Last week the DOJ charged four bankers from Honduras in a multi-year scheme to launder drug money and bribe foreign officials through accounts located in the United States.
One defendant — Yankel Rosenthal Coello — was arrested last Tuesday night in Miami. The other three are fugitives.
U.S. Attorney Preet Bharara of the Southern District of New York announced the indictment.
It charged the defendants under Title 18, United States Code, Sections 1956 and 1957 with “conspiring to conduct financial transactions occurring in whole or in part in the United States and involving the proceeds of (i) narcotics offenses and (ii) offenses against a foreign nation involving bribery of public officials and the misappropriation, theft, or embezzlement of public funds.”
Bribery of public officials? The defendants aren’t charged under the FCPA with anti-bribery offenses. But they’re alleged to have used drug money laundered in the U.S. to bribe foreign officials. Under 18 USC 1956, that’s a specific offense.
Why didn’ the DOJ charge the defendants under the FCPA?
First, jurisdictional problems.
The defendants all hold Honduran passports. Only Yankel Coello appears to have had a U.S. address, according to OFAC’s Foreign Narcotics Kingpin Designation issued last week. The address was in Miami. He was arrested there last week. The other three defendants have only Honduras addresses, according to OFAC.
There’s no mention in the DOJ’s criminal complaint that any of the three Hondurans who didn’t have U.S. addresses spent any time in the United States or acted from U.S. soil, which would be required for FCPA jurisdiction over a foreign national.
The anti-money laundering statute confers jurisdiction over foreign persons if one of their financial transactions or any part of it happened in the U.S., or if they have a U.S. bank account. The Honduran defendants allegedly used the U.S. financial system to launder drug money and used some of that money to bribe foreign officials. That’s plenty to confer jurisdiction under the anti-money laundering statute.
Second, would bribing officials in Honduras to hide criminal conduct satisfy the FCPA’s business nexus test?
The FCPA prohibits giving or promising to give anything of value to a foreign official for the purpose of obtaining or retaining business. Is a bribe to a foreign official that’s intended to help conceal a money-laundering operation really about obtaining or retaining business, as the phrase is used in the FCPA? Who knows? So don’t gum up an apparently strong money-laundering case with a weird FCPA issue.
Third, offenses under the federal anti-money laundering statute, including conspiracy, are punishable by up to 20 years in prison.
FCPA antibribery offenses, however, are punishable by up to five years in prison. For prosecutors wanting to put defendants under the gun, the AML statute is a bazooka compared to the FCPA pea shooter.
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The indictment in U.S. v. Rosenthal et al is here (pdf).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.