White Collar Crime Prof Blog: January 10, 2010

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January 15, 2010

Government Response to Discovery Violations

A DOJ Press Release reports on the appointment of Andrew Goldsmith as the new national coordinator for its criminal discovery initiatives. It states that -

"As the national coordinator, Goldsmith will oversee the implementation of a number of initiatives designed to provide prosecutors with the training and resources they need to meet discovery obligations in criminal cases. These efforts include:

Creating an online directory of resources on discovery issues available to all prosecutors at their desktop;
Producing a Handbook on Discovery and Case Management similar to the Grand Jury Manual so that prosecutors will have an accessible and comprehensive resource on discovery obligations;
Implementing a training curriculum and a mandatory training program for paralegals and law enforcement agents;
Revitalizing the Computer Forensics Working Group to ensure the proper cataloguing of electronically stored information recovered as part of federal investigations; and
Creating a pilot case management project to fully explore the available case management software and possible new practices to better catalogue law enforcement investigative files and to ensure that all the information is transmitted in the most useful way to federal prosecutors. "

See here (background and commentary)

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January 15, 2010 in Investigations | Permalink | Comments (1) | TrackBack

In the News & Around the Blogosphere

Mike Scarcella, BLT Blog, Former DOJ Fraud Section Chief Goes to Weil Gotshal

Amir Efrati, WSJ Blog, Squawk Box’ Convicts Given Bail Pending Appeal; Brady Violation?

Jeff Jeffrey, BLT Blog, Former TARP COO Joins Cozen O’Connor

DOJ Press Release, Attorney General Eric Holder at a Press Conference Announcing the Credit Suisse Resolution

DOJ Press Release, Attorney General Eric Holder Testifies Before the Financial Crisis Inquiry Commission

Ashby Jones, WSJ Blog, Joseph Collins, Former Refco Lawyer, Gets Seven Years in Prison

Mark Parry, Chronicle of Higher Education, Online Scheme Highlights Fears About Distance-Education Fraud

Rachelle Younglai, Reuters, US SEC bolsters enforcement division with new tools

Sue Reisinger, law.com, Corporate Counsel, Geithner's AIG E-Mails, Phone Logs Subpoenaed by House Panel

Richard Renner, Whistleblowers Protection Blog, Birkenfeld tells WSJ about high level cover-up

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January 15, 2010 in News | Permalink | Comments (0) | TrackBack

New Report on DPAs

GAO issued a third report on Deferred Prosecution Agreements (DPA) and Non-Prosecution Agreements (NPA), this time titled - DOJ Has Taken Steps to Better Track Its Use of Deferred and Non-Prosecution Agreements, but Should Evaluate Effectiveness. The report recommends that:

"To assess its progress toward meeting its strategic objective of combating public and corporate corruption, the Attorney General should develop performance measures to evaluate the contribution of DPAs and NPAs towards achieving this objective."

There were 12 U.S. District and magistrate judges who provided comments that assisted in the report. A highlight sheet on the report states that "prosecutors, company representatives, monitors, and judges with whom GAO spoke more frequently cited disadvantages to greater judicial involvement - such as the lack of time and resources available to judges and concerns about the separation of powers and constitutionality of increased judicial involvement -than advantages to such involvement-such as the court's ability to act as an independent arbiter of disputes, increased transparency in the DPA process, and decreased perceptions of favoritism in selecting the monitor."

I wonder what defense attorneys would have said if they had been consulted on this question.

Prior Reports - Prosecutors Adhered to Guidance in Selecting Monitors for Deferred Prosecution and Non-Prosecution Agreements, but DOJ Could Better Communicate Its Role in Resolving Conflicts;Preliminary Observations on DOJs Use and Oversight of Deferred Prosecution and Non-Prosecution Agreements

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January 15, 2010 in Deferred Prosecution Agreements, Government Reports | Permalink | Comments (0) | TrackBack

January 14, 2010

New SEC Rules - Commentary

The SEC has instituted a new initiative to provide for greater cooperation in hopes of encouraging individuals to assist in bringing to light improper activities. (see SEC Press Release) And cooperators may obtain a benefit of immunity in return for their cooperation (see Marketplace here). The framework for this cooperation can be found here. Some concerns -

What if you are the last person in the chain and there is no one left to offer cooperation against - is it fair for cooperation to be a race to the SEC office? Will individuals with more resources be the ones to receive the most benefits, while poorer folks are left to suffer the consequences of others cooperating?
It is clear that the SEC gives itself enormous discretion in deciding the value of the individual's cooperation. The four factors listed as the outline for determining "whether, how much, and in what manner to credit cooperation by individuals" sound wonderful, but the outline is clearly subject to many different interpretations. For example, will everyone be in agreement as to "[w]hether the individual's cooperation resulted in substantial assistance to the Investigation?" Also, the SEC will be determining if the person acted with scienter. Will those who could suffer consequences of an SEC action agree with the determination that is made?
And what if the individual disagrees with the level of cooperation determined by the SEC, is there any place to obtain review? The rules explicitly state that it does not "create[] or recognize[] any legally enforceable rights for any person."
Does this really go beyond the powers that the SEC presently has now? If cooperation is offered, couldn't they now decide not proceed against someone? Is this new initiative offered for a symbolic purpose?
If there is a real incentive offered will it result in the possibility of misinformation being relayed to the SEC by those who desire to obtain immunity. How will the SEC handle cooperators who lie to save themselves from the consequences that they can face for their illegal activities?
Until such time as a neutral third party enters this picture to evaluate the cooperation, it certainly seems like this "new" approach is vague and perhaps just more of the same.
The real question is not whether the SEC will receive information on improprieties, but rather will they do something about it when the information is received. Would this situation have brought the Madoff case to light sooner, or was Madoff brought to their attention but they failed to follow up.

For more commentary on other aspects of the SEC announcement, like the use of deferred prosecution agreements, see Mike Koehler, FCPA Blog, Game-Changing" Day at the SEC

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January 14, 2010 in Deferred Prosecution Agreements, SEC, Securities | Permalink | Comments (0) | TrackBack