Saturday, September 14, 2019

More Varsity Blues - Privilege and Perspective

So Felicity Huffman gets 14 days (see here and here) in the college admissions scandal. But there are problems with this -

  1. 14 days serves no real punishment purpose.   It is not the prison time that will deter her in the future.  The general deterrent and rehabilitation was accomplished the minute she was indicted.  The indictment in this case served that purpose because it stigmatized her and her family and brought their then-current lives to a crushing halt.  The 14 days is a token to society that only costs the taxpayer money with no benefit. It was unnecessary here.
  2.  Should she have gotten more time?  Absolutely not. As stated above this public shaming was more than sufficient and one can only hope that she and her family can rise above this event and move on in a positive way to assist society. Your mother loves you - forgive her and be there for her. 
  3.  Is the sentence an acknowledgement of disparity in the criminal justice system?  Definitely yes.  Accused individuals who are poor or minorities can suffer significantly greater consequences. There are too many examples of this to even mention.  This case highlights the disparity in our judicial system and for that alone, courts should go back and resentence those who received greater sentences for less activity - and reduce their sentences. The case was supposed to punish privilege but ends up acknowledging that privilege matters. This is no fault on the part of the sentencing judge - it is a problem of how society treats criminal justice. I applaud the judge for not giving a harsher sentence.
  4.  This case brought forth improprieties in college admission testing and admissions. This needs serious reevaluation. In the corporate criminal sphere - a rogue employee can sometimes still hold the entity liable. Although, there is no criminality here, nor should there be, hopefully admissions testing processes will go through massive re-evaluation, not only on how they are administered, but also on the value of these exams.    
  5.  Was there a better way to handle all of this?  Yes. If prosecutors had proceeded on correcting this unethical conduct by exposure - a report - and sending a message to all that privilege in national testing will not be tolerated, then stopping this unethical conduct could have been accomplished.  Using a broken criminal justice system to attempt to correct this process just ends up showing how broken the system really is.
  6. The individual who brought in so many parents into this scheme deserves stiff punishment.  Giving cooperator status to the individual who promoted this unethical conduct is backwards.  The parents who were roped into this scheme, oftentimes of their free will, should be the ones testifying here. If you want to stop the criminal conduct, punish the party who made the crime possible.  
  7. Bottom line - what were the parents all thinking - really?  The criminal justice system is not the answer to the problem here. 

(esp)

See also excellent op-ed -David Oscar Marcus, Felicity Huffman's 14-Day Sentence is Unjust - Because It's Too High, The Hill, here.

September 14, 2019 in Celebrities, Fraud, Prosecutions, Prosecutors, Sentencing | Permalink | Comments (0)

Tuesday, August 13, 2019

Obstruction of Justice Charge in ICE Related Case - Old News?

Back in April 2019, the US Attorney's Office in Massachusetts charged a Massachusetts District Court Judge and a court officer alleging two counts of aiding and abetting in obstruction of justice and one count of conspiracy to obstruct justice. The court officer was also charged with perjury. (See press release here).  At the time of this arrest, the US Attorney stated:

“The allegations in today’s indictment involve obstruction by a sitting judge, that is intentional interference with the enforcement of federal law, and that is a crime. We cannot pick and choose the federal laws we follow, or use our personal views to justify violating the law. Everyone in the justice system – not just judges, but law enforcement officers, prosecutors, and defense counsel – should be held to a higher standard. The people of Massachusetts expect that, just like they expect judges to be fair, impartial and to follow the law themselves.”

See also ABA Jrl. ( here). Other than these short-cut offenses, there were no other charges. 

(esp)

Update: Aaron Leibowitz, Mass. Judge Accused of Obstructing ICE Gets Pay Restored, Law 360 (Aug. 13, 2019)

August 13, 2019 in Prosecutions, Prosecutors | Permalink | Comments (1)

Saturday, July 13, 2019

Jeffrey Epstein: The Unanswered Questions

  1. Who in DOJ made the ultimate decision to drop the proposed felony indictment of  Jeffrey Epstein and to cap the Non-Prosecution Agreement ("NPA") sentence at two years--later reduced to 18 months? The 6-2-17 affidavit of AUSA Ann Marie Villafaña, the lead prosecutor on the original federal criminal case, largely supports Alex Acosta's account of certain key events in this week's press conference. Keep in mind, however, that her affidavit was filed as part of the Jane Doe 1 and Jane Doe 2 litigation in SDFL, which resulted in Judge Marra's ruling that SDFL violated the Crime Victim's Rights Act ("CVRA") by failing to notify Epstein's victims about the NPA.  At the time it was filed, the affidavit was focused on the effort to convince Marra that SDFL had not violated the conferral/right to be heard provisions of CVRA. On pages 8 and 9 of her affidavit, Villafaña attests that: "Prior to the Office making its decision to direct me to engage in negotiations with Epstein's counsel, I discussed the strengths and weaknesses of the case with members of the Office's management and informed them that most of the victims had expressed significant concerns about having their identities disclosed. While I was not part of the final decision-making at the Office that arrived at the two year sentence requirement, I was part of the discussions regarding sex offender registration and the restitution provision. It is my understanding from these and other discussions that these factors, that is, the various strengths and weaknesses of the case...together with the Office's desire to obtain a guaranteed sentence of incarceration for Epstein, the equivalent of uncontested restitution for the victims, and guaranteed sexual offender registration...were among the factors that informed the Office's discretionary decision to negotiate a resolution of the matter and to ultimately enter into the NPA." Translation: Villafaña disagreed with dropping the indictment and was not part of the group that made the ultimate decision to go for an NPA with a two year state prison cap. If she was even present at the meeting where the decision was made, she disagreed with the decision and was thus not "part of the final decision-making process." It is unusual, but not unheard of, for the lead prosecutor to be overruled on a case. It is very unusual to go from a 50-plus page multi-count felony sex trafficking indictment to an NPA with no federal charges, particularly when your lead prosecutor wants to go to trial. Villafaña was and is a respected career AUSA. Apparently DOJ's Office of Professional Responsibility ("OPR") is looking into how the case was handled.  OPR will want to see Villafaña's  original pros memo in the case, will seek to interview all government participants in the negotiations, and will want to know every DOJ person involved in the ultimate decision to drop the indictment.
  2. Why was DOJ's standard language making it explicitly clear that the NPA bound only the SDFL not included in the NPA? Such language is employed every day by U.S. Attorneys' Offices throughout the United States and has been for years. It goes like this: "The defendant understands that this agreement is binding only on the U.S. Attorney's Office for the ________ District of _______." Why wasn't that done in Epstein's case? Epstein is now arguing that the SDFL NPA prevents his prosecution in SDNY. He will probably lose, given Second Circuit case law, but why even leave the possibility of challenge open? The NPA does not even include a standard integration clause. This is strange.
  3. Why was the entire NPA placed under seal? I understand the Government's desire to protect the identity of Epstein's victims, but this could have been done through a redacted version of the NPA, and indeed this has been done in the subsequent litigation.
  4. Why weren't all of Epstein's known victims notified of the NPA and its terms in a timely fashion? Acosta and Villafaña have explained that they did not want the victims to see the civil damages portion of the NPA before SDFL was certain that Epstein would be pleading to the Florida felony, because they did not want the victims to be cross-examined about having seen those provisions in the event the deal broke down and SDFL took Epstein to trial. Epstein signed the Florida plea papers only a few days before he actually pled guilty and there was not enough time to notify all the victims. I understand the explanation, and assume no bad faith on SDFL's part, but it doesn't cut the mustard. If Judge Marra is correct, CVRA required notification. And either the NPA or Florida plea deal could have been structured to prevent the fiasco of having to locate and confer with victims over a weekend. Marra ruled that SDFL affirmatively hid the NPA from the victims and essentially deceived them into thinking that the office was still investigating Epstein well after the NPA was signed. That scenario should have been avoided.
  5. Why were Epstein's lawyers allowed to lobby Main Justice after the NPA was signed? I understand going to Main Justice and arguing to overturn an individual office's charging decision. Not every lawyer obtains such access and these efforts to overturn are rarely successful. But they almost always occur BEFORE an indictment has been returned. Why was Epstein's team allowed to lobby for several months AFTER the NPA was signed. The original NPA was signed by attorneys on both sides in September 2007. An addendum was signed by the attorneys in October 2007. Epstein signed in December 2007. The Oosterbaan letter, explaining why federal involvement was legitimate, was not signed until May 15, 2008. This is weird.

I do not believe that the Epstein deal was "dirty" in any way. I have heard from multiple sources that Acosta is a person of high integrity, who was well regarded within the office. I was impressed with Acosta's handling of the press conference. I don't think he should have resigned. I don't know how easy or hard it would have been for SDFL to achieve a victory at trial or how many victims would have been further traumatized by a trial. I do know that SDFL has a long history of aggressively prosecuting these types of cases--child sex trafficking and kiddie porn. And I do believe SDFL should have conferred with the victims before NPA was inked. Acosta had no criminal trial experience when he became U.S. Attorney. Was he was out-negotiated here, or overawed by the team of big name defense lawyers representing Epstein? His First Assistant Jeffrey Sloman, a veteran prosecutor who was deeply involved in the negotiations and signed the NPA, has denied this and has publicly defended both Acosta and the deal.

Still, the questions I and others have posed are legitimate and deserve answers. Perhaps we will get them from the OPR investigation.

Here are some additional documents. The first three were made available by Acosta in connection with his press conference in order to help support his explanation of the NPA. Next is the Jeffrey Sloman op-ed defending Acosta and the deal. The final three documents are the most recent filings in the SDNY case and all deal with the government's effort to detain Epstein pending trial.

 Villafana Declaration

 Kuyrkendall Second Affidavit

 Acosta Letter to Starr

 Sloman Op-Ed

 Epstein-Original Government Letter Requesting Detention

Epstein-Letter Motion for Pretrial Release

Epstein-Government Response to Bail Motion

(wisenberg)

July 13, 2019 in Celebrities, Civil Litigation, Current Affairs, Defense Counsel, Deferred Prosecution Agreements, Investigations, Judicial Opinions, News, Prosecutions, Prosecutors | Permalink | Comments (0)

Thursday, April 25, 2019

Miriam Baer - Sorting Out White-Collar Crime

Professor Miriam Baer (Brooklyn) has a fascinating new Article in Texas Law Review. The draft, posted on SSRN (here) has the following Abstract -

Our federal criminal code defines crimes, but declines to sort its fraud offenses according to degrees of harm or culpability. Although state prosecutors routinely charge crimes such as homicide or robbery in varying degrees, the federal code’s core fraud statutes are noticeably flat. There is no such thing as first- or second-degree fraud in the federal code.

Amidst a roiling debate as to whether the federal government overcriminalizes or underenforces white-collar crime, scholars have lost sight of the federal code’s lack of gradation. This Article seeks to remedy this neglect, particularly in regard to fraud crimes. Drawing examples from federal and state criminal codes, the Article analyzes the ways in which ungraded statutory regimes generate problematic and self-destructive expressive gaps. By lumping so much conduct under a single statutory umbrella, the federal code deprives the public of the ability to gauge the seriousness of a specific offense and of the will to discern those factors that separate the worst frauds from the merely bad ones.

If criminal law’s function is to distinguish wrongdoing and not solely to prohibit it, then our federal fraud statutes leave much to be desired. Reasonable people can debate the proper methodology for distinguishing bad from worse offenses, but it is quite another matter to abandon statutory sorting altogether. Accordingly, the Article closes by advocating the use of misdemeanor and low-level felony statutes to improve—and sort—the federal code’s fraud crimes.

Professor Lauren Ouziel (Temple)  provides an equally thoughtful response here titled Steering White Collar Enforcement in the Texas Law Review Online. 

(esp)

April 25, 2019 in About This Blog, Prosecutions | Permalink | Comments (0)

Wednesday, April 10, 2019

Prosecutorial Discretion in Operation Varsity Blues

Prosecutors have enormous discretion.  They decide who to charge, who will receive a plea, who gets cooperation credit, and now we see even more of that discretion being used - tacking on additional charges (money laundering) and adding defendants to existing indictments.

In Operation Varsity Blues, prosecutors initially had some Indictments, some Informations (individuals typically cooperating or at least pleading) and some Complaints brought against parents who were alleged to have conspired to  be "involved  [in] 1) bribing SAT and ACT exam administrators to allow a test taker, typically XXX, to secretly take college entrance exams in place of students or to correct the students’ answers after they had taken the exam; 2) bribing university athletic coaches and administrators—[at a variety of schools]—to facilitate the admission of students to elite universities under the guise of being recruited as athletes; and (3) using the façade of XXX’s charitable organization to conceal the nature and source of the bribes." (XXX's inserted here)(See DOJ Press Release here).  Some of the parents came forward quickly and pleaded guilty (see Bloomberg here). This included a former partner in a law firm and an actress. 

Others, however, did not accept the government invitation for a quick plea (not that one is ever directly offered).  And now they find themselves indicted, but with an additional charge tacked onto the fraud charges - money laundering.  Is this unusual?  Not really for some government prosecutors.  Some prosecutors use their discretion to add charges such as money laundering when an initial plea is not quickly reached.  The addition of charges when a plea is not taken has been found not to carry a presumption of prosecutorial vindictiveness (U.S. v. Goodwin).  But wait there's more....

We also see all the cases coming from the US Attorneys Office in Massachusetts, although many are not from this area and their acts did not occur in this district.  Conspiracy is another way that prosecutorial discretion is used to allow the government to choose the place they want to proceed.  Conspiracy allows them to choose the forum where there was either an agreement or where one of the acts took place.  Coupling everyone together gives the government a wider breadth of possible jurisdictions.  Is this unusual?  Not really, the government has been using conspiracy to choose their forum for many years.  And there may be challenges here on whether this is a conspiracy case that warrants severance. But wait there's more... 

The government has also brought recent Indictments via a Second Superceding Indictment of an existing case (see here). And yes, this new revised Indictment includes the charge of Conspiracy to Commit Money Laundering. And it allows the government to go with a judge who may already have been assigned one of the cases.  (see Jack Newsham, NLJ, College Scandal Defense Teams Accuse Feds of Judge-Shopping).  Is this unusual?  Not really, superceding Indictments happen all the time. 

But putting all three of the above prosecutorial decisions together and looking at them cumulatively, one has to ask whether these prosecutorial practices are really beginning to seem too aggressive. Keep in mind that we are only at the preliminary pre-trial stage. If the individuals decide not to enter a plea, one can anticipate some important legal challenges.  

(esp)

April 10, 2019 in Prosecutions, Prosecutors | Permalink | Comments (0)

Sunday, March 24, 2019

AG Barr's Summary of the Mueller Report

One needs to give credit to AG Barr for his quick release of a preliminary statement (see here - Download AG March 24 2019 Letter to House and Senate Judiciary Committees) concerning the Report of Special Counsel Mueller, which is titled, Report on the Investigation into Russian Interference in the 2016 Presidential Election.  But one also needs to read this four-page statement carefully, because the public needs to grasp all of what is being said and what is not being said here. 

  1. AG Barr's Summary notes the extensiveness of this investigation ("employed 19 lawyers who were assisted by a team of approximately 40 FBI agents, intelligence analysts, forensic accountants, and other profession staff. The Special Counsel issued more than 2,800 subpoenas, executed nearly 500 search warrants, obtained more than 230 orders for communication records, issued almost 50 orders authorizing use of  pen registers, made 13 requests to foreign governments for evidence, and interviewed approximately 500 witnesses.")
  2. AG Barr's Summary does not provide the same specificity in telling the public the number of indictments and convictions of individual and entities in connection with his investigation, instead saying "all of which have been publicly disclosed." Well that number does seem pretty important, as this investigation had so far 7 guilty pleas, 27 people indicted, and 37 indictments with some of the cases still ongoing.
  3. AG Barr's Summary says that "The Report does not recommend any further indictments, nor did the Special Counsel obtain any sealed indictments that have yet to be made public."
  4. AG Barr's Summary does not say how many matters were turned over to other federal or state offices, perhaps because there was criminality that did not pertain to Russian Interference in the 2016 Presidential Election. Although it does say that "During the course of his investigation, the Special Counsel also referred several matters to other offices for further action."
  5.  We now know for certain that the Investigation had two parts, or at least the Report does: Russian Interference in the 2016 US Presidential Election and Obstruction of Justice.
  6. AG Barr's Summary confirms that there were Russian efforts to influence our 2016 US election.   AG Barr's Summary states that - "The report outlines the Russian effort to influence the election and documents crimes committed by persons associated with the Russian government in connection with these efforts."   This is an important statement that needs both executive and legislative follow-up. How will we be assuring that future efforts by another country do not undermine our election?  And even if they "did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities," do we know if the results of the election were accurate?
  7.  AG Barr's Summary confirms "that Russian government actors successfully hacked into computers and obtained emails from persons affiliated with the Clinton campaign and Democratic Party organizations, and publicly disseminated those materials through various intermediaries, including WikiLeaks." Again, did we have a fair election? What is the appropriate remedy?  What will happen in future elections to preclude such activity?
  8. On Part II - Obstruction of Justice - AG Barr's Summary states that "the Special Counsel considered whether to evaluate the conduct under Department standards governing prosecution and declination decisions but ultimately determined not to make a traditional prosecutorial judgment." Barr's Summary says that "[i]nstead, for each of the relevant actions investigated, the report sets out evidence on both sides of the question and leaves unresolved what the Special Counsel views as 'difficult issues' of law and fact concerning whether the President's actions and intent could be viewed as obstruction."  So it does sound like the President was a "subject" as opposed to "witness" of this investigation.
  9. AG Barr's Summary does not say that evaluating the evidence is typically the job of the jury, after a determination has been made that there is probable cause to indict.  Instead AG Barr restates Mueller's Report that "while this report does not conclude that the President committed a crime, it also does not exonerate him."  AG Barr goes on to say that he and Rod Rosenstein have made the decision "that the evidence developed during the Special Counsel's investigation is not sufficient to establish that the President committed an obstruction-of-justice offense."
  10.  In many ways it is good to see that a "short-cut offense" of obstruction of justice will not be used (see my article here), but one has to wonder about the defendants who have been charged with obstruction of justice.  It will be important for everyone to know what has been declined here so that everyone can understand the DOJ's standard for evaluating obstruction.  Isn't it always stated that "intent can be inferred from the circumstances" in letting juries make those decisions? But it is also good to see DOJ taking a hard line in not prosecuting uncertain cases - it is hopeful that all US Attorneys will follow this lead with the obstruction cases they are currently handling. Having the full Report will provide this important transparency. 
  11. I leave for another day a discussion of AG Barr's decision to extract 6(e) grand jury material from the report prior to its release.

(esp)

March 24, 2019 in Investigations, News, Obstruction, Prosecutions, RICO | Permalink | Comments (0)

Sunday, March 17, 2019

Assistant Attorney General Brian A. Benczkowski's Speech at ABA White Collar Conference

I wasn't there, but was just reading Assistant AG Benczkowski's written remarks from the 33rd Annual ABA National Institute on White Collar Crime (see here).  Here are some thoughts that caught my eye -

  1. It is good to see his approach on recognizing that companies are more likely to comply if they know the rules of the game in reporting and cooperating.  Transparency is key to enforcing corporate compliance and it is wonderful to see this recognized.
  2. He claims that there have been "6,500 defendants in white-collar prosecutions, a modest increase over the prior year."  But he doesn't tell us how he defines white collar crime.  Trac (see here) claims the number is down.  And as I noted, there is no consistent methodology for reporting white collar crime -especially as to what crimes are included.  So we really can't assess who is accurate. When he gets to specific internal numbers, like what the Fraud Section's Securities and Financial Fraud Unit charged, that makes sense.  But claiming that white collar prosecutions as a whole have  increased needs a lot more explaining.
  3. It is good to see that DOJ will be using an "'anti-piling on' policy to reduce or apportion financial fines, forfeitures, and restitution between authorities to ensure that the overall outcome is equitable and just." There needs to be a coordinated effort so it is good to see this new practice continuing.
  4.  It is likewise good to see that the internal DOJ/SEC Resource Guide for FCPA matters will now be "reflected in the Corporate Enforcement Policy itself."  Or does this mean that an internal policy, unenforceable at law, is just being moved from one place on the web to another?
  5. It is likewise good to see a training program for assuring consistency in prosecutorial discretion on evaluating effectiveness of corporate compliance programs. But wouldn't it be best to have this done outside the DOJ since if the program is held to be ineffective, it will be the DOJ moving ahead against the company.
  6. But my real concern with the comments lie here - "In 2018, our Fraud Section prosecutors charged 406 individuals, won 268 convictions, and brought 10 corporate enforcement actions." It is the use of the term "won" that raises flags.  Prosecutors do not win convictions and do not lose cases -  prosecutors do justice and that happens irrespective of whether there is a "win," "conviction," "not guilty," or "declination."

Overall, it's sounds good to see that "corporate transparency" will be something of the future, as this can enhance compliance efforts.

(esp)

March 17, 2019 in Prosecutions | Permalink | Comments (0)

Friday, March 15, 2019

White Collar Prosecutions - Down?

Trac Reports titles the recent report, White Collar Prosecutions Hit All-Time Low in January 2019. They note that "[t]his is an historic low since monthly tracking began in October 1998." They note that "this number is down 20.3 percent over the previous month, and continues a five-month downward slide." Additionally, they say that "[c]ompared to five years ago, January filings were down 35.7 percent." President Trump's term they say has a number "lower than in previous administrations."

I don't doubt that the white collar prosecutions are down.  I also don't doubt that comparing the prosecutions from the current administration to the last administration using the same metrics support it being down.

But there is a separate issue here that raises concerns - how does DOJ measure white collar crime.   Trac includes thirty (30) categories of crimes, including ones related to fraud, antitrust, intellectual property violations, identity theft, and arson for profit.  The list of different types of fraud is impressive, including tax fraud, federal procurement fraud, insurance fraud, securities fraud, computer fraud, health care fraud, and many other classes of fraudulent conduct. 

But what I don't see are the "short-cut" offenses that are often used in white collar prosecutions. Unreported here are obstruction of justice, false statements, and perjury.  And yet we all know that these are common offenses used in white collar cases. And is RICO included in the statistics?  Cases under the Racketeer Influenced Corrupt Organization Act can have many different predicate offenses, some of which are street crimes like homicide, and others are mail and wire fraud.     

So there is no doubt that white collar prosecutions are down.  But we should also be asking -- isn't it about time that DOJ started looking at a better methodology for reporting white collar prosecutions.  See Lucian Dervan & Ellen Podgor, White Collar Crime: Still Hazy After All These Years.

(esp)(w/ disclosure that she has a B.S. degree from Syracuse U.- home of the Trac Reports). 

March 15, 2019 in About This Blog, Prosecutions | Permalink | Comments (0)

Tuesday, March 12, 2019

"Operation Varsity Blues"

The allegations coming from "Operation Varsity Blues" are incredibly sad -- from all perspectives.  The DOJ Press Release (here) tells of the arrest of "dozens of individuals" alleged to be "involved in a nationwide conspiracy" of cheating on college entrance exams and the admissions of students into top universities. The DOJ Press Release states:  "The conspiracy involved 1) bribing SAT and ACT exam administrators to allow a test taker, typically XXX, to secretly take college entrance exams in place of students or to correct the students’ answers after they had taken the exam; 2) bribing university athletic coaches and administrators—including coaches at Yale, Stanford, Georgetown, the University of Southern California, and the University of Texas—to facilitate the admission of students to elite universities under the guise of being recruited as athletes; and (3) using the façade of XXX’s charitable organization to conceal the nature and source of the bribes." (XXX's inserted here)

So it looks like there are several aspects to the allegations in Operation Varsity Blues 1) a college entrance exam cheating scheme; 2) a college recruitment scheme; and 3) a tax fraud conspiracy.

Some of the individuals (4) are charged by Information - a clear indication that they have reached an agreement with the government.  We see two cooperating witnesses mentioned in the documents.  The crimes alleged in the Information include charges of racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the US, mail and wire fraud and obstruction of justice. Twelve others face indictment on a charge of  racketeering conspiracy.  The remaining individuals have criminal complaints against them of either conspiracy to commit mail fraud and honest services mail fraud or conspiracy to commit mail and wire fraud. The affidavit for one of the criminal complaints is over 200 pages long (see here).  There are also forfeiture allegations for some of the accused individuals. It will be interesting to see how many of the criminal complaints turn into Informations (requires waivers by the defense) as opposed to Indictments in the next for weeks.

Some thoughts -

  1. The prosecutorial power of using conspiracy and picking one's venue is emphasized here as the cases are being brought in the District of Massachusetts, although the majority of those accused of criminal activity are not from that jurisdiction. The ACT is headquartered in Iowa City and the Educational Testing Service for the SAT is in New York and New Jersey.  
  2. Likewise the prosecutorial power of granting cooperation status appears likely as some of the cases have references to CW-1 and CW-2. Prosecutors get to decide who gets the cooperation status and who gets the cooperator's testimony against them.
  3. The alleged fraud appears to be massive, and one has to wonder how this could have occurred- but compromised college related entrance exams are not something new. Just today the Central District of California filed a 26-count Indictment with charges of conspiracy of false passport, and aggravated identity theft, against defendants for allegedly "using false passports" to take TOEFL (English proficiency) exams for others. (see here).  It may be tougher to detect some issues of fraud outside the United States, but internally this should not be happening. Will the verification processes used with college entrance exams be re-evaluated?  Or were they the ones who detected fraud?
  4. As an educator, I am wondering how the students fared in college.  Were the alleged improper scores an accurate prediction of their college abilities? Could the value of these tests become an issue should someone go to trial?
  5. How many students were improperly admitted to a college, taking a seat of a student who might have had this opportunity?  And if the admitted students were not aware of what their parents had done, one can only imagine the hurt they are feeling right now. So you have issues related to both the admitted students and those who may have been borderline but denied at these institutions.
  6. Likewise, the parents who are accused of this activity were attempting to assist their children, and it is likely that the damage caused is even greater right now. As is so often the case, especially in white collar cases, the collateral consequences can be significant.
  7. And should the collateral consequences to the families who may have committed these acts be considered if determining the plea offers and later sentences that might occur here.
  8. Many of those accused are probably trying to decide how best to handle these charges - plead not guilty and go to trial, or reach a quick agreement with the government. With tapes and other supporting evidence the decisions will likely be examined against possible cross-examination against cooperating witnesses who were involved in multiple cases.  How much sympathy will a parent trying to assist their children receive, and will it surpass criticism against privilege. And there are also legal questions to examine here - is this the intended use of mail and wire fraud, is conspiracy too broad a crime here, and was this a "wheel-and-spoke' conspiracy?   But what is the risk of making such challenges?
  9. The colleges and universities also need to reflect on the allegations here. What kind of compliance programs did they have in place to root out such conduct from individuals involved in sports activities on campus, and what now needs to be done to make certain that this doesn't occur in the future. Perhaps there is nothing they can do, but if the allegations prove true, it should be examined.

There will be much to learn from what happened today.  It was a sad day for many people.

(esp)

March 12, 2019 in Fraud, Money Laundering, Prosecutions, Prosecutors, RICO | Permalink | Comments (0)

Thursday, December 6, 2018

More Clues From Special Counsel Mueller

The latest filing by Special Prosecutor Mueller is very telling as to the status of the investigation.  Michael Flynn pleaded guilty on Dec. 1, 2017, to making false statements to FBI agents, in violation of 18 U.S.C. 1001.  In anticipation of sentencing on December 18th, the government filed its Memorandum in Aid of Sentencing, along with a heavily redacted Addendum. Some thoughts:

1.  The fact that Flynn plead to a Section 1001 violation hurts Mueller's future cases if they decide to use him to testify against others in those cases.  Pleading to a section 1001 charge is admitting that the individual gave a false, material statement, knowingly and willfully, within the executive, legislative, or judicial branch of the government.  The opening cross-examination questions for such a witness might be - 1) You are a convicted felon? 2) And you were convicted for a crime of lying? 3) And you lied to the FBI? 

2. But three things are noteworthy here - 1) the charge is false statements and not perjury - if it had been perjury then the cross-examination would go on about lying under oath and be dragged out for many more questions than the three previous ones; 2) prosecutors do not get to choose their witnesses and if they can provide an explanation for the lie (e.g. pressure or duress) it stings less; and 3) if you can back up the individual's testimony with other evidence then the false statement charge is less problematic.  It seems likely here that there are documents, emails, or other evidence to support whatever Flynn may be saying.

3. Using a "shortcut offense" like section 1001 is typically not good since it takes away from the actual wrongdoing and society never sees the underlying conduct. Deterrence is best achieved when the actual criminality is disclosed and punished. (see White Collar Shortcuts here).  But that is not the case here. Here Flynn is likely a source providing information for other investigations that can have charges beyond shortcut offenses.  For one, Mueller did not use a shortcut in his charging of cybercrimes against Russians (see here). So using false statements here is again justified.

4. 19 interviews - WOW.  That is significant.  One doesn't meet 19 times and get nothing. 

5. This is an ongoing investigation.  Investigations in white collar cases take time.  This investigation is certainly not finished -- one need only look at the number of redactions in the Addendum to reach this conclusion.

6. That the substantial assistance provided extends beyond the special counsel.  Part A says "XXX Criminal Investigation" and Part B says "The Special Counsel's Office's Investigation" and then appears to have three separate subsections - with one subsection completely redacted.  So one could conclude that the special counsel has 3 investigations that Flynn has been useful for, and that someone else perhaps is using him.

7. Mueller has yet again maintained secrecy, and there have been no leaks.  This is impressive.  It is also impressive that Mueller is speaking only through court papers and not providing any additional information.

8.  It may be frustrating to many that more information has not been released, but in time it is likely we will know more. We need to be patient and trust someone who is clearly upholding the highest of ethical values.

(esp) 

December 6, 2018 in Investigations, News, Prosecutions, Prosecutors | Permalink | Comments (0)

Wednesday, September 26, 2018

DOJ Announces Updated USAM - Now Called the Justice Manual

Earlier today, the Department of Justice announced the issuance of an updated United States Attorneys' Manual.  The new manual, now called the Justice Manual, represents the "first comprehensive review and overhaul of the Manual in more than 20 years."  From the DOJ press release:

“This was truly a Department-wide effort, involving hundreds of employees collaborating from many different Department components,” said Deputy Attorney General Rod Rosenstein. “To mark this significant undertaking, and to emphasize that the Manual applies beyond the United States Attorneys’ Offices, we have renamed it the Justice Manual. Though the name has changed, the Manual will continue as a valuable means of improving efficiency, promoting consistency, and ensuring that applicable Department policies remain readily available to all employees as they carry out the Department’s vital mission.”

By 2017, many provisions of the Manual no longer reflected current law and Department practice. This diminished the Manual’s effectiveness as an internal Department resource, and reduced its value as a source of transparency and accountability for the public. To bring the Manual up to date, employees from around the country, primarily career attorneys, undertook a yearlong, top-to-bottom review. The Department’s goals were to identify redundancies, clarify ambiguities, eliminate surplus language, and update the Manual to reflect current law and practice.

Some specific changes include expanding the Principles of Federal Prosecution to incorporate current charging and sentencing policies, and adding new policies on religious liberty litigation, third-party settlement payments, and disclosure of foreign influence operations.

The Justice Manual may be accessed here

(LED)

September 26, 2018 in Prosecutions, Prosecutors | Permalink | Comments (0)

Friday, September 14, 2018

Superseding Criminal Information - Manafort Case

A superseding criminal information was filed in the case against Paul J. Manafort, Jr.  (see Download Manafort DC_Superseding Criminal Information).  Commentary to follow later today.  

(esp)

September 14, 2018 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (0)

Wednesday, August 22, 2018

The Magic Number Is Eight - And is the Clock Ticking?

Yesterday was a crucial day for Special Counsel Mueller's Investigation in that Paul Manafort was convicted on eight counts. The fact that the remaining counts were "hung" is inconsequential as the sting of these eight convictions sends a strong message and a possible heavy sentence.  To make matters worse for Manafort, he still has an upcoming trial in DC on other charges.  One could argue that there is always the possibility of success on appeal or a presidential pardon.  But one has to wonder whether Manafort's time in negotiating a plea with the Special Counsel may be running out.  And is there now competition in who will get the best cooperation agreement or favorable statement at sentencing from the government.

Further north, it was an important day in that within the same hour as Manafort's conviction, Attorney Michael Cohen entered a guilty plea to eight counts.  Many in the media are noting that in the plea hearing Cohen said that his actions were "at the direction of a candidate for federal office."  Was Michael Cohen sending a message to Mueller's team that he is ready to talk?

These two cases are not currently connected --two different prosecutors, two different offices, two different courts, two different matters. 

But how many cooperators does Mueller need, and will Manafort (if he decides to cooperate) be up against Cohen's desire to offer evidence, assuming that he might have an interest in cooperation.

It may be a stretch to say that the clock is ticking for potential cooperators.  It may also be that Mueller is someone who says "the more the better."   Bottom line we just don't know. But yesterday's count of 8 will go down as a memorable day, not because of the matching 8s, but because of what is happening to individuals who had been associated with the President.

(esp)

August 22, 2018 in News, Prosecutions, Prosecutors, Verdict | Permalink | Comments (0)

Saturday, July 28, 2018

Soliciting Contributions From a Foreign National: It's Against the Law. But is it a Crime?

Can we talk about the law here? Title 52 U.S.C. §30121, subsection (a), makes it unlawful, among other things, for "(1) a foreign national, directly or indirectly, to make...(A) a contribution or donation of money or other thing of value, or to make an express or implied promise to make a contribution or donation, in connection with a Federal, State, or local election." Section 30121 also makes it unlawful for a person to solicit, accept, or receive a contribution or donation described in subparagraph (A)...of paragraph (1) from a foreign national." If something is unlawful, it is against the law.

Clearly, if Donald John Trump, Donald Trump Jr. or anyone else associated with the Trump campaign knowingly solicited, accepted, or received money or a thing of value from a Russian national, that person has violated this provision of the Federal Election Campaign Act, as amended. And the same is true for Hillary Rodham Clinton and persons associated with her campaign.

But not every violation of law is a crime. To be guilty of criminally violating Section 30121 a person must do so knowingly and willfully. See 52 U.S.C. § 30109. In the context of the Federal Election Campaign Act, this means that an individual, to be guilty, must know that he is acting in violation of the law. In other words, here, as in certain other federal criminal statutes, ignorance of the law is an excuse.

In legally examining what we know about the infamous Trump Tower meeting of 2016, we should keep these realities in mind. I am speaking here of the meeting, and what led up to it, alone, and not what may or may not have later transpired. Based on what we currently know it seems extremely unlikely that any reasonable prosecutor could make a criminal case under the Federal Election Campaign Act against Donald Trump Jr. And that includes a case alleging any a conspiracy or attempt to willfully violate the statute. There just isn't enough.

Here are the statutes in question.  52 U.S. Code Section 3012152 U.S. Code Section 30109.

(wisenberg)

July 28, 2018 in Current Affairs, Prosecutions, Prosecutors | Permalink | Comments (0)

Wednesday, July 25, 2018

U.S. v. Manafort: Judge Ellis Rules on Prosecution and Defense Motions in Limine

For all of you Manafort junkies out there, here is Judge T.S. Ellis, III's July 24 2018 Order, resolving most of the outstanding prosecution and defense motions in limine in U.S. v. Manafort, due to be tried next week in Alexandria.

It is abundantly clear, based on these rulings and the charges in the EDVA Superseding Indictment, that this case will be presented to the jury by the government, as much as possible, as a relatively straightforward bank fraud, concocted by the defendant in order to hide the amount and source of improperly derived offshore income. Manafort and Rick Gates (now a cooperating witness) allegedly created phony loans from offshore nominee entities in order to conceal lobbying income derived from their work as unregistered agents on behalf of, among others, the Government of Ukraine and former Ukrainian President Victor Yanukovych. Later, when Yanukovych lost power and the money source dried up, Manafort and Gates allegedly inflated the value of Manafort's real estate holdings (and/or lied about the nature and use of said real estate) in order to obtain new loans and maintain a lavish lifestyle. The jury will hear and see evidence regarding Manafort's lavish lifestyle, his failure to register as a foreign agent, and his failure to disclose foreign bank accounts that he controlled. But the jury will not see or hear anything pertaining to the Trump campaign's purported collusion or interaction with Russia.

It is becoming fairly obvious to me that Mueller has no criminal collusion case to bring against the President or anyone in the President's entourage absent: 1) bombshell disclosures from Michael Cohen; 2) Manafort flipping after conviction; or 3) Manafort testifying through a post-conviction compelled immunity order issued by a federal court pursuant to 18 U.S.C. §§ 6002 and 6003. The Manafort case was never about Manafort. It was always about Trump. The law unquestionably allows Mueller to operate in this manner. It is what it is.

(wisenberg)

July 25, 2018 in Current Affairs, Defense Counsel, Fraud, Judicial Opinions, Prosecutions, Prosecutors | Permalink | Comments (0)

Monday, July 23, 2018

Government's Exhibit List in U.S. v. Manafort

For all of you Manafort trial junkies, here is the Government Exhibit List, recently filed in U.S. v. Paul J. Manafort, Jr., set to start soon in U.S. District Judge T.S. Ellis, III's Alexandria courtroom.

Here also is Judge Ellis's Order Denying Paul Manafort's Motion for Change of Venue.  Judge Ellis ruled last week that Manafort is not entitled to a presumption that any Alexandria federal trial jury would be partial to the government. If Manafort can establish actual prejudicial partiality through voir dire, a herculean task under current federal criminal law, Judge Ellis will revisit the issue.

(wisenberg)

July 23, 2018 in Corruption, Current Affairs, Fraud, International, Judicial Opinions, Money Laundering, Mortgage Fraud, Obstruction, Prosecutions | Permalink | Comments (0)

Friday, July 13, 2018

The 400 lb hacker?

Special Counsel Robert Mueller's Office has clearly been working to get to the bottom of the alleged Russian interference with U.S. elections.  Today a D.C. federal grand jury handed down an Indictment against  "12 Russian nationals for their alleged roles in computer hacking conspiracies aimed at interfering in the 2016 U.S. elections."  The special counsel's website notes that "the indictment charges 11 of the defendants with conspiracy to commit computer crimes, eight counts of aggravated identity theft, and conspiracy to launder money. Two defendants are charged with a separate conspiracy to commit computer crimes."  The Indictment is here

There are some interesting lines in the Indictment including: "The Conspirators, posing as Guccifer 2.0, also shared stolen documents with certain individuals."  It states,

"On or about August 15, 2016, the Conspirators, posing as Guccifer 2.0, received a request for stolen documents from a candidate for the U.S. Congress. The Conspirators responded using the Guccifer 2.0 persona and sent the candidate stolen documents related to the candidate's opponent."

The indictment speaks about how "[t]he conspirators, posing as Guccifer 2.0, also communicated with U.S. persons about the release of stolen documents."  It notes how the conspirators "wrote to a person who was in regular contact with senior members of the presidential campaign of Donald J. Trump ..."

The Indictment states that "[i]n order to expand their interference in the 2016 U.S. presidential election, the Conspirators transferred many of the documents they stole from the DNC and the chairman of the Clinton Campaign to Organization 1."

One thing is clear in reading this indictment - Mueller is running a legitimate and important investigation and it needs to continue.

(esp)

July 13, 2018 in Computer Crime, Corruption, Current Affairs, Investigations, News, Prosecutions, Prosecutors | Permalink | Comments (0)

Monday, June 18, 2018

The Irony Of The FBI. What Did The Bureau Know And When Did The Bureau Know It?

If Congressman Trey Gowdy is to be believed, and I see no reason not to believe him, this should be an interesting week in Washington. According to Gowdy, Speaker Paul Ryan read the riot act to the DOJ and FBI  on Friday night about the Bureau's stonewalling and foot dragging in the face of longstanding subpoenas issued by the House Judiciary and Intelligence Committees. If the subpoenas are not complied with, Gowdy warned that the full constitutional powers of the House will be employed by week's end. It is clear that Gowdy was not just talking about holding people in contempt. Gowdy's comments are significant, because he has been one of the few House Republicans to consistently support the work of Bob Mueller and to give the benefit of the doubt to the Bureau regarding the origins of the Russian investigation. This has often put him on the outs with the many Trump shills on the GOP side. What apparently pushed Gowdy over the edge was the Horowitz Report's revelation of Peter Strzok's text response to Lisa Page that "we'll stop" Trump from being elected President. Astonishingly, it appears that this text had not been provided to the House prior to the release of the Horowitz Report. I suspect as well that Gowdy was enraged to read in the Report that the Bureau, with the active involvement of Deputy Director McCabe, sat on its knowledge of the Weiner laptop materials, even keeping it from the DOJ prosecutors who had been involved in the Clinton email server investigation (dubbed "Midyear Exam"), until alarmed officials in the SDNY U.S. Attorney's Office tipped off an attorney at Main Justice. It is clear that at the time Strzok was leading and ramping up the Russia investigation, he and a large group of DC FBI officials were suppressing the discovery of 347,000 potentially relevant emails on Weiner's laptop. This is why even the rather tame Horowitz Report "did not have confidence that Strzok's decision to prioritize the Russia investigation over following up on the Midyear-related investigative lead discovered on the Weiner laptop was free from bias." But make no mistake about it, Strzok did not act alone. As many as 39 FBI officials were likely to have participated in a September 28, 2016 secure video teleconference (SVTC) in which the discovery of 141,000 emails potentially relevant to Midyear Exam was discussed. (McCabe was informed of the 347,000 figure later that evening.) This was an FBI conspiracy of silence. The irony is that the FBI's attempt to suppress the Weiner emails almost certainly aided Trump's electoral victory. If the emails had been processed in a timely fashion, without publicity, their ultimate irrelevance would have been established prior to the election and Comey would not have needed to make the damaging announcement that he was reopening the Midyear investigation. It will be doubly ironic if there were wholly legitimate reasons to open the Russia investigation, but the FBI's misguided efforts to hide its own mistakes ends up tainting and derailing the entire project. Byron York reports here on the growing House GOP suspicion that the FBI is hiding even bigger bombshells.

(wisenberg)

June 18, 2018 in Investigations, Prosecutions, Prosecutors | Permalink | Comments (0)

Monday, June 11, 2018

A Deep State Story: The James Wolfe Indictment

Here is the Indictment returned late last week in U.S. v. James Wolfe. Wolfe worked for 30 years for the United States Senate Select Committee on Intelligence ("SSCI") handling top secret and other classified information provided by the Executive Branch to Congress. According to the Indictment, Wolfe leaked the identity of "Male-1" to at least two reporters on two separate occasions and then lied about it to FBI Special Agents. Male-1 is none other than Carter Page and it is clear that the leaks were intended to damage Donald Trump. Reporter #2, referenced in the Indictment, is New York Times reporter Ali Watkins who was romantically involved with Wolfe for almost four years. Records of Watkins' email and phone contacts (but apparently not their contents) were subpoenaed from third party providers. Andrew McCarthy of NRO Online has commentary here, while Alex Pappas of Fox News examines some of Ms. Watkins' embarrassing historical tweets concerning the identity of leakers and the propriety of sleeping with sources. The press and certain members of Congress are concerned, as well they should be, about DOJ's capture of journalistic records. But keep in mind that the press is not the only institution with a watchdog role. The SSCI performs that function as well, and does so officially, with respect to intelligence-related oversight, and it is ironic (in a bad way) that its Chief of Security, if the charges are accurate, betrayed SSCI's trust. At this point Wolfe has only been charged, under 18 U.S.C. Section 1001 (the Martha Stewart statute) with lying to the FBI.

(wisenberg)

June 11, 2018 in Celebrities, Congress, Current Affairs, Investigations, Martha Stewart, Media, News, Obstruction, Prosecutions, Statutes | Permalink | Comments (0)

Friday, June 8, 2018

Third Superseding Indictment - Manafort

Special Counsel Mueller added two counts to Paul J. Manafort Jr.'s Indictment and charged Konstantin Kilimnik with these same two counts (Counts 6 and 7) -  (see Third Superseding Indictment here).  The new counts and new charges allege Obstruction of Justice (Count 6) and Conspiracy to Obstruct Justice (Count 7). Both of these alleged offenses come from the same statute - 18 U.S.C. 1512, with the conspiracy using subsection (k) of section 1512. 

The charges are intriguing in that the special counsel elected not to charge using the general conspiracy statute, section 371, a statute he did use in count 1 against Manafort.  The use of the conspiracy provision within a substantive offense is charged in count 2 (conspiracy to launder money), but here there is no charge of money laundering against Manafort. 

So basically you have one conspiracy to defraud charge, two conspiracy charges coming from specific offenses but not charged under the specific offense provision of the general conspiracy statute, and one of the conspiracy charges coming from the same statute as the specific offense that is charged.

So some questions to ponder:

  • did the special counsel only want one conspiracy charge under 371 and did not want to combine the specific acts?
  • did the special counsel not want to confuse the conspiracy to defraud the government charge with specific offense charges?
  • did the special counsel want to leave more room to split the charges if one of the two people now charged decides to cooperate?

There are probably some out there who will argue that this is all to get cooperation. And whether that is true  is not the question being asked here. Special Counsel Mueller has a professional and skilled team and learning their thoughts on why things were charged in a certain way will hopefully be a talk he gives years from now to some bar association. In the interim, please continue to work as diligently as you have been.

(esp)

June 8, 2018 in Prosecutions, Prosecutors | Permalink | Comments (0)