April 22, 2006
Upcoming NACDL White Collar Crime Day
The National Association of Criminal Defense Lawyers (here) is having a full day seminar in Philadelpha that will explore white collar crime. It is an incredible array of speakers and promises to be an informative program. The program description states:
“The Practice of White Collar Criminal Defense,” will have seasoned white collar lawyers and professionals share their insight on how to represent white collar defendants in a wide array of cases. This program will appeal to both seasoned white collar veterans who wants to broaden his ir her expertise as well as serve as a primer for those who are interested in starting a white collar practice. We will update you on current cases and introduce you to the relevant issues and precautions in Securities Law, Criminal Tax Enforcement, Healthcare Fraud, Mail and Wire Fraud, Sentencing in a Post-Booker World, as well as two panels on dealing with joint defense agreements, parallel proceedings, immunity agreements, and the when, where, why, and how to proffer.
Speakers include -
David Angeli – Portland, OR
NACDL White Collar Crime Committee Vice-Chair David Angeli focuses his practice on complex civil and criminal litigation, with an emphasis on health care, securities, financial and white-collar criminal matters. He has represented numerous individuals and business entities in state and federal courts around the country. Most recently, Angeli represented Joseph Hirko, the former CEO of Enron Broadband Services, in a 3-month federal criminal trial, winning acquittals on 14 of 27 counts and deadlocking the jury on the remaining 13. He is an adjunct professor of law at the Lewis & Clark Law School in Portland, where he teaches a federal white collar crime seminar.
Amy Baron-Evans – Boston, MA
Amy Baron-Evans is the National Sentencing Resource Counsel to the Federal Public and Community Defenders Office. She represents Defenders’ interests before the US Sentencing Commission, develops sentencing policy, and provides training in sentencing advocacy. She has authored a number of articles and lectured on a variety of criminal law issues including computer searches, the federal sentencing guidelines, mental health issues, DNA evidence, and professional ethics for criminal lawyers. Baron-Evans is a former Co-Chair of NACDL’s Federal Sentencing Guidelines Committee and Co-Chair of the Practitioners’ Advisory Group to the US Sentencing Commission.
Blair Brown – Washington, DC
NACDL Board Member and White Collar Crime Committee Co-Chair Blair Brown has a national white collar criminal defense practice. Prior to joining Zuckerman Spaeder LLP, he was a staff attorney for the Public Defender Service in the District of Columbia where he eventually became Deputy Chief of the Trial Division. Brown co-chairs the DC subcommittee of the ABA Criminal Justice Section’s White Collar Crime Committee and has served as a faculty member of the Harvard Law School Trial Advocacy Program and the National Institute of Trial Advocacy. He lectures on criminal and civil practice topics, and has served as a constitutional and criminal law commentator on television and before the District of Columbia City Council. Brown is a board member of the Innocence Project of the National Capital Region. He has published articles on grand jury investigations, federal sentencing law, and federal procurement fraud prosecutions and is listed in The Best Lawyers in America.
Gerald Feffer – Washington, DC
Gerald Feffer is a partner in the Washington, DC law firm of Williams & Connolly and has a nationwide white collar criminal defense practice. As a former Assistant Deputy Attorney General of the Tax Division in charge of criminal investigations, he has developed a national practice representing clients under investigation for criminal tax fraud and money laundering violations and has successfully represented a number of clients under investigation for health care, banking, securities, and environmental fraud. Feffer is the Chairman of the ABA’s Annual National Institute on Criminal Tax Fraud and is a former Chairman of the Association's Criminal Tax Committee. He was recently named as one of "Washington's Top Lawyers" by the Washingtonian, and ranked as one of the 20 Best Go-To Litigators in the DC area by the Legal Times. Feffer is a fellow of the American College of Trial Lawyers and the American College of Tax Counsel.
Ross Garber – Hartford, CT
Ross Garber focuses his practice on the litigation of complex criminal and civil cases. In addition to his litigation practice, he counsels clients on dealing with state and federal government agencies and conducts internal and external investigations for companies in a variety of industries where he assists in creating corporate compliance and integrity programs. Garber served as chief counsel to the Office of the Governor of Connecticut during eight days of televised legislative hearings on whether the Governor should be impeached. Garber is a faculty member at the ABA's National Institute on White Collar Crime and recently conducted a training session for the National Governors' Association on Crisis Management for Governors' Legal Counsel.
Peter Goldberger – Ardmore, PA
NACDL Federal Rules and Procedures Committee Co-Chair Peter Goldberger is the founder and principal of a three-lawyer firm, which focuses its nationwide practice on the post-conviction aspects of federal criminal cases, particularly sentencing and appeals. He has argued before the US Supreme Court and most of the federal circuits. Working for over ten years under a CJA appointment, in 2003 Goldberger was one of the attorneys who won the first DNA exoneration from Pennsylvania’s death row. Twice named one of Pennsylvania’s ‘Super Lawyers’ by the Philadelphia Magazine, Goldberger has been listed in Best Lawyers in America for more than a decade. He is the co-author of a two-volume Practice Guide for Federal Appellate Procedure in the Third Circuit (1997; now out of print), and the author of a chapter in Collier on Bankruptcy, covering immunity and Fifth Amendment privilege.
Lawrence Goldman – New York, NY
NACDL Past President Larry Goldman (2002-2003) has been practicing criminal law in New York City since 1972, specializing in white collar cases. From 1966 - 1971, he served as an assistant district attorney under Frank Hogan in New York County. Goldman is Co-Chair of NACDL’s White Collar Crimes Committee, Chair of the New York State Commission on Judicial Conduct, and he is on the executive committee of the Criminal Justice Section of the New York State Bar Association. He is a past president of both the New York State Association of Criminal Defense Lawyers (NYSACDL) and the New York Criminal Bar Association (NYCBA). Goldman has lectured at numerous bar associations and law school programs on various aspects of criminal law and procedure, trial tactics, and ethics. In 1998, he was honored with the Robert J. Heeney Award, NACDL’s most prestigious recognition. Goldman has also received the Outstanding Practitioner Award from the NYCBA, the Thurgood Marshall Award from the NYSACDL, and the Charles F. Crimi Award from the New York State Bar Association Criminal Justice Section.
Jan Nielsen Little – San Francisco, CA
Jan Nielsen Little has been in private practice for 18 years and previously prosecuted public corruption cases for the Department of Justice’s Public Integrity Section. Little is a partner at Keker & Van Nest in San Francisco specializing in white collar cases and fraud-related civil and SEC litigation. She and John Keker recently defended CSFB banker Frank Quattrone and Enron CFO Andrew Fastow. Little received the California Attorneys for Criminal Justice’s Significant Achievement Award for the acquittal of Patrick Hallinan, a criminal defense attorney charged with RICO offenses in connection with his defense of criminal cases.
William Mateja – Dallas, TX
William Mateja is a principal at Fish & Richardson PC. Prior to joining the firm, he served as Senior Counsel to Deputy Attorneys General Larry Thompson and James Comey. He was the point person for President Bush's Corporate Fraud Task Force, oversaw the Justice Department's corporate, civil, and criminal health care fraud efforts as well as the development of its sentencing policies post-Protect Act. Mateja is a frequent lecturer on topics ranging from corporate fraud, sentencing of white collar defendants, Sarbanes-Oxley, corporate criminal liability, corporate compliance, parallel proceedings, corporate prosecution guidelines, and Justice Department sentencing policies. He is an author of Sentencing Reform, The Federal Criminal Justice System, and Judicial and Prosecutorial Discretion (2004).
Robert Morvillo – New York, NY
Robert Morvillo was Chief Trial Assistant to the US Attorney in charge of the Frauds Unit, Southern District of New York (1970-1971) and Chief of the Criminal Division, US Attorney's Office, Southern District of New York (1971-1973). He is a past president of the New York Council of Defense Lawyers (1993-1994), served on the Board of Trustees for the Federal Bar Council (1989-1997), and was Chairman of the American College of Trial Lawyers (1998-2000). Morvillo is well-known for his defense of Martha Stewart.
Gary Naftalis – New York, NY
Gary Naftalis represents individuals and corporations in complex criminal, regulatory, and civil matters including allegations of insider trading, market manipulation, accounting irregularities, and other financial fraud. He recently defended Michael Eisner, the former CEO of The Walt Disney Company, in the shareholders derivative lawsuit relating to the hiring and termination of Michael Ovitz. During his 30 year career, Naftalis has successfully represented numerous securities industry clients, Salomon Brothers, Kidder Peabody, and Canary Capital Partners. He has been counsel for significant figures and entities in the investigations concerning corporate accounting irregularities, including the recent representation of the Chairman and Founder of Global Crossing. Naftalis is a former faculty member of Columbia and Harvard Law Schools and has authored or co-authored numerous books and articles including The Grand Jury: An Institution on Trial (with Judge Marvin E. Frankel).
Catherine Recker -- Philadelphia, PA
Catherine Recker is a partner at Welsh & Recker PC, specializing in white collar defense. She represents individuals and corporate clients in traditional criminal proceedings, as well as in civil penalty forfeiture, license revocation, and similar proceedings including SEC enforcement actions, false claims act suits, debarment and preclusion proceedings involving the HHS, DEA, FDA, and analogous state agencies, antitrust, internal investigations and parallel civil matters.
Leon Rodriguez – Washington, DC
Leon Rodriguez is a principal in the Ober Kaler law firm’s White Collar Criminal Defense Group. He counsels and defends physicians, hospitals, HMOs, PPOs, nursing homes, home health agencies, and labs against claims of Medicare and medical fraud and abuse. Rodriguez has directed numerous complex white collar criminal investigations, particularly in matters of health care and securities fraud. In 2004, he was selected by Nightingale’s Healthcare News as one of the outstanding healthcare litigators. Rodriguez is a co-author of Criminal Investigations, published in Ober Kaler’s The Nonprofit Legal Landscape (2004).
Audrey Strauss – New York, NY
Audrey Strauss represents institutions and individuals in white collar criminal defense and regulatory matters. From 1975 to 1982, Strauss served in the US Attorney’s Office for the Southern District of New York as Chief Appellate Attorney, where she was responsible for the office’s criminal appeals before the US Court of Appeals for the Second Circuit. She also served as Chief of the Fraud Unit, where she supervised all securities and fraud cases prosecuted by the US Attorney’s Office. Strauss writes a regular column on corporate criminal issues for the New York Law Journal and is a Fellow of the American College of Trial Lawyers and a director of the Legal Aid Society of New York and the Office of the Appellate Defender. In 2004, Strauss was ranked by the Chambers USA among the top 10 leading white collar criminal lawyers in the country.
John "Rusty" Wing – New York, NY
A former chief of the Fraud Unit in the US Attorney’s Office for the Southern District of New York, John Wing has represented individuals and corporations in a wide variety of complex criminal matters involving allegations of securities fraud, environmental violations, RICO, money laundering, tax fraud, bribery, extortion, government contracts fraud, antitrust violations, labor law violations, customs fraud, and bank fraud. He also conducts internal investigations and engages in consulting work for clients victimized by or involved in criminal activities of others. In 2005, Wing was named one of New York’s best lawyers in New York Magazine and has been listed in The Best Lawyers in America. He has lectured extensively on jury trial work and criminal law topics and has been a faculty member at the Harvard Law School Trial Advocacy Workshop and the New York District Attorney’s Trial Advocacy Program. Wing has appeared as a television commentator for Fox 5, MSNBC, and Court TV.
William Winning -- Philadelphia, PA
William Winning concentrates his practice in the representation of individuals and corporations under investigation for, or charged with, violations of federal and state criminal law. He has significant experience representing clients in a variety of regulatory and government compliance matters. Winning Co-Chairs the White Collar Crime & Complex Criminal Defense Practice Group at the Cozen and O’Connor Law Firm. He was recently named as one of the Best Lawyers in America and was selected a ‘Pennsylvania Super Lawyer’ by his peers.
As well as others. For more details see here.
April 21, 2006
How NOT to Respond to a Subpoena
A Third Circuit opinion discusses the application of the crime-fraud exception to the attorney-client privilege in an investigation that shows how a subpoena recipient should not respond unless the person wants to move into the "target" category in a hurry. In In re: Grand Jury Investigation (here), the court reviewed a challenge to the district court's order to an attorney to testify about his communication with his client -- Jane Doe -- about the content of a grand jury subpoena for e-mail records. Doe was the executive director of an Organization that was affiliated with the primary target of the investigation involving possible corruption of a public official, and her attorney forwarded to her a grand jury subpoena seeking e-mail records of the Organization. The government apparently was unsatisfied with the response, setting in motion a chain of events that led to the attorney being called to testify before the grand jury:
On February 10, 2005, pursuant to an agreement among the parties, an FBI computer technician went to the Organization’s place of business and "imaged" the hard drive on Jane Doe’s computer. The Government thus made an exact copy of the contents of the hard drive, including deleted email files. It uncovered numerous stored messages which could be construed to show a conscious effort by the Organization’s staff to destroy emails.
Concerned about the potential obstruction of justice by Jane Doe and others at the Organization, the Government issued a subpoena duces tecum to Attorney on March 1, 2005. It sought to compel grand jury testimony regarding his discussions with Jane Doe as to her compliance (or apparent non-compliance) with the prior subpoenas for production of the Organization's e-mails.
The Third Circuit held that there was sufficient evidence of a pending or future crime by Doe, namely obstruction of justice, for not preventing the deletion of the e-mails. The court upheld the district court's order directing the attorney to testify.
Interestingly, the court cited to the Second Circuit's recent decision in United States v. Quattrone as support for the proposition that failing to stop the destruction of e-mails after learning of a subpoena for those records can constitute obstruction. The court stated: "The Government’s position in this case is that the communication between Attorney and Jane Doe provided her with knowledge of the type of material the Government sought, comparable to the documents relating to the IPO allocation process sought in Quattrone." While the conviction in Quattrone was overturned due to faulty jury instructions, the Second and Third Circuit decisions do show that the handling of e-mail can rise to the level of obstruction of justice, showing once again how important this type of evidence is in white collar crime investigations and prosecutions. (ph)
There Are No "Perry Mason" Moments in White Collar Crime Trials
Former Enron CEO Jeffrey Skilling concluded almost two weeks on the witness stand, and next up will be his predecessor and successor, Ken Lay. The cross-examination produced no bombshell moments, and few if any concessions by Skilling regarding the themes brought out in his direct testimony. That is unsurprising because Skilling spent a significant amount of time preparing for his testimony, including the cross, and it is unlikely he would deviate from the plan for presenting his position that Enron was a strong, viable company when he left as CEO in August 2001. While media reports note that Skilling maintained his position in the face of tough questioning by the prosecutor, that is hardly news. In the same vein, questioning about his investment in a photography company run by a former girlfriend has been portrayed as irrelevant to the underlying fraud at Enron, a point raised by Skilling himself ("What does this have to do with fraud at Enron Corporation? Just out of curiosity.") (see Houston Chronicle Trial Watch blog here). Yet, the case rests on the credibility of the witnesses for both sides, and there are clear disputes whether certain discussions took place or whether a comment by Skilling was meant to be facetious (the "Mr. Bill" response about whether "they're on to us") or serious. Whether a witness is truthful is not limited to just the testimony on direct examination, but can include other business dealings that affect the company, in much the same way that the plea agreements of government witnesses are relevant to their credibility. The jury's determination of which witness(es) to believe will not be based on a single line of questioning, although small moments can take on great meaning during the deliberations when the jury makes its final decision on who to believe. Any assessment of the effectiveness of Skilling's testimony now is pure guesswork. An AP story (here) and Reuters story (here) discuss Skilling's testimony. (ph)
How Prosecutors Secure Corporate Cooperation
The University of Maryland held a Roundtable yesterday called the Criminalization of Corporate Law. (see here). David B. Anders, a former Assistant United States Attorney for the Southern District of New York who handled the Ebbers and Quattrone cases was the keynote speaker. Larry Ribstein at Ideoblog here does a wonderful job of capturing some of the comments made by this speaker. This is definitely worth reading. Does it bother anyone that corporations have become mini-prosecutors that serve up the government its employees?
Presidential Pardons to White Collar Offenders
President Bush announced the pardon of eleven individuals who were convicted of a variety of offenses, and as usual a substantial number of them fall into the white collar crime category (see U.S. Newswire story here). That is not a surprise because those convicted of such offenses are normally non-violent, which makes them more appealing for a pardon, and some may have political or social connections that can be used to assist in the pardoning process. Moreover, they (or their families) are probably more likely to be able to afford to retain counsel to assist in their applications.
Three involved tax offenses, and a fourth was convicted of a tax crime along with mail fraud. It is interesting that the pardons for those offenses would come so close to the annual tax filing day, amid a crackdown by the IRS and DOJ on tax evasion schemes. One pardon recipient was convicted of misprision of a felony based on assisting her then-boyfriend in covering up evidence related to his false statements relating to gun purchases, so I will count that one as a white collar crime. Other offenses include false statements (Sec. 1001) and conspiracy to defraud the United States.
The defendant who received the greatest punishment was Mark Hale, sentenced to three years for his role in a bank fraud involving the savings and loan at which he was CEO. Back in the early 1990s, the so-called "S&L Crooks" were the functional equivalent of Ken Lay, Bernie Ebbers, and the like -- CEOs and senior managers accused of serious misconduct that had a substantial deleterious effect on the economy. At that time, a three year prison term (from the Bureau of Prison records it appears he served no more than two years) was a substantial punishment, although of course no where near the sentences handed out to Ebbers, John Rigas, and others. Hale, who is from Henderson, Texas, cannot be descirbed as a minor participant in the offense (see U.S. v. Wilder, 15 F.3d 1292 (5th Cir. 1994)).
To this point, President Bush has issued only 82 pardons, far fewer than any of his predecessors since 1945, including his father, who issued the next-lowest number, 296, and that in only a single term as President (See Office of the Pardon Attorney statistics here). Margaret Colgate Love, who served as the Pardon Attorney in the Department of Justice before entering private practice, has an analysis of the President's rather parsimonious exercise of the pardon power that is available on Doug Berman's Sentencing Law & Policy blog (here). (ph)
April 20, 2006
Lying, Cheating, and Stealing: A Moral Theory of White-Collar Crime
Professor Stuart Green, the Louis B. Porterie Professor of Law at Louisiana State University, has published a new book entitled Lying, Cheating, and Stealing: A Moral Theory of White-Collar Crime with Oxford University Press. Professor Green is one of the leading criminal law theorists in the country, and he turns his attention to white collar crime by analyzing why conduct that might appear to be otherwise legal can be punished as a crime. This area of the law has avoided the type of theoretical analysis that other aspects of the criminal have undergone, and the book is a comprehensive analysis of the and moral intuitions about what is wrongful. As Professor Green notes, "I argue that without a clearer understanding of the relationship between morality and white-collar criminal law, the retributive principles on which the criminal law is founded are placed in serious jeopardy." The book is now available through Amazon (here). For those unfamiliar with Professor Green's scholarship, his writing is clear and the analysis is thorough, and the book clearly is an important contribution to the literature on white collar crime. (ph)
Former School District IT Director Indicted for Embezzling Federal Funds
A former school district official in South Carolina was indicted on twelve counts of mail and wire fraud related to embezzling funds from the federal government through the E-Rate program, which provides funds to disadvantaged school districts to pay for communications networks and internet access for students and teachers. Cynthia Ayer was technology director for the Bamberg County School District, and the charges arise from funneling money from the grants through a company that she set up. According to a Department of Justice press release (here):
[F]rom April 1, 1999, until Feb. 1, 2003, Ayer used her position as the technology director of the school district to award technology contracts to her company, Go Between Communications, by submitting fraudulent applications for E-Rate funding of more than $3.5 million to the Federal Communications Commission’s (FCC) Universal Service Company (USAC) without a competitive bidding process. The indictment further charges that, as a result of her scheme to defraud the E-Rate program, Ayer fraudulently obtained $468,496 in payments from USAC.
April 19, 2006
Giants Trainer Subpoenaed in Bonds Perjury Investigation
The federal grand jury investigating possible perjury by San Francisco Giants slugger Barry Bonds has subpoenaed the team's head trainer to testify on April 27, in addition of Bonds' personal physician. Bonds testified before a grand jury in 2003 about whether he used steroids from Balco (Bay Area Laboratory Co-operative), where his personal trainer worked. Bonds denied knowingly taking steroids, and recent publications cast doubt on whether his testimony was truthful. By seeking testimony from the personal physician and team trainer, the government likely is focusing on learning if health care professionals observed if Bonds exhibited any of the outward signs of steroid use, which can cause substantial physical changes. The witnesses may also have spoken with Bonds about whether he was using steroids or human growth hormones. While his physician may be able to raise a privilege claim to conversations, the team's trainer is unlikely to be able to throw up a similar roadblock to testifying.
Whether either witness can provide the type of circumstantial evidence needed to establish that Bonds' testimony was false -- which will be necessary to meet the high standard for a perjury conviction -- is certainly an open question. Both may well by sympathetic to Bonds, and so could provide only equivocal statements regarding his physical condition. To this point, the government's evidence appears to be coming from those convicted in connection with the Balco operation, a jilted former girlfriend, and claims made by anonymous sources as reported in a book and in the media. The government likely needs objective evidence of steroid use and not anecdotal claims if it wants to make a case against Bonds. A San Francisco Chronicle story (here) discusses the grand jury investigation. (ph)
Jury Selection Begins in Corruption Trial of Scrushy and Former Gov. Siegelman
Jury selection began in the corruption trial of former HealthSouth CEO Richard Scrushy, former Alabama Governor Don Siegelman, and two former members of Siegelman's cabinet. The judge expects to complete jury selection in two days, and then begin the trial on May 1. Based on the government's witness list, U.S. District Judge Mark Fuller said that the trial will last from four to six weeks, which puts it perilously close to the June 6 Democratic gubernatorial primary in which Siegelman is a candidate. Among the other candidates for the Democratic nomination is Lt. Governor Lucy Baxley, former wife of Lt. Governor Bill Baxley, who happens to be defense counsel to one of the other defendants. According to an AP story (here), potential witnesses include a number of current and former state legislators and three former Governors: Guy Hunt, Jim Folsom Jr. and Fob James. As if things were not political enough, the judge rejected the government's motion to prohibit Siegelman from arguing that the charges were brought based on political considerations (AP story here) because the request was untimely. And this is just one of the defendants.
Scrushy's motion to dismiss the indictment on the grounds that the grand jury was selected in a racially biased manner still has not been decided (see earlier post here). That is a difficult claim to establish, so it is unlikely the judge would proceed with jury selection if there were any reasonable likelihood of the indictment being dismissed. Along with the political aspects of the case, Scrushy may try to raise issues of racial and economic bias. This trial could make Scrushy's earlier fraud prosecution in Birmingham look like an out-of-town tryout for the main attraction. (ph)
CFO Gets Sticky Fingers
The chief financial officer of a company holds one of its most trusted positions, so if that person decides to start stealing from the company there may be little that can be done to prevent it. When it goes on for two years, however, it signals a breakdown in oversight procedures or a complete lack of internal controls. The U.S. Attorney's Office for the Eastern District of Virginia announced the indictment of Jennifer Pleacher on charges of fraud and money laundering for embezzling over $500,000 from Vogel Lubrication, Inc., where she was CFO. According to the press release (here): "The indictment charges that from on or about January 2, 2003, through on or about January 7, 2005, Pleacher used her CFO position to secretly embezzle approximately $518,414.33 from Vogel’s financial accounts for her own use and benefit. According to the indictment, Pleacher embezzled amounts ranging from as low as $5,000 up to $52,964.27, on each occasion." (ph)
Dismissal of Conspiracy Charge Against DeLay Upheld
The Texas Third District Court of Appeals upheld the trial court's dismissal of a conspiracy charge against former House Majority Leader Tom DeLay (opinion here). Travis Country (Austin, Texas) grand juries charged DeLay with money laundering and conspiracy to violate the state's election law related to funneling campaign contributions from corporations through third parties before distributing them to candidates in Texas in 2002. The election law was amended in 2003 and explicitly authorizes a conspiracy charge for violating the campaign contribution rules, but that was after DeLay's alleged illegal conduct. In upholding the decision to dismiss, the appellate court stated:
Although the legislature amended the election code in 2003 to explicitly incorporate a conspiracy offense, the State cannot rely on this amendment because DeLay is charged with conduct that took place prior to its enactment. See Tex. Elec. Code Ann. § 1.018 (West Supp. 2005). Instead, the State contends that conspiring to violate the election code has always been an offense and that the 2003 amendment merely clarified the law. Were we writing on a clean slate, the State's argument would carry considerable weight because Texas has had a generally applicable conspiracy offense since the nineteenth century. However, we are bound by controlling precedent that limits the applicability of the penal code's conspiracy provision to offenses found within the penal code. Because the conspiracy provision of the penal code did not apply to making an illegal contribution under the election code at the time of the alleged criminal conduct, we affirm the district court's order.
The money laundering indictment that includes a charge of conspiracy to commit money laundering is not affected by the earlier dismissal and can proceed to trial unless District Attorney Ronnie Earle appeals to the Texas Court of Criminal Appeals, further delaying the case (so to speak). DeLay announced that he will resign from his seat in the near future, and will be out of Congress by the time the case goes to trial. (ph)
Businessman Cooperating in Iraq Fraud Investigation
American businessman Philip Bloom entered into a plea agreement with prosecutors in February in connection with the ongoing investigation of fraud in the award of contracts through the Coalition Provisional Authority for work in rebuilding Iraq. Bloom was charged in 2005, along with CPA contracting official Robert Stein, with fraud for making approximately $2 million in payments in exchange for over $8 million in contracts. Key evidence in the case includes e-mails between Bloom and military officials discussing the cars they wanted in exchange for approving the contracts. Among the vehicles supplied were a GMC Yukon and a Nissan 350Z. Showing once again that people do not seem to understand that e-mails actually exist after hitting the "Send" key, one military officer sent a message to Bloom stating that "If there were any smoking guns, they would have been found months ago." Needless to say, that e-mail pretty much qualifies as the aforesaid weapon with the white cloud around it. A Washington Post story (here) discusses Bloom's plea agreement. (ph)
April 18, 2006
"Die Hard" Director Pleads Guilty
The Wall Street Journal (AP) reports here that "Die Hard" director John McTiernan plead guilty to making false statements in an investigation concerning celebrity private eye Anthony Pellicano. This is yet another plea in an investigation "by the U.S. Attorney's Office for the Central District of California of private investigator Anthony Pellicano for using illegal wiretaps and accessing law enforcement data bases to gather information for his clients." (see post here)
Tough Day For Skilling
One need only read a few of the reports from today to realize that Jeffrey Skilling had a tough day. Washington Post here reporter Carrie Johnson notes that Skilling lost "his cool" under prosecution questioning. And the Houston Chronicle here points out the prosecution attack on Skilling's failure to remember. A far cry from yesterday's reports of Skilling being cool despite questioning. (see here)
But what is the jury hearing? According to the NYTimes (here) Skilling accused the prosecutor of "looking at the baseball rankings and saying, 'Let's look at the bottom two teams.' "
Is the jury listening critically to what is being presented? Do they want more answers, or are the financial aspects so over their heads and perhaps incomprehensible? And what is their reaction to Skilling being able to remember some things, yet not others?
Watch The Books
When a bookkeeper is able to embezzle more than $270,000.00, one has to ask questions such as: how was this possible; where was the oversight; and what is being done to change how the system operated?
Fraud Update reports here on a sentence of two years in prison and restitution in the amount of $270,000.00 upon a plea to wire fraud of an individual who:
"would write out expense checks from the Famous Anthony’s Account to her own personal account, but would list the payee as an acceptable payee or vendor in the Famous Anthony’s account books. When the original checks cleared [this individual's] personal account and were sent back to Famous Anthony’s, [she] would destroy the original check that named her as payee."
April 17, 2006
Cross - Ex of Skilling
In some white collar cases, there is nothing better for the prosecution than having the defendant take the witness stand. The prosecution is likely to be thinking this here, as it allows them to put questionable transactions in the face of the defendant-witness. With so much riding on the credibility of the witness, getting the witness/defendant tangled on dates, amounts, and reasons for selling stock (such as Enron failing) can help the prosecution build an image that this person cannot be trusted. And without doubt this case is likely to rest largely on which witnesses the jury believes. (see Mary Flood's article in the Houston Chronicle here).
Is it wrong for the accused to use a jury consultant to help him put answers in understandable English. It sounds like the prosecution is implying that here (see Mary Flood's article in the Houston Chronicle here, NYTimes here). Isn't this part of the lessons that FBI learn at the Academy, and shouldn't the defense have the same ability to learn how to speak to juries? But some consider having the consultant so visible a misstep (see Wall Street Journal blog here)
And how will the government's technical problems play to the jury? (See Peter Lattman - Wall Street Journal here on the government's technical difficulties).
And PhotoFete, a Skilling investment that may have been filled with conflict? Is this the key to devastation caused to so many at Enron? (Wall Street Journal here and here) Or is this merely a prelude to a cross-examination that is forthcoming?
Comments on the Ryan Verdict
Some random thoughts on the Ryan Verdict:
1. These days, one finds a very supportive public if bringing a corruption case with believable witnesses.The public is not tolerant of public officials who are accused of misusing their office.
2. People who judge these cases are individuals who might not read the newspapers and might not watch TV.
3. What may start as a minor issue can become a nightmare to the accused in a corruption investigation. The Ryan case was initially a license for bribe investigation.
4. Those at the top, like a former or present Governor, have the most to lose when the government is conducting an investigation as they are likely to be last to be offered any deal. Because they are a front-pager, they are the ones who stand the most to lose. See, e.g. Rowland, Edwards
5. White collar cases can be lengthy trials and costly to the public. Is it wise for the government to bring a case with so many counts against Ryan? It resulted in a lengthy trial, a trial more likely to contain error subject to reversal, a trial that proved to be an enormous cost to the jurors and parties to the proceedings. Could the same result be accomplished with fewer charges, less witnesses, and a shorter trial. After all, how many years can a man of 72 years old serve?
6. Sometimes the government is lucky - like here, when the verdict, which includes a tax offense, comes out on the very last day for individuals to file tax returns or extensions.
7. Why is it that the government will comment on some items after a trial and refuse to comment on others? Were there leaks in this case? What happened to merit replacement jurors in this case?
8. Patrick Fitzgerald is a no-nonsense prosecutor and those who might have links to "Scooter" Libby should be getting nervous. He will not let political party affiliation stand in his way.
9. Seventh Circuit prosecutors have never been shy to bring RICO charges in corruption cases. But it was the Supreme Court decision in the McNally case, a case pertaining to intangible rights used in a mail fraud prosecution that destroyed many a Seventh Circuit conviction coming from Operation Greylord. Will the Supreme Court now reexamine the new "honest-services" doctrine in this soon to be Seventh Circuit appellate case?
Former Governor Ryan Is Convicted
The Chicago Tribune (here) and Wall Street Journal (here) are reporting that former Illinois Governor George Ryan and Larry Warner have been convicted on all counts.This trial lasted over six months, with the jury being out for 11 days. Alternates were used in the deliberation.
For Ryan this means sentencing on charges including a RICO Conspiracy charge. There will no doubt be some interesting issues for appeal.
The former Illinois Governor made a statement following the verdict in which he thanked his legal counsel.
More to come....
April 16, 2006
Judge Allows Hearing on Government's Use of Thompson Memo in KPMG Case
At the end of last week, US District Court Judge Lewis Kaplan issued an Order (Download Order.pdf) responding to defendant's motion arguing that the government was improperly interfering with defendant's right to counsel through use of the Thompson Memo. The government's response proved to be insufficient for the court, as it should be. The court stated:
"Assuming arguendo that the government's account of the discussions with KPMG is accurate, and the Court has no reason to suppose that it is not, the government's presentation may not be a sufficient response to the defendants' position. It ignores, among other things, the defendants' allegations that (1) the Thompson memorandum, insofar as it deals with advancement of defense costs as a factor relevant to whether a prospective corporate defendant will be prosecuted, is an improper interference with the defendants' rights to obtain counsel of their choice and to mount a defense consistent with their means, and (2) KPMG's decision not to advance defense costs was influenced by the Thompson memorandum and KPMG's desire to avoid prosecution. Moreover, the government's declaration concedes that the lead prosecutor in this case inquired in February 2004 about KPMG's obligations and plans with respect to payment of legal fees of partners and employees. Against the background of the Thompson memorandum, the inquiry itself arguably was a signal to KPMG as to actions that would promote its chances of avoiding prosecution."
The court's Order permits discovery on this issue and has set a hearing for consideration of the defendants' motion. Perhaps the most important part of this Order is its recognition of the importance of a defendant's right to counsel. With the government blatantly asking corporations in deferred prosecution agreements to waive the attorney client privilege and now asking a corporation if they will be paying employees attorney fees, the government is crossing an important line in our adversarial system.
Public Discovery - Abramoff Emails
How many times does defense counsel complain that the government is failing to release discovery material? And now we are seeing a different sought of response. A defendant arguing that the public release of discovery is a pressure to obtain a plea. According to the Washington Post here the government released emails between David Safavian and Jack Abramoff concerning Abramoff's dealings.
These past few years we have seen a continual use of emails in criminal cases. In one case the email was used as a basis of an obstruction of justice count. In other cases emails have been evidence to support statements of a witness. And in some cases the contents of the emails are incriminating the defendant. What happens when a generation of individuals who were not raised on email traffic are suddenly thrust into this new age?