Thursday, July 7, 2016

The Law Behind the FBI’s Decision to Recommend No Charges in Clinton Email Investigation

Guest Bloggers Ziran Zhang & Eugene Gorokhov (Burnham and Gorokhov, PLLC):

Recently, Professor Podgor wrote two informative posts covering FBI Director James Comey’s public statement about the FBI’s year-long investigation into Hillary Clinton’s use of private e-mail servers, its recommendation that no criminal charges be filed (here), and AG Loretta Lynch’s acceptance of the FBI’s recommendation (here). Professor Podgor noted many unusual aspects about Director Comey’s statement, including the fact that the FBI does not usually publicize its recommendations.  The short version of Director Comey’s speech is that the FBI did find “evidence of potential violations of the statutes regarding the handling of classified information,” but is recommending against criminal prosecution for a variety of reasons.  This post examines two questions: (1) Is Director Comey right when he says that the evidence indicated potential violations of federal laws?  (2) if so, why is the FBI recommending against prosecution? 

What laws did Hillary Clinton’s conduct potentially violate?

While the FBI’s investigation undoubtedly looked at many federal statutes, the one that Director Comey referenced in his statement appears to be 18 U.S.C. 793(f), which makes it a federal crime for anyone  “through gross negligence" to permit  classified information "to be removed from its proper place of custody or delivered to anyone in violation of his trust, or to be lost, stolen, abstracted, or destroyed[.]”

In this case, classified information was undoubtedly removed from its proper place of custody.  According to Director Comey, of the approximately 30,000 emails provided by Hillary Clinton, 110 contained classified information at the time they were sent or received. (Another 2,000 emails were later determined to contain classified information, although those were not formally classified at the time they were sent or received).  A small number of emails also contained documents with markings that indicated the presence of classified information. Comey noted that “none of these e-mails [containing classified information] should have been on any kind of unclassified system,” let alone “unclassified personal servers not even supported by full-time security staff[.]” 

Whether the act of communicating classified information through personal servers constitutes “gross negligence” is a more difficult question to answer. The Supreme Court has called “gross negligence” a “nebulous” term “lying somewhere between the poles of negligence at one end and purpose or knowledge at the other[.]” Farmer v. Brennan, 511 U.S. 825, 836 n.4 (1994).

Reported decisions of prosecutions under 18 U.S.C. § 793(f) are rare. In one case, a Marine Corps intelligence officer pled guilty to a violation of § 793(f) where he inadvertently packed classified documents into his gym bag along with his personal papers and took the classified documents home. United States v. Roller, 42 M.J. 264 (CAAF 1995). Former FBI Agent James J. Smith, who had an affair with suspected Chinese spy Katrina Leung, was also charged under this provision for taking classified documents to Leung’s home, resulting in Leung covertly copying the documents without Smith’s knowledge.  Smith later pled guilty to a charge of false statements.

Director Comey opined that the use of a private server was “extremely careless” and that any “reasonable person” in Hillary Clinton’s position would know better than to use an unclassified system to discuss classified information. A jury looking at the full evidence, including the actual content of the emails and the context in which these events occurred, may have agreed with Comey, or may have decided that although negligent, Clinton’s conduct did not rise to gross negligence.

Why did the FBI recommend that no criminal charges be filed? 

Director Comey’s primary reason for not recommending criminal charges in this case appears to be the lack of precedent for criminal charges in similar cases in the past.  According to Director Comey, “[a]ll the cases prosecuted involved some combination of: clearly intentional and willful mishandling of classified information; or vast quantities of materials exposed…; or indications of disloyalty to the United States; or efforts to obstruct justice.” Whereas “in similar circumstances,” “individuals are often subject to security or administrative sanctions”

While the decision to prosecute is ultimately up to the prosecutor, what some may not realize is that in federal cases, the prosecutor’s decision to bring criminal charges is governed by the United States Attorney’s Manual. USAM 9-27.000, titled “Principles of Federal Prosecution” contains the DOJ’s written guidance to prosecutors about decisions to initiate or decline prosecution. Specifically, 9-27.220(A) instructs prosecutors to file criminal charges in all cases where there is a violation of federal law and the evidence is sufficient to obtain a conviction, unless one of three grounds exist:

  • Lack of a substantial federal interest;
  • The defendant is subject to prosecution in another jurisdiction; or
  • The existence of adequate non-criminal alternatives to prosecution.

In this case, both the first and third grounds are potential reasons that a federal prosecutor can rely on to justify not bringing any charges. 

The first ground, “substantial federal interest,” is a composite factor that weighs a number of considerations including federal law enforcement priorities, the nature and seriousness of the offense, the deterrent effect of prosecution, the personal characteristics of the individual, and the probable sentence upon conviction.  Nationally, the DOJ’s number one law enforcement priority is protecting U.S. citizens from national security threats.  See Memorandum re: Federal Prosecution Priorities. However, a prosecutor can potentially justify declining prosecution based on Hillary Clinton’s personal characteristics and the nature and seriousness of the offense.

The third ground, the existence of adequate non-criminal alternatives, appears to have been the one that Director Comey relied upon.  In this case, for example, Hillary Clinton could potentially face security and administrative sanctions such as revocation of her security clearance, and such a sanction may be “adequate” in light of past practice. (How such a sanction would work if Clinton is elected President, however, is a question we can’t answer). 

Concluding remark

The FBI’s investigation uncovered sufficient evidence for a reasonable jury to find that Hillary Clinton did violate the law. However, the federal government does not (and should not) bring criminal charges in every case. If Director Comey is right that individuals in similar circumstances in the past were only subjected to administrative sanctions, then its decision to recommend no prosecution in this case may be the right one. 

(ZZ & EG)

July 7, 2016 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (0)

Comey's Pronouncement and Lynch's Recusal Both Inappropriate

The declination to prosecute Hilary Clinton and the public announcement of that decision by FBI Director Comey, were, in my opinion, wholly proper.  When an investigation of a public figure receives widespread notice, it should be incumbent on the prosecuting agency to make public a decision not to prosecute.

However, the severe criticism of Ms. Clinton  by Director Comey was inappropriate.  I do not know enough to assess the accuracy or fairness of his report and do not challenge it.  However, the FBI (either acting, as here, as the surrogate prosecutor, or otherwise) should not, in the absence of sufficient evidence to recommend charges,  issue a public declaration of fault in any case, let alone one that affects a presidential election.  By his pronouncement, Comey, obviously knowingly, did so.  That he had no business doing.

The Department of Justice is also at fault.  Attorney General Lynch should never have agreed to meet with Bill Clinton, the husband of the target of a criminal investigation under her supervision, even if he were a past President and even just to exchange pleasantries.  I do understand how Attorney Lynch, a classy and courteous person, would have been reluctant to refuse to meet a past President, but propriety should have trumped gentility.   Worse, she never should have abdicated the responsibility of the Department of Justice  to determine whether to prosecute.  If she felt she were or appeared to be personally tainted by the meeting, she should at most have recused herself and left the decision to her deputies, not have turned it over to an investigating agency.

The American system of justice essentially places the responsibility of investigation on the investigators and the decision to prosecute based on the results of that investigation to the prosecutors.  Effective prosecution often involves an integration of and input from both agents and prosecutors, but the prosecutors still should be the sole and final deciders of whether to prosecute.  There is an inherent bias on the part of investigators, wanting a positive and public result of their work, in favor of arrest and prosecution.  The prosecutors, more knowledgeable about the law and the workings of the court system than the investigators, should act as  a buffer and, giving regard to the investigators, make the determination whether to prosecute.  That is an important check in the criminal justice system's checks and balances.  I hope this unusual situation does not serve as a precedent.

July 7, 2016 in Celebrities, Current Affairs, Government Reports, Investigations, Prosecutors | Permalink | Comments (0)

Wednesday, July 6, 2016

AG Loretta Lynch's Statement Contrasted With FBI Director Comey's Statement

Attorney General Loretta Lynch issued a statement today regarding the DOJ's decision to close the investigation without charges. (see here). It's 3 1/2 lines shows the proper way to handle a declination of prosecution.  It simply tells the individual and public that the investigation is over and that there will be no charges.

Unlike FBI Director Comey's comments it does not state opinions and hypotheticals.  Further, it does not carelessly accuse a person of conduct that they did not and will not have an opportunity to refute in a legal forum. One also has to give AG Lynch credit for removing herself from the decision-making function and leaving this matter to career prosecutors.  

From the perspective of process - Attorney General Loretta E. Lynch gets an "A" in my book.


July 6, 2016 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (0)

Tuesday, July 5, 2016

Comey's Statement on Hillary Clinton's Use of E-Mail

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.


July 5, 2016 in Government Reports, Investigations, News | Permalink | Comments (0)

Can a Breach of Contract Be the Basis for a Wire Fraud Conviction

An interesting case is pending in the 11th Circuit that considers whether a breach of a real estate contract can be the basis for a wire fraud conviction. The case involves a failure to disclosure a sinkhole when selling a residence.  There is a huge federalism question here that is magnified by the fact that Alabama "employ[s] the cannon of caveat emptor in real estate transactions." But the most interesting aspect of the case is the government's taking a civil action and using the wire fraud statute to prosecute the conduct.  I'll withhold further comment until after I have seen the government's brief - but I have to wonder if this is the case that the late-Justice Scalia was waiting for to limit the reach of the mail/wire fraud statutes.  

Appellant's Brief - Download Defendant-Appellant's Initial Brief


July 5, 2016 in Fraud, Prosecutions, Prosecutors | Permalink | Comments (0)

Friday, July 1, 2016

McDonnell Is Nothing New

Some folks have expressed critical views of the Supreme Court's opinion in the McDonnell case. But they are forgetting several important points:

  1. This was a unanimous decision by the Court.  There were no dissents.  There were no concurring opinions.  It was clearcut!
  2. This decision does not put a stop to prosecutions for bribery and extortion. Cases in which there is a receipt of money for official acts can still be prosecuted. (Evans v. United States).
  3. This decision does not create any new limit to the bribery/extortion statute.  It has always existed. (see United States v. Birdsall - a 1914 decision).

So what happened here?  The government tried to push the envelope further than permitted and they were caught.  This is no different than back in the 1980s when they tried to bring mail fraud cases based on intangible rights as opposed to property, a requirement of the statute.  The Supreme Court in 1987 issued the McNally decision to place the government on notice that developing a new theory that exceeded the language of the statute would not be permitted.

Bottom line - Congress writes the laws and government prosecutors need to stay within the language provided to them.


July 1, 2016 in Judicial Opinions, Prosecutors | Permalink | Comments (0)

Wednesday, June 29, 2016

Thoughts on the McDonnell Decision

I received the McDonnell decision with mixed feelings.  Initially, I was happy for my colleague Hank Asbill, one of the nation's top criminal defense attorneys, for a great victory.  Asbill and his co-counsel litigated this case the "old-fashioned way" - they fought it, and fought it, and then fought it.  Their tenacity, dedication and skill make me proud to be a defense lawyer.

Not having read the briefs of the parties, or of the amici, or heard the oral arguments, I am hesitant to criticize the opinion, especially an opinion by a brilliant chief justice for a unanimous court (I suspect due to  a compromise by potential dissenters, possibly to avoid an outright dismissal).  Indeed, the opinion makes a strong case that the decision was required by precedent.  However,  I do question several aspects of the opinion. First, I find questionable Justice Roberts' Talmudic crucial narrowing of the definition of "official act" by virtually eliminating the broad catch-all words "action" and "matter," largely by resort to the Latin word jurisprudence that is often an indication that the interpretation is on shaky ground. 

Second, while I am less troubled than the Court about the federal assumption of power to monitor the conduct of state officials for purportedly violating their offices,  there is something bothersome about federal officials by criminal prosecutions in effect setting ethical standards for state officials.  However,  as a practical matter it appears that with rare exceptions local prosecutors lack the will and/or the resources to prosecute high state officials.  In New York City, for instance, U. S. Attorney Preet Bharara has in recent years prosecuted about ten state legislators on corruption charges, while New York's five district attorneys combined have not prosecuted any. 

Third and most importantly, I am concerned by the decision's enablement of business-as-usual pay-to-play practices.   By narrowing the definition of "official act,  the Court has legalized (at least federally) the practice of paying a government  executive to set up a meeting with a responsible official.  By doing so, the Court has given such "soft" corruption a green light.  Under the opinion, a businessperson does not violate federal bribery law by paying a governor, mayor - or even the President -  tens of thousands of dollars to make a phone call to a purchasing official asking or directing her to meet with the businessperson.   And that call, however innocuous that actual conversation may sound, will have real consequences - otherwise, why would the businessperson pay for it?  Even absent a verbal suggestion that the executive wants the official to do business with the caller, the official cannot but  think that the executive would like that she do business with that person.  I imagine a New Yorker cartoon with a governor sitting at a phone booth with a sign saying, "Phone calls, official meetings. $10,000 each." 

To be sure, the law concerning bribery - not alone among federal statutes - vests too much power in the government.  At argument government counsel conceded (candidly but harmfully) that a campaign contribution or lunch to an official could constitute the quid in a quid pro quo.  That is frightening, but the problem is in  the quid, not in the quo - about which this case is concerned.  (I applaud Chief Justice Roberts statement in response to the standard "Trust me, I'm the government" argument that "We cannot condone a criminal statute on the assumption the government will use it responsibly.")   And, certainly, if this case were to apply to campaign contributions - and not, as in this case  personal  receipt of money and goods-in the words of the amicus brief of former White House counsel -  it would be "a breathtaking expansion of public corruption law."  Indeed, a distinction should be made between personal and campaign contributions.  But this case applied to the quo - what the governor did in exchange for $175,000 worth of goods and money.  And, in my view he took "action" as the governor on a "matter" by "official acts" -  hosting an event at the official mansion, making calls and arranging meetings. 

June 29, 2016 in Corruption, Current Affairs, Defense Counsel, Judicial Opinions, Prosecutions, Prosecutors | Permalink | Comments (2)

Tuesday, June 28, 2016

Bob McDonnell, Arthur Andersen and the Failure of District Court Gatekeeping

McDonnell v. United States and Arthur Andersen v. United States are remarkably similar Supreme Court reversals. In both cases, aggressive federal prosecutors pushed obviously dubious jury instructions on all-too-willing federal district judges.  In Arthur Andersen, Enron Task Force prosecutors convinced Judge Melinda Harmon to alter her initial jury charge, defining the term "corruptly." Judge Harmon's charge was right out of the form book, based on the approved Fifth Circuit Pattern Criminal Jury Instruction. The Government's definition allowed conviction if the jury found that Andersen knowingly impeded governmental fact-finding in advising Enron's employees to follow Enron's document retention policy. The 5th Circuit Pattern's requirement that the defendant must have acted "dishonestly" was deleted by Judge Harmon and the jury was allowed to convict based on impeding alone. Thus, at the government's insistenceknowingly impeding the fact-finding function replaced knowingly and dishonestly subverting or undermining the fact-finding function. This effectively gutted the scienter element in contravention of the standard Pattern definition. Local observers were not surprised by Judge Harman's ruling. Her responses to government requests are typically described as Pavlovian. Judge James Spencer, the trial judge in McDonnell, is also an old pro-government hand. Generally well regarded, he was a military judge and career federal prosecutor prior to ascending the judicial throne. In McDonnell, the government's proposed jury instructions regarding "official act" flew in the face of the Supreme Court's Sun Diamond dicta. They were  ridiculously expansive, with the potential to criminalize vast swaths of American political behavior. In both cases, Andersen and McDonnell, the Supreme Court unanimously reversed. In both cases, careful attention to the law, even-handedness, and a willingness to stand up to the government would have saved taxpayer dollars and prevented human suffering. Careful attention to the law, even-handedness, and a backbone. That's what we expect from an independent federal judiciary.


June 28, 2016 in Current Affairs, Enron, Fraud, Judicial Opinions, Statutes | Permalink | Comments (0)

Monday, June 27, 2016

Should Former Virginia Governor McDonnell's Case Be Retried?

The Supreme Court vacated and remanded the convictions from former Governor Robert McDonnell's case this morning in a unanimous decision, finding that "hosting an event, meeting with other officials, or speaking with interested parties is not, standing alone, a 'decision or action' within the meaning of section 201(a)(3), even if the event, meeting, or speech is related to a pending question or matter." (see here)  In vacating the conviction and remanding it back to the district court, the Supreme Court gives the lower court an option:

  1. It can find insufficient evidence under the Court's standard - then the charges get dismissed.
  2. If the lower court finds sufficient evidence under the Court's standard - then the case gets reset for trial for a new jury to properly evaluate this case.

But there really is a third option here. If the lower court decides that there is sufficient evidence for a trial (which there doesn't seem to be), then the government can step in and say - enough is enough and dismiss this case. In the Supreme Court's opinion, it states - "[W]e cannot construe a criminal statute on the assumption that the Government will 'use it responsibly.'"

This is an opportunity for the government to step in and accept the Court's decision and be responsible.  And the responsible thing to do here is dismiss!

There are many criminal acts occurring in society that warrant prosecution.  Companies are in need of computer laws being enforced.  Corruption is without doubt a problem and when someone takes money for doing a specific official act, then prosecution is needed.

But being a nice guy and listening to constituents, trying to promote their businesses, and sticking to one's campaign slogan - "Bob's for Jobs" - should not be crime.


June 27, 2016 in Judicial Opinions | Permalink | Comments (0)

Governor McDonnell's Conviction Vacated and Remanded- Analysis

It was the last decision issued by the US Supreme Court this term, and an important one for many.  The Supreme Court vacated and remanded former Virginia Governor Robert McDonnell's conviction (see here). It was a unanimous decision - a strong statement with which to end the Court's term.  The key issue was what constitutes an "official act" to meet the bribery statute.  The issue arose, as so many issues do, from the district court's giving of a jury instruction - 

Chief Justice Roberts issued the 28 page decision vacating and remanding the lower court's decision -

  • Setting up a meeting, hosting an event, or contacting officials - without more - is not an "official act".
  • The Court uses a straightforward statutory definition analysis to define what constitutes an "official act".
  • The precedent offered in Sun Diamond supports the Governor's arguments that "hosting an event, meeting with other officials, or speaking with interested parties is not, standing alone, a 'decision or action' within the meaning of section 201(a)(3), even if the event, meeting, or speech is related to a pending question or matter."
  • "[S]omething more is required: section 201(a)(3) specifies that the public official must make a decision or take an action on that question or matter or agree to do so."
  • "[A]n 'official act' is a decision or action on a 'question, matter, cause, suit, proceeding or controversy."
  • The government's "expansive interpretation" of what is an "official act" raises significant constitutional concerns.
  • "[W]e cannot construe a criminal statute on the assumption that the Government will "use it responsibly."
  • The Court notes three deficiencies in the district court's instructions from this case.
  • The Court sends it back to the district court to determine if there is sufficient evidence to meet the Supreme Court's definition of "official act" and if the district court finds that there is - a new trial should be held using this standard.

More commentary to follow on whether this case should be retried.  This case was tried by Hank Asbill (Jones Day).


See also Lyle Denniston, Scotus Blog here; David Debold (Scotusblog) here.

June 27, 2016 in Corruption, Judicial Opinions | Permalink | Comments (0)

Governor McDonnell's Conviction - Vacated and Remanded

See here.  Commentary to follow.


June 27, 2016 | Permalink | Comments (0)

Tuesday, June 21, 2016

Abramowitz Decries Effect of Corporate Prosecutions on Employees

Elkan Abramowitz, one of the best and most-respected white collar crime defense practitioners in the nation, last week received the Robert Louis Cohen Award for Professional Excellence from the New York Criminal Bar Association.   At the dinner at which he received the award, Mr. Abramowitz spoke thoughtfully about the pernicious effect of prosecutions of corporations, particularly on the rights corporate employees. 

The recent focus on perceived corporate wrongdoing, he said, "has seriously impeded the rights of individual employees caught up in the web of ... corporate investigations."  He pointed out that the "simple threat"of a corporate investigation has forced corporations "to conduct internal investigations upon any suspicion of wrongdoing" and, because corporations rarely, if ever, can risk going to trial, they will end up disclosing alleged criminality to the prosecutors to work out the best deal they can.   The results as to the corporations themselves are non-prosecution or deferred prosecution agreements "which typically give the prosecutors much more power over the corporation than [they] would have if the corporation were actually convicted of a crime in court."  The results as to corporate employees are at the insistence of prosecutors as a condition for a deal with the corporation that "the heads of individual employees be handed to them on a silver platter." 

Mr. Abramowitz made a distinction between investigations by prosecutors who "hopefully most of the time" investigate without bias toward a particular result and corporations which in an internal investigation "are incentivized to find out and expose criminality."   Thus, corporate employees are explicitly made to understand that if they refuse to testify they will be terminated and often told that their legal fees will not be paid if they chose to defend themselves."  And, since these individuals accordingly sometimes choose not to hire counsel and to talk to internal investigators, the information presented to prosecutors by corporations often provides "more ammunition" than an investigation conducted by the FBI, police or another federal agency.

The results are, Mr. Abramowitz said, cases against individuals "that might never have been brought without the corporation's coercion."   Thus, he believes, "Whatever social utility is believed to be served by this system,..this outsourcing of a purely governmental function is extremely dangerous and [causes] great injustices to individuals working in companies under investigation."

Mr. Abramowitz's observations of the systemic changes, most obviously the role of corporations and their special prosecutors (who, interestingly, he did not mention specifically) as quasi-prosecutors, are right on the mark.   And, he is quite correct that the prosecution of individuals coerced into giving up their rights to silence and to counsel in response to their employer's demands "flies in the face of the restraining values of our society as expressed in the Bill of Rights."  However, I suspect that most prosecutors and many others (including those liberals and others who like Bernie Sanders are still complaining that no individuals from the big institutions involved in the 2008 financial crisis were jailed) would not say that on balance the addition of corporations to those ferreting out financial crime is a negative one.  After all, that addition presumably has or will result in more indictments, convictions, and jail sentences of individuals who have committed financial crimes.  While I too bemoan the incursion into fundamental individual rights as a result of corporate prosecutions, I suspect Mr. Abramowitz and I are in the minority.


June 21, 2016 in Attorney Fees, Defense Counsel, Deferred Prosecution Agreements, Investigations, Prosecutions, Prosecutors | Permalink | Comments (0)

Monday, June 20, 2016

The RJR Nabisco v. European Community - What Does It Mean For White Collar Criminal RICO Cases

Yes, The Supreme Court's opinion here looks at whether RICO has extraterritorial application in the civil context. And in that regard it limits its extraterritorial application.  But there is some important language in this opinion for both civil and criminal practitioners, especially since much of RICO is premised on a criminal statute, and all of RICO is located in Title 18, the Criminal Code.

  1. There has been much confusion as to whether one should look at the predicate acts or the enterprise in determining extraterritoriality and the Court provides significant guidance here.
  2. In deciding RICO's extraterritorial application, the Court divides it into two issues: a) "do RICO's substantive prohibitions, contained in sec. 1962, apply to conduct, that occurs in foreign countries;" b) "does RICO's private cause of action, contained in sec 1964(c) apply to injuries that are suffered in foreign countries?"  It is this first issue that one needs to examine for criminal cases.
  3. The Court reaffirms in statutory construction the premise that there is "presumption against extraterritoriality."
  4. The Court describes the two-step process - "Morrison and Kiobel reflect a two-step framework for analyzing extraterritoriality issues. At the first step, we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially. We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction. If the statute is not extraterritorial, then at the second step we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute’s 'focus.' If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U. S. territory."
  5. The Court says to look first at the predicate act, asking - is it one that applies extraterritorially ("Although a number of RICO predicates have extraterritorial effect, many do not.")
  6. With respect to 1962 (b) and (c) the Court states, "[w]e therefore conclude that RICO applies to some foreign racketeering activity. A violation of sec. 1962 may be based on a pattern of racketeering that includes predicate offenses committed abroad, provided that each of those offenses violates a predicate statute that is itself extraterritorial." 
  7. With respect to 1962(a) the Court states, "arguably sec 1962(a) extends only to domestic uses of the income."
  8. In dicta, with respect to 1962(d), the conspiracy section, the Court states, "[w]e therefore decline to reach this issue, and assume without deciding that sec 1962(d)'s extraterritoriality tracks that of the provision underlying the alleged conspiracy."
  9. The Court is less focused on whether the enterprise element is domestically based.  But it does note that "[e]nterprises whose activities lack that anchor to U.S. commerce cannot sustain a RICO conviction."

The language in this case provides important guidance for criminal practitioners on the extraterritoriality of RICO, and clearly it provides strong arguments that not all of RICO applies abroad.


June 20, 2016 in Judicial Opinions, RICO | Permalink | Comments (0)

Supreme Court Limits Loose Hobbs Act Interstate Commerce Interpretation to Drug Cases

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.


June 20, 2016 in Judicial Opinions, News | Permalink | Comments (0)

Monday, June 13, 2016

Opinion Recognizes Mitigating Effect of Collateral Consequences on Sentencing

A few weeks ago, in United States v Nesbeth (15 CR-18, EDNY, May 24, 2016) Judge Frederic Block wrote an important opinion on the effect of post-conviction collateral consequences on one convicted of a felony, and as a result of such consequences imposed a one-year probation sentence on a woman convicted of importing cocaine.   He wrote that "sufficient attention has not been paid at sentencing by me and lawyers - both prosecutors and defense counsel - as well as by the Probation Department to the collateral consequences facing a convicted defendant."  He went on to a history of collateral consequences, efforts at reform, and the breadth of post-conviction statutory and regulatory collateral consequences.  He noted the "broad range of collateral consequences that serve no useful purpose other than to punish criminal defendants after they have completed their court-imposed sentences."

The opinion is a call for reform, for mitigation of sentences because of such additional punishment, and for increased awareness of collateral consequences by all participants in the sentencing process. Judge Block specifically called for probation officers "to assess and apprise the court, prior to sentencing, of the likely collateral consequences facing a convicted defendant."

Judge Block recognized an apparent Circuit split as to whether collateral consequences may be a mitigating factor in sentencing.  The Sixth, Seventh, Tenth and Eleventh Circuit seemingly have found that collateral consequences may not be considered, while the Second and Fourth Circuits appear to have found that they may.  I believe that under 18 USC 3553(a) they may, especially when atypical, be considered.

White-collar defendants obviously face not only the usual collateral consequences applicable to all convicted felons, but often also special ones such as loss of licenses or other professional bars.  I personally have had limited success in appealing to judges to mitigate sentences against white-collar defendants because of collateral consequences.  Many judges feel that that to consider those factors would favor the rich and well-educated over the poor and less-educated.  To be sure, as Judge Block's opinion demonstrates, the poor and less-educated too suffer from such collateral consequences. 

Defense lawyers should, as Judge Block writes, be aware of such consequences in order to set them forth as mitigating factors at sentencing.   Such knowledge is also necessary to inform defendants of these consequences so that they may make an educated decision whether to plead guilty.  As indicated by the flurry of defendants who have claimed they were unaware that their guilty pleas would subject them to deportation, lawyers historically may not have focused on collateral consequences.




June 13, 2016 in Defense Counsel, Judicial Opinions, Prosecutors, Sentencing | Permalink | Comments (0)

The Baylor Findings of Fact: All Too Transparent.

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.





June 13, 2016 in Current Affairs, Investigations, News | Permalink | Comments (0)

Thursday, May 26, 2016

Stanley Sacks: Still Going Strong!

Happy Birthday to the dean of the Norfolk, Virginia criminal defense bar, Stanley Sacks. Still going strong at 94 and still going to work every day.  

Stanley Sacks

May 26, 2016 | Permalink | Comments (0)

Foster Decision Raises Question Whether Batson is Workable

The Supreme Court this week in Foster v. Chatman  (14-8349, decided May 23,2016) reversed a Georgia murder conviction because the prosecutors violated the requirement of Batson v. Kentucky, 476 U.S. 79 (1986) that lawyers not use race-based peremptory challenges to remove jurors.   The Court, in an exquisitely detailed factual analysis by Chief Justice Roberts, dissected the prosecutors' purported reasons for challenging two prospective African-American jurors and found them disingenuous. 

In a Slate article, my friend and colleague, the prolific and invaluable Prof. Bennett Gershman ("How Prosecutors Get Rid of Black Jurors," May 26,2016) writes that, notwithstanding Batson and now Foster, prosecutors will continue to "remove black persons from jury service with impunity simply by concocting purportedly race-neutral reasons."  He points out that the Foster reversal occurred only because of the random discovery of the prosecutors' file containing telltale notations and comments about their intentions to strike black jurors.

I agree with Prof. Gershman.  Prosecutors will continue to use race as a basis, sometimes the predominant or even only basis, in their determinations which jurors to challenge.  And, so will defense lawyers.  Given the limited knowledge lawyers have about the predelictions and potential biases of jurors, especially in jurisdictions which prohibit or severely limit lawyer questioning of jurors. a juror's's race is perceived by trial lawyers, reasonably I believe (although not to my knowledge based on any scientific proof), as an indication of how he will vote in the jury room, just as how he will vote in the voting booth. 

As Prof. Gershman states with respect to prosecutors (generally applicable also to defense lawyers), "Prosecutors have long believed that striking black jurors improves their chances of convicting a black defendant.  Prosecutors assume that black people are more likely than white people to have negative feelings about government, to have had bad experiences with the police, are more likely to have been targeted for arrests and forcible stops than white people, are more likely to have been imprisoned for minor drug crimes, and are more likely to believe that crimes against black victims are prosecuted less aggressively than crimes against whites."  Thus, generally, prosecutors (and defense lawyers) believe that, all other things being equal, black jurors are more likely to acquit black defendants than other jurors.  (I am not aware of any empirical studies of how race affects jury decisions.  Empirical studies of jury verdicts are, it seems, far fewer than analyses of voting decisions.)

Accordingly, prosecutors and defense lawyers, both seeking to win (and believing that jury composition is a major factor as to whether they will), and therefore  desiring jurors likely to favor their clients, consider race in their jury selection decisions and, when challenged (as are prosecutors more often than defense lawyers) employ less than candid justifications for their choices.  And, since judges are hesitant to call lawyers, especially prosecutors, liars, the lawyers' justifications, if at all plausible, are almost always accepted.  Compliance with Batson's dictates therefore is essentially,  as Prof. Gershman states, "a charade,"  commonly violated by prosecutors (and also by defense lawyers). 

To be sure, there are some differences between race-based challenges by prosecutors and by  defense lawyers.  Prosecutors' race-based challenges more often are exercised  in order to deprive a defendant from a cross-section of the community and a jury including some of his peers; defense lawyers' race-based challenges are more often designed to reach those goals.  Prosecutors' race-based challenges more often deprive black citizens of the right to serve on juries; defense lawyers' challenges enhance that (but diminish the right of whites and others to serve).  Additionally, to discriminate - which is what challenging a juror based on race is - is presumably more invidious if done by an agent of the state than a private citizen.  But race-based challenges by either side are common, and violate the constitutional principles of Batson

Batson, therefore, simply does not work.  Both sides commonly violate its principles to achieve their own goals.  It may be considered a noble experiment with a lofty goal that has failed, or perhaps an example of a short-sighted Supreme Court just not realizing how things are done down in the pits.  What can or should be done?  I am sure many trial lawyers, both criminal and civil, prosecutor or defense counsel, would prefer it be eliminated.   Prof. Gershman mentions a proposal to limit peremptory challenges to situations where attorneys give a "credible reason" for their exercise, what I call a challenge for "semi-cause."  Another proposal he mentions is to track carefully all prosecutorial challenges similar to the way police stops are tracked.  An obvious way is to eliminate all peremptory challenges, as Justice Marshall had suggested in Batson.  And, of course, professional sanctions against lawyers who violate Batson might help enforce its dictates.  (However,  the history of lack of sanctions against prosecutors for other areas of prosecutorial misconduct suggests increased sanctions would have little effect).   Lastly, more lengthy voir dire of jury panels, especially if by lawyers and not judges, would provide the litigants with a greater basis to exercise challenges than racial generalizations.

As Prof. Gershman says, "[Batson] diminishes the integrity of the criminal justice system."   The decision in Foster is unlikely to solve that problem.

May 26, 2016 in Legal Ethics, Prosecutions | Permalink | Comments (0)

Post Luis Blues

In Luis v. United States, the Supreme Court held that pretrial restraint of untainted assets needed by a criminal defendant to retain counsel of choice violates the Sixth Amendment. But what about pretrial restraint of untainted assets not needed to hire counsel? The Fourth Circuit, alone among federal circuits, permits pretrial restraint of untainted substitute assets, subject to Sixth Amendment concerns. In United States v. Chamberlain, in the Eastern District of North Carolina, the government moved for a post-indictment pretrial restraining order against the defendant's untainted substitute asset pursuant to 21 U.S.C. Section 853(e). Both the defendant and government agreed that the untainted asset in question, a parcel of land, was not needed by Chamberlain in order to secure criminal defense counsel. The defendant opposed the government's motion, arguing that Justice Breyer's language/analysis in Section II.B.1. of Luis foreclosed pretrial restraint of any substitute asset under Section 853, in effect overruling Fourth Circuit precedent. The government maintained that Luis was inapplicable since Chamberlain raised no Sixth Amendment issue. Judge Mack Howard sided with the government. "While the undersigned agrees that the Supreme Court may in fact interpret Section 853 in this way in the future, it has not yet ruled on this issue and has not upset applicable Fourth Circuit precedents governing the instant question presented before this court." Steve West was on the briefs for the government and Elliot Abrams (Cheshire Parker Schneider & Bryan) and Tommy Manning (Manning Law Firm) were on the briefs for Chamberlain. According to Abrams, this all matters at a practical level for the criminal defense bar:

Consider the facts of Luis.  There the government established probable cause to believe that the defendant obtained more in illegal proceeds than she currently possesses. 


Under Luis, she can use her innocent/substitute assets to pay her attorneys a reasonable fee.  But under Billman and its progeny the relation-back doctrine of 853(c) applies to all of those innocent/substitute assets such that, if she is convicted, the government’s ownership interest in all of her assets will be deemed to have vested before she paid her attorneys.


Therefore, if she is convicted, the government can forfeit all funds paid for legal services, despite that a court authorized those payments under the Sixth Amendment. 


Section 853(n) does not help because the lawyer’s right vested after the property became forfeitable and because the lawyer had reason to believe that the property was subject to forfeiture.  And since forfeiture is mandatory, the court could not exempt those funds from forfeiture. 


This would create the same Sixth Amendment problem that Luis solved—people being unable to use their innocent assets to hire counsel.  It would also force lawyers to take such cases on contingency, which is ethically improper.


Here are the government and defense briefs and Judge Howard's opinion.  U.S. v. Chamberlain - Gov Application Restraining Order,  U.S. v. Chamberlain - Response in Opposition to Gov Motion for Restraining Order,  U.S. v. Chamberlain-Government's Reply Memorandum,  U.S. v. Chamberlain-Defendant's Sur-ReplyU.S. v. Chamberlain-Order Granting Government's Motion.

Judge Howard's Order is being appealed to the Fourth Circuit.


May 26, 2016 in Forfeiture, Judicial Opinions | Permalink | Comments (0)

Thursday, May 19, 2016

Speedy Trial Clause Does Not Encompass Sentencing Delay

This just in from the Supreme Court. The Sixth Amendment's Speedy Trial Clause does not apply to the time between conviction, via trial or guilty plea, and sentencing. Justice Ginsburg wrote the unanimous opinion. The Court noted that petitioner did not base his claim on the Due Process Clause and refused to speak to the issue of whether excessive delay between conviction and sentencing might run afoul of Due Process. The Court reserved the question of whether the Speedy Trial Clause may apply in the case of bifurcated procedures, in which facts that could enhance the prescribed sentencing range are determined during the sentencing phase. The Court also left open whether the Speedy Trial right reattaches upon renewed prosecution of a convicted defendant who has prevailed on appeal. Justice Sotomayor wrote a separate concurrence stating that "in the appropriate case" she would consider applying the Barker v. Wingo test to determine whether delay between conviction and sentencing ran afoul of Due Process. Justice Thomas, joined by Justice Alito, wrote separately to say that the Court should not prejudge the Due Process question, but should wait for a proper presentation, argument, and full briefing "before taking a position on this issue." The case is Betterman v. Montana.


May 19, 2016 | Permalink | Comments (0)