Saturday, January 21, 2006

Libby's Defense

"Scooter" Libby's defense is starting to show more and more. (See Washington Post here)  The Wall Street Journal reports here of possible forthcoming subpeonas of the defense (interestingly the motion was filed jointly with the prosecution).  Two themes seem to be appearing:  1) a defense of the "too busy executive" (see post here), and now 2) others knew this information.

This second defense is important because it can eliminate the "materiality" element of the false statement and false declaration charges. Both 18 U.S.C. 1001 and 1623  require that the statement be "material."  If others already knew this information, then materiality becomes questionable.  The Indictment against Libby (here) has two (2) counts of false statements and two (2) counts of perjury.

In addition to these four counts, there is a count charging Libby with Obstruction of Justice. The obstruction charge 18 U.S.C. 1503 may be more problematic for the defense. Obstruction does not have a clearly defined element of materiality. I have argued that one should read "materiality" into the statute, in the same way that "materiality" has been read into the mail fraud statute in United States v.Neder, 527 U.S. 1 (1999). (See Symposium, Washburn Law Journal - "Arthur Andersen, LLP and Martha Stewart: Should Materiality be an Element of Obstruction of Justice." (see here). Perhaps this case will wind up being the test case of whether materiality should be a part of an obstruction charge.


January 21, 2006 in Plame Investigation | Permalink | Comments (0) | TrackBack (0)

Friday, January 20, 2006

Survivor: Tax Evasion Trial

The tax evasion trial of Richard Hatch, the first Survivor winner, may take a strange turn if Hatch testifies in accord with a statement made by his lawyer.  An AP story (here) states that during a break in Hatch's testimony in federal court in Rhode Island for not reporting the $1 million prize and other payments he received in 2000,  Michael MInns, the defense lawyer, told the court that Hatch made a deal with Survivor's producers that they would pay taxes on the prize if he did not report that other contestants secretly received food from friends during the filming of the program.  Hatch has not yet mentioned the purported deal in his testimony, which will continue after a weekend break.  Of course, any deal with the producers would not necessarily absolve him of his reporting duty, but it could undermine his intent, and Minns has described Hatch as the "world's worst bookkeeper." 

The tax evasion charges against Hatch also include the failure to report a payment by a Boston radio station and alleged diversion of funds from a charity he controlled, so any deal with the Survivor producers would not cover that income.  Nor did it help his case when an accountant testified that she told Hatch he had to report the $1 million prize, with no apparent mention of the side deal.  If he did make the heretofore undisclosed deal, he might not be quite as bad a tax planner as he is a bookkeeper. (ph)

January 20, 2006 in Tax | Permalink | Comments (1) | TrackBack (0)

Does the Push Against Organizations Paying Attorney's Fees for Employees Violate Their Constitutional Rights?

Among the flurry of motions filed by the defendants in the KPMG tax shelter prosecution is one seeking dismissal of the indictment because the government improperly pressured KPMG into terminating the payment of legal fees to its former partners charged in the case.  The Department of Justice's Thompson Memo (here) on prosecuting business organizations states that an organization's decision to pay the attorney's fees for individuals under investigation or being prosecuted could be viewed as an indication of a lack of cooperation and may result in charges being filed against the organization.  In the KPMG case, the firm agreed to stop paying the attorney's fees for its partners who did not cooperate in the investigation as part of its deferred prosecution agreement.  After the prosecution of Arthur Andersen, it was likely that criminal charges against KPMG would result in the firm's demise, and so throwing aside a few former partners was a small cost.

A brief (link available below) filed with the U.S. District Court for the Southern District of New York on behalf of twelve defendants argues that under Delaware law -- the state in which KPMG is organized as an LLP -- organizations are encouraged to provide support for employees and partners who are the subject of criminal and civil cases arising from their work on behalf of the business by advancing the costs of legal representation.  Their brief asserts:

[T]he prosecution unilaterally pre-empted the policy determination not only of the legislature but also of KPMG itself. By making clear that KPMG’s survival as an entity could depend, even in part, on abandoning its practice – grounded in state law and public policy – to advance legal fees to employees who had acted on its behalf, the Government has uncomfortably expanded its role. It has gone from an investigator/prosecutor to a bullying behemoth, who demands as tribute the sacrifice of individuals and uses any means at its disposal to stifle opposition to its awesome power to prosecute individuals. In so doing, the Government has violated law and policy. It has undermined the public policy and legal admonitions of the state of Delaware; it has improperly interfered with the contractual relationship between KPMG and its partners; and it has also unjustifiably and intentionally hampered the KPMG defendants’ ability to defend themselves in this case.

The brief goes on to note that if a private party had tried to force another party into not paying the fees, it could constitute tortious interference with a business opportunity.  The more difficult part of the argument is linking the government's conduct in having KPMG cut-off the attorney's fee spigot to a constitutional violation that could support dismissal of the indictment.  They argue that the government's conduct interferes with the right to counsel and to a fair trial, but the assertion is a bit of a stretch.  The brief relies heavily on the dissent in Caplin & Drysdale, a case involving the forfeiture of funds that would be used to pay attorney's fees.  In this case, the defendants have the right to counsel of choice, and the issue is one step removed concerning the source of the funds for payment for that counsel when the government is not directly seizing the money. 

Given the Supreme Court's aversion to enforcing the right to counsel of choice, I doubt a court will find a sufficient link between the government's conduct and the Sixth Amendment right of the defendants to permit dismissal of the indictment or ordering KPMG to resume paying the defendants' attorney's fees.  Even if there is no constitutional violation from the Department of Justice's conduct, the view that an organization which pays the attorney's fees of its employees is somehow not cooperative with the government is misguided.  I have beaten the drum before that the view of defense counsel as an obstacle or someone to be gotten rid of is flawed because the system is built around the availability of competent representation for both sides.  Undermining access to counsel is not a benefit to the criminal justice system. (ph)

Download kpmg_attorneys_fees_memo.pdf

January 20, 2006 in Defense Counsel, Prosecutions | Permalink | Comments (0) | TrackBack (1)

FBI Releases Its 2005 Computer Crime Survey

The FBI released its 2005 Computer Crime Survey on Jan. 18, 2006 (here).  The Survey compiles the responses form over 2000 public and private organizations in four states, and contains the following "key findings":

  • Frequency of attacks. Nearly nine out of 10 organizations experienced computer security incidents in a year's time; 20% of them indicated they had experienced 20 or more attacks.
  • Types of attacks. Viruses (83.7%) and spyware (79.5%) headed the list. More than one in five organizations said they experienced port scans and network or data sabotage.
  • Financial impact. Over 64% of the respondents incurred a loss. Viruses and worms cost the most, accounting for $12 million of the $32 million in total losses.
  • Sources of the attacks. They came from 36 different countries. The U.S. (26.1%) and China (23.9%) were the source of over half of the intrusion attempts, though masking technologies make it difficult to get an accurate reading.
  • Defenses. Most said they installed new security updates and software following incidents, but advanced security techniques such as biometrics (4%) and smart cards (7%) were used infrequently. In addition, 44% reported intrusions from within their own organizations, suggesting the need for strong internal controls.
  • Reporting. Just 9% said they reported incidents to law enforcement, believing the infractions were not illegal or that there was little law enforcement could or would do. Of those reporting, however, 91% were satisfied with law enforcement's response. And 81% said they'd report future incidents to the FBI or other law enforcement agencies. Many also said they were unaware of InfraGard, a joint FBI/private sector initiative that battles computer crimes and other threats through information sharing.

    (ph -- thanks to Vernon McCandlish for alerting me to the Survey)

    January 20, 2006 in Computer Crime, Government Reports | Permalink | Comments (0) | TrackBack (0)

    Thursday, January 19, 2006

    Seymour Lazar Asks, "Did Anybody Get Screwed?"

    Seymour Lazar is a lawyer in Southern California indicted last year (along with another lawyer) for allegedly taking secret payments from prominent plaintiff class action firm Milberg Weiss to serve as the representative plaintiff in various securities fraud and consumer cases.  A front-page article in the Wall Street Journal (here) includes an interview of Lazar in which he discusses his case, a step that is usually a risky proposition but one we've seen lately in white collar crime cases (see post here).  Lazar disputes doing anything wrong, although he does not deny receiving the payments.  He calls them "referral fees" and notes that lawyers pay them all the time in cases.  Lazar asks, "Did I hurt anybody? Who did I cheat? Did anybody get screwed?"

    The problem for Lazar is that the standard is not simply did he "cheat" or "screw" anybody.  The representative plaintiff in a class action usually has to certify that he/she is not receiving anything more than other class members will receive, and class representatives have been disqualified for being affiliated with counsel for the class without any direct payment or other remuneration.  To take a payment from the lead attorney is more than just the appearance of a conflict, it is a violation of the fiduciary obligation of the representative.  The question for the fiduciary is not whether anyone was "screwed" but whether the representative plaintiff fulfilled the duties of being the named party in the action charged with the responsibility of acting to protect the interests of the class. Lazar's interview may be an effort to generate sympathy, and it succeeds by noting that at 78 years old, he recently had a triple bypass and is receiving treatment for cancer.  And he certainly is a colorful character, having played a minor role in the Melvin Dummar/Howard Hughes will contest in the 1970s.  Whether his standard for what is proper for a class representative will fly is another question. (ph)

    January 19, 2006 in Fraud, Legal Ethics, Prosecutions | Permalink | Comments (4) | TrackBack (6)

    Spinning the Media

    There is an interesting phenomenon recently in which defendants charged in white collar crime cases have been speaking out in the press about their cases and asserting their innocence (or at least lack of guilt).  In a story in the New York Times (here) that could be titled "Extreme Makeover -- Defense War Room Edition," former Enron CEO Jeffrey Skilling discusses how he built the rooms in Houston that his O'Melveny & Myers attorneys are using to prepare the defense at his upcoming conspiracy and securities fraud trial.  The article includes a discussion of his purchase of bathroom tile shelves from Home Depot and tables from Ikea, interspersed with the far more important message from his attorney that Skilling plans to testify at trial.  Skilling also gave an interview to the Associated Press (story here) that is similar to the Times article. 

    Skilling is not the only person to put his views out in public.  Co-defendant Ken Lay went even further in giving a speech (available here) to the Houston Forum in December in which he set forth his view that the "Enron Task Force investigation is largely a case about normal business activities typically engaged in on a daily basis by corporate officers of publicly held companies throughout the country."  Defendants normally do not telegraph their defense a month before trial, or attack the prosecutors as being misguided.

    In the Wall Street Journal (here), Seymour Lazar discusses the fraud and conspiracy charges against him for allegedly accepting secret payments to serve as the representative plaintiff in class action cases.  Lazar asserts that the payments are not illegal but only "referral fees" from the attorneys. 

    Going one step further, an AP story (here) states that the author of articles that portrayed Richard Scrushy in a sympathetic light during his trial states she was paid $11,000 by Scrushy in money that was funneled through other organizations.  The columns appeared in the Birmingham Times, a small newspaper that is the oldest African-American owned paper in the city, and Scrushy denies paying to have the stories written.  Assuming the jury adhered to the court's instructions, then the articles would have no effect on the outcome, but if stories were bought then it takes the issue of use of the media well beyond giving an interview to put forth one's side of the case.

    For the Enron defendants, their public discussions are part of an effort to negate the effects of the widespread negative publicity surrounding the cases arising from the Enron collapse that cost a number of jobs in the area in which they will be tried.  Lazar's case portrays the various lawyers as prototypical sharks, and the article's discussion of his age and health problems will put him in a more sympathetic light.  Is it a good strategy?  It's hard to say at this point, of course, but in white collar crime cases the issue usually is not whether the person engaged in the conduct, but whether they intended to commit an illegal act.  Intent is inferred from circumstantial evidence, so a discussion of the facts of the case will rarely implicate a person in conduct that the government could not otherwise prove, and an assertion of innocence does not add much to the prosecution's knowledge of the case or provide much insight into the defense strategy.  With clients that are used to being in the limelight, it may be one way to allow them to regain a bit of their lost luster at what is likely only at most a modest cost to defending the case. (ph)

    January 19, 2006 in Media | Permalink | Comments (0) | TrackBack (0)

    First CAN-SPAM Conviction

    The United States Attorney's Office for the Eastern District of Michigan announced the first conviction under the CAN-SPAM Act [Controlling the Assault of Non-Solicited Pornography and Marketing] Act of 2003.  The criminal provision, 18 U.S.C. Sec. 1037, prohibits anyone from knowingly doing the following:

    (1) accesses a protected computer without authorization, and intentionally initiates the transmission of multiple commercial electronic mail messages from or through such computer,

    (2) uses a protected computer to relay or retransmit multiple commercial electronic mail messages, with the intent to deceive or mislead recipients, or any Internet access service, as to the origin of such messages,

    (3) materially falsifies header information in multiple commercial electronic mail messages and intentionally initiates the transmission of such messages,

    (4) registers, using information that materially falsifies the identity of the actual registrant, for five or more electronic mail accounts or online user accounts or two or more domain names, and intentionally initiates the transmission of multiple commercial electronic mail messages from any combination of such accounts or domain names, or

    (5) falsely represents oneself to be the registrant or the legitimate successor in interest to the registrant of 5 or more Internet Protocol addresses, and intentionally initiates the transmission of multiple commercial electronic mail messages from such addresses . . . .

    A press release issued by the USAO (here) states:

    The information presented to the court at the time of the plea showed that between January 2004 and August 2004, Daniel Lin and others developed a business to market and sell certain products, including weight loss patches, so called "generic" viagra and cialis pills, and other products through the use of "spam" or bulk commercial electronic mail. Lin caused hundreds of thousands of email messages advertising these products to be sent containing falsified header information, or by routing the messages through other computers without authorization. In carrying out this scheme, Lin and others caused the introduction into the United States of prescription medications from India, in packages that did not declare their true contents, and sold these drugs in the United States without a prescription as required by the Food and Drug Administration.

    A small step, but at least it's a start.  Now, if someone could figure out how to stop those e-mails soliciting my help in arranging the transfer of large amounts of money from overseas banks. (ph)

    January 19, 2006 in Computer Crime | Permalink | Comments (0) | TrackBack (2)

    The Last Independent Counsel Report

    Independent Counsel David Barrett's investigation of former HUD Secretary Henry Cisneros and alleged attempts to thwart the investigation has finally concluded, after nearly 11 years and over $20 million, with the release of the Final Report (here).  Cisneros entered a guilty plea to a misdemeanor charge of lying to the FBI after an investigation into false statements related to payments to a former mistress he made as part of a background check for his cabinet appointment.  The investigation continued long after the plea in 1999 because of claims that the Clinton administration tried to keep the investigation from expanding into tax and obstruction of justice issues.  In the Executive Summary of the Final Report, Barrett states that "[a]lthough we are not able to say with certainty whether any criminal laws were broken, it is clear, I think, that there was questionable activity -- as well as inactivity -- by a number of government officials."  The Final Report and related documents is 474 pages, so it's not a quick read, and could even be a cure for insomnia.  This does bring an end to the Independent Counsel investigations, and Barrett's office set the record for longest IC investigation.  It's always nice to go out setting a record that will never be broken. (ph)

    January 19, 2006 in Government Reports | Permalink | Comments (0) | TrackBack (0)

    Wednesday, January 18, 2006

    Ralph Sampson Digs Himself a Deeper Hole

    Former NBA star center Ralph Sampson, who is 7-4, finds himself in a bad position after being charged with perjury and making a false claim related to an affidavit of financial need he filed to obtain appointed counsel in connection with charges of failing to pay child support (see U.S. Attorney's Office press release here).  Sampson, whose professional basketball career ended in 1992 due to injury, was charged in federal court in Virginia with failing to pay almost $250,000 in child support for two of his children who live in Northern Virginia, and he submitted the affidavit to demonstrate his lack of financial resources to hire counsel and requesting a court-appointed attorney.  This was the second time Sampson had been charged with failing to pay child support (see earlier post here), and he agreed to a plea bargain on the latest child support charge that will require him to pay the past-due amount to avoid a 30-month prison term.  The perjury and false claim charges will certainly make the hole he has dug for himself even deeper, if that's possible, and no doubt it will be harder for him to come up with both the back-payments and future child support.  A story on ESPN.Com (here) discusses the case. (ph)

    January 18, 2006 in Perjury | Permalink | Comments (3) | TrackBack (0)

    'Tis the Season for Embezzlement

    Earlier posts (here and here) discussed recent embezzlement prosecutions in Washington, D.C., and Maryland involving large amounts of money transferred by the defendants to fund rather lavish personal spending.  Another case in the District of Columbia seems to be the topper, at least for the victim missing a rather obvious sign that trouble could be looming.  Anna Anderson entered a guilty plea to wire fraud charges related to embezzling almost $900,000 from a lobbying firm.  Anderson wired funds from the firm's bank account into an account she opened at a Virginia bank, and then moved some of the money into her fiance's account.  A press release (here) issued by the U.S. Attorney's Office details Anderson's accounting of how she spent the money:

    [Anderson] acknowledged wrongfully taking between $500,000 and $600,000 from Global. She estimated that she had spent the money over in the following manner on goods and services for her own use: $40,000 on travel; $20,000 on clothes; $10,000 on purses; $10,000 on a Christmas party; $30,000 on decorations; $20,000 on down payments on cars; $5,000 on a sprinkler system; $6,000 on a gutter system; $9,000 on landscaping; $10,000 on a deck; $15,000 on general bills; $50,000 on past due bills and collections; $80,000 on jewelry; $18,000 on divorce proceedings; $22,000 on daycare; $130,000 on an upcoming wedding; $30,000 on an engagement party; $6,000 on a play set; $30,000 on furniture; and $8,000 on an intercom system.

    During this same period, the defendant and her fiancé made the following specific purchases, among others, using the illegally obtained funds: (1) a 2002 Mercedes Benz S430, for $40,466.61; (2) a Suzuki Hayabusa motorcycle and accessories for approximately $25,000; (3) a 1995 BMW 740, with approximately $14,800 being paid on the vehicle; and (4) a 2.01 carat diamond engagement ring set in platinum, with an appraised value of $33,296.55.

    What makes this different from the other embezzlements?  To start with, Anderson was convicted in Virginia just one year before she started working for the firm in 2004 for -- you guessed it -- embezzlement.  She was placed on six years probation for that offense, and of course was still on probation when the lobbying firm hired her as its bookkeeper.  I wonder who was responsible for checking her background before putting her into a position in which she was able to siphon hundreds of thousands of dollars without anyone noticing that nice Mercedes or 2 carat diamond engagement ring.  At least her taste is better than the defendant who used the embezzled money to buy a mink jacket with fox trim. (ph)

    January 18, 2006 in Prosecutions | Permalink | Comments (2) | TrackBack (2)

    Another Loss Avoided Insider Trading Case

    Has anyone heard this one before?  The SEC filed a settled civil enforcement action against Deog Jeong, a co-founder of Silicon Image, Inc., a Silicon Valley-based semiconductor company.  According to the SEC's litigation release (here):

    [O]n November 7, 2003, Jeong was informed by Silicon Image's Chief Executive Officer that the audit committee of the company's board of directors had launched an internal investigation into revenue recognition issues at the company. The complaint further alleges that within hours of learning this material, non-public information, Jeong sold 40,000 shares of Silicon Image at a price of $7.80 per share, in breach of the duty of trust and confidence he owed Silicon Image as a corporate insider.

    As the complaint alleges, a week later, after the close of the market on November 14, 2003, Silicon Image publicly announced that it would not timely file its Form 10-Q for the third quarter of 2003, because of the audit committee's recently launched internal investigation. After the announcement, the price of Silicon Image stock fell sharply the next trading day to close at $6.40 per share -- a 28% decline from the prior trading day's closing price. The complaint alleges that by unlawfully selling his shares of Silicon Image in advance of the announcement, Jeong avoided losses of $56,000.

    We've recently seen loss avoided cases against the former general counsel for Biogen (civil) and the former CEO of Qwest Communications (criminal).  In addition to disgorging the $56,000, Jeong paid a similar amount as a civil penalty.  It still isn't worth it. (ph)

    January 18, 2006 in Civil Enforcement, Insider Trading, Securities | Permalink | Comments (0) | TrackBack (0)

    Lengthy Sentences for Husband and Wife in Wendy's Severed Finger Hoax

    The stomach-turning story of the discovery of a severed finger in a bowl of Wendy's chili that was an attempt to scam the fast-food company resulted in sentences of 12 years for Jaime Plascencia and 9 years for his wife, Anna Ayala.  At the time of the March 2005 claim that she bit on the severed finger that her husband actually obtained from a co-worker, Ayala asked on camera, "Where would I get a damn finger?"  She has now expressed remorse for her conduct, stating that it was a "moment of poor judgment."  That was quite a moment, and all the media attention did not help Wendy's, which estimated that it lost $2.5 million in sales immediately afterward due to the negative publicity.  An AP story (here) discusses the sentencing. (ph)

    January 18, 2006 in Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)

    CEO of Rhode Island Hospital Fired Because of Corruption Indictment

    Roger Williams Medical Center in Providence, Rhode Island, was indicted along with its now former CEO, Robert Urciuoli, and two other officers, on corruption charges related to payments to a former state Senator.  The hospital rejected a plea bargain offered before the indictment on Jan. 5, and became the uncommon corporate defendant in a public corruption case.  After initially putting Urciuoli on paid administrative leave, the Medical Center's board fired him "for cause" on Monday, Jan. 16, after a long meeting.  With his termination, Urciuoli loses not only his severance pay -- which would be equal to 30 months of his salary -- but also the payment of his attorney's fees.  Urciuoli's attorney blasted the hospital, which originally stated that it would fight the charges, stating that the firing was "a regrettable attempt to appease the United States Attorney" and that "[w]e are appalled by the hospital Board's flip flop on the position it has taken for months on end concerning the legality of Bob Urciuoli's actions."  The board's move will likely trigger litigation with Urciuoli regarding whether the termination was "for cause" and whether he can recover his attorney's fees.  Regardless of how that turns out, the cost of his defense will be significant and put him under additional pressure.

    Rhode Island Governor Gov. Donald Carcieri has been critical of the Medical Center's board for not negotiating a plea with the federal prosecutors, and this latest turn likely signals that the hospital is trying to work out a deal with the government.  As a non-profit, it is likely that any punishment imposed on the Medical Center will not be significant because it could affect its ability to provide medical services to the poor.  An article from the Providence Journal (here) discussed Urciuoli's firing. (ph)

    January 18, 2006 in Corruption | Permalink | Comments (0) | TrackBack (0)

    Tuesday, January 17, 2006

    Office Assistant Stole HOW MUCH?

    Fraud Alert posted here a link to a press release of the USA for the District of Columbia that reports that a "former office assistant  pleads guilty to stealing $1.35 million from her employer."  According to the press release, "between January 1999 and October 2004, [this individual], who was then an office assistant for [ ] a Washington, D.C. based real estate management company, stole funds from her employer's bank accounts by issuing $1,354,376 in checks made payable to [her] or her creditors. To conceal her activities, [she] omitted material information from [the real estate companies] accounting records and removed cancelled checks from [their] monthly bank statements."

    The government has been very focused on compliance programs for the larger businesses.  This case tells the story of why all companies need to have fraud-detection controls in place. How one person could steal 1.35 million over a five year period, without anybody realizing anything, is truly amazing.


    January 17, 2006 in Fraud | Permalink | Comments (0) | TrackBack (2)

    Does a Police Officer Have Special Skills?

    According to the Chicago Tribune here, a police officer and supervisor (of "more than 100 officers at the city's airports") plead guilty to fraud for stealing "$4,000 earmarked for a ceremony to honor heroic police officers."  What will make this sentencing hearing particularly interesting is that both sides appear to be split on whether the officer's conduct constitutes a "special skill" for purposes of sentencing.  A sentence may be increased under the federal sentencing guidelines if the individual "used a special skill, in a manner that significantly facilitated the commission or concealment of the offense."  Post Booker, the court is left to first examine the guidelines and thus the need to determine whether the officer was using a "special skill."


    January 17, 2006 in Fraud | Permalink | Comments (1) | TrackBack (0)

    Transparency on Executive Pay

    The SEC voted for greater transparency in executive pay packages. (see here)  The new rules that have been published for comment:

    "would amend disclosure requirements for executive and director compensation, related party transactions, director independence and other corporate governance matters, and security ownership of officers and directors. The proposed rules would affect disclosure in proxy statements, annual reports and registration statements. The proposals would require most of this disclosure to be provided in plain English. The proposals also would modify the current reporting requirements of Form 8-K regarding compensation arrangements."

    Although pay packages received by executives may not be influenced by this new reporting requirement, it is likely that this transparency could assist in curtailing criminal activity.  For one, it provides a reporting method so that everyone knows the amounts involved and takes away any avenues that might have existed for under the table sources of income from a company.  Further, it also serves a benefit for executives now subject to this rule.  It is difficult to claim that moneys received were improper when there is full compliance with the reporting rules. (See also The New York Times here)


    January 17, 2006 | Permalink | Comments (0) | TrackBack (1)

    Bond on Appeal Didn't Last for Former Westar Exec.

    According to the Kansas City Business Journal here, Westar Executive David Wittig has lost his right to remain free pending his appeal.  Convicted for bank fraud (see post here), Wittig was sentenced to 51 months in jail. A court, however, found that he violated the terms of his release "by making numerous financial transactions with money he potentially would have to forfeit."   My gut reaction is that it is not common for courts to allow a defendant to be free pending appeal, although perhaps more common in the white collar scenario. Losing the privilege of remaining free because of a violation of one of the terms provided by the court is even less common. 


    January 17, 2006 in Sentencing | Permalink | Comments (0) | TrackBack (0)

    Monday, January 16, 2006

    Tokyo Investigation

    Investigation into alleged white collar criminal activity is not unique to the United States.  According to the Wall Street Journal here, Tokyo prosecutors "raided" the Livedoor Co. in a securities investigation.

    The Journal noted that the President of this company is a blogger.  One has to wonder if some of the material from his blogs will form the evidence should there ultimately be a prosecution.  Emails have been crucial in cases such as the Quattrone case, so one can only imagine what one might find in delving through the material of someone who might be tech savvy.  On the other hand, a blog might be a voice to influence people against those conducting the investigation.


    January 16, 2006 in International, Investigations | Permalink | Comments (0) | TrackBack (3)

    The Collateral Consequences of the Abramoff Plea

    More collateral consequences are being reported to the Abramoff Plea.  The Washington Post reports here on the political difficulties faced by Ralph Reed, a candidate for lieutenant governor in Georgia.

    Also reported in the Washington Post, here,  "Rep. Robert W. Ney (R-Ohio) announced yesterday he would temporarily relinquish his chairmanship of the House Administration Committee."

    Sometimes one has to wonder if it is better to be indicted, and have the chance to prove oneself innocent, than to have to defend allegations and rumors that have political and personal consequences.  It can be particularly hard on individuals in power positions, such a politicians and CEOS, as they are used to having control of a situation and this clearly causes them to lose some of that control.  On the other hand, if there is a potential for criminal liability, the waiting process - as difficult as it may be - might be the best of the available options.   Perhaps the most crucial aspect of recent happenings is that key individuals with power are getting a first hand view of some of the deficiencies of our legal process. 


    January 16, 2006 in News | Permalink | Comments (0) | TrackBack (0)

    Sunday, January 15, 2006

    Grand Jury Abuse by Prosecutors

    Grand Jury Abuse has been the subject of much concern. (See Commission Report to Reform the Grand Jury Process here).  So it is not surprising to see this issue arising in the white collar case against Lynchburg Mayor Carl Hutcherson, who faces charges of "mail fraud, Social Security fraud, lying to federal officials and obstruction of justice."  Conor Reilly of the News Advance has a wonderful article here detailing the allegations of grand jury abuse being alleged in this particular case. The article quotes Professor Darryl Brown at Washington & Lee on the incredible prosecutorial discretion provided to prosecutors in presenting items in a grand jury. Every time I teach the case of  United States v. Williams, 504 U.S. 36 (1992) I am reminded of the incredible unchecked power that prosecutors have in the grand jury process. It is important to stress to students that even though abuses in the grand jury may be overlooked on review, it does not mean that they should be tolerated. One would hope that the Office of Professional Responsibility of the Attorney General would monitor the abuses that occur.

    (esp) (hat tip to Jack King at NACDL)

    January 15, 2006 in Fraud, Grand Jury, Prosecutions | Permalink | Comments (0) | TrackBack (0)