Saturday, September 15, 2007

Things Are Getting Hot in Alaska

The Washington Post reports on the latest happenings in an investigation related to Senator Ted Stevens (R) of Alaska. In court testifying in a federal case was the former chief executive of Veco Corporation, who stated that he gave some material and labor that were used in the building of the Senator's home near Anchorage. Although some of the discussion in that case related to the Senator's son, the fact is that the Senator's home was raided pursuant to a search warrant. (See here).  The question remains as to whether Senator Stevens is a target, subject, witness, or not even involved in this investigation. And one has to wonder whether his status will change as the investigation progresses. Will individuals be offered "deals" to encourage them to supply testimony against higher-ups?

(esp)

September 15, 2007 in Investigations | Permalink | Comments (0) | TrackBack (0)

Who's Minding the Department of Justice?

Bob Denver fans may recall his role in Who's Minding the Mint, a 1967 movie with a terrific cast that included Milton Berle and Joey Bishop, two of the finest borscht belt comedians.  The current state of the Department of Justice raises a similar question about who, if anyone, is in charge, although it is not quite as comic.  Alberto Gonzales, the eightieth Attorney General, left office on September 14 with a low-key farewell ceremony (Washington Post article here).  If you look at the Department's organizational chart (here), there is a decided absence throughout the upper level positions of individuals who have been confirmed by the Senate.  Along with the Attorney General position, which Solicitor General Paul Clement will fill on a temporary basis, the Deputy AG and Associate AG offices both have acting occupants in them, while the Assistant AGs for the Civil  Rights and Civil Divisions have recently announced their resignations.  No successsors have been nominated, and the next AG is likely to have a role in picking new people for the positions, so nothing will happen on that front until the top job is filled.  Out in the field offices, a quarter of the U.S. Attorneys do not have permanent appointments, including all seven districts in which the U.S. Attorneys were fired on December 7, 2006, purportedly to make way for new faces -- none of whom seem to have appeared quite yet. 

The end of a second-term President's administration always sees a heavy movement toward the exits, but the Department of Justice has usually avoided such large-scale turnover.  That may be because its senior positions can be so beneficial to one's career, and the switch to private firms is often not a very drawn out process, so there's no great need to time the jump to the private sector.  The current vacuum at the top is striking, however, and to this point the White House has not even nominated a successor to Gonzales.  The leadership void will continue for at least a while because the confirmation hearings for the eighty-first Attorney General will, in all likelihood, not be a pro forma exercise, unless the nominee is a true consensus candidate -- and that's not something I would bet on.  (ph)   

September 15, 2007 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

Friday, September 14, 2007

NFL and MLB Cooperation in HGH Investigation

A Yahoo story (here) discusses the ongoing investigation of an Orlando pharmacy that shipped human growth hormones (HGH) to various professional athletes, apparently including National Football League and Major League Baseball players.  The investigation by Albany, New York, District Attorney David Soares has triggered different responses from the leagues.  According to Soares, the NFL has been cooperative and he has been willing to share information with the league about players whose names have come up in the case.  With MLB, on the other hand, Soares claims there has been less cooperation, and he has been unwilling to provide information to the league about players who may have received HGH.  He met with former Senator George Mitchell, who is conducting the investigation of steroid use, on September 13 to discuss the investigation, and another Yahoo story (here) describes it as "productive."  But, Soares apparently will not share information unless the league is willing to produce players for interviews with the DA's office.  That may be a tough one for MLB, however, because the players' union is likely to balk at any effort to force players to speak with the DA's office, which could lead to a stalemate.

The names of three major league players who apparently received HGH from the pharmacy have already leaked out, although Soares denies the information came from his office.  Whether baseball will be able to get information about HGH use by its players from the DA remains to be seen, but with Mitchell's investigation apparently moving forward at leat a little bit in an effort to gather information about players, there could be more damaging revelations about the use of performance-enhancing substances to further blacken baseball's eyes. (ph)

September 14, 2007 in Investigations | Permalink | Comments (0) | TrackBack (0)

The Prevalence of Perjury

Further thoughts on the earlier post (here) about a story in The Oregonian (here) in which lawyers and judges decry the amount of perjury that seems to be occurring in court, and the paucity of prosecutions for the lies.  One of the best lines in the article is from former NADCL president John Henry Hingson III, who notes that divorce court is the place to go if you want to see perjury: "The grand-slam, home-run winner is in domestic relations court. People in divorce cases act crazy."  Of course, labeling something as a lie is easy to do, but proving perjury is a much more difficult task.  In addition to older common law requirements like the two-witness rule, or now the two independent pieces of evidence requirement, the Supreme Court's decision in Bronston v. United States, 409 U.S. 352 (1973), requires more than just inconsistent or evasive answers.  In Bronston, the Court held that a defendant cannot be convicted if the answer is literally true.  Thus, the government cannot prosecute a witness for evasive answers, or ones that have enough ring of truth that it cannot be shown to be demonstrably false..

Another way to avoid a perjury charge is to correct testimony to show that the mistake was only inadvertent, or at least not a clearly intentional falsehood.  There are not many crimes that allow a do-over, but 18 U.S.C. Sec. 1623(d), one of the two perjury statutes, does allow a witness to change the testimony to cure any false statement, or misstatement.  It provides, "Where, in the same continuous court or grand jury proceeding in which a declaration is made, the person making the declaration admits such declaration to be false, such admission shall bar prosecution under this section if, at the time the admission is made, the declaration has not substantially affected the proceeding, or it has not become manifest that such falsity has been or will be exposed."  A recent incident brought that provision to mind. Director of National Intelligence Admiral Mike McConnell issued a statement correcting testimony he gave to Congress about the effectiveness of the recently-passed Protect America Act.  Admiral McConnell cited the Act at a Senate Committee hearing as being helpful in the recent arrest of three alleged terrorists in Germany, but in a statement (here) he now recants that testimony:

During the Senate Committee on Homeland Security and Governmental Affairs hearing on September 10, 2007, I discussed the critical importance to our national security of the Foreign Intelligence Surveillance Act (FISA), and the recent amendments to FISA made by the Protect America Act. The Protect America Act was urgently needed by our intelligence professionals to close critical gaps in our capabilities and permit them to more readily follow terrorist threats, such as the plot uncovered in Germany. However, information contributing to the recent arrests was not collected under authorities provided by the Protect America Act.

Not that Admiral McConnell's testimony would have constituted perjury even without the correction, but claims will no doubt fly around Capitol Hill about lies and perjury. (ph)

September 14, 2007 in Perjury | Permalink | Comments (0) | TrackBack (0)

Guilty Plea for Illegal Campaign Contributions

A Kenosha, Wisconsin, businessman who worked for a trucking company entered a guilty plea to charges that he used a $250,000 fund for illegal campaign contributions by reimbursing individuals for making the donations to campaigns.  Over twenty state and federal candidates from both parties received the money, and it was directed to candidates who supported Indian gaming and changes to the trucking laws that would favor the defendant's employer.  A Milwaukee Journal-Sentinel story (here) and U.S. Attorney's Office release (here) discuss the guilty plea. (ph)

September 14, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Thursday, September 13, 2007

Kobi Alexander Is Down $50 Million from Civil Asset Forfeiture

While former Comverse Technology CEO Kobi Alexander has been successful in fighting off extradition from Namibia on charges related to options backdating at the company, he lost on the government's civil asset forfeiture action that may well result in the seizure of nearly $50 million from two brokerage accounts.  In July 2006, after Alexander fled the U.S., the federal government filed a civil asset forfeiture action to obtain the money from two Citigroup accounts on the ground that they represented a portion of the proceeds of the options backdating and one account had been used to launder the funds. Shortly before the government declared him a fugitive, Alexander wired $57 million from the accounts to Israel, and he has since been living with his family off that money, along with other overseas assets.

The district court granted summary judgment (opinion below) to the government by applying 28 U.S.C. Sec. 2466(a) , which enacted the fugitive disentitlement doctrine for civil asset forfeiture cases after the Supreme Court rejected its application in such cases in the 1996 in Degen v. U.S, 517 U.S. 820 (1996).  The statute provides:

a) A judicial officer may disallow a person from using the resources of the courts of the United States in furtherance of a claim in any related civil forfeiture action or a claim in third party proceedings in any related criminal forfeiture action upon a finding that such person--
(1) after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution--
(A) purposely leaves the jurisdiction of the United States;
(B) declines to enter or reenter the United States to submit to its jurisdiction; or
(C) otherwise evades the jurisdiction of the court in which a criminal case is pending against the person; and
(2) is not confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction.

In applying Sec. 2466, the district court held that "[t]here is absolutely no basis for concluding that Kobi is not free to return to the United States to face the criminal charges against him" -- except that he would be put in jail until trial so quickly it would make his head spin.  Perhaps more ominously for Alexander, the district court noted that "there is no basis for concluding that the government's case is weak considering the early stage of this litigation."  Also rejected were arguments that the fugitive disentitlement provision violates the Constitutional due process and the excessive fines provisions.

While Alexander lost his claim to the $50 million, his wife fared slightly better -- but just slightly.  Mrs. Alexander asserted that she had standing to claim the money in a filing by her counsel, Goodwin Proctor.  The district court noted that "[o]rdinarily, I might simply find that when such a law firm submits a standing allegation as vague and conclusory as this one, the claim should be dismissed as a matter of law."  Yet, "despite the flagrant shortcomings of this allegation," the court did order discovery on her claim to the account, although simply being the spouse of the account owner will not be sufficient to give her standing to fight the civil asset forfeiture action.  While the government does not have the $50 million quite yet, it moved a big step closer to it. (ph)

Download us_v_alexander_asset_forfeiture_ruling_sept_10_2007.pdf

September 13, 2007 in Civil Enforcement, Fraud, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Chiquita Directors Dodge an Indictment

What looked like a potentially unprecedented prosecution of corporate directors for not stopping the company's illegal overseas payments after it disclosed the conduct to the Department of Justice ended with a decision not to pursue charges against any individuals.  Chiquita Brands International, Inc. had been paying a Columbian paramilitary group protection money for a number of years to ensure the smooth operation of its subsidiary in the country, even after the delcaration that the organization was a global terrorist.  After Chiquita reported the payments -- and its improper accounting for them under the FCPA -- to the Department of Justice, there was concern on the board that it could not simply stop paying the money without risking the safety of its employees, so for nearly a year it continued the transfers.  While the company was allowed to plead guilty to one count of engaging in transactions with a specially-desiganted global terrorist, the district court refused to sentence Chiquita until the Department of Justice decided whether it would charge any of the directors who allowed the payments to continue after the initial disclosure.  While there was "serious consideration" given to filing charges, according to the government's sentencing memorandum (available below), "In the exercise of its prosecutorial discretion, the United States has decided not to do so."  The government and Chiquita agreed to a $25 million fine and five years probation for the violation, and no individuals will be charged in the case.  Sentencing is scheduled for September 17. (ph)

Download us_v_chiquita_brands_government_sentencing_memorandum_sept_11_2007.pdf

September 13, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Another Former Ney Aide Receives Probation

The second chief of staff for former Ohio Representative Bob Ney who entered a guility plea received two years probation, a $2,000 fine, and 100 hours of community service for his role in the favors passed by former superlobbyist Jack Abramoff to the Congressman.  Neil Volz was instrumental in the investigation of Ney, who is currently serving a 30-month sentence after his own guilty plea to corruption charges.  Ney's other chief of staff during the period received two years probation after his guilty plea, which also included substantial cooperation.  While federal prosecutors asked for a period of home confinement for Volz, the government acknowledged his significant cooperation in the Ney investigation.  A Columbus Dispatch story (here) discusses the sentencing. (ph)

September 13, 2007 in Corruption, Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 12, 2007

Whatever Happened to Richard Scrushy

When Richard Scrushy was indicted in 2005 on corruption charges, he was just coming off an acquittal on conspiracy and securities fraud charges related to accounting fraud at HealthSouth when he was CEO.  Many viewed Scrushy as the primary player in the case, which also included former Alabama Governor Don Siegelman and two of his aides.  It now seems that Scrushy was just along for the ride, and Siegelman was the primary focus of the government's investigation that is being viewed quite differently now that allegations of political motivations have surfaced.  According to an affidavit (here), the White House, in the person of Karl Rove, targeted Siegelman, and the case would be handled by two U.S. Attorney's in Alabama, described as the "girls" in the affidavit that sets out purported conversations about Siegelman after he narrowly lost re-election in 2002.  Unfortunately, the affidavit recounts hearsay on hearsay, and the other participants deny the conversations ever took play.  The allegations may not be much of a basis to attack Siegelman's convictions on corruption charges related to $500,000 of payments made by Scrushy.  Even if politics tainted the investigation and prosecution of Siegelman, it's not clear what effect that would have on  Scrushy's conviction because he does not appear to have been the direct target of the investigation, but only more of a bit player.

Not that Scrushy has receded completely into the background.  He is currently in the FCI in Beaumont, Texas, after receiving an 82-month prison term.  He has filed for bail pending his appeal of the convictions, and a brief filed by the government on September 10 (available below) argues that he is a flight risk, citing his excursion from Orlando to South Florida while he was awaiting sentencing as a factor in denying bail.  With Congress looking into the decision to prosecute Siegelman -- a letter (here) from House Judiciary Committee Chairman John Conyers to the Department of Justice decries its refusal to turn over documents related to the Siegelman case and two other prosecutions -- and the Eleventh Circuit considering the bail motion and the appeal, the case will not end any time soon. (ph)

Download us_v_scrushy_bond_on_appeal_goverment_brief_sept_10_2007.pdf

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

Tuesday, September 11, 2007

Plea in KPMG Related Case

The Wall St Jrl reports that one of the individuals in the KPMG related case has agreed to plead guilty and cooperate against two others that remain charged.  Thirteen others were dismissed from the case. (see here and here).

(esp)

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

Attorney-Client Privilege Hearing Set

The Senate Committee on the Judiciary has issued a notice of a hearing on September 18, 2007 on "Examining Approaches to Corporate Fraud Prosecutions and the Attorney-Client Privilege Under the McNulty Memorandum."

(esp)

September 11, 2007 in Privileges | Permalink | Comments (0) | TrackBack (0)

Monday, September 10, 2007

The Siegelman Prosecution

Adam Nossiter of the NYTimes has a fascinating article that tells of forthcoming scrutiny of the prosecutor's decision to proceed on the case of former Governor Don Siegelman. The article raises interesting questions concerning prosecutorial discretion, and it looks like Karl Rove may have some questions to answer.

Prosecutors clearly have enormous prosecutorial discretion in their charging process. The discretion often becomes heightened by the fact that many federal statutes have enormous breadth.  This provides more power to the decisionmaker in his or her determination of whether to charge a crime.  With recent DOJ happenings and political appointments and dismissals, it is clearly necessary to scrutinize high-level decisions that might have improperly been influenced by the political system.

(esp)

September 10, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

More on "Scooter" Libby

Bush commuted I. Lewis "Scooter" Libby's sentence, but left the conviction in place. The collateral consequences  of a conviction, at least to one who holds a law license, can be devastating.  A felony conviction often results in a suspension or disbarment of one's law license.  The Report and Recommendation of the DC Board of Professional Responsibility can be found here. The key will be whether the conviction is affirmed.

(esp)

September 10, 2007 in Civil Enforcement | Permalink | Comments (0) | TrackBack (3)

Perjury

The Oregonian has an article by Edward Walsh that discusses the amount of perjury that regularly occurs in courts. In the federal system perjury is controlled by 18 U.S.C. s 1621 which requires that the "government prove that the defendant 1) under oath, by one authorized to administer the oath; 2) before a competent tribunal, officer, or person; 3) made a false; 4) material statement; 5) willfully and with knowledge of its falsity." See White Collar Crime in a Nutshell.

(esp)

September 10, 2007 in Perjury | Permalink | Comments (0) | TrackBack (0)

Sunday, September 9, 2007

Protecting Sea Turtles

A DOJ Press Release tells of a "three-year undercover operation conducted by federal agents of the U.S. Fish and Wildlife Service" and how this investigation "led to the arrests [  ] of five individuals for their roles in illegal international trade of exotic skins and parts manufactured from sea turtles and other protected species of wildlife."  And this investigation, after three years, led to 2 indictments of 54 money laundering, smuggling, and conspiracy charges. The DOJ Press Release states that:

"Sea turtles are protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a multilateral treaty of which the United States, Mexico and approximately 170 other countries are parties. CITES prohibits international trade in sea turtles or their parts or products for commercial purposes, and also restricts international trade in many other species of wildlife involved in this case which are deemed at risk of extinction and are, or may be, affected by international trade. Five of the seven species of sea turtles are listed as “endangered” in all or part of their range, pursuant to the according to the Endangered Species Act. A sixth species is listed as “threatened.” Six species of sea turtles are found on and along the coasts of Mexico."

(esp)

September 9, 2007 in Environment | Permalink | Comments (0) | TrackBack (0)

Attorney & Former Judges Sentenced

A DOJ press release reports on an attorney and two former judges in Mississippi being sentenced following jury convictions to charges of bribery, RICO, and fraud.  The attorney received a sentence of 11 years, a 2.7 million dollar fine, a 1.5 million dollar restitution that will be shared with a co-defendant, and a special assessment.  One of the judges received a sentence of 70 months incarceration plus the joint fine, restitution and special assessment, with the last judge receiving 110 months incarceration, a fine of 125,000 dollars and a special assessment.

(esp)

September 9, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Public Corruption is Now the FBI's Top Priority

TPMmuckraker quotes a National Journal story (here) that public corruption is now the top priority of the FBI, which is committing increased resources to the cases.  The story states: "According to FBI officials, cases involving corrupt government officials are now the bureau’s top criminal priority. The number of FBI agents focusing on public corruption has jumped by more than 40 percent—from 451 agents in fiscal 2001 to 641 in fiscal 2007. In 2005 and 2006, FBI probes were instrumental in the convictions of 1,060 government officials on corruption charges -- 177 federal officials, 158 state officials, and 725 local officials and police -- an increase of 40 percent from the previous two-year period."  Recent investigation trends show a decrease in white collar crime cases over the past three years, although it's not clear whether those statistics include public corruption investigations.  Just based on media reports, it appears that there are a number of investigations of members of Congress, some spawned by the cooperation of former superlobbyist Jack Abramoff, and others involving Congressional earmarks that favor campaign contributors and local businesses.  (ph)

September 9, 2007 in Corruption, Investigations | Permalink | Comments (0) | TrackBack (0)