Thursday, June 30, 2011

In the News & Around the Blogosphere

Wednesday, June 29, 2011

The Ultimate Cross-Examination

Hats off to Attorney Ira London for a cross-examination that everyone can learn from here.

(esp)

June 29, 2011 | Permalink | Comments (0) | TrackBack (0)

The Wrong Judge and the Lindsey FCPA Trial Bombshell

If I were a federal prosecutor in the Central District of California I would not want to tick off Judge Howard Matz. But that's just what federal prosecutors in the Lindsey Manufacturing FCPA case have done. Matz is an exceptionally thoughtful and intelligent jurist. He is also a former AUSA whose son is a Central District prosecutor. So Matz knows when things aren't right. And things aren't right in the Lindsey Manufacturing case. On Monday, during post-verdict proceedings, AUSA Doug Miller revealed that the government had inadvertently violated a court order by failing to turn over portions of FBI Special Agent Susan Guernsey's grand jury testimony to the defense. Matz was shocked, according to this excellent LAW360 story (subscription required) by Zach Winnick. "I shouldn't be shocked, because it's not the first time you and your colleagues have trailed into court with excuses and benign mea culpas." Ouch.

It is clear from Winnick's piece that Matz has long been troubled with various aspects of the government's presentation. Now Matz is ordering additional briefing on whether the guilty verdicts should be overturned and the case dismissed. My colleague Ellen Podgor posted here in March on earlier Brady problems encountered by the government. And Winnick reported here in May (in LAW360) on Judge Matz's harsh criticism of some of the government's summary charts. Matz called the charts, "ill-advised, misleading, and shockingly incomplete." Oral arguments on the defense motions to dismiss are set for September 8.

(wisenberg)

June 29, 2011 in FCPA, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 28, 2011

Sentences Beyond a Lifetime

Benjamin Weiser, NYTimes, Judge Explains 150-Year Sentence for Madoff has a fascinating story of some of the surrounding conversations prior to the Madoff sentencing. But there is one aspect that continues to trouble me when sentences given are beyond the lifetime of the individual serving the sentence - that is, does this undervalue our sentencing process. Some may claim that it sends a more pronounced message when the sentence is of such a stinging length. And clearly a long sentence was warranted here. But what does it say about our sentencing process when individuals are given sentences that are not only beyond the lifetime of the defendant, but also beyond any person's lifetime. I have to wonder if it makes a mockery of the sentencing process.

(esp)

Addendum - Doug Berman, Sentencing Law & Policy,Judge Denny Chin and Bernie Madoff talk about a sentence of 150 years

June 28, 2011 in Sentencing | Permalink | Comments (0) | TrackBack (0)

What If Ruth and Bernie Madoff Had Divorced?

White-collar defense attorneys are often asked by clients accused of or investigated for theft or fraud, or by their client’s spouses, what could be done to protect the spouse financially. My advice had always been for the spouse to seek advice from a knowledgeable and independent debtor-creditor attorney. As a result of the New York Court of Appeals ruling in CFTC v. Walsh last week, my current advice is to consult with a knowledgeable and independent matrimonial attorney.

In that case, the CFTC and SEC attempted to claw back from a divorced "innocent spouse" funds allegedly stolen by her ex-husband that she received in a divorce settlement. The state court, basing its decision largely on issues of finality and fair consideration (and perhaps that a different ruling would disproportionately harm women), ruled that a wife uninvolved and unaware of her husband’s criminality could not be required to disgorge the proceeds to the theft victims.

The case came to the New York court in a peculiar posture. The federal Second Circuit Court of Appeals referred the case to the New York State court to answer two questions of law, one of which the state court modified before answering.

I am far from sure that the Second Circuit will be comfortable ratifying the state court’s ruling, which I personally find questionable on both logical and policy grounds. If, however, the Second Circuit does accept the state court’s reasoning and precludes disgorgement from the wife, fraudsters fearful of eventual apprehension and considerate of their spouses might seek or encourage divorce to assure the spouse’s secure financial future. And if Bernie and Ruth Madoff had been divorced before Bernie’s fraud was revealed, under such a ruling Ruth Madoff (presumably an "innocent spouse") would now be a very, very, very rich woman.

(Goldman)

June 28, 2011 in Forfeiture, Fraud | Permalink | Comments (0) | TrackBack (0)

Monday, June 27, 2011

Blagojevich Found Guilty on 17 of 20 counts - Joining The Illinois Governor Convicted Felon Club

The press is reporting herehere, here, and here, that Former Illinois Governor Rod Blagojevich has been found guilty of 17 counts, not guilty on one count, and two counts with no verdict. This was the second trial, the first ending in a hung jury except for one count. The jury was out this time for 10 days.  Blagojevich did not testify in the first trial, but did testify this time. 

A second trial was an enormous benefit to the government.  They had the opportunity to re-evaluate their case and to see that keeping it simple was the smarter choice. They also had the conviction on one count to allow them to start cross-examination against him with the "convicted felon question."  

Why is it that so many Illinois Governors wind up as convicted felons?  (e.g. Otto Kerner, Dan Walker, George Ryan, and Rod Blagojevich).  

(esp)

Addendum - Doug Berman, Sentencing Law and Policy Blog here

June 27, 2011 in Fraud, Verdict | Permalink | Comments (6) | TrackBack (0)

Sunday, June 26, 2011

Underenforcement of Corporate and White-Collar Fines and Penalties

A new article on SSRN by Martin H. Pritikin and Ezra Ross, titled "The Collection Gap: Underenforcement of Corporate and White-Collar Fines and Penalties" - forthcoming in Yale Law & Policy Review.  SSRN's abstract:

Civil and criminal monetary sanctions (fines, penalties, and restitution orders) are primary tools in the enforcement activities of the modern administrative state, particularly in the context of corporate wrongdoing. Although the enforcement literature debates the fairness and efficiency of imposing corporate sanctions, once imposed, those sanctions must be collected to be effective. Yet federal and state agencies are leaving untold billions in collectible fines unrecovered. This is a problem of both theoretical and practical importance, yet it has been largely overlooked. This Article, for the first time, amasses the evidence of pervasive governmental undercollection; rebuts the argument that the problem is due to factors beyond governmental control; examines the root causes of undercollection; and recommends solutions that address the political and economic circumstances that impede reform.

(esp)

June 26, 2011 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, June 24, 2011

Not a Good Day for Conrad Black

Ameet Sachdev, Chicago Tribune, Black headed back to prison; wife collapses in court

(esp)

June 24, 2011 in Fraud, News | Permalink | Comments (0) | TrackBack (0)

The Prosecutor’s Duty to Investigate His Own Witness

The Seventh Circuit on June 17 issued a ruling in a drug case that appears to have general applicability to criminal cases, including white-collar cases. In United States v. Freeman, 09-cr-4043, 2011 WL 2417091 (7th Cir., June 17, 2011), the Seventh Circuit affirmed a district court’s grant of a new trial on the ground that the prosecutors presented testimony of a key cooperating witness on the stand who they knew or at least should have known was lying. In that case, a defense lawyer, after reading the witness’s grand jury testimony, sent the prosecutors a letter stating that the defendant had been incarcerated at the time the witness claimed the defendant had participated in important events in the charged conspiracy. The prosecutors apparently failed to investigate this claim and called the cooperating witness, who testified falsely (the prosecutors did later stipulate that the defendant had been incarcerated at the time of the events the witness described).

The court’s opinion forcefully stated the prosecutor’s obligation to present accurate and candid information:

[T]he governing principle is simply that the prosecutor may not knowingly use false testimony. This includes "half-truths" and vague statements that could be true in a limited, literal sense but give a false impression to the jury.

The court went on, more remarkably, to impose a duty upon the government to investigate plausible allegations that a government witness’s expected testimony was false:

[I]t is obvious that when the government received the letter from [the defendant’s] attorney, it knew there were problems with [the witness’s] testimony – problems it should have cleared up well before [the witness] was allowed to testify . . . .

[W]hen the government learns that part of its case may be inaccurate, it must investigate. It cannot simply ignore evidence that its witness is lying. Here, the government abdicated its responsibility by failing to investigate . . . .(Citations omitted.)

The case is significant not so much for its statement that the government must not knowingly present false or misleading testimony, a rather obvious principle, but on its imposing on the government a duty to investigate a specific allegation that its cooperating witness had testified falsely or was about to testify falsely. Prosecutors, in white-collar and other cases, often wholly and uncritically accept the stories told by cooperating witnesses, particularly the first to "turn," regardless of the witness’s blemished background and huge personal motivation, and stubbornly cling to the belief the witness is telling the truth despite indications to the contrary. Too often consequently, prosecutors turn a deaf ear to substantial allegations brought to them by defense lawyers that their witnesses are lying. And perhaps too often defense lawyers, fearing that the prosecutors will not seriously investigate matters that will undermine their cases but rather will make efforts to minimize their significance, choose not to bring such information to the prosecutors’ attention.

This case suggests that a prosecutor who makes no effort to investigate a plausible allegation that a major government witness will give false testimony may imperil a conviction if it is later revealed that the witness lied, ordinarily not by itself grounds for reversal. At the same time it may indicate that a defense lawyer who chooses not to approach the prosecutor with evidence of a prosecution witness’s expected perjury and instead uses such evidence unsuccessfully at trial may weaken or undermine a post-trial motion based on that false testimony.

(Goldman)(hat tip Evan Jenness)

June 24, 2011 in Investigations, Judicial Opinions, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, June 23, 2011

In the News & Around the Blogosphere

CALL FOR PROPOSALS / CALL FOR PAPERS

The American Bar Association, Business Law Section, Business Bankruptcy Committee, Criminal Justice Section, White Collar Crime Committee and the Golden Gate University School of Law proudly host a national dialogue about the freezing, seizing and distributing entity assets and operating the entity at the intersection of complex white collar crime prosecutions and business bankruptcy.  The conference will serve as part of an ongoing discussion about lessons learned, recurring issues and best practices.  The conference will feature leading voices from the federal district and bankruptcy bench, Department of Justice, Criminal and Civil Divisions from "Main Justice" and prominent U.S. Attorney's Offices, and Securities and Exchange Commission, as well as prominent white collar crime and business bankruptcy practitioners and academics.  The conference is scheduled for Friday and Saturday, November 4-5, 2011 at Golden Gate University School of Law in San Francisco, CA.

The conference organizers seek proposals for papers of publishable quality that explore this intersection between white collar crime prosecutions, business bankruptcy.  Particularly, we seek papers discussing the freezing, seizing and distributing of entity assets, operating the entity, and the different practices and goals inherent to criminal prosecution, civil enforcement and business bankruptcy proceedings.  A committee of academics will review paper proposals that may contribute to our discussion.  Both essay and article length papers are welcome.

Proposals should describe the thesis, its general support, and the proposed format of the final paper. Proposals should be no more than 3-pages. We will review proposals as received, beginning on June 1, 2011, with the submission deadline of July 15, 2011.  Authors of selected proposals will then submit a draft of the paper in advance of the November conference and by October 1, 2011.  During the November conference, authors of the selected proposals will present a draft of their paper and the committee of academics and conference participants will review the draft papers in advance of the conference and participate in workshops for selected papers during the conference.

 To submit a proposal or draft paper, or for more information about the conference, participants or call for papers, contact Professor Karen Gebbia (kgebbia@ggu.edu) or Wes Porter (wporter@ggu.edu), or by phone at (415) 442-6600.  The attachment should be in Word or PDF format.  Late submissions will not be accepted.  An e-mail acknowledging submission will be sent promptly to each author.  Decisions will be communicated on a rolling basis with final decisions no later than August 1, 2011.

(esp)

June 23, 2011 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 22, 2011

Second Chance for Bad Guess?

          The appeal of former New York State Senate majority leader Joseph L. Bruno, argued last week before the United States Court of Appeals for the Second Circuit, has raised some interesting double jeopardy issues which may or may not be addressed by the court.  Bruno was convicted of honest services fraud under 18 U.S.C. 1346 based on an undisclosed self-dealing theory.  After Bruno’s conviction and while his case was on appeal, the Supreme Court in United States v. Skilling rejected the undisclosed self-dealing theory under Section 1346 and limited the statute’s application to cases involving bribery or kickbacks (thereby making the statute virtually superfluous since such conduct is usually covered by other statutes).  On appeal in Bruno, the government, conceding reversal was required because the court’s instructions to the jury were flawed under Skilling, nonetheless argued that it should be given a second shot at Bruno, this time with a superseding indictment more specifically alleging bribery.

          Generally, an appeal of a criminal trial marred by instructions proper under prevailing law at the time given (as they apparently were here) but later found defective by a higher court in that or another case results in a retrial with proper instructions.  One underlying justification is that the prosecution cannot be expected to anticipate changes in the law and should be able to rely on current law.  This case is somewhat different, however.  Here, the government could not, or certainly should not, have failed to realize that the theory it chose to pursue was constitutionally questionable on vagueness and overbreadth grounds.  The theory of prosecution had been questioned by courts, scholars, and lawyers and was about to be considered by the Supreme Court pursuant to a grant of certiorari.  The government nonetheless chose to go forward on this theory, most likely because it was easier to prove factually, rather than a bribery charge that was less assailable legally but probably more difficult to prove.  This case thus appears to be a classic example of a prosecutor deciding to seek the instant gratification of a conviction at trial and not to worry about the appeal until later.

          Last week, in Davis v. United States, the Supreme Court held in a search and seizure case that evidence should not be excluded if the evidence was seized pursuant to police procedures compliant with then-binding legal precedent even though that precedent was subsequently overruled.  Following that line of reasoning, a court may well rule that there should not be a double jeopardy bar to retrial if the prosecutor’s conduct was compliant with binding legal precedent that was subsequently overruled.  A different approach seems appropriate, however, when the law the prosecutor relied on was, as here, up in the air.  Indeed, Justice Sotomayor, concurring in Davis, made such a distinction, stating that she would have ruled differently if the law the police relied on was unsettled.  It will be interesting to see how the Second Circuit, if it reaches this issue, will decide it.

(Goldman)

June 22, 2011 in Fraud, Prosecutions, Searches | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 21, 2011

The Foreign Corrupt Practices Act

Guest Bloggers: Stephen Richer – Director of Outreach, Washington Legal Foundation; John Kendrick – Summer fellow, Washington Legal Foundation

"The Foreign Corrupt Practices Act is a huge legal quagmire; companies don’t have a clear idea of what they can and can’t do." Tony Alexis, Mayer Brown LLP.

In 2004, the DOJ found just two violations of the Foreign Corrupt Practices Act (FCPA). In 2010, that number rose to 48. Have businesses become significantly more corrupt in the past six years? Hardly. Rather, as Mike Volkovpointed out at a recent Washington Legal Foundation (WLF) web seminar, the DOJ has simply realized a cash cow in the FCPA, and they’re milking it for all it’s worth. Consider these FCPA fines from the past four years: Siemens, $800 million; Haliburton, $579 million; Daimler $185 million; Johnson & Johnson, $70 million.

Onlooking companies in similar positions have witnessed such nine digit fines and asked, "How do we steer clear of similar penalties?" Unfortunately, that’s uncertain when it comes to the FCPA. Questions such as "what constitutes a foreign official," are difficult for even attorneys to answer, and the absence of a de minimis provision makes it so even a cup of coffee to a Chinese transportation official could merit an FCPA fine. As Volkov stated later in the WLF program, "The reach of FCPA is unbelievable.

"The FCPA is both vague and broad, and, to make things even easier for the DOJ, it has a generous whistleblower program that doesn’t encourage inter-company solutions first. Volkov called it a, "confessional justice system." All told, the FCPA is a nightmare for American businesses. Especially unwelcome at a time when national unemployment is at 9.1 percent.

Fortunately, Volkov, Alexis, and WLF are not the only ones to recognize the flaws of the FCPA. At a Tuesday House Judiciary Committee hearing on the FCPA, Former Attorney General Michael Mukasey emphasized the need to "clarify the meaning of a ‘foreign official,’" the need for a "willfulness requirement for corporate criminal liability," and the general want for greater "clarity and certainly." George J. Terwilliger of White & Case LLP and Shana Regon of the National Association for Criminal Defense Lawyers also added their ideas to "help clarify ambiguity in the statute and its application."

It can only be hoped that such experts have influence on Congress because, as Volkov put it, the current ambiguity of the laws allow government officials to be "not only enforcers of the law, but also judge and jury," and that’s not a formula for inspiring American business.

(sr)

June 21, 2011 in FCPA | Permalink | Comments (0) | TrackBack (0)

Monday, June 20, 2011

Latest Lauren Stevens Bombshell: Maryland U.S. Attorney Refused To Sign Indictment

Corporate Counsel's Sue Reisinger reports here that Rod Rosenstein, the universally respected U.S. Attorney for the District of Maryland, refused to sign his name on either Lauren Stevens indictment, because he did not believe that the evidence was sufficient to support a conviction. The case was prosecuted by District of Massachusetts AUSAs, but venue was found in Maryland. The typical practice is for the U.S. Attorney in the district of prosecution to sign all indictments issued by the grand juries in his/her district, or at least to have his/her signature block signed by an AUSA. This did not happen in the Stevens case. Rosenstein, a former colleague of mine, is the quintessence of straight-arrowhood. His failure, literally, to sign-off on the Stevens charges surely sent an important signal to Judge Roger Titus, who threw the case out under Rule 29. Let me give you an idea of how well respected this Jimmy Stewart, Boy Scout, is. Rosenstein, the Republican appointee in an overwhelmingly Democratic state with two Democratic U.S. Senators, has yet to be replaced, even though a Democrat has held the White House for 2 and one-half years. The story of the Stevens prosecution gets curiouser and curiouser.

(wisenberg)

June 20, 2011 in Obstruction, Prosecutions, Prosecutors | Permalink | Comments (1) | TrackBack (0)

More Oversight At the Top - Avoiding Needless Prosecutions

Sue Reisinger at Corporate Counsel has this fascinating piece titled, Why Didn't the Maryland U.S. Attorney Sign the Lauren Stevens Indictment?  But there are some additional questions that need answers.  Why if a top US Attorney is not willing to sign the Indictment did senior officials at DOJ's criminal division not intercede?  And if they did re-examine the case, did they authorize proceeding with this case? (For background on the dismissal of this case by the judge, see here).

There is something to be said about an indictment coming from the district bringing the charges - it's an aspect of venue.  Prosecutors from that district get to look at the case in comparison to other matters being prosecuted in that district, in order to determine if this merits expending funds for a prosecution.  Having outsiders brought in to consider a prosecution may be warranted, especially when the prosecutor has a conflict.  But in any event, someone at the top needs to examine whether the prosecution is warranted.

(esp)

June 20, 2011 in Obstruction, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Sunday, June 19, 2011

In the News & Around the Blogopshere

MIlton J. Valencia, Boston Globe, In appeal, DiMasi case to test high court ruling; Bob Salsberg, Seattlepi, Ex-Mass. Speaker convicted in corruption case

Robert Gavin, Timesunion, Exasperated Bruno waits for appellate ruling in corruption case; Christie Smythe, law360, US Bid To Retry Ex-NY Sen. Takes Heat In 2nd Circ.

DOJ Press Release, Former Colonial Bank Senior Vice President Sentenced to 8 Years in Prison for Fraud Scheme

DOJ Press Release, Texas-Based Fluor Corporation to Pay U.S. $4 Million to Resolve False Claims Act and Anti-Kickback Act Liability

DOJ Press Releases, FORMER EXECUTIVE OF ILLINOIS REFUSE CONTAINER REPAIR
COMPANY SENTENCED TO SERVE 16 MONTHS IN PRISON FOR CONSPIRING TO DEFRAUD THE CITY OF CHICAGO

Kate Moser, The Recorder, law.com, Bonds' Appellate Team Seeks Dismissal, Says Slugger Convicted of Being Wordy

Michael Volkav, White Collar Defense and Compliance, Congress and the FCPA: Here We Go Again

Mike Salinero, TBO.com, Kevin White indictment alleges bribes from towing boss

Mike Scarcella, BLT Blog, DOJ Subpoenas In Trade Secret Case Withstand Challenge

Business Wire, Gary Naftalis Wins Litigator of the Year for White Collar Criminal Defense at the Chambers USA Awards

CityBizzlist, Chambers USA Ranks Zuckerman Spaeder LLP as Top White-Collar Crime Firm in Washington, DC

Mark Hamblett, law.com, NYLJ, Jury Convicts Three, Capping Prosecution of Insider Trading

Zoe Tillman, BLT Bog, Former Maryland Prosecutor Joins King & Spalding's D.C. Office

(esp)

June 19, 2011 in News | Permalink | Comments (0) | TrackBack (0)

Friday, June 17, 2011

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “From Push to Shove: Defending Against Higher Sentences,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

The seminar closed with a discussion of sentencing strategies. Moderated by Jeffery Robinson, the panel consisted of David Angeli, Ellen Brotman, U.S. District Court Judge Robert T. Dawson, Vito de la Cruz, and Jan Nielsen Little.

Mr. de la Cruz started the discussion by suggesting that because the guidelines still carry considerable weight, plea agreements should (where possible) be negotiated to impose a statutory cap on the possible penalty. With regard to the guidelines, Mr. de la Cruz discussed looking at the way in which the guideline was drafted. If the guideline was not based upon a Sentencing Commission study and empirical evidence, the case law is clear that the district court can reject the guideline based upon policy alone.

Ms. Brotman seconded those comments, and noted the excellent resources made available by federal defender offices to assist in analyzing whether the guideline at issue may be subject to challenge on this basis.

Judge Dawson noted the reason behind the guidelines was to establish some sense of fairness between sentences, but were intended to be recommendations only. Post-Booker, the “real work” at sentencing is with regard to variances.

Mr. Angeli suggested that the “deconstructing the guidelines” approach may be effective with regard to 2B1.1 guidelines, because those guidelines have not evolved due to careful Sentencing Commission study. Ms. Brotman followed up by noting that this kind of attack should be supported by empirical evidence in favor of the sentence that is being sought, rather than just relying on omissions by the Sentencing Commission. She additionally noted that the initial research upon which the guidelines were based was flawed, because it only included defendants who were sentenced to prison.

Mr. Angeli discussed Pepper v. U.S., a Supreme Court case which held that post-1st-sentencing, pre-re-sentencing rehabilitative efforts can be taken into consideration. He noted that the Court held that the sentencing guideline which did not make good policy sense could and should be disregarded. The holding in Pepper suggests that a number of other policy statements are now subject to challenge.

Ms. Little noted that the Sentencing Commission has compiled a huge variety of statistics, available on their website, which can be used to make arguments for lenience. For example, she noted that statistics supporting a relatively high frequency of variances with regard to similarly situated defendants can be cited to request a similar variance. Ms. Brotman suggested that the Sentencing Commission can remain relevant by making this information even more readily available.

Ms. Brotman discussed the application of the four purposes of sentencing listed in 18 U.S.C. 3553 apply to white collar cases. The negative use of the same factors by the government was discussed by Mr. Robinson and Ms. Little.

Ms. Brotman discussed the Ninth Circuit’s review of white collar sentences, and noted with concern that a number of the Judges have expressed that discretion in white collar cases should be reined in because Judges are more inclined to be sympathetic to white collar defendants because they are more likely to actually be similar to them with respect to their background.

The panel noted (with audience agreement) that Assistant United States Attorneys are almost uniformly asking for guideline sentences. Ms. Brotman noted that this rigid policy often eliminates them from the discussion regarding the appropriate sentence.

(dt)

June 17, 2011 in Conferences, Sentencing | Permalink | Comments (0) | TrackBack (0)

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Defending the Individual in FCPA Cases: Managing the Company, Dealing with the Facts,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

The penultimate discussion was moderated by Marc J. Rochon, who was joined by Mary Carter Andrues, Pamela R. Davis, Jeffrey H. Knox, and C.E. Rhodes.

This panel dealt with a hypothetical company which had a deferred prosecution agreement with SEC/DOJ involving small value facilitation payments which were actually bribes. The hypothetical involves an email sent to the company’s auditing committee by a sales agent in Egypt alleging the bribes are taking place.

Following the disclosure to the audit committee, outside counsel is retained, and (due to the deferred prosecution agreement) DOJ/SEC needs to be informed of the situation.

Mr. Rhodes indicated that the company should retain counsel for the whistleblower in response to hypothetical questions involving that individual’s exposure and rights.

Ms. Andrues, acting as counsel for the hypothetical whistleblower, reviewed the information she would want to have access to, and the potential issues she would need to address, including the relevant law in the foreign country (Egypt) that could impact the investigation.

Mr. Knox indicated that he (acting as hypothetical prosecutor) would potentially provide background information to counsel for the whistleblower. However, both Ms. Andrues and Ms. Davis (acting as hypothetical whistleblower counsel) indicated that it was unlikely they would contact the prosecutor, although both indicated that the call could be useful to obtain the lay of the land.

Mr. Rochon proposed a one-way flow of information from company counsel to counsel for the whistleblower as a way to get the attorney up to speed without compromising company’s counsel’s ability to remain as counsel in the event the whistleblower ends up cooperating with the government.

Another employee, an accountant, also needs counsel, and has given statements indicating involvement and potential additional exposure. The panel agreed that counsel for that individual might not allow an interview of that client, although the employee will almost certainly be terminated. Ms. Davis indicated that he may be facing termination even after an interview. The panel agreed that if the accountant still wanted to go forward with the interview, he should be thoroughly advised regarding the risks. However, the panel expressed significant doubts that the company would facilitate investigation.

Another hypothetical client was then discussed: in-house counsel who failed to act on the whistleblower’s initial complaints and who’s (at a minimum) negligence appears to have led to this problem. Because this hypothetical client’s version of the events was unsupported by documents or other witnesses, the panel agreed that this individual would clearly not be allowed to be interviewed by anyone, regardless of employment consequences.

During these exchanges, it was repeatedly discussed that the company’s agreement with DOJ/SEC required them to disclose information it discovered, and that this factored into every decision regarding allowing the various clients to be interviewed.

Mr. Rhodes commented regarding employment futures of these individuals. All appear to be unlikely to remain with the company, but the in-house counsel is most likely to be fired immediately. The accountant was deemed likely to be terminated after another interview. The tension between the interests of the company and the individual appeared especially intense in this scenario.

With regard to interview requests by DOJ/SEC, Ms. Andrues and Ms. Davis expressed skepticism regarding the amount of protection and value of proffer letters. In the event that the interviews were to take place, and a recording was required and defense counsel was not going to be given a copy, it was unlikely that the interview would occur. Mr. Knox noted that admissions by officers during interviews would be considered admissions by the company.

In response to a comment from the audience regarding the dangers of conducting investigations in foreign countries, Mr. Rhodes and Mr. Rochon agreed that local legal issues will always influence investigations and should be carefully considered.

(dt)

June 17, 2011 in Conferences, FCPA | Permalink | Comments (0) | TrackBack (0)

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – Keynote Address: Benedict P. Kuehne, Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

The Keynote Presentation, "Standing Tall: Criminal Defense Lawyers as Constitutional First Responder s in Today’s War on Crime," was given by Benedict P. Kuehne.

Benedict Kuehne spoke regarding the important role that criminal defense attorneys play in America. He noted that criminal defense lawyers often put at risk not only their fee, but their own liberty. Because the role of criminal defense lawyers is to safeguard our constitutional rights, that role itself is threatened. Mr. Kuehne used his personal story to examine these principles. In 2004, his office was searched pursuant to a federal warrant. He was the subject of a grand jury investigation into conspiracy and money laundering. His alleged crime related to legal advice he provided another criminal defense lawyer regarding the source of his fee.

This prosecution was part of an overall trend towards the broadening of the scope of money laundering prosecutions, Mr. Kuehne suggested, noting that money laundering has replaced conspiracy as the prosecution’s weapon of choice.

Mr. Kuehne noted that this prosecution theory threatened to chill the assertion of the Sixth Amendment right to counsel and the willingness of counsel to provide legal representation to individuals facing prosecution.

Mr. Kuehne then explored the history of litigation surrounding the specific statutory exemption for criminal defense fees. For 20 years, the government persisted in attempts to convince courts that the exemption did not mean what it said. These efforts, combined with the ability to seek forfeiture of fees, had a chilling effect on that Sixth Amendment right.

His case resulted in the decision U.S. v. Velez, vindicating the criminal defense fees exemption in money laundering cases.  Mr. Kuehne's story is an inspiring one that clearly demonstrates the importance of the work that we defense lawyers do everyday.

(dt)

June 17, 2011 in Attorney Fees, Conferences, Defense Counsel, Legal Ethics, Money Laundering | Permalink | Comments (1) | TrackBack (0)

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Nowhere to Run, Nowhere to Hide: Antitrust Defense in the Age of Amnesty Agreements & Corporate Self-Reporting,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

The morning of day two of the seminar concluded with a panel discussion of the current issues facing antitrust defense practitioners. The panel consisted of Richard H. Deane, Jr., David Gerger, Eric Grannon, Christine Levin, and Jessica K. Nall.

Ms. Levin began by referencing the concerns expressed yesterday regarding the trend towards cooperation by corporate counsel. She indicated this has been driven, in part, by the Anti-trust Division’s amnesty program and DOJ’s aggressive marketing thereof. She reviewed the requirements of eligibility for the amnesty program: first to approach DOJ; prompt and effective action to terminate the wrongful conduct; full, continuing and complete cooperation; it must be “a true corporate act”; restitution must be made if possible; the company cannot have been the architect of the scheme, and cannot have coerced the others.

The benefits of the amnesty program include: the company receives complete protection from fines; no jail or fines for employees; no joint and several liability exposure in the subsequent civil actions; and no treble damages. Potential pitfalls include the following: the agreement only binds the Antitrust Division; a failed application, which can result in a prosecution using the information provided during the application process; “Amnesty Plus”, a program giving a break to companies which are not first in reporting to DOJ if the company reports additional violations, but which can lead to new grand jury investigations; and the use of amnesty as an anticompetitive tool, i.e., a way to cause headaches or worse for a company’s competition.

Mr. Gergen noted pending litigation in which the government has asserted that an employee may not seek to enforce the amnesty agreement.

To facilitate discussion of these problems and how they apply in real-world settings, the panel reviewed a number of cases in which a successful defense was mounted against leniency application prosecution.

Mr. Deane compared antitrust defense to white collar defense generally. He analogized the amnesty program to “proffering” in other white collar cases, noting the differences – particularly as it results in tension between the goals of corporate counsel and the interests of the individuals involved, and the potential conflict between such goals and a joint defense agreement.

Ms. Nall discussed endgame negotiation strategies. She noted that positioning a client is very fact-specific, but some general principles do apply. For example, cooperation is always viewed favorably by the government. She cautioned that DOJ views with great disfavor the argument that a defendant should be treated with leniency because the defendant is foreign and doesn’t understand or isn’t familiar with American antitrust laws. Legal arguments (regarding jurisdiction, for example) may also be strong bargaining chips.  Mr. Grannon suggested jurisdiction may provide a defense at trial as well.

Mr. Grannon also discussed the decision making process involved in evaluating a plea offer. These decisions often take place after a company has received amnesty, your client’s company has pled guilty, and your client has been left as a “carve-out.” Mr. Grannon presented data on sentences for defendants, comparing different kinds of defendants and providing examples from specific cases.  He noted that DOJ indicates that “no jail” pleas are no longer an option. He noted one particularly troubling DOJ strategy as follows: DOJ has a Memorandum of Understanding with Immigration, indicating that Sherman Act violations are crimes of moral turpitude – which results in deportation and exclusion for 15 years. This agreement exists despite a strong argument that it is not a crime of moral turpitude as that term is commonly defined. DOJ will use this threat as a bargaining chip, agreeing to waive the application of the Memorandum of Understanding it has with Immigration in exchange for a plea of guilty.

(dt)

June 17, 2011 in Antitrust, Conferences | Permalink | Comments (0) | TrackBack (0)