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.
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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.