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

On June 24, the United States Supreme Court rendered its decision in the case of former Enron executive Jeffrey Skilling. The majority in U.S. v. Skilling, No. 08-2349, in an opinion authored by Justice Ruth Bader Ginsberg (which may be read in its 114 page entirety here), held that the "honest services" mail fraud statute, 18 U.S.C. §1346, applies to bribery and kickback schemes, and not to mere "undisclosed self-dealing by a public official or private employee," alone. The majority held that Skilling did not violate §1346 since, although the Government charged Skilling with conspiring to de-fraud Enron’s shareholders by misrepresenting the company’s financial health and therefore profiting, the government never alleged that Skilling solicited or accepted any payments from third parties in exchange for making the misrepresentations.

The recent Skilling decision is already having an impact on federal prosecutions. As reported by Law.com, this week, Judge Ellen Segal Huvelle of the U.S. District Court for the District of Columbia told the parties in the prosecution of Kevin Ring, a former associate of convicted lobbyist Jack Abramoff, that the Court would grant Ring more time to file a motion for judgment of acquittal in light of Skilling. Ring was charged with bribery and tried last year, however the trial ended in a hung jury. The Court intentionally delayed Ring's retrial to await the Supreme Court's decision in Skilling and the cases of Black v. U.S. and Weyhrauch v. U.S. The prosecution has announced its intent to push forward with a second trial of Ring.

In Georgia news, attorney M. Dewey Bain, of Sugar Hill, Georgia, was sentenced to 5 years and 3 months imprisonment today in the U.S. District Court for the Northern District of Georgia for defrauding clients--including a 97 year-old woman--out of $4.3 million, as reported by the Atlanta Journal-Constitution. Bain entered into trust agreements with clients in which Bain falsely promised he would invest their monies in safe accounts, but instead fraudulently diverted the monies to his own personal use.

In Southeastern news, Snamprogetti Netherlands B.V.--yes, that Snamprogetti Netherlands B.V.--has agreed to pay $240 million in penalties to the government for alleged violations of the Foreign Corrupt Practices Act (FCPA) for allegedly bribing officials in Nigeria to obtain engineering, procurement and construction (EPC) contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, according to an FBI press release. Snamprogetti is a Dutch corporation and a wholly owned subsidiary of Snamprogetti S.p.A., an Italian corporation. Snamprogetti was alleged, along with Kellogg Brown & Root Inc. (KBR), Technip S.A. (Technip), and a Japanese engineering and construction company to have engaged in a joint venture that was awarded four EPC contracts by Nigeria LNG Ltd. (NLNG), between 1995 and 2004 to build LNG facilities on Bonny Island. Snamprogetti allegedly caused the venture to hire two agents, Jeffrey Tesler and a Japanese trading company, to pay approximately $172 million in bribes to Nigerian officials. The deferred prosecution agreement was filed today in the U.S. District Court for the Southern District of Texas. Snamprogetti also reached a settlement of a related civil action by the SEC.

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UK citizens Lincoln Julian Fraser and Jared Bentley Brook, former executives with the Imperial Consolidated Group (ICG) were acquitted today at the Old Bailey at the conclusion of a nearly nine month trial, according to the Guardian and the Telegraph. The jury acquitted Mr. Fraser and Mr. Brook of one count of conspiracy to defraud, and deadlocked over another conspiracy charge and a fraudulent trading charge. 

The fraud charged against Mr. Fraser, Mr. Brook, ICG (headquartered on a Royal Air Force base in Lincolnshire, England, with offices in Europe, Australia and the Caribbean) and others, involved offshore investments in South American mining operations and havens such as the British Virgin Islands and Greneda, in what has been alleged to be Britain's largest Ponzi scheme. From 1998 through 2002, approximately 3,000 investors around the world invested nearly £253 with ICG on the promise of high-yield returns of up to 36 percent and "total asset protection." The loss to investors is alleged to be £150 million. One investor alone, Yuichi Yoshida of Japan, invested £16.7 million. The defendants were also alleged to have provided false information to investors, including falsely inflating the alleged value of mining interests in South America, and publishing false or misleading performance figures in the Financial Times. The defendants allegedly used investment monies to cover overhead and expenses, and for investments in failed mining interests in Argentina.

ICG's business declined precipitously when a Spanish newspaper article allegedly linked ICG to Osama bin Laden in 2001. The company failed in 2002.

The British Department of Trade and Industry disqualified Mr. Fraser and Mr. Brook from acting as directors of ICG for alleged unfit conduct relating to a failed hotel business in Morecambe, Lancashire, England. 

The Crown has attempted to prosecute Mr. Fraser and Mr. Brook three times over eight years. The first trial of Mr. Fraser and Mr. Brook two years ago ended in stalemate, forcing the judge to discharge the jury. The second trial was abandoned by the Serious Fraud Office (SFO) as a result of legal errors. The SFO has seven days in which to choose to seek a retrial, but has announced that it will cease its efforts to prosecute Mr. Fraser and Mr. Brook, the investigation and prosecution of whom has cost British taxpayers approximately £10 to £20 million.

A co-defendant, Bill Godley, pled guilty to a charge of conspiracy to defraud in 2007. Godley claimed to have posed as a dynamic entrepreneur and to have transformed ICG into an international business empire. Godley is expected to receive approximately three years in gaol.

Mr. Fraser's and Mr. Brook's former solicitor, Michael John Harvey, was struck off by the British Law Society in a disciplinary proceeding for alleged involvement in Mr. Fraser's and Mr. Brook's dealings.

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In a press release by the Department of Justice today, the Department announced that, in cooperation with the Ministry of Justice of Japan, it has recovered more than $40.2 million in proceeds from an alleged $1 billion Ponzi scheme by a Japanese citizen, Isamu Kuroiwa, involving investments in Filipino shrimp farms.

Kuroiwa operated "World Ocean Farm" from February 2005 to May 2007. Authorities allege that World Ocean Farm was a Ponzi style investment scheme which claimed to operate shrimp farms in the Philippines, and promised investors a 100 percent annual return on their money. According to the government, World Ocean Farm did own a couple of ponds in the Philippines, which contained no shrimp and were used to dupe traveling Japanese investors.

Instead, investors were treated to shrimp from local markets. Kuroiwa and his accomplices also allegedly told investors that World Ocean Farms was invested in high-yield investments in the U.S.

The scheme affected over 30,000 Japanese investors and defrauded them of approximately $1 billion (or ¥91 billion). Kuroiwa and his co-conspirators allegedly laundered investment monies through Japanese and American financial institutions. They used the proceeds to pay earlier investors and for their own personal uses, including a lavish gambling trip to Las Vegas. Kuroiwa was arrested, along with his accomplices.

The $40 million was returned to Japanese investors pursuant to an order of forfeiture by the U.S. District Court for the District of Columbia.

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