Posted on July 6, 2010 by Anthony Lake

Acquittals in Ponzi Prosecution Across the Pond: Jury Acquits Imperial Consolidated Execs Fraser and Brook

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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Posted on May 10, 2010 by Anthony Lake

Elena Kagan on Criminal Law

President Obama is expected to announce today his nomination of Solicitor General Elena Kagan to succeed Justice John Paul Stevens. Solicitor General Kagan has been one of the presumptive leading choices to replace Justice Stevens ever since the Justice announced that he was stepping down. Ms. Kagan has drawn criticism from both the right and the left of the political spectrum, and the Senate confirmation process is expected to involve some controversy--as it invariably does.

Ms. Kagan's distinguished background is well known. She graduated magna cum laude from Harvard Law School in 1986, clerked for Supreme Court Justice Thurgood Marshall, worked at the Washington, D.C., law firm of Williams & Connolly, was a professor at the University of Chicago, worked as Associate Counsel and Deputy Assistant to the President for Domestic Policy during the Clinton Administration before returning to Harvard as Dean of the Law School in 2001. In March 2009, President Obama named Ms. Kagan as Solicitor General for the United States.

Less well known is Solicitor General Kagan's views on criminal law. As Professor Douglas Berman of Ohio State University School of Law observes on his blog, Ms. Kagan lacks much of a record on criminal law issues which routinely come before the court.

There are indeed very few reported criminal cases which Ms. Kagan has been involved with during her career. Interestingly, many of the cases that do exist have gone against Ms. Kagan or against the government. While at Williams & Connolly, Ms. Kagan represented the defendant-appellant in the appeal of  U.S. v. Chuang, 897 F.2d 646 (2d Cir. 1990) before the U.S. Court of Appeals for the Second Circuit, in which the Court held that the defendant, who was both a bank officer and attorney, possessed no reasonable expectation of privacy in bank documents which were not found in his office, since banking is a closely-regulated business and the documents were subject to routine inspection by the Office of the Comptroller of the Currency. Much later, in Kucana v. Holder,130 S.Ct. 827 (2010), the Supreme Court held, contrary to the position of the Solicitor General, that motions to reopen immigration proceedings before the Board of Immigration Appeals were subject to judicial review. Next, in Johnson v. U.S., 130 S.Ct. 1265 (2010), the Court reversed the petitioner's conviction for possession of ammunition by a convicted felon under 18 United States Code Section 922(g)(1), holding that the petitioner's conviction for simple battery under Florida was not a "violent felony" which could be used to enhance the petitioner's sentence under the Armed Career Criminal Act in 18 United States Code Section 924. In addition, as we have noted, the Court also ruled against the Administration in Bloate v. U.S., 130 S.Ct. 1345 (2010) in holding that time spent preparing pretrial motions is not automatically excludable from the Speedy Trial Act, 18 United States Code Section 3161 et seq. And most recently, in U.S. v. Stevens, --- S.Ct. ----, 2010 WL 1540082 (April 20, 2010), the Court found against Solicitor General Kagan in holding that 18 United States Code Section 4, which criminalized  the commercial creation, sale, or possession of certain depictions of animal cruelty, was substantially overbroad in violation of the First Amendment.

The lack of an extensive background in criminal issues is certainly no barrier to a potential distinguished and exceptional service as a Supreme Court justice. Indeed, it is hoped that the contrary results and setbacks which Solicitor General Kagan has experienced in her few forays into the field have encouraged a more nuanced and open minded view on criminal issues, or at least one that is not a mere rubber stamp of law enforcement and government actions.

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