Thursday, December 31, 2020
Almost 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 Collar for 2020 is:
Happy New Year! See y'all next year.
Saturday, December 26, 2020
The Corporate Transparency Act is part of the 2021 National Defense Authorization Act (NDAA). This is important bi-partisan legislation that will provide transparency when companies and individuals are using shell corporations to "thwart law enforcement and hide their illicit activities." (See Rep. Carolyn B. Malony's webpage). A description of the Act can be found here. See Morris Pearl, Congress just passed the most important anti-corruption reform in decades, but hardly anyone knows about it , (Dec. 26, 2020).
Friday, August 28, 2020
Judge Gary R. Brown issued a Memorandum & Order in U.S. v. Cohn allowing for a waiver of a jury trial despite government objection. In this unusual move, in these unusual times, he is allowing for a securities fraud related case to proceed to a bench trial with the defendant's consent, but without the government's approval. See here.
Wednesday, August 12, 2020
Yesterday's Flynn hearing was long - almost four hours - and somewhat contentious. But it was more about the role of Mandamus then what Flynn's attorney would have wanted the court to consider.
Prosecutors typically do have discretion to dismiss cases as they so please. But when an individual has already plead guilty, the question is more complicated, as forcing a judge to just dismiss without asking questions as to why the DOJ is dismissing, would render the court a rubber stamp of prosecutorial discretion. Interesting issues discussed during the hearing included whether the district court can inquire as to the reasons for the dismissal. After all, Federal Rule of Criminal Procedure 48(a) allows for government dismissal "with leave of court."
But for the most part, the hearing turned on the remedy being employed by defense counsel to secure a dismissal - A Writ of Mandamus. One has to wonder if defense counsel had just waited for the court to rule on the DOJ's Dismissal Motion whether this hearing would even be happening.
See Khorri Atkinson, Full DC Circ. Not Inclined to Immediately Halt Flynn's Case.
Tuesday, August 11, 2020
Speculation is rampant about indictments that may result from Connecticut U.S. Attorney John Durham's probe into the FBI's handling of the Crossfire Hurricane investigation, and the Bureau's four materially false FISA Applications submitted to the FISA Court. Fans of the President, expecting or demanding a rash of indictments, are likely to be as disappointed as Trump haters were when Robert Mueller's investigation of Trump-Russia criminal collusion turned out to be a dud. Rumors also abound that, indictments or not, Durham will issue a Report, naming names and detailing the FBI's multiple misdeeds. Opponents of such a Report point out that the Department of Justice ("DOJ"), except in the unusual circumstance of a Special Counsel's Report, does not typically smear people when the grand jury fails to return indictments. You know some folks are getting worried when Mueller Pit Bull Andrew Weissmann pens a New York Times Op-Ed all but urging career DOJ officials to refuse to cooperate with the highly respected Durham if he asks the grand jury to return indictments within 90 days of the the 2020 election.
Attorney General William Barr has already made it clear (sending a not very subtle hint to the faithful) that not all governmental abuses of power, even serious abuses, constitute crimes. To take an obvious example, I consider the set-up of Trump's first National Security Advisor Michael Flynn, by the FBI's Comey-McCabe Cabal, to be one of the most significant abuses of law enforcement power in recent American history. But I don't see any federal criminal statute that was violated in the process of the set-up.
So, we are likely to see a small handful of indictments at most, based on the currently available public record. Were the Flynn-Kislyak phone calls feloniously leaked? Almost certainly so, absent Presidential declassification, but good luck proving who did it. The only known individual publicly referred for possible prosecution as a result of Michael Horowitz's OIG investigation into FISA abuse was former FBI Office of General Counsel Attorney Kevin Clinesmith. Clinesmith gave false information to FBI Supervisory Special Agent #2, who served as the FBI's affiant on all three FISA Renewal Applications. Clinesmith also altered a key email from a CIA liaison, materially changing its meaning, and forwarded it to the same affiant. Of course it is possible that Clinesmith is cooperating and naming other people, but that is pure speculation at this point. More information may also come out explaining whether the predicate for Crossfire Hurricane, the Alexander Downer conversation with George Papadopoulos, was itself some kind of an intelligence agency set-up, but, again, turning that into an actionable crime is another matter.
So how will the story be told by Durham? The easiest way will be through a lengthy speaking indictment against one person, or a handful of conspirators, that tells the prosecution's story of the case. Speaking indictments which have been common for decades in federal criminal cases, tell the tale of the prosecution's case in as many chapters as the prosecutors need or want to take. These speaking indictments can be broad enough to include manner and means and overt acts, criminal and non-criminal, as part of the mosaic. In other words, in telling the story, the government can include non-criminal conduct, or conduct that it could not prove beyond a reasonable doubt to a jury, as long as long as the conduct is rationally related to the charged crime. Mueller himself did this, through some of his indictments or informations (Manafort, Gates, and the Russian hacking and troll farm cases) and through the Statement of the Offense in cases where defendants pled guilty. in fact, it was through careful examination of the Special Counsel's charging instruments that knowledgeable observers were able to determine fairly early on that that Mueller had no criminal collusion case.
So, that's what I think we will see from John Durham. A small handful of defendants and at least one significant, story-telling, speaking indictment.
Monday, August 10, 2020
Patricia Hurtado, Trump Oversees All-Time Low in White Collar Crime Enforcement
Wednesday, August 5, 2020
Michael Flynn Update: D.C. Circuit Sets Argument Times and Asks Parties to Address Judge Sullivan's Possible Disqualification
The U.S. Court of Appeals for the D.C. Circuit today announced the allocation of oral argument time in the Michael Flynn Mandamus case, In re Flynn. This was expected. Twenty minutes each were allotted to General Flynn, the Department of Justice, and Judge Emmet Sullivan. The Court "FURTHER ORDERED that, in addition to the issue set forth in the court's order filed July 30, 2020, the parties be prepared to address at oral argument the effect, if any, of 28 U.S.C. §§ 455(a) and 455(b)(5)(i) on the District Court judge's Fed. R. App. P. 35(b) petition for en banc review." This was unexpected. The Court further Ordered "One counsel per side to argue."
Under the Federal Rules of Appellate procedure, only a party may petition a full appellate court for a rehearing en banc. Judge Sullivan is the person who filed the petition in In re Flynn. Both the Department of Justice and General Flynn argued in response to Judge Sullivan's Petition for En Banc Rehearing that he had no standing to even file such a Petition, because he was not a party to the Petition for Mandamus. But the full Court had not indicated, until yesterday, that it wanted to hear about that issue.
Under 28 U.S.C. § 455(a) "Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned."
Under 28 U.S.C. § 455(b)(5)(i), a judge "shall also disqualify himself" if "He...is a party to the proceeding."
What is going on here? As noted above, originally, the full court only wanted to hear oral argument on whether Mandamus was the appropriate remedy under the facts of the case.
Judge Sullivan has not disqualified himself from the underlying case of U.S. v. Flynn.
Does the full Court simply want the parties to now be prepared to argue whether Judge Sullivan had standing to file the Petition for Mandamus? Are they saying, in effect, "We know Judge Sullivan would not make himself a party without disqualifying himself. Since he hasn't disqualified himself, is this further proof that he isn't a party and does not have standing in our Court?" Do they even want to hear from Sullivan on the 11th if he is not a party? If so, why did they grant his counsel 20 minutes to argue the case? Are they signaling Judge Sullivan to reassign the case below prior to the 11th?
Or does the Court merely want to hear argument on whether, in the event that Mandamus is denied, the case should be assigned to another judge because Judge Sullivan's "impartiality might reasonably be questioned" or, more likely, because he has made himself a "party to the proceeding" ? (General Flynn has already argued for reassignment to another judge. DOJ did not ask for this.) In other words, is the Court basically saying to Judge Sullivan" "Since we voted to grant your Petition for Rehearing, haven't we implicitly accepted your status as a party? And if we have accepted your status as a party, how can you remain as the trial judge in Flynn's case, even if we deny the Mandamus Petition?"
I would think that the Court really wants to hear the reassignment issue, but the wording of the order leaves this open to question. Here is In re Flynn 8-5-20 Order re Oral Argument and 28 U.S.C. 455(a) and (b)(5)(1)
Friday, July 31, 2020
The full United States Court of Appeals for the D.C. Circuit yesterday granted Judge Emmet Sullivan’s Motion for Rehearing En Banc, vacating a decision by one its three-judge panels, and will soon decide whether to grant General Michael Flynn’s Petition for a Writ of Mandamus against Judge Sullivan. Flynn seeks the Writ of Mandamus in order to force Judge Sullivan to immediately grant the Department of Justice’s May 7, 2020 Motion to Dismiss the criminal case against him, a motion consented to by Flynn. Regardless of the full Court’s ultimate ruling on the mandamus issue, DOJ’s Motion to Dismiss will have to be granted sooner or later under governing legal precedents. No federal appellate court has ever sustained a district court’s refusal to grant an unopposed government motion to dismiss an indictment.
There are two separate but related legal issues at stake before the Court of Appeals. First, does the law require Judge Sullivan to grant DOJ’s Motion to Dismiss in the absence of a grave constitutional issue, reducing Sullivan’s function to a ministerial one? Federal Rule of Criminal Procedure 48(a) requires “leave of court” when the government moves to dismiss an indictment, but an abundance of federal case law holds that the district court’s role is in fact quite limited when the government moves to dismiss a criminal case and the defendant consents. Second, is mandamus the appropriate remedy for Flynn given that Judge Sullivan has yet to rule on DOJ’s Motion to Dismiss? Mandamus is an extraordinary remedy, typically reserved for situations where the remedy provided at law is inadequate. Judge Sullivan had not yet ruled on DOJ’s Motion to Dismiss when Flynn filed his Petition for a Writ of Mandamus. Why didn’t Flynn just wait for Judge Sullivan to rule and for DOJ to appeal Sullivan’s order if he denied the motion?
The DOJ has argued that Judge Sullivan’s: 1) appointment of retired federal judge John Gleeson as an amicus, or friend of the court, for the specific purpose of opposing DOJ’s Motion to Dismiss; and 2) Judge Sullivan’s indication that he intends to examine closely DOJ’s motives in filing the Motion to Dismiss, will themselves be an improper intrusion into Executive Branch functions, in violation of Separation of Powers. Flynn has argued that these same factors, along with Sullivan’s setting of a drawn out briefing schedule, harms him financially and reputationally by delaying the immediate relief he is entitled to.
What is likely to happen next?
Argument before the Court sitting En Banc has been set for August 11, but the Court wants no further briefing. The Court’s Order states that the parties “should be prepared to address whether there are ‘no other adequate means to attain the relief’ desired. Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367, 380 (2004).” Cheney is a key Supreme Court case involving the intersection of Separation of Powers and Mandamus case law. In other words, the key issue before the full D.C. Circuit is whether mandamus is premature. Should Judge Sullivan have been allowed to hold a hearing and make a ruling before Flynn went to a higher court seeking mandamus relief or did the very mechanisms set in place by Sullivan create an improper intrusion into Executive Branch matters and a harmful delay in the relief to which Flynn was entitled?
Even if the Court of Appeals ultimately holds that mandamus is premature, expect the full Court to set clear standards as to what Judge Sullivan can and cannot do (and how long he can take) in ruling on DOJ’s Motion to Dismiss. And make no mistake about it. The DOJ’s Motion will ultimately be granted.
July 31, 2020 in Current Affairs, Defense Counsel, Government Reports, Investigations, Judicial Opinions, Legal Ethics, News, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (0)
Thursday, July 23, 2020
Check out - Tom McParland, 'It's Retaliation': US Judge Orders Michael Cohen Released From Prison, Finding Free Speech Rights Were Curtailed, law.com -
"U.S. District Judge Alvin K. Hellerstein of the Southern District of New York said in a hearing that in his 21 years on the bench, he had “never seen” a clause requiring that a candidate for home confinement agree not to speak to the media, and he roundly rejected the government’s claims that Cohen’s jailing was the result of his failing to cooperate with the terms of his release."
Monday, July 20, 2020
Michael T. Flynn's Opposition to Rehearing En Banc has been filed today in the United States Court of Appeals for the D.C. Circuit. This is in opposition to Judge Emmet G. Sullivan's Petition for Rehearing En Banc, filed on July 9. The Department of Justice was invited by the Court to respond and did so today in the United States' Response to the Petition for Rehearing En Banc.
Both Flynn and DOJ argue that Sullivan lacked standing to file the Petition for Rehearing, as he is not a party and there is no longer a case or controversy. Apparently only one federal judge in history has filed such a petition and it was denied. DOJ's brief also argues in detail, quite effectively I think, that the panel's decision granting mandamus does not conflict with: D.C. Circuit precedent; precedent in other circuits; or Supreme Court precedent.
DOJ also responds directly and succinctly to Judge Sullivan's argument that mandamus was premature, because he had not yet held a hearing or made a ruling on DOJ's Motion to Dismiss. Flynn therefore had an effective remedy on appeal from any adverse ruling. This argument ignores the continuing harm to the Executive Branch's interests occasioned by the judge's dilatory behavior:
"That objection misses the point: at stake is not mere consideration of a pending motion, but a full-scale adversarial procedure spearheaded by a court-appointed amicus hostile to the government’s position raising factual questions, relying on extra-record materials, probing the government’s internal deliberations, and second-guessing core prosecutorial judgments.... Accordingly, while the panel specifically recognized that '[a] hearing may sometimes be appropriate before granting leave of court under Rule 48,' it determined that the hearing contemplated by the district court here would 'be used as an occasion to superintend the prosecution’s charging decisions' and would cause 'specific harms.' "
My prediction is that Judge Sullivan's Petition for Rehearing En Banc will be denied.
Saturday, July 11, 2020
We are finally seeing former Special Counsel Robert Mueller defending his investigation. Check out his op ed:
Thursday, July 9, 2020
The Supreme Court issued two opinions on the last day of the Court, all pertaining to the non-release of taxes and documents of President Trump. The questions presented (here) had different entities seeking business records or tax returns of the President for oversight or investigations. Some points from the Mazars/Duetsche Bank cases:
- A president contesting demands for presidential documents is not typically a problem because the president usually works it out with the legislature.
- There is a lot of history of "negotiation and compromise - without the involvement of this Court - until the present dispute."
- We're not going to use the typical standards when documents of the President are subpoenaed.
- A four-part test should be used: (a)"First, courts should carefully assess whether the asserted legislative purpose warrants the significant step of involving the President and his papers." (b) "Second, to narrow the scope of possible conflict between the branches, courts should insist on a subpoena no broader than reasonably necessary to support Congress's legislative objective." (c) "Third, courts should be attentive to the nature of the evidence offered by Congress to establish that a subpoena advances a valid legislative purpose." (d)"Fourth, courts should be careful to assess the burdens imposed on the President by a subpoena."
- "When Congress seeks information 'needed for intelligent legislative action,' it 'unquestionably' remains 'the duty of all citizens to cooperate."
In a 7-2 opinion, the Court sent it back to the lower court to rule consistently with this opinion.
The Vance case was also 7-2. This case also provides enormous historical information and analysis:
- "Beginning with Jefferson and carrying on through Clinton, Presidents have uniformly testified or produced documents in criminal proceedings when called upon by federal courts. This case involves - so far as we and the parties can tell - the first state criminal subpoena directed to a President."
- There is no need to use a heightened standard here to protect the President, "the public interest in fair and effective law enforcement cuts in favor of comprehensive access to evidence."
- He could still challenge the subpoena just like everyone else could do so.
- "Two hundred years ago, a great jurist of our Court established that no citizen, not even the President, is categorically above the common duty to produce evidence when called upon in a criminal proceeding .... the President is neither absolutely immune from state criminal subpoenas seeking his private papers nor entitled to a heightened standard of need."
Justice Kavanaugh, with who Justice Gorsuch joined concurring stated, "In our system of government, as this Court has often stated, no one is above the law."
One last point - many say that the public will not see the documents and taxes of President Trump prior to the next election. That depends on whether the President continues this fight to keep the public and an investigating state from receiving these items. The Court has ruled in these two cases and given an opportunity to the President to comply with what every President has done in the past - provide the materials. The question is - will he?
The Flynn case has proved to be interesting, with first a guilty plea by Flynn, and then the government trying to dismiss the case. Prior posts are here, here, here, here, here, here, here, and here. The latest is that Judge Emmet G. Sullivan has filed a Petition for Rehearing En Banc. The issues include that "the panel opinion conflicts with the Supreme Court's Decision in Rinaldi v. United States," and that it "conflicts with this Court's mandamus precedents." This could prove some interesting legal questions for the full DC Circuit Court of Appeals to hear. Full brief available here (law.com)
These cases come at it from different angles, but all involve subpoenaed records of Donald Trump. In the Mazur case the U.S. House Committee on Oversight and Reform issued a subpoena to Trump's accounting firm and some of his businesses for financial records. In the Deutsche Bank case the Committee on Financial Services and the Intelligence Committee also issued subpoenas for records from President Trump and his businesses. The issue before the Court was "whether three committees of the House of Representatives had the constitutional and statutory authority to issue subpoenas to their-party custodians for the personal records of the sitting President of the United States? In the Vance case it is the N.Y. District Attorney attempting to get financial records of President Trump and a business - the records being in the hands of an accounting firm. The question before the Court was "whether this subpoena violates Article II and the Supremacy Clause of the U.S. Constitution."
And the winner is: Depends.
Mazur/Deutsche Bank here
Commentary to follow.
Wednesday, July 8, 2020
The NY Department of Financial Services entered into a Consent Order with Deutsche Bank AG (NY Branch) and Deutsche Bank Trust Company America with the Bank agreeing "to pay $150 million in penalties" "for significant compliance failures in connection with the Bank's relationship with Jeffrey Epstein and correspondent banking relationships with Danske Bank Estonia and FBME Bank." The press release notes that "[t]his agreement marks the first enforcement action by a regulator against a financial institution for dealings with Jeffrey Epstein." "
"Superintendent Lacewell said. 'In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the Bank itself deemed to be high risk. In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein’s terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.'"
It is a fascinating consent decree with details of alleged suspicious banking activities. One item stated in the Consent decree is "[t]he interpretation was exemplified by a later email exchange in March of 2017, when a member of the transaction monitoring team responded to an alert about payments to a Russian model and Russian publicity agent, stating, '[s]ince this type of activity is normal for this client it is not deemed suspicious.'"
In the Consent decree one sees a good number of unnamed individuals (Co-conspirator 1, 2, and 3; US Bank -1; Relationship Manager -1; Executive -1 and 2; AML Officer -1 and 2; Coverage Team Member -1; Accountant -1; AML Compliance Director-1; Attorney -1; Offshore Company -1).
Thursday, July 2, 2020
Will the Court allow the release of the redactions in the Mueller Report? The issue accepted by the Supreme Court is "[w]hether an impeachment trial before a legislative body is a 'judicial proceeding' under Rule 6(e)(E)(i)?
The briefs on the Cert Petition are:
Government Brief on Petition for Cert here
House Judiciary Committee Brief here
DOJ Reply Brief here
Wednesday, July 1, 2020
A frequent accusation hurled at the Michael Flynn camp is that Flynn’s plea deal was a tremendous boon to him, because Flynn faced possible charges, or, in the words of Lawfare’s Ben Wittes, “massive criminal liability”, for failing to register as a foreign agent for Turkey, during the transition period, in violation of the Foreign Agents Registration Act (“FARA”).
This argument is absurd. For openers, almost nobody faces massive criminal liability under FARA. It has a five year statutory maximum and would, in Flynn's case, probably be scored under Section 2B1.1 of the Sentencing Guidelines. (This is because FARA has no Guideline section attached to it and 2B1.1, is "the most analogous" offense Guideline.) And no amount of monetary loss would be factored in. Thus, even a defendant in Flynn's shoes who went to trial and got convicted could easily receive a Guidelines range of 0-6 months.
Second, it is not at all clear that Flynn was an agent of Turkey during the transition period or that he could have been successfully convicted as such pursuant to FARA. Flynn severed his ties with Turkey shortly after Trump won the election. His partner in Flynn Intel Group (Bijan Rafiekian) was tried and convicted in the Eastern District of Virginia for conspiring to violate FARA (by submitting a materially false FARA filing ) in relation to a transaction that Flynn himself participated in. (Indeed, the government's Statement of the Offense in U.S. v. Flynn included allegations of false statements by Flynn in connection with the very project at the heart of Rafiekian's case.) The highly respected trial judge, Anthony Trenga, however, threw out the jury's verdict after trial based on insufficient evidence, ruling that no rational juror could have found Flynn’s partner guilty. See U.S. v. Rafiekian Opinion Granting Rule 29 Motion. That ruling is currently being appealed by the DOJ at the Fourth Circuit.
Third, the DOJ itself told Judge Trenga that Flynn was not a co-conspirator with his Rafiekian. The DOJ tried to reverse its position on this point when Flynn moved to withdraw his DC plea, but Trenga was having none of it.
Thus, there is no indication that Flynn feared going to trial under 18 U.S.C. Section 1001 or FARA. His original lawyers didn't see a crime. Flynn had a good chance to win and the downside was small, which is quite rare in federal prosecutions. But the government threatened to charge Flynn's son. It’s as simple as that. Then the prosecutors left that key condition out of Flynn’s written plea agreement, so that this part of the deal wouldn’t necessarily have to be revealed as Giglio to future defendants who Flynn might be called to testify against. That's how the sausage is sometimes made in white collar cases. But let's not pretend anything other than his son's fate was at stake for General Flynn. Either a guilty plea or a guilty jury verdict would have been equally devastating for Flynn's reputation.
Friday, June 26, 2020
Co-sponsored with the ABA's Global Anti-Corruption Committee, Perkins Coie's Markus Funk, Chelsea Curfman, and Kevin Feldis have released a podcast series (six so far) as follows:
Introducing the White Collar Briefly MiniPod
They include candid conversations with a variety of special guests, including:
· American “book of the year” author, editor, screenplay writer and publisher Dave Eggers- see here
· Joel Esquenazi (defendant in the high-profile U.S. v. Esquenazi FCPA case)- see here
· Molson Coors’ Global Ethics & Compliance Chief Caroline McMichen see here
· Chicago-based U.S. District Judge Virginia Kendall - see here
· University of Colorado COO (and former GC) Patrick O’Rourke - see here
· Avanos Medical Deputy GC Ross Mansbach - see here
Thursday, June 25, 2020
There appears to be a growing economic disparity between those benefitting from compassionate release and those who are not being heard. Paul Manafort and others are being sent home due to COVID19 concerns. The latest is former judge Michael Conahan, who was allegedly involved in a scheme involving kickbacks from juvenile facilities. See Michael R. Sisak & Michael Balsamo, AP, Kids-for-cash judge released from prison over virus concerns
Many of the individuals receiving this relief should in fact be released. Our prisons could certainly use some social distancing, not to mention the fact that we are country with exhorbitant prison populations. But how about some parity in this relief?
Wednesday, June 24, 2020
This is one of the saddest hearings I have heard in a long time - "special treatment" clearly entered into decisions at the Department of Justice. We heard a member of congress tapping on the table to interfere with our ability to hear what the speaker was saying. But despite this conduct by a member of the House, we eventually did get to hear from civil servant witnesses - who risked their careers to come forward with important information concerning improper influence being used in the DOJ.
Two AUSAs testified to influence beyond the merits being considered in matters in the DOJ. And it is not limited to just one area - testimony is that it happened with the Stone case, and happened in Antitrust. Politics did enter into DOJ years back. For example, there was an investigation in June 2008 of allegations of politicized hiring in the Department of Justice Honors Program and Summer Law Intern Program here. But one would have hoped that lessons would have been learned from this past conduct. It is more disturbing to hear that Presidential tweets are factoring into conduct at the DOJ.
Thank you John Elias and Aaron Zelinsky for coming forward - "the truth still matters."