The World in U.S. Courts: Spring 2017 - White Collar Criminal Law/Money Laundering
February.17.2017
This criminal action alleges conspiracies to violate RICO and to commit wire fraud, and money laundering, against 27 individuals based on the alleged misuse of their positions in the Federation Internationale de Football Association (“FIFA”), and related entities. One defendant argued that the charges against him were based on an impermissibly extraterritorial application of each of the criminal provisions.
The Court observed that the first criminal “RICO predicate offense”—conspiracy to commit wire fraud—does not have extraterritorial applicability. To determine whether the indictment alleged sufficient US actions to constitute a violation, the Court applied the US Supreme Court’s RJR Nabisco opinion to require that it determine the “focus” of the statute, and then whether the indictment alleged domestic conduct “relevant to the focus” that would satisfy “every essential element” of a violation. The Government and the defendant each proposed a different “focus” of the statute, and the Court rejected both, concluding that it was required to take a “holistic” approach that did not give too much weight to “only incidental or minimal use of U.S. wires.” But the Court declined to elaborate further on its test, finding the defendant’s alleged involvement in a conspiracy affecting soccer matches held in the US, the sale of US broadcast rights, and meetings and significant uses US wires more than adequate to satisfy any test that might be applicable. That the alleged fraudulent schemes may have had their “centers of gravity” outside the US was irrelevant because the schemes’ contacts with the US were “substantial” and “integral” to the fraud. Notably, the Court also explained that the indictment’s failure to allege that the defendant personally participated in US activities was irrelevant because as a member of a conspiracy the defendant would be held responsible for any co-conspirators’ US activities that were “reasonably foreseeable.”
The second alleged RICO predicate offense was a conspiracy to launder money, which by its own terms operates extraterritorially in enumerated circumstances. The Court found the indictment to fall within one of those circumstances, rejecting the Government’s argument that it had alleged a domestic US violation. The Court explained that the enumerated circumstances described as involving extraterritorial application were conditioned on more than USD 10,000 being at issue, and that it would impermissibly “thwart” the intent of the provision if the dollar threshold could be avoided merely by using an overly broad definition of the requirement that conduct be US “domestic.”
As regards RICO, the Court noted that the US Supreme Court’s RJR Nabisco decision made the extraterritorial applicability of RICO correspond to the territorial applicability of the violations that together establish the alleged “pattern of racketeering activity.” Because the indictment alleged extraterritorial acts that violated money laundering statutes having extraterritorial applicability, and domestic acts that violated the domestic wire fraud statute, the Court ruled that the indictment did not involve an impermissibly extraterritorial application of RICO. In so concluding, the Court rejected the defendant’s argument that a RICO violation must be based on “minimal contacts” separate from those necessary to violate the underlying RICO predicate statutes.
[Editor’s note: The Hawit case is also addressed under the RICO section of this report.]