White Collar Crime Prof Blog

What Will Cooperation Bring?

Carrie Johnson's Washington Post article titled, Ex-Aide Sentenced, New Probe Emerges discusses a 6 month sentence being given to an individual who faced a possible 2 years for an embezzlement related charge.  But the telling part of this article pertains to a probe involving lawmakers using staff members for political related activities.  The problem here being that the political activities may have occurred during government paid time. So, what does an embezzlement plea have to do with this new probe?

• Will it be a Political Investigation: The article notes that the person being sentenced is affiliated with two lawmakers who are Democrats. So a first question will be whether this investigation will be limited to one political party? With a politicized justice department in the recent past, such investigations raise concerns as whether they will be an outgrowth of the politics in the department.
• Can't Give too Good a Deal: An individual facing 2 years gets 6 months. The government doesn't want to give too good a deal (such as no time) if they plan on using the person to testify against others.  Credibility of the individual providing the information is important, and too good a deal makes one wonder whether the person is in fact being truthful.
• How Many Dominoes Will Fall: One has to wonder whether this plea is but one domino in a major investigation.  Will this individual provide information that will be verified by others, and will there be more pleas prior to the filing of a major indictment of a top person?
• How High Will it Go: One problem for the government with these types of investigations -- in seeing how high you can go --is determining the knowledge of the top individuals.  Did the individuals leave such matters to those below them, did they have actual knowledge of how their staff was used, or is it a willful blindness situation, where the individual knows what is going on but just avoids being a part of the conduct to avoid criminal culpability?
• Will it Hit a Wall: What may sometimes seem like a major investigation can sometimes fall flat when there just isn't any criminal conduct there.  Could this be the case here?

A lot of unanswered questions, but Carrie Johnson at the Washington Post is onto something worth watching.

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In the News and Blogsphere

FBI Press Release - Two owners and corporate officers of Engineering Dynamics, Inc. ("EDI") plea to a one-count information of conspiracy to violate the International Emergency Economic Powers Act and the Iranian Transactions Regulations

Doug Berman's Sentencing Law & Policy Blog - A (record-setting?) long white-collar sentence (330 years)

FCPA Blog - Ex-World Bank Manager Sentenced for FCPA Offense

Examiner.com - Baltimore man gets lengthy sentence in $8 million fraud case (15 years - 27 counts of mail and wire fraud)

FBI Press Release - TENNESSEE WALTZ -The Dance is Over (Tennessee Waltz undercover sting operation ends) (see here for background)

DOJ - Southern District of Indianapolis Press Release - Louisville Woman Sentenced for Embezzling $7,000,000 From Credit Union (97 months)

DOJ - U.S. Coast Guard Officer Pleads Guilty for Lying about Vessel Pollution

Houston Chronicle (AP) - 3 NatWest Bankers Get Different Prisons (here)

Detroit Free Press - The latest in the case against the Detroit Mayor (here) (see here for background)

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The Olis Response to the Government

Attorneys for Jamie Olis filed a Reponse to Government's Answer and Motion for Summary Judgment, and Motion for Reconsideration of Olis' Motion for Discovery. Perhaps the most fascinating argument pertains to the payment of attorney fees.  What role did the Thompson Memo have in depriving Olis of Dynegy money to present his defense?  One paragraph from the brief states:

"The government also urges that trial counsel’s awareness of the existence of the Thompson Memorandum put Olis on notice of the constitutional violation. Gov’t Answer at 12-14. That suggestion misses the mark for two reasons. First, Olis’ counsel, . . . , did not understand that the Thompson Memorandum would by itself prevent Dynegy from fulfilling its contractual obligations to Olis. On the contrary, [he] believed that Dynegy decided to put funds in escrow in order to circumvent the implications of the Thompson Memorandum by putting the funds out of the company’s reach. Kelley Decl. (Docket # 318) Ex. D at 65:23-66:12. Second, Olis does not contend that the Thompson Memorandum alone violated his constitutional rights. Rather, it was the actions of the USAO, which improperly used the Thompson Memorandum to put pressure on Dynegy, that constituted the violation."

Reponse - Download 349_olis_response_to_govt_answer_and_motion_for_summary_judgment.pdf

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The Latest in the Olis Case

Check out Mary Flood at Houston Chronicle - Kelley asks judge to leave the Olis case

(esp) (w/ a hat tip to Bill Olis)

Addendum -  WSJ Blog here.

Commentary - When should a judge recuse him or herself from a case?  There are many times that the answer to the question is easy, such as when the judge is related to a party or when the judge has personal knowledge of the facts in question.  But many times the answer to this question is less clear.  The ABA Model Code of Judicial Conduct provides judges with guidance to assist in deciding whether recusal is necessary.  Specifically Rule 2.11 pertains to disqualification (see here).  But as with so many ethics rules, one is often left trying to decide an issue in the gray area of the rules.

For defense counsel, filing such a motion may pose problems.  If the defense counsel is successful, then they have succeeded with their motion and a new judge is appointed.  But if defense counsel raises the issue and is unsuccessful, then one often wonders if they continue their case in front of the judge with a certain stigma attached to their cause.  It is easy to say that judges will not hold this against the party who loses a judicial recusal motion, after all defense counsel is just doing their job.  But this fear may cause hesitation in the filing of a judicial recusal motion.

In the News

Wall Street Journal - SEC Sues Alabama Mayor in Muni Case

Philly.com - Feds Object to Wecht retrial delay during 3rd Circuit appeal

Washington Post - Police: 'D.C. Madam' Palfrey Hanged Self in Fla.

FBI Release- Director Robert Mueller Speaks on Mortgage Fraud Crisis 

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Former President of Monster Indicted

A DOJ Press Release of the U.S.  Attorneys Office of the Southern District of New York announces that the former chief operating officer and president of Monster Worldwide, Inc. was charged with securities fraud and conspiracy in connection with backdating of stock options. The press release states as the alleged criminal activity that:

"TREACY conspired with other former senior executives at Monster to systematically backdate stock option grants to Monster employees between 1997 and 2003, in an effort to provide
profitable options to employees without recording the required compensation expenses, thereby falsely inflating Monster's earnings. As a result, Monster’s public filings with the United
States Securities and Exchange Commission ("SEC") between 1997 and 2005 fraudulently understated the company’s compensation expenses by a total of more than $300 million."

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Wecht & Jurors Talk - Commentary

KDKA.com has an incredible tape from jurors and also with Wecht himself talking.  He hits it on the money when he notes how powerful prosecutors can be. The very fact that citizens who served as jurors and heard the evidence in this case are speaking out, that Wecht is telling how he has been destroyed by enormous legal fees and the emotional strain placed upon him, makes one wonder where is the oversight of main justice and have there been any discussions of a deferred prosecution. (see here)

It is equally bothersome to hear the prosecution claiming they need outsider jurors for the retrial (see here).  It sounds just like the defense argument in a much higher profile case - that is, Jeffrey Skilling's claim when being tried before a Houston jury.

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The Latest in the Wecht Case

This case is beginning to sound like a movie. As I previously noted here:

First there were questions about whether this case warranted a federal prosecution, and more importantly one with this many charges.  Then there was a seven week trial with a long deliberation, but that ended with a hung jury. (see here)  The post trial conduct by the FBI in questioning jurors certainly raised some eyebrows. (see here)  There were even questions about how the jurors names were obtained. (see here) There have also been claims that the FBI fabricated a 2005 affidavit (see here).  And there are claims that an excused juror did not want to leave the deliberations (see here).  And the prosecution is arguing that they need "outsiders" to get a fair jury in the retrial (see here and here).  And the judge responding to claims of bias, says he is not stepping aside. (see here and here) And you have the house committee asking for documents related to this case (see here).  And there have been claims of this being a political prosecution (see here). And you have prominent players asking AG Mukasey to step in here. (see here)

Wouldn't this be a perfect case for a Frank Quattrone style deferred prosecution agreement (see here)?

And just when you think enough has happened here, there is more.  The latest -

• The Pittsburgh Tribune Review (AP) - Wecht appeals to 3rd Circuit to overturn judge's decision
• The Pittsburgh Tribune Review - Judge won't dismiss charges against Wecht
• Pittsburgh Post Gazette - Wecht jurors surprised prosecutors seek retrial

So who will play Wecht is this movie?

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In the News

Forbes.com - Wachovia says has never discussed deferred-prosecution deal with DOJ

Wall Street Journal - Gabelli Funds to Pay $16 Million To Settle SEC Market-Timing Case

DOJ (Press Release) - Owner of Kansas City Computer Service Companies and Family Member Indicted in Scheme to Defraud Federal E-Rate Program

ABA Law Jrl News - E-Mails Show More Abramoff Links to Ex-DOJ Staffers; Probe Continues

DOJ (Press Release) - Former State Prison Supervisor Sentenced for Obstruction of Justice-Related Charge (15 months in prison)

Houston Chronicle -Oscar Wyatt asks to finish his prison term in Houston

(esp) (w/ a hat tip to Bill Olis on the last item)

New Pardon Attorney Appointed

A press release of the DOJ states that Ronald L. Rodgers has appointed to serve as the U.S. Pardon Attorney.  The release states:

"Rodgers has served with the Department of Justice since March 1999 in the Drug Intelligence Unit of the Criminal Division’s Narcotic and Dangerous Drug Section, where he has been Director of the Unit since September 2005.

"Prior to joining the Department of Justice, Rodgers served on active duty in the U.S. Marine Corps from 1977 to 1999. His final active duty assignment was as Circuit and Deputy Chief Military Judge of the Navy-Marine Corps Trial Judiciary from 1995 to 1999. During his time in the Marine Corps, Rodgers also gained several years experience as a prosecutor, defense counsel, and trial advocacy instructor.

Rodgers is a 1977 graduate of the U.S. Naval Academy, and a 1983 graduate of the University of Dayton School of Law, where he graduated summa cum laude. Rodgers also attended the U.S. Marine Corps Command and Staff College from 1989-90."

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What's Happening at Wachovia?

WSJ- Marketwatch - Wachovia Faces Money-Laundering Probe: Report

Washington Post (Reuters) - Wachovia Part of Probe into Latin Drug Money: Report

NYTimes - AP - Wachovia Pays $144 Million to Settle Marketing Claims

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Addendum - See Wall St. Jrl Correction here.