Thursday, September 30, 2010

NACDL's 6th Annual Defending the White Collar Case Seminar – “The White Collar Trial: Required Skills and Exceptional Techniques,” Thursday, September 30, 2010

Guest Blogger: Hank Asbill, Jones Day (Washington, DC)

Moderator: Gerald Goldstein

Panelists: Cristina C. Arguedas, Marcus J. Busch, Francis D. Carter and Barbara “Biz” Van Gelder

Frank Carter spoke about openings. His advice was never to waive it.  It must be brief, with no more than three to four themes.  Be indignant but under control.  In order to prepare it, you need early access to Jencks.  In a multi-defendant case, address issues and facts relating to your client alone.  Talk about your client’s good qualities you know you will be able to elicit from government witnesses.  Do not promise your client will testify.  Stay away from humor.  Stick with a style that works for your personality.  If the government uses demonstratives, you should respond to those exhibits with your own.

Chris Arguedas talked about cross-examining the key government witness.  Learn how to cross by watching other accomplished lawyers.  You have to have real confidence in yourself – either from doing lots of trials or by being very well prepared.  Remember you have law and control on your side.  Cite Crawford, argue constitutional due process, materiality – dictate pace, topics, sequencing.  Remember also not to do any harm.  Do not cross if you don’t need to. 

Chris keeps a trial notebook with a section of each witness that she transfers to a computer to ensure it is organized.  She writes down her questions, anticipated answers, text of potential impeachment – and color codes them.  She recommends asking only one fact per question and never using tag lines and never schmoozing with the prosecutor or agent in the jury’s presence.  It’s all about discipline and the effective use of your demeanor and outrage.

Lastly, Chris rereads the rules on impeachment with inconsistent statements right before she starts her cross.  And she makes sure to use documents if she can find any to impeach.

Biz Van Gelder addressed the issue of whether to put your client on the stand.  She thinks it is a decision that is made well before the trial – primarily by the client.  She would prefer not to put any of them on and tries to convince them to remain silent.  She also asks judges to voir dire the client about the decision.  If the client testifies, you must communicate your theory of the case and the client’s credibility in the examination.  The key to successful direct is preparation and your trust in their ability to help the case.  Biz asks her clients to help write out the questions in conformity with her outline so the client’s voice will come through.  She also recommends having a heart to heart with the client’s spouse about the defendant’s decision to testify and making sure to prepare the client for mistakes or misrecollections on cross.

Marcus Busch addressed the cross-examination of the defendant.  It’s a test of your judgment how you approach the witness.  Map it out weeks or months in advance – structure it around your themes and your key documents.  Don’t go for the home run.  Win on points.  Take the defendant out of his comfort zone – he’s not adored or in charge while you are crossing him, but if the witness is annoying, give him the rope to hang himself.  The key to great cross is to be creative.

Marcus uses searchable case management systems to ensure he does not fumble around with paperwork when he wants to impeach.  And he recommends never bluffing.

Marcus also closely watches the defendant’s demeanor in the trial – both in and out of the jury’s presence – and tries to use that demeanor against the witness.  He takes good notes on direct so he can hold the witness to exactly what he testified to and demonstrate to the jury that he is accurate and therefore credible.  If the witness scores points on Marcus, he tries not to show he has been hurt.

 Gerry Goldstein summarized the panel’s presentation.  He then covered closing arguments.  He passionately emphasized telling a theatrical story at all stages of the trial, and about borrowing great ideas from great lawyers.  He admitted morphing over the years from being an “attack dog” to taking a more mature, measured approach.  He talked about the importance of candor, self-deprecation and pride in your role as a defender of the accused – all critical themes to convey to the jury.  And, he illustrated his points with many examples from the conference’s written materials.


September 30, 2010 in Conferences, Defense Counsel | Permalink | Comments (0) | TrackBack (0)

NACDL's 6th Annual Defending the White Collar Case Seminar – “Where Do We Go From Here? Honest Services Fraud and Public Corruption,” Thursday, September 30, 2010

Guest Blogger: Steven P. Ragland, Keker & Van Nest LLP (San Francisco, CA)

Moderator: Abbe David Lowell

Panelists: Miguel A. Estrada, Ross Garber, Hon. Barbara M. G. Lynn and Timothy O’Toole

The future of honest services fraud—that immensely nebulous charge—was addressed by an afternoon panel comprised of Miguel Estrada, Ross Garber, Hon. Barbara Lynn, Jack Smith (N.D. Tex.), and Tim O’Toole.  Abbe Lowell moderated. 

The context was set by a complex hypothetical involving government contracts and an amorphous “benefit” without a concrete quid pro quo.  In other words, the perfect scenario for a charge-of-last resort.  Now that the United States Supreme Court has limited the reach of honest services fraud charges with the recent Skilling opinion, the future of honest services/public corruption charges is unclear.  The Court said that bribery and anti-kickback charges are certainly viable in the post-Skilling world, but undisclosed conflicts of interest may no longer be sufficient to state a federal crime.  Indictments alleging mushy, apparent benefits short of a concrete quid pro quo, therefore, are vulnerable to challenge. 

Here, the hypothetical is one of those mushy cases.  The target of the investigation, Reynolds, is a U.S. Congressman and former Texas state legislator.  Since the Texas legislature is a part-time gig, Reynolds was employed by Dallas Dynamics when in the State house.  Dallas Dynamics is a recipient of state contracts.  Reynolds’ compensation from Dallas included a bonus based on business he generated.  One year, the state Comptroller, Brown, awarded a contract to Dallas Dynamics after Reynolds introduced Brown to Dallas Dynamics’ CEO, Cowen.  As a result of this contract, Reynolds received a $1.5 million bonus.  Brown’s office also got increased appropriations thanks to help from legislator Reynolds.  Reynolds and Cowen agreed to pay his bonus out over the course of 8 years.  As a result, there was no discernible spike in Reynolds’ income.  Reynolds reported his income from Dallas Dynamics, but did not particularize the salary and bonus amounts or reveal that part of his compensation was based on bringing in business.  Dallas Dynamics hired Reynolds’ son soon after receiving the government contract.  Finally, after becoming a U.S. Congressman, Reynolds could no longer earn new income from outside work, but he did disclose the remaining years of amounts owed to him by Dallas Dynamics in the same way as he did while in the state house.

A key preliminary issue identified was the need for separate representation for Reynolds, for Cowen, for Brown, and possibly for the son too.  This issue of ensuring no conflict in representation is a theme that has run through several of the panels today.  The broad consensus is that the more separate lawyers, the better.  Even if individuals sign conflict waivers, the better practice is to provide separate counsel.  From a judicial perspective, conflicts are not only problems for the immediate case, but down the road in case one of the targets is convicted and later raises the conflict issue as a habeas petition.  The possibility of collateral attacks and ineffective assistance claims make separate representation all the more important and prudent. 

Adding to the need for more lawyers in the hypothetical investigation, entities such as the Comptroller’s Office and the Texas legislature will likely receive investigative subpoenas.  Because these agencies and entities need to protect themselves against allegations of spoliation or even obstruction, separate, independent counsel is very important. 

This led to a discussion of joint-defense agreements, whether they should be written or oral, and whether the prosecutor could challenge a joint defense agreement under the theory that it is tantamount to a joint representation conflict?  It’s probably unlikely that a court would declare a joint defense agreement null and void.  But, if someone in the joint defense pleads out, there may be judicial oversight, requiring, for example, notice to the other members if one person is going to start talking to the government.

Going back to the hypothetical, is a case viable if it alleges that as a state senator, Reynolds failed to disclose properly his true benefit from Dallas Dynamics because the bonus payment was not separately disclosed?  Reynolds appears to have gotten an improper benefit by introducing Brown to Cowen and the business-generation bonus was hidden. 

Now, after Skilling (and Black) limited the breadth/application of the honest services statute, it is much more difficult to bring a viable indictment under that theory case because there is no evidence of an explicit agreement.

Post-Skilling, do you have to allege there was a quid pro quo?  Unclear.  If the theory is bribery, probably so.  But, if you make this hypothetical into a kickback case, you may be able to allege that Reynolds got a kickback in the form of his bonus by using his public office to arrange the contract.  By creative pleading, such as using section 371 (conspiracy) and section 666 (bribery), an indictment might survive even without an allegation of a concrete quid pro quo.  If it does not allege an actual bribery or kickback, such allegations are vulnerable to a bill of particulars and a mere failure-to-disclosure scenario is probably no longer enough.  Additionally, the line between illegitimate “gratuity” and legitimate, e.g., campaign contributions is very hard to draw. 

But ultimately, how big is the gap that Skilling left?  The consensus is that some creative pleading of conspiracy, bribery/kickback charges can probably survive initial motions to dismiss.  There may be proof issues, particularly at the Rule 29 stage, but such charges are probably sufficient in the first instance.

Finally, Congress is now looking at how to fill the “gap” left by the Skilling case—trying to find a way to make the mushy case that the Supreme Court kicked out again subject to prosecution.   Senator Leahy’s current gap-filling measure criminalizes the failure to disclose a benefit that was “in whole or in part” motivated by a private interest. 

My ultimate take from the discussion is that while the narrowing of honest services charges is indeed a boon to defense lawyers and the accused, and should impose upon prosecutors a higher bar to charging public corruption cases, the ultimate fallout is unclear.  There are plenty of arrows left in the government’s quiver and Congress seems eager to simply provide more ammo.  Time will tell, but a cynic (e.g., a criminal defense lawyer) would guess that the victory—as important and monumental as it was—may prove academic for all but a handful of individuals…and ultimately short-lived.


September 30, 2010 in Conferences, Corruption, Fraud | Permalink | Comments (0) | TrackBack (0)

NACDL's 6th Annual Defending the White Collar Case Seminar – Special Lunch & Keynote Interview, Thursday, September 30, 2010

Guest Blogger: Ivan J. Dominguez, Assistant Director of Public Affairs & Communications, National Association of Criminal Defense Lawyers (NACDL)

Interviewer: Abbe David Lowell

Keynote Interviewee: Jeffrey Toobin

Jeffrey Toobin, CNN Senior Analyst and New Yorker Staff Writer, delivered a fascinating Keynote address at a special luncheon today at “NACDL’s 6th Annual Defending the White Collar Case – In and Out of Court.” The format of the presentation was as an interview by nationally-recognized white collar trial attorney Abbe David Lowell, partner in the Washington, DC, office of McDermott, Will & Emery.

Toobin explained that the reason he left the practice of law for a career in journalism can be traced to his parents, both of whom worked in journalism. A graduate of Harvard College and Harvard Law School, Toobin clerked on the Second Circuit Court of Appeals for the late Judge Lumbard. He spoke about the book he wrote on the Oliver North case. Toobin had worked for Independent Counsel Walsh in that matter. Later in the discussion, he explained that he is not a big proponent of the independent counsel structure. Toobin went on to serve as an Assistant U.S. Attorney in the Eastern District of New York. His career in journalism, though, was sealed by the O.J. Simpson case.

Toobin went into some detail about his thorough enjoyment of trying cases, though he doesn’t miss the administrative aspects of the practice of law. As far as his favorite part of being a journalist–it is the youthful joy he gets from reporting.

The conversation then moved to Toobin’s recent book The Nine: Inside the Secret World of the Supreme Court. Toobin said he is currently working on a sequel. In connection with his research, he interviewed more than 75 former clerks. During this discussion, he offered a variety of insights about current and former Supreme Court justices, including the effects of Bush v. Gore on different justices. As a Supreme Court observer, Toobin explained his view that Bush v. Gore was a very dark moment for the Supreme Court.

He also noted that former Justice O’Connor has been in a sense exiled from the Republican Party, something he said happened to former Justices Souter and Stevens as well.  He described it as a feature of the changed nature of the Republican Party. Indeed, he went on to discuss how former Justice O’Connor is currently working hard, promoting and speaking on the importance of judicial independence, and specifically the undesirability of judicial elections, an effort he said finds its opposition in the Republican Party.

In his discussion of the nomination process to the Supreme Court, Toobin observed that perhaps the most significant development in the American political landscape over the last 40 years has been the turn to the right of the Republican Party, which he suggested might be reinforced by the upcoming midterm election. He explained that in his view the Democratic Party is not as far left as the Republican Party is far right, and this is reflected by the current Supreme Court. In the context of the discussion of the Supreme Court nominees, Toobin characterized Presidents Clinton and Obama as moderates.

Rather than seeing the next Supreme Court nominee be a trial lawyer, Toobin appeared interested in seeing a politician appointed to the Supreme Court. He went on to discuss the history of politicians on the court. In general, he is of the mind that diversity is beneficial in all contexts. He speculated that the uniformity of judicial experience of the sitting justices as appellate justices has come with a cost.


September 30, 2010 in Conferences | Permalink | Comments (0) | TrackBack (0)

NACDL's 6th Annual Defending the White Collar Case Seminar – “iDefense: Strategic & Ethical Issues in the Digital Age,” Thursday, September 30, 2010

Guest Blogger: Debra A. Karlstein, Spears & Imes LLP (New York, NY)

Moderator: Gerald B. Lefcourt

Panelists: Elkan Abramowitz, Daniel K. GelbMark R. Hellerer and Eric V. Mazur

The panel was moderated by Gerald Lefcourt and included defense lawyers Elkan Abromowitz, Mark Hellerer, Daniel Gelb, and Eric Mazur, a forensic expert from Navigant Consulting.

Gerry introduced the panel, speaking about the sea change in the law and life arising out of the explosion of technological changes such as smart phones that have us carrying our personal information about all our contacts, our emails, a GPS device that allow others to know where we are at all times, our photos, and a history of our web browsing.

Elkan Abromowitz addressed three issues.  First, Elkan spoke about the Fourth Amendment’s prohibition on unreasonable searches of papers and effects in the modern age when people have all types of private information on their computers, desktops or blackberries.  The Ninth Circuit has held that law enforcement can look at information on a laptop at a border search – for any person entering or leaving the country–even in the absence of reasonable suspicion.  (By contrast, reasonable suspicion is still required for a personal search, even though most of us carry far more information on our laptops than on our physical bodies!).

Second, Elkan spoke about the Balco case, in which the Ninth Circuit restricted the ability of law enforcement to obtain subpoenas that would allow the government to obtain information on computers that go beyond what was actually sought.  En banc, the Ninth Circuit removed certain guidelines set forth in the original opinion, leaving some uncertainty about the proper breadth of a reasonable search in the context of a subpoena for computer records.

Third, Elkan spoke about the Quon case in the Supreme Court, which held that an employer can review emails sent on work computers and mobile devices issued by the employer–regardless of whether the employee has a reasonable expectation of privacy–as long as there is a non-investigatory workplace reason to do so.

Eric Mazur spoke about the exponential increase in the amount of data available and the ability of forensic experts to retrieve it.

Mark Hellerer also spoke about the increase in data and its impact on electronic discovery.  In civil cases, the Sedona Conference has met annually to try to develop guidelines and best practices.  In criminal cases, companies are faced with the daunting task of trying to respond to extremely broad subpoenas.  Mark noted that there are certain limits on the proper scope of a grand jury’s investigative powers, and courts have at times been willing to apply Rule 17(c)’s limitation to quash–or more likely modify–unreasonably overbroad and unduly burdensome subpoenas.

Daniel Gelb talked about the statutory and constitutional limits on the reach of law enforcement with respect to electronically stored information in GPS devices, social media websites, et cetera.  He noted that there is no reasonable expectation of privacy in comments posted on social media sites such as Facebook, even if directed only to a limited group of individuals such as “friends.”  In addition, the government can often circumvent the need to obtain a search warrant upon a showing of probable cause by issuing a subpoena to cell phone providers who now collect GPS tracking devices.

Finally, the panelists discussed a hypothetical (based on an actual case in Washington, DC) involving a law firm partner who was prosecuted for obstruction of justice, along with his registered domestic partner and roommate, in connection with a homicide.  Although the defendants were acquitted, the wife of the deceased brought a wrongful death lawsuit and has sought emails sent and received by the law firm partner on the firm’s computers.


September 30, 2010 in Computer Crime, Conferences, Searches, Web/Tech | Permalink | Comments (1) | TrackBack (0)

NACDL's 6th Annual Defending the White Collar Case Seminar – “Prosecutors Behaving Badly: More Unethical Conduct or Just More Discovery of Misconduct?,” Thursday, September 30, 2010

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender, Northern District of Ohio

Moderator: Gerald Goldstein

Panelists: Hon. Paul J. Fishman, David Markus, Richard Marmaro, Hon. Ricardo M. Urbina and Ellen Yaroshefsky

NACDL’s Defending the White Collar Case seminar kicked off with a panel discussion on prosecutorial misconduct. The “Prosecutors Behaving Badly” hypothetical presented the panelists with the story of a federal investigation and trial regarding kickbacks paid by a construction company to a state university in exchange for a contract. The initial criminal investigation involved the corporation, the CEO, and 2 other executives who would eventually be charged and tried. An internal investigation was simultaneously conducted by the construction company.

One set of issues discussed by the panel involved legal representation during the investigation. In the hypothetical, one law firm represented: (1) the CEO; (2) the construction company; and (3) the two executives who would eventually be charged (this representation was paid for by the construction company, and was subject to a conflict waiver). Additionally, another partner in the same firm conducted the internal investigation on behalf of the construction company. Multiple panel members commented that it would be virtually impossible to ever get an effective waiver under these circumstances. U.S. Attorney for the District of the New Jersey, Hon. Paul J, Fishman, explained how he would approach a District Court Judge and seek to disqualify any attorney attempting to provide representation under these circumstances. The prosecutor would later use admissions made to the attorney who conducted investigation against the two executives at trial.

Another set of issues involved the prosecutor’s obligation (if any) to disclose Brady material during plea negotiations. During this investigation, the prosecutor was involved in plea negotiations with a whistleblower. At first, counsel for this whistleblower indicated that he had not been present during any incriminating discussions between the two charged defendants and the CEO, and that the two charged defendants had merely told him about these discussions. After the prosecutor balked at providing a favorable plea bargain in exchange for this second hand information, counsel for the whistleblower indicated that “after serious reflection, his client does recall several occasions when he overheard direct conversations between [the two executives who would eventually be charged] and their CEO, as well as several of the College Trustees.” The panelists agreed that the prosecutor’s disclosure obligations during plea negotiations were at best not clear. The prosecutor could not deny the prior inconsistent statement existed; however, the law is unclear regarding an obligation to turn over Brady material during plea negotiations. The panel noted that U.S. v. Ruiz, 536 U.S. 622 (2002) did not answer this question with regard to exculpatory evidence. In Ruiz, the Supreme Court held only that the prosecutor had no obligation to turn over impeachment evidence, because this obligation was closely connected to trial. In light of Padilla v. Kentucky, 130 S.Ct. 1473 (2010- holding that a defendant was denied the effective assistance of counsel during plea negotiations where he was not advised of the immigration consequences of his plea of guilty) this issue appears to be ripe for litigation.

Many panelists noted that another way to address this problem is through a re-write of Criminal Rule 16. Professor Ellen Yaroshefsky expounded upon this, noting how many jurisdictions already offered complete open-file discovery. One panelist, David Markus, argued strongly that there is a seeming disconnect between the tenor of Attorney General Eric Holder’s statements in favor of openness and the undercurrent of resistance to efforts to address these problems.

This same Brady material/prosecutorial ethics issue re-presented itself during the trial of the two executives, at which time the prosecutor again failed to disclose this information. Additionally, the prosecutor did not disclose that the witness had been “reimbursed” for his out-of-pocket expenses. No specific Brady request is made by defense counsel, however, there was no doubt among the panelists that this initial description by the whistleblower’s counsel would constitute a prior inconsistent statement by this whistleblower, and had to be disclosed. Nor was there any doubt that the failure to disclose the reimbursement was also flagrantly improper.


September 30, 2010 in Conferences, Legal Ethics, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 28, 2010

Commentary: We Have Always Done It That Way

Very early in my legal career, I hung around the Travis County courthouse, soaking in the wisdom of seasoned criminal defense attorneys. One such gent was Jack Darrouzet, who handled all kinds of traffic offenses. This was back in the days when Texans still labored under the doctrine of fundamental error in charging instruments. Jack became an expert in this area and applied it with rigor to each and every traffic crime, no matter how small. If you sat with him in the courthouse café, inevitably a big name attorney with a big time case would come by Jack’s table and seek his advice on some obscure point of indictment construction.

Jack also loved to hold forth on the banality of prosecutors. Jack knew Texas criminal law and procedure and all of the Supreme Court precedents, and he knew how to argue the law in front of a Texas judge. It really bugged Jack when he made a cogent legal argument against some county attorney’s action and received the following response: “But Your Honor, we’ve always done it that way.” More than anything else I witnessed during my brief sojourn at the courthouse, this drove Jack crazy. “We’ve always done it that way is not a legal argument,” he would remind anyone gathered around his table.

For some reason Jack’s lament has always stuck with me. You don’t see this kind of argument much in federal court anymore, as the government can usually come up with some god-awful precedent to justify even its most absurd actions. But you certainly see the same mindset when federal prosecutors use tactics that are lawful but unfair.

Think about arresting white collar defendants at home in front of their children or at work in front of their colleagues. Prosecutors have the absolute right to do it. But is it right or fair, when the same prosecutors will not oppose pretrial release? The defendant is presumed innocent and will be processed and freed within hours. Why should he or she suffer the humiliation and potential prejudice of a public arrest? And how about the closely connected practice of perp-walking, in which the arresting agent walks the alleged perpetrator to the federal courthouse, parading him or her before the waiting media hordes? Granted, this practice has decreased in recent years, but it still happens, as it did in the case of the late Ken Lay.

I have a feeling that several routine practices engaged in by prosecutors could stand re-examination. With respect to many of these practices, I’m sure that the AUSAs in question do not even stop to think about the fairness of what they are doing. This is not because they are bad people, or because they intentionally do bad things. (Indeed, they would be, and often are, shocked and offended when you suggest that they are not being fair.)  It is because they have always done it this way.



September 28, 2010 in Prosecutors | Permalink | Comments (5) | TrackBack (0)

Monday, September 27, 2010

Skilling Update

Friday, September 24, 2010

In the News & Around the Blogosphere

Fox8 News, Frank Russo's Son Pleads Guilty to Bribery 

DOJ Press Release, Former Employee of a National Bank Pleads Guilty for Role in Bid-Rigging and Fraud Conspiracies Involving Proceeds of Municipal Bonds

DOJ Press Release, Martinair Airline Executive Indicted in Conspiracy to Fix Surcharge Rates on Air Cargo Shipments

Robert Snell, Detroit News, Howell contractor charged in scheme involving Ferguson

Laurel Brubaker Calkins, Bloomberg, Enron’s Skilling Gets Nov. 1 Hearing on Retrial Bid

John Rogers & Robert Jablon (AP), Dallas News, Abuses outlined in California city corruption scandal

Hilary Potkewitz, Crains, Elderly man receives one-year probation in UBS case

 AP, Boston Herald, 41 charged with NY drug and corruption charges

Janice Burns,, Law enforcers target crooked lawyers and accountants who aid organised crime

 John Pacenti,, Rothstein Ponzi Victims Get in Line for Payouts

Rachel Donadio, NYTimes, Vatican Defends Bank After Seizure of $30 Million

David Hechler, Corporate Counsel (, Countrywide CFO's Defense: What About the Lawyers?

Mike Scarcella, BLT Blog, Federal Judge in D.C. Backs Subpoena in Foreign Bribery Case 

David Ingram, BLT Blog, Informant in Major FCPA Case Pleads Guilty

DOJ Press Release, Southern California Medical Center to Pay U.S. $2.2 Million to Resolve Fraud Allegations

DOJ Press Release, Former Nexus Technologies Inc. Employees and Partner Sentenced for Roles in Foreign Bribery Scheme Involving Vietnamese Officials

DOJ Press Release, Former Indianapolis City-County Councilman Charged with Soliciting a Bribe and Attempted Extortion


September 24, 2010 in News | Permalink | Comments (0) | TrackBack (0)

Monday, September 20, 2010

Dodd-Frank FCPA Whistleblowers: The Coming Wave

Take the FCPA, add in expansive new whistleblower protections, start employing the willful blindness doctrine with abandon, and presto! You've got a real growth industry on your hands.

The new whistleblower provisions in the Dodd-Frank Act should significantly increase federal civil and criminal fraud enforcement actions in the coming years. Whistleblowers will now be able to reap potentially huge monetary rewards for the timely reporting of corporate fraud to the SEC and CFTC, if recoveries of over a million dollars are made by those entities, the DOJ, or other regulators. Under Dodd-Frank, the pool of qualified whistleblowers has been enlarged and there is no requirement that whistleblowers file qui tam actions in order to be compensated for their information.

Expect to see exponential growth in the already burgeoning area of FCPA enforcement, fueled by new whistleblower activity. Recall that the FCPA is a creature of the securities fraud statutes, and is therefore within the SEC's purview. 

All of this and more is detailed in my friend Michael E. Clark's excellent new article in the September issue of ABA Health eSource, Publicly Traded Health Care Entities at Risk from New SEC Whistleblower Incentives and Protections in Dodd-Frank Act. Clark is with Duane Morris's Houston office. As with all ABA publications, Mike's article may not be copied or disseminated, in whole or in part, in any form or by any means, or downloaded or stored in an electronic database or retrieval system, without the express written consent of the American Bar Association.


September 20, 2010 in Civil Enforcement, Congress, Current Affairs, FCPA, Fraud, Qui Tam, SEC | Permalink | Comments (0) | TrackBack (0)

Sunday, September 19, 2010

New Book - Careers in Criminal Law

Ellen C. Brotman, Careers in Criminal Law here -

"The book is organized into five different parts:

  • Part I focuses on traditional criminal defense, including public defending, white collar criminal defense, big firm practice, solo practice and appellate and post conviction advocacy.

  • Part II tells the stories of those who prosecute, in state court, federal court, and juvenile court.

  • Part III describes the journeys of three judges in three very different venues.

  • Part IV explores careers representing defendants who have been convicted as they attempt to get back on track.

  • Part V presents a handful of careers in criminal law that simply defy categorization."


September 19, 2010 in Books | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 15, 2010

Government "Finally" Dismisses Charges in Enron Barge Case

The government filed a Motion to Dismiss - with prejudice - charges against James A. Brown on Counts One, Two, and Three.  The former Merrill Lynch banker had been charged as part of the Enron Barge case.  An appeal on the motion for a new trial on Counts IV and V remains.

This has been a case that has a long history with claims of discovery violations on the part of the Enron Task Force.  The defense had argued that "[a]fter Brown's trial and appeal, a new prosecutor finally produced the government's notes of multiple conversations with Fastow, the grand jury testimony of Merrill counsel, and other Brady material - all which proves Brown's innocence on all charges." here 

The original case was discussed on this blog back in 2005.  And a lot has happened since the sentencing of back then. 

What is interesting now is that it takes the government until today to dismiss these counts - with a trial date that had been set for September 20th.  Is it really necessary to wait right up to the trial date to dismiss? One can only imagine the costs to the defense of preparing for trial?  

Motion to Dismiss - Download Dkt. 1263 MTD


Addendum - Opposition to Continuance - Download Dkt. 1252 Brown's Opposition to Continuance

September 15, 2010 in Enron, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Tuesday, September 14, 2010

Ignorance Is Bliss, But Is It Also a Crime?

NACDL White Collar Summer Series Event -- Ignorance Is Bliss, But Is It Also a Crime?

Opening Your Eyes to the Willful Blindness Doctrine

Speakers are Andrew Wise (Miller & Chevalier), K. C. Maxwell (Law Office of K.C. Maxwell), Daniel Brown, Murphy & McGonigle, Alexandra Walsh (Baker Botts)

The "willful blindness" or "conscious avoidance" doctrine has been a prominent issue for numerous recent white collar defendants, from securities fraud and FCPA allegations through false statements and perjury charges. Our highly experienced panel will discuss the origin and contours of the doctrine, explore recent cases that highlight the current state of the law and offer successful defense strategies.Please join our panelists afterward for a rooftop reception overlooking the White House.

September 16, 2010 - 5 p.m. – 7:30 p.m. EDT

655 15th Street, N.W., Suite 900, Washington, D.C. (enter on G Street)

Beer, wine and light fare will be served. Hosted by Miller Chevalier

Please register at Space is limited. The program is free to attend. If arranged in advance, up to 2 hours of CLE credit is available at a cost of $60.


September 14, 2010 in Conferences | Permalink | Comments (0) | TrackBack (0)

Sunday, September 12, 2010

The Ninth Circuit Rejects Reach of 18 USC 1344 in Case

Guest Blogger - Linda Friedman Ramirez -

The Ninth Circuit rejects reach of 18 USC 1344 to Bank of America’s mortgage subsidiary, Equicredit Corporation, in a case brought prior to the amendment of 18 USC 20.       

USA v Bennett, (9th Cir. 2010) -

Federal law provides that  it is a federal crime knowingly to execute, or attempt to execute, a scheme or artifice “(1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C. § 1344. 

According to the Court, the defendant James Bennett operated a sophisticated property flipping scheme in Southern California. He provided cash to straw purchasers, improperly appraised the properties at inflated prices, provided false information about the buyers and falsified documents for closing.  

One of the defendant’s victims was Equicredit, a subsidiary of Bank of America. The Government conceded that in this case, Equicredit did not meet the statutory definition of “Financial institution.”  The definition of “financial institution” was later expanded in May 2009. See Fraud Enforcement and Recovery Act of 2009, Pub.L. No. 111-21, § 2(a)(3) (2009).1

In order to try and save the convictions the Government argued that Bennett fraudulently obtained funds “owned by” a financial institution for purposes of § 1344(2).

The government argued that, as a matter of law, a parent corporation “owns” the assets of its wholly-owned subsidiary, and therefore that Bennett fraudulently obtained assets “owned by” BOA, a financial institution, when he obtained mortgages from Equicredit..

 The Court rejected this argument. ”More than a century of corporate law says otherwise.” The Court reviewed jurisprudence in this area. “As early as 1926, the Supreme Court recognized that “[t]he owner of the shares of stock in a company is not the owner of the corporation’s property.” R.I. Hosp. Trust Co. v. Doughton, 270 U.S. 69, 81 (1926). While the shareholder has a right to share in corporate dividends, “he does not own the corporate property.’”   “Today, it almost goes without saying that a parent corporation does not own the assets of its wholly-owned subsidiary by virtue of that relationship alone.”  The Ninth Circuit thereafter vacated conviction of the relevant counts.


1“Financial institution” now encompasses “a mortgage lending business ... or any person or entity that makes in whole or in part a federally related mortgage loan as defined in section 3 of the Real Estate Settlement Procedures Act of 1974.” 18 U.S.C.A. § 20(10)  A “mortgage lending business” is in turn defined as “an organization which finances or refinances any debt secured by an interest in real estate, including private mortgage companies and any subsidiaries of such organizations, and whose activities affect interstate or foreign commerce.” 18 U.S.C.A. § 27



September 12, 2010 in Fraud, Judicial Opinions, Mortgage Fraud | Permalink | Comments (0) | TrackBack (0)

Saturday, September 11, 2010

Upcoming Conferences

NACDL, George Mason Law School, Journal of Law, Economics & Policy, Overcriminalization 2.0, D.C. here and here

NACDL, Defending White Collar Crimes, Sept. 30-Oct. 1, 2010, NY here

ABA Criminal Tax Fraud Conference, Dec. 2-3, 2010, San Francisco here

ABA, The Fourth Annual National Institute on Criminal Enforcement of Intellectual Property Rights, Nov. 5, 2010, San Francisco here

ABA, The Fifth Annual National Institute on Securities Fraud, October 7-8, New Orleans here 

Strafford Webinars & Teleconferences - Foreign Corrupt Practices Act in Sub-Saharan Africa -Compliance Strategies Given the Region's Unique Cultural and Governmental Intricacies - Oct. 7, here

ABA, The Supreme Court’s Ruling on Honest Services Fraud:Where Do We Go From Here? - Sept. 14, here

ABA 2010 Fall Conference, Third Annual Sentencing and Reentry Institute and Criminal Justice Legal Educators Colloquim, Nov. 5, Washington, D.C. here

ABA 3rd Annual National Institute on the Foreign Corrupt Practices Act, Oct. 21-22. Washington, D.C. here


September 11, 2010 in Conferences | Permalink | Comments (0) | TrackBack (0)

Thursday, September 9, 2010

Fraud Rules the Roost in FBI Press Release Count

I believe that I subscribe to every DOJ press release service pertaining to federal criminal law. My favorite press releases to read are those put out by the FBI. World class self-promoters, the folks at the Bureau like to brag every time one of their investigations results in an arrest, indictment, guilty plea, trial conviction, or sentence. Following the FBI's press releases can give you a quick, informal, and unscientific sense of what's hot and happening in federal law enforcement--at least according to the FBI. Yesterday, the Bureau issued 19 press releases related to specific federal criminal cases. Fraud is in first at 8 press releases. Robbery comes in a strong second at 5. Child pornography is third with 2. Piracy, stolen firearms, stolen cars, and prescription drug abuse limp in at 1 each. White collar crime rules the roost. We're number one!


September 9, 2010 in Current Affairs, Fraud, Government Reports, Investigations, Media, News, Prosecutions | Permalink | Comments (2) | TrackBack (0)

Wednesday, September 8, 2010

Feds are armed and dangerous in BP criminal investigation

Guest Blogger - Dan Cogdell  

As the Justice Department prepares a grand jury investigation of possible crimes involved in the BP oil spill, ex-CEO Tony Hayward is looking smarter for leaving this country for reasons beyond his lack of popularity. 

Multiple indictments are likely to be sought, charges could reach well up the corporate ladder and British citizens who are not in this country when indicted might have protection from “double criminality,” which prevents extradition unless the same action is a criminal offense in both countries. It’s very possible the Justice Department will stretch the envelope and that could put their use of U.S. laws in a place not covered by European Union law.

There is no question the federal government is taking dead aim at environmental crimes in the BP oil spill or that the legal artillery is formidable. Federal prosecutors were already ramping up their environmental crime filings before the Deepwater Horizon started spewing oil into the gulf. Now, with massive public pressure, this could be the environmental version of the Enron prosecutions.

This week (8/23-8/27) the U.S. Coast Guard and the Interior Department are holding hearings in Houston to further investigate the BP disaster. Witnesses who invoke the Fifth Amendment may not look like team players, but they will be taking the smartest path.

Expect prosecutors to take fullest advantage of the powerful and far-reaching tools they have available. Expect them to issue more than just wrist slaps and corporate fines out of the Refuse Act, the Migratory Bird Treaty Act and the Clean Water Act. Expect them to seek jail time. There is a lot going in their favor.

Prosecutors will most assuredly rely on the “Responsible Corporate Officer Doctrine,” which allows Clean Water Act violations to be directed at even top corporate officers. Prosecutions under this theory have resulted in convictions of people who were not even at work sites and, in one case, not even working for a company but had “honorary power.” (See United States v. Hanousek, 176 F. 3rd 1116 (9th Cir. 1999), cert. denied, 528 U.S. 1102 (2000), and United States v Brittain, 931 F2d 1413 (10th Cir. 1991)) The “Responsible Corporate Officer Doctrine” may be the prosecutor’s ticket to tag BP’s hierarchical elite while soothing the related political nightmare currently facing the U.S. government.

In a Clean Water Act misdemeanor case, the government does not have to prove that anyone intentionally caused this enormous harm. Negligence is a comfortably lower bar for these prosecutors. And this isn’t BP’s first rodeo. A company culture that prosecutors contend encourages money-saving over safety has landed BP in the government’s sights time and time again, and will only bolster the prosecutor Howard Stewart’s efforts.

Whether BP employees or contractors believe they are targets or not, they must balance the idea of seeing justice done with protecting themselves and their employer. Taking the Fifth at this point may be the least popular but most prudent move.

Dan Cogdell is a Houston-based criminal defense attorney with Cogdell & Ardoin who has represented numerous clients in environmental and white-collar criminal cases.


September 8, 2010 in Environment, Grand Jury, International, Investigations | Permalink | Comments (1) | TrackBack (0)

Tuesday, September 7, 2010

Honest Services Update

Kim Chandler, The Birmingham News, Don Siegelman and Richard Scrushy ask court to dismiss honest services fraud charges against them; Bob Johnson (AP), Tuscaloosa, Siegelman asks appeals court to dismiss charges; Margaret Cronin,Bloomberg, HealthSouth's Scrushy Loses His Bid for Early Release Pending Court Review

Edvard Pettersson, Business Week, Enron’s Skilling to Remain in Prison During Appeal, Court Rules ; Reuters, Judge denies bail for former Enron CEO Skilling-court document

Roxana Hegeman,, Prosecutors drop case against former Westar execs; law360,Citing Skilling, Prosecutors Drop Westar Case (Subscription required)

Victoria Pynchon, Forbes, On the Docket, Zach Scruggs Asks Court to Vacate “Earwhigging” Conviction; U.S. v. David Zachery Scruggs, Defendant's Memorandum of Authorities In Support of HIs Motion to Vacate His Conviction Pursuant to 28 USC 2255 

Bill Estap,, Prosecutor Moves to Set Aside Convictions in part of Clay Co. case

Peter Lattman, NYTimes, Fraud Ruling Is Reshaping Federal Cases (hat tip to Tiffany Joslyn)

Fox Chicago News, Former Gov. George Ryan Asks Court to Invalidate Conviction on Basis of 'Honest Services' Decision

Joseph P. Ganim - Supplement to Request for Certificate of Appealability -  Download Supp CA 8 19 10; Second Circuit Order -  Download 2d C. Order

North, Sen Joseph Coniglio's bid for bail is shot down by judge

Kevin Ring case - Ken A. Ring's Revised Motion for Judgment of Acquittal - Download 07-19-2010 RING Revised MJOA (DE 155); United States Response to Defendant Ring's Revised Motion for Judgment of Acquittal  -Download 07-27-2010 US Response to Def_s Revised MJOA (DE 161);   Kevin A. Ring's Reply in Support of his Revised Motion for Judgment of Acquittal - Download 08-03-2010 RING Reply in Support of Revised MJOA (DE 168)

NACDL has created an Honest Services Fraud Filings Decisions Bank for its members here (password protected).


September 7, 2010 in Fraud, Judicial Opinions | Permalink | Comments (1) | TrackBack (0)

Monday, September 6, 2010

The Patient Protection and Affordable Care Act of 2010 Reduces the Criminal Mens Rea Requirement for Healthcare Fraud and Increases Penalties Under the Federal Sentencing Guidelines


            There has been a significant uptick in the number of criminal statutes enacted by Congress that diminish or eliminate the mens rea  or “guilty mind” requirement. The Patient Protection and Affordable Care Act of 2010 (“PPACA”), Pub. L. No. 111-148, Title VI, §§ 10606, 6402, 124 Stat. 1008 (Mar. 23, 2010), is the most recent and significant example of legislative relaxation of the standard of criminal culpability in federal courts and healthcare fraud cases in particular.

            The PPACA added subsection (b) to the healthcare fraud statute, 18 U.S.C. §1347, stating: “With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.” The same language was added to the Anti-Kickback Statute now codified at 42 U.S.C. 1320a-7b(h).

            Section 1347 previously contained elements of the offense underscoring that a specific intent to knowingly or willfully violate the criminal healthcare fraud statute is necessary before imposing criminal liability:

To support a conviction for health care fraud under 18 U.S.C. § 1347, the government must prove that the defendant: (1) knowingly and willfully executed, or attempted to execute, a scheme or artifice; to (2) defraud a health care benefit program or to obtain by false or fraudulent pretenses any money or property under the custody or control of a health care benefit program; (3) in connection with the delivery of or payment for health care benefits, items, or services.

United States v. Abdallah, 629 F.Supp.2d 699, 720 (S.D.Tx. 2009); United States v. Choiniere, 517 F.3d 967 (7th Cir. 2008), cert. denied, 130 S.Ct. 193 (2009).

            Moreover, the Patient Protection and Affordable Care Act of 2010 includes Congressional mandates increasing the Sentencing Guidelines in healthcare fraud cases. Under the PPACA, the Guidelines will be amended to provide a specific offense characteristic enhancing the otherwise applicable fraud Guideline by two to four additional levels according, again, to the amount of “loss.” Loss is an elusive term of art and the Guidelines authorize several methodologies for loss determination.

            Yet, the Act materially impacts the common law of sentencing’s definitions of loss and instead directs that: “… the aggregate dollar amount of fraudulent bills submitted to the Government health care program [which] shall constitute prima facie evidence of the amount of the intended loss by the defendant. Pub. L. No. 111-148 at §10606(a)(2)(B).

            In conclusion, one result of the PPACA engenders conflict between competing values of allocating criminal blameworthiness for culpable criminal conduct and reconciling social imperatives reflected by Congressional intent to deter burgeoning healthcare fraud. On balance, the legal issues that emerge from amendment of 18 U.S.C. §1347(b) and 42 U.S.C. §1320a-7b(h) will be the subject of significant litigation concerning both the guilt/innocence and penalty phases of healthcare fraud prosecutions.


September 6, 2010 in Fraud, Prosecutions, Scholarship, Statutes | Permalink | Comments (0) | TrackBack (0)

In the News & Around the Blogosphere

60 Minutes, The $60 Billion Fraud  (incredible story of medicare and medicaid fraud in South Florida - it shows how a billing scam can operate when there is little government oversight) What is the government doing?  Check out AG Holder's talk here

Stuart Pfeifer, LATimes, Man accused of fraud may get life in prison under California's three-strikes law

Alicia A. Caldwell, Business Week, 11 indicted in Texas county public corruption case

Mike Scarcella, BLT Blog, Former Republican Congressional Committee Treasurer Pleads Guilty to Theft

Jenna Greene, BLT Blog, ICE's Interior Decorator Pleads Guilty to Conspiracy to Defraud Government

DOJ Press Release, Employee of Federal Contractor Charged with Disclosing National Defense Information to National News Reporter

DOJ Press Release, Former Airline Executives Indicted in Conspiracy to Fix Fares on Flights Between the United States and the Republic of Korea

DOJ Press Release, Partner at Major International Accounting Firm Convicted of Tax Crimes

David Phelps & Dan Browning, Star Tribune, Informant gets year in Petters case

Brian Witte, San Francisco Examiner, US attorney: State Sen. Ulysses Currie indicted

FBI Press Release, $600 Million Settlement in Botox Case 

NYTimes (Reuters), Ex-Fund Manager Settles Insider Trading Claims

Mary Pat Gallagher,, Ticket-Fixing N.J. Judge Is Handed Jail Term but May Not Serve

Mark Hamblett, NYLJ,, High Court Restriction on Reach of U.S. Laws Is Applied to RICO -Venezuelan citizen claims he was wrongly imprisoned for almost three years in Venezuela as part of a foreign currency extortion scheme


September 6, 2010 in News | Permalink | Comments (0) | TrackBack (0)

Sunday, September 5, 2010

New Books, Articles, and Other Materials

Sara Sun Beale, (forthcoming Ohio St J of Criminal Law), An Honest Services Debate 

Alexander Bunin (Federal Public Defender Northern District of NY), Federal Convictions Reversed  (a wonderful compilation of federal cases  from the United States Courts of Appeal and the United States Supreme Court. The opinions contain at least one point favorable to criminal defendants), Download Federal Convictions Reversed 08.2010

September 5, 2010 in Books, Books [1], Money Laundering, Scholarship | Permalink | Comments (0) | TrackBack (0)