January 22, 2006
What is Favorable Press in a Trial?
AP reports here regarding claims that Richard Scrushy paid for favorable press in his trial. Scrushy, in response, has a statement on his website here denying the claim. The bottom line is - does it make a difference since the jurors should not have been reading newspaper articles related to the case.
January 19, 2006
Spinning the Media
There is an interesting phenomenon recently in which defendants charged in white collar crime cases have been speaking out in the press about their cases and asserting their innocence (or at least lack of guilt). In a story in the New York Times (here) that could be titled "Extreme Makeover -- Defense War Room Edition," former Enron CEO Jeffrey Skilling discusses how he built the rooms in Houston that his O'Melveny & Myers attorneys are using to prepare the defense at his upcoming conspiracy and securities fraud trial. The article includes a discussion of his purchase of bathroom tile shelves from Home Depot and tables from Ikea, interspersed with the far more important message from his attorney that Skilling plans to testify at trial. Skilling also gave an interview to the Associated Press (story here) that is similar to the Times article.
Skilling is not the only person to put his views out in public. Co-defendant Ken Lay went even further in giving a speech (available here) to the Houston Forum in December in which he set forth his view that the "Enron Task Force investigation is largely a case about normal business activities typically engaged in on a daily basis by corporate officers of publicly held companies throughout the country." Defendants normally do not telegraph their defense a month before trial, or attack the prosecutors as being misguided.
In the Wall Street Journal (here), Seymour Lazar discusses the fraud and conspiracy charges against him for allegedly accepting secret payments to serve as the representative plaintiff in class action cases. Lazar asserts that the payments are not illegal but only "referral fees" from the attorneys.
Going one step further, an AP story (here) states that the author of articles that portrayed Richard Scrushy in a sympathetic light during his trial states she was paid $11,000 by Scrushy in money that was funneled through other organizations. The columns appeared in the Birmingham Times, a small newspaper that is the oldest African-American owned paper in the city, and Scrushy denies paying to have the stories written. Assuming the jury adhered to the court's instructions, then the articles would have no effect on the outcome, but if stories were bought then it takes the issue of use of the media well beyond giving an interview to put forth one's side of the case.
For the Enron defendants, their public discussions are part of an effort to negate the effects of the widespread negative publicity surrounding the cases arising from the Enron collapse that cost a number of jobs in the area in which they will be tried. Lazar's case portrays the various lawyers as prototypical sharks, and the article's discussion of his age and health problems will put him in a more sympathetic light. Is it a good strategy? It's hard to say at this point, of course, but in white collar crime cases the issue usually is not whether the person engaged in the conduct, but whether they intended to commit an illegal act. Intent is inferred from circumstantial evidence, so a discussion of the facts of the case will rarely implicate a person in conduct that the government could not otherwise prove, and an assertion of innocence does not add much to the prosecution's knowledge of the case or provide much insight into the defense strategy. With clients that are used to being in the limelight, it may be one way to allow them to regain a bit of their lost luster at what is likely only at most a modest cost to defending the case. (ph)
January 03, 2006
Wall Street Journal Starts a Law Blog
The Wall Street Journal has joined the fun with a blog devoted to law and legal topics, written by Peter Lattman (here). It looks like it will cover all parts of the legal world, and with the Journal's resources it should be a good place to get information and links to their stories. (ph)
December 22, 2005
Scrushy Sues Birmingham News and Radio Host for Libel
Former HealthSouth CEO Richard Scrushy and his wife, Linda, filed libel suits against the Birmingham News and Alabama radio personality Paul Finebaum for comments regarding their decision to switch churches during the government's investigation of fraud at the company. The Scrushys changed congregations from one in the suburbs to a largely African-American church in Birmingham in 2003, after he was terminated from HealthSouth and the U.S. Attorney's investigation obtained the cooperation of all five CFOs regarding the accounting fraud. The Scrushys allege that the Birmingham News quoted a law professor as stating that the change was to gain an advantage in the expected criminal prosecution and made them appear to be "like a devious hypocrite and heathen," while Finebaum is accused of making unflattering comments about Linda Scrushy. Both defendants are challenging the suits on First Amendment grounds, and it will be interesting to see if the case can survive a summary disposition. An AP story (here) discusses the libel suits. (ph)
November 25, 2005
The Ol' "Advance-Copy-of-Business-Week" Insider Trading Scheme
Former broker David Pajcin was arrested in New York for insider trading based on receiving advance copies of issues of Business Week and trading in stocks touted in the magazine's "Inside Wall Street" column. This is a type of scheme that has been tried with alarming regularity since the 1980s, particularly with Business Week, although it also was the underlying misconduct in the well-known Carpenter v. U.S. decision by the Supreme Court that upheld the conviction of defendants who traded in advance of "Heard on the Street" columns in the Wall Street Journal. An AP story (here) notes that Pajcin is accused of trading in shares of ten companies, including Alltel, thestreet.com, Arbitron, and Spectrum Pharmaceuticals.
This is not Pajcin's first brush with insider trading allegations. He was named in an SEC amended complaint on Aug. 18 alleging insider trading in Reebok stock options immediately before the company announced it agreed to be taken over by adidas, trades that generated over $2 million in profits. According to the SEC's Litigation Release (here), some of the trading took place through an account in the name of Pajcin's aunt who lives in Croatia. Look for the U.S. Attorney's Office to pursue criminal charges against Pajcin (and others) in this case, too. (ph)
UPDATE: Bruce Carton has an interesting post on the Securities Litigation Watch blog (here) noting how Pajcin's trading fits a transparent pattern of insider trading that will (usually) be noticed by the SEC.
November 15, 2005
According to the Washington Post here, Dow Jones went to court seeking some of the documents in the Libby case. It seems that Special Prosecutor Patrick Fitzgerld wants a protective order from some of these documents being released to the media.
It is likely that issues of balancing the public's right to know versus insuring the defendant a fair trial, continuing an ongoing investigation, and protecting the secrecy of grand jury material may be some of the issues at stake here.
Defense counsel is entitled to receive immediately all exculpatory material or what is commonly referred to as Brady material. Ultimately, when and if the case goes to trial, the defense is also entitled to receive Jencks material, or any prior statements made by a witness. According to statute and a federal rule of criminal procedure, Jencks material does not have to be turned over to the defense until after the witness has testified. In reality, most prosecutors provide Jencks material to defense counsel prior to trial so that the trial does not need to be placed on hold while defense counsel reads and further investigates the defense case based upon the Jencks material that is just received.
Prosecutors often, as they should, provide all discovery material to defense well before trial. The benefit of defense counsel receiving this material pre-trial is that upon seeing the prosecution's case it may be more likely that a plea agreement will avoid the necessity of the cost of trial. It is also a question of basic fairness. Shouldn't defense counsel have the same ability to prepare for trial the prosecution has had in the many months that it has been investigating its case?
But giving discovery material to the media is another matter. What if this were an ongoing investigation and someone is still providing information to the government - - would that individual be protected? Would the government be able to continue to obtain information from someone once their identity is disclosed?
But on the other side, will defense counsel be able to properly prepare for trial under the constraints of a protective order? When police want information, they often use the press to publicize the matter. Police have the ability to put bulletins out to the public seeking information on an alleged crime. Shouldn't defense counsel have this same ability? If the defense want more information on events, shouldn't they also have the right to use the media? But if that's the case, wouldn't it be defense counsel arguing against this protective order as opposed to Dow Jones?
Obviously the defense counsel needs to receive discovery material to properly prepare for trial, but when does the public's right to know prevail over prosecutorial needs in a continuing investigation? Defense counsel often struggles with prosecutors to obtain all the discovery material they need to prepare for trial. Perhaps now the media will understand the difficulties faced by defense counsel in their preparation for trial.
November 07, 2005
Former Corporation for Public Broadcasting Chairman Under Investigation
Kenneth Tomlinson, whose tenure as chairman of the Corporation for Public Broadcasting was controversial, resigned from the CPB's board recently after a critical inspector general's report, and now is under investigation for possible criminal violations. A New York Times story (here) states that the investigation focuses on the use of federal funds for personal expenses, and the hiring of ghost or unqualified employees. As a federal enterprise, directors and officers of the CPB are subject to the federal anti-corruption statutes. (ph)
October 26, 2005
What's Happening At SOCom?
Accroding to the St. Pete Times, SOCom, the United States Special Operations Command, has had its share of white collar related problems within its ranks. In this past month alone, the St. Pete Times reported on the "widening" of a bribery scandal. (see post here) Yesterday, the St. Pete Times provided a listing of some of the titles of articles they have published on SOCom, "the military arm that overseas the nation's elite commmandos such as the Green Berets and the Navy SEALS." The titles of these articles included "SOCom Target of Bribery Investigation," and "SOCom Hides $20-million from Congress." (see article here - titled "Despite Problems, SOCom Carries On). Paul De La Garza of the St. Pete Times provides an in depth report in this article of investigations, responses by SOCom, etc.
October 24, 2005
Is Perjury a "Technicality"?
On Meet the Press, in the context of discussing possible charges from the grand jury investigation of the leak of the status of Valerie Plame, Senator Kay Bailey Hutchison stated that a perjury charge would be a "technicality" and any such charge would be an attempt by Special Counsel Patrick Fitzgerald to justify a two-year investigation -- see the Reuters story here. As an earlier post (here) notes, this may well be the week in which Fitzgerald decides whether to seek a grand jury indictment. The Reuters article also notes that Fitzgerald may inform one or more officials in the administration that they are targets of the investigation, a final step toward seeking an indictment.
If a perjury (or Section 1001 or obstruction of justice) charge were to be returned by the grand jury, is that just a technicality, particularly if the underlying subject matter of the investigation -- whether there was a violation of federal law from the disclosure of Plame's position as a cover intelligence agent -- is not also charged? Lying is hardly a technical violation of the law, particularly when a person has sworn an oath to testify truthfully before a federal grand jury, and trying to diminish perjury as a "collateral" violation or otherwise unimportant denigrates the integrity of the investigative process. As the Eighth Circuit noted in U.S. v. Lasater, 535 F.2d 1041, 1049 (8th Cir. 1976): "The grand jury performs an important function in our judicial system, as the device by which criminal investigations are conducted and criminal proceedings instituted . . . Any false testimony before a grand jury, which tends to impede its investigation, should be diligently prosecuted." Interestingly, a claim of perjury was the basis for the first article of impeachment (here) against President Clinton, which stated:
[I]n violation of his constitutional duty to take care that the laws be faithfully executed, has willfully corrupted and manipulated the judicial process of the United States for his personal gain and exoneration, impeding the administration of justice, in that: On August 17, 1998, William Jefferson Clinton swore to tell the truth, the whole truth, and nothing but the truth before a Federal grand jury of the United States. Contrary to that oath, William Jefferson Clinton willfully provided perjurious, false and misleading testimony to the grand jury . . . .
That does not sound like a "technicality" to me. (ph)
October 20, 2005
Judith Miller's Testimony to Senate Committee on the Judiciary
Judith Miller testified before the Senate Committee on the Judiciary. Her testimony found here was to "urge [Congress] to enact the Free Flow of Information Act so that other journalists will not be forced, as [she] was, to go to jail to protect their sources." The protection of reporters sources is clearly important to the public obtaining information that might not be forthcoming by the government. (see post here)
But in one passage of her testimony she discusses the BALCO case. She says "[t]he leakers in the Balco case in San Francisco violated grand jury secrecy rules or laws, but their information about steroid use in professional baseball gave Congress the facts and impetus to start hearings and make needed reforms."
Is she suggesting that leaks from the grand jury are good and sometimes necessary? Wouldn't Congress have eventually received this information without this leak? It is one thing to allow reporter's to protect sources, and for reporters to bring out information that might not have been disclosed absent the confidentiality being provided to the source. But this seems different than saying it is OK for someone to violate the grand jury rules as long as they tell the information to a news reporter.
Grand jury leaks should not be tolerated. This is especially true when the leak is to a newspaper reporter who then may be disclosing it to the world. The importance of grand jury secrecy is undermined when individuals covered by the grand jury rules will be able to tell reporters anything and be protected by this process.
In finding a fair balance between confidentially of news sources and grand jury secrecy, it is important to factor in both values and not just protecting the sources.
Rove + Libby = ?
An AP report (here) discusses various conflicts in the testimony of Karl Rove and I. Lewis Libby that indicates Libby may have contacted reporters about the status of Valerie Plame as a CIA operative and not the other way around. Rove also testified that he may have learned about Plame from Libby, although as with everything else in this investigation, the recollection is hazy, at best.
Almost like the pieces of a giant puzzle, the information coming together points to some serious inconsistencies in the testimony of Libby, the chief of staff to Vice President Cheney, about his contacts with the press and the source of his knowledge of Plame. Whether they are enough to pull together into an indictment for false statements, perjury, or obstruction is a different matter, however. While contradictory statements are wonderful for cross-examining a witness, proving a person lied (as opposed to being nonresponsive) in the grand jury is much more difficult. "Might" and "may have" do not make for the types of falsehoods usually prosecuted. As more information leaks out about the grand jury testimony of witnesses, I wonder whether claims of prosecutorial violation of the secrecy requirements of Rule 6(e) will surface. (ph)
UPDATE: An extensive Washington Post story (here) discusses the role of various administration officials in the investigation. (ph)
October 17, 2005
"Don't Go There"
One aspect of New York Times reporter Judith Miller's case, presented in great (although sometimes slippery) detail in the newspaper (here), includes some hotly disputed interchanges in 2004 between Joseph Tate, the lawyer for the Vice President's chief of staff, I. Lewis Libby, and Miller's then-lawyer, Floyd Abrams. According to the Times, Tate described to Abrams part of Libby's grand jury testimony in which Libby said he did not give Miller the name or status of Valerie Plame as a CIA operative. According to Miller, Abrams told her that when he told Tate that there could be no assurances that Miller's testimony would be consistent with Libby's, Tate allegedly responded "Don't go there, or, we don't want you there." Special prosecutor Patrick Fitzgerald ultimately examined Miller about whether she believed Libby wanted her to conform her testimony to his.
The role of the lawyers has been crucial in the investigation. Miller's new lawyer, Robert Bennett (former lawyer for President Bill Clinton in the infamous Paula Jones deposition), negotiated her release after Libby provided assurances of his waiver of confidentiality. Fitzgerald even played a key role in that process, sending a letter to Tate stating that any contact with Bennett regarding Miller testifying (or not) would not be viewed as being an obstruction of justice. But, could Miller's (and Abrams') recitation of the conduct of Tate -- who vehemently denies telling Abrams "Don't go there" or even implying that --constitute obstruction of justice? Interestingly, lawyers receive special treatment under the obstruction of justice statutes because legal counseling can often involve telling a client to do things that could be viewed as impeding an investigation. 18 U.S.C. Sec. 1515(c) (here) provides: "This chapter does not prohibit or punish the providing of lawful, bona fide, legal representation services in connection with or anticipation of an official proceeding." Tate's statement, if made to Abrams, would likely fall within the "safe harbor" as bona fide legal services. "Don't go there" is not a request that Miller change her testimony, and "we don't want you there" is even vaguer. Communicating with a lawyer, and not the witness, would likely take the conduct even further away from obstruction, unlike a case where a lawyer meets with a witness and suggests testimony.
In the hail of information on the investigation of the Plame leak, it is getting more difficult to separate out who said what to whom, and when. Ultimately, that's the challenge that Fitzgerald and his staff faces in deciding whether there has been any criminal conduct that can be proven. (ph)
October 16, 2005
More on the Judith Miller Case
Some side-notes to the post below-
1. Judith Miller hires Robert Bennett. The NY Times reports here that "Ms. Miller recalled Mr. Bennett saying while he signed on to her case: 'I don't want to represent a principle. I want to represent Judy Miller.'" - Is this a situation that the party needed private representation above and beyond the company lawyer? Clearly Floyd Abrams is the "name" on First Amendment issues.
2. Why are there so many misunderstandings?
A. Judith Miller admits according to the NY Times that "W.M.D. - I got it totally wrong." (Id.)
B. According to the NY Times article, Ms. Miller "'made a strong recommendation to my editor' that an article be pursued. 'I was told no,' she said. She would not identify the editor." But the NY Times story in the next sentence says that "Ms. Abramson, the Washington bureau chief at the time, said Ms. Miller never made any such recommendation." (Id.)
C. According to the NY Times, after an article in the Washington Post about two officials in Washington releasing the name of Valerie Plame, "Ms. Abramson's successor as Washington bureau chief, asked Ms. Miller and other Times reporters whether they were among the six. Ms. Miller denied it." Did she not recall her conversations with Libby? Did she not consider herself part of the six, and if so, why not?
D. She thought that Libby did not want her to testify, but Libby's attorney calls this according to the NY Times - "Outrageous." (Id.) It is apparent from this news report that Libby wanted her to testify. Instead she does 85 days later in jail. Is this a misunderstanding? Is this a book in the making? Do you really want to read this one?
3. Judith Miller in her article describing her testimony before the grand jury here states that "During the Iraq war, the Pentagon had given me clearance to see secret information as part of my assignment 'embedded' with a special military unit hunting for unconventional weapons." Does it seem rather odd for the Pentagon to be given a clearance to a newspaper person? Should a newspaper person be accepting such clearance? On one hand they can't report on it and on the other hand do they have a fiduciary duty to their paper and the public to report news? If she had security clearance will this preclude a charge against Libby as he might have thought he was discussing confidential information with someone who had clearance?
4. And yes, Miller and Libby just happen to meet at a rodeo in Jackson Hole, Wyo. after a conference she attended in Aspen, Colorado - which by the way was on National Security. (Mapquest shows the distance from these two cities to be - 590.96 miles - not that this means anything). But I still don't understand Libby's reference in his letter to Miller that
"'Out West, where you vacation, the aspens will already be turning,' Mr. Libby wrote. 'They turn in clusters, because their roots connect them.'"
Was her answer to Fitzgerald's question sufficient? It seems likely he was looking for a secret code that might allow for an obstruction of justice charge against Libby. Did Fitzgerald stop with the response reported by Judith Miller in her artticle, or did he ask some additional questions? Blogsphere offers a good bit here and here on this line in the letter.
Miller was not able to take notes in the grand jury room so obviously she can't be expected to remember everything. But I keep wondering - what about the material not in her story about her grand jury testimony. She was there for four hours - there must be more. Are we getting the full story here? And did any of the grand jurors ask questions, and what questions did they ask? And don't tell me I have to wait for the movie to come out.
I keep coming back to the place I started - - The bottom line is that someone leaked the name of a CIA agent. That's serious and that's a problem.
What Does Patrick Fitzgerald Do Now?
Judith Miller, N.Y. Times reporter who spent 85 days in jail for what may now appear to be a misunderstanding about whether a source - I. Lewis "Scooter" Libby - had authorized her to disclose his name, now talks to the grand jury. She spoke to Libby she says (see her NY Times story here), but she can't recall who gave her the name of Valerie Plame, reported on her notes as Valerie Flame. And to top it off she states that "[m]y notes indicate that well before Mr. Wilson published his critique, Mr. Libby told me that Mr. Wilson's wife may have worked on unconventional weapons at the C.I.A."
She admits that she agreed to call Libby a "[f]ormer Hill staffer" as opposed to referring to him as "senior administration official." Id. Does the press use the test of whether it is just "literally true?"
It sounds like a good number of people are not too happy with what has happened here:
1. Clearly Judith Miller, who just spent 85 days in jail and then had to face the NY Times staff with this change in event must be bothered by the situation. Is this worth a book?
2. Probably Libby is not too happy with the revelation that he appears to be the cause of her not testifying, when he thought it clear his release had been given. The last thing in the world he probably wanted was to have a prosecutor and grand jury think he was trying to hide something.
3. Probably the N.Y.Times, who has had to deal with this entire scenario are not to happy about this event. (See Wall St Jrl. article here). And that's without even mentioning the attorney expense of the paper. (See Washington Post here) Clearly this was a tough call for the press bosses - they want to show that they support their employees and will stand behind someone who is protecting sources, but is this the type of situation they really wanted to stand behind? Don Van Natta Jr., Adam Liptak, and Clifford J. Levy present a fair evaluation of this event in the NY Times here and one has to especially give them credit for presenting all perspectives including a quote from Jill Abramson, a managing editor, who when "[a]sked what she regretted about The Times's handling of the matter, . . . said: 'The entire thing.'" But also check out Greg Michell's take from Editor and Publisher Magazine here (linked from Romenesko on the Poynteronline site here).
But what does Patrick Fitzgerald, the prosecutor, do now? The bottom line is that someone leaked the name of a CIA agent. That's serious and that's a problem.
October 12, 2005
Down to the Wire on CIA Leak Case
Prosecutor Patrick Fitzgerald is facing a deadline (NYTImes reports it here as Oct. 28th) of an upcoming end to the grand jury that has been investigating the leak of a CIA agent. Although he can ask to continue, it looks like Fitzgerald is moving things along in the final stages of this investigation. He has Karl Rove reappearing before the grand jury (see post) and now NYTimes reporter Judith Miller, who is out of jail, also set to appear. According to the NYTimes, Judith Miller met with prosecutors in anticipation of her testimony today to the grand jury. (see here). Stay tuned.
October 08, 2005
Letter to the Editor
Capitol Weekly reports here a new kind of scheme - writing letters to the editor under different pen names. To make matters worse, the letters sometimes supported each other and were authored by a political consultant. Not a bad way of securing support for ones position. But it presents a problem in California as it is a misdemeanor to send false letters to newspapers.
September 30, 2005
Judith Miller Released From Jail
According to the NYTimes here, reporter Judith Miller has been released from prison after 12 weeks. It seems that after 12 weeks, her confidential source is now providing her with a sufficient waiver of the privilege. Should this have happened earlier? Does it make a difference if the source turns out to be part of the administration? If the source has a tie to the administration, how could this have happened? Or was a waiver previously given, and if it was - why did she spend 12 weeks is prison?
September 25, 2005
The "CSI Effect" on White Collar Crime Prosecutions
Reuters has a story (here) about the white collar crime conference at Georgetown University this past week in which U.S. Attorney Alice Martin noted the effect of a lack of forensic evidence on the prosecution by her office of former HealthSouth CEO Richard Scrushy, which ended with an acquittal. She lamented the fact that jurors said there was no "fingerprint" evidence linking Scrushy to the documents in the case, nor did he say "fraud" on any of the audiotapes. The so-called "CSI Effect" to which she referred is based on the television shows that have cases solved through careful scientific analysis of physical evidence that links the perpetrator to the crime (along with more than a few lurid details to keep the viewers' attention). In white collar crime cases, it is rare that any such forensic analysis will play a role in the prosecution, and in the vast majority the defendants admit to the underlying transactions and argue about their intent or lack of involvement in the decisions.
While I don't dispute that many jurors do not have a good understanding of how the criminal justice system works, I think the focus on the "CSI Effect" is overblown. Television shows about lawyers have been around for years, and jurors perceptions of the legal system have been shaped by programs stretching back to "Perry Mason." One can argue that legal programs are more pervasive than before, but not all make the system look cut-and-dried or focus exclusively on forensic analysis. Some episodes of "Law and Order" consider the gray areas of the law, and occasionally a defendant is not convicted, although that has become rarer over the years. One can also argue that real life prosecutions of defendants as diverse as O.J. Simpson, Bernie Ebbers, and Scott Peterson have as much effect on perceptions about the criminal justice system as any weekly drama.
The statements made by the Scrushy jurors are as much about their doubts regarding the government's evidence as they are a possible reflection of how a criminal prosecution is perceived. Perhaps the jurors were not mislead by their view of the system, but instead were demanding from the prosecution a clearer link between Scrushy and the fraudulent accounting beyond just the word of admitted criminals (i.e., the five guilty CFOs, among others), and they simply noted that some sort of objective evidence would have bolstered the prosecution's case. It seems a bit disingenuous to blame the jurors -- and the media -- for the outcome of the Scrushy prosecution when juries were able to handle complex accounting issues in the successful prosecutions of Ebbers and former Adelphia Communications officers John and Timothy Rigas, neither of which involved any of the forensic evidence used to solve all those crimes on the many CSI's that populate television. (ph)
Considering the Kozlowski & Swartz Sentence
The weekly New York Times column What's Online (here) reviews co-editor Ellen Podgor's post discussing the 8-to-25 year sentence imposed on former Tyco CEO Dennis Kozlowski and CFO Mark Swartz and arguing that the prison term is too harsh given the status of the defendants as first-time offenders. (ph)
September 14, 2005
How Many Times Can You Re-Indict A Person?
According to the Dallas Morning News here, another indictment has been issued, with new charges, against "associates of U.S. House Majority Leader Tom DeLay." The new charges relate to campaign contributions. And as one might suspect, defense counsel is complaining about the defendants being indicted "three times for the same alleged acts." (See also post here)