Archive for May, 2011

Dual SEC and DOJ Agreements in FCPA Settlement

Posted on May 17th, 2011 by Eryn Karpinski Hoerster

Tenaris, S.A., a publicly traded corporation headquartered in Luxembourg with operations in 12 countries through 17 subsidiaries, today entered into separate agreements with the SEC Division of Enforcement and the DOJ’s Criminal Division for alleged violations of the Foreign Corrupt Practices Act (FCPA) and the Securities Exchange Act of 1934.  Although it must have been a bitter pill to swallow (totaling $9.9 million in disgorgement and criminal penalties), the company has agreed to provide full cooperation to the U.S. government in exchange for no criminal or civil sanctions.  From the attorney’s perspective, this case highlights the enormous tool-kit available to federal prosecutors across agencies, and the challenges facing companies who must negotiate with each of them in order to achieve the finality of a global settlement.     (more…)

Update on Stevens Dismissal: Questions on Discovery Rulings

Posted on May 11th, 2011 by Eryn Karpinski Hoerster

One of the remarkable things about the Stevens criminal indictment was the volume of attorney-client privileged material that comprised the evidence presented at trial.  While Judge Titus qualified his criticism of a District of Massachusetts Magistrate Judge’s order requiring these documents to be produced by noting that his opinion was “with the 20/20 vision of hindsight,” he found himself resolving that Crime-Fraud Exception was erroneously applied.   This left us wondering, why did the Magistrate Judge have the last word on the production of documents that eventually led to the indictment of Lauren Stevens?  Could this entire trial have been avoided had the discovery order been overturned? (more…)

District of Maryland Judge Dismisses Charges Against Glaxo Lawyer Lauren Stevens

Posted on May 10th, 2011 by Eryn Karpinski Hoerster

On Tuesday, Hon. Roger W. Titus of the District of Maryland granted defendant Lauren Stevens’ Rule 29 Motion for Judgment, acquitting her of all six charges  brought against her.  The opinion is notable as a hindsight analysis of the crime-fraud exception to the attorney-client privilege, the statutory safe harbor for advice of counsel in obstruction cases, and yet another example of good faith winning the day.  For attorneys, the opinion is also a ringing endorsement for zealous advocacy.  (more…)

Ninth Circuit Upholds a Post-Skilling Honest Services Fraud Case

Posted on May 4th, 2011 by Sam Kauffman

On April 13, 2011, the Ninth Circuit Court of Appeals upheld an “honest services” fraud conviction where the government also argued and submitted an alternative theory that the defendant had deprived the victims of “money and property.” In U.S. v. Pelisamen the defendant was accused, along with his former lawyer, of removing funds from his grandmother’s estate, of which he was the administrator.  The government charged both Pelisamen and the former lawyer with, among other things, wire fraud in violation of 18 U.S.C. § 1343.  The indictment specified that such wire fraud was for the purposes of “obtaining money and property.” The indictment did not mention 18 U.S.C. § 1346, which provides that the behavior punishable under § 1343 includes a scheme or artifice “to deprive another of the intangible right of honest services” (at issue in Skilling).  The district judge however instructed the jury that it could convict Pelisamen if it found that he had either (1) “defrauded the heirs of the Estate of Rita Kaipat,” or (2) “deprived the heirs . . . of their right to honest services,” or (3) done both.

Because Pelisamen did not object to the jury instruction (Skillingwas decided after the trial), the Court engaged in a plain error analysis.  The panel concluded that because there were no bribes or kickbacks alleged, the incorporation of honest-services fraud into the jury instructions and jury verdict form was plainly erroneous under Skilling. However, the Court held that Pelisman was not prejudiced by the error because the jury had convicted on both of the government’s alternative theories. Therefore, the conviction was based on a valid “money or property” theory of wire fraud.