Friday, July 15, 2016
In 2014, prosecutors proceeded with a case against fed ex. Unlike many companies in a post-Arthur Andersen world, they would not be bullied into folding and taking a non-prosecution or deferred prosecution agreement. Instead, they took the risk - and it is always a risk - of going to trial. What makes this case particularly puzzling is that the company had cooperated with the government. They hired a top-notch white collar attorney Cristina Arguedas and the government folded shortly after the trial began. Now, according to Dan Levine and David Ingram in their Reuter's story, U.S. Prosecutors Launch Review of Failed Fed Ex Drug Case, the DOJ is reviewing this matter. Some thoughts -
1. It is good to see DOJ re-examining this case. What happened here should not have happened, and learning from this case is important.
2. The review should not be limited to the fed ex case. There needs to be an examination, especially for the smaller companies that cannot afford to go to trial, of the government cooperation tactics.
3. If cooperation is going to work, then credit needs to rightfully be given.
4. The government's pitting employees (the corporate constituents) against the employers (company) needs to also be examined. This practice defeats the ability of corporations and individuals working together to root out corporate misconduct.
5. Criminal defense attorneys need to recognize that one can successfully take a corporation to trial against the government. The risk is enormous, but innocence needs to matter.
Tuesday, July 5, 2016
FBI Director James B. Comey spoke this morning regarding the FBI's investigation of Hillary Clinton's Use of a Personal E-Mail System. See his remarks (here), which are unique in many ways:
1. Most investigations do not receive a formal statement saying that no charges will be recommended. ("we don’t normally make public our recommendations to the prosecutors"). Most individuals are left hanging without receiving a statement such as this or a statement from DOJ. Often folks may go through a lengthy investigation and but for the statute of limitations, they may never know it was over.
2. By not recommending that she be charged, but by stating negative comments about her actions (calling her "careless") she is left without the opportunity to demonstrate the truth or falsity of these statements. That said, having a statement that their recommendation to DOJ is that she not be indicted, is probably appreciated.
3. It is important to remember that an investigation such as this is one-sided - that is, the government is running the show. The FBI has no obligation to review or consider exculpatory evidence and one has to wonder if they shared what they found with defense counsel and gave them the opportunity to respond after they had reviewed the specific documents in question. Government investigations typically are not a give and take with defense counsel - they are the government accumulating as much evidence as they can to indict an individual and one only hears from the defense if and when there is a trial.
4. Is it the FBI's role to speak about hypotheticals when they have no hard facts? For example, FBI Director Comey stated - "It could also be that some of the additional work-related e-mails we recovered were among those deleted as 'personal' by Secretary Clinton’s lawyers when they reviewed and sorted her e-mails for production in 2014."
5. The accusations about what her lawyers did were unnecessary statements that had no place in this FBI statement. The statement that the "lawyers cleaned their devices in such a way as to preclude complete forensic recovery," seems like a proper action on the part of counsel - especially since they are dealing with the alleged classified documents.
6. Their statement about deficiencies in the security culture of the State Department ("While not the focus of our investigation, we also developed evidence that the security culture of the State Department in general, and with respect to use of unclassified e-mail systems in particular, was generally lacking in the kind of care for classified information found elsewhere in the government.") - To rectify this problem clearly takes money - will Congress authorize money for better technology and security within the State Department?
My Conclusions - It sounds like FBI Director James Comey's office did an extensive investigation and concluded that criminal charges are not in order - as it should be when a mens rea is lacking. It would be nice if this special instance of telling the individual that they are recommending against indictment were used in all cases when they have a recommendation for no indictment. When they do provide an announced recommendation of non-indictment, the FBI should limit their statement to just that. There is no need to tarnish a person's reputation in the process - especially when there is no concrete evidence to support the hypotheticals. Finally, becoming technologically savvy is difficult as the technology is constantly changing. Perhaps we need to re-examine our technological infrastructure across the board with the government -something we should have learned post-Snowden. Perhaps this can be put on the agenda of the next President.
Monday, June 20, 2016
The Supreme Court ruled today in Taylor v. United States, examining the interstate commerce element of the Hobbs Act. Although it provided a broad interpretation, it limited the decision to "cases in which the defendant targets drug dealers for the purpose of stealing drugs or proceeds." The Court explicitly states that it "did not resolve what the Government must prove to establish Hobbs Act robbery where some other type of business or victim is targeted."
A strong dissent by Justice Thomas argued that there should be a showing that the "defendant's robbery itself affected interstates commerce."
What this opinion means for white collar cases is that a strict interpretation of interstate commerce should be argued in these cases, with a requirement that there be a showing beyond a reasonable doubt that the accused acts affected interstate commerce.
Monday, June 13, 2016
When I first read the Baylor University Board of Regents FINDINGS OF FACT, it was immediately obvious that these were not factual findings at all, not in any sense that lawyers would recognize. They were normative conclusions almost completely unsupported by detailed facts, particularly with respect to the individuals who have been publicly shamed by the Board. Say what you will about Pepper Hamilton's report on the Penn State Jerry Sandusky debacle, that report at least contained a detailed, chronological factual narrative. Not so with Baylor's findings, which were promulgated by the Regents under Pepper Hamilton's guidance. Want to find out what Ken Starr did to warrant removal? His name is nowhere mentioned in the findings. Is Starr mentioned by title? Yes, the President and Chancellor are referenced exactly three times. "A Special Committee of the Board of Regents, on behalf of the University, accepted the President and Chancellor’s recommendation to engage Pepper in order to ensure objectivity, and Pepper was provided with unfettered access to personnel and data." Wow. What an indictment! It was Starr who recommended, almost immediately after learning about Baylor's problems, that Pepper Hamilton be hired in the first place. "Pepper interviewed witnesses across multiple departments, including the President’s Office..." There you go! Fire the bastard! Pepper Hamilton was given unfettered access to his office. How about Coach Art Briles? Surely his dastardly deeds would be dealt with in the findings. But Briles is not mentioned by name or by his Head Coach title. There are six references to "coaches" in the Findings, but no way of telling if Briles is one of them or even knew or approved of what the others did.
So I was all set to call for releasing the real report, the Pepper Hamilton Report of Internal Investigation. You know what I'm talking about, right? The report that law firms produce after conducting internal investigations of purported misconduct for companies and other entities? The kind of report that companies typically do NOT release except to DOJ, but that universities, such as Penn state, do? But then I read the Board of Regents' Statement posted on Baylor's website and realized that there is no report! That's right folks, the Board met with Pepper Hamilton from time to time and was "updated" with factual findings. "Over the course of the investigation, a special committee of the Board of Regents was periodically updated on Pepper's work. Additionally, in early May, Pepper presented their findings of fact and recommendations to Board leadership in Philadelphia and was onsite to brief the full Board during its May meeting in Waco. While no written report has been prepared, the Findings of Fact reflect the thorough briefings provided by Pepper and fully communicates the need for immediate action to remedy past harms, to provide accountability for University administrators and to make significant changes that can no longer wait." Translation: the Pepper Hamilton investigation was structured in such a way that no written report would be generated. This was obviously done for reasons of litigation and public relations strategy.
Now the Baylor Board can pretend that it has issued detailed findings admitting its sins in the interest of transparency. It isn't true. There is not one fact in the findings justifying the firing of Starr, or even Briles for that matter. There isn't any information about any improprieties that may or may not have been committed by Board members themselves. The conflict of interest here is palpable, as the Board is currently being sued and can probably expect more suits in the future. Do we really think that no member of the Board ever intervened in any manner in Baylor's athletic programs?
There is only one action the Baylor Board can take to assure its students and alumni that the full facts of the scandal, and the justifications for the Board's actions and inactions in the wake of its findings, are set out for all to see. Release the factual materials actually presented to the Board and/or its subcommittee by Pepper Hamilton, with appropriate redactions to protect any victims. Release all interview summaries. Release all PowerPoint presentations. In the alternative, Pepper Hamilton can be directed to draft the report it should have done in the first place. Only then can the Baylor Board say that it has come clean.
Thursday, May 5, 2016
NACDL and the US Chamber of Commerce have a Law & Policy Symposium on Thursday May 26, 2016 at the US Chamber of Commerce in Washington, D.C. The title of the program is "The Enforcement Maze: Over-Criminalizing American Enterprise." The morning keynote speaker will be Chair of the House Committee on the Judiciary Bob Goodlatte, with David Ogden, former deputy AG, doing a keynote address later in the day. For the full program, see here - Download Agenda_NACDL-ILR Law Policy Symposium_External Agenda_5-5-16
Wednesday, April 20, 2016
Judge Valerie Caproni, the Southern District of New York judge presiding over the case of convicted former New York State Assembly Speaker Sheldon Silver, has unsealed papers submitted by United States Attorney Preet Bharara alleging that the convicted politician had affairs with two women who allegedly received favorable treatment from him in his professional capacity. The women, whose names were redacted from court papers (but identified, with accompanying photos, by the New York Daily News) were allegedly a prominent lobbyist who dealt regularly with Silver in his official capacity and a former state official whom Silver allegedly helped get a state position.
The government, whose efforts to introduce evidence of the relationships at trial were rebuffed by the judge, argued it should be able to provide such evidence at sentencing, purportedly to demonstrate that these relationships and favors provided by Silver demonstrated a pattern of abuse of power and possibly to rebut any evidence, including Silver's 50-year marriage, of Silver's good character. The judge seemed to accept the first argument, stating that she viewed this information "as a piece with the crimes for which Mr. Silver stands convicted," although "not exactly the same since no one is suggesting a quid pro quo, but of a piece of a misuse of his public office, and that's why I think it is relevant."
Generally, a federal judge has a right to consider virtually any information on sentencing, but I am uneasy about the injection of information of extramarital affairs of a defendant into the sentencing decision. If "no one is suggesting a quid pro quo," as Judge Caproni said, I question its relevance. Unless there is some basis that Silver did something favorable for these women because of their alleged sexual relationships - which I would call a "quid pro quo - I wonder whether his alleged actions constitute a "misuse of public office."
There, of course, is a difference between allowing a party to present evidence or argument at sentencing and factoring that information into the sentencing decision, and, absent specific facts, I am hesitant to say the material should not be considered. I am troubled, however, by the possibility that a defendant's alleged marital infidelity will become a regular part of a prosecutor's sentencing toolbox.
I am relatively sure that my first boss, from almost fifty years ago, Frank Hogan, the legendary and exemplary longtime District Attorney of New York County, would not have proffered such evidence, but Mr. Hogan was a man with a perhaps old-fashioned notion of fair play in a perhaps gentler age in which prosecutors rarely took aggressive (or even any) positions on sentencing (and the press did not publicize the dalliances of public officials).
(I note that Mr. Silver, whom I never met or spoke with, or contributed to, appointed me three times (and failed to reappoint me a fourth) to serve on the New York State Commission on Judicial Conduct).
Saturday, April 9, 2016
The New York Times reported on Tuesday, April 5 that Donald Trump, contrary to his asserted practice of refusing to settle civil cases against him, had settled a civil fraud suit brought by disgruntled purchasers of Trump SoHo (New York) condos setting forth fraud allegations that also were being investigated by the District Attorney of New York County ("Donald Trump Settled a Real Estate Lawsuit, and a Criminal Case Was Dismissed"). The suit alleged that Trump and two of his children had misrepresented the status of purchaser interest in the condos to make it appear that they were a good investment.
What made this case most interesting to me is language, no doubt inserted by Trump's lawyers, that required as a condition of settlement that the plaintiffs "who may have previously cooperated" with the District Attorney notify him that they no longer wished to "participate in any investigation or criminal prosecution" related to the subject of the lawsuit. The settlement papers did allow the plaintiffs to respond to a subpoena or court order (as they would be required by law), but required that if they did they notify the defendants.
These somewhat unusual and to an extent daring conditions were no doubt designed to impair the District Attorney's investigation and enhance the ability of the defendants to track and combat it, while skirting the New York State penal statutes relating to bribery of and tampering with a witness. The New York statute relating to bribery of a witness proscribes conferring, offering or agreeing to confer a benefit on a witness or prospective witness upon an agreement that the witness "will absent himself or otherwise avoid or seek to avoid appearing or testifying at [an] action or proceeding" (or an agreement to influence his testimony). Penal Law 215.11 (see also Penal Law 215.30, Tampering with a Witness). Denying a prosecutor the ability to speak with prospective victims outside a grand jury makes the prosecutor's job of gathering and understanding evidence difficult in any case. Here, where it is likely, primarily because of a 120-day maximum residency limit on condo purchasers, that many were foreigners or non-New York residents and thus not easily served with process, the non-cooperation clause may have impaired the investigation more than it would have in most cases.
A clause requiring a purchaser to declare a lack of desire to participate, of course, is not the same as an absolute requirement that the purchaser not participate. And, absent legal process compelling one's attendance, one has no legal duty to cooperate with a prosecutor. It is questionable that if, after one expressed a desire not to participate, his later decision to assist the prosecutor voluntarily would violate the contract (but many purchasers would not want to take a chance). The condition of the contract thus, in my view, did not violate the New York statutes, especially since the New York Court of Appeals has strictly construed their language. People v. Harper, 75 N.Y.2d 373 (1990)(paying victim to "drop" the case not violative of statute).
I have no idea whether the settlement payment to the plaintiffs would have been less without the condition they notify the District Attorney of their desire not to cooperate. And, although the non-cooperation of the alleged victims no doubt made the District Attorney's path to charges more difficult, the facts, as reported, do not seem to make out a sustainable criminal prosecution. Allegedly, the purchasers relied on deceptive statements, as quoted in newspaper articles, by Mr. Trump's daughter Ivanka and son Donald Jr. that purportedly overstated the number of apartments sold and by Mr. Trump that purportedly overstated the number of those who had applied for or expressed interest in the condos, each implying that the condos, whose sales had actually been slow, were highly sought. A threshold question for the prosecutors undoubtedly was whether the statements, if made and if inaccurate, had gone beyond acceptable (or at least non-criminal) puffing into unacceptable (and criminal) misrepresentations.
Lawyers settling civil cases where there are ongoing or potential parallel criminal investigations are concerned whether payments to alleged victims may be construed by aggressive prosecutors as bribes, and often shy away from inserting restrictions on the victims cooperating with prosecutors. On the other hand, those lawyers (and their clients) want some protection against a criminal prosecution based on the same allegations as the civil suit. Here, Trump's lawyers boldly inserted a clause that likely hampered the prosecutors' case and did so within the law. Nonetheless, lawyers seeking to emulate the Trump lawyers should be extremely cautious and be aware of the specific legal (and ethical) limits in their jurisdictions. For instance, I personally would be extremely hesitant to condition a settlement of a civil case on an alleged victim's notifying a federal prosecutor he does not want to participate in a parallel federal investigation. The federal statutes concerning obstruction of justice and witness tampering are broader and more liberally construed than the corresponding New York statutes.
Monday, March 7, 2016
What do Bill Cosby and Whitey Bulger have in common? Both have lost challenges to criminal accusations based on the claim that their prosecutions were barred because they received oral, informal grants of immunity from prosecutors.
Last week, the First Circuit denied the appeal of Joseph (Whitey) Bulger, the notorious Boston mobster who was on the lam for 17 years until his 2011 arrest in California. Bulger was convicted after trial in 2013 for racketeering for participating in eleven murders and other crimes, and was sentenced to two life sentences plus five years. He is now 86.
Bulger's primary claim on appeal was that he was denied his constitutional rights to testify and to present an effective defense by the refusal of the trial judge to allow him to testify before the jury that he was granted immunity for both past and future crimes by a now-deceased high-ranking DOJ prosecutor. Interestingly, Bulger claimed that that the purported immunity grant was not in exchange, as one might suppose, for his providing information to or testifying for the prosecutor, but for his protecting the prosecutor's life. He insisted, contrary to widely-accepted reports, that he was not an informant.
The Court of Appeals upheld the district court's rulings that whether the prosecution was barred because of immunity was to be determined prior to trial by the judge, and not by the jury, and thus Burger could not present to the jury testimony about the purported immunity promise . Although the appeals court ruled that Burger had waived consideration of the issue on the merits by his failure to present the trial judge with any evidence, but only with a "broad, bald assertion from defense counsel lacking any particularized details," it reviewed the judge's merits determination on a "plain error" standard, and found that the judge was not "clearly wrong" in deciding that Bulger had failed to demonstrate either that the promise had been made, or, that if it had been made, that the promising prosecutor had authority to make it..
The government described Bulger's claim that the prosecutor promised him immunity "frivolous and absurd." What did give Bulger's contention an infinitesimally slight possibility of credibility, however, was that there was a demonstrated history (although not presented at the trial) that the Boston FBI had for years ignored Bulger's criminal acts when he served as an informant for them.
To be sure, the similarities between the Cosby and Bulger situations are limited. In the Cosby case the then District Attorney, the prosecutor who, if anyone, had authority to grant immunity, testified that he did promise not to prosecute Cosby. Here, there was no corroboration whatsoever of the purported promise by a now-dead prosecutor, and the Department of Justice strongly contended that even had such a promise been made, the prosecutor had no authority to make it. However, the decision, made by a respected appellate court (although under a different set of procedural rules and no binding or other authority over a Pennsylvania state trial court) does squarely hold that whether a prosecutor has granted immunity is not a jury question. And, should Cosby try to re-litigate the immunity issue before his jury, the decision will likely be cited by the District Attorney.
Friday, March 4, 2016
New England Patriot quarterback Tom Brady did not get the reception he wanted at the oral argument of the appeal of the National Football League (NFL) of a district court decision overturning his four-game suspension in the so-called Deflategate case. Brady has been accused of conspiring with Patriot employees to deflate footballs so that they were easier for him to throw in a game in cold weather. The appellate court spent a considerable amount of time questioning Brady's counsel about Brady's destruction of his cellphone shortly before he was to appear before NFL investigator Ted Wells.
In my view the evidence concerning whether the footballs were deflated was equivocal and, even if they were deflated, the evidence that Brady was knowingly involved was largely speculative, and in total, absent an inference of wrongdoing from the unjustified destruction of evidence, probably not sufficient to meet even the minimal 51-49 "more probable than not" standard used in the NFL and most other arbitrations. Evidence of the suspiciously timed destruction of the cellphone, and the lack of a convincing justification for it, however, for me pushes the ball over the 50-yard line and may be the linchpin of an appellate decision upholding the suspension. As Judge Barrington Parker stated at oral argument, "The cellphone issue raised the stakes. Took it from air in a football to compromising a procedure that the commissioner convened." He asked Brady's counsel,"Why couldn't an adjudicator take an inference from destroying a cellphone?," then stated that Brady's explanation - that he regularly destroyed cellphones for privacy reasons - "made no sense whatsoever."
Courts are understandably especially sensitive (sometimes too sensitive and too punitive, in my view) to acts like perjury or destruction of evidence which obstruct investigations or prosecutions. Our justice system relies, at least theoretically, on the basic (although somewhat erroneous) principle that, at least generally, witnesses will not violate the oath to tell the truth. It is therefore no great surprise that the court focussed on Brady's destruction of evidence and his purportedly lying about it. Indeed, Judge Parker appeared to accept that even if Brady had not been involved in tampering with the footballs, his destruction of evidence would justify Goodell's decision. "Let's suppose a mistake was made and the footballs weren't deflated, and then a star player lies in his testimony and destroyed his phone. An adjudicator might conclude the phone had incriminating evidence. Why couldn't the commissioner suspend Brady for that conduct alone?"
Of course, it would be rather perverse if Brady's suspension were upheld when in fact he had actually not been involved in deflating footballs and had destroyed his cellphone as an excuse for not producing it and lied about it for reasons unrelated to the deflating issue, such as that the phone contained wholly unrelated embarrassing information or that he possesses an Apple-like principled view of privacy rights. It calls to mind Martha Stewart, who was convicted and jailed for lying to federal agents and prosecutors in a proffer session even though the underlying insider trading allegation about which she was questioned, was not prosecuted. On the other hand, it would not be perverse if in fact the destroyed cellphone did contain incriminating conversations.
Sometimes a client under investigation asks his lawyer what the client should do with incriminating evidence he possesses. As much as the lawyer in his heart may want the evidence to disappear, he cannot ethically or legally advise the client to conceal the evidence. (The specific advice will vary depending on the facts and circumstances.) The lawyer should frankly explain his ethical and legal obligations. However, generally the client doesn't give a hoot about them. The lawyer should explain that destruction, tampering and concealment of evidence, if discovered by the prosecutor, will undoubtedly eliminate the possibility of non-prosecution, lessen the possibility of a favorable plea deal, strengthen the prosecution's case at trial, and, if there is a conviction, undoubtedly cause a more severe sentence. Just as lawyers sometimes invoke the Stewart case to caution about the danger of voluntary interviews with prosecutors, so might they invoke the Brady case to caution about the danger of destruction of evidence.
The Brady case highlights the danger of destruction of evidence and lying to investigators.
Tuesday, January 19, 2016
White collar crime in sports has been a topic of much discussion over the last year, including the widespread coverage of corruption allegations against high ranking officials with FIFA (discussed here). Now it appears that the tennis word is coming under greater scrutiny as a BuzzFeed and BBC article is released discussing what they describe as "widespread match-fixing by players at the upper level of world tennis."
The article, entitled The Tennis Racket, was released over the weekend and immediately provoked much discussion. The story details evidence of match-fixing, including the involvement of Russian and Italian gambling syndicates. According to the authors, tennis's governing body has been repeatedly warned about the activities of a core group of sixteen players, each of whom has ranked in the top 50 and some of whom are winners of singles and doubles at Grand Slam tournaments. According to the report, none of the sixteen have been sanctioned and more than half will be playing in the Australian Open, which started today. Included in the article is a fascinating discussion of a 2007 match in which the betting was so suspicious, Betfair (the world's largest internet betting exchange) suspended the market and announced for the first time in its history that all bets on the match were void.
After the release of this article, it appears all eyes over the next couple of weeks will be on both the matches at the Australian Open and these serious allegations of misconduct. The question now is whether this story will mark the beginning of a journey for the tennis world similar to the one the soccer world has experienced over the last year.
Tuesday, December 8, 2015
Not surprisingly, New York County District Attorney Cyrus Vance's office has announced it will after a hung jury retry, albeit in slimmed-down form with fewer defendants and counts, the criminal case involving the defunct firm of Dewey & LeBoeuf's alleged misrepresentations in seeking financing during its desperate dying days. Prosecutors rarely admit defeat in big cases after a single hung jury. Double jeopardy does not apply.
The major defendant, against whom (as often happens with the highest-ranking officer) there is the least evidence, Steven H. Davis, its former chair, has been pared from the case and apparently will receive a deferred prosecution. "Deferred prosecutions" are rarely, if ever previously, given to individuals by New York state prosecutors, at least by that name. Although the terms have not been announced, this disposition, I suspect will essentially be just a dismissal dressed up so that the prosecutor can save some face and not admit a total loss.
The prosecutor, as is a custom in New York County, announced publicly on the record his plea offers to the three defendants remaining. I find this custom repugnant and sometimes in return I announce the defendant's terms for a final disposition - such as, a dismissal, an apology by the prosecutor and a testimonial dinner in the defendant's honor.
The plea offers here were a felony plea with a one-to-three year jail term to Joel Sanders, a felony plea with 500 hours of community service to Stephen DiCarmine, both of whom spent six months at the trial that ended in a hung jury, and a misdemeanor plea with 200 hours of community service, to Zachary Warren, who was severed and has not yet gone to trial. I would not be surprised if these cases were settled before trial, not necessarily at the offered price.
Friday, December 4, 2015
This morning's Wall Street Journal contains an opinion piece I wrote on the subject of the "trial penalty." Entitled "The Injustice of the Plea-Bargaining System," the commentary examines the manner in which the trial penalty induces too many defendants to give up their constitutional right to trial. In examining the issue, the piece includes a discussion of the tragic case of Orville (Lee) Wollard. Wollard, who was charged with a crime after firing a warning shot in his home into the wall next to his daughter's allegedly abusive boyfriend, turned down a plea offer of five years probation and ended up receiving a sentence of twenty-years in prison after conviction at trial. I hope you will have an opportunity to read the entire piece.
Thursday, December 3, 2015
Not Guilty on Two Counts and Conviction on a Misdemeanor Count in CEO's Case Following Deadly Mining Accident
It is interesting to see the headlines from the NYTimes - Former Massey Energy C.E.O. Guilty in Deadly Coal Mine Blast and Politico - Coal baron convicted for mine safety breaches. Both headlines focus on the conviction of the CEO. The Wall Street Journal headline says - Jury Convicts Former Massey CEO Don Blankenship of Conspiracy - but does say in smaller print below this headline "Former executive found not guilty of securities-related charges after deadly West Virginia mining accident."
Yes, it is important to note that a CEO was convicted here of workplace related safety violations and this was after a deadly accident. But what is also important is that CEO Blankenship was found not guilty of the serious charges that he initially faced. What started as a 43 page indictment by the government (see here), ended as a misdemeanor conviction on one count. William W. Taylor, III of Zuckerman Spaeder LLP was the lead on this defense team.
Remaining in this case is a single misdemeanor charge following the court's dismissal of homicide charges against a BP engineer on the Deepwater Horizon oil rig. (see here) Eleven charges were dismissed by the government in 2014 premised on the statute not applying to the operator of a drilling ship and eleven other charges were now dismissed by the court as the "government agreed" to this dismissal of charges of "'involuntary homicide' based on lack of evidence and other arguments. Initially, this individual faced 22 felony homicide charges, plus one misdemeanor charge of water pollution. The remaining misdemeanor charge is scheduled for a February trial. David Gerger from Quinn Emanuel represented the accused. See also Smyser, Kaplan & Veselka, LLP lawyers David Isaak, Shaun Clarke, and Dane Ball's role in this case (see here).
Monday, November 30, 2015
According to Reuters, a judge approved Britain's first Deferred Prosecution Agreement today. The below is from the Serious Fraud Office's (SFO) press release.
The Serious Fraud Office's first application for a Deferred Prosecution Agreement was today approved by Lord Justice Leveson at Southwark Crown Court, sitting at the Royal Courts of Justice.
The counterparty to the DPA, Standard Bank Plc (now known as ICBC Standard Bank Plc) ("Standard Bank"), was the subject of an indictment alleging failure to prevent bribery contrary to section 7 of the Bribery Act 2010. This indictment, pursuant to DPA proceedings, was immediately suspended. This was also the first use of section 7 of the Bribery Act 2010 by any prosecutor.
As a result of the DPA, Standard Bank will pay financial orders of US$25.2 million and will be required to pay the Government of Tanzania a further US$7 million in compensation. The bank has also agreed to pay the SFO's reasonable costs of £330,000 in relation to the investigation and subsequent resolution of the DPA.
In addition to the financial penalty that has been imposed, Standard Bank has agreed to continue to cooperate fully with the SFO and to be subject to an independent review of its existing anti-bribery and corruption controls, policies and procedures regarding compliance with the Bribery Act 2010 and other applicable anti-corruption laws. It is required to implement recommendations of the independent reviewer (Price Waterhouse Coopers LLP).
DPAs are a new settlement vehicle in the U.K., as discussed in my article International White Collar Crime and Deferred Prosecution Agreements. One should expect that now the first DPA has been approved, U.K. enforcement bodies will begin aggressively using DPAs in the coming years. As the Director of the SFO, David Green, said of the Standard Bank DPA, "This landmark DPA will serve as a template for future agreements."
The press release and links to the Standard Bank DPA are available on the SFO website.
Friday, November 27, 2015
If you want to know why companies settle with the government, even when they aren't guilty of anything, look no further than Ally Financial LLC's $98 million "no admit or deny" settlement with the Consumer Financial Protection Bureau (CFPB) over alleged racial bias in auto lending. As Wednesday's Wall Street Journal reports here, the CFPB chose questionable statistical methods, had questionable legal authority, and used the threat of unfavorable action by the Federal Reserve and the FDIC in a wholly separate matter, to coerce a settlement. Ally was eager to receive approval from the Fed and FDIC to convert to holding company status, in order to avoid having to shed some of its business units. The Fed was only too happy to oblige CFPB in its bullying tactics. As an internal CFPB memo makes clear, a Fed finding of improper discrimination would "most likely result in the denial of holding company status," but the Fed "also indicated that if Ally takes prompt and corrective action, it would consider such a factor in its determination." The House Financial Services Committee Report, Unsafe at any Bureaucracy, carefully documents CFPB's sordid tactics . Incredibly, CFPB referred the matter to DOJ. This kind of stuff happens, and dictates business litigation strategy with the government, quite often. So, when people complain that the failure to prosecute corporate insiders is inevitably suspicious in light of large civil settlements, I always want to know the industry, the company and other important details.
Tuesday, November 24, 2015
Sally Yates' new DOJ Memo has been a hot topic. (see here, here, here). Check out Sara Kropf's terrific entry here reporting and questioning the Yates Memo influence in a recent indictment of a corporate employee.
But one wonders if this DOJ claim that they have changed their policy is anything new. Has DOJ forgotten Enron and Jeff Skilling, who remains incarcerated?
My take continues to be that all the Yates really does is make it official that companies have to throw individuals under the bus (see here). And knocking NPAs and DPAs is not the answer. Yes, the terms within these documents are often offensive. (see here) But getting compliance from companies and changing corporate culture is an important goal and one needs to remain focused on how best to achieve this goal. Working with companies, as opposed to against companies, is the best way to foster compliance. Likewise, pitting individuals within a company against the entity and the entity's counsel is not the answer.
Tuesday, November 10, 2015
Looks like the NY Attorney General has decided to take a lead in stopping some fantasy sports companies. (see Walt Bogdanich, Joe Drape, and Jacqueline Williams, Attorney General Tells DraftKings and FanDuel to Stop Taking Entries in New York.) Some are wondering if other states will get on the bandwagon. But others of us are wondering what role the federal government may decide to take, or not take here. I'm not betting on this one.
Friday, October 30, 2015
Guest Blogger - Steven H. Levin
White-collar laws are written broadly in order to permit federal prosecutors to combat the increasingly creative, technologically complex efforts of enterprising criminals. Most, but certainly not all, prosecutors make rational decisions based upon the best possible expenditure of resources, the assessment of the jury appeal of a particular case, and the desire to maintain a good reputation with the bench, if not the bar. In bringing a case, prosecutors also must consider the deterrent effect of a particular prosecution.
In the case involving Dennis Hastert, it has been reported that he was paying “hush money” to cover up alleged misconduct that occurred several decades ago. Mr. Hastert’s structuring fell squarely within the broadly worded federal statute. In his piece (“Should Hastert Have Been Prosecuted?”) Lawrence Goldman is correct to question the purpose such a prosecution serves. The answer is found in the concept of deterrence. Mr. Hastert’s prosecution has potential deterrent effect, both in terms of deterring those engaged in structuring (to cover up crimes) and those engaged in blackmail (threatening to expose crimes).
Once the investigation became known, the public learned that Mr. Hastert had been accused of taking money out of a bank account in order to pay an extortionist. Both would-be structurers and would-be extortionists were put on notice by the federal government: blackmailing may not be successful in the future, because the victim of the extortion may be better off going to law enforcement rather than a bank. Further, it might deter an individual from engaging in the initial misconduct in the first place, knowing that such actions may ultimately see the light of day, even decades later.
Still, as Mr. Goldman writes, Mr. Hastert is, at least in part, a victim. And the decision to prosecute is different than a demand for jail time, which, under the plea agreement, is what prosecutors may seek. Mr. Hastert’s conduct does not warrant jail time, as the collateral consequences of the prosecution itself are significant enough to deter at least some future would-be extortionists from engaging in blackmail and their victims from submitting to it. This fact is all-too-often overlooked by prosecutors.
Wednesday, October 28, 2015
Three recent articles confirm the growing significance of technology and big data to both the general practice of law and the field of white collar crime in particular.
The first article, appearing in Enterprise Tech, is entitled Big Data Plays Arresting Role in White Collar Crime. The piece discusses the manner in which analytical tools and big data are making it easier for law enforcement to discover and understand fiscal anomalies.
The second article, appearing earlier this year in Forbes, reiterates the role of big data in white collar investigations. In the article, entitled Analysis of Big Data Leads to Big Arrests in Medicare Part D Fraud, Walt Pavlo explores the important role of technology in the arrest of 243 people in an alleged $712 million scheme.
The final article, appearing in the ABA Journal, is entitled What the Jobs Are: New Tech and Client Needs Create a New Field of Legal Operations. This article is not about white collar crime. However, it does offer a detailed discussion of the use of technology and data to increase the efficiency of law firm management and the provision of legal services. When read in combination, the three pieces provide a fascinating glimpse into the future of legal practice and the important role technology and big data are already playing in a changing landscape.