Saturday, May 12, 2007

White Collar Prosecutions Are Down

TRAC 's latest statistics show a decline in the number of white collar prosecutions. The report finds a drop in white collar prosecutions of 13.3% from a prior month. And if one is looking at the 5 year statistics, then it presents a 21.9 % decrease in prosecutions.  The report provides the categories of case types (as opposed to listing specific offenses) that are included within these crime statistics.  But it also provides the leaders of specific offenses, with bank fraud being at the top. The report lists top ten judges and areas.  But these are not exactly the kind of numbers anyone will be bragging about.  See prior posts on statistical reporting of white collar cases.   

(esp)(w/ disclosure that she is a B.S. graduate of Syracuse U.)

May 12, 2007 in Think Tank Reports | Permalink | Comments (0) | TrackBack (2)

Goodling Gets Immunity

The United States District Court for the District of Columbia issued an order of immunity (here) for Monica Goodling, former White House liaison for Attorney General Alberto Gonzales.  Once she is subpoenaed to appear before the House Judiciary Committee and formally asserts her Fifth Amendment privilege, the order will be served on her and she must comply.  Contrary to what some media reports imply, however, an order of immunity under 18 U.S.C. Sec. 6005 does not mean she cannot be prosecuted, or cannot be charged with any crimes for things she testifies about.  That type of immunity is called "transactional" immunity, and is rarely given in federal criminal investigations, although it was the type of immunity grant provided to Monica Lewinsky during the Independent Counsel's investigation. 

The form of immunity authorized by the statute is "use/fruits" immunity, and pursuant to the Supreme Court's decision in Kastigar v. United States, 406 U.S. 441 (1972), the government is prohibited from using the testimony itself or any information derived from the testimony to prosecute the immunized witness.  If it does prosecute the immunized witness, it must meet a "heavy burden" of showing that all evidence was derived from sources unconnected to the testimony and the fruits of the statements.  While it is very difficult to prosecute an immunized witness, it is not legally impossible.  That said, given the wide publicity Goodling's testimony is likely to receive, in fact it will be almost impossible to pursue charges for her role in the U.S. Attorneys firings, and perhaps on the issue of using political criteria to hire Assistant U.S. Attorneys -- think Ollie North on this one.  The next step will be scheduling a hearing for Goodling to testify and issuing her a subpoena to compel her appearance.  (ph)

May 12, 2007 in Investigations, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Bristol-Myers Will Plead Guilty to Two False Statement Counts

Bristol-Myers Squibb Co. announced that it has reached an agreement in principle with the Antitrust Division of the Department of Justice to plead guilty to two false statement charges for violating Sec. 1001.  The case arose from the company's negotiations over settling patent litigation involving the drug Plavix and the attempt to prevent a generic version from being manufactured and sold by Apotex Corp.  According to Bristol-Myers' 10-Q (here):

Under the agreement in principle, the Company or a subsidiary of the Company will plead guilty to criminal charges consisting of two violations of Section 1001 of U.S. Code Title 18 (relating to false statements to a government agency) carrying an aggregate statutory maximum fine of $1 million. The charges relate to representations made by a former senior executive of the Company during the renegotiation of the proposed settlement agreement with Apotex in May 2006 that were not disclosed to the FTC. The agreement in principle is contingent on the parties’ agreement to the terms of a final agreement and acceptance of the plea by the court in which it is entered. There can be no assurance that the agreement in principle will be finalized or that the plea will be accepted. If the agreement in principle is not finalized or the plea is not accepted, it is not possible to assess the ultimate resolution of this investigation or its impact on the Company. Although there can be no assurance, the Company does not believe that resolution of this investigation in accordance with the agreement in principle should have a material impact on its ability to participate in federal procurement or health care programs.

The former senior executive is not identified, but if Bristol-Myers is acknowledging that false statements were made, then a prosecution of the individual officer may be on the horizon.

This is not the company's first brush with the law, and it is still operating under a two-year deferred prosecution agreement entered into with the U.S. Attorney's Office for the District of New Jersey in June 2005 for accounting fraud related to channel-stuffing.  Bristol-Myers avoided having a determination that the agreement was breached, according to the 10-Q:

The U.S. Attorney for the District of New Jersey has advised the Company, although the guilty plea that is contemplated by the agreement in principle constitutes a violation of the DPA, the Company has cured that breach by terminating the employment of certain former officers of the Company as well as other actions taken to prevent the recurrence of the issues and events that led to this matter. The U.S. Attorney also has advised the Company that, assuming resolution of this investigation in accordance with the agreement in principle, and assuming the Company’s compliance with the DPA between May 10, 2007, and June 15, 2007, it is the USAO’s intention to terminate the DPA on June 15, 2007, and to seek dismissal with prejudice of the deferred charges pursuant to the DPA on a timely basis.

Unlike the settlement of that investigation, the Antitrust Division investigation will result in the company pleading guilty to two criminal charges, although the penalties are fairly modest and it may be only a subsidiary that enters the plea, avoiding any consequences to the parent.  Can Bristol-Myers go to the well a third time if the government were to uncover wrongdoing in another case in the near future?  One has to wonder whether the government will continue to give Bristol-Myers a break with these nice settlements. (ph)

May 12, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Friday, May 11, 2007

Gonzales on the Warm Seat

Attorney General Alberto Gonzales made another appearance on Capitol Hill, this time before the House Judiciary Committee, to answer questions about the firing of nine U.S. Attorneys in 2006 -- add Todd Graves from the Western District of Missouri to the list.  From reports about the testimony (see L.A. Times story here), the questioning was not nearly as contentious and Gonzales was much more relaxed, perhaps knowing that the pressure was off after having survived the earlier hearing before the Senate Judiciary Committee.  His memory was not much improved, and he add almost nothing to his earlier testimony.  Moving beyond the focus on the U.S. Attorney's, Representative James Sensenbrenner, former chairman of the Judiciary Committee who lost his position when the Democrats took control of the House, asked Gonzales about another corruption investigation, this time inquiring about the status of the inquiry into William Jefferson, a Louisiana Democrat in whose freezer agents discovered $90,000 in cash.  Asking about a continuing investigation invites a single response, which Gonzales gave -- No comment.  I wonder why he asked? 

Now that the House had its fill of Gonzales, the investigation moves on to others who could be more enlightening, particularly the testimony of Monica Goodling, who the Committee voted to immunize so that she can testify about her role in the firings.  Whether she has much to add to the story remains to be seen, and I suspect the investigation may well wind down unless the Congressional Committees decide to pursue a confrontation with the White House over obtaining testimony from Karl Rove and Harriet Miers. (ph)

May 11, 2007 in Investigations, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Insider Trading as Marriage Therapy

Married couples need to have at least some common interests, and engaging in joint projects can certainly strengthen a relationship.  When the venture involves trading on insider information one partner gets on the job and passes on to the other, however, then the prospect of a jail sentence and SEC enforcement action might not be a salve for the relationship.  Three insider trading cases this week involve trading by married couples, which should set some kind of record.  First, Jennifer Wang and her husband Ruben Chen were charged with one count of conspiracy and three counts of insider trading for transactions in on-line brokerage accounts in the name of Wang's mother (Feng) that netted over $600,000 in profits, and the SEC also filed a civil enforcement action.  Wang was a vice president at Morgan Stanley, and the trading involved (1) Morgan Stanley Real Estate's (MSRE) December 19, 2005 announcement of its acquisition of Town & Country Trust; (2) MSRE's August 21, 2006 announcement of its acquisition of Glenborough Realty Trust; and, (3) Formation Capital, LLC and JER Partners' January 16, 2007 announcement of its agreement to acquire Genesis HealthCare Corporation.  Chen was an analyst at international banking firm ING Group, and the SEC Litigation Release (here) discusses how the trading occurred:

The Commission's complaint alleges that Chen and Wang funded and exercised control over Feng's online brokerage accounts. When Feng's first brokerage account was opened, it was funded with money from a checking account in Wang and Chen's name. In addition, Feng, who lives in Beijing, China, did not access the two online brokerage accounts that were opened in her name on the days of the relevant trading. Rather, most of the logins to the brokerage accounts were from Internet Protocol addresses at ING and from Chen and Wang's home in New Jersey.

A press release issued by the U.S. Attorney's Office for the Southern District of New York (here) discusses the arrest of Wang and Chen and the charges.

The second case involves the guilty pleas of Randi and Christopher Collatta to conspiracy and insider trading charges involving tipping and trading before the announcement of four deals.  Sticking with the marriage and Morgan Stanley theme, Randi was an attorney in the investment firm's compliance office, the office whose responsibilities include monitoring and preventing insider trading.  Both Collattas are attorneys, although not for too much longer with their guilty pleas.  Three other defendants have pleaded guilty, according to a press release issued by the U.S. Attorney's Office (here).

Finally, On May 8, the SEC filed insider trading charges against Kan King Wong and Charlotte Ka On Wong Leung, a married couple in Hong Kong, alleging that they purchased 415,000 shares of Dow Jones stock in April in advance of the announcement of News Corp.'s offer of $60 per share to buy the company.  The transactions netted them over $8 million in profits, and the SEC obtained an order freezing the money at Merrill Lynch where they conducted the trades (SEC Litigation Release here). 

Maybe bowling, or tennis, or even just long walks would be a better way to strengthen the relationship, rather than insider trading. (ph)

May 11, 2007 in Insider Trading | Permalink | Comments (1) | TrackBack (1)

Former Comverse GC Receives a Year-and-a-Day Sentence

Former Comverse Technology general counsel William Sorin received a sentence of one year and one day for his role in options backdating at the company.  In November 2006, Sorin entered a guilty plea to a charge of conspiracy to commit mail, wire, and securities fraud for participating in the creation of false documents to award management, including himself, options backdated to generate additional profits.  Sorin also settled an SEC civil enforcement action in January 2007, agreeing to disgorge profits (plus interest) of $2.4 million and pay a civil penalty of $600,000. 

The extra day tacked on to the sentence is more than symbolic, because under Bureau of Prisons regulations Sorin is only eligible to receive good time credit if the sentence exceeds one year.  The 15% reduction available by adding a day means that he will serve about eight months in a federal correctional institution, with the last part of the sentence probably in a half-way house before he's released to a three-year term of supervised release.  Sorin's guilty plea also requires him to cooperate in the government's prosecution of former Comverse CEO Kobi Alexander, who has settled into Namibia while he fights an extradition action to return him to the U.S. to face charges.  A Reuters report (here) discusses the sentencing. (ph)

May 11, 2007 in Securities, Sentencing | Permalink | Comments (0) | TrackBack (0)

Former Chicago Alderman Charged With Bribery

Former long-time Chicago Alderman Edward Vrdolyak was charged with mail fraud, wire fraud, and bribery in connection with a sale of property on behalf of the former Chicago Medical School (now the Rosalind Franklin University).  According to the indictment (here), Vrdolyak allegedly worked with a member of the school's board of trustees who headed the real estate committee to steer property on the Gold Coast to a friendly buyer and then receive a portion of a secret $1.5 million payment from the sale.  The transaction never took place because in 2006 the board member entered a guilty plea and cooperated in the federal investigation.  In addition to serving as an Alderman for sixteen years, Vrdolyak was head of the Cook County Democratic Committee in the 1980s before running for mayor as a Republican in 1989. (ph)

May 11, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Thursday, May 10, 2007

And Then There Were Nine

Just in time for Attorney General Alberto Gonzales' testimony before the House Judiciary Committee, the Washington Post reports (here) that a ninth U.S. Attorney identified himself as having received a telephone call asking him to resign, this time in January 2006.  Todd Graves, the former U.S. Attorney for the Western District of Missouri (Kansas City), said that Michael Battle, then head of the Executive Office for U.S. Attorneys (EOUSA) who also delivered the bad news to the other eight prosecutors, asked him to resign to "give another person a chance."  That was the same reason given to Bud Cummins when he was asked to resign his position in Arkansas.  The person appointed to replace Graves as the interim U.S. Attorney was Bradley J. Schlozman, who had been in the Civil Rights Division and clashed with Graves over filing a law suit related to Missouri's voter rolls.  The U.S. Attorney's Office also obtained an indictment related to voting fraud shortly before the 2006 election.  Schlozman, who is now in the EOUSA, is supposed to testify before the Senate Judiciary Committee.  His replacement as U.S. Attorney is John Wood, who was confirmed by the Senate on April 11, 2007.  According to his biography (here):

Mr. Wood joined the Bush Administration in 2001 and held several prominent positions prior to becoming U.S. Attorney. He has previously served at the Department of Justice as a Deputy Associate Attorney General and as a Counselor to Attorney General John D. Ashcroft. He has also worked at the White House as Deputy General Counsel for the Office of Management and Budget. His last job prior to being nominated by the President to serve as U.S. Attorney was as Chief of Staff for the U.S. Department of Homeland Security, which is the third largest department of the federal government with approximately 180,000 employees and an annual budget of over $40 billion.


May 10, 2007 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

Will There Be Criminal Charges From the U.S. Attorney Firings?

At a forum at Seattle University School of Law, former U.S. Attorneys John McKay (Western District of Washington) and David Iglesias (New Mexico) said that they expect criminal charges to be filed related to their firings -- along with six other U.S. Attorneys -- and from the subsequent Congressional investigations.  McKay, who is now on the Seattle faculty, speculated that obstruction of justice charges could be brought for interference with public corruption investigations in San Diego and New Mexico.  McKay and Iglesias also raised the possibility of perjury charges from the testimony of Attorney General Alberto Gonzales and Deputy Attorney General Paul McNulty when they said the dismissals were performance-related.  A Seattle Times article (here) discusses the statements by McKay and Iglesias, and quotes from a statement issued by a Department of Justice spokesman that reads in part, "After several hours of testimony by the Attorney General, over 6,000 pages of documents released to Congress and hours of interviews with other senior DOJ officials, it is clear that the Attorney General did not ask for the resignation of any individual in order to interfere with or influence a particular prosecution for partisan political gain." 

Will there be any criminal charges?  The decision of the House Judiciary Committee to grant immunity to Monica Goodling, Gonzales' former White House liaison, makes it unlikely she will be charged.  The odds of the AG or DAG being charged are probably just as unlikely because their statements were couched in vague terms that would make it very difficult to meet the standard for a perjury prosecution.  This may be more of a publicity grab than anything else.  Then again, with many e-mails still unavailable, particularly from the White House, you never know because e-mails contain some of the darnedest things.  As McKay said, "This is going to get worse, not better."  We'll see how much worse. (ph -- thanks to YH)

May 10, 2007 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

When Fraud Is Your Life

That scam artists are willing to lie constantly is not really surprising, but it always amazes me to see how someone can develop so many different frauds.  A press release (here) from the U.S. Attorney's Office for the Southern District of Indiana describes a series of frauds by one Alan R. King, Jr., age 29, who entered a guilty plea to charges that landed him a 105-month prison term.  His frauds include:

  • In October 2005, he filed three fictitious Hurricane Katrine FEMA relief claims, even though he was living in Bloomington, Indiana at the time, and received over $40,000.  The capper here is that one of the claims was with a social security number he obtained earlier after he claimed that his original number had been hijacked by identity thieves.  That's certainly creative.
  • King filed fourteen fraudulent student loan applications, and seven were granted.  He received $105,000 from six loans, but the seventh turned out to be his undoing because federal agents did a controlled delivery of the check and arrested him.
  • He obtained $60,000 in car loans, used the money to buy a 2005 Mercedes, and then had the title cleared by giving a falsified letter to the state motor vehicle department stating that the loan had been paid.  He sought additional loans once the lien was removed, too.
  • King engaged in various and sundry smaller frauds, perhaps just to kill time, involving credit from stores based on the identity of others and received a Pell Grant using false documents.

That's got to be a full-time job keeping all that paperwork flowing smoothly.  King will have 8+ years to chill out in a federal correctional institution, however. (ph)

May 10, 2007 in Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)

Marvell Technologies Keeps Its CEO After Options Backdating Investigation

Silicon Valley company Marvell Technologies Group determined that there was significant backdating of stock options granted to executives, and its CFO and chief operating officers resigned, although the COO is allowed to stay on in a lesser management role.  The general counsel of the U.S. subsidiary was terminated earlier, although it is not clear whether he participated in the backdating or whether the firing was due to other conduct at the company, perhaps during the internal investigation.  Marvell's CEO, Dr. Sehat Sutardja, dodged the primary bullet and gets to keep his executive position but steps down as chairman of the board, although he gets to remain a director.  The company's press release (here) states:

As previously announced, the Board of Directors concluded on October 2, 2006 that the actual measurement dates for financial accounting purposes of numerous stock option grants issued in the past differ from the recorded grant dates of such awards.  The Special Committee has determined that there were numerous instances in which grant dates were chosen with the benefit of hindsight as to the price of the Company’s stock, so as to provide exercise prices lower than the fair market value on the actual  measurement date.  In addition, the Special Committee found a systemic failure of internal controls with respect to the stock option process and related matters, as well as a failure by certain members of current and former management to exercise sufficient oversight over the stock option process, resulting in inaccuracies in the Company’s books and records, financial statements, and public filings.  The Special Committee reported that several current and former members of management, including the previously terminated General Counsel of its U.S. operating subsidiary and the recently resigned Chief Financial Officer and Chief Operating Officer, bear varying degrees of responsibility for these deficiencies.

The Special Committee found that the Company’s Chief Executive Officer participated in only a few instances in grants with incorrect measurement dates.  The Special Committee recommended that Dr. Sehat Sutardja remain as Chief Executive Officer and as a member of the Board of Directors, but step down as Chairman of the Board in favor of a non-executive Chairman of the Board.  The board’s Governance Committee is commencing a search for three new independent directors to fill existing vacancies. One of these independent directors will succeed Dr. Sutardja as Chairman of the Board.  Dr. Sutardja, upon such event, will remain a director and continue as the Company’s President and Chief Executive Officer. [Italics added]

This sounds a little bit like the "Steve Jobs Treatment" at Apple -- the CEO (who happens to be a company founder) was involved in the backdating, but just a little bit and he really shouldn't be held responsible.  Kind of like a mulligan for you golfers out there.  (ph)

May 10, 2007 in Investigations | Permalink | Comments (0) | TrackBack (0)

What Is a Reasonable Sentencing Departure

Professor Doug Berman of the esteemed Sentencing Law & Policy blog discusses a recent decision of the Second Circuit in U.S. v. Canova (available below) about how to evaluate the reasonableness of a sentencing court's decision to grant a downward departure from the Sentencing Guidelines.  The prosecution involved Medicare fraud, and among the grounds for granting the lower sentence was the defendant's record of community service and the fact that he paid restitution   In two sentencings, the defendant received probation each time. The question the appellate court grapples with, but ultimately avoids, is the standard to be used for assessing the size of the departure -- should the analysis be in an absolute or relative sense.  The Second Circuit described the two approaches this way:

We have not set forth any particular method for assessing the extent of a departure in order to determine its reasonableness.  Several methods can plausibly be advanced, grouped within either of two categories--an absolute assessment or a relative assessment. An absolute assessment would gauge the extent of the departure, measured in levels, without regard to the starting point from which the departure was made. Such an assessment could consider only the number of levels the departure spans--in the pending case, 15. A relative assessment would gauge the extent of the departure either by the increase or decrease in the resulting prison time (from the prison time for the adjusted offense level) or by the percentage of increase or decrease of either prison time or levels. Using a relative assessment based on prison time would require noting either the tops of the original and new ranges or the bottoms of such ranges . . .

The court leaned toward the relative assessment, finding that it was likely to be more informative than looking at the departure in absolute terms.  Having set forth this analysis, the Second Circuit then sent the case back to the district court to consider the impact of the defendant's intended loss on the reasonableness of the departure.  The appellate court was troubled by the fact that the original sentence of probation was reimposed in a second proceeding even though the intended loss from the offenses was found to be $5 million and the district court's initial assessment was a zero loss, which caused the first remand.  The Second Circuit stated:

Transcending the numbers in this case, however, is the blunt fact that the effect of the departure and the resulting sentence was to treat Canova as though he had intended to cause no loss at all.  Canova’s sentence was probation when the District Judge understood that no actual or intended loss had occurred, and it remained probation even after this Court’s remand made clear that Canova had caused some actual loss and had intended a loss of $5 million.  Although unusual circumstances might arise in which it would be reasonable to impose the same sentence after a significant aggravating (or mitigating) factor had been taken into consideration, such an outcome would require a persuasive justification. Since the District Judge sentenced here without any consideration of the $5 million loss that Canova intended, a departure that results in the reimposition of the same sentence appears to be unreasonable.


Download us_v_canova_opinion_may_8_2007.pdf

May 10, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 9, 2007

SEC Files Insider Trading Charges Against Hong Kong Couple for Dow Jones Trades

The offer by Rupert Murdoch's News Corp. for Dow Jones may come to naught, but it has triggered another insider trading case against foreign purchasers.  The SEC filed a complaint (here) in the U.S. District Court for the Southern District of New York against Kan King Wong and Charlotte Ka On Wang Leung, a husband and wife, for their purchase of 415,000 shares of Dow Jones from April 13 through April 30 in an account at Merrill Lynch.  After the announcement, the value of the shares increased by over $8 million.  Trading in Dow Jones garnered significant attention after News Corp.'s announcement (see earlier post here), but it was in the out-of-the-money call options that the real profits occurred.  The trading here shows that buying stock is not as cost effective as buying options because the defendants had to commit over $15 million to the trades, a far higher amount than would be necessary to buy call options for a comparable amount of shares -- not that I'm advocating any trading on material non-public information, of course.  The SEC's complaint does not connect the defendants to any identified source of information, but it does note that one of the defendants put in a sell order and inquired when the money would be available.  The Commission needed to act quickly to keep the money in the United States, and the District Court entered a freeze order (here) to ensure that the proceeds do not disappear.  As always, the challenge now is to link the defendants to the information. And look for the SEC to move on the options trading at some point. (ph)

May 9, 2007 in Civil Enforcement, Insider Trading, Securities | Permalink | Comments (0) | TrackBack (0)

Another Deal, Another Spike in Options Trading

It's the same refrain: a deal is announced -- usually a buyout by a private equity firm -- and in the days before the public disclosure trading in out-of-the-money call options shoots up.  The latest example: the acquisition of Florida East Coast Industries by Fortress Investment Group for $84 per share, a bit more than $10 above its market price prior to the announcement on May 8.  According to a Bloomberg article (here), the average daily volume in Florida East Coast options was 375 per day, but on April 30 it was 1,888 contracts, and then 4,722 contracts on May 2.  The most active options the day before the deal were the May 80s, which would expire in a bit more than two weeks and were fairly deep out of the money -- until the announcement, of course.  Insider trading, perhaps?  Time (and the SEC) will tell.

Meanwhile, in another insider trading case, Credit Suisse investment banker Hafiz Naseem was released on $1 million bail while he faces charges of tipping a Pakistani banker about pending deals that garnered over $7 million in profits.  A man identified as the tippee denied that Naseem gave him any inside information, saying that he only received "generic" information, whatever that means.  A Sharewatch story (here) discusses the bail grant. (ph)

May 9, 2007 in Insider Trading | Permalink | Comments (1) | TrackBack (0)

Tuesday, May 8, 2007

Radler Testifies in Conrad Black's Trial

Rick Westhead of the Toronto News reports on the testimony provided by the key witness for the government in the Conrad Black trial.  David Radler is the link the government is using to present its case against Black. But because so much of this case appears to rest upon the credibility of this witness, it is likely to mean that the cross-examination will be crucial.   The defense will likely be trying to show that the agreement Radler received is a key motivation for this testimony and that this testimony is therefore suspect.


May 8, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

White Collar Crime in the Education World

Universities are not exempt from scrutiny by prosecutors.  This is demonstrated in two recent cases.   The Chronicle of Higher Education reports on the arrest of two individuals  "accused of defrauding the Rhode Island School of Design."  In yet another case, the Chronicle reports on a ten year sentence being given to the "former chief financial officer at Texas Southern University."

(esp) (with a Stetson hat tip to Dean Darby Dickerson)

May 8, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Monday, May 7, 2007

AG Related Issues Remain a Top Billing

The Washington Post has two stories today that keep the AG's office as one of the top stories in the paper. Dan Eggen has a piece on the likelihood that immunity will be given to Monica Goodling. And DOJ's  Office of Professional Responsibility (OPR) and the Justice Department's Inspector General are questioning whether immunity is the correct route to take here.  They note that they are conducting an investigation.

There are two problems here:  1) Although OPR and the IG have good intentions to do a thorough investigation here, one has to wonder if insiders are really the proper parties to investigate this matter.  Do they perhaps have a conflict in that OPR, for one, reports to the Deputy Attorney General, who reports to the Attorney General?  (See here for chart of the DOJ).  Is this at least an appearance of impropriety? 2) On the other hand is the House Judiciary Committee correct in granting immunity this early in an investigation.  It could easily serve as a bar to a later action if the evidence proves that the individual being granted immunity is the most culpable and has criminal liability. One doesn't have to go too far back in history to figure out the ramifications of a grant of immunity.

So what should happen here?  Should there be a special prosecutor who investigates all avenues first, and then decides if immunity is the correct path to take? But maybe Patrick Fitzgerald is not right for this one.  Perhaps what is needed here is someone who will not try to keep the press from telling the whole story, even when it may be beneficial for the entire investigation. (see here)


May 7, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Veco's Chair and CEO Get Quick Pleas

Following three new indictments, there were some quick pleas by the Chairperson and the CEO of Veco. The Wall Street Jrl provides details here.


May 7, 2007 in Settlement | Permalink | Comments (0) | TrackBack (0)

White Collar Crime Conference - Part VI

Stephanie Martz, White Collar Crime Project Director at the National Association of Criminal Defense Lawyers (NACDL), guest blogs a six part series on the recent White Collar Crime Track at the NACDL Cincinnati Conference: 

Session VI: The Use of Experts in White Collar Cases

Barry Pollack presented Mike Mulligan, the Executive Director of Financial Corporate and Legal Advisors International, and a key consultant and witness in several of the Enron cases (including one in which Pollack won an acquittal for his client in the broadband case) as well as US v.Scrushy; and Stan Murphy, a Managing Director in Navigant Consulting’s Tampa office with a specialty in health care fraud. He also coordinated PwC’s corporate integrity agreement services.

One of the most important issues is picking your discrete, understandable battles. You inevitably have to leave off the table some issues that you know you’re right about at the risk of befuddling the jury.

Both experts emphasized the importance of communicating with the defense attorney on a daily basis about which issues are good issues and where things are heading – especially in a criminal case. Murphy originally examined the cost issue in a recent health care fraud case but ended up not putting that in his disclosures because the issue abated.

In a criminal case, as opposed to a civil case, you need to be less concerned about discovery of the communication process between the defense lawyer and expert. But in cross, could the government stumble onto an area like that? Pollack said that hadn’t happened to him yet – he hasn’t been burnt by broadly sharing work product. Mulligan said, though, that he has a high degree or paranoia about privilege issues, even in the criminal context – no emails, destroy faxes, be careful even about phone conversations.

Do you try to maintain your flexibility in your Rule 16 statement about what your expert will talk about? Pollack said the vaguer the better; the experts don’t all agree. Murphy pointed out the differences between Rule 26 and Rule 16; Rule 26 (F.R. Civ. P.) requires you to put your opinion in the report. Rule16 does not; you do the Daubert motion. But you might in some circumstances want to scare the government off of a particular issue; on the other hand you might want to sucker the government into arguing a strong issue and underplay your good hand.

A question came about mounting a full-court press on the government’s witnesses. A problem is that Daubert is taken much less seriously in the criminal context. The government often tries to sneak its expert testimony in through supposed fact witnesses – this definitely happened in some of the Enron cases. The government will also do this through a pre-trial asset forfeiture hearing (in Scrushy, a 30-day TRO hearing at the end of which the government lost).

How do experts like to prepare? Murphy said the scripts don’t work for him, especially if the testimony will be lengthy. No question you have to practice and rehearse; you have to be prepared with the lawyer to change up depending on how the jury is reacting. BTW, Murphy hates hypotheticals, period. They can be useful on direct in terms of preempting cross but they can paint you into a corner – you’ve gotta be very quick on your feet. Mulligan agrees: Don’t script the direct. But the process can be painful. The lawyer needs help in formulating the question so that the answer isn’t "it depends." In Pollack’s Enron case, many, many hours of prepping testimony also made Mulligan better able to deal with cross – he could accept the prosecutor’s premises and still get to where she was going before she did. Thematic rather than scripted preparation for direct prepared the expert better for cross.

(sm/posted by esp)

May 7, 2007 in Think Tank Reports | Permalink | Comments (1) | TrackBack (0)

Sunday, May 6, 2007

Three Republicans Charged in Alaska

The Anchorage Daily News reports  that three Republican legislators (one present and two former) have been charged with federal bribery, extortion, and conspiracy charges. One of the indictments also alleges a violation of the honest services clause. The Indictments allege the sale of votes on an issue concerning oil taxes. See also Wall Street Jrl here.

Interestingly the federal prosecutors did not charge the three in a single indictment, but rather used two separate charging documents to proceed in these cases.  The indictments use Company A, CEO, and other identifying labels as opposed to naming the names of company officials.

Indictments can be found here and here


May 6, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)