Monday, March 7, 2011

Testimony of Secretary Timothy F. Geithner - House Committee on Financial Services

Here's his testimony. Some highlights -

  • "For decades, the government supported incentives for housing that distorted the market, created significant moral hazard, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market"
  • "The Administration is committed to a system in which the private market – subject to strong oversight and strong consumer and investor protections – is the primary source of mortgage credit."
  • "Alongside these efforts, Treasury, the Department of Housing and Urban Development, and the Department of Justice are coordinating the Administration’s interagency foreclosure task force, which is comprised of eleven federal agencies and also works closely with the state Attorneys General.  In light of reports of misconduct in the servicing industry, the task force is currently reviewing foreclosure processing, loss mitigation, and disclosure requirements at the country’s largest mortgage servicers.  Those that have acted improperly will be held accountable." 

(esp)

March 7, 2011 in Congress, Government Reports, News | Permalink | Comments (0) | TrackBack (0)

Thursday, March 3, 2011

ABA White Collar Crime Conference - Honest Services Fraud Panel

This panel was moderated by Professor Julie O'Sullivan of Georgetown Law School.

It started with Denis J. McInerney, Chief of the Fraud Section of the Criminal Division of the Department of Justice, who gave the history of the mail fraud statute from its inception up to the Court's decision in Skilling.

The second panelist was Martha Boersch of Jones Day.  She spoke about the 110 cases that have been examined post-Skilling. Some circuits have said a fiduciary duty is required - but not all circuits have held this. Another big issue is whether the government has to prove a quid pro quo - she noted the split in some court cases on this issue. There is also uncertainty as to what a quid pro quo would be in this context. Does the government have to prove a contemplated economic harm? There are likely to be future cases on the definition of honest services coming from instructions given in mail fraud cases.

The third speaker wasFrank Razzano, Pepper Hamilton,who spoke about five open questions: 1) Does it require a fiduciary duty? (He said you should make sure that there is a breach on the part of the payor); 2) Is legislation necessary to address this issue or is there a way around this for prosecutors; (He spoke about the case of U.S. v. Jain here- how you can use a pecuniary theory of mail fraud; 3) Does Skilling limit the stream of benefits theory?  4) He noted that you need to analyze the intent of the payor and payee carefully   5) Gratuities - does honest services fraud include this, or is it limited to bribery?  He looked at some of the cases where these issues had arisen.

Finally Professor Julie O'Sullivan talked about congressional acts that have been introduced since Skilling.

(esp)(blogging from San Diego)

March 3, 2011 in Conferences, Congress, Fraud, Prosecutions | Permalink | Comments (2) | TrackBack (0)

Monday, January 17, 2011

Speech and Debate Clause Hampers DOJ

Boo hoo. The Washington Post has a good article here, by Jerry Markon and R. Jeffrey Smith, about the Constitution's Speech and Debate Clause, and the various ways in which it is hampering DOJ corruption probes. Unfortunately, the article implies that certain high-profile cases were dropped primarily or solely because of Speech and Debate. This unfairly maligns the named lawmakers and/or former lawmakers in question, and makes it seem that they were let off on a technicality. That damned technical Constitution--always getting in DOJ's way. In fact, the very idea that DOJ wiretapping of House members was, until recently, considered a legitimate and entirely appropriate law enforcement tool is a testament to how out of whack the balance of powers between the Legislative and Executive Branches has become. Congress finally woke up and smelled the coffee and, with an assist from the DC Circuit in U.S. v. Rayburn House Office Building, is resisting Exective Branch encroachment on its institutional powers. 

(wisenberg)

January 17, 2011 in Congress, Corruption, Current Affairs, Investigations, Prosecutions, Prosecutors, Searches | Permalink | Comments (0) | TrackBack (0)

Monday, September 20, 2010

Dodd-Frank FCPA Whistleblowers: The Coming Wave

Take the FCPA, add in expansive new whistleblower protections, start employing the willful blindness doctrine with abandon, and presto! You've got a real growth industry on your hands.

The new whistleblower provisions in the Dodd-Frank Act should significantly increase federal civil and criminal fraud enforcement actions in the coming years. Whistleblowers will now be able to reap potentially huge monetary rewards for the timely reporting of corporate fraud to the SEC and CFTC, if recoveries of over a million dollars are made by those entities, the DOJ, or other regulators. Under Dodd-Frank, the pool of qualified whistleblowers has been enlarged and there is no requirement that whistleblowers file qui tam actions in order to be compensated for their information.

Expect to see exponential growth in the already burgeoning area of FCPA enforcement, fueled by new whistleblower activity. Recall that the FCPA is a creature of the securities fraud statutes, and is therefore within the SEC's purview. 

All of this and more is detailed in my friend Michael E. Clark's excellent new article in the September issue of ABA Health eSource, Publicly Traded Health Care Entities at Risk from New SEC Whistleblower Incentives and Protections in Dodd-Frank Act. Clark is with Duane Morris's Houston office. As with all ABA publications, Mike's article may not be copied or disseminated, in whole or in part, in any form or by any means, or downloaded or stored in an electronic database or retrieval system, without the express written consent of the American Bar Association.

(slw)

September 20, 2010 in Civil Enforcement, Congress, Current Affairs, FCPA, Fraud, Qui Tam, SEC | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 31, 2010

Roger's Reputational Dilemma

As expected, Roger Clemens pled not guilty on Monday to charges of perjury, false statements, and obstruction of Congress. He is represented by two of the ablest white collar criminal defense attorneys in the country—Rusty Hardin of Houston and San Diego’s Mike Attanasio. I know these men and their work. They are stellar lawyers.

The government asked Judge Reggie Walton to make Clemens surrender his passport in order to reduce the risk of flight. Honest. They really did. Give me a break. Walton didn’t buy it.

It is generally assumed that Clemens could have taken five before Congress and was therefore foolish to testify and subject himself to possible perjury charges. I’m not completely convinced of this, since the activity Congress was investigating at the time appears to have been beyond the statute of limitations. How can you incriminate yourself by truthfully admitting to something that you can no longer be prosecuted for?

At any rate, Clemens appeared without a subpoena, so there was no question of him not testifying. His attorneys will be able to argue to the jury that he had everything to lose and nothing to gain by appearing and testifying. Ergo, he must have been telling the truth. This can be a powerful argument in skilled hands, particularly in front of a DC jury, but it is better not to be forced to make it at all-better not to be indicted in the first place.

Roger's dilemma is the dilemma of the client with exposure, even limited exposure, who cannot or will not do the prudent thing and shut the hell up. It is best not to testify under oath, or even talk to the government, if you face potential criminal prosecution. Just ask Martha Stewart. But some high profile clients cannot take the perceived damage to their reputations involved in invoking the privilege. Clemens had the example of Mark McGwire in front of him. McGwire’s reputation was permanently and severely damaged by his refusal, on Fifth Amendment grounds, to answer a Congressional panel’s questions. 

I know, I know; the privilege protects the innocent as well as the guilty. But nobody believes that in television land. Had Clemens publicly invoked the privilege, he would have been scarred for life. And he is not some dime-a-dozen, $40 million bonus CEO. He is one of the immortals.

The reputational dilemma is not confined to high-profile clients or the decision to invoke the Fifth Amendment. As a prosecutor, I saw defendants refuse to take plea offers, including misdemeanors with no jail time, because they could not admit wrongdoing to a spouse or child. It is a reminder that the strategy and tactics of criminal defense work are not always confined to logical analysis. The human, emotional element is ever present.

(slw)

August 31, 2010 in Celebrities, Congress, Current Affairs, Defense Counsel, Martha Stewart, News, Perjury, Privileges, Prosecutions, Prosecutors, Sports, Statutes | Permalink | Comments (6) | TrackBack (0)

Thursday, August 19, 2010

Roger Clemens Indicted

The Washington Post story is here and has a link to the indictment. Nothing yet up on PACER. Clemens is charged in six counts with perjury, false statements, and obstruction of Congress.

(slw)

August 19, 2010 in Celebrities, Congress, Current Affairs, Grand Jury, Investigations, Media, Obstruction, Perjury, Prosecutions, Sports | Permalink | Comments (2) | TrackBack (0)

Clemens to be Charged?

The Wall Street Journal is reporting here that baseball great Roger Clemens will soon be indicted by a federal grand jury for perjury.

(slw)

August 19, 2010 in Celebrities, Congress, Current Affairs, Grand Jury, Investigations, Obstruction, Perjury, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Monday, August 2, 2010

House Ethics Committee Accuses Representative Maxine Waters Of Violating Ethics Rules

No details on the specific allegations. The Wall Street Journal news alert is here.

(slw)

August 2, 2010 in Congress, Current Affairs, Government Reports, Legal Ethics, News | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 20, 2010

Talk About the Dodd-Frank Act

Check out Macia Coyle's article in the National LJ (law.com),  Corporate Sector Sounds the Alarm Over Financial Reform's 'Bounty' System as it highlights whistleblower provisions in the forthcoming financial reform package. But one can also expect some new penalty provisions. NACDL has a list of some of the items that were included in drafts of the legislation here.  On the NACDL website here it states "[t]hese new offenses, if enacted into law, will further explode the federal criminal code, which already contains an estimated 4,450 criminal offenses."

(esp)

July 20, 2010 in Congress, News | Permalink | Comments (1) | TrackBack (0)

Thursday, December 10, 2009

Senate Judiciary Hearing on Financial Crisis

Yesterday, the Senate Judiciary Committee held a full committee hearing on "Mortgage Fraud, Securities Fraud, and the Financial Meltdown: Prosecuting Those Responsible."  Testifying at the hearing were: Assistant AG Lanny Breuer, Director Enforcement Division SEC Robert Khuzami, and FBI Assistant Director Kevin Perkins.  One can listen to the hearing here.  The opening speaker, Lanny Breuer (see written testimony here) spoke about the new Financial Fraud Enforcement Task Force (see here for background).  In his written statement he says that "Since 2002, the Department has obtained approximately 1,300 corporate fraud convictions, including convictions of more than 200 corporate chief executives or presidents, more than 120 vice presidents, and more than 50 chief financial officers." He also gave examples of the coordinated efforts of mortgage fraud prosecutions stating: 

"Operation "Malicious Mortgage," conducted last year, included charges against more than 400 defendants in cases across the nation. Operation "Quick Flip" in 2005 featured a nationwide takedown of mortgage fraud cases charging a total of approximately 155 defendants. Operation "Continued Action" in 2004 targeted mortgage fraud and other schemes in more than 150 cases in more than 35 states."

Robert Khuzami, speaking next outlined some of the recent initiatives at the SEC.  The final speaker from the FBI, Kevin Perkins, spoke about a wide array of conduct talking about matters related to Madoff,  Petters, and others. (see written testimony here) He spoke about a new proactive approach being taken to financial fraud. The approach he spoke about highlighted  investigation.

See also David Ingram, National LJ, law.com, Senators Impatient With Fraud Prosecutions

(esp)

December 10, 2009 in Congress, Fraud, Mortgage Fraud | Permalink | Comments (1) | TrackBack (0)

Friday, November 13, 2009

Breaking News: William Jefferson Sentenced to 13 Years

Guest Blogger:  Tiffany M. Joslyn, National Association of Criminal Defense Lawyers (NACDL)

U.S. District Judge T.S. Ellis III has sentenced ex-congressman William Jefferson to 13 years in prison for his conviction on 11 counts of public corruption. See breaking news coverage below:

Bruce Alpert, Times-Picayune, William Jefferson sentenced to 13 years in prison

Matthew Barakat, The Washington Post (AP), Ex-congressman gets 13 years in freezer cash case

John Bresnahan, Politico, William Jefferson gets 13 years in prison

(tmj)

November 13, 2009 in Congress, Current Affairs, FCPA, Money Laundering, RICO, Sentencing | Permalink | Comments (1) | TrackBack (0)

Friday, October 2, 2009

NACDL's 5th Annual Defending the White Collar Case Seminar - "Perfecting Your Panel--Tips from the Experts on Jury Consulting & Selection," Friday, October 2, 2009

Guest Blogger:  Shana-Tara Regon, Director, White Collar Crime Policy, National Association of Criminal Defense Lawyers

Moderator:  Abbe David Lowell

Panelists:  Julie Blackman, Hon. Noel Hillman, William H. Kettlewell, Deborah Starr

Picking up where he left off in the hypothetical from yesterday’s panel on public corruption cases, Abbe David Lowell closed NACDL’s 5th Annual White Collar Crime conference by moderating a panel on jury selection.  Joining Mr. Lowell was Julie Blackman, Deborah Starr, the Hon. Noel Hillman and William Kettlewell.

Panelists first addressed the issue of a defense lawyer’s desire to prevent or reverse bad publicity in the broad sense, as opposed to a more focused approach on learning all that is possible about the actual people who are prospective jurors.

Judge Hillman discussed what might be his response to hypothetical leaks in a grand jury investigation, outlining what kinds of factors would lead him to judicially intervene, while Mr. Kettlewell addressed the pros and cons of engaging in a war of motions related to grand jury leaks.  

Panelists specifically addressed the issue of whether and how to have aggressive “dueling” press conferences or other press strategies after the public announcement of an indictment of your client.  Ms. Starr discussed the value of assessing how to engage with “social media” to help shape a counterattack, in order to help manage public perception.  Drawing a laugh, Julie Blackman pointed out how judges are now instructing jurors “not to Google, not to blog and not to Twitter”—even when those judges don’t even understand what any of those terms mean.

The panelists pondered how a lawyer can assess whether their client is capable of getting a fair trial in a particular jurisdiction and when and how to consider moving a trial.  Specifically, there was a discussion involving the use of email or phone community attitude surveys or mini “mock trials” that set forth the specific facts of your case, and how such tools can help assess the strengths and weakness of your case. 

Ms. Blackman explained that these kinds of surveys are very helpful in helping a lawyer prepare arguments and witnesses for cases and have proven to be as predictive as political polling.  Judge Hillman discussed the circumstances under which he might be willing consider a venue change.  Mr. Kettlewell discussed the use of written questionnaires and the benefits of attorney voir dire, with Judge Hillman weighing in on the different ways that a court handles such matters, including what he perceives to be the benefits and efficiencies of a judge conducting individual voir dire in criminal cases.  Judge Hillman prefers to conduct his own voir dire, as informed by questions that lawyers have previously submitted to him.  He likes to do his questioning and stated:  “I worry about people who want to be on a jury.” Ms. Blackman and Ms. Starr discussed how particular questions are useful in elucidating a potential juror’s prejudices and personality, as well as questions that might be useful in predicting outcomes.   

Judge Hillman discussed how he might respond in a hypothetical situation involving a prosecutor’s claim that the defense was attempting to “taint” a jury pool by using community attitude surveys or trial simulations.  He expressed the view that if such efforts were being conducted by defense lawyers, he’d like to know about it so that he can be sure that no one who communicated with the defense ultimately made it onto the jury.

Ms. Starr discussed the incredible depth of information available about potential jurors now—including social views, voting records etc.  Ms. Blackman discussed how this specific information about your jurors can be entered into a sophisticated algorithm that correlates to the results of your telephone survey or trial simulation, resulting in highly predicative information.  Judge Hillman expressed a concern about the mining of so much information about individuals and whether that will further discourage jurors from fulfilling a very important constitutional role in the process.

Questions and comments from the audience helped tease out the panelists’ views on which tools are the most effective if costs preclude the use of the full toolbox, and also touched upon the possible danger of information learned in the various polling processes from being leaked to the prosecution. This panel brought a close to a day and a half of incredible presentations by an unparalleled faculty.  If you weren’t able to join us this time, I certainly hope you will consider joining us next year.  And if any of the particular panels that have been blogged about sound like they address issues that you are dealing with in your practice, don’t despair—high quality audio recordings will be shortly available for purchase here.  Stay tuned for future programming news at www.nacdl.org.

(str)

October 2, 2009 in Conferences, Congress, Fraud, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

NACDL's 5th Annual Defending the White Collar Case Seminar - "Capitol Chaos--What's Happening in D.C.?," Friday, October 2, 2009

Guest Blogger:  Ross H. Garber, Shipman & Goodwin (Hartford, CT)

Panelists:  Shara-Tara Regon, Kathleen Sullivan

Legislative Update

Shana Regon, NACDL’s Director of White Collar Crime Policy, provided an update on NACDL’s efforts on Capitol Hill.  She began by talking about NACDL advocacy on attorney-client privilege and attorney work product protection issues, particularly related to DOJ policy on requesting waivers of the privilege and protection from cooperating companies.  She also talked about proposed legislation, HR 1947, that would regulate deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs).  Among the provisions of HR 1947 are those that would require court approval of DPAs and NPAs and require posting of all DPAs and NPAs on the DOJ website.  Shana also talked about NACDL’s efforts to educate Congress about overcriminalization including ambiguous mens rea standards, mandatory minimums, the federalization of criminal conduct and the adoption of overlapping statutes covering the same conduct.

Supreme Court Update

Kathleen Sullivan of Quinn Emanuel spoke about some recent white collar cases decided by the Supreme Court in the past session: Diaz v. Massachusetts; Yaeger v. United States; and Nijhawan v. Holder.  In Malendez-Diaz, the Supreme Court held in a 5-4 decision that the confrontation clause applies to an affidavit from a crime lab analyst because it is testimonial in nature.  Kathleen emphasized that this decision would apply to any forensic experts.  In Yaeger, the court held that when a jury acquits on some counts and hangs on others, the government may not re-try the defendant on any of the counts.  In Nijhawan the Court interpreted the deportation statute for aggravated felonies with respect to crimes of fraud or deceit involving more than $10,000.  The Court held that the $10,000 requirement is met based on the facts of the case, even if the underlying aggravated felony statute itself does not require a $10,000 loss

Kathleen noted that in this session, the Court is considering several honest services cases.  Among the issues the Court will tackle is whether the mail fraud statute criminalizes mere ethical missteps. Among the honest services cases are United States v. Weyrauch, in which an Alaska legislator was convicted of soliciting legal work from clients when he was in a position to benefit clients and not disclosing the work.  The question posed in this case is whether the government must prove violation of disclosure requirements otherwise required by state law. 

In a case involving Conrad Black, the Supreme Court will evaluate whether there must be an intent to and likelihood of depriving a corporation of a business opportunity for an executive to be found guilty of the honest services provision of the mail fraud statute.  Kathleen said she expects these cases to be decided for the defendants on narrow statutory grounds.

(rhg)

October 2, 2009 in Conferences, Congress, Current Affairs, Fraud, Judicial Opinions, Statutes | Permalink | Comments (0) | TrackBack (0)

Thursday, October 1, 2009

NACDL's 5th Annual Defending the White Collar Case Seminar - "Pay to Play - The Current Wave of Public Corruption Cases," Thursday, October 1, 2009

Guest Blogger:  Linda Friedman Ramirez, P.A. (Tampa St. Petersburg, FL)

Panel Moderator:  Abbe David Lowell

Panelists:  Robert Trout, Karen Patton Seymour, Reid Weingarten, and Edward Genson

NACDL's 5th Annual White Collar Crime Conference kicked off today with the Pay to Play panelists jumping into a thorough discussion of the key issues in the defense of a public corruption case via a hypothetical created by panel moderator Abbe Lowell. 

Quick Overview of the Hypothetical - Alice Adams, the Democrat Maryland Speaker of the House, is also a civil attorney. Her firm Murphy andSchaeffer also has a lobbying practice. Her Chief of Staff Bruce Bannon is an attorney in private practice but has no office. Funhouse hires Murphy and Schaeffer to promote gambling legislation in Maryland. Alice earns a percentage of her law firms fees. She introduces and fast tracks legislation to legalize gambling. In an ethics form regarding outside employment, she discloses Murphy andSchaeffer but does not discuss specific clients. Funhouse CEO also hires Bannon for personal estate planning work and essentially pays him $50,000 for a will. There is a federal and state joint investigation and grand jury subpoenas are issued for records investigating allegations of bribe, theft of honest services, and wire fraud.

The panel agreed that attorneys are needed for all individuals and entities subpoenaed. The first question is whether joint defense agreements are more problematic than helpful. There seemed to be a consensus that there might be some benefits, particularly when working with attorneys with whom there has been no prior experience or quirky clients, but most panelists expressed reservations about their use.

Next up - the panelists discussed the subpoena for records relating to the legislative process and the Speech and Debate privilege. Who asserts? The panel propounded on the importance of collaboration between the attorney for Alice and the attorney for House. Also, how to handle keeping back documents that may be privileged and the concept of using a privilege log? TheDOJ’s view of the Speech and Debate clause is in a great deal of flux, and DOJ’s view has changed radically. Further, if it is a federal subpoena does this change anything? And how does the counsel for Funhouse handle its own subpoena? The four panelists explored the issues relevant to subpoenas for contribution records and the intersection with the First Amendment.

Another important issue for practitioners is how to respond to precharge or pretrial publicity in high profile cases, including responding to questions by investigative reporters. Clients often have a strong desire to speak to the public. Different responses from the panelists: give clients a limited script; have the attorney act as spokesperson -- though that raises the concern for attorneys of moving into the realm of public relations; hiring surrogates.

Also, what happens if a client wants to make his case to the prosecutor? Is this a good strategy? Of course the most important issues are whether the facts are sufficient for a prosecution pursuant to 18 U.S.C. 1346?  Is conflict of interest + non-disclosure enough under this statute?  This was the meat of the panel and the discussion was exciting and demonstrated the knowledge of the panel.  Also, Moderator Abbe Lowell injected into the discussion 18 U.S.C. 666, which is the jurisdictional statute for prosecution of offenses committed by state public officials and the requirement of a connection with the receipt of federal funds 18 U.S.C 666 (b).

By the close of the panel it was clear that an hour and a half was not nearly enough time to explore this topic!

(lfr)

October 1, 2009 in Conferences, Congress, Corruption, Investigations, Privileges | Permalink | Comments (0) | TrackBack (0)

Saturday, August 1, 2009

Overcriminalization: An Area That Needs Attention

Several groups were on the hill this past week for a hearing on “Over-criminalization of Conduct and Over-Federalization of Criminal Law” before the U.S. House of Representatives Crime, Terrorism, and Homeland Security Subcommittee.  The coalition includes an odd mix of groups from the ABA, ACLU and NACDL to the Heritage Foundation, Washington Legal Foundation and Federalist Society. The very fact that such a wide array of groups are agreeing that change is needed, is important.  To give a flavor of the arguments, here is the  NACDL statement and testimony.  An overhaul of the federal criminal justice system is needed, and one of the deficiencies of the existing system is that there is overcriminalization and overfederalization. Lets hope the strong showing by so many different constituencies moves this issue forward.

(esp)

August 1, 2009 in Congress | Permalink | Comments (3) | TrackBack (0)

Sunday, June 14, 2009

Will There Be Change in the US Criminal Justice System

The US Senate, Committee on the Judiciary held a hearing this past week (June 11th) titled, "Exploring the National Criminal Justice Commission Act of 2009." (see here).  Panel Two included Chief William Bratton - LA Police Dept., Pat Nolan - VP Prison Fellowship, Professor Charles Ogletree - Harvard, and Brian Walsh of the Heritage Foundation.  The panel discussed issues related to massive incarceration, including the incarceration of the mentally ill. Chief William Bratton noted how  the "American system of justice is overworked."  Professor Charles Ogletree said that we need to retire the phrase "a war on crime" and replace it with a phrase "be smart on crime." Brian Walsh emphasized that crime reform should not be driven by partisan politics and he also stressed the importance of examining overcriminalization issues. Pat Nolan gave some concrete examples of how to reform incarceration practices to save money and achieve better results.

Listening to this hearing, sent the important message that we need to stop thinking just retribution, and thinking wisely about how to reduce recidivism.  It was particularly good to see that some were mentioning the importance of distinguishing crimes and criminals. With the increased white collar sentences, it is hoped that if a President's Commission is established it will look closely at how best to treat white collar and corporate offenders.

(esp)

June 14, 2009 in Congress | Permalink | Comments (2) | TrackBack (0)

Thursday, May 28, 2009

Fraud Enforcement Recovery Act of 2009 - False Claims Act Provisions

FERA makes many changes to the False Claims Act, 31 U.S.C. ss 3729-3733. FriedFrank (with many thanks to John T. Bose) has done a wonderful analysis here (Download 090521), and has a redline copy here that lets one see the changes that were made to these statutes. Finally, the statute with the provisions incorporated is here (again, thanks to FriedFrank).  

When examining the money laundering statute changes (here), it was apparent that a key change was to address the recent Supreme Court ruling in the Santos case.  The changes in the False Claims Act also address some Court rulings, most noteably Allison Engine Co. v. United States ex re. Sanders.    FERA, overall, makes the government job of obtaining convictions and getting civil remedies easier. The False Claim Act provisions do that with a reduced intent requirement.  But the government and relators do not get everything here, as FERA provides for a materiality requirement.(see Download 090521, supra).

(esp) 

May 28, 2009 in Civil Enforcement, Congress | Permalink | Comments (1) | TrackBack (0)

Wednesday, May 27, 2009

Fraud Enforcement Recovery Act of 2009 - The Money Laundering Provisions

In recent years, some white collar cases have had money laundering charges included in the Indictment.  Some may believe that the addition of money laundering counts is used as leverage to secure a plea from the accused. The Fraud Enforcement Recovery Act of 2009 includes changes to both sections 1956 and 1957 of title 18, the money laundering statutes. The changes are as follows:

SPECIFIED UNLAWFUL ACTIVITY.—

(1) MONEY LAUNDERING.—Section 1956(c) of title 18, United States Code, is amended—

(A) in paragraph (8), by striking the period and inserting ‘‘; and’’; and

(B) by inserting at the end the following:

‘‘(9) the term ‘proceeds’ means any property derived from or obtained or retained, directly or indirectly, through some form of unlawful activity, including the gross receipts of such activity.’’.

(2) MONETARY TRANSACTIONS.—Section 1957(f) of title 18, United States Code, is amended by striking paragraph (3) and inserting the following:

‘‘(3) the terms ‘specified unlawful activity’ and ‘proceeds’ shall have the meaning given those terms in section 1956 of this title.’’

It is obvious in reading the language that Congress was reacting to the Supreme Court decision in United States v. Santos, where a plurality (Scalia, Souter, Ginsberg, and Thomas) found that the rule of lenity applied because of a failure to define the term "proceeds" in the statute.  Justice Stevens went with these four justices, but limited his decision, saying he would not have ruled this way if the case involved contraband or organized crime.  The Court, therefore, held that "proceeds referred to "profits" and not "receipts."  A four person dissent (Breyer, Alito, Roberts, and Kennedy) believed that proceeds should include the total amount brought in.  This Congressional amendment to the statute endorses the position taken by the dissent and provides a definition of what is meant by the term "proceeds."  

But there are several points to note here.  Even though the new legislation clarifies the statute, thus voiding any need to resort to the Rule of Lenity in defining "proceeds" and also resolves future cases on which crimes are covered by the Santos decision (an issue that several district and circuit courts have had to contend with), it may still allow defense counsel to make merger arguments.  As stated by Justice Stevens in his concurring opinion in Santos

"Allowing the Government to treat the mere payment of the expense of operating an illegal gambling business as a separate offense is in practical effect tantamount to double jeopardy, which is particularly unfair in this case because the penalties for money laundering are substantially more sever than those for the underlying offense of operating a gambling business."

 It also leaves open the issue of how this statute applies to mail fraud when the crime is not complete and whether a sentence can be enhanced when the predicate offense and the money laundering merge.  Congress was clearly concerned about the merger issue as the amendment includes a specific statement "Sense of the Congress and Report Concerning Required Approval for Merger Cases" that states:  

(1) Sense of Congress - It is the sense of the Congress that no prosecution of an offense under section 1956 or 1957 of title 18, United States Code, should be undertaken in combination with the prosecution of any other offense, without prior approval of the Attorney General, the Deputy Attorney General, the Assistant Attorney General in charge of the Criminal Division, a Deputy Assistant Attorney General in the Criminal Division, or the relevant United States Attorney, if the conduct to be charged as ‘‘specified unlawful activity’’ in connection with the offense under section 1956 or 1957 is so closely connected with the conduct to be charged as the other offense that there is no clear delineation between the two offenses.

(2) REPORT.—One year after the date of the enactment of this Act, and at the end of each of the four succeeding one-year periods, the Attorney General shall report to the House and Senate Committees on the Judiciary on efforts undertaken by the Department of Justice to ensure that the review and approval described in paragraph (1) takes place in all appropriate cases. The report shall include the following:

(A) The number of prosecutions described in paragraph (1) that were undertaken during the previous one-year period after prior approval by an official described in paragraph (1), classified by type of offense and by the approving official.

(B) The number of prosecutions described in paragraph (1) that were undertaken during the previous one-year period without such prior approval, classified by type of offense, and the reasons why such prior approval was not obtained.

(C) The number of times during the previous year in which an approval described in paragraph (1) was denied.

(esp)

May 27, 2009 in Congress, Money Laundering | Permalink | Comments (2) | TrackBack (0)

Monday, May 25, 2009

Fraud Enforcement Recovery Act of 2009

Passed by both the House and Senate, the Fraud Enforcement and Recovery Act of 2009 (FERA) was signed it into law by the President with the following statement -

Today I have signed into law S. 386, the "Fraud Enforcement and Recovery Act of 2009." This Act provides Federal investigators and prosecutors with significant new criminal and civil tools to assist in holding accountable those who have committed financial fraud. These legislative enhancements will help the Department of Justice to combat mortgage fraud, securities and commodities fraud, and related offenses, and to protect taxpayer money that has been expended on recent economic stimulus and rescue packages. With the tools that the Act provides, the Department of Justice and others will be better equipped to address the challenges that face the Nation in difficult economic times and to do their part to help the Nation respond to this challenge.

Section 5(d) of the Act requires every department, agency, bureau, board, commission, office, independent establishment, or instrumentality of the United States to furnish to the Financial Crisis Inquiry Commission, a legislative entity, any information related to any Commission inquiry. As my Administration communicated to the Congress during the legislative process, the executive branch will construe this subsection of the bill not to abrogate any constitutional privilege.

BARACK OBAMA
THE WHITE HOUSE,
May 20, 2009.

There are many important provisions related to white collar crime in this new law, including changes in the Civil False Claims area, changes to the money laundering statute, areas related to TARP, and changes to a host of statutes like 18 U.S.C. ss 1014, 1031, 1348, and 1956.  Over the next week I will be offering commentary on what FERA says and how it changes the prosecution and defense of white collar matters. 

(esp)

May 25, 2009 in Congress | Permalink | Comments (4) | TrackBack (0)

Monday, March 2, 2009

NACDL & Heritage: Together in Bed Again

The NACDL and Heritage joined forces together again, this time opposing the Public Corruption Prosecution Improvements Act (S49) (see here). (see previously the opposition to S. 386, the Fraud Enforcement Recovery Act here). "Although the two organizations are, as they note in their letter, often 'on opposite ends of the liberal-to-conservative spectrum,' the two organizations agree that federal prosecutors already have all the tools they need (and far more) to prosecute public corruption."

(esp)(w/ a hat tip to Jack King)

March 2, 2009 in Congress, News | Permalink | Comments (0) | TrackBack (0)