Saturday, July 15, 2006
The personal attorney for San Francisco Giants slugger Barry Bonds, Laura Enos, expects her client will be indicted in the next week on perjury and tax evasion charges. An AP story (here) quotes Enos as stating, "We are very prepared . . . We have excellent tax records and we are very comfortable that he has not shortchanged the government at all." The federal grand jury in San Francisco investigating Bonds is set to expire in the near future, perhaps as early as Thursday, July 20, so any indictment must be returned by then barring a six-month extension of its term. Bonds' former personal trainer, Greg Anderson, remains in jail for civil contempt for refusing to testify before the grand jury, and the Ninth Circuit denied his motion for bail while he appeals the contempt or, more likely, waits for the clock to wind down -- a witness is released from civil contempt once the grand jury's term expires. A lot of people will be watching for signs of an indictment on July 20, when the Giants will be home playing the division-leading San Diego Padres. (ph)
Wednesday, July 12, 2006
Media reports (see here) indicate that federal prosecutors may seek a grand jury indictment of San Francisco Giants slugger Barry Bonds, probably this month, on perjury and tax evasion charges. The perjury relates to his testimony before a grand jury in 2003 regarding his use of steroids received from Balco (Bay Area Laboratory Cooperative) in which he is reported to have denied knowing that two substances provided by his personal trainer, Greg Anderson, contained steroids. Anderson, Balco founder Victor Conte, and two others entered guilty pleas in 2005 to drug charges related to the creation and distribution of so-called designer steroids -- which had nicknames like "the clear" and "the cream" -- that were undetectable until the recent development of new drug tests.
A U.S. District Court judge recently sent Anderson to jail for civil contempt because he refused to testify before the grand jury investigating Bonds. He has filed a motion with the Ninth Circuit for bail while he appeals the contempt citation, but the grand jury is ending soon, perhaps at the end of the month, and it's unlikely he will be released before it expires or Bonds is indicted (see AP story here). From earlier reports about the appearance of witnesses, it appears that this is a "Thursday Grand Jury" that meets once each week, so any indictment is likely to come on that day.
The perjury case against Bonds looks to be based on the testimony of a former business partner involved in selling memorabilia autographed by Bonds and a former girlfriend who claims, among other things, that Bonds gave her $80,000 in cash. The tax charges likely relate to memorabilia sales that may not have been reported as income. If there is an indictment, I suspect any tax count is part of a "Liar, Liar" approach in which the government will try to show that Bonds was deceptive in other areas of his life to bolster the theory that he was not truthful in the grand jury about his use of steroids. The amount of income involved is unlikely to be significant for someone with Bonds' salary and ability to generate additional income through appearances and autograph sessions, so any tax charge looks to me to be part of a broader strategy to call into question his truthfulness. Moreover, if there is a basis for tax evasion charges, that would make it more difficult for Bonds to take the witness stand to explain his earlier testimony. If that is the case, the defense will focus on trying to undermine the credibility of the government's witnesses.
Mark you calendars for Thursdays during July, because something more than hot pennant races may be of interest. (ph -- sorry for the headline, I couldn't resist)
Thursday, July 6, 2006
Greg Anderson, the former personal trainer for San Francisco Giants slugger Barry Bonds, will be spending at least a few weeks in jail for refusing to testify before a federal grand jury in San Francisco investigating whether Bonds committed perjury in the Balco (Bay Area Laboratory Cooperative) steroids investigation. Anderson first refused to testify a week earlier because he believed that his plea agreement did not require him to do so and the government was acting improperly. U.S. District Judge William Alsup held Anderson in civil contempt and ordered him sent to jail, rejecting a request by Anderson's attorney, Mark Geragos, for bail while he appeals the contempt.
An AP story (here) notes that the grand jury is set to expire in a few weeks, and a civil contempt only lasts as long as the grand jury is authorized, which is usually eighteen months. Geragos noted -- or perhaps boasted -- that there were things in refrigerators with a longer shelf-life than the grand jury investigating Bonds. That may be, although under Federal Rule of Criminal Procedure 6(g) a grand jury "may serve more than 18 months only if the court, having determined that an extension is in the public interest, extends the grand jury's service. An extension may be granted for no more than 6 months, except as otherwise provided by statute." Therefore, if the particular grand jury hearing evidence of possible perjury by Bonds has not been extended once, the court could push its service out another six months and Anderson could be held during the extended term. Similarly, there is nothing that would prevent prosecutors from transferring the case to a new grand jury once the current one's term expires and resubpoenaing Anderson to testify, leading perhaps to another civil contempt, although if the judge believes jailing him is futile then Anderson would have to be released.
Given the grand jury's short remaining term, assuming no extension or transfer, then we are likely to learn in the next few weeks whether Bonds will be indicted on perjury charges, and perhaps other violations identified during the investigation. Just in time for the dog days of August when the pennant races tighten considerably. (ph)
Friday, June 30, 2006
Greg Anderson, the former personal trainer for San Francisco Giants slugger Barry Bonds, refused to testify before a federal grand jury in San Francisco investigating whether Bonds committed perjury in 2003 when he testified about his lack of knowledge in taking steroids. Anderson was connected to Victor Conte's drug lab, Balco (Bay Area Laboratory Cooperative), and provided Bonds with a then-undetectable steroid called "the clear." Bonds testified during the Balco investigation that he did not know the substance Anderson gave him contained steroids. Anderson plead guilty to drug charges and served a three-month prison term, and prosecutors subpoenaed him to testify about Bonds' steroid use.
Anderson did not assert the Fifth Amendment, which may not have been available because of his guilty plea or, in the alternative, prosecutors may have been willing to grant him immunity. Instead, the basis for his refusal was that prosecutors wanted to examine him about a tape-recording in which he discusses Bonds using the clear in 2003 to avoid major league baseball's drug-testing program. Anderson's attorney, Mark Geragos (from the Scott Peterson murder case), argued that the tape was made illegally, but an AP story (here) notes that a federal district court judge decided that the government was not involved in the taping so prosecutors could use it to examine Anderson. By refusing to testify, Anderson faces a civil contempt proceeding and may be sent to jail if he continues to refuse to testify, at least for the term of the grand jury. If the court holds him in contempt, he could then appeal to the Ninth Circuit, although it is hard to see how he can avoid testifying about other matters unless her asserts the Fifth Amendment.
While Anderson is unlikely to be a particularly strong witness in any prosecution of Bonds, the tape recording could be important contemporaneous evidence used to link him to knowing steroid use near the time of his grand jury testimony. It certainly appears that, as the pennant races heat up, so is the investigation of Bonds. (ph)
Monday, June 12, 2006
An AP story (here) reports that San Francisco Giants slugger Barry Bonds is willing to speak with former Senator George Mitchell in his investigation of steroid use in baseball, conditioned on one very big "if." The if is that Bonds must be assured the information will not be given to the Department of Justice for use in the grand jury investigation of whether Bonds committed perjury in 2003 when he testified about steroids supplied by Balco (Bay Area Laboratory Cooperative). The grand jury has already heard from a number of witnesses, and the recent search of the home of former major league player Jason Grimsley has also been linked to the Bonds investigation.
Can Bonds get the assurances his attorney says he needs, or is this all a smokescreen to make it appear that Bonds is willing to cooperate but that his hands are tied because of those mean federal investigators? The parties could agree to a type of civil protective order, although whether that would be enforceable in the absence of a judicial officer's endorsement is an open question. More importantly, under Ninth Circuit precedent (the case is being investigated by the U.S. Attorney's Office for the Northern District of California), In re Grand Jury Subpoena Served on Meserve, Mumper & Hughes, 62 F.3d 1222 (9th Cir. 1995), grand jury subpoenas trump such protective orders even when issued by a federal judge in civil litigation. Any agreement between Bonds and Mitchell would have no effect on the grand jury's power to obtain the evidence, which would not be subject to any privilege claim or the like.
Would the Department of Justice join such an agreement not to used Bonds' statements to Mitchell's investigators? That sounds like a type of quasi-immunity, something prosecutors are unlikely to grant without first hearing from Bonds or his attorney about the content of his statements -- that whole "buying a pig in a poke" problem. It is not clear what upside, if any, prosecutors would see in agreeing not to use any statements Bonds might make about steroid use. If he simply reiterates his grand jury testimony, there is nothing gained. If he were to contradict that testimony and be indicted for perjury, not only could the statements not be used, but Bonds could argue for a type of "use fruits" protection on the ground that disclosure of his statements would be an impermissible use that has tainted the government's investigation. One of the scariest phrases to federal prosecutors is "Kastigar hearing," which is a hearing to determine whether the government has used immunized testimony in any way in a subsequent prosecution. That was the ground on which Oliver North's convictions were overturned, and the mere mention of a Kastigar hearing sends chills down the spine of prosecutors because it means they have to show an independent basis for all their evidence, a difficult standard to meet. Any hint of immunity for Bonds, even informal immunity, creates this possibility, and the San Francisco U.S. Attorney's Office is unlikely to see the Mitchell investigation as worth creating that kind of risk to a perjury prosecution.
Bonds' attorney surely is aware of all these considerations, and how unlikely it is that the government will grant such protection to statements by Bonds. I suspect that spin has already begun, with Bonds trying to show how "cooperative" he is and that federal prosecutors are unwilling to hear his side of the story. The grand jury investigation promises to get warmer as the summer moves on and the pennant races heat up. (ph)
Friday, June 9, 2006
The recent search of (now-former) major league pitcher Jason Grimsley's home for steroids and human growth hormones has been linked to the on-going grand jury investigation of San Francisco Giants slugger Barry Bonds for perjury. An AP story (here) states that Grimsley's lawyer said that federal agents asked Grimsley to secretly record conversations about Bonds' alleged steroid use, a proposition he refused. Grimsley spent most of his career in the American League while Bonds has been in the National League since coming to the majors with the Pittsburgh Pirates in 1986, so it is unlikely Grimsley would have been able to obtain much direct evidence against Bonds. The government's search warrant affidavit alleges that Grimsley named other players who used steroids and HGH, so it may be that investigators were using Grimsley to get evidence on those closer to Bonds who could then testify against him.
On a related front, the lawyer for Kimberly Bell, a purported former mistress of Bonds, has informed former Senator George Mitchell that federal investigators told his client not to cooperate in baseball's steroids investigation because of her involvement in ongoing grand jury proceedings. Bell testified before the grand jury in San Francisco that has also heard from the Giants' team trainer and Bonds' personal physician in connection with Bonds' possible steroid use, which would be at odds with his earlier grand jury testimony. Investigators are following the old adage about not creating discovery material or Jancks statements that would have to be disclosed before a trial and could be used to impeach a witness' s credibility if there are any inconsistencies.
The government clearly is putting a great deal of effort into the Bonds investigation, and taking approaches, such as searches and wires, usually not seen in such cases. Whether there is enough there to make out a case remains to be seen. Now that the request to Grimsley to tape conversations has been revealed, all baseball players, especially Bonds, will be wary of any discussion of steroid or HGH use. (ph)
Friday, June 2, 2006
A New York Times article (here) discusses a motion to quash grand jury subpoenas issued to the two San Francisco Chronicle journalists who broke the story about the grand jury testimony of San Francisco Giants slugger Barry Bonds in the Balco (Bay Area Laboratory Cooperative) steroids investigation. The journalists are co-authors of the book Game of Shadows that contains a number of detailsdescribing alleged steroid use by Bonds. The Times article discusses the affidavit submitted by Mark Corallo, former Department of Justice spokesman for Attorney General Ashcroft, blasting the issuance to subpoenas to journalists for information about confidential sources absent a significant need related to national security or a threat of harm to innocent third-parties.
While most of the attention has been on the issue of the propriety of journalist subpoenas, the fact that federal prosecutors have taken such a dramatic step may indicate that the Bonds investigation is in its final stages. Subpoenaing journalists to track down confidential sources who may be eyewitnesses to possible steroid use by Bonds seems to show that, to this point, the government does not have enough independent evidence to make a perjury case. Bonds denied having knowingly used steroids before the grand jury in 2003, and prosecutors would have to prove the falsity of those statements and not merely that they were not completely truthful. The grand jury has heard from Bonds' personal physician and a Giants team trainer, but it is unlikely that they would have direct evidence of any steroids use. Bonds' personal trainer, Greg Anderson, may have testified about what Bonds put into his body, but having pled guilty in the Balco case, Anderson's testimony may not be sufficiently credible to warrant a perjury prosecution. Similarly, a former supposed girlfriend of Bonds would have similar issues if she were a government witness.
Issuing subpoenas to journalists looks like a last -- and possibly desperate -- step to build the perjury case. Whether the government can obtain what it wants remains to be seen. (ph)
Friday, May 5, 2006
Former NBA star Ralph Sampson seems to be attracting federal indictments these days as prosecutors added two more charges against him arising out of an earlier prosecution for failure to pay child support. As discussed in an earlier post (here), Sampson was indicted in January 2006 on perjury and false claim charges for filing a false affidavit seeking appointment of counsel due to indigency in the child support prosecution. Sampson plead guilty to the child support charges, and the two additional charges were set to go to trial on May 16. Prosecutors have now secured a superseding indictment adding new mail fraud and false statement charges. According to an AP story (here), Sampson did not disclose in his application for the appointment of counsel that he had a $5,000 per month consulting contract and the use of a $200,000 house in exchange for certain promotional activities, claiming instead that he had no income. In addition, he denied ownership of an SUV valued at $43,000, and is alleged to have mailed false documents to a finance company to hide his ownership of the vehicle. The hole keeps getting deeper for Sampson. (ph)
Tuesday, May 2, 2006
The documents related to the plea agreement of Howard Vogel, who admitted to receiving over $2 million in secret kickbacks from plaintiff securities class action firm Milberg Weiss for serving as the representative plaintiff, are available below. Two interesting items to note in the documents. First, Vogel pled guilty to violating 18 U.S.C. Sec. 1623, the false declaration/perjury provision, based on certifying to the federal courts considering the settlements of the securities class actions that he did not receive any payments other than what was approved by the court. This strikes me as a much stronger case than asserting mail or wire fraud for the payments because the law is clear that such payments are prohibited without judicial approval and the documents will show the scope of the disclosure ( or lack thereof). Second, the payments to Vogel and his family were from 1992 to 2005, including a $1.1 million payment in December 2003 from Milberg Weiss arising from the Oxford Health Plans securities class action, so it is a continuing course of conduct. The Statement of Facts contains a chart listing the specific cases and payment amounts, which will provide a roadmap to the types of charges that may be filed against current or former members of the law firm and, perhaps, even the firm itself. Very interesting reading, and possibly a precursor to coming indictments. (ph -- thanks to a faithful reader for sending along the case documents)
Wednesday, April 26, 2006
The number of witnesses keeps growing in the San Francisco federal grand jury investigation of whether Giants slugger Barry Bonds committed perjury in 2003 in his testimony before the grand jury investigating steroid distribution through Balco (Bay Area Laboratory Cooperative). In addition to previously disclosed subpoenas to Bonds' personal physician and the Giants team trainer, media reports are that a former Balco executive, James Valente, and Bonds' personal trainer, Greg Anderson, have been subpoenaed to testify. Valente and Anderson entered guilty pleas in 2005 to charges related to the distribution of steroids through Balco. Bonds admitted in his testimony that Anderson gave him substances that turned out to contain steroids, but he denied knowing that at the time he used them.
Anderson can be a key witness regarding Bonds' knowledge of what those substances included, and whether he provided Bonds any other of the so-called "designer" steroids developed at Balco to avoid drug testing measures. The problem with Anderson, of course, is that as a convicted felon he may not be a credible witness. Nevertheless, he was likely at the "scene" of any steroid use that may have occurred, so unlike most white collar crime cases, he may be an important eyewitness, regardless of the credibility issues. An AP story (here) discusses the latest grand jury subpoenas. (ph)
Wednesday, April 19, 2006
The federal grand jury investigating possible perjury by San Francisco Giants slugger Barry Bonds has subpoenaed the team's head trainer to testify on April 27, in addition of Bonds' personal physician. Bonds testified before a grand jury in 2003 about whether he used steroids from Balco (Bay Area Laboratory Co-operative), where his personal trainer worked. Bonds denied knowingly taking steroids, and recent publications cast doubt on whether his testimony was truthful. By seeking testimony from the personal physician and team trainer, the government likely is focusing on learning if health care professionals observed if Bonds exhibited any of the outward signs of steroid use, which can cause substantial physical changes. The witnesses may also have spoken with Bonds about whether he was using steroids or human growth hormones. While his physician may be able to raise a privilege claim to conversations, the team's trainer is unlikely to be able to throw up a similar roadblock to testifying.
Whether either witness can provide the type of circumstantial evidence needed to establish that Bonds' testimony was false -- which will be necessary to meet the high standard for a perjury conviction -- is certainly an open question. Both may well by sympathetic to Bonds, and so could provide only equivocal statements regarding his physical condition. To this point, the government's evidence appears to be coming from those convicted in connection with the Balco operation, a jilted former girlfriend, and claims made by anonymous sources as reported in a book and in the media. The government likely needs objective evidence of steroid use and not anecdotal claims if it wants to make a case against Bonds. A San Francisco Chronicle story (here) discusses the grand jury investigation. (ph)
Friday, April 14, 2006
It should not come as a great shock that a federal grand jury in San Francisco is investigating star slugger Barry Bonds for perjury related to his testimony in December 2003 in the Balco (Bay Area Laboratory Co-operative) steroid investigation. CNN.com reports (here) that the grand jury began hearing testimony about one month ago, around the time reports emerged about the book "Game of Shadows" that asserts Bonds began using steroids in 1998, after Mark McGwire broke Babe Ruth's single-season home run record. The San Francisco Chronicle reported in 2004 that Bonds told the grand jury that he used two items that he did not know contained steroids, but that he never knowingly used steroids.
The grand jury has subpoenaed, among others, Bonds' personal physician, according to an AP story (here). The doctor accompanied Bonds to Balco's offices and drew his blood there, according to "Game of Shadows." In March 2005, a reputed former girlfriend of Bonds testified before the Balco grand jury that he took steroids (see earlier post here). The testimony of the physician may corroborate assertions by others about Bonds' use of steroids at the time he testified before the grand jury, contradicting his testimony. As an earlier post (here) noted, however, a perjury prosecution will depend on the specificity of the questions and answers from the 2003 testimony.
Mike Rains, Bonds' attorney, may already be setting up the defense to an indictment by arguing that the government set a "perjury trap." According to the CNN.com story, Raines said, ""Look no further than Martha Stewart. The trap is perjury . . . You offer immunity and you get him in there and then you ask them questions and you get them on lying to federal officers. That's the trap. That's exactly what they got Martha for." I think the comparison to Martha Stewart is rather inapt. Even if one accepts that it was unfair to prosecute Stewart for false statements but not the underlying subject of the investigation, she did not receive immunity and her statements were not under oath. Bonds received immunity for the purpose of telling the truth, and the government had no desire to obtain false testimony from him. Indeed, the reason why immunity is granted in most cases is because the person will provide evidence against others and avoids prosecution. The immunity grant states explicitly that false testimony can be used against the person, and this appears to be the exact type of situation in which a perjury prosecution is most appropriate. The witness agrees to tell the truth to assist an investigation, and then gives false testimony -- that strikes me as the paradigmatic scenario for a perjury prosecution. Granting immunity is probably the least likely situation in which a so-called "perjury trap" would be set by prosecutors. (ph)
Wednesday, March 29, 2006
Former Assistant U.S. Attorney Indicted on Conspiracy, Obstruction, and Perjury Charges Related to Trial Conduct
Former Assistant U.S. Attorney Richard Convertino was indicted on conspiracy, obstruction of justice, and perjury charges related to his conduct as lead trial counsel in the so-called "Detroit Terrorism Trial" in which two defendants were convicted on terrorism charges only to have the government request that the verdicts be thrown out because the theory of prosecution was unsupported (indictment below). State Department Agent Harry Smith, who was one of the government's key witnesses, is also charged. The prosecution began shortly after the Sept. 11 terror attacks when a search of a Detroit apartment turned up evidence believed to be related to a terrorist cell. Among the evidence used at trial was a hand-written drawing of what the government asserted was the Queen Alia Military Hospital in Jordan; the notebook in which the drawing was found contained the Arabic writings "Queen Alia" and "Hashemite Kingdom of Jordan." Convertino and Smith viewed the hospital, and Smith attempted to take pictures of the facility. When those pictures did not turn out, he requested that another State Department agent in Jordan take digital pictures of the hospital, which were eventually e-mailed to Convertino before the trial. At trial, however, Smith testified in response to Convertino's questions that no pictures of the hospital were ever taken, and indeed could not be taken because it was a military hospital and a foreign agent taking such pictures would jeopardize the relationship with the Jordanian government. The defense had requested any pictures of the hospital to determine whether the drawing, which was quite crude, in fact matched the building, but Convertino denied that any existed. The photographs eventually came to light, and led the U.S. Attorney's Office to investigate the prosecution and determine that the terror charges were unfounded.
Among the overt acts for the conspiracy charge is the allegation that Convertino "failed to comply with his duty" to disclose the photographs to defense counsel. This may be the first criminal prosecution premised in part on the failure to comply with the prosecution's Brady obligation. Similarly, the obstruction of justice charge is based on "concealing contradictory evidence from the Court, defendants and jurors," which again relies on the due process right of defendants to disclosure of material exculpatory evidence. Convertino has consistently maintained that the prosecution was proper, and that he is being prosecuted because he is a whistle-blower. He has filed a lawsuit against the Department of Justice and various current and former DOJ officials in Washington D.C. related to his being removed from the case and relieved of his duties as a prosecutor.
The prosecution is the end game in a case that was touted by Attorney General Ashcroft as the first significant terror prosecution after Sept. 11 and collapsed after the government, at the urging of the district court judge who presided over the trial, took a second look at the evidence and whether it fulfilled its Brady obligations. Two of the original defendants entered guilty pleas to minor charges, and it is likely that they had nothing to do with terrorist groups. This indictment may help to show how serious the government is in ensuring that trials are conducted fairly. (ph)
Wednesday, March 8, 2006
A book by two San Francisco Chronicle reporters called "Game of Shadows" that is scheduled to appear in late March alleges that San Francisco Giants star Barry Bonds became a heavy steroid user beginning in 1998, including the use of some of the strongest drugs available that are injected into the body. Bonds testified before a federal grand jury in San Francisco in 2003 in the BALCO (Bay Area Laboratory Co-Operative) steroid investigation that led to guilty pleas by its founder, Victor Conte, and Bonds' personal trainer, Greg Anderson. Reports of the grand jury testimony indicate that Bonds admitted to going to BALCO's office to have his blood tested and that he used a cream provided by Anderson, but stated he did not know that it contained a designer steroid. Bonds purportedly asserted that he never knowingly took steroids, a position that would be contradicted if the claims in "Game of Shadows" are true.
Whether the book contains anything not already known to federal prosecutors will likely be the key to the possibility that Bonds could face a federal investigation for perjury or obstruction of justice. If the information in the book comes from Anderson, Conte, and others implicated in the BALCO prosecution, then it is likely federal prosecutors already know about it, although perhaps not in as much detail. A perjury case built on the testimony of convicted felons does not strike me as particularly strong, and Conte in particular has been quite erratic in his public statements. In 2005, former major leaguer Rafael Palmeiro testified before Congress that he had never used steroids and then three months later tested positive for stanozolol, one of the drugs Bonds is accused of using. The House committee, however, did not pursue perjury charges because of the lack of evidence that Palmeiro had used steroids before his testimony.
This type of case is difficult to win because the government must prove that the defendant lied, and not just that the person was less-than-forthright in the testimony. Bonds admits to using something that turned out to contain steroids, and does not deny his interactions with BALCO. Did he lie before the grand jury, or was he just perhaps just evasive? More than accusations in a book containing sensational claims of continued steroid use will be needed to pursue a criminal prosecution. A Yahoo Sports column (here) by Jeff Passan discusses the book. (ph)
Thursday, January 26, 2006
Being a general counsel for a corporation is getting to be almost as precarious as being a chief financial officer (see post below). Bruce Hill, who was the general counsel for Inso Corp., was convicted in June 2005 of one count of perjury for lying to the SEC in its investigation of accounting fraud at the company. The jury deadlocked on securities fraud and conspiracy counts of the indictment, and after sentencing the government dismissed those charges. Hill received a sentence of a year-and-a-day for the perjury conviction. The effect of giving him the extra day actually reduces his sentence because he is then eligible for good time credits that can reduce his sentence by 15%, so he will only have to serve a bit over ten months. According to a press release from the U.S. Attorney's Office for the District of Massachusetts (here):
Evidence presented during the month-long trial proved that at the end of September 1998, Inso Corporation, Inc. arranged a sham transaction whereby a Malaysian software distributor signed a purchase order for roughly $3 million upon assurances that Inso would actually sell the software to another customer within a few days or weeks.
At the end of 1998, HILL, who was the Vice President, Secretary, and General Counsel of Inso, played a pivotal role in arranging a series of deals that were designed to create the appearance that the Malaysian software distributor had paid Inso $3 million for software products that Inso had reported as sold during the third quarter of 1998. In sworn testimony before the SEC, HILL disavowed any knowledge about the preparation of a fraudulent certificate which purported to reflect approval by Inso's Board of Directors of the issuance of approximately $4 million in letters of credit that were used to create the appearance that Inso received $3 million in payment for the reported third quarter sale. At trial, the United States presented evidence that HILL had personally directed the preparation of the fraudulent certificate and approved its signing.
Share prices for Inso's stock tumbled in February 1999, when the company publicly announced that it would need to restate its revenues from the first three quarters of 1998. The company is no longer publicly traded.
Interestingly, that factual recitation relates to the counts on which the jury did not convict Hill, but the press release adds that "United States District Judge Douglas P. Woodlock  noted his finding that – based on a preponderance of the evidence – HILL did conspire to commit fraud in connection with the reporting of revenues . . . ." After Booker, there has been some doubt regarding the applicability of the preponderance of the evidence standard for sentencing factors beyond the offense of conviction. The sentence may well have been influenced by the judge's finding of Hill's participation in the fraud, despite the inability of the jury to find him guilty of securities fraud and other counts beyond a reasonable doubt. At the same time, a conviction for perjury by a lawyer in a government investigation, particularly by the general counsel of the corporation, is a situation that would often trigger a higher sentence. The sentence will likely be yet another issue on appeal in the case. (ph)
Wednesday, January 18, 2006
Former NBA star center Ralph Sampson, who is 7-4, finds himself in a bad position after being charged with perjury and making a false claim related to an affidavit of financial need he filed to obtain appointed counsel in connection with charges of failing to pay child support (see U.S. Attorney's Office press release here). Sampson, whose professional basketball career ended in 1992 due to injury, was charged in federal court in Virginia with failing to pay almost $250,000 in child support for two of his children who live in Northern Virginia, and he submitted the affidavit to demonstrate his lack of financial resources to hire counsel and requesting a court-appointed attorney. This was the second time Sampson had been charged with failing to pay child support (see earlier post here), and he agreed to a plea bargain on the latest child support charge that will require him to pay the past-due amount to avoid a 30-month prison term. The perjury and false claim charges will certainly make the hole he has dug for himself even deeper, if that's possible, and no doubt it will be harder for him to come up with both the back-payments and future child support. A story on ESPN.Com (here) discusses the case. (ph)
Friday, January 6, 2006
The Second Circuit upheld the convictions of Martha Stewart and Peter Bacanovic on conspiracy, false statement, perjury (Bacanovic only), and obstruction of an agency investigation charges in a published opinion (available on Findlaw here). The opinion is long -- 74 pages -- and goes into a fair amount of detail about the government's evidence because many of the legal issues relate to the weight of the evidence. After looking through it, it appears to me that the court deals with a number of discrete issues that are largely unremarkable, and only the first two issues in the opinion appear to be a potential basis for a Supreme Court appeal (assuming either defendant wishes to pursue a further appeal at this point).
The first issue the Second Circuit deals with concerns the application of the Supreme Court's 2004 decision in Crawford v. Washington, 541 U.S. 36 (2004), to a Confrontation Clause claim regarding the admission of statements by Stewart and Bacanovic in their interviews with the SEC and FBI as evidence against the other. The Court issued Crawford a short time after the jury verdict in the case, so the issue is reviewed only for "plain error," which is a very difficult standard for defendants to meet. For those whose eyes glaze over at the mere mention of the Confrontation Clause, suffice to say that Crawford does not permit the government to introduce out-of-court statements that are "testimonial," and Stewart and Bacanovic argued that the introduction of their statements violated the Confrontation Clause because they were made to government officials, and hence "testimonial" in nature. After Crawford, such statements cannot be introduced against another defendant without a chance to cross-examine the declarant (recall that neither Stewart nor Bacanovic testified). Crawford has caused a great deal of uncertainty about its application by not defining what is a "testimonial" statement, which is one reason why it could be an issue that might draw the Supreme Court's attention. The Second Circuit dealt with the defense argument in this way:
Here, Defendants do not have the temerity to argue that somehow Crawford precludes the government’s proof of the Defendants’ false portions of their statements because they were provided in a testimonial setting. Crawford expressly confirmed that the categorical exclusion of out-of-court statements that were not subject to contemporaneous cross-examination does not extend to evidence offered for purposes other than to establish the truth of the matter asserted. * * * Defendants object that certain truthful portions of their statements made during the course of the agreed-upon obstruction must be excluded because they are "testimonial." On the facts of this case, where the object of the conspiracy is to obstruct an investigation that is engaged in obtaining those testimonial statements of the conspirators, that objection must fail. * * *
As noted, the admissibility of such totally false statements, made in the course and in furtherance of the conspiracy, suffers no Sixth Amendment bar under Crawford. The truthful portions of statements in furtherance of the conspiracy, albeit spoken in a testimonial setting, are intended to make the false portions believable and the obstruction effective. Thus, the truthful portions are offered, not for the narrow purpose of proving merely the truth of those portions, but for the far more significant purpose of showing each conspirator’s attempt to lend credence to the entire testimonial presentation and thereby obstruct justice. It would be unacceptably ironic to permit the truthfulness of a portion of a testimonial presentation to provide a basis for keeping from a jury a conspirator’s attempt to use that truthful portion to obstruct law enforcement officers in their effort to learn the complete truth.
In other words, good effort, but it just can't work that way.
The second issue concerns the false testimony of Lawrence Stewart, the Chief Forensic Scientist at the Secret Service laboratory who testified about the ink used in a notation in Bacanovic's broker book about selling Stewart's ImClone shares "@60." Lawrence Stewart was later prosecuted and acquitted of perjury charges related to his testimony, and Stewart and Bacanovic argued that the government's use of perjured testimony violated their due process rights. False testimony in the government's case-in-chief is highly suspect, but the jury returned a not guilty verdict on the charge related to the false testimony. In light of that, the Second Circuit held:
Lawrence’s testimony did not influence the verdict on the counts of conviction. It pertained exclusively to Bacanovic’s "@60" worksheet and was used by the Government to support its position that the $60 stop-loss agreement was an after-the-fact fabrication. The jury acquitted Defendants of all of the counts and specifications relating to the existence of the agreement. Because the Government failed to persuade the jury to convict on the only counts to which Lawrence’s testimony related, that testimony cannot be considered capable of materially affecting the verdict on the counts to which it had no relevance.
The other issues relate to juror misconduct, the failure to give a jury charge for the defendants related to insider trading, evidentiary rulings excluding evidence of the legality of Stewart's sale of ImClone stock, and challenges by Bacanovic to his convictions (e.g., the "two-witness" rule for perjury). The issues are largely non-controversial, and the court's resolution of them is unlikely to be the basis for a Supreme Court appeal because they involve judgment calls by the district court in areas in which the trial judge has fairly wide discretion.
While the Stewart case has received an a great deal of media attention, the appellate opinion affirming the convictions shows that the legal issues are rather mundane, and certainly not of great legal importance except perhaps the Crawford and witness perjury questions. (ph)
UPDATE: Doug Berman has an interesting post (here) on the Sentencing Law & Policy blog on the pace of appellate review in non-capital cases like this one. (ph)
Monday, December 5, 2005
An earlier post (here) discussed an e-mail sent by a lawyer to his law firm partners describing his likely malpractice in representing a client, and I noted that this is not the type of thing to commit to writing. Here's another example of what not to write down, and, more importantly, not to recommend to a client. Tennessee attorney Scott Pratt was arrested for contempt of court and being investigated for attempting to suborn perjury by his client, and the evidence includes the following e-mail to his client, Meredith Grant, about her testimony in the upcoming DUI trial: "[T]hey won't have anyone there to testify how much you had to drink. You won't be charged with perjury. I've never seen them charge anyone with perjury, and everybody lies in criminal cases, including the cops. If you want to tell the truth, then we'll just plead guilty and you can get your jail time over with." Grant provided the judge in her case with copies of two e-mails from Pratt, which led to his arrest and the pending investigation by the Tennessee Bureau of Investigation. Not only is the recommended course of conduct completely unethical and illegal, but it is beyond stupid to put it in writing -- especially to a client, who may view the attorney's advice as a bargaining chip in her own case. Remember what your mother always told you: Just because everyone else is doing it doesn't make it right. A story on TriCities.com (here) discusses the case, and this story is also highlighted on the CrimLaw blog (here). (ph)
Monday, November 14, 2005
The House Government Reform Committee decided not to make a criminal referral to the Department of Justice regarding possible perjury by former Baltimore Oriole Rafael Palmeiro for his statement in March 2005 that he never took steroids and subsequent positive test for stanozolol, a powerful steroid. The Committee's report (here) describes Palmeiro's statement regarding how the steroids might have entered his system:
During his interview with Committee staff, Mr. Palmeiro stated that his best guess as to what caused his positive steroid test was his use of liquid B-12. The Committee obtained no evidence indicating that B-12 has ever been inadvertently contaminated with stanozolol. The vial of B-12 provided to Mr. Palmeiro by Mr. Tejada was discarded by Mrs. Palmeiro. However, two bottles of B-12 were provided to the Players Association by Mr. Tejada. Neither sample was contaminated with stanozolol. During the Committee staff’s interview of Player A, he stated he had a remaining vial of B-12 provided to him by Mr. Tejada in May of 2005. Player A gave to the Committee the remainder of the vial of B-12. This bottle was tested, and also contained no stanozolol.
During the 2005 season, Mr. Tejada and Player A both injected B-12 purchased by Mr. Tejada and neither tested positive for steroids under MLB’s testing program. Based on this information, the interviews with Miguel Tejada and Player A, and the analysis run on the vial of B-12 provided to Player A by Mr. Tejada, the Committee is unable to determine whether the B-12 provided to Mr. Palmeiro by Mr. Tejada contained stanozolol.
Despite the clear problems with this excuse, the Committee concluded, quite properly, that the higher threshold for perjury could not be met, despite such a seemingly preposterous "explanation" from Palmeiro. Of course, showing that birds of a feather truly flock together, Jose Canseco, who accused Palmeiro in a book of taking Stanozolol, refused to provide the Committee with any specific information about Palmeiro's use that would support a perjury charge. No doubt such information would have required Canseco to wrack his brain, and would be unlikely to generate additional book sales. A sad chapter is closed, at least until Palmeiro comes up for election to the Hall of Fame five years from the end of his playing career, which may well have already happened. (ph)
Saturday, November 5, 2005
After Ronald Perelman won a $1.58 billion fraud judgment against Morgan Stanley for its failure to properly warn him about problems at client Sunbeam Inc., the financier pursued criminal contempt charges against the firm for alleged perjury by its lawyers and officers regarding the production of e-mail evidence. At the initial fraud trial, Judge Elizabeth Maass held that Morgan Stanley's repeated failure to produce e-mails permitted the court to find that the firm intended to defraud Perelman, so the only issue at trial was the amount of the damages. On top of the fraud verdict, the court has now heard Perelman's petition that Morgan Stanley be held in criminal contempt for its misleading statements to its opponent and the court about the completeness of its document production. The judge is considering the motion, which raises questions about the intent of the firm and its lawyers, and whether a private party can pursue a criminal contempt action. An adverse ruling would be more than a black eye for Morgan Stanley because it holds licenses to trade securities in all the states, and some of those could be placed in jeopardy by a criminal contempt citation. A nasty fight keeps getting nastier. A CNN.Com story (here) discusses the contempt proceeding. (ph)