White Collar CrimeFall 2010Professor Garvey

Included in this Outline:

I: Short Substantive Outline: Pages 2-21

II: Case Briefs: Pages 22-41

III: Procedural Issues Outline: Pages 42-52

IV: Sentencing Guidelines Outline: Pages 53-56

NOTE: To organize my outline, I inserted the full statute of each crime and the case briefs corresponding to that crime in between each crime in the short substantive outline (e.g., Mail Fraud Pages from Short Outline Mail

Fraud Statute Case Briefs about Mail Fraud Bribery/Illegal Gratuities Pages from Short Outline)

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I. SHORT SUBSTANTIVE OUTLINE

A. MENS REAHow To Interpret Mens Rea

General Summary: court tries to interpret statutes in a way that avoids convicting the morally innocent. NOTE: does not have default rules like the MPC Step One : Congressional Intent:

o Plain Languageo Legislative Historyo Other Statutory Provisions

Step Two : Canons of Construction:o Presumption of mens rea: favors defendanto Ignorance of the law is no excuse: favors governmento Public Welfare: lower mens rea for “dangerous or deleterious devices or products or obnoxious

waste materials”: favors gov’t o Rule of Lenity: when ambiguous, favor defendant.o Severity of the Punishment: favors defendanto Statutory Complexityo Use of the mental state term “willful”

Rule of Mandatory Culpability: some propose that the Court actually follow this interpretation (93, n. 2) Federal criminal statutes should not be interpreted to permit the conviction of “morally innocent” 1) Figure out what the competing interpretations are 2) Ask whether a “morally innocent” person could be convicted if statute is interpreted as the gov’t wants

o Morally Innocent: reasonably ignorant of the fact that he violated the law 3) If yes, find what mens rea would preclude conviction of a morally innocent person, and read it into statute.

Awareness of Legal Requirements General Rule: ignorance of the law is no excuse Exceptions:

o When ignorance disproves an element of the offense (e.g., when statute says “willful”) ANDo When the statute deals w/highly complicated issues

Examples:o Cheeks: tax evasion case in which statute used “willful” – Knowledge Requiredo Ratzlaf: anti-structuring laws case in which statute used “willful” – Knowledge Requiredo Bryan v. U.S., 1998: unlicensed use of firearms case in which statute used “willful” – Knowledge NOT

Required; need only know that conduct was unlawful

Mistakes of Fact and Law Mistake of fact: Failure of proof defense: state has not carried its burden of persuasion: it has not proved

that the D possessed the required mental state beyond a reasonable doubt Mistake of law may be a defense:

o Failure of proof “defense” Same-law mistakes: but generally ignorance of the law is not a defense Different-law (“legal fact”) mistakes: like mistakes of fact but the fact w/respect to which the

D is mistaken is a “legal fact” – requires another body of law to know o Affirmative Defense:

Estoppel or reliance Notice

In our case, usually mistakes of “fact” or “legal fact”

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B. ENTITY LIABILITY 1) Are the individuals of the corporation either individually or collectively guilty of the crime?

o Collective Knowledge Doctrine (US v. Bank of New England) but may only apply if the corp. is flagrantly indifferent (doesn’t have effective compliance system)

2) If yes, were their actions within the actual or apparent scope of their employment or authority?o 1) Would a reasonable person believe the actor is acting w/in his/her authority?o 2) Was the agent “on the job” while committing the crime?o Not a stringent threshold

3) If yes, did the individual actors act with the intent, at least in part, to benefit the corporation, whether or not the crime actually did benefit the corp. and even if it was against the express policy of the corp.?

o Even if it actually ends up hurting the corp. (U.S. v. Sun-Diamond)o Even if contrary to corp. policy (U.S. v. Hilton Hotels) BUT often courts hesitate to impute liability.

If yes, impute liability. NOTE: applies to subsidiaries too as well as to low-level employees

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C. PERJURY § 1621 States or subscribes

o Under Oath before competent tribunal1 (subsection 1) or Under 1746 (subsection 2)o False (not in statute but read as an element)

Knowledge (not in statute—derived from willful) o Material: if it has the capacity to influence the decision of the decision-making body to which it is

addressed. Willful = intent to deceive

o Some courts read it as specific intent: knowledge of falsity and intention to deceive Two-witness rule: uncorroborated testimony of one witness is insufficient to prove that D’s statement was

false (need independent corroborating source but circumstantial evidence usually suffices). Defenses:

o Literal Truth (Bronston)

1 Competency of tribunal issues: not often but sometimes (in congressional hearing w/o a quorum)4

D. FALSE DECLARATIONS § 1623 Makes declaration or uses information

o Under oath before or ancillary to any court or grand jury (or 1746) o False (subsection a) OR

Knowledgeo “Irreconcilably contradictory” (subsection (c))o Material: if it has the capacity to influence the decision of the decision-making body to which it is

addressed. Defenses:

o Literal truth (Bronston)o Recantation: Majority: must recant in same continuous proceeding before it has become “manifest

that such falsity has or will be exposed” and declaration mustn’t have “substantially affected proceeding”

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E. FALSE STATEMENT §1001(a)(2)—False Statement Statement

o Actually False (even an exculpatory no (Brogan)) Knowledge

o Material: Has the capacity to influence the decision of the decision-making body to which it is addressed

o “In a matter w/in the jurisdiction of … the Government of the United States” Willful

o [Intent to deceive] OR [Knowledge that one is acting unlawfully—1st Cir.] Exceptions

o Judicial Functiono Legislative Function

FALSE STATEMENT § 1001(a)(1)—Concealment Case Failure to disclose fact (omission)

o Legal duty to disclose Knowledge

o Material: Has the capacity to influence the decision of the decision-making body to which it is addressed

o “In a matter w/in the jurisdiction of … the Gov’t of the US” Affirmative Act: Falsification, concealment or covering up by “trick, scheme, or device” Willful

o [Intent to deceive] OR [Knowledge that one is acting unlawfully] Exceptions

o Judicial Functiono Legislative Function

Materiality: Don’t have to show statement was credible, believed, or relied upon, etc. (just as capacity to influence)

Jurisdiction: Circuit split btw 9th (Facchini, yes) and 11th (Herring, no) on whether you needed a direct relationship btw statement and fed’l agency. Today, both say yes.

Herring: w/in jurisdiction if statement was made to a state agency that used fed’l funds (now repudiated)

Materiality and Jurisdiction can be related: False statement had no capacity to influence fed’l agency bc it wasn’t made in a matter w/in the agency’s jurisdiction.

Judicial Function 1001(b): does not apply to a party to a judicial proceeding, or that party’s counsel, for statements, representations, writings, or docs submitted by such party or counsel to a judge or magistrate in that proceeding

Trial tactics excluded (Bramblet) Rationale: to avoid chilling advocacy (particularly w/respect to the concealment prong)

Legislative Function 1001(c): 1001 only applies to (1) administrative matters… or (2) any investigation or review conducted pursuant to authority of any committee or office of the Congress, consistent w/applicable rules of the House or Senate.

Issues relating to the identity of a person before a criminal court were usually deemed “administrative’ Rationale: To protect free flow of constituent submissions to Congress

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F. OBSTRUCTION OF JUSTICE OMNIBUS CLAUSE § 1503“Whoever … corruptly or by threats of force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be punished.”

OMNIBUS CLAUSE § 1503 Endeavoring Pending Judicial Proceeding

o Knowledge Nexus (i.e., natural and probable consequence of conduct would be obstruction of justice) (Aguilar)

o Knowledge Intent to obstruct Corrupt Motive: act with purpose of obstructing justice (Cueto)

Nexus Test: Step 1) Determine whether nexus exists: Given what the D knew, would a reasonable person believe that the

D’s acts would be likely to obstruct the due administration of justice? (Proof of Nexus)o Doesn’t actually have to obstruct justice for nexus to exist.

Step 2) If yes, then: Did the D know this or was willfully blind? (Knowledge of Nexus)

Prosecution of Lawyers under 1503 1) Lawyer’s intent to influence a proceeding isn’t per se unlawful but when joined w/a corrupt motive, it can

be (Cueto) 2) Safe Harbor of 18 U.S.C. 1515(c): “This chapter does not prohibit the providing of lawful, bona fide, legal

representation services in connection w/or in anticipation of an official proceeding.” BUT: Can be construed in a number of ways:

o Does protect lawyers (like Cueto) w/a corrupt motive, bc conduct alone is lawful, bona fide services. o Does not protect lawyers w/corrupt motive bc if corrupt motive, not providing lawful services. This

essentially eliminates the “safe harbor” for lawyers.

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G. OBSTRUCTION OF PROCEEDINGS BEFORE CONGRESS OR FED’L AGENCIES § 1505: Endeavoring Pending proceeding before dept or agency of the US or congressional inquiry

o Knowledge Nexus

o Knowledge Intent to obstruct Corrupt motive: acting w/an “improper purpose, personally or by influencing another (1515(b))*

*Note: 1515(b)’s definition of corruptly (applies to 1505 and 1512) was enacted in response to Poindexter, which held that lying directly to Congress was not a crime under 1505 (needed transitive nature: D lies to A who lies to Congress)

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H. WITNESS TAMPERING § 1512(b) Whoever knowingly:

o corruptly persuades another person or attempts to do so ORo engages in misleading conduct toward another person

With the intent too (1) influence, delay, or prevent testimony of any person in an official proceeding (official proceeding)

Nexus (Andersen): Knowledge that his action (corrupt persuasion or misleading conduct) is likely to influence a proceeding that he foresees or contemplates

o (2)(A)-(D) cause or induce any person to do A, B, C, or D (w/hold, destroy docs, evade summons etc.) (official proceeding)

Nexus (Andersen): Knowledge that his action (corrupt persuasion or misleading conduct) is likely to influence a proceeding that he foresees or contemplates

o (3) hinder, delay, or prevent communication to a law enforcement officer or judge of info relating to the possible commission of a fed’l crime (no official proceeding)

NO Nexus but Bc but seems to require transitive nature (D must corruptly persuade A to lie to law enforcement—courts have found liability when D lies directly though)

Witness Tampering Omnibus § 1512(c) Whoever corruptly:

o (1) Alters, destroys, or conceals document w/intent to impair its use in an official proceeding OR Nexus? Unclear but must know that info will go to gov’t (Singleton, Comp. Associates)

o (2) Otherwise* obstructs, influences, or impedes any official proceeding Nexus? Unclear but must know that info will go to gov’t (Singleton, Comp. Associates)

*Does otherwise mean that 1 and 2 must go in tandem and that 2 requires doc destruction? Unlikely, but unclear.

LOOK AT DEFINITIONS IN 1515

Knowingly corruptly persuade means D must be conscious of wrongdoing and there is a nexus requirement btw destroying docs and particular proceeding (which must be “foreseen”). (Andersen)

Corruptly persuades: “does not include conduct which would be misleading conduct but for a lack of a state of mind.” No one knows what this means. (1515(a)(6))

Corruptly: acting w/an “improper purpose, personally or by influencing another (1515(b))

Misleading conduct (1515(a)(3)) SEE DEFINITION NOTE: misleading conduct has been held to apply to conduct which is intended to mislead the witness, not to

mislead the gov’t

Official Proceeding: not limited to court proceedings but covers congressional, administrative action. Broader than 1503 and 1505 bc it encompasses both. (1515(a)(1))

“Official proceeding need not be pending or about to be instituted at time of the offense.” (1512(f)(1)).

Law Enforcement Officer: (1515(a)(4))

Defense for Lawyers 1512(e): Meant to safeguard lawyers from prosecution for legitimate advocacy: Person may lawfully engage

in prohibited means of influencing testimony or w/holding docs if conduct “consisted solely of lawful conduct and …the D’s sole intention was to encourage, induce, or cause other to testify truthfully”

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I. MAIL FRAUD § 1341 and WIRE FRAUD § 1343 Scheme to defraud

o Cognizable types Misrepresentation

Material (Neder) Non-disclosure

Material (Neder)o Cognizable objects

Tangible Property: Money or Property (McNally) Intangible property: Confidential Business Info (Carpenter) OR Business’s Right to Control its

Assets (Wallach, D’Amato, but Cleveland) Intangible non-property (1346 honest services)

Bribery or kickbacks only (Skilling)o Intent to defraud

2nd Cir: Intent to Deceive and Intent to Harm (Regent Office Supply) Falsity of rep must be shown to be capable of affecting the customer’s understanding

of the bargain and of influencing his assessment of the value of the bargain to him 7th Cir: Intent to Deceive and Intent to harm or gain 1st Cir: Intent to Deceive and Intent to obtain money or other property

A mailing for the purpose of executing the scheme.o Test: Mailing is part of the D’s scheme as conceived at the outset (i.e., he wants mail to be used) and

D’s action was a but-for and proximate cause of the alleged mailing. (Schmuck)

Manufactured Jurisdiction: D can be guilty, even if gov’t sets up a trap (unless it constitutes entrapment—rare)

Mailing: By re-categorizing the scheme as an ongoing one, you can change the mailing element (it becomes a required

part of your scheme if you plan to keep doing it) (Schmuck) Innocent/Routine mailings count if they are essential part of perpetuating the fraudulent scheme (even if the

mailing might lead to the uncovering of the scheme) (Schmuck) Required Records Exception: if mailings would have been made [and when they were made] despite the D’s

fraud. Test: Pull D out of picture and ask, “Would those mailings have been made?” If yes, exception applies. Lulling Theory: If mailing was in order to lull the victim into a false sense of security, D can be guilty.

Fraud Reasonable Reliance and Damages are not elements of mail and wire fraud (Neder). Moreover, victim need

not have relied on the fraud to bring a RICO claim predicated on mail fraud (Bridge v. Phoenix Bond) Materiality is an element: Two Definitions in Neder:

o P. 416: Capable of influencing the intended victim. o P. 415, n. 5 R. of Torts: A reasonable person would attach importance to the representation’s

existence or non-existence in determining his choice of action in the transaction OR The maker of the rep should have known that its recipient regards or is likely to regard the matter as important in determining his choice of action, although a reasonable man would not so regard it.

Non-Disclosure Fraud Test (Siegal, corp. officers and Bronston, lawyer w/conflict of interest): Is there a Primary Duty (generally arising from fiduciary duty or employee duty)? Is there a Secondary Duty to disclose breach of Primary Duty? If failure to satisfy secondary duty, then we have non-disclosure fraud NOTE: Need tangible harm. NOTE: even w/o written contract, an employee has a fiduciary obligation to protect confidential info

obtained during the court of his employment. Snepp

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Right to Control Theory: Denying victim the right to control its assets by depriving it of info necessary to make a discretionary economic decision

NOTE: What questions remain open after Skilling? What exactly is covered by the prohibition against bribery and kickbacks? When does a fiduciary relationship exist such that a bribe or kickback must be disclosed? Can conflict-of-interest (self-dealing) cases be characterized as thefts of intangible property

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J. BRIBERY AND ILLEGAL GRATUITIES

Bribery § 201(b)Bribe Giver

Whoever corruptly Gives, offers, or promises to any public official, or

offers or promises any public official to give to any person or entity

Anything of value W/intent to influence any official act or to induce

a public official to do/omit to do any act in violation of the lawful duty of such official or person

Bribe Recipient: Public official corruptly Demands, seeks, receives, accepts, or agrees to

receive or accept Anything of value In return for being influence din the performance

of any official act or being induce to do or omit to do any act in violation of the official duty of such official or person

Elements of Bribe Giver Corruptly** Give, offer, promise

o Anything of value o To public official or to another person or

entity for a public official With intent to influence official act or induce a

violation of a lawful duty (quid pro quo)

Elements of Bribe Recipient Public Official Corruptly** Demand, seek, receive, accept, agree to

receive/accepto Anything of valueo Personally or for another person or

entity Knowing that the thing is given, offered, or

promised with intent to influence official act or to induce violation of lawful duty*

*Doesn’t follow language of statute—“in return for being influenced”—but this is how it is construed.**Unlike in 1503, where courts give separate meaning to corrupt v. intent to obstruct, you don’t see that in bribery

Illegal Gratuities § 201(c)Gratuity Giver

Whoever Directly or indirectly gives, offers, or promises Anything of value To any public official, former public official, or

person selected to be a public official For or bc of any official act performed or to be

performed

Gratuity Receiver Public official, former public official, or person

selected to be a public official Directly or indirectly demands, seeks, receives,

accepts, or agrees to receive or accept Anything of value Personally for or bc of any official act performed

or to be performed

Elements of Gratuity Giver

Give, offer, promiseo Anything of valueo To public official

For or bc of official act performed or to be performed

o With intent to reward; oro With hope or expectation of influencing

Elements of Gratuity Receiver Public Official Demand, seek, receive, accept, agree to

receive/accepto Anything of valueo Personally

For or bc of any official act performed or to be performed

o Knowing that the thing is given, offered, or promised w/intent to reward; or

o Knowing that the thing is given, offered, or promised with the hope or expectation of influencing.

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Difference: Bribery requires proof of a quid pro quo: specific intent to give/receive something of value in return for an official act and gratuity does not.

Definitions: Anything of value: subjective value to the recipient (very broad) Official Act: “any decision or action on any question, matter, cause, suit, proceeding, or controversy, which

may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit” (201(a))

o Not limited to duties in a written job description—duties customarily associated w/that job tooo TEST: Whether D’s actions involved a matter or issue that could properly, by law, be brought before

him in his official job title? Muntain: HUD Secretary’s Consultant approached by people who wanted help in marketing

group auto insurance to unions–NO o TEST: Whether D’s action constituted a decision or action on any question, matter, case, suit,

proceeding, or controversy brought or pending before any public official in such official capacity Valdes: Police officer who did a fake judge a favor by looking up license plates on gov’t

database—NO Public Official: “Persons acting for or on behalf of the US, or any dep’t, agency, or branch of Gov’t…in any

official function, under or by authority of any such dep’t, agency, or branch of Gov’t”o Appears to be Federal officials only but get state/local/private actors too bc of Dixson and § 666o Test: whether person occupies a position of public trust w/official fed’l responsibilities (Dixson)o 18 U.S.C. § 666: supplemented § 201 to make clear that fed’l law prohibits “significant acts of bribery

involving fed’l monies that are disbursed to private orgs or state/local gov’ts pursuant to Fed’l program”

Bribery Bribery completed when D expresses ability and desire to pay bribe—just when offer is made, even if public

official denies it and is not corrupted As long as $ was offered w/corrupt intent, official does not necessarily even need to be aware of the bribe

Illegal Gratuities Nexus (Sun-Diamond): “For or bc of any official act performed or to be performed” = Nexus Requirement: Gov’t must prove a link

btw the gift…and a specific ‘official act’ for or bc of which it was given Giver of gratuity…

o Thing given, offered, or promised with intent to reward decision already made or committed; oro Thing given, offered, or promised with hope or expectation of influencing

Problem: this sounds a lot like intent to influence, which is bribery—different mental states? Purpose (bribery) v. Knowledge/Reckless (gratuities)

Recipient of gratuity…o Knowledge (belief) that thing is given, offered, or promised with the intent to reward a decision

already made or committed; oro Knowledge (belief) that the thing is given, offered, or promised w/the hope or expectation of

influencing.

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K. INSIDER TRADING

Statutes and Regulations 15 U.S.C. § 78j(b) = § 10(b) of the 1934 Act (States general rule of liability; requires promulgation of SEC rule) 17 C.F.R. § 240.10b-5 = Rule 10b-5 (Sets forth the SEC rule defining “unlawful” conduct) 15 U.S.C. § 78ff(a) = § 32(a) of 1934 Act (stat. max of 20 years for “willful” violations of 10(b) or Rule 10b-5)

o NOTE: Any person who willfully violates…rule…shall upon conviction be…imprisoned…but no person shall be subject to imprisonment…if he proves that he had no knowledge of such rule or regulation

o RULE: “Willful” requires Gov’t to prove D realized his actions were wrongful (not unlawful). If D proves by preponderant evidence he didn’t realize his actions were unlawful, he can’t be imprisoned, even if the Gov’t has proven that he realized his actions were wrongful. US v. Kaiser (2nd Cir, 2010)

17 C.F.R. §240.14e-3 = Rule 14e-3 (Deals w/insider trading in course of a tender offer) Rule 10b5-1: A “manipulative and deceptive device” includes trading “on the basis of” material non-public

info in breach of duty to the issuer or shareholder of the stock traded or to the source of information. o On the basis of: means awareness of the fact that the info was material and non-publico An actor who is aware of the fact that he is trading on material, non-public information can do so if

he committed to the trade before becoming aware of the information. Regulation FD: Failure to disclose as required by Regulation FD does not establish a Rule 10b-5 violation

Insider Trading: Classical Theory (Chiarella) By the use of any means or instrumentality of interstate commerce, or of the mails or of nay facility of any

nat’l securities exchange To employ any device, scheme, or artifice to defraud

o Type of fraud: Nondisclosure: The fiduciary duty to disclose runs to the shareholders of the company with

respect to which the D is an insider, i.e., the market.o Information

Material Nonpublic

o Object of fraud Money

o Intent to defraud Intent to deceive Intent to gain (tipper/tippee)

In connection w/the purchase or sale of any security

Classical: must breach duty to disclose (by trading) that runs to shareholders of the corp. in which you are an insider

Temporary Insiders: some Ds can be temp. insiders if relationship creates expectation of confidentiality. Dirks, fn. 14

Tipper/Tippee Liability: For a tippee to be liable, there must be a tipper. A tipper must breach a fiduciary duty to corporate shareholders by disclosing for personal benefit (i.e., w/an intent to gain). If no personal benefit, no breach of fiduciary duty, no tipper. Tippee must know or should know that tipper breached duty. (Dirks)

Personal benefit (broad): Pecuniary Gain; Reputational Benefit; Reciprocal Information/Quid Pro Quo; A Gift

Problem of Remote Tippees: Insider tells Tippee (T1) who tells other Tippees (T2) who trade. Theory 1 : Pull T1 out of picture: ask if T2 knows info is material and non-public and knows/should know that

Insider breached his or her fiduciary duty not to disclose. Theory 2 : Put T1 in as the Insider: T1 intended to benefit from T2’s trading; T2 knows the info is material and

non-public; T2 knows or should know that an insider has breached his/her fiduciary duty not to disclose.

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Theory 3 : T2 knows the info is material and non-public; T2 knows or should know that an insider has breached his/her fiduciary duty not to disclose (Broadest theory and the most prominent)

Insider Trading: Misappropriation Theory (O’Hagan) “By the use of any means or instrumentality of interstate commerce or one of the mails, or of any facility of

any nat’l securities exchange” “To employ any device, scheme, or artifice to defraud”

o Type of fraud Nondisclosure: The fiduciary duty to disclose runs to the source of the information

o Information Material (awareness) Nonpublic (awareness)

o Object of fraud: Intangible property (information)o Intent to defraud

“In connection w/the purchase or sale of any security”

Note on Misappropriation Theory Gap in Liability: The duty to disclose runs to the owner or source of the information. If D discloses his intent

to trade to those to whom he has a duty to disclose, he would not be guilty of insider trading (bc he no longer breached duty to disclose) even though the public is still harmed from the trading.

When does a relationship give rise to a duty to keep information confidential? Chestman (2d Cir 1991): when relationship involves “reliance, and de facto control and dominance”:

o Employer-employee Attorney-client Psychiatrist-patient Rule 10b5-2: Enumerated duties of trust or confidence. For purposes of this section, a “duty of trust or

confidence exists in the following circumstances, among others:o Whenever a person agrees to maintain info in confidenceo Whenever the person communicating the material nonpublic info and the person to whom it is

communicated have a history, pattern, or practice of sharing confidences, such that the recipient of the info knows or reasonably should know that the person communicating the material nonpublic info expects that the recipient will maintain its confidentiality; or

o Whenever a person receives or obtains material nonpublic info from his or her spouse, parent, child, or sibling; provided, however, that the person receiving or obtaining the info may demonstrate that no duty of trust or confidence existed w/respect to the info, by establishing that he or she neither knew nor reasonably should have known that the person who was the source of the info expected that the person would keep the info confidential, bc of the parties’ history, pattern, or practice of sharing and maintaining confidences, and bc there was no agreement or understanding to maintain the confidentiality of the info.

Classical Theory Misappropriation Theory Nondisclosure of material, non-public

information

Duty to disclose runs to the market Object is money Materiality inquiry focuses on the behavior of

the market (i.e., reasonable investor) Victim is the market (members of your family)

Nondisclosure of unauthorized use of material, non-public information

Duty to disclose runs to the company (the source)

Object is information Materiality inquiry focuses on the behavior of

the company (source) Victim is the company (i.e., source of the

information)

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L. CONSPIRACY § 371 Agreement btw 2+ people Dual Intent:

o Intent to agreeo Intent that the object of the conspiracy be achieved, that is:

An intent to commit an offense against the US; or An intent to defraud the US

To cheat gov’t out of property or money or to obstruct one of its lawful functions by deceit, craft or trickery, or by means that are dishonest (don’t need damages).

Overt Act (easy: need not be criminal: meeting, phone call)

Agreement: Need proof of purposeful behavior aimed at furthering the goals of the conspiracy. Can show by circumstantial evidence or evidence of a tacit understanding. Not enough: presence at scene of crime, fact that one knows a crime is being committed.

Intent Gov’t must show D agreed “w/knowledge of the criminal purpose of the scheme” and “w/the specific intent to aid in the accomplishment of those lawful ends” (May be shown by circumstantial evidence or willful blindness).

Defraud and Offense Clauses: Often overlap and can sometimes charge under both Exec order is an offense under 371 when Congress authorizes it and sets up sanctions. (Arch Trading)

Plurality Requirement 1) A group of conspirators can’t escape conspiracy responsibility merely bc they all act on behalf of a corp. 2) Liability for a conspiracy may be imputed to the corp itself on a respondeat superior theory. 3) But sole controlling shareholder can’t be guilty for conspiring w/corp w/o another human actor. (Stevens)

Essential Nature Requirement: don’t need to know all of the details Not defeated when, in a money laundering conspiracy, Ds don’t know from which SUA the dirty money came

—agreement to launder dirty money is enough (Stavroulakis).

Impossibility and Withdrawal Impossibility is not a defense to a conspiracy charge (Recio, gov’t seize drugs before D agreed to help). Withdrawal: If an actor withdraws before the commission of any overt act by any of the conspirators, then

she is not guilty of conspiracy, nor of any crime committed in furtherance of it. If an actor withdraws after the commission of an overt act, then she is guilty of conspiracy, but not for any crime committed in furtherance of it after her withdrawal (i.e., no Pinkerton liability).

Evidence of Withdrawal: “Affirmative acts inconsistent w/the object of the conspiracy and communicated in a manner reasonably calculated to reach co-conspirators have generally been regarded as sufficient to establish withdrawal or abandonment.”

Scope of Conspiracy: In determining whether there is one conspiracy or more, we look at whether the Ds “shared a common goal,” “any interdependence btw the alleged participants,” and “any overlap among alleged participants.” (Gatling)

Wheel Conspiracy: Kotteakos v. US, U.S. 1946: central player w/other actors involved o For a single wheel conspiracy, those people who form the spokes must have been aware of each

other and must do something in furtherance of some single, illegal enterprise (so you have the rim).o If wheel doesn’t exist, proof of multiple conspiracies under an indictment alleging a single conspiracy

constitute a material variance requiring reversal where a D’s substantial rights had been affected.o Kotteakos: one guy doing fake loans for many people. Multiple conspiracies bc Brown was the only

common figure and no one else’s success in conspiracy was connected w/anyone else’s Chain Conspiracy: Blumenthal v. US, U.S. 1947

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o Essential element is interdependence: scheme must depend on the successful operation of each link in the chain. Each participant must know that the chain has a scope and others must be involved, but this may be inferred from the nature of the enterprise.

o Common purpose test: where there are a number of otherwise diverse activities performed to achieve a single goal.

o Blumenthal: Whiskey owner conducted complex scheme to conceal true price for which he was selling whiskey

Pinkerton rule: A conspirator is guilty as an accomplice of any reasonably foreseeable crime committed by a coconspirator in furtherance of the conspiracy, including any crime that forms the object of the conspiracy (Tilton, but wrong in this case)

Practical Advantages of Including a Conspiracy Count Hearsay : Gov’t can introduce the statements of co-conspirators, which would otherwise be inadmissible

hearsay, provided the statement is made during the course of and in furtherance of the conspiracyo Show conspiracy existed and D and the declarant were parties to that conspiracyo Statement must be made during the course and in furtherance of the conspiracy

Joinder : Gov’t can join co-conspirators in a single trial Venue : Gov’t can bring the case where the agreement was made or where any overt act was committed. Statute of Limitations : Gov’t can bring the case w/in 5 years of the last overt act

Merger Doctrine: If A + B agree to commit crime, and if B commits crime, is B guilty of both crime and conspiracy to commit crime? What about A?

B is guilty of both bc federal law follows the group-criminality theory A is guilty of conspiracy as a principal, and guilty of crime Z as an accomplice under Pinkerton

Other Notes: Conviction of one co-conspirator is valid even if all other co-conspirators are acquitted (Hughes, 9th Cir.)

One Agreement to Engage in Multiple Crimes: can only have one conspiracy count but D will be responsible for all actions under that one conspiracy.

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M. RICO § 1962

1962(a): “It shall be unlawful for any person who has rec’d income derived…from a pattern of racketeering activity…to use or invest…any part of such income…in acquisition of any interest in or the establishment or operation of any enterprise”

Elements: Pattern of Racketeering Activity INCOME Person INVESTS Enterprise

1962(b) “It shall be unlawful for any person through a pattern of racketeering activity…to acquire or maintain…any interest in or control of any enterprise.”

Elements: Person CONTROLS THROUGH PATTERN OF RACKETEERING ACTIVITY Enterprise

1962(c): “It shall be unlawful for any person employed by or associated with any enterprise…to conduct or participate…in the conduct of such enterprise’s affairs through a pattern of racketeering activity”

Test: o 1) Do we have a person? o 2) Do we have an enterprise (sufficiently distinct from person and from racketeering activity)?o 3) Is person employed by or associated w/enterprise? (Easily Satisfied)o 4) Does person conduct or participate in the conduct of the affairs of the enterprise? o 5) Do we have pattern of racketeering activity?

NOTE: (a) and (b) are about infiltration of legitimate enterprises through racketeering while (c) is about using an enterprise to conduct the racketeering activity

SEE 18 U.S.C. 1961: Definitions and SEE 18 U.S.C. 1962: Prohibited Activities1961(1)(A): “Racketeering activity”1961(3): “Person”: Includes “any individual or entity capable of holding a legal or beneficial interest in property”1961(4): “Enterprise”: Includes “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity”

Rule: The enterprise must be sufficiently distinct from the pattern of racketeering activity but enterprise includes legitimate and illegitimate (association-in-fact) enterprises (Turkette)

o Association-in-fact enterprise: group of persons associated together for a common purpose of engaging in a course of conduct

o Person: Individual A AND Enterprise: Individual A, Individual B, Individual C, etc.: OKAY (Turkette) Rule: “Person” must be distinct from the “enterprise” with which the person is associated but there is a low

threshold (Cedric Kushner, president and corp. okay)o Person: Corp. A and Enterprise: Corp. B: NO but okay under 1962(a)o Person: Employee A and Enterprise: Employee A and Corp. B: OKAYo Person: Corp. B AND Enterprise: Corp. B + Employee A (or Subsidiary Corp A): NO (Riverwoods, 2d Cir)

p. 691 n.41961(5): “Pattern of racketeering activity”: Requires at least 2 acts w/in ten years of the prior act

Continuity and Relationship Test (H.J. Inc):o Continuity : “[R]efer[s] either to a closed period of repeated conduct [extending over a substantial

period of time], or to past conduct that by its nature projects into the future with a threat of repetition.

Temporal, fact-specific test satisfied by showing that the predicate acts are part of an ongoing entity’s regular way of doing business

o Relationship: “Criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events”

Conduct of Enterprise’s Affairs: Operation or Management Test (Reves v. Ernst & Young) The person must have “participated in the operation or management” of the enterprise’s affairs

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The person “must have some part in directing [the] affairs [of the enterprise]”N. RICO Conspiracy 1962(d): conspiracy to violate (a), (b), or (c)

No Overt Act

20 Year Sentence (v. 5 for 371)

Chain and Wheel Conspiracy Theories Don’t Apply Rule: The key is that each D agreed to participate directly and indirectly in the affairs of the enterprise by

committing two or more predicate crimes. Elliot: Although Ds must agree to participate directly or indirectly in the affairs of the enterprise through the

commission of a pattern of racketeering activity (2+ predicate acts), they need not agree to commit the same pattern as long as the D’s pattern involve the same enterprise.

Antar: Liabilty would be permissible under 1962(d) if an actor “conspires to operate an enterprise,” but it would not be permissible if an actor “conspires w/someone who is operating or managing the enterprise.”

Salinas: D doesn’t have to agree to commit 2 predicate acts, himself—agreeing that one of the conspirators will commit the object of the agreement suffices.

1962(d): D must agree that…Element of 1962(c) He or she personally will… He or she personally or his or her co-

conspirator willBe employed by or associated w/enterprise

Conventional view

Conduct or participate in conduct of enterprise

AntarElliot

Conventional view (Quintanilla)

Through a pattern of racketeering activity

Elliot Conventional view (Salinas)

§ 1963: Criminal Penalties; § 1964: Civil Penalties (People like RICO bc you get treble damages and attorney’s fees)

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O. MONEY LAUNDERING § 1956

A. 1956(a)(1): Transaction Offenses: Domestic Money Laundering Conducts or attempts to conduct a financial transaction Proceeds are in fact the proceeds of Specified Unlawful Activity (SUA) Knowledge that Proceeds of some form of unlawful activity (don’t have to know that it is an SUA) And a Specific Intent Prong:

o Promotion Prong: w/intent to Promote the carrying on of SUA (§ 1956(a)(1)(A)(i))o Transaction Prong: Transaction is designed in whole or in part to conceal the nature, location, source,

ownership, or control of proceeds of SUA (§ 1956(a)(1)(B)(i))

Test for 1956(a)(1)(A)(i): Promotion 1) Conduct or attempt to conduct a financial transaction? 2) Proceeds in fact the proceeds of SUA? 3) Knowledge that proceeds are some form of unlawful activity (don’t have to know it is an SUA--) 4) With the intent to promote the carrying on of SUA

Test for 1956(a)(1)(B)(i): Concealment 1) – 3): Same as above 4) Transaction is designed to conceal nature, location, source, ownership, or control of proceeds 5) Knowledge that transaction is designed to conceal the nature, location, source, ownership or control of

proceeds?

B. 1956(a)(2): Transportation Offenses: International Money Laundering “Transports or attempts to transport” A “monetary instrument or funds”

o 1956(c)(5): defines “monetary instrument” Across the border of the U.S. And a Specific Intent Prong:

o Promotion Prong (A): With the intent to promote the carrying on of SUA o Transportation Prong (B)(i):

Monetary instruments or funds are or are represented to be proceeds of unlawful activity Knowledge

Transportation is designed in whole or in part to conceal the nature, location, source, ownership, or control of proceeds of SUA

Knowledge

Test for 1956(a)(2)(A) Promotion 1) Transports or attempts to transport? 2) A monetary instrument or funds? 3) Across the US border? 4) With the intent to promote the carrying on of SUA?

Test for 1956(a)(2)(B)(i) Concealment 1) – 3): Same as above 4) Are monetary instruments or funds proceeds of SUA? 5) Does D know that monetary funds are proceeds of some unlawful activity? 6) Is transportation designed in whole or in part to conceal the nature, location, source, ownership, or

control of proceeds of SUA? 7) Does D know that transportation is designed in whole or in part to conceal the nature, location, source,

ownership, or control of proceeds of SUA?

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C. § 1957: Trafficking Engages or attempt to engage

o Knowledge In a monetary transaction

o Knowledge In criminally derived property

o Knowledge W/value greater than $10,000

o Knowledge Property was in fact derived from SUA

Test for § 1957(a) Trafficking 1) Knowingly engage or attempt to engage in a “monetary transaction”? (as an accomplice) 2) Was the monetary transaction in “criminally derived property”? 3) Did the criminally derived property have a value greater than 10,000? 4) Did criminally derived property derive from SUA? 5) Did D know the property was criminally derived property?

Concealment Prong: D must know a) proceeds come from unlawful activity (but does not have to know what unlawful activity) and b) that the transaction was designed to conceal (but doesn’t have to act w/purpose of concealing) (Campbell)

Promotion Prong: The promotion sections of 1956 do not require that the promotion is for a SUA other than the underlying SUA. (Piervinanzi)

1957: Does require that transaction use the criminally derived property (can’t come out of the transaction)

Notes on Money Laundering 1956(a)(3): Authorizes use of gov’t sting operations Definitions: 18 U.S.C. 1956(c)

o Conduct (§ 1956(c)(2))o Transaction (§ 1956(c)(3))o Financial Transaction: (§ 1956(c)(4)): any “transaction which … affects interstate commerce …

involving the transfer of title to any real property …”o Specified Unlawful Activity (§ 1956(c)(7)): includes all RICO predicates and otherso Knowing that the property represents proceeds of some form of unlawful activity (1956(c)(1))

Definitions: 18 U.S.C. 1957(f)o Monetary Transaction: 1957(f)(1): transaction involving “funds or a monetary instrument” (as

defined in 1956(c)(5)) and involving a “financial institution” (as defined in 1956(c)(6))o Financial Institution; A “financial institution” means, among other things, “persons involved in real

estate closings and settlements” (31 U.S.C. § 53129a)(2)(U))o Criminally Derived Property: 1957(f)(2): property constituting, or derived from, proceeds from a

criminal offense Actual Proceeds of SUA: Don’t have to directly trace tainted money when mixed w/legitimate funds. Gov’t

need only present evidence that D engaged in conduct typical of criminal activity and had no other legitimate source of funds.

o 1956(a)(3) may be invoked where money laundered doesn’t in fact involve proceeds of illegal activity bc money is gov’t money used in sting (okay as long as D believed it was proceeds of illegal activity)

Does “Proceeds of SUA” refer to the net profits of the SUA or the gross receipts?

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o Split decision (US v. Santos (U.S. 2008)): Four justices said “proceeds” refers only to net profitso Congress responds: “proceeds” means gross receipts (18 U.S.C. § 1956(c)(9))

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II. CASE BRIEFS

MENS REA

US v. Int’l Minerals & Chemical Corp. (U.S. 1971): If dangerous/deleterious device ignorance of law is no defense. Facts: corp. charged for shipping sulfuric acid in interstate commerce w/o properly classifying it according to

regulation dealing w/hazardous materials. Violation statute says “whoever knowingly violates any [ICC] regulation” will be punished.

Issue: does “knowingly” require knowing the language of the reg or knowing that it was shipping something hazardous?

Holding: Ignorance of law is no defense when dangerous or deleterious devices or obnoxious waste materials are involved bc the probability of regulation is so great that anyone dealing with them must be presumed to be aware of that regulation.

Staples v. US (U.S. 1994): Firearms are not under public welfare: must know it fires automatically. Facts: D has a semi-automatic that has been changed to automatic. Statute says it is a crime to possess a

firearm, which includes automatic weapon. D says he did not know it could fire automatically. Statute is silent on mental state.

o Freed: State didn’t have to prove man who knew he had grenades also knew those grenades were unregistered

o Liparota: Gov’t must prove D knew that his possession of food stamps was “unauthorized” and not merely that he was in possession of food stamps

Issue: Is it enough that D knew he was in possession of a weapon or does Gov’t have to show that D also knew that the weapon could fire automatically.

Holding: Statute requires proof that D knew of the characteristics of his weapon that made it a firearm under the Act bc otherwise the law would punish people who genuinely believed they were law-abiding.

Dissent: Would rely on public welfare doctrine to say that bc D knew that the gun was dangerous, this should be enough.

US v. Weitzenhoff (9th Cir. 1993) (might want to look at in class notes): Discharging pollutants falls under public welfare doctrine

Facts: D dumping waste in water exceeding amount allowed by permit. Clean Water Act says it is a felony to “knowingly violate permit” (and a misdemeanor to “negligently violate”). Ds allege that they thought they were authorized under the permit and did not “knowingly violate” it.

Interpretations:o Charge: It is a felony to knowingly discharge pollutants in violation of any permit condition or

limitationo Majority: “Knowingly” modifies only “discharge pollutants” (only the acts you are doing)o Dissent: “Knowingly” modifies both “discharge pollutants” and “in violation of any permit condition

or limitation” Holding: Gov’t does not need to prove that Ds knew that their acts violated the permit bc this is a public

welfare issue. Knowing = knowingly engaging in the acts that violate the law (Int’l Minerals). Dissent: this interpretation punishes morally innocent (even if these Ds are not) will discourage sewage

workers and we need that for public health

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ENTITY LIABILITY

NY Central & Hudson River R.R. Co. v. US, U.S. 1909: Corporations can be criminally liable for acts of its employees Facts: Violated Elkins Act by giving rebate to Am. Sugar to get its business. Act says corp. and actor are liable

if w/in scope. Issue: Is it unconstitutional to impute commission of crimes onto a corp., (D says it hurts stockholders and

that the corp is actually innocent). Holding: Yes, corporations can be criminally liable for the acts of its employees. We see no valid objection in

law and every reason in public policy (prevent favoritism) why corp, which profits by the transaction, can only act through its agents and officers, shall be held punishable by fine bc of the knowledge and intent of its agents to whom it has entrusted authority to act and whose knowledge and purposes may well be attributed to the corp. for which the agents act.

U.S. v. Sun-Diamond Growers of CA, D.C. Cir. 1998: Intent to Benefit Facts: Sun-Diamond employee D gives money to his friend Espy, who was the Secretary of Agriculture, and an

important character in Sun-Diamond’s business. D and Lake (officer at Sun-Diamond’s PR firm, RSLM) agrees to get 5 RSLM employees to pay money to Espy and then D and Lake would arrange for Sun-Diamond to reimburse them.

Charge: S-D is indicted for defrauding RLSM through fraudulent theft of property and theft of (Lake’s) honest services.

Sun-Diamond’s Claim: D wasn’t acting with intent to benefit Sun-Diamond. Rather, he defrauded Sun-Diamond.

Holding: Although Sun-Diamond was in fact a victim here, jury had right to find that D was still trying to benefit corporation by cultivating a relationship with Espy. And we do not have to impute rules to be the same on both sides.

US v. Hilton Hotels Corp., 9th Cir. 1972: Liability even when act was against corp. policy Facts: Group of hotel operators agree to give preferential treatment to suppliers who contributed money to

the group and to curtain purchases from those who did not. The President of Hilton announced that this was contrary to policy and instructed agent not to follow but agent still did. Company is charged w/Sherman Act violation.

Holding: Corps can be liable for acts of agents even if conduct was contrary to express instructions (as long as it is still w/in the scope of employment) because it is in the public interest and bc often it is hard to hold individual agents responsible.

Rationale: Breadth and critical character of the public interests protected by Sherman and gravity of threat to those interests. Talks about how it was very dramatic legislation w/an important protective purpose.

United States v. Bank of New England, 1st Cir. 1987: Collective Knowledge Doctrine Facts: Bank of NE was found guilty of willfully failing to file CFRs on 31 large cash withdrawals made by

McDonough. The bank’s head tellers, however, were found not guilty in individually aiding and abetting. Holding: The Bank is still found guilty under collective knowledge—Willful requires knowledge (willful

ignorance) of the facts and of the law requiring a CFR to be filed. While individual actors may not have had such knowledge, combined, the corp. does. Bc bank has compartmentalized structure like most corps, collective knowledge instruction is necessary.

Knowledge of Facts

Knowledge of Law

Willful violation

Head Teller 1 Yes Maybe MaybeHead Teller 2 Yes Maybe MaybeGeneral Counsel No Yes NoBank (Total of Above)

Yes Yes Yes

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PERJURY, FALSE DECLARATIONS, and FALSE STATEMENTS

Bronston v. US, (U.S. 1973): Literal Truth is a Defense Under Perjury (and False Declarations) Facts: D’s company opened bank accounts in foreign countries. D wants bankruptcy arrangement

w/creditors: hearing on company’s assets. D had personal bank account for 5 years in Geneva. Testimony:o Q: Do you have any bank accounts in Swiss banks, Mr. Bronstono A: No Sir (true: did not have account at time of questioning)o Q: Have you ever?o A: The company had an account there for about 6 months, in Zurich (literally true—co. did have

account in Zurich) Issue: whether a witness may be convicted of perjury for an answer, under oath, that is literally true but not

responsive to the question asked and arguably misleading by negative implication Holding (Burger): 1621 cannot sustain a conviction based on D’s answer bc the gov’t did not prove that the

statement was false. It’s not enough that it was unresponsive and in casual conversation, would’ve implied that there was no personal account. This isn’t casual convo and this should have been cured by the lawyer asking questions to stop witness’s evasion.

NOTE: Result under 1623 would be the same.

U.S. v. Libby: No Faulty Memory Defense Facts: Scooter Libby tries to say his false testimony is excused because of “faulty memory”. D wants to

introduce memory expert to show that faulty memory is a valid defense. Holding: No, expert’s theories don’t apply and are beyond the understanding of the average juror.

United States v. Herring (11th Cir. 1990): False Statements: Indirectly “Within the Jurisdiction”: Not Good Law Facts: D falsely claimed unemployment to GA Dep’t of Labor to get benefits. US DOL gives money to GA DOL

to make sure that it is following procedures. The money covers admin costs. D claims (a) not w/in jurisdiction of fed’l agency (and even if it was, gov’t must show I knew that and I didn’t) and (b) not material.

Holding: Yes, w/in jurisdiction (and gov’t doesn’t have to prove D knew that) and Yes, material. § 1001 is a proper basis for the prosecution of one who receives GA Unemployment Insurance benefits as the result of filing false statements in the application for such benefits.

Problem w/Herring: overbroad (what if a teacher working at a school that gets federal funding lies and calls in sick?)

Brogan v. US, (U.S. 1998): False Statements: Can be Liable for an Exculpatory No Facts: D is a union official who has been taking $ from an employer violating labor laws. Agents come to

investigate and ask if he’ll answer questions. He agrees. They ask if he rec’d gifts from employer. Brogan says “no.” Agents knew he had. On appeal, D says (a) an “exculpatory no” doesn’t pervert gov’t functions, which is purpose of 1001, and therefore is immaterial (b) affirmative defense is needed to protect privilege against self-incrimination.

Holding (Scalia): No, there is no exception to liability under 1001 for “exculpatory no” statements. Congress intended the statute to be broad and exculpatory no does pervert gov’t functions—their purpose is to find the truth and D lied. The “cruel trilemma” doesn’t exist here bc D could have remained silent—the 5th A gives you a right to remain silent, not to lie.

o D says silence is illusory bc a suspect fears that silence will be used against him later, or may not know silence is an available option. Just bc this is true, doesn’t mean it’s okay to lie.

o D says: risk prosecutorial abuse. Courts may not create their own limits on statutes, even if there are policy arguments for doing so.

Concurrence (Ginsburg): Not for us to change but wake up Congress. Even though Brogan’s little denial didn’t actually mislead anyone, he is convicted of a federal offense.

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NOTE: In Concurrence, Ginsburg notes that 2nd Cir. left open the question whether “to violate 1001, a person must know that it is unlawful to make such a false statement.” 1st Cir. case mentioned by Garvey answers this in the affirmative

OBSTRUCTION OF JUSTICE

Omnibus Clause of 1503

US v. Aguilar, (U.S. 1995): Not guilty unless there is a Nexus Facts: Tham files a post-conviction motion and asks C to help him by using their relationship w/Aguilar, a

judge. C meets w/Aguilar who meets w/judge hearing Tham’s motion. Meanwhile, Tham is suspect in FBI’s racketeering investigation. FBI wiretaps Tham’s and C’s phone and discovers meeting btw C and Aguilar. FBI tells a judge who tells Aguilar that C may be involved w/crime. Aguilar tells nephew to tell C he was being wiretapped. Grand Jury convenes to investigate conspiracy to interfere w/Tham’s motion. FBI speaks w/Aguilar who lies about his participation and knowledge of the wiretap.

Issue: Does 1503 punish false statements made to potential grand jury witnesses? Holding (Rehnquist): Uttering false statements to an investigating agent who may/may not testify before a

grand jury is not sufficient for a 1503 omnibus violation. 1) D must have known/had notice that justice was being administered in a court; 2) Need intent to influence judicial/grand jury proceedings (not intent to influence an ancillary proceeding); 3) Nexus: endeavor must have “natural and probable effect” of interfering w/due admin of justice (doesn’t have to be successful)

Concurrence/Dissent (Scalia): Majority’s reading writes “endeavor” out of the statute. Don’t think you need to have nexus. It is a subjective crime—impossible endeavors to obstruct justice are okay. “Acts specifically intended to influence, obstruct, or impede, the due administration of justice are obviously wrongful, just as they are necessarily corrupt.”

NOTE: Not guilty bc actual nexus does not exist (had FBI said “we are working for the grand jury” it would have)

US v. Cueto, (7th Cir. 1998): Corrupt: act w/purpose of obstructing justice; diff from Intent to Obstruct (lawyer not liable just bc he intends to obstruct/influence but can be liable if corrupt motive)

Facts: Venezia owned B&H, which supplied video poker games to bars and bar owners would make gambling payouts to its customers (racketeering). ILCC and FBI investigate, using Robinson as undercover liquor agent. Robinson tells Venezia that he’d stop investigating for money. Cueto is Venezia’s lawyer but they had other business deals arising out of the illegal company. He drafts letter about Robinson’s conduct and files it in court. State court grants injunction against Robinson but then a bar owner is arrested. Cueto writes letter to ILCC, State’s Attorney, and FBI claiming that Venezia was suffering damage bc of Robinson’s interference w/Venezia’s business. Venezia/B&H charged w/fed’l racketeering. Cueto advised him during investigation and prior to indictment but not during trial, though Venezia still relied on his advice. Venezia/B&H convicted. Later, another grand jury returned a 2nd indictment naming Cueto, Venezia, and Romanik (public official).

Claim on Appeal: a) omnibus is unconstitutionally vague: much of what lawyers do are attempts to influence the justice system and 1503 omnibus wasn’t meant to cover that, b) “corruptly” isn’t a clear term and c) insufficient evidence

Holding: Omnibus clause may be used to prosecute a lawyer’s litigation-related criminality and neither the omnibus of 1503 nor this court’s construction of “corruptly” is unconstitutionally vague as applied to Cueto’s conduct.

Reasoning: A) Corruptly means to act w/a purpose of obstructing justice—requires that D should have reasonably seen that the natural and probable consequences of his acts was the obstruction of justice. B) Even a lawful act may violate 1503 is performed corruptly. Congress drafted 1503 to be broad enough to cover lawyers even though courts might hesitate. Can’t use lawyer-status to protect yourself: attorney understands this conduct is wrong. Lawyers who mistakenly obstruct justice wouldn’t be guilty—must have corrupt motive. C) Record supports conviction. Jury was justified in finding that this his act of filing frivolous appeals and charges against Robinson were motivated by his interest to safeguard his financial interest.

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WITNESS TAMPERING UNDER 18 U.S.C. 1512

Arthur Andersen LLP v. US, (S. Ct. 2005): Knowingly corruptly persuade means D must be conscious of wrongdoing and there is a nexus requirement btw destroying docs and particular proceeding (which must be “foreseen”).

Facts: Enron’s auditor and outside counsel, AA, instructed employees to destroy docs pursuant to its doc retention policy. SEC starts informal investigation of Enron. AA aware of the problems. SEC starts formal investigation. Doc destruction continuing though some at AA were hesitant. Then, “no more shredding…we’ve been officially served for our docs.” Head of Enron (now bankrupt) is fired and pled guilty to witness tampering. AA indicted for “knowingly, intentionally, and corruptly persuad[ing] … other persons, to wit: AA’s employees, w/intent to cause them to w/hold docs from and alter docs for use in “official proceedings, namely: regulatory and criminal proceedings and investigations”

Issue: What it means to “knowingly…corruptly persuade” another person “w/intent to cause” that person to “withhold” documents from, or “alter” documents for use in, an “official proceeding.

Holding (Rehnquist): Conviction reversed bc of jury instructions did not require enough culpability for “knowingly corruptly persuades.” It’s not per se corrupt for att’y to persuade client w/intent to cause client to w/hold docs (Upjohn: att’y-client privilege). Here, we need “knowingly…corruptly persuades” which requires that D be conscious of wrongdoing (knowledge: awareness/consciousness AND corruptly: w/improper motive). Also, we need nexus btw persuasion to destroy documents and the particular proceeding (proceeding need not be pending but must be foreseen)

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MAIL AND WIRE FRAUD§§ 1341 and 1343

Schmuck v. US, (S. Ct. 1989): Innocent/Routine mailings count if they are essential part of perpetuating the fraudulent scheme (even if the mailing might lead to the uncovering of the scheme)

Facts: D buys used cars, rolls back odometers and sells them at higher prices to dealers who then resell to customers. Dealer submits title-application form to state DMV on behalf of customer (required for selling to customers).

Issue: Do submission of form count as mailings in furtherance of fraudulent schemes under 1341 and 1343? Holding (Blackmun): Yes, although forms may not have contributed directly to the duping of dealers or

customers, they were necessary to the passage of title, which was essential to the perpetuation of Schmuck’s scheme. The relevant question is whether the mailing is part of the execution of the scheme as conceived by the perp at the time, regardless of whether the mailing later, through hindsight, may prove to have been counterproductive.

Dissent (Scalia): It is the mail fraud not the mail and fraud that incurs liability. Here, fraud was complete when D pocketed the dealer’s money—it did not matter whether dealer sold the car. Combining each transaction into one scheme not okay—should follow precedent.

Precedent in Schmuck Kann v. US, U.S. 1944:

o Facts: Ds were accused of setting up dummy corp. to divert profits into their own pockets. Ds caused corp. to issue 2 checks payable to them, which were cashed at local banks, which were then mailed to drawee banks.

o Holding: No Mail Fraud. Mailing of cashed checks didn’t satisfy element bc D’s scheme had been brought to fruition at that point.

o Was this an ongoing fraud? Yes Parr v. United States, U.S. 1960:

o Facts: Ds charged w/obtaining gas through unauthorized use of credit card issued to the school district that employed them. Mailing occurred when oil company which issued credit card mailed invoices to school district for payment and when the district mailed payment in form of check.

o Holding: No Mail Fraud. Doesn’t satisfy because it was immaterial to Ds how oil company collected its payments

o Was this an ongoing fraud? Yes Maze:

o Facts: D stole roommate’s credit card and got food and lodging at motels. Mailing occurred when each motel proprietor mailed invoice to bank, which would mail bill to roommate.

o Holding: No Mail Fraud. Didn’t satisfy bc D’s scheme reached fruition when he checked out of each motel.

o Was this an ongoing fraud? Yes Reconciling Schmuck w/Precedent

o “The question at all is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time”

o Under Schmuck, where the jurisdictional mailing or wiring follows the point at which the D has obtained that which he sought through fraud, prosecutors may still show that they were done in furtherance by redefining the scheme as an ongoing one.

Neder v. US, S. Ct. 1999: Materiality is an element of 1341 and 1343 Facts: D engaged in real estate transactions financed by fraudulently obtained bank loans totaling over $40

million. Issue: whether materiality is an element of a “scheme or artifice to defraud” under 1341, 1343, and 1344

(bank fraud)

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Holding (Rehnquist): Yes it is. Materiality of falsehood is an element of federal mail, wire, and bank fraud bc it is a critical part of the common law meaning of fraud. Gov’t says that bc the statute talks about a scheme to defraud, it is not necessarily to actually defraud (thus materiality should not be an element). While we don’t impute reasonable reliance and damages bc the statutory language is incompatible with those elements, we do impute materiality.

Disposition: Remanded to see if jury instruction’s failure to include materiality was a harmless-error.

Bridge v. Phoenix Bond & Indemnity Co., S. Ct. 2008: First-party reliance on the misrepresentation is not required. Facts: State has annual public auctions to sell tax liens it has on property of delinquent taxpayers. Bids are in

% penalties—bidder willing to accept lowest penalty wins right to purchase lien in exchange for paying outstanding taxes on the property. The original owner can redeem the property by paying the taxes and the penalty set at auction as the bid. However, many bidders are willing to accept 0% so to avoid ties, State had a rotational (take turns) basis and a Single, Simultaneous Bidder Rule where each tax-buying entity had to submit bids in its own name and sign a sworn affidavit. D (Sabre Group) sets up firms and has them bid separately but it is all going to D. Phoenix Bond, another bidder brings RICO civil suit based on mail fraud. Mailings occurred when Ds sent property owners various notices required by law.

Issue: Whether P must show that he relied on D’s misrepresentations? Holding (Thomas): No, first-party reliance is not required. A P asserting a RICO claim predicated on mail fraud

need not show, either as element of its claim or as a prerequisite to proximate cause that it relied on D’s misrepresentations.

US v. Regent Office Supply Co. (2nd Cir. 1970): Intent to defraud (intent to deceive and intent to harm) is an element Facts: Regent sells stationary through agents who solicit orders by telephone. Pursuant to policy, Regent

agents get sales by telling a false story to person on the phone in order to get to the purchasing agent (e.g., agent was referred by a friend, agent was a doctor who had stationary to be disposed of, etc.). Regent says false reps were only a preliminary part of the agent’s solicitation—simply lies to get past the secretaries to the purchasing agent—and that everything important (price, quality) were always discussed honestly

Issue: Does solicitation of a purchase by means of false reps not directed to the quality, adequacy, or price of goods to be sold, or otherwise to the nature of the bargain, constitute a scheme to defraud…w/in the prohibition of 1341?

Holding (Moore): No it does not bc there is no intent to defraud (i.e., intent to injure). Falsity of representation must be shown to be capable of affecting the customer’s understanding of the bargain and of influencing his assessment of the value of the bargain to him or there is no intent to injure.

US v. Siegel (2nd Cir. 1983): Non-Disclosure Fraud Facts: D-officers made $100,000 worth of off-the-books cash sales of Mego merchandise which had been

marked down for clearance or returned bc of defect. Ds falsely told Mego’s auditors there were no unrecorded assets.

Gov’t Theories:o 1) Ds defrauded the company out of money that they used for their personal benefito 2) Ds defrauded the company out of money that they used for bribery (payoffs to union officials)

Charge: scheme to defraud Mego and its stockholders by misappropriating proceeds for self-enrichment, violating fiduciary duties to act honestly and faithfully in best interest of the corp. and to account for the sale of all Mego property

Holding (Pratt): When a fiduciary fails to disclose material info to one whom he is under a duty to disclose and where non-disclosure could/does result in harm to another, this is enough for mail fraud. Here, there is sufficient evidence to say that D used proceeds for non-corp. purposes in breach of duties to act in best interest of the corp. and to disclose material info. This is enough money to constitute material and jury had enough evidence to infer that Ds used scheme for personal gain. That being said, we disapprove of this type of prosecution that should have been a derivative suit or state criminal.

Dissent: Fiduciary duties are contractual obligations—wire fraud is not the proper statute to enforce them. This creates a new area of federal law where juries will now decide what is in the best interests of a corp.

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NOTE: Not embezzlement bc fed’l embezzlement requires embezzlement of fed’l funds or embezzlement by fed’l officials.

NOTE: Primary Duty is not to use corp. funds for personal gain or for bribery. Secondary Duty is to disclose a breach of the primary duty. The failure to satisfy secondary duty (i.e., non-disclosure) is the fraud.

US v. Bronston (2nd Cir): Lawyer can be liable under non-disclosure mail fraud for failing to disclose conflict of interest

Bronston (lawyer) gave assistance to client who was competing for a franchise w/another client represented by Bronston’s firm. Court upheld conviction based on fraudulent failure to disclose breach of fiduciary duty (actively engaging in efforts designed to frustrate the precise endeavor which the other client had engaged the firm to pursue)

McNally v. US, (S. Ct. 1987): Tangible Property Facts: Hunt (Dem Party Chairman) and Gray (Public Official) have power to select insurance co for Kentucky.

They select Wombwell. Kentucky gives premiums to Wombwell who gives premiums to insurance underwriters. Insurance Underwriters provide insurance to Kentucky and give commission to Wombwell. Wombwell keeps some $ and gives the rest to Seton Insurance (owned by Hunt and Gray), Snodgras (owned by McNally, private individual) and to other entities. Gray and Hunt had set up Seton for the sole purpose of getting commissions (before Gray was public official). Hunt pleaded guilty to mail fraud and Gray and McNally were charged (McNally as accomplice, Gray as either principal or accomplice).

Charge: Mail fraud (mailing: commission check to Wombwell by insurance co from which it secured coverage for KT). Gov’t says Ds defrauded KT citizens + gov’t of intangible rights such as right to have KT’s affairs conducted honestly

Issue: Does a state officer commit mail fraud if he picks an insurance agent to provide insurance for the state but requires that agent to share its commissions w/other insurance agencies, one in which the officer has an ownership interest?

Holding (White): No bc scheme to defraud must have a cognizable object (money or property). One deemed a public official owes fiduciary duty to public and misuse of his office for private gain is fraud. Mail Fraud protects property rights but doesn’t refer to the intangible right of the citizenry to good gov’t. History suggests it was only meant to protect property rights and we take the less harsh reading when Congress is less than clear. Here, assuming is okay to make an agency share commissions or to own an agency benefitting from commissions, Hunt and Gray rec’d commission but it wasn’t KT’s money. No defrauding of property = no conviction under jury charges

Dissent (Stevens): Congress broadly prohibited use of mails to carry out “any scheme or artifice to defraud.” The statute should be read to embrace a secret agreement by state officials to place the state’s insurance w/a particular agency in exchange for that company’s agreement to share a major portion of its commissions w/a list of agents, including sham agencies under the officials’ control. We see defrauding of intangible rights such as honest services a lot:

o Public officials defrauding right to the honest services of their gov’t officialso Officials secretly made gov’t decisions w/objective of self-benefit instead of fulfilling commitment to

citizenso Elected officials convicted of mail fraud when using mail to falsify votes, defrauding right to honest

election NOTE: This would be non-disclosure fraud. Ds here had duty not to make this agreement w/Wombwell

(primary duty). Ds were obligated to disclose the breach of that duty (secondary duty). NOTE: Object of the fraud here is honest services, i.e., the intangible right of KT’s citizens to the honest

services of the Ds. NOTE: Court’s decision was a “total surprise” since most lower courts were recognizing “intangible rights”

theory of mail/wire fraud

Carpenter v. US, (S. Ct. 1987): Right to confidential Information satisfies object for a mail/wire fraud conviction

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Facts: Winan’s WSJ column gives info on investing in certain stock. Bc of its reputation, it had the ability to affect stock price and prior to publication, the info in the column was confidential. However, Winans agreed to give two brokers advance info about the column, letting brokers buy/sell based on the column. SEC began investigation Denials eventually, Winans and Carpenter (Winan’s aiding/abetting roommate) went to SEC and revealed scheme Indictment and bench trial.

Holding (White): Winans knowingly breached a duty of confidentiality by misappropriation WSJ’s confidential info from the column. This is different type of object than honest services in McNally bc confidential info is actually (WSJ’s) property, although it is intangible. It fits concept of fraud: wronging one in his property rights by dishonest methods or schemes, usually signify the deprivation of something of value by trick, deceit, chicane, or overreaching.

NOTE: Non-Disclosure Fraud:o Defendants violated their duty to WSJ to keep information confidential (primary duty) o Ds were obligated to disclose that breach (secondary duty)o Ds failed to do so.

Right to Control Theory: Denying victim the right to control its assets by depriving it of info necessary to make a discretionary economic decision

Wallach, 2nd Cir: questionable payments made to people (one a corp. director) supposedly as payment for assistance in an IPO—disguised so they didn’t have to be disclosed to SEC.

o Holding: Fraudulent deprivation of shareholders’ “right to control” how corp. money was spent D’Amato, 2nd Cir: a D in a “right to control” case must intend to injure the person misled, and that

person/entity must be the target of the inaccurate or concealed info. Not if officer in good faith believes his misrep is legal and in best interests of corp. D can show: 1) Mgmt has made an otherwise lawful decision that concealment or failure to disclose is in corp.’s best interests and 2) Mgmt acted in good faith and did not intend to benefit personally from the deception.

Cleveland v. U.S., S. Ct. 2000: D had tax problems so he concealed the fact the he was a business-owner in the license application which was mailed to the state.

o Holding: not property in gov’t’s hands bc State’s core concern is “regulatory” and whatever financial stake it had in licenses accrues only after they’ve been issued. Rejected right to control argument that D frustrated gov’t’s right to control issuance of licenses: “far from composing a recognized property interest, these intangible rights of allocation, exclusion, and control amount to no more and no less than LA’s sovereign power to regulate”

Skilling v. US (S. Ct. 2010): Intangible Non-Property (i.e., honest services) can be an object only if it involves bribes or kickbacks

Facts: Skilling makes misrepresentations to market about Enron’s health, which increases stock price of Enron. Enron gives him salary bonuses and sale of stock for his work (where honest services comes in).

Issues/Holding (Scalia):o Is 18 U.S.C. § 1346 unconstitutionally vague (DP violation)

The statute is not unconstitutionally vague (contrary to concurring justices)o If not, did Skilling’s conduct fall outside the scope of that statute?

Skilling’s conduct does not fall within the statute—1346 covers only “schemes to deprive another of honest services through bribes or kickbacks supplied by a 3rd party who has not been deceived,” where the D owes the victim a duty to disclose (based on a fiduciary relationship) the bribe or kickback

NOTE: What questions remain open after Skilling?o What exactly is covered by the prohibition against bribery and kickbacks?o When does a fiduciary relationship exist such that a bribe or kickback must be disclosed? o Can conflict-of-interest (self-dealing) cases be characterized as thefts of intangible property

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BRIBERY AND ILLEGAL GRATUITIES § 201(b) and (c)

US v. Sun-Diamond Growers of CA (S. Ct. 1999): Nexus is required btw official act and the gifts under illegal gratuity. Facts: SD is a trade association made up of coops. They gave Espy, the Sec. of Agriculture various gifts. Gifts:

money, etc. Interests: Sec. must approve their MPP funding, Gov’t regulates a pesticide Issue: Do you need a nexus between the official act and the gifts under the illegal gratuity statute Holding: Yes, the Gov’t must “prove a link btw the thing of value…and a specific ‘official act’ for or bc of which

it was given” bc it is the most natural reading; other statutes clearly impose status-based ban on giving gifts, and it is a better fit w/other statutes.

o Most Natural Reading: Problem revolves around the definition of “any” in “for or bc of any official act.” Any could mean 1) “any” as in “some particular” (I.e., do you like any composer?) or 2) “any” as in “all” (i.e., do you like any composer [no matter what their names]?) We think 1st is more natural—a particular act must be involved.

o Other Statutes: Our refusal to read it as a prohibition of gifts given by reason of the donee’s office is supported by the fact that when Congress wants a broad statute, it makes it so. Gives examples (499)

o Better Fit: Finally, a narrow prohibition is more compatible w/fact that 201(c) is one strand of an intricate web of regulations, both administrative and criminal, governing the acceptance of gifts and other self-enriching actions by public officials. Plus those statutes all have exceptions which would be unnecessary if we accepted Gov’t’s position bc then everything would fit into 201(c)

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SECURITIES FRAUD – INSIDER TRADING

Chiarella v. US (S. Ct. 1980): Classical Theory: must breach duty to disclose that runs to the shareholders Facts: Chiarella, a printer, sees announcements of corporate takeover bids and buys securities before the

final printing. He sells his shares right after disclosure, getting $30,000. Chiarella agreed to return profits to sellers of shares and was indicted for violating 10(b). He was convicted and 2nd Cir affirmed.

Holding: Chiarella isn’t guilty bc he had no fiduciary duty to disclose to the corp. whose stock he traded in. Reasoning (Powell):

o Cady, Roberts (SEC 1961): Insiders in possession of material, non-public info have a duty to disclose the info or abstain from trading.

o Duty to abstain until disclosure arises from an affirmative duty to disclose material info, which has been imposed on insiders bc they are in a special relationship of trust and confidence w/shareholders and it is unfair to let an insider take advantage of that info.

o But a stock purchaser who has no duty to a prospective seller bc he is neither an insider nor a fiduciary has no obligation to reveal material facts

o Here: D is not a corp. insider and the market info upon which he relied didn’t concern the earning power or operations of the target company, but only the plans of the acquiring company. D’s use wasn’t a fraud unless he was subject to an affirmative duty to disclose and we don’t want a rule putting a duty to disclose on everyone.

o The idea of misappropriation was not put to the jury so we aren’t reaching that. Dissent (Burger): Raises misappropriation theory NOTE: The argument that Chiarella is an insider of Corp. A bc he works for Pandec which works for Corp. A

fails to impose liability bc Chiarella traded in Corp. B’s stock.

Dirks v. SEC (S. Ct. 1983): Tipper/Tippee Liability requires that Tipper breach a fiduciary duty through intent to personally gain.

Facts: Dirks learns from Secrist that a corp. is acting fraudulently. Dirks looks into the claim (some affirm, some deny) then tells a journalist but he won’t publish. SEC sues and finds D aided/abetted 10(b) violations by repeating fraud allegations to members of the investment community who later sold their stock.

Holding: Dirks is not guilty of insider trading bc there is no derivative fiduciary liability. To have a tippee, you need a tipper. A tipper must breach a fiduciary duty and must make a personal gain.

Reasoning: Powello Rule: A tippee assumes a fiduciary duty to the shareholders of a corp. not to trade on material

nonpublic info only when the insider has breached his fiduciary duty to the shareholders by disclosing the info to the tippee and the tippee knows or should know that there has been a breach

o Test: whether the insider personally will benefit, directly/indirectly, from his disclosure. Absent some personal gain, there has been no breach of duty to stockholders. And w/o a breach by the insider, no derivative breach.

Dissent: Blackmun, Brennan, Marshallo Secrist intended Dirks to injure the purchasers of EF securities to whom Secrist had a duty to discloseo If Dirk knows/has reason to know that info is material and nonpublic and obtained through a breach

of duty, he is liable too. Just bc insider didn’t benefit doesn’t eradicate the shareholder’s injuryo Secrist may have had a good motive of exposing fraud but he went about it in a bad way

US v. O’Hagan (U.S. 1997): Misappropriation Theory Facts: O’Hagan, partner in law firm of Dorsey & Whitney, learns of tender offer by Grand Met (a D&W client)

to Pillsbury, though not involved in representing Grand Met. He buys Pillsbury stock, which doubles in price. Holding: Guilty—A person who trades in securities for personal profit, using confidential info

misappropriated in breach of a fiduciary duty to the source of the info guilty of violating 10(b) and 10b-5? Reasoning (Ginsburg)

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o Misappropriation theory: a person commits fraud in connection w/a securities transaction when he misappropriates confidential info for securities trading purposes.

o In misappropriation, D breaches a duty owed to the source of the information, rather than the shareholders.

o Here: D owed a duty of trust/confidence to his law firm and to its client. o Full disclosure forecloses liability under the misappropriation theory: because the deception essential

to the misappropriation involves feigning fidelity to the source of info, if the fiduciary discloses to the source that he plans to trade on the nonpublic info, there is no “deceptive device” and thus no 10(b) violation.

But if you owe a duty to two entities, must disclose to both. Dissent/Concurrence (Thomas): agrees about misappropriation idea but doesn’t think the deception was used

in connection w/a securities transaction. Undisclosed misappropriation of confidential info is not necessarily consummated by a securities transaction. D could have done other things—sell info to a newspaper, given it to Pillsbury, kept it for his own amusement.

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CONSPIRACY

US v. Arch Trading (4th Cir. 1993): Exec order constitutes an offense under 371 when Congress authorizes it and sets up sanctions.

Facts: Pres. Bush prohibited US persons from going to Iraq or dealing w/gov’t of Iraq. Earlier, AT contracted w/Agricultural of Iraq to ship and install equipment in Iraq. Shipments were made but installations were not done before President’s order, of which AT received copies. Two AT execs attempted to enter Iraq to install the equipment. That failed so they had a Jordanian company install but an AT exec helped coordinate. To cover this up, AT submitted backdated docs for money from Kuwaiti bank and asked Jordanian company to backdate its confirmation of performance. Kuwaiti bank wouldn’t give money until gov’t office licensed it. AT wrote letter, backdating again. Gov’t office wrongly replied that license wasn’t needed. AT indicted for conspiracy.

Defense: 371 criminalizes conspiracies to commit an offense against the US and conspiracies to defraud the US. AT was charged w/the former but said it could only have been the latter, bc violating exec order doesn’t constitute an “offense”

Holding: When Congress provides criminal sanctions for violations of exec orders that it empowers the President to issue, such violation constitutes an “offense” for the purposes of 371. The two prongs of 371 are not mutually exclusive: can be charged under both.

US v. Stevens (11th Cir. 1990): A sole controlling stockholder can’t be guilty of conspiracy w/a corp. in absence of another human actor.

Facts: D made 4 corps which entered into a contract w/Navy. D misrepresented that certain work ahd been performed in several requests for progress payments.

Issue: Can a sole stockholder conspire w/a corp.? Holding: A sole stockholder who completely controls a corp. and is the sole actor in performance of corp.

activities can’t be guilty of conspiracy w/that corp. in absence of another human actor. We have held that corp may be liable under 371 when conspiring w/its officers or employees. We rejected the single entity theory bc conspiracy is meant to deal w/danger posed to society by combinations of individuals acting in concert.

US v. Recio (S. Ct. 2003): Impossiblity is not a defense to conspiracy charge. Facts: Conspiracy to distribute drugs; gov’t seizes the drugs and then D joins conspiracy not knowing that

gov’t has already seized the drugs. D cites Cruz (9th Cir) which held that conspiracy terminates when there is affirmative evidence of abandonment, withdrawal…or defeat of the object of the conspiracy (i.e., when gov’t makes goals impossible).

Issue: Does conspiracy end automatically when the object of the conspiracy becomes impossible to achieve Holding (Breyer): No, conspiracy law does not contain any “automatic termination” rule. The crime of

conspiracy is separate from underlying offense so it doesn’t stop when underlying offense becomes impossible.

US v. Stavroulakis (2d Cir 1992): Essential nature requirement is not defeated when, in a money laundering conspiracy, Ds don’t know from which SUA the dirty money came—agreement to launder dirty money is enough.

Facts: Gov’t informant introduced D to undercover FBI agent who said he was connected w/organized-crime people wanting to launder a lot of money from narcotics. D took the bait and agreed to introduce FBI agent to his accountant, assuring him that he’d find a way to launder the cash. When D’s accountant wouldn’t do it, he got someone else at NMBG bank but told him it was gambling money, not narcotics money. D made elaborate scheme for laundering the money: he’d open an account at NMBG, money would be deposited there then transferred to Greece, where it’d go through a fake corp, etc. etc. The schemers met to plan a few times.

Defense: no agreement on the essential nature of the plan bc D believed the money came from narcotics while the bank guy thought it was from gambling.

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Holding: Conspiracy doesn’t require that co-conspirators believe that the money to be laundered is derived from the same specified unlawful activity as long as the unlawful source is proven to be one of the SUAs.

US v. Gatling (D.C. Cir. 1996) In determining whether there is one conspiracy or more, we look at whether the Ds “shared a common goal,” “any interdependence btw the alleged participants,” and “any overlap among alleged participants.”

Facts: Gatling and Walker work in Section 8 Div. in DC’s Dept of Public Housing. Section 8 gives vouchers to help cover qualified applicants’ rents. There is a process for categorizing applicants and putting them on a wait list, w/highest need getting first dibs. In exchange for bribes, Ds gave subsidiaries to ineligible individuals. There are two schemes: DC scheme and Chicago Scheme.

o What links Walker to Chicago Scheme? Bufford says he paid Walker $1,000 and she told him to pay $1,000 to Gatling—no real

evidence of this. Defense: Walker says she thought he had authority to do this.

o What links Walker to D.C. Scheme? Knight says: Jackson said “Gatling splitting money w/Walker” (comes in bc of hearsay

exception as Jackson was co-conspirator) Johnson says: Jackson said “Walker is doing it with Gatling” Knight says: Walker helped Gatling with photo-copying. $6,000 deposit Talking to Gatling about the number of rooms and helping her photocopy.

Issue: Is Walker guilty? She says evidence establishes at most the existence of two conspiracies, one Chicago and one DC.

Holding: No, this is one conspiracy bc the schemes shared a common purpose and overlaps in time and actors. In determining whether there is one conspiracy or more, we look at whether the Ds “shared a common goal,” “any interdependence btw the alleged participants,” and “any overlap among alleged participants.” This may not be as interdependent as a drug chain conspiracy, but still is sufficient.

NOTE: Matters bc if there were two, there would have been a variance btw indictment and evidence which could be grounds for reversal if it substantially prejudiced the D.

NOTE: If we take away hearsay statements, we are left with insufficient evidence.

US v. Tilton (5th Cir. 1980): Pinkerton: D is guilty of substantive offense committed by co-conspirator if it was committed in furtherance of the conspiracy (could reasonably be foreseen as a natural consequence of the conspiracy), even if D didn’t participate in the acts

Facts: D works for Sea-Land, which starts program to send refurbished chassis to Saudi Arabia. D selects Streaker (owned by Fiore & Brenner) to do chassis reconditioning. Fiore tells Brenner that D needs commission for each chassis and to bury the payment in the books as travel expenses. Brenner do so. D did this w/a different company, UTS (owned by Cotrone and Gillespie) but UTS inflated invoices in order to make up for the commission. D indicted for conspiracy to commit mail fraud

Holding: Evidence is sufficient to show that D conspired to commit mail fraud. The scheme of inflating invoices mailed to Sea-Land in order to generate “commissions” defrauded Sea-Land. The mailing was the padded invoices. Bc D was part of a conspiracy, he can be convicted of the substantive offense based upon acts committed by a co-conspirator in furtherance of the conspiracy as long as the facts fall w/in the scope of the conspiracy and could reasonably be foreseen as a necessary or natural consequence of the unlawful agreement. A party to a conspiracy can be held responsible for substantive offenses committed by co-conspirators if acts were committed in furtherance of a conspiracy even though D neither participated in the actual act of committing the crime nor knew it was committed.

NOTE: Problem in this holding: Cotrone and Gillespie committed the mail fraud and the victim is Sea-Land, but the court finds that Tilton is guilty as an accomplice bc the mail fraud was a natural and foreseeable consequence of his agreement to get commissions. However, Tilton did not conspire to commit a crime with Cotrone and Gillespie.

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RICO

US v. Turkette (U.S. 1981): The enterprise must be sufficiently distinct from the pattern of racketeering activity Facts: Enterprise was group of individuals associated for purpose of drug trafficking, bribery. D allegedly led

the enterprise. Claim on Appeal: No enterprise here because the enterprise is not sufficiently distinct from the racketeering

activity. Holding (White): No, “enterprise” encompasses both legitimate and illegitimate enterprises under RICO.

Statute and legislative history suggests that it encompasses both. We disagree w/lower courts that ejusdem generis should be followed and we recognize a difference btw the group as an enterprise and the act. We know that the major purpose was to address infiltration of legitimate business by organized crime but we don’t see anywhere that this was the exclusive purpose.

Ejusdem generis: where general words follow a specific enumeration of persons or things, the general words should be limited to persons or things similar to those specifically enumerated (because each enterprise listed is legitimate)

Cedric Kushner Promotions v. King “Person” must be distinct from the “enterprise” with which the person is associated but there is a low threshold

Facts: Don King is president and sole shareholder of Don King Promotions. P says King has conducted the corporation’s affairs through illegal racketeering but acted w/in scope as corp. employee.

Issue: Are there two distinct entities, a “person” and a separate “enterprise”? Holding (Breyer): Yes, person and enterprise are distinct. We agree that there must be two entities (person

and enterprise) and that there must be some distinctness between them but we don’t think it has a very high threshold. Here, a corp. owner is distinct from the corp. bc they have a different legal status. That is sufficient. We distinguish a 2d Cir case bc there, P alleged that the person was the corp. and the enterprise was the corp. w/all the employees.

Hypotheticals Person: Individual A AND Enterprise: Individual A NO Person: Corp. B AND Enterprise: Corp B NO (BUT okay under 1962(a)) Person: Employee A AND Enterprise: Corp. B YES (Cedric Kushner) Person: Employee A AND Enterprise: Employee A + Corp. B YES Person: Individual A AND Enterprise: Individual A, Individual B, Individual C, etc. YES (Turkette) Person: Corp. B AND Enterprise: Corp. B + Employee A (or Subsidiary Corp A) NO (Riverwoods, 2d. Cir.

1994 p. 691 n.4

H.J. Inc. v. Northwestern Bell Tel. Co. (U.S. 1989): Continuity and Relationship Test Facts: Ps, customers of D, allege bribery and violations of 1962(a)-(d) by D, employees, officers, and MPUC

members. MPUC: responsible for determining rates that D may charge. Ps say D sought to influence members of MPUC to give them higher rates than reasonable, by giving cash/gifts to commissioners.

o 1962(a): got income from the schemeo 1962(b): came to control MPUC

Holding (Brennan): Pattern of racketeering does not require proof of multiple schemes—just must satisfy continuity and relationship test: showing of (a) a relationship btw at least 2 predicate acts and (b) the threat of continuing activity. Here, over 6 years, Ds gave five members of MPUC bribes for the common purpose of getting unreasonable rates. On remand, threat may be demonstrated by showing that alleged bribes were a regular way of conducting D’s ongoing business.

Concurrence (Scalia, O’Connor, Rehnquist, Kennedy): Pattern was meant to import some requirement beyond multiple acts. Today’s opinion hasn’t helped. This is bad in the RICO context bc RIO is validating the federalization of broad areas of state common law of frauds. Indicating that a constitutional challenge is needed

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IV. Conduct of Enterprise’s Affairs Operation or Management Test

o The person must have “participated in the operation or management” of the enterprise’s affairso The person “must have some part in directing [the] affairs [of the enterprise]”

Reves v. Ernst & Young (U.S. 1993): Operation or Management Test Facts: White, gen. manager of Farmers Co-op, took money from Co-op for his own venture, White Flame

Fuels. He was convicted of fed’l tax fraud. Co-op retained E&Y who determined that the value of White Flame on Co-op’s books depended on when it was acquired: a) if purchased at inception: $4.5 million or b) if purchased from White: $1.5 million. E&Y took option (a) bc otherwise Co-op was insolvent but doesn’t tell Co-op any of this. Co-op went bankrupt. Group sued E&Y on behalf of Co-op under 1962(c).

Issue: Meaning of “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs.” Holding (Blackmun): Operation or Management test. Bc conduct is used twice, we must give it directional

meaning (lead, run, manage NOT just carry on) in first instance otherwise it is superfluous. Participate in the conduct of affairs is more than “conduct affairs” but less than “participate in the affairs.” Thus some part in directing the affairs is required but isn’t limited to those w/primary responsibility and isn’t limited to those w/a formal position.

NOTE: the basis for the charge was the failure of E&Y to disclose to Co-op’s board its decision to list White Flame as purchased at inception. It boiled down to the question of given what E&Y did, does that amount to merely auditing the financial statements (in which case no liability) or did it amount to creating the financial statements (liability)

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RICO CONSPIRACY

US v. Elliot (5th Cir. 1978): Although the Ds must agree to commit a pattern of racketeering activity, they need not agree to commit the same pattern as long as the D’s pattern involve the same enterprise.

Facts: 6 Ds convicted under 1962(d) of conspiring to violate 1962(c). Various people engaging in various illegal acts: stealing cars, meat, and dairy, arson, murder, drugs, etc. Activities are kind of divided into 2 different depts, both led by one D.

Claim on Appeal: D’s acts aren’t proscribed by underlying 1962(c) bc they were not committed in furtherance of the affairs of an enterprise. Ds argue that there was not one big conspiracy (bc then murder would be linked w/other lesser crimes)

Holding: o Jury reasonably inferred existence of one enterprise led by one D w/circumstantial evidence.

Discusses wheel and chain conspiracy and finds that if we were applying these pre-RICO concepts, it would be tough to find a single conspiracy. Here, Congress intended to authorize prosecution of a multi-faceted diverse conspiracy by freeing the gov’t of the multiple conspiracy doctrines and focusing instead on: enterprise. The key in RICO conspiracy is that each D agreed to participate directly and indirectly in the affairs of the enterprise by committing two or more predicate crimes. It is irrelevant that each D committed different predicate crimes as long as we reasonably infer that each crime was intended to further the enterprise’s affairs.

o Constitutional Consideration: Court looks at whether RICO comports w/the constitutional due process requirement that guilt remain “individual and personal.” Finds that gov’t can use circumstantial evidence to show conspiracy but Court cannot say it violates due process bc it doesn’t authorize that individuals be tried en masse nor does it punish mere association w/conspirators and knowledge of illegal activity (focus is still on the conduct).

o An individual, by words or actions, must have objectively manifested an agreement to participate, directly or indirectly, in the affairs of an enterprise through the commission of two or more predicate crimes. Gov’t doesn’t need to show that a D knew all of the details of the conspiracy, just must know the essential nature of the plan (bc secrecy and concealment are part of this type of crime) Here: essential nature of plan was to associate for the purpose of making money from repeated criminal activity.

o We do not lightly dismiss the fact that 4 Ds who didn’t commit murder are standing trial jointly with and as confederates of 2 others who did. We know prejudice will occur but the Constitution doesn’t guarantee a trial free from prejudice that inevitably accompanies any charge of heinous group crime.

NOTE: w/o RICO, you’d have 2 counts of conspiracy. Because 1962(c) is in the picture, it is an association-in-fact enterprise, leaving us with one conspiracy.

Salinas v. US (U.S. 1997): D doesn’t have to agree to commit 2 predicate acts, himself—agreeing that one of the conspirators will commit the object of the agreement suffices.

Facts: B-A, a prisoner, bribes Sheriff (for money) to get contact visits w/his wife/gf. When Sheriff wasn’t available, Salinas arranged for the contact visits and stood watch outside the room where they took place. He got a truck and watch. Salinas was convicted of one 1962(d) count and two 666 bribery counts (acquitted of 1962(c) charge).

Issue: Does a 1962(d) conspiracy to violate 1962(c) require each conspirator to agree that he or she will personally commit acts constituting a pattern of racketeering activity?

Holding (Kennedy): No, bc general conspiracy principles require only an agreement that one of the conspirators will commit the object of the agreement. Each D is responsible for the acts of the other. A conspirator must intend to further an endeavor, which, if completed, would satisfy all elements of the substantive offense, but it suffices that he adopt the goal of furthering the criminal endeavor. The interplay btw c and d doesn’t permit us to excuse from the reach of conspiracy an actor who does not himself commit or agree to commit 2+ acts. Here, the Sheriff committed at least 2 acts and Salinas knew about/agreed to facilitate the scheme. This is sufficient.

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NOTE: acquitted of 1962(c) bc 666 isn’t a RICO predicate and jury didn’t believe that Salinas was guilty of state law bribery, which were the alleged predicates for 1962(c) count. But D was guilty of 1962(d) because he agreed that Sheriff would commit state-law bribery

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MONEY LAUNDERING§§ 1956 and 1957

US v. Campbell (4th Cir. 1992): Concealment Prong of (a)(1): D must know a) proceeds come from unlawful activity (but need not know what unlawful activity) and b) that transaction was designed to conceal (but it need not be D’s purpose to conceal)

Facts: Real Estate Agent Campbell helps Lawing, a drug dealer, buy a house. Lawing represented himself as a businessman. He drove Porsche and once showed briefcase w/$20,000 to Campbell. To pay for house, Lawing took out a mortgage in his parents’ name and got the sellers to let him give them $60,000 under the table in cash (in paper bags) in return for lower contract price (made up a reason for doing this). Lawing tipped Campbell w/a couple hundred dollars.

Charges: 1956(a)(1)(B)(i) domestic money laundering and 1957(a) engaging in transaction in criminally derived property

Claim on Appeal: There is insufficient evidence for jury to find that Campbell knew (a) that funds were the proceeds of illegal activity and (b) that the transaction was designed to disguise the nature of those proceeds.

Holding: Evidence is sufficient—Gov’t must only show that D possessed the knowledge that transaction was designed to conceal illegal proceeds and D doesn’t have to know the specific illegal activity from which the money came. Knowledge is shown through willful blindness here. D does not have to have the purpose to conceal nor does she have to know the specific unlawful activities involved. Here, there is evidence to show D a) knew that Lawson was using money from unlawful activity and b) knew that the transaction was designed to conceal the nature of his proceeds.

1956(a)(1)(B)(i) requires D’s knowledge of 2 separate facts:o 1) that funds involved in the transaction were the proceeds of illegal activityo 2) that transaction was designed to conceal the nature of the proceeds

NOTE: Gov’t can appeal the acquittal here bc the jury convicted. The trial court entered judgment of acquittal bc weight of the evidence warranted a new trial. The jury verdict is reinstated, and Campbell gets a new trial.

NOTE: Under 1956(a)(3): not guilty bc it requires “intent to conceal”

US v. Piervinanzi (2d Cir. 1994): The promotion sections of 1956(a)(2) do not require that the promotion is for a SUA other than the underlying SUA.

Facts:o Irving Scheme: DelG (Irving employee) offers to help Marchese and Piervinanzi do an illegal wire

transfer of funds from Irving Trust into an overseas account. Tichio says he and Rambali can set up account in Cayman Islands. Were to steal $10 million. Piervinanzi to provide security. He asks Robin to make call to Irving to initiate transfer. DelG was scared so he sabotaged the deal by not providing Robin w/a correspondent bank so deal would fail.

o Morgan Guaranty Scheme : DelG left Irving and moved to Morgan. He had to perform audit of bank’s wire transfer dep’t. DelG, Marchese, and Pierinanzi began planning a fraudulent wire transfer from Morgan. Get identity of a correspondent bank. Robin calls again and directs a wire transfer of $24 million to the selected account in London w/Bankers Trust as correspondent. Although Robin had all necessary info, Morgan’s clerk was suspicious bc Robin didn’t sound like the man he claimed to be (Cicio). The wire transfer was reversed.

Charges: 1956(a)(2), 1957, conspiracy, attempted bank fraud and money laundering from Irving scheme; actual wire fraud, attempted bank fraud, attempted money laundering from Morgan scheme

Claims on Appeal:o 1) The evidence was insufficient to support § 1957(a) (Count 7 – Morgan Guaranty)

1957(a) requires that D first obtain criminally derived property then engage in monetary transaction w/that property. Here, the funds transferred from Morgan weren’t yet derived from wife fraud.

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I.e., 1957(a) requires a “monetary transaction in criminally derived property,” but here the SUA never generated any “criminally derived property,” i.e., proceeds.

o 2) Evidence insufficient to support 1956(a)(2)(A) (Count 3 – Irving Trust, Count 6 – Morgan Guaranty) 1956(a)(2)(A) requires intent to promote the carrying on of some SUA other than the SUA

that generated or would’ve generated the monetary instrument or funds transported and here the D had no such intent

Holding: o 1) Reverses § 1957(a) conviction bc the SUA did not generate proceeds, and § 1957(a) requires actor

to engage in a monetary transaction in criminally derived property, i.e., in property constituting the proceeds of SUA.

“Obtained” and “property” suggest possession and although D succeeded in transferring funds from Morgan, they never came into the possession or under the control of the conspirators.

o 2) Affirms § 1956(a)(2)(A) convictions bc the attempted transportation of the funds “would [have] hamper[ed] official efforts to recover the stolen funds” and thus would have promoted the carrying on of SUA.

Statute requires there be a transmission of funds “w/intent to promote carrying on of SUA.” SUA includes bank fraud. The use of overseas accounts was integral to both schemes. It’s clear the attempted transfers were designed to promote the underlying crime. This reading doesn’t merge the underlying crime and the promotion through laundering into one. The act of attempting to transfer funds out of banks was distinct from the attempted transmission of those funds overseas and it was independently illegal.

1956’s structure confirms this: (a)(1): Domestic money laundering (transactions that involve the proceeds of SUA). This

requires that proceeds first be generated and second that D knew the proceeds were dirty… (a)(2) in contrast: no requirement that proceeds first be generated Skinner: although transaction “in reality represented only the completion of the sale of

cocaine,” we concluded that it were made to facilitate the sale of cocaine and thus were made w/the intent to promote the carrying on of SUA.

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III. PROCEDURAL ISSUES OUTLINE

GRAND JURY

Overview of Grand Jury: Under the Fifth A, a D has a right to be charged by a grand jury in certain cases Composition:

o Consists of 16-23 jurors and 12 jurors are required to indict (regarding of whether there are 16 or 23 total)o Term is 18 monthso Indictments are formal charges based on probable causeo All felonies must proceed by indictment unless D waives and agrees to proceed by information (Fed. R. Crim. P.

7(a), (b))

Dual Functions of the Grand Jury A grand jury serves the dual function of determining if there is probable cause to believe that a crime has been

committed and of protecting citizens against unfounded criminal prosecutions A grand jury has the power to subpoena witnesses and tangible evidence, and the scope of its inquiry may be quite

broad. The grand jury is not bound by rules of evidence. DOJ has certain policies regarding evidence admissibility but it is not

mandatory nor enforceable. 1) Investigation:

o Grand juries are usually used as the primary investigative bodies in fed’l white collar cases. Headed by the prosecutor in charge of the investigation, the actual investigative footwork may be done by law enforcement agencies acting at the grand jury’s behest

o NOTE: Courts have held that the gov’t cannot use the grand jury to gather evidence for trial after the grand jury has issued its indictment.

2) Screening and Charging: a buffer btw defendant and prosecution o People I SCREEN I Prosecutoro Judicial policing and prosecutorial misconduct

Problem: if the grand jury is not really independent of the prosecutor you have a powerful investigative and charging tool in the hands of the prosecutor BUT If you try to make the grand jury more independent you end up moving from screening to adjudication, such that the grand jury process looks more like the trial process.

Grand Jury’s Investigative Function: Subpoena Power – Fed. R. Crim. P. Rule 17 Subpoenas for testimony (ad testificandum) – Fed. R. Crim. P. 17(a)

o Compliance enforced through contempt powero 4th A doesn’t apply (Dionisio): only applies to seizures of persons and dragging you into jury room for grand jury

doesn’t constitute seizure.o 5th A privilege applies: witness can refuse to self-incriminate but he can’t refuse to appear at all.

Witness can be subpoenaed even if the witness has said he intends to invoke the 5th Amendment (a discretionary decision for prosecutor—may not be worth it)

Immunity: Prosecutor can get the testimony by granting witness immunity based on the testimony with forces them to testify but in exchange forecloses the possibility of incrimination.

Miranda warnings not required (Washington) but DOJ policy is to provide “Advice of Rights” that look similar to Miranda (p. 787)

NOTE: It is unclear whether the Advice of Rights is constitutionally or legally required.o Hearsay testimony is admissible (Calandra) but DOJ policy is to ensure jurors are not mislead into believing

hearsay based on personal knowledge.o If you are not subpoenaed, you are NOT entitled to appear before the grand jury if you want to.o Witness is NOT entitled to have lawyer with him in the grand jury room.o Witness can refuse not to answer things that would breach attorney-client privilege.

Subpoenas for documents (duces tecum) – Fed. R. Crim. P. 17(c)o Compliance enforced through contempt powero Need not be based on probable cause (unlike search warrants)

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o 4th A requires the seizure pursuant to a subpoena to be “reasonable” and Rule 17(c)(2) provides that a subpoena can be quashed if “compliance would be unreasonable or oppressive.” (R. Enterprises)

o D can show that a subpoena is unreasonable if… 1) The info a grand jury subpoena requests is “irrelevant,” i.e., if no “reasonable possibility exists that

the subpoena will produce info relevant to the general subject matter of the investigation” 2) It is too “indefinite” OR 3) Compliance would be “overly burdensome” NOTE: Relevance is generally not the guidance factor bc before formal charges are filed, it is

impossible to know what evidence will be relevant. o Corporations have no 5 th A rights. o Individuals can resist subpoenas for docs based on 5th A under the Act of Production Doctrine, but not based

on the content of the documents. Doctrine: Even if docs are incriminating you must hand them over, unless the act of turning over the

docs itself is incriminating and testimonial bc then you have the elements for a 5th A claim (compelled + incriminating + testimonial)

Rationale: you were not under compulsion when you made the docs (and 5th A is meant to protect compelled self-incrimination) but you are compelled to turn over the documents.

NOTE: difference btw testimonial aspects of producing the docs (by handing over the doc, you admit you possess the docs) and admitting to info that docs point to (these docs are mine, and they point to conduct which, if true, would incriminate me)

o Subpoenas for docs can also be resisted under the attorney-client and work product privilegeso Illegally seized evidence is permissible but DOJ policy is not to present illegally seized evidence if the AUSA

“personally knows” that the evidence has been illegally seized.o Exculpatory Evidence need not be presented but DOJ policy that it will be presented if prosecutor is “personally

aware of substantial evidence that directly negates guilt”

Overview: How to Resist Subpoena for Docs Show it is unreasonable or oppressive

o Irrelevant o Indefiniteo Overly burdensome

Show it is protected under attorney-client or work product privileges Raise 5th A claim through Act of Production Doctrine

Grand Jury’s Secrecy Obligation – Fed. R. Crim. P. Rule 6(e) Fed. R. Crim. P. 6(e)(2): Who may be Present: Jurors; Prosecutor; Witness*; Court reporter; Interpreter *The witness is the only one not under an obligation not to “disclose a matter occurring before the grand jury.”

o Knowing disclosure violations may be punished as contempt Disclosure Permissible WITHOUT Court Approval:

o To an attorney “for the gov’t” (i.e., another prosecutor involved in the case). Rule 6(e)(3)(A)(i).o To “gov’t personnel” necessary to assist attorney for the gov’t in enforcing federal criminal law. Rule 6(e)(3)(A)

(ii).o To someone under 18 U.S.C. § 3322 (an attorney for the gov’t to enforce the civil penalties associated

w/FIRREA or civil forfeiture). Rule 6(e)(3)(A)(iii).o To another grand jury. Rule 6(e)(3)(C).o Any matter involving foreign intelligence, counterintelligence, or foreign intelligence information to specified

officials. Rule 6(e)(3)(D). (a post-9/11 development) Disclosure Permissible WITH Court Approval

o Preliminary to or in connection w/a judicial proceeding (particularized need must be shown) (Douglas Oil). Rule 6(e)(3)(E)(i)

Balance the need to avoid injustice in another judicial proceedging with the need for grand jury secrecy.

o At a defendant’s request to a defendant if grounds exist to dismiss. Rule 6(e)(3)(E)(ii). Defendant typically doesn’t know what went on in the grand jury (unless they talk to the witness)

o At the gov’t’s request to a foreign court or prosecutor

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o At the gov’t’s request to state or foreign officials if the matter discloses a violation of that jurisdiction’s criminal law.

o At the gov’t’s request to military officials if the matter discloses a violation of military law.

Defense Side Defense generally cannot get a copy of the witness’s testimony (but there are exceptions under Rule 6) and can get

access if witness becomes a witness at trial

Policing and Prosecutorial Misconduct: How to Police Prosecutors: Defense must gather evidence w/o access. Defense can gain access once it makes the required showing based on evidence gathered w/o access (particularized

need must be shown) Court can review minutes in camera. An indictment will not be dismissed unless the errors were “prejudicial,” i.e., the errors “substantially influenced” the

decision to indict (Bank of Nova Scotia) Federal courts lack supervisory power to promulgate rules to police prosecutorial misconduct (Williams)

DISCOVERY

Overview Discovery by the defense in criminal cases is much more limited than discovery by the parties in civil cases

o No depositions, no interrogatories, etc. o Why more limited:

Pre-trial discovery would encourage perjury (bc if you know what they have, you can concoct lies or intimidate witnesses)

Defense shouldn’t be permitted to discover the Gov’t’s case bc the Gov’t cannot discover the D’s defense

Think about it temporally – at what time can the gov’t cite certain rules to get info: 1) Pre-indictment

o Defense No rule under Const. or fed’l law that entitles or actively enables defense to get anything from 3rd

parties Freedom of Information Act requests

o Government Grand jury subpoenas

2) Post-indictment, pre-trialo Defense:

1) Brady v. Maryland: constitutional rule obligating the gov’t to disclose certain kinds of info before trial;

2) Rule 16- a limited discovery device; 3) Rule 17 – subpoena that the defense can obtain in order to gather info from third parties

o Government: Rule 16

3) Trialo Defense:

Jencks Act: statute that imposes an obligation on the govt to disclose witness statements; Fed. R. Crim. P. 26.2: a reciprocal rule that imposes a reciprocal obligation on the defense (they are

thought of interchangeably) o Government:

Rule 26.2

What is the “RULE” of Brady v. Maryland (U.S. 1963)? The gov’t must disclose material, exculpatory evidence to the defense prior to trial bc it is fundamental to a fair trial. The Rule (set out in Stricker v. Greene, U.S. 1999): The state/gov’t must timely disclose evidence if….

o 1) The evidence is “favorable to the accused”

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o 2) The evidence has “been suppressed by the state, either willfully OR inadvertently” AND o 3) The evidence is Material (i.e., failure to disclose was “prejudicial”)

1) Evidence must have been favorable to the accused i.e. the evidence must be “exculpatory” o Exculpatory with respect to guilt or punishmento Exculpatory inasmuch as it could have been used for impeachment (“Giglio” material)

2) “Evidence must have been suppressed by the state, either willfully or inadvertently”o State’s good faith is irrelevant o Obligation applies to any state actor acting on the state’s behalf (including civil enforcement agencies if it was

involved in investigation or prosecution)o State has no obligation to create or otherwise seek out exculpatory evidence o Obligation exists whether or not the defense makes a request o Q: Is the obligation contingent on the “due diligence” of the defense i.e. the gov’t need not disclose if the

defense could’ve discovered the evidence through reasonable investigation? A: Probably no if thinking about fairness to the D but circuits are split.

3) “Prejudice must have ensued” i.e. the suppressed evidence must have been material. Update in Kyles v. Whitely (1995): one of the few post-Brady cases that found a Brady violation

o Souter held that materiality is NOT a sufficiency of the evidence test. o Look at all the evidence at trial, pour all the Brady evidence back in, then (don’t) ask yourself if the evidence is

sufficient, bc the answer will inevitably be yes.o Thus if a Brady error exists, harmless-error analysis is unnecessary bc you’ve already determined materiality,

w/D bearing the burden of proving materiality. o Suppressed evidence should be considered as a whole.

Policy Question: Would something else be better than Brady?o Marshall’s dissent in Bagley: prosecutor has an affirmative duty to turn over ALL info known to the gov’t that

might reasonably be considered favorable to the D’s case. Any breach of that duty would be subject to harmless error (beyond a reasonable doubt as the standard) and gov’t would bear burden of proving harmlessness.

Rule 16 General Philosophy: D should have access to evidence in the possession of the Gov’t if…

o 1) The evidence is likely to be particularly influential on the jury at trialo 2) Pre-trial access is needed in order to respond effectively at trialo 3) Not the kind of evidence likely to prompt mischievous acts by D, such as manipulation/witness intimidation

Rule 16 imposes reciprocal obligations: if the defense requests disclosure and the gov’t complies, the defense must comply if the gov’t requests disclosure (unlike Brady, which is a one-way street)

(a)(1): Upon D’s request, gov’t must disclose to D: o A) D’s oral statements

The substance of any relevant oral statement made by D, before or after arrest, in response to interrogation by a person the D knew was a gov’t agent if the gov’t intends to use the statement at trial.

o B) D’s written or recorded statements i) Any relevant written or recorded statement by D if

Statement is w/in gov’t’s possession, custody, or control and Attorney for the gov’t knows or through due diligence could know that the statement exists

ii) The portion of any written record containing the substance of any relevant oral statement made before or after arrest if D made the statement in response to interrogation by a person D knew was a gov’t agent

iii) The D’s recorded testimony before a grand jury relating to the charged offense.o C) Corp. statementso D) D’s criminal recordo E) Documents and Objects “w/in the gov’t’s possession, custody, or control” IF

i) The item is material to preparing the defense ii) The gov’t intends to use the item in its case-in-chief at trial OR iii) The item was obtained from or belongs to the D Q arises: how does materiality under Brady compare to materiality under Rule 16??

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A: Some courts say they mean the same thing. Other courts say materiality under Rule 16 can include inculpatory evidence as well as exculpatory evidence.

A: “Evidence is material if there is a strong indication that it will play an important role in uncovering admissible evidence, aiding witness preparation, corroborating testimony, or assisting impeachment of rebuttal” OR “if it can be used to counter the gov’t’s case or bolster a defense” [2d Circuit—broad]

NOTE: For exam, recognize that materiality may be same/diff from Brady and refer to n. 2 on 844-45 to explain the different standards and apply them to the issue.

o F) Examination and test reportso G) Expert witness summaries

(a)(2): Work product privilege applies unless Rule 16(a)(1) provides otherwise; witness statements discoverable only through Jencks Act.

(b)(1): Disclosure to the Gov’t o A) Documents and Objects: If D requests disclosure under 16(a)(1)(E) and gov’t complies, then D must permit

gov’t, upon request, to inspect/copy/photograph books, papers, docs, data, photos, tangible objects, buildings/places, or copies or portions of these items if:

i) The item is w/in D’s possession, custody or control AND ii) D intends to use the item in D’s case-in-chief

o B) Examinations and Tests: If D requests disclosure under 16(a)(1)(F) and gov’t complies, D must permit gov’t, upon request, to inspect/copy/photograph the results or reports of any physical or mental exam and of any scientific test/experiment if:

The item is w/in D’s possession, custody, or control AND D intends to use the item in the D’s case-in-chief at trial, or intends to call the witness who prepared

the report and the report relates to the witness’s testimonyo C) Expert Witnesses: D must, at gov’t’s request, give to gov’t, a written summary (which includes witness’s

opinions, bases, and reasons, and qualifications) of any testimony D intends to use under FRE 702, 703, or 705 as evidence at trial if:

D requests disclosure under 16(a)(1)(G) and gov’t complies OR D has given notice under Rule 12.2(b) of an intent to present expert testimony on D’s mental

condition. (b)(2): Information NOT subject to Disclosure: Except for scientific/medical reports 16(b)(1) doesn’t authorize:

o A) Reports, memoranda, or other docs made by D, or D’s attorney/agent during the case’s investigation or defense

o B) A statement made to D or D’s att’y or agent by: i) The D ii) A gov’t or defense witness; or iii) A prospective gov’t or defense witness.

NOTE: Whenever you have Brady, you will have 16(a)(1)(E)(i)

Jencks Act (18 U.S.C. 3500) Fed. R. Crim. P. 26.2 (imposes reciprocal obligations) General rule: After a witness other than D has testified, and upon motion, the nonmoving party must produce any

statement in its possession that relates to the subject matter of the witness’s testimony. “Statement” is a “term of art” defined as:

o 1) A written statement that the witness makes and signs, or otherwise adopts or approves; o 2) A substantially verbatim, contemporaneously recorded recital of the witness’s oral statement that is

contained in any recording or any transcription of a recording; ORo 3) The witness’s statement to a grand jury, however taken or record, or a transcription of such a statement.

Rationale: providing this AFTER witness has testified is to provide an opportunity to impeach

NOTE: Don’t have to turn over Jencks material until after witness testifies; but for Brady, you turn it over in ADVANCE of trial to provide defense w/sufficient time to digest.

Fed. R. Crim. P. 17(c) (we saw this in talking about grand jury subpoenas) Can be used by the defense to appear at trial or to secure documents

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Under US v. Nixon standard, a Rule 17 subpoena from the defense to a 3rd party can be quashed as “unreasonable or oppressive” if…

o 1) Evidence is Not Relevanto 2) Evidence is Not Admissible (e.g., if it is just for impeachment)o 3) Defense did not specifically describe what it’s seeking

NOTE: Contrast what’s unreasonable for defense subpoenas (3rd parties) vs. grand jury subpoenas (from prosecutor to whoever, from R. Enterprises): Much more strict and easily quashed (not easy for defense)

Discovery Hypothetical:McG, fmr Gen Man of treatment plant tells gov’t investigators that plant was discharging in excess of permitted amts. He turns over to the gov’t drafts of reports required by regulation upon which appear handwritten directions to alter amt of actual discharges to meet permit req. Docs, McG says, show that Pres of Plant, O, directed McG to file false reports. FBI agent goes to O’s house and O denies any wrongdoing, informs agent that he was out of town at those times and notes that McG was fired and thus has it out for O and the plant. O later provides, pursuant to subpoena, handwriting exemplars.

1) Can D interview agent before trial to explore what he recalls about O’s statements? ??? Must gov’t make a record of agent’s recollection and turn it over to D? YES under 16(a)(1)(A).

2) Assume after interview, agent wrote out short summary of O’s statements on a form 302—is D entitled to this memo? YES under 16(a)(1)(B)(ii)

3) Assume agent taped interview w/O—is recording discoverable? YES under 16(a)(1)(B)(i). If so, in what form? ??? Assume prosecutor made transcript—is defense entitled to transcript?

4) Assume McG sues O for wrongful termination and O responds to complaint and appears for depo—must gov’t turn over materials? NO, not w/in gov’t’s custody (a separate proceeding)

5) Assume gov’t has no criminal record of O but defense knows about a marital battery conviction in another state—does defense have to turn it over? NO, not to be used by case-in-chief

6) Is D entitled to access to the draft reports turned over to gov’t by McG? YES, under 16(a)(1)(B)(ii) 7) Assume both gov’t and D have submitted reports to their own expert doc examiners for handwriting and those

experts have submitted written reports of their findings. Gov’t’s report reaches indeterminate result—must gov’t turn over report? YES under Brady, 16(a)(1)(F)(iii) or 16(a)(1)(E). Assume it does. D’s expert detects fingerprints not noted in gov’t report but D fears they are O’s—must defense turn it over? NO bc not intending to use it.

Assume McG agreed to plead guilty in a cooperation agreement w/govt’. McG completes direct exam. Defense earlier filed motion for Jencks material.

8) Is D entitled to discover McG’s criminal record to impeach him? Must gov’t turn over McG’s coop agreement? Plea colloquy? Pleadings and depos in McG’s civil action?

o Yes under Brady if it is exculpatory and w/in Government’s possession. o Yes under Jencks if it constitutes a “statement” in the Government’s possession and related to the

testimony. 9) Agents met w/McG and took about 25 pages of handwritten notes generally summarizing his info—is D entitled to

discover?o Yes under 16(a)(1)(E)(i) if it is material to D’s caseo Yes under Brady if exculpatory o Probably not under Jencks bc not a “statement”

10) Agent dictated 20 page memo describing interviews w/McGuigan using handwritten notes to prompt his memory—must gov’t turn over memo? How about dictation tape?

o Yes under 16(a)(1)(E)(i) if it is material to D’s case?o Yes under Brady if exculpatory

11) In grand jury, agent testified regarding McG’s statements to agents—must grand jury transcript be produced?o Turn over under Brady or 16(a)(1)(E)i) if material o Probably not under Jencks unless agent testified at trial

12) Just before trial, gov’t gets letter from McG about gov’t’s failure to follow through on promises it had allegedly made to him in terms of protecting him from fall-out. Must gov’t turn this over?

o Yes under Jencks Act insofar as it is related to witness’s testimony. 13) After speaking w/McG AUSA prepares draft “script” summarizing his likely testimony on 6 typed pages.

o No under Jencks (not McG’s statement)o No under Brady bc it is not exculpatoryo No under Rule 16

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FIFTH AMENDMENTI. Testimony and Immunity

A. Overview of Fifth Amendment Privilege Against Self-Incrimination What: When questioned by the gov’t at a grand jury, at a trial, or in other official settings, an individual has the right not

to answer if the response might incriminate the individual in a criminal case Immunity: The gov’t can only compel testimony in such a case by obtaining an order that grants the defendant

immunity Language: “No person … shall be compelled to be a witness against himself” “No person”:

o Only natural persons (and sole proprietorships) possess the privilegeo Corporations do not (collective entity doctrine)

“shall be compelled”o Privilege can only be asserted in the face of compulsiono In the grand jury or at trial the compulsion is a contempt ordero Outside the grand jury or trial compulsion includes “custodial interrogation,” which is the basis for the Miranda

warnings “to be a witness”

o Privilege protects against being forced to give testimonyo Testimony must be incriminatingo It must form a “link in the chain” leading to criminal liability

“against himself”o Testimony must incriminate the person giving it, not someone else, in order to be privileged

THE IMPORTANCE OF THE FIFTH AMENDMENT PRIVILEGEWithout 5th Amendment

(Cruel Trilemma)With the 5th Amendment

(No Cruel Trilemma)With Grant of Immunity

(No Cruel Trilemma)Option Result Option Result Option Result

Remain Silent Contempt Remain Silent NOTHING Remain Silent Contempt

Answer Truthfully Self-Incrimination Answer Truthfully Self-Incrimination Answer Truthfully IMMUNITY from Incrimination

Lie Perjury Lie Perjury Lie Perjury

What Kinds of Immunity will Displace the Fifth Amendment Privilege? (Kastigar, 1972)TYPE OF IMMUNITY WILL IT DISPLACE 5th A?

Use ImmunityWeakest form, if I say X, then my statement X can’t be used against me alone but if my statement X is used to find more against me, my statement X can be used against me.

NO

Use-and-Derivative Use Immunity YES

Transactional ImmunityYES

Kastigar v. United States, U.S. 1972 Facts: Kastigar is granted use-and-derivative use immunity under Fed’l Immunity Statute (18 U.S.C. 6002) and was held

in contempt when he refused to testify. Kastigar says that such immunity cannot displace privilege against self-incrimination.

Holding: No, use-and-derivate use suffices as does transaction. Use immunity does not.

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Difference Between Statutory/Formal Immunity (§ 6002) and Pocket/Informal ImmunityFormal Immunity Informal Immunity

WHERE

18 U.S.C. § 6001-056002 Immunity Generally:…no testimony or other info compelled under the order (or any info directly/indirectly derived from such testimony or other info) may be used against the witness in any criminal case…

- Plea bargain agreement

- Cooperation agreement

- Non-prosecution agreement

WHAT

- Centralized DOJ review

- Person is compelled to speak (by contempt power)

- Immunity displaces the privilege

- Binding on state and fed’l authorities (binding on world)

- Prosecution receives only testimony

- Governed by contract principles (must be bargained for)

- Person agrees to speak

- Privilege is waived, not displaced

- Binding only on parties to the agreement

- Prosecutor can bargain for cooperation and testimony

-Transactional immunity can be given

B. Kastigar Hearings and Using Immunized Testimony

Kastigar Hearing: The Gov’t’s Burden Gov’t must show by preponderant evidence that it has not used immunized testimony to prosecute the person giving

the testimony, nor that it has used any evidence derived from that testimony. In other words, Gov’t must show that it has an “independent source” for the evidence it uses against the immunized

person In still other words, Gov’t must show that it has not compelled the person to be a witness against himself through the

use (or derivative use) of the testimony that it compelled him or her to give.

What does it mean to “use” immunized testimony? What are some ways in which immunized testimony might be used in prosecution of the person who gave the

testimony? 1) Direct Evidentiary:

o Prohibited, unless Gov’t satisfies Kastigar burden 2) Impeachment

o Prohibited, unless Gov’t satisfies Kastigar burden 3) Indirect Evidentiary (e.g., using immunized testimony to refresh a witness’s recollection)

o Prohibited, unless Gov’t satisfies Kastigar burden BUT circuit split over what showing Gov’t must make to satisfy Kastigar*

4) Non-evidentiary (e.g., trial strategy)o Prohibited, unless Gov’t satisfies its Kastigar burden BUT circuit split over what showing the Gov’t must make

to satisfy Kastigar* (p. 869) *The Circuit Split: Must the Gov’t only show an independent source for the evidence it uses, OR must it also show that

the witness’s/prosecutor’s exposure to the immunized testimony did not change his/her testimony/decision-making

C. Taking a Proffer: How AUSA Decides whether to Grant Immunity Proffer session: The person who is a prospective witness to whom you are thinking about granting immunity will say

things, presumably incriminating things.

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Problem: D won’t give incriminating testimony w/o immunity and Gov’t won’t grant immunity w/o incriminating testimony.

Solution: Fed. R. Evid. 410: no use may be made of statements made in proffer sessions, but allows for the derivative use of such statements.

Queen for A Day Agreements (Waivers in Proffer Sessions) Velez: waiver allowed Gov’t to make “direct use” of statements made during proffer session on rebuttal, even if D didn’t

testify.o Held: Valid (United States v. Velez, 2d Cir. 2004)

Mezzanatto: waiver allowed Gov’t to make “direct use” of statements made during proffer session for impeachment if D testified.

o Held: Valid (United States v. Mezzanatto, U.S. 1995)

PROFFERS SUMMARYIS THE FOLLOWING USE OF STATEMENTS FROM PROFFER SESSIONS PERMITTED OR NOT?

Formal Immunity Rule 410 Queen-for-a-Day Agreement

Testimony in a perjury or false statement prosecution Yes Yes Yes

Testimony in case in chief in another prosecution No No No

Derivative evidence in any prosecution No Yes Yes

Testimony for Impeachment No No Yes (Mezzanatto)

Testimony for rebuttal No No Yes (Velez)

II. Documents and Tangible Objects

RULE: One can refuse to produce documents based on the Fifth Amendment if the “act of producing” the documents is incriminating. One cannot refuse to produce docs based on the 5th A just bc the docs contain incriminating info.

Rationale: The 5th A protects against compelled self-incrimination and docs were not created under compulsion.

TEST: Does act of production involve testimonial self-incrimination? Step 1) Is the act of production testimonial:

o Testimonial: An act is testimonial if it “communicates any factual assertions, implicit or explicit, or conveys any info to the Gov’t” (Doe v. US, U.S. 1988: Grand jury investigation bc D is believed to have accounts in foreign bank. D is ordered to sign consent form, allowing Bank to disclose D’s documents)

o An Act of Production can be testimonial with regard to: 1) Existence: The docs you ask for exist

Existence of business docs will not be a foregone conclusion unless the Gov’t describes the docs it seeks with “reasonable particularity” (4th A Idea) (Hubbell)

2) Possession: The docs you ask for are in my possession 3) Authenticity: The docs I am giving you are the docs you ask for

Step 2) Is the Testimony Incriminating?o Incriminating Testimony: 5th A privilege extends not only to testimony that would in itself support a conviction

but also embraces that which would furnish a link in the chain of evidence needed to prosecute the person giving the testimony. (Hoffman v. US, U.S. 1951)

o It must be “perfectly clear” that the testimony “cannot possibly” have a tendency to incriminate If yes to 1 and 2, then you can refuse to turn over docs under 5th A.

Invoking Another Person’s 5th A Privilege

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The Fifth Amendment is personal and thus cannot be raised on behalf of someone else. However in privileged relationships (attorney-client), the holder of the docs can resist a subpoena based on the privilege if the other person if that person could have used the 5th Amendment privilege had the docs been in their possession.

(Fisher v. United States, U.S. 1976)

Fisher v. United States, U.S. 1976: Facts: IRS investigating taxpayers. Accountants create docs. Accountants give docs to Taxpayers who give docs to

Lawyers in order to get legal advice. IRS issues subpoena summons to lawyers for the “Accountant’s Docs” (“accountant’s work papers, copies of income tax returns, and the accountant’s copies of correspondence btw accounting firm and taxpayer”)

Holding:o 1) Lawyers cannot assert the taxpayers’ Fifth Amendment rights, bc the privilege is personalo 2) Lawyers cannot assert their own Fifth Amendment privilege, bc the docs do not incriminate them.o 3) Lawyers can assert the attorney-client privilegeo 4) Lawyers can resist subpoena based on attorney-client privilege if the taxpayers’ could’ve resisted it based on

their 5th A privilege (act of production) had the docs been in their possession and the subpoena issued to them. Application: Act of Production doesn’t apply bc existence is not testimonial; possession is not testimonial bc they are

both “foregone conclusions” NOTE: 5th Circuit held that lawyers could assert taxpayer’s 5th A rights bc the 5th A protects privacy (Boyd v. US, US 1886).

Today, Boyd is dead.

Fisher v. United States (U.S. 1976)EXISTENCE POSSESSION AUTHENTICITY

Testimonial Incriminating Testimonial Incriminating Testimonial IncriminatingNo. Existence was

a “foregone conclusion”

NoNo. Possession was a foregone

conclusionNo Not Clear No

Collective Entity Doctrine: Corporations cannot assert the Fifth Amendment bc they are not “persons” A corp. employee cannot resist a subpoena issued to the corp. based on his own 5th A act-of-production privilege

o Braswell v. US, U.S. 1988, held that a corp. custodian cannot resist a subpoena based on his own 5th A act of production privilege

BUT: the Gov’t may make no evidentiary use of the “individual act” [of production] against the individual o Braswell: “For example, in a criminal prosecution of the custodian, Gov’t may not introduce into evidence

before the jury the fact that the subpoena was served upon and the corp.’s docs delivered by one particular individual, the custodian”

United States v. Hubbell, U.S. 2000 Claim by Hubbell:

o 1) Hubbell receives subpoena for “any and all documents reflecting, referring, or relating to any direct or indirect sources of money or other things of value rec’d by or provided to” you or any member of your family

o 2) Formal immunity granted “to the extent allowed by law”o 3) Gov’t can’t use any incriminating testimony implicit in Hubbell’s act of production nor any evidence derived

from that testimonyo 4) Hubbell’s act of production implicitly testified that the docs existedo 5) The existence of these docs was a link in the chain to the contents of the docs themselveso 6) The content of the docs was directly incriminating; therefore, the testimony as to the existence of the docs

were incriminatingo 7) Therefore, the Gov’t could not use the contents of the docs against Hubbell unless it established an

independent source for their contents Court Holding: Gov’t cannot use the contents of the docs against Hubbell unless it established an independent source

for their contents. Reasoning: Had Hubbell not been granted immunity, would he have been able to invoke 5th A?

o 1) Would the act of production be testimonial as to the existence of the documents? The existence of the docs requested will not be a foregone conclusion unless the Gov’t describes the

documents it seeks with “reasonable particularity” (4th A Idea)

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Here: yes it would be testimonial bc it wasn’t a foregone conclusion that the docs existed—in other words, Govt’ didn’t describe with reasonable particularity what it was requesting (its request was too broad and vague)

o 2) Would the testimony as to the existence of the documents be incriminating? Yes bc the testimony regarding the existence of the docs would be a link in the chain leading to the

contents of the docs, which are incriminating (reject’s Gov’t’s “manna from heaven theory” that gov’t would only use the contents of the docs and make no reference to the act of production)

o Thus, the act of production constituted incriminating testimony and he could’ve resisted on the basis of the 5th A.

United States v. Hubbell (U.S. 2000)EXISTENCE POSSESSION AUTHENTICITY

Testimonial Incriminating Testimonial Incriminating Testimonial IncriminatingYes. Existence was

not a “foregone conclusion.”

Yes

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IV. SENTENCING GUIDELINES OUTLINE

DEPARTMENT OF JUSTICE CHARGING POLICY and SENTENCING UNDER CH. 8 OF FEDERAL SENTENCING GUIDELINES

Department of Justice Charging Policy Would you have charged S-D under the DOJ policy? Consider: 1) Harm: Seriousness of the crime 2) Culpability: Pervasiveness of wrongdoing: how many were involved (spread throughout company or rogue

employee?)o Criminal Historyo Effective Ethics and Compliance program

3) Remorse: Disclosure and cooperation and Remedial Actions 4) Proportionality

o Collateral Consequences (think of Arthur Andersen)o Prosecution of individuals (is prosecuting individuals only sufficient?)o Adequacy of civil enforcement (is existence and likelihood of civil remedies sufficient on its own?)

Overview Two Types of Sentencing Systems

o “Real Offense” sentencing: based on what one really did. Judge will look past the charge to the real offense that was committed. Enables judge to gather a lot of information.

Who controls the sentence? The judgeo “Charge” Sentencing: the charge governs the decision—now it makes a difference depending on what

punishment is attached to the various offenses. Who controls the sentence? Legislature and Prosecutor

History of Sentencingo Before the Guidelines: Real Offense System

Problems: Lack of uniformity; too much discretion in hands of judge; discriminationo After the Guidelines: Modified Real Offense sentencing w/Charge System features

Charge Features: Charge determines the applicable guideline Real Offense Features:

Relevant conduct rules: prosecutor decides to charge only one count and its associate loss is $1,000—this won’t give you a break bc relevant conduct rules will take it all into account

Grouping rules: 100 counts are grouped together so prosecutor’s decision of how to charge doesn’t have much effect

Who controls sentencing? Prosecutors and guidelineso After US v. Booker (U.S. 2005): Real Offense System: Guidelines advisory

Why: bc of 6th A right to jury trial problem: jury must decide the facts constituted a crime beyond a reasonable doubt. There is a conflict btw demands of 6th A and the way in which the Fed’l Sentencing Guidelines operated

Key: To what does a guidelines number refer? For example, U.S.S.G. § 8A1.2? 8: Chapter A: part 1: Subpart 2: Guideline

§§ 3553(a), 3572(a): 3553(a): Sentencing factors generally: sufficient, but not greater than necessary (Parsimony Clause)

o Consider nature and circumstances, need for sentence to reflect seriousness of defense, deterrence, protection of public, etc

3572(a): Sentencing factors specific to fines 3571: Maximum Sentences

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Individual Sentencing: Emphasize punishment and retribution Step 1: Use Appendix to get applicable guideline for Count 1 Step 2: Go to guideline and determine Base Offense Level and applicable Offense-Specific Adjustments for Count 1 Step 3: Determine any general (non-grouping) Chapter 3 adjustments

o Part A: Victim-Related Adjustmentso Part B: Role in the Offense Adjustmentso Part C: Obstruction and Related Adjustments

This will give you the Offense Level for Count 1 Go through Step 1-3 for all other counts.

o Note: Under conspiracy charges, you charge one count of conspiracy for each count of the underlying offense. This will give you the Offense Level for All Counts Step 4: Grouping: Determine whether or not the counts should be Grouped under § 3D1.2

o General Rule: “All counts involving substantially the same harm shall be grouped together in a single group” Step 5: Determine the offense level for the group under §3D1.3

o The subsection of 3D1.3 will be determined by what subsection you used to group the charges in Step 4 This will give you the offense level for the group Step 6: Combine Multiple Groups under § 3D1.4

o 1) Begin with the offense level that is the highesto 2) Determine how many Units do we have?o 3) Look at Table in § 3D1.4 to determine the increase to the offense level based on the number of Units

Step 7: Adjust for any reduction for acceptance of responsibility under Chapter 3 Step 8: Determine Criminal History Category (WE DON’T HAVE TO DO THIS) Step 9: Determine the sentencing range w/an offense level of 27 and criminal history category of 1 by going to the grid Step 10: Determine the sentence w/in the range Step 11: The guideline sentence then becomes one factor to be considered in applying 18 U.S.C. § 3553(a)

NOTES:Base offense level, specific offense characteristics, and Chapter 3 adjustments are determined on the basis of the following:

1) Acts and omissions of the defendant 2) Reasonably foreseeable acts and omissions of others in furtherance of jointly undertaken criminal activity (i.e., Acts

and Omissions of Accomplices) 3) All Acts and Omissions in reference to the Offense of Conviction from Preparation to Avoidance 4) Acts and omissions describe above if groupable under § 3D1.2(d) and part of the same course of conduct or common

scheme or plan. 5) All harm resulting from the acts and omissions of these persons over this period of time and all harm that was the

object of those acts and omissions

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Organizational Sentencing: Chapter 8 (Emphasize restitution and reform) Part A: General Application Principles

o Road Map: when you want to sentence a corp., here are the steps you should take Part B: Remedying the Harm from Criminal Conduct and Effective Compliance and Ethics Program

o Philosophy: Restitution Part C: Fines

o The fine is generally a function of the seriousness of the offense and the culpability of the corporation. Part D: Organizational Probation

o Philosophy: Reform

Effective Ethics and Compliance Program: Basic Elements: § 8B2.1(a)

o Due diligence to prevent and detect criminal conducto Promotion of an organizational culture that encourages ethical conduct and commitment to compliance w/the

law Elaboration: § 8B2.1(b) Monitoring: § 8B2.1(c)

Sentencing Under Chapter 8 Step 1: Use Appendix to Get Applicable Guideline for Counts

o When there are two guidelines, look at each and say which fits my facts best? Step 2: Go to § 8C2.1 to Determine Applicability

o If not applicable (ex: RICO), use general factors of §§ 3553(a) and 3572(a) Step 3: Determine Offense Level for Count 1

o Find Base Offense Level under Chapter 2 Guidelineo Make Specific Offense Adjustmentso NOTE: Do not apply Chapter 3 adjustmentso Get Final Base Offense Level

Step 4: Determine Offense Level for Other Counts (by repeating Step 3) Step 5: Group Counts under Chapter 3, Part D Step 6: Determine Base Fine under § 8C2.4

o a) Greatest of the following under § 8C2.4(a): 1) Table Amount 2) Pecuniary Gain 3) Pecuniary Loss

o b) § 8C2.4(b): But apply any special instruction in lieu of above if an instruction exists under the specific Guideline for that offense

Going back to Guideline: Special Instructiono Get Base Fine

Step 7: Determine Culpability Score Under § 8C2.5o § 8C2.5(a): Begin with score of 5o Make adjustments under § 8C2.5(b)-(g) (+ = add points; - = subtract points):

+ Involvement or tolerance + Prior history + Violation of order + Obstruction of justice - Effective compliance and ethics program - Self-reporting, cooperation - Acceptance of Responsibility

Step 8: Determine Multiplier Under § 8C2.6 Step 9: Determine Fine Range Under §8C2.7 Step 10: Select Fine w/in the Range §8C2.8 (Factors to consider in selecting fine w/in range) Step 11: Take Fine and Consider other Factors in Statute Step 12: Check Statutory Maximum: §§ 3571(c), (d): Greatest of:

o 1) Greatest of amt specified in statute under which defendant-organization was convicted (If convicted you will be sentenced to no more than X years and no more than X dollars)

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o 2) Greater of twice gross gain or losso 3) $500,000 for felony

Step 13: Choose Final Fine

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