McDonnell v. United States and Arthur Andersen v. United States are remarkably similar Supreme Court reversals. In both cases, aggressive federal prosecutors pushed obviously dubious jury instructions on all-too-willing federal district judges. In Arthur Andersen, Enron Task Force prosecutors convinced Judge Melinda Harmon to alter her initial jury charge, defining the term "corruptly." Judge Harmon's charge was right out of the form book, based on the approved Fifth Circuit Pattern Criminal Jury Instruction. The Government's definition allowed conviction if the jury found that Andersen knowingly impeded governmental fact-finding in advising Enron's employees to follow Enron's document retention policy. The 5th Circuit Pattern's requirement that the defendant must have acted "dishonestly" was deleted by Judge Harmon and the jury was allowed to convict based on impeding alone. Thus, at the government's insistence, knowingly impeding the fact-finding function replaced knowingly and dishonestly subverting or undermining the fact-finding function. This effectively gutted the scienter element in contravention of the standard Pattern definition. Local observers were not surprised by Judge Harman's ruling. Her responses to government requests are typically described as Pavlovian. Judge James Spencer, the trial judge in McDonnell, is also an old pro-government hand. Generally well regarded, he was a military judge and career federal prosecutor prior to ascending the judicial throne. In McDonnell, the government's proposed jury instructions regarding "official act" flew in the face of the Supreme Court's Sun Diamond dicta. They were ridiculously expansive, with the potential to criminalize vast swaths of American political behavior. In both cases, Andersen and McDonnell, the Supreme Court unanimously reversed. In both cases, careful attention to the law, even-handedness, and a willingness to stand up to the government would have saved taxpayer dollars and prevented human suffering. Careful attention to the law, even-handedness, and a backbone. That's what we expect from an independent federal judiciary.
Category: Enron
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18 U.S.C. § 1519, known as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002, makes it a crime for anyone who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object” with the intent to impede or obstruct an investigation (emphasis added). Congress passed this statute in the aftermath of the Enron debacle. But did they ever envision that a prosecutor would use this statute against a commercial fisherman for allegedly having undersized grouper fish that were thrown overboard following the issuing of a civil fishing citation from the Florida Fish and Wildlife Commission?
The government’s extension of this SOX statute is the subject of a Petition for Certiorari (Download Yates Pcert_Filed) before the Supreme Court. A key issue is whether “fish” are tangible objects for the purposes of this statute. And even more bizarre is that the fisherman allegedly started with 72 undersized red grouper and when he came to shore there were purportedly only 69 fish. Could this be a federal prosecution under SOX for 3 missing fish? And is this all happening during a time of sequestration with tight funding?
Perhaps the Supreme Court will agree that in the ocean of crime, this one is a bit fishy. Following the filing of the Petition for Certiorari and a distribution for conference, the Court requested a response from the government. Amici filed a couple of briefs and it was again distributed for conference. It is now set for distribution a third time, April 25, 2014 (see here). It's a wonderful case for the Court to examine principles of statutory interpretation and how far afield the government can go in using a statute written and intended to stop one form of criminal conduct but being used in an unintended manner. This case also provides the Court the chance to step to the plate and express a view on overcriminalization. (see NACDL amicus brief of William Shepherd here – Download NACDLYATESAMICUS). There are many other issues in the "fish case" that may also interest the Court, such as how a civil fishing citation became a criminal case with an indictment issued 985 days after the citation. (see Petitioner's Reply Brief – Download Yates Reply to Brief in Opposition). But the real question is whether the Court will order fish this coming Friday at their conference.
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The Supreme Court denied certiorari in the latest matter related to Jeffrey Skilling. See here Skilling is still subject to resentencing resulting from the Supreme Court decision that held that the honest services provision of mail fraud (section 1346) would be limited to bribery and kickbacks.
See also Greg Stohr, Bloomberg, Enron’s Skilling Rejected by Top U.S. Court on Conviction , Washington Post, AP, Court rejects ex-Enron CEO Jeffrey Skilling’s appeal asking for new trial
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In the wake of the Schuelke/Shields report and the introduction of new discovery legislation, one has to wonder whether the Supreme Court will take a case that raises a Brady discovery issue. At their doorsteps is the case of James A. Brown, a case from the Enron days. As previously noted (here) Brown, is a former Merrill Lynch executive who "was convicted of perjury and obstruction of justice for his testimony before the Enron grand jury about a transaction between Merrill and Enron in late 1999." There are important issues here like the appropriate standard of review for Brady cases. Should it be "clear error" or should it be de novo. (see here) The case also examines "materiality," a term that has created some confusion. What must a prosecutor provide to the defense counsel. And isn't it odd that the adversary in the process is making the determination for what the defense is entitled to receive. The case looks at summaries being provided to defense counsel. Bottom line – summaries are not the same as the real thing.
In the reply brief recently filed, they argue-
"Here, as in Stevens, many exculpatory statements appear only in raw notes of government interviews of key players. In Brown, the Enron Task Force actually yellow-highlighted these notes before trial – along with prior testimony and FBI 302s – indicating that the information met the requirements of Brady and was material, but suppressed them anyway. While continuing to deny that any evidence fell within Brady, new prosecutors recently disclosed 6,300 pages including much (but still not all) of the evidence suppressed by the Task Force." (Reply Brief – Download FILED REPLY ON CERT.)
The government's brief sees things differently – Download SG OPP32312.
This case is distributed for conference on April 20th.
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The cert petition in James A. Brown v. United States (11-783) raises interesting questions regarding Brady. Brown, a former Merrill Lynch executive "was convicted of perjury and obstruction of justice for his testimony before the Enron grand jury about a transaction between Merrill and Enron in late 1999." This case was part of the "Enron barge transaction" investigation. The cert petition states that "prosecutors steadfastly denied that they possessed any Brady evidence and claimed that their production of nineteen pages of court-ordered 'summaries' exceeded their constitutional obligations." The Fifth Circuit later found the "evidence was exculpatory and 'plainly suppressed,' but 'not material.'" This was despite the fact that items had been "yellow-highlighted" by prosecutors as "selected exculpatory statements in the evidence they submitted for the district judge's pretrial in camera review." Years after the trial "new prosecutors disclosed thousands of pages of actual notes, 302s, and testimony." This cases raises the issue of what is the correct standard of review under Brady and Kyles.
The petition asks the Court to "establish three clear rules to enforce the crucial constitutional protections established in Brady v. Maryland." It states:
"First, consistent with the majority of Circuits, this Court should establish that Brady decisions must be reviewed de novo. Second, this Court should reject the Fifth Circuit's novel and dangerous approach to determining materiality, and thereby refine and reinforce the Kyles test. Third, this Court should adopt and mandate the majority rule that exculpatory evidence is material per se if the government corrupts the adversary process by providing deficient summaries or affirmatively capitalizing on its suppression at trial."
Discovery issues need to be examined by the Court. This is a good case for the Court to stress the importance of defendants receiving timely discovery to allow for a fair and proper defense to the charges.
Petition for Cert – Download 2011 CERT PETITION FILED
See also Brady posts of co-bloggers Lawrence Goldman here and Solomon Wisenberg here.
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Jeffrey Skilling is trying for a second shot with the Supreme Court. On November 28, 2011 he filed a cert petition with the Court (see here). The questions presented are:
1. Whether Neder permits a court conducting a harmless-error analysis in the context of an "alternative theory" case to consider only the strength of the Government's case on the legally valid theory, without regard to whether the defendant contested that theory enough to create a factual dispute that rationally could have been resolved in the defendant's favor.
2. Whether a court conducting a harmless-error analysis in the context of an "alternative theory" case may categorically exclude the defendant's testimony in his own defense on the legally valid theory.
The government's response is due January 3, 2012.
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The Fifth Circuit Court of Appeals affirmed the James A Brown case (U.S. v. Brown), in which a "managing director at Merrill Lynch and the head of its Strategic Asset and Lease Finance group" had been indicted in the Nigerian Barge case coming from the Enron events. The indictment was for "short-cut" offenses of perjury and obstruction of justice and the convictions had previously been affirmed by a three judge panel. Brown was now challenging his conviction on the basis that "the government violated his rights to due process by withholding materially favorable evidence that it possessed pre-trial."Specifically that it failed to disclose three pieces of evidence which included "1) The FBI notes of its interview with Fastow, 2) Senate investigators' notes of their interview with McMahon, and 3) transcripts of Zrike's pretrial testimony before the grand jury and the SEC." Although some of this evidence was shown to the court in camera before Brown's trial, the government admitted "that it did not submit the Fastow notes to the district court for in camera review." The Court takes the position that the government "did not suppress favorable evidence and that, even if it did, it was not material."
As noted by the defense in its en banc petition request and rehearing request, the court uses a standard other than de novo in reviewing part of this Brady violation claim. This presents an interesting question for an en banc or later Supreme Court to examine.
Brown En Banc Petition –Download 10-20621 Brown En Banc Petition FILED COPY
Brown Rehearing Petition –Download 10-20621 Brown Panel Rehearing FILED COPY
These events are also a perfect reason why there needs to be a statutory change in the discovery rules. NACDL has a proposal that would assist in making certain that favorable evidence is provided to the defense (see here) and hopefully Congress will take up this issue. Examining these issues after the fact only creates added issues.
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U.S. v. Bryant is a third circuit decision where the court affirmed the convictions finding no defect in the jury instructions for honest services or bribery. The court found that the "government presented substantial evidence of a quid pro quo bribery scheme to defraud the citizens of New Jersey of Bryant's honest services, including circumstantial evidence of the requisite mens rea…" The court stated that the Skilling case did not "undermine[] the viability of the stream-of-benefits theory." And further is was stated that "[i]ndeed, Skilling did not eliminate from the definition of honest services fraud any particular type of bribery, but simply eliminated honest services fraud theories that go beyond bribery and kickbacks."
The court also looked at a claim of prosecutorial misconduct made by appellants that alleged that prosecutors improperly interfered with the defense's access to witnesses. The court noted that "[i]f the prosecution impermissibly interferes with the defense's access to a witness during a criminal trial, that conduct violates due process insofar as it undermines the fundamental fairness of the proceeding." In this case, the "District Court took measures to clarify" any "misunderstanding well before trial. In response to Appellants' motion to dismiss, the Court instructed the Government to send a letter to all subpoena recipients five months before the start of trial, stating that the witness had an 'absolute right to speak to anyone…about anything [they] know about any of the matters under investigation, including the fact that [they] were subpoenaed and ….testified before the grant jury."
Opinion – Download BryantGallagher Opinion
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Addendum – See also Beldini – Download Beldini NPO
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In Skilling, the Court limited section 1346 to bribes and kickbacks. But this decision has left courts with several unresolved issues. The Stinn case raises an important issue, and the briefs highlight an interesting position being taken by the government.
The defense files a 2255 motion in Stinn saying that Skilling applies and the conviction should be vacated. - Download Omnibus Memo of Law ISO Stinn's Mtn to Vacate They note that "[i]t is immaterial that the government and the trial court did not use the phrase 'honest services' in the indictment or the jury instructions. The government argued the same invalid theory as it did in Skilling throughout the trial and relied on that theory to convince the jury to convict Stinn."
The government argues that Skilling does not apply because they did not file the case under 1346. Download Gov's Memo in Opp to D's Mtn to Vacate Convictions & Grant Bail They note "the Supreme Court's holding in Skilling is irrelevant to the defendant's case, as he was not prosecuted under an honest services theory of fraud."
The defense replies, however, with several arguments including - isn't this the exact opposite position the government took in the Redzic case. Download REPLY TO GOVT'S OPP TO MTN TO VACATE Redzic, an unusual case, had the court finding that the "money or property" portion of the case was problematic and could not stand. But even though the defendant was not charged under 1346, the court went on to uphold the conviction saying that 1346 did not "create a separate substantive offense, it merely defines a term contained in sections 1341 and 1343." The court held it was not necessary to cite 1346 in the charging instrument.
Redzic raised issues of whether the accused had truly been advised under due process of the charges against the defendant since the government was using an uncharged basis for asking that the conviction be upheld. But now the government in Stinn is saying that it makes a difference whether the government charges a case under 1346. Is the government taking the opposite position in these two cases (Redzic and Stinn), and is this problematic?
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A fascinating opinion vacating convictions and reversing the district court, was issued by the Sixth Circuit in the case of U.S. v. Ford. This appeal concerned convictions for false statements and two counts of "honest services" wire fraud. This case does not pertain to another case against Ford in which he was sentenced to 5 1/2 years imprisonment.
The government's problem with the 1001 conviction was that the statute was inapplicable to the defendant's conduct. Section 1001 requires federal jurisdiction. As stated by the court in noting the defendant's argument, "while the facts that he failed to disclose concerned an entity inseparable from federal ties, the entities to which he failed to disclose those facts were anything but federal." The court noted that the "failures to disclose financial interests were related to functions of the state government of Tennessee – the senate's and election registry's reporting requirements." The court also used the rule of lenity in support of its vacating these convictions.
The wire fraud counts were easier – Skilling limited honest services to "bribery and kickbacks," and that was not the case here.
Attorneys Representing Ford were Paul Mogin, William E. McDaniels, & M. Jesse Carlson (Williams & Connolly LLP).
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