Monday, June 30, 2008

In the News

Day Two of the National Institute on Cyberlaw

Guest Blogger - Whitney Scott -  A 3L at Stetson University College of Law - 

Day two of this year's National Institute on Cyberlaw started with a very informative session on digital forensics, or what can be obtained from a computer and how that information links people to knowledge. The panel discussed the types of information such as structured and unstructured, various kinds of data, where it is stored on a computer or other device, and how it can be recovered. The uses of this data are also varied. Lawyers need to know about this topic because of evidentiary concerns such as admissibility and reliability, discovery requests and compliance, and client protection.

The next session was a very lively debate on the constitutionality of the President's authorization for the National Security Agency to monitor communications between foreign nationals outside the U.S. and people located in the U.S., to include U.S. citizens. The arguments integrated originalist interpretations of the Constitution, historical uses of presidential power in foreign relations, the Fourth Amendment, the balance of powers between the legislative and executive branches, and the role of the President as the Commander in Chief.

The afternoon breakout session I attended concerned pornography, sexual predators and the Internet. An interesting issue was presented as to whether images of child pornography present in a computer's cache, as opposed to its hard drive, was enough to allow prosecution for possession of child pornography. Both the FBI panelist and the panelist representing the U.S. Attorney's office said that they knew of no prosecutions for possession when the images were only in the cache. A 9th circuit decision (U.S. v. Romm, 455 F.3d 990) that was mentioned concerning such a situation said that there has to be intent to exercise dominion and control over the images for possession to occur.

The last session of the day addressed the downloading of copyrighted material from the Internet. A vice president of the RIAA and the lawyer involved in the only case (Virgin Records, Inc. v. Thomas) in which the RIAA was successful in suing a person alleged to have distributed copyrighted material were on the panel. Although the RIAA won in the jury trial, the judge in the case requested both sides to present briefs on their positions. There is a three-way split in the law the RIAA is using to sue people. The issue is whether simply making copyrighted material available on one's computer is enough to constitute distribution under 17 U.S.C. 106(3). Some courts say it is, some say it is not, and others say that it is if there is intent to make the copyrighted material available as shown by the way it is stored on the computer.

(ws)

June 30, 2008 in Conferences | Permalink | Comments (1) | TrackBack (0)

Sunday, June 29, 2008

In the News & Blogosphere

Phillip Inman, Guardian, UK is weak on tackling white collar crime and short sellers, says HBOS chairman

Martha Neil, ABA Law Journal News, Ex- Prosecutor: DOJ Destroyed My Career

Lawrence Hurley, Washington Briefs, Leahy Reveals Discussions with DOJ Over McNulty

(esp) (blogging from Denver, Colorado)

June 29, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Recent Scholarship

Plea Bargaining's Survival: Financial Crimes Plea Bargaining, a Continued Triumph in a Post-Enron World


LUCIAN E. DERVAN
Affiliation Unknown


Oklahoma Law Review, Vol. 60, No. 3, Fall 2007
Abstract:     
This article examines the war on financial crimes that began after the collapse of Enron in 2001. Although many believed that the reforms implemented following this scandal led to greater prosecutorial focus on financial crimes and longer prison sentences, an analysis of data from 1995 through 2006 reveals that little has actually changed. The statistics demonstrate that the government's focus on financial crimes has not increased and prison sentences for fraud have remained stagnant. How could this be the case? It is this author's hypothesis that although prosecutors could have chosen to use new statutes and amendments to the United States Sentencing Guidelines passed in the wake of Enron to increase prosecutions and sentences, they did not. Instead, prosecutors are using their new tools to encourage defendants to accept plea agreements that include sentences similar to those offered before 2001, while simultaneously threatening to use these same powers to secure astounding sentences if defendants force a trial. The result is that the promises of post-Enron reforms aimed at financial criminals were hollow and served only to reinforce plea bargaining's triumph.

From Boardroom to Courtroom to Newsroom: The Media and the Corporate Governance Scandals

KATHLEEN F. BRICKEY
Washington University School of Law


Journal of Corporation Law, Vol. 33, p. 625, 2008
Washington U. School of Law Working Paper No. 08-05-01

Abstract:     
Enron and its progeny spawned an unprecedented amount of press coverage. To its credit the press has, in the main, acquitted itself well. But media coverage of the ensuing investigations and trials also has raised a host of provocative questions about judgment, professionalism and restraint. Using five high-profile criminal trials arising out of recent corporate fraud scandals as a springboard, this article provides a critical analysis of how media coverage - and defendants' efforts to spin that coverage - can influence the course and outcome of a trial. Some, but not all of the mischief originates with the press. Ever conscious of the potential for media coverage to alter the outcome, defendants in high-profile fraud trials have increasingly orchestrated costly multi-media public relations campaigns that demonize prosecutors, witnesses, and the press to exonerate themselves. The five case studies in the article highlight growing points of tension between the media and the courts and provide a concrete context for exploring the extent to which we should be concerned about the potential for aggressive media coverage and media manipulation to undermine the legitimacy of the courts, to affect the outcome of lengthy criminal trials, to play on the passions of the community from which the jury will be drawn, to subvert journalistic credibility and independence, and to invite more restrictive court-imposed rules governing media coverage of high-profile trials. The article concludes that if the press is to effectively perform its watchdog role, it should be mindful of the need to watch itself. Three appendices at the end of the article provide a media-centric postscript on coverage of the corporate governance scandals.

The Changing Atmospherics of Corporate Crime Sentencing in the Post Sarbanes-Oxley Act Era

PETER J. HENNING
Wayne State University Law School


Journal of Business and Technology Law, Vol. 3, No. 2, March 18, 2008
Wayne State University Law School Research Paper No. 08-09
Abstract:     
The Sarbanes-Oxley Act of 2002 has been viewed as a watershed event in dealing with corporate fraud. In addition to its extensive provisions dealing with internal controls and corporate accounting procedures, the law adopted new crimes and pushed the United States Sentencing Commission to enhance the Federal Sentencing Guidelines provisions for fraud and related offenses. Even before the adoption of the Act, the Commission had increased the potential punishment for white collar crimes by amending the loss table for fraud offenses. These two steps played a key role in the increased sentences imposed on defendants convicted for their role in corporate crimes, such as Bernie Ebbers (twenty-five years) and John Rigas (fifteen years). The Sarbanes-Oxley Act marked a change in the sentencing atmospherics for corporate crime that propelled judges to give out sentences that were unthinkable even five years earlier.

This article considers how the Sarbanes-Oxley Act changed the approach to sentencing of white collar defendants involved in corporate crimes. It uses a hypothetical case to illustrate how sentences under the Guidelines have tripled from what they would have been just a few years earlier. It then looks at the recent Supreme Court decision in Gall v. United States that emphasized the discretion federal judges have even under the Sentencing Guidelines to shape sentences that reflect the individual circumstances of the defendant. The change in sentencing created by the Sarbanes-Oxley Act may well be abating in the new era of discretion fostered by the Supreme Court.

(esp) (posting from Denver, Colorado)

June 29, 2008 in Scholarship | Permalink | Comments (3) | TrackBack (0)

Thursday, June 26, 2008

Scrushy - Prove You Won't Flee

The 11th Circuit Court of Appeals denied Richard Scrushy's motion for bail pending appeal.  His co-defendant former Alabama Governor Don Siegelman had been granted bail.  Scrushy argued that Siegelman's release warranted review of his claim for bond pending appeal.  The court, however, ruled that Scrushy had failed to prove the preliminary step to obtain bail in that he failed to demonstrate "by clear and convincing evidence that he is unlikely to flee if he is released pending resolution of this appeal."

Order -Download scrushyorder.pdf

(esp)

June 26, 2008 in HealthSouth, Judicial Opinions, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Will Airline Tickets Increase?

A DOJ Press Release reports that "[m]ajor international airlines–Socit Air France (Air France), Cathay Pacific Airways Limited (Cathay), Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), Martinair Holland N.V. (Martinair), and SAS Cargo Group A/S (SAS)– have agreed to each plead guilty and pay criminal fines totaling $504 million for participating in a multi–year conspiracy to fix prices for air cargo rates. . . . " Of the $504 million in fines, Air France-KLM, which now operates under common ownership by a single holding company, has agreed to pay a $350 million criminal fine, the second highest fine ever levied in a criminal antitrust prosecution."

(esp)

June 26, 2008 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 25, 2008

And 20 Days Later Conrad Black Loses His Appeal in 7th Circuit

Twenty (20) days following the oral argument, the 7th Circuit in an opinion authored by Hon. Posner affirmed Conrad Black's conviction ( Opinion - Download conrad_black.pdf ). The trial lasted four months, and Conrad Black was sentenced in December 2007.  The opinion is 16 pages long and the last sentence of it states: "[t]he defendants raise some other points in their 161 pages of briefs, but none that has sufficient merit to require discussion."   

The court examines both 1341's money element and 1346's honest services provision. To get a sense of the opinion, here's a paragraph:

"They are making a no harm-no foul argument, and such arguments usually fare badly in criminal cases. Suppose your employer owes you $100 but balks at paying, so you help yourself to the money from the cash register. That is theft, e.g., State v. Winston, 295 S.E.2d 46, 51 (W. Va. 1982); Edwards v. State, 181 N.W.2d 383, 387-88 (Wis. 1970); State v. Self, 713 P.2d 142, 144 (Wash. App. 1986), even though if the employer really owes you the money you have not harmed him. You are punishable because you are not entitled to take the law into your own hands. Harmlessness is rarely a defense to a criminal charge; if you embezzle money from your employer and replace it (with interest!) before the embezzlement is detected, you still are guilty of embezzlement."

The court rejects materiality being needed for obstruction. With regard to the ostrich defense, the ostrich is a clear winner, as the court states:

"The first is whether an "ostrich" instruction should have been given. The reference of course is to the legend that ostriches when frightened bury their head in the sand. It is pure legend and a canard on a very distinguished bird. Zoological Society of San Diego, Birds: Ostrich, www.sandiegozoo.org/animalbytes/t-ostrich.html (visited June 12, 2008) ("When an ostrich senses danger and cannot run away, it flops to the ground and remains still, with its head and neck flat on the ground in front of it. Because the head and neck are lightly colored, they blend in with the color of the soil. From a distance, it just looks like the ostrich has buried its head in the sand, because only the body is visible"). It is too late, however, to correct this injustice."

The court, however, rejects defendant Conrad Black's argument on this issue.

What Others say:

Chicago Tribune here

Wall Street Jrl Blog here

(esp)

June 25, 2008 in Judicial Opinions | Permalink | Comments (1) | TrackBack (0)

Sentences Reduced - But Very Different Reasons

Abha Bhattarai, NYTimes, Sentences Reduced for Adelphia Founder and Son

Ashby Jones, WSJ Blog, A Rigas Reprieve: Father and Son Receive Lighter Sentences

Curt Anderson, Yahoo News (AP) - Abramoff's ex-partner

These articles are yet additional support that cooperation brings enormous benefits.  You pay the price if you risk trial and lose. 

(esp)

June 25, 2008 in Sentencing | Permalink | Comments (0) | TrackBack (0)

DOJ's Compliance Program Fails With Disgraceful Politicized Hiring

The Report titled an Investigation of Allegations of Politicized Hiring in the Department of Justice Honors Program and Summer Law Intern Program presents a review of appalling conduct occurring with respect to DOJ hiring practices. There is no excuse for hiring civil servants based upon politics.  Yet the Report provides ample evidence that this is what occurred in DOJ. The Report states " based on the results of our data analysis, we found that Honors program candidates whose applications reflected liberal affiliations were deselected at more than three times the rate (55 percent) of candidates whose applications reflected conservative affiliations (18 percent) and more than twice the rate of candidates whose applications reflected neutral affiliations (23 percent)."  The Report in its conclusion states that "[t]he evidence in our investigation -- including the documentary evidence, the testimony of witnesses, and the analysis of the applications of candidates who were selected for interviews and who were deselected by the 2006 Screening Committee -- supports the conclusion that political or ideological affiliations were used to deselect candidates from the Honors Program and from SLIP (Summer Law Intern Program)."

Kudos go to the Office of the Inspector General and OPR for issuing this Report.  But it is not enough. It is clear that DOJ did not have a proper compliance program in place, and still has insufficient measures to assure that conduct such as this will not happen again. It is also clear that an independent body needs to examine what has happened here and make recommendations as to how best to proceed.

The bottom line is that DOJ needs a better compliance program - yes, an "effective program" like they require of others.  And there needs to be oversight to make certain this never happens again. It is ironic that the department that requires others, namely corporations, to have appropriate compliance programs in place, failed to have one that would meet their own criteria.

AG Mukasey's assurance of - it's wrong and I'll change - is not enough.  He stated that he "accept[s], and have directed the implementation, of all of those recommendations" in the Report. (See AG Mukaseys' comment here) But would such a response be sufficient if this was a corporation that had failed to abide by the law?  Wouldn't they be asking for the appointment of a monitor?  And what would the fine be, even if they did give a deferred prosecution agreement?

And is the statement of "no more politics" sufficient. Should there not be a review of those who secured jobs via this appointment process to see if they were the most qualified?  Should there not be contact made with those who were deprived of the jobs because of this hiring practice to see if they would like to be a part of DOJ?  It is pretty frightening to think that the department that will monitor elections has been compromised and continues to be compromised by political hiring practices. More needs to be done here to rectify these past practices.

(esp)

What Others Are Saying:

Carrie Johnson, Washington Post - here (noted previously)

Dan Slater, WSJ - here

Eric Lichtblau, NYTimes here -

June 25, 2008 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 24, 2008

This Is the Subprime Mortgage Smackdown?

Guest Blogger Professor Peter Henning (Wayne State Law School & Blog Editor Emeritus):

Two former Bear Stearns hedge fund managers were paraded in handcuffs through Brooklyn while the FBI touted charges against 406 defendants for mortgage fraud. This must mean that those to blame for all the problems caused by declining home prices and mortgage foreclosures are finally being called to account – right? Unfortunately, it is only a crime to lie to the government, so don’t believe everything you hear about efforts to find a few scapegoats for the current economic problems in the housing market.

On June 19, Ralph Cioffi and Matthew Tannin were arrested at their homes and brought to Brooklyn to take part in an unseemly perp walk before a media throng hungry to give a picture for all that is wrong with the economy. At the same time, an FBI press release linked those charges to the inartfully named Operation Malicious Mortgage that has resulted in 144 mortgage fraud cases since March 1. These two events have absolutely nothing to do with one another, other than the fact that the government chose to announce them together, but it provides an opportunity for prosecutors to tout the "cop on the beat."

The indictment of Cioffi and Tannin at best is only coincidentally related problems in the mortgage market. The two hedge funds they manages into oblivion were heavily invested in securities tied to the subprime mortgage market, but that just happened to be the vehicle they chose – the could just as easily have invested in junk bonds or natural gas futures (think Amaranth Advisors and its $6 billion meltdown). The charges against them allege conspiracy, securities and wire fraud for what they told their customers, not what was done with the underlying securities.

The charges under Rule 10b-5 and the wire fraud statute (18 U.S.C. § 1343) require the government to prove more than just dissembling. Fraud is a type of larceny, so the defendants have to make misstatements or omit to disclose information to gain something from their victims. A false hope that the hedge funds would pull through, no matter how misguided, can be a defense to a fraud charge. Showing that Cioffi and Tannin were of two minds, or conflicted about where the market was headed, does not mean that their statements to investors were part of a fraudulent scheme.

As a Wall Street fraud case, the charges seem a bit thin to me. Hedge fund managers are essentially salesmen, touting their wares in much the same way that the man on the used car lot has a great deal for you. Tannin is accused of telling investors that he was investing more in the hedge funds when in fact he did not. When the car salesman tells you his daughter drives the same car and he wouldn’t put her in a shoddy vehicle, do you actually believe him? Perhaps credulity among the so-called sophisticated investors in hedge funds is higher than the caveat emptor every used car buyer must possess.

The indictment brings us interesting tidbits, like the vodka toast before Cioffi warned Tannin and others not to discuss the funds’ difficulties. Speaking of toast, Tannin wrote in an e-mail that "the subprime market is toast" yet only three days later said nothing of the sort to investors on a conference call. The fact that Wall Street salesmen talked out of both sides of their mouths is nothing new. Didn’t former Bear Stearns CEO Alan Schwartz go on CNBC a few days before the firm’s collapse and say he was not aware of any imminent threat to its liquidity?(see here) Whether Cioffi and Tannin are guilty of fraud remains to be seen.

Cioffi’s withdrawal of $2 million from one of the funds gives an economic motive that is otherwise missing from the alleged scheme. However, withdrawing your own money is not the type of theft one expects to see in a fraud case. The case against Cioffi and Tannin essentially charges them with crossing the line between aggressive salesmanship and fraud, but where is that line? Hedge fund managers whose assets are struggling had better be careful about what the do – and don’t – say lest they too be accused of defrauding investors who lose money. And, of course, be careful what you write in an e-mail.

Operation Malicious Mortgage, on the other hand, involves the classic type of fraud we’re used to seeing. [Personal aside: Who thinks up these stupid names? I’ve never heard of a mortgage being malicious, even if it does come back to bite you one day.] But the victims are not, for the most part, those who are suffering from foreclosures or underwater mortgages with ballooning principal balances. Instead, they are the banks, commercial lenders, and other creditors who got taken in scams involving false documentation and inflated appraisals for the most part.

There is an old adage that every generation thinks they discovered sex, and the same seems to be the case in the current mortgage fraud crackdown – this not a new type of crime. Does anyone remember the Savings & Loan Crisis, when the collapse of the real estate market brought to the surface any number of lending abuses? The fact that scam artists took advantage of the housing price bubble should not come as a startling revelation, and charging 406 defendants in a three-month period is a nice start but nothing to trumpet from the rooftops.

Mortgage-related fraud is a serious problem, in much the same way that insurance fraud and shoplifting causes all of us to pay higher prices. The FBI’s assertion in a press release that Operation Malicious Mortgage will help "to combat the threat mortgage fraud poses to the U.S. housing industry and worldwide credit markets" is more than a bit overblown. Even the billion dollar loss caused by the alleged mortgage frauds is surely just a drop in the bucket in the international credit markets.

Cioffi and Tannin risk becoming the poster children for a perceived crackdown on abuses in the mortgage markets, but the charges against them have virtually nothing to do with increased foreclosures and declining economic prospects for a number of Americans. Operation Malicious Mortgage shows the government’s concern with a type of fraud that raises the cost of home mortgages, but it will not make the lives of people who are losing their homes any better. But maybe we can all sleep a bit better at night knowing the cop is on the beat, ready to arrest corporate executives and parade them in handcuffs. Maybe.

(ph)

June 24, 2008 in Mortgage Fraud | Permalink | Comments (11) | TrackBack (0)

In the News

DOJ Hiring Practices - Carrie Johnson, Washington Post, Report Says Partisanship Reigned in Justice Department Hiring Program

Plea in Options Backdating - "Dr. Henry Samueli, the co-founder and former chief technical officer of Broadcom, Inc., pleaded guilty . . . to making a false statement in testimony before the Securities and Exchange Commission relating to that agency’s investigation into options backdating at the Irvine-based technology company." His "plea agreement calls for a sentence of five years probation, a $250,000 criminal fine, and the payment of $12 million to the United States for making a false statement to the SEC." DOJ Press Release - Download broadcom_samueli_plea.086.pdf ; See also LaTimes - E. Scott Reckard and Christopher Goffard,  Broadcom co-founder Samueli pleads guilty in stock options fraud case

El Paso Corruption Investigation - DOJ Press Release reporting on a guilty plea to conspiracy to defraud in El Paso County, Texas.  This is part of an ongoing corruption Investigation in El Paso.  The individual admitted that "he conspired with others to pay cash money to an elected member of the El Paso County Commissioner's Court to secure their support and vote for contracts between the County and various vendors seeking to do business with the County."

Criminal Investigation Leads to Bankruptcy - Sean P. Murphy and Jonathan Saltzman, Boston.com (Globe) - Accused Big Deal Firm Files for Ch. 11 - facing US Charges, seeks financial shield

(esp)

June 24, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Day One of the National Institute on Cyberlaw

Guest Blogger - Whitney Scott - A 3L  at Stetson University College of Law -

I attended the first day of the ABA sponsored 2nd Annual National Institute on Cyberlaw today. The two hour panel discussion was a general overview of cyberlaw essentials. The panel discussed some hot issues such as the difference between identity theft and identity fraud, problems with using biometrics for identification or authorization, data mining, and how the government uses data brokers to aggregate information that it would not otherwise be able to use for criminal prosecutions.

The panel discussed the reasons for the large amount of identity theft in the U.S. The main reason is the use of the same information to identify someone and to authorize that person's access to private information. Everyone agreed that identity should be determined by one piece of information while another piece of information that is a shared secret between the user and the information holder should be used to allow access.

One audience member asked why companies should not have fiduciary duties to customers whose personal information they hold. One answer was that some states are mandating that companies notify customers when there is a security breach and customers' personal information is compromised. Fiduciary duties would have to be legislated, though.

Data brokers are companies that have compiled information gathered from various public records, such as criminal, property, and drivers' license records, then aggregated the data into a single piece of comprehensive information about a person. The government can buy the information, and this information apparently does not have the same Fourth Amendment protection as information the government collects itself.

There was also a short discussion about the National Security Agency and how limited public knowledge is about this agency, and about digital forensic science.

(ws)

June 24, 2008 in Conferences | Permalink | Comments (0) | TrackBack (0)

Monday, June 23, 2008

Reversals of Federal Convictions

Alex Bunin, Federal Public Defender from the Northern District of New York has produced an incredible document, a document he has been updating since 1995, that provides by categories reversals of federal convictions from U.S. Courts of Appeal and the United States Supreme Court.  Some white collar cases are included, such as cases with charges of money laundering, fraud, RICO, false statements, and perjury.

The document (updated version) - Download federal_convictions_reversed_6.08.pdf

(esp)

June 23, 2008 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Sunday, June 22, 2008

Former US Attorneys Push for Passage of Attorney-Client Privilege Legislation

A letter signed by 33 former United States Attorneys was sent to Senator Leahy, chair of the Judiciary Committee,  asking that he support S. 186, the Attorney-Client Privilege Protection Act.  The letter states that "[t]his bill is crucial to stemming the Department of Justice’s widespread practices and policies that pressure businesses to waive the attorney-client privilege in return for avoiding a harsher charging decision."  It further states:

"The attorney-client privilege, the oldest of the evidentiary privileges, is a cornerstone of our justice system. The Department of Justice must end the practice of demanding that an organization place its employees in legal jeopardy in return for leniency. The time has come to pass legislation that protects the existing rights of individual employees and business organizations. As Chairman of the Senate Judiciary Committee, you are in the position to ensure this legislation is given proper consideration. The Department of Justice has failed to make necessary changes. Therefore, we respectfully ask you to support S. 186, the Attorney Client Privilege Protection Act of 2007, and take appropriate action to bring it to the floor of the Senate."

The Letter - Download letter_to_senator_leahy_from_former_united_states_attorneys.pdf

(esp)

Addendum - See WSJ Blog here.

June 22, 2008 in Privileges | Permalink | Comments (1) | TrackBack (0)

A Hot Summer for a Cincinnati Icemaker

A DOJ Press Release reports on the Cincinnati packaged-ice manufacturer, The Home City Ice Company (Home City Ice), pleading guilty to a one-count information under the Sherman Act, charging the company with conspiracy. (The Plea Agreement). The press release states that "Home City Ice and co-conspirators carried out the conspiracy by:

  • Participating in meetings and conversations to discuss packaged-ice customers and territories in southeastern Michigan and the Detroit metropolitan area;
  • Agreeing during those meetings and conversations to allocate packaged-ice customers and territories in southeastern Michigan and the Detroit metropolitan area;
  • Exchanging information during those meetings and conversations, for the purpose of monitoring and enforcing adherence to the agreements to allocate customers and territories in southeastern Michigan and the Detroit metropolitan area; and
  • Refraining from competing for packaged-ice customers and territories that were so allocated."

The Agreement has a cooperation section that calls for the company to cooperate with the government. In this regard, the Agreement also provides for a reduction of the fine if the cooperation is satisfactory to them.  It states:

"If the United States determines that the defendant has provided substantial assistance in any investigation or prosecution, and has otherwise fully complied with all of the terms of this Plea Agreement, it will file a motion, pursuant to U.S.S.G. §8C4.1, advising the sentencing judge of all relevant facts pertaining to that determination and requesting the Court to impose a fine departing from the lower end of the guideline range of $24 million to $48 million in light of the factors set forth in U.S.S.G. §8C4.1(b)(1)-(3). The defendant acknowledges that the decision whether it has provided substantial assistance in any investigation or prosecution is within the sole discretion of the United States. It is understood that, should the United States determine that the defendant has not provided substantial assistance in any investigation or prosecution, or should the United States determine that the defendant has violated any provision of this Plea Agreement, such a determination will release the United States from any obligation to file a motion pursuant to U.S.S.G. §8C4.1, but will not entitle the defendant to withdraw its guilty plea once it has been entered. The defendant further understands that, whether or not the United States files a motion pursuant to U.S.S.G. §8C4.1, the sentence to be imposed on it remains within the sole discretion of the sentencing judge."

This case may be the start of more-to-come as there is "an ongoing investigation into the packaged-ice industry."

(esp)

June 22, 2008 in Settlement | Permalink | Comments (1) | TrackBack (0)

Saturday, June 21, 2008

In the News and Blogosphere

Carrie Johnson, Washington Post, Justice Dept. Grant Overseer Subject of Criminal Probe

John Fritze, Gus G. Sentementes and Lynn Anderson, Baltimore Sun, State raids mayor's home

DOJ Press Release - "A former New York City engineer pleaded guilty . . . to participating in a conspiracy to commit bribery in connection with a project to repair New York’s Pier 86, the principal location of the Intrepid Sea, Air and Space Museum."

Instapundit - Sharpton Lawyers Up in Tax Probe

Jessica Gresko, AP, Ex-UBS banker pleads guilty in US tax evasion case

Larry Ribstein, Ideoblog, More on the Bear Indictments

William Rashbaum, NYTimes, Prosecutors Question Tests of Concrete in City Buildings (an investigation coming from Robert Morgenthau's Office - Mahattan District Attorney)

DOJ Press Release - Banker Pleads Guilty to helping American Real Estate Developer Evade Income Tax on $200 Million

DOJ Press Release - Chinese National Sentenced for Economic Espionage (the 3 year sentence is the first ever for a violation of 18 USC Section 1831)

(esp)

Addendum -

Jenna Johnson, Washington Post - Corporate Espionage Detailed in Documents   (excellent article regarding corporate spying)

June 21, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Collateral Consequences of a Criminal Conviction & Martha Stewart

Sometimes the collateral consequences of a conviction make no sense.   Martha Stewart could not possibly hurt anyone or be a harm to the UK, yet the technicality of the conviction initially denied her receiving a visa. See CNN, Martha Stewart Denied UK Visa But Hopes to Visit Soon.

(esp)

Addendum - There is certainly a question as to why Ms. Stewart needed a visa, and what legal provision in the UK looks at criminal convictions in other countries? Any readers know the answer here?

June 21, 2008 in Martha Stewart | Permalink | Comments (2) | TrackBack (0)

Friday, June 20, 2008

2008 Report - Corporate Fraud Task Force

The 2008 Report to the President of the Corporate Fraud Task Force is now available (see here).  And reading the many prosecutions with guilty pleas and convictions after trial, one would certainly think that this task force has been an incredible success.  After all the Report says that the DOJ "has obtained nearly 1,300 corporate fraud convictions."  It states that "[t]hese figures include convictions of more than 200 chief executive officers and corporate presidents, more than 120 corporate vice presidents, and more than 50 chief financial officers." The Report even goes so far as to supply successes with civil enforcement.

But there is something noticeably missing from this report. How about the not guilty verdicts?  Shouldn't a report of this nature present a fair assessment of what really happened with this Corporate Fraud Task Force? Back when they issued their 5 year report I wrote (here) -

But omitted from the list of companies and employees are numbers of those found "not guilty."  The report does not speak about the death sentence given to Arthur Andersen, LLP, a conviction that was later reversed by the Supreme Court.

It is important to remember that prosecutors are to be "ministers of justice."  And "win" or conviction records are not what counts.  What matters is whether the prosecutor has proceeded against criminality in a fair and professional matter.

The closest the latest Report comes to presenting a true picture of what happened, is on page 1.11 when discussing KPMG they say that "the Government is currently appealing an adverse ruling in connection with the remaining 13 individuals."

This Report should be sent back for a rewrite.  Lets see a Report that presents a true picture of what has been accomplished by the Task Force.  That picture may show that the government has been successful in many cases.  But it will allow the President to see exactly what has or has not been accomplished by this Task Force. 

(esp)

June 20, 2008 in Think Tank Reports | Permalink | Comments (1) | TrackBack (1)

The Government Files Notice of Appeal in the Snipes case

Following the pre-appeal motions in the Wesley Snipes case is not easy.  The latest is that the government filed a Notice of Appeal in the 11th Circuit ( Download usnoa_061908.pdf) and one has to figure they must be contesting the bail order granting Wesley Snipes bail pending appeal. The court in the Middle District of Florida granted bail finding that Wesley Snipes was not a flight risk and that the court was "not prepared to say that the issues on appeal are patently frivolous or asserted merely for purposes of delay." (see here).  It seemed simple - some courts grant bail and some deny it (see here).  When it is denied, one sees the accused before the appellate tribunal asking for relief.  But could it possible be that the government is appealing a bail order of a case involving misdemeanor convictions?

(esp)

June 20, 2008 in Celebrities | Permalink | Comments (0) | TrackBack (0)

Do We Need A Scoreboard to Keep Track of Prosecutions

Amir Efrati and Tom McGinty  of the New York Times have a must-read article titled, Youz Indictin' Who? A Rivalry Grows For Stock Cops in Brooklyn, Manhattan.  Although it is good to see that two offices in New York are going to be strong in bringing white collar cases, it is pretty frightening to think that a rivalry may be in the making. It is hard to imagine that a prosecutor's office might become like the end-of-the-month street cops, trying to arrest people to keep the numbers high. They may all be speeding, but there is something bothersome about such an investigative and prosecution philosophy, especially in the white collar sphere. 

This article made me remember a 1986 article in the NYTimes by Arnold Lubasch, titled Lindenhauer Pleads Guilty as Officials Debate Subpoena (sorry no link available).   The article talked about how a normally "routine arraignment procedure was marked by a behind-the-scenes conflict between Rudolph W. Giulianai, the United States Attorney in Manhattan, and Robert M. Morgenthau, the Manhattan District Attorney."  In this article it was a federal-state rivalry.  How interesting to now see it as a federal-federal one.

(esp)

June 20, 2008 in Prosecutors | Permalink | Comments (1) | TrackBack (0)