As I see it, Acting Attorney General Sally Yates had four options regarding her opposition to President Trump's Executive Order on refugees, visas, and travel bans: 1) defend it in the courts since most or all of the Order is likely to be judicially upheld; 2) explain to the President in private why the parts you don't like are problematic and try to change his position; 3) accept the President's position if you fail to change his mind; or 4) resign in protest if you fail to change the President's mind. Yates, so far as is known, did none of those things. Instead, she loudly and publicly ordered her subordinates not to defend the OLC vetted Order in court–an Order promulgated by the head of the Executive Branch of the United States. Her firing was thus inevitable and fully justified. As a career move it was brilliant of course. She was about to ride off into the sunset as one of those career DOJ types who occasionally get elevated to a political leadership post. No doubt a cushy partnership awaited her at a prominent national firm if that was her desire, or perhaps she coveted an academic slot at a prominent law school. She will still get something like that, but is now a political celebrity as well with a possible political future. Well played, Ms. Yates.

(wisenberg)

On August 11, 2016, the Eleventh Circuit issued an 124 page opinion in U.S. v. Clay. Review of this decision in the 11th Circuit was denied. So now the case is likely to be teed up on a Petition for Cert. for review by the Supreme Court.  There are important issues presented by this case, two that standout here.

1. Mens rea is the crux of many white collar crimes.  The complicated nature of many statutes places individuals in difficult situations in both understanding the laws and abiding by them. Too many times, when individuals are indicted for white collar offenses, there are cries that they did not know the conduct was illegal. After all, it can sometimes be difficult to discern when a business decision crosses the line into illegality. This particular case has a section 1347 claim, a relatively new statute that is modeled on the older mail (1341) and wire (1343) fraud statutes. The fact that it took the appellate court 124 pages, and many of these pages were a description of the alleged illegal conduct (facts go to page 66 and many of remaining pages discuss the facts) sets the tone for the complicated nature of this case. As with another recent case coming from the Middle District of Florida (Yates -1519 fish case reversed by the Supreme Court), the case involves a federal and state initiative.

The Appellate Court finds that the defendants had the requisite knowledge.  But was the standard for ascertaining that knowledge correct? The Supreme Court's decision in Global Tech, notes the importance of needing "knowledge" in criminal law.   The Court makes clear that "recklessness and negligence" do not suffice.  It is clear the Court in Global Tech wants actual knowledge or a clear avoidance of that knowledge. In Clay, the instruction given to the jury was a "statement or representation is false or fraudulent if it is about a material fact that the speaker knows is untrue or makes with deliberate indifference as to the truth and makes with intent to defraud." (emphasis added).  The 11th Circuit finds this sufficient because of the use of "and" "with intent to defraud" used in the instruction. But in a complicated white collar case, should additional words following words that are insufficient be enough to meet the required knowledge of the alleged wrongdoing? This presents an interesting question for the Supreme Court to consider. The 11th Circuit's reliance on its pattern jury instruction with only removing the word "reckless indifference" and replacing it with "deliberate indifference" lowers the standard of knowledge that should be required in a white collar case with facts that are clearly complicated as demonstrated by the 11th Circuit's description.

2.To premise a false statement charge on statements that are made by individuals on the scene of a search with approximately 200 agents may seem warranted when the case involves something like a specific act of homicide, rape, burglary or robbery.  But put this now in the context of  a complicated white collar case and one needs to recognize that being asked specifics about a business requires closer scrutiny of both the context and the statements being made. White collar businesses typically involve hundreds of documents and nuances within those documents. It is not the same as asking – did you have a gun, or did you enter a house. A specific answer may appear false, because explaining a complicated business transaction cannot be done in simple answers to agents that are swarming a place and placing the individuals in a pressure situation. White Collar cases typically proceed through grand juries and with the use of subpoenas. The current use of searches needs to be examined, especially when there are resulting charges of false statements such as in this case. 

(esp)

As co-blogger Solomon Wisenberg noted here, the Supreme Court issued an opinion today in Salman v. United States resolving an issue related to insider trading.  But is the law really clear now, as some claim (see here)? 

It would appear that Salman does little to modify the current landscape regarding insider trading, except to perhaps reaffirm the scope covered under the Court's prior holding in Dirks and reject the Second Circuit's Newman approach. The unanimous Court stresses its adherence to the doctrine from Dirks. The Court states, " Dirks makes clear that a tipper breaches a fiduciary duty by making a gift of confidential information to 'a trading relative,' and that rule is sufficient to resolve the case at hand."

But it is important to note here, that the Court is also issuing a narrow opinion and not providing extensive guidance on how to assess liability for gift-giving.  The Court notes that this case "is in the heartland of Dirk's rule concerning gifts."  But the Court goes on to say, "[i]t remains the case that 'determining whether an insider personally benefits from a particular disclosure, a question of fact, will not always be easy for courts.'"  The Court states, "there is no need for us to address those difficult cases today, because this case involves 'precisely the "gift of confidential information to a trading relative" that Dirks envisioned.'"

Although this factual scenario did not provide a basis for the use of the Rule of Lenity, one has to wonder if another issue not in the heartland might offer such a scenario.

See also Eric C. Chaffee  –Salman v. United States: A Few Observations; Joan Heminway –U.S. Supreme Court Simply and Elegantly Affirms Dirks in Salman

(esp)

See here.  Commentary to follow.

(esp)

Happy Birthday to the dean of the Norfolk, Virginia criminal defense bar, Stanley Sacks. Still going strong at 94 and still going to work every day.  

Last week in a significant opinion involving mens rea and the federal aiding and abetting statute, 18 U.S.C. Section 2(a), the First Circuit threw out a conviction based on faulty jury instructions.

The instruction allowed the jury to convict the defendant if she “knew or had reason to know” that her husband had been previously convicted of a criminal offense punishable by a term of over one year.

The court ruled that the “had reason to know” language impermissibly allowed for conviction on a theory of negligence.

Here is the key language:

“Notwithstanding Xavier and its progeny, we therefore adhere to our view that, in order to establish criminal liability under 18 U.S.C. § 2 for aiding and abetting criminal behavior, and subject to several caveats we will next address, the government need prove beyond a reasonable doubt that the putative aider and abettor knew the facts that make the principal's conduct criminal. In this case, that means that the government must prove that Darlene knew that James had previously been convicted of a crime punishable by more than a year in prison. Having so concluded, and before turning to consider the effect of this holding on this appeal, we add several important caveats.”

The chief caveat imposed by the court was that “knowledge” can be established through a “willful blindness” instruction, if  "(1) the defendant claims lack of knowledge; (2) the evidence would support an inference that the defendant consciously engaged in a course of deliberate ignorance; and (3) the proposed instruction, as a whole, could not lead the jury to conclude that an inference of knowledge [is] mandatory."

The case is  U.S. v. Ford (1st Cir. 2016) (mens rea for aiding and abetting).

(wisenberg)

Symposium-Discussion: Corporate Criminal Liability 2.0

Stetson University College of Law – Gulfport, Florida

Friday, February 19, 2016

10:00 a.m. – 3 p.m.(Eastern Time)

This Symposium/Discussion will consider the current state of corporate criminal liability from corporate, criminal, white collar, political, and international perspectives; looking at what does corporate criminal liability 2.0 look like, and more importantly what should it look like.

Stetson University College of Law – 1401 61st Street South Gulfport, Florida 33707 United States

To register to attend – here

(esp)

The Ethics & Compliance Initiative (ECI) released a special Blue Ribbon Panel report, Principles and Practices of High Quality Ethics & Compliance Programs.  The report is a discussion draft, and they are seeking comments and suggestions from colleagues and other members of the public. The draft report can be found here –   Download FinalBRPReport 

The deadline for comments is January 8th, but they asked that those needing more time to contact their office.

(esp)