Sunday, July 20, 2008

The Latest on Sam Waksal - ImClone's Founder

For cancer patients, any word of the possible release down the road of Sam Waksal is likely to be celebrated.  The latest word on his status is seen in an article by Beth Landman in the Intelligencer titled, Sam Waksal's Return to New York.

Waksal was the founder of ImClone, a company that produced a drug called Erbitrux. But the FDA's initial disapproval and his activities following that disapproval led to his conviction for insider trading. He stepped down as President and CEO in 2002 stating:

"Serving as Chief Executive Officer of ImClone Systems has been an honor and a privilege for the past eighteen years. In light of recent events and the distractions they have caused, I am withdrawing myself from the daily operation of the Company in the confidence that ImClone Systems will be able to maintain its focus on the advancement of our clinical development and research programs. I fully believe that our product candidates, the most advanced of which is ERBITUX(TM), will have a profound effect on the way that patients with cancer are treated." (see here)

The sad part of the events is that Waksal was thereafter incarcerated.  The FDA finally approved ImClone's drug in 2004 (see here), but Waksal went to prison.

It is good to see that he may be able to return to assisting the development of cancer drugs.  Those who go to prison are likely to be changed by the experience, but few are able to leave with little damage to their reputation.  Whether Sam Waksal is in this select group remains to be seen. 

(esp)(w/ a hat tip to Jack King) 

July 20, 2008 in Insider Trading | Permalink | Comments (0) | TrackBack (0)

In the News and Blogoshpere

Saturday, July 19, 2008

In the News and Blogosphere

Pittsburgh Post-Gazette, Appeals court sets Aug. 4 for Wecht arguments ; Lebanon Daily News (AP), Oral arguments scheduled in Wecht retrial case

Linda Friedman Ramirez, Representing Foreign Nationals Blog, White Collar Crime and Criminal Immigration: Prosecution of MacDonald Franchise Results in Plea

Dan Levine,, Federal Judge Refuses to Accept Guilty Plea in Health Care Fraud Case

Charlie Savage, NYTimes, Felons Seeking Bush Pardon Near a Record (it is an amazing list of individuals - both from the white collar and other areas)


July 19, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Friday, July 18, 2008

Sometimes It Is Just Better to Take the Loss - DOJ Takes A Second Punch

Amir Efrati of the Wall Street Jrl reports on a ruling in the Second Circuit in a post titled, Second Circuit Stings SDNY in “Specialist” Case. The Second Circuit affirmed the acquittal of the trial court, an acquittal that occurred post trial following a jury verdict. Some thoughts on this decision:

What the Second Circuit decision held -

  • The court refuses to find that "interpositioning" per se constitutes securities fraud.  Interpositioning is when a specialist "'prevents the normal agency trade between matching public orders and instead interposes' himself 'between the matching orders in order to generate profits' for the principal account -- in other words, when the specialist acts as an arbitrage by taking a profit on the spread between the bid price and the ask price of customers' orders." (p. 3-4)
  • The court finds that a violation of a "NYSE rule does not establish securities fraud in the civil context... let alone in a criminal prosecution." (p. 18)
  • The court finds insufficient evidence of securities fraud here saying that "the government has attributed to [the accused] nothing that deceived the public or affected the price of any stock: no material misrepresentation, no omission, no breach of a duty to disclose, and no creation of a false appearance of fact by any means." (p. 19)

Commentary -

  • Some DOJ individuals might be thinking about what kind of language is needed for a new statute so that the conduct they wish to criminalize will be covered. 
  • What needs to be said by high-ups at DOJ:  It's a unanimous decision.  How much money should be expended on being told that this isn't securities fraud.  Some things just need to be left to control by regulators.
  • Those with similar cases on appeal are probably celebrating, and those who plead guilty may be calling lawyers to see if anything can be done to change their plea.
  • Don't hold your breath waiting for the US Attorneys Office to issue a press release on this decision as it never seems to happen when they are unsuccessful.
  • There's plenty of criminal activity in society today - especially related to Internet fraud and identity theft.  Maybe this is how DOJ should be spending its time and energy.

(esp) (w/ a hat tip to Bill Olis)

July 18, 2008 in Judicial Opinions | Permalink | Comments (1) | TrackBack (0)

Thursday, July 17, 2008

What's Cuomo Up To?

A press release of New York Attorney General Andrew M. Cuomo tells of charges against an apartment screening service.  The charges arise from an undercover investigation.  It is claimed that this "New York City company acting as an apartment broker used bait & switch schemes on the popular website to bilk 4,000 New Yorkers out of almost $1 million dollars." (see also WSJ here)

Another press release  of Cuomo's office "announced the arrests of two former New York State employees who are charged with fraudulently receiving workers' compensation benefits by lying about their employment status." 


July 17, 2008 in Prosecutions | Permalink | Comments (1) | TrackBack (0)

In the News

On the Other Side of the Ocean

Simon Bowers,,  White-collar crime: SFO boss plans to cut back on prosecutions and investigations -  (The Serious Fraud Office is taking a different approach from the U.S. to efforts to combat white collar crime.  It seems the SFO "plans to spend less money prosecuting and investigating in order to pursue alternative 'harm reduction' initiatives...")


July 17, 2008 in International | Permalink | Comments (0) | TrackBack (0)

Politics and Privilege

Carrie Johnson, Washington Post, Administration Wanted Loyalist as Justice Department Legal Adviser (Will history paint former Attorney General Ashcroft as a voice of reason?  It is hard to imagine that the Attorney General who issued an Order permitting the government to monitor attorney-client conversations in prison would fit this description - see here)

Dan Eggen, Washington Post, White House Blocks Release of FBI Files - Privilege Is Cited in CIA Leak Case  (Will Attorney General Mukasay be held in contempt for not complying with a House  subpoena?)


July 17, 2008 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

What's Happening in the Ben Kuehne Case

Wednesday, July 16, 2008

Another U.S. Attorney Nominee from the White Collar Sector

In addition to the Middle District of Florida having a new nominee for U.S. Attorney (see here), Newsday (see also is reporting that President Bush also put forward the name of Michael Considine for Connecticut U.S. Attorney. Mike Considine is chair of Day Pitney's White Collar Defense and Internal Investigations Practice Group.

It is interesting to see two white collar defense attorneys announced as nominees for U.S. Attorney just as the TRAC statistics show that although there is an increase by 7% in white collar prosecutions for April, white collar prosecutions are down 17.7% from five years ago. As previously noted, these statistics raise interesting questions as to what should be included and what has been included in the definition of white collar crime. (see here)

(esp)(w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports). 

July 16, 2008 in Prosecutors | Permalink | Comments (0) | TrackBack (0)

In the News

Michael Madigan has joined the law firm of Orrick, Herrington & Sutcliffe LLP as a partner in its White Collar Criminal Defense and Corporate Investigations practice. (see press release

William March and Elaine Silvestrini, TBO Blog, Sources: Albritton to Get U.S. Attorney Nomination (Brian Albritton of Holland and Knight)  This could be a step that will increase the white collar crime prosecutions in the Middle District of Florida, as Albritton's practice was largely devoted to white collar criminal matters. 

WSJ (AP), Mitsubishi, Former Executives Found Guilty of Falsifying Report


July 16, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 15, 2008

The Latest in Alabama

Scott Horton, American Lawyer, Commentary: Has a U.S. Attorney Knowingly Prosecuted Innocent People? (on here) - The article discusses some recent prosecutions in Alabama.

In addition to the issues raised by the article, one can't help but notice that the prosecutor is making no comment.  A prosecutor can be placed in an awkward position of not being able to make a comment to explain his or her position of what happened in a case, as the prosecutor is bound by ethics rules.   But on the other side of the coin is the fact that prosecutors are not reluctant to issue press releases when they indict an individual, even before the jury has weighed in on guilt or innocence.  It is rare that you see a prosecutor issue a press release following a jury trial telling how the jury found the individual or company not guilty.  In a system where a prosecutor serves as a minister of justice, one has to wonder if prosecutors should be required - when the defendant wants this to happen - to issue a statement of the "not guilty" finding by a jury in cases where the prosecutor had issued a press release telling of the indictment.


July 15, 2008 in News | Permalink | Comments (1) | TrackBack (0)

Corporate Criminal Liability - Involuntary Manslaughter Charges in France

Alan Cowell of the New York Times wrote about the recent indictment in France against Continental Airlines and some employees for charges of involuntary manslaughter related to the Concorde crash in 2000. (See Criminal Charges Against Continental in Deadly Concorde Crash). Continental denies liability. (see here)

Corporations, when prosecuted, typically have charges of obstruction of justice, fraud offenses, or specific offenses like environmental crimes. Although it is becoming more common to see corporations being targets of criminal investigations, it is rare that one sees charges from the homicide category. 

In the U.S. there are a few examples of corporations being charged with homicide related offenses.  States courts have found that a corporation is a "person" for purposes of criminal liability. This definition opens the door allowing prosecutors to proceed with homicide related charges against a corporation.  For example, in a Wisconsin case a court of appeals decision found that a corporation could be prosecuted for negligent homicide. Some may remember an unsuccessful Indiana state prosecution against a major automobile company on charges of reckless homicide for deaths following an explosion of a Pinto.  And there are other examples of prosecutors who have brought corporate manslaughter charges.

Other countries may go to greater lengths in recognizing corporate manslaugher.  For example, in the UK, there is the Corporate Manslaughter and Corporate Homicide Act 2007. The use of manslaughter types of charges against companies adds an additional concern for companies operating abroad.


July 15, 2008 in Prosecutions | Permalink | Comments (1) | TrackBack (0)

Sunday, July 13, 2008

In the News

Pittsburgh Tribune, Wecht prosecutor returns to private practice

Mike Stanton, Providence Journal, Urciuoli Retrial Details Emerge - discussing the upcoming retrial of former Roger Williams Medical Center executives following the 1st Circuit's reversal  (for background see here), Detroit Mayor Trial May Hinge on Few Words

Amanda Bronsted, National Law Journal &, Christensen Case a 'Wake-Up' Call for Lawyers on Use of Private Eyes

Ben Evans, Washington Post (AP), Rove Ignores Subpoena, Refuses to Testify on Hill

DOJ Press Release, Former Hewlett Packard Vice President Pleads Guilty to Theft of IBM Trade Secrets

Editorial, Washington Post, Too Many Prisoners: States Should Stop Warehousing NonViolent Offenders

Joe Whitley has joined the Atlanta law firm of Greenberg Traurig.  He previously served in the positions of Acting Associate Attorney General, as the USA in the Middle and Northern Districts of Georgia, and as the first General Counsel of the United States Department of Homeland Security (DHS).

Russell Gold, Wall Street Journal, El Paso Ex-Executives Settle Charges Over Reserves ($235,000 civil fines)

Dan Slater, WSJ Blog, On McNulty Memo, Specter Fires Back at DOJ

(esp) (blogging from Dublin, Ireland)

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

Saturday, July 12, 2008

Recent Indictment - Alaska State Senator

DOJ Press Release - Alaska State Senator Indicted on Public Corruption Charges - "[A] current member of the Alaska State Senate, was indicted on charges arising out of a federal investigation into public corruption in the state of Alaska." It's a two count indictment - one count of bribery and one count conspiracy.

(esp) (blogging from Dublin, Ireland)

July 12, 2008 in Corruption | Permalink | Comments (0) | TrackBack (0)

Thursday, July 10, 2008

Acceptance of Responsibility Needs to Be Timely - Attorney-Client Privilege

Why is it that immediately before the legislature is about to make a change that will affect DOJ policy, the DOJ steps in to say -  we'll make a change, no need for you Senators to step into this matter.  The problem with this approach is that the cosmetic changes that DOJ then makes usually will not resolve all the issues being considered by the congressional committee.  And more importantly, where was DOJ when everyone was shouting that change was necessary.  DOJ argues that the criminally accused needs to accept responsibility timely.  But their failure to act timely in changing policy -- and then announcing the changes just before the legislature acts -- is disturbing.

The latest scenario involves the attorney-client privilege and the famed McNulty Memo, which in prior lives resembled the Holder Memo, then the Thompson Memo, followed by the McCullum revisions.  The latest is that Deputy Attorney General Mark Filip sent a letter to Senators Leahy and Specter outlining changes that will be made by DOJ.

The letter states that in the last 18 months DOJ has not approved any attorney-client privilege waivers in the corporate arena. If that's the case, then why not just change the law so the problems of the past never happen again?

The letter provides that cooperation will be measured by facts and evidence and not by waivers. But who will provide the oversight to make sure that this actually happens in the U.S. Attorney offices across the country?

And why doesn't the letter speak to Category I waivers?  Will there be no changes here?

And after listing some suggested changes, changes that could probably result in a new Memo, the Filip Memo, the Deputy Attorney General states that "I have come to the conclusion that the above changes to the Principles are preferable to any legislation, however well intentioned and diligently drafted, that would seek to address the same core set of issues."   

But why is it preferable for DOJ to make the changes?  Is it because it will be easier for DOJ?

Somehow I have a feeling that this letter will not pacify advocates for the Attorney Client Privilege Protection Act.

Letter From Deputy Attorney General Mark Filip  -

Download leahy_specter_principles_letter_0.pdf

What Others Are Saying:

Pedro Ruz Gutuerrez, Legal Times, AG Mukasey Hints at Revision of McNulty Memo, Spars With Senators at Hearing

Dan Slater, WSJ Blog, DOJ: No, No, Don’t Worry About It, Senator. We’ll Fix the McNulty Memo

(esp) (blogging from JFK Airport)

July 10, 2008 in Privileges | Permalink | Comments (2) | TrackBack (0)

Wednesday, July 9, 2008

In the News

Kevin Diaz, Star, Scams use dead doctors' IDs

U.S. Attorney, Southern District of NY Press Release, U.S. Government Contractor Arrested for Participating in Scheme to Steal Fuel from Camp Liberty, Baghdad, Iraq


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

Tuesday, July 8, 2008

11th Circuit Grants Rehearing En Banc in Mail Fraud Case

The 11th Circuit Court of Appeals granted a rehearing en banc in a case involving a mail fraud issue. (see here)  The initial panel had reversed and remanded 5 counts in a case where the defendants were "convicted of conspiracy, mail fraud, money laundering, and interstate transportation of money obtained by fraud." The panel had also sent the entire case back for re-sentencing as a result of this holding. (see here)  The decision to go en banc vacates that ruling, leaving the matter for review by the entire circuit court.

One issue likely to be discussed is the pattern jury instruction, which states that a "scheme to defraud" is "any plan or course of action intended to deceive or cheat someone out of money or property by means of false or fraudulent pretenses, representations, or promises."  Should the word "someone" be replaced with language that requires a reasonable person standard? Prior cases emphasize the importance of requiring that the scheme be "intended to deceive or cheat a person of ordinary prudence and comprehension." (see here)


July 8, 2008 in Fraud | Permalink | Comments (0) | TrackBack (0)

In the News & Blogosphere

Joe Milicia, San (AP) - Adviser gets 12 years in prison in Ohio fraud case

Marcia Coyle, National L.J., A Crucial Quest for New Look at Liability- Corporate Criminal Standards at Stake (subscription required)

M.L. Elrick & Joe Swickard, Detroit Free Press, Strategy in Text Scandal a Risky One for Worthy- Kilpatrick's Denial of Affairs Debatable (Blog Editor Emeritus - Peter Henning - discusses the problems that arise when you have ambiguity in the questions being asked)

DOJ Press Release - Bristol-Myers Squibb Agrees to Clean Air Act Upgrades

Lawrence Hurley, Daily Journal - DOJ Considers Changes to Waiver Policy- Senators Press Agency for Solution to Privilege Issue (subscription required); see also Lawrence Hurley, Washington Briefs, Leahy Reveals Discussions With DOJ Over McNulty Memo

DOJ  Press Release - Former Chief Financial Officer of Catholic Diocese of Cleveland Convicted of Conspiracy & Filing False Tax Returns


July 8, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Sunday, July 6, 2008

Paul Minor's Appellate Brief

The Paul Minor case is an intriguing one. When prosecutors were unable to secure convictions on the first try, they came back for a second shot.  And according to the recently filed appellate brief, this time the rulings were different and the defendant had a tougher road. Abbe David Lowell's 28,816 word brief presents an interesting contrast between trial one and trial two.  The Appendix to this brief charts some of the differences.

Minor, a trial lawyer and a leading one at that, was accused of engaging in "fraud, bribery, and racketeering when he provided loan guarantees to three Mississippi state court judges who were running for office."  A key issue on appeal is whether there was a quid pro quo and whether the jury received an instruction explaining this aspect of the law. The appellant argues that "[a]t the first trial, the court instructed the jury that the government's case required a finding of quid pro quo, yet it refused to provide that same instruction in 2007."  The brief goes on to note that the bribery standards were, however, used for sentencing. And here is the classic line from this brief - "It was as if the indictment was the government's accordion, contracting at trial to allow the government to obtain a conviction, and then expanding at sentencing to inflict the greatest punishment on Mr. Minor."

Appellate Brief -

Download no. 07-60751, United States v. Minor, Brief of Appellant Paul S. Minor.pdf

See also Scott Horton's Harper's Magazine - A Minor Injustice: Why Paul Minor?


July 6, 2008 in Prosecutions | Permalink | Comments (0) | TrackBack (1)