Sunday, September 25, 2005
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)
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)
Wednesday, September 14, 2005
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)
Saturday, September 3, 2005
It has been surprisingly quiet lately with respect to the jailing of New York Times reporter Judith Miller for her failure to reveal confidential sources, sources which by the way she never used in an article. Today's New York Times, however, reminds us of her incarceration, with a story describing Bob Dole's support of this newsperson. See here.
Thursday, August 25, 2005
Are blacks being targeted in corruption prosecution cases being brought by the Department of Justice?This question is raised in a news article in the Dallas Morning News here. In addition to listing the many blacks that have faced or are facing recent indictments (e.g. former Mayor Bill Campbell, Atlanta), the article presents the views of some who are studying this issue.
Actually, though, it is not the first time this issue has been raised. One will find an article titled, "Selective Prosecution: Are Blacks Officials Investigative Targets, in 78 A.B.A. J. 54 (Feb. 1992) that looked at this same issue years back and presented some statistics and studies that made one seriously question whether in fact the government was targeting blacks in criminal corruption cases.
Wednesday, August 24, 2005
The Houston Chronicle has an interesting story (here) about a planning session attended by representatives of local Houston civic organizations about how to present "the other side of the story" about the city when the media descend in January for the trial of former Enron CEOs Ken Lay and Jeffrey Skilling, and former chief accounting officer Richard Causey. Among the ideas kicked around at the meeting was something called "covert hospitality" in which hotels at which media members were staying would be identified and the staff would be trained to answer their questions -- an idea quickly rejected, by the way. The city will make arrangements for the expected media circus by providing a tent for equipment and parking spaces, albeit not free parking, because this is Houston.
Planning for major events like the Super Bowl takes years and involves extensive efforts to spruce up the city -- witness the major road construction here in Detroit for the 2006 Super Bowl, which will do nothing to prevent the usual round of stories about urban decay, crime, corrupt city government, and the cold temperatures. Although the Enron trial will not have the party atmosphere of a Super Bowl, it is sure to be filled with details of accounting minutiae and special purpose entities, the stuff of legends. (ph)
Monday, August 22, 2005
The indictment of former Chicago Sun-Times publisher F. David Radler, along with the former general counsel for Hollinger Inc. and Lord Conrad Black's private holding company, Ravelston (see earlier post here), signals a significant step forward in the government's civil and criminal investigation of large payments made to Black and other senior officers of Hollinger, the media holding company. A New York Times article (here) discusses Radler's decision to plead guilty and cooperate in the government's investigation of Black, the former CEO of Hollinger. Radler's role as publisher of the Sun-Times, one of the many newspapers owned by Hollinger, certainly does not appear to have been based on merit, at least if quotes in the Times story are to be believed: "He wasn't averse to quality journalism; he just thought it should go on someplace else" and "I always used to think: 'How stupid can he be? He's the guy with the jet and the money and three homes.' " For 36 years, Radler was Black's confidante and behind-the-scenes numbers person, so his knowledge of Hollinger's business dealings will be crucial to building a case against Black, who is the obvious target of the continuing investigation. Much like Scott Sullivan was the key to unlocking Bernie Ebbers' involvement in the fraud at WorldCom, Radler can give investigators a roadmap to the diversion of company funds and perhaps other schemes to siphon assets from Hollinger, a Canadian company whose shares are traded on the New York Stock Exchange so it is subject to the jurisdiction of federal prosecutors and the SEC. Of course, much like Sullivan, Radler's every peccadillo will be subject to scrutiny to determine whether he can be a credible witness. (ph)
Friday, August 19, 2005
DOJ Press Releases:
How does the 8-18-05 press release come before the 8-12 and the 8-17?
The former publisher of the Chicago Sun-Times, along with a lawyer for Hollinger International have been indicted. Additionally, the company that controlled Hollinger International - The Ravelston Corp. Ltd. was also indicted. See DOJ press release here. The press release states that the indictment was for "federal fraud charges for allegedly fraudulently diverting from the U.S.-based Hollinger newspaper holding company more than $32 million through a complex series of self dealing transactions."
The 27 page indictment presents seven counts of mail and wire fraud. Interestingly, 18 U.C.S. sec. 1346, the intangible right to honest services is used in the indictment. The charges against in-house counsel are premised on an alleged "fiduciary duty of undivided loyalty to International, which among other things, required [the attorney] to provide honest services to International, to disclose all material facts regarding all related party transactions to International's Audit Committee, and to refrain from assisting others in any breach of fiduciary duty against International."
This case perhaps could have had some interesting issues - for one the corporation is a Canadian company and the former publisher is a Canadian citizen; although the indictment does note that the publisher "often stayed at an apartment in Chicago that was owned by International, and often worked at International's office in Chicago."
But one has to wonder if the indictment is just a prelude to a larger show. According to CNN Money here, the prosecutor stated that Radler, the president and CEO of Hollinger who was indicted, is cooperating with the government.
The indictment can be found here.
See Wall Street Jrl here.
See Chicago Sun Times (AP story) here.
(esp) (w/ thanks to PH for documents)
Wednesday, August 10, 2005
The American Bar Association issued a news release here supporting a journalist's shield statute. Interestingly it did not take a hard line approach of protecting all sources, but rather provided for some exceptions. The essence of the news release provides that:
"To overcome the reporters’ shield, the new association policy would require a showing that the information sought from a journalist is essential to a critical issue, that all reasonable alternative sources for the information have been exhausted, and that the need for the reporter’s information clearly outweighs the public interest in free flow of information."
In reading this, I am reminded of Rule 3.8(e) of the ABA Model Rules of Professional Conduct that precludes prosecutors from subpoenaing a lawyer to a "grand jury or other criminal proceeding to present evidence about a past or present client unless the prosecutor reasonable believes" that the information is not protected by the privilege, the information is essential to an ongoing investigation and the prosecutor has no other way of obtaining the information. Here, however, the privilege reigns as a priority above the public's need to know.
Are lawyers more entitled to a privilege than journalists? On the other hand it is nice to see some restraint being suggested so that prosecutors cannot try to use the media as a shortcut for doing the hard work in their investigation.
Wednesday, August 3, 2005
We left off here, asking, - where is this investigation heading?
John Dean looks squarely at Rove here, and speaks about his thoughts and in one instance a comparison to Watergate.
Then the New York Times here titles its article, "2 Aides to Rove Testify in CIA Leak Inquiry."
Then you have columnist Novak and a CIA operative not seeing quite eye to eye in prior discussions here. Did some of this actually come from a simple "Who's Who?"
Grand jury secrecy is a strange thing, it keeps the public from the transparency of the judicial system that they so desire. It allows for the media to go in so many different directions. But the bottom line is that no one really knows what goes on behind the closed doors except the prosecutor, grand jurors, and the court stenographer - and luckily none of them are talking. Remember - white collar cases sometimes move a lot slower than the street crime cases. They are a breed unto themselves. So the fact that things are still fairly quiet is not alarming.
Friday, July 29, 2005
Georgetown University and the National Association of Criminal Defense Lawyers (NACDL) will be holding a conference titled, "Defending the White Collar Case:In and Out of Court" September 22-23, 2005. The website states:
Georgetown University School of Law and NACDL will hold this jointly sponsored 2-day seminar at Georgetown University School of Law, September 22-23, 2005.
Today’s white collar climate is unlike any we have ever seen. With sentencing guidelines and government investigations bearing-down on corporate accounting scandals, the white collar bar needs to stay abreast of the latest strategies for representing corporate clients.
The federal guidelines have dramatically increased sentencing exposure, and more individuals and corporations are going to trial in white collar cases. Knowing when to plea is essential, but when trial is necessary, you need to understand the complex issues involved and know about the latest enforcement tools being used by prosecutors and how to avoid and discredit them.
Georgetown University Law Center and The National Association of Criminal Defense Lawyers have produced this very timely and unique program to address lessons learned from current cases and investigations, and teach you the best ways of defending your clients on all fronts. Seasoned defense lawyers, corporate counsel, consultants and judges will share their stories and arm you with new skills, techniques, and knowledge to negotiate and try the toughest cases in the white collar legal arena, including the appropriate actions to take and what to avoid. Veteran prosecutors will also be on hand to contribute the government’s perspective on the most pressing issues facing the defense bar.
Join NACDL and Georgetown in addressing the new realities of white collar defense and threats to your clients.
For more information, see here.
Thursday, July 28, 2005
We all have heard of rewards being offered for lost items or to find information on the location of individuals- - even information leading to arrests in connection with a crime where the perpetrator may be unknown - but this one is VERY DIFFERENT.
According to CCN here the "The Cook County Republican Party is offering a $10,000 reward for information leading to an indictment and conviction of Mayor Richard M. Daley. . ."
Would any prosecutor dare to proceed on information obtained this way? Can you imagine the cross-examination at a trial on how the information was obtained? So if the jury fails to convict, no payment?
This is a lesson in why politics should stay out of law enforcement.
Addendum - The second part of this story may be around the question of whether the Republicans actually have the money to pay such a reward. John Kass in a column for The Chicago Tribune quotes them as saying, "We'll get it." See here.
(esp) (with thanks to Mike Orenstein).
Addendum - The Marathon Pundit has here a post "Cook County GOP chairman fired from day job (after offering $10,000 bounty for Mayor Daley conviction)"
Discrediting a CIA operative may have been a motive of some of the administration, but motive is not the same as intent. If Prosecutor Fitzgerald wishes to prosecute someone he is faced with showing some form of intent in the leak of the confidential information to the press. Intent, however, can be inferred from the circumstances and the motive may form a circumstance that assists in showing an intent.
Alternatively, Prosecutor Fitzgerald has to look at whether someone has committed a crime of obstruction of justice, perjury, false declarations or false statements. The "who" still remains an unknown - at least to most of us - with new information being presented in the press each day. The Washington Post reports here some of the latest in an article titled, "Prosecutor In CIA Leak Case Casting A Wide Net."
Thinking back to Special Prosecutor Ken Starr's investigation that started with the Whitewater investigation and traveled to sexual conduct engaged in by the President, one has to wonder how far Prosecutor Fitzgerald will go with his investigation. Will he start examining the 16 words in a State of the Union address, televised over wires, that may have started this whole chain of events?
Tuesday, July 26, 2005
Bruce Carton on the Securities Litigation Watch blog has an interesting post (here) about schools with buildings (or in one case a professorship) named after defendants in corporate crime prosecutions, including Kozlowski Hall at Seton Hall and the Rigas Family Theater at St. Bonaventure. Other examples include Alberto Vilar, who is charged with fraud for allegedly taking funds from a client's account to make good on various charitable pledges, including his alma mater Washington & Jefferson College, and the A. Alfred Taubman College of Architecture and Urban Planning at the University of Michigan, named after Al Taubman, who was convicted of an antitrust violation and served a little less than a year in federal prison. Unfortunately for the schools, they cannot control the actions of major donors. (ph)
Monday, July 25, 2005
The LATimes here discusses whether possible perjury and obstruction of justice will be the main focus of the special prosecutor in evaluating the evidence received in the investigation of the leak that caused the name of a CIA agent to be released to the press. Often "short-cut" type offenses, like obstruction of justice, are used by the government because they are easier to prove. I have often maintained that it should not be proper for the government to avoid a thorough investigation just because they think there might be an easier course to pursue. Justice demands more than mere efficiency. As such obstruction of justice, perjury, false statements, and false declarations should not be used to avoid a thorough investigation of possible criminal activity. In the case of Arthur Andersen, LLP, the government learned that taking shortcuts is not always effective. In Andersen the Supreme Court struck down the conviction in a case in which the government proceeded with a single obstruction charge.
Short-cuts should be frowned upon when the government is able to investigate the underlying offense. If the underlying offense is impossible to investigate because of the destruction of evidence, intimidation of witnesses, or there is an inability to obtain the underlying evidence, charges such as obstruction of justice may be warranted. With a journalist in jail (Judith Miller of the New York Times) because she has not been released to disclose her source, these type of charges may in fact be proper if there is conduct found by the prosecutor to be false, obstructive, or intimidating. The question will certainly be whether the conduct meets the elements of one of these crimes, and more importantly "who," if anyone, engaged in such activity.
The NYTimes reports here that some may even believe that the rules regarding outing CIA agents needs review and change, to loosen the requirements placed on existing secrecy of CIA agents. If a congressional hearing proceeds this way, it may prove to be interesting, as the NYTimes notes that the CIA was the one that called for the investigation upon the disclosure of one of their operative's names. Would Congress wish to provide less protection to the CIA then they desire?
In any event, this investigation may not be on page one of all newspapers, but it continues to be prominent. (See, e.g., A4 Wall Street Jrl here). Certainly not an easy position for any prosecutor.
The fall-out from the grand jury investigation of Matthew Cooper/Judith Miler affects other media outlets, and back in June the editor for the Cleveland Plain Dealer stated that he would not run a story based on information from confidential sources until the protection for reporters was clarified. The story has now hit, and the paper has revealed the contents of a 115-page FBI affidavit, which had been sealed by the court, that was used to obtain wiretaps for telephones of Nate Gray, who was the best man at the two weddings of long-time Cleveland Mayor Michael White. A corruption prosecution of Gray and others ended in a mistrial, and a second trial is scheduled to begin in August. One of Gray's lawyers admitted that he leaked another document to the Plain-Dealer, which was an FBI summary of an interview with a confidant of Mayor White. The lawyer claimed that he did not know the document was covered by the court order sealing the documents, although that type of information is not usually a matter of public record and not something that would be given to a reporter if it were otherwise available. The defense received the documents as part of the discovery in the prosecution, and the affidavit (filed in 2002) describes the FBI agent's conclusions regarding alleged bribes paid to Mayor White, who left office in 2002 and has not been charged with any crimes. The Plain Dealer story (here) describes the affidavit and alleged corruption in the White administration, and a follow-up article (here) describes a hearing before the court in which U.S. District Judge James Gwin called for an investigation of the leaks. Unlike the leak investigation in Washington, D.C., this case has a more limited universe of potential leakers, although like so many of these types of inquiries it will be very difficult to figure out who leaked the affidavit. (ph)
Sunday, July 24, 2005
The special prosecutor's investigation of a leak of the name of a CIA operative is back at the top of the news. CNN reports here in an article titled, "Ex-CIA Official Blasts Bush on Leak of Operative's Name" that a former CIA official who worked with Valerie Plame is not happy about this leak stating that "[w]e deserve people who work in the White House who are committed to protecting classified information."
The NYTimes, the newspaper employing Judith Miller who remains in jail for refusing to testify before a grand jury as to her source, discusses here the implications of this case to President Bush.
Has the media been fair to Bernard Ebbers, who was recently convicted and sentenced to 25 years?
One person associated with the defense team does not think so and has written his case to the newspapers in the form of an op-ed. It remains to been seen whether the media will print this piece. In the meantime, you can find this op ed here -
Craig J. McCann, PhD, CFA, Securities Litigation and Consulting Group, Inc. states that:
"1. The bloodlust for Mr. Ebbers is misplaced and doesn’t justify the sentence. He should have been sentenced on the basis of what he was convicted of and 99% of the losses in WorldCom were definitely not caused by the things Mr. Ebbers was convicted of.
2. The standard of evidence for proving shareholder losses at sentencing hearings is so low that a rough assertion by the government suffices. I contrast this with the evidentiary burden in class action litigation.
3. The sentencing guidelines thresholds are so low that (combined with the low standard of proof for shareholder losses in sentencing hearings) executives at large publicly traded firms who are found guilty of filing false SEC reports statements will always get the maximum sentence – effectively a life sentence."
Although many may disagree with the Ebbers sentence, find the media mischaracterizing the harm, and find some of the recent white collar sentences beyond recognized punishment theory, convincing the public may prove more difficult. The Wall Street Journal's poll on the Ebbers sentence (here) shows 55% of the people voting in the poll finding the Ebbers sentence to be fair, with only 24% finding it too harsh. But maybe you haven't voted yet.
Thursday, July 21, 2005
With the announcement of a Supreme Court nominee, the front page of newspapers across the United States focused on this newly nominated individual - the Hon. John G. Roberts Jr. As one might suspect, Karl Rove's name was no longer on the front page. For example, one finds him mentioned on page 6A of yesterday's USA Today. Peter Johnson of USA Today notes that "President Bush had no control over when Supreme Court Justice Sandra Day O'Connor would step down. But announcing her successor — and when — was his call." (see here)
And irrespectiveof whether the timing on the Supreme Court nominee announcement was intended to remove controversial issues from the front page of newspapers, who will actually control the media remains to be seen. Hearings continued on proposed legislation to protect journalists. Although Deputy AG James Comey did not appear before the Judiciary Committee on this legislation, his written statement was, "[t]he bill is bad public policy primarily because it would bar the government from obtaining information about media sources -- even in the most urgent of circumstances affecting the public's health or safety or national security.'' (AP NYTimes here)
In the meantime, Judith Miller of the New York Times remains in jail. Is it rather odd that one part of the executive is advocating for disclosure of confidential sources and another office is refusing to comment on it? Who is controlling the media?