Here is the Washington Post story on AG Holder’s decision to launch a preliminary investigation of alleged CIA torture. Career AUSA John Durham of Connecticut, already probing destruction of CIA interrogation tapes, gets the nod for this assignment. The District of Connecticut OUSA is the office of choice for special prosecutors these days.
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Todays WSJ carries this column by Karl Rove, defending himself against allegations of impropriety in the U.S. Attorney firings scandal.
Yesterday the Ninth Circuit reversed former Brocade CEO Gregory Reyes’ securities fraud convictions, related to stock option backdating, due to prosecutorial misconduct. Here is the opinion, which I have not had time to read in full and analyze. More to come.
Carrick Mollenkamp of the WSJ has an excellent piece here about the widening UBS tax scandal and the use of Hong Kong shelf corporations to facilitate the fraud. Now that the bank has agreed to hand over more names of U.S. taxpayers and increasing numbers of those taxpayers are running to confess to the DOJ, expect new revelations to come in at a fast and furious pace. The article is notable for its intelligent use of plea-related documents filed in U.S. v. John McCarthy. McCarthy is a California-based UBS client who pled guilty on Friday in the Central District of California.
Allen Stanford is trying to get Judge Hittner’s Pretrial Detention Order reversed in the Fifth Circuit. Here is Stanford’s Reply (to the Government’s Response), filed last week.
Here it is, c/o the USDOJ SDNY website.
According to this piece in the Saturday WSJ, long time Bernie Madoff aide Frank DiPascali (who ran Madoff’s “trading operation”) is set to plead guilty to federal felony charges in Manhattan on Tuesday. If true, this should cause the dam to start breaking. As of this evening, however, no documents regarding DiPascali have been posted on PACER.
Mary Flood of the Houston Chronicle has an excellent piece here on the efforts of Allen Stanford’s current and future criminal defense attorneys to get paid. Dick DeGuerin wants out, not having seen any money since March, but U.S. District Judge David Hittner will not allow it until a replacement comes in “unconditionally.” Such a ruling looks abusive to me this early in the proceedings. Bob Luskin wants to represent Stanford, but will not come in under Judge Hittner’s conditions unless payment is assured. Luskin’s problem is that Stanford’s assets have been frozen by a different federal judge out of Dallas in the SEC civil action. Stanford’s D&O carrier was purportedly willing to pay defense costs until the court-appointed receiver in the Dallas action announced that the policy proceeds were part of Stanford’s frozen assets and could not be released. Co-defendant Laura Pendergest-Holt and the other co-defendants could also pay their lawyers out of the D&O proceeds. Dan Cogdell, Pendergest-Holt’s criminal defense attorney says: “It couldn’t be more obvious that we’re entitled to be paid.” Undoubtedly he is correct. D&O Policies are purchased precisely for this reason. It just goes to show you something they never teach in law school. Insurance rules the business world. Meanwhile, Stanford and the DOJ are battling over Judge Hittner’s detention order in the Fifth Circuit. The order should be overturned–but don’t bet too much money on it in the Fifth Circuit.
CNBC reports here that Patton & Boggs’ ace DC white collar man, Bob Luskin, has replaced Houston’s Dick DeGuerin as Allen Stanford’s lead criminal attorney. DeGuerin could not get frozen funds released for Stanford’s defense and apparently was not sufficiently satisfied of future payment. CNBC says that DeGuerin has been working without pay since March. Pending at the Fifth Circuit is Stanford’s motion to vacate Judge Hittner’s draconian pretrial detention order.
The NYT reports here on an Israeli-U.S. tax fraud ring. Charges were unveiled earlier today in Tel Aviv and Chicago. The perpetrators allegedly filed false tax refund requests using the names of unsuspecting U.S. prison inmates. Looks like protective custody may be in order.
According to this story last week in the Anchorage Daily News, Hank Schuelke, court-appointed prosecutor in the Ted Stevens trial debacle, requested and received authority from Judge Emmet Sullivan to subpoena and compel the testimony of the Stevens prosecutors, government witness Bill Allen, Allen’s attorney, and lead case agent Mary Beth Kepner. Hat Tip to Dave Westheimer for sending this my way.
In another case that highlights the importance of jury instructions to a successful white collar defense, the Second Circuit vacated and remanded the conviction of a man on charges of knowingly operating an “unlicensed money transmitting business” under 18 U.S.C. Section 1960. Section 1960 prohibits, among other things, knowingly conducting a money transmitting business. Under the statute, “money transmitting” is defined as “transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier.” An “unlicensed money transmitting business” includes “a money transmitting business that affects interstate or foreign commerce in any manner or degree and…is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law.”
Appellant Bah owned a licensed money transmitting business in New Jersey. He also owned a separate business in New York. Bah was prosecuted for transmitting money out of New York without a New York license. New York Banking Law Section 650 requires licensing for “[i] engag[ing] in the business of receiving money for transmission or [ii] transmitting the same.” Bah contended at trial that while he received money for transfer in New York, he only transferred it out of New Jersey, where he was licensed. Bah asked for the following jury instruction: “1960 does not make it unlawful to receive money for transmission without a license.”
The Government objected to the proposed jury charge and the trial court refused to include it. The trial court reasoned that if Bah violated New York law by engaging in the business of “receiving money for transmission” without a license, he had, by virtue of that fact alone, violated 18 U.S.C. Section 1960.
The Second Circuit disagreed, in an opinion by Chief Judge Dennis Jacobs, holding that the New York law could not broaden federal criminal law. Section 1960 only prohibits engaging in the business of transmitting money without an appropriate state license, and does not mention or cover the mere receipt of money for such transmission. Under the trial court’s instructions, the jury may have convicted Bah even if they believed his story that he received the money for transmission in New York, but transferred it out of New Jersey. Since such a defense would have been entirely valid, the judgment of conviction had to be vacated and remanded.
The case, decided Wednesday, is United States v. Bah.