Tuesday, August 27, 2013

A Rare Rebuke.

The Fourth Circuit has issued a rare and stern rebuke to the Eastern District of North Carolina U.S. Attorney's Office, for what the panel describes as repeated failures to disclose exculpatory evidence on the part of some of the office's prosecutors. Judge Floyd also directed that the opinion be sent to AG Holder and DOJ's OPR. This is remarkable. EDVA District Court Judge Henry Hudson was on the panel, sitting by designation, and concurred in the opinion. The Raleigh News & Observor has the story here. The opinion, U.S. v. Bartko, is here. The pertinent pages are 24-30.

(wisenberg)

August 27, 2013 in Judicial Opinions, Prosecutions, Prosecutors | Permalink

Wednesday, August 21, 2013

11th Circuit Reverses Health Care Fraud Conviction

In an unpublished opinion by the 11th Circuit, the court  in United States v. Reddy reversed and remanded a conviction coming out of a 7 day trial that started with a 37 count Indictment and had convictions for all but five wire fraud counts.  This health care case included counts of mail fraud, wire fraud, health care fraud, and falsifying records in a federal investigation.  At the heart of the reversal is a Daubert claim. Looking at the proposed expert's qualifications, reliability of the methodology, and relevance, the cout found that the error was not harmless in that what the expert "had to say about his peer review and accuracy of the work performed by" the accused "was highly probative and would have likely been helpful to the jury."

The court did note that the Indictment should not have been dismissed premised upon another argument made by the defendant. The court said that Section 1347 is a federal offense and "the underlying conduct must have an interstate nexus or other 'jurisdictional hook.'"  But the court noted that the "Indictment's language generally tracks the statutory language" and therefore "is sufficient to withstand a motion to dismiss."

The defense in this case was handled by the Altanta, Georgia law firm of Kish and Lietz.

(esp)

August 21, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Monday, July 22, 2013

Excellent Article Compares Appellate Judges' Reversal Rates

by: Lawrence S. Goldman

Lawyers frequently talk about which judges are pro-defense and pro-prosecution but, perhaps out of fear of upsetting the judiciary, few have made any statistical effort to determine which judges fit where.

Richard Levitt, the imaginative Renaissance man of the criminal defense bar, and Peter Schmidt, the dedicated publisher of the illuminating Punch & Jurists newsletter, did a painstaking analysis of the complete reversal rates of those judges currently sitting in the Second Circuit.  The result, while enlightening, was not particularly surprising.  The complete reversal rates (determined by the percentages of cases in which the judge voted to reverse all counts of conviction after trial) of the court's sitting judges who heard over fifty cases ranged from 0% (Judge Gerard Lynch) to 8.79% (Judge Barrington Parker).  (The article, entitled "What Are the Odds of Complete Reversal After Conviction in the Second Circuit?," appeared in the New York Law Journal on June 27, 2013, and is available online at www.newyorklawjournal.com but only to those with premium access.)

The authors concluded, "The results of our survey strongly suggest that an appellant's odds of winning a complete reversal in a close case brought in the Second Circuit are largely determined by which three-judge panel hears the appeal.  By any yardstick this seems random and unfair."

I broke down the complete reversal rates of the judges by party line, depending whether the judges were appointed by Democratic or Republican presidents.  Contrary to what many would expect, the reversal rates for those judges appointed by Republican presidents (4.26%) exceeded the reversal rates by those appointed by Democratic presidents (3.55%).  While there are several explanations for this finding, including that Judge Lynch is a Democratic appointee and Judge Parker a Republican appointee, it tends to indicate that one cannot reliably predict, at least in a Second Circuit criminal trial appeal, how a judge will rule based on her political party background.

(goldman) 

July 22, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 17, 2013

Sixth Circuit Reverses RICO Vote-Buying Convictions Due To Multiple Evidentiary Errors

by: Solomon L. Wisenberg

In a major blow to the government, the U.S. Court of Appeals for the Sixth Circuit has reversed the convictions of each and every defendant in U.S. v. Douglas C. Adams, et al. This was a high-profile RICO public corruption prosecution (premised on an alleged vote-buying scheme) brought by the U.S. Attorney's Office for the Eastern District of Kentucky. The Sixth Circuit vacated and remanded based on the following evidentiary errors: 1) admitting testimony from three cooperators regarding their drug-dealing activities with some of the defendants, which activities occurred 10 years prior to the alleged vote-buying scheme; 2) admitting an Inside Edition video that also discussed drug-dealing activities in the community; 3) admitting evidence of witness intimidation that could not be tied to any of the defendants; 4) the trial court's making of unprompted, substantive changes to the government's tape transcripts; 5) permitting use before the jury of the inaccurate transcripts that resulted from the unprompted changes; 6) admitting un-redacted, and highly prejudicial, versions of state election records which contained statements implicating the defendants in vote-buying schemes. This appears to be a case of government overkill in the presentation of its evidence, as the Sixth Circuit had no problem affirming the sufficiency of the evidence. The unanimous panel opinion was written by Judge Karen Nelson Moore. John Kline, Trevor Wells, and Jason Barclay argued the case for Appellants. With them on the various briefs were: Larry Mackey, Marty Pinales, Candace Crouse, Kent Westberry, Elizabeth Hughes, Jerry Gilbert, Robert Abell, Scott White, and Russ Baldani. Congratulations to all.

(wisenberg)

July 17, 2013 in Corruption, Current Affairs, Fraud, Judicial Opinions, RICO | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 9, 2013

White Eagle: Ninth Circuit Strictly Construes 18 U.S.C. Section 1001 Criminal Liability For Material Omissions

by: Solomon L. Wisenberg

In an important decision handed down on July 5th, the Ninth Circuit, following the DC Circuit's lead in United States v. Safavian, 528 F.3d 957 (DC Cir. 2008), held that the federal government cannot sustain a fraudulent concealment conviction under 18 U.S.C. Section 1001 (a) (1), unless "a statute or government regulation requires the defendant to disclose specific information to a particular person or entity" and the defendant submits a report, or makes a statement, that fails to do so. In these situations, "the defendant's silence is akin to an affirmative misrepresentation, and therefore logically falls within the scope of [Section] 1001's prohibition on false and fraudulent statements." But it is not enough that the defendant violates a general ethical/regulatory duty to report fraud, waste, and abuse. Any relationship between such duties and Section 1001 is too tenuous. The case is United States v. White Eagle. Although several other counts were reversed, this was largely because "the crimes charged did not fit the facts." The discussion of Section 1001 material concealment is by far the most critical part of the opinion.

(wisenberg)

July 9, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 2, 2013

Global-Tech? Can't Get No Respect!

by: Solomon L. Wisenberg

Yesterday, in United States v. Goffer, an insider trading/securities fraud criminal appeal, the Second Circuit again refused to alter a standard conscious avoidance jury instruction to comport more fully with the Supreme Court's opinion in Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2068-72 (2011). According to Judge Wesley, Global-Tech was not "designed to alter the substantive law. Global-Tech simply describes existing case law." The instruction given by the trial court "properly imposed the two requirements imposed by the Global-Tech decision." Moreover, Appellant Kimelman's request "that the district court insert the word 'reckless' into a list of mental states that were insufficient" was unnecessary, because "Global-Tech makes clear that instructions (such as those in this case) that require a defendant to take 'deliberate actions to avoid confirming a high probability of wrongdoing' are inherently inconsistent 'with a reckless defendant...who merely knows of a substantial and unjustified risk of such wrongdoing."

I don't know. Sounds a little circular to me. According to Global-Tech, willful blindness has "an appropriately limited scope that surpasses recklessness and negligence." Why not just say it squarely in a jury instruction? The problem here is that district courts are generally afraid to alter standard jury instructions in light of emerging case law. And appellate courts are generally reluctant to vacate major securities fraud convictions unless the jury instructions are blatantly improper. The Goffer opinion can be found here.

(wisenberg)

July 2, 2013 in Fraud, Insider Trading, Judicial Opinions, Prosecutions, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Monday, July 1, 2013

Sekhar v. United States: A Pyrrhic Victory?

by: Solomon L. Wisenberg

Professor Podgor's concise and outstanding analysis of the Supreme Court's opinion in Sekhar v. United States can be found here.

From the majority opinion:

"It may well be proper under the Hobbs Act for the Government to charge a person who obtains money by threatening a third party, who obtains funds belonging to a corporate or governmental entity by threatening the entity’s agent, see 2 J. Bishop, Criminal Law §408, p. 334, and n. 3 (9th ed. 1923) (citing State v. Moore, 1 Ind. 548 (1849)), or who obtains 'goodwill and customer revenues' by threatening a market competitor, see, e.g., United States v. Zemek, 634 F. 2d 1159, 1173 (CA9 1980). Each of these might be considered 'obtaining property from another.' We need not consider those situations, however, because the Government did not charge any of them here."

From the concurrence:

"To recognize that an internal recommendation regarding a government decision is not property does not foreclose the possibility that threatening a government employee,as the government’s agent, in order to secure government property could qualify as Hobbs Act extortion. Here, after all, petitioner’s ultimate goal was to secure an investment of money from the government. But the jury found only that petitioner had attempted to obtain the general counsel’s recommendation, so I have no occasion to consider whether a Hobbs Act conviction could have been sustained on a different legal theory."

Translation: Note to the Government. Charge the case more intelligently next time.

(wisenberg)

July 1, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Thursday, June 27, 2013

First Circuit Holds That 18 U.S.C. Section 666 Doesn't Criminalize Gratuities

by: Solomon L. Wisenberg

The mark of the beast is fading a little, at least in the First Circuit. Amidst the hubbub of the Supreme Court's Wednesday rulings, the First Circuit quietly decided that 18 U.S.C. Section 666 can't be read to prohibit gratuities. This sets up a circuit split. The opinion in United States v. Fernandez & Maldanado is here.

Congratulations to Martin Weinberg, David Chesnoff, Kimberly Homan and Jose Pagan, who were on the brief for Appellant Bravo Fernandez. Congratulations to Abbe Lowell and Christopher Man, who were on the brief for Appellant Martinez Maldonado.

(wisenberg)

June 27, 2013 in Corruption, Fraud, Judicial Opinions, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 26, 2013

Supremes Strike Down the Government's Attempt to Stretch The Hobbs Act

In Sekhar v. United States, the Supreme Court looked at the question of "whether attempting to compel a person to recommend that his employer approve an investment constitutes 'the obtaining of property from another' under 18 U.S.C. s 1951(b)(2),"  the Hobbs Act.  The Hobbs Act has been a statute of choice for federal prosecutors in many white collar cases.  Its heavy penalty provisions offer increased sentence posibilities when the defendant knowingly and willfully induced someone to part with property by extorionate means and there has been interstate commerce. 

In Sekhar, the issue arose from an alleged threat to disclose an alleged affair following a general counsel's written recommendation to a state comptroller not to invest in a fund. Although the jury form offered three options of the possible property of the attempted extortion, the jury selected only the third option - "the General Counsel's recommendation to approve the Commitment." The Supreme Court reversed the Second Circuit finding that this was not extortion.

The Court issued an unanimous holding with three concurrences.  Justice Scalia, writing for the Court, stated that:

"As far as is known, no case predating the Hobbs Act - English, federal, or state - ever identified conduct such as that charged here as extiotionate.  Extortion required the obtaining of items of value, typically cash, from the victim."

 The opinion provides a wonderful history of the Hobbs Act, and highlights how "extortion" requires "obtaining property from another." The Court holds that "[t]he property extorted must therefore be transferable - that is, capable of passing from one person to another." Finding that the alleged property fails here, the Court reverses the convictions. The Court also goes on to say that you need "something of value." The Court states:

"The principle announced there [referencing its prior opinion in Scheidler] - that a defendant must pursue something of value from the victim that can be exercised, transferred, or sold - applies with equal force here. Whether one considers the personal right at issue to be property in a broad sense or not, it certainly was not obtainable property under the Hobbs Act." (footnotes omitted).

Citing to the prior decision in Cleveland, the Court holds that "an employee's yet-to-be-issued recommendation" is not obtainable property. Intangible property is not enough, it must be "obtainable property."

The Court emphasizes that coercion is not extortion, and Congress has not criminalized coercion in the Hobbs Act.

The three-person concurrence (Justices Alito, Kennedy, and Sotomayor), focuses on property and tries to limit the decision by saying that this case is an "outlier and that the jury's verdict stretches the concept of property beyond the breaking point." They reference the rule of lenity and although this concurrence agrees that Congress did not "classify internal recommendations pertaining to government decisions as property," they leave open the possibility that the government could perhaps have prosecuted "under some other theory."

My Commentary -  

Bottom line - the government stretched the statute and they were caught.

This decision offers defense counsel strong arguments and requests for instructions in Hobbs Act cases.  Limiting the definition of property to "obtainable property" and requiring a clear definition of when "something is of value" are likely to be requests coming from defense counsel in the future.

My advice to the government - -  there is real crime out there, please put our valuable resources into prosecuting it! 

(esp)  

June 26, 2013 in Judicial Opinions, Prosecutions | Permalink | Comments (2) | TrackBack (0)

Supreme Court Issues Decision in Hobbs Act Case

Sekhar v. United States here.   Commentary to follow.

(esp)

June 26, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 25, 2013

Second Circuit Affirms Rajaratnam Case - But Goes A Step Further in Supporting the Government

It's a relatively short opinion issued by the Second Circuit, and 24 of the 29 pages pertain to a summary of the holding, facts, and the wiretap order used in this case.  For background on the issues raised, the briefs (including amici briefs), see here. Judge Cabranes wrote the majority opinion, joined by judges Hon. Sack and Hon. Carney. A summary of the holding states:

In affirming his judgment of conviction, we conclude that: (1) the District Court properly analyzed the alleged misstatements and omissions in the government’s wiretap application under the analytical framework prescribed by the Supreme Court in Franks; (2) the alleged misstatements and omissions in the wiretap application did not require suppression, both because, contrary to the District Court’s conclusion, the government did not omit information about the SEC investigation of Rajaratnam with "reckless disregard for the truth," and because, as the District Court correctly concluded, all of the alleged misstatements and omissions were not "material"; and (3) the jury instructions on the use of inside information satisfy the "knowing possession" standard that is the law of this Circuit.

Some highlights and commentary:

1. The Second Circuit goes further than the district court in supporting the government's actions with respect to the wiretap order.

2.  The Second Circuit agrees with the lower court that a Franks hearing is the standard to be used with a wiretap order where there is a claim of misstatements and omissions in the government's wiretap application. The Second Circuit notes that the Supreme Court has "narrowed the circumstances in which ...[courts] apply the exclusionary rule."  But the question here is whether the Supreme Court has really addressed the wiretap question in this context and whether a cert petition will be forthcoming with this issue.

3. Although the Second Circuit uses the same basic test in reviewing the wiretap, it finds that "the District Court erred in applying the 'reckless disregard' standard because the court failed to consider the actual states of mind of the wiretap applicants."  The Second Circuit then goes a step further and finds that omission of evidence does not mean that the wiretap applicant acted with "reckless disregard for the truth."

4.  The court states that "the inference is particularly inappropriate where the government comes forward with evidence indicating that the omission resulted from nothing more than negligence, or that the omission was the result of considered and reasonable judgment that the information was not necessary to the wiretap application."  - This dicta provides the government with strong language in future cases when they just happen to negligently leave something out of a wiretap application.

5.  Does the CSX Transportation decision by the Supreme Court call into question Second Circuit precedent?  The Second Circuit is holding firm with its prior decisions.  But will the Supreme Court decide to take this on, and if so, will it take a different position.

Stay tuned.

(esp)

June 25, 2013 in Celebrities, Civil Enforcement, Judicial Opinions, Prosecutions, Prosecutors, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Friday, June 21, 2013

DOJ Continues To Violate Brady Rule

by: Solomon L. Wisenberg

Despite all the promises and policy iterations we continue to see blatant DOJ Brady violations. These are violations that first year criminal procedure students would know not to commit. The latest to come to light is from the Eastern District of Tennessee.

Yesterday, the U.S. Court of Appeals for the Sixth Circuit reversed Abel Tavera's conviction for conspiracy to distribute meth and possession with intent to distribute meth. Tavera was the passenger in a truck involved in an undercover drug deal. He plausibly claimed no knowledge of the drug transaction, testifying that he thought he was heading to a roofing job. Some of the physical evidence tended to corroborate Tavera's story. The evidence against Tavera was almost entirely bottomed on the testimony of co-defendant Granado. Non-testifying co-defendant Mendoza debriefed. He first told the government that Tavera had no knowledge of the drug transaction. Later the same day Mendoza told the government that Tavera only gained knowledge of the drug transaction upon entering the truck on the day of the transaction. Mendoza also denied that Tavera came along to count money and provide security, and consistently stated that one of the purposes of the truck ride was to work on a roofing job. All of this was contradictory to Granado's ultimate testimony. Mendoza later pled guilty. Mendoza's written plea agreement stated: "Tavera knew that they were transporting methamphetamine from North Carolina to be delivered to another person in Tennessee and agreed to accompany [Mendoza]. Since they were transporting methamphetamine, Tavera told [Mendoza] that they needed to be careful." The prosecutor, AUSA Donald Taylor, failed to disclose Mendoza's earlier debriefing statements to the defense.

Judge Merritt, speaking for the majority, decided to send a message:

"This particular case is not close. Prosecutor Taylor's failure to disclose Mendoza's statements resulted in a due process violation. We therefore vacate Tavera's conviction and remand for a new trial. In addition, we recommend that the U.S. Attorney's office for the Eastern District of Tennessee conduct an investigation of why the prosecutorial error occurred and make sure that such Brady violations do not continue."

Tavera's attorney never tried to interview Mendoza. The government argued that no Brady violation occurred, under Sixth Circuit precedent. because Mendoza was equally available to both sides. The majority disagreed with this contention,and further found it foreclosed by the U.S. Supreme Court's ruling in Banks v. Dretke, 540 U.S. 668 (2004). Judge Clay accepted the government's position regarding Sixth Circuit precedent and dissented.

The statements were plainly material and exculpatory. So the question remains, why is such conduct continuing to occur and what is the DOJ doing about it when it comes to light? Here, what one branch of the DOJ did was to argue that Brady wasn't violated.

These constitutional violations directly affect the fairness of federal criminal trials. They will never stop, absent legislation with teeth and/or a federal criminal defense bar willing to be fanatical in its intolerance of Brady violations.

Here is the decision in United States v. Tavera.

(wisenberg)

June 21, 2013 in Judicial Opinions, Obstruction, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, June 13, 2013

Circuit Report

by: Solomon L. Wisenberg

Today in U.S. v. Cherry, the Fourth Circuit held that it was plain error for a trial court to tell the jury about the defendant's inadmissible criminal history prior to polling the jurors. Alas, the error was harmless, given the overwhelming evidence of guilt. The offending jurist was Senior District Judge Robert Doumar of the Eastern District of Virginia (Norfolk Division), who informed the jurors of defendant's three prior criminal convictions immediately after the verdict, but prior to polling. The Fourth Circuit opinion was authored by Judge Allyson  Duncan.

(wisenberg)

June 13, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Sunday, June 9, 2013

"'We the people' are the boiling frog, and the water has started to boil."

by: Solomon L. Wisenberg

The wonderful John Wesley Hall concisely explains, at Welcome to the Fourth Amendment.com, the decades-long erosion of our Fourth Amednment rights, at the hands of the Supreme Court and a succession of do-nothing Congresses. No surprises here, as Hall laments: 

"What is Congress doing? Essentially nothing. Proposing a law with great fanfare is meaningless if it goes nowhere. I wrote my Senators about email privacy, so I figure they don’t care since they never wrote back. So, I haven’t bothered to write to them about Sen. Paul’s bills. Congress is too mired in gamesmanship to do their damned jobs of actually legislating in the public interest."

***

"Now, what are we going to do about it? Complain, but sit on or wring our hands and do nothing?"

Hat Tip to NACDL's tireless weekend warrior, Ivan J. Dominguez, for sending this out. Similar points were made on Friday by the inimitable Scott Greenfield at Simple Justice in Seize It All And Trust the Government To Sort IT Out:

"Yet all the hand-wringing interest today will fade and we will elect the same men and women to power to continue to re-enact the same laws that allow the government to do such things to its own people, and presidents who believe so strongly in their own exceptionalism that they can be trusted with our personal data even though the other team could never be."

Cheery thoughts for a Sunday afternoon.

(wisenberg)

June 9, 2013 in Congress, Current Affairs, Judicial Opinions, Searches | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 5, 2013

Sideshow: DC District Court Staff's Failure to Unseal the James Rosen Affidavit

by: Solomon L. Wisenberg

FBI Special Agent Reginald Reyes' affidavit supporting DOJ's search warrant application for Fox News Reporter James Rosen's Google email account was ordered unsealed in November 2011. But it wasn't actually unsealed by the DC U.S. District Court's staff until late May of 2013. In other words, the affidavit was only unsealed several days after AG Holder testified that, "[w]ith regard to potential prosecution of the press for the disclosure of material, that is not something that I have ever been involved in, heard of, or would think would be a wise policy." Once the affidavit and search warrant application were unsealed, it became clear that Holder's testimony was inacurrate, as he had personally authorized the search warrant application. See here for yesterday's post on this issue.

DC Chief Judge Royce Lamberth is not happy about his staff's failure to unseal the affidavit and related documents. Here is Chief Judge Royce Lamberth's 5-23-2013 Order expressing his unhappiness.

(wisenberg)

June 5, 2013 in Congress, Current Affairs, Investigations, Judicial Opinions, Legal Ethics, Perjury, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, April 11, 2013

Administrative Judge Reverses Suspension of Stevens Prosecutors

by: Lawrence S. Goldman

An administrative judge for the Merit Systems Protection Board has overturned the DOJ internal decision finding reckless misconduct for violating Brady obligations by two prosecutors of Senator Ted Stevens, Joseph Bottini and James Goeke, and ordering their suspensions.  See here

The administrative judge ruled that DOJ had violated its own disciplinary procedures which require a rank-and-file DOJ attorney in the Professional Misconduct Review Unit to review OPR findings and determine whether misconduct had occurred.  The career attorney who reviewed the OPR findings, Terrence Berg (now a federal district judge in Michigan), decided in favor of the prosecutors, but his ruling was reviewed and reversed by his superiors, who found that misconduct had occurred and suspensions were appropriate.  Review and reversal by the superiors, said the administrative judge, was improper procedurally, and the rank-and file attorney's decision was non-reviewable and final.

I lack sufficient familiarity with administrative law to opine whether this decision is wrong  (although Prof. Bennett L. Gershman has made a strong case that it is).  See here.  I recognize that prosecutors, like those they prosecute, are entitled to due process.  However, procedural infirmities aside, the actions of the prosecutors were clear enough and serious enough to warrant on the merits a finding of misconduct and a suspension.  See here.

I find it ironic that DOJ's finding of misconduct was (according to the administrative judge) based on DOJ's own procedural misconduct.  More seriously, however, I find extremely troubling the notion that a DOJ prosecutor's misconduct should be finally determined by a fellow career DOJ prosecutor.  Defense lawyers, for instance, are not entitled to have their alleged misconduct weighed by a fellow defense lawyer.

A prosecutor's alleged misconduct ideally should be determined by the appropriate state bar disciplinary committee, not a fellow prosecutor (or fellow prosecutors).  Of course, bar disciplinary committees, as several commentators have pointed out, have been extraordinarily hesitant to discipline prosecutors, especially with respect to Brady violations.

DOJ has the right to appeal to the three-judge Merit Systems Protection Board.  It will be interesting to see if it does.

(goldman)

April 11, 2013 in Judicial Opinions, Legal Ethics, News, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 5, 2013

Eleventh Circuit Finds Violation of Customs Regulation Not Criminal

by: Lawrence S. Goldman

One of the several troubling aspects of the continuing overcriminalization of federal law is the frequent elevation of a violation of civil regulation to a crime.  In United States v. Izurieta, 11th Cir., 11-13585 (February 22, 2013), the Eleventh Circuit addressed this issue.

The defendants in Izurieta were convicted after trial by jury of violating the general smuggling statute, 18 U.S.C. 545, importing goods "contrary to law," by violating a customs regulation, 19 C.F.R. 142.113(c), in failing to redeliver to Customs for exportation or destruction goods purportedly contaminated with E. coli, Staphylococcus aureus and/or Salmonella which had been conditionally released.

The defendants appealed on various grounds -- significantly not including whether the indictment sufficiently charged a crime by relying on the Customs regulation.  At oral argument, however, the Court raised this issue sua sponte and ordered supplemental briefing.

Section 545, as pertinent here, reads:

Whoever fraudulently or knowingly imports or brings into the United States, any merchandise contrary to law, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law . . . shall be fined . . . or imprisoned . . . .

Emphasis added.

The regulation or "law" upon the charges here were based covered the "failure to deliver, export, and destroy with FDA supervision" certain foods found to be adulterated.  19 C.F.R. 141.113(c).

The Court in its opinion recognized a split among circuits on when a regulation constitutes the "law" upon which a Section 545 indictment may be based.  The Ninth Circuit in United States v. Alghazouli, 517 F.3d 1179, 1187 (9th Cir. 2008) took what the opinion called "a relatively narrow interpretation" of Section 545 that regulations are included in "law" only when "there is a statute (a 'law') that specifies that violation of that regulation is a crime."  The Fourth Circuit in United States v. Mitchell, 39 F.3d 465, 470 (4th Cir. 1994), to the contrary, took what the opinion called a "more expansive" view, deciding that Section 545 criminalizes violations of any regulation "having the force and effect of law" based on a three-prong test.

The Court, while claiming its binding authority, Bobb v. United States, 252 F.2d 702, 707 (5th Cir. 1958) was consistent with the Fourth Circuit's "expansive" approach in Mitchell, applied the rule of lenity and held that the regulation in question did not qualify as a "law" for purposes of Section 545 liability.  It found that the regulation in question was primarily to reflect contractual requirements between Customs and the importer and thus was "civil only."

The rule of lenity was premised, it said, on two ideas:  first, that "a fair warning should be given . . . of what the law intends to do if a certain line is passed" and, second, that "legislators and not courts should define criminal activity."

This apparent case-by-case approach, of course, does not establish a "bright line" as to when violations of an administrative regulation become a crime.  Citizens and attorneys will often have to guess whether a violation of a regulation is a crime; that is, "what the law intends to do if a certain line is passed."  The case may, however, curb the government's increasing efforts to convert violations of ostensible civil regulations into crimes.

This case should remind lawyers that the uncertainties in this area require that they pay attention at both the trial and appellate levels to the issue of whether a violation of an administrative regulation is a crime.

 (goldman)

(A hat tip to Paul Kish and the Federal Criminal Lawyer Blog)

 

March 5, 2013 in Food and Drink, Judicial Opinions, Prosecutions, Prosecutors, Statutes | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 29, 2013

Ring Case - Commentary

The D.C. Court of Appeals rejected all of Kevin Ring’s appellate arguments, from his claims of an impropriety premised on the district court’s definition of what constitutes an "official act" to a claim of a  Federal Rule of Evidence 403 violation. The court’s findings include that "campaign contributions can be distinguished from other things of value." (see here). 

The court states "[t]he distinction between legal lobbying and criminal conduct may be subtle, but, as this case demonstrates, it spells the difference between honest politics and criminal corruption."  This sentence in the opinion concerns me.  Should a distinction that results in imprisonment be "subtle"?  "Googling" the word "subtle" a definition provided is "[s]o delicate or precise as to be difficult to analyze or describe."  And if this distinction is "subtle," should the rule of lenity be considered?  And should a "subtle" difference be considered to "spell[ ] the difference between honest politics and criminal corruption" or as this case finds - spell the difference between freedom and prison.

Irrespective of whether the movie Lincoln wins best picture, unlike Argo, Zero Dark Thirty, Silver Lining Playbook, and the other nominees, Steven Spielberg will be able to say that a federal appellate court has quoted the movie in its decision.  Yes, Hon.Tatel held that "[t]he ubiquity of these practices perhaps explains why in Steven Spielberg’s film Lincoln a lobbyist declared, "It is not illegal to bribe congressmen—they’d starve otherwise."

(esp)

January 29, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

D.C. Circuit Affirms Ring Decision

The D.C. Circuit affirmed the decision in the Kevin Ring case.  See here - Download Ring Decision Commentary to follow.

(esp)

January 29, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Thursday, January 3, 2013

Mail Fraud - Part II By Hon. Jed Rakoff

The Ninth Circuit issued an opinion in United States v. Philips, a case that includes issues related to mail fraud, money laundering, forfeiture, and alleged government misconduct.  The court reversed the district court decision to deny the government's forfeiture application, and affirmed other aspects of the case, including the money laundering conviction.  All but one, that is - the mail fraud conviction.  Here the court rejected the government's arguments and reversed the conviction. 

In a opinion written by District Judge Jed Rakoff (yes, sitting on the Ninth Circuit by designation) we are finally getting to see what we hope he will include in a Part II to his famed mail fraud article published in 18 Duq. L. Rev. 771 (1979-80) titled Federal Mail Fraud (Part 1).  

Hon.Rakoff does not cite to himself in this opinion, but his incredible knowledge of this statute definitely shows.He dissects the Supreme Court's decision in United States v. Maze and concludes that "[h]ere as in Maze, the success of Phillip's fraudulent scheme did not depend in any way on the use of the mails."

Too many take for granted the enormous power of the government in its use of the "stop-gap" provision. But it is also important to remember that there are limits - constitutional ones - with this statute. Thank you, Judge Rakoff for reminding us of this. And thank you Washington Appellate Project atty Lila Silverstein for making this argument.

(esp)(with a hat tip to Evan Jenness)

January 3, 2013 in Judicial Opinions | Permalink | Comments (0) | TrackBack (0)