United States v. Bourke ( 2011 )

09-4704-cr (L)
USA v. Bourke
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
____________________
August Term, 2010
(Argued: February 10, 2011 Decided: December 14, 2011)
Docket No. 09-4704-cr(L)
____________________
UNITED STATES OF AMERICA,
Appellee,
v.
VIKTOR KOZENY, DAVID PINKERTON,
Defendants,
FREDERIC BOURKE, JR.,
Defendant-Appellant,
LANDLOCKED SHIPPING CO., DR. JITKA CHVATIK,
Petitioners.1
____________________
Before: POOLER and HALL, Circuit Judges.2
Frederic Bourke Jr. appeals from a judgment of conviction entered on November 12,
1
The Clerk of the Court is directed to amend the official caption as shown.
2
The Honorable Joseph F. Bianco, United States District Court for the Southern District
of New York, sitting by designation, took no part in the consideration of this matter. The two
remaining members of the panel, who are in agreement, have determined this matter. See 28
U.S.C. § 46(d); 2d Cir. Internal Operating Procedure E(b); United States v. Desimone, 140 F.3d
457, 458-59 (2d Cir. 1998).
2009, in the United States District Court for the Southern District of New York (Scheindlin, J.)
following a jury trial. Bourke was convicted of conspiring to violate the Foreign Corrupt
Practices Act and the Travel Act in violation of 18 U.S.C. § 371 and of making false statements
in violation of 18 U.S.C. § 1001. The district court denied Bourke’s motions for new trial and
for judgment of acquittal.
On appeal, Bourke vigorously attacks his conviction on several fronts, including the (1)
correctness of the jury instructions given, (2) the propriety of certain evidentiary rulings made by
the district court, and (3) the sufficiency of the evidence supporting the false statements
conviction. For the reasons given below, we affirm.
Affirmed.
____________________
MICHAEL E. TIGAR, Law Office of Michael E. Tigar, Pittsboro,
N.C. (John D. Cline, Law Office of John D. Cline, San Francisco,
Cal.; Harold A. Haddon, Saskia A. Jordan, Jason C. Middleton,
Haddon, Morgan & Foreman, P.C., Denver, Colo., on the brief),
for Defendant-Appellant Frederic Bourke Jr.
HARRY A. CHERNOFF, Assistant United States Attorney for the
Southern District of New York (Preet Bharara, United States
Attorney for the Southern District of New York, Iris Lan, Andrew
L. Fish, Assistant United States Attorneys for the Southern District
of New York; Robertson Park, Assistant Chief, Fraud Section,
United States Department of Justice, on the brief) New York, N.Y.,
for Appellee the United States of America.
POOLER, Circuit Judge:
Azerbaijan reclaimed its independence in 1991 following the collapse of the Soviet
Union, gaining control over its rich stores of oil and natural gas. In the mid-1990s, Azerbaijan
began privatizing various state assets. The candidates for privatization included the state-owned
oil company, SOCAR. The government alleged that in an attempt to capitalize on this
opportunity, Viktor Kozeny and Frederic Bourke Jr. conspired with others in a scheme to
illegally purchase SOCAR by bribing the Azerbaijani president and other officials. After a jury
2
trial, Bourke was convicted of conspiring to violate the Foreign Corrupt Practices Act (“FCPA”),
15 U.S.C. § 78dd-1 et seq., 18 U.S.C. § 371, and the Travel Act, 18 U.S.C. § 1953, and of
making false statements in violation of 18 U.S.C. § 1001. The district court denied Bourke’s
motions for new trial and for judgment of acquittal.
On appeal, Bourke vigorously attacks his conviction on several fronts, including (1) the
correctness of the jury instructions given, (2) the sufficiency of the evidence, and (3) the
propriety of certain evidentiary rulings made by the district court. For the reasons given below,
we affirm.
BACKGROUND
Bourke co-founded the accessory company Dooney & Bourke, and considers himself an
inventor, investor and philanthropist. In the mid-1990s, Bourke met Viktor Kozeny. Dubbed the
“Pirate of Prague” by Fortune magazine, Kozeny is an international entrepreneur known for
shady dealings. In a December 1996 article, Fortune detailed how Kozeny and his partner
engaged in massive fraud during the privatization of the state-owned industries in the Czech
Republic, including engaging in insider trading, purchasing state secrets and participating in
various other unsavory business practices. Testimony at trial established that Bourke was aware
of Kozeny’s “Pirate of Prague” moniker.
In the late 1990s, Azerbaijan began converting state-controlled industries to private
ownership through a voucher-based initiative, similar to the one used in the Czech Republic.
Among the assets being considered for privatization was SOCAR, the state-owned Azerbaijani
oil company. However, observers considered it unlikely that SOCAR would ever actually be
privatized, given its economic importance to the country. As part of the privatization process,
3
the Azerbaijani government issued each citizen a voucher book with four coupons. The
coupons, which could be freely traded, were used to bid at auction for shares of state-owned
enterprises being privatized. Foreigners seeking to participate in the auctions needed to pair
their vouchers with options issued by the State Property Committee (“SPC”), the entity charged
with administrating the privatization process. Every coupon needed to be matched with an
option, so to bid a complete voucher book a foreigner needed to match the four coupons with
four options. Voucher books sold for roughly $12.
In May 1997, Kozeny invited Bourke to travel with him to examine potential
investments. Their journey included a stop in Azerbaijan. Kozeny created two entities upon
returning from the trip: the Minaret Group, an investment bank; and Oily Rock, an entity formed
to purchase and own the privatization vouchers issued by the Azerbaijani government. Kozeny
recruited Thomas Farrell to work for the entities, and instructed Farrell and other employees to
start purchasing vouchers. The vouchers were purchased using U.S. currency flown in on
private jets from Zurich or Moscow. Altogether, about $200 million worth of vouchers were
purchased.
Kozeny and Farrell were introduced to Ilham Aliyev, the then president’s son and vice-
president of SOCAR. Aliyev introduced the two to Nadir Nasibov, chair of the SPC, and his
deputy, Barat Nuriyev. Kozeny discussed acquiring SOCAR at auction with Nuriyev -- an
auction that would not be conducted absent a presidential decree. As part of a scheme to
purchase SOCAR, Kozeny and Nuriyev agreed that all future purchases of vouchers would be
made through Nuriyev and his confederates. Nuriyev told Kozeny purchasing SOCAR would
require one million vouchers (four million coupons paired with four million options). Nuriyev
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also made clear that an “entry fee” would need to be paid to various Azerbaijani officials,
including President Aliyev, in the range of $8 to $12 million dollars. The “entry fee” was
intended to encourage the president to approve SOCAR’s privatization. Kozeny agreed to pay
the “fee,” with Farrell delivering cash payments to Nuriyev to pass on to the president.
In addition, Nuriyev demanded that two-thirds of Oily Rock’s voucher books and options
be transferred to Azerbaijani officials. The officials would then be able to receive two-thirds of
the profits from SOCAR’s eventual privatization without actually investing any money. To
make the transfer possible, in September 1997 Kozeny instructed his attorney, Hans Bodmer, to
set up a complex corporate structure involving multiple parent and holding companies. In
December 1997, Nuriyev told Farrell that Aliyev had doubled the voucher book requirement
from one to two million vouchers. At the time Nuriyev had this conversation with Farrell,
voucher books had increased in price to approximately $100 each.
This development spurred Kozeny to start seeking out additional investors, an effort he
kicked off with a lavish holiday party at his home in Aspen, Colorado. Bourke attended, as did
Tom McCloskey, another Aspenite who previously invested in Oily Rock. In January, 1998
Kozney took a group of potential investors to Azerbaijian, including Bourke and his friend,
Robert Evans. The group met with Nuriyev and toured the Minaret Group offices. Carrie
Wheeler traveled with the group on behalf of a potential investor. She testified that, “it seemed
like the gist of the meeting was to communicate [to] investors that [Kozeny] had a relationship
with the government in some way.”
Bourke and Evans returned to the Azerbaijani capital, Baku, with Kozeny in February
1998. Bodmer -- who traveled separately -- testified that Bourke approached him in Baku and
5
questioned him regarding the Azerbaijanis. Bodmer testified that during this so-called “walk-
talk,” he told Bourke of the nature of the bribery scheme and the corporate structures created to
carry it out. Bodmer conveyed the substance of his conversation with Bourke to Rolf Schmid, an
associate at Bodmer’s law firm. Schmid memorialized Bodmer’s description of the conversation
years later in a memorandum:
Ricky Bourke asked Hans Bodmer about the legal structure of Oily
Rock and its subsidiaries, the ownership of vouchers and options by
the holding companies, etc. Hans Bodmer remembers that --
probably at the beginning of 1998 -- he left together with Ricky
Bourke . . . in Baku and went for a walk together with Ricky
Bourke. During this walk he briefed Ricky Bourke in detail about
the involvement of the Azeri interests . . . the 2/3:1/3 arrangement .
..
After traveling to Baku, Bourke set up Blueport, an investment company incorporated in
the British Virgin Islands, and invested $7 million in the company. He also recruited other
American investors to invest via Blueport, including former Senator George Mitchell. Over time,
Blueport would invest roughly $8 million in Oily Rock. In April 1998, Bourke traveled back to
Baku for the official opening of the Minaret offices. Mitchell also traveled to Baku for this event,
and met with President Aliyev to discuss Oily Rock’s investment. Following his conversation,
Mitchell told Bourke and Kozeny that the president intended to go forward with SOCAR’s
privatization. During this same period, Bourke also asked Farrell several times whether “Viktor
[was] giving enough” and “[h]as Viktor given them enough money?”
Bourke made another trip to Baku shortly after the Minaret office opening. When he
returned home, Bourke contacted his attorneys to discuss ways to limit his potential FCPA
liability. During the call, Bourke raised the issue of bribe payments and investor liability.
Bourke’s attorneys advised him that being linked to corrupt practices could expose the investors
6
to FCPA liability. Bourke and fellow Oily Rock investor Richard Friedman agreed to form a
separate company affiliated with Oily Rock and Minaret. This separate company would shield
U.S. investors from liability for any corrupt payments made by the companies and Kozeny. To
that end, Oily Rock U.S. Advisors and Minaret U.S. Advisors were formed, and Bourke joined
the boards of both on July 1, 1998. Directors of the advisory companies each received one
percent of Oily Rock for their participation.
In mid-1998, Kozeny and Bodmer told Bourke that an additional 300,000,000 shares of
Oily Rock would be authorized and transferred to the Azeri officials. Bourke told a Minaret
employee, Amir Farman-Farma, that “Kozeny had claimed that the dilution was a necessary cost
of doing business and that he had issued or sold shares to new partners who would maximize the
chances of the deal going through, the privatization being a success.”
Bodmer set up a Swiss bank account for several Azeri officials -- including Nuriyev, his
son and another relative, as well as President Aliyev’s daughter. From May to September 1998,
nearly $7 million in intended bribe payments was wired to these accounts. In addition to the
evidence of cash bribes, the government adduced evidence that Bourke and other conspirators
arranged and paid for medical care, travel and lodging in the United States for both Nuriyev and
his son.
By the end of 1998, Kozeny had abandoned all hope of SOCAR’s privatization, and began
winding down the investment scheme. The Minaret Group fired most of its employees by the end
of January 1999, and drastically reduced the pay of the few who remained. Kozeny told the
investors that the vouchers were worthless, good only for “wallpaper.” Around the same time,
Bourke resigned from the advisory company boards. As time went on, the privatization scheme
7
became an issue in civil litigation by investors in the United Kingdom. Kozeny’s attorneys
contacted the U.S. Attorney’s office in late 2000, and Bourke was subsequently advised he was
the subject of an investigation. Bourke entered into a proffer agreement on April 26, 2002.
Bourke also waived attorney-client privilege and instructed his attorneys to answer questions
from investigators. During his proffer sessions, Bourke was asked specifically about whether
Kozeny made corrupt payments, transfers and gifts to Azeri officials, and Bourke denied any such
knowledge.
On May 12, 2005, Bourke, Kozeny and David Pinkerton, a managing director for
American International Group responsible for its investments in Oily Rock and Minaret, were
indicted. Kozeny remains a fugitive in the Bahamas and has never faced trial. The indictment
charged Bourke with five counts of violating FCPA, 15 U.S.C. § 78dd–1 et seq.; two counts of
violating the Travel Act, 18 U.S.C. § 1952; one count of conspiracy to violate FCPA and the
Travel Act, 18 U.S.C. § 371; two counts of money laundering, 18 U.S.C. § 1956; one count of
conspiracy to commit money laundering, 18 U.S.C. § 371; and one count of making false
statements to FBI agents, 18 U.S.C. § 1001. Bourke moved to dismiss all of the counts of the
indictment save the false statement charge on statute of limitations grounds. The district court
partially granted his motion, United States v. Kozeny, 493 F. Supp. 2d 693 (S.D.N.Y. 2007), and
this Court affirmed, United States v. Kozeny, 541 F.3d 166 (2d Cir. 2008). Bourke ultimately
went to trial on three counts: conspiracy to violate FCPA and the Travel Act, conspiracy to
launder money, and making false statements to the FBI.
The trial lasted five weeks. At the close of the government’s case, Bourke moved
pursuant to Federal Rule of Criminal Procedure 29 for a judgment of acquittal, which the district
8
court denied. United States v. Kozeny, 638 F. Supp. 2d 348 (S.D.N.Y. 2009). After three days of
deliberations, the jury convicted Bourke on Count One (FCPA conspiracy) and Count Three
(false statements) of the indictment, but acquitted on Count Two (conspiracy to commit money
laundering). Bourke moved again for a judgment of acquittal or, in the alternative, a new trial.
The district court denied the motion. United States v. Kozeny, 664 F. Supp. 2d 369 (S.D.N.Y.
2009). This appeal followed.
DISCUSSION
Bourke raises numerous challenges to his conviction. He primarily argues the district
court erred in (1) instructing the jury, (2) allowing his conviction to stand without being
supported by sufficient evidence, and (3) certain evidentiary rulings. We address each of his
arguments in turn.
I. Jury Instructions.
Bourke challenges the jury instructions on four primary grounds. First, he argues the
district court erred in refusing to instruct the jury that it needed to agree unanimously on a single
overt act committed in furtherance of the conspiracy. Second, he argues the district court
improperly charged the jury on conscious avoidance because (1) there was no factual basis for
such a charge; and (2) the government waived its reliance on the conscious avoidance theory.
Third, he argues the district court erred by failing to instruct the jury that the government needed
to prove Bourke acted “corruptly” and “willfully” to sustain a conviction on FCPA conspiracy.
Finally, he argues the district court erred in failing to give the jury Bourke’s proposed good-faith
instruction.
9
We review claims of error in jury instructions de novo. United States v. Wilkerson, 361
F.3d 717, 732 (2d Cir. 2004). “An erroneous instruction, unless harmless, requires a new trial.”
Anderson v. Branen, 17 F.3d 552, 556 (2d Cir. 1994). An error is harmless if it is “clear beyond a
reasonable doubt that a rational jury would have found the defendant guilty absent the error.”
Neder v. United States, 527 U.S. 1, 18 (1999). “[A] defendant who requests an instruction bears
the burden of showing that the requested instruction accurately represented the law in every
respect and that, viewing as a whole the charge actually given, he was prejudiced.” Wilkerson,
361 F.3d at 732 (internal quotation marks omitted).
A. Overt acts.
Bourke seeks to overturn his conviction on the ground that the district court erred in
refusing to instruct the jury that it needed to agree unanimously on the specific overt act
committed in furtherance of the conspiracy. He relies on the Eighth and Ninth Circuits, arguing
both require jury unanimity on a specific overt act. Our reading of the cases finds each stands on
its own facts, rather than for the proposition Bourke relies on. In United States v. Haskell, the
Eighth Circuit approved a charge instructing the jury that “in order to return a verdict of guilty,
you must unanimously agree upon which act was done.” 468 F.3d 1064, 1074-75 (8th Cir. 2006).
There was no discussion about whether such charge was always required when charging on overt
acts, just that the particular charge in question sufficed. Id. The Ninth Circuit in United States v.
Jones addressed the issue in a similarly oblique manner. See 712 F.2d 1316, 1322 (9th Cir.
1983). A fair reading of both Haskell and Jones suggests that the Eighth and Ninth Circuits were
simply approving the jury instructions, rather than undertaking an analysis of whether jurors are,
as a rule, required to agree on a particular overt act.
10
Conversely, the Fifth and the Seventh Circuits hold that the jury need not agree
unanimously on the specific overt act committed in furtherance of a conspiracy in order to
convict. In United States v. Sutherland, the Fifth Circuit held:
We are convinced that in this case the jury need not specifically
have considered and agreed as to which of a large number of
potential overt acts of bribery were established by the government.
These acts were not distinguished in any significant respect and the
evidence as to each is remarkably similar. Therefore this series of
alleged acts comprises one “conceptual group” and the jury need
not have unanimously agreed as to which was proven.
656 F.2d 1181, 1202 (5th Cir. 1981). Similarly, in United States v. Griggs, the Seventh Circuit
found the jury did not need to unanimously agree on a particular overt act to convict on
conspiracy:
The law distinguishes between the elements of a crime, as to which
the jury must be unanimous, and the means by which the crime is
committed. If the jurors in our case disagreed about which of the
overt acts charged were committed, that was less momentous than
failing to agree on what crime the defendant had committed.
569 F.3d 341, 343 (7th Cir. 2009) (citations omitted).
We have not yet decided the issue on direct review. However, in United States v. Shaoul,
we considered the issue under a plain error review. 41 F.3d 811, 817 (2d Cir. 1994). In Shaoul,
defendant argued, for the first time on appeal, that the district court erred when it failed to instruct
the jury that it needed to unanimously agree on which overt acts took place in furtherance of the
conspiracy. Id. The district court gave a general unanimity instruction, to wit, that “[t]o report a
verdict, it should be unanimous.” Id. Applying a plain error review, we found that even if the
jurors had to agree on which particular act the defendant committed, “the district court was
required only to instruct the jury generally about its duty to return a unanimous verdict.” Id. at
819.
11
In Richardson v. United States, the Supreme Court examined whether a jury must agree
unanimously about which specific violations were committed as part of the “continuing series of
violations” that make up a continuing criminal enterprise under 21 U.S.C. § 848(c). 526 U.S.
813, 815 (1999). The Court held that the jury must agree that a defendant committed each of the
violations comprising the “continuing series.” Id. While a jury “cannot convict unless it finds
that the Government has proved each element” of the charged crime, the jury “need not always
decide unanimously which of several possible sets of underlying brute facts make up a particular
element.” Id. at 817. The Richardson Court aptly described the distinction between a brute fact
and an element of the crime:
Where, for example, an element of robbery is force or the threat of
force, some jurors might conclude that the defendant used a knife to
create the threat; others might conclude he used a gun. But that
disagreement – a disagreement about means – would not matter as
long as all 12 jurors unanimously concluded that the Government
had proved the necessary related element, namely, that the
defendant had threatened force.
Id.We agree with the district court’s rationale, and hold that the jury need not agree on a
single overt act to sustain a conspiracy conviction. As the district court noted, the overt act taken
in furtherance of the conspiracy need not be a crime. See Braverman v. United States, 317 U.S.
49, 53 (1942) (“The overt act, without proof of which a charge of conspiracy cannot be submitted
to the jury, may be that of only a single one of the conspirators and need not be itself a crime”).
“[A]n indictment need not specify which overt act, among several named, was the means by
which a crime was committed.” Schad v. Arizona, 501 U.S. 624, 631 (1991). Indeed, the
government may plead one set of overt acts in the indictment and prove a different set of overt
acts at trial without prejudice to the defendant. United States v. Kaplan, 490 F.3d 110, 129 (2d
12
Cir. 2007). We conclude, therefore, that although proof of at least one overt act is necessary to
prove an element of the crime, which overt act among multiple such acts supports proof of a
conspiracy conviction is a brute fact and not itself element of the crime. The jury need not reach
unanimous agreement on which particular overt act was committed in furtherance of the
conspiracy.
B. Conscious avoidance.
The district court instructed the jury on conscious avoidance as part of its charge on the
substantive FCPA violation (Count One):
The FCPA provides that a person’s state of mind is knowing with
respect to conduct, a circumstance, or a result if, and I’m quoting
from the statute, the FCPA, if such person is aware that such person
is engaging in such conduct; that such circumstance exist [sic] or
that such result substantially is certain to occur, or such person has
a firm belief that such circumstances exist or that such result is
substantially certain to occur. That’s the end of the quote.
When knowledge of existence of a particular fact is an element of
the offense, such knowledge may be established when a person is
aware of a high probability of its existence, and consciously and
intentionally avoided confirming that fact. Knowledge may be
proven in this manner if, but only if, the person suspects the fact,
realized its high probability, but refrained from obtaining the final
confirmation because he wanted to be able to deny knowledge.
On the other hand, knowledge is not established in this manner if
the person merely failed to learn the fact through negligence or if
the person actually believed that the transaction was legal.
(JA 983-84)
“A conscious avoidance instruction permits a jury to find that a defendant had culpable
knowledge of a fact when the evidence shows that the defendant intentionally avoided confirming
the fact.” United States v. Ferrarini, 219 F.3d 145, 154 (2d Cir. 2000). The jury may be
instructed on conscious avoidance only where “(1) the defendant asserts the lack of some specific
13
aspect of knowledge required for conviction, and (2) the appropriate factual predicate for the
charge exists, i.e., the evidence is such that a rational juror may reach the conclusion beyond a
reasonable doubt that the defendant was aware of a high probability of the fact in dispute and
consciously avoided confirming that fact.” Id. (internal quotation marks, alterations and citation
omitted). Without either of those factors, as we explained in Ferrarini:
[A] jury could be given a conscious avoidance instruction in a case
where there was only equivocal evidence that the defendant had
actual knowledge and where there was no evidence that the
defendant deliberately avoided learning the truth. Under those
circumstances, a jury might conclude that no actual knowledge
existed but might nonetheless convict, if it believed that the
defendant had not tried hard enough to learn the truth.
Id. at 157.
Bourke first argues that the conscious avoidance charge lacks a factual predicate. We
disagree. While the government’s primary theory at trial was that he had actual knowledge of the
bribery scheme, there is ample evidence to support a conviction based on the alternate theory of
conscious avoidance. The testimony at trial demonstrated that Bourke was aware of how
pervasive corruption was in Azerbaijan generally. (Tr. 1496, 1571) Bourke knew of Kozeny’s
reputation as the “Pirate of Prague.” (Tr. 1666-67) Bourke created the American advisory
companies to shield himself and other American investors from potential liability from payments
made in violation of FCPA, and joined the boards of the American companies instead of joining
the Oily Rock board. (GX 41-T4) In so doing, Bourke enabled himself to participate in the
investment without acquiring actual knowledge of Oily Rock’s undertakings.
The strongest evidence demonstrating that Bourke willfully avoided learning whether
corrupt payments were made came from tape recordings of a May 18, 1999 phone conference
with Bourke, fellow investor Friedman and their attorneys, during which Bourke voiced concerns
14
about whether Kozeny and company were paying bribes:
I mean, they’re talking about doing a deal in Iran . . . . Maybe they .
. . bribed them, . . . with . . . ten million bucks. I, I mean, I’m not
saying that’s what they’re going to do, but suppose they do that.
Later in the conversation, Bourke remarks:
I don’t know how you conduct business in Kazakhstan or Georgia
or Iran, or Azerbaijan, and if they’re bribing officials and that
comes out . . . Let’s say . . . one of the guys at Minaret says to you,
Dick, you know, we know we’re going to get this deal. We’ve
taken care of this minister of finance, or this minister of this or that.
What are you going to do with that information?
He goes on to say:
What happens if they break a law in . . . Kazakhstan, or they bribe
somebody in Kazakhstan and we’re at dinner and . . . one of the
guys says, ‘Well, you know, we paid some guy ten million bucks to
get this now.’ I don’t know, you know, if somebody says that to
you, I’m not part of it . . . I didn’t endorse it. But let’s say [ ] they
tell you that. You got knowledge of it. What do you do with that? .
. . I’m just saying to you in general . . . do you think business is
done at arm’s length in this part of the world.
Finally, Bourke’s attorney testified that he advised Bourke that if Bourke thought there might be
bribes paid, Bourke could not just look the other way. Taken together, a rational juror could
conclude that Bourke deliberately avoided confirming his suspicions that Kozeny and his cohorts
may be paying bribes.
Of course, this same evidence may also be used to infer that Bourke actually knew about
the crimes. See United States v. Svoboda, 347 F.3d 471, 480 (2d Cir. 2003). Relying on
Ferrarini, 219 F.3d at 157, Bourke argues that the conscious avoidance charge was given in error
because the government argued Bourke actually knew of the bribes. We disagree. In Svoboda,
we held that:
15
the same evidence that will raise an inference that the defendant had
actual knowledge of the illegal conduct ordinarily will also raise the
inference that the defendant was subjectively aware of a high
probability of the existence of illegal conduct. Moreover,
[conscious avoidance] may be established where, a defendant’s
involvement in the criminal offense may have been so
overwhelmingly suspicious that the defendant’s failure to question
the suspicious circumstances establishes the defendant’s purposeful
contrivance to avoid guilty knowledge.
347 F.3d at 480 (citation, emphasis and internal quotation marks omitted); see also United States
v. Carlo, 507 F.3d 799, 802 (2d Cir. 2007) (“The conscious avoidance charge was appropriate
because [defendant] asserted that he did not know that his statements were false and the
government presented an adequate factual predicate for the charge.”); United States v. Aina-
Marshall, 336 F.3d 167, 171 (2d Cir. 2003) (approving conscious avoidance charge where
defendant “admitted possession of contraband but . . . denied knowledge of its nature,” because
“the defendant herself has directly put in issue whether the circumstances were such as to alert
her to a high probability that the goods were contraband and what steps she took to learn of the
extent of that danger”).
It is not uncommon for a finding of conscious avoidance to be supported primarily by
circumstantial evidence. Indeed, the very nature of conscious avoidance makes it unlikely that
the record will contain directly incriminating statements. Just as it is rare to find direct record
evidence of an employer stating, “I am not going to give you a raise because you are a woman,” it
is highly unlikely a defendant will provide direct record evidence of conscious avoidance by
saying, “Stop! I think you are about to discuss a crime and I want to be able to deny I know
anything about it!” Here, the evidence adduced by the government at trial suffices to support the
giving of a conscience avoidance charge.
16
Finally, Bourke argues that the conscious avoidance charge improperly allowed the jury to
convict him based on negligence, rather than based on evidence that he avoided learning the truth.
As detailed above, the record contains ample evidence that Bourke had serious concerns about the
legality of Kozeny’s business practices and worked to avoid learning exactly what Kozeny was
doing. Bourke also argues that the risk of the jury convicting on negligence was heightened here
because the district court erroneously admitted the testimony of Wheeler and James Rossman, the
attorney also conducting due diligence for Texas Pacific Group (“TPG”). At one time, TPG
considered investing with Kozeny, but decided against it. Rossman and Wheeler testified
regarding the due diligence they undertook on Oily Rock. Rossman testified that as part of his
due diligence, he traveled to Switzerland to meet with Bodmer, and that Bodmer provided
Rossman with documents related to the Oily Rock investment. Bodmer also discussed the
involvement of the Azeri investors with Rossman. Based on his conversations with Bodmer, and
his knowledge of Kozeny’s reputation gleaned from news articles, Rossman advised TPG that
Oily Rock “was a dumb investment,” with “a significant risk because of the lack of information
about the other shareholders, [and because] there could be a FCPA issue.”
We find no grounds supporting the proposition that Wheeler and Rossman’s testimony,
coupled with the jury charge, allowed Bourke to be convicted based on negligence. The
government offered the testimony to demonstrate that others with access to the same sources of
information available to Bourke were able to figure out Kozeny’s scheme and avoid participating.
It was entirely proper for the government to argue that Bourke refrained from asking his attorneys
to undertake the same due diligence done by Rossman and Wheeler because Bourke was
consciously avoiding learning about the bribes. This is distinguishable from United States v.
Kaplan, 490 F.3d 110. Bourke relies on Kaplan for the proposition that a court abuses its
17
discretion when it admits testimony about a third party’s knowledge of fraud where “the
Government failed to offer evidence that would explain how [the] defendant . . . would have
obtained the third parties’ knowledge of the criminal scheme.” Id. at 121. Here, Bourke went to
Azerbaijan on the same trip as Wheeler, and like Rossman had access to Bodmer. This is the type
of explanation Kaplan contemplates. Id. (“Evidence of others’ knowledge would have been
highly relevant had it been supplemented by evidence supporting the conclusion that such
knowledge was communicated to [the defendant], or that [the defendant] had been exposed to the
same sources from which these others derived their knowledge of the fraud.”).
Finally, the district court specifically charged the jury not to convict based on negligence.
There is no reason to suspect that the jury ignored that instruction.
C. Insufficiency of the mens rea charge.
Bourke argues that the district court erred by failing to instruct the jury that it must find he
acted “corruptly” and “willfully,” because that is the mens rea necessary to sustain a conviction
on a substantive FCPA offense. In giving the charge on conspiracy, the district court instructed
the jury that:
[T]he government must prove beyond a reasonable doubt that the
defendant knew that he was a member of an operation or a
conspiracy that committed or was going to commit a crime, and that
his action of joining such an operation or conspiracy was not due to
carelessness, negligence or mistake.
Unlawful means simply contrary to the law. The defendant need
not have known that he was breaking any particular law or any
particular rule. He need only have been aware of the generally
unlawful nature of his acts.
An act is done knowingly and willfully if it is done deliberately and
voluntarily, that is, the defendant’s act or acts must have been the
product of his conscious objective, rather than the product of a
mistake or accident or mere negligence or some other innocent
reason.
18
Earlier, when charging on the conspiracy FCPA count, the district court instructed the jury
as to the elements of a substantive FCPA offense:
The third element, corruptly and willfully: The third element of a
violation of the FCPA is that the person intended to act corruptly
and willfully. A person acts corruptly if he acts voluntarily and
intentionally, with an improper motive of accomplishing either an
unlawful result or a lawful result by some unlawful method or
means. The term “corruptly” is intended to connote that the offer,
payment, and promise was intended to influence an official to
misuse his official position.
A person acts willfully if he acts deliberately and with the intent to
do something that the law forbids, that is, with a bad purpose to
disobey or disregard the law. The person need not be aware of the
specific law and rule that his conduct may be violating, but he must
act with the intent to do something that the law forbids.
The district court prefaced its instruction on the substantive elements with:
The substantive offense -- that is, the substantive offense of
violating the FCPA -- has seven elements, which I will define for
you. You should note that the government need not prove each of
the following elements in order to prove that the defendant engaged
in a conspiracy to violate the FCPA. I am instructing you on the
elements only that they will aid you in your determination as to
whether the government has sustained its proof, burden of proof,
with respect to this count.
We need not decide if Bourke properly preserved this issue for appellate review, because
we find the charge proper under either a de novo or plain error standard. Bourke relies on United
States v. Feola, 420 U.S. 671, 686 (1975), for the proposition that “in order to sustain a judgment
of conviction on a charge of conspiracy to violate a federal statute, the Government must prove at
least the degree of criminal intent necessary for the substantive offense itself.” Bourke maintains
that Feola requires the government to prove at least the specific mens rea for the underlying
substantive offense, and the district court erred in not so instructing the jury. In Feola, the
Supreme Court considered whether, in order to convict for conspiracy to assault federal officers,
19
the government had to prove that the defendants knew the victims were federal officers. Id. at
684. The Supreme Court answered in the negative. Id. It went on to hold that “where a
substantive offense embodies only a requirement of mens rea as to each of its elements, the
general federal conspiracy statute requires no more.” Id. at 692.
Here, the district court instructed the jury to make the necessary findings. The district
court instructed the jury that to convict, it must find that he knew of the conspiracy’s object, and
that Bourke intended for that object to be accomplished. The district court further instructed the
jury that one possible object of the conspiracy was to violate FCPA, and to violate FCPA one
must act “corruptly” and “willfully.” Thus, the district court properly instructed the jury that it
must find Bourke knowingly entered a conspiracy that had the object of corruptly and willfully
bribing foreign officials and that Bourke intended to aid in achieving this object. (SA 161)
Moreover, the jury charge that Bourke urged the district court to adopt would require the jury to
find Bourke willfully and corruptly joined a conspiracy to willfully and corruptly bribe foreign
government officials - an absurd result unsupported by law. We find no error.
D. Proposed good faith instructions.
“A defendant is entitled to a jury charge which reflects his defense.” United States v.
Doyle, 130 F.3d 523, 540 (2d Cir. 1997). “A conviction will not be overturned for refusal to give
a requested charge, however, unless that instruction is legally correct, represents a theory of
defense with basis in the record that would lead to acquittal, and the theory is not effectively
presented elsewhere in the charge.” Id. (internal quotation marks omitted).
Bourke argues the district court erred in not giving the jury a separate good faith
instruction with respect to FCPA and false statement counts. Even assuming arguendo that
Bourke’s proposed instruction was legally correct with an adequate basis in the record, his
20
argument fails because the theory was effectively presented elsewhere in the charge. The district
court instructed the jury that the government did not meet its burden if the defendant “merely
failed to learn the fact through negligence or if the person actually believed that the transaction
was legal.” It also charged that “the government must prove beyond a reasonable doubt that the
defendant knew that he was a member of an operation or conspiracy that committed or was going
to commit a crime, and that his action of joining such an operation or conspiracy was not due to
carelessness, negligence or mistake.” The jury was told that it “must first find that [Bourke]
knowingly joined in the unlawful agreement or plan.” The jurors were instructed that
“knowingly” meant “deliberately and voluntarily,” and could not be a “mistake or accident or
mere negligence or some other innocent reason.”
The instructions given here were strikingly similar to the ones given in Doyle. There, we
found that:
The indictment charged, and the court instructed, that knowledge
and willfulness concerning the ultimate destination of the
equipment is an element of the offense that the Government was
required to prove beyond a reasonable doubt. It was not error for
the court to refuse to charge that the Government had the burden to
prove bad faith, when it had already charged that the Government
had to prove willfulness and that good faith was a defense to the
willfulness element.
130 F.3d at 540-41. The failure to give a specific good faith charge does not require a reversal.
II. Evidentiary Rulings.
We review decisions to admit or exclude evidence for abuse of discretion. United States
v. Massino, 546 F.3d 123, 128 (2d Cir. 2008). In evaluating whether testimony should have been
excluded based on Fed. R. Evid. 403, we have explained that:
Federal Rule of Evidence 403 provides for the exclusion of
otherwise relevant evidence if its probative value is substantially
outweighed by the danger of unfair prejudice. We uphold Rule 403
21
rulings unless the district court has abused its discretion. So long as
the district court has conscientiously balanced the proffered
evidence’s probative value with the risk for prejudice, its
conclusion will be disturbed only if it is arbitrary or irrational. In
light of the deferential nature of our review, appellate courts
reviewing a district court’s evaluation of evidence under Federal
Rule of Evidence 403 generally maximize its probative value and
minimize its prejudicial effect.
Id. at 132 (citations, brackets, and internal quotation marks omitted).
Bourke challenges a number of the district court’s evidentiary rulings, including the
decision to admit testimony from Wheeler and Rossman. For the reasons discussed above, we
find no abuse of discretion in admitting their testimony.
A. Proposed testimony of Bruce Dresner.
Bourke argues the district court abused its discretion in not permitting him to introduce
the testimony of Bruce Dresner, vice president for investments at Columbia University.
Columbia also invested in Oily Rock through Omega Advisors, a hedge fund. Dresner oversaw
that investment. Bourke sought to admit the testimony to serve as a benchmark for the type of
due diligence undertaken by others, and to demonstrate that others also asked questions about
potential FCPA liability. The district court precluded Dresner’s testimony as irrelevant -- a
holding well within its discretion. (Tr. 2699-2701) Dresner invested in the hedge fund Omega
Advisors, not directly in Oily Rock, which necessarily required different due diligence. Dresner
did not travel to Azerbaijan, and did not meet Kozeny, Farrell or Bodmer. Further, the fact that
Dresner also asked questions about FCPA liability does not make Bourke’s questions less
indicative of guilt. As the district court aptly noted, the statements Bourke made regarding FCPA
on the recorded call could only be evaluated in the context of that call.
B. Cross-examination of Farrell.
Bourke also challenges the district court’s refusal of his request to cross-examine Farrell
22
regarding certain matters discussed under seal. The seal was imposed to protect confidential
investigations. For the reasons set forth by the district court at the May 21, 2009, conference, we
find no abuse of discretion.
C. The Schmid memorandum.
At trial, the government was permitted to introduce a portion of a memorandum written
for Bodmer by his associate, Rolf Schmid, that included an account of Bodmer’s February 1998
conversation with Bourke about the corrupt scheme. Bodmer testified that while in Baku with
Bourke, Bodmer told Bourke about the particulars of the corrupt arrangements, including that the
Azeri government officials would receive two-thirds of the vouchers in an arrangement that
would allow the Azeri officials to incur no risk. The defense called Bodmer’s recollection of this
conversation into question because Bodmer had trouble remembering exactly when the
conversation took place. The government then sought to salvage Bodmer’s testimony by having
Schmid testify that Bodmer had told Schmid of his conversation with Bourke, and memorialized
that conversation in a memo. The government sought to admit that portion of the memo
referencing the conversation as a prior consistent statement of Schmid under Federal Rule of
Evidence 801(d)(1)(b).
While he objected to its admission below, on appeal, Bourke does not argue that the
portion of the memo introduced at trial was inadmissible. Instead, he argues the entire memo
ought to have been admitted into evidence, under both the rule of completeness and as a prior
inconsistent statement of Bodmer. We are skeptical that the portions of the memo introduced by
the government at trial were admissible. However, any error in that regard was harmless.
Further, we find no abuse of discretion in the district court’s decision not to admit the entirety of
the memo. The memo was prepared by Schmid in response to a request for information by
23
lawyers suing Kozeny over the collapse of the privatization scheme. Schmid was charged with
drafting the response. The admitted portion of the memo states:
Ricky Bourke asked Hans Bodmer about the legal structure of Oily
Rock and its subsidiaries, the ownership of vouchers and options by
the holding companies etc. Hans Bodmer remembers that --
probably at the beginning of 1998 -- he left together with Ricky
Bourke in Baku and went for a walk together with Ricky Bourke.
During this walk he briefed Ricky Bourke in detail about the
involvement of the Azeri Interests by way of the credit facility
agreements, the 2/3:1/3 arrangement . . .
Bourke argues that while this portion of the memo seemingly supports Bodmer’s trial testimony
about the walk-talk, the redacted portion contradicts Bodmer’s testimony. The redacted portion
states in relevant part:
At the time [Bodmer’s law firm] drafted the credit facility
agreements it was our understanding that the credit facility
agreements should be the basis for an arm’s length transaction. If
Viktor Kozeny and/or the Azeri interests had other intentions [it] is
unknown to us.
In another portion, the memo states:
Neither Hans Bodmer nor any one else [at the firm] has specific
knowledge of corrupt payments. Whether there is such an
agreement between Viktor Kozeny and Barat Nuriyev is not known
to [the firm] and if such payments were in fact discussed Hans
Bodmer did not attend such meetings.
Under the rule of completeness, “[w]hen a writing or recorded statement or part thereof is
introduced by a party, an adverse party may require the introduction at the time of any other part
or any other writing or recorded statement which ought in fairness to be considered
contemporaneously with it.” Fed. R. Evid. 106 [2010]. Omitted portions of the “statement must
be placed in evidence if necessary to explain the admitted portion, to place the admitted portion in
context, to avoid misleading the jury, or to ensure fair and impartial understanding of the admitted
portion.” United States v. Johnson, 507 F.3d 793, 796 (2d Cir. 2007) (quotation marks omitted).
24
“The completeness doctrine does not, however, require the admission of portions of a statement
that are neither explanatory of nor relevant to the admitted passages.” Id. (quotation marks
omitted).
The district court did not abuse its discretion in declining to admit the entirety of the
memo. Schmid testified that the parts of the memo discussing the legality of the transactions
were based on his own understanding and opinions, and that he did not consult Bodmer in
drafting the memorandum. Schmid’s legal opinions were therefore irrelevant. Importantly, the
memo was offered to corroborate Schmid’s testimony that Bodmer had told him he discussed the
two-thirds/one-third split with Bourke. The memo was offered as a prior consistent statement of
Schmid, not of Bodmer. Thus, the rule of completeness does not require that the entire memo be
admitted, because Schmid’s legal analysis, recollection and understandings are not relevant.
III. Sufficiency of the Evidence.
Bourke challenges his conviction on the false statements count (Count III) on the ground
that the verdict is not supported by sufficient evidence. A defendant challenging the sufficiency
of the evidence bears a heavy burden, because the reviewing court is required to draw all
permissible inferences in favor of the government and resolve all issues of credibility in favor of
the jury verdict. United States v. Desena, 287 F.3d 170, 176-77 (2d Cir. 2002). We must affirm
the conviction if “any rational trier of fact could have found the essential elements of the crime
beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis omitted).
While circumstantial evidence may support a conviction, the conviction cannot “rest on mere
speculation or conjecture.” United States v. Pinckney, 85 F.3d 4, 7 (2d Cir. 1996).
Count Three charges that Bourke falsely stated during four proffer statements with the
FBI that he was unaware that Kozeny made corrupt payments, transfers and gifts to the Azeri
25
officials. The FBI agent who interviewed Bourke testified that when Bourke was asked if he
learned of any personal favors or gifts between Kozeny and the Azeri officials Bourke replied, “I
was unaware. I’m still unaware of any transfers of anything.” When asked if he had any reason
to believe Kozeny had paid bribes or made corrupt payments, Bourke said, “No.” The
government adduced statements from Bodmer and Farrell that contradicted Bourke’s statements
to the FBI. Specifically, Bodmer testified that Bourke had approached him in February 1998
about an “arrangement” with the Azeri officials, and that Bodmer had then explained to Bourke
how the Azeri officials were to receive a two-thirds share of the vouchers without assuming any
risk, and without payment.
Bodmer’s testimony regarding the timing of his conversation with Bourke in Baku was the
subject of extensive cross-examination. Documentary evidence demonstrated that at least one of
the conversations with Bourke that Bodmer testified to could not have taken place on the date
Bodmer believed it did, and the government so stipulated. While Bodmer’s testimony regarding
the date of the conversation was questioned by the defense, that does not mean a reasonable juror
could not conclude that the conversation took place on a different date. Indeed, both Bodmer and
Farrell testified regarding conversations with Bourke by April 1998 about payments to the Azeri
government officials, and both were extensively cross-examined on the issue. Bourke argues that
the only reasonable inference from Bodmer and Farrell’s failure to accurately identify the date the
conversations took place is that the conversations never took place. However, drawing all
inferences in favor of the government, as we must, a reasonable juror could have concluded that
the conversations took place and that the witnesses simply got the dates wrong. Thus, there is
sufficient evidence to sustain the conviction on Count Three.
26
CONCLUSION
We have examined the remainder of Bourke’s arguments and we find them to be without
merit. For the reasons given above, we affirm his conviction.
27