Thursday, May 4, 2006

Blogging at the NACDL White Collar Crime Program in Philadelphia

Blogging in Philadelphia at the National Association of Criminal Defense Lawyers (NACDL) is guest blogger Stephanie Martz who serves as the director of NACDL’s white collar crime project.

The morning began with Audrey Strauss from Fried Frank in New York talking about recent developments in the field of criminal securities enforcement. Of course, one of the most intriguing developments in the last year were the decisions in US v Stringer and US v. Scrushy. The courts in both of those cases held, as Strauss put it, that what we learned in geometry class is true: two parallel lines never intersect. Thus, when the SEC’s civil investigation not only intersects with, but masks, a criminal investigation, they ain’t parallel anymore. Strauss laid out the facts of the Stringer case in some detail (the case was addressed in a previous posting (here) and I think one of the most interesting is that when the defendant’s counsel asked specifically, before the defendant went into SEC testimony, whether there was a criminal investigation, the SEC kind of finessed the answer and referred to Form 1662, which all SEC deponents get. It left me wondering how different Stringer really is from the typical case (since that’s ALWAYS how the SEC answers that question), and whether, if other courts start going in the same direction, the SEC is going to have to change its practice.

In any event, Strauss urged the audience to use Brady motions to get discovery on how information was shared between the SEC and US Attorney’s office, and at least one member of the audience said that he had done so already. Query whether there is a vehicle for doing this pre-indictment? ....

Next was Scott Michel, a partner at Caplan & Drysdale in DC, who spoke about developments in tax criminal enforcement. Headline: DOJ looooves bringing criminal tax cases these days, and has begun to focus (ala KPMG) on tax professionals – tax lawyers, folks who market shelters, etc. – rather than the taxpayer. What was once a good defense – "our lawyer told us that this was a legal shelter" – now becomes a conspiracy investigation. Second, as can be seen in the massive prosecution of Walter Anderson in DC, the IRS’ CID and DOJ are increasingly ignoring the corporate form in going after off-shore tax arrangements. In other words, having an off-shore company with a real structure, real boards of directors for itself and its subsidiaries, and legitimate money transfers can still get you indicted. Third, the IRS announced last year that it would no longer cease the civil track once a criminal track has commenced. Fourth, again ala KPMG, employees have become "speed bumps on the way to deferred prosecution agreements."


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