Anyone that knows me can tell you that I get really disappointed by the way courts have handled the definition of willfulness in criminal prosecutions of violations of the International Emergency Economic Powers Act (IEEPA). For those of unfamiliar with the statute, IEEPA serves as the underlying statutory authority in many sanctions programs. In order for there to be a criminal violation of IEEPA, one of the elements the government must prove is that the defendant acted willfully. In my dream world, willfully would be defined as acting with knowledge of the specific prohibitions of the IEEPA based sanctions program. Unfortunately, no courts have sought to make my dreams come true; this includes the Seventh Circuit which continued the rain on my sanctions parade in their recent opinion in U.S. v. Turner.
If you are unfamiliar with the Turner case, here is a quick summary of the facts. Two U.S. persons sought to extend lobbying services to Robert Mugabe, and a host of other Zimbabweans on the Specially Designated Nationals and Blocked Persons (“SDN”) List. The lobbying services were intended to influence U.S. government officials to push for the delisting of the Zimbabwean SDNs. Because the provision of services to SDNs designated under Executive Orders 13228, 13469 and 13391-the Zimbabwe sanctions E.O.s–is prohibited without a license from the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC), C. Gregory Turner and his co-defendant, Prince Asiel Ben Israel, were charged with violating IEEPA. While Ben Israel pled guilty to those charges, Turner fought them and was ultimately convicted at trial.
On appeal, one of Turner’s primary challenges was to the alleged error by the lower court as to how it defined “willfully” or “willfulness” in its instructions to the jury. At trial, the district court instructed the jury as follows as to willfully as follows:
“As used in Count 3, the defendant acted willfully if he acted intentionally and purposefully with the intent to do something the law forbids, that is, with bad purpose to disobey or to disregard the law. The defendant need not be aware of the specific law or rule that … his conduct would violate. In other words, the defendant does not have to know that his conduct would violate a particular law, executive order or federal regulation, but he must act with the intent to do something the law forbids.”
Turner argued that this definition of “willfulness” misstates the law, and that in order for their to be willfulness “the government must show that [Turner] acted with `the specific intent to do something the law forbids … i.e. providing services to Specially Designated Nationals.'” However, the Seventh Circuit quickly dismissed Turner’s argument stating that the district court’s definition of “willfulness” was accurate because it was consistent with the Supreme Court’s decision in Bryan v. United States, 524 U.S. 184 (1998). In Bryan, the Court held that the traditional definition of “willfully” applied, and that the government only needed to prove “knowledge that the conduct is unlawful.” Id. at 192. Thus, any argument of “a more particularized showing”—-that the defendant knew that a specific federal law prohibited his conduct–was rejected. Id. This does not mean that ignorance of the law is not necessarily a defense–it still could be in the IEEPA context. However, knowledge that the conduct is unlawful is all that is required to meet that willfulness requirement in IEEPA.
Turner relied upon Seventh Circuit law to justify the application of the more particularized definition of willfulness, including United States v. Dobek, 789 F.3d 698 (7th Cir. 2015). Dobek, involved failure to obtain a license to export certain munitions under the Arms Control Export Act. The Seventh Circuit adopted that particularlized definition in Dobek because when it comes to exports of munitions to a particular country where that type of product is commonly exported, it is not as clear that a person who does not know of a specific regulation would be acting wrongfully.
However, in Turner’s case, even if such a heightened definition of willfulness were to be applied, the Seventh Circuit held that it would have failed under harmless error review–similar to the outcome in Dobek. Specifically, Turner arranged meetings and correspondence between U.S. and Zimbabwean officials in order to discuss the lifting of the sanctions. In other words, he provided services to the SDNs to assist in lifting the prohibitions against providing services to the SDNs. Thus, even if the trial court had instructed the jury to follow the heightened willfulness definition, it was clear that Turner knew his conduct to be unlawful.
Another interesting aspect of this appeal was that Turner argued he could not be convicted because the conspiracy count required, as an element of the crime, that the particular SDNs to whom he was providing services be identified. Again, the Seventh Circuit found Turner’s arguments unavailing. The court noted that under an IEEPA conspiracy to provide services to SDNs–in this case under the Zimbabwe sanctions executive orders–that the particular SDNs are the means of the conspiracy, and not an element of the offense.
The Seventh Circuit relied upon, in part, the fact that the unlawful acts language of the IEEPA penalty provision, 50 U.S.C. § 1705(a), does not mention SDNs, but rather that a person conspired to violate a license, order, regulation, or prohibition issued under IEEPA. The court then focused on the fact that the Zimbabweans Sanctions Regulations, 31 C.F.R. Part 541, prohibit services performed by U.S. persons on behalf of a person whose property and interests in property are blocked pursuant to 31 C.F.R. § 541.201(a)–which blocks those designated pursuant to Executive Orders 13288, 13391 and 13469. Finally, given that there is no language in the ZSR to suggest specific SDNs must be identified for there to be a violation–the prohibitions just broadly address prohibitions related to persons designated under the relevant executive orders–then identification of whom prohibited services were provided to is a means, rather than an element, of the offense.
At the end of the day what all of this means is that in order to obtain a conviction for transacting with SDNs, the Government need not reach juror unanimity as to which SDNs were provided services–as this is merely a means of the conspiracy. All they must show is that services were provided to an SDN (the object of the conspiracy). In short, the Government will have greater flexibility in obtaining criminal convictions for sanctions violations….as if they needed more help. Criminal prosecutions for sanctions violations are becoming more commonplace, and as these cases get litigated, more law unfavorable to defendants is being created. As such, compliance is more important than ever, and thoroughly understanding the potential theories of both civil and criminal liability for engaging in transactions with sanctioned parties or jurisdictions is becoming an absolute necessity.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or email@example.com