On April 21, 2015, Judge Breyer of the Northern District of California dismissed an entire indictment filed against three foreign nationals alleging conspiracy, honest services wire fraud, and soliciting and giving bribes involving a Federal Program. See United States v. Sidorenko, No. 3:14-cr-00341-CRB (N.D. Cal. 2015). Judge Breyer’s opinion, following Supreme Court precedent in Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), held that neither the wire fraud statute (18 U.S.C. § 1343) nor the Federal Program bribery statute (18 U.S.C. § 666) contain “a clear indication or extraterritorial intent . . . as required by Morrison,” and therefore could not be applied to the facts alleged in the indictment, all of which occurred outside the United States. This ruling is consistent with other District Court rulings with respect to the extraterritorial effect of the criminal RICO statute. It is the first, however, to explicitly state that there is a territorial limit on the wire fraud statute, a mainstay of federal prosecutions.
The indictment alleged that two chairmen of a Ukrainian conglomerate bribed an employee of the International Civil Aviation Organization (“ICAO”), a United Nations specialized agency headquartered in Canada. The indictment alleged specific actions that would constitute bribery under the statute. Yet, “[a]ll of this conduct occurred outside of the United States between three defendants who are not United States citizens, who never worked in the United States, and whose use of the wires did not reach or pass through the United States.”
The Court’s analysis demonstrated that the statutes at issue clearly do not pass Morrison’s extraterritorial test: “When a statute gives no clear indication of an extraterritorial application, it has none.” Here, neither statute contains such an indication.
The Court further distinguished a line of cases that allow extraterritorial application in criminal cases based on “the right of the government to defend itself against obstruction, or fraud wherever perpetrated, especially if committed by its own citizens, officers, or agents.” (Quoting United States v. Bowman, 260 U.S. 94 (1922).) The Court rejected the government’s theory that because the United States funds a portion of the ICAO, it could protect itself by prosecuting this fraud against the ICAO under the wire fraud and bribery statutes. According to the Court, this “case involves wholly foreign conduct and wholly foreign actors” and there “is no allegation that even one dollar of the millions of dollars the United States presumably sent to ICAO was squandered.”
Finally, the Court also held that “[b]ecause there is an insufficient domestic nexus between the Defendants and the United States, the relevant statutes cannot be applied consistent with due process.”
This ruling is significant in limiting the reach of federal prosecutions for actions that occur wholly outside of the United States.