Saturday, December 29, 2007

Which Crimes Should Be Investigated?

Normally one finds federal prosecutors saying "no comment" on pending investigations.  But the San Francisco Chronicle reported earlier this week a reverse scenario.  It seems prosecutors were calling individuals in the press to obtain information related to State Senate President Pro Tem Don Perata (see here).  It seems this white collar investigation has been ongoing for several years, with no results.

In the interim, the Chronicle reports that Senator Perata was the subject of a carjacking at gunpoint (see here). 

One has to wonder if federal resources are being placed in the correct place. With carjacking as a federal statute, 18 U.S.C. § 2119, would our resources be better spent on stopping this crime?

(esp)

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

Tough Times for Two Texas DAs

The holidays are always a slow time for news, so when a couple prosecutors find themselves in a little hot water it draws more than the usual amount of media attention.  Harris County DA Chuck Rosenthal's office turned over a slug of e-mails as part of the discovery in a civil rights case against the sheriffs office, and among there were some rather personal ones Rosenthal sent to his executive assistant.  Statements like "I love you" and "I want to kiss you behind your right ear" were in there, according to an AP story (here).  The e-mails were inadvertently released by the federal court, and although they've been resealed, even a short time being available on the internet allowed the media to pounce on them, and that toothpaste won't fit back into the tube now.  DA Rosenthal has apologized for the missives, stating that the disclosure is a "wake-up call to me to get my house in order, both literally and figuratively."  This is our regular reminder that just because you hit the "Send" button doesn't mean the e-mail disappears into the ether, never to be heard from again.  Especially for a chief prosecutor -- send that stuff on your own time.

Meanwhile, in a much less salacious situation up the pike in Dallas County, DA Craig Watkins had his law license suspended on December 14 for failing to pay his state bar dues.  He has since paid them, and it might be an otherwise minor embarrassment except that the DA's name is on all indictments and plea bargains as the county's chief legal officer.  Are the documents valid, or will new indictments be needed for the two weeks he was not licensed?  In the federal system, the United States Attorney's name similarly appears on all filings, but I'm not aware that the person holding the position has to be a member of the district's state bar.  I believe the only requirement is admission to that federal court and the circuit.  While there are internal Department of Justice requiring attorneys to be a member of a state bar, and almost all USAOs that I'm aware of similarly require Assistant U.S. Attorneys to be members in the state bar where the lawyer practices.  I don't think the U.S. Attorney's bar status would affect any filings, and the same may well be the case in Dallas County.  I suspect DA Watkins' will send his check in right away when he receives the first dues notice next year. A Dallas Morning News story (here) discusses the dues flap.  (ph -- with thanks to a Texas reader)

December 29, 2007 in Prosecutors | Permalink | Comments (2) | TrackBack (0)

Friday, December 28, 2007

2007 White Collar Crime Awards

In the finest end-of-the-year tradition of various media outlets, we again honor individuals and organizations for their work this year in the white collar crime arena by bestowing "The Collar" on those who deserve our praise, scorn, acknowledgment, blessing, curse, or whatever else you can think of that would be appropriate. Comments are open if any readers would like to suggest additional categories or winners (or losers?), remembering to keep any offerings reasonably mature and somewhat well-meaning, at least to the extent ours meet those criteria (and do not open us up to a libel suit).

With the appropriate fanfare, and without further ado, we present The Collars for 2007:

The Collar for Best Exposure of the Deficiencies in the Federal Sentencing Guidelines -- To President George Bush for finding I. Lewis "Scooter" Libby's guidelines sentence to be excessive.

The Collar for Best Parent -- For the third year in a row, to Bill Olis for all his work on behalf of his son Jamie.  Last year we said one more year and we retire the award in Bill's name, and so this award now is retired and permanently bears the name of The Bill Olis Best Parent Award.

The Collar for Nice Work If You Can Get It -- to former AG John Ashcroft, appointed by a former subordinate as a monitor under a deferred prosecution agreement that will require the monitored company to pay him between $29,000,000 and $52,000,000.

The Collar for Biggest Bang From a Deferred  Prosecution Agreement-- to U.S. Attorney Christopher Christie (the subordinate mentioned in the preceding Collar) for also getting three former colleagues appointed as monitors in the same case, and this comes after his law school alma mater happened to receive a chaired professorship in 2005 pursuant to a deferred prosecution agreement (surprise!!).  Three guesses who may run for Governor of New Jersey in 2009?

The Collar for the Best Skating Not on an Ice Rink -- to Andy Fastow and Jack Abramoff (no explanations needed).

The Collar for Worst Award  -- To the ABA Journal, which originally selected -- with no apparent irony -- the gone-but-surely-not-forgotten AG Alberto Gonzales as its "Lawyer of the Year," initially defending the selection by claiming that he made the most news, even if almost all of it was bad. 

The Collar for Hottest 30-Year Old . . . Statute -- To the Foreign Corrupt Practices Act, which has come into its own as a "mature" criminal statute, even being noticed by the New York Times.  And get your minds out of the gutter, this is a family-friendly blog!

The Collar for Best Able to Move Past a Conviction -- hands down this one goes to Martha Stewart, who has moved on with her life with hardly a misplaced dinner fork.

The Collar for Least Qualified to Hire an Assistant U.S. Attorney -- To Monica Goodling, former White House Liaison to AG Alberto Gonzales (briefly a "Lawyer of the Year" -- see above), who admitted she allowed political considerations to enter into the hiring of career AUSAs. 

The Collar for What Started With a Bang Sure Ended With a Whimper -- To former investment banking star Frank Quattrone, who went through two trials (first jury hung), a conviction later overturned by the Second Circuit, and then received the only deferred prosecution agreement given to an individual in a white collar crime case to this point, with the condition being that he remain a good boy for twelve months.  He did, and is now free from his prior entanglements.

The Collar for the Law Firm With the Most Named Partners Charged With a Crime -- To what was known as Milberg Weiss Bershad & Schulman, whose three living partners (Milberg died long before the firm's troubles arose) were all charged in federal indictments, with Bershad and Schulman pleading guilty.  As a cherry on top, the firm's predecessor included another name partner who entered a guilty plea, William Lerach.

The Collar for Wildest Bribery Case in Mississippi -- To Dickie Scruggs, made famous in the movie "The Insider" about the tobacco litigation that made him rich, who now faces charges of trying to bribe a state court judge in Mississippi, along with his son and another attorney at the firm.  This one has it all: money, local politics, undercover tapes, wiretaps.  Who's writing the screenplay for this one?

The Collar for the Biggest Perjury Case Since, Well, the Last Biggest One -- Now that I. Lewis "Scooter" Libby dodged prison and dropped his appeal, it's on to the next "biggest" perjury case: the prosecution of one Barry Lamar Bonds for lying to a grand jury investigating the steroids factory Balco.

The Collar for the Next Next Biggest Perjury Case Since . . . -- To Roger Clemens, who has loudly proclaimed his innocence regarding steroid use after being named in the Mitchell Report on the invasion of performance enhancing drugs in baseball, will be pressured to testify under oath before Congress when it holds hearings on the Report.  With a scheduled interview on Sixty Minutes, perhaps Congress will make lying to Mike Wallace a federal offense, because Clemens would be a fool to walk into a perjury trap on Capitol Hill.

The Collar for Hardest "What Do These Two Have In Common" Trivia Question -- To Michael Dwayne Short, formerly of Hyattsville, Maryland, who will be forever linked with I. Lewis "Scooter" Libby.  Care to guess why? [Answer will be posted in the Comments on January 1 in case you care.]

The Collar for the White Collar Defendant Most Needing Relief -- To Chalana McFarland, a first-time offender who received 30 years for a mortgage fraud.

The Collar for the State With the Most High-Profile Federal Corruption Investigations -- A tie this year between Louisiana and Alabama, with Alaska starting early to secure next year's award.

The Collar for Blogs That Should Be Nominated for Some Award -- To The D & O Diary (written by Kevin LaCroix) and The FCPA Blog (written by Dick Cassin), both outstanding for their thorough, balanced posts that are uniformly informative -- they deserve recognition for the service they provide to readers but probably won't in various popularity contests.

(esp & ph)

December 28, 2007 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Thursday, December 27, 2007

How Not to Respond to a Malpractice Verdict

Being accused of legal malpractice is not much fun, so being found liable has to be much worse.  But to then try to avoid the judgment by filing for bankruptcy and using other subterfuges can result in a criminal prosecution for contempt, as one New York lawyer discovered.  In a case that shows some people have an aversion to honesty, the lawyer -- a freshly minted law school graduate from two years earlier -- gave a rather inflated view of his credentials to attract the client, and then proceeded to file the lawsuit after the limitations period for the suit expired.  From there, according to a New York Law Journal article (here), the client filed a malpractice claim and won a judgment of nearly $400,000 in 1999; in the meantime, the lawyer was disciplined by the state bar.  Then came the bankruptcy filing to avoid the judgment, which was rejected, and later an agreement by the lawyer to sell his firm and make arrangements to pay the former client the judgment, which he then violated by not making the required payments.  U.S. District Judge Denise Cote, who had presided over the case since 1997, finally referred the matter to the U.S. Attorney's Office for a contempt prosecution.  She has now sentenced the lawyer to a two-year probation plus spending six nights in community confinement.  Judge Cote did not fine him because she wants all his money going to pay the judgment.  At the sentencing, the lawyer is reported to have said, "I'm not sure exactly what to say except that I am sorry."  I'm not sure exactly what else could have been said, because any attempt at an excuse might have sent the Judge through the roof.  A fair question can be asked whether the attorney should remain a member of the bar.  According to the records of the New York State Unified Court System (search here), he remains a member in good standing of the New York bar.  Talk about giving lawyers a bad name. (ph)

December 27, 2007 in Contempt | Permalink | Comments (1) | TrackBack (0)

Wednesday, December 26, 2007

Avoiding the Whipsaw of Possible Conflicts for Barry Bonds' Attorneys

The first issue raised by the government in the prosecution of Barry Bonds for perjury and obstruction of justice involves the potential -- or perhaps even actual -- conflict of interest his two new attorneys may have because of their prior work representing witnesses in the Balco (Bay Area Laboratory Co-operative) steroids investigation.  The much-heralded lawyers are Alan Ruby and Christine Arguedas, and both were hired right before Bonds' arraignment on December 7.  Ruby earlier represented Dr. Arthur Ting, Bonds' personal physician, for about a month, and Dr. Ting was a witness before the grand jury that investigated Bonds for perjury.  Arguedas represented, among others, former track star Tim Montgomery and three former members of the Oakland Raiders. 

In a filing raising the potential conflicts of interest (available below), prosecutors note that they are unlikely to call Montgomery and the three football players, probably because they had nothing to do with Bonds and could not provide any valuable testimony.  I doubt there is even a colorable claim of a conflict of interest involving Arguedas based on her representation of witnesses with no connection to her current client who are not going to tesify.  Dr. Ting, however, is another matter as the government motion notes that he is likely to be a witness at trial.  Indeed, he could well be a crucial witness in establishing that Bonds use steroids during the periods that he denied their use before the grand jury.  Media reports indicate that Dr. Ting accompanied Bonds to Balco, and participated in a private drug test of Bonds in 2000.  The filing redacts a portion of a paragraph relating to Dr. Ting, most likely because it refers to his grand jury testimony, which remains secret under Federal Rule of Criminal Procedure 6(e).  Any redaction draws attention, of course, and it is intriguing to specualate about what he might say at trial, and whether he will try to defend Bonds.

Ruby only represented Dr. Ting for a short time, so the potential conflict is not clear.  One common basis for claiming that defense counsel cannot represent a current defendant because of prior representation of a government witness is that the lawyer will not be able to fully cross-examine the witness due to the confidentiality rules.  For example, if the prior client made a statement to the lawyer and then makes a different assertion at trial, the lawyer would not be able to use that earlier statement to undermine the former client's credibility because of the protections afforded to attorney-client communications.  The lawyer's obligations to the two clients would come into conflict because of the need to protect one at the expense of the other getting the best possible defense, and so might result in the lawyer providing ineffective assistance to the current client, the defendant.  If Ruby has a conflict of interest because of what he might have learned from Dr. Ting during the earlier representation, then his presence on the case could result in the reversal of any conviction due to a Sixth Amendment violation due from claimed ineffective assistance of counsel.

The government's filing notes that prosecutors will accept a waiver from Bonds of the possible conflicts, which triggered his brief appearance before U.S. District Judge Susan Illston on December 21.  At this point, there has not been a motion to remove either Ruby or Arguedas, and prosecutors are raising the conflict at this point to avoid being whipsawed if there is an actual conflict of interest.  One of the dictionary definitions of "whipsaw" is "to defeat or best in two ways at once."  The issue prosecutors are raising is that they do not want to lose a conviction because of a problem that the defense lawyer has with his/her client.  If the case goes to trial with conflicted counsel and the jury returns a "not guilty" verdict, then there is no harm from the conflict.  If the jury convicts, then a defendant can claim that the result is tainted due to defense counsel's conflict, a difficult argument to win but one that results in overturning the verdict if an actual conflict is found that affected counsel's performance at trial.  Hence the whipsaw, because the defendant can win either way with a conflicted lawyer, at least in the government's eyes, because prosecutors did not do anything wrong.

The waiver is one form of protection for the case, although it does not provide an absolute shield against a defendant raising the issue on appeal.  By requiring Bonds to appear in court to answer questions, Judge Illston is taking steps to avoid having the case affected by the potential conflict.  She has ordered Bonds and his attorneys to make a submission by January 4, 2008, waiving the conflict to establish a record that it is both knowing and voluntary.  Because Dr. Ting is likely to be a witness, he too must agree to waive any confidentiality or conflict of interest claim he might have against Ruby.  While the current client is often happy to waive the conflict, the former client has an interest that must be protected. 

If Dr. Ting were to refuse to waive, then the issue becomes much more complicated and I would expect Judge Illston to seriously consider removing Ruby as a member of Bonds' legal defense team.  Of course, that is a decision also fraught with danger, because the recent Supreme Court decision in United States v. Gonzalez-Lopez held that improper denial of a defendant's right to counsel of choice results in an automatic reversal of a conviction.  While I expect the court to accept Bonds' waiver, assuming Dr. Ting also waives the protections of the confidentiality rule, this is an issue that can rear its ugly head at any point in time.  (ph)

Download us_v_bonds_government_conflict_of_interest_motion_dec_20.pdf

December 26, 2007 in Defense Counsel, Privileges, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 25, 2007

Yet Another FCPA Matter - This Time It's Lucent

Cases involving the Foreign Corrupt Practices Act (FCPA) are clearly on the rise.  This time it involves a settlement with Lucent Technologies, Inc. The company will be paying a fine of one million dollars to resolve FCPA allegations. What is happening with these settlements is that the contours of what is permitted expenses and what will not be tolerated are coming to light.  Companies are finding out the hard way, that it is better to err on the side of not paying sums that might in any way be considered bribery to a foreign official.  In the Lucent matter, the DOJ press release states:

"Lucent acknowledged that it provided Chinese government officials with pre-sale trips to the United States to attend seminars and visit Lucent facilities, as well as to engage in sightseeing, entertainment and leisure activities. In 2002 and 2003 alone, there were 24 Lucent-sponsored pre-sale trips for Chinese government customers. Of these, at least 12 trips were mostly for the purpose of sightseeing. Lucent spent over $1.3 million on at least 65 pre-sale visits between 2000 and 2003. The individuals participating in these trips were senior level government officials, including the heads of state-owned telecommunications companies in Beijing and the leaders of provincial telecommunications subsidiaries.

Between 2000 and 2003, Lucent also provided Chinese government officials with post-sale trips that were typically characterized as “factory inspections” or “training” in contracts with its Chinese government customers. By 2001, however, Lucent had outsourced most of its manufacturing and no longer had any Lucent factories for its customers to tour. Nevertheless, Lucent provided individuals with trips for “factory inspections” to the United States, Europe, Australia, Canada, Japan and other countries that involved little or no business content. These trips consisted primarily or entirely of sightseeing to locations such as Disneyland, Universal Studios, the Grand Canyon, and in cities such as Los Angeles, San Francisco, Las Vegas, Washington, D.C., and New York City, and typically lasted 14 days each and cost between $25,000 and $55,000 per trip.

In the agreement, Lucent admits to all of this conduct, as well as other instances of providing travel and educational opportunities to Chinese government officials and to the improper recording of those expenses in its corporate books and records."

An additional cost that many companies can face when having to deal with FCPA allegations is the cost of attorney fees to respond to government investigations and actions. See also the WSJ here that talks about Alcatel-Lucent paying 2.5 million in fines.

(esp)

December 25, 2007 in FCPA | Permalink | Comments (0) | TrackBack (3)

Monday, December 24, 2007

Wishing Everyone A Happy Holiday

Wishing everyone a healthy, happy, and peaceful holiday.

(ph) & (esp)

December 24, 2007 in About This Blog | Permalink | Comments (0) | TrackBack (0)

The Fastow Notes

As noted by Tom Kirkendall here, the Fifth Circuit has ordered that the Enron Task Force notes regarding Andrew Fastow need to be turned over to defense counsel. This order was initially made in the Jeff Skilling case and now has also been included in the Nigerian Barge case (see here).  The bottom line is that the Fifth Circuit, as it should, is going to allow defense counsel the opportunity to see these notes. Some observations here:

  • This could be the straw that breaks the back of the Enron Task Force. If the notes include exclupatory material that was not turned over to the defense counsel in these cases, it could prove important in Jeff Skilling's appeal. Even with a harmless error standard, Fastow was a key witness in this trial and exculpatory material regarding him should have been disclosed.  On the other hand, if there is no smoking gun here, the credibility of the Task Force may be heightened.
  • Skilling's reply brief alleges the destruction of exculpatory material (Reply, p. 133).   It certainly seems ironic that prosecutors who proceeded against Arthur Andersen for alleged destruction of evidence, might possibly have destroyed anything considering the high stakes involved in this case.  Obviously, the merit of this argument needs resolution.
  • Fastow's plea agreement for 10 years, but eventual sentence to 6 years raises some eyebrows.(see here)  Will the notes present evidence of a sidedeal?
  • Why were the prosecutors objecting so strenously to this disclosure of the notes?  If there is nothing here, then it shouldn't be a problem for defense counsel to see these items.  Or is that not the case? 

(esp)

Addendum - The Orders are:

Download 11107_order.pdf

Download 112807_order.pdf

Download 122007_order.pdf

December 24, 2007 in Enron | Permalink | Comments (0) | TrackBack (0)

Sunday, December 23, 2007

The Letters for White Collar Offenders

Oftentimes in white collar cases, the convicted individual will present letters in an attempt to convince the court to give a lenient sentence. (see here and here). There has been ample discussion about the value that should be afforded to letters written for white collar offenders.  Do they matter and should they?  Should the letters of the wonderful things that the accused did during his or her life cause a judge to reduce a sentence, and should they play any part in determining what that sentence will be?

The federal sentencing guidelines clearly try to move the system away from using these letters - the attempt to reach what I call a "classless sentencing system."  After all, will those who are less fortunate in society have the ability to secure numerous letters.

On the other hand, if a person has spent much of his or her life helping others, serving this country, or being a "good" person -- should that not be a value considered in sentencing. 

The issue of letters arose again this week, as a judge in Connecticut sentenced a defendant convicted of tax evasion (1.8 million) to 16 months in prison.  According to the Connecticut Post here, the judge stated that he had received more letters for the accused than in any other case. Yet, despite the letters, the judge felt that for the sake of general deterrence it was necessary to send the accused to prison. The defendant, a lawyer, faced additional penalty beside the jail time and fine in that he no longer will be practicing law.

On one hand you don't want to give a preference to those who can secure letters in support of a reduced sentence, when others may not be able to do so.  But, on the other hand, it should be equally important to recognize what a person has accomplished in their lifetime to better society.

(esp)

December 23, 2007 in Tax | Permalink | Comments (0) | TrackBack (0)

DOJ Will Not Appeal Stolt-Nielsen Decision

The DOJ is taking a cautious and wise position in the dismissal of the Stolt-Nielsen Indictment by a court (see here for background) by deciding not to appeal this matter. Issuing a Press Release, the DOJ states:

"The Department of Justice has determined that it will not appeal the dismissal of the indictment in U.S. v. Stolt-Nielsen S.A. et al. While the Division is disappointed with the ruling, it respects the role of the court in making the factual determinations that support the decision that Stolt-Nielsen, two of its subsidiaries, and two executives did not breach the conditional leniency agreement.

Since the Antitrust Division revised its Leniency Program in 1993, cooperation from leniency applications has resulted in scores of convictions and nearly $4 billion in criminal fines. Many of the Division’s major international investigations have been advanced through the cooperation of a leniency applicant, including recent prosecutions involving airline fares, air cargo rates, computer memory chips, vitamins, and other goods and services affecting U.S. businesses and consumers. The benefits to the Division’s cartel enforcement program are greatest when a conditional leniency applicant successfully completes the leniency process. At the same time, the Department must preserve the integrity of the program. Accordingly, the Division will continue to use the Leniency Program as a weapon in the fight against cartels, and administer the program in a transparent and equitable manner that ensures that those conditionally admitted to the program adhere to all requirements to obtain leniency.”

(esp)

December 23, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)