Tuesday, May 31, 2011
Jaxon Van Derbeken, San Francisco Chronicle, S.F. police scandal widens - 26 more cases dropped
Jay Weaver, Miami Herald, Four of Ponzi schemer Scott Rothstein’s colleagues charged with fraud
Mike Scarcella, BLT Blog, Utah Insurance Company President Charged in Fraud Scheme
Mike Scarcella, BLT Blog, Former NASDAQ Official Pleads Guilty to Insider Trading
Peter Lattman, Dealbook,NYTimes, A Tangle of Details Emerge in an Insider Trading Case
A DOJ Press Releasereports that "EVA Airways Corporation has agreed to plead guilty and to pay a $13.2 million criminal fine for its role in a conspiracy to fix prices in the air cargo industry." The press release states that "[u]nder the plea agreement, which is subject to court approval, EVA has agreed to cooperate with the department’s antitrust investigation." This sometimes means that indictments will follow against some individuals in the corporation.
Friday, May 27, 2011
Mike Baker, AJC (AP), AP source: Edwards could be indicted within days
Houston Business Chronicle, Attorney Hardin on the case for PHA investigation
Tony Mauro, BLT Blog, Former AG Gonzales 'Disappointed' in His Own Conduct in DOJ Hiring
Peter Blumberg, Fred Strasser, San Francisco Chronicle (Bloomberg), Rajaratnam Lawyers Ask Judge to Void Jury's Guilty Verdicts
Glen Johnson, Boston Globe, DiMasi trial gets big witness: Patrick
Wednesday, May 25, 2011
The Weyhrauch case has had a long journey - but it is not over yet. It went to the Supreme Court, along with Jeff Skilling's case. (see here). Bruce Weyhrauch came back and plead to a misdemeanor in state court - not federal court. He then filed a Hyde Act Amendment motion to recover his attorney fees. The government has now filed it's Hyde Act response. A couple of sentences in this response are fascinating:
- "[T]he Hyde Amendment does not provide for discovery, and none is appropriate here. (p. 1)
- "The fact that Weyhrauch pleaded guilty to a state misdemeanor as opposed to the federal crimes for which he was originally indicted is irrelevant." (p. 6)
- "...Weyhrauch fails to specify how the government's position in this litigation has been vexatious, frivolous, or in bad faith ...The closest Weyhrauch comes to making an argument on this point is claiming that an FBI agent testified falsely before the grand jury ..." (p. 7)
See also Richard Mauer, Anchorage Daily News, Justice Department rejects Weyhrauch reimbursement WEYHRAUCH: Prosecutors say guilt admission negates his claim.
The DOJ Press Release is titled, Jenkens & Gilchrist Attorneys, Former BDO Seidman CEO and Deutsche Bank Broker Found Guilty in New York of Multi-Billion Dollar Criminal Tax Fraud Scheme - Massive, 10 Year Criminal Scheme Generated More Than $7 Billion Dollars of Fraudulent Tax Losses
The Press Release states in part:
"NEW YORK – Paul M. Daugerdas, Donna M. Guerin, Denis M. Field and David Parse were convicted today in Manhattan federal court for their roles in a tax shelter scheme in which they designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to avoid paying taxes to the Internal Revenue Service (IRS), announced Preet Bharara, U.S. Attorney for the Southern District of New York; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Victor S.O. Song, Chief of the IRS Criminal Investigation. Together, Daugerdas, Guerin and Field made $130 million in profits from the 10-year scheme.
But the press release also notes that, "Raymond Craig Brubaker,. . . a banker at Deutsche Bank who was also charged along with the defendants, was acquitted by the jury on all counts."
Brubaker was represented by the law firm of Kramer, Levin, Naftalis & Frankel.
According to TRAC the February 2011 statistics show an increase of 50.3% increase in white collar prosecutions from the prior month. (see here) More interesting is that white collar prosecutions are reported as being up 23.5 from levels reported in 2006. What is particularly good to see is that "aggravated identity theft" is the leading charge of the white collar charges in magistrate courts. But there are several deficiencies in this reporting process, such as what is considered within the category of white collar crime- see here.
(esp) (w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports).
Tuesday, May 24, 2011
DOJ Press Release, New Jersey UBS Client Sentenced for Failing to Report More Than $1 Million in Swiss Bank Account (given 3 years probation and 12 months home confinement)
Azam Ahmed, Dealbook, NYTimes, Another Guilty Plea to Insider Trading Is Disclosed
Dan Frosch, NYTimes, Fighting for the Right to Tell Lies (w/ a hat tip to John Wesley Hall)
Wacotrib.com (AP), Ex-Enron finance chief Fastow out of prison; Washington Post (w/ Bloomberg) (AP), Ex-Enron finance chief Andrew Fastow moved from federal prison to Houston halfway house
Peter Lattman, Dealbook, NYTimes, Grassley Investigating Trades Made by SAC Capital
Bloomberg Businessweek, (AP), NY trial starts for man fired by Raj Rajaratnam
Marla Cichowski, Foxnews, Blagojevich Preparing To Testify At His Corruption Trial
Kim Chandler, al.com, Former Alabama Gov. Don Siegelman may ask Supreme Court to review case, attorney says
Andrew Ramanas, Main Justice, Senate Panel Backs Anti-Fraud Bill
Andrew Ramonas, Main Justice, Alaska Court Suspends Former U.S. Attorney, Palin Legal Aide
Mike Scarcella, BLT Blog, Former Prosecutor Appeals Dismissal of Suit Against DOJ
Ruben Castaneda & Miranda S. Spivack, Washington Post, Johnson, ex-county executive in Prince George’s, pleads guilty to taking bribes
Dechert Press Release, Judge James McGuire to Join Dechert as a Partner in New York
Patricia Hurtado, Bloomberg, Steven Fortuna Still Providing Information in Galleon Probe, U.S. Says
Monday, May 23, 2011
It is good to see that President Obama is using his pardon powers, granting eight pardons this past week. (See Press Release here) Clearly more pardons would have been better as there are many suffering from the collateral consequences of a conviction that should not have happened. Likewise, there are many that have significantly reformed their lives and are deserving of a second chance. Some observations about these pardons:
- Four of the eight included a conspiracy count.
- Three of the eight had a drug related charge.
- The largest sentence that had been given in any of these offenses was five years.
- Four had a sentence of no prison time.
- The most recent sentencing from these cases was 2001.
- Seven of the eight cases were prior to 2000.
- Only two cases were from the same state, that being Indiana.
An important question to ask is whether any of these cases should have been criminal activity in the first place. Did we really need to send someone to prison for "the possession and sale of illegal American alligator hides" in violation of the Lacey Act? Would a civil fine have been sufficient?
Sunday, May 22, 2011
This blog previously looked at the Kott and Kohring cases coming from Alaska (see here). Both cases were connected to the Ted Stevens case, a case that DOJ eventually chose to dismiss after discovery violations were publicly shown. The Ninth Circuit in Kott and Kohring remanded the cases of these two individuals as a result of prosecutorial discovery violations. One judge dissented, arguing instead for a complete dismissal stating:
"I am deeply troubled by the government's lack of contrition in this case. Despite their assurances that they take this matter seriously, the government attorneys have attempted to minimize the extent and seriousness of the prosecutorial misconduct and even assert that Kott received a fair trial -- despite the the government's failure to disclose thousands of pages that reveal, in part, prior inconsistent statements by the government's star witnesses, ..., regarding the payments Kott allegedly received."
And now the Ninth Circuit Court of Appeals denied the Petition for Rehearing filed by Peter Kott. Here again it was a 2-1 split, with Judge B. Fletcher voting to grant the petition and order an evidentiary hearing.
But what remains unknown is whether the government will in fact proceed with these two cases. If they plan to, then shouldn't they have already given the defense the exculpatory evidence it was entitled to receive? Are they waiting until trial? (see Jim Burke, Alaska Dispatch, Alaska Corruption Cases on Ice?). The Stevens, Kott, and Kohring cases are the very reason that Congress needs to codify discovery practices to assure that prosecutors comply with the important Constitutional mandate of providing an accused with due process.
Obstruction of justice is a common offense used by prosecutors in white collar matters. I call it, along with perjury and false statements, "short-cut"offenses - as they usually allow prosecutors to obtain a conviction fairly easily without needing to present a lengthy document case - and white collar cases can be very document intense. But lately, the government has not been so fortunate in its use of the short-cut approach. Because even if proceeding with a short-cut crime, you still need to prove the case. More importantly, you need to have a case with sufficient evidence of all the elements of the crime.
The Eleventh Circuit in U.S. v. Dennis Friske, a.k.a. Denny, ruled that the "government failed to introduce sufficient evidence to permit the jury to find that he knew the existence of the forfeiture proceeding." Bottom line - the case was remanded for the district court to enter an acquittal.
Although this is not a white collar case, it is an important decision for white collar practitioners as it emphasizes the need to focus on whether the government has the sufficient nexus for an obstruction crime. The court in Friske cites to the Supreme Court decisions in Aguilar and Arthur Andersen in holding that the "government was required to prove that Friske knew of, or at least foresaw, the forfeiture proceeding." Merely acting suspiciously will not be enough.
See also Paul Kish, Federal Criminal Lawyer Blog, Atlanta-based Federal Court of Appeals Reverses Obstruction Conviction Because No Evidence Defendant Aware of the Proceeding He Supposedly Obstructed
(esp)(w/ a hat tip to Linda Friedman Ramirez)
The Charleston Law Review invites submissions for its annual Supreme Court Preview volume. This year’s Preview will feature a foreword by Erwin Chemerinsky, Dean and Distinguished Professor of Law at the University of California Irvine School of Law. The 2009 Supreme Court Preview volume was cited by Justice Clarence Thomas in his concurring opinion in FCC v. Fox Television Stations Inc., 129 S. Ct. 1800 (2009).
We welcome an article or essay addressing a case before the Court in its October 2011 Term, or in the alternative, addressing an aspect of the Court itself such as recent voting trends, case load, an analysis of a particular Justice, or any other topic related to the Supreme Court.
The Supreme Court Preview is published to coincide with the opening of the October 2011 Term. We therefore ask that work be submitted no later than August 1, 2011. Submissions will be reviewed on a rolling basis beginning June 1, 2011. Please direct submissions and any questions about our Supreme Court Preview to Mollie Brunworth, Editor in Chief, via email at email@example.com.
NACDL has a west coast white collar crime conference June 16-17th in beautiful Lake Tahoe, NV, at the luxurious Hyatt Regency Lake Tahoe Resort.
Topics will include:
- Handling the Unique Challenges of High-Profile Defense
- Hot Topics in Criminal Antitrust
- National Security Issues that Arise for the Regular Practitioner
- FCPA Defense
- White Collar Sentencing
- When Your Clients’ Assets are Frozen
- Ethical Considerations of Witness Contact & MoreFor
For more information, see here.
Tuesday, May 17, 2011
Joel Schectman, CNN MOney- Fortune, Wharton grads respond to Rajaratnam conviction
Gretchen Morgenson, NYTimes, New York Investigates Banks’ Role in Financial Crisis
James McGrath, Internal Investigations Blog, Lauren Stevens, GlaxoSmithKline, and Bugs Bunny
(esp)(blogging from Los Angeles)
The 11th Circuit ruled on the post-Skillingremand in the case of Don Siegelman, former Governor of Alabama, and Richard Scrushy, former CEO of HealthSouth. The court's per curiam opinion considered honest services convictions and other convictions in light of the Supreme Court's ruling in Skilling that limits 1346 to "bribery and kickbacks." It also looked at First Amendment rights with respect to political contributions. It's a long 65 page opinion that is very fact-specific.
Siegelman and Scrushy had raised nine errors. As to Siegelman convictions on 5 counts were affirmed and 2 were vacated. As to Scrushy, convictions on 4 counts were affirmed and 2 were vacated. The case was also remanded for resentencing.
(esp)(blogging from San Francisco)
Sunday, May 15, 2011
As noted here by Sol Wisenberg, Raj Rajaratnam was found guilty on all counts. Many have been commenting on the case, see here, here, here, here, and here for example. Some predict that this decision will be the stepping stone for future insider trading cases (see here, here , and here) After all the government might say - the wiretaps seemed to work in this case, perhaps they can work in other insider trading cases.
Hopefully, the government will think this through rationally. The wiretaps were clearly questionable (see here) (Professor Dershowitz takes a different view here). It remains to be seen whether a higher court will find their use acceptable. If there are more prosecutions using these types of wires, and it turns out that a higher court finds them unacceptable - a lot of time and money will have been wasted by the government.
A second issue is with respect to what constitutes insider trading and when is the conduct illegal. The fuzzy nature of this question makes many of these prosecutions questionable. The question I always wonder is if the person knew that the conduct was illegal, would they have committed the act. If they knew that a heavy jail sentence would be following, would they engage in this activity. The concern here being that perhaps more time needs to be spent on making criminal offenses clearer and educating folks on what is legal and what is not.
(esp)(blogging from San Francisco)
Mike Scarcella, BLT Blog, DOJ Seeks Restrictions in FCPA Sting Case in D.C.
Mike Scarcella, BLT Blog, Appeals Court Upholds Safavian Public Corruption Conviction (w/ a hat tip to Ivan Dominguez)
CNN, Senate committee refers Ensign case to Justice Department (w/ a hat tip to John Wesley Hall)
Mike Scarcella, BLT Blog, Lawyers for Abramoff Associate Say Client Can't Afford Legal Bills
Don Jeffrey, Bloomberg, Galleon Defendants Denied Requests on May 16 Trial Evidence, Postponement
Brian Baxter, AMLaw Daily, Ex-Ropes & Gray Associate Disbarred after Rajaratnam Verdict
(esp)(blogging from San Francisco)
Saturday, May 14, 2011
Here is yesterday's opinion from the D.C.Circuit in United States v. David Safavian. The former Jack Abramoff friend and colleague was convicted upon retrial, after the appellate court threw out the original convictions on various grounds. The primary contention in the latest appeal was vindictive prosecution, as new charges were added after the remand. The Court held that the trial court did not abuse its discretion in finding that the government added the new charges to counter Safavian's literal truth defense. Safavian's alleged felonious conduct was incredibly petty and minor in nature. The prosecution was a tremendous waste of government resources.
Wednesday, May 11, 2011
Read all about it. Here is Katya Wachtel's report for businessinsider.com. Carrie Johnson of NPR's All Things Considered discusses the deterrent effect of Wall Street wiretaps in Wiretaps: Not Just For Mob Bosses Anymore, with a quote thrown in from yours truly.
Tuesday, May 10, 2011
Grant McCool, Reuters, No decision yet from Raj Rajaratnam jury's ponderings
Hon. Roger Titus (nominated by George W. Bush) provides a moving statement in granting an acquittal of Lauren Stevens:
"I take my responsibility seriously. I practiced law for a long time and made a number of Rule 29 motions that -- or in the state system equivalent of them. I don't have a very good track record with those motions. In my seven and a half years as a jurist I have never granted one. There is, however, always a first."
The judge noted how attorney-client privilege material had been used in trial as a result of the prosecution obtaining them via a claim under the crime-fraud exception. He notes -
"With the 20/20 vision of hindsight, and that's always the place to be in terms of wisdom, the Massachusetts Order was an unfortunate one, because I now have benefitted from a trial in which these documents that were ordered produced were paraded in front of me and the prosecutors were permitted to forage through confidential files to support an argument for criminality of the conduct of the defendant.
"What those records demonstrate to the Court is, first of all, that access should not have been granted to them in them in the first place. . . But they also show that this was a client that was not engaged to assist a client to perpetrate a crime or fraud. Instead, the privileged documents in this case show a studied, thoughtful analysis of an extremely broad request from the Food and Drug Administration and an enormous effort to assemble information and respond on behalf of the client."
"The responses that were given by the defendant in this case may not have been perfect; they may not have satisfied the FDA. They were, however, sent to the FDA in the course of her bona fide legal respresentation of a client and in good faith reliance of both external and internal lawyers for GlaxoSmithKline."
The court notes near the end of the Order:
"I conclude on the basis of the record before me that only with a jaundiced eye and with an inference of guilt that's inconsistent with the presumption of innocence could a reasonable jury ever convict this defendant."
"There is an enormous potential for abuse in allowing prosecution of an attorney for the giving of legal advice. I conclude that the defendant in this case should never have been prosecuted and she should be permitted to resume her career."
Transcript of Hearing - Download 110510STEVENS (hat tip to Ronald Levine- Post & Schell)