Monday, September 17, 2007

Was the Rider Related Case A Runaway Grand Jury?

A Grand Jury in Mercer County, New Jersey brought an indictment against school officials, including a dean of students, at Rider University for activities related to the death of a student. (see here)  And it was not surprising to see these charges later dismissed by prosecutors, as the idea of indicting school officials in this context was unusual. (see here).  The ABA L Jrl News is now questioning whether these charges were in fact the result of a runaway grand jury. (see here)

The saying has long been that a prosecutor can get a grand jury to indict a ham sandwich.  But runaway grand juries do happen on occasion.  White collar cases, unlike cases of street crimes, are more likely to use the grand jury process for an investigation.  In street crime cases, the police usually conduct the investigation and present the evidence in a shortened form to the grand jury that decides whether to issue an indictment.  In contrast, in white collar cases the grand jury can be used extensively to procure information via subpoena and to have witnesses testify in the investigation of possible criminal activity.   Although there is no legal requirement to present exculpatory evidence (U.S. v. Williams) to a grand jury, there is an ethical standard that provides that "[n]o prosecutor should knowingly fail to disclose to the grand jury evidence which tends to negate guilt or mitigate the offense." (ABA Standard 3-3.6). There is no allegation here of the prosecutor failing to present exculpatory evidence to the grand jury. But perhaps what is the interesting question is the prosecutorial discretion that a prosecutor has in deciding what cases he or she will investigate before a grand jury.

(esp)

Addedum - See here for details on an upcoming program on "The Impact of Criminal Law on Student Affairs Professionals: Insights into Investigations and Indictments."

September 17, 2007 in Grand Jury | Permalink | Comments (0) | TrackBack (0)

Sunday, August 26, 2007

Reviewing Grand Jury Transcript

The ABA Jrl, in an article by Debra Cassens Weiss, explores the effect of a recent federal court ruling that allows witnesses to review their grand jury testimony. The title of the article is, "Ruling Thwarts Perjury Prosecutions." 

The court's opinion in In Re Grand Jury states:

"This case raises a question that, surprisingly, has not yet been decided by this court: whether federal grand jury witnesses, after they have testified, are entitled to examine the transcripts of their own testimony. Applying Federal Rule of Criminal Procedure 6(e)(3)(E)(i), we hold that grand jury witnesses are entitled to review the transcripts of their own testimony in private at the U.S. Attorney’s Office or a place agreed to by the parties or designated by the district court."

In rejecting one of the government's arguments, the DC Circuit Court states:

"[T]he Government is concerned about grand jury witnesses (or their attorneys) who disclose information to other grand jury witnesses (or their attorneys) with the purpose of obstructing the criminal investigation. The Government identifies joint defense agreements among attorneys as a threat to the integrity of the grand jury process. But denying witnesses access to their own transcripts to help prevent witnesses from talking to others makes little sense to begin with – and makes even less sense given that grand jury witnesses are under no legal obligation of secrecy. A grand jury witness is legally free to tell, for example, his or her attorney, family, friends, associates, reporters, or bloggers what happened in the grand jury. For that matter, the witness can stand on the courthouse steps and tell the public everything the witness was asked and answered. See Fed. R. Crim. P. 6(e)(2)(A)-(B); Fed. R. Crim. P. 6, Advisory Committee Notes, 1944 Adoption, Note to Subdivision (e) ("rule does not impose any obligation of secrecy on witnesses"). The secrecy rules therefore are no justification for denying witnesses access to their own transcripts."

(esp)(hat tip to John Wesley Hall)

August 26, 2007 in Grand Jury, Perjury | Permalink | Comments (0) | TrackBack (0)

Saturday, March 31, 2007

That's What a Subpoena Is For

Every once in a while a line in a company's discussion of a government investigation catches your eye when it appears to miss the point.  Beazer Homes USA is facing a government investigation of its mortgage lending practices, as discussed in a prior post (here).  On March 29, the company filed an 8-K(here) about the investigation, after the media stories first reported the FBI's confirmation of the investigation, that states, "The Company has received a grand jury subpoena from the United States Attorney’s Office in the Western District of North Carolina seeking the production of documents.  The subpoena was issued upon application of the Office of Housing and Urban Development, Office of Inspector General and focuses on the Company’s mortgage origination services.  The Company has not received a request for information or documents from the FBI or IRS in this regard. (Italics added)  Of course, a grand jury subpoena means the FBI is going to get the documents, and it does not have to "request" any information because the subpoena requires Beazer to provide it.  Similarly, if there is a criminal tax investigation, then the IRS can't ask for documents, or even issue a summons, because the case is now in the exclusive jurisdiction of the Department of Justice.  Once the grand jury subpoena arrives, rest assured that a federal investigative agency will be looking at the materials provided for any potential criminal violations -- they don't even need to say "Please" any more. (ph)

March 31, 2007 in Grand Jury, Investigations | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 14, 2007

Au Revoir, New Century Financial?

The shake-out in the subprime lending market may well take down mortgage lender New Century Financial, which disclosed that its banks have cut off most of its access to credit, the lifeblood of any financial institution.  While executives scramble to prevent a complete meltdown, with the company's shares having lost most of their value and now delisted from the New York Stock Exchange, they also have to deal with grand jury and SEC investigations that will likely target individuals at the company.  According to New Century's 8-K filing on March 13 (here):

On February 28, 2007, the Company received a letter from the United States Attorney’s Office for the Central District of California (the "U.S. Attorney’s Office") indicating that it was conducting a criminal inquiry under the federal securities laws in connection with trading in the Company’s securities, as well as accounting errors regarding the Company’s allowance for repurchase losses. The Company has subsequently received a grand jury subpoena requesting production of certain documents. The Company intends to cooperate with the requests of the U.S. Attorney’s Office.

On March 12, 2007, the Company received a letter from the staff of the Pacific Regional Office of the Securities Exchange Commission stating that the staff was conducting a preliminary investigation involving the Company and requesting production of certain documents. The staff of the SEC had also previously requested a meeting with the Company to discuss the events leading up to the Company’s previous announcement of the need to restate certain of its historical financial statements. The Company intends to cooperate with the requests of the SEC.

If New Century ends up declaring bankruptcy, then the trustee is likely to undertake its own investigation while also providing information to government investigators, which would likely include a waiver of the attorney-client privilege and work product protection.  It is not clear what trading is being looked at, but accounting issues are sure to involve senior management among those who will be questioned. (ph)

March 14, 2007 in Grand Jury, Investigations, Securities | Permalink | Comments (0) | TrackBack (0)

Saturday, February 24, 2007

Criminal Investigation of KB Home's Options Backdating

The Department of Justice is looking at the options issuance practices of KB Home, joining a previously-disclosed SEC formal investigation.  According to a company press release (here): "KB Home's past stock option grant practices are being investigated by the Securities and Exchange Commission. The Department of Justice is also looking into these practices but has informed KB Home that it is not a target of this investigation. KB Home has and intends to fully cooperate with any government agency looking into this matter."  On November 12, 2006, the company announced (here) that long-time CEO Bruce Karatz was retiring, and he "voluntarily" agreed to repay the difference between the lower, backdated strike price and the proper price on options he had exercised.  In addition, KB Home's human resources director was fired, and its general counsel resigned.  While the disclosure of a criminal investigation does not necessarily mean charges will be filed, the fact that it comes on the heels of the SEC upgrading its investigation from an informal inquiry likely means the government will be looking at a wide range of transactions, and the company's former officers are the probable targets of the investigation. (ph)

February 24, 2007 in Grand Jury, Investigations, Securities | Permalink | Comments (1) | TrackBack (0)

Thursday, February 15, 2007

SF Chronicle Reporters Avoid Jail for Civil Contempt

The mystery about who leaked the grand jury transcript of erstwhile San Francisco Giants slugger Barry Bonds has been solved, much to the relief of the two reporters who published stories based on the testimony.  Sacramento attorney Troy Ellerman, who at one time represented Balco founder Victor Conte in the steroids prosecution, agreed to plead guilty to permitting San Francisco Chronicle reporters Lance Williams and Mark Fainaru-Wada view the transcripts that had been produced as part of the pre-trial discovery in the case.  Williams and Fainaru-Wada were held in contempt for refusing to testify about the identity of their source of the transcripts that is part of a larger investigation of Bonds for perjury.  Their case was before the Ninth Circuit, and given how the appellate courts have ruled on such media confidentiality claims lately, the two reporters did not have a strong chance of avoiding jail.  As it is, they are now off the hook, and only Bonds'  former trainer, Greg Anderson, remains incarcerated for civil contempt for refusing to testify about steroid use by the baseball star.  At some point, a decision will have to be made about whether to move forward with a prosecution of Bonds or drop the case.  A story on ESPN.com (here) discusses the latest twist in the Bond perjury saga. (ph)

February 15, 2007 in Grand Jury, Investigations, Perjury | Permalink | Comments (0) | TrackBack (0)

Subpoena Fight Over New Jersey Legislative Records

The Office of Legislative Services (OLS) for the New Jersey State Legislature is fighting a federal grand jury subpoena seeking records related to possible conflicts of interest in the state budgeting process, according to an article in the Newark Star-Ledger (here).  The investigation grows out of an earlier investigation of Medicaid and Medicare fraud at the University of Medicine and Dentistry of New Jersey (UMDNJ) that was settled with a substantial penalty and appointment of a monitor.  A report by the monitor identified a possible no-show job for a state Senator at UMDNJ, and federal prosecutors are now looking at a wider range of possible corruption involving the award of discretionary grants by legislators.  OLS, which is a non-partisan arm of the legislature that received the subpoena, asserts that the records sought, including e-mails and internal memos, are confidential, and seeks to quash the subpoena. 

The problem the state legislature faces is that federal grand juries are entitled -- in a time-worn phrase sure to appear in the district court's decision -- "to every man's evidence."  A state confidentiality statute is unlikely to win out over the authority of a federal grand jury to compel the production of records, and state legislative privileges are not recognized under the federal Speech or Debate Clause, so that road is unavailable to prevent enforcement of the subpoena.  Public corruption investigations of state and local officials always raise sensitive issues of federal authority, and the fact that a Republican U.S. Attorney leads the office investigating the actions of Democratic state officials makes it even more complicated.  But on the narrow issue of the enforceability of a federal grand jury subpoena, the smart money is usually on the federal government getting what it demands. (ph)

February 15, 2007 in Corruption, Grand Jury, Investigations | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 31, 2007

A "Just in Case You're Indicted" Clause in Bonds' Contract

The new contract Barry Bonds agreed to with the San Francisco Giants that will pay him $15+ million has an unusual clause allowing the team to void the contract if he is indicted for perjury in the ongoing Balco (Bay Area Laboratory Co-operative) steroids investigation.  Some baseball contracts permit a team to back out if a player sustains a certain type of injury, such as the recent contract J.D. Drew signed with the Boston Red Sox relating to a previously-injured shoulder.  Baseball also has a "good conduct" requirement, but a criminal indictment alone would not necessarily keep him from pursuing Hank Aaron's home run record.

Bonds has been under investigation for nearly two years for possible perjury related to his grand jury testimony in 2003 in which he denied knowingly taking steroids.  Another issue that emerged relates to possible tax evasion for not reporting income from autograph signings and memorabilia sales. Whether Bonds is charged is very much an open question since the U.S. Attorney for the Northern District of California, Kevin Ryan, lost his position.  That change raises doubts about whether new leadership in the office will continue to pursue a case that has already triggered civil contempts and appeals to the Ninth Circuit for three witnesses who have refused to testify: Bonds' former trainer and two San Francisco Chronicle reporters. 

It could be, though, that the Giants know something about the direction of the case.  In July 2006, the team submitted Bonds' medical records to the grand jury, and a team physician and trainer testified.  It is not clear whether the contract provision will pass muster with the players union or the Commissioner's office, so it may come to naught.  A Chronicle story (here) discusses Bonds' new contract. (ph)

January 31, 2007 in Grand Jury, Investigations, Perjury | Permalink | Comments (0) | TrackBack (0)

Thursday, January 25, 2007

Extortion and Reggie Bush

A report on Yahoo.Com (here) states that a federal investigation of possible extortion of former Heisman Trophy winner Reggie Bush includes tapes made by sports marketers who may have given Bush and his family large financial benefits while he was a "student-athlete" at USC.  The allegations of improper payments first emerged after Bush finished his career USC in January 2006, and there were claims that he had agreed to be the first client for a new sports marketing agency.  When the deal didn't come to fruition, Bush alleged that he received extortion threats, triggering a federal grand jury investigation in San Diego, where the agency was headquartered.  Among the items subpoenaed were tapes that allegedly include Bush stating he would repay the money he received and for a car he drove.  The receipt of such benefits by a college athlete means the person loses their eligibility, and likely would trigger NCAA sanctions against USC; Bush is beyond the jurisdiction of the college sports czars, and is a likely choice for NFL Rookie of the Year for his play with the New Orleans Saints this season.

This would not be the first federal case involving questionable payments to "student-athletes" by shady characters.  The prosecution of Norby Walters in the 1980s on RICO and mail fraud charges involved secret payments by a sport agents to college players who later reneged on their deals, and threats against them.  For a summary of the case, see United States v. Walters, 997 F.3d 1219 (7th Cir. 1993). (ph)

January 25, 2007 in Grand Jury, Investigations | Permalink | Comments (0) | TrackBack (0)

Thursday, December 28, 2006

Ninth Circuit Clears Seizure of Baseball Drug Tests -- Did Barry Bonds Flunk One?

The investigation of possible perjury in the Balco (Bay Area Laboratory Co-Operative) steroids investigation took another interesting turn with the release of a Ninth Circuit opinion (here) overturning lower court orders directing the government to return drug tests because the searches were unconstitutional.  The government originally subpoenaed two drug testing labs in early 2004 for the results of drug tests of ten major league baseball players with Balco connections who may have tested positive for steroids.  The most famous player linked to Balco is San Francisco Giants slugger Barry Bonds, who testified before a federal grand jury in 2003 that he did not knowingly take steroids provided by his trainer, Greg Anderson, who was involved with Balco.  After the labs refused to provide the drug tests, investigators obtained search warrants for the facilities and seized records of the drug tests of all major leaguers, and athletes in a number of other sports.  The government then issued another subpoena to obtain many of the records it had already seized.  District court judges in Los Angeles, Las Vegas, and San Francisco ordered the return of the records and granted a motion to quash a subpoena at the urging of the baseball players union, which intervened to represent the interests of all the players whose records were seized.

In its decision in United States v. Comprehensive Drug Testing, Inc., a divided panel upheld the search warrants, including the seizure of computer records, and ordered the lower court to segregate records that fall outside the scope of the warrant for review by a magistrate judge.  A second issue decided by the Ninth Circuit majority was to reverse the district judge's order quashing the subpoena issued after the search as unreasonable.  The appellate court determined that the government may issue a subpoena for documents held by a third party even after a search for the same records. 

A strong dissent by Circuit Judge Sidney Thomas, which runs 60+ pages, accuses the government of acting improperly in both the search and subpoena issuance.  Judge Thomas concluded about the seizure of private medical records not covered by the warrants:

In discussions of the alleged use of steroids by baseball players, much is made about “the integrity of the game.” Even more important is the integrity of our legal system. Perhaps baseball has become consumed by a “Game of Shadows” [a book written about Bonds' steroid use], but that is no reason for the government to engage in a “Prosecution of Shadows.” The district judges were entirely right to order the government to return the thousands of private medical records it wrongfully seized by use of pretext and artifice.

The Ninth Circuit decision raises a number of interesting issues that are coming up more often in white collar crime cases, such as the scope of a warrant to search a computer, plain view of computer files, the government's right to seize intermingled documents, and the prosecutor's authority to use both a search warrant and a grand jury subpoena for the same records.  These are not issues the Supreme Court has confronted in the context of white collar-related investigations, and much of the Court's Fourth Amendment jurisprudence arises in drug and gun cases that are not always a good fit when applied in corporate and business crime investigations -- how often does the auto search exception arise in a mail fraud case? 

The union has some very deep pockets, and a strong interest in keeping the drug testing results secret, so I expect the players' lawyers (from leading San Francisco firm Keker & Van Nest) will seek rehearing en banc and, if that fails, certiorari from the Supreme Court.  While the government has won this round, don't look for a quick resolution of the question whether prosecutors can use any drug test taken by Bonds as evidence for a potential perjury prosecution. Bonds has denied failing a drug test, so the value of the evidence remains to be seen. (ph)

                                                                                       

UPDATE (12/28):  Not surprisingly, Donald Fehr, head of the baseball players union, said the union will consider further action to overturn the Ninth Circuit panel's 2-1 ruling allowing prosecutors access to player drug tests in 2003.  In a prepared statement (here), Fehr said, "We will consult with our counsel, and then determine what our next step should be in our fight to protect the Constitutional rights -- including the basic right to privacy -- of our members." (ph)

December 28, 2006 in Grand Jury, Investigations, Judicial Opinions | Permalink | Comments (2) | TrackBack (3)

Sunday, December 24, 2006

Things Are Heating Up in Alaska

As noted here an Alaskan state representative was recently indicted. But it looks like this might not be the end of things.  According to the Anchorage Daily News , the investigation continues. Richard Mauer of the Anchorage Daily News provides an incredible detailed account of the investigation from start to present. But what remains to be seen is if the feds have a direction that is causing them to subpoena certain records.  And is that direction one that looks at possible state corruption or federal corruption.

(esp)

December 24, 2006 in Environment, Grand Jury, Investigations, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Friday, December 22, 2006

Lawyer Allegedly Leaked Bonds Grand Jury Testimony

A Yahoo.Com story (here) states that a former defense attorney for Balco (Bay Area Laboratory Co-operative) founder Victor Conte leaked the grand jury testimony of San Francisco Giants slugger Barry Bonds and perhaps other major league players who testified into the investigation of steroid manufacturing.  Two San Francisco Chronicle reporters, Mark Fainaru-Wada and Lance Williams, published excerpts of the testimony, including Bonds' statement that he unknowingly took steroids in 2001.  The lawyer, identified as Troy Ellerman, represented Conte and another Balco executive in the criminal case, although Conte switched lawyers in March 2005 and eventually agreed to a plea bargain.  A former investigator who shared an office with Ellerman asserts that the lawyer disclosed the transcripts in 2004 to the Chronicle.  In addition to his legal practice, Ellerman is the commissioner of the Professional Rodeo Cowboys Association.

The grand jury transcripts were likely supplied to defense counsel after the 2004 indictment of five defendants with Balco connections, including Conte and Bonds' former personal trainer, Greg Anderson.  They may have contained Brady material, and so prosecutors had to disclose them to the defense, but that disclosure would have included significant restrictions on any pre-trial use of them.  If Ellerman leaked the documents, it would in all likelihood violate a court secrecy order and could subject him to a contempt proceeding, although not under Federal Rule of Criminal Procedure 6(e)(7) because defense lawyers are not covered by the grand jury secrecy rules.

An interesting question is whether the two Chronicle reporters can avoid jail for contempt if Ellerman is the source for their stories recounting the grand jury testimony.  Fainaru-Wada and Williams refused to testify about the identity of their source before the grand jury investigating the leak, asserting the journalist privilege to maintain the confidentiality of sources; the contempt issue is currently before the Ninth Circuit.  While reporters have been unsuccessful lately in fighting demands for testimony about their confidential sources, there may be no need to obtain testimony from the reporters now and the contempt citation could be vacated.  That would certainly be a nice holiday gift for Fainaru-Wada and Williams.  (ph)

December 22, 2006 in Grand Jury, Investigations, Perjury | Permalink | Comments (1) | TrackBack (0)

Saturday, December 16, 2006

Athlete Indicted for Perjury in Balco Investigation

The Balco (Bay Area Laboratory Co-Operative) steroids investigation has entered what U.S. Attorney Kevin Ryan called the "third stage" with the indictment of Tammy Thomas, a former cyclist banned from competition for steroid use.  Thomas testified under a grant of immunity in 2003 before the same grand jury that heard from a number of prominent athletes, including famed San Francisco Giants slugger Barry Bonds and Olympic gold medalist Marion Jones.  According to the indictment (here), Thomas committed perjury by denying she received the designer steroid THG, known as the "the clear," from Balco chemist Patrick Arnold, who entered a guilty plea earlier in 2006 to conspiracy and money laundering charges.  The indictment quotes the relevant testimony for count one:

Q: Did you ever – besides this one instance of getting the 1-AD from Mr. Arnold, did you ever get any other services from Mr. Arnold or products?

(a) A: No, no other products.

* * * * *

Q: Did you ever, in addition to anything I’ve said, get any kind of what you knew to be banned or illegal performance-enhancing drugs from Mr. Arnold?

(b) A: No.

In another exchange quoted in the indictment, she denied ever taking steroids or taking anything that Arnold gave her.  Thomas tested positive for steroids in 2002,leading to her ban from competition.  The key witness appears to be Arnold, which means that the case could come down to a credibility battle between Thomas and an admitted felon.

U.S. Attorney Ryan hinted in a press release (here) that more perjury indictments may be coming.  He said, "“In the early stages of the investigation, the individuals who distributed steroids to some of the nation’s top-flight athletes were indicted and convicted. In the second stage, we developed the evidence to indict and convict the creator of the undetectable steroid THG distributed through Balco. A third stage has begun as we bring charges against individuals who lied to investigators or committed perjury while testifying under oath to a federal grand jury. Our investigation into each of these stages will continue as the evidence develops."  In addition to Thomas, the grand jury earlier indicted Trevor Graham, Jones' former coach.

Bonds has already been the subject of serious speculation about a possible perjury and tax evasion indictment, the latter based on unreported income from memorabilia sales.  When the earlier Balco grand jury expired in July 2006, many thought its last act would be to indict Bonds, but right before its expiration, the Giants released his medical records, so White's office announced that nothing would be done at that time.  Bonds' former personal trainer, Greg Anderson, remains in jail on a civil contempt because of his refusal to testify about Bonds' use of steroids; Anderson was affiliated with Balco and entered a guilty plea to a drug charge related to steroid distribution.  A San Jose Mercury News article (here) quotes Bonds' attorney stating, "If this is phase three, why not indict Barry?'  The simple answer -- they need the testimony of Greg Anderson.''

It's not clear how important Anderson is to the case, but he could certainly help the government by identifying Balco documents that apparently indicate a schedule of steroid use by Bonds.  If the perjury case rides on Anderson, the government will not be in a very strong position unless it has powerful documentary evidence to support its position.  Anderson is unlikely to be a very convincing witness, or perhaps not a very trustworthy one. 

In addition to Anderson, two San Francisco Chronicle reporters are fighting a contempt citation in the Ninth Circuit for refusing to testify before the grand jury about the leak of transcripts of Bonds and other major league players.  The perjury stage of the investigation has generated a significant amount of litigation already, and the U.S. Attorney's Office for the Northern District of California has not been shy about pursuing perjury and contempt cases, so look for more to come.  Whether higher-profile athletes like Bonds, Jones, or perhaps others are charged could play out over the next few months. (ph)

December 16, 2006 in Grand Jury, Perjury, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 13, 2006

Is David Stockman Headed Back to the Woodshed?

Former political wunderkind David Stockman was famously taken to the woodshed by President Reagan for his comments about the administration's tax and budget cuts when Stockman was head of the Office of Management and Budget.  He may be headed back there, according to a report in the Detroit News (here) that a federal grand jury in New York is looking at whether he managed earnings through accounting gimmicks and made misleading statements about Collins & Aikman Corp. in 2005 when he was CEO of the company.  After leaving the White House in 1985, Stockman moved to the world of finance, and in 2001 acquired control of various auto parts companies, rolling many of them into C&A, which entered bankruptcy in May 2005.  The board ousted him a few days before filing bankruptcy, and in the months before the filing Stockman made optimistic statements about C&A's prospects.  In addition to the criminal probe, the SEC sent Stockman a Wells Notice that the Enforcement Division staff intends to recommend the filing of a securities fraud action against him.  It sounds like the government is preparing a coordinated criminal-civil case against Stockman, and perhaps other former C&A executives. (ph)

December 13, 2006 in Fraud, Grand Jury, Investigations | Permalink | Comments (0) | TrackBack (0)

Saturday, November 25, 2006

Grand Jury Secrecy

Rule 6(e) is important as it sets forth the importance of grand jury secrecy.  And according to an article by Josh Gerstein of the New York Sun here, the secrecy may have been violated in a recent government case.  The article provides details on a court's recent ruling finding a prima facie case that government officials may have violated grand jury secrecy.  This means the ball is in the government's court to show otherwise. For more details see here.

(esp)

November 25, 2006 in Grand Jury | Permalink | Comments (0) | TrackBack (0)

Saturday, November 11, 2006

Al-Arian Faces Grand Jury After Plea

Perhaps one of the worst nightmares for a convicted defendant is the thought that they will be subpoenaed before a grand jury, given immunity, and then forced to testify. Like the conviction isn't enough, the government forces cooperation with the threat of increased jail time for contempt.  For example, Susan McDougal spent many months in prison refusing to talk before a grand jury that was investigating Whitewater when prosecutors slammed a subpoena on her following trial.

The Tampa Tribune reports here that Al-Arian is facing similar treatment.  And in many respects his situation is worse as he entered a plea agreement with the government that did not call for cooperation.  Despite this agreement, the government, following sentencing decided to call for his testimony before a grand jury.  The key here may be that the prosecutors doing the investigation are in Virginia and the plea agreement does state that it "is limited to the Office of the United States Attorney for the Middle District of Florida and the Counterterrorism Division of the Department of Justice and cannot bind other federal, state, or local prosecuting authorities, although this office will bring defendant's cooperation, if any, to the attention of other prosecuting officers or others, if requested." (Plea Agreement here)

(esp)

November 11, 2006 in Grand Jury | Permalink | Comments (0) | TrackBack (0)

Thursday, October 19, 2006

Throwing All the Lawyers Into the Grand Jury

A New York Times article (here) discusses the direction of the government's ongoing investigation of Anthony Pellicano, the so-called "PI to the Stars" who worked with, most prominently, leading Los Angeles attorney Bert Fields.  Pellicano has been under indictment since February 2006 on conspiracy and wiretapping charges that allege he engaged in illegal wiretaps to help out attorneys in various cases, many involving leading Hollywood stars and some of them represented by Fields' Century  City firm, Greenberg, Glusker, Fields, Claman & Machtinger.  According to the Times, approximately ten lawyers from Greenberg Glusker have been called before a federal grand jury to testify about Fields' involvement in Pellicano's activities.

There are a couple of interesting aspects to this phase of the grand jury investigation.  First, the lawyers are being questioned about the firm's representation of clients, so there are probably some sticky attorney-client privilege and work product issues that had to be worked out.  Perhaps the clients waived the privilege and allowed the attorney's to testify, although that would probably involve a number of waivers, and some might not be particularly willing to do that if it turns out Pellicano worked on their cases.  The government could argue the crime-fraud exception as the basis for obtaining the testimony, but that would require proving possible criminal or fraudulent conduct in every representation.  Courts are leery of simply ordering wide-spread disclosure of otherwise privileged or protected information in the name of the crime-fraud exception without proof that a specific representation involved such conduct.

Second, the article states that counsel for the lawyer-witnesses "refused to speak publicly, citing grand jury secrecy rules."  While that excuse for not talking to the press sounds plausible, under Federal Rule of Criminal Procedure 6(e) the secrecy requirement does not apply to witnesses before the grand jury.  While they may not want to discuss what the witnesses said in the grand jury session, the secrecy rules are not a bar to discussing the testimony, even if prudence counsels silence.

Finally, while the investigation is focused on Fields' involvement with Pellicano, it may be that the grand jury sessions will turn up additional evidence that can be used in prosecuting Pellicano.  The grand jury cannot be used as a discovery tool for a pending case, but if a continuing investigation produces admissible evidence in such a case, then courts generally allow its use at trial.  Whether or not prosecutors can build a case against Fields, they may get a benefit out of the grand jury sessions for the Pellicano case.  The Times articles hints at weaknesses in the government's case, so the Fields investigation may be a vehicle to help out on the pending prosecution.  That case has already been postponed to February 2007, and Pellicano has been in jail since the indictment.  At some point, the case has to move forward. (ph)

October 19, 2006 in Grand Jury, Investigations | Permalink | Comments (0) | TrackBack (0)

Friday, October 6, 2006

Bonds' Former Trainer Freed Again, For At Least a Little While

Greg Anderson, the former personal trainer for (perhaps the former) San Francisco Giants slugger Barry Bonds, was released from jail by U.S. District Judge William Alsup because of what the judge termed a "legal snafu."  Judge Alsup sent Anderson to jail for civil contempt twice because of his refusal to testify before a grand jury investigating whether Bonds committed perjury in denying before a federal grand jury that he knowingly used steroids.  Anderson pleaded guilty in the Balco (Bay Area Laboratory Co-operative) case to supplying steroids, and according to the government possessed records showing possible steroid use by Bonds.  Anderson's first contempt ended in July when the grand jury's term expired, and this time he was released because the Ninth Circuit did not complete its review of Anderson's appeal of the civil contempt within the required thirty days.  Under the Recalcitrant Witness Act, 18 U.S.C. Sec. 1826(b), "Any appeal from an order of confinement under this section shall be disposed of as soon as practicable, but not later than thirty days from the filing of such appeal."  The Ninth Circuit issued a memorandum opinion (here) on September 28 rejecting most of Anderson's arguments, but it remanded the case because the district court's findings on an secret tape recording that Anderson alleges was the result of an illegal wiretap were insufficient for appellate review.  The district court was given one week to make a record of its position on the wiretap issue so the appellate panel could review it, but that meant the Ninth Circuit had not decided the appeal within the requisite thirty days, which expired on Oct. 5. 

While Anderson is free once again, he could be back in jail rather quickly if the Ninth Circuit agrees with the district court's findings that the government's proposed examination of him in the grand jury will not entail any use of the tape recording and therefore does not violate his rights.  If the Ninth Circuit does not release him, then Anderson may have to sit in jail until the grand jury's term expires in January 2008, unless he decides to cut his losses and testify about Bonds. An AP story (here) discusses District Judge Alsup's reluctant ruling. (ph)

October 6, 2006 in Grand Jury | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 12, 2006

Accounting Investigation of Dell Gets a Lot More Serious

It is a tough time for leading computer companies, with the government investigation of Hewlett-Packard's use of possibly illegal methods to gather private information about its board members and now Dell's disclosure that it will not be able to file its financial statements due to continuing accounting problems.  Dell disclosed in August (8-K here) that the SEC had initiated an informal investigation of its accounting "relating to revenue recognition and other accounting and financial reporting matters for certain past fiscal years . . . ."  The company soft-peddled the inquiry, burying it in a press release that championed its second quarter results.  The disclosure of the informal inquiry came a number of months after the SEC contacted the company.  Now comes another Dell 8-K (here) with the news that the U.S. Attorney's Office for the Southern District of New York has subpoenaed the company in connection with its accounting, and that the issues will affect prior years.  Taking the same approach that seems to discount the investigation, Dell states that "[t]he SEC requests for information have been joined by a similar request from the United States Attorney for the Southern District of New York, who has subpoenaed documents related to the company’s financial reporting from 2002 to the present." 

While one can describe a grand jury subpoena as a "request" from the Department of Justice, subpoenas are a bit more than just a casual missive sent when prosecutors have nothing better to do.  Moreover, the fact that federal prosecutors from the Southern District are now involved in the case means it is a much greater threat to the company, and perhaps to individual officers.  If any executives on the financial side of Dell suddenly resign, that is a good sign that the criminal investigation has advanced and is targeting individuals.  Unlike the Hewlett-Packard investigation, which is unrelated to the company's core business, this investigation goes to the propriety of Dell's financial reporting, a key issue for investors and regulators. (ph)

September 12, 2006 in Grand Jury, Investigations, Securities | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 6, 2006

Reporters in Bonds Leak Investigation Avoid Jail for Now

San Francisco Chronicle reporters Lance Williams and Mark Fainaru-Wada have avoided being sent to jail for civil contempt, at least for a little while.  The two reporters were subpoenaed to testify before a grand jury investigating the leak of the testimony of major league baseball players, most prominently San Francisco Giants slugger Barry Bonds, who testified in 2003 during the Balco (Bay Area Laboratory Co-operative) steroids investigation.  The reporters quoted extensively from Bonds' testimony in which he denied knowingly using steroids provided by his personal trainer, Greg Anderson.  The current investigation includes possible perjury by Bonds and the potential violation of Federal Rule of Criminal Procedure 6(e) related to the improper disclosure of grand jury materials.  While a federal district court judge ordered the two reporters to testify or be subject to civil contempt sanctions (see earlier post here), they worked out an agreement with prosecutors that they do not have to go to jail while they appeal the district court's order to the Ninth Circuit.  They are in a better position than Anderson, Bonds' former trainer, who is in jail for a second time because he refused to answer questions before the grand jury about his knowledge of Bonds' use of steroids.  Given the recent spate of cases enforcing subpoenas to reporters, it seems unlikely that Williams and Fainaru-Wada will avoid jail if they carry through with their assertion that they will not testify.  The grand jury has over 15 more months in its term, so they could face a substantial period of incarceration for civil contempt. An AP story (here) discusses the agreement with federal prosecutors. (ph)

September 6, 2006 in Grand Jury, Investigations, Perjury | Permalink | Comments (0) | TrackBack (0)