Friday, December 30, 2016

2016 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 2016:

The Collar for the Best Left Hand Turn – To the Supreme Court following Justice Scalia’s death in affirming both insider trading and bank fraud convictions.

The Collar for Failing to Deliver the Goods – To the government for prosecuting Fed Ex and then needing to dismiss the case following opening statements. 

The Collar for Needing New Glasses – To James Comey so that he can read Agency policy to not do anything election related within 60 days of an election. 

The Collar for Sports MVP – To the world of tennis, which stole some of the focus from FIFA this year with the BBC's allegations of significant match-fixing.

The Collar for Slow and Steady – To Britain's Serious Fraud Office, which, after announcing the implementation of DPAs in October 2012, entered into its first DPA in November 2015 and its second in July 2016. 

The Collar for Quick and Steady – To the DOJ, which, according to Professor Brandon Garrett’s website, has entered into well over 100 DPAs and NPAs since October 2012. 

The Collar for Best Reading of this Blog– To the Supreme Court in reversing Virginia Governor Bob McDonnell’s conviction, this blog’s 2015 case of most needing review.

The Collar for the Longest Attempt to Justify a DecisionTo the 11th Circuit for its 124-page decision in United States v. Clay that attempts to justify how “deliberate indifference” meets the Global Tech standard.

The Collar for Worst Schmoozing at an Airport To former President Bill Clinton for causing AG Loretta Lynch to accept the FBI’s decision-making after Bill Clinton came abroad her airplane. 

 The Collar for the Most Underreported Settlement – To Trump University’s agreement to pay $25 million settlement in the Trump University case.

 The Collar for Mandating Corporate Backstabbing To Deputy AG Sally Yates, who keeps insisting her memo that promoted a corporate divide from its constituents – widely referred to as the “Yates Memo” -- should be called the Individual Accountability Policy.

 The Collar for the Pre-mature Weiner Release – To James Comey for his overly excited announcement about the former Congressman’s emails.

The Collar for Community Service to Russia – To all those who failed to investigate and release reports on computer hacking that caused the release of information during the election.

The Collar for the Quickest Backpeddling – To Rudy Giuliani for “clarifying” his statement that he knew about a confidential FBI investigation related to Hillary Clinton’s emails.

The Collar for Best Game of Hide and Seek – To Donald J. Trump for explaining that he could not release his already-filed tax returns because he was under an IRS audit.

The Collar for Best Self-Serving Confession – To the Russian Sports Federation for admitting there was systematic doping of Olympic athletes (but Putin didn't know about it).

The Collar for Quickest Recantation (aka the "Mea Culpa Collar") – To DOJ Chief Leslie Caldwell for criticizing overly aggressive AUSAs at a Federalist Society function and apologizing to DOJ attorneys a few days later.

The Collar for Best Judicial Watchdog – To Judge George Levi Russell III of the United States District Court for the District of Maryland for his post-trial decision reversing the conviction of Reddy Annappareddy and dismissing the indictment with prejudice based on prosecutorial misconduct.

The Collar for Never Giving In – To Josh Greenberg and Mark Schamel who tirelessly and brilliantly represented Reddy Annappareddy post-trial and secured his freedom.

The Collar for Best Money Laundering  – To the New York City and Los Angeles real estate developers who sell eight-figure condo apartments to anonymous LLP's owned by foreign officials and their families.

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), (esp)

December 30, 2016 in About This Blog, Current Affairs, Deferred Prosecution Agreements, Government Reports, Investigations, Judicial Opinions, Money Laundering, News, Prosecutions, Prosecutors | Permalink | Comments (0)

Tuesday, December 27, 2016

Van Hilley: 1946-2016

We mourn the passing of Van Hilley and extend our deepest sympathies to his family and the lawyers and staff members at Goldstein, Goldstein & Hilley. Van was an outstanding trial lawyer and a long-time leader in the San Antonio, Texas white collar criminal defense bar. Of more importance, he was a valued mentor and friend to generations of young lawyers, including prosecutors and criminal defense attorneys. Van was a consummate gentleman of the old school, in the truest sense of the word, to every one he met. Rest in Peace.


December 27, 2016 | Permalink | Comments (0)

Monday, December 12, 2016

Supreme Court Clarifies Bank Fraud Statute

In an unanimous decision, the Supreme Court in Shaw v. United States rejected defendant's argument that section 1344(1) "does not apply to him because he intended to cheat only a bank depositor, not a bank."  The Court found that the defendant's scheme to cheat another "was also a scheme to deprive the bank of certain property rights."  That said, the Court noted that there is no need to show "that the defendant intend that the victim bank suffer" a financial harm. The Court summed up stating:

"The statute is clear enough that we need not rely on the rule of lenity. As we have said, a deposit account at a bank counts as bank property for purposes of subsection (1).  The defendant, in circumstances such as those present here, need not know that the deposit account is, as a legal matter, characterized as bank property.  Moreover, in those circumstances, the Government need not prove that the defendant intended that the bank ultimately suffer monetary loss.  Finally, the statute as applied here requires a state of mind equivalent to knowledge, not purpose." (citations omitted)

But the Court does leave open one important question - the jury instruction. The defendant argued that the instruction allowed for a guilty finding for one who deceives the bank but not one who "deprive[s]" the bank of anything of value. The Court stated that it is necessary that the "scheme be one to deceive the bank and deprive it of something of value." Sending it back to the 9th Circuit, the Supreme Court instructs the lower court "to determine whether the question was fairly presented to that court and, if so, whether the instruction is lawful, and, if not, whether any error was harmless in this case."    


December 12, 2016 in Fraud, Judicial Opinions | Permalink | Comments (0)

Wednesday, December 7, 2016

U.S. v. Clay - A Case Needing Supreme Court Review

On August 11, 2016, the Eleventh Circuit issued an 124 page opinion in U.S. v. Clay. Review of this decision in the 11th Circuit was denied. So now the case is likely to be teed up on a Petition for Cert. for review by the Supreme Court.  There are important issues presented by this case, two that standout here.

1. Mens rea is the crux of many white collar crimes.  The complicated nature of many statutes places individuals in difficult situations in both understanding the laws and abiding by them. Too many times, when individuals are indicted for white collar offenses, there are cries that they did not know the conduct was illegal. After all, it can sometimes be difficult to discern when a business decision crosses the line into illegality. This particular case has a section 1347 claim, a relatively new statute that is modeled on the older mail (1341) and wire (1343) fraud statutes. The fact that it took the appellate court 124 pages, and many of these pages were a description of the alleged illegal conduct (facts go to page 66 and many of remaining pages discuss the facts) sets the tone for the complicated nature of this case. As with another recent case coming from the Middle District of Florida (Yates -1519 fish case reversed by the Supreme Court), the case involves a federal and state initiative.

The Appellate Court finds that the defendants had the requisite knowledge.  But was the standard for ascertaining that knowledge correct? The Supreme Court's decision in Global Tech, notes the importance of needing "knowledge" in criminal law.   The Court makes clear that "recklessness and negligence" do not suffice.  It is clear the Court in Global Tech wants actual knowledge or a clear avoidance of that knowledge. In Clay, the instruction given to the jury was a "statement or representation is false or fraudulent if it is about a material fact that the speaker knows is untrue or makes with deliberate indifference as to the truth and makes with intent to defraud." (emphasis added).  The 11th Circuit finds this sufficient because of the use of "and" "with intent to defraud" used in the instruction. But in a complicated white collar case, should additional words following words that are insufficient be enough to meet the required knowledge of the alleged wrongdoing? This presents an interesting question for the Supreme Court to consider. The 11th Circuit's reliance on its pattern jury instruction with only removing the word "reckless indifference" and replacing it with "deliberate indifference" lowers the standard of knowledge that should be required in a white collar case with facts that are clearly complicated as demonstrated by the 11th Circuit's description.

2.To premise a false statement charge on statements that are made by individuals on the scene of a search with approximately 200 agents may seem warranted when the case involves something like a specific act of homicide, rape, burglary or robbery.  But put this now in the context of  a complicated white collar case and one needs to recognize that being asked specifics about a business requires closer scrutiny of both the context and the statements being made. White collar businesses typically involve hundreds of documents and nuances within those documents. It is not the same as asking - did you have a gun, or did you enter a house. A specific answer may appear false, because explaining a complicated business transaction cannot be done in simple answers to agents that are swarming a place and placing the individuals in a pressure situation. White Collar cases typically proceed through grand juries and with the use of subpoenas. The current use of searches needs to be examined, especially when there are resulting charges of false statements such as in this case. 



December 7, 2016 | Permalink | Comments (1)

Tuesday, December 6, 2016

Insider Trading - Is The Law Now Clear?

As co-blogger Solomon Wisenberg noted here, the Supreme Court issued an opinion today in Salman v. United States resolving an issue related to insider trading.  But is the law really clear now, as some claim (see here)? 

It would appear that Salman does little to modify the current landscape regarding insider trading, except to perhaps reaffirm the scope covered under the Court's prior holding in Dirks and reject the Second Circuit's Newman approach. The unanimous Court stresses its adherence to the doctrine from Dirks. The Court states, " Dirks makes clear that a tipper breaches a fiduciary duty by making a gift of confidential information to 'a trading relative,' and that rule is sufficient to resolve the case at hand."

But it is important to note here, that the Court is also issuing a narrow opinion and not providing extensive guidance on how to assess liability for gift-giving.  The Court notes that this case "is in the heartland of Dirk's rule concerning gifts."  But the Court goes on to say, "[i]t remains the case that 'determining whether an insider personally benefits from a particular disclosure, a question of fact, will not always be easy for courts.'"  The Court states, "there is no need for us to address those difficult cases today, because this case involves 'precisely the "gift of confidential information to a trading relative" that Dirks envisioned.'"

Although this factual scenario did not provide a basis for the use of the Rule of Lenity, one has to wonder if another issue not in the heartland might offer such a scenario.

See also Eric C. Chaffee  -Salman v. United States: A Few Observations; Joan Heminway -U.S. Supreme Court Simply and Elegantly Affirms Dirks in Salman


December 6, 2016 | Permalink | Comments (0)

Supremes Go With the Ninth Circuit on Insider Trading

Salman is in. Newman is out. Justice Alito writes the opinion for an 8-0 Court. Here is the opinion in Salman v. United States.


December 6, 2016 in Current Affairs, Fraud, Insider Trading, Judicial Opinions | Permalink | Comments (0)

Friday, December 2, 2016

Josh Greenberg, U.S. v. Annappareddy Hero, Opens New Firm.

Readers of this Blog are no doubt familiar with United States v. Reddy Annappareddy, the District of Maryland case in which a guilty verdict was overturned (and new trial granted) with the grudging, belated concurrence of government prosecutors, because the government presented false testimony to the jury. The indictment was then dismissed with prejudice, over government objection, due to the government's destruction of potentially relevant evidence and the trial court's finding of prosecutorial misconduct.  All of this was the result of the tireless and brilliant work of Annappareddy's post-trial attorneys, Josh Greenberg and Mark Schamel of Womble Carlyle.  See my prior posts herehereherehere, and here. Since my last post, the government moved to withdraw its appeal, the Fourth Circuit granted the motion, and the mandate has issued. 

Now, Josh Greenberg, who played a key role in devising and implementing the post-trial strategy, has decided to open his own shop, focusing on white collar criminal defense, civil litigation, and appeals. Congratulations to Josh. We wish him the best.


December 2, 2016 in Defense Counsel, Judicial Opinions, Legal Ethics, News, Prosecutions, Prosecutors | Permalink | Comments (0)