Monday, August 17, 2009

Former Credit Suisse Broker Convicted

Following a three week trial, a former Credit Suisse broker was convicted of conspiracy and securities fraud. The DOJ press release from the Eastern District of New York tells how "the scheme was discovered when the market for the mortgage-backed CDOs purchased by the companies collapsed and various auctions for CDO-ARS began to fail." Many frauds are coming to light as a result of the financial downturn.

(esp)

August 17, 2009 in Fraud, Verdict | Permalink | Comments (0) | TrackBack (0)

Saturday, August 15, 2009

"The Tip of the Iceberg" - A Plea in the UBS Swiss Accounts

UBS entered into a deferred prosecution agreement with the government (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." Things initially moved slowly as an agreement needed to be reached regarding the release of information in light of privacy laws (see here). But with these two steps apparently settled according to press reports, it is not surprising to see an individual reaching a plea agreement with the government for failure to disclose UBS Swiss bank accounts to the IRS. A DOJ Press Release reports that this individual "admitted that he failed to pay at least $200,000 in federal income taxes and that he now owes the government interest and penalties."

One has to wonder if the government action of proceeding against individuals with Swiss accounts that were not properly reported to the IRS, will assist the US economy. Eileen C. Mayer, Chief of IRS-Criminal Investigation, called this prosecution "the tip of the iceberg."

(esp)

August 15, 2009 in Deferred Prosecution Agreements, Settlement, Tax | Permalink | Comments (2) | TrackBack (0)

In the News & Around the Blogosphere

Friday, August 14, 2009

In the News & Around the Blogosphere

Thursday, August 13, 2009

Is the US/Swiss Agreement the Fall of Tax Havens?

The press is reporting that the US has reached an agreement with the Swiss on the release of information that could implicate individuals in the United States. See Wayne Tomkins, Daily Business Review, law.com,  Swiss, U.S. Reach Agreement in UBS Tax Evasion Dispute; CNN,UBS settles secret accounts case with U.S.;Lynnley Browning,U.S. Reports Agreement With UBS in Tax Case.

Previously UBS entered into a deferred prosecution agreement. (see here)  But an issue remained as to whether there was a conflict in Swiss law that could preclude the release of some information to the U.S. After all, what do you do when releasing information to the U.S. in one country might result in a criminal violation of the laws of that country.

Court decisions have previously looked at such conflicts in laws.  For example, in 1998 the U.S. Supreme Court considered a Fifth Amendment issue in the case of U.S. v. Balsys, a case where the witness argued that answering questions pursuant to an OSI (Office of Special Investigations of the Criminal Division of the US Dept. of Justice) subpoena might subject him to criminal prosecution by other countries.  The Court stated that "[s]ince the likely gain to the witness fearing foreign prosecution is thus, uncertain, the countervailing uncertainty about the loss of testimony to the United States cannot be dismissed as comparatively unimportant."  The Court in Balsys held "that although resident aliens are entitled to the same Fifth Amendment protections as citizen 'persons' the risk of their deportation is not sufficient to sustain a self-incrimination privilege intended to apply only to the United States government." Oyez here  

Some pre-Balsys courts used a balancing test to determine whether an Internal Revenue summons, that would subject individuals to criminal liability in another country, should be enforced. See U.S. v. First National Bank of Chicago, 699 F.2d 341 (7th Cir. 1983); U.S. v. Chase Manhattan Bank, 584 F. Supp. 1080 (S.D. N.Y. 1984).

Obviously reaching an agreement will resolve the immediate issue. But it remains to be seen whether this issue will be revived in some form in individual cases against U.S. citizens who may be accused of  using Swiss accounts to avoid U.S. taxation, although I cannot see a way that it could be.  It will also be interesting to see if other countries that may have served as tax havens for U.S. citizens will start to crumble.  In the meantime, there are probably many unhappy individuals in the U.S. who placed money in Swiss accounts years back thinking that the Swiss secrecy that they were noted for, would never be breached.

(esp)

August 13, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 12, 2009

In the News & Around the Blogosphere

Mary Flood, Houston Chronicle,Another Enron barge trial set for February

SEC Press Release, SEC Charges Hank Greenberg and Howard Smith for Roles in Alleged AIG Accounting Violations -

"Without admitting or denying the SEC's allegations, Greenberg has consented to a judgment enjoining him from violating the antifraud provisions of the Exchange Act, and from controlling any person who violates the reporting, books and records and internal control provisions of the federal securities laws, and directing him to pay a penalty of $7.5 million and disgorgement of $7.5 million."

Cynthia Hujar Orr Elected President of the National Association of Criminal Defense Lawyers (NACDL) here

(esp)

August 12, 2009 in News | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 11, 2009

Welcome Home - Jamie Olis

The White Collar Crime Prof Blog sends a welcome home to Jamie Olis and his family.  See also Tom Kirkendall at Houston Clearthinkers here; Laurel Brubaker Calkins, Bloomberg, Ex-Dynegy’s Jamie Olis to Be Released After Five Years in Jail here.

(esp)

August 11, 2009 in News | Permalink | Comments (0) | TrackBack (0)

Madoff's CFO Pleads

Bernie Madoff's Chief Financial Officer entered a plea today to 10 counts that included fraud, money laundering, and other charges.  See Jack Healy, NYTimes, It Was All Fake,’ Madoff Aide Tells Court; David Vorceacos & Thom Weidlich, Bloomberg,  Ex-Madoff Finance Chief Frank DiPascali Pleads Guilty    He also reached a partial settlement with the SEC: 

Without admitting or denying the allegations of the SEC's complaint, DiPascali has consented to a proposed partial judgment, which if entered by the court would impose a permanent injunction against DiPascali and leave the issues of disgorgement and a financial penalty to be decided at a later time.

The SEC Press Release further states that:

According to the SEC's complaint, DiPascali helped Madoff cover his tracks in numerous nefarious ways. For instance, when Madoff grew concerned that showing positive returns every month would be suspicious, he occasionally instructed DiPascali to enter phony trades designed to lose money in order to make their investment strategy and returns more credible. In order to avoid scrutiny by sophisticated financial institutions, they made a practice of closing down accounts of investors who worked at such institutions. Madoff and DiPascali even went so far as to develop a phantom computer trading platform that would appear to reflect real trading. In the event of a surprise visit from outsiders requesting to observe real-time trading activity, one BMIS employee was to enter trades on a computer screen and another employee was to go into an office nearby and play the role of a counterparty trader in Europe.

It is hard to imagine that this could have gone on for as long as it did without someone realizing that it was just a man behind the Wizard's curtain.

(esp)

August 11, 2009 | Permalink | Comments (0) | TrackBack (0)

DOJ Looks for Top Fraud Attorney

Mike Scarcella, over at The National Law Journal reports that DOJ is looking for a "superstar" to lead the Fraud Division.  (see here)  One can imagine that many will be trying for this important position - after all being the top fraud attorney in the aftermath of an economic crisis is an incredible opportunity to serve the government. In looking for this "superstar"  it is hoped that the following qualities will be considered -

  • Someone with respect for the judicial process and not someone who labels everyone a criminal prior to conviction
  • Someone with believes in a fair fight - which means giving discovery to the defense in a timely manner - but who also recognizes the importance of protecting witnesses
  • Someone who understands both the role of a prosecutor and defense attorney and the important role that the judiciary serves
  • Someone who believes that prosecutors should be ministers of justice
  • Someone who is willing to work long hard hours to bring fraudsters to justice
  • Someone who is technologically adept to use the website and technology to empower DOJ and deter future criminality
  • Someone who is willing to educate corporations and the less fortunate on applicable laws so that they can comply as opposed to violating the law
  • Someone who will listen to the regulators and prosecute cases that need to be prosecuted

(esp)

August 11, 2009 in Prosecutors | Permalink | Comments (2) | TrackBack (0)

In the News & Around the Blogosphere

Monday, August 10, 2009

Upcoming Conferences

NACDL, Testimonial Traps: Defense Strategies for Invoking the 5th Amendment in Civil Cases, Investigations & Other Proceedings (Participating Faculty - Ross Garber (Shipman & Goodwin), Benjamin D. Brown(Cohen Milstein), Pamela J. Marple (McDermott Will Emery LLP), Steven Salky (Zuckerman Spaeder LLP) Wed, August 19th, Washington, DC

Strafford, Foreign Corrupt Practices Act Investigations and Privacy Protection, August 11th here

American Conference Institute, Foreign Corrupt Practices Act - 22nd National Conference, Nov. 17-18 here (speakers and program here) (includes Mark Mendelsohn, Cheryl Scarboro, William B. Jacobson and others)

(esp)

August 10, 2009 in Conferences | Permalink | Comments (0) | TrackBack (0)

Sunday, August 9, 2009

In the News & Around the Blogosphere

Wednesday, August 5, 2009

Jefferson Verdict

Nola.com, William Jefferson verdict: Guilty on 11 of 16 counts

Commentary later...

(esp) (blogging from Palm Beach, Florida) 

August 5, 2009 in Corruption, Fraud, News | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 4, 2009

In the News & Around the Blogosphere

Alexandra Clough, Palm Beach Post, Ex-WorldCom exec out of prison, back in area (Scott Sullivan)

Reuters, Massachusetts attorney general targets economic crime

(esp) (blogging from Palm Beach)

August 4, 2009 in News, WorldCom | Permalink | Comments (2) | TrackBack (0)

Saturday, August 1, 2009

Overcriminalization: An Area That Needs Attention

Several groups were on the hill this past week for a hearing on “Over-criminalization of Conduct and Over-Federalization of Criminal Law” before the U.S. House of Representatives Crime, Terrorism, and Homeland Security Subcommittee.  The coalition includes an odd mix of groups from the ABA, ACLU and NACDL to the Heritage Foundation, Washington Legal Foundation and Federalist Society. The very fact that such a wide array of groups are agreeing that change is needed, is important.  To give a flavor of the arguments, here is the  NACDL statement and testimony.  An overhaul of the federal criminal justice system is needed, and one of the deficiencies of the existing system is that there is overcriminalization and overfederalization. Lets hope the strong showing by so many different constituencies moves this issue forward.

(esp)

August 1, 2009 in Congress | Permalink | Comments (3) | TrackBack (0)