Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

Checking in on the trial of former Representative William Jefferson, now in its third week in the U.S. District Court for the Eastern District of Virginia, WBRZ in Louisiana reports that yesterday, U.S. District Judge T.S. Ellis stated that Jefferson’s wife, Andrea Jefferson, could be considered part of the bribery conspiracy charged against Jefferson, even though she has not been indicted. Mrs. Jefferson is an Assistant Vice President of Southern University, and owns a consulting company called The ANJ Group along with her five daughters. The Government has alleged that Jefferson steered payments to The ANJ Group in return for promoting a project in Africa for Kentucky telecommunications company iGate. iGate’s President, Vernon Jackson, testified earlier in the trial that he paid The ANJ Group $330,000, although the company did no work for iGate. Assistant U.S. Attorney Mark Lytle argued that Mrs. Jefferson “knew her husband was using her company to further iGate’s ambitions.”

Jefferson’s lead counsel, Robert Trout, argued that there was no connection between Mrs. Jefferson and the alleged scheme. Jefferson is charged with 16 counts, including bribery, conspiracy, racketeering and money laundering, and is alleged to have demanded bribes for himself and his family members in exchange for pushing certain projects in Africa. Jefferson’s attorneys have defended that Jefferson was acting as a private businessman in the alleged dealings, and did not commit official legislative acts such as voting, introducing legislation or appropriating government money.

The prosecution spent most of the day yesterday attempting to prove that Jefferson benefitted from his wife’s company, putting Jefferson’s former campaign and personal treasurer, Jack Swetland, who was also the accountant for The ANJ Group, on the stand. Swetland testified that the company was created in 2001, and by the end of 2005, William Jefferson was sending out the majority of its personal checks.

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Former Telfair County Georgia Sheriff, Jimmie Williamson, was sentenced late last week in federal court to 3 years in prison following his plea earlier this year to honest services mail fraud. Williamson pled guilty to embezzling fine and bond money paid by criminal defendants, accepting bribes in exchange for reduced charges from criminal defendants and purchasing items for his own personal use with Sheriff’s Department funds.

The Macon Telegraph has the story here.

Williamson is the second Telfair County Sheriff to enter a guilty plea to federal charges in the past 2 decades. In the mid-1990s, former Sheriff, Ronnie Walker, was sentenced to 10 years in federal prison for his role in aiding marijuana growers in his county.

The government was represented by an extremely capable young attorney who came to the Southern District of Georgia from Latham & Watkins, Brian Tanner. The Telegraph reports that Tanner argued that the Sheriff had committed a "monumental breach of trust."

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The Houston Chronicle reported Friday that convicted District Court Judge Samuel Kent finally resigned from his position as a United States District Court Judge effective at the end of this month. Kent was convicted by guilty plea of obstructing an investigation into his conduct. At the core of Kent’s criminal conduct was his predatory sexual abuse of two women who worked for the court.

Kent had earlier offered to resign in June 2010, but hearing that, the House quickly voted to impeach him. Kent had continued to collect his salary of $174,000 per year even though he began serving his 33 month sentence earlier this month. Kent could only be removed by his own resignation, or impeachment. Angered by Kent's arrogance in submitting his resignation for a year down the road, the Senate was moving forward with impeachment.

The Chronicle reports that Kent handed a one sentence resignation letter to Senate officials who showed up at his federal prison last week.

So ends a case that demonstrated all too well that the judiciary is unable to police itself. However, the case also demonstrates that the courage and suffering of two citizens can be redeemed with a measure of justice in our society.

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Wesley Snipes' misdemeanor convictions for failing to file a tax return have been scheduled for oral argument in November before the Eleventh Circuit. We blogged on this case with some frequency post verdict. Snipes now has his 7th attorney on board for the purpose of handling his appeal, Philadelphia attorney, Peter Goldberger. Snipes has a rather significant venue issue that was litigated pretrial. The issue -whether Snipes is a resident of central Florida (where he grew up) for purposes of filing tax returns, or whether his residency for tax purposes is in either New York, or Los Angeles where he has resided during his professional life. We’ll follow this appeal as briefs are filed.

Snipes remains free on bond pending appeal.

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Sir Robert Allen Stanford entered a plea of not guilty yesterday to the indictment charging him with alleged defrauding investors in a $7 billion Ponzi scheme. U.S. Magistrate Judge Frances Stacy presided over the arraignment in the U.S. District Court for the Southern District of Texas in Houston.

Also yesterday, Stanford's co-defendant and alleged co-conspirator, Leroy King, a former official with Antigua and Barbuda's Financial Services Regulatory Commission, was arrested in Antigua. King is in custody pending a potential extradition request to the United States.

Stanford remains in custody. Magistrate Judge Stacy told the parties yesterday that she intended to order Stanford released on $500,000 bond, but that she would reserve her ruling until today to give the government time to appeal her decision. Assistant United States Attorney Paul Pelletier argued that there are no set of conditions which would guarantee Stanford's appearance at trial. The Government has filed a Memorandum in Support of Detention, arguing that Stanford should be denied bond based on the fact that he has a motive to flee, as well as the means and opportunity, noting, among other things, that Stanford's passport shows that he has traveled to over 30 foreign countries, and entered Antigua over 40 times in 2008. The defense filed a Memorandum in Support of Standford's Right to Pretrial Release on Wednesday, arguing that Standford is not a flight risk and that Stanford is required to be released on his own recognizance or an appearance bond under 18 United States Code section 3142. The memorandum cites the fact that Stanford voluntarily surrendered his passport to the Government after the Securities and Exchange Commission filed a civil fraud suit against him back in February; and that he arranged to voluntarily surrender to authorities upon learning of his indictment. We note that Stanford also has a home in South Florida... complete with a moat.

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Sir Robert Allen Stanford is scheduled to be arraigned today on conspiracy, mail and wire fraud, money laundering and obstruction charges in Houston in the U.S. District Court for the Southern District of Texas. Stanford is represented by attorneys Dick DeGuerin and Sean Ryan Buckley, of the Houston firm of DeGuerin and Dickson.

According to the docket for the case, the Government obtained its 21-count indictment, which can be viewed here, last Thursday and promptly moved to seal (i.e. prevent public access to) it, and then unsealed it on Friday shortly before Stanford’s arrest.

The Court will likely revisit the issue of whether Stanford is entitled to release before trial. On Friday, the Court ordered co-defendants Mark Kuhrt and Gilberto Lopez released on a $100,000 unsecured bond. However, given Stanford’s considerable wealth and ties abroad, any amount of bond imposed in his case will undoubtedly be far higher, if Stanford is granted pre-trial release at all, that is. The U.S. District Court for the Eastern District of Virginia determined that Stanford posed a high risk of flight, and denied bond.

The case will be tried before U.S. District Judge David Hitter, a brief description of whom can be found here.

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While Sir Robert Allen Stanford was being indicted in the alleged second-largest Ponzi scheme in U.S. history, Bernard Madoff’s defense team was preparing for his sentencing in the largest scheme, set for next Monday, according to the Associated Press and the Daily Telegraph. Madoff’s attorney, Ira Sorkin, has filed documents with the Court arguing that a 12 year sentence of imprisonment would be appropriate for Madoff. Madoff pled guilty in March to defrauding investors in a $50 billion Ponzi scheme which lasted for decades. He could face as much as 150 years in prison. The U.S. Sentencing Guidelines recommend life imprisonment for the offense. Mr. Sorkin cited Madoff’s voluntary surrender to authorities, his full acceptance of responsibility, his cooperation with investigators and the nonviolent nature of the offense as grounds for the low sentence. He stated that Madoff has recently met with the Inspector General of the Securities and Exchange Commission to provide the SEC with information on his conduct for the purpose of strengthening regulation and oversight of Wall Street. The filing gives statistics for the average sentences for fraud offenders who do not receive leniency (15.3 years) and cites the fact that Madoff, who is 71 years old, only has a life expectancy of another 12.6 more years.

Madoff will be sentenced by U.S. District Court Judge Denny Chin. The Court has received dozens of letters from victims urging the Court to ensure that Madoff spends the remainder of his life in prison. Mr. Sorkin stated in the filing that Madoff will speak at the sentencing regarding “the shame he has felt” and “the pain he has caused.” Eight of Madoff’s victims will also testify at the hearing.

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The writers of Federal Criminal Defense Blog have been busy writing on other matter and apologize for the brief hiatus. Much has happened in the sphere of white collar crime even during our short absence, most notably developments in the two largest Ponzi schemes in U.S. history, and we have some catching up to do.

We’ll start with the second largest—an indictment indictment against billionaire Texas financier Sir Robert Allen Stanford, 59, was unsealed in the U.S. District Court for the Eastern District of Virginia on Friday according to the Associated Press  and the BBC. The 50-page indictment alleges that Stanford and six other defendants with allegedly perpetrated a $7 billion Ponzi-style fraud. It charges Stanford and the other defendants with 21 counts, including 7 counts of wire fraud, 10 counts of mail fraud, conspiracy to obstruct an investigation for the Securities and Exchange Commission, obstruction of an investigation by the SEC and conspiracy to commit money laundering. Defendants Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt are executives of Stanford Financial Group. Defendant Leroy King, a former bank regulator for the Caribbean island nation of Antigua and Barbuda, allegedly accepted more than $100,000 in bribes from the other defendants in order to allow the alleged scheme to continue.

The indictment alleges that the defendants sold certificates of deposit issued by Stanford International Bank, based in Antigua, to investors, promising large returns. The defendants allegedly made false claims to investors regarding the growth of Stanford Financial Group’s assets.

The scheme had approximately 30,000 investors. Stanford is alleged to have diverted more than $1.6 billion in investment funds in personal loans to himself. More than $1 billion in investment money is allegedly unaccounted for. Stanford is also charged in the indictment with allegedly conspiring to obstruct an SEC proceeding. Stanford Financial Group’s finance chief, James M. Davis, is cooperating with investigators. Davis has been charged with fraud and obstruction in a separate indictment.

Stanford was the owner of a newspaper, two restaurants, and a development company in Antigua, and was a cricket enthusiast and owner of the Stanford cricket grounds in Antigua. In 2008, Stanford staged a $20 million, winner-takes-all, match between a West Indian XI and England at the grounds. In 2006, Stanford became the first American to be knighted by Antigua and Barbuda.

Stanford is represented by attorney Dick DeGuerin, who has issued a statement to the press that Stanford is innocent of the charges. Stanford has made repeated statements as to his innocence and has alleged that no money was lost.

Stanford surrendered to the FBI on Thursday and had his initial appearance on Friday. U.S. Magistrate Judge Hannah Lauck determined that Stanford posed a flight risk and ordered him to remain in custody pending a future detention hearing in Houston. Several governments have frozen his assets. Stanford faces as much as 250 years in prison if convicted.

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This week, the Fifth Circuit Court of Appeals issued an opinion in United States v. Brown, Case No. 08-20038 (5^th Cir. 2009). The defendants in Brown were former Merrill Lynch employees charged with conspiring with employees of failed energy corporation Enron to “park” certain of Enron’s “assets” with Merrill Lynch to artificially enhance Enron’s earnings for 1999. The “assets” involved were power generating barges located off the coast of Nigeria. Pursuant to the scheme, Merrill Lynch would “purchase” the barges from Enron based on a secret side deal that Enron would buy the barges back after six months. Specifically, Merrill agreed to invest $7 million in purchase equity in the barges so that Enron could record $12 million in earnings and meet its forecasts. Enron agreed to repay Merrill its investment with a fixed rate of return, as well as a $250,000 advisory fee, despite the fact that Merrill performed no advisory services (Its sad to say, but much of the story of how the country got in the fix it is in will eventually be laid out in the pages of the Federal Reporter and Federal Supplement.)

The defendants were charged with, and convicted by the jury of, conspiracy and wire fraud with three alleged goals, including defrauding Enron and its shareholders of the “intangible right to honest services.” However, the Fifth Circuit Court of Appeals reversed the defendants’ conviction on the ground that the transactions underlying the case did not fall within “honest services” wire fraud—which was one of the types of fraud charged in the indictment. A panel of the Court recognized that the Enron employees had breached their fiduciary duties in pursuit of earnings goals which Enron itself had imposed and tied to employee compensation. The Court noted that there was “senior executive support” for the barge transaction at Enron. Therefore, the scheme did not resemble the typical kickbacks and self-dealing fraud against an employer which characterizes garden variety honest services fraud.

The government tried to re-try the defendants by redacting the honest services fraud theory from its indictment and alleging that the defendants deprived Enron or its shareholders of “money or property.” The defendants moved to dismiss, which motion was denied by the trial court. The defendants appealed to the Fifth Circuit again. They argued that the government was barred by Double Jeopardy and collateral estoppel from prosecuting them under a money or property theory. The Court noted that Double Jeopardy will bar re-trial where an appellate court reverses a charge based on the fact that the evidence is insufficient, or where a verdict is supportable on one ground but not another, and where it is impossible to determine which ground the jury selected. The Court found that it had not considered whether the defendants might be held liable under a money and property theory in its earlier opinion, or found the evidence insufficient, such as would bar re-trial.

The Court also rejected the defendants’ argument the government could not prove that they defrauded Enron of money or property because the Court had found in its earlier opinion that Enron was a “willing beneficiary” of the scheme. The Fifth Circuit proceeded to assume the wholly contradictory position that it had concluded that Enron was a “willing beneficiary,” and not a victim, for the purposes of honest services wire fraud, but that Enron “was not excluded by [the Court’s earlier decision] as a victim for the purposes [of the money and property wire fraud charges].”

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