As a follow up to this post, the Supreme Court has granted review of the question of the scope of the term “official act” in federal bribery law. This is an important question for white collar defense lawyers, particularly those who deal with allegations of public corruption. This case and the Fourth Circuit’s ruling upholding it seriously blurred the line between typical political activity and illegal federal bribery, and reversing the conviction would go a long way toward giving fair notice to public officials regarding what conduct they can engage in without fear of a federal bribery or honest services wire fraud conviction.
In 2014, a federal jury convicted the former mayor of New Orleans (2002-2010) of twenty federal white-collar felonies including bribery, honest service wire fraud, conspiracy to commit money laundering, and filing false tax returns. (Here’s the opinion). The mayor appealed his conviction for honest service wire fraud as well as the judge’s imposition of a money judgment for forfeiture.
The appeal of the honest service wire fraud conviction was a long shot. He argued that the judge misstated the law when it instructed the jury that it could convict the mayor of honest service wire fraud for accepting a post-mayoralty employment contract in exchange for performing official act of supporting a city contract for the future employer even if the jury found that the mayor would have supported the contract even if he was not promised employment later. The mayor argued that he could only be convicted of honest service wire fraud if the government proved that he was influenced in his official action by the promise of future employment. But bribery is complete as soon as a person accepts a payment knowing that it is being given by the payor with the intent that the payment influence an official act–the act need never be completed. Therefore, the Fifth Circuit rejected this argument.
The asset forfeiture portion of the appeal is more interesting. The mayor argued that the judge erred by issuing a money judgment for forfeiture, instead of tying the forfeiture to certain assets that were obtained illegally.
The asset forfeiture laws operate through tainted property analysis. A piece of property obtained through an illegal transaction is tainted property and is subject to forfeiture. Any property later acquired with tainted property is also tainted and is similarly subject to forfeiture. Moreover, if the government proves that the defendant placed certain property beyond the reach of the government, the government may be able to take other “substitute property” in criminal asset forfeiture proceedings. However, each of these asset forfeiture analyses–directly tainted property, indirectly tainted property, and substitute asset theory–rely on some tracing of the illegally obtained property. On the other hand, the government has begun arguing that all it must do is prove the amount of money or property that the defendant received illegally and ask for a “money judgment for forfeiture” in that amount. Nothing in the asset forfeiture statutes authorizes this procedure. But, unfortunately, courts have routinely accepted it.
The Fifth Circuit relied on prior cases to uphold the money judgment for forfeiture in this case. However, it left the door open for later defendants to make the argument that money judgments for forfeiture are only appropriate where the government can prove that the property it seeks to forfeit is substitute property under 21 U.S.C. 853(p). The circuits disagree on this point, and it is an issue that should be taken to the Supreme Court for resolution.
This case shows how complicated and confusing asset forfeiture law is, and illustrates why people facing public corruption and other economic or white-collar offenses must hire an experience asset forfeiture defense lawyer when facing investigation or criminal prosecution. Our Raleigh asset forfeiture lawyers have developed substantial experience in this area of the law. If you are facing prosecution, contact us today.
We are proud to announce that Business North Carolina‘s 2016 Legal Elite has named four of Cheshire Parker’s Raleigh criminal defense lawyers as Legal Elite in the field of criminal law.
Elliot Abrams, Bradley Bannon, and Collin Cook have been named as current Legal Elite in the criminal law field. Joe Cheshire has been named in the Legal Elite Hall of Fame, which means that he previously received the most votes in the criminal law Legal Elite balloting and is no longer eligible for the annual list.
Business North Carolina explains the meaning of the rankings as follows:
Making the Legal Elite means a lawyer has been recognized by his or her peers as one of the state’s top practitioners. Even more elite are those who receive the most votes in each category. Since 2004, they have been elevated into the Hall of Fame and are no longer eligible for the annual list. There is no Hall of Fame for Young Guns winners, but they can only be elected in another category. Unless otherwise requested, Hall of Fame members are listed by their firm at the time of their selection.
Business North Carolina explains its methodology:
Since 2002, Business North Carolina magazine has honored Tar Heel lawyers by publishing Business North Carolina’s Legal Elite, a listing of the state’s top lawyers in business-related categories. Winners are chosen not by BNC editors but by the state’s lawyers. Business North Carolina’s Legal Elite has become the model for other awards and lists, but it remains unique as the only award that gives every active lawyer in the state the opportunity to participate. Business North Carolina’s Legal Elite includes the top lawyers chosen using this statewide ballot.
Each year, BNC sends ballot notices to every member of the N.C. State Bar living in North Carolina — asking each a simple question: Of the Tar Heel lawyers whose work you have observed firsthand, whom would you rate among the current best in these categories? Voters are not allowed to vote for themselves. They may select members of their firms only if they pick out-of-firm lawyers in the same categories, with the latter votes weighted more heavily. The top vote-getter in each category becomes a member of Business North Carolina’s Legal Elite Hall of Fame and is ineligible to win again.
Congratulations to this years winners! If you need representation, contact one of our award-winning Raleigh criminal defense lawyers today.
Virginia Governor Bob McDonnell was convicted last year of honest services wire fraud, a vague law that the Supreme Court saved from constitutional challenge by redefining it to outlaw bribery and kickbacks by public officials. Unlike the standard anti-political bribery statute, 18 USC 201, honest services wire fraud covers misconduct by state officials. (There was already a federal law that typically applied to state officials, 18 USC 666–but no matter, the Supreme Court did what it did.)
So Bob McDonnell was charged with the honest devices wire fraud, which required the government to prove that he corruptly accepted personal payments in exchange for his performance of an “official act.”
At trial, the government argued that the following acts were “official acts”:
- Asking an aide a question about research pertaining to a businessman’s company.
- Attending two receptions the businessman attended.
- Arranging a meeting with his staff and the businessman and suggesting another meeting to an aide.
The government argued that these acts were official acts because the governor’s ultimate aim was to obtain state government funding for the businessman’s business.
It bears mentioning that the businessman provided numerous things of value to the governor and his wife. But that alone is far from federal bribery. In fact, in Virginia, there is no prohibition on giving gifts to government officials.
So the issue is not whether the conduct is morally correct, but rather whether Mr. McDonnell could have reasonably foreseen that the acts listed above–setting up meetings an so forth–constitute “official acts” under federal bribery law.
A foundational principle of our democracy is that a person cannot go to prison for conduct if they could not have reasonably foreseen that the behavior was criminal. This fair warning requirement of due process is violated most often in public prosecutions, where prosecutors know that the public will find the political sausage-making distasteful. It is for this reason that Justice Scalia warned that honest services wire fraud statute “invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators and corporate C.E.O.’s who engage in any manner of unappealing or ethically questionable conduct.”
Because Virginia law does not prohibit the payments in question, and because a reasonable person would not have fair warning that that above acts are official acts–like decisions to award a contract to a certain firm or to veto a law–31 current governors; 60 former state attorneys general; 13 former federal officials, including two former U.S. attorneys general and former legal counsels to every president starting with Ronald Reagan; and three law professors from Harvard University and the University of Virginia all have urged the Supreme Court to overturn McDonnell’s conviction.
We agree. The Supreme Court is poised to consider tomorrow whether to take up the case. We will continue to follow this important case in the area of political corruption law.
The Raleigh criminal defense firm of CHESHIRE PARKER SCHNEIDER & BRYAN handles all types of public corruption cases, including bribery and honest services wire fraud charges. If you are facing prosecution, contact one of our Raleigh criminal defense lawyers today.
In April 2015, the president created new rules allowing the federal government to freeze the assets of those suspected to be involved in high-level computer hacking. (Executive Order; RT.Com article).
On December 31, 2015, the Treasury Department published abbreviated rules for imposing these sanctions, indicating that a comprehensive set of rules will be published at a later date. (Federal Register).
The new regulations not only govern the blocking of transfers of funds by those suspected of computer hacking, but they also govern how those suspects can pay their lawyers. (Federal Register at § 578.506, 507). And lawyers who accept payment to represent suspects whose funds have been blocked must provide an annual report to the Department of the Treasury outlining “The individual or entity from whom the funds originated and the amount of funds received; and . . . (A) The names of any individuals or entities providing related services to the U.S. person receiving payment in connection with authorized legal services, such as private investigators or expert witnesses; (B) A general description of the services provided; and (C) The amount of funds paid in connection with such services.” (§ 578.507(b)).
The executive order and these rules indicate the increasingly drastic measures the federal government is taking to prevent computer hacking, cyberattacks, theft of trade secrets, and other computer crimes.
Asset seizures are allowed under the executive order whenever a person is suspected of any direct or indirect involvement in, responsibility for, or complicity in a cyberattack originating from outside the United States that has a significant impact on computer systems within the United States or involves the theft of trade secrets.
Although the executive order purports to limit the application of these rules to computer hacking that is “reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States,” this language is vague enough to apply to virtually anyone suspected of any involvement in computer hacking that is believed to have an international component.
With this increased federal government focus on computer hacking and theft of trade secrets, it is important to contact a Raleigh white-collar defense lawyer immediately if you believe you are being investigated.
In the wake of strong criticism of the federal civil asset forfeiture program, the United States Department of Justice has announced that it has ended its so-called “Equitable Sharing” program that allows local police to seize property from people and businesses using the permissive federal asset forfeiture procedures. (WaPo).
This program led to widespread abuses of the already questionable area of civil asset forfeiture because it created a monetary incentive for police to seize property. It’s widespread use resulted in charges that law enforcement agencies were “policing for profit”–targeting people and companies in order to boost their departments’ budgets, rather than focusing primarily on protecting the public from crime. The fact that the Feds took more from people in 2014 than burglars did (CheshireParker) suggests that these incentives have significantly altered law enforcement priorities at the federal level. And it is reasonable to expect that the same has happened at local police departments under the Equitable Sharing program.
USDOJ has indicated that the shutdown of the program is only temporary. So it remains to be seen what long term impact the move will have. Hopefully, it will curb the abuses of asset forfeiture programs–although it may spur a call by local police to expand state civil forfeiture laws.
If the government has seized property from you or your business, contact one of our experienced Raleigh asset forfeiture lawyers today.
In 2014, the federal government took more property from American citizens through asset forfeiture than burglars did. According to the Washington Post (link), the federal government deposited more than $5 billion into their asset forfeiture funds, whereas burglary losses were only $3.5 billion.
The following is a Washington Post graph showing the tremendous growth of seizures through asset forfeiture over the last 10 years–from less than $1 billion seized in 2004, up to over $5 billion last year.
This tremendous growth in a particular area of criminal law is somewhat rare. And because asset forfeiture was largely an afterthought in criminal defense cases, few criminal defense lawyers have developed extensive experience handling these complex cases.
If your property has been seized by the government, or if you have received a notice of forfeiture, contact one of our experienced Raleigh asset forfeiture lawyers today.
In light of an Ohio grand jury’s recent decision not to indict the police officer who shot and killed 12-year-old Tamir Rice in Cleveland, it’s worth revisiting a Letter to the Editor of the News & Observer from CPSB criminal defense attorney Bradley Bannon following the decision of a Missouri grand jury not to indict the police officer who shot and killed 18-year-old Michael Brown in Ferguson. While reasonable people can disagree about whether evidence supports probable cause for a criminal charge, it is beyond debate that prosecutors control the grand jury. As Brad wrote in the News & Observer in November 2014:
It is disingenuous for anyone familiar with modern American criminal procedure to maintain that the grand jury is, as intended, an independent check on government power. Quite the opposite, it’s an extension of that power.
This is no fault or criticism of the grand jurors themselves, who deserve respect for their sacrifice and service. But they can work with only what they’re given. And that is unilaterally controlled by prosecutors. In secret.
At least in federal court, there’s a transcript of that reality. In states like ours, there’s no record at all. Indeed, in some counties, where dozens of cases can be heard and indictments (drafted by prosecutors) signed by the grand jury in a mere couple of hours, who could type that fast?
So when a grand jury action is cited as if it’s entirely independent of the prosecution, we owe it to ourselves as a society to recognize that just isn’t true. The prosecutor controls the process, and it’s axiomatic that the person who controls the process often controls the outcome.
You may remember Silk Road, the “deep web” black market website where customers could purchase everything from drugs and guns to the services of hit men. Its founder, known as “Dread Pirate Roberts,” was a 29-year-old from Texas with an undergraduate degree in physics, who went to a prestigious graduate program in materials science at Penn State. (WaPo). He was ultimately convicted at a trial and sentenced to life in prison.
However, this conviction may be in question with the recent disclosure (known to the government at the time of the trial) that the lead DEA and Secret Service agents involved in the investigation extorted and stole hundreds of thousands of dollars worth of Bitcoins, and were also attempting to obtain employment from potential suspects and witnesses, all throughout the course of the investigation. (Forbes).
The federal criminal complaint by the Public Integrity Section of the Department of Justice alleges that these lead agents “abused their positions as federal agents and engaged in a scheme to defraud a variety of third-parties, the public, and the government, all for their own financial enrichment.” (Federal Criminal Complaint).
Specifically, as Forbes describes it:
The criminal complaint against former DEA agent Carl Mark Force IV and former Secret Service agent Shaun Bridges alleges money laundering, wire fraud, theft of government property, and more. But more shockingly, it tells the story of a sprawling case tainted by an unbelievable web of corruption. A state’s witness took the fall for an agent’s theft, thus becoming the target for a murder-for-hire—a murder that was then faked by the same agent. The Silk Road case was compromised again and again as Force and Bridges allegedly took every opportunity to embezzle and steal money. With so much bitcoin on their hands, the two had to coax various bitcoin and payments companies to help convert their ill-gotten gains to dollars. When companies resisted, investigations were launched, subpoenas were issued, and civil forfeitures were sought in retaliation.
This government retaliation targeted Venmo, among other companies, one of which received a note from Force after having their funds seized stating, “told you [you] should have partnered with me!”
Lawyers for Silk Road’s founder unsuccessfully moved for a new trial, arguing that much of the information alleged in the criminal complaint was exculpatory yet not disclosed to them sufficiently in advance of trial. His case in now on appeal. A website http://freeross.org/ has been set up to aid in his defense.
The information alleged in the criminal complaint against the former DEA and Secret Service agents, if true, shows the immense power federal law enforcement officers have and illustrates why, as Raleigh federal criminal defense attorneys, we dig deep to uncover any government misconduct that may have occurred in a federal criminal investigation. If you believe you have been wronged by government misconduct, call one of our Raleigh federal criminal defense attorneys at (919) 833-3114 to schedule an appointment.
Last week, President Obama met with numerous congressional leaders of both parties to encourage them to move forward with pending legislation that would reform the federal criminal justice system. (WaPo, Sentencing Law and Policy Blog). Both the House and Senate have considered numerous proposals, some of which include provisions that would reduce the mandatory minimum sentences for certain drug crimes; others would add provisions to nearly all federal offenses that require the government to prove, at least, that the defendant “knew, or had reason to believe, that the conduct was unlawful”; and others would eliminate federal offenses that criminalize “trivial conduct.”
Although much still needs to be decided, the Senate Minority Whip, Richard Durbin, believes that congress has “a good chance” of passing criminal justice reform legislation in early 2016 and sending it to the president “before the midpoint of the year.” Senate Judiciary Committee Chairman Charles Grassley also seemed optimistic.
Our hard-hitting Raleigh criminal defense lawyers include Joseph Cheshire, Bradley Bannon, Collin Cook, Elliot Abrams, and Keat Wiles. We will continue to monitor these developments in criminal justice reform to see how these changes may benefit our clients.
We have a reputation for fighting for justice and of winning tough drug cases. The earlier you retain a qualified lawyer, the better your chances of a successful outcome to your drug offense case. Our Raleigh drug crime lawyers lodge a thorough investigation to gather crucial evidence for motions to suppress whenever possible. This hard-hitting approach can often keep unlawfully obtained damaging evidence out of court. Call Cheshire Parker Schneider & Bryan at (919) 833-3114 to schedule an appointment.