Bingo! A Defense Win Limits Broad Use of Mail Fraud Statute

Bingo GameThe only thing I like better than seeing a defense lawyer win is seeing a friend who is a defense lawyer win.

A friend of mine, Jay Nanavati, led a case to victory in the Northern District of West Virginia, persuading the judge to dismiss all 53 counts of the indictment against his client.

It’s a win for Jay and his client—and the other co-defendants—but since the court’s opinion limits the government’s broad use of the mail fraud statue, it’s a win for all of us too.

The case is about bingo in West Virginia, so you know it’s going to be good.

Continue reading

Posted in Dismissal of charges in indictment, Mail Fraud, Money Laundering | 2 Comments

Upjohn Warnings from Both Sides of the Table

danger thin iceI recently participated on a panel at the excellent NACDL White Collar Defense College with Ellen Brotman, Preston Pugh, Brian Bieber and Cynthia Orr. The College aims to teach lawyers how to handle white-collar cases from start to finish. We were tasked with presenting about the ethics of handling an internal investigation.

As in years past, our discussion about Upjohn warnings led to the most questions and engendered a little controversy. The main issue was whether the company’s lawyers should tell interviewed employees that the company will disclose what the employee says to the government.

I have different views on this issue based on where I’m sitting: on the company’s side of the table or on the employee’s side of the table.

But let’s back up to the basics.

Continue reading

Posted in Attorney client privilege, internal investigation, Obstruction | 2 Comments

Update on the Hedge Fund Founder David Ganek’s Lawsuit Against Preet Bharara

A few weeks ago, I wrote about the lawsuit filed by Level Global founder David Ganek. Mr. Ganek sued Preet Bharara, the former U.S. Attorney for the Southern District of New York, as well as other prosecutors and agents, claiming that they had harmed him by obtaining and executing a search warrant based on false information.

The district court had allowed most of the complaint to proceed, denying the defendants’ motion to dismiss. The case had then headed to the Second Circuit.

Law360 (sub.) reported on the argument yesterday:

During appellate arguments Friday, the circuit panel asked questions of both sides but gave few clues about how it might come out.

Judge Raggi, for example, seemed to dislike the government’s assertion that the affidavit contained no false information. But Judge Chin observed, contrary to Judge Pauley’s finding, that Ganek’s allegations against top prosecutors appeared to be conclusory.

That left Ganek’s lawyer, retired Harvard Law professor Nancy Gertner, and prosecutor Sarah S. Normand seeking to sway the panel based, among other things, upon the potential consequences of a dismissal — or of a trial.

“This is about accountability,” Gertner said. Her filings reminded the circuit of Ganek’s accusation that the investigation destroyed his business. She warned that others will see their belongings rifled through if such cases are not allowed a full airing.

But Normand said it would be bad precedent and an “enormous burden” on the government to force prosecutors into court to defend their practices in cases where a corrected affidavit would have led a judge to authorize the same search.

“[S]uch allegations could be made against supervisors in almost any context, and amount to an impermissible” theory of employer liability, the government’s briefs said.
The court will no doubt take a few months to decide this case, but I’m hopeful we’ll see something by the end of the summer. (Most judges like to finish opinions in important cases before their law clerks switch over in August.)
At a minimum, it sounds like the panel was not completely hostile to the claims. That alone is a win. Also, Preet Bharara–no longer a government employee–has a little more cash to settle the case, should he decide to do so.
Posted in Appeal, civil case, DOJ policy and practice, Fourth Amendment | Leave a comment

Like DOJ, the SEC Has Trouble with Misleading Press Releases

unfair to fair on white paperI’ve written before about the fundamental unfairness of the Department of Justice’s practice of issuing press releases touting indictments but not issuing press releases when the charges are dismissed or the defendant acquitted.

It looks like the SEC has the same problem.

On April 11, 2016, the SEC announced a complaint it filed against the Texas Attorney General Ken Paxton, among others. I wrote about the basics of the civil and criminal cases against Mr. Paxton a few months ago.

The SEC’s press release opened, in big bold letters:

SEC: Company Misled Investors About Energy-Efficient Technology

It went to explain:

The Securities and Exchange Commission today announced fraud charges against a Texas-based technology company and its founder accused of boosting stock sales with false claims about a supposedly revolutionary computer server and big-name customers purportedly placing orders to buy it.

Also charged in the SEC’s complaint is Texas Attorney General Ken Paxton and a former member of the company’s board of directors for allegedly recruiting investors while hiding they were being compensated to promote the company’s stock.


While serving in the Texas House of Representatives, Paxton allegedly reached an agreement with Mapp to promote Servergy to prospective investors in return for shares of Servergy stock.  According to the SEC’s complaint, Paxton raised $840,000 in investor funds for Servergy and received 100,000 shares of stock in return, but never disclosed his commissions to prospective investors while recruiting them.

Pretty salacious stuff against a sitting state attorney general. The press release also includes a link to the PDF complaint in the case.

That press release is still proudly sitting on the SEC’s website.

Continue reading

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

OIG Investigations – Why Lawyers and Clients Should Both Worry

Virus searchOn first glance, investigations by a federal agency’s Office of Inspector General, or OIG, may seem like no big deal. An inspector general has no criminal authority. He can’t charge you with a crime or throw you in jail. He can’t even arrest you. Maybe he can fine you or get you fired if you are a federal employee.

But I’ve seen OIG investigations ruin people’s decades-long careers and lead to criminal investigations and False Claims Act cases. The upshot is that you should worry about an OIG investigation if you are the target of the investigation.

You should also worry if you are the target’s lawyer, because defending someone in these investigations is complicated. It’s never easy to defend a client when the deck is stacked against you, and when you may be actively prevented from advocating for your client.

Continue reading

Posted in OIG investigations | 2 Comments

Why Won’t the Witness Talk to Me?

Thomas KlebestreifenWhen I’m representing a white-collar criminal defendant pre-indictment, one of my key tasks is to try to contact potential witnesses.

But when? The timing is a tightrope.

Contact a witness before you know anything about the case and your risk not asking the right questions in what may be your one shot to talk. Contact a witness too late and you risk losing the chance to ask any questions at all.

Why would you lose your chance? Because if a government agent gets in touch with the witness first, there’s a very good chance that the witness won’t talk to you at all. It’s maddening and frustrating. It happens much too often to be a coincidence.

It seems that some government agents feel the need to subtly—or not to subtly—discourage witnesses from talking to defense counsel. Now, I’m not talking about drug or violent cases where there’s a true risk of physical retribution against witnesses. Let’s just say that “snitches get stitches” doesn’t apply in my cases.

Every prosecutor will deny that he discourages witnesses from talking to defense counsel. Every agent will deny that it too. And you probably can’t prove that it happened.

Continue reading

Posted in Trial preparation | Leave a comment

Where Are They Now? The First-Ever Case Against a Compliance Officer over Failure to Implement Anti-Money Laundering Program

moneygramNearly two years ago, I wrote about the government’s civil complaint filed against the former Chief Compliance Officer of MoneyGram.

The defendant in that case is still fighting and the case appears headed for trial.

As a quick reminder of the case:

The Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) recently sued MoneyGram International Inc.’s former CCO, Thomas Haider. FinCEN accuses Mr. Haider of having a direct role in MoneyGram’s failure to file required suspicious activity reports (SARs) and failure to implement an adequate Anti-Money Laundering (AML) system. MoneyGram entered into a 2012 deferred prosecution agreement over this conduct.

Although the court denied his motion to dismiss, Mr. Haider filed a counterclaim and is trying to file another one. His claims are based, in part, on supposed leaks by FinCEN to the media about his case.

I love the fact that Mr. Haider continues to battle the government over these allegations. He’s not making it easy for FinCEN to push its theory of liability. I’m not aware of any similar cases being brought (but correct me if I’m wrong), so this lawsuit alone may be delaying the government’s reliance on this theory of liability in other cases.

Let’s take a look at what has happened since I first wrote about the case in March 2015.

Continue reading

Posted in civil case, Compliance, Money Laundering | Leave a comment

Fight the Power, Part III: The David Ganek Complaint

Fist pileIn Part I of the series, I introduced the idea that defense counsel are increasingly fighting back against DOJ in creative ways. In Part II, we talked about Sheldon Silver and his defense counsel’s efforts to use DOJ’s very public statements against Mr. Silver as a reason to dismiss the indictment.

In Part III, we’re going to take a look at yet another innovative technique to fight back against DOJ: a civil complaint alleging a Bivens claim against the agents and SDNY prosecutors for money damages.

The plaintiff is David Ganek, the former head of now-defunct hedge fund Level Global. The government executed a search warrant for his office and personal devices. As a result of extensive publicity about the investigation and raid, Level Global went out of business. Even though Mr. Ganek was never charged with insider trading, he lost his business.

The district court refused to dismiss the case, and that decision is on appeal in the Second Circuit. So, this one is not a complete victory (yet) but it’s an interesting road-map for challenging the government’s actions.

Continue reading

Posted in civil case, DOJ policy and practice, Fifth Amendment, Fourth Amendment, Insider Trading, Prosecutorial misconduct, Search warrant, Securities fraud | Tagged | 1 Comment

Fight the Power, Part II: The Sheldon Silver Case

Fist pileIn Part I of this series, I pointed out that DOJ uses the media as a tool to punish defendants. It publicizes indictments, without equally publicizing acquittals and dismissals. This post is the second in a series exploring how defense lawyers are fighting back against this trend.

In February 2015, New York State assemblyman Sheldon Silver was indicted for bribery and honest services fraud. The defense in that case, however, filed an interesting motion to dismiss the indictment. Although the motion ultimately failed, it is a helpful roadmap for defense attorneys considering how to fight back against inflammatory public statements by prosecutors.

Continue reading

Posted in Dismissal of charges in indictment, DOJ policy and practice, DOJ Statements, Ethics, Grand jury, Prosecutorial misconduct, Public Corruption | 1 Comment

The Five Most-Read Posts of 2016 (and My Five Favorite Posts This Year)

The Winner Is... card with bokeh backgroundLast year, I did a round-up of the 10 most popular blog posts from 2015. Since I’m just back from vacation and have about 48 items on my to-do list, I thought I’d repeat the concept this year too.

I just checked the stats for the week, figuring them to be low because of the holidays. But on Tuesday, there was a huge spike of about 500%. It didn’t take long to figure out why: an article in The Hill linked to my blog post on statutes of limitations. (And here I thought the world had finally realized the brilliance of my blog. Alas.)

This year, my blog traffic went up a bit and steadied at a higher level. I wouldn’t exactly call my readers plentiful, but you are a loyal bunch. Thank you for reading and commenting. I had one colleague email me out of the blue to tell me how much he enjoyed my posts. I can’t tell you how nice that was. It can sometimes feel like spitting in the wind to blog regularly, but then someone will mention how much they like the blog, and it makes all the work worthwhile.

I’m about to start year 4 of my solo law firm, so that’s a major milestone. I’m proud of my practice and this blog. This blog was also named to the ABA’s LawBlawg 100 for the second year in a row–so thanks to all who nominated me.

On to the top 5!

Continue reading

Posted in Uncategorized | Leave a comment