Archive for February, 2009

Scalia’s Right! Supremes “Quite Irresponsible to Let the Current Chaos Prevail”

Tuesday, February 24th, 2009

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18 U.S.C. § 1346 expands the definition of mail & wire fraud to include “a scheme or artifice to deprive another of the intangible right of honest services.” That’s short and sweet, but what does it mean?

The courts have been left to define the crime for themselves. Unfortunately, they differ wildly in what the theft of honest services means. The Fifth Circuit says it’s only a crime if the deprivation of services was also a crime under state law. The Seventh Circuit says the crime is when someone abuses their position for private gain. The Third Circuit says gain is irrelevant.

In general, they agree that employees and public officials have a duty to act only in the best interest of their employers and constituents. But there are lots of ways to act otherwise, and the courts seem to agree that not all of them ought to be criminalized. There is a spectrum of behavior, ranging from the socially acceptable to the abhorrent. Where the line ought to be drawn is undefined and uncertain.

So the Supreme Court finally had a chance to clear it all up, define what “honest services” means, and give straightforward guidance to the courts and to all the employees and officeholders out there. Sorich v. United States, No. 08-410 came to the Supremes on a cert petition, asking them to define the crime and settle the issue at last. That’s what the Supreme Court likes to do, after all — if the circuits can’t agree, it the Court’s job to define the correct approach.

Instead, the Supremes punted, and denied cert.

Scalia wrote an intense dissent, pointing out that this is precisely the kind of issue that the Court ought to resolve, that the split among the circuits is causing confusion in the law, and that real injustice is resulting. “It seems to me,” he wrote, “quite irresponsible to let the current chaos prevail.” We can’t help but agree.

“If the honest services theory… is taken seriously and carried to its logical conclusion,” Scalia pointed out that all kinds of actions would be criminal. Not all ought to be. “A state legislator’s decision to vote for a bill because he expects it will curry favor with a small minority essential to his reelection,” a perfectly normal and expected aspect of electoral politics, would be a federal crime. “A mayor’s attempt to use the prestige of his office to obtain a restaurant table without a reservation,” a perhaps obnoxious act, but one hardly worthy of punishment, would also be included. “Indeed, it would seemingly cover a salaried employee’s phoning in sick to go to a ball game.”

“What principle it is that separates the criminal breaches, conflicts and misstatements from the obnoxious but lawful ones, remains entirely unspecified.” Failing to define what the crime actually means invites unjust prosecutions by “headline-grabbing prosecutors.” Furthermore, nobody knows if their actions would be considered criminal or not, and “it is simply not fair to prosecute someone for a crime” that won’t be defined until the judge’s ruling that sends him to jail. “How can the public be expected to know what the statute means when the judges and prosecutors themselves do not know, or must make it up as they go along?”

Scalia closed with an excellent dictum, quoting from another useful dissent — that of Hugo Black in Green v. United States, 365 U.S. 301, 309 (1961) — “Bad men, like good men, are entitled to be tried and sentenced in accordance with law.” It is truly unfortunate that the Supreme Court has passed on an excellent opportunity to ensure just that.

Sen. Stevens Prosecutors Held in Contempt, Taken Off the Case

Wednesday, February 18th, 2009

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We took an unexpected trip out of state until yesterday, and so haven’t had a chance to catch up on the latest in the ongoing saga involving allegations of prosecutorial misconduct in the Sen. Ted Stevens case. When last we left off, District Judge Emmet Sullivan had ordered a status hearing for last Friday, the 13th.

In Friday’s status hearing, Judge Sullivan held four DOJ lawyers in contempt, for failing to turn over 33 documents to the defense. These documents pertained to December’s whistleblower claims of FBI agent Chad Joy, which had raised concerns of prosecutorial misconduct.

The judge had ordered these documents turned over on January 21. At first, the prosecutors said the documents were protected by the work-product doctrine. But then, even though they later determined that the doctrine did not apply, they still didn’t hand them over to the defense. At the hearing, the DOJ couldn’t give a good reason for the non-production, and so the judge held the lawyers in contempt.

The contempt order was imposed against William Welch II, the chief of the Public Integrity Section of the DOJ which had prosecuted Sen. Stevens. Also held in contempt were Brenda Morris, the section’s deputy chief and the lead prosecutor at trial; Patricia Stemler, chief of the Appellate Section of the Criminal Division; and Kevin Driscoll, a trial attorney with the Public Integrity Section. The order against Driscoll was revoked the following day, however, as he had only recently joined the prosecution team, and had not been a party to the relevant pleadings. Judge Sullivan stated that he would not impose sanctions until the case was over.

On Monday, Welch announced that the trial team of Brenda Morris, Nicholas March and Edward Sullivan were off the case, and would have no further role in the litigation of the charges of prosecutorial misconduct. This only makes sense, as they are necessarily witnesses to their own conduct, and will probably need to testify themselves. What is surprising is that the DOJ waited so long to take this simple action.

Welch added that the government will now turn over internal DOJ documents related to agent Joy’s allegations of misconduct, including memos and emails of the trial prosecutors. Again, what is surprising is not that this material is being disclosed, but that it took so long to do so. This notwithstanding Welch’s statement that the DOJ “understands that the interests of the parties and the public will be advanced by a prompt airing of these claims, and that additional delay relating to the whistleblower-status issue does not advance that cause.”

You Thought Your Courthouse Was Bad? Try This: 466 Year Backlog of Criminal Cases!

Thursday, February 12th, 2009

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Here in Manhattan, we like to brag that we’ve got the busiest courthouse in the world. But at least the system can handle it. According to Tuesday report from the chief justice of the New Delhi High Court, however, the courts in India are all just as busy, but the system is so broken that they just can’t handle it.

The Delhi High Court, which has jurisdiction over civil, criminal and constitutional matters, is so overwhelmed that the chief justice estimates it could take 466 years just to wade through the 2,300 criminal appeals waiting to be heard.

The reasons for the backlog are not complicated. India’s justice system has a longstanding reputation for “corruption, inefficiency and lack of accountability,” according to this AP report, “often making the rule of law unattainable for all but the wealthy and the well-connected.”

Corruption and unaccountability are enough on their own to doom any judicial system. They destroy the perception of justice. And in the realm of justice, as in the worlds of finance and politics, perception is reality. If people think that crimes are not efficiently, consistently and fairly punished — whether truly so or not — then punishment loses its deterrent effect. If people think that the law does not consistently and fairly protect rights and interests — whether it does or not — then the law may as well not exist, and the rule of law becomes a joke.

As prominent New Delhi lawyer Prashant Bhushan puts it, India “only lives under the illusion that there is a judicial system.” Bribing judges, he adds, is commonplace: “It’s a lucrative business.”

And it doesn’t look like anything can be done about it, at least not in the short term. Corruption is a commonplace of Indian society, says retired Supreme Court justice J.S. Verma, so “of course corruption is there. The people who man the courts and the court system come from the society.”

On top of the systemic failure of the rule of law, the courts are under an enormous administrative burden as well. There are only 11 judges for every million people — there are ten times as many in the U.S.

The administrative burden is exasperated by the bureaucracy, which slows down the legal process with overstrict formalities and procedures that can overwhelm a layperson.

The administrative burden can be met by shifting resources to the judicial system, and by eliminating bureaucratic time wasters. Political decisions only. But of course that would only happen if the government wanted to do so. That’s a tall order when the ruling classes are the beneficiaries of the present state of affairs.

More Allegations of Prosecutorial Misconduct in Sen. Ted Stevens Case

Wednesday, February 11th, 2009

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First, a recap: Last July, former Alaska Senator Ted Stevens was indicted on seven counts of failing to report gifts he’d received, including renovations to his house in excess of what he’d paid for, but mostly goods and services from oil tycoon Bill Allen. Sen. Stevens pled not guilty, and with an election coming up he demanded a speedy trial to clear his name. The trial began on September 25.

Soon after the trial began in Washington, D.C, the prosecutors came under fire for sending one of their witnesses home to Alaska without letting the judge or the defense know. The witness, Rocky Williams, then contacted the defense team and told them that he’d spent a lot less time working on Stevens’ home than the renovation company’s records indicated. That severely weakened the prosecution’s argument that the company had spent its own money doing the renovations.

Then it came out that the government had withheld Brady material. FBI records containing prior statements of a witness had been handed over to the defense, but the prosecutors — Brenda Morris, Nicholas Marsh and Joseph Bottini (pictured) — had redacted parts of the statements that were potentially exculpatory. This wasn’t affirmatively exculpatory material, but it was impeachment material, and should have been turned over.

A memo from Bill Allen was discovered during trial, in which Allen stated that Sen. Stevens probably would have paid for the goods and services, had he been asked to. The prosecution claimed that their failure to disclose it beforehand was an inadvertent oversight.

The judge was reportedly angered by all this, stating with respect to the Brady material that “it strikes me that this was probably intentional. I find it unbelievable that this was just an error.” Nevertheless, the judge did not declare a mistrial, and on October 27 the jury convicted Stevens on all seven counts.

Then in late December, FBI agent Chad Joy went public with the accusation that the prosecutors really had intentionally withheld exculpatory evidence, and had intentionally sent Rocky Williams back to Alaska to conceal him from the defense.

Now, as the New York Times reports, Joy has come forward with additional allegations of prosecutorial misconduct.

In his latest whistleblower filing, Joy claims that another FBI agent conspired with the prosecutors “to improperly conceal evidence from the court and the defense,” as the Times puts it.

“I have witnessed or learned of serious violations of policy, rules and procedures, as well as possible criminal violations,” Joy stated in his affidavit.

With respect to Rocky Williams, Joy stated that the witness was sent back to Alaska not because of ill health (the reason given by the prosecution), but because after preparing him for testimony, the prosecutors decided that his testimony would help the defense case. Joy stated that Nicholas Marsh came up with the idea, after Williams fared poorly in a mock cross-examination.

Joy stated that the prosecution team also tried to hide the Bill Allen memo that stated that Sen. Stevens would have paid for the items if he’d been asked to. Rather than an accident, as prosecutors claimed at trial, Joy now alleges that it was intentionally withheld.

In addition, Joy claims that fellow FBI agent Mary Beth Kepner had an inappropriate relationship with the star witness, Bill Allen. She almost always wore pants, he said, but on the day that Bill Allen testified, Joy says she wore a skirt, which she described as “a present” to Allen. Joy also states that Kepner went alone to Allen’s hotel room. Although Joy’s redacted affidavit doesn’t say it specifically, the defense team now claims that Kepner and Allen appear to have had a sexual relationship.

Joy also claims that FBI agents received gifts from Allen, including help getting a job for a relative.

The judge, Emmet Sullivan, has ordered a hearing to be held in two days, this Friday the 13th, on whether a new trial is warranted. If the judge determines that Sen. Stevens did not receive a fair trial, he could very well scrap the conviction and order a do-over. It would be anyone’s guess, at that point, as to whether the prosecutors would actually try the case again.

Watch this space for future developments.

Prisons Crowded? Don’t Build More, Says Court. Just Release the Inmates.

Tuesday, February 10th, 2009

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A panel of three federal judges yesterday essentially ordered the State of California to reduce its prison population by as much as 57,000 people, because crowding is causing violations of prisoner rights. This doesn’t mean that wardens will be releasing thousands of hardened criminals back onto the streets, but it does raise questions of how to do it. In its ruling, the court accepted certain possible solutions, but rejected the one obvious solution of building more prison space.

The panel was made up of U.S. District Court judges Thelton Henderson and Lawrence Karlton, as well as Stephen Reinhardt of the Ninth Circuit. These judges are known for their left-leaning policies, so it’s hardly surprising, perhaps, that they accepted and rejected the solutions that they did. Increasing prisons is not widely regarded as a liberal position.

Although the panel only issued a “tentative ruling” in Coleman v. Schwarzenegger (link from the L.A. Times), this is probably going to be the final ruling, which is why they were confident enough to issue it formally. Unless it’s overturned on appeal, California is going to have to think up and enact some creative methods of carrying out the order, so the judges wanted to give the state time “to allow them to plan accordingly.”

The case, actually two cases, were brought by prisoners who alleged that crowding — not overcrowding, just crowding — was causing violations of their constitutional rights. These aren’t new cases — one has been in the remedy stage since 1995, and the other since 2002.

The dispute now was not over whether crowding exists, or whether care is unconstitutionally inadequate. Gov. Schwarzenegger issued a state of emergency in 2006, still in effect today, because overcrowding was putting prisoners’ and guards’ health and safety at risk. So the fact of crowding couldn’t be in dispute. Also not in dispute is a previous court ruling that the prisons were not providing constitutionally adequate medical and psychological care.

The issue here was whether the crowding was the main reason for the failure to provide adequate medical and psychological care. And if so, then what to do about it.

The court found that there aren’t enough clinical facilities, resources or personnel to accommodate all the inmates who needed them. The risk of the spread of infectious disease is also enhanced by bunking prisoners in gyms and other spaces not intended to be used for housing. Lots of experts testified that crowding was the primary cause of the problems.

That being decided, California wanted a chance to fix the problem without decreasing the prison population. California showed that, under monitoring by a receiver and special master during the past 11 years, the Department of Corrections and Rehabilitation had already made significant improvements in conditions. So they asked for more time to fix these particular problems.

The court said no. They’ve had 11 years, and haven’t fixed the problem yet, so the court didn’t trust the monitors to fix it now. And anyway, “many of their achievements have succumbed to the inexorably rising tide of population.” Furthermore, California has no money to spare for new facilities, resources and personnel. Remedies for these cases have been tried since 1995, for 14 years now, and any future efforts of the receiver and special master could take many more years to have effect. The court felt that any further continuation of the already lengthy deprivation of constitutional rights would be wrong.

The court couldn’t think of any other relief that would work, other than reducing the prison population. Because scores of remedial orders had so far failed, “we are at a loss to imagine what other relief short of a prisoner release order a court could grant.”

So back to the question of how to do it. The court suggested various methods, such as “parole reform,” which we guess would mean changing parole rules, so that violators don’t necessarily go back to prison. Or “good time credits,” which could include both granting greater time off for good behavior, and letting more bad behavior count as good behavior. Or “evidence-based programming intended to reduce recidivism,” which simply means implementing services that are scientifically proven to actually reduce subsequent criminal behavior, as opposed to trying things that just sound good.

The court felt that building more prison space, the one obvious solution, was not something the court could order California to do, because it “may not be within the court’s general powers under the PLRA.” The PLRA, 18 U.S.C. §3626(g)(4) defines a “prisoner release order” as anything that has the effect of reducing or limiting the prison population. So the examples above would work. But one that merely reduces crowding — the problem to be solved here — doesn’t count, because it doesn’t reduce the number of prisoners.

We think that’s probably wrong. Building more prison space would solve the problem complained of. It may not be within the scope of the PLRA, but that’s not the sole authority that the court has. It has equitable power to order the state to do whatever works to stop the constitutional violations.

The court went on to say that California’s inmate population was about 200% of intended capacity, but reducing that population to about 120% to 145% would be sufficient. The court felt that this was the proper balance between concerns of public safety and prisoner rights.

The state immediately announced that it will appeal, of course. This will be one to watch, as pretty much every state is operating prisons beyond their design capacity, and fixes need to start happening soon. What happens here will influence how other states deal with the problem.

Gang Crime Rising, So More… White-Collar Prosecutions?

Tuesday, February 3rd, 2009

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Gang crime is on the rise, the FBI reports. The politicians and prosecutors, however, are focusing on white-collar crime these days. Here’s a look at why this is happening.

Gang crime seems to have increased, ironically, as a result of improved anti-gang law enforcement in the big cities.

According to the 2009 National Gang Threat Assessment, street gangs have started expanding more rapidly from urban centers into suburban and rural areas. This has spurred new membership, as fresh populations are opened to gang recruitment. By the end of last year, about a million people were estimated to belong to gangs within the U.S.

One might think that the burbs lack the same social pressures that drive gang membership. Gangs are products of the inner cities, after all, where kids lack fathers to lead them, involved communities to belong to, competent schools to teach them, and opportunities for money and glory. We expect gangs to arise in the inner cities of single moms, apathetic neighbors, dysfunctional schools, government welfare and hopelessness. Suburbia’s not like that, right?

Well, according to the NGTA, drugs drove the expansion. During the 1980s, the suburbs began to become a profitable new market for drug dealers who had previously focused on the urban market. During the 1990s, the huge profits from suburban drug sales caused the street gangs to physically expand their territory, often resulting in violence as urban gangs clashed with local toughs and with each other in the race to occupy the burbs.

Meanwhile, law enforcement started cracking down on gang and drug crime in the cities. It was getting dangerous to operate in NYC, LA and Chicago. Suburban cops, however, just weren’t as much of a concern. The burbs were also seen as safe places to hide from unsuspecting law enforcement, unused to dealing with a gang element.

The combination of weaker opposition from law enforcement, and higher profits from suburban drug users paying “white boy prices,” was a clarion call for gang expansion. It was an irony that improved law enforcement actually resulted in the spread of gang-related crime.

There were other reasons for the spread of gangs into suburban and rural communities, not detailed by the NGTA report. From the author’s own interviews with drug traffickers in the New York area, gangs sometimes followed inner-city populations that had moved out there first. People on government assistance began moving out to places such as Lancaster, Pennsylvania and various towns Upstate along the Hudson River, because a person on welfare could have a nicer quality of life there. Many of them brought with them the quality of life that they were trying to avoid, unfortunately. And those who were drug users brought their demand with them. And so the dealers followed, the gangs followed, and the forces that spurred gang recruitment never went away.

Despite the spread of violent crime and drug trafficking, however, the FBI is focusing more on white collar crime. White collar crimes certainly are on the rise lately, especially fraud cases.

“We may not be doing as many drug enterprise operations,” Special Agent in Charge Richard Lambert recently said, “so we can focus more on mortgage fraud and corporate fraud problems.”

In just the past month or so, 3000 new FBI positions have been created to combat white collar crime. On top of those new hires, the Senate Banking Committee is preparing a $110 million fund that would hire 500 new FBI agents, 50 new AUSAs, and 100 new SEC agents.

Bill co-sponsor Chuck Schumer (D-NY) stated in the accompanying press release that “our white collar crime divisions are under-staffed, under-funded, and overwhelmed. When a wave of violent crime sweeps through a city, the immediate response is to beef up the police forces, putting more cops on the beat, extending overtime, and making sure the city returns to safety. Our reaction to the financial crisis and the massive and complex financial fraud investigations that loom should be no different.”

Why the rise in white collar cases? It’s not just the economy, stupid.

Sure, people may be tempted to commit crimes in an economic downturn. But this usually applies to people who are on the bottom rungs of the economy. Wall Street types and CEOs don’t start robbing banks just because their net worth slipped a bit.

Instead, white collar crime goes on all the time. What’s changing now is not the number of crimes being committed, as the number of cases being prosecuted. There’s a difference. As Anne van Heerden, head of forensics at KPMG Switzerland told Swissinfo, “I do not believe that the number of cases is growing, but rather the detection rate is increasing.”

Sophisticated financial crimes have always been sexy for law enforcement. What prosecutor didn’t want to convict the next Ivan Boesky, Andy Fastow or Michael Milken? The problem is, they’re hard to catch. The crimes take place on paper, in back rooms, and on golf courses. Not places frequented by cops or detectives. Evidence is often hard to find, and even harder to comprehend if found.

But the new economic downturn — which many see as the direct result of white collar crime — has led to new political pressure to “do something about it.” (At a function last week, we joked with a prominent judge that our white-collar defense practice was recession-proof, to which the judge responded “yes, but your clients caused the recession.”) Elected officials feel that pressure to “do something,” and they start rewarding successful prosecutions, and funding more of them.

So the word has come down from above that white-collar prosecutions are what the chiefs want. And that’s what they’re getting.

Expect to see more.