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

Although it may be considered small change when compared with the fraud of fellow Floridian Scott Rothstein, according to an FBI press release, Gary Ernest Williams, former Chief Financial Officer for Marian Gardens Tree Farm (MGTF) in Groveland, Florida, was sentenced to eight years imprisonment on Monday in the U.S. District Corut for the Middle District of Florida. Williams was charged with embezzling approximately 10.5 million from MGTF since 2000 through falsified checks, use of a credit card in the company's name and making large cash withdrawals which he told bank officials were to be used to pay “employee bonuses.” Willams spent the money on lavish homes, luxury cars, jewelry, drugs, and vacations by private jet. He also failed to failed to pay federal income taxes in the amount of $3,675,000 on the illegally obtained funds.

Williams entered a guilty plea in July. The District Court ordered Williams to pay more than 14 million in restitution to MGFT and to forfeit homes in North Carolina, Pennsylvania and the Bahamas.

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In response to allegations uncomfortably similar to those against former New York celebrity lawyer and arch Ponzi-schemer Marc Dreier, Fort Lauderdale attorney Scott Rothstein, head of Rothstein, Rosenfeldt and Adler, P.A., appeared in response to a criminal information in the U.S. District Court for the Southern District of Florida on Tuesday. The information charges Rothstein with one count of Racketeering Conspiracy, in violation of 18 U.S.C. § 1962(d); one count of Money Laundering Conspiracy, in violation of 18 U.S.C. § 1956(h); one count of Mail and Wire Fraud Conspiracy, in violation of 18 U.S.C. § 1349; and two counts of Wire Fraud, in violation of 18 U.S.C. § 1343, as well as criminal forfeiture, U.S. v. Rothstein, 0:09-cr-60331-JIC.

According to the criminal information, available here, from about 2005 through November 2009, Rothstein, and other “known and unknown” unnamed co-conspirators, allegedly unlawfully obtained approximately $1.2 billion from investors through a Ponzi scheme (outdoing even Dreier’s scheme). The Government alleges that Rothstein used false statements, documents and computer records to induce investors to loan money to alleged borrowers based upon fraudulent and fictitious promissory notes and bridge loans. Rothstein allegedly falsely informed investors that his law firm, Rothstein, Rosenfeldt and Adler, P.A.’s, clients requested short-term financing for undisclosed business deals and that the clients were willing to pay high rates of return for loans negotiated by Rothstein.

Rothstein also allegedly told investors that they could purchase at a discount confidential settlement agreements in sexual harassment and whistleblower cases in amounts ranging from hundreds of thousands of dollars to millions of dollars. Rothstein allegedly falsely represented that the settlement agreements would be repaid to the investors at face value over time. Rothstein allegedly represented to investors that the settlements were highly confidential in order to protect the reputations of the companies and executives involved; that the plaintiffs preferred to settle the claims rather than purse them in a public forum; that Rothstein, Rosenfeldt and Adler, P.A., would disburse the investors’ funds to the plaintiffs; that the firm would make payments to the investors pursuant to the payment schedules in the alleged settlement agreements; that the funds were maintained in designated trust accounts for the investors in accordance with the rules and regulations of the Florida Bar and were verified by independent sources, as well as numerous other alleged false statements regarding the settlement agreements, investment funds and the firm.

To effect the fraud, Rothstein allegedly established numerous trust accounts in Rothstein, Rosenfeldt and Adler, P.A.’s name; falsified statements from financial institutions and manufactured online banking information allegedly showing investors’ monies; created false and fictitious settlement agreements and other documents. Among the alleged false and fictitious documents was a court order in a case, purportedly signed by a Federal District Judge, which falsely alleged that Rothstein, Rosenfeldt and Adler, P.A.’s clients had prevailed in a lawsuit and were owed $23 million, when in fact the firm had settled the case without the clients’ knowledge and had obligated them to pay $500,000 to the defendant.

The information also alleges that Rothstein allegedly falsely told clients that, in order to recover funds, they had to post bonds to be held in Rothstein, Rosenfeldt and Adler, P.A.’s trust account. Over several years, clients wired approximately $57 million to a trust account controlled by Rothstein. Rothstein allegedly created another false Federal court order to conceal the scheme, providing that the funds were to be returned to the clients by a later date.

Rothstein used the funds acquired through the alleged scheme to fund the operations of Rothstein, Rosenfeldt and Adler, P.A., and to expand the firm. The firm grew to employ approximately 70 attorneys. Rothstein is alleged to have laundered the funds from the scheme through corporations, contributions and large bonuses and gifts to employees. The information alleges that Rothstein used the funds to make contributions to Federal, State and local political candidates in a manner designed to conceal the source of the funds and to circumvent Federal and State limits on campaign contributions; for charitable donations; to purchase controlling interests in restaurants in South Florida; and to hire members of local law enforcement to provide security for Rothstein, Rosenfeldt and Adler, P.A., and for Rothstein personally.

The enormous wealth amassed by Rothstein through the alleged scheme is apparent in the Governement’s forfeiture allegations, which seek forfeiture not only of a sum of $1.2 billion, but also of 24 properties in Fort Lauderdale, Lauderdale by the Sea, Boca Raton, Hollywood and Plantation, Florida; New York City and Narragansett, Rhode Island, including Rothstein’s 10% ownership in the Miami Beach mansion of late fashion mogul Gianni Versace, “Casa Casuarina.” Forfeiture is also sought of numerous business interests, bank accounts and jewelry, as well as 24 vessels and vehicles purchased by Rothstein, including a 55 foot yacht.

The Government also lists millions in political and charitable contributions by Rothstein which it seeks forfeiture of, including contributions to the Republican Party of Florida; Florida Governor Charlie Crist; Democratic Chief Financial Officer Alex Sink, who is running for governor; and two hospitals.

As reported in the Miami Herald here, and here, Rothstein started Rothstein, Rosenfeldt and Adler, P.A., in 2002 as an obscure attorney practicing employment law. Over the next six years, his net worth grew from about $160,000 to tens of millions. Rothstein used flashy wealth and connections in the Broward County social and business communities to lure wealthy persons to invest in his schemes. He befriended the rich and famous, including NFL Hall of Famer Dan Marino

George G. Levin, a wealthy Fort Lauderdale resident and hedge fund manager, gave $656 million to Rothstein to invest in settlements purportedly worth $1.1 billion. Levin helped Rothstein market investments in employment and sexual harassment lawsuits to investors, although he is not alleged to have been complicit in Rothstein’s crimes. Another of Rothstein’s clients, car-dealership mogul Ed Morse, claims that Rothstein defrauded him of $57 million, arising from the settlement of a contract dispute with an interior decorator.

Rothstein would allegedly give large bonuses to employees of Rothstein, Rosenfeldt and Adler, P.A. on the condition that they make campaign contributions to political candidates who Rothstein would specify. The Government has stated that the recipients of the political contributions have returned the contributions. The Florida Democratic Party has returned $200,000 and the Florida Republican Party has given back $150,000. After Crist won the Governor’s race in 2006, he appointed Rothstein to a panel which nominates Broward County judicial candidates. The Florida Democratic Party has called for an investigation of Crist. Rothstein also allegedly paid gratuities to local law enforcement officers to avoid scrutiny.

Rothstein’s scheme began to unravel over Halloween weekend, when investors began calling the firm for overdue payments and discovered the fraud. Rothstein fled to Morocco in October, taking $400,000 to $500,000 in cash with him and wiring $16 million to Casablanca. Rothstein reportedly sent e-mails to members of his firm that he was contemplating suicide, but he returned to the U.S. on a private jet in early November. He met with Federal authorities and provided details regarding his Ponzi scheme. FBI and IRS agents raided Rothstein, Rosenfeldt and Adler, P.A.’s law offices, and seized Rothstein’s real and personal property. Rothstein agreed to waive indictment, an indication that he is cooperating with the Government, although Rothstein’s counsel has denied that he has any deal with the Government.

The Government’s information does not name Rothstein’s alleged co-conspirators, however news reports suggest members of Rothstein's inner circle at the law firm, and officers at Toronto Dominion Bank, where the investor trust accounts were held.

Rothstein’s alleged Ponzi scheme has been called the largest in the history of South Florida by Federal officials. The Florida Bar has disbarred Rothstein for stealing from the firm’s trust account. Rothstein, Levin and TD Bank are also being sued by a group of investors for more than $100 million.

Rothstein appeared in court on Tuesday in casual attire with a confident demeanor and pled not guilty to the information. U.S. Magistrate Judge Robin Rosenbaum ordered Rothstein jailed pending trial based on Rothstein’s flight to Morocco. Rothstein is represented by attorney Marc Nurik, oddly of Rothstein, Rosenfeldt and Adler, P.A. He faces up to 100 imprisonment if convicted.

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Last Wednesday, the Government, through Deputy Assistant Attorney General Kenneth A. Blanco, filed a brief Motion to Dismiss Third Superseding Indictment with Prejudice seeking to dismiss its indictment against Miami, Florida, attorney Benedict P. Kuehne, and also Colombian attorney Oscar Saldarriaga Ochoa, in the criminal action of U.S. v. Velez, 1:05-cr-20770-MGC, in the U.S. District Court for the Southern District of Florida. The Government’s motion stated that it was based upon the “totality of the circumstances,” including the Eleventh Circuit Court of Appeals’ affirmance of the District Court’s dismissal of the Government’s charge of conspiracy to launder money against Mr. Kuehne. The Government stated that it believe that dismissal was in the interest of justice. On the same day, U.S. District Judge Marcia Cooke entered an order dismissing the Third Superseding Indictment.

The dismissal marked the end of a long ordeal for Kuehne, who was indicted over two years ago for alleged money laundering conspiracy, money laundering concealment conspiracy, concealment money laundering and wire fraud conspiracy. According to the Government’s indictment, Fabio Ochoa Vasquez was one of the leaders of the Medellin Cartel, one of the largest cocaine trafficking and money laundering organizations in the world. In 2001, Ochoa was extradited from Colombia to the U.S. to face charges of conspiring to smuggle approximately 30 tons of powder cocaine into the U.S. per month between 1997 and 1999. Ochoa hired distinguished attorney Roy Black, of the Miami law firm of Black, Srebnick, Kornspan & Stumpf, P.A., and other attorneys to represent him, and the defense in turn retained Mr. Kuehne, of the Law Offices of Benedict P. Kuehne, P.A., to investigate the funds which Ochoa would use to pay his legal team. Kuehne drafted various opinion letters for the offense. The Government alleged that Kuehne was paid for his investigation and opinions by various wire transfers with monies which were the proceeds of specified unlawful activity—the distribution and sale of illegal drugs, including monies from the Colombian “Black Market Peso Exchange” and drug proceeds supplied by undercover U.S. agents.

Kuehne, through his attorney, Jane Moscowitz of Moscowitz & Moscowitz, P.A., filed a motion to dismiss the indictment in July, which may be viewed here, relying on the fact that one of the federal money laundering statutes, 18 U.S.C. § 1957, contains an express exemption for “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.” 18 U.S.C. § 1957(f)(1).The motion began with a quote from Banking Crimes: Fraud Money Laundering and Embezzlement, by John K. Villa: "There is an inestimable difference... between expecting a defendant to be able to find an attorney willing to risk his fee, and expecting him to find an attorney willing to risk his personal liberty." Kuehne argued that Congress enacted the exemption in § 1957(f)(1) out of a concern that the threat of prosecution of criminal defense attorneys for accepting fees would have a “chilling effect” on attorneys’ willingness to accept clients, and therefore impose an unacceptable burden on the exercise of the Sixth Amendment right to counsel. The defense argued that the monies paid fell squarely within § 1957(f)(1)’s exemption and that Count One of the indictment should be dismissed. The District Court agreed and dismissed Count One, and the Eleventh Circuit affirmed in United States v. Velez, No. 09-10199, 2009 WL 3416116 (11th Cir., October 26, 2009).

As reported by the Miami Herald, Kuehne addressed reporters on the steps of the courthouse, stating that he always believed “things would turn out well in the end.” Prior to the allegations against him, he had been a prominent member of the legal community, serving on the Florida Bar board of governors, as a past president of the Dade County Bar Association and as a member of Vice President Al Gore’s legal team in the 2000 Florida presidential election dispute. Kuehne expressed his appreciation to the Department of Justice for the dismissal of the matter. Cynthia Hujar Orr, President of the National Association of Criminal Defense Lawyers, which filed amicus briefs in Kuehne’s case, called the Government’s prosecution of Kuehne “disgraceful.”

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The trial of Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin got underway last week. As reported by attorney Jacob Zamansky in Forbes and the New York Daily News, the parties gave opening statements on Thursday. Assistant U.S. Attorney Patrick Sinclair argued that Bear Stearns financial officer Matthew Tannin allegedly told investors on 11 occasions that he was putting more of his own money into Bear Stearns’ troubled High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Enhanced Leveraged Fund. Tannin allegedly told investors that it would be “silly” to redeem their investments. Sinclair also told the jury that Cioffi failed to disclose to investors that he had transferred $2 million of his own money to another Bear Stearns fund. The prosecution cited alleged incriminating e-mails between Cioffi and Tannin in which the defendants allegedly acknowledged that the subprime mortgage market was “toast” and that they should “close the fund.” Sinclair argued that Cioffi’s and Tannin’s actions were allegedly to save their bonuses and reputations. He spoke to the jury for about 45 minutes.
 

In contrast, Cioffi’s attorney, Dane Butswinkas, delivered a two hour opening statement using charts and exhibits to show the complexity of Bear Stearns’ management structure, hedge funds and the operation of the collateralized debt obligation (CDO) market. Butswinkas argued that the defendants were the victims of market forces beyond their control and that the defendants did their best to predict the future performance of the market and the funds. Tannin’s counsel, Susan Brune, also spent approximately two hours explaining to the jury about hedge funds, CDOs and market risk. Brune attributed the failure of the funds on a “run on the bank” and argued that the funds’ investors were well aware of the risks. Brune characterized the prosecution’s theory as “I lost my money, therefore there has to be a fraud.” The defense argued that the e-mails were taken out of context, and that worrying about markets is not a crime.
 

Nearly 300 investors kept their investments in the hedge funds, which lost $1.4 billion in July of 2007. The two hedge funds had experienced positive growth until the preceding quarter, however an internal Bear Stearns report showed that securitized subprime mortgages were losing value fast.
 

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The trial of former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin begins today in Brooklyn, as reported by Bloomberg. A jury will be selected today. 

Cioffi and Tannin are charged with allegedly causing losses of $1.4 billion to investors by misleading investors regarding the health of two Bear Stearns hedge funds, the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. ("Enhanced Fund"). and the Bear Stearns High- Grade Structured Credit Strategies Master Fund Ltd. ("Master Fund"). Cioffi was a hedge fund manager and Tannin was an attorney who served as chief operating officer. They are charged with alleged conspiracy, securities fraud and wire fraud. Cioffi is also charged with alleged insider trading.

Cioffi's and Tannin's attorneys have argued that the collapse of Bear Stearns was actually the result of the failure of two other Bear Stearns hedge funds a year prior to the failure of the Enhanced Fund and the Master Fund.

U.S. Attorney Benton Campbell, a former member of the Justice Department’s Enron Corp. Task Force, and Assistant U.S. Attorney James McGovern, are leading the prosecution of Cioffi and Tannin. The prosecution alleges that Cioffi and Tannin were promoting the funds to investors while knowing that the health of the funds was in serious risk. The government has listed 38 witnesses and 532 exhibits which it intends to present at trial, however, the centerpiece of the government's evidence is expected to be Cioffi's and Tannin's own words in e-mails.Cioffi allegedly sent one e-mail on March 15, 2007, with the subject-line "Fear," stating that he was fearful of what the markets were going to do. In another e-mail, Tannin allegedly stated that if AAA bonds were downgraded, there would be no way for the funds to make money. Google released additional private e-mails to the government last week. Prosecutors allege that e-mails show Cioffi and Tannin allegedly boasting of how they were luring investors to invest more money in the funds at the same time they knew that the funds were in trouble. Witnesses for the government are expected to include Bear Stearns employees and investors in the hedge funds.

Cioffi is defended by attorney Brendan Sullivan, who won reversal of the charges against Alaska Senator Ted Stevens, as well as Margaret Keeley and Dane Butswinkas, all of Williams & Connolly LLP. Tannin is being represented by Susan Brune and Nina Beattie of Brune & Richard LLP. Commentators have observed that the e-mails by Cioffi and Tannin can be read in "many" ways.

A year following the failure of the funds, Bear Stearns itself failed and was purchased by JP Morgan Chase & Co. The failure of Bear Stearns was accompanied by failures of Lehman Brothers Holdings, Inc., and AIG. Losses from U.S. banks and mortgage companies in the financial collapse total at least $396 billion.

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As reported by Chris Herring over at the Wall Street Journal Law Blog, the trial of former Bear Stearns hedge fund managers Matthew Tannin and Ralph Cioffi is scheduled to commence next Monday. And now the government has obtained Tannin's e-mails from his private Google account. Tannin had closed the Google account on the advice of his counsel. Prosecutors suspected that Tannin was hiding something. Google released the e-mails a few days ago. U.S. District Judge Frederic Block for the U.S. District Court for the Eastern District of New York has ruled that since the e-mails have been released, the government cannot explore whether Tannin was trying to hide anything from investors in his personal e-mails, stating that it would confuse the jury and citing the fact that the government already intends to present 38 witnesses and over 500 exhibits in its case against the defendants.

E-mails between Tannin and Cioffi allegedly expressing concern over the health of the hedge funds have already been released to the public. The newly-produced e-mails are expected to reflect similar alleged concerns by the defendants.

As reported by CNN, Cioffi and Tannin are the only two persons to face criminal charges resulting from the worst financial crisis in U.S. history since the Great Depression. The defendants are alleged to have misled investors in two of Bear Stearns' hedge funds to believe that the condition of the funds was better than it in fact was. The hedge funds collapsed in the Spring of 2008, resulting in over $1 billion in losses to investors.

Legal observers have characterized Cioffi's and Tannin's prosecution as a "test case" and have cited the government's need to make an example to discourage similar conduct in the financial sector. Although Cioffi and Tannin may have offered the government what it believed to be its most clear cut case, commentators have noted it may be difficult to prove that Cioffi and Tannin possessed an alleged intent to defraud investors rather than merely being misguided or stupid, given the fact that very few foresaw the subprime mortgage crisis and the collapse of the market.

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As we check back with Sir Robert Allen Standford, the most noteworthy development is perhaps that the Bellagio, a Las Vegas casino and luxury resort, filed suit against Stanford last week in a Clark County Nevada district court for an alleged $258,480 in unpaid gambling debts.The lawsuit alleges that Stanford signed for 14 markers between January 15 and 22 of this year.

Oddly enough, Stanford is allegedly a self-professed Southern Baptist who reportedly infused the boardroom culture in his companies with religion, surrounded himself with individuals he met through church and used church contacts to find customers. Furthermore, Stanford's adoptive home, Antigua and Barbuda, is one of the leading host nations for the multi-billion dollar international online gambling  industry. Stanford, however, reportedly refused to deal with persons involved in gambling in his business dealings. While Stanford's companies based in Antigua have ceased operations, its online gambling sector has continued to thrive.

The Securities and Exchange Commission, which has frozen Stanford's assets, is investigating the Bellagio markers.

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As is well known, Bear Stearns, one of the largest investment banks in the world, was sold to JP Morgan Chase and effectively ceased to exist in March of 2008, after two Bear Stearns hedge funds invested in collateralized debt obligations—mainly subprime home loans—and once worth approximately $1.6 billion, lost nearly all of their value. The collapse of Bear Stearns was the harbinger for a succession of massive failures of financial institutions, including Lehman Brothers, Merrill Lynch and AIG, triggering the current global recession.

As reported by New York Magazine, Reuters and the Daily Telegraph, two managers of the hedge funds, Ralph Cioffi and Matthew Tannin were charged in June in the Eastern District of New York with several counts of wire and securities fraud for allegedly misleading investors regarding the status of the funds in the Spring of 2007. Cioffi, a hedge fund manager, and Tannin, the Chief Operating Officer of Bear Stearns Asset Management (BSAM), have pled not guilty. The collapse in value of the funds cost investors approximately $1.4 billion. When traders wanted to sell some of the funds’ subprime mortgages, no one wanted to buy them.

The trial of Cioffi and Tannin is set to begin in October. The evidence against Cioffi and Tannin consists largely of e-mails between them and investors describing the funds as “an awesome opportunity,” despite allegedly knowing that the funds had problems. Bear Stearns investors are expected to testify at the trial. Both men have consistently maintained their innocence. They face a potential 20 years in prison if convicted.

Cioffi is also charged with alleged insider trading for withdrawing $2 million of his own money from the funds. The government alleges that he engaged in hundreds of transactions involving the funds without the necessary approval by the fund’s directors and despite being warned about conflicts of interest. All trades between Bear Stearns, a securities firm, and BSAM, an asset management firm, were supposed to be vetted by an independent committee. In the Fall of 2006, Bear Stearns ordered a moratorium on such internal trades by Cioffi. Prosecutors sought to introduce evidence of Cioffi’s alleged insider trading in order to demonstrate how Cioffi allegedly operated.

British bank Barclays, a shareholder of one of the funds, also filed suit against Cioffi and Tannin for alleged fraud, however, the suit has been withdrawn.

The prosecution of Cioffi and Tannin makes conspicuously noticeable the fact that no senior executives from Bear, Lehman Brothers, AIG, etc., have been charged with any wrongdoing in the fallout from the financial crisis.

 

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Pharmaceutical giant Pfizer, inc., will pay $2.3 billion to the Federal government and 49 States to settle allegations that it violated federal regulations in promoting several drugs, as reported by the Atlanta Journal-Constitution. The settlement is the largest in U.S. history to date in a healthcare fraud case. 

Georgia will receive $21.7 million as part of the settlement. A spokesperson for the Georgia Attorney General's office told the media that Georgia's portion of the settlement funds would be earmarked for Georgia's Medicaid program.

The U.S. Department of Justice had accused the New York-based pharmaceutical company and its subsidiaries of conducting marketing campaigns to promote drugs including Geodon, Lyrica, Zyvox, and no longer marketed Bextra, for uses not approved by the U.S. Food and Drug Administration. The government also alleged that Pfizer gave kickbacks such as cash, travel and entertainment to members of the healthcare industry in order to persuade them to prescribe these drugs and others, including Lipitor, Zyrtec and Viagra. The only State which did not join in the suit was South Carolina.

Pharmacia & Upjohn Co., a subsidiary of Pfizer, has pled guilty to a felony charge of violating the Food, Drug and Cosmetic Act, and will pay a fine of $1.3 billion.

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As reported in the Atlanta Journal-Constitution and the Associated Press, closing arguments have started in the terrorism trial of Atlanta area native and former Georgia Tech student Ehsanul Islam Sadequee. Sadequee is representing himself and will present his own closing argument.

Sadequee called only two witnesses in his defense before resting his case, including his older sister, Sharanika Sonali Sadequee. Sadequee told the Court that he did not want to testify in his defense. His sister testified that he was quiet, inquisitive and nonviolent and had traveled to Bangladesh to marry his long-time love. The government contends that the trip was actually a cover for Sadequee's alleged plan to attend a terrorist training camp. Sharanika Sadequee testified that her brother has been prohibited from discussing certain subjects in the trial, including his arrest in Bangladesh, which she called a kidnapping, and an attack on Sadequee by another inmate while he has been in custody. Sadequee's mother prayed in the courtroom throughout the proceedings.

U.S. District Court Judge William S. Duffey, Jr., scolded Sadequee for attempting to introduce his wedding photographs into evidence at the last minute. The Judge denied Sadequee's motion for acquittal and ruled that there was sufficient evidence to take the case to the jury on all four counts. The jury will begin deliberations later today.

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We did not weigh in yesterday, but the biggest federal criminal defense news was clearly the conviction of U.S. Representative William Jefferson of Louisiana in his criminal trial in the U.S. District Court for the Eastern District of Virginia, as reported by the New Orleans Times-Picayune. The jury of eight women and four men returned a verdict of guilty against Jefferson on 11 of 16 counts, including 2 counts of conspiracy to solicit bribes to a public official in violation of the Foreign Corrupt Practices Act (FCPA), 2 counts of soliciting bribes, 3 counts of honest services fraud, 3 counts of money laundering, and one count of racketeer influenced and corrupt organization (RICO) violations. As a testament to Jefferson's defense, the jury did not find Jefferson guilty on three of the honest services charges as well as a charge for obstruction of justice and a count for violation of the FCPA.

Jefferson, who is 62, faced a maximum of 235 years in prison if convicted on all counts. He has been allowed to remain released pending his sentencing on October 30. A forfeiture hearing will be held regarding his assets.

Jefferson was the first African-American congressman from Louisiana since Reconstruction.

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Ehsanul Islam Sadequee, 23, nicknamed "Shifa," which means "Cure," is representing himself in his trial in the U.S. District Court for the Northern District of Georgia on four counts of allegedly conspiring to provide material support to terrorism. As reported by the Atlanta Journal-Constitution and the Associated Press, Sadequee began his 14 minute opening statement with a prayer. He told the jury that he had talked about jihadist "fantasies" but that it was empty talk and that there was no plan to carry out acts of terrorism. Sadequee denied conspiring with known terrorists. He told the jurors that he only discussed jihad in online chat rooms."If everything is a question mark, can there be a plan?" he asked the jurors.

Assistant U.S. Attorney Robert McBurney argued to the jury that Sadequee only needed to orchestrate the crime, not carry out any terrorism. The government claimed that Sadequee began visiting online sites frequented by Islamic militants and leaving messages regarding his intent to join the Taliban shortly after the September 11, 2001, terrorist attacks, when he was only 15.

The government presented testimony by Omer Kamal, an Atlanta accountant, former Georgia tech student and friend of Sadequee's. Kamal testified that he, Sadequee and Syed Haris Ahmed, who was convicted in June, watched training videos by Osama bin Laden and the Taliban, and practiced jihad attack techniques with paintball guns in North Georgia. He stated that he backed out of the group when they started planning to visit the Middle East to link up with terrorist groups. Kamal cooperated with the FBI and agreed to testify against Sadequee after becoming concerned that he was under surveillance. He said that the group discussed attacking targets including the White House, the U.S. Capitol, Guantanamo Bay Prison and Abu Ghraib. Kamal said he had slipped a note under his friends' doors when he decided to leave the group. Sadequee then went with Ahmed to Toronto, Canada, to meet with terrorists there. Sadequee spent over an hour cross-examining Kamal yesterday.

Mr. McBurney argued that Sadequee sent videos of the alleged targets to a terrorist suspect in Britain disguising the videos with titles such as "jimmy's 13th birthday party" and "volleyball contest." He claimed that Sadequee subsequently traveled to Bangladesh in order to get married, but also to link up with terrorist groups. Sadequee was arrested in Bangladesh in 2006. Mr. McBurney said that Sadequee communicated with other terror suspects including Ahmed and Mirsad Bektasevic, a Balkan-born Swede who was convicted in 2007 of planning to blow up a target in Europe to force the pullout of foreign troops from Iraq and Afghanistan.

Ahmed, who is awaiting sentencing, has agreed to testify against Sadequee, and will take the stand today.

Sadequee has worn a gray tunic with a beard and long hair during the proceedings. Sadequee's mother, Shirin, sat in the audience during the proceedings and wept and prayed for her son. If convicted Sadequee faces up to 60 years in prison.

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We closely followed the trial of Syed Haris Ahmed, who was convicted for providing material support to terrorism in early June--all of our posts may be found here. The trial of Ahmed's alleged co-conspirator, Ehsanul Islam Sadequee on terrorism charges began yesterday in the U.S. District Court for the Northern District of Georgia. Sadequee has apparently taken a page from Ahmed, who delivered a highly unusual closing argument in his own case, and has opted to represent himself and will present his own opening statements, according to the Atlanta Journal-Constitution. Sadequee has opted for a jury trial unlike his alleged co-conspirator, who was tried by the same judge, the Honorable William S. Duffey. The parties completed jury selection yesterday.

Attorney Don Samuel is serving as stand-by counsel for Sadequee. Mr. Samuel told the Court that Sadequee did not understand what it meant to represent himself. Judge Duffey replied that he had informed Sadequee regarding what it meant to represent himself numerous times.

Sadequee, who is nicknamed “Shifa,” was born in Virginia in 1986, and is of Bangladeshi descent. He and Ahmed are most infamously accused of videotaping landmarks in Washington, D.C., in April of 2005, for purposes of terrorism, including the United States Capitol and the headquarters building of the World Bank. It is also alleged that Sadequee and Ahmed engaged in paramilitary training in North Georgia; met with a circle of terrorists in Toronto, Canada, in February of 2005; and sent the video of the alleged targets to Younis Tsouli, a terrorist in the United Kingdom.

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As noted at White Collar Criminal Prof Blog and The Justice Fellowship, the U.S. House of Representatives Subcommittee on Crime, Terrorism and Homeland Security held a hearing last week on "Over-criminalization of Conduct and Over-federalization of Criminal Law." Organizations which addressed the Subcommittee on issues of over-criminalization and over-federalization included the American Bar Association, the American Civil Liberties Union, the National Association of Criminal Defense Attorneys, the Heritage Foundation and the Federalist Society.

The hearing considered the lack of distinction between federal criminal and civil offenses, as well as over-federalization of criminal law where federal criminal laws have been enacted to cover offenses already subject to state criminal laws, usually providing for harsher penalties. The Subcommittee noted the existence of approximately 4,500 federal criminal laws, with approximately 50 new criminal laws enacted by Congress each year.

The hearing should be welcome news to most federal criminal defense practitioners. Reform in these areas is badly needed. In some cases, certain prosecutions of alleged federal crimes would be more equitably, and less expensively, handled through the imposition of civil fines and penalties. Furthermore, in many cases, State prosecutorial entities are as capable as Federal entities to prosecute offenders in areas where State and Federal criminal law overlaps. The Blog looks forward to the proposals for reform which result from the hearing.

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