Saturday, February 10, 2007

Antitrust Division Secures Conviction

DOJ's Antitrust Division issued a press release reporting on a a jury conviction in Texas of "the former president and owner of ATE Tel Solutions Inc., which does business as ATE Telecom Solutions Inc. (ATE Tel), on seven of nine counts of wire fraud in a scheme to defraud the federal E-Rate program."  The press release further states:

"The Antitrust Division’s ongoing investigation into fraud and anti-competitive conduct in the E-Rate program has yielded charges being filed against 14 individuals and 12 companies. Six companies and four individuals have either been found guilty at trial, pleaded guilty, agreed to plead guilty, or have entered civil settlements. The defendants have collectively agreed to pay criminal fines and restitution totaling more than $40 million. Two of the individuals have each been sentenced to serve six years in prison."

(esp)

February 10, 2007 in Fraud | Permalink | Comments (0) | TrackBack (0)

Upcoming Conference

CORPORATE CRIMINALITY: LEGAL, ETHICAL, AND MANAGERIAL IMPLICATIONS

Hosted by the Georgetown Business Ethics Institute, in partnership with the National Association

of Criminal Defense Lawyers, the Heritage Foundation, the US Chamber of Commerce’s Institute

for Legal Reform, and the American Criminal Law Review

Georgetown University Law Center

March 15, 2007

Washington, DC

For details -

Download corporate20criminalityfeb6.pdf

For registration see here -

For further information, contact John Hasnas at: [email protected]

(esp)

February 10, 2007 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Could the Jury Find Libby Not Guilty?

The government rested its case against I. Lewis Libby, winding up the testimony with Meet the Press host Tim Russert, who Libby identified in the grand jury as the source of his knowledge about Valerie Plame's status as a CIA operative -- or at least the second source after Vice-President Cheney.  Russert flatly contradicted Libby's statements to the FBI and grand jury, stating that he had never heard of Plame until he read Robert Novak's column a few days later, the item that touched off the long-running investigation of the leak.  Special Counsel Patrick Fitzgerald offered six witnesses from the Bush Administration who testified about conversations with Libby in which they informed him about Plame, and three journalists testified they received information from Libby about Plame.  Is that too much evidence for Libby to overcome with his "honest but overworked public servant" defense that claims he simply forgot about these conversations?

While the defense may be viewed as a bit far-fetched, the government's case is not as airtight as it seems.  The problem Fitzgerald faces -- not one of his own making -- is that just about everyone seems to be a liar.  In an approach that looks to be all-too-typical of Washington today, the various witnesses appear to have viewed their initial interviews with the FBI (or grand jury) as an opportunity to spin the investigation in a way that made themselves and others look good, apparently on the belief that if the statements were later contradicted they would just move on to a different story.  Pretty much standard procedure in a campaign, so why not try it with the investigators? 

The first two government witnesses were former State Department official Marc Grossman, a close ally of Richard Armitrage, another leaker about Plame who has not been prosecuted, and former CIA heavyweight Robert Grenier.  Each man recounted telling Libby about Plame, yet when each initially spoke with the FBI they made no mention of that fact.  Now, it could be that they simply didn't recall who they spoke with about what, and only focused on Libby later, but isn't it odd that each neglected to mention Libby and then later had almost complete recall of multiple conversations?  Former White House spokesman Ari Fleisher took the stand with a "pig in a poke" deal from Fitzgerald (see earlier post here) in which he refused to make any statement before receiving immunity -- not the type of witness who makes you comfortable with his recall when he demanded the prosecutor trust him blindly.

The media witnesses where hardly much better.  Former New York Times reporter Judith Miller, a key component in the case, spent 85 days in jail for refusing to testify before the grand jury about her conversations with Libby because she had promised him confidentiality.  In her first appearance before the grand jury, Miller testified as to her July conversation with Libby, but not about a June discussion that included Plame's CIA role.  Only after Fitzgerald showed her notes of the conversation did she now recall that earlier conversation, offering the excuse that if she didn't write a story about it she didn't remember the details.  A juror asked a question (through the judge) about whether that was her standard procedure.  Sitting in a jail in Alexandria for civil contempt because of your conversations with a senior administration official would seem to be a good time to try to remember everything about the case, because there isn't that much else you can do there.  How did an important detail of a relationship that could have landed Miller in jail for upwards of eighteen months slip her mind? 

Tim  Russert had his own problems, this time almost the opposite of the "forgetful first FBI interview" scenario.  When first approached by an FBI agent, Russert willingly recounted his conversation with Libby.  Later on in the investigation, he refused to cooperate with the grand jury and insisted that his source was confidential.  Russert also went on the Don Imus radio program and, according to reports of his interview, sounded almost exultant at the prospect of Libby being indicted.  Hardly the neutral journalist whose only interest is the truth.  But then, the testimony from Vice-President Cheney's media adviser, Cathie Martin, was about how the Administration sought to manipulate the media, so truth takes a back seat to access, sources, and spin.

I'm not so naive as to think most (or even many) people tell the truth in Washington.  But the government's case is built on people who made statements that strain credulity, and worked to manipulate the truth.  In that maelstrom of misinformation, can a jury find Libby guilty?  The burden of proof is on the government, and the issue is not whether Libby is innocent.  In an earlier post, I questioned whether Libby could avoid taking the witness stand -- Is Libby Backpedaling? -- but now I wonder whether he should testify.  Ted Wells, one of Libby's defense lawyers, has made a name for himself by successfully representing high-profile political defendants like former cabinet members Ray Donovan and Mike Espy in cases in which they did not testify.  The problem for Libby may be his grand jury testimony in which he says he first learned about Plame's identity from Vice-President Cheney, forgot the information, and then had it replanted by Russert.  Again, hardly the stuff of a credible witness.  But perhaps a defense tactic of "a pox on all the liars" would work.  The argument could be that Libby may have bent the truth, but so did everyone else it seems who found himself or herself in the same room as an FBI agent or grand juror, so how can we say he committed perjury, made false statements, and obstructed justice?  That might result in a not guilty verdict. (ph)

February 10, 2007 in Perjury, Plame Investigation, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Friday, February 9, 2007

DC Circuit Reverses Illegal Gratuities Conviction of Police Detective

The D.C. Court of Appeals en banc  (7-5) reversed the conviction of a veteran D.C. police detective who had been convicted of three counts of accepting an illegal gratuity under section 201(c)(1)(B) of title 18. In Valdes v. U.S., the D.C. Circuit found that the acts did not meet the statute and that the jury charge was in error.  The court stated that "both the precedent and the language of the statute make clear that section 201 is not about officials' moonlighting, or their misuse of government resources, or the two in combination."  The court discusses the appropriate definition of what constitutes an "official act" under this statute noting that "[b]ecause the government failed to show that the payments received by [    ] were for any 'decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official' as required by 18 U.S.C. s 201, the judgment of conviction is reversed."

An NACDL press release summarizes the facts as follows:

Valdes, a decorated cop, was working security at a D.C. nightclub when he was befriended by an FBI undercover agent posing as a federal judge, who asked him to retrieve publicly available information from his police department computer. The phony judge insisted on tipping Valdes for the favors, but the detective demurred. When Valdes reluctantly accepted [$300] in gifts from the "judge," the FBI pounced.

An amicus brief was filed in this case by Attorneys Blair G. Brown and Barak Cohen of Zuckerman Spaeder LLP.

(esp) (w/ a hat tip to jack King)

February 9, 2007 in Judicial Opinions | Permalink | Comments (1) | TrackBack (0)

Challenging the Brocade Fraud Charges

The defendants in the first options backdating prosecution, former Brocade CEO Gregory Reyes and HR manager Stephanie Jensen, are seeking dismissal of seven of the twelve counts of the indictment because the charges are tainted by a questionable theory of honest services fraud.  The defendants rely on the Fifth Circuit's decision in United States v. Brown, 459 F.3d 509 (5th Cir. 2006), in which the court overturned the convictions of defendants in the Enron Nigerian Barge trial because the government could not establish the defendants' intent to deprive the company of their honest services.  The key quotation in Brown is:

We do not presume that it is in a corporation's legitimate interests ever to misstate earnings--it is not. However, where an employer intentionally aligns the interests of the employee with a specified corporate goal, where the employee perceives his pursuit of that goal as mutually benefitting him and his employer, and where the employee's conduct is consistent with that perception of the mutual interest, such conduct is beyond the reach of the honest services theory of fraud as it has hitherto been applied. Therefore, the Government must turn to other statutes, or even the wire fraud statutes absent the component of honest services to punish this character of wrongdoing.

In the Brocade prosecution, neither Reyes nor Jensen received the backdated options, and they were doled out to entice prospective employees to join the company.  The use of the options as a means to attract good workers is arguably a goal "mutually benefitting [them] and [their] employer" so the backdating could be viewed as "consistent with that perception of the mutual interest."  The government urged the District Court to reject Brown as controlling precedent, and asserts that the indictment is sufficient to go to trial without the court having to determine what theory will support a conviction. (Briefs available below)

The Fifth Circuit decision could turn out to be a significant problem for federal prosecutors if it spreads to other circuits.  The court's view that employees who believe their interests are aligned with the employers could make it much more difficult to prosecute honest services fraud cases when the defendant does not directly receive a pecuniary benefit from the breach of fiduciary duty.  Perhaps even more troublesome for the government would be if courts applied Brown outside of private honest services fraud cases to those involving public officials.  Many of those cases involve dishonest conduct but not direct financial gain to the official, and it could be difficult to pursue cases if it were a good defense that the defendant "perceived" his or her interest as being aligned with the government

The defendant filed a petition for certiorari in Brown on January 16, 2007, and the government has until mid-March to respond.  It will be interesting to see if the Solicitor General seeks to have the Fifth Circuit's honest services analysis overturned by the Supreme Court.  The danger in seeking cert, of course, is that an unfavorable decision would have a broad impact on honest services fraud cases of all types.  Then again, after the Court took a narrow view of the mail fraud statute in McNally v. United States, 483 U.S. 350 (1987), Congress promptly enacted Sec. 1346 to restore the right of honest services theory.  The current atmosphere of curtailing corruption could work in the government's favor. (ph)

Download brocade_mail_fraud_brief_jan_2007.pdf

Download brocade_mail_fraud_u_s_opposition_jan_2007.pdf

February 9, 2007 in Fraud, Prosecutions, Securities | Permalink | Comments (0) | TrackBack (0)

The Family That Trades on Inside Information Together Goes to Jail Together

Federal prosecutors and the SEC filed criminal and civil insider trading charges against a father, two of his sons, and a family friend for transactions in the securities of the company where the father was an executive and later in companies retaining the accounting firms of one son and the friend.  The defendants in the criminal case, who entered guilty pleas, are Zvi Rosenthal, who was a vice president of Taro Pharmaceuticals Industries, Inc., his sons Amir and Ayal, and Amir's childhood friend, David Heyman.  The SEC suit also alleges insider trading by Oren Rosenthal, Zvi's third son, Amir's father-in-law, and Amir's supervisor.  Ayal worked at PricewaterhouseCoopers, and Heyman worked at Ernst & Young.  They admitted tipping Amir about pending mergers before the public announcement of the transactions, and Amir in turn tipped his supervisor.  The SEC Litigation Release (here) describes the insider trading at Taro Pharmaceuticals:

In its complaint, the Commission alleged that Zvi Rosenthal, a Vice President at Taro, abused his position at Taro by systematically stealing material, nonpublic information concerning 13 separate company announcements, including earnings results and pending generic drug approvals by the Food and Drug Administration. Zvi then traded on the information and passed it on to his family members who then traded in Taro stock and options. Typically, Zvi provided information to his son, Amir Rosenthal who traded in personal accounts he controlled, and in the account of the family- owned and controlled hedge fund, Aragon Partners, LP.

The Commission alleged that the gains and losses avoided total $3.7 million over a period from 2001 to 2005.  In addition to managing the family hedge fund -- which seems to be another way of saying he managed the family's investments -- a press release issued by the U.S. Attorney's Office for the Eastern District of New York (here) states that Amir is an attorney in New York City.  According to court records, there is an attorney with the same name admitted to practice in New York in 2006 after graduating from a New York area law school. An AP story (here) states that Zvi Rosenthal has a prior fraud conviction, which means his sentence may be higher if the court applies the Federal Sentencing Guidelines' criminal history provisions. (ph) 

February 9, 2007 in Civil Enforcement, Insider Trading, Prosecutions, Securities | Permalink | Comments (1) | TrackBack (0)

A War of Words in Philly

The federal indictment of powerful Pennsylvania state Senator Vincent Fumo on corruption, tax evasion, and obstruction of justice charges has sparked a vigorous response from his lawyer, Richard Sprague.  The government unveiled a 139-count, 267-page indictment against Fumo and three aides alleging a range of fraudulent schemes involving alleged abuse of his office and diversion of funds from non-profits.  Sprague held a press conference (audio available here) in which he belittled the prosecution as politically motivated by Republicans in Washington, D.C. -- Fumo is a Democrat from Philadelphia -- and described the charges as "full of twists and distortions, venal and salacious entries, deliberate statements out of context -- all for the purposes of having an effective public relations campaign by the prosecutor's office."  A Philadelphia Inquirer story (here) notes that a U.S. Attorney's Office spokesman responded to Sprague, stating that the "comments are inaccurate and regrettable and we will present our case in court." 

While the case is barely a day old, it is the product of a four-year investigation that has already involved an appeal to the Third Circuit over privilege issues related to a grand jury subpoena to an attorney (United States v. Doe, 429 F.3d 450 (3d Cir. 2005)).  Philadelphia has seen its fair share of corruption cases the past two years, with a former Treasurer and City Council member convicted.  Its politics can occasionally show some rough edges, much like a Phillies crowd during a losing streak, so don't look for the the case to go away quietly. (ph)

February 9, 2007 in Corruption, Defense Counsel, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Five More Indicted for Fraud in Iraq Rebuilding

The Department of Justice announced the indictment of five more defendants for fraud involving the Coalition Provisional Authority-Southern Command in Iraq.  Three were senior Army officers, Colonel Curtis G. Whiteford and Lt. Colonels Debra M. Harrison and Michael B. Wheeler, and two are civilians, Michael Morris and William Driver; Harrison and Driver are married.  A press release (here) discusses the charges in the 25-count federal indictment filed in New Jersey:

Whiteford, once the second-most senior official at CPA-SC, was charged with one count of conspiracy, one count of bribery, and 11 counts of honest services wire fraud. Harrison, at one time the acting Comptroller at CPA-SC who oversaw the expenditure of CPA-SC funds for reconstruction projects, was charged with one count of conspiracy, one count of bribery, 11 counts of honest services wire fraud, four counts of interstate transport of stolen property, one count of bulk cash smuggling, four counts of money laundering, and one count of preparing a false tax form. Wheeler, an advisor for CPA projects for the reconstruction of Iraq, was charged with one count of conspiracy, one count of bribery, 11 counts of honest services wire fraud, one count of interstate transport of stolen property, and one count of bulk cash smuggling.

Three others involved in the case have already entered guilty pleas, with Robert Stein, the former comptroller for the CPA-SC, sentenced to nine years in prison. According to the indictment, Harrison and Driver "allegedly received a Cadillac Escalade as a bribe and used tens of thousands of dollars for improvements to their home in Trenton. Whiteford allegedly received at least $10,000 in cash, a $3,200 watch, a job offer from [a coconspirator], and other valuables." (ph) 

February 9, 2007 in Fraud, Prosecutions | Permalink | Comments (1) | TrackBack (1)

Thursday, February 8, 2007

Audit Committee Chairman Accused of Insider Trading by SEC

The SEC filed a civil insider trading case against Donald A. Erickson alleging that he bought call options in Magnum Hunter Resources, Inc. (MHR) while the company was negotiating a possible merger.  At the time of the trading in January 2005, Erickson was a director and chairman of the company's audit committee.  In that role, he was responsible for ensuring that MHR had the requisite internal controls, and so likely was aware of the prohibition on insider trading.  According to the SEC's Litigation Release (here):

In its complaint, the Commission alleges that in late December 2004, Donald A. Erickson, while serving as audit committee chairman and a director of MHR, purchased MHR call options during the time MHR was exploring a possible merger or sale of the company. The complaint alleges that Erickson was briefed regularly on the status of negotiations and participated in key decisions regarding the Cimarex deal. The complaint also alleges that in mid-January 2005—just two trading days before the public announcement of the merger, and one day after he attended a board meeting addressing the status of negotiations with Cimarex—Erickson exercised his call options and acquired 30,000 shares of MHR stock. According to the Commission, Erickson purchased and exercised the options based on material, nonpublic information about MHR’s merger negotiations and, ultimately, the Cimarex deal.

The Commission also alleges that Erickson's Form 4 (here) filed in connection with the option purchase was false because it did not disclose the actual date of the transaction, instead listing it as occurring on January 31, 2005, after the announcement of the deal.  (ph)

February 8, 2007 in Civil Enforcement, Insider Trading, Securities | Permalink | Comments (0) | TrackBack (0)

Get Your Theory of Prosecution Right at the Start

In a criminal prosecution, it's important for the government to think through the theory of its case at the start and not shift things around once the evidence is in.  That is certainly not what happened in United States v. Milwitt, a bankruptcy fraud case in which prosecutors did not prove the theory charged in the indictment, leading to a reversal of the conviction by the Ninth Circuit.  John Milwitt engaged in a rather simple scheme by buying an ad in the local San Francisco Yellow Pages advertising himself as a landlord-tenant attorney when in fact he had never gone to law school.  He attracted several clients who were having problems with their landlords.  He had them withhold their rent payments and secretly filed bankruptcy petitions on their behalf, listing the cases as pro se filings.  As these things are wont to do, the scheme unraveled and he was charged with fraud, in this case bankruptcy fraud in violation of 18 U.S.C. Sec. 157.  That provision, enacted in 1994, makes it a crime to engage in a scheme or artifice to defraud by filing a bankruptcy petition, a different offense than than the older bankruptcy crime statute, 18 U.S.C. Sec.152, which reaches misstatements to the bankruptcy court.  The government's indictment alleged that Milwitt defrauded the landlords of their legal right to the rents, but at trial the evidence was that the tenant-clients were the victims of the scheme because the landlords lost nothing that they were otherwise entitled to receive.

The Ninth Circuit reversed the conviction (here), noting that Sec. 157 is similar to the mail and wire fraud statutes.  According to the opinion, "The specific intent to deceive or defraud element of the mail and wire fraud crimes requires the prosecution to prove that the defendant intended to defraud an identifiable individual."  The court found that the variance between the indictment's allegations that the landlords were the victims and the proof that the tenant-clients were the victims meant the government had not introduced sufficient evidence for the conviction, resulting in a reversal with no retrial of the charge.  The Ninth Circuit held:

[W]hen the government rested its case, it had presented no proof that there was a scheme to defraud the landlords, much less that the bankruptcy petitions had been filed as a means of executing or concealing the scheme. Rather, the evidence showed that the tenants were likely justified in not paying the landlords; that the fraudulent scheme was one by Milwitt to deprive the tenants of money by fraudulently representing to them that he was representing their interests against the landlord; and that the purpose of the bankruptcy filing was to conceal the fraud from the tenants.

While the government likely could have convicted Milwitt under Sec. 152 for making false statements to the bankruptcy court, and perhaps even the mail and wire fraud statutes if it identified the tenant-clients as the victims, in this case its use of the bankruptcy statute may have made the case more complicated than it should have been.  Milwitt is a good lesson in the need to prove the crime that is charged. (ph)

February 8, 2007 in Fraud, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Two Executives Charged with Backdating Options

The SEC filed a civil securities fraud complaint (here) against two former financial executives at Engineered Support Systems, Inc. alleging that they backdated options over a six-year period.  Gary C. Gerhardt is the former CFO and Steven J. Landmann is the former Controller, and they are accused of backdating options worth over $15 million for senior executives at the company.  The Commission alleges that Gerhardt and Landmann personally profited by $1,906,300 and $518,972 respectively.  Landmann settled the case and agreed to pay disgorgement of $518,972, prejudgment interest of $108,099, and a civil penalty of $259,486, along with a permanent bar from serving as an officer or director of a public company.  Gerhardt did not settle and appears to be fighting the civil action.  According to the SEC's Litigation Release (here):

The complaints allege that, from 1997 through 2002, Gerhardt instructed Landmann to backdate company stock option grants to coincide with historically low closing prices of Engineered Support's common stock. The company's stock options vested at the time of grant, allowing the option recipients to obtain immediate cash profits. In addition, the complaints allege that, on at least two occasions, Gerhardt ordered Landmann to cancel previously issued Engineered Support stock options that had fallen out-of-the-money and to reissue them with new backdated grant dates and exercise prices, to bring them back in-the-money. The complaints also allege that Gerhardt directed Landmann to issue additional Engineered Support stock options to nonemployee directors in excess of authorized amounts, from which these directors received a total gain of approximately $6 million.

As part of the scheme, Gerhardt and Landmann allegedly caused Engineered Support to misrepresent in its Forms 10-K and proxy statements filed with the Commission that all stock options were granted at the fair market value of the stock on the date of the award. Engineered Support also failed to report the additional compensation its executives had received through in-the-money option grants. In addition, the company failed to disclose the repricing of options that had fallen out-of-the-money, or the granting of stock options to nonemployee directors in excess of authorized amounts.

(ph)

February 8, 2007 in Civil Enforcement, Securities | Permalink | Comments (1) | TrackBack (0)

The Jury Pool Issue Heats Up in the Scrushy-Siegelman Case

Well before their trial on corruption charges in the Middle District of Alabama, former HealthSouth CEO Richard Scrushy and former Alabama Governor Don Siegelman challenged the method for putting together the jury pool by arguing that it did not include a sufficient number of African-Americans, violating their Sixth Amendment rights.  The issue remained undecided through the trial, and only now seems to be percolating to the surface.  According to a report on WSFA TV12 in Montgomery (here):

One question is --  do the issues that result in the under-representation of African-Americans in the jury pools rise to a "substantial" enough level to have denied businessman Richard Scrushy and former Governor Don Siegelman their rights under the Constitution?  If what many perceive as minor problems are not eventually corrected, will they have an impact on other cases brought in the Middle District of Alabama?

Tuesday in federal court, Judge Charles Coody moved an issue which has been on the back burner of the corruption case involving Scrushy and Siegelman, who were convicted last June, back to the front burner.  The judge held a conference call with counsel from all sides to flesh out some old motions related to a jury challenge over the under-representation of African-Americans on juries in the Middle District of Alabama.

There are already jury misconduct issues before the district court a second time, related to alleged improper e-mail communications between two jurors, and a new trial motion on this ground was denied once already.  The jury pool issue will likely be yet another basis for the appeal of the convictions, assuming their motion is denied.  The case was hard-fought from the outset, and that shows no sign of abating.  The parties have until February 14 to file briefs on the issue. (ph)

February 8, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 7, 2007

Is Libby Backpedaling?

All along, defense counsel for I. Lewis Libby proclaimed that he would testify in his defense at trial to advance the position that any misstatements in his grand jury testimony and to the FBI were the product of a faulty memory -- the "dedicated but overworked public servant" defense.  It now appears that Libby may not testify at trial, as discussed in his brief filed with the District Court on February 5 (available below).  It states, "We emphasize that at this point Mr. Libby has not decided whether he will testify."  The brief seeks the admission of three categories of national security information at trial to show the types of information innundating Libby around the time that he spoke with reporters about Valerie Plame's CIA status.  The government's position is that if Libby does not testify, then the evidence should not be admitted because it is irrelevant.  Libby argues that denying admission of the evidence would infringe on his Fifth Amendment right against self-incrimination and Sixth Amendment right to present a defense.

The interesting question is why the defense appears to be backpedaling from its earlier position.  A faulty memory defense is difficult to establish without the defendant's testimony because there is no witness who can say what the defendant did and did not remember, or why the person was distracted.  Offering evidence of what could have occupied Libby's attention may not be admissible without his testimony as to what exactly he was focusing on, and how he could have made the mistake regarding his conversations with the reporters.  The District Court may not allow evidence to show what might have been on his mind.  Defenses centered on the defendant's lack of intent often pressure the person to testify, and it is not uncommon that evidence is excluded because it would allow the jury to speculate.

In a sense, Libby has already testified because Special Counsel Patrick Fitzgerald played approximately eight hours of the grand jury testimony that is the basis for the perjury charge.  I have not heard of a perjury case in which that much testimony of the defendant's testimony was provided to the jury, although it may happen in other cases.  The government's strategy in offering the entire body of testimony may be to put Libby in a position where it is too dangerous for him take the witness stand in his defense.  Having heard the explanations to the grand jury, it would be difficult for him to take a different position at trial, and he opens himself to the possiblity of being impeached by any inconsistency between the trial and grand jury testimony.  Libby's brief stating that he may not testify could be an acknowledgement that the government's tactic has effectively prevented him from testifying. 

His brief states that "any errors in his statements and testimony resulted form confusion, mistake, or faulty memory rather than deliberate deception."  The government's witnesses testified that they provided the information about Plame to Libby, and he was rather insistent about rebutting the charges made by her husband, Joseph Wilson.  Asking the jury to find "confusion, mistake, or faulty memory" when they've heard the grand jury testimony but without hearing from Libby may well be impossible.  (ph)

Download libby_state_of_mind_brief_feb_5_2007.pdf

February 7, 2007 in Perjury, Plame Investigation, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Tuesday, February 6, 2007

Philly Politician Indicted

Vincent J. Fumo, a long-time Philadelphia politician (State Senator - Democrat), has been indicted. The case relates to his alleged improper use of a charitable foundation.  The 267 page indictment is described in a press release as including charges of:

"139 counts, that is, two counts of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 371; one count of conspiracy to defraud the United States, in violation of Section 371; one count of conspiracy to obstruct justice, in violation of Section 371; 60 counts of mail fraud, in violation of 18 U.S.C. § 1341; 41 counts of wire fraud, in violation of 18 U.S.C. § 1343; 32 counts of obstruction of justice, in violation of 18 U.S.C. §§ 1512(b)(2)(B), 1512(c)(1), and 1519; and two counts of aiding and assisting the filing of a false tax return, in violation of 26 U.S.C. § 7206(2)."

But it sounds like this case will not be the norm as the defendant is speaking out in response to this government action.  The Philadelphia Inquirer provides the text of his speech to the State Senate. One aspect of this speech is particularly telling - it speaks to the toll an investigation takes on the life of the accused and his or her family. Fumo notes that he is "relieved," "that [this] phase is over, and I can move forward, knowing who and what I am fighting. I will be able to meet the allegations head on, instead of trying to answer the countless rumors that have attended this process."  This is most definitely a case to follow.

(esp) (w/ a hat tip to Peter Goldberger)

February 6, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Not Guilty for AOL Executives

Mid-level AOL executives were found not guilty after a lengthy jury trial. (see Business Week here) Carrie Johnson of the Washington Post reports on the details of the trial and the "not guilty" verdicts for the three defendants. It is admirable to see Chuck Rosenberg, the U.S. Attorney for the Eastern District of Virginia commenting that he respected the jury's decision.  This is the kind of comment that should be forthcoming from a prosecutor who acts as a minister of justice.  The government did not "lose" this case as the government wins every time they present evidence fairly to a jury. But one also has to congratulate defense counsel Mark J. Hulkower, Terrence Reed,  and Hank Asbill who spent the last months of their lives representing the defendants in this case.

(esp)

February 6, 2007 in Verdict | Permalink | Comments (0) | TrackBack (0)

Fourth Day Defense Victory in AOL Execs Case

First it was 29 of 31 counts dismissed.  And on the 4th day the jury returned with the not guilty verdict.  Details to follow.  But the news is that the AOL executives have been acquitted.  For background see here.

(esp)

February 6, 2007 in Verdict | Permalink | Comments (0) | TrackBack (0)

Monday, February 5, 2007

Another Long Sentence - 25 Years

The U.S. Attorneys Office for the Central District of California issued a press release telling of the 25 year sentence of an individual who was found guilty after a jury trial.  The release states:

"A Southern California man found guilty of bilking the customers of Employers Mutual LLC a company that falsely purported to provide health care coverage to more than 20,000 people across the United States was sentenced today to 25 years in federal prison and was ordered to pay more than $20 million in restitution."

James Graf was "found guilty by a federal jury in Los Angeles in late 2005 of conspiracy, five counts of mail fraud, 10 counts of misappropriation in connection with a health care benefit program, six counts of money laundering and one count of obstruction of justice."  The press release notes "that Employers Mutual, LLC is unrelated to Employers Mutual Insurance Company of Des Moines, Iowa."

(esp)

The press release is here -

Download employers_mutual_graf_sent.016.pdf

February 5, 2007 in Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)

Hyundai Motor Co. Chair Gets Three Years

Wall Street Jrl reports here that Hyundai Motor Co. Chairman Chung Mong Koo has been sentenced to three years.  The Wall Street Jrl notes that whether he will actually serve jail time remains to seen. 

(esp)

February 5, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

8 Hours of Tapes

8 hours of tapes are what the jury is presenting hearing according to the Washington Post here. And Talk Left has some interesting commentary here.  Also check out Neil Lewis's article in the New York Times here.  Some questions to consider: How will jurors react to these 8 hours of testimony?  Will they find the prosecution pushing too hard in having such a long recording?  Will this evidence serve to discredit Libby and be the sounds that strengthen the prosecution case?  Stay tuned.

(esp) 

February 5, 2007 in Plame Investigation | Permalink | Comments (0) | TrackBack (0)

Sunday, February 4, 2007

Where Have All the U.S. Attorneys Gone?

Noted here and here are the recent departures of two U.S. Attorneys.  Also discussed is the appointment of a new U.S. Attorney and the motion filed contesting this appointment on the basis that the appointment was never submitted to the Senate for its "advice and consent," and only the President has the power to make such an appointment - not the Attorney General. (see Attorney John Wesley Hall's Motion here). 

The Washington Post reports here of the growing trend to create vacancies and appoint new U.S. Attorneys. These recent "firings" raise questions as to whether U.S. Attorneys can operate as true "ministers of justice."   They should not be influenced by political considerations, they should be allowed to take the "tougher" cases even when it might drive the statistics down, and "win-loss" records should not be a consideration in whether they are properly doing their job.  They have a higher mission than just seeking convictions. 

White collar cases can often be more difficult and taking these more difficult cases may serve as a detriment to the statistics of a U.S. Attorney. This is especially true with respect to new technology cases like those of identity theft and computer crimes. Although there is no claim that the recent happenings in U.S. Attorney Offices related to a drop in statistics, it is important to remind everyone of the important role served by these public servants. One has to hope that the recent pressure on U.S. Attorneys will not deter these individuals from continuing to pursue their justice mission.

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February 4, 2007 in Prosecutors | Permalink | Comments (0) | TrackBack (0)