UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW …€¦ · the Copa America Centenario...

UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK

____________________________________:

UNITED STATES OF AMERICA ::

v. : Case No. 15 CR 252 (S-1)(PKC) :

JUAN ANGEL NAPOUT, ::

Defendant. ::

____________________________________:

JUAN ANGEL NAPOUT’S MOTION TO DISMISS ALL CHARGES FOR LACK OF EXTRATERRITORIAL JURISDICTION

Defendant JUAN ANGEL NAPOUT respectfully moves the Court to dismiss all

charges in the Superseding Indictment for lack of extraterritorial jurisdiction. As demonstrated

in the attached Memorandum of Law filed in support of this Motion, the Superseding Indictment

fails to establish a basis for the exercise of jurisdiction pursuant to RJR Nabisco, Inc. v.

European Community, 136 S.Ct. 2090 (2016) and additional Second Circuit and Supreme Court

cases.

REQUEST FOR ORAL ARGUMENT

Mr. Napout respectfully requests oral argument on the motion.

Respectfully submitted,

GREENBERG TRAURIG, LLP PIÑERA-VAZQUEZ LAW FIRMOne International Place International CenterBoston, MA 02110 1900 Southwest 3rd AvenueTel: (617) 310-6000 Miami, Florida 33129pappalardoj @gtlaw.com Tel: (305) [email protected] [email protected]

s/ A. John Pappalardo s/Silvia B. Piñera-Vazquez A. John Pappalardo Silvia B. Piñera-VazquezJacqueline Becerra

Case 1:15-cr-00252-PKC-RML Document 491 Filed 11/21/16 of 2 PageID #: 4856

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on November 21, 2016, the foregoing document was

electronically filed with the Clerk of the Court using CM/ECF. I also certify that this document

is being served simultaneously on all counsel of record in the manner specified, either by

transmission of Notices of Electronic Filing generated by CM/ECF, or in another authorized

manner.

s/Silvia B. Piñera-Vazquez Silvia B. Piñera-Vazquez, Esq.

Case 1:15-cr-00252-PKC-RML Document 491 Filed 11/21/16 of 2 PageID #: 4857

UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK

____________________________________:

UNITED STATES OF AMERICA ::

v. : Case No. 15 CR 252 (S-1)(PKC) :

JUAN ANGEL NAPOUT, ::

Defendant. ::

____________________________________:

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT JUAN ANGEL NAPOUT’S

MOTION TO DISMISS ALL CHARGESFOR LACK OF EXTRATERRITORIAL JURISDICTION

GREENBERG TRAURIGJohn PappalardoJacqueline Becerra

PIÑERA-VAZQUEZ LAW FIRMSilvia B. Piñera-Vazquez

Case 1:15-cr-00252-PKC-RML Document 491-1 Filed 11/21/16 Page 1 of 21 PageID #: 4858

I. INTRODUCTION

For the past six years, the United States government has been engaged in an international

soccer investigation spanning six continents regarding allegations centered on a 24-year

corruption scheme in which over $200 million in bribes and kickbacks were paid to secure

lucrative rights to international soccer tournaments throughout the world. As part of its

investigation, the government issued countless grand jury subpoenas to banks and other

institutions; interviewed hundreds of witnesses; used cooperating defendants to record

conversations; sought assistance of foreign jurisdictions through the Mutual Legal Assistance

Treaty (“MLAT”) process; and secured plea deals with several cooperating defendants.

In essence, the Eastern District of New York (“EDNY”) prosecutors and agents have

used their considerable power to hunt the globe for evidence of wrong doing in the revered

international game of soccer, or “futbol”, as it is commonly known in the rest of the world. Thus

far, the government has succeeded in obtaining numerous convictions without any discernable

challenge to the evidence it gathered. Indeed, all convictions have been the result of either pre-

arrest negotiated agreements or post-arrest plea deals.

Notwithstanding the six years of investigation using the most powerful tools and

sophisticated agents in the world, the government fails to state any viable claim against one

defendant – Juan Angel Napout, a citizen of Paraguay. To be precise, as to Mr. Napout,

individually, the Superseding Indictment fails to assert that he engaged in any criminal conduct

within a United States territory or that impacted the United States. See RJR Nabisco, Inc. v.

European Community, 136 S.Ct. 2090 (2016) Rather the 236 page Superseding Indictment

reflects the government’s significant overreach and selective distortion of the facts as evidenced

by the discovery disclosed. But even accepting the Superseding Indictment allegations as true,

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the five counts in which Mr. Napout is charged do not cross the relevant legal threshold and

must be dismissed for lack of extraterritorial jurisdiction.1

First, there is no extraterritorial jurisdiction for wire fraud, and there can be no such

jurisdiction for money laundering when the money laundering charge relies on an alleged wire

fraud for its specified unlawful activity. Since the money laundering charges against Mr. Napout

in Counts Ten and Eighty-Four in the Superseding Indictment are limited to purported

laundering of the proceeds from the wire fraud alleged in Counts Nine and Eighty-Three, there

can be no extraterritorial jurisdiction over Mr. Napout’s alleged conduct in those charges.

Similarly, there can be no extraterritorial jurisdiction over the RICO charge against Mr. Napout

in Count One because it wholly relies on Mr. Napout allegedly engaging in wire fraud and

money laundering as the predicate offense for RICO.

Second, the Superseding Indictment fails to allege sufficient conduct by Mr. Napout in

the United States to support a finding that the wire fraud and money laundering statutes are not

being applied domestically, so as to alleviate the need to extraterritorial jurisdiction. Domestic

application of these statutes as to Mr. Napout would require the alleged conduct of Mr. Napout

related to the focus of these charges to have occurred in the United States. The government does

not, and cannot, claim that (1) Mr. Napout ever used the United States banking system or

accounts to receive or send dirty money; (2) Mr. Napout ever received or solicited a bribe in the

1/ Mr. Napout is named as a defendant in the following five counts: (1) Count One forRacketeering Conspiracy under 18 U.S.C. § 1962(c) (the Racketeer Influenced and CorruptOrganizations (“RICO”) Act); (2) Count Nine for conspiracy to commit wire fraud under 18U.S.C. § 1343 in connection with the CONMEBOL Copa Libertadores Scheme #2; (3) CountTen for conspiracy to commit money laundering under 18 U.S.C. § 1956(a)(2)(A) in connectionwith the CONMEBOL Copa Libertadores Scheme #2; (4) Count Eighty-Three for conspiracy tocommit wire fraud under 18 U.S.C. § 1343 in connection with the 2016 Copa AmericaCentenario Scheme; and (5) Count Eighty-Four for conspiracy to commit money launderingunder 18 U.S.C. § 1956(a)(2)(A) in connection with the 2016 Copa America Centenario Scheme. Superseding Ind., ¶¶ 363, 379, 381, 502, 504.

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United States; or (3) Mr. Napout was recorded, while in the United States, conspiring or

agreeing to commit wire fraud or money laundering, or to accept a bribe.

Lastly, regardless of whether extraterritorial jurisdiction would be permitted, the charges

against Mr. Napout should be dismissed for lack of jurisdiction because extraterritorial

jurisdiction should not be exercised when it is unreasonable. The exercise of extraterritorial

jurisdiction would be unreasonable here because there is no alleged specific criminal conduct of

Mr. Napout within the United States and no reason to interfere with the inherent interest of

Paraguay in regulating the alleged conduct of Mr. Napout, a Paraguay citizen.

II. BACKGROUND

A. Allegations in Superseding Indictment

This 27-defendant, 92-count Superseding Indictment spans a 24-year period and also

involves dozens of uncharged coconspirators, 15 schemes and numerous “financial transactions

and relationships.” Hrg. Tr. 3/29/16 at 18; D.E. 304 at 3. The schemes alleged are diverse,

including the payment of bribes in connection with purchase of commercial rights for national

and international soccer tournaments, the sponsorship of the Brazilian national soccer federation,

the selection of the host country for the 2010 World Cup, the 2011 FIFA Presidential Election,

the UNCAF Region World Cup Qualifiers, and the UNCAF Region Friendlies. D.E. 31;

Superseding Ind. (D.E., 102) at ¶¶292-303; 231- 276; 277- 291. The latter two have sub-

schemes involving tournaments in certain Central American countries, none of which involve

Paraguay.

In addition to being charged with the overarching RICO conspiracy in Count One along

with all other defendants,2 Mr. Napout is only charged with participating in two of the 15

2/ Count One alleges RICO predicate acts of honest services wire fraud (18 U.S.C. § 1343);money laundering and money laundering conspiracy (18 U.S.C. § 1956 and §1957); the Travel

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schemes – the CONMEBOL Copa Libertadores Scheme #2 in Counts Nine and Ten (“Copa

Libertadores Scheme #2”) and the CONMEBOL/CONCACAF Copa America Centenario

Scheme in Counts Eighty-Three and Eighty-Four Ten (“Copa America Centenario Scheme”).

As to both schemes, he is charged with wire fraud conspiracy (Counts Nine and Eighty-Three)

and money laundering conspiracy (Counts Ten and Eighty-Four), in violation of 18 U.S.C. §

1343 and 18 U.S.C. § 1956(h).

Of the 26 codefendants named in Count One, 16 are absent. Of the 14 codefendants

named in the Copa Libertadores Scheme #2, 12 are absent, and of the 13 codefendants named in

the Copa America Centenario Scheme, 11 are absent. (The same codefendants are charged in

Copa Libertadores Scheme #2 as in the Copa America Centenario Scheme, except for Osuna

who is only charged in the Copa Libertadores Scheme #2).3 Put another way, as to these two

schemes, only Mr. Napout, Rafael Esquivel, and Jose Maria Marin have appeared. Esquivel

recently pled guilty and is awaiting sentencing.

B. Allegations Specific to Juan Napout

The allegations in the Superseding Indictment as to Mr. Napout are as follows:

1. Introductory Allegations

The first group of allegations identifies Mr. Napout as “a citizen of Paraguay,” and sets

forth the positions Mr. Napout has held in FIFA and CONMEBOL. Superseding Ind. at ¶41.

Between May 29, 2015 and November 23, 2015, he was a member of the FIFA executive

committee and a FIFA vice president, and “at various times relevant to the indictment he was

Act (18 U.S.C. § 1952) and, obstruction of justice and obstruction of justice conspiracy (18U.S.C. § 1512).3/ The 14 codefendants named in the Copa Libertadores Scheme #2 are as follows, with thosewho are absent noted in italics: Manuel Burga, Carlos Chavez, Luis Chiriboga, Marco Polo DelNero, Eduardo DeLuca, Rafael Esquivel, Eugenio Figueredo, Nicolas Leoz, Jose Maria Marin,Jose Luis Meiszner, Romer Osuna, Ricardo Teixeira, Hugo Jinkis and Mariano Jinkis.

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also a member of FIFA’s executive committee and a FIFA vice president, including the

disciplinary committee and the organizing committee for the World Cup.” Id. From August

2014 to “present”, he was the CONMEBOL president, and prior to that, he was one of

CONMEBOL’s vice presidents. Id.

From 2003 to 2013, Mr. Napout was vice president and then president of the

Associacion Paraguaya de Futbol, the Paraguayan soccer federation which was a national

member association of FIFA and CONMEBOL. Id. It is alleged that he was “employed by and

associated with the enterprise.” Id. The Superseding Indictment also alleges that all defendants

conspired “to use their positions … to engage in schemes” involving “the offer acceptance and

receipt of undisclosed and illegal payments, bribes, and kickbacks,” and sets forth specific acts

engaged in by various conspirators to conceal their illegal activities in the United States and

elsewhere. Id. at ¶¶95-96. It is not alleged which of the specific acts of concealment Mr.

Napout was purportedly engaged in. Id.

2. CONMEBOL Copa Libertadores Scheme #2

Mr. Napout is named among “high-ranking CONMEBOL officials,” including named

defendants, who allegedly received payment of bribes and kickbacks from Alejandro Burzaco

(“Burzaco”), owner of sports marketing businesses Torneos, to secure “the broadcasting rights to

each edition of the Copa Libertadores, among other tournaments,” which rights had been held by

Torneos and its partners from 1999 to present. Id. at ¶114. The sports marketing companies

paid the bribes at the direction of defendants Hugo Jinkis, Mariano Jinkis, and Burzaco, which

included moving “millions of dollars among the sports marketing companies and to soccer

officials who were the recipients of illicit payments” (e.g., Jose Margulies wired $3.5 million

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into accounts controlled by codefendants Rafael Esquivel, Nicolas Leoz, and Eugenio Figueredo

from 2003 to 2008). Id. at ¶¶115-116.

It is alleged that in 2009, Mr. Napout was among “six presidents of … CONMEBOL

[that] formed a bloc to obtain greater control over decisions relating to … the sale of

CONMEBOL’s commercial properties.” Id. at ¶181. The bloc was led by Luis Chiriboga,

Rafael Esquivel, and Luis Bedoya (“Bedoya”), vice president of CONMEBOL and a member of

FIFA’s executive committee, and the other members of the bloc were Mr. Napout, Manuel

Burga, and Carlos Chavez. Id. Starting in about 2009, they “demanded that they, too, receive

annual bribe payments in exchange for their support of T&T as the holder of broadcasting rights

to the Copa Libertadores” and “Burzaco [paid] annual six-figure bribe payments to Napout,

Manuel Burga, Carlos Chavez, Luis Chiriboga, Rafael Esquivel and to Bedoya.” Id. at ¶182.

The allegations name the defendants who solicited and received bribes from Burzaco as well as

the defendants Burzaco relied upon as intermediaries to facilitate bribes and kickbacks. Id. at

¶¶183-184. Mr. Napout is not named in these allegations.

In the course of the scheme, “various defendants and their coconspirators used wire

facilities and financial institutions located in the United States, among other countries, to make

and receive bribe payments and to transfer payments related to contracts secured through bribery

… and conducted meetings in the United States in furtherance of the scheme.” Id. at ¶185. Mr.

Napout is not named in these allegations. Id. at ¶¶183-185.

3. 2016 Copa America Centenario Scheme

It is alleged that, in 2013, after meetings with other named defendants as well as with

Burzaco and Jose Hawilla, the company - Datisa - was newly formed to “obtain and exploit

commercial rights to the 2015, 2019 and 2023 editions of the tournament, as well as to a special

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centennial edition to be held in the United States in 2016.” Id. at ¶344. In or about August

2013, after a meeting in Buenos Aires between Burzaco, Jose Hawilla, and defendants Hugo

Jinkis and Mariano Jinkis, and a meeting four days later in London, “Datisa agreed to pay tens of

millions of dollars in bribes to CONMEBOL officials – all of whom were also FIFA officials –

in connection with the 2013 Copa America Contract.” Id. at ¶348.4 Mr. Napout is not alleged to

have been at the meetings.

It is next summarily alleged that the “officials who had solicited and/or were to receive

bribes included Napout, ten defendants, coconspirator #1 and Luis Bedoya among others.” Id.

The further allegations detail the use of financial institutions in the United States to make

payments, the use of bank accounts in Switzerland to wire money to accounts controlled by

CONMEBOL officials throughout the world, and other specific allegations describing the

scheme. Id. at ¶¶349-361. Mr. Napout is not named in these allegations.

There are no other allegations in the Superseding Indictment referencing allegedly

criminal conduct by Mr. Napout, and there are no allegations whatsoever specifying any conduct

by Mr. Napout in the United States.5

4 The Superseding Indictment also alleges historically that: In about 1993-2011 Traffic enteredinto contracts with CONMEBOL, obtained through bribery, which awarded exclusive marketingrights to all editions of the Copa America from 1993-2011; in 2010 Traffic sued CONMEBOL,codefendants Luis Chiriboga, Rafael Esquivel as well as Bedoya with respect to the contract; andin 2013 the law suit was settled. Id. at ¶¶ 341-346.5 The only other mention of Mr. Napout is in an irrelevant allegation that in August 2014,Napout, who was then CONMEBOL president, stated “The Americas are one, it is man whocreates frontiers. I believe in a single America in a working context with CONCACAF andwe’ve reached something real which will go ahead in 2016.” Id. at ¶358.

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III. ARGUMENT

THE SUPERSEDING INDICTMENT FAILS TO ALLEGE ANY EXTRATERRITORIAL JURISDICTION

OVER THE CONDUCT OF JUAN NAPOUT

There is no legal basis for the Court to exercise extraterritorial jurisdiction over the

alleged conduct of Mr. Napout, and therefore each of Counts One, Nine, Ten, Eighty-Three and

Eighty-Four of the Superseding Indictment should be dismissed as to Mr. Napout.

A. Legal Standards for Extraterritorial Jurisdiction

The recent Supreme Court case of RJR Nabisco, Inc. v. European Community, 136 S.Ct.

2090 (2016) provides insight on the applicability of extraterritorial jurisdiction in this context,

and demonstrates that this Court lacks extraterritorial jurisdiction over Mr. Napout. The RJR

Nabisco Court first explained the strong presumption against federal laws having extraterritorial

jurisdiction.

It is a basic premise of our legal system that, in general, “United States lawgoverns domestically but does not rule the world.” . . . This principle findsexpression in a canon of statutory construction known as the presumption againstextraterritoriality: Absent clearly expressed congressional intent to the contrary,federal laws will be construed to have only domestic application. . . . Thequestion is not whether we think “Congress would have wanted” a statute toapply to foreign conduct “if it had thought of the situation before the court,” butwhether Congress has affirmatively and unmistakably instructed that the statutewill do so. . . . “When a statute gives no clear indication of an extraterritorialapplication, it has none.”

Id. at 2100 (quoting Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 454, 127 S.Ct. 1746, 167

L.Ed.2d 737 (2007) and Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255, 261

(2010).

The Supreme Court explained that this presumption is required and applied even where

there may be a conflict with a foreign law, “to avoid the international discord that can result

when U.S. law is applied to conduct in foreign countries,” and because Congress legislates laws

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to address domestic issues. Id. (citing Kiobel v. Royal Dutch Petroleum Co., 133 S.Ct. 1659,

1663–1664, (2013); Smith v. United States, 507 U.S. 197, 204, n. 5 (1993) and other cases). The

Court re-affirmed “a two-step framework” for determining whether a United States law applies

to conduct outside domestic territory.

First, a court should determine “whether the presumption against extraterritoriality has

been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies

extraterritorially.” Id. at 2101. Second, if the statute in question does not apply

extraterritorially, a court should determine whether the statute is being applied domestically in

the case at issue. The Court explained that, for this second step, “[i]f the conduct relevant to the

statute’s focus occurred in the United States, then the case involves a permissible domestic

application even if other conduct occurred abroad; but if the conduct relevant to the focus

occurred in a foreign country, then the case involves an impermissible extraterritorial application

regardless of any other conduct that occurred in U.S. territory.” Id.

The Supreme Court concluded that the Racketeer Influenced and Corrupt Organizations

Act (RICO), “applies to some foreign racketeering activity . . . [where an alleged violation of 18

U.S.C. § 1962 is] based on a pattern of racketeering that includes predicate offenses committed

abroad, provided that each of those offenses violates a predicate statute that is itself

extraterritorial.” Id. at 2103. Among the predicate RICO offenses at issue in RJR Nabisco was

wire fraud. The Court acknowledged that the Second Circuit had (1) ruled that “the fraud

statutes [including wire fraud] . . . do not contain the clear indication needed to overcome the

presumption against extraterritoriality,” and (2) also “held that the complaint alleges domestic

violations of those statutes.” Id. at 2105 (citing European Community v. RJR Nabisco, Inc., 764

F.3d 129, 140 (2d Cir. 2014) (emphasis in original).

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Because the RICO charge against Mr. Napout in Count One includes the predicate

offenses of wire fraud and money laundering that are charged in Counts Nine-Ten, Eighty-Three

and Eighty-Four, this Memorandum addresses the extraterritorial application of the wire fraud

and money laundering counts first.

1. The First Step in RJR Nabisco Analysis - Confirms That There is No Extraterritorial Jurisdiction For All Five Counts Against Napout

As demonstrated below, the allegations in the Superseding Indictment against Mr.

Napout, wire fraud, money laundering in furtherance of wire fraud, and RICO, fall squarely

within the presumption against extraterritoriality and thus, fail to satisfy the first step in the RJR

Nabisco analysis.

a. No Extraterritorial Jurisdiction for the Wire Fraud Conspiracy Charges in Counts Nine and Eighty-Three

Count Nine alleges “Wire Fraud Conspiracy - CONMEBOL Copa Libertadores Scheme

#2.” DE 102, ¶¶378-379. Count Eighty-Three alleges “Wire Fraud Conspiracy -

CONMEBOL/CONCACAF Copa America Centenario Scheme,” which is based upon an alleged

wire fraud. D.E. 102, ¶¶501-502. There is no extraterritorial jurisdiction for each charge. The

Second Circuit has ruled that neither “the wire fraud statute, 18 U.S.C. § 1343 . . . [nor] the

Travel Act, 18 U.S.C. § 1952, appl[y] extraterritorially, and explained “that the references to

foreign commerce in these statutes . . . do not indicate a congressional intent that the statutes

apply extraterritorially.” European Community v. RJR Nabisco, Inc., 764 F.3d 129, 140–41 (2d

Cir. 2014) (reversed on other grounds by RJR Nabisco, Inc. v. European Community, 136 S.Ct.

2090 (2016)); see also U.S. v. Prevezon Holdings LTD., 122 F.Supp.3d 57, 70 (S.D.N.Y. 2015)

(same); Laydon v. Mizuho Bank, Ltd., 2015 WL 1515487, at *8 (S.D.N.Y.2015) (“Wire fraud

does not apply extraterritorially.”).

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Whether there is extraterritorial jurisdiction over a conspiracy charge is determined by

whether there is extraterritorial jurisdiction over the alleged crime underlying the conspiracy.

See U.S. v. Yousef, 327 F.3d 56, 87–88 (2d Cir. 2003). Therefore, since there is no congressional

intent to overcome the presumption against extraterritorial jurisdiction for wire fraud, there is no

extraterritorial jurisdiction for the conspiracy to commit wire fraud charges in Counts Nine and

Eighty-Three. Both Counts must be dismissed as to Mr. Napout.

b. No Extraterritorial Jurisdiction for the Money Laundering Conspiracy Charges in Counts Ten and Eighty-Four

The charges against Mr. Napout for conspiracy to commit money laundering are brought

in Counts Ten and Eighty-Four. Count Ten alleges money laundering in furtherance of the

alleged “Money Laundering Conspiracy - CONMEBOL Copa Libertadores Scheme #2,” which

is based upon an alleged wire fraud. DE 102, ¶¶380-381; see also 378-379. Count Eighty-Four

alleges money laundering in furtherance of the alleged “CONMEBOL/CONCACAF Copa

America Centenario Scheme,” which is based upon an alleged wire fraud. DE 102, ¶¶503-504;

see also 501-502. Since in each instance the money laundering is expressly alleged to further a

wire fraud, and Congress has not indicated an intent for wire fraud to apply extraterritorially, the

alleged money laundering likewise cannot apply to extraterritorial conduct.

The money laundering statute, 18 U.S.C § 1956, however, allows for the possibility of

extraterritorial jurisdiction.

(f) There is extraterritorial jurisdiction over the conduct prohibited by this sectionif--

(1) the conduct is by a United States citizen or, in the case of a non-UnitedStates citizen, the conduct occurs in part in the United States; and(2) the transaction or series of related transactions involves funds ormonetary instruments of a value exceeding $10,000.

18 U.S.C. § 1956(f). Notwithstanding this Congressional directive, courts have confirmed that

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the specified unlawful activity (“SUA”) giving rise to the proceeds that are laundered must also

apply extraterritorially for extraterritorial jurisdiction over the money laundering. See United

States v. Prevezon, 122 F. Supp 3d 57 (S.D.N.Y. 2015).

The Prevezon Holdings LTD. case is instructive on this issue. In Prevezon Holdings, the

district court considered whether a civil forfeiture claim was stated under or based upon alleged

money laundering, in violation of 18 U.S.C. §§ 1956 and 1957, of the proceeds of a large tax

fraud on the Russian Treasury. 122 F.Supp.3d at 61. Among other things, Prevezon argued that

the Government “does not identify a specified unlawful activity actionable in the United States.”

Id. at 67. The district court first acknowledged the fundamental rule that “[u]nder Section 1956,

the Government must allege that a specified unlawful activity . . . occurred, and that Prevezon

then laundered the proceeds of that SUA.” Id. at 69. The district court explained that the

government had listed several potential SUA underlying the alleged money laundering, and that

one alleged SUA was “wire fraud.” Id. at 70.

The district court then (1) cited the above-discussed Second Circuit holding, in European

Community v. RJR Nabisco, Inc., that “the wire fraud statute does not apply extraterritorially,”

and (2) therefore ruled that “the wire fraud alleged here cannot qualify as the relevant SUA,

because the alleged scheme is not sufficiently domestic and is therefore not actionable under

U.S. law.” Prevezon Holdings, 122 F.Supp.3d at 70. The district court expressly found that an

“allegation that U.S. wires were used in one instance to send a kickback to the then-husband of .

. . the Russian tax official,” did not allege sufficient domestic conduct “to overcome the

presumption against the wire fraud statute's extraterritorial application” where “the Government

does not plead that the wire fraud scheme here was formed in the United States, let alone that all

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of the elements of wire fraud were completed in the United States.” Id. at 71.6

Likewise, the money laundering charges alleged against Mr. Napout in Counts Ten and

Eighty-Four cannot apply extraterritorially because the only SUA alleged as the source of the

laundered proceeds is wire fraud, for which extraterritorial jurisdiction is precluded. See also

Petroleos Mexicanos v. SK Engineering & Const. Co. Ltd., 572 Fed.Appx. 60, 61 (2d Cir. 2014)

(“[B]ecause Pemex relies exclusively on the wire fraud statute in pleading predicate acts, it has

failed to state a claim sufficient to support extraterritorial application of RICO.”); U.S. v. Lloyds

TSB Bank PLC, 639 F.Supp.2d 314, 319 (S.D.N.Y. 2009) (holding that extraterritorial provision

of Section 1956 did not apply Lloyds TSB Bank where it was alleged to be a conspirator in the

money laundering conspiracy but not in the underlying securities fraud serving as the SUA).

c. No Extraterritorial Jurisdiction for the RICO Charge in Count One

In Count One for Racketeering Conspiracy under 18 U.S.C. § 1962( c), the predicate

offenses which Mr. Napout is accused of conspiring to violate are wire fraud under 18 U.S.C. §

1343; money laundering under 18 U.S.C. §§ 1956 and 1957; travel in aid of racketeering under

18 U.S.C. § 1952; and obstruction of justice under 18 U.S.C. § 1512. D.E. 102, ¶364. As an

initial point, there are absolutely no allegations whatsoever relating Mr. Napout to any alleged

obstruction of justice (see, e.g., D.E. 102, ¶¶140-141), nor to any alleged violation of the Travel

Act.7 Rather, the predicate charges pertaining to Mr. Napout’s alleged conduct relate solely to

wire fraud and money laundering the proceeds of wire fraud.

6/ The Prevezon Holdings court ultimately denied the motion to dismiss the money launderingclaim because the Government has separately alleged another SUA of an “offense against aforeign nation,” which did qualify for extrajudicial jurisdiction. Id. at 72.

7/ Also, even if Mr. Napout had been accused of violating the Travel Act, as explained above,there is no extraterritorial jurisdiction over violations of the Travel Act. See RJR Nabisco, Inc.,764 F.3d at 140–41.

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As the Supreme Court explained in RJR Nabisco, Inc. v. European Community, “[a]

violation of § 1962 [i.e., the RICO Act] may be based on a pattern of racketeering that includes

predicate offenses committed abroad, provided that each of those offenses violates a predicate

statute that is itself extraterritorial.” 136 S.Ct. at 2103 (emphasis added). Thus, because there

is no extraterritorial jurisdiction over the charges against Mr. Napout of wire fraud conspiracy

and the money laundering conspiracy (regarding the proceeds of wire fraud), there necessarily

can be no extraterritorial jurisdiction over the RICO Count against Mr. Napout using those

offenses as RICO predicate offenses.

2. The Second Step in RJR Nabisco Analysis – Confirms Wire Fraud,Money Laundering and RICO Statutes are Not Being AppliedDomestically, and thus, No Jurisdiction

Since the alleged wire fraud, money laundering in furtherance of wire fraud, and RICO

charges as to Mr. Napout remain within the presumption against extraterritoriality, the final step

under the two step analysis described in RJR Nabisco, Inc. v. European Community is to

determine whether the wire fraud, money laundering and RICO statutes are being applied

domestically in this case. This analysis entails a determination of whether the alleged conduct

relevant to the “focus” of those charges occurred in the United States. 136 S.Ct. at 2101. Here,

it did not.

There is no allegation in the Superseding Indictment that Mr. Napout ever used any bank

accounts in the United States to receive or send money. In fact, none of Mr. Napout’s bank

accounts or properties are listed in the criminal forfeiture portion of the Superseding Indictment.

Also, contrary to the other defendants, Mr. Napout is not named as having committed or been

involved in any specific acts of bribes or kickbacks, let alone in the United States. Finally, the

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government does not allege that Mr. Napout was recorded or otherwise heard participating in

any conspiracy in the United States (or elsewhere).

To the contrary, the only evidence the government has provided of Mr. Napout’s conduct

in the United States is exculpatory, as it is an audio recording actually capturing Mr. Napout

definitively stating that he has never received money, and the undercover cooperating defendant

(Prom, #1) agreeing that Mr. Napout has not done so.

On May 1, 2014 at 8:06 pm, Mr. Napout and Promoter #1 had the following 3 minute

conversation (in Spanish) in which the government significantly failed to identify Napout:

Napout: That thing is starting to piss me off. Today I got one of them. Anybody comes to you and says that I’m in on anything, I’m not in anything. I am not.

Prom. #1: I know you are not.

Napout: Okay, glad you know that. If they use my name, f____ them.Prom. #1: I know and they did and I’ve known you too long.

Napout: Okay, just …Prom. #1: And they are liars.

Napout: The other day Eugenio came to me and he said I know you receivemoney; and I said f___ you; and he said but they told me; so I said,bring the people who say that, bring me the papers, bring me the,give me …

Prom. #1: I know, they are a bunch of assholes and that’s their way of doingthings.

Napout: I know but I am smarter than they are.Prom. #1: I know.

Napout: When it comes to the moment; they do not have to play with me. Itell you.

Prom. #1: I know.

Napout: I am not a snitch do you understand what I am saying? And I don'tcare about that part so they shouldn’t bother me, so if they comeand say anything about me.

Prom. #1 Don’t pay attention to them.

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See Sealed attachment.

In the absence of sufficient conduct by Mr. Napout in the United States, there can be no

extraterritorial jurisdiction over the alleged wire fraud, money laundering and RICO charges

against him, even if couched as conspiracy charges. See, e.g., U.S. v. Lloyds TSB Bank PLC, 639

F.Supp.2d 326, 346 (S.D.N.Y. 2009) (holding that proposed amended complaint (“PAC) does

not state a securities fraud conspiracy claim against defendant Bank because “[t]he PAC does

not allege conduct by or chargeable to the Bank which occurred in the United States to an extent

sufficient to justify subjecting the Bank to extraterritorial jurisdiction under the MLCA [Money

Laundering Control Act]”).

Moreover, even the allegations regarding the conduct of other defendants in the two

conspiracies in which Mr. Napout is alleged to be involved fail to establish a “permissible

domestic application” under the second step of RJR Nabisco, Inc., 136 S.Ct. at 2101. In the

allegations pertaining to the CONMEBOL Copa Libertadores Scheme #2, the Government

alleges that banks and bank accounts in foreign countries and in the United States were used, but

the allegations do not show that the United States was the “focus” of the wire fraud or money

laundering. See Superseding In., ¶¶ 174-185. The allegations pertaining to the

CONMEBOL/CONCACAF Copa America Centenario Scheme similarly fail to establish that the

United States was the “focus” of the wire fraud or money laundering, as the government

references only three transfers from United States banks, while averring that banks all over the

world were used.

Significantly, federal courts have repeatedly found similarly minimal contacts with the

United States insufficient to establish jurisdiction where Congress has not clearly intended

extraterritorial jurisdiction. See Petroleos Mexicanos v. SK Engineering & Const. Co. Ltd., 572

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Fed.Appx. 60, 61 (2d Cir. 2014) (holding allegations of “three minimal contacts with the United

States: the financing was obtained here, the invoices were sent to the bank for payment, and the

bank issued payment . . . are simply insufficient to sustain RICO jurisdiction,” where pleadings

showed that “the scheme was [not] directed from (or to) the United States” and “[t]he activities

involved in the alleged scheme—falsifying the invoices, the bribes, the approval of the false

invoices—took place outside of the United States”); Worldwide Directories, S.A. De C.V. v.

Yahoo! Inc., 2016 WL 1298987, at *9–10 (S.D.N.Y. 2016) (dismissing RICO claims for

insufficient domestic conduct to establish wire fraud or other predicate offense where the

“allegations supporting the domestic connections are threadbare and conclusory . . . [in stating]

that the scheme was devised in and operated from the United States, for the benefit of a domestic

corporation . . . . [and] the only fact . . . that meaningfully supports the alleged domestic

connections is the link between the draft opinions and Baker US”); Laydon, 2015 WL 1515487,

at *8-9 (S.D.N.Y.2015) (holding that “presumption against RICO's extraterritorial application,”

where wire fraud is the predicate, is not overcome where allegations - that “Defendants

completed all elements of wire fraud within the United States or while crossing United States

borders ... by coordinating their daily Yen–LIBOR and/or Euroyen TIBOR submissions and their

Euroyen-based derivatives trading positions in electronic chats routed through electronic servers

located in the United States” - “are far too attenuated to sufficiently plead that the scheme to

defraud came about in the U.S.”).

Based on the foregoing, the Superseding Indictment, and indeed the government’s

evidence, each fail to show that the focus of any alleged wire fraud involving Mr. Napout

occurred in the United States, or for that matter the focus of the wire fraud of other defendants in

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the two schemes in which Mr. Napout is alleged to be involved. Therefore, there can be no

extraterritorial jurisdiction over Mr. Napout’s alleged conduct.

C. Exercise of Extraterritorial Jurisdiction as to Juan Angel Napoutis Unreasonable

Finally, even if extraterritorial jurisdiction could apply to the conduct of Mr. Napout as

charged in the Superseding Indictment, it should not be exercised because it is unreasonable to

do so here. As explained by the district court in U.S. v. Lloyds TSB Bank PLC, 639 F.Supp.2d

314 (S.D.N.Y.2009):

[t]he rule in the Second Circuit is that to be enforceable by the courts, legislationprohibiting extraterritorial conduct must be reasonable in the circumstances. . . . [T]he Javino court cited Restatement (Third) of Foreign Relations Law of theUnited States § 403(1) (1987), which states: “[A] state may not exercisejurisdiction to prescribe law with respect to a person or activity havingconnections to another state when the exercise of such jurisdiction isunreasonable.” . . . .[O]ne of the Restatement factors [in evaluatingreasonableness] is “the extent to which another state may have an interest inregulating the activity,” § 403(3)(g). . . . Accordingly, and as an alternativeground for disposition, I conclude that even if the MLCA could be read to extendsubject matter jurisdiction over the claims the Government asserts against LloydsTSB in this case, that exercise in extraterritorial jurisdiction is unreasonable, andhence impermissible in law.

Id. at 324–25 (citing United States v. Javino, 960 F.2d 1137, 1143 (2d Cir.1992)).

Here, the exercise of extraterritorial jurisdiction over Mr. Napout would be unreasonable

in light of the lack of any alleged criminal conduct of Mr. Napout within the United States (as

shown above), and the obvious interest Paraguay would have in regulating Mr. Napout’s alleged

conduct. See Restatement (Third) of Foreign Relations Law § 403 (1987) (“(2) Whether

exercise of jurisdiction over a person or activity is unreasonable is determined by evaluating all

relevant factors, including, where appropriate: (a) the link of the activity to the territory of the

regulating state, i.e., the extent to which the activity takes place within the territory, or has

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substantial, direct, and foreseeable effect upon or in the territory; [and] (g) the extent to which

another state may have an interest in regulating the activity . . . .”).

IV. CONCLUSION

For the foregoing reasons, the charges against Mr. Napout should be dismissed for lack

of extraterritorial jurisdiction. Mr. Napout is charged with two separate wire fraud conspiracies

and money laundering conspiracies regarding the proceeds of the alleged wire frauds, and a

RICO charge using the alleged wire fraud and money laundering as predicate offenses. There is

no extraterritorial jurisdiction for wire fraud or for money laundering the proceeds of wire fraud,

and there is insufficient alleged conduct by Mr. Napout in the United States to support domestic

jurisdiction.

Since there is no jurisdiction for the wire fraud conspiracies and money laundering

conspiracies, there can be no jurisdiction for the RICO charge relying on the alleged wire fraud

and money laundering as predicate offenses. Accordingly, all charges against Mr. Napout should

be dismissed.

Respectfully submitted,

GREENBERG TRAURIG, LLP PIÑERA-VAZQUEZ LAW FIRMOne International Place International CenterBoston, MA 02110 1900 Southwest 3rd AvenueTel: (617) 310-6000 Miami, Florida 33129pappalardoj @gtlaw.com Tel: (305) [email protected] [email protected]

s/ A. John Pappalardo s/Silvia B. Piñera-Vazquez A. John Pappalardo Silvia B. Piñera-VazquezJacqueline Becerra

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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on November 21, 2016, the foregoing document was

electronically filed with the Clerk of the Court using CM/ECF. I also certify that this document

is being served simultaneously on all counsel of record in the manner specified, either by

transmission of Notices of Electronic Filing generated by CM/ECF, or in another authorized

manner.

s/Silvia B. Piñera-Vazquez Silvia B. Piñera-Vazquez, Esq.

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW …€¦ · the Copa America Centenario...

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