Category: Fraud

Madoff – Sentenced to More Than A Lifetime

June 29th, 2009

The Hon. Denny Chin gave a sentence of 150 years to Bernie Madoff, a number a far cry from the 12 years asked for by defense counsel. (see here)

Jack Healy, NYTimes, Madoff Sentenced to 150 Years in Prison for Ponzi Scheme

Chad Bray, WSJ, Madoff Sentenced to 150 Years

Washington Post, Madoff Sentenced To Maximum 150 Years In Jail

Aaron Smith, CNN,Madoff sentenced to 150 years -Federal judge gives maximum sentence to Ponzi mastermind following his apology and victims' request for life sentence.

Doug Berman, Sentencing Law & Policy Blog, Madoff gets sentenced to max of 150 years in federal prison!

Commentary to follow.

(esp)

Addendum, Doug Berman,A new white-collar benchmark: the main reason the number 150 matters in Madoff
Madoff- Preliminary Order on Forfeiture

June 29th, 2009

The Preliminary Order on Forfeiture has been issued. See here. Commentary to follow.

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Stanford Gets Bail, But After Jumpsuit Walk

June 27th, 2009

Who gets bail and who remains in jail has been interesting to watch. The question is not limited to one stage of the criminal process, as the issue arises 1) upon indictment and arrest, 2) after a guilty finding at trial, 3) after sentencing, and 4) after an initial appellate ruling.

The first stage – upon indictment and arrest – is often one of the easier ones for obtaining release as there is no conviction and being charged with a white collar crime, there is little chance of the accused using violence to harm others. In this stage Madoff, Snipes, Lay, and most other white collar individuals were released pending their trial. So it is not surprising to see that R. Allen Stanford is being given bail pending his trial.

So knowing the likelihood of bail, is it really proper for the government to parade Stanford in a jumpsuit in front of the media. Check out the picture with this article:Mauricio Guerrero, NYTimes, Stanford Enters Plea; Bail Is Set at $500,000 It's all well and good if Stanford is found guilty. But if he is not convicted – the picture of the escorted man in an orange jumpsuit will forever remain. The problem here is not the press. The problem is the government's misuse of its power to taint an individual who has not been proved guilty.

(esp)
Madoff

June 25th, 2009

The talk of the town is Madoff, assuming one is limited to discussions in the white collar area. With some comparisons and non-comparisons to Stanford, (see here) and others looking at Skilling's case. (See Business Week here). The sentencing is set for Monday, and the latest is that Bernie Madoff will be allowed to appear in civilian garb. (See here)

Not surprisingly, defense counsel for Madoff filed a sentencing memo asking for 12 years, a number that some victims are not happy with. Will the sentence be higher because cooperation has not reached a level of assisting the government in providing information (if it exists) on others close to him? See David Glovin & Thom Weidlich, Madoff’s Failure to Name Accomplices Cripples His Leniency Bid

Or maybe it will be higher than the amount requested by defense counsel, for the reason that the fraud involved here is not what is seen in many white collar cases. In white collar cases, especially ones coming from the corporate sector, we often see the accused arguing that he or she did not know the conduct was illegal. Some will argue that admitting the wrongdoing and accepting responsibility should be credited as the Sentencing Guidelines advise. Others, however, may wonder if this is the perfect example of a case that demonstrates why one should not be penalized for going to trial. Maybe it is easy to say one is guilty when they are the sole person who committed the crime. But when the acts of others are involved, or the crime involves ambiguous business conduct, it becomes more questionable. So, the real question here is not whether Bermie Madoff should receive 12 years, but whether this sentence is proportionate to others who went to prison for longer amounts of time for conduct they believed was not illegal or for which they should not be held accountable. It is normally the government that argues that the lesser sentence should go to the one who pleads and cooperates. But will the government really take that position when the case involves Bernie Madoff?

Madoff''s Sentencing Memo – Download US_v_Madoff_Sentencing_Letter_June_23_2009 ( w/ a hat tip to Peter Henning)

(esp) (blogging from Tuscon, Arizona)
Stanford and Other Execs Indicted

June 19th, 2009

Robert Standard, chair of Stanford Financial Group, along with three executives from the company and one "former chief officer of the Antiguan bank regulatory agency" were indicted. A DOJ Press Release states:

According to the indictment, Stanford and his co-defendants engaged in a scheme to defraud investors who purchased approximately $7 billion in certificates of deposit administered by Stanford International Bank Ltd. (SIBL), an offshore bank controlled by Stanford and located on the island of Antigua. Stanford and his co-defendants allegedly misused and misappropriated most of those investor assets, including diverting more than $1.6 billion into undisclosed personal loans to Stanford himself, while misrepresenting to investors SIBL’s financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities.

The Indictment does not include allegations related to section 1346, the honest services clause (is the government shy to use this statute in light of the pending case before the Supreme Court). The indictment does, however, include fraud charges and conspiracy to commit money laundering against some of those accused. There will be many interesting questions on the conduct of the government that may arise from this prosecution. (see Attorney Dick DeGuerin'sStatement here as posted on the WSJ site - left hand side of page under Stanford Press Statement here)

Perraud Indictment here

Stanford Indictment here

Davis Information here

See also Evan Perez, WSJ, U.S. Files Criminal Charges in Stanford Case ;Matthew Goldstein, Stanford 'Is Not Madoff'; Mary Flood, Tom Fowler, & Jennifer Dlouhy, Stanford and 4 others indicted -Feds say holders of $7 billion in CDs bilked; Stanford attorney proclaims innocence;Clifford Krauss, NYTimes, Texas Financier and Antiguan Official Charged With Fraud

(esp)
Pictures of Different Fraudsters

June 15th, 2009

Melanie Linder, Forbes, has an article titled, How to Foil a Corporate Fraudster. What is particularly unique about this piece is that it is coupled with pictures of seven different types of fraudsters. The different types (e.g., The Wannabe, The Survivor) really capture the sociology behind different types of individuals who commit white collar crimes. This article, with its pictures, presents an interesting perspective in deciding where along the spectrum a corporate fraudster belongs when it comes to sentencing. I highly recommend this piece in thinking about a sentencing hearing.

(esp)
DiMasi Indictment

June 5th, 2009

The U.S. Attorneys Office in Massachusetts indicted the former Massachusetts Speaker of the House, Salvatore F. Dimasi, along with three associates on charges of conspiracy, mail and wire fraud (using the honest services statute), and money laundering. Dimasi served as speaker of the house from October 2004 through January 2009. The Indictment makes a point of noting that he is a lawyer. The case is alleged to involve a software company that sells "business intelligence and performance management software and related services." The press release sums it up as a "scheme to deprive the citizens of Massachusetts of his honest services by allegedly improperly using his power and influence to enable a software company to obtain multi-million dollar procurements from agencies of the Commonwealth of Massachusetts." Like so many modern cases, emails may be playing a part in the case as one finds reference to emails in the Indictment.

Indictment – Download DiMasi Indictment
Conrad Black Asks for Bail Pending a Ruling by the Supremes

June 1st, 2009

Lyle Denniston over at Scotus Blog has Conrad Black's application for bail (see here), and it is noted that the government has until Friday to respond. In the defendant's favor is the fact that a co-defendant has been granted bail pending appeal. Further, the fact that the Supreme Court has accepted certiorari is an important consideration (see here). Despite the summary resolution of the case by the Seventh Circuit (see here), there is a fascinating mail fraud issue that the Court will be reviewing (see here). The disparity in having one co-defendant on bail, and the other incarcerated seems like a strong argument to grant bail when there has been no indication of a flight risk or a danger to society. But lets see what the Government responds.

(esp)
Commentary on Cert Grant in Black Case

May 18th, 2009

The 7th Circuit "efficiently" ruled on Conrad Black's case 20 days after the oral argument. Despite the fact that the trial lasted four months, the court issued a 16 page opinion that included a sentence stating that "[t]he defendants raise some other points in their 161 pages of briefs, but none that has sufficient merit to require discussion." (see here).

But it looks like the Supreme Court intends to give Conrad Black more time and further consideration. The Court accepted certiorari on the following question, as reported on Scotus Blog here:

Whether the “honest services” clause of 18 U.S.C. § 1346 applies in cases where the jury did not find – nor did the district court instruct them that they had to find – that the defendants “reasonably contemplated identifiable economic harm,” and if the defendants’ reversal claim is preserved for review after they objected to the government’s request for a special verdict.

The acceptance of a section 1346 case may prove controversial. Recently, the Court denied cert in the Sorich case, but the denial included a strong dissent by Justice Scalia, who noted that the "28 words" in the statute had "been invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries." He stated that "[w]ithout some coherence limiting principle to define what 'the intangible right to honest services" is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct." Justice Scalia concludes his dissent by stating that "it seems to me quite irresponsible to let the current chaos prevail." (see here)

So the acceptance of cert in this case may resolve some of the issues raised in the Rybicki dissent. It may finally provide a clue as to whether section 1346 is constitutional or not. It may decide on whether this statute is vague. It may offer some insight of how the statute should be interpreted when a private fraud is at issue, and it may determine if an economic harm is needed. Most importantly, will this be another McNally decision that will again send a message to prosecutors that mail fraud should not be stretched too far.

(esp) (blogging from Washington, D.C.)
Key Evidence Tossed in Wecht Case – Should it be Called Dead?

May 18th, 2009

The case against Dr. Cyril Wecht, former coroner in Allegheny County, Pa. and former President of the American Academy of Forensic Science, a started with many counts (see here) and eventually was reduced to 14. At the initial trial that lasted 7 weeks, the government presented 44 witnesses and the defense rested without presenting anything, which is not surprising considering the nature of this case. It resulted in a hung jury. But the government decided to proceed further.

The government's ability to now proceed on the remaining counts is in serious jeopardy as the court tossed out evidence obtained from a search warrant. The government is now faced with deciding whether to proceed to a higher court appealing the court's ruling on the search warrant. Is this case really worth any more tax dollars?

For press coverage on the court's ruling, see here, here, and here.