Thursday, June 11, 2009

Nacchio Files Reply Brief and Case Is Set for Conference

Former Qwest CEO Joseph Nacchio's Petition for Cert can be found here. He argued that the Tenth Circuit decision (en banc) conflicted with other circuits. (The Tenth Circuit opinion was decided with a close vote). Nacchio has now filed his Reply Brief, responding to the government, and the matter has been set for conference at the end of the month.  Here are some interesting lines from the brief-

  • "The petition and amicus briefs explained that if the internal debates and predictions underlying this prosecution count as 'material inside information' then no company or executive can buy or sell stock, ever, without risking capricious criminal prosecution."
  • "The government never denies that this is the first time an executive has ever been prosecuted on the basis of undisclosed 'risks' about future quarters, or that Nacchio was convicted for failing to disclose information that other circuits would have punished him for disclosing."

There are a host of other important issues in this case.  

Reply Brief - Download Cert_Reply

See also Catherine Tsai, Houston Chronicle (AP), Nacchio: Case never should have gone to trial


June 11, 2009 in Prosecutions | Permalink | Comments (2) | TrackBack (0)

Indictment - Attorneys and Accountants

The indictment against seven individuals - "three former shareholders of the Jenkens & Gilchrist law firm (J&G), the former Chief Executive Officer and a former tax partner from the BDO Seidman accounting firm (BDO), and two former bankers from a foreign bank with headquarters in New York (Bank A)" is a top news item. The accusations are about alleged "tax fraud conspiracy and related crimes arising out of tax shelters promoted by J&G, BDO, and the bank." The DOJ Press Release is here.  The Indictment makes a point of giving some of the background of the individuals accused with crimes.  For example, that one individual previously worked for Arthur Andersen and that another had a Masters in Laws degree in Taxation.

In reading the Indictment, I kept thinking of Justice Ginsburg's words in the case of Ratzlaf v. United States - "[c]ourts have noted 'many occasions' on which persons, without violating any law, may structure transactions 'in order to avoid the impact of some regulation or tax.'" The question here will be, did the individuals cross the line, and did they commit criminal acts.

 The Indictment is here - Download Daugerdas,_Paul_et_al_Indictment


June 11, 2009 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

More on Boyle

The Supreme Court's decision in Boyle clarifies the law on association-in-fact enterprises in RICO.  (See here). For an in-depth analysis of this decision, see Hugh Kaplan's piece in BNA's Criminal Law Reporter & White Collar Crime Report -  Reproduced with permission from Criminal Law Reporter, 85 CrL 347 (June 10, 2009). Copyright 2009 by The Bureau of National Affairs, Inc. (800-372-1033)

-Download Boyle.BNA.

(esp)(with thanks to Mike Moore and BNA for the reprint permission)

June 11, 2009 in RICO | Permalink | Comments (2) | TrackBack (0)

In the News & Around the Blogosphere

Tuesday, June 9, 2009

In the News and Around the Blogosphere

Ashby Jones, WSJ Blog, Gone But Not Forgotten: Jenkins & Gilchrist Trio Indicted for Tax Fraud

Zachery A. Goldfarb, Washington Post, Mortgage Pioneer Accused Of Fraud -Former Countrywide CEO Sued by SEC Over Risky Lending (w/ a hat tip to Tiffany Joslyn of NACDL)

Jason Cato, Pittsburgh Tribune Review, Majority of defendants in corruption cases by Buchanan were Dems

David Voreacos, Bloomberg, Billionaire Tax Felon Says UBS Lied in Pledge to Report to IRS

Anthony Lake, Federal Criminal Defense Blog, The Rise and Fall of Marc Dreier: A Guide  (w/ a hat tip to Thomas Withers)

Globe Staff,, DiMasi faces arraignment on corruption charges

Heather Smith,, EADS Insider-Trading Probe May Be Easing, Lawyers Say

Harvey Silverglate, The Boston Phoenix, Sotomayor's Mixed Message on Free Speech

Former DOJ Deputy Assistant Attorney General  (Steven A. Engel) Joins Dechert LLP

Tony Mauro, National LJ,, Sotomayor's Balancing Act

Louise Story & Eric Dash, U.S. to Propose Wider Oversight of Compensation

Matthew Barakat, AP, Ex-US Rep. Jefferson faces federal bribery charges; Jordan Weissmann, BLT Blog, Jefferson Jury Selection Underway  

Carrie Levine, NLJ,, Tax havens lobby to keep their names out of the law (w/ a hat tip to Tiffany Joslyn of NACDL)

Marisa McQuilken,, Beware of Enforcement Agencies, Say Ex-Bush Officials (w/ a hat tip to Tiffany Joslyn of NACDL)


June 9, 2009 in News | Permalink | Comments (0) | TrackBack (0)

Check These Out -

Dan Hurson, United States: A New Approach For The SEC—Criminal Enforcement And Mandatory Disclosure Of Violations By Public Companies

The United States Securities and Exchange Commission ("SEC") is hard at work remaking and re-energizing both its image and law enforcement role. It is also trying to ensure its survival as the premier agency overseeing the financial markets. It has assembled a new team at the helm, including a former federal prosecutor as head of the Enforcement Division and a new SEC Chairman, Mary Schapiro, who has committed herself to revitalizing the agency and has the Washington regulatory background to succeed. . .

Lisa Crosby, Sidley Austin LLP - Powerpoints from Compliance Week Conference - Compliance, Export Controls and Intermediaries - Download Compliance_Week


June 9, 2009 in Conferences, Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, June 8, 2009

Cert Denied - Former Tyco CEO & CFO

L. Dennis Kozlowski and Mark Swartz, former CEO and CFO of Tyco, had no luck with getting their case heard in the Supreme Court, as their petition for certiorari was denied. (see here) For details on their petition, see here.

See also Andrew Ross Sorkin (ed.), Dealbook, NYTimes,  Supreme Court Will Not Hear Ex-Tyco Chief’s Appeal


June 8, 2009 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Supreme Court Decides Boyle - RICO Enterprise Case

In a 7-2 decision, the Supreme Court held that yes - RICO association-in-fact enterprises require an "ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages, but no - "an instruction framed in this precise language is not necessary." (Boyle v. United States). In the first part of the decision, the Court looks are three questions - "First, must an association-in-fact enterprise have a 'structure'? Second, must the structure be 'ascertainable'? Third, must the 'structure' go 'beyond that inherent in the pattern of racketeering activity' in which its members engage?"  The decision relies heavily on Turkette.

The Court held that an association-in-fact enterprise needs to have "three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose."  But despite the Court stating that these three features are needed, it does not require that the jury be told many specifics. The Court found that the instruction given "properly conveyed the point [  ] made in Turkette, that proof of a pattern of racketeering activity may be sufficient in a particular case to permit a jury to infer the existence of an association-in-fact enterprise.

This decision is very helpful for government prosecutions in that it allows RICO cases to be brought with the jury being told a minimal amount of what is required for a RICO enterprise.  The Court states:

Such a group need not have a hierarchical structure or a "chain of command"; decisions may be made on an ad hoc basis and by any number of methods—by majority vote, consensus, a show of strength, etc. Members of the group need not have fixed roles; different members may perform different roles at different times. The group need not have a name, regular meetings, dues, established rules and regulations, disciplinary procedures, or induction or initiation ceremonies. While the group must function as a continuing unit and remain in existence long enough to pursue a course of conduct, nothing in RICO exempts an enterprise whose associates engage in spurts of activity punctuated by periods of quiescence.

The question likely to be asked now is - what is not an association in fact enterprise for RICO. In this regard, the Court gives an example in footnote 4 (why are the best footnotes always numbered 4), where the Court states:

It is easy to envision situations in which proof that individuals engaged in a pattern of racketeering activity would not establish the existence of an enterprise. For example, suppose that several individuals, independently and without coordination, engaged in a pattern of crimes listed as RICO predicates—for example, bribery or extortion.Proof of these patterns would not be enough to show that the individuals were members of an enterprise.

A two-person dissent (Stevens and Breyer) offers a more limited and structured view of what should be included within the word "enterprise." They state that "Congress intended the term 'enterprise' as it is used in [RICO] to refer only to business-like entities that have an existence apart from the predicate acts committed by their employees or associates."

See also Scotus Blog here


June 8, 2009 in Judicial Opinions, RICO | Permalink | Comments (6) | TrackBack (0)