White Collar Crime Prof Blog

Operation Direct Hit - A State Investigation

Although the FBI - a federal agency - was involved in the investigation, the charges against two corporations and 61 individuals was brought by a state prosecutor - the district attorney in Queens, New York. An FBI press release speaks to accusations of "engaging in a widespread, multi-million dollar no-fault automobile insurance fraud scheme that sought to defraud insurance carriers by intentionally staging accidents, submitting false medical and bodily injury claims and arranging for unneeded treatment and costly and unwarranted medical tests."  The press release also notes that "[t]he charges are the result of a 19-month investigation by the Queens District Attorney’s Organized Crime and Rackets Bureau and the New York Health Care Fraud Task Force – which is composed of agents and detectives from the FBI, the NYPD, and other federal, state and local law enforcement entities, as well as investigators from the insurance industry."  In a world with more and more charges being brought in the federal system, it is important to see a state prosecutor working with a federal agency to bring criminal charges.

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Reforming Corporate Criminal Liability

The Institute of Legal Reform has issued a new whitepaper on the role of criminal law as it relates to corporate conduct. One of the authors of this Report is former Enron prosecutor Andrew Weissmann. Titled, Reforming Corporate Criminal Liability to Promote Responsible Corporate Behavior - the whitepaper can be found here. It concludes stating -

"Changing the current vicarious liability rules will promote effective compliance programs within companies, and redirect to a more condign track a legal doctrine that has gone far off course. Practitioners and academics have offered practical solutions for balancing society’s need for punishing the guilty and making a victim whole against society’s interest in resorting to criminal sanctions only when a defendant has done something wrong. Given the nearly 100-year long misreading of a single Supreme Court precedent and recent pronouncements from that Court, it is high time to reform the standard for vicarious criminal corporate liability. As described above, the current doctrine is not founded on either an act of Congress or Supreme Court precedent. Compliance-based and hierarchy-based alternatives to the current regime would continue to hold lawless corporations liable for criminal acts, while ensuring that responsible corporations are not unfairly penalized. It is incumbent upon legislators, academics, and practitioners to press the case for a greater recognition of the harmful and counterproductive consequences of the current system and to seize the opportunities for reform outlined herein."

It certainly would be good to see revisions in the present approach to corporate criminal liability. I advocate for the adoption of a good faith defense in my article - A New Corporate World Mandates A Good Faith Affirmative Defense.

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Massachusetts State Senator Indicted

A Press Release of the United States Attorney's Office in Massachusetts reports on the indictment of an "[e]ight-term Massachusetts State Senator" "on public corruption charges stemming from her [alleged]acceptance of more than $20,000 in cash payments to introduce legislation in the State Senate." She is charged "with attempted extortion under color of official right and theft of honest services as a State Senator."  But it also sounds like there is another side to this story.  Check out - Michael Levenson and Jonathan Saltzman, Boston Globe, Bribery defendant Wilkerson - Senator allegedly took cash for help on liquor license, development

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Upcoming Conferences

NACDL/Georgetown will present their 4th Annual White Collar Seminar at the Georgetown Law School in Washington, D.C., November 6-7, 2008 - see here

ABA - The 25th Annual National Institute on Criminal Tax Fraud,  San Francisco, December 4-5, 2008 - see here

FCPA: Managing Internal and Government Investigations of FCPA Matters -January 21-22, 2009 · Venue to be Confirmed, Washington DC - see here

ABA - White Collar Crime Institute, San Francisco, March 4-6, 2009 see here

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New Articles

• A new article on mail fraud by Jack D. Arseneault and Joshua C. Gillette from the New Jersey Lawyer Magazine. It is titled, Federal Honest Services Mail Fraud: The Defining Role of the States.
• Daniel C. Richman, Political Control of Federal Prosecutions - Looking Back and Looking Forward  "explores the mechanisms of control over federal criminal enforcement activity that the Administration and Congress used or failed to use during George W. Bush's presidency."
• Mikah K. Thompson, To Speak or Not to Speak? Navigating the Treacherous Waters of Parallel Investigations Following the Amendment of Federal Rule of Evidence 408

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Stevens - Guilty

Details can be found at - CNN here; Washington Post here; NYTimes here; WSJ  here.  The question of whether it was a good move to proceed to trial quickly, to beat the forthcoming election, has now also been answered.

Indictment here

An added consideration to the prior blog post here, is that if there was any error that causes a reversal of this conviction, it is hard to remedy it prior to the election.  Appeals can take a long time, and certainly more time than the few days left before the election.

Trivia - The late Rep. Charles Diggs was re-elected while awaiting sentencing (although he did eventually resign) here.

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P.S.  Will the defense be raising an issue on appeal regarding a response to a jury question during the deliberation process?  See  BLT Blog here. 

Federal Charges for Allegedly Changing Grades

The Acting U.S. Attorney in the Northern District of Florida has charged students for allegedly changing grades in the Florida Agricultural and Mechanical University (FAMU) computer system. A press release states in part,

"According to the indictment, the conspirators caused the grades of approximately 90 FAMU students to be changed, effecting changes in approximately 650 grades overall. The grade change increased the grade point averages of the majority of students whose grades were changed, which in turn, made these students eligible for financial aid in the form of grants, scholarships, and loans to which these students would not otherwise have been entitled."

The charges include conspiracy to commit wire fraud, the computer fraud statute (18 USC 1030), and aggravated identity theft.   Is this an example of overcriminalization/overfederalization?

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Update on the Stevens Deliberations

The Washington Post (AP) story is titled, Judge Removes Juror in Sen. Stevens's Trial.  When a judge replaces a juror with an alternate, it is necessary that the jury start the deliberations from the beginning.  Federal Rule of Criminal Procedure, Rule 24(c)(3) states:

Retaining Alternate Jurors.

The court may retain alternate jurors after the jury retires to deliberate. The court must ensure that a retained alternate does not discuss the case with anyone until that alternate replaces a juror or is discharged. If an alternate replaces a juror after deliberations have begun, the court must instruct the jury to begin its deliberations anew.

If the jury deliberation went for a long period of time, this could be difficult as it may be difficult to remember in the new deliberations what had, and had not, already been discussed.  But perhaps with the simpler case, and with a deliberation that has not been extensive, this may be easier. 

For Senator Stevens (and perhaps his opponent) in the Senate race, a different clock is running as election day is close at hand. This raises interesting questions on whether it is proper to indict a person immediately prior to their election or re-election to office.  On one hand, if there is a conviction the public has a right to know this prior to the election or re-election of the candidate.  On the other hand, if there is no conviction, the negative publicity prior to voting day and the candidate's inability to fully campaign because they have a trial to contend with can be harmful to the election process.

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In the News and Blogosphere

Mike Scarcella, Legal Times Blog, Stevens Trial Deliberation Postponed to Accommodate Juror

Doug Berman, Sentencing Law and Policy Blog, Saying Sorry Helps in Mortgage Fraud Cases

Houston Chronicle, Digest: Skilling transferred to prison in Colorado (w/ a hat tip to Bill Olis)

Lindsay Fortado, Bloomberg, Freddie Mac, Fannie Mae Hire Lawyers for U.S. Probe  

Alyson M. Palmer, Fulton County Daily Report, Law.com, En Banc 11th Circuit Case Tests Mail Fraud Law

Amanda Bronstad, National L J., Former senior Milberg Weiss partner asks for no prison time in kickback case   

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