Tuesday, July 14, 2009
After a 5 1/2 month trial (that had to have been a significant punishment in itself), Former State Senator (Pa.) Vincent J. Fumo was convicted. An issue previously discussed relative to this trial pertained to posting on Facebook and Twitter during trial (see here). He has now been sentenced to 55 months with the judge setting the loss figure at $1.2 million. The prosecution appears not to be happy with this sentence (see here).
Representing Fumo were Samuel Buffone (Ropes & Gray, Washington DC - he recently won the Yeager case in the United States Supreme Court see here); Dennis Cogan (Philadelphia) and Peter Goldberger (Ardmore, PA).
(esp)(blogging from The Hague, Netherlands)
Monday, July 13, 2009
Sunday, July 12, 2009
From opposite sides of the U.S., two U.S. Attorneys Offices are actively involved in white collar cases. Obviously many other offices have white collar investigations, prosecutions, guilty pleas, and sentencings -- but for the past week these two offices have been in the news a good bit.
In the Southern District of New York a press release tells that there was a plea by "a former tax partner at the BDO Seidman accounting firm, [who] pleaded guilty . . . to three counts of a Superseding Indictment that charge[d] him with conspiracy to defraud the United States in connection with tax shelter transactions involving clients of his firm and of the law firm Jenkens & Gilchrist ("J&G"); tax evasion in connection with a multimillion-dollar tax shelter that [he] helped sell to a client of his firm; and a corrupt endeavor to obstruct and impede the due administration of the internal revenue laws."
The Southern District of New York also had a press release telling about charges against six in an alleged 140 million dollar investment fraud and stock manipulation scheme, a press release telling about a Connecticut investor who was "found guilty in [a] scheme to bribe government officials in Azerbaijan," and a press release telling of a "Smart Online CEO and two others [who were] found guilty of manipulation of company stock."
On the opposite coast, in the Central District of California, a press release tells of a major indictment in the medical arena. The press release states that "Federal and State authorities . . . arrested 20 defendants accused of being part of [a] ring that defrauded Medi-Cal out of nearly $4.6 million by using unlicensed individuals to provide in-home care to scores of disabled patients, many of them children with cerebral palsy or developmental disabilities. " The press release says that the 41 count indictment included "42 defendants" and that it was "part of an investigation called Operation License Integrity, a two-year investigation conducted by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General, and the Office of the California Attorney General-Bureau of Medi-Cal Fraud and Elder Abuse."
(esp)(blogging from The Hague, Netherlands)
Thursday, July 9, 2009
"A case-by-case examination of the sentences imposed by Judge Sonia Sotomayor during her six years as a trial judge in the Southern District of New York has determined that she was more likely than her colleagues to send a person to prison. . . this was particularly true for convicted white-collar criminals."
They provide charts and numbers that confirm their findings. They used a definition of white collar that may have been more restrictive than I used as they compared only 47 of her cases with a total of 1,570 of all judges in New York's Southern District. They found that
"For this group of criminals, Judge Sotomayor's colleagues sent 43% to prison, with only one out of three of the total receiving a sentence of six months or longer. Judge Sotomayor, in contrast, handed out prison time more often. In her case, a bit more than half (52%) were given some prison time and nearly half (48%) -- rather than one-third (34%) -- were given a prison sentence of 6 months or more."
Hats off to TRAC for providing this empirical evidence.
(esp) (w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports).
Wednesday, July 8, 2009
John Harris, who served as Blagojevich's chief of staff, entered into a plea agreement that includes cooperation. The agreement states:
Defendant agrees he will fully and truthfully cooperate in any matter in which he is called upon to cooperate by a representative of the United States Attorney's Office for the Northern District of Illinois. This cooperation shall include providing complete and truthful information in any investigation and pre-trial preparation and complete and truthful testimony in any criminal, civil or administrative proceeding. Defendant agrees to the postponement of his sentencing until after the conclusion of his cooperation.
See Jeff Coen & Dan Mihalopoulos, Chicago Breaking News, Ex-Blagojevich aide pleads guilty, will testify
(esp)(w/ a hat tip to Mark Johnson)
Addendum, NYTimes, (AP) Blagojevich Aide Pleads Guilty in Corruption Case
Carol Leonnig, Washington Post, Bribery Plea in Probe of Firm With Murtha Ties (w/ a hat tip to Mark Johnson)
Matt Egan, Fox Business, Report: SEC Probing Apple's Disclosures on Steve Jobs
David Laufman, Life Science Leader, Strategies For Avoiding FCPA Liability
Mike Pollick, Sarasota Tribune, Nadel falls short of judge's terms -SEEKING BAIL: Defense will ask for his release with just 3 bond signers, not 4
David Voreacos and Patricia Hurtado, Bloomberg, AIG Looting Case Against Starr Was ‘Weak,’ Jury Forewoman Says
Kristina Moore, Scotus Blog, Reports on Judge Sotomayor's Record
Tuesday, July 7, 2009
William Cole, law.com, European Authorities Join in Madoff-Related Probes
Check out the FCPA Blog here for a discussion of the FCPA count in William Jefferson's trial. The question is asked " Is William Jefferson still on trial for violating the Foreign Corrupt Practices Act?"
Andy Spaulding, Fulbright Scholar at the University of Mumbai, India, posted a piece on the FCPA on SSRN here. Here's an abstract of the piece -
Unwitting Sanctions: Understanding Anti-Bribery Legislation as Economic Sanctions Against Emerging Markets
Although the purpose of international anti-bribery legislation, particularly the U.S. Foreign Corrupt Practices Act, is to deter bribery, empirical evidence demonstrates a more problematic effect: in countries where bribery is perceived to be relatively common, the present enforcement regime goes beyond deterring bribery and actually deters investment. Drawing on literature from political science and economics, this article argues that anti-bribery legislation, as presently enforced, functions as de facto economic sanctions. A detailed analysis of the history of FCPA enforcement shows that these sanctions have most often occurred in emerging markets, where historic opportunities for economic and social development otherwise exist and where public policy should encourage investment. This effect is contrary to the purpose of the FCPA which, as the legislative history shows, is to build economic and political alliances by promoting ethical overseas investment.
These perverse and unanticipated consequences create two policy problems. First, the sanctions literature suggests that the resulting foreign direct investment void may be filled by capital-rich countries that are not committed to effectively enforcing anti-bribery measures. This dynamic can be observed, for example, in China's aggressive investment in Africa, Latin America, and Central Asia, and creates myriad ethical, economic, and foreign policy problems. Second, by enforcing these laws without regard to their sanctioning effects, developed nations are unwittingly sacrificing poverty reduction opportunities to combat bribery. The paper concludes with various proposed reforms to the text and enforcement of international anti-bribery legislation that would further the goal of deterring bribery without deterring investment.
Sunday, July 5, 2009
ABA Presidential Showcase Program: Hot Topics and Recent Developments in Public Corruption Investigations & Government Ethics here
NACDL - Defending White Collar Crimes - October 1-2, NY - here
Strafford, Foreign Corrupt Practices Act in Latin America -Implementing FCPA Compliance Programs and Mitigating Legal Risks -July 9th here
FCPA - November 17-18, 2009 - Washington, D.C. here
Friday, July 3, 2009
Chronicle of Higher Education, Former Professor Gets 4 Years for Allowing Unauthorized Access to Sensitive Technology
Laura Sullivan, NPR, Madoff Likely Won't Be Serving Time in 'Club Fed'
David Scheer, Bloomberg.com, SEC Names Ex-Prosecutor Reisner Deputy of Enforcement
ACFE Press Release,$65 Billion Stolen by Madoff? Not Hardly
Daniel Wise, law.com, NYLJ, Judge Names Receiver in Madoff Feeder Fund Suit
Thursday, July 2, 2009
The Lori Drew case was scheduled for a hearing today and the question was whether she would be sentenced or perhaps the case dismissed. According to press reports it looks like it may be the latter, although everyone is calling it a "tentative" ruling pending the court's written order. A key issue in the case was whether the computer statute that was used was appropriate for these alleged acts. (see here) The State where the alleged act took place - Missouri - did not have a cyberbullying crime at that time, although one has since been passed. Federal prosecutors in California brought this case, a case with a keystroke in Missouri, premised upon the contractual agreement one clicks with MySpace. They also used the conspiracy statute as it allows for a wide jurisdictional base, although Drew was not convicted of conspiracy. If the final decision is to dismiss the case, it would not be surprising.
See Alexandra Zavis, LATimes, Judge tentatively dismisses case in MySpace hoax that led to teenage girl's suicide ; Gina Keating, Reuters, MySpace suicide conviction tentatively dismissed; Linda Deutsch, AP, Judge tentatively acquits woman in MySpace case
Beazer Homes USA, Inc. entered into a deferred prosecution agreement with the US Attorney's Office for the Western District of North Carolina. The company issued the following release for investors (see here). The agreement calls for an immediate payment of 10 million dollars in restitution (actually 7.5 million since it already paid 2.5 to North Carolina victims), with additional funds down the road. Additional payments to the FHA include an immediate payment of 4 million.
It is good to see that this agreement does not explicitly include a waiver of attorney client privilege. But there are two provisions in this agreement that cause concern. First is a statement that says that "BEAZER expressly agrees that it shall not, through its present or future attorneys, board of directors, officers, or any other person authorized to speak for the company, make any public statement, in litigation or otherwise, contradicting BEAZER'S acceptance of responsibility set forth above or the factual allegations in the criminal information filed in conjunction with this Agreement, except insofar as BEAZER contests the applicability of the factual allegations in the criminal information and/or this Agreement to a specific private civil litigant or class of litigants...." It later states that "[t]he decision of whether any public statement by any such person contradicting a fact contained in the criminal information will be imputed to BEAZER for the purpose of determining whether BEAZER has breached this Agreement shall be in the sole discretion of the United States." (emphasis added)
A second concern with this agreement also pertains to who has the authority to determine a breach of the agreement. The Agreement states "BEAZER agrees that the decision whether conduct and/or statements of any individual will be imputed to BEAZER for the purpose of determining whether BEAZER has knowingly, intentionally and materially violated any provision of this Agreement shall be in the sole discretion of the United States." (emphasis added) And later the same issue, "It is further agreed that in the event that the United States, in its sole discretion, determines that BEAZER has materially breached or violated any provision of this Agreement...." (emphasis added).
It's good to see DOJ no longer seeking a waiver of attorney-client privilege, but they also need to pay closer attention to contracts and provide a fairer agreement if there is a breach by a party to the agreement. A neutral party, as opposed to one of the parties to the agreement, should be making this call. See Candace Zierdt & Ellen S Podgor, Corporate Deferred Prosecutions Through the Looking Glass of Contract Policing
For discussion of the deferred prosecution agreement, see also Harry R. Weber, Houston Chronicle (AP), Charges filed against Beazer; Settlement reached ; Reuters, Beazer Homes agrees to settle mortgage fraud case; Wallace Witkowski, Marketwatch WSJ, Beazer settles with North Carolina, feds.
Beazer Settlement - Download BEAZER SETTLEMENT
Bill of Information - Download Bill of Info
Deferred Prosecution Agreement - Download Deferred Prosecution
James Barron, NYTimes, Assemblyman Steps Down and Admits Guilt in Scheme
Mike Scarcella, BLT Blog, [Earl] Silbert Named President of Council for Court Excellence
Kevin McCoy, USA Today, Appeal of Madoff's 150-year sentence wouldn't matter
Martha Neil, ABA Jrl Law News Now, Ex-Latham Practice Head Gets 15 Months in Client Expense Fraud Case
Zachery Kouwe, NYTimes, S.E.C. Previews Its Madoff Report
Amanda Bronstad, NLJ, The anatomy of an acquittal in the W.R. Grace asbestos trial
Harry Weber, Breaking News 24/7, SEC Charges former Beazer Homes Chief Accounting Officer With Fraud
Stacy-Marie Ishmael & Brooke Masters, Financial Times, Stanford CFO intends to admit fraud charges
Wednesday, July 1, 2009
Blogged here was the jumpsuit walk of R. Allen Stanford following the ordering of bail by a magistrate judge. But the bond was short-lived as the federal judge overseeing the case revoked his bail. A key test for securing bail pending trial is whether the accused will flee. The court, concerned with the possibility of Stanford fleeing, decided he should stay incarcerated. But even with this decision, I have to question the jumpsuit walk. Our system is premised on innocence until proved guilty. Parading an innocent person in front of cameras implicates that individual prior to any finding of guilt. See Juan Lozano, Huffington Post, Stanford's Bail Revoked By Judge; Clifford Krauss, NYTimes, Judge Revokes Bail for Billionaire Accused of Fraud.
The criminal forfeiture order, negotiated between the defendant and the government w/o input from the victims as guaranteed by the CVRA (see 18 USC 3664(d) and FedRCrimP 32(i)(4)(B)), ensures Mrs. Madoff a couple of million to live on for the rest of her lonely life. It takes all of the defendant's assets and makes them property of the United States. (It also disregards the binding Santos definition of "proceeds," but never mind that.) By leaving the defendant with nothing, it prevents him from making restitution to any victim (although he can and will be ordered to make restitution, he won't have a penny other than prison earnings with which to comply). While a victim can apply to the Attorney General for a partial "remission" of the forfeiture (see 21 USC 853(i)(1)(incorporated by reference into other forfeiture laws), there are no governing standards, no due process, and no judicial supervision -- it is 100% in the discretion of the DOJ. Section 3572(b) of title 18, however, prohibits the judge from ordering any "financial penalty" (which would include criminal forfeiture) if doing so would impair the ability of the defendant to pay restitution. On that basis, I believe the forfeiture order in Madoff's case is illegal. I wonder if any victim will take that position and file a mandamus under the CVRA ((3771(d)(3) & FedRCrimP. 60 (b)(5)(B)) against it?