in the united states district court for the …...jose larrea, case no. 1:18-cr-20312-mgc, s.d....

010-8697-6374/3/AMERICAS

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

CASE NO. 1:18-CR-20596-GAYLES/OTAZO-REYES

UNITED STATES OF AMERICA

Plaintiff,

v.

JUAN ANDRES BAQUERIZO ESCOBAR,

Defendant.

EP PETROECUADOR’S MEMORANDUM OF LAW IN SUPPORT

OF MOTION FOR RECOGNITION OF ITS RIGHTS AS A VICTIM AND

ENTITLEMENT TO RESTITUTION

SQUIRE PATTON BOGGS (US) LLP

200 South Biscayne Blvd., Suite 4700

Miami, Florida 33131

Tel.: (305) 577-7056

COUNSEL FOR EP PETROECUADOR

Case 1:18-cr-20596-DPG Document 37 Entered on FLSD Docket 01/08/2019 of 18

TABLE OF CONTENTS

Page

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INTRODUCTION ......................................................................................................................... 1

FACTS FROM DEFENDANT BAQUERIZO’S GUILTY PLEA THAT SUPPORT

THIS MOTION. ....................................................................................................................... 2

Baquerizo’s Offense Was an Offense Against Property Under the MVRA ...................... 5

EP Petroecuador Is Entitled to the Rights of a Victim Under the CVRA and

MVRA................................................................................................................................ 7

EP Petroecuador Was Not Complicit in Baquerizo’s Crimes ............................................ 9

RESTITUTION DETERMINATION ......................................................................................... 11

CONCLUSION ............................................................................................................................ 12

CERTIFICATION OF SERVICE................................................................................................ 13


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TABLE OF AUTHORITIES

Page(s)

Cases

In re McNulty,

597 F. 3d 344, 350 (6th Cir. 2010) ............................................................................................8

Reich v. Lopez,

858 F.3d 55, 2017 U.S. App. LEXIS 9172 (2d Cir. 2017) ......................................................10

Smith-Perry Elec. Co. v. Transp. Clearings of L.A.,

243 F.2d 819, 821 (5th Cir. 1957) ...........................................................................................11

Standard Oil Co. of Tex. v. U.S.,

307 F. 2d 120 (5th Cir 1962) ...................................................................................................10

U.S. v. Collins,

854 F. 3d 1324 (11th Cir. 2017) ................................................................................................5

United States v. Alcatel-Lucent France, S.A. et al,

10-cr-20906-COOKE, Dkt. 43 ...................................................................................................8

United States v. Arturo Escobar Dominguez,

Case No. 1:18-cr-20108-CMA, S.D. Fla., .................................................................................2

United States v. Atl. States Cast Iron Pipe Co.,

612 F. Supp. 2d 453, 460-61 (Dist. N.J. 2009) ..........................................................................8

United States v. Credit Suisse AG,

Case No. 1:14cr188, 2014 U.S. Dist. .........................................................................................8

United States v. Frank Roberto Chatburn Ripalda,

Case No. 1:18-cr-20312-MGC, S.D. Fla ...................................................................................2

United States v. Jose Larrea,

Case No. 1:18-cr-20312-MGC, S.D. Fla., .................................................................................2

United States v. Juan Andres Baquerizo Escobar,

Case No. 1:17-cr-20596-DPG, S.D. Fla., ..................................................................................2

United States v. Kasper,

60 F. Supp. 3d 1177 (D.N.M. 2014) ..........................................................................................8

United States v. Marcelo Reyes Lopez,

Case No. 1:17-cr-20747-KMW, S.D. Fla., ................................................................................2


TABLE OF AUTHORITIES

(continued)

Page(s)

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United States v. Ramiro Andres Luque Flores,

Case No. 1:17-cr-00537-CBA, E.D.N.Y., .................................................................................2

United States v. Ridglea State Bank,

357 F.2d 495 (5th Cir. 1966) ...................................................................................................10

Vt. Agency of Natural Res. v. United States ex rel. Stevens,

529 U.S. 765, 120 S. Ct. 1858 (2000) ........................................................................................9

Will v. Michigan Dept. of State Police,

491 US 58 (1989) .......................................................................................................................9

Statutes

18 U.S.C.A.§ 3663 ...........................................................................................................................5

18 U.S.C. §§ 3663A, 3664, and 3771 ..............................................................................................1

18 U.S.C. § 3664 ............................................................................................................................11

18 U.S.C. § 3771(a) & (d)(1) ...........................................................................................................8

18 U.S.C. § 3664 ..............................................................................................................................2

18 U.S.C. § 3771 ....................................................................................................................7, 8, 12

RICO ..............................................................................................................................................10

Other Authorities

Federal Sentencing Guidelines, Section 6A1.5 ..............................................................................11

Rule 32(c)(1)(B) FED. R. CRIM. P. ................................................................................................1

150 Cong. Rec. S4269 (daily ed. Apr. 22, 2004 ..............................................................................7

150 Cong. Rec. S10912 (daily ed. Oct. 9, 2004) ............................................................................7

False Claims Act (“FCA”), 31 U.S.C. § 3729(a) .............................................................................9

www.eppetroecuador.ec .................................................................................................................11

Rule 32(b)(2), FED. R. CRIM. P. ..................................................................................................12


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Empresa Pública de Hidrocarburos del Ecuador (“EP Petroecuador”) respectfully moves

this Court to recognize its rights as a victim and to enter an order of restitution requiring Defendant

Juan Andres Baquerizo Escobar (“Baquerizo” or “Defendant”), pursuant to 18 U.S.C. §§ 3663A,

3664, and 3771 and FED. R. CRIM. P. 32(c)(1)(B), to make restitution to EP Petroecuador as a

victim of the offense to which this Defendant has plead guilty.

INTRODUCTION

EP Petroecuador is the principal corporate victim of the Defendant’s criminal conduct and

has suffered financial losses as a direct result of the Defendant’s and other co-conspirators’

criminal acts. Accordingly, EP Petroecuador moves for recognition of its rights as a victim and

its entitlement to restitution from the Defendant.

Due to the complexity of this case and its interrelatedness with two other cases pending

before another judge in this district, where EP Petroecuador is the victim,1 EP Petroecuador is

requesting 90 days post-sentencing to ascertain the amount of its losses caused by this Defendant

and his co-conspirators. For example, EP Petroecuador has discovered at least 15 contracts

Baquerizo’s companies obtained in exchange for paying bribes to rogue EP Petroecuador

employees. EP Petroecuador needs the requested 90 days following Baquerizo’s sentencing to

identify all the companies and contracts connected to Baquerizo so it can determine the amount of

overpricing the Defendant and his co-conspirators charged EP Petroecuador on the contracts his

companies obtained through this complex bribery scheme.

This case is part of an ongoing investigation by the U.S. Department of Justice. Thus far,

six defendants have been identified and charged as perpetrators of federal crimes in relation to

1 United States v. Jose Larrea, Case No. 1:18-cr-20312-MGC, S.D. Fla.; United States v. Frank Roberto Chatburn-

Ripalda, Case No. 1:18-cr-20312-MGC, S.D. Fla.


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corruption-induced contracts with EP Petroecuador.2 Of those six defendants, five have pleaded

guilty.3 Three of the five defendants that have pleaded guilty have been sentenced.4 One has had

his sentencing postponed pending his testimony in an upcoming trial.5 This final Defendant,

Chatburn-Ripalda, was re-arraigned on a superseding indictment on January 8, 2019. His trial date

is set for February 19, 2019.6 As further detailed below, EP Petroecuador is a victim of the crimes

committed by these six defendants and here particularly, the crimes perpetrated by Baquerizo.

As a victim, EP Petroecuador is thus entitled to the recognition of its rights, and to joint

and several restitution from Baquerizo and his convicted co-conspirators for the losses and harms

it has suffered as a direct and proximate cause of their confessed crimes against EP Petroecuador,

pursuant to 18 U.S.C. § 3664(h).

FACTS FROM DEFENDANT BAQUERIZO’S GUILTY PLEA

THAT SUPPORT THIS MOTION.

The facts stated below are taken directly from Baquerizo’s Factual Proffer in Support of

Guilty Plea (“Proffer”) (Dkt. 19); accordingly, none of those facts are in dispute.

2 United States v. Marcelo Reyes Lopez, Case No. 1:17-cr-20747-KMW, S.D. Fla., Indictment dated October 24,

2017; United States v. Arturo Escobar Dominguez, Case No. 1:18-cr-20108-CMA, S.D. Fla., Information dated

February 20, 2018; United States v. Ramiro Andres Luque Flores, Case No. 1:17-cr-00537-CBA, E.D.N.Y.,

Information dated October 6, 2017; United States v. Jose Larrea, Case No. 1:18-cr-20312-MGC, S.D. Fla., Indictment

dated April 19, 2018; United States v. Frank Roberto Chatburn Ripalda, Case No. 1:18-cr-20312-MGC, S.D. Fla.,

Indictment dated April 19, 2018; United States v. Juan Andres Baquerizo Escobar, Case No. 1:17-cr-20596-DPG,

S.D. Fla., Information dated July 11, 2018. 3 Messrs. Marcelo Reyes Lopez, Arturo Escobar Dominguez, Ramiro Andres Luque Flores, Jose Larrea, and Juan

Andres Baquerizo Escobar have pleaded guilty. See United States v. Marcelo Reyes Lopez, Case No. 1:17-cr-20747-

KMW, S.D. Fla., Plea Agreement dated April 10, 2018; United States v. Arturo Escobar Dominguez, Case No. 1:18-

cr-20108-CMA, S.D. Fla., Plea Agreement dated March 28, 2018; United States v. Ramiro Andres Luque Flores, Case

No. 1:17-cr-00537-CBA, E.D.N.Y., Plea Agreement dated October 6, 2017; United States v. Jose Larrea, Case No.

1:18-cr-20312-MGC, S.D. Fla., Plea Agreement dated September 14, 2018; United States v. Juan Andres Baquerizo

Escobar, Case No. 1:17-cr-20596-DPG, S.D. Fla., Plea Agreement dated September 14, 2018. 4 See United States v. Marcelo Reyes Lopez, Case No. 1:17-cr-20747-KMW, S.D. Fla., Sentenced on July 23, 2018;

United States v. Arturo Escobar Dominguez, Case No. 1:18-cr-20108-CMA, S.D. Fla., Sentenced on June 6, 2018;

United States v. Jose Larrea, Case No. 1:18-cr-20312-MGC, S.D. Fla., Sentenced on November 27, 2018. 5 Ramiro Andres Luque Flores is expected to testify at an upcoming trial, and he is set for a status conference in

March 2019. 6 Frank Roberto Chatburn Ripalda has pleaded not-guilty. See United States v. Frank Roberto Chatburn Ripalda,

Case No. 1:18-cr-20312-MGC, S.D. Fla. (Dkt. 110)


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EP Petroecuador is the state-owned oil company of Ecuador. EP Petroecuador regularly

engages outside companies to provide goods and services needed as part of EP Petroecuador’s

business operations. From in or around 2003 through in or around 2016, Baquerizo, a citizen of

Ecuador, owned and controlled an Ecuadorian company that provided services in the oil industry,

including to EP Petroecuador.

As Baquerizo admitted, from 2012, continuing at least until 2016, he knowingly and

willfully used the mails and instrumentalities of interstate commerce to corruptly pay

approximately $1,720,000 in bribes to EP Petroecuador officials in order to influence these

officials in their official capacity and to secure an improper advantage for companies associated

with him in order to assist these companies in obtaining and retaining business with EP

Petroecuador (“the illegal bribery scheme”). (Dkt. 19 at 1-2). Baquerizo further conspired with

others to conceal and disguise the nature, location, source, ownership and control of the proceeds

of this bribery scheme and to promote the scheme’s continuance. Id. at 2.

As further admitted, Baquerizo and others obtained shell companies in the Bahamas and

Panama, opened bank accounts in Panama and Switzerland in the names of those shell companies,

and transferred proceeds of the illegal bribery scheme from those shell companies’ bank accounts

into Panama-based bank accounts held in the name of shell companies controlled by a former EP

Petroecuador official. This included causing six wire transfers, totaling approximately $1,123,678,

to be made from bank accounts in Panama and Switzerland held in the names of shell companies

Baquerizo controlled, into bank accounts in Panama held in the names of shell companies

controlled by this corrupt EP Petroecuador official. Id. at 2.

Baquerizo’s admitted conduct and its effect on EP Petroecuador is detailed further in the

Proffer: between August 2015 and December 2015, Baquerizo directed other individuals to make


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two wire transfers totaling about $40,000 from bank accounts held in the names of companies they

controlled into Panamanian bank accounts of shell companies controlled by this same former EP

Petroecuador official. And on or about February 1, 2016, Baquerizo coordinated the transfer of

about $500,000 into a shell company’s Panamanian bank account for this EP Petroecuador official.

Baquerizo admitted to knowing these funds were bribe proceeds from another company paid to

this former EP Petroecuador corrupt official.

Baquerizo further admitted that in furtherance of his money laundering conspiracy, and

with intent to conceal and disguise the proceeds of this illegal bribery scheme, and to further

perpetuate it, he caused $600,000 in proceeds from the illegal bribery scheme to be sent to a real

estate IOTA trust account in the Southern District of Florida. These illegal bribery proceeds of

approximately $600,000 that Baquerizo sent to the IOTA trust account were used for the purchase

of real properties located at 4775 Collins Av. Unit 1802 (unit) and CA-D28 (cabana), Miami

Beach, Florida, 33140, for the benefit of an EP Petroecuador official.7 As further admitted,

Baquerizo knew these contracts were not awarded by EP Petroecuador through a legal, fair and

equitable process, and he knew that his acts of paying bribes and concealment were unlawful. Id.

at 4.

As part and parcel to the bribery scheme, Baquerizo and other vendors added percentage

increases to the value of their companies’ respective contracts to generate the funds from which

they would pay certain EP Petroecuador employees, and pay themselves a profit.8 Baquerizo knew

7 In United States v. Juan Andres Baquerizo Escobar, Case No. 1:17-cr-20596-DPG, EP Petroecuador filed its

Verified Petition for Hearing to Adjudicate Third–Party Claim to the Value of the Real Property Located at 4775

Collins Ave., forfeited by Defendant, Juan Andres Baquerizo Escobar. (Dkt. 34) 8 It is common practice in bribe-induced contracts for the bribing parties to account for the value of the bribe in the

price of the contract they are awarded as a result of the bribe payment. The bribing parties (here Baquerizo and others)

inflated the value of their contracts which were accepted by the corrupt officials holding the power to award the

contracts (here, unnamed EP Petroecuador officials and management). Once the overpriced invoice is paid for by the

victim entity (here EP Petroecuador), the money is then laundered by the chosen launderers (here, Baquerizo and


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that by setting up and purchasing shell companies and establishing bank accounts in their names

so that certain PE Petroecuador officials could receive the bribe payments, from himself and

others, and by disguising illegal proceeds through real estate investments, that he was enabling the

continued success of this bribery scheme.

Accordingly, Baquerizo’s acts directly and proximately harmed EP Petroecuador by

denying it the right to have its contracts awarded through a legal, fair and equitable process, at

competitive prices, resulting in what is easily millions of dollars in losses.

Baquerizo’s Offense Was an Offense Against Property Under the MVRA

Full restitution is mandatory under the Mandatory Victim Restitution Act of 1996

(“MVRA”) for an “offense against property,” including any offense committed by fraud or deceit.

18 U.S.C.A.§ 3663A(c)(ii). Pertinent here, the MVRA applies to conspiracies when their

underlying purpose was an offense against property, as it was in the case at bar. See U.S. v. Collin,

854 F. 3d 1324 (11th Cir. 2017).

Indeed, the Eleventh Circuit’s decision in Collins makes clear that Baquerizo’s offense is

one against property. There, as in this case, the defendant was convicted of conspiracy. The

unlawful conduct in Collins was the illegal acceptance of gratuities by Collins to assist her co-

conspirator in cashing stolen U.S. Treasury checks by opening bank accounts under the names of

fictitious persons or intended recipients, and depositing them in the victim’s fraudulently opened

bank accounts. Id. at 1328. In short, the court affirmed the district court in holding that Collins

“facilitated bank transactions that proximately caused Wells Fargo’s losses, and she intended to

others) into the offshore accounts they set up for the EP Petroecuador employees. Once laundered, the bribes and

profits of the corrupt scheme are distributed, in one form or another, to all co-conspirators, leaving the victim holding

the bill. See e.g. United States v. McNair, 605 F.3d 1152, 1221 (11th Cir. 2010) (“the [bribing party] essentially

recouped their bribe money by adding it back to their sewer and engineering contract bills as a cost of doing business

with the County.”).


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derive an unlawful benefit from the property that was the subject of these transactions,” and that

constituted an “offense against property.” Id. at 1327.

In determining that Collins’s conspiracy offense was one against property, the court

reasoned that the focus should be on “the offense that was the object of the unlawful scheme.” Id.

at 1335. The court explicitly rejected the approach of relying on the elements of the offense for

this determination. Id. at 1334. The court ultimately held that “[b]y accepting … cash payment

in connection with [banking] transactions … Ms. Collins intentionally derived an unlawful

pecuniary gain by taking property belonging to Wells Fargo, thereby making her gratuities offense

an ‘offense against property.’” Id. at 1335.

Accordingly, if the defendant’s offense in Collins – facilitating bank transactions and

accepting cash bribes to do so – constituted an offense against property that was a proximate cause

of the bank’s losses, then Baquerizo’s offenses of overpricing contracts, paying bribes,

concealment, and deriving profit from the entire bribery scheme surely qualifies. See 18 U.S.C.A.§

3663A(c)(ii). These contracts were stolen from EP Petroecuador through fraud and deceit, not

only because they were “paid-for,” but also because Baquerizo and his co-conspirators purposely

overpriced them, with built-in percentages to cover the bribes and their profits. As in Collins, here

the bribe money and the profits derived from EP Petroecuador’s payments are part of the property

losses at issue.

But for each co-conspirator’s fulfilling their respective roles, e.g. agreeing to accept the

bribe in exchange for granting the contract, forming the shell companies and setting up their bank

accounts, wiring the bribe payments into these companies’ offshore accounts, and then investing

these illegal proceeds into real property, the conspiracy and the money laundering would have

collapsed. Therefore, to the fullest extent, each co-conspirator, including Baquerizo, jointly,


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severally, directly and proximately caused EP Petroecuador’s injury by causing it to award its

contracts to corrupt companies, over pay for the goods and services it purchased, which resulted

in its monetary loss and the loss of the honest services of its officials and employees.

Accordingly, EP Petroecuador is entitled to mandatory restitution under the MVRA

because this money laundering offense is an offense against property and EP Petroecuador is the

identifiable victim.

EP Petroecuador Is Entitled to the Rights of a Victim Under the CVRA and MVRA

EP Petroecuador is a victim and entitled to all the rights granted under the Crime Victims’

Rights Act of 2004 (“CVRA”) pursuant to 18 U.S.C. § 3771, and the MVRA. As a victim under

the CVRA, EP Petroecuador has the right, among others provided: (1) not to be excluded from any

public court proceeding; (2) to be reasonably heard at any public proceeding in the district court

involving release, plea, sentencing, or any parole proceeding; (3) to confer with the attorneys for

the Government in the case and be informed by them; (4) to be reasonably protected from the

accused; and (5) to be considered by the Court for “full and timely restitution as provided in law.”

18 U.S.C. § 3771(a)(1), (3)–(6). The Government here, however, failed to fulfill any of these

obligations. That failure has hampered EP Petroecuador’s ability to timely and adequately seek

restitution against all co-conspirators and its capacity to ensure that no bad actors remain with the

company.

Congress enacted the CVRA, part of the Justice For All Act of 2004, to reform the federal

criminal justice system by providing an uncomplicated procedure for crime victims to “force the

criminal justice system to be responsive to a victim’s rights in a timely way.” 150 Cong. Rec.

S4269 (daily ed. Apr. 22, 2004) (statement of Sen. Feinstein); see also 150 Cong. Rec. S10912

(daily ed. Oct. 9, 2004) (statement of Sen. Kyl). The CVRA makes crime victims part of the


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process by guaranteeing ten different statutory rights and allows both the government and the

victims to enforce those rights. Id. (citing 18 U.S.C. § 3771(a) & (d)(1)).9

Given that the CVRA was based on the MVRA, including its almost word-for-word

definition of victim, courts have routinely held that the CVRA should be interpreted consistently

with the MVRA. See e.g., United States v. Atl. States Cast Iron Pipe Co., 612 F. Supp. 2d 453,

460-61 (Dist. N.J. 2009) (“one of the chief sponsors of the [CVRA], Sen. John Kyl, has explained

that the CVRA’s definition of a crime victim is based on the federal restitution statutes, citing …

the MVRA”) (internal quotations omitted). Indeed, pertinent to this case, the court in United States

v. Credit Suisse AG, Case No. 1:14cr188, 2014 U.S. Dist. LEXIS 144179 (E.D.Va. Sept. 29, 2014),

held that “we find our case law construing the VWPA and the MVRA persuasive, both for how

the CVRA is to be interpreted procedurally and for when an individual qualifies as a victim of a

conspiracy.” Id. at *9 (quoting In re McNulty, 597 F. 3d 344, 350 (6th Cir. 2010).

Despite this near universal guidance, the Government recently raised the argument in a

separate proceeding presently pending before another judge in this District.10 In the Government’s

argument it posited that the CVRA’s definition of victim does not include sovereigns, even though

the MVRA’s definition, on which the CVRA’s is based, does. In support of this position, the

Government cited a lone district court opinion from New Mexico that held, without much analysis,

that a sovereign was not a crime victim for purposes of the CVRA.11 United States v. Kasper, 60

9 Since its passage, the CVRA’s victim rights have benefitted unsophisticated individuals (i.e. a rape victim), high-

net worth investors (i.e. victims of Bernie Madoff and other financial schemes), large corporations (Merrill Lynch)

and international organizations (FIFA). Domestic or foreign governmental entities have also been afforded all rights

under the CVRA under a real or a “quasi” victim status. See Instituto Constarricense de Electricidad (“ICE”) where

the government “accorded ICE with the rights typically reserved for victims” (United States v. Alcatel-Lucent France,

S.A. et al, 10-cr-20906-COOKE, (Dkt. 43 at 1-2). In that case, the Government rejected ICE’s right to restitution, but

spent more than FIVE pages of its memorandum in opposition to ICE’s victim status discussing how it afforded ICE

each one of the rights granted under the CVRA (Dkt. 43 at 13-21). 10 United States v. Jose Larrea, Case No. 1:18-cr-20312-MGC, S.D. Fla. 11 See, Jose Larrea, Case No. 1:18-cr-20312-MGC, S.D. Fla.


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F. Supp. 3d 1177 (D.N.M. 2014). This case, however, is unpersuasive for a number of reasons,

not least of which, its reading of “person” to exclude sovereigns, including foreign governments,

is based on an expansive reading of Vt. Agency of Natural Res. v. United States ex rel. Stevens,

529 U.S. 765, 120 S. Ct. 1858 (2000). The Supreme Court in Vermont Agency refused to include

States (i.e. sovereigns) within the definition of “person” because such reading would subject States

to qui tam liability under the False Claims Act (“FCA”), 31 U.S.C. § 3729(a). See also, Will v.

Michigan Dept. of State Police, 491 US 58 (1989) (“This approach is particularly applicable where

it is claimed that Congress has subjected the States to liability to which they had not been subject

before.”).

In EP Petroecuador’s case, the issue is not whether to subject sovereigns to liability, to

which they had not been subjected before, but whether Congress intended that they should be

excluded from the protections that the CVRA provides to all victims of crime. That distinction by

itself shows how inapposite Vermont Agency is to address the issues here. Accordingly, the large

number of courts interpreting the CVRA consistent with the MVRA and its protections easily

apply to the case here, where EP Petroecuador comes before this Court as a victim.12

EP Petroecuador Was Not Complicit in Baquerizo’s Crimes

Baquerizo and his co-conspirators intended to corrupt EP Petroecuador’s employees by

bribing them for EP Petroecuador’s business. Baquerizo and his co-conspirators knew full well

they would recoup their monies by overcharging EP Petroecuador for their goods and services.

Indeed, the scheme could not work unless EP Petroecuador was victimized and lost millions of

12 In the FCPA context, several victimized government entities have received restitution. See, Cook Islands in U.S.

v. Kenny Int’l Corp., Cr. No. 79-372 (D.D.C. 1979) (ordering restitution to Cook Islands government for a guilty plea

to FCPA bribery violations); West Germany in U.S. v. F.G. Mason Eng’g, Inc., Cr. B-90-29 (D.Conn. 1990) (ordering

restitution to West Germany’s government for a guilty plea to FCPA bribery violations); Haiti in U.S. v. Diaz, No. 09-

cr-20346-JEM, at Dkt. 37 (S.D. Fla. Aug. 5, 2010) (Defendant ordered to pay restitution to Haitian government

resulting from a guilty plea to FCPA bribery violations involving state-owned telecommunications company).


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dollars. To argue otherwise would be contrary to the facts of this case, applicable law, and the

entire logic of these secret and corrupt schemes.13

On point, in United States v. Ridglea State Bank, 357 F.2d 495 (5th Cir. 1966),14 the Court

rejected the idea that a bank officer’s secret complicity with a borrower could be imputed to his

employer:

[I]f a specific criminal intent is necessary to constitute a crime, an

employer may be penalized for an employee’s criminal act only if

the agent acted within the scope of his employment, and not if the

agent acted for some purpose other than that of serving his employer

. . . . [Here] Hubbard’s purpose, in fact, was to line his own pockets

and those of his accomplices . . . .” (emphasis added)

357 F.2d at 498.

This case called for the application of the rule which the Fifth Circuit discussed in Standard Oil

Co. of Tex. v. U.S., 307 F. 2d 120 (5th Cir 1962); that is:

that the knowledge of or guilty intent of an agent not acting with a

purpose to benefit his employer, will not be imported to the

employer, when the latter is sought to be held liable under a statute

requiring knowledge or guilty intent.

357 F.2 at 498.

EP Petroecuador obtained no benefit from this conspiracy and underlying bribery scheme.

There is not an iota of evidence that the bribe-taking employees – and the ensuing money

laundering – who damaged EP Petroecuador financially, were acting in any way and from any

perspective, even in part, to benefit EP Petroecuador. Legally and factually, EP Petroecuador

13 In Reich v. Lopez, 2017 U.S. App. LEXIS 9172, *11 (2d Cir. 2017), a civil RICO action against a private

Venezuelan energy company, Derwick Associates, that allegedly stole billions of dollars from the Venezuelan

government through bribery of Venezuelan officials to secure contracts at inflated rates without public bidding, the

court of appeals states that “the victims were competing energy contractors and the government of Venezuela”

(emphasis in original). Derwick Associates and its owners are currently under investigation for money laundering by

the U.S. Attorney’s Office for the Southern District of New York. 14 The Eleventh Circuit adopted as binding all decisions of the former Fifth Circuit handed down at the close of

business on September 30, 1981.


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cannot be held to be complicit in their acts. See Standard Oil Co. of Tex. v. United States, 307

F.2d 120, 129 (5th Cir. 1962) (“the corporation does not acquire that knowledge or possess the

requisite ‘state of mind essential for responsibility,’ through the activities of unfaithful servants

whose conduct was undertaken to advance the interests of parties other than their corporate

employer.”); Smith-Perry Elec. Co. v. Transp. Clearings of L.A., 243 F.2d 819, 821 (5th Cir. 1957)

(it is “elementary that a transaction outside the scope of the agent’s authority, actual or apparent,

is incapable of subjecting the principal to liability.

EP Petroecuador has over 4,500 of employees.15 Those being pursued for their crimes

represent but a small percentage of the honest, hardworking employees at EP Petroecuador.

Simply put, EP Petroecuador has suffered property and financial losses at the hands of these

defendants. EP Petroecuador lost its contracts, its money, and the honest services of its employees

to these criminals.

RESTITUTION DETERMINATION

The losses sustained by EP Petroecuador have not yet been ascertained. Therefore, EP

Petroecuador, pursuant to 18 U.S.C. § 3664(d)(5), requests this Court to set a date for a restitution

hearing and final determination of its losses 90 days after Baquerizo’s sentencing, currently

scheduled for January 18, 2019. Although this case and determining EP Petroecuador’s losses are

complicated, EP Petroecuador will work diligently to ascertain its losses within the requested 90

days, discuss them with the Government and Probation Officer, and be prepared for its restitution

hearing.

15 See www.eppetroecuador.ec.


http://www.eppetroecuador.ec/

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Section 6A1.5, Crime Victims’ Rights (Policy Statement) of the Federal Sentencing

Guidelines states:

In any case involving sentencing of a defendant for an offense

against a crime victim, the court shall ensure that the crime victim

is afforded the rights described in 18 U.S.C. § 3771 and in any other

provision of Federal law pertaining to the treatment of crime

victims.

Rule 32(b)(2) of the Federal Rules of Criminal Procedure provides,

as to the time of sentencing, that:

(2) Changing Time Limits. The court may, for good

cause, change any time limits prescribed in this rule.

CONCLUSION

Accordingly, for all of the reasons stated above, and in its Motion and Supporting

Memorandum of Law for Recognition of its Rights as a Victim and Entitlement to Restitution, EP

Petroecuador respectfully requests that:

1. The Court grant EP Petroecuador’s motion for recognition as a victim under both

the CVRA and the MVRA;

2. The Court set a restitution hearing 90 days after Baquerizo’s sentencing; and

3. The Court award EP Petroecuador the restitution it is seeking under the provisions

of the MVRA.


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Respectfully submitted,

s/ Rebekah J. Poston

Rebekah J. Poston

Florida Bar No. 183355

[email protected]

Raul B. Manon


[email protected]

Digna B. French


[email protected]

Squire Patton Boggs (US) LLP

200 South Biscayne Blvd.


(305) 577-7056

COUNSEL FOR EP PETROECUADOR

CERTIFICATION OF SERVICE

I hereby certify that on the 8th day of January, 2019, I electronically filed the foregoing

pleading with the Clerk of Court and served all counsel of record using the Court’s CM/ECF

system.

/s/ Rebekah J. Poston

REBEKAH J. POSTON


mailto:[email protected]



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SERVICE LIST

Karen Rochlin, A.U.S.A.

United States Attorney’s Office

99 NE 4 Street


Telephone: (305) 961-9234

Email: [email protected]

David M. Fuhr

Department of Justice

Bond Building

1400 New York Avenue NW

Washington, DC 20005

Telephone: (202) 616-3504


Kathern Raut


Bond Building, 11th Floor



Telephone: (202) 616-2577


Lorinda Laryea


Bond Building



Telephone: (202) 353-3439


Mary Ann Mccarthy





Telephone: (202) 616-5584


Nalina Sombuntham


Southern District of Florida

99 N.E. 4th Street


Telephone: (305) 961-9224


Alexander Seraphin

United States Probation Officer

Wilkie D. Ferguson, Jr. United States Courthouse

400 North Miami Avenue, 9th Floor South


Telephone: (305) 523-5332


Ana M. Davide, Esq.


2929 SW 3rd Avenue, Suite 420


Telephone: (305) 854-6100

Fax: (305) 854-6197


(Counsel for Defendant, Juan Andres

Baquerizo Escobar)










in the united states district court for the …...jose larrea, case no. 1:18-cr-20312-mgc, s.d....

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