Source: https://www.pbwt.com/second-circuit-blog/category/white-collar-crime/
Timestamp: 2019-05-26 18:16:19
Document Index: 621749106

Matched Legal Cases: ['§ 802', '§ 812', '§ 802', '§ 2751', '§ 201', '§ 201', '§ 1341', '§ 1951', '§ 1519']

White Collar Crime | Second Circuit Criminal Law Blog
Gupta Summary Order Republished As Opinion
by Harry Sandick and Stephanie Teplin on January 11, 2019
Earlier this week, we discussed the Second Circuit’s summary order in the insider trading appeal by Rajat Gupta. Gupta was convicted in SDNY as part of the string of successful prosecutions brought during the tenure of U.S. Attorney Preet Bharara. The summary order affirmed the denial of Gupta’s 2255 petition, thereby leaving in place his conviction. The Second Circuit, without explanation, has withdrawn the summary order and published the same decision as a per curiam opinion. Other than the correction of minor typos, there appear to be no changes in the Court’s ruling. A link to the published opinion is here.
Court Clarifies Knowledge Standard Required for Analogue Act Conviction
by Clinton W. Morrison and Harry Sandick on November 2, 2018
In United States v. Demott, No. 13-3410 (2d Cir. Oct. 9, 2018) (Leval, Pooler, Wesley), the Second Circuit vacated two convictions under the Controlled Substance Analogue Enforcement Act of 1986 (the "Analogue Act"), 21 U.S.C. § 802(32)(A), 813, due to errors in the district court’s jury instructions relating to the statute’s knowledge element. The Court also found error in the admission of certain hearsay testimony by a case agent about the underlying investigation. The defendants in Demott were convicted of participating in a conspiracy to distribute two different synthetic “designer drugs” substantially similar to the listed controlled substance MDMA. The defendants were thus prosecuted under the Analogue Act, which functions as a catch-all statute to enable prosecutions of crimes involving drugs that are substantially similar to drugs already listed in the schedule set forth in the Controlled Substances Act (“CSA”), 21 U.S.C. § 812. See id. §§ 802(32)(A), 813.
Notable Insider Trading Decision Affirmed, Despite Asserted “Personal Benefit” Error
by Harry Sandick on October 26, 2018
In a short summary order issued on October 25, 2018, the Second Circuit (Newman, Lynch, Droney) affirmed the denial of a habeas petition in the case of Whitman v. United States. This case could have given the Second Circuit an opportunity to address again a complicated area of insider trading law, but the Court instead rejected the appeal based on procedural grounds, holding that procedural default prevented the district court from granting the petition.
Second Circuit Limits Reach of FCPA to Persons Present in the United States
by Stephanie Teplin and Harry Sandick on August 31, 2018
In an important decision issued on August 24, the Second Circuit limited the reach of the Foreign Corrupt Practices Act (“FCPA”) by holding that theories of conspiracy or complicity cannot be used to charge non-U.S. citizens who do not work for an American business and whose furtherance of corrupt schemes takes place outside the United States. Judge Pooler wrote the majority decision in United States v. Hoskins, No. 16-1010, and Judge Wesley authored a concurring opinion. This decision is notable because FCPA cases are rarely litigated because the stakes are ordinarily too high for corporations to challenge the government’s theory of liability in court, and individual prosecutions are rare. Hoskins is also particularly interesting because it appears to contradict the DOJ and SEC’s own interpretation of the FCPA, as set out in the FCPA resource guide.
by Stephanie Teplin and Harry Sandick on June 5, 2018
Second Circuit Affirms Constitutionality of Arms Export Control Act
by Harry Sandick on May 8, 2018
In United States v. Mark Henry, the Second Circuit (Jacobs, Cabranes, and Wesley, Js.) affirmed that the Arms Export Control Act (“AECA”), 22 U.S.C. § 2751 et seq., does not constitute an unconstitutional delegation of legislative authority to the executive branch, in addition to addressing various issues of trial procedure. The defendant, Mark Henry, appealed his 2014 conviction following a jury trial of violating and attempting to violate the AECA by exporting “ablative materials”—military-grade technology used in rockets and missiles—and microwave amplifiers to customers in Taiwan and China. The AECA prohibits the exportation of ablative materials, microwave amplifiers, and other “defense articles” except pursuant to a license issued by the Directorate of Defense Trade Controls, a division of the U.S. Department of State. The government presented evidence at trial that the defendant was aware of the need for an export license, that he did not have such a license, and that instead of acquiring a license the defendant took steps to conceal his exportation of restricted materials through the use of intermediaries, fictitious companies, and falsified documents, among other things. The court allowed the defendant, who is from China and primarily speaks Mandarin, to testify at trial in English through the help of a standby interpreter, although the court otherwise required a translator to assist the defendant throughout the trial.
by Clinton W. Morrison and Harry Sandick on February 8, 2018
Court Declines to Revisit Reversal of LIBOR Convictions
by D. Brandon Trice and Harry Sandick on November 13, 2017
The Second Circuit has denied the government’s request for rehearing en banc in United States v. Allen, et al. (16-cr-98).
by Harry Sandick on August 25, 2017
by Jason Vitullo and Harry Sandick on July 26, 2017
The Chiclets and Runts vending machine at your local car repair shop last decade may have been one piece of a fraudulent enterprise that ensnarled roughly 7,000 victims. As CEO of Vendstar, Defendant Edward (“Ned”) Weaver directed a scheme that enticed victims to make substantial up-front investments in quarter-slot candy dispensers with false promises of significant returns—even hundreds of a dollars a day. Despite assurances that this “home-based vending business” had “little risk,” many customers lost their entire investment.[1]
In United States v. Weaver, 16-3861 (June 21, 2017) (Newman, Cabranes, Lynch), the Court held in a per curiam order that contractual disclaimers signed by victims of Weaver’s fraud did not render the fraudulent statements “immaterial” as a matter of law and negate criminal liability.
by Elena Steiger Reich and Harry Sandick on July 24, 2017
by Elena Steiger Reich and Harry Sandick on July 19, 2017
On July 19, 2017, in United States v. Allen, et al. (16-cr-98) (Cabranes, Pooler, Lynch), the Second Circuit issued a decision reversing the convictions of defendants Anthony Allen and Anthony Conti for wire fraud and conspiracy to commit wire fraud and bank fraud. This was the first federal criminal appeal in connection with the London Interbank Offered Rated (“LIBOR”) prosecutions, which involved allegations that various individuals and banks manipulated the LIBOR.
by Harry Sandick on July 17, 2017
Silver Conviction Vacated Due To Jury Instructions
by Harry Sandick on July 13, 2017
This morning the Second Circuit (Cabranes, Wesley, Sessions, D.J.) released an opinion vacating the conviction of Sheldon Silver and remanding the case to the district court for further proceedings including a retrial. The Second Circuit concluded that the evidence of guilt was sufficient to permit a retrial, but found that the jury instructions did not comport with the Supreme Court’s McDonnell decision and that the error was not harmless. The panel took no joy in rendering its decision, observing that “many would view the facts adduced at Silver’s trial with distaste.” Nor did the panel blame either the district court or the government for today’s reversal, recognizing that the McDonnell decision—which changed the law of the Circuit—was issued after the Silver trial had concluded. Nevertheless, the panel felt itself compelled by McDonnell and the facts of the case to decide the matter as it did.
Honest Services Fraud Conviction Upheld Despite Error In Jury Instructions
by Harry Sandick on July 12, 2017
On July 10, 2017, in United States v. Boyland, No. 15-3118 (Kearse, Walker, Hall), the Second Circuit affirmed the conviction of former New York State Assembly member William F. Boyland, Jr. on twenty-one counts of public corruption offenses, including eleven counts of honest services fraud. Many of these counts involved determining that the benefits Boyland offered in exchange for bribes amounted to “official acts” under 18 U.S.C. § 201, the federal bribery statute prohibiting public officials from “being influenced in the performance of any official act.” Id. § 201(b)(2)(A). The U.S. Supreme Court recently narrowed the definition of this term in McDonnell v. United States, 136 S. Ct. 2355 (2016), which led the government to concede in Boyland’s appeal that the trial court’s jury instructions on the meaning of “official act” were in part erroneous. The Second Circuit, however, determined on plain error review that the error did not affect Boyland’s “substantial rights” and thus affirmed his convictions. This decision may prove problematic for other high-profile former elected officials whose appeals are currently pending before the Second Circuit.
by Helen P. O'Reilly and Harry Sandick on November 29, 2016
by Joshua Kipnees and Harry Sandick on September 23, 2016
The line that separates lawful tax shelters from unlawful ones is notoriously hazy, particularly at the margins. There is little question, however, that a transaction that serves no meaningful business purpose other than to reduce one’s tax liability will be treated as an illegitimate tax shelter.
Second Circuit Affirms Bribery Conviction of Former Mayor of Spring Valley, New York
by Harry Sandick on August 29, 2016
In United States v. Noramie Jasmin, 15-2546-cr, a Second Circuit panel (Walker, J., Cabranes, J. and Lohier, J.), affirmed by summary order the bribery conviction of Noramie Jasmin, a former mayor and trustee of the Village of Spring Valley, New York, a town in Rockland County, New York. Jasmin was convicted of participating in a scheme to obtain financial benefits for herself in exchange for exercising her official powers to facilitate the construction of a community center. Jasmin appealed from a conviction of one count of mail fraud in violation of 18 U.S.C. §§ 1341 & 1346, and one count of Hobbs Act extortion in violation of 18 U.S.C. § 1951, and her sentence of four years imprisonment.
by Harry Sandick on July 7, 2016
In United States v. Rivernider, 13-4865, the Court (Livingston, J., Lynch, J. and Rakoff, D.J., sitting by designation) affirmed the judgment entered by the United States District Court for the District of Connecticut (Chatigny, J.) against two defendants, Robert Rivernider and Robert Ponte. The defendants pled guilty and were sentenced for multiple counts of wire fraud, conspiracy to commit wire fraud, and tax evasion stemming from a Ponzi scheme and real estate scheme the two ran together.
In United States v. Bouchard, 14-4156, the Court (Parker, J., Lynch, J., and Lohier, J.) reversed the conviction of defendant Michael Bouchard after finding that the Government’s evidence only showed that Bouchard had made false statements in order to defraud BNC Mortgage (“BNC”), a mortgage lender that did not fall within the Title 18 definition of a “federally insured financial institution” or “bank” as would be required by statute for a conviction.
Second Circuit Reaffirms The Right of A Corporation To Impose Consequences On Employees Who Do Not Cooperate With Internal Investigations
by Stephanie Teplin and Harry Sandick on June 22, 2016
In Gilman v. Marsh & McLennan Cos., No. 15-0603-cv (Kearse, Winter, Jacobs), the Second Circuit held that a corporation can fire an employee for cause if the employee refuses to participate in an internal investigation of the company’s possible criminal wrongdoing. Masquerading as an employment dispute, the decision could have important consequences for how a corporation and its employees handle internal investigations when there is the potential for criminal prosecution.
by Harry Sandick on June 22, 2016
In United States v. Rowland, No. 15-985, the Second Circuit (Winter, Chin, Carney) rejected challenges by former governor of Connecticut John Rowland to both his conviction and sentence on seven counts of violating campaign finance laws and falsifying records. In so doing, the panel issued an important decision regarding the interpretation of 18 U.S.C. § 1519, a provision of the Sarbanes-Oxley Act, which prohibits the falsification of documents for the purpose of misleading government investigators. The Rowland decision tacks in a different direction from the Supreme Court’s recent decision in Yates v. United States, 135 S. Ct. 1074 (2015), in which the Court narrowed the reach of this statute by adopting an interpretation rooted in the statute’s purpose. Rowland, by contrast, seems to take a broader approach.
En Banc Ruling Avoids Complicated Fourth Amendment Question
by Elena Steiger Reich and Harry Sandick on June 1, 2016
In United States v. Stavros Ganias, 12-240, the Second Circuit, in a rare en banc ruling jointly written by Judges Livingston and Lynch, sidestepped a complicated Fourth Amendment issue related to the government’s retention of files from a hard drive outside the scope of a warrant, and instead affirmed the defendant’s conviction on the ground that, regardless of whether there was a Fourth Amendment violation, the government reasonably relied in good faith on a later warrant to search those files. The en banc holding reversed the decision of a divided Second Circuit panel that came down nearly a year ago, which reversed the district court’s denial of the motion to suppress and vacated the judgment of conviction. All of the judges on the Court, except for Judge Chin, either joined in the opinion or concurred in the result. The novel and important question raised in this appeal—whether the government can retain electronic files collected pursuant to a search warrant and later search those files for a separate purpose, pursuant to a second search warrant—will need to be addressed in another case or by Congress.
Release of Right to Bring Qui Tam Action Not Enforceable If Government Had No Other Way To Learn About the Violation
by Elena Steiger Reich and Harry Sandick on May 26, 2016
In USA ex rel. v. Exelis, Inc. (14-4155), the Second Circuit (Kearse, Pooler, Droney) held that the right to bring a qui tam suit on behalf of the federal government can be contractually released, but that such a release is unenforceable as against public policy where the government did not have knowledge of the allegations of fraud before the release was signed. The decision complicates somewhat the process of negotiating binding releases with employees at companies that are engaged in government contracting work. That said, such releases still have value to employers and will often be enforceable because in many cases the government will have knowledge of the fraud allegations before the release is signed.
A Summons to Collect a Tax Penalty Is Proper When the IRS’s Criminal Referral Has Been Terminated
by Harry Sandick on May 20, 2016
In Haber v. United States of America, No. 15-2078, the Court (Calabresi, J., Lynch, J., and Lohier, J.) considered and rejected petitioner James Haber’s challenges to an administrative summons issued by the IRS. Among his other challenges, Haber contended that the summons was improper because a criminal referral to the DOJ was still in effect. The Court rejected this argument and Haber’s suggestion that the Government must use precise language to terminate a criminal referral. Instead, the Court took a common-sense view of the evidence and concluded that the DOJ had indeed terminated its investigation of the IRS’s criminal referral, and so the administrative summons was properly issued. DOJ need not use any particular words to declare the termination of the investigation; it need only be clear from the record that the investigation has ended.
by Harry Sandick on May 17, 2016
In United States v. Kent, 14-2082, 14-2874, the Court (Livingston, J., Hall, J., and Hellerstein, J. sitting by designation), the Court vacated the sentence imposed by the United States District Court for the Southern District of New York (Forrest, J.) and held that the record was insufficient to impose Guidelines Section 3B1.1(a)’s leadership enhancement. Section 3B1.1 provides for a four-level increase in offense level if the defendant “was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” In Kent, the Court restated that the “otherwise extensive” prong of this enhancement is not meant to be a qualitative assessment of whether the crime was serious, but rather involves a quantitative question about the number of criminally responsible and unknowing participants in the offense. Because the district court did not conduct the required analysis, the Court of Appeals reversed and remanded the case.
Cassye M. Cole