Monday, January 23, 2006

Re-Sentencing Gets Same Sentence

Posted here was the Supreme Court's denial of certiorari in the case of Betty Loren-Maltese, an appeal in part premised upon the vagueness of the "honest-services" clause used in prosecuting federal fraud. the case pertained to an alleged insurance scheme. 

This Monday, Loren-Maltese was re-sentenced.  But according to the Chicago Tribune here the court rejected the prosecutor's arguments to increase the sentence and likewise did not reduce the eight-year sentence of the defendant. But the failure to reduce was probably difficult, especially with a Seventh Circuit decision [United States v. Spano, 421 F.3d 599 (7th Cir. 2005)] that included language of  "[t]he fraud, which continued until it was unmasked in 1996, has done nothing for the reputation of Cicero, a town notorious as the headquaters of Al Capone."


January 23, 2006 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Opening Statements - Bill Campbell Trial

Opening Statements in the trial of former Atlanta Mayor Bill Campbell were today. (See AJC here for details).  In examining the newspaper reports on the opening statements, it was clearly a day for the defense who personalized their client for the jury and emphasized his role as a civil rights leader. The defense agenda looks like  - "The city has over 8,000 employees" and the accused couldn't know everything.  I didn't know what my aides were doing seems to be a familiar theme in some of the recent corporate criminal prosecutions.

The defense noted that Bill Campbell could have left city hall for a lucrative law firm job.  He didn't, and that may be hard for the prosecution to overcome. If he were really after money, then why not take that route.

Although the defense had their day today, the next couple of weeks are likely to be in the prosecution's arena as they unfold the evidence supporting their case.  Like so many recent white collar trials, the prosecution will be parading out a host of individuals who cut deals, and the defense will likely be trying to show that these deals were to save their own necks. The jury is left to determine the truthfulness of these witnesses.

In reading about the opening statement of the defense team, it is interesting to now go back and see how the questions on the jury questionnaire reflected their defense.  This jury questionnaire (here) is a model that might be helpful to those who practice in courts that do not permit direct jury questioning. Some of the questions that give clues of the defense are:

15. Do you supervise others in your current job or in previous jobs? Yes___ No___ If so, how many?

46. Have you ever worked for a business where an employee has stolen money or property from the business? Yes ____ No ______  If yes, please explain.


January 23, 2006 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Japanese Authorities Move Quickly in White Collar Case

Reported here, just days ago, was the raid on Livedoor Co. as part of a securities investigation in Toyko.  It has not taken the Japanese authorities long to now arrest someone. The Washington Post reports here  and the New York Times here on the arrest of Livedoor's President, Takafumi Horie.  This case will be an interesting one to follow, to see how another country handles a prosecution of a major CEO type of individual. One also has to wonder the effect of such a prosecution internationally, as some of the products operate in the global marketplace.


January 23, 2006 in International, News, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Ameriquest Reaches a Deal With States

The Wall Street Journal reports here that Ameriquest Mortgage Co reached a settlement with State Attorney Generals in which the company will "pay $325 million and change some of its practices." The Ameriquest website here notes that:

"Ameriquest will implement a series of measures to enhance the company’s business practices while continuing to help consumers meet their mortgage financing needs.

The company acknowledged no wrongdoing and there are no restrictions or limitations on the company’s licenses."

The agreement calls for detailed changes such as "[u]sing third-party closing agents to help prevent conflicts of interest."


January 23, 2006 in Settlement | Permalink | Comments (1) | TrackBack (0)

Deferred and Non Prosecution Agreement Report

A Report called "Crime Without Conviction: The Rise of Deferred and Non Prosecution Agreements," was released in late December by Corporate Crime Reporter. (see here)  It provides fascinating data on the government's use of deferred and non-prosecution agreements, with detailed accounts of the many agreements formed between companies and the government. The report states that the government has entered into twice as many such agreements in the last four years than in the prior ten years, and that these agreements "have become the settlements of choice for prosecutors and corporate defense attorneys."

So is this a negative? Some may believe that failing to have a full prosecution, followed by a conviction, is less favorable to our justice system.  It might be argued that these agreements diminish the deterrent effect of corporate criminality by failing to proceed to a formal conviction against the company.

Two Responses: 

1) First, there is another component that may also play a factor in the increase in the use of these agreements. This is the institution and progression of the corporate criminal sentencing guidelines.  The carrot-and-stick approach to these guidelines may in fact be producing favorable responses that allow the government to avoid proceeding criminally and move instead to reprimanding the corporation for its failure to have full compliance with the corporation's compliance program.  After all, corporations are basically mandated to have an "effective program" as corporate directors can be civilly obligated to institute these measures (see In re Caremark International Inc. Derivative Litigation) Yet, we all know that if the compliance program was really "effective," there would be no criminality.  But the very institution and existence of such a program demonstrates an attempt at avoiding criminal activity. Thus, the corporate sentencing guidelines may have the net effect of reducing criminal charges and likewise reducing criminal conduct in a corporation. 

Obviously, this does not preclude individuals within a corporation from committing crimes. Thus, we see the DOJ move to prosecute more individuals and less corporations. The Corporate Crime Report's conclusion that we have moved from a criminal justice system that "save[s] the individuals and plead[s] the corporation" to a system where "the individual executives are sacrificed to save the corporation," may thus be, in part, an outgrowth of the institution of the federal sentencing guidelines. But that said, it is clear that the Thompson Memo encourages corporations to give up individuals and inappropriately demands the waiver of the attorney-client privilege, actions that also play a part in the increased individual prosecution and reduction in corporate criminal convictions.

2) Second, these agreements should not be considered a negative in the fight against corporate criminality. Many of these agreements produce substantial income to the federal government and provide for victims to receive funds (e.g., Aetna Life Insurance paid 5.2 million in fines and restitution; AOL paid a 60 million dollar fine and 150 million into a victims settlement account; Bristol-Myers Squibb is paying 300 million, etc.).  Are these fines any different than what would have been achieved if the company were prosecuted?  This is especially true since a corporation cannot be incarcerated.

Punishment comes in many forms, and corporations are certainly not skating from punishment by entering into these agreements.

Now mind you, there are clearly some negatives to many of the existing deferred prosecution agreements.  But perhaps the negatives go to the internal provisions within these agreements, provisions that are fundamentally unfair.


January 23, 2006 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Sunday, January 22, 2006

Former Mayor Bill Campbell's Trial Begins

Jurors for the trial of former Mayor Bill Campbell (post) have been selected (AJC here).  The jury consists of seven blacks and five whites, and seven men and five women. (post here) Last week pre-trial motions resolved some of the evidentiary issues that might arise in the trial. (AJC here).  The AJC has extensive coverage of this trial on a webpage here that includes links to the jury questionnaire, artist sketches, and profiles of the jurors. Opening statements and evidence starts this week.

Individuals accused of white collar crimes usually hang their heads and go into hiding.  Recently, however, some have not followed this protocol.  For example, Richard Scrushy, who was acquitted, had his own website. (see here)  Ken Lay, who faces trial, likewise has his own website. (see here) And Bill Campbell gave a press conference the day of this indictment.  One day this past week Campbell provided morning radio comments, restating his innocence. (see here).  For many years defense attorneys have told their clients to say nothing, especially to the media, as what the client says may come back to haunt him or her at trial.  Perhaps those accused of white collar offenses are starting a new trend in being more public on the web and with the media.


January 22, 2006 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

What is Favorable Press in a Trial?

AP reports here regarding claims that Richard Scrushy paid for favorable press in his trial.  Scrushy, in response, has a statement on his website here denying the claim.  The bottom line is - does it make a difference since the jurors should not have been reading newspaper articles related to the case.


January 22, 2006 in HealthSouth, Media | Permalink | Comments (0) | TrackBack (0)