Friday, July 29, 2011

Clemens to Government: "You're Outta Here!"

William Roger Clemens's Motion to Prohibit Retrial and Dismiss the Indictment was filed today, and it is a very good one. Hats offs to Rusty Hardin, Mike Attanasio and the entire defense team. Judge Walton's ultimate decision, and the inevitable appellate review of that decision, will hinge heavily on the quality and detail of the judge's factual findings.

(Wisenberg)

July 29, 2011 in Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, July 28, 2011

Chiesi Sentenced to 30 Months

Danielle Chiesi, the former beauty queen, hedge fund trader, and fount of inside information to Raj Rajaratnam, was sentenced last week to 30 months in prison. We had blogged about her earlier. (see here)

Ms. Chiesi, who had extracted information from lovers and passed it on to Rajaratnam, was described by United States Attorney Preet Bharara in interesting imagery as "the vital artery through which inside information flowed between captains of industry and billionaire hedge fund managers."

The 30-month sentence was three months greater than that imposed on her former lover and boss, Mark Kurland, whom she blamed for involving her in criminality. Ms. Chiesi had specifically asked for a sentence equal to or lesser than Mr. Kurland’s. The government sought a sentence within the advisory guideline range of 37 to 46 months.

Retaining her sense of style to the end, Ms.Chiesi wore an atypical outfit for a defendant about to be sentenced, a sleeveless pink dress and matching pumps. And, after the sentence, alluding to her early morning arrest, she told the FBI agents at the prosecution table that the next time they knocked on her door they should do it in the afternoon. I suspect that she’ll be up early for the next 30 months.

(Goldman)

July 28, 2011 in SEC, Securities, Sentencing | Permalink | Comments (0) | TrackBack (0)

Monday, July 25, 2011

"Folks do need to pay attention to where they are."

This weekend saw something unusual in the nation's elite newspapers. Three detailed stories about white collar crime issues.

WSJ Weekend carried this in-depth and outstanding piece by Gary Fields and John R. Emshwiller about overcriminalization--the proliferation of criminal statutes, particularly at the federal level, covering more and more aspects of everyday life. The article also focused on Congress's increasing enactment of statutes that dispense with any meaningful mens rea element. Although both of these problems have been around for years, and the article makes no effort to treat the matter historically, it does a generally good job of framing the issues.

Fields and Emshwiller detail how the Idaho U.S. Attorney's Office successfully prosecuted a father and son for attempting "to take artifacts off federal land without a permit" under the Archaeological Resources Protection Act of 1979. They were out camping and looking for arrowheads, which they failed to find, and apparently did not know that the law existed. According to Fields and Emshwiller, the Act "doesn't require criminal intent." This is true of the Act on its face, but the father and son clearly intended to search for arrowheads and did not have a permit. This case is really more an example of obscure administrative criminal statutes that no normal person can be expected to master. Hence it is terribly unfair in such circumstances to apply the old saw that "ignorance of the law is no excuse." But don't tell that to Idaho U.S. Attorney Wendy Olson. She will just answer that "[f]olks do need to pay attention to where they are."

The article also details how Olson's office convicted an inventor for abandoning covered chemicals under the Resource Conservation and Recovery Act. This was after the inventor had been acquitted in an Alaskan federal court for illegally shipping the same chemicals without proper labeling. Would this have been the proper occasion for the exercise of prosecutorial discretion? Not a chance. According to Ms. Olson, her "office will continue to aggressively prosecute" such crimes.

Meanwhile, on Friday, the Washington Post's David Hilzenrath wrote a story with the headline, Quandary for U.S. companies: Whom to Bribe? The piece purported to give both sides of the FCPA debate, but I found it slanted towards the DOJ view. While discussing the recent convictions in the Lindsey Manufacturing case, Hilzenrath never mentions that the Lindsey guilty verdicts are in serious doubt post-trial, with further briefing due from the parties and a federal district judge who has questioned the case and is angry at the government. Even more amazingly, Hilzenrath nowhere references the recently concluded 10-week jury trial in D.C. against the first wave of defendants in DOJ's heavily publicized African Sting FCPA bribery case. The trial resulted in a hung jury mistrial. According to one of the defense attorneys, Todd Foster, the main theme of the defense was that the FCPA was too complicated to be understood by the defendants. Yet this trial, occurring right under the Post's nose, was not deemed worthy of mention. Hat tip to Todd for bringing the article to my attention.

Finally, the Sunday New York Times focuses on Murdoch's Unlikely Ally, former New York City schools chancellor and DOJ Antitrust Chief Joel Klein, in an article by Jeremy Peters, Michael Barbaro, and Javier Hernandez. It is a very good story and remarkable for its focus on the mechanics of News Corporation's internal investigation. Instead of following the "best practice" and hiring an outside law firm to conduct the investigation and report to an audit or special committee controlled by independent outsiders, News Corporation is employing something of a hybrid. It has appointed Lord Anthony Grabiner as the internal investigation's "Independent Chairman." But Grabiner sat behind, and presumably advised, the Murdochs during last week's parliamentary testimony. Grabiner will report to Klein, a News Corporation executive and trusted Murdoch adviser who also sat behind the Murdochs. Klein will report to Viet Dinh, "an independent director on the News Corporation board," for whom I have enormous respect. The article quotes University of Delaware corporate governance expert Charles Elson to the effect that this arrangement "is not standard practice." It may be more standard than Professor Elson realizes. It is obviously not the best practice for ensuring a truly independent investigation. Virtually by definition, there is no way that such an investigation can be wholly and truly independent.

By the way, even an investigation conducted by outside counsel and reporting to the audit committee (or a specially created independent committee) may only be independent up to a point. Let's say that the investigation is completed and outside counsel submits a report to the audit or independent committee. What happens next? Is the Board of Directors required to follow the recommendations of the independent committee? If not, then what is the point of the process in the first place? But that is a topic for another day.

(Wisenberg)

July 25, 2011 in Current Affairs, FCPA, Investigations, Legal Ethics, Media, News, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Sunday, July 24, 2011

In the News & Around the Blogosphere

Carrie Johnson, NPR, FBI Begins Investigation of News Corp (includes comment by contributing blogger Sol Wisenberg)

DOJ Press Release, Hacker Sentenced in Virginia to 10 Years in Prison for Stealing 675,000 Credit Card Numbers Leading to $36 Million in Losses

(esp) (blogging from Hilton Head, South Carolina)

July 24, 2011 in News | Permalink | Comments (0) | TrackBack (0)