392 F. Supp. 3d 872
E.D. Ill.2019Background
- 2013 indictment charging Dmitry Firtash and Andras Knopp (and four others) with conspiracies to bribe Indian public officials to obtain mining licenses and to sell titanium sponge to a U.S. company headquartered in Chicago.
- Alleged scheme involved payments routed through U.S. financial institutions, meetings between conspirators and U.S. company representatives, domestic travel by co-conspirators, and use of U.S. communications networks.
- Neither Firtash (in Austria; extradition proceedings pending) nor Knopp (in Russia) appeared; both moved to dismiss the indictment on venue, failure-to-state, extraterritoriality, and due-process grounds.
- Counts: RICO conspiracy (18 U.S.C. § 1962(d)), conspiracy under the MLCA (18 U.S.C. § 1956), Travel Act counts (18 U.S.C. § 1952), and FCPA-related conspiracy/aiding and abetting (15 U.S.C. §§ 78dd-2, -3) as to some defendants.
- Court accepted indictment allegations as true for pretrial review, considered extraterritoriality and due-process principles, and denied the motions to dismiss.
Issues
| Issue | Plaintiff's Argument (Gov't) | Defendant's Argument | Held |
|---|---|---|---|
| Venue | Venue proper in N.D. Ill. because conspiracy intended to affect Company A in Chicago; overt acts and substantial contacts alleged | Venue improper because defendants never physically in U.S.; foreseeability insufficient | Venue proper: indictment alleges conspiracy intended to have effect in Chicago; substantial-contacts test met |
| RICO (Count One) — extraterritorial reach | RICO conspiracy charge valid; indictment alleges effects on U.S. commerce and predicates that apply extraterritorially | §1962(d) cannot apply extraterritorially absent showing enterprise significantly affected U.S. commerce or extraterritorial predicates | Denied: §1962(d) requires conspiracy to affect U.S. commerce (not completed effect); indictment adequately alleges intent and effects; merits for trial |
| Predicate statutes (MLCA, Travel Act) | MLCA applies extraterritorially where transfers occur in part in U.S.; Travel Act allegations constitute domestic application | Transfers limited to correspondent banking through U.S. do not trigger §1956(f); Travel Act not implicated by alleged travel | Denied: allegations and government proffer suffice to invoke MLCA extraterritorial trigger; Travel Act allegations sufficiently plead domestic travel with unlawful intent |
| FCPA (Count Five) — secondary liability/extraterritorial limits | Secondary liability (§2, §371) can reach conspirators even if foreign; indictment need not allege defendant is agent of a domestic concern | Under Hoskins, foreign nationals cannot be convicted under FCPA extraterritorially via aiding/abetting unless they are agents/employees of U.S. domestic concern | Denied: Seventh Circuit precedent (Pino-Perez) disfavors Hoskins approach; aider-and-abettor liability applies absent clear statutory text exempting classes; indictment survives |
| Due process/extraterritoriality | Exercise of jurisdiction reasonable: substantial conspiratorial acts occurred in U.S. and scheme intended to affect U.S. commerce | Prosecution in U.S. violates Fifth Amendment (contacts too tenuous; India is the proper regulator) | Denied: Restatement §402 grounds satisfied (conduct in substantial part in U.S. and intended to affect U.S.); §403 reasonability factors favor U.S. jurisdiction |
Key Cases Cited
- RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (Sup. Ct.) (statutory-presumption framework for extraterritoriality; substantive RICO requires predicate statutes that cover extraterritorial conduct)
- United States v. Ballestas, 795 F.3d 138 (D.C. Cir.) (indictment sufficiency and assumption of government's factual proffers on pretrial extraterritoriality challenges)
- United States v. Pino-Perez, 870 F.2d 1230 (7th Cir.) (aider-and-abettor liability under §2 attaches generally absent clear statutory exclusion)
- United States v. Hoskins, 902 F.3d 69 (2d Cir.) (holding foreign nationals may not be criminally liable under the FCPA extraterritorially unless they are agents of a domestic concern)
- Salinas v. United States, 522 U.S. 52 (U.S.) (agreement to commit unlawful act punishable even if substantive offense not completed)
- United States v. Ochoa, 229 F.3d 631 (7th Cir.) (venue in conspiracy: venue proper where an overt act occurred)
- United States v. Muhammad, 502 F.3d 646 (7th Cir.) (venue may be proper where overt act intended to have an effect in the district)