Monday, April 18, 2011
The Ninth Circuit Court of Appeals in U.S. v. Pelisamen ruled that "where the jury returned a special verdict form indicating that it had convicted the defendant on both theories" ("money and propery" and "honest services") the conviction remains valid post-Skilling because the jury has designated that it convicted the defendant on both theories. This case differs from the Skilling remand, where there was an alternative theory issue. Here in Pelisamen it is clear that the jury looked at both items and convicted on both. But one also has to wonder if evidence of honest services taints the jury with prejudicial evidence. And one additionally has to wonder why the government felt it necessary to charge honest services if they had such a strong case premised on "money or property."
(esp)(hat tip to Linda Friedman Ramirez)
Thursday, April 14, 2011
A fascinating opinion vacating convictions and reversing the district court, was issued by the Sixth Circuit in the case of U.S. v. Ford. This appeal concerned convictions for false statements and two counts of "honest services" wire fraud. This case does not pertain to another case against Ford in which he was sentenced to 5 1/2 years imprisonment.
The government's problem with the 1001 conviction was that the statute was inapplicable to the defendant's conduct. Section 1001 requires federal jurisdiction. As stated by the court in noting the defendant's argument, "while the facts that he failed to disclose concerned an entity inseparable from federal ties, the entities to which he failed to disclose those facts were anything but federal." The court noted that the "failures to disclose financial interests were related to functions of the state government of Tennessee - the senate's and election registry's reporting requirements." The court also used the rule of lenity in support of its vacating these convictions.
The wire fraud counts were easier - Skilling limited honest services to "bribery and kickbacks," and that was not the case here.
Friday, April 1, 2011
This week's Sentencing Guidelines opinion from the Third Circuit in United States v. Negroni underscores the importance of forcing district courts to create an adequate record at sentencing hearings. Paul Negroni and James Hall IV pled guilty to mail and wire fraud, among other crimes. They were knowing participants in a massive fraud scheme. Hall's original Guidelines range was 87-108 months, reduced to 46-57 months after the district court struck Paragraph 45 of the PSR, which had provided the factual support for a 6-level "250 or more victims" enhancement. The judge then downwardly varied to a 15 month sentence. Negroni's Guidelines range was 70-87 months. The judge downardly varied to a probated sentence with 9 months home detention. The Third Circuit vacated both sentences, because of the procedural unreasonablemess of the downward variances, and remanded for resentencing, I have commented previously on the disturbing trend in federal circuit courts of reversing downward variances based on alleged procedural irregularities, thereby gutting Gall and Kimbrough. The Fourth Circuit is particularly notorious for this.
But district judges must step up to the plate and do their part. In Negroni, the sentencing court struck Paragraph 45 of Hall's PSR, but clearly failed to articulate on the record its reason for doing so. The district court also failed to adequately articulate the substantial downward variance it granted to Negroni. Instead, like so many sentencing judges, it rather rotely recited the Section 3553 factors without intelligently discussing most of them or specifically applying them to the facts of Negroni's case and personal history.
It is really not that hard for a district judge to make an adequate procedural record. Defense counsel must force the sentencing court to discuss each Section 3553 factor and apply it in some fashion to a defendant's unique circumstances. How does counsel do this? By literally providing, in writing and in advance, a paint-by-numbers guidebook for the court. I do not know if that was attempted in Negroni. Perhaps it was. It is not always psychologically easy, in the midst of a hearing, to convince a judge who is ruling in your favor to touch all the bases. But don't kid yourself--the circuit courts are waiting, and itching, to send these babies back. Better to educate the district court beforehand, through your sentencing memorandum, about the procedural requirements for a downward variance.
Here is the opinion. Hat tip to Greg Poe for sending this decision our way.
Thursday, March 17, 2011
A Ninth Circuit opinion in United States v. Harrell examines a question of first impression for the 9th Circuit: "whether the 'relating to' parentheticals within 18 U.S.C. s 1028A(c) limit the statute's otherwise clear articulation of which offenses may serve as predicates for application of s 1028(a)." Among the charges against Harrell were a charge of aggravated identity theft. The court held that "'relating to'parentheticals do not limit the statute's effect, but serve simply as descriptive aids." Finding the plain text clear, the court did not "trudge through the deep mud of legislative history." Neither did the court use the rule of lenity.
A DOJ Press Release says: "Three former executives of Fair Financial Company, an Ohio financial services business, were arrested today and charged in an indictment filed in the Southern District of Indiana for their roles in a scheme to defraud approximately 5,000 investors of more than $200 million." The press release also states that "'These arrests follow the largest corporate fraud investigation in the history of the FBI in Indiana which resulted in over 5,000 victims and an estimated loss of $200 million dollars,'said Special Agent in Charge Welch."
Indy.com here. Check out the picture - Was a perp walk really necessary in a case like this?
Indictment - Download Durham
Discussed here is the alleged Brady violations in the James A. Brown case, a former Merrill Lynch executive who was convicted of perjury and obstruction and is contesting these charges on several grounds. Then posted here was a brief filed in the Brown case that argued concerning a possible conflict because Lanny Breuer's name appeared on the brief and he was conflicted out of the case. The government now responds basically saying that this is just a clerical error.
Government's Brief - Download Filed Version of Government's Opposition to Brown's Motion to Strike
Tuesday, March 15, 2011
As noted here (KTUU.com, Weyhrauch Gets Fine, Probation in Corruption Case Plea) and also Becky Bohrer, Anchorage Daily News (AP),Weyrauch Gets Suspended Jail Sentence, $1,000 Fine , the Weyhrauch case is finally being resolved. But lets look at what is happening here -
Weyhrauch was initially charged with an individual named Kott, who is now awaiting a ruling on whether his case will be dismissed for discovery violations. Perhaps we have a preview of the reasoning of the Ninth Circuit Court of Appeals by the decision last week in the Kohring case that found that the government had failed to provide Brady material to the defense. (see here, here, and here).
Weyhrauch's case went to the Supreme Court as one of three cases being examined as part of the "honest services" doctrine that prosecutors stretched to a point that the Court decided to place new limits upon -- requiring a showing of "bribery and kickbacks." In its ruling in Skilling, the Court did not directly address the question raised in the Weyhrauch case as to whether you needed a violation of state law for a mail fraud charge that uses honest services. Rather the Court reframed the question with a new test of "bribery or kickbacks." (see also here)
Now Weyhrauch is back in court pleading to the charge noted in the articles above. In dismissing the federal case against him he filed a non-opposition to the motion to dismiss as follows:
"Weyhrauch non-opps the motion to dismiss for two reasons. First, this was a very weak case from the beginning and all the evidence the government ever really had was that Weyhrauch had participated in, aided, or abetted a lobbyist engaging as a lobbyist without being registered. See, attached Exhibit 1, Information and Plea Agreement. Now that Weyhrauch has pled to that crime in state court, there are no longer facts to support a federal indictment. Second, Weyhrauch believes there is evidence to support dismissal of the indictment because of "misconduct before the grand jury which returned the indictment against Weyhrauch." (reference to a letter filed under seal), which is filed under seal because it refers to grand jury testimony and other grand jury proceedings. If the standard is that dismissal is appropriate when the ends of justice are served, then this case qualifies by any measure."
The more important question is: Did the ends of justice warrant the federal government using the mail fraud statute to bring this alleged state case in the first place?
AG Holder speaking at the Detroit Health Care Fraud Prevention Summit stated:
"In just the last fiscal year, we obtained settlements and judgments amounting to more than $2.5 billion in False Claims Act matters alleging health care fraud – the largest annual figure in history and an increase of more than 50% from fiscal year 2009. We also opened more than 2,000 new criminal and civil health care fraud investigations, reached an all-time high in the number of health care fraud defendants charged, stopped numerous large-scale fraud schemes in their tracks, and returned more than $2.5 billion to the Medicare Trust Fund and more than $800 million to cash-strapped state Medicaid programs."
Full press release here.
Friday, March 11, 2011
The Third Circuit Court of Appeals examined convictions on five counts of honest services mail fraud in violation of 18 U.S.C. §§ 1341 and 1346 and one count of extortion under color of official right in violation of 18 U.S.C. § 1951(a) and vacated the convictions and sentences on the honest services counts, See opinion here. The defendant had argued:
"(1) in light of Skilling, the District Court erred in instructing the jury that it could convict him under the [honest services mail fraud] HSMF Counts based on the Concealed Conflict Object; (2) his HSMF convictions must be vacated because the error concerning the Concealed Conflict Object was not harmless beyond a reasonable doubt and (3) his Extortion Count conviction should be vacated due to "prejudicial spillover" from the HSMF Concealed Conflict Object error. Alternatively, [the defendant] contends that his convictions should be vacated because the District Court erroneously charged the jury in several other respects."
The court held:
"Upon careful review of the record below, it is not possible for us to conclude beyond a reasonable doubt that a rational jury would have convicted [the defendant] based solely upon the Bribery Object. At trial, the Government inextricably intertwined evidence of bribery and concealment. The District Court itself specifically charged the jury that it might convict [the defendant] on either the Bribery Object or the Concealed Conflict Object, and the District Court's evidentiary rulings throughout the trial may have been affected by the existence of the Concealed Conflict Object charges. Moreover, there is no escaping the fact that, while understandably emphasizing the Bribery Object to a greater degree, the United States did argue that the Concealed Conflict Object alone was a sufficient basis for conviction."
Thursday, March 3, 2011
This panel was moderated by Professor Julie O'Sullivan of Georgetown Law School.
It started with Denis J. McInerney, Chief of the Fraud Section of the Criminal Division of the Department of Justice, who gave the history of the mail fraud statute from its inception up to the Court's decision in Skilling.
The second panelist was Martha Boersch of Jones Day. She spoke about the 110 cases that have been examined post-Skilling. Some circuits have said a fiduciary duty is required - but not all circuits have held this. Another big issue is whether the government has to prove a quid pro quo - she noted the split in some court cases on this issue. There is also uncertainty as to what a quid pro quo would be in this context. Does the government have to prove a contemplated economic harm? There are likely to be future cases on the definition of honest services coming from instructions given in mail fraud cases.
The third speaker wasFrank Razzano, Pepper Hamilton,who spoke about five open questions: 1) Does it require a fiduciary duty? (He said you should make sure that there is a breach on the part of the payor); 2) Is legislation necessary to address this issue or is there a way around this for prosecutors; (He spoke about the case of U.S. v. Jain here- how you can use a pecuniary theory of mail fraud; 3) Does Skilling limit the stream of benefits theory? 4) He noted that you need to analyze the intent of the payor and payee carefully 5) Gratuities - does honest services fraud include this, or is it limited to bribery? He looked at some of the cases where these issues had arisen.
Finally Professor Julie O'Sullivan talked about congressional acts that have been introduced since Skilling.
(esp)(blogging from San Diego)
This afternoon breakout session on public corrruption was moderated by Joshua R. Hochberg (McKenna, Long & Aldridge).
Jack Smith, Chief of the Public Integrity Section of the Criminal Division of the Department of Justice,spoke about how his office was moving cases along. He stressed the importance of maintaining the deadlines that are established. He also stated he has not found a problem finding statutes to use when bringing state and local corruption cases post the Supreme Court's modification of 1346. He said that other statutes are available to bring conflict of interest cases.
Robert M. Cary, a partner in the Washington, D.C., office of Williams & Connolly LLP, noted the lack of transparency in discovery. Until there is an enforceable rule, it will be a problem.
Laura A. Miller, Nixon Peabody LLP, said that "successful representation is when my name and my client's name does not appear in the press."
Patrick M. Collins, Perkins Coie LLP questioned why the government can't go the extra mile and have open file discovery.
The panel discussed the Speech & Debate Clause and how it can affect a case. They also looked at discovery issues - Laura Miller noted the lack of uniformity on discovery issues. She mentioned how in the "rocket docket" they receive Jencks material the Friday before trial. Jack Smith said that if it is close - turn it over.Jack Smith said they sometimes he will highlight documents for the defense. He recognized his duty to go through documents and find Brady material. Laura Miller noted that we should all work together to manage discovery. A final topic discussed was venue.
(esp)(blogging from San Diego)
The opening panel of this morning discussed some recent white collar cases: Karatz (alleged options backing); WebMD (alleged financial statement fraud), and Petters (alleged Ponzi scheme). Ronald J. Nessim was listed as moderating this panel, but Vince Marella filled in for him. Particularly interesting were the remarks of John Lauro, who talked about how a group of defendants stuck together for a long time - and the importance of this for the case. Both he and John Keker discussed the initial corporate investigation in their cases and how the companies did not conduct it with a purpose to demonize their clients, although in one instance the later relationship might not have been as amicable.
In the Petters case, the prosecutor explained how the case came to light and how quickly it moved forward. This was contrasted with the WebMD case where there was no discussion with the prosecutors. What was noted in the WebMD case was the importance of having resources to make the case - Lauro said it would not have been possible without resources.
John Lauro explained that one of the biggest challenges for the defense was the discovery. He also explained how a Daubert challenge allowed them to educate the judge about the case.
I only wish I could have stayed to listen to more of this fascinating presentation - but off to a meeting for my panel on ethics.
(esp)(blogging from San Diego)
Monday, February 21, 2011
DOJ's requested budget focuses a good bit on national security. But there is also money for continued activity on financial fraud. In a DOJ Press Release it states,
"The FY 2012 budget also supports the continued efforts to crack down on financial fraud. From August through December 2010, the Attorney General’s Financial Fraud Enforcement Task Force brought charges against over 500 criminal and civil defendants for fraud schemes that have harmed more than 120,000 victims throughout the country, involving more than $8.0 billion in estimated criminal losses and more than $2.1 billion in estimated civil losses. In addition, the FY 2012 budget requests $3.0 million of program increases for the Criminal Division for transnational enforcement of intellectual property law."
Sunday, February 20, 2011
Thursday's Wall Street Journal has a fascinating piece here by Steve Eder, Michael Rothfeld, and Jenny Strasburg on the friendship, between Donald Longueuil and Noah Freeman, that was shattered by the SDNY's insider trading probe. As the white collar world now knows, Freeman secretly recorded Longueuil. Longueuil's damaging admissions were captured, quoted in the criminal complaint against Longueuil and Samir Barai, and splashed across the headlines. Freeman has pled guilty and his plea agreement is publicly available.
I thought it might be interesting to compare Freeman's plea agreement to that of Danielle Chiesi, who recently pled guilty in the Raj Rajaratnam case. Chiesi has not agreed to cooperate against Rajaratnam as part of her deal, but Freeman has agreed to cooperate with the government against Longueuil. The Noah Freeman Plea Agreement is a classic, bare bones, SDNY white collar plea deal. Unlike the vast majority of federal criminal plea agreements in other jurisdictions, the Freeman agreement contains no Sentencing Guidelines calculations or stipulations. Freeman agrees to plead to two felony counts--securities fraud and conspiracy to commit wire and securities fraud. The maximum statutory term for those two counts combined is 25 years. Freeman agrees to pay restitution and to forfeit proceeds traceable to the charged offenses. The government agrees not to prosecute him further, except for tax crimes, and to recommend a Section 5K1.1 downward departure if he continues to truthfully cooperate. And that's about it.
Why is the agreement structured this way? Because SDNY prosecutors do not want want to put anything into the agreement which would indicate to a jury what actual sentence Freeman might get. If hard Guidelines numbers were put into the agreement, even as non-binding stipulations, Longueuil's attorney could compare those numbers, during Freeman's cross-examination, to the stratospherically higher Guidelines sentence Freeman would have received sans cooperation. Now, when Freeman takes the stand against his former friend, he can truthfully tell the jury that he has no idea what sentence he will ultimately receive. Sure, he wants a light sentence or probation, but all he knows is that he is looking at a statutory max of 25 years and some kind of 5K1.1 motion if he tells the truth.
And what is Freeman's attorney told by the prosecutors, or what does the attorney already know without being told if he or she has practiced long enough in the SDNY? "Trust us. We are not going to promise your guy anything other than a 5K1.1, but if you look at what past white collar targets have received when they came in early and cooperated, you will see that we treated them fairly. Many of them received probation or light sentences. By the way--if you come in on the eve of trial, don't expect to be treated as well." The defense attorney relays this information in some form or another to the client and tells the client that there is no guarantee. He also tells the client that the people who came in early and cut plea deals in the World Com case got probation or light sentences. That fellow who came in right before trial got five years. The guy who went to trial and lost got hit with 25. The client ususally takes the deal. (Who wants to roll the dice with those odds?) It all makes for a much cleaner trial and cross-examination in the government's view.
Contrast this with Chiesi whom the government does not need and who litigated her case like crazy almost until the eve of trial. The Danielle Chiesi Plea Agreement is highly structured and much more like those you will see in other parts of the country. Chiesi pled to three conspiracy counts, each carrying a five year max. The government and Chiesi stipulated as to the appropriate version of the Guidelines, the Guidelines section applicable to her conduct, the base offense level, the adjusted offense level based on an agreed-upon amount of gain, and Chiesi's acceptance of responsibility. The parties stipulated that Chiesi's Guidelines offense level is 21, her criminal history category is I, and her Guidelines sentencing range is 37-46 months. Either side is free to argue for a Booker downward variance, but neither side can argue for an upward or downward Guidelines departure or adjustment unless it is specifically called for in the agreement. Because the prosecutors do not particularly need Chiesi, they are not worried about how her 37-46 month range compares to what her range would have been sans cooperation.
In one of those delightful traditions peculiar to the SDNY, neither of these plea agreements has been publicly filed with the appropriate district court, although neither agreement is under seal. This is insane. Jason Pflaum's plea agreement is virtually identical to Freeman's. Pflaum consensually monitored the conversations/messages of Sam Barai and is expected to testify against Barai and others.
Thursday, February 17, 2011
A DOJ Press Release issued today titled, Medicare Fraud Strike Force Charges 111 Individuals for More Than $225 Million in False Billing and Expands Operations to Two Additional Cities tells that "[t]he Medicare Fraud Strike Force today charged 111 defendants in nine cities, including doctors, nurses, health care company owners and executives, and others, for their alleged participation in Medicare fraud schemes [allegedly] involving more than $225 million in false billing,..." It states that "[t]oday’s operation is the largest-ever federal health care fraud takedown."
The press release notes that:
"The defendants charged today are accused of various health care fraud-related crimes, including conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, money laundering and aggravated identity theft. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, physical and occupational therapy, nerve conduction tests and durable medical equipment.
"According to court documents, the defendants charged today participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes, never provided. In many cases, indictments and complaints allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, health care company owners, executives and others charged in the indictments and complaints are accused of conspiring to submit a total of more than $225 million in fraudulent billing."
AG Holder, speaking at a press conference stated that "[w]e are also pleased to announce the expansion of the Medicare Fraud Strike Force – which currently operates in Baton Rogue, Brooklyn, Detroit, Houston, Los Angeles, Miami, and Tampa – to two additional cities: Dallas and Chicago."
Monday, February 7, 2011
Finding no bribery or kickbacks, a U.S. District Court in the Eastern District of California set aside and vacated in its entirety an honest services mail fraud conviction. See here - Download Judicial Order The Motion to Vacate this Conviction was presented via a Motion of Coram Nobis - Download Corum Nobis Petition Some will obviously claim that this is why section 1346, the honest services fraud provision, should be rewritten. Others of us will say - this is exactly why such a prosecutorial extension should not be allowed. When prosecutors have a deprivation of "money or property," even when the property is intangible property, there is ample basis for prosecuting mail and wire fraud. But to allow prosecutions premised on intangible rights, with little understanding of what constitutes intangible rights, provides prosecutors with discretion that allows them to stretch prosecutions beyond what folks would recognize to be criminal conduct. Attorney Doug A. Goss represented the accused in this case.
See also Scott Smith, Recordnet, Judge vacates conviction of ex-prosecutor
Thursday, January 20, 2011
The Skilling case proved consequential in the discussion before the the Eleventh Circuit in the Siegelman and Scrushy cases. Check out this story on the oral argument -
John Schwartz, NYTimes, Judges Take Another Look at Ex-Alabama Governor’s Conviction
Some may claim that it is cases like this that should influence Congress to re-examine section 1346. Perhaps - but only to void the entire statute as recommended by Justice Scalia. One lesson that should be learned from both the McNally case, and now Skilling is that if the government is criminalizing conduct, it is necessary to require strict legal lines and those lines should not cross into legitimate conduct. 1346 should be voided because it is unnecessary. The basic mail fraud statute, 1341, and wire fraud, 1343, as well as the other fraud statutes, criminalize deprivations of "money or property." The Supreme Court has clearly held that "money or property" includes intangible property (Cleveland). To include "intangible rights" is therefore unnecessary for the prosecution of criminal misconduct. If the self-dealing does not involve money or property, should we really waste government resources on the prosecution?
Tuesday, January 18, 2011
The Paul Minor case (see here) may flesh out some of the questions left unresolved by the Court ruling inSkilling. Across the country we are seeing cases being reexamined to determine whether the conduct, indictment, jury instructions, and trial focused on "bribery or kickbacks" - the one permissible activity for "honest services" in the fraud statute - 18 USC 1346. In this regard, in the Paul Minor case we see several interesting issues - 1) Does the Mississippi bribery law meet the Skilling Court's test of "a uniform national standard,"; and 2) How should a court factor in that the prosecution used "concealment" and "self-dealing" in the indictment and closing argument as opposed to terms that would represent bribery. The high powered lineup to present these issues are: Ted Olson and David Debold of Gibson, Dunn & Crutcher.
Motion to Vacate Convictions -Download Motion to Vacate
Memo in Support of Motion to Vacate Convictions-Download Motion to Vacate - Memo
Government Response - Download 46738335-US-Response-to-Paul-Minor-s-lastest-motion-to-dismiss-010711
Friday, January 7, 2011
Okay, let me take off my white collar defense attorney hat and put on my former prosecutor hat for a minute. Call it my citizenship hat. Don't most of us want real, unadulterated big-time crooks to be investigated and, where appropriate, charged? Where are all the investigations and prosecutions of the accounting control fraud that caused one of the greatest recessions in U.S. history? You know, the current recession.
Back in the late 1980s, when the S&L Crisis hit and the Dallas-based S&L Task Force was formed, federal law enforcement officials quickly realized that, in many instances, colossal fraud had been committed by the very players who controlled the S&Ls. The S&L fraud was overwhelmingly based on sham transactions and sham accounting for those transactions. Massive resources were committed to investigating and prosecuting the S&L fraud. It was understood that the crooked players had hijacked their S&Ls and defrauded depositors and/or the FSLIC. This rather elementary distinction between the savings and loan as an institution and the fraudsters who controlled it was grasped by AUSAs and effectively conveyed to juries across the land.
Nothing like this is happening today with respect to the federal government’s investigation of the housing bubble, liars’ loans, and Wall Street's subprime lending scandal. The overwhelming number of investigations and prosecutions seem to be focused on piker fraudsters—corrupt individual borrowers or mortgage brokers. These cases are easy pickings, but do not get to the massive fraud that clearly permeated the entire financial system.
Professor William Black, of Keating Five fame, has written a scathing piece all about this for the Huffington Post. Here it is. Among Black's revelations? "During the current crisis the OCC and the OTS - combined - made zero criminal referrals." Astounding. These two agencies accounted for thousands of criminal referrals per year during the S&L Task Force years. More fundamentally, Black argues that today's federal prosecutorial authorities do not comprehend that individuals in control of an institution can have an incentive to engage in short-term fraud that enriches them individually while destroying the long-term prospects of the institution and the larger economy.
Nobody should be charged with a white collar crime unless the crime is serious and the prosecution believes in good faith that a jury will find guilt beyond a reasonable doubt. But how about a substantive investigative effort, including commitment of appropriate resources? Why are such huge resources being spent on dubious endeavors like insider trading and FCPA enforcement, while elite financial control fraud goes largely unaddressed? Professor Black's piece is highly recommended reading.
Monday, December 27, 2010
My colleague Ellen Podgor posted here about the Ninth Circuit's reversal of a securities fraud conviction on sufficiency grounds in United States v. Goyal, and specifically recommended Judge Alex Kozinski's concurrence. That concurrence led me to Judge Brett Kavanaugh's equally outstanding concurrence in United States v. Moore, 612 F.3d 698, 702-04 (D.C. Circuit 2010).
Moore involved an expansive application of 18 U.S.C. Section 1001. As explained by Judge Kavanaugh, "This case is novel: The Government has obtained a false statements conviction under 18 U.S.C. [Section] 1001 against an individual who signed the wrong name on a postal delivery form....Federal prosecutors tried Moore twice for various drug offenses, but both times the jury hung. In the second trial, prosecutors tacked on a false statements charge under [Section] 1001."
Judge Kavanaugh wrote separately to discuss the mens rea issues which can arise under the "ever-metastasizing" statute. His concurrence should be required reading for all white collar practitioners. In essence, Judge Kavanaugh argues that the Government must prove, in a Section 1001 prosecution, that the defendant knew he was violating the law. This is because Sectiuon 1001 contains a willfulness element. As Judge Kavanaugh points out, recent and not-so-recent Supreme Court pronouncements, in cases such as Bryan v. United States, 524 U.S. 184, 191-92 (1998), Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 57 n.9 (2007), and Dixon v. United States, 548 U.S. 1, 5 (2006), establish that a defendant cannot harbor willful criminal intent unless he knows in some sense that his conduct is unlawful. (The defendant need not know the specific code provision he is accused of violating, except in the case of highly technical statutes.)
There is no reason, absent some particular statutory twist, why this principle should not apply across the board to statutes containing a willfulness element. But many of the federal circuit courts take a different approach with respect to certain fraud statutes, such as Section 1001, apparently because some of their precedents predate the most recent Supreme Court holdings and dicta. Judge Kavanaugh, who once clerked for Judge Kozinski, concurred with the majority opinion in Moore, but only because the defendant did not request an appropriate jury instruction on the willfulness element. Here is Judge Brett Kavanaugh's Concurrence in U.S. v. Moore.