Wednesday, September 7, 2016
Finally, as promised, here is the U.S. v. Reddy Annappareddy 9-1-16 Motion to Dismiss Hearing Transcript. At the conclusion of that hearing Judge George Levi Russell dismissed the Indictment with prejudice. Judge Russell's rationale for his ruling can be found at pages 49-62 of the transcript. This was a health care fraud case and a core government theory was that Mr. Annappareddy received Medicaid reimbursement for pills that were never given to patients. The government sought to prove its theory by showing that Mr. Annappareddy's pharmacies billed for more pills than they received. The most significant evidence that the prosecutors offered in support of this allegation was a calculation of the purported “loss” from the alleged fraud. The following factors were key to the Court's finding that the government committed due process violations that shocked the conscience and rendered it impossible to put Mr. Annappareddy back on an even footing with the government: 1) the government violated Brady by failing to disclose loss calculations from its initial auditing team that were significantly smaller (in total and with respect to two key pharmacies) than the calculations of a subsequent government auditor who testified at trial; 2) the government violated Brady by failing to disclose the risk of double-counting errors in the loss calculations; 3) the government presented false testimony regarding the loss calculations due to double counting errors; 4) the government presented false testimony by a government agent, based on her examination of the wrong set of phone records, that Mr. Annappareddy had NOT made any calls to a key individual in response to a material email from that individual, when in fact Annappareddy had several phone contacts with the individual within minutes of the material email; and 5) the government destroyed potentially key exculpatory evidence without a court order or the defense's permission. The Court also sent a not so subtle warning to the government: "In the event that my record is not clear or exercise of my discretion too broad, this Court will conduct an extensive time-consuming and costly hearing as to these matters and the other grounds supporting the motion to dismiss and other motions which have already been filed. To that end, the balance of all other motions in this case are denied as moot." Translation: If you appeal this ruling and I am reversed, we will delve in detail into the other grounds of error raised by the defense. And it will not be a pleasant process. Hat Tip to David Debold of Gibson Dunn for sending along the transcript.
Thursday, September 1, 2016
The case against Reddy Annappareddy is over. The Government's case has been dismissed with prejudice by U.S. District Court Judge George Russell because of a pattern of government misconduct that shocks the conscience. As soon as I obtain a copy of today's hearing transcript we will post it. Congratulations are in order for Mr. Annappareddy and his Womble Carlyle defense team of Mark Schamel and Josh Greenberg. Greenberg's relentless motions work over the past 11 months has been particularly brilliant. Anybody who does white collar work in the federal courts knows how difficult it is to obtain a result like this, post-trial. This is a magnificent victory.
As we write this post U.S. District Court Judge George Russell is holding a hearing on Defendant's Motion to Dismiss with prejudice. I have previously discussed this case here and here. The motion is bottomed on various alleged prosecutorial errors and misdeeds. In a bad omen for the Government, Judge Russell only set arguments on the Motion to Dismiss (despite the pendency of other motions) and summarily denied the Government's motion to delay the hearing. The Government wanted a delay in the wake of an onslaught of defense motions, authored by Womble Carlyle's Josh Greenberg, alleging additional Government misbehavior, including destruction of potentially exculpatory evidence at a time when the Defendant's Motion for New Trial was filed and awaiting a decision. The Government later joined in the Motion for New Trial after admitting that it presented false material testimony to the jury. Meanwhile, in a filing that can only be described as stunning, the Government yesterday attempted to defend its admitted document destruction. Here lies the Government's Response Re Document Destruction.
Wednesday, August 31, 2016
Guest Blogger: Rory K. Little (Joseph W. Cotchett Professor of Law, U.C. Hastings College of Law)
Almost all of the Court’s October arguments will be in criminal cases
In a somewhat unprecedented calendaring wrinkle, the entire first week of oral arguments at the Supreme Court this coming Term, and 7 of the 8 cases to be argued in all of October, are criminal-law-based cases. This is probably not intentional, but rather reflects hesitancy in certiorari consideration last Spring by an evenly-divided eight-Justice Court.
Although the Court normally opens with oral arguments on “the first Monday in October,” this Term, due to Rosh Hashanah, the Court will only issue Orders on that day. Then on Tuesday, October 4 the Court will open its argument Term by hearing two cases; and on Wednesday, three. Three of these five arguments are pure criminal cases; the other two are “civil” but arise directly from criminal prosecutions.
The next Monday, October 10, is the Columbus Day holiday, and Wednesday is Yom Kippur. So the only argument day that week will be Tuesday October 11, when the Court will hear three cases. Two of those are criminal (discussed below), and the third is Samsung v. Apple, October’s only completely non-criminal case (described briefly in the next paragraph).
That’s it for October -- eight cases which, given the Court’s slow pace in granting certiorari until late June, were all that could be fully briefed and ready for argument that “speedily.”
The lone civil case set for argument in October, Samsung Electronics v. Apple, is a “big” IP case, presenting an important question about the extent of damages available for patent infringement when the infringed patented design applies only to a “component” of a product. Oral arguments will be presented by two well-known Supreme Court “heavy-hitters” -- Kathleen Sullivan for Samsung, and William Lee for Apple.
Otherwise, the Court’s entire argument focus in October will be on criminal matters. Below are short (and undoubtedly simplified) summaries of the seven criminal cases set for argument in October, presented in the order they will be heard.
- Bravo-Fernandez v. United States (argument on Oct. 4): A somewhat complicated Double Jeopardy question, which invokes a favorite old chestnut of law professors, Ashe v. Swenson, and the “collateral estoppel” effects of related prosecutions. When jury convictions have been vacated on appeal, is retrial on those counts barred by (perhaps inconsistent) acquittals that were returned on other counts? Arguing: former Assistant to the U.S. Solicitor General Lisa Blatt (for Bravo) and Elizabeth Prelogar from the current U.S. Solicitor General’s office. (Specific arguing counsel have not yet been officially identified by the Court; these summaries present my best guesses as to arguing counsel.)
- Shaw v. United States (argument on Oct. 4): Does subsection (1) of the federal bank fraud statute require the government to prove that the defendant intended to obtain “bank-owned” property, as opposed to fraudulently obtaining assets of a customer that are held by the bank? The case is a follow-on from the Court’s 2014 decision in Loughrin v. United States. Arguing: Deputy Federal public Defender Koren Bell of Los Angeles (for Shaw); and Anthony Yang from the current U.S. Solicitor General’s office.
- Salman v. United States (argument on Oct. 5): An important insider trading case. Is the Second Circuit’s groundbreaking 2014 decision in United States v. Newman correct in holding that the government must prove “at least a potential gain [to the tipper] of a pecuniary or similarly valuable nature;” and if so, does the gift of a “tip” to a close friend or relative satisfy this “personal benefit” requirement (derived from Dirks v. SEC, 1983)? Arguing: Alexandra Shapiro of New York (for Salman), and Deputy U.S. Solicitor General Michael Dreeben.
- Buck v. Davis (argument on Oct. 5): The case presents a technical procedural question arising from a decidedly un-technical incident of racial bias in a death penalty case. Buck’s defense counsel actually elicited “expert” testimony at sentencing that Buck was more likely to be dangerous in the future because he is black – Texas now concedes that such generic race-based testimony is “always inappropriate.” So, did the Fifth Circuit erroneously deny a Certificate of Appealability from the district court’s denial of federal habeas corpus? Such a Certificate is a statutory prerequisite to allow review of Buck’s habeas corpus claim on the merits. This same case previously attracted the Court’s attention in 2011, when the Court denied certiorari at an earlier stage and five Justices joined two opinions: three Justices concurring in, and two dissenting from, the denial of certiorari. Arguing: Christina Swarns of the NAACP Legal Defense & Education Fund (for Buck); and someone from the Texas Attorney General’s office.
- Manuel v. City of Joliet (argument on Oct. 5): It is complicated to even briefly describe what question this case presents. In a §1983 civil rights complaint, filed after criminal charges against him were dropped, Manuel alleged that he was held in jail for 47 days based on false reports made by the police. Among other things he claimed damages for “malicious prosecution” after the institution of “legal process” -- and to avoid dismissal under a statute of limitations, Manuel argued that he could not legally file that claim until the prosecution against him had terminated in his favor. The central question presented is whether the Fourth Amendment, or the Due Process Clause, governs such a claim. Many federal Circuits have said Fourth Amendment, while the Seventh Circuit here said Due Process. This same question was debated, but not resolved by a majority, in Albright v. Oliver (1994) (a plurality said Fourth Amendment; Justice Kennedy joined by Thomas said Due Process), and oral argument will likely focus on the intricacies and subsequents Court statements about Albright. However, the briefs filed so far also suggest that the parties disagree about a number of preliminary wrinkles, which could sidetrack the Court at argument. Arguing: Stanley Eisenhammer of Arlington Heights, Illinois (or possibly Professor Jeff Fisher of Stanford, see the next case) for Manuel; Michael Scodro of Chicago’s Jenner & Block (and former Illinois Solicitor General and Justice O’Connor clerk) for the City of Joliet; and Assistant to the U.S. Solicitor General Ilana Eisenstein for the United States as Amicus..
- Pena-Rodriguez v. Colorado (argument on Oct. 11): After Pena-Rodriguez was convicted of three sexual assault misdemeanors, two jurors reported that during deliberations, another juror had made a number of racist statements against “Mexicans.” The question is whether the Sixth Amendment right to an “impartial jury” requires that such reports of “racial bias” during criminal jury deliberations be considered, despite Colorado’s (and many other jurisdictions’) “no impeachment” rule that generally bars use of evidence about things said or done inside the jury room to impeach a verdict. Something like this question was left open by the 2014 decision in Warger v. Shauers. Arguing: Jeff Fisher of Stanford Law School, for Pena-Rodriquez; Frederick Yarger, Solicitor General of Colorado; and Assistant to the U.S. Solicitor General Rachel Kovner afor the United States as Amicus.
- Manrique v. United States (argument Oct. 11): Is a notice of appeal -- filed after sentence and judgment (including a general restitution obligation) is imposed, but before restitution is precisely determined -- sufficient to challenge the details of the restitution award? Arguing: Paul Rashkind, Assistant Federal Public Defender in Miami (for Manrique); and Allon Kedem from the U.S. Solicitor General’s office.
* * * * *
So stay tuned for an almost “all criminal, all the time” month of arguments at the nation’s Highest Court! (And if you really want an earful, attend the “UC Hastings Annual Supreme Court Review & Preview” panel discussion, in San Francisco at Hastings on September 26, 2016.)
Tuesday, August 30, 2016
The Supreme Court decision in McDonnell v United States, decided June 27, has given several politicians whose corruption convictions are on appeal both a cause for optimism and freedom on bail pending appeal. Last week SDNY District Judge Valerie Caproni granted former New York Assembly Speaker Silver's request for bail pending appeal on the grounds that there was a "substantial question" whether the court's instruction defining "official act" passed muster in light of the narrow definition of that term announced in the later Supreme Court decision.
Judge Caproni made it clear that she had little doubt about Silver's guilt of the major accusations against him, stating, "There is no question that Silver took a number of official acts - most obviously passing legislation and approving state grants and tax-exempt financing - as part of a quid pro quo scheme." These acts would clearly fall within the Supreme Court definition of "official act." But the judge recognized that there were other acts committed by Silver that were presented to the jury by the government, such as holding a meeting or arranging an internship, that might not fall within the narrow Supreme Court definition of "official acts." The jury was thus presented with instructions which may have permitted it to find Silver guilty for actions that were not criminal even if bought and paid for.
18 USC 3143(b)(1) allows a convicted defendant to be granted bail pending appeal if, inter alia, there is "a substantial question of law or fact likely to result in (i) reversal [or] (ii) an order for a new trial...." Finding the existence of a "substantial question," despite the literal language of the statute, does not mean that the judge believes there is a likelihood of reversal, only that if there were a substantial question which if decided in the defendant's favor would bring such relief. United States v. Miller, 750 F2d 19 (3d Cir 1985). Appellate courts deal with a lot of "substantial questions" that have led to bail pending appeal, but rarely reverse trial convictions.
Here, it appears that under the instructions it was given, the jury could have convicted Silver based on acts not within the statute as limited by the Supreme Court.. But that is not the end of the analysis. The appellate court will also consider, and the decision is likely to turn on, whether the evidence is considered so strong that the jury would have undoubtedly convicted Silver under a proper charge - in other words, whether the erroneous instruction constituted "harmless error."
I hesitate to predict the outcome of the appeal. Cases of political figures, as demonstrated by McDonnell, are scrutinized by appellate courts more carefully than, for instance, cases of drug dealers. I believe it is likely, and will appear likely to the appellate court, that Silver would have been convicted upon a proper instruction. How likely is the issue. Is it so likely that the court will find the error "harmless?" What is "harmless error' is in many ways just a visceral judgment by the judges putting themselves in the role of jurors. Harmless error analysis, thus, arguably deprives an accused of his basic constitutional right to a determination by a properly-instructed jury of peers and I believe should be applied rarely.
Other factors the appellate court will probably consider include whether the defense proposed an instruction in accord with the standard set forth in McDonnell, and whether the defense specifically objected to the definition given by the trial court as too broad. Another factor that may conceivably affect the decision, although unlikely to be mentioned, is whether the judges believe the 12-year prison sentence imposed on the 72-year old Silver is excessive. And, of course, there may be other, unrelated issues raised. In any case, based on the "official act" issue issue alone, a reversal will likely not give Silver a dismissal, but only a new trial, presumably with proper jury instructions.
One lesson that lawyers - both prosecutors and defense lawyers - might learn from this situation is to be aware and up-to-date on cases for which the Supreme Court has granted cert and, if any concern issues that might arise in a pending case, to craft requests to charge in anticipation of the possible result of the Supreme Court case. Another lesson - for judges and prosecutors more than defense lawyers - is to adjourn a pending case that might be affected by a pending Supreme Court case until after that decision. A third lesson - for prosecutors - is to analyze all aspects of their prospective case and discard legally or factually questionable ones when there are strong aspects.
Monday, August 29, 2016
Things are getting personal in U.S. v. Annappareddy. I posted here last week about this District of Maryland case in which the Government ultimately admitted to having presented false evidence to the trial jury, and grudgingly joined Defendant's new trial motion--granted the next day by Judge George Russell. Now the Government has admitted to "disposal" of certain documents while defendant's New Trial Motion was pending in March 2015. Annappareddy's current trial team was not notified of the disposal until August 19, 2016, and claims, in Defendant's Motion for Extension of Time to File Motions In Limine, that some of the destroyed documents were exculpatory in nature. No court order authorized the destruction at the time it was accomplished.
The DOD/OIG Evidence Review Disposal Sheet from March 11, 2015 states that AUSA Sandy Wilkinson determined that the items in question "were not used as exhibits in trial and would not be used in future proceedings against Annaparreddy." In other words, Wilkinson acted unilaterally, apparently consulting no one on the defense team before making her decision. The Government's response to the allegation is a footnote stating in part that "in early March 2015, after the trial, the government began to clean up papers and documents not used from the Washington Blvd collection and store the trial exhibits post- trial. The government began purging the contents of several unused boxes. These were items Defendant and his own attorneys had reviewed at length and were never marked as exhibits or used in any way by them at trial. Yet they couch their complaint again in the most accusatory of tones. "
Well, yes. Destruction of potential evidence prior to final judgment on appeal is quite rare, if not unheard of, in federal criminal practice. That an AUSA would do it on her own is remarkable. The Government's Response to Annappareddy's Motions to Limit Government Evidence complains further that Annappareddy's new lawyers don't play nice in the sandbox, unlike the original trial lawyers--you know, the ones who lost after the Government presented false testimony. That's right, Ms. Wilkinson. Lawyers tend to get angry when false testimony is put in front of the jury and potentially exculpatory evidence is destroyed.
The case is far more involved, and the issues more complex, than I can do justice to here. Annappareddy has moved to dismiss with prejudice and a hearing on that motion is set for September 1. Failing that, the defense wants to limit the Government's evidence at a new trial to the evidence presented at the first trial. One thing absent from the Government's papers that I have had an opportunity to review is any recognition of the emotional, financial, and strategic harm suffered by defendants when the Government screws up, forcing a new trial. It's as if Ms. Wilkinson wants a cookie and a pat on the back for deigning to agree that Reddy Annappareddy gets to go through the whole damn thing again.
Tuesday, August 23, 2016
In June 2016, the U.S. District Court for the District of Maryland (Judge George Levi Russell III, presiding) granted Reddy Annappareddy a new trial on the grounds that the prosecutors presented false evidence to the jury at his first trial and that the outcome might have been different without the false evidence. This ruling is part of a remarkable turnaround for Mr. Annappareddy, whose case appeared to be over after the first trial ended in December 2014.
The case is captioned as United States v. Annappareddy, No.1:13-cr-00374 (D. Md.). The prosecutors’ main allegation during the first trial was that Mr. Annappareddy’s chain of pharmacies, known as Pharmacare, committed health care fraud by billing government insurance programs for prescriptions that were never picked up or delivered. The most significant evidence that the prosecutors offered in support of this allegation was a calculation of the purported “loss” from the alleged fraud. Mr. Annappareddy’s current counsel, Mark Schamel and Josh Greenberg of Womble Carlyle, began working on the case in the spring of 2015. In September 2015, they filed a Supplement to the one-and-a-half-page Motion for New Trial filed by Annappareddy's original trial counsel. The Supplement and a Reply in support of it argued, among other things, that the prosecutors presented materially false evidence to the jury on a number of important subjects in violation of the Due Process Clause.
After many months, during which the parties took depositions of trial counsel and Greenberg and Schamel filed extensive additional briefs raising troubling issues, the Court scheduled a hearing for June 3 on Annappareddy's Motion for New Trial. On the afternoon of June 2, the prosecutors filed a letter with the Court conceding that the "inventory analysis" it presented to the jury, in an effort to prove purportedly enormous losses caused by Annappareddy, was in "substantial error", rendering its own evidence "wrong", and violative of Due Process. The Government effectively joined Annappareddy's Motion for New Trial, which was granted the next day by Judge Russell during a status conference.
Judge Russell scheduled a second trial – to last eight weeks, three weeks longer than the first trial – to begin on September 19. Last month, the Court entered an Order denying the Government's motion to delay the second trial. The Order emphasizes that the Court granted a new trial because the prosecutors presented “significant material and false testimony” at the first trial and that the delay they sought “would be fundamentally unfair” to Mr. Annappareddy.
While government admissions of error are always welcome, one of the striking things about this case has been the prosecution's reluctance to admit that the evidence it presented to the jury was not just wrong or in error--it was false.
The defense recently filed a motion calling for dismissal with prejudice. Check this space for further details. The multiple briefs filed by Greenberg and Schamel since they entered their appearances represent outstanding work.
Here are some relevant documents pertaining to the case: a partial transcript from the U.S. v. Annappareddy 6-3-16 Status Conference; Judge Russell's 7-6-16 Order Denying Gov't's Motion for Modification of Trial Schedule; and the Government's Letter to Court Conceding that New Trial is Warranted.
Friday, July 1, 2016
Some folks have expressed critical views of the Supreme Court's opinion in the McDonnell case. But they are forgetting several important points:
- This was a unanimous decision by the Court. There were no dissents. There were no concurring opinions. It was clearcut!
- This decision does not put a stop to prosecutions for bribery and extortion. Cases in which there is a receipt of money for official acts can still be prosecuted. (Evans v. United States).
- This decision does not create any new limit to the bribery/extortion statute. It has always existed. (see United States v. Birdsall - a 1914 decision).
So what happened here? The government tried to push the envelope further than permitted and they were caught. This is no different than back in the 1980s when they tried to bring mail fraud cases based on intangible rights as opposed to property, a requirement of the statute. The Supreme Court in 1987 issued the McNally decision to place the government on notice that developing a new theory that exceeded the language of the statute would not be permitted.
Bottom line - Congress writes the laws and government prosecutors need to stay within the language provided to them.
Wednesday, June 29, 2016
I received the McDonnell decision with mixed feelings. Initially, I was happy for my colleague Hank Asbill, one of the nation's top criminal defense attorneys, for a great victory. Asbill and his co-counsel litigated this case the "old-fashioned way" - they fought it, and fought it, and then fought it. Their tenacity, dedication and skill make me proud to be a defense lawyer.
Not having read the briefs of the parties, or of the amici, or heard the oral arguments, I am hesitant to criticize the opinion, especially an opinion by a brilliant chief justice for a unanimous court (I suspect due to a compromise by potential dissenters, possibly to avoid an outright dismissal). Indeed, the opinion makes a strong case that the decision was required by precedent. However, I do question several aspects of the opinion. First, I find questionable Justice Roberts' Talmudic crucial narrowing of the definition of "official act" by virtually eliminating the broad catch-all words "action" and "matter," largely by resort to the Latin word jurisprudence that is often an indication that the interpretation is on shaky ground.
Second, while I am less troubled than the Court about the federal assumption of power to monitor the conduct of state officials for purportedly violating their offices, there is something bothersome about federal officials by criminal prosecutions in effect setting ethical standards for state officials. However, as a practical matter it appears that with rare exceptions local prosecutors lack the will and/or the resources to prosecute high state officials. In New York City, for instance, U. S. Attorney Preet Bharara has in recent years prosecuted about ten state legislators on corruption charges, while New York's five district attorneys combined have not prosecuted any.
Third and most importantly, I am concerned by the decision's enablement of business-as-usual pay-to-play practices. By narrowing the definition of "official act, the Court has legalized (at least federally) the practice of paying a government executive to set up a meeting with a responsible official. By doing so, the Court has given such "soft" corruption a green light. Under the opinion, a businessperson does not violate federal bribery law by paying a governor, mayor - or even the President - tens of thousands of dollars to make a phone call to a purchasing official asking or directing her to meet with the businessperson. And that call, however innocuous that actual conversation may sound, will have real consequences - otherwise, why would the businessperson pay for it? Even absent a verbal suggestion that the executive wants the official to do business with the caller, the official cannot but think that the executive would like that she do business with that person. I imagine a New Yorker cartoon with a governor sitting at a phone booth with a sign saying, "Phone calls, official meetings. $10,000 each."
To be sure, the law concerning bribery - not alone among federal statutes - vests too much power in the government. At argument government counsel conceded (candidly but harmfully) that a campaign contribution or lunch to an official could constitute the quid in a quid pro quo. That is frightening, but the problem is in the quid, not in the quo - about which this case is concerned. (I applaud Chief Justice Roberts statement in response to the standard "Trust me, I'm the government" argument that "We cannot condone a criminal statute on the assumption the government will use it responsibly.") And, certainly, if this case were to apply to campaign contributions - and not, as in this case personal receipt of money and goods-in the words of the amicus brief of former White House counsel - it would be "a breathtaking expansion of public corruption law." Indeed, a distinction should be made between personal and campaign contributions. But this case applied to the quo - what the governor did in exchange for $175,000 worth of goods and money. And, in my view he took "action" as the governor on a "matter" by "official acts" - hosting an event at the official mansion, making calls and arranging meetings.
Tuesday, June 28, 2016
McDonnell v. United States and Arthur Andersen v. United States are remarkably similar Supreme Court reversals. In both cases, aggressive federal prosecutors pushed obviously dubious jury instructions on all-too-willing federal district judges. In Arthur Andersen, Enron Task Force prosecutors convinced Judge Melinda Harmon to alter her initial jury charge, defining the term "corruptly." Judge Harmon's charge was right out of the form book, based on the approved Fifth Circuit Pattern Criminal Jury Instruction. The Government's definition allowed conviction if the jury found that Andersen knowingly impeded governmental fact-finding in advising Enron's employees to follow Enron's document retention policy. The 5th Circuit Pattern's requirement that the defendant must have acted "dishonestly" was deleted by Judge Harmon and the jury was allowed to convict based on impeding alone. Thus, at the government's insistence, knowingly impeding the fact-finding function replaced knowingly and dishonestly subverting or undermining the fact-finding function. This effectively gutted the scienter element in contravention of the standard Pattern definition. Local observers were not surprised by Judge Harman's ruling. Her responses to government requests are typically described as Pavlovian. Judge James Spencer, the trial judge in McDonnell, is also an old pro-government hand. Generally well regarded, he was a military judge and career federal prosecutor prior to ascending the judicial throne. In McDonnell, the government's proposed jury instructions regarding "official act" flew in the face of the Supreme Court's Sun Diamond dicta. They were ridiculously expansive, with the potential to criminalize vast swaths of American political behavior. In both cases, Andersen and McDonnell, the Supreme Court unanimously reversed. In both cases, careful attention to the law, even-handedness, and a willingness to stand up to the government would have saved taxpayer dollars and prevented human suffering. Careful attention to the law, even-handedness, and a backbone. That's what we expect from an independent federal judiciary.
Monday, June 27, 2016
The Supreme Court vacated and remanded the convictions from former Governor Robert McDonnell's case this morning in a unanimous decision, finding that "hosting an event, meeting with other officials, or speaking with interested parties is not, standing alone, a 'decision or action' within the meaning of section 201(a)(3), even if the event, meeting, or speech is related to a pending question or matter." (see here) In vacating the conviction and remanding it back to the district court, the Supreme Court gives the lower court an option:
- It can find insufficient evidence under the Court's standard - then the charges get dismissed.
- If the lower court finds sufficient evidence under the Court's standard - then the case gets reset for trial for a new jury to properly evaluate this case.
But there really is a third option here. If the lower court decides that there is sufficient evidence for a trial (which there doesn't seem to be), then the government can step in and say - enough is enough and dismiss this case. In the Supreme Court's opinion, it states - "[W]e cannot construe a criminal statute on the assumption that the Government will 'use it responsibly.'"
This is an opportunity for the government to step in and accept the Court's decision and be responsible. And the responsible thing to do here is dismiss!
There are many criminal acts occurring in society that warrant prosecution. Companies are in need of computer laws being enforced. Corruption is without doubt a problem and when someone takes money for doing a specific official act, then prosecution is needed.
But being a nice guy and listening to constituents, trying to promote their businesses, and sticking to one's campaign slogan - "Bob's for Jobs" - should not be crime.
It was the last decision issued by the US Supreme Court this term, and an important one for many. The Supreme Court vacated and remanded former Virginia Governor Robert McDonnell's conviction (see here). It was a unanimous decision - a strong statement with which to end the Court's term. The key issue was what constitutes an "official act" to meet the bribery statute. The issue arose, as so many issues do, from the district court's giving of a jury instruction -
Chief Justice Roberts issued the 28 page decision vacating and remanding the lower court's decision -
- Setting up a meeting, hosting an event, or contacting officials - without more - is not an "official act".
- The Court uses a straightforward statutory definition analysis to define what constitutes an "official act".
- The precedent offered in Sun Diamond supports the Governor's arguments that "hosting an event, meeting with other officials, or speaking with interested parties is not, standing alone, a 'decision or action' within the meaning of section 201(a)(3), even if the event, meeting, or speech is related to a pending question or matter."
- "[S]omething more is required: section 201(a)(3) specifies that the public official must make a decision or take an action on that question or matter or agree to do so."
- "[A]n 'official act' is a decision or action on a 'question, matter, cause, suit, proceeding or controversy."
- The government's "expansive interpretation" of what is an "official act" raises significant constitutional concerns.
- "[W]e cannot construe a criminal statute on the assumption that the Government will "use it responsibly."
- The Court notes three deficiencies in the district court's instructions from this case.
- The Court sends it back to the district court to determine if there is sufficient evidence to meet the Supreme Court's definition of "official act" and if the district court finds that there is - a new trial should be held using this standard.
More commentary to follow on whether this case should be retried. This case was tried by Hank Asbill (Jones Day).
Monday, June 20, 2016
Yes, The Supreme Court's opinion here looks at whether RICO has extraterritorial application in the civil context. And in that regard it limits its extraterritorial application. But there is some important language in this opinion for both civil and criminal practitioners, especially since much of RICO is premised on a criminal statute, and all of RICO is located in Title 18, the Criminal Code.
- There has been much confusion as to whether one should look at the predicate acts or the enterprise in determining extraterritoriality and the Court provides significant guidance here.
- In deciding RICO's extraterritorial application, the Court divides it into two issues: a) "do RICO's substantive prohibitions, contained in sec. 1962, apply to conduct, that occurs in foreign countries;" b) "does RICO's private cause of action, contained in sec 1964(c) apply to injuries that are suffered in foreign countries?" It is this first issue that one needs to examine for criminal cases.
- The Court reaffirms in statutory construction the premise that there is "presumption against extraterritoriality."
- The Court describes the two-step process - "Morrison and Kiobel reflect a two-step framework for analyzing extraterritoriality issues. At the first step, we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially. We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction. If the statute is not extraterritorial, then at the second step we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute’s 'focus.' If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U. S. territory."
- The Court says to look first at the predicate act, asking - is it one that applies extraterritorially ("Although a number of RICO predicates have extraterritorial effect, many do not.")
- With respect to 1962 (b) and (c) the Court states, "[w]e therefore conclude that RICO applies to some foreign racketeering activity. A violation of sec. 1962 may be based on a pattern of racketeering that includes predicate offenses committed abroad, provided that each of those offenses violates a predicate statute that is itself extraterritorial."
- With respect to 1962(a) the Court states, "arguably sec 1962(a) extends only to domestic uses of the income."
- In dicta, with respect to 1962(d), the conspiracy section, the Court states, "[w]e therefore decline to reach this issue, and assume without deciding that sec 1962(d)'s extraterritoriality tracks that of the provision underlying the alleged conspiracy."
- The Court is less focused on whether the enterprise element is domestically based. But it does note that "[e]nterprises whose activities lack that anchor to U.S. commerce cannot sustain a RICO conviction."
The language in this case provides important guidance for criminal practitioners on the extraterritoriality of RICO, and clearly it provides strong arguments that not all of RICO applies abroad.
The Supreme Court ruled today in Taylor v. United States, examining the interstate commerce element of the Hobbs Act. Although it provided a broad interpretation, it limited the decision to "cases in which the defendant targets drug dealers for the purpose of stealing drugs or proceeds." The Court explicitly states that it "did not resolve what the Government must prove to establish Hobbs Act robbery where some other type of business or victim is targeted."
A strong dissent by Justice Thomas argued that there should be a showing that the "defendant's robbery itself affected interstates commerce."
What this opinion means for white collar cases is that a strict interpretation of interstate commerce should be argued in these cases, with a requirement that there be a showing beyond a reasonable doubt that the accused acts affected interstate commerce.
Monday, June 13, 2016
A few weeks ago, in United States v Nesbeth (15 CR-18, EDNY, May 24, 2016) Judge Frederic Block wrote an important opinion on the effect of post-conviction collateral consequences on one convicted of a felony, and as a result of such consequences imposed a one-year probation sentence on a woman convicted of importing cocaine. He wrote that "sufficient attention has not been paid at sentencing by me and lawyers - both prosecutors and defense counsel - as well as by the Probation Department to the collateral consequences facing a convicted defendant." He went on to a history of collateral consequences, efforts at reform, and the breadth of post-conviction statutory and regulatory collateral consequences. He noted the "broad range of collateral consequences that serve no useful purpose other than to punish criminal defendants after they have completed their court-imposed sentences."
The opinion is a call for reform, for mitigation of sentences because of such additional punishment, and for increased awareness of collateral consequences by all participants in the sentencing process. Judge Block specifically called for probation officers "to assess and apprise the court, prior to sentencing, of the likely collateral consequences facing a convicted defendant."
Judge Block recognized an apparent Circuit split as to whether collateral consequences may be a mitigating factor in sentencing. The Sixth, Seventh, Tenth and Eleventh Circuit seemingly have found that collateral consequences may not be considered, while the Second and Fourth Circuits appear to have found that they may. I believe that under 18 USC 3553(a) they may, especially when atypical, be considered.
White-collar defendants obviously face not only the usual collateral consequences applicable to all convicted felons, but often also special ones such as loss of licenses or other professional bars. I personally have had limited success in appealing to judges to mitigate sentences against white-collar defendants because of collateral consequences. Many judges feel that that to consider those factors would favor the rich and well-educated over the poor and less-educated. To be sure, as Judge Block's opinion demonstrates, the poor and less-educated too suffer from such collateral consequences.
Defense lawyers should, as Judge Block writes, be aware of such consequences in order to set them forth as mitigating factors at sentencing. Such knowledge is also necessary to inform defendants of these consequences so that they may make an educated decision whether to plead guilty. As indicated by the flurry of defendants who have claimed they were unaware that their guilty pleas would subject them to deportation, lawyers historically may not have focused on collateral consequences.
Thursday, May 26, 2016
In Luis v. United States, the Supreme Court held that pretrial restraint of untainted assets needed by a criminal defendant to retain counsel of choice violates the Sixth Amendment. But what about pretrial restraint of untainted assets not needed to hire counsel? The Fourth Circuit, alone among federal circuits, permits pretrial restraint of untainted substitute assets, subject to Sixth Amendment concerns. In United States v. Chamberlain, in the Eastern District of North Carolina, the government moved for a post-indictment pretrial restraining order against the defendant's untainted substitute asset pursuant to 21 U.S.C. Section 853(e). Both the defendant and government agreed that the untainted asset in question, a parcel of land, was not needed by Chamberlain in order to secure criminal defense counsel. The defendant opposed the government's motion, arguing that Justice Breyer's language/analysis in Section II.B.1. of Luis foreclosed pretrial restraint of any substitute asset under Section 853, in effect overruling Fourth Circuit precedent. The government maintained that Luis was inapplicable since Chamberlain raised no Sixth Amendment issue. Judge Mack Howard sided with the government. "While the undersigned agrees that the Supreme Court may in fact interpret Section 853 in this way in the future, it has not yet ruled on this issue and has not upset applicable Fourth Circuit precedents governing the instant question presented before this court." Steve West was on the briefs for the government and Elliot Abrams (Cheshire Parker Schneider & Bryan) and Tommy Manning (Manning Law Firm) were on the briefs for Chamberlain. According to Abrams, this all matters at a practical level for the criminal defense bar:
Consider the facts of Luis. There the government established probable cause to believe that the defendant obtained more in illegal proceeds than she currently possesses.
Under Luis, she can use her innocent/substitute assets to pay her attorneys a reasonable fee. But under Billman and its progeny the relation-back doctrine of 853(c) applies to all of those innocent/substitute assets such that, if she is convicted, the government’s ownership interest in all of her assets will be deemed to have vested before she paid her attorneys.
Therefore, if she is convicted, the government can forfeit all funds paid for legal services, despite that a court authorized those payments under the Sixth Amendment.
Section 853(n) does not help because the lawyer’s right vested after the property became forfeitable and because the lawyer had reason to believe that the property was subject to forfeiture. And since forfeiture is mandatory, the court could not exempt those funds from forfeiture.
This would create the same Sixth Amendment problem that Luis solved—people being unable to use their innocent assets to hire counsel. It would also force lawyers to take such cases on contingency, which is ethically improper.
Here are the government and defense briefs and Judge Howard's opinion. U.S. v. Chamberlain - Gov Application Restraining Order, U.S. v. Chamberlain - Response in Opposition to Gov Motion for Restraining Order, U.S. v. Chamberlain-Government's Reply Memorandum, U.S. v. Chamberlain-Defendant's Sur-Reply, U.S. v. Chamberlain-Order Granting Government's Motion.
Judge Howard's Order is being appealed to the Fourth Circuit.
Wednesday, May 4, 2016
As every veteran litigator knows, who the trial judge is not only a major determinant in the ultimate result of a case, but a major factor in how unpleasant and difficult the lawyer's life will be. There are judges, I suspect fewer than in the past, who are so biased to defendants and hostile to their lawyers, more often to defense lawyers than prosecutors, that the case is a nightmare for the lawyers (and obviously their clients). Reversals of judges for intemperate and biased conduct toward lawyers, or even the generally meaningless criticisms in cases that are not reversed, are rare. Defense lawyers, therefore, rejoice when one of those decisions is issued by an appellate court.
Last week, the Ninth Circuit in an unpublished opinion, United States v. Onyeabor, 13-50431 (April 27, 2016), reversed a conviction by a jury before Central District of California Judge Manuel Real primarily because the judge's remarks "devastated the defense, projected an appearance of hostility to the defense, and went far beyond the court's supervisory role" so that they "revealed such a high degree of antagonism as to make fair judgment impossible." This is not the first time the court has admonished Judge Real, who in 2006 was the subject of a Congressional investigation which considered but did not vote impeachment.
Almost every state has a judicial conduct commission which on occasion removes unfit judges. These commissions generally consist of a combination of judges, lawyers, and laypeople. There is no direct federal analog, although there is a somewhat clumsy apparatus whereby the judiciary itself may impose sanctions and recommend that Congress consider impeachment. Sanctions on federal judges for abusing lawyers and litigants are, to my knowledge, virtually non-existent. Although a federal judge apparently may be removed for beating a spouse (as Alabama District Judge Mark Fuller likely would have, had he not resigned) , he or she will likely not be sanctioned at all for beating up lawyers and defendants.
Monday, April 25, 2016
The United States Supreme Court accepted cert this morning in Shaw v. United States here. In 2014 the Court had looked at section 1344(2) of the bank fraud statute. (Loughrin v. United States). In contrast to Loughrin, this new case examines subsection (1), specifically the "scheme to defraud a financial institution" and whether it requires proof of a specific intent not only to deceive. The case comes from the 9th Circuit where the court examined the question of "whether that means the government must prove the defendant intended the bank to be the principal financial victim of the fraud." The Ninth Circuit held that although there needs to be an intent to defraud the bank under section 1, there is no requirement that the bank "be the intended financial victim of the fraud." Other circuits, however, have "held that risk of financial loss to the bank is an element that must be proven under section 1344(1). Stay tuned...
Wednesday, April 6, 2016
The DC Circuit Court of Appeals, Hon. Srinivasan, vacated the district court order in the Fokker case finding that these "determinations are for the Executive - not the courts - to make." The case arose "from the interplay between the operation of a DPA and the running of time limitations under the Speedy Trial Act." The Court of Appeals held "that the Act confers no authority in a court to withhold exclusion of time pursuant to a DPA based on concerns that the government should bring different charges or should charge different defendants." Some key quotes from the decision -
"The Constitution allocates primacy in criminal charging decisions to the Executive Branch."
"It has long been settled that the Judiciary generally lacks authority to second-guess those Executive determinations, much less to impose its own charging preferences."
"Nothing in the statute's terms or structure suggests any intention to subvert those constitutionally rooted principles so as to enable the Judiciary to second-guess the Executive's exercise of discretion over the initiation and dismissal of criminal charges."
"The context of a DPA is markedly different. Unlike a plea agreement - and more like a dismissal under Rule 48(a) - a DPA involves no formal judicial action imposing or adopting its terms."
Wednesday, March 30, 2016
Sixth Amendment Right to Counsel Infringed When Untainted Assets are Frozen, Preventing Payment of Attorney Fees
In Sila Luis v. United States, the Supreme Court rules "[a] federal statute provides that a court may freeze before trial certain assets belonging to a criminal defendant accused of violations of federal health care or banking laws. See 18 U. S. C. §1345. Those assets include: (1) property 'obtained as a result of' the crime, (2) property 'traceable' to the crime, and (3) other 'property of equivalent value.' §1345(a)(2). In this case, the Government has obtained a court order that freezes assets belonging to the third category of property, namely, property that is untainted by the crime, and that belongs fully to the defendant. That order, the defendant says, prevents her from paying her lawyer. She claims that insofar as it does so, it violates her Sixth Amendment 'right . . . to have the Assistance of Counsel for [her] defence.' We agree."