Overview­ WCC Approaches

Offense­Related o Focuses on how a crime is committed

Offender­Related o Focuses on a particular group of people—those in high status or “respected” occupations,

or positions of power Note that although a specific crime may be thought of as WCC, the conduct may fall into both

WCC and street crime depending on the conduct involved o For example, a computer can be used to commit both a white collar and non­white collar

offense The WC Criminal Lawyer

Information Control o Opposition of government adversaries in quasi­judicial and court settings, challenging

subpoenas and seeking to suppress evidence already obtained Distinctive Role

o Presentation of substantive defenses, i.e. defenses claiming the client has not violated the law…often presented before a charge is even made, rather than waiting

o WCC typically have ambiguity in their definition (although not all); defense may benefit Constitutionality Issues: Prosecution of WC Criminals

o Debate over methods used by prosecutors to get information available through other sources less invasive or troublesome to the accused via subpoenas, depositions, etc.

o Use of legit methods debated when information is readily available in other ways The Federal Role

The vast majority of WCC prosecution is brought under state law in state courts and governed, apart from Constitutional issues, by state law

The Supreme Court has noted on numerous occasions that states have the principal responsibility to define and prosecute crimes

Consider the Omnibus Crime control and Safe Streets Act of 1968, which included federal firearms provisions that supplemented state criminal prohibitions AND provided substantial federal financial assistance to state enforcement; “crime is essentially a local problem“

o Congress does extend fed. law to crime…consider Patriot Act and Sarbanes­Oxley Act The three fastest growing areas of the federal docket:

o Drug offenses, Immigration offenses, Firearm offenses Federal Influence and Local Corruption

Four Federal Statutes traditionally applied to other criminal activity were put into use beginning in the 1970s to handle corrupt local officials

o Hobbes Act, Mail Fraud Act, Travel Act, RICO See Sabri v. US in which the Supreme Court dismissed a federalism challenge against an

anti­corruption statute targeting, among others, officials of state and local governments, when used by the federal government to prosecute bribery of a Minneapolis Community Development Agency’s Board of Commissioners, due to involvement/potential involvement of federal funds…See 18 U.S.C. § 666

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Dual­Sovereignty Rule (aka Petite Policy, Petite v. United States, not in Constit.; some states d/n use) Neither the double jeopardy bar nor the due process requirement of the Constitution prevent both

the Federal Government AND State from prosecuting the same defendant for the same criminal conduct

o See U.S. v. Lanza Allows a fed. prosecution notwithstanding prior state prosecution for same conduct

o The DOJ has a policy on dual prosecution and successive federal prosecution that: o Precludes the initiation or continuation of federal prosecution, following a prior state or

federal prosecution, based on substantially the same act(s) or transaction(s) IF: Matter must involve a substantial federal interest Prior prosecution must have left that interest demonstrably unvindicated; and The government must believe that the defendant(s)’ conduct constitutes a federal

offense, and that the admissible evidence probably will be sufficient to obtain and sustain a conviction by an unbiased trier of fact

Note: U.S. Atty’s Manual provides “guidelines” that are not binding in law, but are very important to know and follow Foreign Corrupt Practices Act (FCPA) See United States v. Castle (Can’t dodge charge for conspiracy to violate FCPA, which excludes “foreign officials,” if no charges possible under FCPA; Canadian defendants case) See United States v. Kay (On specificity of statutes…Congressional intent is what it says, FCPA clear in language and clear in components req. for prosecution) International Law has five principles commonly used to determine whether a criminal statute should have extraterritorial application:

1. Territorial, wherein jurisdiction is based on the place where the offense is committed 2. National, wherein jurisdiction is based on the nationality or national character of the offender 3. Protective, wherein jurisdiction is based on whether the national interest is injured; 4. Universal, which amounts to physical custody of the offender; and 5. Passive Personality, wherein jurisdiction is based on the nationality or national character of the

victim See United States v. Nippon Paper Industries Co, LTD. (Sherman Act violation; Court stated statutory language is vital and application of federal law abroad can greatly hinge on the impact of the conduct in question domestically, even if wholly abroad)…Statute here had the rule of lenity in it; ambiguity/dual interpretation of statute resolved in favor of def. (held non­applic. in this case)

Extraterritoriality

Statute Focused on Extraterritorial Conduct o FCPA, for example; clearly states that it gives the US extraterritorial ability

Specific Provisions o Statutes that may have an extraterritorial provision within it o 18 U.S.C. 1623: “This section is applicable whether the conduct occurred within or

without the United States.” Judicial Interpretation

o Congress is silent, statute is silent

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Sherman Act is an example (see Nippon case above); not focused on extraterritorial conduct as a statute, so…

o Courts look to Congress’ intent/leg. history…which is hard Revenue Rule?

­See Pasquantino v. United States (Candian­US liquor smuggling; US statute clearly prohibited their actions and could be applied) Foreign Commerce See United States v. Tarkoff

Two ways to establish that a defendant conducted a financial transaction. o The government must prove either:

(1) That [the defendant] participated in a transaction that in any way or degree affected interstate or foreign commerce and involved the transfer of funds or the use of one or more monetary instruments, or

(2) That [the defendant] participated in a transaction that involved the use of a financial institution that was engaged in, or the activities of which affected, interstate or foreign commerce in any way or degree."

Tarkoff worded loosely enough to allow the US to expand its jxd to a wide set of individuals/acts. Corporate (Criminal) Liability

1. Originally, no Corporate Criminal Liability at CL a. No body, no mind

2. Then, for regulatory offenses only a. Acts of omission; intent not required, only fines

3. Liability for acts beyond omissions, but limited to strict liability a. Courts say no basis for distinguishing passive and active acts

4. NOW, criminal liability for acts with mens rea, too a. New York Central case

See New York Central & Hudson River Railroad Company v. United States

A corporation may be held criminally liable for the acts of its agents acting within the scope of their authority

Note: o This case took away immunity from crim. prosecution that corps previously enjoyed.

Good Faith Defense o Offered to companies in civil actions when facing respondeat superior in tort

That is, when a corporation acts in good faith while concurrently, a rogue employee acts otherwise

o However, in United States v. Ionia Management S.A., the 2nd Circuit held that there was no precedent for an affirmative defense for corporate criminal liability

Good faith may be considered by the court in sentencing o There is no good faith defense in criminal law for corporations, right now.

“For the Benefit”

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Action for the benefit of the corporation is required for corporate criminal liability unless it’s a strict liability crime in which case it does not matter.

o This line of analysis is used in conjunction with respondeat superior (employer resp. employee when employee acting in scope of employment)

When prosecuting the CORPORATION, resp. superior AND “for the benefit of” If you’re prosecuting an individual, you look to the statute

See Standard Oil Company of Texas v. United States (vic. li. Req. corp. benefitting from acts) Court said the scenario should be addressed by borrowing from tort; most often used Test

in these scenarios o 1) Purpose to benefit the corporation, AND o 2) Performed by an agent within scope of employment

The corporation does not acquire that knowledge or possess requisite state of mind essential for responsibility through activities of unfaithful servants whose conduct undertaken for the interests of parties other than their corp. employer

See United States v. Hilton Hotels Corp. (Corps vic.lia. even if employee acted against policy)

A corporation is criminally liable for the acts of its agents in the scope of their employment, even where agents have acted against the express policy of the corporation, when the corporation will profit from the illegal activity

­Note: Jury Unanimity

In federal criminal cases brought under § 848 of the Sherman Act, the jury must unanimously agree not only that the defendant committed some continuing series of violations, but also that the defendant committed each of the individual violations necessary to make up that continuing series

Restricting Corporate Criminal Liability

Corporate criminal liability has continually been the subject of criticism Federal v. MPC (ALI)

o Federal courts and many state courts use the common law respondeat superior approach in assessing whether to impute the acts of an agent to the corporation for the purposes of criminal liability

MPC focuses on whether actor was a “high managerial agent” o The MPC approach is criticized because higher­ups don’t necessarily do these sorts of

things…what about little guys? Respondeat Superior approach is the majority approach, and it is used in most

jursidictions…The ALI’s MPC approach is the minority view Corporate Dissolution

o Melrose Distillers, Inc. v. United States; the Supreme Court allowed a criminal action against a corporation that had been dissolved

Procedural Considerations o A CORPORATION does not have 5th privileges o IT DOES have ACP and 4th Amendment rights, whether corp. liability or not

Collective Knowledge

By “aggregating” the acts and omissions of two or more natural persons acting as the corporation (within scope of employment), the actus reus and mens rea for corporate criminal liability can be obtained through collective knowledge

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o When multiple actors who, collectively, satisfy the actus/mens of the crime being alleged, you may use this doctrine to sue the CORPORATION as an alternative to respondeat superior

See United States v. Bank of New England (CKD example) "The bank's knowledge is the totality of what all of the employees know within the scope of

their employment" Deferred Prosecution Agreements/Non­Prosecution Agreements

Corporations rarely, if ever, go to trial o Instead, they opt for a DPA, a NPA, or a plea

DPA o Actually goes through the court; prosecution is filing, or about to file the action, and the

two parties reach an agreement The court has it in front of them that the parties are asking for a deferral of the

prosecution There is a list of terms upon which said deferral is based upon

NPA o Doesn’t go through the courts; the attorney for that corporation and the local assistant US

attorney get together and write a letter to each other putting forth the terms of the agreement

No information or indictment is filed; there is nothing in the court records; it’s just an agreement

o Terms such as how much the corporation will be fined, how much or what kind of compliance program they’ll put into effect, what type of monitor may be put into place to oversee and make sure there’s compliance, etc.

Plea o Self­explanatory

Trial Compliance Programs

o Role of Corporations In re Caremark, McCall

o The above cases demand you must comply with the law; corporations must have compliance programs to ensure individuals are complying with the law.

Individual Responsibility See United States v. Park (Responsible Corporate Officer Doctrine example)

The theory of liability announced by the majority in this case is known as the “responsible corporate officer” doctrine.

o There must be evidence that defendant had, by virtue of his position in the corporation, the responsibility and authority to prevent a corporate violation of law, OR to promptly correct a violation.

When going after a PERSON, just look to the statute! The Mens Rea Element See Ratzlaf v. United States

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“To establish that a defendant ‘willfully violated’ the antistructuring law, the Government must prove that the defendant acted with knowledge that his conduct was unlawful.”

NOTE: o 4 Vehicles For Appeal

Insufficient evidence Evidence that shouldn’t have come in, came in Constitutional issue Jury Instruction (matter of law)

Ratzlaf argued the 4th one; said it was too vague Ignorance of the law is not an excuse at CL, but exceptions exist (when it is a statute that uses

the word “willfully,” and when it is a statute that is “highly complicated in it’s nature” See Lambert v. California

Good faith reliance on counsel can be excuse, See Cheek v. United States o “A good faith belief that one is not violating the law negates willfulness”

D/n have to be objectively reasonable to claim the defense o To establish an advice of counsel defense, defendant must establish that

Before taking action, In good faith sought advice of competent attorney For the purpose of securing advice of the lawfulness of his possible future

conduct And made a full and accurate report to his attorney of all material facts which the

defendant knew And acted strictly in accordance with the advice of the attorney who had been

given a full report It determined action undertaken with knowledge of its probable consequences and having

requisite effects can be sufficient to find liability under antitrust Consider Also:

o Bryan v. United States The court found that a willful act was one undertaken with a bad purpose.

o GLOBAL– TECH APPLIANCES, INC., et al.v. SEB S.A. Willful blindness

There must be an affirmative act showing that the individual in question had knowledge in that they purposely avoided learning the information.

Two Part Test o Subjective belief a fact exists o Affirmative action taken to avoid learning it

Ambiguity in Other Elements See Dowling v. United States

Copies of copyrighted works cannot be regarded as stolen property for the purposes of a prosecution under a statute criminalizing the interstate transportation of such property.

Long­held principle; ambiguity resolved in favor of defense (lenity doctrine) o HUGE argument in WCC cases b/c the statutes are so complex

Hobbes/Going “Beyond” the Statute See McCormick v. United States (Quid Pro Quo Required) (Hobbs Act)

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The Hobbs Act prohibits campaign contributions made in exchange for a explicit promise or favorable action…it does not prohibit campaign contributions made with the anticipation of favorable action.

See Evans v. United States (Quid Pro Quo for extortion can be shown thru “passive exception), McCormick reasoning therefore affirmed/supplemented)

The inclusion of the word "induced" in the definition does not require that the wrongful use of official power begin with a public official.

o The Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts…this is passive acceptance and satisfies the quid pro quo requirement

NOTE The Hobbs Act and bribery are two different things

o See 18 USC 201 Yet the decision above blurs them

o Bribery is taking a bribe. Case above: Hobbs Act/Extortion can be charged w/o action by person receiving $

Extortion (§ 1951) v. Bribery & Gratuities (§ 201)…Hard to Distinguish b/c Evans

A public official commits extortion under the color of right when he obtains a payment to which he is not entitled knowing that it was made in exchange for official acts.

o IN CONTRAST, under § 201 (bribery), gov. must also prove quid pro quo It is important to note, however, that it is irrelevant whether the public official in fact intended

to hold up his or her end of the bargain—it is enough that the official had knowledge of the payor's intent to buy official acts.

o Notwithstanding its potentially broad reach, § 1951 (extortion) is narrower than § 201 (bribery) in at least one important respect:

Under § 201 (bribery), both the official receiving a bribe and the person bribing him have committed a federal crime

See United States v. Sun­Diamond Growers of California

To sustain conviction for federal bribery there must be a clear quid pro quo link between the gratuity received and performance of a specific past, present, or future "official" act.

o It is not a crime to provide public officials with gifts or free meals unless they are aimed at rewarding a specific action by the official

Mail/Wire/Money Laundering

A mail fraud prosecution requires the government to prove o 1) A scheme devised or intending to defraud or for obtaining money or property by

fraudulent means; and o 2) Use or causing the use of the mails (or private courier) in furtherance of the fraudulent

scheme o Materiality is essential to proving mail fraud

The statute’s enormous breadth allows federal prosecutors to use this offense to combat many different types of fraudulent conduct

Required Components

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1. Scheme A. Sort of self­explanatory…a plan of some sort

2. Intending to defraud (D’Amato) A. The scheme to defraud need not have been successful or complete

i. Therefore, the victims of the scheme need not have been injured B. Gov. must show "actual harm or injury contemplated by the schemer"

i. Misrepresentations amounting only to a deceit are insufficient C. Deceit alone not enough; must be harm contemplated or caused

3. Materiality (Neder) A. CL fraud required a misrepresentation or concealment of material fact

i. Therefore, materiality IS essential element of mail, wire, bank fraud 4. “…of Money or Property”

A. Tangible Property (McNally) i. Money, tangible assets/property

B. Intangible Property (Carpenter) i. There can be intangible forms of property of which a victim may be

defrauded…patents, copyrights, contract rights, etc. ii. i.e. confidential business information; embezzled when an employee reveals to

others so as to deprive employer of exclusive possession 1. This eliminates any need for a showing of actual/intended economic

injury to employer; revelation itself is the injury iii. In light of McNally and Carpenter (read together)

1. Req. of econ. gain by def., & loss by victim (or prospect of) 2. BUT, no req. gain/loss be “property” as understood by Congress

C. Intangible Rights (to Honest Services) i. No under McNally, but Anti­Drug Abuse Act, incl. “scheme or artifice to

defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.”

1. Provision covers only bribery/kickback schemes (Skilling) D. Licenses are NOT property for purposes of Mail Fraud (Cleveland)

5. Mailing In Furtherance (Schmuck) A. Whether the mailing is part of the execution of the scheme as conceived by the

perpetrator at the time, regardless of whether the mailing later, through hindsight, may prove to have been counterproductive and return the haunt the perpetrator of the fraud; This is SUBJECTIVE;

B. “If a step in plot, part of plot;” even inconsequential mailings can hurt you C. Limitations to “In Furtherance”

i. Imperative duty imposed by state ii. Mailing prior to commencement of scheme to defraud iii. Mailing after fruition of scheme to defraud

6. REMBEMER; the activity must substantially affect interstate commerce (Lopez)

Further Considerations Carriers

o Mailings using FEDEX or UPS are subject to prosecution under the mail fraud statute, following an amendment of Section 1341 (money/property) of the Violent Crime Control and Law Enforcement Act of 1994

Private or commercial interstate carriers, too

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Tax Fraud/Mail Fraud o Mail fraud can be a cumulative and alternative charge to tax fraud o Mail fraud has been held improper for alleged income tax evasion due to the existence

of “particularized legislation” o DOJ: Only in “exceptional circumstances” will tax fraud be approved for mail fraud

prosecution Particularized Legislation bar to Mail Fraud?

o United States v. Simon permitted mail fraud prosecution despite the enactment of a specific Medicaid fraud statute (Majority view)

o United States v. Gallant did not allow mail fraud prosecution where particularized legislation existed within Copyright Act (Minority view)

Wire Fraud Parallel to mail fraud statute with the differing element being the method used in the transmission

to be “by means of wire, radio, or television communication” o The accused need not know or foresee that the wire communication was interstate

(Bryant) Whether or not a defendant knows or can foresee that a communication is

interstate, the offense is still morally wrong o Jurisdictional hook: You must prove the wires go out of state

To support a conviction for wire fraud, the government must prove (Czubinski) o (1) The defendant’s knowing and willing participation in a scheme or artifice to

defraud with the specific intent to defraud and o (2) The use of interstate wire communications in furtherance of the scheme.

If no intent to deprive can be proven, then a scheme to defraud is not shown REMEMBER, the activity must substantially affect interstate commerce (Lopez)

Money Laundering

Disguising/retaining proceeds of fraudulent/illicit activity in unlawful way (Yusuf) o Money laundering must be DISTINCT from the crime by which $ obtained

Money laundering statute is a prohibition of processing the fruits of a crime or of a completed phase of an ongoing offense

RICO

18 USC 1962 (a­d) enumerates the four types of prohibited conduct: o RICO requires that the defendant to be/have:

a) Using income from a pattern of racketeering activity to acquire an interest in an enterprise engaged in, or the activities of which affect interstate or foreign commerce,

b) Acquiring or maintaining through a pattern of racketeering activity an interest in an enterprise engaged in, or the activities of which affect interstate or foreign commerce,

c) Conducting or participating in the conduct, through a pattern of racketeering activity, of such affairs of an enterprise that affect interstate or foreign commerce, or

d) Conspiring to further any of the activities listed in (a­c) 18 USC 1964 extends RICO to civil proceedings

Required Components

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1. Pattern of Racketeering (Predicate Offenses, ALL found in 18 USC 1961(a­b) a. Continuity and Relationship Required Between the Acts (H.J.)

i. Continuity can be: 1. Open:

a. Short­term, requiring a “threat” of future activity 2. Closed:

a. Long­term, requiring related acts over a substantial period of time

ii. Relationship: 1. At least 2 predicate acts, and they MUST be related

a. Indelicato factors: i. Proof of temporal proximity ii. Common goals iii. Similarity of methods iv. Repetitions

b. Predicate acts can be the certain ones, state AND/OR federal, found in 1961 c. State offenses must be pun. by 1+ year in prison/chargeable under state law

2. Enterprise a. Types

i. Individual, partnership, corporation, association, or legal entity, OR ii. Union or group of individuals associated in fact

1. Purpose/relationships/suff. longevity of association (Boyle) iii. See Turkette

b. Distinctiveness i. Indiv. must be distinct from enterprise; CEO of company is distinct from

company; he uses it is as “vehicle” for RICO violation (Kushner) c. Enterprises= wholly legit., infiltrated by illegit., or entirely illegit (Turkette)

3. Interstate Commerce a. Two Ways to Connect (Only need 1)

i. “Engaged in” 1. Must be interstate, small amt. of activity maybe ok (Robertson)

ii. “Affecting” 1. “Sufficient nexus” w/interstate comm. when min. connection

iii. The connection must result from actions of the enterprise b. Economic Motive

i. Organizations w/o an economic motive can still affect commerce; economic motive NOT required (National Organization for Women)

4. Nexus (THIS ONLY APPLIES TO 18 U.S.C. 1962(c)) a. Operation or Management (Reves)

i. Actor being charged must be involved in the operation OR management of the enterprise;

1. Shows “suffi. connect.” to enterprise warranting RICO liability ii. “Operation” may or may not be limited to upper management; footnote says

Court not deciding how far down ladder they would go b. Simply aiding and abetting RICO violation NOT sufficient for liability

Other Considerations

Conspiracy

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o RICO req. only a consp. to commit prohib. act; d/n need overt act (Salinas) Note the diff. b/t this and Gen. Consp. Stat., which DOES req. overt act

Forfeiture o Property (18 USC 1963)

(a)(1) Literal profits, causal conn. to racketeering activity (Rusello) (a)(2) Interests used to further activity/generate profits, d/n need caus. conn. to

rack. activity; link showing use to furth. enterp. is suff. (a)(3) Proceeds of racketeering activity (b) Extends property subject to forfeiture to intangible

o Attorney’s Fees Relation­Back Principle (Angiulo), 18 USC 1963(c)

o 1963(a)(1) forf. lim. to prop. int. that w/n have been acq./maint. BUT FOR racketeering Prop. must have been acq. AFTER RICO viols.…from time of violation+

o DOES NOT matter if the property was transferred during the violations Regulatory Offenses

Used to be strict liability; this is no longer the case Regulatory statutes are found throughout state AND federal codes Voluntary Disclosure

o DOJ policy encourages self­auditing, self­policing and voluntary disclosures of environmental violations… actions are mitigating factors in enforcement

Although environmental offenses are not specifically listed as predicate acts for a RICO prosecution, mail and wire fraud have served as predicates for RICO prosecutions involving environmental offenses

Mens Rea Element

There is no consistent mental state required for all of the regulatory offenses Strict, White Fuel…Willfulness, Dye…Knowingly (proof you acted knowingly; usually inferable

from circumstances), Bronx Reptiles, Negligently, Hanousek Willful blindness, Buckley

o Global Tech Case; must do some affirmative act showing avoidance, AND deliberately did it to avoid the truth; usually NOT required to know the law being violated; courts split on whether resp. corp. officer doctrine applies

CONSIDER U.S. v. International Minerals and Chemical Corps.: “where…probability of regulation is so great that anyone who is aware that he is in possession of [dang. Chems.] or dealing with them must be presumed to be aware of the regulation.”

­Strict Liability, see United States v. White Fuel Corporation

Defendant could have escaped liability by proving discharge resulted from actions of 3rd party. High risk enterprise carries higher burden of responsibility

­Willfulness

See United States v. Dye Construction Company o Omission or failure to act willfully done if done voluntarily and intentionally

­No Knowledge Proviso (Securities ONLY)

If you do not know about a regulation, you cannot get prison time

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o D/N apply to 10(b) or 10(b)(5)…securities fraud, but if a minor regulation and you can prove you didn’t know, may still be convicted, but no jail time

Mens Rea Determined by Misdemeanor or Felony o The mens rea for acts under the FDCA may depend upon the level of the offense

­Knowingly See United States v. Bronx Reptiles, INC.

o Knowledge of the action taken, regard. of whether or not knew of illegality Knowing Endangerment

o Found in RCRA and CWA; criminally liable if, in violating other provisions of RCRA, places others in danger of great harm and knowledge of danger

­Willful Blindness

See Untied States v. Buckley o Closing eyes to obvious facts or failure to investigate when aware of facts which

deemed investigation” is sufficient

­Negligently See United States v. Hanousek

o A person who acts with ordinary negligence in violating 33 U.S.C. § 1321(b)(3) may be subjected to criminal penalties.

Individuals Liable ­Persons in Charge

See Apex Oil Company v. United States o It is immaterial that no corp. officer or director had knowledge of the spills; the corp. was

as much "in charge" as its employee, and employee's knowledge is imputed to corp. ­Responsible Corporate Officer

See United States v. MacDonald & Watson Waste Oil Company o RCO doctrine cannot apply when the offense being charged contains within its

provisions an express element of required knowledge of the unlawful activity by the individual against whom liability is asserted

o This was a FELONY statute; not a strict liability one, such as the Park case Perjury and False Statements

Perjury o Allows for broader range of proceedings o Has the two witness rule

False Statements o Have the recantation/retraction defense o Use of two inconsistent statements to prove falsity is sufficient

BOTH perjury AND false declarations o Allow for extraterritorial statements

Perjury, 18 USC 1621

1621 applies to a wide variety of circumstances, including civil depositions o Specific offense perjury statutes also exist throughout Federal Criminal Code

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Materiality o Perjury under 1621 requires the statement be material

Perjury allows for a broader range of proceedings (than false declarations) Perjury has a “Two Witness Rule”

o You can’t just have one person say it’s a lie; you must have two o It does not have to be two live people (but can be) o It can be one live person (need a person), and evidence supporting it

See United States v. Bronston (Perjury)

Although petitioner gave response under oath that was unresponsive to question and was arguably false by neg. implication, petitioner believed statement true and evaded crim. liability for perjury

See United States v. DeZarn (NOT a SC decision; used by pros. to get around Bronston) Unlike Bronston, DeZarn's answer was "unequivocal/directly/fully

responsive"…context/content key diff. here, despite answer being “literally true” False Declarations, 18 USC 1623

Use of the false statement statute is limited to judicial or grand jury proceedings False Declarations has a Recantation Defense; MUST be given the right to do this 1623 allows use of two inconsistent statements to prove falsity

See United States v. Hixon (False Statements, similar to Bronston)

The statement was literally true, because defendant was, in fact, employed by a corporation he owned and was thus not self­employed

Where a statement is subject to two plausible interpretations, the burden is on the government to show the defendant’s intended interpretation was the false one

§ 1001…to be guilty of concealment, person must have a legal oblig. to disclose info to gov. Obstruction of Justice

Variety of Statutes; emanates from a contempt statute 1503­Generic­Due Administration of Justice (can be charged for circumstances that also fit

1512/1513, which are the more specific statutes) 1512­ Tampering with a witness, victim, or an informant

o NOTE: 1512(c), recently added, prohibits the destruction, alteration or concealment of records related to an official proceeding

1513­ Retaliating against a witness, victim, or an informant 1519­ Sarbanes Oxley Act; unclear whether extends to other forms of obstruction

CONSIDER Yates v. United States (fish case, “destruction” of evidence for tossing fish) See Arthur Andersen LLP v. United States

Federal document law required a "consciousness of wrongdoing" for conviction…For companies to be convicted of “corrupt persuasion” there must be an M.O. of trying to evade justice or trying to intentionally lie to gov.

o Destruction of property (records) so that the government cannot review it is not criminal unless said destruction was intended to be criminal as opposed to a means of fulfilling company policy.

After this case, the Sarbanes Oxley Act was created (18 U.S.C. § 1519); it criminalizes "knowing" destruction of documents with the intent to impede a "contemplated" investigation

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The Federal Grand Jury As An Investigative Body

Majority of states abolished the req. of felony indictment, thereby allowing prosecutors to proceed by information (ordinarily, only if supported by a magistrate’s finding of PC at a preliminary hearing)

FEDERAL SYSTEM, a prosecution can only proceed by information in noncapital felony cases if defendant waived his right to indictment (FRC Pro. 7(b))

The Federal Grand Jury Process

A pool of citizens is summoned at random, and 23 are chosen at random Sit for indefinite period not to exceed 18 months; if the time period ends, you can take

everything you have, pick a new grand jury, and continue unless SOL bars Grand jury hearings are excessively secret (Rule 6(e)) If at least 12 agree that there is PC to believe suspect committed the crime, the grand jury

returns a “true bill” that, when signed by prosecutor = indictment o If the grand jury concludes that the evidence is insufficient, it returns a “no bill” (or “no

true bill”), and the preliminary charges are dismissed See Branzburg v. Hayes

Requiring reporters to disclose confidential information to grand juries served a "compelling" and "paramount" state interest and did not violate the 1st Amendment

Grand Jury Subpoenas Duces Tecum; used for tangible evidence/Ad Testificandum; used for testimony Failure to comply is contempt, both civil/criminal

o Shillitani v. United States directs courts to look first to civil contempt: Courts have held that if imprisonment of a contemnor becomes punitive rather

than coercive, then the confinement MUST end Objective Achieved by Grand Jury Testimony

Obtaining Testimony From Reluctant Witnesses o Compulsory may intimidate witness/the secrecy requirements of the grand jury process

may also encourage witnesses to be more forthcoming o Witness testifies out of the presence of counsel, the witness need not even tell counsel

exactly what was said before the grand jury “Fishing” For Documents

o Unlike the search warrant, a subpoena duces tecum can issue without a showing of PC; preferable, too, for administrative advantages (party served must bring all records together/sort what’s requested/etc.)

o However, while a search warrant provides for direct seizure, a subpoena provides time to respond, risking destruction of records

Keeping the Target “In the Dark” o A person may be investigated without knowing they’re the target of an investigation,

what activities are being examined, or who is examining them Controlling Public Disclosure

o Secrecy requirements also help keep the public/press out of things Deflecting Claims of Improper Motivation

o GJ seen as a bar between improper prosecution and innocent individuals

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The Grand Jury Subpoena

Federal Rule of Criminal Procedure 17 Subpoenas’ Content

o Ad Testificandum The document itself is relatively simple; it informs the recipient when and where

they must appear/what documents or other tangible items to bring/name of the federal prosecutor issuing the subpoena

o Duces Tecum The attachment to this type provides the critical content of the subpoena; drafted

broadly to ensure all relevant docs. provided, but note 5th amendment privileges may prevent production

Subpoena Challenges

The most common ground for refusing to comply with a grand jury subpoena is the assertion of a common law, statutory, or constitutional privilege

In determining whether to move to quash (17(c)), consider all the circumstances and facts of the situation…also, there are tactics you can use to your advantage

o i.e. where the government has asked for immense quantities of documents, “information control” may best be practiced by giving them everything that could possibly fall within its demands and then counting on the lack of resources in the prosecutor’s office to find the potentially damaging material

If a party decides to object and their objection is rejected, that often ends in the matter for the subpoenaed party; denial of a motion to quash is generally not viewed as a final order and therefore is not appealable under 28 U.S.C. 1291, which limits appellate review to “final decision” of the district courts

o A subpoenaed party does not face such a final order unless the party continues to refuse to comply with the subpoena, notwithstanding the rejection of the motion, and the party subsequently is held in contempt

o The only exception recognized is where the subpoenaed party possesses documents belonging to another, has no substantial interest in challenging the subpoena, and therefore would not be in contempt

Appellate review of the denial of a motion to quash is allowed here on the ground that insisting upon such a party standing in contempt would “render impossible any review whatsoever”

The subpoenaed party who stands in contempt after the motion to quash is denied in order to pursue his or her appeal ordinarily faces civil contempt

The Recalcitrant Witness Act: “Whenever a witness in any proceeding before any grand jury of the US refuses without just cause to comply with an order of the court, the court may summarily order his confinement.” <­(normally not imposed)

o Note that a lawyer may be required to assert a claim on behalf of a client, including the 5th Amendment, and the ACP, and could be forced to suffer the contempt in order to preserve the right to appeal the lower court’s decision

The grant of a motion to quash is appealable by the gov. under 18 U.S.C. 3731 ­Rule 17(c): Objections to the Subpoena

Can quash or modify it on grounds that it is “unreasonable or oppressive” A GJ has broad investigatory powers, BUT cannot engage in “Fishing Expedition”

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o Sometimes, may use in camera review and tell Judge what they know…the judge will decide whether or not subpoena justified or may narrow it

See United States v. R. Enterprises, Inc. (Subpoena must be reasonable)

Nixon standard was inappropriate in the GJ context, and holding instead that grand jury subpoenas should be subject only to a showing of reasonableness

o Reasonableness is assumed, but may be rebutted by party seeking to quash On Self­Incrimination

Testimony Immunity; can be given in exchange for testimony, but not always

The Act of Production Doctrine (5th bars prod. that is incriminating, can get PP immunity) ­See Boyd v. United States

The 5th extends to the production of documents ­See Fisher v. United States

Act of production can be compelling under 5th, but not doc. content another has ­CONSIDER United States v. Doe (On Documents from a Sole Proprietorship)

5th privilege applies to the act of production of the business records of a sole proprietorship, but does not apply to the content of business records

­CONSIDER Doe v. United States (“Doe II”) Signing a form disclosing bank records did not compel “testimony”

Foregone Conclusion Doctrine (Fisher)

IF it is a "foregone conclusion" that records exist and are possessed by a person, producing them in response to a subpoena is not sufficiently testimonial to merit Fifth Amendment protection

Gov. must show w/“reasonable particularity” it knows of existence/location of docs

See United States v. Hubbell If a witness is immunized via production privilege, both the act of producing AND the

contents, CANNOT BE USED AGAINST WITNESS…UNLESS o The government can show that it has prior knowledge of the existence, location, and

authenticity of the documents (a FC) in which case PP will fail because the act of production no longer has testimonial value

BUT if immunity is granted, prosecution on the basis of the immunized conduct/production is only possible if Kastigar requirements met; Gov. bears burden to show there is no taint in the evidence and that it has an independent, legitimate source for it

Entity Documents ­Collective Entity Doctrine (“Entity Exception”)

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5th privilege does not apply to artificial entities (such as corporations) or to their custodian of records who claims that producing documents will incriminate the custodian personally; such entities act only through agents.

See Braswell v. United States A custodian of corporate or entity records, held those documents in a representative rather

than a personal capacity; corporation d/n have 5th priv. (Possibly won’t apply if a small family partnership?)

Scope of the Collective Entity Doctrine ­Closely­Held Business See Amato v. United States

No privilege can be claimed by the custodian of corp. records, regardless of how small the corp. may be;” [collective­entity] rule applicable to one­person corp.

Corporate records receive no Fifth Amendment protection even after dissolution Supervisory Power Over the Conduct of the Grand Jury See United States v. Williams

No general rule requiring prosecutors to present exculpatory evidence; it is incumbent upon the defendant to present exculpatory evidence.

Challenges to Use of the Grand Jury Consider United States v. Arthur Andersen, LLP

Unpublished Order Challenging Continued Use of Grand Jury o A court should not intervene in the GJ process absent a compelling reason

“Sole or Dominant Purpose Test” o Abuse of process occurs ONLY when government’s sole or dominant purpose in

convening a GJ is to gather evidence for an already pending litigation The existence of a pending indictment d/n, per se, bar gov. from using the GJ to make good

faith, continuing inquiry into charges not included in that indictment Grand Jury Secrecy See Barry v. United States

Two­Step Analysis employed to determine Rule 6(e) violation o 1) District court must determine whether the plaintiff has established a prima facie case o 2) If the court determines such a case has been established, the burden shifts to the

accused to “attempt to explain its actions” in a show cause hearing If this fails, a violation occurred and court determines remedy

See In re: SEALED CASE NO. 99­3091

Public disclosures of internal deliberations of OIC prosecutors that did not directly reveal grand jury proceedings did not violate Rule 6(e) b/c did not "occur before GJ”

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Searches See United States v. Travers (Warrants, Overbreadth, Officer Good Faith)

In holding the officers acted in good faith in this case, court found as a matter of fact that agents neither intentionally deceived the issuing magistrate by omitting details regarding the nature of their investigation, nor deliberately exceeded the scope of warrant in the items seized/consulted w/attorneys a lot prior

See United States v. SDI Future Health, Inc. (Standing re: Corporate Property, Overbreadth)

Except in the case of a small, family­run business over which an individual exercises daily management and control, an individual challenging a search of workplace areas beyond his own internal office must show some personal connection to the places searched and the materials seized…factors such as personal property/location kept/secured/custody of item when seized/etc.; otherwise, no standing under 4th

See United States v. Adjani (Scope of Warrants) Searches need not be limited to property belonging to target or suspect so long as there is PC to

believe third party's property might hold evidence of a crime. See United States v. Mittelman (On Excessive Searches + Outcome/Remedy)

In cases where there is a "flagrant disregard" for the terms of the warrant, the district court may suppress all of the evidence, including evidence that was not tainted; remedy used only when the violations of the warrant's requirements are so extreme that search is essentially transformed into an impermissible general search.

o However, [a] criminal enterprise does not exempt itself from a search warrant by conducting its business and keeping its records in its lawyer's office; only that outside scope of warrant suppressed.

Searches v. Subpoena

Searches are expensive Searches req. particularity, and you may not know where to look; subpoenas are very broad Searches are not secret like subpoenas; no notice/time to destroy; search STOPS things immed. Searches require probable cause; subpoenas don’t, which makes them easier to secure Searches req. PC; if PC lacks/is determined lacking, search/evidence seized may be invalidated Searches are surprise; subpoenas are not Searches can take advantage of the plain view doctrine Searches may result in possible incriminating statements at the location searched

­So what if the government shows up at a law office with a warrant to seize “all of the files?” Call atty; he will say let’s bring this all to the cour and then he’ll call the judge for a hearing

o Judge will appoint an independent party…a “taint team”…to sort things Then, the materials turned over will be ones determined not to be protected by ACP and those

that the government can prove they need Self­Incrimination Privilege

All witnesses called before the GJ may exercise it by taking the witness stand and refusing to answer individual questions on the basis of it

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The privilege may be used by both targets and subjects of GJ investigation o Targets

A person whom the prosecutor or GJ has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative (alleged) defendant

o Subjects A person whose conduct is within the scope of the GJ’s investigation

It is recommended by the United States Attorney Manual that before subpoenaing a GJ witness, voluntary testimony should first be sought out; if no­go, then subpoena

DOJ policy to advise a GJ witness of his or her rights as a target or subject o “Target letters”

Targets may, of course, request to testify o But recall Williams; no requirement a prosecutor present exculpatory ev.

Advance Assertion of 5th Privilege o Upon receipt of a subpoena, a witness may inform the prosecutor that he or she will

exercise the privilege as to all questions posed by the GJ o If a target of the investigation and his or her attorney state, in writing, signed by both, that

the target is invoking 5th privilege, the witness should ordinarily be excused from testifying unless the GJ and USAtt. agree to insist

Miranda Warnings? o United States v. Mandujano

Even if adequate warnings of self­incrimination had not been given, that failure could not constitute a defense to a perjury charge

Warnings Re: Pending GJ Witness Status? o The USAM directs prosecutors to advise a target or subject of the investigation of their

rights (§ 9­11.151) o See United States v. Washington

Notification of target/witness status when before GJ is NOT required o The DOJ, nevertheless, advises warning targets

Waiver of 5th Amendment Privilege See Rogers v. United States

Books and records kept in a representative, rather than a personal, capacity cannot be the subject of the personal privilege against self­incrimination, even though production of them might tend to incriminate their keeper personally

Disclosure of a fact waives the privilege as to its details If the witness himself elects to waive his privilege and discloses his criminal connections, he is

not permitted to stop but must go on and fully disclose Immunity

18 USC 6002, a witness can be granted “use/fruits” immunity o It prevents the prosecution only from using witness's own testimony or any evidence

derived from the testimony against the witness. But if pros. acquires evidence substantiating the supposed crime—independently

of witness's testimony—witness may be pros. o Gov. bears burden to show there is no taint in the evidence and that it has an independent,

legitimate source for the evidence (Kastigar)

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Kastigar Hearing: A hearing where prosecution must prove its case rests on evidence other

than protected statements and their fruits o Only the AG or a designated officer of the DOJ has authority to grant “use”

immunity…an administrative agency, w/approval of the AG, may also grant it “Transactional immunity,” which completely protects witness from future prosecution for

crimes related to his or her testimony o Reluctantly granted b/c the person cannot be prosecuted at any point, while use/fruits

d/n prevent subsequent pros. of the immunized witness Granting Immunity to Defense Witnesses

o Courts will generally not grant it w/o government request, but… o United States v. Ebbers

Defendant must show the government has used immunity in a discriminatory way and has forced a potential witness to invoke the 5th by overreaching or deliberately denied immunity for the purpose of withholding exculpatory evidence and gaining a tactical advantage through such manipulation, AND

Defendant must show that the evidence to be given by an potentially immunized witness will be material, exculpatory and not cumulative and is not obtainable from any other source

The Proffer and Limited Immunity

A prosecutor commonly will require that the individual’s counsel make a “proffer” as to the individual’s participation and information that he/she can provide; concern here is the possible waiver of ACP, and counsel will often first obtain an agreement in writing that the proffer will not constitute such a waiver; gov. may also decide to never grant immunity or offer it after obtaining ev. from proffer

o A proffer may include a reference to incriminating documents that the client can identify and give the government information about the existence/location of the documents that it would not otherwise have had, and thus allow the government to obtain those documents by subpoena

If a witness goes to trial, the gov. may insist the proffer be available to it for use to impeach the individual should they be later prosecuted/offer contrary testimony

See United States v. Mezznatto

Absent some affirmative indication that the agreement was entered into unknowingly or involuntarily, an agreement to waive the exclusionary provisions of the plea­statement rules is valid and enforceable

Parallel Proceedings

Key Issue: Evidence from one body to another Delaying the parallel proceeding

o Problem for defense… o Maintaining self­incrimination privilege

Grand Jury Material (secrecy issue)

See United States v. Stringer (Simultaneous/non­disclosed civil­crim investigations by gov). The government can conduct parallel civil and criminal investigations without violating the

due process clause so long as it does not act in bad faith.

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Uses of Civil Discovery in a Criminal Prosecution See United States v. Kordel

Circumstances that would not survive scrutiny: o Situations where the government has brought a civil action solely to obtain evidence for a

criminal prosecution o Situations where the government has failed to advise a defendant in a civil proceeding

that it is contemplating a criminal prosecution o Situations where a defendant is unrepresented o Situations with the potential for prejudice from adverse pretrial publicity or other unfair

injuries, and o Situations where there are special circumstances that might suggest the

unconstitutionality or impropriety of a criminal prosecution Qui Tam Actions (and the False Claims Act)

A private party called a “relator” brings an action on the government's behalf. The government, not the relator, is considered the real “plaintiff”

o If the government succeeds, the relator receives a share of the award. Ties in heavily w/False Claims Act, aka "Lincoln Law," which allows people not affiliated

w/gov. to file actions against fed. contractors claiming fraud against gov. o The act of filing such actions is informally called “whistleblowing”

The government then has at least 60 days to decide whether to take over the action o During that time, the complaint filed in camera, must remain under seal:

If the government chooses TO intervene, it has the primary responsibility for prosecuting the action and is not bound by an act of the relator

o The relator has the right to continue as a party to the action, but the government may limit relator’ authority to call witnesses and cross­examine adverse witnesses, and may dismiss or settle action w/o the relator’s consent

If the government chooses NOT to intervene, the relator has the right to conduct the action and no person other than the government may intervene or bring a related action based on the same underlying facts

Shareholder Derivative Suits

It is common for shareholders to file a derivative action related wrongdoing in the business alleging directors and officers breached fiduciary duties to the company

o While ACP usually protects internal communications related to an internal investigation of the company, shareholders can seek to obtain otherwise privileged information as part of the derivative litigation

Prosecutorial Request for Stay During GJ Investigation

Gov. may request that a civil action—including those brought by federal administrative agencies—be stayed pending completion of the crim. investigation

o See Securities and Exchange Commission v. Healthsouth Corporation Prosecutorial Request for Stay After Indictment

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When the government indicts a defendant who is also the subject of a civil enforcement action, the defendant may try to take advantage of the more liberal civil discovery rules to gather info about the criminal case that would not be as readily available through criminal discovery rules

o See Securities and Exchange Commission v. Doody Debarment and Suspension

Administrative actions that prohibit or limit an individual business from doing future business with the federal government

Debarment means the person or business is prohibited from doing business with the government for a defined period, with three years being the usual maximum

Suspension is a temporary exclusion imposed on a suspected wrongdoer pending outcome of an investigation and any ensuing judicial/administrative proceedings

See Robinson v. Cheney Professional Practice Exclusion

The SEC has adopted Rule 2(e) that permits it to exclude an accountant from practicing before it if the person acts improperly

The Role of Counsel

Client Identity Corporate Internal Investigations

o Now known as the Corporate Fraud Task Force/Financial Fraud Task Force Initially headed by Larry Thompson, “Thompson Memorandum”

o Increased number of Deferred and Non­Prosecution Agreements (investigations via monitors)

o Few trials between government and corporation; “the Arthur Andersen Effect” o Corporations paying huge fines o Sentencing Guidelines –“Carrot and Stick” Approach—Incentives to come forward, enter

into agreements, and put into place compliance programs that will “exercise due diligence to prevent and detect criminal conduct”

o New statutes requiring reporting of violations o Result of all of the above? Growth of internal investigation industry

Internal Investigations o Unregulated (GAAP accounting standards; Professional conduct rules) o Unmonitored o They are supposed to be internal, secret, and confidential o In theory—DOJ or Government Agency—not a direct participant in a corporate internal

investigation o In practice—DOJ has become an indirect participant in corporate internal

investigations Independent Corporate Investigation

o Upjohn v. United States Privilege only protects disclosure of communication, NOT the underlying

facts by those who communicated with the attorney Facts in doc. aren’t priv.; the doc. itself is, and comm. made to lawyer are

o Bevill Test Controls Individual must show they approached counsel for purpose of legal advice

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Individual must demonstrate advice sought in individual capacity as opposed to representative capacity

Individual must demonstrate that counsel agree to communicate with them in individual capacity, knowing conflict could arise

Individual must prove conversations were confidential (One more ?)

o Almost all courts hold that privilege lies with the company, not the individual UPJOHN WARNINGS

o Providing an employee with an Upjohn warning should make it clear that the: ACP over communications between company counsel and employees belongs

solely to/is controlled by the company Company may choose to waive this privilege and disclose what the employee

says to in­house counsel/a government agency/3rd party

See In re: SUBPOENAED GRAND JURY WITNESS A client’s motive for seeking legal advice is confidential…accordingly, the privilege protects an

unknown client’s identity where its disclosure would reveal a client’s motive for seeking legal advice, thus assisting in prosecution

Providing Payment Information See United States v. Sindel

After reviewing the in­camera testimony, the Eighth Circuit concluded that Sindel could not reveal Jane Doe's payment information without revealing the subject matter of a "confidential communication." Therefore, the court held that the attorney­ client privilege protected information required on Form 8300 with respect to Jane Doe.

NOTE: Courts have held that absent special circumstances, attorneys are REQUIRED to provide information requested by Form 8300…failure to comply can result in fines and criminal charges against he attorney

o In Camera Review? Can’t tell the judge too much, but enough to make it known you don’t want to disclose b/c of ACP...pros. not present/ex­parte

SEC Disclosure Rules

In the wake of corporate bullshit, the Sarbanes Oxley Act was enacted: It mandates the SEC issue rules prescribing minimum standards of professional conduct for

attorneys appearing and practicing before…including at a minimum a rule requiring an attorney to report evidence of a material violation of securities laws or breach of fiduciary duty or similar violation by the issuer or any agent thereof to appropriate officers within the issuer and, thereafter, to the highest authority within the issuer, if the initial report d/n result in appropriate response.

o In addition, SEC rule permits disclosure to the Commission in certain circumstances Subpoena of Attorneys

The DOJ permits federal prosecutors to subpoena attorneys for information about their clients, but exercises “close control” over such subpoenas by requiring prior approval of the AAG for the Criminal Division

See Impounded (crime­fraud exception to ACP)

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If the government has submitted sufficient prima facie evidence of a crime or fraud and legal advice was sought from or given by the attorney in connection therewith, the attorney­client privilege has been waived, and the grand jury may compel the attorney to testify about his communications with the target

o Absent this finding, the attorney may validly assert the attorney­client privilege in response to the grand jury subpoena.

Supervisory Power to Quash o Several circuits have recognized a supervisory authority in the district court sufficiently

broad to justify quashing a subpoena to an attorney in an exceptional case Right to Counsel See United States v. Stein

Federal prosecutors violated the Sixth Amendment rights of 13 former KPMG partners and employees by pressuring KPMG not to pay the defendants’ legal fees in the context of the government’s criminal investigation of KPMG and negotiation with the firm of a deferred prosecution agreement.

o The prosecutors’ conduct constituted an unjustifiable interference with the defendants’ relationship with counsel and their ability to mount a defense, all in violation of the Sixth Amendment.

The McNulty Memo o Limits the DOJ’s policy on considering payment of attorney fees for employees

suspected of being involved in wrongdoing Principles of Federal Prosecution of Business Organizations, issued by the DOJ in August of

2008, outright which rejects any consideration of payment of attorney’s fees in deciding whether a company has cooperated

o Assuming federal prosecutors adhere to Principles, Stein won’t happen again State Action

o The key to the 2nd circ’s application of the 6th above was finding that KPMG was acting on behalf of the government in denying the attorney’s fees

Ethical Regulations

Most states follow ABA Model Rule 3.8(e), which appears to require a federal prosecutor meet the same criteria for issuance of a subpoena to an attorney as the DOJ rules; ethical rules do not create additional rights for an opposing litigant

McDade Act (28 U.S.C. § 530B) o Adopted to provide ethical standards for attorneys for the government

The Act also requires the DOJ to adopt rules to implement the statute o Federal district courts often incorporate a state’s rules of PR for their court

Lawyer Involvement in Client Misconduct o Counsel’s representation of a client can trigger an accusation that the lawyer engaged in

criminal conduct o In United States v. Kellington, court held the limiting instruction re: ethical obligations

was improper and caused a “miscarriage of justice” in impact on the jury deliberations Regulatory Agency Representation

o A lawyer owes a duty to his client, but a lawyer cannot commit fraud. o See United States v. Cavin,

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A lawyer accused of participating in his client’s fraud is entitled to present evidence of his professional, including ethical, responsibilities, and the manner in which they influenced him; excluding such evidence prevents the lawyer from effective defense

Contact With Represented Persons o Model Rule 4.2 o 1990, DOJ “Thornburgh Memorandum,” exempt. fed. pros. from model rules, specif. 4.2

This caused a shit storm….McDade Act supersedes it o See United States v. Grass

Court found that even if attorney had violated Rule 4.2 he could show that he did not do so in a willful, deliberate, or intentional manner.

See United States v. Taleo

Ferrer initiated the communications with the U.S. Attorney's office, and Harris responded properly by clarifying her ethical duties/advising Ferrer of her right to counsel…proper actions

Sentencing

Sentencing Reform Act of 1984, which became effective in 1987 and created determinate sentencing, eliminated parole, and limited “good time” reductions to fifty­four days a year after the first year of incarceration

Congress established the United States Sentencing Commission as an independent entity in the judicial branch; drafted original Guidelines after referral to Congress and become law following non change/veto by Congress

o Congress can legislate amendments to them if they wish, proposed by Commission Guidelines make white collar criminal serve as much time as other criminals and reduce leniency Booker SC held that sentencing court must consider the Guidelines, but need not follow them;

they are but one of many sentencing factors to be considered o Booker DOES NOT change the court’s inability to sentence below a statutory minimum

on its own discretion; the statutory limit will always control (as far as minimum or maximum goes)…BUT a court can SOMETIMES depart below a statutory minimum when the gov. files a motion asking the court to do so, and the statute permits such an action in its text

The Guidelines

Computing the Sentence o Two numerical values set for each guideline case: an offense level and a criminal history

category o While Booker returned a large measure of sentencing discretion to the court, it did not

diminish the importance of understand the guidelines’ application in each case Courts tend to follow the Guidelines most of the time, even though they’re not

binding o The Court also looks to conduct deemed “relevant” under the Guidelines, including acts

and omissions of the defendant during commission of the offense, in preparation of it, or in the course of attempting to avoid detection or responsibility for it

For sentencing, beyond a reasonable doubt is not needed to hold the defendant responsible for an act that increases the base level offense as a specific offense characteristics, but rather preponderance of the evidence is sufficient

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Relevant conduct also seems to include “lesser included offenses” o Adjustments exist in 5 major groups

Victim related, defendant’s role, obstructing justice, multiple count conviction, and acceptance of responsibility by defendant

All of these can result in multiple level increases or decreases of an offense o The guidelines express a presumption in favor of concurrent sentences when court

sentences a defendant already subject to an un­discharged term Exception is offense for which the statute mandates a consecutive offense when

committed while incarcerated or on probation Relevant Conduct

o United States v. Williams Scope of conduct matters in determining relevancy

Sentencing White Collar Offenders o See United States v. Parris

Court considered amount of loss, number of victims, the “sophisticated means,” status as officers/directors, role in the offense, obstruction of justice

o NOTE: Other Factors Abuse of position of trust, cooperation, use/utilization of special skills, collateral

consequences o See United States v. Lang

Court held defendant’s ability to “cheat at cards” was not a “special skill”; threshold is “whether a skill was one that usually requires substantial education, training, or licensing”

“Ability to cheat at cards is useless outside crime; unlike a doctor/lawyer gone bad, Liang abused no societal trust by appropriating otherwise positive educational investment for illegal personal gain”

Court also held defendant’s extraordinary eyesight was not “special skill;” intrinsic “skills” that are human capabilities, like motor abilities, are not sufficient for sentencing increases

Plea Agreements “Substantial Assistance”

o Guidelines authorize government to file a motion requesting a judge depart under a Guideline range if def. provides “substantial assistance” to the pros.

Wade v. United States, SC held government does NOT have a duty to file such a motion when defendant substantially assisted; just the power to…however, def. entitled to relief of prosecutor’s refusal to do so grounded in race or religion

o See Melendez v. United States Government motion attesting defendant’s assistance does not allow departure

below a lower statutory minimum UNLESS the government specifically requests such a departure

“Plea Bargains” o The Guidelines have three main types

Charge Bargain Accept a plea in exchange for dismissal of others

Sentence Recommendation Specific, Agreed Sentence

Appellate Review o See United States v. Tomko

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Sentencing Corporations

Convicted/charged like people and Guidelines provide factors to consider o Remedy/harm caused o If organization operated primarily for criminal purpose or by criminal means, fine set

high to divest of all assets o Seriousness of offense and culpability of organization, determined by steps taken by it to

prevent misconduct, level and extent of involvement in or tolerance of offense by personnel, and actions taken by organization after offense

o Probationary sentences if and when necessary to ensure future similar conduct prevented Guidelines have departure (up and down) factors to consider for corporations: Guidelines have requirements for probationary sentences Encouraging Cooperation Voluntary Disclosure

o Not always advantageous to do this b/c fines, but lie and get caught = bad Determining the Fine

o Organizations convicted of an offense are subject to a fine and probation, but cannot be imprisoned

o Starting point for fine is determination of base offense level, then consideration of organization size, level of involvement of senior officers, and the cooperation of the organization in the governments investigation

Result is a “culpability score” providing a multiplier for fine to be imposed, ranging from .05 to 2.0; ability to pay may be contested

o Criminal fines may still be required even if the company goes into bankruptcy, dissolves, or transfers the company to new owners

Corporate Liability v. Individual Liability

See United States v. C. R. Bard, INC. o C.R. Bard Inc., a multinational medical device company, agreed to pay the federal

government $48.2 million to settle this whistleblower lawsuit that alleged its urological division and wholly owned subsidiary, ProSeed Inc., paid doctors and hospitals kickbacks to entice them to order Bard’s products at inflated prices to treat Medicare patients with prostate cancer.

Note o Corporations regularly enter into DPAs allowing the corporation to continue its business o DPAs and NPAs frequently include a provision on fines, civil penalties, and restitution,

which shifts the decision from the court to the DOJ to determine punishment

Rob Blagojevich Incicted in 2009 on 23 charges 1st trial mistrial

o Only found guilty during it of lying Re­indicted for 2nd trial

o Guilty 17/20 charges o All 10 counts of wire fraud; acquitted on one count of bribery and unable to reach a verdict on two

counts of attempted extortion Senate Seat Abuse of Power/Pay­to­Play

o Threatened to withhold $8 million of state funds to extract campaign contribution from hospital

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Post­Trial o 14 years in prison; 3 difference sentences of 168 months, 60 months, and 26 months, concurrently

Will have to serve 85% before parole/serving time with former Enron CEO Skilling in Colorado BP

BP pled guilty to 11 counts of misconduct for negligent officers/several env. Statute violations o BP agreed to a $4 billion plea o Civil still pending

Multidistrict Litigation (MDL) o MDL 2179

BP found responsible for gross negligence and willful misconduct o MDL 2185

Securities lawsuits DOJ filed criminal charges against

o Kurt Mix, BP engineer, who deleted texts about oil spill o Donald Vidrine/Robert Kaluza

Site managers, 11 counts voluntary manslaughter for acting negligently o Tony Hayward, CEO

Removed after spill and sent to Siberia Kept 17 million dollar pension and 1.6 million salary Is now chairman of Glencore Xstrata, a mining company/crude trader

Grace

CT corporation; packing materials/chemicals/Mined vermiculite o Used to insulate and a variety of other things

Claims over Asbestos in products o EPA began investigation into Grace as response to the contamination o DOJ began criminal proceedings

Conspiracy to violate CAA o 3 counts of CAA violation o Wire fraud o Obstruction

Actually go to trial; 36 days o Found NOT GUILTY of everything, although stock fell almost 50%, but went back up 36%

$120 million in defense spending, would’ve cost $280 million if convicted Scooter Libby

Plame Affair o Joseph Wilson, US Ambassador, sent to Niger to investigate claim Niger selling uranium to Iraq

Reported this information as not true (problematic of the Bush Administration) Documents were obvious forgeries

o NYT article by Nicholas Kristof cited anonymous source for info that Iraq invasion was bs o Affiliation of Valerie Plame (wife of Wilson) to CIA was revealed by a WSJ reported in violation

of 50 usc 421 September 2003 asked CIA to investigate leak 22 month investigation under Patrick Fitzgerald, US AG

o Two reporters jailed for refusing to testify/disclose Judith Miller in particular; had conversations with Scooter

o Scooter claimed to have learned the identity of Plame’s CIA affiliation through Tim Russert United States v. Libby

o Indicted in 2005 for obstruction, perjury, false statements o Focused on conversations that Libby had several reporters in which he claims that knowledge of

Ms. Plame’s CIA status came from Russert

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o Court found Mr. Libby found out and informed several other officials of Ms. Plame’s relationship to Wilson weeks in advance of leaking op­ed

o Scooter charged with obstruction, perjury, and false statements (acquitted of one count) 30 months in prison, $250k fine, 400 hours community service, 2 years probation

o Bush commuted prison sentence but left other penalties Don Siegelman

51st Governor of Alabama o On 5/27/2004, indicted on federal charges, then charges dropped, then case thrown out, yeah.

2006 indictment on bribery/mail fraud with connection with a new name, Richard Scrooshy (CEO of Healthsec) (sp?)

o Witness Nick Bailey helped seal the deal against Siegelman Argued by many this was all political; connections drawn to Karl Rove

Sam Waksal

Former CEO of a ImClone bio­tech company that at the time researched anti­cancer drugs ImClone almost went bankrupt by early 90s

o Erbitux, cancer drug, produced by Sloan­kettering chariman John Mendelsohn o Erbitux had good results o 2001 deal with ImClone for drug

FDA looked into the drug o Rejected; corners being cut, etc. o Waksal blamed rejection on documentation error, but FDA sad the drug had serious issues o Waksal told his broker, daughter, father and others about the problems in drug

Martha Stewart tipped off as result of all this b/c he told her broker Waksal also dated her daughter

o SEC investigates… 2002 charges against him for insider trading, illegal involvement in various crimes

Plead guilty to everything, too! Sentenced to 7 years, 3 months in prison

o $4million in fine and back taxes Permanent ban for being public officer in a public company

Martha got 5 months in jail, 30k fines o 200k in civil fines, 5 year probation(?)

59 months in prison before release o Currently living in SOHO’s upper east side o Started up Kadmon Pharmaceuticals as founder and CEO, private company so no ban issues

Still rich! o ImClone is still around, too o Erbitux came back around, and doing very well

No jobs or 401k’s lost from any of this Jack Abramoff

Former lobbyist and Bush Administration insider o Spent 43 months in federal prison

Known for swindling Indian tribes out of millions promising them influence and access to land, casinos, etc o Fraud, conspiracy, tax evasion, and wire fraud

Now one of the most staunch activists against corruption, actually 85 million from tribes

o 23 million in fraudulent wire transfers to buy a casino gambling boat in Miami o Funding trips abroad o Massive political contributions in exchange for political favors

“The most harrowing political scandal since Watergate” 70 months in prison

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o Casino Jack film based on his story Cunningham

Navy Pilot during Vietnam War Entered politics in 1990 after being a Top Gun instructor

o In 2005, US gov. filed conspiracy charges for bribery, tax evasion Also tax evasion

2.5 million in illicit payments and benefits o Bribery for assets involving hundreds of thousands, as well as miscellaneous items; millions in tax

evasion Ultimately agreed to forfeit assets

o Via plea agreement o Waived a number of trial rights

Sentenced to 100 months in prison, 3 year supervised release o Served entire sentence

Released in 2/13, has contemplated writing/becoming advocate for judicial reform Bob McDonnell

Federal corruption charges re: political gifts/donations/etc. Bernard Ebbers

Odd jobs before richness, started w/hotel empire Worth 1.4 billion at peak Co­founded LDDS (WorldCom) in 1995

o Built up company w/loans, but amassing lots of debt/$400 million in company support o In 2002, resigns as CEO and SEC probes company support of his personal loans

11 billion in fraud o Largest bankruptcy filing at that time/17k jobs lost

Found guilty of all charges March 15, 2005 o Sentenced to 25 years in prison

Still serving sentence in Louisiana; done in 2027 at 85 years old Aaron Swartz

“Hacktivist” and genius from a young age; helped created RSS o Helped program Reddit before it was sold

Heavily involved in Open Access Movement o Co­wrote Guerilla Open Access Manifesto o Co­founded Demand Progress

Successfully led campaign to prevent SOPA PACER­ Public Access to Court Electronic Records

o Public record access, but charged per page o Aaron felt this shouldn’t cost anything; modified a program to automatically download docs o Responsible for downloading 18 million pages worth approximately $1.5 million

In late 2010 and early 2011, went to MIT and downloaded a ton of JSTOR articles without paying; used visitor network to access it from a modified laptop

Arrested after; indicted July 2011 o 2 counts wire fraud, 11 counts computer fraud o Facing lots of prison and nearly $1 million fine

Case highly criticized; JSTOR and MIT declined to sue him civilly o Prosecutor offered 6 months in prison for plea on all 13 counts; refused

Committed suicide in January 11, 2013 o Prosecution highly criticized and statutes, too, for being overbroad

Rick Perry

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Criticism of activities while in office o Trans­Texas Corridor, blasted for soliciting private funding; meant to be a super­highway and it

never happened o Issues with Merck donating money to his campaign ($6k) o Accused of being a “corporate crony”

INDICTED 8/15/14 o Abuse of official capacity/Coercion of public servant o Arose out of DWI arrest of Rosemary Lehmberg, Travis County DA

.239 BAC While incarcerated, labeled uncooperative and aggressive; needed to be chained and

“spit­masked” Motions to dismiss filed in August and October of 2014

o Currently an independent prosecutor to look at this entire thing; ongoing Michael Milken

Very involved in medicine and “Junk Bonds” Milken didn’t like the junk bond system;

o Changed the way things worked o Started selling junk bonds o Made 550 million in 1987

More than gross national product of small countries/Gave a lot to charity, made 1 million/day

DA Giuliani went after Mike for securities fraud/poss. insider trading o SEC had been watching his firm, Drexel, since the mid­1980s

98 count indictment filed o First major use of RICO; used to go after a high level executive o Now, they can’t invoke RICO for securities law violations alone

Sentenced, originally, to 10 years w/parole after 3, plus 3 of community service o Filed a motion to reduce; served 24 months/reorganized a number of things in prison while there

Market actor/didn’t really harm investors/offered full restitution The Quiz Show Scandal/ Charles Van Doren

1994 film made about quiz show scandals; specifically the “21” scandal o 21 had poor ratings; other shows more popular o Van Doren came from a good family; PHD in literature, good looking, etc. o Picked to replace Stempel(sp?) b/c he looked too “immigrant­y” (?)

Turns out show was rigged and contestants were coached Stempel eliminated from show/tv altogether, got angry b/c they lied about keeping him on tv, brought the

case to the NY DA o DA didn't’ care; no real crime committed at the time

No evidence/No laws broken/No corroboration because everyone lied o Goodwin, member of House Subcommittee, took interest

Investigated Van Doren and NBC, took findings to Congress o Congress subpoenaed everyone from the show/Van Doren found guilty of perjury; came clean

Allen Stanford

In 2009, Stanford Financial (his company) investigated for higher than market returns o Leaked message from US embassy reported companies under his control engaged in bribery,

money laundering, and political manipulation Feb. 2009, FBI raided offices

o Investors bought certificates of deposit from his bank in Antigua…Something illegal here? Indicted, pled not guilty to all charged, maintains innocence Trial set for January 2011, but he was deemed unfit to stand trial In prison now, 63, lots of years to go

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o Prosecutors relied heavily on his former University roommate o Testified Stanford’s business empire was a fraud o Described how Stanford sent him to London to do illegal stuff

Still claims he did nothing wrong o 13 convictions, incarcerated in Florida, earliest possible release is 2105, and forfeited 6.7 billion

In September 2014, filed a 299 page brief o Hand­written because he’s broke/claims US had no jurisdiction overseas

Frank Something

Huge scam artist/imposter Dennis Something

NJ/CEO of TYCO, made it very successful…threwwife a 2 million dollar party; sort of a dick overall Did something illegal.

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