Friday, November 30, 2007

Beware of a Higher Sentence for Vick

Two of Michael Vick's co-defendants in the federal dog-fighting case received sentences at the high end of the Sentencing Guidelines range, which may portend a longer prison term for Vick at his sentencing in December.  The applicable range for the co-defendants was 12-18 months and 18-24 months, based on their prior criminal histories, and they received sentences of 18 and 21 months.  U.S. District Judge Henry Hudson gave the higher sentences because "[y]ou may have thought this was sporting, but it was very callous and cruel."  Vick may be in a lower sentencing range under the Guidelines, but could well receive a sentence higher than my earlier prediction (see Vick's Thanksgiving post) of a year-and-a-day and instead be looking at 15 to 18 months.  Vick surrendered himself earlier in November to begin the prison sentence, and a sentence of even 15 months would keep him in prison or a half-way house through all of the 2008 NFL season. An AP article (here) discusses the sentencing of Vick's co-defendants. (ph)

November 30, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Dickie Scruggs Is in a Heap of Trouble, But Did the Government Charge the Right Crimes?

Mississippi plaintiffs tort lawyer Dickie Scruggs, his son, another lawyer in his firm, and a lawyer and staffer from a different firm have been charged in a six-count indictment (available below) with trying to bribe a Mississippi state court judge to rule in their favor in a dispute over claims to $26.5 million in attorney's fees.  Scruggs was charged earlier with contempt in federal court in Alabama related to his conduct in litigation involving State Farm over insurance coverage from Hurricane Katrina (also available below).  The current indictment includes conspiracy, Sec. 666 bribery, and wire fraud/honest services counts (Sec. 1346), and these charges could result in a substantial prison term.  The federal prosecutors allege that Scruggs and the others tried to pay the judge in the attorney's fee dispute $50,000 in bribes to rule in his favor.  Rather than take the money, the judge went to the FBI and agreed to work undercover.

The centerpiece of the government's case is a tape recording of a meeting between the judge and the lawyer from another firm in which they discuss the payment and the fact that Scruggs could be counted on to keep quiet about it because of all the "bodies buried" over the past six years.  The recorded conversation includes the following quoted in the indictment:

“We, uh, like I say, it ain’t but three people in the world that know anything about this . . . and two of them are sitting here and the other one . . . the other one, uh, being Scruggs . . . he and I, um, how shall I say, for over the last five or six years there, there are bodies buried that, that you know, that he and I know where . . . where are, and, and, my, my trust in his, mine in him and his in mine, in me, I am sure are the same.”

That sure is eloquent, isn't it?  The conspiracy charge is the key here, because the tape recording is hearsay as to Scruggs and the other defendants not present, except that statements by one conspirator in furtherance of the conspiracy -- which this certainly is -- are admissible against all other members under FRE 801(d)(2)(e).

The Sec. 666 charge makes it a crime to offer anything of value to a state or local official with the intent to influence or reward the official "in connection with any business, transaction, or series of transactions" of the government agency.  This is not the typical Sec. 666 case, in which the official usually is an administrator or elected official steering a contract or other government benefit to the offeror of the bribe.  Here, the state judge allegedly was being asked to rule in favor of Scruggs to the detriment of the opposing parties in the attorney's fee suit, so the government was unharmed, and indeed Scruggs and the others had no intention to cause the government any loss.  Does this fall outside of Sec. 666 if the government is not the intended victim?  The statute could be read that narrowly, but the courts, led by the Supreme Court, have construed Sec. 666 fairly broadly, so the charge will probably survive a challenge.  The fact that the judge might have ruled in their favor in the suit is irrelevant to the bribe because the propriety of the decision is not an issue.

The wire fraud charge based on the right of honest services theory may be a bit more difficult to defend as charged in the indictment.  These two counts allege that Scruggs and the others sought to deprive the citizenry of Mississippi of the honest services of the state judge as part of a wire fraud scheme.  The judge is supposed to perform is job "free from deceit, bias, self-dealing and concealment" according to the indictment.  Honest services fraud is a rather malleable concept, to say the least, and the statue has been used in a variety of public corruption cases.  The problem is that Scruggs and the defendants did not owe the state a fiduciary duty, and the real victim of the crime was the opposing party in the attorney's fee lawsuit, and only indirectly the state if the judge had taken the bribe.  Absent the judge's participation, and he clearly was not going to accept the bribe, was there a scheme to defraud Mississippi of honest services, or is this case better cast as a scheme to defraud the litigants of an honest judge by depriving them of whatever value the lawsuit had?  The better victim might well have been the opposing party because the defendants were trying to take money, or at least the opportunity for a fair claim to the attorney's fee, and not the more ephemeral right of the citizenry to an honest judge.  That said, prosecutors love to charge honest services fraud with public servants, even when they are not corrupt themselves, and I suspect any defense challenge based on failure to charge an offense will likely fail.

The federal anti-corruption laws are a bit of a mishmash, with the key to cases being things like "honest services fraud" or showing under Sec. 666 that a state or local agency received $10,000 in a twelve-month period from the federal government.  As I've argued before (see my article Federalism and the Federal Prosecution of State and Local Government, 92 Kent. L.J. 75 (2003))), federal prosecutors have a crucial role to play in policing corruption at the state and local level.  While there are efforts in Congress to expand Sec. 666 and make it a bit easier to pursue these types of bribery, skimming, and embezzlement cases through other modest changes (see S. 1946 here), it may be even more helpful to prosecutors to have coherent laws that don't rise and fall on how a court construes the scope of a phrase like "honest services fraud."  But then, asking for coherence out of Congress may be just a bit too much.  (ph)

Download us_v_scruggs_indictment_nov_28_2007.pdf

Download us_v_scruggs_contempt_charge_aug_2007.pdf

November 30, 2007 in Corruption | Permalink | Comments (0) | TrackBack (2)

Thursday, November 29, 2007

Sentencing for White Collar Crimes Article

The sentencing of white collar defendants, especially high-profile corporate executives convicted of a variety of fraud-related offenses, has been in the news a great deal these days.  From the 20+ year sentences handed out to Bernie Ebbers and Jeffrey Skilling to the upcoming sentencing of Lord Conrad Black in which the government has asked for upwards of 30 years, the severity of these punishments has called into question the rationale and efficacy of sentencing in white collar crime cases.  Blog co-editor Professor Ellen Podgor has a new article that will appear in the Journal of Criminal Law & Criminology entitled "The Challenge of White Collar Sentencing."  The abstract states:

Sentencing white collar offenders is difficult in that the economic crimes committed clearly injured individuals, but the offenders do not present a physical threat to society. This Article questions the necessity of giving draconian sentences, in some cases in excess of twenty - five years, to non - violent first offenders who commit white collar crimes. The attempts by the U.S. Sentencing Commission to achieve a neutral sentencing methodology, one that is class - blind, fails to respect the real differences presented by these offenders. As the term white - collar crime has sociological roots, it is advocated here that sociology needs to be a component in the sentencing of white collar offenders.

The article is available on SSRN here. (ph)

November 29, 2007 in Scholarship | Permalink | Comments (1) | TrackBack (0)

Getting Ready for the Sentencing in US v. Black

Both sides filed their objections to the presentence report (PSR) in the prosecution of Lord Conrad Black and three other former Hollinger International executives -- Peter Atkinson, John Boultbee, and Mark Kipnis -- mail fraud charges in connection with non-compete payments.  Lord Black was also convicted for obstruction of justice related to his removal of boxes of documents from his Toronto office while the SEC was investigating the company, a conviction that may have a significant effect on the final sentence imposed.  While the PSR is not made public, the objections filed by both sides are, and we can get a pretty good idea of what the Probation Office is recommending, and where U.S. District Court Judge Amy St. Eve may end up in the sentencing.  Each of the filings is available below.

Two key points in the calculation under the Federal Sentencing Guidelines is the amount of the loss and which version of the Guidelines will be applied.  The former is the primary driver of the sentence, and the choice of which edition will be used can effectively increase the sentence by up to three times.  For Atkinson, Boultbee, and Kipnis, the PSR recommends the 2000 version (here) in effect at the time of the primary transaction for which they were convicted.  For Black, the recommendation is to use the current version of the Guidelines (here) because his obstruction of justice took place in 2005, and so the more recent version should apply -- there is no significant difference between the 2005 and 2007 editions, so the current one works just as well.  Black objects to the use of the more recent version, while the government objects to applying the 2000 version to the other three defendants, arguing that all should be subject to sentencing under the 2007 Guidelines. 

On the loss issue, the PSR calculates the amount at $5.5 million, based on the dollar figures involved in the transaction that formed the basis for the convictions of all four defendants.  Needless to say, each side objects to the loss calculation.  The defendants argue that the amount should be limited to their individual gain from the diversion of funds through the non-compete agreement, not the total, and even seek a lower figure, such as Atkinson's recommendation of $15,000 as the loss to Hollinger.  Meanwhile, the government has proposed a $32.15 million figure based on relevant, i.e. acquitted, conduct connected to other diversions charged in the case.  While Judge St. Eve could opt to use the higher or lower amounts, I suspect she will adopt the PSR calculation because it reflects the total amount in the transaction on which the jury convicted and does not give the defendants a discount for what they didn't take directly. 

Using the $5.5 million figure illustrates the difference between the potential sentence depending on which version of the Guidelines applies.  Under the 2000 version, the loss amount would increase the sentence by 14 offense levels, on top of the base offense level of 6.  Adding in potential enhancements for more than minimal planning and abuse of a position of trust brings the offense level to 24.  The sentence under the Guidelines would be 51-63 months, a bit over four years, and if the Judge grants a minor role adjustment to a defendant then the sentence could drop into the 37-46 months range.  Using the 2007 Guidelines, on the other hand, starts with a base offense level of 7, then the increase for a $5.5 million loss would be 18.  Under the Sarbanes-Oxley Act, the conviction of a corporate executive, such as the CEO, triggers an additional four-level enhancement, and add to that Black's obstruction of justice which can add another two levels.  He would be looking at a sentence of 108-135 months, and it could easily jump to 151-188 months if other enhancements are applied -- more than ten years

The selection of the applicable version of the Guidelines probably will be among the first issues Judge St. Eve decides at the sentencing, and the year chosen will give an early indication about whether she will impose a substantial term of imprisonment on the defendants.  Each of the defendants argues that the Guidelines calculation overstates the severity of the offense, a position I doubt the Judge will accept.  They also argue for a below-Guidelines sentence based on personal factors related to the defendants.  As we've come to expect in corporate executive cases, the defendants -- especially Black -- have had a number of letters written on their behalf urging Judge St. Eve to go lightly on the sentence.  Black's brief also devotes a lot of space to recounting his personal background to show what a good individual he is.  That argument might not strike a cord with the court, given that at one point during the trial the Judge told Black's counsel to rein in his client because of Black's somewhat intemperate comments to the press. 

Of course, the sentencing is just the final stop in the district court before the case leaves for the Seventh Circuit.  It will be interesting to see what issues each defendant advances in their briefs, and the oral argument is sure to be grueling given the number of lawyers who will be addressing the court. (ph)

Download us_v_black_atkinson_sentencing_memorandum_nov_27_2007.pdf

Download us_v_black_boultbee_sentencing_memorandum_nov_27_2007.pdf

Download us_v_black_kipnis_sentencing_memorandum_nov_27_2007.pdf

Download us_v_black_sentencing_memorandum_nov_27_2007.pdf

Download us_v_black_government_objections_to_psr_nov_27_2007.pdf

November 29, 2007 in Fraud, Securities, Sentencing | Permalink | Comments (1) | TrackBack (0)

Get Me the Geeks!

You just can't make some of this stuff up, even if you tried to while writing a final examination.  The head of the Office of Special Counsel, Scott Bloch, is purportedly leading the investigation of improper political briefings at agencies and alleged misuse of government resources to support Republican candidates by White House aides, including former senior adviser Karl Rove.  According to its website, the OSC "is an independent federal investigative and prosecutorial agency. Our basic authorities come from three federal statutes, the Civil Service Reform Act, the Whistleblower Protection Act, and the Hatch Act."  To call OSC obscure, at least in the pantheon of Washington D.C. offices involved in high-profile investigations, is an understatement.  A Wall Street Journal article (here) gives us the Felliniesque specter of Bloch possibly destroying files, or dare we say e-mails, from computers in his office while being investigated himself by the IG of the Office of Personnel Management for allegedly retaliating against staffers and dismissing whistleblower complaints improperly.  Not exactly something to inspire confidence.

According to the Journal, Bloch brought in a computer technician from "Geeks on Call" -- surely a fun bunch -- to eradicate a virus on his computer.  He apparently didn't bother to contact OSC's tech department.  What the Geeks did was conduct a so-called "seven-level wipe" which gets rid of virtually everything on the computer, making it impossible to reconstruct files.  As the article notes, that's not the usual way to get rid of a virus, and in addition to his computer, Bloch had the computers of his two top political deputies who had recently left OSC wiped clean too.  I'm not aware of many computer viruses that only invade the computers of the head of an office and two top deputies, but then this computer stuff is beyond me.  We all know how much trouble e-mails can cause, because for some reason people seem to think that when they hit "send" -- or "delete" -- the message no longer exists.  Using an outside service to wipe clean the hard drive is perhaps equally questionable, but whether there was anything suspicious, or even incriminating, on the hard drives of the computers will likely remain a mystery.  Thus, that old D.C. favorite: plausible deniability.

Whether the OSC's investigation of possible Hatch Act violations goes anywhere is certainly an open question, and there may not be much hope that any recommendation from Bloch will be noticed.  With Rove gone from the government, he is outside OSC's jurisdiction.  The Journal notes that Bloch recommended disciplinary action against another federal official for a Hatch Act violation related to the political briefings, but to this point the recommendation has not been acted on by the White House.  Would "ignored" be a better word? (ph)

November 29, 2007 in Investigations | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 27, 2007

McFarland - Unpublished

Doug Berman's Sentencing Law & Policy Blog is getting traffic on the 30 year sentence that was affirmed in an unpublished opinion by the Eleventh Circuit. (see posts here and here) And the comments he is receiving are very telling. (see here).  A copy of the opinion and our original post can be found here.

So can a 30 year sentence for a first time white collar offender on a mortgage fraud case be justified.  Many blame the prosecution for asking for this draconian sentence. And then there is also the sentencing guidelines that allow for this sentence.  But I keep going back to the remarks of President Bush when he said of Scooter Libby's sentence that it was "excessive."  I keep wondering how he feels about McFarland's 30 year sentence.   

My recent article on SSRN titled, "The Challenge of White Collar Sentencing" questions the necessity of giving draconian sentences in white collar cases. It looks at whether the attempts to achieve a class-blind sentencing system end up with a disregard for real differences.

But there is something else that I can't help but keep thinking about, and that is the fact that this is an unpublished opinion. A review of a thirty year sentence for a first offender provides nothing new to the legal literature? It is good to see Professor Berman noting how this decision is in tension with the Rita decision. (see here). 

(esp)

November 27, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

The Wyatt Sentence

As noted here, Oscar Wyatt received a sentence of a year and a day on his guilty plea.  Tom Kirkendall at Houston ClearThinkers calls it "Hedging the Trial Penalty."  This sentence for Wyatt's role in the U.N.'s Oil-For-Food program is a below guidelines sentence.  It is a sentence being given to an 83-year-old man who pleaded guilty mid-trial to conspiracy to commit wire fraud. As noted here he faced an enormous risk in going to trial.  On one side you have him waiving the right to a jury trial.  On the other side he is choosing not to roll the dice and risk the chance of a guilty finding after a jury trial, a finding with severe ramifications because of the higher sentence given post-trial.

But should individuals receive a higher sentence because they avail themselves of their constitutional right to a trial by jury?  Is efficiency so important to our system that we should so heavily reward individuals who enter pleas?

(esp)

November 27, 2007 in Sentencing | Permalink | Comments (1) | TrackBack (0)

NatWest Hearing Today

Tom Kirkendall of Houston Clearthinkers reminds us here that there will be a hearing today for the NatWest 3. And the predictions are appearing that something may happen today - The Guardian Unlimited titles their piece "Three May Plea Bargain Over Enron Charges." The Houston Chronicle (see here) also calls it a "rearraignment" or as some may say - an opportunity to change one's plea to guilty.  the charges may be different from the original wire fraud charges, but that remains to be seen - as does whether these three will plead to any charges. The three British bankers were a source of controversy during their extradition to the United States. (see here).

(esp)

Addendum - As anticipated, there was a plea.  See Houston Chronicle here.

November 27, 2007 in Enron | Permalink | Comments (0) | TrackBack (0)

Oscar Wyatt - 1 Year and a day

The Houston Chronicle headline is "Oscar Wyatt Receives 12 Month Sentence." (see here). Commentary to follow - stay tuned.

(esp)

November 27, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

When Fraud Is Your MAC

Corporate acquisitions can be quite lucrative, and when a merger agreement goes down the tube it can be a particularly nasty affair.  But can a failed merger be the basis for a criminal investigation?  Specialty retailer Genesco Inc. is involved in a nasty fight with The Finish Line and investment bank UBS over their moves to back out of a deal to buy Genesco for $54.50 on the grounds that Genesco's financial statements were, shall we say, less-than-completely forthright.  In the parlance of the M&A world, that's called invoking the MAC (Material Adverse Change) clause, a provision in the merger agreement that allows the acquirer to get out of a deal due to changed circumstances, although it's usually something more than a shift in market conditions.  For the best coverage on the current MAC controversies swirling around several companies in addition to Genesco, please check Professor Steven Davidoff's thorough analysis over at the inestimable M&A Law Prof Blog

This would appear to be an ordinary fight between corporations in which each side blusters and rattles legal sabers, only to reach an agreement to settle the matter in which everyone goes away unhappy -- except the lawyers, of course, who never come out on the short end.  Only this time someone has upped the ante, because the U.S. Attorney's Office for the Southern District of New York has sent a grand jury subpoena to Genesco requiring the production of documents related to the merger agreement.  A Genesco press release (here) states that "the documents are sought in connection with alleged violations of federal fraud statutes."  That would be the mail, wire, and securities fraud provisions, no doubt.  Genesco's CEO is quoted in the release stating, "The U.S. Attorney subpoena comes on the heels of the baseless fraud allegations made by UBS ten days ago. These allegations are completely without merit and are simply part of UBS’ litigation tactics to avoid their contractual obligations; we will fully cooperate with the U.S. Attorney in connection with their inquiry. Most importantly, we will not be deterred from enforcing our rights under the merger agreement.”  In other words, UBS called out the big dogs on this one, and Genesco isn't going to roll over (to keep with the canine metaphor).

A grand jury subpoena as a litigation tactic?  The legal battles over M&A deals can be rather contentious, to say the least, and getting the upper-hand on an opponent as leverage for a settlement is common.  A grand jury investigation is something else altogether, though, because once started it takes on a life of its own, and the parties cannot terminate it as part of a global settlement of their claims.  It would be more than a bit scary if a U.S. Attorney's Office did the bidding of one side of a corporate deal, and one would at least hope that the prosecutors were shown something to indicate that this is more than the usual overheated rhetoric that accompanies most corporate litigation -- where everyone claims to want their day in court and no one ever seems to end up there.  Whether there's anything more than smoke here remains to be seen.  But look for references to Genesco's press release to appear in the next filing by Finish Line and UBS in the civil litigation.  (ph)

November 27, 2007 in Fraud, Investigations | Permalink | Comments (0) | TrackBack (0)

Monday, November 26, 2007

McFarland Sentence Affirmed With Unpublished Opinion

The 11th Circuit affirmed the conviction and sentence of Chalana McFarland with a 14 page unpublished opinion.  This first offender had her 360 - month sentence (yes, 30 years) affirmed for crimes of "money laundering, bank fraud, wire fraud, and conspiracy to commit such acts as well as obstruction of justice and perjury." The court states that "McFarland and her co-conspirators defrauded mortgage lenders and insured depository financial institutions by inflating the fair market values of properties which were then used to secure fraudulent loans for straw buyers."  The sentence in this case appears to a large extent to be a function of the numerous charges filed (170 counts) and the calculation of loss.  In its decision, this appellate court states -- in response to a defense argument -- that the trial court "felt duty bound - not legally bound - to sentence within the Guidelines range."

For some of the prior posts, and background on this case, see here and here.

The opinion is here.

(esp) 

November 26, 2007 in Sentencing | Permalink | Comments (1) | TrackBack (0)

Indictment - Brooke Astor's Son and Attorney

The NYTimes reports that Brooke Astor's son and one of her former lawyers were indicted.  The case emanates from an investigation of the "Elder Abuse Unit, which is part of the Special Prosecutions Bureau of the [Manhattan] district attorney’s office." 

(esp)

November 26, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Sunday, November 25, 2007

BAE Investigation

Nelson D. Schwartz and Lowell Bergman have a fascinating NYTimes article titled, "Payload Taking Aim at Corporate Bribery" here.  And without doubt, the BAE investigation is one that needs to be followed. The article details some of the major Foreign Corrupt Practices Act (FCPA) cases of recent vintage. And it notes that Alice Fisher, head of the DOJ Criminal Division is noting the increased prosecution of FCPA cases, and saying the trend will continue. For a discussion of some of the FCPA investigations and cases discussed on the blog - go here. It is interesting to see that TRAC reports white collar crime prosecutions as being down (see here), and Ms. Fisher is saying that FCPA cases are up. Are FCPA not included in the white collar figures?  Or is that other forms of white collar crime are so very low to allow for this higher number here? 

(esp)

November 25, 2007 in FCPA | Permalink | Comments (0) | TrackBack (0)

FCPA - Getting a Basic Education

How does the DOJ interpret the Foreign Corrupt Practices Act (FCPA), and what guidance is available to those attempting to understand its language?

Actually there is more available than one might suspect.  First there is a lay person's guide on the DOJ website here. And then there are opinion releases found here.  The one problem with the web-based opinion releases is that one doesn't find an index available and thus, one may have to hunt through the many there to find applicable guidance - or ask again. But as websites go for the DOJ, this is clearly one of the better ones, with helpful guidance to businesses in that interpretations are offered. For those who advocate for administrative rule-making, you can appreciate what is offered here. 

(esp)

Addendum - Another place to find materials/cases on FCPA - see here (Shearman & Sterling site)(w/ a hat tip to Paul Lekas)

November 25, 2007 in FCPA | Permalink | Comments (0) | TrackBack (0)

Saturday, November 24, 2007

Former Telcom Owner Gets Three Years

A DOJ Press Release reports that "[t]he former president and owner of ATE Tel Solutions Inc., which does business as ATE Telecom Solutions Inc. (ATE Tel), was sentenced to serve three years in prison following his conviction for his involvement in a scheme to defraud the federal E-Rate program, the Department of Justice announced today."  The case originated as an Antitrust investigation and "resulted from an ongoing national investigation of fraud in the E-Rate program."  The conviction was for 9 counts of wire fraud.

(esp)

November 24, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Pay-To-Stay Programs in Correctional Facilities

Michigan's Online Journal - First Impressions - has a symposium on Pay-to-Stay Programs in Correctional Facilities.  See here.

(esp)

November 24, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Deferred Prosecutions Article

Deferred and non-prosecution agreements are fast becoming the accepted means for corporations to settle a range of criminal investigations, from FCPA violations to healthcare fraud to accounting problems.  What little law there is in the area has developed haphazardly, and there has not been much attention paid to these agreements in academia.  Stetson law professors Candace Zierdt and Ellen Podgor, co-editor of this blog, have contributed to the discussion with their new article, Corporate Deferred Prosecutions Through the Looking Glass of Contract Policing.  From the abstract:

This article examines deferred and non-prosecution agreements entered into between corporations and the Department of Justice (DOJ) through the lens of contract policing theory. It adds a new dimension to the contractual law now applicable to plea bargains and proffer agreements by suggesting key provisions that should be prohibited in deferred prosecution agreements. Three provisions common to many deferred prosecution agreements, or used by the government as leverage to secure a deferred prosecution agreement, are of particular interest here. These are: (1) the requirement of a corporation to waive its attorney-client privilege; (2) the determination of a breach of the agreement being within the sole province of the government; and (3) the provision that corporations not abide by previously negotiated contract terms that allow the corporation to pay the attorney fees of corporate employees. Specifically, this article examines the viability of specific provisions within these agreements when matched up against contract policing principles such as duress and unconscionability. This article concludes that corporations are deprived of basic contract rights as a result of the over-powering prosecutorial power used in reaching these agreements.

The article is available to download on SSRN (here). (ph)

November 24, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, November 23, 2007

What's the Evidence in the Bonds Case?

The prosecution of homerun king Barry Bonds for four counts of perjury requires prosecutors to establish that he lied and not just made misleading statements.  The testimony recounted in the indictment shows Bonds clearly denying any knowing use of steroids, and placing his inadvertent use of "the cream" in and around the 2003 season.  A "literal truth" defense (see earlier post here) will be difficult to mount when the testimony is explicit and a clear denial.  To prove Bonds lied, prosecutors will need to produce evidence that he did in fact use steroids at various times, and that it was done at least with his knowledge of a strong possibility that what he ingested or administered into his body was steroids.  While the indictment identifies the alleged lies, it says almost nothing about the government's proof to show the statements were in fact false, and Bonds' knowledge of their falsity.

One avenue of evidence involves documents seized from Balco (Bay Area Laboratory Cooperative), which was the source of the steroids Bonds allegedly used.  There is a reference in the indictment to an exchange in the grand jury in which the prosecutor shows Bonds a Balco document with a date for possible steroid use and the notation "BB" next to it, but Bonds disclaims any use at that time.  The purported creator of the document is former Bonds trainer Greg Anderson, who refused to testify before the grand jury and his attorney recently vowed in an interview (see MSNBC story here) that he will not testify at trial.  Anderson would be key to identifying whether BB is Bonds, and he can authenticate the documents for admission in to evidence.  While there is a chance prosecutors will call Anderson at trial to at least get the documents into evidence, I doubt they will go down that road.  There may be other means to have the document admitted.  Moreover, Anderson has shown no willingness to provide any information that could harm Bonds, and if he were to testify prosecutors would have no idea what he would say.  He could even "fall on his sword" and testify as a means to exculpate Bonds.  While that would subject Anderson to the risk of a perjury prosecution, it would be little comfort to prosecutors if Bonds were found not guilty based on reasonable doubt raised by Anderson's testimony.  If he refuses to testify at trial, Anderson could be charged with criminal contempt, but that doesn't help prosecutors much in the Bonds case and gives at least the appearance of vindictiveness against Anderson, who has made his position clear.

Other sources of evidence speculated about in the press (see AP story here) include a former long-time friend and business partner of Bonds and a former mistress, but each carries significant baggage and would not be particularly strong witnesses, or at least not the type of witness on which one centers a case.  A likely source of information may be documents and testimony from the staff of the San Francisco Giants, Bonds' former employer for fifteen years.  In July 2006, prosecutors allowed the term of an earlier grand jury investigating Bonds to expire because the government had just received Bonds' team medical records pursuant to a subpoena.  Those documents, and perhaps testimony from medical personnel with the Giants, could be used to establish his likely usage of steroids, thus bolstering the testimony of any witnesses who might recount statements made by Bonds about his steroids use.  In the credibility battle like to unfold at trial, the documents can be the government's best evidence because they don't hold a grudge or have deals with prosecutors.

As a final note, one criticism of the indictment from the media and even Bonds' lawyers was the delay in seeking the charges, that the government had all its evidence back in 2005.  The problem with this criticism is that it's not yet clear what evidence the prosecutors plan to use, and whether they obtained any in the past year or so.  For example, the medical records were not delivered until July 21, 2006, and that was over the objection of Bonds, who tried to quash the subpoena to the Giants (see San Francisco Chronicle story here).  Anderson spent over a year in jail for civil contempt because he refused to testify before the grand jury, and prosecutors cannot be faulted for trying to obtain information from a potentially key witness that results in delaying the investigation.  The Bonds case played out over a long period of time, but whether that is a ground for criticism is certainly not clear. (ph)

                                                                           

UPDATE: A New York Times story (here) indicates that Bonds is shopping for new counsel with more experience in federal prosecutions, something lacking on his current legal team.  There are plenty of outstanding white collar defense counsel in San Francisco, although a local attorney is not necessary for a case like this, so the search may well involve lawyers throughout the company.  Whoever wins the sweepstakes will see his or her name in the newspaper and on ESPN quite a bit. (ph)

November 23, 2007 in Obstruction, Perjury | Permalink | Comments (0) | TrackBack (0)

Ashcroft's Bounty

Thanksgiving is a time to express gratitude for the benefits of the previous year, and former Attorney General John Ashcroft may well be counting quite a few of them from his appointment as an outside monitor for Zimmer Holdings, Inc.  The company was one of four medical device makers that entered into a deferred prosecution agreement (here) with the U.S. Attorney's Office for the District of New Jersey in September 2007 that included the now-standard provision requiring the appointment of an outside monitor.  According to a Newark Star-Ledger column (here), U.S. Attorney Christopher Christie approved the appointments of the monitors that included two former U.S. Attorney's and his former boss at the Department of Justice.  The Ashcroft Group LLC, which advertises itself on its website (here) as specializing "in strategic consulting for corporations worldwide in homeland security, corporate governance, litigation strategy, and data security," expects to charge Zimmer somewhere between $29 million and $52 million for the eighteen months that the firm acts as a monitor.  That's not a bad payday, and Zimmer -- like every other company that enters into a deferred or non-prosecution agreement -- can hardly object to the fees lest it look uncooperative and bring down the wrath of the U.S. Attorney's Office.  So much to give thanks for this Thanksgiving. (ph)

November 23, 2007 in Investigations | Permalink | Comments (0) | TrackBack (0)

Thursday, November 22, 2007

Vick's Thanksgiving

Former Atlanta Falcon's quarterback Michael Vick opted to begin his expected prison term almost three weeks before sentencing when U.S. District Judge Henry Hudson signed an order (available below) directing the U.S. Marshal to "take custody of the Defendant immediately upon his surrender."  By choosing to start his term now, Vick probably will spend his first -- and I suspect his only -- Thanksgiving in prison.  While the maximum term Vick is facing is five years, I expect he will receive a sentence of a year-and-a-day or thereabouts.  There's an outside chance of a split sentence that would include home confinement, but his use of marijuana while on bail pending sentencing probably jeopardizes his hopes for such a modest punishment.  I think the upside to entering the Bureau of Prisons system now is that the expected term will be completed by October 1 because of the 15% good time credit he would receive for a sentence of more than one year -- the extra day effectively cuts off about six weeks.  Vick would likely be released in August to a half-way house, at which point he could begin workouts in the hope of resuming his football career, perhaps even as early as the end of the 2008 season if NFL Commissioner Roger Goodell were to suspend him for one year from the date of sentencing on December 10.

The pressure on Vick to start generating an NFL salary again is enormous.  Federal prosecutors filed a motion for a restraining order (available below) seeking to keep Vick from dissipating assets before he pays approximately $930,000 in restitution for the care of the pitbulls seized from his property in Virginia.  The motion outlines other pending proceedings against Vick seeking to recover money from him that include: (1) the Falcons' arbitration proceeding to recoup almost $20 million of bonus money paid to Vick based on his being on the team's roster during his contract, which has now been voided; (2) a claim by Wachovia Bank for $1.3 million in loans for a wine store; (3) RBC Centura Bank's claim to recover on a $2.5 million line of credit extended to Vick; and, (4) 1st Source Bank's suit to recover on a $2.5 million loan for a car rental business.  That's a lot of money being sought by creditors, and the sooner Vick can get back to the NFL -- some team will certainly take a chance on a quarterback with his talent, even if he sits out two seasons -- the quicker he can start rebuilding his financial life.  Trading a Thanksgiving in prison for a shot at an earlier release may be a worthwhile exchange when prison is inevitable. (ph)

Download us_v_vick_order_voluntary_self_surrender_nov_2007.pdf

Download us_v_vick_restraining_order_motion_nov_2007.pdf

November 22, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (1)