Saturday, December 14, 2013

Fourth Circuit Extends Required Records Exception to Foreign Bank Accounts

Yesterday, in U.S. v. Under Seal (4th Cir. 2013), the Fourth Circuit, joining several other federal circuits, extended the Fifth Amendment's Required Records Exception to records of foreign bank accounts required to be maintained pursuant to the Bank Secrecy Act ("BSA"). John and Jane Doe received a subpoena to turn over records of their Swiss bank accounts. They responded that complying with the subpoena compelled them to testify against themselves, as they were required to create and maintain such records pursuant to the BSA. They also argued that the long-standing, judicially-created, Required Records Exception did not apply in this case, because the BSA's record-keeping provisions are essentially criminal, rather than regulatory, in nature. The district court disagreed, the Does took civil contempt, and an appeal ensued. Unsurprisingly, the Fourth Circuit sided with the government, accepting its argument that the BSA's record-keeping provisions are essentially regulatory in nature. You are shocked? There's not exactly a strong constituency, public or judicial, for foreign bank account tax evasion. 

(wisenberg)

December 14, 2013 in Antitrust, International, Investigations, Judicial Opinions, Prosecutions, Prosecutors, Qui Tam, Tax | Permalink | Comments (0) | TrackBack (0)

Monday, September 2, 2013

Second Circuit Rules 10(b) Does Not Apply Extraterritorially

In United States v. Vilar, the Second Circuit examined a post-Morrison decision with an issue of whether Section 10(b) of the Securities Exchange Act of 1934 applies to extraterritorial criminal conduct.  The government had argued that the Supreme Court's decision in Bowman allowed for an extraterritorial application and that civil and criminal conduct should be treated differently and thus Morrison should not apply. The Second Circuit  disagreed with the government saying that the Bowman decision was limited to conduct that was "aimed at protecting 'the right of the government to defend itself.'" In contrast, statutes such as 10(b) have as its "purpose [  ] to prohibit 'crimes against private individuals or their property,'"  and therefore "the presumption against extraterritoriality applies to criminal statutes, and Section 10(b) is no exception."

The court also noted that "[a] statute either applies extraterritorially or it does not, and once it is determined that a statute does not apply extraterritorially, the only question we must answer in the individual case is whether the relevant conduct occurred in the territory of a foreign sovereign." Despite this legal analysis and ruling, the court found that there was no plain error with respect to territoriality on the counts here and thus no need to reverse on this issue.

Other issues raised by the defendants, such as those relating to a search warrant, jury instructions, and the admission of statements were found not to be in error.  The court did, however, remand the sentence.

(esp) 

September 2, 2013 in International, Judicial Opinions, Prosecutions, SEC | Permalink | Comments (0) | TrackBack (0)

Thursday, August 29, 2013

DOJ Releases Statement on U.S.-Swiss Tax Evasion Investigations

The DOJ issued a press release today telling of "a program that will encourage Swiss banks to cooperate in the department's ongoing investigations of the use of foreign bank accounts to commit tax evasion."  The release also notes that "Switzerland will encourage its banks to participate in the program."  A joint statement was agreed upon by the DOJ and Swiss Federal Department of Finance." (see here). The program excludes those presently under investigation.  It offers others a non-prosecution agreement under a list of terms that include, "cooperat[ion] in treaty requests for account information," "agree to pay substantial penalties," and "make a complete disclsure of their cross-border activitites." The press release notes that

"banks seeking a non-prosecution agreement must agree to a penalty in an amount equal to 20 percent of the maximum aggregate dollar value of all non-disclosed U.S. accounts that were held by the bank on Aug.1, 2008.  The penalty amount will increase to 30 percent for secret accounts that were opened after that date but before the end of February 2009 and to 50 percent for secret accounts opened later than that."   

It will be interesting to see how many banks come forward to obtain a non-prosecution agreement. And if they do, will the disclosures result in tax prosecutions of individuals within the U.S.

(esp)

August 29, 2013 in International, Investigations, Tax | Permalink | Comments (0) | TrackBack (0)

Monday, December 17, 2012

HSBC Settlement: The Unanswered Questions

by: Solomon L. Wisenberg

You can debate all day whether the government should allow any financial institution to get too big to fail. You can also debate whether such an institution, if it is too big to fail, should be too big to prosecute, even when it engages in blatantly criminal conduct over a lengthy period of time. However, you cannot seriously debate whether to prosecute senior bank officials of an international mega-bank who knowingly directed the criminal enterprise in question. Corporations only act through agents. Those agents are human beings.

We are not talking about technical matters here. This is not a question of whether each party to a complex transaction understood the fine print which revealed, or obscured, that an investment bank was betting against the deal it was pushing.  According to the published reports and press statements, obvious narcotics-related money laundering was repeatedly facilitated by the bank, despite multiple regulatory warnings. The sources of funds connected to outlaw regimes were intentionally and repeatedly hidden. If this stuff happened, people did it. And they were no doubt high-ranking people.

No credible person will contend that the prosecution of corrupt bank officers can ever endanger the financial community. No matter how important the institution or high-ranking the officer, employees are fungible. The global financial impact of prosecuting these officers, no matter how important they think they are, will always be negligible.

Assistant AG Lanny Breuer said at his press conference that individual prosecutions were not being ruled out. (Similar statements were made at the time of the robo-signing settlement press conference, and we all know what an avalanche of individual DOJ prosecutions followed in the wake of that!) But other comments Breuer made, discussing how hard it supposedly is to prosecute the individuals involved, appear to be window-dressing rehearsals for future DOJ declinations.

Reporters should not let this issue slide into oblivion. The DOJ does not typically comment upon pending investigations of individuals. (Of course this does not stop some FBI and IRS agents from telling all of a target's friends that he is being criminally investigated, thereby ruining the target's life.) Here is an occasion where the policy should be ignored, particularly since the DOJ can comment on a pending investigation without revealing the names of the subjects and targets. 

The question every self-respecting reporter should be asking AG Holder and Assistant AG Breuer is not whether individual indictments have been ruled in or out. The questions to be asked at every opportunity in the coming weeks and months are:

"What is the status of the investigation?"

"Is there really any investigation?"

"Are you treating this investigation like you treat the investigation of other individuals suspected of facilitating murder and drug crimes?"

Here is an account by Rolling Stone's Matt Taibbi of his appearance on Eliot Spitzer's Viewpoint program discussing the HSBC settlement. Taibbi's account contains a link to the Spitzer interview. Hat tip to Jack Darby of Austin's Krimelabb. com for alerting me to this posting. Taibbi also has an interesting opinion piece about the HSBC settlement on his Rolling Stone TAIBBLOG.

(wisenberg)

December 17, 2012 in Current Affairs, Deferred Prosecution Agreements, International, Investigations, Money Laundering, Prosecutors | Permalink | Comments (1) | TrackBack (0)

Monday, November 5, 2012

Alleged Theft of Trade Secrets

An area that has long fascinated me is intellectual property and prosecutions premised on theft of trade secrets. It is particularly intriguing when the actors are outside the United States. The U.S. Attorney in the Eastern District of Virginia issued an indictment of a company and several executives "for allegedly engaging in a multi-year campaign to steal trade secrets related to DuPont’s Kevlar para-aramid fiber and Teijin Limited’s Twaron para-aramid fiber.  The indictment seeks forfeiture of at least $225 million in proceeds from the alleged theft of trade secrets from Kolon’s competitors."  What will make this case particularly interesting is that the company - Kolon- is "[h]eadquartered in Seoul, South Korea, yet the indictment came from a grand jury in Richmond, Virginia. (see here).

(esp)

November 5, 2012 in International, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Sunday, November 4, 2012

Carbon Copy Prosecutions - New Article

T. Markus Funk, Perkins Coie Partner and former federal prosecutor, and Chicago Assistant U.S. Attorney Andrew S. Boutros examine the growing - but still largely under-recognized - international phenomenon of what Funk and Boutros term "carbon copy prosecutions." A country’s incentive to vindicate its own laws is not insubstantial, especially when a company or individual has already admitted, in a foreign proceeding, to having violated local law.  With the increase in FCPA and money laundering cases, globalization presents many new concerns. Check out -  Andrew S. Boutros & T. Markus Funk, "Carbon Copy" Prosecutions: A Growing Anticorruption Phenomenon in a Shrinking World

(esp)

November 4, 2012 in International, Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, October 26, 2012

ABA Fall Meeting -Opening Session & Overcriminalization Panel

The ABA Fall Institute opened with welcoming remarks from William Shepherd (Holland & Knight), chair of the Criminal Justice Section, and Laurel Bellows, President of the American Bar Association. 

The opening address was given by Edwin Meese III, former U.S. Attorney General. He talked about how to make our system “effective, efficient, and just.” He noted that the National Association of Criminal Defense Lawyers (NACDL) is aligned with the Heritage Foundation on this important issue of overcriminalization. He spoke about the improper use of the criminal law and process for political reasons and social regulation, emphasizing the misuse of limited resources. He gave some frightening examples of how ordinary law-abiding citizens were caught up in the criminal process.  He said that the estimate today is that there are over 5,000 criminal statutes and then there are also regulatory offenses, and his estimate is over 300,000 federal criminal penalizing statutes and regulations.  He noted the lack of a meaningful mens rea in many of these statutes.  He mentioned how overcriminalization problems in the United States also involve cases in international law. He suggested that we need education  (educating the public and legislators) and also legislators should not be able to delegate criminal responsibility to an agency for the creation of a crime.  The legislature should also make crimes clear with a necessary ingredient being the mens rea. In this regard he advocated for an innovation of using mistake of law, something that is being experimented with in New Jersey. Finally, placing all criminal laws in Title 18 is something that he thinks will assist.

This opening address was a lead into a discussion of the next panel on the topic of Overcriminalization,
a panel moderated by Professor Sara Sun Beale. She started with questions of asking whether we have a problem of Overcriminalization and if so, what do we should do about it. The first speaker was Melodee Hanes, Acting Administrator, Office of Juvenile Justice & Delinquency Prevention, U.S. Department of Justice.  She said that U.S. detains youth five times more than the next industrialized country. She noted that Japan does not detain their youth; they resolve issues in an alternative method. Community based alternatives are needed.  Professor Roger Fairfax (George Washington) discussed the “smart on crime” philosophy. Charles J. Hynes, District Attorney of Kings County, Brooklyn, New York, who created 29 new alternative programs, including a re-entry program, noted the need for criminal law reform.The last speaker was Professor Luis Chiesa (Pace Law School), who offered a comparative perspective from a civil law view. He suggested using rules of construction similar to European courts and others.  This international perspective added another dimension to this discussion.

(esp)

October 26, 2012 in Conferences, International | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 17, 2012

Libor: The Regulatory Mind And the Prosecutorial Mind (2)

As I mentioned here last Wednesday:

"By ignoring material financial falsehoods, the regulators and examiners allow frauds to continue and decrease the likelihood of future accountability through the criminal process."

The New York Fed's Friday data dump reveals beyond question that some of its officials, including Timothy Geithner, were aware of intentionally misreported Libors by 2008 at the latest. Today's Wall Street Journal editorial lays out the damning transcripts.

What does this mean? For openers it means that DOJ's announcement of a criminal investigation is a joke. Regulators and government officials at the highest levels knew of the misrepresentation. By not immediately raising bloody hell and putting a stop to it they either sanctioned the conduct, rendering it non-criminal, or themselves became co-conspirators.

Do you really think DOJ is about to investigate Geithner or drag him into somebody else's criminal defense? Get real. These people can't even prosecute robo-signers.

(wisenberg)

July 17, 2012 in Civil Enforcement, Current Affairs, International, Investigations, News | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 25, 2012

Should Wal-Mart Be Prosecuted, Really Prosecuted?

I expect that any day now one of my non-white-collar criminal clients will come to my office and ask me to incorporate him to protect him from future criminal liability.  Of course, incorporation does not immunize an individual from criminal liability.  Nor, generally, does it protect small corporations from prosecution.

However, it appears that just as massive corporations are "too big to fail," they are too big to prosecute.  In the wake of the government's destruction of Arthur Andersen because of an ill-conceived, aggressive and ultimately unsuccessful indictment which caused the loss of thousands of jobs, DOJ has been highly reluctant to aggressively prosecute major corporations.

Although there are occasionally indictments of major corporations, most often these are disposed of by "deferred prosecutions," which are essentially delayed dismissals with financial penalties in numbers that are large in absolute terms but meager in comparison to the profits and assets of the corporation.  To be sure, even when prosecuted to conviction, corporations do not go to jail and thus there may be little practical difference between a conviction of a corporation and a deferred prosecution.  However, to the extent a goal of the criminal justice system is to achieve apparent fairness and equality, there is a genuine, if symbolic, reason for the prosecution of the large and powerful, whether they be individuals or corporations.

According to a thorough account in the New York Times this past Saturday, April 21, see here, Wal-Mart in Mexico, where the company has, according to the Times, one-fifth of its stores, engaged in a systemic countrywide scheme in which it spent millions of dollars to bribe hundreds of Mexican officials to gain favorable and expedited treatment and a competitive advantage.  According to the Times, this conspiracy was not, as is often the case in corporate wrongdoing, the act of a rogue individual or group.  Rather, it was orchestrated from the very top of the Wal-Mart Mexican hierarchy.  Additionally, again according to the Times, when reports of this corruption reached Wal-Mart's U.S. headquarters, top executives took great pains to cover up the wrongdoing.

The alleged conspiracy, if the Times report is accurate, appears to be the kind of corporate crime, therefore, that deserves aggressive prosecution (not just an indictment and a deferred prosecution), especially if the government wants the Federal Corrupt Practices Act ("FCPA") to be taken seriously.  Of course, there may be statute of limitations or other fact-finding or evidentiary problems involved in putting together a case involving facts from 2005, the year, according to the article, the bribe payments were made.  It is far easier to write an article reporting corruption than to prove it under the rules of evidence beyond a reasonable doubt.  It will be interesting to see what, if anything, DOJ does with respect to this matter.

(goldman)

April 25, 2012 in Arthur Andersen, Corruption, Deferred Prosecution Agreements, FCPA, International, Investigations, Obstruction, Prosecutions, Prosecutors | Permalink | Comments (2) | TrackBack (0)

Wednesday, February 22, 2012

Strauss-Kahn Involved Again in Sex Case

Dominique Strauss-Kahn is once again in trouble with the law in relation to an investigation involving sexual activity.  Strauss-Kahn was detained overnight in Lille, France, for questioning in a French investigation related to an alleged prostitution ring that purportedly supplied women for sex parties with Strauss-Kahn in Brussels, Paris and Washington.

Strauss-Kahn contends that he had no reason to believe that the women at these parties were prostitutes.  His French lawyer bared that defense to French radio in December, "People are not always clothed at these parties.  I challenge you to tell the difference between a nude prostitute and a classy lady in the nude."  Reuters article, see here.  This lack of scienter defense ironically appears to be the converse of what many believed would have been Strauss-Kahn's defense had the New York case in which he was accused of sexual assault gone to trial.  In that case, it was expected that his defense would have been that he did believe that the woman in question was a prostitute.

The investigation, in which eight people have been charged, involves alleged misuse of corporate funds to pay for the services of the prostitutes.  Engaging prostitutes is not illegal in France (although it is in Washington), but if the investigators determine that Strauss-Kahn had sex with prostitutes he knew had been paid for out of company funds, he might be charged as a beneficiary of that misuse of funds.  Most likely, it will be difficult to prove that Strauss-Kahn, even if he were found to have known the women involved were prostitutes, knew how they were paid.

High-profile cases in other jurisdictions often affect prosecutorial priorities.  One wonders whether this case will lead American prosecutors to scrutinize corporate books to determine whether corporate funds have been used to supply prostitutes to customers, political figures and others.  I suspect that such payments (and consequent tax deductions as business expenses) are not wholly uncommon, at least for non-public businesses.  Any resulting cases, involving both sex and corporate corruption, are sure to draw media attention.

(goldman)

February 22, 2012 in Celebrities, Corruption, International, Investigations, Media, News, Tax | Permalink | Comments (0) | TrackBack (0)

Friday, July 1, 2011

UK Bribery Act - Today's the Day

Thursday, June 2, 2011

Will Strauss-Kahn’s Bail Conditions be the Norm?

Guest Blogger - Lawrence S. Goldman - Law Offices of Lawrence S. Goldman

Dominique Strauss-Kahn is not accused of a white-collar crime, but he is a prototypical white-collar defendant – important, rich, and well-connected.  

Strauss-Kahn, a French citizen accused of attempted rape and other crimes, was denied bail at his arraignment by a New York City lower court judge.  A major justification was that France (like Germany, China, Japan, and many other nations) will not extradite its nationals.  Subsequently, Strauss-Kahn’s experienced and able attorneys, desperate to get him released, proposed a highly onerous bail package, which a higher court judge accepted over the prosecutor’s strenuous objection.  That bail package consists of a $1 million cash bond, an additional $5 million bond secured by a home owned by Strauss-Kahn’s wife, home confinement in New York City with an ankle bracelet, inside and outside video cameras, and even a 24/7 armed guard (Why armed?  To shoot him if he tries to escape?  To prevent the French foreign legion from freeing him?).  These security measures reportedly will cost $200,000 a month.  Strauss-Kahn, like all persons confined at home pre-trial, will receive no jail credit for his period of house arrest.

One wonders whether Strauss-Kahn’s bail conditions will become a prototype for bail conditions for major white-collar defendants, at least those with foreign or multi-national citizenship (an increasing number with the expansion of both the global economy and prosecutorial jurisdictional reach).  The setting of bail is perhaps the most unguided and unpredictable of judicial decisions.  Judges have wide discretion, amorphous standards, and, at least initially, generally little information about the case and the defendant.    It is to be expected that judges will look for similar cases or similar defendants for a model.  And, as recent history has shown, the most aggressive and/or harsh prosecutorial practices employed in the prosecution of violent and drug crimes (lengthy sentences, seizure of assets, restriction of counsel fees, eavesdropping and the like) soon work their way into the area of white-collar prosecution.  If the Strauss-Kahn bail conditions become a standard, we can expect severe and restrictive home confinement bail conditions for white-collar defendants.

(lsg)

June 2, 2011 in Celebrities, International, News, Prosecutions | Permalink | Comments (3) | TrackBack (0)

Sunday, March 27, 2011

New ABA Website Features U.S. and International Anti-Corruption News and Peer-Reviewed Analysis by and for Practitioners

The American Bar Association’s Criminal Justice Section is launching a new website that provides up-to-date, practitioner-oriented information and analysis on global anti-corruption matters. Managed by the section’s Global Anti-Corruption Task Force, the site features, among other unique categories of information:

Peer-reviewed articles and analysis from practitioners worldwide;

Up-to-date news reports;

Extensive online resource links;

A library of presentations; and

Notices of upcoming anti-corruption events and seminars.

The task force provides a neutral, practitioner-focused online resource to monitor, evaluate and report on anti-corruption news and developments in transnational anti-bribery efforts. Focus is on the interplay between anti-corruption governmental efforts and the effect that those efforts have on global commerce and business development.

The website’s distinguishing features are: a) all published articles are peer-reviewed and available free of charge online; b) its subject-matter focus covers the globe, and not just the United States; c) published pieces come from leading practitioners and industry leaders from all over the world; and d) its objective is to provide news and analysis that is "for and by" practitioners who are looking for the latest developments and insights in the ever-changing global anti-corruption arena.

The site also provides extensive real-time news announcements and reports on criminal and regulatory enforcement activities relating to the Foreign Corrupt Practices Act, as well as similar international instruments such as the United Kingdom Bribery Act, the German Anti-Corruption Act, Russia’s National Plan for Counteraction to Corruption, and the U.N. Convention Against Corruption.

The Global Anti-Corruption Task Force is co-chaired by Assistant U.S. Attorney Andrew S. Boutros (in his personal capacity) and Perkins Coie Investigations and White Collar Defense Group partner (and former Assistant U.S. Attorney) T. Markus Funk.

A link to the task force website is available here.

(esp)

March 27, 2011 in Corruption, FCPA, International, News, Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, March 18, 2011

Ninth Circuit - Exporting Thermal Imaging Cameras Requires License

In United States v. Guo, the defendant was convicted with knowingly and willfully conspiring to export, and attempting to export, ten export -controlled cameras to China without a license.  The defendant argued on appeal that the statute 50 USC s 1705 was too vague and thus there was a due process violation. The Ninth Circuit ruled that the complexity of a statute is not the same as vagueness.  Since the statute requires "that the person knew that he needed a license but did not get one," the court did not see a danger of someone violating the statute "unwittingly."

(esp)

March 18, 2011 in International, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Saturday, October 23, 2010

Overcriminalization Hurts

Lesley Clark at the Miami Herald tells the story of Abner Schoenwetter, a victim of overcriminalization, in an article titled Congress Looks at Law that Criminalizes Non-Criminal Behavior.  Mr. Schoenwetter recently traveled to Washington to testify before a congressional committee.  His testimony, along with others at the hearing, can be found here. Mr. Schoenwetter's case arose with an individual named David McNabb - a case involving the importation of spiny lobster tails from Honduras to the U.S.  Despite the fact that the Attorney General of Honduras said that there was no violation of law, the 11the Circuit refused to reverse this conviction premised on a violation of the Lacey Act.  For more discussion of this case, see my article - A New Dimension to the Prosecution of White Collar Crime: Enforcing the Extraterritorial Social Harms.   

In reading the Miami Herald I couldn't help but notice the difficulties that Abbie Schoenwetter now faces.  I, for one, intend to purchase something from his business here. Overcriminalization hurts real people.

(esp) 

October 23, 2010 in Fraud, International, Judicial Opinions, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Sunday, October 3, 2010

Commentary on Recent Decisions in the Second Circuit Related to International Matters

Kiobel v. Royal Dutch Petroleum - the Second Circuit looks at whether a corporation can be held liable under the Alien Tort Statute (ATS).  Circuit Judge Jose Cabranes in his decision asked "whether a plaintiff bringing an ATS suit against a corporation has alleged a violation of customary international law."  He holds "[t]he concept of corporate liability for violations of customary international law has not achieved universal recognition or acceptance as a norm in the relations of States with each other. Inasmuch as plaintiffs assert claims against corporations only, their complaint must be dismissed for lack of subject matter jurisdiction." (citation omitted).  Circuit Judge Leval, authoring a concurring opinion, agreed that the "claims pleaded against the Appellants must be dismissed," but noted that he could not join "the majority’s creation of an unprecedented concept of international law that exempts juridical persons from compliance with its rules. The majority’s rule conflicts with two centuries of federal precedent on the ATS, and deals a blow to the efforts of international law to protect human rights."

Commentary - One has to wonder whether this case can be used to show why corporate criminal liability should be treated differently on occasion from individual liability?

Norex Petroleum v. Acess Industries -  the Second Circuit looks at "whether a United States federal court can properly hear a claim under the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961 et seq, arising from allegations of a conspiracy which primarily involves foreign actors and foreign acts."  The court refers to the recent decision in Morrison v. National Australian Bank Ltd., 130 S. Ct. 2869 (2010) and holds, "that absent an express intention by Congress of extraterritorial effect, a statute applies only domestically."  The court notes that "RICO 'is silent as to any extraterritorial application.'" The court states that "Morrison wholeheartedly embraces application of the presumption against extraterritoriality, finding that 'unless there is the affirmative intention of the Congress clearly expressed to give a statute extraterritorial effect, we must presume it is primarily concerned with domestic conditions.'" (citations omitted).

Commentary - As RICO is both a criminal and civil statute, will this mean that prosecutors can not apply RICO extraterritorially? 

(esp) 

October 3, 2010 in International, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 8, 2010

Feds are armed and dangerous in BP criminal investigation

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.

(DC)

September 8, 2010 in Environment, Grand Jury, International, Investigations | Permalink | Comments (1) | TrackBack (0)

Wednesday, August 18, 2010

Barclays Bank PLC Forfeiting 298 Million Dollars

Many of the recent corporate settlements with the government have focused on violations of the Foreign Corrupt Practices Act.  This one is somewhat unique in that the $298 Million Dollars being forfeited are for violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). A DOJ Press Releasestates that "[t]he violations relate to transactions Barclays illegally conducted on behalf of customers from Cuba, Iran, Sudan and other countries sanctioned in programs administered by the Office of Foreign Assets Control (OFAC)." The forfeiture was part of a deferred prosecution agreement with DOJ and the NY County District Attorney's Office. 

Barclay's press release notes that it "worked closely and constructively with the US Authorities."  They noted that "[t]he US Authorities have recognised Barclays substantial cooperation in the resolution." It sounds like 100,000 members of Barclay's staff will be going through training programs.

See also Mike Scarcella, BLT Blog, Judge Approves $298M Settlement Between DOJ, Barclays Bank; William McQuillen & Jesse Westbroook, Barclays Follows Citigroup With Court Rejection of U.S. Accord

(esp)

August 18, 2010 in Deferred Prosecution Agreements, International | Permalink | Comments (0) | TrackBack (0)

Sunday, March 14, 2010

Amicus Brief - Cert Petition: Legislative Jurisdiction/Extraterritoriality

Austin Parrish (Southwestern)  writes on Prawfsblawg -

"I wanted to begin by reaching out to law professors who might be interested in signing on to a amicus brief in support of a petition for writ of certiorari.  Max Huffman(Indiana) and I are writing an amicus brief in the case British American Tobacco v. United States. The cert. petition is part of a massive case brought by the U.S. against the tobacco companies. Various cert. petitions have been filed, including a government petition seeking recovery of a $280 billion disgorgement award.  Details about the underlying case can be found on SCOTUSblog.  

"The amicus brief that we are writing is on a narrow issue focused on how a court should interpret the geographic reach of federal law (the extraterritoriality question).  The brief is being submitted to encourage the Court to grant certiorari and review the decision of the D.C. Circuit. The brief clarifies the history and application of the effects test and shows how that history bears upon the proper interpretation of whether Congress intended a statute to reach extraterritorial conduct.  The brief does not take a position on the underlying merits: the federal government's use of RICO to prevent and restrain an alleged scheme to deceive American consumers about the health risks of smoking.

"If you are a law professor who would consider signing on to the amicus brief, please email me at [email protected], and I can send you a draft. A draft will be completed Monday, and we hope to finalize within the next week or so (it's on a tight filing deadline).  Because the effects test applies in a number of contexts (antitrust, securities, trademark, labor law, environmental law, criminal law etc.), the D.C. Circuit's decision, if left to stand, could have far-reaching implications. Legal commentators have also lamented the doctrinal incoherence in how courts approach legislative jurisdiction.  This would be a good opportunity for the Court to clarify what is now a confused area of law. More information about the case and the amicus brief is included below.

"The petitioner's cert petition implicates the question of whether RICO applies to the overseas conduct of foreign corporations.  The D.C. Circuit did not directly address whether Congress intended RICO to apply extraterritorially -- an issue on which the lower courts are divided.  Instead, it found: (1) that when domestic effects are felt in the United States, regulation of foreign conduct of a foreign corporation does not implicate extraterritorial jurisdiction; and (2) that it need not decide whether RICO applies extraterritorially so long as the foreign conduct has substantial effects in the United States.  Because the D.C. Circuit found a domestic effect, it presumed that Congress intended RICO to regulate abroad.  The case raises interesting questions about the role of the presumption against extraterritoriality and the effects test.  It implicates at least a three-way circuit split on how the courts determine legislative (prescriptive jurisdiction).

"The amicus brief attempts to show how the D.C. Circuit's opinion has added confusion to the existing circuit split.  It also suggests that the D.C. Circuit erred by disregarding the presumption against extraterritoriality.  The brief argues that the effects test sets the outer limits, under international law, of Congress's legislative jurisdiction, but does not serve as a canon of construction that overrides the presumption against extraterritoriality. The brief highlights how assuming legislation applies extraterritoriality can cause harm and undermine the meaningful development of international law.

"Max Huffman and I have previously written about these issues. Max's excellent article on the Foreign Trade Antitrust Improvements Act can be found here. I have written two pieces on international law, the effects test, and extraterritoriality.  They can be found here and here."  

March 14, 2010 in International, RICO | Permalink | Comments (0) | TrackBack (0)

Friday, November 27, 2009

White Collar Sentencing - In China

How much time is appropriate for a white collar criminal?  What if the crime results in death to individuals? Is it no longer a white collar crime?  In China it can mean a death sentence.  See Sharon LaFraniere, NYTimes, 2 Executed in China for Selling Tainted Milk

(esp)

November 27, 2009 in International, Sentencing | Permalink | Comments (0) | TrackBack (0)