10.12.21 | Blog Posts

The Pandora Papers Shed New Light On The U.S. As A Tax Haven

The Insider: White Collar Defense and Securities Enforcement

Last week, the International Consortium of Investigative Journalists published the leaked cache of financial documents known as the “Pandora Papers,” consisting of more than 11.9 million confidential files from fourteen offshore services firms located in numerous countries. Publication of these files augments the existing trove of similarly sensational material revealed in prior leaks, including the Panama Papers, published in April 2016, and the Paradise Papers, published in November 2017, which detailed trillions of dollars of funds held “offshore” by taxpayers around the world. More so than in prior leaks, the United States plays a prominent role in the Pandora Papers—not just as a source of the immense wealth held offshore, or of the professional expertise facilitating such arrangements, but as an offshore destination in its own right.

Related Lawyers: Jeremy H. Temkin, Jasmine Juteau

09.17.21 | Blog Posts

The U.S. Sentencing Commission’s Inadequate Response To Covid-19

The Insider: White Collar Defense and Securities Enforcement

For the past 18 months, federal courts have grappled with the impact of Covid-19 on sentencing proceedings, and a curious disparity has emerged. On the one hand, anecdotal evidence suggests that federal judges are imposing more lenient sentences in recognition of how the pandemic has made imprisonment harsher and more punitive than in the past. On the other hand, reports available from the U.S. Sentencing Commission tell a different story—at least for now—suggesting that courts have to a great extent ignored the pandemic when imposing sentence. I have written in the past (here and here) about how the body of sentencing law is effectively hidden from public view (as it exists primarily in court transcripts). This dearth of readily accessible sentencing law is particularly problematic during the Covid-19 pandemic, as courts are grappling with novel issues in hundreds of cases. The U.S. Sentencing Commission is uniquely positioned to fill this gap, but so far has largely failed to do so.

Related Lawyers: Brian A. Jacobs, Rachel M. Fleig-Goldstein

09.13.21 | Blog Posts

Can the Capitol Insurrection Result in Prosecution of Members of Congress?

The Insider: White Collar Defense and Securities Enforcement

On August 30, the U.S. House Select Committee to Investigate the January 6th Attack on the United States Capitol (“Select Committee”) issued requests to various companies to preserve phone records for hundreds of people whose records the committee may want to review. The letters identified records for, among others, current members of Congress, suggesting the Select Committee may issue subpoenas to these companies to obtain personal data for the specified lawmakers. Not surprisingly, news of the preservation requests ruffled some lawmakers’ feathers and prompted questions about the enforceability of any subpoenas the Select Committee may issue. Congressional inquiry, however, may not be lawmakers’ only concern.

Related Lawyers: Robert J. Anello, Jorja Knauer

07.28.21 | Blog Posts

Will Justice Thomas Bring Consistency to Cannabis Regulation?

The Insider: White Collar Defense and Securities Enforcement

In recent years, the majority of states have enacted laws legalizing some form of marijuana use, with eighteen states and the District of Columbia allowing the recreational use of marijuana, and another eighteen states authorizing the use of marijuana for medicinal purposes.  The federal Controlled Substances Act (the “CSA”), however, continues to classify marijuana as a Schedule I controlled substance, criminalizing virtually all production, sale, and possession of marijuana.

Related Lawyer: Jeremy H. Temkin

07.27.21 | Blog Posts

Investors Are Entitled to Whistleblower Protection From the SEC

The Insider: White Collar Defense and Securities Enforcement

Earlier this month in “Companies Better Not Tread on Whistleblowers’ Right to Report,” I discussed the U.S. Securities and Exchange Commission’s action against Collector’s Coffee, Inc. and its CEO Mykalai Kontilai, and suggested that it might indicate the expanded reach of whistleblower protections under SEC Rule 21F-17(a). This week, a federal judge in New York issued an order in that case, (Securities and Exchange Commission v. Collector’s Coffee, Inc., No. 19 Civ. 4355 (VM)) confirming that Rule 21F-17(a) protects not only whistleblowing employees, but investors as well.

Related Lawyer: Catherine M. Foti

07.15.21 | Blog Posts

Digital Art May Be Next In The SEC’s Crosshairs

The Insider: White Collar Defense and Securities Enforcement

Like many other things, art and collectibles have gone digital. This year has seen explosive growth for NFTs, with NFT sales for 2021 already exceeding $2.5 billion. With the growing market for NFTs comes innovation, most notably the emergence of f-NFTs (“fractional non-fungible tokens”).  Where financial innovation goes, the SEC is bound to follow. F-NFTs are no exception. Although perhaps not intending to rain on the creative parade, in March 2021 comments, SEC Commissioner Hester M. Peirce sounded a note of caution, warning creators of f-NFTs to be careful that they are not creating securities that would be subject to regulation.

Related Lawyer: Robert J. Anello

07.09.21 | Blog Posts

Companies Better Not Tread On Whistleblowers’ Right To Report

The Insider: White Collar Defense and Securities Enforcement

Guggenheim Securities, LLC recently was fined $208,912 by the Securities and Exchange Commission for its policies prohibiting employees from contacting regulators without prior approval from the company’s legal or compliance departments.

Related Lawyer: Catherine M. Foti

06.16.21 | Blog Posts

Eleventh Circuit En Banc Ruling Fails To Resolve Key Issue Regarding Victims’ Right To Confer With Prosecutors

The Insider: White Collar Defense and Securities Enforcement

The Crime Victims’ Rights Act gives “crime victims” a right to “confer” with government attorneys and to be “reasonably heard” in the course of federal criminal prosecutions. The Act calls on federal courts to “ensure” that victims are “afforded” these rights. (See Abramowitz and Sack, “Victims’ Rights and White Collar Defense,” New York Law Journal (July 11, 2017)). An important procedural issue has arisen under the CVRA: when does a victim’s right to confer arise – before charges are filed in court, or only afterward.

Related Lawyer: Jonathan S. Sack

05.26.21 | Blog Posts

Crypto Goes Corporate: Litigation Sure To Follow

The Insider: White Collar Defense and Securities Enforcement

Until recently, cryptocurrencies appeared to be far from the kind of institutionally sound investments that would be attractive to CFOs looking to diversify a corporate portfolio.  Once seen as gimmicks for unsophisticated retail investors, many of whom purchased cryptocurrencies based on obscure internet nomenclature, nonsensical children’s songs, or even notable hip-hop artists, few would expect the notoriously volatile electronic currencies to find their way into corporate treasuries.  The joke appears to be over, or perhaps is just beginning to turn stale.  As executives have sought to stash excess corporate cash into electronic currencies, the novelty assets are now an increasingly popular option to add to corporate ledgers.  With this expansion into uncharted territory, however, comes additional risks, from both private litigation and regulatory scrutiny.  Likewise, as with any novel asset, CFOs must balance their desire to invest creatively with the concerns of wary shareholders.  On these fronts, cryptocurrencies present potential pitfalls for those charged with charting companies through modern-day legal and regulatory shoals.

Related Lawyers: Robert J. Anello, Anthony Sampson

04.29.21 | Blog Posts

President Biden To The IRS: Resources Are On The Way

The Insider: White Collar Defense and Securities Enforcement

While the IRS postponed “Tax Day” from April 15 to May 17 this year, tax enforcement has received substantial attention in recent weeks culminating in President Biden’s proposal to boost the IRS’s budget (previewed here and here). The desire to make a massive investment in the IRS is attributable to three interrelated issues: concerns regarding how to pay for the Biden administration’s domestic priorities; substantial increases in estimates of the so-called tax gap, which reflects the difference between the amount of taxes that are owed and taxes that are collected; and the perennial hope that revenue shortfalls can be filled through increased enforcement. While it is tempting to view increased enforcement as a panacea to cure budget shortfalls, it is important to be clear-eyed about just how much additional revenue can really be raised and how quickly the floodgates will open.

Related Lawyers: Jeremy H. Temkin, Mary Vitale

04.19.21 | Blog Posts

New Legislation May Portend Wave of Anti-Money Laundering Enforcement

The Insider: White Collar Defense and Securities Enforcement

January was not a quiet month in D.C. An outgoing president refused to concede the election, a mob stormed the Capitol, and a new President eventually was inaugurated. Amidst the chaos, one might be forgiven for overlooking what is likely to be the most consequential change in federal anti-money laundering laws in a generation: the Corporate Transparency Act.

Related Lawyers: Robert J. Anello

04.15.21 | Blog Posts

The Man On The Street And The Layperson With Common Sense

The Insider: White Collar Defense and Securities Enforcement

For many years, purportedly to preserve its renowned sense of collegiality, the Second Circuit heard fewer cases en banc than any other circuit court. On March 2, 2021, however, the Second Circuit issued an en banc opinion that could prove to be a harbinger of a new era featuring more en bancs and potentially less collegiality. In United States v. Scott, the en banc Second Circuit overturned a prior panel decision and held that New York first-degree manslaughter is a categorial crime of violence under the federal Armed Career Criminal Act (“ACCA”), which can trigger significant mandatory minimum sentences. Others have summarized the opinion elsewhere, and the holding itself is not particularly surprising. What is surprising, however, is the unusually harsh language that jumps out at a handful of moments in the majority and dissenting opinions.

Related Lawyers: Brian A. Jacobs, Bronwyn Roantree

03.08.21 | Blog Posts

Commissioner Rettig on the State of the IRS

The Insider: White Collar Defense and Securities Enforcement

In October 2018, after a long career representing taxpayers in civil and criminal tax controversies, Charles Rettig was sworn in as the 49th Commissioner of the Internal Revenue Service. Within 18 months of taking the helm, Commissioner Rettig faced a once in a lifetime pandemic that wreaked havoc on the entire country.

Related Lawyer: Jeremy H. Temkin

02.24.21 | Blog Posts

“SPAC-tacular” Growth Means More Enforcement Ahead

The Insider: White Collar Defense and Securities Enforcement

A once-derided investment vehicle, the SPAC is surging as investors turn the traditional IPO process on its head to streamline the public offering process and leverage a booming stock market. A company’s decision to assume the sometimes substantial undertaking to make an initial public offering (“IPO”) opens the floodgates to a deluge of regulatory obligations and disclosures about the details of its business operations. The payoff, however, can be vast; once the Company hits public markets, it has unparalleled access to capital and a bump in prestige.

Related Lawyers: Robert J. Anello, Anthony Sampson

01.27.21 | Blog Posts

The Masked Stinger

The Insider: White Collar Defense and Securities Enforcement

President Joe Biden’s Justice Department is widely expected “to ramp up white-collar crime” prosecutions, after former President Donald Trump’s Justice Department notched an “all-time low in white collar crime enforcement.” But how, exactly, will the Biden DOJ pursue such a goal? Under President Barack Obama, the DOJ garnered headlines (see here, here, and here) by investigating white-collar crimes using tactics—such as undercover officers and sting operations—that are usually reserved for street crime cases. If President Biden’s DOJ follows suit by stepping up the use of such tactics in white-collar cases, counsel and courts may find themselves revisiting the governing law.

Related Lawyers: Brian A. Jacobs, Margaret Vasu

12.16.20 | Blog Posts

‘Achoo . . . so sue me!’: Criminal Liability for Spreading a Virus

The Insider: White Collar Defense and Securities Enforcement

Aside from worrying about being sued, individuals who spread the coronavirus also have to be concerned about being prosecuted. Dozens of Americans have been charged with coronavirus-related crimes since the beginning of the pandemic, ranging from people who have intentionally tried to infect others with Covid-19 to people who simply have disobeyed public health orders. Common criminal charges include making a terroristic threat, spreading a communicable disease, assault and battery, reckless endangerment, harassment, and disorderly conduct. [...]

Related Lawyers: Robert J. Anello, Chelsea L. Scism

12.10.20 | Blog Posts

IRS-CI’s Annual Report And The State Of Enforcement

The Insider: White Collar Defense and Securities Enforcement

On November 16, the IRS Criminal Investigation division issued its annual report for the fiscal year ending September 30, 2020, which touts recent achievements and may foreshadow a rise in IRS enforcement. The report highlighted IRS-CI’s noteworthy achievements last year, including identifying over $2.3 billion in tax fraud, which represents an increase of $500 million (almost 28 percent) from fiscal year 2019. The report further noted that IRS-CI had initiated 1,598 investigations and recommended 945 prosecutions, up slightly from the previous year, when it initiated 1,500 investigations and recommended 942 prosecutions, but not quite returning to 2018 levels of 1,714 investigations and 1,050 recommended prosecutions. report noted that IRS-CI now has 2,030 Special Agents. While that represents a modest (1%) increase over the prior fiscal year, it is still below the 2,100 agents in place in May 2019, when IRS-CI was pushing to expand its ranks. [...]

Related Lawyer: Jeremy H. Temkin

11.08.20 | Blog Posts

How A Supreme Court Case About The Affordable Care Act Could Change Federal Criminal Law

The Insider: White Collar Defense and Securities Enforcement

On Tuesday morning, the Supreme Court will hear oral arguments in the latest case challenging the Affordable Care Act (“ACA”), once again placing the Court at the center of a dispute affecting the healthcare of millions of people around the country. The Court’s ultimate decision will be important in its own right, but the case also bears scrutiny because it could potentially have unintended but lasting consequences for federal criminal law as well. [...]

Related Lawyers: Brian A. Jacobs, Chelsea L. Scism

10.27.20 | Blog Posts

How DOJ Shows It “Cares” About CARES Act Fraud

The Insider: White Collar Defense and Securities Enforcement

No good deed goes unpunished. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which endeavors to give struggling small businesses free money, reportedly has been rife with abuse. In a noble rush to put emergency funds in the hands of Americans in need, the U.S. Small Business Administration (SBA) relaxed many federal loan safeguards, giving the unscrupulous the perfect opportunity for fraud. The U.S. Department of Justice already has begun investigating and prosecuting individuals who have attempted to steal CARES Act funds and has relied on tips from major financial institutions to do so. As new evidence comes to light in the coming months, we can expect DOJ to continue escalating its enforcement efforts. [...]

Related Lawyers: Robert J. Anello, Chelsea L. Scism

10.22.20 | Blog Posts

Jury Trials in the Time of Covid

The Insider: White Collar Defense and Securities Enforcement

The mail arrived the other day and there it was, the blue, slightly larger than letter-size envelope with the words “JURY SUMMONS ENCLOSED” blazoned on the front. I was being called for jury duty at federal district court just as the upturn in the curve indicated an increase in Covid-19 cases. But, unlike in the past, where the envelope’s contents provided little guidance as to what the process of jury selection would entail, it now included a personal letter from the Chief Judge describing the steps the court is taking to protect jurors from Covid. It also contained a questionnaire aimed at determining whether I might be infected with Covid or might present a danger of infecting others – questions that now are all too familiar but are new to the process of jury service. [...]

Related Lawyer: Catherine M. Foti

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