For more than a century, U.S. federal courts have been articulating and refining a doctrine known as the fugitive disentitlement doctrine.[1] In the context of criminal law, the doctrine generally allows a court to deny a party’s request to make use of the U.S. judicial system when he or she is seen to be “purposely evad[ing] the jurisdiction to avoid criminal prosecution.”[2] In principle, the doctrine extends to all areas of federal crime, including white-collar crime.[3]
The U.S. Supreme Court has advanced three reasons for application of the doctrine. First, “so long as the party cannot be found, the judgment on review may be impossible to enforce.”[4] Second, an appellant’s escape “disentitles” the appellant to call upon a court’s resources “for determination of his claims.”[5] Third, disentitlement “discourages the felony of escape and encourages voluntary surrenders,” and “promotes the efficient, dignified operation” of the courts.[6]
One of the persistent questions in federal courts has been whether the doctrine should apply in criminal prosecutions to a criminal defendant who has not taken any action to flee the United States before or after the commencement of criminal prosecution, but is a foreign national who has simply remained outside the United States and seeks to challenge her prosecution without entering the United States.
Recently, the U.S. Court of Appeals for the Second Circuit, in United States v. Bescond,[7] held that a citizen and resident of France who remained at home when she was federally charged was not a fugitive within the meaning of the doctrine, and that the federal district court that had deemed her a fugitive had abused its discretion in doing so. This post will summarize and take note of the key points in Bescond.
Background
For most of the past decade, United States, United Kingdom. and French prosecutors pursued cases against multiple global financial institutions and individuals connected with manipulation of the London Interbank Offered Rate (LIBOR), a global benchmark interest rate used to settle trades in a variety of financial instruments such as Eurodollar futures contracts.[8] One of the individuals indicted in the LIBOR investigations was Muriel Bescond, the head of the Paris treasury desk of a global financial institution.[9] A citizen and resident of France, Bescond was charged with violating the U.S. Commodities Exchange Act (CEA) by transmitting, from her office in Paris, false, misleading, and knowingly inaccurate commodities reports pertaining to the LIBOR rate calculation process.[10]
Bescond remained in France and did not submit to U.S. jurisdiction at any time, and the French Government refused to extradite her. Through counsel, Bescond moved to discuss the indictment against her on multiple grounds (i.e., the indictment violated her Fifth Amendment right to due process, the statute of limitations had run, the Justice Department was selectively prosecuting women who participated in the alleged scheme while declining to prosecute similarly situated men, and the indictment against her impermissibly charged an extraterritorial application of the CEA). She also argued that, “as an alternative to dismissal on grounds of selective prosecution and statute of limitations, the court should order discovery and additional briefing from the government on those issues.”[11]
Despite the fact that Bescond had not been in the United States at any time relating to the case and had simply remained in France, the U.S. District Court for the Eastern District of New York declined to reach the merits of her motions. Instead, it concluded that she was a fugitive and made the discretionary ruling that disentitlement was warranted in this case. It also provided an alternative ruling on the merits, ruling against Bescond on the issues of due process and the CEA’s application, but “declined to make an alternative ruling on selective prosecution and the statute of limitations.”[12]
The Decision
On appeal, Bescond argued three points: (1) that the Second Circuit had appellate jurisdiction to review the disentitlement ruling under the collateral order doctrine, and should exercise pendent appellate jurisdiction to review the alternative rulings on the merits of extraterritoriality and due process; (2) that the District Court erred in designating her a fugitive and in exercising discretion to disentitle her; and (3) that the indictment charges an impermissible extraterritorial application of the CEA and violates her due process rights.[13]
A panel of the Second Circuit reached two principal conclusions: (1) it had jurisdiction to review the disentitlement ruling, but not to review the merits of the extraterritoriality or due process issues; and (2) “Bescond is not a fugitive and, even if she were a fugitive, the district court abused its discretion in concluding that disentitlement was justified.”[14] The Court determined that Bescond was neither a traditional fugitive (i.e., someone who, having committed a crime, flees the jurisdiction where the crime was committed) or a “constructive-flight fugitive” (i.e., someone “who allegedly committed crimes while in the United States but who w[as] outside the country—for whatever reason—when [she] learned that [her] arrest[] w[as] sought and who then refused to return to the United States in order to avoid prosecution”).[15]
The Court also opined:
[a]lthough we express no view as to its merits, it is telling that Bescond raises a nonfrivolous extraterritoriality claim . . . . Labeling a foreign defendant a fugitive can be enough to coerce submission to U.S. jurisdiction wholly regardless of whether the charged statute reaches individuals outside our territory. That result is in tension with principles that underlie the presumption against extraterritoriality. . . . And if our law does not reach Bescond or her conduct, can it be said that she is in flight from it?[16]
With regard to the district court’s finding of disentitlement, the Court concluded that in this case disentitlement served none of the purposes of the doctrine (i.e., (1) assuring the enforceability of any decision against the fugitive; (2) penalizing the defendant for flouting the judicial process; (3) discouraging flights from justice and promoting the court’s efficient operation; and (4) avoiding prejudice to the government caused by the defendant’s escape).[17] As the Court noted:
Other than to avoid a ruinous designation as a fugitive, Bescond has no reason to travel here: it is not shown that she has residence, immigration status, job, or family in this country, and she allegedly committed the charged offense entirely from abroad. . . . All Bescond has done is stay home, where she remained during the allegedly criminal scheme, and where her government permits her to live freely. Her reasons for litigating from home are legitimate and fair.[18]
The Court concluded that the district court had abused its discretion in disentitling Bescond, given her “innocent residence as a foreign citizen abroad”, “the nature of the charged offense and her remoteness from the alleged harm that it caused”, “her line of work”, and “her nonfrivolous challenge to the extraterritoriality of the criminal statute”.[19]
Observations
On its face, Bescond appears consistent with federal courts’ constructions and substantive applications of the fugitive disentitlement doctrine in criminal cases.[20] Lawyers advising multinational companies, however, should take care to state that the result in Bescond should not be construed as absolute immunity from disentitlement in future U.S. criminal investigations and prosecutions.
In this case, the Second Circuit deemed Bescond’s extraterritoriality challenge to the charges to be nonfrivolous. Future U.S. criminal cases, however, may involve other federal offenses that are more clearly extraterritorial in scope, and therefore may pose greater risk of disentitlement in such cases.
Companies that become aware that any of their executives residing and working abroad are under investigation for U.S. criminal offenses, such as foreign-bribery, money laundering, or sanctions violations, should therefore consult promptly with counsel about their options for contesting potential criminal charges against those executives. At least in the Second Circuit, those options now include interlocutory appeals from fugitive disentitlement orders.
Footnotes
[1] See, e.g., Degen v. United States, 517 U.S. 820 (1996); Ortega–Rodriguez v. United States, 507 U.S. 234 (1993); Smith v. United States, 94 U.S. 97 (1876).
[2] See Chloe S. Booth, Note, Doctrine on the Run: The Deepening Circuit Split Concerning Application of the Fugitive Disentitlement Doctrine to Foreign Nationals, 59 Boston College L. Rev. 1153, 1155 (2018). Discussion of application of the doctrine beyond criminal prosecution to other proceedings, such as civil forfeiture or immigration proceedings, is beyond the scope of this post.
[3] See, e.g., In re Hijazi, 589 F.3d 401 (7th Cir. 2009); United States v. Awadalla, 357 F.3d 243 (2d Cir. 2004).
[4] Degen, supra note 1, 517 U.S. at 824.
[5] Molinaro v. New Jersey, 396 U.S. 365, 366 (1970) (per curiam).
[6] Estelle v. Dorrough, 420 U.S. 534, 537 (1975) (per curiam).
[7] United States v. Bescond, 7 F.4th 127 (2d Cir. 2021).
[8] See, e.g., Serious Fraud Office, SFO concludes investigation into LIBOR manipulation, October 18, 2019, https://www.sfo.gov.uk/2019/10/18/sfo-concludes-investigation-into-libor-manipulation/; Fraud Section, Criminal Division, U.S. Dep’t of Justice, Fraud Section Year in Review 2018 6, 18 (January 18, 2019), https://www.justice.gov/criminal-fraud/file/1123566/download; U.S. Dep’t of Justice, Société Générale S.A. Agrees to Pay $860 Million in Criminal Penalties for Bribing Gaddafi-Era Libyan Officials and Manipulating LIBOR Rate, June 4, 2018, https://www.justice.gov/opa/pr/soci-t-g-n-rale-sa-agrees-pay-860-million-criminal-penalties-bribing-gaddafi-era-libyan.
[9] See Indictment, United States v. Sindzingre and Bescond, No. 2:17-cr-00464-JS (E.D.N.Y., filed August 24, 2017), https://www.justice.gov/criminal-fraud/file/993261/download.
[10] Bescond, supra note 7, at 131-32.
[11] Id. 133.
[12] Id.
[13] Id. 133-34.
[14] Id. 139.
[15] Id. 140 (quoting Collazos v. United States, 368 F.3d 190, 199 (2d Cir. 2004)).
[16] Id. 140-41.
[17] Id. 141-42 (quoting Empire Blue Cross & Blue Shield v. Finkelstein, 111 F.3d 278, 280 (2d Cir. 1997)).
[18] Id. 142.
[19] Id. 143.
[20] In a separate opinion in this case, Chief Judge Debra Ann Livingston argued that the majority “departs from our sister circuits to create a novel rule of appellate jurisdiction” by creating “a new class of interlocutory appeals” of fugitive disentitlement orders. Id. 143 (concurring in part and dissenting in part).
Jonathan J. Rusch is a Senior Fellow at New York University School of Law’s Program on Corporate Compliance and Enforcement; Adjunct Professor at Georgetown University Law Center, American University Washington College of Law, and Washington and Lee Law School; and Principal of DTG Risk & Compliance LLC. He is a former Deputy Chief in the U.S. Department of Justice’s Fraud Section, and former Senior Vice President and Head of Anti-Bribery & Corruption Governance at Wells Fargo.
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