Tuesday, February 10, 2009
Check out Marketwatch, NeuroMetrix Resolves Investigation into Past Sales and Marketing Practices for the latest deferred prosecution agreement.
A press release issued by NeuroMetrix tells that "it has reached a resolution with the United States Department of Justice ("DOJ") and the Office of Inspector General ("OIG") of the United States Department of Health and Human Services regarding the previously-disclosed investigation into certain of the Company's past sales and marketing practices relating to its NC-stat System." It looks like a 3.7 million dollar price tag as "the Company has agreed to a $1.2 million payment and the DOJ has agreed not to prosecute NeuroMetrix in return for compliance with the terms of the three-year Agreement." Additionally there is a "civil Settlement Agreement with the DOJ and OIG" for 2.5 million.
Monday, February 9, 2009
Jamie Olis moves to a half-way house today.
Mark Hamblett, NYLJ, law.com, N.Y. Attorney Convicted of Mortgage Fraud
Leo Strupczewski & Peter Hall, Legal Intelligencer, law.com, Rumors Abound That Alleged Case-Fixing Is Target of Pa. Probe
Tracy Green & Ann C. Scheider, Real Estate Fraud -- Ten Individuals Indicted in San Diego Case Relating To Home Foreclosure Services
Sunday, February 8, 2009
Marisa McQuilken, BLT Blog, Cleary Partner David Becker Tapped as SEC GC
DOJ Press Release, Government Contractor Sentenced to 30 Months in Prison on Bribery Charges
Allan Lengel, Ticklethewire.com, New Mexico U.S. Attorney Would Like to Stay
Jesse Westbook & David Scheer, Bloomberg, SEC Said to Consider Khuzami to Lead Enforcement Unit ; Securities Docket, Report: Robert Khuzami Top Candidate to be Next SEC Enforcement Director
Friday, February 6, 2009
The January 2009 Report - Alternative Sentencing in the Federal Criminal Justice System sends a clear message that people really do go to prison in the U.S. The report states that "[d]espite the availability of alternative sentencing options for nearly one-fourth of federal offenders, federal courts most often impose prison for offenders in each of the sentencing table zones."
And for those who believe that white collar offenders seldom face prison, the study shows that "[o]ffenders convicted of fraud and other white collar offenses, while still primarily sentenced to prison, also more often are sentenced to alternatives; approximately one-third of fraud and white collar offenders are sentenced to prison alternatives." That means that about 2/3 must be going to prison. What is not stated here, however, is how white collar is defined. Does it include RICO and money laundering offenses?
See also Doug Berman, Sentencing Law & Policy Blog here
The 1872 mail fraud statute has been the subject of numerous Court decisions and much commentary. It has changed over time, with Court rulings that have served as the impetus for legislative changes. And in these sad economic times, it is a statute that prosecutors are clinging to in order to prosecute cases that might have no other basis in the criminal law. As described by Hon. Jed Rakoff in a law review article in 1980 - mail fraud is the "prosecutor's Stadivarius or Colt 45."
In its early years the focus was on the mailing. Today, the scheme to defraud element serves as the emphasis for prosecutions under this statute.
But even today, so much remains at issue. Judge Jacobs in a dissenting opinion in United States v. Rybicki noted the differences in interpreting the honest services provision that often attaches to a mail fraud prosecution:
In sum, the circuits are fractured on the basic issues: (1) the requisite mens rea to commit the crime, (2) whether the defendant must cause actual tangible harm, (3) the duty that must be breached, (4) the source of that duty, and (5) which body of law informs us of the statute's meaning. This lack of coherence has created "a truly extraordinary statute, in which the substantive force of the statute varie[s] in each judicial circuit." Brumley (Jolly, J., dissenting).
One also finds several Supreme Court decisions ruling on a variety of mail fraud issues, such as finding a requirement of "money or property" in the generic 1341 statute, holding that licenses were not property, and requiring proof of materiality in these fraud prosecutions. Seeing the variance in different issues under the mail fraud statute, it is not surprising to see the Eleventh Circuit deciding not to follow a prior panel ruling that required " a scheme reasonably calculated to deceive persons of ordinary prudence and comprehension." But the real question may be whether the defense will proceed to a higher court on the Svete case and what that Court will say. (For the Svete decision and holding, see here). See also Alyson M. Palmer, Fulton County Daily Report, law.com, 11th Circuit Tosses Fraud Precedent .
Thursday, February 5, 2009
Who gets released pending trial has proved interesting -- especially in some of the recent white collar cases. For the most part this blog has focused on bail post conviction, noting that Bernie Ebbers remained free, Jeffrey Skilling went to prison, Conrad Black to prison, and Wesley Snipes received bail. But the standard pre-trial is different, and a much more difficult one for the government to overcome. After all, the individual is presumed to be innocent.
Bernie Madoff, despite allegations of enormous amounts of money involved in the alleged scheme, was released with conditions that included house arrest. Art Nadel, in his first attempt to secure bail was denied it with the court finding him - according to the Bradenton Herald - "too much of a flight risk" (see here). How he fares when he appears in a New York court remains to be seen. And now we see Marc S. Dreier being allowed to post bond. It looks like the bond details will keep Dreier from reading this blog, as it includes removal of his computer from his residence. But that is the least of his concerns, as the creative conditions show that the court is trying to provide his pre-trial release while also making any possibility of flight non-existent. (see NYLJ, law.com, Judge Paves Way for Dreier's Release; Larry Neumeister Houston Chronicle (AP), House arrest for lawyer in $400 million fraud case).
Joe Palazzolo, BLT Blog, DOJ Apologizes for Misstatements in Stevens Case
DOJ Press Release, Minnesota Man Arrested in Connection with Ponzi Scheme
Pamela A. Maclean, NLJ, law.com, Accounting Firms Take New Hits Over Madoff, Other Ponzi Schemes
R. Robin McDonald, Fulton County Daily Report, law.com, Home Depot Fraud Case Grows With Two More Managers Targeted - Prosecutors seek to seize houses allegedly bought with kickbacks
Susan Schmidt & Evan Perez, WSJ, More Call for Probe on Financial Crisis
Wednesday, February 4, 2009
Debra Cassens Weiss, ABA Jrl, Honest Services Theory Used in Priest Abuse Cover-up Probe
Dechert's White Collar & Securities Litigation Group, Second Circuit Rejects Opportunity to Limit Application of Vicarious Liability Doctrine to Corporate Criminal Defendants
Teresa Baldes, NLJ, law.com, Detroit's Former Mayor Is Out of Jail, but Not Out of Legal Problems
Adam Lynch, Jackson Free Press, The Sour Smell of Corruption
ABA, The Uncertainty Surrounding Honest Services Fraud, Teleconference, Feb. 11
ABA White Collar Crime Institute, San Francisco, March 4-6
Ethics - Politics- Corruption, Birmingham, Alabama, April 4-5
ABA, National Institute on the Internal Corporate Investigations and In-House Counsel, Washington, D.C., May 7-8, 2009
Second Annual Global Anti-Corruption Summit USA 2009, Washington, D.C., May 14-15
Tom Lieber, NYTimes, How to Avoid a Tom Daschle Tax Problem
Feminest Law Professors Blog has moved to here
In a recent decision of the Ninth Circuit, U.S. v. SDI Future Health Inc. the court decided "whether corporate executives may challenge a police search of company premises not reserved for the executives' exclusive use." As stated by the court, "While '[i]t has long been settled that one has standing to object to a search of his office, as well as of his home,' Mancusi v. DeForte, 392 U.S. 364, 369 (1968), this case presents the novel issue of the extent to which a business employee may have standing to challenge a search of business premises generally." The court stated:
"we conclude that, except in the case of a small, family-run business over which an individual exercises daily management and control, an individual challenging a search of workplace areas beyond his own internal office must generally show some personal connection to the places searched and the materials seized. To adapt Anderson, although all the circumstances remain relevant, we will specifically determine the strength of such personal connection with reference to the following factors: (1) whether the item seized is personal property or otherwise kept in a private place separate from other work-related material; (2) whether the defendant had custody or immediate control of the item when officers seized it; and (3) whether the defendant took precautions on his own behalf to secure the place searched or things seized from any interference without his authorization. Absent such a personal connection or exclusive use, a defendant cannot establish standing for Fourth Amendment purposes to challenge the search of a workplace beyond his internal office."
In applying the standard the court stressed "that particularity and overbreadth remain two distinct parts of the evaluation of a warrant for Fourth Amendment purposes." The court held in this particular case "that five of the twenty-five categories of materials listed in the search warrant were unconstitutionally overbroad and that no exception rescues them from suppression."
Attorney General Eric Holder was sworn in by Vice President Joe Biden. His remarks are telling that DOJ will be returned to being a non-political institution. In part he stated -
"There shall be no place for political favoritism, no reason to be timid in enforcing the laws that protect our rights, our environment and our principles as long as I have the opportunity to lead this great Department. This may be a break from the immediate past but it is consistent with the long history of the Department of Justice. I call on every employee of this Department - from this moment on - to return to the practices that are the foundation of this entity. It is time once again to base our actions on policies that are rooted in fairness and in a desire to ensure a more just America."
Not surprisingly, the opposition to his becoming AG was not consequential See WSJ Blog here The ranks of the department will now start to fill, as well as the changing of many USAttorneys throughout the United States. See Mary Flood, Houston Chronicle, Prosecutors, judges jockey for U.S. attorney spot
Addendum - It is sad to see that a member of the Senate Judiciary committee is criticizing nominees for positions at DOJ premised on their political or social leanings. See David Ingram, BLT Blog, Sessions Gives Preview of Objections to DOJ Nominees
Monday, February 2, 2009
The 11th Circuit in an en banc opinion overruled its prior decision in United States v. Brown, 79 F.3d 1550 (11th Cir. 1996). The court in United States v. Svete held that "the district court did not err when it gave the pattern jury instruction for mail fraud." The remaining issues were remanded for the panel to further consider.
The decision was written by Circuit Judge Pryor. The court held that "Congress has never used any language that would limit the coverage of the mail fraud statute to schemes that would deceive only prudent persons." The court also stated, "[p]roof that a defendant created a scheme to deceive reasonable people is sufficient evidence that the defendant intended to deceive, but a defendant who intends to deceive the ignorant or gullible by preying on their infirmities is no less guilty."
Concurring opinions were by Judges Edmondson (w/ Birch), Tjoflat, and Kravitch.