Thursday, June 24, 2010

Skilling - Commentary

It was a Thanksgiving Day turkey carving by the Court, and they left a lot more meat on the bones then many imagined.

Will We See More Government Stretching? The Court says, "[a]s to arbitrary prosecutions, we perceive no significant risk that the honest-services statute, as we interpret it today, will be stretched out of shape."  Gosh I hope they are correct. Based upon the DOJ's track record, that has not been the case.  They started the ball rolling with intangible rights well before the Supreme Court knocked it out in 1987.  And even when raised  as an issue in these three cases, the government argued for more to be included in the statute's sphere.

Should Congress Rewrite the Statute? The Court said - ""The 'vast majority' of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes." -  This should be a statement Congress should look at when and if the government takes up the Court's second invitation to rewrite the statute.

What happens now?  We saw that after the McNally case crushed the government's intangible rights theory, many cases required interpretation to see if they deserved to be tossed, or whether they could survive the holding.  In the next few weeks and months, we are likely to see a good number of these type of arguments being made. 

Will DOJ learn from this?  They have bribery, they have mail fraud and wire fraud with money or property, and they have section 666 for the state/local officials. The government has plenty of tools to prosecute crime.  The question is whether they will be happy with what they have, or instead decide that they want to try for more.

(esp)(blogging from Lisbon, Portugal)

June 24, 2010 in Enron, Fraud, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Interpretation or Invention - Key Aspects of the Honest Services Portion of the Skilling Opinion

Check out the prior posts of Solomon Wisenberg here, here, and here, that include summary and links to the three decisions. Looking at Skilling specifically, here are some important items to note from the decision-

1. As discussed by Attorney Tim O'Toole in an NACDL press conference - the Court rejects the government's attempt to include a third category beyond bribery and kickbacks, that category being "undisclosed self-dealing by a public official or private employee."

2. The Court states - "The 'vast majority' of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes."

3. The Court states - "Reading the statute to proscribe a wider range of offensive conduct, we acknowledge, would raise the due process concerns underlying the vagueness doctrine."

4. Is it judicial legislating when the Court states in footnote 43 - "Apprised that a broader reading of §1346 could render the statute impermissibly vague, Congress, we believe, would have drawn the honest-services line, as we do now, at bribery and kickback schemes."

5.Footnote 45 - the Court tells Congress if it really wants to include "self-dealing" there needs to be a whole lot of questions examined first.

6.  The Court says, "Its prohibition on bribes and kickbacks draws content not only from the pre-McNally case law, but also from federal statutes proscribing—and defining—similar crimes. See, e.g., 18 U. S. C. §§201(b), 666(a)(2); 41 U. S. C. §52(2)." John D. Cline noted in the NACDL Press Conference how the Court used section (b) of the bribery statute, but did not include (c) which is the gratuities section.

7. The Court says in footnote 46 that "[o]verlap with other federal statutes does not render s1346 superfluous." The Court then notes how section 201 only applies to federal public officials. What about section 666, a section they mentioned previously (see note above)

Concurring opinion of Scalia, Thomas and Kennedy -

1. They say - " in transforming the prohibition of honest services into a prohibition of 'bribery and kickbacks" it is wielding a power we long ago abjured: the power to define new federal crimes."

2. In speaking to the Court's allowing bribery and kickbacks to remain within the statute, the three justices state that "arriving at that conclusion requires not interpretation, but invention."  They later remark - "the Court today adds to our functions the prescription of criminal law." They also state "that is a dish the Court cooked up all on its own."

(esp)(blogging from Lisbon, Portugal)

June 24, 2010 in Fraud, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

NACDL President Comments on Honest Services Trilogy


Here is a press release from the National Association of Criminal Defense Lawyers ("NACDL") containing NACDL President Cynthia Orr's comments on today's U.S. Supreme Court honest services opinions. Orr is “heartened that the Court has unambiguously rejected government arguments that the ‘honest services’ fraud statute can be properly used across as broad a range of conduct as the government has sought to do in recent years.” Nonetheless she is"disappointed that the Court has held that there remains a place in our criminal justice system for a statute on whose meaning few can agree.” (In various friend of the court briefs, NACDL has taken the position, now shared by Justices Scalia, Thomas, and Kennedy, that 18 U.S.C. Section 1346 is unconstitutionally vague.)

Orr expects “to see future litigation surrounding efforts by prosecutors to wedge their cases into the ‘bribe or kickback’ paradigm to which the Court has now limited this statute.” Of this we can be sure.

The NACDL press release also bemoans the portion of the Skilling opinion which "shockingly found that pre-trial publicity and community prejudice did not prevent Mr. Skilling from obtaining a fair trial. In fact, though, there has not been a more poisoned jury pool since the notorious first robbery and murder trial of Wilbert Rideau in Louisiana." 


June 24, 2010 in Current Affairs, Enron, Insider Trading, Judicial Opinions, Media, News, Obstruction, Prosecutions, SEC, Securities, Statutes | Permalink | Comments (1) | TrackBack (0)

More on Honest Services and Skilling


The breakdown is as follows. All nine justices agree that the judgments in the three honest services fraud cases must be vacated and remanded. The majority rules that Section 1346 honest services fraud encompasses only bribery and kickback schemes, and would be unconstitutionally vague if interpreted more broadly. The majority opinion in Skilling (and Black) is written by Justice Ginsburg, who is joined by five other justices. Justice Scalia (joined by Justices Thomas and Kennedy) concurs, but would simply hold Section 1346 unconstitutionally vague under the Due Process Clause and would not seek to salvage it through a narrowing interpretation.

The jury instructions in all of the cases allowed for conviction under the now-discredited broad view of honest services. The lower courts must decide whether the instructional errors were harmless.

Jefffrey Skilling's fair trial arguments were rejected 6-3, with Justice Sotomayor, joined by Justices Stevens and Breyer, dissenting.

Conrad Black and co-defendants properly preserved their objections to the jury charge.

All of this is based on my quick skim. More detailed analysis will come later.

Once more, here are the slip opions in Skilling, Black, and Weyhrauch.


June 24, 2010 in Current Affairs, Enron, Fraud, Judicial Opinions, News, Prosecutions, SEC, Securities, Statutes | Permalink | Comments (0) | TrackBack (0)

Weyhrauch Honest Services Judgment Vacated and Case Remanded to Ninth Circuit for Further Consideration in Light of Skilling Decision

Here is the one-paragraph slip opinion.


June 24, 2010 | Permalink | Comments (0) | TrackBack (0)

Supreme Court Vacates and Remands in Conrad Black Honest Services Case!

Here is the slip opinion. More to come. The decision was 9-0 to vacate and remand for harmless error analysis re honest services jury instructions. Scalia (joined by Thomas) and Kennedy concur, and would hold Section 1346 unconstitutionally vague. Defendants properly preserved error on jury instructions.


June 24, 2010 | Permalink | Comments (0) | TrackBack (0)

Supreme Court Vacates and Remands in Skilling's Honest Services Case!


Here is the slip opinion. According to the Court's syllabus, Section 1346 is not unconstitutionally vague, but only proscribes the "bribe-and-kickback core of the pre-McNally case law." More to come.


June 24, 2010 in Fraud, Judicial Opinions, Prosecutions, Securities, Statutes | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 23, 2010

SDNY Goes After Bongiorno and Crupi Assets


Here is the SDNY's press release regarding the civil forfeiture complaints filed yesterday against property "traceable" to Bernard Madoff's Ponzi scheme "and paid to or on behalf of" former Bernard L. Madoff Investment Securities LLC ("BLMIS") employees, Annette Bongiorno and Joann Crupi. Here is the Bongiorno-related complaint and here is the Crupi-related complaint.

It is clear from the complaints that the government believes Bongiorno and Crupi were knowing participants in Madoff's fraud. They each allegedly "knowingly perpetuated the fraud" by, among other things, overseeing, preparing, or assisting in the preparation of fabricated account statements and other documents.

By proceeding civilly against the properties at this time, the government lowers its burden of proof and puts the longtime, back-office BLMIS employees in the unenviable position of possibly incriminating themselves if they seek to retain their assets through the in rem forfeiture litigation. Hat tip to forfeiture expert David B. Smith of English and Smith for pointing out to me that invocation of the Fifth Amendment in the context of a civil forfeiture proceeding may not automatically result in the drawing of an adverse interest.


June 23, 2010 in Civil Enforcement, Civil Litigation, Forfeiture, Fraud, Investigations, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 22, 2010

Enron Barge Case Continues

Some cases continue - like Jim Brown of the Enron Barge Case. The latest is that Hon. Werlein denied the defense Speedy Trial Act Motion. (Download Memorandum & Order 61510 Dkt. 1208)  The defense had claimed that "[s]ince August 13, 2009, the government has failed to take even a first step to bring Brown to trial." 

This case also includes claims of discovery violations on the part of the Enron Task Force, with the defense arguing that "[a]fter Brown's trial and appeal, a new prosecutor finally produced the government's notes of multiple conversations with Fastow, the grand jury testimony of Merrill counsel, and other Brady material -all which proves Brown's innocence on all charges." (Download SuppMtnNewTRIAL.Dkt.1160).  

Discovery violations have been prominent issues in several recent cases (see here) including the prosecution of former Senator Ted Stevens. Most recently, DOJ issued new guidelines pertaining to discovery practices in the DOJ (see here). With strong claims of discovery violations and prosecutorial selectivity in the Brown case, one has to wonder if DOJ will re-examine what has transpired in this case.


June 22, 2010 in Enron | Permalink | Comments (0) | TrackBack (0)

In the News & Around the Blogosphere

Monday, June 21, 2010

Judges Sentencing Order Calls for Twenty Seven Years for Head of Iowa Kosher Meat Plant

The Hon. Linda R. Reade issued a sentencing memorandumin the case of Sholom Rubashkin  who is scheduled to be sentenced tomorrow. The case arose from a raid of his plant for alleged illegal aliens. The grand jury issued a 163 count Indictment against the defendant that charged him with conspiracy to harbor undocumented aliens for profit, harboring and aiding and abetting the harboring of undocumented aliens for profit, conspiracy to commit document fraud, aiding and abetting document fraud, bank fraud, false statements and reports to a bank, wire fraud, mail fraud, money laundering and willful violation of an order of the secretary of agriculture and aiding and abetting willful violation of an order of the secretary of agriculture.(see here for prior discussion of sentencing), He took the risk of going to trial and the jury returned some not guilty verdicts, but also many guilty ones. Interestingly, in state court he also risked trial and was found not guilty there. (see here)  The government moved to dismiss the immigration counts. The court's Sentencing Memo methodically goes through the arithmetic of how the sentence was computed. The court fails to adjust the sentence to account for the defendant's son being "developmentally disabled" saying "such considerations of sympathy and compassion are present in all criminal cases that come before this court."

For those who claim that Booker and its progeny will be the demise of long sentences in white collar cases, they need only read this memorandum to see otherwise.

See also Grant Schulte, Des Moines Register, Rubashkin’s wife to leave Postville; Michael J. Crumb, Baltimore Sun, Judge: Former Iowa kosher slaughterhouse manager will get 27 years in prison, pay $27M; Doug Berman, Sentencing Law & Policy Blog, Kosher plant CEO Sholom Rubashkin sentenced to 27 years imprisonment


June 21, 2010 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Not Guilty for Miami Cops Charged With Perjury

Three Miami police officers were found not guilty after a trial by jury on charges of conspiracy to make false statements, perjury and obstruction of justice.  One of the individuals was represented by Attorney Richard Sharpstein.

See also David Oscar Markus, Southern District of Florida Blog,  NGs for the cops on trial before Judge Middlebrooks; David Ovalle, Miami Herald, Federal Jury Acquits Miami-Dade Cops of Perjury in Weapons case 


June 21, 2010 in Verdict | Permalink | Comments (0) | TrackBack (0)

No Honest Services Cases Today

The Supreme Court continues to hold us in suspense with no honest services cases issued today.  The next day for opinions will be this Thursday, and then the following Monday unless the Court adds other days. Stay tuned.


June 21, 2010 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Sunday, June 20, 2010

In the News & Around the Blogosphere

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