Case 1:10-cr-20893-PCH Document 49 Entered on FLSD Docket 02/28/2012 Page 1 of 14
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO: 10-CR-20893-HUCK
UNITED STATES OF AMERICA,
vs.
MANUEL SALVOCH,
Defendant.
/
DEFENDANT MANUEL SALVOCH’S
MEMORANDUM OF LAW IN AID OF SENTENCING
Manuel Salvoch (“Mr. Salvoch”) files this Memorandum of Law in response to the United
States’ Motion for Downward Departure pursuant to Section 5k1.1 (the “5K Motion”). United States
v. Salvoch, Case No. 1:10-cr-20893-PCH (D.E. # 35).
The Government’s recommendation of 36 months in prison for Mr. Salvoch is inconsistent
with sentencing precedent in the Southern District of Florida and across the country, as discussed
below. Courts have departed downward, significantly, from sentencing recommendations for
cooperators.1 Mr. Salvoch played a minor role in a scheme created and directed by his company’s
most senior executives. In light of Mr. Salvoch’s immediate acceptance of responsibility and his
significant and prolonged cooperation with the Government’s investigation and prosecution over the
past five years, as well as the Government’s unreasonable delay in prosecuting this case, the
appropriate sentence for Mr. Salvoch is one year of probation with six months of home confinement,
as more fully demonstrated below.
1
Stein, Gary, Sentencing of Individuals in FCPA Cases, Law Journal Newsletter: Business
Crimes Bulletin, Jan. 2011, attached hereto as Exhibit A.
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FACTUAL AND PROCEDURAL SUMMARY
1.
Latin Node, Inc. (“LatiNode”), was a Miami-based provider of wholesale
telecommunications services that sought business with Empresa Hondureña de Telecomunicaciones
(“Hondutel”), the state-owned telecommunications authority in Honduras.
2.
LatiNode was led by founder, Jorge Granados, who served as Chairman and CEO
from the company’s inception in 1999 through November 2007. Mr. Granados was a significant
shareholder of LatiNode.
3.
Co-defendant Juan Pablo Vasquez worked at LatiNode from November 2000 through
November 2007 and held such titles as Chief Commercial Officer, Vice President of Sales and Vice
President, Wholesale Division. During that time, Mr. Vasquez was responsible for, among other
things, LatiNode’s commercial and sales relationships with long distance carriers. Mr. Vasquez was
also a significant shareholder of LatiNode.
4.
Co-defendant Manuel Caceres worked at LatiNode from September 2004 through
November 2007 and served as Vice President for Business Development. Mr. Caceres was a citizen
of Honduras and was responsible for, among other things, developing LatiNode’s business in
Honduras. Mr. Caceres reported to Mr. Vasquez. Mr. Caceres was not a shareholder of LatiNode.
5.
Of the four co-defendants, Mr. Salvoch worked at LatiNode for the briefest stint, from
March 2005 through November 2007. He served as Chief Financial Officer during that time. Mr.
Salvoch was not a shareholder of LatiNode.
6.
In December 2005, LatiNode was the sole winner of an “interconnection agreement”
with Hondutel. The agreement permitted LatiNode to use Hondutel’s telecommunication lines for
long distance services between the United States and Honduras. LatiNode was required to pay
Hondutel a fixed rate for calls to Honduras.
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7.
In January 2006, after the contract was awarded, Manuel Zelaya became president of
Honduras. He appointed his nephew, Marcelo Chimirri, to head Hondutel.
8.
Several months after LatiNode began doing business with Hondutel, Mr. Caceres
traveled to Honduras to investigate why the amounts of minutes being used pursuant to the
interconnection agreement had decreased. Despite the contract between the parties, other companies
had been allowed into Honduras at better rates.
10.
Caceres met with Chimirri, President Zelaya’s nephew, and learned that LatiNode
would need to bribe Hondutel officials or lose its contract. LatiNode CEO Granados authorized
Caceres to begin negotiating the bribe payments to keep the interconnection agreement in place and
to receive reduced rates that would increase LatiNode’s viability in the Honduran market.
11.
The bribe rate was $0.01 per minute of long distance traffic from LatiNode. Between
September 2006 and June 2007, LatiNode paid approximately $500,000 in bribes to the Hondutel
officials. A significant portion of those payments were made without the authorization or knowledge
of Mr. Salvoch.
12.
The Government fingered Granados as a “hands-on micromanaging CEO who was
a micromanager of this bribe scheme. [Granados] directed and authorized every payment.” United
States v. Granados, Case No. 1:10-cr-20881-JAL (S.D. Fla. 2011) (D.E. #88, pg. 35, lines 12-25)
(emphasis added).
13.
At the direction of CEO Granados, Mr. Salvoch’s role in the scheme was to write and
authorize a small number of money transfers. Manuel Caceres specifically testified that Salvoch
worked to carry out Granados’ orders. Id. at 16.
14.
In 2007, Granados entered into negotiations to sell LatiNode to eLandia International
Inc. (“eLandia”). eLandia discovered the bribes and, after conducting its own investigation, with
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which Mr. Salvoch fully cooperated and assisted, made a voluntary disclosure of the conduct to the
U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”). Mr.
Salvoch has been unable to work or provide for his family since his initial cooperation with the
eLandia investigation. In April 2009, LatiNode pled guilty and was sentenced to a $2 million fine.
United States v. Latinode, Case No. 09-20239-CR-HUCK.
15.
Mr. Salvoch “has been cooperating with the government since May 14, 2008” and
has provided “substantial assistance in the investigation and prosecution of individual targets.” 5K
Motion (D.E. # 35) at 1. According to the Government,
[o]n December 14, 2010, based in significant part on Salvoch’s cooperation,
a grand jury returned an indictment against Jorge Granados and Manuel
Caceres for criminal violations of the Foreign Corrupt Practices Act,
international money laundering and conspiracy to commit these crimes. On
May 18, 2011, Caceres pleaded guilty to conspiracy to violate the FCPA, and
on May 19, 2011, Granados pleaded guilty to the same charge, again based
in significant part on the cooperation of Salvoch.
Id. at 2. As a result, the Government requested a downward departure of 40% from the Sentencing
Guidelines range of 60 months (the statutory maximum sentence. Id. However, the below survey
of sentencing precedent for similarly-situated, cooperating defendants indicates that a sentence of
36 months’ imprisonment runs counter to courts’ final sentencing judgments in these matters.
16.
On January 11, 2011, Salvoch pled guilty to a one-count bill of information charge
of conspiracy to violate the Foreign Corrupt Practices Act (the “FCPA”), 18 U.S.C. § 372.
17.
“Ringleader” Granados was sentenced on July 7, 2011 by Judge Lenard to 46 months
imprisonment and 2 years of supervised release. Granados, 10-CR-20881-JAL (S.D. Fla. 2011)
(D.E. # 85). Judge Lenard varied down 14 months from the statutory maximum sentence of 60
months.
18.
Mr. Vasquez’s sentencing is currently set for March 19, 2012 before Judge Seitz. Mr.
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Caceres’ sentencing continues to be indefinitely postponed due to the availability of certain
“classified information” relevant to his sentencing.
19.
At the May 20, 2011 sentencing hearing before Your Honor, undersigned counsel
argued that probation was an appropriate sentence for Mr. Salvoch. Your Honor requested additional
information on the cases presented by undersigned counsel. This Sentencing Memorandum provides
analysis of cases analogous to Mr. Salvoch’s case, including Southern District of Florida precedent.
MEMORANDUM OF LAW
Sentencing of individual defendants is ultimately a matter of judicial, not prosecutorial,
discretion. See United States v. Booker, 543 U.S. 220 (2005). Sentencing courts are free to impose
any sentence within the statutory range established by Congress, subject to appellate review for
reasonableness. Id. at 264; see United States v. Wright, 607 F. 3d 708, 719 (11th Cir. 2010).
Given this terrain, over the past several years, courts have rejected the sentences proposed
by the DOJ for violations of the FCPA. See Exhibit A, hereto. This trend is especially true in
matters involving defendants, like Mr. Salvoch, who cooperated with the Government. Id. As
discussed more fully below, precedent from the Southern District of Florida strongly supports this
trend. Collectively, FCPA sentencing precedent supports our recommendation of one year of
probation and six months of home confinement as an appropriate sentence for Mr. Salvoch given his
extensive cooperation with authorities and given the Government’s prolonged delays in prosecuting
this case.
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I.
SALVOCH PARALLELS SIMILARLY SITUATED DEFENDANTS WHO
RECEIVED SENTENCES DEPARTING FROM DOJ RECOMMENDATIONS,
INCLUDING PROBATION
A.
Southern District of Florida Precedent
United States v. Esquenazi, et al.
Six individuals involved in a telecommunications-related bribery scheme to government
officials in Haiti were sentenced by Judge Jose E. Martinez. United States v. Esquenazi, et al., 09CR-21010-JEM (S.D. Fla. 2009), and its related cases involve an FCPA prosecution that, despite
being far larger in scope than LatiNode, is strongly illustrative of why probation is appropriate for
Mr. Salvoch. The sentences range from an FCPA-record 15 years, for convictions at trial, to 6
months for a cooperator who pled guilty. The 6 month sentence parallels Mr. Salvoch’s involvement
in the LatiNode matter.
On the upper bound of the Esquenazi sentences are the orchestrators of the scheme. Joel
Esquenazi, former president, and Carlos Rodriguez, former executive vice president, each of Terra
Telecommunications Corp., were convicted at trial in August 2011 and later sentenced to 180
months and 84 months, respectively, for their roles in bribing Haitian government officials. Id.
They were convicted of one count of conspiracy to violate the FCPA and wire fraud; seven counts
of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering.
Clearly, these charges are more numerous than the lone charge to which Mr. Salvoch pleaded guilty.
A third defendant, Robert Antoine, former director of international affairs for Haiti Teleco,
pleaded guilty to one count of conspiracy to commit money laundering and was sentenced to 48
months in prison. The Government recommended that the sentencing guideline offense be reduced
by two levels. Plea Agreement, United States v. Antoine, 09-CR-21010 (S.D.Fla. 2010) (No. 135).
The lowest sentence in the range recommended by the DOJ was 70-87 months. Thus, the final
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determination of 48 months was a roughly 45% reduction. All factors considered, Antoine’s role
in the scheme is distinguishable from Mr. Salvoch’s involvement in the LatiNode matter because
Antoine was a direct recipient of the bribes–he admitted to receiving more than $1 million. Id.
Judge Martinez also sentenced Juan Diaz, controller of the shell companies that funneled
more than $1 million in bribe money to the Haitian telecommunications officials, to 57 months in
prison. United States v. Diaz, 09-20346-CR-JEM (S.D. Fla. 2009). Diaz had pleaded guilty to a
one-count FCPA charge. Unlike Mr. Salvoch’s case before this Court, the Government did not file
a downward departure from the sentencing guidelines for Diaz–nor did the DOJ argue for a
downward departure. Plea Agreement, Diaz, (2009) (No. 15 at p. 5). DOJ recommended a guideline
calculation of at least 78 to 87 months in prison. Id. at p. 5. Diaz received 57 months.
Antonio Perez, also involved in the scheme, was sentenced to 24 months in prison following
his guilty plea to a sole FCPA count. See United States v. Perez, 09-CR-20347-JEM (S.D. Fla.
2009). Perez, the controller of one of the three telecommunications companies involved in the case,
was connected to approximately $674,193 in bribes from his employer to Haitian government
officials during the conspiracy’s course from 1998 through 2003. The Government did not file a
motion for downward departure. Instead, it recommended that the court reduce by two levels the
sentencing guidelines level applicable to Perez’s offense because he “timely notif[ied] authorities
of his intention to enter a plea of guilty” and saved judicial resources accordingly. Plea Agreement,
Perez, (2009) (No. 13 at pp. 3-4). Perez’ case is similar to Mr. Salvoch’s in regards to the bribe
amount.
However, the sentence is distinguishable because Mr. Salvoch gave considerable
investigative assistance to authorities, in addition to his timely indication that he would plead guilty.
The defendant that most closely parallels Mr. Salvoch is Jean Fourand. Fourcand, sentenced
to six months in prison, pled guilty to one count of money laundering for receiving and transmitting
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bribe monies in the scheme. United States v. Fourcand,10-CR-20062-JEM (2010). The Government
did not file a motion for downward departure pursuant to Section 5k. Id. It did recommend that
Judge Martinez reduce its sentencing guidelines by two levels based upon Fourcand’s “recognition
and affirmative and timely acceptance of personal responsibility.” Plea Agreement, Fourcand (No.
14 at p. 7). Based on parallel involvement, Mr. Salvoch’s situation is most analogous to this
defendant. Fourcand admitted to acting as a middle-man for the payments from Telco through Juan
Diaz’s companies on through to Antoine, the defendant that received more than $1 million in bribes.
Mr. Salvoch’s role parallels Fourcand in that both laundered funds at the direction of higher-ups in
the scheme. However, Mr. Salvoch, unlike Fourcand, cooperated immediately. Mr. Salvoch has
benefitted from a Government Motion for Downward Departure; Fourcand did not. Thus, the six
months that Fourcand received in prison should serve as an upperbound for the sentence imposed
against Mr. Salvoch. Again, this Motion respectfully argues a year of probation and six months
home confinement as an appropriate sentence given the breadth of circumstances.
United States v. Sapsizian
On September 25, 2008, Judge Seitz (who will be sentencing Mr. Vasquez on March 19,
2012) sentenced Christian Sapsizian, a former Alcatel telecommunications executive, to 30 total
months in prison for two FCPA charges (as opposed to Salvoch’s one). Judgment, United States v.
Sapsizian, 06-CR-20797 (S.D. Fla. 2008) (No. 69). The defendant was involved in a scheme paying
$2.5 million in bribes (as opposed to approximately $500k here) to senior Costa Rican government
officials in order to obtain a mobile telephone contract from its state-controlled telecommunications
authority. Alcatel was awarded a $149 million mobile telephone contract in August 2001.
Sapsizian, a French citizen, cooperated with the Government since pleading guilty before
Judge Seitz.
Government’s Motion for Downward Departure, Sapsizian, (No. 65). The
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Government’s recommendation was a sentencing range between 61 to 75 months imprisonment.
Judge Seitz departed from this recommendation by more than fifty-percent on a two-count
indictment. Halving the Government’s recommendation for Salvoch would result in a term in prison
of 19 months. However, probation is more appropriate for Salvoch because of mitigating factors that
did not exist in the Sapsizian case, such as the Government’s delays in prosecuting this case and Mr.
Salvoch’s minimal involvement..
Accordingly, Sapsizian’s sentence is distinguishable from Salvoch’s situation on at least
three points. First, the bribery amounts Sapsizian admitted to being involved with–$2.5 million-were more than five times the $500,000 or so that Salvoch moved at Granados’ direction, and
Salvoch has repeatedly explained to the Government that he was not aware that most of the payments
he authorized of the $500,000 were bribe payments.
Second, Salvoch immediately began
cooperating with the Government in its investigation–before his guilty plea--while Sapsizian began
to cooperate after pleading guilty to two counts.
Third, Salvoch faces one FCPA count while
Sapsizian faced two.
Summary
Southern District of Florida sentencing precedent for defendants, as described above, for
telecommunications-related FCPA bribery offenses reflects the general propensity of courts to
significantly depart from DOJ recommendations. Nonetheless, none of the cases detailed above are
closely tailored to the present matter given the existence of many mitigating factors that work in Mr.
Salvoch’s favor. As discussed below, defendants in other jurisdictions who cooperated to a degree
as significant as Mr. Salvoch have, in fact, received probation.
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B.
NATIONAL SENTENCING PATTERNS FOR COOPERATORS IN FCPA
CASES SUPPORT PROBATION AS AN APPROPRIATE SENTENCE FOR
MR. SALVOCH
A defendant involved in an FCPA scheme with bribes exceeding $3 million received
probation because of the presence of mitigating factors. Specifically, the defendant, like Salvoch,
faced a Hobbesian choice of going along with a bribery scheme or risking the loss of his job. Bobby
Jay Elkin, also a cooperator like Salvoch, pleaded guilty to a single FCPA charge and drew three
years’ probation, notwithstanding the Government’s 38-month imprisonment request, for bribes
worth approximately $3,000,000. United States v. Elkin, 4:10-CR-00015 (W.D. Va.. 2010). At the
direction of an American tobacco company, Elkin, an executive in that company, bribed Kyrgyztan
officials over an eight-year period in return for preferential treatment. During sentencing, U.S.
District Court Judge Jackson Kiser stated probation was appropriate because of the detailed help
Elkin gave investigators and that Elkin faced “either you do this or lose your job.” Elkin, (D.E. #29,
pg. 25) (emphasis added). The detailed help which Salvoch has given investigators is described in
no uncertain terms as “significant” time and again in the DOJ’s motion. Gov.’s Sentencing Mot.
A case in the District of New Jersey bears strong parallels to the present matter. Two
cooperators in a foreign telecommunications bribery scheme received probation, as well as home and
community confinement. See United States v. Ott, 07-CR-608 (D. N.J. 2007); see also United States
v. Young, 07-CR-609 (D. N.J. 2007).
Steven Ott, former vice president of global
telecommunications company ITX, was sentenced to six months in a community confinement center,
six months home confinement, and five years of probation for bribes of $267,000 for
telecommunications contracts in Africa. His conspirator, former ITX managing director Roger
Michael Young, received 3 months’ home confinement and 5 years’ probation for bribes worth
$267,000. Ott and Young had pleaded guilty to FCPA charges for illegal commissions to employees
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of foreign state-owned telecommunications carriers. A third co-conspirator received 18 months’
imprisonment, including 6 months in a halfway house. United States v. Amoako, 06-CR-702 (D. N.J.
2006). However, Amoako had been the chief negotiator of many of the bribes involved. Ott and
Young, the executives who received probation and confinement, had roles more like Salvoch’s.
In a District for the District of Columbia case, a defendant received a sentence of 1 year and
1 day of imprisonment for bribes worth $400,000. The defendant had pled guilty to two other counts
besides the FCPA violation, resulting in a total sentence distinguishable from Salvoch’s. United
States v. Pitchford, 02-CR-365 (D.D.C. 2002).
In Pennsylvania, two cooperators were sentenced to probation in a scheme where bribes of
more than $250,000 were paid to Vietnamese government officials in exchange for contracts. See
United States v. Kim Nguyen, 08-CR-522 (E.D. Pa. 2010) (sister of company president sentenced to
two years of probation and ordered to pay a $20,000 fine); United States v. Lukas, 08-CR-522 (E.D.
Pa. 2010) (former business partner sentenced to two years of probation and ordered to pay $1,000
fine). The government had sought jail time for both.
These cases illustrate a pattern of courts across the country taking significant downward
departures from the sentences recommended by the Department of Justice. The summary provided
in Exhibit A also offers a salient summary of precedent for cooperators.
II.
Salvoch’s Sentence Should Be Commensurate With Precedent & His Cooperation
As illustrated above, courts in myriad cases have departed downward significantly from DOJ
sentencing recommendations–a trend further evident in matters involving cooperators. See Ex. A.
In evaluating Salvoch’s assistance to the Government, the Court should evaluate the “significance
and usefulness” of his assistance and consider “the truthfulness, completeness, and reliability” of the
information he provided, along with the “nature and extent of his assistance” and the “timeliness”
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of his assistance. U.S.S.G. § 5K1.1. Salvoch cooperated immediately with the Government’s
investigation, after his full cooperation during the internal LatiNode investigation.
As a result of Salvoch’s cooperation, the two most culpable participants were indicted, pled
guilty, and have been sentenced to jail time. Granados is serving a 46 month setence. Salvoch was
debriefed several times and agreed to testify against against both Granados and Caceres. He
provided documentary evidence to the Government in aid of its investigatory efforts. Mr. Salvoch
helped DOJ prepare the case prior to the grand jury. Based on these mitigating factors and the
sentences described above, Salvoch should receive a reduction greater than the 40% reduction
recommended by the Government. Specifically, it is submitted before your honor that Salvoch
receive a sentence of one year of probation with six (6) months home confinement.
Salvoch is by no means an innocent bystander in this case. However, his role, essentially,
was to abide by the executive orders of Granados in a scheme that was designed, at its core, to allow
LatiNode to compete in the Honduran telecommunications market. It is regrettable that the
“business as usual” model in the international telecommunications industry often involves bribery
payments to executives of state-controlled entities. Indeed, this status quo is made clear by the
Government’s righteous enforcement actions described above, specifically those involving other
telecommunications firms here in the Southern District of Florida.
Less clear is the appropriate punishment for a crime that speaks more to the greed and
dysfunction of governmental entities abroad than any malfeasance of corporate entrepreneurs here
at home. The stepped-up enforcement of the Foreign Corrupt Practices Act has frustrated American
businesses who are seeking clarity for compliance.2
2
Aruna Viswanatha, U.S. corporations beg clarity on anti-bribery law, Reuters, Feb. 21,
2012, http://www.reuters.com/article/2012/02/21/us-fcpa-guidance-idUSTRE81K1OV20120221
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Obviously, this matter has weighed considerably upon Mr. Salvoch’s conscious and soul.
He is laden with regret. To make amends, he cooperated fully and immediately. He took every step
possible to advance the Government’s investigation. He has learned his lesson, so to speak, very
well. He is now dedicated to proceeding forward honestly and lawfully to put his life to use--his
talents and knowledge--for the positive benefit of society. A lengthy sentence would only prolong
Salvoch’s ordeal and further burden our court and prison system. It has been more over four years
since the Government’s investigation began, and a year since Salvoch pled guilty. He continues to
live–and will live–with this burden every day. Based on judicial precedent, it is not necessary that
he do so behind bars.
All parties and the Clerk of Court are directed to also serve any claims or papers filed herein
upon the undersigned counsel for Defendant, MANUEL SALVOCH.
Dated on this 28th day of February, 2012.
Respectfully submitted,
PODHURST ORSECK, P.A.
25 West Flagler Street, Suite 800
Miami, FL 33130
(305) 358-2800 / Fax: (305) 358-2382
Counsel for Defendant
By:
/ s / Robert C. Josefsberg, Esq.
ROBERT C. JOSEFSBERG, ESQ. (FBN 040856)
[email protected]
RAMON A. RASCO, ESQ. (FBN 0617334)
[email protected]
Case 1:10-cr-20893-PCH Document 49 Entered on FLSD Docket 02/28/2012 Page 14 of 14
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 28th day of February, 2012, I electronically filed the
foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing
document is being served this day on all counsel of record identified on the attached Service List in
the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF
or in some other authorized manner for those counsel or parties who are not authorized to receive
electronically Notices of Electronic Filing.
/ s / Robert C. Josefsberg, Esq.
ROBERT C. JOSEFSBERG, ESQ.
RAMON A. RASCO, ESQ.