Former PA Attorney Nicholas Panarella Has Honest Services Fraud Conviction Reversed After 10 Years

 

In 2001, Pennsylvania tax attorney Nicholas Panarella, Jr., pled guilty to charges of honest services fraud. Mr. Panarella was alleged to have paid former Pennsylvania State Senator F. Joseph Loeper more than $330,000 as "consulting fees" to take actions which benefitted Mr. Panarella's tax-collection firm.

However, as a result of the Supreme Court's decision in U.S. v. Skilling relating to honest services fraud, the U.S. District Court for the Eastern District of Pennsylvania this week ruled that Mr. Panarella's actions were no longer criminal and that he was entitled to have his conviction reversed by means of a writ of coram nobis (Latin for "the error before us"), according to Philly.com.

Mr. Panarella was disbarred following his 2001 plea. Prior to his conviction, he assisted former Mayor of Philadelphia in recovering $51.9 million in back taxes. Joseph Loeper served 20 months in prison for obstructing a tax investigation.

 

Supreme Court Reaffirms Tenth Amendment/Federalism Limitations on Federal Criminal Statutes in Bond v. U.S.

Last week, the U.S. Supreme Court reaffirmed the Tenth Amendment and Federalism as a limitation on Federal statutes, in particular Federal criminal statutes, in the first significant case since U.S. v. Lopez, 514 U. S. 549 (1995), Bond v. U.S., No. 09–1227, which may be read here. Bond is an encouraging development given the overwhelmingly predominant trend to presume Federal criminal statutes and their application to be ipso facto within Congress' authority.

Carol Anne Bond discovered that her close friend was pregnant by Bond's husband. Bond engaged in a campaign of harassment against the woman, which included placing caustic chemicals on objects which the woman was likely to touch. The woman received burns from the substances, and Bond was charged in the U.S. District Court for the Eastern District of Pennsylvania pursuant to 18 U.S.C. s 229, the Federal chemical weapon statute. She entered a plea of guilty and was sentenced to 6 years' imprisonment. She reserved the right to challenge the constitutionality of the statute on appeal, and appealed, arguing that the Section 229 exceeded Congress' authority to enact under the Tenth Amendment which provides that "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." U.S. Const. Amend. X.

The Third Circuit Court of Appeals denied Bond's claims, holding that Bond lacked "standing" to object to the statute based upon the Tenth Amendment or Federalism (the division of powers between the Federal government and the States) because no State was involved in Bond's Federal prosecution. The Supreme Court granted certiorari and, in a unanimous opinion authored by Justice Kennedy,  held that where there is an otherwise justiciable case or controversy, a party may object that his or her injury results from violation of the Federal system of government. The Court held that although the States are also beneficiaries of Federalism, Federalism also serves to enhance individual freedom by “‘secur[ing] to citizens the liberties that derive from the diffusion of sovereign power,’” (Quoting New York v. United States, 505 U. S. 144, 181 (1992); quoting Coleman v. Thompson, 501 U. S. 722, 759 (1991) (Blackmun, J., dissenting)). The doctrine  protects the liberty of all persons within a State by ensuring that law enacted in excess of delegated governmental power cannot direct or control their actions. (Citing Gregory v. Ashcroft, 501 U. S. 452, 458 (1991)). Action exceeding the Federal government’s enumerated powers undermines the States’ sovereign interests. The Court remanded Bond's Tenth Amendment arguments for consideration on the merits. 

Diamond Store Owner Arthur Hiaeve Acquitted on Federal Money Laundering Charges on Venue Grounds

Arthur "Avi" Hiaeve, owner of the Manhattan diamond store, Hiaeve & Co., was acquitted last Wednesday on money laundering charges in the U.S. District Court for the Eastern District of New York. According to Reuters, Senior District Judge Allyne Ross granted Mr. Hiaeve's motion for judgment of acquittal on the seven counts of laundering drug money through his business as well as charges of avoiding currency reporting requirements, holding that a single telephone call by Mr. Hiaeve to a government informant was insufficient to establish venue in the Eastern District, and that Mr. Hiaeve should have been prosecuted in Manhattan in the Southern District of New York. The prosecution responded that Mr. Hiaeve allegedly had reason to know that he was laundering money coming from drug operations operating in the Eastern District of New York. Double jeopardy bars a subsequent prosecution of Mr. Hiaeve in Manhattan.

The government had alleged that Mr. Hiaeve laundered at least $106,000 on five occasions. Employees of Hiaeve, Kevin and Tanny Donaldson, were also charged with laundering drug money and entered pleas of guilty to conspiracy to distribute controlled substances and money laundering, respectively. Mr. Hiaeve is still involved in a civil forfeiture suit involving $3 million in diamonds and $17,900 in seized currency.

 Source: Elite Choice

President Obama Issues Pardons; To Rob or Not to Rob? 78 Year-Old Georgia Man Charged With Bank Robbery

Today's Atlanta Journal-Constitution has an article on the nine pardons announced by the White House on Friday--the first pardons issued by President Obama. The pardons related to a variety of offenses dating all the way back to 1960. Only recipient appears to have been charged with an alleged federal, "white collar" crime--Laurens Dorsey, of Syracuse, New York, sentenced in 1998 to five years of probation and $71,000 in restitution for conspiracy to defraud by making false statements to the Food and Drug Administration

78 year-old George B. Hamlet of Georgia, unlike his prevaricating namesake, has allegedly taken decisive action to knock off a bank in Knoxville, Tennessee, according to an article at Knoxvillenews.com. Mr. Hamlet allegedly brandished a  weapon, jumped on the counter at First Tennessee Bank in Knoxville, and began collecting money from the tellers. Mr. Hamlet was stopped by a security guard as he was leaving the bank, and has been charged with one count of bank robbery in the U.S. District Court for the Eastern District of Tennessee.

Detroit Attorney Acquitted on Motorcycle Club Drug Charges

On Monday, Detroit Attorney Tim Attalla had charges that he helped the Highwaymen Motorcycle Club carry out a drug business thrown out by the U.S. District Court for the Eastern District of Michigan following a bench trial, as reported by an article on Freep.com. U.S. District Court Judge Nancy Edmunds concluded there was insufficient evidence to prove that Mr. Attalla was part of any drug conspiracy, or that he ever served as general counsel to the group.

Prosecutors had argued that Mr. Attalla allegedly assisted Aref Nagi, the former Vice President of the Club, in carrying out a drug conspiracy, including giving him advice on how not to get caught. The government also alleged that Mr. Attalla allegedly gave Nagi Viagra and Vicodin pills on at least two occasions. Nagi was convicted of racketeering in June. During trial, th government had former members of the Club testify against Mr. Attalla that he allegedly hung out at strip clubs with Nagi and also played taped phone conversations between Mr. Attalla and Nagi. The defense argued that Mr. Attalla did nothing more than advise his clients to remain silent pursuant to their Fifth Amendment rights.
 

Rascos Give Up the Fight; U.S. Senate Assumes Role of a Court for Impeachment Trial of Louisiana District Judge G. Thomas Porteous, Jr.

We have commented on the case of Alfredo and Niurka Rasco of South Georgia, who were charged in a $6.5 million Medicare fraud scheme. Well, despite a heated and well-founded defense against the charges based upon illegal use of immunized evidence by the government, Mr. Rasco and his wife pled guilty to the charges against them last week during their trial, according to a press release by the U.S. Attorney's Office for the Southern District of Georgia. Mr. and Mrs. Rasco face maximum terms of imprisonment of 12 years and 6 months respectively.

In other news, the U.S. Senate will convene next week to hold an impeachment trial of U.S. District Judge G. Thomas Porteous, Jr., of the Eastern District of Louisiana according to the National Law Journal. Judge Porteous is charged with corruption. Specifically, Judge Porteous is charged with accepting meals, trips and other gifts from bail bondsman Louis Marcotte III and his sister Lori Marcotte in return for giving the Marcottes and their clients special treatment while he was a state court judge. Judge Porteous is also alleged to have made false statements to the Senate and to the FBI in 1994 regarding his past.

Judge Porteous' attorneys are vigorously defending him, however, pointing out that much of the conduct charged against Judge Porteous occurred prior to his appointment to the bench. Furthermore, a federal grand jury had investigated Judge Porteous as part of wide-ranging probe into Louisiana corruption, however no charges resulted. The U.S. Department of Justice also decided to drop the case against Judge Porteous. Judge Porteous' attorneys have denied any wrongdoing by Porteous, and state that he has done nothing to justify his removal from office.  The defense also contends that the FBI and the Senate were aware of the allegations against Judge Porteous prior to voting to confirm his appointment.

A fascinating fact is that Congress is also the nation's least used court. The trial of Judge Porteous will be the Senate's first since the impeachment trial of President William Jefferson Clinton (who appointed Judge Porteous to the bench) in 1999, and the first of a federal judge since 1989. The U.S. House of Representatives has considered bringing impeachment proceedings against federal judges in the interim, but the judges had resigned before the proceedings could be brought. Judge Porteous was referred to the Senate for impeachment by the Judicial Conference of the United States, led by Supreme Court Chief Justice John Roberts Jr., in June of 2008. A committee of 12 senators will serve as both judges and jurors at his trial. Members of the House will serve as prosecutors, or "managers." The Senators will vote on whether to convict Judge Porteous, with a two-thirds majority required to convict. Any of the Senators may question witnesses following examination and cross-examination by counsel. The Senate Committee will first gather evidence for consideration by the full Senate. Each side will have 20 hours to put on evidence. The Senate can only vote to impeach Judge Porteous, and cannot impose any sentence of imprisonment or fine. The trial will take place in the same chamber the Senate uses for confirmation hearings.

Sarah Palin E-mail Hacking Case Goes to Jury

Knoxvillenews.com has been intensively covering here, here, here and elsewhere the trial of David C. Kernell, son of Tennessee State Representative Mike Kernell of Memphis and former University of Tennessee student, who was charged in the U.S. District Court for the Eastern District of Tennessee with hacking into the electronic mail account of former Governor of Alaska and Vice Presidential candidate Sarah Palin in 2008. The jury received the case today, and is still deliberating. The trial began last week.

Kernell, 22, is charged with guessing the answers to various security questions to gain access to Palin's Yahoo! e-mail account shortly after she was chosen to be Arizona Senator John McCain's running mate during the 2008 U.S. presidential campaign. Screenshots, pictures and a new password for the e-mail account were then posted on the website 4Chan. Ten other individuals in the U.S. and abroad proceeded to access the account more than 70 times.

Kernell, who was a 20 year-old economics major at the time, was charged with identity theft and other offenses. Palin herself testified on Friday, and her daughter, Bristol Palin, testified last week. Kernell did not testify.

Assistant U.S. Attorney Greg Weddle argued to the jury yesterday that Kernell intended to do something malicious from the beginning. Authorities seizing Kernell's computer found a New York Times article questioning whether Palin was using private e-mail accounts for government business. Assistant U.S. Attorney Mark Krotoski quoted Kernell's message on the 4Chan discussion board: "'I'm not going to ruin someone's life' but I'll give you the key, the pass(word)." Weddle cited Kernell's statement to persons who posted the information for him on the website 4Chan "make me proud."

Kernell's attorneys defended that Kernell did not believe that such a high-profile public figure could use such a poorly protected e-mail account. They argued to the jury that Kernell only used information available in newspaper articles and from the official state of Alaska website, and that what Kernell did was stupid and closer to a prank than a crime.

Daimler AG Agrees to Pay $184 Million to Settle SEC and DOJ Allegations; Alleged Conduct Includes Sales of Vehicles and Parts to Iraq Under U.N. Oil for Food Program

The Federal government has massively ramped up enforcement against domestic and foreign corporations for violation of the Foreign Corrupt Practices Act (FCPA), essentially an anti-bribery or kickback statute applicable to overseas transactions. The latest target to fall to FCPA allegations, according to an SEC press release, is German automotive giant Daimler AG. The Securities and Exchange Commission had alleged that Daimler allegedly paid bribes to foreign government officials to secure business in Eastern Europe, Africa and Asia. Last Thursday, the SEC announced that Daimler had entered into a settlement agreement with the SEC in which Daimler agreed to pay $91.4 million in disgorgement. Daimler also agreed to pay $93.6 million in fines to settle alleged criminal charges which were announced by the Department of Justice last week.

The SEC complaint, filed on March 22, charges that Daimler allegedly paid $56 million in improper payments, involving more than 200 transactions in 22 countries, over a period of 10 years. The government contends that Daimler allegedly earned $1.9 billion in revenue and at least $90 million in illegal profits as a result of the payments. Included in the government's allegations are allegations that Daimler paid kickbacks to Iraqi officials in relation to sales of vehicles and spare parts to Iraq under the United Nations Oil for Food Program. The complaint also alleges that Daimler kept ledger accounts of credit balances for the benefit of foreign government officials.

Daimler allegedly made bribes or kickbacks through several methods. Amounts of alleged discounts or rebates on sales contracts were allegedly kicked back to foreign officials. Daimler also alleged used false sales intermediaries, corrupt business partners and cash desks to funnel bribes to officials. The government alleges that Daimler's management sanctioned the practices.

Daimler has issued a press release relating to the settlement. The company notes that it cooperated with SEC and DOJ during their investigations, entering into a consent agreement with the SEC and a deferred prosecution agreement with DOJ. The release also notes that Daimler North East Asia Ltd., also entered into a deferred prosecution agreement with DOJ and Mercedes-Benz Russia SAO and Daimler Export und Trade Finance GmbH pled guilty to charges of violations of the FCPA in the U.S. District Court for the District of Columbia.

Daimler also states that it has taken steps to ensure that its future conduct will comply with all applicable laws and Daimler's "Integrity Code." Daimler states that under its deferred prosecution agreements, it must maintain a comprehensive compliance program and not commit any further violations of the FCPA for two years. If Daimler successfully complies with these terms, the charges against the corporation and its subsidiaries will be dismissed.