Tuesday, April 15, 2008

Another Long Sentence for a White Collar - But This Time With A Plea

This time it is 20 years for a white collar offender.  But unlike Bernie Ebbers who received 25 years, Jeffrey Skilling who was given 24 years, and the Rigas sentences of 20 and 15 years -  the accused - Samuel Israel III - plead guilty. 

In the past the exorbitant sentences have been given for the most part to individuals who risked trial. We have seen individuals who enter pleas receiving lower sentences, like six years (Fastow) in return for testimony. 

But what happens when you have no one to testify against and when the amount of loss is high? The co-founder of the defunct hedge fund Bayou Group found out that the reduction for a plea brought it to a sentence of 20 years.

The Wall Street Jrl here,  NYTimes here, USA Today here, Reuters here.

See also my article, The Challenge of White Collar Sentencing


April 15, 2008 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Stringer Commentary

Howard M. Shapiro and David Z. Seide of Wilmer Cutler Pickering Hale and Dorr have an important commentary piece on Stringer in Legal Times. One can access it here via the site's free registration. They provide an important piece of advice to defense counsel - "Defense counsel should keep pushing for a detailed record of communications and interaction between civil and criminal agencies because prosecutors and civil enforcement attorneys will continue to risk crossing the line every time they coordinate their investigations."

For background on the Stringer decision, see here and here.


April 15, 2008 in Civil Enforcement | Permalink | Comments (0) | TrackBack (0)

Memorial for Stanton Wheeler

Susan Shapiro, Senior Research Fellow, American Bar Foundation writes:

At the upcoming Law & Society Association meeting, we will be honoring the memory of Stanton Wheeler, one of the founders of the Association and a mentor and friend to many of us, who passed away in December.

As part of our remembrance, we will be assembling a family tree, recording those whose lives were touched by Stan. If you feel part of that extended family, please contact Susan Shapiro at sshapiro@abfn.org . Please respond by April 21.

The family tree will be on display at the Law & Society meeting in Montreal and then given to his family. On Friday, May 30, 2008 from 4:30-6:15, there will be a roundtable remembrance panel at the meeting to honor Stan. In addition to the official commentators, those in attendance will have an opportunity to offer their memories (time permitting). For details contact Susan Shapiro.

To learn more about Professor Stanton Wheeler, see here.


April 15, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Government Asks for 36 Months for Snipes

The government filed its sentencing brief (see here - Download usa_sentencing_memo_re_snipes.pdf ) in anticipation of the forthcoming Wesley Snipes sentencing hearing set for April 24, 2008. The brief calls for the court to impose a sentence of "36 months’ imprisonment and a fine of at least $5 million."  It also requests the court to deny bail pending appeal.  See Professor Doug Berman's Sentencing Law & Policy for his comments on this brief.

(esp) (w/ a thanks to Whitney Curtis)

April 15, 2008 in Celebrities, Sentencing, Tax | Permalink | Comments (2) | TrackBack (1)

The Wecht Case - Should There Be A Retrial?

Cyril Wecht's possible retrial is receiving close scrutiny, as it should. The 77 year old gentleman's trial went for 7 weeks, had hundreds of exhibits, and the government presented 44 witnesses. It probably cost the taxpayers a pretty penny to try this case, and most certainly the defense tab was likely to have been high. As I stated here:

"The case is a relatively simple one.  The government charges corruption with expansive statutes like wire fraud and honest services fraud under section 1346. They take each fax and make it into separate counts, even when the faxes were sent the same day. The Indictment makes one wonder what a case like this is doing in federal court, except for the fact that the accused is charged with activities while in his role as a county coroner."

See Indictment. It seemed like the government was throwing spaghetti against the wall and hoping something would stick.

But the jury was not as hungry as the prosecution hoped. And despite many days of deliberation, it was hung. A press report states that it was a hung with a majority in favor of acquittal (see here).

The happenings since the jury was dismissed have been disappointing.  It seems the FBI has engaged in post-trial conduct that includes contact with jurors. (see here)  There is question about the source of the names and contact information of the jurors, especially in light of a prior court order (see here)  One can't help but wonder here if the tables were reversed and the defense were engaged in such conduct if the FBI would tolerate this conduct.

The defense has filed a new motion, premised on double jeopardy. Argued is whether Federal Rule of Criminal Procedure, Rule 26.3 was violated in how the court determined it was a hung jury and whether there was "manifest necessity" for a mistrial.  (See Defendant's Brief in Support of his Motion to Dismiss the Indictment and to Preclude the Government From Further Prosecution in Violation of the Prohibition Against Double Jeopardy) - Download double_jeopardy_brief.pdf  Interesting commentary on this motion is offered by Professor Robert Weisberg in this comprehensive article by Jonathan Silver of the Pittsburgh Post Gazette.

But more important questions remain here.  First, is this case important enough to expend tax dollars on a retrial?  Has the accused, irrespective of guilt or innocence, been sufficiently punished by the physical, emotional, and actual cost of this long first trial? Second is DOJ's criminal division providing sufficient oversight here or are they leaving this decision to an individual US Attorney's Office? Third is someone scrutinizing the post-trial government conduct?


April 15, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Monday, April 14, 2008

AG Cuomo Looking at Lawyers and Law Firms in School District Probe

A press release of Attorney General Andrew Cuomo's office states:

"Attorney General Andrew M. Cuomo announced today that his Office has issued multiple subpoenas to lawyers and law firms in upstate counties as part of his rapidly expanding probe into potentially fraudulent employment arrangements between public school systems and lawyers.

Investigators from the Attorney General’s Office have thus far identified more than 90 attorneys (more than 70 upstate and 20 in Long Island) who may have been improperly placed on public school system payrolls in connection with more than 180 school districts statewide (more than 150 upstate and 30 in Long Island). Calling these lawyers “employees” enabled them to collect taxpayer-funded health, pension, and other benefits not otherwise available for professional consultants."


April 14, 2008 in Investigations | Permalink | Comments (0) | TrackBack (0)

But Do You Really Want BigLaw?

For those exiting law school and thinking of a career in white collar crime, the question always is - where to go.  One place to try for is the Department of Justice.  The Honors Program offers one highly competitive route.  But there are also many agencies that provide avenues for a career in white collar crime.  For example, the FBI here (check our their summer internship program here) investigates many white collar activities.  State prosecutors in some cases are starting white collar sections to handle cases like consumer fraud type matters. And of course there is the Attorney General's Office - just ask New York AG Andrew Cuomo what he is doing (see here).

Another route - the law firms.  There are many small criminal defense firms throughout the country that specialize in white collar crime.  There are also firms that handle many different types of matters and also take some white collar cases.  Finally there are large firms with groups that handle "special matters" or white collar crime.

Don't forget the corporate avenue, in that many corporations are needing to deal with compliance programs and making certain that the corporation is not charged with any criminal offenses.

Some may prefer to take the route of BigLaw, but it is important to note that this is not the only route to handling white collar crime matters.  The National Law Journal posts today a listing of where students go from different law schools.  But although the article places BigLaw in the first slot of its table, one shouldn't always think of this route as the only way to enter the white collar crime law arena.

Obviously, the one way you most definitely want to avoid in entering the world of white collar crime is as the criminal defendant.


April 14, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Sunday, April 13, 2008

Hillary Takes on White Collar Crime

Presidential Candidate Hillary Clinton has presented a tough on crime posture in framing issues in her campaign.  Her latest statement discussed white collar crime. Reporting on Clinton's latest statement, NBC/NJs Anetha Jones writes -

"white-collar crime cost people their pensions and their jobs and contributed to the economic woes communities face. As president, she would pledge to pursue corporate criminals like street criminals, directing her attorney general to conduct a 90-day review of all deferred prosecution agreements and report on how to strengthen prosecution efforts against corporate wrongdoers."

ABC - KPRG- TV9 states

"She promised to pursue white collar crime as well, placing an emphasis on identity theft and prescription drugs purchases made over the Internet..."

It is interesting that two important issues related to white collar crime are singled out here - computer related offenses (identity theft) and corporate deferred prosecution issues.


April 13, 2008 in News | Permalink | Comments (0) | TrackBack (0)

In the News

U.S. Attorney's Office - Oregon, Press Release -  Former Director of Accounting Services at Oregon Department of Education Admits Stealing $925,000 Government Investigators Recover $750,000

Jason, Cato, Pittsburgh Tribune Review - Legal fees to cost Wecht millions

Philly.com (AP) - Judge Sets Jury Selection for Second Wecht Trial

NYTimes, Letters to the Editors - Fines, Fear and Corporate Criminals  (responding to article on deferred prosecutions here)

Ralph R. Reiland, Columnist, Pittsburgh Tribune Review - The Real Theft & Fraud (discussing the Wecht trial)


April 13, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Tax Cases Are "In" This Week

With April 15th just around the corner, it is not surprising to see DOJ filing an increased number of tax cases.  This increased prosecution, right before the tax deadline, is like an advertisement that deterrence is the government's aim.  The following is a sampling of some of the recent tax cases:

DOJ Press Release - Federal Court Bars Oregon Family and Associate From Promoting Tax Fraud Scheme

DOJ Press Release - Federal Permanently Court Bars Michigan Man from Preparing Tax Returns

DOJ Press Release - Federal Court in Seattle Permanently Shuts Down "Warehouse Bank" Tax Defier Operation with $28 Million in Deposits over Four Years

DOJ Press Release - Imprisoned Missouri Tax Preparer Permanently Barred From Preparing Federal Tax Returns

DOJ Press Release - Federal Court Bars Hialeah, Florida Woman From Preparing Tax Returns for Others

DOJ Press Release Fresno Man Barred From Promoting Tax Scheme

And in addition, there is a new initiative starting -

Press Releases, Nathan J. Hochman, Tax Division's Assistant Attorney General, Announces the Creation of the National Tax Defier Initiative


April 13, 2008 in Tax | Permalink | Comments (0) | TrackBack (0)

Upcoming Conferences

18th Annual National Institute on Health Care Fraud here

Strafford - Foreign Corrupt Practices Act in India here

Civil False Claims Act & Qui Tam Enforcment - Washington, D.C. - June 11-13  here

April 13, 2008 in Conferences | Permalink | Comments (0) | TrackBack (0)

Thursday, April 10, 2008

Post Wecht Trial Conduct by the FBI

Cyril Wecht's trial ended with a hung jury (see here), and it was a relatively long trial at that (see here).  Jonathan Silver at the Pittsburgh Post-Gazette, in an article titled Many Questions Surround Wecht Retrial, Set for May, provides an interesting description of the government's desire to proceed in a retrial against this 77 year old man, including some statements from former AG and Governor Dick Thornburgh.

But the government has not stopped at just saying they want to retry this case.  According to an article by Carl Prine and Jason Cato in the Pittsburgh Tribune-Review, (see here) the FBI is calling the jurors in the prior trial. Check out a prior article titled Majority Thought Wecht Was Innocent, Juror Says.

Perhaps the irony here is that Wecht's charges relate to his alleged use/misuse of public funds.  But the government's use, and perhaps continued use, of public funds to continue this prosecution might be questioned by some as beyond what is necessary. 


Addendum - Steve Benen - Salon.com

April 10, 2008 in Prosecutions | Permalink | Comments (1) | TrackBack (0)

AOL Executives SEC Trial

Hearing "not guilty" from a jury may not always end the case. AOL executives were acquitted of criminal conduct after a lengthy jury trial (see here).  A behind the scenes look at the trial is portrayed in an article in the American Lawyer (see here).  But the next phase in now underway as the SEC trial is nearly finished.  The evidence has been presented and now closings are set for April 21-22. 

White collar cases are somewhat unique in that the criminal trial is not the only matter that may be facing the accused.  Often parallel proceedings may mean that the government has multiple chances to obtain some relief from the accused.


April 10, 2008 in SEC | Permalink | Comments (0) | TrackBack (0)

Plea in Public Procurement Fraud Case

A press release from the Antitrust Division states that "a U.S. Department of Defense (DOD) contractor from Baltimore pleaded guilty ... to conspiring to steal competitive information concerning contracts to supply fuel to DOD aircraft at locations worldwide."  The prosecution of this case came from the "creation of the National Procurement Fraud Task Force, " an "initiative announced in October 2006 [that] is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs."


April 10, 2008 in Fraud | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 9, 2008

In the News & Blogsphere

SEC Press Release - SEC Action Returns Former Gemstar CEO's Pending Severance Payment to Company and Shareholders -  The Securities and Exchange Commission today announced a court ruling that successfully concludes its effort to stop a $29.5 million severance package from being paid to the former CEO of Gemstar-TV Guide International ....  (see also LATimes here)

Wall Street Jrl (AP) - Hung Jury in Boeing Leak Trial

Heritage Foundation - The Foundry - -NYT's Latest Catty Swipe at the Justice Department

Liz Coffy  - Medill Reports - Savvy and Sorry: Web Fraud on the Rise

DOJ - US Attorney's Office New Jersey  - Press Release - "The former chief financial officer of defunct cheese manufacturer Suprema Specialties, Inc. was sentenced ... to eight years in prison for his conviction on charges of conspiracy, bank fraud, mail fraud, wire fraud, and making false statements to the Securities and Exchange Commission...."


April 9, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Response to NYTimes Article on Deferred Prosecution

Guest Blogger - Stephanie Martz, White Collar Crime Project Director - NACDL - writes:

I think that a lot of us are admirers of Eric Lichtblau, who after all won a well-deserved Pulitzer for his coverage of the "TSP," or whatever name the administration is currently giving it.  Therefore, I was saddened when I read -- and re-read, because I couldn't believe my eyes -- his surprisingly unsubstantiated piece on deferred prosecution agreements that appeared on A1 of the April 9 NY Times (here).

For starters, I couldn't find any, well, facts.  To start with, the headline – "Corporate Deals Replace Trials" – is not actually supported in the piece.  Neither Mr. Lichtblau nor anyone he quoted seemed to have tried to figure out whether, based on past conviction rates or even actual "trials" (which are always few and far between in the corporate context), prosecutions have actually been "replaced."  In the second paragraph, he makes the unattributed assertion that Monsanto "would have been prosecuted" in an earlier era.  Really?  Maybe, but not a very supportable assertion.  Monsanto involved a few hundred dollar bills being passed by an employee of  a subsidiary in a foreign country.  In the spirit of supposion, I feel like this case would have resulted in a CIVIL settlement with the SEC, rather than criminal charges.  And nowhere does he acknowledge that deferred prosecution agreements require that charges be filed with a U.S. District Court.  They are then dismissed IF the company complies with the terms of the DPA.

Let's continue:  "In many cases, the details are kept secret."  Really?  They can be hard to find because DOJ hasn't compiled them or made them available anywhere.  But two law review authors in the last 6 months alone have gathered more than 80 of them and analyzed them.  I'm not sure why Mr. Lichtblau didn't interview them, since they are the actual experts in this area. (McConnell/Finder piece and Joe Warin's piece).

Mr. Lichtblau also quotes a former prosecutor, apparently without asking  that person for supporting information, as saying that the DPA fines are "peanuts" compared to fines imposed by a criminal conviction.  Really?  Has Mr. Lichtblau actually looked at these agreements?  I think that Purdue Pharmaceuticals, Reliant Energy, and Vetco would disagree.  Again, the actual facts do not bear this out.  Around 85% of companies that are actually sentenced in federal court pursuant to plea OR trial are small, privately held companies that would be ruined by multi-million dollar fines.  We don't even have a good "set" to compare with the big publicly traded companies that are doing these DPAs.  I might add that if "peanuts" means that companies get to live but pay tons of money to the government under DPAs or die under indictment, I think "peanuts" might be in the public interest.

In short, I suspect that an accurate assessment of DPAs would indicate that they are representative of more, rather than less, government oversight of companies; or at least a shifting focus at DOJ from prosecution to reform, which traditionally has been the bailiwick of the SEC.  Even if that proves to be untrue, any conclusion should be based on facts rather than unfounded speculation. Don't you think?


April 9, 2008 in Deferred Prosecution Agreements | Permalink | Comments (1) | TrackBack (0)

Tuesday, April 8, 2008

In the News

Five Former San Diego City Officials Face SEC Charges

A Press Release of the SEC states that they

"filed securities fraud charges against five former San Diego city officials who played key roles in the city’s inadequate municipal securities disclosures in 2002 and 2003. The SEC charged the former officials for failing to disclose to the investing public buying the city’s municipal bonds that there were funding problems with its pension and retiree health care obligations and those liabilities had placed the city in serious financial jeopardy."


April 8, 2008 in SEC | Permalink | Comments (0) | TrackBack (0)

Wecht Trial Over - Mistrial

In some ways there is relief for the defense when a mistrial occurs - at least it isn't a conviction. In another respect, it is an added weight - they have to go through it again.  The court has reset 77 year old Wecht's re-trial for May 27th, although the defense will likely present motions to dismiss in the interim.  Some of the problems that a defendant faces after a mistrial are -

  • The prosecution has heard the cross-examinations and the theme of the defense case.
  • The defendant will not only be paying for one trial, but now for a second one. (Prosecutor's work on the public payroll and don't have to worry about this aspect - although maybe they should have to answer to whether the expenditure of money is a worthwhile one)

One question prosecutors should be asking now is whether this case is really worth a re-trial.  This is where DOJ Criminal Division oversight should be used, as often an individual USAttorney's office is so invested in a case that they can't properly compare this case with those across the country.  It is interesting that USAs want uniformity in sentencing, but when it comes to selection of charges they seem to want the individual office making a decision, except in the unusual cases that require DOJ approval like RICO cases.  Maybe it would be good to require DOJ Criminal Division oversight in all cases that resulted in a mistrial, to ascertain as to whether valuable resources should be spent on a re-trial. After all the defendant has suffered by payment of attorney fees, by publicity, and most of all by the strain and pressure that comes in being a defendant facing many years in prison. 

Pittsburgh Post Gazette - Mistrial declared in Wecht case; new trial set for May 27

Pittsburgh Post Tribune - Wecht trial over; feds to try again


April 8, 2008 in Prosecutions | Permalink | Comments (0) | TrackBack (0)

Monday, April 7, 2008

In the News & Around the Blogsphere