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Showing posts from 2008

Fiat Enters FCPA Deferred Prosecution Agreement

Fiat has agreed to pay a $7 million penalty for illegal kickbacks paid to officials of the former Iraqi government by three of its subsidiaries. According to the DOJ, the company will pay the fine as part of a deferred prosecution agreement with the government.
Criminal informations were filed today against three Fiat subsidiaries in U.S. District Court for the District of Columbia. Iveco S.p.A. (Iveco) and CNH Italia S.p.A. (CNH Italia) were each charged with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act (FCPA). CNH France S.A. (CNH France) was charged with conspiracy to commit wire fraud.Fiat has acknowledged responsibility for the actions of its three subsidiaries, Iveco, CNH Italia and CNH France, whose employees and agents made improper payments to the former Iraqi government in order to obtain contracts with Iraqi ministries to provide industrial pumps, gears and other equipment. The agreement req…

Siemens AG to Plead Guilty

According to the Associated Press, Siemens AG will plead guilty to settle corruption charges brought by the United States Department of Justice. The charges relate to allegations of bribery and falsification of corporate books from 2001 to 2007. According to the report, Siemens AG will pay at least $448.5 million in fines.
The Justice Department has accused Siemens of making bribes and trying to falsify its corporate books from 2001 to 2007. It has also accused some of the conglomerate's subsidiaries of bribery, including paying kickbacks to the former Iraqi government to get some of the United Nations Oil-for Food contracts.Siemens and its subsidiaries in Bangladesh, Venezuela and Argentina have agreed to plead guilty on Monday in U.S. District Court in Washington in front of Judge Richard J. Leon.Siemens has agreed to pay $448.5 million in fines, with the three subsidiaries paying at least $500,000 each, according to court papers.A spokeswoman for the U.S. division of Siemens h…

Several Guantanamo Detainees Charged in the 9/11 Attacks Seek to Plead Guilty

The New York Times is reporting that five Guantanamo detainees charged with coordinating the September 11 attacks told a military judge on Monday that they wish to confess in full and enter pleas of guilty.
The request, which was the result of hours of private meetings among the detainees, appeared intended to undercut the government’s plan for a high-profile trial while drawing international attention to what some of the five men have said was a desire for martyrdom. But the military judge, Col. Stephen R. Henley of the Army, said a number of legal questions about how the commissions are to deal with capital cases had to be resolved before guilty pleas could be accepted.The case is likely to remain in limbo for weeks or months, presenting the Obama administration with a new issue involving detainees at the naval base at Guantánamo Bay to resolve when it takes office next month. At the start of what had been listed as routine proceedings Monday, Judge Henley said he had received a writ…

The Second O.J. Simpson Trial - Simpson Rejected an Earlier Plea Deal for Less Time

MSNBC is reporting that prosecutors offered O.J. Simpson a plea deal before he was convicted that would have resulted in less time behind bars than he now faces. Simpson was convicted and sentenced for kidnapping and assaulting two sports memorabilia dealers with a deadly weapon.
O.J. Simpson is headed to prison for at least nine years, but a prosecutor says the former football star could have spent less time behind bars if he had accepted a plea deal before he was convicted.Clark County District Attorney David Roger said Simpson was offered a deal for less prison time than the nine-to 33-year prison terms the graying former football star was sentenced to on Friday for kidnapping and assaulting two sports memorabilia dealers with a deadly weapon."Mr. Simpson wanted something just short of a public apology," Roger said. "We didn't think that was appropriate."
For an interesting discussion of the varying reports in the media regarding how many years Simpson actual…

U.S Senator Craig's Efforts to Withdraw Guilty Plea Rejected by Court

CNN is reporting that the Minnesota Court of Appeals today rejected the arguments of U.S. Senator Larry Craig, who sought to withdraw his guilty plea to a misdemeanor offense of disorderly conduct in connection with a sex-string operation at the Minneapolis airport.
The Minnesota Court of Appeals on Tuesday rejected U.S. Sen. Larry Craig's effort to withdraw his guilty plea to a misdemeanor offense of disorderly conduct in connection with a sex-sting operation."Because we see no abuse of discretion in the denial and conclude that the statute is not overbroad, we affirm" a lower court's decision, the three-judge panel wrote in a 10-page ruling.In a written statement, Craig said he was "extremely disappointed" by the action and was considering an appeal."I disagree with their conclusion and remain steadfast in my belief that nothing criminal or improper occurred at the Minneapolis airport," Craig said.The Idaho Republican was arrested in the Minneapo…

Michael Vick Enters Guilty Plea on State Charges

According to the AJC, Michael Vick, who is currently serving a 23 month federal prison sentence on felony charges related to dogfighting, pleaded guilty to related charges in Virginia state court on Tuesday. Vick is currently serving his federal sentence at Leavenworth prison and is scheduled for release on July 20, 2009.
Vick pleaded guilty to a state dogfighting charge Tuesday in a Virginia courtroom. Under a plea agreement, the Falcons quarterback received a three-year suspended prison term and a $2,500 fine on a charge of attending, sponsoring and participating in dog fights. A charge of cruelty to animals with prejudice was dismissed. He also received four years’ probation. The fine will be suspended if Vick pays court costs and keeps the terms of the probation. The charges against Vick carried a maximum sentence of 10 years.After accepting the plea, Surry County Circuit Court Judge Samuel E. Campbell allowed Vick to speak. A stoic Vick, dressed in a gray suit, paused and then sai…

Conrad Black, Fallen Press Baron, Discusses the U.S. Justice System and Plea Bargains from Behind Bars

Conrad Black, who once presided over the world's third-largest newspaper empire, is currently serving a 78 month prison sentence in the United States after being convicted on three counts of fraud and one count of obstruction of justice related to improper diversion of company funds for personal benefit. Black recently discussed life behind bars and the U.S. criminal justice system in London's Sunday Times.
I write to you from a US federal prison. It is far from a country club or even a regimental health spa. I work quite hard but fulfillingly, teaching English and the history of the United States to some of my co-residents. There is practically unlimited access to e-mails and the media and plenty of time for visitors. Many of the other co-residents are quite interesting and affable, often in a Damon Runyon way, and the regime is not uncivilised. In eight months here there has not been the slightest unpleasantness with anyone. It is a little like going back to boarding schoo…

Korea Considering Adopting Plea Bargaining System

According to the Korea Times, South Korea is considering implementation of a plea bargaining system, and the lead prosecutor has stated that the system would initially be utilized for corruption cases. If these plans move forward, this will offer a unique opportunity to observe a criminal justice system's implementation of plea bargaining from the beginning.
The prosecution is seeking to adopt plea-bargaining for corruption cases.Prosecutor General Lim Chae-jin stressed the importance of criminal law reform, including the introduction of a plea bargaining system, at the prosecution's 60th anniversary ceremony held in southern Seoul, Friday. "It is time for Korea's judiciary to adopt plea-bargaining to a limited extent, such as in bribery cases, in order to effectively punish corruption, which is getting more complex,'' Lim said.Plea-bargaining is an agreement whereby the prosecution offers a lighter punishment to a criminal suspect in exchange for admitting h…

Ex-UBS Executive Is Sentenced to Six and a Half Years in Prison After Guilty Plea

According to Reuters, a former UBS executive has received a sentence of six and a half years in prison for his role in an what has been termed the most pervasive insider trading ring since the 1980s. The defendant, Mitchel Guttenberg, pleaded guilty in February 2008.

Mitchel Guttenberg, a former institutional client manager in UBS' equity research department, admitted in a guilty plea in February to selling nonpublic information about the bank's stock recommendations.In handing down the sentence, which includes three years of supervision after his release, Judge Deborah Batts of U.S. District Court in Manhattan said, "from the moment he joined the (UBS) investment review committee he planned to give that information to others to use illegally."Batts did not fine Guttenberg, who expressed his remorse to his family, the court and his former employer. His lawyer Sean O'Shea described Guttenberg as "a broken man" whose wife had left him, and he was living in…

McCain Op-Ed Discusses DOJ and Enforcement Priorities

Senator John McCain wrote an opinion article at the request of the National Law Journal regarding legal issues facing the next president. Below is a portion of the article discussing the Department of Justice, the ongoing mortgage fraud investigations, and organized crime.
Much responsibility for the effective administration of justice is entrusted to the dedicated men and women who toil day in and day out at the Department of Justice. My first objective would be to ensure that the department is, and remains, above the political fray. The department must function with integrity and effectiveness above all else. I would also bolster law enforcement programs that will aid our struggling economy and address the ongoing threat of terrorism and other public safety concerns. Unfortunately, we have all recently observed what happens when banks, major financial institutions and other engines of commerce become subject to market manipulators. Those who make a mockery of rules designed to keep o…

KPMG Case Heads to Trial

Another case we have followed closely is that of the government's prosecution of former KPMG executives and an ex-partner at Sidley Austin. The case, which was once billed as the biggest tax-fraud case in U.S. history, began with 19 defendants, but only four remain. Both the New York Times and the Wall Street Journal Law Blog have articles on the case this week.

From the NYT.
Jury selection began on Tuesday in a closely watched tax shelter case once billed as the largest ever, but government prosecutors face a difficult road after a string of defeats in a proceeding that has been scaled back.The four defendants, including three executives who once worked for the accounting firm KPMG, are set to stand trial on fraud and conspiracy charges. They are accused of creating, selling and sometimes using abusive tax shelters that reduced clients’ tax bills by at least $2.5 billion from the late 1990s to recent years. Opening arguments in the trial, before Judge Lewis A. Kaplan of Federal Dis…

New Twist In Broadcom Co-Founder's Plea Bargaining Matter

We've been following the events surrounding the plead agreement reached between the federal government and Broadcom Corp. co-founder Henry Samueli for quite a while now. (see here and here). Last month, the U.S. District Court Judge handling the case rejected the plea deal, which included five years of probation, a $250,000 fine, and $12 million in restitution to the U.S. Treasury. According to the District Court Judge, the proposed deal would "erode the public's trust in the fundamental fairness of our justice system" and would give the perception that "justice is for sale." The matter is on appeal to the 9th Circuit Court of Appeals.

Law.com has an update of events this week.
On Tuesday, Samueli and prosecutors declined to reject the plea deal, although both agreed to lift the binding provisions to allow the judge to consider a statutory maximum sentence of up to five years.Thom Mrozek, a spokesman for the U.S. Attorney's Office for the Central District…

A Little Hollywood Drama in the Plea Bargaining World

Michael Edison, a con man who stole $2 million from the widow of Atherton Phleger, a founding partner of Brobeck, Phleger & Harrison, pleaded guilty to all charges this week in return for an agreement that the government will not seek prison time for his wife, an alleged accomplice in trying to obstruct justice by deceiving Edison's attorney. The full story of how Edison perpetrated his con is a story that involves a Hollywood star, private jets and yachts, and fake documents from Switzerland. For his part, Edison agreed to serve 63 months in prison and pay $2.5 million in restitution.

Law.com has an article regarding the events.
Michael Edison admitted targeting Jean Phleger, widow of Brobeck, Phleger & Harrison founder Atherton Phleger, in a financial swindle. Originally introduced to Phleger by her son-in-law, the actor Don Johnson, Edison agreed to refinance Phleger's house, pay down her old mortgage, and use $2 million in leftover cash to pay Phleger's bills. Bu…

Former Chief Executive of Enron Broadband Services Pleads Guilty

According to the Associated Press, the former chief executive of Enron Broadband Services, Joseph Hirko, pleaded guilty on Tuesday to one count of wire fraud. The agreement requires Hirko to serve up to 16 months in prison and pay up to $8.7 million in restitution to the government for victims of the Enron collapse. He will also cooperate with prosecutors in other pending broadband prosecutions. Sentencing will occur on March 3, 2009.

As noted in the AP article, Hirko entered into the plea agreement because he did not want to risk the consequences of losing at trial. As has been discussed here previously (see this post regarding my recent article of plea bargaining in financial crimes cases after Enron), many individuals prosecuted for financial crimes following Enron agreed to enter plea bargains due, at least in part, to the existence of significant "sentencing differentials" between the sentence offered by the government in negotiations and the potential sentence resulting…

SEC Follows DOJ Regarding Requests for Waiver of Privilege

The National Law Journal is reporting that the SEC has released its "Red Book" publicly for the first time. The Red Book is similar to the Department of Justice's U.S. Attorney's Manual and provides guidance to the staff of the SEC Enforcement Division in the investigation of potential violations of the securities laws.
The manual addresses the privilege waiver issue as well as a number of areas that should aid practitioners, including the evaluation of possible investigations, issuing Wells letters, communicating with senior SEC officials, responding to document subpoenas, "witness assurance" letters and contacting current and former employees.In the privilege section, the manual contains the following statement in bold face type: "The staff should not ask a party to waive the attorney-client or work product privileges and is directed not to do so."It adds that all decisions about potential waivers are to be reviewed by the assistant supervising t…

ABA Task Force's Draft Recommendations Regarding Upjohn Warnings

A Task Force of the ABA has been working on recommendations regarding a set of best practices for company counsel to follow when providing Upjohn Warnings to company employees during internal investigations. Below is the executive summary from the Task Force's latest draft.
This Report and Recommended Best Practices are the product of a Task Force established in early-2008 by the White Collar Crime Committee of the American Bar Association’s Criminal Justice Section. They are intended to address an increasingly-common question associated with the attorney-client privilege: What best practices should corporate counsel follow when interacting with corporate employees while conducting internal investigations on behalf of the corporate entity? In particular, what advice or warnings – commonly referred to as Upjohn warnings, or corporate Miranda warnings – should corporate counsel (attorneys for any legal entity that is distinct from its members) provide to corporate Constituents (em…

DAG on the New Corporate Charging Guidelines

Last week, the Deputy Attorney General, Mark Filip, discussed the new DOJ corporate charging guidelines at the Third Annual National Institute on Securities Fraud Conference sponsored by the ABA Criminal Justice Section.

During the speech, the DAG outlined the major provisions of the corporate charging guidelines dealing with waiver of the attorney-client privilege and employee legal rights. During the question and answer portion of the event, Mr. Filip said that he did not believe that federal legislation was needed to protect the attorney-client privilege and employee rights now that the Department has refined its policies. He also said that the Department continues to support separate legislation (introduced in previous Congresses but not currently pending) that would allow companies to voluntarily produce privileged materials to the government without waiving the privilege as to third parties (the so-called "selective" or "limited" waiver proposals).

The audio of…

Guilty Pleas from the Subprime Mortgage Fallout Begin

Law.com is reporting that three people have pleaded guilty to a multi-million dollar subprime mortgage scheme in the Southern District of New York.
Galina Zhigun and her son, Garri Zhigun, operators of the Brooklyn-based mortgage brokerage AGA Capital NY Inc., and Maryann Furman, an AGA employee and the wife of Garri Zhigun, entered guilty pleas to fraud charges before Southern District of New York Magistrate Judge Gabriel Gorenstein. Accused of using false documents and straw buyers to obtain loans fraudulently, the three were among 26 people indicted in the subprime scheme. Friday's pleas bring to 11 the number of those who have pleaded guilty in the case. The remaining 15 defendants are scheduled to go to trial in two waves, the first on Nov. 17 and the second on Jan. 19. When he is sentenced on Jan. 5, Garri Zhigun is expected to receive up to nine years in prison. He has agreed to forfeit a total of $2.5 million. His co-defendants are expected to receive between up to four yea…

From Special Attorney to Special Counsel: The History of "Special" Lawyers

Slate had an interesting article today that discusses the difference between special counsels, special attorneys, and special prosecutors. The piece stems from discussion of Connecticut federal prosecutor Nora Dannehy's appointment as a "special attorney," though many in the media are mistakenly using the title "special prosecutor." Here is an excerpt from the article discussing the history of the various titles.
The term "special prosecutor" first came into use in the United States during the Teapot Dome scandals of 1920s, when Calvin Coolidge appointed outside lawyers to look into the corrupt land-leasing practices of federal officials. Special prosecutors were given more official status in the aftermath of Watergate, when Richard Nixon finagled the firing of the one assigned to investigate him. The Ethics in Government Act of 1978 called for the position of "special prosecutor" to be separate from the executive and legislative branches and…

When Not Guilty Can Mean More Prison Time

ABC News recently had an interesting article discussing one of the most widely debated aspects of the current U.S. federal sentencing regime - receiving an increased sentence for acquitted conduct. The story begins by discussing the story of Roger White.
When Roger White helped his brother and his brother's girlfriend rob a bank in Maysville, Ky., he led police on a high-speed, 17-mile chase down country roads before he finally crashed his car and was caught. At his 2003 trial, White, the getaway driver, was convicted of aiding the bank robbery, but the jury acquitted him of several other charges involving the use of a gun during the robbery and escape. Nevertheless, a judge found that there was sufficient evidence that shots were fired during the robbery and subsequent police chase to add nearly 14 years onto White's prison sentence, more than doubling it even though a jury found White not guilty of most of the gun charges. White's case, now pending before the Sixth Circui…

Former British Airways Executive Pleads Guilty - Nine Companies and Two Other Individuals Have Already Pleaded Guilty

According to a DOJ Press release, a British citizen and former British Airways Executive has agreed to plead guilty, serve eight months in jail and pay a criminal fine for participating in a conspiracy to fix rates for international air cargo shipments.
According to the charges filed in U.S. District Court in the District of Columbia, Keith Packer, former Commercial General Manager for British Airways World Cargo, and his co-conspirators engaged in a conspiracy to fix the air cargo rates charged to customers for international air shipments, including to and from the U.S., in violation of the Sherman Act. Under the plea agreement, which is subject to court approval, Packer has agreed to serve eight months in jail, pay a $20,000 criminal fine and cooperate with the Department’s ongoing investigation.Packer is the first foreign national and third individual charged as part of the Antitrust Division’s ongoing investigation into price fixing in the air transportation industry. Additionally,…

Ex-CIA Official Pleads Guilty in Virginia

The Washington Post has a nice article detailing the events leading to today's guilty plea by former top CIA administrator Kyle "Dusty" Foggo.
The CIA's former top administrator pleaded guilty today to steering agency contracts to a defense contractor and concealing their relationship, making Kyle "Dusty" Foggo the highest-ranking member of a federal intelligence or law enforcement agency to be convicted of a crime, officials said. Foggo admitted in U.S. District Court in Alexandria that he conspired to defraud the United States in his relationship with Brent R. Wilkes, a California businessman. Prosecutors say Wilkes subsidized meals and vacations for Foggo and his family, and that Foggo helped Wilkes get lucrative contracts, including one in which the CIA was bilked when it paid 60 percent more than it should have for water supplied by a Wilkes-affiliated company to CIA outposts in Afghanistan and Iraq. Foggo, a longtime logistics officer, was the CIA'…

Don't Throw Away the Benefits of Your Bargain

The WSJ Law Blog is reporting that Bill Lerach, the plaintiffs lawyer who is serving a two-year prison sentence after pleading guilty to participating in a scheme to pay kickbacks to lead plaintiffs, was recently transferred from a prison camp to a medium security prison. The transfer stemmed from his having offered his San Diego Chargers season tickets to a guard at the camp outside Santa Barbara earlier this year. Lerach's new home will be in Phoenix and will likely include double fences with electronic detection systems and cell-type housing rather than dormitories.

No one is going to argue that a prison camp is nice, but it is certainly more comfortable and safer than a medium security facility. Further, the move takes Lerach further from his home and medium security facilities typically have more restrictive visitation policies. One must assume that his placement in a prison camp in California was one of the factors he considered when deciding whether to accept a plea deal. Of…

Plea in Case of Largest Data Theft in History

On September 11, 2008, Damon Patrick Toey entered a plea of guilty to charges including wire fraud, credit card fraud, and aggravated identity theft stemming from the largest data theft in history. Toey and others stole information on tens of millions of customers from TJX Cos. and BJ's Wholesale Club. According to federal prosecutors, the group also breached the security of many other companies.  The Boston Globe had extensive coverage of the hearing.At a hearing in federal District Court in Boston yesterday afternoon, Damon Patrick Toey, 23, of Miami, pleaded guilty to multiple charges, including wire fraud, credit card fraud, and aggravated identity theft. Prosecutors alleged he helped the accused ringleader, Albert Gonzalez, to break through the computer security of a number of retail stores in the Miami area.Gonzalez himself appeared at a second hearing later in the day and pleaded not guilty to a set of similar charges.Prosecutors said both men were key players in a loose-kn…

Detroit May Get a Trial After All

According to the NYTs, Christine Beatty, the former chief of staff to Detroit Mayor Kwame Kilpatrick, has rejected a plea deal and will go to trial on perjury and other felony charges.
The aide, Christine Beatty, whose racy text message exchanges with Mr. Kilpatrick began the scandal that led to his resignation, refused proposals from prosecutors that called for her to serve two to five months in prison and pay $125,000 in restitution to the city. Ms. Beatty’s lawyer, Mayer Morganroth, dismissed a five-month sentence as “unreasonable” and said she would rather fight the charges before a jury. A conviction on all charges could result in a sentence of 19 to 30 months. For months, Ms. Beatty, who is charged with lying under oath when she swore that she had not had a sexual relationship with her married boss, had been widely expected to make a deal with prosecutors that would secure her freedom in exchange for testifying against Mr. Kilpatrick. But instead it appears that Mr. Kilpatrick, w…

Real Estate Developer Closes Big Deal

The Wall Street Journal is reporting that Raffaello Follieri, the Italian real estate developer, has entered into a deal with prosecutors in New York in relation to his alleged involvement in a real estate investment scheme.In the indictment, prosecutors accused Mr. Follieri, the chairman and chief executive of the Follieri Group, of getting millions of dollars from investors by claiming that his connections with the Vatican allowed him to buy church properties at below-market prices and redevelop them for “socially responsible” purposes. Mr. Follieri had no special rights in terms of buying properties but was simply competing against other bidders, the indictment said.Instead, the government said, he used money he received from investors to finance a lavish lifestyle including a $37,000-a-month apartment, meals and clothing. The charges accused him of misusing more than $2 million. According to the WSJ, the deal includes four to five years in prison. Interestingly, the deal included a…

Broadcom Co-Founder Plea Deal Rejected by Judge

We discussed a while ago the plea bargain entered into by Henry Samueli, co-founder of Broadcom. The deal would have allowed for probation for Samueli's alleged role in a stock-options backdating scandal. Last week, however, Judge Cormac J. Carney rejected the bargain, stating that the proposed punishment would not be sufficient.  He stated, "The court is not alone in concluding that a five-year probationary sentence does not capture the seriousness of Dr. Samueli's alleged misconduct."  The Wall Street Journal Law Blog had a nice discussion of what happens next. What are the options for prosecutors and Samueli in the wake of Carney’s ruling? They asked the judge for time to renegotiate their plea deal to address the court’s concerns, including the fact that Samueli didn’t agree to cooperate with prosecutors in cases against other former executives, such as former CFO, William J. Ruehle, or co-founder Henry T. Nicholas III, who were charged earlier this year with sec…

New DOJ Guidelines for Corporate Prosecutions in Response to KPMG Case

The Wall Street Journal had a nice editorial a couple of weeks ago regarding the events leading to the removal of the 2006 "McNulty Memorandum" in favor of revised corporate guidelines that expressly bar prosecutors from forcing organizations and their employees to waive numerous fundamental rights, including the attorney-client privilege, work product doctrine, and the constitutional right to counsel. Congratulations to Lewis D. Kaplan, the federal judge whose withering critique of prosecutorial abuse in the KPMG tax-shelter case was vindicated yesterday by the Second Circuit Court of Appeals.In fact, you can double that applause, because yesterday the Justice Department went further and once again rewrote its white-collar prosecution guidelines to accommodate Judge Kaplan's demolition. Whether Justice anticipated its legal defeat before the surrender is less important than the fact that it has now restored a measure of due process fairness to corporate defendants and t…