Wednesday, April 30, 2014

Recent and Noteworthy

The Tenth Circuit explains the rather Talmudic distinction between a material omission, which requires the government to prove the defendant's duty to disclose, and a half-truth, which imposes no such requirement on the government. The case is  U.S. v. Charles Homer Chip Sharp (10th Cir. 2014) (omission in mail fraud). I'm surprised that no academic has done a study on the number of white collar defendants named Chip and Skip.

The Third Circuit's current willful blindness instruction is a vast improvement over its old one.  It survives a valiant and brilliant attack from appellate guru Peter Goldberger in U.S. v. Abdur Razzak Tai.

Here's a novel idea. Before a defendant can be sentenced, the jury has to actually render a guilty verdict. The Fourth Circuit provides remedial instruction in U.S. v. Saul Ramirez-Castillo.

(wisenberg)

 

April 30, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 29, 2014

In My Expert Opinion The Defendant Is A Liar

This post isn't about a white collar case, but America is our beat. Yesterday the Tenth Circuit reversed the bank robbery conviction of Stanley Hill, because FBI Special Agent Charles Jones (qualified as an "expert" trained in "special tactics and ways to identify deception in statements and truth in statements") testified that Hill's answers during a government interrogation were "not worthy of credence and 'did not make sense.'" Jones also testified that Hill "displayed evasive behaviors 'common among the criminal element to keep law enforcement at bay'" during interrogations. When asked about Hill's purported statement that he would rather die than face charges, Jones opined that "[n]ever in my career have I seen that with an innocent person." Finally, in discussing Hill's frequent invocation of God during the interrogation, Jones told the jury "'[m]y training has shown me...when people start bringing faith into validating their statements, that they're deceptive. Those are deceptive statements.'"

The surprise here is not that the Tenth Circuit found plain error and reversed. The surprise is that a DOJ trained prosecutor would ever put on such testimony in the first place. The surprise is that a federally trained public defender  CJA Panel Attorney would sit like a potted plant and fail to object to such flagrantly inadmissible testimony. The surprise is that a United States District Court Judge with even a cursory understanding of the Federal Rules of Evidence and due process would allow such testimony to go forward. Of course the Tenth Circuit panel went out of its way to absolve the trial court of any responsibility: "We cast no blame on the district court for the error that occurred in this case." That's the federal judicial protection racket for you. Most traffic court judges would know better than to allow in testimony like this. Here is the opinion in United States v. Stanley Hill.

(wisenberg)

 

Update: Hat Tip to Steve Levin of Levin & Curlett LLC for pointing out that the case was tried by a CJA Panel Attorney rather than the Public Defender's Office.

April 29, 2014 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Monday, April 28, 2014

In the News & Around the Blogosphere

Tony Mauro, Legal Times, Ted Stevens’ Defense Lawyers Honored As ‘Constitutional Champions’ (congratulations to Brendan Sullivan Jr. & Robert Cary)

Amanda Bronstad, The National Law Journal, Ex-KPMG Partner Gets 14 Months for Insider Trading

Paul Mogin, National Law Journal, DOJ Relents on False-Statements Policy

(esp)

 

April 28, 2014 in News | Permalink | Comments (0) | TrackBack (0)

Wire Fraud: Lying Isn't Always Enough

Nancy and Lester Sadler ran pain clinics that sometimes serviced  more than 100 patients a day--and that didn't even include the fake ones. They were convicted of several crimes and the Sixth Circuit affirmed all but one of the counts of conviction last week. Nancy Sadler's wire fraud conviction was vacated, however. According to the Court,  "the government showed that Nancy lied to pharmaceutical distributors when she ordered pills for the clinic by using a fake name on her drug orders and by falsely telling the distributors that the drugs were being used to serve 'indigent' patients." But this did not "deprive" the distributors of their property, because Nancy paid full price. "[P]aying the going rate for a product does not square with the conventional understanding of 'deprive.'" The government argued that the distributors would not have sent the pills had Nancy told them the truth. The Sixth Circuit dubbed this a "right to accurate information" and noted that the federal mail and wire fraud statutes no longer cover this kind of intangible right in the post-McNally era. Congress' statutory fix of McNally only covers the intangible right of honest services, "which protects citizens from public-official corruption." Of course 18 U.S.C. Section 1346 does more than that, even after Skilling, as it also covers certain private deprivations of honest services. But the conduct at issue in Sadler did not involve Nancy's "honest services" to the pharmaceutical distributors. She provided no services to them--she simply fibbed, but paid full price. Here is the opinion in United States v. Nancy Sadler.

(wisenberg)

April 28, 2014 in Fraud, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 22, 2014

A Fishy SOX Case

18 U.S.C. § 1519, known as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002, makes it a crime for anyone who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object” with the intent to impede or obstruct an investigation (emphasis added).  Congress passed this statute in the aftermath of the Enron debacle.  But did they ever envision that a prosecutor would use this statute against a commercial fisherman for allegedly having undersized grouper fish that were thrown overboard following the issuing of a civil fishing citation from the Florida Fish and Wildlife Commission? 

The government’s extension of this SOX statute is the subject of a Petition for Certiorari (Download Yates Pcert_Filed) before the Supreme Court. A key issue is whether “fish” are tangible objects for the purposes of this statute. And even more bizarre is that the fisherman allegedly started with 72 undersized red grouper and when he came to shore there were purportedly only 69 fish.  Could this be a federal prosecution under SOX for 3 missing fish? And is this all happening during a time of sequestration with tight funding?

Perhaps the Supreme Court will agree that in the ocean of crime, this one is a bit fishy.  Following the filing of the Petition for Certiorari and a distribution for conference, the Court requested a response from the government. Amici filed a couple of briefs and it was again distributed for conference. It is now set for distribution a third time, April 25, 2014 (see here). It's a wonderful case for the Court to examine principles of statutory interpretation and how far afield the government can go in using a statute written and intended to stop one form of criminal conduct but being used in an unintended manner. This case also provides the Court the chance to step to the plate and express a view on overcriminalization. (see NACDL amicus brief of William Shepherd here - Download NACDLYATESAMICUS).  There are many other issues in the "fish case" that may also interest the Court, such as how a civil fishing citation became a criminal case with an indictment issued 985 days after the citation. (see Petitioner's Reply Brief - Download Yates Reply to Brief in Opposition). But the real question is whether the Court will order fish this coming Friday at their conference.   

 (esp)

April 22, 2014 in Enron, Obstruction, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, April 17, 2014

Extradition in an Antitrust Case

DOJ reports their first ever extradiction on an Antitrust charge. (see here).  The accused is charged with violating the Sherman Act.  The company where the excutive had worked was in Italy, but the arrest and extradition was from Germany. Obviously, the individual is presumed innocent and the Government will bear the burden of proving guilt.

(esp)

April 17, 2014 in Antitrust | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 15, 2014

Lois Lerner Held in Contempt

Last week, as reported in the New York Times (see here), the House of Representatives Oversight and Government Reform Committee voted to hold in contempt Lois Lerner, the Internal Revenue Service official who after making a brief statement declaring her innocence invoked her Fifth Amendment privilege and refused to answer questions from the Committee members.  The Committee action will be referred to the entire House of Representatives for its consideration.  If the House votes to hold Ms. Lerner in contempt, it would refer the matter to the United States Attorney for the District of Columbia, Ronald C. Machen, Jr., a Democrat who in my view is unlikely to pursue this politically-charged case.

The Committee vote was based on party lines, with the Republican majority voting against Ms. Lerner.  A vote of the entire Congress, if it occurs, will most likely similarly be so based.  Indeed, Representatives on the Committee took exaggerated and hyperbolic positions.  Republican John J. Duncan claimed if Ms. Lerner's position were accepted, "every defendant . . . would testify and plead the Fifth so they couldn't be cross-examined . . . ."  Democrat Elijah Cummings said if he were to vote to hold Ms. Lerner in contempt, it would "place him on the same page of the history books as Senator Joseph McCarthy."

As I said before (see here), I believe that Ms. Lerner's general declaration of innocence, before she invoked the Fifth, does not constitute a waiver, but I do not believe the issue is crystal-clear.  Lawyers who represent witnesses before legislative committees (or in other matters) should be cautious about taking such positions.

(goldman)

April 15, 2014 in Contempt, Current Affairs, Investigations, News, Privileges, Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 8, 2014

NYU Conference - Deterring Corporate Crime: Effective Principles for Corporate Enforcement

I had the privilege of being at an NYU Conference titled, Deterring Corporate Crime: Effective Principles for Corporate Enforcement.  Hats off to Professor Jennifer Arlen for bringing together folks with some different perspectives on corporate crime. Individuals presented data, and I heard different positions presented (corporate, government, industry, judicial) on a host of topics.  The individual constituent (CEO, CFO, employee) within the corporation was not a key focus, unless it was a discussion of their wrongdoing or prosecution.   

From this conversation it was clear that deterring corporate wrongdoing is not easy.  Penalties have increased, yet we continute to see corporate criminality.  So the question is, how do we encourage corporations not to engage in corporate wrongdoing?

This is my top ten list of what I think exists and what needs to be changed -

1. Most companies try to abide by the law.

2.  Complying with the law is not always easy for corporations. In some instances the law and regulations are unclear, making it difficult to discern what is legal.  The array of different laws and regulations (e.g., state, federal, and international), as well as their complexity  makes corporate compliance problematic.

3.  Companies resort to internal investigations to get information of wrongdoing within the company. In some instances companies will threaten individuals with the possible loss of their jobs if they fail to cooperate with a corporate internal investigation. Individuals who provide information to their employers sometimes do not realize that the company may provide that information to the government and the information may then be used against them.

4.  If a company is criminally charged, it typically is financially beneficial for the company to fold, work with the government, and provide information to the government of alleged individual wrongdoing within the company.

5. DOJ's incentives to a corporation that causes it to fold and provide evidence to the government against alleged individual wrongdoers may be causing more harm because it pits corporations against its individual constituents.

6. We need a stronger regulatory system.  Our system is broken and one just can't blame agencies like the SEC.

7. If we expect agencies like the SEC to work, Congress needs to provide them with more money to engage in real regulatory enforcement.

8. There are many good folks in DOJ, including AG Holder, who look longterm at stopping corporate wrongdoing. But there are also individuals in DOJ who fail to see the ramifications of what may seem like short-term benefits.   

9. Corporate crime can be reduced if everyone - the corporation, government, and also the individual constituents would work together.

10. It would be beneficial in reducing corporate crime if there was more transparency.  We all need to hear what works - when there are declinations of prosecutions, or when an agency decides not to fine a company. We can learn from the good things companies do (anonymously) and when DOJ declines to proceed against the company.   

(esp)

April 8, 2014 in Conferences, FCPA, Prosecutions, Prosecutors, Qui Tam, SEC, Settlement | Permalink | Comments (0) | TrackBack (0)