Notes for the week.
Prosecuting Individuals
Federal criminal tax lawyer Jack Townsend blogs at Federal Tax Crimes. Here is his note on Prosecuting Corporate Employees, particularly in the tax context:
I have previously blogged on Professor Brandon Garrett (UVA Law) who have carved out an academic niche on how the Government deals with corporate crime, particularly large corporate crime (the too big to jail group). See e.g., Judge Jed Rakoff Reviews Brandon Garrett’s Book on Too Big to Jail: How Prosecutors Compromise with Corporations (Federal Tax Crimes Blog 2/10/15), here. At the risk of oversimplifying his arguments, I summarize them in part relevant to this blog entry: When the Government goes after corporate misconduct, it too often focuses only on the corporation in terms of criminal sanctions and not the individuals, particularly those higher up the chain, who committed the underlying conduct. Corporations cannot go to jail; individuals can. Prosecuting and convicting individuals in addition to corporations could, he thinks, provide more front-end incentive for individuals to forego illegal conduct within the corporations. However, as fans of tax crimes know at least anecdotally, it is hard to convict higher level corporate officers for conduct that their underlings actually commit. The poster child example is the acquittal of Raoul Weil, a high-level UBS banker who “remoted” himself from the dirty work of actually servicing U.S. taxpayers seeking to evade U.S. tax. See e.g., Raoul Weil Found Not Guilty (Federal Tax Crimes 11/3/14; 11/6/14).
Mr. Townsend goes on to discuss the DOJ’s Yates Memorandum and new work by University of Virginia law professor Brandon Garrett. Professor Garrett’s website (Federal Organizational Prosecution Agreements) is the best compendium of deferred-prosecution and non-prosecution agreements.
Michael Landon (“Little Joe Cartwright”) being served with a subpoena (1968)
Another useful Townsend post addresses a common issue — the Government’s attempt to muzzle the recipients of subpoenas:
In United States v. Gigliotti, 2015 U.S. Dist. LEXIS _____ (ED NY 12/23/15), here, Judge Dearie denied a motion to suppress evidence obtained pursuant to grand jury subpoena that unlawfully contained the following:
YOU ARE HEREBY DIRECTED NOT TO DISCLOSE THE EXISTENCE OF THIS SUBPOENA, AS IT MAY IMPEDE AN ONGOING INVESTIGATION.
Sound familiar? Read the entire piece at Judge Criticizes Prosecutor’s Use of Language Directing Secrecy for Receipt of Grand Jury Subpoena. We have written about the grand jury previously here, here and here. If you are to young (or too old) to remember Bonanza on TV, here is a refresher. Here is an episode from 1960 entitled — appropriately, for White Collar Wire readers — “Desert Justice”:
Head-on-a-platter and all that.
Or Not Prosecuting Individuals?
White Collar Wire should have sent a Christmas goose to Senator Elizabeth Warren (D-MA), who wants more white-collar types to get indicted: 2015 Spurred Billions in Bank Fines, But Not Enough for Warren. In particular:
In a 10-page report titled “Rigged Justice: 2016,” the U.S. Senator’s staff cited 20 cases in which they say prosecutors showed “timidity” by not pursuing individuals for civil or criminal misdeeds. No executives at Citigroup Inc., JPMorgan Chase & Co., or Deutsche Bank AG were accused of wrongdoing in cases alleging rigged currency markets and the misleading of investors, her office wrote in the document released Friday. The investigations led to their companies paying billions of dollars in penalties.
Senator Warren will have none of the Yates Memo, thank you:
The report even dismisses a recent U.S. Justice Department announcement, known as the Yates memo, in which Deputy Attorney General Sally Quillian Yates heralded a new direction by telling prosecutors to embark on investigations by focusing on people, not companies. “Both before and after this DOJ announcement, accountability for corporate crimes has been shockingly weak,” Warren’s office wrote.
“Shocking to whom” is a good question, but it’s all good for the white-collar bar. Here is her report.
Good Practices and Bad
A miscalculated penalty, perhaps.
From the Harvard Law School Forum on Corporate Governance and Financial Regulation and Jon Eisenberg, a partner in the Government Enforcement practice at K&L Gates LLP, here is a useful article (with cases and charts) about the SEC’s use of civil monetary penalties. Tellingly, and sadly, the authors point out that “these decisions might not survive appellate scrutiny . . . but very few respondents appeal their sanctions all the way to the D.C. Circuit.”
Hall monitor?
Deferred-prosecution agreements often impose corporate monitors. Should the reports of such monitors be kept confidential? A federal judge ordered the release of the HSBC monitor’s report, over the object of both HSBC and DOJ:
A federal judge has ordered the release of a report detailing how well HSBC Holdings Plc has complied with anti-money laundering requirements imposed by U.S. regulators when the British bank was fined $1.92 billion three years ago.
Thursday’s order by U.S. District Judge John Gleeson in Brooklyn is a defeat for HSBC and the U.S. Department of Justice, which complained the release could make it easier to launder money, including for terrorism, and discourage cooperation with law enforcement.
“This case implicates matters of great public concern and is therefore one which the public has an interest in overseeing,” Gleeson wrote, citing the public’s constitutional right of access under the First Amendment.
I cannot speak to the terrorism angle, but cooperation (and thus, monitoring) both work best when company employees have some comfort that what they say and do will be held in confidence, at least within reasonable parameters. The public’s oversight interest is real, but surely an organization that has paid billions in fines and is living with a monitor is being “overseen” to a reasonable extent, especially when that oversight requires continued cooperation to be effective.
Read the entire article here: HSBC money laundering report must be made public. To read our earlier posts about DPAs and monitors, go here, here, and here.
Crime Fiction
Digital content, quoth the raven.
From the good folks at The Rap Sheet, a piece on the nominees for the 2016 Edgar Awards. Here is the complete list from the Mystery Writers of America.
Thomas Hardy (1840-1928)
It is not a raven, but there is a bird in Thomas Hardy’s poem “The Darkling Thrush”:
I leant upon a coppice gate
When Frost was spectre-grey,
And Winter’s dregs made desolate
The weakening eye of day.
The tangled bine-stems scored the sky
Like strings of broken lyres,
And all mankind that haunted nigh
Had sought their household fires.The land’s sharp features seemed to be
The Century’s corpse outleant,
His crypt the cloudy canopy,
The wind his death-lament.
The ancient pulse of germ and birth
Was shrunken hard and dry,
And every spirit upon earth
Seemed fervourless as I.At once a voice arose among
The bleak twigs overhead
In a full-hearted evensong
Of joy illimited;
An aged thrush, frail, gaunt, and small,
In blast-beruffled plume,
Had chosen thus to fling his soul
Upon the growing gloom.So little cause for carolings
Of such ecstatic sound
Was written on terrestrial things
Afar or nigh around,
That I could think there trembled through
His happy good-night air
Some blessed Hope, whereof he knew
And I was unaware.
Crime Noir and Miles Davis
It’s Miles. It’s cool.
On the subject of crime, Apple Music must have intuited that I like noir-ish fiction and cool jazz. It directed to me a set of Miles Davis that included “Ascenseur pour l’echafaud” (1958), a French crime film by Louis Malle released in the States as Elevator To The Scaffold (or Lift To The Scaffold in the U.K.) Davis’s horn on the title track is as evocative as it gets, as seen here:
ESPN’s 30-for-30
Wishing It Were Fiction: Duke Lacrosse and Due Process
On Sunday, March 13, at 9 p.m. ET, ESPN’s acclaimed “30 for 30” film series will present Fantastic Lies, a film about the the Duke lacrosse case. Here is an interview with the producer, Marina Zenovich.
Damage done.
We have written about the Duke lacrosse case before, here and here.
Depends on how we sell it.
In opening statements and closing arguments, the genuine is good. The cornball or the obscure, on the other hand, are bad. The same is true of our written work. As noted by Philip Corbett, master of the After Deadline blog in the New York Times:
[A]n overreliance on anecdotal openings — especially the classic “stranger in the lead” approach — can make our prose feel shopworn rather than vivid. This is particularly true when readers encounter unfamiliar names at the top of two or more adjacent stories, whether in print or online.
Read the entire piece: Here’s Someone You Never Heard of. Read On.
