June 22, 2017

KEEPING CURRENT: Department of Justice’s First Antitrust Extradition Highlights the Danger of Foreign Travel for Executives Under Investigation

On April 4, 2014, the U.S. Department of Justice’s (DOJ) Antitrust Division announced the first extradition of a foreign national to the United States to stand trial for alleged criminal antitrust law violations. Romano Pisciotti, an Italian national and former executive with Parker ITR Srl, headquartered in Italy, has arrived in Miami, Florida, following extradition from Germany. He will now face charges under the Sherman Act for allegedly participating in an international cartel involving sales of marine hoses. 

Although DOJ has previously secured the arrest of foreign nationals at U.S. borders, and on one occasion successfully extradited a foreign national to the United States based on obstruction of justice charges relating to an antitrust investigation, this is the first time that a foreign national has been extradited to the United States for an antitrust charge. DOJ’s announcement demonstrates its commitment to pursuing criminal prosecution of antitrust offenders wherever they may be found. It also emphasizes the risks individuals face when they travel while under indictment. 

Background 

Criminal prosecution of individuals, including imprisonment, is an essential component of DOJ’s cartel enforcement program. Over the last two decades, DOJ has increasingly focused on international cartels involving foreign companies. DOJ has made it a high priority to hold foreign nationals accountable for violations of the U.S. antitrust laws. 

DOJ may use information provided by whistleblowers, cooperating with DOJ (typically under its leniency program), to identify and arrest alleged antitrust violators visiting the United States. In 2007, DOJ arrested seven British, French, and Italian executives attending an energy industry convention in Houston to face charges in connection with its marine hose investigation – the same one that has now led to Pisciotti’s extradition. DOJ alleges that from roughly 1999 to 2007, several international companies conspired to rig bids for marine hose procurements. 

Even absent advance information about visits to the United States, DOJ can impose a border watch to detain individuals whenever they might enter the country. For example, in July 2011, an executive of auto lights manufacturer Eagle Eyes Traffic Industrial and Taiwanese national, Homy Hong-Ming Hsu, was arrested and held for trial when his plane touched down at Los Angeles International Airport en route to Mexico. 

DOJ can also seek extradition of individuals from their home countries. Its likelihood of success depends on whether the home country has an extradition treaty with the United States, the content of the home country’s extradition laws, and, in some cases, the political will of the home country to enforce those laws under the particular circumstances. Extradition commonly requires “dual criminality,” that is the conduct alleged to violate U.S. antitrust laws must also constitute a crime in the individual’s home country. For example, in March 2010, Ian Norris, a UK national and former CEO of Morgan Crucible, was extradited to the United States to stand trial for allegedly obstructing and conspiring to obstruct an antitrust investigation of carbon component manufacturers. DOJ was unable to extradite Norris to face U.S. antitrust charges because antitrust violations were not criminal offenses in the United Kingdom at that time (they now are). Conduct amounting to conspiracy to obstruct, on the other hand, was a crime in both the United States and the United Kingdom. Norris was later convicted of conspiracy to obstruct justice and sentenced to 18 months in U.S. prison. 

DOJ, however, has not yet obtained extradition of any foreign national from his or her home country to face antitrust charges in the United States. Some nations’ laws prohibit extradition of their own citizens. For example, although some forms of bid rigging are illegal under both German and U.S. criminal law, and would thus meet the dual criminality requirement, German constitutional law generally prohibits extradition of German citizens to the United States. 

Pisciotti had been “carved out” of his former employer’s guilty plea, meaning that DOJ reserved the right to prosecute him. DOJ obtained an indictment against him on August 26, 2010, but kept it secret by filing it under seal. DOJ then put Pisciotti on Interpol’s Red Notice, asking participating countries to hold Pisciotti for extradition. 

Pisciotti likely faced less risk of extradition from his home country of Italy, because anticompetitive conduct is generally not a criminal offense there. But while returning from a business assignment in Nigeria, he landed in Germany for his connecting flight to Italy. Because he was on Interpol’s Red Notice, he was detained for potential extradition to the United States. As a non-German citizen, Pisciotti was subject to potential extradition under German law. He sought to avoid extradition by claiming it would violate European law principles prohibiting discrimination based on nationality, but his claim was rejected by a German court and subsequently by the European Commission. Pisciotti has initiated a civil lawsuit in Italian court and is considering challenging the European Commission’s decision in EU courts. 

Implications for Future Cases 

Pisciotti’s extradition, like that of Ian Norris, demonstrates that DOJ is prepared to pursue aggressively alleged antitrust offenders for prosecution in the United States, including foreign nationals living abroad. It also graphically illustrates the risks such fugitives face when they choose to travel from their home countries. In criminal cartel cases, counsel routinely advise clients who are known to be under indictment (or may be under sealed indictment) to refrain from international travel. But that is easier said than done, especially for senior executives at international companies, who may have difficulty doing their jobs without leaving their home countries. Despite the risks, some individuals at least potentially wanted for U.S. antitrust violations have apparently continued to travel internationally. Pisciotti’s extradition, like Hsu’s arrest, may cause such individuals to reconsider that choice. 

DOJ vigorously pursues alleged antitrust offenders located outside the United States, and is aggressively using Interpol’s Red Notice, border watches, and other tools available to do so. Extradition laws are complicated, vary by country, may depend on the nationality of the individual, and can sometimes be inconsistently applied, especially where they leave room for discretion. When traveling, fugitives from U.S. antitrust charges must worry about potential extradition from their home country, destination country, and all countries in which they may connect along the way. Moreover, notwithstanding the best laid travel plans, there is always a risk that a plane may land in an unexpected country due to weather, mechanical difficulties, or other unanticipated circumstances. Pisciotti’s extradition may cause individuals in similar circumstances to think twice before venturing from their home countries, or to reconsider whether to refuse voluntarily to come to the United States to face charges in the first place.