U.S. v. Harder (Harder Motion to Dismiss)

8/20/2019 U.S. v. Harder (Harder Motion to Dismiss)

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

____________________________________

:

UNITED STATES OF AMERICA : :

v. : Criminal No. 2:15-cr-00001-PD

:

DMITRIJ HARDER :

___________________________________ :

ORDER

AND NOW, this ____ day of ___________ 2015, upon consideration of Defendant

Dmitrij Harder’s Motion to Dismiss Counts One through Eleven of the Indictment, it is hereby

ORDERED that said motion is GRANTED, and Counts One through Eleven of the Indictment

are DISMISSED.

BY THE COURT:

____________________________________HONORABLE PAUL S. DIAMONDUnited States District Court Judge

Case 2:15-cr-00001-PD Document 40 Filed 10/16/15 Page 1 of 43


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____________________________________

:



:

DMITRIJ HARDER :

___________________________________ :

DEFENDANT DMITRIJ HARDER’S MOTION TO DISMISS

COUNTS ONE THROUGH ELEVEN OF THE INDICTMENT

Pursuant to Fed. R. Crim. P. 12(b)(3), defendant Dmitrij Harder (“Mr. Harder”), by and

through his undersigned counsel, respectfully moves this Court for an order dismissing Counts

One through Eleven of the Indictment, because the Indictment fails to plead required elements of

a Foreign Corrupt Practices Act violation or a Travel Act violation. In support thereof, Mr.

Harder relies upon the accompanying memorandum of law.



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WHEREFORE, Mr. Harder respectfully moves this court for an Order granting his

motion to dismiss Counts One through Eleven of the Indictment.

October 16, 2015 Respectfully submitted,

BLANK ROME LLP

By: __/s/ Ian M. Comisky ________Ian M. ComiskyMatthew D. Lee

One Logan Square, 130 N. 18th StreetPhiladelphia PA 19103Phone: (215) 569-5646Fax: (215) [email protected] [email protected]

LACHEEN, WITTELS & GREENBERG, LLP

By: /s/ Stephen LaCheenStephen LaCheen

1429 Walnut Street, 13th FloorPhiladelphia, PA [email protected] (215) 735-5900

Attorneys for Dmitrij Harder



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____________________________________

:



:

DMITRIJ HARDER :

___________________________________ :

DEFENDANT DMITRIJ HARDER’S MEMORANDUM OF LAW

IN SUPPORT OF HIS MOTION TO DISMISS

COUNTS ONE THROUGH ELEVEN OF THE INDICTMENT

BLANK ROME LLP One Logan Square, 130 N. 18th StreetPhiladelphia PA 19103

LACHEEN, WITTELS & GREENBERG, LLP

1429 Walnut Street, 13th FloorPhiladelphia, PA 19102

Attorneys for Dmitrij Harder

October 16, 2015



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TABLE OF CONTENTS

FACTUAL BACKGROUND ..........................................................................................................1

ARGUMENT ..................................................................................................................................3

I. STANDARD FOR MOTION TO DISMISS AN INDICTMENT ......................................3

II. COUNTS ONE THROUGH SIX SHOULD BE DISMISSED BECAUSE THEINDICTMENT FAILS TO ALLEGE A VIOLATION OF THE FCPA .............................4

A. FCPA Statutory Language .......................................................................................5

B. The Indictment Alleges that Mr. Harder Made Corrupt Payments “For the Benefitof” the EBRD Official, but Such Conduct Is Outside the Scope of the FCPA. .......7

C. The Indictment Is Devoid of any Factual Allegations that Mr. Harder Allegedly

Made Corrupt Payments to the EBRD Official’s Sister “while Knowing that Allor a Portion of Such Money or Thing of Value Will Be Offered, Given, orPromised, Directly or Indirectly, to” the EBRD Official. ........................................8

D. The FCPA Charges Should Be Dismissed Because the Indictment IncorrectlyPleads Certain Elements of the Offense.................................................................10

III. SECTION 78DD-2(H)(2) OF THE FCPA IS UNCONSTITUTIONAL ..........................12

A. FCPA Framework with Regard to “Public International Organizations” ..............13

B. Congress Violated the Non-Delegation Doctrine when It Authorized the President

to Define “Public International Organization” for FCPA Purposes ......................15

1. Congress Must Set Policy, Direction and Limitations when DelegatingLegislative Power.......................................................................................15

2. The FCPA Fails to Set Forth any Policy for the President to Follow, orLimitations to Constrain the President’s Power, in Determining whatQualifies as a Public International Organization .......................................21

3. Even the FCPA as a Whole Does Not Reveal any Policy or Limitationswith Respect to the President’s Power to Designate a Public International

Organization. ..............................................................................................23

4. A Higher Delegation Standard Should Be Applied in Criminal Cases. ....24

C. The Term “Public International Organization” Is Inherently Vague and Results inArbitrary Criminal Enforcement Under the FCPA. ...............................................25

1. On its Face, the FCPA Provision Defining “Public InternationalOrganizations” as “Foreign Officials” Is Vague and Unconstitutional. ....27



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2. The FCPA Is Unconstitutional as Applied to Mr. Harder. ........................28

IV. THE TRAVEL ACT COUNTS MUST BE DISMISSED .................................................29

A. Because the Indictment Fails to State an Offense of Bribery Under PennsylvaniaState Law, There Is No “Unlawful Activity” for the Travel Act Counts. .............29

B. The Travel Act Has No Extraterritorial Reach when Predicated on a DomesticCommercial Bribery Statute. .................................................................................33

V. THE CONSPIRACY COUNT MUST BE DISMISSED BECAUSE THERE ARE NOSURVIVING FCPA OR TRAVEL ACT CLAIMS ..........................................................35

CONCLUSION ..............................................................................................................................36



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Pursuant to Fed. R. Crim. P. 12(b)(3), defendant Dmitrij Harder (“Mr. Harder”), by and

through his undersigned counsel, files this motion to dismiss Counts One through Eleven of the

Indictment. The Indictment fails to accurately allege the elements of a violation under the

Foreign Corrupt Practices Act (“FCPA”) – it is devoid of any allegations that Mr. Harder paid an

allegedly corrupt payment to a “foreign official,” fails to state required allegations when an

allegedly corrupt payment is made to a third party, and impermissibly substitutes “public

international organization” in the charging language against Mr. Harder. The FCPA counts

should also be dismissed because the provision permitting the President to expand the term

“foreign official” by identifying “public international organizations” as authorized by 15 U.S.C.

§ 78dd-2(h)(2)(B) is unconstitutional. Finally, the Travel Act counts fail to state an offense

under the Pennsylvania anti-bribery statute and because the Travel Act does not apply

extraterritorially to the facts of this case.

FACTUAL BACKGROUND

The fourteen-count Indictment charges Mr. Harder with conspiracy to violate the FCPA

and Travel Act (Count One); substantive violations of the FCPA (Counts Two through Six);

Travel Act violations (Counts Seven through Eleven); conspiracy to commit international

promotion money laundering (Count Twelve); and substantive international promotion money

laundering (Counts Thirteen through Fourteen).1 All of the charges are based upon an alleged

scheme described in the Indictment as follows:

Between in and around 2007 through in and around 2009,

defendant HARDER engaged in a scheme to pay approximately$3.5 million in bribe payments for the benefit of a foreign officialto corruptly influence the foreign official’s actions on applicationsfor financing submitted to the European Bank for Reconstruction

1 Mr. Harder has separately submitted a motion to dismiss the money laundering counts (Counts Twelve throughFourteen).



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and Development (“EBRD”) by clients of defendant HARDER andthe Chestnut Group, and to corruptly influence the foreign officialto direct business to defendant HARDER and the Chestnut Group,and others.

Indictment ¶ 2.2

The Indictment alleges that Mr. Harder made payments to the sister of the “EBRD

Official” (who is referred to in the Indictment as “EBRD Official’s Sister”), and she received

those payments “ for the benefit of EBRD Official.” See, e.g., Indictment ¶ 23 (emphasis added).

This particular allegation is repeated at least eight times in the Indictment:

• “Between in or around 2007 through in or around 2009, defendant HARDER engaged

in a scheme to pay approximately $3.5 million in bribe payments for the benefit of aforeign official…” (Indictment ¶ 2) (emphasis added);

•

“EBRD Official’s Sister received these payments for the benefit of EBRD Official…”( Id . ¶ 23) (emphasis added);

• “Instead, EBRD Official’s Sister received these payments for the benefit of EBRD

Official…” ( Id. ¶ 29) (emphasis added);

• “…defendant DMITRIJ HARDER paid EBRD Official’s Sister approximately $3.5million in bribe payments for the benefit of EBRD Official” ( Id. ¶ 30) (emphasisadded);

• “…defendant DMITRIJ HARDER, EBRD Official’s Sister, and others, offered to

pay, promised to pay, and authorized and caused the payment of bribes, directly andindirectly, to and for the benefit of EBRD Official” ( Id. ¶ 35) (emphasis added);

• “DMITRIJ HARDER…did willfully use…the mails and any means andinstrumentality of interstate commerce…[for] the giving of anything of value to, and for the benefit of , a foreign official…” ( Id. ¶ 42) (emphasis added);

• “…discussed the payment of bribes from HARDER to and for the benefit of EBRD

Official” ( Id. ¶ 47) (emphasis added); and

• “authorized and caused the payment of bribes, directly and indirectly, to and for the

benefit of EBRD Official” ( Id. ¶ 48) (emphasis added).

2 The EBRD describes itself as follows: “We provide project financing for banks, industries and businesses, bothnew ventures and investments in existing companies. We also offer business advisory services.” Seehttp://www.ebrd.com/home (last accessed October 11, 2015).



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Notably, the Indictment fails to allege that the EBRD Official actually received or was offered

(even indirectly) any of the allegedly corrupt payments.

ARGUMENT

I.

STANDARD FOR MOTION TO DISMISS AN INDICTMENT

A pretrial motion may raise any defense “that the court can determine without a trial of

the general issue.” Fed. R. Crim. P. 12(b). A defense can be considered pretrial when trial

“would be of no assistance in determining [its] validity.” United States v. Covington, 395 U.S.

57, 60 (1969). “The court must decide every pretrial motion before trial unless it finds good

cause to defer a ruling. Fed. R. Crim. P. 12(d). Pursuant to Fed. R. Crim. P. 12(b)(3)(B), an

indictment is invalid unless it “allege[s] that the defendant performed acts which, if proven,

constituted a violation of the law that he or she is charged with violating.” United States v.

Hedaithy, 392 F.3d 580, 589 (3d Cir. 2004) (citations omitted).

Alleging particular facts is crucial, because “where the definition of an offence [sic] . . .

includes generic terms, it is not sufficient that the indictment shall charge the offence in the same

generic terms as in the definition[.] . . . [I]t must descend to particulars.” United States v.

Russell , 369 U.S. 749, 765 (1962) (internal quotations omitted). The “important corollary

purpose” of this rule is “to inform the court of the facts alleged, so that it may decide whether

they are sufficient in law to support a conviction, if one should be had,” id. at 768, or so that the

court may “decide whether the facts alleged are sufficient in law to withstand a motion to dismiss

the indictment,” id. at 768 n.15. In such cases, “a charging document fails to state an offense if

the specific facts alleged in the charging document fall beyond the scope of the relevant criminal

statute, as a matter of statutory interpretation.” United States v. Panarella, 277 F.3d 678, 685

(3d Cir. 2002) (emphasis in original). Accordingly, if the indictment is premised upon an



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incorrect interpretation of the statute, it must be dismissed. See, e.g., United States v. Enmons,

410 U.S. 396, 410-12 (1973) (rejecting government’s interpretation of statute and affirming

dismissal of complaint); United States v. Alkhabaz , 104 F.3d 1492, 1496 (6th Cir. 1997) (same).

II. COUNTS ONE THROUGH SIX SHOULD BE DISMISSED BECAUSE

THE INDICTMENT FAILS TO ALLEGE A VIOLATION OF THE FCPA

Under the FCPA, when an allegedly corrupt payment is made to a person who is not a

“foreign official” (like “EBRD Official’s Sister”), it is a crime only if the payment is made by the

defendant “while knowing that all or a portion of such money or thing of value will be offered,

given, or promised, directly or indirectly, to any foreign official.” 15 U.S.C. § 78dd-2(a)(3).

The statutory language of the FCPA does not mention the phrase “for the benefit of.” The

Indictment therefore fails in two ways: (1) it purports to expand the statute’s reach and

criminalize payments made “for the benefit” of a foreign official; and (2) it fails to set forth any

factual allegations that the allegedly corrupt payments were made by Mr. Harder “while knowing

that all or a portion of such money or thing of value will be offered, given, or promised, directly

or indirectly, to any foreign official.”

The Indictment also fails to state an offense because it charges Mr. Harder with inducing

a foreign official to use his influence with a public international organization under 15 U.S.C. §

78dd-2(a)(3)(B), but that prong of the FCPA only addresses acts intended to influence a “foreign

government” and not a “public international organization.”

Counts Two through Six do not state FCPA violations by Mr. Harder and must be

dismissed, and the conspiracy count (Count One) fails as well to the extent it is premised on

FCPA liability.



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A. FCPA Statutory Language

The FCPA makes it unlawful for a “domestic concern” to offer, pay, promise to pay any

money or thing of value “to any foreign official” or “to any person, while knowing that all or a

portion of such money or thing of value will be offered, given, or promised, directly or

indirectly, to any foreign official” for the purposes of assisting a domestic person or entity in

obtaining business. 15 U.S.C. § 78dd-2. The relevant provisions of the FCPA state:

(a) Prohibition

It shall be unlawful for any domestic concern… or for any officer,director, employee, or agent of such domestic concern…, to makeuse of the mails or any means or instrumentality of interstatecommerce corruptly in furtherance of an offer, payment, promiseto pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of valueto—

(1) any foreign official for purposes of—

(A)

(i) influencing any act or decision of such foreignofficial in his official capacity,

(ii) inducing such foreign official to do or omit todo any act in violation of the lawful duty of suchofficial, or

(iii) securing any improper advantage; or

(B) inducing such foreign official to use his influence witha foreign government or instrumentality thereof to affect orinfluence any act or decision of such government orinstrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person;

* * *

(3) any person, while knowing that all or a portion of such moneyor thing of value will be offered, given, or promised, directly orindirectly, to any foreign official… for purposes of—



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(A)

(i) influencing any act or decision of such foreignofficial, political party, party official, or candidatein his or its official capacity,

(ii) inducing such foreign official, political party, party official, or candidate to do or omit to do anyact in violation of the lawful duty of such foreignofficial, political party, party official, or candidate,or

(iii) securing any improper advantage; or

(B) inducing such foreign official, political party, partyofficial, or candidate to use his or its influence with aforeign government or instrumentality thereof to affect or

influence any act or decision of such government orinstrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person.

15 U.S.C. § 78dd-2.3

In order to charge a crime under the FCPA, a determination as to who received the

allegedly corrupt payment must first be made. Though the Indictment does not expressly state

whether the government is proceeding under (a)(1) or (a)(3), the charging language against Mr.

Harder includes both, and both have been pleaded incorrectly because the government inserted

the “for the benefit of” language for any alleged payment to a foreign official under (a)(1), and

failed to plead required elements when an alleged payment was made to “any person” under

(a)(3). The charging language also inaccurately substituted “public international organization”

for “foreign government,” even though “public international organization” is part of the

3 Subsection (a)(2) of the FCPA criminalizes payments made to “any foreign political party or official thereof,”which has no relevance to this case. 15 U.S.C. §78dd-2(a)(2).



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definition of “foreign official,” not “foreign government and the government’s alternative

attempt to state a FCPA violation fails.

B. The Indictment Alleges that Mr. Harder Made Corrupt

Payments “For the Benefit of” the EBRD Official, but SuchConduct Is Outside the Scope of the FCPA.

The Indictment does not allege that Mr. Harder made any allegedly corrupt payment

directly to a foreign official, except in a conclusory fashion in the final charging paragraph for

Counts Two through Six. See Indictment ¶ 42 (referring to the “giving of anything of value to,

and for the benefit of, a foreign official”). There are no allegations in the Indictment that Mr.

Harder ever made “an offer, payment, promise to pay… any money…” to a “foreign official” as

required by subsection (a)(1) of the FCPA. 15 U.S.C. §78dd-2(a)(1).

Even though it is clear that the government cannot proceed under subsection (a)(1) of the

FCPA, the Indictment nonetheless attempts to charge Mr. Harder with such a violation.

Paragraph 42 of the Indictment purports to allege that Mr. Harder allegedly made a payment “to,

and for the benefit of, a foreign official.” Indictment ¶ 42. This language refers to an offense

under section (a)(1) of the FCPA. But, there are no factual allegations in the Indictment that any

corrupt payment was ever made – directly or indirectly – to the EBRD Official. Indeed, Counts

Two through Six detail alleged payments to the EBRD Official’s Sister – and not the EBRD

Official. There are no paragraphs in the Indictment that mention a payment from Mr. Harder to

the EBRD Official.

The government attempts to obscure this fact by inserting the phrase “for the benefit of”

in the charging language of Paragraph 42 and eight other times throughout the Indictment. But

the text of the FCPA is devoid of any such “for the benefit of” language. Instead, the FCPA

devotes an entirely separate subsection – (a)(3) – to the criminal offense that occurs when a



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payment is made to “any person” other than a foreign official, “while knowing that all or a

portion of such money or thing of value will be offered, given, or promised, directly or

indirectly, to any foreign official.” 15 U.S.C. § 78dd-2(a)(3). Thus, the Indictment incorrectly

charges Mr. Harder with a violation of subsection (a)(1) of the FCPA – even though there are no

alleged payments to a “foreign official” and payments made “for the benefit of” a foreign official

are not criminal under that provision of the FCPA. Thus, the Indictment fails to state an offense

under (a)(1) of the FCPA.

C. The Indictment Is Devoid of any Factual Allegations that Mr. Harder

Allegedly Made Corrupt Payments to the EBRD Official’s Sister “while

Knowing that All or a Portion of Such Money or Thing of Value Will BeOffered, Given, or Promised, Directly or Indirectly, to” the EBRD Official.

The Indictment also fails to state an offense under subsection (a)(3) of the FCPA – which

addresses corrupt payments to a person other than a foreign official – the only subsection of the

FCPA that can possibly be charged based upon the facts alleged in the Indictment.

When an alleged FCPA violation is based upon a corrupt payment to “any person” rather

than a “foreign official,” the payment must have been made “while knowing that all or a portion

of such money or thing of value will be offered, given, or promised, directly or indirectly, to any

foreign official.” 15 U.S.C. § 78dd-2(a)(3). Nowhere in the Indictment, however, is it alleged

that the allegedly corrupt payments made by Mr. Harder to the EBRD Official’s Sister were

made while knowing that the EBRD Official’s Sister would offer, give, or promise the payment

to the EBRD Official. The Indictment also does not allege that the allegedly corrupt payments

from Mr. Harder to the EBRD Official’s Sister were ever in fact offered, given, or promised,

directly or indirectly to the EBRD Official. The Indictment merely alleges that the payments by

Mr. Harder to the EBRD Official’s Sister were “for the benefit of” the EBRD Official. See, e.g.,

Indictment ¶¶ 23, 29, 35, and 42. But, this is not what the FCPA requires when the payment is



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made to “any person.” Thus, the allegations asserted against Mr. Harder – because they allege

that a payment was made “for the benefit” of a foreign official and do not allege that the payment

was made while knowing it would be at least offered to the foreign official – simply do not

constitute a FCPA violation.

Paragraph 42 of the Indictment – the final, summary paragraph for Counts Two through

Six – does recite, in purely conclusory fashion, the statutory elements of FCPA liability under 15

U.S.C. § 78dd-2(a)(3). That paragraph states, in pertinent part, as follows:

42. On or about the dates set forth below, in the EasternDistrict of Pennsylvania and elsewhere, defendant

DMITRIJ HARDER

. . . while knowing that all or a portion of such money and thing ofvalue would be and had been offered, given, and promised to,directly and indirectly, a foreign official . . . .

Indictment ¶ 42. This paragraph is a mere recitation of the elements of the crime (recited

wrongly in some parts of this paragraph, omitted here and discussed elsewhere), and does not

allege any facts upon which these elements would be proven at trial. Nowhere else in the

Indictment are there any allegations of the key elements of an offense under subsection (a)(3) of

the FCPA, and mere conclusory statements need not be accepted when assessing whether an

Indictment fails to state an offense. See United States v. Huet , 665 F.3d 588, 595 (3d Cir. 2012)

(“In determining whether an Indictment validly states the elements of the offense, we need not

blindly accept a recitation in general terms of the elements of the offense”) (citing United States

v. Panarella, 277 F.3d 678, 685 (3d Cir. 2002)).

In the preceding 41 paragraphs of the Indictment, there is not a single factual allegation

that Mr. Harder paid money to the EBRD Official’s Sister knowing she would offer it to the

EBRD Official or that any money was ever in fact paid to the EBRD Official. Indeed, the



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government does not even claim that the EBRD Official was part of the conspiracy. See

Indictment ¶ 33 (“The object of the conspiracy was for defendant DMITRIJ HARDER, EBRD

Official’s Sister, and others . . . .”). The government just repeats the claim over eight times that

the money was paid “for the benefit of” the EBRD Official. Without allegations that the

allegedly corrupt payments were paid to the EBRD Official’s Sister knowing they would be

offered to the EBRD Official, the Indictment fails to state a crime against Mr. Harder, and

Counts Two through Six must be dismissed.

D. The FCPA Charges Should Be Dismissed Because the Indictment

Incorrectly Pleads Certain Elements of the Offense.

The Indictment is defective in another way. In the charging language (Indictment ¶ 42),

the Indictment improperly substitutes the phrase “public international organization” for “foreign

government or instrumentality thereof,” but “public international organization” is part of the

“foreign official” definition and is not a “foreign government or instrumentality thereof.” Thus,

the manner in which the Indictment charges Mr. Harder fails to state a violation of the FCPA.

As shown in full above, each alleged FCPA violation – depending upon whom received

the allegedly corrupt payment (sections (a)(1), (a)(2), and (a)(3)) – contains two subsections (A)

and (B). The government is required to alleged and prove either subsection (A) or (B). Thus, to

establish a violation of subsection (a)(3), the government must allege and prove that the

defendant made a corrupt payment for purposes of:

• “influencing any act or decision of such foreign official, political party,

party official, or candidate in his or its official capacity” (15 U.S.C. §78dd-2(a)(3)(A)(i));

• “inducing such foreign official, political party, party official, or candidate

to do or omit to do any act in violation of the lawful duty of such foreignofficial, political party, party official, or candidate” (id . § 78dd-2(a)(3)(A)(ii));



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• “securing any improper advantage” (id . § 78dd-2(a)(3)(A)(iii)); or

• “inducing such foreign official, political party, party official, or candidateto use his or its influence with a foreign government or instrumentalitythereof to affect or influence any act or decision of such government or

instrumentality” (id . § 78dd-2(a)(3)(B)).

The Indictment in this case alleges that Mr. Harder made allegedly corrupt payments to

EBRD Official’s Sister for purposes of:

• “influencing acts and decisions of such foreign official in his official

capacity” (Indictment ¶ 42);

• “inducing such foreign official to do and omit acts in violation of the

lawful duty of such official” (id .);

•

“securing an improper advantage” (id .); or

• “inducing such foreign official to use his influence and authority with a public international organization to affect and influence acts and decisionsof such organization” (id .).

But, in alleging the fourth “purpose” for the allegedly corrupt payments, the Indictment fails to

track the statutory language and instead improperly substitutes the phrase “public international

organization” for “foreign government”:

Indictment ¶ 42 FCPA, 15 U.S.C. § 78dd-2(a)(3)(B)

“inducing such foreign official to use hisinfluence and authority with a publicinternational organization to affect andinfluence acts and decisions of suchorganization” (emphasis added)

“inducing such foreign official, political party, party official, or candidate to use his or itsinfluence with a foreign government orinstrumentality thereof to affect or influenceany act or decision of such government orinstrumentality” (emphasis added)

This language fails to state an offense against Mr. Harder under 15 U.S.C. § 78dd-

2(a)(3)(B). The Indictment purports to overwrite the statutory FCPA elements and define an

entirely different offense – based upon purported influence over a “public international

organization” rather than a “foreign government or instrumentality thereof.” The statute makes



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clear that the term “public international organization” is subsumed within the definition of

“foreign official,” § 78dd-2(h)(2)(A), (B), and it is not interchangeable with the term “foreign

government or instrumentality thereof” as the Indictment suggests and this portion of the

Indictment fails to state an offense under the FCPA.

III. SECTION 78DD-2(H)(2) OF THE FCPA IS UNCONSTITUTIONAL

The FCPA counts in the Indictment (Counts One through Six) should be dismissed

because the FCPA statute is unconstitutional to the extent criminal liability is premised upon

allegedly corrupt payments in connection with “public international organizations.” In this

regard, the FCPA states, without any explanation or limitation, that the President of the United

States is empowered to designate entities as “public international organizations,” whose

employees are then considered to be “foreign officials” covered by the FCPA. But Congress

cannot delegate its legislative powers to the President in criminal matters without providing

some direction (such as policy, scope, or limitations), and Congress failed to do this in the

FCPA. Further, because the FCPA is vague as to what conduct is criminal – because the term

“public international organization” is not clearly defined nor are the designated entities so easily

identified – this portion of the FCPA is void for vagueness, particularly because an individual

can be convicted without proof that the defendant knew that the entity in question was a “public

international organization” and therefore covered by the FCPA. Mr. Harder believes this to be

the first case where the government has charged anyone under the “public international



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organization” prong of the FCPA, and the constitutional defects arising from that portion of the

statute are readily apparent.4

Mr. Harder has not found any case that has reviewed the constitutionality of the

definition of “public international organization” for purposes of the FCPA – the key element to

the government’s case against Mr. Harder. The term “public international organization” was not

in the FCPA when it was originally enacted in 1977. Only when the FCPA was amended as of

November 10, 1998, was the term “public international organization” inserted into the FCPA.

See PL 105-366 (Nov. 10, 1998). This term, as utilized in the FCPA, violates two important

constitutional doctrines: the non-delegation doctrine and the void for vagueness doctrine.

A. FCPA Framework with Regard to “Public International Organizations”

In section (a) of the FCPA, entitled “Prohibition,” the statute prohibits payments to a

“foreign official” (or to a person while knowing the payment will be offered or paid to the

“foreign official”). 15 U.S.C. §78dd-2(a). To understand how “foreign official” is defined in

this case, a definition and sub-definition within section (h) of the FCPA must be reviewed. In

section (h), the FCPA defines “foreign official” as an employee of either a foreign government or

a “public international organization”:

4 Numerous commentators have noted the unusual nature of this prosecution. See FCPA Professor, “DOJ BringsFirst FCPA Enforcement Action of 2015” (Jan. 7, 2015) (“The enforcement action is notable in that it invokes therarely used ‘public international organization’ prong of the FCPA’s ‘foreign official’ element.”) (available athttp://www.fcpaprofessor.com/doj-brings-first-fcpa-enforcement-action-of-2015, last visited October 15, 2015);FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act, “United States v. DmitrijHarder” (“The DOJ’s action against Dmitrij Harder is unique in that it invokes the rarely used ‘public internationalorganization’ prong of the FCPA’s ‘foreign official’ element.”) (available athttp://fcpa.shearman.com/?mode=form&id=5ca70080a46cd9ed9a1cd1285f0b5463, last visited October 15, 2015);Miller & Chevelier FCPA Spring Review 2015, “DOJ Charges Former Chestnut Group Executive” (Apr. 17, 2015)(“Harder’s indictment marks the DOJ’s first individual FCPA prosecution of 2015. The case is also noteworthy because the alleged bribe recipient qualifies as a ‘foreign official’ not because he worked for a foreign governmententity, but because he worked for a ‘public international organization,’ as that term is defined under the FCPA.”)(available athttp://www.millerchevalier.com/Publications/MillerChevalierPublications?find=145305#ChestnutGroup, last visitedOctober 15, 2015).



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The term ‘foreign official’ means any officer or employee of aforeign government or any department, agency, or instrumentalitythereof, or of a public international organization.

15 U.S.C. § 78dd-2(h)(2)(A) (emphasis added). The term “public international organization” is

in turn defined as either (1) “an organization that is designated by Executive order pursuant to

section 288 of title 22,” or (2) “any other international organization that is designated by the

President by Executive order for the purposes of this section, effective as of the date of

publication of such order in the Federal Register.” 15 U.S.C. § 78dd-2(h)(2)(B)(i), (ii).

Even after reviewing this definition-within-a-definition, the FCPA still does not specify

which international organizations are “public international organizations” for FCPA purposes.

According to the FCPA, one must next review an entirely different statute. Section 288 of Title

22 is entitled “Privileges and Immunities of International Organizations,” and authorizes the

President to identify, by Executive order, organizations for the purposes of this statute. Under 22

U.S.C. § 288, organizations designated by the President as such have the right to contract, are

immune from suit, are immune from seizure, and are those entities that the United States

participates with through a treaty or an act of Congress:

For the purposes of this subchapter, the term “internationalorganization” means a public international organization in whichthe United States participates pursuant to any treaty or under theauthority of any Act of Congress authorizing such participation ormaking an appropriation for such participation, and which shallhave been designated by the President through appropriateExecutive order as being entitled to enjoy the privileges,exemptions, and immunities provided in this subchapter.

22 U.S.C. § 288. The EBRD was designated by Executive Order No. 12766, dated June 18,

1991, as a “public international organization” pursuant to 22 U.S.C. §288. 56 Fed. Reg 28463

(June 20, 1991).



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B. Congress Violated the Non-Delegation Doctrine when It Authorized the

President to Define “Public International Organization” for FCPA Purposes

Congress improperly delegated to the President the authority to define what is a “public

international organization” under the FCPA. The language of the FCPA imparts upon the

President the ability to determine by Executive order the entities that can be a “public

international organization” under the FCPA. Thus, the President alone has the power to

determine what is criminal in the context of allegedly corrupt payments to officials of non-

government entities. And, the President is free to identify the qualifying “public international

organizations,” because Congress failed to include in the FCPA any language to constrain or

guide the President in making these determinations. Because Congress left this decision as to the

scope of criminal conduct under the FCPA to the President, without any other direction, it has

violated the non-delegation doctrine.

1. Congress Must Set Policy, Direction and Limitations when Delegating

Legislative Power

The Constitution provides that “[a]ll legislative Powers herein granted shall be vested in a

Congress of the United States.” U.S. Const., Art. I, § 1. The Supreme Court has relied upon this

language to derive the non-delegation doctrine, which mandates that “Congress may not

constitutionally delegate its legislative power to another branch of Government.” Touby v.

United States, 500 U.S. 160, 164-65 (1991). “The nondelegation doctrine is rooted in the

principle of separation of powers that underlies our tripartite system of Government.” Id.

(quoting Mistretta v. United States, 488 U.S. 361, 371 (1989)).

“[T]he power to define criminal offenses and to prescribe the punishments to be imposed

upon those found guilty of them, resides wholly with the Congress.” Whalen v. United States,

445 U.S. 684, 689 (1980) (citing United States v. Wiltberger , 5 Wheat. 76, 95, 5 L.Ed. 37;



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United States v. Hudson & Goodwin, 7 Cranch 32, 34, 3 L.Ed. 259)). Congress can, however,

seek “assistance, within proper limits, from its coordinate Branches.” Mistretta, 488 U.S. at 372.

“Thus, Congress does not violate the Constitution merely because it legislates in broad terms,

leaving a certain degree of discretion to executive or judicial actors.” Touby, 500 U.S. at 165.

Congress may delegate what are typically legislative duties as long as Congress “lay[s] down by

legislative act an intelligible principle to which the person or body authorized to [act] is directed

to conform, such legislative action is not a forbidden delegation of legislative power.” Id.

(emphasis added) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409

(1928)). Congress must “clearly delineate[ ] the general policy ... and the boundaries of this

delegated authority.” Mistretta, 488 U.S. at 372-73 (emphasis added).

In Touby, the Supreme Court considered whether Congress had impermissibly delegated

its legislative power to the Attorney General to temporarily add or remove drugs on the five

schedules of substances proscribed under the Controlled Substances Act. Touby, 500 U.S. at

162. The Court noted that the prior case law was unclear on what guidance is required but

decided that it need not resolve the issue based upon the constraints placed upon the Attorney

General to define criminal conduct with respect to designer drugs. Id. at 165-66. Importantly

(and what is missing from the FCPA), the Controlled Substances Act contained specified and

detailed procedures for the Attorney General to follow when adding a drug to a schedule, thus



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affecting the scope of criminal conduct under the statute. Id. at 162-63.5 The Court concluded

that through this statutory framework, “Congress has placed multiple specific restrictions on the

Attorney General’s discretion to define criminal conduct” and therefore did not violate the

nondelegation doctrine. Id. at 167.

The Third Circuit has analyzed the non-delegation doctrine in three recent cases – all of

which met the “intelligible principle” test because each statute in question contained sufficient

directives as to how to accomplish what had been delegated. In United States v. Amirnazmi, 645

F.3d 564 (3d Cir. 2011), the court considered whether Congress violated the nondelegation

doctrine when it delegated in the International Emergency Economic Powers Act (“IEEPA”) the

power to regulate international trade in the time of a national emergency to the President.

Acknowledging that the Supreme Court had already upheld the delegation of civil authority to

the President under the IEEPA in Dames & Moore v. Regan, 453 U.S. 654, 675 (1981), the court

likewise found that Congress had not improperly delegated authority for the criminal provisions

under the IEEPA. Amirnazmi, 645 F.3d at 575-76. Likening the IEEPA to the Controlled

Substances Act in Touby, the court explained:

…to activate IEEPA, the President must find that an “unusual andextraordinary threat… to the national security, foreign policy, oreconomy of the United States” originating on foreign soil hasreached “national emergency” proportions.… IEEPA prohibits thePresident from regulating certain exempt transactions, 50 U.S.C. §1702(b), from prosecuting unwitting violators or holding liable

5 The Controlled Substance Act gave appropriate direction and limitation to the Attorney General in determiningwhich drugs were listed on which schedule of the Act: “First, the Attorney General must request a scientific andmedical evaluation from the Secretary of Health and Human Services (HHS), together with a recommendation as towhether the substance should be controlled. A substance cannot be scheduled if the Secretary recommends againstit. Second, the Attorney General must consider eight factors with respect to the substance, including its potential forabuse, scientific evidence of its pharmacological effect, its psychic or physiological dependence liability, andwhether the substance is an immediate precursor of a substance already controlled. Third, the Attorney Generalmust comply with the notice-and-hearing provisions of the Administrative Procedure Act (APA), which permitcomment by interested parties. In addition, the Act permits any aggrieved person to challenge the scheduling of asubstance by the Attorney General in a court of appeals.” Touby, 500 U.S. at 162-63 (citations omitted).



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those who act in good faith reliance on the statute and regulations,id. §§1705(c), 1702(a)(3), and from obviating Congress’s role asultimate arbiter of emergency trade policy. See id. §§1602(b),1703, 1706.

Amirnazmi, 645 F.3d at 576 (citations omitted) (footnote omitted). The IEEPA thus contained a

structure for the President to operate in when exercising the powers delegated to him by

Congress including congressional consultation, review and termination. The court held that the

IEEPA meaningfully constrained the Executive’s discretion.

In United States v. Berberena, 694 F.3d 514, 523 (3d Cir. 2012), the court considered the

constitutionality of Congress’s delegation of authority to the Sentencing Commission to issue

binding policy statements that were to limit a prisoner’s ability to benefit from retroactive

Sentencing Guidelines amendments. The court reiterated the test: “a delegation of legislative

power is permissible if Congress ‘lay[s] down by legislative act an intelligible principle to which

the person or body authorized to [exercise the delegated authority] is directed to conform.’” Id.

(quoting Mistretta, 488 U.S. at 372). In Berberena, Congress’s delegation of authority was

constitutional because it directed the Sentencing Commission appropriately:

“[B]oth §§ 994(u) and 994(a)(2) limit and inform the Commissionon how it must exercise its delegated authority.” United States v.Smith, 459 Fed. Appx. 99, 101 (3d Cir. 2012). In § 994(u),Congress articulated the contours of the Commission’s power: “tospecify in what circumstances and by what amount the sentencesof prisoners serving terms of imprisonment for [an] offense may bereduced” whenever it lowers the applicable Guidelines range forthat offense. In § 994(a), Congress further guided the Commission28 U.S.C. § 994 (u)’s exercise of that authority. First, it“prescribed the specific tool – policy statements – for the

Commission to use in regulating the retroactive effect ofsentencing.” Horn, 679 F.3d at 405. Second, it required that any policy statements issued on the subject further the purposes setforth in [18 U.S.C. §] 3553(a)(2).



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Id. at 523-24. The Berberena court concluded that this delegation was sufficient; Congress had

“delineate[d] the general policy, the public agency which is to apply it, and the boundaries of this

delegated authority.” Id. at 524 (quoting Mistretta, 488 U.S. at 373).

In United States v. Cooper , 750 F.3d 623 (3d Cir. 2014), the court traced the history of

the non-delegation doctrine. Importantly, the court noted that in Panama Refining Co. v. Ryan,

293 U.S. 388 (1935), the Supreme Court “invalidated Section 9(c) of the National Industrial

Recovery Act of 1933, which authorized the President to prohibit the shipment of oil produced in

excess of state-imposed quotas… because it lacked any standard whatsoever to limit the

President’s discretion.” Cooper , 750 F.3d at 268 (emphasis added) (explaining that the

provision was unconstitutional because “it gives to the President an unlimited authority to

determine the policy and to lay down the prohibition, or not to lay it down, as he may see fit”

that then becomes “a crime punishable by fine and imprisonment” and the provision “provided

no guidance whatsoever to limit the discretion of the President in executing the power delegated

to him”) (quoting Panama Refining Co., 293 U.S. at 415, 430).

A statute was also invalidated for having violated the non-delegation doctrine in A.L.A.

Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935). In that case, the Supreme Court

“struck down Section 3 of the National Industrial Recovery Act, which authorized the President

to approve ‘codes of fair competition’ for trades or industries, . . . [because] the statute

completely failed to define ‘fair competition’ and thus impermissibly transferred to the executive

branch the power to create law.” Cooper , 750 F.3d at 268 (quoting A.L.A. Schechter Poultry

Corp., 295 U.S. at 537-38). The Supreme Court had reasoned that “Congress cannot delegate

legislative power to the President to exercise an unfettered discretion to make whatever laws he



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thinks may be needed or advisable for the rehabilitation and expansion of trade or industry.”

A.L.A. Schechter Poultry Corp., 295 U.S. at 537-38 (emphasis added).

The Cooper court explained that even if the statute does not expressly state the policy and

limits of the delegated power, it may still be constitutional if such policy and limits could be

implied from the overall statute. Cooper , 750 F.3d at 269-70. In American Power & Light Co.

v. Securities & Exchange Comm’n, 329 U.S. 90 (1946), section 11 of the Public Utility Holding

Company Act was alleged to have violated the non-delegation doctrine because it authorized the

Securities and Exchange Commission to “require companies to take steps the Commission

deemed necessary to prevent holding companies from ‘unduly or unnecessarily complicat[ing]

the [holding-company system] structure’ or ‘unfairly or inequitably distribut[ing] voting power

among security holders.” Cooper , 750 F.3d at 269 (quoting American Power , 329 U.S. at 97).

The Supreme Court had rejected the contention that this direction was meaningless and

“suggested that the larger context of the act itself could imbue these terms with sufficient

meaning to guide the Commission.” Cooper , 750 F.3d at 270 (quoting American Power , 329

U.S. at 104) (explaining that the terms may be interpreted “from the purpose of the Act, its

factual background and the statutory context in which they appear”). Even if American Power

suggests that the delegation authority can properly be implied from the context of the statute, a

statute still must meet the Mistretta test, which is that a delegation is “constitutionally sufficient

if Congress clearly delineates the general policy, the public agency which is to apply it, and the

boundaries of this delegated authority.” Mistretta, 488 U.S. at 372-73.



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2. The FCPA Fails to Set Forth any Policy for the President to

Follow, or Limitations to Constrain the President’s Power, in

Determining what Qualifies as a Public International Organization

In the FCPA, Congress met only one of the three requirements under Mistretta. Congress

identified the public agency to which it delegated its power: the President. The other two

requirements under Mistretta are not met. The FCPA is silent as to any general policy as to what

should be a “public international organization” for purposes of the FCPA because the FCPA does

not set a policy as to what should be a “public international organization” under the FCPA and

the cross-referenced statute (22 U.S.C. §288), and the FCPA is silent as to any boundaries or

limitations on the President in identifying a “public international organization.” This delegation

of power is therefore unconstitutional.

What makes Congress’ delegation of power under the FCPA even more egregious is the

fact that Congress demonstrated that it knew how to properly delegate power in other FCPA

provisions. In subsection (e) of the FCPA, Congress delegated authority to the Attorney General

to issue guidelines as to what would assist the business community in understanding how to

comply with the FCPA. 15 U.S.C. § 78dd-2(e). This subsection specifically states how the

Attorney General is to go about soliciting this information and how it can be interwoven with the

Justice Department’s enforcement policy. Id. Similarly, in subsection (f) of the FCPA, Congress

delegated authority to the Attorney General to issue responses to specific inquiries from

businesses as to whether certain conduct would violate the act. 15 U.S.C. § 78dd-2(f). How the

Attorney General is required to conduct this procedure to issue opinions is set forth in detail with

lengthy limitations as to what the Attorney General may do. Id.

In contrast, the delegation of power to the President to identify “public international

organizations” under the FCPA contains no direction from Congress whatsoever. Congress



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stated that “public international organizations” are those authorized by Executive order either

pursuant to 22 U.S.C. § 288 or by any other Executive order. 15 U.S.C. § 78dd-2(h). This

delegation provides seemingly limitless authority to the President to unilaterally identify “public

international organizations” and, in so doing, dramatically expands the scope of potential FCPA

liability.

Even if it were determined that Congress provided some guidance to the President based

upon the text of 22 U.S.C. § 288, the FCPA still violates the non-delegation doctrine because of

the two-pronged manner in which the President is authorized to designate organizations. The

President may designate international organizations either (1) pursuant to 22 U.S.C. § 288 (15

U.S.C. § 78dd-2(h)(2)(B)(i)) or (2) by simply issuing an Executive order (id . § 78dd-

2(h)(2)(B)(ii)). Under the second prong, Congress provided absolutely no guidance to the

President, or limiting principles, in designating “public international organizations.” Indeed, on

March 19, 2002, President George W. Bush issued Executive Order 13259, under the second

prong (§ 78dd-2(h)(2)(B)(ii)), designating the following entities as “public international

organizations” for FCPA purposes:

(a) The European Union, including: the European Communities(the European Community, the European Coal & SteelCommunity, and the European Atomic Energy Community);institutions of the European Union, such as the EuropeanCommission, the Council of the European Union, the EuropeanParliament, the European Court of Justice, the European Court ofAuditors, the Economic and Social Committee, the Committee ofthe Regions, the European Central Bank, and the EuropeanInvestment Bank; and any departments, agencies, andinstrumentalities thereof; and (b) The European Police Office(Europol), including any departments, agencies, andinstrumentalities thereof.

66 Fed. Reg. 13239 (Mar. 21, 2002). This Executive Order is devoid of any analysis or

explanation as to why the President was designating these particular entities for FCPA purposes,



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and instead confirms that the Executive Branch has unfettered discretion in identifying entities as

“public international organizations.”

A review of the “public international organizations” designated by the President to date

reveals the indefiniteness as to the criteria for identifying such an organization. For instance, the

current list of organizations designated by Executive order pursuant to 22 U.S.C. § 288 appears

to include the following: the Caribbean Organization; the European Space Agency; the Global

Fund to Fight AIDS; the International Atomic Energy Agency; the International Coffee

Organization; the International Cotton Institute; the International Pacific Halibut Commission;

the United Nations; and the World Health Organization. See 22 U.S.C. § 288. (This list does not

include organizations designated by Executive order under the second prong, such as Executive

Order 13259 described above.) Notably absent from this list are international organizations such

the North Atlantic Trade Organization and the Fédération Internationale de Football Association

(“FIFA”). The International Committee of the Red Cross is on the list; but Médecins Sans

Frontières (“Doctors Without Borders”) is not.

3.

Even the FCPA as a Whole Does Not Reveal any

Policy or Limitations with Respect to the President’s Power

to Designate a Public International Organization.

Assuming that a constitutional violation of the non-delegation doctrine may be cured by

implying direction from Congress through other text of the statute (as was suggested in American

Power ), the overall goal of the FCPA does not provide any rational explanation for many of the

organizations designed as “public international organizations” for FCPA purposes. The purpose

of the FCPA is to prohibit bribes to officials of foreign governments or foreign governmental

entities. Through the developing case law, the purpose and scope of the FCPA has been

challenged primarily through the term “instrumentality” and whether a particular entity qualifies



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as an “instrumentality” of a foreign government. See, e.g., United States v. Esquenazi, 752 F.3d

912 (11th Cir. 2014). The “instrumentality” inquiry focuses on whether an entity controlled by a

foreign government performs a function the controlling government treats as its own. Id. Many

– if not all – of the organizations designed at “public international organizations” do not satisfy

this test. How organizations such as the International Cotton Institute or the Global Fund to

Fight AIDS serve a traditional governmental function is not at all clear.

This case goes far beyond the permissible scope of delegated legislative authority that

was found acceptable in Touby, Amirnazmi, or Berberena. Here, Congress provided no

“intelligible principle” – let alone any principle that “meaningfully constrains” executive action,

as argued below – for the President to follow when determining what organizations should

qualify as “public international organizations” for FCPA purposes. Instead, Congress granted

the President unbridled discretion to identify “public international organizations” and, in so

doing, define the parameters of criminal liability. The FCPA has no instructions, framework, or

guidance at all to provide any meaningful direction for the President to determine what type of

organization should qualify as such. This portion of the FCPA is thus unconstitutional.

4. A Higher Delegation Standard Should Be Applied in Criminal Cases.

In addition, this case presents the unsettled question of whether something more than an

“intelligible principle” is required when Congress authorizes another branch to promulgate

regulations that contemplate criminal sanctions. See Touby, 500 U.S. at 165-66 (raising the

question, but not deciding, whether a higher standard which “meaningfully constrains” executive

discretion to criminalize is warranted); Amirnazmi, 645 F.3d at 576 (“Therefore, IEEPA meets

the same standard of constraint outlined in Touby; that is, IEEPA meaningfully constrains the

Executive’s discretion. Accordingly, it is unnecessary for us to address the unsettled question of



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whether something more demanding than an ‘intelligible principle’ is necessitated within the

context of delegating authority to define criminal conduct.”). In Cooper, the Third Circuit noted

that a higher standard of “meaningful constraints” was proposed, but declined to resolve the

issue. 750 F.3d at 271. The President’s ability under the FCPA to expand the definition of

“foreign official” and thereby dramatically increase the potential for criminality unquestionably

poses a heightened risk to individual liberty. Because the President’s decision to issue Executive

Order 12766 designating the EBRD as a “public international organization” expanded the

criminal reach of the FCPA, a standard higher than a mere “intelligible principle” should be

applied here. Even under the “intelligible principle” standard, the FCPA delegation fails.

C. The Term “Public International Organization” Is Inherently Vague

and Results in Arbitrary Criminal Enforcement Under the FCPA.

Any lay person reviewing the FCPA would likely fail to comprehend that it criminalizes

payments to employees of a “public international organization,” because that particular term is

buried in a definition-within-a-definition and requires analysis of an entirely different statute

(located in a different title) as well as every single Executive order issued by the President on

this subject. Moreover, the FCPA contains no mens rea requirement, which might otherwise

cure this vagueness problem; the defendant is not required to know that the subject organization

is a “public international organization.” Because the term “public international organization” is

vague and because there is no scienter requirement, this term is unconstitutionally vague and is

void.

A penal statute must define a criminal offense “[1] with sufficient definiteness that

ordinary people can understand what conduct is prohibited and [2] in a manner that does not

encourage arbitrary and discriminatory enforcement.” Skilling v. United States, 561 U.S. 358,

402-03 (2010) (quoting Kolender v. Larson, 461 U.S. 352, 357 (1983)). A statute is



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unconstitutionally vague only if it “‘fails to provide people of ordinary intelligence a reasonable

opportunity to understand what conduct it prohibits’” or “‘authorizes . . . arbitrary and

discriminatory enforcement.’” Amirnazmi, 645 F.3d at 588 (quoting United States v. Stevens,

553 F.3d 218, 249 (3d Cir. 2008) (quoting Hill v. Colorado, 530 U.S. 703, 722 (2000)).

A vagueness challenge may be made facially or as applied, and, in this case, Mr. Harder

raises both. “A facial challenge is an attack on a statute itself as opposed to a particular

application.” City of Los Angeles, Calif. v. Patel , __U.S.__, 135 S.Ct. 2443, 2449 (2015).

Though the Supreme Court has stated that facial challenges are the “most difficult . . . to mount

successfully” (id. (quoting United States v. Salerno, 481 U.S. 739, 745 (1987)), the Court has

permitted them to be raised – and has considered them – in “a diverse array of constitutional

provisions.” Patel , 135 S.Ct. at 2449. Even if a facial challenge fails, the statute may be invalid

as applied. “[V]agueness attacks are based on lack of notice, they may be overcome in any

specific case where reasonable persons would know their conduct puts [them] at risk of

punishment under the statute.” San Filippo v. Bongiovanni, 961 F.2d 1125, 1136 (3d Cir. 1992)

(alteration in original) (internal quotation marks and citation omitted).

In either a facial or as-applied challenge, void for vagueness assertions can be overcome

where the statute in question contains a mens rea element. “Scienter requirements in criminal

statutes ‘alleviate vagueness concerns’ because a mens rea element makes it less likely that a

defendant will be convicted for an action committed by mistake.” United States v. Moyer , 674

F.3d 192, 211-212 (3d Cir. 2012) (quoting Gonzales v. Carhart, 550 U.S. 124, 149 (2007)

(citation omitted)). When a conviction under a statute can only occur “for an act knowingly

done with the purpose of doing that which the statute prohibits, the accused cannot be said to



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suffer from lack of warning or knowledge that the act which he does is a violation of law.”

Moyer , 674 F.3d at 212 (quoting Screws v. United States, 325 U.S. 91, 102 (1945)).

1. On its Face, the FCPA Provision Defining “Public International

Organizations” as “Foreign Officials” Is Vague and Unconstitutional.

Not only does the FCPA contain no warnings for an unwitting individual that an entity

might be a “public international organization” – and buries that term deep within the statutory

text – but the FCPA does not even set forth a list of covered organizations. The FCPA

overwhelmingly focuses on foreign governments, political parties, and political candidates,

lending to the reasonable interpretation that only those entities that serve governmental

functions, and employees thereof, are covered by the FCPA.

The “prohibition” section of the FCPA does not even mention a “public international

organization,” and the focus on foreign governments is prevalent. Indeed, each violation of the

FCPA – dependent upon to whom the payment was made (sections (a)(1), (a)(2), and (a)(3)) –

contain two subsections (A) and (B) that must be alleged and proven for a crime to have

occurred. Subsection (A) prohibits payments “for purposes of (i) influencing any act or decision

of such foreign official…, (ii) inducing such foreign official…to do or omit to do any act in

violation of the lawful duty…, or (iii) securing any improper advantage.” 15 U.S.C. § 78dd-

2(a)(3)(A). Subsection (B), however, is focused only on foreign governments and prohibits

payments “for the purposes of inducting such foreign official…to use his or its influence with a

foreign government or instrumentality thereof to affect or influence any act or decision of such

government or instrumentality.” 15 U.S.C. § 78dd-2(a)(3)(B) (emphasis added).

In addition, in analyzing the FCPA to determine which of the three sections might apply

(sections (a)(1), (a)(2), and (a)(3)), each of the three sections all address a “foreign official” or a

“foreign political party or official thereof” or a “candidate for foreign political office.” Put



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another way, section (1) is about corrupt payments to a “foreign official”; section (2) is about

corrupt payments to a “political party,” political party “official,” or a “candidate of foreign

political office”; and section (3) is about corrupt payments to a “foreign official,” “political

party,” political party “official,” or a “candidate of foreign political office” (which is a

combination of (1) and (2)). Given that the two primary foci of the “prohibition” statute of the

FCPA were incorporated in section (3), a reasonable person would think that this was all the

FCPA was meant to cover – payments relating to governmental functions.

What constitutes a “public international organization” is not at all clear by the definition

contained in the FCPA. First, the reference is tacked on to the very end of the “foreign official”

definition, which is otherwise defined to be an official of “a foreign government or any

department, agency, or instrumentality thereof.” 15 U.S.C. § 78dd-2(h)(2). Even after the term

is located within the FCPA, two more steps are required to determine what constitutes a covered

organization. This requires review of a different statute, contained within a different title (Title

22), and then researching all Executive orders issued by the President pursuant to either 22

U.S.C. § 288 or the FCPA.

If the statute included a mens rea element – and the FCPA does not – the vagueness of

the term “public international organization” might not amount to a constitutional violation. If the

FCPA only criminalized payments knowingly made to a public international organization, then a

vagueness claim might not be viable. But the FCPA has no such mens rea requirement and it is

therefore unconstitutional.

2. The FCPA Is Unconstitutional as Applied to Mr. Harder.

In addition to being vague on its face, the term “public international organization” is

vague as applied to Mr. Harder. A reasonable person, like Mr. Harder, would not know that a



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foreign bank like the EBRD would be covered by the FCPA. First of all, no U.S. government

agency appears to maintain a comprehensive list of all covered “public international

organizations” for purposes of the FCPA.6 Second, the likelihood of criminally ensnaring a

reasonable person like Mr. Harder is greater with international organization such as the EBRD.

By its own description, the EBRD functions like a bank, not a government. It provides financing

and business consulting services, services a reasonable person would not likely consider to be

government functions.

IV. THE TRAVEL ACT COUNTS MUST BE DISMISSED

Counts Seven though Eleven in the Indictment allege violations of the Travel Act, 18

U.S.C. §1952(a)(3). Indictment ¶¶ 43-44. The Travel Act prohibits the use of a facility in

interstate or foreign commerce with an intent to carry on or facilitate any “unlawful activity.” 18

U.S.C. § 1952(a)(3). The Indictment alleges that the “unlawful activity” that supports Counts

Seven through Eleven is bribery in violation of the Pennsylvania bribery statute, 18 Pa. Cons.

Stat. Ann. § 4108. Indictment ¶ 44. The Travel Act counts must be dismissed for two reasons.

First, the Pennsylvania bribery statute does not apply to the conduct alleged in the Indictment.

Second, the alleged Travel Act violations do not apply extraterritorially.

A. Because the Indictment Fails to State an Offense of Bribery

Under Pennsylvania State Law, There Is No “Unlawful Activity”

for the Travel Act Counts.

The Pennsylvania bribery statute criminalizes (a) the acceptance of a bribe; (b) the

acceptance or solicitation of a bribe when the person holds himself out to the public as someone

engaged in a business involving the disinterested selection of services (like an appraiser); and,

6 While the Title 22 provision enumerates the international organizations designed by the President pursuant to thefirst prong (§ 78dd-2(h)(2)(B)(i)), that statute does not include a listing of entities designated by the President pursuant to the second prong (§ 78dd-2(h)(2)(B)(ii)), such as Executive Order 13259 issued by President George W.Bush on March 19, 2002.



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(c) the solicitation of a bribe but only if the acceptance of the bribe is also criminal under the

Pennsylvania statute. 18 Pa. C.S.A. §4018. The statute, entitled “Commercial bribery and

breach of duty to act disinterestedly,” states in full:

(a) Corrupt employee, agent or fiduciary. – An employee, agent orfiduciary commits a misdemeanor of the second degree when,without the consent of his employer or principal, he solicits,accepts, or agrees to accept any benefit from another person uponagreement or understanding that such benefit will influence hisconduct in relation to the affairs of his employer or principal.

(b) Corrupt disinterested person. – A person who holds himself outto the public as being engaged in the business of makingdisinterested selection, appraisal, or criticism of commodities orservices commits a misdemeanor of the second degree if hesolicits, accepts or agrees to accept any benefit to influence hisselection, appraisal or criticism.

(c) Solicitation. – A person commits a misdemeanor of the seconddegree if he confers, or offers or agrees to confer, any benefit theacceptance of which would be criminal under subsections (a) or

(b) of this section.

18 Pa. Cons. Stat. Ann. § 4108 (emphasis added).

Here, although the Indictment does not state which prong of the Pennsylvania statute it

relies upon to charge Mr. Harder with violations of the Travel Act, there are no allegations that

Mr. Harder accepted a bribe or that he was in a business that related to the disinterested selection

of services for the public.7 Thus, only the subpart about solicitation (part (c)) could apply.

Under the solicitation subpart, solicitation of a bribe is criminal only if the acceptance of

a bribe is criminal under subparts (a) or (b). This means that Mr. Harder can be convicted of

bribery under Pennsylvania law only if the EBRD Official’s Sister (who allegedly accepted the

bribes “for the benefit of” the EBRD Official) could be convicted of bribery under Pennsylvania

7 See Allen Neurosurgical Assocs., Inc. v. Lehigh Valley Health Network, No. Civ. A. 99-4653, 2001 WL 41143, at*7 (E.D. Pa. Jan. 18, 2001) (§ 4108(b) is limited “to persons whose primary business is making critical judgments…[to] include, for example, food critics, art appraisers, and possibly certified public accountants”).



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law. But the EBRD Official’s Sister could never be convicted of bribery under Pennsylvania

law.

First of all, the alleged conduct of the EBRD Official’s Sister does not come within the

scope of the Pennsylvania law, because she is not an employee or agent of the EBRD and her

conduct was not allegedly being influenced. A crime of bribery under § 4108(a) requires that the

bribe paid to a person “influence his conduct in relation to the affairs of his employer or

principal.” 18 Pa. Cons. Stat. Ann. § 4108(a). Whatever the EBRD Official’s Sister may have

allegedly accepted from Mr. Harder, it was not to influence her conduct in relation to the affairs

of her employer. Thus, there are no allegations to support an alleged crime under § 4108(a).

Second, there also no allegations that Mr. Harder committed a crime under § 4108(c).

The act of accepting payment of a bribe outside of Pennsylvania does not constitute an offense

under the solicitation provision (§ 4108(c)). See Parise v. United States, 2000 WL 876894 (E.D.

Pa. June 20, 2000). In Parise, the defendant was convicted of RICO and Travel Act violations

that were based upon predicate offenses of the Pennsylvania bribery statute. Id. at *1. The

defendant had traveled from Pennsylvania to South Carolina, Louisiana, Virginia, Florida,

California, Nevada, and Arizona to offer and make improper payments to union employees so

that those employees would refer personal injury cases to a particular law firm in Pennsylvania.

Id. This Court, construing § 4108 together with § 102(a), the territorial provision of the

Pennsylvania criminal code,8 held that the union employees’ actions were not sufficiently

connected to Pennsylvania to constitute a violation of § 4108(a). Id. at *3-*4. The Court

explained that “[b]ecause § 4108(c) is dependent upon a violation of § 4108(a), and such a

8 18 Pa. C.S.A. § 102(a).



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violation did not exist here, [the defendant] cannot have been found guilty under § 4108(c).” Id.

at *4.

This case is identical to Parise except that the alleged improper conduct occurred not

only outside of Pennsylvania but outside of the United States. There are no allegations in the

Indictment connecting the EBRD Official’s Sister to Pennsylvania (or, for that matter, the EBRD

Official). There is no allegation that the EBRD Official’s Sister ever traveled to Pennsylvania at

any time. There is no allegation of any act of, or conduct by, the EBRD Official’s Sister in

Pennsylvania at all. And, there is no allegation of any act of, or conduct by, the EBRD Official’s

Sister (or by the EBRD Official) outside of Pennsylvania that implicates Pennsylvania in any

way. Indeed, of the five alleged corrupt payments, three originated from an account in Germany.

Indictment ¶ 44. The other two originated from an account in Pennsylvania, but this Court stated

on a denial of motion for reconsideration that where the payments may have originated from is

not relevant under the Pennsylvania bribery statute. Parise, 2000 WL 1201382, at *1 (“The

government’s reliance on the location in which the bribe money originate is misplaced. Where

the money comes from is not an element of the crime under § 4108(a)”). The Court explicitly

stated that there is “nothing in the Pennsylvania commercial bribery statute that concerns how or

where the person paying the bribe obtained the money to commit the crime.” Id. Further, the

Indictment does not charge that the alleged conduct violated laws of other jurisdictions, that Mr.

Harder failed to perform a legal duty imposed by Pennsylvania law, or that § 4108 expressly

prohibits conduct outside of the Commonwealth of Pennsylvania.

Mr. Harder was alleged only to have solicited bribery payments (not accepted bribery

payments), and solicitation is criminal under Pennsylvania law only if the acceptance of those

payments is also criminal under Pennsylvania law. Because the EBRD Official’s Sister (who



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allegedly accepted the payments) was not in Pennsylvania (or even the United States) at the time,

she cannot be found guilty of bribery under Pennsylvania law. And the Indictment contains no

allegations relating to any connection between the EBRD Official and Pennsylvania, either.

Because the allegations in the Indictment are insufficient to state violations of § 4108(a) of the

Pennsylvania bribery statute by EBRD’s Official’s Sister, there can be no violation for

solicitation under the Pennsylvania bribery statute by Mr. Harder. With no viable bribery claims,

the predicate “unlawful activity” to support the Travel Act counts fails, and Counts Seven though

Eleven must be dismissed.

B.

The Travel Act Has No Extraterritorial Reach whenPredicated on a Domestic Commercial Bribery Statute.

Even assuming the Indictment did state an offense under the Travel Act because of a

Pennsylvania bribery crime – which it does not – the Travel Act cannot be applied

extraterritorially in this circumstance, because of “a canon of statutory interpretation known as

the presumption against extraterritorial application.” Kiobel v. Royal Dutch Petroleum Co., __

U.S. __, 133 S. Ct. 1659, 1664 (2013). “That canon provides that ‘[w]hen a statute gives no

clear indication of an extraterritorial application, it has none.’” Kiobel , 133 S.Ct. at 1664

(quoting Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255 (2010)). The purpose of

this canon is to “reflect[] the ‘presumption that United States law governs domestically but does

not rule the world.’” Kiobel , 133 S.Ct. at 1664 (quoting Microsoft Corp. v. AT & T Corp., 550

U.S. 437, 454 (2007)); see also United States v. Laboy-Torres, 553 F.3d 715, 718 (3d Cir. 2009)

(O’Connor, J., sitting by designation) (noting “the legal presumption that Congress ordinarily

intends its statutes to have domestic, not extraterritorial, application” (quoting Small v. United

States, 544 U.S. 385, 388-389 (2005)).



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A statute applies extraterritorially only if Congress has so expressly stated, and this

express statement must be more than a reference to “foreign commerce.” “Unless there is an

affirmative intention of the Congress clearly expressed to give a statute extraterritorial effect, we

must presume it is primarily concerned with domestic conditions.” Morrison, 561 U.S. at 255;

see also Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010). Though the

Travel Act does proscribe travel or use in “foreign commerce,” this does not render it

extraterritorial: “we have repeatedly held that even statutes that contain broad language in their

definitions of ‘commerce’ that expressly refer to ‘foreign commerce’ do not apply abroad.”

Morrison, 561 U.S. at 263. Not only is there no express statement of foreign application, but the

Travel Act evidences its domestic focus, as shown through its definition of “unlawful conduct”:

“extortion, bribery, or arson in violation of the laws of the State in which committed or of the

United States.” 18 U.S.C. § 1952(b)(2).

In response, the government is certain to claim that United States v. Bowman, 260 U.S.

94 (1922), permits an extraterritorial reach. The Supreme Court in Bowman explained that the

presumption that a statute is not extraterritorial unless Congress states otherwise “should not be

applied to criminal statutes which are, as a class, not logically dependent on their locality for the

government's jurisdiction, but are enacted because of the right of the government to defend itself

against obstruction, or fraud wherever perpetrated, especially if committed by its own citizens,

officers, or agents.” Id. at 98. Whatever the continuing vitality of this case, post- Morrison, the

Indictment has not alleged that “obstruction or fraud” was committed against the government,

which is the rationale behind Bowman. The allegations against Mr. Harder are related to the

EBRD – not the U.S. government. And the Indictment does not allege that the wrongdoing was



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committed by the government’s “own citizens, officers, or agents.” Mr. Harder is not a U.S.

citizen, officer, or agent – he resides in the U.S. with a green card.

Indeed, the Indictment alleges no domestic activity by Mr. Harder whatsoever. The

Indictment alleges a scheme to make payments to the sister of a foreign official, who is located

overseas. There are no allegations of his travel or where the alleged discussions took place that

formed the basis of the scheme. Three of the counts reference payments made from Germany.

For those three counts, at a minimum, the Travel Act cannot be applied. For the other two

counts with an alleged payment from the United States to an offshore location, the Travel Act

should not be applied to foreign conduct.

V. THE CONSPIRACY COUNT MUST BE DISMISSED BECAUSE

THERE ARE NO SURVIVING FCPA OR TRAVEL ACT CLAIMS

Count One in the Indictment alleges conspiracy under 18 U.S.C. § 371. Indictment ¶¶ 1-

40. The conspiracy statute prohib

U.S. v. Harder (Harder Motion to Dismiss)

Documents

U.S. v. Harder (Harder Motion to Dismiss)