Four Executives Acquitted in Florida Hurricane Catastrophe Fraud Case

As reported in the Miami Herald, four former executives for Vanguard Fire and Casualty Co. were acquitted yesterday in the U.S. District Court for the Northern District of Florida in Tallahassee on charges that they allegedly defrauded the Florida Hurricane Catastrophe Fund of $20 million. The charges arose from the 2004 hurricane season, one of the most deadly and destructive for Florida, in which the State was hit by four hurricanes, Charley, Frances, Ivan and Jeanne.

The defendants were tried by a bench trial (i.e. trial by the judge without a jury). U.S. District Judge Robert Hinkle found in favor of the executives, former Vanguard President William Sanders, former CEO Thomas Stinson, Richard Magsam and John Henry Axley III, holding that there could not have been any fraud because the defendants told hurricane fund officials what they were doing and why they were doing it.

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President's Financial Fraud Task Force Gets Rare Win in Atlanta and Other News

After another late night of listening to tapes of witness interviews and undercover phone calls, I’ve just put on a little Richie Havens to look over the federal criminal news for you readers.

Much has been written over the past couple of years about the lack of financial institution fraud cases brought by the Department of Justice. However, the U.S. Attorney in Atlanta, Sally Quillian Yates, announced yesterday a sentencing in a case investigated by President Obama’s Financial Fraud Task Force. Mrs. Yates announced that Atlanta businessman, Charles Michael Vaughn, who operated CM Vaughn Emerging Ventures Fund, was sentenced to 8 years in federal prison and ordered to pay $9 million in restitution.


The announcement lauded the efforts of the multi-agency approach of federal law enforcement, regulatory agencies and others working to investigate and prosecute financial crimes in the markets. Quite frankly, that seems like a little bit of a stretch here to fit this case in that dynamic. This case seems more like the usual sort of fraud case traditionally handled by the FBI, or Postal Service.


Of absolutely no relation, but of note because it is such a rare event, federal district court Judge Richard J. Holwell, 65, is leaving the bench to form a boutique firm with two of his former partners at White & Case. Judge Holwell recently presided over the insider trading trial of Raj Rajaratnam. Of particular interest, Judge Holwell, noted in his interview with the New York Times that being a federal judge is “an extremely rewarding job, but [that it] can also be an extremely isolating job.” Also, he said that his move back into private practice had nothing to do with the compensation difference between private practice and the judiciary. You gotta like the guy to. Instead of maintaining the “Judge” before his name in private practice, he says, “I’m going back to Rick.”

Georgia Federal Court Judgeships Remain Vacant

A seat on the Court of Appeals for the Eleventh Circuit and two judgeships with the U.S. District Court for the Northern District of Georgia remain vacant, as reported in the Atlanta Journal-Constitution. All of the three positions have been vacant for at least a year, with one of the District Court judgeship having been vacant for 31 months. The vacancies have been declared "judicial emergencies" by the U.S. Courts.

On January 26, 2011, President Obama nominated U.S. Magistrate Judge, Linda Walker, and Natasha Perdew Silas, a Federal public defender in Atlanta, for the District Court judgeships. If confirmed by the Senate, they would become the first African-American women District Court judges in the Northern District. Georgia's Senators, Saxby Chambliss and Johnny Isakson, have given blue slips of approval for Judge Walker, but have not for Ms. Silas. The failure to give Ms. Silas a blue slip effectively blocks the Senate from voting to confirm her. The failure has caused friction between the White House, which views Judge Walker and Silas as a package nomination, and Congressional Republicans.

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The Eleventh Circuit vacancy is the result of the retirement of Justice Stanley Birch, who was appointed by President George H.W. Bush in 1990, in August of 2010. The White House has not nominated any replacement for Justice Birch.

Conrad Black Re-Sentenced to an Additional 13 Months' Imprisonment


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On Friday, U.S. District Judge Amy St. Eve of the Northern District of Illinois re-sentenced Lord Conrad Black, former CEO of newspaper giant Hollinger International, Inc., to serve the remainder of his sentence, as reported in Canada's Globe and Mail. Black has served 29 months of his original 78 month sentence, imposed following his conviction on three of 12 counts in July of 2007. He has been on release from prison for nearly a year while his appeals of his convictions have been pending.

According to the article, Black has sued Richard Breeden, a special investigator for Hollinger and former Chairman of the U.S. Securities and Exchange Commission, and others for libeling him in a special report prepared for Hollinger. The Supreme Court of Canada is considering whether the dispute should be heard in Canada or the United States. 

Canadian Defense Attorney Acquitted on Money Laundering Charges

Canadian defense attorney Jeffrey Root received the greatest Christmas gift ever when a judge acquitted him on the 21st of charges of conspiracy to launder money and to possess illegal proceeds, and attempting to launder money, according to the Niagara Review. Mr. Root had met with an undercover Royal Canadian Mounted Police officer and discussed ways to launder money. The RCMP investigated Mr. Root from 2002 to 2004. RCMP officer Ron Nicholson posed as Paul Cox, an alleged member of an illegal organization which operated a trust company in Florida. Nicholson and another RCMP operative, James Kelly, opened a store called Shamrock EEzy Grow Hydroponics Ltd., which sold equipment for illegal marijuana growing operations, in Niagara Falls, Ontario.

Judge Harrison Arrell found that there was no evidence that Mr. Root had intended to commit any crime. The judge observed that Mr. Root initially tried to brush Nicholson off, but the officer continued to pursue Mr. Root. The defense argued that Mr. Root never had any intention of going through with any of the deals, and told the officers that he had partners who would need to agree with the deals.

Investigations and Numerous Potential Challenges Grow Out of Case Against Former Judge Jack Camp

Many are familiar with the case of former Senior United States District Judge Jack T. Camp, who entered a plea of guilty on November 19, 2010, to  one count of aiding and abetting a felon's possession of cocaine, a painkiller and marijuana, as noted in an article in today's Atlanta Journal-Constitution. The charges arose from conduct involving an exotic dancer, cocaine,  marijuana and prescription narcotics.

U.S. Attorney for the Northern District of Georgia Sally Quillian Yates announced yesterday that the government is investigating cases Judge Camp presided over to determine whether or not the cases could have been influenced by drug use or an alleged bias against African Americans. Former Judge Camp has admitted to drug use, but has denied that his use interfered with court business. Ms. Yates stated that the government will not oppose requests by defendants for resentencing if the defendants were sentenced during the five month period in which former Judge Camp admitted to using drugs. Camp presided over 16 sentencings and one trial during this period.

The allegations of racial bias come from former Judge Camp's girlfriend, Sherry Ann Ramos, and Ramos' landlord. His attorney, Bill Morrison of Jones Morrison & Womack, has stated that former Judge Camp has assisted the government to the fullest extent possible, and acted free from alleged racial bias.

Investigators have found evidence that former Judge Camp sentenced women in certain cases well below their recommended sentencing ranges. Judge Camp's alleged biases could call into question cases dating back to 1988, when he was appointed to the bench.

Camp is scheduled to be sentenced on March 4, 2011, by Senior U.S. District Judge Thomas Hogan, a Washington judge assigned to the case by U.S. Supreme Court Chief Justice John Roberts. He faces a maximum sentence of four years in prison. Attorney Craig A. Gillen of Gillen Withers & Lake LLC observed that Mr. Morrison did a fantastic job in negotiating on behalf of Judge Camp. Mr. Gillen also noted that the deal was not negotiated with the U.S. Attorney's Office for the Northern District of Georgia, but directly with Washington.

High Crimes, Shrimp and Vodka: The Senate Trial of Judge Thomas Porteous

Very balanced pre-trial coverage and background of the U.S. Senate trial of Federal Judge Thomas Porteous can be found on, courtesy of a reader.

As reported at, during Judge Porteous' trial last week, the 12 member Senate committee heard testimony regarding allegations that a bonding company, Bail Bonds Unlimited, provided free vehicle repairs, buckets of shrimp and bottles of vodka to Judge Porteous while he was a State judge in Jefferson Parish Louisiana. Judge Porteous is alleged to have performed favors for the bonding company in return. Members of the House of Representatives serving as prosecutors also presented evidence that Judge Porteous allegedly omitted assets and gambling debts from bankruptcy filings, and used the false name "G.T. Ortous" in the filing.

There was also testimony that Judge Porteous asked Jefferson Parish attorney Jacob Amato in 1999 to help defray part of the cost of Judge Porteous' son's wedding at the same time that Judge Porteous was presiding over a multi-million dollar legal dispute between Lifemark Hospitals and Liljeberg Enterprises, in which Amato represented Liljeberg. Amato was alleged to have put $2,000 in an envelope for Judge Porteous' secretary.

Judge Porteous' attorneys argued that the bankruptcy false name was intended to prevent embarrassing publicity, and presented expert testimony that the omissions from the filings were not unusual. They also presented a Loyola University Law School Professor, who testified that, until last year, Louisiana's rules on gifts and meals for judges were fairly vague, and that State judges regularly received lunches and holiday gifts from lawyers practicing before them. Evidence was also presented that Lifemark retained attorney Donald Gardner in its dispute with Liljeberg for $100,000 solely based on Gardner's familiarity with the Judge. Gardner kicked back $30,000 of the fee to the attorney who recruited him. Judge Porteous' counsel argued to the committee that the allegations against Judge Porteous are not the sort of conduct which the Founding Fathers intended impeachment for--treason and high crimes and misdemeanors. Counsel emphasized that Judge Porteous was never charged with any crime relating to the alleged conduct, and that most of the conduct occurred before he was appointed to the Federal Bench.

The committee consists of six Democrats and six Republicans. The full Senate will determine whether Judge Porteous will be impeached during its lame duck session in November. If the Senate votes in favor of impeachment, Judge Porteous will become the eighth Federal judge to be removed from office in U.S. history.

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.

Reflections on the Sentencing of Dickie Scruggs

I had the pleasure of visiting extensively with Tom Freeland over at the Folo Blog this weekend in follow up to the Scruggs sentencing and it was interesting to get the local take on the sentencing.

A transcript of the sentencing hearing is available here.

The government took no real position at sentencing other than to state that any sentence imposed was within the court’s discretion.

John Keker, Scruggs' attorney, to his credit, relied upon his sentencing memorandum submitted to the Court, and really made no extensive comments.

One of the big questions for the general public, is did Scruggs get the benefit of his plea bargain in this case, and the answer to that is a resounding yes. Judge Biggers calculated the sentencing guideline range at 108 to 135 months, but the maximum term of imprisonment for the conspiracy charge Scruggs pleaded to limited his sentencing exposure to 60 months imprisonment. In my view, 60 months was the only sentence Scruggs could fairly receive given the severity of the conduct – judicial bribery in a case where millions were at stake.

I’ve been to more sentencings in federal court, both as a prosecutor and as a defense attorney, than I care to remember, but the judge's comments directed at Scruggs is one of the lengthiest denunciations of a defendant’s conduct that I’ve ever seen.

Interestingly, Judge Biggers stated that he was not considering any of the other crimes evidence regarding the Joey Langston plea, although the jduge did remark that Scruggs "bribed a judge, corrupted a judge, in another case in another court.”  However, the judge said that was probably something Scruggs would have to answer to later.

Judge Biggers noted that this case was really not about so much the amount of money that was given to Judge Lackey of the state court, but that it was about the effect of that bribe, of what the purpose of it was, to corrupt the ruling and the actions of the circuit court. 

Maybe someone else can answer this question, but why was Scruggs so intent on getting this case out of the local court system into an arbitration panel? Wouldn’t a guy named Dickie Scruggs want his people deciding his case?

As has been reported extensively, Judge Biggers commented that he saw how easily and quickly Scruggs entered into the bribery scheme, and it made him think that this, perhaps, was not the first time Scruggs had engaged in bribery because he did it so easily.

The judge also commented that Scruggs had committed a reprehensible crime which is one of the most reprehensible crimes that a lawyer can commit - the corruption of the rule of law which he' s sworn to uphold.

Scruggs’ co-conspirator, and former law partner, Sid Backstrom, received a sentence of 28 months, less than the 30 month maximum sentence that was part of the plea agreement. Judge Biggers remarked that he was impressed with Backstrom’s level of remorse.

I’ve commented on several occasions that the defendants in this case seem obsessed with minimizing their criminal conduct, all the more incredible given the gravity of the offense to which they pleaded guilty – judicial bribery.

So, how much time will Scruggs actually serve? He will serve 85% of the 60 months, which is 51 months. He will spend the last 6 months in a halfway house under Bureau of Prison's pollcy, so Scruggs will do 45 months in a federal prison camp, presumably in Pensacola, Florida.