United States v. Noriega
| Decision Date | 01 December 2011 |
| Docket Number | No. CR 10–01031(A)–AHM.,CR 10–01031(A)–AHM. |
| Citation | 831 F.Supp.2d 1180 |
| Parties | USA v. Enrique Faustino AGUILAR Noriega, et al. |
| Court | U.S. District Court — Central District of California |
OPINION TEXT STARTS HERE
Douglas M. Miller, Jennifer M. Resnik, AUSA–Office of United States Attorney, Los Angeles, CA, Jeffrey Goldberg, Nicola Jean Mrazek, U.S. Department of Justice, Washington, DC, for USA.
Stephen Gerard Larson, Douglas M. Miller, Upland, CA, Michael M. Kowsari, Molly B. Weber, Girardi Keese, Jan Lawrence Handzlik, Venable L.L.P., Janet I. Levine, Martinique E. Busino, Crowell & Moring L.L.P., Los Angeles, CA, Matthew B. Hayes, Hayes Employment Law Practice, Pasadena, CA, for Enrique Faustino Aguilar Noriega, et al.
ORDER GRANTING MOTION TO DISMISS
In this case, the first Foreign Corrupt Practices Act criminal prosecution against a corporation to proceed to jury trial, the Court has been asked to vacate the convictions and dismiss the indictment because of alleged prosecutorial misconduct. On November 29, 2011, the Court conducted a hearing on this motion. Before the hearing began, the Court provided a draft of this order to all the lawyers and allowed them three hours to prepare for argument. The hearing lasted for more than two and a half hours.
When faced with motions that allege governmental misconduct, most district judges are reluctant to find that the prosecutors' actions were flagrant, willful or in bad faith.1 In this case, for example, the Court denied several previous motions to dismiss and permitted the prosecution to proceed over the heated objections of defense counsel because it was willing to accept the prosecutors' assurances that their conduct was inadvertent and would not be repeated. The Court even said it was “not anxious to attribute a deliberate, intentional, and devious motive” to the Government. April 5, 2011, R.T. at 448.
In this Court's experience, almost all of the prosecutors in the Office of the United States Attorney for this district consistently display admirable professionalism, integrity and fairness.2 So it is with deep regret that this Court is compelled to find that the Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court's rulings, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.
Consequently, the Court throws out the convictions of Defendants Lindsey Manufacturing Company, Keith E. Lindsey and Steve K. Lee and dismisses the First Superseding Indictment.
On October 21, 2010, the Government filed a First Superseding Indictment (“FSI”) charging Defendants Keith E. Lindsey, Steve K. Lee, and Lindsey Manufacturing Company (“the Lindsey Defendants”) with conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), as well as substantive violations of the FCPA. Lindsey Manufacturing Company (“LMC”) is a relatively small, privately-owned company that manufactures emergency restoration systems and other equipment used by electrical utility companies. Keith Lindsey is its President and CEO. Lee is LMC's Vice–President and CFO.
The gist of the allegations in the FSI was that the Lindsey Defendants paid bribes to two high-ranking employees of the Comisión Federal de Electricidad (“CFE”), an electric utility company wholly-owned by the Mexican Government. LMC funneled the alleged bribes to the CFE employees (Nestor Moreno and Arturo Hernandez) by making payments to Grupo International (“Grupo”), a company owned and controlled by co-Defendants Enrique Faustino Aguilar Noriega (“Enrique Aguilar”) and his wife, Angela Maria Gomez Aguilar (“Angela Aguilar”). 3 The payments from LMC to Grupo ostensibly were commissions for services performed by Enrique Aguilar in his capacity as LMC's sales representative in Mexico. In reality, according to the indictment and to the Government in its trial presentation, large portions of those payments were used to bribe Messrs. Moreno and Hernandez. The alleged bribes consisted primarily of the purchase of an expensive Ferrari and a fancy yacht for Moreno, payment of his American Express bills, and a number of other payments benefitting Hernandez and him.
The investigation and ensuing charges in this case resulted directly from an earlier investigation and several prosecutions in the Southern District of Texas. See United States v. ABB Inc., No. 10–CR–664 (S.D.Tex.), United States v. ABB Ltd.-Jordan, No. 10–CR–665 (S.D.Tex.), and United States v. O'Shea, No. 09 CR–629 (S.D.Tex.). In those cases the Government alleged that the ABB entities and an ABB employee paid bribes to CFE officials through a Mexican middleman named Fernando Maya Basurto and his father. The Government's lead prosecutor in those cases was one of the Department of Justice prosecutors at this trial, and sometime in 2008 she initiated the investigation that led to the charges here.4
The defendants in the ABB cases allegedly used an Enrique Aguilar-controlled entity named “Sorvill” to funnel at least some of those bribe payments to the CFE officials. As will be shown below, the prosecutors in this case pushed aggressively to link Sorvill to the Lindsey Defendants, when in fact there was no evidence even suggesting the Lindsey Defendants ever heard of Sorvill.
In late December 2009 the Government obtained a sealed warrant for the arrest of Enrique Aguilar, a Mexican national. He has never been arrested and was not present at trial. But on August 9, 2010, his wife Angela Aguilar (“Angela”) was arrested, pursuant to a warrant, while she was engaged in business in Texas. That day, a complaint containing criminal charges was filed against her in this district. (Dkt. 13.) According to Angela's initial attorney, not long thereafter the DOJ attorney responsible for the ABB cases “indicated” to him that the Government might enter into a pre-indictment diversion agreement with Angela if she cooperated in arranging for her husband to surrender to U.S. authorities. Zweiback Decl. ¶ 2. (Dkt. 232.) Angela refused.
Angela was brought into this jurisdiction on August 30, 2010. (Dkt. 8.) The Government then had to move quickly to obtain an indictment. The original indictment, naming just Angela and her husband as Defendants, was filed on September 15, 2010. Enrique was accused in four counts of violating the Foreign Corrupt Practices Act, in a fifth count of conspiracy to do the same, in a sixth count of conspiring to launder money and in a seventh count of money laundering. Angela was named only in the sixth and seventh counts relating to money laundering.
Having indicted the Aguilars, having reason to know that Angela was intent on proceeding quickly to trial, and knowing that if she were tried alone the Lindsey Defendants would have a “free look” at what they would face in any subsequent trial against them, the prosecution again moved quickly to secure charges against those Defendants. It presented some evidence to one grand jury on September 8, 2010, and September 15, 2010. It then convened a second grand jury and presented evidence to it on October 14, 2010, and October 21, 2010.
The First Superseding Indictment adding the Lindsey parties as Defendants was filed on October 21, 2010. Thereafter, and continuing through the course of the trial, this case proceeded at an unusually rapid pace, in part because the Defendants were intent on exercising their rights under the Speedy Trial Act. The jury trial began on March 30, 2011.
The case not only moved quickly, but it also led to an extraordinary number of motions, ex parte applications, requests for judicial notice, disputes over jury instructions and other disputes necessitating dozens of hearings before and during the trial. For example, in a single omnibus pleading, the Government filed twelve motions: four to admit various items of evidence, including evidence relating to the ABB cases, six to preclude Defendants from introducing certain evidence and two other motions. (Dkt. 225.) For their part, before the motion to dismiss now before the Court was first filed on May 9, 2011, the Defendants (including Angela Aguilar) collectively filed eight previous motions to dismiss the indictment, at least five of which were based on claims of governmental misconduct.5 Defendants also filed more than two dozen other motions and ex parte applications.
The fast pace of pre-trial preparation and the almost non-stop, often acrimonious motion practice that took place from October 2010 through the return of the verdicts on May 10, 2011, is important for at least two reasons. First, it meant that each side forced the other to divert resources away from trial preparation. Although that undoubtedly handicapped each side to some extent, the Defendants were hurt more. While furiously preparing for trial they also had to seek to discover information about the investigation and the evidence supporting the charges. Yet, as is demonstrated below, they were often thwarted. In contrast, the Government had been investigating the case since 2008. On the Government's trial team were three experienced prosecutors, some paralegals, and a large number of FBI agents. Once an indictment has been returned, the Governmentis presumed to be ready to proceed to trial, even if, as was apparently the case here, the Government was compelled to indict some Defendants (the Lindsey Defendants) sooner than it would have preferred because it already had indicted some other Defendants (the Aguilars).
Second, when a trial judge managing a large docket is required to devote a great deal of time and effort to a fast-moving case that requires...
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