U.S. v. Castle
| Decision Date | 08 March 1991 |
| Docket Number | No. 90-1455,90-1455 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. Donald CASTLE, and Darrell W.T. Lowry, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Peter B. Clark, Sr. Litigation Counsel, Deputy Chief, Marie O'Rourke and Sara Criscitelli, U.S. Dept. of Justice, Crim. Div., Washington, D.C., for plaintiff-appellant.
William Kim Waide, Dallas, Tex., for Castle.
William D. Sheetz, Dallas, Tex., for Lowry.
Appeal from the United States District Court for the Northern District of Texas.
Before WISDOM, JOLLY, and DAVIS, Circuit Judges.
In this case, we are called upon to consider the Foreign Corrupt Practices Act of 1977 (hereinafter "FCPA"), 15 U.S.C. Secs. 78dd-1, 78dd-2, and determine whether "foreign officials," who are excluded from prosecution under the FCPA itself, may nevertheless be prosecuted under the general conspiracy statute, 18 U.S.C. Sec. 371, for conspiring to violate the FCPA.
APPENDIX
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS DALLAS DIVISION
United States of America
v.
John Blondek, Vernon R. Tull, Donald Castle, and Darrell W.T. Lowry
Filed June 4, 1990
All four defendants in this case are charged in a one-count indictment with conspiring to violate the Foreign Corrupt Practices Act of 1977 ("FCPA"), 15 U.S.C. Secs. 78dd-1, 78dd-2. Defendants Castle and Lowry have moved to dismiss the indictment against them on the grounds that as Canadian officials, they cannot be convicted of the offense charged against them. The two other defendants, Blondek and Tull, are U.S. private citizens, and they do not challenge their indictment on this ground. The Court has considered supplemental briefing and oral argument on the motions.
The indictment charges all four defendants with conspiring to bribe foreign officials in violation of the FCPA. Blondek and Tull were employees of Eagle Bus Company, a U.S. concern as defined in the FCPA. According to the indictment, they paid a $50,000 bribe to Defendants Castle and Lowry to ensure that their bid to provide buses to the Saskatchewan provincial government would be accepted.
There is no question that the payment of the bribe by Defendants Blondek and Tull is illegal under the FCPA, and that they may be prosecuted for conspiring to violate the Act. Nor is it disputed that Defendants Castle and Lowry could not be charged with violating the FCPA itself, since the Act does not criminalize the receipt of a bribe by a foreign official. The issue here is whether the Government may prosecute Castle and Lowry under the general conspiracy statute, 18 U.S.C. Sec. 371, for conspiring to violate the FCPA. Put more simply, the question is whether foreign officials, whom the Government concedes it cannot prosecute under the FCPA itself, may be prosecuted under the general conspiracy statute for conspiring to violate the Act.
In Gebardi v. United States, 287 U.S. 112, 53 S.Ct. 35, 77 L.Ed. 206 (1932), the Supreme Court confronted a similar issue: whether a woman who agreed to be transported by her lover across state lines to engage in sexual intercourse could be convicted of a conspiracy to violate the Mann Act. The Mann Act prohibited the transportation of women across state boundaries for immoral purposes, but did not criminalize the conduct of the women being transported. Acknowledging that it could not prosecute the woman for violating the Mann Act itself, the Government prosecuted her instead for conspiring to violate the Mann Act. The woman objected to her conviction on the grounds that the Mann Act exempted her from prosecution for her participation.
The Court noted first that the incapacity of a person to commit the substantive offense does not necessarily imply that he may conspire with others to commit the offense with impunity, since the state may criminalize the collective planning of the criminal conduct. Id. at 120-21, 53 S.Ct. at 37. For example, it is a crime for a bankrupt to conceal property from his trustee, and thus only bankrupts may be convicted of the substantive offense of concealing property. But convictions of others for conspiring with the bankrupt to conceal property have been upheld. See id. at 120 n. 5, 53 S.Ct. at 37 n. 5 and cases cited therein.
The Court distinguished the case before it on the grounds that a violation of the Mann Act necessarily required the agreement of the woman to the criminal act--her transportation across a state line. Yet the Act did not make the woman's consent a crime. The Court concluded that by excluding the transported woman from prosecution under the Mann Act, Congress evinced an affirmative legislative policy "to leave her acquiescence unpunished." Id. at 123, 53 S.Ct. at 38. A necessary implication of that policy was that the woman's agreement to participate was immune from any kind of prosecution, including prosecution for conspiring to violate the Mann Act. To do otherwise, the Court reasoned, would allow the Executive Branch to extend the reach of the Act beyond the scope of Congress' intention.
We think it a necessary implication of that policy that when the Mann Act and the conspiracy statute came to be construed together, as they necessarily would be, the same participation which the former contemplates as an inseparable incident of all cases in which the woman is a voluntary agent at all, but does not punish, was not automatically to be made punishable under the latter. It would contravene that policy to hold that the very passage of the Mann Act effected a withdrawal by the conspiracy statute of that immunity which the Mann Act itself confers.
Id. at 123, 53 S.Ct. at 38. On this basis, the Court reversed the conviction of the woman for conspiring to violate the Mann Act.
The principle enunciated by the Supreme Court in Gebardi squarely applies to the case before this Court. Congress intended in both the FCPA and the Mann Act to deter and punish certain activities which necessarily involved the agreement of at least two people, 1 but Congress chose in both statutes to punish only one party to the agreement. In Gebardi the Supreme Court refused to disregard Congress' intention to exempt one party by allowing the Executive to prosecute that party under the general conspiracy statute for precisely the same conduct. Congress made the same choice in drafting the FCPA, and by the same analysis, this Court may not allow the Executive to override the Congressional intent not to prosecute foreign officials for their participation in the prohibited acts.
In drafting the Mann Act, Congress was probably motivated by a protective instinct toward women based on a belief that most women would not participate in the activity without coercion or duress by the man involved. The Government tries to distinguish Gebardi on this ground, asserting that "the exception" provided in Gebardi to prosecution for conspiracy only applies to individuals belonging to the class of persons the criminal statute was designed to protect.
Nothing in Gebardi indicates that only "protected" persons are exempted from conspiracy charges; rather, the Court explicitly built its analysis on Congress' clear intention, evinced by the plain language of the statute, to exempt the transported women from all prosecutions for their involvement in the prohibited activities. A similar intent is apparent from the language of the FCPA, especially when compared to other bribery statutes which criminalize both the payment and receipt of bribes. Compare 15 U.S.C. Secs. 78dd-1 and 78dd-2 with 18 U.S.C. Sec. 201 (); 18 U.S.C. Secs. 210 and 211, 212 and 213, 214 and 215 and 216 ().
Even accepting the general idea that Congress must have some reason for exempting from prosecution a class of persons necessarily involved in the proscribed conduct, Congress was quite explicit about its reasons, but none of these reasons have anything to do with foreign officials. Instead, the exclusive focus was on the U.S. companies and the effects of their conduct within and on the United States.
First, Congress was concerned about the domestic effects of such payments. In the early 1970's, the Watergate affair and resulting investigations revealed that the payment of bribes to foreign officials was a widespread practice among U.S. companies. In the House Report accompanying an earlier version of the Act, it was noted that more than 400 companies had admitted making such payments, distributing well over 300 million dollars in corporate funds to foreign officials. H.R.Rep. No. 640, 95th Cong., 1st Sess. 4 (1977). Such massive payments had many negative domestic effects, not the least of which was the distortion of, and resulting lack of confidence in, the free market system within the United States.
The payment of bribes to influence the acts or decision of foreign officials ... is unethical. It is counter to the moral expectations and values of the American public. But not only is it unethical, it is bad business as well. It erodes public confidence in the integrity of the free market system.... In short, it rewards corruption instead of efficiency and puts pressure on ethical enterprises to lower their standards or risk losing business.
Id. at 4-5. See also S.Rep. No. 114, 95th Cong., 1st Sess. 4, reprinted in 1977 U.S.Code Cong. & Admin.News 4098, 4101. The House Committee...
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