Defendants Esquenazi and Rodriguez were convicted in Miami federal court of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit wire fraud and money laundering. The FCPA makes it a crime to bribe the foreign official for the purpose of influencing the official. A foreign official is defined as an officer or employee of a foreign government or of any department, agency, or instrumentality thereof. The chief issue in the appeal in U.S. v. Esquenazi, was the definition of an instrumentality of a foreign government.
The defendants ran a telecommunications company that purchased phone time from foreign vendors and resold the minutes to customers in the United States. One of their main vendors was a telecommunications company in Haiti. The defendants worked out a deal with the phone company that reduced the defendants’ phone bill debt and in exchange the defendants agreed to funnel 50% of the savings to the principle under the guise of a consulting agreement. The government presented evidence that Haiti owned the phone company and that the phone company was an instrumentality of the government of Haiti. The issue to the court of appeals said to resolve was whether the district court’s definition of the instrumentality as it was used in the jury instructions was correct. Furthermore it had to define instrumentality in resolving the sufficiency of the evidence issue and the defendants’ challenge to the constitutionality of the statute.
The court rejected the defendants’ argument that the definition had to be limited to entities that perform traditional core government functions. The court defined instrumentality as an entity controlled by a foreign country that performs a function that the controlling government treats as its own. To decide whether the government controls entity courts and juries should look to the following: the foreign government’s formal designation of that entity; whether the gov’t has a majority interest in the entity; the government’s ability to hire and fire the entities principles; the extent to which the entity’s profits go directly to the government; and the to the extent to which the government funds the entity if it fails to break even. The court found that the lower courts jury instruction included most of the relevant elements for determining an instrumentality of a foreign governments incorrectly stated the definition of an instrumentality.
As for sufficiency the evidence, the court found that the evidence supported a verdict of that Teleco was and instrumentality of the Haitian government. Haiti gave the company a monopoly over Telecommunications Services, and its director was chosen by the Haitian president. The government expert testified that Teleco belong totally to the state and was considered a public entity.
The court rejected the defendants’ argument that the statute was unconstitutionally vague. Here they’re as no question under these facts that the company was overwhelmingly owned by the state and had no separate independents based on these facts there was no vagueness.
Deliberate Ignorance jury instruction
The court did find fault in giving the deliberate ignorance instruction but found harmless error. The court found the trial judge erred in giving the instruction because the evidence only points to either actual knowledge or no knowledge on the part of the defendant. It cautioned trial courts not to give the deliberate instruction except when there is evidence in the record showing the defendant purposely contrived to avoid learning the truth. It was harmless error because of overwhelming evidence that the defendant had actual knowledge of the unlawful payments.