Saturday, January 13, 2007

Upcoming Seminars/Webcasts

ABA Teleconference and Live Audio Webcast - Cybercrime, Privacy, and  Ethics - Domestic and International Implications, January 23, 2007.

ALI-ABA Live Telephone and Audio Webcast Seminar - Attorney Client Privilege and Work Product Protection: What You and Your Clients Need to Know, January 26, 2007.

NACDL 2007 Midwinter Conference,  One of Four Tracks on the Program is - "Defending Computer & Technology Crimes," February 21-24, 2007, San Diego.

ABA White Collar Crime Institute, March 1-2, 2007, San Diego.

(esp)

January 13, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Investigators Eye Options Grant to Steve Jobs

While the board of Apple Inc. (recently dropping "Computer" from its name to show its broad market coverage) may fully support CEO Steve Jobs despite his involvement in a questionable grant of options on 7.5 million shares, investigators from the U.S. Attorney's Office and the SEC are scrutinizing his role.  In December, Apple announced in its 10-K (here) that "[a]lthough the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications."  While some reported that Jobs had been exonerated, Apple's statement indicated a greater degree of involvement than previously disclosed (see earlier post here).  Information is now emerging that a lawyer for Apple claims she was ordered by the company's then-general counsel to backdate the documents.  Where the case goes from here is still an open question, and issues regarding possible immunity or plea agreements may affect the pace of the investigation.  With someone as prominent as Jobs involved in possible backdating, look for investigators to leave no stone unturned. A San Jose Mercury News article (here) discusses the latest developments in the case. (ph)

January 13, 2007 in Investigations, Securities | Permalink | Comments (0) | TrackBack (0)

Did Too Many White Collar Cases Doom a U.S. Attorney?

A San Diego Union-Tribune story (here) reports that U.S. Attorney Carol Lam has been forced out because under her leadership the office in the Southern District of California did not put sufficient resources into pursuing alien smuggling and gun cases.  When appointed in 2002, Lam said she would emphasize public corruption and white collar crime cases, and her office pursued former Representative Randy "Duke" Cunningham, who is now serving a 100-month prison term for accepting bribes from defense contractors.  Cunningham is cooperating with prosecutors, and rumors have swirled that a former high-ranking CIA official might be charged with a crime.  Lam's office also pursued two trials for Medicare fraud against Alvarado Hospital and its former CEO, with both ending in mistrials before a civil settlement ended the case.  Lam was on the trial team for the cases, and it is rare to see the U.S. Attorney try a case, especially one as time-consuming as a healthcare fraud prosecution.

While weapons and immigration are top priorities for the Department of Justice, Lam's firing (if that's what it is) raises the question whether the federal government should be targeting crimes related to weapons that the state is fully capable of prosecuting.  Many white collar cases benefit from the resources of the federal government, especially when the crime crosses state lines because the U.S. Attorney's Offices are best equipped to deal with multi-state violations.  Corruption cases are particularly apt for federal involvement because of the possibility that a local prosecutor will not investigate officials at the same level, or such investigations may be viewed as tainted by politics.  A case like Cunningham's involved conduct in California, Virginia, and Washington D.C., including searches in different jurisdictions, that would have been impossible for a local prosecutor to pursue.  An interesting question is whether the emphasis on gun cases is designed to generate statistics and good publicity for the federal government.  (ph)

January 13, 2007 in Prosecutors | Permalink | Comments (1) | TrackBack (0)

Friday, January 12, 2007

Ground Rules Set for Libby's Trial

The upcoming trial of I. Lewis Libby promises to be the biggest political trial since the impeachment proceeding of President Clinton, and U.S. District Judge Reggie Walton has set forth the ground rules for the proceeding in an order available below (courtesy of TalkLeft).  Among the issues treated in the order are seating arrangements in the gallery, what types of equipment may and may not be brought into the courtroom (e.g. no camera-equipped cell phones), and when everyone has to be seated or lose their spot.  Judge Walton has imposed a gag order on the attorneys for the government and Libby: "The Court expects counsel not to make comments to the media.  The Court will not tolerate any attempts to have this case tried in the media."  That's no fun.  Unlike some other districts, the District of Columbia does not prohibit contact with jurors after the trial is completed, although the order notes that "they are not obligated to do so and there must not be further attempts to talk to jurors who have indicated a desire not to have such discussions."

On the subject of the media at the trial, the Washington Post reports (here) that among those who will have reserved seats in the gallery will be two bloggers.  The article gives a less-than-complimentary view of bloggers, asserting that "[t]he common journalistic practices of verifying facts, seeking both sides of a story and subjecting an article to editing are honored mostly in the breach. Innuendo and rumor ricochet around the Internet as blogs link from one to another, at times making defamatory voices indistinguishable from the many others involved in this experiment of free expression."  I'm sure the author would be a big fan of this blog, however. 

The Houston Chronicle's trial blog by its reporters during the prosecution of Ken Lay and Jeffrey Skilling was an invaluable resource, with up-to-the minute reporting of the proceedings and discussion of the courtroom atmosphere that went beyond what would appear in most newspaper articles.  Let's hope that the bloggers and the rest of the media live up to that standard in their reporting. (ph)

Download libby_trial_procedures_order.pdf

January 12, 2007 in Defense Counsel, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Judge Orders Further Briefing on Scrushy-Siegelman Motion

The seemingly never-ending battle over the bribery convictions of former HealthSouth CEO Richard Scrushy and former Alabama Governor Don Siegelman may get another airing in U.S. District Court.  After the district court denied their motion for a new trial based on juror misconduct that included unverified e-mails purportedly between two jurors, the defendants received anonymously two more e-mails that they claim show that the jurors acted improperly (see earlier post here).  Chief U.S. District Judge Mark Fuller has ordered the government to respond to the defense motion seeking reconsideration of the denial of the new trial motion, directing that the brief be filed by January 19.  The defendants still have not been sentenced, and their motion challenging the racial composition of the jury pool remains outstanding along with the reconsideration request.  A WSFA TV-12 report (here) discusses the latest developments in the case. (ph)

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

Catchy Headline

How's this for an attention-grabbing headline: Ex-Prosecutor Is Accused of Running Escort Service.  The article, from the New York Law Journal, discusses a former federal and state prosecutor's involvement in the NY Confidential escort service, and among the other defendants is a second-year law student who clerked at the former prosecutor's criminal defense firm.  That should make for an interesting entry on his resume. (ph)

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

Thursday, January 11, 2007

First Federal Charges Filed in H-P Pretexting Scandal

The first federal charges arising from Hewlett-Packard's internal investigation that involved pretexting to obtain private telephone records were filed against Bryan Wagner, one of the private investigators used by the company.  Wagner was also charged in 2005 along with four others, including former H-P chairwoman Patricia Dunn, by the California Attorney General's office for violations of state law.  The San Jose Mercury News (here) reports that the federal charges involve conspiracy and identity theft counts, and are contained in a criminal information (available below), not a grand jury indictment.  An information usually indicates that the defendant is cooperating and will plead guilty to the charges in the near future.  Wagner would certainly be a candidate to cooperate because he is fairly low-level and may be able to provide information about others. 

The federal investigation had pretty much dropped off the radar screen after the state charges against the five defendants and H-P's settlement with the California Attorney General that involved a $14.5 million payment.  The filing of the information indicates that the federal prosecutors are pushing forward with their own case, and an interesting question is whether any H-P officials who were not charged in the state prosecution, such as the company's former general counsel, are targets in the federal investigation.  If Wagner pleads guilty, the hearing may provide some clues on the direction of the case. (ph)

Download wagner_hp_criminal_information.pdf

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

Former Comverse GC Settles Securities Fraud Case

Former Comverse Technology, Inc. general counsel William Sorin settled an SEC civil enforcement action for his role in back-dating options grants at the company.  According to the SEC Litigation Release (here), Sorin will pay "$1,670,915.03 in disgorgement, of which $1,007,201.58 represents the 'in-the-money' benefit from exercises of backdated option grants. In addition, Sorin will pay $817,509.07 in prejudgment interest thereon, and a $600,000 civil penalty, for a total of $3,088,424.10." Sorin entered a guilty plea in November 2005 to a charge of conspiracy to commit securities, mail and wire fraud.  Former Comverse CFO David Kreinberg also has pleaded guilty and agreed to settle the SEC case, paying a total of $2,394,917.68 (see SEC Litigation Release here).  Former Comverse CEO Kobi Alexander remains in Namibia fighting extradition back to the United States to face an array of fraud, conspiracy, obstruction, and bribery charges.  According to an article posted on AllAfrica.Com (here), Alexander "has decided to invest in low-cost, solar-powered housing for 100 low-income residents of Kuisebmond in Walvis Bay [Namibia]."  Don't hold your breath waiting for him to land in the United States any time soon. (ph)

January 11, 2007 in Civil Enforcement, Securities, Settlement | Permalink | Comments (0) | TrackBack (0)

Abramoff's Cooperation May Ensnare a Former Interior Department Official

Former superlobbyist Jack Abramoff's cooperation in the government's investigation of corruption in Washington D.C. seems to be continuing.  There are media reports (see Rocky Mountain News story here) that Steven Griles, who was at one time a deputy to former Interior Department Secretary Gale Norton, is the now the target of an investigation of possible false statements in testimony during a Senate Indian Affairs Committee hearing in 2005.  Griles denied accepting anything from Abramoff to provide assistance to Indian tribes concerned about competing gaming licenses.  Former Secretary Norton is quoted in the story, "I was in a position to see whether Steve influenced any decisions to favor Abramoff — and I did not see Steve take any step in that direction."  For a corruption prosecution under 18 U.S.C. Sec 201(b)(2), the government need not prove that an actual decision was influenced, only that the official "corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for . . . being influenced in the performance of any official act . . . ."  Moreover, a false statement or perjury charge would focus on the truthfulness of the statements, and not whether there was in fact a bribe or gratuity.  The fallout from  Abramoff's cooperation continues to reverberate through our nation's capital. (ph)

January 11, 2007 in Corruption, Investigations | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 10, 2007

Winning the Bake-Off by Cooking the Books

Federal prosecutors charged former Aspen Technology, Inc. CEO David L. McQuillin with securities fraud in a criminal information alleging various accounting violations.  The violations occurred in 2001 and 2002, when McQuillin, then Aspen's co-chief operating officer, was involved in a "bake-off" with the other COO competing to succeed Lawrence Evans as CEO of the company.  While McQuillin won, he used methods that have led him into the criminal case, according to a press release (here) issued by the U.S. Attorney's Office for the Southern District of New York:

From January 2001 through September 2002, MCQUILLIN was the Co-Chief Operating Officer (“COO”) of Aspen, which was in the business of developing and selling computer software to oil refineries and other process industries. During the time that MCQUILLAN was co-COO of Aspen, he was in a competition – or so-called “bake-off” – with his co-COO to become the next CEO of Aspen. In the course of this “bake-off,” during which MCQUILLIN’s performance was evaluated largely on Aspen’s software revenues, MCQUILLIN engaged in a scheme to inflate the software revenues Aspen reported to the investing public. MCQUILLIN became the CEO of Aspen in October of 2002.

The SEC filed civil securities fraud charges (complaint here) against McQuillin, Evans, and Lisa Zappala, Aspen's former CFO.  Two outside companies are described as assisting in the revenue recognition scheme by providing assurances to auditors about the timing and legitimacy of software contracts.  McQuillin was also charged with conspiracy, although his alleged co-conspirators have not yet been identified. The government usually proceeds with a grand jury indictment in these types of cases, so look for a wider range of charges to be brought in the near future, perhaps with other defendants included.  It will be interesting to see if anyone outside the company is charged with aiding the revenue recognition scheme. (ph)

January 10, 2007 in Civil Enforcement, Fraud, Prosecutions, Securities | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 9, 2007

New Face in White House Counsel Office

With Harriet Miers stepping down as White House counsel (see here), the question was who would offer the expertise needed to handle any possible upcoming investigations.  The answer: Fred F. Fielding. According to Fox News, he has it all, having served under both Nixon and Reagan. And when serving Reagan, he had as an assistant the now-Chief Justice, John Roberts.  Although also a business attorney, his web site at Wiley, Rein & Fielding notes that he is recognized by Washingtonian magazine as a "Top Criminal Defense Attorney."  This appointment sends the message that the White House is ready for future subpoenas.

(esp)

January 9, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, January 8, 2007

Judge in Stein Case Defends his Ruling

Yesterday, the Hon Lewis A. Kaplan, filed a "Response to a Rule 21(b)(4) Invitation."

Download kaplan20stein20memo20to20second20circuit20jan208202006.pdf

In essence, the judge filed a response defending the fact that he issued an opinion in Stein et. al, the case of the individual defendants related to KPMG. In that case, the court was asked to resolve issues related to aspects of the Thompson Memo as applied to the defendants' ability to obtain their attorney fees from KPMG. (see here, here, here, and here).  KPMG was not particularly happy with the court's ruling (see here).

And so onto the court of appeals, with KPMG contesting the court decision.  But who is to respond? And did the court have jurisdiction to issue its decision in the first place? 

Judge Kaplan starts by discussing whether there should be a "departure from the final judgment rule." He then notes that his basis for ruling on the fees issue in the Stein case was part of the district court's "ancillary jurisdiction." He states,

"Garcia, in the District Court's view, holds that a district court has ancillary jurisdiction to decide a dispute between a criminal defendant and a non-party where the dispute has its genesis in the criminal case and the resolution of the dispute is important to the district court's ability to perform its function and to do justice."

In recent years, those teaching the criminal law course, or perhaps white collar crime course, have been sitting with the corporate folks to discuss the intersection of corporate and criminal law.  Today, we add a new player to the field - the civil procedure professors.

(esp)

January 8, 2007 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Two Miami Lawyers Get to Keep Attorney Fees

David Oscar Markus at the Southern District of Florida Blog, tells that two Miami attorneys have been told by the government that they can retain their $757,000 in legal fees. In an article in the Daily Business Review it notes that the government had initially taken the position that the money was tainted.

(esp)

January 8, 2007 in Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Sunday, January 7, 2007

The Reversal of the Convictions of the Westar Executives: Wrap-up

This Blogs Coverage of the reversal of the Westar Executives' Convictions -

Is the Lake (Westar) Reversal Big?

More on the Westar Related Case

Convictions of Former Westar Executives Overturned

Blogsphere Coverage -

How Appealing - here

Houston Clear Thinkers - here

Sentencing Law & Policy - here

Wall Street Jrl Law Blog - here

(esp)

January 7, 2007 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

This Week - Expect A Motion for Acquittal in AOL Execs Case

The prosecution completed their case in chief against two former AOL executives. (see here).  And as one might expect, there will be a defense motion for acquittal this coming week.  The prosecution may have had issues pre-trial because of the statute of limitations (see here). 

The trial against the two mid-level executives has been a long one, beginning in mid - October. Carrie Johnson of the Washington Post reminds readers here that the length of the trial is surprising considering that it is being tried in the "rocket-docket."

(esp)

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

Dealing With Coke's Trade Secrets

Although two individuals plead guilty in the Coke trade secret case, a third remains for trial. The defendants were charged with trying to sell trade secrets to Pepsi for 1.5 million dollars (for background see here).  The Atlanta Journal Constitution (AP) reports on an issue that has surfaced in the trial of the remaining defendant -- How do you try an individual for an attempted theft of a trade secret, but still maintain the secrecy of the trade secret?  Congress considered this issue and legislation exists to allow secrecy of information during trial. But, it does require legal balancing, as on one hand the accused is entitled to confront the evidence against him or her, but on another hand people will not be able to be prosecuted if there is disclosure of trade secret information.  The prosecution is using the Classified Information Procedures Act to assist in this regard.

(esp)

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