Publications

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

07.23.14 | Blog Posts

Big Brother Vs. Underfunded Enforcement

The Insider: White Collar Defense and Securities Enforcement

On July 5, 2014, in an opinion piece entitled “The Real Internal Revenue Scandal,” the editorial board of The New York Times noted that “every dollar spent on internal revenue service enforcement yields $6 in additional revenue.”

I suspect that the SEC would make the same claim, that for every dollar spent on staff attorneys in the Division of Enforcement, the SEC recovers a multiple of that number. [...]

Related Lawyers: Lawrence S. Bader

07.16.14 | Blog Posts

Medicaid Claims And Health Care Fraud: As The Data Flows, New Cracks Emerge

The Insider: White Collar Defense and Securities Enforcement

As we noted in two of our prior posts in the Insider blog, the government has long touted its ability to rely upon data mining as a means of detecting fraud in the federal health care system, and has initiated a host of investigations and prosecutions based on its analysis of claims data from the Medicare and Medicaid programs.  Yet any approach that relies on data mining rests on a fragile foundation, because the quality of the information upon which the government relies has often been in doubt.  As we explained in the first of our two prior posts on this topic, an HHS Regional Inspector General testified in June 2012 that much of the data used to identify overpayments and fraud is not “current, available, complete, [or] accurate.”  Subsequently, in a post from November 2012, we described the concerns that two United States Senators raised regarding the effectiveness of the “Fraud Prevention System Program” (“FPS”), which is intended to use “predictive analysis” to reduce fraud, waste, and abuse in the Medicare program. [...]

Related Lawyers: Robert M. Radick

07.07.14 | Articles

SEC Enforcement Data Analyses: Volume 2, Issue 1

The third publication of Morvillo Abramowitz's SEC Enforcement Data Analyses examines the work of the Securities & Exchange Commission's Division of Enforcement, beginning with cases filed on or after January 1, 2013. This publication focuses primarily on cases filed between January 1, 2014 and March 31, 2014 and provides a useful tool to discern important enforcement trends and precedents. 

Related Lawyers: Lawrence S. Bader, Peter Janowski

07.03.14 | Blog Posts

The Second Circuit And The Separation Of Powers: Limiting Judicial Scrutiny Of SEC Settlements

The Insider: White Collar Defense and Securities Enforcement

On June 4, 2014, a three-judge panel of the Second Circuit Court of Appeals vacated a widely publicized 2011 decision by U.S. District Judge Jed Rakoff, which rejected a settlement between the U.S. Securities and Exchange Commission (“SEC”) and Citigroup Global Markets, Inc. (“Citigroup”).  The settlement resolved allegations that Citigroup had misled investors in connection with the structuring and marketing of a fund holding assets that were linked to subprime securities.  The settlement called for a civil penalty of $285 million but did not include admissions of fact or liability by Citigroup. [...]

Related Lawyers: Jonathan S. Sack

07.01.14 | Articles

False Statement Prosecutions: Major Change at Justice Department?

New York Law Journal

Under Section 1001 of Title 18, a wide array of false statements is subject to criminal prosecution, raising concern over the power the law gives to prosecutors. To the surprise of many, the Justice Department has recently taken a position on one element of a Section 1001 offense—“willfulness”—which at first blush would seem to make prosecutions under the law more difficult for the government. This article considers the Department’s position and its practical implications for white-collar defense lawyers and their clients. 

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

06.18.14 | Blog Posts

If You See Something, Say Something, But Maybe Only To The SEC

The Insider: White Collar Defense and Securities Enforcement

A debate has been raging in the courts over whether an employee who reports suspected misconduct only to his employer but not to the U.S. Securities and Exchange Commission (“SEC”) is a “whistleblower” entitled to the protection of the Anti-Retaliation Provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). Last summer, in Asadi v. G.E. Energy (USA), L.L.C., the Fifth Circuit Court of Appeals – the only federal appellate court to address this issue –ruled that an employee who reported a potential Foreign Corrupt Practices Act (“FCPA”) violation to his employer was not a “whistleblower” because he did not “provide information relating to a violation of the securities laws to the SEC,” contradicting five federal district courts which had found internal reporting to be adequate. (I analyzed the Asadi opinion and its likely effect on internal reporting in “When Is A ‘Whistleblower’ Not Really A ’Whistleblower’?”). A few district courts have since adopted the Fifth Circuit’s interpretation, but most have concluded that, consistent with the SEC’s own rules, internal reporting is sufficient to implicate Dodd-Frank’s protections. [...]

Related Lawyers: Catherine M. Foti

06.17.14 | Articles

Multidistrict Litigation: For Better or Worse

New York Law Journal

While consolidated multidistrict litigation may prove beneficial in terms of cost and efficiency, consolidating multiple complex cases in a single forum also comes with risk. The rules governing multidistrict litigation generally permit transfer back to the original forum for trial, but not all cases can be transferred back to their original jurisdictions. This article examines the application of law governing multidistrict litigation in the context of Apple's recent multidistrict antitrust litigation.

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

06.03.14 | Articles

Revisiting Criminal Insider Trading Liability

New York Law Journal

The insider trading conviction of Galleon Group founder Raj Rajaratnam continues to ignite debate on the breadth of federal insider trading law. In affirming Rajaratnam’s conviction, the U.S. Court of Appeals for the Second Circuit relied on its precedent, broadly imposing criminal insider trading liability where a defendant has knowledge of insider information without evidence that he actually relied on the information in making a trade. That question, which is central to Rajaratnam’s petition for certiorari to the U.S. Supreme Court, is the topic of this article.

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

05.22.14 | Blog Posts

Postcards From Paris To The U.S. – An Object Lesson For Those Who Favor Extraterritorial Jurisdiction By U.S. Courts And Regulators

The Insider: White Collar Defense and Securities Enforcement

This story comes to mind now because of the increasing influence of the United States on the world’s regulatory environment, imposing United States views of how things should be run on the rest of the world. This week, the Department of Justice announced that it had reached an agreement with Credit Suisse whereby Credit Suisse agreed to plead guilty to conspiracy to commit tax evasion in the United States and pay a penalty of $2.6 billion. Presumably, most of the conduct at issue took place outside of the United States. But because it had consequences in the United States, the United States government believed that it had the right to punish that conduct. [...]

Related Lawyers: Lawrence S. Bader

05.07.14 | Blog Posts

The British Are Coming: The Redcoats Get Serious About Prosecuting International White-Collar Crime

The Insider: White Collar Defense and Securities Enforcement

United States financial entities and their individual employees should be aware that a new sheriff is in town.  Last week, the United Kingdom’s Serious Fraud Office (SFO) brought criminal charges against three American bankers in connection with its ongoing investigation into the rigging of the interest rate benchmark known as LIBOR.  The SFO’s press release was two sentences in length: “Criminal proceedings by the Serious Fraud Office have commenced today against three former employees at Barclays Bank Plc . . . in connection with the manipulation of LIBOR.  It is alleged they conspired to defraud between 1 June 2005 and 31 August 2007.”  [...]

Related Lawyers: Robert J. Anello

05.06.14 | Articles

Scope of Disclosure When Investigative Reports Are Released to the Public

New York Law Journal

When a government investigation becomes widely known, negative publicity usually follows. The target of the investigation often looks for ways to influence public discussion, including issuance of an investigative report, as Governor Christie recently chose to do. This article considers the legal implications of releasing an investigative report, most importantly, the extent of further disclosure that may be required following its release.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack


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