in the united states court of appeals for the ninth ... · no. 17-50358 in the united states court...

No. 17-50358

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

HEON-CHEOL CHI,

Defendant-Appellant.

Appeal from the United States District Courtfor the Central District of California

Honorable John F. Walter, District Judge Presiding

APPELLANT’S OPENING BRIEF

BENJAMIN L. COLEMANCOLEMAN & BALOGH LLP1350 Columbia Street, Suite 600San Diego, California 92101Telephone: (619) 794-0420

Attorneys for Appellant Heon-Cheol Chi

Case: 17-50358, 03/26/2018, ID: 10813023, DktEntry: 12, of 54

TABLE OF CONTENTS

Table of authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Statement of jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Bail status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Statement of the issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Pertinent statutory provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Statement of the case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Summary of argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

I. The district court erred by failing to dismiss the indictment and ininstructing the jury because it misinterpreted “bribery of a public official”under 18 U.S.C. §§ 1956(c)(7)(B) and 1957 as only meaning Koreanbribery rather than requiring the generic federal definition... . . . . . . . . . . . . . . . . 11

A. Introduction and standard of review.. . . . . . . . . . . . . . . . . . . . . . . . . 11B. The statutes require generic federal bribery of a public official. . . . 14C. The jury instructions were erroneous, requiring a new trial. . . . . . . 21D. This Court should order dismissal of the indictment. . . . . . . . . . . . . 28

II. The district court incorrectly instructed the jury on the bribery offenseunderlying the 18 U.S.C. § 1957 violation, even if only Korean law wereapplicable.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

A. Introduction and standard of review.. . . . . . . . . . . . . . . . . . . . . . . . . 30B. The instruction failed to include corrupt and influence elements. . . 33C. Defective official act and public official elements.. . . . . . . . . . . . . . 35D. The error was not harmless beyond a reasonable doubt.. . . . . . . . . . 37

i


III. The government presented insufficient evidence because it failedto prove beyond a reasonable doubt that the specific transaction allegedin the single count of conviction was traced to dirty funds as requiredunder 18 U.S.C. § 1957... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Certificate of related cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Certificate of compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Certificate of service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ii


TABLE OF AUTHORITIES

CASES

Arthur Andersen LLP v. United States,544 U.S. 696 (2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,25,34

Bond v. United States,134 S. Ct. 2077 (2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Buck v. Davis,137 S. Ct. 759 (2017). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,38

Burgess v. United States,553 U.S. 124 (2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,35

Descamps v. United States,570 U.S. 254 (2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,15

Dixon v. Williams,750 F.3d 1027 (9 Cir. 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,35th

Esquivel-Quintana v. Sessions,137 S. Ct. 1562 (2017). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,17

Ho v. Carey,332 F.3d 587 (9 Cir. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,35th

Leocal v. Ashcroft,543 U.S. 1 (2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Man-Seok Choe v. Torres,525 F.3d 733 (9 Cir. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19th

Mathis v. United States,136 S. Ct. 2243 (2016). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,34

iii


McDonnell v. United States,136 S. Ct. 2355 (2016). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Neder v. United States,527 U.S. 1 (1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,37

Olivas-Motta v. Holder,746 F.3d 907 (9 Cir. 2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,20th

Perrin v. United States,444 U.S. 37 (1979). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Scheidler v. National Organization for Women, Inc.,537 U.S. 393 (2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Shafer v. South Carolina,532 U.S. 36 (2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,38

Sullivan v. Louisiana,508 U.S. 275 (1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,37

Taylor v. United States,495 U.S. 575 (1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,16

Torres v. Lynch,136 S. Ct. 1619 (2016). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

United States v. All Assets Held at Bank Julius Baer & Company, Ltd.,571 F. Supp. 2d 1 (D.D.C. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

United States v. Awan,459 F. Supp. 2d 167 (E.D.N.Y. 2006). . . . . . . . . . . . . . . . . . . . . . . . . . 19,20

United States v. Carll,105 U.S. 611 (1881). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

iv


United States v. Caruto,532 F.3d 822 (9 Cir. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,38th

United States v. Chao Fan Xu,706 F.3d 965 (9 Cir. 2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,33th

United States v. Corona-Sanchez,291 F.3d 1201 (9 Cir. 2002) (en banc). . . . . . . . . . . . . . . . . . . . . . . . . . . . 14th

United States v. Cruz,554 F.3d 840 (9 Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39th

United States v. DuBo,186 F.3d 1177 (9 Cir. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28th

United States v. Gaudin,515 U.S. 506 (1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

United States v. Goyal,629 F.3d 912 (9 Cir. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39th

United States v. Hess,124 U.S. 483 (1888). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

United States v. Jeong,624 F.3d 706 (5 Cir. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18th

United States v. Lazarenko,564 F.3d 1026 (9 Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,18th

United States v. Leal-Del Carmen,697 F.3d 964 (9 Cir. 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,38th

United States v. Loe,248 F.3d 449 (5 Cir. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,40th

v


United States v. Munguia,704 F.3d 596 (9 Cir. 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,33th

United States v. Nardello,393 U.S. 286 (1969). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

United States v. Omer,395 F.3d 1087 (9 Cir. 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,28th

United States v. One 1997 E35 Ford Van,50 F. Supp. 2d 789 (N.D. Ill. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

United States v. Pirro,212 F.3d 86 (2d Cir. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

United States v. Real Property Known as United 5B of the Onyx Chelsea,2011 WL 4151775 (S.D.N.Y. Aug. 26, 2011). . . . . . . . . . . . . . . . . . . . . . . 20

United States v. Resendiz-Ponce,549 U.S. 102 (2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

United States v. Rutgard,116 F.3d 1270 (9 Cir. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39th

United States v. Santos,553 U.S. 507 (2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

United States v. Sherbondy,865 F.2d 996 (9 Cir. 1988). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21th

United States v. Silver,864 F.3d 102 (2d Cir. 2017). . . . . . . . . . . . . . . . . . . . . . . . . . . 22,23,28,35,38

United States v. Steffen,687 F.3d 1104 (8 Cir. 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29th

vi


United States v. Sun-Diamond Growers of California,526 U.S. 398 (1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,26,33,35

United States v. Vazquez-Hernandez,849 F.3d 1219 (9 Cir. 2017). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,34th

United States v. Viayra,365 F.3d 790 (9 Cir. 2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39th

STATUTES

8 U.S.C. § 1101. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

18 U.S.C. § 201. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

18 U.S.C. § 981. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

18 U.S.C. § 1952. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

18 U.S.C. § 1956. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

18 U.S.C. § 1957. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

18 U.S.C. § 3231. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

28 U.S.C. § 1291. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RULES

Fed. R. App. P. 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Fed. R. Crim. P. 26.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Fed. R. Crim. P. 29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,8,39

vii


MISCELLANEOUS

Black’s Law Dictionary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,26

Convention on Combating Bribery of Foreign Public Officialsin International Business Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

H.R. Rep. No. 107-250. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,19

South Korea Criminal Code Article 129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

viii


IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, ) U.S.C.A. No. 17-50358) U.S.D.C. No. 16CR00824-JFW

Plaintiff-Appellee, ) )

v. ))

HEON-CHEOL CHI, ))

Defendant-Appellant. )___________________________________ )

STATEMENT OF JURISDICTION

Appellant Heon-Cheol Chi appeals his conviction for engaging in a

monetary transaction in property derived from specified unlawful activity under 18

U.S.C. § 1957. The district court asserted jurisdiction pursuant to 18 U.S.C. §

3231 and entered the judgment on October 3, 2017. CR 202; ER 202. The notice1

of appeal was filed on October 13, 2017, ER 201, within the 14-day period in Fed.

R. App. P. 4(b). This Court has jurisdiction under 28 U.S.C. § 1291.

BAIL STATUS

Dr. Chi is in custody as of the submission of this brief, but he is

scheduled for release on May 8, 2018.

“CR” refers to the Clerk’s Record. “ER” refers to the Excerpts of1

Record. “RT” refers to the Reporter’s Transcript of the trial.


STATEMENT OF THE ISSUES

1. Whether the district court erred by failing to dismiss the indictment

and in instructing the jury because it misinterpreted “bribery of a public official”

under 18 U.S.C. §§ 1956(c)(7)(B) and 1957 as only meaning Korean bribery rather

than requiring the generic federal definition.

2. Whether the district court incorrectly instructed the jury on the

bribery offense underlying the 18 U.S.C. § 1957 violation, even if only Korean

law were applicable.

3. Whether the government presented insufficient evidence because it

failed to prove beyond a reasonable doubt that the specific monetary transaction

alleged in the single count of conviction was traced to “dirty” funds as required

under 18 U.S.C. § 1957.

PERTINENT STATUTORY PROVISIONS

18 U.S.C. § 1956(c)(7) provides:

the term “specified unlawful activity” means –* * *

(B) with respect to a financial transaction occurring in whole or in part inthe United States, an offense against a foreign nation involving – * * *

(iv) bribery of a public official, or the misappropriation, theft, orembezzlement of public funds by or for the benefit of a public official . . . .

2


18 U.S.C. § 1957(a):

Whoever, in any of the circumstances set forth in subsection (d), knowinglyengages or attempts to engage in a monetary transaction in criminally deprivedproperty of a value greater than $10,000 and is derived from specified unlawfulactivity, shall be punished as provided in subsection (b).

STATEMENT OF THE CASE

Dr. Chi is a citizen and resident of South Korea who was a principal

researcher at the Korea Institute of Geoscience and Mineral Resources

(“KIGAM”) and had served as director of KIGAM’s Earthquake Research Center.

ER 193-94. In the wake of several devastating earthquakes and tsunamis in the

late 1990's and early 2000's, he developed and implemented Korea’s early warning

system. RT 742-45. He also served on a working group for the Comprehensive

Test-Ban Treaty Organization, which monitors for testing of nuclear weapons

around the world, including ascertaining when North Korea conducts such testing.

RT 185, 255-56.

In December 2016, a federal grand jury in the Central District of

California returned an indictment, which was eventually superseded and ultimately

charged Dr. Chi with six monetary transaction counts under § 1957. CR 6; ER

193-200. The indictment alleged that the unlawful activity underlying the

monetary transactions was bribery and that Dr. Chi violated Korean law because

3


he “used his official position at KIGAM to provide business advantages” to a

British company and a California company, both of which manufactured and

distributed equipment used to detect earthquakes and other seismic events. ER

194-95.

The indictment alleged that, from 2012 to 2016, Dr. Chi engaged in six

monetary transactions with the proceeds of the alleged bribery by writing checks

ranging from $30,000 to $60,000 from a Bank of America account in Glendora,

California that were deposited into a Merrill Lynch brokerage account in New

York. ER 197-98. In particular, Count 6 alleged that, on November 22, 2016, a

check in the amount of $56,000 from the Bank of America account was deposited

into the Merrill Lynch brokerage account. ER 198.

Before trial, the parties disputed whether the indictment adequately

alleged the § 1957 offense. The government contended that the indictment alleged

a violation of Korean bribery law as the underlying specified unlawful activity and

that a violation of foreign law is all that is required in this context. CR 74, 98; ER

106. Dr. Chi, on the other hand, contended that the government had to allege and

prove at least a violation of generic federal bribery. CR 68, 98; ER 102-05. The

parties also disputed the elements of bribery under Korean law. CR 98; ER 99-

136, 524-92. The district court essentially sided with the government, as it found

4


that only a violation of Korean bribery law was required and overruled various

objections by Dr. Chi regarding the definition of Korean bribery set forth in the

jury instructions. ER 3-5, 18-20, 52-96.

At trial, the government presented the testimony of Christopher Potts,

the current chairman of Guralp Systems, the British company alleged in the

indictment. Guralp sold sensitive equipment designed to detect earthquakes and

other seismic events, such as the testing of nuclear weapons. Potts testified that

Guralp is a private company that was started by Cansun Guralp and was eventually

taken over by Potts’ investment group. RT 228-31. In approximately September

2015, Potts noticed that payments totaling hundreds of thousands of dollars had

been made by Guralp to Dr. Chi over the course of approximately ten years. RT

236-39. After investigating, Potts discovered two contracts, a 2003 contract

between Guralp and KIGAM and a 2005 consulting or advice contract between

Guralp and Dr. Chi. Potts further discovered invoices reflecting payments to Dr.

Chi, a few early ones had been in cash and most were then sent to a bank in the

United States. RT 239-54.

Potts was concerned that the arrangement with Dr. Chi was illegal, and

therefore he terminated the payments. Potts met with Dr. Chi and traded emails

with him regarding the payments. In their communications, Dr. Chi stated that the

5


payments were confidential, and he appeared to recognize that they were

inappropriate. When Potts informed Dr. Chi that Guralp would no longer make

payments to him under their contract, Dr. Chi attempted to arrange a new

arrangement where he would receive payments openly, but Potts refused. RT 259-

84.

The government also presented the testimony of Natalie Pearce, the

former sales director for Guralp. She testified that Dr. Chi was paid an advice fee

for helping Guralp win bids and sell equipment in Korea, including equipment to

KIGAM. Among other things, Dr. Chi would assist Guralp with the bidding

process and help it meet the specifications for the needed equipment. RT 408-32.

With respect to the second company alleged in the indictment, the

government introduced documents reflecting that, in 1999, Dr. Chi signed

“installation and maintenance” agreements on behalf of KIGAM with Kinemetrics,

Inc. (previously called Quanterra, Inc.), a Pasadena, California company that also

designed and sold equipment to detect seismic events. RT 347-48, 663-64. 2

Dr. Chi had also previously received a “technical advisor” agreement2

from the founder and president of the company in 1996 that provided forcompensation for his consultation services. CR 68-3. Although the partiesstipulated to the admissibility of the agreement as Government Exhibit 254 andDefense Exhibit 501, CR 114, 143, it does not appear that the document wasactually admitted at trial.

6


Through the controller for Kinemetrics, Michelle Harrington, the government

introduced business records indicating that Kinemetrics paid various

“commissions” to Dr. Chi for the sales of equipment in Korea. RT 353-81.

Harrington, however, had never met, spoken with, or even communicated with Dr.

Chi. As a result, she could not provide any information regarding the

circumstances of the payments, and she could not definitively state whether the

payments were commissions as opposed to advice fees. RT 392-97.

Through an FBI forensic accountant, the government introduced various

bank records for Dr. Chi’s account with Bank of America. The documents showed

that, on November 9, 2015 and December 11, 2015, Dr. Chi received wires of

$66,500 and $21,100 from Kinemetrics. On November 22, 2016, he wrote a check

in the amount of $56,000 to his Merrill Lynch account. RT 514-17, 541, 570-71;

Gov. Ex. 25.

After the government presented its case-in-chief, the defense moved for

a judgment of acquittal under Fed. R. Crim. P. 29, and the district court reserved

ruling on the motion. ER 31. The defense then presented the testimony of several

witnesses who worked with Dr. Chi at KIGAM. A principal researcher at KIGAM

testified that approximately 60% of the funding for KIGAM comes from the

government while 40% comes from the private sector. RT 692-96. He also

7


testified that KIGAM encouraged its employees to seek consulting work with

private companies and that he himself had done so. RT 696-97. A KIGAM

employee could freely contract with private companies to engage in such work,

and it wasn’t until 2015 that an employee had to obtain approval of the contract

from a supervisor. RT 698-700. Both the current and past directors of KIGAM

testified and confirmed that employees could also have contracts with private

companies, and the current director previously had contracts with private

companies and did not tell others at KIGAM about the payments he received. RT

741, 771, 789-92, 804-07. Similarly, the head of the audit division at KIGAM

testified that employees were free to have consulting agreements with private

companies and that KIGAM did not tighten its rules regarding such agreements

until 2012, but the rules were not retroactive. RT 845-51.

At the conclusion of the trial, the district court denied Dr. Chi’s Rule 29

motion. ER 25-29. Over Dr. Chi’s objections, the district court instructed the jury

on bribery under Korean law as the unlawful activity underlying the monetary

transaction charges. ER 4-5. The jury deadlocked on Counts 1-5 but convicted on

Count 6. CR 162, 171. The district court ultimately imposed a sentence of 14

months in custody, one year of supervised release, and a $15,000 fine. CR 202;

ER 202-03.

8


SUMMARY OF ARGUMENT

First, “an offense against a foreign nation involving” “bribery of a

public official” for purposes of 18 U.S.C. §§ 1956(c)(7)(B) and 1957 requires at

least generic federal bribery of a public official. The plain language of the

statutory definition uses the term “offense,” which signals a generic-crime

approach, as the Supreme Court and this Court have stated on numerous

occasions. When construing related statutes, the Supreme Court has repeatedly

stated that the generic definition controls. Congress added the bribery language

after the United States signed a treaty requiring such an addition to the money

laundering statutes, and the treaty reflects that bribery should be defined under the

same terms as American bribery. The jury instructions given by the district court

were erroneous because they did not set forth generic bribery, particularly the

“official act” and corrupt influence elements. Recent Supreme Court precedent

demonstrates that the instructional error was not harmless, and the circumstances

of this case, including the jury’s deadlock on five of six counts, reflects that the

government’s case was not overwhelming and the error was prejudicial. In any

event, there was also structural error, as the indictment should have been

dismissed because the government conceded that the grand jury only alleged a

watered-down bribery offense under Korean law, not generic bribery.

9


Second, even if Korean bribery law were the only relevant standard for

purposes of §§ 1956(c)(7)(B) and 1957, the jury instructions were still defective.

The district court recognized that Korean bribery requires a corrupt quid pro quo,

and the government conceded that an improper payment was required. Yet, the

instructions failed to set forth the corrupt and influence elements of bribery.

Furthermore, the expansive instruction that an “official duty” “includes” acts that

an official is “customarily responsible for” was overbroad, and it was likewise

error to instruct the jury that Dr. Chi was a public official as a matter of law.

Third, the evidence supporting the sole count of conviction was

insufficient. To sustain a § 1957 violation, this Court requires the government to

“trace” the specific monetary transaction supporting the count of conviction to

“dirty” funds. The funds that were deposited into Dr. Chi’s account before the

alleged transaction supporting Count 6 were sent from Kinemetrics. The

government, however, failed to present a single witness with personal knowledge

who could testify about the circumstances of the deposits. Furthermore, the only

evidence introduced at trial demonstrated that the relevant deposit from

Kinemetrics was not for equipment sold to KIGAM. Accordingly, the government

failed to present sufficient evidence that the transaction underlying Count 6 was

“traced” to “dirty” funds.

10


ARGUMENT

I. The district court erred by failing to dismiss the indictment and ininstructing the jury because it misinterpreted “bribery of a public official”under 18 U.S.C. §§ 1956(c)(7)(B) and 1957 as only meaning Korean briberyrather than requiring the generic federal definition.

A. Introduction and standard of review

The indictment alleged violations of § 1957, which provides: “Whoever

. . . knowingly engages or attempts to engage in a monetary transaction in

criminally deprived property of a value greater than $10,000 and is derived from

specified unlawful activity, shall be punished as provided in subsection (b).” 18

U.S.C. § 1957(a). As relevant here, “specified unlawful activity” is defined as “an

offense against a foreign nation involving . . . bribery of a public official, or the

misappropriation, theft, or embezzlement of public funds by or for the benefit of a

public official . . . .” 18 U.S.C. § 1956(c)(7)(B)(iv). For the specified unlawful

activity, the indictment alleged violations of Article 129 of South Korea’s

Criminal Code, which provides that “a public official who receives, demands, or

promises to accept a bribe in connection with his duties shall be punished by

imprisonment . . . .” ER 194-95, 198, 222.

Before trial, Dr. Chi moved to dismiss the indictment, arguing that the

specified unlawful activity must include the generic federal definition of bribery;

11


he also contended that the jury had to be instructed accordingly. CR 68, 98; ER

102-16. In response, the government conceded that the indictment did not allege a

violation of generic bribery: “As set forth in the government’s opposition to

defendant’s motion to dismiss, the specified unlawful activity alleged in this case

is a matter of Korean, not United States law. The grand jury has not alleged a

specified unlawful activity other than Article 129, thus, the jury need not and

should not be instructed on any others.” ER 106. Thus, with respect to the

instructions, the government contended that the jury should only be charged on

Korean law, not generic bribery. ER 102-16.

The district court denied Dr. Chi’s motion to dismiss, reasoning that the

indictment did not have to allege all of the elements of the underlying specified

unlawful activity. ER 188. The district court found that only bribery under

Korean law was applicable, overruled Dr. Chi’s objections regarding the jury

instructions, ER 64-93, and charged the jury as follows:

In order to establish that the property involved in the monetarytransaction was derived from bribery of a public official inviolation of Article 129 of South Korea’s Criminal Code, theGovernment must prove each of the following elementsbeyond a reasonable doubt:

(1) The defendant is a public official for the purposes ofArticle 129; and

12


(2) The defendant received, demanded, or promised to accepta payment in exchange for exercising his official duties, or inother words, as a quid pro quo for exercising his official duties.

I instruct you as a matter of law that a director or researcher atthe Korea Institute of Geoscience and Mineral Resources(“KIGAM”) is a public official for purposes of Article 129.

“Official duties” include duties for which the public official isresponsible under the law, acts closely related to such duties,acts that the public official is practically or customarilyresponsible for, and acts that may influence decision-makers.

ER 4-5.

During deliberations, the jury sent two notes asking how to “determine

if bribery occurred under Korean law” and how it was “determined that a ‘director

or researcher is a public official under Korean law.’” CR 165, 167. The district

court referred the jury back to the instruction quoted above. ER 7-12. The jury

ultimately deadlocked on the first five counts and convicted on Count 6. CR 162,

171.

Dr. Chi contends that the district court erred by denying the motion to

dismiss because the indictment failed to allege the requisite elements and thereby

state an offense given the government’s explicit concession that the grand jury did

not charge generic bribery as the specified unlawful activity. Furthermore, the

jury instructions failed to convey the critical elements that constitute generic

13


bribery. Dr. Chi will first establish that generic bribery is required and then

demonstrate that the jury instructions were flawed before returning to the

dismissal of the indictment question. This Court conducts de novo review. See,

e.g., United States v. Munguia, 704 F.3d 596, 598 (9 Cir. 2012) (juryth

instructions); United States v. Omer, 395 F.3d 1087, 1088 (9 Cir. 2005)th

(dismissal of indictment).

B. The statutes require generic federal bribery of a public official

Under the relevant provisions of §§ 1956 and 1957, the specified

unlawful activity must involve at least generic bribery of a public official. The

plain language of the statutes, relevant precedent, legislative history, and policy

considerations all support this construction.

This Court begins with the language of the statute, see Leocal v.

Ashcroft, 543 U.S. 1, 8 (2004), which applies to “an offense against a foreign

nation involving . . . bribery of a public official . . . .” 18 U.S.C. §

1956(c)(7)(B)(iv). As explained in Leocal, the use of the word “offense” signals

the elements of a generic definition of a crime. See Leocal, 541 U.S. at 7; United

States v. Corona-Sanchez, 291 F.3d 1201, 1205 (9 Cir. 2002) (en banc) (use ofth

the word “offense” is meant to incorporate a “generic” definition); see also Mathis

v. United States, 136 S. Ct. 2243, 2248 (2016); Descamps v. United States, 570

14


U.S. 254, 257 (2013); Taylor v. United States, 495 U.S. 575, 590-92 (1990).

Furthermore, the use of the word “involving” after the word “offense” does not

alter the generic-crime approach. See, e.g., Olivas-Motta v. Holder, 746 F.3d 907,

915 (9 Cir. 2013).th

Over the course of several decades, the Supreme Court has confirmed

this approach when interpreting related statutes that have used non-federal

offenses as underlying criminal activity. First, in United States v. Nardello, 393

U.S. 286 (1969), the Court considered the Travel Act, 18 U.S.C. § 1952, which,

like §§ 1956 and 1957, is contained in Chapter 95 of Title 18. The Court

concluded that the underlying offense of “extortion” under state law meant

“generic” extortion, which was the government’s interpretation of the statute. Id.

at 290, 296. Ten years later, the Court relied on Nardello to reach a similar

conclusion that an underlying state offense of “bribery” under the Travel Act

meant “the generic definition of bribery . . . .” Perrin v. United States, 444 U.S.

37, 49 (1979). More recently, in Scheidler v. National Organization for Women,

Inc., 537 U.S. 393, 409-10 (2003), the Court followed cases like Nardello and

Taylor and held that “extortion” under state law for purposes of the RICO statutes,

which are also contained in Chapter 95, means “generic” extortion.

These cases make it clear that if § 1956(c)(7)(B) were worded, “an

15


offense against a [State] involving bribery of a public official,” the relevant

definition would require generic federal bribery of a public official, not the

definition of bribery in that individual State. See, e.g., Taylor, 495 U.S. at 590-92.

The fact that “foreign nation” is what appears in the brackets should not in any

way alter the reading of the language of the statutes. Other similarly worded

statutes also include foreign offenses, see 8 U.S.C. § 1101(a)(43); Torres v. Lynch,

136 S. Ct. 1619, 1623 (2016), and yet the generic-definition approach still applies.

See, e.g., Esquivel-Quintana v. Sessions, 137 S. Ct. 1562, 1568 (2017). The fact

that a foreign offense is involved would seem to be all the more reason to apply a

generic-crime approach given the greater potential for substantial deviations by

foreign criminal justice systems.

The government contended below that the language in § 1956(c)(7)(B)

demonstrates that the generic definition of bribery does not apply because some of

the offenses listed in that subsection reference specific federal statutes, and §

1956(c)(7)(B)(iv) did not reference 18 U.S.C. § 201(b), the federal bribery statute.

But the generic approach still applies when Congress has used both statutory

descriptors and common law or other descriptors in the same statute. For example,

8 U.S.C. § 1101(a)(43) lists offenses that have a common law description and

regulatory offenses that are more easily identified by referencing a specific statute;

16


nonetheless, the generic approach still applies to the common law offenses or

offenses that are not otherwise described by a specific federal statute. See, e.g.,

Esquivel-Quintana, 137 S. Ct. at 1568. There is no reason why a different

interpretation should apply here.

While this Court has not explicitly addressed the issue presented, the

only two Ninth Circuit cases that have discussed § 1956(c)(7)(B) support Dr.

Chi’s construction. In United States v. Lazarenko, 564 F.3d 1026, 1038-39 (9th

Cir. 2009), this Court looked to the common law and federal statutes to determine

the meaning of extortion in the context of a foreign extortion allegation being used

as an underlying offense pursuant to § 1956(c)(7)(B). Similarly, in United States

v. Chao Fan Xu, 706 F.3d 965, 986 (9 Cir. 2013), abrogated on other grounds byth

RJR Nabsico, Inc. v. European Community, 136 S. Ct. 2090 (2016), this Court

looked to “American law” when assessing the meaning of “fraud” under §

1956(c)(7)(B) and rejected the defendants’ challenge because their “fraudulent

acts are unlawful in both the United States and China.” Id. at 986 (emphasis

added). Thus, Lazarenko and Chao Fan Xu support Dr. Chi’s position that

“bribery of a public official” means generic federal bribery for purposes of §

1956(c)(7)(B).

While the language of the statute and the relevant controlling precedent

17


supports Dr. Chi’s position that “bribery of a public official” under §

1956(c)(7)(B) means generic bribery, the legislative history also supports his

construction. Congress added the bribery provision to § 1956(c)(7)(B) in 2001,

see Lazarenko, 564 F.3d at 1038, shortly after the United States signed the

Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions. See United States v. Jeong, 624 F.3d 706, 709-10 (5 Cir.th

2010) (South Korea is also a party). Article 7 of the Convention provides: “Each

Party which had made bribery of its own public official a predicate offence for the

purpose of the application of its money laundering legislation shall do so on the

same terms for the bribery of a foreign public official, without regard to the place

where the bribery occurred.” Thus, bribery of a foreign official requires the “same

terms” as bribery of an American official. See Bond v. United States, 134 S. Ct.

2077, 2087 (2014) (looking to international treaty when interpreting federal

criminal statute).

In the district court, the government pointed to a brief comment in H.R.

Rep. No. 107-250 (Oct. 17, 2001) regarding the 2001 amendment, which stated:

“This amendment enlarges the list of foreign crimes that can lead to money

laundering prosecutions in this country when the proceeds of additional foreign

crimes are laundered in the United States. The additional crimes include all

18


crimes of violence, public corruption, and offenses covered by existing bilateral

extradition treaties.” While this language does not speak directly to the issue

presented, it certainly does not undermine Dr. Chi’s construction because it

demonstrates that the amendment was designed to include offenses covered by

bilateral extradition treaties, which typically require dual criminality, meaning that

the conduct charged must be a crime in both the United States and the foreign

country. See, e.g., Man-Seok Choe v. Torres, 525 F.3d 733, 737 (9 Cir. 2008). th

The government also pointed to brief language in the same House Report related

to the forfeiture statute, but that language similarly failed to address the issue

presented, and the forfeiture statute actually demonstrates that the conduct

described in § 1956(c)(7)(B) must also constitute a violation of American law.

See 18 U.S.C. § 981(a)(1)(B)(iii).

Faced with a wall of authority supporting the generic crime approach,

the government cited a handful of district court opinions, which generally did not

address the issue presented. In United States v. One 1997 E35 Ford Van, 50 F.

Supp. 2d 789, 802 (N.D. Ill. 1999), the court found that the language “offense

against a foreign nation” did not require that the offense “be committed against a

public official or government entity” and therefore did not address the question

presented in this case. In United States v. Awan, 459 F. Supp. 2d 167, 183

19


(E.D.N.Y. 2006), the defendant contended that the word “involving” in §

1956(c)(7) rendered the statute unconstitutionally vague; the opinion did not

address the issue presented here, and, as mentioned, the word “involving” is

consistent with a generic-crime approach. See, e.g., Olivas-Motta, 746 F.3d at

915. And, in United States v. All Assets Held at Bank Julius Baer & Company,

Ltd., 571 F. Supp. 2d 1, 10 (D.D.C. 2008), the court addressed whether §

1956(c)(7)(B) could apply retroactively in a civil forfeiture proceeding, again far

afield from the issue here.

The only case cited by the government that arguably addressed the

instant claim is an unpublished report and recommendation by a magistrate judge

that was rejected by the district judge. See United States v. Real Property Known

as United 5B of the Onyx Chelsea Condominium, No. 10 Civ. 5390, 2011 WL

4151775, at *6 (S.D.N.Y. Aug. 26, 2011), rejected, 2011 WL 4359924 (Sep. 19,

2011). The brief analysis in the unpublished and rejected recommendation did not

address the wealth of authority cited by Dr. Chi.

Finally, interpreting § 1956(c)(7)(B) to require generic bribery makes

sense from a policy perspective. While a judge may sometimes be required to

decide questions of foreign law, see Fed. R. Crim. P. 26.1, the statute should be

interpreted so as to avoid, as much as possible, burdening district judges with

20


having to fashion jury instructions based on foreign law. Putting aside the

difficulties with interpreting unfamiliar statutes and precedent translated from a

foreign language, many countries do not utilize standardized jury instructions

(some may not even require trial by jury) or set forth their crimes with distinctly

defined elements that can be readily conveyed to a jury. ER 74-76. Instructing

juries with a comprehensible definition of American laws is often difficult enough,

and this jury was puzzled by the task of evaluating Korean bribery law. CR 165,

167; ER 7-12. By interpreting the statute to require generic bribery, district judges

will be able to utilize traditional jury instructions and thereby avoid these

problems. Only in those cases where the foreign bribery offense is more narrow

than the generic definition will foreign law become relevant. To the extent there is

any doubt, the Rule of Lenity supports a construction of the statute that requires at

least generic bribery rather than allowing convictions based on watered-down

foreign definitions. See, e.g., United States v. Santos, 553 U.S. 507, 514-15

(2008) (relying on Rule of Lenity in interpreting definitions in § 1956); United

States v. Sherbondy, 865 F.2d 996, 1009 (9 Cir. 1988) (relying on Rule of Lenityth

to adopt generic elements-based approach).

C. The jury instructions were erroneous, requiring a new trial

The jury instructions given by the district court failed to convey the

21


essential ingredients of generic federal bribery. As an initial matter, the

instructions defined the required element of an official act much more broadly

than the element defined under 18 U.S.C. § 201 and the Supreme Court’s recent

decision in McDonnell v. United States, 136 S. Ct. 2355 (2016).

The instruction described the element as “official duties,” which it

stated “include duties for which the public official is responsible under the law,

acts closely related to such duties, acts that the public official is practically or

customarily responsible for, and acts that may influence decision-makers.” ER 5.

The change from “act” to “duty” was erroneously expansive, and the definition is

problematic because it begins with the word “include,” which is “a term of

enlargement, and not of limitation.” Burgess v. United States, 553 U.S. 124, 131

n.3 (2008). While the instruction did not cabin the definition, constituting error in

and of itself, see United States v. Silver, 864 F.3d 102, 118 (2d Cir. 2017) (holding

that instruction with enlarging language was erroneous under McDonnell), the

descriptions listed were deficient and did not convey the requisite conduct.

The “customarily responsible for” language in the instruction is nearly

identical to the language that the Supreme Court found to be erroneous in

McDonnell. See McDonnell, 136 S. Ct. at 2373-74. While this is a significant

error alone, the definition also did not provide any of the “guts” of the official act

22


definition, which is “any decision or action on any question, matter, cause, suit,

proceeding or controversy, which may at any time be pending, or which may by

law be brought before any public official, in such official’s official capacity, or in

such official’s place of trust or profit.” 18 U.S.C. § 201(a)(3).

This definition requires a “focused and concrete” “formal exercise of

governmental power” regarding a matter similar to a proceeding or controversy

that is pending or could be brought as a specific agenda item before the public

official. McDonnell, 136 S. Ct. at 2369. The public official also “must make a

decision or take an action on that question or matter, or agree to do so.” Id. at

2370 (emphasis in original). Far different from these requirements, the definition

given by the district court allowed the jury to find an official duty if Dr. Chi took

any action that was related to his duties, which was clearly inadequate and actually

far more defective than the instruction given in McDonnell. See McDonnell, 136

S. Ct. at 2366 (setting forth district court’s erroneous official-act instruction);

Silver, 864 F.3d at 118-19.

The definition of an official act set forth in § 201 and explained in

McDonnell constitutes the generic federal definition. The Supreme Court

explained that a more expansive definition of an official act “would raise

significant constitutional concerns.” McDonnell, 136 S. Ct. at 2372. Broader

23


definitions have the potential for chilling protected activity and also run into

constitutional vagueness problems. Id. at 2372-73. Particularly given these

concerns, it is clear that the definition set forth in the federal bribery statute and

recently explicated by the Supreme Court is the generic definition, and, for this

reason alone, the jury instructions erroneously failed to set forth the elements of

generic bribery.

In addition to the erroneous articulation of the official act element, the

instructions also failed to convey the essence of bribery, which requires the

official to have a “corrupt” intent to be “influenced.” 18 U.S.C. § 201(b)(2); see

United States v. Sun-Diamond Growers of California, 526 U.S. 398, 404 (1999).

Rather than including these basic elements of the offense, the instructions only

required the jury to find that “[t]he defendant received, demanded, or promised to

accept a payment in exchange for exercising his official duties, or in other words,

as a quid pro quo for exercising his official duties.” ER 4.

The instructions did not even use the key term “influence,” nor did they

mention anything about the requisite “corrupt” intent, which requires the

defendant’s conduct to be “wrongful, immoral, depraved, or evil.” Arthur

Andersen LLP v. United States, 544 U.S. 696, 705 (2005). “[T]he jury instructions

at issue simply failed to convey the requisite consciousness of wrongdoing.

24


Indeed, it is striking how little culpability the instructions required.” Id. at 706.

The instruction’s definition of bribery basically applied to any

governmental employee who collects a paycheck because it simply required the

defendant to receive a payment in exchange for exercising his official duties. In

other words, a prosecutor who collects a paycheck for writing an appellate brief

urging affirmance of a conviction would be guilty of bribery under the

instructions, as he received a payment in exchange for exercising his official

duties. Without the “corrupt” intent and “influence” requirements of bribery, the

instructions failed to distinguish between a crime and completely lawful behavior.

The fact that the instructions contained the Latin phrase “quid pro quo”

does not overcome these basic defects, as the phrase was not linked to corruption.

See McDonnell, 136 S. Ct. at 2372 (bribery is “quid pro quo corruption”). Under

the instructions, “nearly anything a public official accepts . . . counts as a quid;

and nearly anything a public official does . . . counts as a quo.” Id. at 2372.

Without the “corruptly” and “influence” elements, the Latin phrase simply failed

to do enough work, as the definition of the phrase contains no element of

corruption: “What for what; something for something. Used in law for the giving

one valuable thing for another. It is nothing more than the mutual consideration

which passes between the parties to a contract, and which renders it valid and

25


binding.” Black’s Law Dictionary, at 1248 (6 ed.). th

A juror could not be expected to read the corrupt and influence elements

of bribery into the Latin phrase. See United States v. Vazquez-Hernandez, 849

F.3d 1219, 1225-26 and n.3 (9 Cir. 2017). In essence, without linking the quidth

pro quo language to the corrupt intent and influence requirements, the instructions

did not even set forth a lesser gratuity offense, which is an improper “reward for

some future act that the public official will take (and may already have determined

to take), or for a past act that he has already taken.” Sun-Diamond Growers of

California, 526 U.S. at 405; see 18 U.S.C. § 201(c). At the very least, the

instructions were unconstitutionally ambiguous and confusing. See Dixon v.

Williams, 750 F.3d 1027, 1032-33 (9 Cir. 2014); Ho v. Carey, 332 F.3d 587, 592th

(9 Cir. 2003). th

The instructions’ failure to convey the essential ingredients of generic

bribery requires reversal of the sole count of conviction. The Supreme Court has

held that an instructional error as to a single element of the offense is subject to

harmless error analysis. See Neder v. United States, 527 U.S. 1, 9-10 (1999).

Here, however, the instructions were erroneous as to multiple elements of bribery,

essentially nullifying the jury’s verdict and constituting structural error. See

Sullivan v. Louisiana, 508 U.S. 275 (1993).

26


Even if harmless error review were applicable, the error was certainly

not harmless beyond a reasonable doubt. As explained by the Supreme Court in

McDonnell: “Because the jury was not correctly instructed on the meaning of

‘official act,’ it may have convicted . . . for conduct that is not unlawful. For that

reason, we cannot conclude that the errors in the jury instructions were ‘harmless

beyond a reasonable doubt.’” McDonnell, 136 S. Ct. at 2375.

While McDonnell should end the harmless error inquiry, other

circumstances demonstrate that the government cannot meet its heavy burden of

showing harmlessness beyond a reasonable doubt. The jurors sent notes asking

about the elements of bribery, reflecting that they were confused by the vague and

watered-down standard contained in the instructions. See Shafer v. South

Carolina, 532 U.S. 36, 52-53 (2001); see also Buck v. Davis, 137 S. Ct. 759, 776

(2017); United States v. Caruto, 532 F.3d 822, 832 (9 Cir. 2008). The jury alsoth

deadlocked on five of the six counts, indicating that the government did not

present an overwhelming case and that the error was not harmless. See, e.g.,

United States v. Leal-Del Carmen, 697 F.3d 964, 971, 976 (9 Cir. 2012). th

While Dr. Chi maintains later in this brief that the evidence supporting

the sole count of conviction was legally insufficient, it was at least very thin. The

alleged bribery underlying Count 6 was for funds received from Kinemetrics.

27


However, the only Kinemetrics witness was essentially a document custodian who

had absolutely no personal knowledge of the circumstances surrounding the

specific payment, or any of the payments to Dr. Chi for that matter. It is far from

clear that the specific payment was for an “official act,” let alone with the requisite

corrupt intent to influence and pursuant to a corrupt quid pro quo. Accordingly,

the instructional error was not harmless beyond a reasonable doubt. See Silver,

864 F.3d at 119-24 (finding harmful error for erroneous instruction under

McDonnell and analyzing specific official acts implicated).

D. This Court should order dismissal of the indictment

This Court should also order the district court to dismiss the indictment.

Because Dr. Chi made a timely pretrial motion to dismiss, this Court must reverse

for structural error if the indictment was defective. See Omer, 395 F.3d at 1088;

United States v. DuBo, 186 F.3d 1177, 1179-81 (9 Cir. 1999). In other words,th 3

harmless error analysis does not apply. If this Court agrees that § 1956(c)(7)(B)

requires generic bribery, then the indictment was defective and should have been

dismissed because it did not allege a valid specified unlawful activity.

This Court’s rule is consistent with long-established Supreme Court3

precedent. See United States v. Hess, 124 U.S. 483 (1888); United States v. Carll,105 U.S. 611 (1881); see also United States v. Resendiz-Ponce, 549 U.S. 102, 116-17 (2007) (Scalia, J., dissenting).

28


The district court denied the motion to dismiss, reasoning that the

indictment did not have to allege all of the elements of the underlying specified

unlawful activity. ER 188. This reasoning misses the point. The government

conceded in its pretrial pleadings that the indictment did not allege a violation of

generic bribery: “[T]he specified unlawful activity alleged in this case is a matter

of Korean, not United States law. The grand jury has not alleged a specified

unlawful activity other than Article 129 . . . .” ER 106. The government clearly

conceded that the indictment only alleged Korean bribery, which it maintained

was a watered-down version of generic bribery, as discussed above.

Thus, even assuming the indictment did not have to allege the elements

of generic bribery, it at least had to allege a valid specified unlawful activity,

which it failed to do. Furthermore, the government’s concessions in response to

the motion to dismiss are conclusive that the indictment failed to allege a valid

specified unlawful activity and was therefore defective. See United States v.

Steffen, 687 F.3d 1104, 1115 (8 Cir. 2012) (affirming dismissal of indictmentth

based on government’s concession in response to motion to dismiss indictment);

United States v. Pirro, 212 F.3d 86, 94-95 (2d Cir. 2000) (same). Accordingly,

this Court should reverse Dr. Chi’s conviction and instruct the district court to

dismiss the indictment.

29


II. The district court incorrectly instructed the jury on the bribery offenseunderlying the 18 U.S.C. § 1957 violation, even if only Korean law wereapplicable.

A. Introduction and standard of review

Even if the relevant definition of bribery of a public official for purposes

of § 1956(c)(7)(B) is limited to foreign law, and particularly Article 129 of South

Korea’s Criminal Code, the district court still erred in instructing the jury.

Because the district court determined that Korean bribery law, rather than generic

federal bribery, was the only relevant standard, the parties produced conflicting

experts and voluminous materials, including case law, regarding Korean law.4

Dr. Chi requested that the district court instruct the jury in accordance

with generic federal bribery, and, with respect to Korean law, he requested an

instruction that the jury had to find that an “improper payment was given in

exchange for exercising his official duties” and that the jury had to agree on what

he “intended to do in return for the payment.” ER 101-05, 112-14, 120-26.

Regarding whether the payment was related to Dr. Chi’s official duties, the

Those materials are included in the Excerpts of Record, although the4

original Korean language and some extraneous pages have been removed in aneffort to condense the volume, if at least slightly. ER 212-627. As one mightexpect with translations of foreign legal documents, they are not the easiest read,providing further support for interpreting § 1956(a)(7)(B) as requiring genericfederal bribery.

30


defense argued that, unlike politicians and law enforcement officials, non-

traditional public officials like a researcher were given more flexibility under

Korean law to enter into private contracts in their field of expertise. Dr. Chi

therefore requested that the jury be instructed to consider various factors,

including whether there was a “third party contract,” whether services were

provided in his “private or official capacity,” and whether he “exercised any

improper influence on behalf of the party providing payments” or “influence[d] an

official decision.” ER 121. He also requested that the district court instruct the

jury that it was “not a violation of Korean law merely for a researcher or director

at KIGAM to enter into an independent contract with a third party to provide

technical advice or services for pay.” ER 121.

The district court concluded that it would not instruct on generic federal

bribery but acknowledged that the traditional definition of bribery requires a

corrupt payment and stated that Korean law was similar. ER 64-65. Defense

counsel argued that the instructions at least had to include “corruptly” language so

that the jurors could determine “whether or not the payment is a bribe or the

payment is for some legitimate service” and “differentiate between conduct that is

intended to influence wrongly, as opposed to allowing a researcher to trade on

their expertise.” ER 78-81. After the district court announced its proposed

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instruction, the defense expert emphasized that the court’s quid pro quo language

was lacking an “influential” element, which was “important.” ER 90. The district

court, however, ultimately rejected these objections, ER 18, and instructed that, for

Korean bribery, the jury had to find that “[t]he defendant received, demanded, or

promised to accept a payment in exchange for exercising his official duties, or in

other words, as a quid pro quo for exercising his official duties.” ER 4.

The district court also mostly rejected the defense’s arguments regarding

the definition of “official duties” and instructed the jury that “‘[o]fficial duties’

include duties for which the public official is responsible under the law, acts

closely related to such duties, acts that the public official is practically or

customarily responsible for, and acts that may influence decision-makers.” ER 5.

The district court instructed the jury, over objection, that, “as a matter of law . . . a

director or researcher at [KIGAM] is a public official for the purposes of Article

129.” ER 4.

During deliberations, the jury sent notes asking how it could determine

bribery under Korean law and how it was determined that a researcher was a

public official. CR 165, 167. The district court referred the jury back to the

instructions quoted above. ER 7-12. The jury ultimately deadlocked on the first

five counts and convicted on Count 6. CR 162, 171.

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Dr. Chi contends that, even if Korean bribery is the only applicable

standard, the instructions were flawed in at least two general respects: (1) as

argued in the preceding claim, they failed to convey the requisite corrupt and

influence elements of bribery under Korean law; and (2) they incorrectly set forth

the official act and public official elements. This Court again applies de novo

review. See, e.g., Chao Fan Xu, 706 F.3d at 986; Munguia, 704 F.3d at 598.

B. The instructions failed in include corrupt and influence elements

Article 129 provides that a “public official . . . who receives, demands,

or promises to accept a bribe in connection with his duties shall be punished by

imprisonment for not more than five years . . . .” ER 194-95, 222 (emphasis

added). As explained above, the essence of a “bribe” is a corrupt intent to be

influenced, see 18 U.S.C. § 201(b)(2); Sun-Diamond Growers of California, 526

U.S. at 404, and the district court appeared to recognize that there was no reason

to think that Korean law dispensed with these essential elements of bribery. ER

65. Furthermore, the government conceded that Korean bribery required an

improper benefit. ER 527. Despite the government’s concession and the specific

objections of defense counsel and the defense expert that the instructions did not

convey a corrupt intent and influence requirements, the district court failed to

include these essential elements in its instruction.

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As explained earlier, the instructions failed to convey the the “requisite

consciousness of wrongdoing” for corrupt intent, and “it is striking how little

culpability the instructions required.” Arthur Andersen LLP, 544 U.S. at 705-06.

The instructions did not even require an improper benefit, which the government

conceded was applicable, and the definition given for bribery was so watered

down that it could cover any governmental employee who collects a paycheck.

The Latin phrase “quid pro quo” did not overcome these basic defects, as the

phrase was not linked to corruption. See McDonnell, 136 S. Ct. at 2372. A juror

could not be expected to read the corrupt and influence elements of bribery into

the Latin phrase. See Vazquez-Hernandez, 849 F.3d at 1225-26 and n.3.

The government contended below that Korean bribery did not require

the corrupt and influence requirements but could not point to anything specific in

Korean law to support such an argument. ER 80-81. Essentially, the government

contended that Article 129 is a watered-down gratuity offense, not a bribery

offense. As the government appeared to acknowledge, however, a gratuity5

offense requires an improper discharge of official duty, see 18 U.S.C. § 201(c)(1);

The government’s position again demonstrates why a generic-crime5

approach should apply. The fact that a foreign country “labels” an offense“bribery” does not make it bribery as that term is understood under §1956(c)(7)(B). See, e.g., Mathis, 136 S. Ct. at 2251.

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Sun-Diamond Growers of California, 526 U.S. at 405, and the purported Korean

bribery instructions did not even convey that requirement. For all of these

reasons, the instructions were erroneous and at least unconstitutionally ambiguous,

see Dixon, 750 F.3d at 1032-33; Ho, 332 F.3d at 592, even if only Korean law

were applicable.

C. Defective official act and public official elements

The district court instructed the jury that “‘[o]fficial duties’ include

duties for which the public official is responsible under the law, acts closely

related to such duties, acts that the public official is practically or customarily

responsible for, and acts that may influence decision-makers.” ER 5. Even if

Korean law does not require an “official act” as defined by § 201(a) and

McDonnell, the instruction on “official duties” was still erroneous. As mentioned,

an initial defect is that the definition erroneously began with the word “include,”

which is “a term of enlargement, and not of limitation[,]” Burgess, 553 U.S. at 131

n.3, and therefore the instruction did not cabin the definition. See Silver, 864 F.3d

at 118.

Furthermore, the “customarily responsible for” language was overbroad,

see McDonnell, 136 S. Ct. at 2373-74 (rejecting this language), even under Korean

law. The district court failed to address Korean cases cited by Dr. Chi

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demonstrating that the language was defective in this specific context. For

example, the Supreme Court of Korea held that a professor and doctor at a national

medical school and hospital did not commit bribery when he was hired by an

outside party to diagnose and render an opinion regarding a patient who was not

being treated at his hospital. ER 426-27. Although there could be little question

that what the defendant did was the type of duty that he was “customarily

responsible for,” the court nonetheless held that a defendant did not commit

bribery in this context.

Similarly, Dr. Chi cited a recent Korean decision holding that a research

director at a national university did not commit bribery when he entered into a

contract for a consulting fee with a private company to perform a study that was

related to another study that he was conducting on for the university. Once again,

although there could be little question that the researcher was paid for performing

a duty that he was “customarily responsible for,” the court nonetheless held that he

did not commit bribery. ER 517-21.

Thus, the use of the “customarily responsible for” language was

overbroad and erroneous, at least in the context of researchers at public Korean

institutions who only maintain the “legal fiction” of a public official for purposes

of the bribery statute. ER 224-30. This erroneous language was exacerbated by

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the district court’s decision to instruct the jury, as a matter of law, that a director or

researcher at KIGAM was a public official for the purposes of Article 129. Under

United States v. Gaudin, 515 U.S. 506, 511-14 (1995), it was error to instruct the

jury as a matter of law on such a mixed question of law and fact, particularly when

the question of whether Dr. Chi was a public official for purposes of Article 129

was wrapped up in the question of whether he was formally engaging in official

duties.

D. The error was not harmless beyond a reasonable doubt

Once again, the instructions’ failure to convey the essential ingredients

of bribery requires reversal of the sole count of conviction. While instructional

error as to a single element of the offense is subject to harmless error analysis, see

Neder, 527 U.S. at 9-10, the erroneous instructions on multiple elements of bribery

essentially nullified the jury’s verdict and constituted structural error. See

Sullivan, 508 U.S. 275. Accordingly, automatic reversal is required.

Even if harmless error review were applicable, the error was not

harmless beyond a reasonable doubt under McDonnell because the jury “may have

convicted . . . for conduct that is not unlawful.” McDonnell, 136 S. Ct. at 2375.

The jurors sent notes expressing confusion about applying Korean bribery law and

how to determine whether Dr. Chi was a public official, reflecting that they were

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confused by the vague and watered-down standard contained in the instructions.

See Shafer, 532 U.S. at 52-53; see also Buck, 137 S. Ct. at 776; Caruto, 532 F.3d

at 832. The instructional error was particularly prejudicial because the jurors

could not have been expected to be familiar with Korean law, and an unexplained

Latin phrase did not clarify the governing principles.

The jury also deadlocked on five of the six counts, indicating that the

government did not present an overwhelming case and that the error was not

harmless. See, e.g., Leal-Del Carmen, 697 F.3d at 971, 976. Indeed, the evidence

supporting the sole count of conviction was insufficient, and at least exceedingly

thin. The alleged bribery underlying Count 6 was for funds received from

Kinemetrics, but no witness with personal knowledge testified about the

circumstances surrounding the specific payment, or any other payments to Dr. Chi

from Kinemetrics. It is far from clear that the specific payment was for an

“official duty,” let alone with the requisite corrupt intent to influence and pursuant

to a corrupt quid pro quo. For all of these reasons, the government has not

satisfied its heavy burden of demonstrating that the instructional error was

harmless beyond a reasonable doubt. See Silver, 864 F.3d at 119-24.

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III. The government presented insufficient evidence because it failed to provebeyond a reasonable doubt that the specific transaction alleged in the singlecount of conviction was traced to dirty funds as required under 18 U.S.C. §1957.

Dr. Chi made a motion for a judgment of acquittal pursuant to Rule 29

as to all elements of all counts at the close of the government’s case-in-chief. The

district court reserved ruling and then denied the motion when Dr. Chi renewed it

at the end of the trial. ER 21-31. The district court erred because the government

presented insufficient evidence to satisfy the “tracing” requirement for § 1957 as

to Count 6. This Court conducts de novo review, see United States v. Goyal, 629

F.3d 912, 914 (9 Cir. 2010); United States v. Viayra, 365 F.3d 790, 793 (9 Cir.th th

2004), and is limited to the evidence that the government presented in its case-in-

chief because the district court reserved ruling on the motion at that time. See

United States v. Cruz, 554 F.3d 840, 844 n.4 (9 Cir. 2009).th

Unlike § 1956, this Court has held that to sustain a § 1957 conviction,

the government must specifically trace the funds at issue to “dirty” money. See

United States v. Rutgard, 116 F.3d 1270, 1290-93 (9 Cir. 1997). Under theth

tracing requirement, “where an account contains clean funds sufficient to cover a

withdrawal, the Government cannot prove beyond a reasonable doubt that the

withdrawal contained dirty money.” United States v. Loe, 248 F.3d 449, 467 (5th

39


Cir. 2001). Thus, the question is whether the government proved beyond a

reasonable doubt that Dr. Chi’s Bank of America account lacked sufficient clean

funds to cover the $56,000 check that was written on November 22, 2016, as

alleged in Count 6. ER 198.

The bank records introduced by the government reflect that as of the

beginning of November 2015, Dr. Chi’s account balance was approximately

$20,000. On November 9, 2015, he received a $66,500 wire from Kinemetrics,

and, on December 11, 2015, he received another $21,100 wire from Kinemetrics.

With the exception of what appears to be a small refund from hotels.com, no other

deposits were made into the account thereafter. As alleged in Count 6, he wrote a

$56,000 check on November 22, 2016. See Gov. Ex. 25; RT 514-17, 541, 570-71.

Because the $66,500 wire from Kinemetrics was sufficient to cover the check, the

government had to prove beyond a reasonable doubt that those particular funds

were dirty.6

The government introduced virtually no evidence regarding the

circumstances of that wire. No witness from Kinemetrics, or any other witness for

Dr. Chi maintains that the government did not prove beyond a6

reasonable doubt that any of the specific funds in the account at the time weredirty. The insufficiency of the evidence is most clearly shown with respect to the$66,500 wire, however, and therefore that is the focus of the text.

40


that matter, testified about the circumstances of the payment. Nobody with

personal knowledge testified about what the payment was for, nor what official

action Dr. Chi took in a purported corrupt quid pro quo for the payment. The only

evidence in the record about the payment is a business record reflecting that Dr.

Chi received a purported commission (although the custodian who testified could

not even confirm that it was a commission) for equipment sold by Kinemetrics; the

documents reflects that the customer for the particular sale was not KIGAM. Gov.

Ex. 255; RT 353, 392-97.

Given these circumstances, the government did not meet its burden of

proving beyond a reasonable doubt that the $66,500 payment was dirty. Due to

the lack of evidence regarding the circumstances of the particular payment, the

government failed to prove that the funds were dirty even if a watered-down

theory of Korean bribery were all that were required. As a result, the government

failed to prove that the subsequent $56,000 check was traced to dirty funds.

Accordingly, this Court should vacate the conviction on Count 6 and order the

district court to enter a judgment of acquittal.

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CONCLUSION

For the foregoing reasons, this Court should reverse Dr. Chi’s

conviction. This Court should order the district court to enter a judgment of

acquittal on Count 6 and to dismiss the indictment. Alternatively, this Court

should order a new trial.

Respectfully submitted,

s/Benjamin L. Coleman

Dated: March 26, 2018 BENJAMIN L. COLEMANCOLEMAN & BALOGH LLP1350 Columbia Street, Suite 600San Diego, California 92101Telephone: (619) 794-0420Attorneys for Appellant Heon-Cheol Chi

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CERTIFICATE OF RELATED CASES

Counsel is not aware of any related cases that should be considered

with this appeal.

Respectfully submitted,

s/Benjamin L. Coleman

Dated: March 26, 2018 BENJAMIN L. COLEMANCOLEMAN & BALOGH LLP1350 Columbia Street, Suite 600San Diego, California 92101Telephone: (619) 794-0420

Attorneys for Appellant Heon-Cheol Chi

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CERTIFICATE OF COMPLIANCE

Pursuant to Fed. R. App. P. 32(a)(7) and Ninth Circuit Rule 32-1, the

attached Appellant’s Opening Brief is:

Proportionately spaced, has a typeface of 14 points ormore, and contains 9,281 words.

Date: March 26, 2018 s/Benjamin L. Coleman BENJAMIN L. COLEMAN

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CERTIFICATE OF SERVICE

I, hereby certify that on March 26, 2018, I electronically filed the

foregoing Appellant’s Opening Brief with the Clerk of the Court for the United

States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF

system.

I certify that all participants in the case are registered CM/ECF users

and that service will be accomplished by the appellate CM/ECF system.

Dated: March 26, 2018 s/Benjamin L. Coleman BENJAMIN L. COLEMAN

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in the united states court of appeals for the ninth ... · no. 17-50358 in the united states court...

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