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The news reports claim that the FBI and federal prosecutors with
the FCPA Unit out of the U.S. Department of Justice are
investigating whether MLB clubs and those acting on their behalf
are "bribing clerks or immigration officials to change dates
of birth on identification documents, or to fabricate false
identity documents," when recruiting top baseball prospects
coming out of international markets. Specifically, the well-sourced
FCPA Professor blog, in quoting a former
baseball operations executive for an MLB club, explained that,
"MLB scouting staff or other club employees may interact at
various times with these [international] officials to obtain
identification documents for prospects, such as birth certificates
and passports. . . . The reason why these points of contact create
risk for clubs is that prospects, through their agents or handlers,
commit rampant age and identity fraud in order to appear younger
and thus increase their market value."
Of course, those familiar with the FCPA know that the statute
makes it illegal for certain persons and business entities
(certainly anyone resident or acting in the United States) to
corruptly offer or give anything of value (whether money, gifts, or
other benefits) to foreign officials, foreign political parties, or
public international organizations, with the intent to obtain or
retain business. And, of course, major league baseball and its
prized recruiting systems are big business in the sports world,
both in the United States and abroad. If true, this criminal probe
may well shine a spotlight on a foreseeable dark side of MLB
recruiting practices in the same way that a different federal grand
jury investigation brought attention to illegal steroid use by some
of the league's best and most popular players several years
ago.
This latest reported FCPA investigation also demonstrates (once
again) that U.S. government enforcers are applying the versatile
statute to fact patterns outside traditional corporate paradigms
such as improper payments for lucrative contracts. Indeed, just a
few years ago, we wrote about another "non-traditional"
FCPA fact pattern, that one involving the DOJ and SEC scrutinizing
whether a for-profit higher-education institution (and
"issuer") may have made an improper payment while
operating its overseas campus in Turkey. See
"Higher Education Institutions are Beginning to Get an
Education in the FCPA," Management Alert, Seyfarth Shaw
LLP (December 22, 2016). As we noted then, "[l]ong gone are
the days where the FCPA was viewed as practically applying only to
large multinational companies with significant overseas business
activity." We went on to observe that as "U.S. higher
education institutions have opened foreign campuses (either
directly or through affiliates) in places such as China, India, and
the Middle East," the foreign government approval process has
required "colleges and universities to interface with foreign
government officials, which in turn increases the risk that higher
education institutions will fold to pressures of commission or
kickback requests, or hidden payments for expediency."
The lesson in all of these out-the-box investigations is that
the FCPA really cannot be limited to a so-called "box"
anymore. Whenever U.S. entities, persons, or others interface with
foreign government officials, then regardless of the
industry—whether sports, film, music, education, art, or
traditional business—the opportunity and temptation for
improper payments will be present. And, under such circumstances,
criminal activity will necessarily abound, at least to some degree.
When that happens, we should not be all that surprised to see our
enforcers step up and take a crack at the conduct with their rather
mighty enforcement bats.
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