A recent ruling in the Southern District of New York rejected two defenses in a Foreign Corrupt Practices Act (FCPA) case, resulting in an interpretation of the law that could have damaging consequences for defendants who are foreign nationals. In Securities and Exchange Commission v. Straub, Judge Richard J. Sullivan held that the general federal statute of limitations that applies to most federal offenses is also applicable in FCPA investigations. As a result, the limitations period does not begin to run until the target of the investigation is physically present in the United States. Additionally, Judge Sullivan held that the government is not required to prove a defendant’s intent to use interstate commerce to engage in a corrupt scheme, finding instead that the interstate commerce element is a jurisdictional factor that does not require proof of mens rea.

The Securities and Exchange Commission (SEC) alleged that beginning in 2005, the defendants – former executives of Magyar Telekom PLC, a Hungarian telecommunications company – orchestrated a scheme to bribe Macedonian officials. Details of the scheme were memorialized in various documents attached to e-mails sent to and from locations outside of the United States but stored in or routed through U.S.-based servers. Throughout this period, shares of the company were publicly traded in the United States and were registered with the SEC. The SEC alleged that the defendants had made false certifications by concealing the true nature of the transactions that formed the basis of the bribery scheme.

The defendants moved to dismiss the SEC’s allegations that they had engaged in a scheme to bribe Macedonian government officials to mitigate the effects of a new law on their company. They argued in part that the SEC had failed to allege the defendants’ intent to use interstate commerce in furtherance of the alleged scheme and that the SEC’s claims were time barred.

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Topics:  Bribery, Deferred Prosecution Agreements, DOJ, Email, FCPA, Interstate Commerce, Minimum Contacts, Personal Jurisdiction, SEC, SEC v Sharef, SEC v Straub, Statute of Limitations

Published In: Civil Procedure Updates, Criminal Law Updates, Finance & Banking Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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