Dmitrij Harder was the president and owner of both the Chestnut Consulting Group, Inc., which was incorporated in the State of Pennsylvania, and the Chestnut Consulting Group, Co., which was incorporated in the State of Delaware. Harder operated through one or both of these entities (referred to collectively as the “Chestnut Group”) purportedly to provide, among other things, consulting services to companies seeking financing from multilateral development banks.
The European Bank for Reconstruction and Development (“EBRD”) was a multilateral development bank headquartered in London, England, and was owned by over 60 sovereign nations. Among other things, the EBRD provided debt and equity financing for development projects in emerging economies, primarily in Eastern Europe. According to the indictment, Harder knew a senior banker at the EBRD from prior business dealings. The senior banker was responsible for leading the review of the applications for loans and equity investments, and also set the terms and conditions for that financing. Harder allegedly paid bribes to the senior banker in order to gain a favorable outcome in the review of applications for financing submitted by his clients, and to corruptly influence the foreign official to direct business to Harder and the Chestnut Group, and others. Between about 2007 through about 2009, Harder made five payments, totaling more than $3.5 million, to the senior banker's sister. These payments were made purportedly for consulting and other services provided to Chestnut by the official’s sister, when, in fact, no such services were provided. According to the indictment, Harder also participated in the creation of fake documents in an attempt to justify the payments to the official’s sister. Chestnut allegedly earned approximately $8 million in “success fees” as a result of the EBRD’s approval of the financing applications of two of the Chestnut Group's clients.
On January 6, 2015, Harder was criminally indicted in the Eastern District of Pennsylvania. The indictment charges Harder with one count of conspiracy to violate the Foreign Corrupt Practices Act and Travel Act, five counts of violating the Foreign Corrupt Practices Act, five counts of violating the Travel Act, one count of conspiracy to commit international money laundering, and two counts of international money laundering. A superseding indictment was filed on December 15, 2015 alleging the same fourteen counts.
On March 2, 2016, the court denied Harder's motion to dismiss the charges against him. Among other arguments, Harder argued that the EBRD was not a public international organization under the FCPA. The court rejected that argument, finding that the indictment contained sufficient facts for a jury to determine whether the EBRD was in fact a public international organization.
According to a DOJ press release dated April 20, 2016, Harder pleaded guilty and is scheduled to be sentenced on November 3, 2016, but as of August 1, 2016, the plea agreement was not yet available. Prior to sentencing, Harder moved for bail, but the court revoked his bail because he failed to show he was not a flight risk. He moved the court to reconsider, which it denied, and then Harder appealed that decision. The circuit court denied his motion for bail.
On July 21, 2017, Harder was sentenced to 60 months in prison to be followed by 3 years of supervised release. The court ordered Harder to pay a fine of $100,000 plus a mandatory assessment of $200. Harder was further ordered to forfeit $1.9 million.
On August 7, 2017, Harder appealed his sentence to the Third Circuit Court of Appeals on the theory that his argument that there had been an economic benefit to Siberia based on the misconduct had not been properly considered by the district court in his sentencing. On November 8, 2018, the Third Circuit affirmed his sentencing.
Notably, this enforcement action invoked the rarely used “public international organization” prong of the FCPA’s “foreign official” element, based on the EBRD's designation as a "public international organization."
