Friday, November 15, 2013

Professor Dervan Testifies on Capitol Hill Regarding Overcriminalization, Regulatory Crimes, and Plea Bargaining

I was pleased to have the opportunity to testify yesterday before the House Committee on the Judiciary, Overcriminalization Task Force.  The focus on the hearing was potential solutions to overcriminalization, particularly regulatory overcriminalization. 

Below is a portion of my testimony:

" I commend the Task Force for its work, shining a light on the issue of overcriminalization and working to correct this fundamental problem in our criminal justice system.    

Before beginning a discussion of the possible solutions to the numerous problems associated with overcriminalization that have been identified by this Task Force during prior hearings, I think it is also important to consider once again the far reaching consequences stemming from the phenomenon of overcriminalization.  As reported by the American Bar Association in a 1998 study, forty-percent of the criminal laws passed since the Civil War were enacted after 1970.  Since the release of this ABA report, it is estimated that the federal government has created hundreds of additional criminal statutes and untold numbers of additional criminal regulatory provisions. 

One of the most visible results of overcriminalization in the last forty years has been the growth in the size of the American prison population.  In a report released in March 2009, the Pew Center on the States concluded that 2.3 million adults in the United States were in prison or jail.  This represented 1 out of every 100 adults.  Further, when adults in the United States who were on probation or parole were included, the total number under correctional control reached 7.3 million, or 1 out of every 31 adults.  Finally, as noted in a 2011 study, an estimated 65 million adults in the United States, which represents more than 1 in 4, have a criminal record.  Given these statistics, it should come as no surprise that the United States has the world’s largest prison population.  Though we represent only 5% of the world’s population, we have “almost a quarter of the world’s prisoners.”

It is also important to remember in this context that the consequences of conviction do not end when a prison sentence is completed.  There are hundreds of collateral consequences that can flow from a misdemeanor or felony conviction, regardless of whether a prison or jail sentence is ever served.  Further, such collateral consequences can impact not only the convicted but their family and community as well.  The breadth and significance of these collateral consequences cannot be understated, and I believe this is an important issue that this Task Force should consider addressing at a future hearing.

As evidenced by the work of this Task Force, there is now a deep and bipartisan appreciation for the significance of overcriminalization in our criminal justice system.  Therefore, let us consider several solutions that might be adopted by Congress to both reduce the negative impacts of past overcriminalization and prevent a return to overcriminalization in the future.  While this hearing is focused on solutions to regulatory crime, it is important to note that the solutions I propose below are applicable to all criminal offenses in the federal system and should be considered potential solutions to the broader issue of overcriminalization, not just regulatory overcriminalization.

Adopt a Default Rule for Mens Rea

First, mens rea is a cornerstone of our criminal justice system and conveys the idea that individuals should be prosecuted where they have acted with a guilty mind.  As Justice Jackson wrote in Morissette v. United States in 1952, “The contention that an injury can amount to a crime only when inflicted by intention is no provincial or transient notion.  It is as universal and persistent in mature systems of law as belief in freedom of the human will and a consequent ability and duty of the normal individual to choose between good and evil.”  Today, as a result of overcriminalization, there are many federal offenses for which there is no mens rea or only weak mens rea.  Where adequate mens rea is lacking, innocent and mistaken conduct can be criminalized under circumstances in which Congress never intended a person’s liberty to be put in jeopardy.    

To correct this problem, Congress should adopt a default mens rea rule.  Such a rule would correct unintentional omissions of a mens rea term in existing and future legislation and ensure that those without a guilty mind are protected from unwarranted prosecutions.  When adopting such a default rule, the Task Force should carefully consider the appropriate level of mens rea for incorporation as the default.  While many current federal criminal statutes utilize the lower-level mens rea standard of “knowingly,” this term generally only requires proof that the defendant had “knowledge of the facts that constitute the offense.”  Therefore, the utilization of the term “knowingly” will likely fail to achieve the Task Force’s goal of preventing application of regulator crimes and other offenses to individuals unless they intentionally engaged in inherently wrongful conduct or acted with knowledge that their conduct was unlawful.  A stronger and more appropriate term for utilization would likely be the term “willfully,” which would require some proof that the individual was aware his or her “conduct was unlawful.”

Adopt a Default Rule Applying Mens Rea to All Material Elements of an Offense

In addition to adoption of a default mens rea rule as described above, consideration must be given to codification of rules of construction that will assist in protecting the constitutional rights of defendants.  As one such example, the Task Force should consider adoption of a provision requiring courts to apply any mens rea term contained in or applicable to a statutory or regulatory offense to all material elements of that offense. 

There are several advantages to adopting such a rule.  First, this type of provision will assist in clarifying ambiguities if a default mens rea rule is adopted.  Second, such a provision will assist in preventing costly litigation regarding existing statutes that already contain a mens rea requirement but which are vague as to whether the mens rea applies to each of the material elements of the offense.  Third, adoption of a default rule will assist in creating greater uniformity amongst the various courts and their interpretations of statutes containing ambiguities as to the mens rea element.  Finally, such a provision will further the goals of this Task Force by helping to ensure that individuals are not prosecuted where they have not acted with a guilty mind.

. . .

It is important to note, of course, that Congress could still limit the application of a particular mens rea term in a particular statutory or regulatory offense.  In such cases, the specific legislation would simply need to include a clear indication of Congressional intent to limit the applicability of the mens rea term.  The default rule as described above would only apply in those cases where no such indication was present.

Adopt a Codification of the Rule of Lenity

As a second rule of construction, the Task Force should consider codifying the Rule of Lenity, a doctrine with a long and respected history in American law.  The Rule of Lenity states that “ambiguous criminal laws [are] to be interpreted in favor of the defendants subjected to them.”  Recently, in the case of United States v. Santos, Justice Scalia remarked regarding the Rule of Lenity:

This venerable rule not only vindicates the fundamental principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed.  It also places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress’s stead.

Unfortunately, the application of the Rule of Lenity by lower courts has not been consistent.  Therefore, the codification of this important doctrine is necessary to ensure its uniform application consistent with the doctrines that the government must sustain its burden of proof and defendants are presumed to be innocent.  Importantly, codification of the Rule of Lenity alone is not sufficient to correct the problems emanating from overcriminalization.  Rather, codification of the Rule of Lenity should be viewed only as an additional safeguard in combination with the above proposed solutions. 

Additional Possible Solutions

In addition to the above three solutions to the issue of overcriminalization and its impact on statutory and regulatory offenses, I believe consideration should also be given to several other ideas.  These include passage of a Congressional rule requiring every law that adds or modifies criminal offenses or penalties be subject to automatic referral to the relevant judiciary committee, enactment of a law that would require the federal government to produce a public report that assesses the justification, costs, and benefits of any new criminalization, and enactment of a law that would require Congress to approve any new or modified regulatory criminal offenses or penalties proposed by the Executive Branch.

Plea Bargaining

In closing, I would like to address one additional issue. 

Today, almost 97% of criminal cases in the federal system are resolved through a plea of guilty.  As the number, breadth, and sentencing severity of federal criminal statutes increased over the last century because of overcriminalization, prosecutors gained increased ability to create overwhelming incentives for defendants to waive their constitutional right to a trial by jury and plead guilty.  The power of the prosecution in this context has been made even greater by the presence of vague and esoteric regulatory offenses that require little or no mens rea.  At the same time, the financial and emotional costs to defendants and their families of proceeding to trial have grown into often insurmountable obstacles. 

Consider the examples already described in testimony before this Task Force.

In Mr. Lewis’s testimony regarding allegations he committed a felony violation of the Clean Water Act related to a blocked sewage line at work, he offered the Task Force a clear glimpse at the options he believed he had after been accused of a crime.  He stated, “I wound up pleading guilty to a federal misdemeanor because the prosecutors said that if I pled guilty, they wouldn’t oppose probation.  As a single dad, I was worried that if I went to prison there would be nobody to raise my children or care for my mother.” 

Ms. Kinder’s testimony regarding allegations that she had committed a felony violation of the Lacey Act related to the harvesting of paddlefish from the wrong side of the Ohio river also included a discussion of plea bargaining.  She stated, “We felt, and we still feel now, that we did nothing wrong.  But, on January 17, 2012, we made the painful and humiliating decision to plead guilty because we didn’t think we had a choice.  We were facing a maximum penalty of up to five years in prison, a $250,000 fine, or both, on each of four counts…  We couldn’t suffer the emotional and financial trauma of a trial, and we didn’t want to risk losing our freedom as well as our property.”  As a result, Ms. Kinder pleaded guilty to a misdemeanor.  

In each of these cases, one is offered insights into the various issues that prevent individuals from challenging criminal allegations today and exercising their constitutional right to put the government to its burden of proof at trial.  These challenges include steep sentencing differentials and penalties for proceeding to trial, along with significant financial and familial considerations.

As the examples offered by the witnesses before this committee demonstrate, we must recognize that a symbiotic relationship exists between overcriminalization and plea bargaining.  Plea bargaining and overcriminalization have perpetuated each other.  Plea bargaining has shielded overcriminalization from scrutiny.  At the same time, overcriminalization has provided the laws that allow prosecutors such wide discretion in selecting charges and creating significant incentives for defendants to plead guilty.  This relationship has lead us to our current state and created an environment in which we have jeopardized the accuracy of our criminal justice system in favor of speed and convenience.

And this is not only occurring in regulatory cases.  It is occurring in all manner of criminal cases throughout the country.

Consider for example, the nationally publicized case of Brian Banks.  In 2002, Banks, who was sixteen years old at the time, was a top college football prospect.  His world came crashing down, however, when he was wrongfully accused of sexual assault and kidnapping by an acquaintance.  After his arrest, Banks was offered a choice.  If he pleaded guilty, the government would recommend a three year sentence.  Should he proceed to trial, he could risk receiving a sentence of 41 years to life.  Banks, who some reports indicate was given only 10 minute to decide his fate, took the plea offer.  After serving five years in prison, Banks was contacted by the accuser who admitted that she had lied about the incident.  She allegedly refused to inform authorities of the falsity of her original allegations, however, because of a large financial settlement previously awarded to her in the case.  After secretly taping the accuser’s admission that the assault had not occurred, Banks was exonerated in 2012.

Consider also the case of Ada JoAnne Taylor.  In 1989, Taylor and five others were accused of killing a sixty-eight-year-old woman in Beatrice, Nebraska.  The options offered to Taylor were starkly different.  If she pleaded guilty and cooperated with prosecutors, she would be rewarded with a sentence of ten to forty years in prison.  If, however, she proceeded to trial and was convicted, she would likely spend the rest of her life behind bars.  The choice was difficult, but the incentives to admit guilt were enticing.  A sentence of ten to forty years in prison meant she would return home one day and salvage at least a portion of her life.  The alternative, a lifetime behind bars, was grim by comparison.  After contemplating the options, Taylor pleaded guilty to aiding and abetting second-degree murder.  In reality, however, she was innocent.  After serving nineteen years in prison, Taylor was exonerated after DNA testing proved that neither she nor any of the other five defendants in her case were involved in the murder. 

Through academic study, we now know that the actions of Brian Banks, Ada JoAnne Taylor and many others are not anomalies.  Factually and morally innocent people facing tough circumstances, such as penalties for proceeding to trial or a realization of the financial costs of challenging an indictment, will falsely confess to something they have not done.  As an example, in a recent article written by Dr. Vanessa Edkins (Assistant Professor, Department of Psychology, Florida Institute of Technology) and myself and published in the Journal of Criminal Law and Criminology, we discovered that more than half of the innocent participants in our study were willing to falsely admit guilt in return for a perceived benefit.

As we now know the true power of plea bargaining from both actual criminal cases and from academic research, we must begin to examine the impact that overcriminalization has had on this most fundamental aspect of the American criminal justice system.  I hope, therefore, that this Task Force and the Committee on the Judiciary will next turn its attention to modern day plea bargaining, one of the many outgrowths of the overcriminalization phenomenon. 

Along with plea bargaining, there are many other issues currently being debated in the legal academy and legal profession that are appropriate for this Task Force’s review.  Those might include issues related to collateral consequences of conviction, mandatory minimum sentences, forfeiture provisions, and conspiracy laws.  While those are not the topics of today’s proceedings, I think they are topics ripe for investigation and analysis at future hearings considering overcriminalization and the state of the American criminal justice system.

Thank you for the opportunity to testify today.  I welcome any questions the Task Force might have regarding my remarks."

The work of this bipartisan Task Force and the overwhelming interest in finding a solution to the issue of overcriminalization give me great hope that meaningful reforms are on the horizon.

A copy of my full written testimony may be found here, along with a video link to the hearing.

Monday, November 4, 2013

Johnson & Johnson settles "kickback" charges with $2.2 billion penalty

It was a good day for the government.  Along with reports that SAC Capital will pay $1.8 billion in fines related to insider trading allegations, Johnson & Johnson has reportedly agreed to pay $2.2 billion to settle allegations regarding the marketing of drugs for unapproved uses and the payment of kickbacks to doctors and nursing homes.
The penalties announced Monday involve fines and forfeiture to the federal government and several states. The settlement involves the schizophrenia drugs Risperdal and Invega, and the heart failure drug Natrecor, the company and Attorney General Eric Holder said...

The penalty amounts to one of the country's largest health care-related settlements, the Justice Department said.

It also results in what one plaintiff's attorney called the largest whistleblower payout in U.S. history. Whistleblowers in three states will collect $167.7 million under the False Claims Act...

The settlement includes payments to the federal government and several states by Johnson & Johnson, as well as subsidiaries Janssen Pharmaceuticals and Scios.
The entire CNN article is available here.

SAC Capital to Plead Guilty to Charges of Insider Trading

According to CNN, SAC Capital has agreed to pay a $1.8 billion fine and plead guilty to criminal insider trading charges. 
In addition, prosecutors say SAC will close its investment advisory business, meaning it will no longer manage money for outside investors. The deal still allows the firm to operate as a "family office," with Cohen and others at SAC investing their own money.

Cohen is one of the country's most famous hedge fund managers, with a net worth estimated at $9.4 billion in September. He could still face criminal charges of his own since the agreement does not include any immunity for individuals at the firm.

Prosecutors accused SAC in their indictment of fostering a culture of insider trading "that was substantial, pervasive, and on a scale without known precedent." The indictment excerpts a number of e-mails and instant messages from SAC traders suggesting they had illicit information from corporate insiders.

"What SAC Capital's plea demonstrates is that cheating and breaking the law were not only permitted, but allowed to persist," FBI Special Agent in Charge April Brooks said. "It was nothing short of institutional failure."

The deal still awaits approval from a judge. Preet Bharara, U.S. Attorney for the Southern District of New York, said the government's investigation remains ongoing.
The entire CNN article is available here.

Tuesday, October 29, 2013

The Wolf of Wall Street (Jordon Belfort) and Restitution Payments after Supervised Release

Many in the white collar criminal law community are looking forward to the upcoming movie from Martin Scorsese entitled "The Wolf of Wall Street."  The movie, staring Leonardo DiCaprio, is based on the true story of Jordon Belfort.  Belfort was sentenced to four years in prison in 2003 and ordered to pay $110.4 million in restitution for engaging in an alleged pump and dump stock scheme.

Of interest to readers of this blog is an issue that recently arose with regard to Belfort's restitution payments.  From CNN:
Despite Belfort's lucrative movie and book deals, and earnings from a new career as a motivational speaker, many of these victims are still waiting for restitution.

When Belfort was sentenced in 2003 to four years in prison, Judge John Gleeson ordered him to pay about $110.4 million to a victims fund, in installments equal to 50% of his monthly gross income, after his release from jail. If any major changes in his financial circumstances took place, the percentage Belfort had to pay could be adjusted up or down.

After I asked for an update on the fund in early October, lawyers in the office of Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, replied that Belfort had only contributed about $11.6 million to the victims' fund so far -- about one-tenth of the required total.

In a court filing with many details about Belfort's current income whited out, Lynch's office asked Gleeson to find Belfort in default, saying that according to his tax returns and other available information, the payments he has been making are "insufficient." They said that in 2011, for instance, Belfort paid $21,000 in restitution, although he made more than $1 million for the motion picture rights to his memoir, as well as more income from a motivational speaking corporation he half-owns.

Belfort's attorneys responded that he doesn't deny he still owes money to victims, but that his position is his obligation to pay 50% of his income to them ended when his term of "supervised release" from prison expired in April 2009. They said that for the past two years, he's been trying to arrange a "forbearance" agreement with the government to "pay 100% of the profits of the movie and the two books," but that his offer has been turned down.

"Before you accuse me of anything, you should learn the facts," Belfort said in an e-mail last week. "I have been trying to settle this case forever and have been completely stonewalled. I can even show you the settlement offer from the government, on their letterhead, asking for only 50% of my books, after I offered 100%."

On Friday afternoon, the government asked to withdraw its pending motion to hold Belfort in default on his payments to victims. Oral argument in the case had been scheduled to begin Nov. 22. In a court document, Beth Schwartz, Assistant U.S. Attorney for the Eastern District of New York, said the delay would give both sides "an opportunity to explore a resolution" of certain issues, and that "Mr. Belfort joins in this request."
The issue of how the government should respond in such situations once supervised release has ended has come up several times in recent years.  It will be interesting to see what happens in this particular case as interest in the back story increases during the lead up to the Christmas Day movie release.
Read the entire CNN article here.  The is another article about the restitution issue here.
To watch a preview of "The Wolf of Wall Street," click here.

Tuesday, October 1, 2013

Upcoming ABA CJS International White Collar Crime Conference - London, October 7-8, 2013

Next week is the American Bar Association's second annual International White Collar Crime conference.  This year's event will take place in London, UK on October 7-8, 2013.  The program is below.  A link to the registration materials is here.

The ABA Criminal Justice Section and City of London Law Society’s

Corporate Crime & Corruption Committee

Present the

2013 International White Collar Crime Conference

October 7-8, 2013       London, United Kingdom 
Hosted at the Offices of
Berwin Leighton Paisner LLP
Adelaide House, London Bridge

Monday, October 7, 2013 – DAY 1

8:00 – 9:00 a.m.             Registration & Coffee/Tea - Meet and Greet

9:00 – 9:15 a.m.             Welcoming RemarksMathias Heck, Chair, ABA Criminal Justice Section and Michael Caplan, QC, Chair, CLLS Corporate Crime & Corruption Committee

9:15 – 10:15 a.m.           Session I – Plenary

Governmental Perspectives Regarding the Enforcement of International White Collar Criminal Laws – A Discussion with David Green CB QC, Director, UK Serious Fraud Office
10:15 -- 10:30 a.m.         Networking Break

10:30 – 11:30 a.m.          Session II – Plenary

The Evolving Challenges of Investigating and Preventing Corporate Espionage and Cyber-Crimes in the Twenty-First Century

As the issues of corporate espionage and cyber-crimes take center stage in the twenty-first century’s global business environment, this session will consider a broad range of issues, including techniques for preventing, detecting, and investigating this illicit behavior.

Moderator: Scott L. Marrah, Kilpatrick Townsend, Atlanta

11:30 – 11:45 p.m.         Networking Break

11:45 – 12:45 p.m.         Session III – Breakouts

A.      Anti-Corruption Enforcement Trends: What Every Global Company Needs to Know

This session will examine the FCPA, the UK Bribery Act, and other similar statutory regimes to provide a detailed and sophisticated overview of these laws and provide a blueprint for protecting corporations and employees from the risks of corruption.  This discussion will include a review of recent enforcement actions and guidance, examination of risk factors in emerging markets (third parties, gifts/entertainment, and travel), analysis of the rise in Chinese anti-corruption enforcement, and consideration of strategies for developing and implementing an effective global anti-corruption compliance program.

Moderator: Z Scott, Kaye Scholer, Chicago

B.      Aggressive Enforcement of Tax Laws by the US, UK, and Other EU Members against Bank Secrecy Jurisdictions – The Impact of FATCA and Other legislation

As authorities with various institutions in the U.S., U.K (FCA), and around the globe increase scrutiny of corporate tax strategy and regulatory framework, this session will consider recent trends in this field.  This discussion will include review of recent enforcement actions and guidance, examination of emerging risk areas, and consideration of strategies for developing and implementing an effective tax compliance program 

12:45 – 2:30 p.m.           Luncheon at Fishmonger’s Banqueting Hall (on London Bridge, directly across from Adelaide House) Featuring a Keynote Address by Caroline Binham, Legal Correspondent for the Financial Times, London

2:30 – 3:30 p.m.             Session IV -- Breakouts

A.     Anti-Trust/Anti-Cartel – Competition Law Across the Globe

This session will explore the choices companies and individuals make when confronted with cartel enforcement in multi-jurisdictional investigations and actions.  In particular, this session will discuss how resolutions are impacted by internal investigations, first-in amnesty programs, non- prosecution agreements, and the intended and unintended effect of carve outs.  Specific cases discussed will include the marine hose cases and the air cargo cases, and how determinations are made in multi-jurisdictional investigations as to what constitutes “anti competitive” versus what constitutes “business as usual,” as exemplified by the Google/Motorola Mobility matter, and other similar matters.

Moderator:  Nina Marino, Kaplan Marino, Beverly Hills, Calif.

B.     The Globalization of Enforcement Actions and Internal Investigations 

This session will consider the challenges presented by the globalization of enforcement actions and internal investigations.  In particular, this session will consider recent trends in the field, including analysis of current global enforcement actions, enforcement initiatives, and internal investigations, discussion of best practices when structuring and executing international internal investigations, and the challenges of privilege issues in the international setting. 

Moderator: Professor Lucian E. Dervan, Southern Illinois University School of Law

3:30 – 3:45 p.m.             Networking Break

3:45 -- 4:45 p.m.            Session V - Breakouts

A.     Money Laundering & Sanctions Violations in the Context of a Diverse and Globalized Economy

This session will consider how to identify high-risk individuals and organizations among suppliers, vendors and clients.  Further, this session will consider pressing issues in the field, including subsidiaries, the inventory rule, and conflicts between the U.S., E.U, and U.K. law.

Moderator: Elizabeth Robertson, K & L Gates, London
B.           The Challenges of Document Collection, Data Dissemination, and Employee Contacts During International Internal Investigations

This session will consider the challenges of collecting, reviewing, and transferring documents during international internal investigations.  In particular, the session will examine strategies for dealing with documents and the impact of data privacy laws and other restrictions. Further, this session will explore the complexities of interacting with various individuals during international internal investigations, including consideration of labor laws in various jurisdictions, some of which include stringent requirements regarding notification to employees under investigation and the timing and procedures for employee sanctions.           

Moderator: Karen Popp, Sidley Austin, LLP, Washington, D.C.

4:45 p.m.                       Reception at Fishmonger’s Court Room (on London Bridge, directly across from Adelaide House)

Tuesday, October 8, 2013 – DAY 2

8:30 – 9:30 a.m.             Coffee/Tea & Networking

9:30 – 10:30 a.m.           Session I – Plenary

                                    Global Trends in Whistleblowing: Best Practices for International Corporations Facing Whistleblowers Armed with New Legal Incentives & Technologies 

                                    As the United States and others begin increasing the monetary incentives for whistleblowing and whistleblowers become more technologically sophisticated, corporations must prepare for this new global environment.  This session will examine recent whistleblowing laws, including the Dodd-Frank Act and subsequent regulations, best practices for encouraging internal whistleblowing, and strategies for responding to external whistleblowing.

                                                Moderator: Aaron Stephens, Berwin Leighton, Paisner LLP, London

10:30 -- 10:45 a.m.         Networking Break

10:45 – 11:45 a.m.          Session II – Plenary

The Global Expansion of Deferred and Non-Prosecution Agreements - Lessons Learned from the U.S. and Strategies for Avoiding Collateral Consequences of Settlement

As the U.K. and other jurisdictions prepare to implement deferred and non-prosecution agreements as potential settlement tools in white collar criminal investigations, corporations and their counsel must prepare for these new enforcement mechanisms.  This session will explore the lessons learned from the utilization of these tools in the United States, including strategies for anticipating and avoiding the collateral consequences that such settlements might bring.

Moderator: Raymond Banoun, Cadwalader, Wickersham & Taft LLP
11:45 – 12:00 p.m.         Closing Remarks – Lord Ken McDonald, QC – AARON TO INVITE


**Bonus Women’s Leadership Luncheon Event at K & L Gates to Follow**

The ABA Criminal Justice Section’s Women In White Collar Subcommittee


Women Leaders in White Collar & the Global Corporate Community

Hosted by Elizabeth Robertson

at the Offices of

K & L Gates LLP

Please join white collar practitioners and corporate general counsel from around the globe at this first-ever event organized for women-to-women networking, appreciation, and mutual support.
The panel discussion will inspire, educate, and empower. This event is not to be missed.
1:15 p.m.                       Networking/Meet & Greet
1:15 – 2:30 p.m.             Luncheon & Panel Presentation         
Moderator:  Nina Marino, Kaplan Marino, Beverly Hills, Calif.

Interesting Story About Former Qwest CEO Nacchio's Prison Experience

The Wall Street Journal has an interesting article about the prison experience of former Qwest CEO Joseph Nacchio.  Nacchio spent 54 months in federal prison after being convicted by a jury of selling $52 million in stock as Qwest's prospects began to deteriorate.
Mr. Nacchio spent most of his sentence in two Pennsylvania facilities called camps, the lowest level of security offered by the Bureau of Prisons.

There are no bars and no walls around the perimeter. Camp inmates can send emails.

But they are awakened in the night for security checks. Phone calls are limited to about 10 minutes a day. Visitors are allowed but only every other weekend and some holidays.

Prison experts and former inmates say conditions are less comfortable for white-collar criminals than they were in the 1980s, when media stories about leafy prison camps with sparkling athletic facilities surfaced during the savings-and-loan crisis. They say authorities took down tennis nets in at least one camp and cut off inmate access to golf courses and swimming pools.

A Bureau of Prisons spokesman said federal camps do not have pools and said the agency doesn't keep records of past amenities.

"There is no such thing as a Club Fed," said prison consultant Alan Ellis, who advises white-collar convicts about life in prison.

Mr. Nacchio's fellow inmates included former Galleon Group trader Zvi Goffer and his brother Emanuel Goffer, both serving time for an insider-trading scheme. Mr. Nacchio got to know both of them.

But the two prison camps where Mr. Nacchio served, named Schuylkill and Lewisburg, were in large part populated with drug offenders, Mr. Nacchio said—men with muscular builds, covered in tattoos, and often two decades younger than him. Two of them became his guardian angels.

"Joe was right down to earth," said Spoonie, who asked that his real name not be used because of the stigma his drug-conspiracy conviction carries.

Spoonie, 45, said other white-collar offenders were "just all full of themselves," and stereotyped inmates such as himself and Juice, another drug offender, because of their tattoos and crimes.

"We are like best friends now," he said, adding that Mr. Nacchio's prison nickname was "Joe-ski-luv," because he's been married to the same woman for more than 30 years. "If he ever needs a lung or a bone, I'm there."
The entire article is available here.

Thursday, August 22, 2013

U.S. Sentencing Commission Releases Policy Priorities for Amendment Cycle Ending May 1, 2014

The U.S. Sentencing Commission has released its policy priorities for the amendment cycle ending May 1, 2014.  A few of the highlights including the following:
Pursuant to 28 U.S.C. 994(g), the Commission intends to consider the issue of reducing costs of incarceration and overcapacity of prisons, to the extent it is relevant to any identified priority...

Continuation of its work with Congress and other interested parties on statutory mandatory minimum penalties to implement the recommendations set forth in the Commission’s 2011 report to Congress, titled Mandatory Minimum Penalties in the Federal Criminal Justice System, including its recommendations regarding the severity and scope of mandatory minimum penalties, consideration of expanding the ‘‘safety valve’’ at 18 U.S.C. 3553(f), and elimination of the mandatory ‘‘stacking’’ of penalties under 18 U.S.C. 924(c), and to develop appropriate guideline amendments in response to any related legislation...

Possible consideration of amending the policy statement pertaining to ‘‘compassionate release,’’ § 1B1.13 (Reduction in Term of Imprisonment as a Result of Motion by Director of Bureau of Prisons)...
The full Federal Register notice is available here.

Modified Drug Charge Plea Deal in DC Area - Example of New Directive from AG Holder on Averting Mandatory Minimum Sentences for Low-Level Drug Offenders

The Washington Post is reporting that a man accused of drug running pleaded guilty in Alexandria, Virginia this week to a cocaine conspiracy charge that did not include a specific quantity of narcotics.  The Post believes this is the first case in the D.C. area to utilize Attorney General Eric Holder's new directive on mandatory minimum sentencing for minor drug offenders.

From the Post:
Marko Bukumirovic, 33, who lives in Severna Park, was charged in May with conspiracy to distribute five kilograms or more of cocaine, which carries a mandatory minimum sentence of 10 years in prison. But in an Alexandria court Tuesday, he pleaded guilty to essentially the same charge without the five-kilogram amount noted — an offense that has no mandatory minimum term.

On paper, the case seems to be one of the first public applications of Attorney General Eric H. Holder Jr.’s directive on mandatory minimum sentencing — the centerpiece of a criminal-justice reform plan that aims to save tens of millions of dollars in prison costs by reserving the most severe penalties for high-level or violent offenders and allowing minor drug criminals to reenter society more rapidly. But practically, it is likely to have little impact on Bukumirovic’s sentence, said Stephen R. Pickard, his attorney.

Bukumirovic is no longer facing the 10-year mandatory minimum: The legal maximum he now faces is 20 years instead of life in prison, Pickard said. But as a low-level, first-time offender, Bukumirovic likely would have qualified for the “safety valve” — another mechanism that allows certain offenders to avoid mandatory minimum sentences, Pickard said. And the modified charge, he said, does not affect Bukumirovic’s sentencing guidelines at all.

“The basis of the charge has everything to do with Holder,” Pickard said. “Practical point? No difference. . . . Ultimately, the guidelines came out the same.”
The entire article is available here.

Video of Attorney General Holder announcing the new directive is available here.

Wednesday, August 21, 2013

Bradley Manning Sentenced to 35 Years in Prison

According to CNN, Bradley Manning has been sentenced to 35 years in prison by a military judge.  Manning will also have his rank reduced to private, will forfeit his pay and benefits, and will be dishonorably discharged from the military. 

From CNN:
Lind convicted Manning in July of stealing 750,000 pages of classified documents and videos and disseminating them to WikiLeaks. He was found guilty of 20 of the 22 charges against him, including violations of the U.S. Espionage Act.

Prosecutors have said Manning acted as a "determined insider" in leaking classified information about the wars in Iraq and Afghanistan and should be locked up for at least 60 years.

Manning's lawyer contends he can be rehabilitated and should not "rot in jail."

"There may not be a soldier in the history of the Army who displayed such an extreme disregard" for his mission, Capt. Joe Morrow, the prosecutor, said Monday during final sentencing arguments.
The entire CNN story is available here.  A New York Times article is available here.

Earlier this year, Manning was found not guilty of aiding the enemy, a charge that could have carried a sentence of life in prison.  He was found guilty of lesser charges, including violations of the Espionage Act, stealing government property, and a single violation of the Computer Fraud and Abuse Act.  See earlier post regarding his not guilty verdict here.

Wednesday, August 14, 2013

Jesse Jackson Jr. Sentenced to 30 Months in Prison

Jesse Jackson Jr. has been sentenced to 30 months in prison for his misuse of campaign funds. According to CNN, Jackson's wife, Sandi Jackson, received 12 months in prison.
"I misled the American people," Jackson, 48, said before U.S. District Judge Amy Berman Jackson imposed the term, which she said should be served in Alabama.

The ex-Illinois lawmaker's wife, Sandi, received a 12-month sentence for her role in her husband's misuse of roughly $750,000 in campaign funds over several years. As the judge read her sentence, Sandi Jackson wept.

The pair pleaded guilty in February to various charges -- Jackson to one count of conspiracy to commit wire and mail fraud, and false statements; and his wife to filing false tax returns.

A smooth politician and the son of Jesse Jackson Sr., a civil rights leader and one-time political heavyweight, the younger Jackson admitted to years of using campaign money to pay for things such as vacations, furs and Michael Jackson memorabilia.

In a statement read in court, Jackson said he wanted to be held accountable for his actions and he knew what he did was wrong.

He also asked the judge to not punish his wife for what he said "was a subset of what I did."

"I ask that my kids not suffer from my actions," Jackson said of his two children, 9 and 13. "If probation is not available to my wife, give me her time."

Jackson's lawyers reiterated that sentiment and asked the court for an 18-month sentence for Jackson and probation for his wife.

"This is not Madoff," Reid Weingarten, Jackson's lawyer, said in court, referring to notorious Wall Street swindler Bernie Madoff. "There was no Ponzi scheme."

Sandi Jackson sobbed through part of her courtroom statement and said she "put her family unit in peril" for filing false tax returns.

"I stand before you today asking for mercy," she said. "My heart breaks every day with the pain it's caused my babies. I ask the court for mercy."

Prosecutors had sought a four-year sentence for Jackson and 18 months in jail and restitution of $168,550 for his wife.

"This is a sad day that involves a waste of talent," prosecutor Matthew Graves said. "They were in the top 10% of household earnings in the United States. There's just no need for this kind of conduct."

Graves said that Jackson did not "deserve credit" for his job as a congressman.

"That's what he was paid to do," he said.

Jackson's lawyers pointed to his record in Washington -- one they said was good -- in arguing for a lighter sentence.

The defense team also requested that Jackson be jailed at federal correctional facilities in either Montgomery, Alabama, or Butner, North Carolina.

Butner is where Madoff is serving his 150-year sentence for investment fraud. Both facilities are minimum security.

"I ask for Alabama so I can be as far away from everybody for a while as I can be," Jackson said in court. "I want to make it a little inconvenient for everybody to get to me."

Prosecutors have kept the couple's children in mind, suggesting the Jacksons serve their sentences consecutively so that one parent is able to be home at all times, but asked the judge not to grant Sandi Jackson probation on account of her children.

"There are numerous parents who are sentenced every day," Graves said. "That isn't a basis for a probationary sentence."

After sentencing the couple, the court gave the Jacksons a few minutes to discuss who wanted to serve their sentence first.
The entire CNN story is available here.

Tuesday, August 6, 2013

US Prison Populations Decline

The New York Times has an interesting piece regarding the continued decrease in the U.S. prison population.
The prison population in the United States dropped in 2012 for the third consecutive year, according to federal statistics released on Thursday, in what criminal justice experts said was the biggest decline in the nation’s recent history, signaling a shift away from an almost four-decade policy of mass imprisonment.

The number of inmates in state and federal prisons decreased by 1.7 percent, to an estimated 1,571,013 in 2012 from 1,598,783 in 2011, according to figures released by the Bureau of Justice Statistics, an arm of the Justice Department. Although the percentage decline appeared small, the fact that it followed decreases in 2011 and 2010 offers persuasive evidence of what some experts say is a “sea change” in America’s approach to criminal punishment.

“This is the beginning of the end of mass incarceration,” said Natasha Frost, associate dean of Northeastern University’s school of criminology and criminal justice.

About half the 2012 decline — 15,035 prisoners — occurred in California, which has decreased its prison population in response to a Supreme Court order to relieve prison overcrowding. But eight other states, including New York, Florida, Virginia and North Carolina, showed substantial decreases, of more than 1,000 inmates, and more than half the states reported some drop in the number of prisoners. (Figures for three states were estimated because they had not submitted data in time for the report.) The population of federal prisons increased slightly, but at a slower rate than in previous years, the report found.

Imprisonment rates in the United States have been on an upward march since the early 1970s. From 1978, when there were 307,276 inmates in state and federal prisons, the population increased annually, reaching a peak of 1,615,487 inmates in 2009.

But in recent years, tightened state budgets, plummeting crime rates, changes in sentencing laws and shifts in public opinion have combined to reverse the trend. Experts on prison policy said that the continuing decline appears to be more than a random fluctuation.
The entire article is available here.

Tuesday, July 30, 2013

Bradley Manning Verdict - Not Guilty of Aiding the Enemy

Bradley Manning, accused of being the largest leaker of classified information in American history, has been found not guilty of aiding the enemy by the judge in his court-martial.  This charge carried a sentence of up to life in prison.  He previously pleaded guilty to other lesser charges that carry a sentence of up to 20 years in prison.

From a New York Magazine article regarding Manning.
Manning shipped out to Iraq with a top security clearance, his multiple identities held close inside him. There was abundant evidence that Manning was having trouble keeping it together psychologically, but the Army brushed aside doubts—it desperately needed intel analysts with Manning’s computer skills. After all, the Army was wired; in fact, the whole government had never been more networked, a development that had been pushed partly by the desire to improve information-sharing and shorten reaction time after 9/11. Much of the war was fought remotely; triggers were pulled by people in Langley, Virginia, or outside Las Vegas or field offices near Baghdad, where Manning was eventually posted. Military engagement had turned into a video game—but with real bullets. Manning was built for this sort of combat. In the modern Army, Manning’s skill set made him a highly useful soldier, and a dangerous one.

In Iraq, the torments Manning suffered at the hands of his fellow soldiers, his loneliness and concern over his gender, and the hours and hours he would spend in the airless intel office watching the brutal inner workings of the war bore down on him. He was unmoored in a way he hadn’t been before: angrier, less afraid, more certain of what was good and what was evil, and more compelled to act on this dawning righteousness. It was while in Iraq that Manning came across WikiLeaks founder Julian Assange—a charismatic authority figure who, far from rejecting him, as had so many others, took a passionate interest in him and what he had to contribute. Manning had an awakening—and he became, says the U.S. govern­ment, a traitor. 
The entire New York Magazine article is available here.

Monday, July 29, 2013

Should corporations be permitted to plead guilty?

Doug Berman has an interesting post over at the Sentencing Law & Policy Blog regarding a recent case from Judge Young of the District Court of Massachusetts.  According to Berman, the Judge's opinion in United States v. Orthofix, No. 12-10169 (D. Mass. July 26, 2013), indicates the Judge may not believe the public interest is served by corporate plea deals.

From the opinion:
This memorandum sets out the Court’s reasons for rejecting each of the (C) pleas from these two corporate criminal defendants. In many ways, the Court’s decision to reject Orthofix’s (C) plea stands as the better subject for elucidation of the Court’s principled objection toward accepting (C) pleas from corporate criminals. This is because, in contrast with the wholly unsatisfactory settlement proffered by APTx, see APTx’s Plea Hr’g 18:13 (“[T]his is a strikingly below guidelines sentence . . . .”), Orthofix’s plea was tendered as part of what was, substantially, “a fair and appropriate settlement,” Tr. Arraignment, Plea & Sentencing (“Orthofix’s Sentencing”) 25:8, Dec. 14, 2012, No. 12-10169-WGY, ECF No. 39.

This memorandum articulates the Court’s view of the unusually complex considerations posed by the sentencing of corporate criminals and lays out the Court’s interpretation of the duties it must discharge, with prudence and circumspection, in performing its sentencing function. The Court concludes that, in light of these considerations, it would be rare indeed for a corporate criminal to persuade this Court that its guilty plea is an appropriate candidate for acceptance under the fetters of Rule 11(c)(1)(C).
The entire opinion is available here.

Doug Berman's post is available here.

Five Years Later and Few Charges re 2008 Financial Crisis

NPR has an interesting story regarding the lack of prosecutions related to the financial collapse in 2008 in the United States.  According to the story, part of the reason for the lack of prosecutions might be the lack of investigatory resources targeting the issue.
In the latest in a string of insider trading cases, federal prosecutors this week indicted SAC Capital, one of the most prominent and profitable hedge funds in the world.

But when it comes to the 2008 financial crisis that sent the economy into a tailspin, criminal prosecutions have been few and far between.

"The folks responsible for this incredibly painful economic damage that struck our economy have gone free," says Neil Barofsky, a former federal prosecutor who also served as special inspector general overseeing the big Troubled Asset Relief Program bank bailout, signed into law by President Bush in 2008...
The article goes on to describe the allocation of resources by the government.  According to the article, William Black, previously with the Office of Thrift Supervision during the S&L crisis in the 1980s, stated:
"I've been saying it for years," he says. "You have to make the effort."

He notes that during the savings and loan crisis, he was involved with a lot of criminal prosecutions. "At peak we had a thousand FBI agents working those cases."

By comparison, Black says, when the financial crisis hit there were only 120 FBI agents working on bank fraud.

And mortgage fraud cases against big financial firms are just tough cases to bring, Black says.

The entire NPR story is available here.

Friday, July 26, 2013

Breaking News - Ariel Castro to Plead Guilty - Avoid Death Penalty - Life Plus 1,000 Years

CNN is reporting that Ariel Castro agreed today to plead guilty in return for the government taking the death penalty off the table.  Reportedly, Castro will receive life plus 1,000 years.

From CNN:
Ariel Castro agreed Friday in an Ohio courtroom to a plea deal in one of the most sensational kidnapping cases in recent memory. The deal, reached with prosecutors, would let him avoid the possibility of a death sentence and spare his alleged victims from having to testify at a trial.

The plea deal recommends that he be sentenced to life in prison without parole -- that he never get a parole hearing. It could also mean that a trial Castro was facing on August 5 will not happen and he will not face the possibility of being sentenced to death. Judge Michael J. Russo went over the deal with Castro, and told him that he would be labeled as a sexual predator.

Castro replied that he understood. At one point, he interjected that he was "also a victim as a child ..." to which Russo responded that he could make whatever statement he wanted during a sentencing hearing. Russo also said that victims would be notified of the hearing and would then have a chance to say what they liked.

A source close to the case had earlier told CNN that the deal could require that Castro stand at a podium in court and plead guilty.

An attorney for three women had told CNN that they were hoping for a plea deal because they do not want to take the stand at Castro's trial.
Castro was charged with 977 counts, including aggravated murder on suspicion of ending the pregnancy of one of his alleged captives. Under the deal, he agreed to plead guilty to 937 counts.

Earlier this month, the former bus driver pleaded not guilty to the 977 charges, and he was being held on $8 million bail.

Castro's defense attorneys had previously said they wanted a deal that would take capital punishment out of the equation.

Castro abducted Michelle Knight, Amanda Berry and Georgina "Gina" DeJesus separately in a two-year period starting in 2002, according to authorities.
 The complete CNN story is here.

Halliburton Agrees to Plead Guilty to Destruction of Evidence in Connection with Deepwater Horizon Tragedy

The Department of Justice announced this week that Halliburton Energy Services, Inc. has agreed to plead guilty to charges related to the Deepwater Horizon investigation.

According to the DOJ:
Halliburton has signed a cooperation and guilty plea agreement with the government in which Halliburton has agreed to plead guilty and admit its criminal conduct. As part of the plea agreement, Halliburton has further agreed, subject to the court’s approval, to pay the maximum-available statutory fine, to be subject to three years of probation and to continue its cooperation in the government’s ongoing criminal investigation. Separately, Halliburton made a voluntary contribution of $55 million to the National Fish and Wildlife Foundation that was not conditioned on the court’s acceptance of its plea agreement.

According to court documents, on April 20, 2010, while stationed at the Macondo well site in the Gulf of Mexico, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions and fire, which resulted in the deaths of 11 rig workers and the largest oil spill in U.S. history. Following the blowout, Halliburton conducted its own review of various technical aspects of the well’s design and construction. On or about May 3, 2010, Halliburton established an internal working group to examine the Macondo well blowout, including whether the number of centralizers used on the final production casing could have contributed to the blowout. A production casing is a long, heavy metal pipe set across the area of the oil and natural gas reservoir. Centralizers are protruding metal collars affixed at various intervals on the outside of the casing. Use of centralizers can help keep the casing centered in the wellbore away from the surrounding walls as it is lowered and placed in the well. Centralization can be significant to the quality of subsequent cementing around the bottom of the casing. Prior to the blowout, Halliburton had recommended to BP the use of 21 centralizers in the Macondo well. BP opted to use six centralizers instead.

As detailed in the information, in connection with its own internal post-incident examination of the well, in or about May 2010, Halliburton, through its Cementing Technology Director, directed a Senior Program Manager for the Cement Product Line (Program Manager) to run two computer simulations of the Macondo well final cementing job using Halliburton’s Displace 3D simulation program to compare the impact of using six versus 21 centralizers. Displace 3D was a next-generation simulation program that was being developed to model fluid interfaces and their movement through the wellbore and annulus of a well. These simulations indicated that there was little difference between using six and 21 centralizers. Program Manager was directed to, and did, destroy these results.

In or about June 2010, similar evidence was also destroyed in a later incident. Halliburton’s Cementing Technology Director asked another, more experienced, employee (“Employee 1”) to run simulations again comparing six versus 21 centralizers. Employee 1 reached the same conclusion and, like Program Manager before him, was then directed to “get rid of” the simulations. 

The complete DOJ Press Release is available here.

Thursday, July 25, 2013

Bicyclist Pleads Guilty to Manslaughter

In what is being reported as a first in U.S. legal history, a bicyclist who hit and killed a pedestrian after riding recklessly has pleaded guilty to manslaughter in San Francisco.

The Washington Post reports:
Under the unusual plea deal last week, Chris Bucchere, 37, would not serve any jail time and instead would be sentenced to three years of probation and sentenced to 1,000 hours of community service in the death of Sutchi Hui of San Bruno, District Attorney George Gascon said.
“Our goal is to send a message to cyclists about safety,” Gasc√≥n said. “Just because you are riding a bicycle doesn’t mean all bets are off. All of the rules of the road that apply to everyone else apply to you, too.”
A software engineer from San Francisco, Bucchere had been riding recklessly and had run three red lights when he struck Hui as he and his wife crossed a street in the Castro District on March 29, 2012, prosecutors said. Hui died four days later of injuries from the collision. His wife was not hurt...
Hui’s family has filed a civil suit against Bucchere regarding the fatality. Gascon said the victim’s family did not want to see Bucchere incarcerated and prosecutors did not think a judge would sentence him to jail time, so they offered probation and community service in the plea deal. Gascon added that they did not want to risk a possible not guilty verdict at a trial.
“We believe this is the best outcome for this type of case,” he said.
Gascon said his office had done research and didn’t find any other cases in which a prosecutor had obtained a manslaughter conviction against a bicyclist.
The entire story from the Washington Post is available here.

Monday, July 22, 2013

The Militarization of America's Police Forces - Part III

In this third and final post regarding recent stories focusing on the militarization of America's police forces and the resulting consequences, I look at an article that appeared in the Wall Street Journal this week.

The story is entitled, "Rise of the Warrior Cop: Is it time to reconsider the militarization of American policing?" and is written by Radley Balko.  Mr. Balko is the author of "Rise of the Warrior Cop," published this month by PublicAffairs (Mr. Balko is also the author of the first article discussed in this three part blog series). 

Below are a few excerpts from his Wall Street Journal piece.
The number of raids conducted by SWAT-like police units has grown accordingly. In the 1970s, there were just a few hundred a year; by the early 1980s, there were some 3,000 a year. In 2005 (the last year for which Dr. Kraska collected data), there were approximately 50,000 raids.

A number of federal agencies also now have their own SWAT teams, including the Fish & Wildlife Service, NASA and the Department of the Interior. In 2011, the Department of Education's SWAT team bungled a raid on a woman who was initially reported to be under investigation for not paying her student loans, though the agency later said she was suspected of defrauding the federal student loan program.

The details of the case aside, the story generated headlines because of the revelation that the Department of Education had such a unit. None of these federal departments has responded to my requests for information about why they consider such high-powered military-style teams necessary.
Mr. Balko's piece also includes the following.
In my own research, I have collected over 50 examples in which innocent people were killed in raids to enforce warrants for crimes that are either nonviolent or consensual (that is, crimes such as drug use or gambling, in which all parties participate voluntarily). These victims were bystanders, or the police later found no evidence of the crime for which the victim was being investigated. They include Katherine Johnston, a 92-year-old woman killed by an Atlanta narcotics team acting on a bad tip from an informant in 2006; Alberto Sepulveda, an 11-year-old accidentally shot by a California SWAT officer during a 2000 drug raid; and Eurie Stamps, killed in a 2011 raid on his home in Framingham, Mass., when an officer says his gun mistakenly discharged. Mr. Stamps wasn't a suspect in the investigation.
The entire Wall Street Journal piece is available here.

Mr. Balko's book, "Rise of the Warrior Cop," is available here.

For more information of this topic, visit the Cato Institute, which has a report by Mr. Balko entitled "Overkill: The Rise of Paramilitary Police Raids in America" and a map showing botched paramilitary raised in the U.S. - report available here and map available here.