Dismissal of PDVSA FCPA Case is Latest Illustration of DOJ Overreach
A court in Texas has dealt a further blow to the Department of Justice’s (“DOJ”) latest attempt to enforce the Foreign Corrupt Practices Act (“FCPA”) against a foreign individual defendant residing outside of the United States, for acts carried out entirely outside of the United States. In dismissing the case, the Court set important limitations on the DOJ’s ability to claim that such a defendant can incur FCPA liability on an agency theory.
A court in the Southern District of Texas dismissed an indictment for lack of jurisdiction against Daisy Teresa Rafoi-Bleuler, a former asset manager with Swiss nationality currently residing in Switzerland. The DOJ charged Rafoi-Bleuler with violating both the FCPA and the Money Laundering Control Act based on allegations that she participated in a bribery scheme involving the Venezuelan state-owned oil company Petróleos de Venezuela SA (commonly known as “PDVSA”).
To allege jurisdiction based on the elements of an FCPA offense, the DOJ had to properly allege that Rafoi-Bleuler was an “agent of . . . a domestic concern.” To meet this requirement, the DOJ alleged that:
- Rafoi-Bleuler acted as an agent of a dual citizen of the U.S. and Venezuela and two U.S. businessmen, by facilitating the laundering of their proceeds.
- Rafoi-Bleuler communicated through email and other instruments of interstate commerce with the domestic concerns.
The Court, however, found these allegations wholly deficient. First, the Court found that the Indictment was insufficient to establish jurisdiction because the government must – but did not – proffer “undisputed [direct] evidence of mutual assent and control over the details of the person and agency, such that the principal controls the details over the assignment…. Absent direct or undisputed evidence, an agency does not exist.”
The Court reasoned that Rafoi-Bleuler did not work under the control of an American company. Instead, she merely contracted at arm’s length with one, to provide certain business services. The Court held that this relationship did not constitute an agency relationship.
Further, the Court rejected DOJ’s claim that Rafoi-Bleuler’s communications through interstate commerce provided a sufficient tie to the U.S. to establish an agency relationship. Specifically, the court held that such “ties” did not “present direct evidence that the defendant was an agent, as a matter of law.”
The Court also concluded that, if applied to the facts and circumstances of the case, the term “agent” would be unconstitutionally vague. Specifically, the Court held that the “application of the term ‘agent’ to the defendant, as a basis for jurisdiction, is such a novel application that no court has interpreted the statute or rendered a judicial decision that fairly discloses the manner in which the term may be applied to establish jurisdiction. That fact alone establishes the vagueness of the term.”
This case is another important reminder that the DOJ’s theories of FCPA jurisdiction can be aggressive, and in certain circumstances, may be vulnerable to challenge.