Friday, June 19, 2009
Robert Standard, chair of Stanford Financial Group, along with three executives from the company and one "former chief officer of the Antiguan bank regulatory agency" were indicted. A DOJ Press Release states:
According to the indictment, Stanford and his co-defendants engaged in a scheme to defraud investors who purchased approximately $7 billion in certificates of deposit administered by Stanford International Bank Ltd. (SIBL), an offshore bank controlled by Stanford and located on the island of Antigua. Stanford and his co-defendants allegedly misused and misappropriated most of those investor assets, including diverting more than $1.6 billion into undisclosed personal loans to Stanford himself, while misrepresenting to investors SIBL’s financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities.
The Indictment does not include allegations related to section 1346, the honest services clause (is the government shy to use this statute in light of the pending case before the Supreme Court). The indictment does, however, include fraud charges and conspiracy to commit money laundering against some of those accused. There will be many interesting questions on the conduct of the government that may arise from this prosecution. (see Attorney Dick DeGuerin'sStatement here as posted on the WSJ site - left hand side of page under Stanford Press Statement here)
Perraud Indictment here
Stanford Indictment here
Davis Information here
See also Evan Perez, WSJ, U.S. Files Criminal Charges in Stanford Case ;Matthew Goldstein, Stanford 'Is Not Madoff'; Mary Flood, Tom Fowler, & Jennifer Dlouhy, Stanford and 4 others indicted -Feds say holders of $7 billion in CDs bilked; Stanford attorney proclaims innocence;Clifford Krauss, NYTimes, Texas Financier and Antiguan Official Charged With Fraud
Thursday, June 18, 2009
Carrie Johnson, Washington Post, After Stevens Case, Justice Dept. Corruption Unit in Disarray
Chronicle of Higher Education, Federal Investigators Subpoena Admissions Records at 3 Illinois Universities (subscription only)
law.com, (AP) Investigated DOJ Prosecutor Removed From Corruption Case
Steve Levin, Fraud With Peril, Stephanie's Fresh Perspective
Yahoo Finance, Judge orders Scrushy to pay $2.9B to shareholders
Craig McCoy, Philly.com, Judge rebuffs Fumo's bid to delay sentencing
Shannon P. Duffy, Legal Intelligencer, law.com, Grand Jury Indicts Medical-Device Companies for Defying FDA Safeguards
(esp) (blogging from Denver)
The Yeager decision (see here) by the Supreme Court is an important decision for those handling both white collar and non-white collar cases. Some thoughts on the decision:
- Just because it is a hung jury on some counts, doesn't mean the government can rrepackage it and try again calling it something else. If it is the "same offense" it will not be allowed. Here the conduct forming the basis for the "insider trading" was the same as the "fraud" offense.
- The doctrine set forth in Ashe v. Swenson controls - even when dealing with a multi-count case.
- The government practice of filing multiple counts for the same conduct, hoping that something will stick, doesn't provide them with multiple trials when it is the same conduct and the jury has acquitted on that conduct. As stated by the Court -
Because a jury speaks only through its verdict, its failure to reach a verdict cannot - by negative implication - yield a piece of information that helps put together the trial puzzle. A mistried count is therefore nothing like the other forms of record material that Ashe suggested should be part of the preclusion inquiry.
- In deciding whether a retrial should be allowed, look at what the jury decided, not at what they failed to decide. Thus, if they decided that the defendant had no material inside information, then clearly he could not be reprosecuted for conduct that was premised on his having material inside information.
- This decision will assist defendants who suffered multiple trials at enormous costs to them and their families. The Supreme Court is sending a strong message that the government only has one bite of the apple for the same conduct.
- The Court leaves a door slightly open for the government to relitigate the fact issue in the lower courts, but one hopes that the government will use taxpayer money wisely and move forward with prosecutions where the jury has not spoken.
- This decision reaches far beyond the white collar world and offers defendants who have been subjected to multi-count indictments- set forth in multiple different ways - with increased finality should there be a hung jury on some of the counts in the Indictment. The breadth of many federal criminal statutes allow for prosecutors to bring the same conduct under different statutes. If there is an acquittal on the conduct - it really means not guilty.
(esp)(blogging from Boulder, Colorado)
Addendum to Bullet One - Yeager speaks to cases when there is a "not guilty" on some counts and a hung jury on others. Obviously, it would be a different situation if there were a hung jury on all counts.
The Supreme Court ruled today on the case of Yeager v. United States, a case from the Enron Broadband cases. For background see here. Basically, defendant, who was an employee at Enron Broadband Services ("EBS"), was acquitted on some of counts but the jury was hung on others. The government indicted Defendant on some of these hung counts and the issue was whether collateral estoppel can apply to hung counts. The decision has six on the majority and three dissenting, with Justice Stevens writing the majority opinion. Justices Roberts, Souter, Ginsberg, and Breyer joined in this opinion, and Justice Kennedy joined in parts I - III and V of the opinion, and he also filed a separate concurring opinion. Justices Scalia, Thomas, and Alito provide the dissents with two separate opinions that are each joined by the others.
The holding of the decision is summarized in the following statement:
The question presented in this case is whether an apparent inconsistency between a jury's verdict of acquittal on some counts and its failure to return a verdict on other counts affects the preclusive force of the acquittals under the Double Jeopardy Clause of the Fifth Amendment. We hold that it does not.
Commentary on this decision to follow. See also Scotus Blog here.
(esp)(blogging from Boulder, Colorado)
Wednesday, June 17, 2009
AG Holder testified this morning to the Senate Committee on the Judiciary (see here). In his prepared remarks (see here) he covered several items related to white collar crime. Two of the topics he focused on were: "Federal and State Partnerships Targeting Financial and Mortgage Fraud," and " Health Care Fraud." He stated in his prepared remarks the following:
"The Department, in partnership with the U.S. Department of Treasury, the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC) and the Attorney General of Illinois, will coordinate information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, and step up enforcement actions. As part of this multi-agency effort, the Department has outlined ways to crack down on mortgage fraud schemes. The FBI is investigating more than 2,500 mortgage fraud cases as of May 31, 2009. This number is up almost 400 percent from five years ago. The Bureau has more than doubled the number of agents investigating mortgage scams, created a National Mortgage Fraud Team at Headquarters, and is working hand-in-hand with other partnering agencies."
He also stated:
"We recognize that health care fraud has a debilitating impact on our most vulnerable citizens – the elderly and those in long-term care facilities. Our Elder Justice and Nursing Home Initiative coordinates the activities of our attorneys and agents throughout the country to better understand and address the abuse, neglect and financial exploitation of these victims, and to bring to bear the full weight of my Department to ensure that these types of crimes are prevented and/or prosecuted. We also look forward to working with Congress to identify and pursue legislative and regulatory reforms that are needed to prevent, deter, and prosecute health care fraud, such as additional preventative authorities, appropriate payment policies, and increased sanctions and penalties."
(esp) (blogging from the Atlanta airport)
Michael S. Rosenwald, Washington Post, Instead of Zen Dens, Starwood Builds an Espionage Case Against Hilton (w/ a hat tip to Dennis Beal)
Jordan Weissman, BLT Blog, Jefferson Day 2: Businessman Who Pleaded Guilty Testifies
Martha Greybow, Reuters, More financial fraud cases seen after US overhaul
Ron Scherer, Christian Science Monitor,Next target of Madoff case: his wife?
Sophia Lind, Legal Week, (law.com) DLA and White & Case Moscow Offices Raided in Fraud Investigation
Susan Beck, American Lawyer, (law.com), Mayer Brown Partner Gets New Judge in Refco Trial
Ted McClure, Administrative Law Prof Blog, What is changed in the Statutory Time-Periods Technical Amendments Act of 2009 (changes in RICO and Obstruction of Justice)
Lynn Marek, National LJ, DOJ may rein in use of 'honest services' statute
Richard Mauer, Anchorage Daily News, Kohring had a rude transition from freedom to prison (w/ a hat tip to Tiffany Joslyn)
Danny Hakim & Nicholas Confessore, NYTimes, Espada Faces State and Local Inquiries Into Finances (w/ a hat tip to Tiffany Joslyn)
Walecia Konrad, NYTimes, Medical Problems Could Include Identity Theft (w/ a hat tip to Tiffany Joslyn)
(esp)(blogging from the Atlanta airport)
A former General Re executive received a sentence of community service, a fine, and probation. A factor here is likely the cooperation provided to the government. See Matt Scroggins,Ex-Gen Re exec gets probation for finite fraud; Dave Collins, Houston Chronicle (AP), Former General Re executive given probation For background on other sentences coming from this investigation, see here.
Monday, June 15, 2009
Melanie Linder, Forbes, has an article titled, How to Foil a Corporate Fraudster. What is particularly unique about this piece is that it is coupled with pictures of seven different types of fraudsters. The different types (e.g., The Wannabe, The Survivor) really capture the sociology behind different types of individuals who commit white collar crimes. This article, with its pictures, presents an interesting perspective in deciding where along the spectrum a corporate fraudster belongs when it comes to sentencing. I highly recommend this piece in thinking about a sentencing hearing.
Jennifer Forsyth, WSJ Blog, Deal Talks for Indicted Judge With Ties to Scruggs?
Enrique Rangel, Amarillo.com, Mortgage fraud cases cover state, Texas AG confronts rising crime in Austin
Del Quintin Wilbur, Washington Post, Economic Downturn Accelerates Collapse of Ponzi Schemes
DOJ Press Release, Virginia Resident Pleads Guilty to Conspiring to Defraud the U.S. Navy
DOJ Press Release, Four Miami-Area Residents Sentenced in $10 Million Medicare Fraud Scheme
Paul N. Monnin & R. Jospeh Burby have an article titled, "Off the Chart: The U.S. Sentencing Guidelines Become Increasingly Irrelevant in the Wake of the Market Meltdown." The article can be found here -
2009 byThe Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com Reproduced with permission from White Collar Crime Report, 4 WCR 298, 04/24/2009. Copyright
Sunday, June 14, 2009
The US Senate, Committee on the Judiciary held a hearing this past week (June 11th) titled, "Exploring the National Criminal Justice Commission Act of 2009." (see here). Panel Two included Chief William Bratton - LA Police Dept., Pat Nolan - VP Prison Fellowship, Professor Charles Ogletree - Harvard, and Brian Walsh of the Heritage Foundation. The panel discussed issues related to massive incarceration, including the incarceration of the mentally ill. Chief William Bratton noted how the "American system of justice is overworked." Professor Charles Ogletree said that we need to retire the phrase "a war on crime" and replace it with a phrase "be smart on crime." Brian Walsh emphasized that crime reform should not be driven by partisan politics and he also stressed the importance of examining overcriminalization issues. Pat Nolan gave some concrete examples of how to reform incarceration practices to save money and achieve better results.
Listening to this hearing, sent the important message that we need to stop thinking just retribution, and thinking wisely about how to reduce recidivism. It was particularly good to see that some were mentioning the importance of distinguishing crimes and criminals. With the increased white collar sentences, it is hoped that if a President's Commission is established it will look closely at how best to treat white collar and corporate offenders.