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

As reported by the LA Times, Supreme Court Justice Kennedy, in a speech to the Los Angeles legal community at Pepperdine University, derided the state of our nation’s prison mentality. In what was described as an “otherwise courtly and humorous address,” Justice Kennedy remarked that “California now has 185,000 people in prison at $32,500 a year.” Justice Kennedy noted that U.S. prison sentences are eight times longer than those issued by the European court system.

We have previously commented about the criminalization of virtually everything in our nation. We even have a federal criminal law on the books for the unlawful use of the character of “Smokey Bear” (seriously – look it up – 18 U.S.C. 711) and interstate transportation of dentures (18 U.S.C. 1821 – you can’t make this stuff up)! More importantly, has been the use of honest services mail fraud (18 U.S.C. 1346) by federal prosecutors to fashion together a federal criminal common law, which the Supreme Court, we hope, will soon reign in.

Nevertheless, it is nice to note that the oppressive length of our prison sentences are not lost on our Supreme Court. Injustice is being done in our justice system.
 

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Macon attorney Mark Treadwell has been nominated by President Obama to fill a District Court vacancy in the Middle District of Georgia created by Judge Hugh Lawson’s taking of senior status. The Macon Telegraph reports that Mr. Treadwell was informed yesterday of his nomination.

Mr. Treadwell, a 1981 graduate of Mercer University School of Law, is a partner in the firm of Adams, Jordan & Treadwell, P.C. After graduation Mr. Treadwell worked for a large Atlanta firm before returning to Macon in 1985, where he has resided and practiced law. He is a fellow of the distinguished American College of Trial Lawyers and teaches as an adjunct Professor of Law at Mercer’s School of Law.

Mr. Treadwell’s firm’s website is here and his resume is here.
 

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As previously predicted here, we believe that the Supreme Court will declare the honest services statute unconstitutional. Apparently, the U.S. Attorney’s Office in the Northern District of Illinois thinks likewise.

In an apparent effort to head off any problems caused by the loss of the honest services mail fraud counts, the government has returned a Second Superseding Indictment against former Illinois Governor Rod Blagojevich. In a filing yesterday, the U.S. Attorney’s Office in the Northern District of Illinois explained that because the defendants’ conduct violated multiple criminal statutes, additional violations of the law are charged in the Second Superseding Indictment. The filing is in direct response to Blagojevich’s Motion to Dismiss the honest services mail and wire fraud counts,  and is fashioned in such a way that, should the Supreme Court find that the honest services mail and wire fraud statutes are unconstitutional, those charges can easily be dismissed, so as not to effect the trial of the case. The Blagojevich trial is scheduled for June 3.

All criminal practitioners should be filing similar motions to dismiss the honest services counts in any pending indictments.
 

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The Boston Globe reports this morning that Newton, Mass., attorney Lawrence M. Perlmutter has been charged with conspiring to launder drug proceeds and failing to file IRS forms related to monetary transactions. According to the Globe, Perlmutter made cash deposits into his law firm's trust account, which he then converted into cashier’s checks to bail out defendant’s with pending drug cases.

According to the agent’s affidavit filed in the case, a co-defendant, Secundino Cespedes acquired funds from drug dealers, and it was those funds that were, allegedly, laundered through Perlmutter’s trust account.

Perlmutter was arrested by federal agents outside of a Bank of America branch in Roxbury, Mass., after allegedly converting $100,000 into a cashier’s check. Apparently, according to the Globe, Cespedes’ business partner, Rafael Benzan, provided the $100,000 to Perlmutter in a sting operation.

Perlmutter is scheduled to make his first appearance in federal court today.
 

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As reported by the Macon Telegraph, on Friday the Georgia Court of Appeals reversed a ruling of the Superior Court of Bibb County, Georgia, dismissing Racketeer Influenced and Corrupt Organization (RICO) charges against Jimmy Collins, the former pastor of God's Worship Center (GWC), near Macon, Georgia, and Steven Pittman, a former employee of BB&T Bank. Collins and Pittman were alleged to have fraudulently induced church members into taking out more than $600,000 worth of loans.

Superior Court Judge S. Phillip Brown had dismissed the indictment against Collins and Pittman last July, finding that the State's indictment was not specific enough in alleging the RICO violations. However, the Court of Appeals held that the indictment contained sufficient detail, including a list of specific loan transactions.

Collins and Pittman are alleged to have used Pittman's position as a bank officer to obtain loans and lines of credit for approximately 10 members of Collins' church between 2002 and 2008. Collins allegedly requested that the church members "assist" the church by taking out personal loans, allegedly telling them that they would have no personal risk because the church would be responsible for repaying the loans. Collins is alleged to have targeted church members lacking in "sophistication," allegedly telling them that it was their "Christian duty." Collins and Pittman also allegedly forged documents, provided false financial information regarding the members and falsely represented the intended use of the loan funds. One couple incurred more than $350,000 worth of debt, and claimed that Collins and Pittman executed at least two loans without their knowledge.

Church members filed five civil suits against Collins, Pittman and BB&T. BB&T reached a confidential settlement with the plaintiffs and the claims against it were dismissed.

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Last month, the U.S. Sentencing Commission issued its 2010 Proposed Amendments to the U.S. Sentencing Guidelines, which may be viewed here, which contain much of interest for both corporate and individual defendants.

In regard to corporations or “organizational" defendants, the Commission has proposed several changes to Chapter Eight of the Guidelines. The Proposed Amendments amend Guideline Section §8B2.1, governing compliance and ethics programs for corporations, by adding language in the Application Notes regarding personnel who must be aware of an organization’s document retention policies and conform to such policies and setting forth “reasonable steps that an organization should take after detection of criminal conduct.” The steps are:

First, the organization should respond appropriately to the criminal conduct. In the event the criminal conduct has an identifiable victim or victims the organization should take reasonable steps to provide restitution and otherwise remedy the harm resulting from the criminal conduct. Other appropriate responses may include self-reporting, cooperation with authorities, and other forms of remediation. Second, to prevent further similar criminal conduct, the organization should assess the compliance and ethics program and make modifications necessary to ensure the program is more effective. The organization may take the additional step of retaining an independent monitor to ensure adequate assessment and implementation of the modifications.

Section 8D1.4, governing conditions for probation for corporations or organizations, is also amended to provide, as conditions of probation, that an organization develop and submit a compliance and ethics program and retain an independent monitor. The amendment further provides that organizations must disclose any material adverse changes in its business or financial condition or prosepects, and any new criminal prosecutions, civil litigation, administrative proceedings, investigations or formal inquiries commenced against the organization.

Last September, the Commission had stated that one of its policy priorities would be to study alternatives to incarceration. Accordingly, the Proposed Amendments increase “Zone B” and “Zone C” of the Guidelines’ Sentencing Table by one level. Defendants with Guidelines calculations falling within Zone B are eligible, instead of a sentence of imprisonment, to have imposed “a sentence of probation that includes a condition or combination of conditions that substitute intermittent confinement, community confinement, or home detention for imprisonment…” pursuant to Section §5C1.1(b)(3).

The Commission has sought comments on its Proposed Amendments. It has also sought comments on potential revisions to certain specific offender characteristics as a basis for downward departure in sentence pursuant to the policy statements in Chapter 5 of the Guidelines, including age; mental and emotional condition; physical condition; military, civic, charitable, or public service, employment-related contributions and record of prior good works; and lack of guidance as a youth. The Commission has stated that it has considered eliminating these statements pursuant to the Supreme Court’s decision in Booker, which mandated that sentencing courts consider a defendant’s “history and characteristics” pursuant to Section 3553(a) in fashioning a reasonable sentence. Under the “old” Guidelines system, such factors were either prohibited or discouraged grounds for a downward departure in sentence.

The Proposed Amendments also take into account the Supreme Court’s landmark holding in United States v. Booker, 543 U.S. 220 (2005) that the Guidelines are advisory, rather than mandatory, by amending the instructions on applying the Guidelines in Section 1B1.1 to provide that, after a sentencing court has determined the proper sentencing range under the Guidelines and considered the factors in 18 U.S.C. § 3553(a), “[t]he court shall then determine the sentence (i.e., a sentence within the guideline range, a departure, or a variance), considering the applicable factors in 18 U.S.C. § 3553(a) taken as a whole.”

The Proposed Amendments expand courts’ authority to impose probation as an alternative to incarceration in certain drug cases in a new proposed Guideline Section 5C1.3 provided that the defendant participates in a substance abuse treatment program and meets certain additional criteria. The Amendments furthermore suggest changes to determining a defendant’s criminal history in terms of the recency of prior offenses. Finally, the Proposed Amendments also recommend so-called “hate crimes” enhancements under Section 3A1.1 which provide for an increase of 3 or more levels to a defendant’s offense level where “the defendant intentionally selected any victim or any property as the object of the offense of conviction because of the actual or perceived race, color, religion, national origin, ethnicity, gender, gender identity, disability, or sexual orientation of any person…”
 

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The culture of corruption of some foreign nations may heavily influence to U.S. companies doing business abroad to play along in order to be competitive. Regardless of the competitive disadvantages, the Foreign Corrupt Practices Act (FCPA) stands as a serious deterrent to engaging in bribery or kickbacks in business transactions abroad. The force of the FCPA was demonstrated once again on Thursday, when two former executives of Willbros International, a subsidiary of Willbros Group, an engineering-construction firm headquartered in Houston, were sentenced in the U.S. District Court for the Southern District of Texas for participating in a $6 million bribe of Nigerian officials to secure a contract for a major natural gas pipeline. As reported by the Houston Chronicle, Jason Edward Steph and Jim Bob Brown had pled guilty to violating the FCPA. U.S. District Judge Sim Lake sentenced Steph to 15 months imprisonment and Brown to a year and a day. Willbros Group has also agreed to pay $32.3 million under a deferred adjudication settlement.

The bribe was made in relation to a $387 million natural gas pipeline project in the Niger Delta known as the Eastern Gas Gathering System. Steph and Brown gave bribes to Nigerian officials to ensure that Willbros was awarded the contract, at one point keeping $1 million in a suitcase.

The prosecution requested consideration for Steph and Brown based on their cooperation with and assistance to the government. Steph told the court that he was doing what his superiors had told him to do.

Brown's attorney pointed out at the sentencing hearing that Brown had been threatened, kidnapped, beaten and shot at while in Nigeria. The court noted the corrupt conditions in Nigeria, observing that one of the Nigerian officials bribed is currently running for office. However, the court stated that it wanted to send a message to the business community in sentencing Steph and Brown.

Another former executive, Kenneth Tillery, remains a fugitive in the case.

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Yesterday, a federal judge dismissed alleged drug charges against Henry Nicholas, the former Chief Executive of Broadcom Corp., a manufacturer of integrated circuits for broadband communications. In a related civil action, the judge, U.S. District Judge Cormac Carney of the U.S. District Court for the Central District of California, also ordered the Securities and Exchange Commission to amend alleged fraud charges against Mr. Nicholas and other former Broadcom executives within seven days, stating that he found "serious problems of proof" with the SEC's complaint against the former executives and inquired as to what proof the SEC had against them, as reported by The National Law Journal. The court had previously dismissed the SEC's complaint without prejudice.

Last month, during the trial of Mr. Nicholas and former Broadcom Chief Financial Officer William Ruehle, the court had granted Nicholas' and other defendants' motions to dismiss charges of backdating stock options based on prosecutorial misconduct and entered judgments of acquittal. Judge Carney found that the government "distorted the truth-finding process" and infringed on the defendants' due process rights to a fair trial. The court also questioned the evidence supporting the charges, noting that there was "considerable debate" regarding certain accounting practices used by Broadcom and many other major companies, including Microsoft and Apple.

The defendants made their prosecutorial misconduct claims after the court granted immunity to former Broadcom executives David Dull and Henry Samueli at the request of counsel for Mr. Ruehle so that the witnesses would not refused to answer based upon their Fifth Amendment privilege against self incrimination. Mr. Ruehle wanted Mr. Dull and Mr. Samueli to testify in order to rebut the testimony of Nancy Tullos, former Broadcom Chief of Human Resources, a witness for the government who had pled guilty in 2007 to obstruction of justice charges. The court found that the prosecution had improperly influenced Dull's, Samueli's and Tullos' testimony. Judge Carney also reprimanded the government for leaking misleading information regarding the grand jury proceedings to the news media. It set a hearing for the government to show cause as to why the narcotics case against Mr. Nicholas should continue.

At trial, he court also set aside Mr. Samueli's plea of guilty to making alleged false statements to the SEC following his testimony in Mr. Ruehle's and Mr. Nicholas' trial, stating that he had difficulty finding how Mr. Samueli had committed any crime. Judge Carney found that the government had pressured Broadcom into terminating Mr. Samueli, calling the government's treatment of him "shameful."

The court furthermore criticized the government for leaving Mr. Dull "hanging in the wind" for two years, treating him as an alleged co-conspirator but not charging him. The prosecution had entered a nonprosecution agreement with Mr. Dull after threatening to charge him with perjury based upon statements which Mr. Dull intended to make in his testimony in the Ruehle/Nicholas trial.

The extensive allegations of prosecutorial misconduct in the case against Mr. Nicholas and the other defendants included an allegation by the defense that the government had used Mr. Nicholas' 13 year-old son to gather evidence against his father.

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Of course we knew it was coming, but disbarred Fort Lauderdale attorney Scott Rothstein, architect of a $1.2 billion Ponzi scheme selling phony interests in settlements in employment and civil cases, pled guilty today in the U.S. District Court for the Southern District of Florida to charges of racketeering, fraud and money laundering,

and various other sources. Rothstein was also charged with taking monies from client trust accounts and making unlawful campaign contributions to politicians. Former attorneys and employees of Rothstein's former law firm, Rothstein Rosenfeldt Adler, are currently being investigated for illegal campaign contributions.

Following his surrender to authorities last fall, Rothstein assisted authorities in locating assets. His sentencing hearing has been set for May 6.

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