SEC v. Jackson and Ruehlen (Opposition Brief to Motion to Dismiss)

7/31/2019 SEC v. Jackson and Ruehlen (Opposition Brief to Motion to Dismiss)

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION____________________________________

)

SECURITIES AND EXCHANGE )COMMISSION, ))

Plaintiff, ) Case No. 4:12-cv-00563)

v. ))

MARK A. JACKSON and )JAMES J. RUEHLEN, )

)Defendants. )

____________________________________)

PLAINTIFFS CONSOLIDATED RESPONSE IN OPPOSITION TO

DEFENDANTS JACKSONS AND RUEHLENS MOTIONS TO DISMISS

Case 4:12-cv-00563 Document 37 Filed in TXSD on 06/22/12 Page 1 of 59


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TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................................................... iii

PRELIMINARY STATEMENT .....................................................................................................1

STATEMENT OF FACTS ..............................................................................................................5

NATURE AND STAGE OF PROCEEDING .................................................................................7

ISSUES PRESENTED.....................................................................................................................8

STANDARD OF REVIEW .............................................................................................................8

ARGUMENT .................................................................................................................................10

A. THE COMPLAINT STATES A CLAIM UNDER THE FCPASANTI-BRIBERY PROVISIONS ...........................................................................10

1. The Complaint Adequately Alleges the Involvement ofAny Foreign Official ..............................................................................12

a. The Allegations in the Complaint Regarding the ForeignOfficials Satisfy Rule 8(a)s Notice Pleading Standard ...............12

b. Defendants Proposed Re-Definition of Any ForeignOfficial to Require Specific Identity Finds No Basis inLaw or Legislative History ............................................................14

2. The Complaint Alleges The Acts The Foreign Officials WereBribed to Undertake ...................................................................................19

3. The Complaint Sufficiently Pleads That The Payments WereProscribed Bribes and Not Permissible Facilitating Payments ..................22

a. The SEC Need Not Plead to Negate the NarrowException for Routine Governmental Action .............................22

b. The Payments Alleged in the Commissions Complaint

Do Not In Any Event Fall Into the Narrow Exception forFacilitating Payments .....................................................................24

c. The Routine Governmental Action Exception Is NotUnconstitutional .............................................................................27



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4. The Complaint Sufficiently Pleads That Jackson and ReuhlenActed Corruptly .........................................................................................29

a. Corruptly Does Not Require Specific Intent ToViolate A Particular Law ...............................................................30

b. The Complaint Sufficiently Alleges DefendantsCorrupt Intent .................................................................................32

B. THE COMPLAINT SUFFICIENTLY PLEADS DEFENDANTSVIOLATIONS OF SECTION 13(B)(5) AND RULE 13B2-1 ..............................35

C. THE COMPLAINT SUFFICIENTLY PLEADS DEFENDANTSAIDING AND ABETTING VIOLATIONS OF SECTIONS 30A,13(B)(2)(A) AND 13(B)(2)(B) ..............................................................................39

D. THE COMPLAINT SUFFICIENTLY PLEADS JACKSONS LIES TOAUDITORS, FALSE CERTIFICATIONS, AND LIABILITY AS ACONTROL PERSON ............................................................................................40

E. THE COMMISSIONS COMPLAINT IS TIMELY .............................................43

1. The Complaint Alleges Misconduct Within The Statute ofLimitations .................................................................................................43

2. The Continuing Violation Doctrine Tolled the Statute ofLimitations .................................................................................................45

3. The Fraudulent Concealment Doctrine Tolled the Statute ofLimitations .................................................................................................46

4. The Statute of Limitations Does Not Apply to EquitableRemedies ....................................................................................................47

CONCLUSION ..............................................................................................................................49



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TABLE OF AUTHORITIES

CASES

Abbott v. Equity Group, Inc., 2 F.3d 613 (5th Cir. 1993) ............................................39, 41

Abels v. Farmers Commodities Corp., 259 F.3d 910 (8th Cir. 2001) ..................................9

Ashcroft v. Iqbal, 556 U.S. 662 (2009) ................................................................................8

Badaracco v. C.I.R., 464 U.S. 386 (1984) .........................................................................48

Bass v. Stryker Corp., 669 F.3d 501 (5th Cir. 2012) .........................................................10

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................8, 10

Castro v. United States, 248 F. Supp. 2d 1170 (S.D. Fla. 2003) .......................................17

Cook v. United States, 84 U.S. 168 (1872) ........................................................................23

County of El Paso, Tex. v. Jones, No. EP-09-CV-00119-KC, 2009 WL 4730305(W.D. Tex. Dec. 4, 2009)...............................................................................................9

Crissey v. Morrill, 125 F. 878 (8th Cir. 1903) ...................................................................47

Cuvillier v. Taylor, 503 F.3d 397 (5th Cir. 2007) ..............................................................10

Dennis v. General Imaging, Inc., 918 F.2d 496 (5th Cir. 1990) ........................................41

Dist. 1199P Health & Welfare Plan v. Janssen, L.P., 784 F. Supp. 2d 508(D.N.J. 2011)..................................................................................................................9

E.I. Du Pont de Nemours & Co. v. Davis, 264 U.S. 456 (1924) .......................................48

Exploration Co. v. United States, 247 U.S. 435 (1918) .....................................................46

Florida v. DLT 3 Girls, Inc., No. , 2012 WL 1565533 (S.D. Tex. May 2, 2012) .............10

G.A. Thompson & Co. v. Partridge, 636 F.2d 945 (5th Cir. 1981) ...................................41

Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) ....................................................45

Hershey v. Energy Transfer Partners, L.P., 610 F.3d 239 (5th Cir. 2010) .........................8

Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076 (9th Cir. 1999) ..................................15



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Holmberg v. Armbrecht, 327 U.S. 392 (1946) ...................................................................46

In re Int'l Admin Servs., 408 F.3d 688 (11th Cir. 2005) ....................................................47

Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,

___U.S. ___, 130 S. Ct. 1605 (2010) .....................................................................32, 33

McKelvey v. United States, 260 U.S. 353 (1922) .........................................................23, 24

McLaughlin v. Anderson, 962 F.2d 187 (2d Cir. 1992) .......................................................9

Meek v. Howard, Weil, Labouisse, Friedrichs, Inc., 95 F.3d 45 (5th Cir. 1996) ..............41

Merck & Co. v. Reynolds, ___ U.S. ___, 130 S. Ct. 1784 (2010) .....................................46

Pinney Dock and Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445 (6th Cir.

1988) ............................................................................................................................47

Rosen v. Brookhaven Capital Management Co.,194 F. Supp. 2d 224 (S.D.N.Y. 2002)..........................................................................23

SEC v. BankAtlantic Bancorp, Inc., 2012 WL 1936112 (S.D. Fla. 2012) ...........................9

SEC v. Berry, 580 F. Supp. 2d 911 (N.D. Cal. 2008) ........................................................48

SEC v. Brown, 740 F. Supp. 2d 148 (D.D.C. 2010) ..........................................................46

SEC v. Carroll, 2011 WL 5880875 (W.D. Ky. 2011) .........................................................9

SEC v. Diversified Corporate Consulting Grp., 378 F.3d 1219 (11th Cir. 2004) .............48

SEC v. Gabelli, 653 F.3d 49 (2d Cir. 2011) ...........................................................46, 47, 48

SEC v. Geswein, No. 5:10CV1235, 2011 WL 4541303(N.D. Ohio Sept. 29, 2011) ..........................................................................................45

SEC v. Huff, 758 F. Supp. 2d 1288 (S.D. Fla. 2010) .........................................................45

SEC v. Jones, 476 F. Supp. 2d 374 (S.D.N.Y. 2007).........................................................48

SEC v. Kelly, 663 F. Supp. 2d 276 (S.D.N.Y. 2009) ..................................................45, 48

SEC v. Kornman, 391 F. Supp. 2d 477 (N.D. Tex. 2005) ...................................................9

SEC v. Kovzan, 807 F. Supp. 2d 1024 (D. Kan. 2011) ................................................45, 46



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SEC v. Lorin, 869 F. Supp. 1117 (S.D.N.Y. 1994) ............................................................48

SEC v. Nacchio, 614 F. Supp. 2d 1164 (D. Colo. 2009)....................................................48

SEC v. O'Hagan, 703 F. Supp. 218 (D. Minn. 1992) ........................................................48

SEC v. Ogle, No. 99 C 609, 2000 WL 45260 (N.D. Ill. Jan. 11, 2000) .............................45

SEC v. Pentagon Cap. Mgmt. PLC, 612 F. Supp. 2d 241 (S.D.N.Y. 2009) ......................45

SEC v. Ralston Purina Co., 346 U.S. 119 (1953) ........................................................23, 24

SEC v. Rind, 991 F.2d 1486 (9th Cir. 1993) ......................................................................48

SEC v. Solucorp Industries, Ltd., 274 F. Supp. 2d 379 (S.D.N.Y. 2003) ..........................38

SECv. Tambone, 550 F.3d 106 (1

st

Cir. 2008) ..................................................................48

SEC v. Williams, 884 F. Supp. 28 (D. Mass. 1995) ...........................................................48

SEC v. World-Wide Coin Investments, Ltd., 567 F. Supp. 724 (N.D. Ga. 1983) ...............36

Smith v. Duff & Phelps, Inc., 5 F.3d 488 (11th Cir. 1993) ................................................47

State of N.Y. v. Hendrickson Bros., Inc., 840 F.2d 1065 (2d Cir. 1988) ............................47

Stichting Ter Behartiging Van de Belangen Van Oudaandeel-houders InHet Kapitaal Van Saybolt Int'l B.V. v. Schreiber,327 F.3d 173 (2d Cir. 2003).......................................................................17, 30, 31, 32

Stripling v. Jordan Prod. Co., 234 F.3d 863 (5th Cir. 2000) .............................................49

Swierkiewicz v. Sorema, 534 U.S. 506 (2002) ...................................................................32

TRW, Inc. v. Andrews, 534 U.S. 19 (2001) ........................................................................46

Texas v. Allan Const. Co., 851 F.2d 1526 (5th Cir. 1988) ...........................................46, 47

Turner v. Pleasant, 663 F.3d 770 (5th Cir. 2011)..............................................................10

United States ex rel. Barajas v. United States, 258 F.3d 1004 (9th Cir. 2001) .................15

United States v. Blondek, 741 F. Supp. 116 (N.D. Tex. 1990), aff'd and adoptedby United States v. Castle, 925 F.2d 831 (5th Cir. 1991) ......................................15, 18

United States v. Castle, 925 F.2d 831 (5th Cir. 1991) .....................................15, 17, 18, 19



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United States v. Duvall, 846 F.2d 966 (5th Cir. 1988) ......................................................31

United States v. Hopkins, 916 F.2d 207 (5th Cir. 1990) ....................................................37

United States v. Iron Mountain Mines, Inc., 987 F. Supp. 1244 (E.D. Cal. 1997) ............23

United States v. Jacobs, 431 F.2d 754 (2d Cir. 1970) .......................................................31

United States v. Jennings, 471 F.2d 1310 (2d Cir. 1973) ..................................................17

United States v. Johnson, 621 F.2d 1073 (10th Cir. 1980) ................................................17

United States v. Kay, 359 F.3d 738 (5th Cir. 2004) ...................................10, 18, 21, 25, 29

United States v. Kay, 513 F.3d 432 (5th Cir. 2007) ....................................21, 29, 30, 31, 35

United States v. Kozeny, 667 F.3d 122 (2d Cir. 2011).......................................................13

United States v. Liebo, 923 F.2d 1308 (8th Cir. 1991) ......................................................35

United States v. Outler, 659 F.2d 1306 (5th Cir. 1981) ...............................................23, 24

United States v. Poly-Carb, Inc., 951 F. Supp. 1518 (D. Nev. 1996) ................................23

United States v. Pommerening, 500 F.2d 92 (10th Cir. 1974) ...........................................29

Wilson v. Birnberg, 667 F.3d 591 (5th Cir. 2012) .............................................................24

STATUTES, RULES AND REGULATIONS

Federal Rules of Civil Procedure

Rule 8(a).................................................................................................................11, 12

Rule 8(a)(2) ....................................................................................................................8

Rule 9(b) ..................................................................................................................9, 32

Rule 12(b)(6) ................................................................................................................10

Rule 15(a).....................................................................................................................49



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Securities Act of 1933

Section 4(a)(2) [15 U.S.C. 77d(a)(2)] .......................................................................23

Securities Exchange Act of 1934

Section 13(b)(2)(A) [15 U.S.C. 78m(b)(2)(A)] ........................................................36

Section 13(b)(5) [15 U.S.C. 78m(b)(5)] ...................................................................36

Section 20(a) [15 U.S.C. 78t(a)] ...............................................................................41

Section 20(e) [15 U.S.C. 78t(e)] ...............................................................................39

Section 21D(b)(2) [15 U.S.C. 78u-4(b)(2)] ................................................................9

Section 30A [15 U.S.C. 78dd-1] ....................................................................... passim

Section 32(c)(2)(A) [15 U.S.C. 78ff(c)(2)(A)] .........................................................31

Section 32(c)(2)(B) [15 U.S.C. 78ff(c)(2)(B)] ..........................................................31

Rule 13b2-1 [17 C.F.R. 240.13b2-1] ........................................................................36

18 U.S.C. 201 ............................................................................................................17, 29

18 U.S.C. 371 ..................................................................................................................18

18 U.S.C. 666 ............................................................................................................17, 18

28 U.S.C. 2462 ..........................................................................................................43, 48



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MISCELLANEOUS

Commentaries on the Convention on Combating Bribery of Foreign PublicOfficials in International Business Transactions, 37 I.L.M. 1 (1998) ...................20, 31

H.R. Conf. Rep. No. 100-576 (1988), reprinted in 1988 U.S.C.C.A.N. 1547 ......13, 16, 26

H.R. Rep. No. 95-640 (1977) ...........................................................................16, 25, 26, 30

H.R. Rep. No. 105-802 (1998) ...........................................................................................21

S. Rep. No. 95-114 (1977), reprinted in 1977 U.S.C.C.A.N. 4098 .......................15, 16, 30

S. Rep. No. 105-277 (1998) ...............................................................................................21

Report of the Securities and Exchange Commission on Questionable and Illegal

Corporate Payments and Practices, reprinted in Sec. Reg. & L. Rep. (BNA)(Special Supp. May 19, 1976)......................................................................................16



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Plaintiff, the United States Securities and Exchange Commission (SEC or

Commission), respectfully submits this consolidated memorandum of law in opposition to the

motions to dismiss filed by defendants Mark A. Jackson and James J. Ruehlen pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure (FRCP).

PRELIMINARY STATEMENT

The Complaint charges defendants Jackson and Ruehlen, a former and current senior

officer of Noble Corporation (Noble), respectively, with multiple violations of the anti-

bribery and accounting provisions of the Foreign Corrupt Practices Act (FCPA), 15 U.S.C.

78dd-1, and other violations of the federal securities laws. Noble, an international oil drilling

company, used for years an intermediary customs agent to pay bribes to government officials

of the Nigerian Customs Service and other Nigerian government officials. Jackson and Ruehlen

were intimately involved in arranging, approving, falsely booking, and concealing Nobles bribe

payments to foreign officials. Together, the defendants participated in paying hundreds of

thousands of dollars in bribes to improperly obtain approximately eight illegitimate duty

exemptions, known as temporary import permits (TIPs), and twenty-two TIP extensions.

These TIPs and extensions were obtained illicitly so that Nobles oil rigs offshore in Nigeria

could continue to operate under lucrative drilling contracts. Jackson approved the payments and

concealed the payments from Nobles audit committee and auditors. Ruehlen prepared false

documents as to the movement of the rigs, sought approval for the payments from Jackson and

others at Noble, and processed and paid the bribe money to the intermediary customs agent.

The First and Second Claims of the Complaint allege that Jackson and Ruehlen violated

the anti-bribery provisions of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C.

78dd-1, directly and by aiding and abetting Noble and others violations. The Third Claim



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alleges that defendants aided and abetted Nobles violations of the books and records and

internal controls provisions of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B), 15 U.S.C.

78m(b)(2)(A) and (B), relating to the bribery scheme. The Fourth Claim alleges that

defendants, by falsifying or causing to be falsified Nobles books and records, and by failing to

implement or circumventing internal controls, violated Exchange Act Section 13(b)(5), 15

U.S.C. 78m(b)(5), and Rule 13b2-1, 17 C.F.R. 240.13b2-1. Claims Five and Six charge

Jackson for making false certifications in management representation letters in violation of

Exchange Act Rule 13b2-2, 17 C.F.R. 240.13b2-2, and for signing false personal

certifications in violation of Rule 13a-14, 17 C.F.R. 240.13b2-2. Claim Seven seeks to hold

Jackson liable as a control person for having controlled Noble, Ruehlen, and others during the

violations, and indeed, while he was aware of the bribery, participating in the bribery, lying to

auditors, and signing false certifications to conceal the bribery. The SEC seeks penalties and an

injunction.

Defendants contend that the Commission has failed to state a claim upon which relief

may be granted pursuant to FRCP 12(b)(6). They attack the sufficiency of the Complaint in

scattershot fashion, but their arguments distilled to their essence advance six primary arguments

for dismissal:

First, the defendants argue that the SEC must allege the specific identity of Nigerian

officials for whom the defendants authorized the payment of bribes. This line of argument finds

no support in the text, legislative history, case law, or purposes of the FCPA. Defendants

authorized bribes to foreign officials through intermediaries. The Complaint identifies the

officials by country and government agency and alleges defendants corrupt intent to

improperly influence those officials through the payment of money. Neither the FCPA nor the



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notice pleading standards of Federal Rule of Civil Procedure 8(a) require anything more. As the

language, text, legislative history and policies of the FCPA confirm, a violation of its provisions

rests with the intent of the person authorizing the bribes, not with the identity or role of the

official targeted for bribery. The name, title or exact position of the official need not be pleaded

or proved, as confirmed by decisions under analogous domestic bribery statutes.

Second, the defendants argue that the Complaint fails to allege facts to support the

inference that their payments fell outside of the FCPAs statutory routine governmental action

(a.k.a. facilitating payments) exception. Yet, the SEC is not required to plead preemptively

around a statutory exception that a defendant might invoke. For over a century, including in the

securities context, the Supreme Court has held that a pleading based on a general provision that

defines the elements of a statutory violation need not negate an exception made by proviso or

otherwise to those elements. The facilitating payments exception fits that rule. Thus, the

defendants, not the SEC, must raise the exceptions application in the pleadings and prove its

applicability at trial. Moreover, the Complaint satisfies any purported need to plead around

the exception. The well-pled facts, such as that the bribes were paid to induce foreign officials

to falsely certify facts and accept false paperwork, indicate that defendants bribes were not

facilitating payments, i.e., payments authorized to expedite or secure the performance of an

ordinarily or commonly performed official act.

Third, Ruehlen claims that the FCPAs routine government action exception is

unconstitutionally vague as applied to him. Claims of this nature have been soundly rejected by

the courts, including by the Fifth Circuit. Also, the Complaint abundantly alleges that Ruehlen

sought and obtained authorizations to pay bribes that cannot be understood reasonably as

anything other than crossing the line of prohibited conduct.



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Fourth, the defendants contend that the Complaint does not allege facts giving rise to the

inference that they acted corruptly. This attack on the Complaint ignores the well-pled facts

and misconstrues the law. The legislative history of the FCPA and the decisions in the Fifth

Circuit and elsewhere reject defendants definition of corruptly. Defendants also overlook

that states of mind, such as intent and purposes, may be alleged generally. The Complaint

alleges defendants corrupt intent, and the allegations are supported by ample facts.

Fifth, the defendants seek to dismiss the Complaint as insufficiently pleading alleged

securities violations other than bribery. Defendants, for example, argue that the SEC fails to

specify the books and records that were falsified and the internal controls that they evaded.

Defendants line of arguments directed to these issues are, first, largely premised on their attack

on the Commissions bribery claims an attack that this Court should reject. In addition, the

defendants simply ignore the facts actually pled in the Complaint. The allegations set forth in

great detail what Jackson and Ruehlen claim not to find in the Complaint, including identifying

the books and records falsified and the internal controls evaded or not implemented.

Sixth, the defendants argue that the Complaint is untimely because the applicable statute

of limitations permits relief only for conduct occurring five years before the filing of the

Complaint on February 24, 2012. Yet buried in footnotes in their briefs, the defendants admit

that they signed tolling agreements extending the statute of limitations. The Complaint alleges

violative conduct within the limitations period even absent the tolling agreement. What is more,

various equitable doctrines would apply to toll the statute. And the statute of limitations does

not apply to claims for equitable relief such as injunctions.

Finally, throughout each of their briefs, defendants intermittently challenge facts

asserted in the Complaint, advance facts not alleged in the Complaint but purportedly reflected



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elsewhere, and argue for inferences favorable to them. At the pleadings stage, these arguments

are not a proper basis for granting a motion to dismiss and must be rejected.

The Commission has stated a claim upon which relief may be granted for each of Claims

One through Seven, and defendants motions to dismiss should be denied.

STATEMENT OF FACTS

Noble is an international oil drilling firm that, during the relevant period, was

headquartered in Sugar Land, Texas. Complaint 2, 16. As detailed in more than 140

paragraphs of facts alleged in the SECs Complaint, defendants, Nobles senior employees

Jackson and Ruehlen, among other things, authorized the repeated bribery of Nigerian customs

officials through intermediaries to obtain illicit TIPs and TIP extensions for Nobles oil drilling

rigs. Id. 2-5, 8-144.

Jackson was a Noble officer from September 2000 through September 20, 2007, serving

at times as its CFO, COO, and ultimately its President, CEO and Chairman of the Board of

Directors. Id. 5, 8-11. As CFO, Jackson had responsibility for Nobles FCPA compliance

and for providing written pre-approval of all payments to government officials. Id. 9, 24, 40-

42. Ruehlen was, and continues to be, a Noble employee. He served from September 2004

through at least early 2011 as the Division Manager of Nobles subsidiary, Noble-Nigeria, the

highest executive of that subsidiary. Id. 1, 13-15.1

During the relevant time period, Nobles rigs operated in Nigerian waters under illicit

TIPs obtained from the Nigeria Customs Service (NCS) through bribery. Id. 18. TIPs were

Before that time, he worked in Nobles

corporate internal audit groups. Id. 14.

1 Paragraph 13 of the complaint states that Ruehlen is still the Division Manager of Noble-Nigeria. The SEC has since learned that Ruehlen is no longer working in Nigeria, but servingas the Division Manager of Nobles operations in Mexico.



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valid only for one year, id. 19, and NCS had the discretion to grant up to only three six-month

extensions to a TIP, id. 20. At the expiration of any TIP and extensions, NCS required the rig

to be exported out of Nigeria. Id. 20. If a rig needed to remain in country to complete drilling

contract work past the expiration of a TIP, NCS required the rig to be exported and then re-

imported on the basis of a new TIP. Id. 20, 76.

From about September 2004 to about May 2007, Noble did not export its rigs at the

expiration of the period set by the TIP and any extensions, as required by Nigerian law, the

TIPs terms, and NCS. Id. 22. Instead, Ruehlen and other Noble officials, together with

Nobles customs agents, created false documents purporting to show that rigs moved out of and

back into Nigerian waters, when the rigs in fact never moved. Id. 22, 70, 74, 105, 108, 131.

Jackson knew that the rigs moved only on paper and approved the use of false documents to

obtain the TIPs. Id. 22, 34-36, 50-53, 82-90, 101, 116.

To ensure that NCS officials granted these falsely documented TIPs and ignored the fact

that the rigs did not move, Ruehlen and Jackson authorized Nobles customs agent to pay

Nigerian government officials amounts between 6.9 million and 7.2 million Naira2

2 Naira is the Nigerian currency. As detailed in the Complaint, the tens of millions of Nairathat flowed to foreign officials as bribes was equivalent to more than $700,000. Id. 27-31.

per rig. Id.

22, 69-70, 80, 82-95 (Jackson and Ruehlen authorize payments); id. 103-13, 131-36

(Ruehlen authorizes payments). With these payments, Ruehlen and Jackson sought and

received official documents from government agencies, such as the Nigerian Port Authority and

the National Maritime Authority, falsely evidencing rig movement into and out of Nigeria as

well, from NCS, new TIPs. Id. 24-30, 73, 80-81, 92, 106, 109-10, 112, 135-36. Ruehlen and

Jackson took these acts to retain business under lucrative drilling contracts, obtain profits from



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operating rigs in Nigeria, and avoid the payment of permanent import duties on Nobles rigs.

Id. 32, 76-78, 85.

Similarly, Ruehlen and Jackson authorized Nobles customs agent to pay Nigerian

government officials amounts between 1.6 million Naira to 5 million Naira per rig to obtain

discretionary TIP extensions. Id. 31, 54-61, 96-98, 115, 117-25. Ruehlen also authorized the

customs agent to pay Nigerian government officials an amount of 7 million Naira to obtain a

fourth TIP extension in 2007 that he knew NCS officials were not permitted to grant, and did

not grant, as a matter of policy. Id. 66, 71, 76, 78, 126-30.

In addition to acts in furtherance of these payments, defendants took steps to conceal the

bribery. Defendants knew that these practices were improper and had subjected Noble to fines

in Nigerian previously. Id. 34-36, 40-41, 45, 47-53, 64, 71, 76-78, 81, 106, 109. They also

knew that the Audit Committee of Nobles Board of Directors had expressed concern about the

improper practices and had given instructions in 2004 that the practices stop. Id. 50-53, 83-

90, 142. Yet, after Ruehlen explored lawful, albeit expensive, alternatives, id. 20, 53-68, 85,

defendants resumed the bribery in 2005. Id. 68-90. Neither Jackson nor Ruehlen informed

the Audit Committee that they had resumed making the payments, in direct contradiction to the

Audit Committees directive. Id. 68, 90. And both of them proceeded to conceal the fact of

the resumption and the nature of the payments not only from the Audit Committee but also from

later CFOs, auditors, and others at the company. Id. 104, 107, 121-23, 142-43.

NATURE AND STAGE OF PROCEEDING

The Commission filed suit on February 24, 2012. On May 8, each defendant filed his

motion to dismiss (Dkt. Nos. 35, 36). With the Courts leave, which was granted on June 12,

the SEC is responding to each defendants motion in this single, consolidated opposition.



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ISSUES PRESENTED

The issue before the Court is whether the Complaint contains factual allegations that,

when taken as true and in the light most favorable to the SEC, plausibly state claims for relief.

Specifically, the defendants motions to dismiss contend that:

1. The Complaint fails to allege the specific identity or specific functions of theNigerian officials for whom the defendants authorized the payment of bribes in

violation of the FCPA;

2. The Complaint fails to allege facts to support the inference that the payments at issuedo not fall within the statutory facilitating payments exception to FCPA liability;

3. The FCPA is unconstitutionally vague as applied to defendant Ruehlens conduct;4. The Complaint fails to allege facts giving rise to the inference that the defendants

acted corruptly in authorizing and otherwise acting in furtherance of the bribe

payments;

5. The Complaint fails to specify the books and records falsified and the internalcontrols evaded by the defendants; and

6. The Complaint fails to allege facts demonstrating that the misconduct at issue hereoccurred within the five year statute of limitations found in 28 U.S.C. 2462.

STANDARD OF REVIEW

When filing a complaint, FRCP 8(a)(2) requires a short and plain statement of the

claim showing that the pleader is entitled to relief sufficient to provide fair notice of the

claim and the grounds upon which it rests.Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555

(2007). Detailed factual allegations are not required. Hershey v. Energy Transfer Partners,

L.P., 610 F.3d 239, 245 (5th Cir. 2010) (quotingAshcroft v. Iqbal, 556 U.S. 662, 678 (2009)).



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FRCP 9(b) provides that, for claims sounding in fraud, the complaint must state with

particularity the circumstances constituting fraud. Claims under the FCPA, including bribery

claims, do not fall within the scope of this provision and need not be alleged with particularity.

See, e.g.,Abels v. Farmers Commodities Corp., 259 F.3d 910, 919 (8th Cir. 2001) (noting that

Rule 9(b) would not apply to an allegation of bribery);Dist. 1199P Health & Welfare Plan v.

Janssen, L.P., 784 F. Supp. 2d 508, 529 (D.N.J. 2011) (holding that bribery does not invoke

the heightened pleading requirements of Rule 9(b), but rather need only satisfy the more

liberal pleading requirements of Rule 8(a) (internal quotation marks omitted)); County of El

Paso, Tex. v. Jones, No. EP-09-CV-00119-KC, 2009 WL 4730305, at *19 (W.D. Tex. Dec. 4,

2009) (noting that the heightened pleading requirements of Rule 9(b) do not apply to bribery

claims); cf.McLaughlin v. Anderson, 962 F.2d 187, 194 (2nd Cir. 1992) (holding that

heightened standard of Rule 9(b) did not apply to an extortion claim).

Further, even under the heightened pleading standard of FRCP 9(b), intent, knowledge,

and other conditions of a persons mind may be alleged generally. This means that a level of

particularity alleging the who, what, when, where and how, is not required to allege intent,

knowledge, and other conditions of the mind. See, e.g., SEC v. BankAtlantic Bancorp, Inc., No.

12-60082-Civ, 2012 WL 1936112, at *8 (S.D. Fla. May 29, 2012); SEC v. Carroll, No. 3:11-

CV-165-H, 2011 WL 5880875, at *6 (W.D. Ky. Nov. 23, 2011). Nor is the SEC subject to the

Private Securities Litigation Reform Act, 15 U.S.C. 78u-4(b)(2), and its heightened pleading

requirements with regard to mental states, which is only required for private litigants. See, e.g.,

SEC v. Kornman, 391 F. Supp. 2d 477, 494 (N.D. Tex. 2005) (observing that the SEC need not

satisfy the PSLRAs requirement to plead with particularity facts giving rise to a strong

inference that the defendant acted with the required state of mind).



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Under FRCP 12(b)(6), a defendant may move to dismiss a complaint for failure to state

a claim. In this circuit, such a motion is viewed with disfavor and is rarely granted. Turner v.

Pleasant, 663 F.3d 770, 775 (5th Cir. 2011). In ruling on a motion to dismiss, [a]ll well-

pleaded facts in the complaint are accepted as true and viewed in the light most favorable to the

nonmovant. Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012). To survive a Rule

12(b)(6) motion, a complaint need only contain enough facts to raise a right to relief above the

speculative level. Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Twombly,

550 U.S. at 555); see also Florida v. DLT 3 Girls, Inc.,No. 4:11-cv-3624, 2012 WL 1565533, at

*1 (S.D. Tex. May 2, 2012) (this Court observing that the standard is neither evidentiary nor

akin to a probability requirement).

ARGUMENT

A. THE COMPLAINT STATES A CLAIM UNDER THE FCPAS ANTI-BRIBERY PROVISIONS.

The anti-bribery provisions of the FCPA proscribe acting by any means or

instrumentality of interstate commerce corruptly in furtherance of a payment, offer, promise or

authorization of payment to any foreign official, including through an intermediary, with the

purpose to influence or induce the foreign official to misuse his official position to assist a

corporation in obtaining or retaining business. 15 U.S.C. 78dd-1. Recognizing that bribes to

foreign officials may be disguised through the use of intermediaries, the FCPA broadly

prohibits both direct and indirect payments to foreign officials. It also encompasses mere

offers, promises or authorizations to pay foreign officials, regardless of whether the bribe is

actually paid and the official actually corrupted. See United States v. Kay, 359 F.3d 738, 755-

56 (5th Cir. 2004) (Kay I) (Congress intended for the FCPA to apply broadly to payments

intended to assist the payor, either directly or indirectly.).



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To state a claim that Jackson and Ruehlen violated the FCPA by engaging in bribery

perpetrated through intermediaries, as alleged in the Complaint, the SEC must allege facts

plausibly showing that the defendants were officer[s], director[s], employee[s], or agent[s] of

[an] issuer who:

ma[de] use of the mails or any means or instrumentality of interstate commercecorruptly in furtherance of an offer, payment, promise to pay, or authorization ofthe payment of any money . . . or giving of anything of value to , (3) anyperson, while knowing that all or a portion of such money . . . will be offered,given, or promised, directly or indirectly, to any foreign official for purposesof (A)(i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any actin violation of the lawful duty of such foreign official , or (iii) securing any

improper advantage in order to assist such issuer in obtaining or retainingbusiness for or with, or directing business to, any person.

15 U.S.C. 78dd-1(a)(3).

The general allegations in the Complaint easily satisfy the notice pleading standard of

FRCP 8(a) and properly allege these elements. The Complaint alleges that Jackson (a Noble

officer at the time of the alleged violations) and Ruehlen (a Noble employee), acting on

behalf of Noble (an issuer of securities), using e-mails (and other instrumentalities of

interstate commerce), corruptly (seeinfra at 29-35) authorized the payment of tens of

millions of Naira, to employees of the Nigerian government, including officials of the NCS, the

Nigerian Port Authority, and the National Maritime Authority (all foreign officials). It also

alleges that the defendants authorized these payments for purposes of influencing or inducing

those officials to create and process false documents, grant TIPs based on those false

documents, and extend TIPs that they had the discretion to deny or should have denied (any act

or decision of such foreign official in his official capacity or any act in violation of his lawful

duty). The Complaint further alleges that defendants authorized Nobles payments so as to

continue operating under and maintain lucrative oil drilling contracts (assist the issuer in



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obtaining or retaining business). Under FRCP 8(a), these allegations sufficiently allege that

the defendants violated the anti-bribery provisions of the FCPA through their authorization of

bribes to any foreign official. The 149-paragraph summary of the allegations is a

comprehensive description of the conduct with which the defendants are charged and provides

ample information from which the defendants can understand the claims against them.

1. The Complaint Adequately Alleges the Involvement of Any Foreign

Official.

Defendants challenge the pleading sufficiency of the any foreign official element by

arguing that the SEC must specifically identify in its Complaint the foreign official to whom

the illicit payment was paid by name, or by job title, or position, or job responsibility.

Jackson Mot. at 11; Ruehlen Mot. at 8. Defendants are mistaken. Under the notice pleading

standard of FRCP 8(a), the Complaint adequately alleges that the defendants sought to make

corrupt payments to Nigerian officials. Nothing in the FCPAs provisions requires alleging, or

proving, the specific identity of a foreign official by using his name, title or job description.

Nor has any court ever determined that the government must plead, or prove, the specific

characteristics of the official. And for good reason: such a requirement would run counter to

the language of the FCPA and Congresss intent to combat often difficult-to-detect foreign

bribery by broadly proscribing direct or indirect bribery of foreign officials, as well as

criminalizing bribes that were never completed such as the offer or promise of a bribe.

a. The Allegations in the Complaint Regarding the Foreign OfficialsSatisfy Rule 8(a)s Notice Pleading Standard.

As required by FRCP 8(a), the Complaint provides a short, plain statement regarding the

foreign officials bribed. First, it alleges that foreign officials were the intended recipients of

payments authorized by defendants. Paragraphs 23 and 25, for example, allege that to obtain

TIPs with false paperwork, Ruehlen sought authorization for, and Jackson authorized, illicit



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payments to Nigerian government officials and that he authorized the agent to proceed with

the payments to ensure the favorable processing and grant of TIPs or TIP extensions.

Second, the Complaint identifies these foreign officials by country, government agency,

and action sought. It alleges that the NCS was responsible for approving and granting TIPs and

TIP extensions and that, in exchange for those actions, NCS officials received Jacksons and

Ruehlens authorized payments. See, e.g., Complaint 18-22; id. 73, 109; id. 81; id.

62, 96-98; id. 129. The Complaint also alleges that officials of agencies such as the Nigerian

Port Authority (NPA) and National Maritime Authority (NMA) received payments that

defendants authorized, in exchange for creating false papers, receipts, and evidence of export

and import related to the securing of false paperwork TIPs. Seeid. 69, 80, 110, 92, 112.

Third, the Complaint alleges that Ruehlen and Jackson knew, firmly believed, or were

aware to a high probability3 that these payments were going to Nigerian government officials

and that the customs agent specifically told them as much. See, e.g., id. 39-41, 69, 80. For

example, the customs agent identified the undocumented payments to foreign officials as

special handling or procurement both on price proposals for obtaining the TIPs and TIP

extensions, and on invoices. Seeid. 23-24, 80, 89, 92-94, 103, 107, 110, 112. Paragraphs 23

and 24 also allege that (1) Ruehlen understood4

3 Actual awareness is not a requirement. Under the FCPA, a persons state of mind isknowing if he is substantially certain, has a firm belief, or is aware of a highprobability. 15 U.S.C 78dd-1(f)(2)(A). This includes the concept of conscious disregard andprecludes any head in the sand defense. H.R. Conf. Rep. 100-576 (1988), reprinted in 1988U.S.C.C.A.N. 1547, 1952-54. See United States v. Kozeny, 667 F.3d 122, 132 (2d Cir. 2011).

that all payments specifically labeled special

4 Jackson wrongly argues that each and every allegation of knowledge is conclusory as amatter of law. Jackson Mot. at 7. The SEC need only allege general allegations of knowledge.See cases cited supra 8-10. Moreover, when viewed in its entirety, the general averments ofJacksons knowledge are well-supported by the other facts regarding, for example, Jacksonspositions, his communications with others, his presence at audit meetings, his paymentapprovals, and his quarterly review of payments. See, e.g., facts at 13-14 (knowledge of



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handling or procurement without supporting documentation were payments to government

officials, and that (2) Jackson understood that all requests from Ruehlen to pay special

handling charges for TIPs and TIP extensions were requests to make payments to government

officials to secure false paperwork TIPs or discretionary TIP extensions. See also, e.g., id.

59, 82-94, 115. Also, defendants knew, firmly believed, or were aware to a high probability

that these Nigerian government agency officials were receiving the payments because the

government agencies were identified on the custom agents price proposals and invoices. See,

e.g., id. 69, 80, 92, 110, 112, 136. In sum, the SEC has more than adequately pled the

involvement of foreign officials and Ruehlens and Jacksons knowledge of that involvement.

No more specific allegations are necessary to give them notice of the claims against them.

b. Defendants Proposed Re-Definition of Any Foreign Official toRequire Specific Identity Finds No Basis in Law or Legislative History.

In the face of well-pled allegations, defendants ask the Court to rewrite the FCPAs any

foreign official language to require proof of payment to a specifically identified government

official. Jackson Mot. at 11; Ruehlen Mot. at 8. Such specificity is not required by the

language of the FCPA or the relevant pleading standards, and there are several reasons this

Court should reject it.

First, the FCPAs language requires only that the defendants have acted corruptly in

furtherance of an authorization of illicit payments to any person knowing that all or a

portion of those payments would be offered, given, or promised to, directly or indirectly, any

foreign official. 15 U.S.C. 77dd-1(a), (a)(3) (emphasis added). These terms defining the

violation expressly contemplate and proscribe not only direct bribery, but also circuitous,

indirect bribery through third party intermediaries to foreign officials. The FCPAs definition

payments), 6 (false paperwork), 20-21 (discretionary actions), and 7, 20, 27-28, 32-33(unlawfulness and other facts).



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of foreign official includes the term any five times. See 15 U.S.C. 78dd-1(f)(1)(A).

Moreover, [t]he term any is generally used to indicate lack of restrictions or limitations on

the term modified. United States ex rel. Barajas v. United States, 258 F.3d 1004, 1011 (9th

Cir. 2001);see Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076, 1080 (9th Cir. 1999)

(observing that the dictionary defines any as one, no matter what one and that the broad

meaning of any has been recognized by courts). Thus, consistent with Congresss use of

any, this Court should give a broad construction to the FCPA generally and, specifically, to

the phrase any foreign official.

In view of this statutory language broadly proscribing bribery payments to any foreign

official, this Court should require no greater specificity than the SEC has already alleged. The

defendants cite no cases because there are none where a court has compelled the

government to plead, let alone prove, the specific identify and characteristics of the foreign

officials that the defendant believes to be involved in the corrupt scheme, and such a request

would be inconsistent with the FCPAs broadly encompassing language.

Second, the FCPAs legislative history confirms that the government need not

specifically name the foreign officials who are the intended recipients of the bribes. The

legislative history reflects that Congress deliberately refused to make foreign officials

themselves liable for bribery or to allow as a defense the fact that the foreign official himself

demanded payment. S. Rep. No. 95-114, at 10-11 (1977), reprinted in 1977 U.S.C.C.A.N.

4098, at 4108). As indicated throughout the legislative history, the FCPAs clear focus is on the

intent of the person authorizing or paying the bribe, not the bribe recipient or his identity. See

also United States v. Blondek, 741 F. Supp. 116, 117, 119 n.2 (N.D. Tex. 1990), affd and

adopted by United States v. Castle, 925 F.2d 831 (5th Cir. 1991) (tracing the legislative



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history).5

Third, requiring specificity would also run counter to the purpose of the FCPA. By

enacting the FCPA with broad provisions, Congress was particularly concerned with

widespread but indirect bribery of foreign officials through agents and intermediaries.

Particularly in cases involving bribery through a third party as presented here the

legislative history makes plain that where the corporation [or individual] knows the payment

will be passed on for a proscribed purpose, the violation is complete. S. Rep. No. 95-114 at 11

(1977), reprinted in 1977 U.S.C.C.A.N. 4098, at 4109. Based on these pronouncements

focusing squarely on the bribe-payers wrongful intent to corrupt any foreign official, the

Court, again, should reject any effort to engraft additional requirements on the statute to provide

specific information about the alleged corrupt officials particularly at the pleadings stage.

6

5 Defendant Jackson concedes the point: The essence of a violation of the Foreign CorruptPractices Act is the purpose of the payment, and the defendants knowledge and intent onmaking it. Jackson Mot. at 17.

These

practices lent plausible deniability to those seeking to pay or paying bribes by enabling the

bribe-payers to disclaim knowledge of the bribes ultimate recipient. Congress aimed to outlaw

this practice. For this reason, Congress established a knowledge requirement that included

willful blindness and criminalized bribes paid to unidentified foreign officials indirectly. See

supra at 13 n.3. Requiring that the targeted official be specifically identified would thwart these

goals by enabling bribe-payers to deliberately avoid specific knowledge of those they seek to

corrupt by using a third party to make the payment to public officials. That is why the language

of the FCPA reads in such a broad way to redress the harm caused by indirect bribes, including

through corrupt acts in furtherance of an authorization of the payment of any money to

6 See, e.g.,Report of the Securities and Exchange Commission on Questionable and IllegalCorporate Payments and Practices, reprinted in Sec. Reg. & L. Rep. (BNA) (Special Supp.May 19, 1976), at 12-13; H.R. Rep. No. 95-640, at 6 (1977); H.R. Conf. Rep. 100-576,reprinted in 1988 U.S.C.C.A.N. 1547, 1952-54 (1988).



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any person knowing that all or a portion of it will be offered, given, or promised, directly

or indirectly, to any foreign official. 15 U.S.C. 78dd-1(a), (a)(3). So long as the bribe

payer believes that any foreign official will be paid, directly or indirectly, the government has

met its pleading and proof obligations.

Finally, this interpretation is fully consistent with how courts have viewed analogous

anti-corruption statutes,7

7 See Stichting Ter Behartiging Van de Belangen Van Oudaandeel-houders In Het KapitaalVan Saybolt Intl B.V. v. Schreiber, 327 F.3d 173, 182 (2d Cir. 2003) (Stichting) (drawing ondomestic bribery law in interpreting the FCPA); Castle, 925 F.2d at 834 (same).

such as the domestic bribery statute (18 U.S.C. 201) and the statute

outlawing bribery relating to federal programs (18 U.S.C. 666). Like the FCPA, these bribery

statutes focus on the intent of the bribe-payer, and do not require knowledge of the specific

traits and characteristics of the official to be bribed. See United States v. Jennings, 471 F.2d

1310, 1311-13 (2d Cir. 1973) (holding that knowing the title and position of the government

official is not necessary for liability under the domestic bribery statute because the sole scienter

required is knowledge of the corrupt nature of the offer and an intent to influence [an] official

act); Castro v. United States, 248 F. Supp. 2d 1170, 1183-84, 1186 (S.D. Fla. 2003) (holding

under 18 U.S.C. 666, which renders criminally liable any person who corruptly gives

anything of value to any person, with intent to influence or reward an agent of a[] local

government, or any agency thereof ., that the identity of the agent whom defendant sought to

influence is clearly not among the elements of the offense ., and that the government was

not required to allege in the indictment or prove at trial the identity of the agent [defendant]

sought to influence (citations omitted));see alsoUnited States v. Johnson, 621 F.2d 1073,

1076 (10th Cir. 1980) ([I]t need not be shown that the public official was actually

corrupted nor that he accepted the bribe, and the object of the bribe need not even be



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attainable to support a conviction. [S]o long as the money is offered with corrupt intent, the

official does not necessarily even need to be aware of the bribe. (citations omitted)).

The argument against imposing additional pleading or proof burdens as to the identity of

the bribe recipient is even stronger in the foreign context, where the nature of the schemes

makes specific identification of the officials pocketing the bribes far more difficult than in

domestic bribery schemes. Indeed, the identity of the foreign official is sometimes shielded

from the bribe payor so the official can maintain his anonymity in an effort to avoid detection.

Defendants citeKay I, to suggest that the specific identification of foreign officials and

their roles, duties, and functions is an essential element of the FCPA. See Ruehlen Mot. at 7;

Jackson Mot. at 10-12. In fact,Kay Isays no such thing. TheKay Iopinion simply recognizes,

in dicta, the unremarkable proposition that one element of an FCPA violation is the identity of

the foreign country and the officials to whom the suspect payments are made. Kay I, 359 F.3d

at 760. Nowhere doesKay Isuggest that the identity of the foreign official need be specified

with the level of detail that the defendants demand. Consistent withKay Is dicta, the

Complaint identifies the foreign country (Nigeria) and officials to whom defendants bribes

were directed (government officials, including at NCS, the Nigerian Port Authority, and the

National Maritime Authority). Particularly at the pleading stage,Kay Is passing statement in

dicta in a criminal case should not be read to contradict the pleading standards of FRCP 8(a)

and the language, legislative history, and purposes of the FCPA itself.8

8 Defendants reliance on Blondek, 741 F. Supp. at 117 n.1, affd and adopted by Castle, 925F.2d at 831, is misplaced. Blondekand Castle involved the governments effort to prosecuteforeign officials who could notbe charged with FCPA violations but were charged with aviolation of 18 U.S.C. 371, under a general conspiracy theory. The reference quoted bydefendants from that case to a foreign official as a necessary party to an FCPA violation doesnot respond to the argument made here and again is pure dicta. If anything,Blondekand Castlesupport the SECs position in confirming that the FCPAs focus is on the briber, not the foreign



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2. The Complaint Alleges The Acts The Foreign Officials Were Bribed to

Undertake.

Defendants next argue that the Complaint fails to identify the actions the Nigerian

officials were asked to take in exchange for the bribes. Jackson Mot. at 12-13; Ruehlen Mot. at

10. Yet the Complaint provides abundant factual support for the conclusion that the bribes were

authorized for purposes proscribed by the statute to (1) influence an official act or decision,

(2) induce an official to disregard his lawful duty, or (3) secure an improper advantage.

The first unlawful purpose is to influence[] any act or decision of such foreign official

in his official capacity in order to assist an issuer to obtain or retain business. 15 U.S.C. 78dd-

1(a)(3)(A)(i). On this score, the Complaint alleges that defendants understood that NCS

officials were the officials who could grant or extend TIPs (see, e.g., Complaint 19-22, 62-

67, 71, 76, 85), and that defendants understood that such officials would not grant or extend

TIPs absent payments (see, e.g., id. 59, 73, 78, 92-94, 126). The Complaint also alleges that

Jackson and Ruehlen authorized payments to such officials in order to obtain TIPs and

extensions. Seeid. 20-26, 56, 60, 70, 82-94, 96, 98, 103-05, 107-08, 115, 118, 129, 134.

The Complaint further sufficiently alleges that defendants authorized payments for the

second purpose proscribed under the FCPA: to induce any foreign official to violate his lawful

duty. 15 U.S.C. 78dd-1(a)(3)(A)(ii).9

official. See, e.g., Castle, 925 F.2d at 834 & n.2 (noting that Congress was concerned solelywith regulating the conduct of U.S. entities and citizens; its exclusive focus was on the

briber). Finally, defendants reliance on and citation of the courts oral statements in OShea isunpersuasive. Ruehlen Mot. at 8-9; Jackson Mot. at 10 n.14. Judge Hughess oral statement isunclear, offers no analysis, and does not address the pertinent statutory language and legislativehistory. As a result, it has no precedential value that this Court should (or can) consider.

As alleged, NCSs policies prohibited fourth TIP

9 Defendants argue that a determination of lawful duty turns on the specifics of Nigerian law,which they claim has not been sufficiently pled. Jackson Mot. at 13; Ruehlen Mot. at 13-14.Defendants are wrong. First, nothing in the FCPA suggests that reference to Nigerian law isrequired. Rather, the alleged conduct of the foreign officials isper se unlawful officials



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extensions, Complaint 66, 71, 76, 78, and Ruehlen knew this fact, id. 71, 76, 78 and 126.

Yet in 2007 Ruehlen authorized the payment of 7,000,000 Naira, the largest TIP extension-

related payment yet, to induce officials to grant a fourth extension. See, e.g., id. 126-29. The

Complaint also alleges that Jackson and Ruehlen authorized payments to Nigerian officials to

secure TIPs and extensions to which Noble was not entitled. See, e.g., Complaint 19-32.

Paragraph 19 alleges, for example, that [u]nder Nigerian law, NCS grants TIPs for rigs that,

subject to any other conditions imposed by NCS, will be in country only temporarily and that

TIPs are valid for only one year. Paragraphs 81, 106, and 109, allege the specific conditions of

the TIPs granted by NCS, which makes clear that the rigs had to be exported out of Nigeria at

the end of the year. Paragraph 20 alleges that NCS had the discretion to grant up to three six-

month extensions to a TIP, but that NCS required export of the rig at the expiration of a TIP and

any TIP extensions. See alsoid. 62-63, 97, 118. Finally, the Complaint alleges that Jackson

(e.g., Complaint 34-36, 53, 83-85) and Ruehlen (e.g., id 45, 47, 53, 62-67, 71, 76, 78, 83-

85, 97, 118, 128) knew that NCS required the rigs be exported, and that [c]ontrary to Nigerian

law, Noble-Nigeria did not export its rigs at the expiration of TIPs and extensions and did not

convert its rigs to permanent import status and pay permanent import duties. Id. 22.

cannot legally lie on documents they generate or process, approve documents they know to befalse, and take bribes. See infra at 24-27 (discussing the routine government exception and howthe payments at issue were for non-routine, improper or discretionary actions); see alsoCommentaries on the Convention on Combating Bribery of Foreign Public Officials inInternational Business Transactions, 37 I.L.M. 1, 8 (1998) ([I]t was understood that everypublic official had a duty to exercise judgment or discretion impartially and this was anautonomous definition not requiring proof of the law of a particular officials country.). Buteven if allegations and proof of Nigerian law were necessary, which they are not, the Complaintalleges more than sufficient facts at this stage of the case. As alleged, Ruehlen and Jacksonknew the pertinent Nigerian law which was reflected, among other places, in the permitsthemselves. See 19-21 (improper advantage and proscribed purposes discussion), 26-29(facilitating payment discussion) and 32-33 (corrupt intent discussion).



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Paragraphs 68-95, 101, 103-13, 116, and 131-36 detail each instance that Noble, with Ruehlens

or Jacksons assistance, paid officials to grant the false paperwork TIPs, even though Noble was

neither qualified nor entitled to them.10

The third purpose proscribed by the FCPA securing any improper advantage,see 15

U.S.C. 78dd-1(a)(3)(A)(iii) is also properly alleged. As the Fifth Circuit noted when

discussing the FCPAs improper advantage language inKay I, 359 F.3d at 753-54, Congress

added this language to implement the Organization of Economic Cooperation and

Developments Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions (the OECD Convention). See also H.R. Rep. No. 105-802, at 17-19

(1998); S. Rep. No. 105-277, at 2-3 (1998). The OECD convention defined improper

advantage broadly as something to which the company concerned was not clearly entitled.

Kay I, 359 F.3d at 754. As stated inKay I, to obtain an improper advantage, one need not

have a benefit over another, but a benefit that one is not entitled to and likely will not receive

absent a payment to an official to ignore the deficiency. Id. at 754-56. The allegations that

satisfy the other prohibited purposes, discussed above, satisfy this aspect of the FCPA as well.

11

In short, the Complaint alleges that defendants authorized payments to foreign officials,

identifying the actions the Nigerian officials were asked to take in exchange for the bribes and

for purposes proscribed by the statute. The SEC has gone well beyond what is required to state

a claim that Jackson and Ruehlen are liable for violating the FCPA.

10 Jackson attacks all allegations that he or Ruehlen acted to influence or induce official actionas conclusory. Jackson Mot. at 7. But again, because states of mind can be alleged generally including purpose these assertions are without merit. Seesupra 9 & 13 n.4.

11 Even if all other companies are engaging in bribery to obtain the same benefit, the improperadvantage proscription will still be satisfied. As held in United States v. Kay, 513 F.3d 432 (5thCir. 2007) (Kay II), [t]he fact that other companies were guilty of similar bribery during the1990s does not excuse ARIs actions; multiple violations of law do not make those violationslegal. Id. at 441.



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3. The Complaint Sufficiently Pleads That The Payments Were Proscribed

Bribes and Not Permissible Facilitating Payments.

Ruehlen next argues that the SEC must plead facts which he wrongly asserts the

Complaint fails to do that demonstrate that the payments he authorized were not permissible

payments for routine governmental action. Ruehlen Mot. at 7;see 15 U.S.C. 78dd-1(b)

(Exception for Routine Governmental Action). Ruehlen misconstrues the rule that governs

pleading requirements with regard to statutory exceptions. It has long been established that, as

a general matter, the burden is on the defendants, not the plaintiff, to raise the application of the

exception at the pleadings stage and to prove its applicability at trial. Yet even assuming that

the SEC must plead preemptively around the statutory exemption, the Complaint pleads more

than sufficient facts to indicate that the payments could be illegal bribes under the statute, and

not permissible facilitating payments.

a. The SEC Need Not Plead to Negate the Narrow Exception for Routine

Governmental Action.

Payments to a foreign official to facilitate or expedite the performance of a routine

governmental action are exempted from the otherwise very broad anti-bribery provisions of the

FCPA: Subsections (a) and (g) shall not apply to any facilitating or expediting payment to a

foreign official, the purpose of which is to expedite or to secure the performance of a routine

government action by a foreign official . 15 U.S.C. 78dd-1(b).

It has been the long-standing rule that statutory exceptions, especially ones that are

narrowly drawn, constitute defensesthat must be pleaded and proved by the defense:

By repeated decisions it has come to be a settled rule that an indictment or otherpleading founded on a general provision defining the elements of an offense, or of aright conferred, need not negative the matter of an exception made by a proviso orother distinct clause, whether in the same section or elsewhere, and that it isincumbent on one who relies on such an exception to set it up and establish it.



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McKelvey v. United States, 260 U.S. 353, 357 (1922);see alsoCook v. United States, 84 U.S.

168, 177 (1872). Applying this principle, [c]ourts have specifically held in the securities

context that defendants have the burden to plead and prove statutory exemptions, not the

plaintiff. Rosen v. Brookhaven Capital Management Co., 194 F. Supp. 2d 224, 228 (S.D.N.Y.

2002) (citing SEC v. Ralston Purina Co., 346 U.S. 119, 126 (1953)) (other citations omitted).

In finding that the SEC had no requirement to plead the statutory exemption, the

Supreme Court inRalston dealt with a securities provision of the same linguistic form as 15

U.S.C. 78dd-1(b): The provisions of section 5 shall not apply totransactions by an issuer not

involving any public offering. 15 U.S.C. 77d(a)(2). Citing the long-standing rule

concerning exceptions made by proviso or other distinct clauses, and noting the broadly

remedial purposes of federal securities legislation, the Supreme Court held that the burden

rested with a defendant who sought to invoke that exception, not the SEC. Ralston, 346 U.S. at

126. Here, as inRalston, Cookand McKelvey, the defendants, and not the SEC, must plead and

prove the routine governmental action exception.

Ruehlen cites two cases that are materially different from this one, neither of which has

anything to do with the securities laws or bribery. 12

12 See Ruehlen Mot. at 7, citing United States v. Outler, 659 F.2d 1306 (5th Cir. 1981) andUnited States v. PolyCarb, Inc., 951 F. Supp. 1518 (D. Nev. 1996).

The district court decision inPoly-Carb has

been discredited with regard to its holding that an exclusion must be pled simply because the

exclusion does not appear as one of the [statutory] affirmative defenses. See, e.g., United

States v. Iron Mountain Mines, Inc., 987 F. Supp. 1244, 1248-49 & n.6 (E.D. Cal. 1997) (Poly

Carb is contrary to all other authority) (citations omitted). In Outler, the Fifth Circuit

expressly drew upon a single rare instance to depart from McKelvey, where an exception can

be so necessary to a true definition of the offense that the elements of the crime are not fully



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stated without the exception. 659 F.2d at 1310. This is not the case here. And Ruehlen

provides no argument why or how the exception for routine governmental action is necessary to

an understanding of what are proscribed bribes under the FCPA. This deficiency is not

surprising given that Ruehlen also fails to acknowledge the McKelvey rule, acknowledge

Outlers holding as a rare exception, and acknowledgeRalstons securities law holding.

If defendants wish to take advantage of the routine governmental action exception,

they must controvert the SEC allegations on the purpose of the bribes. The SEC need not

preemptively plead the exceptions inapplicability.

b. The Payments Alleged in the Commissions Complaint Do Not In AnyEvent Fall Into the Narrow Exception for Facilitating Payments.

Even if the SEC has the burden to plead facts establishing that the narrow facilitating

payments exception does not apply, the Complaint pleads facts alleging that Ruehlen and

Jackson bribed Nigerian officials with payments that were not permissible facilitating

payments.13

13 Jackson maintains that there is an obvious alternative explanation for his decision to makecorrupt payments to Nigerian officials, and that he acted in good faith. Jackson Mot. at 15.The well-pled facts contradict Jacksons assertions. But if he wants to dispute the allegationsabout his mental state, he can do so at trial. A motion to dismiss is not the proper forum forthese assertions. See Wilson v. Birnberg, 667 F.3d 591, 600 (5th Cir. 2012) ([A]t the motion todismiss stage, courts must limit their inquiry to the facts stated in the complaint and thedocuments either attached to or incorporated in [it]. (internal quotation and citations omitted)).

Defendants authorized payments to Nigerian officials so that those officials

would (1) lie on government papers, (2) improperly process documents they knew to be false,

(3) approve TIPs for rigs that did not qualify for temporary import status and exemption from

duty, (4) grant extensions to TIPs they had the discretion to deny, and (5) grant a fourth TIP

extension that they were obligated to deny. The payments at issue were authorized to evade the

requirements for TIPs and secure exemptions to which Noble was not entitled. This is not the

type of routine governmental action to which the exception applies.



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The statute defines a routine governmental action to mean only an action which is

ordinarily and commonly performed by a foreign official in (i) obtaining permits, licenses, or

other official documents to qualify a person to do business in a foreign country; . 15 U.S.C.

78dd-1(f)(3)(A). The Fifth Circuit has recognized that this exception is narrowly drawn and

that Congress was carving out very limited categories of permissible payments from an

otherwise broad statutory prohibition. Kay I, 359 F.3d at 745. According toKay I:

A brief review of the types of routine governmental actions enumerated byCongress shows how limited Congress wanted to make the grease exceptions. [R]outine governmental action does not include the issuance ofevery officialdocument orevery inspection, but only (1) documentation that qualifies a party

to do business and (2) scheduling an inspection very narrow categories oflargely non-discretionary, ministerial activities performed by mid- or low-levelforeign functionaries.

Id. at 750-51 (emphasis added).

Defendants suggest that since the duty exemptions they sought and obtained were called

temporary import permits, they somehow fall within the routine governmental action

exception. But the exception does notapply to any and all payments to a foreign official

related to any and all permits. Rather, as indicated by the narrow textual definition of the

exception, and its interpretation by the courts, including this circuit, it is sharply limited both by

purpose and by the action obtained.

To fall within the exception, the purpose of the payment must be to expedite or to

secure the performance of a routine governmental action. 15 U.S.C. 78dd-1(b). A routine

government action is one which is ordinarily and commonly performed. Id. 78dd-

1(f)(3)(A). See H.R. Rep. No. 95-640, at 8 (1977) (explaining that Congresss intent is to carve

out only payments which merely move a particular matter toward an eventual act or decision or

which do not involve any discretionary action or payments made to assure or to speed the



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proper performance of a foreign officials duties). The legislative history underscores that an

ordinarily and commonly performed action is a proper action that does not involve

discretion. See H.R. Conf. Rep. No. 100-576 (1988), at 921, reprinted in 1988 U.S.C.C.A.N.

1547, at 1954 (The Conferees wish to make clear that ordinarily and commonly performed

actions with respect to permits or licenses would notinclude those governmental approvals

involving an exercise of discretion by a government official.) (emphasis added).

Here, the payments were not made to expedite or secure the proper granting of

lawful and non-discretionary TIPs and TIP extensions that would qualify as routine

governmental action. The conduct secured by the payments was not the type of conduct

ordinarily and commonly performed by government agency officials. Lying on official

documents, as alleged in the Complaint, cannot be construed as routine governmental action.

Nor is it common and ordinary for agovernment official to issue receipts or certifications

showing the occurrence of an event that did not happen. E.g., Complaint 80. Yet such

receipts and evidence of export and import for rigs that never actually moved were obtained

from NPA and NMA officials through payment of special handling charges authorized by

Ruehlen and, later, by Jackson. Id. 80, 92. These acts, as pled, do not qualify as routine

acts which do not involve any discretionary action. See H.R. Rep. No. 95-640, at 8 (1977).

Nor is favorably processing duty exemptions based on known false documents routine

governmental action. Government officials do not commonly or ordinarily act on the basis of

paperwork known to be false. Yet, for example, in exchange for payments authorized by

Ruehlen and later Jackson, NCS accepted false paperwork showing a rig export when the rig did

not in fact leave Nigerian waters. NCS also cancelled bonds securing the value of the duties

owed based on bogus evidence of export. See, e.g., Complaint 73, 106, 109, 135. In



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exchange for further payments, NCS officials also granted new TIPs on documents falsely

indicating export and import of rigs that they knew had not moved. See, e.g., id. 81, 92, 106,

109, 110, 112. As alleged, therefore, defendants authorizations to line the pockets of Nigerian

officials with bribe money called forper se violations of those officials duties, which cannot

automatically be permissible facilitating payments as defendants claim.14

c. The Routine Governmental Action Exception Is Not Unconstitutional.

Indeed, in view of

the details alleged in the Complaint, defendants, at best, raise issues as to the routine

governmental action exception that are questions of fact and must be determined at a later

stage and cannot be a matter of law for which a Rule 12(b)(6) motion is applicable.

Finally, Ruehlen argues the FCPAs routine governmental action exception is

unconstitutionally vague as applied to him. Ruehlen Mot. at 17-18. He claims that nothing in

the Complaint shows that he could have known that the payments were not permissible

facilitations payments. Such an argument is without the merit, especially at the pleadings stage.

This case is not about the finer points of the facilitating payments exception. The SEC

has alleged official acts that cannot reasonably be understood as anything other than non-

routine, especially at the deferential pleadings stage. There is nothing subjective or

extraordinary about the fact that the law prohibits paying government officials to lie, process

false documents, and grant ultra vires exemptions. In fact, as alleged, the first time Ruehlen

learned of Nobles use of false paperwork to obtain TIPs, he thought the practice was wrong

14 Also outside of routine action, and in exchange for special handling payments, officialsgranted unlawful extensions,see, e.g., id. 66, 71, 76, and 128, and granted TIP extensionsthat the official had discretion to deny. As alleged, NCS had the discretion to grant up to threesix-month TIP extensions (Complaint 20), and did not, as a matter of policy, grant fourthextensions. Ruehlen and Jackson both authorized payments to NSC officials to secure thosediscretionary extensions. See, e.g., id. 31, 56, 59, 98, 115, 117-18. Ruehlen also authorizedpayment to NCS officials for a fourth extension. See id. 66, 71, 76, 128. Since granting theextensions involved an exercise of discretion or a violation of policy, the grants fell outsideroutine and the payments to officials were not facilitating ones as defined by the statute.



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and subjected Noble to the risk of additional fines for the improper use of the temporary import

permit system. Complaint 47. Ruehlen and Jackson also knew that the Audit Committee had

directed the process to stop because it was a violation of Nigerian law. Id. 50-53, 82-85.

Indeed, under Ruehlens reading of the statute, a person could bribe foreign officials with

impunity as long as the bribe somehow related to a permit. Ruehlen Mot. at 19.

The Complaint abundantly supports a conclusion that Ruehlen (as well as Jackson) knew

what he was paying for non-routine, unlawful, and sometimes discretionary TIP grants,

renewals and extensions and that the officials to be bribed would be the ones to carry out these

actions. Ruehlen is the one who: (1) dealt directly with the customs agents (see, e.g., id. 23,

25, 26, 55, 57, 66, 70, 96, 103, 105, 108, 117, 126), (2) received their proposals detailing the

special handling payments to government officials to obtain the illicit acts (see id. 55, 57, 69,

80, 92, 98, 103, 107, 110, 112, 117, 119, 132, 136), (3) received the TIP grants and TIP

extensions that stated the rig had to be exported (seeid. 62, 81, 97, 106, 109, 118), (4)

resumed the use of false paperwork in contravention of Nobles Audit Committees instructions

(see id. 66-85), (5) prepared the false TIP applications and assisted with the fabrication of

documents (seeid. 70, 74, 108, 131, 134, 135), and (6) sought a fourth extension through

payment of bribes because he knew NCS did not grant fourth extensions (seeid. 126-30). He

and Jackson also knew that TIP-related payments to government officials were large, unusual,

[and] non-routine payments and treated them as such. Complaint 91.

The relevant statutory provisions are sufficiently clear to a person of common

intelligence that they withstand any constitutional scrutiny. Here, an ordinary person would

have understood that payments to officials to lie and act on false paperwork were improper. As



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the Fifth Circuit stated in considering a similar argument about the business nexus element of

the FCPA:

A man of common intelligence would have understood that ARI, in bribing

foreign officials, was treading close to a reasonably-defined line of illegality. Asthe Supreme Court inBoyce held, no more than a reasonable degree of certaintycan be demanded [in a criminal statute]. Nor is it unfair to require that one whodeliberately goes perilously close to an area of proscribed conduct shall take therisk that he may cross the line. Defendants took this risk, and splitting hairs asto the illegality of one type of action under the business nexus test does not allowthem to argue successfully that the FCPAs standards were vague.

Kay II, 513 F.3d at 442;Kay I, 359 F.3d at 744 n.16. Hence, even if the routine government

action exception was ambiguous in some far-fetched hypothetical situation which it is not

that ambiguity would not rise to the level of rendering the FCPA or the exception on its face

unconstitutionally vague. See also Kay II, 513 F.3d at 444 ([Defendants] unlucky status as

two of the few individuals that the Government has vigorously prosecuted under the Act does

not permit them to argue successfully that they were unaware of the boundaries of illegality

under the Act).15

4. The Complaint Sufficiently Pleads That Ja

SEC v. Jackson and Ruehlen (Opposition Brief to Motion to Dismiss)

Documents

Transcript of SEC v. Jackson and Ruehlen (Opposition Brief to Motion to Dismiss)