Monday, June 2, 2014
Second Circuit Reverses Convictions Due to Prosecutorial Misconduct and Exclusion of Good-Faith Evidence
The Second Circuit Court of Appeals, which issues complete reversals in only about five percent of the criminal cases it hears, last week in an opinion by Judge Jed S. Rakoff (sitting by designation) reversed the trial conviction of two individuals and a corporation for environmental crimes involving asbestos removal, and ordered a new trial. United States v. Certified Environmental Services, Inc., et al. (see here). The reversal was based on the denial of a fair trial due cumulatively to the exclusion of evidence of good faith to demonstrate the defendants' lack of intent (an issue not discussed here) and prosecutorial misconduct in improper "bolstering" during the opening and closing arguments. The Court denied that part of the defendants' appeal based on Brady v. Maryland.
The decision does not concern any novel legal grounds. Perhaps most significant in the white-collar area is its detailed discussion of the proper and improper use by prosecutors of the cooperation agreements their witnesses commonly enter into with the government. Since many, probably most, white-collar cases involve cooperating government witnesses, prosecutorial introduction of and comments on cooperation agreements frequently occur in white-collar trials. Here, the prosecutor improperly bolstered the witnesses' testimony on numerous occasions, both in the opening and closing arguments, by referring directly and indirectly to the self-serving language that prosecutors routinely place in the cooperation agreements they draft to the effect that the witnesses are obligated to tell the truth. Prosecutors and defense attorneys would do well to review the opinion to determine when and how the government may disclose and use the truth-telling requirement language of cooperation agreements during testimony and in argument.
The opinion also excuses, but does not condone, the improper failure of the government to turn over handwritten notes by a testifying agent which were discovered in the later examination of another agent and belatedly revealed to the defense. The notes should have been revealed earlier, says the Court, not only since they included evidence favorable to the defense, but also pursuant to Fed. R. Crim. Pro. 16(a)(1)(B)(ii), a discovery rule, and 18 U.S.C. 3500, the Jencks Act. However, since the notes were, however belatedly, turned over and the defense had an opportunity to review them, examine the later-testifying agent about their content, and recall the earlier witness if it chose, and since their timely disclosure would not have changed the verdict, in any case there was no Brady violation. The opinion thus demonstrates that late provision of Brady (or Rule 16 or Jencks) by the government during trial will virtually never be grounds for reversal, at least not in the Second Circuit.
Thursday, November 29, 2012
We recently saw BP settling with a record $4 billion in criminal fines and penalty. See here. And as noted then -
"The guilty plea entered by BP provides that the 'Department agrees
that, if requested to do so, it will advise any appropriate suspension or
debarment authority that, in the Department's view, the defendant has accepted
criminal responsibility for its conduct relating to the Deepwater Horizon
blowout, explosion, oil spill and response by virture of this guilty plea and
that BP is obligated pursuant to this agreement to cooperate in any ongoing
criminal investigation by the Department relating to the Deepwater Horizon
blowout, explosion, oil spill and response.' But it does state that '[n]othing
in this agreement limits the rights and authority of the United States of
America to take further civil or administrative action against the defendant
including but not limited to any listing and debarment proceedings to restrict
rights and opportunities of the defendant to contract with or receive
assistance, loans and benefits from United States government agencies.'"
Reports are showing now that it is federal regulators that are temporarily suspending BP from government contracts. Although as noted on law.com by Jenna Greene, Feds slam BP's ethics, bar oil giant from contracts it is unclear how long of a period this suspension will last. (see also Michael Pearson, CNN, The spill: How much should BP suffer?)
The real question will be whether the criminal fine or the civil suspension will carry the most deterrence and punishment. This raises an important issue of whether corporate criminal liability is really the best route, or whether civil remedies can provide better compliance with the law and regulations. Most importantly, it is good to see regulators acting. It would be even better if regulatory actions were proactive, as opposed to reactive - after something has occurred.
Thursday, November 15, 2012
According to a DOJ press release - BP agreed "to pay a record $4 billion in criminal fines and penalties." BP had an Information filed against it for "seaman's manslaughter," and violations of the "clean water act, migratory bird treaty act, and obstruction of congress."
The guilty plea entered by BP provides that the "Department agrees that, if requested to do so, it will advise any appropriate suspension or debarment authority that, in the Department's view, the defendant has accepted criminal responsibility for its conduct relating to the Deepwater Horizon blowout, explosion, oil spill and response by virture of this guilty plea and that BP is obligated pursuant to this agreement to cooperate in any ongoing criminal investigation by the Department relating to the Deepwater Horizon blowout, explosion, oil spill and response." But it does state that "[n]othing in this agreement limits the rights and authority of the United States of America to take further civil or administrative action against the defendant including but not limited to any listing and debarment proceedings to restrict rights and opportunities of the defendant to contract with or receive assistance, loans and benefits from United States government agencies."
The agreement includes an attachment for monitors. It also provides that the North American Wetlands Conservation Fund will receive $100 million. As a part of the probation, special conditions are included in an Order which includes $350 million to the National Academy of Sciences and $2.394 billion to the National Fish and Wildlife Foundation.
While at the same time that we see the company pleading guilty, we see that individuals are indicted - two "BP supervisors onboard the Deepwater Horizon on April 20, 2010 – are alleged to have engaged in negligent and grossly negligent conduct in a 23-count indictment charging violations of the federal involuntary manslaughter and seaman’s manslaughter statutes and the Clean Water Act." Another is "charged with obstruction of Congress and making false statement to law enforcement officials."
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.
Saturday, March 3, 2012
This panel was moderated by Joseph G. Block (Venable). Panelists were Richard E. Byrne (Exxon), Marc R. Greenberg (Keesal, Young, & Logan), Gregory F. Linsin (BlankRome), and Stacey H. Mitchell (Chief, Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice). The panel covered issues related to the ongoing investigation into Deepwater Horizon, Lacey Act violations, vessel pollution, and a host of other white collar related environmental matters.
The panelists talked about how to handle legal issues arising with emergency responders. Several panelists noted that the most important thing is to mitigate damages to injured, being candid to first responders, and telling them what they need to know - such as where folks may be.
When there is death or significant environmental damage occurs, you can expect that the government might investigate. Richard Bryne said you need to presume investigation - you need to set up a privileged internal investigation
The panelists talked about how to handle searches. Some panelists on the corporate side commented that you should have a developed plan in place; get to the facility as quickly as possible; instruct individuals to cooperate with the search warrant but also telling them that there is no way they must agree to be interviewed. The importance of truthfulness was stated. From the government perspective there is concern about the safety of agents.
The corporate and defense attorney panelists discussed approaches in giving Upjohn warnings to employees being interviewed. It was noted that Upjohn warnings can trigger questions from the employees being interviewed. It may be difficult for the company because they may not know at this point whether they will cooperate with the government in resolving the matter. There is also the question of whether to appoint counsel for company employees.
(esp)(blogging from Miami Beach, Florida)
Wednesday, July 6, 2011
It is not often that companies are criminally charged, and usually when it happens, regardless of the merits, we see the company enter a guilty verdict or enter into a deferred prosecution agreement (see here). But not Xcel Energy, Inc. and Public Service Company of Colorado. They were charged, they exercised their right to a jury trial, and were found not guilty after close to a month-long trial.
The Justice Department brought criminal charges against this Fortune 250 public company alleging safety violations - OSHA violations - in the deaths of five contractors at a hydro-electric power plant in Colorado.
Clearly this is an incredibly sad situation, with many families suffering and one cannot help but have the deepest sympathy for each person who has suffered here.
But one also has to wonder whether our criminal justice system should be used for prosecutions alleging OSHA violations from industrial accidents. Would these matters be better left for the administrative and civil process? And would our scarce resources be better spent educating companies on how best to keep workers' safe?
The company was represented by Cliff Stricklin, Chair of Holme Roberts & Owen's White Collar & Securities Litigation Group in Denver, Colorado. Stricklin also is an adjunct professor teaching white collar crime at University of Colorado School of Law.
See also John Ingold, Denver Post, Xcel Energy Found Not Guilty in 2007 Deaths of Five Workers in Colorado
Tuesday, April 19, 2011
A DOJ Press Release here reports on a Massachusetts fish packer being "found guilty of falsely and misleadingly labeling frozen fish fillets." Clearly this conduct sounds improper? But is this the kind of conduct we want to criminalize and spend funds for prosecution? Could we accomplish the same deterrence in a less costly way by proceeding civilly with fines?
Monday, January 17, 2011
The Obama Administration was expected to increase environmental crime enforcement as part of its overall commitment to environmental justice. For the first two years, the record has been mixed and the expected increase against corporate defendants never materialized. That may soon change.
FY 2010 saw an increase in the number of individuals, as opposed to corporations, charged with environmental crimes, from 74 percent in FY 2009 to 76 percent in 2010. Criminal charges were brought against 289 defendants during FY 2010 and, of those 289 defendants, 251(87 percent) included charges against individual criminal defendants. These enforcement results are consistent with the EPA/DOJ’s renewed emphasis on maximizing the deterrent effect of its prosecutions.
In 2010, the number of criminal prosecutions against companies declined, but the number of individual prosecutions increased in the last year. Additionally, both individual and corporate criminal defendants can expect stiffer penalties for environmental crimes, in keeping with the EPA’s mission to achieve maximum deterrence.
The EPA’s Strategic Plan outlines a planned 20 percent increase in criminal prosecutions against individuals and corporations. The increased focus on criminal prosecutions reflects a decision by the EPA to increase criminal cases involving waste dumping and other statutory violations where significant harm to the environment or death or serious injury do not occur. In addition, electronic reporting will become a new area ripe for criminal enforcement, as the EPA shifts away from paper records and moves toward requiring regulated entities to certify compliance via e-filing.
In any year, there are only a handful of environmental crime incidents involving death or serious bodily injury. While the agency will certainly investigate and prosecute those serious, the new effort is aimed at increasing the less glamorous environmental crimes – i.e. false reporting or illegal storage or disposal of waste that may not cause serious environmental harm.
In order to carry the increased caseload, the EPA has increased its staff of criminal investigators – 25 new agents are scheduled to start in the beginning of the year, bringing the total staff to over 200 criminal investigators, and another 25 new agents are scheduled to begin in May 2011. During the early 2000s, EPA cut its number of agents to well below 200 in violation of the 1990 Pollution Prosecution Act—following which the agency embarked upon a three-year hiring strategy to restore EPA CID to present numbers.
Corporate compliance officers would be well informed to review their company’s environmental compliance programs, increase compliance efforts, and allocate additional resources to prevent any possible criminal investigation.
Friday, December 17, 2010
The federal government charged Glenn Straub, and his company Palm Beach Polo Holdings, Inc., with filling in two wetlands within the jurisdiction of the United States in violation of the Clean Water Act, 33 USC 1319. The case involved two pieces of property in Wellington, Florida.
In fact, Straub engaged a contractor to remove Melaleuca trees and Brazilian Pepper trees from two of his properties. The State of Florida recognizes these plants as invasive noxious weeds which destroy wetlands. Straub obtained a vegetation removal permit from the Village of Wellington prior to starting the work, and hired a contractor who used a rotary cutter specially designed to avoid any impact on the soil.
The case was brought in the Southern District of Florida. The trial, in Ft. Lauderdale, lasted six days. Yesterday, after deliberating four hours, the jury found both defendants not guilty on all counts. Congratulations to Straub’s attorney, Stephen Binhak, of Miami, and Palm Beach Polo Holdings’ attorney, Craig Galle, of Wellington.
Wednesday, September 8, 2010
Guest Blogger - Dan Cogdell
As the Justice Department prepares a grand jury investigation of possible crimes involved in the BP oil spill, ex-CEO Tony Hayward is looking smarter for leaving this country for reasons beyond his lack of popularity.
Multiple indictments are likely to be sought, charges could reach well up the corporate ladder and British citizens who are not in this country when indicted might have protection from “double criminality,” which prevents extradition unless the same action is a criminal offense in both countries. It’s very possible the Justice Department will stretch the envelope and that could put their use of U.S. laws in a place not covered by European Union law.
There is no question the federal government is taking dead aim at environmental crimes in the BP oil spill or that the legal artillery is formidable. Federal prosecutors were already ramping up their environmental crime filings before the Deepwater Horizon started spewing oil into the gulf. Now, with massive public pressure, this could be the environmental version of the Enron prosecutions.
This week (8/23-8/27) the U.S. Coast Guard and the Interior Department are holding hearings in Houston to further investigate the BP disaster. Witnesses who invoke the Fifth Amendment may not look like team players, but they will be taking the smartest path.
Expect prosecutors to take fullest advantage of the powerful and far-reaching tools they have available. Expect them to issue more than just wrist slaps and corporate fines out of the Refuse Act, the Migratory Bird Treaty Act and the Clean Water Act. Expect them to seek jail time. There is a lot going in their favor.
Prosecutors will most assuredly rely on the “Responsible Corporate Officer Doctrine,” which allows Clean Water Act violations to be directed at even top corporate officers. Prosecutions under this theory have resulted in convictions of people who were not even at work sites and, in one case, not even working for a company but had “honorary power.” (See United States v. Hanousek, 176 F. 3rd 1116 (9th Cir. 1999), cert. denied, 528 U.S. 1102 (2000), and United States v Brittain, 931 F2d 1413 (10th Cir. 1991)) The “Responsible Corporate Officer Doctrine” may be the prosecutor’s ticket to tag BP’s hierarchical elite while soothing the related political nightmare currently facing the U.S. government.
In a Clean Water Act misdemeanor case, the government does not have to prove that anyone intentionally caused this enormous harm. Negligence is a comfortably lower bar for these prosecutors. And this isn’t BP’s first rodeo. A company culture that prosecutors contend encourages money-saving over safety has landed BP in the government’s sights time and time again, and will only bolster the prosecutor Howard Stewart’s efforts.
Whether BP employees or contractors believe they are targets or not, they must balance the idea of seeing justice done with protecting themselves and their employer. Taking the Fifth at this point may be the least popular but most prudent move.
Dan Cogdell is a Houston-based criminal defense attorney with Cogdell & Ardoin who has represented numerous clients in environmental and white-collar criminal cases.
Monday, June 14, 2010
Guest Blogger - Benson Weintraub
The daily images of oil soaked wildlife and soiled beaches—not to mention the loss of human life from British Petroleum’s Deepwater Horizon explosion on April 20, 2010—is a reminder that corporate crime can only be reduced by a change in corporate culture. However, BP failed to heed this organizational imperative.
In United States v. BP Products of North America, Inc., 610 F.Supp.2d 655, 660 (S.D. TX. 2009),"BP Products North America, Inc. entered a plea of guilty to an information charging a felony violation of the federal Clean Air Act. The charge arises from the March 23, 2005 explosion at the Texas City, Texas plant that killed 15 and injured scores. The plea agreement stipulates the sentence: a $50 million fine and three years of probation with the conditions that BP Products comply with a Settlement Agreement reached with the Occupational Safety and Health Administration ("OSHA") and an Agreed Order imposed by the Texas Commission on Environmental Quality ("TCEQ")."). BP also paid more than $1 billion in restitution.
The 74 page decision addresses restitution, corporate fines, Apprendi, and claims under the CVRA.
DOJ has now commenced a criminal investigation of BP’s handling of the 2010 explosion and events leading up to it.
Be assured that one focus of BP’s counsel is on application of the Corporate Sentencing Guidelines and the firm’s prior criminal history. One point would be assessed under USSG §8C2.5(c)(1) because the instant offense was committed by "the organization (or separately managed line of businesses)" after a "criminal adjudication based on similar misconduct" within the past 10 years. Id.
Before the threat of receivership takes hold, BP’s lawyers would be well-advised to get ahead of this problem by enforcing their compliance programs and making voluntary disclosures rather than obstructive comments.
Friday, May 8, 2009
See Grace Case, A Joint Project of the School of Law & the School of Journalism, W.R. Grace not guilty on all counts (and hats off to all the students and professors involved in the wonderful blog coverage of this trial).
Note above website seems to be down. See also WSJ Blog here
Sunday, December 30, 2007
John Wesley Hall, at FourthAmendment.com tells of a recent OSHA case that held that "[t]here is no constitutional right to a pre-execution contempt hearing and that administrative warrants, like criminal warrants, can be executed by means of reasonable force." Attorney Hall talks about the recent Fifth Circuit decision in Trinity Marine Products v. Chao which held that:
"Over the objection of Trinity Marine Products, Inc. ("Trinity"), but pursuant to an administrative search warrant, compliance officers from the Occupational Safety and Health Administration ("OSHA") inspected a workplace owned by Trinity and issued citations. Trinity claims that the search violated the Fifth Amendment because OSHA threatened to arrest Trinity personnel who interfered with the search, but the constitutionally required method to execute administrative warrants when the targeted party refuses to acquiesce is to commence a civil contempt proceeding, which OSHA did not do.
An administrative law judge ("ALJ") heard and rejected Trinity’s argument. Trinity petitions for review. Because Trinity’s contention finds no support in the Constitution or precedent, we deny the petition."
Monday, November 19, 2007
A DOJ Press Release reports on the indictment of a Texas company and two individuals associated with the company. The Press Release states that "the president and owner of [a Texas Oil Company], and .... the company’s operations manager, were arrested and charged today with illegally disposing of hazardous waste at facilities only approved to take oil and gas production waste. [The company], a licensed hazardous waste transporter and used oil handler, was also named in the indictment." They were "charged with 14 felony counts including conspiracy, violating the Safe Drinking Water Act and violating the Resource Conservation and Recovery Act."
Sunday, October 28, 2007
The 11th Circuit Court of Appeals reversed an environmental conviction, and in the process provided a clearer understanding of what constitutes navigable waters. Finding that a "significant nexus" test was not used in the jury instruction, the court found error and further found that the government had not met its burden of showing this as harmless error. The case was remanded for a new trial. The opinion can be found here.
(esp)(w/ a hat tip to Steve Glassroth)
Tuesday, October 23, 2007
Sunday, September 9, 2007
A DOJ Press Release tells of a "three-year undercover operation conducted by federal agents of the U.S. Fish and Wildlife Service" and how this investigation "led to the arrests [ ] of five individuals for their roles in illegal international trade of exotic skins and parts manufactured from sea turtles and other protected species of wildlife." And this investigation, after three years, led to 2 indictments of 54 money laundering, smuggling, and conspiracy charges. The DOJ Press Release states that:
"Sea turtles are protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a multilateral treaty of which the United States, Mexico and approximately 170 other countries are parties. CITES prohibits international trade in sea turtles or their parts or products for commercial purposes, and also restricts international trade in many other species of wildlife involved in this case which are deemed at risk of extinction and are, or may be, affected by international trade. Five of the seven species of sea turtles are listed as “endangered” in all or part of their range, pursuant to the according to the Endangered Species Act. A sixth species is listed as “threatened.” Six species of sea turtles are found on and along the coasts of Mexico."
Tuesday, July 24, 2007
The Washington Legal Foundation (WLF) issued a press release telling of its filing of a federal lawsuit in the Western District of Louisiana. The lawsuit alleges that the plaintiff was "maliciously prosecuting" by the government "for allegedly storing a hazardous substance without a permit from the Environmental Protection Agency (EPA)."
Press Release -
Sunday, June 17, 2007
In a press release of the Department of Justice, it tells that Nevada Power will be paying 60.7 million in a Clean Air Act settlement. The release notes that "this is the first NSR settlement with an electric utility concerning alleged violations at a gas-fired power plant. It is also the second NSR settlement in the past year in the Western United States."
Saturday, June 16, 2007
The Washington Legal Foundation has petitioned "the Environmental Protection Agency (EPA) to revise its criminal enforcement policy and practices to ensure that more reasonable non-criminal remedies - including administrative and civil remedies - are utilized as Congress intended to address alleged violations of the myriad of complex environmental laws and regulations." Press Release here -
The 13 page filing by this organization provides an array of examples to support its position. and further describes the prosecutorial discretion that permits "a growing number of unwarranted and abusive criminal prosecutions, particularly against smaller businesses, and their owners, and employees, for violations of federal laws and regulations." It will be interesting to see if the government responds.
Their petition can be found here-