Tuesday, October 6, 2009

Fascinating 60 Minutes and Vanity Fair Interview with Marc Dreier

60 Minutes ran a fascinating interview with Marc Dreier this week, which included significant discussion of the forces that led Dreier to commit fraud and the chain of events that led to the unraveling of his scheme.

The 60 Minutes interview was done in conjunction with Vanity Fair, which published an article regarding the interview with Dreier in this week's issue.

The sun-drenched apartment, perched high in a Midtown Manhattan building looking down on the famed restaurant Le Cirque, is as luxurious as one would expect for space that cost $10.4 million. Lined with floor-to-ceiling glass, the living room features low divans wrapped in rich golden fabric. On the vast outdoor deck, as big as many apartments, the views stretch north and east, all the way across Long Island Sound toward Connecticut.

Yet even a casual visitor would notice that something is amiss. Dozens of bare hooks line the white walls; all the paintings are gone. Boxes of paperwork litter the floors. In the kitchen, the knives are missing. Bags of trash overflow. The dining-room table is strewn with containers of half-eaten Chinese food. In an adjacent nook, an older man slumps on a sofa watching CNN on a wall-mounted flat-screen television. Unpaid bills are piling up. As nice as this apartment once was, it now feels like a $10 million dorm room.

That’s because it’s a jail. Sort of. On the orders of a federal judge, its owner is living here under house arrest. That man watching CNN? He’s a retired F.B.I. agent, one of several who rotate through all week long. One morning I arrive after 11. The owner, the man the security guards are watching, is just getting out of bed.

His name is Marc Dreier, he is 59 years old, and his life is over. A smallish, tightly wound man with red, stubbled cheeks and a silvery pompadour, Dreier was once a hotshot New York litigator with multi-millionaire clients. Then he stole $380 million from a bunch of hedge funds, got caught, and was arrested in Toronto under bizarre circumstances, having attempted to impersonate a Canadian pension-fund lawyer as part of a scheme to sell bogus securities to the big American hedge fund Fortress Investment Group. Now, as he wanders into the living room rubbing sleep from his eyes, Dreier is waiting for the judge to tell him just how many years he will spend in prison.

As he takes a seat across from me, he is wearing a loose-fitting black sweater and black jeans. And then, in the lifeless monotone of a death-row inmate, Marc Dreier begins to tell his story.

The Wall Street Journal Law Blog also has discussion of the interview.

Friday, October 2, 2009

5th Circuit Allows Waiver of Ban on Evidence from Plea Negotiations

The 5th Circuit has ruled that public policy considerations do not justify barring a prosecutor from eliciting a defendant's waiver of the ban on the admission of statements made during plea bargaining negotiations. The Court found permitting this waiver was a natural extension of the 1995 Supreme Court decision in United States v. Mezzanatto, 513 U.S. 196 (1995), enforcing a waiver with respect to impeachment evidence.

United States v. Sylvester, 5th Cir., September 18, 2009:

Now presented with a case-in-chief waiver, however, we can find no convincing reason for not extending Mezzanatto’s rationale to this case. Justice Thomas, writing for the Mezzanatto majority, set forth a framework for analyzing plea-statement waiver. He first discerned a “background presumption that legal rights generally, and evidentiary provisions specifically, are subject to waiver by voluntary agreement of the parties.” Thus, without affirmative indication that Congress intended to proscribe waiver of statutory protections, including evidentiary rules, voluntary agreements to waive these protections are presumptively enforceable. As for Rules 410 and 11(e)(6), Justice Thomas found no indication of congressional disfavor toward waiver, either in the rules’ text or in their attendant Advisory Committee’s Notes. Against this backdrop, Justice Thomas then explained that courts should examine the public policy justifications, if any, for departing from the norm. In Mezzanatto, he looked to three potential rationales for overriding the presumption of waivability. He rejected each.

Perhaps chief among these concerns is the integrity of the judicial system. Yes, “[t]here may be some evidentiary provisions that are so fundamental to the reliability of the fact-finding process that they may never be waived,” but, as Justice Thomas reasoned, “enforcement of agreements like respondent’s plainly will not have that effect.” This is because “admission of plea statements for impeachment purposes enhances the truth-seeking function of trials and will result in more accurate verdicts.” When the prosecution seeks to enforce a waiver allowing it to use plea statements for impeachment, the defendant “[u]nder any view of the evidence . . . has made a false statement, either to the prosecutor during the plea discussion or to the jury at trial.” “[M]aking the jury aware of the inconsistency will tend to increase the reliability of the verdict without risking institutional harm to the federal

Nor is waiver at odds with Rule 410's goal of encouraging voluntary settlement, an argument that had persuaded the court of appeals. Mezzanatto cautions that focusing solely on the defendant’s incentives to plead guilty, as the court of appeals did, “completely ignored the other essential party to the transaction: the prosecutor.” Even if waiver discourages some defendants from negotiating, “it is also true that prosecutors may be unwilling to proceed without it.” Instead of precluding negotiation over an issue “[a] sounder way to encourage settlement is to permit the interested parties to enter into knowing and voluntary negotiations without any arbitrary limits to their bargaining chips.”

And, while defendants do face considerable pressure to plead guilty and to abandon many rights, Justice Thomas rejected the notion that waiver agreements invite prosecutorial overreaching and abuse. He explained that our criminal justice system presents many such loaded decisions for defendants–indeed the plea bargaining process necessarily exerts such pressure–and, absent specific evidence that the agreement was entered into unknowing or involuntarily, courts cannot infer abuse of prosecutorial bargaining power.

8th Circuit Decision - Failure to Inform Defendant of Maximum Sentence Spoiled Plea

The 8th Circuit Court of Appeals has ruled that a district court's failure to inform a defendant of the maximum sentence he faced when pleading guilty is not harmless error, even where the defendant was apprised of the lighter sentence the court ultimately imposed. According to the Court, harmlessness in this context turns on whether the defendant would have pleaded guilty had he been completely informed, not whether he actually received a sentence within the range of which he was informed.

United States v. Gray, 8th Cir., September 21, 2009:
The government’s argument fails, however, because the test for harmless error is whether the defendant's knowledge and comprehension of the omitted information would likely have affected his willingness to plead guilty. Gillen, 449 F.3d at 903. Thus, the question is not whether Gray was sentenced within the range of which the court did make him aware; rather, the question is, had Gray known of the full range to which he could be sentenced, would he have pled guilty in the first place. When a district judge simply understates a maximum penalty by a relatively small amount and a defendant is sentenced within that range, it is possible, maybe even probable, the slight understatement of the maximum sentence did not affect the defendant’s decision to plead guilty. In this case, however, the "judge did not understate the maximum penalty; rather, []he omitted mention of any maximum penalty." UnitedStates v. Jaramillo-Suarez, 857 F.2d 1368, 1372 (9th Cir. 1988) (holding the district court's failure to inform the defendant he could face a maximum of twenty years in prison was not harmless error, even though he was sentenced to the mandatory minimum, of which he was made aware). A complete failure to inform Gray of the maximum sentence is far different from the type of trivial understatement of a maximum sentence identified as harmless in the advisory committee’s notes to Rule 11. Given the complete failure to inform Gray he could be sentenced up to life in prison should he be found to be an armed career criminal, as well as Gray’s vociferous complaints upon learning the same, we cannot say with certainty that had Gray known of the accurate range of imprisonment he faced by pleading guilty, he would have pled guilty anyway.

Fugitive Attorney Pleads Guilty

An attorney who was the final defendant is a $194 million hedge fund fraud has pleaded guilty in connection with a scheme that defrauded some 250 investors.

According to the Department of Justice:

In December 2006, defendants Won Lee, John Kim, and his brother, Yung Bae Kim were charged in a thirty-five count Indictment for their participation in a massive investment fraud in the operation of various hedge funds under the umbrella of the KL Group, LLC, initially in California and later in Palm Beach County. According to the Indictment, documents filed with the court, and statements made during the plea hearings, the defendants used quarterly mailings and website postings to misrepresent to investors that the KL Financial Group was a hugely successful family of hedge funds. In fact, however, the KL funds lost millions of dollars, and, in Ponzi scheme fashion, used new investors’ monies to make payments owed to previous investors. From 2000 through 2005, KL received approximately $194 million in investor funds.

Also charged in the Indictment were three hedge fund advisor companies that were owned and controlled by the individual defendants: KL Group, LLC, KL Triangulum Management, LLC, and Shoreland Trading, LLC. The companies pled guilty in July 2007 to participating in the investment fraud conspiracy. They were sentenced and were ordered to pay restitution in the amount of $78,525,567.34. As well, defendants John Kim and Yung Kim pled guilty to their involvement in the fraud, and were sentenced on July 17, 2008 to 220 months in prison and 75 months in prison, respectively.

Defendant Won Lee remained a fugitive from December 2007 until early 2009. In 2009, federal authorities located Won Lee in South Korea. He was extradited to South Florida in April 2009 to face the federal charges pending against him. In pleading guilty today, Won Lee signed a detailed factual proffer, which was filed with the court, in which he admitted lying to investors to induce them to invest in the hedge funds and to keep their monies invested or to reinvest in different hedge funds. The misrepresentations included false statements about the soundness and performance of particular funds. For example, victims were told that the funds were profitable, when in fact, none were. Lee also admitted his complicity in creating counterfeit clearing firm statements that were used to perpetrate and conceal the

In addition, Lee admitted lying to a clearing house about the origin of monies used to buy and sell stocks cleared through Penson, a Texas-based clearing firm. Lee also admitted to creating fictitious stock trading sheets, which were used to show a one-day profit of $22 million in a stock known as RIMM, the company that manufactures the popular “Blackberry” device. The RIMM trade, however, never took place, and the fictitious stock trading sheets were used to fool investors concerning the profitable trades being conducted by the KL hedge funds.

Friday, September 18, 2009

Breaking News! Colorado Terror Suspect Admits Ties to Al Qaeda, Plans to Plead Guilty

According to Fox News, sources at the Justice Department have confirmed that Najibullah Zazi, the man under investigation for alleged ties to a New York City subway terror plot, has admitted ties to Al Qaeda and is currently negotiating to plead guilty to terrorism charges. It is unclear what information Zazi will provide to the government as part of the agreement or whether he has information regarding other terrorist operations currently underway within the United States.

According to Fox News:

The source said 24-year-old Najibullah Zazi, who until now had protested that he had no connection to Al Qaeda, changed his story Friday. Zazi reportedly told officials that he had received explosives training and may plead guilty as part of a deal to cooperate with the government.

Zazi had submitted to two eight-hour interrogations, Wednesday and Thursday, at the FBI offices in Denver, and he was called back for further questioning Friday.

The FBI's Joint Terrorism Task Force went through Zazi's home, as well as the nearby residence of his aunt, Rabia Zazi. The searches are part of a terrorism investigation that fed fears of a possible subway bomb plot and led to several police raids Monday in New York City. . .

Zazi, who authorities suspect of training at a Pakistani terror camp, reportedly had bomb-making diagrams on a computer that he carried with him on a visit to New York. Zazi's attorney had denied these allegations. . .

Najibullah Zazi is a driver for an airport shuttle service in Denver. Authorities say he rented a car and drove from Denver to New York, crossing into Manhattan the day before the anniversary of Sept. 11, 2001.

He was stopped in what was described as a routine stop at the George Washington Bridge before he was allowed to go free.

A relative said Zazi drove because he wanted to see the American countryside. Zazi said he went to New York to resolve some issues with a coffee cart he owns in Manhattan, but officials suspected that something more sinister might have been in the works.

FBI agents and police officers with search warrants seeking bomb materials searched three apartments and questioned residents in the neighborhood in Queens where he was staying.

A joint FBI-New York Police Department task force feared Zazi may be involved in a potential plot involving hydrogen peroxide-based explosives like those cited in an intelligence warning issued Monday, said two other law enforcement officials, who spoke on condition of anonymity because they were not authorized to speak about the investigation.

Folsom [Zazi’s attorney] said Zazi was born in Afghanistan in 1985, moved to Pakistan at age 7 and emigrated to the United States in 1999. Zazi's aunt had said earlier that he was born in Pakistan and grew up in Queens, New York City.

Folsom said Zazi has returned to Pakistan four times in recent years: in 2004 because his grandfather was sick and dying, in 2006 to get married, and in 2007 and 2008 to visit his wife.

Former Rwandan Official Pleads Guilty to Complicity in Genocide

According to the Georgetown Security Law Brief, a former Rwandan government official pleaded guilty Thursday to one count of complicity in genocide before the International Criminal Tribunal for Rwanda (ICTR). Machael Bagaragaza admitted to funding, training, and providing weapons to the Interahamwe, an extremist Hutu militia that killed thousands of ethnic Tutsi during the 1994 Rwandan genocide.

The Jurist has the following report on the guilty plea.

Prosecutors submitted an amended complaint with the plea agreement that withdrew genocide and conspiracy to commit genocide charges against the former director general of OCIR-Tea, the agency which oversees Rwanda's tea industry. A sentencing hearing is planned for November 2.

Bagaragaza was transferred in May 2008 to the ICTR in Arusha, Tanzania, after a Dutch court ruled that it did not have jurisdiction to try his case. In August 2007, the ICTR revoked a previous order transferring Bagaragaza's case to a local court in the Netherlands after the country expressed doubt that its court system could handle the trial. In 2006, the ICTR denied prosecutors' request to transfer Bagaragaza's trial to Norway because Norway did not have a specific law against genocide. Bagaragaza surrendered to the ICTR in August 2005.

Physical Therapist Pleads Guilty in $18.3 Million Fraud

Jay Jha, a physical therapist in Michigan, pleaded guilty on August 26, 2009 to conspiracy to defraud the Medicare program of $18.3 million. According to the plea agreement, Jha and a co-conspirator created fictitious therapy files listing services that had not actually been performed. The fictitious services were then billed to Medicare through sham providers controlled by the conspirators.

Hacker Agrees to Plead Guilty in Two Massive Data Thefts

Albert Gonzalez, who is currently charged in New Jersey with stealing credit and debit card data from a record number of victims, has agreed to plead guilty to charges relating to two previous hacking cases in Massachusetts and New York. The Massachusetts case gained national attention several years ago when Gonzalez stole more than 40 million credit and debit card numbers from several major retailers, including the TJX Companies Inc.

The deals in Massachusetts and New York do not affect a third case pending in New Jersey, where Gonzalez is alleged to have stolen data related to more than 130 million credit and debit cards. The New Jersey case is the largest credit and debit card breach in US history.

Ex-Stanford Group CFO Pleas Guilty in $7B Ponzi Scheme

James Davis, a former Stanford Group chief financial officer, pleaded guilty to fraud charges in a Houston federal court on August 27, 2009. The plea is the first arising from the alleged $7 billion investment scheme at the financial group. According to the Department of Justice, Davis has agreed to cooperate with their ongoing investigation in return for an eventual sentencing reduction.

Davis was charged in June 2009 with mail fraud, conspiracy to obstruct an SEC investigation, and conspiracy to commit mail, wire, and securities fraud.

According to sources, Davis admitted in his plea agreement that he and others defrauded investors who bought $7 billion in certificates of deposit administered by the Stanford International Bank Ltd. He also admitted to misappropriating many of those assets, including diverting $1.6 billion for personal loans.

Friday, August 28, 2009

Ex-CIA Spy's Son Pleads Guilty to Conspiracy Charges

The Miami Herald is reporting that the son of an ex-CIA spy has agreed to testify against his father as part of a plea agreement that may prevent the son serving any prison time for taking money from Russian agents. Nathaniel Nicholson pleaded guilty this week to engaging in a conspiracy to act as an agent of a foreign government and conspiracy to commit money laundering.

Jim Nicholson was the highest-ranking CIA official ever convicted of espionage when he pleaded guilty in 1997 to a conspiracy charge that sent him to prison for more than 23 years. He had been accused of selling information to the Russians about the CIA agents he trained and passing along other secrets.

Both Nicholsons were indicted in January on new charges of conspiracy, money laundering and acting as an agent of a foreign government. Jim Nicholson was accused of sending his son back to his Russian handlers from 2006 to 2008 to squeeze more money out of them.

Under the plea agreement, the 25-year-old Nicholson admitted taking money from the Russians and promised to testify, if required, against his father in the new case. In return, federal prosecutors have agreed to recommend a sentence that could result only in probation.

During a hearing before U.S. District Judge Anna Brown, Nathaniel Nicholson admitted traveling to San Francisco, Mexico City, Lima, Peru and Nicosia, Cyprus, to meet with agents of the Russian Federation on behalf of his father.

The younger Nicholson took about $45,000 in payments from the Russian agents, who wanted to determine how much U.S. agencies had learned about their operations during the investigation of the elder Nicholson. He said he gave most of the money to family members, at his father's direction.

Acting U.S. Attorney Kent Robinson said the guilty plea showed the younger Nicholson's "willingness to accept responsibility for his actions."

Nate Nicholson was just 12 years old when his father was sentenced in June 1997, but had visited him regularly at the federal prison in Sheridan, a small town in the farmland southwest of Portland.

Sentencing was set for January 25 for the younger Nicholson. A trial for his father, an Oregon native, is not expected until at least May.

Thursday, August 27, 2009

Davis Pleads Guilty in Stanford Bank Case

James Davis, former CFO of Stanford Bank, pleaded guilty to three counts of fraud and conspiracy in connection with the meltdown of the bank. Davis faces a maximum of 30 years in prison, though his sentence will likely be significantly impacted by his cooperation with the government in the case against Allen Stanford.

Here is a portion of a story of the plea from the Houston Chronicle.

On the day his one-time boss was hospitalized, former Stanford Financial Group executive James Davis pleaded guilty today to three fraud and conspiracy counts for his role in an alleged $7 billion fraud.

R. Allen Stanford, set to appear in court on a different matter, did not make the trip to the Houston federal courthouse from a Conroe jail cell. U.S. District Judge David Hittner said Stanford was found to have an irregular heartbeat and extremely high blood pressure around 5:30 a.m. and was taken to a Conroe hospital for evaluation.

Davis' plea agreement has been expected since his attorney said Davis has been cooperating with investigators since March. The sentencing of Stanford's former chief financial officer will come at another date, but legal experts have speculated he may face many years behind bars given the number of charges. Hittner accepted the plea, which also calls for Davis to forfeit about $1 billion, and set a Nov. 20 sentencing date. Victims of the Stanford Financial Group's collapse last year will get a chance to
address Davis at that hearing. After today's hearing, Davis was
contrite in a brief statement to reporters.

"I apologize and take responsibility for my actions," he said. His attorney said Davis is currently earning about $10 an hour by laboring on a family farm in Michigan.

Wednesday, July 22, 2009

Interesting 7th Circuit Case Regarding 5K1.1 Motions

The Sentencing Law and Policy Blog points us to this interesting Seventh Circuit case - U.S. v. Knox (7th Cir. July 20, 2009). The case contains the following statement, "We agree with Davis that, as a general matter, a district court may consider a defendant's cooperation with the government as a basis for a reduced sentence, even if the government has not made a section 5K1.1 motion."

According to Professor Berman:
In the immediate wake of Booker, federal prosecutors often contested and/or complained if a district judge sought to reduce a [sentence] based on a defendant's cooperation absent a government 5K motion. In the wake of Gall and Kimbrough, I do not believe federal prosecutors still resist the notion that a district court's sentencing authority extends this far. Nevertheless, the fact that the Seventh Circuit expressly declares in this new ruling that a "defendant’s cooperation with the government as a basis for a reduced sentence" even absent a government motion seems noteworthy.

Mumbai Terrorist Admits Guilt

According to the NYT, Ajmal Kasab admitted in open court that he was a participant in the Mumbai terrorist attacks that killed more than 160 people.

The sole surviving gunman of the deadly rampage in Mumbai unexpectedly confessed in court here on Monday, adding his voice, matter-of-fact even as he spoke of opening fire into crowds, to what may be the most well-documented terrorist attack anywhere.

The gunman, Ajmal Kasab, 21, was the man in an infamous surveillance photograph, looking calm with a blue T-shirt and a machine gun. The photograph was one part of an extraordinary electronic record reviewed during the trial, which the judge ruled would go on. Other tapes showed his fellow gunmen shooting up luxury hotels. Recordings of intercepted phone calls provided a spooky, real-time narration between the handlers and the gunmen, who at times needed to be prodded into action and were stunned at the opulence of one hotel.

“Everything is being recorded by the media,” one of the handlers told the gunmen at the Oberoi Hotel. “Inflict maximum damage. Keep fighting. Don’t be taken alive.”

But it did not appear to be the evidence that prompted Mr. Kasab to confess to his role in the attacks, where more than 160 people were killed in November in luxury hotels, a train station, a popular cafe and a Jewish center. He said it was because his native Pakistan, which had denied any role in the attacks, had begun cooperating more with India and identified him as a participant.

“I don’t think I am innocent,” he said, speaking in subdued Hindi. “My request is that we end the trial and be sentenced.”

For the better part of a day he held the courtroom spellbound: he portrayed himself as a poor Pakistani who joined the militant group Lashkar-e-Taiba only for money. But in the end, the mission was martyrdom, inflicting the greatest amount of death and chaos along the way. He told the court how he and his partner had assembled a bomb in a public bathroom at a train station, then planted another bomb in a taxi.

“I was firing, and Abu was hurling hand grenades,” he told the court, referring to his partner and to the assault on the train station, where more than 50 people were killed. “I fired at a policeman, after which there was no firing from the police side.”
His journey to Mumbai was at once banal and strange.

He told Judge M. L. Tahilyani that he was broke and tired of his job working for decorator in Jhelum, a small town in Pakistan, and making a pittance. He and a friend had hatched a plan. They would earn cash by robbing people. And to improve their banditry skills they would seek out military training from the easiest source available to a young Pakistani man: Islamic militants.

Mr. Kasab and his friend went to Rawalpindi, he said, and asked in the market where they might find mujahedeen. They were directed to the office of Lashkar-e-Taiba. Indian and American investigators say that Lashkar-e-Taiba planned the attacks in Pakistan. Although Pakistan initially denied that any of its citizens had been involved, it has now charged five men believed to be Pakistan-based Lashkar operatives with involvement. The organization’s founder, Hafez Saeed, has not been charged.

In the months before the attack, Mr. Kasab said in court, he and the other attackers were taken to a safe house in Karachi, the coastal city that is the commercial capital of Pakistan and is a world away from the Punjabi village where his family lived.

There the young men were cut off from the world. He said they and their trainers were not told where they would go next nor were they given any details about their mission, though it was clear that it would involve lethal weapons and deadly force.

“They told us we were to wait for some time,” Mr. Kasab said in court. “There was some problem.” They were warned sternly that “nobody will disobey” their orders.
In a month and a half, they were allowed out of the house only once for a training exercise when they were taught how to navigate the inflatable boats that they would use to leave Pakistani waters.

On Nov. 26, Mr. Kasab and nine other Pakistani men headed toward Mumbai in an inflatable dinghy, each of them armed with a Kalashnikov, a 9 millimeter, ammunition, hand grenades and a bomb containing explosives, steel ball bearings and a timer.

It is clear from the electronic record that the attackers seemed unworldly tools of their handlers.

In one video clip, the attackers wander through the Taj Mahal Palace & Tower hotel, seemingly dazed by the opulence of their surroundings. The 30-inch computer screens, huge windows, bathrooms and kitchens stunned the gunmen, most of them in their early 20s.

But they quickly snapped out of it, and the videos captured the muzzle flashes of the attackers’ Kalashnikovs as they opened fire in marbled hallways, kicking in hotel room doors and mowing down those hiding behind them.

A handler instructed a gunman, “For your mission to end successfully you must be

In the last recorded call just as the siege was about to end with an attack by Indian soldiers, a handler told one of the attackers at the Jewish community center: “Brother, you have to fight. This is a matter of the prestige of Islam.”

As one of the fighters lay bleeding, he told his handler: “I am shot, pray for me.”
And then: “Pray that God will accept my martyrdom.”

When the smoke cleared, Mr. Kasab was the only survivor among the attackers. He was arrested and confessed on camera, giving a slightly different version of his life story to his interrogators, who questioned him in his hospital bed. He later recanted that confession.

In that version, first aired in Dispatches, a documentary show on Channel 4 in Britain that obtained leaked recordings, Mr. Kasab said that he had joined Lashkar-e-Taiba at the urging of his father, who said he would earn a lot of money and would “give us some of the money, too, and we won’t be poor anymore. Your brothers and sisters will be able to get married. Look, son, the way these people eat and live comfortably, you will do so, too.”

Monday, June 29, 2009

Will "Nobody. . . Ever Plead Guilty Again" After Madoff?

The WSJ Law Blog has an interesting post entitled "Nobody . . . Is Ever Going to Plead Guilty Again," which asks whether anyone will plead guilty again after the 150 year sentence handed down to Madoff today. As you recall, Madoff pleaded guilty to 11 criminal counts, including fraud, money laundering, perjury, false filing with the SEC, and other crimes. What incentives remain for others in similar situations to plead guilty?

It’s only been a few hours, but already people in the white-collar world are buzzing over 150 year the sentence imposed by Judge Chin.

First, a couple notes on the sentence: Typically in white-collar cases, judges impose a sentence equivalent to the maximum statutory punishment for the most serious criminal count to which a defendant pleads guilty. In Madoff’s case, that would have been a charge of securities fraud, which carries a statutory maximum of 20 years. But Chin said he would take penalties for all 11 criminal charges and have them run consecutively, rather than concurrently.

Judges also don’t typically depart so greatly from a recommended sentence provided to them by the U.S. Probation and Pretrial Services System, an agency that researches every convicted defendant and submits a presentence report to help guide the judge. In Madoff’s case, Judge Chin said the probation office recommended a 50-year sentence.

And what about the guilty plea itself? If Madoff thought he might get sympathy from the judge for pleading guilty, rather than forcing prosecutors to spend time and money proving their case, it didn’t work. Some white-collar lawyers read a lesson into that: “Nobody in Madoff’s position is ever going to plead guilty again,” says Christopher Clark, a former federal prosecutor who is now a defense lawyer at Dewey & LeBoeuf in New York. “What benefit did this guy get for pleading guilty?”

But other lawyers point that Madoff’s crime – and the devastation it wrought — was extreme. Also, the judge said he didn’t think Madoff was cooperative with authorities after his arrest; typically cooperation helps defendants score points.

John Coffee, a law professor at Columbia University, said the Madoff case might help criminal defendants take a harder look at the evidence early on. If they realize “that if the evidence is strong,” they should take a plea bargain on fewer counts so that if the various sentences for each count run consecutively, it won’t amount to life in

“The only way to avoid life sentences in highly publicized cases is to strike a deal in the plea-bargaining phase,” Coffee says. “Otherwise you are subject to extraordinarily high punishment.”

Madoff Sentenced to 150 Years for Ponzi Scheme

Here is a summary of the sentencing from CNN.

Judge Denny Chin of U.S. District Court in New York announced the sentence just moments after Madoff apologized to his victims.

"I live in a tormented state for all the pain and suffering I created," Madoff said. "I left a legacy of shame. It is something I will live with for the rest of my life."

Turning to face some of his victims, he addressed them directly: "Saying I'm sorry is not enough. I turn to face you. I know it will not help. I'm sorry."

Madoff said he was not asking for forgiveness and not offering any excuses for his behavior.

"How can you excuse betraying thousands of investors?" he asked. "How can you excuse deceiving hundreds of employees? How can you excuse lying to and deceiving your wife who still stands by you?"

Victims urged a judge to hand down the maximum life sentence against Bernard Madoff, the mastermind of the largest and most sweeping Ponzi scheme ever. "We implore you to give the maximum sentence at a maximum prison for this deplorable low life," said one of the victims in court before Madoff spoke. "This is a violent crime without a tangible weapon."

Many of Madoff's investors were wiped out financially by the scam and sent letters to Judge Chin requesting he spend the rest of his life behind bars. Nine of the letter-writers were expected to speak in court on Monday.

Speaking on behalf of his wife and looking at Madoff, the victim said, "I have a marriage made in heaven. You have [a] marriage made in hell, and that's where you'll return. May God spare you no mercy."

The 150-year sentence is the maximum that federal prosecutors in New York requested, based on the number of Madoff's victims, the amount of money he stole and the extent of the damage he caused.

Judge Chin said that the Federal Department of Probation had recommended a 50-year sentence.

Madoff, who was stripped of his property in a legal action Friday, confessed on March 12 to running a massive Ponzi scheme. He pleaded guilty to 11 criminal counts, including fraud, money laundering, perjury, false filing with the Securities and Exchange Commission, and other crimes.

Lawyer Ira Lee Sorkin, who represents Madoff, asked for a 12-year sentence. In a letter to the judge, Sorkin explained that his 71-year-old client "has an approximate life expectancy of 13 years" and isn't likely to outlive the requested sentence by more than a year.

Wednesday, June 17, 2009

Judge Orders Defendant to Write Book

Last week, Judge Ricardo Urbina, United States District Court Judge for the District of Columbia, sentenced a former senior pharmaceutical executive at Bristol-Myers to an unusual sentence. Dr. Andrew G. Bodnar had pleaded guilty to making a false statement to the federal government about the company's efforts to resolve a patent dispute over the blood thinner Plavix. At sentencing, Judge Urbina sentenced Mr. Bodnar to two years probation, during which he must write a book about his experience connected with the case. He must also pay a $5,000 fine.

Here is further information on the case from the NYT.

Elkan Abramowitz, Dr. Bodnar’s lawyer, said he had never before heard of a case in which a judge sentenced a defendant to write a book.

But this is not the first time Judge Urbina has demanded written penance. In 1998, he sentenced a prominent Washington lobbyist to write and distribute a monograph to 2,000 lobbyists at the defendant’s own expense.

The lobbyist, James H. Lake, pleaded guilty to making illegal corporate campaign contributions. Judge Urbina ordered him to pay a $150,000 fine and to write a monograph describing the criminal provisions of federal laws governing corporate campaign contributions.

In the sentencing hearing on Monday, Judge Urbina said he would like to see Dr. Bodnar write a book about the Plavix case as a cautionary tale to other executives. The case concerned accusations that Bristol-Myers had made false statements to federal investigators about the company’s attempt to resolve a patent dispute with a Canadian maker of generic drugs, Apotex.

The Justice Department contended that the company in 2006 made a secret deal, in which Apotex would hold off making a generic version of Plavix. In exchange, the Justice Department said, Bristol-Myers indicated that it would subsequently give Apotex an exclusivity period in which it could produce its Plavix generic without Bristol’s making a generic of its own.

The government said that Bristol-Myers’s actions were anticompetitive and had the potential to restrict public access to lower-priced drugs. Plavix had sales of about $4.9 billion in the United States in 2008, according to IMS Health, a health care information company.

The initial accusations of anticompetitive behavior ended with only minor charges.
In 2007, in an agreement worked out with the antitrust division of the Justice Department, Bristol-Myers agreed to plead guilty to two violations of the Federal False Statements Accountability Act and to pay $1 million, the maximum fine.
In a separate suit, the Justice Department charged that Dr. Bodnar, who had negotiated with Apotex, misled the government over the Plavix agreement.

Monday, June 8, 2009

9/11 Detainees May Be Permitted to Plead Guilty

The NYT reports that the Obama administration is considering a change in the law for the military commissions at the prison at Guantanamo Bay, Cuba, that would allow detainees facing the death penalty to plead guilty without a full trial.

The provision could permit military prosecutors to avoid airing the details of brutal interrogation techniques. It could also allow the five detainees who have been charged with the Sept. 11 attacks to achieve their stated goal of pleading guilty to gain what they have called martyrdom.

The proposal, in a draft of legislation that would be submitted to Congress, has not been publicly disclosed. It was circulated to officials under restrictions requiring secrecy. People who have read or been briefed on it said it had been presented to Defense Secretary Robert M. Gates by an administration task force on detention. . . .

The proposal would ease what has come to be recognized as the government’s difficult task of prosecuting men who have confessed to terrorism but whose cases present challenges. Much of the evidence against the men accused in the Sept. 11 case, as well as against other detainees, is believed to have come from confessions they gave during intense interrogations at secret C.I.A. prisons. In any proceeding, the reliability of those statements would be challenged, making trials difficult and drawing new political pressure over detainee treatment. . . .

The provision would follow a recommendation of military prosecutors to clarify what they view as an oversight in the 2006 law that created the commissions. The law did not make clear if guilty pleas would be permitted in capital cases. Federal civilian courts and courts in most states with capital-punishment laws permit such pleas.

But American military justice law, which is the model for the military commission rules, bars members of the armed services who are facing capital charges from pleading guilty. Partly to assure fairness when execution is possible, court-martial prosecutors are required to prove guilt in a trial even against service members who want to plead guilty.

Monday, June 1, 2009

Former Enron Executive Pleads Guilty to Avoid Third Trial

The WSJ Law Blog is reporting that former Enron Broadband Services CFO Kevin Howard pleaded guilty today to one count of falsifying books and records. The plea deal comes six years and two trials after he was first indicted. Howard's first trial ended in a hung jury. The second trial ended with a conviction that was later overturned because of the government's use of the honest-services statute. Under the agreement, Howard will serve a maximum of 12 months home confinement. (A short summary of the Enron Broadband trial can be found here).

The Houston Chronicle also wrote about the plea agreement.

Howard first went to trial alongside four other ex-broadband executives in 2005 in a three-month case that ended with a handful of acquittals, no convictions and jurors hung on dozens of other counts — including all pending against him.

Two other broadband executives — former co-CEO Kenneth Rice and former chief operating officer Kevin Hannon — each pleaded guilty to crimes in 2004. Both finished prison terms earlier this year.

Most of the 2005 trial involved tedious, technology jargon-filled testimony regarding three defendants accused of overstating the division’s capabilities so they could pocket millions from selling company stock inflated by the hype.

The case against Howard and former in-house accountant Michael Krautz involved allegations that they manufactured earnings by selling future revenues in a video-on-demand venture that failed.

Unable to win convictions in the first trial, prosecutors split the defendants among three separate, pared-down cases. In their second round before a jury in 2006, Krautz was acquitted while Howard was convicted of conspiracy, wire fraud and falsifying books and records.

Gilmore tossed out Howard’s convictions in 2007, ruling that prosecutors prevailed by flawed means.

Gilmore based her ruling on a 5th U.S. Circuit Court of Appeals decision that wiped out most convictions in another Enron case because prosecutors wrongly presented a theory of guilt that was also used in Howard’s case.

That theory held that the defendants robbed Enron of their “honest services” by helping cook Enron’s books. However, the 5th Circuit ruled that the theory didn’t apply because the defendants didn’t steal, take a bribe or otherwise rob Enron of money or property.

In Howard’s case, the government conceded that four of his five convictions would be tossed out on appeal, but Gilmore threw out all five. The 5th Circuit upheld her decision, so prosecutors moved to try Howard a third time. As part of today’s deal, prosecutors stipulated Howard did not personally benefit from any fraud at Enron.
The honest services issue is central to former Enron CEO Jeff Skilling’s appeal as

Like Howard and the defendants in the other Enron case, Skilling didn’t take money or property. But the 5th Circuit ruled earlier this year that as a CEO, he set the fraudulent agenda rather than carry out orders from above, and upheld all 19 of his convictions. Skilling is seeking a review by the U.S. Supreme Court.

Of the other three broadband defendants, former co-CEO Joseph Hirko pleaded guilty to wire fraud last year and faces a 16-month prison term after he is sentenced in September. The other two — former top strategist Scott Yeager and software executive Rex Shelby — are still fighting and have yet to be tried a second time.

The Supreme Court heard Yeager’s appeal earlier this year that the government should drop insider trading and money laundering charges against him because the 2005 jury acquitted him of underlying fraud and conspiracy charges. Shelby’s retrial is on hold pending the outcome of Yeager’s appeal.

Wednesday, May 27, 2009

Men Plead Guilty in Weapons Deal

According to the Miami Herald, two individuals pleaded guilty in Miami yesterday to fraud charges. The charges related to their supplying of prohibited Chinese munitions to the Afghan military.

Two men have pleaded guilty in Miami to federal fraud charges involving the supply of prohibited Chinese ammunition to the Afghan military.

David Packouz and Alexander Podrizki on Tuesday admitted involvement in a scheme by U.S. defense contractor AEY Inc. to conceal the Chinese origin of ammunition for Afghanistan. AEY had a $298 contract with the Pentagon to supply the ammunition, and authorities say they falsely claimed it came from Albania.

Packouz was vice president of AEY and Podrizki was a company agent in Albania. They each face a maximum of five years in prison. Still awaiting trial are former AEY
president Efraim Diveroli and business associate Ralph Merrill. They have pleaded not guilty.

Thursday, April 30, 2009

Seven Plead Guilty to Supporting Iran Terrorist Group

According to the Miami Herald, seven people in California has pleaded guilty to providing material support to an Iraq-based terrorist organization. Each of the seven face up to twenty years in prison.

According to prosecutors, the defendants raised funds for the Mujahedin-e Khalq (MEK). According to the State Department, the militia was supported by Saddam Hussein and works against the Iranian government. The group was designated a foreign terrorist organization in 1997.

Al Qaeda Sleeper Agent Pleads Guilty to Terror Charges

According to FoxNews, Ali al-Marri, a man held since 2001 as an alleged Al Qaeda sleeper agent, has pleaded guilty to supporting terrorism. The plea was entered in United States District Court in Peoria, Illinois. According to the report, Marri pleaded guilty to one count of conspiracy to provide material support or resources to a foreign terrorist organization.

Marri, a legal U.S. resident, was declared an "enemy combatant" in late 2001 and held without charges for more than five years at a Navy brig in South Carolina. The designation of "enemy combatant" was later dropped when a grand jury in Illinois indicted him. Marri will be sentenced in July.

The Washington Post had a story regarding Marri this morning in anticipation of his possible guilty plea.

Prosecutors and lawyers for Ali Saleh Kahlah al-Marri are engaged in negotiations that could produce a guilty plea by the suspected al-Qaeda associate in a federal courtroom as early as today, according to sources familiar with the talks.

The discussions have ebbed and flowed in recent weeks but the core arrangement would involve a plea by Marri to a single criminal conspiracy charge that would send him to prison for 15 years, said the sources, who spoke on the condition of anonymity because the talks are not complete.

A plea along those lines would cut by half the prison time Marri is facing under statutory maximum sentences if he was convicted of conspiracy and providing support to al-Qaeda.

Among the most sensitive issues are conditions of Marri's confinement and whether he will win credit for the 5 1/2 years he has served in a South Carolina military brig. Complicating the talks are questions of whether Marri would be incarcerated in the United States or be moved to another country, perhaps his homeland of Qatar, requiring sensitive diplomatic intervention.

The case has been closely watched because Marri was the sole remaining "enemy combatant" held on American soil without criminal charges. U.S. marshals moved him to Peoria, Ill., last month after a grand jury there issued a bare-bones, two-count indictment against him.

In a speech in Germany yesterday, Attorney General Eric H. Holder Jr. cited Marri's case as an example of a break from practices of the Bush administration on national security, and an early signal that at least some of the 241 inmates held in a military facility at Guantanamo Bay, Cuba, would be sent to the United States to face trial in courts here. Holder is on an extended European tour this week, meeting with government officials across the continent to seek their help in relocating Guantanamo detainees.

Marri long has been a source of fascination for investigators. He entered the United States one day before the Sept. 11, 2001, terrorist strikes on a visa he secured to attend graduate school. Military officials later filed a sworn statement allegedly linking Marri to hazardous chemicals and a plot to disrupt the financial system. None of those allegations appeared in the grand jury indictment in February, however, giving rise to questions about the strength of the government's case. . .

Wednesday, April 29, 2009

US Army Soldier Pleads Guilty to Desertion

Jurist reports that a US Army soldier, Spc. Cliff Cornell, who fled to Canada to avoid serving in the Iraq war has pleaded guilty to charges of desertion. Cornell received a one year prison sentence and an bad conduct discharge.

Cornell spent four years in Canada, but was denied asylum by the Canadian government in February. Canadian advocacy group War Resisters Support Campaign decried Cornell's sentence, calling the Iraq War "illegal and immoral." Cornell had reportedly become actively involved with the group.

Several other US soldiers have sought asylum in Canada. In 2005, US Army Pvt. Brandon Hughey, who fled to Canada after refusing a deployment order to Iraq and deserting his unit at Fort Hood, formally asked the Canadian Immigration and Refugee Board for asylum. Hughey's application was denied, and he is currently waiting to find out whether he will be allowed to remain in Canada. Several others are also appealing denials of asylum.

Tuesday, April 28, 2009

Marc Dreier to Plead Guilty

According to the defense counsel for Marc Dreier, a prominent New York City attorney accused in a $700 million fraud, his client will plead guilty on May 11 to securities fraud and money laundering charges. The AP, courtesy of Forbes.com, had this regarding the deal.

Shargel says Dreier wants to enter the plea to demonstrate his acceptance of responsibility and his profound remorse.

Until December, Dreier had led a law firm with 250 attorneys and celebrity clients. He was arrested after hedge funds complained he was stealing from them.

Prosecutors say the 58-year-old could face a maximum of 30 years to life in prison.

Wednesday, April 15, 2009

Guilty Plea in New York Pension Fund Investigation

According to the WSJ Law Blog, Barrett Wissman entered a plea of guilty this morning to charges of paying kickbacks in exchange for state pension fund investments. The guilty plea was part of New York Attorney General Andrew Cuomo's ongoing investigation into how state officials sold access to billions of dollars held by New York's state pension fund in return for kickbacks and other payments.

Earlier today Barrett Wissman, who managed Texas-based Hunt Financial Ventures Asset Management, which manages money for the Hunts, the prominent oil family, pleaded guilty to charges of paying kickbacks in exchange for state pension fund investments in HFV. Raymond B. Harding, a past Chair of the former New York State Liberal Party, was also criminally charged for being a “sham placement agent” for three pension fund investments when, allegedly, he was only being paid for doing political favors for state officials.

Harding allegedly obtained over $800,000 in illegal fees on state pension fund investments as a reward for opening up a New York State Assembly seat for then-Comptroller Alan Hevesi’s son and for over 30 years of prior political endorsements. Wissman, a classical music impresario will pay $12 million in penalties and forfeiture to the state over a period of three years. His guilty plea was first reported in today’s New York Times.

Last month, David J. Loglisci, the state’s former deputy comptroller and chief investment officer, and Henry “Hank” Morris, a top political adviser and chief fundraiser for former New York Comptroller Alan Hevesi, were charged in a 123-count criminal indictment. They have denied wrongdoing. Wissman, the hedge fund manager, is alleged to have paid kickbacks to Morris while working at Hunt.

The Securities and Exchange Commission also has brought a parallel civil case against the four men charged by Cuomo.

Tuesday, April 14, 2009

Former Senator Ted Stevens Rejected Plea Offer

Law.com is reporting today that former Senator Ted Stevens rejected a plea deal early in his public corruption case. According to Law.com, Stevens rejected the offer and made clear that he had no interest in pleading guilty regardless of the offer to serve no jail time.

Defense lawyers and their clients routinely face this dilemma: Take a plea for leniency, or roll the dice with a jury. The Ted Stevens case was no different.

Stevens was offered a deal -- sometime before his indictment in July -- to plea to one felony and stay out of prison. Stevens' lawyer, Williams & Connolly partner Brendan
Sullivan Jr., said the deal was rejected, according to a transcript of a bench conference that had been sealed until now. Sullivan did not elaborate about the decision to reject the offer.

"I'd like to make it clear on the record that there is no offer at this point," said Brenda Morris, principal deputy chief of the Justice Department's Public Integrity Section, who spoke at the bench conference July 31 in U.S. District Court for the District of

"That's true," Sullivan responded."

Is that alright?" Morris asked.

"And if one is made, it will not be accepted," Sullivan replied.

Stevens opted for speedy trial, forcing the government to put together its case in a compressed time frame. Stevens, of course, lost. A jury returned seven guilty verdicts in late October just days before the November election. A sentencing law expert says Stevens faced a likely prison term had his case gotten that far. A sentencing date was never set.

At the request of the Justice Department, U.S. District Judge Emmet Sullivan last week dismissed charges and vacated the verdict. Judge Sullivan cited prosecution misconduct, saying he'd seen nothing in nearly 25 years on the bench approaching the mishandling of the Stevens case. Morris and five Justice prosecutors -- including William Welch II, the Public Integrity chief -- are now under investigation for criminal contempt.

Cozen O'Connor partner Barry Boss, who specializes in white-collar criminal defense work, says if Stevens had taken a plea -- more than 90 percent of federal defendants do just that -- none of the alleged abuses in the case would have ever come out.

"The Stevens case is a watershed event highlighting something that goes on in many more cases," Boss says. "Many other defendants would have probably taken a plea like that to get the case over with. If that had happened, then none of this would have been uncovered."

The client, Boss says, is the driving force behind whether or not to accept a plea. Stevens had made it clear before, during, and after the trial that he did not believe he was guilty of charges of filing false Senate financial disclosure forms.

Thursday, April 2, 2009

The Resurrection Plea

According to news reports, a former member of a religious cult, Ria Ramkissoon, pleaded guilty to starving her one year old child to death with the condition that her plea will be withdrawn if the child is resurrected. Under the deal with prosecutors, Ramkissoon will also testify against four other members of the cult, formerly known as 1 Mind Ministries, who are also charged in the death.

According to abcnews:

[T]he cult members stopped feeding the boy when he refused to say "Amen" after a meal. After Javon died, Ramkissoon sat next to his decomposing body and prayed for his resurrection.

Ramkissoon's attorney, Steven D. Silverman, said Ramkissoon believes the resurrection will occur. She agreed to plead guilty only after prosecutors said they would drop the charges if the child comes back to life, Silverman said.

"This is something that she absolutely insisted upon, and this is indicative of the fact that she is still brainwashed, still a victim of this cult," he said. "Until she's deprogrammed, she's not going to think any differently."

Baltimore Circuit Judge Timothy J. Doory assured Ramkissoon that the plea would indeed be withdrawn if the child is resurrected.

Ramkissoon pleaded guilty to one count of child abuse resulting in death. She will remain in custody until she testifies against her co-defendants and will receive a suspended 20-year sentence and serve five years probation. Sentencing was scheduled for Aug. 11.

By then, Ramkissoon would have spent about a year behind bars.

As part of her probation, Ramkissoon must submit to treatment, including sessions with an expert on cult behavior.

The maximum sentence for child abuse resulting in death is 30 years, and defendants typically receive between 12 and 20 years, according to Maryland sentencing

Ramkissoon will fare much better under the plea deal than if she had pursued an insanity defense, Silverman said. A court psychiatrist found that she was both competent to stand trial and could have been held criminally responsible for Javon's death because she knew the difference between right and wrong.

Wednesday, March 25, 2009

Supreme Court Rules Regarding Broken Plea Bargains

In a vote of 7-2 in the case of Puckett v. United States, the Supreme Court ruled on Wednesday that where federal prosecutors violated a plea bargain with an accused, the violation must be preserved at the trial court level to avoid the application of Rule 52(b).

James Puckett was indicted for bank robbery in July 2002. He later negotiated a plea agreement with the government in which he agreed to plead guilty in return for the government agreeing to a reduction in his guideline offense level for acceptance of responsibility and a sentence at the lowest end of the applicable guideline range. Prior to sentencing, however, Puckett assisted in a scheme to defraud the postal service. When sentencing took place, the government opposed any reductions in Puckett's offense level for acceptance of responsibility. The district court then determined that even if it could grant the reduction, it would not. At no time did Puckett's counsel object to the government's new position.

On appeal, the 5th Circuit applied the plain-error standard under Rule 52(b) for unpreserved claims of error. It then ruled that although the error occurred and was obvious, Puckett had not demonstrated that the error affected his substantial rights. The court of appeals affirmed the sentence.

The Supreme Court granted certiorari in 2008 to consider "a question that has divided the Federal Courts of Appeals: whether Rule 52(b)'s plain-error test applies to a forfeited claim, like Puckett's, that the Government failed to meet its obligations under a plea agreement." The Supreme Court concluded that Rule 52(b) does apply and that the decision of the lower court is affirmed.

The court stated:

In federal criminal cases, Rule 51(b) tells parties how to preserve claims of error: “by informing the court -- when the court ruling or order is made or sought -- of the action the party wishes the court to take, or the party's objection to the court's action and the grounds for that objection.” Failure to abide by this contemporaneous-objection rule ordinarily precludes the raising on appeal of the unpreserved claim of trial error. See United States v. Young, 470 U.S. 1, 15, and n. 12 (1985). Rule 52(b), however, recognizes a limited exception to that preclusion. The Rule provides, in full: “A plain error that affects substantial rights may be considered even though it was not brought to the court's attention.”

We explained in United States v. Olano, 507 U.S. 725 (1993), that Rule 52(b) review -- so-called “plain-error review” -- involves four steps, or prongs. First, there must be an error or defect -- some sort of “[d]eviation from a legal rule” -- that has not been intentionally relinquished or abandoned, i.e., affirmatively waived, by the appellant. Id., at 732-733. Second, the legal error must be clear or obvious, rather than subject to reasonable dispute. See id., at 734. Third, the error must have affected the appellant’s substantial rights, which in the ordinary case means he must demonstrate that it “affected the outcome of the district court proceedings.” Ibid. Fourth and finally, if the above three prongs are satisfied, the court of appeals has the discretion to remedy the error -- discretion which ought to be exercised only if the error “‘seriously affect[s] the fairness, integrity or public reputation of judicial proceedings.’” Id., at 736 (quoting United States v. Atkinson, 297 U.S. 157, 160 (1936)). Meeting all four prongs is difficult, “as it should be.” United States v. Dominguez Benitez, 542 U.S. 74, 83, n. 9 (2004).

We have repeatedly cautioned that “[a]ny unwarranted extension” of the authority granted by Rule 52(b) would disturb the careful balance it strikes between judicial efficiency and the redress of injustice, see Young, supra, at 15; and that the creation of an unjustified exception to the Rule would be “[e]ven less appropriate,” Johnson v. United States, 520 U.S. 461, 466 (1997). . .

Application of plain-error review in the present context is consistent with our cases, serves worthy purposes, has meaningful effects, and is in any event compelled by the Federal Rules. While we recognize that the Government's breach of a plea agreement is a serious matter, "the seriousness of the error claimed does not remove consideration of it from the ambit of the Federal Rules of Criminal Procedure." Johnson, 520 U.S., at 466.

Thursday, March 12, 2009

Breaking News! Madoff Pleads Guilty to Eleven Counts

Madoff has pleaded guilty to all eleven counts. Here is a description of the events by the New York Times.

Standing before Judge Denny Chin in United States District Court in Manhattan, Mr. Madoff was asked, “How do you now plead to the information, guilty or not guilty?”
“Guilty,” he responded.

The hearing on Thursday marks the first time since he was arrested by federal agents on Dec. 11 that Mr. Madoff has spoken publicly about how he ran what was perhaps the largest fraud in Wall Street history, a global scheme that ensnared hedge funds, nonprofit groups and celebrities, and devastated the life savings of thousands of people.

Dressed in a gray suit, Mr. Madoff, 70, stood up in a courtroom packed with journalists, lawyers and some of his victims and pleaded guilty to 11 counts of fraud,money laundering, perjury and theft — charges whose maximum sentences total 150 years. Mr. Madoff then answered questions about how he sustained a 20-year fraud whose collapse erased as much as $65 billion that his customers thought they had in their accounts.

His immediate fate remained in the balance. The is expected to rule later Thursday on whether Mr. Madoff will remain free on bail and return to his apartment on Manhattan’s Upper East Side, or whether he will be immediately jailed as he awaits sentencing.

Some of Mr. Madoff’s victims are also expected to speak on whether the judge should accept Mr. Madoff’s guilty plea, and whether his $10 million bail should be revoked.

Tuesday, March 10, 2009

Madoff to Plead Guilty to Eleven Charges in Ponzi Scheme

Bloomberg has gathered some of the details regarding the plea agreement Madoff will enter on Thursday.  According to the reports, Madoff will plead guilty to eleven criminal charges related to a fraud that prosecutors state began in the 1980s. 

By last November, Madoff told 4,800 investors their accounts held $64.8 billion, according to court papers filed in Manhattan federal court. Prosecutors will seek forfeiture from Madoff of as much as $170 billion. Madoff, free on $10 million bail, faces 150 years in prison.

“There is no plea agreement,” Assistant U.S. Attorney Marc Litt said at hearing today before U.S. District Judge Denny Chin.

Madoff, originally charged with a sole count of securities fraud, will plead guilty to that charge and an additional 10 counts filed today in a so-called criminal information, defense attorney Ira Sorkin said. The new charges are investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission and theft from an employee benefit plan.

Sorkin disclosed Madoff’s plans at a hearing where Madoff waived his attorney’s possible conflicts of interest in the case. The lawyer said he disagreed with the amount of loss alleged by the government, arguing that some victims received more in returns than they invested with Madoff.

At the hearing, Madoff gave brief answers to more than 50 questions posed by the judge.

“We have been unable to review a vast amount of documents, reflecting money going in and going on,” Sorkin said in court. “It’s difficult at this point to identify real victims.”

Friday, March 6, 2009

Madoff Plea Deal May Be In The Works

According to MSNBC, prosecutors have filed a motion that indicates Bernard Madoff may be preparing to plead guilty to charges related to one of the largest frauds in history. The indication came in a brief filed with the court that stated Madoff is waiving indictment, a potential sign that a deal is in the works.

NBC's Pete Williams, citing an unnamed law enforcement official, said Madoff may plead guilty next week. The official said under the terms of the deal, Madoff will serve prison time and be required to help the government put together a full accounting of what happened.

The filing was the latest sign pointing toward a possible plea deal with Madoff, who has been confined to his Manhattan penthouse since his arrest in December. Madoff has never contested the allegations and recently surrendered millions of dollars in major assets, actions that typically precede plea deals.

Investigators have spent the last three months trying to untangle Madoff's complicated financial operation while attempting to return what is left of his assets to investors who lost billions. Madoff's cooperation could be key to explaining the mysteries and intricacies of his business, and also explain if others were involved in the fraud. Daniel J. Horwitz, a Madoff defense lawyer, would only say that "we've waived the right to indictment and the case will proceed by information."

Typically, a defendant is brought before a judge, waives indictment and enters a guilty plea the same day to a charging document known as an "information." It resembles an indictment but is brought by prosecutors rather than a grand jury.

Thursday, February 26, 2009

Plea Likely from Iraq Terror Suspect

The Washington Post reports that a Dutch national accused of planting roadside bombs in Iraq is expected to plead guilty today. The case represents the first prosecution of an alleged Iraqi insurgent in a U.S. Courtroom.

Wesam al-Delaema, 36, was indicted by a federal grand jury in Washington on charges that include conspiring to murder U.S. citizens and possessing a destructive device during a crime of violence. . . .

[Delaema] was arrested by Dutch authorities in May 2005 and extradited to the United States in early 2007.

Authorities have alleged that Delaema traveled to Iraq in 2003 and was a member of the group Mujaheddin From Fallujah, which deployed roadside bombs.

On a videotape seized from his Dutch home, Delaema and other alleged insurgents were shown making, planting and discussing explosives intended to harm U.S. troops operating near Fallujah, authorities have said. On the video, Delaema said in Arabic that "we have executed several operations, and most of them were successful."

Dutch authorities began to investigate Delaema because they thought he may have participated in the 2004 killing of Nicholas Berg, a 26-year-old American businessman, prosecutors have written in court documents. . . .

After a lengthy wiretap investigation of Delaema that turned up discussions of insurgent attacks in Iraq and local crimes, Dutch authorities arrested him, prosecutors have said.

More recently, Delaema was charged with assaulting a corrections officer at the D.C. jail.

Any sentence imposed would be served in the Netherlands. As part of the extradition deal, U.S. authorities agreed not to send Delaema to the U.S. military prison in Guantanamo Bay, Cuba, and agreed that he would serve his prison time in his home country.

Interestingly, Dutch officials may amend any sentence imposed in the case.

Tuesday, February 3, 2009

Should Plea Bargains Be Available On-Line?

Doug Berman over at the Sentencing Law and Policy blog has an interesting post regarding a National Law Journal article about a federal judge who has defied the DOJ's wishes and ordered all plea agreements to be posted online. Here is a portion of the National Law Journal article.

Chief Judge Federico Moreno of the Southern District of Florida, bucking the wishes of the U.S. Department of Justice, has ordered all plea agreements to be posted online.

In an order issued on Jan. 22, Moreno stated that as of Feb. 20, all plea agreements "will be public documents, with full remote access available to all members of the public and the bar, unless the Court has entered an order in advance directing the sealing or otherwise restricting a plea agreement." Moreno's order rescinds a previous order of April 2007 taking all plea agreements offline and making them accessible for physical viewing only at the courthouse.

The issue of whetherplea agreements should be publicly available, able to be viewed electronically through the PACER system, is a controversial one, pitting prosecutors against defense lawyers and First Amendment advocates. In 2007, the Justice Department asked the Judicial Conference to restrict electronic access to plea and cooperation agreements in order to keep information about cooperating witnesses secret.

The Justice Department was concerned about a new Web site, Whosarat.com, which was posting information about all cooperators in federal cases. "We are witnessing the rise of a new cottage industry engaged in republishing court filings about cooperators on Web sites such as whosarat.com for the clear purpose of witness intimidation, retaliation and harassment," stated the Justice Department's memo to the courts. The Southern District of Florida, like most other courts around the nation, complied, taking pleas off PACER.

But defense attorneys, First Amendment advocates and the federal public defender's office protested, arguing that the public's right to know about the court system was being impaired.

In 2007, the National Association of Criminal Defense Lawyers passed a resolution opposing the exclusion of plea agreements from PACER.

Moreno ordered a study of the situation and held an en banc hearing, with representatives from both the U.S.attorney's office and defense bar. After the hearing, most of the district judges agreed to rescind the previous order and make plea agreements public again, stated the order.

"The sense of the Court is that the public's interest in access must prevail in this instance and that restricting access to all plea agreements is overly broad," states Moreno's order. "Other means are available to the prosecution and defense to insure that the public record does not contain information about cooperation agreements in those instance where the interests of safety or other considerations require different treatment." Judges can still seal plea agreements in individual cases, he noted.

Monday, February 2, 2009

South Dakota Post-Conviction DNA Testing - But What About Plea Bargains?

According to the Argus Leader, South Dakota may soon get post-conviction DNA testing.

Some inmates in the state prison system could have DNA evidence tested to determine whether they were wrongly convicted if a bill in the Legislature becomes law. House Bill 1166, introduced Wednesday, has four Republican sponsors in the House and two Republicans and one Democrat in the Senate. The bill would let felony convicts petition for DNA testing if the evidence exists and if there were questions about identity in their prosecutions.

The bill has the backing of the local chapter of the Innocence Project, a national group that has pushed to expand post-conviction DNA testing at the state and federal level. Evidence lockers across the nation contain evidence of rapes and murders that were committed before science enabled investigators to use DNA to identify perpetrators.

DNA testing has enabled law enforcement agencies across the nation to solve old cases. But the tests also have helped those who were wrongly convicted. More than 230 people nationwide have been exonerated because of post-conviction DNA testing, according to the Innocence Project.

Forty-four states already have similar legislation, according to University of South Dakota law professor Chris Hutton. Hutton is the faculty adviser for the local chapter of the Innocence Project, which includes law students and volunteer lawyers.

An interesting post by the Innocence Project of Florida notes, however, that the South Dakota bill excludes DNA testing for individuals who plead guilty to a crime. This type of exclusion from post-conviction DNA testing statutes has been fairly common in recent years.

The only worry in South Dakota appears to be that convicts who pled to their crimes will be denied access to testing. This is troubling because, as we know, people often plead guilty to crimes they did not commit. The only criterion for access to post-conviction DNA testing should be an inmate's ability to inject a reasonable doubt into their prior conviction.

Chris Hutton, the faculty advisor for the South Dakota chapter of the Innocence Project commented, "Everybody from the attorney general on down realizes mistakes can be made."

Wednesday, January 14, 2009

Today in Plea Bargaining History - The Andrew Fastow Guilty Plea

Five years ago today, Andrew Fastow pleaded guilty to participation in crimes that contributed to the collapse of Enron. In his plea, Fastow admitted to disguising Enron's deteriorating financial health and engaging in a scheme to defraud the company of millions of dollars for his own benefit. Fastow also entered into an agreement to surrender more than $23 million to the SEC to settle related civil charges.

Fastow's plea agreement was the beginning of the end for the Enron conspirators. On January 22, 2004, Richard Causey, former Enron Chief Accounting Officer, was charged with being "a principal architect" of a scheme to mislead investors. On February 19, Jeff Skilling, former Enron CEO, was indicted on 35 counts of fraud, insider trading, and conspiracy. Finally, on July 18, Ken Lay, Enron founder and former CEO, was indicted on eleven counts of conspiracy, making misleading statements, wire fraud, bank fraud, and securities fraud.

In early 2005, Causey pleaded guilty and agreed to testify against Skilling and Lay. The trial began on January 30, 2006, and both Skilling and Lay were convicted on May 25.

Lay died prior to sentencing. Skilling was sentenced to 24 years and four months in prison. Recently, Skilling was ordered resentenced by the United States Court of Appeals for the Fifth Circuit due to a sentencing guidelines calculation error. Skilling is awaiting word on his new sentence, which some predict could include a more than modest reduction.

While Fastow's plea agreement called for Fastow to serve ten years in prison, his cooperation during the subsequent investigation and prosecutions was so extensive that he was eventually sentenced to only six years. He is serving his time at a federal facility in Colorado and is scheduled for release in 2011.

Monday, January 5, 2009

Remembering Judge Griffin B. Bell - Carter's Attorney General and Creator of the Special Matters Team at King & Spalding LLP

It is with great sadness that we learned today of the death of Griffin B. Bell, an individual aptly named by the New York Times as the “dean of Georgia lawyers.” Judge Bell’s influence in the law extends well beyond Georgia of course. In particular, his reputation of strong principles and independence led him to be a popular choice for internal investigations and an attorney who shaped this ever growing area of the law. As the New York Times noted today, his reputation was such that he established a Special Matters practice at King & Spalding to handle such assignments.

It is as a member of the King & Spalding Special Matters Team that I was able to meet Judge Bell and, during my final year with the firm, even had the pleasure of having an office just down the hallway from the former Attorney General. I will remember most his Southern style and his gift for quickly boiling down complex issues to the core. He was always a provider of thoughtful guidance, and he will be missed.

The New York Times has a well written obituary for Judge Bell, which is below.

Griffin B. Bell, the dean of Georgia lawyers and the United States Attorney General during most of the presidency of his childhood neighbor Jimmy Carter, died at Piedmont Hospital in Atlanta on Monday morning. He was 90.

A spokesman for King & Spalding, the law firm where he was senior counsel, said the cause of death was complications from pancreatic cancer.

Judge Bell, as he was almost always addressed long after his 15 years' service on the Federal bench, embodied more than a few of the clich├ęs about Southern gentlemen of the law, with his small-town background, a manner that was often called courtly, self-deprecating humor, a gift for persuasion and an instinct for politics.

But he was also known for strong principles and an independent streak, a reputation that made him a popular choice for blue-ribbon commissions and high-profile investigations of corporate malfeasance – to the point that he established a whole "special matters" practice at his law firm to handle such assignments.

Though a politically active Democrat nearly all his life, he often stood apart from many in his party in Georgia, whether by opposing racial segregation in the 1950's or by acting as President George H.W. Bush's personal counsel during the Iran-Contra investigations in the early 1990's.

He was equally independent as Attorney General, insisting on direct access to President Carter that no other cabinet officer enjoyed, and sticking tenaciously to policy decisions that he thought were grounded in fundamental tenets of the law, even when those decisions embarrassed or discomfited the president.

President Carter issued a statement on Monday saying he was "deeply saddened" by the death of his longtime friend, whom he called a "trusted and enduring public figure."

Born on Halloween, 1918, in the west central Georgia town of Americus, Griffin Boyette Bell was the third child and only son of a farmer from a locally prominent family who later turned to shopkeeping. With several lawyers in his extended family, including a cousin who became the state's chief justice, Mr. Bell found himself drawn in childhood to a legal career, and he often attended local court sessions with his father.

After army service in World War II, he attended college on the G.I. Bill, received a law degree from Mercer College and established a successful practice in Savannah and Rome, Ga., before being invited to become a partner in King & Spalding, an elite Atlanta firm, in 1953. He remained associated with the firm for the rest of his life.

By 1958 he was managing partner, as well as a key adviser to newly elected Gov. Ernest Vandiver, who had promised in his campaign not to desegregate Georgia's schools, but who did not want to shut them down to avoid federal court-ordered integration. Mr. Bell, who opposed segregation, helped Governor Vandiver finesse the problem for a time, by persuading the legislature to set up a commission to hold hearings around the state on whether the schools should close.

Mr. Bell's political star ascended farther when he co-managed John F. Kennedy's campaign in Georgia and delivered a bigger majority even than Massachusetts did. Kennedy rewarded him in 1961 with a seat on the United States Court of Appeals for the Fifth Circuit, which in those days covered the whole Southeast.Civil rights cases figured heavily on the court's docket in the 1960s, and Judge Bell was handed a momentous one after just two months on the bench. In it, a panel that he led ruled that Georgia's longstanding "county unit system" of primary voting unconstitutionally denied fair representation to the state's growing cities, with their large concentrations of black voters. The decision broke the grip of white rural party barons on the state's politics.

As a judge, he was regarded as a good administrator more than a legal theorist; a strong defender of the First Amendment; opposed to segregation and discrimination but also to racial quotas; and very conservative on the rights of criminals.

Judge Bell resigned in 1976 to return to private practice at King & Spalding, saying he wanted "to make some money." But in less than a year, public service beckoned again: Jimmy Carter, whose family farm in Plains, Ga., is nine miles from Judge Bell's childhood home, offered him the top job at the Justice Department, an appointment he was initially reluctant to accept. His Georgia roots and his work for Governor Vandiver made him the most controversial of President Carter's cabinet choices, but a number of black leaders in Georgia spoke out in favor of his confirmation.

As Attorney General he concentrated on repairing the lingering damage from the Watergate scandal, and on de-politicizing and re-professionalizing the Justice Department and the F.B.I.

After stepping down in 1979 to return once again to King & Spalding, Judge Bell's notable legal work included representing Eugene Hasenfus, whose capture by Nicaraguan authorities exposed the Iran-Contra scandal. Judge Bell was hired by the E.F. Hutton brokerage firm to investigate a check-kiting scandal at the firm, and helped Dow Corning defend itself against litigation over its silicone breast implants. He published a memoir and other writings about legal issues, spoke out in favor of term limits for elective office, proposed limiting the president to a single six-year term, and was the subject of a biography by Reg Murphy, the former editor of the Atlanta Constitution.

Judge Bell's wife of 57 years, the former Mary Foy Powell, died in 2000. He remarried the following year, to a lifelong friend, Nancy Duckworth Kinnebrew. She survives him, as do his son by his first marriage, Griffin Bell Jr., a labor lawyer who lives in Atlanta; two grandchildren, including Griffin Bell III, also a lawyer, and five great-grandchildren.

Though he gave up the senior partner title at King & Spalding at the end of 2003 as a concession to advancing age, he kept working, and kept being named to blue-ribbon panels, including a commission to review the controversial "data mining" of personal information about millions of citizens by the Defense Department and other agencies. The commission issued a report in 2004 calling for greater privacy safeguards.

Number of Corporate Settlements with the DOJ Spikes

According to the Washington Post, the DOJ has reached more than a dozen business-related settlements since November.

The climate for business settlements could grow more harsh when Obama appointees seize the reins at the Justice Department, corporate lawyers say. They point to statements by Attorney General-designate Eric H. Holder Jr., who told an audience last month that he would expand the focus of federal prosecutors into corporate suites.

A review of 15 agreements involving corporations since early November suggests that much of the alleged misconduct dates back five years or more, provoking questions about why the cases took so long to mature and why resolutions are coming with only weeks left in President Bush's term. . .

Justice Department officials said there is nothing unusual about end-of-year settlements. They defend their record in investigating and prosecuting corporate misdeeds. In recent weeks, they announced indictments against five Blackwater Worldwide security guards for their role in a 2007 ambush that killed or injured 34 Iraqi civilians. Justice Department officials also rolled out their second-largest price-fixing settlement, a $585 million penalty shared by three companies that make high-tech liquid crystal display panels for computer monitors, televisions and cellphones. . .

Since November, the Justice Department has announced 19 settlements or plea deals with companies, compared with 16 in the same time frame the year before. In 2006, department officials announced five business settlements in the same time frame.

Three lawyers who routinely represent companies before the Justice Department said they began to take notice shortly after the Nov. 4 election, when authorities announced a $725,000 environmental deal with Plantation Pipe Line. The number of settlements and plea agreements accelerated from there.

By mid-November, Britain's Aibel Group agreed to pay $4.2 million to resolve accusations that the oil and gas services company had flouted a probation agreement signed a year earlier, covering bribes its executives allegedly spread to Nigerian customs officials between 2002 and 2005.

A few weeks later came a case that authorities described as "unprecedented in scale and geographic reach." Siemens committed to pay $450 million in criminal fines, in a pact that left the German conglomerate eligible to bid for and win lucrative U.S.
government contracts.

Two days before Christmas, Justice Department officials rolled out more settlements: a $1.7 million deal with Spartan Motors, which allegedly paid kickbacks to win a contract to make chassis for military vehicles; a $6.1 million deal with a subsidiary of Exxon Mobil, accused of violating the Clean Water Act in connection with a 15,000-gallon diesel oil spill in Massachusetts; and a $7.6 million pact with Yale University to settle charges that it overbilled federal agencies on research grants between 2000 and 2006.

Corporate lawyers and public interest groups pointed to several other reasons contributing to the burst in settlements, including a desire by businesses to avoid negative publicity by timing their deals to the holiday season, and a push by government attorneys to complete big cases before they leave for private-sector
work. . .