June 3, 2011
According to a DOJ Press Release, it's a 6-count indictment "for allegedly participating in a scheme to violate federal campaign finance laws." "The indictment, returned in the Middle District of North Carolina, charges . . . . one count of conspiracy to violate the federal campaign finance laws and to make false statements to the Federal Election Commission (FEC); four counts of accepting and receiving illegal campaign contributions from two donors in 2007 and 2008; and one count of concealing those illegal donations from the FEC." The press release states:
"According to the indictment, while a candidate for President of the United States, Edwards conspired with other individuals to accept and receive campaign contributions in excess of limits imposed by the Federal Election Act in an effort to protect and advance his candidacy from disclosure of an ongoing extra-marital affair and the resulting pregnancy. The indictment alleges that between 2007 and 2008, Edwards accepted and received more than $900,000 as part of this effort."
1) This is a technical case - reporting requirement - is it really necessary to have 6 counts? Did the DOJ include conspiracy in the hopes that they could secure a plea or alternatively if going to trial - get the jury to at least compromise by convicting on one count?
2) The affair will likely not play well with a jury. But on the other hand, isn't he needed now as a father?
3) Should this be criminal? Even if he improperly handled his campaign finances - which we do not know at this point - couldn't this be more appropriately handled via a civil action that would recover the money with penalties. Do we really need to clog up our criminal dockets with this kind of case.
June 2, 2011
Will Strauss-Kahn’s Bail Conditions be the Norm?
Dominique Strauss-Kahn is not accused of a white-collar crime, but he is a prototypical white-collar defendant – important, rich, and well-connected.
Strauss-Kahn, a French citizen accused of attempted rape and other crimes, was denied bail at his arraignment by a New York City lower court judge. A major justification was that France (like Germany, China, Japan, and many other nations) will not extradite its nationals. Subsequently, Strauss-Kahn’s experienced and able attorneys, desperate to get him released, proposed a highly onerous bail package, which a higher court judge accepted over the prosecutor’s strenuous objection. That bail package consists of a $1 million cash bond, an additional $5 million bond secured by a home owned by Strauss-Kahn’s wife, home confinement in New York City with an ankle bracelet, inside and outside video cameras, and even a 24/7 armed guard (Why armed? To shoot him if he tries to escape? To prevent the French foreign legion from freeing him?). These security measures reportedly will cost $200,000 a month. Strauss-Kahn, like all persons confined at home pre-trial, will receive no jail credit for his period of house arrest.
One wonders whether Strauss-Kahn’s bail conditions will become a prototype for bail conditions for major white-collar defendants, at least those with foreign or multi-national citizenship (an increasing number with the expansion of both the global economy and prosecutorial jurisdictional reach). The setting of bail is perhaps the most unguided and unpredictable of judicial decisions. Judges have wide discretion, amorphous standards, and, at least initially, generally little information about the case and the defendant. It is to be expected that judges will look for similar cases or similar defendants for a model. And, as recent history has shown, the most aggressive and/or harsh prosecutorial practices employed in the prosecution of violent and drug crimes (lengthy sentences, seizure of assets, restriction of counsel fees, eavesdropping and the like) soon work their way into the area of white-collar prosecution. If the Strauss-Kahn bail conditions become a standard, we can expect severe and restrictive home confinement bail conditions for white-collar defendants.
June 1, 2011
Supreme Court Speaks About Willful Blindness
The Supreme Court issued an opinion in the case of Global-Tech Appliances, Inc. v. SEB S.A., a civil patent infringement case. A key issue was whether under 35 U.S.C. s 271(b), a party "must know that the induced acts constitute patent infringement." This case, however, is extremely important for the white collar practitioner and other criminal law practitioners who have cases with willful blindness issues. Willful blindness has been a recent concern in the white collar realm because a CEO, CFO, or other corporate executive may be claiming that he or she did not know about the questioned criminal conduct.
In Global Tech, the Court outlines its position for purposes of both criminal and civil law stating that "[o]ur Court has used the [Model Penal] Code's definition as a guide in analyzing whether certain statutory presumptions of knowledge comported with due process. . . And every Court of Appeals -- with the possible exception of the District of Columbia Circuit ...-- has fully embraced willful blindness, applying the doctrine to a wide range of criminal statutes." (citations omitted) The Court later states:
"While the Courts of Appeals articulate the doctrine of willful blindness in slightly different ways, all appear to agree on two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact. We think these requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence. Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts. . . . By contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing, see ALI, Model Penal Code § 2.02(2)(c) (1985), and a negligent defendant is one who should have known of a similar risk but, in fact, did not, see § 2.02(2)(d).
"The test applied by the Federal Circuit in this case departs from the proper willful blindness standard in two important respects. First, it permits a finding of knowledge when there is merely a "known risk" that the induced acts are infringing. Second, in demanding only "deliberate indifference" to that risk, the Federal Circuit's test does not require active efforts by an inducer to avoid knowing about the infringing nature of the activities."
Justice Kennedy dissents. He states, "[h]aving interpreted the statute to require a showing of knowledge, the Court holds that willful blindness will suffice. This is a mistaken step. Willful blindness is not knowledge; and judges should not broaden a legislative proscription by analogy." He also states: "[t]he Court appears to endorse the willful blindness doctrine here for all federal criminal cases involving knowledge. It does so in a civil case where it has received no briefing or argument from the criminal defense bar, which might have provided important counsel on this difficult issue."
(esp)(w/ a hat tip to Tim O'Toole)
New Book - Fraudulent Intentions
Scott Hilsen, a lawyer and certified fraud examiner in Atlanta, has written his first novel. It is described as a novel "based on the true story of a corporate deal gone bad and the internal investigation that exposed a shocking online fraud." For details see here.
Hilsen is a partner at Alston & Bird - see here.
May 31, 2011
In the News & Around the Blogosphere
Jaxon Van Derbeken, San Francisco Chronicle, S.F. police scandal widens - 26 more cases dropped
Jay Weaver, Miami Herald, Four of Ponzi schemer Scott Rothstein’s colleagues charged with fraud
Mike Scarcella, BLT Blog, Utah Insurance Company President Charged in Fraud Scheme
Mike Scarcella, BLT Blog, Former NASDAQ Official Pleads Guilty to Insider Trading
Peter Lattman, Dealbook,NYTimes, A Tangle of Details Emerge in an Insider Trading Case
EVA Airways Corporation Agrees to Plead Guilty
A DOJ Press Releasereports that "EVA Airways Corporation has agreed to plead guilty and to pay a $13.2 million criminal fine for its role in a conspiracy to fix prices in the air cargo industry." The press release states that "[u]nder the plea agreement, which is subject to court approval, EVA has agreed to cooperate with the department’s antitrust investigation." This sometimes means that indictments will follow against some individuals in the corporation.