ORDER & OPINION
This сase is before the Court pursuant to a writ of mandamus order issued July 1, 2011, from the Seventh Circuit to promptly rule on Defendant Hijazi’s motions to dismiss (Docs. 15, 131, 174) the Indictment pending against him. Before the Court are Defendant’s Motion to Dismiss Indictment (Doc. 15) and Memorandum in Support (Doc. 16), Defendant’s Motion to Dismiss Second Superseding Indictment (Doc. 131) and Memorandum in Support (Doc. 180), Defendant’s Motion to Dismiss Based on Sixth Amendment Right to a Speedy Trial (Doc. 174) and Memorandum in Support (Doc. 175), Memorandum of Amici Curiae in Support of Defendant’s Motion to Dismiss Based on Lack of Jurisdiction (Doc. 166), the Government’s Consolidated Response to Defendant Hijazi’s Motions to Dismiss the Indictment (Doc. 217), and Defendant’s Reply Brief in Support of his Motions to Dismiss (Doc. 222). On May 7, 2010, Magistrate Judge Cudmore issued a Report and Recommendation recommending that Defendant’s Motions to Dismiss be denied (Doc. 230). Defendant filed Objections to the Report and Recommendation (Doc. 233), the Government filed a Response to Defendant’s Objections (Doc. 235) and Defendant filed a Reply thereto (Doc. 238).
Background
On March 16, 2005, the United States Government (“Government”) charged Defendant Ali Hijazi (“Hijazi”) and Jeff Mazon (“Mazon”) with violations of the Major Fraud Act, 18 U.S.C. § 1031(a), the wire
In late 2001, the U.S. Army contracted with Kellogg Brown & Root Services (“KBR”), an American company, to provide property and services to the military at locations around the world, including Kuwait. (Doc. 59 ¶¶ 3 — 8). One service that KBR contracted to perform was to store and dispense fuel at the Aerial Port of Debarkation (“APOD”) in Kuwait. (Doc. 59 ¶ 11). The APOD was the airport used by the United States military for military operations in Kuwait. (Doc. 59 ¶ 11). As was common practice for KBR, it sought out a subcontractor to perform work related to the storage and dispensation of fuel at the APOD; the subcontractor would invoice KBR for their work, which KBR would then pay and subsequently invoice the United States. (Doc. 59 ¶¶ 8, 20).
From December 2002 through June 2003, Jeff Mazon was the Procurement, Materials, and Property Manager for KBR stationed in Kuwait. (Doc. 59 ¶ 12). Aсcordingly, it was his duty to negotiate, execute, and administer subcontracts such as the one for fuel storage and dispensation at the APOD. (Doc. 59 ¶¶ 12, 20). On February 2, 2003, Mazon solicited bids by electronic mail from potential subcontractors for fuel tankers to store and dispense fuel for a six month period at the APOD; KBR had estimated that the cost of the subcontract would be $685,050. (Doc. 59 ¶ 20). One of the bids received by Mazon was from LaNouvelle General Trading & Contracting Co. (“LaNouvelle”), a Kuwaiti company of which Hijazi
Prior to awarding the subcontract, Mazon substantially inflated both bids. (Doc. 59 ¶22). He raised LaNouvelle’s bid to approximately $5,521,230, and the competing bid to approximately $6,243,237. (Doc. 59 ¶ 22). On February 14, 2003, Mazon and Hijazi signed a subcontract (“Subcontract 39”) under the inflated price, which was more than $4.8 million more than KBR’s estimate for the work, and more than $3.8 million more than LaNouvelle’s original bid. (Doc. 59 ¶ 23). Hijazi signed Subcontract 39 knowing that the price was inflated and that Hijazi would pay Mazon money for Mazon’s favorable treatment of LaNouvelle. (Doc. 59 ¶ 16). Subcontract 39 indicates that the United States Government was the Owner, for whom work was being performed, and that all escorts and security monitors and fuel costs incurred in the sublet work would be covered by the United States. (Doc. 226-1 at 4-5).
From March 2003 through August 2003, Mazon and Hijazi caused LaNouvelle to submit six different invoices to KBR for payment under Subcontract 39 in the total amount of $5,521,230, which was the inflated price. (Doc. 59 ¶ 26). KBR paid La
Sometime in September 2003, Hijazi gave a $1 million draft to Mazon in exchange for Mazon’s favorable treatment of LaNouvelle. (Doc. 59 ¶ 28). The men also executed a promissory note as a ruse to make the $1 million payment appear to be a loan from Hijazi to Mazon. (Doc. 59 ¶ 28). However, on September 24, 2003, Hijazi sent Mazon an e-mail telling him that Hijazi considered “this whole lown [sic] (principal and interest) as totally your money....” (Doc. 59 ¶ 29). On October 1, 2003, Mazon tried unsuccessfully to deposit the $1 million in a U.S. bank. (Doc. 59 ¶ 30). On October 9, 2003, Hijazi sent Mazon a second e-mail, instructing him on how to deposit the money. (Doc. 59 ¶ 31). Hijazi told Mazon to open an offshore account with three different financial institutions and to deposit around $300,000 in each, under the auspices that it was from “consultancy work, business associates [sic], salaries abd [sic] bonuses, or any other reasoning.” (Doc. 59 ¶ 31). On October 28, 2003, Mazon again attempted to deposit the $1 million at a second financial institution in the United States. (Doc. 59 ¶ 32).
In November 2003, a KBR investigator questioned Hijazi about Subcontract 39. (Doc. 59 ¶ 33). The next day, Hijazi sent a third e-mail to Mazon stating “Please when you call your ex-friends in Kuwait [sic] please be very careful [sic] on what you say.” (Doc. 59 ¶ 33). Mazon opened this e-mail while he was in the United States. (Doc. 59 ¶ 33).
Shortly after the original Indictment was returned against him, Hijazi voluntarily surrendered himself to authorities in Kuwait. (Doc. 133 at 2). However, he was quickly released and his posted bond was returned to him. (Doc. 133 at 2). On May 3, 2005, Hijazi, via American counsel, filed his first Motion to Dismiss the Indictment (Doc 15), claiming that his prosecution violated principles of extraterritoriality, international law, and due process. (Doc. 16). Rather than substantively respond to his Motion to Dismiss, the Government filed a Motion to Strike (Doc. 20), arguing that because Hijazi had not yet appeared for arraignment, the Court should not entertain his motion. After receiving a Report and Recommendation from Magistrate Judge Gorman (Doc. 30), this Court determined that it would not strike Hijazi’s Motion to Dismiss, however it would defer its ruling until such time as Hijazi appeared for arraignment. (Doc. 36).
Approximately one year later, on August 3, 2006, the Government filed the Second Superseding Indictment against Hijazi. (Doc. 53). On December 21, 2007, Hijazi filed a Motion to Dismiss the Second Superseding Indictment (Doc. 131). In this Motion, Hijazi raised the same three ob
On December 11, 2009, the United States Court of Appeals for the Seventh Circuit granted Hijazi a writ of mandamus, and ordered this Court to rule upon Hijazi’s pending motions to dismiss. (Doc. 213).
A district court reviews de novo any portion of a Magistrate Judge’s R & R to which an objection has been made. Fed.R.Crim.P. 59(b)(3). “The district judge may accept, reject, or modify the recommendation, receive further evidence, or resubmit the matter to the magistrate judge with instructions.” Id. Accordingly, the Court will address each of Hijazi’s objections in turn.
I. This Court’s Jurisdiction Over Hijazi
Hijazi argues that the R & R erred in finding that the Court has jurisdiction over
A. Due Process Concerns
In his Motion to Dismiss the Second Superseding Indictment, Hijazi argues that the exercise of criminal jurisdiction over him would violate due process. (Doc. 180 at 27). Hijazi bases his initial argument upon the due process standard created by the Supreme Court for civil cases in Asahi Metal Indus. Co. v. Superior Court,
In its Consolidated Response, the Government counters that the appropriate due process analysis in a criminal context such as this is whether the extraterritorial prosecution of a foreign defendant is “arbitrary or fundamentally unfair.” (Doc. 217 at 39) (quoting United States v. Yousef,
Neither the Seventh Circuit nor the Supreme Court have explicitly addressed due process requirements in the context of criminal jurisdiction over a foreign defendant. However, in its Opinion in this case, the Seventh Circuit indicated that this Court should look to principles of international law to determine whether Hijazi’s contacts with the United States were sufficient to support his prosecution. In re Hijazi,
B. International Law Concerns
i. Substantial, Direct, Foreseeable Effect upon United States
Section 402 of the Restatement Third of Foreign Relations Law provides that, “Subject to § 403, a state has jurisdiction to prescribe law with respect to ... (l)(c) conduct outside its territory that has or is intended to have substantial effect within its territory; ...; and (3) certain conduct outside its territory by persons not its nationals that is directed against the security of the state or against a limited class of other state interests.” These principles are known as the objective territorial theory, and the protective theory, respectively. “When an allegedly criminal act is performed by an alien on foreign soil courts in the United States have long held that if jurisdiction is to be extended over that act, it must be supported by either the Protective or the Objective territorial theory.” United States v. Columbdr-Colella,
Accordingly, to satisfy the first requirement under international law, the Indictments must allege that Hijazi’s actions were intended to have a substantial effect within the United States, or that they were directed against the security of the state, or other state interests. The parties and the Magistrate spent considerable time discussing whether the conduct of Mazon can be attributed to Hijazi for purposes of examining Hijazi’s conduct. As will be discussed below, the Court believes that it can be, however, in its view, the Second Superseding Indictment alleg
The Second Superseding Indictment alleges that Mazon and Hijazi “devised a scheme to defraud the United States of over $3.5 million by falsely inflating the cost of supplying fuel tankers used to support United States military operations in Kuwait.” (Doc. 59 ¶ 1). Hijazi allegedly originally submitted a bid to KBR of about $1.7 million dollars, but then schemed with Mazon to inflate the bid “to ensure that LaNouvelle would be overpaid.” (Doc. 59 ¶ 15). “Mazon and Hijazi signed the subcontract, knowing that the subcontract price was inflated and that Hijazi would pay Mazon money for Mazon’s favorable treatment of LaNouvelle.” (Doc. 59 ¶ 16). The subcontract, Subcontract 39, indicates the United States as “Owner,” provides that the United States will undertake various tasks for the performance of the subcontract, and requires that LaNouvelle maintain insurance coverage which included a “waiver of subrogation to the benefit of Brown & Root, Inc. and the U.S. Government.” (Doc. 226 §§ 1.2, 1.5, 8.0, 13.0).
Accordingly, based upon the allegations of the Second Superseding Indictment, Hijazi knowingly schemed to defraud the United States of over $3.5 million, and caused the wires to be used to that effect. As Magistrate Judge Cudmore noted, Hijazi’s knowledge that the United States was the ultimate payor on Subcontract 39 is sufficiently alleged in the Second Superseding Indictment, and also supported by the terms of Subcontract 39 itself. (Doc. 233 at 40-44). In the Court’s opinion, this is sufficient to establish that Hijazi’s actions were intended to have a substantial effect' on the United States, namely the theft of millions of dollars from its treasury. See United States v. Bowman,
ii. Reasonableness of Jurisdiction
In addition to meeting a basis for jurisdiction pursuant to § 402, in order for Hijazi’s prosecution to comport with international law it must also be “reasonable.” Restatement (Third) of Foreign Relations § 403(1). Whether jurisdiction is reason
While Hijazi argues that the application of United States’ laws to him is unreasonable, the Court disagrees. As previously discussed, Hijazi’s activity had a substantial, direct, and foreseeable effect upon the United States, i.e. the theft of a substantial amount of money from its treasury. Moreover, the allegations of the Second Superseding Indictment and Subcontract 39 make it plausible that Hijazi knew that his actions were to have such an effect, such that they were not unforeseeable to him. Likewise, the character of the activity to be regulated is of profound importance. The United States has a strong interest in protecting itself from fraud. See Bowman,
Finally, although Hijazi contends that prosecuting him interferes with Kuwait’s sovereignty, and Kuwait agrees, the Court does not see how the Government’s efforts to protect itself from fraud in any way detracts from Kuwait’s sovereignty. This is not a case in which Hijazi acted to defraud Kuwait, or even a Kuwaiti citizen or company, as well as the United States. Hijazi’s conduct was directed at defrauding the United States Government, such that Kuwait would have no duty, or even motivation, to prosecute Hijazi therefor. Accordingly, the Court does not find that the Kuwaiti Government’s objection to its éxercise of jurisdiction renders it unreasonable.
For the foregoing reasons, the Court finds that the exercise of jurisdiction over Hijazi comports with international law, and therefore with due process. The Court will now discuss whether the statutes under which Hijazi has been charged are to apply extraterritorially to his conduct such that jurisdiction is complete.
II. Extraterritorial Application of the Major Fraud Act and Wire Fraud Statutes
The Second Superseding Indictment charges Hijazi with violations of the Major Fraud Act and the Wire Fraud statute.
(a) Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent—
(1) to defraud the United States; or
(2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises, in any grant, contracts, subcontract ... as a subcontractor or supplier on a contract in which there is a prime contract with the United States, if the value of such contract, subcontract ..., is $1,000,000 or more shall ... be fined not more than $1,000,000, or imprisoned not more than 10 years, or both. 18 U.S.C. § 1031.
The Wire Fraud statute provides for a fine and/or imprisonment for the use of “wire, radio, or television communication in interstate or foreign commerce” in furtherance of a fraudulent scheme. 18 U.S.C. § 1343
As noted above, the Government contends that Mazon and Hijazi schemed to defraud the United States by entering into an inflated subcontract on a prime contract to which the United States was a party. It is undisputed that during the relevant time period, Hijazi, a Lebanese citizen, was in Kuwait and allegedly committed acts in violation of the statutes while in Kuwait. On this point, it is clear that Hijazi had no direct contact with the United States except that he is alleged to have sent three e-mails to Mazon, the last of which (allegedly written in an attempt to cover up the pay-off) was opened in the United States. Thus, the Government is attempting to prosecute Defendant for conduct that ostensibly took place in a foreign country — i.e. extraterritorially.
The Government first argues that this Court need not consider the extraterritoriality of the statutes in question because Mazon’s conduct, some of which occurred in the United States, can be imputed to Hijazi. In furtherance of the scheme to defraud the United States, the Government alleges that Mazon e-mailed KBR, an American corporation, regarding the fraudulent subcontract, that he attempted to deposit the kick-back in United States banks, and that he used his United States based e-mail to communicate with Hijazi.
The Second Superseding Indictment does not allege a conspiracy count. The Seventh Circuit has held, however, that “[i]t is not essential that the indictment contain a separate count charging conspiracy in order to take advantage of the doctrines peculiar to conspiracy.” United States v. Wilson,
In any event, the Court will still consider whether the charging statutes have extraterritorial application, as a majority of Hijazi’s own conduct occurred overseas. (See Doc. 230 at 12-13). Acts of Congress are not presumed to have extraterritorial application. Small v. United States,
However, neither the lack of clearly expressed language within the stаtute nor the absence of legislative history may be fatal to this prosecution. An exception to the presumption has been described in United States v. Bowman, 260 U.S, 94, 43 S.Ct. .39,
Thus,
To limit their locus to the strictly territorial jurisdiction would be greatly to curtail the scope and usefulness of the statute and leave open a large immunity for frauds as easily committed by citizens on the high seas and in foreign countries as at home. Id.
The practical result of Bowman’s holding is that “judges must consider the language and function of the prohibition” in determining the extraterritorial reach of a criminal statute. Leija-Sanchez,
The Bowman Court also noted that this exception should only be applied when it fit within “the power and jurisdiction of a government to punish crime under the law of nations.”
III. Applicability of the Defense Cooperation Agreement
In his Motion to Dismiss the Second Superseding Indictment, Hijazi argued that the Defense Cooperation Agreement (“DCA”) between the United States and Kuwait bars this Court from exercising criminal jurisdiction over him. The DCA is a classified document such that Hijazi did not have access to its terms. However, he premised his argument on the fact that other “status of forces agreements” (“SOFA”) like it, such as the NATO SOFA, would bar such jurisdiction. Hijazi also relied on the statements of the Kuwaiti Government that the DCA bars this Court’s jurisdiction. In a formal communication to the Department of Justice on May 3, 2007, Kuwait’s Ambassador to the United States stated:
Upon reviewing the provisions of the Defense Cooperation Agreement (DCA), signed between Kuwait and the United States of America in 1991, we found that it did not grant the United States the right to practice its legal competence (i.e. application of U.S. laws on the citizens of Kuwait or residents in the state of Kuwait, such as in the present case), with respect to acts committed on the territories of the State of Kuwait, except those related to U.S. Army personnel, U.S. civilians and company contractors. (Doc. 180-B).
The Kuwaiti Ambassador reiterated this position in a subsequent letter, in which he stated: “There is nothing in the DCA that would provide any basis for the United States to assert its criminal legal jurisdiction on citizens and residents of Kuwait ...” and that “If the United States desires to exercise its jurisdiction over actions that occur in Kuwait, it can only do so pursuant to the terms set forth in the DCA.” (Doc. 180-C). Finally, Hijazi obtained the opinion of Frederick C. Smith, a former career senior executive at the Pentagon who was personally involved in negotiating the DCA, who stated that “the Kuwaiti Government could rightfully consider it a violation of the DCA ... for the United States to assert jurisdiction over a Kuwaiti national or a person ordinarily resident in Kuwait, who is not a member of the U.S. military, for acts occurring wholly or predominantly in Kuwait.” (Doc. 180-D).
The Government objects to Hijazi’s argument that the DCA bars this Court from asserting jurisdiction over Hijazi. According to the Government, “nothing in the DCA precludes or even discourages this prosecution.” (Doc. 217 at 45). The Government argues that, because it is not purporting to exercise jurisdiction over Hijazi pursuant to the DCA, but rather under established principles of U.S. and internаtional law, the DCA is immaterial to this case. In addition, while the Government is unable to comment on any of the actual provisions of the classified document, it notes that the NATO SOFA itself would also not bar jurisdiction in this case because the agreement does not prohibit jurisdiction on traditional grounds, but rather creates a new basis for jurisdiction over certain crimes. (Doc. 217 at 47 n. 11).
Magistrate Judge Cudmore obtained the DCA and engaged in an in camera review of the document. While the classified status of the document precluded the Magistrate from going into any detail, after reviewing the document he concluded that “the DCA is completely inapplicable to this criminal cause.” (Doc. 230 at 40). Hijazi now argues that the Magistrate gave insufficient deference to the Kuwaiti Government’s interpretation of the DCA, and that if the DCA fairly admits of two constructions, the construction favoring Hijazi’s
While Hijazi is correct that Courts look to the “opinions of our sister signatories” when interpreting a treaty, “[t]he interpretation of a treaty, like the interpretation of a statute, begins with its text.” Abbott v. Abbott, — U.S.—,
IV. Impact of the Long Pre-trial Delay
Finally, Hijazi makes several arguments that the case against him should be dismissed based upоn the length of time that has passed since he was charged. Hijazi’s arguments are based upon the Sixth Amendment right to a speedy trial, and Federal Rule of Criminal Procedure 48(b).
A. Sixth Amendment Right to a Speedy Trial
The Sixth Amendment of the United States Constitution provides: “In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial ...” When a defendant raises a claim pursuant to this provision, the Court applies the following four-part test, created by the Supreme Court in Barker v. Wingo,
Here, both parties agree that the pre-trial delay in this case, now over six years, is sufficiently long to be presumptively prejudicial such that an analysis of the other three factors is appropriate. See id. at 530,
i. Blame for the Delay
The second factor under the Barker analysis asks “whether the government or the criminal defendant is more to blame for th[e] delay.” Doggett v. United States,
“A defendant has no duty to bring himself to trial; the [Government] has that duty.” Barker,
Accordingly, the Court must decide the difficult question of who is to blame between a Government that has taken reasonable and diligent steps to secure a defendant for trial which have proved unsuccessful, and a defendant who lawfully and openly remains beyond the Government’s control. As the Seventh Circuit recognized, this is not a case in which Hijazi is a fugitive, illegally on the run from the United States Government. See Hijazi
The Court agrees with these authorities, and with the thoughtful opinion of Magistrate Judge Cudmore. While it is Hijazi’s right to remain in Kuwait, and the Kuwaiti Government’s right to choose not to deliver him to the United States, this cannot be weighed against the Government in determining why Hijazi has not yet been brought to trial. The Government has acted diligently in seeking to obtain him and has therefore fulfilled its duty. Therefore, the factor is to be weighed in favor of the Government and against dismissal.
ii. Assertion of Right
The next factor for the Court to consider is whether Hijazi asserted his right to a speedy trial in due course. Barker,
It is not disputed that Hijazi first noted his intention to assert his right to a speedy trial on December 21, 2007, in his Mоtion to Dismiss Second Superseding Indictment (Doc. 180 at 30 n. 6), where he indicated that he would be asserting his right to a speedy trial in this matter. Nine months later, on September 3, 2008, Hijazi filed a formal Motion to Dismiss Based on Sixth Amendment Right to a Speedy Trial. (Doc. 174). The question, therefore, is not whether his assertion of his right was
Hijazi cites to'two cases for the proposition that a non-fugitive defendant who resides overseas does not forfeit his right to demand speedy trial. (Doc. 283 at 48). However, in both of those cases, the reason that the defendants had not been tried earlier was due to the government’s negligence in locating them or informing them of the charges pending against them. See United States v. Judge,
The Court finds the Manning rationale and the rationale of the Magistrate to be convincing. If Hijazi truly wants a speedy trial, and desires to assert his right thereto, he cannot at the same time refuse to show up for it. Accordingly, the Court agrees with the Magistrate that Hijazi’s assertion of his Sixth Amendment right is “hollow” and without merit, and thus this factor also weighs in favor of the Government.
iii. Prejudice
The final factor to be considered is whether Hijazi has suffered prejudice as a result of the delay in bringing him to trial. Barker,
Hijazi argues that he has suffered the requisite prejudice to have his case dismissed. He relies on the “litany of substantial hardships contained in the' Seventh Circuit’s decision,” as well as the potential prejudice to his defense. (Doc. 233 at 51-52). In its Opinion, the Seventh Circuit did state, as Hijazi quotes, that the continued indictment over him would “make it very risky for him to ever leave Kuwait, which is not his native country....” In re Hijazi,
The Court does not dispute that Hijazi may be suffering personal prejudice as a result of the indictments hanging over him. However, as the Supreme Court stated in Doggett, because the delay is not due to the Government’s negligence or bad faith, Hijazi must show “specific prejudice to his defense.”
In sum, the Court does not find that Hijazi has suffered enough prejudice to overcome the fact that the delay is of his own making. Accordingly, the Court agrees with the Magistrate’s assessment of Hijazi’s Sixth Amendment claim, and DENIES Hijazi’s Motion to Dismiss Based on Sixth Amendment Right to a Speedy Trial (Doc. 174).
B. Federal Rule of Criminal Procedure 48(b)
Hijazi has also- sought to have the indictments against him dismissed for lack of prosecution, pursuant to Rule 48(b) of the Federal Rules of Criminal Procedure. Rule 48(b) provides: “The court may dismiss an indictment, information, or complaint if unnecessary delay occurs in: (1) presenting a charge to a grand jury; (2) filing an information against a defendant; or (3) bringing a defendant to trial.” The Rule “is a restatement of the inherent power of the court to dismiss a case for want of prosecution,” and that power is not circumscribed by the Sixth Amendment. United States v. Clay,
The Magistrate found that Hijazi’s Rule 48(b) claim was without merit because the delay here is “attributable to Hijazi’s choice to remain beyond the Government’s reach.” (Doc. 230 at 51). While the Magistrate acknowledged that this was a lawful choice for Hijazi to make, he noted that such choice was not without consequences — that is, the delay in his trial. (Doc. 230 at 51). Hijazi has not made any objections specific to his Rule 48(b) claim, but merely seeks to incorporate his objections to his speedy trial claim thereto. (Doc. 233 at 52). Accordingly, for the
Conclusion
For the foregoing reasons, the Report and Recommendation of Magistrate Judge Cudmore (Doc. 230) is AFFIRMED, and Hijazi’s Motion to Dismiss Indictment (Doc. 15) Motion to Dismiss Second Superseding Indictment (Doc. 131) and Motion to Dismiss Based on Sixth Amendment Right to a Speedy Trial (Doc. 174) are DENIED. IT IS SO ORDERED.
REPORT AND RECOMMENDATION
This case is before the Court for a Report and Recommendation on Defendant’s motions to dismiss (d/es 15, 131, 174) the indictment against him. For the reasons below, the Court recommends that the motions be denied.
Background
On March 16, 2005, the U.S. Government (“Government”) charged Defendant Ali Hijazi (“Hijazi”) and Jeff Mazon (“Mazon”) with counts under the Major Fraud Act, 18 U.S.C. § 1031(a), the wire fraud statute, 18 U.S.C. § 1343, and the aiding and abetting statute, 18 U.S.C. § 2. A superseding indictment was filed August 3, 2006. (d/e 59).
The superseding indictment alleges that Hijazi and Mazon “devised a scheme to defraud the United States of over $3.5 million by falsely inflating the cost of supplying fuel tankers used to support United States military operations in Kuwait.” (d/e 59, ¶ 1). In particular, the U.S. Army Operations Support Command entered into a prime contract with Kellogg Brown and Root Services, Inc. (“KBR”), to provide property and services to the U.S. military throughout the world. Id. ¶ 7. One of KBR’s tasks was to provide for the storage and dispensation of fuel at an airport in Kuwait used by the U.S. military. Id. ¶ 11. KBR estimated the cost of this task at $685,080. Id. ¶ 20. To accomplish the task, KBR, through Mazon (its procurement employee), solicited bids from Kuwaiti companies. Mazon was stationed in Kuwait and responsible for negotiating, executing and administering subcontracts under the prime contract.
Hijazi is a resident of Kuwait and was the managing partner of LaNouvelle. General Trading and Contracting Co., a Kuwaiti company (“LaNouvelle”). Hijazi, through LaNouvelle, submitted a bid to Mazon of about $1,673,100. A different company submitted a bid for about $1,891,890. Id. ¶ 21. Upon receiving the bids, Mazon allegedly inflated both bids, raising LaNouvelle’s bid to over 5xh million dollars, and raising the other company’s bid to over 6.2 million dollars.' Id. ¶ 22. LaNouvelle’s inflated bid was more than $4.8 million more than KBR’s estimate for the work, and more than $3.8 million more than its original bid.
Mazon picked LaNouvelle’s “lower” bid, awarding the subcontract to LaNouvelle in February 2003, for approximately %'S'k million. “Mazon and Hijazi signed the subcontract, knowing that the subcontract price was inflated and that Hijazi would pay Mazon money for Mazon’s favorable treatment of LaNouvelle.” Id. ¶ 16.
“From in or about March 2003 through in or about August 2003, Mazon and Hijazi caused LaNouvelle to submit six different invoices to KBR for payment under the” inflated subcontract. Id. ¶ 27. Mazon and Hijazi then allegedly caused KBR to send four invoices to the Government, and the
“In or about September 2003, Hijazi gave a $1 million draft to Mazon in exchange for Mazon’s favorable treatment of LaNouvelle. Mazon and Hijazi also executed a promissory note as a ruse to make the $1 million payment appear to be a $1 million loan from Hijazi to Mazon.” Id. ¶ 28. Hijazi sent an e-mail to Mazon’s employee account on September 24, 2003, characterizing “this whole lown [sic] (principal and interest) as totally your money. ...” Id. ¶29. On or about October 1, 2003, Mazon allegedly tried unsuccessfully to deposit the money in a U.S. bank. Id. ¶ 30. On October 9, 2003, Hijazi sent an email to Mazon’s personal account, imparting advice on how to deposit the funds: Hijazi allegedly told Mazon to open three different offshore accounts and deposit about $300,000 in each, stating that the money was from “consultancy work, business assoicates [sic], salaries abd [sic] bonuses, or any other reasoning.” Id. ¶ 31. Later that month, Mazon tried again to deposit the money in a U.S. financial institution, but the indictment is silent on whether that attempt was successful. Id. ¶ 32.
In November 2003, a KBR investigator questioned Hijazi about the subcontract. Id. ¶ 33. The next day Hijazi sent an email to Mazon’s personal account stating, “Please when you call your ex-friends in kuwait [sic] please be very carreful [sic] on what you say.” Id. ¶ 33.
The superseding indictment, filed in August 2006, charges Hijazi and Mazon with scheming to defraud the U.S. Government, in violation of the Major Fraud Act, 18 U.S.C. § 1031, and with wire fraud based on the same scheme, 18 U.S.C. §§ 2,1343. The U.S. payments to KBR form the basis for four counts under the Major Fraud Act. Mazon’s four e-mails to and from KBR relating to the subcontract, and two wires directing payment to KBR form the basis for the five counts of wire fraud.
Mazon has been tried twice on these charges, each time the jury was unable to reach a verdict, (d/e 217, p. 2). In March 2009, the Government reached a plea agreement with Mazon. Mazon pleaded guilty to a misdemeanor count for making a writing containing a false statement, and in return all the fraud charges against him were dropped. U.S. v. Mazon, 05-cr-40024 (C.D.Ill., Judge McDade, plea agreement, d/e 210). In the plea agreement, Mazon stipulated that he had created a “memorandum of record” for the KBR subcontract file which falsely stated that Mazon had obtained approval from the project manager when, in fact, Mazon had “knowingly and intentionally failed to inform. [the project manager] that the amount of Subcontract 39 was nearly five million U.S. Dollars higher than the original KBR estimate.” Id. ¶ 14. None of the original fraud allegations in the indictment were included in the stipulation, and the agreement does not require Mazon to testify against Hijazi.
Despite its inability to convict Mazon, the Government continues to pursue Hijazi’s prosecution. Hijazi’s prosecution, however, is at a standstill because the Govеrnment has been unable to obtain his appearance in the U.S. Hijazi remains in Kuwait, which has no extradition treaty with the U.S. Hijazi did voluntarily surrender himself to the authorities in Kuwait in April 2005, but he was released and posted
After the indictment, Hijazi hired U.S. counsel and filed motions to dismiss the indictment. The District Court declined to rule on those motions until Hijazi appeared before the Court for arraignment. Hijazi then filed a petition for mandamus with the Seventh Circuit Court of Appeals, seeking a ruling on the motions. The Court of Appeals granted the petition on December 11, 2009, directing the District Court to rule on Hijazi’s motions to dismiss. U.S. District Judge McDade referred the motions to the undersigned on December 17, 2009. Supplemental briefs at the District Court level pursuant to the order of the undersigned were filed February 1, 2010 (d/e 217) and March 19, 2010 (d/e 222). Supplemental issues were addressed by the parties as ordered by the Court (see d/es 223 through 228) with the last filing on April 29, 2010. The motions are now fully briefed. The case is now before this Court for a recommendation on those motions.
Analysis
I. Hijazi’s alleged role in the scheme to defraud the U.S. is enough to permit his criminal prosecution in the U.S. His prosecution is permissible because part of the scheme to defraud the U.S. took place in the U.S., and, in any event, the scheme was intended to and did produce injury to the U.S.
A. Hijazi’s role in the scheme should not be viewed in isolation.
Hijazi contends that all of his alleged conduct took place in Kuwait, outside the reaches of U.S. criminal law. It is undisputed that Hijazi is a resident of Kuwait, a citizen of Lebanon, and his only trip to the U.S. occurred in 1993. (d/е 222, p. 3). The Government also does not dispute that LaNouvelle is a Kuwaiti company, and that the U.S. was not a party to the subcontract between KBR (a U.S. Company) and LaNouvelle. Id.
Hijazi did send three electronic mails (“e-mails”) to Mazon’s e-mail accounts, which the Government maintains were “located in the United States.” (Superseding indictment, d/e 59, ¶¶ 29, 31). Mazon opened two of those e-mails in Greece, and one of the e-mails in the U.S.
The U.S. argues that it is not necessary to decide whether those e-mails alone were enough to allow criminal prosecution of Hijazi, because all the acts taken in furtherance of the scheme to defraud are relevant, including those taken by Mazon in the U.S. and the wire payments by the U.S. Government to KBR. In support of this argument, the U.S. cites cases holding that an overt act in the U.S. to further a criminal conspiracy is enough to prosecute all co-conspirators, even those who did not
The Court agrees with the Government. Hijazi’s conduct should not be viewed in isolation, but instead in context of the overall scheme to defraud the U.S. Government, part of which indisputably occurred in the U.S.
The fact that Hijazi was not formally charged with conspiracy does not detract from the allegations that Hijazi schemed with Mazon to submit a fraudulent bid to KBR, with the ultimate purpose of passing those fraudulent charges on to the U.S. Government. See U.S. v. Dick,
B. The Major Fraud Act and the wire fraud statute apply extraterritorially to Hijazi.
The Government contends that the Court need not address extraterritorial reach because part of the scheme occurred in the U.S. Some of the cases cited by the Government support this conclusion, but others engage in an extraterritorial analysis even where part of the acts occurred in the U.S. Compare U.S. v. Inco Bank & Trust Corp.,
1) Statutory Construction of the Major Fraud Act
Congress has the power to apply its laws outside the U.S., if consistent with international law. U.S. v. Dawn,
18 U.S.C. § 1031 states in pertinent part:
§ 1031. Major fraud against the United States
(a) Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent—
(1) to defraud the United States; or
(2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises, in any grant, contract, subcontract,..., or in any procurement of property or services as a prime contractor with the United States or as a subcontractor or supplier on a contract in which there is a prime contract with the United States, if the value of such grant, contract, subcontract, ... is $1,000,000 or more shall, subject to the applicability of subsection (c) of this section, be fined not more than $1,000,000, or imprisoned not more than 10 years, or both.
This statute does not expressly address whether it applies to frauds against the U.S. which are executed from outside the U.S., nor- do the parties point to any relevant legislative history. The term “whoever” in statute does not point one way or the other. See Small v. U.S.,
“ ‘[I]t is a longstanding principle of American law “that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” ’ ” Dawn,
There is a category of statutes where the presumption either does not apply or is rebutted, even if the statute is silent. Broadly described, these are statutes designed to protect the U.S. from injury, applied in situations where injury to the U.S. either occurs or is likely to occur. This exception to the presumption against extraterritoriality was described in United States v. Bowman,
The American defendants in Bowman moved to dismiss the indictment on the ground that the crime had not been committed within the U.S., and was therefore outside the reach of the criminal fraud statute. The Supreme Court disagreed, concluding that the criminal statute did apply to the three American citizens:
We have in this ease a question of statutory construction. The necessary locus, when not specially defined, depends upon the purpose of Congress as evinced by the description and nature of the crime and upon the territorial limitations upon the power and jurisdiction of a government to punish crime under the law of nations. Crimes against private individuals or their property, like assaults, murder, burglary, larceny, robbery, arson, embezzlement, and frauds of all kinds, which affect the peace and good order of the community must, of course, be committed within the territorial jurisdiction of the governmentwhere it may properly exercise it. If punishment of them is to be extended to include those committed outside of thе strict territorial jurisdiction, it is natural for Congress to say so in the statute, and failure to do so will negative the purpose of Congress in this regard.... But the same rule of interpretation should not be applied to criminal statutes which are, as a class, not logically dependent on their locality for the government’s jurisdiction, but are enacted because of the right of the government to defend itself against obstruction, or fraud wherever perpetrated, especially if committed by its own citizens, officers, or agents. Some such offenses can only be committed within the territorial jurisdiction of the government because of the local acts required to constitute them. Others are such that to limit their locus to the strictly territorial jurisdiction would be greatly to curtail the scope and usefulness of the statute and leave open a large immunity for frauds as easily committed by citizens on the high seas and in foreign countries as at home. In such cases, Congress has not thought it necessary to make specific provision in the law that the locus shall include the high seas and foreign countries, but allows it to be inferred from the nature of the offense....
Thus, Bowman acknowledged the presumption against extraterritorial application, but concluded that the presumption did not apply “to criminal statutes which are, as a class, not logically dependent on their locality for the government’s jurisdiction, but are enacted because of the right of the government to defend itself against obstruction, or fraud wherever perpetrated, especially if committed by its own citizens, officers, or agents.” Id. In these situations, Bowman teaches that extraterritorial application can be inferred, even if the statute does not expressly address the issue.
If Hijazi was an American citizen, Bowman would be dispositive. Bowman, however, specifically declined to address whether the British conspirator could be prosecuted:
The three defendants who were found in Nеw York were citizens of the United States, and were certainly subject to such laws as it might pass to protect itself and its property. Clearly it is no offense to the dignity or right of sovereignty of Brazil to hold them for this crime against the government to which they owe allegiance. The other defendant is a subject of Great Britain. He has never been apprehended, and it will be time enough to consider what, if any, jurisdiction the District Court below hasto punish him when he is brought to trial.
The question then is whether Bowman’s reasoning can be extended to apply to non-U.S. citizens. Case law suggests that it can and has. For example, in U.S. v. Nippon Paper Industries Co., Ltd.,
Cases cited by the Government have reached the same conclusion for criminal conduct by a foreign citizen in a foreign country which produces injury in or to the U.S. U.S. v. Benitez,
The Court believes that these cases, though they may differ in their analysis, can be distilled to one idea: if a statute is silent, extraterritorially application will nevertheless be inferred if the conduct, proscribed causes or is likely cause significant injury to the U.S.
Hijazi questions whether Bowman remains viable in light of several later Supreme Court cases addressing the extraterritorial reach of statutes. After briefing in this case, however, the Seventh Circuit affirmed Bowman’s continued vitality in U.S. v. Leija-Sanchez,
Hijazi attempts to limit Bowman to “crimes that as a practical matter will typically involve foreign conduct” such as illegal drug trafficking, immigration, terrorism and violence against DEA agents. (Hijazi’s Seventh Circuit Supplemental Brief, d/e 215, p. 18). Bowman, though, involved none of these crimes, but instead involved fraudulent overbilling of the U.S., the same kind of crime at issue herein. The Major Fraud Act is directed at schemes to obtain money under false pretenses in contracts and subcontracts where the U.S, is prime contractor — that is what Hijazi allegedly did by intentionally inflating his subcontract. As this case demonstrates, U.S. military efforts abroad can require large sums of money spent on prime contracts and subcontracts throughout the world. The need to protect the U.S. against fraud in these contracts is not an inherently domestic need, but extends globally to wherever those contracts are performed. The potential for fraud is present regardless of the nationality of the subcontractors or the location of the work provided. Bowman recognized this: “[t]he statute in Bowman was designed to prevent fraud by military contractors during the aftermath of World War I. The Justices observed that, because military operations in that war took place throughout the world, the statute must reach frauds hatched abroad.” United States v. Leija-Sanchez,
Unlike the cases cited by Hijazi, the Court sees nothing in the context, structure, or text of Major Fraud Act to suggest that it applies only domestically. Compare with Small v. U.S.,
The cases cited by Hijazi also do not support his assertion that Bowman has been limited to U.S. citizens. For example, Skiriotes v. State of Florida,
Similarly, the cases Hijazi cites do not support his contention that the Major Fraud Statute must expressly state that it applies extraterritorially. In EEOC v. Arabian American Oil Co.,
No such problem exists here, despite the concerns expressed by the Kuwaiti government. Applying the Major Fraud Act to Hijazi will not interfere with Kuwait’s laws or governance. Defrauding a government is not the kind of activity that is allowed in one country and prohibited in another, like religious discrimination, poor working conditions, or patent appropriation. See U.S. v. Leija-Sanchez,
The cases cited by Hijazi do not counsel otherwise. For example, American Banana Co. v. United Fruit Co.,
The other cases cited by Hijazi are also distinguishable. See Yenkichi Ito v. U.S.,
In short, unlike the cases cited by Hijazi, here the nature of the offense (fraud against the U.S. Government) does create an inference of extraterritorial application under Bowman, and extraterritorial application does not interfere with Kuwait’s sovereignty or governance.
2) Statutory Construction of the Wire Fraud Statute
The wire fraud statute, 18 U.S.C. § 1343, provides in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals,' pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.
The Government contends that the term “foreign commerce” demonstrates Congressional intent for extraterritorial application. The Court agrees with Hijazi, however, that this term alone does not evince such intent, if “extraterritorial” means communications originating and ending in a foreign country. The legislative history shows that the term “foreign commerce” was added to extend the statute to wires between the U.S. and a foreign country, in response to dismissal of a criminal case involving a fraudulent phone call from Mexico to California. Aramco,
However, for the same reasons set forth for the Major Fraud Act, the Court concludes that the wire fraud statute applies to Hijazi. As discussed above, the wires that form the basis for the counts occurred either in the U.S., or were sent to the U.S. from Kuwait. Thus, this is not a case where the wires began and ended entirely in a foreign country. As discussed above, Hijazi’s role in the scheme permits his prosecution for those wire frauds, even if his role was played from Kuwait. See United States v. Adcock,
Second, extraterritorial application of the wire fraud statute to Hijazi can be inferred under Bowman by the nature of the offense alleged: a financial fraud against the United States. To find otherwise would make the U.S. vulnerable to
One caveat: the Court agrees with Hijazi that the wire fraud statute “reach[es] аnd make[s] criminal all sorts of conduct that does not involve the Government at all.” (d/e 16, p. 16). However, this case is not that fact pattern. Here, the fraud did involve the U.S. Government and this Recommendation is limited to that issue alone.
C. Hijazi’s prosecution comports with international law.
This Court agrees with the Seventh Circuit that Hijazi’s prosecution raises “delicate foreign relations issues.” In re Hijazi
The Third Restatement on Foreign Relations recognizes that a country may apply its law to “conduct outside its territory that has or is intended to have substantial effect within its territory,” as well as to “conduct outside its territory by persons not its nationals that is directed against the security of the state.... ” Restatement (Third) of Foreign Relations § 402(l)(e) & (d). Fraud against the U.S. clearly has a “substantial effect” in the U.S., threatening the Government’s ability to function, as explained in Bowman. Id. at § 402(f)(protective principle applies to “offenses directed against the security of the state or other offenses threatening the integrity of governmental functions that are generally recognized as crimes.... ”); F. Hoffmann-La Roche v. Empagran,
Hijazi contends that his alleged conduct had no effect in the U.S. — “At the most, Hijazi’s actions could have harmed KBR, and KBR could have passed that harm along to the U.S. government.” (d/e 222, p. 18). As discussed above, however, Hijazi’s conduct must be viewed in context of the alleged overall scheme to defraud the U.S. Government. Hijazi had an important role
Section 403 of the Restatement provides a catch-all limit to extraterritorial application: jurisdiction must still be “reasonable” even if envisioned under § 402. Restatement (Third) of Foreign Relations § 403(1). Determining whether the exercise of jurisdiction is unreasonable is case and context specific, but can include considerations of the extent of the conduct within the country, and whether that conduct has a “substantial, direct, and foreseeable effect” upon the country seeking to exercise jurisdiction. Hijazi again contends that his actions had no substantial, foreseeable effect on the U.S., but as discussed above, Hijazi’s role must be viewed in the context of the overall scheme to defraud the U.S., not simply the overbilling of KBR.
As discussed above, Hijazi contends that prosecuting him interferes with Kuwait’s sovereignty, and Kuwait agrees, (d/e 215, Ex. A, 8/22/07 letter (“Kuwait believes that the indictment by The United States Government has impinged on the sovereign right of Kuwait to defend and practice its jurisdiction over actions that occur within Kuwait.”)). Yet neither explain how the U.S. Government’s efforts to protect itself from fraud interferes with Kuwait’s sovereignty. Kuwait has no duty to protect the U.S. from fraud, and therefore no motivation to prosecute Hijazi or to prevent similar schemes to defraud the U.S. in the future. There is no suggestion that Kuwait would allow such a fraud against itself, regardless of where perpetrated or by whom. This is not a case where the alleged misconduct and injury all occurred in a foreign country, like Torres or Baragona, cases cited by Hijazi. Baragona v. Kuwait Gulf Link Transport Co.,
This is not to say that the continued prosecution of Hijazi is wise or good foreign relations policy. Mazon arguably played the more major role in the scheme yet the Government twice failed to convince a jury of his guilt. If a jury could
D. Hijazi’s prosecution comports with due process.
Exercising criminal jurisdiction over Hijazi does not comport with due process if it is “arbitrary or fundamentally unfair.” U.S. v. Yousef,
The Court concludes that Hijazi’s prosecution comports with due process under any of these standards. The issue again comes down to the characterization of Hijazi’s actions. Hijazi characterizes his conduct as limited to, at most, fraudulent behavior directed only at KBR through actions limited to Kuwait. That, however, is not how the indictment characterizes his conduct. According to the indictment, Hijazi’s actions were an important part of an overall scheme to defraud the U.S. Government. His actions must be viewed in the context of this alleged scheme, not in isolation. Purposefully scheming to defraud the U.S. Government is a sufficient nexus with the U.S. to satisfy due process requirements. See U.S. v. Peterson,
E. The Military Extraterritorial Jurisdiction Act of 2000 (“MEJA”) is inapplicable
Hijazi asserts that the MEJA “confirm[s] that Hijazi is not subject to the criminal jurisdiction of the United States.” (d/e 133, p. 15). MEJA addresses criminal offenses committed outside the U.S. by U.S. forces and those employed by or accompanying U.S. forces. Simplified, it subjects those persons to the same U.S. criminal laws as if the crime had been committed within the U.S. The Act, by its definitions, does not apply to foreign residents. 32 C.F.R. § 153.5(a)(7).
Hijazi contends that MEJA is “additional evidence that Congress likely did not intend for the Major Fraud Act to apply extraterritorially.” (d/e 222, p. 36). However, he does not dispute the Government’s argument that MEJA was enacted
F. The Defense Cooperation Agreement is inapplicable.
On April 14, 2010, the undersigned reviewed the Defense Cooperation Agreement (hereinafter DCA) between the United States and the Country of Kuwait. Said document was brought to the undersigned for an in camera inspection by a Department of Justice employee from Washington, D.C. The DCA is classified as a “secret” document and can only be viewed by those with certain security clearance levels. The Court reviewed the DCA in full in chambers on April 14, 2010. Thereafter, the copy of the DCA reviewed by the Court was tendered to AUSA Gilmore, Central District of Illinois, who is the Security Chief for the Central District of Illinois, for storage in the U.S. Attorney’s Office safe in accordance with classified document protocol. Any judge wishing to review this report and recommendation or Judge McDade’s order pertaining to same, should be able to review a copy of the DCA under the same security steps as the undersigned.
The parties take competing views as to the effect of DCA on the issues herein. Defendant contends that the DCA prohibits the United States from prosecuting him for criminal acts taken entirely within Kuwait and he argues that all of his alleged actions were taken in Kuwait. In addition, the Kuwait Government has also taken the position that the DCA prohibits United States criminal prosecution over this Defendant because all of his actions, they argue, occurred in Kuwait.
The United States Government, on the other hand, contends that nothing in the DCA precludes this Defendant’s prosecution and that the DCA is really immaterial herein. Further, that the U.S. Government is not relying on the DCA to obtain jurisdiction, but is relying on both United States and existing international law.
From the Court’s in camera review of the DCA, the Court concludes that the DCA is completely inapplicable to this criminal cause. The classified status of the Agreement prohibits the Court from going into further detail, but, as discussed above, a judge wishing to review a copy of the DCA should be able to do so under the same security steps as the undersigned.
G. The Seventh Circuit’s opinion does not dictate a different conclusion.
In ruling on the petition for mandamus, the Seventh Circuit Court of Appeals directed the parties to file supplemental briefs on the merits of the motions to dismiss the indictment. The Seventh Circuit ultimately declined to decide the merits, however, noting that “there could be facts that the district court needs to explore; the district court is familiar with the developments in Mazon’s prosecution; ....” In re Hijazi,
Although it is a fact that KBR was operating under a contract with the U.S. government, it is not clear whether Hijazi knew or cared where KBR’s money was coming from. He obviously knew that LaNouvelle was submitting a bid for fuel tankers. It might matter whether Hijazi knew that the tankers were for the use of the U.S. military, but the sketchy record we have thus far does not permit one to draw any conclusions about his knowledge.
This Court is unsure what these comments mean in the posture of this case, which is to test the sufficiency of the indictment, not the strength of the evidence to support that indictment. “An indictment is sufficient if it serves three main functions. It must state the elements of the crime charged, adequately inform the defendant of the nature of the charges, and allow the defendant to plead the judgment as a bar to future prosecutions.” U.S. v. Singleton,
In the Court’s view, the indictment already sufficiently alleges Hijazi’s knowledge that the United States was the ultimate target of the fraudulent scheme. The indictment alleges that Hijazi and Mazon “devised a scheme to defraud the United States of over $3.5 million by falsely inflating the cost of supplying fuel tankers used to support United States military operations in Kuwait.” (d/e 59, ¶ 1). Hijazi allegedly originally submitted a bid to KBR of about $1.7 million dollars, but then schemed with Mazon to inflate the bid, “to ensure that LaNouvelle would be overpaid.” (d/e 59, ¶¶ 15,)(caps omitted). “Mazon and Hijazi signed the subcontract, knowing that the subcontract price was inflated and that Hijazi would pay Mazon money for Mazon’s favorable treatment of La Nouvelle.” (d/e 59 ¶ 16). Hijazi and Mazon allegedly both “caused LaNouvelle to send inflated invoices to KBR ... and to receive payment from KBR on those invoices.” (d/e 59, ¶ 17). They also both allegedly caused KBR to submit inflated invoices to the United States and caused the United States to pay those inflated invoices. Id. These allegations set forth the elements of the crime, give adequate notice to Hijazi of the nature of the charges, and are specific enough for double jeopardy purposes.
To the extent that Mazon’s trial is relevant, the subcontract introduced at the trial, signed by Hijazi, states that it is a subcontract for a prime contract with the U.S. Government, who is defined in the subcontract as the “Owner”, (d/e 226, p. 1 of subcontract terms, sections 1.2, 1.5).
The Court has no opinion on the strength of the inferences that can be drawn from this evidence — Mazon proffered innocent explanations at his trial and the jury hung twice. The Court is only pointing out, in response to the Seventh Circuit’s concerns, that there was evidence introduced at Mazon’s trial to back up the indictment’s allegations that Hijazi and Mazon schemed to defraud the U.S.
II. Speedy trial concerns do not warrant dismissal of the indictment.
As the Seventh Circuit stressed, Hijazi is not a fugitive. In re Hijazi
Hijazi argues that his right to a speedy trial warrants dismissal of the charges, since the case is over five years old and at an impasse with no end in sight.
[i]n considering a defendant’s Sixth Amendment speedy trial challenge, we apply the > following four-part test: “whether the delay before trial was uncommonly long, whether the government or the criminal defendant is more to blame for that delay, whether, in due course, the defendant asserted his right to a speedy trial, and whether he suffered prejudice as the delay’s result.”
U.S. v. Oriedo,
Regarding who is to blame for the delay, Hijazi argues that the Seventh Circuit has already found it is not him because he is not a fugitive, (d/e 222, p. 38). The Seventh Circuit, though, “expressed] no view about the arguments Hijazi has presented based on the Sixth Amendment’s guarantee of a speedy trial,....” In re Hijazi,
Hijazi also maintains that the Government made “little effort to discharge its duty to bring this case to trial” before Kuwait made it clear that such efforts would be futile, (d/e 222, pp. 40-41). He asserts that “before Kuwait’s position had hardened, the government did not make a serious effort to convince the Kuwaiti government that Hijazi should have to stand trial here.” Id. at 41. Yet just one month after the indictment, Hijazi voluntarily surrendered himself to Kuwaiti authorities, and Kuwaiti authorities chose to release him and return his bond. This was a strong indication, coupled with the lack of an extradition treaty, that Kuwait would not be cooperating in Hijazi’s prosecution. Further, that same month, the U.S. -directed INTERPOL to issue a “red notice” on Hijazi, which he admits puts him at peril of arrest should he leave Kuwait. Several months later, in September 2005, the U.S. Government made a formal request to the Kuwaiti Government to turn over Hijazi.
The Court does not know what more the U.S. should have done, nor does Hijazi offer a suggestion. The cases cited by Hijazi involved the Government’s failure to take obvious actions to locate and arrest a defendant, or to bring the defendant to trial, which is not the case here. See Doggett v. U.S.,
In the Court’s opinion, the plaintiffs status as non-fugitive has little or no bearing on determining who is responsible for the delay. Just like a fugitive in hid
As to asserting the right to a speedy trial, the failure to do so “will make it difficult for a defendant to prove that he was denied a speedy trial.” Barker,
Hijazi does cite one case whеre an alleged draft dodger living in Israel successfully move to dismiss charges under the speedy trial rules without ever appearing in court, but the Government in that case had not exercised due diligence to obtain the defendant’s presence at trial. U.S. v. Salzmann,
Unlike Salzmann, the Government in this case was diligent. There is no indication that the Government failed to take any steps that could have reasonably procured Hijazi’s presence. Salzmann, therefore, does not help Hijazi. For the same reasons, the prejudice to Hijazi from the delay does not compel dismissal. Hijazi has the power to prevent that prejudice, so its existence does not weigh much in his favor. See U.S. v. Reumayr,
Hijazi argues in the alternative that dismissal under Federal Rule of Criminal Procedure 48 is warranted due to the “unnecessary delay ... in ... bringing a defendant to trial.” Fed.R.Crim.P. 48(b). “Rule 48 ‘is not circumscribed by the Sixth Amendment,’ ...; however, ... it is driven ‘by the same general considerations as the Sixth Amendment.’ ” U.S. v. Ward,
WHEREFORE, the Court RECOMMENDS that Defendant’s Motions to Dismiss be denied (d/e’s 15,131,174).
Any objections to this Report and Recommendation must be filed in writing with the Clerk of the Court within fourteen days after service of a copy of this Report and Recommendation. See 28 U.S.C. § 636(b)(1). Failure to timely objeсt will constitute a waiver of objections on appeal. Video Views, Inc. v. Studio 21, Ltd.,
Notes
. Also before the Court are Defendant’s Offering of Additional Document and Citation of New Authority in Support of his Motion to Dismiss the Second Superseding Indictment (Doc. 161), Defendant’s Submission of Seventh Circuit Briefs and Other Appellate Filings in Support of Motions to Dismiss (Doc. 215), a Supplemental Authority filed by the Government (Doc. 225) and Defendant’s Response thereto (Doc. 227), and Defendant's Notice of New Supreme Court Authority (Doc. 236) and the Government’s Response thereto (Doc. 237).
. Hijazi is a citizen of Lebanon and lifelong resident of Kuwait. He has traveled to the United States only once, in 1993, under circumstances unrelated to this case. His company, La Nouvelle, is a Kuwaiti company with no American ownership interests. (Doc. 233 at 6).
. The Government made several attempts to obtain Hijazi after the Indictment was returned against him. In April 2005, the U.S. directed the International Criminal Police Organization ("INTERPOL”) to issue a "red notice” on Hijazi, which "calls on member nations to arrest Hijazi if he enters their jurisdiction and, if possible, to extradite him to the U.S.” (Doc. 217 at 48). Several months later, in September 2005, the Government made a formal request to the Kuwaiti Government to turn over Hijazi, but Kuwait refused and demanded that the charges against him be dropped. (Doc. 230 at 6). Because Kuwait refuses to turn over Hijazi, and Hijazi refuses to leave Kuwait (which he is under no legal obligation to do), the Government has been unable to bring him before the Court.
. One day before the Court entered this Order, Hijazi also filed his Motion to Dismiss Based on Sixth Amendment Right to Speedy Trial (Doc. 174).
. In the meantime, this Court presided over two trials for Mazon pursuant to the Second Superseding Indictment, both of which resulted in hung juries. (Minute Entries of 4/30/08 & 10/20/08). Ultimately, the Government and Mazon reached a plea agreement under which the Government filed a misdemeanor false statement charge against Mazon in a separate case, to which he pled guilty in exchange for the dismissal of all charges in this case. (Docs. 210 & 215).
. Hijazi also argues that the Magistrate Judge did not give due deference to the Seventh Circuit’s opinion in In re Ali Hijazi,
. As will be discussed, this is also in line with the Seventh Circuit's direction to consider "how much is enough?” for Hijazi to be prosecuted in the United States. See In re Hijazi,
. The Court finds Hijazi's reliance upon civil cases to be inapposite. Criminal jurisdiction is proper regardless of Hijazi's contacts with the United States so long as the charging statutes apply extraterritorially, and jurisdiction is in accordance with international law.
. Magistrate Judge Cudmore analyzed whether Hijazi's prosecution comported with due process under all three standards. (Doc. 230 at 36-38).
. In its Opinion, the Seventh Circuit stated that “there could be 'facts the district court needs to explore” and that "the district court is familiar with the developments in Mazon’s prosecution.” Accordingly, the Court believes it is proper to look to the terms of the Subcontract, which is explicitly referenced numerous times in the Indictment (Doc. 59 ¶¶ 16, 17, 23, 25).
. Hijazi is also charged with aiding and abetting both crimes, in violation of 18 U.S.C. § 2. '
. The Court also recognizes Hijazi's argument that "In choosing between conflicting interpretations of a treaty obligation, a narrow and restricted construction is to be avoided as not consonant with the principles deemed controlling in interpretation of international agreements. Considerations which should govern the diplomatic relations between nations, and the good faith of treaties, as well, require that their obligations should be liberally construed so as to effect the apparent intention of the parties to secure equality and reciprocity between them. For that reason if a treaty fairly admits of two constructions, one restricting the rights which may be claimed under it, and the other enlarging, the more liberal construction is to be preferred.” Factor v. Laubenheimer,
. Hijazi first argued that the Second Superseding Indictment should be dismissed pursuant to Rule 48(b) for lack of prosecution in his Motion to Dismiss Second Superseding Indictment. (Doc. 180). He later raised his speedy trial claim in a separately filed motion. (Doc. 174).
. In finding that Hijazi has objected to the Magistrate's R & R with respect to his lack of prosecution argument, the Court is generously construing Hijazi’s Objections. Hijazi makes no substantive arguments with respect to his Rule 48(b) claim, but merely cites to the Rule and directs the Court to the applicable section of his Reply Brief. (Doc. 233 at 52). However, as the Magistrate determined that Hijazi’s Rule 48(b) claim was meritless for the same reasons as his Sixth Amendment claim, the Court will look to Hijazi’s objections to the Sixth Amendment claim as pertaining to both.
. Hijazi argues that cases such as these are not relevant to the instant proceedings because they all entailed defendants who were fugitives from the United States, while he is not. (Doc. 233 at 45-58). However, even if all of these cases involved fugitive defendants (which they do not), none of the courts rely on the status of the defendant in determining the weight to be given to the cause for delay factor. Instead, the courts examine the conduct of the government, and if such conduct is reasonable and diligent, conclude that the factor must be weighed in its favor.
. Hijazi also argues that Klopfer v. State of North Carolina,
. The indictment is silent as to whether the U.S. actually paid the entire $5.5 million to KBR. Hijazi cоntends that no "lasting financial loss" was suffered because KBR " 'reversed’ the charges relating to the subcontract after 'discovering' the alleged fraud." (d/e 222, p. 21 n. 9).
. Since the Government does not make the argument, the Court makes no recommendation regarding whether these three e-mails, standing alone without reference to the overall scheme to defraud, are sufficient U.S. contacts to permit Hijazi's prosecution. The Court does point out, however, that Mazon did open one of those e-mails in the U.S., and, in any event, Hijazi arguably should have reasonably foreseen that sending an e-mail to a U.S. citizen’s work or personal account was likely to involve contacts in or with the U.S., regardless of where the e-mail was opened. The Court also believes, contrary to Hijazi’s arguments, that the e-mails did "advance the alleged fraud” (d/e 215, Ex. 1 p. 23) because they coordinated the $1 million alleged kick back and created inferences of attempts to cover up. See U.S. v. Lanas,
. See U.S. v. Dawn,
. Hijazi cites United States v. Yakou,
. Hijazi argues that "the conduct of which [he] is accused is not a crime under Kuwaiti law," but he does not explain this, (d/e 16, p. 3). The assertion may be based on Kuwait's argument that the contract price was "adjusted on account of penalties to be imposed by a Kuwait State-owned Company, on account of removing these tankers from service under a . lease with the Kuwait State-owned Company.” (d/e 161-1, Ex. A., p. 2, letter from Kuwait Ambassador). According to this letter, the penalties were later waived. Id. Whether any penalties were a proper part of the bid was contested at Mazon's trial, where the Government introduced evidence that penalties were not a proper part of the bidding process. The Government also introduced another similar subcontract executed by Hijazi with LaNouvelle shortly after the contract at issue in this case which carried no such penalties. (Mazon trial transcript, pp. 327,-336-37, 527-2.9, 537-541). In any 'event, whether penalties were part of the bid goes to the strength of the case against Hijazi, which is a question for the jury.
. Hijazi cites U.S. v. Golitschek,
. Hijazi has submitted change orders to the subcontract (d/e 228), which the Court has reviewed. They are not relevant to the Court’s analysis.
. In his initial briefs, Hijazi argued that the rule of lenity (construing ambiguous criminal statutes against government) counseled against extraterritorial application. He does not press that argument in his later briefs. In any event, as discussed above, the statutes are not ambiguous because the nature of the offenses alleged against the U.S. clearly create an inference of extraterritorial application. Hijazi also argued in one of his initial briefs that extraterritorial application was unconstitutional because the U.S. Constitution only empowers Congress to " ‘define and punish Piracies and Felonies on the High Seas.’ ” (d/e 16, p. 21). Hijazi does not pursue this argument in later briefs. In any event, the cases discussed above confirm Congress’ constitutional authority to regulate conduct beyond its borders that has substantial effects within its borders, regardless of whether that conduct occurs on the high seas.
. Rule 48(b) has been held to apply only to postarrest delays, so the Court is not sure that Rule 48(b) even applies, but the Government does not make this argument. U.S. v. Blanco,