Sunday, November 30, 2008
Former Governor Don Siegelman remains in the news. See Tuscaloosa News, Case could rip lid off Department of Justice; Kim Chandler & Mary Orndorff, Al.com, Three judges with experience in politically charged cases named to hear appeals of former Alabama Governor Don Siegelman and HealthSouth founder Richard Scrushy
Mike Scarcella, BLT Blog, The Defense Calls to the Stand ... a Prosecutor? (discussing Ted Stevens case)
The MySpace related case, a first case of its kind raises issues as to whether contract terms can serve as the basis for a violation of the Computer Fraud & Abuse Act (18 U.S.C. s 1030). For background information and the indictment, see here. Although there has been a verdict (no felonies), it is likely this case will be reviewed. See Ashley Surdin, Wash. Post, Woman Guilty of Minor Charges for MySpace Hoax. Scott Glover, LA Times, My Space Case Goes to Los Angeles Federal Jury raises the issue of whether this verdict will remain.
(esp) (w/ a hat tip to Gerri Moohr & Tiffany M. Joslyn, Research Counsel at NACDL’s White Collar Crime Project )
Addendum, Doug Berman, Sentencing Law & Policy, Friday forum: What sentence would you impose on Lori Drew, the MySpace bullying defendant?
Wednesday, November 26, 2008
Daniel B. Wood, Christian Science Monitor, Guilty verdict in MySpace suicide case could chill Internet speech
Bloomberg, Carlyn Kolker and David Voreacos, UBS Clients Go to IRS to Settle Swiss Account Taxes
Lynne Marek, National Law Journal, Larger Foreign Corrupt Practices Act Fines Ahead
John R. Wilke, Wall St Jrl, China Defends Price Fixing by Vitamin Makers
Adrian Walker, Boston Globe, FBI informant in bribe cases says more suspects are likely to surface
Del Quentin Wilber, Washington Post, Hearing Set Into Letter by Witness in Stevens Trial
Derek Kravitz, Washington Post, Ex-Interior Official Charged With Taking Payments
David Markus, Southern District of Florida Blog, Ben Kuehne Motions Hearing before Judge Cooke
Monday, November 24, 2008
Carrie Johnson, Washington Post, As Bush's Term Ends, Some Big Names Seek Pardons
Law.com (AP), Christopher Sherman, Prosecutor Who Brought Indictment Against Vice President Seeks Judge's Recusal
Richard Lloyd, The American Lawyer, A Dose of Reform for British Bribery Laws
Fox28 (AP), Ohio corruption probe puts lawyers to work
Jeff Jeffrey, BLT Blog, Former White House Aide Faces 90-Day Suspension of Law License
Joanna Lin, LATimes, Terry Christensen sentenced to three years in Pellicano case
Sunday, November 23, 2008
FCPA Blog, Aibel Pleads Guilty; Wall Street Jrl, Marketwatch, Aibel Group Ltd. Pleads Guilty to Foreign Bribery and Agrees to Pay $4.2 Million in Criminal Fines
Corporate Crime Reporter, Former Enron Prosecutor Hueston Calls SEC Case Against Cuban Risky and Flimsy: Nicholas Rummell, Financial Week, Cuban charges not a slam dunk Viability of the SEC's insider trading case against mouthy billionaire hinges on definition of insider.
Adam Nossiter, NYTimes, New Twist in Appeal of Ex-Alabama Governor
Carrie Johnson, Washington Post, Mukasey Returns to Work After 'Fainting Spell'
Del Quentin Wilbur, Washington Post, Stevens Trial Witness Cries Foul -Ex-Veco Worker Says Prosecutors Improperly Steered Him
Michael Orey, Business Week, Lessons from Intel's Trade-Secret Case - A low-level former employee made off with valuable information by retaining access to company computers after starting a job with a competitor
Ramon Bracamontes, El Paso Times, $2.1 billion in contracts involved in FBI inquiry
There were approximately 350 people at the fundrasier for Ben Kuehne this past week. As this blog stated here, people usually keep their distance when someone is charged with criminal activity. The opposite is happening here. This is yet another indication that DOJ needs to re-evaluate this case. For background see here and here.
Conrad Black writes from a U.S. prison in Florida a piece titled, From my cell I scent the reeking soul of US justice. It appears in the Sunday Times (UK). Perhaps the most interesting aspect of his piece is his evaluation of the U.S. grand jury process. I also recommend reading the comments following the column. If these comments are representative of thoughts throughout the world, then DOJ has a lot of work ahead on its international relations. Interestingly, Doug Berman's Sentencing Blog here, is getting a different set of comments to this piece.
(esp)(w/ a hat tip to Brenda Rossini)
The Fifth Circuit Court of Appeals in U.S. v. Goss, examined a sentence on a mortgage fraud case, affirming in part and vacating and remanding in part. The court noted how in cases "involving immovable real property, ... part, if not all, of the loan value was more likely recoverable," and actual loss should therefore be examined. The court noted that "to determine intended loss, actual, not constructive, intent is considered."The court further stated:
"Obviously, application of an actual-loss method in this instance does not necessarily mean that the full collateral value for each loan will be deducted in every instance. An inflexible, bright-line rule for all of the loans at issue does not ensure the victims’ financial losses will be accurately assessed; and, therefore, it is necessary to examine each loan individually in order to determine the fair market value of the loan’s collateral and whether it should be deducted.
This loan-by-loan inquiry will allow the district court to properly determine how to treat the collateral, for each loan at issue, in order to arrive at the most accurate assessment of the lenders’ losses. Needless to say, this loanby-loan inquiry is fact-intensive, and should be shaped by weighing the appropriate factors in determining, at the time of sentencing, what, in the event of a default, would be the fair market value of any recovered collateral. This inquiry is likely to touch upon many of the issues presented in earlier cases. In this instance, factors that may impact the likelihood of recovery, the fair market value of the property, or both, include: the collateral is immovable; whether third parties exercise control over the collateral; whether, in the event of default, the collateral is, or might be, damaged before recovery; whether the collateral’s value was appraised or assessed at the time of sentencing; and whether there are financial or practical risks inherently associated with the collateral. (Of course, this list is not exhaustive; and no one factor is controlling."
(esp) (w/ a hat tip to Evan Jenness)
This past week the Second Circuit heard oral argument in the Ionia case. Although there are many worthwhile issues in this case, a key one that merits consideration is the level of culpability of a corporation for the acts of a rogue employee. Will the court take the step, as has been done in some civil matters, to insert a "good faith" defense into the legal landscape. (see background and briefs here) (see also Jenner & Block, Second Circuit Amicus Brief Argues for Change in Law of Vicarious Corporate Criminal Liability).
Coverage of the hearing can be found here: Amir Efrati, WSJ Blog, Former Enron Prosecutor: Criminal Charges Shouldn’t Be So Easy; Silive.com (AP), Larry Neumeister, Lawyer urges court to curb corporate liability; Grant McCool, Reuters, Appeals court hears brief on corporate liability
Addendum - Tom Kirkendall's Houston ClearThinkers here
Mark Godsey, Crim Prof here
Michael Thomas, The Daily Caveat here
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Thursday, November 20, 2008
Colin Perkel, The Canadian Press, Chances of President Bush granting leniency to Conrad Black called infinitesimal
Doug Berman, Sentencing Law & Policy, Through the federal clemency looking glass with Holder
Carl Hulse, NYTimes, Democrats Gain as Stevens Loses Race
DOJ Press Release, Miami Physicians Sentenced to Prison for Their Roles in a $6.8 Million Medicare Fraud Scheme (one received 37 months and the other 48 months)
Karen Sloan, National Law Journal, Former U.S. prosecutor lands at King & Spalding
Sue Reisinger, Corporate Counsel, Mission Critical -The British government dropped a bribery probe of BAE, but U.S. prosecutors picked it up. In the meantime, BAE's GC cleaned up its act-enough to fend off an indictment?
Dan Slater has a wonderful piece on the importance of the Sixth Amendment's Right to Counsel and the implications to this right when the government proceeds criminally against legal counsel. See Dan Slater, Wall St Jrl, Scales of Justice: The Right to Counsel vs. the Need to Bar Tainted Legal Fees The article speaks directly to the Ben Kuehne case. For background see here and here. But I have to wonder about a statement at the end of the article that seems to imply that cases to PDs aren't increasing, so therefore lawyers aren't being skeptical about taking these cases. Could it perhaps be that there hasn't been an increase of drug cases to the PD's office because there has been such a strong focus by the FBI on terrorism and immigration, and a movement away from drug cases? Drug cases have declined and no longer hold the top priority that they did in past years. TRAC notes here in a September 2008 report:
"Ranked 3rd was "Drug Abuse Prevention + Control-Prohibited acts A" under Title 21 U.S.C Section 841. Title 21 U.S.C Section 841 was ranked 2nd a year ago, while it was the 1st most frequently invoked five years ago. It was ranked 1st ten years ago and 1st twenty years ago."
So perhaps lawyers are really being deterred from taking these cases, and the fact that PDs are not seeing a decrease in cases in their office is an indication of just that.
Tuesday, November 18, 2008
Everyone appears to be dropping Eric Holder's name as the likely next Attorney General. See Ashby Jones, WSJ Blog, Report: Obama ‘Deeply Interested’ in Eric Holder as AG; LA Times, Looks like Eric Holder, ex-Clinton acting AG, will be Obama's AG
Some appear to be focused on what role he may have played in the Marc Rich pardon (see here). But this focus is misplaced as the President has the power to pardon and there have been a lot more controversial pardons in the history of the U.S. (see William Jefferson Clinton, NYTimes, My Reasons for the Pardons). (I am still waiting to see President Bush's pardons -particularly as to whether Barney will be included - see here).
Further if Holder was "neutral, leaning for" the pardon, as stated by former President Clinton, than perhaps he was in part following the DOJ guidelines that advise against using tax offenses with a RICO charge (see here). (This Indictment included a RICO charge). RICO excludes tax predicates (see here), so using other predicates to enhance a tax case to bring it to a level of a RICO was just plain wrong, and one should credit Holder if it turns out that his hesitation was for this reason. (see here)
But what needs to be asked is where Eric Holder stands today on the "Holder Memo." It's a memo that went through many changes after it left his desk. (e.g., Thompson Memo, McNulty Memo, Filip Memo). The key question that needs to be asked now is where he stands on the attorney-client privilege and will he respect it. It also would be good to see if he will meet the wish list provided here.
Prosecutors have enormous power. They can pick and chose who to indict and for what crimes. The saying goes that a prosecutor can get a grand jury to indict a ham sandwich if the prosecutor wants that (see here for history of this phrase) -although some may claim otherwise. The prosecutorial discretion that comes with the charging power is often criticized, but prosecutors often contend that it is necessary for them to have such discretion.
The use of prosecutorial discretion is likely to be something that is examined in a Texas County of approximately 20,500 people (see here) as it looks like charges may be brought against one very high level official, and another who used to be in a top position. See CNN, Texas Grand Jury Indicts Cheney, Gonzales; Huffington Post (AP),Cheney, Gonzales Indicted By South Texas Grand Jury; Christopher Sherman, Houston Chronicle (AP), Dick Cheney, Alberto Gonzales indicted in S. Texas -Charges related to alleged abuse of prisoners in federal detention centers; Dallas Business Journal, Grand jury indicts Cheney, former AG
Chronicle of Higher Education, Cuomo Is Investigating College Ties to Student-Health Insurers
Chad Brey, CNN Money (Dow Jones), Lawyer Indicted In Tax-Shelter Fraud Scheme
Dan Slater, WSJ Blog, At Long Last, Enron Shareholders Set to Cash Out (w/ a hat tip to Bill Olis)
Margy Love, Washington Post (Op-Ed), In Defense of Lame-Duck Pardons
DOJ Press Release, Two Charged with Illegal Trading with Iran
Mike Scacella, BLT Blog, Sentencing Guidelines Disputed in D.C. Circuit Tax Fraud Case
Amir Efrati, WSJ Blog, NJ USA Christie Resigns, SDNY’s Garcia to Announce Resignation Today
Monday, November 17, 2008
An SEC press release reports that "[t]he Securities and Exchange Commission today charged Dallas entrepreneur Mark Cuban with insider trading for [allegedly] selling 600,000 shares of the stock of an Internet search engine company on the basis of material, non-public information concerning an impending stock offering."
Use of the word charge may leave the wrong impression. This is not a criminal matter, but rather a civil complaint. The complaint can be found here.
The SEC Litigation Release states in part:
"The Commission's complaint alleges that Cuban violated the antifraud provisions of the federal securities laws by engaging in illegal insider trading in the securities of Mamma.com Inc. ("Mamma.com"), a publicly traded Internet search engine company (now known as Copernic Inc.) based in Montreal, Canada. According to the complaint, in June 2004, Cuban sold his entire 600,000 share position in Mamma.com on the basis of material, non-public information concerning an impending PIPE (private investment in public equity) offering by the company. The complaint alleges that Cuban avoided losses in excess of $750,000 by selling his stock prior to the public announcement of the PIPE offering."
Mark Cuban, owner of the Dallas Mavericks' blog is located here. You'll find that his lawyer is Ralph C. Ferrara of Dewey & LaBoeuf (DC) and that his lawyer is not letting him say much - one quote -clearly a good move. But it looks like this matter has been going on for awhile and the lawyer states "Mr. Cuban intends to contest the allegations and to demonstrate that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division." More is stated here. This is clearly a case to follow.
Addendum - Liz Moyer & Andrew Farrell, Forbes Magazine, SEC Guns For Billionaire Mark Cuban
NYTimes, Dealbook, S.E.C. Accuses Mark Cuban of Insider Trading
Mike Scarcella, BLT Blog, Judge Rules Against White House in E-mail Dispute
Jon Swartz, USA Today, Hackers, phishers can't get away with it like they used to
Stirling Newberry, Firedoglake, Who is Neil Barofsky, And Can We Trust Him to Watch the 700 Billion Collar Cookie Jar?
Matthew Barakat, Houston Chronicle (AP), Ex-Tech billionaire gets 9 years for stock fraud