A businessman seeking to dismiss his Foreign Corrupt Practices Act (FCPA) case has argued that payments made to Honduran officials were gratuities, and that the bribery charges against him conflict with Trump Administration’s new approach to FCPA enforcement.

Carl Zaglin faces trial in September in a Miami federal court on foreign bribery and money laundering charges. Those charges relate to his alleged participation in a scheme to pay and conceal bribes to Honduran government officials to secure contracts to provide uniforms and other goods to the Honduran National Police.

Zaglin, the chief executive of a law enforcement apparel producer based in the state of Georgia, was charged in 2023 alongside a former Florida banker (Aldo Marchena) and a Honduran procurement official named Francisco Roberto Cosenza Centeno, who is set to be tried alongside Zaglin. Marchena pleaded guilty earlier this month.

Zaglin and Marchena were charged with conspiracy to violate the FCPA’s anti-bribery provisions, and Zaglin was charged with substantive violations of the anti-bribery provisions. Zaglin, Marchena and Centeno were further charged with conspiracy to commit money laundering, and the latter two individuals are charged with substantive money laundering offenses and engaging in transactions in criminally derived property.

Zaglin’s motion to dismiss

Payments to Honduran officials by Zaglin through Marchena weren’t made until nearly a year after the first police uniform contract was executed, according to Zaglin’s motion-to-dismiss. Similarly, payments relating to the second contract weren’t made until months after it was executed.

“Without evidence of any prior agreement to make payments to influence or induce the decision or action, the payments can’t constitute alleged bribes for the purposes of the [Foreign Corrupt Practices Act], and are similar to gratuities,” the motion said. “The FCPA was intended to curtail foreign bribery, however, the indictment in this case fails to charge facts showing any bribes.”

The focus on gratuities here is tied to a Supreme Court ruling last year; in the case Snyder v US, the high court ruled that gratuities paid to local and state officials did not constitute bribes.

Recently, the co-founder of voting machine producer Smartmatic relied on the Snyder case decision in his motion to dismiss corruption charges relating to a scheme to bribe officials in the Philippines; a ruling is still outstanding in that case.

Going beyond those legal reasons for dismissing the case, Zaglin pointed out in his order that the Trump Administration recently narrowed the scope of FCPA enforcement at the Department of Justice and that President Trump signed an executive order pausing such enforcement a bit before Zaglin’s case was cleared to go to trial.

Following the February executive order, Judge Becerra held a status conference and continued the trial from April 7 to April 28 to give the parties time to address the complexities that arose from the order. The DOJ formally indicated it was going to proceed to trial, and it was rescheduled for August 11.

Zaglin noted in his motion that the Attorney General, Pam Bondi, has announced that a priority for the Department of Justice (DOJ) is the prosecution of drug cartels and “transnational criminal organizations.” His case does not fit into this area of focus, Zaglin said.

“Overbroad enforcement actions against domestic individuals and businesses under the FCPA, such as that in this case, should be abated on the basis that it is in conflict with current policy,” Zaglin’s motion said, citing the recent guidance from senior DOJ officials.

An EO, DOJ guidelines and FCPA cases stuck in the gray zone

The White House issued an executive order (EO) in early February (Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security) instructing the DOJ to temporarily pause enforcement of the FCPA. The order states the Trump administration’s view that overexpansive and unpredictable FCPA enforcement impedes American companies’ ability to compete globally, and harms national security.

In early June, the DOJ issued Guidelines for Investigations and Enforcement of the FCPA, noting that pursuing the eradication of cartels and transnational criminal organizations will require a sustained effort to prosecute their corrupt associates and dismantle the financing mechanisms and shell companies used by these criminal networks.

At the time of the EO’s issuance, five cases involving FCPA charges had already been set for trial.

Naturally, the defendants in those five cases pointed out that their cases deserved to be tossed aside, and the DOJ was forced to consider motions and issue status reports to explain its reasoning on whether it would continue to pursue them to trial.

One case brought during the first Trump administration featured a case against former Cognizant Technology Solutions Corp executives Gordon Coburn and Steven Schwartz, and it featured 12 counts of FCPA violations. On April 3, the court granted the motion to dismiss, citing the February EO.

Another case is US v Hobson, which was scheduled for trial in April in the Western District of Pennsylvania.

The defendant, Corsa Coal Vice President Charles Hobson, was indicted in 2022 with FCPA, money laundering and wire fraud charges for engaging in a scheme to bribe officials at an Egyptian state-owned chemical company and receiving a portion of commissions to sales intermediaries as kickbacks.

The trial date has been vacated for now.