This blog post is dedicated to all defense counsel out there who wanted to scream: “WHY IS THIS HAPPENING? WHY DOES THE GOVERNMENT THINK THIS CASE IS WORTH ITS (OUR) TIME AND MONEY? WHAT PUBLIC POLICY GOAL COULD POSSIBLY BE FURTHERED BY THIS PROSECUTION? WHY WOULD THE GOVERNMENT ALLOCATE HUNDREDS OF THOUSANDS OF DOLLARS OVER A DISPUTE OF NO CONSEQUENCE TO THIS COUNTRY? DOES ANYONE ACTUALLY REVIEW THESE CASES AND EXERCISE DISCRETION? WHERE IS THE ADULT SUPERVISION?”
This blog post is also intended as reading for all Government prosecutors and enforcement lawyers, but especially those who believe prosecution/law enforcement involves finding any possible way to bring an action against someone under one of the thousands of available laws, without regard for proportionality and COMMON SENSE. The ones who think the U.S. Treasury is their little piggy bank.
It’s an easy blog post to write. It doesn’t require any analysis or stylistic writing. It requires only getting the reader to read the transcript of a hearing that took place on April 17, 2015 in the case United States v. Vassiliev, No. CR 14-0341. My thanks to Judge Charles Breyer for saying what needed to be said, and to a former colleague who sent me the transcript, knowing I would be amused and feel in some sense comforted by the fact that there are still people in the system of justice who haven’t lost their minds. If you want to skip to the transcript right away, you will find it here: United States v. Vassiliev Hearing Transcript. There’s a short article about the case here: No extraterritorial jurisdiction for wire fraud: a district court slams DOJ overreach. For those who want just the highlights, I’ve chosen some choice excerpts.
Judge Breyer dismissed an indictment under 18 U.S.C. § 666 (bribery concerning programs receiving federal funds) and 18 U.S.C. § 1343 (wire fraud) that never should have been brought, and minced few words in doing so. So, without further ado, ladies and gentleman . . . Judge Charles R. Breyer:
THE COURT: So this matter is on for a motion to dismiss. A number of grounds have been urged. And the defendants are basically charged with an honest services wire fraud and a bribery – a series of bribery charges. . . .
What I’m going to do is read the facts as I have gleaned them from the indictment and I’d like the Government to – if the Government believes that I’ve misstated it, I would like you to make note.
The International Civil Aviation Organization has been a United Nations specialized agency since 1944. . . . The time period relevant to the indictment is 2005, 2010. And during this time, the United States made annual monetary contributions to the agencies exceeding $10,000 per year. . . .
Mr. Siciliano was an employee of this agency and was specifically assigned to work in the Machine Readable Travel Documents Program. Mr. Siciliano worked and resided in Canada, where the agency that we’ve just discussed is headquartered. He held a Canadian passport, but is actually a Venezuelan national.
Mr. Sidorenko and Mr. Vassiliev were chairmen of a Ukrainian conglomerate of companies that manufactured and supplied security and identity products and their consortium, how they acted, was called EDAPS.
Mr. Sidorenko is a citizen of Ukraine, Switzerland and St. Kitts and Nevis. Not of the United States. But he primarily resided in Dubai during the relevant time period.
Mr. Vassiliev also resided in Dubai, but he is a citizen of Ukraine and St. Kitts and Nevis. He’s not an American citizen either.
And, of course, the company is not — I mean, the agency is not an American agency.
The indictment alleges . . . that Mr. Sidorenko and Vassiliev, Ukrainians, provided things of value to Mr. Siciliano in Canada in exchange for Mr. Siciliano using his position at a place in Canada to benefit an Ukrainian company, as well as these — Mr. Sidorenko and Mr. Vassiliev personally, these Ukrainians personally. . . .
All of those activities, everything that I have said, occurred outside the United States of America between these three defendants, who, by the way, aren’t United States citizens, who never worked in the United States and whose use of the wires did not reach or pass through the United States. . . .
Now, when last I looked, the Ukraine, what’s left of it, was not a state of the United States.
That’s correct, right?
LEUNG: Correct, your Honor.
THE COURT: Okay. So my first reaction in reading this indictment is that your office is to be congratulated because, apparently, you have reduced crime in the Northern District of California, and indeed in the United States of America, to such a point that you are using resources of your office to go after criminal activity that occurs in foreign countries and for that — that’s a rather interesting concept that, apparently, you thought this is a good use of assets and resources of the United States Attorney’s Office for the Northern District of California.
So it occurred to me: Is this statute or statutes, the honest services statute and the bribery statute, extraterritorial? And, fortunately, the Supreme Court has addressed this issue. As recently as 2010, they have said — Justice Scalia writing the opinion for a unanimous court, I might add, said that you just look at the statute. See what Congress said. Did Congress say it should be applied extraterritorial? And you would concede, wouldn’t you, Mr. Leung, there is nothing in the statute that talks about extraterritorial application, is there?
LEUNG: There is nothing in the text of 666 or 1343. I would submit that the legislative history of 1343 suggests that it was meant to be applied extraterritorially.
THE COURT: But you know there are those people, like judges, who look first to the statute. There is nothing in the statute. . . . So then if there is nothing in the statute, that doesn’t preclude necessarily the application of the statute extraterritorial, but we have to see whether or not that’s consistent with the general purpose of the statute.
And it’s your view that since the Government contributes some funds to this agency, which is involved in national security — I guess we can talk about it in open court, can’t we?
LEUNG: Yes, your Honor.
THE COURT: Okay. I didn’t want to clear the Court because of this strong national security interests that apparently are at issue here. . . .
But because they give money to this agency which is engaged in activities, some of which may impact national and international security arrangements, that’s the nexus for the United States Government to apply the statute in an extraterritorial way, is that correct? . . .
And so it occurred to me by that logic, the United States being a very generous country, gives a lot of money to a lot of foreign countries. They give over a billion dollars to Egypt. They give vast sums of money to Mexico. They give sums of money to many, many countries all over the world.
And then I wonder by their giving some money to a foreign country, does that then give them jurisdiction to apply statutes, such as the honest services statute, to individuals who are operating in that country or outside the United States? . . .
So, in other words, if I — it’s your view, your view, that the United States of America can police foreign companies in the exercise of their operation involving foreign citizens on matters unrelated to the program which the United States gave money for — that is, for the specific purpose of the program — and that they then have jurisdiction to act in that regard. . . .
So if there is ever, ever a policy interest of the United States of America in anything a foreign country — that occurs in a foreign country, the United States Attorney’s Office for the Northern District of California will vindicate the way the laws apply — the honest services law applies. You’re going to wipe out bribery and honest services throughout the world. I want to congratulate you for that. And I never in my life, in 50 years of criminal practice, seen a more misguided prosecution as the one that you’ve brought. I just don’t even get it. I don’t get it, how you can — how you can use resources of the United States Attorney’s Office to prosecute some foreign nationals involved in a foreign company, engaged in conduct which was foreign, on doing things that weren’t directly related to the contribution of the United States to that entity. . . .
THE COURT: Did you get permission from anyone in the Department of Justice in Washington DC to bring this prosecution?
LEUNG: It was not required. . . .
THE COURT: And you didn’t choose fit to ask the Department of Justice whether in their smarter sentencing, smarter criminal law enforcement program this is a good use of your resources?
LEUNG: We received office approval. We also coordinated with the State Department, your Honor. . . .
THE COURT: [Y]ou’re telling me this was a decision of the United States Attorney to bring this prosecution without the knowledge of the Department of Justice.
LEUNG: It was a duly authorized decision by this office to do so.
THE COURT: My suggestion, since I’m dismissing this indictment, is that you bring an appeal, right away. I would be very interested in what the Ninth Circuit has to say about this, whether they think that there is enough of a nexus to apply statutes, such as the bribery statute and the honest services statute, to the conduct that’s alleged in this particular case. . . .
My view is these statutes aren’t intended to apply extraterritorially to the conduct that’s alleged in this case. And just — and the very fact that you get up and say: Well, we could have prosecuted somebody in Mexico if American interests are implicated, or we can prosecute somebody in Canada — by the way, we could phone the Royal Canadian Mounted Police. They actually have law enforcement in Canada. If you’re so concerned about the way some Canadians are operating with a Canadian-based company in dealing with Ukrainians, you can always phone the Mounties and they will investigate it if they think it’s appropriate. . . .
There are really no limits to your argument. There are just no limits. I don’t understand where you really draw the line. The United States never gives anything to anybody unless there is some interest in it. And you’re saying whenever they give something to somebody, they can prosecute them, even though everything happens in some other place. . . .
LEUNG: . . . [T]he statutory interest recognized by the Supreme Court is that the United States has an interest to ensure that the money that it distributes pursuant to federal programs are free from corruption.
THE COURT: That’s right. So if you give – your argument is, you give a dollar to some foreign entity, you can then prosecute people who engage — who are involved with that foreign entity even though there are — even though they do it all abroad and do it in connection with something else. They don’t take the dollar. Something else. You say: Well, we can prosecute them for honest services. How do you actually — do you really think this is going to fly anywhere? Anyway, I invite you, I invite you to get the judgment of the Ninth Circuit. Obviously, I’ll be bound by it. . . .
And I’m going to write something so you have my reasons, and you take it right up to the Ninth Circuit and see what they have to say about it. And I don’t even think you have to ask Washington, right?
LEUNG: I think we do in this case, your Honor.
THE COURT: Really? I mean, you brought the indictment without asking them. I don’t know why you can’t appeal it without asking them. But you follow whatever procedure you think is appropriate. And you please put in the comment that I actually think this is a serious waste of scarce resources. If you’re not addressing crime in the Northern District of California, you’re not doing your job. And I think this — I think this prosecution is really a — brings into serious question the manner in which decisions are made by the United States Attorney for the Northern District of California. . . .
LEUNG: Your Honor, would you consider staying the order while we –
THE COURT: No. . . . Go right to the Ninth Circuit. Get a stay, if you think that’s an appropriate use of your resources.
April 28, 2015
Contact Straight Arrow privately here, or leave a public comment below: