Wednesday, November 30, 2011
The Rigases (for background see here) have now filed a habeas claim and at the heart of the motion is a claimed Brady violation. It is argued that the government failed to provide exculpatory evidence to the defense, and that it deceived the court in maintaining that the notes at issue did not include additional exculpatory material. The motion has impressive authors that include Lawrence Marshall from the Stanford Law School.
Judge Emmet Sullivan's Order in relation to the Stevens case summarizing some of the findings of the special report by Hank Schuelke and William Shields was reported last week by my editor Ellen Podgor here and discussed in depth by my co-editor Solomon Wisenberg here. I add some thoughts on Brady violations in general.
First, as Mr. Wisenberg points out, few Brady violations are intentional. Although there are some rogue prosecutors who deliberately conceal what they know is information which would be beneficial to the defendant, the vast majority of Brady violators are well-meaning prosecutors who in their focus on their proof do not realize that certain information would be helpful to the defense.
Second, Brady is counterintuitive. Requiring a participant in any contest to provide information to his adversary which will decrease his chance of winning goes against the grain. Expecting a prosecutor who believes that such information is merely a means of enabling a guilty person to get off (since the material in question presumably has not changed the prosecutor's mind that the defendant is guilty beyond a reasonable doubt) to provide it to his opponent is even more problematical.
Third, Brady violations are not uncommon, although few are revealed. Since Brady violations are done in secret and the concealed evidence is unlikely ever to reach the light of day, most are undetectable. As Judge Sullivan's Order notes, many of the Brady violations in the Stevens case would never have been revealed but for the exhaustive investigation by the court's appointed investigators. And, this case, it should be remembered, involved a U.S. Senator represented by Brendan Sullivan, a superb, highly-respected and aggressive lawyer, and an outstanding law firm with considerable resources, not an overwhelmed court-appointed attorney with limited time and resources.
Fourth, as Mr. Wisenberg notes, prosecutors are rarely punished for Brady violations. Most judges either ignore the violations or gently chide the prosecutors. DOJ internal reviews of alleged prosecutorial misconduct are viewed by defense lawyers and many judges as whitewashes. Disciplinary committees historically have treated errant prosecutors gently in the few cases of prosecutorial misconduct of which they become aware, and prosecutions of prosecutors for obstruction of justice and the like for withholding evidence are virtually nonexistent.
Fifth, the legal standards for Brady disclosure are confused. Most prosecutors and judges think of Brady material as "exculpatory" material, that is, something that might have a significant impact on the determination of guilt, a standard that, to most prosecutors, eliminates all but a very few items of evidence. In fact, what should be disclosed is evidence "favorable" to the accused, a much broader category than "exculpatory." Additionally, many prosecutors believe that the standard used by reviewing courts to determine whether non-disclosure of Brady evidence requires reversal -- whether it is "material" -- is the proper standard to be used by a trial prosecutor in the initial disclose-or-not determination. "Materiality" in this context is essentially a "harmless error" standard of review used to decide whether the withheld evidence mandates reversal, not the standard to determine whether to disclose in the first instance. Just as a prosecutor's argument in summation may be improper, even if unlikely to result in reversal, concealment from the defense of favorable evidence is improper, even if not so serious that it later will be found "material" by an appellate court.
In sum, under current conditions, Brady just doesn't work. More explicit guidelines, as recently published by DOJ, will help, as would standing court orders making a violation contemptuous (as has seemingly not happened in Stevens) and stronger punishments for violations by judges, prosecutorial agencies, and disciplinary committees (and perhaps also a statute criminalizing deliberate and knowing Brady violations). But, in the end, the only real solution to Brady violations may just be, as Mr. Wisenberg suggests, open discovery in criminal cases.
Maybe FCPA isn't such a slam dunk after all if you take the government to trial. Bloomberg's Businessweek has the story here. The announcement was made in open court yesterday. A written opinion is due today. The Court is apparently relying on its supervisory power, so we can expect a vigorous government appeal. The ruling covers Defendants Lindsey Manufacturing, Keith Lindsey, and Steve Lee.
Tuesday, November 29, 2011
The U.S. Supreme Court accepted cert in the case of Southern Union Co. v. United States. The question presented is "whether the Fifth and Sixth Amendment principles that this Court established in Apprendi v. New Jersey, 530 U.S. 466 (2000), and its progeny, apply to the imposition of criminal fines."
Southern Union was convicted under RCRA following a jury trial. The First Circuit Court of Appeals examined whether under Apprendi it was proper that a judge, and not a jury, "determined the facts as to the number of days of violation under a schedule of fines," and held that "Apprendi does not apply to the imposition of statutorily prescribed fines."
With huge fines being levied in white collar cases, this issue is an important one not only in the environmental context, but also in other areas. In the Southern Unioncase, the "district court imposed a $6 million fine and a $12 million 'community service obligation.'" The government argued that Apprendi does not apply to criminal fines citing to the Supreme Court's decision in Oregon v. Ice. But with white collar fines becoming exorbitant numbers, it raises an interesting issue that will likely be an important case to follow in the Court.
Here is Judge Rakoff's Order Rejecting Proposed SEC-CITIGROUP GLOBAL MARKETS INC.Settlement. Here is the New York Times story. Judge Rakoff's Order repeatedly refers to Citigroup as a "recidivist." It is difficult to believe this Order would have ever seen the light of day had the Court truly believed that a comprehensive law enforcement effort was underway to investigate and hold accountable the persons and institutions whose actions "depressed our economy and debilitated our lives."
In anticipation of the Stevens Report, check out Amanda Coyle, Alaska Dispatch, Could botched Ted Stevens prosecution prompt federal legal system reform?
Monday, November 28, 2011
WSJ's Joe Palazzolo reports here this morning on lobbying efforts to weaken/clarify the FCPA. In yesterday's NYTimes, Gretchen Morgenson commented upon the movement to prevent the CFTC from bringing transparency to the swaps market. In a November 4 piece, WSJ's Michael Rapoport detailed Jon Corzine's successful July 2011 campaign, on behalf of MF Global Holdings, to block a CFTC proposal "that would have placed tighter restrictions on how futures-trading firms can invest cash sitting in customer trading accounts." (Prescient move, Jon.) Most or all of the GOP candidates favor repeal of Dodd-Frank. If a Martian fell to Earth he/she/it would never believe that the same financial elites who brought us to the edge of ruin are still having so much success calling the regulatory shots.
FCPA clearly needs clarification. DOJ, in typical fashion, has given the statute the broadest possible interpretation. But don't expect any significant weakening. Why? FCPA is a cash cow. Big companies, most of whom are quite vulnerable, will do anything to avoid a civil or criminal trial. FCPA becomes a cost of doing business. The money flows into the government. Many of the DOJ attorneys flow into private practice. Because big companies do not want to risk losing at trial, bringing FCPA cases and obtaining huge monetary settlements, at least against those companies, is like shooting fish in a barrel. In other words, the cases are easy to do--just like insider trading cases. They bring big headlines. So the public is diverted from thinking about DOJ's remarkable failure to systematically investigate the top tier entitities and individuals who facilitated the worst economic catastrophe since the Great Depression.
Friday, November 25, 2011
"I don't know if there was a stench that developed in this case, but there was a bad odor at times, and so the issue that I'm inviting both sides to address is...whether either through a finding of due process violations or in the exercise of my supervisory power...something akin to the whole being greater than the sum of its parts justifies throwing out this conviction, because a lot of the parts that led up to this conviction are extremely troublesome." U.S. District Court Judge Howard Matz during 6-27-11 post-trial hearing.
The briefs are in and the hearing is set for this Tuesday at 10:00AM in the Lindsey Manufacturing FCPA prosecution. At issue is the Lindsey-Lee Defendants' Motion to Dismiss the Indictment With Prejudice Due to Repeated and Intentional Government Misconduct. A potential bad sign for the Government, as if it needed another one, is the Court's November 16th Order requiring the U.S. Attorney's Office to file certain Government and Court exhibits in the record by November 18. The Court had already publicly criticized the Government for its use and handling of some or all of these exhibits. The Government filed the exhibits in question on November 17, and they are now available through PACER.
Judge Matz has previously characterized the Government's investigation and prosecution of the case as "extraordinarily sloppy at best." He was apparently so troubled by the Government's actions that he generated and kept a post note during trial in order to keep track of them.
Thursday, November 24, 2011
Just wanted to take a moment to thank all the readers of the white collar crime prof blog for stopping by and reading this blog. Your readership is truly appreciated. Also wanted to especially thank co-bloggers Lawrence Goldman and Solomon Wisenberg for their wonderful entries. Happy Thanksgiving.
(esp)(blogging from Atlanta)
Wednesday, November 23, 2011
My colleague Ellen Podgor recently commented here on Judge Emmet Sullivan's 11-21-11 ORDER in In Re SPECIAL PROCEEDINGS, the ancillary proceedings initiated by Judge Sullivan to investigate the multiple Brady violations committed by DOJ prosecutors in U.S. v. Theodore Stevens. The ensuing investigation was conducted, on Judge Sullivan's behalf, by veteran DC lawyers Hank Schuelke and William Shields, who have now issued a report that is, I hope, only temporarily under seal.
It is obvious from reading his Order that Judge Sullivan is still outraged. That's a good thing. Until enough federal judges get hopping mad about systemic DOJ Brady violations, we will have no real legislative discovery reform at the federal level.
In addition to the points highlighted by Professor Podgor, Judge Sullivan's Order notes the following findings and conclusions by Schuelke and Shields:
1. "[T]he investigation and prosecution of Stevens were 'permeated by the systematic concealment of significant exculpatory evidence which would have independently corroborated his defense and his testimony, and seriously damaged the testimony and credibility of the government's key witness.'"
2. "[A]t least some of the concealment was willful and intentional, and related to many of the issues raised by the defense during the course of the Stevens trial."
3. Schuelke and Shields "found evidence of concealment and serious misconduct that was previously unknown and almost certainly would never have been revealed--at least to the Court and to the public--but for their exhaustive investigation."
4. Schuelke does not recommend criminal contempt proceedings, because "in order to prove criminal contempt beyond a reasonable doubt under 18 U.S.C. [Section] 401 (3), the contemnor must disobey an order that is sufficiently 'clear and unequivocal at the time it is issued'... [but] no such Order existed in this case. Rather, the Court accepted the repeated representations of the subject prosecutors that they were familiar with their discovery obligations, were complying with those obligations, and were proceeding in good faith."
5. "Mr. Schuelke also notes that '[i]t should go without saying that neither Judge Sullivan, nor any District Judge, should have to order the Government to comply with its constitutional obligations, let alone that he should feel compelled to craft such an order with a view toward a criminal contempt prosecution, anticipating its willful violation.'"
6. "Mr. Schuelke 'offers no opinion as to whether a prosecution for Obstruction of Justice under 18 U.S.C. [Section] 1503 might lie against one or more of the subject attorneys and might meet the standard enunciated in 9-27.220 of the Principles of Federal Prosecution.'"
It is clear that most or all of this Report is going to be publicly released. It will be interesting to compare it to DOJ OPR's report, assuming that DOJ decides to release it. Two attorneys for two of the prosecutors under scrutiny have already announced that OPR's report clears their respective clients. DOJ has a long history of ignoring the critical comments of federal judges. The latest example of this took place in reference to the prosecution of former Blackwater employees. Despite Judge Ricardo Urbina's scathing factual findings regarding the conduct and credibility of the original set of prosecutors, they were treated to a laudatory/fawning DOJ press release upon reassignment. Urbina, like Sullivan, is one of the most respected federal judges in the country and his factual findings were not questioned or disputed on appeal.
Some final thoughts.
1. For every Emmet Sullivan (or Ricardo Urbina or Howard Matz) there are 10 federal judges who unquestioningly accept the Government's representations regarding Brady issues, irrespective of non-frivolous matters brought to their attention by the defense bar.
2. The defense attorney has an obligation to ferret out Brady issues through the filing of detailed, fact-specific Brady motions closely tied to the formal allegations in the case.
3. We must rapidly move toward open discovery in the federal criminal system, with appropriate safeguards in place to protect witnesses where necessary. The presumption, however, must always be in favor of open discovery. Many states have gone this route without any disastrous consequences. It is appalling that civil litigants have substantially more access to discovery at the federal level than do people who are literally fighting for their liberty.
4. In the meantime, federal prosecutors must be relieved of the burden of determining whether exculpatory information is material. DOJ already recommends this in the Ogden Memo, but it should go one step further and require it. The rule should be: IF IT HURTS MY CASE IN ANY WAY, TURN IT OVER! When a man judges himself, the verdict is always in his favor. When a federal prosecutor, in the heat of trial or pretrial battle, is deciding whether exculpatory evidence is material, the verdict will too often be that it is not. Let's end this invitation to injustice.
5. Of course, federal prosecutors do not think like criminal defense attorneys. That's okay. We don't want them to! But this is the very reason why they cannot ultimately be trusted to make the determination of what is or is not exculpatory. The competent defense attorney headed to trial or sentencing is constantly thinking about anything that will help the defense. Prosecutors are not trained or inclined to do this. Even when they are trying to fulllfil their Brady obligations, AND THE VAST MAJORITY OF FEDERAL PROSECUTORS ARE TRYING TO DO THIS, they cannot be trusted to spot the issues. This difference in outlook/inclination/thought processes really comes to the fore during the period leading up to sentencing hearings, when the prosecutor looks at the defense attorney like a deer in the headlights when reminded of his/her obligation to provide any and all mitigating evidence!
6. Please. Let's have no more: "We understand our Brady obligations and intend to abide by them." Congress should pass a statute requiring some form of detention for any prosecutor who utters this bromide.
November 23, 2011 in Contempt, Corruption, Current Affairs, Government Reports, Investigations, Judicial Opinions, Legal Ethics, Media, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (4) | TrackBack (0)
DOJ Press Release, New Jersey Man Pleads Guilty in $670 Million Fraud Scheme
Editorial, LATimes, Defending the Brady Rule
Andrew Stern, Reuters, Former Obama fundraiser Rezko gets 10-year sentence
Monday, November 21, 2011
The NACDL White Collar Criminal Defense College at Stetson is a “boot-camp” program for practitioners wishing to gain key advocacy skills and learn substantive white collar law. The program will cover client retention, investigation in a white collar case, handling searches and grand jury subpoenas, and dealing with parallel proceedings. Participants will have the experience of negotiating a plea, making proffers, and examining which experts to hire and how to protect the client in this process. Interactive sessions with top white collar practitioners will allow the participants to learn trial skills such as opening statements, cross-examination, jury instructions, closing arguments, and sentencing – all in the context of a white collar matter.
More Information and to registrar here
A. Brian Albritton, Phelps Dunbar, LLP
Henry W. Asbill (Hank), Jones Day
Joe Bodiford, BodifordLaw
Barry Boss, Cozen O'Connor
Ellen C. Brotman, Montgomery McCracken
Robert M. Cary, Williams & Connolly LLP
Vince J. Connelly, Mayer Brown
Lucian E. Dervan, Southern Illinois University School of Law
Donna Lee Elm, Federal Public Defender, Middle District of Florida
James E. Felman, Kynes, Markman & Felman, P.A.
Jack E. Fernandez, Zuckerman Spaeder, LLP
Todd Foster, Cohen & Foster, P.A.
David Gerger, Gerger and Clarke
Nina J. Ginsberg, DiMuroGinsberg, PC
Lawrence S. Goldman, Law Offices of Lawrence S. Goldman
John Wesley Hall, Jr., John Wesley Hall Little Rock Criminal Defense
A. Jeff Ifrah, Ifrah Law
Anthony A. Joseph, Maynard Cooper and Gale, PC
Frank Klim, Stetson University College of Law
John F. Lauro, Lauro Law Firm
Bruce Lyons, Lyons and Sanders Chartered
Terence F. MacCarthy, Distinguished Professorial Lecturer, Stetson
Edward A Mallett, Mallett and Saper, L.L.P.
Bruce Maloy, Maloy, Jenkins, & Parker
David Oscar Markus, Markus and Markus, PLLC
James McComas, Retired
Michael D. Monico, Monico, Pavich and Spevack
Jane W. Moscowitz, Moscowitz and Moscowitz, P.A.
William Nortman, Akerman
Kevin J. Napper, Carlton Fields
Cynthia Eva Orr, Goldstein, Goldstein and Hilley
Patricia A. Pileggi, Schiff Hardin, LLP
Barry J. Pollack, Miller & Chevalier
Mark P. Rankin, Shutts and Bowen, LLP
Shana-Tara Regon, NACDL
Michele A. Roberts, Skadden Arps Slate Meagher and Flom, LLP
Charles H. Rose III, Stetson University College of Law
Kerri L. Ruttenberg, Jones Day
Gail Shifman, Shifmangroup
Adam P. Schwartz, Carlton Fields
William N. Shepherd, Holland & Knight LLP
Neal R. Sonnett, Law Offices of Neal R. Sonnett, PA
Ed Suarez, The Law Offices of Ed Suarez, P.A.
Larry Thompson, Former Deputy Attorney General U.S. Department of Justice and Vice President of PepsiCo
Gary R. Trombley, Trombley & Hanes
Albert A. Vondra, PricewaterhouseCoopers, LLP
Morris “Sandy” Weinberg, Jr., Zuckerman Spaeder LLP
Peter H. White, Schulte Roth & Zabel LLP
Solomon L. Wisenberg, Barnes & Thornburg LLP
The DOJ previously admitted to its failure to produce exculpatory information and "moved to set aside the verdict and dismiss the indictment of Senator Stevens with prejudice." (see here) Judge Emmet G. Sullivan now issued an order that notes
"(1) the significance of the government's decision to dismiss the indictment and not to seek a retrial; (2) the government's admission that it committed Brady violations and made misrepresentations to the Court during the prosecution of Senator Stevens; (3) the prosecutorial misconduct that permeated the proceedings before this Court to a degree and extent that this Court had not seen in twenty-five years on the bench; and (4) the likelihood based on events during and after the trial, including the information revealed by the Department of Justice in support of its motion to vacate the verdict and dismiss the indictment, that the prosecution team may have committed additional constitutional and procedural violations during the Stevens prosecution that had yet to be discovered or addressed, the Court appointed Henry F. Schuelke, III to investigate and prosecute such criminal contempt proceedings as may be appropriate against the six Department of Justice attorneys responsible for the prosecution of Senator Stevens...."
The court noted how Mr. Schuelke had submitted in camera a 500-page "report detailing the findings of his investigation." The court is allowing DOJ and attorneys for Senator Stevens "the opportunity to review the report." These individuals will be allowed to make objections as to why this report should not be released. The sealed materials cover matters related to the cases of Boehm, Kott, Kohring, and Stevens. The court concludes it's order stating, "[W]hile the Court will give appropriate consideration to any legal argument to withhold Mr. Schuelke's Report from the public, the Court notes that the 'presumption of openness may be overcome only by an overriding interest based on findings that closure is essential to preserve higher values and is narrowly tailored to serve that interest." (citation omitted).
Michael Rothfeld, WSJ, No Mr. Nice Guy—Just Ask Wall Street
Mike Salinero, Tampa Tribune, Jury convicts White of 7 corruption counts
FCPA Professor, ABA Ponders FCPA Reform
Tamer El-Ghobashy, WSJ, Prosecutors Lose Corruption Case
Sheri Qualters, NLJ,1st Circuit denies bail to former Massachusetts House speaker
Patricia Hurtado, Bloomberg, U.S. Prosecutors Seek Delay in SEC Case Against Rajat Gupta
Friday, November 18, 2011
CALL FOR NOMINATIONS FOR
WHITE COLLAR CRIMINAL DEFENSE AWARD
The NACDL White Collar Criminal Defense College at Stetson University College of Law is an intensive “boot-camp” style program for practitioners wishing to gain key advocacy skills and learn substantive white collar law. Interactive sessions with top white collar practitioners will allow the participants to learn trial skills such as opening statements, cross-examination, jury instructions, closing arguments, and sentencing – all in the context of a white collar matter.
In conjunction with this event, the Advisory Board of the White Collar Criminal Defense College announces a call for nominations for its White Collar Criminal Defense Award. The following criteria have been established for the award:
- Nominees shall have distinguished him or herself in the white collar defense bar;
- Length of service to the white collar bar and sustained excellence will be considered;
- Nominees should have enjoyed a recent success in a trial or other major result involving a white collar matter;
- Membership in NACDL is not required but is encouraged and will be considered; and
- Nominees may be self-nominated or nominated by others.
All nominations should be submitted to Daniel Weir at email@example.com. The deadline for submissions is December 15, 2011.
More information about the NACDL White Collar Criminal Defense College at Stetson, including an agenda, list of faculty, and registration form can be found here.
(esp)(blogging from Washington, D.C.)
The Fourth Circuit issued an unpublished opinion affirming Defendant Okun’s convictions and 100 year sentence. U.S. Attorney, Neil H. MacBride, states regarding this opinion:
"Financial fraudsters make calculated, rational decisions, and the threat of spending as much as 100 years in prison can begin to change corporate culture and behavior. Today’s opinion confirms that it is just for fraudsters who rob the life savings of their victims to spend the rest of their lives – or at least a big chunk of it – behind bars."
Interestingly the court notes in its opinion that the defendant operated a "Ponziesque" scheme, resulting in losses in excess of $125 million dollars." The court notes that the defendant's conviction on twenty-three counts resulted in a sentence of "1200 months' imprisonment, a sentence 3600 months below the advisory Guidelines sentence."
Some may argue that judges are issuing below guidelines sentences in white collar cases. But this case demonstrates the absurdity of issuing guideline sentences. Do you know anyone who has lived 400 years? Is that reasonable?
(esp)(blogging from Washington, D.C.)
Thursday, November 17, 2011
The Second Circuit yesterday reversed and dismissed (without prejudice) the conviction of former New York State Senate Majority Leader Joseph L. Bruno for theft of honest services fraud on his failure to disclose alleged conflicts of interest. The reversal was based on the Supreme Court decision in United States v. Skilling, which limited 18 U.S.C. 1346, the honest services statute, to cases involving bribery and kickbacks. Even though some circuit courts have upheld honest services fraud convictions over Skilling challenges, the reversal here was no surprise since, among other things, the government conceded error.
In an earlier blog (see here), we discussed what might have been the most important issue in the case: whether the Court should for double jeopardy purposes analyze the sufficiency of the government's evidence at trial based on the "new" standard set forth in Skilling or the "old" standard existing at the time of the trial.
Bruno argued that if there were insufficient evidence at trial to justify a conviction under the Skilling bribery and kickback theory of honest services fraud, the Court must bar retrial on double jeopardy grounds. The government argued that sufficiency review under a standard different from that at the time of trial was inappropriate and unfair. (The defense did not contend there was insufficient evidence based on the law at the time of trial.) At oral argument, the government stated that the evidence at the new trial would be the same as in the first.
The Court, declining to enact any black letter law, and relying considerably on the government's concession that the evidence would not change at a second trial, agreed to analyze the sufficiency of evidence based on the new, narrower Skilling standard. Nonetheless, after reviewing the facts, the Court held that the evidence was sufficient under that standard. Bruno, therefore, won the battle but lost the war. The government announced that it will reindict him under an honest services fraud theory based on bribery and kickbacks.
Last week, a Southern District of New York jury acquitted William Boyland, Jr., a New York State Assemblyman, of honest services fraud for allegedly receiving bribes from David Rosen, the chief executive of a hospital conglomerate, apparently because of lack of sufficient proof of a quid quo pro. Interestingly, Rosen had two months earlier been convicted in a non-jury trial before Judge Jed S. Rakoff for conspiracy to bribe Boyland based on the same payments at issue. (The cases were not mirror images. Rosen was also charged and convicted of conspiring with two others -- a state senator and another assemblyman.)
Wednesday, November 16, 2011
Assistant Attorney General Lanny A. Breuer, in a recent speech to the American Lawyer/National Law Journal Summit spoke about what he considers disparities in sentencing. He stated:
"One area – though by no means the only one – in which we have seen significant disparities in sentencing in the last several years is financial fraud. With increasing frequency, federal judges have been sentencing fraud offenders – especially offenders involved in high-loss fraud cases – inconsistently. For example, a defendant in one district may be sentenced to one or two years in prison for causing hundreds of millions of dollars in losses, while a defendant in another district is sentenced to ten or 20 years in prison for causing much smaller losses."
Of course there are differences. Sentences should not be based solely on the crime or amount of loss involved.And yes, there are disaparities - there are disparities in the charging practices of prosecutors. Lest us forget - we sentence people, not numbers, and people are different.
See also Mike Scarcella, BLT Blog, DOJ's Lanny Breuer Addresses Sentencing Disparities
Tuesday, November 15, 2011