Wednesday, August 17, 2011
Latest data show health care fraud as federal criminal hot-spot
This new report from the Transactional Records Access Clearinghouse, which is headlined "Health Care Fraud Prosecutions for 2011," highlights that the federal court, especially in southern Florida, are seeing many more health care fraud cases these days. Here is the start of the TRAC report:
The latest available data from the Justice Department show that during the first eight months of FY 2011 the government reported 903 new health care fraud prosecutions. Already the activity this year exceeds the level for all of FY 2010.
Numbers were pushed higher by a series of investigations by the Federal Bureau of Investigations which led to prosecutions for health care fraud. In Puerto Rico alone, 420 defendants have been charged this year. Within the fifty states, the Southern District of Florida (Miami) led the nation in activity accounting for one out of every nine health care fraud prosecutions.
Across the nation if this activity continues at the same pace, the annual total of prosecutions will be 1,355 for this fiscal year. According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this estimate is up 85.4% over the past fiscal year when the number of prosecutions totaled 731.
For criminal justice researchers, I think this growing pocket of cases might be especially interesting to try to track from indictment through sentencing. I sense that these health care fraud cases can often have lots of the most dynamic elements of case-processing discretion that can impact sentencing outcomes.
For example, I suspect: that most of these prosecutions result in pleas (and with some defendants cooperating with the feds), but a few defendants go to trial; that these defendants have diverse roles in the crime and diverse backgrounds; that the amount of loss for sentencing purposes can be varied and will often be disputed; that arguments for departures and variances get different receptions in different courthouses.
Wednesday, August 10, 2011
Sentencing debate joined for Raj Rajaratnam in high-profile insider trading case
As detailed in this Bloomberg news report, which is headlined "Rajaratnam Prison Sentence of More Than 24 Years Sought by Prosecutors," a high-profile insider trading case is getting closer to sentencing. The parties have apparently filed initial sentencing memos, and here is how this Bloomberg report describes the terms of the sentencing debate:
Galleon Group LLC co-founder Raj Rajaratnam, labeled by prosecutors as the “face of illegal insider trading,” should spend as long as 24 years and five months in prison, the U.S. told the judge who will sentence him.
Lawyers for Rajaratnam, in a separate court filing yesterday, asked U.S. District Judge Richard Holwell in Manhattan for a prison term “substantially below” what federal guidelines recommend. Rajaratnam’s attorneys, citing their client’s poor health, urged Holwell not to force him to die in prison.
Rajaratnam, 54, was convicted in May of all 14 criminal counts of conspiracy and securities fraud he was charged with. He’s scheduled to be sentenced Sept. 27.
Prosecutors said he should serve at least 19 years, seven months in prison. “Rajaratnam repeatedly leveraged the power of money and his position as the head of a $7 billion hedge fund to induce friends, employees and associates to participate in his criminal activities,” Justice Department lawyers said in their sentencing memorandum yesterday. “He is the modern face of illegal insider trading.”
Prosecutors called Rajaratnam the most “egregious violator” of insider-trading laws ever to be caught. He engaged in a seven-year conspiracy to trade on inside information from corporate executives, bankers, consultants, traders and directors of public companies including Goldman Sachs Group Inc. (GS), they said. He gained $63.8 million as a result of the scheme, according to the government....
Prosecutors called Rajaratnam a “fundamentally deceptive and dishonest person.” They said he lied under oath in a civil deposition and told others how to avoid detection. They also urged the judge to send a message of “deterrence” to combat the “rampant insider trading during the last several years.”
“Rajaratnam represents the worst of illegal insider trading,” prosecutors wrote. They compared him to Enron Corp.’s Jeffrey Skilling and WorldCom Inc.’s Bernard Ebbers, convicted in what prosecutors called “the worst of accounting frauds,” and Bernard Madoff, who they said represents “the worst of Ponzi schemes.” Skilling was sentenced to 24 years, Ebbers to 25 years, and Madoff to 150 years....
“Mr. Rajaratnam is not a healthy man,” his lawyers wrote, citing “significant and challenging medical issues” that are known to the court’s probation department. “His death will be hastened by a term of imprisonment,” they said.
Rajaratnam’s lawyers submitted letters on his behalf from his family members, former business associates, ex-employees and even his apartment doorman. Some of the letters detail what the defense said is more than $45 million in charitable donations by Rajaratnam in the U.S. and abroad, including millions of dollars to help victims of a tsunami that devastated his native Sri Lanka....
The defense argued that Rajaratnam’s crimes are “not in the same league” as those committed by Enron or WorldCom executives “since those defendants betrayed their own shareholders and employees.” Rajaratnam did nothing to harm his investors, [his lawyers] wrote. [They] also said that Rajaratnam’s sentence should be consistent with those imposed on others convicted of insider trading, including former New Castle Funds Analyst LLC Danielle Chiesi, a co-defendant who was sentenced on July 20 to 2.5 years behind bars.
August 10, 2011 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (4) | TrackBack
Wednesday, August 03, 2011
"Rod Blagojevich may get off easy while others rot in prison"
The title of this post is the headline of this provocative new commentary from the Washington Times. Here are excerpts:
Former Illinois governor and convicted felon Rod Blagojevich will have his sentencing hearing on Oct. 6. He faces up to 300 years in prison on various corruption charges. He will probably receive between 6-1/2 and 15 years. Raping, pillaging, and plundering the public trust is not treated the same as other heinous crimes.
The hirsute governor’s attorney claims Blagojevich will testify at his sentencing hearing. What is he going to say? He worked hard for the people of Illinois? He was the people’s governor? We’ve heard all that before.
There are indications that people will testify on his behalf. Who? There are no Friends of Blagojevich. Where were these people when he needed to pay his legal bills? The U.S. Government, us, the people, the tax payers, had to pay for his attorneys.
For some reason politicians do not have to sell their homes, other real estate, or empty their bank accounts and retirement funds to pay their legal bills. Unlike the rest of us, politicians don’t have to be bankrupted when accused of federal crimes. They are a protected class....
This slubberdegullion, and all political scoundrels, rapscallions, and scalawags, should get the maximum sentence for any crime they commit. They should be held to the highest standards of conduct and the highest levels of justice. If Blagojevich is facing 300 hundred years then 300 hundred years he should get. There should be no mitigating circcumstances for political corruption.
Bernie Madoff is in prison until the day he dies, and probably beyond, for violating the trust of people who should have known better. Bernie Madoff was held to a higher standard than pedophiles and serial killers. But, he did not violate the public trust. If Madoff could be sentenced to eternal life in prison why can’t politicians?
Why should they get a break? Why should there be mitigating circumstances? Who cares how many people he allegedly helped? Who cares if he loved his parents, is a good husband and father, helps elderly people cross the street, and goes to church on Sunday? Who cares about his record of achievements as an elected official? He was convicted of corruption. He should go down hard.
Rod Blagojevich, and any elected official, should get the maximum sentence if they are convicted of corruption. A violation of the public trust is a heinous crime. They should get these draconian sentences to set an an example for others. Others who may, just may, think twice before sticking our their grubby hands for the kachingos. There should be no pity, no mercy, and no humanity.
In addition to welcoming comments about what others hoep or believe Blago should get at his federal sentencing on October 6, I would love to hear what readers think about the basic proposition set forth in this commentary that every elected official "should get the maximum sentence if they are convicted of corruption."
Tuesday, August 02, 2011
Significant Tenth Circuit ruling on meaning and application of "intended loss"
The Tenth Circuit yesterday released a thoughtful new decision about the application of the important federal sentencing guidelines concept of "intended loss" in US v. Manatau, No. 10-4101 (10th Cir. Aug. 1, 2011) (available here). Though the stakes in the Manatau case itself are small, I suspect a lot of white-collar defense practitioners will find the ruling significant. Here is the start of the opinion and a few key excerpts (with emphasis in the original):
When calculating an advisory guidelines sentence for an economic crime a district court naturally must take account of the losses the defendant caused others. But the guidelines instruct that, when fashioning a sentence, a court should also account for the losses the defendant “intended” but was unable to realize. The question we face in this case is what counts as an “intended” loss? Unsurprisingly, we hold that the term means exactly what it says: to be included in an advisory guidelines calculation the intended loss must have been an object of the defendant’s purpose....
We hold that “intended loss” means a loss the defendant purposely sought to inflict. “Intended loss” does not mean a loss that the defendant merely knew would result from his scheme or a loss he might have possibly and potentially contemplated....
[T]he district court should examine what losses Mr. Manatau intended. Of course, in answering this question the court is free, as we have explained, to make reasonable inferences about the defendant’s mental state from the available facts. In the sentencing context, too, the government need only prove Mr. Manatau’s intent by a preponderance of the evidence, and the court need only make a “reasonable estimate” of the intended loss.... The available credit limits on the convenience checks in question and the defendant’s knowledge (or lack of knowledge) of them may well be relevant evidence bearing on what loss a defendant did (or didn’t) intend. But a court cannot simply calculate “intended loss” by toting up credit limits without any finding that the defendant intended to inflict a loss reasonably approaching those limits.
Monday, August 01, 2011
Two notable white-collar rulings from the Second Circuit
The Second Circuit gets August off to a note start with two big (and important?) opinions in white-collar cases. Here are the basics, with the summaries taken the the start of each opinion:
US v. Ferguson, No. 08-6211 (2d Cir. Aug 1, 2011) (available here): "The defendants, four executives of General Reinsurance Corporation (“Gen Re”) and one of American International Group, Inc. (“AIG”), appeal from judgments of the United States District Court for the District of Connecticut (Droney, J.), convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. The charges arose from an allegedly fraudulent reinsurance transaction between AIG and Gen Re that was intended to cure AIG’s ailing stock price. We vacate the defendants’ convictions and remand for a new trial."
US v. Feldman, No. 10-2275 (2d Cir. Aug 1, 2011) (available here): "Appeal from a judgment of the United States District Court for the Northern District of New York, David N. Hurd, Judge, convicting Jerome H. Feldman of one count of health care fraud, see 18 U.S.C. § 1347; five counts of wire fraud, see 18 U.S.C. § 1343; and sentencing Feldman to 188 months in prison and three years of supervised release. Affirmed."
As the first sentence of this post hints, I cannot tell from a quick read whether either of these opinions are especially jurisprudentially important. But anytime the Second Circuit reverses a significant white-collar conviction (as in Ferguson) or affirms significant white-collar sentence (as in Feldman), the feds and/or the NY defense bar usually find ways to make the ruling consequential.
Saturday, July 23, 2011
Assailing "out-of-control" federal sentencing guidelines for fraud offenses
Federal sentencing superstars James Felman and Mary Price have this effective new opinion piece in The National Law Journal headlined "Out-of-control fraud guidelines: Four reforms would restore common sense to sentences that have become draconian, disproportionate to the crimes." Here are excerpts:
Not long ago, first-time perpetrators of economic crimes frequently received sentences of probation with special conditions for compensating their victims. Lengthy prison sentences for nonviolent financially motivated offenders were correctly deemed unnecessary. The purposes of sentencing could be accomplished without removing them from society for extended periods of time. These offenders suffer a multitude of unique collateral consequences, including the all-but-certain end to their careers, and the social stigma of a steep and public fall from grace....
Between 1987 and 2001 the Sentencing Commission repeatedly amended the guidelines, adding sentence-inflating enhancements. In 2001, it overhauled the guidelines and voted to increase sentences based on the amount of loss. The ink was barely dry when, just two years later, Congress reacted to public anger over corporate scandals, directing the commission to up them again. It did so with a slew of amendments that increased fraud sentences across the board and enhanced sanctions based on factors that are present in nearly every major fraud....
The result? According to Judge Frederic Block of the Eastern District of New York, "we now have an advisory guidelines regime where…any officer or director of virtually any public corporation who has committed securities fraud will be confronted with a guidelines calculation either calling for or approaching lifetime imprisonment." U.S. v. Parris, 573 F. Supp. 2d 744 (E.D.N.Y. 2008). Put another way, economic crime offenders today can easily face a prison term once reserved for murderers, terrorists and serial rapists.
Judges have made their distaste for such sentences clear by not imposing them. In response, the Sentencing Commission has announced a comprehensive review of the fraud guideline. We welcome the review and have put together a working group of former policymakers, legal experts and attorneys to promote four reforms to restore common sense to the fraud guideline.
First, reduce the current excessive emphasis on actual or intended monetary loss. Second, better account for whether and to what extent the defendant received a monetary gain from the offense. Third, ensure that greater weight is put on the defendant's personal responsibility for the offense conduct, intent and other individual circumstances that should bear on punishment. Finally, eliminate double-counting aspects of the offense by striking redundant enhancements.
These reforms will help ensure that fraud sentences are proportional to the severity of the offense and to individual culpability and circumstances. Greedy perpetrators of fraud should receive stiff sentences. Society, however, can avoid the costs of subjecting less blameworthy offenders to punishments that are excessive, inefficient and counterproductive.
July 23, 2011 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (5) | TrackBack
Thursday, July 21, 2011
Effective discussion of Apprendi's application to corporate fines
Thanks to this post at White Collar CrimProf Blog, I see that a District Court in California has issued an interesting and effective opinion in United States v. Au Optronics Corporation, No. C 09-00110 SI (N.D. Cal. July 18, 2011) (available here), concerning tha application of Apprendi to corporate fines. Here are snippets from the ruling:
In light of the fact that the maximum fine in this case will depend upon proof of the gain or loss caused by the conspiracy, the government seeks two related orders from the Court. First, claiming that evidence of the effects of the alleged antitrust conspiracy is irrelevant to the defendants’ guilt, the government requests that the Court bifurcate the trial into a guilt phase and a penalty phase. Second, claiming that criminal fines are exempt from the Supreme Court’s decision in Apprendi v. New Jersey, 530 U.S. 466 (2000), the government seeks an order that the evidence presented in the penalty phase need not be presented to a jury....
Until recently, there would have been little reason to doubt Apprendi’s applicability to fines. Two circuits had applied Apprendi’s holding to criminal fines....[But] last year the First Circuit held that criminal fines were exempt from Apprendi’s rule [based on dicta in the Supreme Court's Ice decision]....
The government argues that this Court should follow the First Circuit. Relying largely on the same reasoning as the First Circuit, it contends that under historical practices fines fell within the sole discretion of the trial judge.... The government argues that this historical practice renders Apprendi inapplicable to the fines in this case.
The Court is unconvinced. As an initial matter, the Supreme Court’s statement in Ice is dicta, made without the benefit of briefing or argument in a case whose facts do not remotely resemble the facts of this case. While, of course, Supreme Court dicta is compelling, losing sight of Apprendi’s mandate based upon one clause in Ice risks losing the forest for the trees.....
The fine in this case is the primary form of punishment the government seeks and could amount to as much as $1 billion, ten times more than the fine authorized by the Sherman Act. The magnitude and primacy of such punishment puts it in a separate class from an ordinary criminal fine imposed against a defendant who faces incarceration. In the Court’s view, this is reason enough to apply Apprendi’s mandate and require a jury to find the amount of gain or loss under the alternative fines statute.
The historical practices the government has cited simply do not seem well suited for the situation before the Court, where incarceration -- or whippings, for that matter -- is not a penalty the Court can impose. The Sherman Act authorizes a maximum fine of $100 million. Should the government wish to go beyond that act’s authorization and seek a significantly larger fine based upon the establishment of additional facts, it must do so by following Apprendi’s mandate, and by proving those facts to a jury beyond a reasonable doubt.
Friday, July 01, 2011
Fraudster gets 355 years less than federal prosecutors sought...
but still gets what amounts to an virtually an effective life sentences, as detailed in this Bloomberg report headined "Ex-Taylor Bean Chairman Farkas Gets 30 Years for $3 Billion Mortgage Fraud." Here are the details of a high-profile white-collar federal sentencing:
Lee Farkas, the ex-chairman of Taylor, Bean & Whitaker Mortgage Corp., was sentenced to 30 years in prison for leading a $3 billion fraud involving fake mortgage assets.
Farkas, who has been in custody since his conviction in April of 14 counts of conspiracy and bank, wire and securities fraud, was also ordered by U.S. District Judge Leonie Brinkema in Alexandria, Virginia, to forfeit more than $38 million. “I actually don’t believe you accept responsibility for these criminal acts,” Brinkema said today as she handed down the sentence. “This was a very serious series of crimes.”
Prosecutors said Farkas, 58, orchestrated one of the U.S.’s largest and longest-running bank frauds, which duped some of the country’s biggest financial institutions, targeted the federal bank bailout program and contributed to the failures of Taylor Bean and Montgomery, Alabama-based Colonial Bank....
Thomas O’Brien, counsel to the Federal Deposit Insurance Corp. as receiver for Colonial Bank, spoke at the sentencing as a victim of Farkas’s crimes. He said the collapse of Colonial Bank was the sixth-largest bank failure in U.S. history and the third largest failure since “the 2007 financial crisis.”...
Assistant Attorney General Lanny Breuer, head of the Justice Department’s criminal division, said he was pleased with the sentence even though it was less than what prosecutors had pushed for. “I think 30 years has a very powerful deterrent message,” Breuer said in an interview with reporters in the courthouse. “If that’s not a deterrent to you then you’re brain dead.”
In court papers, prosecutors sought 385 years or no less than 50 years. Prosecutors said in a sentencing memorandum that the recommended punishment would be consistent with sentences imposed on “similarly situated” white-collar defendants, such as Bernard Madoff and former WorldCom Inc. Chairman Bernard Ebbers. Madoff, 73, is serving a 150-year sentence for $17 billion in losses and Ebbers, 69, received 25 years for an $11 billion accounting fraud.
Brinkema in court today called a sentence of 385 years “silly.” Patrick Stokes, deputy chief of the Justice Department’s fraud section, told the judge today that the crimes committed by Farkas contributed to the “financial crisis of 2008” and that anything less than a life sentence would send the wrong message. “He killed a bank, Colonial Bank,” Stokes said. “He killed his own company, TBW.”
U.S. Attorney Neil MacBride in Alexandria said the 30-year term “ensures that Lee Farkas will spend the rest of his life in prison.”
William Cummings, one of Farkas’s lawyers, said his client is planning an appeal. He said the actual time Farkas will serve behind bars is about 25 years. Bruce Rogow, a lawyer for Farkas, urged Brinkema to send his client to prison for no more than 15 years....
Six conspirators to the fraud scheme who pleaded guilty have been sentenced by Brinkema to prison terms ranging from three months to eight years.
July 1, 2011 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (3) | TrackBack
Thursday, June 30, 2011
US Sentencing Commission voting today on making new FSA crack guidelines retroactive
As previously noted here and as indicated in this official public notice, this afternoon at a public meeting, the US Sentencing Commission will vote on whether and how to make the new reduced crack offense federal sentencing guidelines applicable retroactively to previously sentencing defendants. The new guidelines reflect the 18-1 quantity ratio between crack and powder cocaine quantities that became the new federal sentencing standard after the Congress passed the Fair Sentencing Act of 2010.
As I have detailed in prior posts (some of which are linked below), a decision to make the crack guidelines retroactive would potentially impact the sentences of many thousands of federal prisoners, and this fact has made this issue a subject of considerable controversy. Still, the smart money is on the Sentencing Commission voting to make the new crack guidelines retroactive with a few (but not too many) limitations on which previously sentencing defendants can get the benefit of the new lower guidelines.
A few related posts on this particular retroactivity decision before the USSC are linked below, and readers interested in a broader understanding of the FSA should check out this February 2011 issue of the Federal Sentencing Reporter on the FSA and those interested in a broader discussion of the last round of crack retroactivity should check out this April 2008 FSR issue on crack retroactivity:
- USSC request comments on possible retroactivity of new crack and drug guidelines
- Revised data from USSC concerning potential impact of FSA guideline retroactivity
- Lots of news as AG Holder say to USSC lower FSA crack guidelines should be retroactive
- Lamar Smith's (deeply misguided) statement about crack retroactivity debate
- Informed criticisms of Justice Department's proposed limitation on crack retroactivity
- US Sentencing Commission slated this week to vote on new FSA crack guideline retroactivity
I will be on the road and likely off-line until very late tonight, but the folks at FAMM are all over this issue, as evidenced by this new item on FAMM's homepage:
Today! Historic Sentencing Commission vote on retroactivity
At 1 p.m., the U.S. Sentencing Commission will vote on retroactivity of the crack guidelines. FAMM's Mary Price told the Associated Press, "there is a tremendous amount of hope out there ... there is a potential that people could see their sentences reduced, some quite dramatically." Learn more -- read FAMM's latest factsheet, "Myths and Facts on Crack Guideline Retroactivity" and other resources. FAMM will also report live from the vote on Twitter.
June 30, 2011 in Implementing retroactively new USSC crack guidelines, New crack statute and the FSA's impact, New USSC crack guidelines and report, Prisons and prisoners, Race, Class, and Gender, Scope of Imprisonment, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack
Wednesday, June 29, 2011
Bold (and misguided?) prediction of 20-25 years in the federal pen for Blago
Attorney Jami Floyd has this notable new commentarysuggesting that a very stiff sentence is in Rod Blagojevich's future. The commentary is titled "His Own Worst Enemy: Why Rod Blagojevich Should Expect a Stiff Sentence," and here are excerpts:
[W]hatever the relative arguments for or against conviction, the jury has spoken. Now, comes the penalty. It will take weeks, if not months to formulate the sentence in the case. At first blush, the sentence is somewhere in the neighborhood of 250-300 years. As the verdict came down Monday, the pundits were quick to point out that Judge James Zagel will have to follow the federal sentencing guidelines, leaving most to surmise that Blago will get somewhere in the neighborhood of 7-10 years.
I think Blagojevich will do much more time, however, and here's why:
1. His Testimony....
2. The Public Trust....
3. The Madoff Example....
You will recall that many of the experts who are now predicting a ten-year sentence for Blagojevich also predicted a ten-year sentence for Bernard Madoff. Madoff was older (71). He was also convicted in federal court and the sentencing guidelines in that case suggested a 13-year term. Instead, Madoff was sentenced to 150 years and will never see the light of day. I predict a slightly kinder, gentler sentence for Blagojevich; something in the order of 20-25 years.
I am not yet ready to make my own Blago sentencing predictions, but I am ready to assert that this sentencing commentary seems quite misguided. Blago's crimes strike me a radically different than Madoff's, especially because there are no proverbial widows or orphans who had their life savings wiped out by Blago. (And I am certain that Floyd is badly mistaken when asserting that Madoff's guideline calculation called for only a 13-year term from bad Bernie.)
That all said, if Judge Zagel is eager to send a stern message with his sentencing of Blago, I do think it is quite possible that Blago will having to count down years, not merely months, when ultimately in federal prison awaiting release.
Some recent related posts:
- "Jury Convicts Blagojevich"
- You make the sentencing call: What sentence should Blago get?
- Judge Denny Chin and Bernie Madoff talk about a sentence of 150 years
- Do would-be white-collar offenders actually "get the message" from long sentences?
Tuesday, June 28, 2011
Judge Denny Chin and Bernie Madoff talk about a sentence of 150 years
The New York Times has this fascinating new lengthy article about the famous sentencing of an infamous white-collar offender. The piece is headlined "Judge Explains 150-Year Sentence for Madoff, and here is how it starts:
With the sentencing of Bernard L. Madoff only a week away, Judge Denny Chin received a letter from Mr. Madoff’s lawyer asking for a prison term substantially below the 150-year maximum. The lawyer, Ira Lee Sorkin, listed several reasons, including Mr. Madoff’s confessing to his sons, knowing he would be turned in; his “full acceptance” of responsibility for his crimes; and his efforts to assist in the recovery of lost assets.
Citing data that showed Mr. Madoff, who was then 71, could expect to live about 13 more years, Mr. Sorkin asked for a term of 12 years — “just short of an effective life sentence,” as he put it — suggesting that Mr. Madoff might be allowed a year of freedom before he died. Mr. Sorkin also proposed another option: 15 to 20 years.
Judge Chin says he understood Mr. Sorkin’s goal. “It’s a fair argument that you want to give someone some possibility of seeing the light of day,” the judge said, “so that they have some hope, and something to live for. And,” he added, “that was one of the struggles in Madoff.”
Judge Chin said he quickly rejected the idea of a 12-year sentence for Mr. Madoff, but pondered whether 20 to 25 years might be acceptable. The judge ultimately concluded that even that “would have been just way too low.”
“In the end, I just thought he didn’t deserve it,” he said. “The benefits of giving him hope were far outweighed by all of the other considerations.”
Judge Chin would impose a term of 150 years on Mr. Madoff, perhaps the most stunning and widely discussed sentencing in the history of American white-collar crime. In doing so, he seemed to find a way to translate society’s rage into a number.
Two years later, Judge Chin’s recollections resurrect all the anger, shock and confusion that surrounded Mr. Madoff’s crimes, and provide a rare peek at the excruciating pressure faced by a judge who had to balance the law, the public’s emotions and his own deeply held beliefs while meting out a sentence that was just and satisfied the court’s need to send a message.
Judge Chin agreed to an extensive series of interviews as part of a broader look into his sentencings in Federal District Court in Manhattan, which will appear in a later article. “Most judges will tell you sentencing is the most difficult thing we do,” he said.
The New York Times also interviewed Mr. Madoff, who offered his first comments about the judge and the sentence, which will have occurred two years ago on Wednesday. Mr. Madoff, speaking by phone from federal prison in Butner, N.C., said he believed that Judge Chin went along with “the mob psychology of the time.”
“Explain to me who else has received a sentence like that,” Mr. Madoff said. “I mean, serial killers get a death sentence, but that’s virtually what he gave me. I’m surprised Chin didn’t suggest stoning in the public square,” he added.
This piece has a lot more quotes from Judge Chin, and this companion piecehas more interesting quotes from Madoff. Here is an excerpt from that piece:
Bernard L. Madoff remains upset that Judge Denny Chin did not give him a shorter term, which might have allowed him the chance someday to regain his freedom, even as a very old man.... “[Q]uite frankly, there’s a big difference with dying in prison, you know, and dying outside with your family.”
Judge Chin has said in recent interviews that he considered a sentence that might have allowed Mr. Madoff to be freed when he is in his 90s. But he concluded that Mr. Madoff simply did not deserve it, and in court called his conduct “extraordinarily evil.”
Mr. Madoff, in a recent series of interviews and e-mails, took issue with the judge’s description. To characterize him as “this monster and this evil person,” he said, “I just think that was totally unrealistic and unfair.”
“In my mind, Chin was anything but fair, with zero understanding of the industry,” Mr. Madoff added. He said the judge had made him “the human piñata of Wall Street,” while financial firms and government officials “walk away free.”
“Remember,” he said, “they caused the recession, not me.”...
He said he had pleaded guilty to spare his family the trauma and expense of a trial. Did he expect a long sentence? Yes, he said. “But, did I think it was going to be 150 years? No.”
Do would-be white-collar offenders actually "get the message" from long sentences?
The question in the title of this post is prompted by this new piece by Professor Peter Henning from the New York Times headlined "Long Sentences Send a Message Few May Hear." Here are excerpts:
The Justice Department has asked for a sentence of as much as 385 years for Lee B. Farkas, former chief executive of the Taylor, Bean & Whitaker Mortgage Corporation, who was convicted of orchestrating a $2.9 billion fraud that caused the collapse of Colonial Bank. The reason for seeking such a severe penalty is to “draw the attention of corporate executives” to the potential for severe punishments for fraudulent activity, but the question is whether anyone will actually listen.
Mr. Farkas was convicted by a jury on 14 counts for selling falsified mortgage loans in a scheme that lasted from 2002 to 2008, and then trying to orchestrate a $533 million investment by the federal government through the Troubled Asset Relief Program to keep Colonial Bank afloat. Prosecutors say that he diverted some $40 million from Taylor Bean for personal investments in bars in Atlanta and Fort Lauderdale along with various trinkets, including a $28 million jet....
In order to grab the attention of other executives, Justice Department officials have asked for more than just a life sentence, instead requesting the maximum term for each charge to be served consecutively, which adds up to 385 years.
In seeking a punishment even greater than that imposed on Bernard L. Madoff, now serving a 150-year sentence, the Justice Department wants to use Mr. Farkas’s sentence as an example to other corporate officers who might be tempted to stray into illegality. According to prosecutors: “Sentencing him to the maximum penalty allowed by law will send the most forceful and unequivocal message to senior corporate executives that engaging in fraud and deceit in order to pump up your company or line your own pockets is unacceptable and will have severe consequences.”...
It is an interesting question whether the “unequivocal message to senior corporate executives” from a particularly harsh sentence would in fact be heard. I think the answer is that it would not.
Taylor Bean was a privately held company based in Ocala, Fla., and its primary lender, Colonial Bank, was based in Montgomery, Ala. Both were far from the major financial and banking centers. Taylor Bean was not a major player in the mortgage-backed securities market, and the prosecution took place somewhat off the beaten path for financial prosecutions: in the Eastern District of Virginia in Alexandria, not in New York where it might have garnered more attention....
It is unlikely that Mr. Farkas will become the face of the government’s efforts to root out criminal conduct arising from the financial maelstrom that hit in 2008. The intended audience for the government’s recommendation may well write off whatever sentence Mr. Farkas receives as hardly a blip on their radar screen. Packaging fake mortgages and diverting corporate funds to private ventures like bars is not something any self-respecting Wall Street executive would ever stoop to doing, at least so the thinking might go. Mr. Farkas can be classified an outlier who engaged in the type of naked fraud that corporate executives would never be so crass as to try, at least in their own minds....
In United States v. Martin, a case involving the sentencing of a former chief financial officer at HealthSouth, the United States Court of Appeals for the 11th Circuit asserted that “because economic and fraud-based crime are more rational, cool, and calculated than sudden crimes of passion or opportunity these crimes are prime candidates for general deterrence.”
I wonder whether corporate executives can be deterred by sentences given to others when they can rationalize misconduct they might engage in as necessary to preserve the company or to make a quarterly estimate, and they would never be caught doing something blatantly illegal. Even Mr. Madoff did not view himself as doing anything particularly troublesome while taking money from new investors and passing much of it on to old investors -- he even described some of his victims as “greedy.”
If executives can convince themselves that there’s nothing “really” wrong with what was done, like inflating revenue or paying a foreign official to obtain a contract, because there was a good reason for doing it, then the likelihood of being deterred by a long prison sentence seems fairly minimal. Corporate executives might not be good candidates for deterrence because they perceive themselves as different from -- and often better than --those who have been caught and punished, even if they are not.
Recent related post:
Monday, June 27, 2011
"Jury Convicts Blagojevich"
The title of this post is the headline of this Wall Street Journal piecereporting on the outcome of a high-profile retrial. Here are the details:
A federal jury on Monday found former Illinois Gov. Rod Blagojevich guilty of 17 counts of corruption, including trying to sell the U.S. Senate seat vacated by President Barack Obama. The jury found Mr. Blagojevich not guilty on one of 20 corruption counts in his second trial and deadlocked on two other counts. The verdicts came more than two years after Mr. Blagojevich, 54 years old, was arrested by federal agents.
Jurors told the judge they couldn't agree on two counts and were confident they wouldn't concur even if they kept deliberating. Scores of onlookers gathered outside the courthouse to await the verdict. Mr. Blagojevich arrived looking pale and shook hands and kissed a woman on the cheek when she wished him good luck.
The verdict was a victory for U.S. Attorney Patrick Fitzgerald, who initiated "Operation Board Games" just a few months after Mr. Blagojevich took office. In the hours after the then-governor's arrest, Mr. Fitzgerald said he had "interrupted a political corruption crime spree" and that Mr. Blagojevich had "put a for-sale sign on the naming of a United States Senator."...
Unlike his first trial, in which the former Chicago congressman escaped conviction on 20 of 21 counts, Mr. Blagojevich testified for seven days at his second trial. He said his intent was to use the seat as leverage to pass legislation that would have benefited the residents of Illinois....
After court was dismissed, Mr. Blagojevich hugged his wife and kissed her on the top of her head. Mr. Blagojevich was found guilty on counts including wire fraud and attempted exortion. He was found not guilty of soliciting bribes.
His attorneys have until July 25 to request a retrial. The judge told Mr. Blagojevich he may not travel outside the northern district of Illinois without permission of the court. "That doesn't mean I will never grant permission," Judge Zagel said.
Among other notable features, the conviction of Blagojevich now raises lots of interesting issues in the application of the 3553(a) sentencing factors. Readers are highly encouraged to suggest they think would be "sufficient, but not greater than necessary" for this former Governor of Illinois.
Sunday, June 26, 2011
Feds ask for (inappropriate?) 385 years(!) for white-collar offender
As detailed in this Wall Street Journal article, headlined "U.S. Seeks 385 Years in Prison for Ex-Taylor Bean Chairman, the federal government is asking for a sentencing term of biblical proportions in a high-profile white-collar case out of Virginia. Here are the particulars:
Federal prosecutors said the former chairman of mortgage lender Taylor, Bean & Whitaker Mortgage Corp., Lee Farkas, should spend the rest of his life behind bars because he continues to deny responsibility for the devastation he wrought as the mastermind of a multibillion-dollar "fraud of staggering proportions."
Prosecutors on Thursday filed court papers urging U.S. District Judge Leonie M. Brinkema to impose the statutory maximum prison sentence of 385 years on Mr. Farkas, whom a jury in April found guilty of 14 counts of conspiracy and bank, wire and securities fraud. Mr. Farkas, 58 years old, is set to be sentenced next Thursday.
On Friday afternoon, Mr. Farkas's attorneys filed court papers requesting a sentence of 15 years, which they said would not only "adequately punish" Mr. Farkas but could also effectively be a life sentence for the 58-year-old man with a heart stent....
Mr. Farkas, who built up Ocala, Fla.-based Taylor Bean into one of the nation's biggest mortgage lenders, was found guilty of misappropriating about $3 billion from banks such as Colonial Bank of Montgomery, Ala., and of trying to fraudulently obtain more than $550 million from the government's Troubled Asset Relief Program, or TARP.
Prosecutors said Mr. Farkas personally pocketed $40 million from the scheme, which he used to buy a jet, an "exotic" car collection, multiple homes and businesses. "Farkas fueled his lifestyle of ostentatious wealth by ripping off banks and attempting to steal from the government, all with little to no regard for the consequences to TBW's or Colonial Bank's employees, thousands of whom lost their jobs when TBW and Colonial Bank closed," prosecutors said. "And to this day … Farkas continues to deny any responsibility for the devastation brought on by the staggering fraud scheme that he initiated and led."...
In addition to the 385-year prison sentence, prosecutors are also asking that Judge Brinkema order the forfeiture of $42.2 million from Mr. Farkas.
Meanwhile, dozens of letters from Mr. Farkas's friends, family members, former employees and other acquaintances have come in urging the judge to be lenient. The letters describe Mr. Farkas's philanthropy not only in the Ocala community but also in their lives, from helping people care for sick relatives, start their own businesses and fund college educations.
This month, Judge Brinkema handed down sentences for Mr. Farkas's co-conspirators in the scheme. Taylor Bean's former chief executive, Paul Allen, and former president, Raymond Bowman, received 40 months and 30 months in prison, respectively. Taylor Bean's former treasurer, Desiree Brown, received a six-year sentence, while Colonial Bank officials Catherine Kissick and Teresa Kelly received sentences of eight years and three months, respectively.
The disparity between those sentences and the proposed sentence for Mr. Farkas is warranted, prosecutors said. "Farkas's co-conspirators are generally decent people who made terrible decisions and failed to extricate themselves from a fraud scheme spiraling out of control. Farkas can hardly be included in this category," they said. "For years, he manipulated his co-conspirators and others to his personal advantage...Farkas exemplifies the adage that there is 'no honor among thieves'."
Prosecutors also said that handing down the highest-possible sentence to Mr. Farkas would serve as a powerful deterrent to executives lured by the promise of easy corporate profits and substantial riches for themselves.
I do not dispute (and neither does the defense team here, it seems, that Farkas merits a serious punishment for his serious crimes. But it strikes me as a bit silly and arguably inappropriate for the Government to assert that only a maximum term of 385-years imprisonment qualifies as "sufficient, but no greater than necessary" for Lee Farkas under the terms of 3553(a). Seem to me that for a 58-year-old offender, a sentence of, say, 100 years would seem to be more than enough to achieve whatever purposes that prosecutors deem critical. But, remarkable, the feds think they need to ask for more than triple that length of sentence for this offender.
Friday, June 24, 2011
Conrad Black has more federal time to do after resentencing
As detailed in this Reuters piece, which is headlined "Ex-media mogul Conrad Black sent back to prison," today's highest-profile federal sentencing did not result in merely a time-served outcome. Here are the particulars:
A U.S. judge on Friday ordered former media baron Conrad Black to serve 13 more months in prison for his fraud and obstruction of justice conviction. Judge Amy St. Eve of U.S. District Court, who sentenced Black to 6-1/2 years following his 2007 trial, ordered the 66-year-old member of Britain's House of Lords to serve a total of 42 months, of which 29 months has already been served.
Black's wife, Barbara Amiel Black, collapsed immediately after St. Eve ruled, and was assisted out of the courtroom by medical personnel. Black was released from prison in July 2010 based on a successful appeal to the U.S. Supreme Court. The high court narrowed the scope of the federal honest services law used to help convict him.
St. Eve said she took into accounts letters from inmates who had served time with Black, which said he had tutored and mentored them. But she said she also took into account the harm Black did to shareholders of Hollinger International, the media company he had controlled. "You had a duty of trust. The shareholders put their trust in you. And you violated that trust," St. Eve said. She said the sentence would "send a message to executives in your position to show respect for the law."...
Black was convicted of scheming with partner David Radler and other executives to siphon off millions of dollars in proceeds from the sales of newspapers as they unwound Hollinger International, then the world's third-largest publisher of English-language newspapers. It once operated the Chicago Sun-Times, the Jerusalem Post, London's Daily Telegraph and dozens of other newspapers across North America.
Any predictions for Conrad Black's federal resentencing?
As effectively detailed in this National Post piece, the high-profile trial, sentencing, appeals and now resentencing comes to an end today in a federal district court in Chicago. Here is the backstory:
Today, Lord Black, 66, returns to Judge St. Eve’s courtroom in the Everett McKinley Dirksen Federal courthouse, where the trial judge will mete out a new punishment for his diminished slate of convictions. It is widely expected to be a more lenient sentence than the 78-month prison term in a U.S. federal minimum-security penitentiary in Florida, where she dispatched him in March, 2008.
Still, it won’t be the complete vindication he sought — and promised — since his legal ordeal began six years ago. Instead, in the wake of a partial victory at the U.S. Court of Appeals for the Seventh Circuit, the former international press baron now faces the stark prospect of returning to prison for a shorter stint, or deportation from the United States.
“This was going to be the capstone for this U.S. Attorney’s office efforts to fight white-collar crime. And instead of the big bang, this is a case that is hanging on by its fingernails on the fraud charges,” observed Hugh Totten, a Chicago-based criminal lawyer who monitored the case closely.
Given that U.S. prosecutors originally sought a jail term of between 24 to 35 years after his 2007 convictions on three counts of mail and wire fraud and one count of obstruction of justice – he wound up with 6½ years – it would seem reasonable to anticipate the federal judge won’t likely force Lord Black back to the Coleman Federal Correctional Complex to complete his term, as the U.S. government has strenuously urged.
Rather, some legal experts expect Judge St. Eve, who presided over the four-month criminal trial, to follow the guidelines set out in a pre-sentencing report by the U.S. Probation department, which recommends a term of between 33 to 41 months. If that happens, Lord Black can claim victory, since his lawyers have argued for time served based on the 29 months he’s already served plus a three-month credit for good behaviour.
“No way he’s going back to jail with that PSR [pre-sentencing report],” predicts Jacob S. Frenkel, a criminal lawyer and former U.S. attorney based in Potomac, MD. “There will be a lot of posturing and bluster, which will have no effect on the judge. The bottom line is that she has made up her mind and the hearing is to go through the motions to give him credit for time served and wrap this thing up as far as the court is concerned.”
Others, such as Chicago lawyer Andrew Stoltmann, disagree: “Conrad Black is heading back to serve the entirety of the rest of his term,” he wrote in an e-mail. “While U.S. District Judge Amy St. Eve has some discretion in overturning the ruling, Black has many factors working against him.”
Most expect there will be passionate arguments before the judge, but few surprises. Sentencing hearings are generally brief because most of the reasonings have been laid out in court submissions filed by both sides weeks ago.
If Judge St. Eve decides to release Lord Black from prison for time served, as his lawyers have requested, she could still attach any number of conditions, including probation time and fines. In that case, the Canadian-born media baron who famously relinquished his Canadian citizenship to become a British peer in 2001, would be arrested by the U.S. Immigration department and become subject to deportation proceeding....
In court filings, U.S. prosecutors have practically begged Judge St. Eve to send Lord Black, who once controlled the world’s third largest English-language newspaper empire including the National Post, back to Coleman to complete his 78-month sentence noting his defiance and lack of remorse.
Even after acknowledging the former businessman was a model prisoner, prosecutors still attempted to portray him as a haughty inmate unworthy of release by filing contradictory testimony from Coleman prison staff alleging Lord Black “demanded special treatment” and was a lax tutor, even though the same employees described him as “not intimidating or condescending” and “always polite and respectful” in prison progress reports and to the probation officer.
The unflattering depictions of Lord Black outlined in the sworn testimony from prison staff “are not allegations Black will want hanging over his head going into the re-sentencing,” said Mr. Frenkel, because the Supreme Court noted that Lord Black’s behaviour while in prison and on bail could be factored into re-sentencing.... To support his case for a full release, there are 18 letters from former prison inmates and staff espousing Lord Black’s positive contributions to prison life.
The Montreal-born businessman, who was released on bond last July pending his appeals, and three other Hollinger International Inc. executives were convicted in 2007 of misappropriating US$6.1-million in the form of non-competition payments. Lord Black was also found guilty of obstruction of justice for removing 13 boxes from his Toronto head office during the U.S. government’s investigation in 2005.
UPDATE: As reported in this new post, Black ended up getting 42 months of imprisonment at his resentencing, and thus he now has 13 months left to serve in the federal pen.
Wednesday, June 22, 2011
Former CEO of big mortgage firm gets 40 months on fraud conviction
This Reuters story, headlined "Ex-CEO of mortgage lender sentenced to prison," reports on one (of many?) criminal justice echoes of the housing crash. Here are the basics:
The former chief executive of one of the largest mortgage firms to collapse in the U.S. housing crash was sentenced to more than three years in prison on Monday for his role in a fraud scheme dubbed "Plan B" that federal prosecutors say cost investors $1.5 billion.
Paul Allen, 55, the former CEO of Taylor, Bean & Whitaker, or TBW, pleaded guilty in April to one count of making false statements and one count of conspiring to commit bank and wire fraud. The Justice Department said the fraud scheme contributed to the failure of TBW, which was one of the largest privately held U.S. mortgage lending companies, as well as the bankruptcy of Alabama-based Colonial Bank, which was one of the 50 largest U.S. banks.
Former TBW Chairman Lee Farkas, who was convicted on April 19 on 14 counts of fraud for his role in masterminding the scheme, is scheduled to be sentenced on June 27....
Allen's co-conspirator Sean Ragland, a 37-year-old former senior financial analyst at TBW, was also sentenced today by Judge Leonie Brinkema to three months in prison. Four other senior officials with TBW and Colonial Bank have also been sentenced to time in prison ranging from three months to eight years for their role in the fraud.
Friday, June 17, 2011
Sentencing proof that Brooklyn never quite gets the respect of Manhattan...
comes from this New York Daily News article, headlined "Fraudster dubbed 'Brooklyn's Bernie Madoff' sentenced to 20 years in prison." Here are the basics:
A Brooklyn fraudster was sentenced Friday to 20 years in prison for fleecing hundreds of hard-working victims in a Ponzi scheme that went on for three decades. Philip Barry, dubbed "Brooklyn's Bernie Madoff" received far less jail time than the 150 years his namesake is serving, but the financial ruin he wrought was no less devastating.
"He's just like a bank robber," Francis Monteleone said in Brooklyn Federal Court. "He robbed my dad, a struggling tailor who trusted him," said Monteleone who also handed over $215,000 from her divorce settlement to the bum.
Barry, 53, a boyish-looking schlub who is a master manipulator, listened impassively as seven victims poured out their hearts to Judge Raymond Dearie.
Linda Poluha said Barry won't have to worry about his three square meals or a roof over his head that doesn't leak like her family does. "If there was still such a thing as a chain gang I believe you deserve that," Poluha said.
The judge dismissed defense lawyer's Lisa Hoyes' argument that Barry lived frugally and didn't enrich himself with the life savings entrusted to him. "Does that make any difference to these folks?" Dearie said.
Assistant U.S. Attorney Jeffrey Goldberg pegged the victims' losses at more than $24 million.
The joke in the title of this post is based on the fact that "Brooklyn's Bernie Madoff" received a prison sentence only roughly 12% as long as Manhattan's Bernie Madoff. Then again, given that the victims' losses caused by Madoff have been pegged to be many billions of dollars, "Brooklyn's Bernie Madoff" actually got a longer sentence for his fraud if measured on a dollar-for-dollar, prison-term-for-prison-term basis.
Wednesday, June 15, 2011
Lots of notable sentencing talk in big Eleventh Circuit opinion affirming big mortage fraud convictions
As detailed in this Atlanta Journal-Constitution article, an Eleventh Circuit panel yesterday "upheld the convictions and 28-year prison sentence against Atlanta real estate developer Phillip Hill, who prosecutors said oversaw a massive mortgage fraud scheme." The panel "also upheld all the convictions and sentences against eight of Hill's associates -- brokers, lawyers and recruiters."
The 163-page opinion in US v. Hill, No. 07-14602 (11th Cir. June 14, 2011) (available here), has lots of discussion of lots of sentencing issues. Among many interesting passages, these passages referencing carrots and sticks caught my eye:
Van Mersbergen contends that he was, arguing that he was deprived of due process because the district court threatened to punish the defendants at sentencing if they refused to agree to reasonable stipulations in order to expedite the trial proceedings.... If one considers a criminal defendant’s failure to stipulate to be the exercise of a constitutional right, it would seem that increasing a defendant’s sentence because of his failure to stipulate crosses the line. But some of the lines in this area are blurry....
In Roberts the Supreme Court held that a court could lengthen a defendant’s term of imprisonment by imposing consecutive instead of concurrent sentences because he had refused to cooperate in the investigation of another crime in which he was a confessed participant.... That those who fail to cooperate receive longer sentences than those who are equally culpable but do cooperate is an inevitable product of encouraging cooperation.
That principle is written throughout our criminal law. For example, the Supreme Court has held that it is entirely permissible for prosecutors to threaten a defendant with a harsher charge carrying a much longer sentence in order to pressure him into pleading guilty, and then carry through with the threat when the defendant has the temerity to insist on his constitutional right to trial....
A distinction might be drawn between the carrot and the stick, between rewarding a defendant for giving up rights to which he is entitled on one hand, and punishing him for refusing to give up those rights on the other. The argument against that distinction is that the result for the defendant is the same. If a defendant receives a sentence of 100 months because he went to trial while his equally culpable co-defendant gets 50 months because he cooperated by pleading guilty, is a stick being administered to the defendant or a carrot being given to the co-defendant?
Whatever may be said about the use of sticks, the law seems to be clear that he who receives a break has gotten a carrot, and there is nothing wrong with doling them out. And that is enough to decide this case. At trial, the district court sometimes expressed its sentiment regarding stipulations by indicating that cooperation would result in a lower sentence, and at other times by indicating that failure to cooperate would result in a higher one. At sentencing, however, there were only carrots — cooperation was rewarded all around.
Monday, June 06, 2011
Notable skepticism about making a federal criminal case against John Edwards
A piece appearing here at Am Law Daily under the headlined "On Edwards Indictment, Am Law 200 Ranks Include Plenty of Skeptics" could well serve as exhibit A if and when John Edwards moves to dismiss the federal felony indictment under which he is now charged. Here are highlights:
[U]nsolicited statements e-mailed to The Am Law Daily Friday by partners at several leading firms were uniformly skeptical of the six-count indictment against Edwards, who, before entering politics, made a small fortune as a plaintiffs lawyer.
Artur Davis, a former Democratic congressman and candidate for governor of Alabama, focused his statement on the Justice Department's decision to hand off the Edwards case to federal prosecutors in North Carolina. "It's telling that the local U.S. attorney's office in Raleigh issued the indictment," says Davis, now a partner at SNR Denton's white-collar and government investigations practice in Washington, D.C.
"While [Main] Justice has to sign off on the case, it is very unusual that any direct action [against] such a prominent individual like Edwards be left in the hands of a satellite office far from Washington."... "The case at its core is a dispute over whether certain funds were a legitimate campaign contribution, a gift, or an independent expenditure," Davis said. "It is extremely rare that these disputes produce a criminal investigation, much less an indictment."
DLA Piper's Peter Zeidenberg believes that the government's case could chart new legal territory because campaign finance violations usually result in civil fines levied by the Federal Election Commission rather than criminal charges. Aggressively prosecuting Edwards over the alleged use of campaign donations to conceal an affair could set a dangerous precedent, he added. "It is a very slippery slope if gifts, which do not directly benefit a campaign, are deemed to violate the law simply because they have some indirect benefit," Zeidenberg said. "In addition, while Edwards is hardly a popular politician right now, this case has very little jury appeal. It is hard to identify what the public harm is in this conduct. This may well be viewed by a potential jury as piling on, and simply kicking a guy when he is down."
Barry Pollack of Washington's Miller & Chevalier believes that just because prosecutors can target an individual as widely vilified publicly as Edwards has been for his personal conduct doesn't mean that they should do so. "Federal criminal laws are expansive enough that a clever prosecutor can recast almost any bad behavior into a federal crime," Pollack said. "Being a jerk should make you a jerk, not a federal felon."
Glen Donath, a white-collar and government enforcement partner with Katten Muchin Rosenman in Washington, also expressed displeasure over the Edwards indictment. "It is both surprising and distressing that the government has brought these charges, considering the novel theory underlying its case," Donath said. "Campaign finance violations are very difficult to prosecute given both the complex and subjective nature of the elements of the offenses."
In addition to confirming my first impression of the Edwards indictment, these comments have me hungering even more for the possibility that Edwards might try to use his skills as an advocate and lawyer to turn the tables on the feds here and put their prosecutorial charging and bargaining choices on trial in the weeks and months ahead.
The enormous discretionary powers of federal prosecutors and the often questionable forces that can drive the execise of these powers never get as much scrutiny as they justify. Especially in a case like this where it is hard to fully understand the national importance of spending considerable federal resources to try to turn a jerk like Edwards into a federal felon, I am hoping not only that federal prosecutorial charging and bargaining choices get put under the microscope, but also that we might learn some broader lessons about the possibilities and problems created by broad a novel application of federal criminal law.
Some recent posts on the Edwards indictment:
- Media reporting that John Edwards is to be indicted today
- Would John Edwards be wise to consider a guilty plea even if he is truly innocent?