Second Circuit Limits The Application Of McDonnell v. United States And Declines To Extend The Potential Scope Of Liability In FCPA Cases
08/13/2019On August 9, 2019, the United States Court of Appeals for the Second Circuit denied the appeal by a Chinese real estate developer of his 2017 conviction arising from the alleged bribery of United Nations (“UN”) officials. U.S. v. Ng Lap Seng, No. 18-1725 (2d Cir. 2019). In affirming the conviction, the Second Circuit ruled that the holding in McDonnell v. United States—in which the Supreme Court held that prosecutors must prove that a bribe is paid in exchange for an “official act” in cases involving the federal anti-bribery statute (18 U.S.C. § 201)—does not apply to prosecutions under the Foreign Corrupt Practices Act (“FCPA”). The Second Circuit clarified in its ruling that the FCPA and the anti-corruption law aimed at protecting federal funding, known as Section 666, are written differently and target a broader set of bribery goals than the federal anti-bribery statute that was at issue in McDonnell.
According to the government, defendant “engaged in a sustained effort over five years to bribe two U.N. officials” in order to obtain a formal UN designation for his real estate complex as the permanent site for the annual convention of the UN Office for South-South Cooperation. Ng Lap Seng, No. 18-1725 at 5. Defendant was ultimately convicted of conspiracy and bribery-related charges, in violation of 18 U.S.C. §§ 371, 666 (prohibiting bribery at organizations that receive federal funds) and 15 U.S.C. §§ 78dd-2, 78dd-3 (the FCPA), as well as money laundering charges that related to these underlying violations. On appeal, defendant raised a number of arguments, including that the District Court provided incorrect instructions to the jury regarding the elements of the bribery-related charges, based on the Supreme Court’s decision in McDonnell v. United States, 136 S. Ct. 2355 (2016). In McDonnell, the Supreme Court considered a jury instruction given in connection with a bribery charge pursuant to the general federal anti-bribery statute, 18 U.S.C. § 201, which prohibits a public official from “receiv[ing] or accept[ing] anything of value” in exchange for being “influenced in the performance of any official act.”
Importantly, the federal anti-bribery statute in McDonnell requires proof that the government official committed or agreed to commit an “official act” in exchange for something of value. In relevant part, the jury instruction at issue in McDonnell provided that the jury must find that the defendant agreed “to accept a thing of value in exchange for official action” and advised the jury that “official acts” encompassed “acts that a public official customarily performs,” including acts “in furtherance of longer-term goals” or “in a series of steps to exercise influence or achieve an end.” McDonnell requested that the court further instruct the jury that “merely arranging a meeting, attending an event, hosting a reception, or making a speech are not, standing alone, ‘official acts,’” but the court declined to give that instruction. Ultimately the McDonnell Court determined the instruction was “significantly over inclusive,” 136 S. Ct. at 2374, reversed the conviction, and held that to sustain a conviction under Section 201 the government must: (1) “identify a question, matter, cause, suit, proceeding or controversy that may at any time be pending or may by law be brought before a public official,” and (2) “prove that the public official made a decision or took an action on that question, matter, cause, suit, proceeding or controversy, or agreed to do so.” Id. at 2358 (quoting 18 U.S.C. § 201(a)(3)).
In Ng Lap Seng, the trial court followed the McDonnell standard for the Section 666 charges but did not do so for the FCPA charges. Defendant argued that all of the charges required proof of an official act satisfying the McDonnell standard and “that the district court’s official‐act instruction on § 666 bribery failed to satisfy that standard[.]” On appeal, the Second Circuit rejected this argument, finding that the language in Section 666 and the FCPA varied from Section 201, in particular, because Section 666 and the FCPA do not have the same official acts requirement found in Section 201. In addition, the Second Circuit found that Section 666 and the FCPA target a broader set of anti-corruption goals than Section 201. Accordingly, the Court affirmed the conviction and made clear that the McDonnell standard does not apply to prosecutions under Section 666 and the FCPA.
The decision is the first circuit court decision considering the application of McDonnell in the FCPA context and is consistent with a number of other circuits limiting McDonnell to the particular bribery statutes that were before the Court. See United States v. Porter, 886 F.3d 562, 565 (6th Cir. 2018) (declining to extend McDonnel to Section 666 bribery charges); United States v. Ferriero, 866 F.3d 107, 127-28 (3d Cir. 2017) (declining to apply McDonnell standard derived from § 201 to state bribery), cert. denied, 138 S. Ct. 1031 (2018); United States v. Reed, 908 F.3d 102, 111-113 (5th Cir. 2018) (declining to extend McDonnell to a wire fraud conviction).