GRVR Attorneys Blog

Using the DOJ’s FCPA Written Opinion Procedure To Prevent Prosecution

2010-12-15T22:27:46Z

I recently read all the advisory opinions that the Department of Justice posts online (there are dozens) in regards the Foreign Corrupt Practices Act (FCPA) [as you may appreciate, this was client-related, not recreational]. The FCPA makes it illegal to bribe foreign officials. I could find no advisory opinion where the DOJ said that a transaction violated the FCPA.

It is popular for white collar crime lawyers to insist that the FCPA has somehow morphed into a strict liability statute thanks to prosecutors’ expansive definitions. Crocodile tears. Maybe there is an argument that when the Securities and Exchange Commission (as opposed to the DOJ) enforces the FCPA’s bookkeeping requirements on publicly-traded companies, this comes close to strict liability. But even that is a stretch. While the mens rea standard is not been set in concrete, prosecutors generally must prove “willfulness” and “corruptly.”

Avoiding Awful Jargon

2010-12-10T23:59:07Z

This article is about writing compliance policies that make sense, and voiding those that do not.

Did you ever see the Princess Bride, the Spielberg movie about a princess who has been kidnapped by three bad buys? There is a swashbuckling, dashing hero who sets out to rescue the princess. The kidnappers throw obstacles in front of our hero, but he overcomes each obstacle methodically and with great flair. The boss kidnapper describes each successful triumph by our hero as “inconceivable”. “It is inconceivable” he keeps repeating. Finally, one of the his fellow kidnappers tells the boss kidnapper: “You keep using that word. I do not think it means what you think it means.”

BIS warns exporters about avoiding Commodity Jurisdiction Requests

2010-08-12T11:20:40Z

BIS warns exporters about avoiding Commodity Jurisdiction Requests

The Bureau of Industry and Security (BIS) issued on August 2nd an interim final rule about Commodity Jurisdiction (CJ) determination requests. This interim final rule is a bit of a misnomer. While it adds a couple sections to the Export Administration Regulations, it does not really create any new rule, but instead clarifies how CJ determination requests work. It is mostly a warning to exporters to stop filing classification requests and requesting advisory opinions with the BIS to circumvent the filing of a CJ determination request with the Department of State Department’s Directorate of Defense Trade Controls (DDTC).

The BIS is visible irked that exporters file and obtain from the BIS classifications and advisory opinions without first making sure that a State Department license is needed. Why would exporters do this? Time is one consideration. The DDTC takes several months at a minimum to respond to a CJ determination request. In contrast, the BIS has a much shorter turnaround time, often less than a month. Exporters may also fear the additional legal exposure from having to obtain a State Department license and from registering as an arms exporter. Apparently, exporters obtain BIS classifications or an advisory opinion from the BIS as a shield against any enforcement proceedings from the State Department or just to avoid getting a State Department license. The BIS has announced through this interim rule that this ploy will no longer shield an exporter against criminal penalties from the State Department.

However, the interim rule leaves unanswered questions. First, why is the BIS handing out classifications and advisory opinions for items it does not even have jurisdiction over? Why is the agency cutting itself slack when exporters get none? The BIS’s website warns, “If you are not completely sure of the export licensing jurisdiction of an item, you should request a CJ determination.” Shouldn’t the BIS shoulder an equal or greater burden of consulting with the State Department if it is unsure whether it has jurisdiction over an item? If some exporters are using the BIS to get around the State Department (is there even any proof of this?), why isn't the BIS revamping the way it handles classification requests and requests for advisory opinions?

Second, who authorized the BIS to speak for the State Department, much less the whole federal government? The interim rule says “Advisory opinions may not be relied upon or cited as evidence that the US Government has determined that items described in the advisory opinion are not subject to the export control jurisdiction of another agency of the US Government.” An exporter gets into trouble with the State Department, not with the BIS, for failing to obtain a requisite ITAR license. Let's hear it from the State Department if it does not like when exporters use the excuse "but the BIS let me do this."

Perhaps President Obama’s much anticipated overhaul of our nation’s export laws will answer some or all of these questions. In the meantime, you have until October 1, 2010 to submit a comment to the BIS regarding the interim final rule.

For now, exporters must take this interim rule to heart and should accommodate the warning in the rule. If you will be filing Commodity Jurisdiction determination requests, your exports may take many months to go through all the export compliance steps.

There is one other development in regards to CJ determination requests. On August 4, a final rule was issued that requires the electronic filing of CJ determination requests. There is one difference between this and the earlier notice, namely, this rule was issued by the State Department, the agency with actual jurisdiction over CJ determination requests.

CBP Can Exclude Infringing Merchandise Even If It Belongs To An Importer In Bankruptcy

2010-07-12T22:57:11Z

Assume you pour money, sweat, and tears into developing a nifty new technology. You want to make sure no one steals your hard work, so you file for and receive a patent from the US Government. You find out that one of your competitors is infringing your patent. You file a complaint with the International Trade Commission (ITC) under 19 USC § 1337(a)(1)(B). That section makes unlawful “[t]he importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that ... infringe a valid and enforceable United States patent.” The ITC finds merit in your complaint and orders a formal investigation. You are confident that the ITC will order (upon the President’s approval) US Customs and Border Protection (CBP) to exclude the infringing merchandise. Then your competitor (the company importing the infringing merchandise) files for bankruptcy. You are stunned when the bankruptcy judge orders the ITC to immediately stop its investigation. While the automatic stay in bankruptcy stops collections activities against the bankrupt debtor, it normally cannot stop federal agencies from doing their job. However, this bankruptcy judge views the ITC investigation as different because it was initiated at the request of a private party, so it was not really the federal government that was being restrained.

The Oil Hits the Fan

2010-06-24T21:50:24Z

So you’re driving your family from Texas to visit the new Harry Potter theme park in Orlando. You’re under the gun. You must complete the long drive before tomorrow afternoon because you made special reservations and plans for your daughter to spend her birthday at the park. You can’t be late. But you've never been to Florida. “How hard can it be to find this park?” you think to yourself, confident that your advanced, albeit largely untested, driving and navigation skills will get you there in time and without a hitch. But your spouse keeps bugging you to buy a map “just in case” (you draw the line at GPS because you view the technology as undignified and wimpy). You give in to her demand (you hate it when she’s completely correct) and, while gassing up the car, you rifle through the collection of maps at the local convenience store. This is Texas, so the store does not have an Orlando map, but it does have a map to Plano, Texas, a city of comparable population and geographic configuration. You plop down $10.27 (includes tax) and stick the map in the glove compartment. The drive proves more challenging than you anticipated, and you need to make up several hours that you lost somewhere along the Gulf Coast. You finally reach the Florida border, but there are no road signs to the Harry Potter theme park or Orlando. You are fast approaching a fork in the road. You’re probably doomed anyway, but take the wrong road and your fate is sealed. Everyone in the car starts to panic, so your wife pulls out the new map from the glove compartment, opens it and asks “Honey, where’s the map to Orlando?” [Disclaimer: the story you just read is completely fictional, excepting the part about the new Harry Potter park, which rocks from all accounts].

The Real Law of Iron Man 2

2010-05-16T04:04:12Z

The blockbuster movie season has started. The movies are expensive, breezy, predictable, and highly enjoyable, especially the younger you are. The critics hate them, but as summer approaches, the public retreats to accessible escapism. The studios work mightily at finding just the right balance between familiarity (often in the form of sequels) and thrills. While Avatar created a whole new world of people, lexicon, and topography, its themes and story line are viewer-friendly and familiar. They have to be. Movies that stray away too much from concrete reality lose audience.

But who judges if a movie is real enough? As we are all human, we are all equally expert at judging motives of all parties to a movie plot. Scientists are often asked about the technology or gadget that is featured in a movie ("can people really do that?"). But lawyers are rarely asked whether events in a movie are even possible under the law. Lawyers would have a field day if asked. For example, CSI movies and TV shows greatly exaggerate the reliability of forensic “science”, the prominence of CSI personnel in resolving a crime, and the admissibility at trial of the evidence generated