Conviction Of First Foreign Official At Trial For Money Laundering Based On Underlying FCPA Bribery Scheme Upheld

Following on the heels of its landmark 2014 ruling in United States v. Esquenazi,1 the Eleventh Circuit has issued another important decision addressing the Foreign Corrupt Practices Act (FCPA) in a related case, United States v. Duperval.2

On Monday, February 9, 2015, the Eleventh Circuit affirmed the conviction and nine-year sentence of Duperval on two counts of conspiracy to commit money laundering and nineteen counts of money laundering. Duperval was the first foreign official to be convicted at trial for money laundering based on an underlying FCPA bribery scheme.

The Eleventh Circuit did not break new ground in rejecting Duperval's argument that he was not a "foreign official" under the FCPA, relying on its previous decision in Esquenazi to find that the Telecommunications D'Haiti, S.A.M. ("Haiti Teleco"), a state-owned company, qualified as a government "instrumentality."

Its discussion of the "routine governmental action" exception, however (also known as the "grease payments" or "facilitating payments" exception) represents only the second time an appellate court has addressed this issue3 and confirms that bribe payments will rarely be found to fall within the ambit of this narrow exception to the FCPA's bribery prohibition.

DUPERVAL RECEIVES BRIBES FROM TELECOMMUNICATIONS COMPANIES

From June 2003 to April 2004, Jean Rene Duperval was the Assistant Director General and Director of International Affairs of Haiti Teleco. Duperval managed Haiti Teleco's contracts with foreign telecommunications companies that provided phone service in Haiti. While in that role, he participated in two separate schemes to launder bribes paid to him by two Miami-based telecommunications companies in exchange for various business favors.

The first scheme involved Terra Telecommunications Corporation ("Terra") and its executives Joel Esquenazi and Carlos Rodriguez. Esquenazi and Rodriguez had an arrangement to pay bribes to Duperval's predecessor at Haiti Teleco, Robert Antoine, in exchange for Antoine's agreement to reduce bills Terra owed to Haiti Teleco. When Duperval replaced Antoine as Director of International Affairs, he became the new recipient of the bribes from the two executives. Terra paid $75,000 in bribes to Duperval through a shell company established as a conduit for the bribes and owned by Duperval's sister, Marguerite Grandison. Duperval also accepted $10,000 and a Rolex watch from Esquenazi.4

The second scheme involved Cinergy Telecommunications Inc. ("Cinergy") and its principals Washington Vasconez Cruz, Cecilia Zurita, and Amadeus Richers, who have also been indicted and remain fugitives.5 Following Antoine's termination from Haiti Teleco, Cinergy hired him as a consultant. In August 2003, Antoine offered to pay Duperval 50 percent of Antoine's consulting fee in exchange for Duperval's help in renewing a Cinergy-Haiti Teleco contract. Duperval agreed but demanded 60 percent of Antoine's fee instead. Haiti Teleco's contract with Cinergy continued, and Cinergy paid Duperval $142,460 through a company owned by Duperval's brother. Cinergy also made additional payments totaling $257,339.68 to Duperval through the shell company held in his sister's name.

Altogether, the two telecommunications companies paid approximately $500,000 to Duperval laundered through the two shell companies in South Florida owned by his siblings. The payments were supported by fabricated documentation including fake consulting agreements. The funds were then disbursed to Duperval and his associates through transfers to his personal account, by check to Duperval and his wife, and by checks used to purchase Duperval's house, pay his mortgage, contribute to his children's college funds, and purchase other personal items.6

THE ROAD TO THE ELEVENTH CIRCUIT

In a superseding indictment, Duperval was indicted together with his sister Grandison, Antoine, Esquenazi and Rodriguez, and Patrick Joseph, a former general director for telecommunications at Haiti Teleco. Duperval was tried separately in March 2012, convicted on all counts, and sentenced to nine years of imprisonment. The other two Haiti Teleco officials, Antoine and Joseph, each pleaded guilty to one count of...