White Collar Crime Prof Blog

Did Lois Lerner Waive the Fifth?

Most witnesses with potential criminal exposure who are called to testify before Congressional hearings take the stand, with their lawyers behind them, and repeat the incantation "I respectfully decline to answer the question based on my Fifth Amendment privilege against self-incrimination," or some variation.  Occasionally, a witness insists on testifying in spite of a danger that his answers might incriminate him or, if in conflict with other witnesses' statements or other evidence, might lead to a perjury or obstruction prosecution.  One notable example is Roger Clemens, who chose to testify and, although ultimately acquitted, was indicted and lost millions of dollars in legal fees and endorsements.

Lois Lerner, an embattled Internal Revenue Service official called to testify before a Congressional hearing earlier this week, tried to have her cake and eat it too.  She made a brief opening statement declaring her innocence ("I have not done anything wrong.  I have not broken any laws.  I have not violated any I.R.S. rules and regulations, and I have not provided false information to this or any other Congressional committee.").  She then invoked her constitutional right not to testify.  Committee Chair Daryl Issa (R-Calif.) and other Congressmen claimed that, by her opening declaration, she had waived her privilege and therefore was required to answer the Committee's questions.

Some lawyers have criticized Ms. Lerner's counsel, William Taylor III, one of the most highly-respected criminal defense lawyers in the nation, for allowing Ms. Lerner to make an opening statement, claiming that at the very least that she placed herself at risk of waiving her constitutional privilege against self-incrimination.  See here.  Although the area of waiver of privilege is indeed murky, with cases going in different directions, I believe Ms. Lerner did not waive her right to silence by her unspecific denials.  As Miranda v. Arizona itself says, "If the individual indicates in any manner, at any time prior to or during questioning, that he wishes to remain silent, the interrogation must cease."  384 U.S. 436, 473-4, fn. 44.

Nonetheless, courts sometimes bend over backwards to "punish" what appears to them as gamesmanship.  Many years ago, a New York City Congressman, Mario Biaggi, in response to a "leak" disclosing he had invoked his privilege in the grand jury and refused to answer questions, declared publicly that he had cooperated fully and answered all the jury's questions -- a statement which was far from true -- and that he had instructed his attorneys to seek release of his testimony to prove it.  His attorneys moved for disclosure of testimony, no doubt expecting the motion to be denied.  (The United States Attorney also so moved.)  The district court, however, as later affirmed by the Court of Appeals, held that Biaggi had waived the privilege and ordered the release of his entire transcript.  In re Biaggi, 478 F.2d 489 (2d Cir. 1973).

Even though I believe that ultimately it will not be determined (or probably even litigated) that Ms. Lerner waived her privilege against self-incrimination, I wonder whether her brief declaration of innocence -- by itself unlikely to persuade anyone -- was worth the risk, however slight.  My guess -- pure guess -- is that the decision to allow her to make her brief opening statement was a compromise made between a careful lawyer and a client, like many I have represented, who adamantly desired to testify.  Of course, professional discretion would prevent Mr. Taylor from shifting any blame.

(goldman)

NACDL White Collar Crime Conference

NACDL's  3^rd Annual West Coast White Collar Conference, titled “Turning the Tables on the Government will be held at the  Hyatt Regency Lake Tahoe Resort on June 6-7, 2013.

(esp)

Discretion At It's Worst - IRS Targeting

The Treasury Inspector General for Tax Administration Office of Audit report and its highlights tell the story of how "Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to review for indications of significant political campaign intervention." This Report issued on May 14, 2013 has been the source of significant media attention and President Obama has stated that the Reports findings are "intolerable and inexcusable." (see CNN here).  The Report calls for several recommendations, including "develop training or workshops to be held before each election cycle including, but not limited to, the proper ways to identify applications that require review of political campaign intervention activities."

A couple of observations:  1)  It is good to see that this Audit produced this evidence and that it was not overlooked;  2) It is also good to see that the Attorney General is not taking this finding lightly; and 3) Most imoprtantly the President is not going to tolerate this activity.

Politics do not belong in the agencies of our government.  Whether it be the DOJ, SEC, or IRS - it is important that when politics gets infused in discretionary decisions, someone immediately puts a stop to this happening. Internal compliance programs are important in the corporate world, maybe we need more compliance programs and monitoring within the government world.

(esp)

Upcoming Conferences

New York City Bar - Second Annual White Collar Crime Institute - here

ABA Securities Fraud 2013, Oct. 24-25, New Orleans - here

Georgia's Institute of Continuing Legal Education (ICLE) - International Business Crimes: Foreign Corrupt Practgices Act (FCPA), Criminal Antitrust and Export Controls, June 6 - Download Program Brochure

AALS Midyear Conference on Criminal Justice, June 9-12, San Diego - here  (There's a panel on Culpability and White Collar Crime)

22nd Annual National Seminar on Federal Sentencing Guidelines, May 22-24, 2013 - Orlando, Florida - here

(esp)

In the News & Around the Blogosphere

DOJ Press Release, Parker Drilling Company Resolves FCPA Investigation and Agrees to Pay $11.76 Million Penalty; Corporate Crime Reporter, Parker Drilling Gets FCPA Prosecution Deferred, to Pay $11.76 Million

DOJ Press Release, Former Investment Banker and His Associate Plead Guilty in San Francisco to
Insider Trading Scheme

Phil Willon, LATimes, Charges filed in San Bernardino airport corruption probe

Adam Kaufmann & Arthur Middlemiss Join Lewis Baach PLLC - see here

(esp)

Brady Violation Leads to Arrest of Former Texas Prosecutor

Prosecutors who have committed Brady violations, even those which have been later demonstrated to have resulted in wrongful convictions and lengthy terms of imprisonment for persons later proven innocent, are rarely prosecuted.  Courts tend to find Brady violations inconsequential, prosecutor's offices generally defend or at the least refuse to acknowledge them, disciplinary committees overlook them, and defense lawyers, out of timidity and self-interest, rarely press for sanctions.  One notable exception to this general disregard by institutions and the bar is DOJ's commendable effort, at the moment thwarted by a questionable administrative law decision, to sanction prosecutors in the Senator Ted Stevens trial (see here and here).

The State of Texas, whose criminal justice system is often disparaged by commentators and defense lawyers, recently took a giant step in holding prosecutors sanctionable for egregious Brady violations.  A Texas judge, acting as a court of inquiry, under Texas law, after a hearing ordered the arrest of a current Texas state court judge, Ken Anderson, for contempt and withholding evidence from the court and defense attorneys when Anderson was a District Attorney prosecuting Michael Morton, who was recently demonstrated to be actually innocent for the murder of his wife for which he served 25 years of a life sentence.  See here.  

The inquiry judge, District Judge Louis Sturns, found probable cause to believe that Anderson had concealed two crucial pieces of evidence:  a statement by Morton's three-year old son that Morton was not home at the time of the crime and a police report which revealed that an unknown suspicious man had been seen on several occasions stalking the Morton house.

For denying to the trial judge that there was exculpatory evidence and for failing to provide a full copy of a police report demanded by the judge, Anderson was charged with tampering with evidence, tampering with a government document, and contempt.  The most serious charge, evidence tampering, carries a maximum prison term of ten years, far short of the 25 years Morton served.

Criminal prosecution of prosecutors for Brady violations has been to my knowledge totally or almost totally nonexistent.  Thirty-five years ago I drafted a proposed New York State statute criminalizing intentional and knowing Brady violations.  As expected, the proposal went nowhere.  The statute, as I wrote it, had such strict scienter requirements that the crime was virtually unprovable.  It was written more to stress to prosecutors the seriousness of such misconduct than to lead to actual prosecutions.  The Anderson prosecution, if it occurs, may fill that function.

(goldman)

Change in Anti-trust Division "Carve-Out" Policy

Guest Blogger - Robert Connolly - DLA Piper

At the ABA Antirust Spring Meeting in Washington DC, Assistant Attorney General for the Antitrust Division William Baer announced a significant change in the Division’s practice of carving out of individuals from the non-prosecution protection offered in corporate plea agreements.  Depending on circumstances, the Division may be willing to enter into a plea agreement with a corporation and provide non-prosecution to some, but not all, of the corporation’s executives.   The Division may reserve for prosecution (carve-out)  some executives it thinks are culpable, or others it whose conduct doesn’t warrant prosecution, but the individual(s) declines to cooperate.  The most contentious part of the carve-out practice was that the Division would name these individuals in a public plea agreement.  This could smear an executive’s reputation by signaling that they were involved in criminal conduct, but provide no way for them to clear their name.   Courts upheld the practice as legal, but one court  found the Division's policy "unappealing," "offensive" and a “perp walk.”

The defense bar had long lobbied for a change in this policy, especially demanding that the names of carved-out individuals not be made public.  See, e.g., Victor, Farber and Duke, “The Policy Case for Eliminating The Public Identification of Carve-Outs In Antitrust Plea Agreements.”   Baer, who has worked on the defense side himself, agreed.  He issued a press release stating: “As part of a thorough review of the Division’s approach to corporate dispositions, we have decided to implement two changes.  The Division will continue to carve out employees who we have reason to believe were involved in criminal wrongdoing and who are potential targets of our investigations.  However, we will no longer carve out employees for reasons unrelated to culpability.”  And, for those carved out “the Division will not include the names of carved-out employees in the plea agreement itself.  Those names will be listed in an appendix, and we will ask the court for leave to file the appendix under seal.”  See Statement of Assistant Attorney General Bill Baer on Changes to Antitrust Division's Carve-Out Practice Regarding Corporate Plea Agreements, April 12, 2013.

(rc) 

Will the "Public Safety Emergency Exception" Apply in White-Collar Cases?

The government decision to delay Miranda warnings, and also the first appearance before a judge and the assignment of counsel, for Dzhokhar Tsarnaev, the surviving alleged Boston Marathon bomber, was a tactical one, no doubt based largely on an evaluation that any admission Tsarnaev makes is unnecessary to a government case (eyewitnesses, an admission, videotapes, possession of explosives, flight, etc.) which appears to be overwhelming.

The broad "public safety emergency exception" which the government asserts is a questionable Department of Justice attempt to expand the narrow exception announced in New York v. Quarles, 467 U.S. 649 (1984).  The government's aggressive stance is based in part on a belief that Miranda does not prescribe a procedural requirement for police questioning, but is only a prerequisite for the admissibility at trial of statements made by a defendant.  Under such reasoning, government agents are free to violate the dictates of Miranda (and perhaps other constitutional rights) with no harm to their case except a return to the status quo ante.

Aggressive law enforcement tactics against criminal suspects accused of particular heinous crimes, such as terrorism, murder, kidnapping and large-scale drug dealing, gradually work their way into the general law enforcement toolbox.  Tactics used against drug dealers and organized crime figures, such as extensive electronic surveillance, undercover agents, forfeiture of assets and disallowance of attorneys' fees, and exceedingly high bail requests, for instance, are no longer uncommon in white collar cases.

I wonder whether the "public safety emergency exception" is so far off.  If it is acceptable under this exception to allow the government to disregard Miranda and Federal Rule of Criminal Procedure 5(a)(1)(A) (requiring agents to bring one arrested before a court "without necessary delay") in order ostensibly to prevent future terrorist crimes, will it also become acceptable to detain for 48 hours and question without Miranda warnings, for instance, those who have provided inside information about unknown persons to whom they might have provided such information in order to deter imminent or future insider trading or  those who have hacked computers about accomplices or others who might commit imminent or future computer crimes?

(goldman)

Administrative Judge Reverses Suspension of Stevens Prosecutors

An administrative judge for the Merit Systems Protection Board has overturned the DOJ internal decision finding reckless misconduct for violating Brady obligations by two prosecutors of Senator Ted Stevens, Joseph Bottini and James Goeke, and ordering their suspensions.  See here. 

The administrative judge ruled that DOJ had violated its own disciplinary procedures which require a rank-and-file DOJ attorney in the Professional Misconduct Review Unit to review OPR findings and determine whether misconduct had occurred.  The career attorney who reviewed the OPR findings, Terrence Berg (now a federal district judge in Michigan), decided in favor of the prosecutors, but his ruling was reviewed and reversed by his superiors, who found that misconduct had occurred and suspensions were appropriate.  Review and reversal by the superiors, said the administrative judge, was improper procedurally, and the rank-and file attorney's decision was non-reviewable and final.

I lack sufficient familiarity with administrative law to opine whether this decision is wrong  (although Prof. Bennett L. Gershman has made a strong case that it is).  See here.  I recognize that prosecutors, like those they prosecute, are entitled to due process.  However, procedural infirmities aside, the actions of the prosecutors were clear enough and serious enough to warrant on the merits a finding of misconduct and a suspension.  See here.

I find it ironic that DOJ's finding of misconduct was (according to the administrative judge) based on DOJ's own procedural misconduct.  More seriously, however, I find extremely troubling the notion that a DOJ prosecutor's misconduct should be finally determined by a fellow career DOJ prosecutor.  Defense lawyers, for instance, are not entitled to have their alleged misconduct weighed by a fellow defense lawyer.

A prosecutor's alleged misconduct ideally should be determined by the appropriate state bar disciplinary committee, not a fellow prosecutor (or fellow prosecutors).  Of course, bar disciplinary committees, as several commentators have pointed out, have been extraordinarily hesitant to discipline prosecutors, especially with respect to Brady violations.

DOJ has the right to appeal to the three-judge Merit Systems Protection Board.  It will be interesting to see if it does.

(goldman)

New Scholarship - "Should Competition Policy Promote Happiness?"

Maurice E. Stucke (University of Tennessee) authored an article titled, "Should Competition Policy Promote Happiness?"  The SSRN abstract states:

What, if anything, are the implications of the happiness economics literature on competition policy? This Paper first examines whether competition policy should promote (or at least not impede) citizens’ opportunities to increase well-being. The Paper next surveys the happiness literature on five key issues: (i) What constitutes well-being; (ii) How do you measure well-being; (iii) What increases well-being; (iv) Do people want to be happy; and (v) Can and should the government promote total well-being? Although the happiness literature does not provide an analytical framework for analyzing routine antitrust issues, this does not mean that competition officials should discount or ignore the literature altogether.

The findings of the happiness literature, as this Paper argues, offer some helpful insights on the current debate over competition policy's goals. The literature suggests that competition policy in a post-industrial wealthy country would get more bang (in terms of increased well-being) in promoting economic, social and democratic values, rather than simply promoting a narrowly-defined consumer welfare objective.

(esp)

White Collar Criminal Law is Heating Up?

Two news items today highlight that the white collar area continues to be a key component of the criminal justice system.  In Atlanta we see a Fulton County Grand Jury issuing indictments for claims that an alleged test cheating scandal involves criminal activity. See Michael Winerip, NYTimes, Former Atlanta Schools Chief Is Charged in Testing Scandal. 

And the headline of the Tampa Bay Times is FBI Raid Signals End of Universal - an article describing the FBI raid of Universal Health Care.

(esp)

Upcoming 2013 Federal Sentencing Guidelines Seminar

22nd Annual National Seminar on Federal Sentencing Guidelines, May 22-24, 2013 - Orlando, Florida - here

(esp)

In the News & Around the Blogosphere

Wes Reber Porter, law.com (The Recorder), Viewpoint: Sentencing Guidelines Needn't Be Scrapped

DOJ Criminal Division Head Lanny A. Breuer Returns to Covington As Vice Chair

Amanda Bronstad, NLJ, Ex-Nixon Peabody partner's co-defendant draws 10-year sentence in Ponzi scheme

Larry A. Mackey and Jason R. Barclay of Barnes & Thornburg represented a real estate executive who received a full acquittal in a 13-count federal jury trial 

Mark Niesse & Bill Rankin, Atlanta Jrl Constitution, Charges expected in APS test-cheating scandal

(esp)

Private Defense Lawyers for the Poor Deserve Recognition

Last week, in celebration of the 50th anniversary of the Gideon decision, some of the nation's leading legal figures lauded the outstanding contributions made by the public defense bar.  Public defenders indeed do deserve plaudits for their dedication and hard work in representing the poor and often despised.  Most public defenders are devoted, diligent, relatively poorly paid, and work in difficult situation and under difficult conditions.

To me, however, the unsung heroes of the defense bar are those private lawyers who ably and diligently represent persons of modest income who are not poor enough to be provided free counsel by the state, but poor enough not to be able to pay substantial legal fees.  Those lawyers, like public defenders, work in difficult situations and under difficult conditions.  They often have no steady income, no employer-provided retirement or health benefits and sometimes no office.  They do not have readily available ancillary services, such as advisory counsel, investigators, social workers and mitigation specialists.  Often, they have to perform those functions themselves.

As insubstantial as the resources for public defense are, the resources available to many private lawyers -- whatever meager savings the client is willing to part with, whatever portion of the client's paycheck he has left over after paying for shelter and food and other expenses -- are often less. 

This bar, to be sure, is an uneven one.  Unlike public defenders, almost all of whom have at least a modicum of competence and expertise and devotion, some in the private bar are part-time or occasional criminal defense lawyers with little criminal experience and little dedication to the representation of their clients.  Many, however, are able, experienced, energetic and devoted, despite being paid a fraction of what they deserve.  Those unsung lawyers deserve credit and recognition. 

(goldman)

New Scholarship - Policing the Firm

Daniel Sokol (UF & Minn) has a new piece titled, Policing the Firm.  SSRN states:

Criminal price fixing cartels are a serious problem for consumers. Cartels are hard to both find and punish. Research into other kinds of corporate wrongdoing suggests that enforcers should pay increased attention to incentives within the firm to deter wrong-doing. Thus far, antitrust scholarship and policy have ignored this insight. This article suggests how to improve antitrust enforcement by focusing its efforts on changing the incentives of internal firm compliance.

(esp) 

In the News & Around the Blogopshere

Nate Raymond, Reuters, Raj Rajaratnam brother charged with insider trading

PerkinsCoie, Perils of the Global Supply Chain Series, Part 3: Groundbreaking 'Honey Laundering' Sting Signals New Era in Supply Chain Enforcement (contributing authors, T. Markus Funk, Jean-Jacques Cabou, Michael A. Sink, Elizabeth M. Banzhoff, & Elizabeth Breakstone)

David Gialanella, New Jersey Law Jrl, Former Prosecutor Convicted of Witness Murder,
Racketeering

Matthew Huisman, NYLJ, Senators question White about time at firm, Questioned on conflicts, White says the public would be her client at SEC. 

DOJ Press Release, Shipping Corporations to Pay $10.4 Million for Environmental Crimes on Four Ships $2.6 Million Will Go to Projects to Aid Coastal Environment Hit by Hurricane Sandy

DOJ Press Release, New York Man Sentenced to 11 Years in Prison for Mail Fraud and Attempting to Corruptly Influence a U.S. Attorney

DOJ Press Release, Texas Man Convicted in Corporate Hacking Case

Jeff Blumenthal, Philadelpahia Business Jrl, Two Ex-Prosecutors Join Pepper Hamilton

(esp) 

Gideon's Promise & White Collar Crime - Is a Ford Taurus Enough?

Today marks the 50th anniversary of the Supreme Court's landmark decision in Gideon v. Wainwright, a case that promises the accused charged with a crime the right to counsel.  Throughout the country many are recognizing the importance of this historic day with articles that tell the Gideon story. (see, e.g., here). One sees a Supreme Court Justice (Kagan) and Attorney General (Holder) recognizing the importance of the right to counsel. (see here) 

But what about the white collar case?

White collar cases can be intricate, involve numerous documents, and can entail a sophistication of understanding financial records, something that one may not find in the routine street crime case.  So when Justice Kagan says that you aren't entitled to a Cadillac defense, just a "Ford Taurus" defense, will that be enough in a white collar case?

Many white collar defendants will have funds sufficient to pay their lawyers, and in these cases it may be a non-issue.  But for those who do not -- Are public defender offices being given adequate funding and resources to handle the lengthy document intensive cases associated with a white collar prosecution? It is difficult to defend these cases with a broken down bicycle that has no wheels.

(esp) 

In the News & Around the Blogosphere

Peter Lattman, NYTimes, SAC Capital to Pay $616 Million in Insider Trading Cases

Paul Kish, Federal Criminal Lawyer Blog, Divided Atlanta Federal Appeals Court Upholds Florida Mail Fraud and Bribery Conviction: the Latest Saga in the "Honest Services" Debate

Mary M. Chapman, NYTimes, Former Mayor of Detroit Guilty in Corruption Case

Adam Nossiter, NYTimes, U.S. Embassy Criticizes Pardons in Nigerian Corruption Cases

Nate Raymond, Thomson Reuters, Rakoff says sentencing guidelines should be 'scrapped'

Robert W. Wood, Forbes, Ernst & Young's $123M Non-Prosecution Agreement Over Tax Shelters: Priceless

Michael Pollick, The Herald Tribune, Danish lawyer charged in Morgans' Ponzi scheme

Deon Daugherty, Houston Business Journal, Judge accepts Transocean’s $400M criminal settlement

(esp)

Thanks for Staying Tuned

Thanks for staying tuned to the WhiteCollarCrimeProf Blog- we're back in full force now, with another book sent off to the press.  More to come about this project down the road.  Your readership is appreciated.  

(esp)

AG Holder's Defense of Swartz Prosecution is Troubling

Attorney General Eric Holder yesterday defended the Department of Justice's treatment of Aaron Swartz, the 26 year-old internet activist who committed suicide three months before his scheduled trial in federal court in Boston.  Specifically, Holder, in response to questioning by Sen. John Cornyn, a Texas Republican, defended the prosecution by citing the plea offer, stating, "There was never an intention for him to go to jail for longer than a 3-, 4- potentially 5-month range . . . .  Those, those offers were rejected."

Holder's response troubles me in at least two regards.  First is his implicit belief that a five-month jail sentence for Swartz was lenient.  Swartz' alleged crimes were clearly based on a heartfelt belief that the public was entitled to free access to knowledge, specifically to academic journals.  He would receive no personal benefit for his actions.  Perhaps in these days, where sentences of years in double digits are commonplace, a sentence of five months seems to Holder like a trip to Disneyland, but five months in jail for a fragile young man acting out of humanistic belief and causing only comparatively light physical damage does not seem lenient to me.  Apparently, Swartz did not see it as light.

Second is Holder's further implicit assumption that government decency is satisfied by a reasonable plea offer and available only to those who plead guilty.  Swartz was indicted originally for crimes theoretically punishable by up to 35 years in prison.  Later, a superseding indictment which ratcheted the potential sentence up to 50 years was filed.  Had Swartz exercised his constitutional right to go to trial and been convicted, I would have been shocked if the government would have sought a sentence of five months or less.  Rather, it undoubtedly would have sought a long sentence, most likely in the sentencing guideline range of approximately seven years.

I do not condemn the government for prosecuting Swartz.  Perhaps prosecuting him was cruel, but prosecutions are often cruel to defendants.  Despite his noble intentions, Swartz arguably violated the law, and I do not believe a victim should control the decision to prosecute, one way or the other.  I do not, however, believe that Swartz' purported crimes deserved the full-blown zealous prosecution they received.  A prosecutor in the appropriate case should charge less than the most serious crimes available and not always exercise her power to the "full extent of the law."  Prosecutorial decency, or prosecution discretion, should not be confined only to plea offers.

(goldman)