April 29, 2011
A Few Recent White Collar Decisions
Second Circuit - U.S. v. Gray, Mack, Wells, & Rhodes - Court affirms lower court holding "that an internal investigation by a privately owned prison that houses federal prisoners of an allegation of excessive force involves a 'matter within the jurisdiction' of the Department of Justice for purposes of 18 U.S.C. s 1519.
Sixth Circuit - U.S. v. Waldren (unpublished) - Court affirms conviction and sentence for making a flase statement to obtain federal worker's compensation in violation of 18 U.S.C. s 1920, but remans to recalculate the amount of restitution owed.
Seventh Circuit - U.S. v. Landwer, Jr - District court gave two-level increase for using "sophisticated means" on a fraud after defendant plead guilty. This court rejected defendant's challenge to this addition which defendant had claimed that his fraud did not involve sophisticated means because it was "too simple and dissimilar to the examples listed in the guidelines to qualify for this adjustment."
Seventh Circuit - U.S. v. Aldridge - Court rejects appeal of wire fraud and aiding and abetting wire fraud convictions, which included a Fourth Amendment argument.
Ninth Circuit - U.S. v. Nosal - Court states "[a]lthough we are mindful of the concerns raised by defense counsel regarding the criminalization of violations of an employer's computer use policy, we are persuaded that the specific intent and causation requirements of s 1030(a)(4) sufficiently protect against criminal prosecution those employees whose only violation of employer policy is the use of a company computer for personal -- but innocuous -- reasons." The court reverses and remands several counts with instructions to reinstate.
New Scholarship - Plea Bargaining, Discovery and the Looming Battle Over Impeachment Evidence
Professor Mike Cassidy (Boston College) has a wonderful new piece titled Plea Bargaining, Discovery, and the Looming Battle Over Impeachment Evidence, which will be published in Vol. 64 of the Vanderbilt Law Review (October 2011). With the discovery under review, this is a very important piece and I recommend it highly. The SSRN abstract states:
"In a criminal justice system where guilty pleas are the norm and trials the rare exception, the issue of how much discovery a defendant is entitled to before allocution has immense significance. This article examines the scope of a prosecutor’s obligation to disclose impeachment information before a guilty plea. This question has polarized the criminal bar and bedeviled the academic community since the Supreme Court’s controversial decision in United States v. Ruiz (2002). A critical feature of the debate has been the enduring schism between a prosecutor’s legal and ethical obligations – a gulf that the American Bar Association recently widened by issuing a controversial opinion interpreting Model Rule of Professional Conduct 3.8(d) to impose obligations on prosecutors well beyond the requirements of the due process clause.
"For reasons of institutional competence and legitimacy, the author argues that rules of criminal procedure are a far better vehicle for regulating pre-plea impeachment disclosures than state attorney conduct rules. As the Advisory Committee on Criminal Rules convenes this year to contemplate controversial amendments to the Federal Rules of Criminal Procedure with regard to the disclosure of exculpatory evidence, the author proposes a categorical approach to impeachment disclosures that will mediate the tension between the defendant’s interest in accurately assessing the strength and weaknesses of the government’s case, and the state’s interest in protecting the privacy and security of potential witnesses."
April 28, 2011
Insider Trading - Hot Topic in NYC
Earlier this week we saw that Craig Drimal entered a plea to insider trading (see here). Today a second plea to insider trading comes out of the Manhattan US Attorneys Office. An FBI Press Release reports that Donald Langueuil is pleading guilty to insider trading. According to the most recent press release:
"Between 2006 and 2010, LONGUEUIL, along with [another], a former portfolio manager at two hedge funds, JASON PFLAUM, a former research analyst for [this other person], and NOAH FREEMAN, a research analyst at a hedge fund and then a portfolio manager at another fund, and their co-conspirators participated in a conspiracy to obtain nonpublic information ("Inside Information"), including detailed financial earnings, about numerous public companies. These companies included Marvell Technology Group, Ltd. ("Marvell"), NVIDIA Corporation ("NVIDIA"), Fairchild Semiconductor Corporation ("Fairchild"), Advanced Micro Devices, Inc. ("AMD"), Actel Corporation ("Actel"), and Cypress Semiconductor Corporation ("Cypress"). LONGUEUIL obtained Inside Information both from employees who worked at these and other public companies, as well as from independent research consultants who communicated with employees at public companies. Often, the defendant and/or his coconspirators used an "expert networking" firm to communicate with and pay their sources of Inside Information. In addition, although LONGUEUIL and his co-conspirators worked at separate hedge funds, they had regular conference calls during which they shared the Inside Information they learned with each other." (name omitted of individual who has pending charges)
So, what is insider trading? The definition may prove problematic and at some point the Court may provide better guidance. But for those facing charges it is difficult to risk a trial as the cost of being found guilty at trial presents huge consequences. But in the back of my mind I have to wonder if a clearer definition and an understanding that one who engaged in this conduct faced jail time, would have precluded this conduct. Are we using our resources wisely to prosecute those who can be educated not to engage in this conduct?
In the News & Around the Blogosphere
Grant Thornton, The UK Bribery Act and What It Means for U.S. Companies here
Google (AP), Delay sought in Ohio public corruption trial
DOJ Press Release, Three Miami-Area Medical Professionals Each Sentenced to Prison for Roles in $23 Million Medicare Fraud Scheme (sentences ranged from 54-70 months)
FBI Press Release, Principal of $80 Million Ponzi Scheme Sentenced in Manhattan Federal Court to 100 Months in Prison (sentenced to 100 months)
April 27, 2011
New Article - Guns, Fruits, Drugs, and Documents: A Criminal Defense Lawyer's Responsibility for Real Evidence
Professor Stephen Gillers has a wonderful new piece in 63 Stanford Law Review 813 (April 2011), titled, Guns, Fruits, Drugs, and Documents: A Criminal Defense Lawyer's Responsibility for Real Evidence. (click here to read it on the Stan. L Rev website) This one is a must-read. We all know how to handle weapons, drugs, or stolen property. But happens with the document in a white collar case? This piece offers some wonderful thoughts of dealing with documents provided to counsel.
April 26, 2011
New Book - Habeas
Professor Nancy King (Vanderbilt) and Joseph L. Hoffman (Indiana) have a new book published by University of Chicago Press, titled, Habeas for the Twenty-First Century: Uses, Abuses, and the Future of the Great Writ.
If this book is like the authors recent op-ed in the NYTimes, it is likely to be extremely controversial on its recommendations on state prisoner habeas. (see op-ed by King and Hoffman here and letters to the editor in response here)(see also Andrea Lyons op ed in response and Nancy Kings response here). Although I tend to be on the side of the responses against the King Hoffman op-ed, I do think this book will offer a much needed history of 2255 and I understand that chapter 6 includes federal criminal cases, which will be helpful to white collar practitioners.
But I do hope that recommendations such as advocated in this op ed are not adopted. Justice is never too expensive. Nor can we assume that eliminating one process will pour money into indigent resources that might correct problems with the system. No matter what the cost of correcting an injustice in the system is, it needs to be done. I am deeply disappointed that too many today reference cost, expensiveness, or efficiency as rationales for shortcutting processes that may assist only a few folks. As I always ask - if you are that one person who could benefit from this criminal process correction, would you want it discarded for efficiency sake?
But that said, I do look forward to seeing this forthcoming book in an area that definitely needs study.
April 25, 2011
Holder Recognizes the Importance of being "Smart on Crime"
AG Holder spoke about the DOJ's Priorities and Mission (see here) He listed four essential priorities:
"In the critical days ahead, these four essential priorities – protecting Americans from national security threats, protecting Americans from violent crime, protecting Americans from financial fraud, and protecting the most vulnerable members of our society – will guide our work."
Specifically when speaking to financial fraud, he stated:
"Third: we will protect Americans from the financial fraud that devastates consumers, siphons taxpayer dollars, weakens our markets, and impedes our ongoing economic recovery. As we’ve seen, the impact of financial crime is not confined to Wall Street – and many times the victims of fraud have worked hard and played by established investment rules, only to see their retirement and life savings vanish at hands of white-collar criminals.
"Over the last two years, through reinforced interagency partnerships and new joint initiatives – such as the Financial Fraud Enforcement Task Force and the Health Care Fraud Prevention and Enforcement Action Team – we have transformed the way we deal with fraud crimes. Not only have we secured record recoveries totaling billions of dollars, we have raised awareness about these crimes and improved the ability of consumers and victims to report suspected fraud schemes. In the coming months, we must take all of these efforts to the next level.
"We will vigorously investigate financial crimes and ensure that those who commit them are made to pay the price – by serving long sentences and making restitution to taxpayers, as well as victims. To identify the most effective ways to prevent and combat financial fraud, senior Department leaders will continue to meet with victims, medical providers, business leaders, and key government and law enforcement partners around the country. We will also work to bring our HEAT task forces to new problem areas, and to expand other successful programs that will allow us to maximize both our efficiency and our impact."
But it was particularly good to hear that he recognized the importance of using "smart of crime" approaches as opposed to prosecuting haphazardly. He stated: "We also will invest in scientific research to make certain that this Department is both tough and smart on crime, and that our decisions are economically sound. This means working closely with state, local, and tribal partners. It also means broadening our support for effective crime prevention, intervention, enforcement, and reentry strategies."
Thank you, AG Holder.
April 24, 2011
20th Annual National Seminar on Federal Sentencing Guidelines, May 4-6, Orlando, Florida here
ABA Third Annual Internal Corporate Investigations & Forum for IN-House Counsel, May 4-6, 2011 New York, here
ABA 21st Annual National Institute on Health Care Fraud, May 11-13, 2011, Miami Beach, here
NACDL's 1st Annual West Coast White Collar Conference - "Turning the Tables on the Government", Lake Tahoe, June 16-17, 2011 here
NACDL's 7th Annual Defending the White Collar Case - NY, September 22-23, 2011 here