Court of Appeals Hands Down Landmark FCPA Ruling Defining the Term “Instrumentality”


Federal appellate court decisions interpreting the Foreign Corrupt Practices Act (FCPA) are rare. Very rare. Indeed, in the statute’s 36-year history there have been barely more than a handful of appellate court decisions analyzing the meaning of the different provisions of this complex statute with which multinational corporations and scores of business executives must grapple on a daily basis. On Friday, May 16, 2014, the Eleventh Circuit Court of Appeals issued a landmark ruling addressing for the first time the definition of the term “instrumentality” as it appears in the FCPA. That case, captioned United States v. Joel Esquenazi and Carlos Rodriguez, affirmed the convictions and sentences of both defendants, and in so doing, upheld the longest sentence in the FCPA’s history, Esquenazi’s 15-year sentence.

The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) understandably view this decision as validating their broad interpretation of who qualifies as a “foreign official” under the FCPA. At a compliance conference held just after the release of this decision, the heads of the FCPA Units at both the DOJ and SEC, Patrick Stokes and Kara Brockmeyer, respectively, described the ruling as an “important,” “seminal” decision on a critical issue and said that they drew comfort from the appellate court embracing the DOJ and SEC’s approach to this issue.

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