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Salesman cleared in $2bn African scam in blow to US

Decision came down to jurisdiction in which crime was committed.

A Privinvest Group salesman was acquitted of defrauding investors in a $2 billion global loan scandal that prosecutors said involved more than $200 million in bribes to bankers and Mozambican officials, a blow to US efforts to police corruption abroad.

Jean Boustani, who worked for the global shipbuilding company based in the United Arab Emirates, was found not guilty Monday on all three conspiracy counts against him — to commit wire fraud, securities fraud and launder money. He smiled and crossed himself after the verdict was read out in federal court in Brooklyn, New York, and embraced each of his lawyers in a bear hug.

The verdict came down to the venue, three jurors, including the foreman, said in interviews afterward. All three, who declined to give their names, said the panel didn’t see how federal prosecutors in Brooklyn had the authority to prosecute crimes that hadn’t occurred in their jurisdiction. The jury deliberated for about four hours on Wednesday, before a Thanksgiving break, and 40 minutes on Monday.

“Your honor, first of all, I apologize for being emotional, a little bit. It wasn’t easy for me after 11 months in jail,” Boustani told US District Judge William Kuntz. The 41-year-old Lebanese national, who’d been in jail in the US since his arrest in early January at John F. Kennedy International Airport in New York, thanked the court “for all your time, dedication and for your fair judgment throughout this trial.”

Boustani, whose proposed $20 million bail package Kuntz had rejected, raised his fist in the air as he walked out of court a free man.

The government argued that Boustani was a central player in a scheme to funnel illicit payments to bankers, who arranged almost $2 billion in loans, and to Mozambican officials to win business for Privinvest for three dubious maritime projects. Prosecutors tried to show during the six-week trial that Boustani had defrauded US investors by helping organize and conceal bribes for loans marketed and sold to Americans in New York and Los Angeles.

Prosecutors told the jury that some of the bribes, even those paid via banks in Abu Dhabi, had passed through the US financial system via correspondent banks such as JPMorgan Chase & Co and Bank of New York Mellon. They also argued that Brooklyn was an appropriate venue because some payments went through JPMorgan accounts there and because even transactions with Manhattan banks went through the contiguous waterways the Eastern District shares with the Southern District.

Defense lawyers argued that Boustani couldn’t have foreseen that money paid via a Middle Eastern bank would go through the US And while the government’s evidence included hundreds of emails in which Boustani sought or offered payments, he told jurors during his three days on the witness stand that these were merely “success fees” for access to Mozambican officials to win business for Privinvest.

“Prosecutors don’t think much about venue, because it’s usually very easy to establish, but they may have made a mistake in this case,” said Peter Henning, a former federal prosecutor who’s now a law professor at Wayne State University.

Boustani’s lawyer Michael Schachter told the jury in his opening statement that the US “was not the world’s policeman.”

The sprawling Boustani case was a complex one for the jury, which was shown thousands of documents culled from the Middle East, Europe and the US Three Mozambican-owned companies had purchased a fleet of tuna fishing boats, built a shipyard and created a coastal defense system that included unmanned patrol vessels. After conducting little or no business, the ventures failed and caused one of the world’s poorest countries to default on its Euro-bonds in 2017.

The projects were heavily financed by loans from Credit Suisse Group AG and Russian bank VTB and paid directly to Privinvest. Prosecutors said Privinvest secured the business after it made more than $150 million in payoffs to Mozambican officials and that the company inflated the costs of equipment, sometimes by as much as 50%, to bankroll the illicit payments. Boustani and Privinvest paid an additional $50 million in kickbacks to Credit Suisse bankers critical to obtaining the loans, according to the US

Boustani told the jury that Privinvest delivered the equipment it agreed to sell to the Mozambican companies under the loan contracts. The shipbuilder has said it “rejects any suggestion of wrongdoing or impropriety with respect to the Mozambique maritime projects.” Credit Suisse wasn’t accused of wrongdoing either.

“At the end of a six-week trial, the government is about as close to meeting their burden of proof in this case as the Brooklyn Bridge is to South Africa,” Boustani’s lawyer Randall Jackson said in closing arguments. “What kind of fraud looks like that?”

Boustani, one of eight people charged in the case, was the only one to go to trial. Three former London-based Credit Suisse bankers pleaded guilty, agreed to cooperate and await sentencing. Four others aren’t in US custody.

In 2015, federal prosecutors in Brooklyn successfully brought an international bribery case against soccer officials accused of crimes that occurred mainly in Latin America and Europe. There, too, they argued that the transactions had passed through the East River and were therefore governed by the Eastern District, in Brooklyn, as well as the Southern District, in Manhattan. In that case, they won two convictions.

The case is US v Boustani, 18-cr-681, US District Court, Eastern District of New York (Brooklyn).

© 2019 Bloomberg 

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