Saturday, May 24, 2008
New York Times (Reuters), 5 More Indicted in Stock-Loan Inquiry
Joby Warwick, Washington Post, Ex-CIA Official Indicted Over Agency Job for Mistress
DOJ Press Release - Medtronic Spine, Formerly Kyphon Inc., to Pay U.S. $75 Million to Resolve Allegations of Defrauding Medicare (civil settlement)
Thursday, May 22, 2008
Former Governor Don Siegelman's brief (see below) was filed in the 11th Circuit Court of Appeals, and it raises some important issues. Also of importance to this case is that the DOJ's Office of Professional Responsibility (OPR) currently has a pending investigation concerning allegations of selective prosecution relating to the prosecution of Don Siegelman. (See AJC - Alabama Governor's Conviction Gets Justice Department Scrutiny - be sure and read the Letter to Chairman Conyers in this article). One has to ask whether the DOJ should be the one doing this investigation, even if it is OPR, or whether this is an appropriate task for an independent outsider.
The first argument in the brief is powerful and unique. It takes the quid pro quo requirement used in the Supreme Court's McCormick case, a Hobbs Act case involving campaign contributions, and applies it to the "honest services" aspect of the mail fraud, conspiracy to commit, and bribery portions of the charges here. And it makes sense that it should apply as the charges are "based on an alleged connection between official action and a campaign contribution." In McCormick, the Court recognized that campaign contributions operate differently and one can't assume criminality for a contribution unless there is a showing of a quid pro quo demonstrated that is tied to that contribution. With a "honest services" statute, that has been criticized by many as allowing for enormous prosecutorial discretion in the charging process, it seems important that a quid pro quo should be mandated so that politicians know what is legal and what is illegal for purposes of violating the "honest services" statute. It's especially important in this case as Siegelman personally received nothing of value. The brief ties in the First and Fifth Amendments here and reminds the court of the importance of the Rule of Lenity in criminal cases.
Equally noteworthy is the next to the last argument in the brief that argues whether it was, "permissible to increase Governor Siegelman's sentence because of out-of-court statements on matters of public concern, i.e., statements criticizing and questioning the actions and motives of prosecutors - particularly without any evidence of factual specificity as to the content of such statements?" It will be interesting to see how the appellate court deals with an increase of a sentence by someone exercising a First Amendment right to speak - especially when the speaking is criticism of the prosecution being politically motivated. In light of recent revelations in the department and the fact that OPR is now investigating this case for possible selective prosecution, this sentence increase is something that an appellate court may want to seriously examine.
There are, of course, other arguments in this brief. Even without seeing the Scrushy Brief and the DOJ response, this brief sends the message that this case will certainly provide for an interesting oral argument.
Addendum - Corrected Brief of Government -
The court has given Wesley Snipes bond pending his appeal. (see here) This is not surprising as the case is a tax case of someone who would not be considered a flight risk.
But it is always interesting to see, in white collar cases, who gets bond on appeal and who gets it denied -
Former Atlanta Mayor Bill Campbell - no bail pending appeal on a tax case (see here)
Jamie Olis (Dynegy)
Former Tyco Executives Dennis Kozlowski and Mark Swartz (see post here -but they were in the state system)
I. Lewis "Scooter" Libby (but sentence was commuted by the President)
Former Adelphia Communications executives John and Timothy Rigas (but now in prison - see here)
Bernie Ebbers (Worldcom) (now in prison - see here)
Martha Stewart (but she elected to go into the prison system sooner and finshed her sentence)
Governor George Ryan (but denied on cert petition)
Addendum - Order - Download snipes_order.pdf
Lou Pearlman, founder of the Backstreet Boys, received a a 25 year sentence (see here). But as Professor Doug Berman over at Sentencing Law & Policy describes here - it's a creative sentence as he can receive a month off for each one million he gives back to victims. Pearlman plead guilty to "two counts of conspiracy to commit an offense against the United States (Counts one and two), one count of money laundering (Count three), and one count of presenting or using a false claim in a bankruptcy proceeding (Count four)." (see here)
Wednesday, May 21, 2008
It doesn't look like the DOJ will be suggesting to a company that a law professor receive an endowed chair as part of a deferred prosecution agreement. The change comes as a result of a recent DOJ Memo issued. (See Reisinger, Corporate Counsel, Law.com - New DOJ Policy: Just Call it the Christopher Christie Amendment). But it doesn't preclude a company from going ahead and giving the chair to the law school professor and then using that as a basis for arguing leniency at sentencing. The new guideline issued by DOJ is as follows:
Plea agreements, deferred prosecution agreements and non-prosecution agreements should not include terms requiring the defendant to pay funds to a charitable, educational, community, or other organization or individual that is not a victim of the criminal activity or is not providing services to redress the harm caused by the defendant's criminal conduct.
Such payments have sometimes been referred to as "extraordinary restitution." This is a misnomer, however, as restitution is intended to restore the victim's losses caused by the criminal conduct, not to provide funds to an unrelated third party.
Apart from the limited circumstances described below, this practice is restricted because it can create actual or perceived conflicts of interest and/or other ethical issues.
This section does not, of course, restrict a defendant's own decision, outside the context of a plea agreement, deferred prosecution agreement or a non-prosecution agreement, to unilaterally pay monies to a charitable, educational, community, or other organization or individual, and then to request leniency from the judge at sentencing based upon such action.
This section also does not restrict "community restitution" payments made pursuant to 18 U.S.C. § 3663(c). That section provides guidance for such payments where the defendant is convicted under 21 U.S.C. § 841, § 848(a), § 849, § 856, § 861 or § 863. Among other factors, that section requires the absence of identifiable victims, as well as a nexus between the payment and the offense.
Neither does this section restrict the use of community service as a condition of probation for environmental prosecutions. United States Attorneys' Offices contemplating such community service as a condition of probation in a case involving environmental crimes shall consult with the Environmental Crimes Section of the Environmental and Natural Resources Division, which has issued guidance to ensure that the community service requirements are narrowly tailored to the facts of the case. The guidance also requires that any funds paid by a defendant as part of the community service portion of a sentence be directed to an entity in which the prosecutors have no interest that could give rise to a conflict and that is legally authorized to receive funds.
There is also the continual concern that DOJ guidelines are not enforceable at law. They are merely internal guidelines. And in some cases, these guidelines are not adhered to. (See my 2004 article in the Cornell Jrl of Law and Public Policy, Department of Justice Guidelines: Balancing 'Discretionary Justice,' ).
(esp)(w/ a hat tip to Dick Cassin)
Kim Christensen, LATimes - Bail Denied for Securities Lawyer in Investment Fraud Case
Betsy McKay, WSJ - Ex-Fund Manager Is Convicted of Fraud
FBI Report - MORTGAGE FRAUD: New Analysis of a Rising Threat
DOJ Press Release - 38 Individuals in U.S. and Romania Charged in Two Related Cases of Computer Fraud Involving International Organized Crime
Amir Efrati & Liam Plevin, WSJ, Greenberg May Face SEC Civil Charges
Dan Slater, WSJ Blog, Kentucky Heart Charity Takes Center Stage in Fen=Phen Trial
A DOJ Press Release reports that "[a] federal grand jury in the Eastern District of Tennessee returned an 18-count indictment today charging [ ] a Professor Emeritus at The University of Tennessee, and Atmospheric Glow Technologies Inc. (AGT), a Knoxville-based technology company, with conspiring to defraud the U.S. Air Force and disclose restricted U.S. military data about Unmanned Aerial Vehicles (UAVs), or 'drones,' to foreign nationals without first obtaining the required U.S. government license or approval." It further states that "between January 2004 and May 2006, [the individual and company were alleged to have] engaged in a conspiracy to defraud the U.S. Air Force and transmit export-controlled technical data related to a restricted U.S. Air Force contract to develop plasma actuators for a munitions-type UAV, or 'drone,' to one or more foreign nationals, including a citizen from the People’s Republic of China. The Chinese national was a graduate research assistant at the University of Tennessee."
Tuesday, May 20, 2008
Kim Christensen, LA Times - Irvine Lawyer Arrested on Wire Fraud Charges (securities lawyer)
John Christoffersen, Newsday (AP) - Lawyer Challenges Government Use of GPS Tracking Device (discussing the government placement of a GPS tracking device on a defendant - an accountant's vehicle)
FCPA Blog - U.S. Prosecutors Detain and Search BAE Leaders
Detroit Free Press - The Detroit City Council’s request that Gov. Jennifer Granholm remove Mayor Kwame Kilpatrick from office because of his conduct in the text message scandal was delivered to Granholm’s office today.
(esp) (from DC at the American Law Institute Meeting -with hats off to Michael Traynor who gave an incredible speech at the ALI Annual Dinner)
Scotus Blog reports that the Supreme Court did not accept to hear the case of Forbes v. United States (former board chair of Cendant Corp.) (for sentencing see here) (for 2d Circuit appeal affirmed see here)
DOJ Press Release- Federal Court Enjoins Nationwide Tax Scheme Promoters
NY Attorney General Andrew Cuomo Press Release - "Attorney General Andrew M. Cuomo and Nassau County District Attorney Kathleen M. Rice today announced that the former operator of a Manhattan-based home care agency and his former billing manager pleaded guilty to stealing over $314,000 from the state through false Medicaid billing schemes."
DOJ Press Release - D.C. Metropolitan Police Detective Turned Tax Defier Convicted of Tax Fraud
WSJ - Amir Efrati, Greenberg Role Seen in AIG-Gen Re Case
WSJ Blog, Dan Slater, Miami Defense Bar Turns Out in Droves to Honor Ben Kuehne; Southern District of Florida Blog, David Oscar Markus, Ben Kuehne Receives Award
Monday, May 19, 2008
The federal indictment resulting from an incident on MySpace has been reported nationally. (see, e.g., here and here). A press release of the U.S. Attorneys Office of the Central District of California states that:
"A Missouri woman was indicted today on federal charges for fraudulently using an account on the social networking website MySpace.com to pose as a teenage boy who feigned romantic interest in a 13 year-old girl. That girl later committed suicide after the 'boy' spurned her and told her, among other things, that the world would be a better place without her."
The Indictment charges a conspiracy to commit a violation of the computer fraud statute - 18 U.S.C. s 1030 and also specific substantive offenses under section 1030. Some are critical of the use of the computer fraud statute for this purpose (see here). Clearly, whether this alleged incident should be the subject of an indictment, and whether it should be subject to a federal indictment will likely be issues that will be considered in this case.
But in addition to questions of whether the computer fraud statute was intended for this purpose, there is also a question of whether the U.S. Attorneys Office in the Central District of California ought to be prosecuting this case. According to the indictment (see below), the basis for the jurisdiction is that Fox Interactive Media Inc. is the Beverly Hills Corporation which operates myspace.com ("MySpace"). As the server is located in LA County, the indictment notes that this is within the Central District of California.
This indictment raises a threshold question of where is the appropriate jurisdiction in computer related cases, and specifically in cases charging criminal conduct. Should it be the place of the keystroke, the place of the social harm, or can prosecutors go for jurisdiction, as they have here, to the place of the server? Is it appropriate to give prosecutors the power to chose jurisdiction this way? Does this disadvantage the accused in that their evidence may be located in the place where the social harm is alleged to have occurred and not where the server is located? Does a prosecution such as this make the requirement of venue meaningless? Interestingly, Missouri has since passed a cyberharrassment law (see here).
The indictment - Download my_space_lori_drew_indictment.pdf
We mourn the passing of criminal defense lawyer Donald B. Fiedler. His obituary is here (Omaha World Herald). He will be missed. He was well known for his wonderful teaching at the National Criminal Defense College. See NACDL here.
In lieu of flowers, Memorials to National Criminal Defense College, c/o Mercer Law School, Macon, GA, 31207.
The photo of Don doing William Jennings Bryan. With a thanks to Korey Reiman; John Wesley Hall, and Norman Reimer. (esp)