Recently in Criminal Law and Prosecution Category

Paul R. Enzinna, partner at Brown Rudnick, lends his extensive expertise in white collar criminal defense to discuss, in a new PoL column, the federal court's expansive interpretation of "honest services" fraud in the Kevin Ring trial and most importantly, the potential implications such expansive interpretation may have in relation to traditional American business relationships.

Mr. Enzinna writes:

Jim invites Pam, an employee of a potential customer, to lunch. Over the next several years, during which Jim and Pam enjoy dozens of lunches and dinners, and Jim treats Pam to many rounds of golf, Pam's company becomes one of Jim's biggest customers. None of this is extraordinary -- most, if not all, businesses, entertain customers in the hope of developing business. However, a recent decision by the U.S. District Court for the District of Columbia threatens to criminalize this practice. In United States v. Ring, the court held that an individual who provides a "thing of value" to another, with the "corrupt intent to influence" her, may face up to 20 years in prison for violating the federal "honest services fraud" statute.

Andrew Wise, leading D.C. defense attorney at Miller Chevalier and James Copland, director of the Center for Legal Policy at the Manhattan Institute, discuss the 'Honest Services' Fraud Statute post Skilling v. U.S. and Wise's defense of Kevin Ring, a former lobbyist who was involved in the Jack Ambramoff Indian lobbying scandal. Andrew Wise offers updated insights on Congressional attempts to reverse Skilling and redefine 'honest services' fraud as he similarly discussed at a Manhattan Institute forum in 2010.

James Copland and Andrew Wise by Manhattan Institute

Introduced in July of this year, H.R. 2572, the Clean Up Government Act of 2011 passed through the House Judiciary Committee unanimously with the objective of among other things to "amend the federal criminal code to revise and expand prohibitions against bribery, theft of public money, and other public corruption offenses."

The bill has garnered bi-partisan support and the support of many good-government groups advocating for tougher anti-corruption efforts. And who could really argue against legislation aimed to curb public corruption? But while we hear justified support for the sentiment of taking a tough stance against corruption among public officials , it is important to consider the manner in which the problem is addressed.

In a written statement before the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security, Timothy O'Toole, attorney with Miller Chevalier and board member of the National Association of Criminal Defense Lawyers, articulated his concern with the criminal provisions of the proposed law which could create conflict and confusion.

The broader concern is the overcriminalization of conduct that may not comport with our traditional notions of criminal justice.

Timothy O'Toole describes it best in his opening argument of the aforementioned written statement,

But I am here today, as a practicing lawyer who is actively working in this area of the law, to remind the esteemed Members of this Subcommittee, and the general public, that we already have a very powerful set of federal laws that prevent and punish those public officials who trade on their public office for private gain. There are, in fact, over 20 federal statutes that are currently very effectively used by prosecutors to curtail suspected public corruption and fraud. These statutes impose stern punishments against those found guilty of these corruption offenses. I write to illustrate to you that H.R. 2572 represents a number of unnecessary changes to the law that will create additional confusion, cost, and potentially unintended consequences, while at the same time having no appreciable affect on curtailing public corruption.

In many ways, the proposal reflects a disturbing trend that we, along with organizations on the right and the left, have labeled overcriminalization--a public policy phenomenon that has drawn the attention of a growing number of groups including the Heritage Foundation, the Federalist Society, the ACLU, and Families Against Mandatory Minimums (FAMM). A variety of political, economic and corporate scandals have graced the front pages of our newspapers, and over the past 30 years, Congress has responded to the public‟s sense of outrage at these events by adopting more and more overlapping laws, often usurping areas that have been competently handled by state and local jurisdictions, ignoring legal safeguards such as criminal intent requirements that limit the criminal law to specific cases of criminal wrong-doing, and incrementally toughening the penalties without regard for cost or even any sense of normative justice. But as Justice Scalia recently noted, that trend must come to an end: "[W]e face a Congress that puts forth an ever-increasing volume of laws in general, and of criminal laws in particular. It should be no surprise that as the volume increases, so do the number of imprecise laws. And no surprise that our indulgence of imprecisions that violate the Constitution encourages imprecisions that violate the Constitution. Fuzzy, leave-the-details-to-be-sorted-out-by-the-courts legislation is attractive to the Congressman who wants credit for addressing a national problem but does not have the time (or perhaps the votes) to grapple with the nitty-gritty. In the field of criminal law, at least, it is time to call a halt."

There are over 4,450 federal crimes scattered throughout the 50 titles of the United States Code. In addition, it is estimated that there are at least 10,000, and quite possibly as many as 300,000, federal regulations that can be enforced criminally. The truth is no one, including our own government, has been able to provide an accurate count of how many criminal offenses exist in our federal code. This is not simply statistical curiosity, but a matter with serious consequences.

We will follow the progress of H.R. 2572 and continue to convey the concerns that the bill has raised with regard to overcriminalization.

One of the arguments one regularly sees against the death penalty is its supposed cost, which we can paraphrase as "It's cheaper just to hold a convicted murderer in prison for life than to spend money on lawyers handling the litigation over his death sentence."

There's a certain chutzpah to this: after all, it's the very people arguing against the death penalty who are forcing governments to waste millions of dollars dealing with collateral attacks on death sentences, in conjunction with judges that ignore the law in assisting that effort through multiple levels of appeal. (Here, I'm distinguishing between those who challenge death penalties on technicalities and public-interest firms like the Innocence Project that are usually acting to exonerate the incorrectly convicted.)

But I've always thought that the cost argument just simply wasn't true. If the death penalty disappeared tomorrow, the hundreds of lawyers who fight the death penalty wouldn't rest on their laurels. They'd simply shift their focus to other attacks on the use of criminal justice to punish criminals. Governments would still be spending the same millions of dollars defending against collateral attacks on convictions; they'd just be spending it on a different set of convicted criminals. Any monetary savings from abolishing capital punishment would be illusory.

Hans Bader's recent post (discussed below) suggests my theory is not only true, it's producing accurate predictions: this term's Court will decide Miller v. Alabama and Jackson v. Hobbs, cases involving life sentences without parole. As some states have moved against the death penalty, the anti-punishment wing of the bar has now opened a second front against life sentences, already with some success in Graham v. Florida.

On the Competitive Enterprise Institute's blog OpenMarket.org, senior attorney and counsel for special projects Hans Bader asks, Will "International" Norms Override Civil Liberties and Protections Against Violent Crime?

Hans makes a compelling case (extended article) that the Supreme Court sets a dangerous precedent when it relies on "international opinion" in deciding a case. The risk according to Hans, is that these "international norms" are usually hostile to our basic civil liberties and are "vague and manipulable" and therefore, can be applied selectively to push a particular ideology/agenda.

Hans expands on this point,

Courts should not rely on "international opinion" to decide cases, since it is vague and manipulable. So-called international law is applied selectively by lawyers and judges, who cite real or imagined "international law" to push the ideological goals they support, while ignoring actual international court rulings they don't like, like foreign court rulings barring punitive damages or limiting damages under the Warsaw Convention (as in Olympic Airways v. Husain).

Left-wing lawyers take vague international treaties and interpret them as mandating liberals' ideological wishlists, like restricting criticism of Islam and minority religions as "hate speech," banning Mother's Day as sexist, and mandating quota-based affirmative action. For example, the CEDAW equal-rights treaty has been construed by an international committee as requiring "redistribution of wealth," "affirmative action," "gender studies" classes, government-sponsored "access to rapid and easy abortion," and "the application of quotas and numerical goals." Never mind that most countries don't even have affirmative action.

But left-wing lawyers ignore foreign law and world opinion when it calls into question liberal policies in the United States. One classic example is the horror that most countries' courts have for the American practice of letting virtually unguided juries award punitive damages. In most of the world, punitive damages are forbidden. But you will never see a liberal Supreme Court justice talk about "international law" or "international opinion" when it comes to punitive damages, which are sacrosanct in the eyes of some liberal judges.

What do you think about courts relying on "international norms"? Join the discussion on Twitter via #PoLforum

Pricewaterhouse Coopers' 6th Global Economic Crime Survey reports the alarming emergence of cybercrime while bribery and money laundering look to be on the decline.

Samuel Rubenfeld of the Wall Street Journal reports,

Reported incidences of bribery and money laundering declined slightly over the past two years, according to a new survey by Pricewaterhouse Coopers.

Out of about 4,000 responses spread across 78 countries, 24% of respondents said they experienced bribery and corruption at their organization in the past 12 months, down slightly from the 27% who said as much in 2009, the last time the survey was completed. Experiences of money laundering were also down slightly to 9% from 12% two years ago, the survey said.

The survey, Pricewaterhouse's sixth of this kind, looks broadly at all economic crime, and it found "asset misappropriation" to be by far the largest crime faced by respondents, with 72% saying they dealt with it in the past 12 months. The largest growth in economic crime was related to cybercrime, which jumped from a statistically negligible level in 2009 to garnering 40% of responses in the latest report.

Steven Wisotsky, a law professor at Nova Southeastern University Law Center, has written an interesting piece, Honest Services Fraud After Skilling v. United States published in the Federalist Society's Practice Groups' Journal Engage, tracking the historical, legal, and judicial developments leading up to Skilling v. United States. Professor Wisotsky then focuses his analysis on post-Skilling jurisprudence and the "unresolved issues" regarding honest services.

Professor Wisotsky writes:

The cycle of the Court imposing limits on the mail fraud statute and inviting Congress to speak "more clearly" may continue. On September 28, 2010, the Honest Services Restoration Act was introduced in the Senate by Senator Patrick J. Leahy. The bill was sent to committee, but it was not passed before the session ended, thereby killing the bill. The bill included both undisclosed self-dealing for public officials and undisclosed private self-dealing for officers and directors. The term "public official" was defined, but "officers" and "directors" were not. The bill also required a mens rea requirement; the individual must "knowingly falsify, conceal, cover up, or fail to disclose material information that is required to be disclosed regarding the financial interest in question by any Federal, State, or local statute, rule, regulation or charter applicable" to the individual.It is unknown whether the bill will be re-introduced.

The Skilling decision did not address important questions regarding honest services and has also created some new ones. For example, it stated that the Court's definition of honest services fraud only reaches serious culpable conduct without defining the term "serious" or explaining whether "minor" frauds can be prosecuted under the honest services statute.Other lacunae relate to the existence vel non of a fiduciary duty, public or private.

Legislative efforts post-Skilling have also been accompanied with suggestions from experts like Elizabeth Sheyn to clarify honest services.

PointofLaw has been closely following the debate and reform efforts with regard to the Foreign Corrupt Practices Act. Passed in 1977, the FCPA prohibits companies from paying bribes to foreign officials in an attempt to win business. According to the WSJ, enforcement of the FCPA has led to approximately $4 billion in penalties against corporations in just the past 5 years. While proponents of staunch enforcement of the Act claim that the FCPA levels the playing field, opponents argue that the law is overly vague and detrimental to American businesses.

Some specific proposals to reform the FCPA include:

• Allowing companies to avoid liability if they can prove they had robust measures in place to prevent bribes, such as training programs.
• Offering companies a reduction in penalty--as much as 40%--if they self-report a possible violation. Companies could receive additional discounts for informing on other companies involved in corrupt practices.
• Quantifying credit for real cooperation so companies and boards can make informed decisions.
• A grace period allowing companies to investigate new acquisitions and disclose what they find without fear of prosecution.

This growing debate has gained some attention in light of reports that Pfizer is near an over $60 million dollar settlement to resolve investigations of alleged FCPA violations by the company in its efforts to win business overseas. And it seems support for FCPA reform cuts across many industries, even those which may come unexpected.

Two weeks ago, PointofLaw featured Assistant Attorney General Lanny Breuer's announcement that next year the Justice Department would release "detailed new guidance" on the Foreign Corrupt Practices Act. In his address however, Lanny Breuer did not specify in any detail the particular guidance to be offered. Therefore, there has been an active effort, like that made by Senator Charles Grassley (R-Iowa), ranking member on the Senate Committee on the Judiciary, to ensure that the Justice Department provide appropriate guidance which would sufficiently aid the business community.

Senator Grassley submitted questions to the Justice Department pressing for clarification among which were the following:

• Will the guidance include the Department's interpretations of ambiguous statutory terms such as "foreign official" and "government instrumentality"?

• Will the guidance clarify when a company may be held liable for the actions of an independent subsidiary?

• Will the guidance clarify the extent to which one company may be held liable for the pre-acquisition or pre-merger conduct of another?

• Will the guidance include an enforcement safe harbor for gifts and hospitality of a de minimis value provided to foreign officials?

Additionally, the Wall Street Journal reported yesterday that Pfizer is near an over $60 million dollar settlement to resolve investigations of FCPA violations by the company in its efforts to win business overseas. In response to these investigations, many major pharmaceutical companies are spending a great deal of time along with millions of dollars developing comprehensive compliance programs. It may be that effective FCPA guidance aimed to cure vagueness and ambiguities would be much needed relief for American businesses.

The James Mintz Group has created a new database "Where The Bribes Are" to track the penalties in U.S. government Foreign Corrupt Practices Act cases since its enactment in 1977. The database is showcased in the form of an interactive international map where each country is shaded respective to the amount of penalties assessed for FCPA violations in that country. The search could be filtered by industry with information available on the particular cases which correspond to the FCPA penalties.

According to the database, FCPA penalties across all sectors total $4.04 billion and energy leads the other sectors with $2.03 billion in penalties. China's corruption risk is high across all sectors while Nigeria leads all nations in the aggregate dollar amount of FCPA penalties.

Take a look at this valuable and easy to use resource.