June 9, 2007
Imagine An Even Broader Mail Fraud Statute
It is hard to imagine that the mail fraud statute could be even broader than what it is now. But a recent bill actually proposes to extend the limits of the 1909 amendment of the mail fraud statute, and the source of that amendment as seen in the Supreme Court decision - Durland. As opposed to limiting mail fraud to "money or property," this proposed legislation seeks to change the wording of the mail and wire fraud statutes to "money, property, or any other thing of value." Now mind you, the government could proceed with a mail fraud case premised on the "intangible right to honest services" as this is permitted by section 1346. But one has to wonder why a couple of individuals in Congress suddenly want "or any other thing of value" added to the statute. Perhaps one place an amendment like this could play out, is in voter fraud cases that might not rise to "honest services" and yet also not involve "money or property." Additionally this proposed legislation, called "The Clean Up Government Act of 2007" expands venue, increases the penalties to 20 years for a section 666 violation and offers increased penalties for other crimes. There are also other language changes offered here that could expand other criminal statutes. If it were the intent of these drafters to make it look like they are tough on crime - that is clearly accomplished here. But the problem may be that these already broad statutes may become limitless if this legislation is passed, and the stakes in the white collar crime game may be more costly.
(esp)(w/ a hat tip to Stephanie Martz) The Bill -
Foreign Corrupt Practices Act Compliance
The ABA is holding a CLE on Foreign Corrupt Practices Act Compliance on Wed., June 13, 2007. Details for this teleconference and live audio webcast can be found here.
Job Posting - The Criminal Enforcement Sections of the U.S. Department of Justice Tax Division
June 8, 2007
Did the Prosecutor Have Jurisdiction in the Libby Case
With a 2 1/2 year sentence issued to I. "Scooter" Libby, it is not surprising to see people examining every aspect of this case. According to the New York Sun here, a group of "scholars," that includes Professors Alan Dershowitz (Harvard), Randy Barnett (Georgetown) and others, have filed an amicus brief challenging the prosecutor's jurisdiction to hear this case. Although it seems that their brief is not directed to the bail issue, it could significantly affect this decision. If the defense can demonstrate a significant issue for appeal, a court is more likely to grant bail pending the appellate process. Even if Judge Walton should deny bail, this issue and the expertise of this group of "scholars" could significantly influence an appellate tribunal in providing an order to release the defendant pending the appeal.
Cable Piracy Nets Five Years
A press release of the U.S. Attorney for the Eastern District of California reports that an individual was sentenced "to five years of prison for his participation in a nationwide and international cable piracy scheme that resulted in the sale and distribution of over 100,000 cable descramblers designed to illicitly obtain cable programming, and that resulted in gross sales of over $12 million." According to this release, the defendant and another individual "operated a business which manufactured and sold cable television descramblers allowing illicit access to cable programming." They "advertised the descramblers extensively through a series of web sites on the Internet and also through national magazines." These devices reaped a profit as they "allowed consumers to receive premium and pay-per-view cable television programming without the knowledge or authorization of cable operators."
Abramoff Still Playing Strong
As anticipated, Italia Federici entered a plea of guilty to an obstruction and tax charge. This is yet another case brought to us by DOJ and Jack Abramoff. The interesting part to now follow is whether Federici, and others who have also entered pleas, will offer missing links in yet other cases. How high up the ladder will all these pleas go. (See Washington Post here).
First Extradition Hearing for Kobi Alexander
The first hearing on the U.S. government's request to Namibia that it extradite Kobi Alexander is set to start on June 8 in Windhoek, the nation's capital. Alexander is the former CEO of Comverse Technology, and was indicted in August 2006 on securities fraud and conspiracy charges related to options backdating at the company. Comverse's former CFO and general counsel entered guilty pleas and are cooperating in the government's prosecution of Alexander, assuming it ever takes place in the Eastern District of Brooklyn where he was indicted. Alexander left the U.S. while the investigation heated up in July 2006 and then bobbed to the surface in Namibia a couple months later, where he moved with his family. He has begun investing in Namibia and spreading his largesse in the country. He has started a scholarship program for Namibian students, and billboards have appeared in Windhoek in the name of "Alexander Enterprises" stating "Yes to investment." At least they don't say "Let me stay and I'll give you money!" The extradition process promises to be slow, with appeals likely to take years if an extradition order is issued. A story from Globes (here) discusses the hearing and billboards. (ph)
Libby Seeks Bail Pending Appeal
I. Lewis Libby's defense team filed its brief with the District Court seeking bail while he appeals his conviction to the D.C. Circuit and, if he fails there, most likely to the Supreme Court -- assuming there's no pardon, which is a different issue altogether. The brief (here, courtesy of TalkLeft), argues that there are questions about the conviction that are sufficiently close to permit U.S. District Judge Reggie Walton to find that the case meets the standard in 18 U.S.C. Sec. 3143. The first step is a determination that the defendant poses no danger to the community and is not a flight risk, both of which are not disputed. The more difficult issue is whether the legal issues Libby plans to raise on appeal meet the requirement of Sec. 3143(b)(1) that "the appeal is not for purposes of delay and raises a substantial question of law or fact likely to result in reversal or an order for a new trial." While judges are unlikely to second-guess themselves, many will permit bail if there are questions at least sufficiently close that reversal by an appellate court is a reasonable possibility, even if not likely. White collar crime cases tend to have such issues, but while it may be more likely these days that defendants in such cases are allowed to remain free, it is certainly not universal, as former Enron CEO Jeffrey Skilling can attest from an FCI in Minnesota.
Libby's brief identifies issues regarding the constitutional authority of Special Counsel Patrick Fitzgerald, the exclusion of an expert on memory to testify about Libby's inability to recall conversations about former CIA operative Valerie Plame, Classified Information Procedures Act (CIPA) decisions, and the exclusion of certain classified evidence because Libby chose not to testify. The constitutional issue is anyone's guess because Fitzgerald's appointment was unique in the post-Independent Counsel world. The CIPA and evidentiary issues could result in a reversal, although these are the types of decisions appellate courts usually do not disturb on legal grounds or because the error is harmless. That said, the issues look to be of sufficient weight that the D.C. Circuit could reverse the conviction, so bail pending appeal is at least a possibility. As co-blogger Ellen Podgor discussed in an earlier post (here), even if Judge Walton turns down the defense request it can be renewed with the court of appeals, which may take a different view of the case. (ph)
Nacchio Takes Another Shot at a Change of Venue
Former Qwest CEO Joseph Nacchio filed a motion for a new trial and a request that the venue be changed on the nineteen counts of insider trading on which he was convicted in April 2007. The motion, available here through the Denver University Sturm School of Law's Corporate Governance Project, points to the prejudice from overly negative publicity in Denver before the trial. The motion argues:
As a result of the unceasing publicity, much of the voir dire was devoted to individual questioning of the venire panel about their prior knowledge concerning the case. This revealed that, of the 44 individuals who were called into the jury box and questioned, an overwhelming majority of 32 jurors responded yes, that they had learned about the case from the media or other outside sources. The Court nevertheless denied the motion to dismiss for cause prospective jurors with prior knowledge, denied our renewed application for change of venue, completed voir dire and impaneled a jury. The result was that, among the 18 jurors and alternates who were ultimately impaneled, an even larger majority of 14 had prior knowledge of the case. The prejudicial publicity then continued unabated throughout the trial.
Because the pervasive publicity was so intensely negative and long lasting, a new trial should be granted pursuant to Fed.R.Crim.P. 33, and a change of venue ordered pursuant to Fed.R.Crim.P. 21.
The memorandum goes on to cite two instances during the trial when strangers approached Nacchio and vilified him, one wishing he contracted cancer.
U.S. District Judge Edward Nottingham denied Nacchio's motion for a change a venue before trial, and it is unlikely he will change his position now. Federal Rule of Criminal Procedure 21 gives the trial judge considerable discretion in deciding on a change of venue, and moving the trial to a different location is a last resort, and rarely granted. The fact that jurors have heard about the case from widespread publicity is not dispositive, so the numbers cited in Nacchio's memorandum are not sufficient in themselves. Courts focus more on the nature of the publicity, and whether it is particularly gruesome or heavily biased, and that is unlikely to take place in a white collar crime case -- regardless of how one might describe a 90% decline in a stock's value, it's only money and not a murder.
Perhaps the most salient factor weighing against Nacchio on this issue is the fact that the jury acquitted him of twenty-three counts of insider trading, and it deliberated for a long period of time before returning its verdict. The government will argue that this is hardly a jury overcome by emotional appeals against Nacchio, but rather one that set aside its prior knowledge and decided the case on the facts. While prosecutors usually do not like to see an acquittal on a number of counts, this is one instance when the jury's decision in favor of the defendant likely provides support for the government's position as well. Rather than a "rush to judgment" that would be the hallmark of a prejudiced jury, the verdict was a fairly balanced view of the facts. In the end, Nacchio's motion is aimed more at the Tenth Circuit by making a record on the issue in the District Court, and I doubt his attorneys will pin much hope on a favorable outcome. For additional discussion of Nacchio's motion and outstanding coverage of the trial, check out J. Robert Brown's Race to the Bottom blog (here). (ph)
Another One Snared in Abramoff's Web
The web of political connections former superlobbyist -- and current federal prisoner -- Jack Abramoff spun in Washington has resulted in another guilty plea. Italia Federici, a cofounder of the Council of Republicans for Environmental Advocacy (CREA), agreed to plead guilty to obstructing a Senate investigation of Abamoff's lobbying activities when she was less-than-truthful in her responses to the Committee. She also admitted guilt to tax evasion for taking CREA funds for her personal use without paying taxes on the income. Federici was involved in a personal relationship with J. Steven Griles, who became deputy secretary of the Department of the Interior in 2001, and she introduced Abramoff to Griles shortly before his confirmation. When questioned by the Committee, however, both Federici and Griles denied how Abramoff was introduced to Griles and the fact that Federici was a conduit for information from Griles to Abramoff. Griles entered a guilty plea to a similar charge in March 2007, and Federici's plea marks the twelfth defendant who has admitted guilt or been convicted for conduct related to Abramoff. The investigation has been moving at a fairly steady pace since Abramoff agreed to cooperate in January 2006, so don't look for it to end any time soon. The relationship between Griles and Federici was certainly more costly than most such involvements that come to an end. A Legal Times story (here) discusses the plea agreement. (ph)
June 7, 2007
Scrushy Tries to Get the Judge Bounced
Former HealthSouth CEO Richard Scrushy filed for a writ of mandamus in the Eleventh Circuit to get Chief U.S. District Judge Mark Fuller removed from the corruption case in which he was convicted along with former Alabama Governor Don Siegelman. The Judge set the sentencing for June 26, and earlier denied a recusal motion related to his ownership interest in an Alabama corporation that has contracts with the military. According to Scrushy's memo in support of the writ of mandamus (available below):
[The company] provides fuel distribution services at Langley Air Force Base, in addition to other military installations. Assistant United States Attorney Feaga, the lead prosecutor assigned to this case, is a colonel in the United States Air Force reserve. Assigned to Langley Air Force Base, Attorney Feaga is an assistant to Staff Judge Advocate Brigadier General Richard C. Harding, who is the principle legal adviser to the Air Combat Command and staff on all legal issues at Langley, which by definition would include contracts such as those granted to [the company]. At no time did Chief Judge Fuller disclose to Scrushy he is the largest shareholder of several businesses which have substantial contracts and do business with branches of the United States government nor did he request a waiver from Scrushy after full and complete disclosure.
Appellate courts are generally loath to grant a writ of mandamus, and the connection identified between Judge Fuller and the prosecutor is a bit tenuous. But this case has been so contentious, it would not be a surprise to see the Eleventh Circuit at least consider the petition to ensure that the sentencing is done properly. An AP story (here) discusses Scrushy's filing. (ph)
Paris Hilton Released After Three Days
In a bow to current pop culture and the abiding interests of my two teenagers, TMZ.com is reporting (here) that unimpeachable sources say Paris Hilton has been released from jail after serving only three days of a 23-day sentence imposed for her traffic violation. That sentence was about half the original 45-day sentence for the offense. With all the talk about harsh sentencing in white collar cases (e.g. Libby, Skilling, Ebbers, Rigases, etc.), here's one going the other direction. (ph -- and I promise no further posts on this topic, unless they're really interesting)
No Second Act for Radler at the Conrad Black Trial
An effort by defense counsel for Lord Conrad Black to recall the government's primary witness, former Hollinger International chief operating officer F. David Radler, was turned back by U.S. District Judge Amy St. Eve. The defense claimed that it uncovered new information showing Radler lied during his testimony during the government's case-in-chief about whether he had any knowledge about parole procedures in Canada, where Radler may serve a portion of his sentence. According to a Bloomberg article (here), the defense claims it learned that shortly before entering into a plea agreement with the government, Radler hired a Canadian lawyer who is an expert on parole procedures, showing that he lied when testifying about his lack of knowledge. Judge St. Eve denied the motion on the ground that the information was available to the defense when Radler was cross-examined, so its failure to pursue that line of questioning was not a good enough reason to recall him. Perhaps the Judge was tired of hearing the defense accuse Radler of being a liar once again, a line of inquiry pursued ad nauseam during the earlier cross-examination. Will the denial of the defense request be something that would constitute reversible error? Most likely not, because the evidence is probably cumulative -- how many different ways could Radler be called a liar, anyway? -- and its relevance is minimal because the fact that Radler hired an attorney does not necessarily show that he lied in his testimony. If Black et al. are convicted, I suspect this would be at worst a harmless error, if the Judge's decision to refuse to recall Radler was even incorrect.
The defense case continues to grind on, although a lack of witnesses gave the jury a break for one day. Nothing particularly explosive from Lord Black, whose lawyers eschewed calling Donald Trump to testify about the party he threw for his wife that was paid for in part by Hollinger. The defense case is expected to end shortly, at which point the jury will be charged and we enter the phase of the case that is the equivalent of watching paint dry: jury deliberations. (ph)
Senate Judiciary Committee Looks Into the Firing of the Ninth U.S. Attorney
In all the tumult over the sentencing of I. Lewis Libby on June 5, lost in the shuffle was another hearing on Capitol Hill on the firing of U.S. Attorneys in 2006, this time focusing on Todd Graves, former U.S. Attorney for the Western District of Missouri. Graves has been added to the list of U.S. Attorneys fired for no apparent reason, having been asked to step aside in January 2006 in a manner remarkably similar to that used with the other eight U.S. Attorneys in December 2006: a telephone call from the head of the Executive Office for United States Attorneys (EOUSA) saying, in effect, "clear out your office." The Senate Judiciary Committee heard testimony from Graves and his replacement, Bradley J. Scholzman, who came from the Civil Rights Division and is now the head of EOUSA. Scholzman generated some controversy in October 2006 when his office filed criminal charges against four members of a liberal voter registration group called ACORN for voting fraud. Scholzman defended the decision to file the charges in his prepared testimony (here):
These cases, which were brought under the anti-fraud provisions of the National Voter Registration Act, were assigned to an experienced career Assistant United States Attorney, who consulted with the career leadership in the Department’s Election Crimes Branch in accordance with the U.S. Attorney’s Manual in conducting the investigation. The Department has adopted an informal policy of not interviewing voters during the pre-election period, which is intended to avoid actions that could conceivably have a chilling effect on voting. The policy clearly does not mean, however, that the Department forbids the filing of any charges around the time of an election. While the ACORN matter arose in October, Department policy did not require a delay of this investigation and the subsequent indictments because they pertained to voter registration fraud (which examined conduct during voter registration), not fraud during an ongoing or contested election. Consequently, the Department’s informal policy was not implicated in this matter. In sum, there was nothing unusual, irregular, or improper about the substance or timing of these indictments. Three defendants have pled guilty and a fourth is scheduled to plea this week.
While the testimony generated few fireworks, it is part of the case being built in the Senate to try to push out Attorney General Gonzales. A vote on the "no confidence" resolution on Gonzales may come up during the week of June 11, but whether that has any effect on his tenure remains to be seen. (ph)
June 6, 2007
Commentary on Libby Sentencing
Receiving a straight guidelines sentence -- and one on the stiff side -- lets the administration feel the full effect of the guidelines sentences they created. Some thoughts:
1. Convicted defendants who maintain their innocence are placed in a no-win situation when appearing for sentencing. If they say anything, like for example express remorse, they can significantly hurt their chances on appeal. Judges are liable to shave months off a sentence for acceptance of responsibility. But the individual who is convicted and still maintains his or her innocence is left in a situation of selecting whether to try and reduce his or her sentence, or risk the chance of success on appeal. And when the sentence is relatively low, taking a chance on the appeal may be better. Libby was respectful to the court, but he certainly did not express remorse, thus maintaining a stronger case for his appeal or possibly for a retrial.
2. Whether the judge will allow Libby to remain free on bail pending appeal is not as definitive as many people believe. It is true that many white collar offenders do remain free pending appeal, but not all are this fortunate (e.g.,Atlanta Mayor Bill Campbell, Jeffrey Skilling, Jamie Olis). If Judge Walton decides to incarcerate Libby immediately, Libby may appeal to a higher court and ask for a stay pending the appeal.
3. If Libby is ordered to jail, the question may be whether he is taken on the spot or allowed to report directly to an assigned facility. There is a benefit to being allowed to report to a facility in that the individual will not be subjected to various prison facilities as they are transferred to their final destination.
4. The administration may be placed in a situation of making a quick decision on whether to pardon Libby or allow him first to serve his sentence. The pardon would be in sharp contrast to other pardons issued by President Bush. His past pardons have not been for individuals who were recently sentenced.
5. And then of course there is always the possibility - in criminal cases - of the newly sentenced individual deciding to cooperate with the government. Even if Libby did have something to offer the government, it may not prove useful as a conviction for perjury and false statements would not make him a particularly credible witness in court.
Checkout - Doug Berman's Sentencing Blog here, discussing upcoming Supreme Court case that could prove helpful to Libby.
Former Red Robin CEO Settles SEC Case over Improper Expenses
Michael J. Snyder, former CEO of Red Robin Gourmet Burgers, Inc., settled an SEC enforcement action over his receiving reimbursements from the company for personal travel, entertainment, and meal expenses. According to the SEC Litigation Release (here):
The Commission's complaint alleges that, during 2002, 2003 and 2004, Snyder incurred personal travel expenses of roughly $1.2 million for charter jet travel, and hotel and dinner expenses. The Complaint further alleges that Snyder submitted expense reports and invoices to Red Robin for payment of these personal expenses, misrepresenting that a business purpose existed for the charter jet trips and hotel and dinner expenses, failing to report the presence of personal guests on the trips, and failing to accurately report the destinations of the charter flights.
According to Red Robin's 2005 proxy statement (here), Snyder's compensation for those years was approximately $700,000, $955,000, and $1,060,000, so his personal expenses of $1.2 million were a significant portion of his overall compensation. Snyder settled the case by agreeing to a director and officer bar and will pay a $250,000 civil penalty. Snyder retired from Red Robin in August 2005, and the company's 8-K (here) filed regarding his resignation stated that "Mr. Snyder will reimburse the Company in full for certain expenses determined to be inconsistent with Company policies or lacking sufficient documentation." It's not clear where he incurred the meal expenses, and it seems a bit odd that the CEO of a restaurant chain would run up a tab at other eateries. (ph)
Pretending to Be a Lawyer Draws Larceny Charge
A former paralegal at a New York law firm who first pretended to attend law school, and then told the firm he had been admitted to the bar, has been charged by the Manhattan DA's office with felony larceny. The paralegal began at Anderson Kill & Olick in 1996, and according to the DA's press release (here), in 1998 he told the firm he had started in a night law program, with his schedule adjusted to accommodate evening classes. Informing the firm in 2002 that he'd graduated, he then stated he failed the bar twice but passed on the third try in July 2003. He claimed admission to the New York state bar in 2004. After becoming an associate in the firm doing litigation, his ruse came to light in October 2006, when he was fired. The larceny charge is based on "stealing the differential between the salaries he received while working in the position of attorney and the top paralegal salaries during that same period, plus $74,500 in bonuses," totaling over $200,000.
The chronology here is a bit odd, and it may be that additional amounts could have been charged in the larceny count. For example, most firms will pay for at least one bar review course and even give time off to study, so I suspect the paralegal got money and certain benefits from purportedly taking (and retaking) the exam, which would explain his "failing" twice. The delay between the reported July 2003 "pass" and the October 2004 "admission" is more difficult to understand -- did he claim a character & fitness issue, perhaps?
According to the WSJ Law Blog (here), the paralegal's attorney stated in response to the charges, “We look forward to presenting facts and circumstances we think will mitigate the charges brought by the people.” It's not entirely clear what "facts and circumstance" would mitigate the charge if in fact the paralegal deceived Anderson Kill over eight years and, perhaps more importantly, for the two years clients believed they were being represented by a licensed attorney and any courts in which he entered an appearance. The paralegal was also charged in Connecticut for impersonating a lawyer for his role in representing a client in a matter in that state; he is seeking to enter a special rehabilitation program that could result in the charges there being expunged (see Stamford Advocate article here). The felony charge in Manhattan may be a bit harder to deal with. (ph)
June 5, 2007
Libby Gets 30 Months
Online press is reporting that I "Scooter" Libby was sentenced today to 2 1/2 years in prison. (e.g., Boston.com; WSJ, CNN, NYTimes) He was convicted of perjury, false statements, and obstruction of justice. The government asked for 30-37 months, with the defense asking for no jail time. This sends a strong message of deterrence that crimes with national security implications will not be tolerated. J. Patrick Fitzgerald wins yet another round of this trial in obtaining a sentence in the range that he requested. This is particularly significant in that according to the Washington Post, the probation department asked for approximately one half of the sentence issued by the court. (see here)
The WSJ notes that the court did not rule on whether Libby would remain free pending appeal. Many assume that this will be automatic, as it tends to be in many white collar cases. But this is not always the case. Former Mayor Bill Campbell of Atlanta was ordered directly to prison and not allowed to remain free pending his appeal.(see here)
But it is also important to remember that this case is not over yet. There are several appellate issues that Libby is likely to raise in the next round. The inadmissibility of evidence that he wished to present will most likely be at the core of these arguments. (see WSJ here).
June 4, 2007
Commentary on the Indictment of Rep. William Jefferson
1. The case is brought in the Eastern District of Virginia, yet the harm alleged in many counts relates to actions related to his position in Congress which of course is located in the District of Columbia and Louisiana. When the government proceeds with conspiracy, they are able to charge in the district where the agreement took place, or where any of the acts took place, and where the parties may have an interest. In this Indictment one finds a cooperating witness in Virginia and the United States Trade and Development Agency also located there. One also finds others connections to Virginia. The government has enormous discretion in a case such as this is choosing its venue, and the defense basically has none. The government's choice here was to place this case in the "rocket docket" jurisdiction and to place it in a venue that is likely to be more favorable to the government.
2. The Indictment mentions that Rep. Jefferson has a JD degree from Harvard and an LL.M. in tax from Georgetown. Is it really necessary to include a person's educational background in an indictment? Or is this an attempt by the government to quash any future claims that might be made by the accused that he did not know what he did was against the law?
3. The Indictment is a classic case of double billing. The government charges conspiracy for the same acts as the substantive offenses, and then repeats them as predicate acts for RICO. Thus the charges in some instances are three times for the same conduct. Is the government permitted to do this- yes.
4. Who are the government witnesses? Two are obvious, as they are named. But the rest range from official A, businessperson A, Company A, and proceed through much of the beginning part of the alphabet in like fashion. Why are there so many undisclosed individuals in this indictment? Is the government protecting its witnesses so that they testify for them and that their businesses do not feel any repercussions? Will the defense be able to properly prepare their defense without these witnesses being disclosed?
5.Several counts relate to a deprivation of honest services. Is it really possible to deprive the United States House of Representatives of their right to honest services?
6. The timing of this Indictment presents some interesting questions also. How long has the government had its evidence? Is it just coincidental that it comes the day before the sentencing of I "Scooter" Libby?
Just some initial thoughts.
Rep. William Jefferson Indicted
CNN, Washington Post, WSJ, New York Times and others report on the Indictment of Rep. William Jefferson. For background information see here. The Indictment is long ( 95 pages) and has many different charges. Count One alleges a section 371 violation, with it being a conspiracy to solicit bribes by a public official, a deprivation of honest services by wire fraud, and the foreign corrupt practices act. Count Two is also under 371 and alleges a conspiracy to solicit bribes and a deprivation of honest services by wire fraud. The remaining counts are substantive offenses: counts three and four are bribes by a public official; counts five through ten are schemes to deprive citizens of honest services by wire fraud, eleven is a Foreign Corrupt Practices Act count, twelve through fourteen are money laundering, fifteen is obstruction of justice, and the final count alleges RICO. There are also forfeiture allegations.
More details will follow.