We all know the drill. A federal criminal case is announced after a person is arrested or charges are issued by a grand jury or a criminal complaint is filed.  Then, the multi-page press release is issued.  The public gets this “news” when a media outlet or a reporter for a more standard publication writes a story about the new case.  However, here is where things have changed so drastically over the years.

When I began three and a half decades ago, reporters ALWAYS called the defense attorney for a comment or reaction to the initial story.  This was ingrained into all journalists, the need to strive for “objectivity”, and the realization that there are always two sides to every story.  Sometimes it made sense to comment, many times the better course was to clam up and let the case work itself through the court system.  I remember one case where an egotistic young Public Defender (OK, it was me) told the assembled group of reporters, “We’ll do our talking in court, unlike the prosecutors.”  We got our butts kicked anyway.

Nowadays, things seem so different.  Every federal prosecutor’s office now has a professional media person who regularly issues press releases.  The first paragraph announces the case and charges, and then there are 3-4 paragraphs where the media flacks for the various agencies like the FBI and DEA spout off about how great their investigators are and how bad the accused person is.  Then, buried down in the 5th or 6th paragraph is a one-liner where the prosecutor needs to try and adhere to ethical rules by noting something like: “Criminal indictments contain only charges; defendants are presumed innocent unless and until proven guilty.”  Somehow, this line never makes its way into the subsequent media stories.

Reporters gobble this stuff up like candy.  Their story is written for them, so all they need to do is re-work a few words and phrases to avoid charges of plagiarism and Voila!  A full-blown piece of “journalism.”  What is missing?  Any comment from the Defendant’s representative!  No one calls the defense lawyer any more.  The public only wants to hear about the charges, and no one bothers to mention that charges are just the beginning of the case, not the automatic end of the story.

I have a client who got charged recently amid a media blossom of attention when the press release announced she had been arrested for selling “illegal products claiming to protect against viruses.”  The media all jumped on the story.  No story had any comment discussing the accused person’s side of the case.  Her family retained me, and I discovered that my client had lots of information that people regularly use this product in Japan.  More astonishing, was the photo in her phone (seized by the Feds) of her little 7-year old son looking so cute in his Cub Scout uniform, WEARING THE SAME PRODUCT!  In other words, she thought it was legal and that it would protect her family, otherwise why would she use it on her son?

We worked out a deal, because the sale of unregistered products is a crime, even if the seller does not know it is illegal.  We also convinced the prosecutors to drop felony charges and allow the Defendant to plead to a misdemeanor and pay a $659 fine.  The press release was issued within hours of her guilty plea.  No mention of people in Japan using the same product.  No discussion of how the law does not require a “guilty mind” in this kind of case.  No mention of the little Cub Scout wearing the product his loving mother thought might protect him from coronavirus.  The national news stories merely repeated what the federal press release said.

Fortunately, I know some of the experienced local reporters.  I was able to get connected the the reporter handling the story.  I felt it was only fair that the public know my client’s side while she was being publicly ridiculed and ostracized.  And, that reporter did was good reporters always do, he wrote a piece that mentioned some of the details we included.

Like many areas, journalism has changed significantly.  I wish that reporters would go back to times when they always tried to get both sides of a story and did not simply reply on press releases issued by the government.

Most times, there is an “indictment”, which is the formal document that sets out the charges.  In the majority of cases, this leads to an arrest warrant.  I always try to convince prosecutors to let me surrender my clients to the agents who have the job of carrying out the arrest warrant.  This way, we avoid having the agents go to the house for a surprise arrest, which is both unnerving to the client (and their family) as well as being dangerous for everyone nearby (how would you feel if you saw armed people sneaking around your neighbor’s house in the early morning hours?)

After the arrest, the agents take the clients to the United States Marshal’s office, for booking.  This generally consists of a photograph and fingerprints.

Next, a United States Pretrial Services Officer generally will interview the clients.  Most times this results in a report in which that Officer makes a recommendation about release on bail, and the conditions of any bond that must be posted for the client’s release.  Under the Bail Reform Act of 1984, the Court can let the person out of custody after posting bail, with various conditions attached to that release order.  In very serious cases, the prosecutor has the authority to request “detention”, which means no bail at all.  When a prosecutor makes such a request, there has to be a special proceeding called a “detention hearing.”  At such a hearing, the prosecutor tries to convince the federal Magistrate Judge  that the accused person is either a “danger to the community” or a “risk of flight.”  The defense attorney often has very little time to prepare for the detention hearing, and many times will ask for a several-day continuance so as to be prepared to fully explain why his or her client is neither a danger nor a risk of fleeing.

In most non-violent criminal cases, the Defendant is released on bail.  Sometimes, the Magistrate Judge requires that the person get a bail bondsman to post the bail.  Other times, the person can secure the bond with a cash deposit with the Court, or by pledging real estate.  Also, the Judge can set the bail, but then make it “unsecured”, meaning that the Defendant signs his or her name only.  No matter what type of bond is set, the accused person is obligated to appear in court when ordered to do so, and not move or leave without permission.  Failing to comply with bail conditions can be grounds for revoking bail, or even can lead to new criminal charges.

Another aspect of the Initial Appearance is the “arraignment.”  This is when the Defendant formally answers to the charges in the indictment.  For the most part, a Defendant can only enter a “not guilty” plea in front of the Magistrate Judge.  In most Districts, anyone who wants to plead guilty has to schedule another hearing on a different day in front of a District Judge.

After the bail is set, the person is generally taken back to the US Marshal’s office, where they do one final check to see if there are any other pending cases involving the Defendant.  If not, then the accused individual is released, and then needs to go to the US Pretrial Services office.  Those folks will set up a schedule for someone to make a home visit.  Also, in many situations the Magistrate requires that the Defendant surrender his or her passport as a condition of bail.  The passport is generally given to the Pretrial Services officer.

The first day in court is stressful, especially for people who have never previously been accused of a crime.  If you feel uncertain about the process, make sure that your attorney answers your questions.

Nobody really wants to have a criminal defense lawyer, but sometimes, people need us. This incident was similar to what my family members in the health care field do when medical emergencies happens.  They jump into action, just as I did the other night

This man called me at 8:30 pm on a weeknight.  I already had a long day, was doing some chores before a little relaxation time, and then his call came.  I spent the next several hours on the phone with the client, with the FBI Agent, emailed back and forth with the prosecutor, did Internet research about the specific situation, and made arrangements to meet the client at my office the next morning.  The client and I then spoke in the morning at my office for several hours, and like medical personnel when someone comes into the emergency room, I then needed to do a quick evaluation and set out a strategy even though I only had several hours’ worth of information.  I told the client my evaluation, and we then embarked on the strategy I recommended.

People sometimes think it looks bad when they ask to consult with a criminal defense lawyer.  “Doesn’t that make me look guilty?”, they sometimes ask me.  The answer is “NO”.   A good criminal defense lawyer can guide the client to the proper avenue, can prevent mistakes, and, sometimes, can even prevent criminal charges from being filed.

I do not yet know what will happen with the man who called me recently late at night.  I do know that he made one correct decision: instead of talking at length with the FBI, he called me and then together the next day we spoke with the FBI and the federal prosecutor.  Anyone in a similar predicament should immediately look for and then speak with a criminal defense attorney who is accustomed to handling such matters.

Many federal prosecutors will tell a Defendant that the Government is on the path toward getting an indictment.  In this scenario, the prosecutor will send what we call a “Target Letter” to the prospective Defendant.  The letter basically says that charges are likely, gives a brief outline of the charges, and tells the person that he or she might want to consider getting a lawyer to talk it over BEFORE the charges are brought.  As a general rule, prosecutors will offer some slight benefit to a person who agrees to plead guilty shortly after getting one of these Target Letters.  Prosecutors also use these Target Letters to get potential Defendants to cooperate against more involved or culpable people, or higher-ups in an organization.

Like many federal criminal defense attorneys, it is very common for clients to come to me after they get one of these Target Letters.  Like many lawyers, I usually will reach out to the prosecutor who wrote the letter to get a somewhat more detailed sense of what the Government is looking at, the client’s potential exposure, the stage of the investigation, whether other people have been charged and/or sentenced, and any other pertinent details.  I then meet the client to get his or her side of the situation.  Here is where it starts to get tricky.

Some clients did the crime and want to end the matter as simply as possible, so that is a matter of trying to negotiate a better deal and trying the convince the Probation Officer and the Judge to see things more my way when we get to a sentencing hearing.  Other clients who did something wrong want to hold out and fight.  And, the really difficult cases are where the client did a few things wrong, it might, or might not, be a crime, and as a lawyer I need to decide whether to tell the prosecutor about the facts that might show the person is not guilty.

Some very rational people will be saying, “Why not tell them, otherwise they will charge the client for sure.”  Maybe, but if they already made that decision, why give them something they do not otherwise have?  In my career, I have seen many situations where the defense lawyer handed over what appeared to be really good defense evidence, only to have the FBI or some other agency tear that evidence to shreds when they get the chance to interview (which really means “to intimidate”) the defense witnesses.  Sometimes, it is better to wait as long as possible before turning over the real good defense evidence.  I was able to use this strategy a few years ago, and when they got the “good” stuff shortly before trial, the prosecutors gave up and dismissed all charges.

No two cases or situations are alike.  In the matter I am working on today, my inclination is to give over the “good” stuff and see if we can convince them to not bring charges in the first place.  It is a gamble, but after discussing it with my client, it seems the best move in this case is to not “hold ’em.”

Readers will recall that the “discovery” materials are those items that the prosecutor is obligated hand over to the defense attorney.  There are various sources of this obligation, found in some statutes, in court rules, and also within our wonderful Constitution’s promise of “due process.”  However, today I want to talk about practical aspects of looking through the “discovery” materials.

First tip for those who may be unfamiliar with defending a federal criminal case: figure out the format.  That’s right, even though most of us operate in our digital lives using well-known tools like Adobe Acrobat or Microsoft Word, federal prosecutors often hand over a series of computer discs that contain material in wildly different formats.  The material is often in a “load file” that generally works only in a certain litigation software.  To reduce all this to the very basics, the feds have nationwide contracts for their software needs, and they often get less than state-of-the-art  programs for storing, accessing and using digital materials.  Many times I get discs that contain multiple formats, and the materials are searchable only one page at a time, meaning that a case with millions of documents and emails can take years to review.  So, what we do is convert everything to a pdf, and then use the Adobe search tools to take a first whack at the materials.  Later, we may use more sophisticated software when we are actually going to court, but I find that this method is a pretty good opening step.

My second tip concerns storage and dissemination of the discovery materials. Obviously, almost all material today is in a digital format, although occasionally we get a case where the Assistant United States Attorney hands over papers, along with computer discs.  We store just about everything on our servers, and also in one of the cloud-based storage services, such as Dropbox.  Cloud storage allows me to access the materials wherever I am, and also lets my client do the same.  So, the attorney needs to make sure that everyone working on the case has the requisite ability to get to the important stuff.

The third tip is based on the fact that (surprise surprise) federal prosecutors do not always turn over everything that they have!  Again, while there are rules governing what must get turned over, prosecutors often are reluctant to or simply do not understand the materials that federal agencies possess that are useful to the defense.  As a result, the lawyer handling a federal criminal case needs to put on his or her thinking cap and figure out where within the far-flung federal government there might be additional material that impacts the case.

The fourth tip is an offshoot of #3–be careful what you ask for, you might get it!  Sometimes, the defense lawyer will ask for additional material, and the prosecutor will send his or her agent looking for it, only to discover even more incriminating evidence against the Defendant! Therefore, the attorney needs to think long and hard as to whether they really really want that extra material, or is this one of those cases where the better course of action is to defend against that evidence which the prosecutor already knows about.

Final tip, then you and me need to go back to real work: be prepared for more materials.  That’s right, the AUSA is supposed to turn everything over on Day #1, but they never do.  They keep getting more and more, and keep getting Judges to excuse their lateness.  I recently reminded a judge who I like personally that he is simply enabling bad conduct when he lets each new generation of baby prosecutors get away with not turning over important material until just before trial.  The Judge acknowledged the accuracy of my point, then shrugged his shoulders and let the tardy disclosure happen with little consequence.  So, the wily federal criminal defense lawyer needs to be ready for new stuff up to and sometimes during trial.

Francis Lorenzo was the head of investment banking at an SEC-registered firm.  He regularly sent out emails to potential investors, suggesting various stocks or other investments.  Now, here’s the key.  The information that Mr. Lorenzo put into the emails to possible clients came from Lorenzo’s boss.  In one set of emails, Mr. L. told investors that a company had over $10 million in assets, and therefore was a good place to invest.  However, Mr. L. knew for a fact that his boss was telling a plain old lie when saying that this company had $10 million.  Lorenzo knew that the company had recently disclosed that its total assets were more in the $400,000 range.  That is a big difference, meaning that if the statement was “untrue” it was also “material.”  The question from yesterday’s case was whether Mr. Lorenzo was the person to “make” the statement when he merely passed along or republished a false claim from his boss.

An earlier Supreme Court decision called Janus Capital Group, Inc. v. First Derivative Traders said that a person “makes” an untrue statement if he or she has “ultimate authority over the statement, including its content and whether and how to communicate it.”  In Janus, the Court said a person was not liable under the securities laws if he was an investment advisor who merely participated in the drafting of a false statement that was later “made” by someone else.  So, the lawyers for our Mr. Lorenzo   sensibly claimed that the rule from Janus should have applied to Mr. L., seeing that it was the boss who controlled the “content” of the statement.

Not so fast, said the 6 justices in the majority of yesterday’s opinion.  The bottom line is that the majority concluded that disseminating false or misleading statements with intent to defraud can be covered by other securities fraud provisions, even if the person disseminating the information did not actually “make” the statement.

Client sometimes come to me at the beginning of a securities fraud investigation.  Other times, they have been under investigation for quite some time and fear a potential criminal prosecution.  Still other clients only come to see me after their securities attorneys failed to avoid an indictment.  Whatever stage a client is in when he or she is being investigated for potential securities fraud, they need to understand that defending such matters is more than merely knowing the meaning of the word “make” in the context of the securities laws and regulations.  The attorney also needs practical knowledge at early phases of an investigation, meaning a pragmatic understanding of what cases are the type that federal prosecutors are likely to bring.  In later stages, the client more and more needs an attorney who has actually stood up in court to fight against such matters.  One of the biggest mistakes I see from time to time is when clients continue to rely on their pure “securities lawyer” to defend them, even though the matter has morphed into a criminal investigation and/or prosecution.  Knowing the intricacies of the securities law is just the beginning of defending such a matter in federal court.

Now remember, most lawyers are not “numbers people.”  That’s the reason we went to law school, because some teacher or school just flat-out insisted that we needed to learn calculus. For the most part, attorneys are not at their strongest when dealing with mathematic or scientific issues.  While most good trial lawyers are bright and can quickly pick up new concepts, this is not our main area of expertise.

So, we have a system where most of the main participants are not all that great with numbers or science, and then we have cases that are chock full of both types of information. Here is what usually happens.  A prosecutor hears about a new type of evidence, such as DNA analysis and comparisons to see if the person on trial had some connection with the victim or crime scene.  It’s only been 30 years since this evidence was first accepted into court, and in the early years virtually all prosecutors and defense lawyers simply deferred to whatever the “experts” claimed.  Then as time progressed, more and more lawyers got comfortable with the basic science behind DNA analysis, and began poking holes in the claims, leading to the far too many cases where DNA analysis has actually exonerated previously convicted Defendants.

Cases involving statistics often follow the same path.  Federal criminal cases arise from a variety of federal agencies, but inside each agency there usually is some small group responsible to keeping and analyzing statistics.  These are the supposed “experts.” After a few years of analysis, these experts massage the numbers to the point where they look as if the analysis shows that a person or company committed a crime, like fraud for example.  The poor criminal defense attorney (the same man or woman who after all went to law school because math was not their strong suit) now has the task of unspooling whatever data and expert analysis is involved.

Most good federal criminal defense attorneys make a practice of using highly competent and experienced experts of their own when taking on a case involving statistics, scientific concepts or otherwise unusual evidence.  I really enjoy working with the experts, for the interchange of ideas back and forth often helps me identify weaknesses in my defense, holes we can poke in the prosecution’s presentation, and often opens new areas of investigation that leads to other helpful evidence.

Another way to handle statistics is to simply sit down and plow through them with an open mind.  It often helps when, as in my office, the attorney is assisted by very bright people who are very accomplished in using various tools for understanding large quantities of data.  But often, there is no substitute for having the lawyer him or herself methodically go through the data to see if the government’s statistical claims hold water.  I sort of enjoy the process of learning new data and analyses, and it often helps that I know the numbers better than the lawyer on the other side of the courtroom.  And, in those few cases where I really know the numbers and find some weakness in the government’s presentation, I get to pull out my old joke about the three kinds of lies!

The case generated some publicity.  Some readers know how I like to pontificate about how the press more and more simply repeat any “press release” issued by some prosecutor’s office.  For example, compare the prosecution’s press release about this case with the story in the local paper, the Atlanta Journal Constitution (usually called “the AJC” by folks hereabouts).  Note that the AJC simply rephrases and rehashes the press release with absolutely no mention of anything from the defense side.  Next, compare the AJC’s story with two other stories in publications devoted to the legal industry, Law.com and Law360.  Each of these latter stories give a far more nuanced and complete story from the sentencing hearing, and include portions of the defense arguments or statements by me.

I’ve already written about how cases with some publicity add an additional level of stress for the criminal defense lawyer.  The other day I posted about the difficulty of doing a federal criminal sentencing hearing when the Probation Officer seems to recommend every potentially applicable sentencing enhancement to the federal Sentencing Guidelines, and how hard it is to get a “good” sentence when the lawyer spends so much energy showing the Judge the probation officer’s errors that the Judge is kind of tired of ruling for the defense when it comes to the final sentence.  Instead of those topics, today, I want to briefly talk about long-term relationships in criminal cases.

I genuinely like most of my clients, probably because I tend to like people in general.  However, my clients are going through some of the most stressful parts of their lives.  I get to see the toll it takes on the client and his or her family.  The lawyer part of me sometimes recedes into the background when I have been representing a client for many months and sometimes many years.  So, when a long-term client is convicted, and then sentenced, it also takes it out of the lawyer.  Good criminal defense lawyers also tend to be individuals who like other people, and all of us are very down when a long-term client gets sent to prison.

First, a little history (those who know me remember that I majored in history and often try and place issues into historical context for better understanding).  The Guidelines came into effect in 1987, and were supposed to iron out differences between the sentences issued by different judges.  Then, we had the big corporate meltdowns in the early 2000’s, Enron, Worldcom, Arthur Anderson, etc.  Congress responded with what is usually called “Sarbanes/Oxley“, a series of laws designed to prevent such corporate high-level shenanigans.  All fine and good, from my viewpoint.  However, (and here’s the “unfair sentencing guidelines part” coming back), as part of this Sarbanes/Oxley law Congress also told the United States Sentencing Commission to greatly ratchet up the sentences imposed on high-level corporate fraudsters, the kind who led to Enron, Worldcom, Arthur Andersen, etc.  Again, fine and good.

The problem, of course, is that the Sentencing Commission created new and extremely punitive Guidelines that are more of a “one-size-fits-all” set of enhancements for most corporate offenders if a case involves securities or stocks.  As a respected Senior Judge in New York wrote in the opening lines of his decision in United States v. Parris:  “I have sentenced Lennox and Lester Parris today to a term of incarceration of 60 months in the face of an advisory guidelines range of 360 to life. This case represents another example where the guidelines in a securities-fraud prosecution “have so run amok that they are patently absurd on their face,” United States v. Adelson, 441 F. Supp. 2d 506, 515 (S.D.N.Y. 2006), due to the “kind of `piling-on’ of points for which the guidelines have frequently been criticized.” Id. at 510.”

That’s the problem with a Commission that tries to micromanage the sentencing process by imposing “points” for different kinds of conduct. Here’s an example.  These new sentencing rules added 4 “levels” (or points) anytime the offense “involved” the securities laws, and the Defendant was an “officer or director” “at the time of the offense.” This 4-level bump applies whether the Defendant was the CEO of a Fortune 500 international entity, or the Secretary of a 2-person company.  See what I mean, “one size fits all.”

We have a lot of work to do for this sentencing hearing, but I plan on writing more about this type of federal criminal case and the accompanying sentencing process.  Stay tuned!

As noted above, honest services bribery or kickback requires an exchange of an official act for money or property. Some earlier decisions rejected efforts by prosecutors to expand the phrase “official acts” to include actions that are “customary” in the performance of many jobs. One court reversed the conviction of a state official who offered, for a fee, to introduce an architectural firm to high-ranking officials who could then secure contracts for the firm. The Defendant there promised to make introductions, but no evidence established that he promised to use his official position to influence those to whom the architectural firm was introduced. That court recognized a distinction between affording access versus actions that influence a decision.

Another federal court of appeals seems to take the same position. That Court said a legislator could not be convicted for taking money from a hospital in return for lobbying mayors to comply with state law in a way that benefited the hospital. That case also seemed to distinguish between actions that use or threaten the use of official powers versus actions that merely trade on reputation or access that accompanies the holding of a certain office.  Yet one more federal appellate court said that “official acts” are limited to those that influence an actual decision about real policies. That case involved a policeman who took payments in exchange for using an official police database to perform license plate and outstanding warrant searches. While accessing the database was part of the officer’s duties, he did not perform an “official act” in return for the money, in that the officer did not exercise any inappropriate influence on decisions made by the organization for which he worked.

In contrast to these three decisions, the Fourth Circuit affirmed the conviction of former Governor Robert McDonnell. On appeal Governor McDonnell’s lawyers argued that he had merely extended “routine political courtesies” to the person who paid him money. “This is the first time in our history that a public official has been convicted of corruption despite never agreeing to put a thumb on the scales of any government decision,” their brief said.

I am currently handling several matters involving potential or actual prosecutions under the “honest services” theory.  I will keep looking at the McDonnell case, as it likely will impact these and future cases we handle in this area.

Delay was known as a hard-charging Republican advocate, whose nickname of “the Hammer” demonstrated his supposedly ruthless tactics. In 2002, Delay wanted to have the Texas Legislature turn solidly Republican, which it did. To accomplish, he asked for a series of corporate political contributions to a campaign committee. Afterwards, that solidly Republican legislature allegedly jiggered the voting districts so that the Texas federal delegation was far more likely to elect Republicans to the U.S. Congress. All well and good, hard nosed politics.

Things got overtly political when the Democratic District Attorney of Travis County brought a series of criminal cases arising out of the method used to try and get lots of Republicans elected to Texas state legislative positions in the 2002 elections. In an initial set of indictments, the State accused the defendants of “participating in a scheme to channel unlawful corporate political contributions to candidates for the Texas House of Representatives in 2002.” The Election Code-based conspiracy charges were thrown out, so the prosecutor re-indicted Delay on two counts, criminal conspiracy to commit money laundering of funds of $100,000 or more and money laundering of funds of $100,000 or more. The predicate offense for the State’s money laundering charge alleged the “offense of knowingly making a political contribution in violation of Subchapter D of Chapter 253 of the Election Code.”

On appeal, the appellate court laboriously plowed through both the Election Code and the evidence at trial. The court demonstrated that first, there simply was no violation of the Election Code. Instead, it seemed that the corporate contributors simply wanted political access, something that is apparently legal in Texas. Second, the Texas Court of Appeals showed that there cannot be illegal “money laundering” unless the money was the result of some criminal act. Because there was nothing illegal when the corporate contributors gave the money over, the subsequent movement of those funds could not be money laundering.

There are plenty of crimes out there, yet aggressive and ambitious prosecutors often fall into the temptation of going after a high profile Defendant who is involved in politics. To me, the real crime is that the kind of contributions involved in this case are apparently legal under Texas law, but we seem to permit that in our country.

The basic story is familiar. Back in 2006, the defendants, an unmarried couple (they’ve since married) were looking for a house to buy. She had good credit, he did not. She applied for the loan, and the application asked for the “borrower’s income.” The defendants wanted to tell the jury that the mortgage broker had told them that “borrower’s income” was really a term of art, and meant the total amount of money that would be used for paying the mortgage, whether or not it was money earned by the person signing the mortgage. So, like many couples, they combined her income and his income on the loan application. They also sort of dressed up her job title, making it look as if she had the sort of employment that would generate the overall joint income of the couple.

The housing market collapsed. Phillips and Hall could no longer pay the mortgage, and it went into foreclosure. The lender had many other similar loans, and the bank went out of business. Regulators scoured the bank’s loans, and came across the one to Phillips and Hall. The regulators also discovered that the mortgage broker had lots of similar loans, so they indicted him. He “flipped” so he could get a sentence reduction by testifying against Phillips and Hall.

The trial prosecutors wanted to prevent Hall and Phillips from telling the jury about their understanding of the term “borrower’s income.” The Defendants wanted to explain what the broker had told them and that they therefore had not knowingly made a false statement on the loan application or associated documents. The trial judge agreed with the prosecutors. The jury convicted them, they appealed, and the majority of the Seventh Circuit reversed their convictions because of the trial judge’s mistaken ruling which prevented the jury from hearing important testimony about what the Defendants believed when they went through the loan application process.

This is eerily reminiscent of our recent case, a complex federal criminal prosecution where prosecutors convinced the trial judge to keep certain important evidence away from the jury. Even the most casual reader of this blog knows how I am a big fan of good lawyering, including attorneys who keep plugging away and finally prevail on appeal. Hats off to the lawyers in this case!

Mr. Peugh was convicted of five counts of bank fraud in a scheme that caused more than $2.5 million in losses by the victim bank. The crimes took place around 1999 and 2000. However, when he went to court years later, the Sentencing Guidelines in effect at the time of his sentencing hearing suggested 70 to 87 months in prison. Peugh objected to use of the 2009 guidelines, insisting that the judge should use the guidelines in effect at the time of his crimes. Under those earlier Guidelines, the appropriate sentence ranged from 30 to 37 months in prison. Peugh argued that relying on higher guidelines enacted after his crimes were committed would amount to the use of an ex post facto law. The sentencing judge rejected the argument, and sentenced Peugh to 70 months in prison. A panel of the Seventh US Circuit Court of Appeals also rejected the ex post facto argument and upheld the sentence.

In reversing those decisions this past Monday, the Supreme Court said: “A retrospective increase in the Guidelines range applicable to a defendant creates a sufficient risk of a higher sentence to constitute an ex post facto violation.” Our new favorite Justice, Sonia Sotomayor, wrote the majority opinion in a 5-4 decision. She was joined by Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, and Elena Kagan.

The majority ruled that a federal judge’s reliance on the tougher guidelines in fashioning Mr. Peugh’s sentence violated the concept of “fundamental justice.” The ban on ex post facto laws is designed to promote basic fairness by preventing the government from changing the law midway through a criminal case when the new law will result in more severe punishment.

The main issue in this case was whether the ban on ex post facto laws should apply beyond statutes (laws enacted by Congress) to include any new, tougher version of the sentencing guidelines (which are created by this hybrid body called the United States Sentencing Commission). In deciding that the ex post facto clause does apply to the Sentencing Guidelines, Justice Sotomoyor wrote, “The Ex Post Facto Clause forbids the [government] to enhance the measure of punishment by altering the substantive ‘formula’ used to calculate the applicable sentencing range.”

“That is precisely what the amended guidelines did here,” she said. “Doing so created a ‘significant risk’ of a higher sentence for Peugh, and offended one of the principal interests that the Ex Post Facto Clause was designed to serve, fundamental justice.”

Justice Thomas wrote a dissent, joined by Chief Justice John Roberts and Justices Antonin Scalia and Samuel Alito. Justice Thomas said the sentencing guidelines may influence a judge’s sentencing decision but that the final sentence is discretionary. The Constitution bars ex post facto laws that increase punishment, not the enactment of discretionary guidelines that may result in a harsher sentence, he said.

It seems there are three basic sets of crimes alleged in the indictment. First, there are two separate supposed frauds, followed by allegations that Representative Brooks violated the tax laws.

The first of the two fraud schemes supposedly involves a tax-exempt charity, Universal Humanities, Inc., that Brooks established in the early 1990s. The grand jury alleges that Brooks solicited contributions from corporate and individual donors purportedly to combat illiteracy in disadvantaged communities in Georgia and across the southeastern United States, eventually raising more than $780,000. The feds claim that Representative Brooks made specific false representations about the work that Universal Humanities was doing and how the donated funds would be used. Prosecutors also contend that in reality, Brooks did not use the donations to promote and address literacy in Georgia or elsewhere. Instead, the indictment alleges that Brooks used the money to pay personal expenses for himself and members of his family.

The second fraud scheme alleged involved the organization Georgia Association of Black Elected officials (GABEO). The indictment alleges that Brooks diverted charitable donations he solicited on behalf of GABEO and used much of the money to pay personal expenses for himself and his family.

The indictment alleges that Brooks solicited contributions to GABEO from corporations, organizations and individuals. The feds contend that Brooks secretly opened a second GABEO bank account, and set himself up as the sole signatory on this account, and had the account statements sent to his address rather than the address of the GABEO Treasurer. Brooks then deposited the donations he solicited on behalf of GABEO into this undisclosed account, and used much of these funds to pay personal expenses for himself and his relatives.

Finally, the indictment charges that Brooks underreported his income to the IRS for the years 2007 through 2011. Prosecutors contend that Representative Brooks misappropriated of hundreds of thousands of dollars through the two fraud schemes concerning Universal Humanities and GABEO, yet his tax returns for the years between 2008 through 2011 falsely reported income of only approximately $35,000 annually.

This indictment is like so many we have seen when we have represented public officials who face federal criminal charges. While often the defense team can show there was no fraud, or at least some confusion as to the fraud charges, it is exceedingly difficult to defend the tax charges when they come up with specific expenditures that clearly show the Defendant had income, yet that same income never shows up on the Defendant’s tax return. We have represented a number of public officials facing similar charges, and look forward to seeing how the defense responds to these allegations.

The feds recently made a splash in New York, arresting a politician who allegedly was trying to buy his way into the Republican race for Mayor. This is but the latest in a string of high-profile cases in that city involving allegations of bribery, payoffs and the like. A recent article I came across notes that despite the restrictions on the honest services theory, federal prosecutors continue to use this species of fraud when going after politicians. The article quoted a former high ranking federal prosecutor as saying that the restrictions on honest services actually helped the government when making such cases.”I thought the court did us – prosecutors – a favor, because I never thought juries liked conflict-of-interest cases. … Juries want to see bribes or kickbacks” because conflicts of interest “seem more like ethical violations than criminal.”

I thought this article was worth noting for a couple of reasons. First, it is further evidence that federal public corruption cases continue, even after the restrictions on the honest services theory. More importantly, the quote from the article explains something I have mentioned previously, namely, that decisions which seem on the surface to hurt law enforcement actually help prosecutors and policemen in the long run. The famous Miranda warnings are but one example, for once the warnings are given, there is no doubt that the Defendant’s statements will be admissible. Many of these rulings at first were criticized by law enforcement, but over the years, many policemen and women have told me they end up doing a better job when complying with these restrictions. And, we all have the added benefit of protecting individual liberties!

On the one hand, we still have a long way to go when we provide counsel to people who cannot afford to pay for a lawyer. Many wonderful lawyers are public defenders who struggle to provide the best defense they can while handling massive and crushing caseloads. While Defendants have the “right” to an attorney, far too often the system is set up so that the public defender simply cannot spend much time with any one client, more or less rendering meaningless the Constitutional “right to counsel” enshrined in the Gideon case.

On the other hand, people facing federal criminal prosecutions face additional difficulties. First, as we have mentioned many times, and as I have written and spoken about on numerous occasions, there is a big difference between a State criminal case and a prosecution handled by the federal government. Federal criminal cases are often exceedingly complex, time-consuming, and beyond the abilities of many otherwise fine lawyers who simply are not equipped to handle the often arcane and weird aspects of defending a criminal case in federal court. Federal criminal defense is a speciality, and like other professions, specialists usually cost a lot more money, which makes it difficult for many people to defend themselves against charges in federal court. Second, defending a case in federal court also puts a Defendant (and his or her attorney) up against a series of very pro-prosecution laws. During the 1980’s and 1990’s, the U.S. Congress regularly enacted more and more “tough on crime” laws. Some of these laws increased sentences (like the horrible crack cocaine laws and mandatory minimum punishments). Other “crime prevention” legislation was aimed at people in the drug trade, and many statutes were designed to go after the money involved in the drug business. One of these laws greatly increased the scope of the federal forfeiture statutes, which are the laws that permit the feds to sometimes get money or property that was involved in or obtained from certain crimes. And, here’s where it all comes back to the Kaley case accepted by the Supreme Court. That is the case where the Justices will need to answer the question of whether the feds can “restrain” a Defendant’s assets even before a trial, without the need for a hearing where the Defendant can challenge the prosecutor’s evidence. The expansion of forfeiture laws, which were mostly designed to go after dope dealers, is now being used against businesspeople like Mrs. Kaley, in a case that seems from the surface to be a contract dispute!

The right to counsel is important, whether or not a person has the assets to hire counsel, and regardless of whether the case is in State or federal court. We certainly hope that the Justices will recognize that Defendants in federal cases should have the right to use their assets to hire the specialists needed to defend matters in federal court, which is just as important as providing counsel for those without such assets.

Ms. Kaley was in the business of selling medical equipment. She and her husband apparently made a good living selling equipment that certain manufacturers no longer wanted. The federal authorities claimed these practices were fraudulent, and indicted the couple. Prosecutors also filed an ex parte request to restrain and freeze much of the couple’s assets, claiming that the money they had in the bank and which they’d used to buy their house was obtained as proceeds of the fraudulent conduct charged in the indictment. A Federal Magistrate Judge agreed, and issued an order freezing their assets so they could not be used by the couple to defend themselves. The case has had a complex history, with two trips already to the Court of Appeals here in Atlanta before the defense team finally got the Supreme Court to agree to hear the case.

Under 18 U.S.C. §853(e), when a Defendant has already been charged in an indictment the prosector can file an ex parte motion seeking restraint of assets that are subject to forfeiture upon conviction. The law does not specifically allow for a pretrial adversarial hearing where the indicted defendant may challenge the propriety of the restraints.

Back in 1989, the Supreme Court rejected the idea that such pretrial restraint violated either the Fifth or Sixth Amendments. United States v. Monsanto, 491 U.S. 600 (1989). However, a footnote in that case explicitly left open the question as to whether the Due Process Clause requires a hearing before a pretrial restraining order can be imposed. Since that time, the courts have issued contrary rulings resulting in a firmly entrenched split among the eleven circuits that have addressed the issue.

Ms. Kaley’s defense team convinced the Supreme Court to accept her case in order to answer the following question:

“When a post-indictment, ex parte restraining order freezes assets needed by a criminal defendant to retain counsel of choice, do the Fifth and Sixth Amendments require a pretrial, adversarial hearing at which the defendant may challenge the evidentiary support and legal theory of the underlying charges?”

This case has huge ramifications in situations where the feds go after Defendants with enough funds to hire good lawyers, but those attorneys cannot be paid because a judge agrees with the prosecutors to freeze the assets even without hearing from the defense. We will follow the case closely.

This also reminded me about a case we had a couple of years ago where we represented a young banker here in Georgia. Back when the real estate market was flying high, he was a superstar, bringing in millions of dollars in loans to developers who were fueling the Atlanta housing boom. When the market began getting soft, he was dismayed by how his bosses were treating him, so he took his book of business to another local bank. The bosses at the first bank did an “investigation”, and turned over to the authorities the dirt they had supposedly uncovered on this young banker. The local District Attorney thought he’d be a star also, and could get his name in the papers by indicting a banker just as the housing market was collapsing. They accused our client of claiming in memos to the loan committee that his developer/clients were putting 10% into the deals, when in fact they were not. The DA then got an indictment that charged our client with making “false entries” in the “books reports or statements” of a financial institution.

We were hired, and, like attorneys should do in every case, we went over everything with a fine-toothed comb. We discovered that the law they charged in the indictment had not been used for over 50 years! Next, we compared this old law, and the few cases interpreting it, to the actual language in the indictment. We came to the conclusion that the memos to the loan committee were not “false entries”, and even if they were, a memo to the loan committee is not a “book, report or statement” of a financial institution.

We took the unusual step of filing what is called a “demurrer” in Georgia. By this step, we basically argued that even if we admitted to the facts in the indictment, those facts did not constitute a crime. The judge was convinced we were right. He had us write up an order, which he then signed, and the judge then dismissed all the charges. This young banker got his life and career back, and we occasionally hear of how well he is doing.

None of us are perfect. But when as lawyers we are asked to defend another human being, that enormous responsibility requires that we look at every possibility when defending our clients. I know that most lawyers representing the growing number of indicted bankers face many of the same challenges.

The Defendants and their company imported dairy products into the U.S. from Central America. Apparently, several of their imported products were contaminated with E. Coli and salmonella.

Some of the post-9/11 laws beefed up the statutes that criminalize the unlawful importing of goods into the United States. One of those laws is 18 U.S.C. § 545. The unlawful importation charges in the indictment here were based on violations of a Customs regulation, alleging the failure to deliver, export, and destroy with FDA supervision certain imported goods found to be adulterated. See 19 C.F.R. § 141.113(c). Failure to comply with this regulation typically gives rise to a civil remedy of liquidated damages in the amount of three times the value of the goods.

The criminal statute, 18 U.S.C. §545, says it is a crime to import items if doing so is “contrary to law”. To summarize what is a quite lengthy decision, the Court of Appeals decided that the regulation is not the kind of “law” referred to in this particular criminal statute.

To me there are two notable items from this decision. First, the Court of Appeals itself brought up the whole issue of whether the indictment even charges a crime. The judges told the lawyers for both sides to file more briefs on the questions of whether 1) the appeals court can even address the issue if no one raised it (they decided they could), and 2) whether the charges, as set out in the indictment, even alleged a crime. I’ve been doing this a very long time, but cannot ever remember a similar case.

The second thing that popped out to me when reading the opinion is that the Court of Appeals totally rejected the prosecutor’s arguments that any problems with the indictment could be fixed by “inferring” the missing pieces. My law partner, Carl, and I have been fighting this fight for over a decade now. Prosecutors get invalid indictments that do not allege everything needed to prove a crime, but judges have been increasingly letting them get away with it by referring to some faulty and flimsy earlier rulings where the missing elements of the crime are put back in by the process of making an “inference.

It is cases like this that re-energize me. I am glad to see judges who take their jobs seriously and who do not think they are supposed to merely rubber stamp every conviction that comes along. While such cases get my juices flowing, the decision also reminds me that all lawyers need to take a good long look at the charges in an indictment, and not just assume the charging document actually alleges a crime.

Mr. Merrill was involved in a company that sold munitions to the Army. The munitions would then be shipped to Afghanistan. There is a federal statute and regulation saying that companies cannot provide any such munitions if the material was manufactured by a company in Communist China. Merrill and others had “old” munitions that had been made by a Chinese Communist manufacturer years before the prohibition went into effect. When they tested the waters, they discovered that the US government would still not allow the use of this “old” Communist material, so they did what any self-respecting international arms dealer would do: they removed all signs of its origin and shipped the stuff to Afghanistan.

The feds eventually got wise, and sent Mr. Merrill a federal grand jury subpoena, telling him to appear in Miami two days before he was supposed to testify in front of a federal grand jury. Merrill apparently showed up with no lawyer helping him. You guessed it, during those two days a federal prosecutor and several agents “dry cleaned” Mr. Merrill, telling him that they had the goods on him, telling him it would be better if he ‘fessed up, and getting him to basically incriminate himself.

They later indicted Mr. Merrill. His defense team argued that Merrill’s statements should be suppressed because a court cannot admit against a defendant “a statement made during plea discussions with an attorney for the prosecuting authority if the discussions did not result in a guilty plea or they resulted in a later-withdrawn guilty plea.” Fed.R. Evid. 410(a)(4). However, there were no charges pending at the time of the interview. Furthermore, the Court of Appeals found it important that Merrill was free to end the interview or to consult with his attorney, and he declined to do either even though he was advised of his rights. And here’s the important part: the trial court “credited the testimony of Agents Vasquez and Perez who testified that any discussions of leniency were general in nature and that no specific promises were made.” As a result, the Court ruled that even if Merrill thought that he was cutting a deal when he made admissions to the prosecutor and the agents, the Court decided to believe the agents who testified that no such deal was discussed.

It is always important to have a lawyer when a person speaks with a federal prosecutor or agent. It is perhaps more important to have another person accompany the Defendant and the lawyer, so that if there is a dispute the Courts cannot always simply rubber-stamp whatever the agents “remember” from such a meeting. This recent case is further proof of why people should consult experienced federal criminal defense lawyers when they get a grand jury subpoena.