Two Ukrainian businessmen living in Dubai bribe an executive at an international organization located in Canada. The men at the center of the corrupt scheme correspond and meet regularly, and money exchanges hands nearly every month. But none of the conduct takes place in the United States. What can an American prosecutor do to stop this corrupt plot? The answer, according to one federal judge, is clear: call the Mounties.
In a rare rebuke of the US Department of Justice’s enforcement efforts, Judge Charles Breyer of the Northern District of California dismissed the government’s case in U.S. v. Vassiliev et al. The US Attorney had charged the three defendants with committing honest services fraud (18 U.S.C. § 1343) and bribery involving a federal program (18 U.S.C. § 666)—a less-well-known legislative cousin of the Foreign Corrupt Practices Act (FCPA).
Although the corrupt conduct allegedly took place outside the United States, the government argued that it could prosecute the defendants because the bribery scheme involved an official at the International Civil Aviation Organization (ICAO), a UN specialized agency. The United States regularly contributes funds to ICAO, and thus—the government reasoned—US law enforcement has jurisdiction to prosecute. Judge Breyer, however, disagreed. According to the judge, the government’s logic would allow them to prosecute individuals in any country where the United States donates money through a federal program. He therefore dismissed the case.
Judge Breyer used surprisingly sharp language to dissect the government’s case. According to the transcript, the judge directly questioned the decision-making of the US Attorney’s Office for the Northern District of California, calling the case “a serious waste of scarce resources.” He quipped, “They actually have law enforcement in Canada. If you’re so concerned about the way some Canadians are operating with a Canadian-based company in dealing with Ukrainians, you can always phone the Mounties.”
The judge’s remarks contrast sharply with the government’s expansive view of US jurisdiction. In the context of the FCPA, liability extends to non-US companies and their agents that take “any act” within the US in furtherance of a corrupt payment to an official. DOJ has argued that placing a telephone call or sending an email, text message, fax, or wire transfer from, to, or through the United States, can trigger an FCPA violation. Federal prosecutors took that concept a step further with the bribery statute at issue in this case by targeting conduct where the only US connection was the government’s funding of an international organization located abroad. For Judge Breyer, this was a bridge too far.
The dismissal of this case—not to mention the judge’s harsh words—is consistent with growing judicial skepticism of the government’s approach to extraterritorial jurisdiction. Indeed, Judge Breyer is not the first to question the global reach of federal prosecutors. In the past few years, judges in DC and New York have reined in government attorneys attempting to charge defendants with violating the FCPA based on foreign conduct. This is part of a broader trend of US courts avoiding disputes involving foreign affairs (a trend we have discussed before).
Of course, the ICAO case is not over. The US Attorney’s Office has appealed Judge Breyer’s decision to the Court of Appeals for the Ninth Circuit. It may take stronger signals from the judiciary or Congress for DOJ to change its approach to extraterritorial enforcement. Prosecutors tend to be aggressive in extending the long arm of the law in cross-border corporate investigations, on the assumption that a company will choose to settle a case rather than risking failure in a challenge to DOJ’s jurisdictional theories