Wednesday, May 28, 2014
Tim Tucker, AJC, Jury finds Jim Donnan not guilty on all counts (he was represented by Ed Tolley & Jerry Froelich)
David Deitch, Crime in the Suites, Another SDNY Judge Finds the U.S. Sentencing Guidelines Wanting
Thursday, May 22, 2014
The Department of Justice (DOJ) on May 12, 2014 issued a memorandum creating "a presumption" that the Federal Bureau of Investigation (FBI), Drug Enforcement Agency (DEA), Bureau of Alcohol, Firearms, Tobacco and Explosives (AFT) and United States Marshals Service (USMS) electronically record, if possible videotape, post-arrest statements made by individuals in their custody in a place of detention, essentially FBI and local police offices and detention facilities, where the facility has suitable equipment. Additionally, agents and prosecutors are encouraged to consider electronic recording in circumstances where the presumption does not apply. This policy is not intended to create any enforceable rights for arrestees.
This is a significant change and DOJ should be commended. Historically, the FBI, in particular, has resisted recording conversations and in fact has had a formal policy prohibiting it without special permission from a supervisor. FBI memoranda stated that recording "may interfere with and undermine . . . successful rapport building techniques" and that "perfectly lawful and acceptable interviewing techniques do not always come across in recorded fashion to lay persons as proper means of obtaining information from defendants." A transcript of the testimony of an FBI agent in a 2013 trial reads:
Q: Does the FBI have a policy of recording interviews?
A: We do not record interviews.
Civil liberties and defense lawyer groups have been seeking such a policy for well over a decade. Indeed, I wrote an NACDL president's column on the subject in December 2002. The cynical have believed that the FBI refusal to record investigations was in order to allow agents to use tough, deceptive and coercive methods to induce confessions and then testify to a sugar-coated sanitized version of the interrogation. The more cynical have believed it gave FBI agents a license to lie with impunity about what the defendants said or did not say.
I believe recording interrogation is a win-win situation. Jurors will be able to see and hear the circumstances surrounding the questioning and the specific words and tones used by the agents and the defendant. Agents will be discouraged from shading testimony as to their methods and the defendant's statements. Defendants and defense lawyers will be unable to argue effectively that the defendants did not make the statement they actually did or claim that they were beaten or coerced when they were not.
To be sure, the memorandum does not require, as some civil liberties and defense lawyer groups have advocated, that the recording begin at arrest. Thus, there still remains the possibility that agents will coerce statements on the way to the place of detention and lie about it or falsely state that the defendant confessed, or that defendants who did make admissions upon arrest will deny it before the jury.
Nonetheless, this is an important positive step toward presenting the triers of fact with accurate best-evidence versions of events so that they will reach a more just determination. It will reduce the number of unjust convictions and perhaps unjust acquittals also. Every law enforcement agency -- federal, state and local -- should adopt such a policy, absent special reasons. The federal government should require it as a condition of a state police agency receiving federal support.
(I just received notice that Martin Tankleff, who was released from prison in 2007 after serving 17 years upon a wrongful conviction for killing his parents based on a false confession when he was 17 years old, will graduate from Touro Law School this Sunday. Had Marty's confession been recorded, Marty would very likely not have been convicted. Marty has vowed to dedicate himself to becoming an advocate for the wrongfully convicted. Congratulations, Marty; consider this policy a graduation present from DOJ.)
Wednesday, May 21, 2014
Two New York State legislators have proposed the creation of a state commission on prosecutorial misconduct to review and investigate complaints of prosecutorial misconduct and to discipline prosecutors who have been found to have acted improperly. See here.
The proposed commission would, it is said, be the first in the nation of its kind. It will be modeled upon New York's Commission on Judicial Conduct, which investigates allegations of misconduct by judges and, if misconduct is found, may discipline a judge by public admonition, censure or removal from the bench.
Virtually every state (but not the federal government) has a commission on judicial conduct and these commissions, it is generally agreed, have had a positive effect in limiting judicial misconduct, removing unfit judges who had committed serious misconduct and increasing public confidence in and awareness of the workings of the court system. (I note that I am a past chair of New York's Commission.) There is, I believe, no good reason that there should not be an analogous agency to review instances of alleged prosecutorial misconduct, sanction offending prosecutors, and remove the most serious offenders from their positions. Indeed, there are stronger reasons for a commission concerning prosecutorial misconduct than for one concerning judicial misconduct. Much of the most serious prosecutorial misconduct, such as concealing exculpatory material and suborning perjury, occurs in the investigative and preparatory stages of a case and is hidden from the view of judges, defense attorneys, and the public and thus not detectable and reviewable by a court. Almost all judicial misconduct, on the other hand, occurs on the bench in public view, is recorded and observed by lawyers and the public, and is readily reviewable by appellate courts.
With rare exception, see here, prosecutorial misconduct has gone unpunished by prosecutorial offices, bar disciplinary committees and judicial authorities. Although grievance committees have authority over the improprieties of prosecutors as much as other lawyers, they have historically shown little interest in sanctioning prosecutorial misconduct. See, e.g., Gershman, Reflections on Brady v. Maryland, 47 S. Tex. L. Rev. 685 (2006); Yaroshefsky, Wrongful Convictions: It is Time to Take Prosecution Discipline Seriously, 8 D.C. L. Rev. 275 (2004). Similarly, judges, even when they reverse a conviction due to egregious prosecutorial misconduct, almost always conceal the prosecutor's identity and rarely refer the prosecutor for professional discipline. And, prosecutorial offices themselves often defend on appeal and thus ratify even serious misconduct of line prosecutors, and fail to sanction even those prosecutors whose serious misconduct they concede. See, Rudin, The Supreme Court Assumes Errant Prosecutors Will Be Disciplined By Their Offices or the Bar: Three Case Studies That Prove That Assumption Wrong, 80 Fordham L. Rev. 537 (2011).
Further, potentially criminal misconduct by judges may be investigated and prosecuted by the District Attorney, an agency wholly independent from the judiciary. However, except in the extremely rare instances where a special prosecutor is appointed, potentially criminal misconduct by prosecutors generally may only be investigated or prosecuted by the very same prosecutorial office that committed that misconduct, which in almost all instances will be hesitant to prosecute one of its own and embarrass the office.
Additionally, there is a stark imbalance in the adversarial criminal justice system where one adversary -- the prosecutor -- may criminally charge the other adversary -- the defense attorney -- when he tampered with evidence or suborned perjury, but where the defense attorney who believes the prosecutor committed such criminal acts may only make a shout in the wilderness by a futile complaint to an overprotective disciplinary agency with no criminal prosecution power. A commission on prosecutorial conduct will not wholly right this imbalance, but will tilt it in the right direction.
Tuesday, May 20, 2014
The sentencing of three former Wellcare individuals demonstrates the importance of having the guidelines as advisory, and the importance of an independent judicary that can recognize that sentences should be about individuals and not about arithmetic. (see here) Hats off to Hon. James S. Moody for being a judge that went beyond the math in sentencing the individuals and for his recognition that the stigma and collateral consequences of a conviction for a white collar offender are huge. With little chance of recidivism, strict guideline sentences were unwarranted here. (see here)
The court gave Todd Farha three years (significantly below the number asked for by the government). Paul Behrens received a sentence of 24 months; William Kale a year and a day, and Peter Clay 60 months of Probation. The attorneys representing these individuals were:
Todd Farha: Barry Boss, Stephen Miller, Rebecca Brodey, Seth Waxman, Peter Neiman, Alan Schoenfeld, Robert Stauffer, Laura Vaughan
Paul Behrens: John Lauro; Jeffrey Lamken; Michael Matthews, Michael Califano
William Kale: Stan Reed, Patrick Donahue, Lauri Cleary, Larry Nathans
Peter Clay: Bill Jung, Larry Robbins, Donald Burke.
Sunday, May 18, 2014
Blank Rome hires Carlos Ortiz as a partner in the White Collar Defense and Investigations Group- here
Scott Neuman, NPR, Congress Holds Former IRS Official Lois Lerner In Contempt
Tony Mauro, NLJ, U.S. gives up a widely decried charging theory
Todd Ruger, Legal Times, Leslie Caldwell Confirmed to Lead DOJ Criminal Division
Friday, May 16, 2014
Here is an unusually sophisticated article about a white collar topic in today's NYTimes. The piece, by Floyd Norris, probes what are essentially debarment waivers obtained by many financial and brokerage institutions as part of their global deals with DOJ and SEC. A guilty plea or deferred prosecution agreement with DOJ, accompanied by an SEC fine and censure, in the past may have been a company's death knell. Now it is just another cost of doing business. Naturally, guilty pleas still look bad and companies want to avoid them. But there's a rather large difference between a short-term public relations nightmare (or even a long-term and expensive monitoring agreement) and a firm's demise. So when government officials say that no companies are too big to jail or too big to fail, it is important to understand the context of the particular global agreement in question. Because a company can't be jailed, and if the company is big and important enough, it won't be allowed to fail.
Thursday, May 15, 2014
An amici brief was filed by a group of law professors and practitioners in support of three defendants in United States v. Farha. It's unusual to see amici coming in at the trial level, but this esteemed group offers some important reasons for allowing this brief.
They note "that this case highlights a serious problem facing federal sentencing judges today - namely, that the federal sentencing guidelines as currently written place too much emphasis on economic 'loss' and too little emphasis on other factors that traditionally have been important factors in determining a fair and just sentence that takes full account of the factors set forth in 18 U.S.C. s 3553(a)." In addition to discussing the distortion caused by the loss guidelines, the authors of this brief also note how other judges have recognized that focusing on loss under the guidelines presents problems. As aptly noted by Hon. Jed Rakoff, the guidelines "tend to place great weight on putatively measurable quantities, such as .....the amount of financial loss in fraud cases, without however, explaining why it is appropriate to accord such huge weight to such factors." (United States v. Adelson).
Hopefully the court will note the growing number of judges that reject strict adherence to a sentence that is ascertained solely by examining numbers and will remember that we sentence people, not numbers.
See Amici- Download AmiciBrief
Tuesday, May 13, 2014
Josh Greenberg and Ellen Brotman have written a timely and informative article entitled Strict Vicarious Liability for Corporations and Corporate Executives-Stretching the Boundaries of Criminalization for Volume 51 of the American Journal of Criminal Law. The article, and related pieces on criminal liability in the corporate context by Mark Filip, Julie O'Sullivan, Barry Pollack and others, can also be found on the Journal's website at http://www.americancriminallawreview.com/.
Thursday, May 8, 2014
Howard University School of Law is hosting a conference in honor of Andrew Taslitz, who died on February 9, 2014. It is not a traditional symposium, for we expect concurrent sessions on many subjects. It is open to people who knew Taz and to those who were inspired by his writing or teaching. If you would like to take part in the live event, please submit an abstract by May 30, 2014 to the co-chairs named below. The conference is free but speakers must pay their own way.
Send abstact to co-chairs:
Josephine Ross JRoss.firstname.lastname@example.org
Lenese Herbert LHerbert@law.howard.edu
Ellen Podgor EPodgor@law.stetson.edu
For more details, see here - Download Andrew Taslitz Galaxy
Monday, May 5, 2014
This morning in Robers v. United States (2014), the U.S. Supreme Court resolved a circuit split and unanimously affirmed the Seventh Circuit. The Mandatory Victim Restitution Act of 1996 requires offenders to pay their victims "an amount equal to...the value of the property" taken, minus "the value (as of the date the property is returned) of...the property that is returned." The Supreme Court, through Justice Breyer, held that the "property" in question is money, rather than real property. Thus, Appellant's argument that his criminal restitution judgment, payable to the bank he defrauded through his straw purchases, should have been reduced by the value of the two properties securing the two loans on the day that the bank took the properties back, was rejected. The sentencing court had determined its restitution figure by subtracting the amount of money the bank received through sale of the two houses from the original loan amount. The Court approved this approach. The Court did note that the statute has a proximate cause component and that offenders may be able to show in some instances that intervening factors broke the causal chain. But Appellant failed to make this argument at the district court level. Justice Sotomayor, joined by Justice Ginsburg, joined in the Court's opinion, but expounded upon the proximate cause issues in a separate concurrence.
Saturday, May 3, 2014
Yesterday in United States v. Shawn Sayer, the First Circuit ruled that that a portion of the federal cyberstalking statute, 18 U.S.C. Section 2261A (2) (A), is constitutional as applied to defendant Sayer's actions and is not facially overbroad. The Court held that Sayer waived his void for vagueness challenge. The facts were undisputed and the case involved a multi-year effort by Sayer to harass his ex-lover by, among other things, posting their intimate sex tapes on pornographic web sites and inviting male strangers to contact her for sexual activity. The Court also approved the trial court's upward variance/departure.
Thursday, May 1, 2014
Well. It's complicated.
Can your co-conspirator also be your victim? Your darn tootin' he can, under the Hobbs Act, according to the Fourth Circuit.
In 2007, the Sixth Circuit ruled that the victim of a Hobbs Act conspiracy must be a person outside of the alleged conspiracy. The case is United States v. Brock, 501 F.3d 762 (6th Cir. 2007). This decision seems to have common sense on its side. How can your victim be your co-conspirator, unless you are the Symbionese Liberation Army?
Prior to Brock, the Fourth Circuit had taken a more nuanced and sophisticated view in United States v. Spitler, 800 F.2d 1267 (4th Cir. 1985). There the Fourth Circuit noted a difference between "mere acquiescence" by an extortion victim, which would NOT render him a Hobbs Act co-conspirator, and "active solicitation", which would. "Refusing to paint with a broad brush," the Court ruled that Spitler's conduct was closer to "active solicitation" than "mere acquiescence."
On Tuesday, in United States v. Samuel Ocasio, the Fourth Circuit refused to abandon Spitler in favor of Brock. Ocasio involved the notorious Baltimore City Police Department towing scandal, in which city cops steered accident victims to a particular towing service in return for kickbacks. Ocasio, a former Bawlmer cop, claimed that, as a matter of logic, he could not have conspired with the towing service owners who were his alleged victims. The Fourth Circuit disagreed, applied the Spitler test, and found the towing service owners' actions closer to "active solicitation" than "mere acquiescence." According to the Court, the plain and unambiguous text of the Hobbs Act compels the conclusion that one CAN conspire with one's victim.
Hat Tip to Lonzo and Oscar.
Wednesday, April 30, 2014
The Tenth Circuit explains the rather Talmudic distinction between a material omission, which requires the government to prove the defendant's duty to disclose, and a half-truth, which imposes no such requirement on the government. The case is U.S. v. Charles Homer Chip Sharp (10th Cir. 2014) (omission in mail fraud). I'm surprised that no academic has done a study on the number of white collar defendants named Chip and Skip.
The Third Circuit's current willful blindness instruction is a vast improvement over its old one. It survives a valiant and brilliant attack from appellate guru Peter Goldberger in U.S. v. Abdur Razzak Tai.
Here's a novel idea. Before a defendant can be sentenced, the jury has to actually render a guilty verdict. The Fourth Circuit provides remedial instruction in U.S. v. Saul Ramirez-Castillo.
Tuesday, April 29, 2014
This post isn't about a white collar case, but America is our beat. Yesterday the Tenth Circuit reversed the bank robbery conviction of Stanley Hill, because FBI Special Agent Charles Jones (qualified as an "expert" trained in "special tactics and ways to identify deception in statements and truth in statements") testified that Hill's answers during a government interrogation were "not worthy of credence and 'did not make sense.'" Jones also testified that Hill "displayed evasive behaviors 'common among the criminal element to keep law enforcement at bay'" during interrogations. When asked about Hill's purported statement that he would rather die than face charges, Jones opined that "[n]ever in my career have I seen that with an innocent person." Finally, in discussing Hill's frequent invocation of God during the interrogation, Jones told the jury "'[m]y training has shown me...when people start bringing faith into validating their statements, that they're deceptive. Those are deceptive statements.'"
The surprise here is not that the Tenth Circuit found plain error and reversed. The surprise is that a DOJ trained prosecutor would ever put on such testimony in the first place. The surprise is that a federally trained public defender CJA Panel Attorney would sit like a potted plant and fail to object to such flagrantly inadmissible testimony. The surprise is that a United States District Court Judge with even a cursory understanding of the Federal Rules of Evidence and due process would allow such testimony to go forward. Of course the Tenth Circuit panel went out of its way to absolve the trial court of any responsibility: "We cast no blame on the district court for the error that occurred in this case." That's the federal judicial protection racket for you. Most traffic court judges would know better than to allow in testimony like this. Here is the opinion in United States v. Stanley Hill.
Update: Hat Tip to Steve Levin of Levin & Curlett LLC for pointing out that the case was tried by a CJA Panel Attorney rather than the Public Defender's Office.
Monday, April 28, 2014
Tony Mauro, Legal Times, Ted Stevens’ Defense Lawyers Honored As ‘Constitutional Champions’ (congratulations to Brendan Sullivan Jr. & Robert Cary)
Amanda Bronstad, The National Law Journal, Ex-KPMG Partner Gets 14 Months for Insider Trading
Paul Mogin, National Law Journal, DOJ Relents on False-Statements Policy
Nancy and Lester Sadler ran pain clinics that sometimes serviced more than 100 patients a day--and that didn't even include the fake ones. They were convicted of several crimes and the Sixth Circuit affirmed all but one of the counts of conviction last week. Nancy Sadler's wire fraud conviction was vacated, however. According to the Court, "the government showed that Nancy lied to pharmaceutical distributors when she ordered pills for the clinic by using a fake name on her drug orders and by falsely telling the distributors that the drugs were being used to serve 'indigent' patients." But this did not "deprive" the distributors of their property, because Nancy paid full price. "[P]aying the going rate for a product does not square with the conventional understanding of 'deprive.'" The government argued that the distributors would not have sent the pills had Nancy told them the truth. The Sixth Circuit dubbed this a "right to accurate information" and noted that the federal mail and wire fraud statutes no longer cover this kind of intangible right in the post-McNally era. Congress' statutory fix of McNally only covers the intangible right of honest services, "which protects citizens from public-official corruption." Of course 18 U.S.C. Section 1346 does more than that, even after Skilling, as it also covers certain private deprivations of honest services. But the conduct at issue in Sadler did not involve Nancy's "honest services" to the pharmaceutical distributors. She provided no services to them--she simply fibbed, but paid full price. Here is the opinion in United States v. Nancy Sadler.
Tuesday, April 22, 2014
18 U.S.C. § 1519, known as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002, makes it a crime for anyone who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object” with the intent to impede or obstruct an investigation (emphasis added). Congress passed this statute in the aftermath of the Enron debacle. But did they ever envision that a prosecutor would use this statute against a commercial fisherman for allegedly having undersized grouper fish that were thrown overboard following the issuing of a civil fishing citation from the Florida Fish and Wildlife Commission?
The government’s extension of this SOX statute is the subject of a Petition for Certiorari (Download Yates Pcert_Filed) before the Supreme Court. A key issue is whether “fish” are tangible objects for the purposes of this statute. And even more bizarre is that the fisherman allegedly started with 72 undersized red grouper and when he came to shore there were purportedly only 69 fish. Could this be a federal prosecution under SOX for 3 missing fish? And is this all happening during a time of sequestration with tight funding?
Perhaps the Supreme Court will agree that in the ocean of crime, this one is a bit fishy. Following the filing of the Petition for Certiorari and a distribution for conference, the Court requested a response from the government. Amici filed a couple of briefs and it was again distributed for conference. It is now set for distribution a third time, April 25, 2014 (see here). It's a wonderful case for the Court to examine principles of statutory interpretation and how far afield the government can go in using a statute written and intended to stop one form of criminal conduct but being used in an unintended manner. This case also provides the Court the chance to step to the plate and express a view on overcriminalization. (see NACDL amicus brief of William Shepherd here - Download NACDLYATESAMICUS). There are many other issues in the "fish case" that may also interest the Court, such as how a civil fishing citation became a criminal case with an indictment issued 985 days after the citation. (see Petitioner's Reply Brief - Download Yates Reply to Brief in Opposition). But the real question is whether the Court will order fish this coming Friday at their conference.
Thursday, April 17, 2014
DOJ reports their first ever extradiction on an Antitrust charge. (see here). The accused is charged with violating the Sherman Act. The company where the excutive had worked was in Italy, but the arrest and extradition was from Germany. Obviously, the individual is presumed innocent and the Government will bear the burden of proving guilt.
Tuesday, April 15, 2014
Last week, as reported in the New York Times (see here), the House of Representatives Oversight and Government Reform Committee voted to hold in contempt Lois Lerner, the Internal Revenue Service official who after making a brief statement declaring her innocence invoked her Fifth Amendment privilege and refused to answer questions from the Committee members. The Committee action will be referred to the entire House of Representatives for its consideration. If the House votes to hold Ms. Lerner in contempt, it would refer the matter to the United States Attorney for the District of Columbia, Ronald C. Machen, Jr., a Democrat who in my view is unlikely to pursue this politically-charged case.
The Committee vote was based on party lines, with the Republican majority voting against Ms. Lerner. A vote of the entire Congress, if it occurs, will most likely similarly be so based. Indeed, Representatives on the Committee took exaggerated and hyperbolic positions. Republican John J. Duncan claimed if Ms. Lerner's position were accepted, "every defendant . . . would testify and plead the Fifth so they couldn't be cross-examined . . . ." Democrat Elijah Cummings said if he were to vote to hold Ms. Lerner in contempt, it would "place him on the same page of the history books as Senator Joseph McCarthy."
As I said before (see here), I believe that Ms. Lerner's general declaration of innocence, before she invoked the Fifth, does not constitute a waiver, but I do not believe the issue is crystal-clear. Lawyers who represent witnesses before legislative committees (or in other matters) should be cautious about taking such positions.
Tuesday, April 8, 2014
I had the privilege of being at an NYU Conference titled, Deterring Corporate Crime: Effective Principles for Corporate Enforcement. Hats off to Professor Jennifer Arlen for bringing together folks with some different perspectives on corporate crime. Individuals presented data, and I heard different positions presented (corporate, government, industry, judicial) on a host of topics. The individual constituent (CEO, CFO, employee) within the corporation was not a key focus, unless it was a discussion of their wrongdoing or prosecution.
From this conversation it was clear that deterring corporate wrongdoing is not easy. Penalties have increased, yet we continute to see corporate criminality. So the question is, how do we encourage corporations not to engage in corporate wrongdoing?
This is my top ten list of what I think exists and what needs to be changed -
1. Most companies try to abide by the law.
2. Complying with the law is not always easy for corporations. In some instances the law and regulations are unclear, making it difficult to discern what is legal. The array of different laws and regulations (e.g., state, federal, and international), as well as their complexity makes corporate compliance problematic.
3. Companies resort to internal investigations to get information of wrongdoing within the company. In some instances companies will threaten individuals with the possible loss of their jobs if they fail to cooperate with a corporate internal investigation. Individuals who provide information to their employers sometimes do not realize that the company may provide that information to the government and the information may then be used against them.
4. If a company is criminally charged, it typically is financially beneficial for the company to fold, work with the government, and provide information to the government of alleged individual wrongdoing within the company.
5. DOJ's incentives to a corporation that causes it to fold and provide evidence to the government against alleged individual wrongdoers may be causing more harm because it pits corporations against its individual constituents.
6. We need a stronger regulatory system. Our system is broken and one just can't blame agencies like the SEC.
7. If we expect agencies like the SEC to work, Congress needs to provide them with more money to engage in real regulatory enforcement.
8. There are many good folks in DOJ, including AG Holder, who look longterm at stopping corporate wrongdoing. But there are also individuals in DOJ who fail to see the ramifications of what may seem like short-term benefits.
9. Corporate crime can be reduced if everyone - the corporation, government, and also the individual constituents would work together.
10. It would be beneficial in reducing corporate crime if there was more transparency. We all need to hear what works - when there are declinations of prosecutions, or when an agency decides not to fine a company. We can learn from the good things companies do (anonymously) and when DOJ declines to proceed against the company.