Wednesday, February 22, 2012
Dominique Strauss-Kahn is once again in trouble with the law in relation to an investigation involving sexual activity. Strauss-Kahn was detained overnight in Lille, France, for questioning in a French investigation related to an alleged prostitution ring that purportedly supplied women for sex parties with Strauss-Kahn in Brussels, Paris and Washington.
Strauss-Kahn contends that he had no reason to believe that the women at these parties were prostitutes. His French lawyer bared that defense to French radio in December, "People are not always clothed at these parties. I challenge you to tell the difference between a nude prostitute and a classy lady in the nude." Reuters article, see here. This lack of scienter defense ironically appears to be the converse of what many believed would have been Strauss-Kahn's defense had the New York case in which he was accused of sexual assault gone to trial. In that case, it was expected that his defense would have been that he did believe that the woman in question was a prostitute.
The investigation, in which eight people have been charged, involves alleged misuse of corporate funds to pay for the services of the prostitutes. Engaging prostitutes is not illegal in France (although it is in Washington), but if the investigators determine that Strauss-Kahn had sex with prostitutes he knew had been paid for out of company funds, he might be charged as a beneficiary of that misuse of funds. Most likely, it will be difficult to prove that Strauss-Kahn, even if he were found to have known the women involved were prostitutes, knew how they were paid.
High-profile cases in other jurisdictions often affect prosecutorial priorities. One wonders whether this case will lead American prosecutors to scrutinize corporate books to determine whether corporate funds have been used to supply prostitutes to customers, political figures and others. I suspect that such payments (and consequent tax deductions as business expenses) are not wholly uncommon, at least for non-public businesses. Any resulting cases, involving both sex and corporate corruption, are sure to draw media attention.
Tuesday, February 7, 2012
Joelle Scott, Forbes, Bharara's Wiretaps: The Latest Insider Trading Charges
Mike Scarcella, BLT Blog, Federal Appeals Court Upholds Abramoff Associate's Plea Deal (w/ a hat tip to Ivan Dominguez)
BLoomberg, Rajat Gupta May Face More Charges, U.S. Says
Kevin McCoy, USA Today, Swiss bank indictment details tax evasion ploys; Lynnley Browning, Reuters,
U.S. indicts Wegelin bank for helping Americans avoid tax
Shannon Green, Corporate Counsel, law.com, Was Penn State's GC Counsel for University Officials?
Mike Scarcella, BLT Blog, DOJ Considers Abandoning Its FCPA Sting Prosecution
Tuesday, January 24, 2012
Joe Paterno is dead, his legacy as one of the greatest coaches in the history of sports tarnished by his termination -- unjust, I believe -- on the grounds that he inappropriately failed to pursue vigorously an allegation of child sex abuse (see here, here and here).
Paterno's death and absence as a witness will likely have little or no effect on the trial of Jerry Sandusky, the former Penn State assistant coach who was the subject of the allegation reported to Paterno by a Penn State graduate assistant coach, Mike McQueary. Paterno's only information about the Sandusky issues appears to have been the hearsay report by McQueary, and thus it is unlikely that he would have been a witness.
Paterno's unavailability, however, may have a considerable impact on the trials of Tim Curley, the former university athletic director, and Gary Schultz, a former university senior vice president, both of whom have been charged with failure to report the suspected child abuse and perjury. Both have been charged with falsely testifying that McQueary, when he spoke with them, did not mention serious or criminal sexual conduct. McQueary, whom the grand jury report (presumably written by the prosecutors) deemed "extremely credible," testified that he reported the specific act to both Curley and Schultz, and seemingly also to Paterno. Paterno's grand jury testimony, however, apparently was that what McQueary related to him was far less specific, and thus more ambiguous. Accordingly, while the grand jury report indicated that Paterno would be a corroborative witness for the prosecution in that he was told by McQueary of the alleged "sexual exploitation" and then reported what McQueary had said to Curley and Schultz, his testimony would apparently also have to an extent corroborated their defenses that McQueary was less explicit than he now claims.
In another highly-publicized investigation involving a former college sports coach, former Syracuse University assistant basketball coach Bernie Fine, it has been reported that two of the four men who had accused Fine of molesting them when they were children have admitted that they committed perjury in connection with the case. One has admitted that he lied when he claimed Fine molested him. The second, the only one whose allegations fall within the applicable criminal statute of limitations, while still claiming that abuse occurred, has admitted doctoring purportedly supporting emails.
The Fine situation is a reminder that not every allegation of child sexual abuse is true. Indeed, in my experience, there is a far higher percentage of false accusations of sexual misconduct than of any other criminal activity. Thus, such accusations should be scrutinized especially carefully before they are acted upon by law enforcement or others.
Sunday, January 22, 2012
The Center on National Security at Fordham Law has a news source that provides "weekly news round-up of articles, information, and opinions about cybersecurity and the laws, policies, and challenges - both domestic and global - that define the cyber world week to week." For more information, see here.
Wednesday, January 18, 2012
Shannon Green, Corporate Counsel, DOJ Collected $1 Billion-Plus in 2011 Antitrust Fines
Newsday (Published by LATimes), Illness postpones Edwards corruption trial
NYTimes, Op Ed, On the Trail of Mortgage Fraud
Edvard Pettersson, Bloomberg, Foreign Bribery Defendants May Fight More as Cases Falter (w/ a hat tip tp Ivan Dominguez)
DOJ Press Release, Marubeni Corporation Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay a $54.6 Million Criminal Penalty - $1.7 Billion in Total Penalties and Forfeiture Orders Obtained for Scheme to Bribe Nigerian Government Officials to Obtain Contracts
Thursday, January 12, 2012
AP, NYTimes, Michigan: Ex-Congressman Gets One-Year Sentence (w/ a hat tip to Ivan Dominguez)
Susan Pulliam, WSJ, Galleon Prosecutor to Leave for Dechert
Peter Lattman, NYTimes, Ex-Fund Manager Gets Prison Term in Insider Trading Case
FCPA Professor, The Year That Was
Danielle Ulman, The Daily Record, Curlett, Levin join forces to form firm specializing in criminal defense (login required)
Gina Passarella, The Legal Intelligencer, Computergate Defendant's Legal Mal Suit Targets K&L Gates, Buchanan Firm (login required) (hat tip to Peter Goldberger)
Wednesday, January 11, 2012
Lynnley Browning, Reuters, US moves toward legal action against Swiss bank-sources
Sue Reisinger, Corporate Counsel, law.com, DOJ and SEC Use of Deferred and Non-prosecution Agreements in 2011
Robbie Brown, NYTimes, North Carolina: Edwards Legal Team Asks for Delay (hat tip to Ivan Dominguez)
DOJ Press Release, GE Funding Capital Market Services Inc. Admits to Anticompetitive Conduct by Former Traders in the Municipal Bond Investments Market and Agrees to Pay $70 Million to Federal and State Agencies;
Matthew Huisman, BLT Blog, SEC, Other Agencies Settle with GE Funding in Securities Fraud Case
Karen Sloan, NLJ, law.com, Study: Jurors can't distinguish between knowing and reckless conduct
Bob Van Voris, Bloomberg News, Ex-trader David Slaine Helped Lead to Rajaratnam, U.S. Says
DOJ Press Release, Los Angeles Church Pastor Sentenced to 180 Months in Prison for $14.2 Million Medicare Fraud Scheme - One of the Longest Health Care Fraud Sentences Imposed in the Central District of California
Mike Scarcella, BLT Blog, D.C. Judge Weighs Mistrial Request In FCPA Case
Sue Reisinger, Corporate Counsel, Ex-GC of WellCare Health Plans Charged with Fraud
Walter Pavlo, Forbes, Will Rajaratnam Testify in Rajat Gupta Case?
Ed Beeson, Star-Ledger, Ex-Chicago Bears wide receiver Willie Gault latest pro athlete accused of white-collar crime
Editorial, Detroit Free Press, Editorial: Lopsided justice in grand jury system (w/ a hat tip to Ivan Dominguez)
Tuesday, January 10, 2012
Sunday, December 18, 2011
Bruce Alpert, Times-Picayune, William Jefferson has chance to shed 4 guilty counts, experts say
Jason Turbow, NYTimes, Bonds Avoids Prison Time for Giving Evasive Testimony
Jenna Greene, BLT Blog, SEC Charges Six Former Fannie and Freddie Executives with Securities Fraud
Mike Scarcella, BLT Blog, Judge Rules For DOJ In Suit Over Politicized Hiring (w/ a hat tip to Ivan Dominguez)
Steven Erlanger, NYTimes, Chirac Found Guilty in Political Funding Case
Mike Scarcella, BLT Blog, Judge Chides Prosecutors In FCPA Case Over Secret Notes
Tom Huddleston Jr., AMLaw Daily, Ex-Am Law Associate Kluger Pleads Guilty in $37 Million Insider Trading Scheme
Tuesday, December 13, 2011
Law.com, The Recorder, Ginny Laroe, 9th Circuit to Consider Whether Employees' Computer Misuse is a Federal Crime
Amanda Bronstad, NNLJ, law.com, Government misconduct in FCPA prosecution cited in related case
Sheri Qualters, NLJ, At 1st Circuit, two ex-lawyers appeal mortgage fraud convictions
Friday, December 9, 2011
Christopher Matthews, WSJ, Catnip For Compliance Officers
Robert J. Anello & Robert G. Morvillo, N.Y.L.J., Media: Defendant's Friend or Foe?
Thursday, December 8, 2011
The New York Times yesterday wrote that in the wake of a CBS 60 Minutes report which said that members of Congress bought stock in companies while considering legislation that might affect those companies, Congress is considering laws banning such trading. The CBS report said none of the trading was illegal at the time. See here.
The 60 Minutes report said that the current chairman of the House Financial Services Committee, Spencer Bachus (R-Ala.), then the ranking Republican on the committee, bet stock prices would fall at the time he was being briefed privately that a global financial crisis might be imminent. According to the Times, at that time Congressman Bachus' office denied he had used nonpublic information as a basis for trading.
I do not venture to assess whether any Congressperson traded on inside information. I am also generally opposed to "new laws" since most are unnecessary and duplicative. Nonetheless, I see no reason that Congress should not be held to the same standard as private businesses or citizens. I also suggest consideration that a new statute, a mirror image to 18 U.S.C. 1001, which criminalizes a false statement to a government official, be enacted prohibiting false statements by a government official to the public.
Friday, December 2, 2011
Patricia Hurtado, Bloomberg, Rajaratnam Seeks to Remain Free While Appealing Wiretap Use
Mark Hamblett, NYLJ, Lawyer Suspect Who Fled to Asia to Be Extradited (w/ a hat tip to Ivan Dominguez)
Tom Fowler, Houston Chronicle, Enron case was much bigger than FBI agent first thought
D. Daniel Sokol, Antitrust & Competition Policy Blog, Corporate Compliance - Enron and Sarbanes Oxley (To Music)
Wednesday, November 23, 2011
DOJ Press Release, New Jersey Man Pleads Guilty in $670 Million Fraud Scheme
Editorial, LATimes, Defending the Brady Rule
Andrew Stern, Reuters, Former Obama fundraiser Rezko gets 10-year sentence
Monday, November 21, 2011
Michael Rothfeld, WSJ, No Mr. Nice Guy—Just Ask Wall Street
Mike Salinero, Tampa Tribune, Jury convicts White of 7 corruption counts
FCPA Professor, ABA Ponders FCPA Reform
Tamer El-Ghobashy, WSJ, Prosecutors Lose Corruption Case
Sheri Qualters, NLJ,1st Circuit denies bail to former Massachusetts House speaker
Patricia Hurtado, Bloomberg, U.S. Prosecutors Seek Delay in SEC Case Against Rajat Gupta
Wednesday, November 9, 2011
Dina ElBoghdady, Washington Post, $3 billion settlement expected in GlaxoSmithKline drug-marketing probe (hat tip to Tiffany Joslyn)
Peter Lattman, Dealbook,NYTimes, Raj Rajaratnam Assigned to Massachusetts Prison
Jane Crosby, Star Tribune, UnitedHealth hires top white-collar crime fighter
Branden Goyette, ProPublica, Cheat Sheet: What’s Happened to the Big Players in the Financial Crisis
Anthony J. Franze & R. Stanton Jones, Bloomberg, Silencing a Watchdog: Government Seeks to Muzzle Amicus in John Edwards Prosecution
US Attorney's Office District of New Jersey, LUCCHESE ORGANIZED CRIME FAMILY MEMBER AND ASSOCIATE AMONG 13 ARRESTED, CHARGED FOR RACKETEERING AND OTHER OFFENSES, INCLUDING ILLEGAL TAKEOVER OF PUBLICLY TRADED COMPANY - Attorneys and Accountant Also Charged as Members of Racketeering Enterprise
Tuesday, October 25, 2011
Monday, October 24, 2011
David Ingram, BLT Blog, John Edwards' Lawyer Faces Conflicts Question
Mike Scarcella, BLT Blog, Ex-Lobbyist Sentenced To One Day In Jail In Corruption Case
Joe Palazzolo, WSJ Law Blog, Ethics Office Clears Lead Prosecutor in Ted Stevens Trial (w/ a hat tip to Tiffany Joslyn)
DOJ Press Release, Virginia Contractors Plead Guilty to Kickback Scheme
DOJ Press Release, FDA Chemist Pleads Guilty to Using Insider Information to Trade on Pharmaceutical Stocks Resulting in Almost $4 Million in Profits - Failed to Disclose the Illicit Profits on Financial Forms
Carrie Johnson, NPR, Businesses Push Back On Foreign Bribery Law (hat tip Amanda Whitt)
DOJ Press Release, Former United Nations Employee Found Guilty of Fraud
Monday, October 10, 2011
A few weeks ago an assistant U.S. attorney told David Finn, a Dallas criminal defense lawyer, that the government lacked funds to pay for copies of the documents it had requested as reciprocal discovery, even though the government had earlier charged Mr. Finn approximately $1,000 at 22 cents per page for copies of the discovery documents it had provided.
The cost of discovery has generally been borne by the party from whom the documents are requested. Occasionally, and much more frequently recently, as in Mr. Finn's case, the government has charged defendants or their lawyers for copies of documents provided in discovery. Generally, these charges are of little significance to the defendant since either the documents are relatively few, the defendant has deep pockets and can easily afford to pay for them, or the defendant is legally indigent and the costs are borne by the government under the Criminal Justice Act. However, when the defendant is a middle-class person with private counsel and the documents are voluminous, as they often are in white collar cases, the cost to the defendant (or his attorney) can be substantial.
The cost of discovery has generally been borne by the party from whom the documents are requested. Occasionally, and much more frequently recently, as in Mr. Finn's case, the government has charged defendants or their lawyers for copies of documents provided in discovery.
Generally, these charges are of little significance to the defendant since either the documents are relatively few, the defendant has deep pockets and can easily afford to pay for them, or the defendant is legally indigent and the costs are borne by the government under the Criminal Justice Act. However, when the defendant is a middle-class person with private counsel and the documents are voluminous, as they often are in white collar cases, the cost to the defendant (or his attorney) can be substantial.
The Federal Rules of Criminal Procedure are silent on costs of providing discovery. In fact, the Rules (most likely drafted with the garden variety non-white collar criminal case in mind) actually provide not for the turning over of documents but for their disclosure and availability to the defendant "for inspection, copying or photocopying." Rule 16(E). One federal appellate court has held that in the absence of an explicit requirement in the Rules that the government bear the cost of providing documents, it is an abuse of discretion for a district court to require it do so. United States v. Freedman, 688 F.2d 1364 (11th Cir. 1982). Since the costs of litigation would almost always be greater than the cost of the documents, there understandably have been few reported cases in this area.
In my view, in a criminal case, the government should provide without cost those documents required to be disclosed under the discovery provision of the Federal Rules. One should not be required to pay the government for the privilege of being prosecuted. The cost of production, of course, can be considerably reduced by providing the documents in electronic form. Further, the expense -- in the event of a conviction -- could be recovered as a cost of prosecution (see 28 U.S.C. 1918(b)).
In any case, the cost of 22 cents per page, while perhaps not out of line with what some lawyers charge clients for copies, appears excessive, but perhaps not so excessive in view of some of the expenses paid by the Department of Justice. In a report of otherwise minimal import to the criminal justice community, the DOJ Inspector General two weeks ago noted that expenses at DOJ conferences "appear to be extravagant." The IG highlighted a $53 per person luncheon, a $5 Swedish meatball, an $8.32 cup of coffee and a $16 muffin. Perhaps if DOJ paid less for food, it would charge less for discovery and be able to pay for reciprocal discovery. (To be fair, "extravagant" refreshment costs are often required by a hotel or conference center as part of the conference package; there is no such excuse for "extravagant" costs for producing discovery.)