Sunday, December 30, 2007
The New Year will deliver a variety of interesting cases and issues in the white collar crime field, and here are a few developments (and predictions) that may be of interest in 2008 (in no particular order):
- Supreme Court decisions on whether to grant certiorari in the appeals of John and Timothy Rigas (Adelphia Communications) on fraud charges and former Illinois Governor Ryan on RICO/corruption charges.
- Appellate court rulings on the convictions of former CEOs Jeffrey Skilling (Enron) and Joseph Nacchio (Qwest). Skilling is likely to have at least some of the counts of conviction reversed due to problems with the honest services fraud theory, while Nacchio could well be looking at a new trial on a variety of grounds.
- The CEO trials just keep on coming, with former Reagan Administration budget whiz David Stockman facing charges related to his tenure at auto parts manufacturer Collins & Aikman and Phillip Bennett charged for his role in the collapse of futures broker Refco, perhaps the quickest demise of a public company -- only two months after the IPO.
- More defense procurement cases -- oops, we said that last year. This time around, the focus will be not only on contractors, especially Blackwater Worldwide, but also government officials charged with investigating corruption, such as former State Department IG Cookie Krongard.
- Foreign Corrupt Practices Act cases will continue to be the hot trend, with Siemens probably setting the record for largest fine assessed in an FCPA case -- perhaps as much as $500 million -- if it is able to settle wide-ranging criminal and civil probes of overseas payments currently estimated at $2 billion.
- Whether the Supreme Court's recent decisions in Gall and Kimbrough bring about changes in white collar sentencing, the most likely source of defendants who can make the case for individualized sentences and take advantage of the newly-restored discretion given to federal district court judges.
- The Barry Bonds perjury/obstruction prosecution will garner significant headlines whenever the home run king appears in court, and his trial will be the hottest ticket since the I. Lewis "Scooter" Libby case, with a different set of political overtones. It could even be a welcome distraction from the Presidential campaign if it occurs in the fall.
- The Second Circuit will decide whether to uphold U.S. District Judge Lewis Kaplan's ruling dismissing charges against thirteen former KPMG partners and employees due to interference with the payment of their attorney's fees by prosecutors. If the appellate court reinstates the indictment, then look for a prediction on when the trial will start in "What's Coming in 2009," unless it's headed to the Supreme Court, of course.
- The District of Columbia's decision on the search of Representative William Jefferson's office has caused the Department of Justice much consternation, so don't be surprised to see the Supreme Court grant the government's certiorari petition filed on December 19 (available here).
- The issue of parallel civil and criminal investigations is the subject of an important case before the Ninth Circuit in United States v. Stringer, argued on September 26, 2007. The opinion should be announced soon, and this is another case that may be headed to the Supreme Court.
- Mortgage fraud moves front and center as the hot focus of the Department of Justice. A sure sign that there is pressure to bring cases will be the formation of a Mortgage Fraud Task Force -- when in doubt, form a committee.
- As options backdating cases wind down, look for the SEC to begin pursuing disclosure investigations involving banks, brokerage firms, and other financial institutions regarding their exposure to subprime mortgages and the valuation of securities, such as CDOs. tied to that collapsing market. Not that any of it will ease the pain of collapsing house prices.
- Look for Kobi Alexander to be in Namibia fighting extradition back to Brooklyn to face securities fraud and obstruction of justice charges a year from now. Indeed, it's an open question whether there will even be a hearing related to the extradition as his attorneys have skillfully thrown up roadblocks to delay even the initial stages of the extradition process. The 2012 version of this list may well be saying the same thing.
- Look for more election fraud cases with the political season heating up, and the Attorney General might find this to be a good place to make an impression as a non-partisan leader of the Department of Justice.
Have a safe and happy New Year!
(esp & ph)