Today’s Washington Post has a good story here by Robert Barnes on Monday’s argument in U.S. v. Skilling, the last of three honest services fraud cases heard at the Supreme Court this term. Skilling involves former Enron CEO Jeffrey Skilling’s appeal of his conviction in the main Enron trial. Other issues in the appeal include the trial court’s refusal to change the venue as well as its rapid selection of a jury. The Court apparently continues to be skeptical of the constitutionality of the honest services fraud statute. Professor Ellen Podgor has an excellent commentary on the Skilling arguments, here, over at the White Collar Crime Prof Blog.
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The NYTimes has the story here. Justice was done, unsurprisingly, by the jury. But the prosecution of Mitchell by County Attorney Scott Tidwell was: a disgrace, a gross abuse of prosecutorial power, and a black mark on Texas criminal jurisprudence. I will have more to say about this in a later post. For now, congratulations to Nurse Mitchell and her legal defense team.
Beau Berman of CBS7News in West Texas reports here on the day two (yesterday) testimony in Nurse Anne Mitchell’s Texas criminal trial for misuse of official information. This is a truly disgraceful prosecution. The county attorney should have declined to bring it and the court should never have allowed it to get to a jury.
The New York Times reports here on the abusive Texas state criminal prosecution of nurse Anne Mitchell for doing the right thing. Mitchell properly and lawfully reported a doctor, who had privileges at the hospital where she worked, to the Texas Medical Board. When the Board informed the doctor, he promptly told his friend, the country sheriff, who helped to engineer Mitchell’s felony prosecution. You might think that somebody with a law license, say the county attorney or D.A., would step in and prevent such nonsense. You would be wrong.
Congratulations to businessman Leonard Lawson and former Kentucky Transportation Secretary Bill Nighbert who were acquitted on all charges today by a federal trial jury sitting in the U.S. District Court for the Eastern District of Kentucky. The jury deliberated only about eight hours, after a hard-fought three week trial, before reaching its verdict. The Louisville Courier-Journal has the story here.
The government had charged Lawson and Nighbert with various counts of conspiracy, bribery, and obstruction of justice. Judge Karl Forester knocked out some of the bribery charges after the government rested, but sent the rest of the counts to the jury on Thursday.
Kudos are also in order for the stellar defense team. I admit to being a little biased here. Lawson was represented by my law partners, Larry Mackey and Jason Barclay, and by Guthrie True. Nighbert was represented by Howard Mann and Kent Wicker.
The government’s case rested largely on testimony from James Rummage, who was decimated on cross-examination. The trial and pre-trial proceedings were marked by extensive litigation over alleged Brady violations. Only days before trial, prosecutors produced case agent notes indicating that Rummage had been told by a Lawson emissary to “tell the truth” to government investigators. Judge Forester ruled that this was obvious Brady material which should have been previously turned over.
I will have more to say about the Brady aspects of this case in days to come. Suffice it to say that the investigation was marked by many irregularities. For now it is enough to congratulate Lawson and Nighbert and to wish them a speedy return to normalcy. Their long nightmare is over.
Onthedocket.org has a summary of the issues here. The one paragraph Per Curiam opinion remanded the case to the Supreme Court of Virginia ”for further proceedings not inconsistent with the opinion in Melendez-Diaz v. Massachusetts, 557 U. S. ___ (2009).”
The Washington Post’s Gene Weingarten has a fascinating column here about his recent experience as an alternate juror in DC Superior Court. Weingarten would have voted to acquit, in a $10 heroin buy-bust, despite his certainty beyond a reasonable doubt that the defendant was guilty. Why? Weingarten was equally certain that the officers who testified for the prosecution lied in a key portion of their testimony. Weingarten figured that he was the only juror or alternate who felt this way, but the jury hung 10-2 in favor of acquittal. The prosecution decided not to re-indict. The defendant was represented by the incomparable Jon W. Norris, who established that the police officers’ testimony about how they identified the defendant could not have been accurate.
Weingarten’s experience as a Superior Court juror was similar to mine. Amazingly, the prosecutor did not move to strike me, despite my status as a criminal defense attorney. The other jurors and I listened to a day and a half of testimony and argument in a gun possession case, and almost immediately voted to acquit, because the lone police officer’s story was simply not credible. I didn’t have to do any arguing. Nobody did. We all walked backed to deliberate, took a vote, and found that it was 12-0 for acquittal.
On January 4, 2010, the U.S. Department of Justice (“DOJ”), through outgoing Deputy Attorney General David Ogden, issued a Guidance for Prosecutors Regarding Criminal Discovery (“Guidance”) and announced related organizational and training measures. These steps were widely seen as a response to several recent embarrassing episodes in which DOJ prosecutors failed to disclose exculpatory evidence to white collar criminal defendants in high profile cases.
The Guidance is codified at Section 165 of the DOJ’s Criminal Resource Manual. The Criminal Resource Manual is part of the U.S. Attorney’s Manual. Although provisions in the U.S. Attorney’s Manual do not have the force of law and do not create rights, they must be followed by federal prosecutors, and failure to do so may result in disciplinary proceedings. Moreover, many of the policies in the new Guidance relate to constitutional and statutory mandates that clearly do have the force of law.
Failure of federal prosecutors to turn over exculpatory and impeaching information to defendants is a growing crisis in the criminal justice system. The Guidance and related organizational and training measures should help to stem that crisis, but do not go far enough.
According to the DOJ, “the guidance is intended to establish a methodical approach to consideration of discovery obligations that prosecutors should follow in every case to avoid lapses that can result in consequences adverse to the Department’s pursuit of Justice.” By explicitly ordering federal prosecutors to consult the Guidance “in every case,” the DOJ is forcing even the most obtuse Assistant U.S. Attorneys to carefully and routinely consider their discovery obligations. In the future, a rogue prosecutor who suppresses clearly exculpatory information will have to explain why he or she ignored both the substance of the law and the DOJ procedures established to insure compliance.
In addition, since prosecutors now know that a very detailed review and disclosure of potentially exculpatory information is the established DOJ norm, they will arguably be less likely to rush to indict high-profile white collar cases, before carefully considering the pros and cons of such action.
The DOJ has also directed each U.S. Attorney’s Office (and each DOJ litigating component handling criminal matters) to develop and implement, by Mach 31, 2010, a Discovery Policy “with which prosecutors in that office must comply.” The Discovery Policy should be consistent with the Guidance, but must take into account “controlling precedent, existing local practices, and judicial expectations.” The individual office Discovery Policy is intended to recognize local variations in discovery practices while eliminating “inconsistent discovery practices among prosecutors within the same office.” Each office’s Discovery Policy “must set forth procedures prosecutors are required to follow to obtain supervisory approval to depart from the [office’s] uniform practices in an appropriate case.”
Each U.S. Attorney’s Office (and each DOJ litigating component handling criminal matters) must also name a Discovery Coordinator. These Discovery Coordinators have already been named and trained and must, in turn, train “their respective offices no less than annually” and must “serve as on-location advisors with respect to discovery obligations.”
The detailed steps laid out in the Guidance for gathering, reviewing, and disclosing discoverable information put much-needed meat on DOJ’s pre-existing discovery guidelines.
The Guidance contains several welcome improvements that will clearly be pertinent to white collar investigations: (1) in cases involving parallel proceedings with regulatory agencies, the prosecutor must consider whether the agency in question is part of the “prosecution team” and therefore subject to having its files reviewed for exculpatory information; (2) the prosecutor must be granted access to and review all of a law enforcement investigatory agency’s files, including the entire confidential informant file; (3) “generally speaking, witness interviews should be memorialized by the agent” and “material variances” in a witness’s statements must be disclosed, even if the variances occur within the same interview session or in a pre-trial prep session; (4) all substantive case-related internal communications, including emails, must be preserved and reviewed; and (5) if exculpatory information is discovered, the information itself must be produced, regardless of the format in which it was maintained.
The Guidance also continues certain troubling DOJ policies. Prosecutors are still charged with determining whether exculpatory and impeaching information is material in nature and therefore subject to production. Such self-certifying procedures are inherently inappropriate, because the prosecutor becomes judge and jury of what will be provided to the defense. All potentially exculpatory and impeaching information (including variances in witness statements) should be provided to the defense as a matter of course irrespective of materiality.
The Guidance also declares that case agent notes, which are not typically part of the official file, should only be reviewed “if there is a reason to believe that the notes are materially different from the memorandum, if a written memorandum was not prepared, if the precise words used by the witness are significant, or if the witness disputes the agent’s account of the interview.” In truth, case agent notes are virtually always Jencks Act material if the agent testifies at trial, and should be provided in such situations whether or not a memorandum has been prepared. More importantly, it is the rare official memorandum of interview that is fully consistent with the case agent’s interview notes. Since such inconsistencies are the norm, prosecutorial review is in order.
In summary, the new DOJ Guidance and related measures establish important substantive and procedural mechanisms that should reduce prosecutorial suppression of favorable evidence in white collar cases. But much remains to be done. Efforts are currently underway within the Judicial Conference of the United States to amend the Federal Rules of Criminal Procedure to insure that prosecutors turn over all exculpatory and impeaching information to the defense, regardless of materiality. Such efforts should continue unabated until binding reform is achieved.
The DOJ yesterday issued, through outgoing Deputy Attorney General David Ogden, a Guidance for Prosecutors Regarding Criminal Discovery. Here is a copy of the memo from DOJ’s website. The Guidance primarily relates to Brady-Giglio issues. I will provide some analysis in a later post.
Here is a moving year-end post from Connecticut criminal defense attorney Norm Pattis.
Judge Ricardo Urbina today dismissed all charges against the five Blackwater defendants with prejudice. Here is the opinion. The dismissal was based on the Government’s multiple violations of Kastigar v. United States through its improper use of compelled statements and admissions (under Garrity v. New Jersey) made by the defendants to State Department investigators.
My Uncle Adolph Westheimer (far left, with his siblings, circa 1930) died two weeks ago at the age of 94. I will miss him very much. He was a really great uncle, and was practically a second father to me when I was young.
Like his younger brothers Sam and Junior, who died before him, and like his little brother Siggy, who lives on, Uncle Adolph was a modest man. Along with so many others of the greatest generation, who lived through the depression and served in World War II, he did his duty proudly and came home to raise a family and become a solid citizen. Uncle Adolph was a veteran of Iowa Jima and a volunteer in Korea, but you would never know that from hanging around him. He did not boast, brag, or even speak about such things.
According to family legend, the doctor attending the birth told my grandmother that Adolph was too sickly to live. My grandmother ignored the doctor and nursed her first-born back to health. When Adolph was a toddler, he thought that his name was Adog, so he called himself Abow-wow for awhile. The name Adolph wasn’t very popular in America during World War II. Adolph became Joe during that struggle and the name stuck all through his professional career at Southern Pacific. Two of his favorites songs were “The World Is Mine Tonight” and “I’m A Ding-Dong Daddy From Dumas.”
It is impossible to distill all of the great memories I have of Uncle Adolph in the space of a few minutes or even a few hours. Two things stand out that I want to talk about.
First–the driving. I spent literally hundreds of hours in the back seat of his car when I was young. Uncle Adolph’s running commentary on the shortcomings of other drivers became part of the very essence of my automotive being. Even to this day, I channel his denunciations effortlessly. When I tell my passengers that the driver ahead of me is “making a career out of a left turn” it is my Uncle Adolph speaking through me.
Second–a conversation. It is sometime around 1998. Both of my parents are dead. After a career as a federal prosecutor, I have gone to Washington to work for Ken Starr on the Whitewater Investigation. I become one of Judge Starr’s deputies and participate in the grand jury questioning of the President of the United States. In the quiet of an evening phone call Uncle Adolph softly reminds me of how proud my parents would be. A simple gesture on his part. Coming straight from the heart. Moving me deeply.
And now he is gone. We are saddened, but feel fortunate to have had him around for so long. Our hearts go out to Aunt Cookie and to my cousins, Paulette, Linda, and Vaughn.
Lest you think that federal prosecutorial overreaching is confined to a few isolated cases, we hereby offer a story from R. Robin McDonald of the Fulton County Daily Report, carried via Law.com, about the government’s vendetta against Columbus, Georgia criminal defense attorney J. Mark Shelnutt. Shelnutt was prosecuted by the Southern District of Georgia on money laundering and drug conspiracy charges, but was acquitted on all counts. U.S. District Judge Clay D. Land has now blasted the U.S. Attorneys’ Offices in the Southern and Middle Districts of Georgia for their handling of the case. Land accused the offices of working in tandem to offer sweetheart deals to big-time drug dealers in an effort to bring down Shelnutt. Land refused to accept the stipulated drug quantity for one such drug dealer, Shawn Bunkley. Hat tip to Douglas Berman’s Sentencing Law and Policy Blog for bringing this to our attention.
Here also is Judge Land’s written order in U.S. v. Bunkley, which is well worth reading. This is a relatively rare example of a federal judge stepping in and challenging the plea bargaining power of the government through rejection of a stipulated drug quantity. The Order is interesting for the light it sheds on the Shelnutt case and for the methodology resorted to by Judge Land to impose a Booker-based upward variance in the face of Guidelines Section 1B1.8.
Here is the transcript of the hearing in which Judge Cormac Carney granted Defendant’s Motion to Dismiss in U.S. v. William Ruehle. Ruehle was Broadcom’s former CFO. The dismissal was based on prosecutorial misconduct (primarily witness intimidation by AUSA Andrew Stolper) and insufficient evidence. Carney also dismissed the Indictment against Broadcom’s co-founder and former CEO Henry Nicholas, who had not yet gone to trial. The Nicholas dismissal was based solely on prosecutorial misconduct involving witness intimidation. Carney had previously thrown out the guilty plea of Broadcom co-founder Henry Samueli and dismissed the felony information to which Samueli pled guilty.
There were stirring and memorable words spoken at the hearing, and the transcript is well worth reading in its entirety. Here is a portion of Judge Carney’s closing remarks:
NOW, I’M SURE THERE ARE GOING TO BE MANY PEOPLE WHO ARE GOING TO BE CRITICAL OF MY DECISION IN THIS CASE AND ARGUE THAT I’M BEING TOO HARD ON THE GOVERNMENT. I STRONGLY DISAGREE. I HAVE A SOLEMN OBLIGATION TO HOLD THE GOVERNMENT TO THE CONSTITUTION. I’M DOING NOTHING MORE AND NOTHING LESS. AND I ASK MY CRITICS TO PUT THEMSELVES IN THE SHOES OF THE ACCUSED.
YOU ARE CHARGED WITH SERIOUS CRIMES AND, IF CONVICTED ON THEM, YOU WILL SPEND THE REST OF YOUR LIFE IN PRISON. YOU ONLY HAVE THREE WITNESSES TO PROVE YOUR INNOCENCE AND GOVERNMENT HAS INTIMIDATED AND IMPROPERLY INFLUENCED EACH ONE OF THEM. IS THAT FAIR? IS THAT JUSTICE? I SAY ABSOLUTELY NOT.
Here is Judge Cormac Carney’s Dismissal Order in U.S. v. William J. Ruehle and U.S. v. Henry T. Nicholas. Most of the newspaper stories on the Broadcom debacle failed to note that Judge Carney dimissed the case against Ruehle for insufficiency of the evidence as well as prosecutorial misconduct. Ruehle’s Rule 29 Motion was granted after jeopardy attached, but before the jury began deliberating. Therefore, the government cannot appeal, and Ruehle cannot be re-tried. With respect to Nicholas, he wasn’t even on trial yet at the time of Carney’s order dismissing the Indictment with prejudice. The government can therefore appeal the dismissal in Nicholas’s case.
Here is the LATimes’ take on Judge Carney’s dismissal of criminal charges against former Broadcom execs William Ruehle and Henry T. Nicholas III, due to prosecutorial misconduct. It is safe to assume that the government will be appealing at least some of Carney’s rulings.
Judge Cormac Carney has just dismissed the criminal stock option backdating cases, against former Broadcom CFO William Ruehle and former CEO Henry T. Nicholas III, based on government misconduct. The Orange County Register story is here. Nicholas had not yet gone to trial. In Ruehle’s case, the prosecution and defense had closed, and jury arguments were set for Thursday. Needless to say, dismissals based on prosecutorial misconduct are exceedingly rare. AUSA Andrew Stolper was at the center of the misconduct allegations and findings.
Here is Roger Aronoff’s latest piece on the White House gate-crashers and on the silly non-investigation being conducted by Homeland Security Committee Chairman Bennie Thompson.
Here is more legal analysis on Judge Cormac Carney’s stunning and unprecedented dismissal of the felony charge against Broadcom co-founder Henry Samueli in the middle of William Ruehle’s trial. The Orange County Register story is by Andrew Galvin and Rachanee Srisavasdi.
So far, all of the articles I have seen on Judge Carney’s dismissal order fail to discuss whether it can be appealed. It can. It is one thing to throw out a guilty plea for an insufficient factual basis. It is quite another to throw out a felony charge brought by the government, particularly when the order of dismissal is based on evidence developed in a separate trial. On the other hand, the felony charge here was contained in a felony information. Felony informations are only valid when the defendant waives indictment. Defendants typically waive indictment when they enter a guilty plea, and that is what Samueli did when he originally entered his guilty plea. If the factual basis for the plea is insufficient, the felony information would have to be dismissed, absent a new waiver by Samueli. But Samueli no longer has any motivation to waive the information.
It isn’t at all clear to me what the Ninth Circuit will do if the government appeals. Generally, district courts are given broad discretion to decide whether to let defendants withdraw guilty pleas, and that is essentially what happened here.
Perhaps the more interesting question is what the courts will do if the government now indicts Samueli for lying to the SEC or for engaging in securities fraud. Before even thinking about the double jeopardy implications of indicting Samueli for lying to the SEC, the government would have to analyze the likelihood of meeting its Kastigar obligations in the wake of Samueli’s immunized testimony in the Ruehle trial. Not a pretty picture. I’m guessing that the Samueli prosecution is totally over.
So said Judge Cormac Carney to Broadcom co-founder Henry Samueli, after Samueli left the witness stand on Wednesday in U.S. v. William Ruehle. Here is the Orange County Register’s coverage of the dramatic events, which culminated in Judge Carney’s dismissal of Samueli’s guilty plea and federal felony charge.
Here, from today’s LATimes, is more context on Judge Cormac Carney’s apparently unprecedented dismissal of the felony charge against Broadcom co-founder Henry Samueli during the middle of the William Ruehle trial.
Samueli originally pled guilty to a one-count felony information charging a violation of Title 18, U.S. Code, Section 1001, for lying to the SEC. The guilty plea was made pursuant to a plea agreement with the government, represented by the U.S. Attorney’s Office for the Central District of California. Judge Carney rejected the plea agreement in September 2008, because, among other things, it called for Samueli to receive a probationary sentence. Unlike most plea agreements, Samueli’s was binding if the Court accepted it. By rejecting the plea agreement, Carney left Samueli free to withdraw his guilty plea. Samueli declined to do so, presumably in order to avoid a lengthy and expensive trial which would have included additional charges. Samueli’s sentencing date had been continued until 2010.
Fast forward to last week, when Judge Carney, who is presiding over the related criminal trial of forner Broadcom CFO William Ruehle, granted Samueli derivative use immuntiy so that Ruehle could call Samueli to the stand as a defense witness. (Since Samueli did not have the protection of a plea agreement, and was designated as a Ruehle co-conspirator by the government, his attorneys had quite properly told the Court that Samueli would invoke his Fifth Amendment privilege against self-incrimination if called to testify.)
Samueli testified on Tuesday and Wednesday of this week. After Samueli stepped down from the stand, Judge Carney told him to face the bench. And then Judge Carney did something that, as far as I know, is unprecedented in the annals of the federal criminal justice system. He threw out Samueli’s guilty plea and dismissed the charges against Samueli, based on his assessment of Samueli’s (post-guilty plea) testimony. Samueli’s testimony convinced Judge Carney that Samueli’s misstatements under oath to the SEC had been unintentional in nature.
Every finding of guilt in a federal criminal case, even one based on a guilty plea, must be supported by a sufficient factual basis. In effect, Judge Carney ruled that there was no factual basis for a finding of guilt as to Samueli.
Perhaps most remarkably, none of this occurred during proceedings in Samueli’s case. It happened in the middle of Ruehle’s criminal trial. But it all took place in the context of AUSA Andrew Stolper’s rather massive misconduct in the Ruehle and Samueli cases. And this misconduct has only recently come to light–right in front of Judge Carney.
Central District of California AUSA Andrew Stolper admitted yesterday that he leaked Broadcom co-founder Henry Samueli’s Fifth Amendment grand jury invocation to the news media. According to this Orange County Register story by Rachanee Srisavasdi, Stolper called it “the stupidest thing I’ve done in my career.” That’s saying quite a lot, since Judge Cormac Carney has already ruled that Stolper engaged in wholly separate misconduct during the ongoing trial of former Broadcom CFO William Ruehle. Stolper claimed that he did not know such leaks were against DOJ policy when he made them. Actually, the intentional leaking of federal grand jury information by a court reporter, grand juror, or prosecutor is a crime.
According to Srisavasdi’s piece, Judge Carney also “dismissed” Samueli’s prior guilty plea. Samueli had pled guilty to a violation of 18 U.S.C. Section 1001 for lying to the SEC. It is unclear from the story whether Judge Carney dismissed Samueli’s felony information or simply allowed him to withdraw his guilty plea. [Update: Judge Carney threw out the guilty plea and the felony conviction. See Samueli Dismissal.] Nothing relating to this has been posted on PACER, which is not surprising given the overall efficiency of the U.S. District Clerk’s Office in the Central District.
Stolper’s misconduct in the Ruehle case involved his phone call to lawyers for former Broadcom general counsel David Dull, right after Judge Carney granted Dull derivative use immunity so that Dull could testify as a defense witness for Ruehle. Stolper, who was no doubt unhappy with the the Court’s ruling, told Dull’s lawyers that if Dull testified consistent with his prior SEC testimony, Dull could face perjury charges.
Two Srisavasdi stories from Monday and Tuesday of this week, here and here, detail Stolper’s earlier misconduct, Judge Carney’s reaction to it, and Samueli’s testimony in Ruehle’s trial. Judge Carney has set a hearing for Tuesday at 9:00 to consider Ruehle’s Motion to Dismiss the case for prosecutorial misconduct.
Meanwhile, who the hell is minding the store here? We are talking about one of the premier U.S. Attorney Offices in the country. How could somebody like Stolper be put in a position of prominence in an investigation of this magnitude?
Ian Urbina of the NYTimes has this excellent and sobering story on a recent District of Columbia internal investigation concerning the DC Police Department’s mass illegal arrests of protesters and innocent bystanders during the 2002 IMF/World Bank Meetings. The investigation, into missing records, was conducted by former federal judge Stanley Sporkin. Sporkin’s investigative report calls for further inquiry and suggests that pertinent documents were intentionally destroyed by city officials. The Times story also discusses the city’s problems litigating the case in front of U.S. District Judge Emmet G. Sullivan, who threatened the DC AG’s Office with sanctions before the case was settled. Particularly disturbing is this passage from Urbina’s article:
“In November, the city agreed to pay $450,000 to eight war protesters to settle a civil lawsuit in which they accused F.B.I. agents of detaining them in a Washington parking garage and interrogating them on videotape about their political and religious beliefs.
For years, the city police and the F.B.I. said that the interrogation had never happened and that they had no records of such an incident. The police also said no F.B.I. agents had been present when officers arrested the protesters for trespassing.
But as lawyers for the protesters were preparing for the trial, which was scheduled to begin in federal court Nov. 30, they unearthed police logs that confirmed the role of a secret F.B.I. intelligence unit in the incident.” (Emphasis added).
There they go again. This is unfortunately part of a longstanding pattern by elements within FBI headquarters of stonewalling and/or making misleading statements concerning the existence vel non of records sought by citizens and litigants.
I’ve said it before and I’ll say it again, the FBI street agent is, generally speaking, the crown jewel of federal law enforcement. He/she is often ill-served, however, by certain rogue elements within headquarters leadership.
The illegal mass arrests occurred on former Police Chief Charles H. Ramsey’s watch.
Amazing things have been happening in the stock option backdating criminal trial of former Broadcom CFO William Ruehle. First, U.S. District Judge Cormac Carney did something that federal judges almost never do. He granted immunity to two witnesses who the defense wanted to call, but who had declined to testify on Fifth Amendment grounds. The government had designated the witnesses as co-conspirators, so their reluctance to testify was understandable. The government plays this game all the time; telling potential defense witnesses that they are targets, which effectively terrorizes them into silence. Well, Judge Carney decided not to put up with it and granted “limited immunity” to former Broadcom General Counsel David Dull and Broadcom co-founder Henry Samueli. Presumably this “limited immunity” was derivative-use immunity which in fact is quite broad.
After Carney issued the immunity ruling, Assistant U.S. Attorney Andrew Stolper called Dull’s attorney and told him that if Dull repeated the essentials of his prior SEC testimony on the witness stand, Dull could face perjury charges. Judge Carney rightfully found this to be prosecutorial misconduct and so informed the jury. The government, aware of its massive screw-up, agreed to give Dull ”full immunity” (presumably transactional) in order to avoid outright dismissal of the case. Dull testified last week and Stolper was prevented from cross-examining him. (Another AUSA took over that task.) All in all, a very bad week for the government. Stolper’s threat is the kind of conduct that has long been condemned by federal courts. For some AUSAs Brady refresher courses may not be enough. The Orange County Register has the story here.
Roger Aronoff of Accuracy in Media has an entirely different take on the Salahi gate-crashing affair. Here is his November 30 column exploring the issue.
Here is Main Justice’s take on yesterday’s announcement by Deputy Attorney General David Ogden that he is resigning effective February 5. Apparently Ogden and Attorney General Holder never meshed. The Washington Post separately reported that if a permanent replacement is not found by February, Gary Grindler, a Deputy Assistant AG in the Criminal Divison, will fill the DAG position in an acting capacity. That seems a little weird, since Grindler currently reports to Assistant AG Lanny Breuer, head of the Criminal Division, but would become Breuer’s boss as acting DAG.
Carrie Johnson of the Washington Post reports here that Washington criminal defense attorney Hank Schuelke, hired by U.S. District Judge Emmet Sullivan to investigate possible obstruction of justice by the DOJ in the Ted Stevens case, is set to interview the six DOJ attorneys at the center of the scandal. Schuelke is purportedly near the end of his work and has already sifted through thousands of documents.
I was struck by the last two paragraphs, and particularly the last sentence, of Johnson’s story:
“In naming a special prosecutor, U.S. District Judge Emmet G. Sullivan identified six people to be scrutinized — members of the prosecution team and the chief of the public integrity unit. Other leaders at the department’s criminal division weighed in on the case from time to time, especially after the judge began to complain in the course of last year’s trial about evidentiary problems, according to sources familiar with the investigation.
New officials at the Justice Department this year sifted through files and provided documents and e-mail about the case to Schuelke and the subjects of his investigation. But the criteria they used for sharing electronic messages may not have captured all the communications involving people in the criminal division or other areas of the department’s front office about the Stevens case, the sources said. Officials turned over only e-mail in which at least two of the six Stevens prosecutors were included as addressees, they said.”
Such a limitation on the DOJ’s disclosure of documents to Schuelke is quite remarkable and alarming. If Schuelke knew about it, he certainly should not have put up with it. The DOJ pledged full co-operation with Judge Sullivan’s probe. If DOJ higher-ups, past or present, had a hand in any of the conduct causing Judge Sullivan to hold the six Stevens-connected prosecutors in contempt, the truth must come out.
The Washington Post reports here that the Salahis have (wisely) decided not to testify in front of the House Committee on Homeland Security. They have also lawyered up with Dewey & LeBoef, since, among other things, their original lawyer (Paul W. Gardner) has become a witness. This new-found silence is probably too little too late, given the couple’s two-day interview with the Secret Service. Meanwhile, the Post reports here that the Washington Redskins Cheerleaders Alumni Association is livid, because Michaele Salahi performed with the group at a September 20 halftime show. Turns out that Michaele never was an actual Redskins Cheerleader. She lied her way onto the alumni group’s membership list. Even worse, ”she was too tall and couldn’t dance.” And, this just in, the Post reports here that the State of Virginia is now investigating the fundraising activities of America’s Polo Cup, a Salahi-run business entity that raises funds for the Salahis’ charity, Journey for the Cure. The Post had previously reported that the Salahis left a long line of vendors with unpaid bills related to America’s Polo Cup events. Let’s hope Dewey & LeBoef got its money up front. The White House wants the story to go away. It won’t.
Today’s Washington Post reports here on the dubious history of Tareq and Michaele Salahis’ annual charity polo event and their Journey for the Cure foundation. According to the story, the Salahis stiffed a number of vendors who worked on the event and misrepresented the extent of corporate sponsorship. The Land Rover America’s Polo Cup web site lists some sponsors, including Land Rover, who “say that they are not sponsors for that event.” Plenty of material for any federal law enforcement types intent on ginning up a prosecution.
Here is the latest news from the Washington Post about Michaele and Tareq Salahi, the social-climbing Northern Virginia “power couple” who revealed to the world how easy it is for just about anyone to slip into the White House and gain access to the President during a state dinner.
Initial stories about the Salahis’ caper quoted U.S. Secret Service sources to the effect that a criminal investigation was in the works, but nobody said what criminal law the couple may have violated.
Now some press accounts are trudging out 18 U.S.C. Section 1001, as a possible prosecution vehicle. I have written extensively over the years about Section 1001, the statute that criminalizes lying to government agents. Okay, I’ve actually written one article and revised it several times.
Section 1001 literally covers ”whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States knowingly and willfully–(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry.”
Whether the Salahis’ conduct on the night of the state dinner fits into one of these subsections obviously depends on the particular circumstances of their case. But the Salahis have apparently made it infinitely easier for the government to prosecute them under Section 1001. The New York Times reports here that the Salahis submitted to interviews, over the course of two days, with Secret Service agents.
Unless they were immunized beforehand, a highly unlikely scenario, submitting themselves to these interviews was a really stupid thing for the Salahis to do. Lying to a government agent during an interview, even if you are not under oath, is a crime under Section 1001, as long as the lie is material. The materiality threshold under the statute is very low. Indeed, most of the abuse that takes place under Section 1001 arises from the prosecution of people who allegedly fibbed during interviews with government law-enforcement agents.
The Salahis were under no obligation to talk to the Secret Service. There was no upside to such an interview. The Secret Service is embarrassed and out for blood. It’s hard for me to believe that the Salahis enjoyed the services and advice of a criminal attorney prior to their Secret Service interview. Of course, sometimes clients do unwise things, against the advice of counsel. The Salahis crave publicity and are doing everything within their power to milk their 15 minutes of fame.
I have long complained about the breadth and misuse of Section 1001. In a government of purportedly limited and enumerated powers, the idea of criminalizing a simple lie to any federal agent who comes knocking at a citizen’s door is appalling.
On the other hand, the Salahis’ conduct on the night of the state dinner, assuming that they were uninvited, is not funny in the least. It sent a terrible signal to the world about Presidential security. Nor should the Salahis be celebrated in any way. The couple actively engaged in a planned and publicized effort to enter the White House complex. If they lied in order to do this, and if their conduct clearly falls within an appropriate criminal statute, they should be prosecuted.
It should be a happy Thanksgiving in the Kuehne household this year. The U.S. Attorney’s Office for the Southern District of Florida dropped its misguided money-laundering prosecution of the prominent Miami attorney today, following a devastating opinion from the Eleventh Circuit Court of Appeals last month. The Miami Herald has the story here.
Adam Liptak has a decent piece here in today’s NYTimes about the alliance between certain conservative and liberal intellectuals against the overcriminalization of our society, primarily at the federal level. The article makes it appear that this particular left-right alignment is brand new, which is inaccurate. For example, Ed Meese, who is featured in the article, has long been in the forefront of the fight against overcriminalization at the federal level. Nor does the alignment cover the entire intellectual-political spectrum. If it did, Congress would presumably stop passing vague and overbroad criminal laws every time some scandal emerges.
In truth, this is an alliance between the criminal defense bar, civil libertarians with criminal defense bar ties, economic libertarians, the Chamber of Commerce, some traditional conservatives, certain segments of the Federalist Society, and former prosecutors who now represent white collar defendants. This doesn’t mean that the alliance is bad, or that its arguments are faulty. Far from it. In fact, the entire federal criminal justice system is heavily rigged, substantively and procedurally, in favor of the prosecution. Don’t expect this to change anytime soon. There is no constituency for being soft on white-collar crime.
The article mentions in passing the three honest services fraud cases that are currently before the U.S. Supreme Court. Justice Sotomayor, who is not mentioned in the article, is on the wrong side of the honest services issue if her Second Circuit jurisprudence is any indication. She appears to be part of the New Deal school of Supreme Court jurisprudence–generally strong on civil liberties, but weak on limiting the reach of draconian federal white collar criminal statutes. I don’t expect her to be receptive to most of the arguments against overcriminalization. Her writings and/or votes on the honest services cases will tell us a lot on this point.
We are delighted to come out of hibernation and report the acquittal of former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin by a federal jury in Brooklyn. The New York Post has the story here. It was obvious from the start that the case was weak and that the government was essentially trying to criminalize puffery. The Post takes the away the lesson that proving guilt in cover-up cases, as opposed to outright fraud cases, will now involve a “high hurdle” because of the verdicts. I wouldn’t be so quick to draw this conclusion. As a general matter, proving a cover-up is easier than proving a fraud. Every case is unique. One of the differentiating factors is the trial judge. Here, the defense was aided by, among other things, Judge Block’s key evidentiary ruling excluding a potentially damaging email written months before the hedge funds at issue collapsed. Sounds like the ruling was correct.
Andrew Ramonas of Main Justice reports here that the DOJ has decided not to withdraw corruption charges against convicted Alaskan lawmakers Pete Kott and Victor Kohring. The two have been free in the wake of DOJ’s discovery that prosecutors failed to disclose exculpatory material before or during trial. The district court will now decide whether there was a Brady violation and, if so, whether a new trial or dismissal is warranted.
Here at last is the Executive Summary to SEC Inspector General David Kotz’s “Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme.” sec-oig-madoff-executive-summary. The complete REPORT OF INVESTIGATION will apparently come out over the next several days. The SEC’s failure, as detailed in the Executive Summary, was more shocking and abysmal than I ever imagined. It makes me want to vomit. The Executive Summary takes about 15 minutes to read and is well worth the effort. The primary failure appears to have been at the supervisory level.
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.
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.
Thirty-eight years ago today my Dad, Alvin Wisenberg, died. He was a great Dad who left his children many memories to cherish throughout the years. One of the greatest memories for me was attending “The Game Of The Century” in the Astrodome on January 20, 1968, between UCLA and the University of Houston. Each team was undefeated at the time. UCLA, featuring Lew Alcindor (later Kareem Abdul-Jabbar), was ranked Number One in the nation. The University of Houston, featuring Elvin “The Big E” Hayes, was ranked Number Two. UCLA had a 47 game winning streak going into the game.
One of my father’s clients gave him four mid-court tickets to the contest. The game was already being hyped as “The Game Of The Century.” I’ll never forget walking into the Dome with my Dad. He stopped me while we were still outside, put his hand on my shoulder and said, “Son, you may not want to get too excited about this. Most of these things that are billed as ‘The Game Of The Century’ turn out to be pretty one-sided.” Then we went into the Dome and watched the most exciting live sporting event I have ever witnessed. The mighty Houston Cougars beat the UCLA Bruins 71-69. It was the second biggest crowd in basketball history and the first nationally televised college basketball game. I remember quite a few things about that game. Halftime entertainment was provided by Jay & The Techniques, singing their hit “Apples, Peaches, Pumpkin Pie” and their follow-up “Keep The Ball Rolling.”
Two other adults attended the game with us; my Uncle Avrohm Wisenberg and his best friend Harold Raizes. I don’t think I had met Harold Raizes before, but he instantly struck me as kind and distinguished.
I would come to know Harold Raizes fairly well over the ensuing years. I became friends with his daughter Francine and would visit her home on Valkeith Drive. At that house I was invariably given a warm welcome by Harold and his wife Sonia, and had many pleasant conversations with both of them. Harold and I often talked about politics, and these sessions typically ended with Harold patiently and genially explaining to me why I didn’t know what I was talking about.
As I grew older I also learned that Harold Raizes had an impeccable reputation in Houston as a successfull and honorable businessman. And it wasn’t hard to see why. If memory serves me correctly, he owned President’s First Lady Health Spas and MacGregor Bowling Lanes, among other enterprises. He treated friends, customers, business associates, and strangers with respect and fair dealing. He was an object lesson in what it means to be an ethical businessman. As Francine’s husband, Daniel Karchem, once said: “My father-in-law Harold Raizes is my hero for being an honorable man. Dad is representative of the many decent people who show up every day and do a good job and the right thing, because they care.”
Over the years I would see him less and less. On those rare occasions when we did see each other we would usually get around to discussing the magnificent game of the century. Word reached me last week of Harold Raizes’s death, which was unfortunately preceded by a long illness. My Uncle Avrohm died almost 20 years ago, and, as noted, my father died 38 years ago today. Now all of the men, the adults, who witnessed that memorable game with me are gone. The memories they made and the legacies passed on to their children remain. Our hearts go out to Harold’s wife Sonia, to his daughters Carolyn, Sherry, and Francine, and to all of the son-in-laws and grandchildren.
The Houston Chronicle obituary can be found here. As Harold’s wife Sonia told the Chronicle: “Kindness permeated his entire being.”
WSJ’s Opinion Journal carries this editorial today on U.S. Representative and Ways and Means Chairman Charlie Rangel’s various ethical shortcomings related to unreported income on House financial disclosure forms and apparent homestead tax exemption shenanigans. The editorial focuses on Rangel’s hypocrisy in wanting to add an income tax surcharge because “it is the moral thing to do.” But it raises a more important question to me. Who is investigating Rangel for federal criminal violations, and, if not, why not? Apparently Rangel neglected to report over $75,000.00 in rental income over a multi-year period on his House financial disclosure forms. The income is from a Dominican Republic yacht club villa that Rangel owns. The motive may have been Rangel’s need to keep his annual reported income under $175,00.00 to avoid losing his eligibility for his rent-controlled residence in Harlem.
Maybe it it was all a mistake. I really don’t wish a white collar criminal investigation on anyone, but what makes Charlie so special? DOJ has not hesitated to prosecute Congressional staffers and mid-level federal officials for relatively picayune failures to disclose income on their financial disclosure forms. And Rangel’s disclosure problems are not an isolated event. The developer of the yacht club also converted Rangel’s mortgage to an interest free loan. WSJ says that this appears to be a violation of the House ban on gifts. And Rangel apparently listed both DC and Harlem residences as homesteads in order to save on taxes.
Here is a situation where the U.S. Attorney’s Office for the District of Columbia or DOJ’s Public Integrity Unit should already be investigating. Here is a situation where the failure to initiate an investigation is most certainly a political act.
Full disclosure: I represent and have represented witnesses, subjects, and targets in investigations carried out by the Public Integrity Unit. This is not about the line attorneys in that unit. It is about how political the new Administration is going to be in the way that it investigates and does not investigate public corruption in Washington and around the nation. An omission, as well as an indictment, can be a political act.
Here is the criminal complaint filed against Peter Cammarano III, Mayor of Hoboken. Cammarano was arrested as part of last week’s massive federal public corruption round-up in New Jersey. The complaint strikes me as pretty weak, given that Cammarano was engaged in electioneering at the time of the alleged bribe. Hobbs Act prosecutions are harder to win in the context of election campaigns. The complaint quotes liberally from tape-recorded conversations. It will be interesting to to hear the tapes in full should Cammarano go to trial, as he indicates he will.
The Washington Post editorializes here for a compromise in the U.S.-Switzerland cold war over UBS’ reluctance to release more names of purported American tax cheats to IRS and DOJ. I understand the Swiss position. It’s tough to be a grown up nation in the 21st Century when a key segment of your economy is devoted to facilitating tax fraud…..Andrew Cuomo is talking to Chuck but in a nasty way, according to this WSJ article. In a Friday letter, the New York AG threatened to sue Charles Schwab & Co. for fraud in connection with its marketing of auction-rate securities. Cuomo is open to a settlement, however, if Schwab buys back the securities from its investor clients. Schwab adamantly denies wrongdoing. Cuomo’s letter provides examples, allegedly supporting his fraud theory. They look pretty weak to me. Let’s see if Andy is as tough on recently departed Auto Task force Chief, and Democratic Party mega-money raiser, Steven Rattner. Fox News reported on his departure, here, last week…..Meanwhile, in the surprise of the century, Neil Barofsky, “the special inspector general overseeing the government’s financial rescue program,” reports that many of the banks receiving TARP money have used those funds for things other than lending! The uses include, investing, repaying debt, and buying other banks. About 80% of the banks spent at least some of their TARP funds in connection with new lending. Barofsky’s report comes out today, according to this Washington Post article. I have an idea to increase employment and reduce waste and fraud. Every company should be required to hire its own special inspector general at inception. Then, after the first special inspector general’s report is issued, the company should be forced to fire the special inspector general on trumped-up charges. We can keep a lot of people employed this way, and generate plenty of news stories about waste and abuse. We should also make every person hire a special inspector general at birth. Then we can ignore virtually every warning the special inspector general gives us and later suffer the consequences. Oh wait–I’ve already done that with Mom and Dad.
James B. Stewart of the Wall Street Journal has no sympathy here for UBS, the Swiss Government trying to protect it, or super-wealthy American taxpayers who parked cash in secret UBS accounts in order to defraud the IRS. The particular tax program that got UBS into trouble was implemented while the bank was purportedly cooperating with the IRS. Stewart implies that UBS, in refusing to turn over more depositor names to the United States, is reneging on a prior agreement. That isn’t true. UBS agreed to turn over some names as part of its plea deal with the United States, but the parties agreed to disagree regarding more extensive disclosures. Stewart also exaggerates the U.S. banking system’s privacy protections. Federal grand juries have virtually unfettered power to subpoena U.S. bank accounts and, in many cases, can order the banks not to disclose the subpoena to the customer whose accounts are being examined. Still, it is hard to argue with Stewart’s basic point. The customers at issue were specifically targeted by the bank as part of a scheme to help Americans dodge U.S. tax payments. If a small African or Latin American country, rather than Switzerland, was aiding and abetting its bank’s refusal to cooperate with such an important American tax fraud investigation, it is difficult to believe that we would be witnessing this much U.S. hand-wringing.
Marc Dreier was sentenced to 20 years imprisonment yesterday by U.S. District Judge (SDNY) Jed Rakoff. The government had asked for 145 years. Dreier’s attorney, Gerald Shargel, requested 10 to 12 years for his client. With good time, Dreier should do about 17 years and be released at the age of 76. His children, now teenagers, will then be in their mid-thirties. Sobering numbers for those caught up in securities fraud and securities fraud investigations. When the SDNY prosecutors threaten you with life imprisonment if you don’t plead guilty and cooperate, you’d better believe they mean business. Dreier’s case is different since he pled guilty early on and had no higher-ups to implicate. It is unclear from the Wall Street Journal story here whether Judge Rakoff granted a downward variance, but I assume that he did. It is impossible to imagine such a “light” sentence under the old mandatory Sentencing Guidelines regime. This is not meant as a criticism of the sentence. Just a reminder that, even in the age of Booker-Gall-Kimbrough, the odds of receiving a substantial term of imprisonment are high for those who roll the dice, go to trial, and lose.
Here is disgraced attorney Marc Dreier’s letter to the Court, attached as an exhibit to his lawyer Gerald Shargel’s outstanding Sentencing Memorandum. Dreier concedes that he deserves and will receive a substantial term of imprisonment. He tries to explain what led him into a life of white collar crime. Hat tip to Tom Kirkendall at Houston’s Clear Thinkers for posting on this.
Jerry Markon of the Washington Post writes here on Judge Sonia Sotomayor’s seeming preoccupation with the factual details of the trial record. This is most unusual in an appellate jurist, although not necessarily a bad thing. Experts disagree. University of Pittsburgh law professor Arthur Hellman calls it an ”odd use of judicial time” and bemoans Sotomayor’s “carpet bombing” approach to opinion writing. Former Clarence Thomas clerk Dan Himmelfarb praises Sotomayor’s “extraordinarily thorough” opinions. Finally, Washington DC criminal appellate attorney Adrienne Urrutia Wisenberg, letterofapology’s favorite expert, admires Sotomayor’s “tenacious trial lawyer’s personality.” The article is based on analysis of Sotomayor’s opinions in 46 Second Circuit split decisions. This accompanying piece contains excerpts from some of Sotomayor’s opinions, with links to the full opinion for each excerpt.
The Washington Post’s Zachary A. Goldfarb reports here that Lori A. Richards, longtime Director of the SEC’s Office of Compliance Inspections and Examinations, is resigning after 14 years on the job. Richards’ Office reviewed Madoff’s operations in 1999, 2004, and 2005, without uncovering his Ponzi scheme.
Last week’s Post carried this outstanding piece by Goldfarb on former Office of Compliance Inspections and Examinations attorney Genevievette Walker-Lightfoot. Walker-Lightfoot was hot on Madoff’s trail in 2004, raising and/or trying to ask several pertinent questions about Madoff’s activities, before she was re-assigned to other duties. Walker-Lightfoot’s supervisors at the time were Mark Donohue and his boss Eric Swanson. Swanson later married Madoff’s niece. The SEC’s Inspector General, H. David Kotz, claims to be currently looking at ”all the circumstances surrounding the SEC’s various examinations of Mr. Madoff, including the 2004 examination.” Stay tuned.
Here is Justice Scalia’s majority opinion in Melendez-Diaz v. Massachusetts. This is one of the 2008-2009 Supreme Court Term’s great decisions, applying the Confrontation Clause to lab reports.file://C:\Documents and Settings\Administrator\My Documents\Caselaw Crawford\Melendez-DIaz.pdf
Here is the Order, straight from PACER.
President Obama, through White House Counsel Gregory Craig, accepted Kent’s resignation. This means no disability-based resignation and no pension/retirement benefits related to Kent’s former judgeship. The House impeached Kent on June 19. Kent’s resignation will almost certainly forestall a Senate trial on the impeachment. Hard to impeach someone who has already resigned. The Houston Chronicle carries Suzanne Gamboa’s AP story here.
The Washington Post carries the Reuters story here. U.S. District Judge Hittner heard arguments today on the government’s appeal of U.S. Magistrate Judge Stacy’s jaw-droppingly low bond setting.
The Wall Street Journal reports here on the 150 year term of imprisonment imposed today by U.S. District Judge Denny Chin on all-time Ponzi King Bernie Madoff. If he behaves himself in prison, Madoff will be eligible for release at the age of 199. Initial press reports do not indicate whether Madoff’s sentence includes a term of supervisory release following imprisonment, but it is statutorily mandated. Judge Chin called Madoff’s fraud “staggering” “unprecedented” and “evil.” Chin also said that the 150 year sentence was symbolically important in sending a general deterrence message to future fraudsters. It is clear that neither the judge nor prosecutor believes Madoff has been fully cooperative.
The Houston Chronicle’s Kristen Hays and Tom Fowler report here on the latest moves in the Allen Stanford prosecution. On Friday, Senior U.S. District Judge David Hittner granted a stay (pending appeal) of U.S. Magistrate Judge Frances Stacy’s surprisingly low bail setting ($500,000.00 with a $100,000.00 cash bond). Hittner will apparently hear the matter on Monday morning. Prosecutors are entitled to appeal such determinations to the district court.
Here is a fascinating story by Jake Bernstein of ProPublica.org about Madoff “victim” Jeffrey Picower. “Between December 1995 and December 2008, Picower and his family withdrew from their various Madoff accounts $5.1 billion more than they invested with the self-confessed swindler, according to a lawsuit filed by the trustee who is trying to recover money for those Madoff defrauded.” This is investigative reporting at its best.
Mary Flood and Tom Fowler of the Houston Chronicle report here on the latest developments.
Sir Allen “no relation to Leland” Stanford has turned himself in to the FBI, according to his lawyer, Dick DeGuerin, and this ABC News.com piece. Sealed indictments were returned in the case earlier today in Houston. Stay tuned.
Carrie Johnson of the Washington Post has written another remarkable piece on the current travails of DOJ’s Public Integrity Unit in the wake of the Ted Stevens debacle. Her article details personnel shifts, the current roles of Chief William Welch and Deputy Chief Brenda Morris, continuing discovery drops and re-examined verdicts in the Alaskan corruption probe, and understandable morale problems. Apparently, the newly produced documents in two of the Alaskan cases are extensive in nature. Most intriguing, however, is this item from Johnson’s story:
“Sources said that among the questions investigators are pursuing is how closely the work of the Stevens trial team was supervised by officials in the Criminal Division. Senior political and career lawyers there may have offered input and monitored decisions about the kinds of material to turn over to Stevens’s defense team at Williams & Connolly, the sources added.”
Senior political and career lawyers in the Criminal Division were monitoring and offering input on the trial team’s discovery obligations? If true, this is extraordinarily unusual, even for a high-profile corruption case, absent a specific complaint or request by the defense team. And if these senior officials really were micro-managing the trial team’s Brady productions, they seem to have screwed up in spectacular fashion.
Well, not exactly. Former Cendant Corp. CEO Walter Forbes is doing 12 years in Allenwood for accounting fraud. His sentence included a $3.275 billion restitution order. The federal government moved, post-sentencing, to liquidate Forbes’ assets in order to satisfy the restitution order. The feds wanted Forbes’ $5 million house, claiming that it was purchased with ill-gotten gains. Now Forbes’ wife Caren has filed for divorce seeking equitable division of the couple’s property. But the mansion is currently held in Caren’s name only, having been sold to her by Walter for a mere $10. Our government is not amused. Nora Dannehy, Acting U.S. Attorney for the District of Connecticut, has taken the highly unusual step of moving to intervene in the Bridgeport Superior Court divorce action. According to Dannehy’s motion: “This court should not allow the Forbes family to undermine the government’s work to enforce the restitution order under the guise of a simple, uncontested, family court matter.” The Connecticut Post story by Daniel Tepfer is here.
Carrie Johnson of the Washington Post reports here on Attorney General Eric Holder’s first oversight appearance in front of the Senate Judiciary Committe. Holder said that OPR’s investigatory report on the role of Bush-appointed DOJ attorneys in drafting/approving so-called “torture memos” could be released to the public in a matter of weeks.
I am always suspicious when an Inspector General gets fired. The Washington Post carries an AP story here, by Ann Sanner and Pete Yost, on President Obama’s firing of Corporation for National and Community Service Inspector General Gerald Walpin, and on Walpin’s response. Walpin had investigated misuse of AmeriCorps federal education grants by Sacramento Mayor, and Obama supporter, Kevin Johnson. Walpin also sent a criminal referral on the matter to the Sacramento U.S. Attorney’s Office in August 2008.
The Acting U.S. Attorney in Sacramento, Lawrence Brown, criticized the referral and reported Walpin to an integrity committee for inspectors general. According to Brown’s letter of complaint, the U.S. Attorney’s Office “highlighted numerous questions and further investigation they [Walpin's office] needed to conduct, including the fact that they had not done an audit to establish how much AmeriCorps money was actually misspent.”
That, standing alone, sounds pretty lame to me. If a U.S. Attorney reported every incomplete federal criminal referral to an integrity committee, we would have quite a backlog. Besides, the U.S. Attorney’s job is to assess the criminal referral and either reject it outright or direct the referring agency to do additional work. It is the very rare referral that results in an immediate indictment.
However, Acting U.S. Attorney Brown also complained about something much more serious in my view–repeated statements to the media by Walpin’s office prior to the Sacramento mayoral election. These statements apparently prompted the U.S. Attorney’s Office to announce, before the election, that it would not file charges against Johnson. Negative statements to the news media by law enforcment sources about politicians embroiled in election battles are, barring unusual circumstances, clearly improper. It is not a federal agent’s job to attempt to influence an election.
Walpin staunchly defended his work, stating that he acted with “the highest integrity” and that he reported his conclusions “in an honest and full way.”
Pardon my absence, but, in addition to my regular day job, I have had the honor this week of serving on a petit jury in a DC Superior Court criminal trial.
On June 8, my birthday, I reported for grand jury duty and talked my way out of it, once I learned that the grand jury panel would have to meet all day every day for 27 calendar days, straight through until July 10. Who in the world has time for such a schedule? When the clerk told our group that we couldn’t sit on the grand jury if we had a pending felony or misdemeanor charge, I offered to step outside and commit a misdemeanor. She was not amused.
The price for talking my way out of the grand jury was a trip to the petit jury panel, where I was sure I would be struck since I do criminal defense work. Wrong! The defense wanted me on and the AUSA figured that my past life as a prosecutor rendered me safe.
The trial, which involved charges related to the carrying of an unlicensed firearm, was presided over fairly, patiently, and masterfully by the Honorable John H. Bayly, Jr. Both the prosecutor and defense attorney were young, earnest, and competent.
My fellow jurors were pleasant, and we tried our best to listen attentively to the evidence and the court’s instructions. We deliberated about thirty minutes and acquitted the defendant of all charges.
After a career as a trial lawyer, this was my first experience as a juror. It was a very simple case, with only two witnesses for the government and none for the defense. What really hit home for me was how irritated I became when either side wasn’t ready to proceed. It is one thing as a trial lawyer to intellectually understand that jurors get annoyed at delays. It is quite another thing altogether to experience that annoyance as a juror. This is something I intend to keep in mind. Not that I’ve ever caused any unnecessary delay.
DOJ has uncovered Brady violations in the cases of two convicted Alaska politicians, Pete Kott and Vic Kohring, whose appeals are pending in the 9th Circuit. Both of these prosecutions were part of DOJ’s longstanding probe of Alaska public corruption, which also included the Ted Stevens case. The charges against Stevens have already been dismissed with prejudice due to Brady violations. In the cases involving Kott and Kohring, DOJ has moved for a remand to the district court so that the trial judge can sort out the Brady issues. In the meantime, DOJ has agreed that Kott and Kohring should be immediately released from prison on their own recognizance.
The Anchorage Daily News story is here. DOJ’s press release announcing the move is here. The Government’s Motion in Kott’s case is here.
Attorney General Eric Holder stated as follows: “After a careful review of these cases, I have determined that it appears that the Department did not provide information that should have been disclosed to the defense….Department of Justice prosecutors work hard every day and perform a great service for the American people. But the Department’s mission is to do justice, not just win cases, and when we make mistakes, it is our duty to admit and correct those mistakes. We are committed to
doing that.”
Assistant AG Lanny Breuer added: “The Criminal Division must ensure that defendants receive all appropriate discovery materials, and today’s action demonstrates that commitment to this responsibility….We will continue regular discovery training for all Criminal Division prosecutors to make certain that they perform their duties in adherence to the highest ethical standards. Every day, hundreds of career prosecutors work to uphold this Division’s proud tradition of being vigilant, ethical and stellar in the
execution of their work. This action is faithful to that tradition.”
Kudos are in order for Holder and Breuer. Their statements strike just the right balance. The overwhelming majority of DOJ prosecutors perform their work in an entirely ethical manner. The production of exculpatory material to defense counsel remains the chief area in which some fall short of the mark. Of course, the jury is still out on who fell short and why in the Stevens and other Alaska prosecutions.
Kohring is an arch-conservative Republican. According to his attorney, DOJ’s action “is enough to make Vic Kohring become a Democrat.”
Reminds me of the old joke: A conservative is a liberal who got mugged. A liberal is a conservative who got arrested.
Here, courtesy of the WSJ, is the SEC’s civil complaint filed today in the Central District of California against Angelo Mozilo, David Sambol, and Eric Sieracki.
Professor Ellen Podgor over at White Collar Crime Prof Blog has this excellent and detailed post discussing Judge Sonia Sotomayor’s approach to white collar crime cases. Ellen sees Sotomayor as decidedly pro-government. Not surprising when you think about it. Most judges from politically liberal backgrounds tend to be pro-government and anti-business. It is only natural that this attitude would flow over into and affect their views on corporate crime. Sotomayor was, in my view, on the wrong side of U.S. v. Rybicki, the Second Circuit’s major private sector honest services fraud case. I agree with Ellen that Sotomayor’s attempt to bring coherence to the various case law defintions of “willfull” criminal conduct in U.S. v. George was both scholarly and impressive. At any rate, you should go read Ellen’s entire analysis. I highly recommend it.
Michael Doyle of McClatchy Newspaper has this interesting story on Sonia Sotomayor’s district and appellate court rulings in criminal law matters. Doyle’s analysis is definitely for the general reader, yet it is better than most. Among Doyle’s findings, Sotomayor has apparently ruled, or joined others in ruling, for the government in 65 of the 90 criminal appeals she has decided on the Second Circuit. (This must be a reference to published opinions.) When voting on behalf of defendants, she has been in the majority in all but one case. Sotomayor is not afraid to go after the government for Brady violations, but does not appear to veer outside of the mainstream in her criminal law rulings. For example, in one child pornography case she ruled that an FBI affidavit lacked probable cause, but upheld the ensuing search. This was obviously the right holding under the Supreme Court’s good faith test established in U.S. v. Leon.
Scott Greenfield over at Simple Justice has another excellent post here concerning the Supreme Court’s recent overruling of Michigan v. Jackson. Will prosecutors still be barrred from interviewing, or directing cops/agents to interview, represented suspects under state ethics rules? Under most such rules you cannot speak to a represented person unless his lawyer gives you permission or unless “authorized by law.” I believe that most, but not all, jurisdictions construe “authorized by law” to include constitutional law decisions by the Supreme Court, but I haven’t researched it recently.
He didn’t have a lot of rules for his law clerks. “I’d like you to be here when I arrive and when I leave.” That meant 8 to 5. And he didn’t want the phones tied up with many personal calls. After all, we only had two lines. And, of course, we were always expected to scrupulously honor the confidentiality of court communications. Other than that we were on our own.
He understood instinctively what it meant to be a judge–to be truly impartial and fair to both sides. And he had no interest in grand theories. Sitting on the Texas Court of Criminal Appeals, Texas’ court of last resort for all criminal appeals, he strove to preserve the rule of law and to ensure that every defendant received a fair trial. He had no use for idle gossip or Machiavellian coalition building. He just called them as he saw them. His clerks were told to examine the facts in the light of the law and never to concern themselves with the press or public opinion.
I never saw him be cruel or mean to anyone. He was the most modest, unassuming, ingenuous man I ever met. He did not go around town referring to himself as “Judge Tom Davis.” Merchants with whom he had traded for years had no clue of his title or position. Whenever I hear the term “Christian gentleman” his visage instantly comes to mind.
He adored his wife Jeannine, and loved his children, Leslie, Mark, and Tommy. His kids’ cars seemed to be constantly breaking down, and he often went to pick them up and loan them his own.
We were a happy little chambers family. Kay Tawater was the secretary, I was the senior clerk, and every year we had a new briefing attorney right out of law school–Larry Kurth, Carol Ann Wood, Mike Hutson, and Doug Wise. New appeals were stored in the judge’s office in redwells that we called “shucks.” Whenever you went to work on a new case, you grabbed a “shuck” from the judge’s office.
I have been blessed with many mentors and benefactors throughout my legal career. I owe more to Tom Davis than to any of them. He plucked me out of total obscurity to be his law clerk. He taught me, through his actions, what it means to be a professional. I clerked for him a little over three years, then left to go to a political job in Washington. Whenever I would call to check in on him, he’d start the conversation by saying: “Hello Sol. Are you calling from Air Force One?”
His accomplishments, although impressive, cannot account for the effect he had on those who knew him. He was, quite simply, an object lesson. Men and women admired him, just for who he was.
Now he goes to join Jeannine, who died last year. Our hearts go out to to his children and grandchildren. Here is the obituary from the Austin American-Statesman.
Dionne Searcey of the Wall Street Journal has a pretty good piece here on the recent upswing in Foreign Corrupt Practices Act (”FCPA”) enforcement by DOJ. The story, however, incorrectly leaves the impression that FCPA was a little-used statute that has been taken down from the shelf and “dusted off” to the surprise of corporate America. This is not the case. The great majority of public companies who do business overseas have had FCPA compliance programs for years. The law has always been a pain for U.S. businesses to deal with, since it prevents virtually all bribes and gratuities paid to foreign governments in order to obtain or keep business.
According here to the Washington Post, the announcement will come at 10:15. And here is a background piece on Sotomayor by the Post’s Keith Richburg. The article does not get into any real legal analysis, but does contain some basic biographical and human interest facts. Sotomayor actually tried cases to juries as a young lawyer, which, if she is confirmed, will make her a rarity among modern Supreme Court Justices.
Carol D. Leonnig of the Washington Post has a detailed story here on Mountaintop Technologies, a Pennsylvania firm withties to Representative John Murtha. Mountaintop is under investigation by DOJ’s Office of Inspector General, apparently in relation to its receipt of several miilion dollars in earmarks for administering and distributing DOJ grants to local Pennsylvania law enforcement agencies. The company denies any worngdoing.
The Washington Post reports here that DC Council Member and former Mayor Marion Barry’s probationary sentence for tax-related offenses was extended two years, because he failed to file a timely tax return in 2007. The original sentence of probation in 2006 was for failure to file tax returns. At that time, according to the article, Barry admitted that he had not paid taxes on most of the income he earned (about $500,000.00) between 1999 and 2004. Prosecutors originally sought prison time for Barry, but relented due to his recent kidney problems. Prosecutors did ask for 30 days home detention which was denied by the sentencing magistrate because they offerred no evidence on wilfullness. Let’s see–he was already on probation for failure to file. Does somebody still need to tell him that filing your taxes on time is a legal requirement? Barry was humble as usual. He publicly asked Attorney General Holder to investigate the prosecutors who “harassed” him.
Just kidding! The American Constitution Society is officially pleased, here, that Duke Law Professor Christopher Schroeder, co-author of ACS’s Keeping Faith with the Constitution, is President Obama’s choice to lead DOJ’s Office of Legal Policy. OLP usually has a key role within the Executive Branch in choosing judicial nominees for the federal district and circuit courts.
I take it from ACS’s description of Keeping Faith that the book is an argument against originalism and in favor of something called “constitutional fidelity.” I used to work in OLP, under Attorney General Meese, helping to choose judicial candidates committed to textualism, originalism, interpretivism, and/or Frankfurterism. A similar effort was undertaken in the Bush years, and I’m sure the Democrats try to install “living Constitution” types when they are in power.
What I learned during my time at OLP was that federal district judges are almost invariably chosen by their home state U.S. Senator or Senators, if the Senator or Senators are members of the President’s party. Essentially, it takes a morals charge to keep a Senator’s choice off of the federal district court, and sometimes even that isn’t enough. DOJ has more leeway in filling circuit court vacancies, but even here a powerful Senator (Phil Gramm and Al D’Amato come to mind from the old days) can stand in the way of the President’s choice.
What I also found back then was that most or all district court candidates and many circuit court ones as well, had virtually no background or interest in constitutional law. I recall asking one candidate about his views on the incorporation doctrine (the doctrine that the 14th Amendment incorporates the first eight amendments of the Bill of Rights and applies them against the states). He responded that he knew everything there is to know about incorporating a business.
My colleagues and I were young then, and for the most part contemptuous of mundane things like trial experience, life experience, or common sense in a judicial candidate. Then I became a trial attorney–12 years as a federal prosecutor, followed by 10 and counting on the criminal defense side, all of it in the federal court system.
From the admittedly narrow, trade perspective of a white collar criminal defense attorney I have found that I don’t really care whether a judge is liberal or conservative. What matters is whether he or she is fair, decent, impartial, intelligent, thoughtful and civil.
Will the judge actually listen to my legal arguments and let me put on my case? Is he/she totally result-oriented in favor of the prosecution or truly open-minded and fair to both sides? Will he/she be fair and willing to rule in my client’s favor, if the law and the facts call for it, even when he/she thinks that my client is guilty? Is he/she civil toward the attorneys? Does he/she encourage the government to fulfill its Brady obligations? Does he/she know government misconduct when he/she sees it, and will he/she crack down on it, even if the offending AUSA or case agent is one who has been practicing in front of him/her for years?
These are the things that interest me. There are many good judges on the federal bench using this test, and many bad ones as well. So have at it, Professor Schroeder. Whether their heroes are Brennan, Black, or Scalia, send us some judges who are decent, intelligent, fair, and who know how to try a case.
T. Christian Miller of ProPublica.org reports here that DOD-OIG may audit AIG and other carriers over their handling of claims for civilian contractors injured in Iraq and Afghanistan. The possible audit comes in the wake of a joint investigative report of wartime claims handling by ProPublica, the Los Angeles Times, and ABC News, and a request by Senator Bernie Sanders of Vermont. The original ProPublica story by Miller and the L.A. Times’ Doug Smith can be found here. According to the piece, many former contractors battling serious wartime injuries have to fight for years to obtain their benefits.
Scott Greenfield over at Simple Justice has this excellent commentary today on the abusive and anachronistic practice of perp walks–that is, law enforcement agents parading arrested defendants in handcuffs before the media. In a country that supposedly honors the principle of the presumption of innocence, this exercise in prejudicial pre-trial publicity should be stopped, and the executive branches at the state and federal level should lead the charge. But don’t count on it.
Newly elected Senator Kay Hagan of North Carolina has announced that George Holding, the U.S. Attorney for the Eastern District of North Carolina, should stay in office awhile longer, as he is overseeing investigations of two prominent Democrats–Governor Mike Easley and former Senator John Edwards. Hagan had originally announced that she was moving forward quickly to recommend a replacement for Republican appointee Holding, but backed off after coming under instant criticism. The Democrats apparently do not want to be accused of their own political U.S. Attorney firings. No word yet on whether the White House or DOJ told her to back off. Holding is a very fine man and has been an excellent U.S. Attorney. But the idea that it is improper or unseemly to replace one party’s political appointees with another’s after a change in administrations is silly. The Raleigh News & Observer story is here.
The Supreme Court has accepted certiorari in U.S. v. Conrad Black, on the question of whether honest services fraud reaches the private conduct of a defendant who did not contemplate identifiable economic harm. This has the potential to be a watershed decision that reins in the current indiscriminate use of honest services fraud as a prosecutorial tool by the federal government. Here is Miguel Estrada’s Petition For A Writ Of Certiorari, care of scotusblog.
Paula Reed Ward reports here in the post-gazette.com that the government’s attempt to retry former Allegheny Count Coroner Dr. Cyril Wecht, after an earlier hung jury, may have suffered a fatal blow. U.S. District Judge Sean McLaughlin has granted Wecht’s suppression motion and thrown out key evidence gathered in two government searches. The judge issued a 55 page opinion supporting his decision. The government is deciding whether to appeal.
Boston white collar attorney Andrew Good and his firm, Good & Cormier, have won a significant victory in a First Circuit decision involving access by witnesses to their own federal grand jury transcripts. The opinion, N0. 08-1880, is styled IN RE: GRAND JURY and was issued on May 11. Although the opinion does not go as far as the landmark 2007 D.C. Circuit ruling in In re Grand Jury, 490 F.3d 978, it lowers the burden a grand jury witness must meet in the First Circuit in order to gain access to, as opposed to a copy of, his or her grand jury transcript when facing the prospect of re-appearing before the grand jury. Such witnesses are often subject to an increased risk of perjury prosecutions, by virtue of having made inconsistent statements over time. The majority also found that the three (count ‘em, three!) AUSAs who questioned the witness were verbally abusive.
Here is a fuller, and excellent, treatment of the Kent sentencing by the Houston Chronicle’s Mary Flood. I earlier incorrectly reported that Kent had not yet retired. The impeachment proceedings being planned for him are part of an effort to force Kent to resign, rather than retire on disability, so that he will not receive any pension. Kent is blaming his years of sexual harassment and misconduct on alcoholism, which he is also claiming as his disability.
Soon-to-be fFormer Former U.S. District Court Judge Samuel Kent of Galveston was sentenced to 33 months in prison yesterday for obstructing a judicial investigation into sexual harassment complaints filed against him by female court staffers. Visiting judge Roger Vinson imposed the sentence, which includes a post-confinement three year term of supervised released. Kent apologized to the court staff and his family, but did not reference the two female employees.
Kent’s attorney, Dick DeGuerin, announced that Kent is retiring from the bench because of a disability–alcoholism. This is an effort to allow Kent to keep his $169,300.00 annual salary while in retirement. Kent had not served long enough to retire based on years of service. If he cannot retire based on a disability, he can only resign and receive nothing. Representatives John Conyers and Lamar Smith called on Kent to resign or face impeachment, according to this AP story by Michael Graczyk in the Washington Post.
In Friday’s New York Times, Charlie Savage here attempts to analyze what went wrong in DOJ’s Public Integrity Unit, whose leadership is now in hot water with Judge Emmet Sullivan for its handling of the Ted Stevens case. Savage’s article seems to posit a former golden age in Public Integrity, when the unit was “elite.” This all began to fade, the story goes, when Michael Chertoff took over as Criminal Division Chief early in the Bush Administration and replaced Public Integrity Chief Lee Radek with “outsiders.” Savage’s piece, although informative, overrates Public Integrity’s glory years and ignores/underrates the long-term, solid work of most of the unit’s line attorneys.
According to this WSJ piece by Evan Perez, DOJ’s Office of Professional Responsibility (”OPR”) is likely to call for state bar sanctions, rather than criminal prosecutions, against John Yoo and Jay Bybee, the former Office of Legal Counsel (”OLC”) attorneys who wrote or signed legal opinions (the so-called “torture memos”) authorizing harsh interrogation techniques against detainees. Amazingly, former OLC Chief Steven Bradbury, who “signed some of the memos,” was “allowed during the final weeks of the Bush administration to comment on drafts of the internal probe’s report in his capacity as a Department of Justice official.” Senators Dick Durbin and Sheldon Whitehouse find this inappropriate since Bradbury was “a target of the probe.” Well, duh! DOJ has responded in a letter to the Senators that Bradbury’s participation, which happened during Marshall Jarrett’s watch as OPR chief, was okay since it “was transparent.” Oh, come on. Am I missing something here? How often does the target of a probe get to comment on drafts of the offense report? How about never! Of course, I’m talking about in the United States, not Russia or Venezuela. Can you imagine Mike Shaheen putting up with this kind of interference when he ran OPR? Note to the Attorney General–OPR needs a little more insulation than this. Will you provide it?
Carrie Johnson of the Washington Post reports here that former Bush White House and Bush DOJ officials have been working behind the scenes to soften the OPR Report. They have apparently argued that even referring Bybee and Yoo to state bars for possible disciplinary action sets a dangerous precedent. To me, the danger of any precedents will be dependent, to a significant extent, upon the report’s factual findings and legal analysis. Let the investigatory process be dispassionate and fair and focus on the possible violation of U.S. criminal law–nothing more, and nothing less. Let the chips fall where they may. Then, assuming probable cause that laws have been broken and a winnable case, let AG Holder and/or President Obama make the prudential decision whether to bring charges. I may not agree with that decision, but it is ultimately the AG’s and the President’s (actively or passively) to make. They call it prosecutorial discretion.
The Washington Post reports here that the John Edwards Presidential Campaign is under investigation for possible misuse of campaign funds in connection with payments made to Edwards’ former mistress.
Federal judges are allowed, in imposing a sentence, to consider alleged criminal conduct against a defendant, even if the trial jury has already acquitted the defendant of those very charges. The sentencing court can use this “acquitted conduct” to increase the defendant’s sentence, provided that a preponderance of the evidence supports the allegations.
Today’s Washington Times has an interesting piece here by Jim McElhatton on the late Jim Caron, aka Juror Number 6. Caron sat for 10 months on a DC federal jury whose members ultimately acquitted defendant Antwuan Ball of all serious charges, convicting the defendant on only a minor drug count. When Caron found out that the government wanted Ball to get 40 years in prison and was using Ball’s acquitted conduct as part of its argument, Caron became furious and wrote a letter of complaint to the trial court. That letter has taken on a life of its own, and has been cited in federal appellate opinions and legal briefs.
Here is Jerry Markon’s take, in the Washington Post, on the DOJ’s decision to drop charges against Steven Rosen and Keith Weissman, formerly of AIPAC. According to Rosen, the criminal case was pushed by government officials “who have an obsession with leaks . . . and an obsession with Israel and the theory that it spies on America.” The theory that Israel spies on America? Let’s not go overboard, Steven. Defense attorneys praised the new Administration’s willingness to evaluate cases on the merits, but law enforcement sources said that EDVA prosecutors made the ultimate call.
Conservative icon and former AFL great Jack Kemp is dead of cancer at 73. Philly.com has the AP obituary here.
The Wall Street Journal reports here that the U.S. Attorney’s Office for the Eastern District of Virginia has dropped all criminal charges against former AIPAC employees Steven J. Rosen and Keith Weissman. They had been accused of passing classified national security information to Israeli sources. AIPAC is a well-known pro-Israel lobby group. DOJ officials cited an intervening appellate decision which increased their burden of proof.
Here is a fine tribute to Bob Sussman from Houston lawyer Murray Newman. Bob clearly touched many lives, professionally and personally.
Word has just reached me of the death of native Houstonian Bob Sussman, a friend and one of the country’s truly outstanding white collar defense attorneys. Bob practiced for many years at Hinton Sussman & Bailey and, more recently, at Locke Lord Bissell and Liddell. He was a skilled negotiator and trial lawyer with a marvelous sense of humor. It is hard to believe that members of the bar will no longer encounter Bob, gregariously working the halls at the ABA’s Annual White Collar Crime Seminar. We first met on opposite sides of a savings and loan fraud case that I was prosecuting. Later, Bob was very gracious and helpful to me when I transitioned from the Office of Independent Counsel into private practice. He did it because he was a nice guy.
The Houston Chronicle obituary is here. According to the Chronicle, Bob “was a mediocre golfer, but played quickly.” The Chronicle also reports that Bob recently “fulfilled a lifelong dream” and attended the Masters. “This past Monday while traveling overseas in Jordan, he once again exhibited in an e-mail to a friend his signature great humor: ‘This place reminds me of Augusta, but less azaleas, less dogwoods, less grass, more bunkers. And the course marshalls have automatic weapons. Need to catch up. Much to report.’” Our sympathies go out to Bob’s wife, son, and brother and to all of his many friends. Houston has lost one of its great ones.
The trial judge rightfully admonished Manhattan Assistant District Attorney Elizabeth Loewy for her outrageous reference to one of Anthony Marshall’s defense attorneys in Loewy’s opening statement in the Marshall/Morrissey fraud trial. The court rejected the defense’s motion for a mistrial, however. John Eligon’s New York Times story here, describing the second day of trial, covers the court’s ruling in the very last paragraph. No word from Eligon on whether Judge Bartley instructed the jury not to consider the prosecutor’s comments, or informed them that the comments were improper. This kind of conduct, striking over the defendant’s shoulders at his attorney, is something that even baby prosecutors are routinely taught not to do. That it would be attempted during a trial of this magnitude is stunning.
The New York Times reports here on opening statements in the Anthony Marshall/Francis X. Morrissey criminal trial in Manhattan. Marshall is the son of the late socialite Brooke Astor. He and Morrissey are charged in state court with looting Astor’s estate. Astonishingly, Manhattan Assistant District Attorney Elizabeth Loewy referenced one of Marshall’s criminal trial attorneys, Kenneth E. Warner, in her opening statement. Loewy mentioned Warner’s alleged role in some of the transactions involved in the criminal case. This is outrageous prosecutorial conduct and should result in a mistrial. It is hornbook law that a prosecutor should not strike at the client by attacking his attorney or bringing the attorney into the underlying case as a witness or virtual witness. Loewy has justified her conduct by pointing out that she tried to have Warner recused. This is beside the point. Loewy lost that motion and she was under a duty to avoid any references to Warner by name.
The SEC has filed a securities fraud complaint against Danny Pang and Private Equity Management Group in the Central District of California. Henry Blodget has the story here in businessinsider.com. This is another case containing allegations of a classic Ponzi scheme.
Here is New York Times Columnist Frank Rich’s latest take on the Bush Administration’s authorization of torture or extremely harsh interrogation methods, depending upon your point of view. Rich (echoing Senator Carl Levin) thinks that “it’s time for the Justice Department to enlist a panel of two or three apolitical outsiders, perhaps retired federal judges, ‘to review the mass of material’ we already have.” He wisely eschews the idea of a truth commission: “We don’t need another commission. We don’t need any Capitol Hill witch hunts.” But then Rich goes too far too fast: “What we must have are fair trials that at long last uphold and reclaim our nation’s commitment to the rule of law.”
Aren’t you jumping the gun there a little bit, Frank? Don’t we need to first ascertain whether there was even a crime cognizable under federal law, and, if so, who committed it? And then, don’t the prosecutors need to determine, in their professional judgment, if the case is winnable? And finally, doesn’t Attorney General Holder (or a Special Counsel, if President Obama and AG Holder have deemed that one is appropriate) need to exercise his prosecutorial discretion as to whether prosecution is appropriate under all of the circumstances? That’s the way it is usually done and the way it should be done here. We don’t need no stinking Truth Commissions and we don’t need any left-wing screechers trying to bully DOJ. We have already had too much political pressure on DOJ in recent years.
As for “a panel of two or three apolitical outsiders, perhaps retired federal judges,” I don’t know of many: 1) successful prosecutions run by a panel; 2) apolitical retired federal judges; or, 3) retired judges who are qualified to lead an investigation at the operational level. How about picking a current well-respected career prosecutor? There are plenty of those around.
According to this Karl Vick piece in today’s Washington Post, former DOJ Office of Legal Counsel chief Jay Bybee, now a judge on the Ninth Circuit, regrets his role in signing the infamous “torture memos.” Since he is a sitting judge, Bybee is not commenting directly, but the article could not have been written without input from his friends. Vick’s story is balanced but short on substantive analysis of the memos in question, and notes that Bybee is friendly and admired by ideological friend and foe alike. I can attest to Bybee’s friendliness. We worked together in DOJ’s Office of Legal Policy in the 1980s and he was a consummate professional who did not appear to have a mean bone in his body. Calls for Bybee’s impeachment, based on conduct occurring before he became a judge, appear premature to me.
On the other hand, if DOJ professionals can make a reasoned argument that certain Bush-era legal memos sought merely to cover obviously illegal activities, let the investigations begin. After all, we investigate (and sometimes even prosecute) lawyers for fraudulently legitimizing tax fraud schemes with dubious letters of legal advice. I don’t see why dubious torture memos warrant different treatment. Just keep the politicians away. We don’t need any of Senator Leahy’s Truth Commissions.
AG Eric Holder has declassified and released a congressionally prepared decision-making timeline (and analysis) regarding harsh interrogation techniques approved and employed by the Bush Administration. At least one former Bush Administration official has criticized the timeline as incomplete. The document highlights the knowledge and key decisionmaking roles of Vice-President Cheney, National Security Advisor Rice, and AG Ashcroft. According to Senator Jay Rockefeller, Colin Powell and Donald Rumsfeld were not briefed unitl late in the day and had little or no substantive role in the decisionmaking process. The Washington Post story is here.
Susan Carey of the Wall Street Journal has an excellent background story here on the Tom Petters federal fraud prosecution, being handled out of Minnesota. As in so many of the recent Wall Street scandles, there are claims that Petters’ alleged fraud contained “elements” of a classic Ponzi scheme. There are also stories of investment advisors who were sharp enough to steer their clients away from Petters after doing rather rudimentary research. The heart of the charged fraud centers around purportedly phony purchases and sales of surplus audio/video products by Petters’ company–phony in the sense that no actual equipment existed. Several persons and entities have already pled guilty.
We have been away for a few days, and apologize to our millions of readers worldwide who have expressed concern. Okay–so there were only ten of you, and nine of those wanted to sell me something. It is still nice to know that we were missed.
Today’s Washington Post has a piece here by Del Quentin Wilber on Senator Stevens’ rejection of a no-jail plea deal and his strategy of demanding a speedy trial.
Sunday’s Post had this very good story by Carrie Johnson on some of the things that went wrong, including the short time between indictment and trial and the last-minute cobbling together of the final trial team.
Hey, talk to the prosecutors and defense attorneys in the Eastern District of Virginia about going to trial 60 days after indictment. It happens a lot over the river.
And here in the Sunday New York Times, Neil Lewis opines that Ted Stevens is not really innocent, even with Judge Sullivan’s setting aside of the verdict and dismissal of the charges with prejudice, because the trial showed the former Senator to be less than candid about his reporting of gifts. Dana Milbank said something similar last week in this Washington Sketch.
I think these guys miss the point. Plenty of public figures and public servants are exposed all the time as having alleged ethical or moral blind spots. But most of them don’t get indicted and tried in federal court. Indictment for a federal crime is really a defining life event–a whole different ball game. So the trial’s revelation that Stevens is less than perfect is irrelevant to me.
Here is a SunSentinel.com story on Judge Alan Gold’s Hyde Amendment ruling in U.S. v. Shaygan. Here is Judge Gold’s Order. Shaygan was acquitted on all counts in a health care-related prosecution. It was discovered during trial that two witnesses secretly taped their conversations with the defense team and that Government prosecutors and case agents approved the taping.
The Washington Post’s Carrie Johnson reports here on the implications of Attorney General Holder’s latest prosecutorial personnel moves. Mary Patrice Brown is only the third person in history to head DOJ’s Office of Professional Responsibility, first established in 1975. The original OPR Chief was the late and legendary Mike Shaheen. How I miss having him around to talk about life in general and all of the issues swirling around the DOJ.
According to the story here by the Washington Post’s Carrie Johnson, current OPR Chief Marshall Jarrett will move over to head the Executive Office of U.S. Attorneys. The new OPR Chief will be Mary Patrice Brown, now Criminal Division Chief in the U.S. Attorney’s Office for the District of Columbia.
So much for my theory that Judge Sullivan might wait to rule on the Motion Of The United States To Set Aside The Verdict And Dismiss The Indictment With Prejudice in order to “better exert the Court’s own disciplinary authority.” What was I thinking? He is a federal judge. He don’t need no stinking pending indictment! He can exert control irrespective of whether the jury verdict stands or an indictment is pending. In fact, he has appointed veteran DC criminal attorney Hank Schuelke to investigate the conduct of six Stevens prosecution team members on behalf of the Court. According to the Washington Post story here Judge Sullivan publicly criticized DOJ’s Office of Professional Responsibility at yesterday’s hearing for its silence to date with respect to its investigation of the Stevens prosecution.
From the L.A. Times, here it is.
Law.com here carries a Legal Times piece by Mike Scarcella and Joe Palazollo on the series of errors that dogged the Stevens prosecution team. According to the story, Public Integrity’s Deputy Chief Brenda Morris wasn’t assigned to the case until days before the indictment. Though the article fails to mention it, this presumably means that Morris did not participate in the April 15, 2008, interview with Bill Allen and may not have ever known about it.
Most commentators are assuming that Judge Sullivan will quickly grant the Government’s Motion to Set Aside and Dismiss, but Sullivan could wait awhile in order to fully satisfy himself concerning the Government’s conduct in the case and to better exert the Court’s own disciplinary authority. It may be harder for him to do this as a practical matter if he immediately grants the Motion to Set Aside and Dismiss.
Hat Tip to Professor Ellen Podgor, over at White Collar Crime Prof Blog, who reports here that Judge Sullivan issued two new Orders this evening in U.S. v. Theodore F. Stevens.
The first Order states as follows:
“MINUTE ORDER as to THEODORE F. STEVENS. The Court, sua sponte, directs that by no later than 10:00 a.m. on April 6, 2009, the government shall provide to the Court copies of all material gathered post-trial and produced to the defendant. The government shall also provide to the Court all exculpatory evidence, witness interviews, 302s, and affidavits gathered, created and/or reviewed as part of the investigation into the Joy Complaint, and the attorneys notes regarding the April 15, 2008 interview with Bill Allen, whether or not that material has been produced to the defendant. Signed by Judge Emmet G. Sullivan on April 5, 2009.”
The second Order states as follows:
“MINUTE ORDER as to THEODORE F. STEVENS. The Court, sua sponte, ORDERS that the Department of Justice, the Federal Bureau of Investigation, the Internal Revenue Service, and any and all other government agencies involved in the investigation and/or prosecution of Senator Stevens immediately preserve any and all documents related to this matter, including but not limited to emails, notes, memoranda, investigative files, audio recordings, and any and all electronically stored information, until further Order of this Court. Signed by Judge Emmet G. Sullivan on April 5, 2009.”
My guess is that Judge Sullivan wants to keep control of the process and certainly doesn’t want DOJ’s Office of Professional Responsibility (”OPR”) to have sole responsibility for ferreting out any wrongdoing.
Lesson #1: Don’t ever conduct a pre-indictment witness interview that fails to generate a 302 or similar report. In fact, don’t ever conduct a post-indictment witness interview that fails to generate a 302, unless it is a genuine testimony prep session. If exculpatory information is revealed during a testimony prep session, turn it over to the defense.
Lesson #2: Look to the exculpatory information and not the format, if any, in which it is memorialized. If a witness reveals exculpatory information and the only written record of it is contained in privileged attorney notes, you may not have to reveal the notes but you damn well better reveal the exculpatory information.
Lesson #3: In a white collar case, unless there are issues of witness intimidation, turn over all 302s to the defense before the trial. Yes, I know, most 302s do not constitute Jencks material, unless the agent who prepared them is testifying. But every 302 of a testifying witness contains potential Brady material. Do you really want to be worrying during trial whether a witness’ real time testimony is inconsistent with the information contained in his six previous 302s? Turn the stuff over and concentrate on winning your case. The federal criminal trial system is already heavily weighted in favor of the prosecution. If your case is so weak that you are afraid of turning over the 302s to the defense, maybe it is time to re-think your case.
The most interesting thing to me about the MOTION OF THE UNITED STATES TO SET ASIDE THE VERDICT AND DISMISS THE INDICTMENT WITH PREJUDICE (”Motion to Set Aside”) in U.S. v. Theodore F. Stevens is the revelation that no FBI-302 was ever prepared of star Government witness Bill Allen’s April 15, 2008 interview. This was a pre-indictment interview attended by four Government attorneys and one FBI agent. Not to prepare a 302 “Memorandum of Interview” of this session was a clear departure from standard FBI practice. (Two of the prosecutors took notes, however, which is presumably how the review team learned about the April 15 interview.) In fact, post-indictment interviews of witnesses and potential witnesses should also generate 302s, the only exception being testimony preparation sessions. (But even exculpatory statements made in pre-trial testimony prep sessions must be reported to the defense by the prosecution, whether or not notes of the session are produced.)
It is hard for me to believe than an agent would have taken it on himself or herself not to prepare a 302 of the April 15 interview. The OPR investigation may ultimately provide the answer, but my guess is that the lone agent in attendance was ordered by somebody not to prepare a 302. The Stevens defense team had produced the October 6, 2002 “Torricelli Letter” to the Government in early 2008, prior to the April 15 interview. That letter, in which Senator Stevens specifically asked Allen to bill him for construction work, was obviously a potential problem for the Government. By the time of trial Allen recalled a conversation with Stevens’ friend Bob Persons in which Persons told Allen not to worry about the Torricelli Letter because “Ted is just covering his ass.” But Allen recalled no conversation, with Persons or anyone else, about the letter during the April 15 interview. Allen first told the prosecutors about the “covering his ass” conversation with Persons shortly before trial in a testimony prep session. As soon as they heard the story and anticipated using it at trial, prosecutors were duty bound to reveal the contradictory content of the April 15, 2008 interview to the defense team. But the original prosecution team never revealed the existence of the April 15 interview to the Court or to Stevens’ attorneys.
Did the original prosecutors forget about the April 15 interview during pre-trial, trial, and immediate post-trial? I suppose it is possible. We will await the OPR report to find out. The interview was in April 2008. Stevens was indicted in July 2008 and went to trial in late September 2008. By demanding an immediate trial, which was his right, Stevens forced the Government to get ready for trial in a hurry. Of course, it is easier to forget about an exculpatory interview when no 302 is prepared in the first place.
The prosecution team also prepared the GOVERNMENT’S OPPOSITION TO DEFENDANT’S MOTION FOR NEW TRIAL, filed in January 2009. In that Opposition, in discussing Allen’s testimony about the Torricelli Letter, the Government stated:
“In claiming that Allen’s testimony was false, defendant relies first on the fact that Persons’s comment was not recorded in the government’s memoranda of its interviews with Allen. This fact proves nothing, however, because the government was not even aware of the October 6, 2002 note until defendant produced it in early 2008, long after most of the memoranda were prepared. Moreover, it was not until shortly before trial that the government questioned Allen about defendant’s statement that he had asked Persons to speak to Allen about a bill, and thereby learned about Persons’s remark. Allen’s recollection on this point was not recorded in an FBI 302 because it was disclosed during a trial preparation session.” (Emphasis added).
In its recent Motion to Set Aside, the Government rightfully informed Judge Sullivan that this statement was inaccurate in light of the review team’s recent discovery of the April 15, 2008 interview.
The defense team correctly noted that many judges routinely accept the Government’s boilerplate pronouncement that all Brady material has been provided to the defense. Judge Sullivan, to his credit, did not do so here. The defense also admirably commended the new review team and AG Holder and stressed that some prosecutors who came to the case late may not have known about all of the Brady problems.
We are left for now with the sobering comments of the Stevens’ defense team:
“[I]t is crucial that this matter be fully investigated to determine the complete facts and assess responsibility.”
Here is Ben Conery’s story in today’s Washington Times. Patrick Fitzgerald’s office had no comment this time.
Here is a copy, courtesy of the Wall Street Journal.
Here, courtesy of the Washington Post, is the statement issued today by Williams & Connolly’s Brendan V. Sullivan, Jr. and Robert M. Cary, Senator Stevens’ attorneys. The statement excoriates the original prosecution team and praises the new DOJ review team, Judge Sullivan, and AG Holder. Here is the Motion of the United States to Set Aside the Verdict and Dismiss the Indictment With Prejudice.
Taken together these documents reveal that the results of an April 15, 2008 government interview with star witness Bill Allen were improperly withheld from the defense. The Motion states that two prosecutors took notes of the interview. The defense statement reveals that four prosecutors and one agent were present for the interview. The government’s opposition to Stevens’ new trial motion was also inaccurate, according to the government’s Motion to Set Aside.
The Washington Post reports here that Attorney General Eric Holder has filed a motion seeking to dismiss all charges (with prejudice) against former Senator Ted Stevens. This action is being taken after DOJ review of the case by a new set of attorneys not involved in the original prosecution. Holder’s decision was apparently bottomed on the discovery of new Brady violations and “in consideration of the totality of the circumstances of this particular case.” Stevens’ age and electoral defeat undoubtedly played a part. Needless to say, dismissal of charges against a high-profile defendant already found guilty by a jury doesn’t happen every day–or even every decade.
Today’s Wall Street Journal reports here that Acting Office of Thrift Supervision (”OTS”) Director Scott Polakoff has been placed on leave pending Treasury OIG’s investigation into whether the OTS approved BankUnited Financial Corporation’s backdating of a capital transfer in August 2008.
According to the story by Damien Paletta and David Enrich:
“In August, BankUnited transferred $80 million from the parent company to its thrift subsidiary, which was running low on funds, according to people familiar with the matter. BankUnited officials said at the time that the transfer was effective as of June 30. The move had the effect of burnishing its capital levels for the quarter that ended June 30.”
“At the end of that quarter, BankUnited’s recorded Tier 1 capital — the measure regulators use to judge a bank’s health — was at 7.6%. That fell to 1.34% by Dec. 31. Regulators typically want a bank to have at least 6% in Tier 1 capital.”
Polakoff is a highly-regarded career federal employee. Treasury OIG revealed in December that the OTS had improperly allowed a similar backdated capital infusion by IndyMac Bank.
The whole scenario of OTS-approved backdating highlights a problem often faced by federal prosecutors when they are called to investigate fraud in the wake of financial debacles. These debacles typically occur during periods of lax regulation. Law enforcement agents discover during their investigations that regulators/examiners have tacitly approved, or at least failed to stop, actions that look like classic fraud to the FBI or an Assistant United States Attorney (”AUSA”).
This makes prosecution more difficult–and with reason. It is hard to justify criminally charging someone who did nothing to hide his/her questionable activities from on-the-scene regulators/examiners. But there are also situations where massive multi-year fraud occurred and the perpetrators sought to cover their actions by obtaining regulatory approval, without full disclosure, to an overworked examiner or regulatory official.
It is the task of the ethical federal fraud prosecutor to determine which of these two types of cases he/she has. The thing to be avoided is a rush to prosecute (in the wake of public rage and hysteria) people who took actions that, however negligent, greedy, or misguided, were entirely within the acceptable regulatory ethos of their times.
The Houston Chronicle reports here that Virginia based law firm Hunton & Williams has agreed to turn over some records to Stanford receiver Ralph Janvey, but not all. Specifically, Hunton & Williams declined to turn over records related to its representation of Stanford’s non-U.S. businesses (including Stanford International Bank) and Allen Stanford individually. Janvey wants them all and has asked U.S. Dsitrict Judge David Godbey for an order to that effect.
According to his attorney David Finn, Stanford CFO and number two man James M. Davis is now cooperating with both the SEC and DOJ investigations. NPR.org has the report here. The story does not indicate whether Davis’ co-operation is taking the form of personal interviews or some type of attorney proffer. The difference may be significant. Finn is quoted as saying that Davis has not been promised leniency and that there will be a time and place to answer questions relating to allegations of Davis’ involvement in a fraud. This may mean that for now Davis is only answering, directly or indirectly, rather detailed factual questions related to the whereabouts of assets. At any rate, it is always dangerous for those with criminal exposure to talk to the government unprotected, whether the discussions are informal or under oath. Laura Pendergest-Holt found this out the hard way.
The Dallas Morning News ran this astonishing story on Friday about the continuing role that Texas’ two GOP Senators intend to maintain in the selection of Texas’ U.S. District Judges and U.S. Attorneys. Apparently the Texas Democratic Congressional delegation thought that it would have the only say in making recommendations to the White House and DOJ, but a compromise of some sort has been worked out that appears to leave the Senators and their nominating committees in control. If true, this is quite surprising. The historical practice, when the party in the White House does not have a U.S. Senate seat in a particular state, is for DOJ and/or the White House to make the pick, with varying degrees of advice from state party members in the U.S. House or the Governor’s office. Obviously, the opposition party’s Senators must be consulted and the choice should not be offensive to them, since home state Senators have an effective veto over such picks. But the Senatorial role being envisioned now in Texas seems to be something different in nature.
There is no word yet on how this development will affect the appointment of a new U.S. Attorney in my old stomping grounds, the Western District of Texas (”WDTX”). The WDTX is one of the largest, busiest, and most important U.S. Attorney Offices in the country, encompassing more than 600 miles of border between the U.S. and Mexico and prosecuting a high number of major drug, drug gang, and money-laundering cases.
House Democrats representing Congressional Districts within the WDTX purportedly sent three names to the White House several weeks ago: Michael McCrum, Michael Bernard, and David Escamilla. All are men of integrity. I know and like Mike Bernard and have heard good things about David Escamilla, but in terms of competence and experience for this important position nobody matches Michael McCrum. Nobody.
In fact, Mike McCrum may be the most qualified U.S. Attorney candidate I have ever seen in any district in the country.
A former Dallas cop and San Antonio civil litigator, McCrum moved over to the U.S. Attorney’s Office in WDTX in the late nineteen eighties. He rose through the ranks, garnering a well-deserved reputation as a highly skilled trial attorney (with a tireless work ethic) in major drug and money laundering cases. McCrum ultimately became Chief of the Drug Unit, and later Chief of the Major Crimes Unit, for several years, exhibiting outstanding administrative talents. As far as I know, neither of the other candidates for the post has any federal experience to speak of.
Since leaving the U.S. Attorney’s Office in 2000 McCrum has handled a mix of criminal and civil work and is generally regarded as one of South Central Texas’ premier white collar defense attorneys, joining the ranks of the legendary Jack Leon and Gerry Goldstein. But even that doesn’t do Mike justice, because his practice (currently at Thompson & Knight) has become national and international in scope.
Finally, Mike is an American success story. A lifelong Democrat, Mike grew up speaking Spanish and English in a lower income neighborhood on San Antonio’s South Side. He is of Mexican heritage on his mother’s and stepdad’s side. Mike graduated highest in his Dallas Police Academy class and with honors from St. Mary’s Law School, where he was Executive Editor of the Law Review. He has been recognized in Best Lawyers In America every year since 2006 in the area of White Collar Criminal Defense and General Criminal Defense and was a Texas Super Lawyer in 2007 and 2008.
The only thing that troubles me is why Mike, or anybody else for that matter, would want the job in the first place. It is a really tough job and thankless in many ways. One thing for sure–McCrum doesn’t need it. He has done very well in private practice.
Mike is also an excellent motivator and speaker and possesses the kind of interpersonal, people, and diplomatic skills needed in the U.S. Attorney’s post. Perhaps most importantly, Mike is a very decent, serious human being with the all-important judgement, prudence, and gravitas required for the all-powerful U.S. Attorney position.
In short, this one is a no-brainer. Michael McCrum has the goods and he knows the district. It is not every day that a person of McCrum’s caliber puts forth his name for a U.S. Attorney slot. There is quite simply no rational reason for President Obama to choose anybody else.
Law.com has Noeleen Walder’s New York Law Journal piece here about the forfeiture provision of the Marc S. Dreier indictment, which essentially asks for all of Dreier LLP’s assets. According to the lawyer for the bankruptcy trustee, this is a “complete turnaround” and will interfere with the imminent asset sale. OUSA denies any intent to interfere.
The Houston Chronicle ran this story yesterday, summarizing and updating the efforts of court-appointed receiver Ralph Janvey to locate and unfreeze investor funds. The hardest funds to find have been those related to certificates of deposit.
Surprise, surprise. The Second Circuit has affirmed Judge Chin on Bernie Madoff’s incarceration. Here is the WSJ alert.
There was much speculation in the white collar criminal defense community last week about why Bernard Madoff would plead straight up to the charges against him. This assumes that the choice was Madoff’s to make. In fact, there is no way that the U.S. Attorney’s Office for the Southern District of New York (”SDNY”) would have entered into a plea greement with Madoff, given his current posture.
Madoff maintains that none of his employees aided and abetted his massive Ponzi scheme. This is obviously a lie and SDNY doesn’t believe it for a minute. SDNY’s proffer sessions have already uncovered malfeasance by Madoff employees. So how could prosecutors enter into a plea agreement with someone who is already lying to them? A plea agreement presupposes that the defendant is being truthful with the government, at least at the outset. Even the relatively bare-bones SDNY white collar plea agreements typically give a defendant three points for acceptance of responsibility and provide that the agreement is null and void if the defendant lies. Plus, the parties must agree on a “factual basis” in support of the plea.
Thus, entering into an “agreement” with Madoff while he is lying about a key aspect of his crime is unthinkable. Quite simply it would be unethical for the SDNY to give its imprimatur to Madoff’s version of events by entering into a “bargain” with him. Besides, it’s not smart to bargain with the devil.
The government, on the other hand, could not and would not prevent a defendant from pleading straight up to all of the charges.
Madoff is determined to protect any and all who aided him in his crimes–a remarkable exhibition of his continuing sociopathy. The government will make him, his family, and his friends pay for it.
Here, courtesy of the WSJ, is the Criminal Complaint filed on March 17 (and unsealed yesterday) against Bruce David G. Friehling. Friehling is charged with Securities Fraud, Investment Advisor Fraud, and False Filings With The Securities And Exchange Commission. There is no allegation that Friehling knew of Madoff’s fraudulent Ponzi scheme. The crux of the case is that Friehling falsely certified, in various public filings, to having audited BLMIS (Madoff’s company) in accordance with Generally Accepted Accounting Principles (”GAAP”) and Generally Accepted Auditing Standards (”GAAS”). The FBI’s “numerous” interviews with various Madoff employees and its review of Friehling’s workpapers, however, allegedly belie these certifications. Also, according to the Criminal Complaint, Friehling certified to the American Institute of Certified Public Accountants (”AICPA”) between 1994 and 2008 that he had not performed any audits, thereby escaping AICPA’s peer review process. During the same period, however, Friehling certified to the SEC that “he was performing annual audits of BLMIS [Madoff's company] in conformity with GAAS and GAAP.”
Judge Emmitt Sullivan has had it again with the DOJ. Here (Pacer subscription required) is his Friday Order to Show Cause issued in Batarfi, et al. v. Bush, et al., the habeas case of a Guantanamo prisoner detained for seven years without any adjudication. The DOJ has until Tuesday to explain why it violated an Order issued several months ago requiring the turning over of Brady (that is, exculpatory) material to the Petitioner. It turns out that an exculpatory document created in March 2002 was belatedly produced by the government in violation of the Court’s earlier Order. The government has failed to offer any explanation or excuse for its late production.
Judge Sullivan appears even angrier at the government’s violation of the Court’s January 16, 2009 Order requiring the DOJ to file a declaration affirming that: “Department of Justice attorneys have reviewed Petitioner’s statements for exculpatory evidence and have produced or will produce all statements containing exculpatory evidence to Petitioner’s counsel.” (Emphasis added.) The DOJ declaration instead indicates that the DOJ continues to rely on Department of Defense (DOD) attorneys to conduct an initial review of documents for Brady material. To do otherwise, according to the DOJ declaration, would be “not feasable.”
You heard me right. DOJ attorneys were ORDERED to file a declaration affirming that DOJ attorneys had reviewed all of Petitioner’s statements for Brady material. They instead filed a declaration saying in effect: “We didn’t do that, because we didn’t want to. It would be too hard.”
According to Judge Sullivan: “The government’s argument raises the disturbing implication that the attorneys conducting the review in this and other habeas cases (who presumably are not criminal prosecutors from DOJ) do not have the necessary experience with and knowledge of the government’s Brady obligations.”
The government’s response is due by noon Tuesday.
America is our beat.
This is a White Collar Blog, but America is our beat. And so, here we bring you a thoughtful op-ed from today’s Chicago Tribune by Constitutional Law expert Ron Rotunda. Rotunda argues that one key element of the American Recovery and Reinvestment Act (aka, the Stimulus Plan) is clearly unconstitutional.
BLT reports here that Judge Emmett Sullivan is threatening to hold DOJ lawyers in contempt for failing to produce exculpatory information on Guantanamo detainee Saeed Abdullah Batarfi. Judge Sullivan first ordered the documents produced on January 16. His written order questions whether the DOJ lawyers examining the documents possess the requisite knowledge to make Brady determinations. I don’t have the written order yet because DC Pacer appears to be down.
As expected, Bernard Madoff pled guilty today in a Manhattan federal court. The Washington Post story is here. Madoff, purporting to be ashamed of his conduct, pled to the government’s 11-count criminal information, available here, which was filed earlier this week. Madoff pled straight up–without a plea bargain agreement. Judge Chin, quite appropriately, ordered Madoff to prison after the plea. Contrary to the previous public outcry, it would have been inappropriate for Madoff to have been jailed before he entered a guilty plea.
It is clear from a close reading of the criminal information, as well as from press stories relating to certain proffer sessions conducted by the SDNY U.S. Attorney’s Office, that the government doesn’t believe Madoff acted alone. However, the criminal information is ambiguous enough in its wording for Madoff to be able to plead guilty to it without admitting that others criminally aided and abetted him.
Today’s Wall Street Journal reports, in a story here by Amir Afrati, that two assistants to longtime Madoff aide Annette Bongiorno were instructed by Bongiorno to generate trading tickets based on their researching of daily share prices for blue chip stocks “from the previous month or several months.” According to the Journal, the trading tickets are “now believed to be bogus.” The information was allegedly revealed by the assistants, Semone Anderson and Winnie Jackson, in proffer sessions with federal prosecutors. Madoff is expected to plead guilty to various offenses in federal court on Thursday.
The Journal article reports that the two former Madoff assistants were interviewed through the vehicle of proffer agreements, which the Journal describes as agreements ”in which prosecutors agree not to use [the assistants'] statements against them as long as they tell the truth, according to people familiar with the matter.”
In fact, the standard SDNY proffer agreement is much broader, and more dangerous, than this description suggests. For example, if the SDNY decides to prosecute one of the former Madoff aides, her proffer statement can be used against her if any portion of her defense, including an attorney’s opening statement or cross-examination question, is inconsistent with her proffer statement. So, assuming that the standard SDNY proffer agreement was used, and assuming further that the Madoff assistants admitted to intentional wrongdoing during the proffer interviews, their right to put on a meaningful defense may be damaged in the event that the SDNY wants to prosecute them, but they do not want to accept a plea offer.
Two of yesterday’s panels at the ABA Annual White Collar Crime Conference were excellent. The panel on the year’s major cases, all of which resulted in convictions, reminded the audience of some time-tested truths. Most or all of the convicted defendants had talked to somebody–the grand jury, corporate internal investigators, or the SEC–prior to indictment. There was general agreement among the attorneys on the panel that the talking had been a major mistake. The decisions to talk had been made for the most part by previous counsel on the cases at issue.
Ted Wells, who represented Scooter Libby, was, true to form, an outstanding panelist. Wells stressed that Libby faced a choice, when deciding whether to testify before the grand jury, between increasing his criminal exposure and losing his job. This is a choice sometimes faced by politicians and public servants who are witnesses, subjects, and targets. It is a choice also faced by corporate executives who are asked to participate in internal investigations or testify at the SEC. The ultimate question that all of these people should ask themselves, at every stage of the game, is: “What do I prefer–to lose my job or my liberty?”
Wells reminded the audience that even the sharpest clients and attorneys often cannot comprehend the full scope of a criminal investigation. Thus there is no way to be prepared for every question. Libby, before he hired Wells, testified in front of the grand jury, apparently not realizing that Patrick Fitzgerald’s mandate was much broader than the question of who leaked Valerie Plame’s name to Robert D. Novak.
The ethics panel focused on ethical quandaries associated with corporate internal investigations. As usual, Earl Silbert called, correctly, for transparency by audit counsel in dealing with corporate employees who are potential interviewees. Specifically, if audit counsel anticipates that the corporation’s attorney-client privilege will be waived, and that interview results will be turned over to the government, these facts should be made clear to the interview subjects. Professor Ellen Podgor, of the White Collar Crime Prof Blog, and the other panelists also made excellent contributions. Ellen is also posting on the conference.
The securities enforcement session was largely forgettable. Again, no mention whatsoever of the dismissal of all criminal charges in the David Stockman case.
We come to you live from the 23rd Annual ABA White Collar Crime Conference at the Westin St. Francis in San Francisco. The festivities began last night with an afternoon nuts and bolts session for beginners and an evening of dinners and receptions. The level of excitement among participants was stratospheric at the hotel, as everyone eagerly anticipated another scintillating opening speech by conference organizer Raymond Banoun. It was all everyone was talking about. Really.
In past years, Banoun’s speeches were so powerful that droves of conference-goers emptied the room. Ray promised to tone down his speech this year, and, having just sat through it, I can report that he definitely kept his promise. Oddly, however, people still emptied the room.
There is absolutely no truth to the rumour that Ray laces his coffee with LSD 30 minutes before the speech begins. Valium, maybe. LSD, never.
I am now sitting through a panel discussion of last year’s allegedly major trials–at least one of which took place in 2007 and all of which resulted in convictions.
Banoun also writes an annual essay, printed in the conference materials book, highlighting the past year’s white collar world highlights. Somehow he forgot to include the government’s decision to drop all criminal charges in the alleged $900 million David Stockman securities fraud case. I guess it wasn’t important enough.
Connecticut attorney Sebastian Ciarcia of Avon pled guilty last week to bribing a Dept. of Veteran Affairs employee, Kevin Malarney, to steer contracts to two companies controlled by Ciarcia. Ciracia also pled guilty to aiding and abetting the preparation of a fraudulent tax return filed by the nominal owner of one of the companies. The District of Connecticut press release is here. Douglas P. Morabito and William M. Brown are prosecuting the case.
Here are the criminal complaint and supporting affidavit filed by the government in U.S. v. Pendergest-Holt, courtesy of the Houston Chronicle’s chron.com. And here is Monica Rhor and Devlin Barrett’s AP story, also on chron.com, detailing Pendergest-Holt’s release from jail (on a $300,000.00, 10% cash, bond), facilitated by a loan from Pendergest-Holt’s criminal defense attorney Dan Cogdell.
Certain things stand out right away.
First, there was no good reason for the feds to arrrest and perp-walk Pendergest-Holt late on a Thursday, thereby forcing her to spend a night in jail, instead of allowing her to turn herself in for the arrest. It was chicken-shit. She is innocent until proven guilty. She hasn’t even been indicted by a grand jury. There was no way in hell that she was going to be detained, as evidenced by the Government’s failure to exercise its automatic right to a three-day continuance in order to prepare for a detention hearing. Yes, the prosecutors and FBI agents were within their rights in arresting and perp-walking Pendergest-Holt on Thursday afternoon. But it still stinks.
Second, FBI Special Agent Vanessa Walther’s affidavit is underwhelming. I would wait to see the complete transcript of Pendergest-Holt’s testimony before rushing to judgment. The government will have to prove that Pendergest-Holt intentionally gave false testimony. It is clear, even from the affidavit, that Pendergest-Holt gave at least some truthful, damaging testimony about R. Allen Stanford and James M. Davis. Moreover, Pendergest-Holt is accused, among other things, of failing to testify about all of the testimony preparation sessions she attended. But she was instructed by the SEC, in at least one instance, not to include, in her answer, testimony about any meetings with her attorney. SFG’s attorney, Attorney A, was present in several of these preparation sessions. If Pendergest-Holt did not think she had to mention all of the sessions, because Attorney A was present and representing her interests as well as SFG’s, she may have an excellent defense. So, let’s just wait and see.
Third, Attorney A is in a heap of trouble. The feds allege that Pendergest-Holt lied under oath and obstructed justice. Attorney A sat through the entire deposition and attended virtually every prep session. Need I say more?
Fourth, at least one attorney-commentator has predicted with great certainty that Pendergest-Holt will cooperate against Stanford and Davis. But that will only happen if she pleads to a felony–and it isn’t at all clear that Pendergest-Holt is prepeared to do that. A close reading of the affidavit suggests that Pendergest-Holt may not have known about the alleged fraud until earlier this year. If that is correct, and if the entire case against her hinges on whether she obstructed jutice in Febraury 2009, Pendergest-Holt may well decide to fight.
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.
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.
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.
To give you an idea of how professional AUSA Tanya Treadway is, take a look at the first paragraph of the original speaking indictment in U.S. v. Schneider, a health care fraud and controlled substances case being brought in the District of Kansas: “Defendant Stephen J. Schneider is a doctor of osteopathic medicine, licensed in Kansas, and board certified in family medicine. Prior to becoming a doctor, he was a butcher.” No, I’m not making this up. The Superseding Indictment, a kitchen-sink affair, is also full of gratuitous, prejudicial verbiage, including community nicknames for Dr. Schneider. U.S. District Judge Monti Belot, not particularly known as a champion of defendants’ rights, has apparently had enough of Treadway’s tactics. He restricted the Government’s use of certain words and phrases contained in the Superseding Indictment and threw out a good deal of the Government’s proposed evidence, in pre-trial rulings on Monday. Yesterday, Treadway and her boss filed a notice of interlocutory appeal on the evidentiary ruling. Belot’s granting of the defense motion in limine is almost certainly not appealable, but the Government’s actions will cause the re-cheduling of the trial, which is currently set for Monday, Febraury 2. When Treadway fist told Judge Belot that she would appeal his evidentiary ruling he angrily accused her of threatening the Court. The defense. rightfully, is howling about the interlocutory appeal and resulting delay. Defendant Linda Schneider has been detained for 13 months and Stephen Schneider is under house arrest. Read all about the latest developments here, here, and here.
According to the Reuters story, carried here in the Washington Post, the agreement to pay $559 million in fines is related to long-running bribery of Nigerian officials by KBR Inc. executives in connection with a Nigerian gas liquefication project. KBR Inc. was a Halliburton subsidiary during the relevant time period. The WSJ reports here that it is currently unknown whether Halliburton will have to admit to bribery and FCPA (Foreign Corrupt Practices Act) violations as part of what looks like a global settlement. The deal still awaits final DOJ approval.
Today’s WSJ has an interesting story here about the “backwards” progress of the Madoff probe, contrary to the typical “from the bottom up” investigatory model. Of course this was necessitated by the SEC’s failure to investigate Madoff’s investment operation, depite years of credible warnings, topped off by Madoff’s surprise confession. The article focuses almost entirely on the SEC’s current probe, hardly mentioning DOJ’s concomitant investigation, which must result in an indictment before long.
The Houston Chronicle reports here that former Enron CEO Jeff Skilling has asked the full Fifth Circuit to review the panel decision, authored by Ed Prado, affirming his convictions. The main thrust of the motion apparently pertains to the honest services fraud question, with Skilling claiming that the panel strayed from recent Fifth circuit precedent.
The SDNY opposes. Dreier appears to be seeking a Madoff-type 24-hour surveillance release. Law.com carries the New York Law Journal article by Noeleen Walder here.
The BLT reports here that Senator Arlen “Single Bullet” Specter and his Republican colleagues on the Senate Judiciary Committee have obtained an automatic one-week delay on the confirmation vote for Attorney General nominee Eric Holder. They want to ask more questions. Apparently they didn’t hear the part of the Inaugural Address about putting away childish things.
Today’s Wall Street Journal reports that Frank DiPascali, who allegedly executed “trades” for Bernard Madoff, has become a focus of the federal investigation. Such focusing make sense, since most of the Madoff trades apparently never occurred. The WSJ story is here.
The Washington Post reports here on President Bush’s commutation, to time served, of the sentences handed out to former Border Patrol Agents Jose Compean and Ignacio Ramos. The two were convicted of shooting an unarmed illegal immigrant in the buttocks as he fled. They later attempted to cover-up their actions. They had each served 26 months on sentences of 12 years for Compean and 11 for Ramos. DOJ had not completed its own analysis of whether a pardon or commutation was appropriate in the case. Bush apparently considered the guilty verdicts just, but the sentences too harsh. That could be said of thousands of people currently serving federal prison terms. But Compean and Ramos had the backing of many prominent conservatives as well as the anti-immigration lobby. The Post article also notes the extremely low number of traditional, low-profile pardon and clemency applications, applications which go through a rigorous and time-consuming process, that were acted upon by Bush.
Many of our citizens want to see federal investigations and prosecutions of criminal violations which were allegedly carried out during the Bush-Cheney years. You know the litany–warrantless wiretapping and data mining; torture and rendition; perjury before Congress and obstruction of justice.
But Barack Obama has said that he wants to look forward; he doesn’t want to “criminalize policy differences.” This is an interesting choice of words–first enunciated by Oliver North during the Iran-Contra Scandal, if I’m not mistaken. By using that phrase, Obama clearly wishes to send a signal of reconciliation and non-retaliation to official Washington.
So, pretend you are Eric Holder. You have been confirmed as Attorney General of the United States. Assume that you were outraged by the waterboarding and warrantless wiretappings and believe that they violated U.S. criminal law. During your first two months as Attorney General you quietly authorize, or allow to go forward, multiple criminal investigations of these activities. Then one day you get a call from President Obama, summoning you to the Oval Office. His message is clear: “Eric, I want these investigations to end. It’s time to move forward.” “But Mr. President,” you protest, “these are almost certainly violations of U.S. criminal law. It is DOJ’s job to enforce the criminal law. If we shut these investigations down we are telling Americans that Presidents and Vice-Presidents are above the law.” President Obama’s response is curt: “Shut them down. That’s an order. I’ve made my position clear.”
Is this political interference with the DOJ? Clearly. Is it improper as a matter of law or policy? Clearly not. The Department of Justice is part of the Executive Branch. As of tomorrow, President Obama will be the Chief Executive Officer of the Executive Branch. The decision whether to open or close any criminal investigation is at bottom a policy decision and the President gets to make that decision is he so desires.
But take another example. Say that a U.S. Attorney’s Office obtains credible evidence that a sitting Democratic Governor, close to President Obama, has committed a crime. An investigation of Governor X begins and the evidence gets stronger. One day Attorney General Holder is summoned to the White House by President Obama, who says: “Eric, I want you to shut down the investigation of Governor X. That’s an order.” “But why?” you protest. “Never mind why,” Obama responds. “I give the orders here. Find someone else to prosecute. There are plenty of criminals around.”
Is this political interference with the DOJ? Clearly. Is it improper as a matter of law or policy? There is nothing illegal about this order. Again, as Chief Executive, Obama has the authority to shut down any criminal investigation. But it is clearly improper, absent some compelling justification.
Why do I say this? What is my criterion for distinguishing proper from improper political interference? Just a gut feeling, reinforced by the traditions and practices of the Department of Justice and the American political tradition during the post-Watergate era. The Department generally aggressively investigates and prosecutes public corruption. That is a policy of longstanding. In our hypothetical, I assume that President Obama does not want DOJ to stop investigating all public corruption cases. So, I have to assume, unless otherwise informed, that Obama wants this case closed because Governor X is a friend and a Democrat. To me, that is not a proper reason, even if it is a policy and even if President Obama has the power to impose it.
There are a whole host of hypotheticals in between the two examples that I have given above, and they can happen at different levels within DOJ. It should not be assumed that all attempts at political interference based on policy choices are legal. If the President orders the Attorney General not to investigate or prosecute crimes against gays, that is presumably a policy choice, albeit an improper and illegal one. On the other hand, President Reagan was entirely within his rights to change DOJ policies and positions on the use of quotas in DOJ civil rights litigation when he became President, although in doing so he infuriated career DOJ civil-rights attorneys. Reagan ran on an anti-quota platform and he was entitled to run DOJ in accordance with this policy choice.
Policy choices and politics are an inevitable part of the DOJ. Determining when politics crosses the line is not always as easy as it seems. What should the Attorney General do when the President persists in ordering him to follow a policy that the Attorney General wholeheartedly disagrees with? If it is important enough to the AG, he should have the guts to quit.
Folo reports here that AUSA Tom Dawson has retired from the U.S. Attorney’s Office in Oxford, Mississippi. Dawson was my colleague at the Office of Independent Counsel-Whitewater and had an illustrious 36-year career as an AUSA. More recently Tom served as lead prosecutor in the Dickie Scruggs case. A consummate professional, Tom Dawson exemplifies the very finest non-partisan qualities and traditions of the Department of Justice prosecutorial corps. I’m truly sad to see him go and wish him the very best in all of his future endeavors.
Magistrate Judge Ellis imposed even heavier restrictions. In addition to the previous 24-hour surveillance, Madoff will now have his transportable valuables subject to monitoring and inspection. Plus, the terms of the SEC injunction are to be made part of the bond conditions. The Government also moved, with Madoff’s consent, to extend the 30-day Speedy Trial Act deadline in which it must file an indictment or dismiss the complaint. The Government’s motion states that it is in talks with Madoff with a view toward possible disposition of the case.
The U.S. Attorney’s Office for the Southern District of New York dismissed all criminal charges yesterday against former OMB Director David Stockman and his co-defendants. Paul Barnaba, one of the co-defendants, is my client. I will post some extended thoughts on this prosecution at a future time. Here for now is David Glovin’s Bloomberg News story and my law firm’s press release. Below is a statement that Adrienne Urrutia Wisenberg and I put out on behalf of Paul Barnaba.
“It is always a victory when justice is served as it was, eventually, in this case. When the headlines fade, and participants move on to their next case, Paul Barnaba will be left to pick up the pieces of his life. We are overjoyed for Paul, but we also acknowledge the toll this process has taken on him. Our Constitution is supposed to protect the innocent, and even though the eventual outcome of the case was correct, the public likely has no idea what sort of devastation an accusation like this can cause to an ordinary individual. Paul Barnaba is 39 years old. He was a salaried employee at Collins & Aikman. He had no stock options or ownership interest in the company. The investigation and indictment cost him virtually everything—his peace of mind for years of his life, his profession, and, until today, his faith in a system that is supposed to be built on the presumption of innocence.”
Judge Ed Prado’s 104 page opinion affirms the guilty verdicts in toto. The case is remanded for re-sentencing, however, in light of an improper enhancement for substantially jeopardizing a financial institution. Jerry Smith and District Judge Alia Ludlum (sitting by designation) rounded out the panel.
Judge Griffin Bell died of pancreatic cancer yesterday, at 90. Undoubtedly one of the finest Attorney Generals in U.S. History, Bell was fiercely independent and a legendary supporter of individual privacy rights while in office and afterwords. Patrick Lyons’ N.Y. Times Obituary, buried here on A18, is excellent, but fails to mentione Bell’s successful stand against Labor Secretary Ray Marshall’s plan to implement a uniform nationwide identity card.
Bernard Madoff’s wife sent some of the couple’s valuables to family members and friends, allegedly in violation of an injunction obtained by the SEC in its civil case against Madoff. Ergo, the SDNY U.S. Attorney’s Office wants Madoff’s bond revoked, on grounds that he is a flight risk and and an economic danger to the community. Magistrate Judge Ronald Ellis seemed skeptical at yesterday’s hearing and wants to see some law. The Government’s brief is due today, and Madoff has through Wednesday to respond. Alex Berenson’s NYTimes story is here. I’ll be discussing this issue on CNBC’s Power lunch today, sometimes between 12:15 and 12:30 PM Eastern Time.
The Washington Post has the story here. Apparently the pace of the federal criminal inquiry quickened after President-Elect Obama announced Governor Richardon’s nomination. FBI Special Agents assisting the Senate in its nominee vetting process purportedly alerted the Obama transition team to the seriousness of the allegations under investigation. According to the Richardson and Obama camps, there was no pressure from the Preseident-Elect on Richardson to withdraw.
Scott Horton of Harper’s gives this less than charitable take on former Attorney General Alberto Gonzales’ tenure, in light of Gonzales’ recent WSJ interview. The interview was covered/summarized here in yesterday’s WSJ. Gonzales’ basic complaint/defense is that he was not, as White House Counsel, the evil mastermind of the Bush administration’s War on Terror policies; he was one of several lawyers who had a willing hand in formulating those policies. Horton believes that Gonzales lacked a critical lawyering skill–the ability to say “no” to a client. It is hard to argue with this. Gonzales never seemed fully to grasp the critical distinction between the role of White House Counsel and the role of Attorney General. The Attorney General must be a loyal Executive Branch official, but he is not the President’s personal lawyer. He also has an independent duty to uphold the law, including the Constitution. Given the White House’s truly breathtaking claims of Executive Privilege, some of which apparently trumped explicit criminal sanctions contained in federal statutory law [see FISA], and given Gonzales’ role in formulating/defending those claims, his unsuccessful transition from White House Counsel to Attorney General was a foregone conceptual conclusion. This is particularly so, given Gonzales’ longstanding role as Governor and President Bush’s yes man.
Even today Gonzales seems clueless as he discusses his famous hospital visit to Attorney General Ashcroft’s side, where he stood off against Deputy AG Jim Comey and the FBI’s Bob Mueller. According to Gonzales, Ashcroft (who had temporarily ceded the AG’s powers to Comey during gallbladder surgery) was “as lucid as I’ve seen him at meetings in the White House.” Really? Was somebody secretly spiking Ashcroft’s punch during Cabinet meetings?
And in the believe it or not category, Gonzales is angry that Comey gave his famous congressional testimony about the hospital visit showdown without having had ”the decency to notify anyone” beforehand. I’m not making any of this up.
Former GSA Chief of Staff David Safavian was convicted on Friday for obstruction of justice and lying to federal officials concerning his dealings with disgraced former lobbyist Jack Abramoff. Safavian didn’t testify or call any witnesses. His original convictions were thrown out by the U.S. Court of Appeals for the D.C. Circuit. U.S. District Judge Paul Friedman presided at the trial and Lawrence Robbins was lead defense attorney. Justin Schur represented DOJ. Jesse Holland’s AP story is here. . . . For five years the FBI improperly instructed its agents in Iraq to over-report hours, resulting in at least $6 million dollars in improper overtime and Sunday payments, according to the DOJ Inspector General’s report. Ben Corey’s Washington Times story is here. The FBI has admitted wrongoing and says it has stopped these deceptive practices. Spencer Hsu’s Washington Post piece reports that six straight counter-terrorism chiefs condoned the false reporting. Apparently not one of these officials consulted with the FBI’s General Counsel’s Office. Agents were told, among other things, to report time spent at cocktail parties and doing laundry as overtime. One FBI employee took the position that, “When you’re in that environment, anything you do to survive is work for the FBI.” No doubt this is true in some sense. But I don’t see DOJ applying that principle to its various criminal investigations of contractor fraud in Iraq. Apparently there are special rules in Iraq for special people. . . . Meanwhile, Washington Post Personal Finance Columnist Jane Bryant Quinn here discusses two obvious red-flags that should have been apparent to Bernard Madoff’s victims: 1) His fund was audited by an obscure, allegedly rinky-dink, accounting firm with no website; and 2) The funds were held in Madoff’s own advisory firm rather than with “a large, independent financial institution that reports cash flows and trading activity to you directly.”
Rob Cox of breakingviews.com has an excellent column placing the Madoff Ponzi Scheme Fraud within the context of boom and bust economic cycles. Big frauds (or “bezzles”) like Madoff’s remain hiddden in speculative boom years and typically come to light during downturns. The dowturns are in part caused by the excesses and scams of the boom years. The bezzle theory was developed by economist John Kenneth Galbraith. According to Cox, Galbraith taught that the first frauds uncovered are seldom the largest. Thanks to Dave Westheimer for shooting this article to me.
Yahoo! News carries this AP story by Don Thompson on mortgage fraud as a booming business for federal prosecutors. Although the article focuses on the rising number of mortgage fraud prosecutions at the federal level, an important subtext is that most of the criminal cases are being brought against relative pikers. Thanks to my friend Michael Clark of Hamel Bowers & Clark for sending this piece to me.
High society investment advisor and Wall Street legend Bernard Madoff has been arrested for running what the SEC calls “a stunning fraud that appears to be of epic proportions.” Madoff was turned in by his sons. The Wall Street Journal has the story here. Losses are estimated to be in the $50 billion range. The SEC has filed suit and DOJ has issued a criminal complaint.
White collar crime is our focus, but America is our beat. And the politics of prosecution in the Department of Justice is always something that we will examine. Here is today’s Washington Post story on the indictment of five former Blackwater guards unsealed yesterday. The guards were providing security for the State Department on a dangerous convoy in Iraq. There are several troubling things about these charges, which we intend to comment on in coming days: 1) it is unclear whether a federally cognizable crime was committed; 2) jurisdiction is iffy; 3) there are serious evidentiary issues caused by the issuance of Garrity assurances to guards who were interrogated; and 4) dubious inclusion of inappropriate firearms/deadly weapons charges. More to come.
White collar cirme is our focus, but America is our beat. Besides, judicial arrogance and official incompetence are always white collar issues. So here is a column from one of DC’s local treasures, Washington Post Saturday columnist Colbert King–a one-man crusader against official arrogance, corruption, and incompetence.
King’s column concerns Jonathan Magbie, a first-time possession of marihuana offender who also happened to be a ventilator-dependent quadriplegic. According to King, the prosecutor didn’t want Magbie to go to jail, but DC Superior Court Judge Judtih Retchin imposed a 10 day sentence. Then the DC jail’s assistant medical director called the judge and requested that she amend Magbie’s sentence so that it it could be served in a hospital, since the jail was not equipped to handle Magbie’s medical condition. Judge Retchin refused to amend her order. Magbie died four days into his sentence, because he could not get access to a ventilator. Read King’s column and weep.
Carrie Johnson of the Washington Post wrote an excellent article on Wednesday about career AUSA Nora Dannehy’s continuing investigation into the U.S. Attorney firings. Here it is. The article serves as a reminder of Attorney General Mukasey’s critical decision to launch a criminal investigation of the firings, after a joint non-criminal probe by DOJ’s Office of Professional Responsibility and Office of Inspector General was stonewalled by Karl Rove, Harriet Miers, and others. Dannehy has full grand jury subpoena power. The Bush Administration has vowed co-operation. Presumably this means that it won’t assert Executive Privilege against its own Department of Justice. But even if it does, assertions of Executive Privilege usually fare poorly when weighed against the grand jury’s right to investigate potential crimes.
Eight minutes after the Government filed a one-paragraph response in opposition, Judge Emmet Sullivan granted Ted Stevens’ motion to exceed the local 45 page limit on new trial motions. The Anchorage Daily News has the story here.
Washington Post columnist Richard Cohen, an old-school liberal, doesn’t think Eric Holder should be Attorney General because of Holder’s acquiescence in then-fugitive financier Marc Rich’s pardon. In today’s column, Cohen makes out the case against Holder about as well as anyone can. Holder, as President Clinton’s Deputy Attorney General, was “neutral, leaning towards favorable” when asked to weigh in on whether Rich should receive a pardon. Holder’s non-opposition gave the Clinton Administration cover for the outrageous pardon of a filthy-rich indictee who had fled the country to avoid prosecution. Holder also neglected to inform the U.S. Attorney’s Office for the Southern District of New York, which originally brought the case against Rich, that a pardon was in the works. That office was rightfully furious when it learned of the done deal.
Okay. It was a big mistake. And some of Holder’s justifications over the years for his non-opposition to the Rich pardon have been absurd. And, yes, I know, we have recently sufferred through an Attorney General who was way too much of a yes man for the White House and who sullied the supposedly glorious reputation of the Department of Justice. But it is the President’s choice, and barring a morals charge or a major felony in the nominee’s background, President Obama should get who he wants at Mother Justice, assuming that the nominee is otherwise qualified. Holder passes this test.
The full text of Judge Emmet Sullivan’s Friday, November 28, order in the Ted Stevens case reads as follows:
“MINUTE ORDER as to THEODORE F. STEVENS. The Court, sua sponte, cancels the hearing scheduled for December 1, 2008. The government is directed to file a response to the defendant’s Motion to Access Government Filing and for Consideration of Additional Remedies by no later than December 15, 2008. The government shall also address any reasons why the Court should not strike the government’s ex parte pleading for failure to comply with Local Criminal Rule 49.1(h). The Court notes it has reminded the government of LCrR 49.1(h) in the past with respect to sealed filings in this case. See, e.g., MINUTE ORDER dated September 4, 2008. The defendant’s reply shall be filed December 29, 2008. A hearing is scheduled on the pending motions for January 15, 2009 at 2:00 pm in Courtroom 24A. Signed by Judge Emmet G. Sullivan on November 28, 2008.”
How did we get here? To recap, on November 15, government witness David Anderson sent a post-verdict letter to the Court alleging that some of his trial testimony was false and that the government knew it was false. (The government had been forced to call Anderson to the stand after Judge Sullivan struck Anderson’s time sheets from the record based on the government’s failure to disclose exculpatory information to the defense concerning Anderson’s work history.) Anderson’s letter apparently arrived at the Court on November 20. Judge Sullivan entered Anderson’s letter into the record on November 21. Later that day, the defense filed a motion for discovery and an evidentiary hearing regarding Anderson’s allegations.
Even later that day, the government filed an initial response, promising to respond more fully by November 24. November 24 came and went, seemingly without a government filing. But that’s because the government made its filing on that date ex parte. On November 25, the Court set a “brief hearing” on the defense’s motion, for Monday, Decmber 1 at 10:30. On November 26, the Court issued a new order changing the hearing to a staus conference.
Also on the 26th, the defense filed a motion for access to the government’s allegedly unauthorized November 24 ex parte filing, and for additional remedies, contending that: “The government’s unilateral ex parte communication with the Court is a clear violation of the rules. The ex parte filing should be rejected; its contents should be disclosed to defense counsel; and the Court should consider whether other remedies are appropriate.” The defense maintained that the government should have informed the defense of its intent to file an ex parte motion ahead of time, so that the defense could have litigated the issue with the Court. It looks from the wording of yesterday’s order as if the Court is inclined to agree with the defense. The Anchorage Daily News has a story about the latest developments here.
According to an ADN.com story here, the government did make its promised Monday filing, responding to allegations of subornation of perjury, in the Ted Stevens case. It’s just that the filing was ex parte, allegedly to protect a separate ongoing investigation. To nobody’s surprise, Stevens’ lawyers are upset about the manner in which the government made the ex parte filing and notified, or failed to notify, the Stevens camp.
In its preliminary response last Friday to Senator Stevens’s Motion For Discovery And An Evidentiary Hearing Regarding Allegations In Letter From David Anderson, the government noted its intent “to provide a more detailed submission to the Court on Monday.” The government also claimed to have “obtained substantial additional evidence…that prove [sic] the falsity of Mr. Anderson’s allegations and that further explicitly prove [sic] Mr. Anderson’s collusion with an interested party in the preparation and transmission of Mr. Anderson’s letter.” The government then stated that it would “describe and submit that additional information to the Court in a subsequent filing on Monday.” Well, Monday has come and gone, and the PACER docket sheet indicates no new filings, under seal or otherwise, by the government. Anderson’s letter claimed, among other things, that his trial testimony denying government-offerred immunity to him and his family members was untrue and obtained under duress.
LetterOfApology mourns the late October passing of John Russell, ace newspaperman and former Justice Department Criminal Division spokesman. John Russell was a consummate professional and a gentleman of the old school. His kindness was legendary and I will never forget various offers of assistance he made to me over the years. Our sympathies go out to his wife Neille, and his daughters, grandchildren, and great-grandchildren. The Cincinatti Enquirer has an obituary here.
A San Franciscoo federal jury has acquitted former McAfee General Counsel Kent Roberts of fraud charges related to the pricing of his stock options. The jury deadlocked on the third charge of falsifying accounting books. The trial judge, in a highly unusual move, recommended against re-trying the case. The AP story is here.
CQ Politics reports here on Judge Sullivan’s decision late this afternoon to deny a defense motion for mistrial, despite the government’s delayed production of exculpatory evidence. The judge ordered the government to turn over all rough FBI interview notes and told the parties to be back in court on October 6 for further discussion.
What a coincidence. On the same day that the Second Circuit publishes its landmark Stein decision, upholding Judge Kaplan’s dismissal of the KPMG indictments based on DOJ’s interference with the Sixth Amendment right to counsel, Deputy AG Mark Filip (recently installed) announces DOJ’s total repudiation of the Holder/Thompson/McNulty Memos’ infringement on attorney client privilege and work product. The remarks can be found here. As Comrade Lenin would say, this is no accident. DOJ’s long overdue and supine surrender comes in the face of Senator Arlen “Single Bullet” Specter’s proposed federal legislation aimed at ending DOJ’s unconstitutional practices.
Here, from Filip’s remarks, are the highlights of the new policy:
“First, credit for cooperation will not depend on whether a corporation has waived attorney-client privilege or work product protection, or produced materials protected by attorney-client or work-product protections. It will depend on the disclosure of facts. Corporations that timely disclose relevant facts may receive due credit for cooperation, regardless of whether they waive attorney-client privilege or work product protection in the process. Corporations that do not disclose relevant facts typically may not receive such credit, just like any other defendant”
“Second, prior Department policy allowed federal prosecutors to request, under certain conditions, that a corporation disclose non-factual attorney-client privileged communications and work product, such as legal advice. This is what the old guidelines designated “Category II” information, and it lies at the core of the attorney-client privilege and work product protection. The new policy forbids prosecutors from asking for such information, with only two exceptions, both of which are well-recognized in existing law.”
“Third, the new policy instructs prosecutors not to consider whether a corporation has advanced attorneys’ fees to its employees, officers, or directors when evaluating cooperativeness. Under the earlier guidance, the Department reserved the right to consider such payments negatively in deciding whether to assign cooperation credit to a corporation. That is no longer the case. A corporation’s payment of or advancement of attorneys’ fees to its employees will be relevant only in the rare situation where it, combined with other circumstances, would rise to the level of criminal obstruction of justice. This of course will generally not be the case.”
“Fourth, under the new policy, federal prosecutors may not consider whether the corporation has entered into a joint defense agreement in evaluating whether to give the corporation credit for cooperating. There are legitimate reasons why a business would choose to enter, or not enter, that kind of agreement. The government may, of course, ask that a corporation refrain from taking information the government provided it and disclosing that information to third parties. But the mere participation in a joint defense agreement by a corporation will not be taken into account for the purpose of evaluating cooperation.”
“Fifth, prior guidance allowed prosecutors to consider whether a corporation disciplined or terminated employees for the purpose of evaluating cooperation. That is now disallowed. Prosecutors may only consider whether a corporation has disciplined employees that the corporation identifies as culpable, and only for the purpose of evaluating the corporation’s remedial measures or compliance program.”
Apparently nobody in the press has figured it out yet, but the remaining portion of the Texas Indictment against former House Majority Leader Tom DeLay will almost certainly be thrown out before long. The Texas Court of Appeals Third District’s Friday opinion upholding the constitutionality of charges brought against James Ellis and John Colyandro is in reality a complete victory for DeLay. A portion of the Court’s opinion rejects Ellis’ and Colyandro’s vagueness challenge to money laundering charges. The very same money laundering charges were brought against DeLay. This looks like a defeat for DeLay, right? Wrong! The Court held that that the Texas money laundering statute in effect at the time of the alleged crime was not vague because it clearly did not apply to anything other than cash or cash equivalents. In other words, the statute did not apply, and could not be applied, to checks, cashier’s checks, or money orders. This has long been obvious to anybody familiar with the statute, which was not amended until 2005 to cover checks. It should have been obvious to Travis County District Attorney Ronnie Earle as well. Why does this help DeLay, as well as Ellis and Colyandro? Because their alleged acts of money laundering involved checks, not cash. They were indicted for acts that were not crimes at the time they allegedly committed them. It looks like DeLay’s long nightmare, and his abuse by the Travis County District Attorney’s Office, is about to end. Assuming that the Court’s opinion is upheld by the Texas Court of Criminal Appeals, as it surely will be, the district judge handling DeLay’s case will be forced to dismiss the remainder of the Indictment.
CNN.com reports here on Karl Rove’s refusal to appear before the House Judiciary Committee in response to a subpoena. The subpoena was issued in connection with the Committee’s investigation of alleged political firings and prosecutions in the Department of Justice. The striking thing about this latest episode of Bush Administration arrogance is not that Rove is claiming executive privilege; it is that Rove refused to even appear before the House Juiciary Committee. Under law, when a witness claims a privilege not to testify before a judicial or legislative body he still, unless excused by the entity issuing the subpoena or a court of law, must appear and invoke whatever privilege he is claiming on a question by question basis. Rove and his attorney Robert Luskin have rejected this approach. The only question left is whether Judiciary Committee Chairman John Conyers and the Democratic majority will have the guts to hold Rove in contempt. Don’t hold your breath.
Former UBS banker Bradley Birkenfeld pled guilty in Miami federal court yesterday to a tax-related Klein Conspiracy count. He is cooperating with the government in its probe of UBS. This is going to be a very big case. Money.com has the story here.
We incorrectly reported yesterday, based on the original AP story, that former Bear Stearns hedge fund traders Ralph Cioffi and Matthew Tannin were in the process of surrendering themselves to authorities. Instead, they were arrested by the FBI and hauled off to court, perp-walk style, with the full panoply of press coverage. This is a despicable practice in white-collar cases unless defendants pose a flight risk. But where non-violent offenders, innocent until proven guilty, are sure to be released, the practice of arresting and parading them in front of the press so FBI agents and prosecutors can get their jollies is pathetic. Tom Hays’s AP story is here in today’s Washington Post. Somebody needs put to put an end to this practice.
According to the Wall Street Journal and AP’s Tom Hays, two former Bear Sterns hedge fund managers are in the process of turning themselves in to the authorities and will be charged today in the Eastern District of New York with Securities Fraud. The AP story is here. Although I have not seen the Indictment, this morning’s WSJ story here makes the prosecution case look pretty weak.
A panel of the U.S. Court of Appeals for the D.C. Circuit has reversed all counts of conviction against Jack Abramoff ’s friend, and former GSA Chief of Staff, David Safavian. Safavian had been convicted of Title 18 U.S.C. Section 1001 false statements to the GSA and obstructing a GSA investigation. The GSA was investigating Safavian’s attendance at an Abramoff-sponsored golf outing to Scotland. The Safavian Opinion was written by Judge Raymond Randolph. The Section 1001 concealment counts were reversed based on insufficient evidence. The Court ruled that Safavian had no duty to disclose all the details of Abramoff’s relationship to the GSA when Safavian sought a GSA ethics opinion prior to the trip and when he later spoke to a GSA agent investigating the trip. The Court firmly rejected the government’s argument that, once Safavian started talking about the trip, he was under a duty to disclose all relevant facts about it. The Court reaffirmed that a person cannot be guilty of a Section 1001 concealment offense unless he is under a duty to disclose the concealed fact. Three other counts, dealing with allegedly affirmatively false statements by Safavian, were thrown out because the District Court failed to allow expert testimony profferred by the defense on the meaning of “doing business” within the government contracts field. Safavian argued that he told the truth in informing GSA that Abramoff was not doing business with the agency at the time of the Scotland trip. Although Abramoff had informally inquired about two GSA properties to Safavian, he did not bid or recieve contracts on those or any other GSA properties. The expert would have testified that in the government contracts field, such informal inquiries do not constitute doing business. The Court ruled that this testimony would have been relevant to Safavian’s state of mind and to whether he intended to mislead the GSA. Congratulations to Lawrence Robbins who argued the case on appeal.
Geoffrey Fieger has been acquitted of charges that he violated federal campaign finance laws. mlive.com has Jim Irwin’s AP story here.
When white-collar defendants are on trial for fraud-related charges, they often assert the defense of attorney reliance. This defense holds that if a person reasonably relied upon the advice of his attorney in committing the charged conduct, he cannot have formed an intent to defraud. Like everything else in law and life, there are exceptions to this defense. For one, the defendant must have disclosed all relevant information to his attorney before receiving and relying upon the advice. And if the advice was patently ridiculous, no jury is likely to buy it. Prosecutors like to argue to the jury that no attorney can advise a client to commit fraud.
As a practical matter, what do prosecutors do when investigating a case where the target has asserted the attorney-reliance defense before the indictment is returned? Often, the prosecutor will be able to satisfy (or convince) himself ahead of time that the attorney was not told the whole story by his client or that the attorney did not give the advice asserted by the target. But some prosecutors solve the problem by indicting the attorney along with the client. This is obviously unfair and improper if the attorney was sincere in giving advice–even mistaken advice. On the other hand, there are definitely occasions in which an attorney knowingly aids and abets a crime by providing “advice” to the principal that is really nothing more than a cover for fraud. This seems to happen a lot in connection with alleged tax shelter schemes.
Why am I even thinking and talking about this stuff? The whole attorney reliance issue came to mind yesterday when I read the Washington Post story on the latest John C. Yoo memo to surface. Yoo is the former Deputy Assistant Attorney General in DOJ’s Office of Legal Counsel, infamous for writing a memo providing legal cover for the mistreatment and/or torture of enemy combatants.
The government has now declassified a sentence from another Yoo memo, penned in 2001. This memo relates to the Foreign Intelligence Surveillance Act (”FISA”). FISA states that FISA is the “exclusive means by which electronic surveillance . . . and the interception of domestic wire, oral and electronic communications may be conducted.” The Bush Administration wanted to conduct warrantless electronic surveillance without even post-surveillance judicial authorization in certain situations, which is prohibited by FISA. FISA allows emergency warrantless eavesdropping, but requires the government to obtain post-surveillance judicial approval withinn 72 hours of the electronic surveillance. That wasn’t good enough for the Bush Administration. Yoo’s declassified sentence states that: “Unless Congress made a clear statement in the Foreign Intelligence Surveillance Act that it sought to restrict presidential authority to conduct warrantless searches in the national security area — which it has not — then the statute must be construed to avoid [such] a reading.”
In other words, even though FISA says on its face that it is the “exclusive means by which electronic surveillance . . . and the interception of domestic wire, oral and electronic communications may be conducted,” Congress really meant to carve out an exception for the inherent Presidential authority to conduct such surveillance and interception. Not only is this analysis false and Orwellian–it doesn’t even make sense as a matter of Constitutional Law. If the President has this inherent authority, it is Constitutional in nature, and cannot be restricted by Congressional enactment.
Predictably, Senator Diane Feinstein is outraged and calls for new FISA legislation with even stronger exclusivity language. But respect for the English language, including the plain language of statutes, has never been a strong suit of the Bush Administration. Senator, and former federal prosecutor, Sheldon Whitehouse, is more to the point: “I cannot reconcile the plain language of FISA that it is the exclusive procedure for electronic surveillance of Americans with the OLC opinion saying Congress didn’t say that. Once again, behind the veil of secrecy, OLC appears to have cooked up extravagant or misguided legal theories which would never survive the light of day.” Translation: Yoo is no better than a tax attorney handing out phony opinion letters to justify a fraudulent off-shore tax fraud scheme.
Brian A. Benczkowski, DOJ’s Deputy Assistant Attorney General in the Office of Legislative Affairs, said that the government no longer relies on the 2001 Yoo memo to justify its warrantless electronic surveillance. Benczkowski, like former Attorney General Alberto Gonzales before him, believes that when Congress approved the September 18, 2001, Authorization for Use of Military Force, it “confirmed and supplemented the President’s Article II authority to conduct warrantless surveillance to prevent catastrophic attacks on the United States.” Almost nobody in Washington involved in the passage of the Authorization really believes this.
So here is my question: If the Obama Administration decides to criminally prosecute members of the Bush Administration for their knowing violation of FISA, will Yoo be a witness for the government, a witness for the defense, or a co-defendant?
If you are going to try and kill the King, you better damn well get it done. Cyril Wecht is a celebrity pathologist superstar. This means that the Cyril Wecht prosecution is a suitcase trial. If you are the prosecutor, you pack your suitcase ahead of time. If you don’t win, you leave town. Maybe that’s why the Wecht prosecutors were so quick to announce they would retry the case, almost right away, despite a hung jury leaning toward acquittal.
The haste to announce retrial was unseemly. Judge Schwab’s strong advice to the jury not to discuss the case with the press or the attorneys was bizarre at best and improper at worst. The publicly displayed animosity between the defense team, which includes a former U.S. Attorney General, and Judge Schwab was stunning. This just doesn’t happen at the federal level.
The FBI’s decision to call some of the jurors to interview them about the case, reported here in the Pittsburgh Tribune-Review, was unusual and stupid, although Judge Schwab’s decision to wisk the jury away quickly after the trial obviously prompted the move.
I started reading about the Wecht trial late in the day. Press coverage has been abysmal. Some things are clear, though, from merely reading the indictment. The case looks pretty chicken-_____ at best.
Prosecutors and defense atttorneys divide crummy cases into two fundamental categories; chicken-_____ and bull-_____. Chicken-_____ cases allege actual crimes, but the charges, even if true, are technical and/or low-grade in nature. Bull-_____ charges are not really crimes at all. They are not “righteous” and never should have been brought in the first place.
The government charged way too many counts in the Wecht case. Most of them appear to be incredibly petty “misuse of public office charges” masquerading as honest-services mail and wire fraud. But honest service fraud cases usually require, in the absence of bribes or kickbacks, lying and/or concealment by a defendant regarding his/her theft of honest services. The Wecht indictment doesn’t do a great job of setting this lying/concealment out and neither, apparently, did the evidence. (Dr. Wecht’s private forensic pathology practice was well known to all.)
The only thing in the indictment that looks like a real crime, if true, is Dr. Wecht’s alleged billing of private clients for reimbursement for transportation expenses that were actually provided by the county. The indictment charges that phony receipts from a defunct company were used in connection with these bills. But even if this happened and Dr. Wecht knew about it, it isn’t the kind of thing you typically see prosecuted at the federal level. It falls under the category of petty theft or greed–fodder for state cases or private lawsuits at best.
The jury in the honest services fraud trial of celebrity pathologist Cyril Wecht begins its 10th day of deliberations. Jurors told the judge on Thursday that they were deadlocked. The defense has, therefore, made a mistrial motion. The Philadelphia Inquirer reports here on the jury’s languid pace.
KPMG either initiated or tolerated accounting fraud at New Century Financial Corp., according to a 581 page report by Michael Missal, the bankruptcy court’s independent examiner appointed at the request of the Department of Justice to investigate New Century’s 2007 plunge into bankruptcy. The report also blames New Century’s management, and details significant departures from generally accepted accounting practice. New Century was once the nation’s second largest subprime lender. Reuters has an excellent piece here by Amanda Beck. The Washington Post’s Carrie Johnson has a story as well. KPMG, the financial industry’s poster child for abandoning your employees in the face of a federal investigation, vigorously denies the report’s conclusions.
Friday’s Miami Herald reports here that longtime GOP operative Roger Stone alerted the FBI to Eliot Spitzer’s call girl habit last year. In November of 2007, Stone’s Cosa Mesa, CA attorney sent a letter to the FBI declining an interview request but reporting Stone’s admittedly second-hand information about New York’s then-Governor. Stone had learned from Miami Velvet, an acquaintance, that Spitzer once used the services of a high-priced call girl in Miami. Stone, in the letter, reported what he knew and stressed that the information was second hand. Stone’s Florida lawyer released the letter last week in an effort to counter Internet-based conspiracy theories about his purported role in bringing down Spitzer, a long-time nemesis. Hat tip to TalkLeft for alerting us to this story.
File this one under Department of Ho-Hum. Even if the snoopers revealed passport contents to outsiders, they have only committed misdemeanors. The Washington Post story, here, does suggest, somehwat murkily, that State Department employees and contractors accessing passport files must first represent (by touching a “Yes” button on a computer monitor) that they are authorized to view the contents. Will a zealous prosecutor claim that such a representation by an unauthorized person constitutes a false statement to the government under 18 U.S.C. Section 1001? Your guess is as good as mine. The Post says that the State Department’s OIG will investigate, but may ask for assistance from DOJ.
That’s Melvyn Weiss, former name partner at Milberg Weiss, LLP, the securities class action powerhouse. WSJ.com has the story here. The WSJ.com Law Blog has more detailed info here. The LA Times reports here that Weiss’ lawyer says he is pleading to “limited participation in a criminal conspiracy.” The Indictment against Weiss alleged that he and former partners enaged in a scheme to pay illegal kickbacks to class-action plaintiffs.
The Journal story is here. The conviction was overturned because of the trial court’s limitations on the testimony of the defense’s expert and its limitations on the defense’s use of classsified data.
Here, for our readers, is Jeff Skilling’s Supplemental Brief Regarding Andrew Fastow Interview Notes. Originally filed under seal, and now unsealed, the brief details the material withheld from Skilling and how this withholding affected Skilling’s trial defense. We breathlessly await the government’s response. Brady-Giglio claims seldom prevail on appeal. An appellant must prove, among other things, that the withheld information was material, non-cumulative, and unavailable to the defendant by other means. Nevertheless, my initial take on this issue, after coming to it late, is that Skilling has a decent chance to win. The government’s use of a composite 302, which allegedly masked Fastow’s changing stories, as well as the government’s failure to show all of its raw Fastow interview notes to the trial court, are, in my view, quite striking (troubling) factors–and highly unorthodox. Ideoblog discusses the matter further, here, as does the always informative Tom Kirkendall, in Houston’s Clear Thinkers.
The Houston Chronicle reports here on convicted former Enron CEO Jeff Skilling’s latest substantive, and fully unsealed, appellate brief, which publicly references for the first time all of the Fastow interview notes that Skilling claims were improperly withheld from the defense by the prosecution. According to Hays, “[a]fter the trial, jurors told reporters that they didn’t give Fastow’s testimony much weight.” This gratuitous information, whether true or false, will be utterly irrelevant to the Fifth Circuit’s ultimate analysis of whether there was a Brady violation, and, if so, whether it warrants reversal.
Former National Republican Congressional Committee (”NRCC”)Treasurer Christopher J. Ward has been accused by GOP officials of diverting up to $1 million from various campaign coffers to his personal accounts. The Washington Post has Paul Kane’s story here.
They do things a little differently in Guam. Apparently without any advance notice to Greenberg Traurig LLP, the giant law firm was added to a Second Superseding Indictment in Guam, along with convicted lobbyist Jack Abramoff, who once worked for Greenberg Traurig. The ABA Journal story is here. Here is the Abramoff/Greenberg Traurig Indictment. The Pacific Daily News of Guam has coverage here. The charges were brought under Guam territorial law and essentially allege a conspiracy to evade the procedures and regulations, and misapproriate the funds of, the Superior Court of Guam, in an effort to hide lobbying activities undertaken by Abramoff and Greenberg Traurig on behalf of the Court. Greenberg Traurig has vowed to fight the Indictment, and has stated that it is a victim of Abramoff. From a quick view of the Second Superseding Indictment, it looks as if Greenberg Traurig may have simply been added because Abramoff worked for the firm at the time of the alleged events.
Kimberly Strassel, in WSJ’s Opinion Journal, analyzes Spitzer’s Media Enablers. WSJ’s Review & Outlook discusses the use and abuse of old statutes in prosecuting current crimes in Of Martin and Mann. The reference is to New York’s Martin Act, which Spitzer used as Attorney General as part of his effort to intimidate Wall Street, and the Mann Act, the old federal prostitution statute, which may be used against Spitzer himself. The Washington Post has the resignation story. One thing is clear as the fog begins to lift in this scandal; for the SDNY U.S. Attorney’s Office to be even contemplating charging Spitzer under the Mann Act is unprecedented and appalling. It is virtually unheard of for a call-girl customer to be prosecuted at the federal level. This would constitute a clear abuse of prosecutorial discretion.
The Washington Post has the basic Elliot Spitzer story here. Dana Milbank’s Washington Sketch column reveals perhaps the most revolting aspect of the case: Client 9 would not even spring for the Amtrak Acela to transport Kristen down to DC from Manhattan. Egads! He forced her to take the regional! Meanwhile, the Wall Street Journal editorializes on it all, here, noting that there isn’t a “shred of nobleness” in Spitzer’s fall. The investigation of Spitzer apparently started with a Suspicious Activity Report filed by a bank in connection with the Governor’s transfer of funds to pay for call girls. We’ll see in coming days whether this turns out to be true and how the investigation grew from this kernel into the exposure of a sitting opposition-party Governor. Stay tuned.
The Washington Post reports here on the two year sentence handed down yesterday in Manhattan federal district court to Texas oilman David B. Chalmers. Chalmers pled guilty in August to conspiracy to commit wire fraud, based on kickbacks he and his company paid to Saddam Hussein’s regime during the pendency of the U.N. Oil-For-Food Program. U.S. District Judge Denny Chin also fined Chalmers $9 million dollars and sentenced his companies, Bayoil USA and Bayoil Supply & Trading, to three years probation.
Today’s Washington Post reports here on Lyglenson Lemorin, one of the “Liberty City Seven.” Indicted in Miami federal court for plotting to blow up the Sears Tower, Lemorin was acquitted. (The jury deadlocked on the other defendants. ) Over two months after the acquittal, Lemorin is still incarcerated, because the government wants to deport him back to Haiti. Lemorin, age 33, is a permanent legal resident who has lived in the U.S. for over 20 years. The government is seeking to deport Lemorin based upon the same charges the jury acquitted him on. Yes, the standard of proof is lower in immigration cases. Yes, the government does this kind of thing all the time. Yes, the government has the right to do it. But that doesn’t make it the right thing to do–particularly here where the evidence against Lemorin was so thin. Come January, certain segments within DOJ are due a major housecleaning.
Reuters has the obituary here.
DOJ Fraud Section Principal Deputy Chief Paul Pelletier took a page from Karen and Richard Carpenter after yesterday’s guilty verdicts against former Gen Re and AIG executives, telling reporters, in effect, “We’ve Only Just Begun.” The trial was notable in a number of respects: spotty and superficial news coverage, the inclusion of the high-ranking Pelletier on the trial team, and the naming of the current and former AIG CEOs as unindicted co-conspirators. “The investigation continues,” Pelletier said. “We’ve got a lot of work to do to work up the ladder.” This is the kind of tough, classic, old-fashioned prosecutor-speak we haven’t heard in a long time, sending a clear message to the just-convicted defendants and to AIG itself. Not surprisingly, it comes out of the Fraud Section, the most aggressive, mad-dog white-collar unit within all of DOJ. Today’s WSJ($$) has an excellent story on the trial, the verdict and the larger implications.
Here is a copy of the indictment handed down in Congressman Rick Renzi’s case. Renzi Indictment. The indictment is a veritable kitchen sink of charges: conspiracy, wire fraud, Hobbs Act extortion, money laundering, and insurance fraud. At first blush, it is unclear to me why the insurance fraud charges, which also involve attorney Andrew Beardall, were included in the indictment. They appear to allege a wholly separate conspiracy.
Also, here is Bloomberg.com’s updated story. Renzi’s DC attorneys, Reid Weingarten and Kelly Kramer, adamantly deny the charges against their client and vow to fight them vigorously.
Remember Travis County D.A. Ronnie Earle’s extortion of money from four corporations charged in the TRMPAC investigation? He demanded that the companies, among other things, donate money to the LBJ School of Public Affairs in exchange for the State of Texas dropping campaign finance-related charges against them–charges that never should have been brought in the first place. Now it turns out that the money has never been spent, because Earle hasn’t “followed up.” Even worse, Earle forced the companies to pony up the cash in the face of warnings from one of his key aides that such an arrangement: didn’t pass the smell test; probably ran afoul of a Texas Attorney General’s opinion; and, might violate federal law. The Austin-American Statesman has the story here.
Bloomberg.com has the story here. No comment as yet from Renzi’s attorney, Reid Weingarten. Indicted along with Renzi are James Sandlin, one of Renzi’s political backers, and attorney Andrew Beardall. According to the story, Renzi attempted to tie his sponsorhip of a bill sought by a private company to that company’s purchase of land owned by Sandlin.
Word reached me last week, by way of the Texas Bar Journal, that Bob Huttash died in November of last year. Bob will be remembered by generations of Texas judges, prosecutors and defense attorneys as an able and gifted State Prosecuting Attorney, a position he held with great distinction from 1979 to 1996. Texas has a split criminal and civil jurisdiction. The Texas Supreme Court hears no criminal cases. That job falls to the Texas Court of Criminal Appeals, the court of last resort in Texas for all criminal matters. The State Prosecuting Attorney is similar to the U.S. Solicitor General, at least for criminal cases coming before the Court of Criminal Appeals. When district attorney’s offices are unable to brief or argue appeals in front of the Court of Criminal Appeals, the State Prosecuting Attorney steps in and fills that function.
I first met Bob Huttash while I was clerking for Judge Tom G. Davis on the Court of Criminal Appeals. Although he was many years my senior, and already quite accomplished, Bob was unfailingly generous with his time in discussing the arcane world of Texas criminal law, particularly fundamental errors in charging instruments, with me. Every young lawyer needs a mentor and Bob Huttash was that and more for me. He was a true friend and a consummate professional. He had me over to his house on several occasions where he grilled a mean steak and played Justin Wilson records. His legal hero was Justice Hugo Black, who revered the plain words of the Constitution.
I remember all of these things about Bob Huttash, although I moved away from Austin in 1985 and, much to my regret, gradually lost touch with him. But what I remember most is Bob Huttash playing ping-pong. Back then, there was a ping-pong table in the basement of the Texas Supreme Court Building. Every day, after a lunch of Texas Barbecue, Mexican Food, or Chicken Fried Steak, you would find a group of us down in that basement, sweating up a storm at the ping-pong table. You needed excellent skills, and a very thick skin, to play at that table. I would not characterize it as a politically correct place. Judge Mike (”The Short Judge”) McCormick, Chief Clerk Tommy (”The Stud Duck”) Lowe, Judge Chuck Campbell, Sol “Menachem” Wisenberg, Michael Hutson, Bill Delmore, Jeff Jones, Joe Porto, and a host of briefing attorneys passed through that room. Huttash towered above them all. He didn’t have a nickname. He was just Huttash–the best ping-ponger I ever played against. He used a red Harvard paddle–retail value, $45.00. One time I went to Houston and purchased custom made paddles for Mike Huston and me, in an effort to knock Bob off his perch. It didn’t work.
We had great fun at that table. I can still see Huttash standing at one of its corners–sweat dripping down his shirt, or under-shirt, a cigarette dangling from his mouth–calmly returning the ball, slam for slam. He’d get tired occasionally. (He was never in great shape.) If he had to work real hard to get a point, he’d look out and say, to no one in particular, “You’re gonna send me to King-Tears.”
The Washington Post reports here (story by Barry Svrluga and Amy Shipley) on today’s showdown in Congress between pitching great Roger Clemens and his accuser Brian McNamee. The Wall Street Journal also has a good piece here by Allen Barra which helps set the stage, and includes some insightful analysis from Bob Costas, who was interviewed by phone for the piece. Costas looks at Clemens’ career pitching stats, noting that they don’t corroborate McNamee’s allegations. One thing is fairly clear from all the hoopla. Representative Henry Waxman’s goal of using the proceedings to browbeat Clemens is likely to backfire. The House Committee on Oversight and Government Reform’s decision to excuse Andy Pettite and Chuck Knoblauch from testifying live also seems dubious to me. I suspect that Waxman wants a rigged game, and that Pettite’s and Knoblauch’s testimony would not have damaged Clemens enough to suit Waxman. Waxman is infamous, even in Washington circles, for his publicity hound stunts. This just in. The Journal runs its first report of McNamee’s actual testimony. The Washington Post is also streaming the testimony live on its website.
The Los Angeles Times has the story here on Lerach’s sentence, handed down today in federal court. After his release from prison, Lerach will be subject to supervised release for a period of two years. Lerach’s lawyers, arguing for leniency, asked for 6 months in prison and 6 in home confinement. The judge was having none of it, noting that Lerach “got a lot of forgiveness in the plea agreement.” The government had recommended 1 to 2 years in prison. The charges stem from Lerach’s payment of kickbacks to plaintiffs in class action suits.
Dow Jones’ marketwatch.com looks here at the SEC’s and DOJ’s widening inquiries into possible wrongdoing at Merrill Lynch–in connection with the sub-prime mess. Yours truly is quoted in the piece, and quoted out of context. Reporter Riley McDermid called me on Friday and asked how likely it was that Merrill Lynch would be indicted. I responded that this was a very unlikely scenario in light of the debacle created by the government’s indictment of Arthur Anderson & Co. (If you recall, the government’s indictment of Anderson effectively shut the company down, throwing thousands of totally innocent people out of work. Anderson’s subsequent conviction was later overturned by the U.S. Supreme Court.) I also told McDermid that Merrill Lynch would gladly cooperate with the government, if necessary by throwing former top officers to the wolves, in order to avoid indictment. In McDermid’s article, co-authored by Greg Morcroft, I am quoted as suggesting that Merrill Lynch’s employees won’t be indicted. That is a different question altogether. If the DOJ thinks it has found fraud in connection with Merrill Lynch’s marketing or accounting for sub-prime mortgages, it is in fact quite likely that employees will be indicted, although they will probably be former employees by the time charges are filed.
Those who argue that Roger Clemens set himself up for a perjury charge by agreeing to testify under oath before a Congressional Committee do not know his lawyer, Rusty Hardin, very well. To put it simply, Hardin is one of the best criminal defense attorneys in the country. I can guarantee you that Hardin warned Clemens, in excruciating detail, about the potential criminal exposure the pitching great faced if Clemens testified before Congress and there was ANY truth to Brian McNamee’s charges. I am struck by the self-confidence evident in the Clemens camp, even in the face of the box of “evidence” disclosed on Thursday by McNamee’s lawyers and their contemptible revelation on Friday that McNamee injected Clemens’ wife with a human growth hormone. The St. Louis Post-Dispatch has the latest details here.
All defendants have rested in the Gen Re fraud trial in Connecticut. No defendants took the stand and no side called Warren Buffett to testify. The entire defense case took two days to put on. Douglas McLeod of businessinsurance.com has the story here.
We reported below on former Wal-Mart Executive Thomas Coughlin’s Friday re-sentencing. Coughlin was originally sentenced by U.S. District Judge Robert T. Dawson to five years probation and 27 months of electronically monitored home confinement; far, far below Coughlin’s advisory U.S. Guidelines range. The Eighth Circuit reversed in August 2007. Between that reversal and Friday’s re-sentencing, the U.S. Supreme Court decided Gall v. U.S. (Dec. 2007), which drastically increased the discretion of federal district courts to render below-Guidelines sentences–provided they adequately articulate their reasons. Prior to Gall, most federal appellate courts routinely reversed the below-Guidelines sentences of district courts, presuming them to be unreasonable, under appellate review standards that effectively gutted the Supreme Court’s Booker opinion. (Booker had first held the U.S. Sentencing Guidelines to be advisory.) On last Friday, Dawson re-sentenced Coughlin, adding only 1,500 hours of community service to the original sentence. To support the new sentence, Judge Dawson submitted his own 30-page Sentencing Memorandum (Coughlin Sentencing) . The U.S. is deciding whether to appeal. The U.S. Circuit Courts of Appeals have already started applying Gall, and a new era in district court discretionary sentencing is upon us. If Coughlin’s sentence is appealed and upheld by the Eighth Circuit, it will be an even further indication that of how broad that discretion truly is.
RIP: Barry Morse 1918-2008. The New York Times obituary is here.
U.S. District Judge Michael Mills yesterday ordered indicted Mississippi lawyer Dickie Scruggs to submit to questioning by State Farm in its civil case against Mississippi Attorney General Jim Hood. The deposition may well take place on Super Sunday, as it must be completed by close of business Monday. Scruggs’ attorneys had asked Mills to quash State Farm’s deposition subpoena. Of course, nothing in the court’s order will prevent Scruggs from invoking his Fifth Amendment privilege against self-incrimination during the deposition. He has every right to do this, and his attorneys have indicated that he will invoke the Fifth Amendment protection, given his current indicted status. The problem Scruggs faces is not uncommon among white-collar criminal defendants, targets, and subjects. He has a right to invoke the privilege against self-incrimination becasue of his potential criminal exposure and this invocation cannot be used against him in any criminal proceeding. But it can be used against him in a civil proceeding. A civil litigant’s failure to answer a deposition question based on Fifth Amendment grounds typically allows the other party to raise an adverse inference against him. This effectively whipsaws people in Scruggs’ position, and isn’t particularly fair. The Northeast Daily Mississippi Journal has the story here.
U.S. District Judge Christopher Droney denied Defendant Christopher Garand’s motion for mistrial Friday in the Gen Re fraud trial, currently taking place in Connecticut. The motion was based on the prejudicial nature of a taped conversation played to the jury. In the conversation, between former Cologne Re Dublin CEO John Houldsworth and then-Gen Re Senior VP Garand, Houldsworth asks Garand “How much cooking goes on there [at AIG]?” Garand answers, “Quite a bit. They’re fairly aggressive. They’ll do whatever they need to do to make their numbers look right.” Garand’s attorney, Jonathan Rich, complained that the reference to AIG book-cooking constituted “exceptionally inflammatory language.” Droney disagreed. Of course, anything that hurts your client is, ipso facto, prejudicial. The testimony here, however, seems to go to the heart of the government’s primary allegation–that the former Gen Re executives on trial helped AIG cook the books on two reinsurance transactions. Evidence must be relevant to be admissible, and the prejudicial nature of the evidence must outweigh its probative value before a judge can exclude it. Here it appears that Judge Droney not only denied a mistrial, but also refused to strike the tape evidence in the first place. The trial is expected to last two more weeks. The AP story, carried in the Houston Chronicle’s chron.com, is here.
Nick Gillespie and Matt Welch, of reason.tv and Reason magazine respectively, take aim at congressional interference in Major League Baseball’s performance-enhancing drug controversy. The essay is here from yesterday’s Washington Post.
Meanwhile, at Yahoo! Sports, Jonathan Littman highlights the IRS’s aggressive use of Title 18, United States Code, Section 1001, a federal felony statute, to prosecute professional athletes for lying to government agents. Littman’s piece, here, cites my long-standing criticism of Section 1001. My original findlaw.com article on the dangers of talking to government agents, even in an informal setting, is here.
The federal criminal trial of former Gen Re and AIG executives on accounting-related fraud charges, has seen spotty media coverage. Today’s post by David Voreacos and Jane Mills at Bloomberg.com is a welcome exception to the general run of stories on this case. It details the cross-examination of former Gen Re Vice-President Richard Napier, a key government witness, and intelligibly places that cross-examination within the broader context of the government’s allegations.
A Presidential Administration is winding down and the quadrennial drum-roll for the release of convicted spy Jonathan Pollard is upon us. Yesterday’s Washington Post detailed the latest efforts of Pollard’s friends, including the Israeli government, to secure Pollard’s freedom. The short story carried the usual abbreviated rehash of the Pollard case, noting the severe harm he caused to U.S. intelligence and the lame-ass excuses of his supporters. What I found interesting was the detail that President Bush, on his trip to Israel, dined with, among others, Rafi Eitan, Pollard’s one-time Israeli intellligence handler in Washington and an un-indicted co-conspirator in the case. Eitan left Washington in a hurry at the time of Pollard’s arrest and is barred from entering our country. Although Eitan was never tried, and is innocent until proven guilty, the Israeli government admitted in 1998 that Pollard was its spy and there is really no dispute that Eitan aided and abetted Pollard’s espionage. Yes, I know, Eitan is an Israeli Cabinet Minister. In that sense it was perfectly normal for him to have been at what I assume was a state dinner. But it stills sticks in my craw that the President of the United States was seated at the table with somebody identified by our own government as a co-conspirator in one of the major spy scandals of recent history.
An insurance executive files a lawsuit against the GOP Governor of Alabama, the former Lieutenant Governor, the Insurance Commissioner, and other state officials. The plaintiff subpoenas a political consultant, who served as a strategist or advisor to several of the defendants. The political consultant’s wife is the United States Attorney for the Middle District of Alabama. After the lawsuit is filed, the U.S. Attorney’s Office begins a grand jury investigation of the plaintiff.
Okay, class. That would never happen in the U.S. Department of Justice, right? No U.S. Attorney would allow such an investigation to go forward without first recusing herself and probably her entire office, correct? And if the U.S. Attorney in question was colossally stupid and imprudent enough to initiate such an investigation, without recusing herself, the professionals at Main Justice would not tolerate it for one moment, would they? The U.S. Attorney would immediately be ordered to recuse herself and would probably be fired. Then someone from outside the U.S. Attorney’s Office, someone with an impeccable reputation for non-partisanship, would be brought in to review the investigation and determine whether it should go forward.
That’s how it would have happened in the old days, but, amazingly, not anymore. The insurance executive in question is John W. Goff. The Republican Governor is Bob Riley. The political consultant is William Canary, and the U.S. Attorney is Leura Canary. When Goff complained to the Department of Justice, his concerns were downplayed by Associate Deputy A.G.David Margolis, a DOJ careerist who has served through several administrations in a non-political slot. Margolis denied that a conflict existed, but stated that Leura Canary had decided to voluntarily recuse herself from involvement in the investigation. Of course, Ms. Canary did not recuse her assistants.
This remarkable, and very troubling, story is the subject of Scott Horton’s No Comment column in Harper’s. Here is Horton’s excellent post, which is highly critical of Margolis. Full disclosure: I had some very unfriendly interaction with Margolis when I served as Deputy Independent Counsel for Ken Starr during the Whitewater-Lewinsky investigation.