Publications

04.16.19 | Articles

When Misrepresentations During Settlement Conferences Become Sanctionable

New York Law Journal

In this article, we discuss Southern District Magistrate Judge James L. Cott’s recent decision in Otto v. Hearst Communications, addressing the potential for imposition of sanctions based upon misrepresentations during settlement conferences.

Related Lawyers: Edward M. Spiro, Christopher B. Harwood

04.11.19 | Articles

Are DOJ’s F/X Prosecutions Ahead of the Law on “Trading Ahead”?

New York Law Journal

Two recent prosecutions in the foreign exchange (F/X) market raise questions about the use of general criminal statutes to regulate a trading practice that Congress, specialized regulators, and market rules have declined to prohibit. Both cases deal with a practice that bankers refer to as pre-positioning, which the government pejoratively labels “trading ahead” or “front running,” in the context of complex, multi-billion dollar F/X trades between sophisticated parties. In this article, we discuss the appeal of the conviction in one such case and the court’s dismissal of the charges in the other.

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

04.02.19 | Articles

“Spoofing” as Fraud: A Novel and Untested Theory of Prosecution

Business Crimes Bulletin

In the past few years, the government has brought several prosecutions targeting “spoofing” activity in the commodity futures markets, with mixed results at trial. In this article, we survey recent prosecutions in which the government has attempted to prosecute spoofing activity under traditional fraud statutes, including commodities fraud and wire fraud, which requires the government to prove that a defendant made a false statement or a material misrepresentation. To make that showing, the government has argued that spoofing—bidding or offering with the intent to cancel the bid or offer before execution—involves an implied misstatement to the market regarding supply and demand and a defendant’s willingness to trade. In response, defendants (joined by financial industry associations) have forcefully criticized the government’s novel theory as an overly expansive application of the wire-fraud statute. How the federal courts address the applicability of traditional fraud statutes to spoofing-related activity will have significant implications for market participants.

Related Lawyers: Jodi Misher Peikin, Justin Roller

03.15.19 | Articles

Does the Sixth Amendment Apply to Restitution? Two Justices Say the Answer May Be Yes

New York Law Journal

Beginning with Apprendi v. New Jersey in 2000, the U.S. Supreme Court has extended the Sixth Amendment to the imposition of terms of imprisonment and fines. In recent years, defendants have argued that the reasoning of Apprendi also applies to restitution – a mandatory and increasingly significant aspect of white-collar sentencing. While this argument has failed in the circuit courts, two justices of the Supreme Court, dissenting from a denial of certiorari, recently suggested that the high court should look closely at the issue. In this article, we discuss the brief dissent of Justice Gorsuch, joined by Justice Sotomayor, indicating that the Apprendi doctrine might appropriately be applied to restitution in criminal cases. 

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

03.14.19 | Articles

Is the IRS Whistleblower Program Finally Reaching Its Potential?

New York Law Journal

Whistleblowing has become big business, resulting in thousands of submissions each year and generating billions of dollars in recoveries by the IRS. Over the years, however, whistleblowers and their lawyers have lodged several complaints regarding the IRS’s management of the Whistleblower Program. In this article, I discuss the Whistleblower Program, highlight a recent statutory change, which has led to a banner year for awards, and conclude that, in order for the Whistleblower Program to reach its full potential, the IRS could benefit from additional resources to allow it to investigate worthwhile leads on a more timely basis.

Related Lawyer: Jeremy H. Temkin

03.06.19 | Blog Posts

From Teapot Dome to Trump: How Congress Investigates Criminal Scandals

The Insider: White Collar Defense and Securities Enforcement

Since the House passed a resolution in 1792 to investigate the defeat of the United States Army at the hands of American Indians in Ohio (known as St. Clair’s Defeat), Congress has investigated hundreds of instances of possible misconduct by members of the executive branch. Today’s news is rife with reports of congressional investigations into potential obstruction of justice and more serious substantive crimes by President Trump and his immediate circle. Inevitably, the paths of congressional and criminal investigations into this type of misconduct overlap. History shows that this intersection can be fruitful, frustrating, and fraught with pitfalls. [...]

Related Lawyer: Robert J. Anello

02.20.19 | Blog Posts

Too Rich To Bail?

The Insider: White Collar Defense and Securities Enforcement

Recently, a federal judge in Brooklyn questioned whether the Bail Reform Act permits “disparate treatment based on wealth,” and denied bail to a high-net worth defendant who proposed a package that included home detention secured by privately-funded guards. In United States v. Boustani, U.S. District Judge William F. Kuntz II rejected the bail package proposed by Jean Boustani, an international businessman at the center of a $2 billion alleged fraud, bribery, and money laundering scheme that the government claims caused “staggering” losses to foreign and American investors and “devastated” the economy of Mozambique. In addition to what courts have called the “private prison” concept, Boustani’s proposed bail package included a $20 million personal recognizance bond secured by $1 million cash, and the surrender of travel documents by Boustani and his wife. [...]

Related Lawyer: Catherine M. Foti

02.19.19 | Articles

Sanctions Stick Even After Settlement

New York Law Journal

An order imposing sanctions catches the attention of litigants, sometimes even encouraging the parties to settle. When they do, the sanctioned party often will seek to have the sanctions award vacated as part of the settlement. Increasingly, judges are resistant to vacating sanctions orders. In this article, we discuss Southern District Judge Victor Marrero’s recent decision in Rogue Wave Software v. BTI Systems, which highlights the trend away from courts vacating sanctions orders just because the parties’ settlement agreement provides for it, and concludes that going forward, the more egregious the conduct leading to a sanctions order, the less likely it is that a court will vacate it.

Related Lawyers: Edward M. Spiro, Christopher B. Harwood

02.15.19 | Blog Posts

Peremptories And Prejudice: The Striking Role Of Employment Status In Jury Selection

The Insider: White Collar Defense and Securities Enforcement

It is a truth universally acknowledged, that a trial lawyer in possession of limited information about prospective jurors, may exercise strikes based on a juror’s employment status. Criminal prosecutors may strike jurors who are unemployed, in the belief that such jurors may be less socially connected, less accustomed to following rules, less experienced in making serious decisions (such as voting for conviction), and thereby potentially biased against the government and in favor of the defendant. Criminal defense lawyers, meanwhile, may strike jurors who are employed, for the inverse reasons. And in civil cases, as one commentator wrote, “[j]ury consultants consistently report that,” among other things, “long-term, unemployed people . . . tend to favor the plaintiff’s position.” Employment status can be an entirely reasonable reason for a trial lawyer to strike a prospective juror. At the same time, however, employment status can at times be misused by trial lawyers as a pretext to strike a juror when the real reason is the juror’s membership in a so-called cognizable group, such as a racial minority. In order to distinguish between a permissible and impermissible strike, judges should engage in extraordinarily careful fact-finding and analysis, as the stakes for both the lawyers and the parties run high. [...]

Related Lawyer: Brian A. Jacobs

02.14.19 | Articles

White-Collar Enforcement After Two Years of Trump

New York Law Journal

The halfway point of President Trump’s term offers an opportunity to examine and assess the impact of his administration on business-related prosecutions. In this article, we discuss the government’s shift in enforcement priorities, which focus on violent crimes, opioid cases, and most notably, immigration violations. We also highlight the decline not only in the number of traditional white-collar cases brought, but also in the amounts of fines and penalties imposed. Despite these numbers, however, the Trump Justice Department has remained aggressive and creative in its pursuit of individual wrongdoers in certain business-related areas, particularly in international corruption and foreign bribery.

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

01.23.19 | Blog Posts

The Harmless Error Standard on a Silver Platter

The Insider: White Collar Defense and Securities Enforcement

In United States v. Stewart, in a 2-1 decision, the Second Circuit vacated defendant Sean Stewart’s insider-trading conviction, holding that the district court erroneously excluded a key piece of impeachment evidence and that this error could not be excused as harmless. Although the opinion focused on the admissibility of evidence that impeaches hearsay statements, the majority’s defense-friendly application of the harmless error standard could have a greater impact in future criminal appeals. [...]

Related Lawyer: Brian A. Jacobs

01.17.19 | Articles

FBAR Penalties: Relief for Taxpayers?

New York Law Journal

By statute, taxpayers who fail to disclose accounts on a Report of Foreign Bank and Financial Account, commonly referred to as an FBAR, are subject to a maximum penalty of up to 50% of the funds in the undisclosed accounts. However, two recent district court opinions have held that the applicable regulations cap the FBAR penalty at $100,000 per undisclosed account. In this article, we analyze four recent cases that have split on the maximum permissible FBAR penalty and the implications of this debate.

Related Lawyer: Jeremy H. Temkin

01.08.19 | Articles

Government Misconduct in a Grand Jury Investigation: Is There a Remedy?

New York Law Journal

In cases of misconduct by the government, federal law strongly favors narrowly tailored remedies in criminal cases. The ultimate sanction, dismissal of an indictment, is reserved for the most extreme wrongdoing. In this article, we discuss the Second Circuit’s recent decision in United States v. Walters, which affirmed an insider trading conviction notwithstanding undisputed, improper leaks to news reporters by an FBI agent prior to indictment.  

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

12.19.18 | Blog Posts

Naughty or Nice: Is Trump's Hint of a Gift of a Pardon to Manafort Obstruction of Justice?

The Insider: White Collar Defense and Securities Enforcement

According to various media reports, President Trump’s Christmas list may include the gift of a pardon to his former campaign chairman, Paul Manafort. Many critics claim that the mere suggestion of a pardon to Manafort amounts to an obstruction of justice. The law on whether and when the nation’s chief law enforcer can be said to engage in obstruction is unsettled, although what is clear is that the president’s constitutional authority is not limitless. Other presidents have exercised their absolute power to pardon in questionable ways, but the question on everyone’s mind lately is whether Trump’s dangle of a pardon to Manafort, as distinguished from the act of pardoning, may constitute an obstructionist act. [...]

Related Lawyer: Robert J. Anello

12.17.18 | Articles

Specific Jurisdiction Through the Lens of New York Activity of Foreign Banks

In the past few years, the Supreme Court has issued a number of decisions emphasizing that the Constitution’s limits on personal jurisdiction have real teeth. In this article, we discuss Chief Judge Colleen McMahon’s recent decision in Nike v. Wu, which applied certain general principles of specific jurisdiction to the New York activities of a group of foreign banks against whom discovery was sought in the Southern District of New York in connection with a judgment enforcement proceeding.

Related Lawyers: Edward M. Spiro

12.04.18 | Articles

1MDB Scandal Tests Justice Department on FCPA and Corporate Prosecutions

New York Law Journal

The Justice Department’s prosecution of the 1Malaysia Development Berhad (1MDB) case illustrates how despite early predictions otherwise, Trump administration enforcement of the Foreign Corrupt Practices Act is alive and well. In this article, we discuss the 1MDB case and examine the extent to which the Justice Department will adhere to the Administration’s declared intent not to “employ the hammer of criminal enforcement to extract unfair settlements” from corporations where there is cooperation and evidence of a strong compliance structure.

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

11.21.18 | Articles

How Institutional Dynamics Have Shaped Insider Trading Law

The Review of Securities & Commodities Regulation

The past decade has brought multiple significant decisions in insider trading law, but has not substantially clarified the line between legal and illegal trading. In this article, we address how some degree of this lack of clarity can be traced to certain institutional dynamics at play in the courts issuing the relevant decisions. In particular, we look at both the Second Circuit’s uniquely strong preference for avoiding en banc review and the Supreme Court’s general preference for narrow decisions, and assess the ways in which these dynamics have shaped and may continue to shape insider trading jurisprudence.

Related Lawyer: Brian A. Jacobs

11.19.18 | Articles

Constitutional Questions in Corporate Internal Investigations

New York Law Journal

In recent years, the Department of Justice has made clear that when companies seek leniency they are expected to turn over incriminating information about current and former employees. In this article, we discuss recent criminal prosecutions in the SDNY and District of New Jersey in which the defendants claimed violations of their constitutional rights because corporate internal investigations became intertwined with federal criminal investigations.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

11.15.18 | Articles

What Will Justice Kavanaugh Mean for Criminal Tax Defendants?

New York Law Journal

Notwithstanding the controversy surrounding Brett Kavanaugh’s recent appointment to the Supreme Court, practitioners need to consider how he will impact the Court’s jurisprudence for many years to come. Regardless of what they think about Justice Kavanaugh’s record on other issues, criminal defense lawyers are likely to view his approach to the imposition of sentencing as somewhat of a mixed bag. In this article, we note that while Justice Kavanaugh has articulated concerns that the post-Booker regime has brought too much unpredictability to sentencing, his decisions have demonstrated deference to district judges, who frequently give defendants convicted of tax offenses the benefit of substantial downward variances.

Related Lawyer: Jeremy H. Temkin

10.15.18 | Blog Posts

Rethinking Corporate Monitors: DOJ Tells Companies to Mind Their Own Business

The Insider: White Collar Defense and Securities Enforcement

Since about the early 2000s, corporate monitors have become a go-to weapon for the Justice Department in its battle against business crime. Imposition of such monitors often results in the disruption of companies’ activities and expenditures of millions of corporate dollars – that might otherwise go to benefit shareholders. In line with its more business-friendly approach, Attorney General Jeff Sessions’ Department of Justice has signaled a retreat from such intrusion on businesses’ operations. Last Friday, Brian A. Benczkowski, the Assistant Attorney General in charge of the Justice Department’s Criminal Division, delivered a speech at New York University School of Law revealing this change in the Department’s approach to the use of corporate monitors. [...]

Related Lawyer: Robert J. Anello


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