Tuesday, September 30, 2008
To DOJ's credit, they have released the Report of "An Investigation into the Removal of Nine U.S. Attorneys in 2006." Additionally to DOJ's credit they have authorized that there be an investigation into the conduct outlined in the report, as opposed to sweeping it under the rug. And to their credit, DOJ did appoint an individual who is presently not in a "political" position to handle this investigation. (see here) But it still comes back to why is DOJ not willing to appoint someone who is outside the department - someone independent - to conduct this investigation. And more importantly, what kind of appointment does Acting US Attorney Nora Dannehy have in handling this case? Attorney General Mukasey says -
"Therefore, I have asked Nora Dannehy to exercise the authority of the United States Attorney for the District of Columbia for purposes of this matter. In that capacity, Ms. Dannehy will report to me through the Deputy Attorney General." (see here)
It does not appear to be an appointment of a special counsel as was done when Patrick Fitzgerald was appointed to "exercise that authority as Special Counsel independent of the supervision or control of any officer of the Department." (see appointment of J. Patrick Fitzgerald here).
The report is a long report - 392 pages- and the authors deserve enormous praise for providing transparency to a sad situation. It was especially sad to see that they were not receiving information needed to fully evaluate the situation. They state, "[t]he White House Counsel’s Office eventually provided to us a heavily redacted version of the document, but the redactions made the document virtually worthless as an investigative tool." - But one also has to ask, isn't this what DOJ does all the time to defense counsel?
Sunday, September 28, 2008
Carrie Johnson, Washington Post, No Grand Jury for Gonzales - Report to Call for Continued Probe of U.S. Attorneys' Firings
Question- With all the these findings, why hasn't there been the appointment of an independent counsel? How can you have someone internal to the department investigate allegations that relate directly to people who were employed in the department?
James Vicini, Reuters, FBI said to probe Fannie, Freddie, Lehman, AIG
DOJ Press Release, Las Vegas Personal Injury Lawyer Convicted of Tax Evasion
Saturday, September 27, 2008
Despite recent Supreme Court opinions that provide some flexibility when sentencing a convicted defendant, guideline sentences appear to be part of a culture that is not changing. A recent white collar case that demonstrates a court not departing below the guidelines, is the recent sentencing of T. Milton Street. A brother of former Philadelphia Mayor John F. Street, T. Milton Street received a sentence of 30 months for his convictions for tax charges. (see Emilie Lounsberry, Philadelphia Inquirer, T, Milton Street Sr. gets 30 months for dodging taxes) The trial was an unusual one, with the accused arguing the unconstitutionality of the tax code (see here). The jury failed to convict the accused of the fraud charges brought by the government, and also did not convict of all the tax charges that had been brought. (see here). In addition to the stiff tax sentence, the court failed to grant the accused bail pending his appeal. (see Michael Hinkelman, Philadelphia Inquirer, T. Milton Street Sentenced to 30 Months) This does not, however, preclude him from asking the appellate court for bail.
(esp)(w/ a hat tip to Peter Goldberger)
Thursday, September 25, 2008
The 10th Circuit heard en banc the appellate case of former Qwest CEO Joe Nacchio. The Denver Post here provides details of that argument. The panel had reversed and remanded the convictions (see here) with a statement that "Armchair economics is not the way to decide complex securities cases." But the case immediately went en banc for the full court to consider some issue regarding the merits of the matter, and others of a procedural nature.
Del Quentin Wilber, Washington Post, Attorney for Stevens Tells Jurors Alaska Senator 'Is Honest,' Did Not Lie
Kroll Global Fraud Report, Annual Fraud Report 2008-09 here
Tuesday, September 23, 2008
Randall D. Eliason, Legal Times, We Need to Indict Them - Deferred Prosecution Agreements Won't Deter Enough Corporate Crime (w/ a hat tip to Whitney Curtis)
DOJ Press Release, Foreign National Pleads Guilty to Conspiracy and Alien Smuggling Charges
Pamela A. MacClean, National Law Journal, Tax Attorney, Former Global Manager at Bechtel Group Indicted on Tax Charges
Monday, September 22, 2008
The jury selection process started in the trial of Senator Ted Stevens. Whether the defense is making a wise move to proceed quickly to trial remains to be seen - clearly for political reasons it allows Senator Stevens the ability to have a trial prior to facing re-election. But should the political issue be the focus when the accused faces possible prison time and a conviction? This can be a tough call for a politician facing criminal charges. On one hand if the accused believes him- or herself innocent, resolving the issue quickly prior to an election is important to avoid a loss premised on innuendos and charges. On the other hand, preparing for a federal trial takes time.
And the pressure is not exclusive to the accused. If the government takes the step to indict before an election, then they should be prepared to go to an immediate trial. Claims of needing more time should have been considered prior to issuing the Indictment of someone who will be on the ballot when the polls open.
The witness list in this case presents an interesting array of individuals, both Democrats and Republicans. (see here) The Indictment presents seven counts of false statements (see here). So far there been discovery issues for both sides. (see here and here). The question will be whether the evidence will start this week, and if so, what will it include.
Sunday, September 21, 2008
Frank Reynolds, Andrews Publications, Ex-Exec Says Dynergy Is $600K Behind on Attorney Bill Payments
(esp)(w/ a hat tip to Bill Olis)
Friday, September 19, 2008
Heritage Foundation, Continuing the "Culture of Waiver" at DOJ
Mike Scarcella, The BLT- Blog of the Legal Times, DOJ Ordered to Post Williams & Connolly Exhibits Online, (pertaining to Senator Ted Stevens case)
John Curran, Law.com (AP), Vermont AG Candidate to Prosecute Bush If She Wins
Howard Bashman, How Appealing, Wecht Seeks to Appeal Case to U.S. Supreme Court (citing Jason Cato, Pittsburgh-Tribune Review)
Washington Post (AP), Charges Against Foley Said to Be Unlikely
(esp) (from Washington, D.C.)
Thursday, September 18, 2008
Rachel Breitman, Alaska Legislators File Suit to Stop Palin Investigation
David Nakamura & Del Quentin Wilber, D.C. Seeks Data on Federal Tax Probe- City Hopes to Make Sure None in Scam Are Still on Staff
David Josar, Detroit News, Kilpatrick's day in the slammer
Wednesday, September 17, 2008
Alison Frankel, AmLaw Daily, Two Chevron Lawyers Indicted in Ecuador,
NYTimes, Opinion, Holding Mr. Rove in Contempt
BLT Legal Times, Taylor Withdraws Nomination
Corporate Crime Reporter, Mendelsohn Says Criminal Bribery Prosecutions Doubled in 2007
Monday, September 15, 2008
Defendants are not always successful in KPMG related cases before Judge Kaplan. The four remaining defendants in the case found that out this past week when their claims of due process violations were denied.
The issue is a fascinating one, and one previously seen in cases such as Scrushy and Stringer - the sharing of information in a parallel proceeding. The court held that "[i]t is well-established that as a general rule, '[t]he prosecution may use evidence acquired in a civil action in a subsequent criminal proceeding unless the defendant demonstrates that such use would violate his constitutional rights or depart from the proper administration of criminal justice.'"
In denying the defense motion to dismiss the case, the court held that a reliance on other cases was "misplaced" in that in each of the cases cited by the defense, "the court emphasized that (1) there was no bona fide civil investigation, and (2) the defendant was deceived by the government during the civil investigation." With "no such allegations in this case" the court denied the defense motion to dismiss.
Memorandum and Order - Download 20080910_order_re_6103_tj252.pdf
So what is happening with the forthcoming trial of Alaska Senator Ted Stevens? See Erika Bolstad, Anchorage Daily News, Stevens Loses Bid to Throw His Case Out of Court. He's getting the discovery for trial, but it was a mess. See Erika Bolstad, Anchorage Daily News, Judge orders that Stevens' lawyers get pile of paper data
Sunday, September 14, 2008
Troopergate, as the investigation has been termed by press and politics, raises the question of whether Sarah Palin abused her power as Governor. A lawyer is now representing her. See Lisa Demer, Anchorage Daily News, Private lawyer hired to represent Palin in Monegan inquiry. And her lawyer wants the discovery from the individual appointed by the legislature to do the investigation, but this lawyer is also saying that this matter should be handled by the state's 3-person personnel board. Are you entitled to discovery from the jurisdiction that you are claiming does not have jurisdiction? And then there is the issue of the subpoenas. Or will all the witnesses now be cooperating? Wall Street Jrl, Washington Wire, Troopergate’ Subpoena Showdown May Be Averted.
The defendants found guilty following a reinsurance contract between AIG and General Re, contracts that the the government argued made it appear that (1) "General Re had transferred approximately $100 million in insurance risk ... to AIG when in fact, no real insurance risk had been transferred; (2) General Re was Paying AIG $10 million in cash 'premiums' when, in fact, General Re never would be out on the transaction; and (3) General Re had offered the transaction to AIG when, in fact AIG offered the transaction to General Re." Sham deals and side-deals form the basis of the criminality alleged by the government. And with convictions in hand, the government is moving to sentencing.
The government has filed its sentencing memo and so too the defendants. The ball now rests with the judge. The disparity is great - with one side focusing on the offender loss and computing numbers and another looking at a first offender with a truly stellar life record. It is fascinating to see in the government's sentencing memo, the admission that there can be more than one way to compute the loss. The government presents two different ways. Should a sentence for a crime be based on mathematical calculations that by the government's own admission are subject to multiple approaches? The real showdown here is with the U.S. Sentencing guidelines.
Government's Sentencing Memo - Download us_sentencing_memo.pdf
See also Douglas McLeod, Sentencing Fight Looms in Finite Case
DOJ Press Release, Five Promoters of Tax Defiance Scheme Indicted for Tax Fraud
Mark J. Stein and Joshua A. Levine, N.Y. Law Jrl, Law.com, The Filip Memorandum: Does It Go Far Enough?
Kaye Scholer, New Developments: (i) The Department of Justice Announces Revisions to the McNulty Memorandum But Leaves Unanswered Questions About Privilege Waiver: and (ii) The Second Circuit Affirms Judge Kaplan's KPMG Ruling
BLT - Blog of the Legal Times, Judge: Stevens' Trial Will Start on Time
Saturday, September 13, 2008
Guest Blogger - Professor Frank Bowman - University of Missouri School of Law:
I enjoyed reading Ms. Martz's response to my American Lawyer/Legal Times article. It's always a relief to find that somebody reads one's stuff, and a real pleasure when it draws an intelligent response. A couple of thoughts on that response:
First, Ms. Martz opines that, "As a philosophical matter, I do not think that open-ended criminal statutes are ever a good idea." I find it hard to believe that she really thinks this, at least in the absolute terms she uses. Virtually all criminal statutes are open-ended to some degree, in the sense that their reach will be unclear at the margins. That's one reason we have appellate courts -- to settle inevitable questions about the reach of statutory language. More importantly to the present discussion, Anglo-American criminal law long ago gave up the struggle to define in advance the precise types of financial skullduggery it would deem criminal. The history of the development of the old common law of larceny, and the later statutory offenses of embezzlement, false pretenses, and fraud is a centuries-long movement away from the particular to the open-ended in recognition of the law's inability to anticipate the forms criminal ingenuity might take. So, unless Ms. Martz is advocating rolling back American law to about 1799 (when the first English embezzlement statute was enacted), what we are talking about is matters of degree. And I agree that some modern federal statutes are too vague and would benefit from careful re-thinking. But the suggestion that the entire body of federal criminal statutes regarding fraud and corruption can or should be changed so that it is no longer "open-ended" is not a serious proposition.
Second, Ms. Martz suggests, in common with many other critics of more aggressive federal white collar crime prosecution, that federal criminal prosecutions using open-ended statutes violate standards of notice and due process. In plain English, she is saying that people are routinely being prosecuted for conduct they are shocked, shocked to find was illegal. Now I won't say that such an event has never happened or that better-drafted federal statutes couldn't reduce the risk of such an event. But it is surpassingly rare. Federal law, as badly drafted as some parts of it are, basically says, "Don't lie, cheat, or steal in connection with certain business or government activities." Ms. Martz's argument, at bottom, is that it is unfair to punish businessmen and government officials for lying, cheating, and stealing unless a statute tells them, with precision, in advance, exactly which forms and methods of lying, cheating, and stealing are prohibited. She and I simply disagree. I think the general prohibition is sufficient to provide notice. In nearly thirty years of practicing and teaching criminal law, I have rarely if ever encountered a white-collar defendant who did the conduct with which he was charged but did not recognize (even if only privately) its intrinsic wrongfulness - even if he vigorously denied its criminality.
And if the uncertain boundaries of federal criminal prohibitions against dishonest business or government behavior cause some to hesitate before engaging in doubtful conduct, so much the better. An economist might argue that this uncertainty may well discourage morally ambiguous, but economically beneficial or socially desirable, behavior. Which will sometimes be true, but that is where public and private regulation of business behavior enters the picture, drawing the nuanced lines that the criminal law cannot and modifying behavior with sanctions less terrible than those of the criminal law.
Ms. Martz seems to miss my point about regulators when she remarks, "Professor Bowman makes no case, however, for why prosecutors are any better at sussing out complicated and often highly technical misconduct than the expert regulators." First, my main point was not that prosecutors understand particular businesses or industries better than the "expert regulators" in the field, but that, for years past, regulators have been actively discouraged from either making regulations or enforcing them. It is precisely because the "experts" have been handcuffed that the criminal law generalists have moved in. Give some real power back to the experts and the heavy hand of the criminal law can relent. Second, if by "sussing out" she means investigating and discovering facts, then she badly misread my article. As I argued there, even in a world with a more active set of public and private regulators, there are some situations and institutions that only the Justice Department can confront. Dismiss the point as merely "pragmatic" if you will, but when big, rich, politically well-connected corporations or industries go seriously astray or corruption becomes entrenched in state or local government, the Justice Department will often be the only institution with the power and incentive to find the facts and make common sense judgments about whether the facts amount to a crime.
Ms. Martz concludes: "In the absence of civil enforcement, criminal enforcement will undoubtedly, unequivocally step into the breach. It's a zero-sum game for American business." I could not disagree more with her characterization of the situation as a zero-sum game for business. It is precisely this attitude - that both active prosecution of business crime AND reasonable civil regulation of business behavior are bad - that has put us where we are today. A sensibly reinvigorated regulatory environment would not only diminish the need for criminal intervention in business affairs, but would improve both the political and economic health of the country.
Friday, September 12, 2008
WTAE-TV, Cyril Wecht Defense, Prosecution Talking To Avoid New Trial; Philly.com (AP), Former judge working to resolve Wecht case
National Association of Criminal Defense Lawyers (NACDL) Press Release, National Criminal Defense Bar Assn. Files Amicus Brief in Appeal of First Stock Options Backdating Conviction
National Association of Criminal Defense Lawyers (NACDL) Press Release, NACDL Hails Legislative Protection for Inadvertently Produced Privileged Material
BLT Blog of Legal Times, Arnold & Porter Settles Tax Shelter Investigation, Former Partner Pleads Guilty
BLT Blog of Legal Times, House Committee Postpones Miers Testimony
Claire Ruckin, Law.com, U.K. Partner Charged in $54 Million da Vinci Art Theft Case
(esp) (from Louisville, Kentucky)
Thursday, September 11, 2008
Karina Frayter, CCN, Enron investors to split billions from lawsuit
Carrie Johnson & Del Quentin Wilber, Former Abramoff Associate Is Arrested - Indictment Charges Fraud, Conspiracy here
Jeff Jeffrey, Law.com, Legal Times, Former Head of DOJ Criminal Division Returns to Latham & Watkins; Latham & Watkins Press Release - Assistant Attorney General, Head of the Criminal Division Rejoins Latham & Watkins - "Alice Fisher Returns to Latham & Watkins, further enhancing one of the world;s leading white collar and government investigations practices."
Amanda Bronstad, National L J., Law.com, Apple to Settle Backdating Case for $14 Million
Wednesday, September 10, 2008
E.Scott Reckard, LA Times, Judge Rejects Plea Deal for Broadcom Co-founder Henry Samueli
(esp) (w/ a hat tip to Stephanie Martz)