Thursday, August 29, 2013

DOJ Releases Statement on U.S.-Swiss Tax Evasion Investigations

The DOJ issued a press release today telling of "a program that will encourage Swiss banks to cooperate in the department's ongoing investigations of the use of foreign bank accounts to commit tax evasion."  The release also notes that "Switzerland will encourage its banks to participate in the program."  A joint statement was agreed upon by the DOJ and Swiss Federal Department of Finance." (see here). The program excludes those presently under investigation.  It offers others a non-prosecution agreement under a list of terms that include, "cooperat[ion] in treaty requests for account information," "agree to pay substantial penalties," and "make a complete disclsure of their cross-border activitites." The press release notes that

"banks seeking a non-prosecution agreement must agree to a penalty in an amount equal to 20 percent of the maximum aggregate dollar value of all non-disclosed U.S. accounts that were held by the bank on Aug.1, 2008.  The penalty amount will increase to 30 percent for secret accounts that were opened after that date but before the end of February 2009 and to 50 percent for secret accounts opened later than that."   

It will be interesting to see how many banks come forward to obtain a non-prosecution agreement. And if they do, will the disclosures result in tax prosecutions of individuals within the U.S.

(esp)

August 29, 2013 in International, Investigations, Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 28, 2013

Judicial Oversight of Corporate Pleas -Protection of the Public Interest

United States v. Orthofix, Inc was an important decision for several reasons. First, the Memorandum  Opinion issued by Judge Young (D. Mass), on July 26, 2013, takes a turn in what typically happens when there is a corporate plea arrangement.   Second, the judge explains at length policy considerations for sentencing corporations.  The case also raises questions for the future of corporate plea agreements.  

This decision involves two cases involving corporate pleas where the court rejected the pleas.  The court notes the importance of considering the "public interest" in accepting pleas. Hon. Young states:

"Just as the Court must take account of the public interest when it exercises its discretion to fashion its own sentence, so too the Court must take account of the public interest when called upon to review a sentencing recommendation attached to a plea bargain."

The court considers the history behind plea bargains and contract law and notes the problem of considering it as a prosecution-defense relationship as opposed to a triadic relationship. Hon. Young states, that "this Court makes no attempt to question the policy choices of executive administrative agencies; it merely seeks to ensure that the sentence imposed upon Orthofix fosters (1) the protection of the public, (2) specific and general deterence, and (3) respect for the law."

The court states that "[o]rganizational criminals pose greater concerns than natural persons for two important reasons."  One of the concerns raised in the case of Orthofix, by the court, was that the plea of five years failed to impose the Corporate Integrity Agreement as part of the probation.

This Memorandum decision raises other interesting questions that were not discussed here, and perhaps not relevant to these matters. But one has to wonder whether courts should also be examining plea agreements that place undue pressure on corporations and individuals to plea because the risk of going to trial is too severe? In a post-Arthur Andersen world do corporations have the choice of risking a trial or is the necessity  of entering a plea too great to avoid the repercussions of an indictment and possible conviction? Should oversight of pleas go beyond the sentencing aspect to also scrutinze the bargaining position of the parties and the fairness of the general bargain?

See also Doug Berman's Sentencing Law & Policy Blog here, Jef Feeley & Janelle Lawrence, Bloomberg's,  Orthofix’s Settlement of Medicare Probe Rejected by Judge

(esp)

August 28, 2013 in Arthur Andersen, Deferred Prosecution Agreements, Judicial Opinions, Prosecutions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 27, 2013

A Rare Rebuke.

The Fourth Circuit has issued a rare and stern rebuke to the Eastern District of North Carolina U.S. Attorney's Office, for what the panel describes as repeated failures to disclose exculpatory evidence on the part of some of the office's prosecutors. Judge Floyd also directed that the opinion be sent to AG Holder and DOJ's OPR. This is remarkable. EDVA District Court Judge Henry Hudson was on the panel, sitting by designation, and concurred in the opinion. The Raleigh News & Observor has the story here. The opinion, U.S. v. Bartko, is here. The pertinent pages are 24-30.

(wisenberg)

August 27, 2013 in Judicial Opinions, Prosecutions, Prosecutors | Permalink

Thursday, August 22, 2013

Financial Meltdown Prosecutions Against Elite Actors? File Them Under "I'll Believe It When I See It."

In an interview with the Wall Street Journal, reported here, Attorney General Holder promises that "he plans to announce new cases stemming from the economic meltdown in the coming months." Some media outlets have interpreted this as a harbinger of criminal prosecutions, but Holder did not indicate whether the cases would be civil or criminal. Any civil case against the likes of a major bank or investment house can be filed under "Costs of Doing Business." In addition to the civil-criminal wiggle room Holder allowed himself, the definition of "cases stemming from the economic meltdown" is broad enough to cover a multitude of alleged malfeasance.  Is DOJ going to prosecute people who purportedly contributed to the meltdown through fraudulent omissions and commissions? Or will it bring desultory civil cases based on conduct that occurred in the wake of the meltdown? According to the article, Professor John Coffee "expected the five-year statute of limitations on many white-collar crimes may bar a successful prosecution of a number of pre-crash abuses." But virtually any federal criminal financial institution fraud case can be brought within 10 years, thanks to FIRREA. Criminally fraudulent activity involving a financial institution that occurred in May 2006 could be charged as late as 2016.

(wisenberg)

August 22, 2013 in Prosecutions, Prosecutors | Permalink

Wednesday, August 21, 2013

11th Circuit Reverses Health Care Fraud Conviction

In an unpublished opinion by the 11th Circuit, the court  in United States v. Reddy reversed and remanded a conviction coming out of a 7 day trial that started with a 37 count Indictment and had convictions for all but five wire fraud counts.  This health care case included counts of mail fraud, wire fraud, health care fraud, and falsifying records in a federal investigation.  At the heart of the reversal is a Daubert claim. Looking at the proposed expert's qualifications, reliability of the methodology, and relevance, the cout found that the error was not harmless in that what the expert "had to say about his peer review and accuracy of the work performed by" the accused "was highly probative and would have likely been helpful to the jury."

The court did note that the Indictment should not have been dismissed premised upon another argument made by the defendant. The court said that Section 1347 is a federal offense and "the underlying conduct must have an interstate nexus or other 'jurisdictional hook.'"  But the court noted that the "Indictment's language generally tracks the statutory language" and therefore "is sufficient to withstand a motion to dismiss."

The defense in this case was handled by the Altanta, Georgia law firm of Kish and Lietz.

(esp)

August 21, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Friday, August 16, 2013

Upcoming Conferences

ABA Sixth Annual Foreign Corrupt Practices Act National Institute, Sept. 18-19, 2013, Washington, D.C. - here

NACDL's 9th Annual Conference - Defending the White Collar Case: In and Our of Court, Oct. 24-25, Washington, D.C. - here

(esp)

August 16, 2013 in Conferences | Permalink | Comments (0) | TrackBack (0)

Thursday, August 15, 2013

Lion Fraud?

ABC News, Chinese zoo's 'African lion' exposed when dog substitute barks here

(esp)(hat tip Tunde Akinyele)

August 15, 2013 | Permalink | Comments (0) | TrackBack (0)

Sentencing - Sandi Jackson and Jesse Jackson Jr.

The BLT Blog provides background here.

The government asked for 4 years and the defense wanted a much lower amount for Jesse Jackson Jr. The court entered a sentence of 2 1/2 years (30 months) for Jesse Jackson Jr. and 1 year (12 months) for his wife, Sandi Jackson.  See Ann E. Marimow and Rachel Weiner, Washington Post, Jesse L. Jackson Jr. sentenced to 30 months in prison 

The Chicago Tribune reports (here) that Jesse Jackson Jr. will serve his sentence first, followed by Sandi Jackson.  

It is good to see courts accommodating the sentences of a husband and wife to account for what may be best for their children.  We have seen this done in the past, for example in the case of Lea and Andy Fastow (see here).  

 (esp)

August 15, 2013 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 14, 2013

Notre Dame Journal of Law, Ethics & Public Policy - Call for Papers

Call for Papers from the Notre Dame Jrl of Law, Ethics, and Public Policy -

The Notre Dame Journal of Law, Ethics & Public Policy is currently accepting articles and essays from professors, practitioners, and public officials for publication in its symposium issue, which will focus on the legal, moral, and ethical considerations of white-collar crime in the twenty-first century, which will be published early next year.  Articles should be approximately 9,000 to 15,000 words and in Bluebook Citation format. Additionally, symposium authors will be among those selected to participate in our symposium event, which will be scheduled during the Spring 2014 semester.  

The law student-edited Journal is unique among legal periodicals because it examines public policy and legal questions within the framework of the Judeo-Christian intellectual and moral tradition.  The Journal has a national audience of persons actively involved in the formulation of public policy, and often includes timely pieces from a broad spectrum of prominent scholars and officials.  The Journal’s unique focus is widely recognized, as demonstrated in citations to the Journal by various state and federal courts, including the United States Supreme Court.  More information on the Journal is available at https://law.nd.edu/publications/journals/notre-dame-journal-of-law-ethics-public-policy/.

If you are interested in submitting a piece, please contact the Journal’s Executive Articles Editor, Angela Johnson at ajohns23@nd.edu or (574) 238-9225.  Please submit by November 1, 2013.  The Executive Board will consider submissions for publication immediately and would appreciate hearing of an author’s intent to submit as soon as possible.

(esp)

August 14, 2013 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 13, 2013

Hats Off to AG Holder

Attorney General Eric Holder's talk (see here) at the American Bar Association Conference should be applauded. To have an Attorney General say that "our criminal justice system is in too many respects broken"  is a huge step in us moving ahead to change.  His recognition "that 20th Century criminal justice solutions are not adequate to overcome our 21st century challenges" is a high point of this speech.  

Addressing issues relevant to the white collar world, he said that his administration had a "strong commitment to common sense criminal justice reform." To have the Attorney General tell the ABA and public "federal prosecutors cannot - and should not - bring every case or charge every defendant who stands accused of violating federal law" is a huge step in correcting injustice in the criminal process. Recognizing the importance of state and local law enforcement is a step in the direction of reigning in federal overcriminalization. He even uses the "smarter" on crime terminology that many have been emphasizing across the country.

Perhaps the most important aspect of this speech is his statement regarding this being the 50th anniversary of the Gideon decision and how our public defender system needs increased funding.  These are the words that reflect him as a true "minister of justice."

He also spoke about problems related to collateral consquences, something that has been most bothersome in the white collar world.

This was an uplifting speech and it is wonderful to see this coming from the Attorney General.  Hats off to AG Holder.

(esp)  

August 13, 2013 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

DOJ's Admission: Our Mortgage Fraud Numbers Were Phony

by: Soloman L. Wisenberg

Well, DOJ didn't admit it in those exact words. The tone and content were more Ziegleresque: "[T]he announcement overstated the number of defendants that should have been included as part of the Distressed Homeowner Initiative, as well as the corresponding estimated loss amount and number of victims." The original press release and press conference in October 2012 touted "the results of the Distressed Homeowner Initiative, the first-ever nationwide effort to target fraud schemes that prey upon suffering homeowners. The yearlong initiative, launched by the FBI, a co-chair of the Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group, resulted in 107 criminal defendants charged in U.S. District Courts across the country. These cases involved more than 17,185 homeowner victims and total losses by those victims estimated by law enforcement at more than $95 million." It turns out the numbers given for people arrested, victims affected, and losses incurred were grossly inflated. Jonathan Weil's blistering Bloomberg.com column discussing the rigged numbers is here. The original press release and Newspeak retraction are here. No doubt DOJ is working up a Section 1001 case right now against the folks who gave out these numbers. I don't usually quote socialists, but I.F. Stone's favorite saying now comes to mind: "All governments are run by liars." Hat Tip to Professor William Black for bringing this story to my attention.

(wisenberg)

August 13, 2013 in Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Monday, August 12, 2013

An Enormously Important Ethics Opinion From the DC Bar

by: Solomon L. Wisenberg

I posted here last October on Guts and the DC Bar Counsel: The Case of Andrew J. Klineand asked:

"What is the solution to the persistent blight of jaw-droppingly obvious Brady/Giglio violations? One solution is to bring ethical complaints against purportedly miscreant prosecutors in appropriate instances. Which brings us to the case of former DC AUSA Andrew J. Kline, currently making its way through the bar disciplinary process . . . DC Bar Counsel wants Kline censured for an alleged Brady/Giglio violation that also runs afoul, according to Bar Counsel, of the arguably broader Rule 3.8(e) of the DC Rules of Professional Conduct . Rule 3.8(e) states in pertinent part that: 'The prosecutor in a criminal case shall not . . . intentionally fail to disclose to the defense, upon request and at a time when use by the defense is reasonably feasible, any evidence or information that the prosecutor knows or reasonably should know tends to negate the guilt of the accused . . . .'

The defense bar often talks about using various state versions of Rule 3.8(e) in tandem with Brady/Giglio, in part to get around the Brady/Giglio materiality problem. Here is a Bar Counsel actually doing something about it. Kline vigorously denies that the withheld information was material or that he intentionally engaged in any wrongdoing.

What information did Kline actually withhold? He was prosecuting Arnell Shelton for the shooting of Christopher Boyd. Shelton had filed an alibi notice and 'the reliability of the government's identification witnesses' was the principal issue at the 2002 trial, according to the Report and Recommendation of Hearing Committee Number Nine ("Report and Recommendation"). Kline spoke with Metropolitan Police Department Officer Edward Woodward in preparation for trial. Kline took contemporaneous notes. Woodward was the first officer at the scene of the crime and spoke to victim Boyd at the hospital shortly after the shooting.

According to the Report and Recommendation, Kline's notes of his conversation with Woodward were, in pertinent part, as follows: 'Boyd told officer at hospital that he did not know who shot him–appeared maybe to not want to cooperate at the time. He was in pain and this officer had arrested him for possession of a machine gun …'

At trial Boyd identified Shelton as the shooter. According to Bar Counsel, Kline never disclosed Boyd's hospital statement to the defense despite a specific Brady/Giglio request for impeachment material. The other identification witnesses were weak and/or impeachable.

The case ended in a hung jury mistrial and the alleged Brady material (that is, Boyd's hospital statement to Woodward) was not revealed to the defense until literally the eve of the second trial, even though DC-OUSA prosecutors and supervisors had known about it for some time. When the trial court found out about the hospital statement and that it had not been disclosed before the first trial because Kline did not consider it exculpatory, the court was thunderstruck: 'I don’t see how any prosecutor could take that position. . . I don’t see how any prosecutor anywhere in any state in the country, could say I don’t have to turn that over because I think I know why he said that.' See DC Bar Counsel's corrected Brief at 8.

The court offered defense counsel a continuance, but she elected to go to trial as her client was then in jail. The second trial ended in Shelton's conviction.

Kline's position now is that the hospital statement was not material, hence not Brady, because Boyd was in pain and being treated for a gunshot wound at the time and because Shelton was ultimately convicted upon retrial.

Bar Counsel's position is that the withheld hospital statement was material and exculpatory and therefore Brady material, but that even if it was not Brady material, the failure to turn it over violated Rule 3.8(e). Bar Counsel seeks a public censure of Mr. Kline."

That was back in October 2012. At the time of the original post, Kline was in the process of contesting Hearing Committee Number Nine's Report and Recommendation to the District of Columbia Court of Appeals Board on Professional Responsibility (Board). The Board issued its own Report and Recommendation on July 31, 2013, upholding the Hearing Committee, but changing the recommended sanction from public censure to 30 days suspension.

The Board accepted the Hearing Committee's factual and legal conclusions and found that: 1) the withheld statement was material; and 2) even if it had not been material, Rule 3.8(e) required its disclosure, because Rule 3.8(e) does not contain a materiality element. The Board also agreed that: 1) Kline knew or should have known that the information tended to negate the guilt of the accused; 2) the defense requested the exculpatory information at a time when its use was reasonably feasible; and 3) the failure to turn over the statement was intentional.

BLT has a story here, stating that the matter is likely headed to the DC Court of Appeals. Here is the Board's opinion, styled In the Matter of Andrew J. Kline.

The DOJ, which says it cares so much about respecting the constitutional rule announced 50 years ago in Brady v. Maryland, came in with an amicus brief arguing that the withheld statement was not material. How appalling.

(wisenberg) 

August 12, 2013 in Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)