Prosecutors Sure Do Love the Perp Walk

Posted on June 27, 2018 by

Businessman is arrested and handcuffedBy Sara Kropf

I recently listened to Preet Bharara’s podcast on a long car ride. He’s the former United States Attorney for the Southern District of New York. After months of conducting interviews of government-side subjects—prosecutors, FBI agents and the like—he interviewed a person who had pleaded guilty to a crime.

What struck me was that although the interview seemed like a prime opportunity for Bharara to hear from someone on the other side of the table, Bharara clearly had no interest in really hearing what Jason Goldfarb said, at least when it came to criticizing Bharara’s practices.

In particular, Bharara declined this opportunity re-evaluate the fairness one of his former office’s pointless and cruel practices: the media-leaked perp walk.

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Posted in DOJ policy and practice, Insider Trading | Tagged | Leave a comment

Supreme Court Rules SEC Administrative Judges Are Unconstitutional, But Special Counsel Mueller is Safe

Posted on June 22, 2018 by

supreme-court-of-the-united-states-of-american-picture-id695120666.jpg

By Dan Portnov

Yesterday, the Supreme Court decided Lucia v. SEC, holding that the Securities and Exchange Commission’s five-member commission must appoint the agency’s Administrative Law Judges (“ALJs”), as these in-house judges are “inferior officers” under the Constitution’s appointments clause. Justice Kagan wrote for a divided court that agency staff may not appoint ALJs, reserving that power to department heads, courts or to the president. (For those keeping score, Justices Ginsburg and Sotomayor dissented, while Justice Breyer concurred in part and dissented in part.)

As recently as 2016, the Commission had been waging a winning battle against financial advisor Raymond Lucia in the D.C. Circuit Court of Appeals, with the legal community watching closely. The Commission, represented by its trial attorneys and the Department of Justice’s appellate attorneys, had fought on behalf of itself and other federal agencies that similarly appointed and utilized ALJs. Many feared an administrative domino effect would result if the Commission’s ALJs were found unconstitutional. So what happened?

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

Surviving Parallel Proceedings

Posted on June 19, 2018 by

 

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.

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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

Posted on June 11, 2018 by

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.

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Posted in Acquittal After Jury Trial, Brady violations, Discovery/Brady, DOJ policy and practice, First Amendment | Tagged | 1 Comment

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

Posted on May 30, 2018 by

 

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.)

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Posted in CFTC case, Due Diligence, Investor fraud, SEC Investigation, Securities fraud | 1 Comment

Do Prosecutors Hate the Attorney-Client Privilege?

Posted on May 7, 2018 by

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.

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Posted in Attorney client privilege | Tagged | 1 Comment

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

Posted on April 30, 2018 by
vintage-detective-looking-through-a-magnifier-picture-id501362758

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:

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Posted in OIG investigations | 1 Comment

Doing the Government’s Laundry

Posted on April 23, 2018 by

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.

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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?

Posted on April 14, 2018 by

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.

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

Posted on April 13, 2018 by

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.

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