Monday, July 18, 2005

Who Said What to Whom and When About Valerie Plame

The investigation by Special Counsel Patrick Fitzgerald of the leak to the press of the identity of Valerie Plame as a CIA covert agent (assuming she was in fact one at the time) is beginning to take on the appearance of the old Abbott and Costello "Who's On First?" routine.  Did Karl Rove learn from Robert Novak the covert status of Ambassador Wilson's wife before speaking with Time reporter Matthew Cooper? Did a memo to Colin Powell contain that information? Did New York Times reporter Judith Miller learn about Plame's CIA role from I. Lewis Libbey, the Chief of Staff to Vice President Cheney?  Or, did Miller tell Libby about Plame?  Does anyone have a headache yet?

To this point, it appears that everyone is pointing a finger at someone else regarding who first disclosed Plame's status with the CIA, and Fitzgerald may never get a straight answer.  What is interesting to me has little to do with this "follow the bouncing ball" aspect of the investigation, but instead I think the grand jury aspects of the case are much more intriguing.  First, where is the grand jury material coming from?  If the witnesses themselves are discussing their testimony, then they are free to say anything they wish because the grand jury secrecy rule does not apply to them.  Indeed, one's grand jury testimony can be used to sell more magazines, as Cooper is doing (see Time press release here touting its "exclusive" story). Whether their statements are in fact an accurate reflection of the testimony in the grand jury is another issue, but then lying to the press is not a criminal offense -- otherwise, no one could serve as a press secretary to an elected official.

Second, as Fitzgerald has more witnesses testify before the grand jury, it appears that his office is likely to be looking at possible perjury charges.  18 U.S.C. Sec 1623(a) (here) provides:

Whoever under oath . . . in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing the same to contain any false material declaration, shall be fined under this title or imprisoned not more than five years, or both.

For a successful perjury charge, the government must first prove the falsity of the statement, which presents a substantial hurdle in light of the Supreme Court's decision in U.S. v. Bronston, 409 U.S. 352 (1973), which held that a perjury charge cannot be brought for a "literally true" statement.  Bronston involved a bankruptcy examination in which the following questioning of Bronston took place regarding overseas bank accounts:

Q: Do you have any bank accounts in Swiss banks, Mr. Bronston?  A: No, Sir.  Q: Have you ever?  A: The company had an account there for about six months, in Zurich.

Bronston in fact had a personal account in Switzerland, and his answer to the questions was evasive, and likely misleading, but was not untrue (although try this defense on a loved one and see whether the "literal truth" defense works).  A perjury charge cannot be brought for an unresponsive answer because it is not false, and according to the Court "[a]n unresponsive answer is unique in this respect because its unresponsiveness by definition prevents its truthfulness from being tested in the context of the question . . . ."  To the extent any grand jury testimony in the Plame investigation can be construed as literally truthful -- and the more tentative the better for the witness ("As I recall" and "I believe") -- then a charge cannot be brought against the witness because in most cases ambiguity will be construed in favor of the defendant (for a slightly different approach on this issue, check U.S. v. DeZarn, 157 F.3d 1042 (6th Cir. 1998)).

Outside of the grand jury, the various government officials involved in the investigation likely spoke with investigative agents, and those statements could be subject to 18 U.S.C. Sec. 1001(a), which provides:

Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation, or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement . . . .

Courts have tended to take the same approach to Sec. 1001 as they do to perjury, requiring that the statement actually be false and not literally true even though the language of the statute references fraudulent statements, which seems to cover more than just untruthful assertions (although an "exculpatory no" is not allowed).  An interesting question would be whether a false statement to the President about one's involvement in contacts with the press would be subject to a Sec. 1001 charge.  For an excellent review of the different statutes in this area, see Stuart Green's article, Lying, Misleading, and False Statements: How Moral Concepts Inform the Law of Perjury, Fraud, and False Statements, 53 Hastings L.J. 157 (2001) (available on SSRN here).

Finally, a Washington Post story (here)  discusses consideration being given by Fitzgerald's office to seek a criminal contempt of Miller for her refusal to comply with the district court's order to testify before the grand jury.  The contempt statute, 18 U.S.C. Sec. 401(3) )(here), provides:

A court of the United States shall have power to punish by fine or imprisonment, or both, at its discretion, such contempt of its authority, and none other, as — . . . (3) Disobedience or resistance to its lawful writ, process, order, rule, decree, or command.

The contempt statute does not have a maximum penalty, although a jury trial is required if the court imposes a sentence of greater than six months on the contemnor.  The criminal contempt would come on top of the civil contempt order which has sent Miller to jail in Alexandria, VA, until the grand jury expires in October (assuming it's not extended, of course).

Who's on first, What's on second, and I Don't Know's on third. (ph)

July 18, 2005 in Grand Jury, Investigations, Perjury | Permalink | TrackBack (0)

The Beastie Boys Meet Wall Street

The Beastie Boys sang (in an extended sense of that term) an all-time great song: Fight For Your Right to Party.  The chorus is quite catchy: "You gotta fight for your right to party!"  An on-going investigation of gift-giving involving Fidelity Investments, which spends approximately $1 billion a year on commissions in its large stock trading operation, and various brokerage firms now includes an in-depth review of a bachelor party for former Fidelity trader Thomas Bruderman in 2003.  A front-page Wall Street Journal article (here) goes into great detail about the party, including the private jet for the trip to Florida (paid for by Jeffries Group Inc.), a yacht in Miami (paid for by SG Cowen & Co.), and hotel rooms (paid for by Lazard Capital Markets).  Prosecutors in the U.S. Attorney's Office in Boston, along with the SEC and NASD, are also trying to ascertain whether any of the brokerage firms paid for two ladies who joined in the festivities and drugs that are alleged to have been part of the fun.  The investigation of gift-giving to Fidelity executives has included questioning of CEO Edward C. Johnson III about tickets he received to the figure skating finals at the 2002 Winter Olympics (see earlier post here).  The investigation is part of a larger effort to limit conflicts of interest in the mutual fund industry. 

Somehow, I suspect having your bachelor party recounted in the Wall Street Journal cannot be counted as one of life's successes.  As the Beastie Boys said so well, "Man, living at home is such a drag." (ph)

July 18, 2005 in Grand Jury, Investigations, Securities | Permalink | TrackBack (2)

Is the Milberg Weiss Case Slipping Away Due to Statute of Limitations Problems?

The New York Times has a long article (here) reviewing the grand jury investigation of the well-known plaintiff class action firm Milberg Weiss and its two lead partners, William Lerach and Melvyn Weiss (note that the firm split in two in 2004), for making secret payments to the representative plaintiffs in class actions for which the firm was lead counsel.  As discussed in an earlier post (here), the U.S. Attorney's Office for the Central District of California (Los Angeles) indicted Seymour Lazar on conspiracy, mail fraud, money laundering, and obstruction of justice charges that allege Lazar, while acting as a representative plaintiff, received secret payments from a "New York law firm" that has since been identified as Milberg Weiss.  The Lazar indictment (link below) contains counts, and a large number of the overt acts for the conspiracy, that took place more than five years ago, which would place them outside the usual five-year statute of limitations (see 18 U.S.C. Sec. 3282 here).  One interesting issue discussed in the Times article is that Lerach and Weiss refused the government's request to waive the statute of limitations and permit an indictment after it has otherwise expired for certain conduct.

For the conspiracy charge, only one overt act must come within the five year limitations period, so that acts much earlier can also be used to prove the criminal agreement.  The Lazar indictment alleges acts as early as 1981, so the government will have to prove a single conspiracy that lasted approximately 20 years.  The problem is that if the evidence does not establish one overarching agreement, but instead multiple agreements, then only that conspiracy (or those conspiracies) with an overt act within the last five years can be charged.  There is a risk that the government may lose significant parts of its case if it can't prove a single conspiracy, and its proof of a more narrow conspiracy may not be as strong.  The government could also face the problem of proving a larger conspiracy involving other plaintiffs -- the difficult issue of whether it is a "chain" or "hub-and-spoke" conspiracy.  For the other conduct outside the five-year limitations period, while it might be used for evidentiary purposes, it cannot be charged separately and the court might bar its introduction at trial.  The longer the government waits to file any charges, the more it loses of the case.  The role of people like Lazar who served as named plaintiffs in securities fraud class actions was largely eliminated in 1995 with the passage of the Private Securities Litigation Reform Act, which made institutional investors the likely lead plaintiffs.  Even If Milberg Weiss made secret payments to individuals serving as representative plaintiffs, they were no longer necessary after 1995.

Of course, even if the statute of limitations were to eliminate many of the potential criminal charges against the firm and any of its partners, that provides no protection from the disciplinary authorities, who do not face the same requirements to complete an investigation and file charges within a specified time period. (ph)

Download lazar_indictment.pdf

July 18, 2005 in Corruption, Fraud, Grand Jury, Investigations, Legal Ethics | Permalink | TrackBack (0)

Sunday, July 17, 2005

The Latest in Illinois

Some of the latest happenings in Illinois:

1. The DOJ reports in a Press Release here that it has secured another plea - its nineteenth- in an ongoing Chicago investigation. The press release states that: "General Services Administration (GSA) planner-estimator . . . pleaded guilty to bribery in connection with the awarding of GSA contracts at the Dirksen Federal Courthouse in Chicago. . ."

2.  The defense does not appear to be happy with the government's tactics in what's happening with former Governor Ryan. According to the Chicago Tribune here the defense is arguing that the government left out exculpatory evidence to the defense in a proffer as a "media ploy." (Chicago Tribune's headline) The Chicago Tribune notes that the defense argues that the proffer fails to include "tapes [that] unequivocally exonerate George Ryan."  The Chicago Tribune reported on the proffer here. The case is set for trial in September (see Illinois Leader here).  According to the Illinois Leader here, the former Governor was "indicted on 22 counts ranging from racketeering to mail fraud to obstruction of justice." Yes, that's the same former Governor who was a nominee for the 2005 Nobel Peace prize (see here).  This will definitely be a case to follow.


July 17, 2005 in Corruption, Investigations, Media, Prosecutions | Permalink | TrackBack (0)