Friday, July 4, 2014

Is The Supreme Court Ready to Reexamine U.S. v. Miller?

Guest Blogger - Jon May

In United States v. Miller, 425 U.S. 435, 96 S.Ct. 1619 (1976) the Supreme Court held that a depositor does not have a reasonable expectation of privacy in the records of his account maintained by a bank pursuant to the Bank Secrecy Act. Justice Powell, writing for the majority of the Court, reasoned that there was no expectation of privacy in the contents of a bank record. According to Justice Powell, “checks are not confidential communications but negotiable instruments to be used in commercial transactions.” Specifically, “financial statements and deposit slips, contain only information voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business.” As such, “The depositor takes the risk, in revealing his affairs to another, that the information will be conveyed by that person to the Government.” Id. at 443-444.

In so holding, the Court did not consider the extent to which the government can obtain information about a person’s most confidential affairs through an analysis of bank account records. But such an analysis was made by Justice Roberts, speaking for a unanimous Court in Riley v. California, which held that the Fourth Amendment prohibits the government from examining the contents of a person’s cell phone absent a warrant.

In Riley Justice Robert’s rejected the government’s argument that an individual did not enjoy an expectation of privacy in those records maintained in electronic devices carried on the person. In so holding, Justice Roberts analyzed the expectation of privacy in a very different way than did Justice Powell. According to Justice Roberts, the arrest of an individual may diminish the person’s expectation of privacy, but it does not do away with it entirely. Slip op. at 20. Justice Roberts pointed out that cell phones are mini-computers which just “happen to have the capacity to be used as a telephone.” This gives people the ability to lug around “every picture they have taken, or every book or article they have read” without the need to schelp around the kind of trunk that the Court would require a search warrant to search under Chadwick.

Seizing the contents of a cell phone gives the government the ability to reconstruct the sum of an individual’s private life, “reconstructed through a thousand photographs labeled with dates, locations, and descriptions….” Justice Roberts observed that while “A person might carry in his pocket a slip of paper reminding him to call Mr. Jones; he would not carry a record of all his communications with Mr. Jones for the past several months, as would routinely be kept on a phone. Id. at 23. Indeed, “it is no exaggeration to say that many of the more than 90% of American adults who own a cell phone keep on their person a digital record of nearly every aspect of their lives—from the mundane to the intimate.” Id.

For example, the government could readily learn everything about an individual’s “private interests or concerns—perhaps a search for certain symptoms of disease, coupled with frequent visits to WebMd.” Further, “Data on a cell phone can also reveal where a person has been.”  Id. As a result a person’s “specific movements down to the minute, not only around town but also within a particular building,” could be uncovered. Id. at 24. A mere examination of the “apps” found on a cell phone could reveal whether a person was a Democrat or a Republican, whether they had an addiction, or were pregnant, etc. Id.

Almost everything that can be said regarding the violation of an individual’s privacy resulting from the government’s search of the person’s cell phone can be said about a search of a person’s bank accounts. You can even trace their movements through time through their credit card charges. Consequently to the extent that it is reasonable for society to expect that the government have a search warrant or a grand jury subpoena as a condition of invading that zone of privacy, the same could be said of searches of an individuals banking records. It appears that this sort of argument, which would have fallen on deaf ears 15 years ago, may find a receptive ear in the courts today.  Lawyers may wish to argue now that Miller’s narrow view of society’s expectations regarding privacy are no longer valid.

(jm)  

July 4, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 2, 2014

BNP Paribas Conviction Commendable, But Length of Investigation and Failure to Prosecute Individuals Raise Questions

Both the Department of Justice (DOJ) and the District Attorney of New York County (DANY) deserve commendation for the criminal conviction of France's largest bank, BNP Paribas, and the securing of penalties of approximately $9 billion (including $2.25 billion to New York State's bank regulatory agency, the Department of Financial Services), and, for the first time, a seemingly not insignificant collateral sanction imposed by a regulator (although how significant remains to be seen).  BNP for ten years falsified transactions in order to be able to use the American banking system to do business with Sudan, Iran and Cuba, countries deemed rogue states by the U.S. government (but not necessarily by France).  See here.  While I accept that those crimes were serious crimes, I would much have preferred a prosecution-to-conviction of an American bank whose wrongs made it and its bankers much richer while making millions of other Americans much poorer.

The investigation, according to a story in the New York Times (see here) began in 2006 under the venerable New York County District Attorney Robert Morgenthau, whose expansive view of jurisdiction included the planet of Saturn (one of his bureaus was called "DANY Overseas"), when an Israeli-American DANY financial analyst developed a lead from reviewing the court papers of a civil suit against Iran brought by a grieving lawyer father whose daughter was killed in a terrorist suicide bombing in Gaza in 1995.  See here.  The investigation was continued by District Attorney Cyrus Vance when he took office in 2009.

No individuals have been indicted (although 13 have been required to leave their jobs), perhaps because the statute of limitations had run during the lengthy investigation.  One wonders why such an important investigation took seven to eight years and has resulted (at least so far) in no indictment of individuals.  Perhaps it was due to the difficulty to forge cooperation between federal and state law enforcement agencies.  New York's federal and state prosecutors have not always played well together.

In any case, the appearance of the District Attorney of New York as a player in the prosecution of big banks is a welcome step.  New York is, as Mr. Vance said, "the financial capital of the world," and therefore probably the financial crime capital of the world.  Perhaps strong prosecutorial action by a local prosecutor -- in a sense a competitor with DOJ for high-profile cases -- will goad DOJ into stronger actions against financial institutions.  Although the U.S. Attorney's Office under Preet Bharara has done a creditable job in fighting insider trading, it -- and DOJ -- had not until six weeks ago (see here) secured a criminal conviction against a major financial institution.

(goldman)

July 2, 2014 in International, News, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Monday, June 30, 2014

Berke and Farah Set Up Shop

Campaign finance law-election law-lobbying law gurus Elliot Berke and Bill Farah have left McGuire Woods to form their own political law/white collar shop at Berke Farah LLP. Helping them out as senior consultant is veteran DC white-collar hand John Kern, who will also maintain his separate practice. Elliot, Bill, and John are something of a rarity in DC. Seasoned professionals who quietly and discreetly get the job done with a minimum of self-promotion. (Although Elliot comes from the GOP side, he was one of the first members of the campaign finance bar to criticize the dubious prosecution of former Senator John Edwards.) Best of luck to them all.

(wisenberg)

June 30, 2014 in Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Friday, June 27, 2014

The Importance of the Fourth Amendment

This past Wednesday's Supreme Court decision in Riley v. California stressed the importance of law enforcement needing to obtain a warrant if they sought to search digital information contained on a cell phone that had been seized from the individual.  From this decision we can see that the Fourth Amendment is alive and well in the Supreme Court.

But is that the case in the Manhattan District Attorney's Office? Larry Goldman notes here on the White Collar Crime Prof Blog that the District Attorney's Office recent prosecution in a computer related case had 4th Amendment problems.  And this morning's New York Times article by Vindu Goel and James McKinley, Jr., Facebook Bid to Shield Data From the Law Fails, So Far shows how the Manhattan district attorney's office has been obtaining Facebook information using demands for documents from Facebook without notification to the individuals who posted the information on Facebook, and precluding Facebook from notifying them. Admittedly in this instance the Manhattan DAs Office did obtain a warrant, but Facebook and individuals who had items being obtained from Facebook were precluded from fighting the warrant.  According to this article, Facebook has continued to fight these warrants and hopefully a court will see the importance of having oversight when it comes to overbroad computer related searches. 

One of the possible ramifications of what the Manhattan D.A. is doing it that when cases eventually come to court, the overbreadth of these searches will be raised. And hopefully attorneys handling these cases will have been alerted by this posting, the New York Times article, and other media sources who may be reporting on these events.  But it is hard to believe that all the information received by the Manhattan DA will be used for a prosecution, and many of these individuals will never know that their privacy had been compromised. As we move further into a digitial age, the principles of the Fourth Amendment need to be maintained. Judges reviewing these search warrants need to provide clearer oversight when granting a warrant, especially when terrorism is not the focus of the search. 

(esp) 

June 27, 2014 in Investigations, Prosecutors, Searches | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 24, 2014

Evidence Suppressed in New York State Prosecution of Aleynikov

One of the more fascinating cases around is the case of former Goldman Sachs programmer Sergey Aleynikov.  Aleynikov was convicted in the Southern District of New York for stealing secret high-frequency trading computer code from Goldman Sachs and sentenced to eight years in prison.  His conviction was reversed by the Second Circuit on the grounds that his actions were not covered by the federal statutes under which he was charged.  Aleynikov had already served a year in prison.

Then, Manhattan District Attorney Cyrus Vance, apparently provided the testimonial and tangible evidence used in the prosecution of Aleynikov by the U.S. Attorney, decided to prosecute him in state court under state statutes, a decision I criticized because it violated at least the spirit of double jeopardy protection (see here).  Last week, a New York State judge threw out much of the evidence underlying the state prosecution on the ground that Aleynikov's arrest and related searches by federal agents were not supported by probable cause that he committed the underlying federal crimes, even though the agents acted in good faith.  See here.  New York has rejected on state constitutional grounds the "good faith exception" to unlawful searches applicable in federal courts.  Compare People v. Bigelow, 66 N.Y.2d 417 (1985) with United States v. Leon, 468 U.S. 897 (1984).  Mr. Vance's choice now is either to concede that the judge's suppression has made his case untriable and make an interlocutory appeal or go forward to trial without that evidence (or, of course, move to dismiss the case).

Ironically, Goldman Sachs, the purported victim of Aleynikov's alleged criminality, is laying out millions of dollars to afford Mr. Aleynikov the energetic and aggressive defense his lawyer, Kevin Marino, is providing.  A New Jersey federal judge last October ordered Goldman to advance Mr. Aleynikov's legal fees based on a corporate bylaw that required it to advance legal fees for officers charged in civil and criminal proceedings.  Aleynikov v. Goldman Sachs (Civ. No. 12-5994, DNJ, October 22, 2013).

(goldman)

June 24, 2014 in Attorney Fees, Current Affairs, Judicial Opinions, News, Prosecutions, Prosecutors, Statutes | Permalink | Comments (0) | TrackBack (0)

Thursday, June 19, 2014

DOJ Narrows Basis for Section 1001 Prosecutions

According to a May 12, 2014 article in the National Law Journal (Tony Mauro, "DOJ's Quiet Concession:  U.S. gives up a widely decried charging theory."), the Department of Justice has quietly narrowed the scope of 18 U.S.C. 1001, the statute that makes lying to an FBI or other government agent a five-year felony.  The statute -- perhaps most notably used to send Martha Stewart to jail when the government couldn't make out an insider trading case against her -- makes it a crime to "knowingly and willfully" make materially false statements in any matter under federal jurisdiction, including lying to an FBI agent.  The government now has conceded that, in order to prove that a defendant accused of a Section 1001 violation acted "willfully," it must show that she knew that her action making or providing a false statement was unlawful.

The change in government attitude was mentioned in low-profile submissions to the Supreme Court containing confessions of error.  The Supreme Court has already returned at least two cases to lower courts for further consideration in light of the concessions.

The most questionable use of the statute, in my opinion, has occurred when agents without prior notice confronted an individual about a purported crime she committed and elicited a knee-jerk exculpatory false denial (although such denials are now to my knowledge infrequently prosecuted).  Prosecutors and agents may now have to forego prosecutions where targets or witnesses lie to them (in the field or their offices) or alternatively give those targets and witnesses a warning that a false response to the government questions is unlawful., which, of course, may discourage them from talking.

(Hat Tip to Monroe Freedman and Steve Lacheen.)

(goldman)

 

June 19, 2014 in Investigations, Prosecutors, Statutes | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 18, 2014

Italian Accused of U.S. Antitrust Crime Extradited After Switching Planes in Germany

With the growing internationalization of business crime, the question of when a foreign national may be extradited to the United States for crimes charged in the United States is arising more frequently.  Generally speaking, under the requirement of "dual criminality," a resident of a foreign country charged in the United States will not be extradited if the country he is residing in does not deem his conduct criminal.  If, however, that person travels from his "safe haven" home country to another country (even in transit) where such conduct is criminal, he may be extradited.

As reported in a recent Wilmer Hale article, see here, Romano Pisciotti, an Italian citizen charged with an antitrust bid-rigging violation in 2010, this April was extradited from Germany after the connecting flight on his trip from Nigeria to Italy landed there.  Germany generally criminalizes bid-rigging; Italy generally does not.  Presumably, had Pisciotti not left Italy, he would not have been arrested. 

Pisciotti's extradition demonstrates that foreign residents indicted in the United States who are not extraditable from their home country (some nations, like Germany, will not extradite its own citizens other than to another European Union country or the International Criminal Court, for instance) take a considerable risk whenever they travel away from their country of residence.

(goldman)

June 18, 2014 in Antitrust, International, Prosecutions, Travel | Permalink | Comments (0) | TrackBack (0)

In the News & Around the Blogosphere

DOJ Press Release, Former CEO and CFO of Arthrocare Corporation Convicted for Orchestrating $400 Million Securities Fraud Scheme

Libby Longino, Women and White-Collar Crime

James Aldridge, San Antio Business Journal, Three San Antonio PEO owners sentenced for fraud (discussing the largest tax fraud case in San Antonio - Lawyer Gerald Goldstein represented an individual who received probation - and this was without a 5K1.1).

Paul Hastings Press Release, Seasoned Government Lawyer Joins Paul Hastings in New York as Firm Continues Growth of Investigations and White Collar Defense Practice (John Nowak - who was Deputy Chief of the Business and Securities Fraud Section of U.S. Attorneys Office, ED New York)

Paul Hastings Press Release, Respected White Collar Team Joins Paul Hastings in Washington, DC (Michael Levy, Michael Spafford, Amy Carpenter-Holmes).

Day Pitney Press Release, Robert Appleton, Former U.S. Prosecutor and United Nations Corruption Fighter, Joins Day Pitney's White Collar Defense and Internal Investigations Practice

Blank Rome Press Release, Blank Rome Welcomes New White Collar Defense Of Counsel Jed M. Silversmith

(esp)

June 18, 2014 | Permalink | Comments (1) | TrackBack (0)

Tuesday, June 3, 2014

Tilting Toward a Travesty in Texas: The Wallace Hall Referral

If it was not such a serious abuse of power, it would almost be funny. It certainly has its comic elements. Wallace Hall is a Member of the University of Texas System Board of Regents, appointed to that position in 2011 by Governor Rick Perry. The Board of Regents is the governing body for the entire University of Texas System. Hall started snooping around and uncovered several things that troubled him, including:

1. An allegedly secret forgivable loan program for favored law professors at the University of Texas School of Law.

2. Allegedly incorrect accounting treatment of certain in-kind donations to the University's fund-raising campaign. The University had to restate its fund-raising figures after the Council for the Advancement and Support of Education rejected the school's accounting theory.

3. Admission of students to the University of Texas School of Law who had LSAT scores below the average for entering U.T. Freshlaws. Some of the admitted students were related or connected to powerful state legislators with key roles in funding the university and law school.

That last revelation was apparently too much for the legislature (or "the leg" as we called it in my day) and impeachment hearings were commenced by the House Select Committee on Transparency in State Agency Operations ("Transparency Committee").

As I said, the controversy has had its comic moments. The Transparency Committee voted to recommend impeachment of Hall before deigning to draft any Articles of Impeachment. And Transparency Committee Co-Chair Dan Flynn wrote a public letter stating that: 1) there were insufficient grounds to impeach Hall; 2) Hall should resign anyway; and 3) Hall should be impeached if he did not resign. When Hall refused to resign, Flynn voted to impeach him. (The Texas Tribune has a good story here on Flynn's remarkable letter and the response he received from Representative Eric Johnson. Both letters are attached to the story in PDF format.)

The fight between Hall and the legislature is apparently part of a larger years-long battle between th Board of Regents and UT President Bill Powers. The Regents have Governor Perry and company on their side and Powers has legislative allies on his. I'm not concerned about that. I have reviewed Hall's purportedly impeachable offenses and find the allegations against him unpersuasive, but I would not be writing about these things on a white collar blog if impeachment hearings were the only thing going on. Unfortunately, there's more.

The Transparency Committee's Co-Chairs also referred Hall to the Travis County District Attorney's Public Integrity Unit, which has opened an investigation into possible criminal wrongdoing by Hall. This is the same office that brought dubious charges against former U.S. House Speaker Tom DeLay and has a long history of questionable public corruption prosecutions. The Public Integrity Unit is an odd creature of Texas law, housed in the Travis County DA's Office with statewide jurisdiction to investigate and prosecute state officials. The old Travis County DA was Ronnie Earle. The current Travis County DA is Rosemary Lehmberg, an Earle disciple, who refused to resign from office after pleading guilty to Driving While Intoxicated.

One of the House Transparency Committee members made the mistake of asking the U.T. System to review whether Hall had violated state or federal law. The U.T. System hired outside counsel Philip Hilder, a nationally known and well-regarded white-collar heavyweight, to research the issue and write a report. The Hilder Report found "no credible evidence" that Hall violated the Texas Government Code or "any other state or federal law."

In a normal world Hall would be breathing easier. But with the Public Integrity Unit lurking in the background, anything is possible.

To me Hall looks like a classic whistle-blower, albeit a powerful one. He may not have the purest of motives. I really don't know and certainly don't care. But he has uncovered, or helped to uncover, potentially serious problems in the U.T. System. His reward? A criminal referral by the powerful interests whom he has offended. And that is an outrage.

(wisenberg)

June 3, 2014 in News, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Monday, June 2, 2014

Second Circuit Reverses Convictions Due to Prosecutorial Misconduct and Exclusion of Good-Faith Evidence

The Second Circuit Court of Appeals, which issues complete reversals in only about five percent of the criminal cases it hears, last week in an opinion by Judge Jed S. Rakoff (sitting by designation) reversed the trial conviction of two individuals and a corporation for environmental crimes involving asbestos removal, and ordered a new trial.  United States v. Certified Environmental Services, Inc., et al. (see here).  The reversal was based on the denial of a fair trial due cumulatively to the exclusion of evidence of good faith to demonstrate the defendants' lack of intent (an issue not discussed here) and prosecutorial misconduct in improper "bolstering" during the opening and closing arguments.  The Court denied that part of the defendants' appeal based on Brady v. Maryland.

The decision does not concern any novel legal grounds.  Perhaps most significant in the white-collar area is its detailed discussion of the proper and improper use by prosecutors of the cooperation agreements their witnesses commonly enter into with the government.  Since many, probably most, white-collar cases involve cooperating government witnesses, prosecutorial introduction of and comments on cooperation agreements frequently occur in white-collar trials.  Here, the prosecutor improperly bolstered the witnesses' testimony on numerous occasions, both in the opening and closing arguments, by referring directly and indirectly to the self-serving language that prosecutors routinely place in the cooperation agreements they draft to the effect that the witnesses are obligated to tell the truth.  Prosecutors and defense attorneys would do well to review the opinion to determine when and how the government may disclose and use the truth-telling requirement language of cooperation agreements during testimony and in argument.

The opinion also excuses, but does not condone, the improper failure of the government to turn over handwritten notes by a testifying agent which were discovered in the later examination of another agent and belatedly revealed to the defense.  The notes should have been revealed earlier, says the Court, not only since they included evidence favorable to the defense, but also pursuant to Fed. R. Crim. Pro. 16(a)(1)(B)(ii), a discovery rule, and 18 U.S.C. 3500, the Jencks Act.  However, since the notes were, however belatedly, turned over and the defense had an opportunity to review them, examine the later-testifying agent about their content, and recall the earlier witness if it chose, and since their timely disclosure would not have changed the verdict, in any case there was no Brady violation.  The opinion thus demonstrates that late provision of Brady (or Rule 16 or Jencks) by the government during trial will virtually never be grounds for reversal, at least not in the Second Circuit.

 (goldman)

June 2, 2014 in Environment, Judicial Opinions, Legal Ethics, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Thursday, May 29, 2014

Credit Suisse Conviction Does Not Demonstrate Substantial Change In Department Of Justice Enforcement

The Department of Justice (DOJ) and Attorney General Eric Holder were strutting last week over the criminal conviction by plea of guilty of Credit Suisse, a major financial institution.  "This case shows that no financial institution, no matter its size or global reach, is above the law," declared the Attorney General.  Recent prosecutions of major financial institutions had resulted in lesser results,  "deferred prosecutions," a somewhat deceptive term for "delayed dismissals," or a guilty plea by a minor affiliate.

The Credit Suisse guilty plea does not represent a sea change in the attitude of DOJ toward major financial institutions; rather, it appears to be a small ratcheting-up of the baseline penalty for serious criminal financial acts by such institutions.  Credit Suisse, despite paying a hefty $2.6 billion fine, will not suffer the severe collateral consequences that ordinary individual defendants do upon a criminal conviction.  (See here, NACDL's report "Collateral Damage:  America's Failure to Forgive or Forget in the War on Crime -- A Roadmap to Restore Rights and Status After Arrest or Conviction," released today, Thursday, May 29, 2014.)  It will still be able to act as an investment advisor, due to waivers agreed to by federal and New York State governmental agencies.  Thus, its conviction, according to its chief executive Brady Dougan, will not have "any material impact on our operational or business capabilities."  In other words, for Credit Suisse, it will be business as usual. 

I hold no sympathy for Credit Suisse.  Its crimes, continuous and notorious, have enabled American citizens and citizens of other countries to launder and evade tax payments on billions of dollars.  In effect, Credit Suisse (not alone among Swiss banks) (see here) was a criminal enterprise, for many years making huge profits from extraordinary fees for its knowing and willful provision of a presumably safe haven for untaxed income, ill-gotten or otherwise.  Mr. Dougan had stated to a Senate hearing in February that the tax evasion scheme was the work of a small group of private bankers that was hidden from senior management.  That hard-to-believe claim was challenged in a statement by Schweitzerisher Bankpersonalverband, the organization representing the bank's employees:  "It was common knowledge that tax evasion was the strategy, a business model pursued by many banks for a long time."  See here

To be sure, Credit Suisse's crimes did not cause the vast hardship to tens of millions of Americans that the wrongs -- criminal or not -- of other major financial institutions did in the last several years.  And, further, its acts -- while subject to the long-arm jurisdiction of American courts -- were apparently legal under Swiss law, and seemingly condoned by the Swiss government.

Some commentators have suggested that there is considerable unfairness in prosecuting corporations for acts of low- or mid-level employees without knowledge of corporate leaders (see here), a position with which I generally agree.  The demi-prosecution of Credit Suisse, however, does not appear to fit within that category, despite Mr. Dougan's claim.  I see no unfairness in the government's requiring Credit Suisse to plead guilty.

I do, however, wonder about the effectiveness of the insistence on a guilty plea if the collateral consequences are waived.  The conviction of a major financial institution with a considerable financial penalty but a waiver of regulatory bars is to me little different from a civil finding of wrongdoing with such a penalty.  Other than its current status as a convicted felon, Credit Suisse today is essentially in the same position it was two weeks ago.

Given the legitimate (but probably exaggerated) fear that a felony conviction of a major financial institution without regulatory waivers will have on its existence and thus on the economy and societal well-being, it may well be that guilty pleas (and trial convictions too) of such corporations should be accompanied by limited collateral consequences.  Such prosecutions, however, will then serve little more than a symbolic purpose (which I accept as a legitimate purpose).  Overall, DOJ's prosecution to conviction of Credit Suisse is a positive step, albeit a small one.

The resolution here suggests again that the criminal process is inadequate to prosecute large financial institutions.  Society looks to the criminal law to solve far more problems than the criminal law is capable of solving.  Meaningful reform of a flawed financial system will not come from criminal prosecutions of corporations, but, if at all, from strong, substantial regulatory rulemaking and non-criminal legislation.

 (goldman)

 

May 29, 2014 in Current Affairs, Deferred Prosecution Agreements, International, Money Laundering, News, Prosecutions, Prosecutors, Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 28, 2014

In the News & Around the Blogosphere

Thursday, May 22, 2014

DOJ Announces Policy Favoring Electronic Recording of Statements

The Department of Justice (DOJ) on May 12, 2014 issued a memorandum creating "a presumption" that the Federal Bureau of Investigation (FBI), Drug Enforcement Agency (DEA), Bureau of Alcohol, Firearms, Tobacco and Explosives (AFT) and United States Marshals Service (USMS) electronically record, if possible videotape, post-arrest statements made by individuals in their custody in a place of detention, essentially FBI and local police offices and detention facilities, where the facility has suitable equipment.  Additionally, agents and prosecutors are encouraged to consider electronic recording in circumstances where the presumption does not apply.  This policy is not intended to create any enforceable rights for arrestees.

This is a significant change and DOJ should be commended.  Historically, the FBI, in particular, has resisted recording conversations and in fact has had a formal policy prohibiting it without special permission from a supervisor.  FBI memoranda stated that recording "may interfere with and undermine . . . successful rapport building techniques" and that "perfectly lawful and acceptable interviewing techniques do not always come across in recorded fashion to lay persons as proper means of obtaining information from defendants."  A transcript of the testimony of an FBI agent in a 2013 trial reads: 

                           Q:  Does the FBI have a policy of recording interviews?

                           A:  We do not record interviews.

Civil liberties and defense lawyer groups have been seeking such a policy for well over a decade.  Indeed, I wrote an NACDL president's column on the subject in December 2002.  The cynical have believed that the FBI refusal to record investigations was in order to allow agents to use tough, deceptive and coercive methods to induce confessions and then testify to a sugar-coated sanitized version of the interrogation.  The more cynical have believed it gave FBI agents a license to lie with impunity about what the defendants said or did not say.

I believe recording interrogation is a win-win situation.  Jurors will be able to see and hear the circumstances surrounding the questioning and the specific words and tones used by the agents and the defendant.  Agents will be discouraged from shading testimony as to their methods and the defendant's statements.  Defendants and defense lawyers will be unable to argue effectively that the defendants did not make the statement they actually did or claim that they were beaten or coerced when they were not.

To be sure, the memorandum does not require, as some civil liberties and defense lawyer groups have advocated, that the recording begin at arrest.  Thus, there still remains the possibility that agents will coerce statements on the way to the place of detention and lie about it or falsely state that the defendant confessed, or that defendants who did make admissions upon arrest will deny it before the jury.

Nonetheless, this is an important positive step toward presenting the triers of fact with accurate best-evidence versions of events so that they will reach a more just determination.  It will reduce the number of unjust convictions and perhaps unjust acquittals also.  Every law enforcement agency -- federal, state and local -- should adopt such a policy, absent special reasons.  The federal government should require it as a condition of a state police agency receiving federal support.

(I just received notice that Martin Tankleff, who was released from prison in 2007 after serving 17 years upon a wrongful conviction for killing his parents based on a false confession when he was 17 years old, will graduate from Touro Law School this Sunday.  Had Marty's confession been recorded, Marty would very likely not have been convicted.  Marty has vowed to dedicate himself to becoming an advocate for the wrongfully convicted.  Congratulations, Marty; consider this policy a graduation present from DOJ.)

(goldman)

May 22, 2014 in Current Affairs, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 21, 2014

New York Legislators Propose Commission on Prosecutorial Misconduct

 Two New York State legislators have proposed the creation of a state commission on prosecutorial misconduct to review and investigate complaints of prosecutorial misconduct and to discipline prosecutors who have been found to have acted improperly.  See here.

The proposed commission would, it is said, be the first in the nation of its kind.  It will be modeled upon New York's Commission on Judicial Conduct,  which investigates allegations of misconduct by judges and, if misconduct is found, may discipline a judge by public admonition, censure or removal from the bench.

Virtually every state (but not the federal government) has a commission on judicial conduct  and these commissions,  it is generally agreed, have had a positive effect in limiting judicial misconduct, removing unfit judges who had committed serious misconduct and increasing public confidence in and awareness of the workings of the court system.  (I note that I am a past chair of New York's Commission.)  There is, I believe, no good reason that there should not be an analogous agency to review instances of alleged prosecutorial misconduct, sanction offending prosecutors, and remove the most serious offenders from their positions.  Indeed, there are stronger reasons for a commission concerning prosecutorial misconduct than for one concerning judicial misconduct.  Much of the most serious prosecutorial misconduct, such as concealing exculpatory material and suborning perjury, occurs in the investigative and preparatory stages of a case and is hidden from the view of judges, defense attorneys, and the public and thus not detectable and reviewable by a court.  Almost all judicial misconduct, on the other hand, occurs on the bench in public view, is recorded and observed by lawyers and the public, and is readily reviewable by appellate courts.

With rare exception, see here, prosecutorial misconduct has gone unpunished by prosecutorial offices, bar disciplinary committees and judicial authorities.  Although grievance committees have authority over the improprieties of prosecutors as much as other lawyers, they have historically shown little interest in sanctioning prosecutorial misconduct.  See, e.g., Gershman, Reflections on Brady v. Maryland, 47 S. Tex. L. Rev. 685 (2006); Yaroshefsky, Wrongful Convictions:  It is Time to Take Prosecution Discipline Seriously, 8 D.C. L. Rev. 275 (2004).  Similarly, judges, even when they reverse a conviction due to egregious prosecutorial misconduct, almost always conceal the prosecutor's identity and rarely refer the prosecutor for professional discipline.  And, prosecutorial offices themselves often defend on appeal and thus ratify even serious misconduct of line prosecutors, and fail to sanction even those prosecutors whose serious misconduct they concede.  See, Rudin, The Supreme Court Assumes Errant Prosecutors Will Be Disciplined By Their Offices or the Bar:  Three Case Studies That Prove That Assumption Wrong, 80 Fordham L. Rev. 537 (2011).

Further, potentially criminal misconduct by judges may be investigated and prosecuted by the District Attorney, an agency wholly independent from the judiciary.  However, except in the extremely rare instances where a special prosecutor is appointed, potentially criminal misconduct by prosecutors generally may only be investigated or prosecuted by the very same prosecutorial office that committed that misconduct, which in almost all instances will be hesitant to prosecute one of its own and embarrass the office.

Additionally, there is a stark imbalance in the adversarial criminal justice system where one adversary -- the prosecutor -- may criminally charge the other adversary -- the defense attorney -- when he  tampered with evidence or suborned perjury, but where the defense attorney who believes the prosecutor committed such criminal acts may only make a shout in the wilderness by a futile complaint to an overprotective disciplinary agency with no criminal prosecution power.  A commission on prosecutorial conduct will not wholly right this imbalance, but will tilt it in the right direction.

(goldman)

May 21, 2014 in Legal Ethics, News, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 20, 2014

Former Wellcare Individuals Sentenced

The sentencing of three former Wellcare individuals demonstrates the importance of having the guidelines as advisory, and the importance of an independent judicary that can recognize that sentences should be about individuals and not about arithmetic. (see here) Hats off to Hon. James S. Moody for being a judge that went beyond the math in sentencing the individuals and for his recognition that the stigma and collateral consequences of a conviction for a white collar offender are huge.  With little chance of recidivism, strict guideline sentences were unwarranted here. (see here)

 The court gave Todd Farha three years (significantly below the number asked for by the government).  Paul Behrens received a sentence of 24 months; William Kale a year and a day, and Peter Clay 60 months of Probation.  The attorneys representing these individuals were: 

Todd Farha: Barry Boss, Stephen Miller, Rebecca Brodey, Seth Waxman, Peter Neiman, Alan Schoenfeld, Robert Stauffer, Laura Vaughan

Paul Behrens: John Lauro; Jeffrey Lamken; Michael Matthews, Michael Califano

William Kale: Stan Reed, Patrick Donahue, Lauri Cleary, Larry Nathans

Peter Clay: Bill Jung, Larry Robbins, Donald Burke.

(esp)

May 20, 2014 in Defense Counsel, Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)

Sunday, May 18, 2014

In the News & Around the Blogosphere

Blank Rome hires Carlos Ortiz as a partner in the White Collar Defense and Investigations Group- here

Scott Neuman, NPR, Congress Holds Former IRS Official Lois Lerner In Contempt

Tony Mauro, NLJ, U.S. gives up a widely decried charging theory

Todd Ruger, Legal Times, Leslie Caldwell Confirmed to Lead DOJ Criminal Division

(esp)

May 18, 2014 in News | Permalink | Comments (0) | TrackBack (0)

Friday, May 16, 2014

Too Big To Jail: Do Guilty Pleas Matter?

Here is an unusually sophisticated article about a white collar topic in today's NYTimes. The piece, by Floyd Norris, probes what are essentially debarment waivers obtained by many financial and brokerage institutions as part of their global deals with DOJ and SEC. A guilty plea or deferred prosecution agreement with DOJ, accompanied by an SEC fine and censure, in the past may have been a company's death knell. Now it is just another cost of doing business. Naturally, guilty pleas still look bad and companies want to avoid them. But there's a rather large difference between a short-term public relations nightmare (or even a long-term and expensive monitoring agreement) and a firm's demise. So when government officials say that no companies are too big to jail or too big to fail, it is important to understand the context of the particular global agreement in question. Because a company can't be jailed, and if the company is big and important enough, it won't be allowed to fail.

(wisenberg)

 

May 16, 2014 in Civil Enforcement, Current Affairs, Deferred Prosecution Agreements, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Thursday, May 15, 2014

White Collar Sentencing is Not All About Loss

An amici brief was filed by a group of law professors and practitioners in support of  three defendants in United States v. Farha.  It's unusual to see amici coming in at the trial level, but this esteemed group offers some important reasons for allowing this brief. 

They note "that this case highlights a serious problem facing federal sentencing judges today - namely, that the federal sentencing guidelines as currently written place too much emphasis on economic 'loss' and too little emphasis on other factors that traditionally have been important factors in determining a fair and just sentence that takes full account of the factors set forth in 18 U.S.C. s 3553(a)." In addition to discussing the distortion caused by the loss guidelines, the authors of this brief also note how other judges have recognized that focusing on loss under the guidelines presents problems. As aptly noted by Hon. Jed Rakoff, the guidelines "tend to place great weight on putatively measurable quantities, such as .....the amount of financial loss in fraud cases, without however, explaining why it is appropriate to accord such huge weight to such factors."  (United States v. Adelson).

Hopefully the court will note the growing number of judges that reject strict adherence to a sentence that is ascertained solely by examining numbers and will remember that we sentence people, not numbers.

 See Amici- Download AmiciBrief 

(esp)

May 15, 2014 in Defense Counsel, Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 13, 2014

Corporate Criminal Liability: Recent and Noteworthy

Josh Greenberg and Ellen Brotman have written a timely and informative article entitled Strict Vicarious Liability for Corporations and Corporate Executives-Stretching the Boundaries of Criminalization for Volume 51 of the American Journal of Criminal Law. The article, and related pieces on criminal liability in the corporate context by Mark Filip, Julie O'Sullivan, Barry Pollack and others, can also be found on the Journal's website at http://www.americancriminallawreview.com/.

 

(wisenberg)

May 13, 2014 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, May 8, 2014

The Taslitz Galaxy: A Gathering of Scholars at Howard - Friday, September 19th, 2014

Howard University School of Law is hosting a conference in honor of Andrew Taslitz, who died on February 9, 2014. It is not a traditional symposium, for we expect concurrent sessions on many subjects. It is open to people who knew Taz and to those who were inspired by his writing or teaching. If you would like to take part in the live event, please submit an abstract by May 30, 2014 to the co-chairs named below. The conference is free but speakers must pay their own way.

Send abstact to co-chairs:

Josephine Ross      JRoss.howardlaw@gmail.com

Lenese Herbert      LHerbert@law.howard.edu

Ellen Podgor         EPodgor@law.stetson.edu

For more details, see here - Download Andrew Taslitz Galaxy

May 8, 2014 in Conferences | Permalink | Comments (0) | TrackBack (0)