SEC Investigations 101: Testimony

This post is the fifth in a series of posts for non-lawyers, or non-securities lawyers, who might suddenly find themselves on the wrong end of a Securities and Exchange Commission document request, subpoena or call from Enforcement division staff.

SEC HQ front.jpgBy  Dan Portnov

If the SEC has opened up a formal investigation or a MUI (Matter Under Inquiry) that involves you or your company, will you have to speak to Enforcement staff? That’s one of life’s great uncertainties but odds are that it will not resolve before you have.

What exactly does that mean? And how can you and your lawyer prepare?

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Roger Stone’s Early-Morning Arrest: Stop the Perp Walk

Businessman is arrested and handcuffedIf you read my Twitter feed, you may know that I am a bit left of center when it comes to politics. Ok, I’m a lot left of center.

But, like so many criminal defense lawyers, I don’t judge my clients’ politics. I have clients who are far right, far left, in the middle and downright apolitical.

It doesn’t matter to me. I’m there to protect and represent them, no matter their political views.

So, although my political side may have been pleased to see Roger Stone, President Trump’s longtime advisor, arrested this morning, that’s not the end of it.

My defense-lawyer side raged at his arrest.

Why in the world is the FBI showing up at Mr. Stone’s house in full SWAT-team gear to arrest him? And, how is it that the media just happened to be there?

The perp walk is alive and well.

It’s an abuse of prosecutorial and law enforcement power.

It should stop.

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Posted in DOJ policy and practice, FBI policy and practice | Tagged | 1 Comment

Decisions, Decisions: What Are the Potential Criminal Violations If President Trump Encouraged Michael Cohen to Lie to Congress?

Three Closed Doors in the Room

On January 17, 2019, BuzzFeed reported that “President Donald Trump directed his longtime attorney Michael Cohen to lie to Congress about negotiations to build a Trump Tower in Moscow, according to two federal law enforcement officials involved in an investigation of the matter.”

This report is based on anonymous sources. Then, on January 19, the Special Counsel’s Office issued a statement that kind of denied it:

BuzzFeed’s description of specific statements to the Special Counsel’s Office, and characterization of documents and testimony obtained by this office, regarding Michael Cohen’s Congressional testimony are not accurate.

So far, BuzzFeed is standing by its story, and it urged “the Special Counsel to make clear what he’s disputing.”

Admittedly, the Special Counsel’s statement was not very specific about what was wrong in the story. Mr. Cohen’s February 7 congressional testimony may shed some light on these allegations.

Just for fun, though, let’s assume it happened. Let’s assume that President Trump directed his lawyer to lie to Congress about a matter being investigated by Congress, the FBI and now the Special Counsel’s Office.

What would be so wrong with that?

A lot of things. I’ve come up with five possibilities so far.

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Defending Research Misconduct Cases Part 2 – What is Research Misconduct?

Close-up shot of microscopeWhen are you accused of a crime, you can look up the statute that defines the crime and then your lawyer can research court cases that interpret it. All of that information helps to defend against the charges.

This information can also help you determine what conduct is illegal so you can avoid engaging in it in the first place.

When it comes to research misconduct, though, information is scarce. There are very few court decisions. And, even though there is an administrative process to challenge findings of research misconduct, that process rarely results in a written opinion that provides helpful guidance.

Despite the lack of information, understanding the definition of research misconduct is a key element to defending against these types of allegations. You may be surprised how broad the definition of “research misconduct” is.

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SEC Investigations 101: Cooperation?

This post is the fourth in a series of posts for non-lawyers, or non-securities lawyers, who might suddenly find themselves on the wrong end of a Securities and Exchange Commission document request, subpoena or call from Enforcement division staff.

By Dan Portnov SEC HQ front.jpg

Thanks to the ongoing Special Counsel investigation, we have been inundated with high profile examples of how cooperation works in criminal investigations, how it doesn’t work and how it can seemingly blow up. Even the President has weighed in on cooperation, saying that it “almost ought to be illegal.” Nevertheless, cooperators are vital for law enforcement to do its job.

(And, no, there’s nothing “illegal” about it.)

Just as federal prosecutors rely on cooperators to prove up their cases in exchange for recommendations of leniency at sentencing, so does the SEC incentivize cooperation by individuals and companies in its investigations. But what exactly does cooperation mean in the SEC context? And how should an individual make the decision to cooperate with the SEC?

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Happy New Year! Our Most-Read Blog Posts in 2018

Top 10 LetterpressHappy new year to our readers!

This year, Dan Portnov began writing regularly for Grand Jury Target, particularly about SEC matters. We’d like to thank everyone for reading. There’s nothing I like better than meeting someone new who says “I love your blog.” I’m even happy when you say “I kind of like your blog” or “I’ve heard of your blog.”

It’s a low bar, really.

At the end of the year, we find it interesting to look back at what posts were the most popular.  It helps us pick topics going forward. It’s not fun to write posts that no one reads.

This year, the pattern is plain: the Russia investigation is a hot topic. Many readers wanted to read about Michael Cohen and about issues related to grand jury investigations.

Here are the top 10 posts for the year:

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Practical Insights from SEC’s Newest Enforcement Associate Directors

 

SEC HQ front.jpg

By Y. Ramona Lin[1]

Last week, I had the pleasure of [virtually] attending a lunch and discussion featuring two newest SEC Enforcement Associate Directors, Anita Bandy and Carolyn Welshhans.[2] The discussion was moderated by Kara Brockmeyer, a partner at Debevoise & Plimpton and former Chief of the SEC’s FCPA Unit.

(Disclaimer: the views of the individual associate directors do not represent those of the Commission or their colleagues.)

Some key takeaways from the discussion included:

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Initial Coin Offerings and What the SEC Might Think About Them: An Update

By Daniel Portnov
SEC HQ front.jpgEarlier this week I attended the DC Bar’s Communities program “Crypto Update: Current Issues Relating to Blockchain, Digital Assets and ICOs” featuring two members of the Commission’s staff – Assistant Director Jennifer Leete from the Enforcement

Division and the Deputy Chief Counsel Jonathan Ingram from the Division of Corporate Finance.[1] Like our post earlier this year from Commissioner Jackson’s reception, Ms. Leete and Mr. Ingram offered valuable insight into Enforcement and CorpFin’s thinking on cryptocurrencies and ICOs. (Necessary disclaimer: the views of the individual staff members did not reflect those of the Commission or their colleagues.)

The key takeaways from the program included:

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Defending Research Misconduct Cases (Part I – The Overview)

We’ve written about Office of Inspector General investigations several times (see here and here and here). But there’s a small component of OIG investigations that relate to scientific research misconduct. This is the first of multiple posts about research misconduct investigations.

This series will explain how this particular investigative process works and offer some guidance about how to defend against those investigations.

The targets of research misconduct investigations are scientists and other researchers working at universities and other research institutions. Those scientists and researchers apply for federal funds for their work. If they win grants, then they use federal funds and report back to the government about the research.

This close nexus between private actors (the researchers) and billions of dollars of federal funds means that someone has to keep an eye out for fraud. This type of fraud has the gentler name of “research misconduct,” but the repercussions are still severe.

We’re talking about employment consequences, expulsion from federally-funded research for years, public shaming and, possibly, criminal charges.

When the government uncovers research misconduct, it does not hesitate to make that misconduct public. For example, every quarter, the Office of Research Integrity (ORI) publishes a newsletter on its website. A prominent part of the newsletter is called “Research Misconduct Case Studies.” In that section, ORI describes in some detail its findings of misconduct against a federally-funded researcher. The researcher’s name is prominently featured in the article, along with the likely career-ending punishment imposed.

If you aren’t a researcher, you may be wondering: What is the ORI? How did it get so powerful?

You may also be wondering: Why is this a topic for a white-collar criminal defense blog?

Let’s start with the second question first.

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10 Quick Takes on Michael Cohen’s Recent Plea Agreement – And What Cohen and Roger Clemens Have in Common

Baseball backgroundRemember when everyone was talking about whether now-Justice Brett Kavanaugh was lying to Congress when he seemed a bit less-than-candid about his drinking in high school?

Seems like a million years ago.

Anyway, it turns out that lying to Congress is a real thing! It can lead to real consequences!

I don’t think any criminal defense lawyer in her right mind thought that Kavanaugh would be charged with a false statement for saying that he never blacked out from drinking beer 35 years ago. Whether he lied when he answered questions about the timeline for learning of the allegations of sexual assault was a bit more serious.

But now, President Trump’s lawyer Michael Cohen has pleaded guilty a second time. This time it’s for lying to Congress.

Here is his plea agreement.

And here is the criminal information.

(An information is a type of charging document. It doesn’t need to be issued by a grand jury. An information is a simpler way to charge someone when there is a plea deal since the defendant can waive his right to a grand jury.)

Cohen apparently sent a two-page letter (JUST TWO PAGES) to the Senate Select Committee on Intelligence and to the House Permanent Select Committee on Intelligence. The committees were investigating Russian interference with the 2016 election. The letter discussed his efforts to help an unnamed company open a “branded property” in Moscow. He also testified before Congress.

(We all know what company is being described.)

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Posted in Congressional investigation, Perjury, Plea Agreement | Tagged | 1 Comment