Category: Verdict

Post-Ruan Acquittals and Dismissals

October 8th, 2022

Last June, in the consolidated cases of Ruan v. United States and Kahn v. United States (hereinafter Ruan) the U.S. Supreme Court considered the mens rea required to convict a physician charged with illegal distribution of narcotics under the Controlled Substances Act. The Court held as follows: "After a defendant produces evidence that he or she was authorized to dispense controlled substances, the Government must prove beyond a reasonable doubt that the defendant knew that he or she was acting in an unauthorized manner, or intended to do so." The stunningly broad ruling was 9-0 on the final outcome, but 6-3 on the majority's reasoning. Justice Alito, joined by Justice Thomas and, far the most part, Justice Barrett, concurred in the result only. They did not join the majority's holding that, once the defendant meets the burden of producing any evidence that he or she was authorized to write prescriptions, the burden of proving beyond a reasonable doubt that the defendant intended to act, or knew he or she was acting, "in an unauthorized manner" falls on the government. But all nine Justices agreed that at least a portion of the jury instructions in each trial were defective because they injected objective reasonableness requirements into their good faith definitions. It is too early to predict with any certainty how the case law will develop in the post-Ruan world. Never underestimate the willingness of individual U.S. Attorney offices to find ways around inconvenient Supreme Court opinions. The convictions of Dr. Ruan and Dr. Kahn were not even overturned. Instead, the appellate judgments were vacated and the cases were sent back to their respective Courts of Appeals to determine whether the faulty instructions were harmless.

But here are some recent developments. In United States v. Bothra, et al. an Eastern District of Michigan case that went to the jury the very day Ruan came out, all Defendants were acquitted on all counts, 54 in total. In U.S. v. Given, in the Northern District of Florida, the lone Defendant was acquitted on all 33 counts. It should be noted that the government's evidence in each case was weak.

In United States v. Kim, in the Western District of Oklahoma, the the court granted the government's motion to dismiss without prejudice. The government seemed to concede that, in light of Ruan, the Indictment was defective.

Finally, in United States v. Brian August, a case in which I represented the Defendant, the United States filed, and the trial court promptly granted, a Motion to Dismiss, conceding that, among other things, the case could not go forward under the Ruan standard.

While these are promising signs, the dust has not yet begun to settle on post-Ruan developments. As I will explain in subsequent posts, the Ruan opinion leaves many questions unanswered. Is a physician-Defendant entitled to a subjective good faith instruction or no good faith instruction? Does the Defendant meet his or her burden of presentation merely by showing that he/she is authorized to prescribe narcotics? Must the government prove that a physician-Defendant had no legitimate medical purpose for his/her prescription and that he/she was operating outside the usual course of his/her medical practice or only one of these two factors? What should a proper jury instruction look like?

I will be posting more on these issues in the coming days, weeks, and months.

(wisenberg)
Total Victory for the Defense in Greenbelt Health Care Fraud Case

June 29th, 2022

After a three-week trial, and only one full day of deliberations, a federal jury in Greenbelt, MD acquitted Kasandra Vilchez-Duarte and Donnie Amis on all counts of an indictment charging conspiracies to defraud Medicaid and violate the Anti-Kickback statute. Congratulations to the defense teams: Federal Defenders Maggie Grace & Ned Smock on behalf of Ms. Vilchez-Duarte, as well as John McNichols & Allie Eisen (Williams & Connolly) and Eugene Gorokhov (Burnham & Gorokhov) on behalf of Mr. Amis.

(wisenberg)
Theranos Founder Elizabeth Holmes Convicted On 4 Of 11 Counts. And That Will Be Enough.

January 3rd, 2022

Here is the CNN story. The jury acquitted Holmes, the former CEO of blood-testing startup Theranos, on all 4 counts related to the alleged defrauding of patients. She was convicted on 4 counts related to defrauding of investors, including a conspiracy count. The jury hung on 3 additional investor fraud counts. There will be no retrial of the counts that the jury could not reach agreement on, because Holmes' ultimate sentence would not be affected by a guilty verdict on those counts. Moreover, under current Supreme Court case law, the trial court can (unfortunately) consider the government's evidence against Holmes on both the acquitted and hung counts in determining her sentence. The SEC long ago settled its case against Holmes without demanding an admission of wrongdoing on her part. Had she made such an admission there would have been no need for a criminal trial.

(wisenberg)
The Magic Number Is Eight – And is the Clock Ticking?

August 22nd, 2018

Yesterday was a crucial day for Special Counsel Mueller's Investigation in that Paul Manafort was convicted on eight counts. The fact that the remaining counts were "hung" is inconsequential as the sting of these eight convictions sends a strong message and a possible heavy sentence. To make matters worse for Manafort, he still has an upcoming trial in DC on other charges. One could argue that there is always the possibility of success on appeal or a presidential pardon. But one has to wonder whether Manafort's time in negotiating a plea with the Special Counsel may be running out. And is there now competition in who will get the best cooperation agreement or favorable statement at sentencing from the government.

Further north, it was an important day in that within the same hour as Manafort's conviction, Attorney Michael Cohen entered a guilty plea to eight counts. Many in the media are noting that in the plea hearing Cohen said that his actions were "at the direction of a candidate for federal office." Was Michael Cohen sending a message to Mueller's team that he is ready to talk?

These two cases are not currently connected –two different prosecutors, two different offices, two different courts, two different matters.

But how many cooperators does Mueller need, and will Manafort (if he decides to cooperate) be up against Cohen's desire to offer evidence, assuming that he might have an interest in cooperation.

It may be a stretch to say that the clock is ticking for potential cooperators. It may also be that Mueller is someone who says "the more the better." Bottom line we just don't know. But yesterday's count of 8 will go down as a memorable day, not because of the matching 8s, but because of what is happening to individuals who had been associated with the President.

(esp)
When Do You Have Corruption? From McDonnell to Silver

May 11th, 2018

Perhaps one of the most confused areas of the law is the Hobbs Act/Bribery area. Cases throughout the years have defined the need for a quid pro quo (McCormick), and noted how a passive acceptance can satisfy that prong of the statute (Evans). But when do you have a quid pro quo, is something that can often be a difficult factual question. Equally confusing is determining what constitutes an "official act." The Supreme Court in McDonnell held that "setting up a meeting, hosting an event, or making a phone call 'standing alone' would not be sufficient . . ."

In the first trial Sheldon Silver, former Speaker of the NY State Assembly, along with Dean Skelos, a former majority leader in the State Senate, both were convicted. But the convictions were quickly overturned because they failed to comply with the McDonnell pre-requisites. And now, according to the NYTimes, Silver was convicted on retrial. (Benjamin Weiser, Sheldon Silver Is Convicted in 2nd Corruption Trial).

For those who doubted the government's ability to prosecute public corruption cases post-McDonnell, this verdict should be very welcomed. For those who are seeking clearer lines between legal moneys paid and illegality, an appeal in this case may provide more answers. I keep wondering if the answer will all come down to "green."

(esp)
Media Coverage of Friday’s International Soccer Convictions

December 23rd, 2017

On Friday, two international soccer executives were convicted in federal court in Brooklyn, New York, for their roles in a global bribery scandal. The defendants were alleged to have received bribes and kickbacks to influence decisions regarding media rights associated with significant FIFA soccer tournaments. The defendants were also alleged to have accepted payments to influence the selection of venues for the World Cup and other important tournaments.

Juan Angel Napout, former head of South America’s football governing body, was accused of accepting $10.5 million in bribes, and Jose Maria Marin, former president of Brazil’s Football Confederation, was accused of accepting $6.55 million in bribes. Napout was convicted of several counts, including racketeering conspiracy, wire fraud, and money laundering. Napout was convicted of racketeering conspiracy and wire fraud.

After the convictions, FIFA stated, “FIFA strongly supports and encourages the U.S. authorities’ efforts to hold accountable those individuals who abused their positions and corrupted international football for their own personal benefit.”

The jury was unable to reach a verdict regarding the third defendant in the case, Manuel Burga, former president of the Peru soccer federation. Jurors will return next week to continue deliberating in his matter.

Since the investigation into international soccer began in 2015, more than 20 defendants have pleaded guilty. Several news outlets have in-depth coverage of Friday’s convictions, including the New York Times, Sports Illustrated, the BBC and Bloomberg.

(LED)
Two Defense Victories: M.D. Florida and E.D. Virginia

March 18th, 2016

We note two recent victories in federal white collar jury trials, one by a seasoned hand and another by an up and coming star. In U.S. v. Kallini, Dr. Adel Kallini, a former anesthesiologist and now pain management physician practicing in Broward County, Florida, was indicted in the Middle District of Florida, Tampa Division. Dr. Kallini was charged with one count of conspiracy to commit health care fraud and wire fraud, as well as one count of falsification of records in a federal investigation. The Government also sought forfeiture of over $1MM.

Dr. Kallina was defended by longtime NACDL Board Member Brian Bieber of Gray Robinson, and his associate Alex Strassman. According to Bieber:

Our sole defense at trial was good faith reliance upon the advice of counsel. In June, 2013, Dr. Kallini’s tax attorney presented him with a business “deal”, proposed to the attorney by two people who claimed to be legitimately involved in the health care field. (Unbeknownst to Dr. Kallini and his lawyer, the two were involved in health care fraud for the past three years which included, but was not limited to, paying kickbacks to patients and doctors in South Florida). The “deal” presented to Dr. Kallini, through his lawyer, essentially required Dr. Kallini to “rent” out his Medicare provider number for (what he was told) the billing of legitimate services provided to patients by other physicians who, for one reason or another, could not bill Medicare for the services provided. From the payments, Dr. Kallini was to receive 25%, his lawyer 10%, and the two others 65%. Dr. Kallini’s lawyer prepared a written agreement/contract reflecting the above.

Dr. Kallini has been practicing medicine since 1971 and had a Medicare provider number since 1973. Having never previously done anything of this nature, he asked his lawyer point blank: “Is this legal?” His lawyer told him it was. Dr. Kallini signed the agreement/contract.

On cross examination, the Government’s expert witness was forced to concede the critical differences between intentional fraud and unintentional "abuse" of the Medicare payment system. The expert also acknowledged that if the defense's factual theory of the case was correct, Dr. Kallini's conduct could fall into the non-criminal category. Bieber's cross examination of the expert on this point was greatly aided by Strassman's discovery on the internet of a six year old Power Point presentation prepared by the expert in which he taught a group of Government investigators the differences between the intentional defrauding of Medicare and the “unintentional abuse” of the payment system. Dr. Kallini was the sole defense witness.

In U.S. v. Upchurch, et al., in the EDVA (Alexandria Division), Eugene Gorokhov of Washington DC's Burnham & Gorokhov, assisted by Ziran Zhang, represented defendant Matthew Jones. According to Gorokhov:

A group of young adults, to include my client, went to a Six Flags amusement park on a Saturday in the Summer of 2015. On the day they were there, numerous people at Six Flags had their belongings stolen, to include bags containing wallets and credit cards. Later surveillance videos showed that several individuals in my client’s group used the stolen credit cards at nearby stores on the same days. My client, however, was not in any of the videos.

Despite the apparent lack of evidence against my client, the Government still charged him, along with the others, with conspiracy to commit wire fraud and access device fraud. As to my client, the only evidence of his involvement was: (1) the appearance of his home address on a fraudulent credit card application, made in the name of a victim who had her belongings stolen from the park; (2) the use of the fraudulently obtained card to pay a phone bill under his name. Multiple people lived at my client’s home address. After indictment, phone records showed that his phone account had two phone numbers, and other evidence the investigator had showed that one of these numbers was used by another resident of his house, giving that person incentive to pay the phone.

The Government investigator, during the course of his investigation: (1) did not interview any of the other residents living at my client’s home address, despite knowing that more than one person lived at my client’s address; (2) overlooked the fact that the fraudulent credit card application listed an email address associated with one of the other residents at my client’s address (and admitted that he overlooked it at trial); (3) did not subpoena any of ATM surveillance videos associated with several fraudulent ATM transactions on the credit card, and those videos were ultimately erased in accordance with the bank's retention policy; and (4) did not obtain recorded phone calls between the credit card company and the individual who made the fraudulent card application, even though there were about a dozen such calls. Those calls surfaced 24 hours before trial and were, for unknown reasons, not previously produced by the bank. Those calls showed that it was someone else, and not my client, attempting to activate the fraudulent card.

During deliberations, the jurors came back with a question that asked, in essence, whether they could find a defendant guilty based only on his knowledge of a crime, and his presence at the scene. The defense asked Judge Brinkema for a "mere presence" instruction, which she gave. Thirty minutes later, the jury came back with a verdict of not guilty with respect to Eugene's client.

Congratulations to Bieber and Gorokhov and their respective teams. And if you have a federal white collar jury trial victory to report do not hesitate to let me know. We'll do our best to publish it and discuss its significance here.

(wisenberg)
Total Defense Victory in EDVA Health Care Fraud Trial

December 5th, 2015

Congratulations to the defense team members and their client in U.S. v. Bajoghli. After a 16 day trial, the dermatologist defendant was acquitted on all counts–over 40. Dr. Bajoghli was represented by Peter White and Nicholas Dingeldein of Schulte Roth & Zabel and Kirk Ogrosky and Murad Hussain from Arnold & Porter. The jury was out a day and a half.

There was some interesting motion work during the pre-trial phase, for those of us interested in government efforts to affect witness testimony. Six weeks before the original trial date, the government sent "victim impact notification" letters to several of Dr. Bajoghli's patients. Dr. Bajoghli complained that the patients, many of whom were scheduled to be defense witnesses, were not victims and that the letter was intended to prejudice the patients against him. Judge Gerald Lee granted the motion and issued a corrective letter. Here are the relevant papers: Bajoghli Motion in Limine Seeking Corrective Witness Instructions, Exhibit A Ogrosky Letter to DOJ, Exhibit B to Bajoghli Motion, Order Granting Motion for Corrective Witness Instruction, Court's Corrective Witness Letter.

(wisenberg)
Not Guilty on Two Counts and Conviction on a Misdemeanor Count in CEO’s Case Following Deadly Mining Accident

December 3rd, 2015

It is interesting to see the headlines from the NYTimes – Former Massey Energy C.E.O. Guilty in Deadly Coal Mine Blast and Politico – Coal baron convicted for mine safety breaches. Both headlines focus on the conviction of the CEO. The Wall Street Journal headline says – Jury Convicts Former Massey CEO Don Blankenship of Conspiracy - but does say in smaller print below this headline "Former executive found not guilty of securities-related charges after deadly West Virginia mining accident."

Yes, it is important to note that a CEO was convicted here of workplace related safety violations and this was after a deadly accident. But what is also important is that CEO Blankenship was found not guilty of the serious charges that he initially faced. What started as a 43 page indictment by the government (see here), ended as a misdemeanor conviction on one count. William W. Taylor, III of Zuckerman Spaeder LLP was the lead on this defense team.

(esp)
Former New York State Speaker Silver is Convicted

November 30th, 2015

Longtime New York State Assembly Speaker Sheldon Silver, a Democrat, was found guilty today by a Southern District of New York federal jury on corruption charges, including honest services theft and extortion under color of law. As Speaker and majority leader, Silver was one of the "three men in a room" who controlled the New York Legislature (the others being the Governor and Senate majority leader, almost always a Republican, one of whom, Dean Skelos, is now on trial on corruption charges in the same courthouse as Silver was - an apparent show of federal prosecutorial bipartisanship).

Silver had requested and received case referrals to the tort specialty law firm where he was counsel from a doctor to whose university-affiliated clinic he later directed a half-million dollar state grant. He also requested from two major real estate firms that they send business to a different law firm from which he received large referral fees. Although the doctor and the real estate firm officers testified that they made the referrals to curry favor and influence Silver, no witness testified that there was an explicit quid pro quo or specific agreement that Silver would perform a specific (or even unspecific) act, although the government maintained that Silver did perform official actions that benefited the doctor and the real estate firms.

The defense argued that there was no quid pro quo, that the referrals were made out of friendship and respect, and that the official acts performed by Silver were legitimate and not performed because of the referrals.

The verdict was no surprise. Although the defense portrayed the incidents as "politics as usual," the "politics" just stunk. Silver had clearly received benefits, referrals to law firms from which he received millions of dollars only because those who had provided these benefits thought that Silver as a powerful official would do things – unspoken, unspecific and perhaps then unknown – that would benefit them. The cases, on which Silver did no actual legal work, were not referred to him because of his reputation as a lawyer.

On the one hand, as one who loathes corruption, I am somewhat gratified that it now appears (subject to judicial reversal of the jury verdict) that a public official may not request a substantial valuable benefit, direct or indirect, if he or she knows or believes, that the donor is conferring the benefit because the donor believes that the official will exercise his or her official power to the donor's advantage, even in the absence of an agreement that the official do anything in his official capacity.

On the other hand, I am concerned about what in effect is legislation by prosecution, even if it is good legislation. However unwholesome Silver's conduct was, he might have been convicted for what had been generally perceived as acceptable conduct in his world that he believed was not criminal. For better or worse, U.S. Attorney Preet Bharara has essentially changed the rules. A corruption conviction does not require as a quid pro quo that there be an agreement by a public servant to do a specific act or at least generally to act favorably in the future when circumstances arise, as many prosecutors had believed for years (and some still do). While the "new" rule is certainly better for society as a deterrent to corruption, I have some concern whether it is just to convict, and likely imprison for a considerable time, someone who acted within what he believed the rules were.

Perhaps this case will embolden prosecutors to go further in charging public officials. Here, Silver clearly solicited benefits, received benefits, and, at least in the case of the doctor, in return provided a benefit, even if not pursuant to an agreement. Will cases now be brought where public official receive monetary or equivalent benefits from those intending to influence them even where there is no evidence of solicitation by the officials and/or no evidence that the officials did anything in return for the benefits received? And what about cases involving campaign contributions made by donors and accepted by a candidates in the expectation that the candidates will act favorably toward their causes, and the candidates (if elected) do so act? (Or should there be an exemption for cases involving campaign funding?)

(Note – Silver, whom I have never met or spoken with, reappointed me three times as his designee to serve on the New York State Commission on Judicial Conduct, but did not reappoint me a fourth time.)