Saturday, November 3, 2007

Fifth Circuit Rules in FCPA Case

The Fifth Circuit Court of Appeals affirmed a Foreign Corrupt Practices Act conviction in the case of United States v. KayThe court opinion discusses, among other things, the application of the Rule of Lenity and whether the indictment and jury instructions failed to properly account for the element of "willfulness."  The court found that "where the legislative history shows that 'Congress meant to prohibit a range of payments wider than only those that directly influence the acquisition or retention of government contracts or similar commercial or industrial arrangements,' the FCPA is not sufficiently ambiguous to merit application of the rule of lenity." The court also found that the failure to include "willfulness" in the indictment was not harmful error.


November 3, 2007 in FCPA | Permalink | Comments (0) | TrackBack (0)

More Lawyers for WellCare

The investigation of Medicaid benefits management company WellCare Health Benefits, Inc., is featuring a growing roster of law firms as the company deals with a healthcare fraud investigation.  As discussed in an earlier post (here), 200 federal and state agents executed a search warrant at WellCare's Tampa headquarters on October 25.  A Wall Street Journal story (here) states that the focus of the investigation is accounting for mental health benefits that may have allowed the company to retain money -- perhaps as much as $35 million -- that should have been refunded to the the state of Florida, its largest client with over 350,000 beneficiaries.  Not surprisingly, there is a qui tam suit, although that remains sealed at this point.  The company's stock has dropped nearly $90 since the search, and a flurry of shareholder derivative and securities class actions have been filed.

A company press release (from Business Wire here) discloses that WellCare's special investigating committee has retained Davis Polk to advise it, and the audit committee has retained Goodwin Procter.  WellCare's earlier announcement disclosed that it had retained King & Spaulding and Greenberg Traurig in connection with the investigation.  That's four national law firms, which can be added to the likely phalanx of lawyers hired for individual officers who may be targets of the investigation, and perhaps even a few for the myriad witnesses who will be interviewed in the internal investigation and perhaps later called before the grand jury.

Do not be surprised if the company's administrative expenses shoot through the roof the next couple quarters as all those legal bills come due.  (ph)

November 3, 2007 in Fraud, Investigations | Permalink | Comments (0) | TrackBack (0)

Second Brocade Options Backdating Prosecution Slims Down

The prosecution of former Brocade HR vice president Stephanie Jensen for options backdating seems to be on the South Beach diet.  Prosecutors disclosed they planned to drop four charges from the original indictment, after earlier dismissing two others, so that she will only face two counts at trial.  Earlier, the company's CEO, Gregory Reyes, was convicted on ten counts related to his role in the backdating, including securities fraud and conspiracy.  Jensen was indicted along with Reyes in August 2006, but U.S. District Court Judge Charles Breyer granted her severance motion, and trial is set to begin with jury selection on November 19. 

In its Pretrial Conference Memorandum (available below), the government disclosed that it planned to drop three counts of making a false filing with the SEC and one count of securities fraud.  It earlier dismissed two mail fraud counts that included a right of honest services component, no doubt to avoid a defense argument relying on the Fifth Circuit's decision in U.S. v. Brown rejecting the application of the right of honest services theory when the defendant believes she is assisting the company.  The remaining charges are conspiracy and falsification of Brocade's books and records.  The latter charge is the narrowest in the original indictment, requiring no intent to defraud or mislead, only an intent that the corporate books be inaccurate.

In its memorandum, the federal prosecutors outlined their basic theory for Jensen's liability: "Jensen oversaw and directed the process by which the earlier date was selected, presented to Reyes, and recorded in the company’s corporate records. She also oversaw and directed the process by which other personnel records were falsified. Reyes signed committee minutes falsely stating that the decision to grant options had been made on the earlier date when the price was lower."

Whether the pared down case succeeds remains to be seen.  The severance allows Jensen to claim that she acted on Reyes' orders and that he was responsible for the proper recording of the options grants -- an "empty chair" defense.  She can also argue that she was unaware that the backdating was not properly recorded in Brocade's books and records -- an ignorance defense.  Unlike the CEO of a company, who can be expected to understand the requirements for SEC financial reporting, a lack of knowledge claim from a lower-level executive may have a greater chance of succeeding.  The conviction of Reyes for the same conduct certainly is not helpful to the defense, but the cases may play out differently so prior performance is not an indication of future returns, as the mutual fund companies like to warn.

With the government's case-in-chief set to start on November 26, Reyes' sentencing originally scheduled for that day will be postponed until after the conclusion of the second case.  The Jensen trial may take as long as two weeks, although the government claims it may complete its case-in-chief in three or four days.  Remember the rule of thumb whenever a litigator gives an estimate for how long it will take to put on a case: multiply by two. (ph)

Download us_v_jensen_pretrial_memo_oct_31_2007.pdf

November 3, 2007 in Fraud, Prosecutions, Securities | Permalink | Comments (0) | TrackBack (0)

Friday, November 2, 2007

The Decline in Corporate Fraud Prosecutions

The American Lawyer has a detailed article (here) What's Behind the Drop in Corporate Fraud Indictments describing what it calls the decline in prosecutions of corporations and senior officers for fraud since the heyday of the President's Corporate Fraud Task Force.  The article and a supporting spreadsheet (here) provides a detailed look at corporate prosecutions since 2002, when the Task Force came into existence shortly before Congress passed the Sarbanes-Oxley Act, the symbol of the government's response to the collapse of Enron, WorldCom, and Adelphia Communications amidst allegations of accounting fraud.  The analysis provides the most comprehensive listing of prosecutions of companies and their executives that I have seen, including information about sentencing and appellate dispositions of cases.

One of the core findings is the drop in corporate fraud prosecutions, particularly since 2004:

Perhaps the most curious of our findings -- and one not highlighted by the Department of Justice -- is the precipitous decline in the number of major corporate fraud indictments in the two years since the re-election of President Bush. After issuing detailed reports in 2003 and 2004, the task force stopped reporting on its efforts in 2005, just as corporate fraud indictments slowed to a trickle. Our analysis shows 357 indictments in major corporate fraud cases between 2002 and 2005. But only 14 indictments were identified by the Justice Department as significant corporate fraud cases in 2006. There have been only 12 major corporate fraud cases indicted so far in 2007.

There are any number of reasons for the decline, and I doubt there is one single "cause" for the slowdown in these types of cases.  One explanation offered by the former U.S. Attorney for the Central District of California takes the "when life gives you lemons make lemonade" approach: the Task Force was so successful that there is no more corporate fraud, at least not on the scale seen a few years earlier.  A more plausible explanation is the almost natural ebb-and-flow to cases in a particular area, be it corporate fraud or drug prosecutions.  Companies change in response to the marketplace, be it products or prosecutors, and so are acting differently.  That doesn't mean they will stay out of trouble forever. 

Perhaps more imporant is the decline in the number of federal prosecutors devoted to corporate crime investigations, which place significant demands on the resources of U.S. Attorney's offices.  With budget resources devoted to the war in Iraq and Afghanistan crimping other departments, and the focus on new prosecutorial initiatives, such as child pornography and terrorism, something has to give and corporate crime is an easy place to cut back when there are no spectacular bankruptcies grabbing the media's attention.  Without the manpower, cases can languish, which is especially difficult in this area because corporate fraud cases are not known for their timeliness.  Filing a case about transactions involving technical accounting issues that occurred in a few years earlier just doesn't leap off the page and demand attention. 

When there are fewer resources committed to the area, the pressure to bring cases may actually decrease because it is not as stylish or important to an assessment of an office's effectiveness.  Moreover, the cases remaining from a few years ago are no longer the "low-hanging fruit" and may be just too difficult to prove without a commitment of significant resources.  Recent media reports indicate that a criminal investigation of accounting fraud at bankrupt auto parts maker Delphi ended with no criminal charges, a result that might not have occurred a few years ago when there was much more pressure to bring cases.

While the American Lawyer focuses on the decline in corporate fraud prosecutions, that does not mean there is a decrease in cases in other areas that fall within the "big tent" of white collar crime -- we are a welcoming niche.  Prosecutions under the Foreign Corrupt Practices Act are increasing, not declining, and the globalization trend probably means this will be a growth area.  [NB: For those interested in the FCPA, please be sure to check out the FCPA Blog (here), which provides outstanding coverage in this area.]   Antitrust prosecutions, especially for international price fixing, have not slowed over the past couple years, and the Antitrust Division's corporate amnesty policy -- first company in the door gets immunity -- seems to work in this area.  The FBI has announced that public corruptioin is a top priority, and the number of Congressmen and Senators under investigation, indictment, or imprisoned recently is staggering.  I doubt anyone is predicting a decline in healthcare fraud investigations, as the recent search at WellCare shows, and the Milberg Weiss prosecution may portend further scrutiny of class action law firms.

Finally, CEOs remain the target of government investigations, and I think that will continue in the future, even if prosecutions of corporations declines.  Former Collins & Aikman CEO David Stockman, former ESS Inc. CEO Michael Shanahan, and former Comverse CEO Kobi Alexander are among the corporate chiefs facing charges -- maybe not Alexander if he can avoid extradition from Namibia.  Regardless of priorities, a case involving the CEO of a public company will be a focus for the Department of Justice, and the resources necessary will be committed to these cases, in all likelihood.

Having seen the aftermath of the collapse of the banking industry up close in the early 1990s, and watching the corporate accounting and backdating cases develop over the past few years, I believe we will see another round of corporate scandals and prosecutions in the next few years.  I wish I knew where it would come from, and the continuing collapse of housing prices may give us a hint. (ph)

November 2, 2007 in Enron, Fraud, HealthSouth, Prosecutions, WorldCom | Permalink | Comments (0) | TrackBack (0)

Willbros Set to Settle FCPA Investigations

Energy services firm Willbros Group Inc. disclosed in its third quarter 10-Q (here) that it has reached a tentative settlement with the Department of Justice and the SEC over violations of the Foreign Corrupt Practices Act.  The bribes involved former subsidiaries operating in Nigeria, Bolivia and Ecuador, and the company will enter into a three-year deferred prosecution agreement requiring it to pay over $40 million in criminal and civil penalties, disgorgement, and prejudgment interest.  According to the company's disclosure -- buried in the footnotes to its financial statements -- the settlement with DOJ will involve:

  • A twelve-count criminal information will be filed against WGI and WII as part of the execution of the DPAs between the DOJ and each of WGI and WII. The twelve counts include substantive violations of the anti-bribery provisions of the FCPA, and violations of the FCPA’s books-and-records provisions. All twelve counts relate to operations in Nigeria, Ecuador and Bolivia during the period from 1996 to 2005.
  • Provided that WGI and WII fully comply with the DPAs for a period of approximately three years, the DOJ will agree not to continue the criminal prosecution and, at the conclusion of that time, will move to dismiss the criminal information.
  • The DPAs will require, for each of their three year terms, among other things, full cooperation with the government; compliance with all federal criminal law, including but not limited to the FCPA; and a three year monitor for WGI and its subsidiary companies, primarily focused on international operations outside of North America, the costs of which are payable by WGI.
  • The Company will be subject to $22,000 in fines related to FCPA violations. The fines are payable in four equal installments of $5,500, first on signing, and annually for approximately three years thereafter, with no interest payable on the unpaid amounts.

This is another example of the growing trend to use deferred prosecution agreements in FCPA cases rather than full guilty pleas by companies. (ph)

November 2, 2007 in FCPA, Settlement | Permalink | Comments (0) | TrackBack (0)

Thursday, November 1, 2007

Former Federal Prosecutor Acquitted on Obstruction Charges

Former assistant U.S. Attorney Richard Convertino and a former State Department security officer were acquitted of all charges relating to their alleged obstruction of justice for not turning over evidence in the first post-September 11 terrorism trial.  Three of the four defendants were convicted in the original case, U.S. v. Koubriti, the so-called "Detroit Terrorism Trial," but the Department of Justice asked that the convitions be reversed and the charges be dismissed because of prosecutorial misconduct.  Convertino was the lead prosecutor in Koubriti, and was indicted on conspiracy, obstruction, and false declaration charges in 2006.  The trial lasted nearly three weeks, and the jury deliberated less than a day before returning the "not guilty" verdicts.  One obstruction charge against Convertino alone, related to the sentencing in an unrelated drug case, was severed before trial, and it's not clear whether prosecutors will pursue that charge in a second trial. 

The charges related in large part to discovery in the Koubriti case, and involved questions of whether evidence was suppressed in violation of Brady v. Maryland.  The prosecution was unprecedented in making a claim of prosecutorial misconduct the basis for a criminal case, at least when there were no allegations of falsified evidence or perjury by fact witnesses.  A Detroit News story (here) discusses the trial and "not guilty" verdicts. (ph)

November 1, 2007 in Obstruction, Prosecutors, Verdict | Permalink | Comments (0) | TrackBack (0)

Ryan Denied Bail Pending Consideration of Supreme Court Appeal

Former Illinois Governor George Ryan is likely facing the beginning of his six year prison term on November 6 when Seventh Circuit Judge Diane Wood denied his request for bail pending the filing and consideration of a writ of certiorari with the Supreme Court.  Ryan and his co-defendant lost the appeal of their convictions on RICO and corruption charges in an opinion issued on August 21, 2007, and the full court denied rehearing en banc by a 6-3 vote, over a strong dissent written by Circuit Judge Richard Posner (see earlier post here).  In denying his request for bail to be continued until the Supreme Court decides the case, Judge Wood issued a chambers opinion (available below) stating:

Appellants here have shown neither a reasonable probability that the Court will grant certiorari nor a reasonable possibility that this court’s decision will be reversed. Most of the arguments presented in the dissent to the panel’s opinion were not preserved in the district court, and none of the arguments in the dissent to the order denying rehearing en banc has ever been advanced by the appellants. Before it could reach these questions, the Supreme Court would have to disregard a series of forfeitures. It is unlikely that the Court would do so, especially given the strength of the government’s case.

Ryan can still apply for bail to Justice Stevens, who is responsible for the Seventh Circuit, until a decision on his cert petition, but that is unlikely to succeed.  The standard for granting bail is the same for the court of appeals and the Supreme Court, under 18 U.S.C. Sec. 3143(b)(1)(B), which requires a finding that the appeal "raises a substantial question of law or fact likely" to result in a reversal of the conviction.  A quick check on Westlaw showed only a few cases in which a single Justice granted bail pending a decision on the writ of certiorari, and given the small number of petitions the Court accepts, I suspect it is unlikely Ryan's request will succeed.  Nevertheless, it is certainly worth a try, especially in light of the dissenting opinions in the case questioning the fairness of his trial. (ph)

Download us_v_ryan_denial_of_bail_pending_cert_oct_31_2007.pdf

November 1, 2007 in Judicial Opinions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Ingersoll-Rand Settles FCPA Case from Iraq Oil-for-Food Program Bribery

Industrial manufacturer Ingersoll-Rand Co. settled criminal and civil investigations of Foreign Corrupt Practices Act violations related to bribes given to participate in the Iraq Oil-for-Food program, which seemed to generate a fountain of corrupt payments.  The bribes involved two foreign subsidiaries, in Ireland and Italy, and Ingersoll-Rand agreed to a three-year deferred prosecution agreement (here) and pay a $2.5 million fine. The government filed conspiracy to commit wire fraud charges against the subsidiaries, which will be dismissed if it fulfills the terms of the DPA.  In addition, the company settled an SEC civil enforcement action, agreeing to disgorge profits of $1,710,034, and pay $560,953 in pre-judgment interest and a $1,950,000 civil penalty (Litigation Release here).  Ingersoll-Rand's total cost was about $6.7 million, which does not include the increased expenses of ensuring compliance with the DPA.

A provision of the DPA that is becoming more common is a section allowing Ingersoll-Rand to assert the attorney-client privilege and work product doctrine to resist producing records prosecutors might request.  However, the cost of doing so is that "the Department may consider this fact in determining whether Ingersoll has fully cooperated with the Department."  Whether DOJ will ever follow through on such a threat remains to be seen, but this type of provision seems to be designed to avoid claims that the government is demanding across-the-board waivers of the privilege. (ph)

November 1, 2007 in FCPA, Settlement | Permalink | Comments (0) | TrackBack (0)

Sell on the Dip

There is an investment adage to "buy on the dip," meaning that when the stock market has one of its periodic one-day plunges that appears to be irrational, buy shares to take advantage of the discounted prices.  If you know bad news is coming, you can also position yourself to take advantage of it, and two SEC insider trading cases show once again that investors can profit from impending bad news just as easily as good news.  In one case, a former vice president at mortgage lender Countrywide Financial took advantage of information about a quarterly earnings shortfall by selling out his shares, sold short additional shares, and bought put options.  The stock dropped 11% on the announcement, netting profits and losses avoided of $35,547.93.  According to the SEC Litigation Release (here), in addition to the disgorgement the defendant paid a double-penalty, a steep price for a single set of trades.

In a second case, the Commission alleges that a Ukrainian national made bearish trades in IMS Health Inc. before the announcement that the company missed its quarterly earnings mark.  The SEC Litigation Release (here) states:

[J]ust hours before the close of the market on October 17, 2007, Dorozhko, while in possession of material nonpublic information regarding the impending announcement of negative earnings by IMS Health, purchased 300 Oct 25 out-of-the-money and 330 Oct 30 at-the-money put options on the common stock of IMS Health which would expire on October 20, 2007, just three days later. According to the Complaint, after the market closed on October 17, 2007, IMS Health reported third quarter earnings of $0.29 per share, which was 28% below analysts' consensus estimates of $0.40 earnings per share and 15% below the previous year's third quarter earnings of $0.34 per share. The Commission alleges that on October 18, 2007, IMS Health's stock price fell to a low of $21.20 per share or 28% from the previous day's closing price. On the same date, Dorozhko sold all of his IMS Health put options and realized proceeds of $328,000 and profits of $287,346 according to the Commission's Complaint.

Because of the overseas trading, the Commission sought and obtained a freeze order to keep the money in the United States while the Enforcement Division staff completes its investigation. (ph)

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

Wednesday, October 31, 2007

The Growing Furor Over the Blackwater Immunity Grants

The grant of immunity by State Department investigators to the Blackwater guards involved in a firefight in Iraq on September 16 that killed a number of civilians is raising a furor on Capitol Hill about who authorized the immunity and whether it was cleared through the Department of Justice.  ABC News reports (here) the language of the immunity grant to each guard who made a statement: "I understand this statement is being given in furtherance of an official administrative inquiry . . . I further understand that neither my statements nor any information or evidence gained by reason of my statements can be used against me in a criminal proceeding, except that if I knowingly and willfully provide false statements or information, I may be criminally prosecuted for that action under 18 United States Code, Section 1001."  This appears to be the common "use/fruits" immunity (see earlier post here) given to a person to obtain testimony over an assertion of the Fifth Amendment privilege.  Department of Justice approval is required before any authorized grant of immunity can be made, which appears to be missing here.  That does not mean the immunity is invalid, however, and the guards are protected regardless of whether the legal requirements were followed. 

Foreign Relations Committee chairman Senator Joseph Biden and House Oversight and Government Reform Committee chairman Representative Henry Waxman sent letters to Secretary of State Rice asking for further information about the immunity grants.  Senator Biden's letter (here) asks, "Press reports today indicate that DS agents offered grants of immunity to Blackwater employees after the September 16 shooting incident in Baghdad.  Are these reports accurate?  If so, who authorized these grants of immunity?  Was there consultation with the Department of Justice prior to such grants of immunity?"  Representative Waxman's letter (here) states, "This rash grant of immunity was an egregious misjudgment. It raises serious questions about who conferred the immunity, who approved it at the State Department, and what their motives were."

One justification offered for giving this type of immunity is that it does not preclude a subsequent criminal prosecution of the immunized witness, unlike "transactional immunity" that prohibits prosecution for any crime discussed by the witness.  Of course, arguing that an even greater protection could have been given is a bit like claiming "I could have caused a lot more damage than I did to the investigation" -- small comfort at best.  Nevertheless, government spokespersons have asserted that criminal prosecutions will still be pursued.  For example, Dana Perino at the White House stated (here) that "Secretary Rice has made it very clear that she takes the situation very seriously. It is under review. She said that anyone who has engaged in criminal behavior will be prosecuted."  A State Department spokesman took the same approach, stating (here) "[t]he kinds of, quote, 'immunity' that I've seen reported in the press would not preclude a successful criminal prosecution."  Perhaps there was a Dr. Evil moment in putting quotation marks around "immunity" because the term is quite clear.

Can the government still pursue a criminal prosecution of any of the guards?  Leaving aside thorny issues regarding jurisdiction, the grant of use/fruits immunity makes a subsequent criminal prosecution very difficult, at best.  Under the Supreme Court's decision in Kastigar v. United States, 406 U.S. 441 (1972), the government has the "heavy burden" in any prosecution of an immunized witness of meeting "the affirmative duty to prove that the evidence it proposes to use is derived from a legitimate source wholly independent of the compelled testimony." (Italics added)  Perhaps the most chilling term a prosecutor ever hears is "Kastigar hearing" because the proof requirements -- especially when immunity is granted early in an investigation -- are so onerous.

What is more striking about the immunity given to the Blackwater guards is the manner of granting the protection appears to violate two of the basic precepts in securing testimony in the face of a Fifth Amendment claim.  First, it does not appear that the investigators had any idea what the guards would say, not even a proffer from them, so it was a blind grant of immunity.  The common adage is that prosecutors should not buy a "pig in a poke" (see earlier post here on the meaning of that phrase), i.e. check the value of the goods before the transaction is completed.  Indeed, it is not clear whether any of the guards ever asserted the Fifth Amendment, so it's possible the immunity grant was unnecessary for some.  Second, even if you do have to buy a pig in a poke, you don't buy it from everyone.  Immunity grants are usually given parsimoniously, and only to those on the lower level or on the outside ring of the investigation.  A blanket grant of immunity to all participants likely means that no one can be prosecuted because separating out the information in a Kastigar hearing would be impossible -- remember Col. Oliver North.  Handing out immunity like Halloween candy is not the way to pursue an investigation if a criminal prosecution is viewed as a possibility, although if the expectation was that no charges would be filed then this would be the best means to ensure that result. (ph)

October 31, 2007 in Investigations, Privileges | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 30, 2007

The Government is Making Money

Recent false claim settlements will be adding money to the government. Neither of the two recent cases involve criminal allegations.

The DOJ reports that "Hexcel Corporation of Stamford, Conn., has agreed to pay the United States $15 million to resolve allegations it violated the False Claims Act in connection with its role in the manufacture and sale of defective Zylon bullet-proof vests to federal, state, local and tribal law enforcement agencies, the Justice Department announced today. As part of the agreement with the government, the manufacturer has pledged their cooperation in the government’s on-going investigation of other participants involved in the fraudulent conduct."

The DOJ in another press release states that "Dianon Systems Inc. has agreed to pay the United States $1.5 million to resolve claims under the False Claims Act that the company mischarged Medicare and TRICARE for certain tests it performed."


October 30, 2007 in Settlement | Permalink | Comments (0) | TrackBack (0)

Monday, October 29, 2007

Immunity in the Blackwater Investigation

David Johnston of the New York Times is reporting here that immunity deals were offered to certain Blackwater employees. And it sounds like the immunity may have come from the State Department as opposed to the DOJ. Who gave the immunity, the validity of the immunity, and the evidence procured may remain open questions for awhile.  But in the interim it is interesting to look at some of the law in this area.

Federal immunity is governed by 18 U.S.C. § 6001 et. seq. and it provides use immunity as opposed to transactional immunity.  This means that "no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case, except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order." (18 U.S.C. § 6002). 

But who has the authority to grant this immunity and in what contexts does this immunity apply?  One place to look is 18 U.S.C. § 6004, which provides:

(a) In the case of any individual who has been or who may be called to testify or provide other information at any proceeding before an agency of the United States, the agency may, with the approval of the Attorney General, issue, in accordance with subsection (b) of this section, an order requiring the individual to give testimony or provide other information which he refuses to give or provide on the basis of his privilege against self-incrimination, such order to become effective as provided in section 6002 of this title.

(b) An agency of the United States may issue an order under subsection (a) of this section only if in its judgment--

(1) the testimony or other information from such individual may be necessary to the public interest; and

(2) such individual has refused or is likely to refuse to testify or provide other information on the basis of his privilege against self-incrimination.

(emphasis added). Whether this is the controlling procedure, whether other statutes may offer more guidance, and whether there are cases that may assist here remains to be seen.  The Washington Post (here) discusses Garrity and Kalkines warnings. (see here for the FCC's explanation).


October 29, 2007 in Investigations | Permalink | Comments (1) | TrackBack (0)

Antitrust Plea

DOJ's antitrust division reports that "[a]n Oregon-based freight forwarder pleaded guilty to rigging bids and allocating shipments for its role in a conspiracy involving its participation in the U.S. Department of Defense (DOD) program for shipping the household goods of military and civilian DOD personnel between the United States and foreign countries."  The press release states that:

"Criminal charges were filed today in U.S. District Court in Alexandria, Va. against Lift Forwarders Inc. (Lift). Under the terms of a plea agreement, Lift pleaded guilty to participating in a conspiracy to restrain trade, in violation of the Sherman Antitrust Act, and agreed to pay a $140,000 criminal fine."


October 29, 2007 in Settlement | Permalink | Comments (0) | TrackBack (0)

Sunday, October 28, 2007

Ryan Ordered to Report to Prison

With the Seventh Circuit affirming his conviction (see here), former Illinois Governor George Ryan has been ordered to report to prison.  The date for him to start serving his 6 1/2 year sentence is November 7th. (see here and here).  Ryan has had the benefit of remaining free pending his appeal.  Some white collar individuals have had this luxury (e.g., Bernie Ebbers). while others have not ( e.g., Bill Campbell, Jeffrey Skilling). It certainly was justified to have Ryan free pending the appeal as his issues were strong (after the fact we can confirm this as he secured three dissenters) and he certainly was not a flight risk or an individual who would cause harm.  At 73 years of age, Ryan  had a strong position of securing bail pending the appeal.  But bail post appeal, that may be a lot more difficult.


October 28, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Indicted Lawyer Leaves Baker & McKenzie

An indicted attorney from the law firm of Baker & McKenzie resigned from the firm.  See here.

(esp)(w/ a hat tip to John Wesley Hall)

October 28, 2007 in Defense Counsel | Permalink | Comments (0) | TrackBack (0)

What is a Navigible Water

The 11th Circuit Court of Appeals reversed an environmental conviction, and in the process provided a clearer understanding of what constitutes navigable waters. Finding that a "significant nexus" test was not used in the jury instruction, the court found error and further found that the government had not met its burden of showing this as harmless error. The case was remanded for a new trial. The opinion can be found here.

(esp)(w/ a hat tip to Steve Glassroth)

October 28, 2007 in Environment | Permalink | Comments (0) | TrackBack (0)

Deferred Prosecution Agreements

The topic was "Corporate Deferred Prosecution Agreements: Issues in Hybrid Enforcement," and the place was the Press Club in DC.  Last Friday afternoon, Steven A. Tyrrell, chief of the Fraud Division of the US Department of Justice, along with Stephanie Martz, Director of the White Collar Crime Project of the National Association of Criminal Defense Lawyers (NACDL), and I, talked about the benefits and problems of corporate deferred prosecution agreements.  As one might suspect, there was ample discussion of  attorney-client privilege and attorney fee waivers.  Concerns that some deferred prosecution agreements may contain a clause that placed a breach of the agreement in the sole determination of the government also caused discussion. Finally, several panelists talked about pending legislation.  The panel was moderated by Professor Lisa Kern Griffin, visiting professor Duke Law School.  For more information, see here.


October 28, 2007 in Settlement | Permalink | Comments (0) | TrackBack (0)