Sunday, September 25, 2011

Solyndra Execs: The Best Week Possible

The Washington Post's Chris Cillizza thinks Solyndra had the worst week in Washington, because its CEO and CFO invoked the Fifth Amendment's Privilege Against Self-Incrimination in front of the House Energy and Commerce Committee. According to Cillizza, the silence of the executives "won't win them any allies in Washington." What allies? These guys already have bruises all over their bodies from where politicians have been touching them with eleven foot poles. Cillizza believes that their taking five "ensures that the probe into how Solyndra won the initial loan in 2009...will not only continue...but grow." This is silly. A vigorous criminal investigation is already assured. If the execs had talked they only would have made the DOJ's job easier.

The first place a bank looks when a big loan goes bad is the borrower's application, including the financial statement. For decades the DOJ has operated as a criminal collection agency for our country's financial institutions. It only gets worse if the loan, in this case about a half billion, is guaranteed by Uncle Sugar. Add in the DC gang mentality attendant upon what has become a political scandal and you would have to be a cretin to open yourself up to possible charges of false statements, perjury, or obstruction of justice. This one was a no-brainer. Kudos to the executives and their attorneys for not being idiots.

(Wisenberg)

September 25, 2011 in Congress, Current Affairs, Fraud, Investigations, News, Privileges | Permalink | Comments (1) | TrackBack (0)

Monday, September 12, 2011

Maxim Healthcare Gets DPA

A DOJ Press Release here  states that "Maxim Healthcare Services Inc., one of the nation’s leading providers of home healthcare services, has entered into a settlement to resolve criminal and civil charges relating to a nationwide scheme to defraud Medicaid programs and the Veterans Affairs program of more than $61 million."  The Deferred Prosecution Agreement (DPA) provides that Maxim will pay "a criminal penalty of $20 million and to pay approximately $130 million in civil settlements in the matter."  The DPA, which requires the company to meet reform and compliance measures, lasts for two years.

As with many companies who enter into DPAs, there are also individuals being prosecuted.  In this case the press release notes that "[t]o date, nine individuals – eight former Maxim employees, including three senior managers and the parent of a former Maxim patient – have pleaded guilty to felony charges arising out of the submission of fraudulent billings to government health care programs, the creation of fraudulent documentation associated with government program billings, or false statements to government health care program officials regarding Maxim’s activities."

The press release also states that "[t]he government’s willingness to enter into a DPA with Maxim is due, in significant part, to the company’s cooperation and the reforms and remedial actions the company has taken – beginning particularly in May 2009 – including significant personnel changes: terminating senior executives and other employees the company identified as responsible for the misconduct; establishing and filling of positions of chief executive officer, chief compliance officer, chief operations officer/chief clinical officer, chief quality officer/chief medical officer, chief culture officer, chief financial and strategy officer, and vice president of human resources; and hiring a new general counsel."

(esp)

September 12, 2011 in Fraud, Investigations, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Tuesday, September 6, 2011

Brown Affirmed - En Banc and Rehearing Filed

The Fifth Circuit Court of Appeals affirmed the James A Brown case (U.S. v. Brown), in which a "managing director at Merrill Lynch and the head of its Strategic Asset and Lease Finance group" had been indicted in the Nigerian Barge case coming from the Enron events. The indictment was for "short-cut" offenses of perjury and obstruction of justice and the convictions had previously been affirmed by a three judge panel.  Brown was now challenging his conviction on the basis that "the government violated his rights to due process by withholding materially favorable evidence that it possessed pre-trial."Specifically that it failed to disclose three pieces of evidence which included "1) The FBI notes of its interview with Fastow, 2) Senate investigators' notes of their interview with McMahon, and 3) transcripts of Zrike's pretrial testimony before the grand jury and the SEC."  Although some of this evidence was shown to the court in camera before Brown's trial, the government admitted "that it did not submit the Fastow notes to the district court for in camera review."  The Court takes the position that the government "did not suppress favorable evidence and that, even if it did, it was not material." 

As noted by the defense in its en banc petition request and rehearing request, the court uses a standard other than de novo in reviewing part of this Brady violation claim.  This presents an interesting question for an en banc or later Supreme Court to examine.

Brown En Banc Petition -Download 10-20621 Brown En Banc Petition FILED COPY

Brown Rehearing Petition -Download 10-20621 Brown Panel Rehearing FILED COPY

These events are also a perfect reason why there needs to be a statutory change in the discovery rules. NACDL has a proposal that would assist in making certain that favorable evidence is provided to the defense (see here) and hopefully Congress will take up this issue. Examining these issues after the fact only creates added issues.

(esp)

September 6, 2011 in Enron, Investigations, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Friday, September 2, 2011

Prosecution Gets Another Turn At Bat In Clemens Case

CNN has the story here. Judge Reggie Walton apparently blasted prosecutors, accusing them of deliberately violating his rulings during the truncated first trial. But Judge Walton believes that governing law prevents him from barring retrial on Double Jeopardy grounds. The leading Supreme Court case is Oregon v. Kennedy, 459 U.S. 812 (1982), which holds that a mistrial granted upon the request of a defendant, even if necessitated by government misconduct, only bars retrial on Double Jeopardy grounds if the prosecution intended to goad the defendant into moving for a mistrial.

(Wisenberg)

September 2, 2011 in Celebrities, Current Affairs, Defense Counsel, Investigations, Judicial Opinions, Legal Ethics, News, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (1) | TrackBack (0)

Friday, August 12, 2011

SEC's Dodd-Frank Whistleblower Regulations Take Effect Today. Corporate America Expects More FCPA Woes.

Politico has a story about it here. The new regs implement Section 21F of the Dodd-Frank Act, which authorizes the SEC to award 10 to 30 percent of the monetary sanctions it recovers in a given case to a qualified whistleblower. What seems to most annoy the business community about the implementing regs is the SEC's insistence that whistleblowers are under no obligation to make use of a company's internal complaint procedures before running to the SEC. But the regs do say that an employee who goes through internal company whistleblower protocols is eligible for a Dodd-Frank whistleblower award if his/her employer subsequently self-reports to the SEC, based on the whistleblower's complaint, and a recovery is had. Further, an employee has a 120-day grace period after whistleblowing to his/her company, within which to bring his/her complaint to the SEC. Finally, in determining the amount of a whistleblower reward, the SEC will consider whether the whistleblower made use of his/her internal company procedures.  The new regs contain enhanced anti-retaliation provisions as well, which prohibit direct or indirect retaliation for making whistleblower complaints to the SEC and other government entities.

There is an inherent tension between the anti-retaliation provisions and the SEC's and DOJ's often-emphasized warnings to companies that they should have vigorous and authentic internal whistleblower procedures. What if a company's pre-existing compliance policy requires the prompt internal reporting of whistleblower complaints? Can a company punish an employee who ignores such a provision and goes straight to the SEC? What if the employee declines to internally report, even after going to the SEC, because he/she feels that the company procedure is a sham? My guess is that such punishments will occur and that they will be deemed to run afoul of the anti-retaliation provisions. The retaliatory response is an instinctiual, persistent, and virtually universal impulse. It is really hard to eradicate.

(Wisenberg)

August 12, 2011 in Current Affairs, FCPA, Fraud, Investigations, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Monday, July 25, 2011

"Folks do need to pay attention to where they are."

This weekend saw something unusual in the nation's elite newspapers. Three detailed stories about white collar crime issues.

WSJ Weekend carried this in-depth and outstanding piece by Gary Fields and John R. Emshwiller about overcriminalization--the proliferation of criminal statutes, particularly at the federal level, covering more and more aspects of everyday life. The article also focused on Congress's increasing enactment of statutes that dispense with any meaningful mens rea element. Although both of these problems have been around for years, and the article makes no effort to treat the matter historically, it does a generally good job of framing the issues.

Fields and Emshwiller detail how the Idaho U.S. Attorney's Office successfully prosecuted a father and son for attempting "to take artifacts off federal land without a permit" under the Archaeological Resources Protection Act of 1979. They were out camping and looking for arrowheads, which they failed to find, and apparently did not know that the law existed. According to Fields and Emshwiller, the Act "doesn't require criminal intent." This is true of the Act on its face, but the father and son clearly intended to search for arrowheads and did not have a permit. This case is really more an example of obscure administrative criminal statutes that no normal person can be expected to master. Hence it is terribly unfair in such circumstances to apply the old saw that "ignorance of the law is no excuse." But don't tell that to Idaho U.S. Attorney Wendy Olson. She will just answer that "[f]olks do need to pay attention to where they are."

The article also details how Olson's office convicted an inventor for abandoning covered chemicals under the Resource Conservation and Recovery Act. This was after the inventor had been acquitted in an Alaskan federal court for illegally shipping the same chemicals without proper labeling. Would this have been the proper occasion for the exercise of prosecutorial discretion? Not a chance. According to Ms. Olson, her "office will continue to aggressively prosecute" such crimes.

Meanwhile, on Friday, the Washington Post's David Hilzenrath wrote a story with the headline, Quandary for U.S. companies: Whom to Bribe? The piece purported to give both sides of the FCPA debate, but I found it slanted towards the DOJ view. While discussing the recent convictions in the Lindsey Manufacturing case, Hilzenrath never mentions that the Lindsey guilty verdicts are in serious doubt post-trial, with further briefing due from the parties and a federal district judge who has questioned the case and is angry at the government. Even more amazingly, Hilzenrath nowhere references the recently concluded 10-week jury trial in D.C. against the first wave of defendants in DOJ's heavily publicized African Sting FCPA bribery case. The trial resulted in a hung jury mistrial. According to one of the defense attorneys, Todd Foster, the main theme of the defense was that the FCPA was too complicated to be understood by the defendants. Yet this trial, occurring right under the Post's nose, was not deemed worthy of mention. Hat tip to Todd for bringing the article to my attention.

Finally, the Sunday New York Times focuses on Murdoch's Unlikely Ally, former New York City schools chancellor and DOJ Antitrust Chief Joel Klein, in an article by Jeremy Peters, Michael Barbaro, and Javier Hernandez. It is a very good story and remarkable for its focus on the mechanics of News Corporation's internal investigation. Instead of following the "best practice" and hiring an outside law firm to conduct the investigation and report to an audit or special committee controlled by independent outsiders, News Corporation is employing something of a hybrid. It has appointed Lord Anthony Grabiner as the internal investigation's "Independent Chairman." But Grabiner sat behind, and presumably advised, the Murdochs during last week's parliamentary testimony. Grabiner will report to Klein, a News Corporation executive and trusted Murdoch adviser who also sat behind the Murdochs. Klein will report to Viet Dinh, "an independent director on the News Corporation board," for whom I have enormous respect. The article quotes University of Delaware corporate governance expert Charles Elson to the effect that this arrangement "is not standard practice." It may be more standard than Professor Elson realizes. It is obviously not the best practice for ensuring a truly independent investigation. Virtually by definition, there is no way that such an investigation can be wholly and truly independent.

By the way, even an investigation conducted by outside counsel and reporting to the audit committee (or a specially created independent committee) may only be independent up to a point. Let's say that the investigation is completed and outside counsel submits a report to the audit or independent committee. What happens next? Is the Board of Directors required to follow the recommendations of the independent committee? If not, then what is the point of the process in the first place? But that is a topic for another day.

(Wisenberg)

July 25, 2011 in Current Affairs, FCPA, Investigations, Legal Ethics, Media, News, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Monday, July 18, 2011

Discovery Reform

The National Association of Criminal Defense Lawyers (NACDL) issued a news release here titled "Legislation Would Enforce Government's Duty to Disclose Favorable Information to Accused." The essense is that it calls for new legislation.  The press release states:

"To help ensure fairness in federal criminal proceedings, the Board of Directors of the National Association of Criminal Defense Lawyers (NACDL) has endorsed model legislation drafted by NACDL’s Discovery Reform Task Force that would require the government to disclose all information favorable to the accused in relation to any issue to be determined in a federal criminal case."

 Proposed Legislation here and Commentary here.

(esp)(disclosure that this author served on the committee working on this suggested legislation)

July 18, 2011 in Defense Counsel, Investigations, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Sunday, July 10, 2011

The Need for Corporate Compliance Committees

Guest Blogger: Michael Volkov  (MayerBrown)

It is hard to move businesses in different directions. I like to use the analogy of turning a ship around -- it takes time, dedication and a steady hand.

Corporate governance is shifting again. We had the revolution of Sarbanes-Oxley in the early 2000s and now we have a new movement afoot. It is no coincidence that aggressive changes in white collar enforcement coincide with significant changes in the corporate governance landscape.

The newest trend -- which I fully endorse -- is the creation of corporate compliance committees. For most businesses, a separate compliance committee is an effective means to focus on difficult compliance issues, demonstrate a management commitment to compliance, and facilitate communications on compliance issues within an organization. By establishing such a committee, a company sends a very clear message. But the committee has to be more than just window dressing -- it has to have the support, the resources, and dedicated members with real expertise in the compliance area.

I like to use another analogy -- a compliance committee is like your dashboard on your car, telling you how fast you are going, how much fuel you have, and allowing you to signal others on the road.

A compliance committee should help your company navigate your legal obligations by empowering your decision makers with the right information. It serves a proactive role, separate from the audit committee which has a number of critical obligations related to Sarbanes-Oxley enforcement.

The compliance committee is responsible for ensuring that the company is complying with key legal and regulatory obligations. It is your primary vehicle by which to manage risk.

The compliance committee must actively gather and disseminate information reporting on overall compliance efforts. It must also communicate compliance issues and business risks to the right people. The right people include responsible managers, who are directly responsible for significant day-to-day business decisions.

The compliance committee must include one or more independent members who understand the regulatory environment, as well as the principles of good governance. This has a number of advantages. The independent member can test reports and statements, and mine discussions for issues that may otherwise go uncovered; may be able to share broad industry information and trends; and is likely to be less susceptible to a company’s internal culture (which might be reluctant to discuss certain risks and violations).

A well-structured compliance committee is your ultimate protection against potential legal and regulatory violations. I encourage others to look at such committees as part of an overall compliance program.

(mv)

July 10, 2011 in Investigations, Scholarship, Settlement | Permalink | Comments (1) | TrackBack (0)

Friday, July 1, 2011

Brady From Heaven For Strauss-Kahn

Dominique Straus-Kahn has received from the district attorney what most defendants never get -- early  Brady material. Today's New York Times reports that "Strauss-Kahn Case Seen as Near Collapse" because prosecution investigators have discovered "major holes in the credibility" of the housekeeper who claims he sexually attacked her. 

The District Attorney should be commended for the early disclosure of the purported victim's credibility problems. I cannot help wonder, however, whether such disclosure would have been made -- certainly so early -- in a case where the defendant did not have such considerable legal and investigative firepower that it could be predicted that his team would itself eventually discover at least some of the victim's credibility problems. I also would love to know, and am sure I never will, what the discussions were in the prosecutor's office about whether and when to disclose this Brady material. In this connection, I also wonder whether the resignation of the head of the sex crimes unit a few days ago is just a coincidence.

Brady revelations by prosecutors are rarely easily made, especially when they are serious enough, as may well be the case here, to destroy the prosecution case. It goes against the grain for any competitor -- and most prosecutors are competitors trying to win -- to provide information that will hurt his case, let alone destroy it. And I have no doubt that at least some of the prosecutors involved in this case still firmly believe that Strauss-Kahn did sexually attack the housekeeper and that all this stuff about money laundering and the like is besides the point or, in legal parlance, immateriaL. 

Experienced prosecutors know that they can almost always get away with Brady violations. The number of prosecutions or disciplinary actions against prosecutors for Brady violations is miniscule. Appellate courts are generally loathe to reverse convictions for anything but egregious Brady violations, generally finding that the withheld information was immaterial. There are certainly generally well-meaning prosecutors who would have withheld the exculpatory information here to increase their chances of achieving what they believe is the just result. And there are others less well-meaning, and far fewer, who would have withheld the information to advance their own careers.

(Goldman)

Response by Professor Larry Ribstein here.   (esp)

July 1, 2011 in Investigations, Privileges, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Friday, June 24, 2011

The Prosecutor’s Duty to Investigate His Own Witness

The Seventh Circuit on June 17 issued a ruling in a drug case that appears to have general applicability to criminal cases, including white-collar cases. In United States v. Freeman, 09-cr-4043, 2011 WL 2417091 (7th Cir., June 17, 2011), the Seventh Circuit affirmed a district court’s grant of a new trial on the ground that the prosecutors presented testimony of a key cooperating witness on the stand who they knew or at least should have known was lying. In that case, a defense lawyer, after reading the witness’s grand jury testimony, sent the prosecutors a letter stating that the defendant had been incarcerated at the time the witness claimed the defendant had participated in important events in the charged conspiracy. The prosecutors apparently failed to investigate this claim and called the cooperating witness, who testified falsely (the prosecutors did later stipulate that the defendant had been incarcerated at the time of the events the witness described).

The court’s opinion forcefully stated the prosecutor’s obligation to present accurate and candid information:

[T]he governing principle is simply that the prosecutor may not knowingly use false testimony. This includes "half-truths" and vague statements that could be true in a limited, literal sense but give a false impression to the jury.

The court went on, more remarkably, to impose a duty upon the government to investigate plausible allegations that a government witness’s expected testimony was false:

[I]t is obvious that when the government received the letter from [the defendant’s] attorney, it knew there were problems with [the witness’s] testimony – problems it should have cleared up well before [the witness] was allowed to testify . . . .

[W]hen the government learns that part of its case may be inaccurate, it must investigate. It cannot simply ignore evidence that its witness is lying. Here, the government abdicated its responsibility by failing to investigate . . . .(Citations omitted.)

The case is significant not so much for its statement that the government must not knowingly present false or misleading testimony, a rather obvious principle, but on its imposing on the government a duty to investigate a specific allegation that its cooperating witness had testified falsely or was about to testify falsely. Prosecutors, in white-collar and other cases, often wholly and uncritically accept the stories told by cooperating witnesses, particularly the first to "turn," regardless of the witness’s blemished background and huge personal motivation, and stubbornly cling to the belief the witness is telling the truth despite indications to the contrary. Too often consequently, prosecutors turn a deaf ear to substantial allegations brought to them by defense lawyers that their witnesses are lying. And perhaps too often defense lawyers, fearing that the prosecutors will not seriously investigate matters that will undermine their cases but rather will make efforts to minimize their significance, choose not to bring such information to the prosecutors’ attention.

This case suggests that a prosecutor who makes no effort to investigate a plausible allegation that a major government witness will give false testimony may imperil a conviction if it is later revealed that the witness lied, ordinarily not by itself grounds for reversal. At the same time it may indicate that a defense lawyer who chooses not to approach the prosecutor with evidence of a prosecution witness’s expected perjury and instead uses such evidence unsuccessfully at trial may weaken or undermine a post-trial motion based on that false testimony.

(Goldman)(hat tip Evan Jenness)

June 24, 2011 in Investigations, Judicial Opinions, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, June 16, 2011

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Finding the Line: Ethical Considerations When Contacting and Interviewing Witnesses,” Thursday, June 16, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

Day One of the seminar concluded with a panel discussion of the various ethical pitfalls surrounding the interviewing of witnesses. Patrick Robbins moderated the discussion. The panel included Blair G. Brown, David Fechheimer, Nina J. Ginsberg, Marc S. Harris, and Steven Singer.

The panel first discussed hypotheticals involving a lawyer who first represents a company (through an audit committee) under investigation.  Ms. Ginsberg pointed out the first potential conflict that lawyers face when interviewing employee witnesses under these circumstances is that the witness’s interests may be adverse to the company client. She further noted that such adverse interests would preclude dual representation as well. She discussed the burdens the model rules place upon lawyers interviewing witnesses. Model Rule 4.3 requires an explanation of the lawyer’s role, prior to interviewing, where the witness may be confused regarding the lawyer’s role, and that this explanation approaches that required by Miranda warnings. As Mr. Brown noted, these warnings are in the interest of the lawyer as well, as they will protect the company and the lawyer from subsequent motion, though he doubted that the warnings ever approach the standard of Miranda. The panel agreed that the overriding goal of representing the company by ferreting out information, and convincing the government that the company is being aggressive in its investigation, runs directly contrary to strong warnings. Marc Harris noted that it was common to demand cooperation from employee witnesses, upon threat of termination.

The panel discussed the problems presented by the question: “Should I get a lawyer?” Everyone agreed that the question required the lawyer to walk a fine line. The lawyer should not give the witness legal advice by opining whether a lawyer is a good idea, but must accurately answer that the witness has the option to get a lawyer.

The next hypothetical involved a lawyer advising an AUSA that he represents all current employees of the corporation and the current and former CFO and CEO, but the AUSA sends the agents to interview the employees. Mr. Brown started his response by cautioning against such blanket assertions of representation unless the facts truly warrant it. He continued by noting that the state ethics rules may provide the best barrier to this kind of conduct.  The panel agreed, with Mr. Singer noted that many state ethics rules specifically include corporate employees as represented parties.

Marc Harris noted that another fine line exists when advising all employees of a company that they need not talk to agents, and that flatly advising against it may constitute obstruction of justice. Ms. Ginsberg further cautioned that it created an impression on the part of the employees that they are being represented. Mr. Brown noted that Model Rule 8.4 allows a lawyer to advise a client’s employee not to talk to an adverse party.

One questioner noted that the trend toward “hyper-co-operativity” on the part of companies has only aggravated the problems faced by the employees on the other side of the hypotheticals discussed.
Another questioner asked about government pressure to not interview government witnesses. Mr. Singer commented that such efforts to intimidate the defense must not be allowed to succeed, and discussed taking steps to protect oneself during those scenarios, i.e., having multiple people present for any interviews.

The final hypothetical involved a grand jury witness taking the 5th Amendment privilege to protect another individual and advising the lawyer he was doing so. Mr. Harris indicated that this is not problematic, but, advising a witness to do so might constitute obstruction of justice, especially if that advice was motivated by a desire for financial gain by securing further employment by the corporation at issue.

(dt)

June 16, 2011 in Conferences, Defense Counsel, Investigations, Legal Ethics | Permalink | Comments (0) | TrackBack (0)

Thursday, June 9, 2011

Khuzami's Complaint

The United Jewish Appeal-Federation of New York has a Criminal Law Group. Wow. I never knew. SEC Enforcement Director Robert Khuzami recently spoke to its members about questionable tactics routinely engaged in by white collar lawyers (and their clients) during SEC Enforcement Division proceedings. Khuzami's Speech is troubling as it reveals clearly unethical and potentially illegal behavior, including: improper signalling to witnesses regarding substantive testimonial responses, representation of multiple witnesses with clearly adverse interests, representation of multiple witnesses who adopt virtually identical and implausible explanations of events, witnesses who "don't recall"  dozens of basic and uncontroverted facts documented in their own writings, scorched earth document production, suspect recantation of damaging testimony after deposition breaks, and window-dressing internal investigations that scapegoat mid-level employees. Khuzami laments these tactics and notes that they often backfire by increasing Enforcement Division skepticism of the entity or person under investigation and by damaging the future credibility of counsel who encourage such behavior. But employment of at least some of these brazen tactics should do more. The people and entities who engage in them should go straight to secondary, as they say at the border. If this had been done in Bernard Madoff's case, after he was caught red-handed lying during a regulatory examination, his fraud would have been uncovered years ago. The message from the SEC should be clear. You don't get to lie or obstruct justice during Enforcement Division investigations or SEC exams. Hat tip to Jonathan Hardt of Wilmer Hale for bringing this speech to my attention.

(wisenberg)

June 9, 2011 in Civil Enforcement, Investigations, Legal Ethics, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Monday, June 6, 2011

Do You Really Need Five DOJ Lawyers to Prosecute John Edwards

A key problem when a DC Prosecution team is sent in to investigate and perhaps indict on conduct, is that they examine the conduct out of the context of the typical case seen in the local U.S. Attorneys' Office.  They don't see the run-of-the-mill drug, immigration, or fraud case that typically comes through the U.S. Attorneys' Office. They become champions of a single or multiple case that they investigate, and with a single lens proceed or not proceed with their cause. 

One has to wonder if this may be playing a part in the John Edwards prosecution.  Mike Scarcella, over at the BLT Blog, notes here that the Public Integrity prosecutors are teaming up with some local prosecutors in this case. But it seems according to his blog entry that "a former chairman of the Federal Election Commission," is saying that the alleged activity is not criminal - and is not even a civil violation.

Whether the prosecutors, or Edwards and his defense team and others, are correct on whether this is a crime or even civil violation, is only half the problem. The other half is why are five lawyers from the department of justice working on an alleged election violation case.  There is some real crime out there - even some real white collar crimes like identity theft and credit card fraud.  Wouldn't our tax dollars be better spent on this?

(esp)   

June 6, 2011 in Celebrities, Investigations, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Sunday, June 5, 2011

The Cost of Cooperation

Is the cost of cooperation really worth it?  In some instances you get a 5K1.1 motion that offers a reduction in sentence for substantial assistance.  In some cases you get the benefit of arguing to the court for a lower sentence.  And in some matters, it may even provide a basis for a non-prosecution. 

But what does this all mean for the person cooperating?  What are the internal costs that this person suffers? This sad story tells it all - Peter Lattman & William K. Rashbaum, NYTimes, A Trader, an F.B.I. Witness, and Then a Suicide

(esp)

June 5, 2011 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (1) | TrackBack (0)

Tuesday, May 31, 2011

EVA Airways Corporation Agrees to Plead Guilty

A DOJ Press Releasereports that "EVA Airways Corporation has agreed to plead guilty and to pay a $13.2 million criminal fine for its role in a conspiracy to fix prices in the air cargo industry."  The press release states that "[u]nder the plea agreement, which is subject to court approval, EVA has agreed to cooperate with the department’s antitrust investigation."  This sometimes means that indictments will follow against some individuals in the corporation.

(esp)

May 31, 2011 in Investigations, Settlement | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 11, 2011

Dog Bites Man. Rajaratnam Guilty On All Counts.

Read all about it. Here is Katya Wachtel's report for businessinsider.com. Carrie Johnson of NPR's All Things Considered discusses the deterrent effect of Wall Street wiretaps in Wiretaps: Not Just For Mob Bosses Anymore, with a quote thrown in from yours truly.

(wisenberg)

May 11, 2011 in Current Affairs, Fraud, Insider Trading, Investigations, Prosecutions, Securities | Permalink | Comments (0) | TrackBack (0)

Saturday, May 7, 2011

20th Annual National Seminar on Federal Sentencing Guidelines - Corporate Plea Negotiations and Sentencing

This panel was moderated by Jeff Ifrah (Ifrah Law), with AUSA Arlo Devlin-Brown (SDNY) and Steven Bunnell (O'Melveny & Myers) as speakers.  After the typical DOJ disclaimer that he was not speaking on behalf of DOJ, AUSA Devlin-Brown said that monitors are still in use.   Monitors, he said, are usually selected by the US Attorney, but getting input in the selection from defense counsel is something done in some cases. The panelists spoke about the lack of attorney-client privilege with the monitor.  Steven Bunnell  spoke about how expensive monitors can be. One of the items discussed is how the scope of the monitorship is negotiated.  

Steven Brunnell noted that corporate plea bargaining is a kind of begging. The corporate reputation is important. Sentencing guidelines are usually not a direct concern.  AUSA Devlin-Brown noted how the collateral consequences of charging a corporation, make a difference (I call that the Arthur Andersen effect). As a result both sides try to reach a settlement. He also spoke about the delicate interests of parallel proceedings.

Hypotheticals were used to consider some of the issues.  For example, what is the government view of the corporation indemnifying the CEO?  How do you deal with employee resistance?  One thing was clear from each hypo - the government has a lot of power.

My commentary - One topic discussed during this panel discussion concerned the level of trust between the corporation's attorney and the DOJ. It seemed to make a difference. But I have to ask the academic question -- should the trust between the private attorney and DOJ be a factor in how things progress in a criminal investigation? It is always interesting to see DOJ looking for consistency in sentencing, but then having individual US Attorneys and AUSAs making decisions on different aspects of a case that will be inconsistent based upon the AUSA or the defense attorney handling the matter.

(esp)

May 7, 2011 in Arthur Andersen, Conferences, Deferred Prosecution Agreements, FCPA, Investigations, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 3, 2011

Discovery

Check out David Markus' op ed on discovery here. The last line is a classic -

"Perhaps the Department of Justice would like to amend the plaque found in federal courtrooms that reads: "We who labor here seek the truth" with the addition, "only if we think it is material."

(esp)

May 3, 2011 in Investigations | Permalink | Comments (1) | TrackBack (0)

Monday, April 11, 2011

En Banc Petition Filed in Norris case

The Third Circuit recently ruled in a closely watched case, on the issue of whether corporate counsel had in fact represented an individual within the corporation and as such the attorney-client privilege should apply.  (see here) The unpublished opinion of the court found no error on the part of the district court.  Counsel for Appellant Norris has now filed for a rehearing en banc.   Three issues are presented in this Petition:

 "I. The Panel Decision Squarely Conflicts With Shramm, Arthur Andersen, and Aguilar as to the Requisite Specific Intent for a Conspiracy to Obstruct a Grand Jury Proceeding;

 II.The Panel Decision Squarely Conflicts with Farrell's Holding that 'Corrupt Persuasion' Does Not Include Persuading an Alleged Co-Conspirator to Withhold Incriminating Information;

III. The Panel Decision Misapplied Bevill to Permit the Evisceration of a Corporate Officer's Personal Attorney-Client Privilege."

Petition for Rehearing En Banc - Download 2011-04-06 Petition for Rehearing En Banc

(esp)

April 11, 2011 in Defense Counsel, Investigations, Judicial Opinions, Obstruction, Privileges | Permalink | Comments (0) | TrackBack (0)

Friday, March 25, 2011

Commentary on Court Dismissal of Indictment Against Former VP & Associate General Counsel of GlaxoSmithKline

Check out - Sue Reisinger, Corporate Counsel, She Asked, Counsel Told: Case Against Glaxo Attorney Is Dismissed

The former VP and Associate General Counsel of GlaxoSmith Kline had been charged with a 6-count Indictment for the alleged crimes of obstruction (1512), falsification and concealment of documents (1519) and false statements (1000). The Indictment against Lauren Stevents has now been dismissed, but it is without prejudice.

Stevens claimed a defense to the charges of advice of counsel in her responses to the FDA's inquiry. The government response was that 18 USC 1519 is a general intent crime and therefore a "good faith reliance on advice of counsel is only a defense to specific intent crimes." 

The court did not agree with the government, citing applicable sources that provide a solid basis for its holding.  My take is that the statute clearly is requiring two intents - to "knowingly alters, destroys, multilates, conceals, coversup, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impeded, obstruct, or influence the investigation ....."  With two intents it seems clear that one should use specific intent here. 

But what is more questionable here is that the government thinks that specific intent should not be required here.  Should you really prosecute someone who may not have had the specific intent to do these alleged acts?  Will this achieve the deterrence from criminality that we desire?  Irrespective of whether one accepts the government's claim that advice of counsel is an affirmative defense or the defense and court position that it negates the mens rea, is prosecution of this alleged conduct the way we want to spend valuable tax dollars?

This case is a perfect example of how we are failing to use our resources wisely.  Do we really need to spend money prosecuting folks who may not have complied with a government discovery request properly? Or would the money be better spent using it for educating lawyers and others of how to respond to government inquiries correctly.  And what happens if we turn the tables - should we start prosecuting Assistant United States Attorneys who do not comply with constitutional requirements of discovery, or would our resources be better spent educating them of the importance of upholding these constitutional rights. 

Bottom line - don't refile this case. 

(esp) 

Addendum - See here

March 25, 2011 in Defense Counsel, Government Reports, Grand Jury, Investigations, Judicial Opinions, News, Obstruction, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)