White Collar Crime Prof Blog

Conrad Black Files Petition for Cert

Howard Bashman, over at his blog, How Appealing, (here) tells that Conrad Black has filed a Petition for Certiorari. One of the three issues presented in this Petition is:

"I. The Circuits Are Deeply Divided On The Application Of The "Honest Services" Statute To Private Conduct; . . ."

The Seventh Circuit Opinion can be found here.  It is not surprising to see the "honest services" statute being  a key subject in this Petition. A dissent in United States v. Rybicki from the Second Circuit pointed out the many circuits that split on issues related to this statute, noting that:

"Although a number of circuits have upheld section 1346 against a claim of facial vagueness, there is now wide disagreement among the circuits as to the elements of the 'honest services' offense. These opinions, taken together, refute rather than support the idea that section 1346 has any settled or ascertainable meaning or that the offense it describes has known contours."

(esp)(blogging from San Diego)(w/ a hat tip to Peter Goldberger)

Charges Against David Stockman Dismissed By Government

Back in 2007, David Stockman stated that the charges against him would "amount to a 'crimeless prosecution.'"  (see here) He can now say - I told you so - as the government has dismissed the charges against him and the others charged with him.  See Dan Slater, WSJ Blog, Prosecutors File a ‘Nolle’, Drop Charges Against David Stockman; David Glovin, Bloomberg, Stockman, Reagan Adviser, Has Fraud Case Dropped ; J. Robert Brown, Race to the Bottom, Stockman (et al) Indictment Dismissed ;Larry Neumeister, Fox News (AP), Charges dropped against ex-Reagan budget director

(esp)(blogging from San Diego)

What Others Are Saying About the Skilling Decision

Doug Berman, Sentencing Law & Policy here (note that Professor Frank Bowman has a comment on the possible sentence)

Dan Slater, WSJ Blog, Skilling Conviction Upheld, Resentencing Ordered

Tom KIrkendall, Houston Clearthinkers, The Fifth Circuit rules in the Skilling appeal

Juan A. Lozano,Washington Post (AP), U.S. Court Orders Skilling Resentenced

Jef Feeley and Thom Weidlich, Bloomberg.com,  Skilling’s Conviction Upheld, Resentencing Ordered

(esp) (blogging from San Diego)

Skilling - Commentary on the Decision

The Fifth Circuit issued a 106 page opinion in the Skilling case (see here or here) - here are some thoughts on it -

• Many courts have struggled with the scope and definition of the honest services fraud statute.  Since its passage, section 1346 has caused several opinions that have attempted to provide a definition to "honest services" - a term that is undefined in the statute.  The Fifth Circuit, in a prior case - Brown had placed some restraints on prosecutions using this statute.  The Skilling decision narrows these restraints and allows more prosecutorial power in bringing an honest services fraud case. The court states:

"Therefore, it is not a matter of Skilling setting the corporation’s policy himself. Instead, the question is whether anyone who supervised Skilling specifically directed his actions—such as how Fastow sanctioned the scheme in Brown. Skilling never alleged that he engaged in his conduct at the explicit direction of anyone, and therefore he cannot avail himself of the exception from Brown."

Simplistically - will this mean that if you can blame someone else for your conduct (such as a higher-up in the corporation), this will mean the Brown exception applies, but if you are the person at the top you may be out of luck in trying to make this claim?

• The court finds - at best- harmless error in the giving of a deliberate ignorance instruction.
• The court rejects each of the claims regarding improper jury instructions.
• The court also rejects the venue claims of Skilling saying -

"It would not have been imprudent for the court to have granted Skilling’s transfer motion. The issue before us, however, is whether the court committed reversible error. It did not."

• The court rejects Skilling's claims of prosecutorial misconduct, and also rejects the Brady violation claims of the defendant.  But the court does let Skilling know that he can raise some of the Brady issues in the trial court.  So this issue may have a future. The court explicitly states:

"We find the omission of this statement from the 302s troubling. Perhaps even more troubling is that the government never disclosed the page of interview notes containing this statement to the district court. However, because the district court never had the opportunity to consider this page of interview notes, we cannot address this Brady claim for the first time on appeal. The district court did not assess the materiality of this statement or determine whether its suppression violated Brady. Thus, there is nothing for us to review. Skilling must bring this claim to the district court before we can address it."

Basically, this means that this case is far from over.

• The sentencing aspect is the biggest win for Skilling. Although the court states that it was proper to use the SEC testimony, it does reject the "four-level enhancement for substantially jeopardizing the safety and soundness of a 'financial institution.'"  What is  the definition of a "financial institution" is the question here, and the court uses the rule of lenity and sides with the defense. I await Professor Doug Berman's calculations from the Sentencing Blog, as to exactly the amount of time that this could reduce his sentence.

(esp)(blogging from San Diego)

Skilling- Sentencing Reversal and Remand; Conviction Stands

Opinion here - Download 06-20885-CR0.pdf

Commentary to follow.

(esp) (from San Diego)

In the News & Around the Blogosphere

Tom Baxter, AJC.com, Griffin Bell, Carter’s attorney general, dies (for background on Bell see King & Spalding here)

Liz Moyer, Forbes, SEC To Probe Its Oversight Of Madoff

Liz Moyer, Forbes, Why The SEC Missed Madoff

Pamela A. MacLean, National LJ, Defrauded borrowers are crime victims -Ruling could affect alleged Madoff victims.

Sasha Issenberg, Boston.com, Obama Cabinet nominee pulls out -Contract investigation bogs down Richardson; First bump in process for president-elect; Sheryl Gay Stolberg, NYTimes, Richardson Won’t Pursue Cabinet Post

Joe Palazzolo, Legal Times, Law.com, What Will Obama Administration Do With the U.S. Attorneys?

John Pacenti, Daily Business Review, Law.com, Kuehne Case 'Hanging On by a Thread'

(esp)

The Changing of the Guard

Some are leaving DOJ, and certainly in the next few weeks we likely will see a good many more moving to the private side. (see here)  But there will also be a transition occurring from the private side to the public sphere. For one, Sujit M. Raman is moving from Hogan & Hartson to be part of Baltimore's USAttorney's Office. Raman has impressive credentials from his white collar defense work and his co-authored article on deferred prosecution agreements indicates that he is very aware of the recent developments in corporate prosecutions. (see Peter Spivack & Sujit Raman, Regulating the "New Regulators": Current Trends in Deferred Prosecution Agreements, 45 Amer. Crim. L.Rev. 159 (2008).  But I am most intrigued with the ending of this article where he states -

"Events from 2007 suggest that DPAs are very much on the rise, with prosecutors keen to flex their muscles as the New Regulators.  However, increased regulation, whether through internal DOJ guidelines or through congressional oversight, appears to be on the horizon and may well dampen their enthusiasm.  Only time will tell."

(esp)