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U.S. v. BODMER

July 9, 2004.

U.S.
v.
HANS BODMER, Defendant.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

Hans Bodmer is a Swiss national who was arrested while in South Korea on business. His arrest stemmed from a sealed United States indictment charging him with conspiracy to violate the Foreign Corrupt Practices Act ("FCPA"), 15 U.S.C. § 78dd-2, and launder money in violation of section 1956 of Title 18. Following his arrest, Bodmer was incarcerated in South Korea for five months, and subsequently extradited to the United States. He now moves to dismiss the Indictment.

I. FACTUAL ALLEGATIONS

  A. Privatization of Azerbaijani State Oil Company

  The Government alleges that in 1997, the Republic of Azerbaijan*fn1 was in the process of privatizing the State Oil Company of the Azerbaijan Republic ("SOCAR"). This undertaking was governed by the State Program of State Property Privatization for 1995-1998, and was administered by Azerbaijan's State Property Committee (the "SPC"). See Indictment ¶ 3.

  As part of the SOCAR privatization process, every Azerbaijani citizen received, at no cost, a booklet containing four voucher coupons. The vouchers were freely tradeable bearer instruments, and could be used to bid at auction on shares of privatized enterprises, including SOCAR. Foreigners who sought to participate in the auctions by using the vouchers were required to purchase, from the SPC, one "option" for every voucher held. The options were sold at an official government price. See id.

  B. The Corporate Entities and Relationships

  According to the Government, Oily Rock Group, Ltd., a British Virgin Islands corporation with its principal place of business in Baku, Azerbaijan, was created in 1997 for the purpose of acquiring, at auction, a controlling interest in SOCAR. To that end, Oily Rock entered into agreements ("Investment Agreements") with various investors to acquire and exercise at auction privatization vouchers and options, with the goal of obtaining a controlling interest in SOCAR.*fn2 Minaret Group, Ltd., a British Virgin Island corporation with its principal place of business in Baku, Azerbaijan, was created at the same time as Oily Rock, and was a party to one such Investment Agreement. See id. ¶¶ 4, 5, 18.

  At various times throughout 1998, Omega Advisors, Inc., a Delaware corporation with its principal place of business in New York City, entered into Investment Agreements, through its subsidiaries and affiliates, with Oily Rock and Minaret. These subsidiaries and affiliates were formed for the purpose of investing in Azerbaijani privatization vouchers and options. Between March and Jul of 1998, Omega purchased $126 million in privatization vouchers and options, and wired funds to effectuate the purchases. See id. ¶¶ 7, 18, 19.

  Oily Rock and Minaret also entered into Investment Agreements with Pharos Capital Management, L.P., a Delaware limited partnership. Pharos Capital Management was in the business of investing in emerging markets, and it effectuated its Investment Agreements with Oily Rock and Minaret during 1998, through various subsidiaries and affiliates that had been formed for the purpose of investing in Azerbaijani oil privatization vouchers and options. See id. ¶ 8. Between March and May of 1998, Pharos purchased $25 million in privatization vouchers and options, and wired funds to effectuate those purchases. See id. ¶¶ 20, 22(e).

  The Government alleges that Omega and Pharos Capital Management, as well as their affiliates and subsidiaries, constitute "domestic concerns," as that term is defined in the FCPA of 1977, 15 U.S.C. § 78dd-2(h)(1)(B).*fn3 The Government further alleges that in his capacity as a lawyer with the Swiss law firm von Meiss Blum & Partners, Bodmer represented Omega and other entities, including Oily Rock and Minaret. As such, he was an agent of a "domestic concern." See id. ¶¶ 4, 6, 8, 21(1). C. The Bribery Conspiracy

  According to the Government, beginning in August 1997, and continuing until 1999, Bodmer, in his capacity as an agent, paid bribes and authorized the payment of bribes, on behalf of various members of the investment consortium. See id. ¶¶ 10-15. The purpose of these payments was three-fold: "(a) to induce Azeri Officials to allow the investment consortium's continued participation in privatization; (b) to privatize SOCAR; (c) and to permit the investment consortium to acquire a controlling interest in SOCAR." Id. ¶ 10; see also id. ¶ 21(a)-(d). The bribes were paid to Azerbaijani officials, including a senior government official, a senior SOCAR official, and two senior SPC officials, and were made in the form of cash, shares of profits from SOCAR's privatization, vouchers and options, wire transfers, and stock, among other things. See id. ¶¶ 9, 13, 21(e).

  In connection with the bribery scheme, Bodmer allegedly participated in numerous meetings with the officials who were bribed, and created off-shore shell companies to effectuate the bribes. Furthermore, he opened Swiss bank accounts and used his law firm's client accounts at Hyposwiss Bank, where he sat on the board of directors, to launder money in furtherance of the scheme. Similarly, he wired funds through banks in Switzerland, the Netherlands, and the United Arab Emirates, and arranged for U.S. currency to be flown to Azerbaijan via private jets and charters; these funds were ultimately paid to the Azerbaijani government officials. Finally, Bodmer purportedly drafted various legal documents in connection with the payment of bribes, and arranged for the issuance of additional shares of Oily Rock, to be used as bribe payments. See id. ¶¶ 21(f)-(n), 22(a)-(k).

  II. LEGAL STANDARD

  A. Standard for Dismissal of an Indictment

  Generally, a facially valid indictment returned by a duly constituted grand jury suffices to call for a trial on the merits of the charges set forth therein. See Costello v. United States, 350 U.S. 359, 363 (1956). An indictment need only provide sufficient detail to protect the defendant against double jeopardy, and to state the elements of the charged offense to permit the preparation of a defense. See United States v. Alfonso, 143 F.3d 772, 776 (2d Cir. 1998); DeVonish v. Keane, 19 F.3d 107, 108 (2d Cir. 1994); United States v. Stavroulakis, 952 F.2d 686, 693 (2d Cir. 1992); United States v. Tramunti, 513 F.2d 1087, 1113 (2d Cir. 1975). Thus, a defendant may not challenge an indictment on the ground that it is not supported by adequate or competent evidence. See Costello, 350 U.S. at 363; see also Alfonso, 143 F.3d at 777 ("[T]he sufficiency of the evidence is not appropriately addressed on a pretrial motion to dismiss an indictment.").

  However, a defendant may raise, by pretrial motion, any defense "that the court can determine without a trial of the general issue." Fed.R.Crim.P. 12(b). A defense meets this criteria if the trial of the general issue of guilt "would be of no assistance in determining the validity of the defense." United States v. Covington, 395 U.S. 57, 60-61 (1969).*fn4 Moreover, "the court must decide every pretrial motion before trial unless it finds good cause to defer a ruling." Fed.R.Crim.P. 12(d). "Good cause" to postpone ruling on a pretrial motion exists when a defendant's claims "are substantially founded upon and intertwined with the evidence to be presented at trial." United States v. Williams, 644 F.2d 950, 953 (2d Cir. 1981); see also United States v. Spero, 331 F.3d 57, 61-62 (2d Cir. 2003) ("[A]ny challenge to an indictment must be brought prior to trial because [the] mandate [of Rule 12(b)(2)] is no mere pleading technicality. Rather, it serves a number of important purposes, including deterrence of gamesmanship . . . and insuring that indictments are not routinely challenged (and dismissed) after the jury has been seated and sworn." (alterations original)).

  B. Rule of Lenity

  A criminal statute must "define the . . . offense with sufficient definiteness that ordinary people can understand what conduct is prohibited . . ." Kolender v. Lawson, 461 U.S. 352, 357 (1983); see also United States v. Roberts, 363 F.3d 118, 122-23 (2d Cir. 2004). In construing an ambiguous criminal statute, a court must adhere to the rule of lenity, which provides that "ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity." Rewis v. United States, 401 U.S. 808, 812 (1971). Applying the rule "ensures that criminal statutes will provide fair warning concerning conduct rendered illegal and strikes the appropriate balance between the legislature, the prosecutor, and the court in defining criminal liability." Liparota v. United States, 471 U.S. 419, 427 (1985); see also United States v. Plaza Health Labs., Inc., 3 F.3d 643, 649 (2d Cir. 1993) (reversing judgment of conviction and dismissing indictment because the defendant did not have "fair warning of the sanctions the law placed on [its] conduct"); United States v. Johnpoll, 739 F.2d 702, 715 (2d Cir. 1984) (dismissing three counts "in accordance with the rule of lenity," and because they were multiplicitous).

  The Supreme Court has explained the rule of lenity as one of three manifestations of the constitutional requirement that criminal statutes provide fair warning. See United States v. Lanier, 520 U.S. 259, 266 (1997). According to the Court,
First, the vagueness doctrine bars enforcement of a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application. Second, as a sort of junior version of the vagueness doctrine, the canon of strict construction of criminal statutes, or rule of lenity, ensures fair warning by so resolving ambiguity in a criminal statute as to apply it only to conduct clearly covered. Third, although clarity at the requisite level may be supplied by judicial gloss on an otherwise uncertain state, due process bars courts from applying a novel construction of a criminal statute to conduct that neither the statute nor any prior judicial decision has disclosed to be within in its scope.
Id. (citations and quotation marks omitted). Consequently, the Lanier Court defined the standard for a fair notice inquiry as "whether the statute, either standing alone or as construed, made it reasonably clear at the relevant time that the defendant's conduct was criminal." Id. at 267; see also United States v. Harriss, 347 U.S. 612, 617 (1954); United States v. Roberts, 363 F.3d 118, 122-23 (2d Cir. 2004) (citing Chatin v. Coombe, 186 F.3d 82, 87 (2d Cir. 1999)). III. DISCUSSION

  Bodmer moves to dismiss both counts of the Indictment. In support of his motion, Bodmer argues that at the time of his alleged misconduct, he was not subject to the FCPA's criminal provisions, and therefore cannot be criminally sanctioned for conspiring to violate the FCPA. Bodmer further argues that ...


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