Thursday, April 28, 2016
A wonderful article appeared in the NYLJ back in March concerning textualism in white collar law. Authors Elkan Abramowitz and Jonathan Sack remark on the broadly worded statutes one finds in the white collar arsenal, and how Justice Scalia was a leader in using a textualist approach in interpreting these statutes. The authors of this article reflect on the "exculpatory no" and obstruction of justice as two examples in demonstrating the use of textualism.
With Justice Scalia no longer with us, it will be interesting to see if others pick up this theme in current cases such as former Gov. McDonnell.
Monday, April 25, 2016
The United States Supreme Court accepted cert this morning in Shaw v. United States here. In 2014 the Court had looked at section 1344(2) of the bank fraud statute. (Loughrin v. United States). In contrast to Loughrin, this new case examines subsection (1), specifically the "scheme to defraud a financial institution" and whether it requires proof of a specific intent not only to deceive. The case comes from the 9th Circuit where the court examined the question of "whether that means the government must prove the defendant intended the bank to be the principal financial victim of the fraud." The Ninth Circuit held that although there needs to be an intent to defraud the bank under section 1, there is no requirement that the bank "be the intended financial victim of the fraud." Other circuits, however, have "held that risk of financial loss to the bank is an element that must be proven under section 1344(1). Stay tuned...
Wednesday, April 20, 2016
Judge Valerie Caproni, the Southern District of New York judge presiding over the case of convicted former New York State Assembly Speaker Sheldon Silver, has unsealed papers submitted by United States Attorney Preet Bharara alleging that the convicted politician had affairs with two women who allegedly received favorable treatment from him in his professional capacity. The women, whose names were redacted from court papers (but identified, with accompanying photos, by the New York Daily News) were allegedly a prominent lobbyist who dealt regularly with Silver in his official capacity and a former state official whom Silver allegedly helped get a state position.
The government, whose efforts to introduce evidence of the relationships at trial were rebuffed by the judge, argued it should be able to provide such evidence at sentencing, purportedly to demonstrate that these relationships and favors provided by Silver demonstrated a pattern of abuse of power and possibly to rebut any evidence, including Silver's 50-year marriage, of Silver's good character. The judge seemed to accept the first argument, stating that she viewed this information "as a piece with the crimes for which Mr. Silver stands convicted," although "not exactly the same since no one is suggesting a quid pro quo, but of a piece of a misuse of his public office, and that's why I think it is relevant."
Generally, a federal judge has a right to consider virtually any information on sentencing, but I am uneasy about the injection of information of extramarital affairs of a defendant into the sentencing decision. If "no one is suggesting a quid pro quo," as Judge Caproni said, I question its relevance. Unless there is some basis that Silver did something favorable for these women because of their alleged sexual relationships - which I would call a "quid pro quo - I wonder whether his alleged actions constitute a "misuse of public office."
There, of course, is a difference between allowing a party to present evidence or argument at sentencing and factoring that information into the sentencing decision, and, absent specific facts, I am hesitant to say the material should not be considered. I am troubled, however, by the possibility that a defendant's alleged marital infidelity will become a regular part of a prosecutor's sentencing toolbox.
I am relatively sure that my first boss, from almost fifty years ago, Frank Hogan, the legendary and exemplary longtime District Attorney of New York County, would not have proffered such evidence, but Mr. Hogan was a man with a perhaps old-fashioned notion of fair play in a perhaps gentler age in which prosecutors rarely took aggressive (or even any) positions on sentencing (and the press did not publicize the dalliances of public officials).
(I note that Mr. Silver, whom I never met or spoke with, or contributed to, appointed me three times (and failed to reappoint me a fourth) to serve on the New York State Commission on Judicial Conduct).
Sunday, April 17, 2016
Last week in a significant opinion involving mens rea and the federal aiding and abetting statute, 18 U.S.C. Section 2(a), the First Circuit threw out a conviction based on faulty jury instructions.
The instruction allowed the jury to convict the defendant if she “knew or had reason to know” that her husband had been previously convicted of a criminal offense punishable by a term of over one year.
The court ruled that the “had reason to know” language impermissibly allowed for conviction on a theory of negligence.
Here is the key language:
“Notwithstanding Xavier and its progeny, we therefore adhere to our view that, in order to establish criminal liability under 18 U.S.C. § 2 for aiding and abetting criminal behavior, and subject to several caveats we will next address, the government need prove beyond a reasonable doubt that the putative aider and abettor knew the facts that make the principal's conduct criminal. In this case, that means that the government must prove that Darlene knew that James had previously been convicted of a crime punishable by more than a year in prison. Having so concluded, and before turning to consider the effect of this holding on this appeal, we add several important caveats.”
The chief caveat imposed by the court was that “knowledge” can be established through a “willful blindness” instruction, if "(1) the defendant claims lack of knowledge; (2) the evidence would support an inference that the defendant consciously engaged in a course of deliberate ignorance; and (3) the proposed instruction, as a whole, could not lead the jury to conclude that an inference of knowledge [is] mandatory."
Saturday, April 9, 2016
The New York Times reported on Tuesday, April 5 that Donald Trump, contrary to his asserted practice of refusing to settle civil cases against him, had settled a civil fraud suit brought by disgruntled purchasers of Trump SoHo (New York) condos setting forth fraud allegations that also were being investigated by the District Attorney of New York County ("Donald Trump Settled a Real Estate Lawsuit, and a Criminal Case Was Dismissed"). The suit alleged that Trump and two of his children had misrepresented the status of purchaser interest in the condos to make it appear that they were a good investment.
What made this case most interesting to me is language, no doubt inserted by Trump's lawyers, that required as a condition of settlement that the plaintiffs "who may have previously cooperated" with the District Attorney notify him that they no longer wished to "participate in any investigation or criminal prosecution" related to the subject of the lawsuit. The settlement papers did allow the plaintiffs to respond to a subpoena or court order (as they would be required by law), but required that if they did they notify the defendants.
These somewhat unusual and to an extent daring conditions were no doubt designed to impair the District Attorney's investigation and enhance the ability of the defendants to track and combat it, while skirting the New York State penal statutes relating to bribery of and tampering with a witness. The New York statute relating to bribery of a witness proscribes conferring, offering or agreeing to confer a benefit on a witness or prospective witness upon an agreement that the witness "will absent himself or otherwise avoid or seek to avoid appearing or testifying at [an] action or proceeding" (or an agreement to influence his testimony). Penal Law 215.11 (see also Penal Law 215.30, Tampering with a Witness). Denying a prosecutor the ability to speak with prospective victims outside a grand jury makes the prosecutor's job of gathering and understanding evidence difficult in any case. Here, where it is likely, primarily because of a 120-day maximum residency limit on condo purchasers, that many were foreigners or non-New York residents and thus not easily served with process, the non-cooperation clause may have impaired the investigation more than it would have in most cases.
A clause requiring a purchaser to declare a lack of desire to participate, of course, is not the same as an absolute requirement that the purchaser not participate. And, absent legal process compelling one's attendance, one has no legal duty to cooperate with a prosecutor. It is questionable that if, after one expressed a desire not to participate, his later decision to assist the prosecutor voluntarily would violate the contract (but many purchasers would not want to take a chance). The condition of the contract thus, in my view, did not violate the New York statutes, especially since the New York Court of Appeals has strictly construed their language. People v. Harper, 75 N.Y.2d 373 (1990)(paying victim to "drop" the case not violative of statute).
I have no idea whether the settlement payment to the plaintiffs would have been less without the condition they notify the District Attorney of their desire not to cooperate. And, although the non-cooperation of the alleged victims no doubt made the District Attorney's path to charges more difficult, the facts, as reported, do not seem to make out a sustainable criminal prosecution. Allegedly, the purchasers relied on deceptive statements, as quoted in newspaper articles, by Mr. Trump's daughter Ivanka and son Donald Jr. that purportedly overstated the number of apartments sold and by Mr. Trump that purportedly overstated the number of those who had applied for or expressed interest in the condos, each implying that the condos, whose sales had actually been slow, were highly sought. A threshold question for the prosecutors undoubtedly was whether the statements, if made and if inaccurate, had gone beyond acceptable (or at least non-criminal) puffing into unacceptable (and criminal) misrepresentations.
Lawyers settling civil cases where there are ongoing or potential parallel criminal investigations are concerned whether payments to alleged victims may be construed by aggressive prosecutors as bribes, and often shy away from inserting restrictions on the victims cooperating with prosecutors. On the other hand, those lawyers (and their clients) want some protection against a criminal prosecution based on the same allegations as the civil suit. Here, Trump's lawyers boldly inserted a clause that likely hampered the prosecutors' case and did so within the law. Nonetheless, lawyers seeking to emulate the Trump lawyers should be extremely cautious and be aware of the specific legal (and ethical) limits in their jurisdictions. For instance, I personally would be extremely hesitant to condition a settlement of a civil case on an alleged victim's notifying a federal prosecutor he does not want to participate in a parallel federal investigation. The federal statutes concerning obstruction of justice and witness tampering are broader and more liberally construed than the corresponding New York statutes.
Wednesday, April 6, 2016
The DC Circuit Court of Appeals, Hon. Srinivasan, vacated the district court order in the Fokker case finding that these "determinations are for the Executive - not the courts - to make." The case arose "from the interplay between the operation of a DPA and the running of time limitations under the Speedy Trial Act." The Court of Appeals held "that the Act confers no authority in a court to withhold exclusion of time pursuant to a DPA based on concerns that the government should bring different charges or should charge different defendants." Some key quotes from the decision -
"The Constitution allocates primacy in criminal charging decisions to the Executive Branch."
"It has long been settled that the Judiciary generally lacks authority to second-guess those Executive determinations, much less to impose its own charging preferences."
"Nothing in the statute's terms or structure suggests any intention to subvert those constitutionally rooted principles so as to enable the Judiciary to second-guess the Executive's exercise of discretion over the initiation and dismissal of criminal charges."
"The context of a DPA is markedly different. Unlike a plea agreement - and more like a dismissal under Rule 48(a) - a DPA involves no formal judicial action imposing or adopting its terms."
Friday, April 1, 2016
From the abstract:
Corporate compliance is becoming increasingly “criminalized.” What began as a means of industry self-regulation has morphed into a multi-billion dollar effort to avoid government intervention in business, specifically criminal and quasi-criminal investigations and prosecutions. In order to avoid application of the criminal law, companies have adopted compliance programs that are motivated by and mimic that law, using the precepts of criminal legislation, enforcement, and adjudication to advance their compliance goals. This approach to compliance is inherently flawed, however — it can never be fully effective in abating corporate wrongdoing. Explaining why that is forms this Article’s main contribution. Criminalized compliance regimes are inherently ineffective because they impose unintended behavioral consequences on corporate employees. Employees subject to criminalized compliance have greater opportunities to rationalize their future unethical or illegal behavior. Rationalizations are a key component in the psychological process necessary for the commission of corporate crime — they allow offenders to square their self-perception as “good people” with the illegal behavior they are contemplating, thereby allowing the behavior to go forward. Criminalized compliance regimes fuel these rationalizations, and in turn bad corporate conduct. By importing into the corporation many of the criminal law’s delegitimatizing features, criminalized compliance creates space for rationalizations, facilitating the necessary precursors to the commission of white collar and corporate crime. The result is that many compliance programs, by mimicking the criminal law in hopes of reducing employee misconduct, are actually fostering it. This insight, which offers a new way of conceptualizing corporate compliance, explains the ineffectiveness of many compliance programs and also suggests how companies might go about fixing them.
Wednesday, March 30, 2016
Sixth Amendment Right to Counsel Infringed When Untainted Assets are Frozen, Preventing Payment of Attorney Fees
In Sila Luis v. United States, the Supreme Court rules "[a] federal statute provides that a court may freeze before trial certain assets belonging to a criminal defendant accused of violations of federal health care or banking laws. See 18 U. S. C. §1345. Those assets include: (1) property 'obtained as a result of' the crime, (2) property 'traceable' to the crime, and (3) other 'property of equivalent value.' §1345(a)(2). In this case, the Government has obtained a court order that freezes assets belonging to the third category of property, namely, property that is untainted by the crime, and that belongs fully to the defendant. That order, the defendant says, prevents her from paying her lawyer. She claims that insofar as it does so, it violates her Sixth Amendment 'right . . . to have the Assistance of Counsel for [her] defence.' We agree."
Monday, March 21, 2016
I have just published a new article in the Compliance Elliance Journal entitled "Internal Investigations and the Evolving Fate of Privilege."
In 1981, the United States Supreme Court delivered a landmark ruling in Upjohn Co. v. United States. The decision made clear that the protections afforded by the attorney-client privilege apply to internal corporate investigations. This piece examines the fundamental tenets of Upjohn, discusses some recent challenges to the applicability of privilege to materials gathered during internal investigations, and considers the manner in which the international nature of modern internal investigations adds complexity and uncertainty to the field.
The article is available for free download here.
Friday, March 18, 2016
We note two recent victories in federal white collar jury trials, one by a seasoned hand and another by an up and coming star. In U.S. v. Kallini, Dr. Adel Kallini, a former anesthesiologist and now pain management physician practicing in Broward County, Florida, was indicted in the Middle District of Florida, Tampa Division. Dr. Kallini was charged with one count of conspiracy to commit health care fraud and wire fraud, as well as one count of falsification of records in a federal investigation. The Government also sought forfeiture of over $1MM.
Our sole defense at trial was good faith reliance upon the advice of counsel. In June, 2013, Dr. Kallini’s tax attorney presented him with a business “deal”, proposed to the attorney by two people who claimed to be legitimately involved in the health care field. (Unbeknownst to Dr. Kallini and his lawyer, the two were involved in health care fraud for the past three years which included, but was not limited to, paying kickbacks to patients and doctors in South Florida). The “deal” presented to Dr. Kallini, through his lawyer, essentially required Dr. Kallini to “rent” out his Medicare provider number for (what he was told) the billing of legitimate services provided to patients by other physicians who, for one reason or another, could not bill Medicare for the services provided. From the payments, Dr. Kallini was to receive 25%, his lawyer 10%, and the two others 65%. Dr. Kallini’s lawyer prepared a written agreement/contract reflecting the above.
Dr. Kallini has been practicing medicine since 1971 and had a Medicare provider number since 1973. Having never previously done anything of this nature, he asked his lawyer point blank: “Is this legal?” His lawyer told him it was. Dr. Kallini signed the agreement/contract.
On cross examination, the Government’s expert witness was forced to concede the critical differences between intentional fraud and unintentional "abuse" of the Medicare payment system. The expert also acknowledged that if the defense's factual theory of the case was correct, Dr. Kallini's conduct could fall into the non-criminal category. Bieber's cross examination of the expert on this point was greatly aided by Strassman's discovery on the internet of a six year old Power Point presentation prepared by the expert in which he taught a group of Government investigators the differences between the intentional defrauding of Medicare and the “unintentional abuse” of the payment system. Dr. Kallini was the sole defense witness.
In U.S. v. Upchurch, et al., in the EDVA (Alexandria Division), Eugene Gorokhov of Washington DC's Burnham & Gorokhov, assisted by Ziran Zhang, represented defendant Matthew Jones. According to Gorokhov:
A group of young adults, to include my client, went to a Six Flags amusement park on a Saturday in the Summer of 2015. On the day they were there, numerous people at Six Flags had their belongings stolen, to include bags containing wallets and credit cards. Later surveillance videos showed that several individuals in my client’s group used the stolen credit cards at nearby stores on the same days. My client, however, was not in any of the videos.
Despite the apparent lack of evidence against my client, the Government still charged him, along with the others, with conspiracy to commit wire fraud and access device fraud. As to my client, the only evidence of his involvement was: (1) the appearance of his home address on a fraudulent credit card application, made in the name of a victim who had her belongings stolen from the park; (2) the use of the fraudulently obtained card to pay a phone bill under his name. Multiple people lived at my client’s home address. After indictment, phone records showed that his phone account had two phone numbers, and other evidence the investigator had showed that one of these numbers was used by another resident of his house, giving that person incentive to pay the phone.
The Government investigator, during the course of his investigation: (1) did not interview any of the other residents living at my client’s home address, despite knowing that more than one person lived at my client’s address; (2) overlooked the fact that the fraudulent credit card application listed an email address associated with one of the other residents at my client’s address (and admitted that he overlooked it at trial); (3) did not subpoena any of ATM surveillance videos associated with several fraudulent ATM transactions on the credit card, and those videos were ultimately erased in accordance with the bank's retention policy; and (4) did not obtain recorded phone calls between the credit card company and the individual who made the fraudulent card application, even though there were about a dozen such calls. Those calls surfaced 24 hours before trial and were, for unknown reasons, not previously produced by the bank. Those calls showed that it was someone else, and not my client, attempting to activate the fraudulent card.
During deliberations, the jurors came back with a question that asked, in essence, whether they could find a defendant guilty based only on his knowledge of a crime, and his presence at the scene. The defense asked Judge Brinkema for a "mere presence" instruction, which she gave. Thirty minutes later, the jury came back with a verdict of not guilty with respect to Eugene's client.
Congratulations to Bieber and Gorokhov and their respective teams. And if you have a federal white collar jury trial victory to report do not hesitate to let me know. We'll do our best to publish it and discuss its significance here.
Wednesday, March 16, 2016
By now, every reader knows that President Obama has appointed D.C. Circuit Chief Judge Merrick Garland to the Supreme Court. On the merits, Garland appears to be a sterling appointment with impressive credentials and moderately liberal views on most issues and moderately pro-government views on criminal issues, positions that approximate those of the President. As a political matter, he, of the named contenders for the Supreme Court, is the one most likely to overcome the Republicans' stated refusal to approve any nominee until the next President is in office. I predict that Garland will be confirmed, but not until 2017, in the first term of President Hilary Clinton.
Garland, I also predict, will be a middle-of-the-road justice on criminal justice issues and generally pro-government on white-collar crime issues, somewhat like Justice Elena Kagan. He will, at least on white-collar issues, be far less pro-defense than his predecessor, Justice Antonin Scalia. Scalia, although painted by liberals as an arch-conservative (as indeed he was on some social issues, like abortion and same-sex marriages) had pro-defense views on many issues, such as the right to confront witnesses, the right to trial by jury, and overcriminalization. Not only did he often vote in favor of the defendant, he sometimes authored opinions with innovative interpretations that became established law.
At a bar affair at which I was introduced to Justice Scalia as the president of the National Association of Criminal Defense Lawyers, he said, absolutely deadpan, "Why don't you guys give me an award? I'm the best justice you have." The NACDL never did, nor was it to my knowledge ever seriously considered, no doubt because of his overall conservative reputation and record. It may to some seem far-fetched, but I would not be surprised if a few years ago from now, white-collar defense lawyers will be lamenting the loss of Justice Scalia.
Monday, March 14, 2016
In November 2014, the American Bar Association Criminal Justice Section Task Force on the Reform of Federal Sentencing for Economic Crimes published its final report. The report recommended major changes to the structure of the Federal Sentencing Guidelines for economic crimes. In particular, the report sought to reduce the current Guideline's dominant focus on loss in favor of a more balanced approach that weighed loss, culpability, and victim impact. I discussed these proposed amendments more fully here. Though the ABA CJS Task Force recommendations were not adopted by the Federal Sentencing Commission (see here and here), some courts have begun to use the ABA "Shadow Guidelines" when varying in economic crimes cases.
Last week, a federal judge in New York used the ABA "Shadow Guidelines" in sentencing Mair Faibish, former CEO of Synergy Brands, Inc. Faibish was accused of kiting checks worth in excess of $1 billion. According to the DOJ press release in the case:
Synergy was a publicly-held food products company that traded on the NASDAQ and Over-the-Counter exchanges and manufactured and distributed various food products. As proven at trial, Faibish and his co-conspirators, on behalf of Synergy, funneled approximately $1.3 billion in checks that were not backed by sufficient funds through Signature Bank, Capital One Bank, and various Canadian bank accounts of associated food manufacturers and distributors in Canada. The Canadian companies then sent checks in corresponding amounts, which were also not backed by sufficient funds, back to Faibish-controlled shell companies. Because the banks made deposited funds immediately available for withdrawal, the scheme artificially inflated the companies’ account balances. Faibish and his co-conspirators used Synergy’s inflated bank account balances to book millions of dollars in fictitious accounts receivable and revenue.
As a result of this fraud, FDIC-insured Signature Bank lost approximately $26 million that Faibish and his co-conspirators had withdrawn before the bank uncovered the scheme. Following the scheme’s collapse, Synergy was taken into bankruptcy, and its publicly traded stock became essentially worthless, causing millions of dollars in investor losses. On November 4, 2014, the Court ordered Faibish to pay $51,166,000 in forfeiture.
The trial evidence also established that Faibish falsely inflated the values of Synergy’s sales, cost of goods sold, and pre-paid expenses in filings with the SEC for the quarter ending June 30, 2008. These material misrepresentations were breaches of the defendant’s fiduciary duties to investors.
The Federal Sentencing Guideline range in the case was life in prison, though the maximum available sentence was actually less due to applicable statutory maximums. Despite the Federal Sentencing Guideline range and the government's request for decades in prison for Faibish, the Court rejected these arguments and sentenced him to 63 months in prison (see here and here). According to LAW360, the judge stated at sentencing that the Federal Sentencing Guidelines for economic crimes are "almost useless" because of their reliance and focus on loss in calculating the applicable sentencing range. Instead, the judge used the ABA "Shadow Guidelines" to determine what he considered to be a more appropriate sentence.
This seems to be yet another indication of the growing dissatisfaction among judges with the Federal Sentencing Guidelines for economic offenses (see here and here) and should serve as yet another call for the Federal Sentencing Commission to consider more significant reforms in the future.
Monday, March 7, 2016
What do Bill Cosby and Whitey Bulger have in common? Both have lost challenges to criminal accusations based on the claim that their prosecutions were barred because they received oral, informal grants of immunity from prosecutors.
Last week, the First Circuit denied the appeal of Joseph (Whitey) Bulger, the notorious Boston mobster who was on the lam for 17 years until his 2011 arrest in California. Bulger was convicted after trial in 2013 for racketeering for participating in eleven murders and other crimes, and was sentenced to two life sentences plus five years. He is now 86.
Bulger's primary claim on appeal was that he was denied his constitutional rights to testify and to present an effective defense by the refusal of the trial judge to allow him to testify before the jury that he was granted immunity for both past and future crimes by a now-deceased high-ranking DOJ prosecutor. Interestingly, Bulger claimed that that the purported immunity grant was not in exchange, as one might suppose, for his providing information to or testifying for the prosecutor, but for his protecting the prosecutor's life. He insisted, contrary to widely-accepted reports, that he was not an informant.
The Court of Appeals upheld the district court's rulings that whether the prosecution was barred because of immunity was to be determined prior to trial by the judge, and not by the jury, and thus Burger could not present to the jury testimony about the purported immunity promise . Although the appeals court ruled that Burger had waived consideration of the issue on the merits by his failure to present the trial judge with any evidence, but only with a "broad, bald assertion from defense counsel lacking any particularized details," it reviewed the judge's merits determination on a "plain error" standard, and found that the judge was not "clearly wrong" in deciding that Bulger had failed to demonstrate either that the promise had been made, or, that if it had been made, that the promising prosecutor had authority to make it..
The government described Bulger's claim that the prosecutor promised him immunity "frivolous and absurd." What did give Bulger's contention an infinitesimally slight possibility of credibility, however, was that there was a demonstrated history (although not presented at the trial) that the Boston FBI had for years ignored Bulger's criminal acts when he served as an informant for them.
To be sure, the similarities between the Cosby and Bulger situations are limited. In the Cosby case the then District Attorney, the prosecutor who, if anyone, had authority to grant immunity, testified that he did promise not to prosecute Cosby. Here, there was no corroboration whatsoever of the purported promise by a now-dead prosecutor, and the Department of Justice strongly contended that even had such a promise been made, the prosecutor had no authority to make it. However, the decision, made by a respected appellate court (although under a different set of procedural rules and no binding or other authority over a Pennsylvania state trial court) does squarely hold that whether a prosecutor has granted immunity is not a jury question. And, should Cosby try to re-litigate the immunity issue before his jury, the decision will likely be cited by the District Attorney.
Texas Disciplinary Rule of Professional Conduct 3.09(d) requires a prosecutor to:
make timely disclosure to the defense of all evidence or information known to the prosecutor that tends to negate the guilt of the accused or mitigates the offense, and, in connection with sentencing, disclose to the defense and the tribunal all unprivileged mitigating information known to the prosecutor, except when the prosecutor is relieved of this responsibility by a protective order of the tribunal.
Rule 3.04(a) requires, among other things, that "a lawyer shall not obstruct another party's access to evidence."
In a highly significant ethics opinion, signed and delivered on December 17, 2015, the Texas Board of Disciplinary Appeals ("BODA") ruled that Rule 3.09(d) does not contain the Brady v. Maryland materiality element, or any de minimus exception to the prosecutor's duty to disclose exculpatory information in a timely manner. BODA also held that Rule 3.09(d) applies in the context of guilty pleas as well as trials. In other words, the prosecutor cannot negotiate a guilty plea without beforehand disclosing exculpatory information to the defense.
The case decided by BODA is Schultz v. Commission for Lawyer Discipline. William Schultz was the Assistant District Attorney in Denton County. He prosecuted Silvano Uriostegui for assaulting Maria Uriostegui, his estranged wife. Maria testified at a protective order hearing that Silvano was her attacker. Schultz never disclosed to the defense that Maria could only identify Silvano by his smell, boot impression, and stature "as seen in the shadow," as it was dark at the time and Maria could not see her attacker's face. Schultz learned this information from Maria one month prior to the trial date. Silvano entered a guilty plea. At the sentencing hearing, Maria testified "that she did not see her attacker's face and that she did not know whether her attacker was Silvano. Maria also testified that she had told the prosecutor earlier that she did not see who attacked her." (With respect to the protective order hearing, Maria "explained that she had testified...that Silvano was her attacker because she had assumed it was him from his smell and boot.")
The testimony at the sentencing hearing was the first time defense counsel Victor Amador learned of the exculpatory information, despite having filed broad pre-trial requests for exculpatory evidence. Amador moved for a mistrial which was granted by the trial court. Amador next filed an application for writ of habeas corpus. The trial court granted habeas relief, allowing Silvano to withdraw his guilty plea. The court also ruled that double jeopardy had attached.
Amador filed a grievance against Schultz with the State Bar, which was the basis of the disciplinary proceeding. Schultz contended that the information in question was neither exculpatory or material. The Commission for Lawyer Discipline disagreed, as did BODA. BODA based its holding primarily on the plain language of Rule 3.09(d) and on commentary to the Rule and to the ABA Model Rule on which Rule 3.09(d) is based. BODA also held that Schultz's failure to disclose the exculpatory information constituted obstruction of another party's access to evidence under Rule 3.04(a). Schultz received a six month fully probated suspension.
The only Texas attorney disciplinary authority higher than BODA is The Supreme Court of Texas. Schultz did not appeal BODA's decision to The Supreme Court of Texas. Thus BODA's decision in Schultz is now the governing ethical interpretation of Rule 3.09(d) in Texas. Ergo, under the McDade Act, it now appears that both state and federal prosecutors litigating in Texas are under an ethical duty to timely disclose to the defense all evidence or information "that tends to negate the guilt of the accused or mitigates the offense," irrespective of its materiality. The disclosure must be made prior to any guilty plea.
The defense bar owes a great debt of gratitude to defense attorney Victor Amador, the Committee for Lawyer Discipline of the State Bar, and BODA. It should also be noted that many other jurisdictions have rules containing similar or identical wording to 3.09(d). There is much more work to be done. Hat Tip to Cynthia Orr of Goldstein, Goldstein & Hilley for bringing this opinion to our attention.
Friday, March 4, 2016
There was an incredible presentation on implicit bias, moderated by Hon. Bernice B. Donald, who chairs the ABA Criminal Justice Section. This was a real highlight of the program and the audience was glued to the screen for a short video of images. The discussion that followed was truly enlightening. Also hats off to the Hon. Mark W. Bennett, who comes off the bench to shake the hand of the defendant in order to explain the presumption of innocence.
One panel, moderated by Morris "Sandy" Weinberg, looked at the The Future of White Collar Criminal Law. The incredible array of panelists discussing the past and future were: Robert B. Fiske, Jr., Gary Naftalis, Dan Webb, Robert Bennett, John Keker, Larry Thompson, Karen Seymour, Leslie Caldwell.
There was another panel titled: Women in the Courtroom: A View from the Jury Box. Moderated by Hon. Patricia Brown Holmes, a retired associate judge in the Circuit Court of Cook County and a partner at Schiff Hardin LLP (Chicago), the panelists continued the discussion from earlier in the program on implicit bias. Joan McPhee, a partner at Ropes & Gray LLP asked the question, “[d]oes gender matter in the courtroom?”
This panel started by saying that there was no real studies, so the panelists decided to do their own research and study.
Dr. Ellen Brickman, Director in the Jury Consulting practice at DOAR Inc., a litigation consulting firm in New York, explained how the juror study was conducted. Ms. McPhee then explained the survey of attorneys and Laura C. Marshall, a partner at Hunton & Williams LLP, described comments received from the surveys.
Bottom line - Women jurors had a stronger preference for women attorneys.
There was discussion of the importance of being careful of distractions and to watch speech patterns in front of jurors. This was in addition to a discussion of who to select on the jury. It was noted that the government tends to have more women on their teams and some of the panelists looked at the challenges of getting more women on trial teams. Although Dr. Ellen Brickman noted that having women on teams as tokens can work negatively. There was also a discussion on the role of emotion and how anger plays out in the courtroom.
I can't wait to read this study.
New England Patriot quarterback Tom Brady did not get the reception he wanted at the oral argument of the appeal of the National Football League (NFL) of a district court decision overturning his four-game suspension in the so-called Deflategate case. Brady has been accused of conspiring with Patriot employees to deflate footballs so that they were easier for him to throw in a game in cold weather. The appellate court spent a considerable amount of time questioning Brady's counsel about Brady's destruction of his cellphone shortly before he was to appear before NFL investigator Ted Wells.
In my view the evidence concerning whether the footballs were deflated was equivocal and, even if they were deflated, the evidence that Brady was knowingly involved was largely speculative, and in total, absent an inference of wrongdoing from the unjustified destruction of evidence, probably not sufficient to meet even the minimal 51-49 "more probable than not" standard used in the NFL and most other arbitrations. Evidence of the suspiciously timed destruction of the cellphone, and the lack of a convincing justification for it, however, for me pushes the ball over the 50-yard line and may be the linchpin of an appellate decision upholding the suspension. As Judge Barrington Parker stated at oral argument, "The cellphone issue raised the stakes. Took it from air in a football to compromising a procedure that the commissioner convened." He asked Brady's counsel,"Why couldn't an adjudicator take an inference from destroying a cellphone?," then stated that Brady's explanation - that he regularly destroyed cellphones for privacy reasons - "made no sense whatsoever."
Courts are understandably especially sensitive (sometimes too sensitive and too punitive, in my view) to acts like perjury or destruction of evidence which obstruct investigations or prosecutions. Our justice system relies, at least theoretically, on the basic (although somewhat erroneous) principle that, at least generally, witnesses will not violate the oath to tell the truth. It is therefore no great surprise that the court focussed on Brady's destruction of evidence and his purportedly lying about it. Indeed, Judge Parker appeared to accept that even if Brady had not been involved in tampering with the footballs, his destruction of evidence would justify Goodell's decision. "Let's suppose a mistake was made and the footballs weren't deflated, and then a star player lies in his testimony and destroyed his phone. An adjudicator might conclude the phone had incriminating evidence. Why couldn't the commissioner suspend Brady for that conduct alone?"
Of course, it would be rather perverse if Brady's suspension were upheld when in fact he had actually not been involved in deflating footballs and had destroyed his cellphone as an excuse for not producing it and lied about it for reasons unrelated to the deflating issue, such as that the phone contained wholly unrelated embarrassing information or that he possesses an Apple-like principled view of privacy rights. It calls to mind Martha Stewart, who was convicted and jailed for lying to federal agents and prosecutors in a proffer session even though the underlying insider trading allegation about which she was questioned, was not prosecuted. On the other hand, it would not be perverse if in fact the destroyed cellphone did contain incriminating conversations.
Sometimes a client under investigation asks his lawyer what the client should do with incriminating evidence he possesses. As much as the lawyer in his heart may want the evidence to disappear, he cannot ethically or legally advise the client to conceal the evidence. (The specific advice will vary depending on the facts and circumstances.) The lawyer should frankly explain his ethical and legal obligations. However, generally the client doesn't give a hoot about them. The lawyer should explain that destruction, tampering and concealment of evidence, if discovered by the prosecutor, will undoubtedly eliminate the possibility of non-prosecution, lessen the possibility of a favorable plea deal, strengthen the prosecution's case at trial, and, if there is a conviction, undoubtedly cause a more severe sentence. Just as lawyers sometimes invoke the Stewart case to caution about the danger of voluntary interviews with prosecutors, so might they invoke the Brady case to caution about the danger of destruction of evidence.
The Brady case highlights the danger of destruction of evidence and lying to investigators.
Thursday, March 3, 2016
Deputy Attorney General Sally Yates was the luncheon speaker at the ABA White Collar Crime Conference. It was a Q and A format, and as one might suspect, the Yates Memo was a key topic - although she preferred not to call it the Yates Memo.
She started by saying that as long as a company acts in good faith, they can still get cooperation credit even if they can't designate a particular culprit. She stated that they are not requesting a waiver of privilege. She said, "we want the facts." As a matter of fact, she said this several times in answer to questions asked.
She was unable to say whether companies were not disclosing because of this new policy. But she did say that a company would get more credit if they voluntarily disclosed than if there was an investigation and they then disclosed. She noted that its a question of how quickly you cooperate. She also spoke about the civil side of investigations - again with an eye toward looking at the individuals. She also spoke about the training conference to educate on this policy.
My takeaway - it's all about throwing the individual under the bus, even if you can't name the specific individual.
This year marked the 30th Anniversary of the ABA White Collar Crime Conference. Hon. Paul Friedman gave a wonderful talk in which he looked at three decades in white collar practice. He noted how initially there was “no focus on white collar crime.” In 1970 a fraud unit was created, and it was the first time anyone decided to focus on this area of law. Initially the main charges one saw were mail and wire fraud. But then came RICO, FCPA and others. He noted that in practice, firms did not have major white collar crime sections. Now they do, with initiatives in export controls, forfeiture, health care, and other areas. He also noted the rise of deferred prosecution agreements.
Judge Friedman focused in his talk on four things: 1) increased power of federal prosecutors – especially with regard to sentencing – which he noted was higher in white collar cases today than it used to be; 2) vanishing jury trials – with more pleas and a smaller number of cases going to trial – which in turn results in fewer lawyers with trial experience; 3) electronic discovery- and the need to confront the new technology; 4) Brady – and the need to eliminate a requirement of having a materiality element, with all potentially favorable information being disclosed. He suggested that judges need to play a more active role in discovery. Finally, he emphasized the growing imbalance of power from the judicial branch to the executive branch.
Wednesday, February 24, 2016
This morning the Texas Court of Criminal Appeals put the final nail in the coffin of former Governor Rick Perry's criminal case. The indictment was returned to the trial court to be dismissed. Here is the majority opinion in Ex Parte Rick Perry.
Friday, February 5, 2016
Symposium-Discussion: Corporate Criminal Liability 2.0
Stetson University College of Law – Gulfport, Florida
Friday, February 19, 2016
10:00 a.m. – 3 p.m.(Eastern Time)
This Symposium/Discussion will consider the current state of corporate criminal liability from corporate, criminal, white collar, political, and international perspectives; looking at what does corporate criminal liability 2.0 look like, and more importantly what should it look like.
Stetson University College of Law - 1401 61st Street South Gulfport, Florida 33707 United States
To register to attend - here