Monday, March 16, 2009
Shannon P. Duffy, Legal Intelligencer, law.com, Federal Jury Finds Former Pa. State Sen. Vincent Fumo Guilty on All Counts
Chronicle of Higher Education, Georgia Tech Employee Gets 10-Year Sentence for $175,000 Spending Spree (subscription required)
Leo Strupczewski & Hank Grezlak, Legal Intelligencer, law.com, Feds Subpoena Insurance Records, Broaden Reach of Judicial Corruption Probe
David Ingram, BLT Blog, Legal Times to Merge With The National Law Journal
Sunday, March 15, 2009
With a fast-growing Internet world with social networks, this was bound to eventually be an issue. See Maryclaire Dale (AP), In York, Fumo: Juror discussing case on Facebook, Twitter; Emilie Lounsberry, Philly.com, Fumo lawyers target juror, deliberations
It was mentioned here, that a DOJ Press Release reported that Hitachi Displays Ltd would be entering a guilty plea to "fixing prices for LCD panels sold to Dell, Inc." The plea would include a 31 million dollar fine. Business Week offers this "snapshot" of the company here. The DOJ posted the Information in the case which states that "[v]arious corporations and individuals, not made defendants in this Information, participated as coconspirators in the offense charged in this Information and performed acts and made statements in furtherance of it." The Information also alleges that "[d]uring the period covered by this Information, the defendant and its coconspirators sold and distributed TFT-LCD in a continuous and uninterrupted flow of interstate and foreign trade and commerce to customers located in states or countries other than the states or countries in which the defendant and its coconspirators produced TFT-LCD."
Saturday, March 14, 2009
Eric Torbenson & Brendan Case, Dallas Morning News, Dallas Attorney charged with conspiracy here; DOJ Press Release, Attorney Indicted for Conspiracy and Wire Fraud in Stock Registration and Manipulation Scheme
Thomas Zambito & Corky Siemaszko, Daily News, What was Ponzi con Bernie Madoff worth? $826 million, claim court papers filed by lawyer Ira Sorkin
Andy Vuong, Denver Post, Nacchio may file for review next week
Marisa McQuilken, BLT Blog, Treasury's TARP Office Needs Lawyers
ALI/ABA Confidentiality and Attorney-Client Communications, March 31 Webcast here
ABA, Recognizing and Defending Against Foreign Corrupt practices Act Violations, April 2 Webcast here
ABA, Ethics, Politics, and Public Corruption, April 3 Birmingham, Alabama here
2nd Annual Global Anti-Corruption Summit USA 2009, May 14-15, Washington, D.C. here.
Friday, March 13, 2009
The trial court sent Bernie Madoff to jail upon his entering of a guilty plea (see here). He has now appealed to a higher court for his release pending his sentencing. See Chad Bray, WSJ, Madoff Appeals Jailing; Thomas Zambito & Corky Siemaszko, Daily News, Bernard Madoff's lawyer Ira Sorkin appeals to spring Bernie from jail
(esp)(blogging from Cambridge, Massachusetts)
The Tenth Circuit recently reinstated the convictions of former CEO of Qwest Communications International, Inc, Nacchio. (see here) But the decision was a close one at 5-4. Nacchio is now presenting new evidence and asking the court to consider this new evidence and also to provide bail pending the resolution of this matter.
What is particularly fascinating here, is that normally the government is the one who obtains favorable evidence in a parallel civil proceeding and the defense may be contesting the use of this evidence in a criminal case. This case finds a reverse scenario, in that the evidence the defense wants the court to consider was evidence obtained in a SEC deposition. As the court typically allows the prosecution to use parallel proceeding evidence, then shouldn't it also be permitted for use by the defense? Now there are other considerations that the court will need to consider here, such as the timing of obtaining this evidence and whether it is inconsequential or harmless evidence. But from a fairness perspective, it would seem that if the government can use evidence from a parallel proceeding, then the defense should have the same benefit. It may be particularly important here with the close vote on the case and new evidence that goes to an issue before the court.
Motion for a New Trial Pursuant to Federal Rule of Crim Proc 33 - Download Motion
(esp)(blogging from Cambridge, Massachusetts)
Thursday, March 12, 2009
There were no surprises in Bernie Madoff entering a guilty plea today as the indications of this had been broadcast for several days. (see here and here) To read a transcript of the proceedings see here. He admits his guilt and explains how he concealed his fraud. He also states that "other business [his] firm engaged in, proprietary trading and market making, were legitimate, profitable, and successful in all respects. Those businesses were managed by [his] brother and two sons." Perhaps some were surprised that he was taken immediately into custody. In many white collar cases the accused remains free on bail while the case is pending. Individuals have remained free in some cases after conviction while the case is pending on appeal (see here). The applause in the courtroom upon sending Madoff to jail says it all - the victims wanted retribution and they wanted it now.
See Chad Bray & Amir Efrati, WSJ, Madoff Pleads Guilty to Massive Fraud; Diana B. Henriques & Jack Healy, Madoff Goes to Jail After Guilty Pleas to All Charges
(esp) (w/ thanks to Whitney Curtis)
Wednesday, March 11, 2009
Larry Neumeister & Tom Hayes, AJC (AP), Madoff to plead guilty, could face up to 150 years; Diana B. Henriques, NYTimes, Madoff Guilty Plea Expected; He Could Face Life in Prison; Robert Chew, Time, No Deal for Madoff, As Victims Prepare to Face Him in Court; Dealbook, NYTimes, Madoff Lawyer Responds to $177 Billion Forfeiture Demand
Brian Baxter, American Lawyer, Madoff Lawyers' Alliance Pushes for International Financial Court
David Ingram, BLT Blog, What do Harvard and Bernie Madoff Have in Common?
Mike Scarcella, BLT Blog, New DOJ Team in Stevens Case Makes Courtroom Debut
DOJ Press Release, Hitachi Displays Agrees to Plead Guilty and Pay $31 Million Fine for Participating in LCD Price-Fixing Conspiracy - Hitachi to Plead Guilty to Fixing Prices for LCD Panels Sold to Dell Inc.
FBI is Seeking Victims in the Stanford Financial Group Case here
Edith Honan (editing Alan Elsner) Reuters, Cyrus Vance Jr seeks Manhattan top prosecutor job
Tuesday, March 10, 2009
Chronicle of Higher Education has a piece that names the institutions for some of what they call "disgraced alums." To be evenhanded, they couple this with a recognition of a famous grad of the institution. See here (subscription required).
Monday, March 9, 2009
Andrew George, Alexandra Walsh, and Bridget Moore, attorneys with Baker Botts LLP, authored a new article in 9 Criminal Litigation (2009) titled "Kimbrough, White Collar Sentencing, and the New Primacy of the Sentencing Commission." One point made in this article is that "in this new era of commission primacy, defendants may not make much headway focusing on sentencing factors available only to the wealthy, white collar offenders. Rather, they are probably better served by highlighting factors available to all - factors like age, health, lack of criminal history, commitment to family, or community service."
It is posted here - Download aba_crim_lit_article_cropped.pdf with permission and a thank you.
Allan Lengel, Tickethewire.com, Uncertainty Abounds When it Comes to Appointments of U.S. Attorneys
John Pacenti, Daily Business Review, law.com, Black Market Peso Exchange at Issue in Kuehne Money-Laundering Case
Doug Berman, Sentencing Law & Policy, "The Libby Letters: Reflections on Sentencing and Mercy in a Post-Booker World" (discussing Professor Scott Sundby's new article on SSRN)
Jeralyn, TalkLeft, Ted Wells Discusses Scooter Libby's Conviction
WSJ Blog, The UBS Tax Probe: Are Execs Next To Face Prosecution?; David Voreacos & Ryan Donmoyer, Bloomberg, UBS Says It Won’t Turn Over More Names in IRS Suit ; Evan Perez, Wall St Jrl, U.S. Pushes for Crackdown on Tax Havens
Forexpros.com, Reuters, Ex-Qwest CEO to report to Penn. prison
Michael Powell, NYTimes, Mortgage Fraud Case Poses Federal Quandary
AP, NYTimes, Ex-Official at NASA Is Indicted
Brian Wlash & Tiffany Joslyn, Real Clear Politics, Congress's Hammer: Another Criminal Law
Saturday, March 7, 2009
This past week a U.S. Virgin Island (USVI) federal jury returned not guilty verdicts on all twenty-six counts in a major federal criminal tax fraud trial. The government alleged that three individuals created and promoted Kapok, a USVI limited partnership, in order to unlawfully obtain tax benefits from a USVI economic development program. The program provided a 90 percent federal income tax credit for eligible companies and individuals. Also charged were a St. Louis area auto dealer and several companies affiliated with the defendants. The government alleged a loss of more than $75 million in federal income taxes from Kapok's participating partners.
Blair G. Brown, a partner in Washington, DC's Zuckerman Spaeder, led the defense of one of the individual's accused, with assistance from associate Lani Cossette. "This case should never have been a criminal prosecution," said Mr. Brown. "The legal standards for USVI residency and qualifying income under the economic development program were vague. All of the defendants did their best in relying on the guidance of experts. The jury also correctly understood that the defendants and similar partnerships brought substantial economic benefits to the USVI."
"The defense was a real team effort that melded the strengths of all defense counsel. Sticking together and pounding our themes-vague standards, reliance, disclosure, and benefits to the USVI-were essential," added Mr. Brown. The defense presented only two witnesses, and none of the defendants testified.
Also representing the same person as Brown were Clyde Kuehn from Belleville, Ill., and USVI local counsel Lee Rohn. Other defense counsel were William Lucco of Edwardsville, Ill.; Chuck Meadows and Josh Ungerman of Dallas; Robert Webster of Dallas; Robert Smith of Dallas; and Gordon Rhea of Mt. Pleasant, S.C. The government was represented by Assistant U.S. Attorneys from the Southern District of Illinois, where the case was originally indicted before its transfer to the USVI, and the U.S. Department of Justice Tax Division.
News reports are indicating that an Information may be filed in the Bernie Madoff matter. This clearly sends a message that a guilty plea may be forthcoming in this case. Using an Information, as opposed to Indictment, allows the parties to negotiate the charges that will be brought. In most cases the individual will be pleading guilty to the charges in the Information. An Information is brought by a prosecutor, the United States Attorney or AUSA, as opposed to the grand jury bringing the charges via an Indictment. Limiting the charges to those explicitly set forth in the Information can control the terms between the parties, including having an influence on what sentence will be issued by the court. The court cannot give a sentence in excess of what crimes an individual pleads guilty to, although uncharged conduct can influence a sentence within the confines of the maximum set for the crime by the statute.
There have been several indications of a plea prior to the filing of the notice of an intent to file an Information. First, is the fact that the time period for filing the Indictment was extended by the parties. Second, the government did not initially push very hard to keep Madoff incarcerated (although they did request this in a later hearing). Third, information about the case seemed to be coming from the defense in the initial paperwork, which would indicate that he has been cooperative with the government. If facing sentencing, cooperation could serve to reduce the amount of time he might serve. More importantly, working with the government may be crucial to someone who wants to protect family members.
If Madoff is cooperating, are we about to see the curtain lifted on all kinds of fraudulent activity, or will this be a case where we find a wizard standing behind the curtain all by himself?
See Walter Hamilton, LATimes, Prosecutors indicate Bernard Madoff plea deal may be in works; Adam Goldman, Newsday (AP), Madoff investors prepare for court confrontation; CNBC, Madoff Guilty Plea?; Grant McCool & Martha Graybow, Reuters, Madoff expected to plead guilty to fraud charges; Larry Neumeister, Business Week, Investors could get say at Madoff plea hearing; Peter Henning, Dealbook, NYTimes, Can Ruth Madoff Keep the Penthouse?; Tom Hays & Larry Neumeister, Law.com (AP), Doubt Cast on $50 Billion Figure in Madoff Case.
Some refer to the ABA White Collar Crime Conference as the AUSA's reunion, as one finds an extremely large crowd of people who used to work in various US Attorney's offices. Although I only had the pleasure of staying for one day at this conference, it clearly was a rich program covering truly hot topics and hopefully topics that remain in the news as DOJ cracks down on white collar criminality.
I had the pleasure of being on a panel titled, Ethical Issues in White Collar Cases. The moderator, Jane W. Moscowitz led us through a discussion of some of the key issues that are facing defense counsel. Joshua Hochberg talked about a scenario coming from the Refco case in which an outside counsel was facing criminal charges. The panel (in addition to Jane Moscowitz, Joshua Hochberg, and myself, the panelists were Brain J. Hennigan and Earl Silbert) talked about the line between criminal, malpractice, disciplinary, and legal advice to a client that would not be subject to scrutiny. How far was counsel required to investigate the activities of his or her client was a key focus of the discussion. Other topics covered included opinion letters, noting how Ben Kuehne (for background see here) was charged with crimes for writing an opinion letter. Two statutes were mentioned - the obstruction of justice and money laundering statutes in which Congress explicitly provided an exception for attorneys providing legal services.
The panel also discussed noisy withdrawals. One question that one always has to determine in corporate-employee situations is "who" is the client and has the employee been made aware of who counsel is representing. Upjohn "warnings" were referenced here, with discussion of what counsel should say to the employee when representing the corporation. It was a lively panel and looking out at the audience it was good to see a full house and more importantly that individuals were not leaving the room. For the unbiased view of this panel discussion, check out Solomon Wisenberg's comments on Letter of Apology here.
As a post script to this panel -Perhaps making ethical issues into criminal issues for counsel is something that the new DOJ needs to rethink.
(esp)(blogging back in Gulfport, Florida)
Addendum - See Steve Levin, Fraud With Peril, Steve’s Fresh Perspective (discussing health care fraud seminar)
Friday, March 6, 2009
As noted here, the 11th Circuit issued its decision in the appellate case involving former Governor Don Siegelman and former CEO of HealthSouth Richard Scrushy. Some of the key points in the decision -
- the court found sufficient evidence "that a reasonable juror could have concluded that Siegelman and Scrushy explicitly agreed to a corrupt quid pro quo"
- the government did not prove that "Siegelman knew that Scrushy intended to defraud Alabama of his honest services while on the Board and that Siegelman personally intended to participate in this fraud."
- although the jury was exposed to extrinsic evidence, it was harmless and the court "did not abuse its discretion in holding that there was no reasonable possibility of prejudice to the defendants arising out of the exposure of the jury to this extrinsic evidence and denying the motion for a new trial"
The court affirmed Scrushy's convictions and reversed two counts of Seigelman's convictions. Seigelman gets a resentencing because of the reversal of Counts 8 and 9.
What happens now? Scrushy and Seigelman have the next step to go - asking for an en banc hearing and perhaps a petition for certiorari to the Supreme Court. But the political arena may be the avenue that we hear the most noise from in the immediate future, as Karl Rove is scheduled to appear before the House Judiciary Committee. See Huffington Post, Karl Rove Agrees to Testify
Thursday, March 5, 2009
The lunch speaker was Neil M. Barofsky of The Office of the Special Inspector General for the Troubled Asset Relief Program ("SIGTARP"), who provided an entertaining and informative presentation that outlined the criminal activity that this office could prosecute. I stopped counting how many times he used the word "transparency" but I assure you it seemed like a good number. The website for the office is here. His conclusion was to remind attorneys that they should make sure that their retainer does not come from TARP funds.
Alice Fisher moderated a panel on corporate charging decisions that provided a primer on the history of the corporate guidelines. There was also discussion of differences between non-prosecution and deferred prosecution agreements. Two statistics (if I caught them correctly) 1) of the 100 corporations under investigation, not one was asked to waive attorney-client privilege; 2) 75% of deferred prosecution agreements have a compliance element. I found the first statistic amusing - if you have a corporation's back against the wall (indict and suffer the consequences, or sign a deferred prosecution agreement) there really is no need to ask for anything - it will all be delivered. This is especially true if you have guidelines that still allow for waivers in some situations, even if the waiver is the exception as opposed to the rule. But I am sure some will disagree with me on this.
(esp)(blogging from San Francisco)