United States v. Harder

• Citation: 168 F.Supp.3d 732
• Decision Date: 02 March 2016
• Docket Number: Crim. No. 15-1
• Parties: United States of America v. Dmitrij Harder.
• Court: United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)

168 F.Supp.3d 732

United States of America
v.
Dmitrij Harder.

Crim. No. 15-1

United States District Court, E.D. Pennsylvania.

Signed March 2, 2016

Jason Dean Linder, Leo R. Tsao, U.S. Department of Justice, Washington, DC,

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Michelle Morgan, U.S. Attorney's Office, Philadelphia, PA, for United States of America.

Ian M. Comisky, Blank Rome, LLP, Stephen LaCheen, LaCheen Dixon Wittels & Greenberg LLP, Matthew David Lee, Blank Rome Comisky & McCauley LLP, Philadelphia, PA, for Defendants.

ORDER

Paul S. Diamond, District Judge.

The grand jury has charged Defendant Dmitrij Harder with conspiracy to violate the Foreign Corrupt Practices and Travel Acts, substantive violations of the FCPA and Travel Act, conspiracy to commit international money laundering, substantive violations of the international money laundering statute, and aiding and abetting. (Doc. No. 1, Cts. 1-14); 18 U.S.C. § 371 ; 15 U.S.C. § 78dd–2 ; 18 U.S.C. § 1952 ; 18 U.S.C. §§ 1956(h), (a)(2)(A) ; 18 U.S.C. § 2.

On October 16, 2015, Defendant filed separate Motions to Dismiss Counts One through Eleven, and Twelve through Fourteen, of the original Indictment. (Doc. Nos. 39, 40); Fed. R. Crim. P. 12(b)(3). On December 15, 2015, the grand jury returned a Superseding Indictment. (Doc. No. 62.) In its response to Defendant's two Motions, the Government addressed Defendant's arguments respecting the original Indictment as though they were directed at the Superseding Indictment. (Doc. Nos. 71, 72). I will similarly construe Defendants' Motions to Dismiss the Indictment as Motions to Dismiss the Superseding Indictment. I will deny both Motions. (Doc. Nos. 39, 40.)

I. Background

The Government alleges the following pertinent facts in the Superseding Indictment. (Doc. No. 62.)

Defendant—a Russian national, naturalized German citizen, and United States permanent resident—is the president and owner of Chestnut Consulting Group, Inc. and Chestnut Consulting Group, Co., which are incorporated in Pennsylvania and Delaware, respectively. (Id.¶ 1.)

The European Bank for Reconstruction and Development is headquartered in London, England providing debt and equity financing for development projects throughout Europe. (Id.¶ 3.) In June 1991, President George H.W. Bush signed Executive Order No. 12,766 designating EBRD a “public international organization.” (Id.); see Exec. Order No. 12,766, 56 Fed. Reg. 28463 (June 18, 1991). As alleged, EBRD employed “Official”—a Russian and United Kingdom national—as a senior banker in EBRD's Natural Resources Group. (Id.¶ 4.) Official was responsible for reviewing project-financing applications. (Id.)

In August 2007, Company A—a Russian independent oil and gas concern—asked Defendant for assistance in raising funds for a Russian natural gas development project. (Id.¶ 11.) In September 2007, Defendant emailed Official respecting Company A's interest in obtaining EBRD financing. (Id.¶ 12.) Company A then entered into several financial services agreements with “Chestnut Inc.” (that Defendant signed), agreeing to pay Chestnut a “success fee” comprising a certain percentage of EBRD funds it might receive. (Id.¶¶ 13, 15.)

In April 2008, Official recommended EBRD's approval of Company A's application for financing. (Id.¶ 14.) Accordingly, EBRD approved and disbursed (via a related holding company) an $85 million equity investment to Company A, which, in turn, paid Chestnut a $1.7 million success fee. (Id.¶¶ 14, 17.) From July to October 2007, Defendant sent three wire transfers for “consulting” and related services totaling some $753,300 from “Chestnut Inc.'s” Germany-based bank account to a bank account in the Channel Islands belonging

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to Official's Sister, also a Russian and U.K. national. (Id.¶¶ 5, 18.) As alleged, these payments were bribes, intended to influence Official respecting EBRD's financing applications. (Id.¶ 23.)

After receiving an additional €90 million EBRD senior loan, Company A entered into a new agreement with Chestnut (which Defendant again signed), providing that the success fee was now payable on the original equity investment plus the senior loan. (Id.¶ 20.) In June 2009, Company A paid Chestnut a success fee of approximately $2.9 million. (Id.¶ 21.) In July 2009, Defendant once again wired approximately $310,121—and again alleged to be an illegal payment—from Chestnut's Pennsylvania-based bank account to the Channel Islands bank account of Official's Sister. (Id.¶¶ 22, 23.)

The Government further alleges that sometime in 2007, Company B—an oil and gas concern incorporated in the United Kingdom and operating in the Russian Federation—approached EBRD for financing, but ultimately obtained it from another institution. (Id.¶ 24.) In May 2009, when Company B again sought EBRD financing, Official was assigned to review its application. (Id.¶ 25.) Company B and Chestnut entered into an Agreement, with terms similar to those in Chestnut's Agreement with Company A. (Id.¶ 26.) In connection with its Agreement, Company B advanced Chestnut $100,000 to be credited to any future success fees. (Id.¶ 28.)

In July 2009, on Official's recommendation, EBRD approved Company B's application for a $40 million equity investment and a $60 million convertible loan. (Id.¶ 27.) In October 2009, Company B paid Chestnut a success fee of approximately $4.9 million (in addition to the previous $100,000) in connection with the EBRD financing approval—a total of some $5 million in success fees. (Id.¶ 28.) In November 2009, Defendant once again wired approximately $2,478,580—again, alleged to be a corrupt payment—to Official's Sister. (Id.¶ 29.)

In sum, the Government alleges that from 2007 to 2009, Defendant—operating through the Chestnut entities—conspired to pay and paid approximately $3.5 million in bribes to influence Official's actions at EBRD. (Id.¶ 2); 18 U.S.C. § 371 ; 15 U.S.C. § 78dd–2 ; (Doc. No. 62, Cts. 1-6). As alleged, the payments were intended to benefit Defendant and his clients (Companies A and B) and to influence Official to direct business to Defendant and Chestnut, all in violation of the FCPA. (Id., Cts. 2-6). The Government additionally alleges that Defendant conspired with Official's Sister to conceal and facilitate the bribes, thus violating the Travel Act. (Id.¶ 2, Cts, 1, 7-11); 18 U.S.C. §§ 371, 1952. Finally, the Government alleges that Defendant conspired to and committed international money laundering by wiring corrupt payments to Europe from the United States with the intent to promote the underlying FCPA scheme. (Id., Cts. 12-14); 18 U.S.C. § 1956(h), (a)(2)(A).

II. Legal Standard

In deciding a motion to dismiss, I must accept factual allegations and disregard legal conclusions to determine whether the alleged facts constitute a crime. United States v. Zauber, 857 F.2d 137, 144 (3d Cir.1988). In assessing an indictment's sufficiency, I must determine whether it: (1) contains the elements of the charged offense, (2) apprises the defendant of the charges against him, and (3) allows the defendant to plead an acquittal or conviction. United States v. Vitillo, 490 F.3d 314, 321 (3d Cir.2007). Generally, an indictment satisfies these requirements if it “informs the defendant of the statute he is charged with violating, lists the elements of a violation under the statute, and specifies the

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time period during which the violations occurred.” United States v. Huet, 665 F.3d 588, 595 (3d Cir.2012) ; see also Fed. R. Crim. P. 7(c)(1) (an indictment need only be a “plain, concise, and definite written statement of the essential facts constituting the offense charged”). At this stage, I must evaluate only the sufficiency of the Government's allegations. United States v. DeLaurentis, 230 F.3d 659, 660 (3d Cir.2000). Finally, I must dismiss counts based on a statutory misinterpretation. See United States v. Enmons, 410 U.S. 396, 93 S.Ct. 1007, 35 L.Ed.2d 379 (1973) (dismissing indictment when statute does not proscribe the conduct charged).

III. Argument

Defendant first asks me to dismiss the substantive FCPA Counts because he contends that the Government fails to plead the elements of an FCPA violation. (Doc. No. 40 at 4-12, Cts. 2-6.) He next challenges the FCPA's constitutionality both facially and as-applied to him. (Id. at 12-28.) Third, he contends that the Indictment fails to include legally adequate Travel Act violations. (Id. at 29-33, Cts. 7-11.) Defendant further argues that if I dismiss the underlying FCPA and Travel Act Counts, I must also dismiss the Conspiracy Count. (Id., Ct. 1). Finally, Defendant asks me to dismiss the International Money Laundering Counts because they improperly merge with the substantive FCPA violations. (Doc. No. 3, Cts. 12-14.) I will deny both Defendant's Motions in their entirety.

1. The Substantive FCPA Counts

Defendant argues that the Government failed to plead that: 1) he corruptly paid a “foreign official” within the FCPA's meaning; and 2) he had the requisite mens rea when paying Official's Sister. Defendant further argues that the Indictment impermissibly substitutes “public...