White Collar Crime Prof Blog

Rezko Convicted

The press is reporting on the conviction of Antoin Rezko:

Bob Secter & Jeff Coen, Rezko Convicted of Corruption

Peter Slevin, The Trail Blog, Washington Post - Rezko Convicted of Influence Peddling

Fox News, Rezko Convicted on 16 Counts in Corruption Trial

Catrin Einhorn & Susan Sauley, NYTimes - Fund-Raiser Convicted in Illinois Bribery Scheme

Ilan Brat & T.W. Farnam, Wall St Jrl, Fund-Raiser Rezko Found Guilty in Illinois Corruption Trial

The case drew national attention when the names of Obama and Blagojevich surfaced during the trial. For background see here, here, here, here and here.  The initial DOJ Press Release can be found here.

(esp)(blogging from Atlanta)

Government Has Second Thoughts in Siegelman/Scrushy Appeal

The government filed a Motion for Voluntary Dismissal of Government's Cross Appeals in the case involving former Alabama Governor Don Siegelman and former CEO of HealthSouth Richard Scrushy.  The cross-appeal had been premised on the sentences given to the pair - the government wanted higher.

So why would the government drop this appeal.  Some possibilities, although whether any of these ideas have merit will only be seen down the road:

• The government realized that the sentences were appropriate and didn't want to hurt their chances on appeal with a frivolous issue?
• Higher-ups said no dice on going forward with this cross-appeal?
• DOJ's internal investigation is not going particularly well for the DOJ?
• Asking for draconian sentences will add pressure for Congress to look closer at why this case was originally brought?

Although the government is dropping the cross-appeal, they still want the same amount space/words allowed in their brief as if this issue were before the court. The Eleventh Circuit Court of Appeals has yet to rule on whether this dismissal warrants a modification of the brief length.

Motion - Download ygovt27smotionforvoluntarydismissalofgovt27scrossappeals.pdf

(esp) (blogging from Atlanta, Georgia)

Addendum - Scott Horton, Harper's Magazine - Siegelman Prosecution Continues to Unravel

AGA Medical Corp. Gets Deferred Prosecution Agreement on FCPA Matter

A DOJ Press Release reports that "AGA Medical Corporation (AGA), a privately-held medical device manufacturer, has agreed to pay a $2 million criminal penalty in connection with corrupt payments to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA)."  The 2 count Information filed by the government "charges AGA with one count of conspiring to make bribe payments to Chinese officials and one count of violating the FCPA in connection with the authorization of specific corrupt payments to officials in China." 

(esp)

Not Guilty for 2 Former CVS Vice-Presidents

W. Zachary Malinowksi over at Projo.com reports (here) on the not guilty verdicts entered against the two former VPs from CVS.  Perhaps the most amazing aspect here is that the jury issued the verdict in 90 minutes. This is particularly noteworthy as one often does not find the quick verdict in white collar cases.  And although this case was not a heavy document case, it still involved allegations of fraud.  The accused individuals had been charged with bribery, conspiracy, and mail fraud (see here).  The case was built largely with testimony of a cooperating witness. One of the individuals in this case was represented by David B. Fein and Scott Corrigan of  Wiggin and Dana.   

Even though successful in court, it is never really a "win" for a criminal defendant who goes to trial. One cannot bring back the agony of facing the charges, the strain of the trial, and the personal costs one faces in maintaining innocence.

(esp)

Scrushy Files Appellate Brief

Richard Scrushy, former CEO of HealthSouth, filed his appellate brief in the 11th Circuit Court of Appeals (for background see here)  The 118 page brief is detailed, with key arguments focused on the following areas:

• No quid pro quo on the campaign contribution that is alleged to be related to an appointment & refusal by the court to give an instruction on the McCormick quid pro quo requirement 
• Juror misconduct including juror use of the Internet
• Judicial conflict and failure to disclose the alleged conflict
• Jury composition challenge
• Admission of hearsay testimony
• Statute of limitations problem with one count

Scrushy also joins in the arguments raised by former Alabama Governor Seligman in his brief (see here).  As with Seligman's brief, the fascinating issue is the lack of a showing or a quid pro quo when a campaign contribution formed the essence of the alleged criminality. It seems likely that the government will respond that the McCormick case should not extend beyond Hobbs Act cases, and therefore should not apply to the Scrushy/Seligman cases.  But without seeing the government's brief, the defense argument seems like a strong one - since without a quid pro quo requirement we might find all campaign contributions being considered criminal activity.

The Brief - Download SCRUSHYINTIALBRIEF0713163BFINAL6.2.08.pdf

(esp)

In the News - Fieger Acquitted; Weiss 30 Months; Brocade Pays; Another Fall From Abramoff

Attorney Geoffrey Fieger acquitted on all counts; another win for Gerry Spence - see here (Detroit Free Press); here (Jim Irwin, MLive.com (AP)); here (TalkLeft)   

Ashby Jones, Wall Street Jrl Blog, Mel Weiss Gets 30 Months in Prison

Ashby Jones, Wall St. Jrl. Blog, Brocade Pays $160 Million to Settle Options-Backdating Suit

DOJ Press Release - Former Congressional Chief of Staff Pleads Guilty to Public Corruption Charge - ("former chief of staff to a former Member of the U.S. House of Representatives has pleaded guilty to conspiracy to commit honest services wire fraud" - this is yet another case related to former lobbyist Jack Abramoff)

(esp)

Supreme Court Rules Against the Government in Two Money Laundering Cases

One would not normally think of money laundering in the same sentence as white collar crime, since one usually considers the money laundering statutes in the context of drugs or gambling.  But the reality is that "[t]here are more than 250 predicate offenses for the money-laundering statute," (J. Scalia, Santos) and often one sees money laundering added in white collar cases. (see here)  It is a crime facing Attorney Ben Kuehne of Miami (see here). Thus, the Supreme Court decisions against the government in money laundering cases are important to the white collar area.

In Cuellar v. United States, the Court reversed a Fifth Circuit decision.  The Court held -

"The provision of the money laundering statute under which petitioner was convicted requires proof that the transportation was "designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control" of the funds. §1956(a)(2)(B)(i). Although this element does not require proof that the defendant attempted to create the appearance of legitimate wealth, neither can it be satisfied solely by evidence that a defendant concealed the funds during their transport. In this case, the only evidence introduced to prove this element showed that petitioner engaged in extensive efforts to conceal the funds en route to Mexico, and thus his conviction cannot stand."

In United States v. Santos, the Court affirmed a Seventh Circuit decision.  The Court held -

"From the face of the statute, there is no more reason to think that "proceeds" means"receipts" than there is to think that "proceeds" means"profits." Under a long line of our decisions, the tie must go to the defendant. The rule of lenity requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them. See United States v. Gradwell, 243 U. S. 476, 485 (1917); McBoyle v. United States, 283 U. S. 25, 27 (1931); United States v. Bass, 404 U. S. 336, 347– 349 (1971). This venerable rule not only vindicates the fundamental principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed. It also places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress’s stead. Because the "profits" definition of"proceeds" is always more defendant-friendly than the"receipts" definition, the rule of lenity dictates that it should be adopted."

(esp)

In the News

DOJ Press Release - Florida Businessman Charged with Forging Correspondence Purportedly From Securities and Exchange Commission Attorney

International Herald (AP) - Former Credit Suisse banker gets 10-year sentence 

DOJ Press Release - Lawyer Indicted on Wire Fraud and Money Laundering Charges for Stealing from Client Escrow Account

(esp)

Former Governor Don Siegelman's Support

The latest press reports on the Siegelman case -

Newsday (AP) - Ex-Attorneys General File Brief Supporting Siegelman

Ala.com (AP) - List of Former Attorneys General Signing Siegelman Brief (provides the list of 54 Former Attorney Generals Who Signed the Brief)

It is not surprising to see Former Governor Siegelman receiving significant support as the case is clearly one that needs scrutiny - even the DOJ is examining it (see here).  And although the courts will scrutinize this case in the normal review process, more is needed here.  An independent review is necessary to determine if politics in any way entered into the decision-making process.  With enormous prosecutorial discretion provided to prosecutors, it is important for there to be accountability.

(esp) (blogging from Firenze, Italy)

Addendum - Amicus Brief -  Download amicus.pdf

In the News

Sylvia Moreno, Washington Post, D.C. Official's Brother Pleads Guilty in Tax Scam

Ann Zimmerman, Wall St Jrl, Home Depot Ex-Executive is Charged with Fraud

Glenn R. Simpson & Carrick Mollenkamp, Wall St Jrl, Ex-Banker to Cooperate, Plead Guilty in UBS Probe

Rosalind S. Helderman, John Wagner, & Ovetta Wiggins, Washington Post, FBI Raids Home of Maryland State Senator

David Armstrong & Jesse Drucker, Wall St. Journal, IRS Scrutinizes Rabobank's Dealings with Newell

Judith Burns, Wall St Jrl, Ernst & Young Ex-Partner is Indicted

David Heinzmann, Chicago Tribune, Officers were Encouraged to Lie, Indicted Chicago Cop Tells '60 Minutes'

(esp) (blogging from Firenze, Italy)

Government Files Cross Appeal in Wesley Snipes Case

The government filed a Notice of Cross-Appeal in the Wesley Snipes case (see below).  How far this will get, however, remains to be seen.  Certainly there are several questions that one has to ask here -

• What could they possibly be appealing?  Snipes received the prison sentence the government asked for  (see here)- three years. (see here) They can't appeal the jury's failure to convict on the counts he was acquitted on.  Thus, the only remaining basis could possibly be the court's failure to impose any fine, or to make "restitution" (payment of delinquent taxes) a special condition of supervised release.  Would they really make this a basis for a cross-appeal?
• Has this cross-appeal been through the approval process of the Solicitor General's office? And if so who approved it? (Paul Clements announced he was stepping down - see here)

Notice of Government Cross-Appeal -  Download Snipes.pdf

(esp - from Firenze, Italy)

Defense Contractor Pleads Guilty

A Department of Justice Press Release reports that "[a] former manager of a West Sayville, N.Y., company pleaded guilty and has agreed to serve a jail sentence and pay a criminal fine for his role in two separate conspiracies, one to rig bids on U.S. Navy contracts for metal sling hoist assemblies and another to accept kickbacks from vendors and subcontractors."  The agreement calls for a year and a day in prison, payment of a $10,000 fine and cooperation in the government's investigation.

(esp)(blogging from Firenze, Italy)

In the News

Amy Shipley, Washington Post, Track Coach Convicted on 1 of 3 Steroid-Related Charges (Balco Related)

International Herald (Bloomberg, AP) - Prosecutors open inquiry into possible spying by Deutsche Telekom (German Prosecutors)

Ha'aretz,  Olmert: Not every person under probe must resign (discussing the investigation involving Israeli Prime Minister Ehud Olmert)

DOJ, Toray Industries to Pay U.S. for Price Fixing on Carbon Fiber Materials ($15.25 Million - civil settlement)

DOJ, FBI Agent Arrested for Attempting to Influence Criminal Case of Man Married to His Mistress

DOJ, Third Defendant Pleads Guilty in China Espionage Case

(esp) (limited posting this week as I am blogging from Firenze, Italy)