Wednesday, January 31, 2024

Opening Supreme Court Brief in Fischer v. United States

As I noted last week, "the U.S. Supreme Court recently granted the Petition for Writ of Certiorari filed in Fischer v. United States, one of three cases in which the United States Court of Appeals for the D.C. Circuit interpreted 18 U.S.C. Section 1512(c) in the context of the January 6 assault on the U.S. Capitol. In addition to its importance in the prosecution and conviction of January 6 protesters and Donald Trump, the case has potentially broad implications for federal white collar criminal law. This is because it involves the proper interpretation of the word 'corruptly', a term that appears frequently in federal white collar statutes. On Monday of this week, Petitioner Josph Fischer filed his opening merits brief. Here it is."

Fischer v. United States-Petitioner Fischer's Opening Merits Brief.


January 31, 2024 in Arthur Andersen, Congress, Corruption, Current Affairs, Enron, Investigations, Judicial Opinions, News, Obstruction, Prosecutions | Permalink | Comments (0)

Tuesday, January 23, 2024

Supreme Court Grants Cert. Petition in Fischer v. United States

The U.S. Supreme Court recently granted the Petition for Writ of Certiorari filed in Fischer v. United States, one of three cases in which the United States Court of Appeals for the D.C. Circuit interpreted 18 U.S.C. Section 1512(c) in the context of the January 6 assault on the U.S. Capitol. In addition to its importance in the prosecution and conviction of January 6 protesters and Donald Trump, the case has potentially broad implications for federal white collar criminal law. This is because it involves the proper interpretation of the word "corruptly", a term that appears frequently in federal white collar statutes. Title 18, U.S.C. Section 1512 is titled, "Tampering with a witness, victim, or informant." Section 1512(c) provides that:

"(c) Whoever corruptly-

(1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object's integrity or availability for use in an official proceeding; or

(2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so,

shall be fined under this title or imprisoned not more than 20 years, or both."

The immediate question in Fischer was whether Section 1512(c)(2) applied to January 6 protesters who delayed Congressional counting and certification of electoral votes from the 2020 Presidential election.  Section 1515 of Title 18 defines an "official proceeding", as used in Section 1512, as "a proceeding before the Congress." The government argued that the January 6 riot obstructed an official proceeding, because it obstructed a proceeding before the Congress. To the government, it was a matter of straightforward textual interpretation. The defense argued that that the history and structure of 1512(c)(2), passed as part of the Sarbanes-Oxley Act (in response to the Enron scandal) to fix a loophole in the federal obstruction of justice statutes, showed that the statute only applied to classic efforts to obstruct evidentiary proceedings. More to come on this important case.

Attached is the Petition for Writ of Certiorari that was granted by the Supreme Court. Fischer v. United States-Petition For A Writ Of certiorari.


January 23, 2024 in Arthur Andersen, Congress, Corruption, Current Affairs, Enron, Investigations, Judicial Opinions, News, Obstruction, Prosecutions | Permalink | Comments (0)

Tuesday, June 28, 2016

Bob McDonnell, Arthur Andersen and the Failure of District Court Gatekeeping

McDonnell v. United States and Arthur Andersen v. United States are remarkably similar Supreme Court reversals. In both cases, aggressive federal prosecutors pushed obviously dubious jury instructions on all-too-willing federal district judges.  In Arthur Andersen, Enron Task Force prosecutors convinced Judge Melinda Harmon to alter her initial jury charge, defining the term "corruptly." Judge Harmon's charge was right out of the form book, based on the approved Fifth Circuit Pattern Criminal Jury Instruction. The Government's definition allowed conviction if the jury found that Andersen knowingly impeded governmental fact-finding in advising Enron's employees to follow Enron's document retention policy. The 5th Circuit Pattern's requirement that the defendant must have acted "dishonestly" was deleted by Judge Harmon and the jury was allowed to convict based on impeding alone. Thus, at the government's insistenceknowingly impeding the fact-finding function replaced knowingly and dishonestly subverting or undermining the fact-finding function. This effectively gutted the scienter element in contravention of the standard Pattern definition. Local observers were not surprised by Judge Harman's ruling. Her responses to government requests are typically described as Pavlovian. Judge James Spencer, the trial judge in McDonnell, is also an old pro-government hand. Generally well regarded, he was a military judge and career federal prosecutor prior to ascending the judicial throne. In McDonnell, the government's proposed jury instructions regarding "official act" flew in the face of the Supreme Court's Sun Diamond dicta. They were  ridiculously expansive, with the potential to criminalize vast swaths of American political behavior. In both cases, Andersen and McDonnell, the Supreme Court unanimously reversed. In both cases, careful attention to the law, even-handedness, and a willingness to stand up to the government would have saved taxpayer dollars and prevented human suffering. Careful attention to the law, even-handedness, and a backbone. That's what we expect from an independent federal judiciary.


June 28, 2016 in Current Affairs, Enron, Fraud, Judicial Opinions, Statutes | Permalink | Comments (0)

Monday, October 27, 2014

Too Much Skin in the Game? A Review of Sidney Powell's Licensed To Lie

Imagine being so angry at prosecutorial shenanigans in one of your cases that you decide to write a book. A book that names names and settles scores. A book that details the Brady violations you believe occurred in your client's trial. A book that compares those purported violations to the undeniable Brady errors judicially noticed in the Ted Stevens prosecution. A book that identifies the DOJ officials connected to both your case and the Ted Stevens case and traces the rise, high within the ranks of DOJ and the White House, of the prosecutors you loathe. A book with a forward by none other than Ninth Circuit Chief Judge Alex Kozinski. Imagine this and you have imagined Sidney Powell's Licensed to Lie: Exposing Corruption in the Department of Justice

This book is a terrific read, particularly for anyone making a living in the world of federal white collar investigations and trials. Both the federal white collar specialist and the intelligent lay reader should find it engrossing. I particularly enjoyed the "you are there" descriptions of defense strategy sessions and courtroom hearings.

Powell played a minor role on the Arthur Andersen appellate team and the lead role in the post-trial defense of Enron Barge defendant, and former Merrill Lynch executive, Jim Brown. She covers most or all of the Enron Task Force sins that have long been the subject of controversy in the white collar defense bar, including the practices of: providing mere summaries, rather than full interview reports, of exculpatory materials to the defense; withholding certain exculpatory information altogether; withholding agent notes of witness interviews; creating composite 302s that fail to reveal changing witness statements over time; designating potential defense witnesses as targets, in effect threatening them with prosecution if they testify; convincing compliant trial judges to approve clearly faulty jury instructions.

Powell reminds us as well that every Enron-related conviction that went up on appeal resulted in a partial or complete reversal.  And although she had no involvement in the Ted Stevens case, Powell does an excellent job of summarizing, based on two publicly released investigations, the multiple material Brady/Giglio violations that occurred in that prosecution.  

And yet this book, as informative and fun to read as it is, has some problems.

For openers, Powell sees the world in black and white terms. You are with her or against her on this ride, and God help you if get on Sidney's bad side. You tend to get painted in black and white terms. Ergo:

Enron Task Force Chief Andrew Weissman is "a narrow faced man with a beak of a nose."

DOJ Criminal Division Chief Michael Chertoff is "sharp-featured."

DOJ's Rita Glavin has "long black hair, sharp features, an easy smirk, and an affinity for androgynous attire."

Original Enron Task Froce Chief Leslie Caldwell is "a short no-nonsense looking woman with closely cropped hair."

FBI Special Agent Raju Bhatia is "smarmy."

Enron Barge Case prosecutor Kathryn Ruemmler, who later served President Obama as White House Counsel, has "a well known passion for expensive Chrisitan Louboutin red-soled stiletto heels." Those heels show up in more than one description of Ruemmler. 

Matthew Friedrich, later Acting Assistant AG in charge of the Criminal Division, has "a boyish face that easily appeared smug."

You get the picture. But if you are lucky enough to be on Sidney's side. Well:

Ike Sorkin is "a handsome man with thick gray hair."

Richard Schaeffer is "a tall handsome impeccably dressed New York lawyer."

And so on.

Fifth Circuit Judges who might rule against Powell are suspected of being politically biased or intellectually corrupt. Thus, in describing the panel she drew for her Fifth Circuit argument that Jim Brown deserved a new trial (based on multiple Brady violations), Powell wonders "if [Judge] Graves...might have some connection with Ruemmler. She, logically, would have been the person to advise the president on Graves' nomination and assist Graves in the confirmation process." Powell also wonders "if Friedrich had been part of the confirmation process with [Judge] Southwick. Friedrich's meteoric rise within the department placed him as  chief of staff to Attorney General Gonzalez when Southwick was nominated and confirmed." After the panel ruled unanimously against her, in an opinion authored by Judge Jerry Smith, Powell "struggled to grasp how a court that I had respected so much for so long could issue an opinion as result-driven, tortured, and just plain bad as this one was."

Second, Powell posits a past DOJ Golden Age, when prosecutors were fair and committed to doing justice, and contrasts it unfavorably with our present era of so-called corruption. Here's a news flash for Ms. Powell. There was never a Golden Age of prosecutorial fairness in the DOJ. There have always been good prosecutors and bad prosecutors, and Assistant U.S. Attorneys have long played a prosecutorial game quite legally and openly rigged in favor of the house.

Last, but by no means least, Powell refuses to deal seriously, or to deal very much at all, with Judge Jerry Smith's Fifth Circuit panel opinion denying Jim Brown a new trial. Powell passionately argues throughout the book that the government hid Brady material from Brown's trial defense team in a grave miscarriage of justice. Virtually every argument she makes, in front of every federal tribunal, is meticulously rendered in 400 plus pages. But her discussion of Judge Smith's opinion is curiously brief, covering two pages, and fails to address Smith's main points.

The Enron Barge case concerned an allegedly sham transaction between Enron and Merrill Lynch to purchase Enron barges. The government maintained that the deal was a sham, and not a real purchase, because Enron orally promised/guaranteed to take Merrill out of the transaction, by buying back the barges, or finding a third party buyer, within six months. Although Jim Brown and the other Enron Barge defendants saw their fraud convictions  overturned by the Fifth Circuit, Brown had also been convicted of perjury and obstruction of justice for grand jury testimony regarding his understanding of the transaction.

Prosecutors refused to disclose the FBI's raw notes of Andrew Fastow's interviews to Brown's trial team, instead providing summaries. The raw notes, unlike the summaries, quoted Fastow as saying that he "never used the word promise" in conversations about a buy-back with Merrill executives. Judge Smith pointed out, however, that "any potential exculpatory value of the passages from the Fastow notes that were not disclosed to the defense is eliminated when we read them in context rather than looking just to the portions of the sentences that Brown cherry-picks."

Smith pointed to other portions of the raw notes and explained that:

 The notes say, to give only a few examples, (1) “It was [Enron’s] obligation to use ‘best efforts’ to find 3rd party takeout + went on to say there would be 3rd party b/c AF is manager of third party,” (emphasis added); (2) “LJM was 3rd party + was already found;” (3) “[Fastow] told [Merrill Lynch] that [Enron] would get [Merrill Lynch] out, would get [illegible] or LJM to buy out;” and (4) “Come June 2000, if [Enron] did not have a buyer then LJM would step in to buy out.”

In other words, Fastow controlled a captive third party, LJM, and could effectively guarantee that if a buyer could not be found, LJM would take Merrilll out of the transaction in six months. Judge Smith noted that:

[T]he sentences that Brown cites from the Fastow notes do not say that the agreement as a whole was a “best efforts” agreement, pace Brown’s testimony; they say only that Enron would use its “best efforts” to find a buyer but that Fastow guaranteed that LJM2, which he controlled, would be that buyer if no one else was found. Indeed, Fastow admitted that, “[i]f call was transcribed—it should have blown the accounting.”

 Now I'm perfectly willing to believe, and in fact I assume, that the Enron Barge defendants, including Jim Brown, got a really raw deal and should never have been indicted. And I'm also willing to hear a good argument that Judge Smith got his Brady analysis backasswards. But in a book devoted to exposing Brady error, written by one of the country's foremost appellate lawyers, I expect more than two pages of cursory, conclusory attacks on a key federal appellate decision. Powell fails to fairly present, much less refute, Judge Smith's specific points (incorrectly referring to his careful 19 page opinion as a "meager" nine pages). I call this a material omission.



October 27, 2014 in Books, Enron, Investigations, Judicial Opinions | Permalink | Comments (2) | TrackBack (0)

Tuesday, April 22, 2014

A Fishy SOX Case

18 U.S.C. § 1519, known as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002, makes it a crime for anyone who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object” with the intent to impede or obstruct an investigation (emphasis added).  Congress passed this statute in the aftermath of the Enron debacle.  But did they ever envision that a prosecutor would use this statute against a commercial fisherman for allegedly having undersized grouper fish that were thrown overboard following the issuing of a civil fishing citation from the Florida Fish and Wildlife Commission? 

The government’s extension of this SOX statute is the subject of a Petition for Certiorari (Download Yates Pcert_Filed) before the Supreme Court. A key issue is whether “fish” are tangible objects for the purposes of this statute. And even more bizarre is that the fisherman allegedly started with 72 undersized red grouper and when he came to shore there were purportedly only 69 fish.  Could this be a federal prosecution under SOX for 3 missing fish? And is this all happening during a time of sequestration with tight funding?

Perhaps the Supreme Court will agree that in the ocean of crime, this one is a bit fishy.  Following the filing of the Petition for Certiorari and a distribution for conference, the Court requested a response from the government. Amici filed a couple of briefs and it was again distributed for conference. It is now set for distribution a third time, April 25, 2014 (see here). It's a wonderful case for the Court to examine principles of statutory interpretation and how far afield the government can go in using a statute written and intended to stop one form of criminal conduct but being used in an unintended manner. This case also provides the Court the chance to step to the plate and express a view on overcriminalization. (see NACDL amicus brief of William Shepherd here - Download NACDLYATESAMICUS).  There are many other issues in the "fish case" that may also interest the Court, such as how a civil fishing citation became a criminal case with an indictment issued 985 days after the citation. (see Petitioner's Reply Brief - Download Yates Reply to Brief in Opposition). But the real question is whether the Court will order fish this coming Friday at their conference.   


April 22, 2014 in Enron, Obstruction, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Friday, June 21, 2013

Jeff Skilling Sentence Reduced To 14 Years

by: Solomon L. Wisenberg

Judge Lake effectively ratified the deal struck months ago by federal prosecutors and the former Enron CEO. The agreement called for a sentence of from 14 to 17.5 years. Skilling agreed to stop fighting his conviction and to hand over restitution funds to the victims. He obviously gets credit for time already served. WSJ has the story here.


June 21, 2013 in Arthur Andersen, Enron, Prosecutions, Prosecutors, Sentencing | Permalink | Comments (0) | TrackBack (0)

Monday, April 16, 2012

Jeffrey Skilling - Cert Denied

The Supreme Court denied certiorari in the latest matter related to Jeffrey Skilling.  See here Skilling is still subject to resentencing resulting from the Supreme Court decision that held that the honest services provision of mail fraud (section 1346) would be limited to bribery and kickbacks.  

See also Greg Stohr, Bloomberg, Enron’s Skilling Rejected by Top U.S. Court on Conviction , Washington Post, AP, Court rejects ex-Enron CEO Jeffrey Skilling’s appeal asking for new trial


April 16, 2012 in Enron | Permalink | Comments (0) | TrackBack (0)

Friday, April 6, 2012

Will the Supremes Take a Discovery Case

In the wake of the Schuelke/Shields report and the introduction of new discovery legislation, one has to wonder whether the Supreme Court will take a case that raises a Brady discovery issue. At their doorsteps is the case of  James A. Brown, a case from the Enron days. As previously noted (here) Brown, is a former Merrill Lynch executive who "was convicted of perjury and obstruction of justice for his testimony before the Enron grand jury about a transaction between Merrill and Enron in late 1999." There are important issues here like the appropriate standard of review for Brady cases. Should it be "clear error" or should it be de novo. (see here)  The case also examines "materiality," a term that has created some confusion. What must a prosecutor provide to the defense counsel. And isn't it odd that the adversary in the process is making the determination for what the defense is entitled to receive. The case looks at summaries being provided to defense counsel. Bottom line - summaries are not the same as the real thing.

In the reply brief recently filed, they argue-

"Here, as in Stevens, many exculpatory statements appear only in raw notes of government interviews of key players. In Brown, the Enron Task Force actually yellow-highlighted these notes before trial – along with prior testimony and FBI 302s – indicating that the information met the requirements of Brady and was material, but suppressed them anyway. While continuing to deny that any evidence fell within Brady, new prosecutors recently disclosed 6,300 pages including much (but still not all) of the evidence suppressed by the Task Force."  (Reply Brief - Download FILED REPLY ON CERT.)

The government's brief sees things differently - Download SG OPP32312. 

This case is distributed for conference on April 20th.


April 6, 2012 in Enron, Judicial Opinions, Perjury, Prosecutions, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Sunday, January 15, 2012

More Discovery Issues - Petition for Cert Filed in Brown Case Looks at Brady

The cert petition in James A. Brown v. United States (11-783) raises interesting questions regarding Brady.  Brown, a former Merrill Lynch executive "was convicted of perjury and obstruction of justice for his testimony before the Enron grand jury about a transaction between Merrill and Enron in late 1999."  This case was part of the "Enron barge transaction" investigation. The cert petition states that "prosecutors steadfastly denied that they possessed any Brady evidence and claimed that their production of nineteen pages of court-ordered 'summaries' exceeded their constitutional obligations."  The Fifth Circuit later found the "evidence was exculpatory and 'plainly suppressed,' but 'not material.'"  This was despite the fact that items had been "yellow-highlighted" by prosecutors as "selected exculpatory statements in the evidence they submitted for the district judge's pretrial in camera review." Years after the trial "new prosecutors disclosed thousands of pages of actual notes, 302s, and testimony."  This cases raises the issue of what is the correct standard of review under Brady and Kyles.

The petition asks the Court to "establish three clear rules to enforce the crucial constitutional protections established in Brady v. Maryland."  It states:

"First, consistent with the majority of Circuits, this Court should establish that Brady decisions must be reviewed de novo.  Second, this Court should reject the Fifth Circuit's novel and dangerous approach to determining materiality, and thereby refine and reinforce the Kyles test. Third, this Court should adopt and mandate the majority rule that exculpatory evidence is material per se if the government corrupts the adversary process by providing deficient summaries or affirmatively capitalizing on its suppression at trial."

Discovery issues need to be examined by the Court.  This is a good case for the Court to stress the importance of defendants receiving timely discovery to allow for a fair and proper defense to the charges.

Petition for Cert - Download 2011 CERT PETITION FILED

See also Brady posts of co-bloggers Lawrence Goldman here and Solomon Wisenberg here.


January 15, 2012 in Enron, Judicial Opinions, Prosecutors | Permalink | Comments (1) | TrackBack (0)

Tuesday, December 27, 2011

New Cert Petition Filed in Skilling - Interesting Question

Jeffrey Skilling is trying for a second shot with the Supreme Court.  On November 28, 2011 he filed a cert petition with the Court (see here).  The questions presented are:

1. Whether Neder permits a court conducting a harmless-error analysis in the context of an "alternative theory" case to consider only the strength of the Government's case on the legally valid theory, without regard to whether the defendant contested that theory enough to create a factual dispute that rationally could have been resolved in the defendant's favor.

2. Whether a court conducting a harmless-error analysis in the context of an "alternative theory" case may categorically exclude the defendant's testimony in his own defense on the legally valid theory.

The government's response is due January 3, 2012.


December 27, 2011 in Enron, Judicial Opinions | Permalink | Comments (1) | TrackBack (0)

Tuesday, September 6, 2011

Brown Affirmed - En Banc and Rehearing Filed

The Fifth Circuit Court of Appeals affirmed the James A Brown case (U.S. v. Brown), in which a "managing director at Merrill Lynch and the head of its Strategic Asset and Lease Finance group" had been indicted in the Nigerian Barge case coming from the Enron events. The indictment was for "short-cut" offenses of perjury and obstruction of justice and the convictions had previously been affirmed by a three judge panel.  Brown was now challenging his conviction on the basis that "the government violated his rights to due process by withholding materially favorable evidence that it possessed pre-trial."Specifically that it failed to disclose three pieces of evidence which included "1) The FBI notes of its interview with Fastow, 2) Senate investigators' notes of their interview with McMahon, and 3) transcripts of Zrike's pretrial testimony before the grand jury and the SEC."  Although some of this evidence was shown to the court in camera before Brown's trial, the government admitted "that it did not submit the Fastow notes to the district court for in camera review."  The Court takes the position that the government "did not suppress favorable evidence and that, even if it did, it was not material." 

As noted by the defense in its en banc petition request and rehearing request, the court uses a standard other than de novo in reviewing part of this Brady violation claim.  This presents an interesting question for an en banc or later Supreme Court to examine.

Brown En Banc Petition -Download 10-20621 Brown En Banc Petition FILED COPY

Brown Rehearing Petition -Download 10-20621 Brown Panel Rehearing FILED COPY

These events are also a perfect reason why there needs to be a statutory change in the discovery rules. NACDL has a proposal that would assist in making certain that favorable evidence is provided to the defense (see here) and hopefully Congress will take up this issue. Examining these issues after the fact only creates added issues.


September 6, 2011 in Enron, Investigations, Judicial Opinions | Permalink | Comments (0) | TrackBack (0)

Sunday, September 4, 2011

Government Successful in Post-Skilling Case

U.S. v. Bryant is a third circuit decision where the court affirmed the convictions finding no defect in the jury instructions for honest services or bribery.  The court found that the "government presented substantial evidence of a quid pro quo bribery scheme to defraud the citizens of New Jersey of Bryant's honest services, including circumstantial evidence of the requisite mens rea..." The court stated that the Skilling case did not "undermine[] the viability of the stream-of-benefits theory." And further is was stated that "[i]ndeed, Skilling did not eliminate from the definition of honest services fraud any particular type of bribery, but simply eliminated honest services fraud theories that go beyond bribery and kickbacks."

The court also looked at a claim of prosecutorial misconduct made by appellants that alleged that prosecutors improperly interfered with the defense's access to witnesses. The court noted that "[i]f the prosecution impermissibly interferes with the defense's access to a witness during a criminal trial, that conduct violates due process insofar as it undermines the fundamental fairness of the proceeding."  In this case, the "District Court took measures to clarify" any "misunderstanding well before trial.  In response to Appellants' motion to dismiss, the Court instructed the Government to send a letter to all subpoena recipients five months before the start of trial, stating that the witness had an 'absolute right to speak to anyone...about anything [they] know about any of the matters under investigation, including the fact that [they] were subpoenaed and ....testified before the grant jury."

Opinion - Download BryantGallagher Opinion


Addendum - See also Beldini - Download Beldini NPO

September 4, 2011 in Enron, Fraud, Judicial Opinions | Permalink | Comments (1) | TrackBack (0)

Sunday, August 21, 2011

Post-Skilling Government Approach - Depends on the Case

In Skilling, the Court limited section 1346 to bribes and kickbacks.  But this decision has left courts with several unresolved issues.  The  Stinn case raises an important issue, and the briefs highlight an interesting position being taken by the government.

The defense files a 2255 motion in Stinn saying that Skilling applies and the conviction should be vacated.  - Download Omnibus Memo of Law ISO Stinn's Mtn to Vacate  They note that "[i]t is immaterial that the government and the trial court did not use the phrase 'honest services' in the indictment or the jury instructions. The government argued the same invalid theory as it did in Skilling throughout the trial and relied on that theory to convince the jury to convict Stinn."

The government argues that Skilling does not apply because they did not file the case under 1346. Download Gov's Memo in Opp to D's Mtn to Vacate Convictions & Grant Bail They note "the Supreme Court's holding in Skilling is irrelevant to the defendant's case, as he was not prosecuted under an honest services theory of fraud."

The defense replies, however, with several arguments including - isn't this the exact opposite position the government took in the Redzic case. Download REPLY TO GOVT'S OPP TO MTN TO VACATE  Redzic, an unusual case, had the court finding that the "money or property" portion of the case was problematic and could not stand.  But even though the defendant was not charged under 1346, the court went on to uphold the conviction saying that 1346 did not "create a separate substantive offense, it merely defines a term contained in sections 1341 and 1343."  The court held it was not necessary to cite 1346 in the charging instrument.  

Redzic raised issues of whether the accused had truly been advised under due process of the charges against the defendant since the government was using an uncharged basis for asking that the conviction be upheld.  But now the government in Stinn is saying that it makes a difference whether the government charges a case under 1346. Is the government taking the opposite position in these two cases (Redzic and Stinn), and is this problematic?


August 21, 2011 in Enron, Fraud, Judicial Opinions, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Monday, April 18, 2011

Reflecting on Skilling after the Barry Bonds Verdict

Guest Blogger - Dane C. Ball (Gerger & Clarke)

I was annoyed by the result in Skilling—that the unquestionable honest-services error was “harmless” beyond a reasonable doubt.  But at the time I couldn’t articulate exactly why.  After the Bonds verdict, I can.  In short, the Bonds verdict illustrates the silliness of the conclusion in Skilling that appellate courts can and should sit as the 13th, 14th, and 15th jurors, then use a cold record to speak for the first 12 jurors while pretending appellate courts have crystal balls that make this okay.

 Compare the two cases.  Skilling’s trial was infected by honest-services error:  in the indictment; in the evidence; in the argument; and in the instructions.  Kicking a door cracked open by the Supreme Court in Pulido, the Fifth Circuit swept this under the rug—finding harmlessness—by pretending it could satisfactorily predict that the jury would have convicted on all counts even absent the error.  To be sure, this put the nail in the coffin for the Yates standard of review, which said that when multiple theories are charged and instructed and one is impermissible, reversal usually is automatic because it is “impossible to tell” whether the jury relied on the impermissible theory.  The Yates standard respected the constitutional right to an impartial jury of one’s peers (which appellate courts concerned with finality and efficiency certainly are not); it recognized the limitations of an appellate court’s ability to predict the past under changed circumstances; and it acknowledged that juries are composed of human beings (not robots) who can be and often are influenced by intangibles not apparent in a paper record. 

The Bonds verdict illustrates why eradicating the Yates standard was a bad idea—and indeed leads to a standard that infringes the right to an impartial jury of one’s peers.  Bonds was charged with repeatedly lying to a grand jury, and obstruction of justice essentially based on repeatedly lying to that grand jury.  With a proper indictment and charge, the impartial jury of Bonds’ peers hung on whether Bonds lied to the grand jury, but agreed that he obstructed by lying to the grand jury.  There are hyper-technical legal ways to attempt to explain this—but in reality (where jurors live), the verdict makes little sense.  And surely Bonds’ attorneys will file a motion challenging the sole conviction on this basis. 

But more importantly to me, Bonds illustrates what was right with Yates and what is wrong with Skilling.  Appellate court’s aren’t very good at predicting the past under changed circumstances.  I’d venture to guess that if the Fifth Circuit judges who decided Skilling had placed bets on the Bonds verdict, they’d have batted 0 for 3 predicting hung counts on lying but conviction on obstruction based on lying. 

I hope the defense bar won’t give up on the Yates standard.


April 18, 2011 in Celebrities, Enron, Judicial Opinions, Obstruction, Prosecutions, Verdict | Permalink | Comments (1) | TrackBack (0)

Thursday, April 14, 2011

Sixth Circuit Vacates Wire Fraud and False Statement Convictions of Former Tennessee State Senator

A fascinating opinion vacating convictions and reversing the district court, was issued by the Sixth Circuit in the case of U.S. v. Ford. This appeal concerned convictions for false statements and two counts of "honest services" wire fraud.  This case does not pertain to another case against Ford in which he was sentenced to 5 1/2 years imprisonment.

The government's problem with the 1001 conviction was that the statute was inapplicable to the defendant's conduct. Section 1001 requires federal jurisdiction. As stated by the court in noting the defendant's argument, "while the facts that he failed to disclose concerned an entity inseparable from federal ties, the entities to which he failed to disclose those facts were anything but federal."  The court noted that the "failures to disclose financial interests were related to functions of the state government of Tennessee - the senate's and election registry's reporting requirements."  The court also used the rule of lenity in support of its vacating these convictions.

The wire fraud counts were easier - Skilling limited honest services to "bribery and kickbacks," and that was not the case here.

Attorneys Representing Ford were Paul Mogin, William E. McDaniels, & M. Jesse Carlson (Williams & Connolly LLP).


April 14, 2011 in Enron, Fraud, Judicial Opinions, Prosecutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 6, 2011

Skilling Remand

The Fifth Circuit issued its decision on the Skilling remand here.

The US Supreme Court had "invalidated one of the objects of the conspiracy charge - honest-services" and sent it back to the 5th Circuit to determine if the error was harmless.  The 5th Circuit ruling today found it to be harmless error, and they now sent the case back to the trial court for resentencing.  

The 16-page decision commences with a review of how to analyze harmlessness of an alternative-theory error.   The court concludes that "based on [its] own thorough examination of the considerable record in this case, we find that the jury was presented with overwhelming evidence that Skilling conspired to commit securities fraud, and thus we conclude beyond a reasonable doubt that the verdict would have been the same absent the alternative-theory error."  The court later states that because it finds "that the alternative-instruction error in this case was harmless with respect to the conspiracy conviction, it follows that Skilling has no basis on which to challenge the remaining convictions."

More later.


April 6, 2011 in Enron | Permalink | Comments (0) | TrackBack (0)

Thursday, March 17, 2011

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


March 17, 2011 in Enron, Fraud | Permalink | Comments (1) | TrackBack (0)

Wednesday, March 16, 2011

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


March 16, 2011 in Enron, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 15, 2011

Brady Problems Outside Alaska

Following the Kohring Catastrophe (see here, here, and here), one has to start looking closely at other cases with alleged Brady violations. One such case is the Brown case pending in the 5th Circuit. Counsel for James A. Brown (Daniel K. Hedges, Sidney Powell, and Torrence E. Lewis) filed an extensive brief in the 5th Circuit that argues that exculpatory Brady material was not provided to the defense. (Brief- Download BROWN BRIEF FILED 122010).  Jim Brown, a former Merrill Lynch executive was convicted of perjury and obstruction and is contesting these charges on several grounds. The case has had an interesting turn of events.  It seems that the government filed a brief claiming that the defense failed to file a timely notice of appeal. Mind you this is after the government was given an extension of time to file its responsive brief by the defense. But it seems that the government had some mathematical computation problems, and on review they realized that Labor Day was in fact a federal holiday and the defense acted timely.  The government, when notified, recognized its error and corrected it by requesting to file a corrected brief, not a confession of error. (See Motion here - Download Brown's OppositionToGMforLeave.)  The important question here is whether there was a Brady violation.  Did a thousand pages of evidence not get revealed until 2010 and if so, why?


March 15, 2011 in Enron | Permalink | Comments (0) | TrackBack (0)

Thursday, October 7, 2010

The Post-Skilling Battle That Could Decide the War

Guest Blogger - Dane C. Ball - Gerger & Clarke

We’ve all memorized Skilling’s core holding: 18 U.S.C. § 1346 (“honest-services fraud”) criminalizes only “bribe or kickback schemes” that violate a “fiduciary duty.”  Prosecutors and criminal defense attorneys are now fighting over questions like:  What kind of “fiduciary duty” is required—one created by state or federal law, contract, or simply a relationship of trust?  What’s the definition of “bribe or kickback”—a quid pro quo or something less?  Though these are important issues, regardless their outcome Skilling will remain a significant victory for the criminal defense bar.

But a more dangerous battle is being fought in the Northern District of New York in United States v. Queri.  This battle could decide the war—if the government wins, Skilling may end up meaning next to nothing.

In Quire the government has taken the position that Skilling-barred honest services theories (e.g., undisclosed self dealing or conflicts of interest) are viable traditional money and propertyfraud theories under §§ 1341 and 1343.  The government reasons that such nondisclosures deprive others of an intangible property right to information that “could impact financial decisions” or cause a “change in business conduct.”[1]

If the criminal defense bar is to successfully respond, it must understand Skilling at a deeper level than “honest-services fraud prosecutions require a bribe or kickback scheme.”  At a minimum, it must be made clear (to lower courts) that:

  1. Skilling must mean something.  And the government’s approach in Queri renders Skilling meaningless.  An employer may always claim that disclosure of a conflict or self dealing would have caused it to “change its business conduct.”  It would have investigated, demoted, suspended, terminated the employee or avoided a deal altogether if tainted by “misconduct.”
  2. It is not just unlikely, but unthinkable that in Skilling’s 3 opinions and 60 pages, 9 Justices failed to mention that the case actually was a waste of time because the honest-services fraud theories at issue were viable intangible property rights theories.  Their silence does not leave the questions open—there was no reason to address this issue because the government asserted in extensive briefing that § 1346 was a crucial enforcement tool that catches many schemes that fall through the cracks of §§ 1341 and 1343.  The government certainly did not take the position that the very same theories at issue in Skilling also passed scrutiny under §§ 1341 and 1343.  A wise decision considering that § 1346 is a definitional statute (not a separate crime) expanding the universe of actionable schemes under the mail and wire fraud statutes.
  3. Finally, and perhaps most importantly, morphing Skilling-barred honest-services fraud theories into traditional money and property fraud theories does not avoid the constitutional problems Skillingsought to remedy:  wishy-washy theories based on undisclosed self dealing and conflicts of interest are too “amorphous” to provide fair notice to criminal defendants.  Removing the “right to honest services” label and replacing it with “intangible property right to information” is constitutionally insignificant.  Such repackaging also ignores the federalism concerns that run throughout Skilling and earlier decisions like McNally and Cleveland.

In sum, we must understand and explain that Skilling has meaning outside the honest-services fraud context.  If we fail, we will have snatched defeat from the jaws of victory.

Dane C. Ball is a Houston-based criminal defense attorney with Gerger & Clarke.


[1] The facts in the Quire—employees received side payments from those doing business with the employer and didn’t tell anyone—demonstrate that Skilling’s “bribe or kickback scheme” requirement appears to have teeth.  The government dropped its honest-services theory after Skilling and opted for more clever traditional money and property theories that look a whole lot like honest-services theories, but require no true “bribe” or “kickback.”

October 7, 2010 in Enron, Fraud, Judicial Opinions | Permalink | Comments (2) | TrackBack (0)