The SEC’s Right to a Jury Trial

We usually think about the right to a jury as one for a defendant facing charges. But it’s worth remembering that agencies are people too. Well, at least when it comes to the right to a jury trial in a civil case.

In a recent Ninth Circuit opinion, the court reversed the judgment in favor of the defendants because the district court refused to allow a trial by jury when the SEC requested it.

In U.S. Securities & Exchange Commission v. Jensen, the SEC went after former CEO Peter Jensen and former CFO Thomas Tekulve of the “now-defunct” Basin Water, Inc.

The SEC filed suit against Defendants in 2011 alleging that they had participated in a scheme to defraud Basin investors by reporting millions of dollars in revenue that were never realized.

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The FCPA Institute Is Coming to Washington

Fellow blogger and professor Mike Koehler is bringing his famed “FCPA Institute” to Washington, DC on September 19 and 20. If you’ve always wanted to handle FCPA cases, or already handle them but want to learn more, go to this event.

Here’s more detail from Prof. Koehler’s website. I just wish I were in town those days so I could go myself.

The FCPA Institute is different from other FCPA conferences as information is presented in an integrated and cohesive manner by an expert instructor with FCPA practice and teaching experience. Moreover, the FCPA Institute promotes actual engagement and active learning by participants through issue-spotting videos, skills exercises, small-group discussions, and the sharing of real-world practices and experiences. To best facilitate the unique learning experience that the FCPA Institute represents, attendance at each FCPA Institute is capped at 30 participants.

In short, the FCPA Institute is offered as a refreshing and cost-effective alternative to a typical FCPA conference and is designed to elevate the FCPA learning experience for a diverse group of professionals such as in-house and outside counsel; other compliance professionals; finance, accounting, and auditing professionals; business executives and others seeking sophisticated FCPA knowledge and practical skills.

This link contains more information about the FCPA Institute (including a sampling of what prior FCPA Institute “graduates” have said about their experience).

At the end of the FCPA Institute, participants can elect to have their knowledge assessed and can earn a certificate of completion upon passing a written assessment tool. In this way, successful completion of the FCPA Institute represents a value-added credential for professional development. The FCPA Institute – DC has been approved for 12 CLE credits in Virginia and attorneys seeking CLE in other states will receive a Uniform Certificate of Attendance that can be used for attorney self-submission in other states. In addition, previous FCPA Institute participants have successfully obtained continuing education units from the Society of Corporate Compliance and Ethics for attending the FCPA Institute.

To register for the FCPA Institute – DC, click here.

Posted in Bribery, Continuing education, FCPA | Leave a comment

An Open Letter Thanking the McDonnell Team (Or, Why We Can’t Give Up)

Dear Governor McDonnell’s Legal Team:

As you probably know, the government decided not to retry Governor Bob McDonnell yesterday. This is big news. It follows his victory in the Supreme Court.

He won. You won.

Was this the best paragraph you’ve ever read?

The United States respectfully moves for this Court to remand this case to the district court for the United States to file a motion to dismiss the indictment with prejudice under Fed. R. Crim. P. 48(a). The defendant does not oppose this motion.

There’s a lot that could be said –and has been said well by others—about the importance of this case to rein in the government’s aggressive prosecution of public officials under an extraordinarily vague statute. Your victory on that front alone is incredible. (Sheldon Silver will likely be sending you his own thank you note.)

I’m not going to talk about that. I’m just going to thank you—from one white collar lawyer to another.

Here’s what struck me about this win. You were, quite simply, relentless. Seriously, you never gave up. You filed motion after motion, preserved error after error, and appealed until the cows came home. I’ll bet the government was annoyed by all of your motions along the way.

I’m not privy to Governor McDonnell’s conversations with you, but I can pretty much guarantee none of you said, “Hey, don’t worry about the convictions. We just need to appeal to the Supreme Court. It will take the case and you will win. It’s a lock.” I’m sure you talked about how it was very possible the Supreme Court wouldn’t take the case, how it was possible you could lose there too.

This case reminds me of the Senator Ted Stevens case. I read Rob Cary’s excellent book about his representation of Senator Stevens. It’s a very interesting book because you get an insider view of how the best lawyers work. (You should write a book.)

The Stevens lawyers, like all of you, never gave up. They too filed motion after motion and kept trying to win even after Stevens has been convicted at trial. And they did win.

On a related note, a friend of mine, Brian Stolarz, wrote a book about getting a client off death row. He too was relentless. It’s a quality of great lawyers.

I wanted to thank you because your representation of Governor McDonnell is a reminder that we cannot give up on winning for our clients, even if it looks like a lost cause.

Let’s face it, both Senator Stevens and Governor McDonnell were represented by some of the best white collar lawyers in the country. They were supported by incredible teams of lawyers.

But just being a good lawyer is not enough. You both lost at trial. (Sorry to point that out.) But you didn’t throw up your hands and cry uncle. Instead, you dug in and looked for a way to win.

I like to think I’m that kind of lawyer—the kind that never gives up. It’s hard when my client doesn’t have the funds to cover every possible motion that I’d like to file. It’s hard, too, when there is enough evidence of wrongdoing by my client that makes the possibility of winning at trial low, and the government offers a very good plea deal.

Hard is what we do for a living. If I wanted easy, I’d have picked another job.

So, thank you. Thanks for winning this case, not only because it resets some precedent that hurt many of our clients but also because it has reminded me why I can’t (and won’t) ever give up on a client.




Posted in Appeal, Public Corruption | Leave a comment

Are Your Client’s Emails Sent From His Work Computer Privileged? A Somewhat Helpful Ninth Circuit Decision

Email concept with laptop ang girl hands

When I meet with a new client, particularly a corporate executive under criminal investigation, we talk about emails.

I tell him that he should use his personal email account to communicate with me, not his work account, since his employer has the right to review emails sent on his work account. But I also caution him that he should try to email me from a device other than one owned by his employer—his personal phone or his home computer. I’m trying to make sure our emails are private and the privilege is secure.

(Sometimes we talk about how easy it is for the government to subpoena a Gmail account, too, and sometimes we use secure messaging systems away from the government’s prying eyes—but that’s a subject for another post.)

But let’s be realistic. Our clients spend a lot of time at work and that’s where they are going to respond to most of our emails.

A recent Ninth Circuit decision about the former governor of Oregon offered a ray of hope that our clients’ emails—even if saved on their employer’s server—are still privileged.

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A Misleading DOJ Press Release

I was surprised to read the headline of a recent DOJ press release: “Former Acclarent, Inc. Executives Convicted of Crimes Related to the Sale of Medical Devices.” I was surprised because I thought I’d read that the case had been a big win for the defense.

So I read the press release.

The first paragraph said that the former CEO and a former VP of Acclarent “were convicted by a federal jury in connection with distributing adulterated and misbranded medical devices.”

The second paragraph named the two defendants and noted that they “were convicted by a jury following a six week trial of 10 counts of introducing adulterated and misbranded medical devices into interstate commerce.”

Wow, ten counts? That sounds like a big win for DOJ.

The third paragraph described the counts of conviction in a fair amount of detail:

The jury concluded that Facteau and Fabian caused the unlawful distribution of a medical device known as the Relieva Stratus Microflow Spacer (“Stratus”) for uses not cleared or approved by the U.S. Food and Drug Administration.  Despite the fact that the company had told the FDA that the Stratus was a medical device intended to maintain an opening to a patient’s sinus, Facteau and Fabian launched the product intending it to be used as a steroid delivery device.  The FDA, however, had specifically refused Acclarent’s request to clear the Stratus for marketing as a drug delivery device without further submissions to support that use.

It sure sounds like these two are some bad dudes, right?

The fourth paragraph of the press release described the “evidence at trial” that apparently led to the convictions.

The evidence at trial demonstrated that Facteau and Fabian sought to quickly develop and market products, including the Stratus as a drug delivery device, to create a projected revenue stream that would make Acclarent an attractive business for either an initial public offering or acquisition.

There must have been an overwhelming amount of “evidence at trial” to lead to these very serious convictions. I’m already pondering a possible blog post about this type of health care fraud. Hmmm…CEO of a company…serious convictions…must be facing a lengthy prison sentence given the loss calculation.

Then I read the FIFTH paragraph:

The jury acquitted Facteau and Fabian on 14 felony counts of fraud.  The 10 counts of conviction were misdemeanor counts related to the same conduct.

Wait. What?

After four full paragraphs explaining that these two executives had been “convicted” of “10 counts” and describing the serious charges and “evidence at trial,” DOJ finally says that the two executives were convicted of minor misdemeanors and face a year in jail.


DOJ is a government agency. It’s not a private firm selling its success stories. It’s not hustling for clients.

So why is it using PR strategies to try to “sell” a big loss in a huge health care fraud trial as a win? DOJ did the same thing to Don Blankenship. It put out a press release about how he was convicted of a “federal conspiracy charge” that doesn’t even use the word “misdemeanor” in it.

I’ve always thought that DOJ’s press releases should report DOJ losses as well as wins. Why shouldn’t the public be made equally aware when DOJ loses a case as when it wins?

And given that DOJ (particularly SDNY) loves to put out press releases of indictments–before any evidence has ever been tested in court before a neutral fact-finder–shouldn’t it put out a press release when that indictment wasn’t proven at trial?

Take a look at the press release for the indictments of these two Acclarent executives. It describes very serious potential misconduct.

DOJ press releases about indictments come in high in Google’s search results. So whenever someone searches for those executives’ names, he will find those press releases. The least DOJ could do when it doesn’t obtain in a conviction is put out a press release fully clearing the person’s name.

Maybe the exoneration will show up second in the search results.




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Another Big Win in the White Collar World (This Time in the EDVA, of All Places)

After I wrote my last post, I was reminded about another big win that I should have mentioned before. Greg Poe, Preston Burton and Rachel Li Wai Suen won a complete acquittal for former high-ranking army officer Edwin Livingston. Here’s a short summary of the win:

A federal court on Wednesday exonerated four former high-ranking Army officers accused of orchestrating a large-scale bribery scheme involving under-the-table payments to Pentagon acquisition officials in an attempt to secure lucrative Defense Department contracts for their Virginia-based government contracting firm.

Edwin Livingston III, 67; Ronald Tipa, 68; Thomas Taylor, 66; and Ross DeBlois Sr., 55, were all found not guilty on a total of 32 counts of bribery and fraud, according to a ruling by the U.S. District Court for the Eastern District of Virginia.

Federal prosecutors alleged the four men, all retired colonels in the Army National Guard, used their government contracting company, Military Personnel Services Corporation, or MPCS, to bribe Defense Department officials to steer Pentagon acquisition and services contracts to the Falls Church, Virginia-based firm.

For those of you practice in the white-collar world, one fact here should stand out. They won a complete acquittal in the EASTERN DISTRICT OF VIRGINIA. That’s probably the toughest court to face these kinds of charges. The jury pool is stacked with current and former military folks, defense contractors and other Northern Virginia residents who don’t take kindly to bribery.

The judges there are uniformly tough on defendants, too. It’s not an easy place to try a criminal case, never mind win one.

The other three defendants also had great counsel. These kinds of wins are a huge team effort, so a quick shout-out to the whole group:

Mark MacDougall, Karen Williams, and Connor Mullin (Akin Gump); Bob Trout, Gloria Solomon, and Chris Hatfield (Trout Cacheris); and Barry Pollack and Addy Schmitt (Miller Chevalier).

That’s a rock star-level joint defense group.

Congrats to everyone!

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Celebrating Summer with Recent Wins in the White-Collar World

In the past few months, there have been several big wins for white-collar defendants.  Because we’re in desperate need for some good news as of late, here are highlights of those victories.

As I’ve pointed out before, DOJ doesn’t publicize its losses, so it’s sometimes hard to learn about these wins for the defense bar. Feel free to send your wins my way, and I’m happy to talk about them here.

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Posted in Acquittal After Jury Trial, Dismissal of charges in indictment, Health care fraud | Leave a comment

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 (

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!




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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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Posted in Appeal, Computer fraud | Leave a comment