Monday, March 28, 2005
The SEC has launched another set of subpoenas to twelve American International Group Inc. executives, on top of the scheduled deposition of former CEO Maurice Greenberg set for April 12, as part of an ever-expanding probe of the multinational insurance company. In addition, another senior executive with close ties to Greenberg, Michael Murphy, apparently has been forced out of the company, and will likely be among those the various agencies investigating the company will seek to depose, assuming he does not assert the Fifth Amendment as two other executives have indicated they will (earlier post here).
With the subpoenas flying around and the impending March 31 deadline to file its delayed annual report, AIG has retained law firms to conduct the internal investigation (Paul Weiss) and to advise the independent directors (Simpson Thacher). The individual officers (both current and former) will most likely have their own separate counsel for any SEC depositions or interviews with state and federal investigators (civil and criminal), and some may assert the Fifth Amendment or work out plea/settlement agreements. Greenberg is being advised by Robert Morvillo, and Murphy's attorney is Sean O'Shea, both well-known in the white collar criminal defense area. I suspect that at some point the halls of AIG will have more lawyers than you care to think about, and just imagine the hourly costs; the quote from Richard II should start popping up very soon. The Wall Street Journal has a story (here) about the continuing investigation. (ph)
UPDATE (3/28): Former CEO Maurice Greenberg announced that he will be resigning in the next few days as non-executive chairman of AIG, according to a Wall Street Journal report (here).
Statute of Limitations May Not Be Suspended for Evidence-Gathering in Foreign Countries When Application Made After Evidence Received
One aspect of international white collar crime investigations that is problematic for the government is the delay in gathering evidence from outside the United States, which can be a laborious process. A federal statute, 18 U.S.C. Sec. 3292, permits a district court to suspend the running of the statute of limitations by up to three years to permit the government to gather evidence in a foreign country for a grand jury investigation. In United States v. Atiyeh [here, argued on appeal by Peter Goldberger], the Third Circuit confronted the problem of a district court granting such an extension when the the government filed for it after it had obtained the evidence from the foreign governments, when the counts in the indictment were outside the five year statute of limitations otherwise. The government obtained its information in the prosecution of the defendant for running an off-shore betting operation from Canada and Antigua at least two months before it filed is application to extend the statute of limitations, and asserted that the extension could be filed for any case involving the collection of evidence from a foreign country. The Third Circuit rejected that position, holding that
The Government argues that it needs additional time to sift through and examine the foreign evidence. There is no provision in the statute giving the Government extra time. To the contrary, 18 U.S.C. § 3292(b) is explicit in providing that the "period of suspension . . . end on the date on which the foreign court or authority takes final action on the request." 18 U.S.C. § 3292(b). The legislative history confirms that Congress was concerned only with the prejudice the Government suffers when it must obtain foreign evidence; it was not concerned with the delays attendant to sifting through such evidence.
As the Third Circuit acknowledged, its position conflicts with the Ninth Circuit's decision in United States v. Miller, 830 F.2d 1073 (9th Cir. 1987), but the court stated that "we are not persuaded by [Miller's] analysis." (ph)
An article in Corporate Counsel (available at Law.Com here) discusses how some of the leading insurance companies that are being investigated by Eliot Spitzer and the SEC have hired former prosecutors to lead their compliance efforts. Even higher up the ladder, Marsh & McLennan promoted a former supervisor of Spitzer in the New York Attorney General's office, Michael Cherkasky, to CEO after Spitzer indicted there would not be a settlement so long as Jeffrey Greenberg -- son of former AIG CEO Maurice Greenberg -- remained in a management position. There's nothing really new about former prosecutors "switching sides" and taking on a defense role, although the number who have moved into corporate positions rather than law firms may well be higher than it has been in the past. The ability to get a telephone call returned promptly, a meeting arranged, and the credibility to make a commitment to a prosecutor's office that will be carried through may well be the most important things former prosecutors have to sell in the legal market. (ph)
Sunday, March 27, 2005
White Collar Crime is not unique to the United States. A new paper is listed on SSRN, although the abstract is all that now appears. The paper by Amarjeet Sinth, discusses white collar crime in the context of Singapore. The abstract states that the piece examines "the lack of comprehensive statistical data and the dearth of documented material on such crimes."
This same problem is true to the United States. Although much has been written about white collar crime in the United States, the reporting systems do not categorize crime this way and the amorphous definition of the word can present problems in deciding what is included and what is not. Perhaps this is a universal problem.