Friday, June 17, 2011

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Monsanto and More: Ethical Tactics for Getting Paid When the Government Gets There First,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

One of two breakout sessions, this session explored the pre-conviction restrain of assets and how to get paid.  Led by John D. Cline, the panel included Mary McNamara and AUSA Steven R. Welk.

John Cline began the discussion with a hypo of an indicted individual who has millions of dollars that the government believes were garnered through criminal activity.  Mr. Welk presented the government’s perspective and outlined the steps taken to identify the assets the government believes can be tied to the charged crimes.  Typically this involves going to the Magistrate and obtaining seizure warrants for assets and then seizing them.  If it involves real property, then they will go get a lis pendens.

Mr. Cline asked about ex parte restraining orders and when and how the government uses them.  Mr. Welk explained that once he obtains the restraining order, he will typically approach the counsel for the client, inform them of the order, and then set up a plan.  Typically the parties sit down and work out the issues together.  Mr. Welk noted that going in ex parte can be extremely disruptive to the business and that is why the defense is willing to sit down.  However, there is always a concern that the assets could disappear if the government does not come in strong.

Mr. Cline then sought the defense perspective from Ms. McNamara—what steps she takes when faced with an ex parte restraining order.  She would first seek out help from an experienced forfeiture lawyer.  This is because this process is quite draconian and it allows the government to basically step into the defendant’s shoes.  However, given the practicality of the temporary restraining order, where the government must show its cards, the parties are usually willing to come to the table and talk.

A member of the audience asked about money that the lawyer already has, such as a retainer.  Mr. Welk explained that there is a wide diversity of views on how to handle this situation.  He will typically sit down with the attorney and work out an arrangement, typically involving a return of a portion of the money.

Ms. McNamara noted that there has been an uptick in asset forfeiture since the Madoff case but Mr. Welk noted that it was really a coincidence of timing.  Rather, he noted that the uptick was a product of at least five years of work by the Asset Forfeiture Working Group.  It just happened that their work aligned with the Madoff case.

Mr. Cline then asked the panelists to discuss negotiations that frequently happen in order to avoid an evidentiary hearing.  Both parties usually go in hoping to cut a deal and come out with a clear plan.  Ms. McNamara explained that the government typically comes in with a pragmatic approach, but that is not always the case.

The panelists engaged with the audience on the interaction between bail and forfeiture, the potential conflict for the defense attorney in seeking to protect the client’s assets in general and specific to defense fees, and the question of government authority over third-party assets.  Mr. Welk noted that while the government has authority to seize third-party assets, but the courts don’t like that.

Mr. Cline closed the panel with a discussion the potential for prosecutors to clawback fees that have been unfrozen for defense.  Mr. Welk said this is rare and there are other venues to explore, one of which is a strongly worded letter to counsel explaining that it is the government’s belief that all the client’s money comes from illegal activity and thus any money accepted may be subject to forfeiture.  There is serious debate over the use of these letters, but defense counsel should be aware of them and on the lookout.

(dt)

June 17, 2011 in Attorney Fees, Conferences, Defense Counsel, Legal Ethics | Permalink | Comments (0) | TrackBack (0)

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “The Accidental Felon: Challenging The Expansion of the Willful Blindness Doctrine,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

One of two breakout sessions, two speakers (Timothy O’Toole and Professor Ellen S. Podgor) reviewed the ever-broadening scope of the willful blindness doctrine and proposed several defenses and counter-attacks to this brutally successful prosecutorial tactic.

The speakers opened by discussing a recent U.S. Supreme Court case, Global-Tech Appliances, Inc. v. SEB S.A. Though this is a patent infringement case, the Court addresses the scope of the criminal law willful blindness doctrine. The Court notes that the instruction has been applied to a wide variety of cases, but sets forth two universal requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact. The Court affirmed, holding there was sufficient evidence that the patent infringer was willfully blind under the criminal law standard.

Professor Podgor began by reviewing U.S. v. Jewell, the Ninth Circuit case most commonly cited as setting forth the law on willful blindness. Professor Podgor noted that Justice (then Judge Kennedy) dissented in the 9th Circuit decision in Jewell, and that he again found himself (this time alone) in the dissent in Global-Tech.

Mr. O’Toole noted that the use of willful blindness in white collar cases (even though it originated in a drug case) is an excellent example of why white collar defense attorneys should not wall themselves off from other areas of criminal defense.   With respect to Global-Tech, he noted that the second requirement of “deliberate action” appears to narrow the scope of willful blindness in comparison to existing circuit case law. The Supreme Court itself emphasized this requirement in its analysis, noting that the Federal Circuit was in error in not requiring deliberate action.

Professor Podgor emphasized the strength of the language used by the Supreme Court in this case. Powerful jury instructions can and should be crafted based upon the Global-Tech. Mr. O’Toole seconded these comments, pointing out that the willful blindness doctrine is often relied upon by the government in cases where evidence of deliberate actions is non-existent. He questioned whether any circuit’s pattern instruction remains valid in light of a universal failure to include a requirement of “deliberate actions” to avoid learning of the key fact(s). He also noted that the Supreme Court didn’t merely indicate that recklessness or negligence wasn’t sufficient, but actually set forth the definitions of those two mental states, and suggested that proposed jury instructions should do the same.

One questioner asked whether the improvement in the legal standard was so great that defense counsel should ask for this instruction, to allow focus on the absence of deliberate actions. Both speakers cautioned against it.

(dt)

Postscript -  Mentioned in this session was a wonderful article by Dane C. Ball (Gerger & Clarke) titled, Improving "Willful Blindness" Jury Instructions In Criminal Cases After High Court's Decision in Global-Tech, published in the BNA Criminal Law Reporter. With many thanks to Dane C.  Ball and the Criminal Law Reporter for allowing us to post it here - Download BNAinsights.Ball2

(esp)

June 17, 2011 in Conferences, Fraud | Permalink | Comments (0) | TrackBack (0)

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Navigating the Wilderness of Mirrors: National Security Issues for the White Collar Lawyer,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

Day two of the seminar started with a discussion of the issues that arise when classified information is implicated in a white collar case. Led by John D. Cline, the panel consisted of Deborah Boardman, Matt Apuzzo (of the Associated Press), Joshua L. Dratel, Ross H. Garber and Nancy Hollander.

John Cline began the discussion by reviewing the Classified Information Procedures Act (“CIPA”) and the Foreign Intelligence Surveillance Act (“FISA”).

Mr. Garber suggested that there are a number of cases in which defense attorneys don’t realize that national security information is implicated. This is for many reasons, including unfamiliarity with the statutes involved and an increasingly aggressive use of FISA and national security related charging decisions by the government. The increased numbers of FISA warrants granted and their revealed use in non-“terrorism” cases (money laundering, export violations, FCPA, among others) were cited in support. Mr. Apuzzo noted that the potential for these issues to arise in cases is often underestimated. The scope of the government’s use of its surveillance powers is constantly increasing.

Mr. Dratel noted that an increasing amount of information has been designated classified, leading to this increase in cases with these issues. Once information is classified, however, a Judge cannot declassify it. There are administrative procedures available, but they are impractical for most cases due to timing. Once classified information is involved, CIPA is going to be the sole avenue of relief. He further noted several examples of the “tactical” use of classification and CIPA by the government, including the use of section 4 of CIPA (which allows the government to submit potentially exculpatory classified material to a Judge for review prior to any disclosure).

Ms. Hollander noted tactical de-classification was also a weapon in the government’s arsenal. She also added that FISA includes more than that wiretapping authority: it includes sneak and peek warrants, email, among other powers. Another hurdle caused by classification arises, she noted, in the context of obtaining security clearances for experts, an additional time-consuming burden imposed in these cases. Deborah Boardman noted that the delay in getting clearances can apply to anyone on the defense team that an attorney wants or needs to have access to classified material in order to effectively defend the client.

Many of these practical problems are best understood by using a case study method. To facilitate that, Ms. Boardman used her recent litigation in U.S. v. Thomas Drake to review these problems and how navigating CIPA enabled her excellent result. Mr. Cline and Ms. Hollander also commented upon the practical problems. The role of Classified Information Security Officers as neutral problem solvers was emphasized. John Cline described them as “the best bunch of problem solvers I have ever run across,” a description with which anyone who has ever dealt with them will readily agree.

Mr. Garber, characterizing these problems as “fun”, described the FISA procedure for challenging the warrant. Unlike traditional search warrant applications, FISA applications are not routinely provided to defense counsel. There is a procedure for requesting the application for the warrant. No such request has ever been granted in 30 years.

Ms. Hollander noted a new problem with FISA warrants: they may continue after indictment. She emphasized that if the FISA information is not going to be used by the government, the existence of the wiretap won’t even be disclosed.

In conclusion, Mr. Apuzzo spoke about the problems of reporting on national security cases. He noted reporters actually have several advantages in understanding these cases. For example, because defense counsel receives only a well-defined set of information, they often miss the larger picture, whereas reporters who work on these cases are often more able to quickly understand the significance of new disclosures. He also indicated that communicating effectively with the media is especially important where a case may have (or appear to have) national security implications. Nancy Hollander emphasized Mr. Apuzzo’s points, emphasizing that a good reporter can often find information that defense could never find.

(dt)

June 17, 2011 in Conferences, Defense Counsel | Permalink | Comments (0) | TrackBack (0)

Thursday, June 16, 2011

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Finding the Line: Ethical Considerations When Contacting and Interviewing Witnesses,” Thursday, June 16, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

Day One of the seminar concluded with a panel discussion of the various ethical pitfalls surrounding the interviewing of witnesses. Patrick Robbins moderated the discussion. The panel included Blair G. Brown, David Fechheimer, Nina J. Ginsberg, Marc S. Harris, and Steven Singer.

The panel first discussed hypotheticals involving a lawyer who first represents a company (through an audit committee) under investigation.  Ms. Ginsberg pointed out the first potential conflict that lawyers face when interviewing employee witnesses under these circumstances is that the witness’s interests may be adverse to the company client. She further noted that such adverse interests would preclude dual representation as well. She discussed the burdens the model rules place upon lawyers interviewing witnesses. Model Rule 4.3 requires an explanation of the lawyer’s role, prior to interviewing, where the witness may be confused regarding the lawyer’s role, and that this explanation approaches that required by Miranda warnings. As Mr. Brown noted, these warnings are in the interest of the lawyer as well, as they will protect the company and the lawyer from subsequent motion, though he doubted that the warnings ever approach the standard of Miranda. The panel agreed that the overriding goal of representing the company by ferreting out information, and convincing the government that the company is being aggressive in its investigation, runs directly contrary to strong warnings. Marc Harris noted that it was common to demand cooperation from employee witnesses, upon threat of termination.

The panel discussed the problems presented by the question: “Should I get a lawyer?” Everyone agreed that the question required the lawyer to walk a fine line. The lawyer should not give the witness legal advice by opining whether a lawyer is a good idea, but must accurately answer that the witness has the option to get a lawyer.

The next hypothetical involved a lawyer advising an AUSA that he represents all current employees of the corporation and the current and former CFO and CEO, but the AUSA sends the agents to interview the employees. Mr. Brown started his response by cautioning against such blanket assertions of representation unless the facts truly warrant it. He continued by noting that the state ethics rules may provide the best barrier to this kind of conduct.  The panel agreed, with Mr. Singer noted that many state ethics rules specifically include corporate employees as represented parties.

Marc Harris noted that another fine line exists when advising all employees of a company that they need not talk to agents, and that flatly advising against it may constitute obstruction of justice. Ms. Ginsberg further cautioned that it created an impression on the part of the employees that they are being represented. Mr. Brown noted that Model Rule 8.4 allows a lawyer to advise a client’s employee not to talk to an adverse party.

One questioner noted that the trend toward “hyper-co-operativity” on the part of companies has only aggravated the problems faced by the employees on the other side of the hypotheticals discussed.
Another questioner asked about government pressure to not interview government witnesses. Mr. Singer commented that such efforts to intimidate the defense must not be allowed to succeed, and discussed taking steps to protect oneself during those scenarios, i.e., having multiple people present for any interviews.

The final hypothetical involved a grand jury witness taking the 5th Amendment privilege to protect another individual and advising the lawyer he was doing so. Mr. Harris indicated that this is not problematic, but, advising a witness to do so might constitute obstruction of justice, especially if that advice was motivated by a desire for financial gain by securing further employment by the corporation at issue.

(dt)

June 16, 2011 in Conferences, Defense Counsel, Investigations, Legal Ethics | Permalink | Comments (0) | TrackBack (0)

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Twitter, Facebook & Google in the Courtroom: High Profile Defense in Real Time,” Thursday, June 16, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

The seminar opened with a discussion of the intersection between the internet (especially so-called “social media”) and the courtroom. The discussion was moderated by Gail Shifman, and the panel included Leslie R. Caldwell, Rusty Hardin, Dennis P. Riordan, and Allen J. Ruby.

The panel started by discussing cases with intense media scrutiny. High profile cases can arise due to the notoriety of the client, as was the case with Mr. Ruby’s former client Barry Bonds. But as Ms. Shifman noted, any kind of case or defendant can become notorious, as the glare of the media spotlight can be prompted by the facts of the case.  The skills discussed can be required by cases in any criminal defense practice.

Mr. Hardin stressed determining early in the case to what extent the client’s reputation in the community is especially important, i.e., a celebrity or politician, and if so, react more proactively in media response. He stressed that the storyline of the case for the media will be set very early, perhaps in the first 36 hours, and will be repeated as the media updates the story.

Mr. Ruby spoke about a client’s concerns when under the spotlight: a strategy that repairs damage to reputation, to the extent possible. The internet has changed the game in many ways, but one is that it never forgets: every news story remains preserved for future searches, making “weathering the storm” less viable of a strategy than in years past.

Mr. Riordan discussed picking potential media outlets to suit your strategy: not every client and case will benefit from a discussion with Nancy Grace or her ilk, but some will.  Different kinds of print media and bloggers are well suited to other kinds of cases.

Multiple panelists referenced the Duke rape case as one of the finest examples of excellence in media strategy. The choice of media, themes and messengers were all lauded.

Where reporters are pressing attorneys for comments, but public comments would not be beneficial (i.e., are part of the media strategy), off-the-record or background comments to the press may be useful, either to “hold them at bay” or to begin to influence the media coverage of a case. Where attorneys are gagged not by strategy, but by court order, motions can be drafted to convey the client’s position.

Another point stressed by multiple panelists was that the jury will remember what the lawyers say, and therefore attorneys should be careful before they make specific factual assertions in the press.

The panel discussion turned to specific social media issues. Use of social media research on witnesses or jurors was discussed, and it was noted that the use of third persons to surreptitiously access Facebook pages has been repeatedly characterized as unethical in numerous bar opinions.

Jury control in the age of social media and internet saturation was discussed. All panelists agreed that ordinary jury admonitions on these topics are seemingly “not processed” by jurors: it is simply unfathomable to not use the internet. Suggestions included requesting Facebook and Twitter information from prospective jurors (perhaps being given only to the court), or requesting the strongest possible judicial warnings to jurors.

(dt)

June 16, 2011 in Celebrities, Conferences, Defense Counsel, Media | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 15, 2011

Will the “Blame the Man” Claim Help?

Danielle Chiesi, the Wall Street blond bombshell who gave new meaning to the term “insider trading” by extracting from sexual partners confidential information which she relayed to convicted inside traders Raj Rajaratnam and Mark Kurland, is reportedly seeking a downward variance from a Sentencing Guideline range of 37-46 months, in part because her wrongdoing resulted from her “toxic” sexual relationship with Mr. Kurland. Ms. Chiesi’s sentencing memorandum highlights a letter from her current boyfriend which contends that Mr. Kurland, her twenty-year lover, exploited her and turned her into his “virtual servant.” Ms. Chiesi seeks to be sentenced to no more than the 27-month term that had been imposed upon Mr. Kurland.

Ironically, one of Ms. Chiesi’s lovers/sources, former IBM executive Robert Moffatt, now serving a six-month sentence for providing confidential information to Ms. Chiesi, at sentencing blamed Ms. Chiesi for manipulating him.

It will be interesting to see whether this “blame the man” explanation strikes a responsive chord with sentencing Judge Richard J. Holwell. Historically, women have received more lenient sentences than men for similar conduct, and the “blame the man” defense frequently worked at sentencing. However, that record was largely compiled with a male-dominated judiciary where some might have condescendingly viewed women as the “weaker sex.” Given changing societal and judicial views (and non-discriminatory mandatory sentences and sentencing guidelines), I suspect that differential has diminished considerably.

(Goldman)

June 15, 2011 in Insider Trading, Sentencing | Permalink | Comments (1) | TrackBack (0)

Monday, June 13, 2011

100 Years of White Collar Crime in 'Twitter'

My forthcoming article in the University of Texas, Review of Litigation, is titled  "100 Years of White Collar Crime in 'Twitter.'"   It is available on SSRN here

The Abstract states:

"Despite the fact that Twitter did not exist when the term “white collar crime” was coined in 1939, it is an interesting exercise to highlight the last 100 years of white collar criminal activity using “tweets.” In so doing, this Essay tries to capture some of the key events that have been prominent in the white collar world.

"This Essay first examines corporate criminal liability, looks next at individual liability, and then discusses key statutes and crimes that have been used in the prosecution of white collar criminal activity. In this regard, mail fraud, RICO, and perjury are examined. Sentencing issues and how they have influenced the treatment of white collar crime are tweeted. The ultimate goal of this fictional presentation is to demonstrate a historical overview of white collar crime happenings and is so doing evaluate its progression over time."

(esp)(blogging from Lenox, Massachusetts)

June 13, 2011 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, June 12, 2011

Conferences - Lake Tahoe - NACDL White Collar Crime - Turning the Tables on the Government

June 16-17 - Lake Tahoe-  First Annual West Coast White Collar Conference - Download West Coast WCC Brochure  For more information and to register - here

(esp)

June 12, 2011 in Conferences | Permalink | Comments (0) | TrackBack (0)

In the News & Around the Blogosphere

Friday, June 10, 2011

Civil Insider Trading - Monetary Penalties

Second Circuit holds in SEC v. Rosenthal - "civil monetary penalties for insider trading are not available under section 21(d)(3) of the Exchange Act."

(esp)(hat tip to Lawrence S. Goldman)

June 10, 2011 in Judicial Opinions, SEC | Permalink | Comments (1) | TrackBack (0)

Thursday, June 9, 2011

Khuzami's Complaint

The United Jewish Appeal-Federation of New York has a Criminal Law Group. Wow. I never knew. SEC Enforcement Director Robert Khuzami recently spoke to its members about questionable tactics routinely engaged in by white collar lawyers (and their clients) during SEC Enforcement Division proceedings. Khuzami's Speech is troubling as it reveals clearly unethical and potentially illegal behavior, including: improper signalling to witnesses regarding substantive testimonial responses, representation of multiple witnesses with clearly adverse interests, representation of multiple witnesses who adopt virtually identical and implausible explanations of events, witnesses who "don't recall"  dozens of basic and uncontroverted facts documented in their own writings, scorched earth document production, suspect recantation of damaging testimony after deposition breaks, and window-dressing internal investigations that scapegoat mid-level employees. Khuzami laments these tactics and notes that they often backfire by increasing Enforcement Division skepticism of the entity or person under investigation and by damaging the future credibility of counsel who encourage such behavior. But employment of at least some of these brazen tactics should do more. The people and entities who engage in them should go straight to secondary, as they say at the border. If this had been done in Bernard Madoff's case, after he was caught red-handed lying during a regulatory examination, his fraud would have been uncovered years ago. The message from the SEC should be clear. You don't get to lie or obstruct justice during Enforcement Division investigations or SEC exams. Hat tip to Jonathan Hardt of Wilmer Hale for bringing this speech to my attention.

(wisenberg)

June 9, 2011 in Civil Enforcement, Investigations, Legal Ethics, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 8, 2011

The Cost of Cooperation – Redux

Guest Blogger - Lawrence S. Goldman - Law Offices of Lawrence S. Goldman

In her blog piece on June 5, 2011, Prof. Ellen Podgor asked, “[I]s the cost of cooperation worth it?”  Her particular focus was on the suicide of a former Wall Street trader two days after a tape he had surreptitiously recorded as a government cooperator was played at trial.

On a more global basis, the widespread prosecutorial (and judicial) practice of giving favorable treatment in white-collar and other cases to those who cooperate with the government by informing, taping and/or testifying has had in many ways a pernicious effect on the criminal justice system, particularly in the white-collar area.  It has weakened the deterrent effect by institutionalizing an escape valve from serious punishment for wrongdoers, has facilitated overcriminalization and the expansive interpretation of existing law by the Inquisition–like requirement that accused wrongdoers admit criminality in order to escape serious punishment, and it has substantially transformed the practice of criminal law, at least in the white-collar area, from an adversarial system in which defense lawyers challenged the government’s proof into one in which defense lawyers are more likely to serve as adjunct prosecutors in seeking deals for their clients to cooperate with the government.

In subsequent blogs, I hope to discuss the process and effects of cooperation in greater detail.

(lsg)

June 8, 2011 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 7, 2011

In the News & Around the Blogosphere

Milton J. Valencia, Boston Globe, DiMasi lawyers seek case dismissal

Gina Passarella, The Legal Intelligencer, law.com,Former CHOP GC Charged With Mail Fraud, Money Laundering 

Squire Sanders Continues to Expand Its Global White-Collar Defense Practice With Another Seasoned Fraud Prosecutor - Former Assistant US Attorney Thomas E. Zeno Brings More Than 25 Years of Experience in Fraud Prosecutions and Investigations

David Voreacos, Bloomberg-Busines Week, Goldman Sachs Criminal Probe May Use Powerful New York State Law

David Markiewicz, Atlanta Jrl Constitution, Ex-Omni Bank exec gets 21 months in prison

DOJ Press Release, FORMER OWNER OF ILLINOIS TECHNOLOGY COMPANIES PLEADS GUILTY IN MULTI-STATE SCHEME TO DEFRAUD THE FEDERAL E-RATE PROGRAM -Schools in Arkansas, Illinois and Louisiana Affected by Scheme

Brian Baxter, ALM, On Edwards Indictment, Am Law 200 Ranks Include Plenty of Skeptics (with a hat tip to John Wesley Hall)

Amanda Bronstad, Nat.L.J., Figure in FCPA prosecution negotiates reduced sentence

Colin MIller, Evidence Prof Blog, Legally Blind?: Supreme Court Attempts To Clarify The Willful Blindness Doctrine

David Sell, Philly.com, Prison Term Sought For Four Over Deadly Medical Tests

DOJ Press Release, Two New Jersey Dietary Supplement Companies and Their Principals Found Guilty of Criminal Contempt

Mike Scarcella, BLT Blog, Former Blackwater Guards Challenge Appeals Court Ruling

60 Minutes, The Speed Traders

KPMG, Global Anti-Bribery and Corruption Survey 2011 - Download 23816NSS_ABC_Srvy_v15_WEB

(esp)

June 7, 2011 | Permalink | Comments (0) | TrackBack (0)

Monday, June 6, 2011

Do You Really Need Five DOJ Lawyers to Prosecute John Edwards

A key problem when a DC Prosecution team is sent in to investigate and perhaps indict on conduct, is that they examine the conduct out of the context of the typical case seen in the local U.S. Attorneys' Office.  They don't see the run-of-the-mill drug, immigration, or fraud case that typically comes through the U.S. Attorneys' Office. They become champions of a single or multiple case that they investigate, and with a single lens proceed or not proceed with their cause. 

One has to wonder if this may be playing a part in the John Edwards prosecution.  Mike Scarcella, over at the BLT Blog, notes here that the Public Integrity prosecutors are teaming up with some local prosecutors in this case. But it seems according to his blog entry that "a former chairman of the Federal Election Commission," is saying that the alleged activity is not criminal - and is not even a civil violation.

Whether the prosecutors, or Edwards and his defense team and others, are correct on whether this is a crime or even civil violation, is only half the problem. The other half is why are five lawyers from the department of justice working on an alleged election violation case.  There is some real crime out there - even some real white collar crimes like identity theft and credit card fraud.  Wouldn't our tax dollars be better spent on this?

(esp)   

June 6, 2011 in Celebrities, Investigations, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wesley Snipes - Cert Denied

The United States Supreme Court denied certiorari in the Wesley Snipes case (for background see here). His Petition to the highest court had raised questions regarding proof of venue in failure to file criminal tax cases. The next possible step would be for him to file a Motion to Vacate under 28 U.S.C. 2255.

See Order - Download Snipes

(esp)

June 6, 2011 in Celebrities, Tax | Permalink | Comments (0) | TrackBack (0)

Sunday, June 5, 2011

The Cost of Cooperation

Is the cost of cooperation really worth it?  In some instances you get a 5K1.1 motion that offers a reduction in sentence for substantial assistance.  In some cases you get the benefit of arguing to the court for a lower sentence.  And in some matters, it may even provide a basis for a non-prosecution. 

But what does this all mean for the person cooperating?  What are the internal costs that this person suffers? This sad story tells it all - Peter Lattman & William K. Rashbaum, NYTimes, A Trader, an F.B.I. Witness, and Then a Suicide

(esp)

June 5, 2011 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (1) | TrackBack (0)

Friday, June 3, 2011

Edwards Indicted

According to a DOJ Press Release, it's a 6-count indictment "for allegedly participating in a scheme to violate federal campaign finance laws."  "The indictment, returned in the Middle District of North Carolina, charges . . . . one count of conspiracy to violate the federal campaign finance laws and to make false statements to the Federal Election Commission (FEC); four counts of accepting and receiving illegal campaign contributions from two donors in 2007 and 2008; and one count of concealing those illegal donations from the FEC."  The press release states:

"According to the indictment, while a candidate for President of the United States, Edwards conspired with other individuals to accept and receive campaign contributions in excess of limits imposed by the Federal Election Act in an effort to protect and advance his candidacy from disclosure of an ongoing extra-marital affair and the resulting pregnancy.   The indictment alleges that between 2007 and 2008, Edwards accepted and received more than $900,000 as part of this effort."

Some thoughts: 

1) This is a technical case - reporting requirement - is it really necessary to have 6 counts? Did the DOJ include conspiracy in the hopes that they could secure a plea or alternatively if going to trial - get the jury to at least compromise by convicting on one count?

2) The affair will likely not play well with a jury. But on the other hand, isn't he needed now as a father?

3) Should this be criminal?  Even if he improperly handled his campaign finances - which we do not know at this point - couldn't this be more appropriately handled via a civil action that would recover the money with penalties.  Do we really need to clog up our criminal dockets with this kind of case.

(esp)

June 3, 2011 in Celebrities, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Thursday, June 2, 2011

Will Strauss-Kahn’s Bail Conditions be the Norm?

Guest Blogger - Lawrence S. Goldman - Law Offices of Lawrence S. Goldman

Dominique Strauss-Kahn is not accused of a white-collar crime, but he is a prototypical white-collar defendant – important, rich, and well-connected.  

Strauss-Kahn, a French citizen accused of attempted rape and other crimes, was denied bail at his arraignment by a New York City lower court judge.  A major justification was that France (like Germany, China, Japan, and many other nations) will not extradite its nationals.  Subsequently, Strauss-Kahn’s experienced and able attorneys, desperate to get him released, proposed a highly onerous bail package, which a higher court judge accepted over the prosecutor’s strenuous objection.  That bail package consists of a $1 million cash bond, an additional $5 million bond secured by a home owned by Strauss-Kahn’s wife, home confinement in New York City with an ankle bracelet, inside and outside video cameras, and even a 24/7 armed guard (Why armed?  To shoot him if he tries to escape?  To prevent the French foreign legion from freeing him?).  These security measures reportedly will cost $200,000 a month.  Strauss-Kahn, like all persons confined at home pre-trial, will receive no jail credit for his period of house arrest.

One wonders whether Strauss-Kahn’s bail conditions will become a prototype for bail conditions for major white-collar defendants, at least those with foreign or multi-national citizenship (an increasing number with the expansion of both the global economy and prosecutorial jurisdictional reach).  The setting of bail is perhaps the most unguided and unpredictable of judicial decisions.  Judges have wide discretion, amorphous standards, and, at least initially, generally little information about the case and the defendant.    It is to be expected that judges will look for similar cases or similar defendants for a model.  And, as recent history has shown, the most aggressive and/or harsh prosecutorial practices employed in the prosecution of violent and drug crimes (lengthy sentences, seizure of assets, restriction of counsel fees, eavesdropping and the like) soon work their way into the area of white-collar prosecution.  If the Strauss-Kahn bail conditions become a standard, we can expect severe and restrictive home confinement bail conditions for white-collar defendants.

(lsg)

June 2, 2011 in Celebrities, International, News, Prosecutions | Permalink | Comments (3) | TrackBack (0)

Wednesday, June 1, 2011

Supreme Court Speaks About Willful Blindness

The Supreme Court issued an opinion in the case of Global-Tech Appliances, Inc. v. SEB S.A., a civil patent infringement case. A key issue was whether under 35 U.S.C. s 271(b), a party "must know that the induced acts constitute patent infringement." This case, however, is extremely important for the white collar practitioner and other criminal law practitioners who have cases with willful blindness issues. Willful blindness has been a recent concern in the white collar realm because a CEO, CFO, or other corporate executive may be claiming that he or she did not know about the questioned criminal conduct.

In Global Tech, the Court outlines its position for purposes of both criminal and civil law stating that "[o]ur Court has used the [Model Penal] Code's definition as a guide in analyzing whether certain statutory presumptions of knowledge comported with due process. . .  And every Court of Appeals -- with the possible exception of the District of Columbia Circuit ...-- has fully embraced willful blindness, applying the doctrine to a wide range of criminal statutes." (citations omitted)  The Court later states:

"While the Courts of Appeals articulate the doctrine of willful blindness in slightly different ways, all appear to agree on two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact. We think these requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence. Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts. . . . By contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing, see ALI, Model Penal Code § 2.02(2)(c) (1985), and a negligent defendant is one who should have known of a similar risk but, in fact, did not, see § 2.02(2)(d).

"The test applied by the Federal Circuit in this case departs from the proper willful blindness standard in two important respects. First, it permits a finding of knowledge when there is merely a "known risk" that the induced acts are infringing. Second, in demanding only "deliberate indifference" to that risk, the Federal Circuit's test does not require active efforts by an inducer to avoid knowing about the infringing nature of the activities."

Justice Kennedy dissents. He states, "[h]aving interpreted the statute to require a showing of knowledge, the Court holds that willful blindness will suffice. This is a mistaken step. Willful blindness is not knowledge; and judges should not broaden a legislative proscription by analogy."  He also states: "[t]he Court appears to endorse the willful blindness doctrine here for all federal criminal cases involving knowledge. It does so in a civil case where it has received no briefing or argument from the criminal defense bar, which might have provided important counsel on this difficult issue."

Tim O'Toole and I will be speaking more about this case and issues of willful blindness at the upcoming NACDL Conference in Tahoe here.

(esp)(w/ a hat tip to Tim O'Toole)

June 1, 2011 in Judicial Opinions, Prosecutions | Permalink | Comments (0) | TrackBack (0)

New Book - Fraudulent Intentions

Scott Hilsen, a lawyer and certified fraud examiner in Atlanta, has written his first novel.  It is described as a novel "based on the true story of a corporate deal gone bad and the internal investigation that exposed a shocking online fraud." For details see here.

Hilsen is a partner at Alston & Bird - see here.   

(esp)

June 1, 2011 in Books | Permalink | Comments (0) | TrackBack (0)