Saturday, April 23, 2011

Lauren Stevens Case To Start Tuesday: Has The Government Overcharged?

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.

Here are: Court's Memorandum Opinion Dismissing Indictment, Lauren Stevens Indictment(2), Background Section of Defense Response on Opinion Testimony, and Declaration of Brian O'Connor.


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

In the News & Around the Blogosphere

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)

DOJ Press Release, Three Individuals and Two Companies Indicted for Conspiring to Export Millions of Dollars Worth of Computer-Related Equipment to Iran

Gabriella Broggi, Bloomberg News, Swiss court acquits banker in corruption case

DOJ Press Release, Hacker Pleads Guilty to Identity Theft and Credit Card Fraud Resulting in Losses of More Than $36 Million

DOJ Press Release, Attorney General Holder Announces Formation of Oil and Gas Price Fraud Working Group to Focus on Energy Markets

DOJ Press Release, New York Broker Pleads Guilty in International Stock Fraud Scheme

Sue Reisinger, Corporate Counsel,, You Dante Say: Defense for Former Glaxo Lawyer Balks at 'Hell' References


April 22, 2011 in News | Permalink | Comments (0) | TrackBack (0)

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"


April 22, 2011 in FCPA, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 19, 2011

Should This Be A Crime

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?


April 19, 2011 in Environment | Permalink | Comments (0) | TrackBack (0)

Monday, April 18, 2011

Ninth Circuit Offers No Relief in Post-Skilling Case

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)

April 18, 2011 in Fraud, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Reflecting on Skilling after the Barry Bonds Verdict

Guest Blogger - Dane C. Ball (Gerger & Clarke)

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.


April 18, 2011 in Celebrities, Enron, Judicial Opinions, Obstruction, Prosecutions, Verdict | Permalink | Comments (1) | TrackBack (0)

Sunday, April 17, 2011

Petition for Panel Rehearing in Kott

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.


April 17, 2011 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

Third Circuit Reinstates RICO Indictment Against an Attorney and Others

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.


April 17, 2011 in RICO | Permalink | Comments (0) | TrackBack (0)