White Collar Crime Prof Blog

Be Careful What You Ask For: Third Circuit Vacates Two Sentences For Defense Breaches Of Plea Agreement

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In two cases consolidated for appeal, U.S. v. Yusuf and U.S. v. Campbell, the Third Circuit reversed downward variances based on defense breaches of the plea agreement. Both cases came out of the District of New Jersey and both involved plea agreements that recognized the sentencing court's ability to downwardly vary, but forbade the defense from arguing for a departure or variance below the recommended Guidelines range. The agreements also forbade the government from arguing for a departure or variance above the recommended range. Yusuf pled guilty to aggravate identity theft and conspiracy to commit bank fraud. Campbell pled guilty to felon in possession. Both cases involved mitigating circumstances that typically garner downward variances. Both cases involved sympathetic judges who all but encouraged defense breaches based on their searching inquiries during sentencing. Both cases stand for the proposition that there is a difference between defense counsel presenting the sentencing judge with all relevant facts about the defendant and the offense, including mitigating facts, and defense counsel asking for a downward variance, either directly or through questions to the client. This distinction is critical for defense counsel to keep in mind, even in response to questions for the court. In Campbell, defense counsel had the client ask the court for no jail time. In Yusuf, a much closer case in the Third Circuit's view, defense counsel suggested a sentence below the recommended Guidelines range. The Court distinguished defense counsel's sentencing hearing arguments in Yusuf from those of counsel for Yusuf's co-defendant Adekunle. (Adekunle's case was not on appeal and he had been sentenced by a different judge.) Adekunle's lawyer had reminded the sentencing court of its duty to consider proportionality, and the sentences handed down to co-defendants, but never asked for a downward variance and reminded the court twice that she was bound by the plea agreement: "I am constrained from arguing a below guideline sentence." The government also argued in Campbell that presenting character letters to the court asking for probation violated the plea agreement. The Third Circuit declined to reach this issue, which had not been preserved at sentencing, based on its finding that counsel's arguments alone constituted a breach. The Court cautioned district court judges at sentencing, "to be particularly mindful of the strictures on counsel when plea agreement provisions like the ones here are in place."

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(wisenberg)

Gideon Day & The Role of Public Defenders In White Collar Cases

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Today, March 18, 2021,  is the 68th birthday of the Supreme Court decision in Gideon v. Wainwright. Although Gideon marks the recognition of the Sixth Amendment right to counsel as a fundamental right applicable in state cases, it reinforces the Court's prior decision in Johnson v. Zerbst, holding the right to counsel in federal cases.  More importantly, the progeny of cases coming from Gideon has allowed court's to use the holding to include the importance of expenses of experts (e.g. Ake v. Oklahoma) as part of that fundamental right.  Many of these cases play an important role in white collar cases, especially ones that require experts such as forensic accountants.   

In the context of white collar crime, many believe that these cases are handled by private counsel and the role of the public defender is minimal.  That may not have been the case, and more importantly it is likely not to be the case as many of the fraud cases on the horizon will be COVID fraud related matters.  Whether it be the improper acceptance of money, or the improper use of money, public defenders are likely to be handling some of these cases. So, on Gideon Day it is important to note the key role that public defenders play in white collar cases. 

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Re-evaluating DOJ's Special Matters Unit

In 2020, the Fraud Section of the DOJ created the Special Matters Unit (SMU).  The naming of this unit was somewhat interesting in that in the early years of white collar crime, larger law firms used the term "special matters" for their section handling white collar criminal activity. Initially, many large firms did not handle any criminal matters and preferred to refer these cases to outside law firms.  Gradually, the business of handling white collar criminal matters became too profitable to send elsewhere, and the firms created sections called "special matters" to handle these cases.  Today, more firms in an effort to attract this business now openly advertise their white collar and government investigations sections.  So, to see in late 2020 the DOJ Fraud Division creating a new unit and calling it "special matters" was fascinating. 

But there is a big difference between the defense and government side of "special matters."  The government unit was created to deal with:

"issues related to privilege and legal ethics, including evidence collection and processing, pre-and post-indictment litigation, and advising and assisting Fraud Section prosecutors on related matters. The SMU: (1) conducts filter reviews to ensure that prosecutors are not exposed to potentially privileged material, (2) litigates privilege-related issues in connection with Fraud Section cases, and (3) provides training and guidance to Fraud Section prosecutors."  (see here)

It appears that this unit was created in response to the 4th Circuit decision, U.S. v. Under Seal, 942 F.3d 159 (4th Cir. 2019), that found the government's use of a taint or filter team improper.

It certainly can be argued that the better process is to appoint a "special master" as was done in Michael Cohen's case. But the question is whether taint teams should continue to be allowed. With continual discovery violations being noticed, this is a time to re-evaluate whether outsiders may be a better way to proceed when issues of attorney-client privilege arise resulting especially from government searches of law offices. 

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Prohibiting Punishment of Acquitted Conduct Act of 2021

Perhaps one of the most difficult issues to explain to students is that acquitted conduct may be used by a court in sentencing someone convicted of a crime. And it should be difficult to explain this, as it goes against the grain of fundamental constitutional rights at the core of our democracy. It is therefore good to see that US Senators Dick Durbin and Chuck Grassley have "introduced the bipartisan, bicameral Prohibiting Punishment of Acquitted Conduct Act of 2021."  " This legislation would end the unjust practice of judges increasing sentences based on conduct for which a defendant has been acquitted by a jury." (see here).  Due process demands that this be passed. As noted in Senator Durbin's press release, Justice Scalia in a dissent to a petition for certiorari wrote, "not only did no jury convict these defendants of the offense the sentencing judge thought them guilty of, but a jury acquitted them of that offense." Justices Ginsburg and Thomas had joined in this dissent.  This is a strong bipartisan issue that needs correction. (proposed bill here).

See also Cara Salvatore, Law360,  Sens. Revive Push to Ban Sentencing for Acquitted Conduct

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Corruption Investigations & Prosecutions Are Not Limited to the U.S.

Sylvie Corbet, Phil. Inquirer, France's Sarkozy Convicted of Corruption, Sentenced to Jail ("A Paris court found French former President . . . guilty of corruption and influence peddling").

CNN (Story by Reuters), South African corruption inquiry wants Zuma jailed for two years after no-show

Business Standard (AP), Israeli court delays Benjamin Netanyahu corruption trial until April

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Garland Hearing

One thing is pretty clear from the Garland hearing - he will easily be confirmed.  Non-political, experienced, caring, and yet determined to restore the DOJ to some of its roots was apparent in his testimony.  Check out, Jack Queen, Garland Aced His AG Audition. Next Comes The Hard Part. But there are still many questions that will await review when he becomes the AG - how he will handle the many challenges facing the department.

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Upcoming Garland Hearing for Attorney General

Many are opining on what to expect at the Garland hearing this week:

Jack Queen, What To Watch For At Garland's AG Confirmation Hearings, Law360

Carrie Johnson, Merrick Garland Heads For Confirmation Hearing, 5 Years After He Was Denied A Vote, NPR

Garland's opening statement is noted on CNN here.

Some thoughts on his opening statement -

1. First page after preliminary thanks and expounding on the historical role of AG is to emphasize the "rule of law" and "independence of the Department from partisan influence in law enforcement investigations."
2. Civil Rights and its importance is placed in the context of history.
3. He speaks about his role in the Oklahoma City prosecutions and moves into foreign and domestic enemies.
4. Two terrific Robert Jackson quotes highlight the ending. 

It is a short statement, and provides little about his priorities as AG.  But it does set a tone that fairness and a nonpolitical administration will be what overrides everything. One can expect he will be peppered with questions about many areas of concern. 

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NACDL Model Rule Under Due Process Protection Act

The Due Process Protection Act (see here and here), provides that:

In all criminal proceedings, on the first scheduled court date when both prosecutor and defense counsel are present, the judge shall issue an oral and written order to prosecution and defense counsel that confirms the disclosure obligation of the prosecutor under Brady v. Maryland, 373 U.S. 83 (1963) and its progeny, and the possible consequences of violating such order under applicable law.

But it also requires that:

Each judicial council in which a district court is located shall promulgate a model order for the purpose of paragraph (1) that the court may use as it determines is appropriate.

So what should that Model Order look like?  The National Association of Criminal Defense Lawyers (NACDL) has such an order for court's to use. It is an order that promotes due process, fairness to the accused, while also balancing the rights of others. A copy of that Order can be found here.  Importantly, it includes provisions of the consequences when there is a failure to comply.

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Top Attorney Added to Manhattan DA's Team

Kara Scannell, Manhattan district attorney bolsters team investigating possible fraud claims by Trump and his company, CNN

William K. Rashbaum, Ben Protess, & Jonah E. Bromwich, Manhattan D.A. Recruits Top Prosecutor for Trump Inquiry, NYTimes

Jerry Lambe, Manhattan District Attorney Escalates Investigation into Trump by Enlisting Heavy-Hitting Former Federal Prosecutor, Law & Crime

Check out Mark Pomerantz - here and here.

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From Rob Cary's Representation of Senator Ted Stevens to the Due Process Protection Act

David Oscar Markus has a terrific podcast interviewing Rob Cary of Williams and Connolly on his representation of Senator Ted Stevens. See here. It is important to be reminded of the important role that Judge Emmet Sullivan played in exposing discovery violations that had occurred in this case.    We are starting to see the full effect of what happened in the Steven's case with the recent passage of the Due Process Protection Act of 2020, which reminds prosecutor's of their discovery obligations under Brady.  

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The Dichotomy Between Overcriminalization and Underregulation

My recent Article - The Dichotomy Between Overcriminalization and Underregulation, 70 Am. U. L. Rev. 1061 (2021) -  available at - here and here.

The U.S. Securities and Exchange Commission (SEC) failed to properly investigate Bernard Madoff’s multi-billion-dollar Ponzi scheme for over ten years. Many individuals and charities suffered devastating financial consequences from this criminal conduct, and when eventually charged and convicted, Madoff received a sentence of 150 years in prison. Improper regulatory oversight was also faulted in the investigation following the Deepwater Horizon tragedy. Employees of the company lost their lives, and individuals were charged with criminal offenses. These are just two of the many examples of agency failures to properly enforce and provide regulatory oversight, with eventual criminal prosecutions resulting from the conduct. The question is whether the harms accruing from misconduct and later criminal prosecutions could have been prevented if agency oversight had been stronger. Even if criminal punishment were still necessitated, would prompt agency action have diminished the public harm and likewise decreased the perpetrator’s criminal culpability?

Criminalization and regulation, although two distinct systems, can be evaluated from the perspective of their substantive structure—a universe of statutes or regulations—as well as their enforcement procedures, the prosecution of crimes, or enforcement of regulatory provisions. The correlation between criminalization and regulation is less noticed, however, as the advocacy tends to land in two camps: (1) those advocating for increased criminalization and regulation or (2) those claiming overcriminalization and overregulation.

This Article examines the polarized approach to overcriminalization and underregulation from both a substantive and procedural perspective, presenting the need to look holistically at government authority to achieve the maximum societal benefit. Focusing only on the costs and benefits of regulation fails to consider the ramifications to criminal conduct and prosecutions in an overcriminalized world. This Article posits a moderated approach, premised on political economy, that offers a paradigm that could lead to a reduction in our carceral environment, and a reduction in criminal conduct.

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Prosecution of COVID Related Fraud Cases Picking Up

DOJ prosecutions related to COVID Fraud are clearly picking up. The DOJ's website front page instructs viewers on reporting COVID-19 crime.  And the Justice News shows a line of recent press releases focused on COVID related fraud.   One sees prosecutions for alleged "schemes purporting to sell Covid-19 Vaccines" (here), pandemic unemployment benefits fraud (here), and charges being brought for alleged "misappropriating monies designed for COVID Medical Provider Relief (here).

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Health Care Related Prosecution Settled With Qui Tam

DOJ Press Release reports, "Florida Businesswoman Pleads Guilty to Criminal Health Care and Tax Fraud Charges and Agrees to $20.3 Million Civil False Claims Act Settlement." (see here). The government notes that along with the criminal matter being resolved (although sentencing as not occurred yet), the settlement of the civil false claims case "includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act." The settlement can be found here.

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CEO Sentenced for $150 Million Health Care Fraud and Money Laundering Scheme

DOJ Press Release reports, "The CEO of a Texas-based group of hospice and home health entities was sentenced today to 15 years in prison for falsely telling thousands of patients with long-term incurable diseases they had less than six months to live in order to enroll the patients in hospice programs for which they were otherwise unqualified, thereby increasing revenue to the company." Full press release here.   

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Acting AG Reinstates Former AG Holder Policy on Charging and Sentencing

The DOJ's Acting Attorney General Monty Wilkinson reinstated the Department Policy on Charging and Sentencing of May 19, 2010.  Although noted that this is an interim measure pending the confirmation of a new Attorney General, it demonstrates the forceful return to a policy that is premised on "individualized assessment."   The new policy dated January 20, 2021 states, "The goal of this interim step is to ensure that decisions about charging, plea agreements, and advocacy at sentencing are based on the merits of each case and reflect an individualized assessment of relevant facts while longer-term policy is formulated."  See Policy here.  

In a country that is plagued with mass incarceration and racial inequities, it is wonderful to see reinstated a policy that will allow disparities to be corrected. As noted in this memo, "Together we will work to safeguard the public, maximize the impact of our federal resources, avoid unwarranted disparities, promote fair outcomes in sentencing, and seek justice in every case."

See also Stewart Bishop, Acting AG Drops Trump-Era Tough-On-Crime Charging Policy here.

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Corporate Criminal Reform

Professor Brandon Garrett here looks at books by  Jennifer Taub here and Hon. Jed Rakoff here in discussing corporate criminal reform.  This is definitely an area that President Biden will need to re-examine.

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Former AG Richard Thornburgh RIP

The press is reporting the death of former Governor of Pa. and Attorney General Richard "Dick" Thornburgh (see here and here). Many will reflect on his handling of the Three Mile Island crisis.  Others will look at his time as Governor. 

But criminal defense attorneys will likely recall the Thornburgh Memo that called for prosecuting or pleading to the "most serious readily provable offense."  There were some exceptions in the guidance, and in some ways this posture can be traced back to AG Civiletti.  (See Alan Vinegrad, Justice Departments New Charging Plea Bargaining and Sentencing Policy, NYLJ explaining the differences and sameness in DOJ  AG Policies). Others may recall his memo that allowed prosecutors to contact defense counsel's clients without their permission.  The highly controversial memo questioned whether US Attorneys were subject to state ethics rules. (See Allen Samuelson & Robert Maxwell, State Ethics Rules Now Apply to Federal Prosecutors)  In the end, the ethics rules prevailed, with the passage of the McDade Amendment in 1998 that legislatively held that attorneys for the government would be subject to state ethics rules. (see here). 

Dick Thornburgh was also known for "shepherding the American with Disabilities Act"(here) When he dedicated the Eleazer courtroom on Stetson Law's campus he said, "[t]he Eleazer courtroom doesn’t simply accommodate wheelchair access, though that is monumental in its own right. It goes so much further. Its technology will enable people with various sensory impairments to participate fully in our judicial process." (see here) 

Finally, Thornburgh supported the importance of the Mueller Investigation and the need for this investigation. In an op-ed piece in USA Today he stated, "We must insist that the Department of Justice perform its duties vigorously and follow the evidence wherever it leads. Our democracy demands no less."  (see here).

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2020 White Collar Crime Awards

Almost each year this blog has honored individuals and organizations for their work in the white collar crime arena by bestowing "The Collar" on those who deserve praise, scorn, acknowledgment, blessing, curse, or whatever else might be appropriate. With the appropriate fanfare, and without further ado, The Collar for 2020 is:

                2020

Happy New Year! See y'all next year.

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Corporate Transparency Act

The Corporate Transparency Act is part of the 2021 National Defense Authorization Act (NDAA). This is important bi-partisan legislation that will provide transparency when companies and individuals are using shell corporations to "thwart law enforcement and hide their illicit activities." (See Rep. Carolyn B. Malony's webpage).  A description of the Act can be found here.  See Morris Pearl, Congress just passed the most important anti-corruption reform in decades, but hardly anyone knows about it , (Dec. 26, 2020).  

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COVID19 & Jury Trial

Judge Gary R. Brown issued a Memorandum & Order in U.S. v. Cohn allowing for a waiver of a jury trial despite government objection. In this unusual move, in these unusual times, he is allowing for a securities fraud related case to proceed to a bench trial with the defendant's consent, but without the government's approval. See here.

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