Publications

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

04.30.14 | Blog Posts

Conducting Online Research Of Jurors Just Got Less Perilous – Or Did It?

The Insider: White Collar Defense and Securities Enforcement

Last week, the American Bar Association’s Committee on Ethics and Professional Responsibility (“ABA”) gave lawyers the go-ahead to scour jurors’ or potential jurors’ publicly available social-media accounts, blogs, and websites such as Facebook, LinkedIn and Twitter. Although lawyers might be expected to breathe a sigh of relief that they can now engage in conduct considered acceptable and expected for most other professions without the threat of professional discipline, the opinion actually adds to the confusion about how existing ethical rules are applied in the ever evolving world of social media. Indeed, just two and three years ago respectively, two different New York bar associations concluded that the conduct the ABA just approved could be considered a violation of New York’s Rules of Professional Conduct. Thus, whether and how an attorney can research his or her jury pool may depend entirely on where that jury is sitting. [...]

Related Lawyers: Catherine M. Foti

04.16.14 | Blog Posts

When Is An Internal Investigation Not Privileged?

The Insider: White Collar Defense and Securities Enforcement

Compliance programs have grown in importance along with the demands of new laws and regulations.  These programs are increasingly seen as vital to preventing corporate misconduct or, at least, mitigating sanctions if misconduct is found.

At the same time, company management needs to think through the scope of work assigned to compliance personnel, especially when questionable conduct is detected.  Under these circumstances, an important question should be addressed:  who should look into the misconduct – compliance staff or in-house or external legal counsel? [...]

Related Lawyers: Jonathan S. Sack

04.15.14 | Articles

A Lawyer's Privacy Interest – Real or Illusory?

New York Law Journal

New York attorneys have long relied on the New York Court of Appeals decision in Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn LLP to protect a category of documents within their files as to which the attorney, rather than the client, has a privacy interest and to which the client does not have a right of access. This article discusses Judge Gardephe’s recent decision in Gruss v. Zwirn highlighting the narrow scope of this privacy interest.

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

04.02.14 | Blog Posts

Punishment Without Cause: Disgorgement And Forfeiture Of Salary And Pensions

The Insider: White Collar Defense and Securities Enforcement

It has become popular among prosecutors and regulators in recent years to claim that officials who engaged in wrongdoing on the job should be forced to surrender every dollar earned on that job.  The U.S. Attorney for the Southern District of New York has issued a policy statement that his office will use federal forfeiture laws to seek to strip the pensions of state officials convicted on federal corruption charges.  Such policy mirrors the position often taken by SEC enforcement lawyers in seeking to disgorge all of the salary and bonuses earned by corporate officials found to have engaged in misdeeds.  The problem with these claims, both as a matter of law and as a matter of fairness, is that they most often fail the basic test of causation. [...]

Related Lawyers: Richard F. Albert

04.01.14 | Articles

Conscious Avoidance: An Over-Used Doctrine

New York Law Journal

This article, “Conscious Avoidance: An Over-Used Doctrine,” discusses the problems engendered by court interpretations of the evidentiary foundation required for a conscious avoidance jury instruction in criminal cases.

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

03.24.14 | Articles

Congress Weighs In On Offshore Enforcement

New York Law Journal

A recent report by the U.S. Senate Permanent Subcommittee on Investigations (PSI) criticized both the Department of Justice and the Internal Revenue Service for their purported "lax enforcement" of the use of offshore bank accounts to evade U.S. tax laws. The report and subsequent hearings, however, ignore significant progress in the pursuit of offshore tax evasion through both the IRS's Offshore Voluntary Disclosure Programs and the DOJ's Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks. This article discusses how Congress could contribute to the appropriate enforcement of the tax laws by fully funding both the DOJ and the IRS.

Related Lawyers: Jeremy H. Temkin

03.20.14 | Blog Posts

Medical Research Fraud And HHS's Office Of Research Integrity: Watching The Watchdog

The Insider: White Collar Defense and Securities Enforcement

Even for those who carefully follow legal developments in the health care fraud arena, the Department of Health and Human Service’s Office of Research Integrity (“ORI”) is an agency that rarely appears on the radar.  According to its website, ORI “oversees and directs Public Health Service (PHS) research integrity activities,” including the integrity of research projects funded by agencies such as the National Institutes of Health (“NIH”) and the Centers for Disease Control and Prevention.  ORI’s primary functions include such tasks as “monitoring” investigations that research institutions conduct when there are allegations of data falsification, and proposing administrative actions against medical researchers found to have fabricated the results of their studies. [...]

Related Lawyers: Robert M. Radick

03.13.14 | Blog Posts

Representing Clients In The Age Of Social Media Is Not As Easy As You Think

The Insider: White Collar Defense and Securities Enforcement

The proliferation of social media over the past decade has drastically changed how people communicate.  Without much thought, people publicly post detailed personal information and photographs documenting their whereabouts and moment-to-moment activities.  In the litigation context, the increase in use of social media has created enormous amounts of discovery material.  Most attorneys are well aware that the personal items and pictures posted on people’s social pages are ripe areas to learn about an opposing party, opposing counsel, potential witnesses, jurors and judges.  Law enforcement agencies too -- like the NYPD, which created a social media unit in 2011 -- are mining social media for information concerning past and prospective criminal activity.  Most laws and rules governing how attorneys may advise their clients concerning the handling of their personal information were developed in the pre-Facebook age.  But, the differences between social media and other forms of discoverable material have altered the legality of attorneys’ actions both substantively and ethically in ways that many attorneys would not expect and in ways that conflict with their experience and instincts.  One problematic – and largely unanswered – question is what advice an attorney can legally and ethically give to a client who has posted potentially incriminating or discoverable material on a social media website. [...]

Related Lawyers: Catherine M. Foti

03.06.14 | Blog Posts

Destitute Before Proven Guilty: Supreme Court OKs Asset Seizure In White-Collar Cases That Bars Defendants' Ability To Retain Counsel

The Insider: White Collar Defense and Securities Enforcement

The Supreme Court’s February 25 decision in Kaley v. United States creates a significant hurdle for white-collar defendants seeking to retain qualified counsel to defend against the government’s allegations.  Ruling that defendants cannot, prior to trial, challenge a grand jury’s probable cause determination that allows the government to bar a defendant’s access to assets linked to the alleged crime, the Court’s decision, according to the dissent, allows the government “to initiate a prosecution and then, at its option, disarm its presumptively innocent opponent by depriving him of his counsel of choice – without even an opportunity to be heard.”  In cases such as Kaley, where the government convinced the grand jury to charge on a novel or untested theory, the result poses a particularly difficult challenge for a white-collar defendant. [...]

Related Lawyers: Robert J. Anello


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