Wednesday, December 7, 2016
On August 11, 2016, the Eleventh Circuit issued an 124 page opinion in U.S. v. Clay. Review of this decision in the 11th Circuit was denied. So now the case is likely to be teed up on a Petition for Cert. for review by the Supreme Court. There are important issues presented by this case, two that standout here.
1. Mens rea is the crux of many white collar crimes. The complicated nature of many statutes places individuals in difficult situations in both understanding the laws and abiding by them. Too many times, when individuals are indicted for white collar offenses, there are cries that they did not know the conduct was illegal. After all, it can sometimes be difficult to discern when a business decision crosses the line into illegality. This particular case has a section 1347 claim, a relatively new statute that is modeled on the older mail (1341) and wire (1343) fraud statutes. The fact that it took the appellate court 124 pages, and many of these pages were a description of the alleged illegal conduct (facts go to page 66 and many of remaining pages discuss the facts) sets the tone for the complicated nature of this case. As with another recent case coming from the Middle District of Florida (Yates -1519 fish case reversed by the Supreme Court), the case involves a federal and state initiative.
The Appellate Court finds that the defendants had the requisite knowledge. But was the standard for ascertaining that knowledge correct? The Supreme Court's decision in Global Tech, notes the importance of needing "knowledge" in criminal law. The Court makes clear that "recklessness and negligence" do not suffice. It is clear the Court in Global Tech wants actual knowledge or a clear avoidance of that knowledge. In Clay, the instruction given to the jury was a "statement or representation is false or fraudulent if it is about a material fact that the speaker knows is untrue or makes with deliberate indifference as to the truth and makes with intent to defraud." (emphasis added). The 11th Circuit finds this sufficient because of the use of "and" "with intent to defraud" used in the instruction. But in a complicated white collar case, should additional words following words that are insufficient be enough to meet the required knowledge of the alleged wrongdoing? This presents an interesting question for the Supreme Court to consider. The 11th Circuit's reliance on its pattern jury instruction with only removing the word "reckless indifference" and replacing it with "deliberate indifference" lowers the standard of knowledge that should be required in a white collar case with facts that are clearly complicated as demonstrated by the 11th Circuit's description.
2.To premise a false statement charge on statements that are made by individuals on the scene of a search with approximately 200 agents may seem warranted when the case involves something like a specific act of homicide, rape, burglary or robbery. But put this now in the context of a complicated white collar case and one needs to recognize that being asked specifics about a business requires closer scrutiny of both the context and the statements being made. White collar businesses typically involve hundreds of documents and nuances within those documents. It is not the same as asking - did you have a gun, or did you enter a house. A specific answer may appear false, because explaining a complicated business transaction cannot be done in simple answers to agents that are swarming a place and placing the individuals in a pressure situation. White Collar cases typically proceed through grand juries and with the use of subpoenas. The current use of searches needs to be examined, especially when there are resulting charges of false statements such as in this case.