Is DOJ Stuck With Its Positions in the “Updated” Roger Stone Sentencing Memo?

Tubes With Epoxy GlueBy Sara Kropf

The Department of Justice’s “supplemental and amended” sentencing memorandum in the Roger Stone criminal case is nothing short of extraordinary. You can find a copy of the updated Stone memo here.

Lots of commentators have hit the high points about this bizarre filing: First, four DOJ career attorneys withdrew from the case in its wake. Second, the Department of Justice doesn’t – just doesn’t – file updated sentencing memoranda that ask for lower sentences. Third, there are the obvious political ramifications here since it appears to be a naked play by Attorney General William Barr to help an ally of President Trump.

I’ll stay away from the politics side of things.

I’ll also point out that the original recommendation by DOJ of 7 to 9 years in prison was extremely high, given the offenses to which Stone was found guilty. From a defense lawyer perspective, a lesser sentence is definitely more appropriate.

I was more intrigued by how my fellow defense attorneys could use the memo to our own advantage in future cases.

Maybe by using the doctrine of judicial estoppel? (Spoiler: this probably won’t work.)

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Why Do Prosecutors Consistently Get the Benefit of the Doubt on Intent for Brady Violations?

unfair to fair on white paperBy Sara Kropf

In most white-collar cases, intent is the key issue. The government generally has to prove that the defendant intentionally acted to break the law and it wasn’t simply a mistake or an oversight.

Circumstantial evidence is enough to prove intent, and, at trial, prosecutors routinely argue to juries that they can infer criminal intent from the defendant’s acts.

For example, take a wire fraud case based on  misleading statements made to investors about a company’s financial position. The prosecutor may point out that (1) the defendant’s business needed investors’ money, (2) the defendant had access to the company’s financial statements before he made the statements but didn’t confirm them, (3) the defendant said it was just an “oversight” that he gave the investors the wrong numbers.

Therefore, the defendant must have intended to defraud the investors, right?

This isn’t a travesty of justice or anything. Directly proving intent is usually impossible. Unless someone is dumb enough to write down, “I intend to defraud people today,” then proof of intent will have to come from circumstantial evidence.

As often as prosecutors  make these arguments, judges and juries routinely buy them.

When it comes to finding if a prosecutor acted intentionally for a Brady violation, though, the bar for proving intent is set a lot higher. Judges who consistently conclude defendants are guilty based on circumstantial evidence of intent suddenly look for every reason to ignore circumstantial evidence that a prosecutor intended to withhold Brady material to prejudice the defendant.

A recent case in New York is a good example. The court found a Brady violation and even dismissed the charges—an incredibly rare outcome. However, the court refused to find that the prosecutor deliberately withheld Brady material. This material included a 38-minute sworn statement by the key cooperating witness (who received the supposed bribes) that he never took any bribes at all.

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Posted in Brady violations, Discovery/Brady, Dismissal of charges in indictment, Uncategorized | Leave a comment

Did the Fourth Circuit Just Outlaw Taint Teams? Nope, But It Threw Up Some Roadblocks

Metal Wheel ConceptBy Sara Kropf

Taint teams are dubious at best. A taint team is a group of government agents or prosecutors selected to review material seized through a search warrant to determine whether any of the material is protected by the attorney-client privilege. If it is, then the team segregates the privileged material to ensure that the prosecuting team doesn’t see it.

We’ve written before about taint teams here and here.

Taint teams are intended to protect the attorney-client privilege. That’s hard to believe when the people in charge of determining whether a privilege exists are the ones most likely to find that it doesn’t exist. Prosecutors aren’t exactly known for their expansive view of the privilege, given that assertion of the privilege may prevent the government from obtaining evidence in a case.

Most judges asked to evaluate the fairness of a taint team procedure reflexively approve it. That’s what makes a recent decision from the Fourth Circuit all the more startling. The decision granted a temporary restraining order in favor of a law firm whose files were seized and were to be reviewed by a taint team. In re Search Warrant Issued June 13, 2019, 942 F. 3d 159 (4th Cir. 2019) (King, J.).

Apart from the excellent outcome, the opinion calls all taint teams into question and sets some serious, practical limitations on how they should be approved by a magistrate judge.

In sum (if you don’t want to read this long post): the Fourth Circuit stopped a taint team from reviewing materials seized from a law firm, concluding that the magistrate had “disregard[ed] the foundational principles that serve to protect attorney client relationships” and holding that this particular taint team protocol improperly delegated the judicial function of resolving privilege disputes to the executive branch.

There are a lot of good quotes, but here is my personal favorite:

We simply observe that prosecutors have a responsibility to not only see that justice is done, but to also ensure that justice appears to be done. Federal agents and prosecutors rummaging through law firm materials that are protected by attorney-client privilege and the work-product doctrine is at odds with the appearance of justice.

I’m sure other courts will limit the opinion’s reach, but the decision could be read to prohibit taint teams where the defense does not have a chance to challenge in court the privilege designation made by the taint team—before the prosecution team sees the documents. It also casts serious doubt on ex parte magistrate approval of taint team protocols without an adversarial process.

Let’s take a deeper look at the opinion.

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Posted in DOJ policy and practice, Search warrant, Taint teams | Leave a comment

Another Insider Trading Court Decision: Making Life Easier for the Government

Handcuffed in suit.jpgBy Dan Portnov

2019 ended with Congress trying to tackle insider trading but 2020 begins with the Second Circuit Court of Appeals once again commanding center stage in defining the elements of the offense. In United States v. Blaszczak (issued on December 30, but no one was paying attention), the court considered insider trading charges based under a newer criminal securities fraud law: Title 18 Section 1348.

The Blaszcak decision made clear that the Second Circuit’s insider trading precedent—Dirks, Newman, et al.—only applied to insider trading cases brought under the 1934 Exchange Act (Title 15 Section 78a). As a result, prosecutions brought under § 1348 should be easier to prove than charges of insider trading in violation of Exchange Act Section 10 or Rule 10b-5 promulgated thereunder.

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Posted in DOJ policy and practice, SEC Investigation, Securities fraud | Leave a comment

Year End Review: Big Firm News and the 5 Most Popular Posts in 2019 (Yours and Ours)

Top 10 LetterpressBy Sara Kropf

We had a big year at Law Office of Sara Kropf. The biggest news is that we don’t exist anymore.

Not to worry, though. Andrea Moseley joined the firm, and we are now Kropf Moseley PLLC. With three lawyers, we are practically a legal empire.

We’re still trying to convince Andrea to write for the blog, and hopefully she’ll do a post or two this year. Andrea handles white-collar criminal matters, as well as lawyer disciplinary work and civil litigation. She knows the Virginia courts backwards and forwards, including the always-intimidating EDVA.

Onwards! Let’s look back at which posts were the most read this year and the ones that we had the most fun writing.

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Posted in Uncategorized | 1 Comment

Congress Tackles Insider Trading

Envelope money.jpgBy Dan Portnov

Not busy enough with impeachment in the run up to the holidays, the U.S. House of Representatives on December 5 passed a bipartisan bill to prohibit insider trading. The Insider Trading Prohibition Act passed by a vote of 410 to 13 and now awaits a Senate vote and then, if passed, a review by the President.

This is not the first time that Congress has sought to explicitly ban insider trading by statute. The bill still has a long way to go before it becomes law, but it does attempt to offer clarity to a body of law that has caused much hand-wringing from the defense bar over the past few years.

So, what does this bill say, and what would it mean to future insider trading prosecutions?

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Posted in DOJ policy and practice, SEC Investigation, SEC policy and practice | 1 Comment

Michael Cohen’s Sentencing Reduction Request Reveals the Minuscule Bargaining Power of a Cooperating Defendant

unfair to fair on white paperBy Sara Kropf

Back in September 2018, I wrote about how Michael Cohen was pleading guilty without the benefit of a cooperation agreement. I said that it was possible that the government would later file a Rule 35 motion, seeking a reduction in his sentence based on his later cooperation.

I was about half right.

On December 11, 2019, Mr. Cohen filed a Rule 35 motion himself. He seeks a reduction of his 36-month sentence to a year-and-a-day sentence (or home confinement) or a hearing to “explore, evaluate and quantify the cooperation which Defendant Michael Cohen provided the United States Government.”

The affidavits provided with the motion reveal what white-collar (and non-white-collar) criminal defense lawyers already know: there is no bargaining power when you are a cooperating defendant.

It’s easy to get distracted by the rather colorful affidavit in support of the motion filed by Mr. Cohen’s lawyer, Roger Adler. It’s an entertaining read and devoid of the legalese that peppers typical briefs.

I was struck by how this case—unusual as it is—is truly indicative of how little bargaining power a cooperating defendant has against DOJ. It’s not a fair fight.

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Posted in DOJ policy and practice, Sentencing | Tagged | 2 Comments

The Hoskins Prosecution Comes To An End

Judge gavel.jpgBy Dan Portnov

On Friday, November 8, 2019, Lawrence Hoskins was convicted of violating the Foreign Corrupt Practices Act.[1] The jury verdict, delivered on a Friday afternoon in Connecticut, barely made the national news (the bar has been set higher these days), but in the FCPA world it was a huge victory for the government. Hoskins was found guilty as an agent of a French company’s U.S. subsidiary. So why was this prosecution so important?

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Posted in Conviction After Jury Trial, FCPA, Money Laundering, Trials | Leave a comment

Why Is DOJ Trying to Unfairly Disqualify Defense Counsel for “Conflicts”?

Group of hands with pointing fingerBy Sara Kropf

There seems to be a disturbing trend by Department of Justice attorneys to encourage defense counsel to disqualify themselves based on a supposed “conflict of interest” without disclosing to defense counsel why the prosecutor thinks a conflict exists.

Let me explain how this issue arises.

In a grand jury investigation involving a company, the government may be simultaneously investigating the company and some combination of its directors, officers, or employees. The company retains outside counsel to represent it in the investigation. As part of that retention, outside counsel conducts an internal investigation and interviews the key people to find out what happened.

That’s all simple enough.

But then the prosecutor says he wants to interview a particular director, one who doesn’t appear to have had a role in any potential wrongdoing. Can the same outside counsel represent the director during the interview?

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Posted in DOJ policy and practice, Ethics | Leave a comment

DOJ Clarifies the Stakes for Corporate Wrongdoers

Suits talking.jpgBy Dan Portnov

You know that it’s been a busy month in law enforcement news when a speech and memo announcement by DOJ Criminal Division Assistant Attorney General (AAG) Brian Benczkowski concerning corporate criminal penalties arrives with little fanfare. It must be something about an impeachment inquiry, I guess.

On October 8th, AAG Benczkowski rolled out a memo detailing DOJ’s policy for corporations settling criminal charges that are unable to pay the attendant criminal fines.[1] Corporate poverty claims are not new, but the Benczkowski memo and its accompanying questionnaire[2] offer additional clarity and perhaps further incentive for cooperation.

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Posted in DOJ policy and practice, DOJ Statements | 3 Comments