HSE University Anti-Corruption Portal
The Rafoi Case Sent for Retrial

The US 5th Circuit of Appeals reversed a trial court’s dismissal of a criminal indictment charging defendants with Foreign Corrupt Practices (FCPA) Act and Money Laundering Control Act (MLCA) violations.


Earlier, the grand jury in the Southern District of Texas and 2nd Circuit of Appeals had returned an indictment charging Daisy Teresa Rafoi Bleuler, Paulo Jorge Da Costa Caquiero Murta and Nervis Villalobos Cardenas with conspiring to violate the FCPA and the MLCA in the framework of a large-scale investigation into corruption at Venezuela’s state oil company Petróleos de Venezuela S.A. (PDVSA).

The higher court of appeals reversed the ruling of the courts of the previous instances referring prevalently to procedural safeguards and decided the following:

1) The information provided in the indictment is insufficient to take the suit.

The court of first instance indicated that:

  • Rafoi was not an “agent” of the US branch of PDVSA, which would have subjected her to the FCPA;
  • the very notion of “agent” with regard to the facts and circumstances of the case was “unconstitutionally vague”;
  • the indictment, to be recognised, did not contain the “undisputed evidence of mutual approval and control of the details by the defendant and the agent demonstrating that the principal controlled those details”.

The 5th Circuit of Appeals pointed that the requirement of plausible allegations with sufficient factual detail was applicable only to civil proceedings (the Twombly/Iqbal standard), whereas in the context of prosecution, for an indictment to be issued, it should have contained a duly formulated statement that a crime had been committed against the United States: “a criminal indictment will survive a motion to dismiss as long as (1) each count contains the essential elements of the offense charged, (2) the elements are described with particularity, and (3) the charge is specific enough to protect the defendant against a subsequent prosecution for the same offense”. Moreover, a defendant cannot challenge an indictment on the ground that the allegations are not supported by adequate evidence; instead the proper forum for such a challenge is a trial of the charge on the merits.

The Court also rejected the argument that the term “agent” was “unconstitutionally vague”. It held that, even if “governed by its common law meaning, a person of common intelligence would have understood that defendants, allegedly setting up accounts on behalf of others to obfuscate funds derived from an alleged bribery scheme were treading close to a reasonably-defined line of illegality under an agency theory”.

At the same time, the court left open the question of whether Rafoi had been an “agent” of the US branch and, if not, whether she, not being subject to the FCPA enforcement, could have been held liable for conspiring to violate the FCPA and the MLCA with an individual subject to the enforcement. This matter will be one of the most disputed throughout the reconsideration of the indictment by the first instance court, particularly in the light of the last decision on United States v. Hoskins.

2) A citizen should not be given Miranda warnings* if the interview does not have elements of “custodial interrogation”.

The court of the previous instance rejected the indictment based, in particular, on the fact that the foreign citizen (Murta) interrogated abroad should have got the so called Miranda warnings.

The court of appeals found that all circumstances of the conversation with Murta showed that it had not been “custodial interrogation”. In particular, Murta, Portuguese citizen, was summoned at the office of the public prosecutor in Lisbon as a witness rather than as a suspect; he was accompanied by his lawyer who was present throughout the interrogation; no restrictions on his movement were imposed; the questioning was neither threatening nor aggressive; he had not been indicted then and at no time during the interview was he accused of committing a crime or threatened with arrest; no one was armed, and no one was wearing police attire. The court therefore found that in that case Miranda warnings were unnecessary.

However, law enforcement qualified some of Murta’s answers as “questionable statements”. For example, he initially denied he knew one of the accused who had already pleaded guilty and changed his testimony after the investigators had produced his correspondence with the accused. In view of that circumstance, Murta was subsequently re-qualified as suspect and over two years after having been charged he was extradited to the United States.

It seems that this circumstance should be taken into consideration by all natural and legal persons who can potentially be subject to the FCPA enforcement and consider any interaction with public authorities, including non-American and not involving indictment in the beginning, as “official” and requiring thorough preparations and lawyer’s advice.

Following the decision of the 5th Circuit of Appeals the indictment was returned to the Southern District of Texas for reconsideration.

* Miranda warning is a constitutional requirement implying that the law enforcement officer must inform the detained about his/her rights upon his/her detention. It is based on the Fifth (the right against forced self-incrimination) and Sixth (the right to a lawyer) amendments of the US Constitution and appeared after the ruling of the Supreme Court on Miranda v. Arizona stating that an accused cannot be subject to custodial interrogation by the police until he/she is informed about his/her right to silence (“You have the right to remain silent. Anything you say can and will be used against you in a court of law…”), to speak to an attorney and to the presence of an attorney throughout the interrogation.

Without Miranda warnings indictments can be declined by courts under the rule that prohibits producing in a court of law the evidence gathered in breach of the US Constitution.

Foreign bribery
Criminal prosecution

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