White Collar Crime Prof Blog

Professor Frank Bowman Responds

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.

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In the News & Blogosphere

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

DOJ Press Release, Two Miami Physicians Plead Guilty and Admit Ordering $6.8 Million Worth of Unnecessary HIV Infusion Treatments

(esp) (from Louisville, Kentucky)

In the News and Blogosphere

Karina Frayter, CCN, Enron investors to split billions from lawsuit

DOJ Press Release, High-Ranking Web Site Administrator Sentenced in Peer-to-Peer Piracy Crackdown

DOJ Press Release, Malaysia Resident Sentenced to Two Years in Prison for Role in International Online Brokerage Scheme

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

Marketwatch, WSJ,  Prominent White Collar Crime Litigator Samuel Rosenthal Joins Patton Boggs

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Judge Rejects Plea of No Jail Time But Extraordinary Fine

E.Scott Reckard, LA Times, Judge Rejects Plea Deal for Broadcom Co-founder Henry Samueli

(esp) (w/ a hat tip to Stephanie Martz)

Third Annual National Institute on Securities Fraud

Third Annual National Institute on Securities Fraud

October 2-3, 2008 Hyatt (Hyatt Regency Crystal City, Arlington, Virginia)

Featured Speaker - Mark Filip, Deputy Attorney General, U.S. Department of Justice

For more information here.

2008 Antitrust Compliance Survey

Professor Daniel Sokol, University of Florida Levin College of Law, and blogger of the Lawprof Antitrust Law Blog, asked me to post the following:

In house counsel or who work at law firms advising clients are asked to take 5 minutes of their time to answer a survey by Prof. Sokol of the University of Florida Levin College of Law.  Professor Sokol is trying to determine whether government or private enforcement of the antitrust laws helps or hinders otherwise economically efficient practices by companies.  Your response to the survey will aid in this research.

To answer the survey, please copy and paste this link into your browser:   http://www.surveymonkey.com/s.aspx?sm=Dvo4dHO7NgfHfTj_2fzXXCvg_3d_3d   

Thank you  for your help.  Should you have any questions, please contact Prof. Sokol at sokold@law.ufl.edu.

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Should the Government Retry Wecht?

Check out this video of Professor John Burkoff on the University of Pittsburgh Law School Blog here.

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Olis & Legal Fees

The Houston Chronicle is reporting that Jamie Olis filed suit to recover legal fees. See Olis sues Dynegy over legal bills   The Second Circuit's affirming of the Stein decision certainly provides strong support for those individuals who might have been a collateral consequence of companies that were trying to secure a deal with the Government and therefore agreed not to pay legal fees of employees that might normally have been paid by the company. Stripping individuals of counsel as part of a negotiated plan with the government raises serious questions about the ability of the individuals to secure adequate representation. Whether that occurred here, remains to be seen.  But re-examining government practices that might have deprived individuals of appropriate legal counsel is important.

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

In the News & Blogosphere

Jenn Abelson, Boston.com, Former Dunkin' official indicted

Gary Fields, Wall St Jrl, U.S. Sentencing Panel to Focus On Alternatives to Jail

Maryclaire Dale, Law.com (AP), Once-Powerful Pa. Senator Faces Long Fraud Trial

Evan A. Jenness,  ALM Business Crimes Bulletin,  Bringing Sentencing Sanity to Operation Malicious Mortgage

Carrie Johnson & Del Quentin Wilber, Abramoff Associate Indicted in Federal Court

Dan Slater, WSJ Blog, Back from Europe, Former Credit Suisse Broker Pleads Not Guilty

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In the News & Blogosphere

Anchorage Daily News, Opinion,  Palin's Stall: Governor is stonewalling the Troopergate investigation

Vanessa Blum, Florida Sun Sentinel, Defense attorney group criticizes charges against S. Florida lawyer (discussing the Ben Kuehne case)

Rosalind S. Halderman & John Wagner, Washington Post, Sen Exum Is Subject of Probe By FBI

Jason Cato, Pittsburgh Tribune Review, Federal appeals court removes Wecht judge

David Ivanovich, Houston Chronicle, KBR Inquiry Broader: Federal Bribery Investigation Goes Beyond Single case in Nigeria

Blog of the Legal Times, Temporary Stay Issued in White House Subpoena Case

(esp)(w/ a hat tip to Jack King on two items)

Upcoming ABA Sentencing Conference

Sentencing Advocacy, Practice and Reform Institute

Presented by The American Bar Association Criminal Justice Section

October 24, 2008

The Marvin Center, George Washington University 800 21st St., Washington, DC

The Section is holding a block of sleeping rooms at The River Inn, 924 25th Street, N.W., a short walk to the Marvin Center at GWU, where the program will be held. Room rate is $219 single/double and can be reserved by calling 800/424-2741. The block expires on Tuesday, September 23, 2008 at 5:00 p.m.

This First Of Its Kind Sentencing Institute Will Feature:

A broad array of sentencing and post-sentencing presentations that address the most pressing criminal justice issue of our time. Three tracks of instruction, each focused on issues of concern to different segments of the criminal justice community including prosecutors, public defenders, judges, academics, sentencing consultants, mitigation specialists, corrections personnel, victim advocates, white collar criminal defense attorneys and policy experts. A White Collar Crime Track that will focus on practice and procedure issues of particular concern to criminal defense attorneys in general and white collar practitioners in particular. A Policy Track that will examine sentencing trends and opportunities for reform in both the federal and state courts. A Corrections Track that will focus on conditions of and alternatives to incarceration as well as cutting edge efforts to reduce recidivism. A plenary session on the state of the sentencing union covering rates of incarceration, sentencing trends, racial disparities, alternatives to incarceration and recent federal legislation.

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