I’m All About the Glory (Please Nominate Me!)

Blawg100WebBadgeLast year, I won the coveted (among geeky law bloggers) ABA Blawg 100 award. I’ll be honest: I put in a lot of time on this blog and that little award meant a lot. I even got a great little badge to put on the blog.

Yes, I should get out more.

I’m hoping to make it two years in a row. If you like this blog, would you consider nominating it again? You just need to click here and then enter the URL of Grand Jury Target (www.grandjurytarget.com).

If you are at the nomination site with extra time on your hands, here are a few other law blogs that I particularly like and are absolutely worthy of the award.

Suits by Suits – a great blog about lawsuits involving corporate executives

Sidebars – an extremely substantive blog written by a former prosecutor, with a bit of a pro-government bent (a nice counterpoint to my blog’s pro-defense bent)

White Collar Crime Prof Blog – written by several folks, it keeps current with developments but also lets the authors express their opinions

Thanks for reading everyone!

Sara

 

 

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When Will the Government Ask for Pretrial Detention for a White Collar Defendant?

Young corrupted businessman behind the prison barsIt is very rare for a defendant in a white collar criminal case to be detained pretrial.

The two primary factors under the Bail Reform Act are whether the defendant (1) is a danger to another person or to the community, or (2) is a risk of flight. 18 U.S.C. § 3142(e)(1) (detention permitted where no set of conditions “will reasonably assure the appearance of the person as required and the safety of any other person and the community”).

Usually, a white collar defendant isn’t much of a safety risk because the crimes are not violent ones. It’s more common that he may flee, but even that is a tough standard to meet when the defendant has a family or strong community ties in the jurisdiction.

A recent healthcare fraud case in the Southern District of Florida is helpful example of the type of extreme case in which the government may ask for pretrial detention.

In United States v. Esformes, the government indicted Philip Esformes in an alleged $1 billion Medicare fraud scheme. According to the government, Mr. Esformes

masterminded and executed sophisticated health care fraud and money laundering conspiracies through a network of skilled nursing facilities and assisting living facilities that he owned or operated.

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Ninth Circuit Stands Strong on Computer Fraud and Abuse Act (Sort Of)

Computer security conceptThe Computer Fraud and Abuse Act has been used by prosecutors to charge individuals who “exceed authorized access” (or act “without authorization”) on a computer–sometimes their employers’ computers, sometimes a stranger’s computer that they are hacking. The problem is that Congress didn’t bother to defined “authorized access.”

If you are a CFAA rookie, I’ve written about the basics of the CFAA before. Plus, I wrote about its use in an…interesting case involving fetishes and a police officer.

Over a single week in July, the Ninth Circuit weighed in with two decisions about the definition of “authorized access.” The opinions are both good and bad.

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The Best Sentence in the McDonnell Decision

The Winner Is... card with bokeh backgroundLike most defense attorneys, I welcomed the Supreme Court’s decision in the McDonnell case.   The Court vacated former Governor McDonnell’s convictions for Hobbs Act extortion and honest services fraud and remanded the case to the Fourth Circuit for further findings.

I’m not going to rehash the substance of the decision in detail, since others have done so quite ably—from SCOTUSblog  to Sidebars  to White Collar Crime Prof Blog.

Instead, I’m going to talk about my favorite sentence in the opinion. Here it is:

[T]he Government’s legal interpretation is not confined to cases involving extravagant gifts or large sums of money, and we cannot construe a criminal statute on the assumption that the Government will “use it responsibly.” United States v. Stevens, 559 U. S. 460, 480 (2010).

Love it.

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Posted in Appeal, Public Corruption, Reversal | 1 Comment

The Hard Numbers on White-Collar Criminal Sentences

Marketing segmentation

Calling all data geeks:

The United States Sentencing Commission just issued its “Overview of Federal Criminal Cases, Fiscal Year 2015.”

It’s a fairly short summary of the longer “2015 Sourcebook of Federal Sentencing Statistics,” which is also worth checking out.

A few interesting tidbits about white-collar cases are included in the Overview.

First, fraud cases make up 10.5% of all cases, the third largest portion of total federal criminal convictions (after drug and immigration offenses). There were 7420 fraud cases, which is a decrease of 2.5% from 2014.

Second, the losses varied greatly among these cases, ranging from $0 (134 cases) to more than $7 billion. There was, according to the report, “an average loss amount of $2,909,541 and a median loss amount of $213,831.”

Third, the “average sentence imposed in fraud cases in fiscal year 2015 was 27 months.”

Fourth, the Sentencing Commission gathered some statistics on sentences imposed on organizations. There were 181 such cases, a little lower than previous years for which the Commission gathered statistics.

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Fifth Circuit Slaps Down District Court’s Loss Calculation in Contracting Fraud Case

The government knows—and exploits the fact—that loss amount is the driver of white collar sentences. In criminal contracting fraud cases, the government has taken the position that the relevant loss is the entire amount of the contract that was wrongfully obtained, even if the defendant fully performed under the contract and the government received everything it was promised under the contract.

This is an absurd position. Consider a typical breach of contract case. Party A sues Party B for breach of contract. During discovery, it becomes clear that Party A received everything it had bargained for under the contract. So what are the damages? Zero. Defendant wins.

A criminal case is, of course, not a civil breach of contract case. (The Civil Division has taken this same position in civil False Claims Act cases, too.) But that shouldn’t mean we leave common sense at the door when it comes to loss.

At least one court of appeals has pushed back on the government’s theory of loss in criminal cases. I wrote about the Third Circuit’s 2015 decision here.

Now, a second court of appeals has joined the Third Circuit in its skepticism about this calculation of loss. In a recent case out of the Fifth Circuit, United States v. Harris, the court of appeals reversed the defendant’s sentence in a government contracting fraud case because the lower court didn’t offset the contract values by the fair market value of the work performed by the defendant.

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Thinking About Consequences and the Yates Memo

Falling dominoes caught in motionDepartment of Justice officials have recently made several speeches trying to explain the Yates Memo. For example, On May 10, Deputy Attorney General Sally Yates gave remarks at the New York City Bar Association’s white-collar crime conference. On May 14, Assistant Attorney General Leslie Caldwell spoke to the American Bar Association’s 25th Annual National Institute on Health Care Fraud. And on June 9, Acting Associate Attorney General Bill Baer gave remarks on the civil False Claims Act.

They seemed to want to quell concerns by the defense bar that the Yates Memo, and DOJ’s new pronouncements about corporate cooperation, would lead to much more extensive (and expensive) internal investigations of wrongdoing by companies.

Let me say, first, that I appreciate the efforts of all of these officials to explain what changes the Yates Memo is meant to bring about. But (and there’s always a “but”) I’m still not convinced that there will not be unintended consequences of the new policy.

In her speech, Ms. Yates said that “the policy was certainly designed to change practices, both within the department and outside the department.” She also explained that “just as the policy does not seem to have brought about the end of Western civilization from the companies perspective it’s not business as usual at DOJ either.”

There are two parts of what she said that are worth considering–the scope of investigations following the Yates Memo, and the real consequences of not cooperating with DOJ about the scope of an investigation.

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Is the FCPA Unit Really Interested in “Transparency”?

For anyone who handles FCPA cases, the blog aptly titled FCPA Professor is required reading. Professor Mike Koehler covers all aspects of the statute, from reported court decisions interpreting its reach to updates on recent prosecutions under it.

Prof. Koehler recently wrote an interesting post about his unsuccessful efforts to interview the head of the FCPA Unit within DOJ.

According to the post, Prof. Koehler has tried to engage a senior DOJ official for a few years now. But he can’t seem to get in the door.

In contrast, DOJ officials have talked to other media sources.

DOJ FCPA officials routinely speak to on-line information sources on topics relevant to the Foreign Corrupt Practices Act and certain of these outlets often put the official’s comments behind a paywall.

This post highlights the DOJ’s long refusal to engage with FCPA Professor and frequent denial of FCPA Professor interview requests. Should DOJ officials engage with FCPA Professor?

So, why aren’t DOJ officials talking to FCPA Professor? It’s worth noting that the blog is free and available to anyone who wants to read it, unlike Law360 and its ilk.

When DOJ announced its new Pilot Program in April 2016, Leslie Caldwell trumpeted the effort as one to bring transparency to the process:

One of my priorities in the Criminal Division has been to ensure that we have a robust and transparent enforcement program targeting violations of the Foreign Corrupt Practices Act (FCPA).  Bribery of foreign officials harms those who play by the rules, siphons money away from communities, and undermines the rule of law.

Now, there’s obviously no obligation for anyone at DOJ to talk to a blogger or a reporter or anyone else, for that matter. But if DOJ wants “transparency” in its enforcement program, then why not answer a few questions from a leading expert on the topic?

DOJ’s continued refusal to engage with Prof. Koehler makes you wonder a few things.  Do DOJ officials want only to talk to reporter who will ask basic questions about enforcement of the FCPA? Do DOJ officials not want to face the questions of an educated, experienced blogger who has, at times, criticized DOJ’s decisions to prosecute under the FCPA and whose posts highlight DOJ’s unsuccessful prosecutions?

I’m sure FCPA Professor will keep up the good fight. If nothing else, he remains hopeful that Daniel Kahn may engage with him.

However, given the DOJ’s frequent reference to engagement and transparency in the FCPA space, I remain hopeful that some day DOJ FCPA officials will conclude it is worth their time to engage with a leading FCPA information source that is a free and publicly available.

Hey, DOJ, give Prof. Koehler a call.

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Commercial Negotiation Tactics Are Not Fraud: Seventh Circuit Limits Scope of the Wire Fraud Statute

Win red dice

The federal wire fraud statute is incredibly broad. In this era of non-stop email and texts, it’s hard to imagine a white collar case that doesn’t implicate it. For the most part, courts have been reluctant to limit its reach. But a recent decision from the Seventh Circuit did just that.

In Weimert v. United States, the court of appeals held that the wire fraud statute could not be stretched to cover deception involving a party’s negotiating position. As the court itself explained,

This case presents a test of how far the mail and wire fraud statutes reach when the parties negotiate a substantial commercial transaction that involves, as almost all will, the use of mails or interstate wire communications.

***

The central issue in this case is whether the mail and wire fraud statutes can be stretched to criminalize deception about a party’s negotiating positions, such as a party’s bottom-line reserve price or how important a particular non-price term is. We conclude that they cannot.

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What is a Reverse Proffer?

reverseI teach a continuing legal education class on defending white-collar criminal cases. When I developed the curriculum, I quickly realized that one of the class’s main goals was to teach everyone the lingo of being a white-collar defense lawyer.

This is no small task.

Like every practice area, white-collar work has its own special vocabulary. There are terms of art that make no sense unless you practice in the area. I’m sure ERISA lawyers have their jargon as do tax lawyers and estate planning lawyers.

One of the main topics of the class is proffers. There are several types of proffers but we’re going to focus on reverse proffers here.

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