The Broad Reach of the FCPA
Monday, July 29, 2019 at 3:15PM
Douglas K. Rosenblum

The Foreign Corrupt Practices Act (“FCPA”), codified in 15 U.S.C. §§ 78dd-1, et. seq., prohibits certain classes of persons and entities from paying foreign government officials to assist in obtaining or retaining business. Specifically, persons and entities may not corruptly use any means of instrumentality of interstate commerce in furtherance of any offer or payment of money or thing of value to any person, while knowing that the money offered is meant to influence a foreign official in his or her official capacity.

Recently, the FCPA made headlines through its involvement in the prosecution of a bribery and money laundering scheme. Two Columbian businessmen – Alex Nain Saab Moran and Alvaro Pulido Vargas – allegedly bribed Venezuelan officials between 2011 and 2015 with payment for fake shipments of construction materials that were never sent to the country after securing a contract to build low-income housing. Funds exceeding $350 million travelled from Venezuela through the U.S. correspondent banking system, and Florida bank accounts collected approximately one half million dollars in tainted funds. 

Because money laundering statutes prohibit the use of the U.S. banking system for transactions involving funds from specified unlawful activity, the government claimed jurisdiction over the case. Included within the money laundering statutes, according to the government’s indictment, are crimes against foreign governments and violations of the FCPA. Specific FCPA provisions criminalize actions taken in the U.S. to promote foreign bribery schemes. Thus, although Department of Justice (“DOJ”) prosecutors did not accuse Moran and Vargas of coming to the United States, their supposed involvement in a conspiracy with three other unnamed people – two of whom they allegedly conspired with in Miami during a meeting – subjected them to FCPA prosecution. Furthermore, prosecutors believe that these two individuals reimbursed another co-conspirator for “expenses” related to the scheme by wiring money to his Florida account. 

Prosecutors charged Moran and Vargas with one count of conspiracy and seven counts of money laundering.  The Treasury’s Office of Foreign Assets Control (“OFAC”) also sanctioned them and several of their companies, contending that these men bribed their way into various other government contracts, including providing food for the country’s nutritional relief program. Moran and Vargas then allegedly inflated invoices to maximize profit, used payments for bribes, and imported food of poor quality for the program. OFAC sanctions also included eight other individuals, including Moran and Vargas family members, three stepsons of Venezuelan President Nicolas Maduro, and José Gregorio Vielma Mora, the former governor of the Venezuelan state of Táchira.

Ultimately, the prosecution of Moran and Vargas demonstrates the virtually unlimited ability of the United States government to reach beyond its borders in prosecuting FCPA matters. With that in mind, DOJ prosecutors will likely continue casting a wide net over potential violators – even those who have never set foot on American soil.

United States v. Alex Nain Saab Moran and Alvaro Pulido Vargas Indictment

Article originally appeared on White Collar Law (http://www.white-collared.com/).
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