Saturday, December 18, 2010
Nate Raymond & Mark Hamblett, NYLJ, law.com, Ex-Winston Attorney Charged With Laundering Fraud Proceeds
Wash Post (AP), Former New Jersey lawmaker acquitted of corruption
Bob Holt, New Jersey Newsroom, L. Harvey Smith is second to beat feds in N.J. corruption sting
Houston Chronicle, AP, Developer in Dallas corruption case gets 14 months
Dayton Daily News (AP), Ex-official gets prison in Ohio corruption case
Ed Timms & Kevin Krause, Dallas Morning News, Public Integrity Units Stay Busy in Other Large Texas Counties
DOJ Press Release, Three Insiders at Public Companies and One Executive of Expert-Networking Firm Charged with Conspiring to Distribute Inside Information to the Firm's Clients
Another Public Company Insider Pleads Guilty to Conspiring to Distribute Inside Information in Connection with Work as a Consultant for an Expert-Networking Firm
Peter Henning, Dealbook, NYTimes, What the New Insider Trading Cases Mean
Friday, December 17, 2010
The federal government charged Glenn Straub, and his company Palm Beach Polo Holdings, Inc., with filling in two wetlands within the jurisdiction of the United States in violation of the Clean Water Act, 33 USC 1319. The case involved two pieces of property in Wellington, Florida.
In fact, Straub engaged a contractor to remove Melaleuca trees and Brazilian Pepper trees from two of his properties. The State of Florida recognizes these plants as invasive noxious weeds which destroy wetlands. Straub obtained a vegetation removal permit from the Village of Wellington prior to starting the work, and hired a contractor who used a rotary cutter specially designed to avoid any impact on the soil.
The case was brought in the Southern District of Florida. The trial, in Ft. Lauderdale, lasted six days. Yesterday, after deliberating four hours, the jury found both defendants not guilty on all counts. Congratulations to Straub’s attorney, Stephen Binhak, of Miami, and Palm Beach Polo Holdings’ attorney, Craig Galle, of Wellington.
According to the 8th Circuit Court in the case of United States v. Redzic, the answer to this question is "yes." The defendant was convicted of mail fraud, wire fraud, bribery, and conspiracy. The mail fraud and wire fraud charges were premised upon sections 1341 and 1343, not 1346. The defendant notes on appeal that he had been indicted, that the government's argument at trial, and that the jury instructions at trial all pertained to a defrauding of property under 1341 and 1343. The problem was that the property in this case happened to be licenses and as previously held in the Cleveland case, regulatory licenses are not property for purposes of mail fraud. So the government's response is - well then let's call this honest services. But there appears to be one problem in doing that - they failed to charge the case this way.
The 8th Circuit holds "[w]hile we believe it would have been preferable in Redzic's case for the indictment to have included the term 'honest services,' its omission was not fatal."
To put this all in context - this opinion is a post-Skilling remand. And yes, the 5th Cicuit held in United States v. Griffin, 324 F.3d 330 (2003):
There is no doubt that the district court erred by instructing the jury that a scheme to defraud includes "a scheme to deprive another of the intangible right to honest services" because the indictment did not contain a reference to 18 U.S.C. § 1346 or its language. And, that error was obvious. Furthermore, we can not permit the district court to second guess "what was in the mind[ ] of the grand jury at the time [it] returned the indictment." Russell,369 U.S. at 770, 82 S.Ct. 1038. To do so would violate the Appellants' Fifth Amendment right to indictment by a grand jury and undermine the public's faith in the integrity of our judicial proceedings.
I wonder what Justice Scalia will think about the 8th Circuit's decision in Redzic?
(esp) (with a hat tip to Dane Ball)
Monday, December 13, 2010
The Ninth Circuit Court of Appeals reversed the conviction of Prabhat Goyal, former chief financial officer of Network Associates (formerly known as McAfee), holding that the government "failed to carry its burden" on an issue of materiality. The court stated that "Goyal's desire to meet NAI's revenue targets, and his knowledge of and participation in deals to help make that happen, is simply evidence of Goyal's doing his job diligently." The court noted that "Goyal's presumed knowledge of GAAP as a qualified CFO does not make him criminally responsible for his every conceivable mistake."
But be sure to read the concurring opinion by Hon. Kozinski. He states in part:
This case has consumed an inordinate amount of taxpayer resources, and has no doubt devastated the defendant's personal and professional life. The defendant's former employer also paid a price, footing a multimillion dollar bill for the defense. And, in the end, the government couldn't prove that the defendant engaged in any criminal conduct. This is just one of a string of cases in which courts have found that federal prosecutors overreached by trying to stretch criminal law beyond its proper bounds." (citations omitted)
He ends his concurrence with: "Although we now vindicate Mr. Goyal, much damage has been done. One can only hope that he and his family will recover from the ordeal. And perhaps, that the government will be more cautious in the future."
(esp)(hat tip Christopher R. Noyes)
Sunday, December 12, 2010
"Starting on Aug. 16, 2010, to date Operation Broken Trust has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes involving more than 120,000 victims throughout the country. The operation’s criminal cases involved more than $8.3 billion in estimated losses, and the civil cases involved estimated losses of more than $2.1 billion"
But the real question is who broke the trust, not what are the ramifications of the eventual trust being broken. Would earlier enforcement have resulted in less damage to individuals? And would proactive education have proved even more significant in curtailing these fraud schemes?