Friday, June 24, 2011
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)
Thursday, June 23, 2011
DOJ Press Release, Former TBW CEO Sentenced to 40 Months in Prison for Fraud Scheme; Mike Scracella, NLJ, Former mortgage company CEO sentenced to 40 months in fraud scheme
George Packer, The New Yorker, A Dirty Business -New York City’s top prosecutor takes on Wall Street crime
DOJ Press Release, Criminal Defense Bar Urges Congress to Reform Foreign Corrupt Practices Act
DOJ Press Release, Owner of Houston Health Care Company Pleads Guilty to Defrauding Medicare
Jury Clears Doctor of Insider Trading Charges - Download Press Release - SEC v. De La Maza re Defense Verdict
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 (firstname.lastname@example.org) or Wes Porter (email@example.com), 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.
Wednesday, June 22, 2011
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.
Tuesday, June 21, 2011
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.
Monday, June 20, 2011
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.
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.
Sunday, June 19, 2011
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.
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
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
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