Jury Begins Deliberating Rep. William Jefferson's Fate Following Over 2 & 1/2 Hours of Jury Instructions

As reported by the New Orleans Times-Picayune, Judge T.S. Ellis, III, of the U.S. District Court for the Eastern District of Virginia read instructions to the jury yesterday which lasted over 2 & 1/2 hours, and the jury retired for its deliberations in the case against former U.S. Representative William Jefferson. The jury deliberated for about four hours and will re-convene to continue deliberations this morning.

The jury weighing the evidence in the six week long trial of Jefferson on 16 criminal counts, including racketeering, honest services fraud and violations of the Foreign Corrupt Practices Act, consists of two white males, six white females, two black males and two black females. Jefferson's case is the first time the Foreign Corrupt Practices Act has been applied to a public official. The Court sent three alternate jurors home yesterday, instructing them to remain "pristine" with regard to their exposure to information regarding the case.Jefferson's lead attorney, Robert Trout, told reporters that Jefferson intends to be present at Court each morning when the jury arrives.

Closing arguments were heard earlier in the week, with numerous media outlets and journalists from Louisiana in attendance.

James K. Happ Acquitted on All Counts in Final National Century Financial Enterprises Trial


National Century Financial Enterprises Case (NCFE), a healthcare financing company, collapsed in 2002, resulting in a loss of $2.9 billion to investors, including the world’s largest bond fund manager, Pacific Investment Management Co., Pimco and Credit Suisse Group. The failure also hastened the bankruptcies of some 275 hospitals and healthcare providers. A dozen NCFE executives and employees were indicted in the Southern District of Ohio in 2003 on charges of conspiracy, mail and wire fraud, securities fraud and money laundering, including NCFE’s former Executive Vice President, Mr. James K. Happ. NCFE, which purchased accounts receivables from healthcare providers at a discount, was alleged to have advanced $2.2 billion to six companies in which its Chief Executive, Lance K. Poulsen, owned stakes, and to have charged NCFE’s clients for the advances. NCFE’s fraud is considered the largest by a private company in U.S. history, and case has received nationwide media attention.

Several of the NCFE defendants pled guilty, and the remaining defendants were convicted in three trials on all counts. In particular, Poulsen was convicted in July for obstruction, and in October, on a total of 17 counts. Poulsen has already been sentenced to 10 years imprisonment on four of the counts, and faces a sentence of 30 years to life in prison on the remaining counts. NCFE co-founder Rebecca Parrett was convicted of 9 counts in March, but disappeared in March when she was given leave by the Court to return to Arizona to tend to her personal affairs.

Mr. Happ, who was charged with counts of conspiracy, money laundering conspiracy and three counts of wire fraud, was to be the seventh NCFE executive tried and the fourth and final NCFE trial. The case was presided over by the Honorable Algenon Marbley, United States District Judge. Mr. Happ was represented in the proceedings by the Columbus, Ohio, law firm of Kravitz, Brown & Dortch, LLC, and by the Atlanta, Georgia, law firm of Gillen Withers & Lake, LLC. Eminent attorney Max Kravitz, founding member and managing partner of Kravitz, Brown & Dortch and professor of law since 1976 at Capital University Law School, represented Mr. Happ until Mr. Kravitz’s untimely passing in August 2007. Representing Mr. Happ at trial were founding member and managing partner of Kravitz, Brown & Dortch, attorney Janet Kravitz, and attorney Craig A. Gillen, founding member and managing partner of Gillen Withers & Lake, serving as lead counsel. Mr. Zach Kravitz, Mr. and Mrs. Kravitz’s son, who is a recent graduate of the University of Florida School of Law, also served as counsel.

During the three-week trial, the defense argued that Mr. Happ was not involved in any wrongdoing and never lied to NCFE’s investors. The prosecution attempted to allegedly connect Mr. Happ to the fraud through witness testimony, including from NCFE Executive Vice-President Sherry Gibson and Frank Magliochetti, Jr., Chief Executive Officer of Med Diversified. The defense impeached the witnesses’ statements against Mr. Happ, and argued that while Mr. Happ advanced monies to healthcare companies, he did so merely as part of NCFE’s legitimate business, that the advances to companies had been occurring for eight years prior to Mr. Happ’s joining NCFE in 2000, and that Mr. Happ was not involved in the creation of any false investor reports or financial documents.

At the close of the trial, the prosecution urged the Court to instruct the jury on intent and “deliberate ignorance” or “willful blindness,” the concept that a defendant may still be found guilty of a crime where the defendant deliberately closes his or her eyes to criminal conduct. The defense responded that the jury could not be instructed on both intent and deliberate ignorance/willful blindness, citing an unpublished decision by the Sixth Circuit Court of Appeals, United States v. Ramos, 38 F.3d 1217 (6th Cir.1994) (unpublished per curiam), in which the Court held that “[t]he deliberate ignorance instruction should not be used where the evidence points to ‘either actual knowledge or no knowledge at all of the facts in question.’” Id. at *4 (quoting Sanchez-Robles, 927 F.2d at 1074; quoting United States v. Perez-Padilla, 846 F.2d 1182, 1183 (9th Cir. 1976)). The Judge found that a deliberate ignorance/willful blindness instruction could not be given where the government attempts to prove a defendant’s intent through direct evidence, pursuant to Ramos, and denied the prosecution’s proposed instruction. The jury subsequently found Mr. Happ not guilty on all counts. Jurors who were questioned following the verdict informed the media that they felt that the government did not prove its case. Mr. Happ is the only NCFE defendant to be acquitted. The acquittal has been widely reported in the national media.



Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.

United States v. Svete: Fraud Requires Scheme Calculated to Deceive "Reasonable Person"

The Eleventh Circuit Court of Appeals has issued a ruling which confirms one more element which the government must prove, and which the jury must be instructed on, in order to convict a defendant of fraud. In United States v. Brown, 79 F.3d 1550, 1557 (11th Cir. 1996), the Eleventh Circuit held (or re-confirmed) that, in order to prove the crime of mail fraud, in violation of 18 U.S.C. § 1341, “the government must show the defendant intended to create a scheme ‘reasonably calculated to deceive persons of ordinary prudence and comprehension.”’ (Quoting Pelletier v. Zweifel, 921 F.2d 1465, 1498-99 (11th Cir.1991)). Last week, in United States v. Svete, NO. 05-13809, 2008 WL 788407, *7 (11th Cir. March 26, 2008), the holding of Brown was finally applied to Eleventh Circuit Pattern Jury Instruction (Criminal Cases) 50.1, which, as the Court noted, “does not include the reasonable person standard as articulated in Brown…” id.

In Svete, the defendants were convicted of conspiracy, money laundering and mail fraud for allegedly defrauding investors in “viaticals,” in which persons (“viators”) sell the right to receive benefits under their life insurance policies to purchasers in exchange for tax-free cash. Id. at *1-2. The government alleged that the defendants defrauded purchasers of viaticals by misrepresenting the life expectancies of the viators, the status of the life insurance policies and the risks associated with purchasing certain viatical contracts. Id. at *2. The defendants appealed, arguing that the district court erred in failing to instruct the jury consistent with the language of Brown, and the Eleventh Circuit reversed, stating that:

The inaccuracy of the definition of “scheme to defraud” in the jury instruction seriously impaired defendants' ability to conduct their defense on the substantive counts of mail fraud. Defendants did not have the opportunity to argue in connection with charged law that the contracts, signed by the investors, made it unreasonable for any prudent investor to have relied upon contrary statements by sales agents or [the Defendants’] promotional literature. Defendants did not have the opportunity to argue in connection with charged law that investors should have sought independent advice on investing in viaticals. Such arguments are clearly contemplated by controlling law in this Circuit. Therefore, the district court abused its discretion when it did not include the Brown, [cit.]., language in the jury instruction. [Defendants] are entitled to a new trial on the substantive counts of mail fraud.

 Id. at *7 (citing Brown at 1557).