- 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.
- Further proof that time in the Chair Force will lead you to seek adventures abroad: this former counterintel agent was charged with spying for Iran — the Air Force Times details how she earned an air medal
- Here’s a unique niche for a defense lawyer — if you’re a member of the Georgia legislature you can have your cases continued indefinitely for your clients for “legislative reasons,” just like the current Speaker of the House has been doing for over a decade
- Lawfare has submitted an interesting FOIA request to see if the “stats” Trump cited to support his emergency declaration actually exist — I’ve got to start submitting more FOIA requests
- “The goal would be an office that could make sure the Homeland Security, Defense and Justice departments are effectively sharing information and working toward common goals” — seems like a no-brainer that should’ve happened years ago, certainly more useful than a Space Force
- The Manafort sentencing memo in his EDVA case is just a joy to read, plus it puts my wife to sleep
- Generally, the chief legal officer prevents the company from running afoul of the law — this one allegedly engaged in a little foreign bribery
Bribery has got to be smooth …
Happy new year! While the shutdown has slowed DOJ, it has not stopped it. And we have fraud documentaries from Netflix and Hulu.
- Just after the new year, the Senate confirmed Brian Moran as the Western District of Washington’s new U.S. Attorney.
- Also in Seattle, a guilty plea to wire fraud and filing a false tax return. The scheme involved defrauding the Washington Department of Revenue by under-reporting chewing tobacco purchased from tribal smoke shops and claiming phony tax credits for sham tobacco sales to those smoke shops.
- A cautionary tale: one of the country’s most prominent law firms has to fork over $4.6 million to the government for its work on behalf of Ukraine’s government. The firm was acting as unregistered agent of a foreign principal, a no-no under the Foreign Agents Registration Act (“FARA”). Though the work was Manafort-related, these requirements govern folks from both parties. The lead lawyer was former Obama White House Counsel Greg Craig, politely referred to as “Partner-1” in the firm’s agreement with DOJ. According to that same agreement, Partner-1 made false and misleading statements to DOJ’s FARA Unit. While we can’t know the implications without more information, I wouldn’t want to be Partner-1 right now.
- Nor would I want to be Individual-1. We all remember him, right? Well, yesterday Buzzfeed [insert joke about listicles here] dropped a bombshell report claiming that President Trump directed Michael Cohen to lie to Congress. If true, that’s a game-changer. But I wouldn’t jump to any conclusions yet: the notoriously tight-lipped Special Counsel’s Office said today that Buzzfeed‘s characterization is inaccurate. Jokes aside, however this story turns out, Buzzfeed has been doing some exceptional reporting for years, and Jason Leopold and Anthony Cormier—the co-authors of this story—are required reading on the Russia investigation.
- Because we live on the strangest possible timeline, not one but two documentaries about the infamous Fyre Festival are now out—one from Hulu and the other from Netflix. We’ve brought up Fyre Fest before on these pages. Though it’s hard to feel too bad for victims who shelled out obscene amounts of money for the chance to take an Instagram selfie with Kendall Jenner, lots of people—including local workers in the Bahamas—were hurt by the 2017 debacle.
- Finally, my favorite (or perhaps favourite?) fraud story of 2019 thus far: an indictment in Seattle for a Canadian man who allegedly pretended to be a British billionaire to bilk investors. I hope the accent was convincing.
Happy holidays after a long break. While we may have been quiet, DOJ has not.
- The U.S. Attorney’s Office in Portland has charged three men with bank fraud and money laundering. The three allegedly used SnapChat to recruit students at Grant High School in Portland to deposit counterfeit checks, luring the teens with pictures of fancy cars and piles of cash in a social media group called the “God Squad.” Start ’em young, I guess.
- In Eastern Washington, an indictment divides 101 felony counts among 22 defendants for a massive alleged fraud scheme that involved staging car, boat, and slip-and-fall accidents in four states over five years. The racket made more than $6 million from insurance payouts.
- In news that should bring some holiday cheer to corporations in DOJ’s cross-hairs, Deputy Attorney General Rod Rosenstein announced a slight revision to the policy in DOJ’s much-vaunted Yates Memo. The biggest change is to relax the requirement that corporations identify all individuals involved in any aspect of criminal misconduct to receive any cooperation credit. Cooperation credit will now be contingent on a corporation identifying those individuals who were significantly involved in or caused the criminal conduct.
- In Pennsylvania, DOJ has joined a False Claims Act suit about alleged kickbacks paid to physicians.
- Remember when Michael Flynn ruminated about sending a Turkish cleric from the US to Turkey but omitted that he and his company got paid half a million dollars by the Turkish government? Well, DOJ remembered . . . .
There’s been a slew of white collar enforcement actions in the Pacific Northwest and around the country in the last six weeks:
- Don’t lie to federal agents. Some false statement charges in Oregon and Alaska. The Oregon case involves $6.4 million in fraudulent billings for work that wasn’t performed for the Oregon National Guard, as well as false statements in related documents. Also a sad case from Alaska with false statements charges against a suspect in the kidnapping and murder of a child.
- Seriously, don’t lie to federal agents. Charges in Washington for a conspiracy to sell fraudulent cell phone unlocking services to allow customers to unlock AT&T cell phones without paying AT&T. One employee allegedly took bribes to participate. That’s bad. Also bad to not report the illegal income on tax returns, which can support a false statements charge.
- Once more for anyone who didn’t hear, don’t lie to federal agents! A Hawaii litigator indicted in Oregon for tax evasion and false statements. Interestingly, the false statements charge is for lying about renter’s income in a filing in a civil case. It’s pretty rare for the government to prosecute false statements made in the course of civil litigation. Maybe because of the other criminal conduct the defendant is accused of, or maybe because the alleged false statements were in a lawsuit he brought against a federal agency.
- Charges in Oregon for evading importing taxes and fraudulently inducing the government to purchase firefighter boots through falsely certifying to qualify for disadvantaged business programs.
- Don’t sell your company’s Superbowl tickets and pocket the proceeds.
- Here’s something you don’t see every day: conspiracy charges, theft of U.S. property, witness tampering, and removal of a paleontological resource in Alaska . The conspiracy was to steal a fossilized woolly mammoth tusk. But Alaska delivers again, with charges against someone else related to smuggling walrus tusks.
- In more national news, we couldn’t resist flagging this one. Jersey Shore‘s The Situation sentenced in New Jersey for tax crimes.
- Farewell, United States Attorneys’ Manual. Hello, Justice Manual. At the end of September, DOJ unveiled its first major overhaul of the U.S. Attorneys’ Manual in 20 years, complete with a fancy new name.
- No matter how hard you squint at it, it’s hard to frame a private suit under the Alien Tort Statute as a white collar matter. But I can’t help talking about this Ninth Circuit decision from last week that again breathed life into a suit against U.S. chocolate companies for allegedly aiding and abetting child slavery in the Ivory Coast for the sake of cheaper cocoa. Perhaps the most interesting part is the separate concurrence by Eastern District of Washington Judge Shea, sitting by designation. His opinion reads in its entirety “I concur in the result.” I suppose if the decision were non-precedential, I could see why you wouldn’t feel the need to share your reasons for reaching the same result as your colleagues. Same thing if you were affirming the district court—a reader might assume you simply agreed with the reasoning below. But this is a published opinion reversing the district court, and Judge Shea agrees with the rest of the panel that the district court got it wrong, but won’t sign on to their reasons. He just doesn’t say why. Nothing wrong with that. I’d just be interested to know his thinking about the case.
You might have heard the term “hawala” mentioned over the last few weeks. Maybe you saw it discussed while watching Amazon’s new Jack Ryan series, or maybe you’re more of a C-SPAN fan, and caught it a few times while watching the House Financial Services Committee’s Subcommittee on Terrorism and Illicit Finance hearing on September 7th on terrorist groups and their means of financing.
Hawala is a trust-based informal value transfer system (sometimes called parallel banking) that is widely used for perfectly legitimate purposes across parts of South Asia, West Africa, and the Middle East, and for facilitating transactions between communities there and people in other parts of the world, like Europe and North America. Its attraction to money launderers and terrorist financers is driven in large part by the difficulty of tracing the transactions and the limited means of regulatory enforcement. Notably, hawala is generally unlawful in countries like Pakistan and India, and in some U.S. states.
- Interesting post from former FBI GC Jim Baker (“Mr. FISA, himself“) about the rarely used presidential power to make legal determinations that are binding on the entire executive branch and whether the current president’s twittering counts
- More interesting would be this newly posted job at the DOJ — Deputy Pardon Attorney, who will “assist the President in the exercise of the executive clemency power conferred to him by Article II, Section 2, of the Constitution”
- Even more interesting was that I looked in vain on Tuesday for a press release on the DOJ website about the Manafort conviction — nothing — apparently tax fraud by owners of a floral company in Pennsylvania was a much bigger deal
- Legal nerd fun — the Second Circuit, relying on legislative intent, ruled that a foreign person who does not reside in the United States cannot be liable for conspiracy under the FCPA if he is not in the category of persons covered by it
- Aaron one upped me in nerdom with this one regarding the False Claims Act — the Ninth Circuit ruled that the Supreme Court’s decision in Escobar — holding that even when a requirement is expressly designated a condition of payment, not every violation of that requirement gives rise to liability — did not overrule Ninth Circuit precedent and the question remains whether the false certification was relevant to the government’s decision to confer a benefit
- Finally, I love “experts say” articles — according to this one, “Getting defendants to ‘flip’ is key tool in going after the kingpin” — you don’t say?
On average, people donate more than $2.5 billion each year to over 40,000 American charities with military-related missions. While most of these charities are trustworthy, others prey on Americans’ patriotism and generosity. Late last month, the Federal Trade Commission announced Operation Donate with Honor, a nationwide law enforcement and education initiative aimed at stopping veteran-related charity fraud.
Here in Washington, Attorney General Bob Ferguson brought civil enforcement claims against two charities as a part of the Operation Donate with Honor initiative. The AG’s respective complaints allege that the charities violated Washington’s Consumer Protection Act and the Charitable Solicitations Act by donating little to no money to their advertised causes and using deceptive practices to draw in donations.
Been a while — not sure “Roundup of White Collar News” is the catchy phrase we’re looking for after a month or so, but here we go:
- Interesting explanation of the Carter Page FISA application over at Lawfare
- The Attorney General announced the publication of the Cyber-Digital Task Force Report — Question: does anyone actually read a bureaucratic monstrosity like this?
- Good for the DOJ — firing reservists because they’re performing military duty is awful, not just illegal
- Good for the DOJ again — I can never get enough of health car fraudsters getting caught and being made to pay
- Blows my mind that we’re even having a debate as to whether a president’s conduct amounts to treason
- Very sad day for L.A. — Jonathan Gold, the man who informed me it was ok, even right, to put yellow mustard on my pastrami sandwich died today