Saturday, January 28, 2012

New Scholarship - Revisiting a Foreign Corrupt Practices Act Compliance Defense

Mike Koehler has a forthcoming article in the Wisconsin Law Review, titled, "Revisiting a Foreign Corrupt Practices Act Compliance Defense." The abstract states:

Abstract:
This article asserts that the current FCPA enforcement environment does not adequately recognize a company’s good faith commitment to FCPA compliance and does not provide good corporate citizens a sufficient return on their compliance investments. This article argues in favor of an FCPA compliance defense meaning that a company’s pre-existing compliance policies and procedures, and its good faith efforts to comply with the FCPA, should be relevant as a matter of law when a non-executive employee or agent acts contrary to those policies and procedures and in violation of the FCPA. This article further argues that a compliance defense is best incorporated into the FCPA as an element of a bribery offense, the absence of which the DOJ must establish to charge a substantive bribery offense.

Part I of this article contains a case study to demonstrate the type of conduct that would be covered by an FCPA compliance defense. Contrary to the claims of some, an FCPA compliance defense would not eliminate corporate criminal liability under the FCPA or reward "fig leaf" or "purely paper" compliance programs. A compliance defense would not apply to corrupt business organizations, activity engaged in or condoned by executive officers, or activity by any employee if it occurred in the absence of pre-existing compliance policies and procedures.

Part II of this article places an FCPA compliance defense in the context of the broader issue of corporate criminal liability and acknowledges the work of other scholars and commentators who have called for a general compliance defense to corporate criminal liability. This section channels that work into the specific context of the FCPA and argues that the unique aspects and challenges of complying with the FCPA in the global marketplace warrant a specific FCPA compliance defense.

Part III of this article highlights that an FCPA compliance defense is not a new idea or a novel idea. This section contains an overview of the FCPA legislative history of a compliance defense, most notably the compliance defense passed by the House of Representatives in the 1980’s. The justification and rationale for a compliance defense then pales in comparison to now as most U.S. companies engage in international business during an era of aggressive FCPA enforcement. This section also demonstrates that several countries, like the U.S. that are signatories to the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "OECD Convention"), have a compliance-like defense in their domestic laws.

Against this backdrop, Part IV of this article details the DOJ’s institutional opposition to an FCPA compliance defense, yet argues that the DOJ already recognizes a de facto FCPA compliance defense albeit in opaque, inconsistent and unpredictable ways. Thus, an FCPA compliance defense accomplishes, among other things, the policy goal of removing factors relevant to corporate criminal liability from the opaque, inconsistent, and unpredictable world of DOJ decision making towards a more transparent, consistent, and predictable model best accomplished through a compliance defense amendment to the FCPA. This section concludes by highlighting the growing chorus of former DOJ officials who support an FCPA compliance defense and argues that the DOJ’s current opposition to a compliance defense seems grounded less in principle than an attempt to protect its lucrative FCPA enforcement program.

Part V of this article concludes by highlighting certain policy objectives advanced by an FCPA compliance defense. This section argues that an FCPA compliance defense will better incentivize more robust corporate compliance, reduce improper conduct, and thus best advance the FCPA’s objective of reducing bribery. An FCPA compliance defense will also increase public confidence in FCPA enforcement actions and allow the DOJ to better allocate its limited prosecutorial resources to cases involving corrupt business organizations and the individuals who actually engaged in the improper conduct.

(esp)

January 28, 2012 in FCPA, Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, January 26, 2012

Romney Non-Disclosure? Ho-Hum.

The L.A. Times reports here that Mitt Romney did not "explicitly disclose" certain foreign and offshore bank accounts on his required federal campaign disclosure forms. These same accounts were reported, however, to the IRS. Doesn't look like there's much to the story. There are different reporting requirements on campaign forms and IRS returns and some of the items revealed to the IRS were apparently listed at a higher level of generality on the campaign forms. Even assuming that there was some misreporting, one would be hard pressed to call it anything other than inadvertent.

(wisenberg)

January 26, 2012 in Celebrities, Current Affairs, Media, Tax | Permalink | Comments (1) | TrackBack (0)

Tuesday, January 24, 2012

Financial Crimes Unit

President Obama's State of the Union Address spoke to many important issues.  One was financial crime.  He said "[w]e will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people's investments." (see full text Wash Po here).  He later states, "[s]o pass legislation that makes the penalties for fraud count."

Some may recall that back in 2009 President Obama created the Financial Fraud Enforcement Task Force that had as its purpose "to hold accountable those who helped bring about the last financial crisis as well as those who would attempt to take advantage of the efforts at economic recovery." (see here)  I am a bit uncertain how this existing body will or will not interact with the new Financial Crimes Unit, but the concept of further enforcement in this area sounds impressive.  Perhaps more funding will be supplied to the SEC through this initiative so that they can properly regulate improprieties and avoid Ponzi schemes of the past.  Perhaps more FBI investigators will be hired to work on building these cases. I applaud the President for this one - especially if he goes in this direction.

On the other hand, we really do not need new legislation to make "the penalties of fraud count."  The legislation is there, and if one looks at the website of the Financial Fraud Enforcement Task Force, there have been a significant amount of prosecutions with existing statutes. (see here). The statutes are there -it is the money that is needed to make these difficult and often complex cases.  Please don't add more to the already approximately 4,500 federal statutes out there. 

So more regulatory oversight, more prosecutors and SEC folks working on financial matters will help.  But the legislation and penalties are already there.  I look forward to seeing this Financial Crime Unit up and running and cracking down on improprieties in our financial world. 

(esp)

January 24, 2012 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (2) | TrackBack (0)

Paterno's Death May Affect Trial of Penn State Officials

Joe Paterno is dead, his legacy as one of the greatest coaches in the history of sports tarnished by his termination -- unjust, I believe -- on the grounds that he inappropriately failed to pursue vigorously an allegation of child sex abuse (see herehere and here).

Paterno's death and absence as a witness will likely have little or no effect on the trial of Jerry Sandusky, the former Penn State assistant coach who was the subject of the allegation reported to Paterno by a Penn State graduate assistant coach, Mike McQueary.  Paterno's only information about the Sandusky issues appears to have been the hearsay report by McQueary, and thus it is unlikely that he would have been a witness.

Paterno's unavailability, however, may have a considerable impact on the trials of Tim Curley, the former university athletic director, and Gary Schultz, a former university senior vice president, both of whom have been charged with failure to report the suspected child abuse and perjury.  Both have been charged with falsely testifying that McQueary, when he spoke with them, did not mention serious or criminal sexual conduct.  McQueary, whom the grand jury report (presumably written by the prosecutors) deemed "extremely credible," testified that he reported the specific act to both Curley and Schultz, and seemingly also to Paterno.  Paterno's grand jury testimony, however, apparently was that what McQueary related to him was far less specific, and thus more ambiguous.  Accordingly, while the grand jury report indicated that Paterno would be a corroborative witness for the prosecution in that he was told by McQueary of the alleged "sexual exploitation" and then reported what McQueary had said to Curley and Schultz, his testimony would apparently also have to an extent corroborated their defenses that McQueary was less explicit than he now claims.

In another highly-publicized investigation involving a former college sports coach, former Syracuse University assistant basketball coach Bernie Fine, it has been reported that two of the four men who had accused Fine of molesting them when they were children have admitted that they committed perjury in connection with the case.  One has admitted that he lied when he claimed Fine molested him.  The second, the only one whose allegations fall within the applicable criminal statute of limitations, while still claiming that abuse occurred, has admitted doctoring purportedly supporting emails.

The Fine situation is a reminder that not every allegation of child sexual abuse is true.  Indeed, in my experience, there is a far higher percentage of false accusations of sexual misconduct than of any other criminal activity.  Thus, such accusations should be scrutinized especially carefully before they are acted upon by law enforcement or others.

(goldman)

January 24, 2012 in Celebrities, Grand Jury, Investigations, News, Perjury, Sports | Permalink | Comments (0) | TrackBack (0)

Sunday, January 22, 2012

New Article - Indictment of Lawyers for their Legal Advice

Attorney Jack Fernandez (Zuckerman Spaeder LLP) has an interesting Essay for the the ABA's White Collar Book entitled, An Essay Concerning the Indictment of Lawyers for Their Legal Advice.  It is here - Download 3533275_1 DOCX (3) (3)

(esp)

January 22, 2012 in Defense Counsel, Legal Ethics, Prosecutions, Scholarship | Permalink | Comments (1) | TrackBack (0)

Circuit Riding

Last Friday the DC Circuit affirmed a district court's refusal to amend or modify Abramoff cooperator Michael Scanlon's plea agreement. Scanlon sought to amend or modify his plea agreement prior to sentencing in light of Skilling v. United States. He had pled guilty to conspiracy to commit: bribery, money and property mail and wire fraud, and honest services mail and wire fraud. The Court of Appeals, through Chief Judge Sentelle, held that federal courts are statutorily prohibited from modifying or amending plea agreements. Scanlon could have moved to withdraw his guilty plea, but chose not to do so. The case is: U.S. v. Scanlon (D.C. Circuit 2012) (courts are not authorized to modify or amend plea agreements).

Last Thursday, the Eleventh Circuit reversed a health care fraud/controlled substances conviction on Confrontation Clause grounds, because the trial court admitted five autopsy reports, over objection, without hearing testimony from the medical examiners who performed them. The case is: U.S. v. Ignasiak (11th Cir. 2012) (admission of autopsy report violates Confrontation Clause).

(wisenberg)

January 22, 2012 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Cybercrime

The Center on National Security at Fordham Law has a news source that provides "weekly news round-up of articles, information, and opinions about cybersecurity and the laws, policies, and challenges - both domestic and global - that define the cyber world week to week."  For more information, see here.

(esp) 

January 22, 2012 in Computer Crime, News | Permalink | Comments (1) | TrackBack (0)