Dutch Aerospace firm Fokker Services BV has appealed Judge Richard Leon’s extraordinary order from earlier this month tossing a deferred prosecution agreement between the company and the Department of Justice.
The company is being represented by David DiBari of Clifford Chance in Washington, D.C.
The company is appealing Judge Leon’s decision to the Court of Appeals for the District of Columbia.
Judge Leon’s decision represents the first time that a federal judge had rejected a deferred prosecution agreement in a corporate crime case.
In June 2014, the Justice Department criminally charged Fokker with violating federal export controls by engaging in illegal transactions involving the export of aircraft parts, technologies, and services to customers in Iran, Sudan, and Burma.
In tossing the deferred prosecution agreement, Judge Leon ruled that “it would undermine the public’s confidence in the administration of justice and promote disrespect for the law for it to see a defendant prosecuted so anemically for engaging in such egregious conduct for such a sustained period of time and for the benefit of one of our country’s worst enemies.”
“Surely one would expect, at a minimum, a fine that exceeded the amount of the revenue generated, a probationary period of longer than 18 months, and a monitor trusted by the Court to verify for it and for the government both that this rogue company truly is on the path to complete compliance,” Judge Leon wrote.
Leon made the point that Fokker took in $21 million in revenue from the illegal sales.
“Notwithstanding this egregious conduct over a sustained period of time, the Government has agreed to dismiss the Information if Fokker Services pays a fine of $10.5 million, cooperates with the Government, implements its compliance program, and complies with U.S. export laws for only eighteen months,” Judge Leon wrote. “As such, even when combined with penalties it must pay to other U.S. regulatory agencies as part of a global settlement on these issues, the Government is not requiring Fokker Services to pay as its fine a penny more than the $21 million in revenue it collected from its illegal transactions.”
Judge Leon also pointed out that no individuals were prosecuted for their conduct in the case and “a number of the employees who were directly involved in the transactions are being allowed to remain with the company.”
Judge Leon also bristled at the fact that the deferred prosecution agreement “does not call for an independent monitor, or for any periodic reports to be made to either this Court or the government verifying the company’s compliance with U.S. law over this very brief 18-month period.”
“As such, the Court is being left to rely solely on the self-reporting of Fokker Services,” Judge Leon wrote. “One can only imagine how a company with such a long track record of deceit and illegal behavior ever convinced the Department of Justice to agree to that!”
“The parties, not surprisingly, argue that Fokker Services’ voluntary self-disclosure of the conduct at issue, cooperation and remediation efforts, and precarious financial condition support the government’s position that the current deferred prosecution agreement appropriately punishes Fokker Services while allowing for company rehabilitation,” Judge Leon wrote.
“I disagree,” Judge Leon wrote. “While I do not discount Fokker Services’ cooperation and voluntary disclosure or, for that matter, its precarious financial situation, after looking at the deferred prosecution agreement in its totality, I cannot help but conclude that the deferred prosecution agreement presented here is grossly disproportionate to the gravity of Fokker Services’ conduct in a post-9/11 world,” Judge Leon wrote.
Judge Leon concluded that the deferred prosecution agreement “does not constitute an appropriate exercise of prosecutorial discretion and I cannot approve it in its current form.”
“To be clear, however, I am not ordering or advising the government, or the defendant, to undertake or refrain from undertaking any particular action — I am merely declining to approve the document before me. I remain open to considering a modified version in the future should the parties agree to different terms and present such an agreement for my approval.”