Monday, March 21, 2016

New Paper re Internal Investigations and Privilege

I have just published a new article in the Compliance Elliance Journal entitled "Internal Investigations and the Evolving Fate of Privilege."  

Abstract

In 1981, the United States Supreme Court delivered a landmark ruling in Upjohn Co. v. United States. The decision made clear that the protections afforded by the attorney-client privilege apply to internal corporate investigations. This piece examines the fundamental tenets of Upjohn, discusses some recent challenges to the applicability of privilege to materials gathered during internal investigations, and considers the manner in which the international nature of modern internal investigations adds complexity and uncertainty to the field.

The article is available for free download here

(LED)

March 21, 2016 in International, Investigations, Privileges, Scholarship | Permalink | Comments (0)

Friday, March 18, 2016

Two Defense Victories: M.D. Florida and E.D. Virginia

We note two recent victories in federal white collar jury trials, one by a seasoned hand and another by an up and coming star. In U.S. v. Kallini, Dr. Adel Kallini, a former anesthesiologist and now pain management physician practicing in Broward County, Florida, was indicted in the Middle District of Florida, Tampa Division.  Dr. Kallini was charged with one count of conspiracy to commit health care fraud and wire fraud, as well as one count of falsification of records in a federal investigation.  The Government also sought forfeiture of over $1MM. 

Dr. Kallina was defended by longtime NACDL Board Member Brian Bieber of Gray Robinson, and his associate Alex Strassman. According to Bieber:

Our sole defense at trial was good faith reliance upon the advice of counsel.  In June, 2013, Dr. Kallini’s tax attorney presented him with a business “deal”, proposed to the attorney by two people who claimed to be legitimately involved in the health care field.  (Unbeknownst to Dr. Kallini and his lawyer, the two were involved in health care fraud for the past three years which included, but was not limited to, paying kickbacks to patients and doctors in South Florida).  The “deal” presented to Dr. Kallini, through his lawyer, essentially required Dr. Kallini to “rent” out his Medicare provider number for (what he was told) the billing of legitimate services provided to patients by other physicians who, for one reason or another, could not bill Medicare for the services provided.  From the payments, Dr. Kallini was to receive 25%, his lawyer 10%, and the two others 65%.  Dr. Kallini’s lawyer prepared a written agreement/contract reflecting the above.

Dr. Kallini has been practicing medicine since 1971 and had a Medicare provider number since 1973.  Having never previously done anything of this nature, he asked his lawyer point blank: “Is this legal?”  His lawyer told him it was.  Dr. Kallini signed the agreement/contract.

On cross examination, the Government’s expert witness was forced to concede the critical differences between intentional fraud and unintentional "abuse" of the Medicare payment system. The expert also acknowledged that if the defense's factual theory of the case was correct, Dr. Kallini's conduct could fall into the non-criminal category. Bieber's cross examination of the expert on this point was greatly aided by Strassman's discovery on the internet of a six year old Power Point presentation prepared by the expert in which he taught a group of Government investigators the differences between the intentional defrauding of Medicare and the “unintentional abuse” of the payment system. Dr. Kallini was the sole defense witness. 

In U.S. v. Upchurch, et al.,  in the EDVA (Alexandria Division), Eugene Gorokhov of Washington DC's Burnham & Gorokhov, assisted by Ziran Zhang, represented defendant Matthew Jones. According to Gorokhov:

A group of young adults, to include my client, went to a Six Flags amusement park on a Saturday in the Summer of 2015.  On the day they were there, numerous people at Six Flags had their belongings stolen, to include bags containing wallets and credit cards.  Later surveillance videos showed that several individuals in my client’s group used the stolen credit cards at nearby stores on the same days.  My client, however, was not in any of the videos. 

Despite the apparent lack of evidence against my client, the Government still charged him, along with the others, with conspiracy to commit wire fraud and access device fraud.  As to my client, the only evidence of his involvement was: (1) the appearance of his home address on a fraudulent credit card application, made in the name of a victim who had her belongings stolen from the park; (2) the use of the fraudulently obtained card to pay a phone bill under his name.  Multiple people lived at my client’s home address.  After indictment, phone records showed that his phone account had two phone numbers, and other evidence the investigator had showed that one of these numbers was used by another resident of his house, giving that person incentive to pay the phone.

The Government investigator, during the course of his investigation: (1) did not interview any of the other residents living at my client’s home address, despite knowing that more than one person lived at my client’s address; (2) overlooked the fact that the fraudulent credit card application listed an email address associated with one of the other residents at my client’s address (and admitted that he overlooked it at trial); (3) did not subpoena any of ATM surveillance videos associated with several fraudulent ATM transactions on the credit card, and those videos were ultimately erased in accordance with the bank's retention policy; and (4) did not obtain recorded phone calls between the credit card company and the individual who made the fraudulent card application, even though there were about a dozen such calls.  Those calls surfaced 24 hours before trial and were, for unknown reasons, not previously produced by the bank.  Those calls showed that it was someone else, and not my client, attempting to activate the fraudulent card.

During deliberations, the jurors came back with a question that asked, in essence, whether they could find a defendant guilty based only on his knowledge of a crime, and his presence at the scene.  The defense asked Judge Brinkema for a "mere presence" instruction, which she gave.  Thirty minutes later, the jury came back with a verdict of not guilty with respect to Eugene's client. 

Congratulations to Bieber and Gorokhov and their respective teams. And if you have a federal white collar jury trial victory to report do not hesitate to let me know. We'll do our best to publish it and discuss its significance here.

(wisenberg)

 

March 18, 2016 in Fraud, Verdict | Permalink | Comments (0)

Wednesday, March 16, 2016

On the Nomination of Merrick Garland as the Replacement for Antonin Scalia

By now, every reader knows that President Obama has appointed D.C. Circuit Chief Judge Merrick Garland to the Supreme Court.   On the merits, Garland appears to be a sterling appointment with impressive credentials and moderately liberal views on most issues and moderately pro-government views on criminal issues, positions that approximate those of the President.   As a political matter, he, of the named contenders for the Supreme Court, is the one most likely to overcome the Republicans' stated refusal to approve any nominee until the next President is in office.  I predict that Garland will be confirmed, but not until 2017, in the first term of President Hilary Clinton.

Garland, I also predict, will be a middle-of-the-road justice on criminal justice issues and generally pro-government on white-collar crime issues,  somewhat like Justice Elena Kagan.   He will, at least on white-collar issues, be far less pro-defense than his predecessor, Justice Antonin Scalia.   Scalia, although painted by liberals as an arch-conservative (as indeed he was on some social issues, like abortion and same-sex marriages) had pro-defense views on many issues, such as the right to confront witnesses, the right to trial by jury, and overcriminalization.   Not only did he often vote in favor of the defendant, he sometimes authored opinions with  innovative interpretations that became established law.  

At a bar  affair at which I was introduced to Justice Scalia as the president of the National Association of Criminal Defense Lawyers, he said, absolutely deadpan, "Why don't you guys give me an award?  I'm the best justice you have."   The NACDL never did, nor was it to my knowledge ever seriously considered, no doubt because of his overall conservative reputation and record.  It may to some seem far-fetched, but I would not be surprised if a few years ago from now, white-collar defense lawyers will be lamenting the loss of Justice Scalia.

March 16, 2016 in Current Affairs, Defense Counsel | Permalink | Comments (0)

Monday, March 14, 2016

Judge Uses ABA CJS "Shadow Guidelines" To Sentence CEO

In November 2014, the American Bar Association Criminal Justice Section Task Force on the Reform of Federal Sentencing for Economic Crimes published its final report.  The report recommended major changes to the structure of the Federal Sentencing Guidelines for economic crimes.  In particular, the report sought to reduce the current Guideline's dominant focus on loss in favor of a more balanced approach that weighed loss, culpability, and victim impact.  I discussed these proposed amendments more fully here.  Though the ABA CJS Task Force recommendations were not adopted by the Federal Sentencing Commission (see here and here), some courts have begun to use the ABA "Shadow Guidelines" when varying in economic crimes cases.  

Last week, a federal judge in New York used the ABA "Shadow Guidelines" in sentencing Mair Faibish, former CEO of Synergy Brands, Inc.  Faibish was accused of kiting checks worth in excess of $1 billion.  According to the DOJ press release in the case:

Synergy was a publicly-held food products company that traded on the NASDAQ and Over-the-Counter exchanges and manufactured and distributed various food products. As proven at trial, Faibish and his co-conspirators, on behalf of Synergy, funneled approximately $1.3 billion in checks that were not backed by sufficient funds through Signature Bank, Capital One Bank, and various Canadian bank accounts of associated food manufacturers and distributors in Canada. The Canadian companies then sent checks in corresponding amounts, which were also not backed by sufficient funds, back to Faibish-controlled shell companies. Because the banks made deposited funds immediately available for withdrawal, the scheme artificially inflated the companies’ account balances. Faibish and his co-conspirators used Synergy’s inflated bank account balances to book millions of dollars in fictitious accounts receivable and revenue.

As a result of this fraud, FDIC-insured Signature Bank lost approximately $26 million that Faibish and his co-conspirators had withdrawn before the bank uncovered the scheme. Following the scheme’s collapse, Synergy was taken into bankruptcy, and its publicly traded stock became essentially worthless, causing millions of dollars in investor losses. On November 4, 2014, the Court ordered Faibish to pay $51,166,000 in forfeiture.

The trial evidence also established that Faibish falsely inflated the values of Synergy’s sales, cost of goods sold, and pre-paid expenses in filings with the SEC for the quarter ending June 30, 2008. These material misrepresentations were breaches of the defendant’s fiduciary duties to investors.

The Federal Sentencing Guideline range in the case was life in prison, though the maximum available sentence was actually less due to applicable statutory maximums.  Despite the Federal Sentencing Guideline range and the government's request for decades in prison for Faibish, the Court rejected these arguments and sentenced him to 63 months in prison (see here and here).  According to LAW360, the judge stated at sentencing that the Federal Sentencing Guidelines for economic crimes are "almost useless" because of their reliance and focus on loss in calculating the applicable sentencing range.  Instead, the judge used the ABA "Shadow Guidelines" to determine what he considered to be a more appropriate sentence. 

This seems to be yet another indication of the growing dissatisfaction among judges with the Federal Sentencing Guidelines for economic offenses (see here and here) and should serve as yet another call for the Federal Sentencing Commission to consider more significant reforms in the future. 

(LED)

March 14, 2016 in Fraud, Prosecutions, Sentencing | Permalink | Comments (0)

Monday, March 7, 2016

Bulger Appeals Court Upholds Denial of Right to Argue Immunity Before Jury

What do Bill Cosby and Whitey Bulger have in common?  Both have lost challenges to criminal accusations based on the claim that their prosecutions were barred because they received oral, informal grants of immunity from prosecutors.

Last week, the First Circuit denied the appeal of Joseph (Whitey) Bulger, the notorious Boston mobster who was on the lam for 17 years until his 2011 arrest in California.  Bulger was convicted after trial in 2013 for racketeering for participating in eleven murders and other crimes, and was sentenced to two life sentences plus five years.  He is now 86.

Bulger's primary claim on appeal was that he was denied his constitutional rights to testify and to present an effective defense by the refusal of the trial judge to allow him to testify before the jury that he was granted immunity for both past and future crimes by a now-deceased high-ranking DOJ prosecutor.   Interestingly, Bulger claimed that that the purported immunity grant was not in exchange, as one might suppose, for his providing information to or testifying for the prosecutor, but for his protecting the prosecutor's life.  He insisted, contrary to widely-accepted reports, that he was not an informant.

The Court of Appeals upheld the district court's rulings that whether the prosecution was barred because of immunity was to be determined prior to trial by the judge, and  not by  the jury, and thus Burger could not present to the jury testimony about the purported immunity promise .  Although the appeals court ruled that Burger had waived consideration of the issue on the merits by his failure to present the trial judge with any evidence, but only with a "broad, bald assertion from defense counsel lacking any particularized details," it reviewed the judge's merits determination on a "plain error" standard, and found that the judge was not "clearly wrong" in deciding  that Bulger had failed to demonstrate either that the promise had been made, or, that if it had been made, that the promising prosecutor had authority to make it..

The government described Bulger's claim that the prosecutor promised him immunity "frivolous and absurd."  What did give Bulger's contention an infinitesimally slight possibility of credibility, however, was that there was a demonstrated history (although not presented at the trial) that the Boston FBI had for years ignored Bulger's criminal acts when he served as an informant for them.

To be sure, the similarities between the Cosby and Bulger situations are limited.  In the Cosby case the then District Attorney, the prosecutor who, if anyone, had authority to grant immunity, testified that he did promise not to prosecute Cosby.  Here, there was no corroboration whatsoever of the purported promise by a now-dead prosecutor, and the Department of Justice strongly contended that even had such a promise been made, the prosecutor had no authority to make it.  However, the decision, made by a respected appellate court (although under a different set of procedural rules and no binding or other authority over a Pennsylvania state trial court) does squarely hold that whether a prosecutor has granted immunity is not a jury question.  And, should Cosby try to re-litigate the immunity issue before his jury, the decision will likely be cited by the District Attorney.

March 7, 2016 in Celebrities, Current Affairs, Judicial Opinions, News, Prosecutions, Prosecutors | Permalink | Comments (0)

What Every Federal Prosecutor (and Every Federal Criminal Defense Attorney) in Texas Should Know

    The McDade Act, 28 U.S.C. § 530B, enforces "[e]thical standards for attorneys for the Government." Passed by Congress in 1999, the Act provides that "[a]n attorney for the Government shall be subject to State laws and rules, and local Federal court rules, governing attorneys in each State where such attorney engages in that attorney’s duties, to the same extent and in the same manner as other attorneys in that State." In other words, the Act requires every federal prosecutor to adhere to the ethical rules of the state in which he or she serves as an AUSA.

    Texas Disciplinary Rule of Professional Conduct 3.09(d) requires a prosecutor to:

make timely disclosure to the defense of all evidence or information known to the prosecutor that tends to negate the guilt of the accused or mitigates the offense, and, in connection with sentencing, disclose to the defense and the tribunal all unprivileged mitigating information known to the prosecutor, except when the prosecutor is relieved of this responsibility by a protective order of the tribunal.

    Rule 3.04(a) requires, among other things, that "a lawyer shall not obstruct another party's access to evidence."

    In a highly significant ethics opinion, signed and delivered on December 17, 2015, the Texas Board of Disciplinary Appeals ("BODA") ruled that Rule 3.09(d) does not contain the Brady v. Maryland materiality element, or any de minimus exception to the prosecutor's duty to disclose exculpatory information in a timely manner. BODA also held that Rule 3.09(d) applies in the context of guilty pleas as well as trials. In other words, the prosecutor cannot negotiate a guilty plea without beforehand disclosing exculpatory information to the defense.

    The case decided by BODA is Schultz v. Commission for Lawyer Discipline. William Schultz was the Assistant District Attorney in Denton County. He prosecuted Silvano Uriostegui for assaulting Maria Uriostegui, his estranged wife. Maria testified at a protective order hearing that Silvano was her attacker. Schultz never disclosed to the defense that Maria could only identify Silvano by his smell, boot impression, and stature "as seen in the shadow," as it was dark at the time and Maria could not see her attacker's face. Schultz learned this information from Maria one month prior to the trial date. Silvano entered a guilty plea. At the sentencing hearing, Maria testified "that she did not see her attacker's face and that she did not know whether her attacker was Silvano. Maria also testified that she had told the prosecutor earlier that she did not see who attacked her." (With respect to the protective order hearing, Maria "explained that she had testified...that Silvano was her attacker because she had assumed it was him from his smell and boot.")

    The testimony at the sentencing hearing was the first time defense counsel Victor Amador learned of the exculpatory information, despite having filed broad pre-trial requests for exculpatory evidence. Amador moved for a mistrial which was granted by the trial court. Amador next filed an application for writ of habeas corpus. The trial court granted habeas relief, allowing Silvano to withdraw his guilty plea. The court also ruled that double jeopardy had attached.

    Amador filed a grievance against Schultz with the State Bar, which was the basis of the disciplinary proceeding. Schultz contended that the information in question was neither exculpatory or material. The Commission for Lawyer Discipline disagreed, as did BODA. BODA based its holding primarily on the plain language of Rule 3.09(d) and on commentary to the Rule and to the ABA Model Rule on which Rule 3.09(d) is based. BODA also held that Schultz's failure to disclose the exculpatory information constituted obstruction of another party's access to evidence under Rule 3.04(a). Schultz received a six month fully probated suspension.

    The only Texas attorney disciplinary authority higher than BODA is The Supreme Court of Texas. Schultz did not appeal BODA's decision to The Supreme Court of Texas. Thus BODA's decision in Schultz is now the governing ethical interpretation of Rule 3.09(d) in Texas. Ergo, under the McDade Act, it now appears that both state and federal prosecutors litigating in Texas are under an ethical duty to timely disclose to the defense all evidence or information "that tends to negate the guilt of the accused or mitigates the offense," irrespective of its materiality. The disclosure must be made prior to any guilty plea.

    The defense bar owes a great debt of gratitude to defense attorney Victor Amador, the Committee for Lawyer Discipline of the State Bar, and BODA. It should also be noted that many other jurisdictions have rules containing similar or identical wording to 3.09(d). There is much more work to be done. Hat Tip to Cynthia Orr of Goldstein, Goldstein & Hilley for bringing this opinion to our attention.

(wisenberg)

 

March 7, 2016 in Legal Ethics, Prosecutions, Prosecutors | Permalink | Comments (0)

Friday, March 4, 2016

2016 ABA White Collar Crime Conference - A Few More Highlights

There was an incredible presentation on implicit bias, moderated by Hon. Bernice B. Donald, who chairs the ABA Criminal Justice Section.  This was a real highlight of the program and the audience was glued to the screen for a short video of images.  The discussion that followed was truly enlightening.  Also hats off to the Hon. Mark W. Bennett, who comes off the bench to shake the hand of the defendant in order to explain the presumption of innocence.

One panel, moderated by Morris "Sandy" Weinberg, looked at the The Future of White Collar Criminal Law. The incredible array of panelists discussing the past and future were: Robert B. Fiske, Jr., Gary Naftalis, Dan Webb, Robert Bennett, John Keker, Larry Thompson, Karen Seymour, Leslie Caldwell.

There was another panel titled: Women in the Courtroom: A View from the Jury Box. Moderated by Hon. Patricia Brown Holmes, a retired associate judge in the Circuit Court of Cook County and a partner at Schiff Hardin LLP (Chicago), the panelists continued the discussion from earlier in the program on implicit bias. Joan McPhee, a partner at Ropes & Gray LLP asked the question, “[d]oes gender matter in the courtroom?”

This panel started by saying that there was no real studies, so the panelists decided to do their own research and study.
Dr. Ellen Brickman, Director in the Jury Consulting practice at DOAR Inc., a litigation consulting firm in New York, explained how the juror study was conducted. Ms. McPhee then explained the survey of attorneys and Laura C. Marshall, a partner at Hunton & Williams LLP, described comments received from the surveys.

Bottom line - Women jurors had a stronger preference for women attorneys.

There was discussion of the importance of being careful of distractions and to watch speech patterns in front of jurors. This was in addition to a discussion of who to select on the jury. It was noted that the government tends to have more women on their teams and some of the panelists looked at the challenges of getting more women on trial teams. Although Dr. Ellen Brickman noted that having women on teams as tokens can work negatively. There was also a discussion on the role of emotion and how anger plays out in the courtroom.

I can't wait to read this study.

(esp)

 

 

 

March 4, 2016 in Conferences, Prosecutions | Permalink | Comments (0)

Brady Appeal Focuses on Destruction of Evidence

   New England Patriot quarterback Tom Brady did not get the reception he wanted at the oral argument of the appeal of the National Football League (NFL) of a district court decision overturning his four-game suspension in the so-called Deflategate case.  Brady has been accused of conspiring with Patriot employees to deflate footballs so that they were easier for him to throw in a game in cold weather.  The appellate court spent a considerable amount of time questioning Brady's counsel about Brady's destruction of his cellphone shortly before he was to appear before NFL investigator Ted Wells.

   In my view the evidence concerning whether the footballs were deflated was equivocal and, even if they were deflated, the evidence that Brady was knowingly involved was largely speculative, and in total, absent an inference of wrongdoing from the unjustified destruction of evidence, probably not sufficient to meet even the minimal 51-49 "more probable than not" standard used in the NFL and most other arbitrations.  Evidence of the suspiciously timed destruction of the cellphone, and the lack of a convincing justification for it, however, for me pushes the ball over the 50-yard line and may be the linchpin of an appellate decision upholding the suspension.  As Judge Barrington Parker stated at oral argument, "The cellphone issue raised the stakes.  Took it from air in a football to compromising a procedure that the commissioner convened."  He asked Brady's counsel,"Why couldn't an adjudicator take an inference from destroying a cellphone?," then stated that Brady's explanation - that he regularly destroyed cellphones for privacy reasons - "made no sense whatsoever." 

   Courts are understandably especially sensitive (sometimes too sensitive and too punitive, in my view) to acts like perjury or destruction of evidence which obstruct investigations or prosecutions.  Our justice system relies, at least theoretically, on the basic (although somewhat erroneous) principle that, at least generally, witnesses will not violate the oath to tell the truth.   It is therefore no great surprise that the court focussed on Brady's destruction of evidence and his purportedly lying about it.  Indeed, Judge Parker appeared to accept that even if Brady had not been involved in tampering with the footballs, his destruction of evidence would justify Goodell's decision.  "Let's suppose a mistake was made and the footballs weren't deflated, and then a star player lies in his testimony and destroyed his phone.  An adjudicator might conclude the phone had incriminating evidence.  Why couldn't the commissioner suspend Brady for that conduct alone?" 

   Of course, it would be rather perverse if Brady's suspension were upheld when in fact he had actually not been involved in deflating footballs and  had destroyed his cellphone as an excuse for not producing it and lied about it for reasons unrelated to the deflating issue, such as that the phone contained wholly unrelated embarrassing information or that he possesses an Apple-like principled view of privacy rights.   It calls to mind Martha Stewart, who was convicted and jailed  for lying to federal agents and prosecutors in a proffer session even though the underlying insider trading allegation about which she was questioned, was not prosecuted.  On the other hand, it would not be perverse if in fact the destroyed cellphone did contain incriminating conversations.

   Sometimes a client under investigation asks his lawyer what the client should do with incriminating evidence he possesses.  As much as the lawyer in his heart may want the evidence to disappear, he cannot ethically or legally advise the client to conceal the evidence.  (The specific advice will vary depending on the facts and circumstances.)  The lawyer should frankly explain his ethical and legal obligations.  However, generally the client doesn't give a hoot about them.  The lawyer should  explain that destruction, tampering and concealment of evidence, if discovered by the prosecutor, will undoubtedly eliminate the possibility of non-prosecution, lessen the possibility of a favorable plea deal, strengthen the prosecution's case at trial, and, if there is a conviction, undoubtedly cause a more severe sentence.  Just as lawyers sometimes invoke the Stewart case to caution about the danger of voluntary interviews with prosecutors, so might they invoke the Brady case to caution about the danger of destruction of evidence.

 

 

 

The Brady case highlights the danger of destruction of evidence and lying to investigators.

March 4, 2016 in Celebrities, Current Affairs, Defense Counsel, Martha Stewart, News, Obstruction, Perjury, Prosecutors | Permalink | Comments (0)

Thursday, March 3, 2016

2016 ABA White Collar Crime Conference - DAG Sally Q. Yates

Deputy Attorney General Sally Yates was the luncheon speaker at the ABA White Collar Crime Conference. It was a Q and A format, and as one might suspect, the Yates Memo was a key topic - although she preferred not to call it the Yates Memo.

She started by saying that as long as a company acts in good faith, they can still get cooperation credit even if they can't designate a particular culprit.  She stated that they are not requesting a waiver of privilege. She said, "we want the facts." As a matter of fact, she said this several times in answer to questions asked.

She was unable to say whether companies were not disclosing because of this new policy. But she did say that a company would get more credit if they voluntarily disclosed than if there was an investigation and they then disclosed.  She noted that its a question of how quickly you cooperate.  She also spoke about the civil side of investigations - again with an eye toward looking at the individuals. She also spoke about the training conference to educate on this policy.

My takeaway - it's all about throwing the individual under the bus, even if you can't name the specific individual.

(esp)

March 3, 2016 in Civil Enforcement, Conferences, Prosecutors | Permalink | Comments (0)

2016 ABA White Collar Crime Conference - Hon. Paul Friedman

This year marked the 30th Anniversary of the ABA White Collar Crime Conference. Hon. Paul Friedman gave a wonderful talk in which he looked at three decades in white collar practice. He noted how initially there was “no focus on white collar crime.” In 1970 a fraud unit was created, and it was the first time anyone decided to focus on this area of law. Initially the main charges one saw were mail and wire fraud. But then came RICO, FCPA and others.  He noted that in practice, firms did not have major white collar crime sections. Now they do, with initiatives in export controls, forfeiture, health care, and other areas. He also noted the rise of deferred prosecution agreements.

Judge Friedman  focused in his talk on four things: 1) increased power of federal prosecutors – especially with regard to sentencing – which he noted was higher in white collar cases today than it used to be; 2) vanishing jury trials – with more pleas and a smaller number of cases going to trial – which in turn results in fewer lawyers with trial experience; 3) electronic discovery- and the need to confront the new technology; 4) Brady – and the need to eliminate a requirement of having a materiality element, with all potentially favorable information being disclosed. He suggested that judges need to play a more active role in discovery. Finally, he emphasized the growing imbalance of power from the judicial branch to the executive branch.

(esp)

March 3, 2016 in Conferences, Think Tank Reports | Permalink | Comments (0)

Wednesday, February 24, 2016

Breaking News: Rick Perry Indictment Dismissed

This morning the Texas Court of Criminal Appeals put the final nail in the coffin of former Governor Rick Perry's criminal case. The indictment was returned to the trial court to be dismissed. Here is the majority opinion in Ex Parte Rick Perry.

(wisenberg)

February 24, 2016 in Current Affairs, Judicial Opinions, Prosecutions | Permalink | Comments (0)

Friday, February 5, 2016

Corporate Criminal Liability 2.0 - Discussion/Symposia

Symposium-Discussion: Corporate Criminal Liability 2.0

Stetson University College of Law – Gulfport, Florida

Friday, February 19, 2016

10:00 a.m. – 3 p.m.(Eastern Time)

This Symposium/Discussion will consider the current state of corporate criminal liability from corporate, criminal, white collar, political, and international perspectives; looking at what does corporate criminal liability 2.0 look like, and more importantly what should it look like.

Stetson University College of Law - 1401 61st Street South Gulfport, Florida 33707 United States

To register to attend - here

(esp)

February 5, 2016 | Permalink | Comments (0)

Thursday, February 4, 2016

Cosby Decision May Affect Oral Agreements in Practice of Criminal Law

 

The decision by a Philadelphia suburban trial court that a previous prosecutor's publicly announced promise not to prosecute Bill Cosby was not enforceable has virtually no precedential value anywhere, but it may affect how prosecutors, defense lawyers, defendants and targets act throughout the nation. The rule of law from this case seems to be that a former prosecutor's (and perhaps a current prosecutor's) promise not to be prosecute, at least when not memorialized in a writing, is not binding, even when the target relies on it to his potential detriment.  That promise can be disavowed by a successor prosecutor, and perhaps by the prosecutor himself.

Occasionally, cases arise where defense lawyers contend that prosecutors violated oral promises made to them and/or their clients.  Such situations include those where a prosecutor, it is claimed, promised a lawyer making an attorney proffer that if his client testified to certain facts, he would not be prosecuted or would be given a cooperation agreement and favorable sentencing consideration.  Often these instances result in swearing contests between the adversary lawyers: the prosecutor denies making any such promise and the defense lawyer says he did.  In most instances, in the absence of a writing,  the court sides with the prosecutor.  With respect to plea agreements, some courts have set forth a black-letter rule that promises not in writing or on-the-record are always unenforceable.

The Cosby case is very different.  There the (former) prosecutor in testimony avowed his promise, which was expressed in a contemporaneous press release, although there was no formal writing to defense counsel or a court, and expressly testified he did so in part in order to deprive Cosby of the ability to invoke the Fifth Amendment in a civil case brought by the alleged victim,  he also said that he believed his promise was "binding."   Cosby, according to his civil lawyer, testified at a deposition because of that prosecutorial promise.  (Generally, prudent prosecutors, when they announce a declination to prosecute give themselves an "out" by stating that the decision is based on currently-known information and subject to reconsideration based on new evidence).

To a considerable extent, the criminal justice system relies on oral promises by prosecutors (and sometimes judges) to defense lawyers and defendants, especially in busy state courts.  And, in federal courts, while immunity agreements are almost always in writing, federal prosecutors (and occasionally, but rarely,  federal judges) often make unrecorded or unwritten promises.   Sometimes such prosecutorial promises are made in order to avoid the time-consuming need to go through bureaucratic channels; sometimes they are made by line assistants because they fear their superiors would refuse to  formalize or agree to such a promise;  sometimes they are made to avoid disclosure to  a defendant against whom a benefiting cooperator will testify.  Based on the Pennsylvania judge's decision,  some defense lawyers (and some defendants) will believe that prosecutors' oral promises are not worth the breath used to utter them, and, perhaps, since there appears to be no dispute that such a promise was made here, that written promises are barely worth the paper they are written on. 

Defense lawyers are frequently asked by their clients whether they can trust the prosecutor's word in an oral agreement.  My usual answer is that they can: most prosecutors are reliable and honest.  Defense lawyers are then sometimes  asked a variant question about what will happen if the promising prosecutor leaves the office or dies.  My usual answer is that if there is no disagreement as to whether the promise was made, it will be honored.  The Cosby decision has made me reconsider that response. 

There are certain highly-publicized cases of celebrities of little precedential or legal value that have a considerable effect on the practice of law by both prosecutors and defense lawyers.  The case of Martha Stewart, who was, on highly disputed testimony,   convicted of 18 USC 1001 for lying in a voluntary proffer to prosecutors investigating her purported insider trading (which, assuming it occurred, was most likely not a crime),  is still invoked by prosecutors in cautioning witnesses not to lie to them and by defense lawyers in cautioning witnesses about making a voluntary proffer.  The Cosby case will likely be cited by defense lawyers and their clients concerning the uncertain value of oral agreements with prosecutors.  The skepticism of many defense lawyers about the reliability of agreements with the government and trustworthiness of prosecutors will grow.   I suspect the sarcastic refrain of some defense lawyers, "Trust me, I'm the government," will be said more often. 

I assume that the decision will be appealed, and also that a motion will be made to exclude Cosby's deposition because it was a consequence of the promise.  That latter motion is likely to be denied based on the judge's decision on the issue discussed here, although since the judge failed to set forth any reasoning for his decision, there may be room for distinguishing that issue from the one decided.

Although the judge's ruling has no doubt pleased those clamoring for Cosby's conviction and those desiring a decision on the merits, it may have a considerable negative effect on the perceived integrity and reliability of prosecutorial  non-memorialized promises and the actual practice of criminal law.  And it reveals once again how celebrity cases often make bad law.

February 4, 2016 in Celebrities, Civil Litigation, Current Affairs, Defense Counsel, Martha Stewart, Privileges, Prosecutors | Permalink | Comments (0)

Tuesday, January 19, 2016

BuzzFeed and the BBC Expose Evidence of Match-Fixing in Tennis

White collar crime in sports has been a topic of much discussion over the last year, including the widespread coverage of corruption allegations against high ranking officials with FIFA (discussed here).  Now it appears that the tennis word is coming under greater scrutiny as a BuzzFeed and BBC article is released discussing what they describe as "widespread match-fixing by players at the upper level of world tennis."  

The article, entitled The Tennis Racket, was released over the weekend and immediately provoked much discussion.  The story details evidence of match-fixing, including the involvement of Russian and Italian gambling syndicates.  According to the authors, tennis's governing body has been repeatedly warned about the activities of a core group of sixteen players, each of whom has ranked in the top 50 and some of whom are winners of singles and doubles at Grand Slam tournaments.  According to the report, none of the sixteen have been sanctioned and more than half will be playing in the Australian Open, which started today.  Included in the article is a fascinating discussion of a 2007 match in which the betting was so suspicious, Betfair (the world's largest internet betting exchange) suspended the market and announced for the first time in its history that all bets on the match were void. 

After the release of this article, it appears all eyes over the next couple of weeks will be on both the matches at the Australian Open and these serious allegations of misconduct.  The question now is whether this story will mark the beginning of a journey for the tennis world similar to the one the soccer world has experienced over the last year.  

(LED) 

January 19, 2016 in Corruption, International, News, Sports | Permalink | Comments (0)

Friday, January 15, 2016

Supreme Court Will Review McDonnell Case

The U.S. Supreme Court granted cert limited to Question One on the Petition. See here.  The Hill here.

See Scotusblog for Petition - here

(esp)

January 15, 2016 in Corruption, Judicial Opinions | Permalink | Comments (0)

Tuesday, January 5, 2016

Ethics & Compliance Initiative (ECI) Seeks Comments on Blue Ribbon Panel Report

The Ethics & Compliance Initiative (ECI) released a special Blue Ribbon Panel report, Principles and Practices of High Quality Ethics & Compliance Programs.  The report is a discussion draft, and they are seeking comments and suggestions from colleagues and other members of the public. The draft report can be found here -   Download FinalBRPReport 

The deadline for comments is January 8th, but they asked that those needing more time to contact their office.

(esp)

January 5, 2016 | Permalink | Comments (0)

Monday, January 4, 2016

Here Is Your $547 Million Check From Swiss Santa

Guest Blogger - Dmitriy Kamensky, Fulbright Faculty Development Fellow, Stetson University College of Law; Professor of Law, Berdyansk State University, Ukraine.

On Dec. 30, just as corporate and the rest of America was getting ready to celebrate the New Year, one of the top-tier Swiss banks, Julius Baer Group, announced (see here) that it had reached an agreement in principle with the U.S. Attorney’s Office for the Southern District of New York, related to a long and extensive investigation into aiding American customers to evade millions of tax dollars. The bank said it set aside $ 547 million to settle the matter with the Justice Department and expects to enter a final settlement in the first quarter of 2016.

This final development of the Julius Baer case is the latest of about a dozen Swiss financial institutions that came under DOJ scrutiny for allegedly providing American customers (and taxpayers) with numbered accounts that were protected by Swiss bank-secrecy laws, thus effectively helping U.S. taxpayers underreport their taxes.

In February of 2009, UBS AG, the largest Swiss bank worth over $ 1 trillion in assets, entered into a Deferred Prosecution Agreement (DPA) with the Department of Justice for $780 million (see here). The bank has acknowledged that between 2000 and 2007 it has participated in a cross-border scheme with the purpose of defrauding the United States and the Internal Revenue Service. The scheme was designed to aid American customers in evading federal taxes, by dodging their money to numbered UBS accounts. Under growing pressure from the U.S. authorities, the bank and later the Swiss government agreed to cooperate, by granting access to American accounts and later relaxing bank secrecy laws altogether.

Then in 2014 another larger Swiss lender, Credit Suisse Group AG, moved to settle a similar criminal probe by pleading guilty to conspiracy to aid its American clients in filing false income tax returns with the IRS. The bank agreed to pay $ 2.6 billion in criminal fine, restitution and other penalties (see here).

With the case of Julius Baer outlining the final part of multiyear aggressive probes by DOJ into the Swiss banking industry and tax dodging operations, it becomes clear that bankers across the globe are being given a serious (and quite expensive) warning: do not mess with American tax laws; federal prosecutors and tax agents have long arms.

(dk)

January 4, 2016 in Deferred Prosecution Agreements, International, Settlement | Permalink | Comments (0)

Saturday, January 2, 2016

2015 White Collar Crime Awards

Each year this blog has honored individuals and organizations for their work in the white collar crime arena by bestowing "The Collar" on those who deserve praise, scorn, acknowledgment, blessing, curse, or whatever else might be appropriate. With the appropriate fanfare, and without further ado, The Collars for 2015:

The Collar for Make-Believe Julius Caesar – To Deputy AG Sally Yates who issued a “new” corporate divide and conquer memo, pitting companies against their employees in a supposed effort to “get tough” on high-level corporate wrongdoers, only to see it followed up by GM’s Deferred Prosecution Agreement. She came, she saw, she whimpered. 

The Collar for Forced Government Product Recall—To Preet Bharara who was ordered by the Second Circuit to recall his spoiled brand of insider trading prosecutions.

The Collar for Bargain Shopping – To DOJ, which might consider shopping its insider trading cases out of Manhattan following the Newman decision.

The Collar for Newspeak (aka the Orwell Collar)—To DOJ's Office of Public Affairs for its press release celebrating the Don Blankenship verdict.

The Collar for Best Singing of "Silence is Golden" – To DOJ for issuing press releases when there is a conviction and nothing when the jury returns a not guilty or a court dismisses the case.

The Collar for Arm-Twisting—To Deputy AG Sally Yates, whose memo spawned a sudden outbreak of corporate throwing--under the bus.

The Collar for Wishful Thinking—To Karl Rove for speculating in his Wall Street Journal column that Hilary Clinton might be indicted.

The Collar for Delusional Thinking—To "bad boy" Martin Shkreli for complaining to the Wall Street Journal that the indictment against him, "doesn't tell my side of the story at all."

The Collar for Hallucinatory Thinking—To Representative Trey Gowdy for thinking that anybody, on either side of the political aisle, really cared about the substance of his special committee’s findings.

The Collar for Favorite Don Quixote Judicial Noodge (aka the Tilting Against Windmills Collar)—To Judge Alex Kozinski who bravely and repeatedly urges his fellow federal judges to deter Brady violations where they matter--in the courtroom.

The Collar for Creative Writing (aka the E.E. Cummings Collar)—To the New Orleans U.S. Attorney's Office, whose prosecutors made anonymous prejudicial comments in local online newspaper stories about the defendants they were prosecuting.

The Collar for Creative Storytelling—To the same New Orleans U.S. Attorney's Office, whose prosecutors denied in open court all knowledge of anonymous prejudicial comments. This resulted in a dismissal with prejudice upheld this year by the Fifth Circuit.

The Collar for Prejudicial Law Enforcement Statements (aka the John Ashcroft Collar)—To the F.B.I. for its spokesperson's public "anonymous" comment that the charges against Martin Shkreli represented "a trifecta of lies, deceit, and greed."

The Collar for Professional Irresponsibility—To the U.S. Attorney's Office for the Eastern District of New York for allowing the FBI to perp-walk Martin Shkreli in front of television cameras.

The Collar for the Fishiest Title on a DOJ Press Release — "Chicken of the Sea and Bumble Bee Abandon Tuna Merger After Justice Department Expresses Serious Concerns"

The Collar for Forcing the DOJ to Call Soccer “Football” – To FIFA for the ongoing corruption investigation in the United States and Europe

The Collar for Defending the Attorney-Client Privilege – To the U.S. Court of Appeals for the District of Columbia for overturning a lower court decision in the case of In re Kellogg Brown & Root, Inc. that “generated substantial uncertainty about the scope of the attorney-client privilege in the business setting."

The Collar for Attempting to Make the Guinness Book of Records for the Longest Investigation – Yet again, to Congress for its investigation of the IRS.

The Collar for Food for Thought in Sentencing – To Stewart Parnell, who received a sentence of 28 years in prison after conviction on charges related to his involvement in a deadly nationwide salmonella outbreak

The Collar for the Case Most Needing Review – Virginia Governor Bob McDonnell’s conviction.

The Collar for Rat-Catching – To Antitrust for having the highest percentage of substantial assistance motions in the 4th quarter.

 The Collar for Judicial Watchdog—To EDVA District Judge Gerald Lee. When the EDVA U.S. Attorney’s Office sent an official letter to potential defense witnesses informing them that they were actually victims, Judge Lee made prosecutors prepare a corrected version setting the record straight.  

The Collar for the Best Child– To Don Siegelman’s daughter, who continues to fight to Free Don.

The Collar for the Best Parent - Retired years ago and renamed the Bill Olis Best Parent Award –not awarded again this year since no one comes even close to Bill Olis, may he rest in peace.

(wisenberg), (goldman), (LED), (esp)

January 2, 2016 in About This Blog | Permalink | Comments (0)

Monday, December 28, 2015

Call for memorial judges for the Stetson International Environmental Moot Court Competition (IEMCC)

The Stetson IEMCC, now in its 20th year, is the world’s largest moot court competition devoted exclusively to global environmental issues. This year’s problem focuses on the return of confiscated poached elephant ivory and implicates UNCAC and UNTOC. We are seeking knowledgeable volunteers to evaluate memorials (briefs) submitted by student teams. 

There is one more opportunity to judge:  For the International Finals, judges will receive their assignments at the end of February/beginning of March. The due date for evaluations is Monday, April 11. We expect that each judge will read six to eight memorials.

If you are interested in assisting, please contact Prof. Brooke Bowman at bowman@law.stetson.edu. General information about the Stetson IEMCC is available at http://www.stetson.edu/law/international/iemcc/index.php. Many thanks for your consideration and happy new year!

(esp)

December 28, 2015 | Permalink | Comments (0)

Thursday, December 24, 2015

Pirela Pirela, Where You Been So Long?

Title 18 U.S. Code, Section 1546(a) prohibits a person from using a document prescribed by statute or regulation for entry into the United States if the document was "procured by means of" a false claim and false statement. In U.S. v. Pirela Pirela, out of the Eleventh Circuit, Pirela Pirela obtained a visa to enter the United States from Venezuela and intentionally failed to mention his Venezuelan criminal conviction. Charged with a violation of 1546(a), he argued that the statute requires the government to prove that he would not have obtained the visa but for his false statement. The government argued that it need only prove the materiality of the false statement. The government won.

(wisenberg)

December 24, 2015 in Judicial Opinions | Permalink | Comments (0)