There was an outstanding post last week over at the White Collar Crime Prof Blog (here). It was written by Matthew Reinhard, left, a litigator and FCPA practitioner based in the District of Columbia. Like us, he thinks Frederic Bourke’s chances on appeal are pretty good. In the post, he talked about the mens rea element at the center of Bourke’s trial. That issue culminated in Judge Scheindlin’s “conscious avoidance” instruction to the jury, followed by post-trial comments from jury members indicating they didn’t grasp the judge’s meaning. The jury foreman was quoted in the New York Law Journal as saying about Bourke: “We thought he knew and he definitely should have known.”
Hey, Reinhard said, that’s not “conscious avoidance.” He explained:
The Government did not create the “conscious avoidance” standard out of whole cloth. Indeed, it is defined within the FCPA’s broader knowledge standard, which states that “when knowledge of the existence of a particular circumstance is required for an offense, such knowledge is established if a person is aware of a high probability of the existence of such circumstance, unless he actually believes the circumstance does not exist.” 15 U.S.C. § 78dd-1(f)(2)(B) (2004) (emphasis added). When the government indicated its intention to travel on this standard, Judge Scheindlin appropriately ruled that to prevail on such a theory the Government would need to prove that Bourke decided not to learn a key fact, not that he was merely negligent in failing to learn it. To a lay-person (and perhaps even to many lawyers) that may seem like a tough distinction to make, but it is also the bright line that separates civil liability from criminal activity.
We let Matt know how much we liked his post. And we asked if he thought any other issues on appeal might work for Bourke. He said:
Judge Scheindlin issued a series of important rulings surrounding the “local law” defense contained in the FCPA. The court rejected Bourke’s argument that the payments were permissible under local Azeri law because they were the product of extortion, concluding that the initial payments were not lawful, only that the Azeri law in question allowed a person to avoid prosecution for payments obtained through extortion. The court concluded that the affirmative defense was not available to Bourke where, as here, local prosecution was avoided due to a “technicality” or a local law that otherwise relieved a person of criminal liability. It will be interesting to see if Bourke’s lawyers press this issue further on appeal.
Jury verdicts, Matt wrote, are notoriously difficult to overturn. But we’re letting ourselves be a little excited at the prospect, however slim, that in a year or so the influential Second Circuit might make new white-collar criminal law in an FCPA-related case.
I really don’t see how the conscious avoidance argument will give Bourke grounds for reversal. For example, the second-half of the jury foreman’s quote "…he definitely should have known" is clearly a misreading of the judge’s instruction, and certainly grounds for a mens rea argument. But I can’t see how the Second Circuit will overlook the first part of the quote "We thought he knew…" Furthermore, as the NY Law Journal article recounts, the jury clearly didn’t believe Bourke’s argument that Kozeny’s lawyers were lying.
It would seem that while that Bourke’s appeal will present an interesting legal argument, there is more than enough evidence to support the jury verdict on independent grounds.
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