Friday, November 27, 2015
If you want to know why companies settle with the government, even when they aren't guilty of anything, look no further than Ally Financial LLC's $98 million "no admit or deny" settlement with the Consumer Financial Protection Bureau (CFPB) over alleged racial bias in auto lending. As Wednesday's Wall Street Journal reports here, the CFPB chose questionable statistical methods, had questionable legal authority, and used the threat of unfavorable action by the Federal Reserve and the FDIC in a wholly separate matter, to coerce a settlement. Ally was eager to receive approval from the Fed and FDIC to convert to holding company status, in order to avoid having to shed some of its business units. The Fed was only too happy to oblige CFPB in its bullying tactics. As an internal CFPB memo makes clear, a Fed finding of improper discrimination would "most likely result in the denial of holding company status," but the Fed "also indicated that if Ally takes prompt and corrective action, it would consider such a factor in its determination." The House Financial Services Committee Report, Unsafe at any Bureaucracy, carefully documents CFPB's sordid tactics . Incredibly, CFPB referred the matter to DOJ. This kind of stuff happens, and dictates business litigation strategy with the government, quite often. So, when people complain that the failure to prosecute corporate insiders is inevitably suspicious in light of large civil settlements, I always want to know the industry, the company and other important details.
Friday, May 29, 2015
Former Speaker of the House Dennis Hastert has been indicted for structuring and lying to the FBI, two crimes that many reasonable people, including me, are not certain should be crimes. Structuring involves, as alleged here, limiting deposits and other financial arrangements so as not to trigger a bank report to the IRS. Lying to the FBI includes a denial of wrongful activity, a natural human response by those confronted (although a mere "exculpatory no" without more is no longer generally prosecuted).
The indictment states that Hastert had paid off a fellow Yorkville, Illinois resident he had known most of that person's life $1.7 million, and promised a total of 3.5 million, "in order to compensate for and conceal...misconduct" committed "years earlier" against that person. The indictment mentions that Hastert was a teacher and wrestling coach at a local high school from 1965-1981.
Reading between the lines of this deliberately vague and unspecific indictment, my guess is that the alleged underlying misdeeds are sexual in nature. I also wonder whether the considerable payment mentioned in the indictment "to compensate for and conceal misconduct " resulted from extortion and, if so, whether as a matter of prosecutorial discretion and perhaps even as a matter of law Hastert should be prosecuted for such relatively minor crimes, and whether Hastert is really being punished for wrongs done decades ago (and probably beyond a statute of limitations). These thoughts, let me be clear, are based on speculation and surmise, with only preliminary knowledge of the facts.
Tuesday, April 14, 2015
Earlier this month, the Second Circuit, as expected (at least by me), denied Southern District of New York U.S. Attorney Preet Bharara's request for reargument and reconsideration of its December 2014 ruling in United States v Newman which narrowed, at least in the Second Circuit, the scope of insider trading prosecutions. I would not be surprised if the government seeks certiorari, and, I would not be all that surprised it cert were granted.
In Newman, the defendants, Newman and Chiasson, were two hedge fund portfolio managers who were at the end of a chain of recipients of inside information originally provided by employees of publicly-traded technology funds. The defendants traded on the information and realized profits of $4 million and $68 million respectively. There was, however, scant, if any, evidence that the defendants were aware whether the original tippors had received any personal benefit for their disclosures.
The Second Circuit reversed the trial convictions based on an improper charge to the jury and the insufficiency of the evidence. Specifically, the court ruled that:
1) the trial judge erred in failing to instruct the jury that in order to convict it had to find that the defendants knew that the corporate employee tippors had received a personal benefit for divulging the information; and
2) the government had indeed failed to prove that the tippors had in fact received a personal benefit.
Thus, at least in the Second Circuit, it appears that the casual passing on of inside information without receiving compensation by a friend or relative or golf partner does not violate the security laws. "For purposes of insider trading liability, the insider's disclosure of confidential information, standing alone, is not a breach," said the court. Nor, therefore, does trading on such information incur insider trading liability because the liability of a recipient, if any, must derive from the liability of the tippor. To analogize to non-white collar law, one cannot be convicted of possessing stolen property unless the property had been stolen (and the possessor knew it). Those cases of casual passing on of information, which sometimes ensnared ordinary citizens with big mouths and a bit of greed, are thus apparently off-limits to Second Circuit prosecutors. To be sure, the vast majority of the recent spate of Southern District prosecutions of insider trading cases have involved individuals who have sold and bought information and their knowing accomplices. Although Southern District prosecutors will sometimes now face higher hurdles to prove an ultimate tippee/trader's knowledge, I doubt that the ruling will affect a huge number of prosecutions.
The clearly-written opinion, by Judge Barrington Parker, did leave open, or at least indefinite, the critical question of what constitutes a "personal benefit" to a provider of inside information (an issue that also might impact corruption cases). The court stated that the "personal benefit" had to be something "of consequence." In some instances, the government had argued that a tippee's benefit was an intangible like the good graces of the tippor, and jurors had generally accepted such a claim, likely believing the tippor would expect some personal benefit, present or future, for disclosing confidential information. In Newman, the government similarly argued that the defendants had to have known the tippors had to have received some benefit.
Insider trading is an amorphous crime developed by prosecutors and courts - not Congress - from a general fraud statute (like mail and wire fraud) whose breadth is determined by the aggressiveness and imagination of prosecutors and how much deference courts give their determinations. In this area, the highly competent and intelligent prosecutors of the Southern District have pushed the envelope, perhaps enabled to some extent by noncombative defense lawyers who had their clients cooperate and plead guilty despite what, at least with hindsight, seems to have been a serious question of legal sufficiency. See Dirks v. S.E.C., 463 U.S. 646, 103 S.Ct. 3255 (1983)(test for determining insider liability is whether "insider personally will benefit, directly or indirectly"). As the Newman court refreshingly said, in language that should be heeded by prosecutors, judges, and defense lawyers, "[N]ot every instance of financial unfairness constitutes fraudulent activity under [SEC Rule] 10(b)."
As I said, I would not be shocked (although I would be surprised) if Congress were to enact a law that goes beyond effectively overruling Newman and imposes insider trading liability on any person trading based on what she knew was non-public confidential information whether or not the person who had disclosed the information had received a personal benefit. Such a law, while it would to my regret cover the casual offenders I have discussed, would on balance be a positive one in that it would limit the unequal information accessible to certain traders and provide a more level playing field.
Wednesday, September 11, 2013
A so-far publicly unidentified attorney in the lobbying group at Dickstein Shapiro reportedly sent emails to members of the House Committee on Government Reform asking them not to question Jonathan Silver, a government employee and prospective witness and Dickstein client. Specifically, the attorney requested, "If possible, please do not direct questions to Jonathan Silver. He's a client of my firm," adding a smiley face emoticon symbol. See here, here and here. The emails were sharply criticized by committee chair Darrell Issa (R-Calif.), who, displaying a copy but charitably blacking out the sender's name, demanded an explanation from Silver's counsel why "we shouldn't refer this to the American Bar Association." (The ABA, of course, does not hear ethics complaints against individual lawyers.) The committee's ranking Democrat, Elijah Cummings, joined in expressing his dismay, saying the requests seemed "clearly out of bounds."
Although the attorney (I suspect someone known to the Congresspersons, perhaps a former House staffer) appears to have demonstrated extraordinarily bad judgment, I question whether her conduct was unethical. Lobbyists are allowed to privately ask Representatives to vote on matters of crucial importance, far more important often than whether a government employee will be asked questions by a committee. I do not find an ex parte attempt to influence questioning at a hearing worse than a similar attempt to influence a vote. Such conduct would ordinarily be unethical, however, if directed toward a judge or prosecutor or if it violated a rule governing House committee conduct.
When I last appeared with a client before a House committee hearing, the chair threatened him with contempt for having, quite appropriately, asserted his Fifth Amendment right to refuse to answer questions. That threat, more shockingly to me, was repeated in private by Congressional staff lawyers, including the then chief counsel for the House of Representatives. I, therefore, am somewhat amused by the self-righteousness of the Congressmen here.
Sunday, June 9, 2013
The wonderful John Wesley Hall concisely explains, at Welcome to the Fourth Amendment.com, the decades-long erosion of our Fourth Amednment rights, at the hands of the Supreme Court and a succession of do-nothing Congresses. No surprises here, as Hall laments:
"What is Congress doing? Essentially nothing. Proposing a law with great fanfare is meaningless if it goes nowhere. I wrote my Senators about email privacy, so I figure they don’t care since they never wrote back. So, I haven’t bothered to write to them about Sen. Paul’s bills. Congress is too mired in gamesmanship to do their damned jobs of actually legislating in the public interest."
"Now, what are we going to do about it? Complain, but sit on or wring our hands and do nothing?"
Hat Tip to NACDL's tireless weekend warrior, Ivan J. Dominguez, for sending this out. Similar points were made on Friday by the inimitable Scott Greenfield at Simple Justice in Seize It All And Trust the Government To Sort IT Out:
"Yet all the hand-wringing interest today will fade and we will elect the same men and women to power to continue to re-enact the same laws that allow the government to do such things to its own people, and presidents who believe so strongly in their own exceptionalism that they can be trusted with our personal data even though the other team could never be."
Cheery thoughts for a Sunday afternoon.
Wednesday, June 5, 2013
FBI Special Agent Reginald Reyes' affidavit supporting DOJ's search warrant application for Fox News Reporter James Rosen's Google email account was ordered unsealed in November 2011. But it wasn't actually unsealed by the DC U.S. District Court's staff until late May of 2013. In other words, the affidavit was only unsealed several days after AG Holder testified that, "[w]ith regard to potential prosecution of the press for the disclosure of material, that is not something that I have ever been involved in, heard of, or would think would be a wise policy." Once the affidavit and search warrant application were unsealed, it became clear that Holder's testimony was inacurrate, as he had personally authorized the search warrant application. See here for yesterday's post on this issue.
DC Chief Judge Royce Lamberth is not happy about his staff's failure to unseal the affidavit and related documents. Here is Chief Judge Royce Lamberth's 5-23-2013 Order expressing his unhappiness.
Tuesday, June 4, 2013
“Well, I would say this. With regard to potential prosecution of the press for the disclosure of material, that is not something that I have ever been involved in, heard of, or would think would be a wise policy.” Attorney General Eric Holder testifying under oath before the House Judiciary Committee on May 15, 2013.
"For the reasons set forth below, I believe there is probable cause to conclude that the contents of the wire and electronic communications pertaining to SUBJECT ACCOUNT, are evidence, fruits and instrumentalities of criminal violations of 18 U.S.C. [Section] 793 (Unauthorized Disclosure of National Defense Information), and that there is probable cause to believe that the Reporter has committed or is committing a violation of section 793(d), as an aider and abettor and/or co-conspirator to which the materials relate." FBI Special Agent Reginald B. Reyes' May 28, 2010, Affidavit in Support of Search Warrant Application for Fox News Chief Washington Correspondent James Rosen's Google email account. The warrant was authorized by Attorney General Holder.
Note than in addition to identifying "the Reporter" as a probable aider, abettor and/or criminal co-conspirator, the affidavit explains that the Department of Justice is not bound by the Privacy Protection Act, otherwise prohibiting warrants for First Amendment work product, precisely because "the Reporter" was "suspected of committing the crime [18 U.S.C. Section 793(d)] under investigation."
There is no doubt that AG Holder gave false testimony to House Members under oath. He is an idiot if he did so intentionally, and he isn't an idiot. What should Holder have done to fix this mess? Corrected the record, of course. In the immortal words of Richard Nixon, "that would have been the easy thing to do."
Holder should have said: "Dear Representatives Goodlatte and Sensenbrenner. I screwed up. My testimony to you is now inoperative. I forgot that I authorized this affidavit, which clearly identifies a 'Reporter' as somebody under investigation for a crime. I did not intentionally try to deceive you. My statement was careless and overbroad. Please accept my apologies."
But the Attorney General apparently cannot not bring himself to do anything as straightforward as that. Instead he spends days sending out spinmeisters, most recently, and regrettably, Deputy Assistant AG Peter Kadzik, as reported here by Sari Horwitz in today's Washington Post.
How sad. Can you imagine anything like this happending under Attorney General Griffin Bell? Bell, a genuine protector of our civil liberties, most likely would have nixed the supboena in the first place. But if Bell had authorized it, he never would have shied away from the ensuing controversy or hidden behind his DOJ underlings.
Mr. Holder has received his fair share of undeserved, demagogic criticism from the kooky right. He deserves what he's getting now.
Here is a copy of the Reyes Affidavit.
Friday, May 24, 2013
Most witnesses with potential criminal exposure who are called to testify before Congressional hearings take the stand, with their lawyers behind them, and repeat the incantation "I respectfully decline to answer the question based on my Fifth Amendment privilege against self-incrimination," or some variation. Occasionally, a witness insists on testifying in spite of a danger that his answers might incriminate him or, if in conflict with other witnesses' statements or other evidence, might lead to a perjury or obstruction prosecution. One notable example is Roger Clemens, who chose to testify and, although ultimately acquitted, was indicted and lost millions of dollars in legal fees and endorsements.
Lois Lerner, an embattled Internal Revenue Service official called to testify before a Congressional hearing earlier this week, tried to have her cake and eat it too. She made a brief opening statement declaring her innocence ("I have not done anything wrong. I have not broken any laws. I have not violated any I.R.S. rules and regulations, and I have not provided false information to this or any other Congressional committee."). She then invoked her constitutional right not to testify. Committee Chair Daryl Issa (R-Calif.) and other Congressmen claimed that, by her opening declaration, she had waived her privilege and therefore was required to answer the Committee's questions.
Some lawyers have criticized Ms. Lerner's counsel, William Taylor III, one of the most highly-respected criminal defense lawyers in the nation, for allowing Ms. Lerner to make an opening statement, claiming that at the very least that she placed herself at risk of waiving her constitutional privilege against self-incrimination. See here. Although the area of waiver of privilege is indeed murky, with cases going in different directions, I believe Ms. Lerner did not waive her right to silence by her unspecific denials. As Miranda v. Arizona itself says, "If the individual indicates in any manner, at any time prior to or during questioning, that he wishes to remain silent, the interrogation must cease." 384 U.S. 436, 473-4, fn. 44.
Nonetheless, courts sometimes bend over backwards to "punish" what appears to them as gamesmanship. Many years ago, a New York City Congressman, Mario Biaggi, in response to a "leak" disclosing he had invoked his privilege in the grand jury and refused to answer questions, declared publicly that he had cooperated fully and answered all the jury's questions -- a statement which was far from true -- and that he had instructed his attorneys to seek release of his testimony to prove it. His attorneys moved for disclosure of testimony, no doubt expecting the motion to be denied. (The United States Attorney also so moved.) The district court, however, as later affirmed by the Court of Appeals, held that Biaggi had waived the privilege and ordered the release of his entire transcript. In re Biaggi, 478 F.2d 489 (2d Cir. 1973).
Even though I believe that ultimately it will not be determined (or probably even litigated) that Ms. Lerner waived her privilege against self-incrimination, I wonder whether her brief declaration of innocence -- by itself unlikely to persuade anyone -- was worth the risk, however slight. My guess -- pure guess -- is that the decision to allow her to make her brief opening statement was a compromise made between a careful lawyer and a client, like many I have represented, who adamantly desired to testify. Of course, professional discretion would prevent Mr. Taylor from shifting any blame.
Thursday, June 28, 2012
So let's see - President Obama wins on the health care decision with the Supreme Court, and later the same day the Attorney General is held in contempt of Congress. So which item ends up at the top of a blog. Was this political?
Don't overlook the Supreme Court's Alvarez decision today when reading about another important decision issued by the Court today - the one that upholds the Affordable Care Act. The Court's finding the Stolen Valor Act unconstitutional opens up some First Amendment arguments in the criminal sphere.
The test provided by the plurality decision is that "there must be a direct causal link between the restriction imposed and the injury to be prevented."
Justice Kennedy (joined by Roberts, Ginsburg, and Sotomayor) found that the respondent who lied about receiving a Congressional Medal of Honor, in direct contravention of a federal criminal statute - the Stolen Valor Act of 2005 (18 U.S.C. s 704) had a first amendment protection. The decision reminds us that there are certain content-based restrictions that are permitted -
"Among these categories are advocacy intended, and likely, to incite imminent lawless action, obscenity, defamation, speech integral to criminal conduct; so-called 'fighting words'; child pornography; fraud; true threats; and speech presenting some grave and imminent threat the government has the power to prevent" (citations and parentheticals from the decision omitted here)
This opinion states that "[t]hese categories have a historical foundation in the Court’s free speech tradition. The vast realm of free speech and thought always protected in our tradition can still thrive, and even be furthered, by adherence to those categories and rules." But the Court also notes that there is no "general exception to the First Amendment for false statements." And specifically when considering defamation it says "that falsity alone may not suffice to bring the speech outside the First Amendment. The statement must be a knowing or reckless falsehood."
That said, this opinion distinguishes statutes such as the false statement statute (s 1001); perjury (s 1623) and false representing that one is speaking on behalf of the Government (s 912).
Although this opinion stresses the importance of the military medals - as it should, it questions whether the "government's chosen restriction on the speech at issue [is] 'actually necessary ' to achieve its interest."
The key test used here - "There must be a direct causal link between the restriction imposed and the injury to be prevented."
The opinion ends by stating:
The Nation well knows that one of the costs of the First Amendment is that it protects the speech we detest as well as the speech we embrace. Though few might find respondent’s statements anything but contemptible, his right to make those statements is protected by the Constitution’s guarantee of freedom of speech and expression. The Stolen Valor Act infringes upon speech protected by the First Amendment."
Justices Breyer and Kagan offer a concurrence that stresses that there is a less restrictive way to achieve the government's goal. They suggest using "intermediate scrutiny" here in evaluating this case, but also hold that "[t]he Government has provided no convincing explanation as to why a more finely tailored statute would not work."
Dissenting are Justices Alito, Scalia, and Thomas. They note that the statute is limited in several different ways. They argue that "false statements of fact merit no First Amendment protection in their own right" and that it is a narrow law.
Commentary to follow.
Monday, May 21, 2012
Here is the Houston Chronicle's take on today's proceedings in U.S. v. William Roger Clemens. Brian McNamee was allowed to testify on re-direct that he injected three other players with HGH. Judge Walton gave the jury a limiting instruction that the testimony could only be used to bolster McNamee's credibility--not to infer Clemens' guilt. Still, this was a significant break for the government.
I am now batting 0 for 2 in my most recent predictions. I predicted that Judge Walton would strike some of Andy Pettitte's testimony and that the judge would not let McNamee talk about injecting other players. So take this next observation wiht a grain of salt. To me, the jurors' questions at the end of each day show their skepticism regarding the government's case and the credibility of key government witnesses.
Tuesday, May 15, 2012
Some years ago, I represented a landlord who was indicted and convicted for offering a bounty to a thug if he beat up the leader of the tenants' committee, which was opposing a rent increase. This behavior does not seem all that much different from what the National Football League has alleged New Orleans Saints linebacker Jonathan Vilma did. Vilma, four other players, and his coach Sean Payton and others, have been disciplined by NFL Commissioner Roger Goodell for allegedly conspiring to offer rewards to teammates to maim opposing players, particularly star quarterbacks.
News about this alleged conspiracy has been widely publicized, but I have yet to read of any current or impending federal or state criminal or legislative inquiry. While certain violence in football is accepted, deliberate maiming goes beyond any acceptable norms. Nonetheless, it would not surprise me that neither federal nor state prosecutors, especially in the New Orleans area, where Vilma and his alleged player co-conspirators played, view such an investigation as crowd-pleasing. Realistically, it is quite possible that a New Orleans jury would nullify and acquit Vilma even if there were convincing evidence against him.
In virtually every other area of business activity where there is a tenable allegation that a person had conspired to maim a competitor or opponent, there would be a serious prosecutorial investigation. In sports, what is ordinarily considered criminality, at least physical criminality, is often given a bye.
One might think that Congress has a legitimate reason and special responsibility to investigate alleged orchestrated maiming in professional football, a national sport/business. The National Football League, as it is now, exists due to Congressional largess. Congress has given the NFL a special exemption to antitrust rules which allows it to function as a lucrative monopoly with an all-powerful commissioner. Professional football (which to my wife's chagrin I watch virtually every fall Sunday), if fairly and properly played, is a dangerous game, as reflected by the frequent injuries and limited career span of its players, and the reported unusual rates of early brain damage, suicides and deaths among its retirees. When improperly played -- played with a purpose of injuring others -- it is even more brutal.
Of course, just as an indictment might not be popular with local fans, a Congressional investigation into football brutality would probably not be favorably received by the voters back home, who like their contact sports (at least professional sports) such as football and hockey to be rough. Congress appears to be more interested in whether baseball players engage in taking illegal drugs, which, if it harms anyone, hurts only themselves or perhaps also competing players who perform at a comparative disadvantage without such presumed aids. Such an investigation also continues to feed the anti-drug attitude Congress has fostered and to justify the harsh drug laws Congress has enacted. Of course, Congress might also be gunshy in view of the embarrassment that the baseball steroid investigation and resulting Roger Clemens trial became.
This is not to say that I presume Vilma is guilty. I have not seen or heard any concrete evidence that he in fact did orchestrate a bounty program. The NFL investigation was conducted in secret and with only a sparse controlled public report by the NFL of its findings. Vilma's attorney, in a letter roughly equivalent to a motion for discovery in a criminal case, has asked for 17 points of information. The NFL's response is essentially that its special counsel, Mary Jo White, a respected and liked, and generally prosecution-minded, former United States Attorney, has reviewed the secret evidence and has found it sufficient. The NFL also claims that it had shared some of the evidence with the alleged offenders and the NFL Players Association. The association, while supporting the players' right to arbitration, presumably represents both Vilma and the alleged offenders, and is barely a substitute for a single-minded advocate on Vilma's behalf.
Thus, Vilma, subject to possible reversal by arbitration or court action, will be punished with a suspension of one year (a significant time in a football player's limited career span), and the loss of millions of dollars without even rudimentary due process. And, unlike many persons suspended or fired from jobs, Vilma is practically unable to ply his trade anywhere else besides the monopolistic NFL.
I do not know enough about the NFL's collective bargaining agreement, which apparently allows the Commissioner to be both prosecutor and judge, or about labor law to know whether Vilma has been treated properly. I do, however, have a visceral feeling that he deserves more rights than a secret investigation and a conclusory decree by a commissioner with dictatorial power.
Few things are more exhilarating to a criminal defense attorney than turning the government's witness into your own. This is exactly what Rusty Hardin did with Yankees GM and Senior VP Brian Cashman to close out last week's testimony in the Roger Clemens trial. It's not as if Cashman provided that much to the government in the first place. He testified on direct that the Yankees acquired Clemens from Toronto after the 1998 season. Clemens contemporaneously asked the Yankees to hire Toronto strength coach Brian McNamee. Cashman declined. There is no evidence that Clemens pressed the matter further at the time. Clemens was injury plagued in 1999, and had his worst ERA ever. After getting shelled in a 1999 playoff game at Fenway Park, Clemens asked Cashman to hire McNamee for the 2000 season. Cashman obliged. In 2000 Clemens rebounded with a great year.
On cross Hardin established that Clemens had experienced a very poor season with the Red Sox ten years previously, yet similarly rebounded the next season with a banner year. Hardin also had Cashman confirm that Clemens never complained when the Yankees ultimately fired McNamee. And Cashman smeared McNamee's character in response to Hardin's questions concerning the circumstances of McNamee's firing. Sprinkled throughout Cashman's responses to Hardin were glowing testaments to Clemens' work ethic, competitive spirit, decency, and sportsmanship.
At the end of the day, the Court accepted proposed questions for Cashman from the jury. One of them was as follows:
"Over the years that you've known Roger Clemens, is it fair to say you admire him as a great player and a leader?"
Judge Walton, who has been needlessly Talmudic in his approach to cross-examination questions veering "beyond the scope" of direct, nevertheless allowed the question, transposing it slightly. He asked Cashman:
"[O]ne of the jurors wants to know what your feelings are about Roger Clemens as a player and as a leader."
Here was Cashman's out of the ballpark response:
"One of the greatest players that I've ever seen, one of the best people, which goes to his leadership abilities. He, you know, he worked harder than everybody. He led by example. So a lot of times, you know, someone like Roger Clemens was given a great deal of ability. But not everybody honors that ability with the work ethic they put behind it. Roger did that.
And Roger at the same time was inclusive. You know despite his, you know, extreme accomplishments and his abilities and therefore celebrity that came from that, you know, his leadership is also shown in the fact that he, you know, treated the 25th man the same way he'd treat maybe the second best player on the team as well as the support staff. So, you know, there's a lot of aspects of being a leader. It's, you know, a true leader leads everybody, you know, the good ones and the bad ones. Roger led them all. So, he was a great player, a hard worker. His work ethic as well as his leadership ability was unquestionable."
Wednesday, May 9, 2012
I mentioned in a recent post that Reggie Walton is a fair judge. That fairness was on display again yesterday in the Roger Clemens trial, when Walton prohibited federal prosecutors from introducing testimony and documents pertaining to Clemens' fat salary as a pitcher. Walton correctly concluded that the prejudicial effect of this evidence outweighed its supposed probative value. It is a very rare federal judge who will bar this kind of "lavish lifestyle" evidence. The government always wants it in, ostensibly to show that a defendant's alleged criminal conduct was part of an effort to maintain a lavish lifestyle. In reality, prosecutors simply want to prejudice the defendant in the eyes of jurors by showing them how rich he is, how "high-on-the-hog" he lives, and how different he is from you and me.
Monday, May 7, 2012
I'd say you had a pretty good week if you got a key government witness to agree there is a 50-50 chance he misheard or misunderstood a purportedly damning admission by your client. That's what happened last week (week one) in the Roger Clemens re-trial, through Mike Attanasio's cross of Andy Pettitte. This morning, team Clemens filed Defendant's Motion to Strike Portions of the Trial Testimony of Government Witness Andy Pettitte. The Motion is an excellent piece of work. The argument?
1. The threshold for establishing admissibility of a preliminary fact question under Federal Rule of Evidence 104 is preponderance of the evidence. Fifty-fifty doesn't cut it.
2. Under Federal Rule of Evidence 401, relevant evidence "means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fifty-fifty doesn't cut it.
3. Even if relevant, the testimony's probative value is substantially outweighed, under Federal Rule of Evidence 403, by the "danger of unfair prejudice, confusion of the issues, or misleading the jury." This is particularly true in light of the Government's statement to the jury, during its opening, that Clemens told Pettitte "he had used human growth hormone and that it helped him with recovery." The real-life fifty-fifty version on the stand didn't cut it.
4. Judge Walton specifically warned the parties before trial about making promises they couldn't keep in opening statements. He said that if it occurred here he would "not hesitate to tell this jury that they must totally disregard any such statements of that nature. I'll specifically identify what those statements were and tell them there was no evidence to that effect, and therefore, they cannot consider that in deciding this case." Judge Walton should make good on his promise, because fifty-fifty doesn't cut it.
Team Clemens also noted that the government could have revisited the conversation during re-direct, but deliberately skirted the issue.
My prediction is that this motion will be granted in some form. It certainly doesn't mean that Clemens is out of the woods. Ted Stevens' outstanding trial team won several motions during trial and Judge Sullivan gave Stevens some very scathing anti-government jury instructions--to no avail. (Of course, in the Stevens case, the government was deliberately hiding important exculpatory material.) But such an instruction will undoubtedly greatly benefit Clemens. It will essentially knock-out a key portion of the government's case.
Kudos to the defense team for an outstanding cross and an excellent motion. One of the nice things about this trial is that co-counsel Attanasio is finally getting some of the national media attention he has long deserved.
Friday, May 4, 2012
Nobody messes with Judge Reggie Walton. Here is a great post from Mike Scarcella of BLT (Blog of Legal Times) on recent bench conferences in the Roger Clemens case. Defense attorney Mike Attanasio incited Walton's wrath this week when he ignored Walton's ruling and tried to go "beyond the scope of direct" during the cross-examination of Andy Pettitte.
According to Scarcella, Attansio was questioning Pettitte about a specific Clemens pitching performance that took place in 1999. Attansio wanted to delve into whether "Clemens was so depressed and beaten up then that he would start taking drugs to perform better." Prosecutor Steve Durham objected that this went beyond the scope of direct. Walton sustained the objection.
Attanasio then asked Pettitte whether he had ever seen Clemens "broken and beaten" after a game. This ticked Walton off: “I’m getting sick and tired of making rulings and counsel not listening to my rulings." Walton reminded Attanasio "that the defense does not have a right to build its case during the government’s pitch to jurors."
That's preposterous of course. Every good defense attorney tries to make his case during cross-examination, and Attanasio was allowed to ask other questions that technically went beyond the scope of direct. For example, Attanasio elicited Pettitte's key testimony that Clemens had never appeared to be pitching on steroids. I haven't read the transcripts yet, but it is unclear to me how far out of the strike zone the additional questioning strayed.
As any experienced litigator knows, courts are all over the map on the scope of cross-examination. Most federal judges allow a relatively expansive cross for reasons of judicial economy. Why make the defense call a witness to the stand in its own case, when you can save time by questioning the witness on cross? But a federal judge's ruling on whether to allow narrow or open-ended cross is virtually unassailable on appeal.
Attanasio did what most good defense attorneys would do in this situation. He ignored (sub silentio) a dubious ruling from Judge Walton and attempted to make the same point through a slightly altered question. That will work with many judges who aren't paying close attention, but it didn't phase Judge Walton.
Judge Walton has many fine qualities. He is intelligent, fair, and couragoeus. But he tends toward rigidity.
Thursday, February 9, 2012
Here is Judge Emmet Sullivan's Memorandum Opinion ordering unredacted release of Hank Schuelke's Report on prosecutorial misconduct in the Ted Stevens prosecution. Any comments or objections to the report by the attorneys involved are due by March 8 and will be published along with the Report.
Friday, December 9, 2011
Former MF Global chief executive Jon Corzine chose not to invoke his constitutional right to silence and yesterday testified before a House committee. While Corzine's decision to testify surprised me (see here), his testimony was what I would have expected of a corporate officer in his position -- he saw no evil, heard no evil and did no evil. Indeed, Corzine was "stunned" when he was told that MF Global could not account for a reported $1.2 billion missing from customer funds.
Perhaps previewing a defense he may later present in a courtroom, Corzine said it was possible, although improbable, that his employees might have moved customer funds at what they believed was a direction from him. If so, however, he testified they must have misunderstood or misinterpreted what he said.
Thursday, December 8, 2011
The New York Times yesterday wrote that in the wake of a CBS 60 Minutes report which said that members of Congress bought stock in companies while considering legislation that might affect those companies, Congress is considering laws banning such trading. The CBS report said none of the trading was illegal at the time. See here.
The 60 Minutes report said that the current chairman of the House Financial Services Committee, Spencer Bachus (R-Ala.), then the ranking Republican on the committee, bet stock prices would fall at the time he was being briefed privately that a global financial crisis might be imminent. According to the Times, at that time Congressman Bachus' office denied he had used nonpublic information as a basis for trading.
I do not venture to assess whether any Congressperson traded on inside information. I am also generally opposed to "new laws" since most are unnecessary and duplicative. Nonetheless, I see no reason that Congress should not be held to the same standard as private businesses or citizens. I also suggest consideration that a new statute, a mirror image to 18 U.S.C. 1001, which criminalizes a false statement to a government official, be enacted prohibiting false statements by a government official to the public.
Tuesday, December 6, 2011
Former MF Global chief executive and former Senator and Governor Jon Corzine has reportedly been subpoenaed to testify this Thursday, December 8 before the House Agricultural Committee concerning MF Global.
The ostensible primary purpose of Congressional committee hearings is to gain information so that the Congresspersons can enact appropriate legislation. Cynics, however, might contend that a major purpose is to let the folks back home know that their Congressperson is tough on Wall Street.
In any case Corzine, on advice of his low-key high-quality counsel, Andrew Levander, will most likely assert his Fifth Amendment privilege against self-incrimination and decline to answer questions. MF Global reportedly "borrowed" customer funds to support its precarious positions in foreign sovereign debt, commingling these funds with its own funds. Although I do not venture to state whether any crime was committed, or whether Corzine was involved in or knowledgeable of any wrongful activity, most criminal defense lawyers representing a hands-on head of a less-than-giant entity against which such accusations have been bruited at this stage would take a conservative approach and advise their client to remain silent. On the other hand, public figures, concerned with their political and public futures (although Corzine's future political career does not look rosy) and often with high estimations of their own powers of persuasion, sometimes feel that they must present their side of the story or else look like "criminals," and that they can do so effectively.
The obvious dangers of testifying are that the witness, whatever his culpability or lack of culpability, may make statements that may later be used as admissions in a criminal or other proceeding or, as in Roger Clemens' case, as the basis for a perjury charge. Of course, although the Supreme Court has pronounced that the protection of the Fifth Amendment applies to the innocent as well as the guilty, a refusal to answer questions is viewed by most people as an indication of guilt. Thus, the decision whether to testify is a "damned if you do, damned if you don't" situation.
Corzine, if he does not wish to testify, through his lawyers will likely seek, or has sought already, to eliminate the necessity of his physical appearance by submitting a letter explaining his intention to invoke his constitutional privilege. That request almost certainly has been or will be refused. Letters do not make good TV. Alternatively, Corzine likely will seek, or has already sought, to limit his appearance to a short statement stating his assertion of his constitutional right against self-incrimination. That request might also be refused. The Congresspersons may want Corzine to undergo a public flogging by "Q&R" -- question and refusal. That does make good TV.
Corzine could conceivably be granted use immunity and, since his resulting testimony could not then be used against him, be deprived of his Fifth Amendment protection and required to testify. However, since Oliver North's conviction was overturned based on the taint from his immunized Congressional hearing testimony, Congress has been extremely wary of using its immunity power.