Fascinating New Reporting

I didn’t think I’d be posting again so quickly after Friday’s devastating news. But today, Buzzfeed News launched their major investigative reporting series, the “FinCEN Files.” It’s sure to continue generating headlines and will be a major focus at anti-money laundering conferences for the foreseeable future.

The series is some of the best investigative journalism I’ve seen in this field. The reporting speaks for itself, but the core centers on several thousand Suspicious Activity Reports leaked to Buzzfeed over a year ago. The Bank Secrecy Act requires financial institutions to file those reports, called SARs, to report suspicious transactions and other conduct that may suggest illegality like money laundering or terrorist financing. The reports are compiled by a Treasury agency, FinCEN—the Financial Crimes Enforcement Network—which often shares them with U.S. law enforcement and with law-enforcement and intelligence agencies around the world.

I’m not aware of any prior leak of so many SARs, which are confidential and sensitive. Buzzfeed worked with hundreds of journalists around the world through the International Consortium of Investigative Journalists. These investigators analyzed not only the SARs themselves, but also thousands of government documents, bolstered by interviews.

The thrust of the stories is that many global banks may have continued transacting business with suspicious actors, despite good reason not to do so. And the government has rarely acted on these SARs or against the banks themselves for lax anti-money laundering controls. The series includes a fascinating interactive map allowing readers to trace suspicious transactions around the world. It also coincides with the launch of a podcast on the investigation—I’ll be adding that to the blogroll here. And Buzzfeed‘s partner organizations have started running their own stories from the documents, like this NBC piece on North Korea. Continue Reading White Collar Update – Buzzfeed’s FinCEN Scoop

Ruth Bader Ginsburg—A Titanic Loss

The most significant legal news is, of course, the tragic death of Justice Ruth Bader Ginsburg yesterday. I hope to write something about her contributions to constitutional criminal procedure and white collar criminal law. These include writing last year’s decision in Timbs v. Indiana—confirming that the Eighth Amendment’s constraints on excessive fines apply to the states—and authoring the plurality opinion in 2015’s Yates v. United States—clarifying the scope of the Sarbanes–Oxley Act’s prohibition on destroying tangible objects to impede government investigations.

But others are conveying much more meaningfully than I could what a towering figure she was in American law and American history. She was one of a handful of American judges who would have been a historic figure even if she had never become a Justice. And, candidly, I’m too upset right now to really think through everything she meant, and everything that her loss could mean. I am wishing comfort to her family and everyone else who was close to her.

William Barr—An Utter Disgrace

Next, just as we need reassurance that the rule of law isn’t crumbling around us, we’re reminded that the leader of the Department of Justice is corrupt to the core. First he intervened in ordinary Department practices to help the President’s friends. Now he has tried to push career officials to prosecute the President’s critics—and protestors against systemic injustice—on dubious and obviously pretextual grounds. Worse, he’s undermined the idea of nonpartisan decisionmaking at DOJ, calling the concept one fit for a “preschool.” Nor are these the remarks the first in which Barr has showed off his authoritarian instincts and disdain for—and ignorance of—history

I’ve tried to confine my criticisms of high officials to focus on narrow issues, but this is too far. Bill Barr has joined A. Mitchell Palmer, Roger Taney, and John Mitchell as among the worst Attorneys General in American history. It’s a terrifying state for the Department of Justice. I can only guess as to how long that institution will take to recover.

Other News

  • Recent news out of the Sourthern District of New York will not help that recovery. There, DOJ misconduct plagued a prosecution for alleged violation of U.S. sanctions against Iran. The misconduct included belated disclosures of exculpatory evidence and improper practices during the investigation. Judge Nathan has directed that every prosecutor in the District’s U.S. Attorney’s Office read it by Monday. If I had my druthers, every DOJ prosecutor in the country would read it. Heaven knows that—under the Department’s current leadership—each could use a reminder of the ethical and constitutional restrictions on the prosecutorial role.
  • Next, in Seattle, an indictment against six individuals for allegedly bribing Amazon employees to secure a $100 million competitive advantage.
  • Finally, a prison sentence for a Springfield, Oregon woman convicted of health care fraud

What’s Next

I’m planning of series of white-collar-themed book reviews. First up will probably be Jeffrey Toobin’s recent book on the Mueller investigation and the impeachment. Spoiler alert: it’s good but not great. I’ll wait to post that until after I’ve read Mueller deputy Andrew Weissmann’s forthcoming book. They may benefit from a side-by-side comparison.

I’m also looking forward to Professor Jennifer Taub’s upcoming book on the cost of white collar crime. It too may benefit from a side-by-side review with 2017’s must-read The Chickenshit Club, by ProPublica’s Jesse Eisinger.

Last, I’d like to do a series of reviews of both classic and new movies that touch on white collar themes. Everything from The Insider to The Informant!.

A lot has happened in the last few months. This is so both in the world of white-collar enforcement and just in the world. I thought I’d share some thoughts on last week’s news about Michael Flynn and the Supreme Court’s decision in the “Bridgegate” case.

I. Flynn-sanity or: Gee, it must be nice to be the President’s buddy when you lie over and over again.

First up, Michael Flynn. He’s been a repeat player on this blog.

The Background. The short version is this: After the 2016 election but before the 2017 presidential inauguration, incoming National Security Advisor Flynn spoke to Russia’s ambassador to the U.S. about U.S. sanctions against Russia. He asked the Russians not to escalate tensions. But he told incoming Vice President Pence later in the transition that he had not discussed the sanctions. He told the FBI the same thing in late January 2017. He pleaded guilty to one charge of making a false statement to the FBI, and also admitted that he had acted as an unregistered agent of the Turkish government during the transition, and that he made false statements to DOJ in March 2017 about his actions on Turkey’s behalf. But then he tried to withdraw his guilty plea. Last week, DOJ filed an unusual motion asking the court to drop the charges against Flynn.

The Controversy. Depending on who you ask, this is either (1) vindication for an innocent man railroaded by the FBI, (2) a stunning assault by the Attorney General on the rule of law and an act of pure corruption to protect the President’s allies, or (3) a small taste of the kinds of pressures that less well-connected subjects of federal investigation face every day. For my part, I lean toward some version of (2) and (3), though neither completely captures my view. Continue Reading Some Thoughts on Michael Flynn & Bridgegate

80 years ago today, Edwin Sutherland introduced the phrase “white-collar criminal.” Sutherland, a noted criminologist, coined the phrase in an address—”White-Collar Criminality”—to the American Sociological Association on December 27, 1939.

The speech focused “crime in the upper or white-collar class, composed of respectable or at least respected business and professional men . . . .” Sutherland contended that criminologists were mistaken to tie understandings of criminal behavior to poverty and mental illness, because most of the data on which those criminologists drew excluded studies of white-collar criminals. In a particularly perceptive passage, Sutherland flagged that the social class from within which many white-collar criminals are drawn plays an outsized role in making the laws.

It’s a fascinating read, and I highly recommend it to any interested in one historical snapshot of white-collar crime and its academic study.

Ten years later, Sutherland published a book, White Collar Crime, which also had a tremendous influence in the field.

 

What happens when the President of the United States asks for a bribe?

I know what you’re thinking: what could possibly have inspired this topic? I’m not here to throw partisan stones or to take sides on the House’s ongoing impeachment inquiry, though publicly available information is pretty damning. Instead, I want to look at what we know now—and what we might know in the future—through the lens of the federal criminal law governing bribery.

I want to briefly explain four things:

  1. What the bribery statute says
  2. Why the facts about Ukraine-gate potentially implicate the solicitation—but not the offering—of a bribe by the President
  3. Whether the bribery statute applies to the President
  4. What legal defenses the President may have if he’s ultimately prosecuted

Continue Reading Presidential Bribery

Recent weeks have seen a few significant white collar issues in the Pacific Northwest and nationally.

Perhaps none has attracted more national attention than the charges against an accused hacker who allegedly compromised the personal and financial data of more than 100 million Capital One customers. The defendant is also suspected of hacking data held by dozens of other companies. She has been detained pending trial. Wired has a great write up on the case. We may explore “cryptojacking”—using the processing power of computers one doesn’t own to mine cryptocurrency, as the defendant here is alleged to have done in a few instances—in a future post.

After 18 years, there have finally been criminal charges related to the tragic murder of a federal prosecutor here in Seattle. We’ve discussed the murder before, when former Deputy Attorney General held a press conference on the subject. Unfortunately, the new charges are not for the murder, but for a witness’s allegedly false statements before a grand jury. One can only hope that these actions represent meaningful progress on seeking justice for a profound tragedy and an assault on the rule of law itself.

Continue Reading Data Breaches and More False-Statements Charges

This last week saw the passing of two titans of American law: John Paul Stevens and Robert Morgenthau. Both led remarkable lives and careers.

Justice Stevens died last Tuesday at age 99. Over more than 30 years on the U.S. Supreme Court, he authored critical majority and dissenting opinions on issues central to white collar criminal enforcement—indeed to criminal law generally. To start, he authored several of the decisions that have transformed criminal sentencing. One of these was Apprendi v. New Jersey, which held that any fact (other than a prior criminal conviction) that increases a defendant’s punishment beyond the otherwise applicable statutory maximum had to be proven to a jury beyond a reasonable doubt. Another, United States v. Booker—a fractured opinion in which Stevens wrote in part for the majority and partially in dissent—the Court invalidated a federal statute that generally required judges to sentence defendants within the ranges set by the U.S. Sentencing Guidelines.

Stevens also dissented from the Supreme Court’s 1987 decision that the federal mail and wire fraud statutes required the government to prove that defendants had deprived their victims of tangible property, including money. It was not enough, the majority said, for a victim to have been fraudulently deprived of “honest services.” Justice Stevens disagreed. He wrote that the Court’s decision undermined Congress’s efforts to broadly proscribe fraudulent schemes. Congress ultimately vindicated Stevens’s view by enacting a new honest services statute the year after the Court’s decision.

Finally, I urge you to read this recent piece in the The Atlantic discussing Stevens’s formative encounter with white collar issues and the criminal justice system more generally when his father was convicted with embezzlement when Stevens was a child. The conviction was ultimately overturned.

I’m not really equipped to comment on all the ways that Justice Stevens made our society better. He was a veteran, an able lawyer, and a judge who always kept the humanity of the parties before him centered in his opinions.

Continue Reading This Week in White Collar News: In Memoriam

  • We’ve linked to alleged gold-based fraud schemes before. Here’s another set of charges—for mail fraud in Oregon—against the owners of a coin business who allegedly misrepresented their operations to clients.
  • And in Alaska, a sparsely detailed indictment for money laundering growing out of a drug operation.
  • DOJ dispatched a representative to Prague to deliver remarks to the ABA’s Global White Collar Crime Institute Conference. The focus was on international cooperation in anti-bribery efforts.
  • And a few items of interest at the Supreme Court. Most significantly, longtime Deputy Solicitor General Michael Dreeben will be leaving DOJ. It’s a loss for the government to be sure: there are few more widely admired experts on federal criminal law out there.
  • In a 7–2 opinion, the Supreme Court also re-affirmed the separate sovereigns doctrine in its double-jeopardy jurisprudence that we’ve discussed before.
  • Though it’s a bit far afield from the world of corporate criminality and fraud, the Supreme Court’s fractured opinion in another criminal case featured a casual snipe by several Justices at one of the administrative law premises underlying modern governance. Too early to tell, but the case may be a harbinger of a resurrected non-delegation doctrine: Just when you thought it was defeated, it attacks again like “actual cannibal Shia LaBeouf.”

Lots of national white collar stories in recent weeks.

But first, why no thoughts (yet) on the Mueller Report? First, it’s been and will continue to be widely covered elsewhere. Second, it’s been a busy two days, and I haven’t finished reading it yet. You probably shouldn’t trust the analysis of anyone else who hasn’t done so either. There are lots of other white collar happenings, though:

  • Part 234 of our ongoing series, “Don’t Lie to Federal Agents,” features former Obama White Counsel Greg Craig’s indictment for lying about work for the Ukrainian government, a subject we’ve covered before.
  • And speaking of conduct that implicates the Foreign Agents Registration Act, convicted FARA violator Sam Patten awkwardly asked a question of a panel featuring the head of the DOJ’s FARA unit.
  • Meanwhile, in my old stomping grounds of Santa Ana, California, a federal grand jury has added sweeping new charges of tax evasion and bilking clients against very bad lawyer/person Michael Avenatti.
  • Noted non-legal-expert Edward Snowden thinks that the conspiracy charges against Julian Assange represent a “dark moment for press freedom.” As with so many other topics, Snowden is wrong.
  • Closer to home, there’s a wire fraud and money laundering indictment in Portland for allegedly persuading victims to deposit bitcoins into an investment scheme promising “zero risk” and 20 to 50 percent returns. Those promises are what some call red flags . . .
  • A top Aequitas executive pleaded guilty yesterday to federal mail and wire fraud charges in Portland.
  • Yet more fraud action in Portland, with an indictment for allegedly avoiding millions of taxes and various bank fraud schemes.
  • And by way of update on my favorite fraud story of 2019 to date—a man posing as a British billionaire to lure investors—a federal judge in Seattle has approved the seizure of $600,000 from a bank account owned by a third-party who allegedly rented a mansion to the fake Brit to help him keep up appearances.
  • Former Manhattan U.S. Attorney and legal podcast star Preet Bharara was in Seattle a few weeks ago promoting his book. It was a great talk, and the book is thus far a great read.

Bribery has got to be smooth …