Friday, October 1, 2010

NACDL's 6th Annual Defending the White Collar Case Seminar – “Making Ends Meet: Obtaining Insurance Advancement & Indemnity in White Collar Cases,” Friday, October 1, 2010

Guest Blogger: Rodger A. Heaton, Hinshaw & Culbertson, LLP (Chicago, IL)

Panelists: Evan A. Jenness and Lee H. Shidlofsky

In his “Advice to a Young Tradesman,” Benjamin Franklin included the time honored maxim that “time is money.”  If that is clear to anyone, it is clear to defense attorneys.  Evan Jenness, an NACDL Board member, and Lee Shidlofsky, offered helpful advice to defense practitioners interested in maximizing their ability to collect attorney fees from employers and insurers.  This third breakout session of the final morning of the seminar provided several tips for obtaining advancement and indemnity for defense costs from an insurance company during an investigation and any subsequent prosecution or enforcement action.  Jenness who practices in Santa Monica, CA, and Lee Shidlofsky of Austin, TX, addressed the issues thoroughly. 

Jenness first summarized the multiple sources of indemnification.  They include corporate charters and by-laws, partnership agreements, employment contracts, employer insurance policies, and severance agreements.  In some states, there are statutes requiring companies to indemnify (e.g., California) 

Jenness reminded the audience that advancement is separate from, though related to, indemnification.  Companies often try to avoid or delay advancing fees.  Clients are often asked for an undertaking requiring the employee to repay the company if the employee is ultimately convicted of a crime, and sometimes are even asked for security to make the undertaking enforceable.  Jenness encouraged challenges to those attempts on the basis that the company could have required a secured undertaking in its by-laws or employment contract. 

Jenness also encouraged defense attorneys who are unable to get a written promise from the company or its insurer to pay right away to challenge it immediately.  As backup protection against recalcitrance from the company, defense attorneys may need to include language in retention agreements requiring a retainer from the client to be used if initial efforts to get paid by the company and insurance company fail. 

Jenness discussed Delaware’s provision of nearly unlimited capacity for companies to indemnify employees and officers, and noted that even if an employee is employed at will, some states provide that advancement and indemnity are available. 

Jenness offered several pracice tips:  1) Don’t assume your client isn’t entitled to coverage under a D&O policy due to lower rank in the company.  Many policies are interpreted to cover lower ranking employees.  2) Find sample indemnity agreements by industry on the internet.  Use them in negotiating the terms of employment and severance contracts.  3) There is no requirement that you share work product and privileged information with the third party fee payer.  Redact bills that are forwarded to the third party payer.  If the company/carrier balks because they don’t know what they are being asked to pay for, then very narrow descriptions may have to be included. 

Shidlofsky reported that D&O policies are typically broad.  Just because a client is under investigation for criminal or intentional conduct and there are “bad conduct” exclusions in the policy, it does not mean there is no coverage.  And, most policies require a final determination of the bad conduct before coverage can be denied.  There may be coverage disputes, but they are worth fighting. 

Shidlofsky also offered a few key practice tips:  1) Provide notice to the insurer as soon as you obtain knowledge of the investigation.  Failure to provide prompt notice can result in reduced or no coverage. 2) Read the definitions of “loss” and “wrongful act” in the policies very carefully.  There is limited case law interpreting these terms, but the more modern trend in policies is to provide coverage even at the investigation stage.  Much litigation is underway on these issues.  3) Evaluate whether the policy requires advancement of fees and costs, or reimbursement only.  Absent clear language on this, many states require advancement of fees and costs. 

Effective defense efforts take time and, therefore, money.  With some tenacity and diligent searching through the sources of potential indemnification, you just might find enough money to do the job right. 

(rah)

October 1, 2010 in Attorney Fees, Conferences, Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Thursday, September 30, 2010

NACDL's 6th Annual Defending the White Collar Case Seminar – “The White Collar Trial: Required Skills and Exceptional Techniques,” Thursday, September 30, 2010

Guest Blogger: Hank Asbill, Jones Day (Washington, DC)

Moderator: Gerald Goldstein

Panelists: Cristina C. Arguedas, Marcus J. Busch, Francis D. Carter and Barbara “Biz” Van Gelder

Frank Carter spoke about openings. His advice was never to waive it.  It must be brief, with no more than three to four themes.  Be indignant but under control.  In order to prepare it, you need early access to Jencks.  In a multi-defendant case, address issues and facts relating to your client alone.  Talk about your client’s good qualities you know you will be able to elicit from government witnesses.  Do not promise your client will testify.  Stay away from humor.  Stick with a style that works for your personality.  If the government uses demonstratives, you should respond to those exhibits with your own.

Chris Arguedas talked about cross-examining the key government witness.  Learn how to cross by watching other accomplished lawyers.  You have to have real confidence in yourself – either from doing lots of trials or by being very well prepared.  Remember you have law and control on your side.  Cite Crawford, argue constitutional due process, materiality – dictate pace, topics, sequencing.  Remember also not to do any harm.  Do not cross if you don’t need to. 

Chris keeps a trial notebook with a section of each witness that she transfers to a computer to ensure it is organized.  She writes down her questions, anticipated answers, text of potential impeachment – and color codes them.  She recommends asking only one fact per question and never using tag lines and never schmoozing with the prosecutor or agent in the jury’s presence.  It’s all about discipline and the effective use of your demeanor and outrage.

Lastly, Chris rereads the rules on impeachment with inconsistent statements right before she starts her cross.  And she makes sure to use documents if she can find any to impeach.

Biz Van Gelder addressed the issue of whether to put your client on the stand.  She thinks it is a decision that is made well before the trial – primarily by the client.  She would prefer not to put any of them on and tries to convince them to remain silent.  She also asks judges to voir dire the client about the decision.  If the client testifies, you must communicate your theory of the case and the client’s credibility in the examination.  The key to successful direct is preparation and your trust in their ability to help the case.  Biz asks her clients to help write out the questions in conformity with her outline so the client’s voice will come through.  She also recommends having a heart to heart with the client’s spouse about the defendant’s decision to testify and making sure to prepare the client for mistakes or misrecollections on cross.

Marcus Busch addressed the cross-examination of the defendant.  It’s a test of your judgment how you approach the witness.  Map it out weeks or months in advance – structure it around your themes and your key documents.  Don’t go for the home run.  Win on points.  Take the defendant out of his comfort zone – he’s not adored or in charge while you are crossing him, but if the witness is annoying, give him the rope to hang himself.  The key to great cross is to be creative.

Marcus uses searchable case management systems to ensure he does not fumble around with paperwork when he wants to impeach.  And he recommends never bluffing.

Marcus also closely watches the defendant’s demeanor in the trial – both in and out of the jury’s presence – and tries to use that demeanor against the witness.  He takes good notes on direct so he can hold the witness to exactly what he testified to and demonstrate to the jury that he is accurate and therefore credible.  If the witness scores points on Marcus, he tries not to show he has been hurt.

 Gerry Goldstein summarized the panel’s presentation.  He then covered closing arguments.  He passionately emphasized telling a theatrical story at all stages of the trial, and about borrowing great ideas from great lawyers.  He admitted morphing over the years from being an “attack dog” to taking a more mature, measured approach.  He talked about the importance of candor, self-deprecation and pride in your role as a defender of the accused – all critical themes to convey to the jury.  And, he illustrated his points with many examples from the conference’s written materials.

(ha)

September 30, 2010 in Conferences, Defense Counsel | 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)

Monday, August 16, 2010

Ellen Podgor Receives Heeney Award

The National Association of Criminal Defense Lawyers' most prestigious award is the Robert C. Heeney Memorial Award, established in 1981 in honor of Heeney, NACDL's 18th President. According to NACDL's website, the Heeney Award "is given annually to the one criminal defense attorney who best exemplifies the goals and values of the Association, and the legal profession." Past winners have included such giants in our profession as Albert Krieger, Barry Tarlow, Nancy Hollander, Barry Scheck, Barbara Bergman, Gerry Goldstein, Lisa Wayne, and Jeffrey Fisher.

This past Saturday in Toronto, at its annual convention, the NACDL gave the 2010 Heeney Award to Ellen S. Podgor. I can't think of anyone more deserving. Congratulations, Professor Podgor!

(slw)

August 16, 2010 in Celebrities, Conferences, Current Affairs, Defense Counsel, News | Permalink | Comments (2) | TrackBack (0)

Monday, August 9, 2010

James K. Robinson 1943-2010 - He Did It All

Robinson_j We mourn the passing of James K. Robinson, educator/dean, prosecutor, defense counsel, and a truly wonderful person. He served as assistant attorney general in the US Department of Justice heading up the criminal division, as dean of the Wayne State Law School, and most recently as "a partner in the Business Fraud and Complex Litigation Practice in Cadwalader's Litigation Department" (see here).  He was actively engaged in law reform work and was a member of the American Board of Criminal Lawyers (ABCL). Henry "Hank" Asbill (JonesDay) said, "as a prosecutor, Jim embraced his duty fairly to seek justice; and as a defense attorney, he thrived on his responsibility to zealously defend his clients.  He was a true gentleman who was loved by many and admired and respected by all." I could not agree more.  He will be missed.  

See also Bill Laitner, Detroit Free Press, James K. Robinson: WSU Law School's former dean

(esp)

August 9, 2010 in Defense Counsel, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, July 15, 2010

Lynne F. Stewart - Resentenced to Ten Years

From 2 years 4 months to 10 years. Speechless.

(esp)

July 15, 2010 in Defense Counsel, Sentencing | Permalink | Comments (2) | TrackBack (0)

Wednesday, May 26, 2010

When the Law Is the Perp

Guest Blogger - Op Ed

By Cynthia Hujar Orr, President, National Association of Criminal Defense Lawyers (NACDL)

With more than 20 years as an American criminal defense lawyer, I have witnessed the drafting and enforcement of innumerable federal criminal laws and regulations that patently fail to meet the basic requirements of fairness and justice. More and more, ordinary, hard-working people are being prosecuted for doing seemingly lawful, everyday things that run afoul of federal authorities or the tax collector. And then their nightmare begins.

Recently, I represented a physician who with other physicians and a medical supply company were involved in what can only be described as a profound personal and professional nightmare for them. Federal prosecutors decided to publicly investigate the clients for making treatment referrals that were not covered by Medicare or Medicaid. The patients in question, a number of whom were injured on the job and on worker’s compensation, came to the clients seeking to be made well again. When the clients made referrals for special treatment for patients with private insurance, sometimes the claims would be covered and honored by the insurance carrier, and sometimes they would not. It would depend on the carrier and the individual’s circumstances. To be sure, the treatment in question in this case has been covered by multiple insurance carriers whose names we all recognize.

Well, buried deep in the criminal code and the accompanying regulations, there are criminal penalties for making certain types of medical referrals when the patient’s medical care is covered by, in this case, (federally funded) Texas Medicaid or Medicare. In fact, a referral for more than $100 of the particular treatment in this case for a Medicaid/Medicare-covered patient can result in many years in prison – if dishonesty is involved. But today, the federal prosecution bar is set much lower than the bar for ordinary crimes such as theft.  Even a mere paperwork mix-up can result in a major criminal investigation where federal regulations are concerned.

After three years of search warrants, subpoenas, interrogations, public embarrassment and scrutiny in the media, threats to their professional licenses, and significant legal and other expenses, it was determined that, as the clients knew all along, they had done nothing wrong. No indictments were issued. Their lives, the lives of their patients, and necessarily the lives and practices of other physicians and professionals seeking nothing more than to do right by their patients and clients, will never be the same. They must now live with the knowledge of what we as criminal defense attorneys have been watching unfold for decades – we are all potential victims of poorly drafted laws that can be improperly and selectively applied by prosecutors. The irony has not been lost on me.  These doctor-clients were prosecuted not because they harmed anyone, but because they tried to help people.

To be sure, health care fraud is a pretty big business in America, with significant costs to all of us. But when the laws passed to deter and punish those who are actually committing those crimes are so poorly crafted that they lead to honorable, decent, everyday people becoming ensnared in our criminal justice system, there is no better evidence that we have a serious problem that must be addressed at the highest levels.  We have reached a point where the federal criminal code rivals or exceeds the federal tax code in volume and complexity.

For nearly two years, the National Association of Criminal Defense Lawyers and the Heritage Foundation have studied this problem, and its causes, in great depth. Noting that the federal criminal code alone now has an estimated 4,450 federal crimes, with an estimated tens of thousands more criminal provisions buried in the federal regulatory code, our organizations set out to see how defective laws, specifically those lacking adequate intent requirements, actually get enacted. The conclusions of this study, and the common sense recommendations to stop and reverse this trend and return the federal criminal law to its rightful role in our free nation, are set forth in a recently released report, "Without Intent: How Congress Is Eroding the Criminal Intent Requirement in Federal Law."

As a practicing member of the criminal defense bar, I know that a lawyer’s job is to protect everyone’s rights, not just those of the criminally accused. Congress makes that job harder when it fails to recognize that a criminal law that no one understands – particularly one that can be violated accidentally, with no intent to hurt anyone – disserves society. Congress is eroding a core element of the criminal law – the intent to do harm or unjustly enrich one’s self. I hope members of Congress and their staff will consider that, and our report, the next time someone says, “There oughta be a law.”

(cho)

May 26, 2010 in Defense Counsel, Prosecutions, Scholarship, Think Tank Reports | Permalink | Comments (1) | TrackBack (0)

Friday, May 21, 2010

The White Collar Associate

The Ohio State Journal of Criminal Law is hosting an amici blog of views from the field.  Online is a piece by Jocelyn Kelly (Jones Day, Cleveland) that is titled, "Advocacy Before the Courtroom: The Life of an Associate in a White Collar Criminal Defense Practice."

(esp)

May 21, 2010 in Defense Counsel, Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 27, 2010

Ted Olson Takes on Paul Minor's Case

Former United States Solicitor General Theodore B. Olson will represent Mississippi attorney Paul Minor in his upcoming appeal to the Supreme Court of the United States.  Olson, now with the law firm Gibson, Dunn & Crutcher LLP, moved immediately into action with an extension of time application that provides clues as to the arguments that will be forthcoming. For openers Minor's convictions are tied to the "honest services" statute, a statute under review this term in three cases (Skilling, Black, and Weyrauch). Also mentioned is the tension between the Fifth Circuit's decision in Minor's case and the McCormick and Sun-Diamond Supreme Court decisions that necessitate a quid pro quo.  The Fifth Circuit had previously vacated the convictions premised on section 666 and remanded the case for resentencing.  The Fifth Circuit in its decision also noted that both the McCormick and Evans cases "left open the question of what level of specificity is required to prove a quid pro quo in regard to the 'quo' or agreed-upon official act."  What is particularly fascinating about this case is that it has "honest services" but also includes bribery allegations.  If 1346 is unconstitutionally vague this issues may be resolved.  But if the Court distinguishes bribery cases under honest services fraud, it may open up other arguments on when a bribery would fall within the reach of the "honest services" fraud statute.

Motion - Download Minor--Extension Application (2)

(esp)

April 27, 2010 in Corruption, Defense Counsel, Fraud | Permalink | Comments (0) | TrackBack (0)

Friday, March 19, 2010

Criminal Defense Counsel - Business Should Be Picking Up

According to the latest figures, white collar prosecutions are up.  The December 2009 figures of Trac Reports here  shows a 9.2 increase from last month and a 19.9 increase from 5 years ago including magistrate court and 1.8 increase excluding magistrate court. But again, these statistics need to be examined carefully. (see here and here), especially with regard to how the term "white collar crime" is defined.

(esp) (w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports). 

March 19, 2010 in Defense Counsel, Think Tank Reports | Permalink | Comments (1) | TrackBack (0)

Sunday, February 21, 2010

Memorial Site for Jack T. Litman z"l

Benjamin and Sacha Litman have created a wonderful memorial website for Jack T. Litman here

(esp) (see background here)

February 21, 2010 in Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Saturday, January 23, 2010

Jack Litman - One of a Kind - 1943-2010

  Jack Litman, a former and long-time member of the National Association of Criminal Defense Lawyers Jack_dinner[1] (NACDL) board of directors and a past president of the NYSACDL passed away Saturday. Ted Simon, Secretary of NACDL and dear friend of Jack, described him as "an incomparable lawyer, father, and friend." As a member of the law firm of Litman, Asche & Gioiella, LLP, he handled major felony cases in New York, like the defense of Robert E. Chambers Jr.  He also represented individuals charged with  white collar related crimes.  Past NACDL President Barry Scheck, described him as a man with a Jack alone MG_0530[1]

"first rate intellect, a love of art, history, and all things Fench. But perhaps most impressive of all, sometimes with gestures of kindness and loyalty unknown to many, he delivered when it counted for his friends, his clients, and the cause of liberty.  Jack never buckled trying one of the most notorious murder cases in the history of New York City."

Jack was special to so many.  For me he was the extraordinary lawyer with whom I could discuss arcane legal issues, talk about the art museum in Vegas or just talk about life.  He was a crucial part of my NACDL family.   He was one of the nicest most caring individuals one could come across in life.  He will be missed, and my tears are for him. He was one of a kind. 

(esp) With a special thank you to his dear friend, Ted Simon, for the photographs. See also Anemona Hartocollis, NYTimes, Jack T. Litman, Lawyer for ‘Preppy Killer’ and Others, Is Dead at 66; Talkleft here; Professor Ellen Yaroshefsky reminded me of the Ethics in America, Vol. 2: To Defend a Killer program that includes Jack Litman, Justice Scalia and others as panelists.

January 23, 2010 in About This Blog, Defense Counsel, News | Permalink | Comments (4) | TrackBack (0)

Thursday, December 10, 2009

Ben Kuehne's Speech to Supporters

David Oscar Markus, Southern District of Florida Blog, Ben Kuehne Thanks His Supporters

(esp)

December 10, 2009 in Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Monday, December 7, 2009

Death Penalty - ALI Withdraws Model Penal Code 210.6

What does the death penalty have to do with white collar crime?  Perhaps the most obvious item to those who practice white collar criminal defense work, is that many white collar attorneys handle or assist on capital cases.  It therefore seems important to notice the white collar attorneys of a recent American Law Institute change.

On October 23, 2009, the ALI Council voted overwhelmingly, with some abstentions, to accept the resolution of the capital punishment matter as approved by the Institute’s membership at the 2009 Annual Meeting in May. The resolution adopted at the Annual Meeting and now accepted by the Council reads as follows:
 
“For reasons stated in Part V of the Council’s report to the membership, the Institute withdraws Section 210.6 of the Model Penal Code in light of the current intractable institutional and structural obstacles to ensuring a minimally adequate system for administering capital punishment.”

See here. Now I can't say I am unbiased in this matter, as the initial motion seeking abolishment of the death penalty by the ALI was brought by myself and Professor Roger Clark (Rutgers- Camden).

See also Franklin E. Zimring, Pulling the plug on capital punishment -The American Law Institute withdraws approval for standards it created, raising doubts about the legitimacy of execution

(esp)

December 7, 2009 in Defense Counsel, Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 25, 2009

Happy Thanksgiving - Ben Kuehne

The government dismissed Ben Kuehne's case today. For background on this case see here, here, and here. Congratulations to Attorney Ben Kuehne and to his counsel Jane Moscowitz and John Nields.  The Government's motion states in part:

"This motion is based upon the totality of the circumstances surrounding this matter, including the changed circumstances occasioned by the affirmance of this Court's dismissal of Count One of the Third Superseding Indictment. The Government believes that dismissal is in the interests of justice."

Motion - Download Kuehne dismissal order

(esp) 

November 25, 2009 in Defense Counsel | Permalink | Comments (1) | TrackBack (0)

Thursday, November 19, 2009

Shelnutt - Not Guilty

The U.S. Attorney's Office for the Southern District of Georgia has their press release telling the world of a 40 count indictment of a Columbus, Georgia attorney.  But no where on the website is the fact that a jury acquitted this same individual on all counts. As ministers of justice it should not be enough for prosecutors to merely say on the courthouse steps that they accept the jury verdict. Prosecution press releases should not be limited to indictments and guilty verdicts, but should also include the not guilty verdicts.

Shelnutt had been charged with a list of offenses that reads like someone opening the federal statutes and trying to find anything that could be used to destroy an attorney especially one who represents criminal defendants.  They charged him with money laundering, aiding and abetting a cocaine conspiracy, attempted bribery of a federal official, witness tampering, failure to file cash reporting forms, and making false statements to an FBI agent.

The bottom line is that the jury did not accept the government's case. See Chuck Williams, Ledger - Enquirer, Shelnutt acquitted -Juror says government's case 'had a lot of holes'

Mark Shelnutt was represented by a legal team headed by Thomas A. Withers, Gillen, Withers & Lake, LLC.

(esp)

November 19, 2009 in Defense Counsel, Verdict | Permalink | Comments (1) | TrackBack (0)

Monday, October 26, 2009

Eleventh Circuit Upholds Dismissal of Count One in Kuehne Case

No surprises in the Eleventh Circuit opinion affirming the trial court's dismissal of Count One in the Ben Kuehne case.  The nine page opinion authored by Hon. Barkett, and joined by Hon. Hull and Quist provides a quick response to the government's contention that 18 U.S.C. 1957 (f)(1) was "nullified" by the Court's decision in Caplin & Drysdale - not so. The court states:

It would therefore make little sense- and would be entirely superfluous-to read § 1957(f)(1) as an exemption from criminal penalties for non-tainted proceeds spent on legal representation, as those funds can always be used for any legal purpose. We do not believe Congress intended such an absurd result ...

See also David Oscar Markus, Southern District of Florida Blog here.  For background see here and here.

(esp)(w/ a hat tip to Joe Beeler)

October 26, 2009 in Defense Counsel, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Friday, October 2, 2009

NACDL's 5th Annual Defending the White Collar Case Seminar - "Getting Paid, Not Charged--Avoiding Indictment by Collecting Fees Ethically," Friday, October 2, 2009

Guest Blogger:  Jon May, Chair, White Collar Crime Section, National Association of Criminal Defense Lawyers

Panelists:  Jane Moscowitz, Martin Pinales

Over the last ten years, and particularly as a result of the indictment of prominent Miami Attorney Ben Kuehne, criminal defense counsel have had cause to be concerned that they could be the subject of prosecution solely for taking a legitimate legal fee. In this morning’s presentation by Jane Moscowitz and Martine Pinales, lawyers found reasons to be hopeful that such fears may be overblown, at least as to potential prosecution. Forfeiture of fees, on the other hand, remain a significant concern.

The Kuehne prosecution is an instance of ideology trumping common sense. Benedict P. Kuehne is the most unlikely of government targets. As Jane Moscowitz, who is one of his attorneys observed, Ben is the best of all of us. He is not just a leader of the bar—having been the President of the Miami-Dade County Bar Association and a member of the Board of Governors of the Florida Bar—he has devoted countless hours to pro bono activities on behalf of organizations representing the interests of African-Americans, Hispanics, Gays and others. He was also one of Al Gore’s principal attorneys during the Florida recount. Not surprisingly, he was Roy Black’s choice for counsel when Roy Black needed an attorney to vet the legal fees he was to be paid to represent notorious Colombian cartel leader Fabio Ochoa.

Roy Black was ultimately paid $5 million for his representation of Ochoa. Ben Kuehne earned approximately $175,000 for vetting this fee. Ben was indicted for conspiracy to launder, what the government recognized, and the indictment stated, was a bona fide legal fee.  This is despite the fact that the money laundering statute 18 U.S.C. Sec. 1957 contains a specific exemption for the receipt of funds necessary to preserve the Sixth Amendment. It was the government’s position before the District Court and just recently before the Eleventh Circuit in their appeal from the dismissal of this count, that the decision of the Supreme Court in Caplin and Drysdale nullified this exemption. The district court, however, was persuaded that it was the intent of Congress to protect counsel from prosecution, even if attorney’s fees could be forfeited. It appears from the tenor of the oral argument, which I was present to see, that the government’s theory is being met with the same level of skepticism that it received by Judge Cooke.

Martin Pinales discussed his experience dealing with government efforts to seize legal fees. Even in instances where the AUSA states that she has no intent to seize fees, counsel can be faced with a post trial effort by the government’s money laundering/forfeiture counsel to claw back those fees. Strategies were discussed for dealing with that problem. One way is to be paid by a third party from monies totally unconnected to any alleged criminal activity. Where money is obtained from the defendant, it is important to insure that the money did not come from any source named in a forfeiture count. And counsel should do due diligence even as to assets that could be later characterized as a substitute asset. It was also important to have your retainer agreement tie fees received to services provided. Where the funds are clearly substitute assets, counsel who takes these steps will have a better chance of demonstrating that they are bona fide purchasers for value in later forfeiture proceedings.

During the seminar, other important issues were raised. In many districts, counsel do not have to worry about their fees if their clients cooperate. Doesn’t that create a conflict of interest? You can charge a flat fee so long as you can demonstrate that it was earned. But don’t call it non-refundable (unless you practice in Florida, but it still has to be reasonable). The final irony, and outrage, discussed was the fact that the indictment against Ben also includes forfeiture count. The government is seeking to forfeit from Ben,  the $5 million that Roy Black received. 

(jm)

October 2, 2009 in Attorney Fees, Conferences, Defense Counsel, Forfeiture, Legal Ethics, Money Laundering | Permalink | Comments (0) | TrackBack (0)

Thursday, October 1, 2009

NACDL's 5th Annual Defending the White Collar Case Seminar - "Choppy Waters - The Ethics of Privilege and Disclosure," Thursday, October 1, 2009

Guest Blogger:  Peter D. Hardy, Post & Schell, P.C. (Philadelphia, PA)

Moderator:  Gerald B. Lefcourt

Panelists:  Robert Cary, Hon. Nancy Gertner, Prof. Bruce Green, Paul Shechtman, Larry Thompson 

Gerald Lefcourt noted that it has been over 46 years since the Brady decision was issued, yet we still have no firm definition of Brady that most federal prosecutors can follow.  There are varying and conflicting practices amongst prosecutors in regards to definitions and the proper time frame for disclosures.  Moreover, incidents of Brady violations or potential violations are not uncommon.

Robert Cary represented Senator Ted Stevens.  The heart of the defense was a note that Senator Stevens had sent to Bill Allen, the key government witness and the builder making improvements on the Senator’s chalet, which stated in part that the Senator wanted to make sure that Allen got fully paid, and that “friendship is one thing, but compliance with these ethics rules is another[.]”  The government responded to this note by eliciting testimony from Allen that the note was just the Senator trying to concoct a cover story.  After the guilty verdict, the second FBI agent on the case filed a self-described whistleblower complaint regarding conduct by the prosecution team.  The Court ordered the government to provide discovery regarding the complaint, and a new prosecution team was put in place.  New discovery contradicted directly the government’s theory and evidence at trial that Allen regarded the note as a mere cover story.  Carey described the Attorney General as a hero for moving to dismiss the case.  All of this happened only after a long trial and post-trial process (as well as Senator Stevens losing his re-election bid).  Judge Sullivan, who oversaw the case, is to be commended for being careful and not simply taking the government’s word.

So, what should be done?  Judge Gertner explained that the solution needs to involve the rules (ethical, court, and criminal procedure).  The case law has slid into an outcome-determinative approach, which makes it very hard for the prosecutor to predict.  The materiality standard is colliding with the harmless error doctrine.  Brady had more to do with a failure to turn over evidence impugning the system, rather than predictions regarding potential outcomes.  The definition of Brady should be re-assessed, and there also should be deadlines set for when information should be turned over:  for example, 28 days before.

Professor Green described how the ABA code of ethics set forth in the 1970s a discovery rule for prosecutors:  you must turn over information that would tend to negate the guilt of the accused.  Everyone had assumed that this rule overlapped with Brady.  But, the rule is not co-extensive with Brady – for example, it does not have a materiality standard.  Rather, it categorically requires the disclosure of favorable information, or information which might lead to favorable evidence.  A materiality test is really directed at post-conviction review, and is not well suited to govern the conduct of prosecutors at the time they are making their discovery decisions.  Defense attorneys also need to know about exculpatory information in order to assess a case and decide whether or not to proceed to trial.

Paul Shechtman described federal plea agreements in New York which require waivers by the defendant of either impeachment and/or all exculpatory information.  These plea waivers apparently run afoul of the rules just described by Professor Green.  Current cases strongly suggest that prosecutors need more education regarding their obligations under Brady, in order to be better able to appreciate the exculpatory value of evidence.  We need to reassess Brady, which has been hijacked by the materiality doctrine.  The burden now is on the defendant to show materiality.  In Brady, Justice Marshall wrote in dissent that the test instead should be harmless error, in which the government has the burden to show that the conviction should not be reversed.  The materiality requirement invites courts to preserve convictions, despite poor decisions and poor decision-making processes by prosecutors.

Larry Thompson described a case in Detroit in which the prosecutor made false statements to the Court, and actually was prosecuted himself.  Judge Gertner noted that part of the problem here is lack of meaningful remedies.  There is professional discipline, but discipline is unlikely.

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October 1, 2009 in Conferences, Defense Counsel, Investigations, KPMG, Legal Ethics, Privileges | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 30, 2009

Beware of What You Say to Counsel Representing a Corporation

The Ninth Circuit Court of Appeals issued a decision in United States v. Ruehle,a case that opens by saying "[w]e here explore the treacherous path which corporate counsel must tread under the attorney client privilege when conducting an internal investigation to advise a publicly traded company on its financial disclosure obligations."  The lower court had suppressed "all statements from former CFO William J. Ruehle to attorneys from Irell & Manella LLP, Broadcom's outside counsel, regarding the stock option granting practices at Broadcom."  In reversing this decision, the Ninth Circuit, rejected the lower court finding that Ruehle "had a reasonable belief that Irell and Manella were his lawyers prior to the June 1, 2006 interrogation by Irell, and that he never gave informed written consent, either to the dual representation by Irell or the disclosure of privileged information to third parties..."  The Ninth Circuit found that the lower court had "applied a liberal view of the privilege that conflicts with the strict view applied under federal common law, which governs here."  The Ninth Circuit stated that it "reject[s] the district court's contrary finding that an expectation of confidentiality was established because, upon review of the record, we are left with the 'definite and firm conviction that a mistake has been committed' and thus we determine that this factual finding was clearly erroneous." Some thoughts on this decision:

  • Although at first glance it may seem like the Ninth Circuit is usurping a factual finding of the lower court, there is more to this picture -  it is factual finding, yes, but one that had been determined by a different legal standard.  What is interesting here is that the Ninth Circuit chose not to remand to the lower court when changing the operative standard for determining the issue.  On the other hand, the court's decision implies that the evidence does not create a factual question.
  • Every corporate officer needs to be aware that statements made during an internal investigation may end up in the government's lap. One can't always count on an attorney client privilege to protect these statements.
  • Outside counsel's job in conducting internal corporate investigations may have just been made more difficult as one wonders if corporate officers will want to cooperate in corporate counsel's internal review.  

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September 30, 2009 in Defense Counsel, Investigations, Privileges | Permalink | Comments (1) | TrackBack (0)