Photo Credit: Zapiro, published in The Times
By: Katherine Murray
In a surprising development, a federal judge in the Eastern District of New York vacated the convictions of a former television executive and an Argentine sports marketing company in the FIFA corruption probe. The ruling, rooted in recent Supreme Court precedent, raises questions about the scope of federal fraud prosecutions in cases involving foreign commercial bribery.
In March, Hernán Lopez, the former CEO of Fox International Channels, and Full Play Group, S.A. were convicted of violating 18 U.S.C. §1346 for paying bribes and kickbacks to CONMEBOL officials in exchange for lucrative broadcasting rights. The two defendants were among dozens of convicted officials and executives involved in the scheme.
The district court vacated the convictions pursuant to the recent Supreme Court holdings in Ciminelli v. U.S. and Percoco v. U.S. In both cases, the Court cautioned against stretching the honest services wire fraud statute beyond its traditional applications, emphasizing the importance of clarifying the fiduciary duty underlying any § 1346 charge. The PercocoCourt cautioned, “‘the intangible right of honest services’ must be defined with the clarity typical of criminal statutes and should not be held to reach an ill-defined category of circumstances.” Specifically, Percoco requires that the existence and source of the fiduciary duty be established separately from the bribery or kickbacks scheme.
Armed with this new guidance, the district court concluded that there was no precedent or legal basis for applying § 1346 to foreign commercial bribery schemes. Particularly those involving foreign employees and foreign non-government employers to which the defendants had no fiduciary duty.
This ruling represents a trend towards narrowing the scope of federal fraud prosecutions, particularly in cases involving foreign commercial bribery. Further, it underscores the importance of adhering to established legal precedents, limiting the potential for expansive interpretations of fraud statutes.
While the immediate impact of the decision remains uncertain, it has raised questions about the fate of other defendants in the FIFA bribery probe. Notably, it is unclear how this ruling will affect the convictions of the dozens of officials who plead guilty. The district court has temporarily halted upcoming sentences in the case pending possible appellate review.