Government Opposes Clemens' Request for Legal Fees and Costs Relating to Mistrial

As reported in the Wall Street Journal Law Blog, the government has opposed former MLB pitcher Roger Clemens' request for reimbursement of the legal fees and costs incurred by him in the government's prosecution of Clemens for perjury, false statements and obstruction of justice. Clemens' trial in the U.S. District Court for the District of Columbia ended in a mistrial in July after  the prosecution played a video to the jury which referenced statements by fellow Yankees pitcher Andy Pettitte that Clemens allegedly admitted to using human growth hormone, evidence which the Court had ruled was excluded from trial. Clemens is currently scheduled to be retried in April 2012.

Following the mistrial, Clemens filed a Motion for the Award of Fees and Costs Associated with Mistrial. The government has filed a response in opposition, arguing that Clemens' request is barred by the doctrine of sovereign immunity.

In criminal cases, the sole mechanism for recovering fees and costs is under the Hyde Amendment, 18 U.S.C. § 3006A Note. The Hyde Amendment imposes considerable hurdles to reimbursement, however. It provides, in relevant part, that "[t]he court, in any criminal case... may award to a prevailing party... a reasonable attorney's fee and other litigation expenses, where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust." Therefore, a defendant must first prevail against all charges. Second, he or she must demonstrate that the government's position in the prosecution was "vexatious, frivolous, or in bad faith"--that is, lacking any reasonable grounds or from an improper motive. Lastly, the Amendment permits the government to argue that any award would be unjust. Clemens' lawyers did not invoke the Hyde Amendment, as the government's response points out, and could not do so in any event since he faces re-trial and has not yet prevailed.

Despite having been in effect for nearly 14 years, Courts have rarely awarded defendants fees pursuant to the Hyde Amendment. See United States v. Aisenberg, 358 F.3d 1327, 1335 (11th Cir. 2004) (reducing award of $2,680,602.22 in attorney’s fees to $1,298,980.00 in attorney’s fees and litigation expenses of $195,670.32, where the appellees were prosecuted for alleged false statements in relation to the disappearance of their daughter, and the government dismissed the indictment against the appellees after the district court found that investigating county detectives made false statements, statements in reckless disregard for the truth, and omitted material facts in wiretap applications; failed to inform the state circuit court that they had not yet interviewed several witnesses and that they were still waiting for the crime lab to process evidence and for a financial analysis of the appelleees; reported and quoted alleged telephone conversations in their wiretap applications which were either not present or not intelligible on the tapes and “deliberately or with reckless disregard summarized conversations out of context,” intercepted communications which were unrelated to the offenses and failed to minimize the recordings of conversations not otherwise subject to the interception authorization); United States v. Sherburne, 249 F.3d 1121, 1125 (9th Cir. 2001) (affirming the trial court’s award of attorney’s fees under the Hyde Amendment to the defendants who had charges against them relating to alleged abuses in the construction of a housing development on an Indian reservation dismissed, observing that the government had “distorted the truth,” “ignored evidence,” and failed to present facts establishing any false representations); United States v. Braunstein, 281 F.3d 982, 996 (9th Cir. 2002) (concluding that the government’s position that the defendant had engaged in wire fraud, interstate transportation of goods obtained by fraud, and money laundering in selling discounted computers to domestic distributors and resellers, despite evidence that computer company was aware of the defendant’s actions and had no agreement with the defendant, “was so obviously wrong as to be frivolous”); United States v. Claro, No. Crim. H-04-126-1 2007 WL 2220980, *6 (S.D.Tex. Jul 31, 2007) (Opinion on Defense Fees and Expenses) (unpublished), affirmed in part, vacated in part by, United States v. Claro, 579 F.3d 452, 456 (5th Cir. 2009) (awarding $391,292.29 in fees and expenses under the Hyde Amendment where court had dismissed indictment for conspiracy, mail fraud, and money laundering against the defendant, observing that the government had no evidence to support its allegations and that “[the defendant] defended himself for nearly sixteen months from fifty-four counts derived from shifting legal theories and inaccurate representations of the facts”).


Government Won't Take Another Swing at Barry Bonds

 The United States Attorney's Office for the Northern District of California filed a dismissal last week of its remaining charges against former San Francisco Giants slugger and outfielder, Barry Bonds, as reported by the Associated Press. Bonds was convicted in April on one count of obstruction of justice. However, a mistrial was declared on the three counts of perjury against Bonds.

The dismissal has spared Bonds a second trial. However, the trial judge has upheld his obstruction conviction. Bonds'  recommended sentencing range is 15 to 21 months' imprisonment, but the court may impose a lesser sentence at sentencing. 

Former Yankees Pitcher Roger Clemens Granted Mistrial in Prosecution for False Statements, Perjury and Obstruction


As reported by ESPN (and virtually every other media outlet), United States District Judge Reggie Walton of the U.S. District Court for the District of Columbia granted former New York Yankees pitcher Roger Clemens' request for a mistrial in his prosecution on three counts of making false statements, two counts of perjury, and one count of obstruction for his testimony relating to steroid use before the House Committee on Oversight and Government Reform in February of 2008.

The defense request for a mistrial came after prosecutors showed the jury alleged video evidence of Maryland Representative and Committee member Elijah Cummings referencing statements by former Yankees pitcher and Clemens' friend Andy Pettitte that he had told his wife, Laura Pettitte, that Clements had allegedly confessed in 1999 or 2000 to using human growth hormone. The Court had ruled before trial that this evidence was to be excluded from the trial on the ground that Pettitte's wife's statement did not involve direct knowledge of what Clemens had said.

In granting the mistrial, Judge Walton opined that Clemens could not get a fair trial as a result of the introduction of the alleged statements, and apologized to the jury for the waste of their time. The Judge had earlier criticized the prosecution for stating, during opening statements, that Pettitte and former Yankee second baseman, Chuck Knoblauch, and relief pitcher, Mike Stanton, had also allegedly used human growth hormone.

Judge Walton has scheduled a hearing on September 2nd to determine if there will be a new trial of Clemens.  It appears, however, that a second trial of Clemens will not be barred by double jeopardy. As the United States Court of Appeals for the District of Columbia Circuit and other courts have held, "when a mistrial is declared with the consent of the defendant or upon his motion, it is 'ordinarily assumed to remove any barrier to reprosecution, even if the defendant's motion is necessitated by prosecutorial or judicial error.'” Lee-Thomas v. U.S., 921 A.2d 773, 775-76 (D.C. Cir. 2007) (quoting Carter v. U.S., 497 A.2d 438, 441 n. 4 (D.C. 1985); citing Anderson v. U.S., 481 A.2d 1299, 1300 (D.C. 1984)); U.S. v. Jorn, 400 U.S. 470, 485, 91 S.Ct. 547 (1971)).

Government to Decide Whether to Take a Second Swing at a Bonds Conviction

Former San Francisco Giants slugger and outfielder Barry Bonds was convicted last Wednesday on one count of obstruction of justice, after the U.S. District Court for the Northern District of California declared a mistrial on the three perjury counts against the former player.

The Associated Press has reported that U.S. Attorney for the Northern District of California Melinda Haag has informed the media that the Government may seek a second trial of Bonds as a result of the dismissed counts. The Court has scheduled a hearing on May 20 to determine whether or not the Government will seek a second trial.

Perjury and Obstruction Trial Against Former San Francisco Giant Barry Bonds Commences in San Francisco; Trial to Begin With Hearing on Bonds' Former Weight Trainer--Possible Contempt


The trial of former San Francisco Giants outfielder Barry Bonds on four counts of perjury and one count of obstruction of justice commenced yesterday in the U.S. District Court for the Northern District of California according to the San Francisco Chronicle. The charges against Bonds arise from his statements to a grand jury in 2003 in relating to an investigation into the Bay Area Laboratory Co-Operative (BALCO) in Burlingame, California, and steriods. Bonds told the grand jury that he never knowingly used banned drugs. The transcript of his December 4, 2003, testimony may be read in full here. Jury selection took place yesterday.

The jurors' names will be kept secret until the conclusion of the trial (however, the jury includes at least one Oakland Athletics fan). Opening statements are expected to take place today, followed by a hearing concerning Bonds' former weight trainer, Greg Anderson. Anderson pled guilty in the BALCO case and has served a year in prison for refusing to cooperate in the investigation of Bonds. The prosecution has subpoenaed him as a witness at trial, however Anderson has stated his intention not to testify against Bonds. The Court has stated that it will rule Anderson in contempt if he refuses to testify and hold him in prison for the duration of the trial.

Bonds, who played as a left fielder for the Pittsburgh Pirates from 1986 to 1993, and for the Giants from 1993 to 2007, holds Major League Baseball records for home runs in a single season, is an all-time leader in walks and intentional walks, and is also the recipient of 14 All-Star awards, 8 Golden Glove awards and 7 Most Valuable Player awards.

Head of Georgia Medical Equipment Provider Indicted for Medicare Fraud; Atlanta Inmate Indicted for Selling "Cooperation" Information to Defendants

Samuel Curtis, III, a Texas resident, has been charged with four counts of health care fraud and aggravated identity theft in the U.S. District Court for the Southern District of Georgia for allegedly attempting to steal more than $500,000 from Medicare, according to an article in the Florida Times-Union. Curtis is alleged to have operated Perferred Prosthetics and Orthotics, a medical equipment supply company doing business in Georgia and Texas, and to have allegedly stolen information from Medicare physicians and recipients and used the information to submit false claims to Medicare. The indictment alleges that Curtis and others routinely billed Medicare for ankle, knee and back braces and other medical devices that either were never provided to patients, were not medically necessary or had not been prescribed by a doctor. Curtis' associate, Cecil Risher, of Brunswick, Georgia, was arrested earlier in the investigation.

In other Georgia news, according to 7th Space, Sandeo Dyson, a former inmate of the Atlanta City Detention Center, has found himself indicted once again in the U.S. District Court for the Northern District of Georgia for allegedly obtaining information about crimes being committed in Georgia and North Carolina from other inmates and then selling the information to criminal defendants in cases in the Northern District for five to ten thousand dollars apiece, earning an approximately $50,000 from the scheme. The defendants would offer the information provided by Dyson to have their sentences reduced for cooperation. Dyson allegedly instructed the defendants to lie to authorities by concealing the fact that they had no real personal knowledge of the proffered information, and had  purchased the information from Dyson. Dyson is charged with one count of conspiracy to obstruct justice and to make false statements, three counts of obstruction of justice, and two counts of false statements.


Alabama Contractor Roger Taylor Acquitted of Conspiracy, Bribery and Obstruction Charges Following Federal Trial; Avoyelles Parish Sheriff Bill Belt and Family Acquitted

On Tuesday, a jury in the U.S. District Court for the Northern District of Alabama in Tuscaloosa found construction contractor Roger Taylor not guilty on one count of conspiracy, five counts of bribery and two counts of obstructing justice, according to Tuscaloosa News. Mr. Taylor was one of numerous individuals investigated in relation to Alabama's Community College System. Mr. Taylor, co-owner of Hall-Taylor Construction, and was alleged to have bribed former two-year college Chancellor Roy Johnson by paying for more than $92,000 in construction costs and appliances at Johnson’s home in Opelika, Alabama, in exchange for awards of construction management work within the system. The government alleged that Mr. Taylor  was awarded $4 million in no-bid state contracts from 2002 to 2006 in exchange for the alleged bribes.

Mr. Taylor's trial began on October 25. He  was originally charged with 17 counts, but the majority of these were dropped after a successful appeal by a co-defendant. At trial, however, the prosecution failed to present any testimony showing that Johnson alleged directed or threatened college presidents to hire Hall Taylor on contracts for a massive makeover of the college system. On the contrary, witnesses testified that another construction management firm received a fair share of the contracts. The witnesses at the trial also praised Hall-Taylor's work. Mr. Taylor's counsel made the trial into a referendum on Johnson's credibility. Johnson pled guilty to 14 charges of conspiracy, bribery, witness tampering and money laundering in January of 2008. He is scheduled to be sentenced on November 18.

17 individuals, including former state legislators, college presidents and the system chancellor, have either pled guilty or been found guilty by a jury as a result of the investigation. A spokesperson for the U.S. Attorney’s Office for the Northern District of Alabama issued a statement that the prosecution believed it had presented sufficient evidence to find Mr. Taylor guilty of the bribery and obstruction charges, but that it respected the jury's verdict. The government has a companion civil forfeiture case against Hall-Taylor's assets. Mr. Taylor's counsel stated that the prosecution intimidated and threatened witnesses at the grand jury investigating Johnson, and have indicated that Mr. Taylor may seek recourse for the prosecution's actions.

In other positive Federal criminal news, Bill Belt, the former Sheriff of  Avoyelles Parish, Louisiana, his wife, Tracy Belt, and his sister, Julie Bernard, were found not guilty of conspiracy, mail fraud and obstruction of justice last week by a jury in the U.S. District Court for the Western District of Louisiana after a trial which also began on October 25, according to

In 1988, Sheriff Belt allegedly contracted with Michael and Rae Johnson to install pay  telephones  for prisoners in Avoyelles Parish in a venture called Cajun Callers. Under the agreement, Cajun Callers would pay a monthly commission to the Sheriff's Office. The Johnsons made large amounts of money  from the venture, which they failed to pay taxes on. Johnson subsequently became a Louisiana  State Judge, but  was removed from the bench due to ethical violations relating to Cajun Callers. The government alleged that Sheriff Belt was paid kickbacks.

In 1990, Sheriff Belt's future wife began keeping the books for two companies She owned: Southern Louisiana Communications, which operated public pay phones; and Central Louisiana Communications, which operated phones in Louisiana parish jails.

Rae Johnson testified at trial that Tracy Belt would allegedly take money collected from the pay phones and deposit it and then write three checks in identical amounts--one of which was to her husband's tax account from which taxes were never paid. Johnson stated that she would allegedly cash one of the other checks and deliver the money to Mrs. Belt. Sheriff Belt's counsel undermined Johnson's account of the triple-check scheme on cross-examination, however. Counsel argued in closing that Johnson was a liar who escaped prosecution herself by making up stories about the Belts. The government also presented the testimony of a convicted male pedophile who installed the Cajun Callers phones in the jails, and another convicted felon who served time for crimes including insurance fraud.

Sheriff Deputies Acquitted on Charges of Alleged Leaks and False Statements in Road Dog Cycle Motorcycle Gang Racketeering Investigation

Two years ago, Deputy Sheriff David Swanson and Sheriff's Captain Raul DeLeon of the Stanislaus County Sheriff's Department in California were indicted in the U.S. District Court for the Eastern District of California for making alleged false statements to federal investigators regarding leaks during a federal investigation of Road Dog Cycle in Denair, California. The owners of Road Dog Cycle, Robert and Brent Holloway, were also indicted for heading a racketeering enterprise, which involved members of the East Bay Dragons outlaw motorcycle club of California; the Merced, California, chapter of the Hell's Angels; and the Red Devils outlaw motorcycle club of Sweden. The defendants were charged with acts of trafficking in stolen motor vehicle parts, robbery, making extortionate extensions of credit and collecting extensions of credit by extortionate means.

Swanson was charged with allegedly leaking confidential law enforcement information to an associate of Robert Holloway who informed Holloway of search warrants which were to be executed at Road Dog Cycle. DeLeon was similarly charged with allegedly concealing his relationship with Robert Holloway and having contact with Holloway during the execution of a State search warrant at the residence of one of Holloway's employees in order to enable the employee to conceal evidence. Swanson and DeLeon faced a maximum of 15 years imprisonment.

Well, as reported by the Modesto Bee, the prosecution of Swanson and DeLeon turned out to be a case of prosecutorial overreaching when a jury acquitted Swanson and DeLeon on all charges earlier this month. Following the verdict, one juror told reporters that Swanson and DeLeon had been "railroaded." The problems in the government's case caused it at one point to offer Swanson the chance to plead to one felony count with no jail time and not even any probation. Even courthouse employees told the defense that they did not believe that he could have conspired to impede the federal investigation into the Holloways' activities.

Beazer Homes Executive and Alpharetta Resident Michael Rand Indicted in NC for Fraud

As reported in the Charlotte Observer, Michael Rand, former Chief Accounting Officer for Beazer Homes USA and a resident of Alpharetta, Georgia, has been indicted in the U.S. District Court for the Western District of North Carolina on 11 counts, including securities fraud, witness tampering and making false statements. Rand is alleged to have directed a conspiracy to manipulate Beazer's books, achieve earnings targets, and deceive the company's auditors.

Specifically, the indictment alleges that, from 2005 to 2007, Rand entered into an agreement with another company to allow Beazer to get revenue from purported sales of model homes, and that he and others created a false set of books to understate income when business was doing well, and "smoothing" income when business became tighter. Beazer terminated Rand in June of 2007 for allegedly destroying documents during an internal investigation.

Federal authorities began investigating Beazer in 2007 after the Charlotte Observer ran a series that claimed that Beazer arranged larger loans than some customers could afford and violated federal lending rules, leading to high foreclosure rates in certain communities. Prosecutors filed mortgage fraud and accounting fraud charges against Beazer in July of 2009, and the company entered into a deferred prosecution agreement in which it agreed to pay up to $50 million. Beazer was also the defendant in a class action lawsuit over lending practices, which it settled in 2009 for $30.5 million. The company stopped mortgage lending in 2008. Beazer has reported 1,643 home closing in the third quarter of this year, as well as losses of $27.6 million.

A detention hearing for Rand is scheduled for Friday. Rand is also the subject of a lawsuit filed in July of 2009 by the Securities and Exchange Commission in the Northern District of Georgia.

Conrad Black on the Problems of the U.S. Justice and Prison System: Prisoners are "An Ostracized, Voiceless Legion of the Walking Dead"


Canadian citizen Conrad Black, former head of Hollinger International, Inc., and once the third biggest newspaper magnate in the world, was charged in the Northern District of Illinois with diverting corporate funds for his own use and was convicted in July of 2007for "honest services" mail fraud, in violation of 18 U.S.C. s 1846, and obstruction of justice, following a jury trial. On June 24, 2010, the Supreme Court issued an opinion in Black v. U.S., case # 08-876, vacating Black's honest services convictions and remanding his case on the ground that the district court's instruction to the jury on honest services was incorrect. Black was incarcerated at the Federal Correctional Center in Coleman, Florida, and was released on bail two weeks ago after spending two years and four months in prison. He remains in the U.S. pending an appeal to return to Canada.

Lord Black's (he was made a member of the House of Lords of the United Kingdom by Queen Elizabeth II and Prime Minister Tony Blair) legal odyssey aside, he has become an observer and critic of the U.S. criminal justice system. Black has kept a diary, which may be viewed here, regarding his experience in prison. Most recently, on July 31, Black published a letter in Canada's National Post entitled "Conrad Black: My Prison Education." Black does pause to criticize his conviction in passing, citing the "fallibility of American justice." However, Black's letter provides a glimpse into life at the end of the tunnel of the federal criminal justice system. Black discusses his daily calls to his wife and his difficulties in getting updates on his application for bail in prison. He recounts the interest of his fellow inmates in the developments and media attention in his case, and rather poignantly describes the lengthy goodbyes from his friends:

"The Mafiosi, the Colombian drug dealers, (including a senator with whom I had a special greeting as a fellow member of a parliamentary upper house), the American drug dealers, high and low, black, white, and Hispanic; the alleged swindlers, hackers, pornographers, credit card fraudsters, bank robbers, and even an accomplished airplane thief; the rehabilitated and unregenerate, the innocent and the guilty, and in almost all cases the grossly over-sentenced, streamed in steadily for hours, to make their farewells."

"Most goodbyes were brief and jovial, some were emotional, and a few were quite heart-rending. Many of the 150 students that my very able fellow tutors and I had helped to graduate from high school, came by, some of them now enrolled in university by cyber-correspondence."


Black goes on to criticize harsh federal sentencing policies, especially for drug offenders, citing in particular the disparities in the crack cocaine sentencing Guidelines and their disproportionate impact on African-Americans. He also takes the public defender system to task for being subservient to the will of prosecutors, and laments the United Sates' massive prison population and prison industry in comparison with other Western democracies. Black concludes that "America’s 2.4 million prisoners, and millions more awaiting trial or on supervised release, are an ostracized, voiceless legion of the walking dead; they are no one’s constituency."


Wesley Snipes, Actor, "Foreign Diplomat" and "Fiduciary of God," Has Tax Convictions and Sentence Affirmed by Eleventh Circuit

On Friday, the Eleventh Circuit Court of Appeals issued an opinion in the highly-publicized tax evasion case against actor Wesley Snipes, U.S. v. Snipes, No. 08-12402, which may be read here. The odd facts in the case are as follows: around 2000, Snipes became involved with a tax resistance organization, American Rights Litigators (“ARL”), operated by Snipes’ co-defendant Eddie Ray Kahn, which made various arguments on behalf of its clients against the IRS’ collection of taxes, including that domestic earnings of individuals allegedly do not qualify as “income” under 26 U.S.C. § 861 because the earnings do not come from a listed “source.”

From 1999 to 2004, Snipes earned more than $37 million, however he did not file income tax returns for any of these years. During this period Snipes did, however, send the IRS correspondence, altered tax forms and demands for income which he had paid in earlier years. Snipes made wildly outlandish arguments to the IRS, including that he was a non-resident alien; that earned income must come from sources wholly outside the U.S.,; that taxpayers are legally defined as persons operating “a distilled spirit Plant;” that the Tax Code is limited to the District of Columbia and insular possessions of the United States, and excludes the other 50 states; and that Snipes was “a fiduciary of God” and a “foreign diplomat” who was not required to pay taxes. In addition, Snipes’ companies ceased deduction of income and payroll taxes for employees. Snipes invited his employees to attend an “861” seminar at his home and threatened one employee who questioned the theory, Carmen Baker, that if Baker was “not going to play along with the game plan,” she should find another job.

Snipes, Kahn and Douglas Rosile were indicted in 2006 in the Middle District of Florida for conspiracy to defraud the United States by impeding the IRS in its collection of income taxes, in violation of 18 U.S.C. § 371, filing a false claim for a refund, in violation of 18 U.S.C. § 287; and willfully failing to file tax returns, in violation of 26 U.S.C. § 7203. Snipes filed several motions to transfer venue to the Southern District of New York pursuant to 18 U.S.C. § 3237(b) and Federal Rule of Criminal Procedure 21(b), which were denied by the district court.

Snipes’ trial commenced in January 2008. Carmen Baker testified at trial that Snipes had allegedly ordered her not to talk to anyone or disclose any information when she received a grand jury subpoena, telling Baker that he had a confidentiality agreement with her signature, and that if she contacted the government, she would have to “pay the consequences.”

Snipes requested several specific jury instructions, including that the Sixth Amendment to the U.S. Constitution protects a defendant’s right to trial in the district where a crime is committed, and on good faith and good faith reliance on advice of counsel.

Defense attorney and former Deputy Independent Counsel Craig Gillen also notes regarding the case that Snipes was charged with six counts of willfully failing to file his individual tax returns for tax years 1999 through 2004, in violation of Section 7203. In May of 2002, Snipes and his lawyer had a telephone conference with an IRS agent wherein Snipes was informed that he was under investigation for tax crimes. The agent read Snipes his non-custodial rights which included the right to remain silent. Snipes replied "very interesting." At trial, Snipes requested a jury instruction based on good faith reliance on his Fifth Amendment privilege against self-incrimination. Snipes claimed that because the IRS agent advised him of his right to remain silent, he believed he had a 5th Amendment privilege not to file his tax returns. Snipes claimed that because he had a good faith belief in his right not to incriminate himself, he could not be guilty of willfully failing to file the returns. The trial court refused to give the requested instruction.

On February 1, 2008, the jury convicted Snipes on three--misdemeanor--counts of willful failure to file individual federal income tax returns for calendar years 1999, 2000, and 2001. The presentence investigation report calculated Snipes’s intended tax loss at $41,038,051 under U.S.S.G. §§ 2T1.1(a) and 2T4.1. It also recommended an enhancement for obstruction of justice pursuant to U.S.S.G. § 3C1.1, for Snipes’ direction to Baker to conceal evidence from the grand jury’s investigation, and recommended an overall sentence of 36 months’ imprisonment. The district court overruled Snipes’ objection to the obstruction enhancement and, discussing the sentencing considerations in 18 U.S.C. § 3553(a), imposed a sentence of 36 months. Snipes appealed.

In its opinion, the Eleventh Circuit panel affirmed Snipes’ conviction and sentence. On appeal, the government conceded that Snipes' proposed instruction on good faith reliance on the privilege against self-incrimination was substantially correct. The Court of Appeals, however, held that there was no error because the conduct which formed the basis for Snipes' counts of conviction occurred before  the May 2002 conversation with the IRS agent, and also held that the trial court's instruction on good faith was sufficient. Although the trial court had refused to give the Snipes instruction, in closing arguments, Snipes' counsel did argue to the jury that Snipes' reliance on the IRS agent's pre-interview advice of rights constituted a good faith basis for his failure to file the tax returns. Apparently this argument resonated with the jury--on all counts for tax years subsequent to the May 2002 interview, Snipes was acquitted.

In regard to Snipes' other arguments, the Court rejected Snipes’ argument that the district court erred in denying his motion for elective transfer under Section 3237(b) as untimely, finding that Snipes failed to properly move to extend the elective transfer deadline. The Court also held that the trial court did not abuse its discretion in not holding a pretrial evidentiary hearing on venue, concluding Snipes was not entitled such a hearing, but rather had a Sixth Amendment right to have the issue of venue decided by the jury. The Court also held that the district court did not err in sentencing Snipes pursuant to Section 2T1.1, or in enhancing his sentence by two levels for obstruction of justice under Section 3C1.1. It concluded that Snipes’ comments to Baker amounted to encouraging Baker to avoid complying with a grand jury subpoena, which may be considered obstruction of justice. Lastly, the Court held that Snipes’ 36 month sentence was reasonable.

More Suggested Guidelines for Electronic Evidence in Federal Criminal Investigations from the National Law Journal

Today's National Law Journal has another article relating to electronically stored information in criminal investigations. For large organizations, subpoenas or requests for information by the government in a criminal investigation are always an unwelcome development, frequently as much because of the potential massive expenditures of time, money and resources they entail as because of their criminal nature. They must, however, be taken with the utmost seriousness, with extreme care to safeguard the rights of the corporation and individuals, and to guard against possible criminal exposure from the very act of responding itself.

The author advises corporations, on becoming aware of a criminal investigation, to issue a notice regarding preservation of evidence to every employee in the corporation, or in relevant offices or departments. Ideally, corporations should already have a comprehensive and thorough document and electronic information retention policy in preparation for any possible demands for information in not only criminal, but civil matters as well. Companies are also advised to take affirmative steps to gather and preserve evidence which might be relevant to a criminal probe upon learning of an investigation or inquiry.

The article also points out the fact that preservation of potential evidence is critical given the danger of obstruction of justice charges by the government. In numerous instances, the government has indicted on charges of obstructing an investigation alone, and not for any alleged underlying crime. The author also notes possible use by the government of any improper handling of evidence as evidence of the corporation's or employees' "consciousness of guilt."

The article recommends forensic management of the hard drives of relevant officers and employees.However, corporations must take care to carefully review the material on the hard drives for any privileged material, at the risk of possible waiver of privileges through disclosure to the government. The author stresses that, even after conducting their own review of the information on hard drives, companies should negotiate an agreement with the government as to a protocol which will ensure that the government's forensic review does not include reviewing privileged information before counsel for the corporation has an opportunity to review and identify the information as privileged. The government and the corporation may enter into a confidentiality agreement under Federal Rule of Evidence 502(e) to guard against possible waiver.

Sentencing Considerations for Corporations and Organizations

            We received an excellent reader question regarding what factors do Federal courts consider in imposing punishment on corporations or organizations in criminal proceedings. Corporations of course, don’t “go to jail.” The Government does collect its $200 however, since the organization sentencing provisions of the United States Sentencing Guidelines are primarily fine-driven. And while there is a massive body of law concerning factors which must be considered in imposing sentence on individuals, caselaw relating to considerations in imposing punishment on corporations is relatively sparse.

However, areas which courts consider in sentencing corporations or organizations, and conversely areas which corporate criminal counsel may emphasize in order to attempt to mitigate the consequences to their corporate clients, may be discerned from the Guidelines themselves. In many cases, such as relating to acceptance of responsibility and role in the offense, these considerations closely parallel those for individual defendant. The questions facing a corporation at sentencing will boil down to how much will the corporation be made to pay in the form of fines and restitution, and what conditions will be imposed on the corporation.

The relevant portion of the Guidelines is Chapter Eight. Imposing a sentence on a corporation or organization in a Federal criminal case involves a complex determination by the sentencing court. In brief, the court must:

1. Determine whether any restitution, remedial orders or community service should be ordered;

2. Determine the amount of the fine, including determining the corporation’s or organization’s “culpability score”;

3. Determine whether any departures or probation is appropriate.

The Introductory Commentary to Chapter Eight states that it is designed “designed so that the sanctions imposed upon organizations and their agents, taken together, will provide just punishment, adequate deterrence, and incentives for organizations to maintain internal mechanisms for preventing, detecting, and reporting criminal conduct.” U.S.S.G., Ch. 8, Pt. A, Introductory Commentary. The sentencing provisions of Chapter Eight are intended to reflect the general principles that:

First, the court must, whenever practicable, order the organization to remedy any harm caused by the offense. The resources expended to remedy the harm should not be viewed as punishment, but rather as a means of making victims whole for the harm caused.

Second, if the organization operated primarily for a criminal purpose or primarily by criminal means, the fine should be set sufficiently high to divest the organization of all its assets.

Third, the fine range for any other organization should be based on the seriousness of the offense and the culpability of the organization. The seriousness of the offense generally will be reflected by the greatest of the pecuniary gain, the pecuniary loss, or the amount in a guideline offense level fine table. Culpability generally will be determined by six factors that the sentencing court must consider. The four factors that increase the ultimate punishment of an organization are: (i) the involvement in or tolerance of criminal activity; (ii) the prior history of the organization; (iii) the violation of an order; and (iv) the obstruction of justice. The two factors that mitigate the ultimate punishment of an organization are: (i) the existence of an effective compliance and ethics program; and (ii) self-reporting, cooperation, or acceptance of responsibility.

Fourth, probation is an appropriate sentence for an organizational defendant when needed to ensure that another sanction will be fully implemented, or to ensure that steps will be taken within the organization to reduce the likelihood of future criminal conduct.

U.S.S.G., Ch. 8, Pt. A, Introductory Commentary. The provisions are designed to offer “incentives” to corporations or other organizations to police and eliminate criminal conduct through compliance and ethics programs. U.S.S.G., Ch. 8, Pt. A, Introductory Commentary.

The Introductory Commentary to Part B of Chapter Eight states:

As a general principle, the court should require that the organization take all appropriate steps to provide compensation to victims and otherwise remedy the harm caused or threatened by the offense. A restitution order or an order of probation requiring restitution can be used to compensate identifiable victims of the offense. A remedial order or an order of probation requiring community service can be used to reduce or eliminate the harm threatened, or to repair the harm caused by the offense, when that harm or threatened harm would otherwise not be remedied.

U.S.S.G., Ch. 8, Pt. B. Guideline Section 8B1.1 requires a court to enter a restitution order for the full amount of a victim’s loss if such an order is authorized. Section 8B1.3 authorizes a court to order community service as a condition of probation “where such community service is reasonably designed to repair the harm caused by the offense.” U.S.S.G. § 8B1.3. The commentary on Section 8B1.3 notes that the community service should be “related to the purposes of sentencing.” U.S.S.G. § 8B1.3, Cmt.

            Guidelines Section 8B2.1 describes an “effective compliance and ethics program.” It states that, in order to have an effective compliance and ethics program, a corporation or organization must:

1. Exercise due diligence to prevent and detect criminal conduct and establish standards and procedures to prevent and

detect criminal conduct;

2. “[P]romote an organizational culture that encourages ethical conduct and a commitment to compliance with the law”;

3. Ensure that the corporation’s or organization’s governing authority is knowledgeable about the compliance and ethics program and that specific individuals have day-to-day responsibility for the program; and

4. Take reasonable steps to ensure that the compliance and ethics program is followed, enforced and evaluated.

            A critical provision is Guidelines Section 8C2.5, which governs determination of a corporation’s “culpability score.” That section provides for a base score of 5 points with increases or decreases to the level for:

1. Condoning, tolerating or “willful ignorance” of criminal activity by corporate governing authorities or high-level personnel;

2. Any prior history of misconduct;

3. Any violation of orders or obstruction of justice; and/or

4. Self-reporting, cooperation and acceptance of responsibility.

With regard to a decrease in culpability level for cooperation, the Application Notes state that:

[C]ooperation must be both timely and thorough. To be timely, the cooperation must begin essentially at the same time as the organization is officially notified of a criminal investigation. To be thorough, the cooperation should include the disclosure of all pertinent information known by the organization. A prime test of whether the organization has disclosed all pertinent information is whether the information is sufficient for law enforcement personnel to identify the nature and extent of the offense and the individual(s) responsible for the criminal conduct.

U.S.S.G. § 8C2.5, Note 12.

            Another vital provision is Guideline Section 8C2.8—the corporate equivalent of Code Section 3553(a) which courts must consider in sentencing individuals. Section 8C2.8 provides:

(a) In determining the amount of the fine within the applicable guideline range, the court should consider:

(1) the need for the sentence to reflect the seriousness of the offense, promote respect for the law, provide just punishment, afford adequate deterrence, and protect the public from further crimes of the organization;

(2) the organization’s role in the offense;

(3) any collateral consequences of conviction, including civil obligations arising from the organization’s conduct;

(4) any nonpecuniary loss caused or threatened by the offense;

(5) whether the offense involved a vulnerable victim;

(6) any prior criminal record of an individual within high-level personnel of the organization or high-level personnel of a unit of the organization who participated in, condoned, or was willfully ignorant of the criminal conduct;

(7) any prior civil or criminal misconduct by the organization other than that counted under §8C2.5(c);

(8) any culpability score under §8C2.5 (Culpability Score) higher than 10 or lower than 0;

(9) partial but incomplete satisfaction of the conditions for one or more of the mitigating or aggravating factors set forth in §8C2.5 (Culpability Score);

(10) any factor listed in 18 U.S.C. § 3572(a); and

(11) whether the organization failed to have, at the time of the instant offense, an effective compliance and ethics program within the meaning of §8B2.1 (Effective Compliance and Ethics Program).

(b) In addition, the court may consider the relative importance of any factor used to determine the range, including the pecuniary loss caused by the offense, the pecuniary gain from the offense, any specific offense characteristic used to determine the offense level, and any aggravating or mitigating factor used to determine the culpability score.

U.S.S.G. § 8C2.8. The Application Notes to Section 8C2.8 further state, in relevant part, “[i]f punitive collateral sanctions have been or will be imposed on the organization, this may provide a basis for a lower fine within the guideline fine range.” U.S.S.G. § 8C2.8, Note 2.

            Finally, Part C of Chapter Eight provides for departures from a sentence/fine if a court finds “that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described.” U.S.S.G., Ch. 8, Pt. C, Introductory Commentary. The relevant potential grounds for upward or downward departures are:

1. Substantial assistance to authorities under Section 8C4.1;

2. Risk of death or bodily injury under Section 8C4.2;

3. Threat to the environment under Section 8C4.4;

4. Threat to a market under Section 8C4.5;

5. Public entity (ground for downward departure) under Section 8C4.7;

6. If members or beneficiaries of the corporation or organization are also victims (ground for downward departure) under Section 8C4.8;

7. Whether the remedial costs exceed the gain from the offense under Section 8C4.9; and

8. Mandatory programs to detect and prevent violations of the law under Section 8C4.10.

            From this maze of Guidelines, the following potential points can be derived for corporate criminal counsel to potentially argue in favor of a low or lesser punishment or fine, departure or for mitigation generally:

  1. Any compliance and ethics programs instituted or proposed by the corporation either before or following the alleged conduct;
  2. Any actions the corporation has taken to remedy any harm from the alleged conduct, including:
    1. Restitution to any victims;
    2. Institution or proposal of a compliance and ethics program;
    3. Any other efforts the corporation has made to detect or prevent criminal activity, or to detect or prevent any recurrence of the alleged conduct;
  3. The corporation’s service to the community before or following the alleged conduct;
  4. Whether the corporation reported the alleged conduct to law enforcement;
  5. Whether the corporation cooperated and/or rendered substantial assistance to the Government, and the degree of such cooperation and/or assistance;
  6. Whether the alleged conduct constituted a distinct, isolated instance, as opposed to demonstrating that the corporation had an alleged criminal purpose;
  7. The relative position of the individuals involved in, or having knowledge of, the alleged conduct—i.e. whether governing or high level officers or lower level personnel;
  8. Whether the corporation has any history of similar conducts;
  9. The seriousness of the alleged conduct, including whether it resulted in any physical harm, threat to any market, third party, etc.;
  10. The corporation’s role in the alleged conduct, including whether the corporation or its officers, members or employees were also victims of the alleged conduct;
  11. The lack of likelihood of recurrence of the alleged conduct;
  12. The corporation’s efforts to investigate the alleged conduct and actions against culpable individuals;
  13. Whether the alleged conduct resulted in collateral consequences to the corporation, including costs from investigation, civil lawsuits relating to the alleged conduct, etc.; and
  14. Whether the gains from the alleged conduct were outweighed by the costs incurred by the corporation in responding to and remedying the alleged conduct.

These points may also furnish useful guidelines or tips for corporate officers or members and counsel in attempting to devise appropriate responses in the event of notice of alleged wrongdoing and/or a criminal investigation.