Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 1 of 10 PageID #: 14065

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1 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 1 of 10 PageID #: Charles A. Stillman Tel: ext Fax: stillmanc@ballardspahr.com Via ECF U.S. District Judge, EDNY United States District Court 225 Cadman Plaza East Brooklyn, NY Re: United States v. Napout et al. 15-CR-252 (PKC) Dear Judge Chen: On behalf of our client, José Maria Marin, we write in response to the various requests for restitution submitted by the Fédération Internationale de Football Association ( FIFA ) (ECF Dkt. Nos. 966, 1006), the Confederation of North, Central America and Caribbean Association Football ( CONCACAF ) (ECF Dkt. Nos. 967, 1013), the Confederación Sudamericana de Fútbol ( CONMEBOL ) (ECF Dkt. Nos. 968, 1003), and certain former employees of Traffic Sports USA ( Traffic ) (ECF Dkt. Nos , 1007) (collectively, the Claimants ). For the reasons set forth below, these requests should be denied in their entirety. 1 I. Traffic is Not a Victim Traffic is not a victim of the offenses for which Mr. Marin was convicted. That is, during the time that Mr. Marin served as the interim president of the Brazilian soccer federation ( CBF ), he did not owe Traffic a duty of honest services and at no point entered into media and marketing contracts on behalf of that organization. For this reason alone, Traffic s request for restitution as to Mr. Marin should be denied. See generally Mem. & Order dated Jan. 1, 2018, ECF Dkt. No. 877, at 2 n.5 (Court ruling that, in the case against Hector Trujillo relating to media and marking rights to the Guatemalan confederation s World 1 Mr. Marin joins the arguments in the submission of co-defendant Napout to the extent applicable.

2 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 2 of 10 PageID #: Page 2 Cup qualifier matches, CONCACAF was not a party in interest); see also Dkt. Order dated May 9, 2018 ( CONCACAF is not a victim in this case; [the Guatemalan confederation] is ). 2 II. CONCACAF and CONMEBOL Assert Claims for Restitution Concerning Tournaments that they are Free to Tender in an Open Market CONCACAF and CONMEBOL assert losses for tournaments that they are free to and in some instances already have tendered in an open market. In brief, on October 15, 2015, CONCACAF, CONMEBOL, Datisa S.A. ( Datisa ) and its shareholders Full Play Group S.A. ( Full Play ), Productora de Eventos S.A. ( Productora ), Torneos y Competencias S.A. ( Torneos ) and Traffic entered into a Termination, Assignment and Release Agreement which, among other things, returned the rights to the 2016 edition of the Copa América to CONMEBOL and CONCACAF. FIFA FIFA On November 18, 2015, CONMEBOL, T&T, Fox Sports Latin America, Ltd. and others entered into a Release Agreement which, among other things, released CONMEBOL from various media and marketing contracts relating to the Copa Libertadores, Copa Sudamericana and the Recopa Sudamericana tournaments. FIFA FIFA As part of that agreement, the parties also agreed to enter into a series of new agreements between CONMEBOL and Fox International Channels concerning the media and marketing rights to the Copa Libertadores, Copa Sudamericana and the Recopa Sudamericana, apparently for the editions. On July 20, 2018, CONCACAF, CONMEBOL, Datisa and its shareholders Full Play, Productora and Traffic entered into a Rights Transfer and Settlement Agreement which, among other things, returned the rights to the 2019 and 2029 Copa América to CONMEBOL. FIFA FIFA This agreement also stated, in part, that 2 The government has apparently elected to take[] no position on the merits of Traffic s claim. Gov t Ltr. dated Aug. 6, 2018 (ECF Dkt No. 965). 3 The government produced copies of certain contracts referenced herein (FIFA FIFA ) to counsel for Mr. Marin on September 19, 2018, pursuant to the protective order. For the Court s convenience, and if the Court directs, we can submit these contracts under seal. In addition, given the nature of the restitution hearing presently scheduled for October 4, and in the interest of time, we respectfully request that the Court direct CONMEBOL to produce the Media Rights Agreement referenced in FIFA , which we submit is relevant to the amount, if any, by which CONMEBOL was ultimately harmed.

3 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 3 of 10 PageID #: Page 3 CONMEBOL acknowledges that the rights with respect to the 2019 and 2023 editions of the Copa America under the CONMEBOL Rights Contract have been returned and restored to it by this Agreement and, as a result, CONMEBOL has suffered no loss as to the 2019 and 2023 editions. Accordingly, CONMEBOL need not and shall not seek restitution, remission, mitigation or restoration with respect to the 2019 and 2023 editions from any of the Datisa Released Parties. CONMEBOL further acknowledges that the rights with respect to the 2016 edition of the Copa America were previously returned and restored to it by a prior agreement titled Termination, Assignment and Release Agreement dated October 15, 2015, entered into by and among CONMEBOL, CONCACAF and the Datisa Parties [] and that CONMEBOL shall not seek restitution, remission, mitigation or restoration with respect to the 2016 edition of the Copa America from any party released under the Centenario Termination Agreement. FIFA (emphasis added). Thus, CONMEBOL seeks restitution for purported losses that relate to rights that have been returned and restored. Id. Any such losses, therefore, have been mitigated and are not compensable under the Mandatory Victims Restoration Act of 1996 ( MVRA ). See 18 U.S.C. 3664(f)(1)(A). More particularly, CONMEBOL was released in one instance nearly three years ago from the bribery-induced contracts concerning the 2016 edition and all subsequent editions of the Copa Libertadores and the 2016 edition and all subsequent editions of the Copa América. As is clear from the contracts recently received from the government (see FIFA ), as well as CONMEBOL s submissions to the Court (see ECF Dkt. No. 968 at 14), the media and marketing rights to these tournaments are being negotiated through a proper tender process. As such, it simply strains reason to suggest that CONMEBOL has suffered losses relating to tournaments, the rights to which they presently own and are freely negotiating in an open market. 4 4 CONCACAF similarly asserts a claim for restitution that also includes lost revenues related to the 2016 edition of the Copa América. See ECF Dkt. No. 967 at 1 (asserting losses that include at least $27.7 million to $32.7 million that CONCACAF lost as a result of the corrupt sale of its commercial rights to the Copa América Centenario ); see also ECF Dkt. No For the foregoing reasons, CONCACAF s claim is also unavailing.

4 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 4 of 10 PageID #: Page 4 III. Claimants Mistakenly Rely Upon the Testimony of Dr. Stefan Szymanski In support of their theory of loss, Claimants rely substantially on Dr. Stefan Szymanski s conclusory testimony. E.g., ECF Dkt. No. 967 at 2; ECF Dkt. No. 968 at 12. As set forth in Mr. Marin s sentencing submission (ECF Dkt No. 978), Dr. Szymanski s testimony was not based upon any actual empirical analysis of financial data involving the various contracts and tournaments at issue in the case. Accordingly, such testimony fits squarely within the type of speculation that was recently rejected in United States v. Finazzo, 850 F.3d 94, 96 (2d Cir. 2017). In that regard, it is telling that CONMEBOL itself recognizes the purely speculative nature of Dr. Szymanski s testimony. ECF Dkt. No. 968 at 14 (offering to provide some concrete evidence of the percentage difference between the fair market value and bribery-induced contract price which may help the Court make a more precisely calculated determination. ) (emphasis added). CONMEBOL did not, however, provide any such empirical evidence in its subsequent submission seeking restitution. IV. Attorney Fees and Investigative Costs are Not Compensable in this Case FIFA, CONCACAF and CONMEBOL seek restitution in the form of attorney fees and investigative costs, e.g., to investigate [Mr. Marin s] misconduct and assist in the investigation and prosecution of [Mr. Marin]. ECF Dkt. No. 968 at 11; see also ECF Dkt. No 966 at 9; ECF Dkt. No 967 at 3. In light of the Supreme Court s decision in Lagos v. United States, which held that under the MVRA, a defendant cannot be forced to reimburse a victim for expenses incurred during an internal investigation of the defendant s illegal actions, as distinct from a government investigation into or prosecution of those actions, these requests are unsupportable. United States v. Razzouk, No. 11-cr-430 (ARR), 2018 WL , at *2 (E.D.N.Y. July 25, 2018) (citing 138 S. Ct. 1684, 1687 (2018)). A. Investigative Costs The MVRA requires that a criminal defendant: reimburse the victim for lost income and necessary child care, transportation, and other expenses related to participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense. 18 U.S.C. 3663(b)(4). In Lagos, the Supreme Court considered whether this provision included private investigations and civil proceedings, or whether it was limited to government investigations and criminal proceedings. Id. at Based in large part on the wording of the MVRA, the Court held that restitution under the MVRA does not extend to private investigations or civil proceedings. Id. at In doing so, the Court narrowly construed

5 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 5 of 10 PageID #: Page 5 the MVRA, concluding that the words investigation and proceedings refer specifically to criminal prosecution and criminal investigation. Id. at The statute thus only embraces costs related to the government s (as opposed to the victim s) criminal investigation. FIFA s attempt to sidestep Lagos advances an inaccurate reading of that decision. In particular, FIFA argues, [t]hough [the Lagos Court] denied GE Capital s request for restitution, the Supreme Court affirmed that attorney fees incurred by the victim in connection with a U.S. government investigation or criminal proceeding were recoverable, so long as the victim s investigation was conducted during the pendency of the U.S. government s investigation or prosecution. See id. at 1688, As such, Lagos confirms FIFA s entitlement to restitution from Marin for the cost of its internal investigation. ECF Dkt. No. 966 at 10. Nowhere in Lagos does the Court suggest, much less endorse, the proposition that attorney fees incurred by the victim were recoverable, so long as the victim s investigation was conducted during the pendency of the U.S. government s investigation or prosecution. Id. (emphasis added). The issue before the Lagos Court was the degree to which, if at all, a private corporation ought to be compensated for an internal investigation undertaken of its own volition. Moreover, the Court specifically declined to address the further issue of whether expenses incurred during a private investigation pursued at a government s invitation or request would be similarly excluded from coverage under the MVRA. Id. at Accordingly, FIFA s argument that because its investigation began on the same day that the first indictment was unsealed, and that such expenses were incurred during the pendency of the U.S. government s investigation and prosecution, simply does not support its claim for restitution. Much to the contrary, FIFA s recounting of the origin of its private investigation reflects just the sort of undertaking that Lagos deemed excludable for reimbursement under the MVRA. 6 5 It bears emphasis that Court explicitly rejected the government s argument that the corporation s act of sharing its investigative findings made those costs part of the criminal investigation. Lagos at CONMEBOL does assert, with nothing further, that its internal investigation was conducted at the specific request of the Government after the U.S. Department of Justice unsealed the Original FIFA Indictment. ECF Dkt. No. 968 at 11 n.43. Mr. Marin respectfully submits that further information is needed (for example, a CONMEBOL proffer of the facts

6 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 6 of 10 PageID #: Page 6 B. Attorney Fees In addition to its investigative costs, FIFA seeks restitution for its prepar[ation] and produc[tion] [of] a witness for the prosecution at the trial, together with the costs of one of its external lawyers [having] attend[ed] the six-week long trial to closely monitor the proceedings. ECF Dkt. No. 966 at 10. With respect to the expenses associated with preparing and producing Ms. Stephanie Maennl, Deputy Head of Corporate Legal for FIFA, we acknowledge that Lagos does not disturb the merit, in theory, of this request. However, to the extent that such fees are recoverable under the MVRA, recovery is permitted only to the extent that such fees were necessary to the investigation or prosecution of the criminal case. United States v. Cuti, 778 F.3d 83, 95 (2d Cir. 2014); see also United States v. Amato, 540 F.3d 153, (2d Cir. 2008) ( The [MVRA] requires that the included [legal] expenses be necessary. ). In order to ensure the attorneys work was actually necessary to the government s investigation or prosecution, the court must carefully parse[] the legal fees paid. Cuti at 93, 95 (vacating and remanding for more detailed analysis of attorneys billing records); see also United States v. Gupta, 925 F. Supp. 2d 581, 587 (S.D.N.Y. 2013) ( [T]ime entries [must] specify the work performed with sufficient particularity to assess what was done, how it was done, and why it was done. ). In the absence of any billing details, FIFA s claims are inadequate. In addition, FIFA has failed to articulate the necessity of preparing Ms. Maennl s testimony for the government s case when, at bottom, the prosecution team was more than able, and Ms. Maennl herself is a licensed attorney. With respect to the costs associated with outside counsel having attended the trial, absent a specific request from the government, there is simply no authority to support FIFA s request to recover such costs (nor does FIFA point to any). Those costs, respectfully, appear to be solely based upon FIFA s own decision to monitor the criminal trial in that manner. V. Salaries, Benefits and Other Compensation FIFA argues that Mr. Marin, in depriving FIFA of his honest services, unfairly obtained money from FIFA in the form of daily per diems and travel expenses when attending FIFA events while he was supposed to be honestly conducting his FIFA responsibilities. ECF Dkt. No. 966 at 5. CONMEBOL similarly argues that Mr. Marin unfairly obtained money from CONMEBOL in the form of salaries, benefits, and other compensation. ECF Dkt. No. 968 at 9. Because the purpose of restitution is essentially compensatory, and because the MVRA itself limits restitution to the full amount of each victim s loss, a restitution order must be tied to the victim s actual, provable, loss. United States v. Zangari, 677 F.3d 86, 91 (2d relating to the request or a government description thereof) before the issue can be fairly addressed by Mr. Marin.

7 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 7 of 10 PageID #: Page 7 Cir. 2012) (internal quotation marks and citation omitted); accord United States v. Gushlak, 728 F.3d 184, 194 (2d Cir. 2013) ( restitution may be awarded only in the amount of losses directly and proximately caused by the defendant s conduct ); United States v. Germosen, 139 F.3d 120, 130 (2d Cir. 1998) (need showing of actual loss for purposes of restitution ). FIFA and CONMEBOL seek to recover the full amount of all compensation and benefits Mr. Marin received as a result of his conviction. ECF Dkt. No. 966 at 5; see also ECF Dkt. No. 968 at 10. As set forth in Mr. Marin s sentencing submission, such an order would provide these organizations with an impermissible windfall. That is, while the Second Circuit recognizes that an employer may receive restitution when it pays for honest services but receives something less, so too has it repeatedly held that even in that context, the employer receives some benefits from the employee s services. United States v. Bahel, 662 F.3d 610, 649 (2d Cir. 2011). Therefore, any order of restitution pursuant to FIFA and/or its constituent organizations having received something less than Mr. Marin s honest services ought to be cabined to an amount that reflects the deprivation proximately caused by Mr. Marin s conduct of conviction. Indeed, a review of Second Circuit law has revealed not a single instance whereupon an award for an employee s entire salary was upheld. It is settled law that the proper calculation is the difference in the value of the services that [were rendered]... and the value of the services that an honest [director] would have rendered. Bahel, 662 F.3d at 650 (affirming restitution award of less than 10% of employee s total salary) (quotations omitted); see also United States v. Skowron, 529 F. App x. 71, 74 (2d Cir. 2013) (affirming restitution award of 20% of defendant s salary). For example, in Bahel, the award was limited to the salary the employer paid to the defendant-employee while he was suspended pending investigation, a time-period in which he performed no services at all. 662 F.3d at 650. The employer did not receive any restitution for the salary it paid the defendant while he was an active employee. As neither FIFA nor CONMEBOL put forth any argument addressing this issue or providing the type of analysis this Circuit requires, their claims should be denied. VI. FIFA and its Constituent Organizations are Not Entitled to Restitution under the MVRA Finally, to award FIFA or any of its constituent organizations restitution under the MVRA would be to provide those organizations with an undeserved award. 7 The Fourth, Seventh, and Eleventh Circuits all recognize that a company that participates in wrongdoing 7 We do not mean to suggest that FIFA or any of its constituent organizations should have been charged as defendants in this matter; our argument is limited to the assertion that these organizations should not be entitled to victim status.

8 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 8 of 10 PageID #: Page 8 even when not charged for its conduct is not entitled to victim status. In re Bankruptcy Estate of AGS, 565 F. App x 172, 175 (4th Cir. 2014); United States v. Litos, 847 F.3d 906, 907 (7th Cir. 2017) (vacating restitution order, noting [t]he order of restitution is questionable because Bank of America, though not a coconspirator of the defendants, does not have clean hands ); In re Wellcare Health Plans, Inc., 754 F.3d 1234, (11th Cir. 2014) (a company could not claim to be a victim under the MVRA where, like here, the purported fraud was perpetrated by a small group of top-level employees without the involvement, knowledge, or approval of the board of directors or the vast majority of the company s employees). The Second Circuit, however, recognizes that co-conspirators are not victims entitled to restitution. United States v. Reifler, 446 F.3d 65, 127 (2d Cir. 2006) (finding that any order entered under the MVRA that has the effect of treating coconspirators as victims, and thereby requires restitutionary payments to the perpetrators of the offense of conviction, is reversible error). The standard to receive restitution thus appears to be less onerous than in the sister circuits. That is, [r]estitution under the MVRA may not be denied simply because the victim had greedy or dishonest motives, where those intentions were not in pari materia with those of the defendant. United States v. Ojeikere, 545 F.3d 220, 223 (2d Cir. 2008). Nevertheless, courts in this Circuit are permitted to, and at times have, looked beyond whether or not an entity is a named co-conspirator in assessing a restitution claim. See United States v. Block, No. 16-cr-595 (JPO), 2018 WL , at *3 (S.D.N.Y. Feb. 6, 2018) (denying a company s request for restitution as its conduct was more accurately regarded as a coconspirator than a victim). In Block, the court based its holding upon the following findings: First, the defendant s actions fall squarely within the scope of criminal conduct that is attributable to a corporate employer ( First Factor ); second, although the government did not charge the company as a coconspirator, the corporate culture and the tone at the top were major themes at trial ( Second Factor ); and third, considerations of the public interest and the incentives that would be furthered by treating the company as a victim warranted that the company not be treated as such ( Third Factor ). Of particular note is that, with respect to the Third Factor, the court reasoned that while the company certainly deserves credit for conducting an internal investigation and cooperating with the government, an even more important incentive is to prevent the circumstances that give rise to fraud and questionable accounting in the first place. Id. at *4. We submit that the decision in Block permits the Court to reach a similar conclusion in this case. To be sure, with respect to the First Factor (akin to a theory of respondeat superior), Mr. Marin s purported conduct cannot be viewed as for the benefit of FIFA and its constituent organizations. We also acknowledge that, because the government identified FIFA and its constituent organizations as making up the RICO enterprise, such entities would ipso facto not be co-conspirators in this case. Nevertheless, the core reasoning of the three factors set forth in Block remain particularly significant here.

9 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 9 of 10 PageID #: Page 9 For example, publicity about the manner that FIFA has acted in addressing the issues raised by this case is, we submit, not consistent with its claim for victim status. In December 2014, the New York Times reported on the resignation of the chairman of the investigative chamber of the FIFA ethics committee based upon, among other things, that committee s misrepresentation of the findings of his two-year investigation. Jeré Longman, FIFA Investigator Michael J. Garcia Quits in Dispute Over Report, N.Y. TIMES, Dec. 17, 2014 (referencing a portion of the resignation statement, which reads, [n]o independent governance committee, investigator or arbitration panel can change the culture of an organization. ). During the 2018 World Cup in Russia, the New York Times published an article that centered on the lavish treatment that FIFA s top officials receive, in spite of their promises to live more austerely. Tariq Panja, For FIFA Executives, World Cup Perks Survive a Scandal, N.Y. TIMES, July 13, 2018 ( In Russia, [], it seems that the names may have changed, but the fringe benefits have not. And that goes for the individuals hired to police and maintain good governance standards inside the organization, too. ). Perhaps most revealing is FIFA s latest edition of its Code of Ethics (attached hereto as Exhibit A), which came into effect on August 12, As the Court will recall, that Code of Ethics (along with those of FIFA s constituent federations) laid the foundation for the government s theory of honest services wire fraud. FIFA s new Code of Ethics removes all reference to the word corruption and appears to actually limit FIFA s ability to prosecute bribery cases. See Rob Harris, Keep bribes quiet for 10 years, FIFA won t punish you, ASSOC. PRESS., Aug. 13, In particular, whereas the 2012 Code of Ethics imposed a limitation period for [p]rosecution for bribery and corruption to a term of 20 years, GX-1226 at 16, the 2018 Code of Ethics provides that, [b]ribery, misappropriation of funds and manipulation of football matches or competitions may no longer be prosecuted after a lapse of ten years Ex. A at 15 (emphasis added). In response to the aforementioned article by the Associated Press, FIFA released a Clarification concerning the revised FIFA Code of Ethics that, among other things, noted, the title of the article Bribery and corruption was changed to Bribery for reasons of language clarity and for the sake of clarity and comprehension, the new code is actually more stringent regarding bribery, by dint of having minimum sanctions to punish any instance of bribery, which did not exist under the previous code. Press Release, FIFA, Clarification concerning the revised FIFA Code of Ethics (Aug. 14, 2018), available at Notwithstanding FIFA s statement, the limitations period for its prosecution of bribery offenses has been cut in half.

10 Case 1:15-cr PKC-RML Document 1025 Filed 09/21/18 Page 10 of 10 PageID #: Page 10 Respectfully, the fact that neither FIFA nor its constituent organizations were charged (or named as an unindicted co-conspirator) does not preclude the Court from considering the role of those entities with respect to the conduct underlying this case, now that they seek to recover millions of dollars in restitution. In that regard, we submit that a fair balancing of each of these considerations do not support such claims. * * * For the aforementioned reasons, the Claimants requests for restitution should be denied. Sincerely, /s/ CAS Charles A. Stillman James A. Mitchell Bradley R. Gershel cc: All counsel of record (by ECF)