Sunday, August 30, 2009
The Ninth Circuit Court of Appeals decision in United States v. Comprehensive Drug Testing, Inc. & Major League Baseball Players Association v. United States looked at "the procedures and safeguards that federal courts must observe in issuing and administrating search warrants and subpoenas for electronically stored information."
It all started in 2002 when the "federal government commenced an investigation into the Bay Area Lab Cooperative (BALCO), which [was] suspected of providing steroids to professional baseball players." It is always interesting to see how an investigation can lead to people well beyond the initial scope of inquiry. Oftentimes the government obtains incriminating evidence against some that is used to move an investigation far from its initial roots. Those that are trapped by the government may provide pleas with coooperation -- as one way to lower a sentence may be to implicate others.
In this case baseball players had been tested under terms that "the results would remain anonymous and confidential." Ten players turned up as testing positive and the government secured a grand jury subpoena in the Northern District of California "seeking all 'drug testing records and specimens'" pertaining to the baseball player's testing. The subpoena was quashed and the government went in with a search warrant for the "records of the ten players as to whom the government had probable cause." Nothing like the government not getting their way and circumventing the order by using a search. But the government did not stop there, as they went to the District of Nevada and also obtained a warrant - a place where the drug tests had been performed.
In total it ended up being three judicial opinions with the judges "express[ing] grave dissatisfaction with the government's handling the investigation, some going so far as to accuse the government of manipulation and misrepresentation." The government appealed and the en banc court eventually ended up with the case. A summary of the court's ruling can be found here.
Clearly there are grave concerns here with respect to the government's conduct. But the decision, with its majority opinion authored by Judge Alex Kosinski, also explores how to handle searches of electronically stored files. On one hand you have a government wanting to obtain information for an investigation and on another hand you have Fourth Amendment's rights to privacy. The court sets forth a framework for how these searches should occur including requiring that "magistrates should insist that the government waive reliance upon the plain view doctrine in digital evidence cases." The decision calls for "[s]egregation and redaction" to be "either done by specialized personnel or an independent third party." And it goes on from there. The bottom line is that the court is trying to bring us into a new and modern age that understands and considers how best to handle computerized material.
Whether this framework is the best one, remains to be seen. But it certainly is good to see that a court is recognizing the need to re-examine the plain view doctrine in this computer and information age.
Some folks are voicing an opinion on the UBS settlement and what may result from it. Check out the following:
- Reuters, Reactions to UBS tax deal
- Tax.com, Law Professors Express Concern over UBS Settlement
- TaxProfBlog, Tax Profs Criticize UBS Settlement
We have also watched with interest the IRS' efforts to promote voluntary disclosure by US taxpayers prior to IRS' commencement of examination. With the lure of amnesty in the form of no criminal action and reduced civil penalties, the IRS hopes taxpayers will come forward "voluntarily." This general concept is equally laudable. However, the IRS' promise to keep open the September 23 amnesty deadline for taxpayers who come forward even after they receive notice from UBS that their names are about to be revealed is the point at which we depart company with IRS policy.
They state later in their letter:
Our law school operates a low income taxpayer clinic. In the last few years, we have seen an increase in the assertion of penalties against the poorest, least sophisticated taxpayers with virtually negligible room for negotiation by the IRS. It would seem that a blanket program of offering reduced penalties and no criminal action to wealthy, sophisticated tax dodgers who come forward on the eve of their names being turned over to the IRS and with prior knowledge of the forthcoming disclosure, is suggestive of something less than even handed tax administration.
Wednesday, August 26, 2009
A press release of Ohio Attorney General Richard Cordray "announced details of an 18-month investigation that led to indictments against 41 people and four companies." The release states that "[t]he defendants are alleged to have engaged in real estate transactions to purchase 453 homes with fraudulent loans totaling $44 million." Although the FBI, US Attorney's Office and Postal Inspector were involved in this investigation, it is interesting to see that the mortgage fraud indictments are being brought at the state level. The press release notes that:
"With funding from the Ohio Attorney General's Office and the Ohio Organized Crime Investigations Commission, the Cuyahoga County Mortgage Fraud Task Force was formed in December 2007. To date, 289 defendants have been indicted for approximately $111 million in fraudulent loans for 812 houses. Of the 812 houses, 616 fell into foreclosure."
"According to the indictment, [these individuals] helped wealthy American clients conceal their assets by establishing sham and nominee offshore entities to hide their U.S. clients' assets and income while allowing these clients to still control the assets and make investment decisions."
Other interesting posts on UBS-
Sharona Coutts, ProPublica, UBS and the Taxpayers’ Hidden Billions
WebCPA Staff, Former UBS Banker Sentenced to 40 Months
Tuesday, August 25, 2009
A DOJ Press Release reports that "Epson Imaging Devices Corporation (Epson) agreed to plead guilty and pay a $26 million criminal fine for its role in a conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display panels (TFT-LCD) sold to Motorola Inc." It also states that "[a]ccording to a one-count felony charge filed today in U.S. District Court in San Francisco, Epson, a subsidiary of Seiko Epson Corporation, participated in a conspiracy to fix the prices of TFT-LCD panels sold to Motorola for use in Razr mobile phones from the fall of 2005 to the middle of 2006. According to the plea agreement, which is subject to court approval, Epson has agreed to cooperate with the Department’s ongoing antitrust investigation." It is a common practice for companies to plead guilty and cooperate in the investigation of individuals. Many a plea or deferred prosecution agreement with a cooperation clause has led to later indictments of individuals within or associated with the company.
The Epson Imaging company website acknowledges this agreement (see here) and states that "[t]he United States Department of Justice has been investigating the pricing practices of the world’s major TFT-LCD manufacturers since December 2006, and Epson Imaging has fully cooperated in this investigation. After careful consideration of the law, the facts and other factors, Epson Imaging has decided that the best course of action was to conclude the agreement with the United States Department of Justice." The company also states that "In consideration of the inconvenience caused to its customers, Epson Imaging’s directors will voluntarily adjust their remuneration."
Laura Diamond & Bill Rankin, Lawsuit charges university with fraud
Saturday, August 22, 2009
5th Annual Defending White Collar Crimes - Sponsored by NACDL - October 1-2, 2009, New York City, Conference Information, Keynote Address Hon. Lanny A. Breuer, Assist AG, Criminal Division, U.S. Dept. of Justice - here
Fourth Annual Securities Fraud National Institute, October 15-16, 2009, Washington, D.C., -here
20th Annual Economic Crime Conference - Sponsored by the Economic Crime Institute of Utica College - Extraordinary Circumstances: Combating Fraud and Corruption in Hard Times (including Keynote Speakers - Cynthia Cooper (CEO The CooperGroup LLC & author of Extraordinary Circumstances)) & Martin T. Biegelman (Director, Financial Integrity Unit, Microsoft Corporation). October 20-22, 2009, Potomac, Maryland. For details see here.
Second Annual Sentencing Advocacy, Practice & Reform Institute - With Special Focus on Reentry, November 6, 2009, Washington, D.C. here
Financial Institution Fraud Enforcement & Financial Recovery - Sponsored by ACI - November 16-17, 2009 - New York City, Conference Information here.
22nd National Conference on Foreign Corrupt Practices Act - Sponsored by ACI - November 17-18, 2009 - Washington, DC, Conference Information - here; Agenda here (says the luncheon address will be given by Hon. Lanny A. Breuer, Assist AG, Criminal Division, U.S. Dept. of Justice). Brochure here - Download 810L10_INH (I've been informed by the marketing executive of the conference that white collar crime prof blog readers who reference the code "White Collar Crime" will receive a $200 discount).
Friday, August 21, 2009
Frank Ahrens, Washington Post, U.S. Charges Two in Swiss Bank Probe - Pair Allegedly Helped Tax Dodgers
Zusha Elinson, The Recorder, law.com, San Francisco SEC Office Trying to Slim Down, Toughen Up
Ben Adducchio, West Virginia Public Broadcasting, National White Collar Crime Center hosts expo in Fairmont
UBS entered into a deferred prosecution with DOJ (see here). The agreement included that UBS would provide the U.S. government "with the identities of, and account information for, certain United States customers of UBS’s cross-border business." The process initially moved slowly. Eileen C. Mayer, Chief of IRS-Criminal Investigation, called one prosecution "the tip of the iceberg." (see here). An issue that needed to be resolved involved an agreement between the US and Swiss government. That agreement has been reached. This is a copy of the US-Swiss Agreement - Download US-Swiss Agreement Declararaions Signed. The Bank's Agreement with DOJ is here - Download Bank_agreement
(esp)(w/ hat tips to Tiffany M. Joslyn of NACDL and Peter Hardy of Post & Schell).
Thursday, August 20, 2009
NACDL’s Aug. 20, 2009, White Collar Crime CLE – “Litigating Pre-Trial Restraint of Assets in Criminal Cases”
Guest Blogger: Cynthia Hujar Orr, President of the National Association of Criminal Defense Lawyers (NACDL)
Tiffany Joslyn, NACDL’s White Collar Crime Policy Counsel, put together this evening’s two-hour continuing legal education (CLE) program on the all-important topic of government efforts aimed at criminal pre-trial restraint of assets. “In the 1999 decision Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., the U.S. Supreme Court characterized pretrial asset restraint as a ‘nuclear weapon of the law’ and the government consistently requests pretrial asset restraining orders in almost all forfeiture cases,” Tiffany explained, adding that “this panel of highly experienced white collar defenders were just the practitioners to effectively dissect this complex area of criminal law and provide defense attorneys with critical tips for protecting their client’s assets.”
Tonight’s program featured some leading defenders with valuable experience and insight when it comes to confronting government efforts to seize your clients’ assets prior to any finding of wrongdoing. Together, these practitioners brought to the table extensive prosecutorial and defense experience, not to mention significant contributions to the organized bar, including in the area of forfeiture law. The panel was moderated by David Smith, a founding partner of the Alexandria, Va. firm of English & Smith, and the panelists were Samuel J. Buffone, partner in the Washington, D.C. office of Ropes & Gray LLP; Nina J. Ginsberg, a founding partner of the Alexandria, Va. firm DiMuroGinsberg, PC; and Andrew Weissman, partner in the New York City office of Jenner & Block LLP.
The first order of business in tonight’s program was a brief discussion of the general concept and purpose behind pretrial restraint of assets. It was immediately clear that the implications of such restraint extend well beyond the general point that a person who has yet to be convicted of anything is being deprived of their assets. A critical constitutional dimension was a thread throughout the discussion – pretrial asset restraint may deprive defendants of their chosen counsel. And this should be a concern to anyone representing a client charged with a federal crime. As David Smith explained in tracing the roots of current federal law concerning pre-trial restraint of assets from the federal drug and RICO case context, “By now, just about every federal felony can trigger a forfeiture.” “We now find ourselves where the extraordinary ‘nuclear weapon’ has become standard operating procedure in the criminal case,” added panelist Samuel Buffone.
The panelists discussed the procedures for challenging pretrial restraint of assets and explored numerous, often under-utilized, strategies for confronting such restraining orders. Key to the effort, of course, is getting the often elusive hearing to level such a challenge. Indeed, the discussion included a survey of the different circuit standards and requirements regarding the necessary showing to get a hearing to challenge the restraining order.
The two-hour discussion had the added dimension of tapping into the prosecutorial experience of certain members of the panel to explain how they would respond to the defense counsel strategies articulated by the other members of the panel. It was, in a sense, a terrific brainstorming session among leaders in the field of forfeiture law who have been involved on both sides of the criminal case. Panelists discussed in detail the current relevant statutory and case law sources for anyone practicing in this area, as well as the constitutional dimensions of the issue. Nina Ginsberg and the other panelists discussed the argument that it constitutes a due process violation for the government to be able to so restrain assets pre-trial in the absence of any showing whatsoever.
As David Smith, the panel moderator and the author of the leading two-volume treatise Prosecution and Defense of Forfeiture Cases, explained in detail in his presentation, there are critical arguments that defense lawyers need to make and often fail to make to resist or reverse the pre-trial restraint of assets. Panelist Andrew Weissman, with his vast experience in federal law enforcement, was there throughout the discussion offering his insight as to anticipated government strategies in response to the defense strategies that were offered up by the other members of the panel.
In sum, this program is an invaluable resource for attorneys seeking to ensure that their clients do not wrongfully have their assets restrained and, most importantly, that they are not deprived of their right to the counsel of their choice.
Click here to read more about the program, panelists and to reach a link to purchase a recording of the program.
Law Professors - The Southeastern Association of Law Schools (SEALS) has a call for papers -
CALL FOR PAPERS
A roundtable discussion will be held at SEALS 2010 on "Re-evaluating Corporate Criminal Liability."
Among the questions that deserve focus in this area are the following:
- Should we discard corporate criminal liability?
- Should we expand corporate criminal liability?
- Should we modify the ALI standard for corporate criminal liability?
- Can tort actions properly accommodate corporate misconduct?
- Is corporate regulation sufficient to handle corporate misconduct?
Participants will prepare a paper of approximately ten pages related to this topic, and the papers will be distributed prior to SEALS 2010. At SEALS, each of the participants will be given a few minutes to summarize their paper, which will be followed by a moderated discussion on the topic.
Two of the participants in this roundtable will be selected from a Call for Papers that will be reviewed by Professor Joan Heminway (Tennessee), Professor Andrew taslitz (Howard), and Professor Ellen S. Podgor (Stetson).
Papers must be received by January 1st to be considered for this Roundtable. You are welcome to submit an abstract by this deadline, but papers are more likely to be given stronger consideration. Submit all papers to Ellen S. Podgor at firstname.lastname@example.org
Wednesday, August 19, 2009
NACDL’s Aug. 19, 2009, White Collar Crime CLE – “Testimonial Traps: Defense Strategies for Invoking the 5th Amendment in Civil Cases, Investigations & Other Proceedings”
Guest Blogger: Cynthia Hujar Orr, President of the National Association of Criminal Defense Lawyers (NACDL)
Shana-Tara Regon, NACDL’s White Collar Crime Project Director, put together this evening’s two-hour continuing legal education (CLE) program covering the critically important Fifth Amendment issues that practitioners often face. Tomorrow’s second installment of NACDL’s White Collar summer CLE series is a panel assembled by NACDL’s White Collar Crime Policy Counsel Tiffany Joslyn exploring the topic “Litigating Pre-Trial Restraint of Assets in Criminal Cases.” There is still space at NACDL’s Washington, D.C. headquarters for tomorrow evening’s program and wine & cheese reception, just RSVP and register here.
Shana explained the purpose of tonight’s Fifth Amendment-related program, “As clients in criminal cases are often involved in civil cases and other investigations and proceedings, what they say in these contexts can and will be held against them. This program provided practical guidance on the often tricky issues that arise when considering whether and how a client may remain silent.”
Tonight’s program featured leading practitioners with vast government and private practice experience and perspective: moderator Ross H. Garber, a partner in the Hartford, Conn. office of Shipman & Goodwin LLP and panelists Benjamin D. Brown, partner in the Washington, D.C. office of Cohen Milstein; Pamela J. Marple, partner in the Washington, D.C. office of McDermott, Will & Emery; and Steven M. Salky, partner in the Washington, D.C. office of Zuckerman Spaeder LLP. Click here to read more about the program, panelists and to reach a link to purchase a recording of the program.
The first order of business in tonight’s program was a brief discussion of the history and purpose of the Fifth Amendment. Ross Garber set the stage. He quoted language from the 2001 U.S. Supreme Court decision in Ohio v. Reiner, “One of the Fifth Amendment’s basic functions . . . is to protect innocent men . . . who otherwise might be ensnared by ambiguous circumstances.” Garber then added his own commentary, explaining that while the Fifth Amendment “seems pretty straightforward, as we all know in this room, Fifth Amendment issues can get really tricky.” There was no disagreement there. In fact, the ensuing discussion served as Exhibit A in support of that assertion.
The program quickly moved from the history and purpose of the Fifth Amendment to a detailed exploration of the practical issues involved in its assertion, but not via a theoretical or academic discussion. Instead, it did so by confronting a hypothetical, and to many people an entirely familiar, scenario. The panelists launched right into an examination of various aspects of the multiple parallel proceedings in which someone might find himself as a mortgage broker who was engaged in the business at the height of the housing boom.
The two-hour discussion covered a set of legal circumstances and litigation tracks that unfolded as moderator Ross Garber confronted the panelists with the complex decisions that must be made as a variety of parallel proceedings emerged and moved forward. The developing challenges for the defendant/target/suspect/putative congressional witness, as well as the company at which he had been employed, included state and federal regulatory investigations, state attorney general and U.S. Department of Justice investigations, a private class action civil lawsuit, as well as a Congressional investigation. As Pamela Marple and Steven Salky covered the perspective of defense counsel in both the civil and criminal contexts, Ben Brown was there at every turn explaining the myriad ways in which plaintiff’s counsel in a parallel civil suit can and do make the most of the defendant’s assertion of his Fifth Amendment rights. As he put it, “the plaintiff’s lawyer wants to get the defendant pleading the Fifth, on tape preferably, as early as possible,” adding that plaintiff’s lawyers want it not just generally but in response to numerous fact-based questions as they build their case on the negative inferences they can seek to have drawn from the same.
There was a careful examination of a variety of issues that counsel must sort through in the context of parallel proceedings, including what type of entities can avail themselves of the Fifth Amendment privilege, when an individual should assert it, and how an individual should assert the privilege when he does. As to how to assert the Fifth Amendment privilege, Steven Salky explained that the defendant has to say enough so that the judge knows that you are asserting the Fifth Amendment, but “he doesn’t have to use the words ‘incriminate’ or ‘self-incrimination.’”
When Congress calls your client as a witness in the midst of all of these parallel proceedings, Pamela Marple, whose experience includes five years as a trial attorney at the DOJ as well as service as counsel to the Senate Judiciary Committee and Deputy Chief Counsel to the Minority on the Permanent Subcommittee on Investigations, had plain and clear advice, “There has to be a reason to testify to Congress” in response to a Congressional subpoena.
In sum, tonight’s program was a far-reaching and intensely practical dissection of the complexities involved in the invocation of the Fifth Amendment in the panoply of contexts in which we often find our clients sought for testimony.
I am looking forward to tomorrow evening’s program at NACDL, “Litigating Pre-Trial Restraint of Assets in Criminal Cases
Watching a part of NBC's Today Show of the interview with Richard Hatch (Survivor) (for background see here) and then hearing that he is arrested shortly thereafter, certainly has a chilling effect. Hatch, on house arrest, did an interview with the media. Listening to Hatch, the media, and his attorney, it sounds like permissions had been granted to do this interview (see here) but I have no information to confirm whether it was or was not. And why shouldn't an interview be allowed - after all even those in prison should be entitled to some First Amendment rights. Is this related to prison security? And if so, does it make a difference that he is no longer in prison? Or was this one of the conditions of this house arrest? And if he violated one of the conditions of his house arrest, why would he chance this now?
Shortly after the interview, the media reports that he was taken from his home back to prison. What is problematic here is that during the interview he not only proclaims his innocence but also claims that anti-gay bias drove this prosecution.
This latter claim needs to be investigated, and an investigation that occurs apart from DOJ individuals associated with the past administration. When someone is on the back end of their prison time (doing house arrest), the last thing they would want to do is jeopardize their ability to return to society. Someone needs to look at whether different treatment is being given to gay collars.
See Today MSNBC.com, ‘Survivor’ Richard Hatch is back behind bars -Mere hours after TODAY interview, reality show star taken into custody; see also Matt Caputo, Daily News, 'Survivor's' Richard Hatch arrested after Today Show with Matt Lauer; says anti-gay bias drove feds
Tuesday, August 18, 2009
Tom Kirkendall, Houston's ClearThinkers, The Stanford D&O Policy
Joanne Silberner, NPR, Medical Fraud Carries A Staggering Price Tag (w/ a hat tip to Ted Gest)
Shane Anthony & Joel Currier, St. Louis Post-Dispatch, St. Peters woman accused of cyber bullying (w/ a hat tip to Ted Gest)
Former CEO of Brocade Communications Systems, Gregory Reyes, had his convictions overturned by the the Ninth Circuit Court of Appeals. The court reversed Reyes' conviction "because of prosecutorial misconduct in making a false assertion of material fact to the jury in closing argument." Reyes had argued that he "signed off on the backdated options without intent to deceive." He also argued that "he relied in good faith on the accuracy of the Finance Department's documentation when he signed off on false financial statements." In reversing, the court states that "[t]he prosecutor asserted as fact a proposition that he knew was contradicted by evidence not presented to the jury." The court does not, however, conclude that "the prosecutor's conduct was so egregious as to require dismissal of the prosecution" and remands the case for a new trial.
The court does not give this same relief to the former vice-president of the Human Resources Department of Brocade Communications Systems Inc. The court affirmed her conviction, but vacated the sentence and remanded the case for resentencing without an enhancement for alleged obstruction of justice.
Materiality was a key issue that Reyes raised and he had requested a directed verdict upon this issue. There is a certain irony here in the court finding that the prosecutor's comments were not harmless error and that "the prosecution argued to the jury material facts that the prosecution knew were false, or at the least had strong reason to doubt."
Opinion - here
(esp) (w/ a hat tip to Tiffany Joslyn)
Monday, August 17, 2009
DOJ issued a press release concerning an indictment of an individual charged with "conspiring to hack into computer networks supporting major American retail and financial organizations, and [allegedly] stealing data relating to more than 130 million credit and debit cards." The indictment is for the crimes of conspiracy and wire fraud conspiracy. He is accused of using a "sophisticated hacking technique" "which seeks to exploit computer networks by finding a way around the network’s firewall to steal credit and debit card information." Several corporations are said to be the victims. The press release tells that this individual has pending charges from the US Attorney's Office in the Eastern District of NY and the District of Massachusetts. The present indictment is from the US Attorneys Office for the District of New Jersey. Three different U.S. Attorneys Office against one person - well maybe more since it is a conspiracy being charged. It is good to see action being taken in identity theft and computer related cases, but I am wondering why three US Attorneys Office are needed here. Even if there are victims in three different districts, won't one or two prosecutions be enough?
See also Tampa Tribune (AP), Prosecutors: Man tapped into 130 million credit accounts