Tuesday, June 25, 2013
According to a federal defender, "[f]ederal public defenders are facing unprecedented and devastating funding cuts in FY14, and the present plan would reduce budgets by 26% and staff by 33% nationally -- making these offices by far the hardest "hit" federal agency in the country." A leading bar organization has issued a statement of concern. The NACDL here notes that last week, "American's federal indigent defense system, known as the Office of Defender Services (ODS) was demoted." In the year that marks the 50th Anniversary of the Gideon decision, this is sad. What is equally sad to see is that these moves are not cost effective, and could end up costing the taxpayers more. As noted by a federal defender:
"Defender offices would lose some branch offices, have to decline the most complex and resource-intensive cases, cease managing the CJA (contract counsel) panel, and shift so many cases to the CJA lawyers that it would double or treble the CJA costs; note, however, that there has been no increase (rather, a decrease) in the CJA budget, and generally private CJA representation costs a lot more than representation by salaried staff in defender offices. Sequestration cuts to defender offices, ironically then, will substantially increase costs of federal indigent defense, while the Federal Defender offices (the "Flagship" of the U.S. Courts) are crippled."
White collar cases tend to be complex and require significant defense time and cost. With the increased emphasis on cases, such as mortgage fraud, more federal public defenders have become involved in this representation. Without adequate defense counsel the status of prosecuting these cases could be at risk. Equally problematic will be whether those charged with crimes will receive adequate representation. Let's hope the legislature wakes us and does something quickly to correct this situation.
Wednesday, June 12, 2013
Gerald Shargel, perhaps the pre-eminent criminal defense lawyer in New York City, has left his solo practice to join the 900-lawyer firm of Winston & Strawn. Shargel's move is embelmatic of two trends: the expansion of white-collar and not so white-collar criminal defense practices of large firms and the exodus of criminal practioners from solo or small partnership practices.
Mr. Shargel's transition is a boon to Winston & Strawn but a loss to the independent, private defense bar that is diminishing in number, income and quality.
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.
Monday, March 25, 2013
Last week, in celebration of the 50th anniversary of the Gideon decision, some of the nation's leading legal figures lauded the outstanding contributions made by the public defense bar. Public defenders indeed do deserve plaudits for their dedication and hard work in representing the poor and often despised. Most public defenders are devoted, diligent, relatively poorly paid, and work in difficult situation and under difficult conditions.
To me, however, the unsung heroes of the defense bar are those private lawyers who ably and diligently represent persons of modest income who are not poor enough to be provided free counsel by the state, but poor enough not to be able to pay substantial legal fees. Those lawyers, like public defenders, work in difficult situations and under difficult conditions. They often have no steady income, no employer-provided retirement or health benefits and sometimes no office. They do not have readily available ancillary services, such as advisory counsel, investigators, social workers and mitigation specialists. Often, they have to perform those functions themselves.
As insubstantial as the resources for public defense are, the resources available to many private lawyers -- whatever meager savings the client is willing to part with, whatever portion of the client's paycheck he has left over after paying for shelter and food and other expenses -- are often less.
This bar, to be sure, is an uneven one. Unlike public defenders, almost all of whom have at least a modicum of competence and expertise and devotion, some in the private bar are part-time or occasional criminal defense lawyers with little criminal experience and little dedication to the representation of their clients. Many, however, are able, experienced, energetic and devoted, despite being paid a fraction of what they deserve. Those unsung lawyers deserve credit and recognition.
Monday, March 18, 2013
Today marks the 50th anniversary of the Supreme Court's landmark decision in Gideon v. Wainwright, a case that promises the accused charged with a crime the right to counsel. Throughout the country many are recognizing the importance of this historic day with articles that tell the Gideon story. (see, e.g., here). One sees a Supreme Court Justice (Kagan) and Attorney General (Holder) recognizing the importance of the right to counsel. (see here)
But what about the white collar case?
White collar cases can be intricate, involve numerous documents, and can entail a sophistication of understanding financial records, something that one may not find in the routine street crime case. So when Justice Kagan says that you aren't entitled to a Cadillac defense, just a "Ford Taurus" defense, will that be enough in a white collar case?
Many white collar defendants will have funds sufficient to pay their lawyers, and in these cases it may be a non-issue. But for those who do not -- Are public defender offices being given adequate funding and resources to handle the lengthy document intensive cases associated with a white collar prosecution? It is difficult to defend these cases with a broken down bicycle that has no wheels.
Tuesday, February 26, 2013
In Caldwell v. Cablevision, 2013 N.Y. Slip Op. 00783, the New York Court of Appeals two weeks ago unanimously affirmed a trip-and-fall civil defendant's verdict in which an emergency room physician subpoenaed by the defense as a fact witness was paid $10,000 for one hour of testimony to verify an entry he made in the "history" section of the hospital records. That note read that the plaintiff had "tripped over [her] dog while walking in the rain," seemingly contradicting the plaintiff's claim that she tripped because of an unfilled trench dug by the defendant.
The court was "troubled" by what was clearly an exorbitant fee paid to a witness for minimal testimony. The relevant statute provided that a witness was entitled to a fee of $15 per day and $.23 per mile travel, but the court wrote it was not improper to pay a witness "reasonable" compensation beyond those amounts for attending, testifying and preparing. The court noted that a witness, however, could not be paid based on the outcome of the litigation.
The court, disturbed by what it called a "disproportionate fee for a short amount of time" and realizing that an excessive payment tended to influence witnesses to testify favorably for the party that paid them, also stated "[a] line must be drawn." However, it not only failed to draw that line, but did not set forth any criteria for when a payment to a witness becomes a bribe. It did hold that the trial court should have tailored a specific jury instruction for the situation, but found the failure to do so was harmless error.
Initially, I thought the court's opinion might provide some limited protection to a New York criminal defense lawyer to offer a witness in a state case a substantial payment to overcome the typical witness reluctance to testify against the prosecution. After a moment's reflection, however, I concluded that such protection was illusory. A criminal defense lawyer who pays a fact witness $10,000 for an hour of testimony is likely to face indictment for bribery. What is acceptable in civil cases is often not acceptable in criminal cases, especially if one's adversary has the power to prosecute. Further, what is acceptable conduct by a prosecutor in criminal cases is often not acceptable if done by a defense lawyer.
Prosecutors routinely induce testimony from witnesses by offering "something of value" greater than money -- a witness' freedom from incarceration, something a defense lawyer obviously cannot offer. While one federal appellate court shook the foundations of federal prosecution offices by holding that the government could not induce testimony by offering such leniency to a witness, United States v. Singleton, 144 F.3d 1343 (10th Cir. 1998), that case was swiftly and soundly overruled en banc, 165 F.3d 1302 (10th Cir. 1999).
In white collar and other cases, the defense often is hampered by its inability to induce a witness to testify by offering something of value for fear that the defendant or her attorney will be prosecuted for bribing a witness. While the defendant has a Sixth Amendment right to subpoena and call fact witnesses (and to pay witness fees and the "reasonable value of lost time"), that right is considerably limited by the witness' Fifth Amendment right to assert his privilege against self-incrimination and decline to testify. Further, defense attorneys lack a mechanism (such as a grand jury) to test what an unamenable witness will state under oath.
One instance where witnesses are often necessary for a viable defense in white-collar cases is where the defendant claims she acted with a lack of criminal intent, often evidenced by a direction or assurance by superiors of the propriety of her conduct or her openness and expressions to her co-workers. Witnesses who might substantiate the defendant's good faith who were somewhat involved in, or just near, the questioned activity, generally at the direction of prudent counsel will often refuse to testify for fear they will be prosecuted. This foreclosure of potentially favorable testimony is sometimes reinforced by prosecution sabre-rattling, often disingenuous, that the witness himself is a potential defendant. Such a declaration almost always will frighten the witness from testifying and deter a judge from granting the witness immunity over prosecutorial objection. But see here.
Allowing white-collar defendants to "buy" (honest) testimony from a reluctant witness -- that is, to pay the witness to give up his constitutional right not to testify -- conceivably theoretically acceptable under the Caldwell case -- might somewhat level the playing field in which the prosecutor to a considerable extent controls who will testify for either side. However, until a court or legislature "draws a line" that clearly allows it, such a payment is fraught with danger to the defendant and the defense lawyer.
Monday, January 28, 2013
Casey Anthony, who was acquitted of murdering her daughter Caylee Marie in 2011, has filed for bankruptcy in federal bankruptcy court in Florida. She has listed approximate assets of $1,100 and debts of $800,000, including $500,000 due Jose Baez, one of her defense attorneys. See here. I was pleased to see no debt listed for my colleague and friend Cheney Mason, who as Baez' co-counsel, added gravitas, savvy and experience to Ms. Anthony's defense team.
It is not surprising for a criminal defense lawyer not to be paid a large part of the legal fees owed to her. I venture that the average criminal defense lawyer is "beat" for some 10-20% of her fees. And I do not know how much Baez actually did receive in fees, but I am sure nothing like the fees many white-collar lawyers and firms often receive for representation in criminal matters of institutions or individuals, even those who never get close to being indicted. Of course, the Anthony case did provide Baez considerable fame.
Friday, December 7, 2012
New Article - Unregulated Corporate Internal Investigations: Achieving Fairness for Corporate Constituents
Professor Bruce Green (Fordham) and I have a new article coming out in Boston Colleg Law Review, titled Unregulated Corporate Internal Investigations: Achieving Fairness for Corporate Constituents. You can download the article here. The SSRN abstract states:
This Article focuses on the relationship between corporations and their employee constituents in the context of corporate internal investigations, an unregulated multi-million dollar business. The classic approach provided in the 1981 Supreme Court opinion, Upjohn v. United States, is contrasted with the reality of modern-day internal investigations that may exploit individuals to achieve a corporate benefit with the government. Attorney-client privilege becomes an issue as corporate constituents perceive that corporate counsel is representing their interests, when in fact these internal investigators are obtaining information for the corporation to barter with the government. Legal precedent and ethics rules provide little relief to these corporate employees. This Article suggests that courts need to move beyond the Upjohn decision and recognize this new landscape. It advocates for corporate fair dealing and provides a multi-faceted approach to achieve this aim. Ultimately this Article considers how best to level the playing field between corporations and their employees in matters related to the corporate internal investigation.
Friday, November 9, 2012
In a major environmental prosecution out of the Northern District of Indiana, a great white collar team proves once again that you CAN go to trial and beat the government. The indictment alleged a conspiracy to violate the Clean Water Act and 26 substantive violations by United Water Services and two of its employees. Some counts were dropped along the way by the government. All three defendants were acquitted of all remaining charges by the jury.
This was a complete victory for the defense. The jury deliberated about 8 hours over two days. Congratulations go to the following members of the respective white collar/environmental defense teams:
Representing United Water Services were my colleagues at Barnes & Thornburg: Larry Mackey, George Horn, Pat Cotter, Harold Bickham, Meredith Rieger, and Tim Haley.
Representing Dwain Bowie were Jackie Bennett and Bob Clark of Taft Stettinius & Hollister.
Representing Gregory Ciaccio were J.P. Hanlon and Kevin Kimmerling of Faegre Baker Daniels.
The case was tried in Hammond, Indiana.
Here is the Post-Tribune story.
Friday, November 2, 2012
The case of Ali Shaygan v. United States is set for distribution for conference on November 9, 2012 in the United States Supreme Court (see here). David Oscar Markus represents the Petitioner on a Hyde Amendment case that asks the question of "[w]hether the Government is exempted as a matter of law for Hyde Amendment sanctions under the statute’s prohibition on "bad faith" prosecutions despite subjective malice in its filing decision and extensive and pervasive prosecutorial misconduct during the course of the litigation, merely because there was probable cause to support the filing of the indictment." The Petition for Cert can be found here. See also Mike Scarcella, In the Supreme Court, a Fight Over Sanctions for Government Misconduct
The NACDL (here) raises the issue of the wide discretion afforded to prosecutors and how "'bad faith' surely includes situations where the government adds numerous charges for an illegitimate reason, such as retaliation for exercising a constitutional right, or engages in discovery abuse." The question here is whether the Hyde Amendment will have any teeth left, and whether there will be a check on government misconduct.
This case raises the important issue of whether there will be any ramifications to the government when it misuses its power.
Monday, October 29, 2012
DC has its share of outstanding white collar practitioners, but some of the very best of them don't often make it into the news. Why? Because they are quietly busy, around the clock and the globe, protecting the reputations, pocket-books, and other interests of their clients. They do this by conducting internal investigations, defending against government inquiries, creating state of the art compliance programs, and offering sound strategic advice. The whole point is to keep your clients out of the news. Two of the very best of these trusted white collar counselors are former Deputy AG George J. Terwilliger III and my old friend Bob Bittman, who are moving this Thursday from White & Case to Morgan Lewis. Terwilliger and Bittman will be Partners in the White Collar Litigation & Government Investigations Group. George and Bob are moving over with experienced white collar hands (and fomer AUSAs) Dan Levin and Matt Miner. Here is the Morgan Lewis Press Release. Congratulations to George, Bob, Dan, and Matt.
Thursday, July 12, 2012
Last month, in a thorough 64-page opinion, Southern District of New York Judge William Pauley ordered a new trial for three of four defendants convicted in what he described as "the largest tax fraud prosecution in U.S. history" because a juror, Catherine M. Conrad, had lied her way into being accepted as a juror. United States v. Daugerdas, et al., 09 Cr. 581.
There appears to be little question Ms. Conrad, a suspended lawyer, connived to make herself in her own word "marketable" so that she could have "an interesting trial experience" as a juror. In voir dire, she lied about her education, claiming the highest level she had reached was a B.A. when in fact she had a law degree. She concealed not only her membership in and suspension from the bar but her own criminal convictions -- for shoplifting, DWI, contempt and aggravated harassment -- as well as her husband's extensive criminal history, which included a seven-year prison stay. She made, according to the court, a "calculated, criminal decision to get on the jury."
At a post-trial hearing at which she was granted use immunity, Conrad stated that if the truth were known, "defense counsel would be wild to have me on the jury." In fact, however, Conrad turned out to be extremely biased against the defendants. In a congratulatory letter she sent to the prosecutors after the trial, she said she was "privileged to observe la creme de la creme -- KUDOS to you and your team." In that letter, she mentioned that she had fought against but ultimately had "thrown[n] in the towel" on a not guilty verdict on one of the counts concerning defendant David Parse. At the hearing, she testified that "most attorneys" are "career criminals." Two of the four convicted defendants were practicing lawyers; Parse was a non-practicing lawyer.
Judge Pauley, clearly upset by the need to retry a case which took three months, strongly urged the government to prosecute Conrad. Perhaps concerned that the government might feel that prosecuting her would be inconsistent with its opposition to a new trial, he added, "The prospect of preserving a tainted jury verdict should not temper the Government's resolve to call Conrad to account for her egregious conduct." Any prosecution of Conrad, however, obviously would have Kastigar obstacles because of her immunity.
The judge, following the Supreme Court's decision in McDonough Power v. Greenwood, 464 U.S. 548 (1984), found that in order to obtain a new trial, the moving party must "first demonstrate that a juror failed to answer honestly a material question on voir dire and then further show that a correct response would have provided a valid basis for a challenge for cause" (emphasis added). Apparently, even in a criminal case, the mere existence of a juror who deliberately lied her way onto the jury may not be sufficient to require a new trial. See United States v. Martha Stewart, 433 F.3d 273 (2d Cir. 2006). The McDonough test appears to be "If the juror hypothetically had answered truthfully, would her truthful answers have led to a challenge for cause?" Thus, unknown facts that might have affected her fitness to serve as a juror which would not in any case have been revealed by accurate responses to voir dire questioning presumably should not be considered.
In a lengthy analysis, mingling those hypothetical answers to questions asked during jury selection with, somewhat questionably, facts learned and impressions formed at the post-verdict hearing -- including Conrad's discovered dishonesty, bias and her animus to lawyers -- the court found that the McDonough criteria had been amply met. Accordingly, it ordered a new trial for all the convicted defendants -- except Parse, who the court ruled had "waived" his claim for a new trial since his attorneys knew or "with a modicum of diligence would have known" that Conrad's statements in jury selection were false and misleading and failed to disclose that knowledge to the court.
Judge Pauley felt that Parse's lawyers, the firm of Brune and Richard, knew or at least suspected (or alternatively should have known) that Conrad was an imposter certainly by the start of jury deliberations, but made a decision not to reveal their belief or suspicion to the court. The court was apparently affected by what seems to be a carefully-crafted, literally true but arguably misleading, statement in the lawyers' new trial motion that they were "prompted" by disclosure of Conrad's post-verdict letter to investigate and conduct records searches "in the wake of Conrad's . . . post-verdict letter." The court found that the motion contained "significant factual misstatements" and that its "clear implication" was to give the false impression that Parse's lawyers had no idea of Conrad's true identity until well after the verdict. In fact, as demonstrated in a later letter from the firm, in the firm's e-mails during trial, which were ordered by the court to be produced, and in testimony by the lawyers at a hearing, the firm apparently had concerns about and suspicion of Conrad's deception, initially at voir dire and later, after further record search revelations, during the judge's charge to the jury. A most graphic example was one lawyer's e-mail during the charge, "Jesus, I do think it's her."
The court believed that the attorneys' submission was designed to foreclose any government claim that their pre-verdict knowledge doomed their post-verdict motion on the grounds that they failed to act with "due diligence." The court found unconvincing the attorneys' claim that notwithstanding the similarities between the juror and the suspended lawyer discovered by electronic research -- name, home town, father's occupation, approximate age -- and the juror's use of previously unmentioned legal terms (such as respondeat superior) in jury notes she authored, the attorneys did not believe until after her letter to the government was disclosed that juror Conrad and suspended lawyer Conrad were the same person.
The court thus found that Parse's attorneys had "actionable intelligence" that Conrad was an imposter and that they had been required, but failed, to undertake "swift action" to bring the matter to the court's attention. The court apparently felt that the attorneys had attempted to "sandbag" it by remaining silent about the defect and only raising the issue when and if the trial did not conclude favorably, in effect providing them and their client with an "insurance policy against an unfavorable verdict." By his attorneys' conduct, the court ruled, Parse waived any error.
It may well be that during the trial the attorneys chose not to report their suspicions because they felt that Conrad, who appeared from web research to be potentially anti-government, would be a favorable juror for the defense, and they did not want to lose her. It may also be that, whatever the objective evidence that the juror and the suspended lawyer were one and the same might look like with hindsight, they actually thought that the juror and the suspended lawyer were different people since, as they claimed, they could not believe that the juror -- a lawyer -- would blatantly lie. Under either alternative, the court found, they had an obligation to share their knowledge with the court.
Some may argue that an attorney, in her duty of zealous representation of a client, may remain silent if she learns during jury selection that a juror misrepresented herself. Judge Pauley's contrary view is clear: "An attorney's duty to inform the court about suggested juror misconduct trumps all other professional obligations, including those owed a client." I agree. See New York Rules of Professional Conduct 3.3(b).
Some may also question whether Parse, the client, should suffer from his lawyer's purported misconduct or lack of diligence (of which he had no apparent knowledge). While generally a client is bound by a lawyer's strategic decision, and cannot cry foul if it backfires, Parse did suffer the same denial of a fair jury as the other defendants. Nonetheless, the court held that his attorneys' failure to report waived any objection by Parse, but granted new trials to the other three convicted defendants (whose lawyers apparently had no knowledge of Conrad's deception).
There are several ironies in this case: Parse, about whom, according to Conrad's letter to the prosecutors, the jurors "had qualms," is the only one whose conviction stands. Further, his attorneys were the ones responsible for investigating and presenting the motions which succeeded in a new trial for the others (who joined the motion), but not for him. And, lastly, if Conrad had told the truth at voir dire and revealed her suspension from the bar and her and her husband's criminal record, she undoubtedly would have been successfully challenged -- whether by cause or peremptory -- on the motion of the prosecution she so strongly favored, and not be the defense she despised.
Wednesday, June 27, 2012
A DOJ Press Release reports, Barclays Bank PLC Admits Misconduct Related to Submissions for the London Interbank Offered Rate and the Euro Interbank Offered Rate and Agrees to Pay $160 Million Penalty
Some highlights of the press release -
- "Barclays Bank PLC, a financial institution headquartered in London, has entered
into an agreement with the Department of Justice to pay a $160 million penalty
to resolve violations arising from Barclays’s submissions for the London
InterBank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR),
which are benchmark interest rates used in financial markets around the world..."
- "To the bank’s credit, Barclays also took a significant step toward accepting
responsibility for its conduct by being the first institution to provide
extensive and meaningful cooperation to the government."
- "Barclays’s cooperation has been extensive, in terms of the quality and type of
information and assistance provided, and has been of substantial value in
furthering the department’s ongoing criminal investigation."
- "The agreement requires Barclays to continue cooperating with the department in
its ongoing investigation."
- "As a result of Barclays’s admission of its misconduct, its extraordinary
cooperation, its remediation efforts and certain mitigating and other factors,
the department agreed not to prosecute Barclays for providing false LIBOR and
EURIBOR contributions, provided that Barclays satisfies its ongoing obligations
under the agreement for a period of two years. The non-prosecution agreement
applies only to Barclays and not to any employees or officers of Barclays or any
Commentary - As a non-prosecution agreement it does not go through the courts and DOJ has the power to enforce or proceed should it believe there is a violation of the agreement. It also sounds like the white collar defense bar may have some new clients as the government has secured the cooperation of the company to go after individuals.
See also Jenna Greene, BLT Blog, Barclays Agrees to Pay $360M to Settle with CFTC, DOJ
over Interest Rate Manipulation
Wednesday, June 20, 2012
The financial cost of a white collar case can be a huge deterrent in itself. But often, the corporation or company where the individual is employed will be footing the bill. Check out - Peter Lattman, N.Y.Times, Goldman Stuck With a Defense Tab, and Awaiting a Payback
(esp)(w/ a hat tip to Professor Jerold Israel)
Monday, June 18, 2012
This nine week trial cost us how much? And what about the first mistrial, too (here)?
And while this was going on, how many cybercrimes and identity thefts have gone unnoticed. And when the investigation of this case was occurring, did we miss some Ponzi schemes and mortgage frauds?
We have limited resources - we need to use them wisely.
Saturday, June 16, 2012
The Tenth Circuit recently affirmed the convictions, but remanded the sentence of Howard O. Kieffer. Kieffer, who for several years was practicing criminal defense law, had a problem - he never went to law school and had no license to practice law. A court in the Eighth Circuit in 2010 upheld his convictions for mail fraud and making false statements. But he was also convicted in 2010 in Colorado for wire fraud and contempt of court. That decision was recently affirmed in the Tenth Circuit with a remand on sentencing here.
There is one aspect of this Tenth Circuit decision that raises eyebrows. The issue is what constitutes interstate wires for purposes of the wire fraud statute. This is a particularly important issue in these days of the WorldWideWeb. For example, in United States v. Phillips, 376 F. Supp2d 6 (D. Mass. 2005) the court rejected the government argument that “in order to satisfy the elements of this offense, it was not necessary to present evidence that the pertinent wire communications themselves actually crossed state lines, as long as the communications (whether interstate or intrastate) traveled via an ‘instrument of an integrated system of interstate commerce,’ such as the interstate phone system.” Even in the Tenth Circuit in United States v. Schaefer, 501 F.3d 1197 (10th Cir. 2007), the court previously held that one person’s use of the internet, “standing alone” was insufficient evidence that the item “traveled across state lines in interstate commerce.”
So it is surprising to read in Keiffer that the Tenth Circuit is now saying, "“[t]he presence of end users in different states, coupled with the very character of the internet, render this inference permissible even absent evidence that only one host server delivered web content in these two states.”
Clearly Keiffer's conduct was appalling, but the ramifications of the language in this decision could be huge. Could individuals from outside this country be charged with crimes against the United States merely because they put something on the web?
(esp)(hat tip to John Wesley Hall)
Tuesday, June 12, 2012
The New York Times reported yesterday that Rajat K. Gupta, a former Goldman Sachs director on trial in the Southern District of New York for providing inside information to his friend and business colleague Raj Rajaratnam so that Rajaratnam could make trades based on those tips, will not testify, according to a letter his highly respected lawyer, Gary Naftalis, submitted to the court on Sunday night. See here. The prior Friday, Mr. Naftalis told the court and the prosecutors it was "highly likely" that Mr. Gupta would testify. I was quite surprised by that declaration and even suspected that it might be a feint to divert prosecutorial resources from the preparation of cross-examination of other witnesses and the summation to preparation for the cross-examination of Mr. Gupta. (While I personally have never made such a feint, I have on occasion considered doing it.)
The government's case against Mr. Gupta is a circumstantial one -- essentially a pattern of incidents in which Mr. Gupta allegedly received secret information at board meetings and very shortly thereafter telephoned Mr. Rajaratnam, and Mr. Rajaratnam then placed trades based on the matters discussed at the board meeting. Most of the critical evidence -- Mr. Gupta's presence at the board meetings at which the information in question was discussed, his calls to Mr. Rajaratnam and Mr. Rajaratnam's firm's trading -- are virtually irrefutable. On the other hand, there is no "smoking gun" in the form of testimony or recordings as to what was said in the critical conversations.
On the witness stand, Mr. Gupta would no doubt be thoroughly and harshly cross-examined on whatever explanation he provided about the substance and timing of the phone calls. Interrogation about these repeated events would allow the prosecutors in effect an extra summation to hammer on these facts, indeed perhaps even better than a summation since the defendant would have to respond directly to each of the allegations, whereas in summation an attorney would have the option of ignoring, glossing over or generalizing about all or portions of the evidence.
In any case, white-collar or not, I believe that when a defendant testifies, the standard of proof beyond a reasonable doubt is diluted. Jurors, rather than asking themselves whether the prosecutor has proved the case beyond a reasonable doubt, focus more on whether the defendant probably told the truth.
I would not be surprised if Mr. Gupta's legal team had spent much of this past weekend cross-examining him and trying to convince him that the better choice for him was to decline to testify. The decision whether to testify is one of the very few that virtually all lawyers, and all ethics rules, decree belongs ultimately to the client. It is often difficult to convince white collar clients, especially those whose egos have become enlarged because of their extreme success, that they will be unable to convince a jury.
While my reading leads me to believe that this is a difficult case for the defense, I believe Mr. Gupta's decision not to testify is a correct one. A similar decision seems to have worked for John Edwards.
Tuesday, June 5, 2012
The Fifth Circuit affirmed the convictions and sentences in U.S. v. Brooks, a case involving alleged "false reporting of natural gas trades in violation of the Commodities Exchange Act and the federal wire fraud statute."
Although the court distinguishes the Stein decision from the Second Circuit with the facts in this case, both cases had individual defendants who had their attorney fees cut off. In Brooks, the defense claimed it was from government pressure, but the Fifth Circuit said the factual findings were not present to confirm this conduct. The court found that the company's policy on payment of attorney fees was a discretionary policy. But when a company gets a deferred prosecution agreement one has to wonder if there is an incentive to show cooperation, albeit payment of attorney fees can not be a factor used.
There is also an interesting question of what constitutes "reports" for purposes of the CEA or CFTC regulations. This is an intriguing issue as one is basically violating federal law through a submission document. The Fifth Circuit rejected a void for vagueness argument here.
The Fifth Circuit also found the Fifth Circuit Pattern Jury Instruction as meeting the recent Supreme Court decision in Global Tech, although they admit it does not use the same language. The question here is whether deliberately closing one's eyes is the same as taking "deliberate actions to avoid learning of the fact," the test set forth in Global Tech. I see a difference in that one is passive and the other is active. The Court seems to be satisfied with the evidence in this case, but one has to wonder if the Fifth Circuit should be quickly looking to change its pattern jury instruction to avoid this issue in future cases.
Then there is the question of defense witness immunity. A witness is on the prosecution witness list and is not called to testify because the prosecution has concerns about the witnesses truthfulness. The witness has not yet been sentenced (the government postponed sentencing for 39 months- obviously to be after this trial) and decides to take the Fifth Amendment. The prosecution called the witness the evening before the witness was to testify, but says the call was to determine if they needed to prepare the witness for cross-examination. The defense argues that the witness has exculpatory evidence for the defense. The defense asks for defense witness immunity and doesn't get it. One has to wonder whether the jury really had full information to resolve guilt or innocence? But the Fifth Circuit held otherwise.
And this is not a case where defendants are receiving light sentences. All the defendants were level one and yet all of their sentences exceeded 11 years imprisonment, with one receiving a 14 year sentence. Whoever thinks white collar offenders are getting off easy, needs to just look at this case to see that this is not the situation.
Sunday, May 20, 2012
Thursday, May 17, 2012
Judge Walton says that the jury is bored at the Clemens trial, and of course he blames the lawyers. Maybe he should look in the mirror. The proceedings would have moved much faster had the Court put a stop to the government's pettifogging objections to cross-examination questions that allegedly strayed beyond the scope of direct.
The judge has also, according to the latest press reports, characterized Rusty Hardin's lengthy cross-examination of Brian McNamee as confusing.
I stopped in on the trial yesterday morning during Hardin's cross-examination of McNamee. Although there was no smoking gun moment, it was an accomplished cross that ably exposed McNamee's shifty, evasive personality. Near the end, Hardin asked a perfectly acceptable question, the point of which was to stress that McNamee would have been valuable to Clemens as a private trainer irrespective of McNamee's ability to provide illegal drugs. The prosecution objected. Rather than simply ruling on the objection, Walton engaged in an unnecessarily lengthy exchange with the attorneys on the finer points of evidentiary law. You would have thought they were discussing the Ex Post Facto Clause or the Magna Carta.
The trial judge has great discretion to move a case along--even a big case. This doesn't mean that the Court should prevent either side from putting on its evidence or vigorously questioning witnesses. The Clemens case would benefit from quicker bench rulings on objections, particularly objections that only serve to break the other side's pace and stride. The government objections that I witnessed on Wednesday did not merit the lengthy treatment they were given by the Court.