Former CIA executive director Kyle “Dusty” Foggo was sentenced to 37 months in prison on Thursday by US District Judge James Cacheris in Alexandria. Foggo pleaded guilty in September to one count of honest services wire fraud in connection with the Brent Wilkes case (earlier). The sentence was the maximum allowable under his plea agreement (NY Times).
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Former Qwest CEO Joe Nacchio’s insider trading convictions were reinstated by the Tenth Circuit sitting En Banc. The Court reversed, by a 5-4 vote, the ealier panel decision which had overturned Nacchio’s multiple insider trading convictions based on trial judge Edward Nottingham’s refusal to allow Nacchio’s expert to testify. The full Court held that Nottingham did not abuse his discretion. The NYTimes story is here.
Yesterday Justice Scalia dissented from the denial of certiorari in Sorich v. United States, a Seventh Circuit honest services fraud case. Scalia’s dissent is a cogent due process and federalism based attack on the unfairness, inconsistency, and appalling lack of clarity governing the case law on honest services mail and wire fraud. With the death of the Holder Memorandum, DOJ’s use and misuse of the honest services fraud statute as a prosecutorial tool is emerging as the the number one issue in federal criminal practice today. Justice Scalia is often a few years ahead of the country on issues related to substantive federal criminal law and sentencing. Let’s hope his dissent catches the attention of some adults at DOJ. Somebody should call Arlen Specter. Here is Justice Scalia’s opinion. Thanks and a hat tip to Tiffany Joslyn of NACDL for bringing this to the attention of the NACDL listserve.
Mary Flood and Lise Olsen of the Houston Chronicle have the story here on chron.com. Kent pled guilty to avoid a long and embarassing trial, according to his attorney Dick DeGuerin. The trial would have covered charges related to sexual harassment/abuse of his employees as well as obstruction, and the judge admitted (without pleading guilty) to unwanted sexual contact as part of the plea agreement. The sex-related charges were to be dismissed pursuant to the deal. The entity obstructed was the judicial panel investigating sexual harassment charges against Kent–charges filed by his own federal court employees. Senior Judge Roger Vinson of Florida, who presided, left intact a broad gag order on parties, witnesses, and their attorneys. To leave such an order in place after a guilty plea is an obvious and outrageous abuse of judicial discretion. Kent also “retired” although he is not yet eligible to do so, absent medical necessity. The retirement was an effort to stave off impeachment and keep his judicial pension. That isn’t likely to wash. Kent was appointed by George Herbert Walker Bush in 1990, which means in reality that he was a Phil Gramm appointee. Rusty Hardin represented victim Cathy McBroom and Terry Yates represented victim Donna Wilkerson.
Apparently Laura Pendergest-Holt, the number three executive at Stanford Fiancial Group, has testified and/or is cooperating with the SEC, at least according to the background piece here in the Northest Mississippi Daily Journal. Pendergest-Holt is a Mississippi native.
Here is a detailed piece from Charles Paikert at InvestmentNews.com, analyzing the SEC complaint against Sir Allen and sampling the views of multiple experts.
The New York Post reports here on how the Stanford fallout has affected some Yankee outfielders and other athletes.
Today’s New York Times has a lengthy background piece here on Sir Allen. Buried within it is this interesting tidbit: “In 2006, the agency [SEC] opened an investigation, but halted it abruptly at the behest of another unnamed agency. The inquiry was reopened late last year, after the alleged $50 billion Ponzi scheme involving Bernard L. Madoff came to light. It is unclear why these and other investigations, including by various law enforcement agencies, appeared to have stalled over the years.”
It was originally reported that the SEC had been investigating Sanford since 2006. Who is the unnamed agency and why would it make such a request? Expect a Congressional investigation.
Meanwhile, the great Tom Kirkendall at Houston’s Clear Thinkers comments here on an allegedly cozy relationship between Stanford Financial Group and IMG, the world’s leading management firm for professional athletes and celebrities. Kirkendall has also commented here on how knowledgeable financial folk in Houston have long looked skeptically at Stanford Financial Group and Sir Allen: “Interestingly, I’ve asked dozens of folks in Houston investment community about Stanford over the years and have never once heard one vouch that an investment in the firm would be a good idea except as an absolute flyer.” This thing gets more and more interesting.
Former Atlanta AUSA Aaron Danzig is facing a wrongful death lawsuit filed on behalf of Jessica Holda’s three year old daughter. According to the Atlanta Journal Constitution story here by Steve Visser, the lawsuit alleges that Danzig kept Holda “in a state of terror and dread.” Danzig issued a statement denying the allegations in the lawsuit, calling them “false and unfounded.” The lawsuit alleges that Holda committed suicide after Danzig threatend to prosecute her if she refused to assist in a federal criminal investigation of her husband. The article quotes Steve Murrin, Holda’s former attorney, to the effect that Danzig refused Murrin’s request to let Holda self-surrender in the event of an arrest warrant being issued. Holda was apparently terrified of going to jail. U.S. Attorney David Namias issued a statement in support of Danzig.
Today’s Washington Post has a good story here by David Hilzenrath on the deferred prosecution agreement announced Wednesday between Swiss banking giant UBS and the DOJ. UBS agreed to pay a modest $780 million and gave up the names, and account information, of 200-300 clents. This is far less than the 20,000-50,000 accounts the IRS and DOJ seek, and legal proceedings will continue on that issue.
WSJ’s lead editorial today calls for an internal DOJ probe of alleged prosecutorial misconduct in the Ted Stevens’ case. Find it here.
The Wall Street Journal reports here that the SEC/FBI probe of financier R. Allen Stanford is widening to cover allegations of Ponzi-type activity. The SEC has sued Stanford for misleading his clients about the liquidity of their investments. The SEC began investigating Sir Allen in 2006. Surprisingly, the federal criminal inquiry began just recently. The close coordination between the SEC and DOJ, which we have seen in many Southern District of New York and DC matters, apparently did not occur in this case. What is truly striking is how long the SEC investigation went on before DOJ was called in. This should be troubling to SEC Enforcement Division critics. The SEC does not have criminal investigatory power. When an SEC probe uncovers potentially serious criminal fraud activity, DOJ should at least be notified. Of course, we are operating from press accounts alone at this point and do not know the full story.
Politico has the story here.
Judge Emmet Sullivan held federal prosecutors, including the Chief and Deputy Chief of the Public Integrity Unit, in contempt yesterday for their failure to turn over documents to Ted Stevens’ lawyers pursuant to a previous Court order. The Court had ordered DOJ to turn over internal communications related to FBI Special Agent Chad Joy’s whistleblower status by a date certain. According to Ben Conery’s Washington Times piece here, DOJ attorneys acknowledged their failure to produce the documents and had no excuse for this failure. The documents were turned over to the defense after Friday’s hearing. I won’t provide editorial commentary on this story as I have clients with matters pending with the Public Integrity Unit.
Timothy Balducci and Steve Patterson were each sentenced to 24 months in prison on Friday by Senior US District Judge Neal Biggers in Oxford for their roles in the first Dickie Scruggs case involving the attempted bribery of Judge Henry Lackey. In both cases it was a downward departure from guidelines. Folo reports the real news here: AUSA Bob Norman needs both men to testify in person on March 23 before a grand jury in the ongoing investigation. Both men were ordered to report to prison on March 25 (Daily Journal, Clarion-Ledger).
Here (h/t folo). One count of conspiracy, one count of honest service mail fraud, two counts of mail fraud and one count of obstruction of justice. The only other name on the indictment was Dickie Scruggs, whose named was removed in connection with his plea on Tuesday. However, count one names four other co-conspirators: Ed Peters, Joey Langston, Tim Balducci and Steve Patterson. Langston has already been sentenced to prison and Ed Peters has surrendered his law license and forfeited his proceeds, while Balducci and Patterson will be sentenced tomorrow for their roles in Scruggs I.
Today’s Washington Post ran two stories on Peanut Corporation of America President Stewart Parnell’s invocation of his Fifth Amendment Privilege Against Self-Incrimination at yesterday’s House Commerce Committee hearing. Lyndsey Layton’s piece here reports on the day’s hearing, which included gut-wrenching testimony from family members of salmonella victims. Those victims contracted salmonella from eating peanut butter produced at Peanut Corporation of America plants. Meanwhile, Dana Milbank’s Washington Sketch here details the theatrics of Parnell’s public shaming. Given the deaths that occurred during the salmonella outbreak, Parnell’s invocation of the Fifth Amendment, and Parnell’s apparent obsession with profits over safety, Milbank sees Parnell’s in-person shaming–he was Waxmanned by Waxman himself-as a good thing. I disagree. The hearing itself was necessary and proper. The in-person shaming of Parnell in tandem with his Fifth Amendment invocation reeks of McCarthyism. It teaches disrespect for the Constitution and prejudices the potential jury pool. Don’t get me wrong. Parnell looks like a total slimeball. If he is guilty of a crime he should be prosecuted, convicted, and sent to prison. For a long time.
The indictment is still sealed this morning but Judge Bobby DeLaughter was arraigned before US Magistrate Judge S. Allan Alexander in Oxford and pleaded not guilty to all charges. We do know that it’s a five-count indictment, Daily Journal says it will be unsealed later today. Tom Freeland at folo reports that DeLaughter was in leg irons and handcuffs. More: Clarion-Ledger.
Dickie Scruggs pleaded guilty yesterday in US District Court in Aberdeen to a one count information charging him with honest services mail fraud. He was immediately sentenced to seven years in prison by US District Judge Glen Davidson. The sentence will run concurrently with the five year sentence he is already serving in connection with Scruggs I.
It was announced that his name had been removed from the list of names in a sealed indictment, confirming rumors that a sealed indictment exists, possibly containing more than just Judge Bobby DeLaughter’s name. USA Jim Greenlee afterwards said it would be unsealed shortly.
Scruggs has become a cooperating witness, and Tom Freeland at folo quotes AUSA Bob Norman: “His cooperation has opened several doors we need to investigate.” Could one or more of them lead to Washington?
From the courtroom: Tom Freeland at folo, Alan Lange at Y’all Politics. Also see: Daily Journal, Clarion Ledger.
The Clarion Ledger reports that he’ll be appearing on Tuesday in US District Court in Oxford to enter a guilty plea in the ongoing second case (h/t folo). He’s apparently en route from prison in the custody of the US Marshals Service. Meanwhile, Scruggs I defendants Tim Balducci and Steve Patterson will be sentenced next Friday.
Legal Times reports here, on Law.com, that convicted former Milberg Weiss partners Melvyn Weiss and David Bershad are among Bernard Madoff’s victims. Ironically, the current incarnation of the firm, Milberg LLP, is busy rounding up other victims of the fraud in anticipation of forthcoming litigation.
Murray Waas reports here in TPMMuckraker that Karl Rove, while still refusing to testify before Congress concerning U.S. Attorney firings, will cooperate with the DOJ criminal probe into the same topic and has cooperated with the internal DOJ probe into the Don Siegelman prosecution.