Sunday, May 31, 2009

Sotomayor and White Collar Crime Opinions

The term "liberal" is not quite the way I see Justice-To-Be Sotomayor, as her white collar crime decisions of the past provide a strong "pro-government" stance. My analysis is based on perusing approximately 100 cases she decided that had the word "fraud" within it. The accuracy of this methodolgy is certainly questionable.

The defendant "wins" are hardly earth-shattering ones.  For example, in Odunaike the court affirmed as modified, with the modification being a reduction of sentence from 87 months to 60 months when the government conceded that the sentence imposed on the count exceeded the statutory maximum.  It is difficult to see this as siding with the defense when the government hands the victory to the defense.

And some of the defense success is only partial.  For example, in U.S. v. Spencer, the panel vacated and remanded a conspiracy count while affirming the commercial bribery count.  And in U.S. v. Griffen, she joined a refusal to allow the government to resolve an issue on an interlocutory appeal. Or the defense might be successful on a partial remand when the Supreme Court issued an opinion that called for a re-examination of the sentence given to the accused. (Thomas, Males, Medes, Bunn, Martinez, Hawkins). And don't think that the remands are all for the defense.  For example, in U.S. v. Barber the remand is because the defendant should not have been given a sentence reduction that the government was appealing. (see also Cotto, Ruttner, Kennedy).

Occasionally, there is a defense victory, as in U.S. v. Dupre where she joined a panel that held that a sentencing enhancement was not proper as evangelical Christians as a class are not "unusually susceptible " to fraud.   Although she did find a sentencing enhancement proper for using lawyer skills in the conduct in another case. (Reich). 

And it is a good thing that the former Mayor of Bridgeport, Connecticut is not ruling on her confirmation as she wrote the decision affirming his conviction finding no prosecutorial misconduct warranting reversal and held the sentence to be reasonable.

There are some reversals, such as when there is a judicial failure to recuse on a case (Amico).  And yes, I did find U.S. v. Samaria, where Judge Sotomayer authored an opinion reversing an alleged credit card fraud case, finding insufficient evidence that the defendant "knowingly and intentionally participated in the crimes charged."

For those who have doubts about her abilities -  I suggest reading U.S. v. George, 386 F.3d 383 (2d Cir. 2004) - as her discussion of the Cheek, Ratzlaf, and Bryan cases and how best to interpret the term "willfully" is very impressive.  And for those who might question her experience, speaking only from a white collar crime perspective, she has ruled on a very wide breadth of cases from securities fraud, mail and wire fraud, money laundering, obstruction of justice, and RICO. She clearly is experienced. 

And to Jeff Skilling, Conrad Black, and others who may have mail fraud cases under the intangible rights doctrine coming up to the Court -- she was not on the defense side in Rybicki.

See also Adam Liptak, New York Times, Nominee’s Rulings Are Exhaustive but Often Narrow ;Scotus Blog, Judge Sotomayor's Opinions with Dissents - Part I; The Dynamic of the Nomination of Sonia Sotomayor; Lefcourt on Sonia Sotomayor in the NYTimes - Voices From a Jurist's History; Doug Berman, Sentencing Law and Policy Blog, Examining Judge Sotomayor's Criminal Justice Record.


Addendum - Tony Mauro, NLJ,, Critics Pounce on Sotomayor's Reversal Rate; Marcia Coyle, NLJ,, Big Issues Lurk Below Surface of Sotomayor Confirmation Hearings

May 31, 2009 in Judicial Opinions, News | Permalink | Comments (1) | TrackBack (0)

In the News and Around the Blogosphere

New Director at NACDL White Collar Crime Policy Office

Shana-Tara Regon to Lead NACDL White Collar Crime Policy Office here.  The press release states that:

Ms. Regon, formerly of Shipman & Goodwin LLP, Hartford, CT, has represented individual and corporate clients in state and federal civil and criminal investigations. She is a member of the bars of Connecticut and Massachusetts and is admitted to the U.S. Court of Appeals for the Second Circuit. She has represented clients facing a variety of criminal charges including fraud, public corruption, RICO, tax fraud, espionage, felony escape, criminal harassment and assault; and in civil matters such as Qui Tam, Freedom of Information Act and unfair trade practices. She has also served as pro bono immigration counsel for political refugees seeking asylum.


May 31, 2009 in Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Upcoming Conferences

12th Transnational Crime Conference, June 11-13, 2009, New York - here

IncisiveMedia Events, 21st Annual General Counsel Conference, June 9-10, New York - here

NACDL, Defending White Collar Crimes, October 1-2, 2009, New York here


May 31, 2009 in Conferences | Permalink | Comments (0) | TrackBack (0)

New Articles & Books

Alan Ellis & James H. Feldman, Jr., "Intended Loss" Redefined in Fraud Cases," 24 Criminal Justice (2009)    

Pew Center on the States, Arming the Courts with Research - Evidence Based Sentencing Brief


May 31, 2009 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, May 28, 2009

Fraud Enforcement Recovery Act of 2009 - False Claims Act Provisions

FERA makes many changes to the False Claims Act, 31 U.S.C. ss 3729-3733. FriedFrank (with many thanks to John T. Bose) has done a wonderful analysis here (Download 090521), and has a redline copy here that lets one see the changes that were made to these statutes. Finally, the statute with the provisions incorporated is here (again, thanks to FriedFrank).  

When examining the money laundering statute changes (here), it was apparent that a key change was to address the recent Supreme Court ruling in the Santos case.  The changes in the False Claims Act also address some Court rulings, most noteably Allison Engine Co. v. United States ex re. Sanders.    FERA, overall, makes the government job of obtaining convictions and getting civil remedies easier. The False Claim Act provisions do that with a reduced intent requirement.  But the government and relators do not get everything here, as FERA provides for a materiality requirement.(see Download 090521, supra).


May 28, 2009 in Civil Enforcement, Congress | Permalink | Comments (1) | TrackBack (0)

Wednesday, May 27, 2009

Fraud Enforcement Recovery Act of 2009 - The Money Laundering Provisions

In recent years, some white collar cases have had money laundering charges included in the Indictment.  Some may believe that the addition of money laundering counts is used as leverage to secure a plea from the accused. The Fraud Enforcement Recovery Act of 2009 includes changes to both sections 1956 and 1957 of title 18, the money laundering statutes. The changes are as follows:


(1) MONEY LAUNDERING.—Section 1956(c) of title 18, United States Code, is amended—

(A) in paragraph (8), by striking the period and inserting ‘‘; and’’; and

(B) by inserting at the end the following:

‘‘(9) the term ‘proceeds’ means any property derived from or obtained or retained, directly or indirectly, through some form of unlawful activity, including the gross receipts of such activity.’’.

(2) MONETARY TRANSACTIONS.—Section 1957(f) of title 18, United States Code, is amended by striking paragraph (3) and inserting the following:

‘‘(3) the terms ‘specified unlawful activity’ and ‘proceeds’ shall have the meaning given those terms in section 1956 of this title.’’

It is obvious in reading the language that Congress was reacting to the Supreme Court decision in United States v. Santos, where a plurality (Scalia, Souter, Ginsberg, and Thomas) found that the rule of lenity applied because of a failure to define the term "proceeds" in the statute.  Justice Stevens went with these four justices, but limited his decision, saying he would not have ruled this way if the case involved contraband or organized crime.  The Court, therefore, held that "proceeds referred to "profits" and not "receipts."  A four person dissent (Breyer, Alito, Roberts, and Kennedy) believed that proceeds should include the total amount brought in.  This Congressional amendment to the statute endorses the position taken by the dissent and provides a definition of what is meant by the term "proceeds."  

But there are several points to note here.  Even though the new legislation clarifies the statute, thus voiding any need to resort to the Rule of Lenity in defining "proceeds" and also resolves future cases on which crimes are covered by the Santos decision (an issue that several district and circuit courts have had to contend with), it may still allow defense counsel to make merger arguments.  As stated by Justice Stevens in his concurring opinion in Santos

"Allowing the Government to treat the mere payment of the expense of operating an illegal gambling business as a separate offense is in practical effect tantamount to double jeopardy, which is particularly unfair in this case because the penalties for money laundering are substantially more sever than those for the underlying offense of operating a gambling business."

 It also leaves open the issue of how this statute applies to mail fraud when the crime is not complete and whether a sentence can be enhanced when the predicate offense and the money laundering merge.  Congress was clearly concerned about the merger issue as the amendment includes a specific statement "Sense of the Congress and Report Concerning Required Approval for Merger Cases" that states:  

(1) Sense of Congress - It is the sense of the Congress that no prosecution of an offense under section 1956 or 1957 of title 18, United States Code, should be undertaken in combination with the prosecution of any other offense, without prior approval of the Attorney General, the Deputy Attorney General, the Assistant Attorney General in charge of the Criminal Division, a Deputy Assistant Attorney General in the Criminal Division, or the relevant United States Attorney, if the conduct to be charged as ‘‘specified unlawful activity’’ in connection with the offense under section 1956 or 1957 is so closely connected with the conduct to be charged as the other offense that there is no clear delineation between the two offenses.

(2) REPORT.—One year after the date of the enactment of this Act, and at the end of each of the four succeeding one-year periods, the Attorney General shall report to the House and Senate Committees on the Judiciary on efforts undertaken by the Department of Justice to ensure that the review and approval described in paragraph (1) takes place in all appropriate cases. The report shall include the following:

(A) The number of prosecutions described in paragraph (1) that were undertaken during the previous one-year period after prior approval by an official described in paragraph (1), classified by type of offense and by the approving official.

(B) The number of prosecutions described in paragraph (1) that were undertaken during the previous one-year period without such prior approval, classified by type of offense, and the reasons why such prior approval was not obtained.

(C) The number of times during the previous year in which an approval described in paragraph (1) was denied.


May 27, 2009 in Congress, Money Laundering | Permalink | Comments (2) | TrackBack (0)

Monday, May 25, 2009

In the News and Around the Blogosphere

Fraud Enforcement Recovery Act of 2009

Passed by both the House and Senate, the Fraud Enforcement and Recovery Act of 2009 (FERA) was signed it into law by the President with the following statement -

Today I have signed into law S. 386, the "Fraud Enforcement and Recovery Act of 2009." This Act provides Federal investigators and prosecutors with significant new criminal and civil tools to assist in holding accountable those who have committed financial fraud. These legislative enhancements will help the Department of Justice to combat mortgage fraud, securities and commodities fraud, and related offenses, and to protect taxpayer money that has been expended on recent economic stimulus and rescue packages. With the tools that the Act provides, the Department of Justice and others will be better equipped to address the challenges that face the Nation in difficult economic times and to do their part to help the Nation respond to this challenge.

Section 5(d) of the Act requires every department, agency, bureau, board, commission, office, independent establishment, or instrumentality of the United States to furnish to the Financial Crisis Inquiry Commission, a legislative entity, any information related to any Commission inquiry. As my Administration communicated to the Congress during the legislative process, the executive branch will construe this subsection of the bill not to abrogate any constitutional privilege.

May 20, 2009.

There are many important provisions related to white collar crime in this new law, including changes in the Civil False Claims area, changes to the money laundering statute, areas related to TARP, and changes to a host of statutes like 18 U.S.C. ss 1014, 1031, 1348, and 1956.  Over the next week I will be offering commentary on what FERA says and how it changes the prosecution and defense of white collar matters. 


May 25, 2009 in Congress | Permalink | Comments (4) | TrackBack (0)

Sunday, May 24, 2009

Memorial Day Thanks

Thanks to all who have served our country.


May 24, 2009 in About This Blog | Permalink | Comments (1) | TrackBack (0)

18th Annual National Federal Sentencing Guidelines Seminar

The 18th Annual National Federal Sentencing Guidelines Seminar was held in Clearwater, Florida this past week. After opening comments from Kevin Napper (Carlton Fields), there was a lively panel titled Developments and a View from the District Court Bench,a panel moderated by Kevin Napper and Norman Reimer (Executive Director of NACDL)  The panelists included Brian Albritton (US Attorney from the Middle District of Florida), Hon Fred Block (District Court Judge, Eastern District, New York), Hon. Steven Merryday (District Court Judge, Middle District of Florida); Hon. Robert Pratt (District Court Judge, Southern District of Iowa), and Hon. Ruben Castillo (Vice Chair, US Sentencing Commission).  Judge Block noted that older judges (those on the bench longer, not age) may feel more comfortable taking the risk of going outside the guidelines, while the younger ones may be more concerned about going above or below the guideline range.  He gave a preview of his approach to "interactive sentencing."

The Fraud/Theft breakout session was moderated by Michael Horowitz (Cadwalader, Wickersham & Taft).  He provided important statistical material on white collar sentencing. His Powerpoints (Download FBA_Guidelines_Program_2009) noted how judges were sentencing in white collar cases post Supreme Court decisions in Booker, Gall, Rita, and Kimbrough. One interesting slide presented the medium loss amount for white collar offenders from 2000 to 2008. For 2008 the amount was $40,499.  Benton Campbell, U.S. Attorney for the Eastern District of New York, and former ex officio member of the Sentencing Commission, remarked how this amount would not even be sufficient for a prosecution in his district.  This comment demonstrates clearly that there are real differences - geographic ones - that demonstrate the importance of having judicial influence in sentencing. Benton Campbell also remarked how he liked the guidelines, but did say that the fraud losses will likely grow in future years. Mark Harrisof Proskauer, Rose, LLP, and a former Supreme Court Clerk to both Justices Powell and Stevens, in addition to Judge Flaum of the 7th Circuit, emphasized that "advocacy begins over fighting over loss."  He provided some wonderful advice on offense specific arguments that can be made, such as motive and whether the defendant personally profitted. Athena Macinnis, Senior U.S. Probation Officer, Southern District of Mississippi, reminded everyone to consider the victims.  

Also on this same panel, besides myself, was Hon. Ruben Castillo, district court judge from the Northern District of Illinois and Vice-Chair of the Sentencing Commission.  He remarked how Congress, when they passed SOX, paid no attention to what the commission had done. By ignoring what the Commission had done, some sentences today could be "off the charts."

This panel talked about the Tomko decision (here) from the third circuit (see discussion here), and Judge Block's Parris decision (here) (see discussion here).

There were also wonderful panels that included Hon. Robin Cauthron, Micheal Dreeban, Beryl Howell, Gregory Poe, Elaine Terenzi, Hon. Paul Borman, Barry Boss, Robert O'Neil, Ted Simon, James Felman, and so many others.   This was clearly a top-of-the-line seminar with a wealth of information.  Other than the poor weather of Clearwater, Florida, truly not the norm, this was one of the best seminars of the year.  


May 24, 2009 in Conferences | Permalink | Comments (1) | TrackBack (0)

Monday, May 18, 2009

Commentary on Cert Grant in Black Case

The 7th Circuit "efficiently" ruled on Conrad Black's case 20 days after the oral argument.  Despite the fact that the trial lasted four months, the court issued a 16 page opinion that included a sentence stating that "[t]he defendants raise some other points in their 161 pages of briefs, but none that has sufficient merit to require discussion."   (see here). 

But it looks like the Supreme Court intends to give Conrad Black more time and further consideration. The Court accepted certiorari on the following question, as reported on Scotus Blog here:

Whether the “honest services” clause of 18 U.S.C. § 1346 applies in cases where the jury did not find - nor did the district court instruct them that they had to find - that the defendants “reasonably contemplated identifiable economic harm,” and if the defendants’ reversal claim is preserved for review after they objected to the government’s request for a special verdict.

The acceptance of a section 1346 case may prove controversial.   Recently, the Court denied cert in the Sorich  case, but the denial included a strong dissent by Justice Scalia, who noted that the "28 words" in the statute had "been invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries."  He stated that "[w]ithout some coherence limiting principle to define what 'the intangible right to honest services" is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct."  Justice Scalia concludes his dissent by stating that "it seems to me quite irresponsible to let the current chaos prevail." (see here)

So the acceptance of cert in this case may resolve some of the issues raised in the Rybicki dissent. It may finally provide a clue as to whether section 1346 is constitutional or not.  It may decide on whether this statute is vague.  It may offer some insight of how the statute should be interpreted when a private fraud is at issue, and it may determine if an economic harm is needed.   Most importantly, will this be another McNally decision that will again send a message to prosecutors that mail fraud should not be stretched too far.

(esp) (blogging from Washington, D.C.)

May 18, 2009 in Fraud | Permalink | Comments (2) | TrackBack (0)

Key Evidence Tossed in Wecht Case - Should it be Called Dead?

The case against Dr. Cyril Wecht, former coroner in Allegheny County, Pa. and former President of the American Academy of Forensic Science, a started with many counts (see here) and eventually was reduced to 14.  At the initial trial that lasted 7 weeks, the  government presented 44 witnesses and the defense rested without presenting anything, which is not surprising considering the nature of this case.  It resulted in a hung jury.  But the government decided to proceed further. 

The government's ability to now proceed on the remaining counts is in serious jeopardy as the court tossed out evidence obtained from a search warrant. The government is now faced with deciding whether to proceed to a higher court appealing the court's ruling on the search warrant.  Is this case really worth any more tax dollars?

For press coverage on the court's ruling, see here, here, and here

May 18, 2009 in Fraud, Searches | Permalink | Comments (0) | TrackBack (0)

Cert Granted in Conrad Black Case

More on this later. - here     



The petitions for writs of certiorari are granted.

(esp) Blogging from Washington, DC.

May 18, 2009 in Celebrities, Fraud, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 12, 2009

Novo Nordisk Deferred Prosecution Agreement

A DOJ Press Releasereports on a deferred prosecution agreement entered into by "Novo Nordisk A/S (Novo), a Danish corporation based in Bagsvaerd, Denmark."  The agreement calls for the company to pay a penalty of "$9 million penalty for illegal kickbacks paid to the former Iraqi government."  This case is part of the DOJ's investigation "into the UN Oil-for-Food program." The DOJ filed "one count of conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act (FCPA)."  The DOJ Press Release states:

"According to the agreement and the information filed today, between 2001 and 2003, Novo paid approximately $1.4 million to the former Iraqi government by inflating the price of contracts by 10 percent before submitting the contracts to the United Nations for approval and concealed from the United Nations the fact that the price contained a kickback to the former Iraqi government. Novo also admitted it inaccurately recorded the kickback payments as "commissions" in its books and records."

See also FCPA Blog here; Reuters here.


May 12, 2009 in Deferred Prosecution Agreements, FCPA, Settlement | Permalink | Comments (0) | TrackBack (0)

Monday, May 11, 2009

In the News & Around the Blogosphere

Martha Neil, ABA Jrl News Now,Ark. Lawyer in Hot Water Over $9M Settlement-Funds Shortfall

DOJ Press Release, Swedish National Charged with Hacking and Theft of Trade Secrets Related to Alleged Computer Intrusions at NASA and Cisco

DOJ Press Release,U.S. District Court Judge Sentenced to 33 Months in Prison for Obstruction of Justice

DOJ Press Release, Justice Department Withdraws Report on Antitrust Monopoly Law

Ben Hallman, American Lawyer,, W.R. Grace Acquittal in Asbestos Trial a Victory for Longtime Kirkland Counsel

Brian Baxter, American Lawyer,, Davis Wright, K&L Gates, Thompson & Knight Ensnared in Ponzi Probe

Howard Mintz, Mercury News, Brocade's Reyes hopes to reverse stock options backdating convictions

Noeleen G. Walder, NYLJ,, Madoff Bankruptcy Trustee Seeks $500 Million Clawback

Charlie Savage, NYTimes, Elite Unit’s Problems Pose Test for Attorney General


May 11, 2009 in News | Permalink | Comments (0) | TrackBack (0)

Skilling Files Petition for Cert

Jeffrey Skilling filed a Petition for Certiorari to the US Supreme Court and focuses his claim on the honest services aspect of mail fraud and jury prejudice.  Clearly these are strong arguments as the Houston home court advantage was extraordinary in a case that was related to Enron and the honest services aspect of mail fraud has been a source of contention in many cases. Justice Scalia, in a recent dissent ona denial of certiorari, voiced strong opposition to the progression of mail fraud's intangible rights doctrine.  He noted the breadth in the "28 words" in the statute and concluded by stating that "it seems to me quite irresponsible to let the current chaos prevail."  It's a good move for Skilling to focus on this aspect of the statute, but the key will be whether the Court will accept certiorari in this case. Based upon a dissent in another Second Circuit en banc case, Rybicki, there are many circuits split on various aspects of the mail fraud statute. 

See also Mary Flood, Houston Chronicle, Skilling asks Supreme Court to review conviction.; Bill Mears, CNN, Former Enron CEO Files High Court Appeal; Ashby Jones, WSJ Blog, Skilling Takes Appeal to High Court


Addendum - Adam Liptak of the NYTimes (here) reminds us, in an unrelated story of today, that "the Senate approved Justice Scalia's nomination ... by a vote of 98-to-0."

May 11, 2009 in Enron, Fraud | Permalink | Comments (0) | TrackBack (0)

Wellcare - Deferred Prosecution Agreement

Back in October 2007, WellCare Health Plans, Inc. in Tampa was the subject of a search by government agents. (see here and here) Last week, the company entered into a deferred prosecution agreement. (see Bloomberg here).  A DOJ Press Release outlines the obligations of WellCare under this agreement.  It includes "consent to the civil forfeiture of $40,000,000," "pay an additional $40,000,000 in restitution to the Florida Medicaid and healthy Kids programs," "retain and pay an independent Monitor," and as usual for deferred prosecution agreements, cooperation in investigations, in this case investigations of "Wellcare executives and employees responsible for the alleged fraudulent conduct at issue."

But like so many of the recent deferred prosecution agreements, the DOJ plays a powerful position in the company's future.  In this case the U.S. Attorney's Office gets to select the "independent Monitor."  And if the "Monitor resigns or is unable to serve the balance of his or her term, a successor Monitor shall be selected by the USAO. . ." Additionally, a breach of the agreement rests in the sole discretion of the prosecution, although they do give the company time to respond to claims of a breach.  And "[r]egardless of whether the USAO pursues criminal charges against WellCare upon any breach of the DPA, any monies paid to the USAO at any time by WellCare will not be returned to WellCare and WellCare will make no claim upon such monies."  So much for contract law. (see here)

Deferred Prosecution Agreement here.


May 11, 2009 in Deferred Prosecution Agreements, Searches | Permalink | Comments (1) | TrackBack (0)

Friday, May 8, 2009

W.R. Grace - Not Guilty

See Grace Case, A Joint Project of the School of Law & the School of Journalism,   W.R. Grace not guilty on all counts (and hats off to all the students and professors involved in the wonderful blog coverage of this trial).


Note above website seems to be down. See also WSJ Blog here

May 8, 2009 in Environment, Verdict | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 6, 2009

Lawyer Memos as a Basis for Criminal Charges

The media is certainly focusing on the "Torture Memos,"  as they should. See here, here, and here.  But one aspect hasn't really been discussed and that is whether there should be reconsideration of another case that involved a lawyer's opinion letter.  If the torture memos are not a basis for a criminal prosecution, then can one really proceed against Ben Kuehne for his opinion letters? See here


May 6, 2009 in Defense Counsel, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)