Thursday, April 6, 2017
My old friend Paul "Bunky" Rosenzweig has written an informative primer on immunity from prosecution in the wake of news that former National Security Advisor Mike Flynn wants immunity, purportedly so that he can "tell all." Well, as my Dad used to say, "People in Hell want ice water." Here is Paul's piece from Lawfare. There was an initial assumption in many social media outlets that Flynn's quest for immunity signaled impending doom for the Trump Administration. How silly. If that's true, then why has President Trump stated that Flynn's request should be granted? Who wouldn't want transactional or derivative use immunity from Congress? If Flynn were to publicly testify after such a grant, future criminal prosecution of him would be virtually impossible. See Ollie North and Admiral Poindexter. So, if Flynn gets immunity from Congress it would either be a colossal act of Congressional stupidity or a scandal of world class proportions. Flynn appears to have very able white collar counsel, so look on this as a bold ruse. Why not at least try it? Regarding immunity granted by a DOJ letter or a federal district court order at DOJ's request, we've learned from the Clinton Espionage Investigation that even DOJ grants of immunity by the truckload don't guarantee a successful prosecution--of anybody. Bottom line: Assuming that DOJ has a case against Flynn he is unlikely to get immunity at all. He would instead get some kind of plea deal. In either circumstance, he would not get it absent an in person proffer. Regarding proffers, and how they should be viewed from the defense perspective, see my old article on proffers from Findlaw. Nothing much has changed since I wrote it.
Wednesday, March 29, 2017
Former Illinois Congressman Aaron Shock's attorneys filed two motions in federal court yesterday, alleging massive government misconduct in the investigation that led to their client's indictment on multiple misconduct and fraud related charges. The allegations center around the government's alleged use of one of then-Congressman Schock's junior staffers as a confidential informant who purportedly recorded conversations covered by the Speech and Debate Clause and the attorney-client privilege, and also stole various privileged materials. The government has apparently conceded that some of the informant's actions were improper and has promised not to use certain evidence he obtained, but if even half of Schock's allegations turn out to be true it will constitute a major embarrassment to DOJ. You look at the facts detailed in Schock's motions and have to be wondering what the government was thinking in using these kinds of tactics in the wake of the Jefferson case and Abramoff era investigations that brought Speech and Debate issues to the fore. There is also an allegation that government prosecutors gave incorrect legal advice to the grand jury. Schock wants more information about the government's use of the informant and access to additional grand jury materials. Here are the Schock Memorandum in Support of Motion for Discovery Regarding Use of Confidential Informant and the Schock Memorandum in Support of Motion for Discovery of Grand Jury Materials. Here is coverage from The Hill and the Washington Post. More to come as this case progresses. Schock is represented by George Terwillliger, Bob Bittman, Benjamin Hatch, Nicholas Lewis, and Christina Egan of McGuie Woods in DC and Chicago and by Jeffrey Lang of Lane & Waterman in Davenport, Iowa. The case is being prosecuted out of the Central District of Illinois.
Sunday, March 12, 2017
It is fairly typical that US Attorneys offer their resignations when a new President, especially one of a different party, is elected. But firings and requiring same-day resignations are less common. This is particularly troublesome as many were finishing up work on current cases. Of the 46 who had not left and asked for their resignations this week were a few that it is sad to see leaving their post. I don't know all 46, but some that I do are mentioned below -
David Capp, U.S. Attorney Northern District of Indiana - Attorney Capp had planned to retire in June 2017. He issued a thoughtful statement here. He thanks the "men and women of the USAO for their dedication and professionalism, day-in and day-out." Thank you David for your dedication and professionalism. In the statement issued he notes -
"Some years ago I spoke one evening at a church in Gary. We had just made some arrests and closed down a drug operation in the neighborhood the church served. Afterwards a gentleman came up to me, shook my hand, thanked me for our efforts and told me “now my grandchildren can play in the yard again.” That has always stuck with me and kept me focused on what our work is really about. I hope that I have played a part in making more yards in the Northern District of Indiana safe for “grandchildren to play in."
Others that were forced to resign include US Attorney Paul J. Fishman (statement here), whose office had prosecuted some of the Bridgegate cases (see here). And Preet Bhatara who was fired after refusing to resign (see here) had done some interesting prosecutions related to Conspiracy to work for Russian Intelligence (see here).
Attorney General Jeff Sessions has much work ahead trying to match the work done by individuals of this caliber.
Addendum - Other statements regarding resignations -
District of Rhode Island - United States Attorney Peter F. Neronha Stepping Down
District of Minnesota - Statement From U.S. Attorney Andrew Luger
Eastern District of Arkansas - U.S. Attorney Christopher R. Thyer Announces Resignation
Friday, March 10, 2017
The New York Times reports that "Trump Abruptly Orders 46 Obama-Era Prosecutors to Resign." Sad.
Acting Assistant Attorney General Criminal Division Kenneth A. Blanco was the keynote speaker for the final morning's program of the ABA White Collar Crime Conference of 2017. He spoke about transnational and money laundering crimes and government prosecutions in this area. He emphasized the importance of international cooperation. He remarked that there has been an increase in multinational investigations and it is important to have strong relationships with our counterparts worldwide.
He used the word "global" 14 times, the word "international" 25 times, and "cooperation" 11 times. International collaboration and cooperation were without doubt his theme.
He spoke briefly about the Fraud Section Pilot Program, stating:
"Before I conclude, I would be remiss if I did not comment on the Fraud Section’s “Pilot Program.” Last year, the Fraud Section implemented a one-year “Pilot Program” for FCPA cases, to provide more transparency and consistency for our corporate resolutions. The “Pilot Program” provides our prosecutors, companies and the public clear metrics for what constitutes voluntary self-disclosure, full cooperation and full remediation. It also outlines the benefits that are accorded a voluntary self-disclosure of wrongdoing, full cooperation and remediation. The one-year pilot period ends on April 5. At that time, we will begin the process of evaluating the utility and efficacy of the “Pilot Program,” whether to extend it, and what revisions, if any, we should make to it. The program will continue in full force until we reach a final decision on those issues."
He ended with the lyrics from a 1960s song from Martha and the Vandellas – "Nowhere to run baby, Nowhere to hide."
A full copy of his talk can be found here.
Thursday, March 9, 2017
Hon. Paul L. Friedman moderated the judges panel. The judges on the panel were Hon. Gregg Costa, Hon. Charles Breyer, Hon. Nannette Jolivette Brown, Hon. Amy J. St. Eve, Hon. Kathleen M. Williams, and Hon. Carlos Mendoza.
Does your life experiences influence your judging? The judges talked about sentencing.
Hon. Carlos Mendoza spoke about how his diverse background has affected his sentencing. Hon. Amy J. St. Eve noted that judging is the most difficult thing that judges do. Hon Charles Breyer noted that there is no such thing as a "right sentence," but there is something called a "wrong sentence."
Some pointers offered:
- Sentencing memos are important
- "Educate us on your client"
- "Know your judge"
- Some Judges may not want 3 or 7 pages of Booker, and then finally saying -now here is what you can do - "I already know that."
- "Watch what your clients do" -Problems when the offender doesn't accept responsibility
- Come up with a better argument then the folks at the country club don't talk to him any more
- Not helpful when government just says - we want a sentence in the guidelines range
- If prosecutor and defense attorney agree on something (C1c), more inclined to do it
Deferred prosecution agreements were discussed as well as the managerial aspects of the judicial position. The panelists offered many reflections in thenearly two hour discussion. They also looked at high profile cases and whether they had any special procedures in these cases. Justice Breyer said the less said, the better. Hon. J. St. Eve said - "I don't read the coverage in a high profile case." They skipped over discussing Brady, but did discuss technology.
One question was whether the judge allowed the defense counsel to see the probation officer's recommendation. It was noted that the judges differed on whether the judge would allow counsel to see this.
Alan M. Dershowitz, the morning speaker, started by telling how he missed teaching. The amount of perjury committed by defendants is small in comparison to the amount of lying by police officers. He talked about how some witnesses are told not only to sing, but to compose. He noted that perjury in civil cases is pervasive. Perjury in civil cases, however, is seldom prosecuted. He also noted that most perjury does not occur on direct examination, but rather on cross-examination. Also he noted that there are often lies in depositions. He ended by saying that we should not be tolerating perjury, and also that we should be focusing on perjury beyond defendant perjury.
Wednesday, March 8, 2017
This is the first time the ABA White Collar Crime Conference had a panel focused on "Due Process on Today's Campus: Handling IX Abuse and Harassment Cases." Moderating this conference was Marcos Hasbun. Panelists were Carolina Meta, Thomas C. Shanahan, and Hon. Nancy Gertner. Many may think this is outside the scope of white collar criminal matters, but attorneys in the white collar area are often involved in the internal investigations for schools and criminal defense counsel can be called on in representation of clients - both individuals accused and victims.
Hon. Nancy Gertner noted that this was initially regulation guidance that was not issued with notice and comment. It has had earth shattering consequences, as described by Hon Nancy Gertner. The preponderance of the evidence standard being used was noted. But unlike ordinary civil cases, you don't have discovery. The panel discussed the "Dear Colleague" letter. She also noted the mandated procedures is how it has played out. Thomas Shanahan discussed the parallel proceedings that can occur with law enforcement and the university disciplinary proceeding.
It was noted that the university is under a mandate to move things along in 60 days. It was also noted that case lines are developing on two different tracks, including those arguing the denial of due process rights by the university.
Some argued that the process is focused on due process rights of the individuals making the accusation. But it was also noted that some states, like North Carolina, permits counsel during the proceedings for the respondent. It was noted it can be beneficial for counsel for the respondent to get the outside lawyer involved.
One of the opening panels of the conference was a breakout on Pre-trial Practice in Federal Criminal Cases. The panel included Hon. Cecilia Altonaga, Professor Ricardo Bascuas, Ryan O'Quinn, David Markus, and Vanessa Snyder. The moderator was Andrew Feldman.
The panel looked at motion filing, bail, and admission and exclusion of evidence as some of the topics for discussion.
From the prosecutor perspective Ms. Snyder emphasized the benefits of defense counsel calling prosecutors before filing motions. "See if you can work it out." It would lead to a more productive result, she stated. She stated that then if it is necessary you can file the motion if you can't work it out.
Judge Altonaga emphasized having a plan when filing pre-trial motions. Is it getting you to your goal or are you alienating the court and prosecutor. Pre-trial motions can be used to educate the court.
David Marcus spoke about the insignificant number of folks who skip on a bond and how the failure to give a bond proves detrimental to the system. Judge Altonaga spoke about the risk of flight standard. It helps if there are local ties, that is ties to the United States exist.
Professor Bascuas noted the increased number of individuals in prison and the decreased number of trials.
Ryan O'Quinn noted the long relationship that the prosecution and defense have prior to Indictment in white collar cases.
The panelists also discussed the admission and exclusion of 404(b) evidence and motions in limine.
Audience questions turned the discussion in a different direction - Brady.
Monday, March 6, 2017
U.S. Attorney Wifredo A. Ferrer Joins Holland & Knight as Head of Global Compliance and Investigations Team
Holland & Knight has announced that Wifredo A. Ferrer, U.S. attorney for the Southern District of Florida, will join the firm as a partner in its Miami office. Mr. Ferrer will lead the firm's Global Compliance and Investigations Team, which focuses on corporate compliance and government investigations within the firm's White Collar Defense Practice. Read more here.
The National Association of Criminal Defense Lawyers (NACDL), the leading national bar association representing the entire defense bar, is seeking a Counsel to work in its White Collar Crime Policy Department on a variety of white collar criminal defense and overcriminalization initiatives. This staff person is a member of NACDL’s national affairs team and works under the Director of White Collar Crime Policy. For more information, see here.
Friday, February 17, 2017
John P. Anderson (Mississippi College School of Law) has a new Article titled, When Does Corporate Criminal Liability for Insider Trading Make Sense? published in 46 Stetson L. Rev. 147 (2016). The abstract reads -
Corporations are subject to broad criminal liability for the insider trading of their employees. Critics have noted that this results in a harsh irony. “After all,” Professor Jonathan Macey argues, “it is generally the employer who is harmed by the insider trading.” In the same vein, former chairman of the Securities and Exchange Commission (SEC) Harvey L. Pitt and Karen L. Shapiro point out that, “[f]ar from being responsible for their employees’ violations of the law…most of the employers who have had the unfortunate experience of employing [insider traders] are in fact the only true victims, in an otherwise victimless crime.”
It is clear that not all insider trading is victimless, and not all employers of insider traders are innocent. But I am convinced that these critics are correct to point out that the current enforcement regime is absurdly overbroad in that it affords no principled guarantee to corporate victims of insider trading that they will not be indicted for the crimes perpetrated against them.
The law should be reformed to insure that corporations are only held criminally liable where they are guilty of some wrongdoing. Section I of this Article outlines current law in the United States concerning corporate criminal liability in general. Section II then looks at corporate liability for insider trading under the current regime. Section III explains why the current regime is absurdly overbroad and in dire need of reform. Section IV then points the way to some reforms that would render corporate criminal liability for insider trading more rational, efficient, and just.
Thursday, February 16, 2017
As many readers know, I am heavily involved in planning international white collar crime conferences with the American Bar Association Criminal Justice Section. These have become wonderful learning and networking opportunities for those with an interest in the many issues in the field that transcend national boundaries.
I’m excited to announce the next international conference offering will occur on April 5, 2017 in Hong Kong. The event will focus on Global Investigations and Compliance: From Regulatory Trends to Leveraging Innovation and Technology. I expect this conference to be a wonderful compliment to the successful Global White Collar Crime Institute the American Bar Association held in Shanghai in 2015. If you attended the Shanghai event, I hope you will join us again and reconnect with the many colleagues and contacts you established at that earlier conference. If you were not in attendance in Shanghai, I hope you will join us in Hong Kong and be introduced to the growing network of international professionals making these American Bar Association white collar conferences an important part of their network.
Seating is limited for this event, and I hope you will register today to reserve your spot (click here to register). I look forward to seeing many of you in April.
Official ABA Event Description
PwC Hong Kong and the American Bar Association are hosting a full day seminar with four robust panel discussions followed by a networking reception. The panel sessions will focus on a number of pertinent topics, such as exploring regulatory updates, international investigations, navigating cross-jurisdictional issues in Southeast Asia, and the future of blockchain technology in compliance programs. The content for these panels will be delivered by leading experts, including prominent attorneys in the US and Asia, US regulators, consulting professionals, corporate executives, professors, and others. The target attendees for this event are international and Hong Kong/China based legal and corporate professionals focused on white collar crime and compliance.
- Regulatory Update: Recent Trends in Enforcement
- Current State of International Investigations
- Navigating Cross-Jurisdictional Issues in the South Asian Market
- Block-chain Technology: What does it mean for the Future of Compliance Programs?
More information here.
Wednesday, February 15, 2017
There is something to be said about having career prosecutors, FBI, and other employees of the government immune from the political struggles surrounding them. They are tasked to focus on their jobs irrespective of the party in power. And clearly sometimes it is probably not easy.
For many years, Sally Yates was a career prosecutor. Climbing the ladder in DOJ took her out of the mainstream career prosecutor path and placed her front and center in the political arena.
I have not been a fan of the "Yates Memo," a memo that she authored that appeared to crackdown on corporate criminality, but rather in my opinion was a symbol of aggressive rhetoric that failed to offer a long-term solution to combatting corporate misconduct.
That said, her leadership role in being a "Minister of Justice" during her short tenure as the acting head of the DOJ needs to be applauded. She refused to defend a presidential order that has now been stayed by multiple judges. Bottom line - she was right and so far has been proven to be correct. For standing up for Justice she was fired on January 30, 2017.
And at the time of her dismissal, we hadn't learned of other investigations that might be of concern to President Trump's administration. It is only now that we are finding out that on January 26th the Justice Department relayed concerns about Michael Flynn to the President. (see discussion of WH Secretary Sean Spicer's Tuesday, press briefing (here).
So was Sally Yates more than just a woman who said NO to the President?
It is important to note here that there have been a long line of women who have spoken up to alert of misconduct (see here), as well as men. Maybe this is a time to recognize all the career folks in the different offices who put politics aside and just do their jobs.
Monday, February 13, 2017
At the end of the day, the new Attorney General is a DOJ guy--a veteran AUSA and U.S. Attorney. He appears to have real reverence for the history and traditions of Mother Justice, and I'm not just talking about withholding exculpatory information from the defense. Don't expect any sudden, shocking institutional changes in the day to day operations of DOJ's prosecutorial regime. Like any Attorney General in a new Administration--particularly a new Administration with a profoundly different ideological approach than its predecessor--there will be substantive shifts in priorities. Certain crimes will go to the head of the class. Ed Meese latched onto Zero Tolerance. Jeff Sessions will have his pet programs too. We have already seen some unfortunate saber rattling on violent crime and asset forfeiture. But things should settle down. President Trump has nominated Rod Rosenstein to be Deputy Attorney General. Rod is also a Department guy, who has served throughout DOJ for Democratic and Republican Attorneys General. Although Rod is a solid Republican, he has a longstanding reputation for non-partisanship. Rosenstein has been U.S. Attorney for the District of Maryland for the last 12 years. You don't get appointed by President Bush, and kept around by President Obama for two terms in a state with two liberal Democratic Senators without being competent and non-partisan in your prosecutorial priorities. Unless you have pictures of somebody. But I digress. Bottom line, it is very difficult to envision anything like the Ted Stevens prosecution occurring in a Department with Sessions and Rosenstein in charge.
What about white collar? Both Sessions and Rosenstein believe strongly in individual accountability for criminal wrongdoing. They truly do. Expect to see a real focus, not just a bullshit press release focus, on going after high-end human white collar targets. If I am right, this will be one of the biggest turnarounds from the changeover in parties at DOJ. Not saying this is good or bad. It is what it is. Expect the overreaching that always comes with such efforts. I've commented for years about the strange phenomenon of GOP AGs being far more aggressive on white collar crime than their Democratic counterparts. Reno was an exception, but she was Clinton's accidental AG--a totally unexpected third choice. Web Hubbell was supposed to be the real power behind the throne. Not long before he was forced to resign, Hubbell called in First Assistants and Criminal Chiefs from U.S. Attorney Offices around the country and harangued them for being too tough on white collar crime. Why is this so--this odd GOP aggressiveness on white collar crime within DOJ? I expect it is embarrassment and the fear of bad press clippings. We are the big money party so we have to be seen as aggressively targeting white collar crime. This mindset, and a press uproar, seem to have spawned the massive resources thrown at S&L prosecutions in the late 80s and early 90s. At any rate, when the next financial scandal hits, let's at least hope DOJ doesn't overwhelmingly target lower middle class players who merely went along with the Zeitgeist. I can't tell you many people of color and immigrants, low level loan officers and the like, were aggressively prosecuted by Obama's DOJ while the true players went untouched. In this regard, for Sessions, there is nowhere to go but up.
Wednesday, February 8, 2017
Bernard Lawrence Madoff carried out what many consider to be the largest financial fraud in U.S. history: a massive Ponzi scheme which cost his client’s $64 billion.
He’s in jail, serving out his 150-year sentence. Steve Fishman’s new Audible series “Ponzi Supernova” features never-before-heard recordings of Madoff as well as dozens of new interviews with FBI agents, attorneys, traders and victims of Madoff’s devastating Ponzi scheme. The fraud, Fishman says, extended far beyond Madoff and his close associates, and he finds fault in a system that actively enabled him to scam his many victims.
I would highly recommend giving the podcast a listen as an introduction to the six-part Audible series. Having heard a few excerpts of Madoff in his own words during the podcast, I can't wait to hear the full series.
Sunday, February 5, 2017
It is always difficult to predict how someone will opine if they are on the Supreme Court. This is especially true if the prior judicial opinions do not cover a wide span on issues. In the case of the nominee, Judge Gorsuch, we do have some opinions to examine.
It is clear that he has excellent credentials from schooling and prior service on the bench. Interestingly, however, is that Judge Gorsuch's ratings are below those held by Judge Merrick Garland, who never received a hearing on his nomination. (see here) And in many ways Judge Garland had superior experience as the Chief Judge for the District of Columbia. After all, his court saw many cases that involved issues of national concern, like national security, including those dealing with Guantanamo. Further Judge Garland is neither a far liberal nor a conservative, having offered to the bench a centrist that would be more appeasing to an already split nation. Everyone seems to agree that Judge Gorsuch presents a conservative approach. (see here and here)
But looking solely at Judge Gorsuch, and not the unfortunate circumstance of the failure of Judge Garland to have the hearing that Judge Gorsuch will now receive, where does Judge Gorsuch stand on white collar matters is the question.
Typically, those on the right tend to be pro-prosecution on Fourth Amendment and drug crimes. In contrast, the same position is not taken in a white collar case. Professor Kelly Strader in his article The Judicial Politics of White Collar Crime, documents this paradox. Judge Gorsuch has a strong record of supporting the prosecution. (See, e.g., United States v. Mendivil, 208 F. App'x 647 (10th Cir. 2006)(affirming drug related conspiracy). And some of these cases might be considered white collar cases (See, e.g., United States v. Carnagie, 426 F. App'x 640 (10th Cir. 2011)(affirming a sec. 1001 HUD related case).
But if one looks at cases beyond the Fourth Amendment, like a gun-related case - we see him emphasizing a strict statutory interpretation. (See United States v. Games-Perez (dissenting)). Justice Scalia was particularly strong in enforcing strict statutory interpretation in white collar cases (e.g., Skilling (concurring opinion), Sun-Diamond Growers, McCormick (concurring), Santos). Justice Scalia was not shy to use vagueness and the Rule of Lenity to accomplish having a white collar statute strictly construed. And in this regard there is a strong similarity seen with Judge Gorsuch. Judge Gorsuch's opinion in United States v. Renz, 777 F.3d 1105 (10th Cir. 2015) provides a glimpse of his statutory interpretation analysis. He includes in the decision a diagram as he takes apart the elements of the statute in a methodical manner. The opinion itself is well-organized, references precedent, and resorts to the Rule of Lenity when clarity is an issue. He was unwilling to accept the government's interpretation of this firearm statute.
So what can we expect if he joins the Supreme Court? It is somewhat uncertain when examining the white collar area. But it does appear that the government may have some problems if it tries to stretch statutes or if the statutes are not clear.
Saturday, February 4, 2017
An important issue to watch this year is the ongoing battle over access to data collected by companies and stored overseas. This issue heated up last year when Microsoft won its Second Circuit challenge of a 2013 warrant for emails housed in an Irish data center. In the Second Circuit decision from July 2016, the court determined that U.S. law did not allow the enforcement of warrants for customer email content housed overseas, even though Microsoft is a U.S. service provider.
Last week, the Second Circuit denied rehearing the Ireland case by a divided 4-4 vote. The decision contains a number of interesting arguments from the judges and is worth a read for those involved in cases with international data issues.
The Second Circuit decision now sets the case up for a possible Supreme Court challenge by the government. According to Orin Kerr, writing in the Washington Post, however, Senator Sessions indicated during his confirmation hearings that he might seek a legislative remedy to address the Microsoft issue. Either way, this topic is one to keep an eye on in 2017.
Tuesday, January 31, 2017
As I see it, Acting Attorney General Sally Yates had four options regarding her opposition to President Trump's Executive Order on refugees, visas, and travel bans: 1) defend it in the courts since most or all of the Order is likely to be judicially upheld; 2) explain to the President in private why the parts you don't like are problematic and try to change his position; 3) accept the President's position if you fail to change his mind; or 4) resign in protest if you fail to change the President's mind. Yates, so far as is known, did none of those things. Instead, she loudly and publicly ordered her subordinates not to defend the OLC vetted Order in court--an Order promulgated by the head of the Executive Branch of the United States. Her firing was thus inevitable and fully justified. As a career move it was brilliant of course. She was about to ride off into the sunset as one of those career DOJ types who occasionally get elevated to a political leadership post. No doubt a cushy partnership awaited her at a prominent national firm if that was her desire, or perhaps she coveted an academic slot at a prominent law school. She will still get something like that, but is now a political celebrity as well with a possible political future. Well played, Ms. Yates.
Sunday, January 8, 2017