February 20, 2009
Kuehne Case - Count Seven Dismissed
Will the government finally get the message that this prosecution just wasn't meant to be? The court dismissed the case against a co-defendant (see here), dismissed Court One against Kuehne (see here), and now Court Seven is dismissed. The most recent dismissal is yet more evidence of the government's stretching to make this prosecution.
The court ruled that "the government has cited no court decision in either the United States or Columbia that recognizes a property right in potentially forfeitable property without first obtaining a judgment." The court dismissed count seven because "the Columbian government's 'right' to seek forfeiture" does not "constitute[ ] a cognizable 'property' right under the mail and wire fraud statutes." Although the opinion only mentions the Cleveland case, where the Supreme Court found that "licenses" did not constitute property, it seems obvious that without a property interest, one does not have property.
See Order - Download order_dismissing_count_7_2.20.09).pdf
See also David Oscar Markus, Southern District of Florida Blog, Another one bites the dust
UBS - Deferred Prosecution and Ramifications
Deferred prosecution agreements can have ramifications to many. A DOJ press release states that "UBS AG, Switzerland’s largest bank, has entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service (IRS), the Justice Department..." The press release further states:
"As part of the deferred prosecution agreement and in an unprecedented move, UBS, based on an order by the Swiss Financial Markets Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business. Under the deferred prosecution agreement, UBS has also agreed to expeditiously exit the business of providing banking services to United States clients with undeclared accounts. As part of the deferred prosecution agreement, UBS has further agreed to pay $780 million in fines, penalties, interest and restitution..."
Deferred prosecution agreements can provide information to the government to proceed against individuals. It has been controversial when the agreement waived attorney client privilege, allowing the government in some cases to secure evidence against individual employees in a corporation. But this deferred prosecution could have ramifications to customers. The issue being whether their tax liabilities were properly paid.
A more recent DOJ Press Release tells more. See DOJ Press Release, United States Asks Court to Enforce Summons for UBS Swiss Bank Account Records. Here the release states that " [t]he government filed a lawsuit ... in Miami against Swiss bank UBS AG." "The lawsuit asks the court to order the international bank to disclose to the Internal Revenue Service (IRS) the identities of the bank’s U.S. customers with secret Swiss accounts. According to the lawsuit, as many as 52,000 U.S. customers hid their UBS accounts from the government in violation of the tax laws."
It sounds like some white collar and tax attorneys will be busy in the next few months.
(esp)(blogging from Louisville, Kentucky)
Addendum - Lynnley Browning, NYTimes, UBS Pressed for 52,000 Names in 2nd Inquiry
February 18, 2009
In the News & Around the Blogosphere
David Scheer & Alison Fitzgerald, Bloomberg, Stanford Attorney’s Withdrawal ‘Screams Fraud,” Spurred SEC
Clifford Krauss, Phillip L. Zweis & Julie Crewell, NYTimes, U.S. Accuses Texas Financial Firm of $8 Billion Fraud
Mike Scarcella, Legal Times, law.com, DOJ Prosecutors Replaced in Post-Trial Stevens Litigation
DOJ Press Release, Justice Department Receives $4 Billion in Grant Funding as a Result of the American Recovery and Reinvestment Act of 2009 -Funds for New Police Officers, Combating Violence Against Women and Fighting Internet Crimes Against Children Included in Act
Dan Slater, WSJ Blog, A Law Blog Q&A With Former Attorney General Michael Mukasey ; Joe Palazzolo, Legal Times, law.com, Mukasey to Join Debevoise & Plimpton
Jeff Coen, Chicago Tribune, Despite tearful plea, ex-Ald. Troutman gets 4 years
Steve Levin, Fraud With Peril, An Appeal to Remember, (discussing mail fraud appeal)
Ramon Bracamontes & Zahira Torres, elpasotimes.com - discussing possible plea in alleged public corruption case - here
February 16, 2009
White Collar Crime Issues Across the Pond
Fionnan Sheahan, Independent.ie, Government refuses to ask fraud squad to investigate (concerning investigations in banking)
Michael O'Regan, Irishtimes.com, Irish white-collar criminals should be 'in handcuffs'
Court Dismisses Co-Defendant in Kuehne Case
Hon. Marcia G. Cooke, of the Southern District of Florida, Miami Division, issued an Order dismissing a co-defendant in the case against Ben Kuehne. (For background on the Ben Kuehne case see here) This co-defendant had been charged with a "single count of conspiracy to commit money laundering." In dismissing the case, the court stated:
"Considering the Government’s substantial pre-indictment and post-indictment delay, the Government’s inability to present an adequate reason for the delay, the Government’s concession that Velez did not contribute in any way to the delay between October 2005 and October 2007, Velez’s timely assertion of her speedy trial rights, the actual prejudice she has shown, and the prejudice that should be presumed considering the length of the delay and the outcome of the other factors, these two counterbalancing factors are insufficient to support a conclusion that Velez’s speedy trial rights have not been violated."
The Order speaks directly to the reasons provided by the government for their delay in this matter. Each of these arguments is easily dismissed by the court. For example, the court states, "The Government’s argument, that it was necessary to sacrifice Velez’s Sixth Amendment rights so that it could engage in discussions with her co- defendants to ensure that all relevant facts were considered before returning an indictment, rings hollow considering that, at that point, Velez had already been indicted."
February 15, 2009
In the News & Around the Blogosphere
James Glanz, C.J. Chivers, & William Rashbaum, NYTimes, Inquiry on Graft in Iraq Focuses on U.S. Officers
Lynnley Browning, NYTimes, U.S. Seeks New Powers to Fight Tax Evasion
The Crime Report, Nearly $4 Billion For Criminal Justice In Stimulus Package (w/ a hat tip to Ted Gest)
DOJ Press Release, Accounting Firm Attorney Pleads Guilty to Tax Fruad Related to Tax Shelters Claiming Over One Billion Dollars of Fraudulent Tax Losses (the plea calls for a plea to one count of conspiracy under 371 and count two of tax under 7201 - it calls for cooperation)
Tricia Bishop, Baltimore Sun, White-collar defendants are given some slack in reporting to federal prison (w/ a hat tip to Bill Olis)
Leo Strupczewski, Legal Intelligencer, law.com, Pa. Judges Plead Guilty in Cash-for-Kids Corruption Scandal
Pamela A. MacLean, NLJ, law.com, Next wave in Madoff mess: tax troubles
Mary Spicuzza, AssetForfeitureWatch.com, Contractor's plea in bribery case
leads to forfeiture and prison time
The Proposed New Fraud Act - Both NACDL and Heritage Voice Opposition
Clearly there is a need for increased regulation to stop fraudulent activities. In this past year, there have been too many innocent victims of fraud. The legislative response, however, is disappointing. As I told Chisun Lee at ProPublica, here, it uses a hammer to hit the wrong nail.
Parts of the new legislation are promising. For example, increased funding to monitor and detect fraud would be wonderful. Admittedly Senator Patrick Leahy when introducing the bill notes that "homes mortgages were packaged together and turned into securities that were bought and sold in largely unregulated markets on Wall Street." But the next paragraphs do not logically follow from this statement. That is, adding new federal legislation and increasing penalties are part of the proposed legislation. New laws, however, are not the answer - especially when there were already laws on the books to meet the alleged conduct. What needs to happen here is stopping this misconduct before victims suffer. There needs to be increased regulation and oversight of that regulation to stop those who try to engage in fraudulent activities.
It is interesting to see the National Association of Criminal Defense (NACDL) and Heritage Foundation issuing a joint statement to the Senate Judiciary Committee showing their opposition to the proposed expansion of federal criminal law in S. 386, the Fraud Enforcement Recovery Act.
Heritage-NACDL Letter -Download nacdlheritage_ltr_to_senate_judiciary__fraud_enforcement__recovery_act_s__386.pdf
Addendum - Rita Glavan, Acting Assistant AG- Criminal Division presents the government position here - Download 2009-3057-1.pdf
Specter Moving on Attorney-Client Privilege Bill
On February 13, 2009, Senator Arlen Specter introduced a bill "to provide appropriate protection to attorney-client privileged communications and attorney work product." (See Thomas here - go to S. 445) The bill:
"Prohibits federal prosecutors and investigators across the executive branch from requesting or conditioning charging decisions on an organization’s reasonable assertion of attorney-client privilege or decision to pay of attorneys fees for an employee. This bill emphasizes that the right to counsel is chilled unless the confidential communications between attorneys and their clients are protected by from compelled disclosure. The Department of Justice has changed its rules three times in the past few years, and attorneys and clients need clarity and an unchanging rule Cosponsors include: Senators Carper, Cochran, Kerry, Landrieu, and McCaskill."
(esp) (w/ a hat tip to Tiffany M. Joslyn)