Saturday, August 10, 2024

Criminal Division Corporate Whistleblower Awards Pilot Program

Using civilians outside DOJ to assist in the fight against crime is not new.  We have seen it with the addition of Civil RICO in 1970 (18 U.S.C. 1964), and of course the government partnership with those outside the government under the False Claims Act.  We have also seen government calls to the public for information related to criminal acts, and the government's use of cooperating witnesses to secure information and testimony against other perpetrators of crimes. That said, the Criminal Division Corporate Whistleblower Awards Pilot Program has some unique aspects that could incentivize individuals to assist the government in reducing criminality.

The program guidance limits the applicable areas to:  (1) certain crimes involving financial institutions, from traditional banks to cryptocurrency businesses; (2) foreign corruption involving misconduct by companies; (3) domestic corruption involving misconduct by companies; or (4) health care fraud schemes involving private insurance plans.  The foreign corruption by companies is particularly intriguing as it can be an area difficult to obtain accurate information.  Likewise, this may be another way to infiltrate misconduct in the cryptocurrency world.

The DOJ provides FAQs for Potential Whistleblowers and also for Companies here. But is also notes that "A whistleblower award is made in the Department’s sole discretion." Finally, the DOJ announcement reminds companies that voluntary "self-report within 120 days of receiving an internal whistleblower report may be eligible for a presumption of a declination under the Criminal Divisions's Corporate Enforcement and Voluntary Self-Disclosure Policy if the company reports to the Department before the Department contacts the company." (Note -Temporary Amendment to the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy)

It is good to see the government exploring new methods to achieve corporate compliance.  In the future evaluation of this program, it is hopeful that there will be a cost-benefit analysis to ascertain whether the program proves to be an administrative challenge for the government in comparison to the rewards of achieving compliance.  But it will be important to factor into that analysis the intangible factors of how many companies step into line just on the mere threat of possibly being caught up in this new whistleblower program. 

(esp)

August 10, 2024 in Corruption, Fraud, Investigations, Prosecutions, Prosecutors, Qui Tam | Permalink | Comments (0)

Sunday, July 21, 2024

Project 2025 - Wakeup!

Project 2025's (here) Presidential Transition Project, a Report coming from the Heritage Foundation, is a disappointing work that is surprisingly coming from an organization that spent time in its past to do reports on topics such as Overcriminalization, working in a bipartisan approach to study correctable and needed areas of the law. This Report, however, is clearly partisan, describes itself as such ("conservative"), but most importantly makes statements that in some instances ignores a basic principle of Socrates - "He who asserts, must prove." (Podgor adds - he, she, or they who assert much prove).   

Focusing here on only one part of the Report, The Department of Justice, the opening statement is accurate - "The Department of Justice (DOJ) has a long and noble history." (p. 545)  But so many of the statements thereafter are unsupported and present a biased approach that will in fact lead to politicizing this branch of government. This commentary only points out three items related to politics and the importance of maintaining a political-free zone in the DOJ:

  1. The Report calls for the elimination of the ten year term of the FBI director.  It states "[t]he Director of the FBI must remain politically accountable to the President in the same manner as the head of any other federal department or agency." (p. 550-551) To claim a desire to depoliticize the DOJ and then make the FBI Director politically accountable to the President puts politics into the office. Having the FBI director serve a 10 year term, thus allowing this person to cross over political administrations takes the officeholder outside the political executive and places him or her accountable to the people.  The absurdity of what this Report calls for here is obvious. 
  2. The Report states, "[t]he department has failed to do its part to stop the flood of fentanyl and other deadly drugs that are flowing across our borders and decimating families and communities across the United States." (p. 550). Yes, there continue to be drugs in the United States, and probably always will be.  But let us not forget that to stop drugs there needs to be more prosecutions.  Yet, drug prosecutions under the last administration were at a historic low (see here).
  3. And the DOJ has come a long way from a past that included politics.  Perhaps some have forgotten "An Investigation of Allegations of Politicized Hiring in the Department of Justice Honors Program and Summer Law Intern Program" from 2002-2006. (see here). Some of us do remember when AG Michael Mukasey appropriately responded to the complaints. (see here)

There is so much more that one could comment upon in this Report, and that commentary would not be favorable to this Report.  One hopes that Congress will give a closer eye (be more skeptical) to Heritage Reports if this is the calibar of work coming from this organization. 

(esp) 

July 21, 2024 in Prosecutions | Permalink | Comments (0)

Monday, July 8, 2024

Menendez Case Brings Back Memories of Computer Associates Prosecution

An interesting article in the New York Times this weekend about the Senator Menendez prosecution brought back memories of an earlier example of the aggressive use of obstruction of justice by the DOJ. According to this weekend’s article entitled How a Last-Ditch Effort to Save Menendez from Prosecution Backfired, Menendez’s attorney met with prosecutors in September 2023 to provide information about certain financial payments that were the subject of government scrutiny in an effort to prevent the Senator from being indicted. As those in the white collar field know, such meetings are not unusual during investigations. According to the Times, despite the meeting, Menendez was indicted in relation to those financial payments less than two weeks later. Again, not an unusual course of events. But there was something of note about the charges in the case. Though not contained in the original indictment, a superseding indictment from March 2024 included a count of obstruction of justice under 18 U.S.C. section 1503 related to that meeting between defense counsel and the prosecution in September. According to the superseding indictment, Menendez engaged in obstruction because he “caused” his counsel to “make statements regarding the bribe money… which statements [he] knew were false, in an effort to interfere with an investigation….” See Superseding Indictment at 62-63 (March 5, 2024). Importantly, the Times makes clear that Menendez’s counsel engaged in no wrongdoing of any kind. 

While the Menendez indictment utilizes a different obstruction statute, the case brings back memories of another obstruction charge from over 20 years ago.

In 2002, the DOJ and SEC investigated accounting practices at a computer software company called Computer Associates. Early in the investigation, the government requested that the company retain counsel and investigate the matter. The company complied and retained an outside law firm in February 2002. The indictment in the case describes what the government alleged happened next.

Shortly after being retained in February 2002, the Company’s Law Firm met with the defendant Sanjay Kumar [former CEO and chairman of the board] and other Computer Associates executives [including Stephen Richards, former head of sales,] in order to inquire into their knowledge of the practices that were the subject of the government investigations. During these meetings, Kumar and others did not disclose, falsely denied and otherwise concealed the existence of the 35-day month [accounting] practice. Moreover, Kumar and others concocted and presented to the company’s law firm an assortment of false justifications, the purpose of which was to support their false denials of the 35-day month practice. Kumar and others knew, and in fact intended, that the company’s law firm would present these false justifications to the United States Attorney’s Office, the SEC and the FBI so as to obstruct and impeded (sic) the government investigations.

… Kumar knew that this explanation was false and intended that the company’s law firm would present this false explanation to the United States Attorney’s Office, the SEC and the FBI as part of an effort to persuade those entities that the accusations of the former salespeople were un- founded and that the 35-day month practice never existed.

See United States v. Kumar, 617 F.3d 612, 616-19 (2d Cir. 2010); see also United States v. Kumar, 2006 WL 6589865 (E.D.N.Y. Feb. 21, 2006); Indictment, United States v. Kumar 30-32 (E.D.N.Y. Sept. 22, 2004).

In response to this alleged conduct, the government in the Computer Associates case indicted the employees with violation of 18 U.S.C. section 1512(c)(2) for seeking to “knowingly, intentionally and corruptly obstruct, influence and impede official proceedings, to wit: the Government Investigations.” In response to the charges, the defense community expressed great alarm and counsel for the employees filed a motion to dismiss. While the motion was denied at the trial level, many anticipated a legal challenge to the charges on appeal if the defendants lost at trial. The higher courts, however, did not have the opportunity to examine the issue as everyone in the matter pleaded guilty.

While there are certainly important distinctions between the Menendez indictment and the Computer Associates case, they both raise important questions about the protections of the role of defense counsel and the future of presentations to the government during the investigatory stage. We will have to wait for the outcome of the trial to see whether the appellate courts have an opportunity to weigh-in on the legal theory this time around. 

(LED)

July 8, 2024 in Defense Counsel, Investigations, Obstruction, Privileges, Prosecutions, Prosecutors | Permalink | Comments (0)

Monday, July 1, 2024

Supreme Court - Analysis of the Past Week - It is Sad - Wake Up

This has been a sad week to watch the Supreme Court significantly change the course of democracy in the United States.  They have gutted agency powers. They have tried to increase power of the judiciary - that is, non-agency tribunals.  They have limited white collar crime prosecutions, this time on the state and local level. They have extended a new immunity to presidents. And they have sent a message telling Presidents that they can confer with their Attorney General - yes about current matters. Separation between the President and DOJ in the "JUSTICE" department is no longer an important norm with our Courts. 

In all, our institutions have taken some significant hits. And although some may think this bold action may benefit a political party or cause, they are overlooking some important considerations:

  1. If you catch a criminal sooner, they receive less time. That is, if the agency puts the brakes on conduct that crosses the line, there is less likely to be damage and if and when the criminal prosecution occurs there will be less loss, fewer victims, and a lower sentence (just think if Bernie Madoff had been stopped sooner). (see The Dichotomy Between Overcriminalization and Underregulation). Deregulating leads to increased criminality (think about what happened in the Savings & Loan crisis).  
  2. When people start to notice that they have fewer rights with an executive that has increased powers and no accountability, the backlash may be strong and who will be there (this time) to curb it?
  3. Some in Congress may be feeling empowered by these decisions, but have they realized that the Court is taking away some of their powers? Without agency delegation - they need to spend more hours passing legislation. Without agency delegation - they will be blamed when a crisis occurs. And with criminal statutes that keep getting knocked out because of lack of clarity, will Congress be able to keep criminal conduct in check.  
  4. Politics may now be the way of the world in our justice system.

WAKE UP!

(esp)

July 1, 2024 | Permalink | Comments (0)

# 3 Trump v. U.S. - Dissenting Opinions - It's Over

Looking at the dissents:

Justice Sotomayor (joined by Justices Kagan and Jackson)

  1. Yes, Let's Look at the Facts - They include facts, something oddly omitted in the majority opinion. 
  2. The World Just Changed - "Today’s decision to grant former Presidents criminal immunity reshapes the institution of the Presidency. It makes a mockery of the principle, foundational to our Constitution and system of Government, that no man is above the law. Relying on little more than its own misguided wisdom about the need for 'bold and unhesitating action' by the President, . . . the Court gives former President Trump all the immunity he asked for and more. Because our Constitution does not shield a former President from answering for criminal and treasonous acts, I dissent." (citation omitted)
  3.   Majority Creates New Law - "The main takeaway of today’s decision is that all of a President’s official acts, defined without regard to motive or intent, are entitled to immunity that is 'at least . . . presumptive,' and quite possibly “absolute.” . . . Whenever the President wields the enormous power of his office, the majority says, the criminal law (at least presumptively) cannot touch him." (Citations Omitted)  
  4. Yes, the Majority Opinion is One-Sided - "The majority relies almost entirely on its view of the danger of intrusion on the Executive Branch, to the exclusion of the other side of the balancing test. Its analysis rests on a questionable conception of the President as incapable of navigating the difficult decisions his job requires while staying within the bounds of the law."
  5. Yes, the Majority Tries to Gut the Indictment -  "Today’s decision to grant former Presidents immunity for
    their official acts is deeply wrong. As troubling as this criminal immunity doctrine is in theory, the majority’s application of the doctrine to the indictment in this case is perhaps even more troubling. In the hands of the majority, this new official-acts immunity operates as a one-way ratchet."
  6. Worth Reading Their Warning - "The President of the United States is the most powerful person in the country, and possibly the world. When he uses his official powers in any way, under the majority’s reasoning, he now will be insulated from criminal prosecution. Orders the Navy’s Seal Team 6 to assassinate a political rival? Immune. Organizes a military coup to hold onto power? Immune. Takes a bribe in exchange for a pardon? Immune. Immune, immune, immune."
  7. A New Level of Judicial Discourse - And Needed Here - "Never in the history of our Republic has a President had reason to believe that he would be immune from criminal prosecution if he used the trappings of his office to violate the criminal law. Moving forward, however, all former Presidents will be cloaked in such immunity. If the occupant of that office misuses official power for personal gain, the criminal law that the rest of us must abide will not provide a backstop. With fear for our democracy, I dissent."

Justice Jackson - 

1. A New World - "JUSTICE SOTOMAYOR has thoroughly addressed the Court’s flawed reasoning and conclusion as a matter of history, tradition, law, and logic. I agree with every word of her powerful dissent. I write separately to explain, as succinctly as I can, the theoretical nuts and bolts of what, exactly, the majority has done today to alter the paradigm of accountability for Presidents of the United States. I also address what that paradigm shift means for our Nation moving forward. "

2. Presidential Power Like Never Before - "To the extent that the majority’s new accountability paradigm allows Presidents to evade punishment for their criminal acts while in office, the seeds of absolute power for Presidents have been planted."

3. New Non-Accocuntability Rules - "The majority of my colleagues seems to have put their trust in our Court’s ability to prevent Presidents from becoming Kings through case-by-case application of the indeterminate standards of their new Presidential accountability paradigm. I fear that they are wrong."

See # 1 - Trump v. U.S. - Majority - Kicks the Can Down the Road

See # 2- Trump v. U.S - Concurring Opinions
 

Sadly, (esp)

 

July 1, 2024 in Judicial Opinions | Permalink | Comments (0)

# 2- Trump v. U.S - Concurring Opinions

Looking at the Concurring Opinions - 

  1. Justice Thomas - This Whole Case Is Questionable -Questions the appointment of a special prosecutor here - "there are serious questions whether the Attorney General has violated that structure by creating an office of the Special Counsel that has not been established by law." 
  2. Justice Barrett - Yes, A President Can Be Prosecuted in More Situations - "Though I agree that a President cannot be held criminally liable for conduct within his “conclusive and preclusive” authority and closely related acts, . . ., the Constitution does not vest every exercise of executive power in the President’s sole discretion, . . . Congress has concurrent authority over many Government functions, and it may sometimes use that authority to regulate the President’s official conduct, including by criminal statute. Article II poses no barrier to prosecution in such cases." (citations omitted).
    1. "This two-step analysis—considering first whether the statute applies and then whether its application to the particular facts is constitutional—is similar to the approach that the Special Counsel presses in this Court."
    2. The President's actions with States may not be immune - "For example, the indictment alleges that the President 'asked the Arizona House Speaker to call the legislature into session to hold a hearing' about election fraud claims. The President has no authority over state legislatures or their leadership, so it is hard to see how prosecuting him for crimes committed when dealing with the Arizona House Speaker would unconstitutionally intrude on executive power."
    3. President gets an interlocutory appeal of the trial court’s ruling, but a typical criminal defendant has to wait. 
    4. "The Constitution does not require blinding juries to the circumstances surrounding conduct for which Presidents can be held liable."
    5. "Thus, a President facing prosecution may challenge the constitutionality of a criminal statute as applied to official acts alleged in the indictment. If that challenge fails, however, he must stand trial." 

See # 1 - Trump v. U.S. - Majority - Kicks the Can Down the Road

See # 3 Trump v. U.S. - Dissenting Opinions - It's Over

(esp)

July 1, 2024 in Judicial Opinions | Permalink | Comments (0)

# 1 - Trump v. U.S. - Majority - Kicks the Can Down the Road

The Supreme Court issued its opinion in Trump v. United States (here) the long-awaited decision on whether a U.S. President has immunity and what any immunity might cover. Let us not forget that this case comes to the Court because a US sitting president has been charged with the violation of criminal laws in the federal system. ("This case is the first criminal prosecution in our Nation’s history of a former President for actions taken during his Presidency.").  Here's what we find in the 119 pages of the opinions -

Majority - C.J. Roberts writes the opinion (Justices Thomas, Alito, Gorsuch, and Kavanaugh join, with Barrett joining except for  Part III–C) 

  1. Fischer First - Note Footnote # 1 -  The lower Court has to first look at whether the 1512 counts can proceed post its opinion in Fischer. So two counts will need to be reviewed for this first.  The other two counts clearly pass this hurdle as they have no relation to section 1512. 
  2. Kicking the Can Down the Road - The Court's conclusion is that:  "We conclude that under our constitutional structure of separated powers, the nature of Presidential power requires that a former President have some immunity from criminal prosecution for official acts during his tenure in office. At least with respect to the President’s exercise of his core constitutional powers, this immunity must be absolute. As for his remaining official actions, he is also entitled to immunity. At the current stage of proceedings in this case, however, we need not and do not decide whether that immunity must be absolute, or instead whether a presumptive immunity is sufficient." (my emphasis added)
  3. Absolute Immunity - "We thus conclude that the President is absolutely immune from criminal prosecution for conduct within his exclusive sphere of constitutional authority." (my emphasis added)
  4. Presumption - But then the important question becomes - what is within that sphere and are we going to judge this question fairly and evenly within the courts. The Court here states: "we conclude that the separation of powers principles explicated in our precedent necessitate at least a presumptive immunity from criminal prosecution for a President’s acts within the outer perimeter of his official responsibility."
  5. NY - You're Good - "As for a President’s unofficial acts, there is no immunity."
  6. The Rest of the Cases - "The first step is to distinguish his official from unofficial actions. In this case, however, no court has thus far considered how to draw that distinction, in general or with respect to the conduct alleged in particular." 
  7. The Court's Guidance (or Lack of Guidance) - "Certain allegations—such as those involving Trump’s discussions with the Acting Attorney General—are readily categorized in light of the nature of the President’s official relationship to the office held by that individual. Other allegations—such as those involving Trump’s interactions with the Vice President, state officials, and certain private parties, and his comments to the general public—present more difficult questions. Although we identify several considerations pertinent to classifying those allegations and determining whether they are subject to immunity, that analysis ultimately is best left to the lower courts to perform in the first instance."
    1.  Don't Use Motive  - "In dividing official from unofficial conduct, courts may not inquire into the President’s motives. Such an inquiry would risk exposing even the most obvious instances of official conduct to judicial examination on the mere allegation of improper purpose, thereby intruding on the Article II interests that immunity seeks to protect."  
    2. Irrelevant if Against the Law - "Nor may courts deem an action unofficial merely because it allegedly violates a generally applicable law."
  8. Court's Analysis (The important section that 1L students tend to miss) 
    1. Are You Listening AG Garland - "The President may discuss potential investigations and prosecutions with his Attorney General and other Justice Department officials to carry out his constitutional duty to “take Care that the Laws be faithfully executed.” Art. II, §3. And the Attorney General, as head of the Justice Department, acts as the President’s “chief law enforcement officer” who “provides vital assistance to [him] in the performance of [his] constitutional duty to ‘preserve, protect, and defend the Constitution.’”
    2. President Can Talk to DOJ  - "Trump is therefore absolutely immune from prosecution for the alleged conduct involving his discussions with Justice Department officials." 
    3. So Mike Pence - What Did Trump Say? - "The indictment’s allegations that Trump attempted to pressure the Vice President to take particular acts in connection with his role at the certification proceeding thus involve official conduct, and Trump is at least presumptively immune from prosecution for such conduct." "We therefore remand to the District Court to assess in the first instance, with appropriate input from the parties, whether a prosecution involving Trump’s alleged attempts to influence the Vice President’s oversight of the certification proceeding in his capacity as President of the Senate would pose any dangers of intrusion on the authority and functions of the Executive Branch." 
    4. Was it Official or Unofficial - Electors - "Unlike Trump’s alleged interactions with the Justice Department, this alleged conduct cannot be neatly categorized as falling within a particular Presidential function. The necessary analysis is instead fact specific, requiring assessment of numerous alleged interactions with a wide variety of state officials and private persons."
    5. Court Let's You Know Where They Stand - "For these reasons, most of a President’s public communications are likely to fall comfortably within the outer perimeter of his official responsibilities. There may, however, be contexts in which the President, notwithstanding the prominence of his position, speaks in an unofficial capacity—perhaps as a candidate for office or party leader. To the extent that may be the case, objective analysis of 'content, form, and context' will necessarily inform the inquiry." 
    6. The Court May Be Back - "We therefore remand to the District Court to determine in the first instance whether this alleged conduct is official or unofficial. (my emphasis)
  9. Majority Tells Dissenters - This is Not Doom  - "As for the dissents, they strike a tone of chilling doom that is wholly disproportionate to what the Court actually does today—conclude that immunity extends to official discussions between the President and his Attorney General, and then remand to the lower courts to determine 'in the first instance' whether and to what extent Trump’s remaining alleged conduct is entitled to immunity."
  10. Why Is This? - "This case poses a question of lasting significance: When may a former President be prosecuted for official acts taken during his Presidency?"
  11. Majority's Closing Words - "The President enjoys no immunity for his unofficial acts, and not everything the President does is official. The President is not above the law. But Congress may not criminalize the President’s conduct in carrying out the responsibilities of the Executive Branch under the Constitution. And the system of separated powers designed by the Framers has always demanded an energetic, independent Executive. The President therefore may not be prosecuted for exercising his core constitutional powers, and he is entitled, at a minimum, to a presumptive immunity from prosecution for all his official acts. That immunity applies equally to all occupants of the Oval Office, regardless of politics, policy, or party."

Concurring & Dissents Next Posts -

See # 2- Trump v. U.S - Concurring Opinions

See # 3 Trump v. U.S. - Dissenting Opinions - It's Over

(esp)

July 1, 2024 in Judicial Opinions | Permalink | Comments (0)

Friday, June 28, 2024

Garland on the Fischer Case

DOJ Press Release here on the Fischer case. AG Garland states in part -

"The vast majority of the more than 1,400 defendants charged for their illegal actions on January 6 will not be affected by this decision. There are no cases in which the Department charged a January 6 defendant only with the offense at issue in Fischer."

See my analysis here.

(esp)  

June 28, 2024 in Judicial Opinions, Obstruction | Permalink | Comments (0)

Fischer - "Who Could Blame Congress for that Failure of Imagination"

The Fischer case (here) is likely to be a note case in casebooks, as opposed to a main case as many (including myself) predicted. The Court engages in a fairly straightforward statutory interpretation analysis with the word "otherwise" being the key word being interpreted by the majority. Although questions are left unresolved by Chief Justice Robert's majority opinion,  Justice Jackson provides lower courts with important guidance in a brilliant concurring opinion. Justice Barrett authors the dissenting opinion with two of the dissenting regulars (Sotomayor and Kagan) joining. 

Looking first at the majority -

  1. In usual monochrome fashion, the Court takes on the question of whether the otherwise clause in subsection 1512(c)(2) should be read as limited by section 1512(c)(1).  
  2. The Court makes a point of noting that Fischer has six other counts that are not under consideration here, and that they are only looking at count three of his convictions. This sends a clear message that charges and convictions under other statutes that go to conduct such as "forcibly assaulted a federal officer, entered and remained in a restricted building, and engaged in disorderly and disruptive conduct in the Capitol, among other crimes. See id., at 181–185; 18 U. S. C. §§111(a), 231(a)(3),1752(a)(1), (a)(2); 40 U. S. C. §§5104(e)(2)(D), (G)" are not hampered by this decision. 
  3. Much of the decision comes down to the meaning of the word "otherwise" in subsection (c)(2), with the majority reading it narrowly. 
  4. So first there is a football analogy of "[f]or instance, a football league might adopt a rule that players must not 'grab, twist, or pull a facemask, helmet, or other equipment with the intent to injure a player, or otherwise attack, assault, or harm any player.' If a linebacker shouts insults at the quarterback and hurts his feelings, has the linebacker nonetheless followed the rule? Of course he has. The examples of prohibited actions all concern dangerous physical conduct that might inflict bodily harm; trash talk is simply not of that kind."
  5. Then there was the zoo analogy, "A zoo might post a sign that reads, 'do not pet, feed, yell or throw objects at the animals, or otherwise disturb them.' If a visitor eats lunch in front of a hungry gorilla, or talks to a friend near its enclosure, has he obeyed the regulation? Surely yes. Although the smell of human food or the sound of voices might well disturb gorillas, the specific examples of impermissible conduct all involve direct interaction with and harassment of the zoo animals. Merely eating or talking is so unlike the examples that the zoo provided that would be implausible to assume those activities were prohibited, even if literally covered by the language."
  6. Looking at the origins from the Sarbanes-Oxley Act and Enron debacle, the Court finds that "[i]t makes sense to read subsection (c)(2) as limited by (c)(1) in light of the history of the provision."  But it then goes on to note that "[t]he better conclusion is that subsection (c)(2) was designed by Congress to capture other forms of evidence and other means of impairing its integrity or availability beyond those Congress specified in (c)(1)."
  7. Noteworthy is the statement, "[r]ather than transforming this evidence-focused statute into a one-size-fits-all solution to obstruction of justice, we cabin our reading of subsection (c)(2) in light of the context of subsection (c)(1)."
  8. In the end, the word "otherwise" is given a narrow meaning - keep it to what Congress intended post-Enron.  ("To prove a violation of Section 1512(c)(2), the Government must establish that the defendant impaired the availability or integrity for use in an official proceeding of records, documents, objects, or as we earlier explained, other things used in the proceeding, or attempted to do so.")
  9. The Court does not decide what happens to defendant Fischer - they send the case back to the lower court to make that decision in light of this decision.  Depending on the evidence at trial, the court may throw out this count.  The court will then need to decide if the inclusion of this count had a spillover onto other counts. 

Concurring Opinion by Justice Jackson - 

1.  She reminds readers what we are really talking about here. ("On January 6, 2021, an angry mob stormed the United States Capitol seeking to prevent Congress from fulfilling its constitutional duty to certify the electoral votes in the 2020 Presidential election. . . .  The peaceful transfer of power is a fundamental democratic norm, and those who attempted to disrupt it in this way inflicted a deep wound on this Nation.")

2. Unlike a somewhat superficial analysis offered in the majority opinion, she goes a step further in considering the football analogy.  Trash talk is not included, but so do we omit the other end of the spectrum ("if a player were to shoot or poison another player, the rule’s drafters would expect the police to be called, not a referee.").

3. She notes that the rule's purpose is important.

4. She guides the lower court's revisit to the case in saying, "Joseph Fischer was charged with violating §1512(c)(2) by  corruptly obstructing 'a proceeding before Congress, specifically, Congress’s certification of the Electoral College vote.' App. 183. That official proceeding plainly used certain records, documents, or objects—including, among others, those relating to the electoral votes themselves. See Tr. of Oral Arg. 65–67. And it might well be that Fischer’s conduct, as alleged here, involved the impairment (or the attempted impairment) of the availability or integrity of things used during the January 6 proceeding 'in ways other than those specified in (c)(1).'”

Dissenting Opinion by Justice Barrett (joined by Justices Sotomayor and Kagan) - 

1.  Best line of the case - "Because it simply cannot believe that Congress meant what it said. Section 1512(c)(2) is a very broad provision, and admittedly, events like January 6th were not its target. (Who could blame Congress for that failure of imagination?)"

2. "Blocking an official proceeding from moving forward surely qualifies as obstructing or impeding the proceeding by means other than document destruction. Fischer’s alleged conduct thus falls within (c)(2)’s scope."

3. Like the majority it references two key statutory interpretation tools, noscitur a sociis and ejusdem generis. 

4.  The dissent argues that the hypotheticals offered by the majority do not fit here with ejusdem generis - there is no laundry list of terms used here, and "trash talk" is not the same as "inflicting an 'injury.'" 

5. Finally, they remind everyone of the role of the Court and the role of legislature, "[o]nce Congress has set the outer bounds of liability, the Executive Branch has the discretion to select particular cases to prosecute within those boundaries. By atextually narrowing §1512(c)(2), the Court has failed to respect the prerogatives of the political branches."

Bottom Line - This is a narrow decision, Justice Jackson gives good guidance of how to interpret it in other cases, and let's not forgot that we are talking about the importance of the peaceful transfer of power. Of course Congress didn't anticipate this. 

(esp)

June 28, 2024 in Judicial Opinions, Obstruction | Permalink | Comments (0)

Fischer v. United States

Here. Commentary to follow. 

(esp)

 

June 28, 2024 in Judicial Opinions, Obstruction | Permalink | Comments (0)

Thursday, June 27, 2024

S.Ct. Gives Trial Advocacy a Boost With SEC Decision

The Supreme Court's 6-3 opinion today in S.E.C. v. Jarkesy  moves power from an administrative agency to the courts. The question as seen by the six person majority is: "This case poses a straightforward question: whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties against him for securities fraud." Likewise, Justice Roberts in authoring the majority opinion, sees the answer as simple, "The SEC’s antifraud provisions replicate common law fraud, and it is well established that common law claims must be heard by a jury."  The Court rejects an application of the public rights exception.  Justice Gorsuch has a concurring opinion, signed onto by Justice Thomas. 

The dissenting three - Justice Sotomayor, joined by Justices Kagan and Jackson conclude their opinion with: "By giving respondents a jury trial, even one that the Constitution does not require, the majority may think that it is protecting liberty. That belief, too, is deeply misguided. The American People should not mistake judicial hubris with the protection of individual rights." 

So is this case a big deal?  Will requiring more jury trials with SEC fraud cases mean anything? I think yes.

Jury trials take more time, more expense, and are not as judicially economical. It could mean more people are going to be receiving notices to appear for jury duty.  It could mean that other civil suits may be slower to get to court because more has been added to the docket.  It could mean that the SEC can take fewer cases as jury trials take longer (you need to pick a jury, and you need to wait for verdicts).  It could also mean that the SEC has less incentive to proceed civilly as opposed to sending the case to DOJ for criminal action.

Whether any of this will happen, remains to be seen.  But what is clear is that a part of an administrative agency's power has moved to a different branch of our government.   

There is also the next question that needs to be asked.  Will this decision set in motion a wave to include jury trials with other administrative agencies and will there be limits? Will it require a common law fraud component?

(esp)

June 27, 2024 in Judicial Opinions, SEC | Permalink | Comments (0)

Wednesday, June 26, 2024

Section 666 Does Not Cover Gratuities

In 6-3 decision, the Supreme Court in Snyder v. United States resolved a jurisdictional split holding that:

The question in this case is whether §666 also makes it a crime for state and local officials to accept gratuities—for example, gift cards, lunches, plaques, books, framed photos, or the like—that may be given as a token of appreciation after the official act. The answer is no. State and local governments often regulate the gifts that state and local officials may accept. Section 666 does not supplement those state and local rules by subjecting 19 million state and local officials to up to 10 years in federal prison for accepting even commonplace gratuities. Rather, §666 leaves it to state and local governments to regulate gratuities to state and local officials.

Here's some analysis of Justice Kavanaugh's majority opinion: 

1.  The Court provides a definition of the difference between bribes and gratuities - something that some have found to be  somewhat unclear.  The Court focused on the timing of the exchange and states, "As a general matter, bribes are payments made or agreed to before an official act in order to influence the official with respect to that future official act.  . . . Gratuities are typically payments made to an official after an official act as a token of appreciation."

2.  In resolving the jurisdictional split, the Court notes, "Six reasons, taken together, lead us to conclude that §666 is a bribery statute and not a gratuities statute—text, statutory history, statutory structure, statutory punishments, federalism, and fair notice." 

3. The Court recognizes the State power to control this conduct if it finds it objectionable. ("States have the 'prerogative to regulate the permissible scope of interactions between state officials and their constituents.'”)

4.  The majority uses the scare of prosecutors proceeding with a section 666 case for "gift cards, lunches, plaques, books, framed photos, or the like—that may be given as a token of appreciation after the official act." ("an unfair trap for 19 million state and local officials")

Justice Gorsuch authored a short concurring opinion that starts and ends with a strong recognition of the Rule of Lenity. ("But make no mistake: Whatever the label, lenity is what’s at work behind today’s decision, just as it is in so many others.")

The dissent, authored by Justice Jackson and joined by Justices Sotomayor and Kagan makes some important points:

1. "Officials who use their public positions for private gain threaten the integrity of our most important institutions."

2.  The dissent hits back on the statutory textual analysis of the majority - "Congress used 'expansive, unqualified language' in 18 U. S. C. §666 to criminalize graft involving state, local, and tribal entities, as well as other organizations receiving federal funds."

3. The dissent offers a more nuanced approach to the statute, giving recognition to Congress' use of the term "reward." ("The word 'rewarded' means to have been given a reward for some action taken. So gratuities are plainly covered. To be sure, if the Court had given that straightforward answer, we might eventually have confronted a followup question: Are all gratuities covered? Said differently: Even if gratuities generally are criminalized by §666, are there circumstances in which certain gratuities are not criminalized?") 

4. The dissent notes that common gift giving would not be implicated, but "rewards corruptly accepted by government officials in ways that are functionally indistinguishable from taking a bribe."

So bottom line - the justices in the majority see this as a dichotomous question.  The three women on the dissent go beyond the monochrome to offer an approach that would criminalize nefarious conduct, but not to a point of ridiculousness.  They offer a good roadmap for Congress to come back and redo this statute.  

(esp)

June 26, 2024 in Judicial Opinions, Prosecutions | Permalink | Comments (0)

Monday, June 17, 2024

S.Ct. Accepts Mail/Wire Fraud Case that Explores "Property"

The Supreme Court accepted the following case today:

23-909 KOUSISIS V. UNITED STATES DECISION BELOW: 82 F.4th 230 CERT. GRANTED 6/17/2024

QUESTION PRESENTED: The circuits are split 6-5 on the validity of the fraudulent inducement theory of mail and wire fraud.

The Questions Presented are: Whether deception to induce a commercial exchange can constitute mail or wire fraud, even if inflicting economic harm on the alleged victim was not the object of the scheme. Whether a sovereign's statutory, regulatory, or policy interest is a property interest when compliance is a material term of payment for goods or services. Whether all contract rights are "property."

(esp)

June 17, 2024 in Fraud, Judicial Opinions, Prosecutions | Permalink | Comments (0)

Friday, April 19, 2024

Sentencing Commission Change - Acquitted Conduct - "Not Guilty Means Not Guilty"

The Sentencing Commission has issued a statement titled - Commission Votes Unanimously to Pass Package of Reforms Including Limit On Use of Acquitted Conduct in Sentencing GuidelinesLinks to an external site.  Note that in addition to the change regarding acquitted conduct, there are also changes regarding downward departure for age and moving commentary regarding the definition of “loss” to the body of the fraud, theft, and property destruction guideline to ensure courts uniformly calculate loss amounts.   It states:

WASHINGTON, D.C. ―The bipartisan United States Sentencing Commission voted unanimously today to prohibit conduct for which a person was acquitted in federal court from being used in calculating a sentence range under the federal guidelines. The Commission’s seven members also joined together to pass a range of additional reforms, including those that bring uniformity to sentencing for certain gun and financial crimes and provide a potential downward departure based on age. “The reforms passed today reflect a bipartisan commitment to creating a more effective and just sentencing system,” said Commission Chair Judge Carlton W. Reeves. Watch the public meeting.

“Not guilty means not guilty,” said Chair Reeves. “By enshrining this basic fact within the federal sentencing guidelines, the Commission is taking an important step to protect the credibility of our courts and criminal justice system.” This reform comes amid robust debate on acquitted conduct from across the country. Last year, several Supreme Court Justices called for the Commission to address acquitted conduct, while a bipartisan group of legislators in Congress introduced a bill limiting the use of acquitted conduct in sentencing.

In addition to limiting the use of acquitted conduct, the Commission revised its policy statement on age, permitting judges to downward depart based on age if appropriate in light of today’s richer understanding of the science and data surrounding youthful individuals, including recognition that cognitive changes lasting into the mid-20s affect individual behavior, culpability and the age-crime curve. The Commission also moved commentary regarding the definition of “loss” to the body of the fraud, theft, and property destruction guideline to ensure courts uniformly calculate loss amounts. And the Commission addressed a circuit conflict over how to properly punish crimes involving weapons with altered or obliterated serial numbers.

These and all other amendments passed by the Commission today will be posted here. The Commission will deliver amendments to Congress by May 1, 2024. If Congress does not act to disapprove the changes, they will go into effect on November 1, 2024. (emphasis added)

(esp)

April 19, 2024 | Permalink | Comments (0)

Saturday, March 9, 2024

ABA Criminal Justice Section launches Prosecutorial Independence Task Force

ABA Criminal Justice Section launches Prosecutorial Independence Task Force - here

The goal of the Task Force for Prosecutorial Independence is to preserve and strengthen prosecutorial independence and enhance the American public’s understanding of the prosecutor’s critical role in maintaining the integrity of the criminal justice system.

For information here

(esp)

March 9, 2024 | Permalink | Comments (0)

Friday, March 8, 2024

New DOJ Whistleblower Policy

Deputy Attorney General Lisa Monaco Delivers Keynote Remarks at the American Bar Association’s 39th National Institute on White Collar Crime - here

Lisa Monaco stated in showcasing the new DOJ whistleblower rewards program:

So we’re planning something new: a DOJ-run whistleblower rewards program. Today, we’re launching a 90-day sprint to develop and implement a pilot program, with a formal start date later this year.

The premise is simple: if an individual helps DOJ discover significant corporate or financial misconduct — otherwise unknown to us — then the individual could qualify to receive a portion of the resulting forfeiture.

Over the next several months, we’ll fill out the particulars, and Acting Assistant Attorney General Nicole Argentieri will discuss that process in greater detail tomorrow. But we’ve already established some basic guardrails. For example, we’d offer payments:

Only after all victims have been properly compensated;
Only to those who submit truthful information not already known to the government;
Only to those not involved in the criminal activity itself;
And only in cases where there isn’t an existing financial disclosure incentive — including qui tam or another federal whistleblower program.
Used proactively, this program will fill gaps. It will create new incentives for individuals to report misconduct to the Department. And it will drive companies to invest further in their own internal compliance and reporting systems.

Now, for all the potential whistleblowers listening today, you might be wondering what to look out for. While we’ll always accept information about violations of any federal law, we’re especially interested in information about:

Criminal abuses of the U.S. financial system;
Foreign corruption cases outside the jurisdiction of the SEC, including FCPA violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act; and
Domestic corruption cases, especially involving illegal corporate payments to government officials.
Maybe you work — or your client does — at a fast-growing private startup here in the Bay Area, and you discover the company's been paying bribes to get regulatory approvals and doctoring the books to hide the payments. If you come forward, you could get paid as part of the recovery from that criminal case.

For speech/remarks from DOJ - here.

(esp)

March 8, 2024 in About This Blog, Prosecutors | Permalink | Comments (0)

Friday, March 1, 2024

Hunter Biden Testifies

Here is the transcript of Hunter Biden's testimony before a joint session of the House Judiciary Committee and House Oversight and Accountability Committee on February 28, 2024.

Hunter Biden House Testimony Transcript.

(wisenberg)

March 1, 2024 in Celebrities, Congress, Contempt, Corruption, Current Affairs, Defense Counsel, Fraud, Investigations, Legal Ethics, Money Laundering, News | Permalink | Comments (0)

Thursday, February 29, 2024

Motion Denied: Jeffrey Clark Successfully Thwarts DC Bar Office of Disciplinary Counsel's Motion to Enforce Subpoena Duces Tecum on Fifth Amendment Privilege Grounds

In what looks to be a reaffirmation of hornbook law regarding the 5th Amendment's Privilege Against Self-Incrimination, the District of Columbia Court of Appeals, not to be confused with the U.S. Court of Appeals for the District of Columbia Circuit, has denied the DC Bar Office of Disciplinary Counsel's ("ODC") Motion to Enforce its Subpoena Duces Tecum against former Assistant Attorney General Jeffrey Clark.  The ODC is investigating Clark for the draft letter he apparently wrote, but never sent, to various State of Georgia government officials. According to the ODC Complaint, Clark's letter informed the Georgia officials that the DOJ "had identified significant concerns that may have impacted the outcome of the election" in Georgia.  On January 3, 2021, Clark told allegedly higher-ranking DOJ officials, including Acting Attorney General Jeffrey Rosen, that he planned to send the letter to Georgia officials in the event that: Rosen refused to do so, Rosen was fired, and Clark was placed in charge of DOJ by Trump. ODC's subpoena commanded Clark to, "Produce all documents and records (stored in hard copy or electronically), of which you were aware before January 4, 2021, that contain evidence of irregularities in the 2020 presidential election and that may have affected the outcome in Georgia or any other state." What was ODC up to? If Clark was unable to produce any such records in response to the subpoena, his subpoena response would be used against him in the disciplinary proceedings, to show that he was planning to lie to the Georgia officials. Clark moved to  quash the subpoena,  invoking his Fifth Amendment Privilege Against Self-Incrimination. As his brief notes:

ODC’s subpoena is, in substance, a set of disguised interrogatories. For example, the subpoena begins with “[p]roduce all documents and records…of which you were aware before January 4, 2021 that contain evidence of irregularities in the 2020 presidential election.” (emphasis added). If Mr. Clark were forced to comply with this and similarly worded requests, he would not only be producing documents but 'testifying' on various subjects such as the state of his knowledge on a particular date relevant to the case. This is an obvious Fifth Amendment violation under In re Artis, 883 A.2d at 101. Because of ODC’s decision to issue disciplinary interrogatories (which are illegal under In re Artis) under the guise of a subpoena, this Court need not reach the act of production doctrine and can decide the case on pure Fifth Amendment testimonial grounds, as the In re Artis court did as well. However, even if ODC’s subpoena had properly limited itself to requesting documents and not testimony, Mr. Clark would still have a valid Fifth Amendment claim under the act of production privilege.

A panel of the District of Columbia Court of Appeals initially summarily rejected Clarke's claim without comment. Clark moved for reconsideration and the Court of Appeals granted his motion in a brief Order. An opinion will follow. This was really a no-brainer under governing case law. We will publish the full opinion when it comes out. Meanwhile, below are the relevant documents. Congratulations to Clark's attorneys, Charles Burnham, of Burnham & Gorokhov, Harry MacDougald, and Robert Destro.

In re Jeffrey B. Clark Esquire--SUBPOENA.

PETITION - Petition For Rehearing and Rehearing En Banc (1).

In re Jeffrey B. Clark Esquire--Office of Disciplinary Counsel En Banc Response.

In re Jeffrey B. Clark Esquire--Order Granting Motion for Rehearing and Denying DC Office of Disclipinary Counsel's Motion to Enforce Subpoena Duces Tecum.

(wisenberg)

 

February 29, 2024 | Permalink | Comments (0)

Sunday, February 4, 2024

Fourth Circuit Delivers Major Post-Ruan Decision Reversing All Counts of Conviction Against Dr. Joel Smithers

On Friday, February 2, 2024, in U.S. v. Joel Smithers, the Fourth Circuit reversed all counts of conviction against Martinsville, Virginia osteopath and pain-killer provider, Joel Smithers. The Government marshalled a mountain of evidence against Smithers, showing that he operated a classic pill-mill operation. But the case went to trial before the Supreme Court's landmark 2022 decision in Ruan v. United States. Ruan held that, in unlawful distribution cases against doctors, "[a]fter a defendant produces evidence that he or she was authorized to dispense controlled substances, the Government must prove beyond a reasonable doubt that the defendant knew that he or she was acting in an unauthorized manner, or intended to do so." Acting in an unauthorized manner means acting without a legitimate medical purpose outside the scope of professional practice. Prior to Ruan, most circuits allowed the Government to prevail if it proved either that a physician acted without a legitimate medical purpose or that he/she acted outside the scope of professional practice. And, importantly, the prosecution was allowed to prove that a doctor acted outside the scope of professional practice under an objective standard, without regard to the defendant's subjective intent or knowledge.  Ruan changed all that. Dr. Smithers was convicted under an instruction that allowed the jury to convict him without regard to his state of mind. That is why he gets a new trial. The unanimous panel opinion, written by Judge Roger Gregory, rejected various waiver and harmless error arguments advanced by the Government. Congratulations to Beau Brindley and his colleagues for the victory. Here is the opinion:

U.S. v. Joel Smithers (4th Cir. 2024).

(wisenberg)

February 4, 2024 in Fraud, Judicial Opinions, Prosecutions | Permalink | Comments (0)

Thursday, February 1, 2024

Robert Hunter Biden Motion to Dismiss Federal Gun Charges: The Briefs Are In.

The briefing is now complete on Hunter Biden's Motion to Dismiss Based on Immunity Conferred by his Diversion Agreement. This motion was filed in the District of Delaware where three felony gun counts are pending against Biden. Biden contends that the Diversion Agreement was a binding contract once signed by the parties to it, and that the only parties to it were Biden and the U.S. Attorney's Office. DOJ disagrees on both points. Biden also argues that U.S. Probation's approval was not necessary and that, even it was necessary, U.S. Probation in fact approved the Agreement.  A similar motion will no doubt be filed in the federal tax case now pending in the Central District of California, with respect to the aborted tax-related Plea Agreement, but Biden's chances of success are much better at getting the federal gun charges in Delaware dismissed, since Diversion agreements do not require approval by the district court. The Diversion Agreement was related to the overall Plea Agreement that blew up last July in Judge Maryellen Noreika's Delaware federal courtroom. Here are Biden's original brief, the Government's Response, and Biden's Reply. Attached also is the Declaration of Christopher Clark, who was Biden's attorney involved in the negotiations surrounding the Plea and Diversion Agreements.

U.S. v. Robert Hunter Biden-Defendant's Motion to Dismiss Indictment Based on Immunity Conferred by Diversion Agreement.

U.S. v. Robert Hunter Biden-Government's Response to Defendant's Motion to Dismiss Indictment Based on Immunity Conferred by Diversion Agreement.

U.S. v. Robert Hunter Biden-Reply in Support of Motion to Dismiss the Indictment Based on Immunity Conferred by Diversion Agreement.

U.S. v. Robert Hunter Biden--Declaration of Christopher J. Clark.

(wisenberg)

 

 

February 1, 2024 in Celebrities, Corruption, Current Affairs, Defense Counsel, Deferred Prosecution Agreements, Investigations, Judicial Opinions, Media, News, Privileges, Prosecutions, Prosecutors, Tax | Permalink | Comments (0)