White-Collar Crime

It’s Harvard Law School’s world, and the rest of us are just living in it.

1999: ARLO DEVLIN-BROWN writes that you never know where you’ll run into a classmate. He is prosecuting MATHEW MARTOMA (née Ajai Mathew Thomas) on insider trading charges in Lower Manhattan. Devlin-Brown has asked U.S. District Judge Paul Gardephe (unfortunately Penn ’79, Columbia ’82) for permission to talk about Matt’s expulsion from Harvard for doctoring his transcript, so get ready for fireworks! The trial is expected to last several weeks, so for anyone who missed WILLIAM PULLMAN and Lisa Frank’s (Yale ’03, NYU Law ’08, NYU Stern ’08) Christmas Eve nuptials, it would be a great opportunity for a mini-reunion!

That is Bess Levin’s imagined entry for the next edition of Harvard Law School alumni news, offered over at our sister site Dealbreaker. It’s based on a New York Times piece marveling at the many HLS folks involved in this major insider trading trial (which also include Martoma’s lawyer, Richard Strassberg of Goodwin Procter, and Lorin Reisner, chief of the criminal division of the U.S. Attorney’s Office).

A takeaway from the Martoma matter: HLS students are the best! At forgery and fraud, that is.

Years before he allegedly cheated on Wall Street, Mathew Martoma, then known as “Ajai Mathew Thomas,” cheated at Harvard Law School by fabricating his transcript when applying for clerkships. It was a sophisticated effort that fooled multiple jurists. Which D.C. Circuit judges came thisclose to hiring him as a law clerk?

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Probably the most interesting question in white-collar crime these days is why there were no prosecutions arising out of the financial meltdown a few years ago.

As with most interesting questions, there are two polarized sides — one side wants to take up pitchforks and torches and head to Wall Street now, and the other side thinks that perhaps we should be a bit more circumspect about throwing people in prison (from that description, you can probably guess which side I’m on).

Judge Rakoff — a man we should all listen to one almost any subject — has weighed in with a thoughtful piece in the New York Review of Books called “The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?

How does Judge Rakoff answer the question?

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The Wolf of Wall Street, by Martin Scorsese and starring Leonardo DiCaprio, is out, and is the story of the rise and fall of Jordan Belfort, a stockbroker who, if the movie is to be believed (and maybe it mainly should be, including the dwarf tossing) built a fabulously successful and fundamentally corrupt trading firm, then was indicted, then went to federal prison and cooperated against two dozen of his friends and co-conspirators.

The film has been criticized for glorifying fraud and being dangerous — a “reckless attempt at continuing to pretend that these sorts of schemes are entertaining” — in a letter by the daughter of someone who went to prison for the stuff in the movie. Apparently traders love it in a creepy and not good way.

DiCaprio responded, saying that Scorsese’s vision is to show characters as they really are and ask “Who am I to judge anybody?” Apparently Pope Francis is contagious.

I don’t think the movie glorifies fraud any more than, say, Macbeth glorifies ambition. It seems like there are some pretty awesome parts to fraud, like you can use fraud to get a lot of money, which you can use to buy cool things. The movie is also frank that there are some serious downsides, like you can go to prison for committing it.

The film is also a largely accurate portrayal of the reality of a lot of white-collar practice.

Here’s how . . 

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Christmas came early for folks who are skeptical about the Department of Justice and how it does business.

Michael Horowitz, the Inspector General at the Department of Justice, issued a memorandum to the Attorney General listing his office’s view of the “Top Management and Performance Challenges Facing the Department of Justice.”

Whether you’re someone with a political axe to grind against a Department of Justice run under a Democratic President, a libertarian who simply doesn’t like the government doing much of anything, or someone in the trenches of the criminal justice system who wants to see the guts of the Department of Justice on display, there’s something for everyone to like in the IG’s memo.

And, of course, the IG’s memo is, institutionally, a bit odd. One would think that Eric Holder, the Attorney General, would be the guy issuing memos about the top issues facing the Department of Justice. But, happily, we have the IG — pulling up the dark parts of the Department and bringing them to the public eye.

So here, just so you don’t have to read it, are the most interesting parts of the Inspector General’s memo for folks in the white-collar world.

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Remember the 80s? Big hair, Dynasty, Huey Lewis was popular for some reason. Well, Judge Jed Rakoff remembers the 80s, and he also remembers the way the federal government used to actually investigate and prosecute people who committed massive financial crimes — Mike Milken, Ivan Boesky, Charles Keating, a bevy of other savings and loans kingpins. Good times.

And Judge Rakoff wants to know what happened to prosecuting financial crimes, specifically the sort of fraud that crippled the economy. So he took to the pages of the New York Review of Books to ponder all the financial prosecutions that could have been. And he has some theories about what happened and how prosecutors could do a better job in the future.

It’s a fascinating look at a bunch of ideas that the government is going to totally ignore…

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A Washington Post article this past weekend gave me the willies.  It was about SIGTARP – the Special Inspector General for the Troubled Asset Relief Program.

Leave aside that the article hits the tired drum that more people should have gone to prison after the financial crisis – because, of course, the only thing that causes an economic downturn is crime.

Instead, check out how SIGTARP shows us that they’re doing good work as a law enforcement agency.

[Special Inspector General Christy] Romero noted that the average prison sentence imposed by courts for crimes investigated by SIGTARP is five years and nine months — nearly twice the national average for white-collar fraud.

Right – SIGTARP is a serious player because it’s getting serious prison time…

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Ed. note: Matt Kaiser founded The Kaiser Law Firm PLLC, a white-collar boutique in Washington, D.C., and will now be writing a weekly column for us about white-collar practice and his adventures in building a law firm. Matt previously covered the Supreme Court for us. This is the second installment of his new column.

Suppose you’re a fourth-year associate in a litigation department in a large firm on one of the coasts. You’ve worked on a lot of different matters — you’ve done document review for commercial litigation. You put together a privilege log for some patent litigation (who says patent litigation is specialized?). You waded through documents in an FCPA case. You even got to do some deposition digesting for a reinsurance lawsuit!

You really liked your work on the FCPA document review. You noticed that the documents related to a foreign country, which sounded exotic. You could sit in your office, staring at the brick wall on the other side of the alley, and imagine that you were an extra in Casablanca, with a view toward how the world really works overseas.

Perhaps most importantly, you loved how your friends from law school reacted when you told them you were working on an FCPA matter. Cocktail parties became more interesting when people thought of you as a white-collar criminal defense lawyer, rather than the reinsurance guy. You resolved that you’d do more white-collar work and perhaps make this noble practice area the focus of your career.

But how?

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Ed. note: Matt Kaiser founded The Kaiser Law Firm PLLC, a white-collar boutique in Washington, D.C., and will now be writing a weekly column for us about white-collar practice and his adventures in building a law firm. Matt previously covered the Supreme Court for us. This is the first installment of his new column.

When I meet non-lawyers — a rare and jolting occurrence -– or talk to lawyers who don’t practice in the white-collar criminal space, I’m frequently surprised at how few of them know what “white-collar criminal defense” means.

Yet, whatever it is, white-collar work is seen as sexy. Just about any fifth-year associate who has reviewed documents as a part of an FCPA investigation has “white-collar criminal defense” listed as a practice area on his firm bio. Fewer, I suspect, have a clear understanding of what white-collar work is.

There are clear cases. The prosecution of John Edwards is classically a white-collar case: it involved campaign finance, was in federal court, was litigated like a civil case, and Abbe Lowell represented the defendant (any case involving Abbe Lowell is per se white-collar).

Then there are the less-clear cases….

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Jill Kelley

* With a government shutdown looming, the Supreme Court will likely go about business as usual. In fact, Justice Alito is rolling his eyes at the mere concept of closing the Court’s doors as we speak. [SCOTUSblog]

* But in the meantime, both the Department of Justice and the federal judiciary are hunkering down and waiting for the collapse of law and order thanks to all of our petulant politicians in Washington, D.C. [Blog of Legal Times]

* Justice Scalia thinks the NSA’s surveillance programs may come before SCOTUS for an examination of a “right of privacy that comes from penumbras and emanations, blah blah blah, garbage.” [Associated Press]

* Perhaps it’s due to the “hangover from the collapse of the markets in 2008,” but white-collar defense practices are on the rise in Biglaw, and the firms’ leaders could not be happier. [Philadelphia Inquirer]

* Another law school ranking just means there’s another way for Yale to whoop Harvard’s ass. Now we know that Lat’s alma mater is slightly better at producing law deans than Elie’s. [National Law Journal]

* A motion to dismiss has been filed, and now Jill Kelley, the Florida socialite who assisted in bringing about the end of General David Petraeus’s career in the CIA, is watching her legal case unravel. [CNN]

* DOJ busts giant fortune telling ring. You’d think they would have seen that coming. [Lowering the Bar]

* Today’s New York Times points out that Judge Kopf penned an eloquent post regarding his reaction to the news that Shon Hopwood — a man Kopf sentenced to a lengthy prison term — is poised to clerk for Judge Janice Rogers Brown of the D.C. Circuit. Funny, it seems like I read that news before… [New York Times]

* The government just doesn’t know what documents Edward Snowden stole. That’s part of the reason British authorities stopped David Miranda. That and the Brits love irony. [The Volokh Conspiracy]

* The message here is not bad per se, but to all the law school apologists spreading it around based on the quote, “Yeah, I know, the legal market sucks, blah blah blah. But you don’t need thousands of jobs. You just need one,” well, that’s not a sustainable model. For students that is. [Medium]

* In the midst of cracking down on the NYPD, Judge Scheindlin also issued a new opinion on e-Discovery. IT-Lex provides an in-depth review. [IT-Lex]

* Another sign of the discrimination against women in business — women lag far behind in the commission of high-level corporate fraud. [Law and More]

* BP has taken out a full-page ad in the New York Times, Washington Post, and Wall Street Journal to complain about how much money they’ve had to spend cleaning up that one time they catastrophically devastated an ecosystem through their own recklessness. It’s the most recent curious PR move on BP’s part…

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