The U.S. Department of Justice’s Antitrust Division (Division) continues to ratchet up the risk of prosecution for individual executives involved in criminal price-fixing as a means of deterring such activity. On April 4, 2014, the Division, for the first time ever, was able to extradite a foreign executive for an alleged antitrust crime in a contested proceeding. To date, foreign executives located abroad have served time in U.S. jails only as part of negotiated plea agreements. This new result demonstrates the Division’s resolve to prosecute and potentially jail high-level executives engaged in cartel activity, including non-U.S. executives who attempt to remain outside U.S. authorities’ jurisdiction.
In March 2011, Romano Piscoitti, an Italian national and former executive with Parker ITR S.r.l., was indicted in Florida federal court. Piscoitti was accused of participating in an illegal agreement to restrain competition in the sale of marine hoses – important components for transferring oil from tankers. The cartel itself became notorious in 2007 when the FBI and prosecutors from the Division arrested eight other foreign executives in a series of coordinated raids, including one at a trade show in Houston, apparently coinciding with a cartel meeting. Subsequently, nine executives and five companies pled guilty. Two other executives were tried and acquitted after a four-week trial.
Piscoitti was not part of the initial wave of arrests and his indictment stands out because it was handed up in secret and filed under seal in August 2010. He apparently also was added to Interpol’s “Red Notice” list, which authorizes Interpol’s 190 member countries to make a preliminary arrest if an identified individual crosses their borders.
In June 2013, Piscoitti was arrested in Germany while traveling through the country. His extradition was hotly contested and litigated in Germany, and only after losing before a German high court was he transferred to the United States.
Extraditing foreign nationals is and will remain complicated and difficult as even Piscoitti’s case shows. Despite the Division’s intense focus on cartel cases since the early 1990s and the advent of its widely successful amnesty program, it is not an accident that no foreign executive previously has successfully been extradited on antitrust charges.
Extradition is governed by international treaties and local extradition enabling laws, and, consequently, is subject to serious limitations. Most extraditions, for example, require that the subject matter crime in the United States be a criminal violation in the home jurisdiction. While many countries such as Japan, England and, of course, Germany, have changed their antitrust laws in the past decade to be more consistent with the U.S. approach, many have not.
Moreover, many jurisdictions are likely to be hesitant to extradite,or are forbidden by local law to extradite, their citizens to face criminal prosecution in the United States. Indeed, the Division’s last high-profile litigated extradition attempt – the British executive Ian Norris – had decidedly mixed results. Norris, who was accused of engaging in fixing the prices of carbon products, was extradited following seven years of proceedings in the U.K. and only on the charge of obstruction of justice. The U.K. refused to extradite him on related antitrust charges. Indeed, it is notable that Piscoitti’s precedent-setting case involves an extradition from Germany of a non-citizen.
Despite these hurdles, there is no doubt that the Division will continue trying to deter cartel behavior by increasing the risk of jail time and penalties imposed on individual executives. Of the 34 individuals charged in 2013, the average jail sentence imposed was just over two years, according to the Division. In comparison, the average sentence from 1990 to 1999 was only eight months. But sentences for foreign executives have long trailed significantly behind those imposed on U.S. citizens, presumably because of negotiating leverage caused by the Division’s inability to extradite such individuals. The Division obviously would like to reduce this type of leverage.
What these two trends show is that the Division has made a long-term commitment to prosecuting and punishing individual wrongdoers. While corporations found to have engaged in criminal cartel activity often pay heavy costs – such as significant criminal penalties and treble damages – it is the individual executives who make the decision to participate.
Piscoitti has now appeared in federal district court in the Southern District of Florida and will almost certainly be detained through trial. If convicted, he faces a prison sentence of up to 10 years.