White Collar Crime Prof Blog

In the News & Around the Blogosphere

Campbell Robertson, NYTimes, Hunting for Bargains After a Titan’s Fall: Everything Must Go (discussing yard sale of Richard Scrushy's Items)

Boston.com, AP, Lawyer in RI corruption case plans not to testify

Press Release, Greenberg Traurig Expands its Dallas Office With the Addition of Victor Vital

DOJ Press Release, Former Owner of Illinois Technology Company Pleads Guilty in Multi-State Scheme to Defraud the Federal E-Rate Program

DOJ Press Release, Former Administrative Assistant to U.S. Senator Charged with Making Prohibited Communications to Senate Office

DOJ Press Release, Former TBW Financial Analyst Pleads Guilty to $1.5 Billion Fraud Scheme

David Voreacos, Bloomberg Businessweek, Sokol Seen as Showing Poor Judgment While Violating No U.S. Laws

WSJ, AP, Developer in NJ corruption sting gets 41 months

David Ingram, BLT Blog, DOJ Programs Office Faces Budget Pressure

DOJ Press Release, Manhattan U.S. Attorney Announces Charges Against Two Men in a $10 Million Commercial Bank Fraud and Identity Theft Scheme

 Brad Heath, USA Today, Justice in Balance Series  (also check out the 201 cases here)

Amanda Bronstad, NLJ, Evidence suppressed in FCPA prosecution

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New ABA Website Features U.S. and International Anti-Corruption News and Peer-Reviewed Analysis by and for Practitioners

The American Bar Association’s Criminal Justice Section is launching a new website that provides up-to-date, practitioner-oriented information and analysis on global anti-corruption matters. Managed by the section’s Global Anti-Corruption Task Force, the site features, among other unique categories of information:

Peer-reviewed articles and analysis from practitioners worldwide;

Up-to-date news reports;

Extensive online resource links;

A library of presentations; and

Notices of upcoming anti-corruption events and seminars.

The task force provides a neutral, practitioner-focused online resource to monitor, evaluate and report on anti-corruption news and developments in transnational anti-bribery efforts. Focus is on the interplay between anti-corruption governmental efforts and the effect that those efforts have on global commerce and business development.

The website’s distinguishing features are: a) all published articles are peer-reviewed and available free of charge online; b) its subject-matter focus covers the globe, and not just the United States; c) published pieces come from leading practitioners and industry leaders from all over the world; and d) its objective is to provide news and analysis that is "for and by" practitioners who are looking for the latest developments and insights in the ever-changing global anti-corruption arena.

The site also provides extensive real-time news announcements and reports on criminal and regulatory enforcement activities relating to the Foreign Corrupt Practices Act, as well as similar international instruments such as the United Kingdom Bribery Act, the German Anti-Corruption Act, Russia’s National Plan for Counteraction to Corruption, and the U.N. Convention Against Corruption.

The Global Anti-Corruption Task Force is co-chaired by Assistant U.S. Attorney Andrew S. Boutros (in his personal capacity) and Perkins Coie Investigations and White Collar Defense Group partner (and former Assistant U.S. Attorney) T. Markus Funk.

A link to the task force website is available here.

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Commentary on Court Dismissal of Indictment Against Former VP & Associate General Counsel of GlaxoSmithKline

Check out - Sue Reisinger, Corporate Counsel, She Asked, Counsel Told: Case Against Glaxo Attorney Is Dismissed

The former VP and Associate General Counsel of GlaxoSmith Kline had been charged with a 6-count Indictment for the alleged crimes of obstruction (1512), falsification and concealment of documents (1519) and false statements (1000). The Indictment against Lauren Stevents has now been dismissed, but it is without prejudice.

Stevens claimed a defense to the charges of advice of counsel in her responses to the FDA's inquiry. The government response was that 18 USC 1519 is a general intent crime and therefore a "good faith reliance on advice of counsel is only a defense to specific intent crimes." 

The court did not agree with the government, citing applicable sources that provide a solid basis for its holding.  My take is that the statute clearly is requiring two intents - to "knowingly alters, destroys, multilates, conceals, coversup, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impeded, obstruct, or influence the investigation ....."  With two intents it seems clear that one should use specific intent here. 

But what is more questionable here is that the government thinks that specific intent should not be required here.  Should you really prosecute someone who may not have had the specific intent to do these alleged acts?  Will this achieve the deterrence from criminality that we desire?  Irrespective of whether one accepts the government's claim that advice of counsel is an affirmative defense or the defense and court position that it negates the mens rea, is prosecution of this alleged conduct the way we want to spend valuable tax dollars?

This case is a perfect example of how we are failing to use our resources wisely.  Do we really need to spend money prosecuting folks who may not have complied with a government discovery request properly? Or would the money be better spent using it for educating lawyers and others of how to respond to government inquiries correctly.  And what happens if we turn the tables - should we start prosecuting Assistant United States Attorneys who do not comply with constitutional requirements of discovery, or would our resources be better spent educating them of the importance of upholding these constitutional rights. 

Bottom line - don't refile this case. 

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Addendum - See here

Kott Decision Matches Kohring - Prosecutors Violated Brady

In an unpublished memorandum decision, the Ninth Circuit Court of Appeals found that Peter Kott's conviction, like Kohring, needed to be reversed because of Brady violations by prosecutors.  The court in citing the Supreme Court's decision in Bagley said, that "there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different."  The court remanded it to the district court to determine if the prosecution "acted flagrantly, willfully, or in bad faith." 

Judge Fletcher concurred and dissented in part, finding a new trial an insufficient remedy.  She wrote to express the view that the court's supervisory authority should be used and the indictment should be dismissed with prejudice. Judge Fletcher stated:

"I am deeply troubled by the government's lack of contrition in this case. Despite their assurances that they take this matter seriously, the government attorneys have attempted to minimize the extent and seriousness of the prosecutorial misconduct and even assert that Kott received a fair trial -- despite the the government's failure to disclose thousands of pages that reveal, in part, prior inconsistent statements by the government's star witnesses, ..., regarding the payments Kott allegedly received."

For prior posts, see here, here, here, and here.  Peter Kott was represented by Sheryl Gordon McCloud of Seattle, Washington.

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In the News & Around the Blogosphere

Tampa Tribune (AP), Charlie Crist testifies at Sansom corruption trial 

David Ingram, NLJ, law.com, Michele Roberts Moves From Akin Gump to Skadden 

Globe Staff, Boston Globe, Nixon Peabody taps Ryan for crime group post

DOJ Press Release, Founder of A&O Entities Convicted in $100 Million Fraud Scheme

Law360, 3rd Circ. Upholds Prison Stint For Morgan Crucible CEO

Sue Reisinger, Corporate Counsel, law.com, Lips Unsealed: Third Circuit Ruling on Privilege Worries Defense Bar

Martha Graybow, Reuters, Analysis: Scrushy acquittal may have lessons for Rajaratnam

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Brady Discovery - Is Defense Getting It One Week Before Trial?

Previously blogged was a FCPA Act case with some interesting issues - such as whether the FCPA applies to state-owned entities. (see here) and whether a grand jury was being used for trial preparation (see here).  The government had filed a supplemental memorandum and declaration of a US State Dept. official on the "foreign official" issue.  The court struck the government's supplemental filing and the declaration of the State Dept. official, refusing to accept that courts needed to defer to foreign policy concerns. The hearing on the motion is set for later this week. (See also Mike Koehler, FCPAProfessor, here)

In the meantime, defense counsel has been busy.  They filed a motion claiming a Brady violation by the government.  This is clearly a "hot" topic these days. They claim that it's a week before trial and the government did not provide exculpatory material that the government has had for "five and one-half weeks."  Defense counsel also claims that:

"[h]ad the defense had this information in a timely fashion, it could have attempted to depose the witnesss under Federal Rule of Criminal Procedure 15, sought other evidence to corroborate this information, and followed through with our own investigation. There is no sound reason and no justification for the government's suppression of this favorable evidence."

The defense offers suggestions on possible remedies that the court could employ here. These include, "consistent with W.R. Grace, the jury should be instructed that the prosecution withheld exculpatory evidence from the defense, contrary to its obligations."

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Third Circuit Rules - OK for Corporate Counsel to Testify Against CEO

In a closely watched case (see here), the Third Circuit was asked to consider whether corporate counsel had in fact represented an individual within the corporation and as such the attorney-client privilege should apply. Defendant had argued that the Bevill standard should not "apply here, as here, both the individual and the corporation have an express attorney-client relationship with counsel." Reply Brief of Ian P. Norris - Download 2011-02-25 Norris Reply Brief. 

The Third Circuit issued an unpublished opinion that resolves this issue in a paragraph, stating in part that:

 "[t]he District Court in this case held an evidentiary hearing and ultimately determined that Norris failed to meet his burden in asserting his privilege pursuant to the five-factor test set forth in In the Matter of Bevill, Bresler & Schulman Asset Management Corp., 805 F.2d 120, 123 (3rd 1986).  The District Court did not legally err in applying this test, and we see no clear error in the District Court's holding based on the facts elicited in the evidentiary hearing."  

To all the corporate executives that are cooperating with corporate counsel thinking that the individual is representing them - beware....

Opinion- Download Opinion

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In the News & Around the Blogosphere

Amanda Bronstad, NLJ, law.com, ICE attorney gets 17-year sentence for taking bribes

Jerry Mitchell, Jackson Clarion-Ledger, Minor, Ex-Judges Still in Limbo

ABC6OnYourSide, Ex-judge goes on trial in Ohio corruption probe

FBI Press Release, Former UBS Investment Banker Sentenced in Manhattan Federal Court to 22 Months in Prison for Insider Trading Scheme 

9th Circuit - United States v. Alvarez, (Stolen Valor Act) - Concurring and Dissenting Opinions in Denial of Rehearing on En Banc

DOJ Press Release, Samsung SDI Agrees to Plead Guilty in Color Display Tube Price-Fixing Conspiracy

Azam Ahmed & Peter Lattman, NYTimes,Galleon Trial Focuses on Clearwire Deal With Intel ; Ashby Jones, WSJ Blog, What, Precisely, is Inside Info? Legal Issue Arises in Raj Trial; Jenny Strasburg & Michael Rothfeld, WSJ, Prosecutors: Tapes Show Intel Deal Tips

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In the News & Around the Blogosphere

Pat Bealle & Cynthia Roldan, The Palm Beach Post News, 13 arrested in massive public corruption case

FBI Press Release, Former Goldman Sachs Computer Programmer Sentenced in Manhattan Federal Court to 97 Months in Prison for Stealing Firm’s Trade Secrets

Mike Scarcella, BLT Blog, DLA Piper Wants Judge To Quash Subpoena in Clemens Case

E. Scott Reckard, Washington Post-Bloomberg, Criminal probe dropped against Countrywide CEO Angelo Mozilo (w/ a hat tip to Ivan Dominguez)

Sue Reisinger, Corporate Counsel, New Docs in Case of Ex-Glaxo In-House Counsel Lauren Stevens Reveal Other Lawyers' Roles (w/ a hat tip to Ivan Dominguez)

Ashby Jones, WSJ Blog, In Raj Trial, Prosecutors Go Back to the Tapes

Lance Williams, California Watch, SFGate, Barry Bonds trial: Expect a 'heavyweight' fight (w/ a hat tip to Ivan Dominguez)

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Upcoming Conferences

Overcriminalization 101: The Dodd-Frank Act as Case Study (Heritage Foundation, NACDL, Texas Public Policy) - Speakers are Andrew Wise (Miller & Chevalier) & Brian Walsh (Heritage Foundation) - Thursday, March 24, 2011, 12:00-1:30 p.m., Capitol Visitor Center, HVC-201  Please RSVP to Landon.Zinda@heritage.org  or (202) 608-6205 by Wednesday, March 23, 2011.

ABA Section of Litigation and Criminal Justice, April 13-15, Miami Beach, Florida here

20th Annual National Seminar on Federal Sentencing Guidelines, May 4-6, Orlando, Florida here

American Bar Association Criminal Justice Section Presents, A Town Hall Meeting on the State of White Collar Crime, April 15, 4:00 PM to 5:30 PM - Reception - 5:30 PM – 7:00 PM
Gansevoort Miami Beach 2377 COLLINS AVENUE, MIAMI BEACH, FL here

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Judge Denies Motion to Disqualify DOJ in Brown Case

The issue was raised here whether Lanny Breuer had a conflict in the James A. Brown case as his name appeared on the brief after he had recused himself. The government opposed defendant's motions to disqualify the DOJ and other motions related to this issue (see here). The court now has denied the appellant's motion to strike appellee's corrected brief, motion to disqualify all DOJ attorneys, motion to stay further proceedings, and motion for the appointment of an independent prosecutor. So it's much ado about nothing on this one.  The real issue, however, remains - was there a Brady violation in this case?  (see here) 

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Ninth Circuit - Exporting Thermal Imaging Cameras Requires License

In United States v. Guo, the defendant was convicted with knowingly and willfully conspiring to export, and attempting to export, ten export -controlled cameras to China without a license.  The defendant argued on appeal that the statute 50 USC s 1705 was too vague and thus there was a due process violation. The Ninth Circuit ruled that the complexity of a statute is not the same as vagueness.  Since the statute requires "that the person knew that he needed a license but did not get one," the court did not see a danger of someone violating the statute "unwittingly."

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In the News & Around the Blogosphere

DOJ Press Release, Former Colonial Bank Mortgage Lending Supervisor Pleads Guilty to Fraud Scheme

David Ingram, BLT Blog, Republicans Launch New Attacks on Deputy AG

Zoe Tillman, BLT Blog, Judge Denies Request to Move Trial for Alleged Ponzi Scheme Orchestrator to Florida

DOJ, Assistant Attorney General Lanny A. Breuer of the Criminal Division Speaks at the 3rd Russia and Commonwealth of Independent States Summit on Anti-corruption (he talks a good bit about the FCPA)

T. Markus Funk, WestlawJrl - White-Collar Crime, Charges that Sting: 'Honey Laundering' and the New Era of Obstruction Prosecutions

Chris Johnson, law.com, American Lawyer, Leaked Government Documents Reveal Weakening of U.K. Bribery Act

Andrew Longstreth, Reuters, White-collar wiretaps can lead to legal challenges

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Ninth Circuit Says Predicates for Section 1028A Are Merely Descriptive

A Ninth Circuit opinion in United States v. Harrell examines a question of first impression for the 9th Circuit: "whether the 'relating to' parentheticals within 18 U.S.C. s 1028A(c) limit the statute's otherwise clear articulation of which offenses may serve as predicates for application of s 1028(a)." Among the charges against Harrell were a charge of aggravated identity theft. The court held that "'relating to'parentheticals do not limit the statute's effect, but serve simply as descriptive aids."  Finding the plain text clear, the court did not "trudge through the deep mud of legislative history." Neither did the court use the rule of lenity.

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DOJ Says "Arrests Follow Largest Corporate Fraud Investigation" for Indiana

A DOJ Press Release says: "Three former executives of Fair Financial Company, an Ohio financial services business, were arrested today and charged in an indictment filed in the Southern District of Indiana for their roles in a scheme to defraud approximately 5,000 investors of more than $200 million."  The press release also states that "'These arrests follow the largest corporate fraud investigation in the history of the FBI in Indiana which resulted in over 5,000 victims and an estimated loss of $200 million dollars,'said Special Agent in Charge Welch."

Indy.com here.  Check out the picture - Was a perp walk really necessary in a case like this?

Indictment - Download Durham

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Government's Response in Brown - Just a Clerical Error

Discussed here is the alleged Brady violations in the James A. Brown case, a former Merrill Lynch executive who was convicted of perjury and obstruction and is contesting these charges on several grounds. Then posted here was a brief filed in the Brown case that argued concerning a possible conflict because Lanny Breuer's name appeared on the brief and he was conflicted out of the case.  The government now responds basically saying that this is just a clerical error.

Government's Brief - Download Filed Version of Government's Opposition to Brown's Motion to Strike

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Does Lanny Breuer Have A Conflict?

Discussed here is the alleged Brady violations in the James A. Brown case, a former Merrill Lynch executive who was convicted of perjury and obstruction and is contesting these charges on several grounds. So far the case has been fraught with issues. The government filed a corrected brief, not a confession of error, caused by some mathematical computation problems. Now it seems the corrected brief has Lanny Breuer's name on it. According to the defense brief filed by Counsel for James A. Brown (Daniel K. Hedges, Sidney Powell, and Torrence E. Lewis), Breuer used to represent a co-defendant and had been conflicted out of the case.  Is this an oops....

Brief of Defense - Download Motion to Strike Governments Brief FILED COPY

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Weyhrauch Mail Fraud Case Finally Dismissed

As noted here (KTUU.com, Weyhrauch Gets Fine, Probation in Corruption Case Plea) and also Becky Bohrer, Anchorage Daily News (AP),Weyrauch Gets Suspended Jail Sentence, $1,000 Fine , the Weyhrauch case is finally being resolved.  But lets look at what is happening here -

Weyhrauch was initially charged with an individual named Kott, who is now awaiting a ruling on whether his case will be dismissed for discovery violations. Perhaps we have a preview of the reasoning of the Ninth Circuit Court of Appeals by the decision last week in the Kohring case that found that the government had failed to provide Brady material to the defense. (see here, here, and here).

Weyhrauch's case went to the Supreme Court as one of three cases being examined as part of the "honest services" doctrine that prosecutors stretched to a point that the Court decided to place new limits upon -- requiring a showing of  "bribery and kickbacks."  In its ruling in Skilling, the Court did not directly address the question raised in the Weyhrauch case as to whether you needed a violation of state law for a mail fraud charge that uses honest services.  Rather the Court reframed the question with a new test of "bribery or kickbacks."  (see also here)

Now Weyhrauch is back in court pleading to the charge noted in the articles above.  In dismissing the federal case against him he filed a non-opposition to the motion to dismiss as follows:

"Weyhrauch non-opps the motion to dismiss for two reasons.  First, this was a very weak case from the beginning and all the evidence the government ever really had was that Weyhrauch had participated in, aided, or abetted a lobbyist engaging as a lobbyist without being registered.  See, attached Exhibit 1, Information and Plea Agreement.  Now that Weyhrauch has pled to that crime in state court, there are no longer facts to support a federal indictment.  Second, Weyhrauch believes there is evidence to support dismissal of the indictment because of "misconduct before the grand jury which returned the indictment against Weyhrauch." (reference to a letter filed under seal), which is filed under seal because it refers to grand jury testimony and other grand jury proceedings.  If the standard is that dismissal is appropriate when the ends of justice are served, then this case qualifies by any measure."

The more important question is:  Did the ends of justice warrant the federal government using the mail fraud statute to bring this alleged state case in the first place?

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In the News & Around the Blogosphere

KTUU.com, Weyhrauch Gets Fine, Probation in Corruption Case Plea (yes, that was one of the trilogy of cases that went with Skilling to the Supreme Court)

DOJ Press Release, UBS Client Sentenced in San Diego for Hiding Assets in Secret Bahamian and Swiss Bank Accounts; Edvard Pettersson, Bloomberg Businessweek, UBS Client in San Diego Gets Probation for Hiding Accounts

Sue Reisinger, Corporate Counsel, law.com, WikiLeaks Release Prompts Call for Probe of BAE Saudi Arms Deal

David Ingram, BLT Blog, Chamber Hires Mukasey to Push FCPA Changes

Jeremy D. Frey, Hold ’Em or Draw: The Strange Case of U.S. Enforcement Efforts Against Internet Gambling and Peer-to-Peer Poker - (originally White Collar Crime Report)

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Holder on Health Care Fraud

AG Holder speaking at the Detroit Health Care Fraud Prevention Summit stated:

"In just the last fiscal year, we obtained settlements and judgments amounting to more than $2.5 billion in False Claims Act matters alleging health care fraud – the largest annual figure in history and an increase of more than 50% from fiscal year 2009.  We also opened more than 2,000 new criminal and civil health care fraud investigations, reached an all-time high in the number of health care fraud defendants charged, stopped numerous large-scale fraud schemes in their tracks, and returned more than $2.5 billion to the Medicare Trust Fund and more than $800 million to cash-strapped state Medicaid programs."

Full press release here.

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