Month in a Minute: June 2023

Welcome to this month’s installment of Hughes Hubbard’s anti-corruption “Month in a Minute,” which offers a quick look-back at the biggest foreign corruption-related developments from the prior month. June 2023 highlights included the dismissal of FCPA claims against a foreign citizen, developments regarding the DOJ’s corporate crime database, the sentencing of PDVSA’s former general counsel, and the DOJ’s success at severing a foreign bribery charge in its case against FTX founder Sam Bankman-Fried. More detail below:

DOJ Appeals Dismissal of FCPA Case Based on Speedy Trial Act Violations

On June 6, 2023, U.S. District Judge Kenneth Hoyt of the U.S. District Court for the Southern District of Texas issued a memorandum opinion and order detailing his reasons for dismissing the case against Paulo J.D.C. Casqueiro-Murta, a Portuguese citizen who was indicted on one count of conspiracy to violate the FCPA and three related money-laundering counts for his alleged involvement in setting up bank accounts to facilitate bribe payments to officials at Venezuela’s state energy company, Petróleos de Venezuela, S.A. (“PDVSA”). Judge Hoyt had dismissed the charges against Murta on May 17, 2023, on the ground that Murta did not receive a speedy trial; however, he agreed to stay the dismissal until seven days after he issued a memorandum detailing his reasoning for dismissing the case to allow the government time to consider an appeal. In his June 6 memorandum, Judge Hoyt stated that he dismissed the case with prejudice based on the government’s intentional delay of the proceedings, in violation of the Speedy Trial Act and the Sixth Amendment. Judge Hoyt found that the government caused unwarranted delay when, on March 3, 2022, just three weeks before trial, it moved for a postponement of several months in order to review classified information. According to Judge Hoyt, the government admitted at the time that the information was irrelevant, and failed to explain why it waited three months to raise the issue despite having reviewed the classified information on December 1, 2021. In light of the facts, Judge Hoyt found that the delay was intentional and in bad faith, and required dismissal with prejudice. On June 14, the government filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit to challenge the dismissal (the execution of which has been stayed).

DOJ Debuts Corporate Crime Database

On June 8, 2023, the U.S. Department of Justice announced the launch of its new corporate crime database, which, per the DOJ, will contain “the significant, relevant cases from each component and U.S. Attorney’s Office” related to corporate wrongdoing. The launch of the database comes after Deputy Attorney General Lisa Monaco acknowledged in September 2022 that there had been a decline in the number of corporate criminal prosecutions. In response, Senator Dick Durbin (D., Ill.), Senator Richard Blumenthal (D., Conn.), and Rep. Mary Gay Scanlon (D., Penn.), sent a letter to Attorney General Merrick Garland in October 2022 calling on the DOJ to publish data on corporate crime. The database is in the process of being populated and currently contains information related to eleven corporate criminal cases resolved since April 2023; it may eventually be expanded to include cases from the last several years.

Former PDVSA General Counsel Sentenced to Three Years

On June 12, 2023, U.S. District Judge Kathleen Williams of the U.S. District Court for the Southern District of Florida sentenced Alvaro Ledo Nass to three years in prison for his role in a bribery scheme involving Venezuela’s state-owned oil company Petróleos de Venezuela, S.A. (“PDVSA”). On March 29, 2023, Nass, who served as the secretary of PDVSA’s board of directors from 2012 to 2014 and as PDVSA’s general counsel from 2014 to 2015, pleaded guilty to one count of money laundering and to taking more than $11.5 million in bribes based on his involvement in a scheme to take advantage of the Venezuelan government’s fixed foreign currency exchange rate. To carry out the scheme, Nass and his co-conspirators set up a shell company that executed loans to PDVSA. Under the terms of the loan contracts, the shell company had the right to be repaid based on the Venezuelan government’s higher, fixed exchange rate. This allowed Nass and his co-conspirators to receive more money upon repayment than the initial loan. Nass and his co-conspirators then used an unidentified individual to launder the loan proceeds through financial institutions in the Bahamas and U.S., some of which were used in additional bribery schemes. Nass also received bribes in exchange for not interfering with the approval process for these loan contracts.

Under the sentencing guidelines and applicable federal statute, Nass faced a maximum sentence of 10 years in prison. However, U.S. prosecutors recognized Nass’s acceptance of responsibility and his assistance in the prosecution of others and recommended a sentence of eight years. Nass’s attorney asked that he be sentenced to home confinement. Ultimately, Judge Williams sentenced Nass to three years in prison. She also ordered Nass to repay the $11.5 million in bribes he received, as well as to pay a fine of $7,500. Nass is scheduled to surrender himself to authorities on January 5, 2024.

New Foreign Bribery Charges Against Bankman-Fried Severed

On June 15, 2023, U.S. District Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York granted prosecutors’ request to sever foreign bribery charges against former FTX chief executive, Samuel Bankman-Fried. Bankman-Fried was first charged in December 2022 with conspiracy to commit wire fraud, securities fraud, money laundering, and campaign finance violations. On March 28, 2023, prosecutors filed a fifth superseding indictment against Bankman-Fried, which added one count of conspiring to violate the FCPA, among other charges. According to the indictment, Bankman-Fried directed FTX employees to pay $40 million in cryptocurrency to Chinese officials in an effort to unfreeze accounts linked to his crypto investment firm, Alameda Research. Bankman-Fried’s lawyers previously argued that these new charges be dismissed because, under the “rule of specialty”, the Bahamas had not consented to the charges as part of Bankman-Fried’s extradition deal. On June 13, the Supreme Court of the Bahamas granted a motion by Bankman-Fried to temporarily stop Bahama’s foreign minister from giving U.S. prosecutors permission to pursue the new charges. Subsequently, on June 14, prosecutors moved to sever these new charges, including the FCPA charge. They argued that doing so would lessen the defendant’s necessary preparation for trial and simplify the proof at trial. Prosecutors also argued that the Supreme Court of the Bahamas’s judicial review of whether the new charges could be tried in the U.S. would cause a delay in proceedings. Ultimately, Judge Kaplan granted the prosecutors’ motion and ordered that Bankman-Fried be tried on the new charges in March 2024. Bankman-Fried’s trial on the initial charges is set to begin in October 2023.

Fact of the Month

June used to be the fourth month in the year. The original Roman calendar only had 10 months, starting with March and ending with December. However, the Romans eventually added in January and February, pushing June to the number six slot it holds today.