UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
) UNITED STATES ) ) v. ) Criminal No. 98-240-01 ) DAVID H. MEAD, ) ) Defendant. ) )
UNITED STATES' OPPOSITION TO PRETRIAL MOTIONS OF DEFENDANT DAVID H. MEAD
The United States, by its undersigned counsel, hereby opposes the motions of David H.
Mead to dismiss the Indictment and for a bill of particulars. As set forth below, Mead fails to set .
forth any valid basis for dismissing any part of the Indictment. Indeed, although it is styled as a
"Motion to Dismiss," much of Mead's submission appears to be a premature request for rulings 7 on the sufficiency of the United States' evidence and for jury instructions as to the elements of the
charged offenses.
INTRODUCTION
The opening section of Mead's brief sets forth a series of broad assertions about the
legislative purposes of the Foreign Corrupt Practices Act ("FCPA") and a series of factual
assertions unsupported by any evidence. See Memorandum of Law In Support of Defendant
David H. Mead's Pretrial Motions ("Mead Br.") at 1-8. Except to the extent that these are
incorporated in Mead's actual requests for relief, these assertions are irrelevant.
The Indictment speaks for itself. Mead is charged with conspiring to violate the FCPA
and the Travel Act (count 1), and with violating those statutes (FCPA, counts 2-3) (Travel Act,
counts 4-5). The Indictment describes in detail how Mead—himself a U.S. resident, and also the _
President of one U.S. corporation (Saybolt Inc.), Executive Vice-President of a second U.S. corporation (Saybolt North America Inc.), and Chief Executive Officer of an unincorporated association (Saybolt Western Hemisphere)—and others decided to send a Saybolt Inc. employee to Panama City, Panama, to oversee the payment of a $50,000 bribe, which they believed would be provided to high level government officials, in exchange for favorable treatment of Saybolt's business interests in Panama. The Indictment charges that Mead gave the order to go forward with the bribe and it details the contents of the e-mail message that Mead sent from his office in
New Jersey to the Saybolt employee in Panama City.
As a matter of law, "an indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." Hurtling v. United States, 418 U.S. 87, 117 (1974); see United States v. Turley, 891
F.2d 57, 59 (3d Cir. 1989). Mead does not seriously contest the sufficiency of the Indictment under this standard. Rather, he asks this Court to adopt a tortured interpretation of the applicable federal and state statutes and to resolve factual issues in advance of trial.
To the extent that Mead advances arguments that turn on issues of fact, his claims are premature. As the Supreme Court has long-since noted, "[it should not be necessary to mention the familiar rule that, at this stage of the case, the allegations of the indictment must be taken as true." Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 343 & n.16 (1952). An extended debate about the facts of the case, before any evidence has been heard, would be a waste of time.
This memorandum addresses the legal arguments that Mead advances, in the order he
2 _ .
raises them. As detailed below, none of his claims has merit. Moreover, none of the rulings
Mead requests would significantly narrow the evidence or issues for trial.
ARGUMENT
1. A Criminal Violation Under The FCPA Does Not Require Proof That The Defendant Had Actual Knowledge Of That Statute. Nor Must An Indictment Charge Such Knowledge,
Mead's first attack on the Indictment is based on the fact that the charges in counts 2-and
4 use the word "corruptly," but do not also use the word "willfully," to describe Mead's scienter.
The term "corruptly" appears in the body of the FCPA's substantive prohibition of bribery of
foreign officials, which Mead is charged with violating. 15 U.S.C. §77dd-2(a). The term
"willfully" is found only in the FCPA's provisions for criminal penalties applicable to individuals. •
15 U.S.C. §77dd-2(g). - - On its face, Mead's argument is frivolous. An indictment need not track the exact
language of the statute to satisfy the notice pleading standard set forth in Rule 7(c)(1) of the
Federal Rules of Criminal Procedure. Indictments need only set forth "a plain, concise and
• definite written statement of the essential facts constituting the offense charged." Fed. R. Crim.
P. 7(c)(1). No magical incantations of state of mind are required. See United States v. Oki, 154
F. Supp. 553, 555 (D.N.J. 1955) ("Formal words are unnecessary where the allegations
necessarily or fairly import guilty knowledge; words which import an exercise of the will may take
the place of the word `willfully.'"); see also United States v. Krogstad, 576 F.2d 22, 28 (3d Cir.
1978) (indictment under 18 U.S.C. §2(b) was sufficient even though it did not specifically charge
"willfulness"). In this case, the FCPA charges contained in counts 2 and 3 expressly incorporate
the Indictment's fulsome description of Mead's role in the offense. They leave no room for
3 misunderstanding; Mead is charged with acts done intentionally and purposely, with the intent to
do something that the law forbids.'
Mead's argument further ignores that in ordinary legal usage, the term "corruptly" denotes
a higher standard of scienter than the term "willfully." 2 Mead himself adopts the definition of the
term "corruptly," for purposes of the FCPA, that was set forth in the jury instruction approved by
the Eighth Circuit in United States v. Liebo, 923 F.2d 1308 (8th Cir. 1991). See Mead Br. at 12.
That the term "corruptly" subsumes the concept of "willfulness" is unmistakable when one
Paragraph 21, for example, specifically describes the correspondence in which the .) employee whom Mead dispatched to Panama told Mead, "I do not know exactly how one justifies a cash "gift" (payoff)." Paragraphs 26 and 27 describe Mead's efforts to disguise the nature of the transaction, referring to the bribe payments as "back-up software." a. Bryan v. United States, 118 S. Ct. 1939, 1944 & n.8. (1998) (noting significance of defendant's promise to obliterate serial numbers on firearms as evidence that defendant willfully engaged in business of selling firearms without a license).
2 In addition to the FCPA, the "corrupt" mental state is found as an element in federal statutes addressing such crimes as bribery of domestic government officials (18 U.S.C. §201), theft or bribery concerning programs receiving federal funds (18 U.S.C. §666), obstruction ofjustice (18 U.S.C. §§1503, 1505, 1512), and obstruction of the IRS (26 U.S.C. §7212(a)). In these settings, courts have interpreted "corruptly" to mean an act done in breach of an official duty owed to the government or the public at large, and an act done in return for an improper quid pro quo. See United States v. Rooney, 37 F.3d 847, 851 (2d Cir. 1994) (violation of 18 U.S.C. §666); United States v. Medley, 913 F.2d 1248, 1260 (7th Cir. 1990) (violation of 18 U.S.C. §201). See also United States v. Brewster 506 F.2d 62 (D.C. Cir. 1974) (discussing the "corrupt" intent element of 18 U.S.C. §201, and contrasting it with the lesser intent necessary to establish the receipt of an illegal gratuity in the same statute). See generally United States V. Kelly, 1998 WL 321699 (2d Cir., June 18, 1998) (declining to impose requirement of actual knowledge of the law in prosecution for obstructing IRS under 26 U.S.C. §7212(a)); United States v. North, 910 F.2d 843, 881-884, 889 (D.C. Cir. 1990) (under 18 U.S.C. §1505 defendant need not know that his actions were unlawful).
4 compares the instruction in Liebo to the common definition of the term "willfully." In Litho
corruptly was defined as follows:
"[A]n act is 'corruptly' done if done voluntarily and intentionally, and with a bad purpose of accomplishing either an unlawful end or result, or a lawful end or result by some unlawful method or means."
923 F.2d at 1312 (quoting jury instruction). The stanc______clar j legal meaning of "willfully" is set forth
in the following jury instruction, which the Supreme Court recently approved: -
"A person acts willfully if he acts intentionally and purposely and with the intent to do something the law forbids, that is with the bad purpose lisobey or to disregard the law. . ."
Bryan v, United States, 118 S. Ct. 1939, 1944 (1998) (quoting jury instruction). Although the
wording is not identical, the two instructions are essentially the same.
To support his claim that the Indictment's use of the term "corruptly" rather than
"willfully" is somehow a critical defect, Mead advances the proposition that—in contradiction to normal legal usage—the FCPA's penalty provisions use the term "willfully" to denote a higher degree of scienter than the term "corruptly." Specifically, he suggests that it requires proof of actual knowledge of the law.
The crux of Mead's argument about willfulness derives from Ratzlaf Y. United States, 510
U.S. 135 (1994), in which the Supreme Court offered several rationales for its ruling that, in a prosecution under the currency structuring statute then in force, the element of "willfulness" would require the government to prove that the defendant had actual knowledge of the law. The primary rationale for the Ratzlaf ruling was that, like some criminal tax statutes, the currency statute was highly technical and could ensnare otherwise innocent, well-meaning citizens. A secondary rationale for the holding in Ratzlaf, however, derived from the structure of the currency
5
2. statute. Noting that the term "willfully" appeared separately from other scienter requirements in the currency statute, the Ratzlaf majority ruled that the term "willfully" would be rendered mere
"surplusage" in that statute, unless it were interpreted to require actual knowledge of law: See
Ratzlaf, 510 U.S. at 138-41.
In the wake of Ratzlaf, some Courts of Appeals, including the Third Circuit, applied this
second rationale to find a Congressional intent to require actual knowledge of the law in other
statutes. See, e.g., United States v. Curran, 20 F.3d 560, 567-69 (3d Cir. 1994) (aiding and
abetting false statements in violation of 18 U.S.C. §§1001 and 2(b)). But see generally United
States v. Zehrbach, 47 F.3d 1252, 1260-63 (3d Cir.) (en banc), cert. denied, 514 U.S. 1067
(1995) (rejecting contention that a defendant's good faith belief in the lawfulness of his conduct
would be a defense to charge of bankruptcy fraud).
_A In particular, Mead relies on a line of decisions by some of the Courts of Appeals
grappling with the distinction between a "knowing" standard and a heightened "willful" standard
under adjacent sections of the Firearms Owners Protection Act, 18 U.S.C. §§924(a)(1) (A)-(D).
See Mead Br. at 14-20 (citing United States v. Hayden, 64 F.3d 126 (3d Cir. 1995) and United
States v. Obiechie, 38 F.3d 309 (7th Cir. 1994)). The issue in the firearms cases was sufficiently
close that it split the circuits. See Bryan, 118 S. Ct. at 1944.
Even if the firearms cases on which Mead relies had some bearing on the interpretation of
the FCPA, they are no longer good law. Shortly before Mead submitted his brief to this Court,
the Supreme Court resolved the conflict among the circuits with respect to the interpretation of
the Firearms Owners Protection Act. See Bryan v. United States, 118 S. Ct. 1939 (June 15,
1998). In so doing, the Supreme Court repudiated the line of cases that followed Obiechie and
6 -
Hayden in imposing an "actual knowledge of law" standard for willful violations of the Firearms
Owners Protection Act. See Bryan, 118 S. Ct. at 1944 (noting conflict between Second Circuit's decision in 'luau and Eleventh Circuit's decision in United States v. Sanchez-Corcino, 85 F.3d
549, 553-554 (11th Cir. 1996)). 3 The )3ryan Court rejected the structural argument—the
"surplusage" theory—on which Mead's motion to dismiss is premised (i.e. that proof of knowledge of the law is required when the term "willful" is used separately from some other term denoting a scienter requirement). See Bryan, 118 S. Ct. at 1945-46.
The decision in Bryan makes clear that the Ratzlaf rule is reserved for "highly technical statutes that present[] the danger of ensnaring individuals engaged in apparently innocent conduct." Bryan, 118 S. Ct. at 1946-47. The FCPA, unlike the tax and currency structuring statutes, does not punish conduct that would otherwise appear innocent. By its terms the statute applies only to those who act corruptly. The acts with which Mead is charged—conspiring to offer, authorize, pay and otherwise provide a bribe to a foreign government official in order to secure a business advantage—are far more "inevitably nefarious"' than the licensing violations proscribed by the Firearms Owners Protection Act (which, after Bryan, do not require proof of actual knowledge of law), let alone the highly technical crimes covered by the currency structuring statutes. It is hard to imagine situations—unlike those postulated by the Ratzlaf Court
(510 U.S. at 144-45 and nn. 12-14)—in which offering or paying substantial bribes to foreign
3 The Eleventh Circuit's ruling in Sanchez-Corcino was explicitly based upon the same authorities—Obiechie and Hayden—as Mead relies upon in this motion. Sanchez-Corcino, 85 F.3d at 553. Thus, in overturning the Eleventh Circuit's interpretation of "willfully" in Sanchez-Corcino, the Supreme Court also implicitly overturned those cases.
4 See Ratzlaf, 510 U.S. at 144 ("currency structuring is not inevitably nefarious").
7 government officials in order to secure a commercial advantage would not be generally recognized as immoral:
Managements which resort to corporate bribery and the falsification of records to enhance their business reveal a lack of confidence about themselves. Secretary of the Treasury Blumenthal, in appearing before the committee in support of the criminalization of foreign corporate bribery testified that: "Paying bribes—apart from being morally repugnant and illegal in most countries—is simply not necessary for the successful conduct of business here or overseas."
S. Rep. No. 114, 95th Cong., 1st Sess. 3, reprinted in 1977 U.S.C.C.A.N. 4101.
Leaving aside the fact that Bryan has now resolved the prior Circuit split, Mead's attempt to analogize to the firearms cases fails of its own weight. First, Mead ignores the critical fact that the "Corrupt" mental state required by the FCPA involves a very high level of criminal intent, such that it encompasses the "willful" mental state. The issue in the firearms cases was how to distinguish between "willful" criminal violations and "knowing" criminal violations, which involve a lower level of scienter. It was in trying to sort out this conundrum—which does not arise under the FCPA—that the decisions on which Mead relies looked to the structure of the firearms statutes for guidance as to Congress' intent.' No court has suggested, however, that the structure of a statute could, by itself, override the plain meaning of its text. See generally United States v.
Wiltberger, 5 Wheat. 76, 18 U.S. 76, 95-96 (1820) (Marshall, C.J.) ("The intention of the legislature is to be collected from the words they employ. Where there is no ambiguity in the words, there is no room for construction.").
5 Another reason the firearms cases were so vexing is that it is difficult to articulate how one can willfully violate a licensing requirement unless one actually knows of that requirement. This issue too is irrelevant under the FCPA, which establishes an outright ban on certain conduct, rather than any type of licensing requirement.
8 Second, Mead also ignores that the term "willfully" found in the penalty section of the
FCPA, unlike the Firearms Owners Protection Act, poses no problems of "surplusage." Under the FCPA, the Court is not called upon to distinguish "knowing" criminal violations from "willful" ones. Rather, the rnens_rea requirement contained in the penalty provisions of the FCPA simply distinguishes "willful" criminal violations from civil violations, for which no special showing of intent is required. Compare 15 U.S.C. §78dd-2(g)(2)(A) (criminal penalty for officer or director
"who willfully violates" FCPA) with 15 U.S.C. §78dd-2(g)(2)(C) (civil penalty for officer or director "who violates" FCPA). The term "willfully" is used in the FCPA to reflect that individual criminal liability under this statute requires a showing of purposeful, intentional action. By contrast, corporate criminal liability, corporate and individual civil liability and injunctive relief under the FCPA may be premised on theories of vicarious liability, respondeat superior, negligent supervision and the like.
The FCPA's use of "willfully" in its ordinary sense is fully consistent with the use of that term throughout the 1934 Securities Exchange Act, which the FCPA amended. For criminal violations of the securities laws, the courts have interpreted the term "willfully" to mean that a defendant must have acted intentionally and volitionally. 6 let, e.g., United States v. O'Hagan,
139 F.3d 641, 646 (8th Cir. 1998) (precedents holding that willfully requires knowledge that one's acts are in violation of the law, "are an exception to the 'general rule that ignorance of the law or a mistake of law is no defense to criminal prosecutions.") (quoting Cheek v. United
6 The term "willfully" is found in the two general penalty provisions of the securities code, 15 U.S.C. §§77x (applicable to violations of the 1933 Securities Act) and 78ff (applicable to violations of the 1934 Securities Exchange Act, including the FCPA provisions applicable to issuers, § 78dd-1).
9 )1 States, 498 U.S. 192, 199-200 (1991)). For purposes of the criminal penalty provisions of the
securities laws, the term "willfully' simply requires the intentional doing of the wrongful acts—no
knowledge of the rule or regulation is required." O'Hagan, 139 F.3d at 646 (citations omitted);
see also United States v. English, 92 F.3d 909, 915 (9th Cir. 1996) (presence of the term willfully
in the penalty provision of securities fraud statute does not impose Ratzlaf requirement of a
specific intent to violate the law because "fraud is an inherently bad act [and] there is no danger of
prosecuting the innocent, feckless, or reckless") (citation omitted). It would be strange indeed if,
as Mead proposes, the word "willfully" were to be given a different meaning under the FCPA than
anywhere else in the Securities Acts.
In short, after Bryan, there is nothing to support Mead's contention that the government
must prove actual knowledge of the law in order to convict him of violating the FCPA, let alone
to support his contention that the absence of the specific word "willful" in counts 2 and 3 renders
those charges insufficient. Counts 2 and 3 properly allege violations of the FCPA and count 1
properly alleges a conspiracy to do so.'
7 Mead's further claim that the conspiracy charge in count 1 is insufficient (based on the absence of the word "willful" in the FCPA charges) suffers from two critical defects. Not only does it rest on the same flawed argument as his claims regarding the substantive FCPA violations charged in counts 2 and 3, it also misstates the legal standards governing conspiracy allegations. Mead directs this Court to various reported decisions regarding the sufficiency of evidence to support conspiracy convictions. See Mead Br. at 19 (citing United States v. Alston, 77 F.3d 713, 717-20 (3d Cir. 1996) and other cases). But those cases say nothing about the sufficiency of a pleading under Rule 7(c)(1) of the Federal Rules of Criminal Procedure. It has long been settled that conspiracy indictments need not allege every element of the underlying offenses, but need only put defendants on notice that they are being charged with conspiracy to commit the substantive offenses. See Wong Tai v. United States, 273 U.S. 77, 81(1927); United States v. Werme, 939 F.2d 108, 112 (3d Cir. 1991), cert. denied, 502 U.S. 1092 (1992); United States v. Scanzello, 832 F.2d 18, 22 (3d Cir. 1987); United States v. Wander, 601 F.2d 1251, 1259 (3d Cir. 1979); United States v. Knox Coal Co,, 347 F.2d 33, 38 (3d Cir.), cert. denied, 382 (continued...) • 10 2. An Association Headquartered In The United States Constitutes A "Domestic Concern" Under The FCPA.
Mead's second attack on the Indictment is even more attenuated. Mead argues that
Saybolt Western Hemisphere ("SWH") is somehow immune from the FCPA because it is not
formally incorporated in the United States and, on this basis, he attacks one allegation (of four)
setting forth the jurisdictional basis for charging Mead under the FCPA. Aside from the fact that
his contention is legally flawed, it is unclear what relief, if any, Mead would be entitled to if this
Court were to decide the matter in his favor, given that the Indictment charges three other
independently sufficient bases for asserting jurisdiction.'
• The Indictment charges that Mead, as a resident of the United States, is himself a
"domestic concern," within the meaning of the FCPA, and is thus subject to individual criminal
liability under the Act. Indictment 115, 9, 37. The Indictment also charges that Mead, as
(1) President and Chief Executive Officer of Saybolt Inc.; (2) Executive Vice-President and
Chief Executive of Saybolt North America Inc.; and (3) Chief Executive Officer of Saybolt
Western Hemisphere, was an officer, director and agent of "domestic concerns," and subject to
• prosecution on that basis as well. Indictment 114, 9, 37. Moreover, the Indictment charges that
Mead conspired with and directed the activities of a United States citizen (Employee A), who was
also an employee of Saybolt Inc., a domestic concern, and that Mead caused that person to travel
7(...continued) U.S. 904 (1965).
Mead effectively concedes this point. See Mead Br. at 20 ("Given that Saybolt North America Inc. and Saybolt Inc. are U.S. corporations, the Indictment may allege that Mr. Mead violated the Act in his capacity as an officer, director, and agent of these "domestic concerns."). . )‘ 11 and to use means and instrumentalities of interstate and foreign commerce, in furtherance of the offer and payment of a bribe to a Panamanian government official, in connection with the business activities of the Saybolt companies. Indictment 1117, 9. Furthermore, the Indictment charges, the defendant committed the charged acts in New Jersey. Id. 137. The offenses at issue here thus fall squarely within the ambit of the FCPA. See generally Dooley v. United Technologies Corp., 803
F. Supp. 428, 435-437 (D.D.C. 1992).
Mead only challenges the jurisdictional allegations in the Indictment insofar as they also charge that he is subject to the FCPA based on his position as Chief Executive Officer of SWH, which the Indictment describes as an unincorporated association with its principal place of business in Parsippany, New Jersey. Indictment ¶3(c). Mead asks this Court for a preemptive ruling that SWH does not qualify as a "domestic concern" within the meaning of the FCPA. With much rhetorical flourish, replete with allusions to classical mythology, Mead tries to characterize
SWH as a prosecutorial construct designed to subvert the will of Congress and improperly to subject foreign corporations to prosecution under the FCPA. See Mead Br. at 7-8. On this basis he argues that SWH is not an "otherwise valid entity" and "could not be legally cognizable as a
'domestic concern' within the meaning of the FCPA. Mead Br. at 20-21.
There are three critical flaws in Mead's argument:
First, Congress has expressly provided in the FCPA that the prohibition on foreign bribery extends to informal entities, such as an "association" and an "unincorporated organization," and not only to formally incorporated businesses. See 15 U.S.C. §78dd-2(h)(1)(B) (defining
"domestic concern" to include "any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of
12 business in the United States . . .."). It has long been settled that such provisions regarding the
scope of a statute preclude the courts from narrowing the statute's reach based on formalities of
corporate organization. See United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 392
(1922) (stating that with the Sherman Act, "Congress was passing drastic legislation to remedy a
threatening danger to the public welfare, and did not intend that any persons or combinations of
persons should escape its application. Their thought was especially directed against business _
associations and combinations that were unincorporated to do the things forbidden by the act, but
they used language broad enough to include all associations which might violate its provisions
. . .."). The Indictment alleges that SWH was an association with its principal place of business in
the United States. As such, SWH is plainly within the reach of the statute.'
Second, Saybolt Western Hemisphere is not a prosecutorial construct, it was an active
business organization.' Mead attempts to downplay this fact by referring to SWH as a
9 That this association was comprised of corporations, as the Indictment charges, does not make it any less subject to the FCPA. The Third Circuit has expressly ruled, in the RICO context, that an "association" comprised of corporations joined for illicit purposes may constitute a RICO "enterprise," which is defined as an "individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." Shearin v. E.F. Hutton Group. Inc., 885 F.2d 1162, 1165 (3d Cir. 1989). Although the Shearin court did not specify which type of enterprise was involved, "association" (the same term used in the FCPA), appears to be the only plausible candidate.
10 The United States anticipates that the evidence at trial will show the following: As a formal matter, the Saybolt network of companies was comprised of multiple corporations (generally, one for each of the many countries in which Saybolt did business). As a practical matter, however, operations in the various countries were generally limited to actual delivery of services, with some limited bookkeeping and accounting functions. Management and control of the company was organized into two primary operating units, Saybolt Eastern Hemisphere, headquartered in Rotterdam, The Netherlands, and Saybolt Western Hemisphere (SWH), headquartered in Parsippany, New Jersey. Thus,SWH represented an operational, management, acco_unting, and marketing structure that transcended the purely formal legal boundaries between (continued...) I
• 13 geographic description "conveniently plucked from a Saybolt International B.V. Annual Report"
(Mead Br. at 7) and as the "government's SWH creation." Mead Br. at 8 n.3. But he fails to mention that—in early discovery—the United States provided him with a copy of that 1996
Annual Report, which explicitly identifies Mead as the "Chief Executive Officer" of Saybolt
Western Hemisphere and describes the business activities of SWH. [Excerpts of the 1996 Annual
Report are appended hereto as Exhibit A]. Mead fails also to mention that the United States _ provided him with a copy of an organizational chart for SWH which reflects the chain of command for the organization and identifies the various individual officers of SWH. [A copy of the SWH organizational chart is appended hereto as Exhibit B]. The 1996 Annual Report and the organizational chart—which were seized from Saybolt's offices pursuant to a search warrant—are . not products of any prosecutor's imagination; they are the working documents of an active, operating business.
Third, Mead fails to offer any support for his assertion that SWH is somehow not cognizable as a "domestic concern" because it encompasses, within its organizational structure, various foreign corporations. Anomalously, the only case Mead cites in support of this argument is one that upholds an FCPA charge against foreign individuals who acted as agents of domestic concerns. See Dooley, 803 F. Supp. at 439-40 (court had jurisdiction over foreign individual who entered into two business arrangements as part of a racketeering conspiracy, which included alleged FCPA violations as predicate Travel Act offenses).
( continued) the dozens of individual corporate entities established in the many countries where Saybolt operated. For operations throughout the Americas, all critical lines of managerial, accounting and financial control flowed through Parsippany, New Jersey.
14 Unless they are otherwise subject to the jurisdiction of the United States, foreign
corporations are not themselves subject to prosecution under the FCPA. See Dooley, 803 F.
Supp. at 439. It does not follow, however, that an association with its principal place of business
in the United States would be immune from prosecution—or that its individual agents would be
immune—merely because that association includes foreign corporations as members. The Court
in Dooley was concerned with tracing the outer reaches of the term "agent" of a domestic _
concern, as used in the FCPA." Nothing in that decision suggests that an association
headquartered in the United States, such as SWH, lies outside the FCPA's definition of "domestic
concern" as an "association" or "unincorporated organization. . . which has its principal place of
business in the United States." 15 U.S.C. §78dd-2(h)(1)(B).
This is not a case in which the Court is called upon to construe the outer limits of the jurisdictional reach of the FCPA. Notwithstanding Mead's dire protestations that the United
States has somehow used the Indictment's reference to SWH as a subterfuge to impose FCPA
liability on foreign corporations, theonlyerp_jogesLls char in this Indictment are individuals who
are plainly within the reach of the statute. As charged in the Indictment, SWH falls squarely
within the definition of a "domestic concern." Although the FCPA's prohibition on bribery and
corruption does not extend to foreign corporations operating outside the United States, an
individual who is plainly within the reach of the statute cannot hide behind the fact that foreign
After a careful review of the legislative history, the Dooley Court concluded that the term "agent" was intended to refer only to individuals. Dooley, 803 F. Supp. at 439. In the matter at bar, fully in keeping with Dooley, the only persons charged in the Indictment are individuals.
15 corporations were also involved in the charged misconduct in order to shield himself from liability.
If this were the rule, the FCPA would be reduced to a nullity.
3. The Indictment Properly States a Cognizable Offense Under the Travel Act,
Mead contends that the Travel Act (18 U.S.C. §1952) charges against him in counts 4 and
5 should be dismissed on the grounds that his conduct does not constitute a violation of the New
Jersey Commercial Bribery statute. N.J. Stat. Ann. §2C:21-10.' Specifically, Mead asserts that
he can not be found criminally liable under this statute because the statute does not reach the kind
of bribery of high-ranking foreign officials that is described in the Indictment.
Under Mead's theory, §2C:21-10 carves out a safe haven of permissible bribery whereby
an officer of a corporation headquartered in New Jersey would be legally permitted to bribe the
public officials of foreign countries. Such a tortured reading of the law is not supported by the
plain language of the statute, applicable precedents, public policy, or common sense.
As with any issue of statutory construction, the starting point must be the text of the
statute. New Jersey's Commercial Bribery statute provides in pertinent part:
A person commits a crime if he solicits, ags or agrees to accept any benefit as consideration for knowingly violating or agreeing to violate a duty of fidelity to which he is subject as:
(1) An agent, partner or employee of another;
(2) A trustee, guardian, or other fiduciary;. . .
12 It is well settled that commercial bribery constitutes "bribery" within the meaning of the Travel Act, 18 U.S.C. §1952(b). See Perrin v. United States, 444 U.S. 37, 49 (1979); United States v. Michael, 456 F. Supp. 335, 346-50 (D.N.J. 1978), affd, 605 F.2d 1198 (3d Cir: 1979). ' 16 - -
N.J. Stat. Ann. §§2C:21-10(a)(1), 2C:21-10(a)(2)." The statute also makes the paying of such a
bribe illegal: "a person commits a crime if he confers, or offers or agrees to confer, any benefit the
acceptance of which would be criminal under this section." N.J. Stat. Ann. §2C:21-10(c).
The thrust of Mead's argument is that his actions in furtherance of the plan to bribe a
Panamanian government official do not violate Section 2C:21-10(c) because acceptance of the
bribe by that official would not be criminal under this law. See Mead Br. at 23-24. Mead „
acknowledges that a foreign government official has a duty of fidelity arising from his or her
position, but he contends that the law nonetheless permits the acceptance of such bribes because
§2C:21-10(a)(1) "exclusively" punishes a breach of this duty of fidelity "arising in an individual's
private, commercial capacity." Mead Br. at 24 (emphasis in original).
Nothing in the language of Section §2C:21-10(a)(1) suggests any such limitation to
, "private, commercial" situations. Rather, the sole authority cited by the defendant for this
proposition is a Fifth Circuit 'case interpreting Louisiana's very different commercial bribery
statute, as it applied to a bribe paid to the Chairman of the Chitimacha Indian Tribe. See United
States v Tonry, 837 F.2d 1281, 1282-85 (5th Cir. 1988). The two words that the defendant
literally and figuratively underscores in his argument "private" and "commercial," do not appear
in the text of §2C:21-10(a) or anywhere else in the New Jersey Commercial Bribery statute. The
absence of these words is significant, as the Fifth Circuit in Tonry was interpreting a statute that
defined commercial bribery as giving anything of value to "any private agent, employee or
13 This subsection of the New Jersey Code of Criminal Justice is captioned, • "Commercial Bribery and Breach of Duty to Act Disinterestedly." Although the name of a statute is not controlling in interpreting the scope of the law, the assigned title indicates a legislative intent that this law have broader scope than just "commercial bribery" between private commercial entities, as Mead suggests.
17 fiduciary" in order to influence that person's actions. Tonry, 837 .F.2d at 1282 n.3 (citing La. Rev.
Stat. Ann. §14:73) (emphasis added). Unlike the Louisiana statute, the New Jersey statute does
not limit the universe of "agent, partner, or employee of another" (or fiduciary) to private or
commercial agents."
Far more similar to the New Jersey statute at issue in this case is the New York
Commercial Bribery statute, which was analyzed in United States v. Young & Rubicam. Inc., 741
F. Supp. 334 (D. Conn. 1990). In that case, the defendants moved to dismiss a Travel Act charge
that was based on violations of the New York Commercial Bribery statute, New York Penal Law
§§180.00 and 180.05. As in this case, the Indictment in Young & Rubicam charged that the
defendants had bribed foreign officials. In an argument strikingly similar to Mead's, the
defendants in Young & Rubicam contended that foreign officials were beyond the scope of New
York's Commercial Bribery statute and were also outside the reach of state laws prohibiting
14 Other provisions of the New Jersey Code of Criminal Justice demonstrate that when the state legislature intends to limit the reach of a criminal statute to commercial or private concerns, it is quite capable of saying so. See, e.g., N.J. Stat. Ann. §2C:21-32(c) ("New Jersey Trademark Counterfeiting Act") (prohibiting certain counterfeiting activities committed "in conjunction with commercial activities within New Jersey"); N.J. Stat. Ann. §2C:21-21(c)(3) ("New Jersey Anti-Piracy Act") (prohibiting manufacture or transfer of sound recording of a live performance without consent for "commercial advantage or private financial gain").
Mead's citations to New Jersey public bribery statutes are not persuasive. Mead Br. at 26. Mead urges this Court to find that the universe of illegal bribe recipients under New • Jersey law is limited to two classes: (1) public servants as defined by the New Jersey public bribery statutes and (2) commercial parties. But the text of §2C:21-10 does not support any such narrow reading. Moreover, the New Jersey Supreme Court's holding that bribery of foreign officials contravenes the public policy of the State of New Jersey belies Mead's suggestion that the state recognizes a protected category of bribes to such officials. See D'Agostino v. Johnson & Johnson. Inc., 133 N.J. 516, 529, 628 A.2d 305, 312 (N.J. 1993).
18 - _
•
bribery of state government officials. The Court rejected such a narrow construction of the
statute, holding that the "statutory language" of the New York Commercial Bribery statute,
"prohibiting bribery of 'any employee, agent or fiduciary. . . of. . .[an] employer or principal,' is
sufficiently broad to include out-of-state public officials." Young & Rubicam, 741 F. Supp. at
339 (citing New York Penal Law, §§180.00 and 180.05). The Court noted:
[T]o construct the statute to apply only to bribery of persons in private business is _ to suggest that [the] State of New York intended not to prosecute instances of bribery occurring within its borders by New York corporations involving non-New York public officials. Such an interpretation would be inconsistent with the statutory purpose of prohibiting and punishing corruption of any commercial transaction within its borders.
Thus, bribery of foreign officials, as alleged in the Indictment in Young & Rubicam, was
sufficient to support a Travel Act charge premised on the New York Commercial Bribery statute.
Unlike the Louisiana statute considered in Tonry, the pertinent language of the New York
Commercial Bribery statute at issue in Young & Rubicam mirrors New Jersey's commercial
bribery law. Like the New Jersey statute, the New York law applies to "any employee, agent, or
fiduciary" without the qualification found in the Louisiana statute, which applies only to a "private
agent, employee or fiduciary." See La. Rev. Stat. Ann. §14:73 (emphasis added)."
Mead's ancillary argument that the Supremacy Clause somehow precludes the State of
New Jersey from criminalizing the conduct charged here is also without merit. In the area of
15 Apart from the definitive guidance found in the text of the New Jersey Commercial Bribery statute, the conclusion that the conduct described in this Indictment is illegal under New Jersey law is further buttressed by the New Jersey Supreme Court's ruling in D'Agostino, which recognizes the FCPA as a reflection of New Jersey state public policy. D'Agostino, 133 N.J. at 529, 628 A.2d at 312 (citing Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081, 1090 (1984) (the FCPA "is a clear expression of public policy that bribery of foreign officials is contrary to the public interest.")).
19 criminal law, the states and the federal government routinely share concurrent enforcement powers, as with the laws governing narcotics trafficking or fraud schemes that use mail or interstate wires. Indeed, it is the states' police powers that are plenary, whereas federal criminal legislation requires a specific grant of jurisdiction. See United States v. Lopez, 514 U.S. 549, 561 n.3 (1995). The civil cases that Mead cites (see Mead Br. at 25) stand only for the unremarkable proposition that in some areas a federal regulatory regime may "occupy the field," leaving no- room for state law. They do not support the notion that a federal criminal statute such as the
FCPA preempts states from enforcing their own laws against commercial bribery orchestrated from within their borders.
There is, likewise, no basis for Mead's claim that the New Jersey Commercial Bribery statute poses obstacles to the accomplishment of the objectives of Congress in implementing the
FCPA or "threatens to regulate an area affecting the foreign affairs of the nation." Mead Br. at
25. This is a purely speculative concern, one that the defendant does not even claim is presented by the facts of this case. Moreover, any such speculative concerns about the reach of New
Jersey's Commercial Bribery statute are tempered by §2C:1-3 of the New Jersey Code of
Criminal Justice, which prescribes the territorial applicability of New Jersey criminal laws.
Here, the New Jersey Commercial Bribery statute and the Foreign Comipt Practices Act are in complete harmony—and Mead's conduct, as charged in the Indictment, violated both laws.
Accordingly, the Court should deny Mead's motion to dismiss counts 4 and 5 and the portion of count 1 that charges conspiracy to violate the Travel Act.
20 4. There Is No Need For a Bill of Particulars In This Case.
A bill of particulars is only required under Rule 7(f) of the Federal Rules of Criminal
Procedure when it is necessary "to inform the defendant of the nature of the charges brought against him to adequately prepare his defense, to avoid prejudicial surprise during trial and to protect him against a second prosecution for an inadequately described offense." United States v,
Addonizio, 451 F.2d 49, 63-64 (3d Cir. 1971), cert. denied,.405 U.S. 936 (1972); see also United
States v. Rosa, 891 F.2d 1063, 1066 (3d Cir. 1989).
The existing Indictment spells out in great detail the factual circumstances underlying the criminal charges that the grand jury has returned against Mead. It is more than adequate to notify Mead of the substance of the charged offenses and to allow him to raise a future defense of double jeopardy if confronted with similar charges in the future. As noted above, the Indictment goes far beyond the notice pleading standard set forth in Rule 7(c)(1) of the Federal Rules of
Criminal Procedure.
Moreover, as Mead acknowledges (Mead Br. at 27) the government has voluntarily provided extensive discovery well in advance of trial, and far beyond the requirements set forth in this Court's discovery order, thereby alleviating any risk of surprise at trial, much less prejudicial surprise. Indeed, as noted above, this early discovery has already addressed the issues for which •
Mead claims a Bill of Particulars is needed. See Exhibits A and B.
In evaluating a request for a bill of particulars, the Court must examine the information already provided by the government through discovery or some other means. United States v. parlavecchio, 903 F. Supp. 788, 795 (D.N.J. 1995) (citing United States v. Eisenberg, 773 F.
Supp. 662, 689 (D.N.J. 1991)). Defendants are not entitled "to a wholesale discovery of the
21 • _ _
Government's evidence." United States v. Lipari, 1992 WL 165799, at *15 (D. N.J. 1992) (citing _ Addonizio, 451 F.2d at 64). Where an indictment adequately advises the defendant of the crimes
with which he is charged and the defendant has already received a wealth of evidentiary material,
separate disclosure of co-conspirators' names is unnecessary. United States v. Torres, 901 F.2d
205, 233-34 (2d Cir.), cert. denied, 498 U.S. 906 (1990); see United States v. Rey, 923 F.2d
1217, 1222 (6th Cir. 1991) (affirming denial of bill of particulars seeking names of unindicted _co-
conspirators); United States v. DiCesare, 765 F.2d 890, 897-98 (9th Cir. 1985), amended 777
F.2d 543 (9th Cir. 1995) (same).
It is "not necessary for the government to disclose in a bill of particulars the precise details
that a defendant and his alleged co-conspirators played in forming and executing a conspiracy or .
all the overt acts the government will prove in establishing the conspiracy." United States v.
Boffa, 513 F. Supp. 444, 485 (D. Del. 1980) (citing United States v. Carroll, 510 F.2d 507, 509
(2d Cir. 1975), cert. denied, 426 U.S. 923 (1976) and United States_v. Cullen, 305 F. Supp. 695,
699 (E.D. Wisc. 1969)). As the Third Circuit observed in affirming the denial of a bill of
particulars seeking the details of overt acts not alleged in the Indictment, such a motion is
"tantamount to a request for wholesale discovery of the Government's evidence, which is not the
purpose of a bill of particulars." United States v. Armocicla, 515 F.2d 49,54 (3d Cir.), cert.
denied, 423 U.S. (1975).
In light of the detailed Indictment returned in this case, in light of the breadth of discovery
that the government has already voluntarily provided, and in light of the weight of authority
limiting defendants' rights to conduct discovery through a motion for a bill of particulars, Mead's
requests for a bill particulars should be denied.
22 CONCLUSION
For the reasons set forth above, Mead's motions should be denied.
Respectfully submitted,
FAITH S. HOCHBERG United States Attorney
By: G. Levenson Joshua S. Levy Special Assistant United States Attorneys 1107 J.W. McCormack Post Office and Courthouse Building Boston, MA 02109 (617) 223-4276
Dated: July 23, 1998
CERTIFICATE OF SERVICE I hereby certify that on this 23rd day of July, 1998 I will cause a true copy of the above document to be served by Federal Express upon:
Paul R. Grand, Esq. Jack Arseneault, Esq. Morvillo, Abramowitz, Grand, Iason Arseneault & Krovatin & Silberberg, P.C. 560 Main Street 565 Fifth Avenue Chatham, NJ 07928-2119 New York, NY 10017
V2shua S.
23
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77.sAygoLT. • USVDM 002978 • _ - •
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-ff • Organization chart
. • .4 • Saybolt International Management Team
•
• Division Financial • Coordinators 'Administration & Controlling . _
.„. Saybolt Western Hemisphere Saybolt Eastern Hemisphere Staff Departments: Staff Departments: Marketing Marketing International Desk International Desk EDP & Communication EDP & Communication Personnel & Organisation Personnel & Organisation Training & Eaucation Training & Education Quality Assurance Quality Assurance Internal Auaits - Internal Audits .44111.11V-.
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USVDM 002982
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, • ' J • E 4.-111tkr. " - • M •nn•• Nom Saybolt International BV . Kg
• fill ; _ • 1 1.• -- Saybolt International BV is a holding company incorporated in The Netherlands and was formed in • 1992 during the Management Buy Out. The shares are held by Institutional Investors and the • Foundation Management Participation. Saybolt was established in the United States of America in 1898. • •
In accordance with the legal requirements. the • company is registered with the Chamber of Commerce in the category of large company with limited liability'. •
Board of Supervisory Directors • Drs. G. Verhagen (Chairman) Mr. H.LJ.M. Gieskes Mr: R.J.L van Rappard
4 Management Ir. F. Pluimers President and Chief Executive Officer D.H. Mead Executive Vice President and CEO of Saybolt Western Hernisohere HetrISCrOek Executive Vice President ana CEO of Saybolt Eastern Hemisphere '..eger RA Financial Director R G. ?etola Financial Controller
Auditor Pnce vVaternouse Nederland B.V.
Bankers ..,.ohanoscne Bank Unie NV - Roneraam ING Bank NV- Rotterdam
I • )1.‘117 SAYBOLT
7 USVDM 002983
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APPENDIX 1 •
ORGANIZATIONAL CHARTS
1. SAYBOLT WESTERN HEMISPHERE ORGANIZATIONAL CHART
2. SAYBOLT INC. ACCOUNTING DEPARTMENT ORGANIZATIONAL CHART
3. SAYBOLT INC. OPERATIONS ORGANIZATIONAL CHART
4. SAY230LT INC. M.-IRKETING DEPARTMENT ORGANIZATIONAL CCIART
5. SAYBOLT INC. CORPORATE LABORATORY ORGANI7ATIONAL CHART
June 1995
ESK 024629 SWH ORGANIZATIONAL CHAR'/ REPORTING STRUCTURE
President/CEO (DHM)
HR/Legal Counsel (JM) EVP/CF0 (RGP)
Fin./Comms. Admin. Admin. Asst. Support
1 1 I 1 VP Ops N. Amer. Quality VP/GM L. Amer. Tech. Dir. Din (US/C/M) Assurance Mgr & Carib. (JMW) of Mal (TMH) (KJ) (SPD)
Refer to Saybolt- Refer to Refer to Refer t Saybolt Inc. STIS " A" Lab. Saybolt Ops. Org . (BRD) Ops. Org . Chart Marketi Chart ' Chart Dept. CY
Also provides assistance to Tech. Manager and Quality Assurance Manager. x (US/C/M . United States, Canada, Mexico.) (SWH = Saybolt Western Hemisphere.)
0