Publications

12.18.14 | Articles

Practical Observations by Judges on the Scope of Discovery

New York Law Journal

In the last several months, judges of the U.S. District Court for the Southern District of New York have issued a number of rulings on discovery disputes that offer both pragmatic resolution of the dispute at hand and broader, instructive commentary on the scope of permissible discovery. These rulings make clear that Southern District judges are increasingly losing patience with discovery for discovery’s sake. This article discusses several of those opinions.

Related Lawyers: Edward M. Spiro, Judith L. Mogul

12.17.14 | Blog Posts

The Barko v. KBR Privilege Battle Continues

The Insider: White Collar Defense and Securities Enforcement

A high-profile qui tam suit against Kellogg, Brown & Root and Halliburton continues to generate important case law relating to the scope of attorney-client privilege and work product protection given to internal investigations.

In the lawsuit, arising out of alleged false claims to the government under Iraq reconstruction-related contracts, federal judge James S. Gwin in Washington, D.C. held, in March 2014, that internal investigation materials were not protected by the attorney-client privilege because the investigation had been conducted as a matter of regular company policy by internal compliance personnel and as required by federal law. (I wrote about Judge Gwin’s ruling in a blog entitled “When Is An Internal Investigation Not Privileged.”) The defendants appealed the ruling, which led to a unanimous decision three months later in In Re: Kellogg Brown & Root, Inc., No. 14-5055 (D.C. Cir. June 27, 2014), in which the U.S. Court of Appeals for the D.C. Circuit vacated the district court decision, holding that an internal investigation is privileged so long as “one of the significant purposes” of the investigation is to obtain or provide legal advice. The Court of Appeals remanded the case to the District Court for further proceedings. (I discussed the D.C. Circuit’s opinion in “D.C. Circuit Upholds Claim of Corporate Attorney-Client Privilege.”) That ruling is now subject to a petition for certiorari to the Supreme Court. [...]

Related Lawyers: Jonathan S. Sack

12.03.14 | Articles

Missing Fish, Obstruction Statute and Prosecutorial Discretion

New York Law Journal

White-collar criminal practitioners spend much of their time arguing about how prosecutors should exercise their discretion in making charging decisions, often against the backdrop of broad and uncertain criminal statutes. When the Supreme Court grapples with the same issue, however, significant new criminal law doctrine may emerge. That potential became apparent most recently during the oral argument of Yates v. United States, the peculiar case of a fisherman prosecuted for obstruction of justice under the Sarbanes-Oxley Act for throwing undersized fish back into the sea. In this article, we discuss this case, the critical comments the justices directed toward the government regarding its exercise of prosecutorial discretion, and potential judicial remedies.

Related Lawyers: Richard F. Albert, Robert J. Anello

12.01.14 | Blog Posts

Prosecuting Individuals for Financial Crimes - Some Questionable Recent Ideas

The Insider: White Collar Defense and Securities Enforcement

The government must be very sensitive about all the criticism it has been getting, from Congress, some judges and others, for not prosecuting more individuals for financial crimes. Perhaps in response, senior government officials have given a series of speeches since September declaring the commitment of the Justice Department to such prosecutions.

White-collar defense lawyers know that individuals are investigated and prosecuted all the time, so in some ways the recent speeches don’t tell us very much. But the speeches introduce a few ideas that raise concern that, perhaps, the government’s sensitivity is generating some questionable proposals. [...]

Related Lawyers: Jonathan S. Sack

11.21.14 | Articles

Redefined Role of Profit in Economic Substance Doctrine

New York Law Journal

Learned Hand famously opined that “[a]ny one may so arrange his affairs that his taxes shall be as low as possible.” There is, however, a line between legitimate tax avoidance and illegal tax evasion and, in drawing that line, the IRS has long challenged attempts by taxpayers to reduce their tax liability by executing transactions that lack economic substance. In this article, I discuss the increasing focus of the economic substance doctrine on the proportionality between the potential profits to be derived from a transaction and the corresponding tax benefits, as well as the effect this changing focus will have on future cases.

Related Lawyers: Jeremy H. Temkin

11.10.14 | Blog Posts

Social Media for Attorneys: Good Business or Ethical Minefield?

The Insider: White Collar Defense and Securities Enforcement

Social media websites allow anyone — or more accurately everyone — to communicate and share ideas and opinions with a wide-ranging audience. Websites like Facebook, Twitter, YouTube and LinkedIn provide an extraordinary means for professional and personal networking and self-promotion, and for researching personal and professional contacts. In previous blog posts, I addressed ethical perils for lawyers who access social media websites to research potential jurors and for lawyers who advise clients concerning the propriety of removing potentially incriminating and discoverable material from social media websites. This post addresses yet another category of ethical pitfalls for lawyers who use social media: The risk of violating the ethical rules that govern attorney advertising by using social media for professional self-promotion. [...]

Related Lawyers: Catherine M. Foti

11.04.14 | Articles

Corporations and Risks of Mandatory Disclosures to the Government

New York Law Journal

One of the axioms of white-collar practice today is that companies, especially public companies, do not litigate against criminal and civil enforcement authorities, except in rare circumstances. In this article, we discuss two trends that may make the already constrained position of companies even more difficult in terms of increased exposure to liability and reduced opportunities to mitigate the terms of settlement.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

10.23.14 | Blog Posts

Eyes Wide Shut: Recent Second Circuit Concurrence Continues Debate on Conscious Avoidance Doctrine

The Insider: White Collar Defense and Securities Enforcement

The legal doctrine of “conscious avoidance,” which provides that a defendant who deliberately shields himself from clear evidence of critical facts is considered equally liable as one who has actual knowledge, continues to provoke debate. The doctrine, also referred to as “willful blindness,” can be critical in complex white-collar criminal cases, where the defendant’s awareness of others’ wrongful conduct is commonly a central issue. We recently addressed the doctrine in an article following the March 2014 conviction of five former employees of Bernard Madoff after a trial that turned almost entirely on the question whether the defendants had knowledge of Madoff’s illegal Ponzi scheme. More recently, Second Circuit Judge Pierre Leval issued a concurring opinion in United States v. Fofanah that provides a detailed and thought-provoking analysis of Second Circuit law regarding when it is appropriate to give a conscious avoidance charge to a jury. The opinion provides no comfort to those concerned that the doctrine is overused and threatens to permit juries to convict on a less culpable mental state than required by statute. [...]

Related Lawyers: Richard F. Albert

10.21.14 | Articles

Recent Rule 45 Developments: Notice and Geographic Limits

New York Law Journal

In this article, we discuss recent SDNY cases addressing the 2013 amendments to Federal Rule of Civil Procedure 45. These amendments were designed to simplify and clarify the scope and mechanics of pre-trial and trial subpoenas. 

Related Lawyers: Judith L. Mogul, Edward M. Spiro

10.15.14 | Blog Posts

Corporate State of Mind in Securities Cases: The Sixth Circuit Blazes a New Trail

The Insider: White Collar Defense and Securities Enforcement

Analysis of the corporate mens rea is, by definition, contrived and one with which federal courts have struggled. Unlike instances where an individual is charged with securities fraud, determining the “thinking” or “knowledge” of an artificial entity, sometimes comprised of thousands of disparate employees throughout the world, is a difficult theoretical undertaking. Until last Friday, corporate scienter generally was assessed by reference to one of two established approaches: traditional respondeat superior, where the company stands in the shoes of the relevant actors; or collective knowledge, where a company is charged with the knowledge of any of its agents, even those who may not have committed the offending conduct. [...]

Related Lawyers: Robert J. Anello

10.07.14 | Articles

SEC’s Possible Reality: All Enforcement Actions Filed Within Five Years

New York Law Journal

Enforcement actions seeking penalties long have been subject to the five-year statute of limitations set forth in 28 U.S.C. §2462. For years, the SEC has sought not to be tied down by a strict five-year limitation by arguing that the clock does not start to run until the alleged fraud is discovered by the agency—a position flatly rejected by the U.S. Supreme Court last year. The last arrow in the SEC’s quiver to avoid the five-year statute has been its argument that when it seeks so-called “equitable” remedies, like injunctions and disgorgement, the limitations period contained in Section 2462 is inapplicable. This final effort to avoid statutory time constraints also may be doomed. SEC v. Graham, a recent decision from the Southern District of Florida, if upheld, would require the SEC timely to investigate and file all enforcement actions regardless of the remedy sought. In this article, we discuss this case and other recent cases, and evaluate the role a change in §2462 would play in future cases.

Related Lawyers: Robert J. Anello, Richard F. Albert

10.01.14 | Blog Posts

Amid the Sunshine, Controversy Lingers: The Release of CMS's "Open Payments" System

The Insider: White Collar Defense and Securities Enforcement

In a March 2013 post on the Insider blog, we noted the issuance by the Centers for Medicare and Medicaid Services (CMS) of a long-awaited final rule mandating the collection of information regarding payments that drug and device manufacturers have made to physicians and teaching hospitals. As we noted in the post, the rule was promulgated pursuant to the “Physician Payments Sunshine” provisions that were part of the Affordable Care Act, and the goal of the rule was to provide transparency into the financial relationships that exist between physicians and industry. In a preliminary effort to assess the potential utility of the payment data that was to be released, our post reviewed the “Dollars for Docs” database that the investigative entity ProPublica maintains on its website, and found that while the ProPublica database provides extensive and noteworthy information, it perhaps raises more questions than it answers about the monetary relationships between medical professionals on the one hand, and manufacturers on the other. [...]

Related Lawyers: Robert M. Radick

09/19/14 | Articles

IRS Summons Enforcement After 'United States v. Clarke'

New York Law Journal

IRS agents conducting audits have the power to issue summonses requiring taxpayers and third parties to produce documents and testify under oath. In a summons enforcement action, the recipient of a summons can avoid providing the requested evidence by showing that the summons was issued for an improper purpose. This past term, the U.S. Supreme Court decided what showing a party must make to obtain an evidentiary hearing as to the propriety of a summons, concluding that the party must “plausibly rais[e] an inference of bad faith.” This article discusses the Court’s decision in United States v. Clarke and addresses the potentially significant questions that remain open.

Related Lawyers: Jeremy H. Temkin

09/12/2014 | Blog Posts

Did the Summer Shine Any Light on Dodd-Frank Whistleblower Land?

The Insider: White Collar Defense and Securities Enforcement

The summer saw a significant new development in the Securities and Exchange Commission's (“SEC”) whistleblower bounty program but failed to see any development on obtaining clarification as to the reach of the Dodd-Frank Act's whistleblower protection provision. While the SEC was busy finalizing the first-ever award to an employee working in the area of compliance, the courts were intent on taking a break from dealing with whistleblowing employees, and their SEC amici, to achieve clarity on the issue of whether reporting internally, but not to the SEC, is sufficient to fall within the protections of the Dodd-Frank Act’s anti-retaliation provision. [...]

Related Lawyers: Catherine M. Foti

09/02/2014 | Articles

Bank Secrecy Act Prosecutions: Why Few Individuals Are Charged

New York Law Journal

Following the 2007-08 financial crisis, government enforcement efforts have met with a recurring criticism – that individuals have not been held accountable for causing the unlawful conduct of institutions. This criticism has been directed at a series of high-profile prosecutions of banks for violations of the anti-money laundering requirements of the Bank Secrecy Act.

Below, we consider the relative scarcity of individual prosecutions in BSA cases and suggest that it lies in the nature of the criminal violations at issue, which focus chiefly on institutional failures to adopt adequate controls, and in the difficulties of investigating the extraterritorial conduct of global financial institutions. It is not surprising, in this light, that civil penalties have begun to receive heightened interest among enforcement authorities as a means of sanctioning and deterring individual misconduct—a development seen in other areas of white-collar enforcement since the financial crisis.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

08/27/2014 | Blog Posts

When The Government Chases the Tail of the Dog

The Insider: White Collar Defense and Securities Enforcement

Two recent white-collar cases are examples of a phenomenon that one tends to find when the defense is able to emerge victorious: a case with some core facts that simply do not fit the pattern of wrongdoing expected in the popular conception. The phenomenon is that of the case that trails behind, and that is missing the characteristics that ultimately matter most: the tail, not the dog. [...]

Related Lawyers: Richard F. Albert

08.26.14 | Articles

Shrinking Grounds for General Jurisdiction After 'Daimler'

New York Law Journal

The Supreme Court’s recent decision in Daimler v. Bauman, coupled with its 2011 decision in Goodyear Dunlop Tires Operations v. Brown, call into question whether certain long-held assumptions about the reach of CPLR 301—New York’s general jurisdiction statute—are consistent with due process. Daimler’s impact is already evident in decisions from the U.S. District Court for the Southern District of New York. We discuss below several of those recent decisions, which raise important questions about the scope of general jurisdiction in New York.

Related Lawyers: Edward M. Spiro, Judith L. Mogul

08/20/2014 | Blog Posts

Be Careful Where You Whistle While You Work: Courts Impose Limits on Dodd-Frank's Protection for FCPA Whistleblowers

The Insider: White Collar Defense and Securities Enforcement

The Dodd-Frank Wall Street Reform and Consumer Protection Act was heralded as providing whistle-blowing employees protection from retaliation by their employers. In Liu v. Siemens AG, handed down last week, the Second Circuit limited the reach of the Act’s anti-retaliation protections to domestic whistleblowers. In doing so, the Court rejected a claim brought by a Taiwanese lawyer employed by a German corporation who disclosed suspected Foreign Corrupt Practice Act violations by the corporation’s Chinese subsidiary, finding that the relevant provisions of the Dodd-Frank Act did not apply “extraterritorially” [...]

Related Lawyers: Robert J. Anello

08.05.14 | Blog Posts

D.C. Circuit Upholds Claim Of Corporate Attorney-Client Privilege

The Insider: White Collar Defense and Securities Enforcement

A recent blog post addressed a noteworthy decision in United States ex rel. Barko v. Halliburton Co., No. 1:05-CV-1276, 2014 WL 1016784 (D.D.C. Mar. 6, 2014), which held that materials relating to an internal investigation were not protected by the attorney-client privilege. The decision was quickly seen as casting doubt on a company’s ability to conduct a privileged investigation of alleged employee misconduct. A petition for writ of mandamus to the Court of Appeals for the D.C. Circuit followed, along with amicus briefs by groups interested in protection of the privilege. [...]

Related Lawyers: Jonathan S. Sack

08.05.14 | Articles

When The Government Searches Your Hard Drives

New York Law Journal

Government searches of ever more sophisticated technology and ever vaster quantities of electronic data implicate ever increasing stakes for individual privacy. Recent decisions from the Supreme Court and the Second Circuit demonstrate that courts are recognizing these stakes, and may be beginning to breathe more life back into the Fourth Amendment after years of cutting back on its protections. This article takes a look at the Second Circuit's ruling in United States v. Ganias, which reversed a tax evasion conviction based on the government's improper off-site search of hard drives, and discusses related Fourth Amendment issues that pose particular challenges when the government seizes digital media.

Related Lawyers: Robert J. Anello, Richard F. Albert


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