Why Won’t the Witness Talk to Me?

Posted on February 18, 2017 by

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.

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

Posted on February 5, 2017 by

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.

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

Fight the Power, Part III: The David Ganek Complaint

Posted on January 23, 2017 by

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.

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

Fight the Power, Part II: The Sheldon Silver Case

Posted on January 8, 2017 by

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.

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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)

Posted on December 30, 2016 by

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!

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Fight the Power, Part I

Posted on December 15, 2016 by

Fist pileThe recent flap over FBI Director’s Jim Comey’s possible efforts to influence the election against Hillary Clinton was fascinating. I watched his press conference and read the print coverage with great interest. People were shocked—shocked—that the head of the FBI may be less than fair and that a press conference may be held with less-than-pure intentions.

Anyone who defends corporate executives was not shocked. We know well that DOJ and the FBI use the press to their advantage. Cases may be formally won in a court of law, but the first punches are thrown in the media.

I have written before about how government investigations can destroy an executive’s reputation forever, even when there is no indictment or finding of guilt. The Department of Justice exercises such incredible power that I can’t understand why it feels the need to advertise its wins, like it’s selling used cars and hoping for more business.

But feel the need it does. How else to explain why DOJ holds press conferences and issues press releases to brag about indictments—but is conspicuously silent when it loses at trial, or an indictment is dismissed, or charges are never brought?

There’s no press conference then,no public forum where DOJ announces with equal fervor that the defendant was not guilty of anything. There’s not even a press release issued to announce the acquittal. The DOJ website keeps on file the press release announcing the indictment, though.

When someone searches the defendant’s name five years down the road, Google will quickly find DOJ’s announcement of the indictment – in the most damning terms possible – but no DOJ announcement of vindication.

This multi-part series is going to examine this problem in more detail–using some high-profile cases as examples–and explore some of the ways defense lawyers are fighting back.

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Posted in DOJ policy and practice | 3 Comments

Prosecutors Take Fair Approach to Sentencing in Fraud Case Against Executive (No, This Is Not Clickbait.)

Posted on December 8, 2016 by

Chief executive officerAs I’ve written about many times before, the loss amount drives many white-collar criminal sentences. The government’s view of loss amount plays a significant role in the court’s ultimate determination of that factor. the government often takes a very aggressive view when it comes to loss amount, such as in government contracting cases.

So, I was intrigued when I recently read about a case in Philadelphia where the government asked for less than the highest possible sentence for a white-collar defendant.

The Facts

The defendant in the case is Brian Hartline. He is the former CEO of Nova Bank. He was accused of having conspired to deceive regulators into giving his bank money under the Troubled Asset Relief Program, otherwise known as TARP. The total possible loss was $13.5 million, because that was the amount that Mr. Hartline and his compatriots tried to get through the TARP program.

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Everything’s Bigger in Texas, But this Sentence Is Absurd

Posted on December 1, 2016 by

Compare Apples to Oranges HeavyNearly all of my clients face federal white-collar criminal charges. Many of them seem to believe that federal criminal charges are more serious than state criminal charges, or that the penalties will be steeper.

A recent case from Texas shows that’s definitely not the case.

The Texas Case

According to a Law360 article, a Texas state court judge sentenced Susan Gay Pruitt to 22 years in prison. Her crime? Selling investments in fake oil and gas projects.

You may be thinking that she defrauded investors of millions and millions of dollars to deserve such penalty. But that’s not the case. In fact, according to the article, she defrauded investors of only $225,000.

You may be thinking that she challenged the government at every step and made them take her to trial in a lengthy proceeding. That’s not true either. She pleaded guilty.

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Posted in Wire Fraud | 6 Comments

Tax Fraud Cases May Be Easier to Defend But Don’t Count Your Chickens

Posted on November 25, 2016 by

Tax Fraud or Slave to TaxesFor most crimes, the government must prove that the defendant acted intentionally. This seems like it should be a fairly high bar particularly in white-collar criminal cases but it’s not.

For most crimes, the government need only prove that the conduct was not accidental or that the defendant intended to engage in the conduct. This is called “general intent.”

Tax fraud is another matter. In a tax fraud case the government must prove a higher level of intent called “specific intent.” Specific intent means that the defendant not only intended to engage in the conduct but also that he intended a specific result (e.g., to defraud someone). To denote specific intent, criminal statutes often use the word “willful.”

To prove criminal tax evasion, the government must prove (1) a tax deficiency, (2) an affirmative act constituting evasion or attempted evasion of taxes, and (3) willfulness. Under section 7201, willfulness is the “voluntary, intentional violation of a known legal duty.”  Cheek v. United States, 498 U. S. 192, 201 (1991).

In other words, the government must prove not only that the defendant acted intentionally and not accidentally, but also that the defendant knew that he was breaking the law.

Many defendants in criminal cases–particularly white-collar criminal cases–try to argue that they didn’t realize what they were doing was illegal. In most criminal cases, that defense holds no water because they are simply general intent crimes. But that defense could work in a tax evasion case.

So does this mean the defendant often wins in tax evasion cases? Nope.

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Posted in Appeal, Tax fraud | Leave a comment

A Podcast About Representing Executives in Internal Investigations Featuring . . . Me

Posted on November 15, 2016 by

Sometimes I’m asked whether this blog has led to clients. That’s a hard question to answer. The simple answer is probably no. I don’t write this blog for SEO purposes, and I don’t write it for the person-on-the-street. Most of my readers are lawyers, and white-collar defense lawyers to boot. Nobody has ever called me to say, I read your blog, I want to hire you.

But, writing this blog has all sorts of other benefits. It helps me keep up with current cases, and it forces me to learn things all the time. I use it to keep in touch with clients through my monthly newsletter, too.

Most important, though, being a blogger has introduced me to other bloggers in this realm. We read comment on each others’ posts, meet at conferences and enjoy common ground in the grind (and joy) of blogging.

Recently, I was lucky to talk with Tom Fox, who has a great blog, focused on FCPA matters. It is called, aptly enough, the FCPA Compliance Report. Tom asked me if I’d like to be on his podcast about issues arising in representing individuals in internal investigations. I was happy to volunteer.

Here’s a link to the final podcast, for your listening pleasure.

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Posted in internal investigation, Joint Defense Agreements | Tagged | Leave a comment