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FIFA corruption charges: Where will FBI investigation go from here?
6:30 | Planet Futbol
FIFA corruption charges: Where will FBI investigation go from here?
Thursday May 28th, 2015

In a legal move that has turned the world of soccer upside down, nine FIFA officials and five corporate executives were indicted on Wednesday by the U.S. Department of Justice for their alleged roles in “rampant, systemic, and deep-rooted” corruption. The 14 defendants allegedly accepted $150 million in bribes and kickbacks as part of a 24-year conspiracy designed to rig the selection of international soccer tournaments and the allocation of media and broadcasting contracts. Seven of the 14 were arrested by Swiss law enforcement officers at the five-star Baur au Lac hotel in Zurich, where they were staying for an annual FIFA meeting. They now face extradition to the U.S. If convicted on all counts, the defendants would face potential sentences of decades in prison.

Explaining the alleged criminal conduct

The 166-page, 47-count indictment details a pattern of alleged activities by the 14 defendants that relate to three types of crimes: racketeering, wire fraud and money laundering.

Racketeering concerns fraudulent moneymaking schemes, such as bribery and kickbacks. The Justice Department contends that the 14 defendants engaged in widespread bribery and kickbacks that since 1991 have netted approximately $150 million. Various bribes are detailed in the indictment, including the startling allegation that former CONCACAF president and FIFA vice president Jack Warner accepted a $10 million bribe from South Africa to ensure the country would host the 2010 World Cup. As a means of supporting the Justice Department’s theory that U.S. law was violated, the indictment links alleged acts of racketeering to U.S. banks, consulting firms and other institutions. These institutions, according to the indictment, possessed funds related to the supposed bribes and kickbacks.

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Wire fraud is similar to racketeering in that it involves an illegitimate scheme to defraud others, but the method of this fraud must utilize wire communications that cross state boundaries. Supporting this charge, the indictment asserts that “FIFA wired billions of dollars from its accounts at a major Swiss financial institution into beneficiary accounts in the United States and throughout the world via a correspondent account at the U.S. branch of a major Swiss financial institution.” The indictment also details numerous examples of alleged wire fraud. For instance, in December 2010, Warner and his co-conspirators allegedly controlled a wire transfer of $290,000 that originated at Citibank in Miami, Florida. This money was then obtained by a Bank of America correspondent account in New York City in order to credit an account at Republic Bank in Trinidad and Tobago.

The third and final theory of criminal conduct detailed by the indictment is money laundering. This type of criminal practice involves moving money obtained through illegitimate means into seemingly legitimate business ventures. The money then appears to be produced lawfully, when in reality the opposite is true.

The Justice Department contends that the FIFA officials aggressively “engaged in conduct designed to prevent the detection of their illegal activities [and] concealed the location and ownership of proceeds of those activities.” The laundering of these activities, according to the indictment, occurred when the defendants deposited ill-gotten gains into agreements for consulting services, banking and lending.  To illustrate, the Justice Department argues that Jose Margulies, a broadcasting executive, utilized a sports marketing company to facilitate FIFA bribes under the cloak of a legitimate-sounding business.

Role of the “Prisoner’s Dilemma” for the 14 defendants

In any indictment where multiple persons are charged in the same conspiracy, prosecutors usually try to “cut deals” with some of the conspirators. The basic deal is as follows: to the first conspirator who agrees to plead guilty, prosecutors promise to recommend a lighter punishment to the sentencing judge that will handle the conspirator. In exchange, the cooperating conspirator agrees to testify against and share incriminating evidence about other conspirators. If one conspirator turns down the offer, prosecutors pitch it to a different conspirator and so on.

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This scenario is sometimes described as a “prisoner’s dilemma.” In it, a conspirator realizes that if he and his fellow conspirators remain silent, the government is less likely to secure a conviction on any of them. Yet the conspirator also realizes that if any of his fellow conspirators “talk” while he remains silent, he is likely to be convicted and face a serious penalty. This dilemma, economists suggest, often leads a rational conspirator to cooperate and implicate other conspirators before one of them does the same to him.

It may only take one of the 14 defendants to cooperate in order for the government to feel certain it will convict the remaining 13. This, in turn, might motivate the defendants to cooperate. Doing so would play exactly into the Justice Department’s hands.

Unfortunately for the 14 defendants, the Justice Department has already secured guilty pleas from four other individuals and two corporations connected to the conspiracy. For instance, Charles Blazer, the former U.S. representative on the FIFA Executive Committee, has agreed to plea guilty to racketeering and wire fraud. It stands to reason that Blazer and the other cooperators likely provided information that aided in the indictment of the 14 defendants.

Extradition could take time, but relevant law favors the U.S.

Before considering how the 14 defendants will combat the charges, it’s worth noting that physically relocating foreign defendants to face trial in United States will not be an automatic or necessarily swift process. It could take months or even years before the defendants are extradited—if they are extradited at all. Many, if not most, of these defendants likely have considerable financial resources to spend on assembling legal teams that could significantly delay extradition.

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Generally speaking, the United States does not have jurisdiction to forcibly relocate foreign nationals who are on foreign soil when charged with domestic crimes. The same dynamic is true for other nations. Countries are limited in the use of extraterritorial legal powers due to the concept of jurisdiction, which refers in part to the power of a country to exercise its authority in a given location. Absent extraordinary circumstances, law enforcement officials from one nation cannot appear in another country to conduct a lawful arrest. Instead, consent by the host country is required for the arrest to be carried out and for a subsequent extradition. Consent for extradition is normally obtained through a court order in the host country.

Two factors should substantially help the United States extradite the seven defendants arrested by Swiss officials. First, the United States and Swiss governments agreed to an extradition treaty in 1990. This treaty generally obligates each country to extradite persons who have been charged with crimes, provided similar crimes exist in both countries and various other conditions are met. Crimes related to racketeering, wire fraud and money laundering are all found in the Swiss legal system, and that should help facilitate extraditions of the defendants.

Second, the Swiss government appears fully supportive of the United States charging the 14 defendants. Swiss law enforcement and the U.S. Justice Department coordinated the arrests of the officials at the five-star Baur au Lac hotel. The Swiss government, moreover, has opened its own investigation into the alleged criminal conduct. While law enforcement officials in two countries collaborating does not necessarily mean a Swiss court would approve extraditions, it is indicative of probable support.

Legal arguments against extradition of defendants in Swiss custody

While the U.S. will likely prevail on extradition of the 7 defendants who are in Swiss custody, watch for these defendants to wage an aggressive legal fight against an unwanted U.S. trip. Even if their fight ultimately fails, it could lead to a substantial delay in bringing them to the United States. There are at least three possible grounds for these defendants to oppose extradition.

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First, the defendants will portray the charges as motivated by politics rather than law. This is an important legal argument since the U.S.-Switzerland extradition treaty dictates that extraditions shall not be approved when the charges are “politically motivated.” Along those lines, watch for the defendants in Swiss custody to claim that the Justice Department is suffering from sour grapes over the FIFA Executive Committee voting to hold the World Cup in Russia in 2018 and in Qatar in 2022 instead of in the U.S. or in an allied nation like Great Britain. For its part, the U.S. Soccer Federation aggressively sought to host the World Cup and was stunned when FIFA instead selected nations with controversial records on legal protections and human rights. The defendants will likely assert that the hotel raid is about exacting political revenge, not enforcing law. The conspicuous timing of the hotel raid—a week before FIFA conducts its presidential election, where Sepp Blatter is expected to be re-elected for a fifth term—could also be cited as evidence of political motivation.

Defendants in Swiss custody who are neither citizens of the United States nor Switzerland may have a second line of defense. Six of these seven defendants are citizens of other countries (Eugenio Figueredo is a citizen of both the U.S. and Uruguay). Watch for the six to attempt to gain diplomatic intervention by their respective embassies. Also, if any of the charged return to their home countries, extraditing them would become more complicated and possibly less certain. Along those lines, it appears that only seven of the 14 charged are in Swiss custody. The Justice Department may find it more difficult to extradite those who relocate to nations that lack favorable extradition treaties with the United States.

This concern may have already materialized as ESPN reports Wednesday night that Warner has surrendered to law enforcement officers in Trinidad and Tobago. Warner will likely insist that the criminal charges are "of a political character," a phrase taken from the extradition treaty between the United States and Trinidad and Tobago to describe when an extradition shall not be granted.

A third, albeit unpersuasive argument against extradition would be to assert the defendants were victims of a setup. Swiss courts in the past have rejected extraditions when there is evidence the defendant facing extradition had entered Switzerland as a result of fraudulent inducement. While the officials were staying at the Zurich hotel for FIFA meetings—a legitimate and non-fraudulent reason—they might contend their hotel stay became illegitimate when law enforcement decided to raid the hotel.

Possible defenses to the charges

While trials for the 14 indicted are likely years away, attorneys for these 14 men have no doubt begun to develop theories of legal defense.

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In addition to the points raised earlier, the defense attorneys can contend that much of what is described in the indictment reflects the skills of savvy and aggressive businesspersons, not the misdeeds of corrupt officials. They might cite empirical data, for instance, demonstrating fierce intentional competition for FIFA-sponsored activities. This competition, the defendants are poised to insist, reflects the global popularity of soccer and successful coordination by FIFA. Countries spend considerable monies in bidding for FIFA-sponsored events. Perhaps it is because of passionate rivalries and citizens’ love of the sport, not because of illegal shenanigans. Put another way, the defendants might assert that what the U.S. frames as unlawful conspiracies are more accurately viewed as lawful enterprises driven by market forces.

The defendants can also recast monetary gains outlined in the indictment as simple evidence of business success. The indictment, for instance, links a surge in the value of FIFA media, marketing and sponsorship rights to purported evidence of bribes and kickbacks. The indictment also details increases in FIFA profits relating to broadcasting, mobile telephone and Internet contracts and casts them in a suspicious light. The defendants, however, will likely attempt to rebut these points as speculative linkages and merely proof of increased interest in soccer. They will also reject the idea that the defendants have, as the indictment claims, “deprived FIFA, the confederations, and their constituent organizations - and, therefore, the national member associations, national teams, youth leagues, and development programs that rely on financial support from their parent organizations.”

Lastly, the defendants are poised to argue that since much of the alleged unlawful conduct occurred outside of the United States, they should not face trial in the United States. This argument will almost certainly fail. The indictment provides painstaking detail how “the defendants and their co-conspirators relied heavily on the United States financial system.” Along those lines, if the indictment’s allegations about financial transactions utilizing U.S. banks and other U.S. companies are accurate, the U.S. should have a compelling argument for sufficient “contacts” to try the defendants in a U.S. court.

Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. He is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law.

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