Saturday, September 22, 2007

Prosecutors File Preliminary Sentencing Memo for Reyes Backdating Convictions

Federal prosecutors in San Francisco filed a "preliminary" sentencing calculation at the request of U.S. District Judge Charles Breyer to get some initial information on the application of the Federal Sentencing Guidelines for the sentencing of Gregory Reyes, the former CEO of Brocade convicted for backdating options.  The loss calculation under USSG Sec. 2B1.1 will be the key, and the government discusses some ideas about how to calculate the loss (or gain) from a case in which the defendant was not convicted of reaping any direct benefits from the backdating.  The government offers a couple different possibilities in its brief (available below), and it may ask for a combination of them when it files a brief with its final position.  One possibility is to measure the effect on Brocade's stock price on the day of the initial announcement of the backdating in January 2005.  Under the analysis outlined in the brief, the 7.5% stock decline resulted in a loss to investors who sold that day of approximately $2 million.  The government also offers the $7 million civil penalty Brocade paid to the SEC to settle the case, and the $3 million it paid for the tax liabilities incurred due to the backdating.  Put those possibilities together, and you have a loss of $12 million.

The brief outlines another surprising calculation, based on Reyes' gain.  At trial there was no claim that Reyes received any of the options that were backdated, but in its brief prosecutors assert: "It is true the government did not try to prove at trial that the defendant backdated his own options.  It is not true, however, that the defendant did not backdate his own options.  He did."  The government alleges that an April 2001 award included options Reyes received, and the backdating resulted in a gain of $5 million.  This is an intriguing approach that seeks to use unprosecuted (and apparently heretofore unmentioned) conduct as a basis for estimating the defendant's gain.  It is not using acquitted conduct, but uncharged similar conduct that the government would only have to prove by a preponderance of the evidence.  Reyes is sure to oppose this strongly, arguing that the alleged backdating is outside the charges and irrelevant for calculating the loss from the counts of conviction.  The addition of the $5 million from this backdating would not affect the loss/gain calculation under Sec. 2B1.1 if the other amount were the $12 million discussed above because the fraud loss table increases the offense level at $7 million and then at $20 million.  It could be important, however, if the court rejects the other methods of calculating the loss. 

Other enhancements the government expects to seek include a four-level increase for a senior officer's involvement in securities fraud, a six-level enhancement for a crime involving over 250 victims, and a two-level addition for use of a sophisticated means.  Using the $12 million loss figure and the additional enhancements, that would give an offense level of 32, for which the sentencing range is 121 to 151 months -- more than ten years.

The filing is only a preliminary assessment and subject to change, and at this point the U.S. Probation Office has not made a sentencing recommendation.  The defense is sure to object to the loss calculations and the enhancements.  In addition, the government is using the 2004 version of the Guidelines, arguing that this was a continuing offense that did not end until the revelation of the backdating in January 2005.  That results in a higher potential sentence because the enhancements are greater under that version, and the changes to the fraud loss table in 2001 trigger a higher offense level.  Reyes is sure to argue that the crimes were complete when the options were issued, which occurred before November 1, 2001, when the major changes in the fraud Guidelines occurred.  A key issue will be which version of the Guidelines will be applied, because the older version could result in a sentence of two to four years, depending on the loss calculations, versus a potential ten year sentence under the more recent version. (ph)

Download us_v_reyes_government_sentencing_brief_sept_21_2007.pdf

September 22, 2007 in Fraud, Sentencing | Permalink | Comments (4) | TrackBack (0)

Are Just a Few "Bad Apples" to Blame for Military Contracting Fraud?

The issue of fraud related to the billions being spent in Iraq and Afghanistan has been the subject of a wide range of government inquiries.  At a hearing before the House Armed Services Committee on September 20 on Accountability during Contigency Operations: Preventing and Fighting Corruption in Contracting and Establishing and Maintaining Appropriate Controls on Material, the Pentagon's deputy inspector general and two other senior procurement officials attributed the problems to "a handful of 'bad apples,' a lack of stringent accounting controls, too few properly trained contracting personnel and the demands of wartime operations," according to an AP story (here).  According to the deputy IG, there are 225 people working on 90 investigations and 29 audits, and the amount of the contracts affected totals approximately $6 billion.  That seems like an awful lot of corruption to blame on bruised fruit along with a lack of training and internal controls.  The witness statements are available on the Comittee website here.

September 22, 2007 in Fraud, Investigations | Permalink | Comments (0) | TrackBack (0)

Friday, September 21, 2007

What Did Hsu Do to Violate the Campaign Contribution Laws?

Of the three charges filed against erstwhile fundraiser Norman Hsu, one alleges that he "willfully violated the Federal Election Campaign Act by making contributions to various candidates for President of the United States, the United States Senate, and the United States House of Representatives in the names of others in excess of $25,000 or more during the calendar year of 2006."  The criminal complaint (available in an earlier post here), which runs sixteen pages that includes the factual description of the case by the lead FBI agent, goes into great detail about the alleged scheme to defraud investors of $60 million, and less on the campaign contribution charge.  The campaign contribution allegations revolve around alleged "pressure" Hsu and others put on investors to contribute to candidates he identified.  The complaint states that Hsu admitted to making "implied threats" to investors to donate to candidates or they could not invest with him in the future.  But is that an illegal contribution by Hsu?  Fundraisers put different forms of pressure on people to donate all the time, and contributors to PACs run by one's employer or business association may be subject to strong "persuasion" to give money to show loyalty.  Can it be that pestering people to contribute is a crime, especially if it is done to stay someone's good graces?  More details are sure to follow when the grand jury returns its indictment, but at this point it's not clear exactly what constitutes the alleged violation of the campaign finance laws. (ph)

September 21, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Weiss Indicted and Government Seeks Forfeiture of $251 Million

As expected, Milberg Weiss founder Melvyn Weiss and the firm were charged in a second superseding indictment (available below) with conspiracy, RICO conspiracy, mail fraud, and obstruction of justice, and Weiss was accused of making a false statement (Sec. 1001) to agents investigating the firm.  While the basic allegation of paying representative plaintiffs in class actions in which the firm served as lead counsel remains the same, the obstruction and false statement charges add a new wrinkle to the case.  Weiss, and through him the firm, are accused of hiding a 1990 fax from one of the plaintiffs to David Bershad, a named partner in the firm, that discusses checks from the firm.  The government subpoenaed the document in January 2002, and the indictment states that from 2003 until August 2007 Weiss obstructed justice by "causing [the fax] to be withheld from production in response to the Grand Jury Subpoena."  Apparently, his refusal to comply with the subpoena was a continuing obstruction of justice. For the Sec. 1001) charge, Weiss alone is accused of lying to agents in August 2003 about his discovery of the document, and subsequent assertion of the self-incrimination privilege to withhold it.  According to the indictment, the fax was a business record of Milberg Weiss and not subject to a Fifth Amendment claim. 

The false statement count shows the benefit of Bershad's cooperation, because the government alleges that he gave the fax to Weiss, information that clearly comes from Bershad.  This is the first time that I have seen an assertion of the self-incrimination privilege as the basis for a false statement charge, with the government claiming that Weiss knew the document was not a personal record and therefore he could not resist production on that ground.  The obstruction and false statement counts likely are designed to help show Weiss' intent to hide the payments to the plaintiffs, an attempt to undermine any claim that he was unaware of what was going on or blaming others for the conduct. 

The forfeiture count seeks $251 million from Milberg Weiss and Weiss, which is the government's estimate of the fees earned from the cases with the improper payments, what the indictment terms the "tainted attorneys' fees."  (ph)

Download us_v_milberg_weiss_second_superseding_indictment_sept_20_2007.pdf

September 21, 2007 in Fraud, Legal Ethics, Prosecutions | Permalink | Comments (0) | TrackBack (0)

The Latest Wall Street Crackdown

Federal prosecutors and the SEC filed criminal and civil charges against a number of Wall Street defendants for abuses in the "stock loan" business that resulted in estimated gains of over $12 million.  The transactions involving loaning shares to brokers who need them so that clients can "short" the stock, i.e. sell shares they do not own, a bet the price will go down so they can be repurchased at a lower price and then returned to the lender.  With the rise in shorting, propelled by hedge funds and other investment vehicles that try to maintain positions on both sides of the market, demand for shares has increased, and so has the temptation to scoop a little extra money off the top by creating cut-outs to charge an extra commission.  According to the SEC press release (here):

The defendants include 17 current and former "stock loan" traders employed at several major Wall Street brokerage firms, including Morgan Stanley, Van der Moolen (VDM), Janney Montgomery, A.G. Edwards, Oppenheimer, and Nomura Securities. These traders conspired in various schemes with 21 purported stock loan "finders" to skim profits on stock loan transactions. The defendants pocketed more than $12 million from their unlawful schemes over a period of nearly a decade.

In two separate complaints filed in federal court in Brooklyn, N.Y., the SEC alleges that from 1998 until June 2006, the stock loan traders named as defendants routinely defrauded the brokerage firms that employed them and others by engaging in collusive loan transactions and causing the firms to pay sham finder fees to companies controlled by the traders themselves or by their friends and relatives. Acting as fronts for the traders, these companies received hefty finder fees on several thousand stock loan transactions even though they did not provide any legitimate finding services and, in many cases, were simply shell companies that were not even involved in the stock loan business. These phony finders included a mailman, a perfume salesman, a pharmacist and a dental receptionist. The defendants shared in the sham finder fees through secret kickback arrangements. In some cases, defendants met monthly at New York City bars and restaurants to exchange thousands of dollars in cash, often wrapped in newspapers or stuffed into envelopes.

The SEC named 38 defendants in two separate civil enforcement actions, a number of whom settled the case, while the U.S. Attorney's Office for the Eastern District of New York announced the indictment of five defendants on securities fraud and conspiracy charges.  Ten defendants already have entered guilty pleas in the case (see press release here). (ph)

September 21, 2007 in Civil Enforcement, Fraud, Prosecutions, Securities | Permalink | Comments (0) | TrackBack (0)

Thursday, September 20, 2007

Hsu to Be Charged with Fraud and Campaign Finance Violations

Norman Hsu, previously known for his fundraising on behalf of Democratic party candidates and a bizarre train trip to Colorado, will be indicted on fraud and campaign finance charges, according to the Wall Street Journal (here).  The case involves millions of dollars of investments that are missing, and campaign contributions to a number of candidates, including Senator Hillary Clinton, that may involve improper reimbusements to donors.  Once documents on the case are available they will be posted. (ph)


UPDATE #1:  U.S. Attorney Michael Garcia's remarks are available below.  Hsu is accused of perpetrating a ponzi scheme and also using straw donors, some of whom were also investors, to donate thousands of dollars to candidates.  According to Garcia: " This case is about self-promotion and greed.  Hsu perpetrated a massive ponzi scheme to support his lavish lifestyle and in the process stole tens of millions of dollars from unsuspecting investors."  Regarding the campaign contributions, Garcia asserts that Hsu made them "to purchase a place on the celebrity campaign circuit." (ph)

Download us_v_hsu_prepared_remarks_usa_garcia_sept_20_2007.pdf


UPDATE #2:  The criminal complaint is below.  It charges Hsu with three counts: mail fraud, wire fraud, and campaign finance violations.  It is usually the case that a grand jury indictment will be issued in the near future outlining a wider array of charges, so the criminal complaint is just the first step to keep Hsu in the system.  The complaint alleges that Hsu defrauded investors of $60 million.  It describes the contents of his locked briefcase that was searched pursuant to a warrant that contained the following:

(1) HSU’s passport; (2) approximately $7,000 in cash; (3) checkbooks for bank accounts used by HSU to carry out his fraudulent scheme; (4) hundreds of thousands of dollars worth of checks from HSU’s victims; (5) bank receipts reflecting millions of dollars worth of financial transactions conducted by HSU; (6) hand-written ledgers reflecting specific amounts of campaign contributions to be made by specific victims on behalf of various candidates for Federal Office; (7) Federal Express shipping labels for materials sent by HSU via overnight mail from Components Ltd. in New York, New York; a Cartier watch and Tiffany jewelry; and (8) receipts reflecting HSU’s travel throughout the United States via a corporate jet service.

It also describes, in very general terms, a statement by Hsu confessing to the ponzi scheme, which he made while in a hospital in Colorado after waiving the right to counsel.  Needless to say, that waiver is likely to be challenged by his lawyers. (ph)

Download us_v_hsu_criminal_complaint_sept_20_2007.pdf

September 20, 2007 in Fraud, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Lerach's Deal

With the impending superseding indictment of Melvyn Weiss and his firm, Milberg Weiss, the prosecution of the firm and its members for paying secret kickbacks to plaintiffs is nearing its denouement.  The plea agreement (available below) of William Lerach, the symbol -- for good or evil, depending on your point of view -- of aggressive class action attorneys has drawn considerable attention and criticism for the sentence and lack of a cooperation requirement.  The deal puts his sentencing range at one to two years along with an $8 million fine, and if the district court does not accept its terms then the agreement can be scuttled by either side.  An additional aspect of the sentence is that no more than half can be served in community confinement, i.e. a halfway house, or home detention, i.e. in the living room.  That means Lerach could serve as little as six months in jail, and it will likely be in a prison camp or similar minimum security federal facility.

Some have criticized the sentence as too light compared to those received by other well-known white collar defendants, such as the 25 years received by Bernie Ebbers or Jeffrey Skilling's 24+ year term, which he is serving even while his appeal is before the Fifth Circuit.  Even Andrew Fastow's comparatively mild sentence for his role in the Enron debacle was six years, far more than Lerach will serve.  The Wall Street Journal, which has never particularly cared for Lerach and his ilk, criticized the $8 million fine he will pay in an editorial (here), asserting that "It's hard to put a number on the money Mr. Lerach took off shareholders over the past three decades or so, but it's safe to say that $8 million isn't close. Even after his fine and minimal jail sentence, he will presumably remain a rich man."

In any discussion of a criminal sentence, it is important to remember that it has to be based on the crime of conviction, in this case conspiracy to obstruct justice and make false statements to the court.  The Milberg Weiss case has never been a fraud prosecution, at least in the sense of depriving victims of money or property.  While the convictions of Ebbers and Skilling/Fastow involved significant accounting fraud, it is not entirely clear whether the Milberg Weiss kickbacks paid to the representative plaintiffs necessarily provided a direct monetary benefit to the firm in excess of what it recovered in the cases.  The plea agreement states that the payments allowed the firm to file its cases earlier, and the degree of oversight exercised by the named plaintiffs was non-existent, in all likelihood, so Milberg Weiss was free to pursue its legal strategy unfettered by any client demands.  An earlier defense filing in the case assailed the government's theory as trying to stretch a violation of the professional responsibility rules into a crime.  While making false statements to the court is certainly criminal, and the kickbacks were not only unethical but likely crimes given the representations the class counsel must make about its representation, what Lerach and others who have entered guilty pleas did was not necessarily a scheme to defraud.  While the WSJ may bemoan Lerach's tactics, due process limits the sentence to conduct related to the criminal offense, and it's hard to see how claims of ripped-off shareholders relates to a conspiracy to mislead judges.

The absence of a cooperation provision in the plea agreement has aroused suspicion because the government usually requires it as part of a deal.  The Ideoblog (here) notes that "it's still possible that the government made an implicit, non-disclosed deal with Lerach."  While there is good reason to be suspicious, I suspect the government does not have much interest in using Lerach in the prosecution of Weiss and the firm, so prosecutors may well have been willing to drop any cooperation demand in the bargaining to get Lerach to plead guilty.  It gives him a small point to argue in the future -- "I'm not a rat" -- at little cost to the government.  Lerach as a witness against Weiss would bring significant baggage, mainly the negative relationship he has with Weiss that led to the breakup of Milberg Weiss in 2004.  Moreover, I doubt prosecutors would trust having Lerach on the stand because he does not strike me as a witness who can be controlled or trusted to maintain his temper on cross-examination.  The key to the case against Weiss is his former partner David Bershad, who was in charge of the firm's finances and paying the representative plaintiffs.  Lerach would be more of a distraction at a trial, so garnering his cooperation would not be worth much while it could be foregone for other benefits during the negotiations.

Whether the sentence (and fine) is "light" or "harsh," the prosecution is a watershed because the government pursued a case against attorneys who sought to take advantage of the system through a long-term pattern of abuse.  That said, not every case in which Milberg Weiss was counsel was tainted, and the firm remains in business.  Lerach certainly should lose his law license, and I doubt many judges will ever welcome him into their courtrooms as a lawyer again.  There's always a danger in asking how a symbol should be punished, and comparing one case with another risks overlooking important differences between them.  (ph)

Download us_v_lerach_plea_agreement_sept_18_2007.pdf

September 20, 2007 in Fraud, Legal Ethics, Prosecutions | Permalink | Comments (2) | TrackBack (0)

What's Next for the Corporate Attorney-Client Privilege Bill

Senator Arlen Specter's bill, the Attorney Client Privilege Protection Act of 2007 (S.186 here), was the subject of a Senate Judiciary Committee hearing on September 18.  The five witnesses (statements available here) included two who strongly support the bill, former Attorney General Dick Thornburgh and Andrew Weissman, who headed the Enron Task Force before entering private practice.  Two academics, Professors Dan Richman of Columbia and Michael Seigel of Florida, oppose the bill, as did Karen Immergut, the U.S. Attorney for the District of Oregon who is the chair of the White Collar Subcommittee for the Attorney General's Advisory Committee.  Specter has been pushing legislation to limit demands on corporations to waive the attorney-client privilege since 2006, but it's not clear whether the bill will clear the Senate Judiciary Committee any time soon.  Specter is the only sponsor of the legislation, and Judiciary Committee Chairman Patrick Leahy has not yet announced his position on the bill.  According to an article in The Deal (available on here), Specter wants a quick vote on the legislation, without waiting to raise the issue in the hearings on the nomination of Michael Mukasey to be the next Attorney General.  Whether Leahy and others will go along with that, or postpone any action on the bill until they can get Mukasey's views remains to be seen.  (ph)

September 20, 2007 in Privileges | Permalink | Comments (0) | TrackBack (0)

OC Lawyer Charged with Fraud and Money Laundering

The U.S. Attorney's Office for the Central District of California announced the indictment of an Orange County lawyer and another man on charges of defrauding clients of his firm of more than $1 million for purported investments in bank instruments that would return up to 40% a week.  According to a press release (here), the defendants were charged with wire fraud and money laundering:

The indictment outlines a scheme in which [the defendants] solicited investments from victims – some of whom were clients of [the lawyer]’s law practice – by falsely stating that the money would be used to trade European bank instruments. The defendants allegedly told victims that their money would be held as collateral, meaning that the investment was completely safe. [The lawyer] told victims that he had completed high-yield investments in the past and had many satisfied clients. [The lawyer] also claimed that he traded AA-rated securities and bonds. The victims were told that their money would be refunded within 30 days of a request.

In fact, the indictment states, [the defendants] never invested any of the victims’ money. Instead, [they] used the victims’ money for business and personal expenses. No money was returned to any victims.

Clients are usually quite trusting of their lawyer, but believing anyone can make 40% per week shows once again that if it sounds too good to be true, it's not. (ph)

September 20, 2007 in Fraud, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 19, 2007

Media Reports Weiss to Be Indicted and Schulman Will Plead

Fortune is reporting (here) that Melvyn Weiss, a name partner at Milberg Weiss, will be indicted shortly on charges related to secret payments to representative plaintiffs in class actions filed by the firm.  Former partner William Lerach just entered a guilty plea to a conspiracy charge that will call for a one- to two-year sentence, while another former name partner, David Bershad, entered a guilty plea earlier that appears to have been the key breakthrough in the investigation.  In addition, Steven Schulman, whose name was put on the firm more recently, reportedly will also enter a guilty plea after fighting the charges for over a year.  The firm itself was also indicted in 2006, and it too is likely to plead guilty at some point.  In its heyday, the firm was called Milberg Weiss Bershad Hynes & Lerach before the 2004 break-up, which means that three of the five "names" in the firm -- Schulman's was added after Lerach left -- will be involved in federal charges related to its conduct.  Lawrence Milberg died in 1989, well before the practices at issue in the case occurred.  (ph)


UPDATE: The Wall Street Journal Law Blog (here) quotes a press release issued by Milberg Weiss confirming that Melvyn Weiss and the firm will be the subject of charges issued in a superseding indictment by a Los Angeles grand jury:

Milberg Weiss understands that a second superseding indictment will be issued tomorrow that will include new charges against the Firm and also Melvyn Weiss. Mr. Weiss has decided to discontinue his participation in Firm management in order to focus on the defense of the charges against him. The Firm’s other partners, none of whom is alleged to have been involved in any wrongdoing, will be responsible for its management and litigation activities. Mr. Weiss will remain available to counsel clients and Firm attorneys. The Firm remains proud of Mr. Weiss’s and the Firm’s accomplishments over the years and will continue to fight for its clients and class members and to produce the excellent results for which it is known. We do not anticipate any interruption in our work and we look forward to putting this difficult period behind us.

With Weiss no longer taking an active management role at the firm, it may be that Milberg Weiss will seek to resolve the charges rather than continue to fight them. (ph)

September 19, 2007 in Fraud, Legal Ethics, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Waxman Takes Aim at State Department Inspector General

Representative Henry Waxman, chairman of the House Oversight and Government Reform Committee, is now taking on State Department Inspector General Howard Krongard over his alleged interference in investigations of possible contract fraud in projects in Iraq and Afghanistan.  In a letter (here) to Krongard, Representative Waxman asserts that the Committee has received information about actions to block or impede investigations from a number of people in the Inspector General's office, and "[t]he allegations made by these officials are not limited to a single unit or project within your office. Instead, they span all three major divisions of the Office of Inspector General — investigations, audits, and inspections. The allegations were made by employees of varied rank, ranging from line staff to upper management."  Alleging a political motive for the claimed interference, Representative Waxman states that "one consistent element in these allegations is that you believe your foremost mission is to support the Bush administration, especially with respect to Iraq and Afghanistan, rather than act as an independent and objective check on waste, fraud, and abuse on behalf of U.S. taxpayers."  The letter includes an "invitation" to a Committee hearing on October 16, which promises to have a few nasty moments. (ph)

September 19, 2007 in Investigations | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 18, 2007

How Far Can You Take Compulsory Process?

The Sixth Amendment to the U.S. Constitution provides that an accused has the right to compulsory process for obtaining witnesses who will present evidence favorable to the accused.  But does this mean that you can subpoena anyone you want? Are there limits?  This may be the test arising in the recent flurry of subpoenas issued to 13 lawmakers.  (See here)  According to Yahoo.Com, these lawmakers are subpoenaed to testify in a case "of a defense contractor charged with [allegedly] bribing jailed former Rep. Randy "Duke" Cunningham."


September 18, 2007 in Corruption, Prosecutions | Permalink | Comments (0) | TrackBack (0)


Interesting piece by Susan Reisinger over at Corporate Counsel titled, "Doctor's Orders: Bristol-Myers is the First Company to Sign a Deferred Prosecution Agreement and then Violate it."  Co-blogger Peter Henning comments that "prosecuting Bristol-Myers for securities fraud would have been 'the nuclear option, because the company already admitted what it did and would have no defense at trial.'"


September 18, 2007 in Settlement | Permalink | Comments (0) | TrackBack (0)

Lerach to Plead Guilty

Famed class action attorney William Lerach is set to plead guilty in Los Angeles to one count of conspiracy related to payments to representative plaintiffs in cases filed by his former firm, Milberg Weiss.  The long-running investigation of the firm has picked up steam in the past few months as former name partner David Bershad entered a guilty plea that outlined how he maintained a cash fund drawn from contributions from other Milberg Weiss partners that was used to make secret payments to the plaintiffs.  In late August, Lerach announced his retirement from his new firm, Lerach Coughlin, in which he acknowledged "my mistakes" and said that the investigation would end soon, which apparently it will for him (see earlier post here).  According to a Bloomberg article (here), the plea agreement does not include a cooperation provision, which likely means Lerach will not be called on to testify against the firm or another former named partner who remain under indictment.  The agreement calls for a prison sentence of one to two years and an $8 million fine.  A key question now is whether prosecutors will bring a case against Melvyn Weiss, who along with Lerach has been the recent focus of the federal investigation.  (ph)

September 18, 2007 in Fraud, Legal Ethics, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Monday, September 17, 2007

Another Leaving DOJ

The exodus from DOJ continues despite the announcement of a new Attorney General being recommended to Congress (see here).  A DOJ Press Release states that Regina B. Schofield, Assistant Attorney General for the Office of Justice Programs, has announced that she will be leaving effective September 28, 2007.  She served approximately two years as the Assistant AG for the Office of Justice Programs.


September 17, 2007 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

Sentencing of Owner of Investment Advisor Firm

According to a press release of the U.S. Attorney's Office for the Central District of California, the sentence issued by a judge in the U.S. District Court for the Central District of California to "the owner and operator of the now -defunct downtown investment advisor firm," was 87 months in prison and $28.8 million in restitution to individual investors and $2.4 million to Wells Fargo Bank.  The defendant had pleaded  "guilty to four counts of bank fraud, 11 counts of mail fraud, two counts of investment advisor fraud and two counts of criminal forfeiture."  The defendant was arrested outside the United States and returned to the U.S. to face these charges.

Press Release -  Download c_capital_yi_sentenced.113.pdf


September 17, 2007 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Was the Rider Related Case A Runaway Grand Jury?

A Grand Jury in Mercer County, New Jersey brought an indictment against school officials, including a dean of students, at Rider University for activities related to the death of a student. (see here)  And it was not surprising to see these charges later dismissed by prosecutors, as the idea of indicting school officials in this context was unusual. (see here).  The ABA L Jrl News is now questioning whether these charges were in fact the result of a runaway grand jury. (see here)

The saying has long been that a prosecutor can get a grand jury to indict a ham sandwich.  But runaway grand juries do happen on occasion.  White collar cases, unlike cases of street crimes, are more likely to use the grand jury process for an investigation.  In street crime cases, the police usually conduct the investigation and present the evidence in a shortened form to the grand jury that decides whether to issue an indictment.  In contrast, in white collar cases the grand jury can be used extensively to procure information via subpoena and to have witnesses testify in the investigation of possible criminal activity.   Although there is no legal requirement to present exculpatory evidence (U.S. v. Williams) to a grand jury, there is an ethical standard that provides that "[n]o prosecutor should knowingly fail to disclose to the grand jury evidence which tends to negate guilt or mitigate the offense." (ABA Standard 3-3.6). There is no allegation here of the prosecutor failing to present exculpatory evidence to the grand jury. But perhaps what is the interesting question is the prosecutorial discretion that a prosecutor has in deciding what cases he or she will investigate before a grand jury.


Addedum - See here for details on an upcoming program on "The Impact of Criminal Law on Student Affairs Professionals: Insights into Investigations and Indictments."

September 17, 2007 in Grand Jury | Permalink | Comments (0) | TrackBack (0)

Sunday, September 16, 2007

What Mukasey Brings to the AG's Office

What if Michael B. Mukasey becomes the next Attorney General?

Probably the strongest asset that Mukasey brings to the AG's office, more than anything, is that he has a long history of working in the criminal justice system, and from a prestigious position of being a federal judge.  This, hopefully, will invigorate the DOJ and increase the morale in the office.  Having presided over terrorist trials he has seen the enormity of the issues faced by this country. Having worked as a white collar criminal defense attorney (see here), albeit only for a year, he should understand the concerns of the business community. But the most important consideration for Congress in assenting to this appointment, and for anyone taking this position, is whether politics can be removed from DOJ. Obviously some politics plays a role in the initial appointment of an AG or a US Attorney, although even these decisions should have as the highest criteria finding the most competent person for the position. But politics should never be a part of the decisions of the hiring, firing or decision-making of the civil servants who work in the offices. The key question is whether DOJ will be an office that represents the people of this country as "ministers of justice."


September 16, 2007 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

Antitrust Indictment Related to Marine Hose

A DOJ Press Release reports of the indictment of two individuals for allegedly "participating in a conspiracy to rig bids, fix prices and allocate market shares for sales of marine hose used to transport oil."  This indictment appears to come in part from a Department of Defense investigation.  What is particularly noteworthy here is how marine hose is used.  The DOJ Press Release notes that "Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities and buoys."  The indictment alleged that "[d]uring the conspiracy, the conspiracy participants sold hundreds of millions of dollars worth of marine hose and related products."  It also alleges that "[t]he victims of this conspiracy included companies involved in the off-shore extraction and/or transportation of petroleum products and the U.S. Department of Defense."


September 16, 2007 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

ABA/Criminal Justice Section Program


Thursday, October 18, 2007

3:00 pm — 5:00 pm, with reception following

New York Marriott Financial Center 85 West Street, New York, NY

Program Chair:
Henry E. Hockeimer, Ballard Spahr Andrews & Ingersoll, LLP

U.S. v. Libby became a test for how far the government can and will go to subpoena journalists and their confidential sources. Will the use of such subpoenas expand? And how will the media and lawyers adjust to the post-Libby era? A prominent journalist and experienced attorneys from the defense, prosecution and corporate bar will explore these and other issues.

Kevin DiGregory, Assistant United States Attorney, Alexandria, VA
Max Frankel, Former Editor, The New York Times, New York, NY
Susan Weiner, Deputy General Counsel, NBC Universal, New York, NY
Reid Weingarten, Defense Counsel, Steptoe & Johnson, Washington, DC

Henry E. Hockeimer, Philadelphia, PA
Robert J. Ridge, Thorp Reed & Armstrong, LLP, Pittsburgh, PA

CLE Credit: Accreditation has been requested from all mandatory CLE states.

For more details see here.

September 16, 2007 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)