Publications

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

10.15.18 | Articles

Privacy Trumps Right of Access to Judicial Documents in ‘Giuffre v. Maxwell’

New York Law Journal

Southern District Judge Robert W. Sweet’s recent decision in Giuffre v. Maxwell addresses the press’s application to unseal potentially salacious documents covered by a protective order in an action concerning allegations of sexual abuse. In this article, we discuss Judge Sweet’s analysis of the law in the Second Circuit on protective orders and the sealing of “judicial documents,” and the tension between the public’s right of access and interest in transparency in the legal system and the individual’s right to privacy.

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

10.11.18 | Articles

The Vanishing Federal Criminal Trial

New York Law Journal

Contrary to Hollywood’s fictionalized vision of our criminal justice system, a recent report from the National Association for Criminal Defense Lawyers confirms what many have recognized: trials are an endangered species. In this article, we discuss how the "trial penalty"-- the difference between the result a defendant may obtain by pleading guilty and the far harsher result that same defendant may receive if found guilty after trial -- has skewed our criminal justice system.   

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

10.04.18 | Articles

Hidden 'Time' Bombs in White-Collar Criminal Matters

Business Crimes Bulletin

Congress has armed the government with an arsenal of weapons to extend limitations periods in white-collar cases that prosecutors have used in increasingly creative ways that are often difficult for defendants to predict. In this article, we examine the various tools at the government’s disposal, including mutual legal assistance treaties in cross-border matters; FIRREA’s ten-year statute of limitations for frauds “affecting” financial institutions; criminal conspiracy charges; tax crimes; and war-time extensions. We highlight a recent decision in United States v. Bogucki, a wire fraud prosecution, which is a prime example of how the government may lie in wait before launching hidden “time” bombs to lengthen the applicable limitations period.

Related Lawyers: Robert J. Anello, Justin Roller

09.26.18 | Blog Posts

Corporate Health Care Fraud Prosecutions in the Trump Administration: It Ain’t Over Til It’s Over

The Insider: White Collar Defense and Securities Enforcement

As we near the two-year point since the election of Donald J. Trump to the White House, the topic of white collar crime continues to dominate the public conversation – but the conversation in fact consists of two distinctly separate streams of dialogue. The first, and plainly more prominent, relates to the conduct of the Trump administration itself. The Special Counsel investigation regarding Russian intervention in the 2016 election, the prosecution of Michael Cohen for violating campaign finance laws, Paul Manafort’s decision to cooperate with the Special Counsel following his trial conviction on counts of bank fraud and tax fraud, and the investigation of President Trump for a host of potential crimes – all of these matters have rightfully earned headlines and generated tremendous public attention. But a second stream of dialogue, while less present in the mainstream media, is nonetheless of significant importance as well. Indeed, it is this second topic – namely, how aggressively the Trump Administration’s Department of Justice will pursue investigations into white collar crime in general, and health care fraud in particular – that is understandably a subject of much import to the corporations and individuals whose conduct may be the focus of government scrutiny. [...]

Related Lawyer: Robert M. Radick

09.20.18 | Articles

‘United States v. Sertich’: Affirmative Obligations of Taxpayers

New York Law Journal

Under the Internal Revenue Code, employers are responsible for accounting for and paying over to the IRS taxes that they withhold from their employees. In United States v. Sertich, the United States Court of Appeals for the Fifth Circuit held that an employer who willfully fails either to account for or to pay over such taxes commits a felony under 26 U.S.C. § 7202. In this article, we address Sertich’s holding that, while Section 7202 lists a series of acts using the conjunctive “and,” the statute imposes mandatory obligations, all of which must be affirmatively fulfilled. Sertich is also noteworthy in its discussion of the government’s heightened burden of proving willfulness in criminal tax cases.   

Related Lawyer: Jeremy H. Temkin

09.20.18 | Articles

‘Obey-the‑Law’ Injunctions: Is Time Running Out for the SEC?

New York Law Journal

SEC enforcement actions are subject to a five-year statute of limitations on civil penalties, but the SEC has often been able to enlarge its time for bringing an action by seeking equitable relief, notably, “obey-the-law” injunctions and disgorgement. In recent years, however, courts have begun to curtail this de facto enlargement of the limitations period. In Kokesh v. SEC, the Supreme Court held that disgorgement is a penalty subject to a five-year statute of limitations. Following Kokesh, courts have begun to address another important question: whether so-called obey-the-law injunctions constitute a penalty subject to the five-year limitations period. In our latest article, we discuss a recent decision of Judge Nicholas Garaufis in SEC v. Cohen, which held that an obey-the-law injunction, like disgorgement, is a penalty subject to a five-year limitations period. 

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

8/21/2018 | Articles

In 'Ambac,' Judge Attempts to Make Sense of New York's Economic Loss Rule

New York Law Journal

New York’s economic loss rule, which acts as a check on asserting tort claims for purely economic damages, has long confounded practitioners. The rule, intended to preserve the distinction between contract and tort law and to protect defendants from disproportionate damages, has its most straightforward application in products liability and construction cases, but has been applied in a broad array of cases. In this article, we discuss a recent SDNY decision by Judge William H. Pauley III in Ambac v. U.S. Bank, which arises in the context of an RMBS case, but provides an interesting and informative lens for viewing the interplay between contract and breach of fiduciary duty claims under New York law.

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

8/16/2018 | Articles

Life After 'Booker': Insights From Federal Sentencing Data

New York Law Journal

Following the Supreme Court’s landmark 2005 decision in United States v. Booker, which transformed the United States Sentencing Guidelines from mandatory to advisory, the question of how sentencing judges would exercise their restored discretion has been a matter of great interest. In this article, we highlight insights from recent sentencing statistics and conclude that the data support the continuation of welcome trends: district courts exercising their restored discretion to tailor sentences individually, with increased regional differences and courts in the Second Circuit taking a leading role in mitigating the excessive harshness of the fraud guidelines.

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

7/19/2018 | Articles

The Full-Payment Rule Strikes Hard: A Look at a Recent Decision

New York Law Journal

It has long been settled law that a taxpayer challenging a tax deficiency assessed by the Internal Revenue Service in federal district court is required to “pay first and litigate later.” While taxpayers can obtain pre-payment review of such deficiencies in Tax Court, a recent decision by the United States Court of Appeals for the Second Circuit in Larson v. United States applied the so-called “full-payment rule” to preclude any judicial review of a civil penalty in excess of $60 million. In this article, we discuss this decision, its application of the full-payment rule, and potential impact on taxpayers.  

Related Lawyer: Jeremy H. Temkin

07.09.18 | Articles

Back to the Future: Criminal Insider Trading Under Title 18

New York Law Journal

In recent decades, the government has brought charges for illegal insider trading primarily under the securities laws, chiefly Section 10 of the Securities Exchange Act and Rule 10b-5. In this article, we discuss the recent SDNY prosecution in United States v. Blaszczak et al., in which the government charged insider trading schemes in violation of not only Rule 10b-5 but also Section 1348 of Title 18. We discuss the implications of the outcome at trial: acquittals on the Rule 10b-5 charges but convictions on the Section 1348 charges – even though the charges related to the same securities trading. 

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

06.26.18 | Blog Posts

Justices Call Foul on SEC’s Home Court Advantage

The Insider: White Collar Defense and Securities Enforcement

After the passage of the Dodd-Frank Act in 2010, the Securities and Exchange Commission increasingly began to rely on internal administrative proceedings in lieu of filing federal court cases for securities fraud violations. This allowed the agency to avoid a sometimes rigorous federal court system and retain what some believed was an unnecessary “home court” advantage by trying cases before an administrative law judge appointed by SEC staff that litigated before it. The Supreme Court’s opinion issued last week in Lucia v. SEC – a case in which the government’s position flipped with the change of administrations – calls into question the validity of reliance by the SEC, and perhaps other federal agencies, on ALJs. [...]

Related Lawyer: Robert J. Anello

06.21.18 | Blog Posts

Getting to Zero: A Hidden Variable Behind Cooperation Rates?

The Insider: White Collar Defense and Securities Enforcement

The United States Sentencing Commission publishes massive sourcebooks of federal sentencing statistics each year, which are available online going back to 1996. The sourcebooks contain numerous charts showing aggregate sentencing trends in federal cases throughout the United States, as well as charts showing a more limited number of sentencing trends on a district-by-district basis. The recently-published 2017 sourcebook contains a surprising number: 223. That’s the number of defendants who were sentenced as cooperators (with a 5K1.1 letter) in the Southern District of New York in 2017. The number is surprising because over the past 15 years, sentencing laws and practices have changed in ways that, to some degree, have reduced defendants’ incentives to cooperate, and the national cooperation rate has steadily fallen (from about 10,000 defendants a year in 2002 (or 17.4% of defendants) to about 7,000 defendants a year in 2017 (or about 10.8% of defendants)). And yet, the number of cooperators in the S.D.N.Y. last year—223—is exactly the same as the number of cooperators sentenced in the S.D.N.Y. fifteen years earlier in 2002: 223. (The percentage of defendants cooperating in the S.D.N.Y. in 2002 and 2017 is also about the same – between 15-16% of all defendants.) Why has the S.D.N.Y. cooperation rate remained at this level when the national data shows a decrease in the frequency of cooperation? A closer look at this question highlights an important factor for courts and counsel to consider in connection with cooperator sentencings. [...]

Related Lawyer: Brian A. Jacobs

06.19.18 | Articles

The Standard for Extending Discovery Deadlines

New York Law Journal

Last month Magistrate Judge Katharine H. Parker issued an interesting decision in City of Almaty, Kazakhstan v. Ablyazov. In this article, we highlight Judge Parker’s decision, which discusses the impact of the proportionality requirements in the Federal Rules of Civil Procedure on extension of discovery deadlines and articulates a five-factor balancing test to apply when considering requests to extend discovery. 

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

06.08.18 | Articles

Sessions' Justice Department's Pragmatic Approach to Corporate Accountability

New York Law Journal

Many of the administration’s enforcement priorities may raise serious concerns for criminal defense lawyers and other champions of legal rights. In this article, however, we discuss the “anti-piling on” policy announced by Deputy Attorney General Rod Rosenstein, which is intended to reduce the perceived unfairness of repeated punishments for corporate misconduct. The policy bespeaks a welcome change in DOJ leadership’s attitude toward corporate accountability, but how the policy will be applied in individual cases remains to be seen.

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

06.05.18 | Articles

When Is a Bid or Offer a 'Spoof'?

Business Crimes Bulletin

Following the government’s first criminal conviction for spoofing in United States v. Coscia, questions remain about what makes a commodity futures trader’s conduct illegal instead of a legitimate trading strategy. In this article, we analyze the confusion faced by commodity futures traders in assessing whether their trading strategies constitute illegal spoofing, examine whether the Commodity Futures Trading Commission (CFTC) and Seventh Circuit have provided sufficient guidance on the distinction between spoofing and legitimate trading activity, and highlight why the Supreme Court’s recent decision to deny Coscia’s petition for writ of certiorari will have significant consequences for the many spoofing actions currently pending before the courts, as well as for commodity futures trading in general.

Related Lawyers: Jodi Misher Peikin, Brent M. Tunis

05.17.18 | Articles

Beyond 'Marinello': Other Newly Relevant Obstacles to Criminal Tax Obstruction Cases

New York Law Journal

While the United States Supreme Court’s recent decision in Marinello v. United States may rightly be viewed as a bulwark against prosecutorial overreaching in tax cases, in his recent decision in United States v. Doyle, Judge Andrew Carter of the United States District Court for the Southern District of New York addressed evidentiary issues arising out of the government’s pursuit of tax obstruction charges in light of Marinello. In this article, we discuss how Judge Carter’s decision in Doyle not only shines an interesting light on post-Marinello litigation under section 7212(a), but also presents a cautionary tale to lawyers who make factual representations on behalf of their clients.

Related Lawyer: Jeremy H. Temkin

05.14.18 | Articles

Insider Trading, or Trading by an Insider?

New York Law Journal

Employees of public companies routinely have confidential information about the businesses of their employers. Because that information is sometimes “material” under the securities laws, opportunities to engage in insider trading are not uncommon. In this article, we discuss recent civil and criminal charges brought against Jun Ying, a former Equifax IT staff member, for trading in Equifax stock after concluding, without being expressly told, that Equifax had suffered a major data breach. The charges raise interesting questions as to when information should be deemed material for purposes of insider trading enforcement.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

05.07.18 | Articles

Marinello v. United States: SCOTUS Reins In the Tax Division

For The Defense

In Marinello v. United States, the Supreme Court rejected the government’s broad interpretation of the Omnibus Clause of the tax obstruction statute, 26 U.S.C. § 7212(a), thereby handing the white-collar defense bar an important victory. In this article, we discuss Marinello and conclude that it continues the Court’s efforts to cabin broadly-worded criminal statutes. By narrowing the scope of § 7212(a), Marinello provides defense lawyers with yet another tool to represent their clients and to push back against seemingly unbounded prosecutorial discretion.

Related Lawyers: Jeremy H. Temkin, Miriam L. Glaser

04.18.18 | Blog Posts

The Stormy Raid of Cohen's Office Strengthens the Attorney-Client Privilege

The Insider: White Collar Defense and Securities Enforcement

Despite tweets proclaiming the death of the attorney-client privilege, the government’s recent seizure of items from Michael Cohen, Trump’s personal attorney, actually serves to preserve and engender respect for the attorney-client privilege by demonstrating the limits of the privilege. The privilege is just that – a privilege, not a right – and the highly-publicized search of Cohen’s office, home, and hotel room reassures the public that an individual cannot hide behind the attorney-client privilege simply because they place an “Esq.” after their name. Even assuming the privilege applies in this case – which given recent revelations of the nature of the lawyer’s activity is debatable – the crime-fraud exception may well “trump” the privilege. That exception, which applies when a client or the lawyer seeks to use the attorney’s services or advice to commit wrongdoing, prevents the cloak of privilege from concealing communications engaged in for fraudulent or illegal purposes. Contrary to recent partisan declarations, this limit on the privilege, in addition to the procedural and legal safeguards that the government must navigate to seize materials from an attorney, insures public trust in the role of lawyers and the appropriate role of the privilege. If lawyers expect to continue to hold a trusted role in society, the proper contours of the important privilege with which they are entrusted needs to be understood and guarded. The crime-fraud exception prevents the exploitation of the attorney-client privilege, which would undermine the public’s respect for the privilege. [...]

Related Lawyer: Robert J. Anello


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