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United States v. Kay - 513 F.3d 432 (5th Cir. 2007)


The Foreign Corrupt Practices Act, 15 U.S.C.S. §§ 78dd-2, 78ff, makes it a crime to (1) willfully; (2) make use of the mails or any means or instrumentality of interstate commerce; (3) corruptly; (4) in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to; (5) any foreign official; (6) for purposes of either influencing any act or decision of such foreign official in his official capacity or inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official or securing any improper advantage; (7) in order to assist such corporation in obtaining or retaining business for or with, or directing business to, any person.


Defendants David Kay and Douglas Murphy, executives of American Rice, Inc. (“ARI”), an American company that exported rice to Haiti in the 1990's, paid Haitian officials to reduce duties and taxes on their rice. In 1991, ARI retained a Houston law firm to represent it in a civil suit. Preparing for this suit, the lawyers asked Kay for background information on ARI’s rice business in Haiti. Kay disclosed that they had paid Haitian officials, but explained that doing so was part of doing business in Haiti. The lawyers then informed the ARI’s directors, who self-reported these activities to government regulators. The SEC investigated, and Murphy and Kay were prosecuted for violating the Foreign Corrupt Practices Act ("FCPA”). The district court dismissed the indictment, concluding that the FCPA did not cover bribes to reduce duties and taxes. The appellate court reversed the dismissal of the indictment and remanded to the district court, finding that the indictment fell within the scope of the FCPA. On remand, a jury convicted both defendants. On appeal, the defendants argued that the statute failed to give fair notice that their conduct was illegal and that proceeding to trial with the late arriving clarification of the Act violated their due process rights.


Did the FCPA fail due to statutory vagueness to give defendants fair notice that their conduct was illegal?




Affirming on appeal, the Court held that defendants had fair notice of the prohibited conduct because the FCPA was not statutorily vague. According to the Court, the FCPA delineated seven standards that may lead to a conviction. All were phrased in terms that were reasonably clear so as to allow the common interpreter to understand their meaning. According to the Court, a person of common intelligence would have understood that bribing foreign officials was illegal. The Court averred that defendants failed to show that the FCPA, and the district court’s application if it, failed to provide them fair notice. The court concluded that the government proved that defendants willfully, not accidentally, violated 15 U.S.C.S. § 78dd-1. As such, neither the jury instructions nor the indictment were defective, as they correctly described the required mens rea.

As for the applicable standards of review: An appellate court reviews de novo a district court's denial of a motion to dismiss an indictment. An appellate court reviews de novo whether application of the appellate court's last opinion in a particular case violates the Due Process Clause

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