I write today on a recent Second Circuit decision that, although not a tax case, addresses some of these derivative liability theories so ubiquitous in white collar crimes generally. In United States v. Hoskins, 902 F.3d 69 (2d Cir. 2018), here, the Court address a related issue in the context of the FCPA. The Court framed the issue as follows:
In this case, we are asked to decide whether the government may employ theories of conspiracy or complicity to charge a defendant with violating the Foreign Corrupt Practices Act ("FCPA"), even if he is not in the category of persons directly covered by the statute.
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The central question of the appeal is whether Hoskins, a foreign national who never set foot in the United States or worked for an American company during the alleged scheme, may be held liable, under a conspiracy or complicity theory, for violating FCPA provisions targeting American persons and companies and their agents, officers, directors, employees, and shareholders, and persons physically present within the United States. In other words, can a person be guilty as an accomplice or a co-conspirator for an FCPA crime that he or she is incapable of committing as a principal?I will now offer substantial "cleaned up" quotes (see my discussion of the cleaned up technique here), with most footnotes omitted:
A. Conspiracy Liability
For purposes of this appeal, we assume that Hoskins was neither an employee nor an agent of a domestic concern and therefore does not fall within the terms of the statute. But accomplice and conspiracy liability are generally not so limited. A get-away driver for a bank robbery team can still be prosecuted even though he has not by force and violence taken from the person or presence of another any property belonging to . . . any bank. As the common law has long recognized, persons who intentionally direct or facilitate the crimes physically executed by others must be held accountable for their actions. This recognition was effectuated by developing the doctrines of conspiracy and complicity, principles that are now codified in statutes. Under 18 U.S.C. § 2(a), a person who does not personally commit the acts constituting an offense is liable as a principal if he or she "aids, abets, counsels, commands, induces or produces" the commission of those acts by another. In addition, 18 U.S.C. § 371 punishes anyone who conspires with another to commit the offense. Thus, by the plain language of the general statutes regarding conspiracy and accessorial liability—which nothing in the language of the FCPA purports to overrule or limit—if Hoskins did what the indictment charges, he would appear to be guilty of conspiracy to violate the FCPA and (as an accomplice) of substantive violations of that statute.
Conspiracy and complicity statutes do not cease to apply simply because a statute specifies particular classes of people who can violate the law. It is well established in federal criminal law that a person may be liable for conspiracy even though he was incapable of committing the substantive offense. That principle was already deeply ingrained when the Supreme Court unanimously ruled in 1915 that persons not themselves bankrupt could be guilty of conspiring with someone who had declared bankruptcy to hide assets of the bankrupt's estate from the bankruptcy trustee, even if a non-bankrupt party could not be convicted of the principal offense. With respect to complicity, the same principal was so clearly entrenched as a matter of the common law of crimes that the Supreme Court saw no need to cite a particular precedent when it unanimously recognized in 1833 that someone who procured, advised and assisted a postmaster to remove from the mail and destroy a letter was guilty of violating, as an accomplice, a statute prohibiting postal employees from taking mail entrusted to them for delivery.
Thus the firm baseline rule with respect to both conspiracy and complicity is that where the crime is so defined that only certain categories of persons, such as employees of a particular sort of entity, may commit the crime through their own acts, persons not within those categories can be guilty of conspiring to commit the crime or of the substantive crime itself as an accomplice. Longstanding principle and precedent thus reinforces what the plain language of the conspiracy and aiding and abetting statutes command.
B. The Affirmative-Legislative-Policy Exception
There is a narrowly circumscribed exception to this common-law principle. In certain cases it is clear from the structure of a legislative scheme that the lawmaker must have intended that accomplice liability not extend to certain persons whose conduct might otherwise fall within the general common-law or statutory definition of complicity. A classic illustration is statutory rape, which makes it a crime to have sexual relations with a person who is under a statutorily defined age of consent. Applying the literal definitions of accomplice liability, a youthful participant who voluntarily consents to the act would be guilty of rape as well, because he or she intentionally aided or solicited the commission of the criminal act. But the legislature, in criminalizing the conduct of the adult participant and not that of the juvenile, obviously conceptualized the under-age party as the victim of the crime, and not a co-participant. Despite the common-law recognition of conspiracy and accomplice liability, and of the general principle that one could be guilty as a conspirator or accomplice even if the statute were defined in such a way that one was not capable of committing it as a principal, the common-law courts had no difficulty in recognizing an exception in those circumstances.
Here the government concedes that the common-law principle of conspiracy liability admits of exceptions but argues that the FCPA falls outside those exceptions. Hoskins, by contrast, contends that the FCPA demonstrates an affirmative Congressional intent to exclude certain persons from liability under the statute. The parties' dispute focuses on two cases, Gebardi v. United States, 287 U.S. 112, 53 S. Ct. 35, 77 L. Ed. 206 (1932), and United States v. Amen, 831 F.2d 373 (2d Cir. 1987), and it is thus profitable to consider both in some detail.
1. Gebardi
In Gebardi, the Supreme Court considered a conviction under the Mann Act, a statute that imposes a penalty upon
any person who shall knowingly transport or cause to be transported, or aid or assist in obtaining transportation for, or in transporting, in interstate or foreign commerce any woman or girl for the purpose of prostitution or debauchery, or for any other immoral purpose.
The Mann Act criminalizes such transportation with or without the woman's] consent. The government convicted both a man and woman for conspiracy to violate the Mann Act, on the theory that the woman conspired to transport a person—herself—merely by consenting to the man's transportation of her.
The Supreme Court reversed the convictions. The Court first noted that the Mann Act plainly covered cases where the woman consents to her own transportation, rather than just cases where her transportation was forced, yet it does not specifically impose any penalty upon her, although it deals in detail with the person by whom she is transported." Because it would be obvious that women would participate in many violations of the statute, but the statute discussed no punishment for the women, the Court concluded that Congress intended for the women not to be liable for at least some class of violations of the Act. In particular, the Court determined it could not infer that the mere acquiescence of the woman transported was intended to be condemned by the general language punishing those who aid and assist the transporter . The penalties of the statute are too clearly directed against the acts of the transporter to support the view that Congress intended the woman always to be liable.
Having decided that Congress intended to leave the woman unpunished when she merely acquiesced in her own illegal transportation, the Court next considered whether she could be convicted of conspiring to violate the statute in such circumstances. The Court concluded that she could not. The Court emphasized, again, that Congress set out in the Mann Act to deal with cases which frequently, if not normally, involve consent and agreement on the part of the woman to the forbidden transportation, but that this acquiescence was not made a crime under the Mann Act itself. Consequently, the Court perceived in the failure of the Mann Act to condemn the woman's participation in those transportations which are effected with her mere consent, evidence of an affirmative legislative policy to leave her acquiescence unpunished. The Court explained that it was
a necessary implication of that policy that when the Mann Act and the conspiracy statute came to be construed together, as they necessarily would be, the same participation which the former contemplates as an inseparable incident of all cases in which the woman is a voluntary agent at all, but does not punish, was not automatically to be made punishable under the latter. It would contravene that policy to hold that the very passage of the Mann Act effected a withdrawal by the conspiracy statute of that immunity which the Mann Act itself confers. Because the defendant in Gebardi had merely consented to her transportation, the Court ruled that her conviction for conspiracy could not stand; and because she had not conspired to violate the Mann Act, her companion had no one with whom to conspire. Both of their convictions for conspiracy were reversed.
In determining that the woman in Gebardi was not liable as a conspirator because of Congress's "affirmative legislative policy" to leave her unpunished, the Gebardi Court distinguished its reasoning from an older common-law limitation on conspiracy liability—a rule widely known as Wharton's Rule. Wharton's Rule states that an agreement by two persons to commit a particular crime cannot be prosecuted as a conspiracy when the crime is of such a nature as to necessarily require the participation of two persons for its commission, such as dueling.
The Court in Gebardi alluded to Wharton's Rule. But the Court stated that Wharton's Rule did not apply, because the Rule requires voluntary consent while criminal transportation under the Mann Act may be effected without the woman's consent as in cases of intimidation or force. Consequently, the Court did not rest the decision upon Wharton's Rule, nor upon the related one that the attempt is to prosecute as conspiracy acts identical with the substantive offense. Instead, the Court explicitly situated its ruling upon the ground that we perceive in the failure of the Mann Act to condemn the woman's participation in those transportations which are effected with her mere consent, evidence of an affirmative legislative policy to leave her acquiescence unpunished.
2. Amen
We applied the reasoning of Gebardi in United States v. Amen, 831 F.2d 373 (2d Cir. 1987). In Amen, the Court considered the "continuing criminal enterprise" statute, a provision designed to reach the 'top brass' in the drug rings, or, to put it differently, the kingpin in an enterprise. A defendant was convicted on the theory that he conspired with, and aided and abetted, an enterprise's kingpin, even though the defendant himself was not the kingpin.
The government conceded that the statute did not apply to an enterprise's employees. It nevertheless attempted to distinguish between mere employees and those who otherwise help the kingpin, and to argue that non-employees who knowingly provide direct assistance to the head of the organization in supervising and operating the criminal enterprise can be punished for violating the "kingpin" statute under conspiracy and aiding-and-abetting theories.
We explained, however, that the government's theory lacked support in legislative history and seemed totally unworkable because many employees would provide greater assistance to the kingpin than non-employee third parties, and that it made little sense to extend the government's theory to one group if it concededly could not reach the other. This application of complicity and conspiracy would disrupt the carefully defined statutory gradation of offenses; the low-level henchman would find himself subject to the more severe penalties applicable to the kingpin. Because the Court determined that Congress did not intend for the "kingpin" statute to apply to the class of individuals involved in the case, the defendant's conviction was overturned. Id.
3. Identifying an Affirmative Legislative Policy
Accepting Gebardi's teaching that conspiracy and complicity liability will not lie when Congress demonstrates an affirmative legislative policy to leave some type of participant in a criminal transaction unpunished, the question becomes how to identify such a policy. As the common-law principle outlined above indicates, we cannot identify such a policy whenever a statute focuses on certain categories of persons at the exclusion of others. Gebardi confirms this, emphasizing that its reasoning was concerned with something more than an agreement between two persons for one of them to commit an offense which the other cannot commit. In Gebardi that "something more" was a recognition that because a woman's participation was "an inseparable incident of all cases in which the woman is a voluntary agent" capable of entering into a conspiracy, Congress's silence as to the women's liability was a conferral of immunity. Similarly, in Amen the Court saw that the continuing criminal enterprise provision was designed to reach the top brass in the drug rings, not the lieutenants and foot soldiers and broadening the scope of liability with the conspiracy statute would subvert that purpose. In both instances the courts looked to the text of the statute and the purpose that Congress was trying to achieve, thereby honoring their over-arching obligation to give effect to congressional intent when interpreting statutes. In keeping with traditional principles of statutory interpretation, as well as the analysis employed in Gebardi and its progeny, an affirmative legislative policy can be discerned by looking to the statute's text, structure, and legislative history.
4. Government's Arguments for a Narrower Principle
The government argues for a much narrower reading of Gebardi that would effectively circumscribe the ability of the courts to ascertain congressional intent in enacting criminal statutes. The government argues that Gebardi forecloses liability for conspiracy or complicity only when (1) the defendant's consent or acquiescence is inherent in the substantive offense, or (2) the defendant's participation in the crime is frequently, if not normally a feature of the substantive criminal conduct. A number of problems arise with either of these narrow readings of Gebardi. The government's first reading of Gebardi is foreclosed because, at least in the conspiracy context, it is the same as Wharton's Rule. As noted, where a substantive offense requires persons to agree in order to commit it, Wharton's Rule disallows liability for conspiracy based on the same agreement required for the substantive crime. Here, the government suggests that we should read the Gebardi principle to mean the same thing: that liability for conspiracy is barred when the defendant's consent or acquiescence is inherent in the substantive offense. The opinion in Gebardi explicitly stated that its reasoning was not based on Wharton's Rule; thus that cannot be the basis for the exception. n6
n6 Wharton's Rule applies only to conspiracy, which means that there could be daylight between it and the government's proposed rule that neither conspiracy nor complicity liability will lie where the defendant's consent or acquiescence is inherent in the substantive offense. But within Gebardi itself, the government's proposed rule would have operated identically to Wharton's Rule, since Gebardi dealt only with a conspiracy charge. And since the Supreme Court said in Gebardi that it was not relying on Wharton's Rule, the government's rule cannot be defended as the rule the Supreme Court meant to adopt.
The government's argument that the exception is limited to situations where the defendant's conduct is inherent in the substantive offense is also inconsistent with Amen. Our holding in Amen, which considered an individual who was not an employee of the criminal enterprise, did not turn on the fact that the defendant was essential to the existence of the criminal transaction under consideration. Although a "criminal enterprise" with a "kingpin" must have employees, and such employees are thus essential to the statute's application, the enterprise need not work with non-employee third parties. Amen held that the "kingpin" statute did not apply to third parties, and did so based on the intentions of Congress rather than because third parties were required for a criminal enterprise to exist.
Second, we do not share the government's view that Gebardi asks whether a certain type of defendant's conduct is frequently, if not normally involved in an offense. With respect to the statute giving rise to Gebardi—the Mann Act—there was no question that a woman's participation in the crime was frequently, if not normally a feature of a violation. Indeed, a woman's participation, either willing or unwilling, was required in every violation. But the Court did not merely ask whether her involvement was "frequently, if not normally" a feature of a violation; instead, the Court discerned the legislative policy of the Mann Act, and provided immunity only to the extent it comported with the Act's policy.
Indeed, in United States v. Holte, 236 U.S. 140 (1915), a predecessor case to Gebardi, the Court explicitly held that a woman could be found guilty for conspiring to violate the Mann Act. The Court described a hypothetical case where immunity would not be appropriate:
Suppose, for instance, that a professional prostitute, as well able to look out for herself as was the man, should suggest and carry out a journey within the [Mann Act] in the hope of black-mailing the man, and should buy the railroad tickets, or should pay the fare from Jersey City to New York,-she would be within the letter of the [Mann Act], and we see no reason why the act should not be held to apply. We see equally little reason for not treating the preliminary agreement as a conspiracy that the law can reach, if we abandon the illusion that the woman always is the victim.
The Court's analysis in Holte, much like in Gebardi, did not merely ask whether a woman would frequently if not normally be present for violations of the Mann Act. Instead, the Court determined Congress's policy in enacting the statute, and limited liability consistent with that policy. To be sure, the fact that a woman was invariably part of a violation of the Act was relevant in discerning congressional policy. But the rule the Holte Court adopted was much more nuanced than could be justified by simply observing those offenses for which women would be present: by definition, a woman's presence was required for every violation of the Act.
Finally, the government relies on Ocasio v. United States, 136 S. Ct. 1423 (2016), a recent decision that it believes to have drawn narrowly the exception exemplified by Gebardi. The opinion in Ocasio considered an incident of bribery charged under the Hobbs Act, and a charge of conspiracy to violate the Hobbs Act by paying the same bribe. Although the language of the Hobbs Act prohibits "extortion" committed by the obtaining of property from another, with his consent under color of official right, jthe Supreme Court has held that this tortured language is best understood as the rough equivalent of what we would now describe as taking a bribe. In other words, the Hobbs Act's text speaks as though a bribe-payer is being "extorted," when, in reality, the bribe may be a consensual one paid to secure some advantage.
The defendant in Ocasio contended, using the language of the Hobbs Act, that he could not be convicted of conspiracy. He noted that the Hobbs Act criminalized obtaining of property from another. He then contended that a conspiracy charge was not appropriate, because the conspirators, who were the officials taking the bribe and the persons paying it, had not agreed to obtain money from another—that is, from a person who was not a member of the conspiracy. The Court rejected this argument, explaining that it did not matter that the defendants who paid the bribes did not have the objective of obtaining money 'from another' because the money in question was their own. The Court simply reasoned that it was sufficient for the defendants to conspire with others who would take money from another, even if that other person happened to be the conspirator himself.
The opinion in Ocasio emphasized that the crime in question, Hobbs Act extortion, bears a meaning not readily discernible from its text. Because, as noted, the statute essentially criminalizes taking a bribe, the Court was unwilling to indulge the defendant's argument that the text indicated an affirmative legislative policy to leave the "extorted" party unpunished, or a desire to punish only the party taking property from another.
Although Ocasio arose in a setting where a statute's language arguably suggested that certain persons are spared from liability, the unique features of Hobbs Act extortion limit Ocasio's helpfulness to the government. Because the Supreme Court did not agree that the Hobbs Act manifested the "something more" present in Gebardi, namely any intention to limit liability for the payer of a bribe, the Court rejected the argument that conspiracy liability should be circumscribed based on any such limitation. The subtext of defendant's arguments is that it seems unnatural to prosecute bribery on the basis of a statute prohibiting extortion, but this Court held in Evans that Hobbs Act extortion 'under color of official right' includes the rough equivalent of what we would now describe as taking a bribe. . . . We have no occasion to overrule Evans. Consequently, the case does not demonstrate a narrowing of the affirmative-legislative-policy exception, but simply a situation where there was no affirmative legislative policy to leave the bribe payers unpunished. Moreover, Ocasio's independent ruling that incapacity to commit a substantive offense does not, without more, preclude conspiracy or complicity charges, is merely a reaffirmation of the common-law principle addressed above, not an abdication of the affirmative-legislative-policy exception.
C. The Affirmative Legislative Policy Regarding the FCPA's Coverage
Applying the teachings of Gebardi and Amen to the FCPA, we find the "something more" that evinces an affirmative legislative policy to leave the category of defendants omitted from the statutory framework unpunished. In particular, the carefully tailored text of the statute, read against the backdrop of a well-established principle that U.S. law does not apply extraterritorially without express congressional authorization and a legislative history reflecting that Congress drew lines in the FCPA out of specific concern about the scope of extraterritorial application of the statute, persuades us that Congress did not intend for persons outside of the statute's carefully delimited categories to be subject to conspiracy or complicity liability. Our conclusion is consistent with the reasoning of other courts that have addressed this question.I think that is enough to inform this blog's readers of the holding and reasoning in the case. The reasoning is fleshed out in greater detail, so I encourage readers whose interest is piqued by this introduction to read the full opinion.
Judge Lynch writes an excellent concurring opinion. Here are some quotes:
The problem for Hoskins, however, as for the get-away driver, is that 18 U.S.C. § 2 punishes as a principal anyone who, although he or she does not personally commit the acts constituting the offense, aids, abets, counsels, commands, induces or procures the commission of those acts by another; in addition, 18 U.S.C. § 371 punishes anyone who conspires with another to commit the offense. The indictment in this case expressly charges that someone (specifically the alleged co-conspirator Pomponi, who was an employee or agent of a domestic concern) did engage in substantive violations of the FCPA, and that Hoskins conspired with, and aided and directed, that person in the commission of the offense.
As the opinion for the Court expressly recognizes, were we to rely solely on the plain language of the general statutes regarding conspiracy and accessorial liability — which nothing in the text of the FCPA purports to override or limit — if Hoskins did what the indictment charges, he would appear to be guilty of conspiracy to violate the FCPA and (as an accomplice) of substantive violations of that statute, just as the wheelman for the bank robbery team is guilty of conspiracy and of substantive violations of the bank robbery statute. That is precisely the result that the conspiracy and complicity statutes, and the common-law doctrines that long preceded such statutes and which the statutes codify, are designed to effect.
Moreover, as the Court also recognizes, the fact that the FCPA specifies that only particular classes of people can violate the law by bribing foreign officials does not in itself restrict the reach of conspiratorial or aiding and abetting liability to those same classes of people. Many offenses are defined such that they may be committed only by the actions of particular types of people. But as the Court's opinion ably documents, the firm baseline rule with respect to both conspiracy and complicity is that where the crime is so defined that only certain categories of persons may commit the crime through their own acts, persons not within those categories can be guilty of conspiring to commit the crime or of the substantive crime itself as accomplices. That is not only the rule established by federal precedent; as the Court notes, that position is "universally held" in the states and in other Anglo-American jurisdictions. Id. n.4, quoting the American Law Institute, Model Penal Code and Commentaries, § 2.06 at 323 (1985).
That baseline principle, like most principles, admits of exceptions, some of which have longstanding common-law roots. One such exception, as the Court's opinion notes, is exemplified by the Supreme Court's opinion in Gebardi v. United States, 287 U.S. 112 (1932). Sometimes we can infer from the apparent purpose of the statute that the legislature cannot have intended to extend accessorial liability to a class of persons who might better be thought of as victims of the crime (such as a willing underage participant in a sex act defined as rape because of the underage party's incapacity to consent, even where the minor intentionally facilitates the act and is old enough to have the capacity to commit a crime), or where a legislative sentencing scheme distinguishes levels of culpability among various participants, and treating the less culpable party as an accomplice of the more culpable one would undermine that scheme (as in the case of narcotics transactions, where possessors of illegal drugs for their own use are punished less severely than distributors; the purchaser is not treated as the accomplice of the seller even though he or she intentionally facilitates the sale).
This exception, however, must be construed narrowly. Discerning when the legislature must have intended to exempt a particular class of persons from the plain text of its statutes is a tricky business. What, after all, in the language or structure of the statute distinguishes one statute that limits the category of principal offenders from another, such that some few should be singled out as clearly intending to preclude some persons outside that category from liability, and distinguished from the general run of statutes where no such intention can be discerned? Nothing, or at least not much, in the statutes at issue tells us to exclude some or all persons not within the designated category from accomplice liability.
In my view, it is helpful in most cases to look to the traditional principles derived from the common law, and embodied in the legislation and judicial decisions of the fifty states, which have the primary responsibility for enforcing criminal law in this country. That is not an idiosyncratic position of my own; it was the view expressed by Justice Jackson, writing for a unanimous Supreme Court in Morissette v. United States, 342 U.S. 246 (1952). The Morissette Court looked to the common law and the rulings of state courts of last resort, on whom fall the heaviest burden of interpreting criminal law in this country, to interpret a federal statute (the prohibition on theft of federal property) that lacked any express prescription of criminal intent. Justice Jackson concluded that, since Congress acted against the backdrop of an unbroken course of judicial decision in all constituent states of the Union, its silence about mens rea reflected the adoption of common-law principles, rather than their rejection.
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