Alan Ellis & James H. Feldman, Jr., "Intended Loss" Redefined in Fraud Cases," 24 Criminal Justice (2009)    

Pew Center on the States, Arming the Courts with Research – Evidence Based Sentencing Brief

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Andrew George, Alexandra Walsh, and Bridget Moore, attorneys with Baker Botts LLP, authored a new article in 9 Criminal Litigation (2009) titled "Kimbrough, White Collar Sentencing, and the New Primacy of the Sentencing Commission."  One point made in this article is that "in this new era of commission primacy, defendants may not make much headway focusing on sentencing factors available only to the wealthy, white collar offenders.  Rather, they are probably better served by highlighting factors available to all – factors like age, health, lack of criminal history, commitment to family, or community service."

It is posted here –  Download aba_crim_lit_article_cropped.pdf with permission and a thank you.

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Professor Miriam Baer of Brooklyn Law School has a new piece on SSRN that will be published in the Virginia Law Review. Titled, Linkage and the Deterrence of Corporate Fraud, she says that the Article "focuses on the difficulties of deterring perpetrators of fraud who are in the midst of their crimes, as opposd to potential perpetrators who are merely considering committing such crimes."  She argues "that when law enforcement policies change (ie, harsher sanctions or promises of more stringent monitoring), mid-fraud perpetrators behave differently from potential perpetrators and, perversely, may perpetrate greater harm in response to traditional increases in sanctions and monitoring resources."  She suggests policy changes.  The Article can be found here.

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• A new article on mail fraud by Jack D. Arseneault and Joshua C. Gillette from the New Jersey Lawyer Magazine. It is titled, Federal Honest Services Mail Fraud: The Defining Role of the States.
• Daniel C. Richman, Political Control of Federal Prosecutions – Looking Back and Looking Forward  "explores the mechanisms of control over federal criminal enforcement activity that the Administration and Congress used or failed to use during George W. Bush’s presidency."
• Mikah K. Thompson, To Speak or Not to Speak? Navigating the Treacherous Waters of Parallel Investigations Following the Amendment of Federal Rule of Evidence 408

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Wendy Gerwick Couture, White Collar Crime’s Gray Area: The Anomaly of Criminalizing Conduct Not Civilly Actionable, available at SSRN here

Adam J. Kolber, The Comparative Nature of Punishment, available at SSRN here

Guest Blogger – Professor Frank Bowman – University of Missouri School of Law:

I enjoyed reading Ms. Martz’s response to my American Lawyer/Legal Times article.  It’s always a relief to find that somebody reads one’s stuff, and a real pleasure when it draws an intelligent response.  A couple of thoughts on that response:

First, Ms. Martz opines that, "As a philosophical matter, I do not think that open-ended criminal statutes are ever a good idea."  I find it hard to believe that she really thinks this, at least in the absolute terms she uses.  Virtually all criminal statutes are open-ended to some degree, in the sense that their reach will be unclear at the margins.  That’s one reason we have appellate courts — to settle inevitable questions about the reach of statutory language.  More importantly to the present discussion, Anglo-American criminal law long ago gave up the struggle to define in advance the precise types of financial skullduggery it would deem criminal.  The history of the development of the old common law of larceny, and the later statutory offenses of embezzlement, false pretenses, and fraud is a centuries-long movement away from the particular to the open-ended in recognition of the law’s inability to anticipate the forms criminal ingenuity might take.  So, unless Ms. Martz is advocating rolling back American law to about 1799 (when the first English embezzlement statute was enacted), what we are talking about is matters of degree.  And I agree that some modern federal statutes are too vague and would benefit from careful re-thinking.  But the suggestion that the entire body of federal criminal statutes regarding fraud and corruption can or should be changed so that it is no longer "open-ended" is not a serious proposition.

Second, Ms. Martz suggests, in common with many other critics of more aggressive federal white collar crime prosecution, that federal criminal prosecutions using open-ended statutes violate standards of notice and due process.  In plain English, she is saying that people are routinely being prosecuted for conduct they are shocked, shocked to find was illegal.  Now I won’t say that such an event has never happened or that better-drafted federal statutes couldn’t reduce the risk of such an event.  But it is surpassingly rare.  Federal law, as badly drafted as some parts of it are, basically says, "Don’t lie, cheat, or steal in connection with certain business or government activities."   Ms. Martz’s argument, at bottom, is that it is unfair to punish businessmen and government officials for lying, cheating, and stealing unless a statute tells them, with precision, in advance, exactly which forms and methods of lying, cheating, and stealing are prohibited.  She and I simply disagree.  I think the general prohibition is sufficient to provide notice.  In nearly thirty years of practicing and teaching criminal law, I have rarely if ever  encountered  a white-collar defendant who did the conduct with which he was charged but did not recognize (even if only privately) its intrinsic wrongfulness – even if he vigorously denied its criminality.

And if the uncertain boundaries of federal criminal prohibitions against dishonest business or government behavior cause some to hesitate before engaging in doubtful conduct, so much the better.   An economist might argue that this uncertainty may well discourage morally ambiguous, but economically beneficial or socially desirable, behavior.  Which will sometimes be true, but that is where public and private regulation of business behavior enters the picture, drawing the nuanced lines that the criminal law cannot and modifying behavior with sanctions less terrible than those of the criminal law.

Ms. Martz seems to miss my point about regulators when she remarks, "Professor Bowman makes no case, however, for why prosecutors are any better at sussing out complicated and often highly technical misconduct than the expert regulators."  First, my main point was not that prosecutors understand particular businesses or industries better than the "expert regulators" in the field, but that, for years past, regulators have been actively discouraged from either making regulations or enforcing them.  It is precisely because the "experts" have been handcuffed that the criminal law generalists have moved in.  Give some real power back to the experts and the heavy hand of the criminal law can relent.  Second, if by "sussing out" she means investigating and discovering facts, then she badly misread my article.  As I argued there, even in a world with a more active set of public and private regulators, there are some situations and institutions that only the Justice Department can confront.  Dismiss the point as merely "pragmatic" if you will, but when big, rich, politically well-connected corporations or industries go seriously astray or corruption becomes entrenched in state or local government, the Justice Department will often be the only institution with the power and incentive to find the facts and make common sense judgments about whether the facts amount to a crime.

Ms. Martz concludes:  "In the absence of civil enforcement, criminal enforcement will undoubtedly, unequivocally step into the breach. It’s a zero-sum game for American business."  I could not disagree more with her characterization of the situation as a zero-sum game for business.    It is precisely this attitude – that both active prosecution of business crime AND reasonable civil regulation of business behavior are bad – that has put us where we are today.  A sensibly reinvigorated regulatory environment would not only diminish the need for criminal intervention in business affairs, but would improve both the political and economic health of the country.

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Professor Daniel Sokol, University of Florida Levin College of Law, and blogger of the Lawprof Antitrust Law Blog, asked me to post the following:

Guest Blogger – Stephanie Martz – Senior Director, White Collar Crime Policy, National Association of Criminal Defense Lawyers (NACDL)

Professor Frank Bowman’s piece in The Legal Times ("Somebody Has to Cry Foul," August 18, 2008) is geared towards a singular thesis – that "the decline of civil regulation makes open-ended criminal statutes necessary." As a philosophical matter, I do not think that open-ended criminal statutes are ever a good idea. They fail to put American citizens on notice that certain behaviors – especially in the white collar area – are in fact against the law. We are supposed to be particularly concerned about this in the criminal, as opposed to civil or regulatory, context because of all of the consequences that are uniquely attendant to criminal prosecution, such as the deprivation of liberty and the lifelong deprivation of civil rights, the social stigma associated with conviction and incarceration, and the singular moral force and deterrent effect of the criminal law. This is why we have the "rule of lenity," in which ambiguous criminal statutes are supposed to be strictly construed by courts. As Justice Scalia wrote just this term in United States v. Santos:

Under a long line of cases, the tie must go to the defendant. The rule of lenity requires ambiguous criminal statutes to be interpreted in favor of the defendants subjected to them. This venerable rule not only vindicates the fundamental principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed.

How does this principle comport with Professor Bowman’s praise for "flexible" and "open-ended" criminal laws? It doesn’t, I’d venture. Let’s take honest services mail fraud as a prime example of a flexible and open-ended criminal law. This law prohibits schemes or artifices to defraud another of your "honest services" – basically, it criminalizes deceit. As numerous courts and commentators have observed, this could conceivably turn taking home a couple of reems of paper from your office into a federal felony. The statute has no built-in limits on how it can be used, and courts have struggled to come up with a coherent set of them. At base, it’s unconstitutional for Congress to permit "a standardless sweep [that] allows policemen, prosecutors, and juries to pursue their personal predlictions" (Smith v. Goguen, 415 U.S. 566, 574 (1974). Professor Bowman seems comfortable with the standardless sweep, as long as it’s in the name of filling in for absentee civil regulators.

Indeed, Professor Bowman seems willing to elide the fundamental point about the due process and notice requirements of criminal law for a hodgepodge of pragmatic reasons, which can all be filed under the rubric of ‘our last worst hope.’ (My words, not his.) "Ideally," he writes, "most of this sort of [mis]behavior would be deterred or dealt with by public and private civil regulatory mechanisms, but those mechanisms have conspicuously atrophied over the past several decades." He argues that "textual flexibility" and "broad prosecutorial discretion" are necessary because civil regulatory bodies "cannot keep pace with the rapid evolution of modern business and finance." Professor Bowman makes no case, however, for why prosecutors are any better at sussing out complicated and often highly technical misconduct than the expert regulators. In fact, criminal prosecutors are far less likely to know the industry, the accounting rules, the compensation regimes, and all of the other details that make climbing the learning curve very difficult to do in each new case. He not-so-subtly accuses civil regulatory officials of capture—calling federal prosecutors "visitors from the normal world who apply ordinary understandings of right and wrong to what they find." But he declines to acknowledge that the flipside of capture is expertise, ability, and the institutional knowledge and perspective that help to ensure against overly aggressive (or overly lenient) enforcement decisions. The "commonsense judgments of prosecutors" that Professor Bowman extols are not, put simply, universally experienced by potential criminal defendants.

In order for us to engage in a more intelligent discussion of the pragmatic aspects of civil versus criminal enforcement of business crimes, it would be helpful if we were working with a complete and illustrative universe of enforcement statistics. While Professor Bowman refers to the frequently cited fact that white collar enforcement is slightly down these days, the Federal Justice Statistics Resource Center’s information shows that the number of federal mail, wire, securities, and related crimes that have been charged each year has remained fairly steady in the last ten years. (See this blog’s "White Collar Crime Prosecutions – A Long Way to Go to Hit the Levels of 5 Years Ago, May 14, 2008, referring to TRAC statistics on white collar crime enforcement.)

On a concluding note,I do think that his thesis should serve as a cautionary tale to those who would rail against the civil regulatory state: In the absence of civil enforcement, criminal enforcement will undoubtedly, unequivocally step into the breach. It’s a zero-sum game for American business.

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Geraldine Szott Moohr ,Of Bad Apples and Bad Trees: Considering Fault-Based Criminal Liability for Complicit Corporations, 44 American Criminal Law Review, Vol 44, 2007 – available on SSRN here

Miriam Baer, Corporate Policing and Corporate Governance: What Can We Learn from Hewlett-Packard’s Pre-testing Scandal?, University of Cincinnati Law Review – Corporate Law Symposium, 2008 – available on SSRN here 

James B. Johnston, Prosecuting Government Fraud Despite the ‘CSI Effect’: Getting the Jury to Follow the Money, New England Law Review, Vol. 41, 2007 – available on SSRN here

Paul Rothstein, ‘Anything You Say May Be Used Against You’: A Proposed Seminar ton the Lawyer’s Duty to Warn of Confidentiality’s Limits in Today’s Post-Enron World, Fordham Law Review, Vol. 76, 2007 – available on SSRN here