Matt Kaiser

Matt Kaiser is a lawyer at The Kaiser Law Firm PLLC, which handles complex civil litigation, white collar investigations, and federal criminal cases. On his blog, The Federal Criminal Appeals Blog, he writes about published opinions in criminal cases in the federal circuits where the defendant wins. He can be reached at mattkaiser@thekaiserlawfirm.

Posts by Matt Kaiser

There’s a new sheriff in town, and it’s corporate America.

Companies face pressure to make sure their market competitors aren’t getting a jump on them. And, in an effort to do that, some large companies have noticed that if they can get the United States Department of Justice to help, they have a big advantage.

Take, for example, this new blog about black market cigarettes. I heard a radio interview with the guy who writes it — Richard Marianos. He seems very passionate about the problems of black market cigarettes being trafficked on Interstate 95. His blog argues that I-95 is the new tobacco road.

(The old tobacco road, apparently, was Interstate 40 in North Carolina, which didn’t traffic in tobacco but, rather, collegiate sports, but, still, it’s a catchy name for a blog. Both tobacco roads seem to be separate from David Lee Roth’s understanding of the term.)

Marianos explained on the radio that black market cigarettes are a huge problem.

Often, he says, folks who traffic in cigarettes aren’t treated as seriously by judges as people who traffic, say, heroin, even though, when you think about it, they’re both drugs. (Though, of course, at the same time, an outhouse and the Louvre are both buildings, so I’m not sure how far that kind of reasoning goes.) Marianos is outraged that some cigarette traffickers only get probation.

He strongly suggested that black market cigarette sales are being used to fund terrorists.

Normally, when I hear the word “terrorist” I stop thinking and just hope the government throws money at combating whatever is being talked about. So, at first, I though black market cigarettes might be a very serious problem that the government needed to fund a response to.

Until I realized that a Marianos’s blog is another example of a disturbing development that I’ve been seeing in criminal intellectual property cases lately….

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One often hears lawyers, especially at large firms, say something like “if I were a client, I couldn’t afford to hire me.”

The reason is obvious; billable hour rates are high and quality legal work, especially in a tricky area, takes time. Legal fees for middle-class or even upper-middle-class people can easily outpace a client’s ability to pay.

This is a problem in a lot of areas of law, from divorce to employment to routine consumer litigation. In some cases, fee shifting or contingency fees can help make hiring a lawyer more affordable. Still, even for lawyers who aren’t in big firms, clients are often unable to afford the lawyer they need.

Federal employees caught up in Congressional or inspector general investigations are another sad example; they can be hit with massive fees for something they have no control over.

The political climate in Washington is hard on federal employees. Darryl Issa’s Committee on Government Reform and Oversight in the House has been bringing down a reign of terror on executive branch agencies — and the employees who work at them — for years now.

For example, think about Lois Lerner….

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As you’ve likely heard, there’s a Southern governor on trial for public corruption.

Shockingly, he’s not from Louisiana.

Former Virginia governor Bob McDonnell and his wife Maureen are on trial for, in essence, taking gifts from a guy named Johnnie Williams in exchange for doing things in the governor’s mansion (there are also some bank fraud charges and obstruction charges, but frankly, in comparison to the public corruption stuff the bank fraud is terribly dreary). After five weeks of trial and testimony, the case just went to the jury.

UPDATE (5:40 p.m.): And the McDonnells got convicted.

There has been a lot of commentary on the McDonnell trial (see, e.g., here, here, here, and here). One thing that hasn’t been talked about during the trial much: the defense severance motion that was denied at the very start.

And, as the trial has continued, that motion looks more and more important in hindsight….

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In Democracy in America (affiliate link), de Tocqueville observed that in America, every political problem becomes, at some point, a legal problem.

The modern version, is that, for a federal prosecutor, every legal problem becomes, at some point, a criminal case.

An AUSA in the U.S. Attorney’s Office in Manhattan is in a fight with his 82 year-old next door neighbor over where a fence dividing their property should be placed.

He’s an AUSA who has been previously mentioned here on Above the Law — Arlo Devlin-Brown, the chief of the public corruption unit in the U.S. Attorney’s Office for SDNY.

He’s also the guy who prosecuted his former law school classmate Matthew Martoma.

As it happens, he’s not only a fan of criminal charges for his law school classmates, but also for his neighbors.

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When I was in law school, I went to hear Chief Justice Rehnquist speak. He told a story of going to visit Finland, and meeting with their attorney general. The Chief Justice asked the attorney general whether the highest court in Finland could overturn an act of its parliament. She didn’t know the answer. She huddled with her staff for a few minutes, then told Rehnquist that they think their Supreme Court could, but the issue had never come up, because their high court had never tried.

Rehnquist told the audience that he thought this was just straight up freaky (not his words). And then began to wonder why he thought this was so strange. He concluded that there is something in the American psyche — especially in the part of the American psyche that lawyers seem to embrace — that feels compelled to push power to its outer limits.

This is a dangerous thing to think about if you think that our law enforcement community — from the lowly beat cops to an FBI forensic accountant — shares this disposition.

It’s an idea perhaps best explored by The Onion in Insecure, Frustrated Bully With Something To Prove Considering Career In Law Enforcement.

Friends and family confirmed that [the frustrated insecure bully], an unpredictable, petty individual who frequently loses his temper when he feels he is being threatened or disrespected, has in recent months been inquiring into joining the ranks of the Raleigh Police Department. In this role, the man with a massive chip on his shoulder and no visible sense of empathy would be tasked with peacefully resolving disputes and evenhandedly administering justice to members of the community over whom he would have official power.

And it’s a problem in the shooting of Michael Brown and subsequent protests. And police response to protests. And violence in response to the police response.

There’s a cultural shift happening in our law enforcement communities, and that shift matters to folks doing white-collar criminal work as much as blue-collar criminal work.

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Americans are obsessed with taxes.

Maybe it’s our libertarian streak. Maybe an anti-tax bias is in our DNA from the Boston Tea Party. In any event, no real American likes paying taxes.

And some people don’t like paying them even more than the rest of us. Like Donna Marie Kozak.

In Omaha Nebraska this week, Kozak was convicted of a number of tax crimes. She is a member of the “sovereign citizen group ‘Republic for the united States of America.’”

According to DOJ’s press release about the case,

since the late 1990s, Kozak has engaged in a long series of fraudulent schemes to obstruct the internal revenue laws. These included placing her property in sham trusts, establishing a sham charitable foundation, sending harassing correspondence to IRS employees and filing bogus tax returns, trust returns, private-foundation returns and other false documents with the IRS. In 2008, she filed a tax return based on fictitious income and tax withholdings on Form 1099-OID statements that claimed a refund of $660,000.

At trial, in addition to the questionable tax filings, she also seems to have filed a $19 million tax lien against a federal judge who oversaw the tax fraud prosecution against two of her friends. She also filed other multi-million dollar tax liens against the federal prosecutors who brought her friends’ case.

It seems Kozak did not have a legitimate claim to $19 million from that judge. And self-help to a fake tax lien is not how one should address a suspicion of prosecutorial overreach.

Like the folks who believe that the limits on maritime jurisdiction, explained by a talking salamander, holds the key to beating a federal criminal charge, the full tapestry of wacko tax fraud theories is a lovely thing to behold….

double red triangle arrows Continue reading “Tax Fraud, Tax Protestors, and the Most Awesome Willfulness Doctrine in Federal Criminal Law Today”

Forfeiture law is insane.

There are lots of reasons to hate criminal forfeiture. You could dislike forfeiture because of the way law enforcement uses it to target poor people, the way law enforcement takes small sums of money that no reasonable person would fight over, the way some law man down south threatened parents with choosing between being arrested and having their kids put in foster care or forfeiting their cash, or even the way it creates insane incentives for cops to fund themselves by taking money from people whether they ought to or not. (For examples of this stuff, see either The New Yorker or The Daily Show, depending on whether you’re currently trying to impress someone).

Law enforcement wants that forfeiture money. And, as the examples above show, they’re going to do a lot to get it.

Though now, in Baltimore, a forfeiture case has led to an allegation that a federal prosecutor knowingly produced a forged document in a case.

If you believe a law enforcement officer’s testimony under oath.

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The white-collar bar is a varied and wonderful thing.

On one hand, there are the large-firm players — the FCPA mongers and the folks doing criminal antitrust work who fly all over the globe representing clients in lucrative conference room litigation that will rarely see a courtroom.

These cases are well-funded. Even if the client has a higher chance of French kissing the Chief Justice during the State of the Union address than of being indicted, as long as he’s indemnified by a large company, many firms will do everything they possibly can to be completely and fully ready for an indictment that will never come. I haven’t yet heard of a mock jury for a client in an investigation that isn’t going to be indicted, but I think that’s only because no one has thought it up yet. (And, to my friends currently representing such indemnified clients, you’re very welcome for the suggestion.)

For these folks, attorney-client privilege exists and is relatively easy to preserve. It’s good to be pre-indictment and it’s good to be indemnified.

But, for the rest of the folks accused of white-collar crimes, our Department of Justice is only too happy to make folks choose between a preserved attorney-client privilege and the Sixth Amendment.

How?

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No one has getting indicted on their bucket list. No one sends word of their indictment to their alumni magazine.

That said, if you’re going to get indicted, it’s a whole lot better to be charged in state court in New York than in federal court anywhere else in the country, in at least one way.

The criminal case about the implosion of Dewey & LeBoeuf shows why. Last week, the folks charged in the Dewey meltdown filed a number of motions to dismiss the indictment. Everyone but Zachary Warren filed an omnibus motion to dismiss. Steve DiCarmine filed his own motion that was so, well, something that it contained Above the Law’s quote of the day. Zachary Warren filed a separate motion. There’s some great stuff in all of the pleadings about the government’s case.

What’s perhaps less obvious to those of us who do white-collar criminal defense but don’t normally practice in state court in New York is that, according to the law as set out in these papers, New York state is a magical Shangri-la of due process compared to federal court.

How?

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Time Magazine cover boy Preet Bharara

In the federal criminal world, there are certain cases where the government almost always wins.

Illegal reentry for a previously deported person, for example, is pretty close to a lock for a government win — all the government has to show is that the person isn’t a citizen, was previously deported, and is in the United States again. If the dude’s in the courtroom, the government is a third of the way there. For example, in the last fiscal year, there were 20,840 folks charged with illegal reentry.  Four of them were acquitted at trial.

Similarly, bank robbery is a high-percentage game for the government. These days, most banks have amazing technology that lets them record pretty much everyone inside. Last fiscal year, 896 people were charged with bank robbery. One lucky guy was acquitted.

These days, federal law enforcement is using wiretaps and, according to the Wall Street Journal, old-school sting operations, to go build white-collar cases (it’s a pretty cool article — very cloak and dagger). The strategies that got the federal government the conviction rate it has in drug and gun cases are being applied to investment fraud and insider trading cases.

This is one reason that insider trading cases have looked like as much of a layup as a bank robbery case. The U.S. Attorney’s Office in the Southern District of New York has secured a record of 85 convictions in either guilty pleas or trials without a single loss.

Until this week….

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