At a hearing last Thursday in the Foreign Corrupt Practices Act appeal of handbag magnate Frederic Bourke Jr., the defense tried to throw the government a curveball. But it didn’t appear to faze the prosecutor or the judges.
Prominent appeals advocate Michael Tigar focused his argument on travel records that he said would have discredited key testimony by the government’s star witness at Bourke’s 2009 trial, had the government revealed them to the defense in time for Bourke’s lawyers to use in a cross-examination. Bourke, the co-founder of handbag maker Dooney & Bourke and the first person ever convicted by a jury of a FCPA offense involving willful blindness, is appealing his conviction of conspiring to pay bribes in an Azerbaijan oil deal.
At trial, the government put Swiss lawyer Hans Bodmer on the witness stand to testify that he told Bourke the deal involved bribe payments. Bodmer testified he told Bourke this information at a Feb. 6, 1998, meeting with him outside the Hyatt Hotel in Baku. But travel records later surfaced during the trial that showed Bourke was in London that day.
Bourke’s six-week trial ended on July 11, 2009 and was closely watched by the FCPA bar, because foreign anti-bribery cases rarely go to trial. Bourke was also found guilty of lying to FBI agents and later sentenced to a year and a day in prison. He remains free on bail while he appeals.
At trial, a large part of Bourke’s defense rested on the impossibility of meetings between himself and Bodmer. After the belated introduction of the travel records, Bourke’s defense argued vociferously that the central Baku meeting between Bourke and Bodmer could not have happened. The government, however, told jurors that Bodmer simply got the date wrong.
After the verdict, jurors said in press reports they were convinced Bourke knew about the bribes.
Now, Bourke’s appeal is also being watched closely, because it is the first-ever challenge to the evidentiary standard required to satisfy the element of the FCPA that says a defendant must have knowledge of the illicit conduct. The jury found that Bourke had consciously avoided finding out whether the deal involved paying bribes to Azerbaijan officials.
But Tigar argued the government should have made the travel records placing Bourke in London available to the key witness before allowing him to testify that he met with Bourke in Baku on the same date.
“The government was dishonest,” Tigar told 2nd Circuit Appeals Court Judges Rosemary Pooler and Peter Hall last Thursday in the hearing. ”I’d never put a witness on the stand who’d testify about [meetings that] records say are not true. The government was saying this was the linchpin of its case.”
One judge commented that simply because the witness mistook the date didn’t mean the meeting never happened. Assistant U.S. Attorney Harry Chernoff of the Southern District of New York told the appeals panel that it would have been unfair to the witness for the government to question Bodmer about the travel records while he was on the stand.
“I’m puzzled by Mr. Tigar’s argument,” Chernoff told the judges.
Bourke, 64, did not attend Thursday’s hearing, which was held in the ceremonial courtroom on the ninth floor of the Daniel Patrick Moynihan Courthouse and packed with investigators and former prosecutors. Tigar was joined at defense counsel table by Harold Haddon of Denver’s Haddon, Morgan and Foreman, P.C.
His conviction–a big victory for federal prosecutors–was based on circumstantial evidence the government introduced to show he was “willfully blind” to the bribes that his partner in the deal, Czech-born Viktor Kozeny, allegedly was paying to former Azerbaijan president Heydar Aliyev and others. The trial judge, U.S. District Judge Shira Scheindlin, instructed the jury that it could convict Bourke based on what he suspected rather than on what he actually knew.
Kozeny fled to the Bahamas after being charged in the U.S. in the case and remains a fugitive.
Chernoff claimed that Bourke first learned about Kozeny’s business reputation from a 1996 article in Fortune magazine that described how he bought up privatization vouchers in his native Czech Republic after the fall of the Soviet Union. Bourke was lured into the oil venture by Kozeny’s reputation for making big profits, the government argued.
Kozeny then engaged Bodmer and his former bodyguard Thomas Farrell, an American expatriate living in St. Petersburg, Russia, to set up Oily Rock Ltd., the vehicle used to allegedly funnel bribes to Aliyev to ensure the State Oil Company of the Azerbaijan Republic, or SOCAR, would be privatized.
The government argued Bourke invested his $8 million in the venture without asking his lawyers to conduct due diligence. And yet others who could also have been expected to better vet the deal also put in money – to the tune of $250 million. These investors included former Senate Majority Leader George Mitchell (D-Maine), American International Group, Columbia University and institutional investors and hedge funds.
They all lost every cent.
Chernoff told the judges the other investors who got burned by Kozeny knew nothing about bribes being part of the structure.
“There was a reason good reputable people invested without getting prosecuted,” Chernoff said. ”The purpose of calling some, and not Columbia, is these institutions got all got burned in the deal. There was no deal. No one from Columbia went to Baku.”
At that, Tigar returned to the podium for his rebuttal. He beseeched the judges to focus on the government’s conduct in the case. “We ask the court to look at the evidence of what took place in Baku. The government knowing it was going to put Bodmer on the stand to talk about the meeting that didn’t occur,” Tigar said.
In the unlikely event the judges split deciding the case, a third judge will be assigned to view the videotaped argument and decide the case; the third judge on last Thursday’s panel, U.S. District Joseph Bianco of the Eastern District of New York, had asked to sit out because he was a SDNY prosecutor while the case was pending.
For his part, Bodmer awaits sentencing more than six years after pleading guilty to money laundering conspiracy charges. If Bourke co-defendant Kozeny is ever extradited to the U.S. from the Bahamas, the government will need Bodmer’s testimony against him.