This Shouldn’t Be News: Second Circuit Affirms that Government Needs Warrant to Seize Property

business concept. money with handThe government’s aggressive methods to seize a defendant’s assets before he is convicted of a crime hinders a defendant’s ability to choose—and pay for—his lawyer.

A recent Second Circuit case limits the government’s ability to do so. It is based on the most fundamental of constitutional principles: the government may not seize property without a warrant.

In United States v. Cosme, the court held that the government must obtain a warrant to seize bank accounts and other property and to hold those assets during a criminal case. The court chided the government for its creative use of civil and criminal forfeiture statutes to avoid putting the forfeiture either to a grand jury or magistrate judge’s review.

If it seems surprising that the Department of Justice needed to be reminded that the Fourth Amendment exists, then you must not be familiar with the scorched-earth tactics of the prosecutors in the Southern District of New York. Unless a court tells them that they can’t do something, then they will. This case is no exception.

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Posted in Appeal, Criminal Forfeiture, Fourth Amendment, Wire Fraud | Leave a comment

Will the New DOJ Policy End Joint Defense Agreements?

Young corrupted businessman behind the prison barsThe white collar world is abuzz about DOJ’s new policy requiring companies to identify the individuals involved in wrongdoing to get cooperation credit.

Joint defense agreements between companies and their executives allow the targets of a criminal investigation to work together to uncover what happened, and, perhaps, to formulate a joint defense to any charges. Does this new policy mean the end of joint defense agreements as we know them?

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Posted in DOJ Statements, Joint Defense Agreements | Leave a comment

Will the United CEO Resignation Have Unintended Consequences for the Airline Antitrust Case?

Professor Randall Eliason has written an excellent blog post on the resignation of Jeff Smisek, the CEO of United Airlines, and two other executives. The media reports have focused on Mr. Smisek’s possible role in the Bridgegate scandal.

As background, The New York Times explained:

United Airlines abruptly replaced its CEO as a federal investigation continued into whether the airline gave preferential treatment to the former chairman of the agency that operates the New York-area airports.

United Continental Holdings Inc. said Tuesday that Jeffery Smisek and two other senior executives had stepped down. Oscar Munoz, a railroad executive and head of United’s audit committee, was named CEO and president.

Federal prosecutors are probing United’s ties to David Samson, the former chairman of the Port Authority of New York and New Jersey. United began a direct flight between Newark, New Jersey, and Columbia, South Carolina, where Samson has a summer home, while he was chairman and ended it days after he resigned last year. United, the dominant airline at Newark Liberty International Airport, was negotiating with the Port Authority over projects at the airport at the same time.

What I keep wondering is whether these United resignations may have some unintended consequences for the entire airline industry.

There is a major, ongoing, high-profile investigation into possible antitrust violations by the airline industry. American Airlines and Southwest Airlines have confirmed that they have received subpoenas. As Bloomberg reports:

U.S. airlines face an antitrust investigation by the Justice Department into whether they are discussing how to control the supply of seats, a crucial factor in determining fares.

American Airlines Group Inc. and Southwest Airlines Co. confirmed receiving Justice Department requests for details of conversations, meetings and conferences where industry capacity was discussed. The department said an inquiry was under way into possible coordination among carriers but wouldn’t give details.

Perhaps even more important, United has been contacted about the antitrust investigation as well.

If Mr. Smisek has information about the antitrust issues being investigated, well, that could prove very useful to the Department of Justice. A massive antitrust conspiracy is much sexier than setting up a flight to benefit a Port Authority official.

If Mr. Smisek has this kind of information–information that could implicate others at United or other airlines–then he could decide to cooperate with DOJ in the antitrust investigation in an attempt to avoid being charged in the Port Authority matter.

This wouldn’t be the first time an individual investigated in one matter turns out to be a cooperator in another one. Knowing a company’s secrets is a powerful thing.

I have no inside baseball here. But I wonder, I wonder, I wonder…

Posted in Antitrust | Tagged , | 1 Comment

The Deleted Email Folder “Is Not Like a Trash Can”: Ninth Circuit Affirms Acquittal in Obstruction Case

3D red dice with win text on all sides

One of the first things I tell a potential client in a criminal case is not to delete anything from his computer. I explain that DOJ will turn deleting an email or two into an obstruction of justice charge. The client will nod and say he understands.

Then he probably goes home and deletes a bunch of emails.

I can’t blame him. It’s a natural temptation to delete incriminating evidence—electronic or not–when you find out that the government is investigating you. In a recent case, however, the Ninth Circuit affirmed a post-verdict judgment of acquittal for a defendant who may have tried to do just that.

The Ninth Circuit’s opinion delved into a surprising amount of detail to describe why a reasonable jury could not have found that Andrew Katakis’ conduct warranted an obstruction conviction. This is a very fact-specific case, but there are a few pointers for every white-collar lawyer here.

Here’s what happened.

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Posted in Appeal, Obstruction, Uncategorized | Leave a comment

First, We’ll Blame the Lawyers: Second Circuit Grants New Trial in Remarkable Jury Taint Case

This is the klies stampind of case that wakes up lawyers in a cold sweat at night.

The Second Circuit recently granted a new trial to a defendant after the trial court found that he had waived his right to a new trial. The waiver came when his lawyers discovered the possibility that a juror had lied during jury selection but did not raise it until after trial when they had actual knowledge of the lies.

A lot of potential jurors may avoid the truth during voir dire. They don’t to be put on the jury, so they will come up with all sorts of reasons to get out of it. In this case, though, a juror lied to stay on the jury.

The lawyers did everything right, in my view. The trial court concluded that it wasn’t enough. The punishment was visited not on the lawyers but on their client. Luckily, the Second Circuit saved the day.

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Posted in Appeal, Jury issues, Tax fraud, Uncategorized | 2 Comments

A Rough Season for Firms Involved in Internal Investigations–Defamation Cases Continue

footballThe Nationals are having a rough year–despite all those World Series predictions. Are you ready for some football?

I have posted before about a defamation suit against the investigative firm that looked into the Penn State sex abuse scandal. The trend continues.

The Miami Dolphins are in DC for the regular season opener against the Washington team.* Former Dolphins coach Jim Turner recently filed a defamation complaint against against Ted Wells and his firm, Paul Weiss. Paul Weiss investigated and issued a report about the Miami Dolphins bullying scandal a few years ago.

This situation is eerily similar to the Penn State case.

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DOJ’s New Approach to Insider Trading Cases? It’s Not Working Yet

Win red dicePeter J. Henning, in the always-interesting White Collar Watch, has a great article today about what may be the Department of Justice’s newest way to weasel out of the Newman decision.

The defendant in an insider trading case in Atlanta was just acquitted at trial of all insider trading charges. Steven Slawson, a New Jersey hedge fund manager, was accused of using insider tips to trade in stock in Carter’s. Two former Carter’s executives had been convicted of insider trading in a related case.

DOJ relied on what may be its newest approach to charge defendants with insider trading.

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The Danger of Opening the Door: Federal Judge Rules that KBR Corporation Must Turn Over Privileged Documents in False Claims Act Case

open doorEvery trial lawyer has a few tried-and-truisms to use in the courtroom. For the admissibility of evidence: That goes to weight, not admissibility. For expert witnesses: The testimony would be helpful to the jury. And for relevance: They opened the door.

A recent ruling out of the Eastern District of Texas shows just how powerful the “opened the door” argument can be.

The government sued KBR, one of its employees, Robert Bennett, and several of its subcontractors based on supposed false statements under the False Claims Act. Just before closing arguments in the case, the court ruled that the company had to turn over to the government the company’s report of an internal investigation into supposed kickbacks to Mr. Bennett. One of the reasons for disclosure was based on testimony KBR had elicited during the trial.

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Posted in Commercial Bribery, Government contracting fraud, Kickbacks | Leave a comment

Please Take 2 Minutes to Nominate Grand Jury Target for ABA Journal’s Top 100 Legal Blogs

Hello everyone

I’m writing from Yosemite National Park–on a much-needed vacation with my family. But I realized upon checking back into social media after a week-long break that the deadline for the ABA Journal’s best 100 legal blogs is coming up very soon.

Someone coined the word “blawg,” but I just can’t quite bring myself to use it. It’s a legal blog, people.

Nominations must be made by August 16 (that’s this coming Sunday).

You can use this link to nominate any blog you wish, though I would be very appreciative if you would consider nominating this one. I work hard every week (well, nearly every week) to write substantive and hopefully interesting posts about cutting edge white collar issues.

I’ll keep writing even if I don’t win any awards, but, hey, I’d rather be on the list than not on the list. If I’m on it, I get to use a cool badge on my blog. Pretty geeky bragging rights, I realize.

Thank for considering my request. And even if you don’t nominate me, go nominate some other great blog that you love to read.

I’m heading to the Nats-Giants game in San Francisco tomorrow night so look for us on TV. We’ll be on the right field line near the Nats dugout–a prime spot for Bryce Harper to toss my sons a ball or two. That’s no doubt more exciting than any hike in Yosemite.



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Absurd Obstruction Charge Reversed–But the Government Won’t Give Up

Win red diceSometimes, the good guys win.

The Deepwater Horizon oil spill was a tragedy. The explosion was deadly and the resulting environmental harm was devastating. The government’s response was typical: let’s find some people to prosecute.

One of the unlucky targets of the government’s focus was a BP engineer named Kurt Mix. He wasn’t the head of operations on the drilling platform, nor was he the person who oversaw any faulty construction of the platform. Nope, he was just an engineer who flew to the site to help calculate the number of gallons of oil leaking from the well.

Mr. Mix was convicted of one count of obstruction of justice for deleting a few text messages related to the spill. However, the Fifth Circuit recently reversed his conviction because there was evidence that one of the jurors had been exposed to extrinsic evidence about the trial during deliberations.

The amount of extrinsic evidence was slight but the court nonetheless concluded that it was sufficient to taint the verdict. For now, Mr. Mix is the victor but it appears that the government does not intend to go gently into that good night. The retrial is currently set for November 2015.

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Posted in Appeal, Obstruction | Tagged | Leave a comment