Thursday, November 21, 2013

Defining Moral Turpitude

The District of Columbia Court of Appeals has ordered disbarment of an attorney convicted of obstruction of justice and other offenses.

The court held that the crime inherently involves moral turpitude, for which disbarment is mandated under governing federal statute.

Huffpost Crime had details of the offenses in this June 2012 post:

A U.S. lawyer who worked for  some of the country's most prestigious firms was sentenced on  Monday to a record 12 years jail for an insider trading scheme  which lasted 17 years and netted more than $37 million between  1994 and 2011.

Matthew Kluger's sentence is the longest ever handed down in  an insider trading case and is one year longer than the 11 year  jail term imposed last year on Galleon Group hedge fund founder  Raj Rajaratnam for insider trading charges.

Kluger was sentenced by U.S. District Judge Katharine Hayden  of Newark federal court. Hayden also sentenced stock trader  Garrett Bauer to nine-years jail for his role in the scheme and  a third person, Kenneth Robinson, is scheduled to be sentenced  on Tuesday.

"The severe sentences imposed today are a warning to anyone  trying to game the financial markets for their own enrichment,"  said New Jersey U.S. Attorney Paul Fishman in a statement.

An attorney for Kluger said he planned to appeal against the  sentence. "It is unduly harsh and fails to reflect that Mr  Kluger received only a fraction of the proceeds from the  offense," said attorney Alan Zegas.

An attorney for Bauer did not return a call seeking comment.

Federal prosecutors and securities regulators accused the  trio of trading on inside information ahead of at least 11  corporate deals.

The three men used merger secrets gathered by Kluger while  he worked as a corporate attorney for prominent law firms,  including Cravath Swaine & Moore; Skadden, Arps, Slate, Meagher  & Flom; and Wilson Sonsini Goodrich & Rosati.

In one instance, Kluger tipped Robinson on Oracle Corp's   impending acquisition of Sun Microsystems Inc in 2009.  In another, the trio traded ahead of Intel Corp's   takeover of McAfee Inc in 2010.

Bauer kept the majority of the proceeds, using some of the  profits to buy a $6.65-million condominium on Manhattan's Upper  East Side and an $875,000 home in Boca Raton, Florida.

Robinson acted as a middleman between Kluger and Bauer in an  elaborate scheme that involved the use of public payphones and  prepaid disposable cell phones in an attempt to hide their  activities from law enforcement. Prosecutors said the men netted  more than $37 million between 1994 and 2011.

The three men have agreed to pay back their ill-gotten gains  plus interest. Bauer agreed to pay $31.6 million, Kluger will  pay $516,000 and Robinson settled for $845,000, an amount  regulators said reflected his willingness to aid authorities.

Both Bauer and Kluger pleaded guilty in December to one  count each of conspiracy to commit securities fraud, securities  fraud, conspiracy to commit money laundering and obstruction of  justice. Robinson pleaded guilty in April 2011 to one count of  conspiracy to commit securities fraud and two counts of  securities fraud.

While the court noted that the concept of moral turpitude is not subject to precise definition, obstruction of justice fits comfortably into the court's jurisprudence that defines the concept. (Mike Frisch)

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