Friday, April 29, 2011
Second Circuit - U.S. v. Gray, Mack, Wells, & Rhodes - Court affirms lower court holding "that an internal investigation by a privately owned prison that houses federal prisoners of an allegation of excessive force involves a 'matter within the jurisdiction' of the Department of Justice for purposes of 18 U.S.C. s 1519.
Sixth Circuit - U.S. v. Waldren (unpublished) - Court affirms conviction and sentence for making a flase statement to obtain federal worker's compensation in violation of 18 U.S.C. s 1920, but remans to recalculate the amount of restitution owed.
Seventh Circuit - U.S. v. Landwer, Jr - District court gave two-level increase for using "sophisticated means" on a fraud after defendant plead guilty. This court rejected defendant's challenge to this addition which defendant had claimed that his fraud did not involve sophisticated means because it was "too simple and dissimilar to the examples listed in the guidelines to qualify for this adjustment."
Seventh Circuit - U.S. v. Aldridge - Court rejects appeal of wire fraud and aiding and abetting wire fraud convictions, which included a Fourth Amendment argument.
Ninth Circuit - U.S. v. Nosal - Court states "[a]lthough we are mindful of the concerns raised by defense counsel regarding the criminalization of violations of an employer's computer use policy, we are persuaded that the specific intent and causation requirements of s 1030(a)(4) sufficiently protect against criminal prosecution those employees whose only violation of employer policy is the use of a company computer for personal -- but innocuous -- reasons." The court reverses and remands several counts with instructions to reinstate.
Professor Mike Cassidy (Boston College) has a wonderful new piece titled Plea Bargaining, Discovery, and the Looming Battle Over Impeachment Evidence, which will be published in Vol. 64 of the Vanderbilt Law Review (October 2011). With the discovery under review, this is a very important piece and I recommend it highly. The SSRN abstract states:
"In a criminal justice system where guilty pleas are the norm and trials the rare exception, the issue of how much discovery a defendant is entitled to before allocution has immense significance. This article examines the scope of a prosecutor’s obligation to disclose impeachment information before a guilty plea. This question has polarized the criminal bar and bedeviled the academic community since the Supreme Court’s controversial decision in United States v. Ruiz (2002). A critical feature of the debate has been the enduring schism between a prosecutor’s legal and ethical obligations – a gulf that the American Bar Association recently widened by issuing a controversial opinion interpreting Model Rule of Professional Conduct 3.8(d) to impose obligations on prosecutors well beyond the requirements of the due process clause.
"For reasons of institutional competence and legitimacy, the author argues that rules of criminal procedure are a far better vehicle for regulating pre-plea impeachment disclosures than state attorney conduct rules. As the Advisory Committee on Criminal Rules convenes this year to contemplate controversial amendments to the Federal Rules of Criminal Procedure with regard to the disclosure of exculpatory evidence, the author proposes a categorical approach to impeachment disclosures that will mediate the tension between the defendant’s interest in accurately assessing the strength and weaknesses of the government’s case, and the state’s interest in protecting the privacy and security of potential witnesses."
Thursday, April 28, 2011
Earlier this week we saw that Craig Drimal entered a plea to insider trading (see here). Today a second plea to insider trading comes out of the Manhattan US Attorneys Office. An FBI Press Release reports that Donald Langueuil is pleading guilty to insider trading. According to the most recent press release:
"Between 2006 and 2010, LONGUEUIL, along with [another], a former portfolio manager at two hedge funds, JASON PFLAUM, a former research analyst for [this other person], and NOAH FREEMAN, a research analyst at a hedge fund and then a portfolio manager at another fund, and their co-conspirators participated in a conspiracy to obtain nonpublic information ("Inside Information"), including detailed financial earnings, about numerous public companies. These companies included Marvell Technology Group, Ltd. ("Marvell"), NVIDIA Corporation ("NVIDIA"), Fairchild Semiconductor Corporation ("Fairchild"), Advanced Micro Devices, Inc. ("AMD"), Actel Corporation ("Actel"), and Cypress Semiconductor Corporation ("Cypress"). LONGUEUIL obtained Inside Information both from employees who worked at these and other public companies, as well as from independent research consultants who communicated with employees at public companies. Often, the defendant and/or his coconspirators used an "expert networking" firm to communicate with and pay their sources of Inside Information. In addition, although LONGUEUIL and his co-conspirators worked at separate hedge funds, they had regular conference calls during which they shared the Inside Information they learned with each other." (name omitted of individual who has pending charges)
So, what is insider trading? The definition may prove problematic and at some point the Court may provide better guidance. But for those facing charges it is difficult to risk a trial as the cost of being found guilty at trial presents huge consequences. But in the back of my mind I have to wonder if a clearer definition and an understanding that one who engaged in this conduct faced jail time, would have precluded this conduct. Are we using our resources wisely to prosecute those who can be educated not to engage in this conduct?
Grant Thornton, The UK Bribery Act and What It Means for U.S. Companies here
Google (AP), Delay sought in Ohio public corruption trial
DOJ Press Release, Three Miami-Area Medical Professionals Each Sentenced to Prison for Roles in $23 Million Medicare Fraud Scheme (sentences ranged from 54-70 months)
FBI Press Release, Principal of $80 Million Ponzi Scheme Sentenced in Manhattan Federal Court to 100 Months in Prison (sentenced to 100 months)
Wednesday, April 27, 2011
New Article - Guns, Fruits, Drugs, and Documents: A Criminal Defense Lawyer's Responsibility for Real Evidence
Professor Stephen Gillers has a wonderful new piece in 63 Stanford Law Review 813 (April 2011), titled, Guns, Fruits, Drugs, and Documents: A Criminal Defense Lawyer's Responsibility for Real Evidence. (click here to read it on the Stan. L Rev website) This one is a must-read. We all know how to handle weapons, drugs, or stolen property. But happens with the document in a white collar case? This piece offers some wonderful thoughts of dealing with documents provided to counsel.
Tuesday, April 26, 2011
Professor Nancy King (Vanderbilt) and Joseph L. Hoffman (Indiana) have a new book published by University of Chicago Press, titled, Habeas for the Twenty-First Century: Uses, Abuses, and the Future of the Great Writ.
If this book is like the authors recent op-ed in the NYTimes, it is likely to be extremely controversial on its recommendations on state prisoner habeas. (see op-ed by King and Hoffman here and letters to the editor in response here)(see also Andrea Lyons op ed in response and Nancy Kings response here). Although I tend to be on the side of the responses against the King Hoffman op-ed, I do think this book will offer a much needed history of 2255 and I understand that chapter 6 includes federal criminal cases, which will be helpful to white collar practitioners.
But I do hope that recommendations such as advocated in this op ed are not adopted. Justice is never too expensive. Nor can we assume that eliminating one process will pour money into indigent resources that might correct problems with the system. No matter what the cost of correcting an injustice in the system is, it needs to be done. I am deeply disappointed that too many today reference cost, expensiveness, or efficiency as rationales for shortcutting processes that may assist only a few folks. As I always ask - if you are that one person who could benefit from this criminal process correction, would you want it discarded for efficiency sake?
But that said, I do look forward to seeing this forthcoming book in an area that definitely needs study.
Monday, April 25, 2011
AG Holder spoke about the DOJ's Priorities and Mission (see here) He listed four essential priorities:
"In the critical days ahead, these four essential priorities – protecting Americans from national security threats, protecting Americans from violent crime, protecting Americans from financial fraud, and protecting the most vulnerable members of our society – will guide our work."
Specifically when speaking to financial fraud, he stated:
"Third: we will protect Americans from the financial fraud that devastates consumers, siphons taxpayer dollars, weakens our markets, and impedes our ongoing economic recovery. As we’ve seen, the impact of financial crime is not confined to Wall Street – and many times the victims of fraud have worked hard and played by established investment rules, only to see their retirement and life savings vanish at hands of white-collar criminals.
"Over the last two years, through reinforced interagency partnerships and new joint initiatives – such as the Financial Fraud Enforcement Task Force and the Health Care Fraud Prevention and Enforcement Action Team – we have transformed the way we deal with fraud crimes. Not only have we secured record recoveries totaling billions of dollars, we have raised awareness about these crimes and improved the ability of consumers and victims to report suspected fraud schemes. In the coming months, we must take all of these efforts to the next level.
"We will vigorously investigate financial crimes and ensure that those who commit them are made to pay the price – by serving long sentences and making restitution to taxpayers, as well as victims. To identify the most effective ways to prevent and combat financial fraud, senior Department leaders will continue to meet with victims, medical providers, business leaders, and key government and law enforcement partners around the country. We will also work to bring our HEAT task forces to new problem areas, and to expand other successful programs that will allow us to maximize both our efficiency and our impact."
But it was particularly good to hear that he recognized the importance of using "smart of crime" approaches as opposed to prosecuting haphazardly. He stated: "We also will invest in scientific research to make certain that this Department is both tough and smart on crime, and that our decisions are economically sound. This means working closely with state, local, and tribal partners. It also means broadening our support for effective crime prevention, intervention, enforcement, and reentry strategies."
Thank you, AG Holder.
Sunday, April 24, 2011
20th Annual National Seminar on Federal Sentencing Guidelines, May 4-6, Orlando, Florida here
ABA Third Annual Internal Corporate Investigations & Forum for IN-House Counsel, May 4-6, 2011 New York, here
ABA 21st Annual National Institute on Health Care Fraud, May 11-13, 2011, Miami Beach, here
NACDL's 1st Annual West Coast White Collar Conference - "Turning the Tables on the Government", Lake Tahoe, June 16-17, 2011 here
NACDL's 7th Annual Defending the White Collar Case - NY, September 22-23, 2011 here
Saturday, April 23, 2011
The federal criminal trial involving former GlaxoSmithKline ("GSK") Vice President and Associate General Counsel Lauren Stevens commences this Tuesday in Greenbelt, Maryland. When I first read the Indictment, without knowing anything else about the facts, it struck me that the government may have overcharged. That is probably not a good sign for the feds, since the Stevens charging instrument is a classic one-sided speaking Indictment that seeks to put the United States' case in the best possible light.
The crux of the prosecution theory is that Stevens, who headed up a team of inside and outside GSK counsel responding to an FDA inquiry, withheld information about off-label marketing of Wellbutrin. Specifically, Stevens allegedly learned that several doctors, paid by GSK and speaking at GSK-sponsored events, promoted off-label (weight-loss) use of the drug. GSK's responses were part of a voluntary production pursuant to a written request from the FDA's Division of Drug Marketing, Advertising, and Communications ("DDMAC"). Stevens allegedly agreed, orally and in writing, to provide DDMA with "materials and documents presented at GSK-sponsored promotional programs, even if not created by, or under the custody or control of GSK." But, according to the Indictment, Stevens knowingly failed to produce numerous off-label promotional and presentation materials, provided to GSK by the doctors in question, with intent to obstruct an FDA proceeding. Rather than focusing entirely or primarily on this failure to produce, the Indictment lumps in many other broad statements contained in Stevens' various cover letters to the government. It seems to me that at least some of these statements are open to differing interpretations. Perhaps the government should have more narrowly honed in on the failure to turn over the presentation/promotional materials.
Part of Stevens' defense will entail her purported reliance on the advice of outside counsel in sending GSK's written responses to the FDA. The original Indictment was thrown out by Judge Roger Titus, because federal prosecutors incorrectly instructed the grand jury that reliance on the advice of counsel is only an affirmative defense. In fact, good faith reliance on advice of counsel negates the specific intent element under the federal obstruction and false statement statutes at issue in the trial.
This prosecution should strike terror into the hearts of inside and outside counsel throughout corporate America. Of particular note is that the FDA inquiry into off-label Wellbutrin marketing did not involve a compelled production and was not even quasi-criminal in nature.
Attached for our readers' benefit are some documents setting out the government's case and what are likely to be key portions of Ms. Stevens' defense.
April 23, 2011 in Arthur Andersen, Corruption, Current Affairs, Defense Counsel, Fraud, Grand Jury, Judicial Opinions, Legal Ethics, Obstruction, Prosecutions, Statutes | Permalink | Comments (0) | TrackBack (0)
Friday, April 22, 2011
Mike Scarcella, BLT Blog, Appeals Court Reinstates Blackwater Manslaughter Case in D.C. (w/ a hat tip to Tiffany M. Joslyn) (Court states - "We thus vacate and remand the case for the court to determine, as to each defendant, what evidence - if any - the government presented against him that was tainted as to him, and, in the case of any such presentation, whether in light of the entire record the government had shown it to have been harmless beyond a reasonable doubt.")
Houston Chronicle (AP), Last Dallas corruption defendants sentenced
Ashby Jones, WSJ Blog, After Crackdown, Future of Online Poker Sites Thrown Into Jeopardy (w/ a hat tip to Tiffany M. Joslyn)
Gabriella Broggi, Bloomberg News, Swiss court acquits banker in corruption case
DOJ Press Release, New York Broker Pleads Guilty in International Stock Fraud Scheme
Sue Reisinger, Corporate Counsel, law.com, You Dante Say: Defense for Former Glaxo Lawyer Balks at 'Hell' References
Written Ruling - Officer or Employee of a State-Owned Croporation Can be a Foreign Official for FCPA Liability
One of the more fascinating FCPA cases is in trial right now. At the start of trial, the court held a hearing on defendant's motion to dismiss the charges. It was claimed that a state-owned corporation could not be a department, agency, or instrumentality of a foreign government and therefore was not a person who was a foreign official for purposes of the FCPA.
The Court therefore looked at the question presented -- "whether an officer or employee of a state-owned corporation can be a 'foreign official' for purposes of FCPA liability."
The court's ruling was discussed here by guest blogger Michael L. Volkov (MayerBrown). Now issuing its written order, the court confirmed its ruling that "a state-owned corporation having the attributes of CFE may be an 'instrumentality' of a foreign government within the meaning of the FCPA, and officers of such a state-owned corporation, as [the individuals mentioned] are alleged to be, may therefore be 'foreign officials" within the meaning of the FCPA."
For a copy of the written decision and commentary see, Richard L. Cassin, FCPA Blog, Lindsey Case: Judge Issues Written Ruling On 'Foreign Official'; Mike Koehler, FCPA Professor, Judge Matz Issues Narrow "Foreign Official" Decision / Calls DOJ Post-Hearing Request "Astounding"
Tuesday, April 19, 2011
A DOJ Press Release here reports on a Massachusetts fish packer being "found guilty of falsely and misleadingly labeling frozen fish fillets." Clearly this conduct sounds improper? But is this the kind of conduct we want to criminalize and spend funds for prosecution? Could we accomplish the same deterrence in a less costly way by proceeding civilly with fines?
Monday, April 18, 2011
The Ninth Circuit Court of Appeals in U.S. v. Pelisamen ruled that "where the jury returned a special verdict form indicating that it had convicted the defendant on both theories" ("money and propery" and "honest services") the conviction remains valid post-Skilling because the jury has designated that it convicted the defendant on both theories. This case differs from the Skilling remand, where there was an alternative theory issue. Here in Pelisamen it is clear that the jury looked at both items and convicted on both. But one also has to wonder if evidence of honest services taints the jury with prejudicial evidence. And one additionally has to wonder why the government felt it necessary to charge honest services if they had such a strong case premised on "money or property."
(esp)(hat tip to Linda Friedman Ramirez)
I was annoyed by the result in Skilling—that the unquestionable honest-services error was “harmless” beyond a reasonable doubt. But at the time I couldn’t articulate exactly why. After the Bonds verdict, I can. In short, the Bonds verdict illustrates the silliness of the conclusion in Skilling that appellate courts can and should sit as the 13th, 14th, and 15th jurors, then use a cold record to speak for the first 12 jurors while pretending appellate courts have crystal balls that make this okay.
Compare the two cases. Skilling’s trial was infected by honest-services error: in the indictment; in the evidence; in the argument; and in the instructions. Kicking a door cracked open by the Supreme Court in Pulido, the Fifth Circuit swept this under the rug—finding harmlessness—by pretending it could satisfactorily predict that the jury would have convicted on all counts even absent the error. To be sure, this put the nail in the coffin for the Yates standard of review, which said that when multiple theories are charged and instructed and one is impermissible, reversal usually is automatic because it is “impossible to tell” whether the jury relied on the impermissible theory. The Yates standard respected the constitutional right to an impartial jury of one’s peers (which appellate courts concerned with finality and efficiency certainly are not); it recognized the limitations of an appellate court’s ability to predict the past under changed circumstances; and it acknowledged that juries are composed of human beings (not robots) who can be and often are influenced by intangibles not apparent in a paper record.
The Bonds verdict illustrates why eradicating the Yates standard was a bad idea—and indeed leads to a standard that infringes the right to an impartial jury of one’s peers. Bonds was charged with repeatedly lying to a grand jury, and obstruction of justice essentially based on repeatedly lying to that grand jury. With a proper indictment and charge, the impartial jury of Bonds’ peers hung on whether Bonds lied to the grand jury, but agreed that he obstructed by lying to the grand jury. There are hyper-technical legal ways to attempt to explain this—but in reality (where jurors live), the verdict makes little sense. And surely Bonds’ attorneys will file a motion challenging the sole conviction on this basis.
But more importantly to me, Bonds illustrates what was right with Yates and what is wrong with Skilling. Appellate court’s aren’t very good at predicting the past under changed circumstances. I’d venture to guess that if the Fifth Circuit judges who decided Skilling had placed bets on the Bonds verdict, they’d have batted 0 for 3 predicting hung counts on lying but conviction on obstruction based on lying.
I hope the defense bar won’t give up on the Yates standard.
Sunday, April 17, 2011
Appellant in the Kott case (see background here) filed a petition for panel rehearing. The court in this case vacated the conviction and sent the case back to the trial court for retrial. This case was related to the prosecution of now-deceased Senator Ted Stevens (Alaska). In vacating Kott's conviction, the panel noted that the case involved a Brady violation by the government. The majority in the case noted that "because we do not have sufficient evidence to conclude the prosecution 'acted flagrantly, willfully, [or] in bad faith,' we do not exercise our supervisory authority to dismiss the indictment."
Appellant argues that "the reason that the record might lack 'sufficient evidence' of willful, flagrant, bad faith, suppression of evidence is that the government is still withholding that evidence -- not because such evidence does not exist." Is the government still withholding evidence from the defense? More importantly, did the government engage in conduct of requesting a local police department to stop the investigation of "sexually predatory acts on minor girls," in order to "bar the creation of Brady evidence it might have to disclose ..."?
Looking forward to seeing the government's response.
The Third Circuit Court of Appeals reversed and remanded a district court's dismissal of a RICO indictment against an attorney and others. (See Opinion - U.S. v. Bergrin here) RICO is clearly a complicated statute and the court's decision presents an extremely thorough review of many aspects of the law in this area. Typically, RICO is one of the few topics that need a few days of classes in order to truly understand its depth and breadth. The Supreme Court's continually allowance for RICO to be read broadly, brings it to an even higher level. Areas that continually plague readers/students is what constitutes a sufficient "enterprise" and when do you have a "pattern of racketeering activity." Justice Scalia in HJ Inc. criticizes the test of "continuity plus relationship" as set forth by the Court, as he says that this is "as helpful to the conduct of their affairs as 'life is a fountain.'"
This Third Circuit decision to reinstate the indictment comes on the heels of the Supreme Court's 2009 decision in Boyle (see here), where the Court held that RICO association-in-fact enterprises require an "ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages, but no - "an instruction framed in this precise language is not necessary."The Court held that an association-in-fact enterprise needs to have "three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose." At the time the Boyle decision came down, I blogged that the decision would be "very helpful for government prosecutions in that it allows RICO cases to be brought with the jury being told a minimal amount of what is required for a RICO enterprise."
This Third Circuit decision confirms that the government will have an easier time in presenting RICO cases. Whether the defendant and others will be convicted in this case remains to be seen, but for now it is clear that the breadth of RICO will allow this matter to move forward.
Friday, April 15, 2011
Bruce Alpert, Times-Picayune, Enron ruling may hurt former U.S. Rep. William Jefferson
Sue Reisinger, Corporate Counsel, law.com, Feds Re-Indict Former Glaxo In-House Lawyer
Joy Powell, StarTribune, Prosecutions up for white-collar crimes
Mike Scarcella, BLT Blog, FTC Clerk Pleads Guilty to Stealing More Than $218K
Greg Moran & Ryan Gabrielson, San Diego News, Tax convictions comparatively low in San Diego - Prosecutors say focus on border, other financial crimes come into play
James M. Odato, Times Union.com, Federal Prosecutors Seek New Trial Against Former Sen. Joseph Bruno
Sue Reisinger, Corporate Counsel, law.com, U.K. Corporate Manslaughter Fine Set at $630K (hat tip to Ivan Dominguez)
Azam Ahmed, Dealbook, NYTimes, At Galleon Trial, Flashes of Anger From the Defense
Michael Winter, USA Today, Israel's foreign minister facing indictment alleging corruption
David Ingram, BLT Blog, Senator Says Goldman Sachs Misled Congress, Plans DOJ Referral
Zoe Tillman, BLT Blog, Former D.C. Ethics Counsel Joins Stinson Morrison Hecker
DOJ Press Release, Newspaper Publisher Pleads Guilty to Making False Statement to Congress
Samuel Rubenfeld, WSJ, Nigerian Ex-Governor Extradited to UK to Face Corruption Charges
Thursday, April 14, 2011
A fascinating opinion vacating convictions and reversing the district court, was issued by the Sixth Circuit in the case of U.S. v. Ford. This appeal concerned convictions for false statements and two counts of "honest services" wire fraud. This case does not pertain to another case against Ford in which he was sentenced to 5 1/2 years imprisonment.
The government's problem with the 1001 conviction was that the statute was inapplicable to the defendant's conduct. Section 1001 requires federal jurisdiction. As stated by the court in noting the defendant's argument, "while the facts that he failed to disclose concerned an entity inseparable from federal ties, the entities to which he failed to disclose those facts were anything but federal." The court noted that the "failures to disclose financial interests were related to functions of the state government of Tennessee - the senate's and election registry's reporting requirements." The court also used the rule of lenity in support of its vacating these convictions.
The wire fraud counts were easier - Skilling limited honest services to "bribery and kickbacks," and that was not the case here.
It is interesting to see that the government has issued a press release announcing that it has re-indicted the former pharmaceutical (GlaxoSmithKline) company lawyer with charges of obstruction and making false statements. It is common for the government to use"short-cut" offenses in white collar cases. (see here).
But shouldn't they have also issued a press release weeks ago when the government's indictment was tossed by a judge (see here). Why is it that the press releases only tell half the story? Shouldn't a minister of justice tell both the dismissals and the re-indictments?
More importantly, is this a case that the government should be spending our precious resources for government prosecution. Even if there is a discovery violation here, and I am not convinced that there has been one - does this matter belong in criminal court? Or, if this conduct did occur, would this better be suited for an administrative or disciplinary matter?
See also Sue Reisinger, Corporate Counsel, Feds Re-Indict Former Glaxo In-House Lawyer
As tax day gets closer, it is always interesting to see the spike in criminal tax filings. In many ways this makes sense since a goal is to achieve deterrence by letting the public know the ramifications of failing to file or fraudulently filing tax returns. But one problem, as I see it, is that DOJ doesn't put out press releases when individuals are found not guilty.
Here are some of the recent DOJ Press Releases on tax filings:
DOJ Press Release, Alabama Sisters Indicted for Tax Fraud and Identity Theft