Federal Criminal Law – Fall 2006 – FULL OUTLINE S C OP E
I.
OF
F E D E RAL C RI M I N AL L AW S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Jurisdiction ................................................................................................................................................................................................................. 5
a. Direct Federal Interests; i.e. attacks on sovereignty (assassinating the president), violating federal intellectual property interests, crimes on federal property (trespassing)............................................................................................................................................................................................................ 5 b. Supplemental/Indirect Federal Interests ................................................................................................................................................................... 5 c. Rules of Construction (applied only when a statute is determined to be ambiguous) ...................................................................................................... 8 T H E M AI L F RAU D A C T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
I. II.
a. b.
Statutory Text ............................................................................................................................................................................................................ 9 Scheme to Defraud .................................................................................................................................................................................................... 9
CL fraud vs. fraud under MFA ................................................................................................................................................................................. 9 The Intangible Rights Theory.................................................................................................................................................................................... 9
III. Use of the Mails ........................................................................................................................................................................................................ 11 IV. Mail Fraud prosecution not exclusive (this does not violate Blockburger b/c that case applies to single punishment when more than one statute is violated by the same conduct; this Q is of liability under multiple statutes, not punishment) ........................................................................ 11
S E CU RI T I E S F RAU D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3
I. II. III.
a. b. c. d.
Relevant Statutes ..................................................................................................................................................................................................... 13 The Civil/Criminal Overlap ................................................................................................................................................................................... 13 Insider Trading ........................................................................................................................................................................................................ 13
Policy Rationale ....................................................................................................................................................................................................... 13 Elements .................................................................................................................................................................................................................. 13 Theories ................................................................................................................................................................................................................... 13 Tipper-Tippee.......................................................................................................................................................................................................... 14 ii. Elements:............................................................................................................................................................................................................ 14 iii. ―Tippee‖ can be liable based on a ―derivative‖ breach, deriving from tipper’s breach ................................................................................ 14 iv. Reg FD: Disclosure ....................................................................................................................................................................................... 15 E XT O RT I O N : T H E H OB B S A C T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6
I. II.
a.
Text of Statute .......................................................................................................................................................................................................... 16 Extortion ................................................................................................................................................................................................................... 16
By Force, Violence or Fear ...................................................................................................................................................................................... 16 i. Fear of particular economic loss required .......................................................................................................................................................... 16 ii. Loss of potential benefit doesn’t count ............................................................................................................................................................... 16 iii. Depravation and acquisition of prop’ty required .......................................................................................................................................... 16 b. Under Color of Off’l Right ...................................................................................................................................................................................... 16 i. Public official need not affirmatively induce payment, only accept money to which he’s not entitled knowing it’s being offered in exchange for a specific requested exercise of his off’l power. ........................................................................................................................................................... 16 ii. Payments that look like campaign contributions ................................................................................................................................................ 17
O F F I C I AL B RI B E RY , G RAT U I T I E S ,
I.
a.
AN D
F E DE RAL P RO G R A M B RI B E RY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8
Bribery and Gratuities............................................................................................................................................................................................ 18
Bribery 18 USC § 201(b) ......................................................................................................................................................................................... 18 Statutory text: .................................................................................................................................................................................................... 18 b. Gratuities 18 USC § 201(c) ...................................................................................................................................................................................... 18 i. Statutory text: .................................................................................................................................................................................................... 18 ii. Requires proof of a nexus between the thing conferred and the off’l act for or because of which it was given................................................... 18 c. Comparing bribery and gratuities ........................................................................................................................................................................... 18 i. Similarities: ........................................................................................................................................................................................................ 18 ii. Differences: ........................................................................................................................................................................................................ 19 i.
II.
Federal Program Bribery 18 USC § 666 .............................................................................................................................................................. 19
a. Text of statute .......................................................................................................................................................................................................... 19 b. No effect on fed’l funds needs to be proven by the govn’t........................................................................................................................................ 19 c. Nexus between funds and bribery required, but it is not very strict ........................................................................................................................ 19 F O RE I G N C O RRU P T P RAC T I CE S A C T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0
I. II. III.
15 U.S.C. § 78dd-1(a)(1): bribery of foreign gov‘t officials to obtain or retain business .................................................................................. 20 The business element is to be broadly construed; FPCA isn’t just about government Ks. ......................................................................... 20 Relationship to Mail Fraud? .................................................................................................................................................................................. 20
a. Bribery scheme to deprive foreign gov’t of revenues can also be MF ...................................................................................................................... 20 b. ―Intangible right to honest services‖ n/a to bribery of foreign official in foreign country → No MF ...................................................................... 21 P E RJ U R Y AN D F AL S E S T AT E M E NT S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
I.
a.
Perjury: 18 USC § 1621-1623 ............................................................................................................................................................................... 22
i. Statutory Text: ........................................................................................................................................................................................................ 22 § 1621: Perjury generally ................................................................................................................................................................................... 22
ii. § 1622: Subordination of perjury: just as guilty if you procure another to commit perjury. ............................................................................. 22 iii. § 1623: False declarations before GJ or court (more specific) ....................................................................................................................... 22 iv. Differences: § 1621 is more general, § 1623 is easier to prove but limited in scope........................................................................................ 22 b. Charging decisions: it is appropriate to charge under § 1621 (more general) rather than § 1623 (for which the defense of recantation is available) when conduct calls under both statutes............................................................................................................................................................................. 23 c. The nature of falsity ................................................................................................................................................................................................ 23 i. Literally true but misleading/nonresponsive statements are not perjury ........................................................................................................... 23 d. Ambiguous Questions: no perjury if susceptible to multiple interps by D .............................................................................................................. 23
II.
False Statements made within the jurisdiction of a federal agency: 18 USC § 1001 ................................................................................... 23
a. Statutory Text: makes illegal the making of a false statement in any matter within the jurisdiction of any branch of the USF G (executive, legislative, or judicial)......................................................................................................................................................................................................... 23 i. ―Branch of the fed gov‖ originally was worded ―any department or agency of the US‖. ................................................................................... 23 b. Elements of the offense: ........................................................................................................................................................................................... 23 i. (1) D must make a false/fraudulent statement .................................................................................................................................................... 23 ii. (2) The statement must be material; ................................................................................................................................................................... 24 iii. (3) Statement be made knowingly or willfully; .............................................................................................................................................. 24 iv. (4) The stmt must relate to a matter w/in the J of any branch of the USFG. ................................................................................................. 24 c. BLOCKBURGER TEST: A D who commits conduct that results in a violation of § 1001 and another offense can be charged/convicted/punished of both offenses as long as each requires proof of an element that the other does not ....................................................................................................... 24 i. False statement + Currency reporting violation: both conv’ns/punishments OK ............................................................................................... 24 ii. False statement + Lying to a customs agent: both conv’ns/punishments not OK. .............................................................................................. 25 d. Repeating the FS exposes D to ↑ liability/punishment only if the repetition of the statement causes add’l harm ................................................... 25 i. Multiple identical denials to same official can’t lead to multiple charges ........................................................................................................... 25 ii. Two denials to different officers with different duties can lead to multiple charges ........................................................................................... 25 O B S T RU C T I O N O F J U ST I CE – I N T E RF E RE N C E WI T H W I T NE S S E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6
I.
The Omnibus Provision § 1503 ............................................................................................................................................................................. 26
a. Statutory text: criminalizes ..................................................................................................................................................................................... 26 b. Nexus b/w act and jud’l proceeding must exist (D must be aware of it) and D’s actions must have a natural and probable tendency to influence the proceeding......................................................................................................................................................................................................................... 26 i. A D must know that justice is being administered to fulfill the requirement of ―intent to influence‖ prong ...................................................... 26 ii. Liability attaches when it is reasonably foreseeable that D’s actions will have the probable effect of obstructing the due administration of justice .......................................................................................................................................................................................................................... 26
II.
Document Destruction/Corrupt Persuasion: § 1512 ......................................................................................................................................... 26
a. Corrupt nexus req’d for knowingly corruptly persuading others w/intent to cause that person to w/hold or alter documents for use in an off’l proceeding. Requires wrongdoing other than just impeding availability of documents. .................................................................................................. 26 b. Official proceeding need not be pending, so actual knowledge of a pending proceeding is not req’d ...................................................................... 26 c. Attempts to bribe someone else to do the conduct made criminal by § 1512 (b) is illegal. US v Farrell (3d Cir 1997). ............................................. 27
III.
a.
The Relationship b/w Charges under § 1503 and § 1512 .................................................................................................................................. 27
i. Circuit Split over whether witness tampering can still be prosecuted under § 1503 or instead must be prosecuted under § 1512. ......................... 27 A majority of courts still allow witness tampering to be prosecuted under either. (US v. Lester) ...................................................................... 27
IV. I.
a. b.
Other Provisions ...................................................................................................................................................................................................... 27 The Core Offenses: Manufacture, Distribution, and Possession w/intent to Distribute 21 USC § 841 ..................................................... 28
Statutory Text: ........................................................................................................................................................................................................ 28 The Weight Requirement ........................................................................................................................................................................................ 28 i. ―Mixture or substance‖ requirement: for sentencing purposes, the relevant weight is that of the total mixture or substance containing a detectable amount of a drug. ....................................................................................................................................................................................... 28 ii. Crack: Powder ratio (100:1) ............................................................................................................................................................................... 28
D RU G O F F E N S E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8
II.
a. b.
Continuing Criminal Enterprise (CCE) 21 USC § 848 ..................................................................................................................................... 28
Compound-complex statute ..................................................................................................................................................................................... 28 Statutory text:.......................................................................................................................................................................................................... 28 i. Requires proof of a continuing series of violations of fed’l drug laws................................................................................................................. 29 ii. (1) Undertaken by a person who occupies a position of organizer, supervisor, or mgr w/respect to 5 or more people; ...................................... 29 iii. (2) From which the organizer or supervisor ―obtains substantial income‖ ................................................................................................... 29 iv. Penalty: 20 years in prison and $2 mn in fines for the first offense, 30 years and $4 mn for subsequent offenses, plus forfeiture. Life in prison authorized for principal admins, organizers, leaders ........................................................................................................................................................ 29 c. Designed to reach top brass in drug rings Garrett v United States (SCOTUS 1985). ................................................................................................. 29 d. Not often used: less than 1% of all fed’l drug charges ............................................................................................................................................. 29 e. CCE and Double Jeopardy ...................................................................................................................................................................................... 29 i. Multiple punishments: Congress‘s intent to make CCE a separate offense (from predicates) and allow multiple punishments is clear from congr‘l intent, Garrett v US (see supra). .................................................................................................................................................................................... 29 ii. Successive prosecutions: ..................................................................................................................................................................................... 29 M O N E Y L AU N D E RI N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1
I. II.
a. b.
3 Steps to Money Laundering: .............................................................................................................................................................................. 31 2 Offenses .................................................................................................................................................................................................................. 31
§ 1956: the basic offense; constitutes four separate offenses, all of which deal with a financial transaction ............................................................ 31 § 1957: The monetary transaction statute............................................................................................................................................................... 32 i. Govn’t must show: ............................................................................................................................................................................................. 32
ii.
Tracing requirement: ......................................................................................................................................................................................... 32 AN D
III. I. II.
a.
Differences between § 1956 and § 1957: .............................................................................................................................................................. 32
R AC K E T E E R I N F L U E N CE D
C O RRU P T O RG AN I Z AT I O N S A C T : RICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3
Controversy:............................................................................................................................................................................................................. 33 Statutory Text: ......................................................................................................................................................................................................... 33
Four types of conduct made criminal: ..................................................................................................................................................................... 33 i. § 1962(a): Using/investing income derived from a pattern of racketeering activity to acquire an enterprise engaged in or affecting commerce .. 33 ii. § 1962(b): Acquiring an interest in such an enterprise through a pattern of racketeering activity .................................................................... 33 iii. § 1962(c): Conducting the affairs of an enterprise through a pattern of racketeering activity ...................................................................... 33 iv. § 1962(d): Conspiring to commit any of the above three violations. .............................................................................................................. 33 b. § 1961 ―Racketeering activity‖ [a pattern of racketeering activity is required]....................................................................................................... 33 i. (1)(A) State predicates: any act or threat involving murder/kidnapping/gambling/arson/robbery/bribery/ extortion/etc which is chargeable under state law and punishable by imprisonment for more than 1 year .............................................................................................................................................. 33 ii. (1) (B) Long list of federal predicates, incl. mail fraud, wire fraud, obstruction of investigations, false passport, interference w/commerce, money laundering, fraud etc...................................................................................................................................................................................................... 33 iii. The Racketeering Requirement..................................................................................................................................................................... 33 c. § 1963: Criminal Penalties: max penalty of 20 years in prison for a RICO violation (predicates have lesser penalties) .......................................... 34
III.
Elements .................................................................................................................................................................................................................... 34
a. The RICO ―person‖ – charges are not brought against the enterprise, rather only against any ―person‖ with the necessary relationship to the enterprise. ......................................................................................................................................................................................................................... 34 i. Person vs Enterprise........................................................................................................................................................................................... 34 ii. Majority view: one cannot associate with oneself (―person associated with an enterprise ...‖), thus the same individual cannot be the person and the enterprise. ................................................................................................................................................................................................................... 34 b. Enterprise: (a) any individual, partnership, corp’n, or ass’n; OR (b) any other legal entity, and any union or group of individuals associated in fact although not a legal entity .......................................................................................................................................................................................... 34 i. ―Enterprise‖ ∅ refer only to illegitimate enterprises—it covers both legit and illegit enterprises ...................................................................... 34 ii. A legitimate corp’n doing business through dealerships ∅ constitute an enterprise ........................................................................................... 34 iii. Proving the existence of an enterprise ........................................................................................................................................................... 34 iv. Economic motive is not required: .................................................................................................................................................................. 35 c. The Pattern Requirement: at least 2 distinct acts w/in a 10-year period + continuity + relationship ....................................................................... 35 d. RICO Conspiracy § 1962(d): it is a substantive offense and separate fed‘l crime to conspire to violate one of the substantive RICO prov‘ns, § 1962 (a), (b), (c). ............................................................................................................................................................................................................................... 35 i. No overt act requirement: RICO conspiracy liability is broader than trad‘l conspiracy liability .............................................................................. 35 e. RICO Indictment (Scrushy): conspiracy counts seem to overlap with substantive allegations (a way to ‗double up the bets‘) Alleged fatal indictment in MFA count when the govn‘t writes about ―honest and faithful‖ services (b/c the standard is only ―honest svcs‖) ................................................................. 36 f. Civil RICO § 1964(c) ............................................................................................................................................................................................... 36 i. Civil RICO allows private civil complaints for treble damages and atty’s fees arising out of violation o the criminal RICO prov’ns (Govn‘t can also proceed civilly against criminal RICO Ds)............................................................................................................................................................... 36 ii. Standard of proof: preponderance of the evidence. ............................................................................................................................................ 36 iii. Previous conviction for Criminal RICO not required ................................................................................................................................... 36 iv. Injury, for standing purposes, is violation of RICO. ..................................................................................................................................... 36 v. Proximate Cause ................................................................................................................................................................................................ 36 C O RP O R AT E C RI M I N AL L I AB I L I T Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 8
I.
a. b. c.
General ...................................................................................................................................................................................................................... 38
Vicarious Liability—extension of the civil law doctrine of respondeat superior. .......................................................................................................... 38 Unlike strict liability, vicarious liability dispenses with the need for a personal act or omission and requires a mens rea. ..................................... 38 Justification: the need to effect the purposes of public welfare statutes. (See NY Central).......................................................................................... 38 i. Imputing individuals crimes to corporations is the only way to effectively enforce statutes and serve public policy. ......................................... 38
II.
a. b.
Elements .................................................................................................................................................................................................................... 38
The individual must be acting w/i the scope and nature of his employment. ........................................................................................................... 38 The individual must be acting, at least in part, to benefit the corporation. ............................................................................................................. 38 i. Actual benefit is immaterial. .............................................................................................................................................................................. 38 ii. Even when such acts are against corporate policy or express instructions (US v. Hilton Hotels) ........................................................................ 38 c. The employee's act and intent must be imputed to the corporation......................................................................................................................... 38 i. ''the only way in which a corporation can act is through the individuals who act on its behalf.‖ (NY Central)............................................................ 38 ii. ―Flagrant organizational indifference‖ meets the ―willfulness‖ MR requirement ............................................................................................. 38 P RO C E D U RAL I S S U E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0
I.
a. b. c. d.
Deferred Prosecution Agreements (DPAs) .......................................................................................................................................................... 40
History: used to be rare and used individually for first-time drug dealers. ............................................................................................................. 40 Typical compromises on the part of a company to get a DPA: from Stolt-Nielsen, infra .......................................................................................... 40 A court cannot enjoin the govn’t to enforce a DPA ................................................................................................................................................. 40 Overreaching in DPAs ............................................................................................................................................................................................. 40
II.
a.
Duplicative Prosecutions ........................................................................................................................................................................................ 40
State + Federal: Dual Sovereignty, Constitutional and Statutory Limits ................................................................................................................ 40 Constitutional doctrine that permits successive prosecutions: the "dual sovereignty" limitation on the Double Jeopardy Clause. .................. 40 b. State + State: Single act prosecuted in 2 states ∅ violate Double Jeopardy ............................................................................................................. 40 c. Criminal + Civil: Simultaneous criminal and civil investigations don’t violate Constitution as long as gov’t conduct does not constitute deceit or affirmative misrepresentation ........................................................................................................................................................................................... 41 i.
III.
a. b. c.
Plea Bargaining and Substantial Assistance ....................................................................................................................................................... 41
Extraordinary reduction must be supported by extraordinary circumstances. ....................................................................................................... 41 The USSG § 5K1.1(a) factors: ................................................................................................................................................................................. 41 On remand, judge in Saenz II tells AppCt to suck it; finds a new way to reinstate initial decreased sentence ........................................................ 41
SCOPE OF FEDERAL CRIMINAL LAWS
I. Jurisdiction a. Direct Federal Interests; i.e. attacks on sovereignty (assassinating the president), violating federal intellectual property interests, crimes on federal property (trespassing) i. Derived from § 8 of the Const‘n (includes the NPC) b. Supplemental/Indirect Federal Interests i. Postal Power (Mail Fraud Act) ii. Taxing Power (basis of old fed‘l drug enforcement laws in the 1970s; now they are based on the Comm Cl) iii. Commerce Clause Power 1. Early approach: a. Transportation in interstate commerce i. Based on direct crossing of interstate boundary 1. Lottery tickets transported across state borders are subject to fed‘l jurisdiction. (Ames) 2. Victims transported across state lines subject D to fed‘l jurisdiction. Hoke v US: ii. Today: extended to apply to communications, electronic signals, and use of communication facility (i.e. Wire Fraud Act) 2. Channels of interstate commerce a. Justification: when people cross state lines, it‘s harder to catch them and harder to prosecute them under state law. b. Concern: federal interest is more attenuated c. Crime must be related to travel across state lines: i. Crime and travel don’t have to occur simultaneously 1. US v Page (6th Cir 1999): D beat his ex girlfriend in his condo in OH; she was subdued and he put her in the car, crossed state lines, then dropped her at a hospital in PA. He challenged his conv‘n under the interstate domestic violence prov‘n of VAWA, saying that he beat her first, then crossed state lines. Ct upheld his conviction as valid exercise of Comm Cl power b/c the beating was integrally related to the subsequent transportation of V across state lines by force. D‘s act enabled him to force her to travel. He probably couldn‘t have been charged under the statute if he just drove around OH on the interstate b/c the statute required ―interstate domestic violence,‖ not just use of channels of interstate activity. No intent req‘d to satisfy jurisd‘l element; one can be convicted even w/accidental crossing. 2. US v Al-Zubaidy (6th Cir 2002): D traveled to wherever his W was to threaten and harass her family; he was conv‘d under the interstate stalking prov‘n of the VAWA and he challenged his conviction, saying that he didn‘t have the intent to harass her when he crossed state lines. Ct held that he had intent to harass her when he crossed state lines because he started calling her and harassing her family almost immediately (this was part of the crime under the statute); Ct infers intent from the totality of the circumstances. ii. Intrastate use of an interstate channel is OK (Travel Act)
1. 2. 3. US v Marek (5th Cir 2001): Two cases consolidated; fed‘l murder-for-hire (MFH) act crminalizes MFH, but on ly when D travels or causes another to travel in interstate commerce or use the mail or ―any facility in interstate or foreign commerce.‖ Marek used Western Union to transfer $500 to fake hit man; no evidence that the transmissio n crossed state lines; Cisernos , throug h fortune teller, made phone calls between TX and Mex ico in furtherance of the scheme. Ct aff‘d bo th convictions, hold ing that the use of interstate commerce facilities in a purely intrastate manner constitu tes ―use of inters tate commerce facilities,‖ and that the use itself could be purely intrastate in character. Statute was not ambigu ous, s o Ct ignored rules of statutory construction. US v Heacock (5th Cir 199 4): Intrastate mailing s using the U S Postal Service constitutes ―use of a facility in in terstate commerce‖; statute didn ‘t rely on the po stal power, bu t rather the Comm Cl. US v Baker (8th Cir 1996): ATMs are facilities in in terstate commerce, even w/strictly local transactions.
3. 4.
Instrumentalities of interstate commerce (i.e. train tracks) Substantially affecting interstate commerce a. Jurisdictional element included in statute: no intent required for satisfaction of jurisd‘l element (don‘t have to intend to affect interstate commerce or intend to cross state lines) i. Statutes included: Hobbs Act, new Gun-Free School Zones Act (after Lopez), firearm poss‘n/use acts
1. Bailey v US (SCO TUS 1995) : Two Ds con victed under § 92 4(c) for ―using or carry ing a firearm‖ during/in relatio n to a crime of violence; D1 had a loade d g un in the trun k of h is car, D2 had an unloaded gun in a loc ked trun k in the bedroom closet. D2 likely gets off; Ct hold s that ―use‖ of a firearm, for purposes of the statute, requires active employ ment, not just proximity and accessibility . If this case was decided after Raich, the ―broad regulatory scheme‖ argument would have been employ ed.
ii. Jurisdictional element saves statute from facial challenge b. No jurisdictional element in statute i. General Rules: 1. Minimal effect on interstate commerce is not sufficient
robberies had to be aggregated to achieve ― substantial effect on interstate commerce‖)
(US v McFarland (below), four separate
2.
Interstate regulation: a statute regulating interstate activity is ok without a jurisd‘l element if the activity has a substantial effect on interstate commerce (congr‘l findings re: effect are given broad latitude)
Test from Morrison: (1) whether regulated activity is commercial/economic in nature; (2) whether an express jurisd‘l element is provided in the statute; (3) whether Congress made findings re: the effect of the activity on interstate commerce; (4) whether the link between prohibited activity and effect on interstate commerce is attenuated. 3. Intrastate regulation: A statute regulating intrastate activity is ok without a jurisd‘l element if it is (1) commercial or economic, because then aggregation is allowed (Wickard); OR (2) it is part of a broader regulation of economic activity, and the scheme would be undercut w/o enforcement of intrastate regulation (Raich). ii. OK if Congress makes findings re: effect on commerce 1. Perez v US (SCOTUS 1971): D loanshark convinced of extortion re: loan to a butcher; D challenged conviction b/c no jurisdictional element and D claimed his actions had no subst‘l effect on interstate commerce. Ct held that no jurisdictional element is required if Congress makes findings re: effect on interstate commerce. 2. But Court doesn‘t always buy Congr‘l findings (see US v Morrison) iii. Intrastate activity subject to Comm Clause regulation (generally occurs only w/o jurisd‘l element in statute ). 1. Economic/commercial activity may be aggregated a. Wickard v Filburn (SCOTUS 1942): D farmer grew wheat to feed his family when statute said he had to report/sell all of his wheat; he challenged his conv‘n saying that his wheat had no effect on interstate commerce b/c it was just for home use. Court held that it was proper to aggregate all individuals similarly situated; if all farmers did this, the effect on interstate commerce was substantial. b. Perez v US (above): loans are economic/commercial activity, even purely intrastate loans, when aggregated, demonstrate substantial effect on interstate commerce. 2. Noncommercial/noneconomic activity
, but see US v McFarland, where equally divided en banc court aff‘d aggregation-based conv‘n for four separate robberies under the Hobbs Act, which has a jurisd‘l element (see US v McFarland (dissent), which sugge sts a distinction between commercial and economic activity, whereby comm‘l activity should be aggregated but not economic activity (robbery)).
a.
Cannot be aggregated i. US v Lopez (SCOTUS 1995): D brought gun to school, faced fed‘l charges under Gun-Free School Zones Act, which prohibited knowing poss‘n of a firearm w/in a school zone. D challenged application of statute b/c there was no jurisd‘l hook and no substantial relation to interstate commerce. Court rev‘d D‘s conviction and held the statute unconst‘l, rejecting the govn‘ts arguments re: connection to interstate commerce (most based on impact on education). No aggregation with noneconomic/noncommercial activities, aggregation principle has limits. b. Not subject to Comm Cl regulation if totally removed from interstate commerce or link is too attenuated i. US v Morrison (SCOTUS 2000): Violence Against Women Act (VAWA) authorized private civil suits for women against their attackers. Ct held that this civil suit provision of VAWA violated the Comm Cl and struck it down, saying that this activity (violence against women) was very far removed from interstate commerce. Lots of legislative findings, but Ct didn‘t give them deference (unusual). Test: (1) whether regulated activity is commercial/economic in nature; (2) whether an express jurisd‘l element is provided in the statute; (3) whether Congress made findings re: the effect of the activity on interstate commerce; (4) whether the link between prohibited activity and effect on interstate commerce is attenuated. ii. US v Stewart (see below): mere possession of a homemade machinegun is too attenuated to interstate
a.
c.
commerce. Homemade machineguns don‘t stimulate a demand and there was no reason to think D would have bought a machinegun if he hadn‘t made his own Can be subject to Comm Cl regulation if it is part of a broader regulatory scheme that would be undercut if the noncommercial intrastate activity was not regulated. This comes from the NPC as well as the Comm Cl (Scalia‘s idea) i. Gonzalez v Raich (SCOTUS 2005): D grew medicinal marijuana (CA had statute) for herself at her home, she was convicted of violating the Controlled Substances Act (CSA) and challenged her conv‘n as an unconst‘l exercise of the Comm Cl, saying the marijuana she grew had no effect on interstate commerce. Court held that the CSA was valid and const‘l as applied; saying Congress can properly regulate purely local activities w/substantial effect on interstate commerce even if the particular effect on commerce is trivial; the CSA is a broad regulatory scheme and even though D‘s marijuana had little/no effect on interstate commerce, if the CSA couldn‘t regulate purely intrastate pot it would be undercut. ii. US v Stewart on reargument (in light of Raich): (homemade machinegun case) Ds in both cases argued that their possession fell within a subgroup of people doing an activity who were not connected to the interstate market; since this is part of a larger scheme, D‘s conviction is appropriate. Question is whether the Ct believes that congress had a rat‘l basis for its proposed connection to interstate commerce; here, it did. iii. Consequences of this approach: Congress can ―hide‖ otherwise invalid legislation in larger schemes. Circular reasoning: the way to get around limitations on legislating is to legislate more.
3.
Qualitative component: only related activities may be aggregated a. US v McFarland (5th Cir 2002): D robber was convicted of four small separate robberies of local convenience stores under the Hobbs Act (Ct aggregated the crimes); he challenged his conv‘n, saying there was insufficient evidence of nexus to interstate commerce. En banc court was equally divided, so it aff‘d his conviction. Dissent held that the statute violated the Const‘n as applied b/c aggregation is generally not applied when there is a jurisdictional element in the statute. T here was no rational basis for aggregating these instances because there was no interrelationship of effect on interstate commerce. i. Concurring in Dissent: Doctrine of clear statement; court should refuse to apply the Hobbs Act until Congress clarifies wheth er aggregation is OK.
iv. Class of activities: no specific proof of effect on interstate commerce req’d 1. Purely intrastate activities commingled with interstate commerce OK a. US v Darby (SCOTUS 1941): Statute prohibited interstate shipment of goods made by workers whose hours didn‘t comply w/the Fair Labor Standards Act, another section required employers to comply w/provisions of the Act. This extended to intrastate activities (manufacturing). Court held that the statute was const‘l because mfr‘ing was so commingled with shipment in interstate commerce that if Congress couldn‘t reach the intrastate activity the Act wouldn‘t have any effect. Court made no inquiry into whether the particular articles D produced had any effect on interstate commerce. 2. No specific proof of effect on interstate commerce req’d a. Rational basis review of congressional findings for proof of connection to interstate activity re: class of activities i. Perez v US (above): D loanshark claimed that his conv‘n was improper b/c his activity had no effect on interstate commerce. Ct looked at congr‘l findings re: impact of loansharking, noting that it is connected to organized crime (inter- and intra-state). ii. It doesn‘t matter if D can prove his activities had no effect on interstate commerce (aggregation under Wickard still available) b. But effect on interstate commerce is still required, and mere possession without any proof of transport is not sufficient. i. US v Stewart (9th Cir 2003): D made a homemade machinegun out of parts that were homemade and
c.
purchased; he was convicted for poss‘n and challenged his poss‘n as an invalid exercise of Comm Cl power. Ct overturned his conv‘n, saying that Congress cannot prohibit mere poss‘n of a homemade machinegun if it never traveled in interstate commerce b/c poss‘n does not substantially effect interstate commerce. Ct hinted that if D had put together a kit, his conv‘n would have been ok. c. Implications of this approach: i. Expands fed‘l jurisdiction (most local crimes have economic impact that reaches interstate commerce) ii. Relieves fed‘l prosecutors of burden of proving link to interstate commerce. Rules of Construction (applied only when a statute is determined to be ambiguous) i. Rule of Lenity: criminal statutes should be construed narrowly. ii. Clear statement rule: absent a clear statement of congr‘l intent to alter the balance between the state and fed‘l govn‘t, Court won‘t do it. If jurisdiction is concurrent (not exclusively federal), Ct won‘t reject application.
THE MAIL FRAUD ACT 18 USC § 1341
I. Statutory Text a. § 1341: Whoever, having devised or intending to devise any scheme or artifice to defraud, for the purpose of executing the scheme or attempting to do so, places in any post office any matter or causes anything to be sent/delivered by the Postal Service (or any pvt or commercial interstate carrier), is guilty. i. Punishment: Fined or imprisoned not more than 20 years or both. If violation affects a financial institution, D shall be fined not more than $1mn or imprisoned more than 30 years or both. b. § 1343: Whoever, having devised or intending to devise any scheme or artifice to defraud, transmits or causes to be transmitted writings, signs, signals, or pictures by means of wire, radio, or TV communication in interstate or foreign commerce. i. Punishment: Fined or imprisoned not more than 20 years or both. If violation affects financial institution, D fined not more than $1mn or imprisoned more than 30 years or both. c. § 1346: ―Scheme or artifice to defraud‖ includes a scheme or artifice to deprive another of the intangible right of honest services. [post-McNally] Scheme to Defraud a. CL fraud vs. fraud under MFA i. CL fraud: misrepresentation of an existing or past fact; can‘t consist of mere intention not to do something in the future. ii. Fraud under the MFA: includes everything designed to defraud by representations as to the past or present, or suggestions or promises as to the future. 1. Durland v US (SCOTUS 1896): D sold bonds, telling people he would invest the money in a company at a high rate of return. He never intended to make payments. Ct upheld his MFA conv‘n over his argument that the Act reaches only CL fraud, stating that the MFA includes everything designed to defraud by representations as to the past or present or suggestions or promises as to the future. b. The Intangible Rights Theory i. Pre-McNally Development 1. Intangible rights included the right to honest svcs of govn‘t officials and the right to an honest election. Element of deceit/misrepresentation was usually satisfied by nondisclosure of dishonest or corrupt actions; no tangible loss was req‘d. a. Requirements for violation: (1) Relationship calling for disclosure; (2) Material fact known to the candidate, off‘l, or party leader; and (3) Failure to disclose. 2. Applied in the public and private sectors: a. Private sector i. US v George (7th Cir 1973): D employee who was in charge of buying component parts rec‘d a kickback of $1 each. Conv‘n of MFA aff‘d, saying that D‘s duty was to negotiate the best price possible for his company, or at least tell the company the supplier was willing to accept less money for the parts. He secretly earned a profit and deprived his company of the material knowledge that the supplier would accept less money. 3. Criticism of Intangible Rights Leading to McNally decision a. US v Margiotta (2d Cir 1982) Conviction of Republican Committee Chairman of Nassau Cty NY for breach of honest svcs (from distributing commissions from insurance purchased by the govn‘t to friends/family who did no legitimate work) aff‘d by divided 2d Cir. Dissent noted typical criticisms: it‘s too broad a reading of the MFA to uphold a conv‘n when a politically active person is found to have assumed a duty to disclose material facts to the general citizenry and intentionally fails to do so. First Amend concerns: fed‘l criminal liability based solely on what political actors say and don‘t say in discussions of public affairs. ii. McNally Decision: SCOTUS Renunciates the Intangible Rights Doctrine 1. McNally v US (SCOTUS 1987): Insurance companies were paying ―commissions‖ (kickbacks) to D state off‘ls were receiving ―commissions‖ (kickbacks) in return for ins. Ks with the state. Ds were convicted of violating the intangible right to have the affairs of the Commonwealth conducted honestly. SCOTUS rev‘d their convictions, saying that the MFA reaches only depravation of ―prop‘ty‖ or monetary rights; and, in invoking the rule of lenity, said that Congress could go farther if it wanted to. a. Dissent (Stevens): language of the statute is broad, congr‘l intent is clear 2. Property under McNally included intangible prop’ty interests: a. Carpenter v US (SCOTUS 1987): D wrote a column for the WSJ with stock tips; column was so widely read that it affected stock value; as a result, the paper had a confidentiality K for information before publication. D entered into a scheme with two stock brokers,
II.
gave them advanced information, they invested money and shared profits with him. Ct upheld his conviction, affirming McNally‘s holding that a D can‘t violate the MFA w/o evidence that he obtained money/prop‘ty from the victim, but noting that the prop‘ty doesn‘t have to be tangible. The intangible prop‘ty interest here was the paper‘s right to confidential business information. Mail element met b/c the mailing (paper distribution) was essential to the scheme (if paper wasn‘t published, stock prices wouldn‘t be affected). This duty would exist even without a formal K because employees have a duty to protect confidential workplace information. iii. Congress enacts § 1346: Congress provided that the intangible rt to honest services is included in MFA. 1. Public Officials: a. Official need not act in his/her off’l capacity to violate MFA i. US v Lopez-Lukis (11th Cir 1997): D was a county comm‘nr on a 5-member board that voted by majority. She took money from a lobbyist representing the interests of an issue on which the board was to vote (incinerator in the town), and also threatened a woman running for comm‘er (who was against the incinerator), causing her to lose the election (evidence that she was trying to influence the votes of the other comm‘ers). Ct upheld her MFA conv‘n, saying that D‘s scheme (both in accepting money for her own vote and in trying to influence the votes of the other board members) was depriving the people of the intangible right to her honest svcs. Ct held that the lower court was wrong to require official capacity to constitute MFA violation for public off‘l. 2. Private Actors a. Liability results when a D misuses his fiduciary relationship or information acquired b/c of that relationship for personal gain. i. US v Hausmann (7th Cir 2003): D PI lawyer had a K w/clients that he would get 30% of the settlement and also pay for medical bills directly out of the client‘s portion of the settlement. He referred his clients to a certain chiropractor and took a 20% kickback, which the lawyer directed the chiropractor to pay to third-party recipients. Ct upheld his conviction as a violation of his clients‘ intangible right to his honest services (based on the clients‘ right to have that information; could also be based on the fact that the clients could negotiate a different deal or go to another atty if they had this info). Arbitrary enforcement is less of a concern w/private actors b/c the cases are limited to fiduciary relationships. ii. Liability results when: (1) fiduciary relationship exists between D and clients; (2) D knowingly engages in a scheme to deprive clients of the right to honest svcs; (3) through that scheme, D misuses his fid relationship for personal gain. b. (At least) a risk of economic harm to the party to whom the duty is owed is required (otherwise every breach of K would result in potential prosecution). c. D must deprive a victim of prop’ty to be guilty under the MFA. i. Definition of prop’ty: thing obtained must be prop‘ty in the hands of the victim 1. Cleveland v US (SCOTUS 2000): Ds applied for licenses to run video poker machines in their truckstop and committed fraud in IDing their adult children as owners of the partnership; they also bribed state legislators to vote in a manner favorable to the video poker industry. Ct rev‘d their convictions, saying that the MFA doesn‘t reach false statements made in an application for a state license b/c, for liability to attach to a private actor, he must obtain money or prop‘ty from the victim. It doesn‘t matter that the state retains significant control over the use and rights of use once licenses are issued b/c here fraud happens before the licenses are issued, these are regulatory concerns (monopoly, ability to collect fees, etc.). Right to exclude doesn‘t necessarily make something prop‘ty. ii. Convergence requirement (doesn‘t apply in all circuits) 1. US v Walters (7th Cir 1993): Wannabe agent wanted to represent pro athletes, so he gave NCAA athletes money and things in exchange for exclusive agency Ks when they graduated (he knew that under NCAA rules this would end their eligibility); schools were giving the athletes scholarships for which they would not be eligible if the schools knew of this arrangement. Ct rev‘d his conviction, holding that to be guilty under the MFA, the D must have a scheme to obtain money from the V
III.
IV.
(this is the convergence requirement). Without this requirement, practical jokes would expose people to liability under the MFA; the gov‘t would also make a criminal out of anyone who consciously cheats on the rules of a private organization (even if it‘s a cartel) iv. Criticisms/concerns of broad reading of intangible rights theory. 1. Prosecutorial discretion: some evidence that fed‘l prosecutors with political ambitions are tempted to ―chalk up big kills‖; no administrative checks to prevent this. a. EPC claims for selective enforcement may be brought; standard is: (1) disparate treatment; and (2) improper motive. 2. Vagueness: two components a. (1) Whether the statute gives fair warning to those potentially subject to prosecution; i. US v Handakas (2d Cir 2002): D K‘er convicted of violating the MFA based on the claim that he deprived the NYC School Construction Authority of his honest svcs by failing to pay his employees the prevailing wage. Ct held that the honest svcs provision was const‘lly inadequate as applied b/c it failed to provide a clear indication on its face of the forbidden conduct. 1. Overruled by US v Rybicki (2d Cir 2003): D personal injury lawyers paid insurance claims adjusters to expedite settlements; Ct said that, when Congress legislates, they‘re presumed to incorporate the settled meaning of terms, so in enacting § 1346, Congress was trying to reinstate McNally cases. b. (2) Whether the statute is subject to abuse by arbitrary and discriminatory enforcement (less of a concern as applied to pvt actors) 3. Federalism concerns: authority from the guaranty clause? 4. Defining the scope of public fiduciary duties: the MFA may create an ad hoc fed‘l code of political conduct 5. MFA as a ―stopgap‖ for new frauds a. US v Maze (SCOTUS 1941): (Burger dissenting) MFA is important as a stopgap, it must be strong and expansive b/c people come up with new ―frauds‖ all the time. Use of the Mails a. Must be incident to an essential part of the scheme (not necessarily essential to the scheme) i. Schmuck v US (SCOTUS 1989): D was a used car dealer who bought cars, rolled back their odometers, and sold them to dealers at inflated prices. When the dealers resold the cars, they submitted (by mail) a title application form on behalf of the customers; this was a prereq to sale and was required to transfer title and get license plates. Court upheld his conviction, saying that ―use of the mails‖ was satisfied because the mailing of the title was part of the execution of the scheme and was incident to an essential part of the scheme: if the mailing hadn‘t occurred, the person who bought the car couldn‘t have gotten a license plate (may not have come out the same way if this was a one-time gig). Doesn‘t matter if use of the mails is counterproductive and eventually gets D caught. 1. Dissent (Scalia): here, there was fraud, and then mailing happened; the mail must be used as part of the execution of the fraud, and these were mechanical mailings. b. Does not satisfy if … i. It‘s immaterial to the scheme (Kann: Ds ha dummy company to funnel money to themselves and issued checks to pay themselves; it was immaterial that the checks were then mailed to payee banks b/c the scheme was already over) ii. The mailing occurs after the scheme is finished (Maze: D stole card from roommate, invoices were mailed from stores where he used the card to the bank, which then mailed a bill to the card owner. Scheme was already finished). iii. Mailing is not in execution of the scheme (Parr: Ds charged w/fraudulently obtaining things w/credit card; similar facts to Maze). iv. Mailing is mechanical; but Schmuck (above) seems to indicate that mechanical mailings, if done in furtherance of the fraud (as broadly construed by the maj in that case) may satisfy. c. Innocent mailings may supply the mailing element (see Carpenter, above: mailing the paper wasn‘t fraudulent) d. Specific intent to use the mails: i. Ds charged with causing an innocent third party to make the mailing: Ds ―cause‖ the mailing when they act w/knowledge that use of the mails will follow in the ordinary course of business or where that use can be reasonably foreseen even if not intended. e. Unit of prosecution: each use of the mails is a separate violation. Mail Fraud prosecution not exclusive (this does not violate Blockburger b/c that case applies to single punishment when more than one statute is violated by the same conduct; this Q is of liability under multiple statutes, not punishment) a. US v Computer Sciences Corp (4th Cir 1982): D was prosecuted under the False Claims Act and the MFA and WFA; he claimed that the False Claims Act (FCA) was exclusive and therefore precluded prosecution under the
b.
MFA/WFA for the same activities. Ct upheld all convictions, holding that prosecution under the FCA was not exclusive; there was no language in any of the statutes to indicate mutual exclusivity. US v Weatherspoon (7th Cir 1978): there‘s no language in either the MFA or the false statement statute to indicate exclusivity or hierarchy. The MFA proscribes different conduct, requiring proof of different elements than the false claims statute.
SECURITIES FRAUD 18 USC §
I. Relevant Statutes a. General Antifraud Provision: ―Unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or the mails, or any facility of any national securities exchange … ― i. § 10(b) of Securities Exchange Act of 1934: use or employ, in connection w/ the purchase or sale of any security … any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.‖ ii. SEC Rule 10b-5: (a) to employ any device, scheme, or artifice to defraud; OR (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on any person, in connection with the purchase or sale of any security. b. Both civil and criminal remedies under these statues. i. Elements of Civil Liability 1. D engaged in a fraudulent scheme, or made a material misstatement or omission; 2. which occurred in connection with the purchase or sale of a security; 3. D‘s act/omission was the prox cause of damages to P; 4. P reasonably relied on D‘s act/omission; AND 5. D acted w/ intent to defraud. ii. Elements of Criminal Liability: Gov must prove that: 1. The D: (a) Engaged in a fraudulent scheme, OR (b) Made a material misstatement, OR (c) Omitted material information to one to whom D owed a duty; 2. The scheme, misstatement, or omission occurred in connection w/ the purchase or sale of a security; AND a. ―In connection with‖: In connection w/ element is satisfied b/c fiduciary‘s fraud is consummated, not when he gains the confidential info, but when, w/o disclosures to his principle, he uses the info to purchase/sell securities. 3. D acted ―willfully.‖ a. Willfulness: Gov ∅ have to prove specific intent to violate the law i. US v. O’Hagan (8th Cir 1998) ―willfulness‖ in SF ∅ require proof of intentional violation of a known legal duty. Sufficient ev that O‘Hagan knowingly breached fiduciary duties that he owed both to his firm and to the firm‘s client, supporting a jury finding of willfulness. The Civil/Criminal Overlap a. SEC has primary responsibility for enforcing securities laws, but can‘t institute criminal cases—must refer them to the DOJ b. Civil SEC actions and federal criminal actions may proceed simultaneously i. If D testifies in the civil action, he waives his 5 Am right to remain silent, and that testimony may be used in criminal trial. Insider Trading a. Policy Rationale i. Inherently unfair to let an insider take advantage of info intended to benefit only the company and its shareholders. Insiders must disclose that info or not trade. (Cady, Roberts; Chiarella) ii. BUT some argue insider trading → more efficient markets b/c brings info to the market. (Dirks v. SEC notes role of market analysts) 1. Easterbrook‘s convergence requirement discussion; MF/WF ∅ to be used to reach misappropriation (Walters) b. Elements i. D bought or sold securities; ii. D – (a) was an insider of the company the securities of which were traded; (b) was a temporary insider of the company; and/or (c) was a misappropriator of info from a person/entity to whom D owed a fiduciary duty. iii. D acted knowingly and possessed material, nonpublic info; and iv. D acted willfully. c. Theories i. In assessing which theory applies, you must determine (a) the entity/person to whom D owed a duty; (b) the company the stock of which was traded; and (c) the H that flowed from the trading. ii. Classic: applies to persons who take secret info from a company and then trade in that company‘s stock in violation of a direct duty to that company and it‘s shareholders. (Cady, Roberts; Chiarella) 1. Two types of Ds:
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―Insider‖ Ds: include corporate officers, directors, and others who owe a direct fiduciary duty to both the company and the company‘s shareholders; and i. An insider violates SF if he trades on the info w/o first disclosing it. (Cady, Roberts) b. ―Temporary‖ or ―quasi‖-insider Ds: includes lawyers, accountants, and others who work for a company on a temporary basis and thereby acquire a temporary duty to the company and its shareholders. i. For this duty to be imposed, the corporation must expect the outsider to keep the disclosed non-public info confidential, and the relationship must at least imply such a duty. (Dirks v. SEC) iii. Misappropriation: applies to trading by one who takes info in violation of a fiduciary duty, as an employee owes to an employer. (O’Hagan) 1. Must be based upon a breach of duty a. Chiarella v. US (US 1980): D was commercial printing company employee. Company prepared materials for clients to use when making bids for ―target‖ companies. D bought stock in the target companies before the bids were made public, and sold afterwords, making $30k in 14 months. Court rejects ―market insider‖ liability theory. First, no duty could arise from D‘s relationship w/ sellers of target company‘s securities, b/c D had no prior dealings w/ them. Second, misappropriation hadn‘t been presented to the jury. i. Dissent (Burger): pro-misappropriation theory. D could be liable b/c he breached his fiduciary duty to the printing company by stealing the info. Fraud wasn‘t on target companies, but on the employer. 2. Fraud on employer may or may not be sufficient; O’Hagan is pro-misapp a. Carpenter v. US (US 1987): WSJ column writer schemed to buy stock in companies discussed in the columns, before they were published, and sold them after they were published. Court affirmed misappropriation theory conviction based on reporter‘s theft of info from, and breach of fiduciary duty to, his employer. i. Court split 4-4 and thus didn‘t decide whether misappropriation theory was a viable basis for securities fraud. ii. This case is different from others—the info didn‘t come from someone connected to the company, the stock of which was being bought/sold. The info was publically available info that reporter had gathered. b. U.S. v. O’Hagan (US 1997): Approved misappropriation theory. D was law firm partner who bought stock in companies his firm‘s client was attempting to acquire. The ―deception‖ here was his theft upon, and fraud upon, the law firm that possessed the secret info. Duty to the law firm. Misappropriation theory necessary to ensure investors that misappropriators weren‘t taking unfair advantage of material, nonpublic info. d. Tipper-Tippee i. Insider trading D who is neither an insider, a quasi-insider, nor a misappropriator is a ―tippee.‖ They receive material, nonpublic info from a ―tipper,‖ who is usually an insider, a quasi-insider, nor a misappropriator. ii. Elements: 1. Tipper must be an insider, quasi-insider, or misappropriator; 2. Tipper must have been acting for personal gain (Dirks); 3. Tippee must have obtained material, nonpublic info from tipper; 4. Tippee must have bought/sold securities 5. Tippee must have knowingly possessed the info when making the purchase/sale; AND 6. Tippee must have acted willfully. iii. ―Tippee‖ can be liable based on a ―derivative‖ breach, deriving from tipper’s breach 1. Dirks v. SEC (US 1983): D was investment analyst receiving info from Secrist, former employee at Equity Funding, who told D that EF had committed fraud by overstating its assets. Secrist wanted D‘s help in exposing the fraud. D recommended that his clients sell their stock in EF, while also facilitating the fraud‘s exposure. D didn‘t himself trade. SEC said he should have disclosed it before giving it to his clients. SCOTUS reversed conviction, affirming the Chiarella principle that equal info is not required among all traders. Tippee of secret info can only be liable in certain circumstances. a. Tippee cannot be liable unless the tipper breached a duty. i. Tippee assumes a fiduciary duty to shareholders of corporation not to trade on material nonpublic info only when: (1) the insider has breached his fiduciary duty to shareholders by disclosing the info to tippee; and (2) tippee knows, or should know, that there‘s been a breach. a.
Tipper breaches a duty only where tipper stood to benefit personally from passing the information. i. This benefit can be in the form of (1) tipper‘s direct or indirect profits from the trading; (2) a reputational or business benefit to the tipper; or (3) the tipper‘s giving of a gift, which could benefit the tipper in the future as the return recipient of a gift. ii. Tipper in Dirks was a whistle-blower who ∅ stand to gain financially. iv. Reg FD: Disclosure 1. Civil regulation (like Dirks) that provides, whenever: a. an issuer, or person acting on its behalf, b. discloses material nonpublic info, c. to certain enumerated persons, d. the issuer must make public disclosure of that same information either: i. simultaneously (for intentional disclosure); OR ii. promptly (for non-intentional disclosure).
b.
EXTORTION: THE HOBBS ACT 18 USC § 1951
I. Text of Statute a. Criminalizes any of the following that affect commerce: ELEMENTS OF EXTORTION: (1) Robbery; (2) Extortion, either through actual or 1) D‘s acts affected interstate commerce; threatened use of force, or under color of official right; 2) D obtained, or attempted to obtain, another person‘s and (3) Physical violence (threatened or actual) property to which D wasn‘t entitled; (Scheidler v. b. Conspiracy to commit any of these offenses violates the NOW) HA; penalty is 20 years (generalized conspiracy prov‘n 3) The property was obtained, or would have been has a 5 year penalty) obtained, with the other person‘s consent; c. Legislative history is clear about anti-racketeering 4) D acted with the required MR; (Evans v. US) purpose, but Act doesn‘t define racketeering 5) The property was obtained, or would‘ve been d. Jurisdictional element: conduct must affect commerce obtained, by: a. The wrongful use of fear; (US v. Capo) or the movement of any article or commodity in and/or commerce. b. Under color of official right (Evans; Extortion McCormick) a. By Force, Violence or Fear i. Fear of particular economic loss required 1. US v Edwards (5th Cir 2002): associates of a corrupt governor ostensibly represented him in extorting money from people who sought approval of riverboat casinos, threatening to make it impossible to obtain the licenses if they didn‘t pay. Ct aff‘d their convictions over their protests that they could not be convicted b/c they had only interfered with a potential economic benefit. Ct said that the fear of inability to get riverboat licenses constituted fear of particular economic loss because they thought that they wouldn‘t be able to get the licenses w/o making the payments. ii. Loss of potential benefit doesn’t count 1. Extortion vs. bribery: bribery is covered by state law and ∅ included in the Hobbs Act a. US v Capo (2d Cir 1987): Ds (employees at Kodak) accepted bribes to refer people for jobs at the company, people knew that these were the people to contact if you wanted a job. Ct rev‘d their convictions, saying that there wasn‘t evidence that the ―victims‖ feared that they would be harmed if they didn‘t pay (they were just losing out on a potential benefit); this was just bribery, which isn‘t covered by the Hobbs Act b. Bribery is consensual; both parties are guilty. In extortion, the person who makes the payment really is a victim. 2. Problems with these crimes: rent-seeking, distortion of productive choices, social losses in blackmail transactions, anxiety and utility. iii. Depravation and acquisition of prop’ty required 3. Scheidler v. National Organization of Women (SCOTUS 2003): NOW brought a civil RICO action against anti-abortion groups alleging that protest tactics outside clinics were violations of the Hobbs Act b/c the organizations were trying to extort the clinics into shutting down, which affected interstate commerce. Court struck down the judgments, saying that to sustain a Hobbs Act violation, one must transfer and receive prop‘ty; if a D neither pursues or receives something of value they can use, transfer or sell, there‘s no Hobbs Act violation. To hold otherwise would make any interference with prop‘ty a Hobbs Act violation. c. Dissent: it‘s not right to limit extortion under the Hobbs Act to acquisition of tangible prop‘ty; it‘s common sense that extortion can happen when a D interferes w/business. b. Under Color of Off’l Right i. Public official need not affirmatively induce payment, only accept money to which he’s not entitled knowing it’s being offered in exchange for a specific requested exercise of his off’l power. 1. Evans v US (SCOTUS 1992): D was an elected member of the Board of Commissioners; an FBI agent posed as a real estate developer seeking rezoning assistance; the agent gave D cash and a check (D reported only the check in campaign-finance disclosure form, but not the cash). D was convicted and challenged his conviction, arguing that he made no act of affirmative inducement of payment, so he wasn‘t guilty. Ct disagreed and aff‘d his conviction, saying that to violate the Hobbs Act, an official need only accept money to which he is not entitled knowing that he‘s being offered payment in exchange for specific requested exercise of his official power (this is the QPQ element). It‘s sufficient that the person made the payment to D because of his position. ―Inducement‖ is required only of private actors in extortion, not of public off‘ls. a. Concurrence (Kennedy): Language of the statute requires a QPQ; this is something more than just acceptance of payment. ―Induced‖ is required of public and private actors, but there was inducement here and off‘l isn‘t required to initiate the transaction.
II.
ii.
Dissent (Thomas): At CL, extortion under color of off‘l right required a pretense that the official was entitled to the money or prop‘ty in question; the maj‘s definition of extortion is too broad, it‘s appropriate to require inducement and ―under color of off‘l right‖ – the court makes this an ―or‖ test. Payments that look like campaign contributions 2. McCormick v US (SCOTUS 1991): D was a legislator in W.Va. who enacted a law favorable to foreign drs, he met with a lobbyist for foreign drs and said ―I haven‘t heard anything from the foreign doctors this campaign‖, lobbyist gave him money that he didn‘t record as campaign contributions. Court held that QPQ is an essential element of a Hobbs Act prosecution; there was no promise or understanding in exchange for this payment. It‘s important to protect campaign contributions; it can‘t be illegal every time a public official acts for the benefit of some constituents by acting in their interest, and campaign contributions are ok too. b.
OFFICIAL BRIBERY, GRATUITIES, AND FEDERAL PROGRAM BRIBERY 18 USC § 201(B), § 201(C), 18 USC § 666
I. Bribery and Gratuities a. Bribery 18 USC § 201(b) i. Statutory text: 1. § 201(b)(1) whoever (directly or indirectly) corruptly gives, offers, or promises anything of value to any public of‘l (or person who has been selected to be a public off‘l), or offers/promises such a person anything of value (even to any other person or entity), with intent a. (A) to influence any off‘l act; or b. (B) to convince the off‘l to aid in or allow fraud, or c. (C) to induce the public off‘l to do or not do any act in violation of his lawful duty. 2. § 201(b)(2) whoever, being a public official (or selected to be a public off‘l) directly/indirectly demands, seeks, receives, accepts, or agrees to receive anything of value personally or for any other person or entity in return for a. (A) being influenced in the performance of an off’l act; b. (B) being influenced to commit/aid in committing fraud; or c. (C) being induced to do/omit to do any act in violation of his off’l duty 3. Punishment: fined (under title) or not more than 3x the monetary equivalent of the thing of value (whichever is greater) or imprisoned for not more than 15 years (or both) and may be disqualified from holding any public office) b. Gratuities 18 USC § 201(c) i. Statutory text: 1. § 201(c) Whoever (1)otherwise than as provided by law for proper discharge of off‘l duty a. (A) directly/indirectly gives, offers, promises anything of value to a public off’l (or fmr or future off‘l) b/c of any off’l act performed or to be performed by such public of‘l; or b. (B) being a public off’l, directly or indirectly demands, seeks, receives, accepts, or agrees to receive/accept anything of value (personally or for someone else) b/c of an off’l act performed or to be performed by such off‘l shall be fined or imprisoned for not more than 2 years or both. ii. Requires proof of a nexus between the thing conferred and the off’l act for or because of which it was given 1. See US v Sun-Diamond Growers of California (below) c. Comparing bribery and gratuities i. Similarities: 1. Both apply to federal public officials: this includes any person acting for or on behalf of the US or any department, agency, or branch of the govn‘t a. Dixson v US (SCOTUS 1984): reaches employees of state and local gov AND employees or private corporations carrying out federal responsibilities. b. Reaches state and local officials who occupy a position of public trust with fed‘l responsibilities c. Reaches private citizens who perform delegated gov‘t functions. 2. Both require proof that something of value was requested, offered, or given to a public official with illicit intent; this means anything with subjective value to the recipient a. Thing of value: i. Things with no actual commercial value satisfy this requirement 1. US v Williams (2d Cir 1983): Senator convicted of bribery when he accepted sham stock, he subjectively believed it had value, Ct said that corruption occurs whether or not D has correctly assessed the value of the bribe. ii. Includes intangible benefits 1. US v Sun-Diamond Growers (see below): the question is whether an intangible benefit has subjective value to the public official in question. 2. Promises of future employment to public officials (this happens a lot, but it‘s only problematic when there‘s a specific QPQ) a. US v Biaggi (2d Cir 1990): an off‘l was bribed by a promise of a lucrative job with a law firm; conflict of interest statutes regulated this conduct so it was violative even w/o QPQ. b. ―Given with illicit intent‖ distinguished from fees for legitimate services i. US v Biaggi (2d Cir 1990): Congressman who retained an ―of counsel‖ relationship with a law firm was convicted of bribery in connection w/payments characterized as fees for legal services; although there was a basis for claiming
II.
that the fees had a legitimate purpose, the court said that the jury must only find BRD that unlawful purposes were of substance (not just vague possibilities) to convict. 3. Both criminalize the payor and the payee; 4. Both are directed at fed’l officials (under NPC); 5. Both require a nexus between the thing offered and action by the off’l. a. US v Sun-Diamond Growers of California (SCOTUS 1999): (gratuities case) D trade association, which engaged in mkting and lobbying activities on behalf of its member coops made gifts to the Sec‘y of Agriculture when it was shown that there were two issues the Sec‘y could have helped the co-op about. No QPQ req‘d in gratuity, but nexus is required; language of statute: ―for or because of any official act‖ means that there must be some particular off‘l act (= decision or action in any proceeding that may be pending or may be brought before the off‘l in his off‘l capacity). Official act =/= official position. ii. Differences: 1. Bribery requires QPQ (off‘l action in exchange for the bribe), gratuities require that money is given (other than as provided by law) for or because of any off’l act performed or to be performed by the off‘l; thus, it requires a two-way nexus (money given for act, money taken for act) 2. Bribery carries 15-yr max penalty, gratuities is only 2-yrs; 3. Bribery is solely forward-looking, gratuity can be forward- and backward-looking. Federal Program Bribery 18 USC § 666 a. Text of statute i. requires that a thing of value be corruptly given to or received by an agent in a listed entity in connection with any business transaction or series of transactions involving anything of value over $5000 where the govn’t entity receives more than $10,000/year in fed’l assistance. b. No effect on fed’l funds needs to be proven by the govn’t i. Salinas v US (SCOTUS 1997): Sherriff and deputy worked at county prison but had an agreement w/the US Marshals service to take custody of fed‘l prisoners in exchange for a grant from the fed‘l govn‘t ($900K) to maintain and improve the jail as well as a certain amount per day for each prisoner housed. One prisoner paid the Sheriff to have contact visits with his wife/girlfriend (not allowed); deputy‘s conviction of §666 at issue, he challenged the conv‘n b/c there was no demonstrated effect on fed‘l funds. Ct upheld his conv‘n, saying that no demonstrated effect on fed‘l funds is req‘d for a §666 conviction. The statute is to be read broadly, not limited to transactions that actually affect funds b/c §666 was enacted to make it clear that fed‘l law applies also to state/local officials accepting fed‘l money, not just fed‘l officials. B/c the statute is unambiguous, using expansive, unqualified language, the plain statement rule does not apply. Gen‘l idea: the visits were disrupting/related to the integrity of the fed‘l program itself, and there was sufficient relationship bwn the fed‘l money and the visits (some nexus is req‘d). c. Nexus between funds and bribery required, but it is not very strict i. 1st Cir Case: municipality got FEMA funds, bribery occurred regarding a K for lights in a sports stadium that had nothing to do with the FEMA grants, but the Ct said this was a sufficient connection. This is the boldest circuit to speak on the issue.
FOREIGN C ORRUPT PRACTICES ACT 18 USC 15 U.S.C. § 78DD-1(A)(1)
I. 15 U.S.C. § 78dd-1(a)(1): bribery of foreign gov‘t officials to obtain or retain business a. FCPA prohibits payments to foreign officials for purposes of: ELEMENTS OF FCPA: i. influencing any act or decision of such foreign 1) D made a payment to any foreign public official official in his official capacity; (regardless of rank or duties) or candidate for foreign ii. inducing such foreign official to do or omit to do political office; any act in violation of the lawful duty of such 2) That payment was intended to: official; OR a. influence a foreign official to act or make iii. securing any improper advantage ... in order to a decision in his official capacity; OR assist [the company making the payment] in b. induce such an official to perform or obtaining or retaining business for or with, or refrain from performing some act in directing business to, any person. violation of his duty; OR The business element is to be broadly construed; FPCA isn’t c. secure some wrongful advantage to the payor. just about government Ks. 3) The result the payment is intended to produce (the a. US v. Kay (5th Cir 2004): In their dismissal motion, Ds QPQ) will assist the payor in efforts to contended that the indictment failed to state an offense obtaining/retaining some business for or with ―any against them. The principal dispute in this case was: person.‖ (broadly construed) whether, if proved BRD, the conduct that the indictment ascribed to Ds (in connection with the alleged bribery of Haitian officials to understate customs duties and sales taxes on rice shipped to Haiti to assist Ds‘ company in obtaining or retaining business) was sufficient to constitute an offense under the FCPA. The indictment's sufficiency hinged on a determination whether the business nexus element of the crime was core. The instant court concluded that, as important to the statute as the business nexus element was, it did not go to the FCPA's core of criminality. The FCPA's core of criminality was seen to be bribery of a foreign official to induce him to perform an official duty in a corrupt manner. The indictment's paraphrasing of the FCPA's business nexus element passed the test for sufficiency, despite alleging no details regarding what business was sought or how the results of the bribery were meant to assist. i. Ct finds the FCPA's language ambiguous - amenable to more than one reasonable interpretation, most significantly b/c of unclear scope of the business nexus element: how close must the link be btw (1) the anticipated results from the foreign official and (2) the assistance provided by or expected from those results in helping the briber to obtain or retain business? ii. Legislative History - Rationale for 1977 statute was moral, economic, and foreign policy interests. 1. Indicates attempt for broad criminalization with narrow exceptions* bc (1) addresses pervasive problem; (2) choice of language as "obtaining or retaining business" instead of "obtaining or retaining govt contracts" shows intent to deviate from narrower scope of language in SEC Report. a. Grease Exception - Allowance for payments to get official to properly perform ministerial duties of his office. 2. 1988 - Congress adds second exception - Affirmative defense for payments that are legal in the country in which they are offered or that constitute bona fide expenditures directly relating to promotion . . . or execution of K." 3. 1998 - By adding "or other improper advantage" Congress chose to add to the original list of abuses of discretion under the statute rather those within the business nexus requirement. 4. --> The LH only confirms the conclusion that the statute was intended to be very broad. Ds conduct may fall under the "other improper advantage" as well. iii. Holding: Congress intended for the FCPA to apply broadly to payments intended to assist the payor, either directly or indirectly, in obtaining or retaining business for some person, and that bribes paid to foreign tax officials to secure illegally reduced customs and tax liability constitute a type of payment that can fall within this broad coverage. iv. Because: 1. Congress motivated to comprehensively address rampart foreign bribery. 2. Narrow exceptions are made against broad applicability. 3. Congressional intent to implement Convention supports this conclusion. Relationship to Mail Fraud? a. Bribery scheme to deprive foreign gov’t of revenues can also be MF i. US v. Pasquantino (US 2005): SCOTUS upheld use of MFS to prosecute scheme to deprive foreign govt of revenues. Ct distinguishes Cleveland on grounds that that injury was purely regulatory while
II.
III.
here it is economic - Canada's entitlement to tax revenue is a straightforward economic interest. At CL, right to be paid money was a form of property. 1. Ct says prosecution ∅ barred by CL revenue rule which prohibits collection of the tax obligations of foreign nations. It only does so in the attenuated sense by enforcing domestic law which concerns interstate and foreign commerce. ii. Note: Does this mean that bribery of foreign official (facts in Kay) could also be prosecuted under MF? b. ―Intangible right to honest services‖ n/a to bribery of foreign official in foreign country → No MF i. US v Giffen (SDNY 2004): D is US citizen and ―Counselor‖ to President of Kazakhstan who made unlawful payments to other govt officials. Defrauding Kazak citizen of honest services of their govt official rejected as basis for MF prosecution. Ct said Congress ∅ intend ―intangible right to honest services‖ to encompass bribery of foreign official in foreign countries.
PERJURY AND FALSE STATEMENTS 18 USC §§ 1621-1623, 18 USC § 1001
I. Perjury: 18 USC § 1621-1623 a. Statutory Text: i. § 1621: Perjury generally ELEMENTS OF P ERJURY: 1. (1) Whoever, having taken an oath in any case in Elements of § 1621: which the fed gov authorizes the oath (that he‘ll 1) D testified under oath in a proceeding in testify truthfully, incl that written testimony, dep, etc. which U.S. law provides that an oath be is true) and willfully and contrary to the oath says administered; something he doesn’t believe to be true; OR 2) Oath was administered by a person 2. (2) In any declaration, etc under 28 USC § 1746 qualified by law to administer the oath; says something he doesn’t believe to be true 3) D made a false statement; 3. Is guilty of perjury and shall be fined/imprisoned (not 4) The statement was material to the more than 5 years) or both. proceedings; AND ii. § 1622: Subordination of perjury: just as guilty if you 5) D acted willfully and w/ knowledge of the statement‘s falsity. procure another to commit perjury. iii. § 1623: False declarations before GJ or court (more Elements of § 1623: specific) 1) D undertook an oath; 1. Statutory text: 2) Oath was administered before or a. (a) whoever under oath in a proceeding ancillary to a court or GJ proceeding; before/ancillary to GJ or court of the US, 3) D made a false statement or used false knowingly makes false material info; declarations or uses other info knowing it to 4) The false statement/info was material to contain false material declarations shall be the proceeding; AND fined/imprisoned for not more than 5 years 5) D knew the statement/info was false. or both. b. (c) Any indictment/information for violation of this section claiming that D made two or c. more declarations, inconsistent to the degree that one is necessarily false, need not specify which declaration is false if each was material to the point in question and each was made w/in the SoL for the offense charged. i. It‘s a defense for D to say he believed each was true at the time. d. (d) Defense: no prosecution if, in the same continuous proceeding in which the false statement was made, D admits it to be false if the declaration hasn‘t substantially affected the proceeding or it has not become manifest ELEMENTS OF RECANTATION DEFENSE: that such falsity has been or will be exposed. (available under § 1623) 2. Purpose: obtaining more truthful responses from witnesses before courts and GJs. 1) In the same continuous court or GJ 3. Defense of recantation is narrow: proceeding in which a declaration is a. US v Sherman (see infra): D lied about made; expert qualifications under oath, was 2) The person making the declaration confronted with his lie and admitted that his admits such declaration to be false, such statements weren‘t truthful. Even if he had admission shall bar prosecution under this section IF, at the time the admission been charged under § 1623, he would not is made: have been entitled to the defense. The a. The declaration has not defense is available if, at the time the substantially affected the admission is made, (a) the declaration hasn‘t proceeding; AND substantially affected the proceeding or (b) it b. It has not become manifest that has not become manifest that the falsity has such falsity has been or will be been or will be exposed. Court reads this as exposed. an ―and‖ (conjunctive) test even though it‘s phrased as an ―or‖ (disjunctive) test, saying that if the test was read in the disjunctive, people could commit perjury with impunity because they could lie and only recant (and escape liability) when they are exposed. iv. Differences: § 1621 is more general, § 1623 is easier to prove but limited in scope. 1. § 1623 ∅ require that the prosecution use two § 1621 § 1623 witnesses to prove perjury; § 1621 does
Recantation Defense Two Witness Rule Mens Rea N Y Willful & Y N Knowing
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Requirement Knowing (Reduced MR § 1623 has a ―knowingly‖ MR requirement; § requirement) 1621 has a ―willfully‖ requirement Inconsistent N Y 3. § 1623 is restricted to testimony before GJs Statements Rule and Courts; § 1621 is just ―under oath‖ 4. § 1623 allows use of inconsistent statements (2 statements inconsistent to the degree that 1 must be false); but ∅ require proof of which one is false; § 1621 requires proof of 1 false statement to use this doctrine. 5. § 1623(d) allows for an exception for recantation (see Sherman, infra). b. Charging decisions: it is appropriate to charge under § 1621 (more general) rather than § 1623 (for which the defense of recantation is available) when conduct calls under both statutes i. US v Sherman (3d Cir 1998): D lied about his expert qualifications under oath; when confronted during the examination, he admitted that his statements weren‘t truthful. He was charged w/committing perjury before a fed‘l GJ under § 1621 (gen‘l perjury, not the more specific statute), but challenged his conv‘n, saying it was improper to charge him under § 1621 instead of § 1623. Court disagreed, upholding his conviction, and noted that when conduct violates two statutes, prosecutors usually have discretion to choose which statute to charge D with violating. Ct also noted that D wouldn‘t have been entitled to the recantation defense (see supra) anyway. 1. Note: after this case (others haven‘t been granted cert and SCOTUS hasn‘t visited it), it‘s unclear whether the govn‘t can proceed under § 1621 when a D would have a valid recantation defense under § 1623. Looks like the govn‘t probably could proceed under either statute. c. The nature of falsity i. Literally true but misleading/nonresponsive statements are not perjury 1. Bronston v US (SCOTUS 1973): D owned a production company and opened bank accounts in various countries; when his company went bankrupt, a Ct held a hearing to determine the extent and location of the company‘s assets. When asked whether he had any accounts in Swiss banks, he said he did now. When asked if he ever had, he answered ―the company had an account there for about six months ...‖ (technically true, but unresponsive; he had a personal account in Switzerland but not at the time of questioning). Ct App aff‘d D‘s conviction in DCt., but SCOTUS rev‘d that conclusion and D‘s conviction, saying that a witness cannot be convicted of perjury under § 1621 for an answer, given under oath, that is literally true yet nonresponsive (and arguably misleading by negative implication). A D violates the statute when he ―willfully ... states ... any material matter which he does not believe to be true.‖ This does not make it criminal to make a statement that implies a material matter that D doesn‘t believe to be true. The primary safeguard against errant testimony is not a prosecution for perjury; this was a testimonial mishap that could have been cured by the lawyer asking one more question. d. Ambiguous Questions: no perjury if susceptible to multiple interps by D i. US v. Farmer (10 Cir 1998): Subsequent to being convicted of perjury, D argued that the Q that led to the perjury charge was not sufficiently specific to support the conviction. On review, Ct concluded that the Q was sufficiently ambiguous that D‘s negative response to the Q could not render her liable for perjury. In reaching its conclusion, the Ct held that it was unnecessary to determine the extent of the Q‘s ambiguity, b/c, under either of two standards, the Q was susceptible to multiple interpretations by D. Additionally, the Ct noted that the prosecution ∅ offer any ev to establish what the Q meant to D. Thus, the Ct held that the ev was insufficient to establish that D knowingly gave false testimony. False Statements made within the jurisdiction of a federal agency: 18 USC § 1001 a. Statutory Text: makes illegal the making of a false statement in any matter within the jurisdiction of any branch of the USFG (executive, legislative, or judicial). i. ―Branch of the fed gov‖ originally was worded ―any department or agency of the US‖. 1. Hubbard (SCOTUS 1995): this excluded the judiciary 2. Next year, Congress amended the language of the statute b. Elements of the offense: i. (1) D must make a false/fraudulent statement 1. Reasonable belief in the truth of a false statement is not significant in determining whether D willfully and knowingly made a false statement. US v Whab (2d Cir 2004). 2. SCOTUS rejects the ―exculpatory no‖ doctrine, saying that a simple denial of wrongdoing falls w/i the ambit of § 1001 a. Brogan v US (SCOTUS 1998): D (union officer) accepted cash payments from a company whose employees were represented by the union; IRS and fed‘l agents visited him at his home, asked if he‘d ever received cash, he said ―no.‖ Agents said they had evidence showing he did and that lying to fed‘l agents in the course of an investigation was a crime, he didn‘t change his answer. He challenged his conv‘n under § 1001, asserting the defense of the exculpatory no doctrine (mere denial of wrongdoing not punishable under § 1001), and SCOTUS rejected it, saying that § 1001 isn‘t limited in
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reach to ―major‖ govn‘tal functions, and since it is the function of fed‘l investigators to discover the truth, falsehood related to the subject of the investigation perverts that function. Actual perversion of govn‘t functions isn‘t req‘d. Ct rejects a 5th A argument for the exculpatory no doctrine, rejecting the ―cruel trilemma,‖ and saying that a D may always remain silent, but is not justified in lying about his involvement. Ct is unconcerned with prosecutorial abuse. i. Concurrence: Human nature, when caught by surprise, is to deny; it‘s surprising that mere denial of guilt can be a felony, nobody was misled b/c the agents already knew that D was guilty. ii. (2) The statement must be material; 1. This means a natural tendency to influence (or capacity to influence) the decision of the body to which it was addressed. Actual influence not req’d. a. US v Whab (see supra): D applied for a US passport, claimed falsely that he was born in NY, when asked for more documentation, he submitted a false birth certificate, then when interviewed by a fed‘l agent, he falsely stated that he was born in the US. D was convicted and challenged his conviction, claiming that, because the agency did not use the forged birth certificate because it couldn‘t be considered by the passport agency (because it was too old). Ct said that the agency could have considered the document, and actual influence is not required (only the capacity to influence). iii. (3) Statement be made knowingly or willfully; 1. Knowingly/willfully means that the statement was made intentionally and with bad purpose; it’s not req’d that the D knew specifically that lying to a fed’l agent is a crime a. US v Whab (see supra): D challenged his conviction, claiming that he didn‘t know he was breaking any specific law. Ct said that a D need not know that he was breaking any specific law to be charged/convicted under § 1001. 2. ―Knowingly/willfully‖ refers only to the falsity of the statement in Q. It does not refer to the jurisd‘l prong (see Yermian, supra) iv. (4) The stmt must relate to a matter w/in the J of any branch of the USFG. 1. No MR req’d for jurisd’l element: b. US v Yermian (SCOTUS 1984): D was hired as a defense K‘er and had to obtain a DOD security clearance; he lied about a prior conv‘n for mail fraud, said he had been employed by two companies that never employed him, then certified to the truth/accuracy ―to the best of his knowledge‖ after his answers were filed out. The document made reference to the DOD. He challenged his conviction of three counts of violating § 1001, claiming that, to be convicted, he would have had to have had ―actual knowledge‖ of the question of the J of the fed‘l agency. Ct held that the fed‘l agency question was a jurisdictional element, and that no mens rea is required for its satisfaction. ii. Dissent: some lesser mens rea standard is required to prove the jurisd‘l element. As interpreted by the Ct, too large a range of conduct is included in the statute. 2. Within the J of a branch of the USFG refers to the power to investigate/adjudicate the matter at issue (broad), not just the power to make final/finding determinations (narrow) c. US v Rodgers (SCOTUS 1984): D, in an effort to find the wife who had left him, told the FBI that she was kidnapped and the SS that she was planning to kill the President. Both agencies spent time/money investigating before they learned he was full of shit. He was charged w/violating §1001, and SCOTUS rev‘d the dismissal of his charge (charge stands, case remanded) over his challenge that he couldn‘t be charged w/violating § 1001 because ―w/in the J‖ should be construed narrowly, limited to the power to make final/binding determinations. Ct started w/ the ordinary meaning of ―J‖ (official authorized function of the agency w/i the periphery of its business), and said that narrower meanings clashes w/ the sweeping, everyday language and broad intent of the statute. BLOCKBURGER TEST: A D who commits conduct that results in a violation of § 1001 and another offense can be charged/convicted/punished of both offenses as long as each requires proof of an element that the other does not i. False statement + Currency reporting violation: both conv’ns/punishments OK 3. US v Woodward (SCOTUS 1985): When entering the country carrying more than $5000 in cash, D was asked if he was and said he wasn‘t. He challenged his conv‘n under both § 1001 and the currency reporting act, claiming that his punishments for both violated DJC. Ct rejected his argument, upholding his conviction and punishment, because each violation required proof of an element the other did not (it‘s possible to violate the currency reporting act w/o any affirmative ―trick scheme or device‖ as req‘d by § 1001; and conv‘n under § 1001 doesn‘t require proof of
carrying more than $5000 in cash). There was no evidence that Congress didn‘t intend to allow separate punishment for the two offenses. ii. False statement + Lying to a customs agent: both conv’ns/punishments not OK. 4. US v Avelino (2d Cir 1992), all elements of both offenses were the same d. Repeating the FS exposes D to ↑ liability/punishment only if the repetition of the statement causes add’l harm i. Multiple identical denials to same official can’t lead to multiple charges 1. US v Oslowy (8th Cir 1987): SS agent asked D the same question three times, he lied each time. Ct App rev‘d his three conv‘ns of § 1001, saying that the repetition of the initial false statement didn‘t further impair the operations of the govn‘t. ii. Two denials to different officers with different duties can lead to multiple charges 1. US v Salas-Camacho (8th Cir 1988): D‘s second denial was to a different off‘l with different duties (conducting a more detailed investigation than the first off‘l); this caused add‘l impairment of govn‘t function, so an add‘l charge/conviction was warranted.
OBSTRUCTION OF JUSTICE – INTERFERENCE WITH WITNESSES 18 USC §§ 1503 AND 1512
I. The Omnibus Provision § 1503 ELEMENTS OF OBSTRUCTION OF JUSTICE: a. Statutory text: criminalizes i. (1) Endeavoring to influence, intimidate, or impede a witness Elements of § 1503 or § 1505 (The Omnibus Clauses): 6) D acted with ―corrupt‖ intent; ii. (2) Injuring a juror/magistrate/officer in the 7) D endeavored to interfere w/ a judicial, administrative, performance of his/her duties or congressional proceeding; (U.S. v. Aguilar) iii. (3) Influencing, obstructing, or impeding or 8) There was a ―nexus‖ b/w the endeavor and the endeavoring to influence, obstruct, or impede proceeding; (U.S. v. Aguilar) 1. This is the catch-all prov‘n and is most 9) The proceeding was actually pending at the time of the frequently used. endeavor; AND b. Nexus b/w act and jud’l proceeding must exist (D must 10) D knew that the proceeding was pending. be aware of it) and D’s actions must have a natural and probable tendency to influence the proceeding. Elements of § 1512 (Corrupt Persuasion): i. A D must know that justice is being 1) Acted knowingly and corruptly; administered to fulfill the requirement of 2) Persuaded or attempted to persuade another person in ―intent to influence‖ prong order to— 1. US v Aguilar (SCOTUS 1995): D1 filed a. prevent, influence, or delay the other person‘s a motion for postconviction relief and testimony or appearance; was assigned to a certain judge who sat b. cause the other person to withhold, destroy, or on a panel with another judge (Aguilar, alter documents; OR D here) to whom he had a connection; c. hinder, delay, or prevent a communication to a U.S. official of info relating to the commission he contacted that connection which or possible commission of a federal offense or resulted in discussion about his motion. parole violation; AND A separate wiretap was authorized by 3) Acted in connection w/ a federal official proceeding. the chief judge of the panel on which the two judges sat when D1 was ID‘d as a suspect in another case; one of the contacts was ID‘d on the wiretap and the judge‘s involvement was exposed. D was charged/conv‘d of § 1503, endeavoring to obstruct justice (catch-all); he was conv‘d, but it was rev‘d by the Ct App, which said that the judge hadn‘t interfered w/a pending jud‘l proceeding b/c the GJ hadn‘t authorized the FBI investigation. Ct aff‘d, saying that a D must know that justice is being administered to be conv‘d under this catchall provision. Reasoning: a person who lacks knowledge of a pending proceeding necessarily lacks intent to obstruct it. a. Dissent: would read the statute more broadly, apparently believing that any act taken w/intent to obstruct the administration of justice (even w/o knowledge of any pending proceeding) is sufficient to impose liability). Critical point for Dissent is whether D knew the statement/information might be provided to a GJ. ii. Liability attaches when it is reasonably foreseeable that D’s actions will have the probable effect of obstructing the due administration of justice 1. US v Brenson (11th Cir 1997): grand juror disclosed info about the content of a GJ proceeding, agreed to provide info about further actions to the target of the investigation. Ct held that he had violated § 1503 b/c it was reasonably foreseeable that his actions would have the probable effect of obstructing justice. Document Destruction/Corrupt Persuasion: § 1512 a. Corrupt nexus req’d for knowingly corruptly persuading others w/intent to cause that person to w/hold or alter documents for use in an off’l proceeding. Requires wrongdoing other than just impeding availability of documents. i. Arthur Anderson LLP v US (SCOTUS 2005): Enron started to suffer financially, when it looked like the SEC would start an investigation, its auditor‘s (AA) in-house counsel started telling people to ―follow the document retention policy‖ (implying that if they destroyed documents in accordance w/the policy, they‘d be ok); when Enron and AA were served, emails went out to ―stop shredding.‖ AA was conv‘d of violating § 1512(b)(2)(A) and (B) (―knowingly corruptly persuading another person w/intent to cause that person to withhold documents from, or alter documents for use in an off‘l proceeding‖) under a jury instruction that basically allowed the jury to find it guilty w/o committing a crime (all that was req‘d was that D impeded justice; but the statute requires wrongdoing, jury instruction should have included the word ―dishonesty‖). The instruction failed to inform the jury that a nexus between the conduct (―knowingly corruptly destroying documents‖) and the particular proceeding. b. Official proceeding need not be pending, so actual knowledge of a pending proceeding is not req’d
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III.
IV.
i. US v Frankhauser (1st Cir 1996): There was direct evidence that D expected a GJ investigation or trial in the foreseeable future, this gave him notice that the advice he gave was illegal. c. Attempts to bribe someone else to do the conduct made criminal by § 1512 (b) is illegal. US v Farrell (3d Cir 1997). The Relationship b/w Charges under § 1503 and § 1512 a. Circuit Split over whether witness tampering can still be prosecuted under § 1503 or instead must be prosecuted under § 1512. i. A majority of courts still allow witness tampering to be prosecuted under either. (US v. Lester) 1. Lester v US (9 Cir 1984): Ds arranged for a gov‘t witness to leave town after he began cooperating with fed authorities as they prepared to prosecute another gang member. The gov successfully prosecuted Ds for conspiracy to obstruct justice and to obstruct a criminal investigation under § 371, obstruction of justice pursuant to § 1503, and obstruction of a criminal investigation under § 1510. The jury returned guilty verdicts against both Ds on all counts. The trial judge entered judgments of acquittal as to the two substantive counts. The gov appealed the acquittal judgments, and one D appealed his conspiracy conviction. The AppCt affirmed the conviction for conspiracy and set aside the acquittal judgments for both Ds, thus reinstating the guilty verdicts. The Ct found that, when viewed in light most favorable to the gov, the ev suggested that the parties conspired to bribe the witness by paying for his trip in order to prevent his communicating with authorities. Other Provisions a. § 1505: Obstruction of proceedings before departments, agencies, and committees b. § 1510: Obstruction of criminal investigations c. § 1511: Obstruction of State or local law enforcement d. § 1513: Retaliating against a witness, victim, or an informant e. § 1515: Definitions for certain provisions; general provision
DRUG OFFENSES 21 USC § 841 ET SEQ.
I. The Core Offenses: Manufacture, Distribution, and Possession w/intent to Distribute 21 USC § 841 a. Statutory Text: i. § 841: (a) Prohibits (1) mfr, distribution, dispensing, or possessing w/intent to mfr/dist/disp a controlled substance; or (2) a counterfeit substance. (b) Penalties; sentences and/or fines based on the weight ―of a mixture or substance containing a detectable amount of‖ the controlled substance. b. The Weight Requirement i. ―Mixture or substance‖ requirement: for sentencing purposes, the relevant weight is that of the total mixture or substance containing a detectable amount of a drug. 1. United States v Grant (11th Cir 2005): D was caught with a very small weight (approx 0.1 g) of LSD in a larger amount of water; together the substance weighed 103.7 g. He pleaded guilty to this amount of drugs, which subjected him to a 10-yr mandatory minimum sentence. After two significant downward departures, his atty found Camacho (holding that, for the purpose of the sentencing guidelines, the weight of pure LSD alone should determine a D‘s offense level); Ct vacated and remanded for sentencing, found the 10-yr minimum still applied but greatly decreased the sentence again. Ct held that the total weight of the LSD + water applied and that D was subject to the mandatory minimum. Ct noted that D had pleaded guilty to the larger weight and noted that, in Chapman, SCOTUS held that LSD + blotter paper is a m/s w/in the meaning of the panty statute (Camacho dealt only w/the guidelines). Ct says that LSD dealers can choose their own carriers to reduce sentences. a. Note: it seems odd that the Ct would allow a sophisticated dealer to receive a shorter sentence b/c of the way he carries the drugs. This also gives higher sentences to Ds who use heavier carriers. 2. Lower courts have divided a. US v Lopez-Gil: D dissolved cocaine into the sides of two fiberglass suitcases, it was proper to exclude the weight of the metal parts of the suitcases and weigh the rest in total. Dissent said that because the cocaine wasn‘t usable when bonded to the suitcases, and b/c as a result of the sentencing he would spend 5 more years in jail, this was the wrong result. b. US v Stewart: 7th Cir rev‘d a sentence calculated on the basis of a mixture that contained meth and poisonous ingredients. c. US v Rolande-Gabriel: Ct held that the weight of a nonusable non-drug liquid should be excluded when calculating weight to determine the sentence. ii. Crack: Powder ratio (100:1) 1. History: bidding war to increase ratio between crack and powder sentences came after 1986 when Len Bias died of a powder cocaine OD (it was initially reported that he died from crack). House proposal was 20:1, house dems increased it to 50:1, senate dems to 100:1. a. Example of politics affecting fed‘l crime policies. 2. Ratio is not unconstitutional a. US v Smith (6th Cir 1996): Cops stopped D and found 5g of crack; he was sentenced to 60 months in prison and supervised release and challenged his sentence based on the 100:1 crack:powder cocaine sentencing weight ratio. Ct aff‘d his sentence and held that the ratio wasn‘t unconst‘l, saying that crack sentences are longer than powder cocaine sentences because crack is potent, highly addictive, affordable, and prevalent. i. Concurrence (Nathan Jones, well-known AA judge, part of NAACP litigation team); the ratio is based on the faulty premises that: (1) crack is distinguishable from powder based on price, means of consumption, character of use, chemical composition; (2) crack is a purer drug and it gets to the brain faster, thereby increasing the likelihood of addiction; (3) crack is cheap/accessible and creates social problems. The ratio hurts blacks, who are more likely to receive a sentence, a longer sentence, and less likely to receive parole 3. Evidence of unconscious racism: the EPC is blind to it b/c the RB test doesn‘t ask whether it was rational to draw the line where it is, just whether it was rational to draw the line at all. a. The Sentencing Comm‘n has considered changing the ratio; most agree it should be eliminated but don‘t know how to do it (Congress won‘t endorse it). Continuing Criminal Enterprise (CCE) 21 USC § 848 a. Compound-complex statute b. Statutory text:
II.
i. Requires proof of a continuing series of violations of fed’l drug laws 1. ―Continuing series of violations‖ a. Jury unanimity as to violations is req’d i. Richardson v US (SCOTUS 1999): the phrase ―series of violations‖ refers to several elements, not just a single element with multiple underlying facts. Court has noted that three violations is the minimum 2. Course of illicit conduct must span a definite period of time, US v Jones (8th Cir 1996). ii. (1) Undertaken by a person who occupies a position of organizer, supervisor, or mgr w/respect to 5 or more people; 1. ―Position of organizer, supervisor, or manager ...‖ [last one is a catch-all] a. Definition: i. US v Church (11th Cir 1992): D was convicted of three predicate violations and of engaging in a CCE, he was sentenced to 40 years and challenged his conviction based on this provision of the statute. Ct said that a govn‘t can prove D‘s role as any type of manager (phrased in the disjunctive) w/respect to any of the ―five or more people,‖ D doesn‘t have to have the same type of relationship with each person. Ct also said that many managerial roles are covered, but it‘s not sufficient to have a buyer-seller relationship. b. D doesn’t have to be the dominant manager, just has to occupy some type of managerial position w/respect to 5 or more people US v Jenkins (10th Cir 1990) 2. ―... with respect to 5 or more people‖ a. US v Church (see supra): D challenged his CCE conviction re: element above. Ct said that the govn‘t doesn‘t have to prove that D conspired with 5 people at the same time or that the 5 conspired with one another; and that all 5 people don‘t have to be convicted of the predicates. All that‘s required is some evidence of their participation. In the instant case, there were at least 8 people involved, maybe more. b. The result is unclear when D associates with more than 5 people but involvement with some or more of them is contested. c. Jury unanimity as to the 5 people not required i. US v Moorman (11th Cir 1991): there is no general unanimity requirement as to a specific fact underlying an element of the offense. d. Cast of characters changing over time: i. US v Bafia (7th Cir 1991): Ct rejected the claim that D would have to manage five people simultaneously. 1. Dissent (Posner): it‘s sufficient that D had relationships with each of the five underlings, but if there are not five ―spots,‖ substitutions won‘t be sufficient (―two man band =/= large organization no matter how many substitutions). iii. (2) From which the organizer or supervisor ―obtains substantial income‖ 3. US v Church (see supra): D challenged his CCE conviction. Ct held that there is no precise definition of ―substantial income,‖ but in that case, the organization made $140K and the drugs stayed within the organization (this counts as ―resources‖). 4. Note: Courts often let prosecutors rely on circumstantial evidence to satisfy this prong. e. It doesn‘t matter if the money was reinvested in drugs or if D owns very little and has debt. iv. Penalty: 20 years in prison and $2 mn in fines for the first offense, 30 years and $4 mn for subsequent offenses, plus forfeiture. Life in prison authorized for principal admins, organizers, leaders 5. Includes fed‘l death penalty prov‘n if another person is killed while the violation occurs. c. Designed to reach top brass in drug rings Garrett v United States (SCOTUS 1985). d. Not often used: less than 1% of all fed’l drug charges i. Penalties for typical drug offenses have increased so much that the punishments here aren‘t worth the trouble of proving three predicates ii. Forfeiture provisions exist throughout the drug laws, this wasn‘t the case when CCE was enacted. iii. New focus is on street gangs. e. CCE and Double Jeopardy i. Multiple punishments: Congress‘s intent to make CCE a separate offense (from predicates) and allow multiple punishments is clear from congr‘l intent, Garrett v US (see supra). 1. But see Rutledge v US (SCOTUS 1996): Multiple punishments for both CCE and predicate drug conspiracy are not allowed b/c the latter is a lesser-included offense of the former. ii. Successive prosecutions: 1. Garrett v US (see supra) D pled guilty to importing pot in the WD Wash, then was indicted in Fla for CCE and the Wash offense was one of the predicates. Ct held that even if CCE and
2.
the Wash drug charge were the same offense, an exception to the DJC applied (didn‘t really reach the issue) Diaz (SCOTUS 1912): DJC doesn‘t bar a murder conv‘n when a V died after D was already convicted of assaulting him since the crime changed/got worse post-conviction.
MONEY LAUNDERING 18 USC §§ 1956 AND 1957
I. 3 Steps to Money Laundering: ELEMENTS OF MONEY LAUNDERING: a. Placement (putting dirty money in a financial institution) Elements of § 1956 (Domestic Money Laundering): 1) D conducted or attempted to conduct a financial transaction; b. Conducting a series of transactions 2) D knew that the financial transaction involved the proceeds of some (but to make it difficult to trace the money not necessarily which) type of unlawful activity that constitutes a felony c. Reinvesting the money, with the under state, federal, or foreign law; appearance of legitimacy. 3) The funds in fact were proceeds from specified unlawful activity; AND 2 Offenses 4) Any ONE of the following: a. § 1956: the basic offense; constitutes a. D engaged in the transaction done with the intent to further a four separate offenses, all of which specified unlawful activity; deal with a financial transaction b. D engaged in the transaction with the intent to commit tax i. Financial transaction § fraud in violation of § 7201 (tax evasion) or § 7206 (false returns) of the Internal Revenue Code; 1956(c)(4): a transaction that c. D engaged in the transaction knowing that the transaction is in any way affects interstate or designed in whole or part to disguise, conceal, or hide the foreign commerce; movement source of money; OR of funds by wire or other d. D engaged in the transaction knowing that the transaction is means; involving one or more designed in whole or part to avoid the currency transaction monetary instruments or reporting laws. transfer of title to any real prop‘ty or Elements of § 1957 (Prohibited Monetary Transactions): vessel/vehicle/aircraft; use of 4) D engaged or attempted to engage in a monetary transaction; 5) The monetary transaction was of a value greater than $10,000; a financial institution engaged 6) The transaction was derived from specified unlawful activity; in or affecting 7) The transaction took place in the U.S. or the D is a ―U.S. person‖; AND interstate/foreign commerce. 8) D had knowledge that the transaction derived from some form of ii. Financial transactions unlawful activity and was of a value greater than $10,000. engaged in w/knowledge that the prop’ty/money involved constitutes proceeds of some form of unlawful activity, with one of the following: a. ―Knowledge‖ here is MR req’ment #1 i. Circumstantial evidence can be used to satisfy this requirement: 1. US v Corchado-Peralta (1st Cir 2003): H and W married; H testified that he held himself out as a legitimate businessman and W didn‘t know about his illegal activities. She wrote checks and performed transactions w/the proceeds of his drug activities and knew he made very little legitimate money, but they had fancy cars. H was indicted, conv‘d, and sentenced for drug charges, then W was indicted and tried for conspiring to launder money. She appealed her conviction, claiming that (1) she didn‘t know the money was from unlawful activity (ct rejects this argument, saying that there were enough facts that a reasonable jury would have believed that she knew the money was proceeds of illegal activity); Ct allowed circumstantial evidence. ii. Willful blindness can satisfy this knowledge requirement 1. US v Campbell (4th Cir 1992): Licensed real estate agent sold a house to a drug dealer who drove around in a fancy car and had a cell phone (rare); she had mentioned that she thought the money ―might be drug money.‖ He said he had to pay for part of the house in cash because he wanted his ―parents‖ to think it was cheaper; she filled out the paperwork saying the house cost less than it actually did (to account for the cash). She was convicted and claimed that she didn‘t actually know that the money came from illegal activity. Ct said that willful blindness could satisfy the knowledge requirement, even though the requirement is of actual, subjective knowledge, not objectively reasonable knowledge. Ct noted that suspicion of unlawfulness doesn‘t satisfy this requirement, but it looks like that‘s all D had here. D‘s judgment of acquittal was rev‘d and a new trial was granted. b. It is generally unconvincing to claim that D didn’t know the money was proceeds from illegal activity i. US v Rivera-Rodriguez (1st Cir 2003): [companion case to Corchado-Peralta]; another D claimed that he knew money was intended to conceal the source of
II.
III.
the funds, but said he didn‘t know that the funds were proceeds from illegal activity. 2. (a)(1)(A)(i): intent to promote specified unlawful activity; 3. (a)(1)(A)(ii): intent to evade taxes; 4. (a)(1)(B)(i): knowledge that the transaction is intended to conceal information about the proceeds of unlawful activity; or a. This requires more than just spending money/engaging in transactions: i. US v Corchado-Peralta (see supra) W challenged her conviction; (2) She claimed that she didn‘t know that the transaction was designed to conceal information about the proceeds of unlawful activities. Ct said that, although she made numerous large purchases, it‘s not enough that a purchase has the power to conceal or disguise proceeds because all purchases do that. The items were not easily concealable, they weren‘t peculiarly concealed or acquired in someone else‘s name. This is a money laundering statute, not a money spending statute. 5. (a)(1)(B)(ii): knowledge that the transaction is intended to evade a currency reporting requirement. b. § 1957: The monetary transaction statute i. Govn’t must show: 1. Monetary transaction 2. With criminally derived prop‘ty of at least $10,000 3. Knowledge as to criminal source of prop‘ty ii. Tracing requirement: 1. US v Rutgard (9th Cir 1997): Feds came to D‘s office b/c they suspected him of money laundering, he called his wife and had her wire money to the Isle of Mann – she made two transfers. He was indicted under § 1957. Ct said that the gov has to show a connection b/w the transactions out of the account and the dirty money coming into the account. Ct says this won‘t make § 1957 too difficult to prove b/c the gov only has to show one deposit of criminal proceeds. a. Note: this is a strange application b/c the purpose of the statute is to keep dirty money out of the banks, prosecuting withdrawals doesn‘t seem to go after the source of the problem. 2. Other circuits‘ interpretations: once dirty money is deposited into an account, any subsequent transfer out of the account is presumed to contain dirty money. Differences between § 1956 and § § 1956(a)(1) § 1957 1957: Requires proof that the D: Requires proof that the D Mens Rea a. Mens rea: § 1956 has two (i) Knew the $ was the ―knowingly engaged … in levels of mens rea, § 1957 has proceeds of an unlawful a monetary transaction in only one (most significant activity; AND criminally derived difference) (ii) Acted w/ further property.‖ b. Minimum monetary knowledge or intent as quantity: § 1956 has one, § required by the specific 1957 has a $10,000 minimum. theory. c. Type of transaction: § 1956 Covers all ―financial Covers only the more Scope deals with ―financial transactions,‖ a broadlynarrowly-defined transaction‖ – this is broad and defined term that includes gifts ―monetary transactions,‖ can include purchases/sales and transfers of property titles. which are limited to that do not involve banks or transactions through financial institutions; § 1957 financial institutions. deals with ―monetary Requires no specific $ amount. Requires that the Amount transactions‖ – in general, transaction be of greater these go through banks. than $10,000. d. Tracing requirement: § 1956 No Yes Tracing has none; § 1957 has one. Requirement?
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT: RICO 18 USC §§ 1961 ET SEQ.
I. II. Controversy: a. RICO was passed in 1970; penalties are severe ELEMENTS OF CRIMINAL RICO: b. Written by a law professor, hard to understand (EXCLUDING CONSPIRACY) Statutory Text: a. Four types of conduct made criminal: Elements of § 1962(a)-(c): i. § 1962(a): Using/investing income derived 1) A RICO enterprise existed; 2) D(s) committed two or more predicate acts (the from a pattern of racketeering activity to ―racketeering activity‖); acquire an enterprise engaged in or affecting 3) The commission of the predicate acts constituted a commerce ―pattern‖ of racketeering activity; ii. § 1962(b): Acquiring an interest in such an 4) The D(s): enterprise through a pattern of racketeering a. invested in an enterprise through the pattern activity of racketeering activity; iii. § 1962(c): Conducting the affairs of an b. acquired an interest in or maintained control enterprise through a pattern of racketeering over an enterprise through the pattern of racketeering activity; AND/OR activity c. conducted the affairs of an enterprise through 1. To be liable, one must have some the pattern of racketeering activity; AND part in directing the affairs of an 5) The racketeering activity affected interstate commerce. enterprise a. Reves v Ernst & Young (SCOTUS 1993): Co-op started up and sold promissory notes to raise money; the GM had most of the power and was taking loans from the co-op to fund construction of a gasohol plant; he was conv‘d of tax fraud, but before that he convinced the co-op to buy his company. Accounting company (D) valued the plant and found that, if dated correctly, the ownership of the plant saved the co-op from insolvency, but it wasn‘t proactive enough in communicating that information to the board. Co-op went bankrupt. Ct, in holding that the accounting firm could not be liable under § 1962(c) said that ―to conduct‖ requires an element of direction (operation or management), not just participation. i. Note: this opinion applies only to use of RICO as a principal (requires that principals participate in operation/mgmt of the enterprise) ii. Aiding/abetting liability is usually not available in RICO iv. § 1962(d): Conspiring to commit any of the above three violations. 1. Difference between RICO conspiracy and regular conspiracy: in RICO conspiracy there must be an enterprise. b. § 1961 ―Racketeering activity‖ [a pattern of racketeering activity is required] i. (1)(A) State predicates: any act or threat involving murder/kidnapping/gambling/arson/robbery/bribery/ extortion/etc which is chargeable under state law and punishable by imprisonment for more than 1 year ii. (1) (B) Long list of federal predicates, incl. mail fraud, wire fraud, obstruction of investigations, false passport, interference w/commerce, money laundering, fraud etc. iii. The Racketeering Requirement 1. Crimes involved: 9 state crimes, 38 fed‘l categories (hardly an important fed‘l crime not listed) 2. Wording: a. ―Any act or threat involving ...‖ listed offenses b. State crimes must be ―chargeable under state law‖ and ―punishable by imprisonment more than one year‖ i. This includes crimes where D‘s conviction is precluded (i.e. statute of limitations) c. Fed‘l crimes: B, C, E, and F cover ―any act which is indictable ...‖; D covers ―any offense involving ... punishable by fed‘l law‖ 3. Conspiracy as predicate: a. If an enumerated statute has a conspiracy clause w/in it (i.e. Hobbs Act) conspiracy can be charged as a predicate. b. When a conspiracy qualifies as a predicate, the crime that‘s the object of the conspiracy may be used as the other predicate, so a single completed conspiracy can supply both predicates. c. Two conspiracies that qualify as enumerated activity can constitute the two required predicates if they‘re sufficiently separate. 4. Acts for which prior prosecutions exist: d. RICO allows use of predicates that were subj of prior proceedings
III.
When the first prosecution was for a predicate offense and D was acquitted ... i. ... in State court, act can be used as a predicate ii. ... in Fed‘l court, act cannot be used as a predicate f. Subsequent prosecution for a predicate after a D is acquitted of RICO is ok. c. § 1963: Criminal Penalties: max penalty of 20 years in prison for a RICO violation (predicates have lesser penalties) i. Includes forfeiture provision, treble damages, divestiture, reorganization and other equitable measures Elements a. The RICO ―person‖ – charges are not brought against the enterprise, rather only against any ―person‖ with the necessary relationship to the enterprise. i. Person vs Enterprise 1. § 1961(3): a ―person‖ is any individual or entity capable of holding a legal or beneficial interest in prop‘ty. 2. § 1961(4): an ―enterprise‖ can be an individual or legal entity as well as an ass‘n in fact; thus, the person and the enterprise can be legal entities or individuals. ii. Majority view: one cannot associate with oneself (―person associated with an enterprise ...‖), thus the same individual cannot be the person and the enterprise. 1. Distinctness requirement: incorporation is sufficient separation a. Cedric Kushner Promotions Ltd v King (SCOTUS 2001): Don King was president and sole shareholder of a closely held corp‘n accused of RICO (he paid boxers to fake sick and cancel events booked w/P company to attend his events). D said he couldn‘t be charged as the person and enterprise, but the Ct said that the fact that he incorporated (closely held corp‘n) was sufficient to establish the distinctness requirement. A corp‘n and its employees are not legally identical, and if the holding was otherwise, people could shield themselves from liability by incorporating. b. Enterprise: (a) any individual, partnership, corp’n, or ass’n; OR (b) any other legal entity, and any union or group of individuals associated in fact although not a legal entity i. ―Enterprise‖ ∅ refer only to illegitimate enterprises—it covers both legit and illegit enterprises 1. US v Turkette (SCOTUS 1981): D was indicted and charged w/RICO conspiracy (§ 1962(d)) for his participation in a drug, arson, insurance fraud, and bribery ring. He challenged his conviction, saying RICO applied only to legitimate enterprises, and since his enterprise was wholly illegitimate, it didn‘t count. Ct said that (a) and (b) are two separate qualifications, (b) doesn‘t just expand on (a). It wouldn‘t make sense for a statute aimed at organized crime to not be able to reach that crime if there was no connection to legitimate business. ii. A legitimate corp’n doing business through dealerships ∅ constitute an enterprise 1. Fitzgerald v Chrysler Corp. (7th Cir 1997): Ps sued Chrysler under RICO, claiming that it sold warranties it had determined not to enforce. Chrysler challenged this, and Ct agreed, saying that a legitimate company, acting through dealerships does not constitute a RICO enterprise. An employer and employees don‘t constitute a RICO enterprise (too broad); since MFA and WFA are predicates, interpreting the enterprise too broadly makes the statute far too expansive. The organization of D with its dealerships didn‘t help it to perpetrate warranty fraud; the dealers were merely a conduit. iii. Proving the existence of an enterprise 1. Proof not required with existence of corp’n, ass’n, or legal entity; problems of proof arise with associations-in-fact. a. HJ Inc v Northwestern Bell Telephone Co (see infra): Because the alleged enterprise was the Minn Public Utilities Comm‘n, no proof of enterprise was needed. 2. Majority view: a. Proof of ascertainable structure distinct from the pattern of racketeering activity is required. i. US v Bledsoe (8th Cir 1982): Ds were charged w/violating § 1962(c) and (d) re: sale of securities. Ct said that proof of an ascertainable structure distinct from the pattern of racketeering activity was req‘d because RICO‘s primary (not sole) purpose was to prevent organized crime from infiltrating legitimate economic entities. Unless the enterprise element requires proof of a structure separate from the racketeering activity and distinct from the minimal organization req‘d for racketeering, the statute would be too broad. 1. Note: this case may be a legal fiction, helpful only conceptually. b. Elements of an enterprise (from US v Bledsoe, see supra) – majority view i. (1) Common or shared purpose ii. (2) Continuity: the enterprise must function as a continuing unit
e.
Similar to Posner‘s concern in CCE: if one person leaves and the ―enterprise‖ falls apart, is it really an ―enterprise‖? Posner would say it‘s not. iii. (3) Organization: must have an ascertainable structure distinct from that inherent in the conduct of a pattern of racketeering activity. 3. Evidence of division of labor may satisfy this, as well as evidence of some sort of structure for decisionmaking (i.e. consensual, hierarchical, etc.) 3. Minority views: a. Enterprise can be inferred from evidence of a pattern of racketeering activity i. US v Perholtz (DC Cir 1988): an organization is required (not just the same group of people who repeatedly commit predicate offenses) but it‘s appropriate to infer the organization from the pattern. Proof of the enterprise may coalesce with proof of the pattern. b. Pattern of racketeering activity and existence of enterprise may be inferred from the same evidence of predicate acts i. US v Coonan (2d Cir 1991): existence of an association-in-fact is more readily proven by what it does rather than abstract evidence of structure. c. Once the govn‘t has proven the predicate acts/pattern, it‘s not req‘d to bring forth any add‘l evidence to prove separate structure of an enterprise. i. Vice versa: US v Cianci (1st Cir 2004): it‘s only required that those associated in fact function as an ongoing unit and constitute an ongoing organization. iv. Economic motive is not required: 4. Enterprises with ideological goals d. NOW v Scheidler (SCOTUS 1994): [civil RICO case] NOW supports legal availability of abortions, Ds were anti-abortion groups that tried to shut down clinics and convince women not to have abortions. NOW sued the groups under civil RICO saying that Ds were members of a nationwide conspiracy to shut down abortion clinics through a pattern of racketeering activity in violation of the Hobbs Act. Ct held that RICO does not require proof of economic motive; the language ―any enterprise ... the activities of which affect interstate or foreign commerce‖ doesn‘t lead to the inference that an economic motive is req‘d. RICO is, by design, more broad than just as required to go after organized crime. ii. Note: Freedom of Access to Clinic Entrances Act solved this problem. e. Note: RICO may be used against the Klan and other ideological groups. c. The Pattern Requirement: at least 2 distinct acts w/in a 10-year period + continuity + relationship i. Quantitative requirement: at least two distinct acts (one of which occurred after the statute‘s effective date) within a 10-year period (excluding any period of imprisonment) ii. Qualitative requirement: pattern = relationship + continuity (predicates that are related and amount to or pose a threat of continued criminal activity) 1. HJ Inc v Northwestern Bell Telephone Co (SCOTUS 1989): Customers of NW bell filed a civil class action alleging violations of § 1962 (a) through (d), claiming that the state body that determines NW Bell‘s phone rates accepted money to approve higher rates for the phone company (allegation was that the Utilities Comm‘n was the enterprise and NW Bell was the person). The 8th Cir would have required that D was engaged in ―multiple schemes‖ but SCOTUS rejects this requirement. Ct noted that the statute doesn‘t define the pattern, just says that two acts are necessary but not necessarily sufficient; this is just the quantitative aspect of the pattern. Ct says that a threat of continued criminal activity (relationship + continuity) is required; continuity can be proven in one of two ways: (1) with a closed period of repeated conduct OR (2) by past conduct that, by its nature, projects into the future with a threat of repetition. a. Court borrowed the definition of pattern from Title IX (―criminal conduct is a pattern if it embraces crim acts with the same/similar purposes, results, participants, victims, or methods of comm‘n, or otherwise are interrelated by distinguishing characteristics and aren‘t isolated events.‖) d. RICO Conspiracy § 1962(d): it is a substantive offense and separate fed‘l crime to conspire to violate one of the substantive RICO prov‘ns, § 1962 (a), (b), (c). i. No overt act requirement: RICO conspiracy liability is broader than trad‘l conspiracy liability 2. Salinas v US (SCOTUS 1997): D sherriff‘s deputy worked at a county jail with an agreement w/the fed‘l govn‘t that it would house fed‘l prisoners for a stipend and $ to house each prisoner. Sheriff accepted bribes from prisoner to allow him to have contact visits with his wife/girlfriend, Sheriff and Deputy were indicted. Deputy was conv‘d of RICO conspiracy but not substantive RICO charge, and he challenged his conv‘n claiming that he had not committed the overt act req‘d for a conspiracy conv‘n. Ct upheld his conv‘n b/c no overt act is req‘d with RICO conspiracy. 2.
e.
f.
The pattern requirement functions as a de facto overt act requirement. All a conspirator must do is intend to further an endeavor which, if completed, would satisfy all elements of a substantive criminal offense; a D need not agree specifically to commit two predicate acts. RICO Indictment (Scrushy): conspiracy counts seem to overlap with substantive allegations (a way to ‗double up the bets‘) Alleged fatal indictment in MFA count when the govn‘t writes about ―honest and faithful‖ services (b/c the standard is only ―honest svcs‖) Civil RICO § 1964(c) i. Civil RICO allows private civil complaints for treble damages and atty’s fees arising out of violation o the criminal RICO prov’ns (Govn‘t can also proceed civilly against criminal RICO Ds) ii. Standard of proof: preponderance of the evidence. 1. Courts deny Civil RICO suits on the basis of standing, insufficient relation, derivative injuries, and statute of limitations problems. iii. Previous conviction for Criminal RICO not required 1. Sedima, SPRL v Imrex Co, Inv. (SCOTUS 1985): P and D had a joint venture; buyers would order parts through P, D would fill the orders, then P would reimburse D. P believed D was presenting it with inflated bills to cheat it out of its proceeds, so it filed a civil RICO action (mail fraud predicates). Ct App said that previous criminal RICO conv‘n was req‘d for civil RICO action to stand. Ct said that the legislative history didn‘t support this (RICO based on Clayton Act which had a civil suit prov‘n and didn‘t require prior criminal conviction for private civil action to proceed). Text of the statute indicates that conviction must be possible (language of conduct that‘s chargeable/indictable/punishable/subject to criminal sanction) but does not require it. iv. Injury, for standing purposes, is violation of RICO. 1. Sedima, SPRL v Imrex Co, Inv. (see supra): Ct App read a ―racketeering injury‖ requirement into civil RICO, claiming that a civil RICO P had to demonstrate an ―injury ... caused by an activity which RICO was designed to deter.‖ SCOTUS said this was too vague and that Ps have standing under Civil RICO if the D has committed a predicate act. Lower courts can‘t add standing requirements. v. Proximate Cause 1. No Civil RICO where alleged harms is entirely distinct from the RICO violation. a. Anza v. Ideal Steel Supply (US 2006): The Court concluded that the steel supplier could not maintain its claim based on § 1962(c). The supplier's theory was that its competitor's owners harmed it by defrauding the NY tax authority and using the proceeds from the fraud to offer lower prices designed to attract more customers. The RICO violation alleged was that the owners conducted the competitor's affairs through a pattern of MF/WF. The direct victim of such conduct was the State of NY, not the steel supplier. It was the State that was being defrauded and the State that lost tax revenue as a result. The cause of the steel supplier's asserted harms was a set of actions (offering lower prices) entirely distinct from the alleged RICO violation (defrauding the State); there was an absence of proximate causation. The fact that the competitor committed tax fraud did not necessarily mean it would lower its prices. Furthermore, the steel supplier's lost sales could have resulted from factors other than its competitor's alleged tax fraud. The Court declined to consider the §1962(a) claim w/o the benefit of the 2nd Cir proximate causation analysis. b. Hard to reconcile with Kay, which looked past the lurking Prox Cause question i. Arg in Anza: P's loss is the D's gain. ii. Arg in Kay: everyone is deprived of the honest services of the public official. iii. Nature of the H is different. Qualitatively different wrongs. 1. Kay: concerned about public corruption 2. Anza: tax fraud iv. Giffen v. Both like MF cases? Defrauding of gov v. corrupting gov and depriving citizens of honest services. vi. One of these cases is either wrongly decided, or failed to do a good prox cause analysis?? 1. Kay--intent to get more business (by lowering prices) 2. More diffuse/general prox cause Q than in Anza 3. Kay-- No taxes → Lowering of price → someone's gain. Not really looking to where that gain came from. 2. Civil RICO predicated on MF need not show, either as an element of its claim or as a prerequisite to establishing PC, Ps reliance on Ds misrepresentations. a. Bridge v. Phoenix Bond & Indem (US 2008): To avoid a disproportionate sales of the tax liens, each party bidding was required to certify that it ∅ use agents to submit
simultaneous bids on the same parcel, and the bidders alleged that the competitors' certifications were false. The bidders contended that the competitors engaged in a pattern of racketeering based on MF, through mailed notices to property owners, but the competitors argued that bidders did not rely on the alleged misrepresentations to support the RICO. SCOTUS unanimously held that the bidders, in asserting the RICO claim predicated on MF, were not required to show, either as an element of their claim or as a prerequisite to establishing proximate causation, that the bidders relied on the competitors' alleged misrepresentations. A RICO claim based on predicate acts of MF only required use of the mails as a significant part of the alleged pattern of misrepresentations, and reliance by the county was sufficient to support the RICO claim. Further, the bidders could be injured by the pattern of MF through loss of valuable tax liens even if they did not rely on the misrepresentations. b. If the court allows this to proceed, means Civil RICO = a run around the economic loss rule in court. i. Loss of potential economic gains aren't compensable--hasn't been any social loss, not same as if someone suffers physical injury or damage to their property. It's just shifting. ii. Implied K? iii. Duties in good faith.
CORPORATE CRIMINAL L IABILITY 18 USC
I. General a. Vicarious Liability—extension of the civil law doctrine of respondeat superior. b. Unlike strict liability, vicarious liability dispenses with the need for a personal act or omission and requires a mens rea. c. Justification: the need to effect the purposes of public welfare statutes. (See NY Central) i. Imputing individuals crimes to corporations is the only way to effectively enforce statutes and serve public policy. 1. NY Central v. Hudson (): D, a corporation, and its assistant traffic manager were convicted for the payment of rebates upon shipments from the City of NY to the City of Detroit. The Ct affirmed D's conviction, finding that the act of the agent, while exercising authority delegated to him to make rates for transportation, could be controlled, in the interest of public policy, by imputing his act to D and imposing penalties upon D. The Ct held that rebating under the federal statutes was a crime which could have been committed by a corporation. The Ct found there was no good reason why corporations could not be held responsible for and charged with the knowledge and purposes of their agents, acting within the authority conferred upon them. If D had not been found criminally liable merely b/c it was a corporation, many such type of offenses would have gone unpunished. The court found that the statutes against rebates could not be effectually enforced so long as only individuals were subject to punishment for violations of the law when the giving of rebates inured to the benefit of corporations of which the individuals were but the instruments. Elements a. The individual must be acting w/i the scope and nature of his employment. b. The individual must be acting, at least in part, to benefit the corporation. i. Actual benefit is immaterial. ii. Even when such acts are against corporate policy or express instructions (US v. Hilton Hotels) 1. U.S. v. Hilton Hotels (): The court found that the ev was clearly sufficient to establish that D agreed to prefer suppliers who paid contributions over those who did not. The primary purpose and direct effect of D‘s agreement was to bring the combined economic power of the hotels to bear upon those suppliers who failed to pay. The exclusion of uncooperative suppliers from the market was the object of the agreement, not merely its incidental consequence. A corporation was liable for acts of its agents within the scope of their authority even when done against company orders. Thus, the general policy statements of D‘s president were no defense. The purchasing agent exercised complete authority. Even if denial of D‘s motion for a copy of the transcript of witness‘ testimony were treated as tantamount to denying Ds the benefit of the witness' trial testimony, the error, if any, would be harmless. Thus, the court affirmed the ruling. a. What could Hilton have done? Given him less discretion; monitored him more closely; disciplined/fired him. c. The employee's act and intent must be imputed to the corporation. i. ''the only way in which a corporation can act is through the individuals who act on its behalf.‖ (NY Central) ii. ―Flagrant organizational indifference‖ meets the ―willfulness‖ MR requirement 1. US v. Bank of New England (): On several occasions, a customer presented D‘s teller with several checks, payable to cash, for varying amounts under $ 10,000. When added together, the checks exceeded $ 10,000. D‘s teller transferred more than $ 10,000 to the customer. D appealed its 31 convictions of the Currency Transaction Reporting Act, 31 U.S.C.S §5311-22 for its willful failure to file reports of the transactions within 15 days, as required by 31 C.F.R. § 103.22. The Ct affirmed the convictions. The Ct considered the customer's acts a single transaction in currency under § 103.11. D was warned that such transactions triggered the reporting requirement. A jury instruction regarding the pattern of illegal activity was proper as the customer made consistent w/drawals from D, which consistently failed to file the required reports. Each transaction was part of pattern of illegal activity, a felony under 5322(b). The jury instruction regarding willfulness was proper, and evidence of activities after the date in the indictment was admissible under Fed. R. Evid. 404(b) as relevant to D‘s intent. 2. MR for reporting requirement: willfulness a. Knew of reporting requirements and SI to violate them b. Collective K; vicarious L 3. ―Flagrant Organizational Indifference‖: consciously avoiding reporting requirements a. How do you prove this? The organization itself, by not training and monitoring its employees, had intent to violate the statute. Attributing individuals conduct back to organization via RS.
II.
b. c. d.
Shifts what kind of proof is required. Court here thinks no difference b/w flagrant indifference and SI If Corporation → policies so that they won't have enough to form SI, then we need this flagrant indifference theory
PROCEDURAL I SSUES
I. Deferred Prosecution Agreements (DPAs) a. History: used to be rare and used individually for first-time drug dealers. b. Typical compromises on the part of a company to get a DPA: from Stolt-Nielsen, infra i. Potential D must be first to report illegal activity ii. At the time of reporting, the govn‘t doesn‘t have enough evidence on its own to sustain a conviction iii. When the illegal activity is discovered, the company must come forward quickly iv. Company comes forward with total candor, completeness, and cooperation v. Company takes responsibility vi. Company makes restitution vii. Company doesn‘t act unduly unfair to other conspirators/potential Ds. c. A court cannot enjoin the govn’t to enforce a DPA i. Stolt-Nielsen v United States (3d Cir 2006): GC of a shipping company resigns b/c he says he discovered anticompetitive practices and company ignored him. Company hired a fmr DOJ off‘l who specialized in antitrust to do an internal investigation, he seeks protection for the company by enrolling it in the program for leniency. Govn‘t agreed not to charge the firm in exchange for a series of promises (see supra) and noted that if the promises/cond‘ns were violated, the agreement was void. When it came out that the company had continued its anticompetitive practices between the time it went to the DOJ and the time when the DPA was signed, the govn‘t said the company violated the DPA and it was no longer in force. Company sought and rec‘d an injunction forcing the govn‘t to apply the agreement, but the 3d Cir rev‘d, saying that a court can‘t enjoin the govn‘t from enforcing a DPA. Ct said the company can get a preindictment determination of whether the DPA has been breached, and that having to stand trial is not an injury, it‘s part of being a citizen. 1. Note: Ct may have been confusing DPAs and immunity agreements (where D agrees to stand trial); DPAs indicate that no prosecution will be had. d. Overreaching in DPAs i. US v Stein (SDNY 2006): KPMG got in trouble for creating tax shelters, a disastrous hearing was held where KPMG employees (Ds) had to discuss potential tax evasion. KPMG decided to ask those people to leave but agreed (as it commonly did) to pay their atty‘s fees. Govn‘t has a non-mandatory memo that listed factors to consider when deciding whether to prosecute corp‘ns, and the Q of whether they help their employees get out of liability was one of them. Later, another similar memo was made mandatory (effect of this: KPMG couldn‘t pay the attys fees without increasing the likelihood that they would get prosecuted). When KPMG w/drew its agreement to pay attys fees, the Ds filed suit. The Ct held that the firm‘s conduct amounted to state action; KPMG has to pay legal expenses and opens a docket for the Ds where they can sue to compel payment of legal fees. Ds have a right to counsel and once Ds have att‘ys, govn‘t can‘t tinker with that. The mandatory memo (Thompson Memo) was not narrowly tailored. USAs went too far. ii. Now, most DPAs require a monitor to sit in on the business; they are very intrusive. Duplicative Prosecutions a. State + Federal: Dual Sovereignty, Constitutional and Statutory Limits i. Constitutional doctrine that permits successive prosecutions: the "dual sovereignty" limitation on the Double Jeopardy Clause. 1. Bartkus v. Illinois: upheld state prosecution of a D who had been acquitted of the same offense in fed court, rejecting the claim that such successive prosecution = denial of DP under the 14Am. a. Court stated the principle of dual sovereignty, stating that it serves states rights to prosecute state offenses. 2. Abbate v. US: extended Bartkus rationale to the DJ Clause of 5Am, holding that a fed prosecution commenced after a state conviction based on same conduct ∅ a violation of that protection. a. Cites U.S. v. Lanza; says 5Am only applies to federal gov b. But declined to o/r dual sovereignty--federal law enforcement would be hindered. Diff b/w fed & state interests--violation might impinge on one more than other. Change in distribution of powers bad. b. State + State: Single act prosecuted in 2 states ∅ violate Double Jeopardy i. Heath v. Alabama (convictions in two states): Petitioner hired two men to kill his wife. They kidnapped petitioner's wife from her home in Alabama and drove a short distance to Georgia where they killed her. Petitioner was charged with murder in Georgia and pled guilty. He was sentenced to life imprisonment. Alabama charged petitioner with murder during kidnapping, and he was tried, convicted, and sentenced to death despite his protests of double jeopardy. After exhausting his state appeals, petitioner filed a petition for writ of certiorari raising double jeopardy claims, but no due process objections were asserted. The Court granted certiorari limited to the question whether petitioner's Alabama conviction was barred by the double jeopardy clause of the U.S. Const. amend. 5.
II.
III.
Holding: The Court held that a single act constituted an offense against each sovereign whose laws are violated by that act and, accordingly, each state was permitted to prosecute. The judgment of the appellate court, which affirmed the conviction, was affirmed. 2. Reasoning: Dual sovereignty is founded on the CL conception of crime as an offense against the sovereignty of the gov. When a D in a single act violates the "peace and dignity" of 2 sovereigns by breaking the laws of each, he has committed 2 distinct "offenses." (U.S. v. Lanza) a. In applying the DS doctrine, the crucial determination is whether the 2 entities that seek successively to prosecute a D for same action can be termed as separate sovereigns. i. This determination turns on whether the entities draw their authority to punish the offender from distinct sources of power. ii. The states are separate entities w/ respect to USFG b/c each state's power to prosecute is derived from its own "inherent sovereignty", not from USFG. States are no less sovereign w/ respect to each other than w/ respect to USFG. Their powers derive from separate and independent sources of power and authority originally belonging to them and preserved by 10th Am. b. Balancing of interests approach ∅ reconcilable w/ the DS principle. 3. Dissent (Marhsall): The reasoning for exemption from DJ for the federal-state context don't hold for state-state. a. Though the states may have opted for different policies, their interests are identical. This is diff than unique federal interests v. state interests. b. The burden of successive prosecutions can't be justified as the QPQ of dual citizenship. c. Plus, the states cooperated far beyond their initial joint investigation. c. Criminal + Civil: Simultaneous criminal and civil investigations don’t violate Constitution as long as gov’t conduct does not constitute deceit or affirmative misrepresentation i. US v. Stringer: Defendants were investigated by the SEC on alleged civil securities fraud. The SEC coordinated its investigation with the United States Attorney's Office (USAO). The SEC advised them of their 5Am rights and that any information could be used by the SEC or any other agency. The DCt held that the gov had engaged in deceitful conduct, in violation of D‘s DP rights, by simultaneously pursuing civil and criminal investigations of D‘s alleged falsification of the financial records of their high-tech camera sales company. The AppCt found that the gov‘s conduct did not amount to a constitutional violation under either the 4th or 5th Amendments. There was nothing improper about the gov undertaking simultaneous criminal and civil investigations, and nothing in the gov‘s actual conduct of those investigations amounted to deceit or an affirmative misrepresentation that justified the rare sanction of dismissal of criminal charges or suppression of evidence received in the course of the investigations. Plea Bargaining and Substantial Assistance a. Extraordinary reduction must be supported by extraordinary circumstances. i. Saenz I (US v. Saenz) (8th Cir 2005): D was one of several persons driving three vans containing marijuana across the country. Following her arrest she cooperated with the gov, and at sentencing, gov moved to reduce the sentence under U.S. Sentencing Guidelines Manual (USSG) § 5K1.1 and 18 U.S.C.S., § 3553(e), based on her provision of substantial assistance, and recommended a departure of 30 percent, or 19 months, to a final sentence of 44 months of imprisonment. The DCt opined that the gov‘s recommendations were arbitrary and capricious b/c it did not disclose how the reduction was calculated. The DCt granted the equivalent of an 11-level departure under the advisory guidelines, reducing the sentence by 68 percent, to 20 months. CtApp vacated the reduced sentence. D was not a key witness who helped bring to justice a major criminal figure, but was only a corroborating witness, and the degree of reduction was not reasonable in light of the evidence concerning the defendant's assistance, the factors set forth in USSG, and the overall structure and theory of the guidelines. Extraordinary reduction must be supported by extraordinary circumstances. b. The USSG § 5K1.1(a) factors: i. ―The extent of a departure or reduction pursuant to § 5K1.1 or § 3553(e) ‗can be based only on assistancerelated considerations,‘ and our review of a reduction for substantial assistance typically centers on the non-exhaustive list of factors set forth in § 5K1.1, which the district court should consider in making its determination:‖ (Saenz I, supra) 1. the ct‘s evaluation of the significance and usefulness of D‘s assistance, taking into consideration the gov‘s evaluation of the assistance rendered; 2. the truthfulness, completeness, and reliability of any information or testimony provided by D; 3. the nature and extent of D‘s assistance; 4. any injury suffered, or any danger or risk of injury to D or his family resulting from his assistance; 5. the timeliness of D‘s assistance. c. On remand, judge in Saenz II tells AppCt to suck it; finds a new way to reinstate initial decreased sentence i. Saenz II (DCt 2006): After her arrest D immediately cooperated with law enforcement officers by providing info concerning co-conspirators and others and testifying at a co-conspirator's sentencing. D‘s
1.
sentencing range under the U.S. Sentencing Guidelines Manual was calculated to be 63 to 78 months of imprisonment but a sentence of 20 months of imprisonment was imposed based upon findings that D‘s cooperation was exceptionally timely and that D provided complete and truthful information to the gov. Upon resentencing, the DCt first noted its disagreement with the AppCt‘s presumption that a 50% reduction for substantial assistance under § 5K1.1 was extraordinary as a matter of law, and the court indicated that its disagreement was supported by new statistical evidence and findings of the U.S. Sentencing Commission. The Ct then held that, esp in view of new ev that D was harassed and threatened while in pretrial confinement based upon her cooperation, D‘s original sentence of 20 months imprisonment was appropriate based on D‘s extraordinary and substantial assistance.