Surviving Parallel Proceedings


judge-with-gavel-on-table-picture-id639884564.jpgBy Dan Portnov

Late last week the other shoe finally dropped for Theranos founder and ex-CEO Elizabeth Holmes, as she and fellow executive Ramesh “Sunny” Balwani were indicted on charges of wire fraud and conspiracy to commit wire fraud. Following allegations made in the Theranos investor lawsuit, the SEC charges against Balwani and settlement with Holmes, this latest and most serious development came as no surprise.

Theranos, with Holmes at the helm, had been the darling of Silicon Valley: once valued at $9 billion, touting a product that would have revolutionized blood testing technology and with investors that included well known private equity firms, media moguls, the family of the Secretary of Education. The deception and fall were also epic.

Continue reading

Posted in Criminal Investigation, DOJ policy and practice, SEC Investigation, SEC policy and practice, Wiretaps | Leave a comment

The Department of Justice Should Drop the Inauguration Day Protest Cases

community initiative or concert concept, hands of group of people in the sky, silhouetteThe Department of Justice has been humiliated in its misguided prosecution of over two hundred Inauguration Day protestors.

It has lost every single case to go to trial. It has engaged in intentional violations of the rules. And it has cost taxpayers hundreds of thousands of dollars along the way.

The DOJ should cut its losses now and dismiss the rest of the cases.

On January 20, 2017, hundreds of protestors gathered at Logan Circle to protest the new administration. Along the route, a handful of the protestors engaged in property destruction ranging from exceedingly minor (dragging newspaper dispenser boxes into the street) to serious (breaking large plate-glass windows). The police eventually surrounded the protestors and arrested the remaining 234 people.

Arresting people is one thing. That’s on the police. Charging them with multiple felonies is another. That’s on the prosecutors.

Continue reading

Posted in Acquittal After Jury Trial, Brady violations, Discovery/Brady, DOJ policy and practice, First Amendment | Tagged | Leave a comment

Initial Coin Offerings and SEC Enforcement: Protecting Investors (Part I)


scam-alert-picture-id918521002.jpgBy Dan Portnov

The SEC’s Office of Investor Education and Advocacy (“OIEA”) came in hot last week with its HoweyCoin initial coin offering pre-sale – a mock ICO designed to teach cryptocurrency-hungry investors the lesson that some ICOs may be scams. It’s quite clever, actually. Complete with countdown clock, tiers of discounts and a white paper (chock full of white paper confidence), the site also features Easter Eggs for securities lawyers, like the coin’s name and that its celebrity promoters feature a generic boxing champ.

(The SEC’s first foray into contemporary public service advertising was to warn March Madness fans about investment adviser fraud. It was catchy, though not as clever.)

Continue reading

Posted in CFTC case, Due Diligence, Investor fraud, SEC Investigation, Securities fraud | Leave a comment

Do Prosecutors Hate the Attorney-Client Privilege?

By Sara Kropf

danger thin ice

The search of attorney Michael Cohen’s office by federal agents led to a phalanx of “former federal prosecutors” quoted by the media.

That’s not surprising. To be fair, I know a lot of great former federal prosecutors who provide informative quotes to reporters and likely share a lot of substantive information off the record that helps the media.

But what two former prosecutors recently said about the attorney-client privilege was disturbing because they show incredible disdain for it.

Liam Brennan, who used to be a federal prosecutor, wrote an op-ed in The Washington Post saying that the attorney-client privilege allows wealthy defendants “a free pass to engage in corrupt conduct.”

What, what? He couldn’t possibly have said that.

Continue reading

Posted in Attorney client privilege | Tagged | Leave a comment

OIG Investigations – Why Lawyers and Federal Employees Should Both Worry (Part III)


I’m not in the OIG, but I play one on TV.

By Dan Portnov

We have written on several occasions[1] about OIG investigations on this blog, chiefly because a) their opacity creates a certain mystique, and b) we hope to minimize the chances that their targets underestimate the seriousness of what could later become a criminal investigation. The focus of this post is on OIG investigations involving a federal employee and a few key principles to keep in mind when suddenly confronted with an investigation.

In our (humblest) opinion, there are five things every federal employee should know about the OIG before its investigators show up to his or her office door:

Continue reading

Posted in OIG investigations | Leave a comment

Doing the Government’s Laundry

laundry-shop-picture-id617735318By Dan Portnov

In certain legal (nerd) circles, coining a phrase or term of art is one of the surest ways to achieve immortality – think Tim Wu’s first use of “network neutrality” in a 2003

journal article or Justice Felix Frankfurter’s opinion in Rochin v. California[1] holding that the certain police methods “shock[ed] the conscience.” And soon we may have Seth Levine[2] to thank for the term “Brady Laundering.”

Here, Levine leveled his accusation on behalf of his client, Anthony Blumberg,[3] in the midst of an evidentiary hearing into the relationship between the government and counsel for Blumberg’s former employer, ConvergEx Group,[4] suggesting the former took pains to avoid uncovering Brady material by outsourcing the bulk of the investigative work to the latter. He further argued that ConvergEx achieved “extraordinary cooperation” status as a result of the company working so closely with the government that it effectively became a member of the prosecution team. Thus, ConvergEx also had the obligation to turn over Brady materials within its possession related Blumberg.

The four-day evidentiary hearing, which began on March 12, 2018 and will (hopefully) culminate on May 15, spotlights several important principles that counsel should consider during DOJ or SEC investigations where cooperation credit is sought.

Continue reading

Posted in Brady violations, Criminal Investigation, Deferred Prosecution Agreement, Discovery/Brady, DOJ policy and practice, Securities fraud | Leave a comment

Music City and the FCPA: What More Can You Want?

If you are new to white-collar work, you will quickly hear about the Foreign Corrupt Practices Act or FCPA. For you seasoned attorneys out there, you may feel like you’ve heard too much about it.

But here’s the thing: you can always learn more.

And I know just the place.

Join the FCPA Professor, AKA Mike Koehler, in Music City, USA, AKA Nashville, May 3-4, 2018, for the FCPA Institute.

Continue reading

Posted in Uncategorized | Leave a comment

The Government Is Probably Going to Win on the Michael Cohen TRO Motion

businessman-burying-his-head-uner-a-laptop-asking-for-help-picture-id658516626The government filed its opposition to Michael Cohen’s motion for a temporary restraining order today. I wrote earlier this week about the search warrant and noted that there would be a court battle coming.

Well, here it is.

Oddly, the public docket has the government’s redacted opposition but does not have a docket entry for the initial TRO motion or for any motion to intervene by President Trump. (If anyone has them, please send them my way.)

Trump would certainly have standing to intervene if it is his privileged documents at issue. There are very limited circumstances when someone has standing to challenge a search warrant (someone other than the person from whom the items were seized, that is). A client in the attorney-client relationship has standing. We’ll see more from President Trump, I’m sure.

And not just Tweets.

From the reports of the court hearing today, it appears that there will be additional filings and the judge made no rulings. But I’ve read the government’s filing, and I have a few initial takeaways:

First, as widely reported, the filing makes clear that Cohen is the target of a criminal investigation. This doesn’t mean that the FBI didn’t also seize information related to other subjects of the investigation (ahem), but the filing suggests that evidence of Cohen’s own wrongdoing was the main focus.

Continue reading

Posted in Attorney client privilege, FBI policy and practice, Fourth Amendment, Grand jury, Search warrant | Leave a comment

The Search Warrant for Lawyer Michael Cohen’s Office – How Did That Happen? DOJ Policies Reviewed

Two security agentsOn April 9, 2018, news broke that the FBI had raided the office of President Trump’s attorney, Michael Cohen.

Apparently the search was the result of referral from Special Counsel Mueller’s team to the SDNY U.S. Attorney’s Office.

When I saw the news, my first thought was “wow, the prosecutor had to jump through a lot of hoops to get approval of that warrant.”

There are a lot of procedural hurdles that must be overcome to obtain approval to search any lawyer’s office, never mind the political minefield involved in raiding the office of the sitting President’s lawyer.

It’s worth noting that the FBI does not normally raid the offices of lawyers. The files and emails held by a lawyer are mostly protected by the attorney-client privilege and seizing them creates all sorts of issues for the FBI.

There are two DOJ relevant policies here–one governs if Mr. Cohen IS the subject of the investigation and one governs if Mr. Cohen is NOT the subject of the investigation.

Let’s take a quick look at each of them.

Continue reading

Posted in DOJ policy and practice, Public Corruption, Search warrant | Tagged | 4 Comments

How Do You Find Out Why the Government Obtained a Search Warrant?

shredded evidenceBy Sara Kropf

Paul Manafort recently filed a motion to compel the production of the affidavits used to support the Special Counsel’s search warrants in his case. To someone unfamiliar with criminal law, that may seem odd. The defendant must know why the government executed a search warrant, right?

Every once in a while, my clients have some suspicions about why the search warrant was executed but, more often, they are clueless. After the initial shock of the search warrant has worn off, my clients always want to know what the government was looking for—and why.

That’s not an easy thing to find out.

Continue reading

Posted in Search warrant | Tagged | Leave a comment