Sunday, November 29, 2009
ABA Criminal Tax Fraud - December 3-4, San Francisco here
Crime & Punishment - Charleston Law Review & The Riley Institute - February 18-19 - Download RIL09 CSOL Save the Date
24th ABA Annual National Institute on White Collar Crime - February 24-26 (Miami Beach) here
American Conference Institute, Securities Regulation & Enforcement - March 2010, New York, NY
American Conference Insitute, 23rd Conference on the Foreign Corrupt Practices Act, March 23-24 New York here
19th Annual Federal Sentencing Guidelines Conference - Federal Bar Association & NACDL - May 12-14, Renaissance Vinoy Hotel, St Petersburg, Florida - Details to Follow
Friday, November 27, 2009
How much time is appropriate for a white collar criminal? What if the crime results in death to individuals? Is it no longer a white collar crime? In China it can mean a death sentence. See Sharon LaFraniere, NYTimes, 2 Executed in China for Selling Tainted Milk
Lynnley Browning, NYTimes, Ex-UBS Banker Seeks Billions for Blowing Whistle
Robert K. Gordon, The Birmingham News, U.S. attorney in Alabama's northern district: Lighter sentences send wrong message (w/ a hat tip to Ted Gest)
Mary Williams Walsh & Michael J. de la Merced, NYTimes, Greenberg and A.I.G. Settle Legal Disputes
Thursday, November 26, 2009
Wishing everyone a Happy Thanksgiving. A special Happy Thanksgiving to Jamie Olis, who will now be able to spend Thanksgiving at home with his family. And a special Thanksgiving to Ben Kuehne and his incredible legal team (see here). And yes, a special Thanksgiving to AG Eric Holder and the new DOJ, for moving DOJ into a department that focuses on justice.
Wednesday, November 25, 2009
The government dismissed Ben Kuehne's case today. For background on this case see here, here, and here. Congratulations to Attorney Ben Kuehne and to his counsel Jane Moscowitz and John Nields. The Government's motion states in part:
"This motion is based upon the totality of the circumstances surrounding this matter, including the changed circumstances occasioned by the affirmance of this Court's dismissal of Count One of the Third Superseding Indictment. The Government believes that dismissal is in the interests of justice."
Motion - Download Kuehne dismissal order
Monday, November 23, 2009
The letter below was written in April 2009, but it surfaced for me this past week - - It's a letter from Hon. Emmet G. Sullivan to Hon. Richard C. Tillman, chair of the Judicial Conference Advisory Committee on the Rules of Criminal Procedure. It's a powerful letter that states:
"I write to urge the Advisory Committee on the Rules of Criminal Procedure (the "Rules Committee") to once again propose an amendment to Federal Rule of Criminal Procedure 16 requiring the disclosure of all exculpatory information to the defense."
Although the Stevens case was dismissed by AG Holder, and one should applaud him for this move, discovery violations need to have a legal basis for rectifying the wrong (after all, we may not have AG Holder in perpetuity). As stated by Hon. Sullivan:
"A federal rule of criminal procedure requiring all exculpatory evidence to be produced to the defense would eliminate the need to rely on a 'prudent prosecutor' deciding to 'err on the side of transparency, ..., and would go a long way towards furthering 'the search for the truth in criminal trials' and ensuring that 'justice shall be done.'" (citations omitted)
Sunday, November 22, 2009
Dan Levine, The Recorder, law.com, Guilty Verdict for McKesson Chairman, but GC Acquitted
Ben Hallman, AmLaw Litigation, law.com,After Three-Year Deferred Prosecution, DOJ Dismisses Charges Against First Foreign FCPA Target ; FCPA Blog, Giving Thanks Once Again; DOJ Press Release, Statoil ASA Satisfies Obligations Under Deferred Prosecution Agreement and Foreign Bribery Charges Are Dismissed
Nicholas Confessore, NYTimes, Bruno Won’t Take Stand at His Corruption Trial
BLT Blog, McInerney Called 'Coup' for DOJ for Fraud Prosecution; McInerney's bio - here
Cheryl Miller, The Recorder, law.com, Former Law Firm Manager Gets 41 Months for Embezzling $1.3 Million
Andrew Ramonas, Main Justice, Florida Senator Weighs in On Nominees for U.S. Attorney
Rothstein Consents to Disbarment, see here
Jack Townsend, Federal Tax Crimes, Is the Criminal Statute of Limitations Suspended under the Wartime Suspension Act?
Mike Scarcella, BLT Blog,DOJ: $2.4 Billion Recovered from False Claims Act Cases; DOJ Press Release, Justice Department Recovers $2.4 Billion in False Claims Cases in Fiscal Year 2009; More Than $24 Billion Since 1986
Curt Anderson, AP, IRS settles with 14,700 over foreign accounts
DOJ Press Release, Connecticut Investor Frederic Bourke Sentenced to Prison for Scheme to Bribe Government Officials in Azerbaijan
Saturday, November 21, 2009
Previously granted oral argument (see here), lawyers for Wesley Snipes appeared in the 11th Circuit this past week to argue the case. A report of the argument sounded like it was a "hot" bench with questions regarding the venue and some about the "good faith" jury instructions. See also Greg Bluestein (AP), Wesley Snipes appeals 3 tax convictions in Georgia.
Thursday, November 19, 2009
The U.S. Attorney's Office for the Southern District of Georgia has their press release telling the world of a 40 count indictment of a Columbus, Georgia attorney. But no where on the website is the fact that a jury acquitted this same individual on all counts. As ministers of justice it should not be enough for prosecutors to merely say on the courthouse steps that they accept the jury verdict. Prosecution press releases should not be limited to indictments and guilty verdicts, but should also include the not guilty verdicts.
Shelnutt had been charged with a list of offenses that reads like someone opening the federal statutes and trying to find anything that could be used to destroy an attorney especially one who represents criminal defendants. They charged him with money laundering, aiding and abetting a cocaine conspiracy, attempted bribery of a federal official, witness tampering, failure to file cash reporting forms, and making false statements to an FBI agent.
The bottom line is that the jury did not accept the government's case. See Chuck Williams, Ledger - Enquirer, Shelnutt acquitted -Juror says government's case 'had a lot of holes'
Sunday, November 15, 2009
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) emphasizes transparency, but it did take me some time to find the website that told me what was going on in this office. It is easy if you put SIGTARP into Google, but not so easy - at least for me - if you try and find it within the Treasury Department website. For those who are looking, you'll find it here. The office issued its Quarterly Report here. It states in part:
SIGTARP’s Investigations Division has developed into a sophisticated whitecollar investigative agency. Through September 30, 2009, SIGTARP has opened 61 and has 54 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected TARP fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, money laundering, and tax-related investigations. While the vast majority of SIGTARP’s investigative activity remains confidential, developments in several of SIGTARP’s investigations have become public over the past quarter . . .
I am not impressed with the statement that resulted in Huffington's Post headline that TARP Fraud Probes Have Tripled Since April, Says Watchdog. The numbers should be increasing enormously - after all this is a relatively new office. But it is good to see that this office is getting off the ground, being staffed, and now moving to stop fraud occurring in the use of TARP funds.
Friday, November 13, 2009
Guest Blogger: Tiffany M. Joslyn, National Association of Criminal Defense Lawyers (NACDL)
U.S. District Judge T.S. Ellis III has sentenced ex-congressman William Jefferson to 13 years in prison for his conviction on 11 counts of public corruption. See breaking news coverage below:
Thursday, November 12, 2009
Lost in this week’s maelstrom of white collar activity – the acquittal of the Bear Stearns bankers, the accusations that Blackwater bribed Iraqi officials, and the sentencing of former Congressman Jefferson this Friday – was the sentencing of handbag mogul turned would-be Caspian petroleum mogul Frederic Bourke. Convicted earlier this summer of conspiring to violate the Foreign Corrupt Practices Act ("FCPA") and making false statements to the FBI in connection with his investment in a consortium attempting to purchase the Azerbaijan state-owned oil company ("SOCAR"), Bourke’s trial was straight out of Hollywood and included testimony from a former U.S. Senator, allegations of suitcases full of cash changing hands, and an alleged co-conspirator nicknamed the "Pirate of Prague" who is currently fighting extradition from his estate in the Bahamas while freely admitting he bribed Azeri officials.
Judge Shira Scheindlin, of the Southern District of New York, sentenced Bourke to a year and one day (the "one day" being important in that it will allow Bourke to receive good behavior credit if he is ever incarcerated) and fined him $1 million. Any confinement in a federal prison is something to be avoided at all costs, but the 366 days doled out by the court is far less than the 10-year sentence prosecutors were seeking and could signal the court’s doubts about Bourke’s ultimate culpability. While any appeal from a jury verdict presents enormous challenges, I like Bourke’s odds at this point.
Bourke’s appeal will squarely frame important evidentiary issues concerning how the government must prove knowledge and, thus, intent, in FCPA and white-collar conspiracy contexts. The Government’s allegations against Bourke notably did not claim that Bourke himself paid bribes. Rather, the Government charged that, as an investor in a consortium attempting to gain control of SOCAR, Bourke had knowledge of the conspiracy’s "unlawful purpose" (i.e., to bribe Azeri officials). However, not only did the Government not charge Bourke with actually making the bribes, it set out to prove Bourke’s "knowledge" for the purpose of the conspiracy not by showing that he had "actual" knowledge of the unlawful purpose, but that he "consciously avoided" gaining actual knowledge – essentially that Bourke stuck his head in the sand to avoid "knowing" that he was engaging in a criminal enterprise.
The Government did not create the "conscious avoidance" standard out of whole cloth. Indeed, it is defined within the FCPA’s broader knowledge standard, which states that "when knowledge of the existence of a particular circumstance is required for an offense, such knowledge is established if a person is aware of a high probability of the existence of such circumstance, unless he actually believes the circumstance does not exist." 15 U.S.C. § 78dd-1(f)(2)(B) (2004) (emphasis added). When the government indicated its intention to travel on this standard, Judge Scheindlin appropriately ruled that to prevail on such a theory the Government would need to prove that Bourke decided not to learn a key fact, not that he was merely negligent in failing to learn it. To a lay-person (and perhaps even to many lawyers) that may seem like a tough distinction to make, but it is also the bright line that separates civil liability from criminal activity.
This distinction quickly became an issue during and after Bourke’s trial. During trial the court admitted testimony and evidence from the Government about Azeri officials’ general reputation for corruption, and conversations between Bourke and other investors regarding concerns that the head of the investor consortium was paying bribes. In objecting to this evidence Bourke’s lawyers specifically noted that the evidence could confuse the jury into believing that the "conscious avoidance" standard is the same as the "should have known" negligence standard. Such fears appear well founded. Interviewed after the verdict, the jury foreman sounded as if he was reading from a tort-law hornbook when he dismissed the need for the court to have even given the "conscious avoidance" instruction, stating: "We thought he knew and he definitely should have known. He’s an investor. It’s his job to know." See Entrepreneur Is Found Guilty of Conspiracy in Azerbaijan, Mark Hamblett, New York Law Journal, July 13, 2009 (emphasis added). That is a clear enunciation of the negligence standard, but it is notably not the "conscious avoidance" standard. I expect Bourke’s attorneys to include a judicially-appropriate re-phrasing of "we told you so" in their appeal briefs.
Next, at sentencing, Judge Scheindlin provided Bourke’s counsel with even more ammunition for appeal. In sentencing Bourke, Judge Scheindlin observed that: "After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both." That sounds a lot like reasonable doubt to my ears. Judge Sheindlin obviously did not feel she had enough to overturn the jury verdict on a Motion for Judgment of Acquittal ("MJOA"), but when a sentencing judge says she is not sure whether a defendant is a "victim or a crook" that must raise substantial questions about the quality of the Government’s evidence.
This case may ultimately be proof that the road to Hell is paved with good intentions. Few would disagree with Judge Scheindlin’s admonition that "[b]ribes must and will result in jail sentences." Nonetheless, the Bourke case will now force the influential Second Circuit Court of Appeals to pass on the appropriate knowledge standard in FCPA and white-collar conspiracy cases, and what evidence can be used to prove that "knowledge." However, given the number of close facts, the apparent skepticism of the trial judge, and the confusion evidenced (perhaps unwittingly) by the jury itself, many observers may rightfully be left wondering whether this is really the case where the Government wants test these theories. We all know that jury verdicts are notoriously difficult to overturn on appeal, but I like Bourke’s chances here.
* For a terrific in-depth analysis of the "conscious avoidance" standard, as well as other important FCPA issues that arose during the Bourke trial, see the article written by my colleague, James Tillen, for Bloomberg Law Reports.
Wednesday, November 11, 2009
Amanda Bronstad, NLJ, law.com, Former Broadcom executive seeks a rehearing before 9th Circuit
Patricia Hurtado, Bob Van Voris and Linda Sandler, Bloomberg, Bear Managers’ Acquittal May Hamper U.S. Fraud Prosecutions
John Mazzetti & James Risen, NYTimes, Blackwater Said to Pursue Bribes to Iraq After 17 Died
DOJ Press Release, Alleged International Hacking Ring Caught in $9 Million Fraud
Ashby Jones, WSJ, Grand Theft Auto Dealer? A New Chapter in the Rothstein Saga
Tuesday, November 10, 2009
Zachery Kouwe, NYTimes, Bear Stearns Managers Acquitted of Fraud Charges reports on the acquittal of two former Bear Stearns Managers who faced government indictment. Unlike many, these two individuals risked going to trial and were acquitted by a jury that heard the evidence. As initially noted on this blog here, "[t]he case is the classic case of the funds going down and everyone then looking for someone to blame." This blog also stated:
Clearly honesty in the market is important. But one also has to wonder if the use of criminal charges is appropriate in cases that would not have occurred but for the poor economy. It is also a concern that the government is using overly broad statutes to criminalize an alleged lack of honesty.
Interestingly, although one rarely finds press releases from a U.S.Attorney following a not guilty verdict, one was issued by the U.S. Attorney's Office from the Eastern District of New York. The press release is definitely a step in the right direction for the DOJ, but they should not be "disappointed by the outcome in this case" as "ministers of justice" should be elated with all jury verdicts as they demonstrate that justice has been served.
Sunday, November 8, 2009
Friday, November 6, 2009
Amir Efrati, WSJ, Looser Rules on Sentencing Stir Concerns About Equity - speaks about recent sentencing of white collar offenders. My response -
Supreme Court decisions clearly allow for more judicial discretion in white collar sentencing - but is this a negative? Hardly not. It provides judges with the opportunity to examine the defendant on an individual basis as opposed to being strictly focused on a mathematical computation of loss. In some cases the sentence may be higher than the guidelines, and in other cases it may be lower. It is easy to say that this creates disparity - but the real question is whether the disparity was there and this now corrects that disparity.
It is important to recognize that some of these white collar sentences are above the guidelines. Further many double-digit white collar sentences are now being handed down (see, e,g, here, here and what about Ebbers, Skilling, MacFarland, and others), and there are even triple digits now seen on occasion. One would be hard-pressed to find the number of double-digit sentences we are presently seeing in white collar cases, in the pre-guideline years. Further, it is clear that the "culture" of the guidelines is respected by most judges and that the government has an appellate process when they believe that the sentence is unreasonable.
But what is also clear is that the guidelines are not the end of the sentencing process. Supreme Court decisions now allow neutral judges necessary discretion to sentence the specific individual before her or him. One important improvement coming from these Supreme Court decisions is that it levels the playing field between the prosecution and defense. The prosecution has had the sole ability to reduce a sentence by filing a 5K1.1 motion - a disparity that often went unnoticed. The new Supreme Court decisions allow the defense to also now be heard.
So what's my opinion? Looser rules should not be "stir[ring] concerns about equity." Rather, looser rules are now allowing us to achieve greater equity by giving judges the ability to account for circumstances that are beyond an efficiency based arithmetic exercise.
(esp)(blogging from Portland, Oregon)
Martha Neil, ABA Jrl Law News Now, 2 Lawyers Charged in Claimed $1.1M Client Embezzlement Scheme
Vesselin Mitev, Law.com, New York Law Journal, Disbarred Attorney Pleads Guilty to Guardian Account Thefts
Linda Sandler & Carlyn Kolker, Bloomberg, Ropes & Gray Lawyer Cutillo ‘Fueled’ $20 Million Insider Scheme ; DOJ Press Release, Manhattan U.S. Attorney Charges 14 Defendants With More than $20 Million in Insider Trading- Charged Defendants Include Hedge Fund Managers, Trading Firm Executives, Lawyers, and Corporate Insiders; Five Already Have Pleaded Guilty To Insider Trading Charges
Jordana Mishory, Daily Business Review, law.com, Fla. Firm's Attorneys Rally Their Defenses as Partner Faces Fraud Allegations - FBI and IRS agents raided the law firm Wednesday, seizing 44 boxes of evidence, hard drives and trash
(esp)(blogging from Portland, Oregon)
Thursday, November 5, 2009
Sam Dolnick, NYTimes, Kerik Pleads Guilty in Corruption Case
David Glovin & Bob Van Voris, Bloomberg, Ex-Galleon Worker, 13 Others Charged in Insider Scam
(esp)(blogging from Portland, Oregon)