Sunday, November 15, 2009
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) emphasizes transparency, but it did take me some time to find the website that told me what was going on in this office. It is easy if you put SIGTARP into Google, but not so easy - at least for me - if you try and find it within the Treasury Department website. For those who are looking, you'll find it here. The office issued its Quarterly Report here. It states in part:
SIGTARP’s Investigations Division has developed into a sophisticated whitecollar investigative agency. Through September 30, 2009, SIGTARP has opened 61 and has 54 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected TARP fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, money laundering, and tax-related investigations. While the vast majority of SIGTARP’s investigative activity remains confidential, developments in several of SIGTARP’s investigations have become public over the past quarter . . .
I am not impressed with the statement that resulted in Huffington's Post headline that TARP Fraud Probes Have Tripled Since April, Says Watchdog. The numbers should be increasing enormously - after all this is a relatively new office. But it is good to see that this office is getting off the ground, being staffed, and now moving to stop fraud occurring in the use of TARP funds.
Friday, October 16, 2009
A DOJ Press Release reports that "Former General Services Administration (GSA) Chief of Staff David H. Safavian was sentenced today to one year in prison on charges of obstruction of justice and making false statements in connection with the investigation into the activities of former Washington lobbyist Jack Abramoff." He also received two years of supervised release.
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
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.
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!
Wednesday, September 2, 2009
The Supreme Court accepted for certiorari the case of U.S. v. Weyhrauch (see here), a case involving honest services mail fraud. The court earlier had accepted for cert another mail fraud case with a different issue (Conrad Black's case here). The Ninth Circuit, in anticipation of the Weyhrauch case, stayed the issuance of a mandate in U.S. v Inzuna. The Ninth Circuit, however, did go ahead and affirm the district court's judgments against two former members of the San Diego City Council. The court adopts what it terms "the majority rule" -- "that private gain is not an element of honest services fraud." In so doing it rejects strong precedent coming from the Seventh Circuit. The Ninth Circuit also rejected a requirement to "prove an independent violation of state law to sustain an honest services fraud conviction." There are other issues in the case, such as those related to the Hobbs Act and arguments premised on objections to closing arguments. The key in this case will be how the Supreme Court decides the Weyhrauch case.
U.S. v. Inzuna - Download Honest Services Fraud - US v Inzunza - 9th Cir 9-1-09
See also Kevin Cole, "Strippergate" Appeal, CrimProf Blog here
(esp) (w/ a hat tip to Evan Jenness)
Wednesday, August 5, 2009
Thursday, July 30, 2009
The press (e.g., Washington Post here; NOLA.com here; BLT Blog here) is reporting that the jury will receive ex-congressman's William Jefferson's case tomorrow. The Indictment included counts related to bribery, RICO, money laundering, Foreign Corrupt Practices Act, and Obstruction of Justice.
From these press reports, it sounds like one interesting question that the jury will be examining is whether his activities meet the definition of an "official act" for purposes of the bribery statute. The government is required to prove that the accused acted corruptly to influence an official act. The statute defines "official act" as "any decision or action on any question, matter, cause, suit, proceeding or controversy, which may by law be brought before any public official, in such official's official capacity, or in such official's place of trust or profit." The definition has been the subject of prior court controversy. For example, in the case of U.S. v. Muntain(DC Cir. 1979) the defendant argued "that his actions were not 'official acts' in that they did not involve matters that would be brought before him in his official capacity. The District of Columbia Circuit Court of Appeals accepted this argument, finding that the promotion of group automobile insurance was not a matter that would be brought before Muntain in his capacity as the Secretary of Labor Relations at HUD." See Podgor & Israel, White Collar Crime in a Nutshell 4th 115 (2009).
Thursday, July 23, 2009
Back in the 1970s and 80s, the FBI ran an undercover operation to stop corruption by government officials. Convictions included a New Jersey Senator, members of Congress and others. The government set up a phony business to lure individuals to commit crimes, and despite claims of entrapment and outrageous government conduct, many of the convictions stood.
Fast forward 30 years and we see the government again is using an undercover operation to arrest many politicians and some religious leaders. The charges are no longer simple bribery or conspiracy charges. Rather now we see newer statutes, like money laundering, statutes that carry more significant penalties.
An Acting US Attorney is proud to say that he is behind charges against "mayors of Hoboken, Secaucus and Ridgefield, the Jersey City deputy mayor and council president, two state assemblymen, numerous other public officials and political figures," and yes community religious leaders. The long list of complaints and press release can be found here. But as one reads these complaints one has to wonder about the "CW" - cooperating witness - that seems to be behind so many of these cases. One also has to wonder what if any individual gains or profits accrued to each of the individuals charged with the alleged crimes. Finally one has to wonder why the government felt a "perp walk" was necessary here. Did they really think these individuals would flee, destroy evidence, or not turn themselves in voluntarily?
See also, Ted Sherman & Joe Ryan, NJ.com, Massive N.J. corruption sting targets mayors, legislators, rabbis
NYTimes (AP), 2 Mayors Arrested in Broad N.J. Corruption Sweep
In this same US Attorney's Office, just a couple of days ago, an assemblyman and former mayor had a new charge added to his Indictment alleging that "he participated in a scheme with his former key political advisor to circumvent the contribution limitation and reporting requirements of the Federal Election Campaign Act." (see here).
Wednesday, April 22, 2009
New York Attorney General Andrew Cuomo is in the middle of conducting a corruption investigation - a Pay-to-Play kickback scheme - with the past chair of the former state liberal party being mentioned in this investigation. In a press release by Cuomo's office it states that the individual allegedly "obtained over $800,000 in illegal fees on State pension fund investments as a reward for opening up a State Assembly seat . . .and for over 30 years of prior political endorsements." "Cuomo also announced that hedge fund manager and classical music impresario Barrett Wissman has pled guilty to a Martin Act felony for his role in the pay-to-play scheme and will pay $12 million in penalties and forfeiture to New York State over a period of three years." The SEC previously had complaints against two individuals in this matter, but added the former leader of the New York Liberal Party and Wissman to the SEC complaint. (see here) The New York Times reported on this recent investigation related to pension funds. See Danny Hakim & Mary Williams Walsh, NYTimes, In State Pension Inquiry, a Scandal Snowballs.
Thursday, April 2, 2009
Rod Blagojevich and 5 others were indicted in a 75 page document that included a myriad of different federal statutes, such a mail and wire fraud, false statements and RICO. The Indictment with its 19 counts (16 against Blagojevich) claim that he "allegedly used his office in numerous matters involving state appointments, business, legislation and pension fund investments to seek or obtain such financial benefits as money, campaign contributions, and employment for himself and others, in exchange for official actions, including trying to leverage his authority to appoint a United States Senator." One interesting aspect of the Indictment is how prosecutors framed the Enterprise for the RICO charge. They call it the "Blagojevich Enterprise." The enterprise is an association in fact comprised of "defendant Rod Blagojevich, the Office of the Governor of Illinois, and Friends of Blogojevich." Will Blagojevich have any friends left by the time this case progresses to trial, if in fact it does?
DOJ Press Release here.
Friday, March 6, 2009
As noted here, the 11th Circuit issued its decision in the appellate case involving former Governor Don Siegelman and former CEO of HealthSouth Richard Scrushy. Some of the key points in the decision -
- the court found sufficient evidence "that a reasonable juror could have concluded that Siegelman and Scrushy explicitly agreed to a corrupt quid pro quo"
- the government did not prove that "Siegelman knew that Scrushy intended to defraud Alabama of his honest services while on the Board and that Siegelman personally intended to participate in this fraud."
- although the jury was exposed to extrinsic evidence, it was harmless and the court "did not abuse its discretion in holding that there was no reasonable possibility of prejudice to the defendants arising out of the exposure of the jury to this extrinsic evidence and denying the motion for a new trial"
The court affirmed Scrushy's convictions and reversed two counts of Seigelman's convictions. Seigelman gets a resentencing because of the reversal of Counts 8 and 9.
What happens now? Scrushy and Seigelman have the next step to go - asking for an en banc hearing and perhaps a petition for certiorari to the Supreme Court. But the political arena may be the avenue that we hear the most noise from in the immediate future, as Karl Rove is scheduled to appear before the House Judiciary Committee. See Huffington Post, Karl Rove Agrees to Testify
Monday, February 23, 2009
An executive business meeting is set for the Senate Judiciary Committee for February 26, 2009. On the agenda are S. 386 - Fraud Enforcement and Recovery Act and S. 49 - Public Corruption Prosecution Improvements Act (see here). The most troublesome aspect of this latter bill is its attempt to provide increased prosecutorial power on mail and wire fraud offenses. Section 3 is titled, "Application of Mail and Wire Fraud Statutes to Licenses and Other Intangible Rights." It looks like an attempt to circumvent the Supreme Court ruling in United States v. Cleveland, where the Court held that licenses were not property for purposes of mail fraud. Imagine this scenario - a person answers a question incorrectly on their mailed application for a fishing license. Assuming other aspects of the statute being met, the government would now be able to prosecute them federally for mail fraud. Adding the words "or any other thing of value" might not include licenses, but the title of this provision sure is an attempt to try to increase prosecutorial power to include them. There needs to be some limits to this already near limitless statute, and this provision is not moving in the correct direction.
(esp)(w/ a hat tip to Tiffany Joslyn of NACDL)
Friday, January 30, 2009
The new Illinois Governor, as his first executive order, has decided to take on the fight against corruption in government. He issued an Executive Order creating the Illinois Reform Commission that has several purposes including "to undertake a focused evaluation of both existing Illinois law and the operational practices of the State of Illinois from the perspective of ethics in government, proposing, as the Commission deems appropriate, amendments to existing law." Although Governor Pat Quinn established this commission before former Governor Rod Blagojevich's impeachment and conviction, this act was his first Executive Order, sending the clear message that he means business.
Friday, January 2, 2009
More on Pardons & Commutations -
Charlie Savage NYTimes, has an article titled On Fast Track for Clemency, via the Oval Office and there are wonderful follow-ups from P.S. Ruckman Jr., Pardon Power, ABC News: Pardon Breakdown and The Times: On Pardons and Access . Some observations -
- The process has its issues and those who are less fortunate and don't have a connection may not have as good a chance of securing a pardon or commutation.
- Politics and/or influence may have played a factor and this needs to be scrutinized.
- The press is monitoring every pardon issued.
It's this last point that interests me. We see newspapers cutting staffs and suffering from the economy and also the effect of the Internet. Investigative reporters have served an important role in society and in uncovering many corruption and white collar crimes. So, too, they serve an important role in keeping the government in check. Will this continue and what happens if we lose the power of the press?
Addendum, Mary Flood, Houston Chronicle, Pardon watch on as transition nears -But it's doubtful any Houstonians will make the cut
Friday, December 12, 2008
Some additional thoughts and references on the Blogojevich case -
- It seems clear that US Attorney Patrick Fitzgerald is now presenting the case to a grand jury. See Todd Lightly & Robert Becker, Chicago Tribune, Tribune Co. subpoenaed in Blagojevich probe (it seems a bit odd to hear the CEO of the Tribune Co. saying to the press that he will not be interviewed)
- Howard Kurtz,Washington Post, Media Notes, discusses a point mentioned here regarding the appropriateness of Patrick Fitzgerald characterizing the evidence to the press. Kurtz notes that US Attorney Patrick Fitzgerald may have gone "beyond describing the allegations contained in the criminal complaint" - Kurtz provides a statement from the Illinois Disciplinary Rule concerning such statements. But to add to what Mr. Kurtz has written, there is also the ABA Prosecution Function Standards that instructs prosecutors not to make extrajudicial statements that "the prosecutor knows or reasonably should know ... will have a substantial likelihood of prejudicing a criminal proceeding," and the ABA Standards for Criminal Justice, Fair Trial and Free Press that question whether a prosecutor should make a statement that speaks to an "opinion of the lawyer on the guilt of the defendant, the merits of the case or the merits of the evidence in the case." (8-1.1). And we haven't even mentioned the internal guidelines of the DOJ on this issue. (see John Steele, Legal Ethic Forum here)
- And then there is the most important question of whether the evidence is really there that provides evidence of any crimes. See Mike Robinson, Houston Chronicle (AP), Are Blagojevich tapes enough evidence to convict?
- Politicians face additional issues when under investigation or when charged with a crime. The parallel proceeding may be an impeachment process. See Ray Long, Chicago Tribune, Quinn: Impeach Rod, let me pick Obama replacement
- One thing is certain - this case will continue to be in the news over the next month.
(esp)(w/ a hat tip to Mark Johnson for the Howard Kurtz piece).
Tuesday, December 9, 2008
The arrest of Illinois Governor Blagojevich raises some interesting questions. Here are some very preliminary thoughts (for backgound see here):
- Clearly the selling of a Senate seat and the other remaining allegations in the Complaint are appalling and if the Governor is found to have done this, it is something that needs immediate correction. But it is also important to remember that this is not an Indictment coming from a grand jury and he has not been proved guilty after a trial by jury. Unlike some countries, we are not a country that convicts a person without first affording them a right to a trial by jury.
- One has to wonder whether Governor Blagojevich will be able to obtain a fair trial. Even if what the USAttorney heard on tapes was as outrageous as he claims, is it proper for a United States Attorney to make comments that characterize the alleged conduct? See Chicago Sun Times here; NYTimes here.
- Mail and wire fraud are statutes with enormous breadth. Using the "intangible right to honest services" under section 1346 extends it even further. After all, what isn't "honest services?" Now put it all together under a conspiracy statute (1349) and the question becomes - how far can prosecutorial power go? (e.g. - the hypo I use in this older article is whether a political falsehood is therefore a dishonest service - see here). One question the defense may raise is whether there was a violation of state law that can serve as the basis for the deprivation of an intangible right to honest services.
- There are no allegations of Hobbs Act violations in the complaint. Interestingly this approach would require a quid pro quo - an important requirement when political contributions are involved. Is the use of the mail/wire fraud statutes an attempt to find an open back-door? Is it being used as the "stopgap" (a term once used in the Maze case).
- Many of the people listed in the Complaint are named as "A", "B", etc. Are any of these unnamed individuals cooperating, and if not, will they soon be?
- The federal government has been obtaining information from wires on a state official as high as the governor. The press release states:
"On October 21, the Government obtained a court order authorizing the interception of conversations in both a personal office and a conference room used by Blagojevich at the offices of Friends of Blagojevich. The FBI began intercepting conversations in those rooms on the morning of October 22. A second court order was obtained last month allowing those interceptions to continue. On October 29, a court order was signed authorizing the interception of conversations on a hardline telephone used by Blagojevich at his home. That wiretap was extended for 30 days on November 26, according to the affidavit.
what does this say about the appropriate balance between the state and federal government?
- Most USA's resign when a new president comes into office. Unlike the civil service employees who work in the office, the US Attorney's serve as a presidential appointment. Will the new DOJ approve this case? Will Patrick Fitzgerald be there to prosecute this case?
- The Complaint alleges that the arrestees had "corruptly solicited and demanded the firing of Chicago Tribune editorial board members" - but some in the press seem to say the opposite (see here).
- Will all this "news" help the Chicago Tribune - Tribune Co. files for Chapter 11 bankruptcy protection. But can we count on them to report all the news (see Chicago Tribune Editor Kern's admission to withholding items here - an interesting issue in itself considering that this information does not appear to be related to national security).
- Would everyone be best here if an agreement is reached that takes this matter off the front page? In this regard perhaps the Governor of Illinois should call former Governor Spitzer for advice. (see here)
- And yes, if these allegations all turn out to be true - then maybe we need some basic ethics tests before a person can hold political office.
(esp)(blogging from Atlanta)
U.S. Attorney Patrick Fitzgerald, the same man who handled the case against Governor Ryan, has now had Governor Rod Blagojevich of Illinois arrested. Also arrested and released was his chief of staff John Harris (See Chicago Tribune here). A press release of the US Attorney's Office for the Northern District of Illinois states that:
"arrested today by FBI agents on federal corruption charges alleging that they and others are engaging in ongoing criminal activity: conspiring to obtain personal financial benefits for Blagojevich by leveraging his sole authority to appoint a United States Senator; threatening to withhold substantial state assistance to the Tribune Company in connection with the sale of Wrigley Field to induce the firing of Chicago Tribune editorial board members sharply critical of Blagojevich; and to obtain campaign contributions in exchange for official actions – both historically and now in a push before a new state ethics law takes effect January 1, 2009."
The Criminal Complaint alleges violations of the mail and wire fraud statute using the intangible right to honest services for allegations of conspiracy under section 1349. There is also a claim under section 666 of title 18 of the federal criminal code. Commentary to follow.
(esp)(blogging from Atlanta)
Wednesday, October 29, 2008
A Press Release of the United States Attorney's Office in Massachusetts reports on the indictment of an "[e]ight-term Massachusetts State Senator" "on public corruption charges stemming from her [alleged]acceptance of more than $20,000 in cash payments to introduce legislation in the State Senate." She is charged "with attempted extortion under color of official right and theft of honest services as a State Senator." But it also sounds like there is another side to this story. Check out - Michael Levenson and Jonathan Saltzman, Boston Globe, Bribery defendant Wilkerson - Senator allegedly took cash for help on liquor license, development
Wednesday, August 27, 2008
In 2006, this blog gave Jack Abramoff The Collar for the Best Cooperating Witness, after all Abramoff caused many politicos to fall as a result of his inside knowledge and use of that knowledge in providing cooperation to the government. In 2007 this blog awarded Abramoff The Collar for the Best Skating Not on an Ice Rink (along with Andy Fastow). And although his cooperation has not always resulted in convictions for the government, (see here) it is clear that he has spent many an hour working with DOJ to unravel alleged improper conduct by government officials.
So it is no surprise to see an article in the Washington Post (AP) by Matt Apuzzo titled, Prosecutors Seek to Slash Abramoff Prison Term.
Cooperation provides benefits to the cooperator. But it also continues to raise serious questions such as:
- What about the individual who is the last one approached, and who has no one left to provide evidence against? Is it proper to deprive this individual of the enormous benefits associated with cooperation?
- And what about the individual who avails him or herself of the constitutional right to a jury trial - is there a penalty for proceeding to trial if the person is convicted?
Saturday, August 16, 2008
Previously discussed here and here, the case against Senator Ted Stevens of Alaska is moving forward quickly. He is under indictment for seven counts of false statements under 18 U.S.C. section 1001. Del Quentin Wilber at the Washington Post has an article titled, "Court Filings Reveal Evidence Against Stevens - Prosecutors Possess Recordings of Senator Promising to Help Oil Company"
Tapes have destroyed many a criminal defendant's case. Often the criminal activity is not the most devastating aspect of the tape. It can be that the accused comes across as someone who just is not a likeable person. In some cases the defendant is forced to hear tapes played in court that may be filled with profanities and other statements that can taint him or her with the jurors. But just because there may be tapes, does not mean that they will automatically be admitted into evidence, and if they are, that they will prove damaging to the defense.
Tapes can also be a problem for the government in that it can confirm the accused's explanation of what might have really happened. In this case it sounds like the defense may have some forceful arguments. The first problem for the government is that the allegations appear to have the company executive coming to the Senator for assistance, as opposed to the reverse. Second is the very fact that this is a Senator, and everyone knows that Senators serve their constituents. Third is that the individual having the conversation with the Senator has obtained a plea deal from the government and this bargain will likely be scrutinized by the defense. So much of what really exists in the evidence related to this case, and what may not exist, has not been seen or discussed. That will happen when the Senator has his day in court.