White-Collar Crime

iStock_000014779007_LargeFake stash house robbery cases are a shameful example of the worst of federal law enforcement.

Here’s how they work. An undercover — generally with the ATF — meets someone who has a criminal record (that part becomes important later). The ATF agent tells the person that there’s a stash house out there, and that it has a whole bunch of drugs in it. Also money. It doesn’t really matter how much — the agent can make up virtually any number he wants. Maybe there are 150 kilos of cocaine in there. Maybe a million. It’s whatever the agent thinks he can dream up and sell.

The agent sells the person on the idea that there’s a vulnerability in the stash house and it can be easily robbed. The agent gives the person a car, or guns, or whatever the guy isn’t able to get on his own. He encourages the guy to recruit more people. You need a lot of bodies to rob stash houses that don’t exist.

They plan the robbery. The agent tape records them planning the robbery. Then they strap up to go rob the stash house that the agent made up.

Surprise! The agent arrests the guy and his friends. And it gets worse…

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In a criminal case in federal court, if you are acquitted at trial of almost all of the charges against you, you can still be sentenced as though you were convicted of all of the charges against you, when the judge disagrees with the jury’s decision. That is off-the-rails crazy.

The point of a trial, of course, is to figure out if someone is going to go to prison for doing something. The jury’s decision about what a person did should be what controls what crime the person is sentenced for committing. Yet that’s not what judges do.

To be sure, there are some cases where judges use sentencing decisions to express concerns, perhaps, about the jury’s verdict. Such as when Barry Bonds was given a light sentence for committing something that was probably not a crime. Or when a woman in Indiana was convicted in a highly questionable prosecution after being inappropriately skewered with unfair questions on cross.

But that’s a judge using her power to set a sentence while respecting the decision of a jury. She accepts what the jury decided, then takes that into account — in addition to other things — when imposing sentence.

When a judge gives someone more time in prison based on something that a jury already decided the person wasn’t guilty of, it’s very different. That’s an insult to the jury and is really hard to square with how the law of federal sentencing has been developing lately.

This week, the Supreme Court had a chance to fix that. It didn’t.

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November 6-8, the National Association of Criminal Defense Lawyers is having its annual White Collar Criminal Defense Conference. If you’re interested in learning about the white-collar bar, you should go (also, in the interests of full disclosure, one of my partners is speaking at it).

The white-collar world has two main conferences. There’s the NACDL White-Collar conference in November — which is sometimes affectionately called the Abbe Lowell conference, since he has been the driving force behind much of it — and the ABA White-Collar conference in the Spring. Normally, the NACDL conference is in Washington, D.C. or New York, and the ABA Conference is some place southern, pleasant, and known for alcohol consumption (Miami last year, New Orleans this year, Vegas a few years ago).

There are differences between the conferences, and they illuminate a good deal about the differences in the white-collar bar….

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Recently, I wrote, with Chris Muha in my office, an amicus brief in the 11th Circuit for the National Association of Criminal Defense Lawyers. It raises an important issue about white-collar criminal cases.

The case, in a highly generalized nutshell, came down to this — WellCare, a company in Florida, that took Medicaid payments made a decision about how to set up a way to provide services under Medicaid that took advantage of an ambiguous statute. Counsel vetted it and signed off on the interpretation as reasonable.

Other companies took essentially the same approach to the ambiguous statute and set up essentially the same approach to providing these services.

The agency in Florida that administers its Medicaid program took a different view of what the statute meant.

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Barry Bonds was convicted of obstruction of justice for giving non-responsive answers to questions in a grand jury. As Judge Fletcher told the government in the oral argument in the 9th Circuit en banc challenge to his conviction, “I find your reading of the [obstruction of justice] statute absolutely alarming.” And for good reason — Judge Fletcher thinks that the government’s interpretation of obstruction of justice would mean that most civil lawyers are felons.

There are a lot of ways to violate federal laws that are related to obstruction of justice. You can lie to a federal agent who is coming to your house to interview you and violate 18 U.S.C. § 1001. You can commit perjury under 18 U.S.C. § 1621. And there are a host of other false statement statutes specific to other regulatory schemes (like false statements in connection with a tax filing, or a health care request for payment, etc.).

All of those laws, though, require that the person who is being prosecuted make a false statement.

Obstruction of justice is different. Instead of having concrete elements like “making a false statement”, obstruction of justice criminalizes willfully “obstruct[ing], imped[ing], or interfer[ing] with” whatever is being allegedly obstructed.

Here, Barry Bonds didn’t make a false statement. Instead, he gave an answer that was non-responsive. The government’s theory was that Barry Bonds didn’t give a responsive answer to a question in order to throw the government off (because, apparently, having the temerity to force an AUSA to listen to questions in a grand jury and ask a follow-up question is the kind of thing that ought to brand you a felon).

And that was “obstructing” the federal law enforcement apparatus.

There are a lot of things wrong with this prosecution. The one I want to focus on is the lengths the federal government will go to in order to protect AUSAs from having to do the same basic work that the rest of the legal community does routinely.

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* Law student sends naked selfie to her father. Hilarity ensues. [Inside Edition]

* “Is insider trading bad?” Asking for a friend. [The Atlantic]

* Judge catches law firm cheating on the page limit. Apparently, Judge Carl Barbier was well-versed in the “slightly less than double-spaced” trick. [NPR]

* What’s the matter with (statutory interpretation in) Kansas? [KSN]

* You may have heard that technology is going to gut the market for low-level lawyering. If not, here’s a wakeup call. [Forbes]

* This year’s MacArthur genius grant recipients. Is your name on the list? SPOILER: No. But a William Mitchell Law professor is. [New York Times]

* Steve Klepper’s fair-minded and favorable review of Lat’s forthcoming book, Supreme Ambitions (affiliate link). [Maryland Appellate Blog]

Jordan Belfort

Last night, I attended a panel discussion at the 92nd Street Y featuring some very interesting individuals — including two lawyers. Thane Rosenbaum, the law professor and novelist, moderated a panel featuring former federal prosecutor Daniel Alonso, CNBC anchor Kelly Evans, and the “star” of the evening, Jordan Belfort — the disgraced stockbroker turned convicted felon turned bestselling author who served as the inspiration for Martin Scorsese’s 2013 film, The Wolf of Wall Street.

So what was the evening like? One attendee described it as “cringeworthy” — and I have to agree….

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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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