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)

Saturday, December 5, 2015

Total Defense Victory in EDVA Health Care Fraud Trial

Congratulations to the defense team members and their client in U.S. v. Bajoghli. After a 16 day trial, the dermatologist defendant was acquitted on all counts--over 40. Dr. Bajoghli was represented by Peter White and  Nicholas Dingeldein of Schulte Roth & Zabel and Kirk Ogrosky and Murad Hussain from Arnold & Porter. The jury was out a day and a half.

There was some interesting motion work during the pre-trial phase, for those of us interested in government efforts to affect witness testimony. Six weeks before the original trial date, the government sent "victim impact notification" letters to several of Dr. Bajoghli's patients. Dr. Bajoghli complained that the patients, many of whom were scheduled to be defense witnesses, were not victims and that the letter was intended to prejudice the patients against him. Judge Gerald Lee granted the motion and issued a corrective letter. Here are the relevant papers: Bajoghli Motion in Limine Seeking Corrective Witness Instructions,  Exhibit A Ogrosky Letter to DOJExhibit B to Bajoghli Motion,  Order Granting Motion for Corrective Witness InstructionCourt's Corrective Witness Letter.

(wisenberg)

December 5, 2015 in Defense Counsel, Fraud, Judicial Opinions, Prosecutions, Verdict | Permalink | Comments (0)

Thursday, December 3, 2015

Not Guilty on Two Counts and Conviction on a Misdemeanor Count in CEO's Case Following Deadly Mining Accident

It is interesting to see the headlines from the NYTimes - Former Massey Energy C.E.O. Guilty in Deadly Coal Mine Blast and Politico - Coal baron convicted for mine safety breachesBoth headlines focus on the conviction of the CEO.  The Wall Street Journal headline says - Jury Convicts Former Massey CEO Don Blankenship of Conspiracy - but does say in smaller print below this headline "Former executive found not guilty of securities-related charges after deadly West Virginia mining accident."

Yes, it is important to note that a CEO was convicted here of workplace related safety violations and this was after a deadly accident.  But what is also important is that CEO Blankenship was found not guilty of the serious charges that he initially faced.  What started as a 43 page indictment by the government (see here), ended as a misdemeanor conviction on one count.  William W. Taylor, III of Zuckerman Spaeder LLP was the lead on this defense team.   

(esp)

December 3, 2015 in Defense Counsel, News, Prosecutors, Securities, Verdict | Permalink | Comments (0)

Monday, November 30, 2015

Former New York State Speaker Silver is Convicted

Longtime New York State Assembly Speaker Sheldon Silver, a Democrat, was found guilty today by a Southern District of New York federal jury on corruption charges, including honest services theft and extortion under color of law.  As Speaker and majority leader, Silver was one of the "three men in a room" who controlled the New York Legislature (the others being the Governor and Senate majority leader, almost always a Republican, one of whom, Dean Skelos, is now on trial on corruption charges in the same courthouse as Silver was - an apparent show of federal prosecutorial bipartisanship).

Silver had requested and received case referrals to the tort specialty law firm where he was counsel from a doctor to whose university-affiliated clinic he later directed a half-million dollar state grant.  He also requested from two major real estate firms that they send business to a different law firm from which he received large referral fees.  Although the doctor and the real estate firm officers testified that they made the referrals to curry favor and influence Silver, no witness testified that there was an explicit quid pro quo or specific agreement that Silver would perform a specific (or even unspecific) act, although the government maintained that Silver did perform official actions that benefited the doctor and the real estate firms.

The defense argued that there was no quid pro quo, that the referrals were made out of friendship and respect, and that the official acts performed by Silver were legitimate and not performed because of the referrals.

The verdict was no surprise.  Although the defense portrayed the incidents as "politics as usual," the "politics" just stunk.  Silver had clearly received benefits, referrals to law firms from which he received millions of dollars only because those who had provided these benefits thought that Silver as a powerful official would do things - unspoken, unspecific and perhaps then unknown - that would benefit them.  The cases, on which Silver did no actual legal work, were not referred to him because of his reputation as a lawyer.

On the one hand, as one who loathes corruption, I am somewhat gratified that it now appears (subject to judicial reversal of the jury verdict) that a public official may not request   a substantial valuable benefit, direct or indirect, if he or she knows or believes, that the donor is conferring the benefit because the donor believes that the official will exercise his or her official power to the donor's advantage, even in the absence of an agreement that the official do anything in his official capacity. 

On the other hand, I am concerned about what in effect is legislation by prosecution, even if it is good legislation.  However unwholesome Silver's conduct was, he might have been convicted for what had been generally perceived as acceptable conduct in his world that he believed was not criminal.  For better or worse, U.S. Attorney Preet Bharara has essentially changed the rules.  A corruption conviction does not require as a quid pro quo that there be an agreement by a public servant to do a specific act or at least generally to act favorably in the future when circumstances arise, as many prosecutors had believed for years (and some still do).   While the "new" rule is certainly better for society as a deterrent to corruption, I have some concern whether it is just to convict, and likely imprison for a considerable time, someone who acted within what he believed the rules were.

Perhaps this case will embolden prosecutors to go further in charging public officials.  Here, Silver clearly solicited benefits, received benefits, and, at least in the case of the doctor, in return provided a benefit, even if not pursuant to an agreement.  Will cases now be brought where public official receive monetary or equivalent benefits from those intending to influence them even where there is no evidence of solicitation by the officials and/or no evidence that the officials did anything in return for the benefits received?  And what about cases involving campaign contributions made by donors and accepted by a candidates in the expectation that the candidates will act favorably toward their causes, and the candidates (if elected) do so act?  (Or should there be an exemption for cases involving campaign funding?)

(Note - Silver, whom I have never met or spoken with, reappointed me three times as his designee to serve on  the New York State Commission on Judicial Conduct, but did not reappoint me a fourth time.)

November 30, 2015 in Corruption, Current Affairs, Prosecutions, Prosecutors, Verdict | Permalink | Comments (0)

Wednesday, July 16, 2014

Rengan Rajaratnam Acquittal Good for Criminal Justice System

As my editor, Ellen Podgor, noted last week (see here), the winning streak in insider trading cases of the U.S. Attorney's Office for the Southern District of New York ended with the jury's acquittal of Rengan Rajaratnam, the younger brother of Raj Rajaratnam, who was convicted of insider trading in 2011 and sentenced to eleven years in prison.

The U.S. Attorney has done an excellent job in prosecuting insider trading, securing convictions by plea or trial of 81 of the 82 defendants whose cases have been concluded in the district court.  The office has appropriately targeted primarily professional financial people who seek or provide insider information rather than those incidental offenders who by chance have received or provided insider tips and taken advantage of their knowledge.  A few of these trial convictions, however, appear to be in jeopardy.  At oral argument in a recent case the Second Circuit Court of Appeals seemed sympathetic to the contention that a trader may not be found guilty unless he knew that the original information came from a person who had received a benefit, and not only had violated a fiduciary duty of secrecy.  Judge Naomi Reice Buchwald, who presided over the Rajaratnam case, agreed with that contention and thereupon dismissed two of the three counts.

Whether the prospective Second Circuit ruling, if it comes, will make good public policy is another matter.  Insider trading (which fifteen years ago some argued should not be a crime) is, or at least was, endemic to the industry.  Presumably, the U. S. Attorney's successful prosecutions have had a positive step in putting the fear of prosecution in traders' minds.  Such deterrent to a particularly amoral community seems necessary:  a recent study demonstrated that twenty-four percent of the traders interviewed admitted they would engage in insider trading to make $10 million if they were assured they would not be caught (the actual percentage who would, I suspect, is much higher).  See here.

The latest Rajaratnam case, indicted on the day before the statute of limitations expired, was apparently not considered a strong case by some prosecutors in the U.S. Attorney's Office.  See here and here.  Indeed, jurors, who deliberated four hours, described the evidence as "no evidence, period" and asked "Where's the evidence?"  That office nonetheless did not take this loss (and generally does not take other losses) well.  It was less than gracious in losing, making a backhanded slap at Judge Buchwald, a respected generally moderate senior  judge.  A statement by the U.S. Attorney Preet Bharara noted, "While we are disappointed with the verdict on the sole count that the jury was to consider, we respect the jury trial system . . . ."  (Italics supplied.)

Southern District judges, generally out of deference to and respect for the U.S. Attorney's Office, whether appropriate or undue, rarely dismiss entire prosecutions or even counts brought by that office, even in cases where the generally pro-prosecution Second Circuit subsequently found no crimes.  See here.  It is refreshing to see a federal judge appropriately do her duty and not hesitate to dismiss legally or factually insufficient prosecutions.

Such judicial actions, when appropriate, are particularly necessary in today's federal system where the bar for indictment is dropping lower and lower.  The "trial penalty" of a harsher sentence for those who lose at trial, the considerable benefits given to cooperating defendants from prosecutors and judges, and the diminution of aggressiveness from a white-collar bar composed heavily of big firm former federal prosecutors have all contributed to fewer defense challenges at trial and lessened the prosecutors' fear of losing, a considerable factor in the prosecutorial decision-making process.  Acquittals (even of those who are guilty) are necessary for a balanced system of justice.

Lastly, it is nice to see a major victory by a comparatively young (43) defense lawyer, Daniel Gitner of Lankler, Siffert & Wohl, an excellent small firm (and a neighbor), in a profession still dominated by men in their sixties or seventies.

 (goldman)

July 16, 2014 in Current Affairs, Defense Counsel, Fraud, Insider Trading, Judicial Opinions, News, Prosecutions, Prosecutors, Securities, Statutes, Verdict | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 4, 2012

Second Circuit Vacates Part of Tax Shelter Case

Guest Blogger - Peter D. Hardy (Post & Schell)

On November 29, a divided panel of the Second Circuit vacated two out of four convictions obtained at trial by the government in the massive Ernst & Young (E&Y) tax shelter case, due to insufficient evidence.  The opinion, United States v. Coplan et al, 10-583-cr(L), is available here.

In Coplan, four defendants were convicted after a 10-week trial on a variety of criminal tax charges arising out of their alleged involvement in the development and defense of five complicated tax shelters that were sold or implemented by E&Y to wealthy clients.  Two defendants, Nissenbaum and Shapiro, had been tax attorneys at E&Y who were each convicted of conspiracy to defraud the United States and to commit tax evasion (18 U.S.C. §371) and two substantive counts of tax evasion (26 U.S.C. §7201).  Nissenbaum also was convicted of one count of obstructing the IRS, in violation of 26 U.S.C. §7212(a), on the basis of allegedly causing false statements to be submitted to the IRS in response to an Information Document Request (IDR) submitted when the IRS was examining one of the tax shelters at issue.

The opinion is lengthy and complex, and resists easy summarization.  It is well worth reading because it discusses in detail a kaleidoscope of issues relevant to any "white collar" criminal trial, from evidentiary rulings to jury instructions to sentencing.  This commentary is limited to the sufficiency of evidence claims, and some of their implications for lawyers as potential defendants.

The panel in Coplan displayed a remarkable willingness to comb through an extremely complicated trial record and test every nuanced inference that the government urged could be drawn from the evidence in support of the verdicts.  The bottom-line holding of the panel was that, after making all inferences in favor of the government, the convictions had to be vacated because the evidence of guilt was at best in equipose.

Although this general principle can be stated easily, its practical application in Coplan involved the panel conducting a particularized review of the evidence that appellate courts often forego.  For example, one important fact for Shapiro was that a tax opinion letter provided to shelter clients stated that, for the purposes of the "economic substance" test governing tax-related transactions, the clients had a "substantial nontax business purpose" (OK, per the Coplan panel), rather than stating, as it had before Shapiro’s revisions, that the clients had a "principle" investment purpose.  Likewise, although Shapiro had reviewed letters and attended phone conferences deemed incriminating by the government, his involvement in such conduct was not "habitual" or otherwise substantial.  As for Nissenbaum’s Section 7212(a) conviction, his response to the IDR that the government characterized as obstructive – a partial explanation of the clients’ subjective business reasons for participating in the tax shelters – could not sustain the conviction because the IDR drafted by the IRS had sought all reasons held by the clients, rather than their primary reason.  If this sounds somewhat murky and convoluted, it is.  The point is that multiple convictions for very significant offenses were vacated after much effort at extremely fine line-drawing.

The implicit theme running throughout the discussion of the evidence was that it was not sufficiently clear that these lawyers had crossed the line while attempting to assist their clients, to whom they owed a duty.  The competing tensions that lawyers can face was encapsulated in a jury instruction discussed later in the opinion.  Although the trial court instructed the jury as requested by the defense that "[i]t is not illegal simply to make the IRS’s job harder[,]" it declined to instruct the jury on the larger defense point that "[t]his is particularly true for the defendants, whose professional obligations as attorneys or certified public accountants required them to represent the interests of their clients vigorously in their dealings with adversaries, such as the IRS." 

The Coplan case echoes partially the case of Lauren Stevens, the former in-house counsel for GlaxoSmithKline who was indicted and tried in 2011 by the government for allegedly obstructing a U.S. Food and Drug Administration investigation of alleged off-label practices by the company.  The district court dismissed all charges against Ms. Stevens at the end of the government’s proofs for insufficient evidence.  The ruling was a tremendous defense victory and underscored, like the Coplan case, the difficulties that the government can face when it targets a lawyer on the basis of alleged conduct undertaken on behalf of a client.  Nonetheless, these cases still stand as cautionary tales to practitioners.  Although there are important differences between Coplan and Ms. Stevens' case, both cases remind us of the pitfalls that can await advocates who stumble into the cross-hairs of the government.  Ms. Stevens – like Shapiro and Nissenbaum – was fortunate enough to have an extremely conscientious court willing to parse through the nuances of the evidence, a great defense team, and the resources for extended litigation.  It is no slight to these clients or their lawyers to recognize that, in many ways, sheer luck played a role in their ultimate outcomes.  Although acquittals can provide vindication, such finales may provide limited comfort to the client after the excruciating process of being investigated, charged and tried.  That such a process might turn eventually on the precise phrasing of a document, or how a conference call might be handled, is sobering.

(Peter Hardy)

December 4, 2012 in Prosecutions, Prosecutors, Tax, Verdict | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 19, 2012

Reactions to Gupta Verdict

The jury deserves credit - they clearly evaluated all the counts as evidenced by their finding of guilt in some and not guilty in others.  The judge deserves credit - Hon. Jed Rakoff is a leading scholar and superb jurist. 

But should this be a crime? And exactly what is the crime? Should individuals who obtain little or no personal profit be subject to criminal penalties?

And what evidence should a jury hear during the trial?  Should wiretaps that are select conversations of the government be allowed to be used against a defendant in a securities fraud case, when this crime is not included in the criminal activity of our wiretap laws (see here)?

There is an interesting interplay here.  On one hand we have someone being convicted for using "secret" information - the insider trading. On the other hand we have the government using "secret" information to convict the individual - the wiretaps.  I keep wondering if there is anything that can be "secret" anymore.  In this information age it seems like information is so accessible that it is difficult to claim anything as being "insider."

 (esp)

June 19, 2012 in Investigations, Securities, Verdict | Permalink | Comments (0) | TrackBack (0)

Monday, June 18, 2012

Government Strikes Out in Clemens - Ballgame Over

As noted here, here, and here - Roger Clemens has been acquitted.

This nine week trial cost us how much? And what about the first mistrial, too (here)?

And while this was going on, how many cybercrimes and identity thefts have gone unnoticed. And when the investigation of this case was occurring, did we miss some Ponzi schemes and mortgage frauds?

We have limited resources - we need to use them wisely.

Hats off to Michael Attanasio and Rusty Hardin.

(esp)

June 18, 2012 in Celebrities, Defense Counsel, Verdict | Permalink | Comments (0) | TrackBack (0)

Friday, June 15, 2012

Gupta Convicted On Some Counts & Acquitted On Others

Thursday, May 31, 2012

Should Edwards Be Retried?

As noted here, John Edwards was found not guilty on one count, and the jury was unable to reach a verdict on the remaining counts. Prosecutors should now move on and not retry Edwards on these remaining counts. 

The government has expended enough taxpayer money on this case and Edwards most likely has had to incur the cost of his defense. Prosecutors have already hurt Edward's reputation with the evidence presented at trial - so there is no punishment basis for proceeding further.  Evidence not presented at trial left the murky question of whether this money was even a political contribution, and the testimony of Federal Election Commissioner Scott E. Thomas that was not heard by the jury raises additional issues on campaign contributions.   But the place to resolve this is not in the criminal courtroom.  More importantly, if skilled folks can differ on this question then one certainly should not hold someone criminally liable.

No one walks out unhurt by this trial.  And that is the huge cost that comes with a prosecution.  It is for this reason that prosecutors need to consider carefully prior to charging anyone with criminal conduct.

(esp)

May 31, 2012 in Judicial Opinions, News, Prosecutions, Prosecutors, Verdict | Permalink | Comments (1) | TrackBack (0)

Tuesday, March 6, 2012

Stanford Convicted

Wednesday, July 6, 2011

Not Guilty of OSHA Violations

It is not often that companies are criminally charged, and usually when it happens, regardless of the merits, we see the company enter a guilty verdict or enter into a deferred prosecution agreement (see here).  But not Xcel Energy, Inc. and Public Service Company of Colorado.  They were charged, they exercised their right to a jury trial, and were found not guilty after close to a month-long trial. 

The Justice Department brought criminal charges against this Fortune 250 public company alleging safety violations - OSHA violations - in the deaths of five contractors at a hydro-electric power plant in Colorado.  

Clearly this is an incredibly sad situation, with many families suffering and one cannot help but have the deepest sympathy for each person who has suffered here. 

But one also has to wonder whether our criminal justice system should be used for prosecutions alleging OSHA violations from industrial accidents.  Would these matters be better left for the administrative and civil process? And would our scarce resources be better spent educating companies on how best to keep workers' safe?

The company was represented by Cliff Stricklin, Chair of Holme Roberts & Owen's White Collar & Securities Litigation Group in Denver, Colorado. Stricklin also is an adjunct professor teaching white collar crime at University of Colorado School of Law.

See also John Ingold, Denver Post, Xcel Energy Found Not Guilty in 2007 Deaths of Five Workers in Colorado

(esp)

July 6, 2011 in Civil Enforcement, Civil Litigation, Deferred Prosecution Agreements, Environment, Prosecutions, Verdict | Permalink | Comments (1) | TrackBack (0)

Monday, June 27, 2011

Blagojevich Found Guilty on 17 of 20 counts - Joining The Illinois Governor Convicted Felon Club

The press is reporting herehere, here, and here, that Former Illinois Governor Rod Blagojevich has been found guilty of 17 counts, not guilty on one count, and two counts with no verdict. This was the second trial, the first ending in a hung jury except for one count. The jury was out this time for 10 days.  Blagojevich did not testify in the first trial, but did testify this time. 

A second trial was an enormous benefit to the government.  They had the opportunity to re-evaluate their case and to see that keeping it simple was the smarter choice. They also had the conviction on one count to allow them to start cross-examination against him with the "convicted felon question."  

Why is it that so many Illinois Governors wind up as convicted felons?  (e.g. Otto Kerner, Dan Walker, George Ryan, and Rod Blagojevich).  

(esp)

Addendum - Doug Berman, Sentencing Law and Policy Blog here

June 27, 2011 in Fraud, Verdict | Permalink | Comments (6) | TrackBack (0)

Wednesday, May 25, 2011

Mixed Verdict in Alleged Tax Fraud Scheme

The DOJ Press Release is titled, Jenkens & Gilchrist Attorneys, Former BDO Seidman CEO and Deutsche Bank Broker Found Guilty in New York of Multi-Billion Dollar Criminal Tax Fraud Scheme - Massive, 10 Year Criminal Scheme Generated More Than $7 Billion Dollars of Fraudulent Tax Losses

The Press Release states in part:

"NEW YORK – Paul M. Daugerdas, Donna M. Guerin, Denis M. Field and David Parse were convicted today in Manhattan federal court for their roles in a tax shelter scheme in which they designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to avoid paying taxes to the Internal Revenue Service (IRS), announced Preet Bharara, U.S. Attorney for the Southern District of New York; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Victor S.O. Song, Chief of the IRS Criminal Investigation. Together, Daugerdas, Guerin and Field made $130 million in profits from the 10-year scheme. 

But the press release also notes that, "Raymond Craig Brubaker,. . . a banker at Deutsche Bank who was also charged along with the defendants, was acquitted by the jury on all counts."

Brubaker was represented by the law firm of Kramer, Levin, Naftalis & Frankel.

(esp)

May 25, 2011 in Fraud, Tax, Verdict | Permalink | Comments (0) | TrackBack (0)

Monday, May 23, 2011

President Obama Grants Eight Pardons

It is good to see that President Obama is using his pardon powers, granting eight pardons this past week. (See Press Release here) Clearly more pardons would have been better as there are many suffering from the collateral consequences of a conviction that should not have happened. Likewise, there are many that have significantly reformed their lives and are deserving of a second chance.    Some observations about these pardons:

  • Four of the eight included a conspiracy count.
  • Three of the eight had a drug related charge.
  •  The largest sentence that had been given in any of these offenses was five years.
  •  Four had a sentence of no prison time.
  • The most recent sentencing from these cases was 2001.
  • Seven of the eight cases were prior to 2000.
  • Only two cases were from the same state, that being Indiana.

An important question to ask is whether any of these cases should have been criminal activity in the first place. Did we really need to send someone to prison for "the possession and sale of illegal American alligator hides" in violation of the Lacey Act?  Would a civil fine have been sufficient?

(esp)

May 23, 2011 in Government Reports, Money Laundering, News, Prosecutions, Sentencing, Verdict | Permalink | Comments (3) | TrackBack (0)

Monday, April 18, 2011

Reflecting on Skilling after the Barry Bonds Verdict

Guest Blogger - Dane C. Ball (Gerger & Clarke)

I was annoyed by the result in Skilling—that the unquestionable honest-services error was “harmless” beyond a reasonable doubt.  But at the time I couldn’t articulate exactly why.  After the Bonds verdict, I can.  In short, the Bonds verdict illustrates the silliness of the conclusion in Skilling that appellate courts can and should sit as the 13th, 14th, and 15th jurors, then use a cold record to speak for the first 12 jurors while pretending appellate courts have crystal balls that make this okay.

 Compare the two cases.  Skilling’s trial was infected by honest-services error:  in the indictment; in the evidence; in the argument; and in the instructions.  Kicking a door cracked open by the Supreme Court in Pulido, the Fifth Circuit swept this under the rug—finding harmlessness—by pretending it could satisfactorily predict that the jury would have convicted on all counts even absent the error.  To be sure, this put the nail in the coffin for the Yates standard of review, which said that when multiple theories are charged and instructed and one is impermissible, reversal usually is automatic because it is “impossible to tell” whether the jury relied on the impermissible theory.  The Yates standard respected the constitutional right to an impartial jury of one’s peers (which appellate courts concerned with finality and efficiency certainly are not); it recognized the limitations of an appellate court’s ability to predict the past under changed circumstances; and it acknowledged that juries are composed of human beings (not robots) who can be and often are influenced by intangibles not apparent in a paper record. 

The Bonds verdict illustrates why eradicating the Yates standard was a bad idea—and indeed leads to a standard that infringes the right to an impartial jury of one’s peers.  Bonds was charged with repeatedly lying to a grand jury, and obstruction of justice essentially based on repeatedly lying to that grand jury.  With a proper indictment and charge, the impartial jury of Bonds’ peers hung on whether Bonds lied to the grand jury, but agreed that he obstructed by lying to the grand jury.  There are hyper-technical legal ways to attempt to explain this—but in reality (where jurors live), the verdict makes little sense.  And surely Bonds’ attorneys will file a motion challenging the sole conviction on this basis. 

But more importantly to me, Bonds illustrates what was right with Yates and what is wrong with Skilling.  Appellate court’s aren’t very good at predicting the past under changed circumstances.  I’d venture to guess that if the Fifth Circuit judges who decided Skilling had placed bets on the Bonds verdict, they’d have batted 0 for 3 predicting hung counts on lying but conviction on obstruction based on lying. 

I hope the defense bar won’t give up on the Yates standard.

(dcb)

April 18, 2011 in Celebrities, Enron, Judicial Opinions, Obstruction, Prosecutions, Verdict | Permalink | Comments (1) | TrackBack (0)

Wednesday, April 13, 2011

News Reports on Verdict in Barry Bonds Trial

AP, AJC, Barry Bonds found guilty of obstruction

Maura Dolan, LATimes, Barry Bonds Convicted of Obstruction of Justice in Steroids Case

Ben Forer, ABC News, Barry Bonds Convicted of Obstruction of Justice, but Jury Hung on Other Charges

Fox News, Bonds guilty of obstruction of justice

Juliet Macur, NYTimes, Bonds Guilty of Obstruction of Justice

Laird Harrison & Dan Levine, Reuters, U.S. jury finds Barry Bonds guilty on one count

Alan Duke, CNN, Bonds convicted of obstruction of justice

 Why is it that the headlines tend to focus on the conviction and not the counts that did not result in a conviction (although it is noticed that ABC News did not do this).  Was this long investigation and trial worth it?  Is this how our tax dollars should be spent?

For background see here.

(esp)

April 13, 2011 in Antitrust, Celebrities, Obstruction, Sports, Verdict | Permalink | Comments (0) | TrackBack (0)

Monday, November 15, 2010

Kevin Ring Convicted Yet DOJ Wants More in an Honest Services Statute

According to a DOJ Press Release, "a federal jury in Washington convicted Kevin A. Ring, a former lobbyist who worked with Jack A. Abramoff, on five counts related to a scheme to corrupt public officials by providing a stream of things of value."  The Press Release states that:

"The jury found Ring guilty on one count of conspiring to corrupt congressional and executive branch officials by providing things of value to them and their staff in order to induce or reward those who took official actions benefitting Ring and his clients.   In addition, Ring was convicted of one count of paying a gratuity to a public official and three counts of honest services wire fraud for engaging in a scheme to deprive U.S. citizens of their right to the honest services of certain public officials.   The jury acquitted Ring on three counts of honest services fraud.   A previous federal jury failed to reach a verdict in the case and the court declared a mistrial."

Interestingly, this verdict comes on the heels of a response by Assistant AG Lanny Breuer to a question by Senator Patrick Leahy, where Breuer claims that there is a need to revise the honest services statute post Skilling. The Court's decision in the Skilling case had limited honest services to "bribery and kickbacks."  Breuer's first answer to a question posed to him tells of two cases where honest services premised on self-dealing was charged - but in both instances he says that it was in addition to bribery charges.  If bribery was present in these two cases, then why should Congress revise the mail fraud statute?  DOJ fails to present a specific need for this legislation.

Breuer then proceeds to state that "without a legislative fix, it will be more difficult and, in some instances, impossible to prosecute federal officials, as well as state and local officials for significant corrupt conduct."  See letter -Download Breuer_Answers  But he can provide no cases and his reasoning for not using existing statutes like section 208 is because this statute is not a predicate for a RICO charge, while mail fraud does serve this function. Is Assistant AG Breuer telling us that he can't circumvent the limits of RICO without this mail fraud fix? Is he saying that Congress should extend a statute so that he can get around congressional intent in the RICO statute?  It's also, he says, because he needs honest services as a predicate for Title III wiretaps. Here again is he saying that he can't circumvent the limits of Title III wiretaps without having a loose mail fraud statute that allows DOJ to use and abuse their discretion. 

With a conviction in the Ring case, it is hoped that the Senate will look closely at the rationale offered by DOJ for needing to expand the honest services provisions of the mail fraud statute. It is also hoped that DOJ will think twice about allowing the possible use of mail fraud to circumvent the existing RICO and wiretap mandates. It is a sad day when prosecutors ask for more power in a statute so that they can use it to circumvent existing laws. 

(esp)

November 15, 2010 in Fraud, Verdict | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 17, 2010

Blago Verdict: Read All About It

The former Governor of Illinois is convicted on one Section 1001 count while the jury hangs on the other 23 charges. The jury hangs on all counts against Blago's brother. The Los Angeles Times has the story here. When the testimony wrapped up two weeks ago, Esquire asked its reporter John Bohrer to pretend he was a juror and opine on the outcome. Bohrer's analysis of the evidence is here. In a remarkable bit of prescience, Bohner noted that, "the Government couldn't close the deal. And that's why I'm voting to acquit." Bohrer still hated Blago, but did not feel that he belonged in prison or was worth the expense to prosecute. "I'll hand it to the prosecution on one of these charges: It does seem like he stone-cold lied to the FBI when they questioned him about whether he mixed state business with fundraising."  Pretty close call. Pretty amazing.

(slw)

August 17, 2010 in Celebrities, Corruption, Current Affairs, Fraud, Prosecutions, Prosecutors, Verdict | Permalink | Comments (1) | TrackBack (0)

Monday, June 21, 2010

Not Guilty for Miami Cops Charged With Perjury

Three Miami police officers were found not guilty after a trial by jury on charges of conspiracy to make false statements, perjury and obstruction of justice.  One of the individuals was represented by Attorney Richard Sharpstein.

See also David Oscar Markus, Southern District of Florida Blog,  NGs for the cops on trial before Judge Middlebrooks; David Ovalle, Miami Herald, Federal Jury Acquits Miami-Dade Cops of Perjury in Weapons case 

(esp)

June 21, 2010 in Verdict | Permalink | Comments (0) | TrackBack (0)