is why it
6 made an exception for grease payments for “routine governmental action.”
7 Finally, the Government all but abandons its argument that the FCPA should be
8 interpreted in a way that gives effect to each portion of the statute by ignoring the
9 “bona fide expenditure” affirmative defense that expressly applies only to “a contract
10 with a foreign government or agency thereof,” not to one with an “instrumentality.”
11 Mot. at 19. The Government’s only response is that “[l]ogic suggests ‘contracting with
12 the foreign government’ also includes departments and instrumentalities.” Opp. at 23
13 n.10. The existence and language of the bona fide expenditure defense, which applies
14 only to government and agency contracts, dooms the Government’s argument.
15 3. The Fact That Other Statutes Expressly Define “Instrumentality” To
16 Include SOEs Supports Defendants, Not The Government
17 The Government points to the FSIA and the Economic Espionage Act (“EEA”)
18 for the proposition that an “SOE could be an agency or instrumentality of a foreign
19 government.” Opp. at 24. Defendants agree: where Congress defines the term
20 “instrumentality” to include SOEs, as it did in the FSIA and the EEA, SOEs may be
21 considered government instrumentalities. But the Government’s assertion that the
22 term “instrumentality” should be read to encompass such entities in the absence of an
23 express definition does not follow. The term “instrumentality” does not have an
24 “accepted legal definition,” and Ninth Circuit case law is clear that an entity may
25 qualify as an instrumentality under one statute but not another. The analysis is statute-
26 specific, and the default position is that “the use of the word ‘instrumentality’ in a
27 general, inclusionary definition does not indicate an intention to encompass entities
28 which are not a part of the government . . . .” Hall, 86 F.3d at 921. So while the FSIA
13
1 and the EEA underscore the point in Defendants’ Motion – i.e., that Congress knows
2 how to define “instrumentality” to include SOEs (and any evidence the Government
3 points to showing the alleged prevalence of SOEs in 1977 only bolsters that point) –
4 they provide no support for the Government’s argument here.
5 The exact same thing is true of the Government’s focus on domestic SOEs.
6 Defendants do not dispute that there are a handful of U.S. SOEs and that some of these
7 entities may be considered U.S. “instrumentalities” under specific statutes. But these
8 facts simply have no bearing on the meaning of “instrumentality” as used in the FCPA.
9 Rather, they highlight Congress’s ability to define them specifically as
10 “instrumentalities” where desired.
11 Tellingly, the Government actually gives away its game by pointing to these
12 other statutes with one hand, while pointing away from them with the other. While the
13 Government cites the FSIA and the EEA for the proposition that SOEs can be included
14 within the definition of “instrumentality,” the Government makes clear that it “is not
15 suggesting that the analysis used . . . under the FSIA or EEA is identical to the analysis
16 used in the FCPA . . . .” Opp. at 25-26 (emphasis added); see also id. at 40 (same with
17 respect to domestic “instrumentalities”). The Government’s position is plainly
18 outcome-driven: Under the FSIA, subsidiaries of SOEs do not qualify as
19 “instrumentalities.” See Dole Food Co., 538 U.S. at 473. Thus, if the Court were to
20 adopt the FSIA definition of “instrumentality,” seven of the nine substantive FCPA
21 counts would fail as a matter of law. So the Government asks the Court to look at
22 these other statutes, but not too closely. The Court should reject this entreaty, which
23 only underscores that the Government’s position is unprincipled.
24 4. The Charming Betsy Doctrine Is Of No Help To The Government
25 The word “instrumentality” has been in the FCPA’s definition of “foreign
26 official” since 1977. Other portions of the definition have been amended, but not the
27 “instrumentality” language. Nonetheless, the Government contends that because the
28 U.S. Senate ratified the OECD Convention in 1998 and Congress subsequently made
14
1 changes to the FCPA to partially conform it to the OECD Convention (Congress knew
2 there were differences between the two, even after the 1998 amendments, see Koehler
3 Decl., ¶¶ 395-96), “instrumentality” should be construed to encompass SOEs. The
4 proposition is meritless.
5 First, although representatives of the Executive Branch may have believed
6 (incorrectly) that employees of SOEs already qualified as “foreign officials” under the
7 FCPA, there is no evidence that Congress as a whole believed this or even debated this
8 issue in making the 1998 amendments to the FCPA. See Koehler, ¶¶ 397-98, 407, 421,
9 428.
10 Second, the OECD Convention was not self-executing, but required that
11 signatories “take measures” to implement its provisions. See id., Exh. 85, Art. 1. It is
12 black letter law that “if a treaty is not self executing it is not the treaty but the
13 implementing legislation that is effectively the law of the land.” Hopson v. Kreps, 622
14 F.2d 1375, 1380 (9th Cir. 1980). Two important points follow from this. First, since
15 the “instrumentality” language has remained unchanged since 1977, and did not
16 change in the 1998 “implementing legislation,” if that language did not cover SOEs
17 prior to the 1998 amendments, it did not cover SOEs after 1998. See Pedroza v. BRB,
18 624 F.3d 926, 933 (9th Cir. 2010) (holding that “congressional inaction is not a
19 reliable guide to determine legislative intent”). Thus, simply because the Executive
20 Branch may have believed in 1998 that “instrumentality” covered SOEs, that belief
21 does not indicate what the enacting Congress, in 1977, had in mind. Second, the
22 scope of “instrumentality” did not change after the 1998 amendments even if the 1998
23 Congress thought the FCPA already covered SOEs (which there is no evidence of). If
24 the 1998 Congress intended the FCPA to cover SOEs but made no changes to the
25 statute to effectuate that change – which it did not – SOEs did not somehow become
26 covered by osmosis. See, e.g., In re Rath, 402 F.3d 1207, 1211 (Fed. Cir. 2005)
27 (“There is no question but that Congress generally intended Section 44 of the Lanham
28 Act to implement the Paris Convention. But this does not mean that Congress intended
15
1 to do so in every respect or that it actually accomplished that objective in all respects . .

2 . .”).
3 The Government cites United States v. Kay, 359 F.3d 738, 752 (5th Cir. 2004)
4 (“Kay I”) for the proposition that “[s]ubsequent legislation declaring the intent of an
5 earlier statute is entitled to great weight in statutory construction,” Opp. at 30, but the
6 facts in Kay I were fundamentally different than here. Moreover, the Supreme Court
7 has recently clarified that “[p]ost-enactment legislative history (a contradiction in
8 terms) is not a legitimate tool of statutory interpretation.” Bruesewitz v. Wyeth LLC,
9 131 S. Ct. 1068, 1081 (2011). Accordingly, any post-1977 legislative history
10 regarding the meaning of the word “instrumentality” is irrelevant.
11 Third, while the Government argues it will be in violation of its treaty
12 obligations if this Court – which, importantly, “do[es] not review federal law for
13 adherence to the law of nations with the same rigor that [it] appl[ies] when [it] must
14 review statutes for adherence to the Constitution,” Serra v. Lappin, 600 F.3d 1191,
15 1198 (9th Cir. 2010) – holds that payments to employees of SOEs are not covered by
16 the FCPA, the Government fails to mention Commentary 15 to the OECD Convention,
17 which states that the Convention does not require criminalization of payments made to
18 employees of SOEs where “the enterprise operates on a normal commercial basis in the
19 relevant market, i.e., on a basis which is substantially equivalent to that of a private
20 enterprise, without preferential subsidies or other privileges.” Decl., Exh. 85, at ¶ 15.
21 This omission – citing Commentary 14 without mentioning Commentary 15 –
22 demonstrates that the Government is not merely seeking conformity with the OECD
23 Convention, but is seeking a ruling validating a much broader and boundless
24 interpretation. Additionally, the Government fails to mention that it believes (although
25 Defendants disagree) that bribes paid to non-foreign officials violate the Travel Act.
26 Thus, if this Court were to hold that the FCPA does not cover bribes paid to employees
27 of SOEs, the Government undoubtedly would contend that those payments are still
28 violative of the Travel Act, meeting its OECD commitments.
16
1 Finally, some context is important: “T]he Charming Betsy canon is not an

2 inviolable rule of general application, but a principle of interpretation that bears on a
3 limited range of cases. . . . [W]e are bound by a properly enacted statute, provided it
4 be constitutional, even if that statute violates international law.” Serra, 600 F.3d at
5 1198-1200. Moreover, it will not come as a surprise to the OECD if this Court rules in
6 Defendants’ favor since the OECD has questioned the Government’s reliance on the
7 “instrumentality” language for years. See Mot. at 9; Hanna Reply Decl., Exh. 3.
8 5. The FCPA’s Legislative History Supports Defendants’ Interpretation
9 The Government contends that Defendants “cannot point to a single quote that
10 supports the position that the FCPA should not apply to employees of SOEs” and
11 argues that “that absence is striking.” Opp. at 35. Even accepting the Government’s
12 literalistic argument as true – Professor Koehler’s declaration provides ample support
13 for the proposition that Congress did not intend for the FCPA to reach payments to
14 employess of SOEs, see Koehler Decl., ¶¶ 16-18 – the inverse is equally true, that is,
15 the Government “cannot point to a single quote” from a member of Congress that
16 supports the position that the FCPA should apply to employees of SOEs.
17 But perhaps most noteworthy is the fact that the Government now has
18 completely abandoned the legislative history it relied upon in Nguyen and Aguilar. In
19 those cases, the Government cited to House Report 95-640 (Sept. 28, 1977), which
20 stated in part that “[s]ectors of industry typically involved [in improper payments] are:
21 drugs and health care; oil and gas production and services; food products; aerospace,
22 airlines and air services; and chemicals.” See Hanna Reply Decl., Exhs. 4-5. The
23 Government cited this report for the proposition that the recipients of improper
24 payments were often employed by SOEs in those industries. See id. But Professor
25 Koehler’s declaration makes clear, as does a plain reading of the language in context,
26 that the House report “refers to the payors of the improper payments, not . . . the
27 recipients[.]” Koehler Decl., ¶¶ 241-42 and Exh. 46. Faced with the fact that its
28
17
1 characterization of that legislative history in those cases was plainly wrong, the
2 Government has now abandoned reliance on it and switched to Plan B.8
3 The Government’s newfound contention that “[a] side-by-side comparison of the
4 four versions of the bills discussed by the defendants demonstrates the replacement of
5 a specific enumerated item with the broad term instrumentality” is similarly meritless.
6 See Opp. at 36-39. Congress considered approximately twenty bills before enacting
7 the FCPA, and there is no evidence that the bills that would have expressly included
8 SOEs were dropped in order to broaden the language to “instrumentality.”
9 Finally, in the Aguilar case, Judge Matz concluded that “the legislative history
10 of the FCPA is inconclusive.” Supp. McCormick Decl., Exh. H.4 at 14. If correct,
11 such ambiguity inures to the benefit of the accused, not the prosecutor. Moreover,
12 Congress’s general distaste for bribery cannot justify extending FCPA proscriptions to
13 payments made to SOE employees, even though this seemed to be the thrust of Judge
14 Matz’s “hypothetical,” which he created in a novel “attempt[] to divine what Congress
15 could be deemed to have contemplated.” Id. Such a “hypothetical” is not necessary
16 because Congress knew about SOEs when it enacted the FCPA and chose not to
17 include them in the statute, but even if the intent of Congress was unclear on the point,
18 the Supreme Court has held that “[w]hen interpreting a criminal statute, we do not play
19 the part of a mind reader. . . . [P]robability is not a guide which a court, in construing a
20 penal statute, can safely take.” Santos, 553 U.S. at 516; see also McBoyle, 283 U.S. at
21 27 (rejecting the Government’s contention that a stolen airplane was encompassed
22 within the statute’s definition of stolen “vehicle” and stating that “the statute should
23 not be extended to aircraft, simply because it may seem to us that a similar policy
24 applies, or upon the speculation that, if the legislature had thought of it, very likely
25 broader words would have been used”).
26 8 The Government’s unchallenged misstatements to the Nguyen and Aguilar
27 courts regarding this legislative history is further reason to give those rulings no
weight. In Esquenazi, the Government argued the motion was premature and
28 offered to provide legislative history if necessary.
18
1 D. The Rule of Lenity Mandates Dismissal of Counts One Through Ten

2 The Government contends that the rule of lenity applies “only where the statute
3 is grievously ambiguous, leaving courts to guess as to its proper construction.” Opp. at
4 42. Even accepting this formulation of the test – the Supreme Court in Granderson
5 said the rule applied “where text, structure, and history fail to establish that the
6 Government’s position is unambiguously correct” (Mot. at 36) (emphasis added) – the
7 test is satisfied here. After reviewing the text, structure, and history of the FCPA, it is
8 impossible to say with certainty that Congress intended employees of any “entity
9 through which the government of a foreign country achieved an end or purpose,”
10 including employees of SOEs, to be deemed “foreign officials.” The Government’s
11 attempts to distinguish Santos fail. In the event of a “tie” between the Government’s
12 proposed interpretation and Defendants’ interpretation, the “tie must go to the
13 [D]efendant[s].” Santos, 553 U.S. at 514.
14
E. If The Term “Instrumentality” In The FCPA Is Construed To Encompass
15 SOEs, The Statute Is Unconstitutionally Vague As Applied To Defendants
16 All parties agree that an FCPA violation, like the theft of a “vehicle” in
17 McBoyle, is a specific intent crime. But the existence of the FCPA’s scienter
18 requirement does not mean the statute will not be rendered void for vagueness if the
19 Court holds that employees of SOEs may be deemed “foreign officials.” Because it is
20 not an FCPA violation to bribe a non-foreign official – even if done so “willfully” and
21 “corruptly” – the existence of the scienter requirement “cannot make definite that
22 which is undefined.” Forbes v. Woods, 71 F. Supp. 2d 1015, 1020 (D. Ariz. 1999)
23 (quoting Screws v. United States, 325 U.S. 91, 105 (1945) (plurality opinion); see also
24 United States v. Loy, 237 F.3d 251, 265-266 (3d Cir. 2001) (“Though in some
25 situations, a scienter requirement may mitigate an otherwise vague statute . . . such a
26 requirement will not cure all defects for all purposes. . . . Indeed, a contrary rule would
27 rob the vagueness doctrine of all of its meaning, for legislatures would simply repair
28 otherwise vague statutes by inserting the word ‘knowingly.’”).
19
1 The Government also argues that the FCPA should be “subject to a less strict
2 vagueness test” because the FCPA “regulates economic activity,” Opp. at 48, but it is
3 well-settled that “[i]f a statute subjects transgressors to criminal penalties” – like here –
4 “vagueness review is even more exacting.” Forbes v. Napolitano, 236 F.3d 1009,
5 1011 (9th Cir. 2000) (criminal statute held vague where the word “experimental” was
6 ambiguous because it lacked a “precise definition”); see also Kolender v. Lawson, 461
7 U.S. 352, 358, n. 8 (1983); Hunt v. City of L.A., 2011 U.S. App. LEXIS 5721, at *18
8 (9th Cir. Mar. 22, 2011). As Defendants face significant prison terms if convicted, see
9 Hanna Reply Decl., Exh. 6, the Court should apply an exacting vagueness analysis.
10 Finally, Skilling does not support the Government’s argument that because of
11 the alleged “extensive previous prosecutions of bribes to officials at SOEs . . . [it is]
12 clear that the ‘core’ encompasses those types of bribes.” Opp. at 49. Just the opposite,
13 the DOJ prosecuted citizens for violating the honest services statute with no allegation
14 of a bribe or kickback for over twenty years, and the Skilling court without pause held
15 that such conduct was not covered by the statute. The Government is also mistaken
16 that “the ‘core’ of the FCPA is not what makes up a foreign official, but instead what
17 was the corruption.” Opp. at 49. This assertion is belied by the fact that Congress
18 deliberately limited the statute to payments made to “foreign officials,” and is further
19 rebutted by the Government’s citation to Kay I. See Kay I, 359 F.3d at 761 (“When the
20 FCPA is read as a whole its core of criminality is seen to be bribery of a foreign
21 official . . . .”). Like much of the authority it cites in its brief, the Government seeks to
22 turn Skilling on its head. Skilling mandates that Defendants’ Motion be granted.
23 III. CONCLUSION
24 For the reasons set forth in their Motion and above, Defendants respectfully
25 request that the Court dismiss Counts One through Ten of the Indictment.
26
27
28
20
1 Dated: May 2, 2011

2 Respectfully submitted,
3 GIBSON, DUNN & CRUTCHER LLP

4 By: s/Nicola T. Hanna
5 Nicola T. Hanna
6 Attorneys for Defendant STUART CARSON
7
SIDLEY AUSTIN LLP
8
By: s/Kimberly A. Dunne
9
Kimberly A. Dunne
10
Attorneys for Defendant HONG CARSON
11
12 BIENERT, MILLER & KATZMAN, PLC
13 By: s/Thomas H. Bienert, Jr.
14 Thomas H. Bienert, Jr.
15 Attorneys for Defendant PAUL COSGROVE
16
LAW OFFICES OF DAVID W. WIECHERT
17
18 By: s/David W. Wiechert
David W. Wiechert
19
Attorneys for Defendant DAVID EDMONDS
20
101069951_1.DOC
21
22
23
24
25
26
27
28
21
EXHIBIT A
Proposed “Factors” For Determining Whether A State-Owned Business Enterprise Is An “Instrumentality” Under The FCPA
OECD Responses (1998) Government’s Proposed Stipulation (2011) Hon. A. Howard Matz (2011)
The Department of Justice has not (1) The circumstances surrounding (1) The entity provides a service to its
adopted a bright-line test for the entity’s creation; citizens – indeed, in many cases
determining which enterprises are to all the inhabitants – of the
instrumentalities. Among the factors (2) The extent of ownership of the jurisdiction;
that it considers are: entity by the foreign government;
(2) The key officers and directors of
(1) The foreign state’s own (3) The purpose of the entity’s the entity are, or are appointed by,
characterization of the enterprise activities; government officials;
and its employees, i.e., whether it
prohibits and prosecutes bribery (4) The foreign government’s control (3) The entity is financed, at least in
of the enterprise’s employees as of the entity; large measure, through
public corruption; governmental appropriations or
(5) The level of the foreign through revenues obtained as a
(2) The purpose of the enterprise; government’s financial support of result of government-mandated
and the entity; taxes, licenses, fees or royalties,
such an entrance fees to a national
(3) The degree of control exercised (6) The entity’s employment park;
over the enterprise by the foreign policies; and
government. (4) The entity is vested with and
(7) The entity’s obligations and exercises exclusive or controlling
privileges under the foreign power to administer its designated
government’s law. functions; and
(5) The entity is widely perceived

and understood to be performing
official (i.e., governmental)
functions.
1 CERTIFICATE OF SERVICE
2 I hereby certify that on May 2, 2011, I electronically filed the foregoing
3 DEFENDANTS’ REPLY IN SUPPORT OF AMENDED MOTION TO DISMISS
4 COUNTS ONE THROUGH TEN OF THE INDICTMENT with the Clerk of the
Court by using the CM/ECF system, which will send a notice of electronic filing to the
5
following:
6
Andrew Gentin — andrew.gentin@usdoj.gov
7
8 Douglas F. McCormick — USACAC.SACriminal@usdoj.gov,
doug.mccormick@usdoj.gov
9
Hank Bond Walther — hank.walther@usdoj.gov
10
11 Charles G. LaBella — charles.labella@usdoj.gov
12 Kimberly A. Dunne — kdunne@sidley.com

13 David W. Wiechert — dwiechert@aol.com
14
Thomas H. Bienert, Jr. — tbienert@ bmkattorneys.com
15
Kenneth M. Miller — kmiller@bmkattorneys.com
16
17 Teresa C. Alarcon — talarcon@ bmkattorneys.com
18 Marc S. Harris — mharris@scheperkim.com, vkirkland@scheperkim.com

19 Jean M. Nelson — jnelson@scheperkim.com
20
21 /s/Nicola T. Hanna
Nicola T. Hanna
22
23
24
25
26
27
28

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Case 8:09-cr-00077-JVS Document 354 Filed 05/02/11 Page 1 of 29 Page ID #:6080

1 NICOLA T. HANNA, SBN 130694, nhanna@gibsondunn.com

10 1. The Term “Instrumentality” Does Not Have “An

15 3. The Government’s Reliance On A Handful Of

22 2. Giving Meaning To All Parts Of The Statute Supports

24 3. The Fact That Other Statutes Expressly Define

1 TABLE OF AUTHORITIES (continued)

21 15 U.S.C. § 78dd-2(h)(4)(A) ........................................................................................ 13

1 not a part of the government, even though they may be governmental

1 application of its self-proclaimed “factors” highlights the dangers of arbitrary

11 official” or “instrumentality” to be construed broadly. In fact, the authority is to the

17 the modifier “any” does not change this outcome.

18 2. Giving Meaning To All Parts Of The Statute Supports Defendants’

1 to do so in every respect or that it actually accomplished that objective in all respects . .

1 Finally, some context is important: “T]he Charming Betsy canon is not an

1 D. The Rule of Lenity Mandates Dismissal of Counts One Through Ten

1 Dated: May 2, 2011

3 GIBSON, DUNN & CRUTCHER LLP

6 Attorneys for Defendant STUART CARSON

(5) The entity is widely perceived

12 Kimberly A. Dunne — kdunne@sidley.com

18 Marc S. Harris — mharris@scheperkim.com, vkirkland@scheperkim.com

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