Wednesday, December 31, 2014

2014 White Collar Crime Awards

Each year this blog has honored individuals and organizations for their work in the white collar crime arena by bestowing "The Collar" on those who deserve praise, scorn, acknowledgment, blessing, curse, or whatever else might be appropriate.

With the appropriate fanfare, and without further ado, The Collars for 2014:

The Collar for Attempting to Make the Guinness Book of Records for the Longest Investigation - To Congress for its continued investigation of the IRS.

The Collar for Trying to Be Best Actor in the “Mirror Has Two Faces”– To corporate counsel who think they can represent individuals in a corporation or academic institution while continuing to represent the entity  

The Collar for Continually Hitting the Snooze Button on the Wakeup Alarm – To the Sentencing Commission for putting off for years the recognition that something needs to be done about Sentencing Guideline 2B1.1  

The Collar for Trying to Build the Economy – To DOJ for reaching huge dollar settlements with companies and banks.

The Collar for the Largest Fireworks End of Year Show – To Alstom and DOJ for reaching a $772 Million Settlement

The Collar for Getting Out When the Going is Good – To AG Holder who tendered his upcoming resignation after announcing important clemency initiatives

The Collar for the Case Most Needing Review - Virginia Governor Bob McDonnell’s conviction   

The Collar for Forgetting What Happened to Humpty Dumpty – To US Attorney Preet Bharara for going too far with insider trading prosecutions

The Collar for the Most Indecipherable Code – To whoever is trying to determine the meaning of how to define insider trading

The Collar for Least Likely to be Teaching Professional Responsibility at a Law School -- The former attorneys at Dewey & LeBoeuf who plead guilty

The Collar for Breaking the Rubber Band When It Was Stretched Too Far – To the DOJ for trying to use the Sarbanes Oxley Act to prosecute a fisherman who threw fish overboard.

The Collar for Role Reversal -To Sidney Powell, who is a female, for her scintillating book Licensed to Lie that exposed prosecutorial shenanigans, but also critiqued the physical characteristics and attire of her DOJ litigation opponents

The Collar for the Most Likely to Fall in a Dominos Game – Anyone who was associated with Bernie Madoff.

The Collar for Justice Finally Served-To the Texas Court of Criminal Appeals that overturned the one remaining Tom DeLay conviction in an 8-1 decision.

The Collar for Most Political District Attorney’s Office -To the Travis Country District Attorney’s Public Corruption Unit. Not satisfied with its humiliating appellate defeats in the Tom DeLay case, the office is now investigating University of Texas System Regent Wallace Hall in a politically inspired witch-hunt.

The Collar for White Collar Integrity-To U.T. System’s outside counsel Phil Hilder whose written report exposed the legal absurdity of the Texas Legislature’s Wallace Hall witch-hunt referral.

The Collar for the Least Likely to Put Up a Fight – To companies charged with Antitrust violations -- that had no trials and 100% of its convictions through plea agreements.

The Collar for Best Non-Fiction -To Rob Cary’s Not Guilty: The Unlawful Prosecution of U.S. Senator Ted Stevens, which builds a devastating critique of the DOJ’s trial team.

The Collar for the Best Child– To Don Siegelman’s daughter, who continues to fight to Free Don

The Collar for the Best Parent - Retired years ago and renamed the Bill Olis Best Parent Award –not awarded again this year since no one comes even close to Bill Olis, may he rest in peace.

(wisenberg), (goldman), (LED), (esp)

December 31, 2014 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Thursday, December 11, 2014

Two Views on Second Circuit's Insider Trading Decision

Here are two (ahem) differing views on yesterday's Second Circuit insider trading decision in United States v. Newman. The Wall Street Journal editorial writers are understandably happy at the ruling and contemptuous of Preet Bharara, dubbing him an Outside the Law Prosecutor. The Journal exaggerates the extent to which the case was an outlier under Second Circuit precedent and incorrectly states that "the prosecution is unlikely to be able to retry the case." The prosecution cannot retry the case, unless the full Second Circuit reverses the panel or the U.S. Supreme Court takes the case and overturns the Second Circuit.

Over at New Economic Perspectives, Professor Bill Black insists that the Second Circuit Makes Insider Trading the Perfect Crime. Black thinks Wall Street financial firms will enact sophisticated cut-out schemes in the wake of the opinion to give inside traders plausible deniability. He compares the fate of Newman and his co-defendant to that of Eric Garner and calls for a broken windows policing policy for Wall Street. Black's piece is outstanding, but in my view he underestimates the extent to which the Newman court was influenced by Supreme Court precedent and ignores the opinion's signals that the government needed to do a much better job of proving that the defendants knew about the tipper's fiduciary breach. As a matter of fact, in the typical insider trading case it is relatively easy to show such knowledge. That's what expert testimony and willful blindness instructions are for. 


December 11, 2014 in Fraud, Insider Trading, Investigations, Judicial Opinions, Prosecutions, Prosecutors, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 10, 2014

Second Circuit Reverses Insider Trading Convictions And Sets New Bar For Tippee Criminal Liability

The Second Circuit's decision in United States v. Newman is out. The jury instructions were erroneous and the evidence insufficient.  The convictions  of Todd Newman and Anthony Chiasso are reversed and their cases have been remanded with instructions to dismiss the indictment with prejudice. Here is the holding in a nutshell:

We agree that the jury instruction was erroneous because we conclude that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit. Moreover, we hold that the evidence was insufficient to sustain a guilty verdict against Newman and Chiasson for two reasons. First, the Government’s evidence of any personal benefit received by the alleged insiders was insufficient to establish the tipper liability from which defendants’ purported tippee liability would derive. Second, even assuming that the scant evidence offered on the issue of personal benefit was sufficient, which we conclude it was not, the Government presented no evidence that Newman and Chiasson knew that they were trading on information obtained from insiders in violation of those insiders’ fiduciary duties.


December 10, 2014 in Insider Trading, Judicial Opinions, Prosecutions, Prosecutors, SEC, Securities | Permalink | Comments (0) | TrackBack (0)

Monday, December 8, 2014

Five Former Madoff Cronies Face Federal Fraud Sentencing Nightmare

The Wall Street Journal's Christopher Matthews has a decent background story (subscription required) here. The Matthews piece contains the U.S. Probation Office's recommended sentences for three of the five defendants. How did this happen, you say, if such information, and the Presentence Report itself, is confidential? My guess is that the information is contained in the various sentencing memos submitted by the parties. Different districts, and different judges within districts, have differing policies on what portions of submitted sentencing materials must be filed under seal. The PSR itself is always highly confidential, but sentencing memos often reveal information about recommended sentences and Guideline calculations. The lack of uniformity on sentencing confidentiality in federal district courts throughout the country is unfortunate. Eight years ago the great majority of sentencing memos I filed were under seal. The trend is very much the other way today.

Today's This week's sentencings will no doubt be heavily influenced by the enormity of Madoff's fraud, the draconian white collar Sentencing Guidelines, and the victims--many of whom have submitted letters and impact statements. We can expect many victims to speak up today in court.


December 8, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, December 5, 2014

Transparency International Releases 2014 Corruption Perceptions Index

Transparency International has released their 2014 Corruption Perceptions Index.  The Index contains a wealth of information regarding the perceived levels of public sector corruption in 175 countries and territories.  Topping this year’s list with the highest score, thus indicating very low perceived levels of public sector corruption, is Denmark, which received a score of 92.  Denmark is followed closely by New Zealand, which received a score of 91.  At the bottom of the list are North Korea and Somalia, each with a score of 8.  The United States is ranked 17th with a score of 74. 

Along with interesting charts, figures, and analysis, the report contains stories of corruption from select locations.  These include stories about corruption related to pharmaceuticals, medical care, food aid, education, and rule of law. 

A very interesting report worth spending some time examining.


December 5, 2014 in Corruption, International | Permalink | Comments (0) | TrackBack (0)