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.
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.
Raleigh criminal defense lawyer Elliot Abrams authored an article for the North Carolina Advocates for Justice regarding cell phone tracking by police. The full text is provided below:
Your Right to Privacy in the Digital Age
In 1976, the United States Supreme Court created a rule that, if strictly applied today, would destroy privacy as we know it. The 1976 case was Miller v. United States, in which the Court held that people have no Fourth Amendment right to privacy in their bank records because those records were disclosed to a third party (the bank). This rule, known as the third party doctrine, essentially established that constitutional privacy rights depend on absolute secrecy of information. Any information disclosed to a third party, regardless of the purpose of the disclosure, is not protected by the Fourth Amendment.
Think: every gmail you draft is disclosed to google, so even your private thoughts, your drafts, your rants that you never even dreamed of sending are not “secret” and thus not private under the third party doctrine. Every television show you watch, every website you visit or search term you enter, and virtually every place you visit while carrying your cell phone, since your phone’s location is logged somewhere on the internet and/or by your cell phone service provider—all of that information is disclosed to a third party and thus is entitled to no Fourth Amendment protection under a strict application of the third party doctrine.
Fortunately, courts have begun to recognize that, as Justice Sotomayor wrote, “[t]his approach is ill-suited to the digital age[.]” Even at the time of its creation Justice Marshall refused to buy in, saying that he “would not assume that all information voluntarily disclosed to some member of the public for a limited purpose is, for that reason alone, disentitled to Fourth Amendment protection.”
The North Carolina Court of Appeals had an opportunity earlier this year to bolster privacy protections in the digital age in State v. Perry. Unfortunately, in writing for the majority, Judge Tyson went back to 1976, holding that a person has no reasonable expectation of privacy in their cell phone’s location information once that information has been obtained by the cell phone service provider—a belief that would startle most cell phone users.
As we increasingly interpose technology into our daily routines—wearing fitness bands and Apple watches, for example—the law will need to adapt to “assure preservation of that degree of privacy against government that existed when the Fourth Amendment was adopted.” That is, after all, the underlying principle of Fourth Amendment jurisprudence. Hopefully the North Carolina Supreme Court will look toward the future, rather than 50 years in the past, in considering whether to uphold or reverse Judge Tyson’s decision.
Elliot S. Abrams is a Raleigh criminal defense lawyer with the law firm Cheshire Parker Schneider & Bryan, PLLC. Elliot represents people charged with federal and state criminal offenses, public officials targeted by government ethics investigations, and licensed professionals facing professional discipline. Elliot cares deeply about his clients and stands up for them in and out of court. If you or a loved one are in need of legal help, feel free to call him at 919-833-3114.
A former clerk of an international law firm pled guilty to insider trading last week. According to Justice.gov the clerk obtained confidential insider information (also known as “material nonpublic information”) related to mergers, acquisitions and stock purchases and used it to profit on his personal transactions. He is also alleged to have passed this insider information to bankers who personally profited from this information as well.
The ex-law clerk was not involved with the transactions on behalf of the firm. Rather, he apparently accessed the information through the firm’s computer network by performing organic searches on topics such as “merger agreement,” “bid letter,” “engagement letter,” and “due diligence.”
According to the FBI by October 2013, the clerk made profits of about $168,000 on 13 planned corporate transactions. In March he was charged with security fraud and conspiracy. In September he rejected a previous plea offer. He now faces the possibility of 20 years in prison and a $5 million fine for the security fraud charge, along with an additional five years in prison and a $250,000 fine for the conspiracy charge.
The other two conspirators are awaiting sentencing after pleading guilty, one of whom has been ordered to pay back bonuses he received of close to $3 million.
Although there has been a great deal of discussion about insider trading law recently due to a new case out of the Second Circuit, nbsp; link, it appears that those issues were not present in this case.
At Cheshire Parker Schneider & Bryan our Raleigh federal criminal defense attorneys represent anyone charged with insider trading or other fraud offenses. If you or a loved one are facing such charges, call us for a free consultation today.
The aptly labeled crime 18 U.S.C. § 666 creates a federal crime out of certain acts of state government bribery (as well as embezzlement from certain state government and non-profit entities).
The distinguishing characteristic of the offense that allows it to be charged as a federal crime is that the crime must involve an entity that received “benefits in excess of $10,000” within one year of the offense conduct.
Due to the pervasive involvement, through grants and other spending, of the federal government in the financing of state and local governments, courts have long struggled with the coverage of § 666. For example, the Supreme Court has dealt with this issue on at least three occasions: Salinas v. United States, 522 U.S. 52, 57 (1997); Fischer v. United States, 529 U.S. 667 (2000); and Sabri v. United States, 541 U.S. 600, 606 (2004).
Last week, the Eleventh Circuit Court of Appeals weighed in, overturning a federal bribery conviction under § 666 of a city councilman in Florida who was caught accepting bribes because the government did not prove that the city received benefits in excess of $10,000. Full opinion US v. McLean -11th Circuit 2014 – Full Text.
At the outset, the court was “mindful that the Supreme Court recently cautioned against federal criminal statutes being read too expansively.” (Citing Yates v. United States, 135 S. Ct. 1074 (2015) (concluding the term “tangible object” defined within the Sarbanes-Oxley Act of 2002, legislation designed to restore confidence in financial markets, did not apply to the undersized red grouper that a commercial fishing vessel’s captain threw overboard)).
The court then applied a test fashioned from a prior case that required the government to provide sufficient detail about the particular local government program that the federal government allegedly funded in excess of $10,000 to allow the court to determine whether the program constituted a federal benefit.
The court found that the government’s evidence did not provide sufficient detail regarding the alleged federal benefits received by the city and therefore overturned the city councilman’s conviction.
The overarching concern the judges appeared to have been federal involvement in state crimes, particularly because (contrary to current practice) there is no generalized federal police power. The Supreme Court shares this concern, as exemplified in US v. Bond, decided in 2014, which overturned a woman’s conviction for utilizing a “chemical weapon” when she surreptitiously placed mildly toxic chemicals on a romantic rival’s door handle causing a minor rash. The Court specifically determined that it “can insist on a clear indication that Congress meant to reach purely local crimes, before interpreting the statute’s expansive language in a way that intrudes on the police power of the States.”
These cases, McLean and Bond, both show an attempt to curb the expansion of federal policing into state and local offenses in response to the over-federalization of law enforcement in this country, a topic wonderfully covered by lawyer Harvey Silvergate in his book Three Felonies a Day.
For Raleigh federal criminal defense attorneys, these rulings are important to be aware of since they suggest that courts will be less willing to endorse the expansion of the federal police power.
At Cheshire Parker we represent people under investigation or charged with federal crimes. To discuss your case and your legal options for defense, contact one of our Raleigh federal criminal defense attorneys at CPSB today.
A federal District Court Judge in Pennsylvania applied the doctrine known as “Act of Production Immunity” to prohibit the U.S. Securities and Exchange Commission (SEC) from forcing defendants accused of insider trading to disclose the passcodes necessary for the government to access their phones.
Act of Production Immunity is an outgrowth of the Fifth Amendment right against self-incrimination. Under it, a defendant cannot be required to disclose the contents of their mind, even if doing so is not by itself incriminating, but may lead to the government discovering incriminating evidence.
Importantly, the court found that the passcodes were not corporate records, even though the smartphones themselves were property of the defendants’ employer.
The full opinion from SEC v. Huang et al is available here: US v. Huang et al – Opinion.
This opinion is another win for privacy in the technological age. The 11th Circuit Court of Appeals in 2012 prohibited the government from forcing a defendant to decrypt his computer hard drive. In both that case and Huang, the court determined that the government did not have particularized knowledge of the contents of the encrypted device to be able to access the device under the “foregone conclusion” exception to Act of Production Immunity.
Under the foregone conclusion case law, the act of providing access to a certain device (or safe or other private space) is not “testimonial” under the Fifth Amendment if the government can show with “reasonable particularity,” “at the time it sought to compel the act of production, it already knew of the materials” being sought, which would make any testimonial aspect of providing access to the device a “foregone conclusion.” This exception has the potential to swallow the rule, so privacy advocates should take heart that judges have required the government to have specific knowledge of the item(s) it seeks access to in order to avail itself of the foregone conclusion exception.
The Fourth Circuit also recently enhanced the protections of individual privacy in its opinion US v. Graham – Opinion. In that case, the court determined that the government must obtain a warrant before reviewing historical cell-site location records (records that show approximately where a cell phone has been), at least when reviewing the records for an “extensive” 221 day period. (See Orin Kerr’s discussion of the case at WaPo: Fourth Circuit adopts mosaic theory, holds that obtaining “extended” cell-site records requires a warrant.)
Each of these cases show courts attempting to apply the Constitution to new technologies, and each of the rulings have important implications for Raleigh criminal defense attorneys in their attempts to protect the privacy of their clients. If you are being asked to disclose your computer password or cell phone passcode to police, call a criminal defense attorney.