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Showing posts from July, 2008

A Big Week for Plea Bargains

It seems there have been a number of interesting plea bargains recently, and I've compiled a list below describing some of the big ones.

(1) The DOJ announced on Tuesday that two DOD contractors pleaded guilty to various conspiracy charges related to their business of providing fuel supply services.
Paul Wilkinson and Christopher Cartwright, who were scheduled to begin trial today, entered into plea agreements filed in the U.S. District Court in Baltimore. Wilkinson pleaded guilty to conspiring to defraud the United States, to commit wire fraud, and to steal trade secrets by hiring another individual, Matthew Bittenbender, to steal those trade secrets from his employer, Avcard. Avcard is a division of Kropp Holdings Inc., a Hunt Valley, Md., company which provides fuel and fuel services to commercial and government aircraft. Wilkinson used the inside information to underbid Avcard at every location where the companies were bidding against each other, thereby subverting DOD's com…

Amnesty Commissions as Plea Bargaining

Continuing our series regarding amnesty and truth commissions as a form of plea bargaining, the BBC had an interesting story regarding Bangladesh's new Truth and Accountability Commission.
A Truth and Accountability Commission has been set up in Bangladesh to tackle the country's endemic corruption. The interim government says it will offer partial amnesties in return for information about corrupt deals. Critics say the terms of reference are unclear and the commission will achieve little before December polls when the government is due to relinquish power. Bangladesh remains one of the world's most corrupt countries, according to watchdog Transparency International. Last month, the group said corruption in the country had continued to thrive since the army-backed caretaker government took power last year pledging to tackle it. Leniency Justice HabiburRahman Khan has been appointed to chair the new three-member commission. Former Comptroller and Accountant General Asif Ali…

Former Lobbyist Pleads Guilty to Trying to Destroy Evidence

According to the DOJ, Cecelia Grimes, a former lobbyist and close friend of former U.S. representative Curt Weldon, pleaded guilty in U.S. District Court on Friday to charges related to the attempted destruction of evidence in a federal investigation.

According to press accounts, Grimes was visited by the FBI in 2006 regarding its investigation of Congressman Weldon. During that meeting, Grimes was presented with two grand jury subpoenas seeking records. Six days later, Grimes placed responsive documents in a trash bag and placed the bag in front of her house for garbage pickup. FBI agents then retrieved the garbage bag and located the documents, which were never produced to law enforcement authorities. Evidence presented at the plea hearing also showed that Grimes placed her blackberry devise in a trash can near a fast food restaurant to prevent the FBI from reviewing its contents. Grimes faces a maximum sentence of 20 years in prison and a fine of $250,000.

Obstruction of justice is a…

The Role of Plea Bargaining in International Crimes Prosecutions

There has been much talk during the last week about the arrest of Radovan Karadzic in Serbia, the request by the ICC for an arrest warrant for Sudan's president, and the start of the first American war crimes trial since WWII. See here, here, here, and here. For the purposes of this blog, I thought we should ask the following - What role does plea bargaining play in international crimes prosecutions?

To that end, I found an interesting article by Nancy A. Combs, entitled "Procuring Guilty Pleas for International Crimes: The Limited Influence of Sentence Discounts," 59 Vand. L. Rev. 69 (2006). Here is the article's conclusion.
The relatively straightforward relationship between sentencing discounts and guilty pleas just described does not exist in the context of international crimes. Although some international defendants rely on sentence-based calculations when deciding whether or not to plead guilty, for a substantial proportion of international defendants currently i…

Former Engineered Support Systems Inc. Chief Executive and Co-Founder Pleads Guilty to Backdating Charge

Former Engineered Support Systems Inc. Chief Executive and co-founder Michael Shanahan Sr. pleaded guilty today to one of twelve federal charges related to backdating company options. As part of the deal, he agreed to pay almost $7.9 million back to his former company.

One article regarding the plea deal includes an interesting discussion of backdating investigations generally.
In court filings, federal prosecutors in St. Louis called the Engineered Support case "one of the most egregious examples of backdating among all of the publicly traded companies in the United States. It strains mathematical formulas to calculate the likelihood of randomly selecting the lowest date within a quarter to issue stock options ... and to do it eight times in a row."While hundreds of companies and executives have been investigated for backdating, only a handful of those probes have led to criminal charges. The Engineered Support case is the only one outside San Francisco or New York to see a f…

The Case for Plea Bargaining in South Africa and a Blast from the Past

The Times in South Africa had an interesting piece on Sunday regarding plea bargaining. The article was entitled "The Case for Plea Bargaining," and the author, the director of the Institute for Security Studies in Cape Town, described not only the forces influencing the plea bargaining debate in South Africa, but the way similar debates have evolved around the world.
In a study into the use of plea bargaining in South Africa, the South African Law Commission concluded that it “performs an important part in our criminal justice system”. . . While the use of legitimate discretionary powers by prosecutors continues to provoke controversy here and abroad, their power to make such deals has been repeatedly upheld by courts. The US Supreme Court has held that “if every criminal charge were subject to a full-scale trial, the states and federal government would need to multiply by many times the number of judges and court facilities”.The overwhelming justification for the use of ple…

Special "Plea Rocket Docket" Sends 88 Inmates Home to Ease Jail Overcrowding

Yesterday, a court in Brevard County, Florida held a special "plea rocket docket" session. The special plea bargaining event was designed to quickly move 88 non-violent misdemeanor offenders off the dockets and out of an overcrowded jail. The judge conducting the event specifically reminded the participants not to accept a plea agreement just to get out of jail, stating, "We want to go fast, but we don't want to slaughter anyone's due process."  Court appearances at the county jail usually are somber sessions filled with bitter hand-wringing and looks filled with regret. Friday was a little different.A specially scheduled "rocket docket" meant to expedite plea deals between nonviolent misdemeanor offenders and the state -- before regularly scheduled court dates -- resulted in 88 inmates going home, as well as a standing ovation when Circuit Judge George Maxwell was finished at 10:42 a.m. There were lots of smiles.. . . Chief Judge Clayton Simmons a…

Interesting Article Regarding the Exclusionary Rule - We're All Alone

An interesting article in the New York Times today explores the fact that the United States is the only country to take the position that some police misconduct must automatically result in the suppression of physical evidence. The article includes great discussion of the history of the rule, the possibility that the U.S. Supreme Court is preparing to reconsider the rule, the exclusions that have been created to the rule over the years, and the approach to suppression of evidence where police misconduct is present in other countries.
The Supreme Court started requiring the exclusion of improperly obtained evidence in 1914 — but only in federal cases.

For many decades afterward, the Supreme Court refused to apply the principle to states, saying they could choose the appropriate remedy for police misconduct — including civil suits and criminal prosecutions — and were not required to suppress evidence. In a 1949 decision, the court justified that position in part with a rationale now disfa…

Judge in Health Care Fraud Case Rejects Guilty Plea

In a highly unusual move, a federal judge in Oakland, California has rejected a defendant's guilty plea because of doubts as to whether the individual actually committed all of the elements of the crime to which he agreed to plead. According to the transcript from the case, Judge Saundra Armstrong stated, "It is not my practice to accept guilty please from people who are not guilty."

The defendant, Chi Yang, agreed to plead guilty in connection with fraudulent sales made by his Dublin, California based biotech company. The guilty plea was to be to charges of false statements, not fraud, but the agreement would have resulted in prison time and hundreds of thousands of dollars in fines and restitution.

This case brings up the interesting question of whether a defendant should be permitted to plead guilty to a crime that he or she did not commit and that carries a lighter sentence, instead of going to trial on a charge to which her or she may be guilty and which carries a l…

Joe Cool Killer to Plead Guilty

On September 23, 2007, an abandoned chartered fishing boat called the Joe Cool was discovered by the U.S. Coast Guard floating 60 miles south of Bimini. Several hours later Kirby Archer and Guillermo Zarbozo were discovered in the vessel's life raft some 10 miles away. Initially, Zarbozo told authorities the boat, which was headed from Miami to the Bahamas had been hijacked by pirates who fatally shot the Captain and his wife and threw the remaining two crew members overboard. Zarbozo claimed he and Archer had been spared. The bodies of the Captain, his wife, and the two crew members were never discovered.

Authorities were naturally suspicious of the story, and, after an investigation, concluded that Archer and Zarbozo killed the four in an attempt to take the boat to Cuba. Archer had once served at Guantanamo Bay, and Zabozo originated from Cuba. Each desired to return to the island.

According to one of the victim's relatives, Archer has agreed to accept a guilty plea to first-…

ICE Probe Leads to McDonald's Franchisee Guilty Plea

The Department of Justice announced this week that one current and one former top executive for a franchisee that owns 11 McDonald's restaurants in and around Reno, Nevada, and the corporation itself pleaded guilty in federal court to federal felony immigration charges for encouraging illegal aliens to reside in the U.S. The defendants in the case waived indictment and pleaded guilty to informations.

The DOJ press release notes that the government and the defendants agreed that the corporation will pay a $1 million fine and be placed on probation during the period the fine is outstanding. This agreement was accepted by the court. The individual defendants face sentencing at a later date.

According to the DOJ, ICE has made 937 criminal arrests in connection with worksite enforcement investigations in 2008. Of those, 99 involved owners, managers, supervisors or human resource employees who face charges ranging from harboring to knowingly hiring illegal aliens.

This case presents an int…

Former HP'er Pleads Guilty to Trade Secrets Violations

Atul Malhotra, a former Hewlett Packard Company employee, pleaded guilty last Friday to stealing trade secrets regarding pricing from IBM, where he had worked as a director of sales and business development in output management services for IBM Global Services for ten years. According to the press release from the Department of Justice:
In May 2006, Malhotra became a vice president of imaging and printing services for HP. According to plea documents, shortly after starting in his new position at HP, Malhotra shared IBM trade secrets with his superiors. On July 25, 2006, Malhotra sent an e-mail to an HP senior vice president with the subject, "For Your Eyes Only," and attached the trade secrets information for which he is charged with sharing. Two days later, on July 27, 2006, he sent an e-mail to another HP senior vice president with the subject, "For Your Eyes Only - confidential," and attached the same trade secrets information. The court documents also reveal tha…

Peteka Pleads Guilty in Morgan Stanley Case

Ronald Peteka pleaded guilty this week in the S.D.N.Y. in a case involving the theft of proprietary information regarding hedge funds from Morgan Stanley & Co. According to the press release from the S.D.N.Y. United States Attorney's Office, Peteka was employed by a Manhattan company in the business of negotiating on behalf of hedge funds the rates that hedge funds pay to Morgan Stanley and its competitors for prime brokerage services. At issue in the case was Peteka's receipt of confidential and proprietary documents from a Morgan Stanley employee that contained information regarding hedge fund clients and the formulas used to calculate certain prime brokerage services. According to prosecutors, Peteka and the Morgan Stanley employee planned to use the information to start a consulting business. Peteka pleaded guilty to one count of interstate transportation of stolen property and faces a total maximum sentence of 10 years in prison and a maximum fine of $250,000. The Mor…

How do you prepare to enter the courthouse?

The New York Times has a great article regarding how celebrities enter the Manhattan courthouse.
Entering and leaving the courthouse — whether it is 100 Centre Street, Manhattan’s main criminal court building, or across the street at 111 Centre, where Mr. Combs was tried — is often a carefully coordinated exercise involving lawyers, court officers and drivers. The officers escort high-profile people in and out of the buildings at the request of their lawyers, who typically arrange for someone to call a driver parked nearby to pick their clients up once their day in court is done.If everything goes smoothly, the driver should pull up just in time to meet the famous passenger, almost always in a black S.U.V. with tinted windows because “it gives you the allure of being someone who needs a blacked-out, tinted S.U.V.,” said Joseph Tacopina, a lawyer who has defended a number of celebrities.
Sometimes, the choreography works. After testifying in May at the trial of a man accused of stalking …

2008 Mid-Year FCPA Update from Gibson Dunn

Gibson Dunn has issued its 2008 Mid-Year Foreign Corrupt Practices Act Update, and it contains an interesting statistical analysis demonstrating that the "trend of continually increasing enforcement is here to stay for the near future."

In a nutshell, the FCPA's anti-bribery provisions target companies that offer money to officials of foreign governments to obtain business. The law also requires the keeping of "books-and-records" detailing companies' transactions and dispositions of assets. It is a fascinating piece of legislation that resulted from a sweeping SEC investigation of such practices in the 1970s and was intended to restore confidence in the integrity of American businesses.

The Gibson Dunn report contains case studies regarding several recent FCPA investigations and, besides increasing enforcement, another trend emerges. Every FCPA investigation of a corporation ended with either a guilty plea, a deferred prosecution agreement, or a non-prosecuti…

Former Refco CEO Sentenced After Plea Deal

Former Refco CEO Phillip Bennett was sentenced today to 16 years in prison for his involvement in a fraud the government alleges involved $2.4 billion. According to the Wall Street Journal Law Blog:
Refco IPO’d in August 2005. It filed for bankruptcy just weeks later — after disclosing that a $430 million debt owed to Refco by a firm controlled by Bennett had been concealed. The disclosure caused Refco’s stock value to plummet.

At today’s hearing, SDNY Judge Naomi Reice Buchwald said white-collar defendants like Bennett often “just don’t think they’ll get caught.” Buchwald continued: “You and others like you play a truly high-stakes poker game.”
Speaking of high-stakes poker games, did Bennett make the right decision regarding pleading guilty? With a $2.4 billion loss number for purposes of the U.S. Sentencing Guidelines, it is clear that he would have remained in jail the remainder of his life had he lost at trial. As such, and with the evidence appearing fairly strong, this may have b…

The Supreme Court on Victims' Rights and Plea Bargains

The SCOTUSblog has two interesting posts regarding the Supreme Court's refusal on Wednesday to enter a stay preventing a federal judge in Texas from considering a plea bargain relating to charges that stem from an oil refinery explosion in March 2005. The explosion killed fifteen workers and injured more than 170. Under the proposed deal, BP Products North American, Inc. would pay $50 million in fines and plead guilty to a violation of the Clean Air Act for failing to maintain equipment and for failing to warn workers of the potential for fire and explosion. The stay was requested by victims of the blast who allege the deal is too lenient and was constructed by prosecutors without any input from them.

While the stay has been denied, an appeal of a U.S. Court of Appeals for the Fifth Circuit opinion limiting the blast victims' rights to object to the plea deal under the Crime Victims' Rights Act is being prepared and might answer the ultimate question: What rights do vic…

Former Home Depot Employee Pleads Guilty to Vendor Kickback Scheme and Tax Evasion

The DOJ has announced that Anthony M. Tesvich of Atlanta, Georgia, has pleaded guilty to one count of conspiracy to commit wire fraud and three counts of tax evasion. The charges stemmed from a scheme to defraud Home Depot.

According to the United States Attorney for the Northern District of Georgia, David E. Nahmias, "This defendant has now admitted to taking millions of dollars in secret payoffs from Home Depot's vendors and not reporting or paying taxes on that corrupt income. Vendor kickbacks to corporate employees corrupt fair competition and the honest operations of American businesses. Those who pay, receive, or solicit such payoffs may face federal prosecution."

This is a particularly interesting case because we see here two of the most common charges from federal prosecutors in a financial crimes case. The first, conspiracy to commit wire fraud, is often utilized because wire fraud is one of the easiest federal criminal statutes to satisfy and the conspiracy tag a…