Publications

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

02.15.19 | 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

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

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

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

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

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

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

03.29.18 | Blog Posts

Where Do Search Warrants Come From?

The Insider: White Collar Defense and Securities Enforcement

On February 27, 2018, the Supreme Court heard oral argument in United States v. Microsoft Corporation. The central issue in the case – which is now likely moot in light of the passage of the CLOUD Act last week – is whether a United States-based provider of email services must disclose, pursuant to a warrant issued under the Stored Communications Act (“SCA”), digital material stored on servers abroad. Beyond this issue, however, the oral argument in Microsoft also touched on a statutory ambiguity relating to data stored here in the United States, the resolution of which could have important implications for federal criminal investigations. […]

Related Lawyer: Brian A. Jacobs

03.22.18 | Blog Posts

Different Results for Citigroup and Wells Fargo Derivative Claims

The Insider: White Collar Defense and Securities Enforcement

Following a spate of regulatory investigations and settlements, a shareholder derivative action was filed against Citigroup’s directors and officers, claiming that they had failed to meet their obligation to “oversee company employees’ compliance with law” under the landmark In re Caremark International Inc. Derivative Litigation decision. At first blush, the case deals with issues very similar to those considered in a separate shareholder derivative suit against Wells Fargo & Company, in which a federal district court in May and October 2017 denied motions to dismiss and permitted discovery to proceed – the subject of a separate blog post. However, in the Citigroup case (Oklahoma Firefighters Pension & Retirement System v. Corbat et al.), the Delaware Chancery Court granted the defendants’ motion to dismiss and then denied a plaintiff motion to reopen the case. It is instructive to consider the Chancery Court’s analysis in the Citigroup case and to contrast the allegations there with the issues in the Wells Fargo case. […]

Related Lawyer: Jonathan S. Sack

03.08.18 | Blog Posts

Prosecuting Corporations: NOT High on Administration’s To Do List

The Insider: White Collar Defense and Securities Enforcement

After a year of conjecture about the Trump administration’s approach to white-collar crime, the Justice Department has reinforced speculation of a relatively hands-off approach to corporate prosecutions. While asserting that it will hold individuals accountable for corporate criminal behavior, Justice Department leaders have stated that they will not “employ the hammer of criminal enforcement to extract unfair settlements” from corporate entities. In pursuit of that strategy, at the end of last year, federal prosecutors announced an initiative for leniency in Foreign Corrupt Practices Act cases where a corporation voluntarily discloses conduct in violation of the FCPA and cooperates with the government. Recently, the government displayed an intention to apply this policy outside of the FCPA context as well. [...]

Related Lawyer: Robert J. Anello

02.23.18 | Blog Posts

Dodd-Frank's Anti-Retaliation Protections Apply Only to Whistleblowers Who Report to the SEC

The Insider: White Collar Defense and Securities Enforcement

In Digital Realty Trust, Inc. v. Somers, a 9-0 opinion by Justice Ginsburg issued February 21, 2018, the Supreme Court held that the anti-retaliation provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act do not extend to employees who have reported internally but extend only to employees who have reported suspected securities law violations to the Securities and Exchange Commission. The Supreme Court's decision reversed the Ninth Circuit, and resolved a longtime circuit split. The Fifth Circuit has held that employees must provide information to the SEC while the Ninth and Second Circuits held that reporting internally is enough for employees to qualify for Dodd-Frank Act's anti-retaliation protections. [...]

Related Lawyer: Catherine M. Foti

02.20.18 | Blog Posts

Something Rotten in Denmark? The International Criminalization of Drug Advertising

The Insider: White Collar Defense and Securities Enforcement

Sometimes, when it comes to drafting posts for The Insider, a little digging can turn up remarkable results. This week’s post demonstrates the point, as it originates from short news stories that appeared recently in two journals that may not be so well known: Medwatch, based in Copenhagen, and Stat, headquartered in Boston. Both sites cover the pharmaceutical and health care industries, and both deserve considerable appreciation, because what they have uncovered is alarming and even disturbing: in the pharmaceutical industry, despite a recent increase in legal protections, you can still go to prison for posting truthful statements on social media about government-approved prescription medications. [...]

Related Lawyer: Robert M. Radick

01.10.18 | Blog Posts

Bitcoin Buyers Beware: The IRS Has Your Number

The Insider: White Collar Defense and Securities Enforcement

As the number and variety of cryptocurrencies on the market continue to grow, so does the scrutiny by government regulators. As noted in my prior post, the Federal Bureau of Investigation, Securities and Exchange Commission, and the Commodities Futures Trading Commission have developed units focused on cyber-threats, as have numerous foreign governments. Most recently, the Internal Revenue Service has joined the mix by investigating the ways in which taxpayers do – and more importantly, do not – report virtual currency transactions. Now Congress has gotten in on the action by amending the tax code to close a loophole that allowed cryptocurrency owners to exchange digital currencies without reporting the transactions on their tax returns. 2018 is likely to be a year of uncertainty for owners of cryptocurrencies, which may account in part for the double digit decline in the value of Bitcoins at the end of December. [...]

Related Lawyer: Robert J. Anello

12.20.17 | Blog Posts

An Unexpected Critique of the Grand Jury Subpoena Power

The Insider: White Collar Defense and Securities Enforcement

On November 29, 2017, the Supreme Court heard oral argument in Carpenter v. United States, which presents the question of whether the federal government must, under the Fourth Amendment, obtain a warrant before getting historical cell-site location records from cell phone service providers. Broadly speaking, the government argued that it did not need to obtain a warrant because individuals do not have a reasonable expectation of privacy in business records held by third parties (in this case, the cell service providers). Carpenter countered that the warrantless collection of data revealing people’s long-term movements so violates reasonable expectations of privacy that a warrant is required, notwithstanding that the data is possessed by third parties. [...]

Related Lawyer: Brian A. Jacobs

11.30.17 | Blog Posts

Wells Fargo Litigation Highlights Directors’ Obligation to Establish and Monitor Corporate Compliance

The Insider: White Collar Defense and Securities Enforcement

Fallout from the unauthorized opening of bank and credit card accounts at Wells Fargo has been immense. Thousands of employees, including the CEO, have lost their jobs, and several long-serving directors were forced to resign. The bank has thus far paid about $185 million in penalties and reportedly has reached and received preliminary approval for a proposed $142 million class-action settlement to compensate customers for accounts opened without their permission. Wells Fargo still faces ongoing investigations by the Department of Justice and Securities and Exchange Commission. [...]

Related Lawyer: Jonathan S. Sack

11.01.17 | Blog Posts

Let the Cyber Wars Begin: Federal Regulators Prepare Their Arsenal

The Insider: White Collar Defense and Securities Enforcement

Federal agencies have begun arming themselves for war against cybercrime. By the nanosecond, the ubiquitous Internet and related technology offer endless opportunities for wrongdoing. Notorious Russian hackers meddled in companies that manufactured and sold voter registration software and voting equipment to influence last year’s Presidential election. In September 2017, credit reporting company Equifax announced that sensitive financial data of over 143 million consumers had been hacked, exposing customers to identity theft. A Brooklyn man has been sued for operating a bitcoin Ponzi scheme to acquire $600,000 in unregistered fraudulent investments. The share prices of publicly traded companies have been manipulated through fake news shared and tweeted on social media. The speed of online innovation and the increase of online engagement makes it increasingly difficult to keep track of the latest digital developments, let alone any potential misuse of such technology. The annual cost of global cybercrime is predicted to double from $3 trillion in 2015 to $6 trillion in 2021. In response, federal regulators have started new units and initiatives to combat misconduct in the cyber world. [...]

Related Lawyer: Robert J. Anello

10.23.17 | Blog Posts

The Role of Publicity in Sentencing

The Insider: White Collar Defense and Securities Enforcement

Should defendants in cases that attract press coverage be given longer sentences than defendants in cases that pass unnoticed? The knee jerk response of anyone familiar with the basic principle of equality under the law would likely be a resounding “no.” And yet, as some recent cases have starkly demonstrated, courts can and do consider a defendant’s level of notoriety as a factor weighing in favor of harsher punishment. [...]

Related Lawyer: Brian A. Jacobs


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