Wednesday, November 30, 2005

Hollinger Execs Case - A Lot Happening

CNN Money (Reuters) is reporting here that two executives in the Hollinger case failed to appear in court today.  The next step for the prosecutor will be to proceed with an extradition.  But one wonders if this will be necessary.  After seeing the possibility of an extradition, they might just decide to return willingly and turn themselves into the court. Extradition seems to be more common in street crime cases, although there have been instances of extradition used in white collar matters.  One has to wonder whether we will be seeing more extradition issues arising in white collar cases as more transnational crimes and individuals are prosecuted. 

On another note, the case - or the judge - is stirring some controversy. Apparently the judge's father in the Conrad Black case made a comment to the press.  (see Toronto Star here).  The issue raised by the Toronto Star is whether this comment warrants recusal by the judge. Co-blogger Peter Henning does not take as strong a position as another ethics prof who thinks that she should "definitely recuse herself."  I tend to agree with Peter on this one, although if they can show that the judge did something that creates the appearance of impropriety it should result in a recusal of the judge.  And certainly it warrants a hearing to see if the judge improperly disclosed information to her father.  But absent such a showing, we certainly do not want judges being thrown off of cases every time a relative makes a statement even when the statement may be totally false. Judges do, however, need to instruct family members that they need to be careful when the press comes calling.

(esp)

November 30, 2005 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Is This An "Assault on Republicans?"

With Republican Representative Randy Cunningham's felony plea (see post here) to bribery conspiracy and tax evasion, and others facing scrutiny (see NYTimes here), it's a time when some find out who  are their real friends. The NYTimes reports on how some people are distancing themselves from the indicted and convicted. 

Others are claiming that this is "part of a broader assault on Republicans." (see NYTimes here) Are they claiming that Attorney General Gonzalez is leading an "assault on Republicans?"  After all he is the United States Attorney, and these indictments are coming from United States Attorneys under the AG.  And the USA's are appointed by the President - - are they claiming that President Bush is also leading an "assault on the Republicans?"  Maybe a better approach would be to credit the President and AG with leading the fight against government corruption and not playing politics in doing this job.

(esp)

November 30, 2005 in Corruption | Permalink | Comments (0) | TrackBack (0)

The Sad Elgindy Story

The Wall Street Jrl, in a superb article authored by John R. Emshwiller here, tells the story of Anthony Elgindy and the tragedy faced by his family as a result of his conviction in a white collar case. Clearly the most moving part of this story is the dilemma faced by his wife in deciding which 2 of 3 children would accompany her into the prison to see their father.  Street crime cases have faced these issues for years, often with little or no acknowledgment.  Perhaps one of the benefits of the focus on white collar offenders and the increased sentences (and in this case the sending of a convicted person to prison prior to sentencing) is that the media is now noticing the effect of these cases on third parties, and most importantly the children.

But white collar crime cases also are unique as pointed out in this article. According to the article it seems the government (article says "federal officials") is offering money (keeping some of their money) to the family if Anthony Elgindy acknowledges a loss of one million dollars, an amount that could increase his sentence.   Would a prosecutor really place a person in the position of agreeing to something that may risk them a higher sentence so that their children would have money  while they were incarcerated?   Talk about prosecutorial power - this is the ultimate power - or shall I say - abuse of power.

(esp)

November 30, 2005 in Sentencing | Permalink | Comments (2) | TrackBack (0)

Ryan Case A Slow One

According to the Chicago Tribune here, prosecutors are not happy at the speed of the trial of former Governor Ryan. But the judge refused, at this time, to place limits on questioning witnesses to speed things along.  This may be the classic case of balancing efficiency with preserving the accused's rights.  Clearly, a person facing jail time deserves to have their case heard in full to the jury. 

One question not answered here is when did the defense receive their discovery material.  In many instances Jencks material are not provided to defense until immediately before trial.  Unlike Brady material, material exculpatory to the accused, the prosecution is not required to provide Jencks material until after the witness has testified.  The late arrival of this discovery material can often slow down a case.  It takes time for the defense to read, digest, and investigate material provided to them.  Shorter cross-examinations are often a function of having the time to fully prepare for the trial.  Now, this may not be the case in former Governor Ryan's trial, but it certainly can be in some cases.

(esp) 

November 30, 2005 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Charles Walker Receives Sentence of Ten Years

The Atlanta Jrl Constitution here reports on the ten year sentence given to Charles Walker, this time referring to him as "[a] sharecropper's son who became one of Georgia's highest ranking lawmakers." The article details the evidence presented at his trial and the political environment during the events. But unmentioned in this article about "the other southern jury" (my comparison to the Scrushy trial) is that the Walker jury met not only on Memorial Day weekend, but also on Memorial Day.  This as well as the jury selection process should make for an interesting appeal.  For a discussion of other issues that may be issues for appeal see post here.

(esp)

November 30, 2005 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 29, 2005

Former Kansas Congressional Candidate Pleads Guilty to Misuing Campaign Funds

Keeping with this week's theme of corruption, former Republican Congressional candidate Adam Taff entered a guilty plea to one count of mail fraud and one count of violating the Federal Election Campaign Act for misusing campaign funds.  Taff was accused of listing $312,000 from his campaign as personal funds in obtaining a home mortgage to purchase a $1.2 million home.  A press release (here) issued by the U.S. Attorney's Office for the District of Kansas states:

In his plea, Taff admitted that in November 2003, while he was a candidate for the U.S. House of Representatives, his campaign had two accounts at Metcalf Bank in Overland Park. At the same time, Taff was an employee of a mortgage company in Overland Park, Kan. His co-defendant in the case, John D. Myers, was the founder and chairman of the company.  In November 2003, Taff agreed to purchase from Myers a house at 177 Hillcrest West, Lake Quivira, Kan. Taff signed a contract to buy the house for $1.2 million. On Jan. 19, 2004, Taff signed a loan application with NovaStar Home Mortgage, Inc., stating that among his assets were two bank accounts at Metcalf Bank with balances of $61,746 and $250,000. In fact, those were his campaign’s accounts and not his personal assets. The loan application also falsely stated that Taff’s monthly income was $15,000. In fact, his income was approximately $6,500 a month.

Whether or not Taff can avoid jail time is an open question, but his political career is most likely over. (ph -- thanks to Scott Lawder for passing along the information)

November 29, 2005 in Corruption | Permalink | Comments (0) | TrackBack (1)

Republican Congressman Enters Guilty Plea to Bribery Conspiracy and Tax Evasion

San Diego-area Republican Rep. Randy (Duke) Cunningham entered a guilty plea in the U.S. District Court for the Southern District of California to conspiracy and tax evasion charges related to approximately $2.4 million in bribes and benefits he received for steering contracts to two defense contractors from his position on the Defense Subcommittee of the House Appropriations Committee.  Cunningham has been under investigation since earlier in 2005 when newspaper stories revealed that he had sold his house in the San Diego area to Mitchell Wade, a campaign contributor and then-president of MZM Inc., a small defense contractor that had received a number of no-bid contracts from the Pentagon over the past three years (see earlier post here).  While the sale price was $1.6 million, Wade turned around and sold the home for $700,000 less.  As part of its investigation, the government executed search warrants at Cunningham's home and the boat on which he lived in Washington D.C.

According to the Plea Agreement (here), Cunningham conspired with four unidentified conspirators, two of whom were majority owners of defense contractors.  The defense contractors who have been involved in the investigation are MZM, which Wade had a controlling interest in before leaving the company, and ADCS Inc., whose majority owner, Brent Wilkes, had his home searched as part of the investigation.  The other conspirators are from the New York City area and were involved in financial transactions related to paying off the mortgage on Cunningham's Ranch Santa Fe home.  The home sale transaction is one of many items listed as involving improper bribes for Cunningham, which also included multiple payments run through various bank accounts, payments to antique stores for various items purchased by Cunningham, and payment for repair work on his Rolls Royce -- there's something to be said for trying to hide one's new-found wealth while living on a government salary.  None of the payments were disguised as campaign contributions, but instead appear to be naked bribes to obtain contracts during a time when the Pentagon was spending significant funds for the Iraq war.  In addition to the guilty plea, Cunningham agreed to forfeit his home, $1.8 million in cash, and the antiques, which including a sleigh-style bed (!).

The plea agreement includes a Sentencing Guidelines calculation that puts Cunningham's potential sentence at over 10 years (135-168 months), and includes a Sec. 5K1.1 provision that will permit the government to ask for a downward departure if he provides substantial assistance.  Given the fact that there are four unidentified coconspirators mentioned in the plea agreement, this is certainly not the last charge that will be filed in the case.  One question about his usefulness as a witness is the fact that Cunningham asserted his innocence when the investigation first started, and only now is admitting to his wrongdoing.  In a public statement (here) released with the entry of the plea that announced his immediate resignation from Congress, Cunningham stated:

When I announced several months ago that I would not seek re-election, I publicly declared my innocence because I was not strong enough to face the truth. So, I misled my family, staff, friends, colleagues, the public -- even myself. For all of this, I am deeply sorry. The truth is -- I broke the law, concealed my conduct, and disgraced my high office. I know that I will forfeit my freedom, my reputation, my worldly possessions, and most importantly, the trust of my friends and family.

In many cases, it is the elected representative who denies that payments were understood to be bribes, so Cunningham's about-face may not cause the government too many problems in pursuing those who provided the money in exchange for government contracts.  It is much harder to assert that the help provided by a Congressman was not in exchange for payments when the deals involve no-bid transactions that likely skirted government procurement rules.  A San Diego Union-Tribune story (here) discusses the plea agreement. (ph)

November 29, 2005 in Corruption, Prosecutions, Tax | Permalink | Comments (0) | TrackBack (0)

Certiorari Granted In Civil RICO Case

The Supreme Court granted certiorari in Anza v. Ideal Steel Supply Corp., a Second Circuit case.  The question presented is: "Is a competitor 'injured in his business or property by reason of a violation' of the Racketeer Influenced and Corrupt Organizations Act when the alleged predicate acts of racketeering activity were mail fraud but the competitor was not a party defrauded and did not rely on the alleged fraudulent behavior?"  The case involves a scheme by one company to avoid paying sales taxes and submitting fraudulent sales tax returns, which constitutes mail fraud, in order to harm a competitor, who sued under RICO alleging that the scheme caused injury to the plaintiff's business.  The Second Circuit held that a competitor whose business is the target of the scheme has standing to sue even though the racketeering activities defrauded a third party and the harm is only indirect to the plaintiff-competitor through the mail fraud (373 F.3d 251 (2d Cir. 2004)). The Second Circuit held:

[T]he principle governing the present case is that where a complaint contains allegations of facts to show that the defendant engaged in a pattern of fraudulent conduct that is within the RICO definition of racketeering activity and that was intended to and did give the defendant a competitive advantage over the plaintiff, the complaint adequately pleads proximate cause, and the plaintiff has standing to pursue a civil RICO claim. This is so even where the scheme depended on fraudulent communications directed to and relied on by a third party rather than the plaintiff.

On Nov. 15, the Court dismissed another RICO case, Bank of China v. NBM, L.L.C. after the Bank of China moved to dismiss the case because it had won a retrial from the Second Circuit.  Anza may allow the Court to clarify the standing requirements for a RICO claim, although if past performance is any indication of future decisions, the opinion will not be particularly helpful in explaining a statute that is hardly pellucid. (ph)

November 29, 2005 in RICO | Permalink | Comments (0) | TrackBack (0)

Not Quite What Was Wished For

The Atlanta Jrl Constitution reports here of a plea to bank fraud and identity theft by an individual who used a scheme to take money from a reputable foundation that assisted children. The foundation detected the fraud and reported it to authorities. (see post here)  But the big question is "why"?  What makes someone take funds from an organization that gives to children who are in need?

(esp)

November 29, 2005 in Fraud | Permalink | Comments (0) | TrackBack (0)

Monday, November 28, 2005

Another Reporter to Testify in the Plame Investigation

An AP story (here) reports that a second Time reporter, Viveca Novak, will testify before the grand jury regarding her conversations with Robert Luskin, Karl Rove's attorney during the investigation.  It is unclear whether Novak's testimony relates at all to the recent revelation by Bob Woodward that a senior administration official leaked information about Valerie Plame's status as a covert CIA agent in June 2003.  It may be that Special Counsel Patrick Fitzgerald is focusing on Rove's knowledge of the disclosure of Plame's identity, and perhaps even whether Luskin tried to dissuade Novak from revealing information about contacts with Rove. 

If the latter is the case, then Luskin may be a focus of a potential obstruction of justice case along with (or perhaps in lieu of) Rove.  To prosecute an attorney for obstruction, however, the government would have to overcome the protection afforded to attorneys in 18 U.S.C. § 1515(c), which states: "This chapter does not prohibit or punish the providing of lawful, bona fide, legal representation services in connection with or anticipation of an official proceeding."  If the Administration was hoping Fitzgerald's investigation would wind down after the Libby indictment, the Special Counsel may instead be like the Energizer Bunny -- and just as annoying as the commercials. (ph)

November 28, 2005 in Plame Investigation | Permalink | Comments (0) | TrackBack (0)

Prosecuting Campaign Contributions as Bribes

The recent conspiracy charge involving Michael Scanlon focuses on the interactions of Jack Abramoff ("Lobbyist A") and Representative Bob Ney ("Representative #1") that involve a number of campaign contributions and gifts in exchange for legislative acts, including placing an item in the Congressional Record.  Recent media reports assert that other Congressional officials, including Senator Conrad Burns, Rep. James Doolittle, and Rep. Tom DeLay, are the focus of the investigation in which large amounts of campaign contributions flowed from the Indian tribes represented by Abramoff and Scanlon to the campaign committees of various elected officials.  Money is, of course, the "mother's milk of American politics" according to an old adage, and while much campaign finance reform focuses on the corrupt influence of money, to this point criminal prosecutions of elected federal officeholders for payments received by their campaign committee's have been few.

One substantial hurdle to prosecuting an elected official for accepting campaign contributions related to legislative action is that those contributions are essentially designed to achieve that very purpose.  In McCormick v. United States, 500 U.S. 257 (1991), a Hobbs Act prosecution for extortion "under color of official right" that is essentially bribery, the Supreme Court stated the following:

Serving constituents and supporting legislation that will benefit the district and individuals and groups therein is the everyday business of a legislator. It is also true that campaigns must be run and financed. Money is constantly being solicited on behalf of candidates, who run on platforms and who claim support on the basis of their views and what they intend to do or have done. Whatever ethical considerations and appearances may indicate, to hold that legislators commit the federal crime of extortion when they act for the benefit of constituents or support legislation furthering the interests of some of their constituents, shortly before or after campaign contributions are solicited and received from those beneficiaries, is an unrealistic assessment of what Congress could have meant by making it a crime to obtain property from another, with his consent, "under color of official right." To hold otherwise would open to prosecution not only conduct that has long been thought to be well within the law but also conduct that in a very real sense is unavoidable so long as election campaigns are financed by private contributions or expenditures, as they have been from the beginning of the Nation. It would require statutory language more explicit than the Hobbs Act contains to justify a contrary conclusion.

This is not to say that it is impossible for an elected official to commit extortion in the course of financing an election campaign. Political contributions are of course vulnerable if induced by the use of force, violence, or fear. The receipt of such contributions is also vulnerable under the Act as having been taken under color of official right, but only if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act. In such situations the official asserts that his official conduct will be controlled by the terms of the promise or undertaking. This is the receipt of money by an elected official under color of official right within the meaning of the Hobbs Act.

Members of Congress are subject to prosecution under 18 U.S.C. Sec. 201, which prohibits both bribery and unlawful gratuities.  For bribes, the government must establish a quid pro quo arrangement, the very issue in McCormick that the Court stated required proof that the quid pro quo was "explicit."  While a later decision in Evans v. United States, 504 U.S. 255 (1992), softened McCormick's holding a bit, for campaign contribution cases the government would have to meet a higher threshold than merely showing that the contributor hoped (or even expected) the elected official to take a position favorable to the contributor, and that the representative knew of the reason for the contribution.

Another problem prosecutors would face in pursuing charges against Congressmen -- but not their legislative staff -- is the Speech or Debate Clause, which provides that "for any Speech or Debate in either House, they shall not be questioned in any other Place." (Art. I, Sec. 6)  In United States v. Helstoski, 442 U.S. 477 (1979), the Supreme Court stated, "The Court's holdings in United States v. Johnson and United States v. Brewster leave no doubt that evidence of a legislative act of a Member may not be introduced by the Government in a prosecution under § 201."  In rejecting the government's argument that it should be permitted to introduce evidence of legislative acts to establish the Congressman's motive in taking money, the Court held:

We therefore agree with the Court of Appeals that references to past legislative acts of a Member cannot be admitted without undermining the values protected by the Clause. We implied as much in Brewster when we explained: "To make a prima facie case under [the] indictment, the Government need not show any act of [Brewster] subsequent to the corrupt promise for payment, for it is taking the bribe, not performance of the illicit compact, that is a criminal act." A similar inference is appropriate from Johnson where we held that the Clause was violated by questions about motive addressed to others than Johnson himself. That holding would have been unnecessary if the Clause did not afford protection beyond legislative acts themselves.

The Court did hold in United States v. Brewster, 408 U.S. 501 (1972), that promises to perform a legislative act in the future could be introduced to show the illicit agreement because the actual performance of the act is irrelevant to proof of the bribe.  In other words, the fact that a legislator engaged in an act in Congress covered by the Speech or Debate Clause would be excluded, but the agreement to do so would be admissible.

For any prosecution of Rep. Ney, which is a definite possibility from reading the criminal information of Scanlon, the government will face greater evidentiary hurdles than it does in other public corruption cases against state and local elected officials, who are not protected by the Speech or Debate Clause (including state constitutional provisions). See United States v. Gillock, 445 U.S. 360 (1980).

If prosecutors decide to pursue charges against members of Congress, the standard for proving a bribe will be high if the payments are identified as campaign contributions.  Moreover, any case involving legislative action likely will implicate the Speech or Debate Clause, an issue of considerable sensitivity on separation of powers grounds that will likely generate pre-trial appeals, slowing the prosecution even more than usual. (ph)

November 28, 2005 in Corruption | Permalink | Comments (0) | TrackBack (2)

Charles Walker Set For Sentencing Today

Charles Walker, a former Senate Majority leader in Georgia, and someone who the Atlanta Jrl Constitution (see here) calls "once the most powerful African-American politician in Georgia", is set for sentencing today after being convicted on 127 counts.  (see post here). Over a 100 of the counts were for mail fraud.

Like Richard Scrushy's trial, this case took place in the south,  But not only was the verdict different, but also the speed of the trial. (see here).  That "other southern jury," as I referred to Walker's case throughout the Scrushy trial, met not only on Memorial Day weekend, but also on Memorial Day.  Sounds like an interesting issue for appeal - - but first the sentence.

(esp)

Addendum - For details on the court appearance of today - see the Augusta Chronicle here.  A key issue in sentencing is the amount of money taken.  Since this is a fraud conviction, the amount can factor into the sentence given. - see Atlanta Jrl. Constitution here.

November 28, 2005 in Prosecutions | Permalink | Comments (0) | TrackBack (1)

Sunday, November 27, 2005

Ohio - Politics As Usual?

The Ohio Republicans seem to be having their issues lately.  As reported here by the Washington Post - - it has been everything from the bizarre investments of rare coins to Tom Noe's indictment for allegedly violating campaign laws. (see prior posts here and here).  And we haven't even gotten to a discussion of Ney or Taft.  Because of the influential role played by Ohio in the last election, one has to agree with the Washington Post that these recent happenings may play a factor in politics. 

What role does politics play for prosecutors?  The answer is that is should play no role.  As noted in the ABA Standards for Criminal Justice, Rule 3-3.9:

"(d) In making the decision to prosecute, the prosecutor should give no weight to the personal or political advantages or disadvantages which might be involved or to a desire to enhance his or her record of convictions."

(esp)

November 27, 2005 in Prosecutions | Permalink | Comments (1) | TrackBack (0)

White Collar Sentencing

A recent article on white collar sentencing in the Chicago Tribune here does an excellent job in pointing out that white collar sentences have risen as a result of the sentencing guidelines.

The article is titled, "Disparity Grows in Penalties for Execs."  Immediately under this title, however, is this subtitle, "Changes in sentencing rules spark variations in prison terms for white-collar criminals."  The article also states, "[t]he upshot: longer sentences than in the past, to be sure, but also a rise in disparities from judge to judge or jurisdiction to jurisdiction."

I agree with the statements of Professor Doug Berman, Attorney James Felman, and Professor John Coffee in this article.  And the article notes some important points regarding white collar sentencing - including the fact that white collar offenders are receiving exorbitant sentences these days. But - - -

1.  How is white collar crime being defined in this article?  Is it being defined the way the government statistics are defining it - a definition that omits all the corruption cases (despite the local USAs including corruption in their definition of white collar crime).  See post here - "Is DOJ 'Cooking the Books' in its Reporting of White Collar Crime?" This is an important question to ask whenever anyone is making any claim about white collar crime - How did they define it!

2. Is there really more of a sentencing disparity now?    The sentencing disparity is greater because of the "deals" the government provides to people - something that has existed since the enactment of the guidelines.  In the pre-Booker phase this was through 5K1.1 motions, and to a large extent that still exists.  Sentences people receive are not always based on their criminal culpability, but rather on whether they cooperate with the government.

3.  Sentencing disparity is also in large part a function of what the government charges the defendant with - that is, the crimes charged and the amount of loss claimed.  The mere adding of a money laundering count to a standard mail fraud charge significantly raises a sentence.  Yes, these days the government might include money laundering in a white collar case. So the sentencing disparity may be nothing more than a judge neutralizes the government charging process.

4. Is it so easy to say that there is now more disparity in sentencing?  Just because a person in one courtroom receives one sentence does not mean that a person in another courtroom receives a different sentence for the same crime.  The problem here is that one is often comparing apples and oranges.  No two cases are exactly the same.  In determining culpability it is important to recognize this, and that is exactly why judges need some discretion to modify the guidelines to suit the specific facts.  The fact remains that even after Booker they all start with the advice of the guidelines.

5. Just because there may be more departures in white collar cases (something I am not fully convinced of yet - and I define white collar crime to include corruption cases), does not mean that judicial sentencing is missing the mark.  Perhaps it is a signal to the legislature that someone needs to re-evaluate the draconian sentences being given in some of these cases.   

So if there is anyone out there who intended to take this Tribune article and say - - you see, we need more mandatory minimums, or we need a guidelines system that is mandatory because the advisory nature of the guidelines produces disparity in white collar cases -- these conclusions are not so easy and miss the real questions noted above. Everyone agrees that white collar sentences have gone up under the guidelines.  Not everyone, however, agrees that this is warranted.

(esp)

November 27, 2005 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Building in Massachusetts

The construction industry has always had its fair share of complaints.  The Boston Globe here talks of an alleged immigrant labor scheme that is under investigation by the AG in Massachusetts. This extensive article, including a diagram, sheds light on how individuals might be paid off the books.  With this extensive press one has to wonder if the feds will become interested (if they aren't already) in checking out what is happening in Massachusetts.

(esp)

November 27, 2005 in Investigations | Permalink | Comments (0) | TrackBack (0)

Saturday, November 26, 2005

Greenberg Dodges a Criminal Bullet

Former American International Group, Inc. CEO Maurice Greenberg will not be facing criminal charges from the New York Attorney General's Office, which decided in June not to pursue a criminal case arising from the accounting problems at AIG.  While N.Y. Attorney General Eliot Spitzer has a civil fraud case pending against Greenberg and former CFO Howard Smith filed in May (complaint here), there was some talk by Spitzer that the office could pursue criminal charges against individuals at the company.  Continuing a pattern seen over the last few weeks (earlier post here), Spitzer's office decided not to pursue a criminal case based on questionable facts and, as with all accounting cases, significant gray areas.  The fact that Greenberg has very deep pockets and indicated he would fight any charges would have made a criminal case that much more difficult. 

Greenberg is not off the hook completely on potential criminal actions because the Southern District of New York and the Fraud Section at Main Justice are also looking at potential criminal charges, which could include securities and mail/wire fraud related to any accounting problems that led to serious misstatements.  Things have been quiet on the AIG front for a while, and the holiday season is usually slow but may produce further developments.  An AP story (here) discusses Spitzer's decision.

November 26, 2005 in AIG | Permalink | Comments (0) | TrackBack (0)

Lord Black Will Be Arraigned on Nov. 30

Lord Conrad Black, former CEO of media holding company Hollinger International Inc., will appear in Chicago on Nov. 30 to be arraigned on fraud charges related to alleged looting of $80 million from Hollinger.  Black is not a U.S. citizen, and his home is Toronto; Hollinger operated out of both Toronto and Chicago.  Two other defendants in the case are Canadians, and there is no word yet whether they will appear with Black at the arraignment or have other arrangements to enter a plea in the case.  Black made clear what his plea will be, as an AP story (here) quotes him as stating the case is "Absolute nonsense . . . There's no truth or substance whatsoever to these charges."  Not surprisingly, this one will be a media circus. (ph)

November 26, 2005 in Fraud, Prosecutions | Permalink | Comments (0) | TrackBack (0)

But Where Would You Get That Can of Cranberry Sauce At the Last Minute?

In the fine spirit of giving thanks for the many blessings in our lives, the Massachusetts Attorney General's Office is investigating whether supermarkets opened on Nov. 24 -- Thankgiving Day -- in violation of the Commonwealth's long-standing Blue Laws prohibiting such crass commecialism (Christmas and New Year's Day receive the same protection).  If such a law were in effect in my home state (Michigan), it would have prevented two last-minute trips to the store and made for one unhappy group of diners who much appreciated the home-made, deep dish apple pie that is the best around.  An AP story (here) discusses this important use of investigative resources. (ph)

November 26, 2005 in Investigations | Permalink | Comments (0) | TrackBack (0)

Friday, November 25, 2005

Congressional Corruption Investigation Expands

The recent plea agreement of Michael Scanlon, a former partner of lobbyist Jack Abramoff, appears to be one part of a broader investigation of potentially corrupt campaign contributions and gifts to a number of elected officials and congressional staff.  A Wall Street Journal article (here) notes that in addition to Reps. Tom DeLay and Bob Ney -- who was identified in the Scanlon plea documents as "Representative #1" -- Rep. James Doolittle of California and Montana Senator Conrad Burns are also involved in the investigation.  In addition, upwards of 17 current and former staffers, including a number form Rep. DeLay's office, are also involved in the spreading probe. 

An AP story (here) discusses a number of campaign contributions from Indian tribes who retained Abramoff as their lobbyist to Representatives and Senators near the time of congressional action that benefited the tribes.  While none of the contributions appear to be illegal in themselves, their connection to legislative acts and contacts by the Congressmen with federal agencies related to tribal business raise questions about whether there was a quid pro quo arrangement.  Based on the Scanlon plea, the investigation is being conducted by the Public Integrity and Fraud Sections of the Department of Justice, and the number of potential subjects (and targets) likely means the initial phase of the inquiry will take months.  Given the number of potential witnesses and targets, the investigation will contribute to the already-booming employment of the District of Columbia's white collar crime bar. (ph)

November 25, 2005 in Corruption, Grand Jury, Investigations | Permalink | Comments (0) | TrackBack (0)

The Ol' "Advance-Copy-of-Business-Week" Insider Trading Scheme

Former broker David Pajcin was arrested in New York for insider trading based on receiving advance copies of issues of Business Week and trading in stocks touted in the magazine's "Inside Wall Street" column.  This is a type of scheme that has been tried with alarming regularity since the 1980s, particularly with Business Week, although it also was the underlying misconduct in the well-known Carpenter v. U.S. decision by the Supreme Court that upheld the conviction of defendants who traded in advance of "Heard on the Street" columns in the Wall Street Journal.  An AP story (here) notes that Pajcin is accused of trading in shares of ten companies, including Alltel, thestreet.com, Arbitron, and Spectrum Pharmaceuticals.

This is not Pajcin's first brush with insider trading allegations.  He was named in an SEC amended complaint on Aug. 18 alleging insider trading in Reebok stock options immediately before the company announced it agreed to be taken over by adidas, trades that generated over $2 million in profits. According to the SEC's Litigation Release (here), some of the trading took place through an account in the name of Pajcin's aunt who lives in Croatia.  Look for the U.S. Attorney's Office to pursue criminal charges against Pajcin (and others) in this case, too. (ph)

                                                                                       

UPDATE: Bruce Carton has an interesting post on the Securities Litigation Watch blog (here) noting how Pajcin's trading fits a transparent pattern of insider trading that will (usually) be noticed by the SEC.

November 25, 2005 in Insider Trading, Media | Permalink | Comments (0) | TrackBack (1)