• Justice Department’s Kleptocracy Forfeiture Action Against Real Estate Allegedly Linked to Honduran Bribery Scheme Underscores U.S. Government’s Expansive Jurisdiction
  • February 25, 2015 | Author: Manuel F. Gomez
  • Law Firm: Sheppard, Mullin, Richter & Hampton LLP - New York Office
  • Earlier this month, the U.S. Department of Justice filed a civil forfeiture action seeking to recover certain Louisiana real estate allegedly purchased with funds traceable to a $2 million bribe paid to a former Honduran government official in the Central American country. The DOJ’s action in United States of America v. Real Property Located at 1404 North Highway 190, No. 2:15-cv-00074 (E.D. La. Jan. 13, 2015), reiterates its commitment to seizing proceeds of foreign official corruption as part of its Kleptocracy Initiative, and underscores the U.S. Government’s potentially expansive jurisdiction over foreign entities based on bribes with little connection to the United States.

    According to the complaint, Dr. Mario Roberto Zelaya Rojas, the former Executive Director of the Honduran Institute of Social Security (HISS), solicited and accepted $2.08 million in bribes from Compania De Servicios Multiples, S. de R. L. (COSEM) in exchange for prioritizing and expediting payments owed to COSEM under a $19 million contract with HISS. Zelaya also allegedly instructed COSEM to bribe two members of HISS’s Board of Directors charged with overseeing the COSEM contract. To conceal the illicit payments, COSEM allegedly sent the bribes through an affiliate company. The complaint further alleges that the bribe proceeds were then laundered into the United States and used by Zelaya and his brother to acquire real estate in the New Orleans area.

    The Government’s action seeks forfeiture of nine properties acquired with the proceeds of Zelaya’s alleged bribery scheme. As property allegedly used to launder money in violation of federal anti-money laundering law, see 18 U.S.C. §§ 1956 and 1957, the real estate is subject to civil forfeiture under 18 U.S.C. § 981(a)(1)(C) and (A).

    This forfeiture action is notable in many respects. For one, that the DOJ is pursuing an action based on foreign criminal conduct connected to the United States only after the fact underscores the breadth of U.S. jurisdiction with even the slightest of jurisdictional hooks. It also illustrates this country’s continued commitment to its No Safe Haven policy, which the United States, along with 53 other jurisdictions around the world, have committed to since the early part of the last decade to “deny safe haven to the corrupt, those who corrupt them, and their assets.” Against this enforcement backdrop, entities operating overseas will want to review their internal controls to ensure they are set up to prevent the sort of illicit foreign conduct that could serve as the basis for U.S. law enforcement action.