White Collar Crime Prof Blog

In the News & Around the Blogosphere

Natalie Neysa Alund & Duane Marsteller, BradentonHerald.com, Judge denies Nadel's bond -Judge says former Sarasota hedge fund manager is too much of a flight risk; John Hielscher, HeraldTribune.com, Art Nadel is denied release

DOJ Press Release, Former Shipping Executive Sentenced to 48 Months in Jail for His Role in Antitrust Conspiracy - Sentence Is Longest Jail Term Ever Imposed for a Single Antitrust Violation

DOJ Press Release, Former US Congressman Indicted on Charges Related to Bogus Investment Scam Involving Internet Companies

John Morrissy, Canwest News Service, White-collar criminals likely to face jail time, study finds (international)

Jeffrey Scott & Craig Schneider, AJC, Federal officials begin criminal investigation of Georgia plant

Ashby Jones, WSJ Blog, Scrushy, Back in Court, Rails Against Huge HealthSouth Settlement

Jennifer Forsyth, WSJ Blog, Indictment: Marc Dreier Used Fraud Proceeds to Support Lavish Lifestyle

Jason Cato, Pittsburgh Tribune-Review, Wecht's lawyers push dismissal ; Paula Reed Ward, Pittsburgh Post-Gazette, Wecht case back in court but with new judge

Ann Woolner, Bloomberg, Madoff Victims Suspected a Crime, Just Didn’t Care

Pamela A. MacLean, NLJ, law.com, Lawyers burned in Ponzi schemes - Several ways for unwitting attorneys to be ensnared in swindles

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New Illinois Governor to Fight Corruption in Government

The new Illinois Governor, as his first executive order, has decided to take on the fight against corruption in government.  He issued an Executive Order creating the Illinois Reform Commission that has several purposes including "to undertake a focused evaluation of both existing Illinois law and the operational practices of the State of Illinois from the perspective of ethics in government, proposing, as the Commission deems appropriate, amendments to existing law."  Although Governor Pat Quinn established this commission before former Governor Rod Blagojevich's impeachment and conviction, this act was his first Executive Order, sending the clear message that he means business.

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The Changing of the Guard

Marcia Coyle, NLJ, law.com, Assistant AG in DOJ's antitrust division returns to Covington & Burling

Lynne Marek, NLJ, law.com, Federal prosecutor on the team that convicted Conrad Black heads to Main Justice

Marcia Coyle, NLJ, law.com, Senate Judiciary Committee GC moves to White House

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Halliburton

Check out the FCPA Blog, Halliburton Announces Pending Settlement; Dan Slater, WSJ Blog, Halliburton Breaks FCPA Settlement Record for U.S. Companies.

How much can you fine a company for violating the law? At what point does the fine exceed a cost of doing business and become a deterrent for future conduct, not to mention a general deterrent to other companies?

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In the News & Around the Blogosphere

David Ingram, BLT Blog, Specter Says He Will Vote for Holder

Elaine Silvestrini, TBO.com, Missing Sarasota Hedge Fund Manager Nadel Surrenders

Houston Chronicle, Former executive pleads guilty

Larry Margasak, LA Times (AP), House Judiciary Committee chairman subpoenas Karl Rove in continuing legal battle

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Second Sentence in AIG- General Re

The first sentence given to a former General Re executive was for two years (see here).  The court now sentenced a second individual, AIG's former vp of reinsurance.  This time the sentence is four years. See Colleen McCarthy, Business Insurance, Milton Sentenced to 4 Years for General Re Fraud; Doug Berman, Sentencing Law & Policy Blog, Another former AIG executive gets serious prison time, but also a serious variance.  Commentary to follow.

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Job Posting - Director for White Collar Crime Policy - NACDL

The National Association of Criminal Defense Attorneys (NACDL) posted the following notice seeking a Director for White Collar Crime Policy:

Applicants Sought for White Collar Crime Policy Director
National Association of Criminal Defense Lawyers

In the News & Around the Blogosphere

Boston Globe, Galvin, SEC say Quincy broker defrauded clients

DOJ Press Release, Former New York Power Authority Employee Sentenced to 37 Months in Jail for Bribery and Fraud Scheme

DOJ Press Release, Lan Cargo S.A., Aerolinhas Brasileiras S.A. and El Al Israel Airlines LTD. Agree to Plead Guilty For Fixing Prices on Air Cargo Shipments - Companies Agree to Pay More Than $124 Million in Criminal Fines

Donovan Slack, Boston Globe, Wilkerson admits she took at least $70,000 -Says ethics panel advice shows gifts were legal

Stephen Labaton, NYTimes, Obama Plans Fast Action to Tighten Financial Rules

Lucy Morgan, St Pete Times, Fighting corruption with the 'honest services' doctrine 

David Ingram, The BLT Blog, In Fundraising Letter, Streisand Backs Holder Confirmation

Ray Long, Chicago Tribune, House prosecutor: Governor 'put his office up for sale'

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Money Needed For Financial Oversight & Prosecution of White Collar Crimes

US Senators Charles E. Schumer and Richard Shelby will be calling for more resources to "add hundreds of new investigators and prosecutors to the financial fraud units at the nation’s top law enforcement agencies in order to expose and punish white-collar crimes that have contributed to the ongoing fiscal crisis." (see press release here).  The press release states that the, "Supplemental Anti-Fraud Enforcement ('SAFE') Markets Act, would dedicate an additional $110 million annually for these new hires. The senators said they would seek to pass the additional funding at the earliest possible opportunity." It is good to see that white collar crime is being recognized as an important priority.  But it is hoped that with the increase in law enforcement resources, there will also be an increase in resources to indigent defense so that we have a system that truly recognizes the importance of a fair judicial system. 

Update on Deferred and Non-Prosecution Agreements

Ryan D. McConnell, Larry D. Finder, and Scott L. Mitchell provide new data regarding corporate deferred and non-prosecution agreements. It is interesting to see a decline of sixty percent in 2008 from the number of agreements in 2007. It was not surprising to see that Foreign Corrupt Practice Act agreements were seven of the sixteen agreements in 2008.  This study is a wonderful compilation of who received agreements, the type of agreement, and for what activities.  The article also speaks to compliance programs with a listing, by crime, of features of a DPA/NPA Compliance Program. This piece should be a must-read for in-house counsel and all attorneys working with companies on compliance programs.

The article, to be published in Corporate Counsel Review, is available on SSRN here

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White Collar Crime Blog Makes Top 20

The rankings are out and this blog was ranked 18th for visitors (was 16th last year), but moved up from 18th into 16th place for page views on the 2008 Law Prof Blog Traffic Rankings (see here for a discussion of this importance of page views).  The rankings process and time period covered are described on Paul Caron's Tax Prof Blog here 

Your readership is appreciated, so thank you for clicking this way.

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White Collar Attorney - Nominee to Head Criminal Division

The nominee to lead DOJ's Criminal Division is Lanny A. Breuer.   

A man who clearly knows the white collar area of law, Breuer presently serves as co-chair of Covington and Burling's White Collar Defense and Investigations practice group.   As described on his webpage - "Mr. Breuer represents corporations and individuals across a broad array of subject matters including corporate accountability, fraud and abuse, securities investigations and litigation, food and drug regulation, medical device health and safety, antitrust, conflicts of interest, environmental crimes, foreign corrupt practices, national security, and export controls."  A Columbia grad (undergrad and law school), his resume includes serving as special counsel to President Clinton, not to mention his representation of Roger Clemens (see here).

It is good to see someone with enormous experience willing to serve the country in this important position. His expertise in the corporate and political world make him a good match in the fight against white collar crime.

See Covington & Burling here; see also Stephen Losey, Federal Times, Obama names four assistant attorneys general.

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Bruno Faces Mail and Wire Fraud Charges

The former Senate Majority Leader for New York, Joseph L. Bruno, was charged with mail and wire fraud in an eight count Indictment.  Findlaw has the Indictment here.  The Indictment includes alleged violations of mail fraud as defined under section 1346, the honest services statute.  This statute was added to the fraud statutes following a Supreme Court decision in United States v. McNally, that held that "money or property" was a requirement for a mail fraud charge.  The legislature immediately responded with a statute that allowed for prosecutions premised upon the "intangible right to honest services."

One interesting aspect of this Indictment is that the honest services allegation is premised in part on the New York Public Officer's Code of Ethics.  It includes reference to written advisory opinions of the Legislative Ethics Committee. The alleged scheme or artifice to defraud as claimed in the Indictment was that he "would contact persons or entities who had business before the Legislature or State agencies, including union officials, exploiting his official position for personal compensation and enrichment, knowing and believing that his reasonably perceived ability to influence official action would, at last in part, motivate those he contacted to enter into financial relationships beneficial to his personal financial interest."

Several issues are likely to arise here, although some of these have rulings in prior cases.  Is the honest services provision vague, should violation of a state ethics provision be sufficient to prosecute for a federal crime, and should federal courts be handling alleged state corruption charges?  Again, many of these issues are not new, but prior to McNally there were many cases that allowed prosecutions based on intangible rights.  One never knows when government will be found to have overstepped its boundaries in its use of the mail and wire fraud statutes.

See also Mike McIntire & Jeremy W. Peters, NYTimes, Ex-Senate Leader Bruno Is Indicted for Corruption

(esp)(w/ a thanks to Peter Henning for sending the Indictment)

In the News & Around the Blogosphere

Jeremy Saland, NYCriminal Lawyer Blog, Bribery Plea: Former Bellevue Director Avoids Jail on Felony Plea

Bloomberg News, AP, Chicago Sun Times, Chicagoan named to investigate Lehman's failure 

Scott Glover, LA Times, Woman gets more than 12 years in prison in Ponzi scheme

Mark McDonald, NYTimes, Two Death Sentences in Chinese Milk Cases

Yukari Iwatani Kane & Kara Scannell, WSJ, Apple Bests Downturn, But Faces SEC Probe,

Elaine Silvestrini, TBO.com, SEC Sues Missing Fund Manager; Dealbook, NYTimes, S.E.C. Charges Missing Fund Manager With Fraud; Darrell A. Hughs, WSJ, Fund Chief Is Charged With Fraud (note- SEC charges)

Nathan Koppel, WSJ Blog, No Bailout for Marc Dreier, Argue Feds; Noeleen G. Walder, NYLJ, law.com, Feds Urge Judge to Reject Dreier's Second Bid for Bail

Daniel Wise, NYLJ, law.com, N.Y. Attorney General Probes Placement of Investments With Madoff

AP, National Law Journal (law.com), Supreme Court to review power to probe national banks

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Skilling Asks for En Banc Hearing

Not surprisingly, Jeffrey Skilling is asking the Fifth Circuit for an en banc hearing.  He focuses on three issues, with the lead one being premised on "honest services" fraud.  The petition argues that the panel's decision is in conflict with other Fifth Circuit decisions, including U.S. v. Brown. It also raises the issue of vagueness as to section 1346.  After all - what is "honest services"?

See Ashby Jones, WSJ Blog, Skilling, Petrocelli Make Two More Pleas to the Fifth Circuit ;  Kristen Hays, Houston Chronicle, Enron’s Skilling asks full court to review convictions

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Upcoming Events

KPMG Forensic, Webcast: FCPA Enforcement - The Paradigm Shift of 2008 - January 28, 2009 - here

Holtz, Rubenstein, Reminick, LLP, Implications and Consequences of the Alleged Fraud of Bernard Madoff - January 21, 2009 - here (note change of venue)

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Second Circuit Affirms Ionia Management Case

The Second Circuit Court of Appeals affirmed the case of U.S. v. Ionia Management  rejecting the amici curiae argument regarding vicarious liability (for background see here).  The court stated:

"Adding such an element is contrary to the precedent of our Circuit on this issue. See Twentieth Century Fox Film Corp., 882 F. 2d at 660 (holding that a compliance program, "however extensive, does not immunize the corporation from liability when its employees, acting within the scope of their authority, fail to comply with the law"). And this remains so regardless of asserted new Supreme Court cases in other areas of the law. As the District Court instructed the jury here, a corporate compliance program may be relevant to whether an employee was acting in the scope of his employment, but it is not a separate element."

Opinion - here

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Bush - Stingy on Pardons?

Check out P.S. Ruckman's PardonPower Blog here for the list of quotes by others who predicted last minute pardons. But it looks like Bush might leave with but an added two sentence commutations to his list (see here; see also Dan Eggen & Carrie Johnson, Washington Post, Bush Commutes Sentences of Ex-Agents) and without anything dramatic.  But some might think that if he was going to issue last-minute pardons, the time to do it would have been after the close of the print press so that it comes on the day of other events (like an inauguration).  But on the other hand, if you issue one that late, you can't try and take it back if you make a mistake (see here). Bottom line - it looks like this will be a quiet exit from office.

The pardon power is an important power of the President that needs to be used to correct injustices in the system. And it needs to be used without politics in mind. Hopefully, President-Elect Obama will be a President with compassion.

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Do We Need More Regulation

Check out - Christine Armario, AP, No sign of US financier or his clients' millions .  The overriding question here, yet again, is do we need more oversight and regulation?  And will those with money, especially those who were previously opposed to regulation, now be in favor of it?

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In the News & Around the Blogosphere

DOJ Press Release, A Third Former Home Depot Employee Pleads Guilty to Vendor Kickback Scheme & Filing False Tax Returns

Mike Scarcella, BLT Blog, AG Mukasey Given Reprieve in Stevens Case Inquiry

David Ingram, BLT Blog, Holder Hearing Wraps Up With Confirmation Expected

DOJ  Press Release, Four Executives Agree to Plead Guilty in Global LCD Price-Fixing Conspiracy

Chicago Tribune, Chicago Breaking News.com, Governor's lawyers quit impeachment trial

Anthony Lin, American Lawyer (law.com), Is China's White-Collar Death Penalty Fair?

Chicago Tribune, Breaking News, Blagojevich adviser admits misusing funds

Amanda Bronstad, NLJ, law.com, Milberg Kickback Defendant Gets Short Reprieve From Prison

Loren Steffy, Houston Chronicle, The hunt for Wall Street wickedness: who's going to jail? (w/ a hat tip to Bill Olis)

DOJ Press Release, Alabama-Based Hospice Company Pays U.S. $24.7 Million to Settle Health Care Fraud Claims

David Lat, Above the Law, Musical Chairs: Kathy Ruemmler from Latham Back to DOJ 

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