White Collar Crime

with Katrice Bridges-Copeland

“Federal White Collar Crime – Cases and Materials,” 5th Edition by Julie O’Sullivan

Table of Contents

DEFINING “WHITE COLLAR CRIME” 3

GOVERNMENT INVESTIGATIONS, OBSTRUCTION, AND LAUREN STEVENS HYPO 6

MENS REA 7
PUBLIC WELFARE DOCTRINE 8
“KNOWING” AND “WILLFUL” 11
MENS REA DOCTRINES AND DEFENSES 13

CORPORATE ENTITY LIABILITY 14

“WITHIN THE SCOPE OF EMPLOYMENT” 15
“INTENT TO BENEFIT THE CORPORATION” 15
CONDUCT CONTRARY TO CORPORATE POLICY OR ORDERS 16
AGGREGATED MENS REA 16
CHARGING GUIDELINES 17

PERJURY 21
DEFENSES 23

FALSE STATEMENTS 25
DEFENSES 29

FALSE CLAIMS 30
CRIMINAL FALSE CLAIMS ACTS - § 287 30
CIVIL CASES – QUI TAM LITIGATION 31

OBSTRUCTION OF JUSTICE 34
§ 1503 - OMNIBUS CLAUSE 34
18 U.S.C. § 1505 – OBSTRUCTION OF FEDERAL AGENCY AND CONGRESSIONAL PROCEEDINGS 38
18 U.S.C. § 1512 - WITNESS TAMPERING AND DESTRUCTION OF EVIDENCE 39
AFFIRMATIVE DEFENSES 42

MAIL AND WIRE FRAUD 42

COMMONLY APPLICABLE CONCEPTS FOR MAIL, WIRE, AND BANK FRAUD 43
MAIL FRAUD 50

CONSPIRACY 51
GENERALLY 51
“OFFENSE” VS. “DEFRAUD” 53
DEFENSES TO LIABILITY 56
MENS REA 57
AGREEMENT 57
OVERT ACT 58
SCOPE AND KIND OF CONSPIRACY 58
PINKERTON LIABILITY 60

HEALTH CARE FRAUD 61

ANTI-KICKBACK STATUTE (AKS) 62
“REMUNERATION” 63
ONE-PURPOSE TEST 63
REFERRAL REQUIREMENT 64
STATUTORY EXEMPTIONS AND SAFE HARBORS 64
HEALTH CARE FRAUD AND FALSE CLAIMS ACT CASES 66

GRAND JURIES 67
ADVISING A GRAND JURY WITNESS 68
GRAND JURY SECRECY - FED. R. CRIM. P. 6(E)(2) 70
“MATTERS OCCURRING BEFORE THE GRAND JURY” 70
GRAND JURY SUBPOEANAS 71

DISCOVERY ISSUES 73
SOURCES OF DISCOVERY AT DIFFERENT STAGES 73
DETOUR – MOTION PRACTICE 74
BRADY MATERIAL 74
JENCKS MATERIAL 75

THE FIFTH AMENDMENT PRIVILEGE 76

IMMUNITY 76
PROFFERS 79
DOCUMENTS AND THE FIFTH AMENDMENT 81

CORPORATE PRIVILEGES 85
ATTORNEY CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE 85
WAIVER 88

PARALLEL PROCEEDINGS 91
CONSTITUTIONALITY 92
DISCOVERY AND CHALLENGING PARALLEL PROCEEDINGS 92
FIFTH AMENDMENT WAIVER AND ADVERSE INFERENCES 93

JOINT REPRESENTATION 97
PROFESSIONAL RULES 97
CONSTITUTIONAL ISSUES 98
SIXTH AMENDMENT WAIVER 101
PRACTICAL ISSUES 101

Defining “White Collar Crime”

 What is the best way to identify white collar crime?
o The acts or types of offense? Or the actor or type of offender?
 Actor – Sutherland’s original characterization of WCC was any crime
“committed by a person of respectability and high social status in the
course of [their] occupation”
 DOJ/Author definition based on acts –
 WCC is not dependent on the social status of actor, any person
can commit it
 “White-collar offenses shall constitute those classes of non-
violent illegal activities which principally involve traditional
notions of deceit, deception, concealment, manipulation,
breach of trust, subterfuge or illegal circumvention”
o non-violent – not street crimes, but could still result in
physical harm to persons or threats to health(e.g.
environmental crimes)
 But there is often an abuse of some power or position of trust
that the person has by virtue of their occupation, like
Sutherland’s definition
o Location of deviant behavior?
o Modus Operandi?
o Relationship between victim and offender?
 Characteristics of WCC
o Non-violent
o Not professional criminals
o Deception/deceit involved
o Abuse of position of power
o Committed for monetary gain
o Impact on organizations and institutions
 Why do we care?
o Huge financial losses to federal, state, local govs, orgs, and people
o Public Health and Safety
o Social Morale
 Criminalization
o Criminal law’s uniqueness stems from its invocation of society’s harshest
sanctions – jail time/deprivation of liberty
o The viability of sanctions/punishment is dependent on
 Careful definitions – criminal standards should be clear to provide
notice
  Procedural safeguards – adjudication of guilt must be fair or society
will lose faith in the punishment
o Overcriminalization
 There is no Federal Criminal Code - only a hodge-podge, swirling
morass of laws that no one can really quantify, which overlap, conflict,
repeat, changes based on political whims, provide no notice, and
basically totally sucks (paraphrasing, but only just)
 White Collar Criminal Practice
o The specific practice area really didn’t emerge until the 1970s, but rapidly
expanded throughout the next few decades
o Unique Attributes
 Complexity and scope – WCC prosecutions are usually extremely
complex, can cross multiple jurisdictions, involve large numbers of
offenders
 Investigation – Grand juries, warrants, and wire taps are increasingly
used by the government to investigate alleged wrongdoing.
Subpoenas lead to documents productions, which may yield info that
leads to more subpoenas.
 Role of Defense Counsel – WCC prosecutions are usually said to be
won or lost at the indictment. Defense counsel needs to control access
to information, and plays a critical role in striking a deal in many cases
(given how often cases setlle/plea out. May have concerns other than
legal – such as political or commercial concerns
o Prosecutorial Discretion
 May opt instead for “Deferred Prosecution” (“DPA”) or a “Non-
Prosecution Agreement” (“NPA”) – if the corporation cooperates with
the gov’s investigation and prosecution of individual wrongdoers, the
gov will dismiss or forego charging the organization
 Some say that the government has pressed this advantage too
far – inappropriately squeezing out privileged information
 Parallel proceedings – a serious area of concern – proceedings in one
forum may impact other proceedings through, e.g., estoppel
 There may be multiple avenues for redress of issues
o Professional Responsibility
 Federal prosecutors have a professional duty to “do justice” (Berger v.
United States (1935)
 “The United States Attorney is the representative not of an
ordinary party to a controversy, but of a sovereignty whose
obligation to govern impartially is as compelling as its
obligation to govern at all; and whose interest, therefore, in a
criminal prosecution in not that it shall win a case, but that
justice shall be done.”
 What does it mean to see that “justice shall be done”?
 Only prosecutors have this special duty beyond zealously
representing their client
  State and local rules may also constrain the conduct of federal
prosecutors, including
 Stages of White Collar Criminal Litigation
o Pre-Indictment (where all of the action is – defense attorney’s job is to
avoid an indictment)
 Pre-Indictment Strategy
 Subpoena Received
o Negotiate over scope
o Preserve docs (avoid confusion)
o Is gov. pursuing parallel proceedings?
o Conduct internal investigation (if client is corp.)
 Internal Investigation
o Discuss attorney-client privilege?
 Waive privilege to cooperate?
o What docs do you want to see?
o Who do you want to interview?
 Post-Investigation
o Now what?
 Write up or verbally report findings?
 Possible charges? Defenses to charges?
 Make report to government? What about
privilege?
 Prepare a white paper to convince government
not to indict (remember, top priority is avoiding
indictment)
 Enter plea deal or fight charges?
 Grand Jury
o Seek immunity for client?
o If no immunity, waive or assert 5th Am privilege?
o What is there is a parallel proceeding?
o When do you assert privilege?
o Indictment
 Post Indictment
 Pre trial discovery
o Trial
 Trial Strategy
 Seek Jencks material? (government witness statements)
 Rule 17 Trial Subpoena
 Testify at trial? What are the risks? Or assert 5th Am priv
o Sentencing
o Appeal
 Defense Counsel Role
o Avoid indictment
o How do you do that?
 o Can you go too far? (Laura Stevens hot topic)
o Why do you want to avoid an indictment?
 Collateral consequences of indictment to the client
 Civil restrictions might be imposed
 If indicted, you can lose gov. contracts
 Low standard of liability for corporations – so you’ll probably lose
o Ways to avoid indictment
 Information control – keep docs away from gov, prevent witnesses
from talking to gov, fight subpoenas, suppress discovery, read
subpoenas narrowly
 Substantive defense
 Vast client resources/client sophistication
 But you have to know when to fold, or know where the line is

Government Investigations, Obstruction, and Lauren Stevens Hypo

o Government Investigations:
o Usually begin with informal request for testimony and/or docs from
witnesses
o If gov is unhappy with level of cooperation (or lack thereof) gov seeks
permission to conduct formal investigation
o If agency decides there has been a law broken, there are four options
 Hold an administrative hearing
 Settle
 Proceed Civilly and get money damages
 Refer to the DOJ to proceed criminally
o How is a DOJ investigation triggered?
 Referral from gov agency
 Tips from competitors, whistleblowers, and public leads
 Through it’s own investigative efforts (FBI)
 Sweep of entire industry based on findings of improper practices at
one or more other companies
 Voluntary disclosure by listed company
o DOJ Investigative Power
 Obtain warrants to monitor telephones or conduct searches
 Convene a Grand Jury (principal method) (can take YEARS)
 Subpoena for documents and witness testimony
 Witness held in contempt if the fail to comply = jail setnece
and/or fines
 Fail to produce evidence = government obtains warrant and
seize evidence itself
o After Investigation
 Filing of a criminal indictment or information in federal court
 
DOJ may file charges and enter a deferred prosecution agreement
(DPA) (lots of restrictions, as long as you follow them gov won’t
prosecute) or Non-Prosecution Agreement (NPA) (gov. promises not
to prosecute)
 DOJ may also decline to prosecute
o Lauren Stevens
o Why did the government go after the lawyer?
 Discourage similar conduct among other lawyers/GCs
 Might not have had enough evidence against GSK, but did have enough
info to go after LS
 Political pressure to have SOMETHING come out of an 8 year
investigation
o The Ethical Issues:
 As an advocate, a lawyer must zealously represent their client
 A lawyer shall not bring or defend a proceeding, or assert or
controvert an issue therein, unless there is a basis in law and fact for
doing so that is not frivolous, which includes a good faith argument
for extending the law
 A lawyer shall not unlawfully obstruct another party’s access to
evidence or unlawfully alter, destroy, or conceal a document or other
material having potential evidentiary value, or counsel or assist
another person to do any such act
 A lawyer shall not, in pretrial procedure, make a frivolous discovery
request or fail to make reasonably diligent effort to comply with a
legally proper discovery request
 In the course of representing a client a lawyer shall not knowingly:
 Make a false statement of material fact or law to a third person
 Fail to disclose a material fact to a third person when
disclosure is necessary to avoid assisting a criminal or
fraudulent act by a client, unless disclosure is prohibited

Mens Rea
 Mens Rea Spectrum
o Strict Liability
o Negligent
o Reckless
o Knowledge/knowing
o Willful/purposefully
 Sometimes the legislature may impose different levels of mens rea for different
elements
 MENS REA SPECTRUM – “Knowing” and “willful”
o Knowledge (general fact) – “know” sufficient facts to put defendant on notice
of likely regulation (public welfare)
o Knowledge (specific facts) – “know” specific facts giving rise to liability
 o Knowledge (mixed q of law and fact) – “know” that the specific facts at issue
put one in violation of regulation
o Willful: General Law – “willfully” violates the law because the defendant
knows that his conduct is general bad or unlawful, but not that his conduct
violates a specific criminal law
o Willful: Specific Law (Super Mens Rea) – “willfully” violate the law because
the defendant knows that his conduct violates a specific legal requirement
 Tax code, Ratzlaf
 General Rule: “Ignorance of the law is no excuse”
o Holmes – liberal positivism – because content of the law can be identified
without reference to morality, there is no excuse for not learning and
following the law
o Kahan – legal moralism – because the law is suffused with morality but it can
only embody morality imperfectly, someone who finds and exploits the gap
between what is immoral/illegal and what is immoral/illegal should not be
excused
o In the anti-Holmesian view – the moral content to the law or regulation is
important in determining whether ignorance of the law should be excused
 If highly moral, no ignorance of law
 If not morally-based, ignorance of law defense OK
 “Applying criminal sanctions to morally neutral conduct is both unjust
and counterproductive. It unfairly brands defendants as criminals,
weakens the moral authority of the sanction, and ultimately renders
the penalty ineffective”
 WHEN should “ignorance of the law be an excuse?
o Malum prohibitum crimes? - the acts are wrong because they are prohibited
by law
 Malum in Se – the acts are wrong independent of the law
o Accessibility of legal standards?
o Individuals subject to regulation? (corporation vs. food stamp recipient)
o Moral evaluation?

Public Welfare Doctrine

o Usually, public welfare offenses have low penalties – usually
misdemeanors and fines (contra Staples)
o Statute designed to protect the public from substantial harm? Or is it
regulating widespread or common “innocent” activity?
o Who should bear the risk of error? The actor or the public? Should the risk of
error be enforced criminally? Is the line between criminal & non-criminal
conduct clear?
o Is the violation a misdemeanor or a felony
o If it is designed to protect the public and a misdemeanor, the court is likely to
say knowledge of the law is not necessary even if regulation says “knowingly
violate”
o International Minerals is usually cited as the foundation of the “public
welfare” line of cases
 When reading a statute that does not have an explicit mens rea
requirement, or where it is ambiguous, courts will impute to congress
the intent to impose a lower mens rea requirement (or strict/stricter
liability) when there are dangerous or deleterious devices or products
or obnoxious waste materials
o United States v. International Minerals & Chemical Corp.
 Facts: D shipped chemicals in interstate commerce, failed to make the
required classification on shipping papers, in violation of federal
regulation. Statute requires that any person who “knowingly violates
any such regulation” shall be fined or imprisoned.
 Rule: “Where dangerous or deleterious devices or products or
obnoxious waste materials are involved, the probability of
regulation is so great that anyone who is aware that he is in
possession of them or dealing with them must be presumed to be
aware of the regulation”
 Generally, a criminal statute must indicate that it is departing from the
adage “ignorance of the law is no excuse”
 Congress has some discretion in applying the reach of mens rea in a
given prohibition
 The court says it is NOT strict liability, because they have to have
knowledge of shipment of dangerous materials is required –
“knowledge” applies to factual circumstances underlying the violation
o If a rule is ambiguous and legislative history, statutory context, and structure
lead us nowhere, what rule should the court use?
o Rule of Lenity – If the statute is ambiguous, resolve the ambiguity in favor of
the defendant
 Fair notice – people should have opportunity to know the law before
they are charged with violating it
 But this rule and others are inconsistently applied
o What does a person have to “know” – that they are engaging in the conduct
generally? Or do they have to know each specific thing that makes the
conduct criminal?
 Most courts agree that rigorous proof is not needed, that only
some factual knowledge is necessary, no strict liability
o Rationale for the Public Welfare Doctrine
 Shifts the risk of dangerous activity to those best able to prevent a
mishap
 Assures uniform treatment of particular, high risk conduct
 By dictating what is per se unreasonable, juries cannot
reassess reasonableness given the itty bitty facts of each case
 Eases the burden on prosecution to prove intent in difficult cases
  The risk that it is not the case is outweighed by the public need for
safety and of speedy prosecutions (e.g. traffic accidents and speeding,
presumption is that speeders are negligent)
o Staples v. United States
 Fully automatic weapons are “firearms” under the NFA, and must be
registered. Possessing an unregistered firearm is felony crime
punishable by up to 10 years in prison. Defendant was found with a
modified, automatic AR-15. Defendant argued that he did not know it
was modified/fired auto. Unlawful to “receive or possess” firearm – no
mens rea requirement.
 Rules:
 Offenses that require no mens rea are generally disfavored,
unless some express or implied congressional intent to
dispense with mens rea is present
 Typically public welfare cases involve statutes that regulate
potentially harmful or injurious items
o In those cases, as long as the defendant knows he is
dealing with a dangerous device of a character that
places him “in responsible relation to a public danger,”
he should be alerted to the probability of regulation
 Consider the following factors in determining whether
Congress intended to dispense with mens rea, if statute was
ambiguous
o Nature of the Statute
o Particular character of the items regulated
o Would dispensing with mens rea criminalize a broad
range of apparently innocent conduct
o The penalty imposed by the regulation or statute
 Staples is pretty fuzzy, not even factors, just “things to think
about”
 This specific statute does require that the defendant “know” it
was of the characteristics that made it prohibited under
statutory definition of “firearm”
o Court expanded public welfare doctrine in some cases
 Freed – unregistered grenades
 Balint – addictive drugs
 Dotterweish – mislabeled or unadulterated drugs
o But not in others
 Liparota – food stamps – Court held that the defendant had to “know”
that the specific circumstances put him in violation of some regulation
or other legal requirement
 Aka had to know he was violating the law
 Concern that a more relaxed mens rea would criminalize too
much “innocent” conduct
o “Signaling Theory”
  Innocent conduct
 No signal
o The conduct raises no eyebrows
o Not immoral
o Not regulable in se
 Must prove the defendant knew they were breaking the law
 Non-Innocent conduct
 The conduct itself sends a signal to check regulations
o Conduct raises eyebrows
o Immoral or regulable in se
 Must show that the defendant knew they were engaging in
conduct
o Comparing the Public Welfare Cases
 International Minerals – “knowingly violate any such regulation”
 Misdemeanor
 Knowledge of regulation not required
 Ignorance of the law is not an excuse
 Knowledge required – know sufficient facts that put you on
notice of likelihood of regulation
 NOTICE – handling dangerous materials
 Staples – “it shall be unlawful to possess an unregistered fully
automatic weapon”
 Felony
 Court reads in a mens rea requirement – mistake of fact
defense
 Knowledge required – “know” specific facts giving rise to
liability
o D not liable because he did not know his semi-automatic
weapon was capable of firing automatically
 Do not want to punish those engaged in “innocent activity”
 Liparota – “whoever knowing acquires coupons in a way not
authorized”
 Court says must “know” that acquisition is not authorized”
 Not enough to know that you acquired the coupons
 Court is concerned with punishing “innocent” conduct
 Not public welfare case
 Generally, with food and drugs, you should be on notice of the
regulatory apparatus, same with environmental laws
 In other types of offenses, the court is reluctant to extend the doctrine
 Ignorance of the law – when it is an excuse?
o Fairly relied on some erroneous advice from an official responsible for
interpreting or enforcing the law
o Responsibly relied on statute or judicial precedent later repealed or
overturned
 o Knowledge of the law is an element of the offense
 But that’s a murky issue – see International Minerals

“Knowing” and “Willful”

o Bryan v. United States
 Facts: Under federal law, it is unlawful for anyone except a licensed
dealer to engage in the business of dealing firearms, and there is a
federal licensing program. An update to the bill added a “knowing”
requirement to most elements but also prohibited “willfully
[violating] any other provision of this chapter.” Defendant had no
license, used straw purchasers to buy guns for him, filed off the serial
numbers, and sold them on the streets in NY. D was dealing firearms
and he knew his conduct was unlawful.
 Rules of Law:
 To establish a “willful” violation, the government must prove
that the defendant acted with knowledge that his conduct was
(generally) unlawful
 Unless the text of the statute dictates otherwise, “knowingly”
requires proof of knowledge of the facts that constitute the
offense
 If a statute is highly technical which present a danger of
ensnaring individuals engaged in apparently innocent conduct,
then it may be that the defendant is required to have had
knowledge of the specific law
 Court says that for “super mens rea” (knowledge of specific law
required)
 Tax code violations
 Ratzlaf
 Both are highly technical, and bear the risk of sweeping in
innocent conduct
 Court says ignorance of law is not an excuse – “willfully” means intent
to do something the law forbids (no knowledge of federal licensing
requirement needed)
 Court is focused on what degree of mens rea is needed to prevent
criminalization of innocent activity versus furthering interests in
social protection
 Court willing to impose super mens rea for laws which are super
complicated and don’t want to punish innocent people who
misunderstand the law’s requirement
 Considerations for mens rea needed to prevent criminalizing innocent
activity
 Nature of the activity
 Extent of threat to health or safety if regulation not followed
 Degree of regulation
 Widespread nature of activity
  Social mores – is activity intrinsically immoral? Or are there
legitimate reasons to engage in activity
 Note a difference between Staples and Bryan – Staples was about a
single person who OWNED a certain type of gun, and Bryan was about
someone SELLING guns in a way that was clearly shady
 Wiley Theory
o The Court’s rule for mandatory culpability has three basic steps
 Use conventional materials of statutory interpretation to list the
crime’s elements
 Analyze whether, hypothetically, a morally blameless person could
violate the elements of the crime
 If no, the elements are fine without any tuning
 If YES, then formulate an additional and minimally sufficient element
about mental state to shield innocent conduct from criminal liability

Mens Rea Doctrines and Defenses

 Specific Intent and General Intent
o What does it mean
 Specific intent ordinarily refers to a particular motive for the conduct
 Specific – 1) an intent to do some future act, or achieve some
further consequence beyond the conduct or result that
constitutes the actus reus of the offense or 2) the actor must
be aware of a statutory attendant circumstances
 General intent merely refers to a blameworthy state of mind
 “specific” ~ “purposely” and general ~ “knowingly”
o Difference is important
 For general intent crimes, only reasonable mistakes of fact or law
create a defense
 For specific intent, even unreasonable mistakes of fact or law can
be sufficient
 Defenses to Specific Intent Crimes
o Good Faith
 The converse of the government’s proving of intent to commit
 Mandatory acquittal because it precludes a finding of intent
 “Among other things, a belief or opinion honestly held with an
absence of malice or ill will and intention of taking unfair
advantage of another” ~ 9th Circuit
 May not get separate instruction because some courts conclude that
the requisite mens rea necessarily encompasses a good faith defense
 The good faith belief does not have to be reasonable in certain
categories of cases (Cheek v. U.S.)
 If a defendant is aware of a duty but believes it is
o Good Faith Reliance on Counsel
 If the elements of this defense are established, no finding of requisite
mens rea is possible
  Elements (D must prove)
 After first making a full disclosure of all of the facts that are
relevant to the advice for which he consulted the attorney
 Good faith reliance on the attorney’s advice
 If these are established, the court must instruct the jury on the
defense
 This can be a double-edged sword – the 2nd Circuit has held that if a
defendant uses this defense and discloses communications with
counsel, the privilege has been pierced, and the prosecution can use
the information to show knowledge and intent
o Willful Blindness/Conscious Avoidance/Ostrich Defense
 Approved by all of the circuits in some fashion, although with varying
justifications and wordings for jury instructions
 Although Court gives lip service to caution on these instructions, they
are used widely
 Usually permitted where the defendant claims a lack of knowledge
and the government introduces evidence to support an inference that
the defendant consciously engaged in a course of deliberate ignorance
 Should NOT take place of proof of specific intent
 Some defenses include insufficient “red flags” or that there must be a
showing that the defendant was reckless in not investigating further
 Recklessness/Ostrich Defendant – In the 7th Circuit, they take a
recklessness approach, that the defendant is culpable for consciously
knowing of a risk yet failing to satisfy his duty to learn the facts and
avoid criminality
 But some circuits reject this theory because it’s not
“knowledge”/”knowing”
 MPC “Knowing” – The MPC includes in its definition of knowledge
situations where a person is aware of a high probability of a fact’s
existence, unless he actually believes that it does not exist
 SCOTUS endorses in Global-Tech, with an added element
 Purposefully or Willfully – esp. in the 9th Circuit, person must be less
ostrich, more fox – the defendant chooses to remain ignorant so he
can claim a lack of positive knowledge if he gets caught
 However, 9th Circuit en banc pushed back against this
“Ostrich plus” instruction
 Global-Tech Appliances, Inc. v. SEB, S.A. (SCOTUS)
 To show willful blindness, it must be shown that
o The defendant subjectively believed that there was
a high probability that a fact exists
o The defendant took deliberate actions to avoid
learning of the fact
Corporate Entity Liability
 SUMMARY: An entity is criminally liable for the criminal acts of its employees
if
o The acts was done within the scope of employment
 Wrongdoing need not be done pursuant to express authority
 Actual authority is not needed for corporate liability – apparent
authority is enough to satisfy the “scope of employment”
o For the benefit of the entity
 Need not be sole or predominant intent of the employee
 Intent need not be rational or well-conceived
 Can actually HARM the entity

“Within the Scope of Employment”

 New York Central & Hudson River R.R. Co. v. United States (SCOTUS)
o Facts: Federal law prohibits giving sweetheart shipping rebates, and
Palmer, who was responsible for procuring rates, offered a sweetheart
deal to a company.
o The corporation may be held liable even for acts not with the agent’s
actual powers when strictly construed, but which the agent has assumed
to perform for the corporation when employing powers actually
authorized, and their need be no written authority under seal or vote of
the corporation in order to constitute the agency or to authorize the act
o A person acts within the scope of their employment to the corporation
when the conduct was within the scope of authority and the type of
employment of the agents
o Held: Because Palmer could establish freight rates, he was acting with the
scope of his employment.
o Court says that many laws could not be effectively enforced if you can
only go after the individuals – criminal liability is a means of controlling
abuses
 Wrongdoing need NOT be taken pursuant to express corporate policy
 Agent does not need actual authority – apparent authority is enough
 Did the agent perform the act in line with the employees general work
responsibilities

“Intent to Benefit the Corporation”

 United States v. Sun-Diamond Growers of California (SCOTUS)
o Facts: S-D’s VP was involved in a scheme to embezzle money from S-D to
pay off the campaign debts of AgSec’s brother. VP’s job was to represent
S-D’s interests in Washington
o Rules: As long as a jury could find that the employee acted, at least in part,
to further the interests of the employer, then a finding of corporate
liability will lie, even if the conduct does not in-fact help or in-fact hurts
the company
 o Courts can rely on INFERENCES in order to draw conclusions about
intent to benefit
o The corporation need not actually receive the intended benefit, and
can be in-fact harmed
o Intention to benefit need not be rational or well-conceived
o The agent need not be acting solely, or even predominantly, with the
intent to benefit the corporate principals
o Second argument was that Lake’s knowledge should be imputed to RLSM,
and that if that happened there could not be fraud convictions – because
Fraud requires deceit, if RLSM (vis Lake) KNEW about what was going
on, then how were the deceived or defrauded

Conduct Contrary to Corporate Policy or Orders

 United States v. Hilton Hotels Corp.
o Facts: Hilton accused of violating the Sherman Act. Purchasing agent,
participating in association with other local hotels, told supplier he would
be boycotted if the supplier didn’t make a payment to the association.
Corporation president said this was against express corporate policies,
and the local manager expressly told the purchasing agent not to
participate in the boycott.
o Corporate liability for the actions of agents may attach even without
proof that the conduct was within the agent’s actual authority, and even
though it may be been contrary to express corporate policy or
instructions
o When important public policy interests are implicated by a criminal law,
it may be assumed that Congress intended to impose liability even where
the conduct was contrary to corporate policy or instruction
 Competing concerns about “paper” compliance program (it’s just for show), and
holding corporations liable for rogue employees
 Special Facts Court Considers
o Commercial offenses
o Difficult to identify particular corporate agents responsible
o Likely that higher management was involved
o Violations come from pressure to maximize profits, which makes general
directions unlikely to be taken seriously

Aggregated Mens Rea

 United States v. Bank of New England
o Facts: Treasury regulations under the Bank Secrecy Act require that
banks file CTRs within fifteen days of a customer currency transaction
exceeding $10,000. It is a felony for the bank to fail to file reports as part
of a pattern of illegal activity involving transactions of more than $100K
in a twelve-month period. McDonough would come and withdraw large
sums of money, asking for a counter check which he would fill out in sums
lower than 10K, but would fill out several at once in an amount above
 10K. The several checks were recorded separately on the banks sheets,
but would be transferred as a single transfer lump sum from the same
account
o Rules:
 Collective knowledge instructions are permitted – the aggregate
knowledge of all employees acting within the scope of the
employment is imputed to the corporation, constituting
knowledge of a particular operation
 It is irrelevant if employees in one component know of the
activities in another component
 “Willfulness” means “a disregard for the governing statute and an
indifference to its requirements”
o Willful: The jury could have concluded that the failure of the Bank
employees to inquire about the reportability of McD’s transctions was
flagrant indifference to the law.
o Knowledge: A bank teller testified that Murphy knew that McD’s
transactions were reportable. There was other evidence that bank
employees knew that McD’s transactions were reportable – an internal
memo to managers stated that transactions including multiple
transactions aggregating more than 10K per day were reportable.
o Here, court used a lot of the information used to show “knowledge”
to also show willfulness – the employees knew all of these things,
and yet chose not to act, showing “flagrant indifference”
o Note that there is an inconsistent verdict (McD and the tellers were
acquitted, but the bank was convicted)

Charging Guidelines
 Since 1999, starting with Dep. AG. Eric Holder, the DOJ has been constantly revising
its guidelines on charging corporate defendants to stop the defense bar from
bitching. It happened in 2003, 2006, and then again in 2008 (and then like last
week).
 A number of concerns have been raised about federal prosecutors “requesting” that
corporations under investigation waive their attorney client privilege or attorney
work product in order to receive credit for cooperation
 From the 2008 “Filip Memo”
o Duties of Prosecutors and Corporate Leaders
 Prosecuting corporate crime is a high priority for DOJ
 It promotes critical public interests, like
 Protecting he integrity of free economic and capital markets
 Protecting consumers, investors, and business entities who
follow the law
 Protecting the public from misconduct that is criminal laws
which safeguard the environment
o General Considerations
  Even where a corporation is charged, that does not mean that
culpable individuals should not also be charged – one is not always an
adequate substitute for the other
 Only rarely should provable individual culpability not be
pursued, particularly if it relates to high-level corporate offenses
 Key Question: Are the acts of individuals fairly attributable to the
corporation?
o Factors to be considered:
 The nature and seriousness of the offense
 This is a primary factor
 The pervasiveness of the wrongdoing within the corporation
 Even minor misconduct may warrant an indictment if the
wrongdoing was pervasive, or by all of the employees in a
specific role or unit
 Fewer individuals need to be involved to find pervasiveness if
those individuals exercised a relatively high degree of
authority
 The corporation’s history of similar misconduct
 Corporations timely and voluntary disclosure of wrongdoing and its
willingness to cooperate
 Willingness to provide relevant information and evidence and
identify relevant actors within and outside the corporation
 This serves as a potential mitigating factor to give the
corporation credit in a case that otherwise might warrant
indictment and prosecution
 Can also consider whether the corporation has obstructed
the investigation
 Existence and effectiveness of the cooperation’s pre-existing
compliance program – but remember that this is not in standard
of guilt for jury
o But these factors are not exhaustive
 In some cases one factor may override all others, but USUALLY no one
factor will be dispositive
o Selecting Charges:
 Prosecutors should, presumably, charge or recommend charges for
the most serious offense that is consistent with the misconduct and
likely to result in a sustainable conviction
o Plea Agreements with Corporations
 Prosecutors should seek a plea to the most serious, readily provable
offense charged
 The terms of the agreement should contain appropriate provisions to
ensure punishment, deterrence, rehabilitation, and compliance
o These principles provide only guidance. They do not create an rights,
substantive or procedural, enforceable at law by any party in any civil
or criminal matter.
 The Department of Justice released a NEW memo, likely to be referred to as the
“Yates Memo”
o It opens with the premise that prosecution of culpable individuals is one of
the most effective ways to combat corporate misconduct, because it:
 It deters future criminal conduct
 It incentivizes changes to corporate behavior
 It ensures that the proper parties are held accountable
 Promotes public confidence
o Identifies steps that should be taken in any investigation of corporate
misconduct
 In order to qualify for ANY cooperation credit, corporations must
provide all relevant facts relating to the individuals responsible
for the misconduct
 Companies cannot pick and choose what to disclose
 If the company declines to learn of such facts or provide
them, they get NO cooperation credit
 Only AFTER providing all relevant facts with respect to
individuals will a company even be considered for credit
o Unless under extreme circumstances or approved DOJ policy, resolving a
matter with a corporation will not absolve culpable individuals of liability
 Prosecutors should not agree to a corporate resolution that provides
for dismiss charges against or immunize individuals unless there are
extraordinary circumstances or approved DOJ policy
o New Doctrine – Six Policy Shifts
 No cooperation credit for corporation unless corp gives DOJ
information about responsible individuals
 “company must completely disclose to the Department all
relevant facts about individual misconduct”
o Identify all individuals
o Provide DOJ with facts relating to that misconduct
o Will consider timeliness, thoroughness, speed of
investigation, proactive nature of cooperation
 Focus on individuals from beginning of civil and criminal
investigations
o Maximize ability to ferret out the full extent of
corporate misconduct (efficient and effective)
o Increase likelihood that individual with knowledge of
the corporate misconduct will cooperate and provide
information against individuals high up in the corporate
chain
o Maximize chances that final resolution will include
charges against culpable individuals
o But is gov still going to try to get the corporation to
identify the bad actors?
 o It’s now explicit – throw your employees under the
bus
 Criminal and civil attorneys should communicate routinely
 What is this change going to do to internal investigations
o Probably will chill/cut off communication between the
investigating attorneys and the employees
 DOJ will not release culpable individuals from liability
when resolving mater with a corporation
o In the past, corporation might enter DPA or DTP that
included a term that DOJ will not pursue individual
employees criminally
 DOJ attorneys should not resolve matter with corporation w/o
clear plan to resolve individual cases
 Civil attorney’s should focus on individuals without regard to
their ability to pay
 Possible Outcomes for Corporations
o No charge filed
o Pre-Trial Diversion – DTP or
 Deferred Prosecution Agreement
 Government files charges but holds them in abeyance for
agreed period of time (1-5 years usually)
 If conditions for DPA met, charges dismissed at end of agreed
period
 Usually corporation has to be VERY cooperative
 Agreements include
 Admission of wrongful conduct
 Payment of fine (can be VERY large)
 Cooperation with giv investigations
 Compliance program or beefing up existing one
 Government selected monitor
 Personnel actions (firing culpable employees)
 Cooperation Credit
o Means turning over ALL of the facts and any culpable employers and heling
identify evidence against them
o Failure to cooperate standing alone does NOT justify charges (but it used to)
o Waiver of privilege is NOT a prerequisite (but it used to be)
o Prosecutors may not consider whether the corp
 Is paying employee’s attorney fees
 Has entered into a joint defense agreement with employees
 Old rule was that BOTH would be held against corporations
o How do you disclose the facts without waiving the privilege?
 Once you waive the privilege, you waive it for everyone with respect
to everything?
  It’s a hard thing to figure out how to strip the privilege from the facts
when you only found the facts in the context of the privilege
 Some Courts have held that when corps have tried to do this, they
actually waived privilege
 Remediation
o Remedial actions – improve an existing compliance program or disciplining
wrongdoers
o Copeland’s Rule: Someone has to be fired, or gov. won’t believe you are
serious
o Need to convince prosecutor that not trying to protect the wrongdoers
 Collateral Consequences
o Civil sanctions that flow from criminal indictment or conviction
o Lose eligibility for government contracts – could be HUGE if the client is a
federal contractor
o Lose ability to participate in federal health care programs
o Can be more severe than criminal punishment

Perjury
 Numerous weapons to fight perjury
o Judicial contempt sanction - If there is some evidence that the perjury
obstructed the court in the performance of its duty
o Enhanced sentence - Federal sentencing guidelines provide for an enhanced
sentence if the defendant convicted of a crime made perjurious testimony at
trial in a willful attempt to obstruct justice
o Prosecution under one of the several federal perjury statutes
 Unless civil perjury affects a government interest or an ongoing criminal
investigation, prosecutors usually won’t go after it, OR
o Gov believes that witness lied under oath, launch investigation and indict
solely on perjury
o Charge perjury in addition to underlying offense
o Charge perjury instead of underlying offense b/c easier to prove (Pretextual
Prosecution)
o Perjury charge can put the honesty and reliability of the defendant
directly into the minds of the jury
 Also, perjury cases can be hard to win because of the strict elements
o Designed to protect those who make incorrect statements due to
“inadvertence, honest mistake, carelessness, neglect, or misunderstanding”
 § 1621
o “Having taken an oath before a competent tribunal… willfully and contrary
to such oath states or subscribes any material matter which he does not
believe to be true”
o Elements
  Testimony given while Defendant was under oath before competent
tribunal, officer, or person
 Defendant made a false statement
 The statement was material to the proceeding
 Defendant acted willfully (usually intent to deceive) and with
knowledge of the statements falsity
 Not clear “willfully” is that important – when do you lie where
you are not trying to deceive
o Applies whenever you take an oath (could be Congressional proceeding,
administrative proceeding)
o ONLY APPLIES TO FALSE STAEMENTS
o Gov must prove the statement is actually false
o Two-witness rule
o No recantation defense
 § 1623
o “Whoever… in a proceeding before… and court or grand jury… knowingly
makes any false material declarations material to the point in question in
any proceeding.”
o Provides for a recantation defense if made “in the same continuous court or
grand jury proceeding… if, at the time the admission is made, the declaration
has not substantially affected the proceeding”
o Elements:
 Tesitmony was given while D was under oath before a court or
grand jury proceedings
 Defendant made a false statement or used false information
 The false statement was material to the proceeding
 Defendant acted with knowledge of the statement’s falsity
o Applies in any court or GJ proceeding ONLY
o Covers false statements AND materials (exhibits, etc)
o Government must prove that the two statements are “irreconcilably
contradictory” (but does not require prove of actual falsity)
o Two witness rule inapplicable
o Perjury must be knowing
o Recantation defense allowed (but very difficult)
o 1623 – context of materiality “broadly construed” – material is material if
it has the potential to aid the investigation (check slides)
o
 Elements (for both § 1621 and § 1623) – Government must prove
o That the testimony was given (or the documents or record was used) while
the defendant was under oath
o The testimony (or record or document) was false
o The defendant knew when he made the statement (or gave or used the
document or record) to the tribunal that [the statement] was false
 o The matters about which the defendant testified falsely (or used false
documents or records) were material
 Differences between 1621 and 1623
o 1623 applies only in “any proceedings before or ancillary to any court
or grand jury of the United States” – including pre-trial civil depositions but
NOT Congressional investigations
o 1621 covers most of 1623 AND congressional investigations
o 1621 applies ONLY to false statements
o 1623 applies when a witness “makes or uses” false information or false
materials, including exhibits, documents, records, or other evidence
containing a false material declaration
o Evidentiary Differences
 Under 1621, the government must prove the statement was actually
false
 Under 1623, the government only needs to prove “that the defendant
while under oath made irreconcilably contradictory declarations
material to the point in question”
 Two Witness Rule
 The uncorroborated oath of one witness is not enough to
establish the falsity of the testimony of the accused
 What is actually needed is one witness PLUS some
independent corroboration
 Most courts agree that circumstantial evidence can sufficiently
corroborate
o Mens Rea
 Both statutes require proof that the defendant made the statement,
etc, knowing it was false
 1621 ALSO requires that the perjury be “willful”

Defenses
 Recantation
o There is a recantation defense under 1623, but NOT 1621
o Under 1621, the crime is complete the moment the false statement is
made
o So under 1623, one can avoid prosecution by recanting their testimony
o However, it’s a very hard defense to raise – it almost never works
o Most courts require that “to claim the defense, the defendant must recant in
the same continuous court or grand jury proceeding in which the false
declaration was made, the declaration must not have substantially
affected the proceeding, and it cannot have become manifest that such
falsity has been or will be exposed”
o So it is really hard – an almost immediate retraction might do, but
anything else probably won’t work
o Elements
  Unequivocally retract the earlier testimony (clear admission that
earlier testimony was false, not enough to attempt to explain or claim
faulty memory not good enough) (but this could fuck you over later)
 Defendant recants in same continuous court of GJ proceeding in
which the false declaration was made (must be virtually immediate)
 Declaration did not substantially affect the proceeding (short time
period)
 AND/OR (majority of courts say statute requires both even
though it says or)
 It cannot have become manifest that such falsity has been or will be
exposed (basically, your lie is about to be exposed)
 “Literal Truth” and “Ambiguity”
o It can be argued that, even if a statement or answer may have been
misleading, if the defendant told the literal truth, the government cannot
meet its burden of proving that the statement was actually false.
o Bronston v. United States (SCOTUS 1973) – p. 288
 Facts: D asked in bankruptcy deposition “Do you have bank accounts
in Switzerland?” D responds “The company had an account in
Switzerland.” D actually did have Swiss account. No dispute that his
statement was literally truthful.
 Held: As long as the defendant’s statement was literally true, even if it
was implicitly misleading or nonresponsive, the statement is not
perjury under § 1621
 “The statute does not make it a criminal act for a witness to willfully
state any material matter that implies any material matter he does
not believe to be true”
 We can’t let a jury engage in conjecture whether an unresponsive, but
true and complete, answer was intended to mislead
 Could argue that the questions were ambiguous because does “you”
mean Bronston personally or the company, of which Bronston was the
sole owner
 Bronston errs on the side of protecting the witness
o You can sometimes argue that you BELIEVED the statement to be true
o The defendant’s presentation of “a plausible, but not inevitable,
understanding of the circumstances that would make the statements at issue
“literally true” is not enough to establish an absolute defense under Bronston
and may be left to a jury determination” ~9th Cir, United States v. Thomas
o “Ambiguity”
 After Bronston, there remains the possibility that the question was too
ambiguous for a response to serve as the basis for perjury charges
 Courts will usually allow a jury to determine the meaning of the
question and the truthfulness of the answer – “Where a prosecutor’s
question is “arguably ambiguous,” a defendant’s understanding of the
question is for the jury to resolve…” United States v. Farmer, 10th Cir
  Where a question is “fundamentally ambiguous” – courts have
overturned convictions to preclude convictions based on conjecture,
prevent witnesses from bearing the risk of inadequate examination,
and encourage witness testimony
 “A statement is fundamentally ambiguous when it is not a
phrase with a meaning about which men of ordinary intellect
could agree, nor one which could be used with mutual
understanding by a questioner and answerer unless it were
defined at the time it were sought and offered as testimony”
 To determine the meaning of a question, the jury or court will
examine the question in the context of the entire line of questioning
and may consider extrinsic evidence that demonstrates how the
defendant interpreted the question
 “Perjury Trap Defense”
o Defense may argue that the government trapped the defendant into
committing perjury by calling a witness before a grand jury for the primary
purpose of obtaining testimony from him in order to prosecute him later for
perjury
o The argument is that this is an abuse of the grand jury process
o Most courts hold that if there was a “legitimate basis” for an
investigation and for particular questions answered falsely, a perjury
trap defense must be rejected
o Courts use that standard to usually avoid the perjury trap defense
o However, courts have rejected perjury trap defenses even where there is
alleged prosecutorial misconduct – courts are very reluctant to allow the
defense
 “Materiality” Defense
o Materiality is an element of perjury and therefore has to go to the jury
o This defense is often raised, but rarely works
o Materiality = “a natural tendency to influence, or be capable of
influencing, the decision of the decisionmaking body to which [the
statement] is addressed
o In United States v. Kross, the Second Circuit explained how the context can
affect how the standard of materiality applies
 Grand Juries: Does the false declaration have “a natural effect or
tendency to influence, impede, or dissuade the grand jury from
pursuing its investigation.”
 We consider the statement for its potential to aid the body,
not the probability of assistance from a truthful answer
(so, whether it “could,” not whether it “would”
 Civil Depositions (Fifth Circuit): materiality is not limited to evidence
admissible at trial, but also matters properly the subject of and
material to a deposition…
 Civil Deposition (Ninth and Sixth Circuits): [must be discoverable], but
also consider the tendency of the false statement itself to affect the
 outcome of the underlying civil suit for which the deposition was
taken
 Civil Deposition (Second Circuit): Whether a truthful answer might
reasonably be calculated to lead to the discovery of evidence
admissible at the trial of the underlying suit”
 “Knew it was false defense”
o Gov has to prove the defendant knew the statement was false when it was
made, not merely mistaken, absentminded, or confused

False Statements
 The main false statements statute is 18 U.S.C. § 1001
o Whoever, in any matter within the jurisdiction of the executive, legislative, or
judicial branch… knowingly and willfully
 Falsifies, conceals, or covers up by trick, scheme, or device a material
fact
 Makes any materially false, fictitious, or fraudulent statement, or
 Makes or uses any false writing or document
 Has the same penalty as perjury
 The statute’s elements are simple and open-ended, creating flexibility
 Can be used instead of, or in conjunction with, statutes for fraud, perjury,
obstruction of justice, and false claims
o For many of these other statutes, there may be a false statement charge
available even if the other charge would not be provable
o It may also be used and applied to false statements made in the underlying
criminal case or investigation
o It can give prosecutors greater leverage
 Elements of liability
o D “made or used a false or fraudulent statement, representation, or
writing; OR falsified, or affirmatively concealed or covered up by trick,
scheme, or device, a fact that the defendant had a legal duty to disclose”
o The false statement or material concealed was “material”
o The subject matter involved was within the jurisdiction”
o Of the executive, legislative, or judicial* branches of the federal
government
o That the false statement/concealment was done “knowingly and willfully”
 “False Statements or Affirmative Concealment of Material Facts”
o False Statements and Concealment of Material Facts are two distinct
crimes with separate requirements
o False Statements – Affirmative Statements
 Require proof of ACTUAL FALSITY
 Gov must negative any reasonable interpretation that
would make the statement factually correct
  Applies to all false statements, whether oral or written, sworn or
unsworn, voluntary or required by law
 Statements do not need to be under oath
 Can make ambiguity of question or “literally true” argument
 May arise in the context of specific statutes – e.g. Congress requires
officer certification of corporate financial statements, and there is also
law dealing with false statements on those statements, both that law
and 1001 could apply
o Concealment
 Require proof of AFFIRMATIVE ACT OF CONCEALMENT
 Also requires proof of LEGAL DUTY TO DISCLOSE FACTS AT THE
TIME THEY WERE CONCEALED
 Duty could arise from statute, fiduciary duty or relationship, 6 th
Cir says you basically always have a duty to disclose material
information under 1001
 Proof of willful nondisclosure by means of a trick, scheme or
device
 Could be used to get around proof of actual falseness needed for
false statement
 Types of False Statements
o False invoices and certifications
o Checks naming false drawees
o False applications to obtain official documents
o False IDs given to border or customs agents
o False medicare claims
o False marriage vows to gain citizenship
o False information given in a federal investigation
 Materiality
o Congress amended 1001 to make sure that “materiality” applied to all
elements, to protect citizens from every trivial false statement
o SCOTUS: Material means it “has a natural tendency to influence, or is capable
of influencing, the decision of the decision-making body to which it is
addressed”
o This element must be proved beyond a reasonable doubt to the satisfaction
of the jury – it’s a jury question, can’t get it thrown out before hand on
materiality
o Gov does NOT have to show
 That the statement was credible or in-fact believed
 That the statement or concealment was actually relied upon or
actually influenced the body
 That there was any intended or actual loss to the government
 That the statements were required to be filed
 That the statements was read or even received by the government
 “Jurisdiction”
o In United States v. Rodgers (1984), SCOTUS interpreted the term broadly
 o Within the “jurisdiction” covers “all matters confided to the authority of
an agency or department”
o The matter does not need to be one over which the department has final
or binding decision-making authority
 Real issue is official functions of dep’t vs. matter peripheral to the
business of that body
 “Executive, Legislative, or Judicial branch”
o original language just said “any department or agency of the United States”
o In Bramblett, SCOTUS said that this meant any executive, legislative, or
judicial proceeding
 But the lower courts didn’t like this, so they created a “judicial
function” exception that was widely followed, saying the statute
did not apply to statements made as part of “trial tactics” in
proceedings before the courts, and only to “administrative”
functions
 In Hubbard v. United States, the Court overruled Bramblett, and
determined that because the lower courts were SO unanimous in their
judicial function exception that stare decisis did not preclude them
creating the exception
 So in Hubbard the court read the terms “any department or
agency” to exclude statements made in judicial proceedings
 Hubbard rule is broader than the exception because it says that
1001 does not apply to the judicial branch AT ALL
o THEN Congress amended the law to specifically enumerate “executive,
legislative, or judicial”
 BUT they also stated the prohibition “does not apply to a party to a
judicial proceeding, or the party’s counsel, for statements,
representations, writings or documents submitted by such party
or counsel to a judge or magistrate in that proceeding”
 This really was both broader AND narrower than the judicial
conception
o Narrower – confined to parties and counsel
o Broader – includes (so liability for) false statements
as to admin matters (which were excluded by
Hubbard)
o There is also a “legislative function exception” (§ 1001(c))
 Congress wanted to EXCLUDE FROM LIABILITY cases based on
constituent correspondence and unsworn testimony
 LIABILITY FOR members of Congress knowingly and willfully
lying on their disclosure form, initiate ghost employee
schemes, knowingly submit false vouchers, and purchase
personal goods and services with taxpayer dollars
 LIABILITY FOR those who knowingly and willfully a duly
authorized congressional investigation
 o DOJ takes the position that parties and counsel may still be prosecuted for
false statements to other entities within the judicial branch, e.g. the probate
office
 Non-parties may be prosecuted for any false statements
 False statements are only within the “jurisdiction of the legislative
branch” if they relate to administrative matters or congressional
investigations conducted consistent with the applicable congressional
rules”
 Mens Rea
o The False Statement or Concealment must be done “knowingly and willfully”
o Gov must prove beyond a reasonable doubt that the statement was made
with knowledge of its falsity
o One must “know” that the representation made or writing used is false or
must know that one is concealing a material fact by trick, scheme, or device
 Willful blindness/reckless indifference jury instructions are OK
o U.S. v. Whiteside READ IN BOOK – Gov has burden to show beyond a
reasonable doubt that D’s statement was not true under a reasonable
interpretation of the law
o If reasonable people could differ as whether the conduct was reasonable
under the law, Gov has not met burden to show “knowing” and “willful”
o Specific Fact mens rea – must know specific fact giving rise to liability –
that your statement was not true when given
o “knowingly” means with “knowledge or awareness of the facts or situation,
and not because of mistake, accident, or some other innocent reason”
o The circuits are split on whether this is a “specific intent crime”
 Some courts say it must be shown that the statement must have
been made with the specific intention of deceiving the
statement’s official audience
 It does NOT require the intent to defraud – to deprive someone of
something by means of deceit
o Often, the jury will be asked to infer the existence of specific intent to
deceive from the fact that the defendant knowingly and materially lied
 So the mentes raeae are often merged
o Some courts hold that willful blindness or reckless indifference can satisfied
the mens rea requirements
o SCOTUS has held that it does not need to be shown that the defendant knew
of the federal agency jurisdiction
 United States v. Herring (11th Cir. 1990) – p. 314
o Facts: Herring lied on an application for unemployment insurance to a state
agency. He received about $900.00. The Fed. Sec. of Labor has approved GA’s
unemployment program, and provides administrative funding for the
state’s program.
o Held: The use of federal funds in a state program in which a false statements
was made is enough to establish jurisdiction under § 1001.
Defenses
 Exculpatory No – NOT A DEFENSE
o Falsely denying guilt to a government officer
o Brogan v. United States (SCOTUS 1998) – p. 318
 Held: An “exculpatory no” (falsely denying guilt to a government
officer) is not excluded from liability under § 1001
 Petitioner wants us to depart from the literal text of 1001 and
approve the “exculpatory no” doctrine approved by many Circuits
o Arguments in support of “exculpatory no” exception
 Denial of guilt does not pervert government functions
 Protect 5th Amendment values
 Creates cruel trilemma
o Court says you did it to yourself
 Curb prosecutorial discretion
o Arguments Opposed
 “Pervert governmental functions” is open-ended and vague, not
supported in legislative history
 5th Amendment not implicated when you lie, only when remain silent
 Leave it to Congress to fix the statute if they want
o Problems with these types of prosecutions (Ginsburg concur)
 Turn innocent conduct into a felony
 Get D who would escape liability b/c of statute of limitations
 Federalize state crimes
 Notice problems b/c the questioning is informal
o Prosecutors recognize the problems with these kinds of cases, and try
to avoid bringing them

False Claims
 False Statements vs. False Claims
o False Statements
 Targets any false statement to U.S. gov
 Willfully makes a false statement
 Must present a claim within the jurisdiction of executive, judicial, or
legislative branch
 False statement must be material
o False Claims
 Only target false CLAIMS
 Must “know” that claim is false
 Must present a claim against the “United States or any agency or
department of the United States”
 Courts generally agree that there is no materiality requirement
 There are two main false claims statutes
o Criminal: 18 U.S.C. § 287
  “Whoever makes or presents to any person
 Purpose is to “protect the government against those who would cheat
or mislead it in its administration of its programs” – United States v.
White (11th Cir. 1994)
o Civil: 31 U.S.C. §§ 3729-3733
 They are frequently invoked, like 1001, for procurement and government program
fraud

Criminal False Claims Acts - § 287

 Originally written in 1863 for defense contracting fraud in Civil War
 Elements
o Defendant presented a claim
o Upon the United States or any agency or department of the United States
o The claim was false, fictitious, or fraudulent
o The Defendant knew the claim was false, fictitious, or fraudulent
 Things you don’t have to show
o Some circuits require proof of specific intent to defraud, but others have held
that only “knowledge” must be shown
o Most circuits have held that materiality is not an element of false claims cases
o Don’t have to show that the claim was honored
o Don’t have to show that the government was actually defrauded
 It’s not just a false statement, but a false CLAIM
o “Claim” is not exactly defined, but most courts construe it broadly
 Request/demand for $ or property
 Reverse claim to avoid or reduce payment to government
 Entity is overpaid by the government, realizes it has been overpaif,
and takes no action to return that overpayment (newly added)
 Claim for credit
 Claim need not have been honored or successful at defrauding
the government
 May be made through an intermediary (third)
 “False, fictitious, or fraudulent”
o Construed broadly
o Claim is actually false
o Falsely submit that medical procedures were supervised
o Submit over-inflated charges/reimbursement
o Falsely representing that you are a licensed professional of a kind necessary
to receive a loan, reimbursement, etc from the gov
 “Knowledge of Falsity”
o D’s reckless disregard/conscious avoidance of truth is enough
o Knowledge of federal nature of claim not required
o Circuit split on specific intent to defraud
 Parallel proceedings
 o DOJ will use a successful prosecution under § 287 to claim estoppel by
judgment or res judicata in civil cases

Civil Cases – Qui Tam Litigation

 Elements of a Civil Action
o D presented or caused to be presented a claim for payment or approval, or
a document to facilitate the payment of a false claim
o Claim or document was false or fraudulent
o D knew it was false or fraudulent (or acted with reckless disregard of
falsity”
 The relator does not have to have been actually harmed to bring the Qui Tam suit on
behalf of the government
 “Knowledge of Falsity” – similar, but not identical, to criminal
o Actual knowledge that it is false
o Deliberate ignorance of truth or falsity
o Reckless disregard of truth or falsity
o Congress specified in CIVIL statute that there need not be a specific intent
to defraud (circuit split for criminal cases)
 The FCA (civil statute) encourages private citizens (“relators”) to file suit on behalf
of the government to recover civil damages from other private citizens for their
fraud against the government
o Civil cases brought by relators (“qui tam cases”) focused on defense fraud
initially, then health care fraud
 A private citizen “relator” brings a qui tam proceeding, based on the individual’s
knowledge of fraud against the government
o They receive a cut of the benefits from government
 Originally, qui tam litigants would just piggy-back off of criminal cases the
government was bringing
o After the Supreme Court put a stamp of approval to this practice, Congress
stepped in to prohibit qui tam suits being brought on “information in the
possession of the United States… at the time such suit was sought”
o The Act also provided no protections for the initial whistleblowers, and
under the amendment the whistleblowers could not bring suit, so they
stopped whistleblowing, which reduced the discovery of frauds
o So Congress amended it again to limit bringing suits based on information
the government knew, but created an exception for the “original source”
of the information
 The original source is the person who either a) prior to a public
disclosure, voluntarily disclosed the information to the
government on which the allegations are based, or b) has knowledge
that is independent of and materially adds to the publicly
disclosed allegations or transactions, and voluntarily gives that
info to the government before filing their suit
 The amendment also increased the relator’s role in litigation and
increased the amount of damages they can cut
 o Go look at the Rockwell stuff
 A person is liable if, by a preponderance of the evidence, the defendant
presented a claim they knew to be false or fraudulent or has knowingly made
or used a false statement material to a false or fraudulent claim
 The Qui Tam Process
o The relator files a complaint under seal with the court, and serves a copy of
the complaint and a written disclosure of substantially all material evidence
and info to the government (but NOT the defendant until ordered by the
court)
o The case is sealed and stayed for 60 days, and the government reviews for
impacts on cases and investigations, and to prevent the defendant from being
tipped off
 The government can also get extensions of this sealed period
o The government investigates ALL cases, but only takes some
o If the government decides not to intervene, the relator may litigate the case
to judgment
 Even if gov does intervene, relator may play a role, and has SOME role
in settlements
o Relators get 25% of the proceeds if the gov intervenes, and 25-30% if the gov
does not intervene
o There are also whistleblower protections
o The gov still gets the lions share of the spoils
 Practical Issues
o The government has broad discovery powers under the FCA to obtain info
for both civil or criminal proceedings
o In responding to civil discovery requests, counsel needs to treat it like a
criminal case – either the relator or government is also accusing you of
conduct that is criminal
o So treat it like a criminal case – invoke the 5th Amendment, even if it hurts
your civil defense
o There may be privilege issues – the potential witness/relator was a former
insider, and has an interest in the corporation’s liability – they may have
privileged information from inside the corporation that they pass on to their
counsel and undermine the defense
o Defense counsel obviously wants to identify the relator to limit the
undermining of privilege – but this is dangerous because there are legal
protections for whistleblowers
o Defense counsel also wants to persuade DOJ not to intervene – if the
government intervenes, the chances of defense winning drops dramatically
 Gov’s key considerations are the amount of money involved and the
merits of the case
 But if you go to the government and try to persuade them, you might
be tipping your hand for your defense
 And admissions you make might be used against you and restrict the
arguments you can make later
  Though some argue that given the broad discovery power of the
government, what could you possibly disclose that wouldn’t be found
anyway?
 As such, in all but rare cases, try to head off the government
o Self-reporting any fraud which is discovered, which would also reduce
criminal liability, may reduce qui tam exposure
o Gov has a problem – the fact that they’re so lucrative, people might bring
cases where the evidence isn’t really there
 Also could interfere with a potential criminal case
 In civil cases there are broader discovery rules available to the
defense, so they can get info gov doesn’t want them to have
 Gov may have already decided they don’t want to pursue case
 Damages
o “treble damages” + Penalty of 5.5-11K per claim + Atty fees and costs
 If gov does NOT join suit, relator gets 25-30%
 If gov joins suit, relator gets up to 25%
 Treble damages (actual $ harm times 3)
o These cases can be VERY profitable
 Problems for Defense Counsel
o If D asserts 5th Am rights, adverse interest can be drawn in civil litigation
o If gov. does not take 5th, gov may use statements in criminal prosecution
o Relator as mole
o Whistleblower protections, can’t remove suspected relator
o DOJ intervention – biggest threat of recovery, desire to keep DOJ out
o How do you keep the DOJ out?
 Make a “submission” to the DOJ
 But that might constitute admissions
 Freeze position you are able to take in defense
 Tipping your hand for defense
 Risk waiver of privilege
 Defenses to Civil False Claim Cases
o “Government Knowledge”
 If gov knows/approves the claim BEFORE the claim is presented, then
D did not “KNOWINGLY” present a fraudulent or false claim
 Gov knowledge negates the fraud or falsity required by the FCA
 Defense is not absolute or automatic
o Good Faith
 You thought that the claim you were submitting was the appropriate
amount
o Government Instruction
o If D was following an instruction from the government, its actions cannot
constitute the “knowing” submission of false claims or false documents
Obstruction of Justice
 There are a billion obstruction of justice statutes
o When someone gets acquitted on obstruction of justice in a high-profile case,
Congress will enact a new one so that it can’t happen again
o This means that the code is “fairly incoherent, often redundant, and
overbroad”
 Obstruction of Justice charges are becoming increasingly more common

§ 1503 - Omnibus Clause

 “Whoever… corruptly or by threats of force, or by any threatening letter or
communication, influences, obstructs, or impedes, or endeavors to influence,
obstruct, or impede, the due administration of just, shall be punished…”
 “The purpose of § 1503 is to protect not only the procedures of the criminal system
but also the very goal of that system – to achieve justice” – it was designed to be able
to respond to the variety of corrupt methods by which justice may be impeded
 Criminalizes
o Endeavoring to influence a juror or court officer
o Injuring a juror or court officer
o Endeavoring to interfere with the judicial system
 Three Elements of “omnibus” violation IN THE STATUTE
o Corruptly
o Influences, obstructs, or impedes or endeavors to influence, obstruct, or
impede
o The due administration of justice
 BUT courts have added three more elements
o Must have knowledge of the proceeding (Aguillar)
o Nexus – must have “natural and probable effect” of interfering with the due
administration of justice (Aguillar)
 OR(???) can show that the action has a relationship in time, causation,
or logic with the judicial proceedings
o With specific intent to obstruct (Note cases, Circuit split)
 1503 can be used for
o False statements to federal agents
o False testimony in a grand jury or court proceeding
o Testimony – refusing to testify when you have immunity, attempting to alter
testimony of witnesses
o Evidence – concealment, destruction, falsification
o Knowing concealment, falsification, or destruction of evidence to be
submitted to a grand jury or court
o Efforts to alter the testimony of a witness for corrupt purposes
 Also applies to activity that might not seem “obstructive”
o Grand juror or other person’s disclosure of grand jury information
o Lawyer’s efforts to obtain money from criminal defendants by false promises
to “fix” the proceedings or pay off officials
 United States v. Aguilar (SCOTUS 1995) – p. 363
o Facts: Tham being prosecuted, asks his friends to speak with the judge (A),
whom they were friends/relatives with. The spoke to A, who then spoke to
Tham’s judge. FBI also investigating Tham, got secret wiretap. Chief judge
ends up telling A about wiretap for Tham. Months later, A warns Tham’s
friends about wiretap. A grand jury had been investigating Tham’s
conviction. FBI agents question A, he lies about influencing Tham’s case and
his knowledge of wiretap.
o Issue: Does § 1503 punish false statements made to a potential grand jury
witness?
o Holding: No. Lying to the grand jury directly all but assures that the grand
jury will consider that material in its deliberations, but for a potential
witness who hasn’t even been called to the grand the conclusion is far too
speculative
o A person is not sufficiently charged with obstructing or impeding the due
administration of justice in a court unless it appears that he knew or had
notice that justice was being administered in such court” ~ Pettibone v.
U.S.
o The action must be taken with an intent to influence judicial or grand jury
proceedings – it is not enough to intend to influence some ancillary
proceeding, such as an investigation independent of the courts or grand
jury’s authority
o The endeavor must have the natural and probable effect of interfering with
the due administration of justice
o The defendant’s actions do not need to be successful – an “endeavor” suffices
o If the defendant lacks knowledge that his actions are likely to affect the
judicial proceedings, he lacks the requisite intent to obstruct
o Giving a false statement to an agent who COULD testify before a grand jury is
sufficient to make out a violation of the catchall of § 1503
o The “endeavor” clause makes conduct punishable where the defendant acts
with an intent to obstruct justice, and in a manner that is likely to obstruct
justice, but is foiled in some way
 1001 is really meant to handle false statements to agents in investigations, 1503 is
more about formal proceedings
 Elements after Aguilar and Pettibone
o Knowing that a judicial proceeding was pending
o Corruptly (nexus requirement?)
o Endeavors
o To influence, obstruct, or impede
o The due administration of justice
 “Pending Proceeding” – GET SLIDES
o 3rd, 6th, 7th Circuit – pending when an investigation is undertaken to secure
“presently contemplated presentation of evidence before the grand jury”
o 1st, 2nd, 4th, 5th, 10th Circuits – investigation conduct by the grand jury
 Application of the nexus requirement – “natural and probable effort” is used all over
the place by lower courts, usually to lower the government’s burden of showing
intent to obstruct
o Arthur Andersen LLP v. United States interpreted § 1512 to include a nexus
requirement, really more related to “corrupt” than “due administration”
o 2nd Cir: The nexus rule limits liability to where he defendant has notice that
his wrongful conduct will affect the administration of justice – it is enough
that he knows that a subpoena calls for a category of documents, or even one
particular document, and then takes steps to place those documents beyond
the reach of the grand jury.
 The Nexus requirement is particularly critical in § 1503 prosecutions premised on
false testimony, because not all false or evasive testimony if obstruction
 Knowledge or Notice of a Pending Proceeding after Aguillar
o Most litigation focuses around situations when it’s not clear if the proceeding
has begun, i.e., during the investigation
o It is also enough that there be a civil proceeding, e.g., that representatives in a
civil lawsuit destroy documents that were otherwise discoverable
o Courts look to “whether the investigating agency has acted in furtherance of
an actual grant jury investigation, i.e., to secure a presently contemplated
presentation of evidence before the grand jury.”
 Endeavor – the individual need not succeed in obstructing justice, it need not even
be shown that the proof would constitute an attempt
 United States v. Cueto (7th Cir 1998) – p. 373
o Facts: Cueto is Venezia’s lawyer, is representing him or giving him legal
advice through federal and state investigations. Undercover agent keeps
trying to get Venezia to bribe him, and Cueto keeps trying to charges against
agent, at the state and federal level. Cueto also has numerous financial, real
estate, etc ventures with Venezia. Venezia et al are prosecuted and convicted
for illegal gambling. Then investigation into Cueto.
o Charges:
 Counts 2, 6, and 7 charged Cueto with obstruction of justice in that he
corruptly endeavored to use his position to influence, obstruct, and
impair the due administration of justice in connection with Venezia’s
prosecution
 Count 2 alleged that he endeavored to obstruct justice in [his
complaint to hold Robinson in contempt of the state court order
which Robinson moved to federal court] by filing or causing to be filed
pleadings in the federal courts
 Count 6 involved Cueto’s actions to try to persuade the State’s
Attorney to indict Robinson and in so doing endeavoring to obstruct
the federal grand jury
 Count 7 involved endeavoring to obstruct the federal racketeering
prosecution of Venezia by preparing and filing “false” pleadings and
court papers
o Held: Even lawful conduct can violate § 1503 if employed with corrupt intent
 o Corruptly means to act with the purpose of obstructing justice
o The government does not need to prove that the defendant’s only or even
MAIN purpose was to obstruct the administration of justice, only that the
defendant should have reasonable seen that the natural and probably
consequences of his acts was the obstruction of justice.
o Because Cueto had financial interests tied in with Venezia and the
operations in question, the jury could conclude that Cueto was
motivated to protect his own interests.
 § 1515 – Protections for Attorneys
o (c) provides that “this chapter does not prohibit or punish the providing of
lawful, bona fide, legal represenatation services in connection with or
anticipation of an official proceeding”
o Duty to be zealous advocate conflicts with government’s efforts to obtain
facts
 “Specific intent to obstruct” Element
o Majority view – D intended to engage in the conduct alleged to be obstructive
and should have reasonably foreseen that the natural and probably
consequence of his actions would be obstruction of justice
o Minority View – Defendant had specific intent to obstruct justice

18 U.S.C. § 1505 – Obstruction of Federal Agency and Congressional Proceedings

 “Whoever corruptly… influences, obstructs, or impedes or endeavors to
influence, obstruct, or impede the due and proper administration of the law under
which any pending proceeding is being had before any department or agency of
the United States, or the due and proper exercise of the power of inquiry under
which any inquiry or investigation is being had by either House, or any
committee of either House or any joint committee of Congress… shall be [fined or
imprisoned]”
 1505 was mean to address obstruction proceedings before federal administrative
agencies and congressional inquiries
 Elements:
o Knowing that there is a proceeding pending before a federal
agency/department, or any inquiry or investigation before [Congress]
o Corruptly
o Endeavors
o To influence, obstruct, or impede…
 “Proceeding” is defined very broadly
o It is not limited to “adjudicative” proceedings
o Courts have interpreted it to include investigative and adjudicative functions
of departments and agencies
o It can also include agency conduct before an investigation is formally
commenced
 Nexus Requirement?
o Most courts have assumed that the nexus of Aguillar has to be shown
 o SCOTUS said in Arthur Anderson that the Aguilar nexus had to apply for 1512,
adhering to the word “corrupt” (so it probably applies to 1505 as well)
 Defining “Corruptly”
o In United States v. Poindexter, the D.C. Circuit overturned a conviction for
lying to Congress because, as applied to that context, “corruptly” was
unconstitutionally vague
 The Court identified that “corruptly” had two possible meanings
 Intransitive – “A becomes/is corrupt” (D does the act)
 Transitive – “A corrupts B” (D corrupts someone else into
doing the act)
 The Court said that the transitive reading made more sense in the
context of the other terms (which were all transitive)
 And making “corruptly” intransitive would make the other methods of
violating the statute superfluous
 It then looked at various definitions of “corruptly” and said it was too
vague to provide notice that it forbade lying to Congress
 But to give it a narrow, transitive definition could never reach
lying to Congress
o But note that 1503 work also contains “corruptly”
 1503 only applies to judicial proceedings, so no
 But when presented with a vagueness challenged for 1503, the DC
circuit distinguished – United States v. Russo
 Anyone who lies to a grand jury is on notice that he may be
corruptly obstructing the grand juries investigation
 It also noted that anyone trying to “influence” Congressional
investigations, using conduct that might be innocent, might be
liable, and Congress could not have intended such a thing
o But FINALLY, in 1996 Congress enacted § 1515(b) to define corruptly
for the purposes of § 1505
 “Acting with an improper purpose, personally or by influencing
another, including the making of a false or misleading statement, or
withholding, concealing, altering, or destroying a document or other
information”
 This gave it both a transitive and intransitive application

18 U.S.C. § 1512 - Witness Tampering and Destruction of Evidence

 1505 and 1512
o 1505 – proof of knowledge of pending proceeding
 1512 – Official proceeding foreseeable
o 1505 – D acted corruptly
 1512 - D has intent less than corruptly except for persuasion
o 1505 – Any activity that obstructs
 1512 – Specific types of activities that may impair physical evidence
or compromise witness testimony
 o 1505 – Not clear it nexus required
 1512 – AA indicates nexus needed
o SO, charge under 1512
 Congress removed the references to witness intimidation and tampering that were
in 1503 and 1505 to make its own section
 It originally only covered coercive conduct, and left large kinds of non-coercive
conduct outside its reach (so Prosecutors would still use 1503)
 Congress then added the “corruptly persuades” language to fill this gap
 1512 focuses less on the corrupt motive and more on presumptively corrupt
methods, because only “persuasion” must be done “corruptly,” none of the other
elements require “corruptly”
 Arthur Andersen LLP v. United States (SCOTUS 2005) – p. 393
o Facts: AA was Enron’s auditor, audited its financial statements. AA has a
document retention policy, Odom reminds Enron team members to bide by
it. Temple told O to remind members. Then Temple reminded everyone to
cople. Duncan told other AA partners to comply. These reminders (and
subsequent destruction) came in part after the SEC informed AA that it was
investigating and wanted documents. Even when SEC formally opened
investigation, doc destruction continued even when partners expressed
unease. The SEC served subpoenas on Enron and AA for records, and they
finally stopped.
o Held: The government must show, and the jury must be instructed, that the
defendant “knowingly… [and] corruptly”
o The nexus requirement of Aguillar must also be shown in a 1512 prosecution
o Indeed, it’s not always criminal to persuade a person to withhold evidence or
testimony from a proceeding (e.g. a mother urging her son to plead the 5 th, or
a lawyer having a client withhold privileged information (UpJohn)
o The underlying conduct, persuasion, is otherwise innocent
o “Knowledge” generally means “with awareness, understanding, or
consciousness”
o “Corruptly” generally means “wrongful, immoral, depraved, or evil” – acting
with an improper purpose
o The district court took out key terms like “dishonestly” and allowed the jury
to find guilt if petitioner intended to “impede” government factfinding
o There is no “knowing… corrupt persuasion” when a person persuades
another to shred documents under a retention policy when the person does
not have in contemplation any particular official proceeding whether those
documents might be material
o Court is concerned about innocent conduct might be swept up by a broad
reading of the statute
o “Only persons conscious of wrongdoing could be said to “knowingly…
corruptly persuade”
 “Knowingly corruptly persuades” requires consciousness of
wrongdoing
 Defendants like to argue that, implicitly, the creation of 1512 means that 1503’s
omnibus provision does not apply to witness tampering
o The 2nd Circuit agrees
o Everyone else does not (9th, 6th)
 “Official Proceeding”
o 1512 activity must occur in the context of an “official proceeding”
o 1515(a) defines “Official Proceedings”
 a proceeding in any federal court
 a federal grand jury
 a proceeding before Congress
 a proceeding before a Federal Government agency authorized by law
 a proceeding involving an interstate insurance business
o Because it applies to so many types of proceedings that it’s much more useful
than 1503 (only for judicial proceedings)
o For 1512(b), an official proceeding need not be pending or about to be
instituted at the time of the offense
 But court seems to say in AA that there must be contemplation of
an official proceeding
 SO ADDED ELEMENTS under “PROCEEDING” for 1512
 Official proceeding must be foreseeable
 Individual must have that proceeding in contemplation
 Documents may be material to the proceeding
o Because an official proceeding need not be pending or about to be
instituted at the time of the offense, the statute obviously cannot
require actual knowledge of a proceeding
 1512(b)(3)
o does not require that the allegedly obstructive activity take place in the
context of an official proceeding
o Here, there need only be intent to hinder, delay, or prevent communication to
a federal law enforcement officer or judge of information relating to the
commission or possible commission of a federal crime
 Corrupt “Persuasion”
o Only persuasion requires a corrupt motive
o So “knowingly… corruptly” has to mean more than “corruptly” under 1503
o There is an important distinction between “corruptly persuading” and
“misleading conduct”
 “Misleading conduct” - defined in 1515(a)(3)
o 1512(b) – whoever knowingly engages in “misleading conduct” with the
intent to…
 “Misleading conduct” = knowingly making a false statement or
intentionally omitting information from a statement with the intent to
mislead
 NO PENDING PROCEEDING REQUIREMENT
 Only an “official proceeding” requirement
 o But, foreseen and contemplated (AA)
 Again issue of what “knowingly” modifies
 “misleading conduct”? with further intent to “affect testimony
or availability of documents”
 No corrupt motive requirement, so do you need an awareness
of wrongdoing?
 Only need false or misleading statement with intent to influence
 LOWER BURDEN
 1512(c)
o After Arthur Andersen, Congress was pissed, so in Sarbanes-Oxley added
1512(c)
o This change added the most sweeping expansion to this whole obstruction of
justice scheme
o “Whoever corruptly –
 Alters, destroys, mutilates, or conceals a record, document, or other
object, or attempts to do so, with the intent to impair the object’s
integrity or availability for use in an official proceeding; or
 Otherwise obstructs, influences, or impedes any official
proceeding, or attempts to do so…”
o Beforehand, 1512(b)(2)(B) required the D to tamper with ANOTHER
witness, with intent for the OTHER person to alter, mutilate, etc
o The new section imposes liability when the defendant is the primary
actor
 So it’s no longer a pure witness tampering statute
o This is being used beyond the white collar realm, to prosecute destruction of
evidence more broadly
o 1512(c)(2)
 This is INSANELY broad, broader than 1503 omnibus
 1503 applies to the “due administration of justice” and ENDEAVORS
 1512(c)(2) applies to ANY OFFICIAL PROCEEDING and ATTEMPTS
 the 10th and 2nd circuits require an Aguillar nexus because of the
similar language to 1503
 But DOJ brings these cases to try to avoid the nexus
requirement

Affirmative Defenses
 1512(e)
o D must prove by a preponderance of the evidence
o Must show that the person “lawfully engaged in prohibited means of
influencing testimony or withholding documents, but “his conduct consisted
solely of lawful conduct and… the defendant’s sole intention was to
encourage, induce, or cause the other person to testify truthfully
 1515(c)
o The safe harbor for lawyers
 o “This chapter does not prohibit or punish the providing of lawful, bona fide,
legal representation services in connection with or anticipation of an official
proceeding
o Applies to 1503, 1505, 1512, 1519, and 1520
o Congress basically didn’t want defense lawyers to be harassed
o Courts disagree about how it works
 Some say it’s a negative element – the burden of proof is always on the
government to prove that it doesn’t apply

Computer Associates Case

Mail and Wire Fraud

 “Bitches LOOOOOOOVE the mail and wire fraud statutes” ~ Judge Rakoff, basically
 They are inchoate offenses – they can apply to schemes that have not come to
fruition or caused any loss
 These statutes can be used to attack a HUGE range of criminal activity, even if it does
not exactly square with traditional notions of fraud
o Local and state political corruption
 They can be used to tackle conduct that might not otherwise be criminal at the time,
until Congress can whip up a statute to specifically deal with it
o But even then, prosecutors might still tack on a mail fraud charge just
because they can and are good at it
 They, on their face, have two elements*
o Scheme to defraud
o Use of mails/interstate wires in furtherance of the scheme
o BUT Judges will graft sub-elements onto the elements in order to narrow the
applicability
 There are a few key differences between mail and wire fraud
o Mail Fraud
 The mailing can be intrastate (because its under the post office
power)
 Although not originally, Congress expanded the law to PRIVATE mail
carriers
 So if it is an intrastate mailing using an interstate private
carrier, it’s okay under Commerce Clause
o Wire Fraud
 The wiring must be interstate (because it’s under the commerce
clause)
 Most courts hold that the government must prove:
 That the defendant know or could have reasonably foreseen
that wires would be used in furtherance of the scheme
 Interstate wires were actually used
  BUT, most do not require that the defendant knew or reasonably
foresaw that the wires used would be interstate
 Because this is really just jurisdictional
 Some Circuits have exceptions

Commonly Applicable Concepts for Mail, Wire, and Bank Fraud

 For mail and wire fraud, the “unit of prosecution” is each single act of mailing or
wiring, not the overall scheme (So Schmuck could have been charged 150 times)
 Sarbanes-Oxley gave longer sentences for mail and wire fraud
 Importantly, Sarbanes-Oxley also made it a crime to attempt or conspire to commit
and offense under this chapter (mail, wire, or bank fraud)
o Also, attempts and conspiracies to commit the fraud crimes will have same
statutory maximum as the substantive crime
 Neder v. United States (SCOTUS 1999) – p. 433
o Held: Under the scheme to defraud element, it must be shown that
material falsehoods were used (so it’s a sub-element)
o Neder argued that “defraud” is such a term and that Congress intended to
incorporate the materiality requirement from common law
o When Congress uses a legally loaded term from common law, we must infer
that Congress incorporated those established meanings absent indication by
the statute
o The government IS correct that SOME elements of common law fraud were
dropped out, because such elements were inconsistent with the “scheme to
defraud” requirement, as opposed to completed fraud
o Uses Restatement definition of materiality in FN 5 – “material if a reasonable
man would attach importance to its existence or non-existence in
determining his choice of action in the transaction in question
o To be clear, the common law elements of fraud were 1) material false
representation, 2) defendant intended to defraud the plaintiff thereby, 3) the
plaintiff reasonably relied on the representation, and 4), the defendant
suffered damages as a result of this reliance
 Neder said HALF of these elements (3 and 4) don’t apply to mail and
wire fraud
 Bridge v. Phoenix Bond & Indemnity Co. (SCOTUS 2008) – p. 437
o Held: For mail/wire/bank fraud have no requirement of reliance
o For RICO civil liability, since the statute incorporates “mail fraud” and not
“fraud,” there need be no showing of reliance
o Victim of the fraud need not be the one to whom the false representations
were made
o Note United States v. Brown in n. 4 on 442 – is there a requirement that a
reasonable person would have relied on the misstatements? - 11 th Cir. Notes
what a person of “reasonably prudence” would do
 So courts are worming in reliance, but the circuits are split
 Intent to Defraud
o United States v. Regent Office Supply Co. (2nd Cir 1970) – p. 443
  Facts: Agents of D lie to office supply managers to get them to talk to
them/sell them the products. But the price and quality of the goods
was always truthful.
 The fraud statutes require evidence from which it can be inferred that
some actual injury, however slight, was a reasonably probable
result of the deceitful representations if successful
 Actual harm not required, only an intent to cause harm (i.e.
reasonably probable result is enough to infer intent)
 It may also be satisfied where a wrong has been suffered when a
person is deprived of his chance to bargain with all of the facts
where the absent facts are material to the bargain they are induced
to enter
 There does not need to be proof that the victim was actually
defrauded, because a “scheme” is enough
 Fraudulent intent is not merely an intent to deceive, it is an
intent to injure
 Distinguishes from other cases, where the lies went to the quality of
the merchandise being purchased
 Court doesn’t want to criminalize every single untruth, concerned
about puffery
 Is this case an intent to defraud case, or a materiality case?
 Courts disagree. The two concepts are closely related – often, a
jury will be asked to infer intent from proof that a defendant
made a clearly material misrepresentation to secure some
unwarranted benefit
o The Circuits agree than an intent to defraud must be proved
 But they DISAGREE as to whether there must be an intent to harm or
injure
 The Second Circuit, a la Regent Office Supplies, says yes
o 2nd, 5th, 6th, 8th, and 10th
 The First Circuit says no (and only them)
o They rely on common law fraud, and say that reliance is
the key question (but need not show actual reliance).
o However, the Circuits all agree that actual injury need not be proven
o SCOTUS – “defraud” means “to wrong someone in his property rights by
dishonest methods or schemes and typically involves the deprivation of
something of value by trick, deceit, chicane, or overreaching”
o Concealment as Fraud - United States v. Siegel (2nd Cir 1983) – p. 450
 Facts: S and A were execs at toy company. They would take
recalled/discontinued products and sell them off-book to merchants
for cash. Sales never on co’s books, they told auditors no unrecorded
assets, cash sales never disclosed. Sales about $100K over 9 yrs.
 Held: There can be fraud where a fiduciary fails to disclose
material information which they have a duty to disclose to
 another under circumstances where non-disclosure could or does
cause harm to the other
 The embezzlement is not the fraud – it is the failure to disclose the
conduct, so if you disclose misconduct not guilty of a federal crime
 Proving Fraud from Breach of Duty
 Prove a fiduciary duty exists
 Breach of duty through embezzlement
 Defendant does not disclose material info = harm to victim
 Objects of a Scheme to Defraud
o Most fraud involves an attempt to obtain money or other tangible property
o However, there can be other objects of fraud
 Intangible property – confidential information or control of business
assets
 Intangible non-property rights – e.g. the right to “honest services” (but
see McNally)
o Unique Aspects of Intangible Rights Cases
 Object: Cases are about the object of the fraud – often no economic
loss to an identifiable victim (public or employer)
 The object of the fraud is the deprivation of someone’s right to
honest services
 Fraud: Schemes where state or private employees use positions of
trust and confidence for private enrichment
o The fraud is non-disclosure of dishonest act
o The “honest services” theory
 Prosecutors wanted to get a local and state political corruption
 The cases were brought, and actually accepted by courts, when
politicians were corrupt, or when their activities, although unethical,
were not illegal under state or local law
 The theory was that the public had been robbed of their right to
“honest services” in the government
 The theory was that the fraud was the failure to tell
(nondisclosure) the citizenry about the corruption or
allegedly improper conduct
 McNally v. United States (SCOTUS 1987) – p. 457
 Facts: Public official in KY uses position to pick an insurance
company, conditions contract so that co will funnel kickbacks
to other companies, including one that M owned.
 Only schemes to defraud persons of their money or property
are within the reach of the fraud statutes – schemes which
deprive persons of “intangible” rights are not within the
statutes
 The fraud alleged was the failure to disclose awarding of
contracts when there was a legal duty to do so – i.e. right to
honest government services
  The STATE did not sustain any loss, did not have to pay more
for insurance, so the object of the fraud was not money
 So SCOTUS is rejecting the “honest services doctrine,” seen as
big change in the law.
 CONGRESS INTERVENES TO OVERRULE MCNALLY
 Congress enacted § 1346 to say that
o “scheme or artifice to defraud” includes a scheme or
artifice to deprive another of the intangible right to
honest services
 Applies to mail and wire fraud, health care fraud, bank fraud,
and securities fraud
 But what does “intangible right of honest services” mean?
o All pre-McNally honest services cases (see Skilling)
o Public Sector cases
 Bribery – take action in exchange for benefit
 Kickback – paid to send business in a certain
direction
 Non-disclosure of material information
o Private Sector cases
 Bribery and kickbacks
 Self dealing – you are acting for self-benefit
under the pretense of acting for another
 There were 8,000 Circuit splits before Skilling
 Must a public official violate a state law to support honest
services mail fraud conviction?
o Yes? – 5 and 3 – fiduciary duty established by state or
federal law
o No? 1, 4, 7, 8, 11 – governed by uniform federal
standard
 Bribery? - Quid pro quo? – explicit or implicit?
o Exchange of value
o Or gratuities? – being rewarded for conduct after the
fact
 Non-disclosure of material information?
o When is there a duty to disclose
o Public harm required?
o Private gain?
 Skilling v. United States (SCOTUS 2010) – p. 486
 Held: The Honest Services Fraud Statute is limited to the core
pre-McNally applications of bribery and kickback schemes
 To satisfy due process/a void for vagueness challenge: “a penal
statute must define the criminal offense 1) with sufficient
definiteness that ordinary people can understand what
 conduct is prohibited and 2) in a manner that does not
encourage arbitrary and discriminatory enforcement.”
 The FRAUD was misrepresenting the company’s fiscal health
and inflating stock prices, the OBJECT is the right to his honest
services
 Court says we can’t have self-dealing in the “core” because
there was no consensus pre-McNally, but there really wasn’t
agreement about bribery and kickbacks before McNally
 After Skilling, no honest services fraud for
o Self-dealing
o Non-disclosure of material fact in breach of a fiduciary
duty
 Those who tried to appeal their convictions after Skilling were
mostly rejected – the Court’s found that their convictions could
stand
 A whole bunch of issues remain?
o Does the defendant have to owe a fiduciary duty?
o Where does the fiduciary duty come from?
o Does the statute apply to public and private officials? Is
the standard of liability the same?
o What is a bribe? What is a kickback?
o Must there be an harm to the victim? What kind?
o Other Intangible Property Rights
 Carpenter v. United States (SCOTUS 1987) – p. 468
 Facts: W is reporter for WSJ, writes influential column that has
impacts on stock prices. WSJ policy was that all info was
confidential before publishing. W was in scheme to give other
info in column early, and then they would trade. C is W’s
roommate eventually go to the SEC and squeal.
 Held: The mail and wire fraud statutes are not limited to
tangible property
 The object of a fraud under the statutes can be confidential
information acquired or compiled by a corporation in the
ordinary course of its business
 The deprivation of exclusive use over confidential information
by the owner is sufficient to satisfy the deprivation of a
property interest
 Fiduciaries who obtain information in the course of their
confidential or fiduciary relationship have a duty to the
source of confidential information not to use it for their own
personal benefit
 Here, the FRAUD was the breach of the duty of confidentiality,
the OBJECT was WSJ’s confidential business information
 Court affirmed imposition of criminal liability for
 o A duty created by the employer to keep certain
information confidential
o A breach of that duty
o AND failing to tell them employer that the duty was
violated
 Lower courts have approved another intangible property right –
denying the victim the right to control its assets by depriving it of
information necessary to make a discretionary economic
decision
 In United States v. Wallach (2d Cir) the corporation made
payments to persons, including a director, and disguised those
payments to hide them from the SEC and shareholders
o The Court held that the defendant’s fraudulently
deprived shareholders over their right to control how
the corporations money was spent
o The Court went back to Learned Hand in Rowe,
discussing how the victim loses the chance to bargain
with the facts before him
o There was a scheme to conceal the true nature of the
transactions
 The theory is predicated on showing that some person or
entity has been deprived of potentially valuable economic
information
 However, there are times when corporations have
legitimate, non-fraudulent reasons to conceal information
– would that be covered under the theory
o To avoid this, the Second Circuit focused on the intent to
injure in United States v. D’Amato
o The court emphasized that the person or entity must be
the specific target of the inaccurate or concealed info
o The theory therefore cannot be charged if the officer in
good faith believes that the misrepresentation is
otherwise legal and has the best interests of the
corporation at heart
o Elements of the Defense
 Management made an otherwise lawful decision
that concealment or nondisclosure was in the
corporation’s best interest
 Management acted in good faith and did not
intent to benefit personally from the deception
 Unissued Government Licenses
 In Cleveland v. United States, the defendant lied on an
application for a state gambling license, and the government
said that the state had a property interest in the licenses
 The Court rejected the theory, and said that the State’s main
concern is a regulatory one, and that any financial stake
accrues after the license is issued
 The Court also expressed a concern about expanding liability
absent clear intent from Congress and stepping into an area
which the States can and do regulate
 Tax Revenues under Foreign Law
 In Pasquantino v. United States, the defendants were smuggling
liquor into Canada to avoid paying Canadian excise taxes, and
two of the conspirators made an interstate phone call
 The Court held that Canada’s interest/right in uncollected
taxes was a property right, observing the common law
tradition that the right to be paid money is a property right
 The Court contrasted the decision with Cleveland, where there
was no allegation that the State had been defrauded of money,
and the defendant their had paid the State all money that was
owed. Furthermore, Canada’s interest in unpaid taxes was a
“straightforward economic theory”
 The Court also accepted the fraud theory, that by concealing
the liquor from border officials and failing to declare them, that
was a scheme to defraud
o What counts as a cognizable property right is a hotly contested issue
 e.g., the right to a fair bidding opportunity is not a property right
 But a state’s interest in confidential testing information is

Mail Fraud
 § 1341 - Whoever, having devised or intending to devise any scheme to defraud or
o for obtaining money or property by means of false or fraudulent pretenses,
representations, or promises…..
o for the purpose of executing such scheme or artifice or attempting so to do,
places in any post office or authorized depository for mail matter
 “Scheme or artifice” definition differs in different circuits
 Schmuck v. United States (SCOTUS 1989) – p. 422
o Schmuch sold used cars. He would roll back the odometers and sell them to
retail dealers for artificially high prices. The DEALER would then submit a
form to the state, and resale was not complete until the title was received. He
did this for 150 cars.
o Held: For a mail fraud conviction, it is enough that the mailing was “incident
to an essential part of the scheme or a step in the plot”
o The use of the mails need not be an essential element of the scheme
o Mailings which are supposedly “innocent” or routine may satisfy the statute
(i.e. they need not contain false information)
o The relevant question is whether the mailing is part of the execution of the
scheme as conceived at the time, even if it ends up hurting the scheme overall
or result in the fraud being discovered
 o Note that Schmuck never sent anything in the mail
 So gov argues that Schmuck could reasonably have foreseen that his
action would cause a mailing to be sent (the title change doc)
 “A defendant “causes” a mailing if he could have reasonably
foreseen it,” even if not actually intended
o Court focuses on three cases
 Kann – Court says that the scheme had reached fruition because they
had received the checks and gotten their money, it didn’t matter to
them how the bank which paid the check sent the checks to the
drawee bank (there, mail)
 Parr and Maze – Court said it was immaterial how payment was
collected when defendants used a stolen credit card to obtain gasoline
et al, and the oil company mailed invoices for payment
o Schmuck Rule Changes
 Mailing need only be incident to the fraud
 Mailing can be innocent (contains no fraud
 Mailing by D, cohorts, or even victim is okay, mailing only need be
foreseeable
 If mailing takes place after D got what he wanted, gov must argue
 Scheme has not come to fruition (is ongoing), OR
 Mailing designed to LULL (United States v. Lane, p. 429)
 There is a question of whether jurisdiction (use of mail) can be manufactured by
federal agents
o Originally, the Second Circuit said “absolutely not” in United States v. Archer,
where federal informants placed interstate calls to the targets to discuss the
scheme and prompted the targets to make interstate calls
o However, “manufactured jurisdiction” has been limited extensively
 In United States v. Wallace, the court allowed the suit to go forward
when the FBI introduces the federal element into a non-federal crime,
and the defendant then takes voluntary actions that implicate the
federal element
 There is also the “lulling” theory – that although the fraud is essentially complete,
the defendant then used the mailing to lull the victims into a false sense of security
to prevent them from, e.g., calling the police
o Theory will be allowed if communication is designed to delay or cover-up
detection of the fraud
o Some Courts say that the comm must be directed to the intended victim

Conspiracy
Generally
 § 371 - “If two or more persons conspire either to commit any offense against the
United States, or to defraud the United States, or any agency thereof in any manner
or for any purpose, and one or more of such persons do any act to effect the
 object of the conspiracy, each shall be fined under this title or imprisoned not more
than five years, or both.”
 Elements:
o Existence of an agreement to achieve an unlawful objective
o The defendant’s knowing and voluntary participation in the conspiracy
o The commission of an overt act in furtherance of the conspiracy
 Prosecutors love the fraud statutes, but Conspiracy is their backup bitch
o There are lots of specific conspiracy statutes for all sorts of different laws
 It’s an inchoate offense – the plan need not come to fruition
 Is separate from the substantive offense, and separate sentences can be imposed
 Key issue – Exception for Co-Conspirator Statements
o Fed. R. Evid. 801(D)(2)(E)
 A hearsay statement is one “other than one made by the declarant
while testifying at the trial or hearing, offered in evidence to prove the
truth of the matter asserted”
 HOWEVER, under 801(D)(2)(E) – a statement is NOT hearsay if it is
offered against a party to a conspiracy and is a statement by a
coconspirator of the party during the course and in furtherance of
the conspiracy”
o These can be extremely damaging to defendants
o In order to get the statement admitted, the government must surmount two
low hurdles
 Must establish that a conspiracy existed by a preponderance of the
evidence
 However, the Fed. Rules also make clear that the content of the
statement is not enough on its own to establish that there was
a conspiracy
 Must show that the statement was made during the course and in
furtherance of the conspiracy
 If the record shows there was no conspiracy, or that it had long
since ended in success or failure when the statement was
made, the statement is inadmissible. Krulewitch v. United States
(SCOTUS)
 The gov has had limited success in arguing that there were
later efforts to conceal the crime and there was thus an
ongoing scheme – SCOTUS has generally rejected
o But the gov can show that the objective of the
conspiracy was such that concealing the activity was
necessary
o Sometimes the court will not decide whether conspiracy was proven until the
end, but allow the jury to hear the statement, and then issue curative
instructions if decides no conspiracy, but JURY HAS ALREADY HEARD
 Joinder
o Joinder of defendants is more readily available where there is a
conspiracy charge under Rule 8(b)
 o In Zafro v. United States, SCOTUS refused to sever a case where the
defendants had conflicting defenses, because joinder is preferred for joint
indictments and because it promotes judicial efficiency
 In Zafro, SCOTUS said that the district should grant a severance
only when a joint trial would compromise a specific trial right, or
where joinder would prevent the jury from making a reliable
judgment about guilt or innocence
o Defendants could argue that the jury would have difficulty sifting through the
evidence and make individualized determinations
 But the fact that there is a ton of evidence against one defendant, but
not the other, is not enough
o Courts will often find that limiting instructions are sufficient to protect
defendants
o In the context of conspiracy, severance will rarely be required
o Prosecutors like joint trials because it eases the burden of telling the
whole story of the conspiracy, and can present, in one trial, the aspects of
the entire scheme
 Venue
o The government bears the burden of showing by a preponderance of the
evidence that venue is proper
o There are two constitutional venue protections – one in Article III, and one
in the Sixth Amendment – both require that the trial occur in the state (and
district) where the crime was committed
o Venue is really important to both the defendant and the government
 You need to have access to witnesses and evidence
o The main question is where the crime was “committed”
 Look to the nature of the crime alleged and the location of the act
or acts constituting it – United States v. Anderson (SCOTUS)
 Because many white collar crimes are ongoing offenses consisting
of multiple acts, the venue issue can be complicated
 The issue is relieved by 18 U.S.C. § 3237(a)
 “Any offense against the United States begun in one district and
completed in another, or committed in more than one district,
may be inquired of and prosecuted in any district in which
such offense was begun, continued, or completed.”
 Statute of Limitations
o Generally five years
o However, the statute begins tolling from the last overt act in furtherance
of the conspiracy
o So even if the beginning of the conspiracy is outside the SoL, if the last overt
act occurred within the past five years, you’re Gucci

“Offense” vs. “Defraud”

 United States v. Arch Trading Co. (4th Cir 1993) – p. 671
 o Facts: Arch has a contract with a company owned by the gov of Iraq to ship
lab equipment and install it. Most materials had shipped and arrived, but not
installed. Iraq invades Kuwait, Prez issues exec orders for an embargo. Arch
received copies of orders. Execs from Arch try to enter Iraq, but fail. Arch
tries to contract with a Jordanian co, and Arch reimbursed expenses for its
employees and Jordanian employees. Then they lie to bank that they had
installed before the embargo, but bank says they need license from gov, so
Arch lied to Treasury about completing before embargo.
o Held: Arch was properly charged with conspiring to commit an offense.
o When Congress provides criminal sanctions for violations of executive
orders that it empowers the President to issue, such violation constitutes
an “offense” against the United States
o § 371 criminalizes two types of conspiracies – conspiracies to commit an
offense against the United States and conspiracies to defraud the United
States
o The two prongs of 371 are not mutually exclusive – conduct may be
proscribed by both clauses, and convictions under one can be upheld on
charges of another
o Conspiring to defraud the United States means
 to cheat the government out of its property or money,
 but it also means to interfere with or obstruct one of its lawful
functions by deceit, craft, or trickery, or at least by means that
are dishonest, and it is not necessary that the government shall
actually suffer pecuniary or property loss
 Conduct, if completed, need not violate any other provision of the
criminal code
o The evidence here would support a conviction under either prong
 Arch probably could have been charge under the defraud clause as
well because they interfered with a lawful government function (the
effective administration of the executive order)
 Obviously, a conspiracy may consist of an agreement to do an unlawful act, usually
charged under the “offense” clause
 But under the defraud clause, can you be charged with conspiring to commit lawful
conduct?
o Arch Trading indicated, and Hammerschmidt v. United States held, that a
conspiracy to defraud the United States could mean “to interfere with or to
obstruct one of [the government’s] lawful government functions”
o This can include agreements to engage in activities that are not necessarily
illegal
 “So long as deceitful or dishonest means are employed to obstruct
government functions, the impairment need not violate a separate
statute”
 Four elements of conspiracy to defraud case
o Defendant entered into an agreement
o To obstruct a lawful function of the government
 o By deceitful or dishonest means
o At least one over act in furtherance of the conspiracy
 The fraud need not be common law fraud. It could be a misrepresentation or other
dishonest means. There need not be a pecuniary or property loss by the
government. It could involve violating the customary practices or duties of a
particular gov agency. There need not be any actual contact between the
conspirators and the government.
 This can be very broad, the types of cases that have been brought are
o Interfere with the performance of official duties by gov officials
o Make payments to gov officials, usually to influence some pending matter
o To deprive the gov of proper government functions
o To embezzle or improperly obtain and use gov funds
o To fail to pay taxes
o To deprive the IRS of information
 Merger of acts into single conspiracy - Braverman v. United States (SCOTUS)
o One agreement cannot be divided up into several agreements for each
individual act (here of violating different IRS provisions)
o The charge of conspiracy is not duplicitous, because the conspiracy is a
substantive crime
o “The single agreement is the prohibited conspiracy, and however diverse its
objects it violates only but a single statute”
 Merger is a double-edged sword for the defendant
o It widens the scope of the conspiracy to every act committed in furtherance
thereof
o So the defendant is liable for every substantive crime taken by a co-
conspirator
o It applies to everything from otherwise hearsay statements, substantive
criminal acts liability, and venue and jurisdiction requirements
o Even if there is not enough evidence to sustain one of the objects of the
conspiracy, a general guilty verdict is okay if there is enough evidence of any
one of the other objects
 There is a circuit split as to whether the “offense” clause and the “defraud” clause
are two separate offenses, or alternative ways to commit the same crime
o Defraud charges should specific enough to alert the defendant as to what
conduct is being charged as criminal
 United States v. Stevens (11th Cir 1990) – p. 676
o Facts: Stevens formed 4 cos in FL to get gov contracts. Cos got a contract with
Navy, would get periodic progress payments. S was sole shareholder and had
sole control. S misrepresented that checkpoints had been reached in requests
for progress payments. Stevens applied for loans at federally insured banks,
listing as security income derived from the contract.
o Held: A corporation may be liable under § 371 for conspiring with its
officers or employees.
 o A group of conspirators cannot escape conspiracy liability merely
because they all act on behalf of a corporation (no “single entity” theory)
o Liability for a conspiracy may be imputed to the corporation itself on a
respondeat superior theory
o Rejected the “single entity theory.”
o Stevens cannot be held liable for a conspiracy with corporations which he
wholly owned and acted for
o The threat posed by conspiracy is the threat of two creative minds
o The general rule has been that you can’t escape liability because you all work
for the same corporation – this case is exception because only one person
 Two or more agents of a corporation conspiring together on behalf of
the corporation constitute a conspiracy
 Debate of Conspiracy Liability
o Threats of conspiracies
 Increases likelihood of success
 Decreases probability that individuals will abandon the plot
 More likely that objective will be achieved
 Makes commission of further crimes more likely
o Neal Katyal has discussed the dangers of conspiracy
 Groups cultivate a social identity, which makes people more likely to
engage in risky behavior, leads persons to act contrary to self-interest,
creates loyalty, and facilitates harm against non-members
o One purpose of conspiracy being a stand-alone crime is to give the
government another tool to combat criminal activity
 Criminal conduct can thereby be stopped before it comes to fruition
 This is okay, because criminal intent has formed, and an action
has been taken
 The general rule does not apply in the Civil Context of Sherman Act anti-trust
violations - individuals within the same corporation cannot commit anti-trust
violations
o The same is true for corporations and their wholly-owned subsidiaries –
Copperweld Corp. v. Independence Tube Corp. (SCOTUS)
 Conspiracies can be established by circumstantial evidence, or by tacit
understanding rather than an explicit agreement
o But they CANNOT be established by mere presence at the scene of a
crime, or that the person KNOWS that a crime is being committed –
there must be purposeful behavior aimed at furthering the conspiracy

Defenses to Liability
 Impossibility - United States v. Recio (SCOTUS 2003) – p. 681
o Facts: There was an existing conspiracy to distribute drugs. The government
seized the drugs which were to be distributed. Not knowing this, the
defendant then joined the conspiracy.
o Held: Impossibility is not a defense to conspiracy charges.
 o A conspiracy terminates when its objects are committed or the
agreement is abandoned
o Government defeat of the conspiracy’s objective does not necessarily and
automatically terminate the conspiracy
o The agreement to commit an unlawful act is a distinct evil, that poses unique
threats to the public
 Where the government has intervened but the conspirators do not
know it, the risks remain, and the essence of the conspiracy
(agreement) remains
 Withdrawal
o A conspirators role can end where the defendant “abandoned, withdrew
from, or disavowed the conspiracy or defeated its purpose”
o To avoid liability, the coconspirator can withdraw before any conspirator
has taken an overt act in furtherance
o What is withdrawal?
 United States v. U.S. Gypsum Co. (SCOTUS) – affirmative acts
inconsistent with the object of the conspiracy and communicated in a
manner reasonably calculated to reach coconspirators have generally
be regarded as sufficient
 Mere inaction is not enough
o Practical implications
 Assuming an overt act already took place, withdrawal will not impact
liability for conspiracy
 Statute of Limitations will begin to run at the date of withdrawal (for
the withdrawer)
 Most courts hold that co-conspirator who has withdrawn cannot be
liable for substantive crimes of other co-conspirators under Pinkerton
 Co-conspirator statements made after withdrawal not admissible
against conspirator who has withdrawn
 Entrapment?

Mens Rea
 Must prove that the defendant possessed two levels of mens rea – “knowledge of
the criminal purpose of the scheme and with specific intent to aid in the
accomplishment of those unlawful ends” United States v. Svoboda (2d Cir.)
o Intent to agree (knowledge of the criminal purpose of the scheme)
 D must have knowledge of the agreement and voluntarily participated
in it
 Conscious participation may be inferred from circumstantial evidence
o The specific intent that the object offense be committed
 Defendant need not know all of the details of the conspiracy (Stavroulakis)
 Mere presence at scene of criminal act or association with conspirators does noe
constitute intentional participation in a conspiracy, even if D had knowledge of
conspiracy
  If gov proves existence of conspiracy beyond reasonable doubt, D’s intent to further
conspiracy, & D’s knowledge of the conspiracy, THEY ONLY NEED PROVE “SLIGHT
CONNECTION” BETWEEN D AND CONSPIRACY

Agreement
 Must be two or more people working toward a common goal (2 autonomous minds)
 Corporations, their officers, agents, etc are considered individual actor
 Sole shareholder of corporation may not conspire with corporation
 Government can demonstrate existence of agreement through circumstantial
evidence
 Defendant need not know of all of the co-conspirators – if you agree with
someone, the other person can go and agree with others to expand the scheme
 If only two actors, one cannot be a government agent
o The money laundering statute has a specific provision essentially
allowing liability for agreeing with an under-cover agent
o Generally, though, federal conspiracy law otherwise requires a bilateral
agreement, so there can be no conspiracy between a defendant and
informant or undercover agent because it takes two to conspire, and the
other part lacks the true criminal intent necessary to render them a bona fide
coconspirator
o The MPC takes a unilateral approach, where the intent of the other party
doesn’t matter
 United States v. Stavroulakis (2nd Cir 1992) – p. 683
o Facts: Gov informant introduced S to undercover FBI agent. FBI agent says
his friends need help laundering money from narcotics sales. S sets them up
with G. Agent told S that G needed to be willing to avoid currency reporting
laws, and needed secrecy, and S agreed. S and Agent came up with scheme to
launder money. They lied to G, said it came from gambling because G
wouldn’t do narcotics money. The three come up with the plan. Later, Agent
and G spoke, affirmed that money from gambling. S shows up and signs
account card.
o Conspirators need not agree on ancillary aspects of the scheme not
running to the heart of the agreement, they must agree on the essential
nature of the plan
o The conspirators must agree on what kind of criminal conduct was in fact
contemplated
o When charged under the “offense” clause of the conspiracy statute, the
conspirators must have agreed to commit the same offense
o In the money laundering context, so long as the conspirators agree to launder
money, and the money in fact comes from one of the illegal sources under the
statute, it does not matter that the conspirators did not agree on the
underlying source activity
o Requiring agreement on every detail would allow conspirators to thwart
liability by compartmentalizing information
 o Stav and G are the two accused of conspiring, not Stav and the Agent, so that’s
why they argue about G’s state of mind
 The rule of consistency, where the acquittal of some coconspirators required the
acquittal of others, has essentially been wiped away by SCOTUS in United States v.
Powell

Overt Act
 Need not be the substantive crime charged as object of conspiracy
 Over Act need not be criminal in characters (innocent acts in furtherance of
conspiracy)
 Overt act by one conspirator is enough for conspiracy liability for all co-
conspirators
 D is liable for overt acts committed by co-conspirators both prior to and during the
D’s participation (for the purposes of establishing a conspiracy)
 Statute of limitations begins to toll from date of last overt act

Scope and Kind of Conspiracy

 A frequently disputed issue is whether the government appropriately charged the
scope of the conspiracy – is this a single, large conspiracy or several smaller
conspiracies
 The concern is over lumping a defendant in with criminal activity he had
nothing to do with
 United States v. Gatling (DC Cir 1996) – p. 668
o Facts: DC DPAH gives out federal housing subisidies. Walker is admin, Gatling
is housing specialist for giving out subsidies. Subsidies available to certain
need categories, must be on wait list, must be DC resident. Categories are
ranked, everyone on waitlist in that category gets subsidy before moving to
next category. Chicago residents contact W and offer her payments in
exchange for subsidies. W directs them to G, G assists them in filing
application falsely claiming DC residency. DC residents received subsidies
in exchange for money when not on waiting list or not next in line. DC’s
would go to Jackson and Knight, who took them to DPAH. G would take
applicants to office, and took the $500 and gave them subsidies. Knight
testifies that he heard Jackson say that W and G were splitting the
money. W also deposited unexplained money into bank accounts.
o Held: Sufficient evidence to prove that there was one large conspiracy.
o In determining whether there was a single conspiracy or multiple
conspiracies, look at factors including
 A shared common goal
 Interdependence between the alleged participants
 Overlap among alleged participants, like core participants linked to
all of the defendants
o Interdependence can be satisfied even where the assistance one branch of
the conspiracy provides to another is minimal
 o Reasoning:
 Both the Chicago and DC schemes shares a common purpose –
obtaining money in exchange for section 8 subsidies
 The differences between the schemes were differences in the
modus operandi, not differences in the underlying objective
 We don’t narrowly define the conspiracy’s purpose
 The schemes were still very similar in operation – they
involved DPAH subsidies at the DC office, and took advantage
of the lax oversight of the office
 There was also a ton of overlap in the timing and participants
 basically occurred at the same time
 Walker and Gatling were main figures in both
 Interdependence
 there is interdependence given the overlap in timing and that
the subsidies were issued by DPAH
 Because of this, accusations relating to one scheme could lead
to the exposure of both
o Court admits that this factor is weak, but rely on overlap
o But won’t this almost always be true if there are
common participants?
 The evidence of common purpose, participants, time, and
interdependence between the two schemes was sufficient for a
reasonable juror could conclude that a single conspiracy existed
o Big Issue was Hearsay for Co-Conspirator Statements, see above
 Says there was enough evidence that Walker and Jackson were co-
conspirator
o One benefit of charging as part of a larger conspiracy is you can charge them
under Pinkerton for all substantive crimes committed by co-conspirators
 Wheel Conspiracies
o Kotteakos v. United States, 328 U.S. 750 (1946) – Wheel theory
 One person, the hub, is accused of conspiring with others, the spokes,
but the RIM was missing because the spokes were not aware of each
other
 For a single “wheel” conspiracy to exist, the people who form the
spokes must
 A be aware of each other
 Do something in furtherance of a single, illegal enterprise
 If there is not some interaction between the spokes and at least one
common illegal object, the wheel has no rim to enclose it
 Chain Theory
o Blumenthal v. United States, 322 U.S. 539 (1947) – Chain Theory
 Were part of a conspiracy to sell whiskey below required prices
 Some middlemen didn’t even know each other, or the owner of the
whiskey
  Proof of mutual dependence – proof that each link in the criminal
chain was mutually dependent on others
 SCOTUS said they “had to know that they were indispensible cogs
in the machinery thorough which the illegal scheme was executes”
 The defendant knows he was aiding in part of a larger plan or
broader scheme
 The key element is interdependence – the success of the conspiracy
depends on the successful operation of each link in the chain
 Knowledge of the existence of other links can be inferred from the
nature of the enterprise
 Post-Conviction challenges to the scope of the conspiracy very rarely work
o Even if the defendant shows that he was improperly charged as part of a
single conspiracy, the court will look at the variance under harmless error
analysis

Pinkerton Liability
 Under Pinkerton v. United States, if a defendant is found to be a part of a
conspiracy, the defendant may also be convicted of every substantive offense
committed by a co-conspirator that was
o within the scope of the conspiracy and
o in furtherance of the conspiracy,
o and reasonably foreseeable as a necessary or natural consequence of the
agreement
 This is so even if the defendant did not participate in the substantive crime or even
knew it occurred
 Predicated on an agency theory
 Pinkerton usually applies in two situations
o Most common – the substantive crime is also one of the primary goals of the
conspiracy
o OR, substantive crime helps achieve one of the primary goals of the
conspiracy
 Can you be held liable for crimes committed before you joined the conspiracy?
o NO
o But you can be held liable for conspiracy, because “overt acts” in furtherance
have already occurred
 United States v. Tilton (5th Cir 1980) – p. 697
o Facts: T manager of Sea-Land. SL has K to refurbish chasses, but needed to
outsource some to get it done on time. T selected Streaker, with B and F. F
told B that T was going to be getting a “commission” (kickback) per chassis,
and to bury the payments. T also selected UTS, with C and G. C told G that T
would need commission for each chassis, and that he knew Streaker was
doing same. UTS would overbill SL for hidden, fake fixes. Invoices were
mailed, then they sent T a check per agreement. Expenses hidden as expense
accounts.
 o Procedure: Tilton was charged and convicted of conspiracy to commit mail
fraud AND THE SUBSTANTIVE MAIL FRAUD FOR the other’s acts.
o Held: Tilton be held liable for the mail fraud of his co-conspirators.
 COPELAND SAYS THAT TILTON MISAPPLIES PINKERTON – not really foreseeable,
didn’t really agree to a conspiracy to commit mail fraud

Health Care Fraud

 FBI estimates that HCF costs the gov/taxpayers tens of millions (est. $80 billion)
every year
o National health care expenditures are $2.9T in 2013
o Based on unique aspects of health care
 Ill-informed consumers leave decisions to provider
 Third-party payer reimbursements means consumers and providers
don’t worry about true costs of services
 Providers makes more money with more demand, so no incentive to
control demand
 Fee-for-service model means more money for each service provided
 Medicare – for the elderly and sick
 Medicaid – for low-come persons
o Joint federal and state program – federal regulations, but state programs can
vary slightly
 Agencies involved
o Medicare and Medicaid provide reimbursements on a fee-for-service basis
o Center for Medicare and Medicaid Service (CMS) runs Medicare and
Medicaid
o The Health and Human Services Office of Inspector General (OIG) is
responsible for eliminating waste, fraud, and abuse
o OIG investigates Medicare and Medicaid fraud and serves as a liaison to the
FBI and DOJ, as well as state agencies
 DOJ Involvement?
o OIG could refer a violation of the AKS
o Civil False Claims case brought by a whistleblower
o Violation of Food, Drug, and Cosmetic Act (referred by FDA)
 Both criminal and civil laws are used by the government to crack down
 Medicare and Medicaid are ripe for fraud because they function as reimbursement-
for-services models – the provider receives payments based on each service
provided, based on quantity, not quality
 In addition to whistleblowers (old school), the gov is now data mining information
and records of providers
 The OIG at DHHS will answer requests for advisory opinions from persons based on
factual scenarios, and are binding only on the requestor
Anti-Kickback Statute (AKS)
 The main criminal HCF statute
 Targets those who receive remuneration for the purpose of inducing the referral of
federal health care program related business
o E.g. a doctor receiving a referral fee from a lab for sending a Medicare patient
there
 Concerns that the statute might impact some potentially beneficial or legitimate
business practices
 Elements
o The defendant knowingly and willfully
 Original statute had no mens rea, was incredibly broad and could
sweep up innocuous conduct, so courts would require super mens rea
a la Ratzlaf
 Congress added the requirement in 1980, but there was a split over
whether specific intent to violate the statute was required, or just
knowledge that the conduct was unlawful
 Obamacare clarified that specific intent to violate the statue is not
required, only knowledge that conduct was unlawful
o Offered or paid, solicited, or received any remuneration
 Anything of value directly or indirectly received
 Any benefit (dinner, gift) exchanged by and between medical
providers
o To induce or in return for
o The referral of program-related business
 Criticism is that it doesn’t distinguish between corrupt requests for payment
and those that would improve the quality of care
 It’s a very broad statute, can cover conduct that might be innocuous
 What about when remuneration is legitimate reimbursement for services
rendered in connection with a referral? (Greber)

“Remuneration”
 “To pay an equivalent for service”
 By including kickbacks and bribes, statute expands remuneration to cover situations
where no service is performed
 Fact that payment was for remuneration (for a service), rather than a kickback, does
not mean no violation
 More difficult to show when there is a service being performed (i.e. payment for
remuneration)
o Really have to show that they are being paid more than fair market
value of the services

One-Purpose Test
 United States v. Greber (3rd Cir 1985) – on ANGEL
o Factual Notes: G prez of C-M, org that provides diagnostic services. One
service is heart monitor. C-M would scan tape, compare to patient diary. C-M
 billed Medicare for the service, forward portion of payment to referring
physician. G paid Dr. Avallone et al “interpretation fees” for consultation,
explaining results to patients. G said in civil proceeding that if not for fee,
doctors would not refer to C-M.
o D argues that as long as the ONLY purpose of payment wasn’t inducement,
it’s okay.
o Held: If one of the purposes (even if there are others) of a payment was to
induce future referrals, the statute has been violated.
o The government correctly argues that the statute was intended to combat
financial incentives for physicians to refer services the patient doesn’t need
o “Any remuneration” means sums for which no service was given, AND
those for which some professional time was expended
o That a payment was a remuneration (implying a service) rather than a
kickback does not foreclose liability
o “If the payments were intended to induce the physician to use C-M’s services,
the statute was violated, even if the payments were also intended to
compensate for professional services”
o Note that Greber stands for the proposition that the agreement does not
have to explicitly provide for payments in exchange for referrals –
courts will look to see what can be inferred or implied
 Courts will also look at whether providers are being overcompensated
for services
o Courts have widely adopted Greber’s one-purpose test
o Evidence that payment was intended to induce?
 Interpretation fee even though Greber evaluated
 Payment greater than what Medicare allowed for interpretation
 Greber said doctors wouldn’t use services if no fee
 Dr’s receiving payment even if no service
 Some argue “one purpose test” of Greber replaces mens rea – if one of the purposes
was to induce a referral, that’s enough for violation

Referral Requirement
 Key question – who did the person have to be receiving the remuneration?
 United States v. Shoemaker (5th Cir 2014) – on ANGEL
o Facts: Tri-Lakes Medical Center (TLMC) was a country hospital. Chandler is
Chairman of the Board of Trustees. Garner owned a nurse staffing business to
provide temp nurses to area hospitals. Shoemaker was TLMC’s COO. TLMC
entered a contract with Garner’s nursing business. Chandler asked Garner to
pay him $5 for every nursing hour that was billed to TLMC to ensure that
Garner’s business was retained and their bills were paid on time. Garner
would also ask Chandler to increase the number of hours his nurses were
working, an Chandler would go to Shoemaker, and he would increase.
Garner paid Chandler some $268,000, and TLMC paid Garner’s company
2.3M for nursing services. Chandler would often deliver invoices and pick up
checks from Shoemakers office for Garner, but no other vendors did that.
 o Procedural Notes: The district court reasoned that it had to be shown that
Chandler was the “relevant decisionmaker,” and because Chandler had no
authority over nursing procurement, he could not be liable.
o Held: Rejected “relevant decisionmaker requirement. The statue applies to
“any person” (not just decisionmaker) so long as the payment is made
with the requisite intent.
o The district court relied on our decision in Unites States v. Miles to limit
liability to a relevant decisionmaker who receives remuneration
 The real issue in Miles is whether the activity (advertising) constituted
“referrals”
o Bottom Line: Formal authority is not key to determining whether a
person was paid remuneration to induce referrals – key question is
whether the person was paid with the intent to induce referrals
o Evidence showed that the $5 was to retain Garner as nursing and
payment of bills on time, that Garner was pushing for more hours
hours, and Chandler would push S, and Chandler paid Shoemaker 12K
over six months to maintain influence
o Policy: If rule otherwise, court explains that you could just bribe
someone one level removed to get the decision maker to make a
decision, and would not be violating the law.

Statutory Exemptions and Safe Harbors

 AKS has a number of statutory exceptions and safe harbors
 Congress directed HHS to create safe harbors for arrangements that would
otherwise violate the statute
 If a provider satisfies all of the elements, they will not be prosecuted even if
unlawful intent is present
 However, even if all of the elements are not satisfied, that does not mean that the
transaction is illegal – OIG will determine on a case-by-case basis whether the
arrangement is abusive and warrants prosecution
o Factors in determining legality
 Increased costs
 Effect on quality of care
 Effect on patient freedom of choice
 Effect on fair competition
 The Employment Exception and Safe Harbor
o Covers payments for employees
o Applies to “any amount paid by an employer to an employee (who has a bona
fide employment relationship) for employment in the provision of covered
items or services”
o Does not cover independent contractors
o Relies on IRS and common law definitions of an employee, based on the
hiring party’s right to control the manner and means of the work performed
(based on common law agency factors)
o Exception – applies to “any amount paid by an employer to an employee
who has a bona fide employment relationship with such employer for
employment in the provision of covered items or services
o Safe Harbor – remuneration does not include any amount paid by an
employer to an employee, who has a bona fide employment relationship with
the employer, for the employment in the furnishing of an item or service for
which payment may be made in whole or in part under Medicare, Medicaid,
or other Federal health care programs
o Very little case law testing or interpreting the exceptions, because employers
will ask for advisory opinions from OIG
o Borrasi involves one of the few questions OIG does not offer opinions on
– what constitutes a bona fide relationship
o United States v. Borrasi
 Facts: B owned IHC, group of healthcare providers. B worked at
nursing homes and hospitals, became close to officers and directors of
RCC, a psychiatric hospital. RCC conspire to bribe B to increase stream
of Medicare patients they got. Over 3 years, pay $650K to B and other
IHC physicians, their referrals to RCC skyrocketed. RCC put all of the
Dr’s on payroll, gave fake titles and job descriptions, asked to submit
false timesheets. Never actually expected to perform duties, were
almost never at RCC, only occasionally went to meetings. RCC also
paid for other IGC expenses.
 Theory of the Case:
 Borrasi and other physicians received payments, in the guise of
salaries, from Rock Creek for their referrals
 Government argued that the statute was violated if any portion
of the payments were for patient referrals
 Jury instructions:
 Jury had to find beyond a reasonable doubt, that some amount
was paid not pursuant to a bona fide employment relationship
 The district court held that statute was violated even if the
payments were also intended to compensate for professional
services
 The court says that courts have long rejected the “primary
motivation” test, citing Greber
 Court reads the exception narrowly, doesn’t apply where there is at
least some intent to induce referrals
 The court does NOT really address whether there is a bona fide
relationship
 Borrasi can be interpreted to mean that even if there is a bona
fide employment relationship, if part of the compensation is to
induce referrals, then the statute has been violated, because the
Court never even considered whether there was a bona fide
relationship
  Copeland says this case is basically contrary to the intent of the safe
harbors, essentially reads the exception/safe harbor out of the statute
 This puts a lot of legitimate employment relationships in jeopardy
 Most AKS exceptions require a written contact

Health Care Fraud and False Claims Act Cases

 No private right of action under the AKS, only gov can bring charges
 Whistleblowers use the FCA to bring AKS cases – theory that even if claim submitted
was necessary and provided as claimed, the claim was tainted by the AKS violation.
The taint of the AKS violation provides the “false” claim necessary to bring suit
under the FCA
o Circuits were split on accepting this argument
 Obamacare settled that “a claim that includes items or services resulting from a
violation of the AKS constitutes a false or fraudulent claim of the purposes of the
FCA”
 Individiauls and entities may violate the FCA by submitting or causing someone else
to submit a claim for payment to a federally-funded healthcare program
 FCA cases
o Knowingly billing for services not provided, altering claims, charging
excessively for servives or supplies, billing for services that were not
medically necessary
o Often used for off-label promotion cases (promoting FDA-Approved drugs for
unapproved uses)
 Resolving Cases Against Pharma Companies
o Exclusion
 Federal health care programs may not pay for any item or services
furnished by the excluded individual or entity
 For company – death penalty – especially if you really rely on the
programs
 The costs for your drugs are not covered by federal programs –
so no one will ever pay for them at full cost
 Really impacts patients – they can’t get the drug, or need to
find a comparable ones
 For individual – virtually unemployable in health care industry
o Government enters into a global settlement with the company
 Company pays huge amounts to the federal or state government
 Company enters into a corporate integrity agreement
 Compliance committee and officer
 Training on fraud and abuse laws
 Executive compliance
 Company has a subsidiary plead guilty to a misdemeanor misbranding
charge under the FCA
 Company avoids exclusion, which is v bad
Grand Juries
 Guaranteed by the Fifth Amendment
 Between 16 and 23-member investigatory body
o Can investigate on a mere suspicion, or because it wants assurances that
the law is not being violated
 Waiver
o Company may just prefer an information rather than go through the
long, arduous process of getting an indictment, resolves the case more
quickly
o This occurs frequently in corporate cases
o If D waived right to be indicted by GJ, prosecutor can charge by using an
information
 An information – pleading that accuses D of committing crimes, just
as an indictment does, filed in court
 Indictment vs. information
 GJ must approve an indictment
 Prosecutor can issue an information without the grand jury’s
approval
 Persons Present
o Only grand jurors, prosecutor, court reporter, translator, and witness
o Only grand jurors are present for deliberation and voting
o Witnesses may not have an attorney present
 Getting Information and Evidence
o GJ entitled to any and all evidence to conduct its business
o GJ subpoenas prepared and signed by prosecutor working with GJ
 Refusing to indict
o The grand jury can refuse to indict
o But, if that happens, the prosecutor can just present the same evidence to
another grand jury (there is no limit to how many times this could happen)
 Operates in secrecy
 Standard of proof – probable cause for an indictment
 Independent from the judicial branch
o Prosecutor operates without a judge, without trained legal opposition, and
without really any public scrutiny
 Evidentiary Rules
o Most trial rules and restrictions do not apply in a GJ proceeding
 E.g. 4th Amendment exclusionary rule, hearsay rule, double jeopardy
clause, Sixth Am . right to counsel
 But Rule 17(c) applies to prevent unreasonable or oppressive
subpoenas
o But Rule 6(e) protects secrecy
 Prohibits disclosure to the public of matters occurring before the GJ
(by prosecutor, grand jurors, court reporter)
  EXCEPTION – witnesses appearing before a grand jury can talk
about their testimony
o There is SOME judicial involvement
 Prosecutor’s Role
o Voir dire
o Control investigatory function – drafting subpoenas
o Advocate
o Legal Advisor
o Judge
o Minister of Justice
 Different Functions
o Screening – does probable cause exist
 Protective bulwark between the citizen and an overzealous
prosecutors
 But the grand jury would indict a ham sandwich
o Investigative
 Unlike in street crime, where the police are investigating, the
grand jury is doing the investigating
 Compel evidence to determine whether a crime has been committed
and if so, who committed it
 You want to investigate through a grand jury when
 Potential witnesses legally obligated to keep information
secret I nthe absence of legal compulsion
 Potential witnesses are reluctant to come forward without a
subpoena

Advising a Grand Jury Witness

 Grand Jury – Advising a Witness
o Step 1 – Don’t Panic
 Ask questions – try to figure out why the grand jury wants to talk with
them
 Call the U.S. attorney and get as much information as you can from
them
 Assume you get some info (county officials took bribes for contracts)
 Try to figure out if your client is a “target”, a “witness”, or a “subject”
 Target – Prosecutor or GJ has substantial evidence linking
person to commission of a crime and is putative defendant
 Witness – individuals who have no culpability and face little risk
of indictment
 Subject – person whose conduct is within the scope of the GJ’s
investigation – investigation may or may not expose
wrongdoing by the person
 What if prosecutor offers to interview client in your presence, and will
reschedule testimony?
o Step 2: Now you start getting the facts, doing your own investigation
  Get client documents, correspondence, calendar
 Check news and local TV for any reports on relevant topics
o Step 3: Interview Your Client
 Gain their trust, ensure them that you have privilege
 Do not rush, have multiple meetings
 Refer client to documents and find out what client knows
 Play Devil’s advocate, go through a simulated grand jury questioning
 Advise client on how to be a good witness – no lying, ask for
clarification
o Step 4: Determine Your Client’s Exposure
 You don’t want your client to admit anything without immunity
 If the client wants to testify to protect her name, and wants to meet
with the prosecutor
o Step 5: Meeting with the Prosecutor
 Prosecutor states “for the record”
 That client agreed to appear voluntarily
 Anything client says can be used against client
 GET THIRD FROM SLIDE
 What if, after meeting, prosecutor says she doesn’t want to prosecute
client, but she wants the person to be a witness
o Step 6: Grand Jury
 Get immunity
 Explain the process to client, that you can’t go in, but will be outside,
they can ask to come speak with you
 If you’re asserting the 5th, your job is easy
 If NOT asserting the 5th, much more complicated
 If client has immunity, tell client to disclose every crime they’ve
ever committed so that they don’t violate their immunity
agreement
 If no immunity, instruct client to ask to consult before
answering a troublesome question
 Explain that theymust be truthful, or will be perjuring themselves
o Step 7: Debrief The Client
 Have an outline of all possible subjects so that you can prompt the
client’s memory
 Ask about any documents the prosecutor showed the client
 What if client doesn’t remember?
 Obtain transcript? Does that violate secrecy rules

Grand Jury Secrecy - Fed. R. Crim. P. 6(e)(2)

 Unless these rules provide otherwise, the following persons must not disclose a
matter occurring before the grand jury
o A grant juror
o An interpreter
o A court report
 o An operator of a recording device
o A person who transcribes recorded testimony
o An attorney for the government,
o A person to whom disclosure is made under SOME OTHER RULE
 But note that a GRAND JURY WITNESS CAN TALK ABOUT THEIR TESTIMONY
WITH ANYONE, THEIR LAWYER OR THE WORLD

“Matters Occurring Before the Grand Jury”

 In Re Sealed Case No. 99-3091 (Office of Independent Counsel Proceedings) (D. DC
1993) – p. 804
o Facts: Senate impeaching Bill Clinton. NYTimes runs article with statements
from Office of Independent Counsel, they thought not long after” the Senate
trial ended, Starr should ask a grand jury hearing the case against Clinton for
an indictment for perjury and obstruction of justice, specifically with
reference to his Jones deposition and his grand jury testimony in August.
President filed a motion to show cause why OIC should not be held in
contempt for violating Rule 6(e).
o Held: Specific statements from OIC prosecutors did not disclose “matters
occurring before a grand jury.”
o “Matters occurring before the grand jury” includes not only what has
occurred and what is occurring, but what is likely to occur, including
the identities of witnesses or jurors, the substance of testimony as well
as actual transcripts, the strategy or direction of the investigation, the
deliberations or questions of jurors, and the like
o However, where information is revealed which is coincidentally before the
grand jury which can be revealed in such a manner that its revelation would
not elucidate the inner workings of the grant jury, disclosure is not
prohibited
o There is a difference between what concerns the prosecutor’s
investigation and what concerns the grand jury’s investigation
o Internal deliberations of prosecutors that do not directly reveal grand
jury proceedings are not covered under Rule 6(e)
o It does not violate the rule to state the general grounds for an
indictment where no secret grand jury information is revealed
o Where the public is already aware of information contained in a prosecutor’s
statement which allegedly revealed grand jury proceedings, it is not a
violation to state such information
o A recommendation by DOJ that an indictment be sought does not reveal any
information about matters before a jury
o We can’t let prosecutors get away with just disclosing info before it is
presented before the grand jury, hence “likely to occur”
o Nor does a statement about an opinion of actual liability, even if based on
knowledge of the proceedings, unless such a statement reveals the grand jury
information on which it is based
 o A statement that prosecutors want an indictment, as here, is not great
(because of its implications for the potentially innocent), but it does not on
its face violate 6(e)
o Court says that the time period for seeking an indictment did not indicate
what is likely to occur within the meaning of Rule 6(e)
o There might be some special considerations because the President was
involved – so how applicable are the rules

Grand Jury Subpoeanas

 Fed. R. Crim. P. 17
o “A subpoena must state the court’s name and the title of the proceeding,
include the seal of the court, and command the witness to attend and
testify…”
o “title of the proceeding” would probably just be “appear before the grand
jury and testify”
o Grand Jury Subpoena Challenges
 Assertion of common law, statutory, or constitutional privilege
 Usually directed at specific question or items demanded
 Might involve a specific list of documents/etc that you are
withholding under privilege
o Prosecutor might challenge and ask for an in camera
review
 Rule 17(c) - Objections to subpoena as unreasonable or
oppressive
 United States v. R. Enterprises, Inc. (SCOTUS) – p. 817
o Facts: Grand jury investigating interstate transportation of obscene materials
in E.D. Va. Three co’s are owned by Rothstein. GJ issued subpoenas of
corporate books and records, and for one copies of videos that had been sent.
Company moves to quash, arguing irrelevance and First Amendment
violations.
o Procedure: Fourth Circuit applied the United States v. Nixon test, that because
in criminal trials the materials would be inadmissible, they cannot be
subpoenaed.
 Under Nixon (which the trial court applied), the standards were
 Relevance
 Admissibility
 Specificity
o Held: The subpoena was not “unreasonable” under Rule 17(c).
o A grand jury subpoena issued through normal channels is presumed
reasonable
o A motion to quash must be denied unless there is no reasonable
possibility that the category of materials the Government seeks will
produce information relevant to the general subject of the grand juries
investigation
 o The party challenging the subpoena has the burden of persuasion, but
the court may compel the government to reveal the subject of the grand
jury investigation
o The grant jury can investigate on suspicion that the law is being violated, or
even merely because it wants assurances that it is not being violated
o It can seek all information that might POSSIBLY bear on its investigation
o In light of the traditional role of the grand jury and relaxed standards, the
Nixon standards are not appropriate here
o The power of the grand jury is not limitless – they may not go on arbitrary
fishing expeditions, or select targets out of malice or to harass
o What is reasonable depends on context
o Under Nixon, there must be a reasonably specific request for information that
is both admissible and relevant
o In a grand jury, it is impossible to know in advance whether the information
sought will be admissible or relevant
o Nothing in the rule makes a distinction between grand jury subpoenas and
trial subpoenas
 Court says the context implies a less exacting standards, based on the
underlying objectives and purposes of the grand jury, as well the
actual
 Overbreadth challenges are really difficult
o You don’t really know that the purpose of the government’s investigation
actually is
 You could argue that the subpoena imposes an undue burden (based on resource
availability)
 Subpoena challenges still occur frequently, why?
o Government might withdraw or issuer narrower subpoena that is more
defensible
o Information gathering – learning more things about the scope/targets of
investigation through filing
o Part of a negotiation with the government
o Permit counsel to raise issues of governmental misconduct (overly broad
subpoenas, improper use of GJ to interfere with attorney-client privilege, etc)
 What If you get a subpoena?
o Challenge on overbreadth, undue burden
o What should you tell the client to do?
 Stop destroying any documents pursuant to a retention policy, they
have to start preserving docs
o Contact Prosecutor, just like with testimony
o Scope of subpoena
 What does it tell you about the investigation
 What do you need to know before advising client
 How should counsel gather info?
o Ignore subpoena? – the answer is always no
 o Challenge subpoena
 R. Enterprise is hard standard to meet
 Consider the benefits/costs of challenging
 Prosecutor might allow for a rolling submission – this is pretty
common in WCC cases
 How might government defend the subpoena

Discovery Issues
 Prosecution wields a lot of power in the grand jury stage
 The defense does not have the same opportunities to engage in discovery

Sources of Discovery At Different Stages

 Pre-Indictment Discovery Sources – D has no right to discovery before
indictment
o Defendant themselves
o Cooperation of other witnesses
o Prosecutor/Subpoena
 Schmoozing the prosecutor – but you need to be careful that they
aren’t trying to squeeze you for info, too
 The subpoena itself can point you in a general direction
o Government questions and documents from GJ testimony
 Debriefing the witnesses is key
 Try to figure out based on q’s and documents what is going on in the
investigation
o Material information from parallel civil litigation
o Public information
 Post-Indictment – D has more discovery rights, but the prosecution still has some
advantage
o Rule 16 pre-trial discovery
 Discretion of judge – could order bill of particulars (provide the facts
alleged in the information/indictment that relate to the commission of
the crime)
 Brady Materials
 Trial Discovery Sources
o Jencks/3500 Material
o Compulsory process for witnesses
 Can force them to come AT trial, but not before, so that could be risky
if you don’t know what they’re going to say

Detour – Motion Practice

 Motions are commonplace and critical in discovery
 Motion = a request to the judge to issue some sort of order, provide relief
 Can do all sorts of things
 Functions
 o To obtain a specific result (dismiss, delay, schedule trial)
o Prerequisite for raising certain legal issues – some MUST be raised within a
certain amount of time, in a specific way
o Preserve an issue for appeal
o Counterclaim for an inadvertent mistake
o Provide discovery – you can at least ask, and the prosecutor has to respond,
which can give you more information
o Assist in trial strategy
o Effect on plea bargaining – annoy the shit out of the prosecutor (but is that
unethical? Frivolous?)
o Educate participants – e.g. if an odd issue of law is present, you may file a
motion to bring it to the attention of the judge
o Protect attorney – some ethical standards suggest that defense attorneys
should take certain actions/motions at certain times
o Gains time to develop case
 Ethical Considerations
o Model Code of Pro Rep Canon 7 – a lawyer must represent her client
zealously within the bounds of the law
o The client is entitled to see any lawful objective through legally permissible
means, and to present for adjudication any lawful claim, issue, or defense
o A lawyer’s conduct is permissible if the position is [taken in good faith,
not frivolous]
o Key issue is good faith – a lawyer cannot, consistent with the Model Code,
assert a position in litigation that is frivolous
 So you can’t just annoy the prosecutor
 Frivolous – if lawyer is unable to make a good faith argument on the
merits on the action or if cannot may a good faith argument for an
extension, modification, or reversal of the law

Brady Material
 Brady v. Maryland, 373 U.S. 83 (1963)
o Facts: B and Boblit were being charged with first degree murder
 To prevail on a Brady claim, the defendant must show three things
o The evidence is favorable to the accused
o The evidence was suppressed by the state, willfully or inadvertently, AND
o The withheld evidence was material
 “Favorable to the accused”
o Doesn’t merely relate to guilt or innocence
o Could be evidence that prosecution’s witness is not credible, such as
impeachment evidence
o Information that would decrease the sentence is considered favorable
o Information of actual innocence is obviously favorable
 Evidence suppressed by the state
 o You do not need to show prosecutorial bad faith – main concern is unfair
trials, not prosecutorial misconduct
o You do not have to show that the defense requested the information
o But some courts require due diligence by the defend preior to finding
suppression – e.g. things that are a matter of public record or easily obtained
 Standard of “materiality” – United States v. Bagley
o “The evidence is material only if there is a reasonable probability that, had
the evidence been disclosed to the defense, the result of the proceeding
would have been different. A reasonable probability is a probability sufficient
to undermine confidence in the outcome,”
o However, this standard looks backwards and make assumptions – Some
courts say must disclose all evidence relating to guilt or punishment which
might reasonably be considered favorable to the defense
 Information in possession of the government
o Prosecutor has duty to learn of any favorable evidence known to others
acting on the government’s behalf (such as police)
o Information possessed by any member of ANY OTHER U.S. Attorney’s
office will be attributed to the prosecution
 Paralegals, federal agents, or other personnel
o Courts are split on whether which evidence in another agency such as the
SEC that might be exculpatory is within the possession of the prosecutor
 Rule 16
o Rule 16 principle – a defendant should not be surprised by the evidence
against him where the evidence:
 Particularly powerful
 GET FROM SLIDES
o HOWEVER, A PRECONDITION OF DISCOVERY IS THE DEFENDANT
REQUESTING THE INFORMATION
 If government provides the material w/o D’s request, it loses the right
to the reciprocal discovery authorized by the rule
 Once defendant has made a discovery request, government must
provide, and continue to provide, covered categories of information as
evidence comes to light

Jencks Material
 Anti-discovery advice – the defense cannot get a crucial category of
information – witness statements – in discovery
 It can only, as a legal matter at least, only obtain witness testimony after it had
been given in court
 Purpose – To dictate time, it is only fair and reasonable to provide prior witness
statements for cross-examination, but there is concerns about witness tampering;
defense doesn’t need pre-trial if only needed to impeach direct testimony
 Preconditions
o Material is in the possession of the government
o Defense must make a timely request
 o The material must relate to the subject-matter of the testimony
o The material must constitute a “Statement” within the means of R. 26.2(f)
 Written statement witne
o GET FROM SLIDES

The Fifth Amendment Privilege

 The Fifth Amendment: “No person… shall be compelled in any criminal case to be a
witness against himself.”
o But the protection is not really THAT broad
 Must you assert 5th Amendment in your own criminal case?
o NO – “any criminal case” refers to the eventual use of the compelled
testimony, not the type of proceeding in which the testimony was first
compelled
o May assert 5th when subpoenaed by Congress, civil deposition, GJ,
administrative proceeding
 Applies when
o The witness is compelled
o The response is testimonial (regardless of the proceeding)
o That is incriminating to the witness

Immunity
 Immunity is the LAST RESORT for the government – they will usually grant it to
someone who is seriously involved in the misconduct VERY reluctantly
o Public outrage about the morally culpable getting away with it
o Also may be concerned about building a case, is the jury more likely to
believe someone who has been given immunity? Defense counsel will argue
that testimony has been bought, “you’ll say anything”
o DOJ policy prefers seeking conviction
o Will usually seek a PROFFER first, before deciding on immunity
 Witness Status – Prosecutor needs to determine first
o Witness – you only saw what happened, not culpable, not within scope – no
5th Amendment right to assert
o Subject – a person whose conduct is w/in the scope of the GJ investigation
OR
o Target – a person who, in the judgment of the prosecutor, is a putative
defendant
 Factors for availability of immunity
o Government’s need for testimony
o Value of testimony
o Importance of case
o Wight of the government’s case against the individual
o Degree of culpability and criminal history
 Transactional Immunity
 o You’re the best lawyer ever – it’s REALLY HARD TO GET
o No prosecution for transaction or any matter about which testimony relates
– so you could admit to ANYTHING
o No prosecution even if the government is able to secure evidnce from a
different, independent source
 Use and Derivative Use Immunity –
o No prosecution of witness based on the testimony or evidence derived from
it
o Prosecution still available if gov has independent evidence to prove the crime
o Direct Evidentiary Use is PROHIBITED
 Cannot introduce immunized testimony to jury in trial against
immunized witness
 Cannot use evidence as a lead in the investigation (i.e. only aware of
new witness because of immunized testimony)
o Bigger issue with indirect evidentiary use
 i.e. to refresh a non-immunized witness’ recollection
 DC Circuit Requires a two-part showing
 Independent source
 Witness exposed to immunized testimony had not shaped or
altered their testimony, directly or indirectly, as a result of that
exposure
 Other circuits have rejected this rule
o Non-Evidentiary Use
 Use to focus investigation, decide whether to initiate prosecution,
interpreting evidence
 Courts are split
 Some prohibit – seems to be contemplated by statute and
broad reading of Kastigar
o These courts basically want a different prosecutor
 Some allow – unless gov puts in place a brand new prosecution
team, this is essentially transactional immunity
 18 U.S.C. 6002 and 6003
o Applies in criminal GJ and trial proceedings – also controls in agency and
congressional investigations
o Once immunity is granted, must testify or face contempt sanctions
o “No testimony or other information compelled under the order (or any
information directly or indirectly derived from such testimony or other
information) may be used against the witness against the witness in any
criminal case, unless GET FROM SLIDE
 Kastigar v. United States (SCOTUS 1972) – p. 886
o Facts: Petitioners subpoenaed before GJ in C.D. Ca. Gov worried they’ll assert
the 5th, so they get an order to compel with use and derivative use immunity.
Petitioners argue that immunity is not co-extensive with privilege. District
 court rejected their args and ordered them to testify. They refused, and are
held in contempt.
o Held: Persons may be compelled to testify under a grant of use and
derivative use immunity.
o The power of the government to compel persons to testify in court is ancient
in our jurisprudence
o But this power is note absolute – there are a number of protections, of which
the most important is the 5th Amendment privilege against compulsory self-
incrimination
o Immunity statutes seek to accommodate the principles of the privilege and
the legitimate need of the government to compel testimony
o Petitioners argue that the 5th Amendment essentially prohibits immunity
statutes that compel testimony – we’ve rejected that argument, it has no
merit
o Petitioners argue that they have to be given transactional immunity,
but transactional immunity affords much broader protections than the Fifth
Amendment
o These protections are comprehensive – they prevent use of the statement as
an investigatory lead, and bar use of evidence obtained by focusing the
investigation of the witness as a result of his/her testimony
 Important Note:
o Neither use nor transactions immunity shields a defendant from
 Civil liability
 Disciplinary authorities
 Tax proceedings, or the like
o So are you really “left in the same position” that you would be in had you not
testified?
 Is the grant of immunity/compulsion to testify constitutional?
o Must be co-extensive with the privilege
o Are witness and prosecution in substantially the same position as if the
witness had claimed the Fifth
 Kastigar Hearings
o When D enters into a immunity agreement, and allegedly is being
prosecuted based on use or derivative use, they call this hearing
o Burden of proof on the gov to prove that the evidence is not tainted by
establishing that they had an independent, legitimate source for the disputed
evidence
o Burden of proof is on the government to show this by a preponderance of the
evidence
o To avoid these issues, under DOJ policy they will summarize evidence
BEFORE the immunity agreement, dated, etc, to preserve the independence
of evidence before the immunity grant
 But what about new evidence? Did that come from the testimony or
the old evidence? How do you prove it
  So it’s still hard to prosecute someone who has use or derivative use
 DOJ has Guidelines for Dealing with Immunity, getting orders
o AUSA seeks DOJ approval
 Submit detailed explanation of case and circumstances
 DOJ examines importance of the investigation, value of testimony, and
likelihood of full compliance by D with the compulsion order/avail of
sanctions if they are not compliant
 You may be seeking more than testimony, more involvement in
investigation
 The approval process can be quite lengthy
o Once DOJ approves, request immunity order from district court judge
 The Court must grant if the technical prerequisites are met

Proffers
 If client is part of a scheme, you and your client may want to be the first to get to the
government, try to get immunity
 Process
o Defense Counsel might go to prosecutor and talk in hypotheticals – an
“attorney proffer”
 You need to be really careful about what you say
o Proffer Sessions
 After attorney proffer, prosecutor might decide to schedule
 Attended by D, D’s attorney, prosecutor, and possibly other
government employee’s
 Sneak preview of what you can being to table if government cuts a
deal with you
 Made with informal understanding that government will enter into
formal written immunity agreement or plea bargain with you
 Fed R. of Evid 401
o Except as otherwise provided in this rule, evidence of the following is not…
admissible against the defendant who made the plea or was a participant in
the plea discussions
 A plea of guilty which was later withdrawn
 A plea of nolo contendere
 Any statement made in the course of any proceedings under Rule 11
of the Federal Rules of Crim Procedure or comparable state procedure
regarding either of the foregoing pleas, or
 Any statement made in the course of plea discussions with an
attorney for the prosecuting authority which do not result in a
plea of guilty or which result in a plea of guilty later withdrawn
o Basically, its an agreement that they will not use proffer testimony against
you if negotiations fall apart
o But you can waive these things, and the prosecution usually insists on some
kinds of waivers
 Proffer Agreements – Queen for a Day Agreements
 o Entered into before proffer sessions between prosecutor and D occur
o Set limits on the 401 protections
o Government can make derivative use of D’s testimony
o Can be used for impeachment or rebuttal – United States v. Mezzanatto
o Statements may be used if any part of defense is inconsistent with your
proffer
 United States v. Velez (2nd Cir 2004) – p. 913
o Facts: D, convicted felon, see by police pulling gun from waistband. They
recover gun. Crime for convicted felon to possess a firearm. D indicted,
participates in two proffer sessions. In first, claims actual innocence. Before
second session, signed agreement waiving rights for proffer protections, that
gov could use statements from proffer sessions to rebut any evidence or
arguments used by defense (so they could use to rebut anything D said that
was inconsistent with proffer statements). In second session, D recants
innocence claim and admits ownership and possession of gun. Third proffer
session cancelled. D asks for ruling on scope of use of proffer statements. Gov
said it would not use in case in chief, but might later if D presented certain
witness. Court says OK. D does not produce witness. Is convicted.
o Held: Knowing and voluntary agreements, where D waives some rights under
rule 401, are enforceable.
o In an identical case, SDNY noted in United States v. Gomez that these kinds of
provisions incentivize truthful proffers by defendants, because NOT allowing
them would allow Defendants to say whatever they want – concerned about
encouraging honest pleading
o Voiding these agreements would also interfere with plea bargaining and
cooperation efforts – prosecutors just won’t engage in such discussions
o The defendant remains free to present whatever defense they want
o No violation of constitutional right to present a defense – could still have
presented evidence, door is merely open for the contrary evidence to go in
 Challenges for D Counsel and Proffers
o Fighting for the best possible terms (but will usually be standard)
o Forecasting correctly (and timely)
o Preparing the client to reveal ALL honestly
o Maintaining the attorney-client relationship and witness’s trust and
confidence in counsel’s loyalty and zealousness
 Proffer – When should D do it?
o Indictment is a foregone conclusion absent a proffer because of the evidence
the government had
o Reasonably specific deal contemplated by both sides
o D & Attorney have decided that they definitely want plea or immunity
agreement
o Prosecutor is trustworthy
o Prosecutor will not be undercut or overruled by superiors
o D is prepared to tell whole truth at proffer session and thereafter
  DOJ Policy Preferences on Proffering
o 1st Choice - Prosecute the witness, because upon conviction, 5 th Amendment
right evaporates
 Problems with this approach
 D is going to be pissed, will they be cooperative
o 2nd Choice – D pleads guilty to specific count or counts pursuant to a
cooperation agreement
o 3rd - Formal Immunity under 6002
o 4th - Informal Immunity – Non-prosecution agreement (can be VERY
LENIENT)

Documents and the Fifth Amendment

 In WCC, documents are critical – paper trail is used to demonstrate the mens rea
and actus reus of the offense
 Privilege against self-incrimination protects natural persons from being
o COMPELLED –
 Are they in custody
o To make testimonial communication (be a witness)
 Testimonial – asserting a fact that can be proven to be true or false
o That is incriminating to the witness (against himself)
 Incriminating – Will they be punished or have their sentence
enhanced
 Examples of things are not testimonial
o Handwriting exemplars
o Standing in a line-up
o Having blood drawn
o Often the production of documents is held to not be testimonial
 Who has the privilege? – Collective Entity Doctrine
o Corporation – NO 5th Amendment privilege
o Custodian of records for corporation – NO 5th Amendment privilege if in
possession in a representative capacity, even if docs incriminate custodian
o Sole Proprietorship – YES
 Fisher v. United States
o Facts: Persons get tax records from their accountants after being questioned
by IRS, person turns tax records over to attorney for legal advice. IRS
served summonses on the lawyers for those tax records.
o Issue: Can the attorneys resist the summons by asserting their clients
privilege?
o Holding: No
o Absent some compulsion ON THE TAX PAYER, there is no compelled self-
incrimination. The attorney is being compelled, not the taxpayer.
o Court steps away from the privacy rationale from old cases
 o NO THIRD PARTY MAY ASSERT YOUR PRIVILEGE, not just attorneys – your
documents are unprotected in third party hands, because you are not
being compelled
o Court looks to the attorney client privilege
 Says that where the client would be privileged from the production
of the document, or would have been protected by the self-
incrimination privilege, the attorney is not obligated turn them
over – i.e. if they weren’t protected before you give them to the
attorney, they’re not privileged after you do so
 You can’t just protect documents by giving them to your attorney
o Even if documents are incriminating, the compelled act of production is not
necessarily testimonial
 But consider whether it was prepared by the person
 What constitutes compulsion?
o Fisher says that the 5th applies only when the accused is compelled to make a
testimonial communication that is incriminating
o Not satisfied in Fisher because, even if incriminating
 Not taxpayer’s own compelled testimonial communication (not
prepared by him); AND
 Documents were prepared voluntarily and are pre-existing
o So if the documents were created voluntarily or for some reason other than
the subpoena, they can be subpoenaed
 The Act of Production CAN be testimonial
o Admission of existence of documents
o Concession of possession
o Admission that the documents are responsive to subpoena
o Authentication
o E.g. if subpoena says “turn over all records of illegal bribes”
 Turning over records would be tantamount to saying these are
records of illegal bribes
 Admission that documents exist is an incriminatory admission
independent from the content of the documents
o But may not be sufficiently testimonial because of “foregone conclusion”
 Existence, possession or control of the subpoenaed documents
was not truly an issue
 Production would not have authenticated the documents because only
the tax preparer could do that
 Reserves the question of whether client could be forced to produce his
own tax records
 STANDARD IS USUALLY MET WHEN
 Documents are identified with reasonable particularity (broad
categories of general business records in subpoena is not
enough)
 There is an outside source who could independently confirm
the existence and authenticity of the documents
  Authentication can be achieved by other means such as
comparison with other documents independently
authenticated or matching handwriting with that of the
subpoenaed party
 Bottom Line – Contents of any personal or business papers (no matter how
private or incriminating) are not “compelled” within the meaning of the 5th
Amendment if the government did not force the author to write them
o Further, the pre-existing documents do not, retroactively become compelled
when the government orders the documents produced
 But you could then look at whether the act of production is
testimonial
 Custodian Claims - Braswell v. United States
o Facts: Braswell, Pres of two companies, receives a subpoena for corporation
documents. Documents incriminate Braswell, so he refuses to produce them
on self-incrimination.
o Held: Voluntarily created business records not privileged
o No claim that contents of business records are incriminating
o HE ARGUES THAT THE ACT OF PRODUCTION IS INCRIMINATING
o Corporation has no 5th claim
o Court holds that Fisher did not do away with the collective entity doctrine
o Custodian cannot claim privilege because he is agent of corporation, which
has no privilege
o Agency rational of collective entity doctrine survives
o Custodian of corporate records holds them in a representative capacity,
not personal
 So the act of production is not a personal act, it is the act of the
corporation
 Claim of privilege by agent would be a claim by the corporation
o Court has very concerned that giving the petitioner his rule would seriously
impact white collar crime prosecutions
o BUT, the Court recognizes an exclusionary rule with respect to
immunity
 Government may not make use of individuals act of production
against the individual
 BUT the government can use the act of production BY THE
CORPORATION against the custodian
 So you can’t say “this person is the one who produced the
documents” but they can say “the corporation produced these
documents which implicate this person”
 Cannot draw testimonial inferences from the custodians acts of
production
 Doe v. United States
o Facts: Foreign banks would not respond to subpoena’s without the consent of
the target. Government drafts consent directive which says “any bank which
 has an account from which I am authorized to withdraw” to deliver ANY
documents related to the account to the grand jury.
o Issue: Is the compelled act testimonial?
o Holding: No
o Reasoning:
 Court does not reach the issue of whether it is incriminating?
 Government argues that act of production is only testimonial if it
explicitly or implicitly relates to factual assertions or conveys
information to the government
 Gov says this is not the case here because the compelled statements
 Act is testimonial when
 Accused communication explicitly or implicitly relate a factual
assertion or disclose information
 Must be aimed at compelling him to disclose any knowledge he
might have or to speak his guilt
 Court says that the statement is so broad, does not relate to any
specific bank or account, doesn’t require him to admit to the existence
of any bank or account
 Why isn’t the forced signing testimonial
 Doesn’t refer to specific accounts
 Speaks in hypothetical
 Does not acknowledge existence of an account or control by
petitioner
 Does not acknowledge existence of documents
 Does not ID bank or account
 SIGNING DOES NOT ADMIT CONSENT (says it is done pursuant
to a court order)
o Stevens Dissent: Key vs. combo lock
 Compelling use of a key is okay, but forcing them to give up a
combination invades the sanctity of the human mind
 When is the communication incriminating enough?
o Hoffman – privilege extends to answers that would furnish a link in the chain
of evidence needed to prosecute the claimant for a federal crime
o If documents innocuous on their face, witness must make a contextual
showing indicating how the linkage to the documents established by the act
of production would create a hazard of prosecution or link in the chain of
evidence (in camera)
o If admission is purely cumulative however, the compelled admission does
not present a realistic hazard

Corporate Privileges
 Entities lack Fifth Amendment protections against self-incrimination
 To make up for this, attorney-client privilege and attorney work product protections
are of critical importance – it’s really their only protection
  Some changes to DoJ policy have made invoking and maintaining these protections
very difficult for corporations
 Determinations of privilege happen early on and can have serious consequences for
the litigation and parallel proceedings
 There are many splits in the circuits on privilege issues, and states have many
different rules

Attorney Client Privilege and Work Product Doctrine

 Attorney Client Privilege:
o Holder – one who seeks to become a client
o Applicable generally, can be invoked in a grand jury, and in restricting the
scope of a warrant
o Corporate Attorney-Client Privilege
 Privilege belongs to the corporation, not employees
 Only corporation may waive (usually officers and directors/Board will
vote)
 If corporation is in bankruptcy, the trustee has the power to waive the
privilege
 Attorney Client Privilege ONLY applies if
o The asserted holder of the privilege is or sought to become a client AND
o The person to whom the communication was made
 Is a member of the bar of a court, or his subordinate and
 In connection with this communication is acting as a lawyer
o AND the communication relates to a fact of which the attorney was informed
 By his client
 Without the presence of strangers
 Exception for secretaries, interpreters, counsel for co-
defendant, parent of minor child
 For the purpose of securing primarily either
 An opinion on law or
 Legal services or
 Assistance in some legal proceeding
 And Not for the purpose of committing a crime or tort
o AND the privilege has been
 Claimed
 And not waived by the client
 Individual v. Corporate Privilege
o When corporate officer or employee talks to corporate counsel about the
matter under investigation, who holds the privilege?
 THE CORPORATION – corporation has the ability to waive, not the
individual
 For employee to argue that the attorney was representing them
personally is a heavy burden, Bevill test on p. 1006
 This standard is nearly impossible
 o Corporate counsel may decide to give an “Upjohn Warning” – that you
represent the corporation, that the conversation is under the corporation’s
privilege, and the corporation has the privilege and the power to waive, not
the individual, and you are expected to keep the conversation confidential
 You may even write in your notes that the first thing you did was give
an Upjohn warning
 Work produce doctrine is distinct (but overlapping) and broader than attorney-
client privilege
o It applies to material obtained or prepared by an adversary’s counsel in the
course of his legal work, when done with “an eye towards litigation”
o The privilege is not automatically waived by disclosure to a third party
o Only the client may asserts attorney-client privilege, but both the attorney
and client can assert work product protections
 Upjohn Co. v. United States (SCOTUS 1981) – p. 971
o Facts: Accountants find payments made by Upjohn’s subsidiaries to foreign
officials. Accountants tell Prez, VP, and GC. Prez consults with counsel and
Chair. Decide to do internal investigation. Attorneys prepare questionnaire to
send to all managers, emphasize need for full information and possibility of
illegal activity. ID Thomas as GC, tasked with running investigation. Q’s
wanted detailed info, said was “highly confidential,” responses sent right to
GC. Co voluntarily gives some parts of reports to SEC. IRS sends summons
order production of ALL investigation files, including questionnaires. Co
refuses on grounds of attorney-client privilege and work product.
o The Sixth Circuit rejected the finding of waiver, but found that the privilege
only applied to communications between attorney’s and the corporation’s
“control group” – those responsible for directing Upjohn’s actions in
response to legal advice
o Held: Attorney client privilege applies to all employees, not just the control
group. Lawyer’s notes on oral statements are protected under work product
doctrine.
o The Court assumes that attorney-client privilege applies to
corporations
o The privilege is not limited to the “control group” of the corporation and
extends to communications with all employees
o The privilege only protects disclosure of communications, but it does not
protect disclosure of the underlying facts by those who communicated
with the attorney
o Work product protections apply to IRA summonses
o Rule 26 permits disclosure of documents and tangible things which are
attorney work product upon a showing of substantial need and inability to
obtain the equivalent without undue hardship
o However, even if disclosed under Rule 26, the court must protect against
disclosure of mental impressions, conclusions, opinions, or legal theories of
an attorney
o This includes memoranda based on oral statements of witnesses
 o Employees beyond the control group as defined are often responsible for
directing actions in response to legal advice, and indeed corporations can be
liable for the actions of employees beyond the control group
o The control group test frustrates the purpose of the privilege, and makes it
difficult for attorney’s to formulate sounds advice to their clients
 What is the purpose of the attorney client privilege (according to SCOTUS in
Upjohn)?
o To promote full and frank communication between attorneys and clients
o Allows the attorney to receive enough information to do their job, represent
the client, and give sound legal advice
o Fosters justice vis informed and vigorous advocacy
 How do you protect the privilege?
o Have the board or an appropriate corporate officer specifically authorize in
writing the attorney’s internal investigation for the purpose of obtaining
legal advice, indicating the basis for the need of the legal advice
o Restrict it to employees, make it clear that the reason is for securing legal
advice for the corporation, make an explicit warning about confidentiality
and that THEY should maintain confidentiality and STAMP EVERY
DOCUMENT
o Investigative findings and communications should be kept confidential in
every way possible and should be disclosed to senior corporate officers with
the authority to act, on a “need to know” basis. Avoid communications
through nonlegal intermediaries
 Work Product Protections
o Written statements, private memoranda and personal recollections prepared
or formed by an adverse party’s attorney, or his representative
o “In the course of his legal duties” – usually read to mean “prepared in
anticipation of litigation or for trial” – does not cover work prepared for
independent reasons which may have some application in later litigation
o Protection is NOT absolute – can be overcome if undue hardship and have
substantial need for information
 Exception for witness statements because it reveals mental process of
attorney
 But may if witness is unavailable
o Justified by the proper functioning of the adversarial system
 Differences Between Atty-Client Privilege and Work Product Protections
o Atty-cli is absolute but may protect a smaller universe of materials –
communications between counsel and client, can only be claimed by client,
waived by disclosure to third parties
o Work product covers a broad variety of materials – not just communications
– but must be prepared in anticipation of litigation and is qualified- can
possible by oversome, held by both the attorney and the client, not
necessarily waived by disclosure to third parties
 o YOU COULD PRESERVE BOTH – common practice to send memos/emails/etc
to the in-house counsel of the client, making it both a privileged
communication and work product – this is ethical and legal

Waiver
 Fed. R. Evid. 502
o 502(a) – Scope of Waiver - if a waiver is found, it applies only to the
information disclosed, unless a broader by the holder’s intentional or
misleading use of privileged or protection comms/info
o 502(b) – Inadvertent Disclosure – inadvertent disclosure of protected or
privileged comms/info is not a waiver if holder took reasonable steps to
prevent disclosure and took reasonable steps to retrieve
o 502(c) – State Proceedings/State Disclosures – If there is disclosure in a
privileged or protected comm/info in a federal proceeding, then states must
honor Rule 502 in later state proceedings, AND if there is a disclosure in a
state proceeding, then admissibility in a later federal proceeding is
determined by the law that is most protective against waiver
o 502(d) – if a federal court orders providing that disclosure did not constitute
a waiver, that order is enforceable against all persons and entities in ANY
state or federal proceeding
o 502(e) – parties in a federal proceeding can enter in a confidentiality
agreement providing for protection against waiver – but such agreements
are binding to non-parties only if incorporated in a court order
 Times were waiver can be required
o Advice of counsel defense requires waiver – cannot use as shield and sword
o Attorney-client privilege can be waived expressly or impliedly
 “Waiver” actually applies to a variety of different circumstances
o Inadvertent Waiver – unintended or mistaken disclosures of privileged
comms or work product and the privilege holder seeks to reclaim the
materials or restrict the scope of any implied waiver
o Partial Waiver – Holder contends that they waived only a portion of
privileged comm or work product by only disclosing that portion, and claim
the remainder of the comm/work product should be protected
o Selective Waiver – Holder asserts that they could intentionally disclose the
privileged comm/work product to some persons but not others
o Courts use a wide variety of labels for these different ideas
o The Supreme Court has said that only the corporation’s
management/officers/directors may waive the corporate privilege, and
that such a waiver must be consistent with those person’s fiduciary
duty to the company and not merely their own self-interest –
Commodity Futures Trading Commission v. Weintraub
 The Court also noted that when power passes from old
management to new (or even a bankruptcy trustee), the new
power holder has the power to waive the privilege, even if the old
holder objects as to statements he made to counsel
 Implied Waiver
o In re Grand Jury Proceeding (United States v. Doe) – 2d Circuit
 Facts: Doe’s founder, Chairman, and controlling shareholder testified
before GJ. Doe Corp. refused to waive privilege. Claim was that
corporate agent waived privilege during testimony because, among
other things, referred to advice of counsel.
 Gov argued that because witness referred to advice of counsel during
his testimony, that was a waiver.
 Held: No waiver. He was compelled to appear, but could not assert 5 th
Amendment, but also was not authorized to waive by the corporation,
which the government knew.
 Implied waiver may be found where the privilege holder asserts
a claim that in fairness requires examination of protected
communications
 Fairness considerations arise when the holder wants to use the
privilege as a shield and a sword – i.e. rely on the privileged
information in their argument, but then claim that the information is
privileged (e.g. making an advice of counsel defense and then saying
the communications are privileged)
 This is determined on a case-by-case basis, in the context in which the
privilege is asserted
 A more limited form of implied waiver may be appropriate where the
disclosure occurred in a context that did not greatly prejudice the
other party in the litigation
 When waiver occurs as a result of inadvertent document disclosure,
courts have limited the scope of that waiver based on the
circumstances involved and overall fairness
 An implied waiver may be found where the corporation made a
deliberate decision to disclose privileged materials in a forum where
disclosure was voluntary and calculated to benefit the disclosing party
 Fairness dictates that the company did not impliedly waive
 Inadvertent Waiver
o There were a variety of standards for inadvertent waiver before Rue 502,
and some were not forgiving
o The advisory committee explained that it wanted to go for the middle ground
o “Inadvertent disclosure of protected communications or information in
connection with a federal proceeding or to a federal office or agency
does not constitute a waiver if the holder took reasonable steps to
prevent disclosure and also promptly took reasonable steps to rectify
the error”
o The rule unofficially considers some of the antecedent factor tests, including
the reasonableness of the precautions taken, the time taken to rectify, the
scope of discovery, the extent of the disclosure and “the overriding issue of
fairness”
 o But it also leaves it open to other considerations like the number of
documents to be reviewed and the time constraints for production
o The Senate Report noted that this was attempting to distill the majority
position
o Elements of Inadvertent Waiver
 The disclosure was truly inadvertent
 The Holder of the privilege took reasonable steps to prevent
disclosure
 Factors including the reasonableness of the precautions taken,
the time taken to rectify, the scope of discovery, the extent of
the disclosure and “the overriding issue of fairness,” number of
docs reviewed, constraints for production, use of advanced
software, linguistics tools
 Holder promptly took reasonable steps to rectify error
 Follow up on any obvious indications that a protected
communication has been produced inadvertently
 Partial Waiver – Partial and Selective Waiver
o This is a critical area in the context of internal investigations by corporations
o The corporation may want to disclose some or all of the results of the
investigation to some government officials/agencies in order to stave off
action or secure leniency
o There may also be pressure to share some internal information with third
parties like underwriters
o The key issues are whether disclosing selected parts waives privilege as to
the entirety (partial disclosure), and whether disclosing to some persons
may occur without disclosing to others (selective disclosure)
o Partial waiver issues arise when the holder wants to use selected portions of
protected materials while protecting the rest of the material
o Another key issue is defense “submissions” – when the lawyer goes to the
government and tries to ward them off, potentially using information
derived, directly or indirectly, from privileged or protected materials
 The government will try to argue that defense’s submission was a
“waiver”
 Courts are all over the place – before 502, the courts said this was a
subject matter waiver
o The real issue with partial waiver is the scope of any additional waiver i.e.
whether things other than what were disclosed are now open to discovery
o Prior to Rule 502, the key issue for both attorney-client and work product
waivers was “fairness” – whether the holder was trying to both use the
information and invoke the privilege to the prejudice of the other party
o Rule 502
 Generally, voluntary disclosure generally results in a waiver only of
the communication or info disclosed
  “Subject matter waiver” should occur only in rare situations in which
fairness requires further disclosure or related, protected information,
in order to prevent a selective and misleading presentation
 So subject matter waiver is limited to situations in which a party
intentionally puts protected information into the litigation in a
selective, misleading, and unfair manner
 As such, inadvertent disclosure can never result in a subject
matter waiver
o Some issues arise this attorney notes, and whether disclosure of certain
materials results in the waiver of attorney records used in the making of
those documents
 Selective Waiver
o Attempting to limit the disclosure to one party and not others
o With respect to attorney-client privilege, every circuit except the 8th has
rejected selective waiver – where materials are shown to third parties, the
protections of the privilege are waived as to all other parties
o Under the work product doctrine, exposure of protected materials to third
parties does not automatically waive
 The key issue is whether the third party is an adversary or one whom
with there is a common interest where circumstances indicate a
legitimate expectation of confidentiality
 Whether the disclosing party knows that an investigation is ongoing
by the recipient entity, there is a adversary relationship
 Using either a selective waiver theory or fairness analysis, the circuits
have held that disclosure of work product to one adversary waives as
to all adversaries
o Disclosure to the government agency at the end of internal investigation is a
waiver of only the communication or information disclosed
 BUT could lead to “subject matter waiver” of all related
communications as to all parties if fairness requires it (to prevent
selective and misleading presentation to disadvantage of adversary)
 Court Orders and Confidentiality Agreements
o Under the Rule, a confidentiality order is enforceable whether or not it
memorializes an agreement among the parties to the litigation – party
agreement is not required for the order to be enforceable
o Parties can agree between themselves that there is no waiver by disclosures
between them, but it only binds the parties unless made a part of a court
order

Parallel Proceedings
 Government often decides to go after companies both civilly AND criminally
o When this happens, criminal proceedings can have implications for the civil
or administrative issue
 o This could include shareholder suits or whistleblower qui tam actions, or an
administrative proceeding brought by, e.g., the SEC
 So you need to be fighting a case on multiple fronts

Constitutionality
 United States v. Kordel, 397 U.S. 1 (1970)
o Due process does not require that the gov choose how to proceed
o May proceed with civil, criminal, and administrative actions against
defendant concurrently or sequentially – Kordel
o Dicta suggests there might be constitutional limits where gov brings civil
action solely to obtain evidence for a criminal case OR where the gov didn’t
inform the civil defendant that the gov is contemplating a criminal case
o Expressed concerns about stunting proper law enforcement be locking
the government in to civil or criminal proceedings
o But defendants are rarely (but sometimes) successful in making Korbel
challenges (see Mahaffy)

Discovery and Challenging Parallel Proceedings

 Criminal vs. Civil Discovery
o Defendant entitled to evidence material to defense
o Exculpatory evidence (Brady)
o Evidence government intends to use at trial (e.g. Jencks material)
 Civil Discovery – way broader
o Any matter, not privileged, relevant to subject of pending action
o Documents, depositions, interrogatories – things you probably wouldn’t get
in the criminal process
o Request for admission, physical & mental exams
 Because civil discovery is so much broader, gov may bring civil case first to
help them find material
o But this can help the defense too, in terms of getting things from the
government to help defense in criminal case
 United States v. Mahaffy (E.D.N.Y. 2006) – p. 1159
o Facts: Picone indicted for conspiracy to commit securities fraud. Picone had
already been involved in a civil proceeding with the SEC. Gov wants to
introduce statements given to the SEC in the criminal proceeding.
o Held: Tactics of gov do not violate a sense of “justice”, gov did not bring civil
action for sole purpose of obtaining evidence in criminal case.
o The prosecution may generally use evidence acquired in a civil action in a
subsequent criminal proceeding unless the defendant demonstrates that
such use would violate his constitutional rights or depart from the proper
administration of justice
o There may also be times where the Government’s conduct is so unfair and
departs from considerations of justice that it may warrant a reversal of
conviction or dismissal of indictment
 o In determining whether the government’s tactics offend justice, the court
may consider factors under Stringer and Scrushy
o Court unwilling to say that the SEC was bringing a civil suit solely to build a
criminal case
 Counsel (and defendant) knew of dual investigation
 Not clear target when he was deposed
 SEC sought testimony on its own, did not coordinate with USAO
 USAO did NOT suggest questions, no real involvement in SEC’s case,
 SEC did not know status of the criminal case, didn’t even know that
USAO would bring charges until months later
 United States v. Stringer, which considered these factors:
o Concealed fact of criminal investigation for two years by covering it with
SEC investigation
o Used SEC investigation to hide the presence of the USAO
o Decision had already been made to indict by USAO
o Attorney asked about criminal case and SEC was evasive
o Court believed that the agents hid the criminal investigation in order to avoid
criminal discovery limits and constitutional protections
 Scrushy Factors
o Government manipulated the civil case for criminal investigatory purposes
 The SEC moved the deposition to support venue in the criminal case
 Adjusted deposition strategy (avoided certain topics) to further
interests of criminal case
o SEC received explicit direction from the USAO
o Court there found that the civil and criminal investigations had essentially
merged, and so evidence was suppressed because failure to advise of the
merger departed from the proper administration of justice
 Does the government have a duty to warn a person that there may be criminal
charges coming as well as civil?
o Courts have generally said no
o But, courts have said that if the civil investigation is nothing more than a
cover, or there is no real intent to go forward with the civil case, then
that is deliberate deception
 Bottom line – Government can not LIE to or MISLEAD defense counsel
regarding the existence of criminal investigation
o OR deceptively use a civil investigation to hide a criminal case
 So if you are a defense attorney, ALWAYS ASK if there is going to be parallel
proceedings/investigations – government agents mislead at their own risk
 These kinds of holdings were pretty rare, but are becoming more common

Fifth Amendment Waiver and Adverse Inferences

 Fifth Amendment can be used to protect against potential criminal exposure, but
NOT civil or non-criminal collateral consequences
 Waiver of the 5th Amendment
 o Majority View
 If you voluntarily testify (i.e. waive) in Proceeding #1, you can still
assert the privilege in Proceeding #2
 Note that the earlier statements might still come in anyway
(party admission or coconspirator statement) but gov cannot
force you to get up and testify
o Minority View (including the D.C. Circuit)
 If you voluntarily testify (i.e. waive) in Proceeding #1, you CANNOT
assert the privilege in Proceeding #2 (i.e. have waived)
 Gov could use whatever is said in earlier proceeding to help further its
investigation, could lock defense in to a particular theory of the case, help
figure out what rebuttal arguments will be
 And if D makes any false statements in an earlier proceeding, could be a
perjury prosecution
 Dangers of answering a civil complaint/making civil testimony
o Gov can use to develop case
o May be considered an admission
o Use civil statemetns to impeach or cross-examine in criminal case
o False statements – perjury conviction
o Can draw adverse inference from invocation of privilege in civil cases if you
fail to respond to evidence suggesting guilt
 Adverse Inferences Generally
o Criminal cases – not permitted – Griffin v. California (380 U.S. 609 (1965))
o Civil Cases – Adverse inference permissible when fails to respond to
probative evidence offered against D
o Courts sometimes need to figure out when an adverse inference can be
drawn
 LaSalle Bank Lake View v. Seguban (7th Cit 1995) – p. 1167
o Facts: LaSalle suing S under RICO for embezzling money, and her husband for
using the embezzled funds. There was also a criminal investigation. Bank
moves for summary judgement. ND of IL has very specific rules for summary
judgment. Had to submit what statements of material facts which are not
disputed, S’s need to respond, but they don’t want to until the criminal case
has gone forward, so they move for a stay. District Court said 5th Am priv did
not create a dispute of material fact, and so granted summary judgment.
Circuit Court says that because there was a criminal proceeding ongoing
means that they had the right to invoke the Fifth, but now deciding
whether there can be an adverse interest.
o Held: Trial court might have drawn improper adverse inference from
invocation of privilege.
o If practices are so costly (economically) that they coerce the holder to waive
the Fifth Amendment privilege, they may be prohibited – Spevak v. Klein, 385
U.S. 511 (1967)
 o Generally, adverse inferences may be drawn from an invocation of the 5 th
Amendment in civil proceedings, e.g. in response to probative evidence.
o However, under the Baxter, although the invocation of the privilege may
be considered among all other evidence as a factor, it may not be taken
as a dispositive/direct inference of guilt (in that civil action)
o Here, granting summary judgment on the allegations of the complaint
ALONE would not be permitted
o Second prong to the summary judgment standard beyond just assuming all
undisputed facts are true – whether summary judgment is proper as a matter
of governing law
o That second prong is critical here, because if it weren’t here it would be
unconstitutional
 There is SOME limit to the ability to draw an adverse inference in a civil
proceeding
o Can’t draw inference where inference would lead directly to civil sanctions
o Assertion of 5th Amendment privilege does not lead directly to entry of
summary judgment, but merely establishes the factual basis from which the
Rule 56 analysis will proceed
 Because at this stage, there had to be specific statements of fact cited
to the record
o Courts don’t want inference to be coercive
 LaSalle says that there was no undue penalty for asserting the
privilege
 Relevance to Corporate prosecutions
o Although corp cannot resist doc request under 5th, an individual could invoke
the privilege for 5th amendment in testimony if they are criminally implicated
o But there could be adverse inferences drawn against
o The problem to think about is how one can protect themselves when there
are both civil and criminal proceedings, given the adverse inference that can
be drawn in a civil proceeding
 How can corporations protect themselves?
 Gov could seek a protective order – judge orders that
documents produced/depositions/etc will be protected, and
won’t be open to their world (and the government) if the case
goes forward
 Protective Orders
o In Re Grand Jury Subpoenas – p. 1177
 Facts: Insurance companies bring civil suit against Gleeson and her
company for fraudulent billing. There is a very long discovery process,
but before trial the parties settle, and as part of settlement court
granted protective order over discovery that had been taken. Grand
jury in criminal investigation subpoenas documents from insurance
companies from the civil suit. APFU moves to intervene and quash
subpoena for violating the protective order
  Issue: When can subpoena be quashed on the basis of a protective
order.
 9th, 4th, 11th Circuits – per se rule – PO CANNOT shield
discovery from GJ subpoenas
 What are pros and cons – allowing case-by-case approach
could undermine law enforcement in civil courts by
depriving relevant evidence, parties will not rely on
protective orders
 2nd Circuit – Government must show either improvidence in
the grant of P.O. or some extraordinary circumstance or
compelling need
 1st and 3rd Circuits – GJ subpoena teumps a P.O. unless person
seeking to avoid P.O. can show existence of exceptional
circumstances that clearly favor subordinate the subpoena to
the P.O.
 Court says protecting status of grand jury, GJ’s right to every
mans evidence. Protective orders are enforced at the expense of
grand juries, can prolong costs involved in criminal case and make
criminal cases take longer. 5th Amendment rights of deponents
shouldn’t be given too much weight, because the PO does not affect
right to assert 5th Amendment privilege before the Grand Jury.
o Bottom Line
 POs are not a substitute for invoking the 5th Amendment privilege
 Adopts per se rule
 In most circuits, a GJ subpoena WILL trump a P.O. as a matter of
course
 Only in 2nd Cir. Does government have a burden in overturning a P.O.
 Staying Proceedings –
o Courts look at
 Effect stay would have on P’s interests (would evidence not be as
good, etc)
 Effect on the defendants interests (e.g. would 5th privilege be
burdened) – specifically what impact would invoking the fifth have
 Convenience to the courts (collateral estoppel)
 Public interest
 Strongest case for D to obtain stay –
 Criminal proceeding has reached an indictment stage
o Prosecution can usually get a stay more easily than the defendant
 S’s didn’t respond to statements for summary judgment, so court
needs to decide what the effect is
 If D counsel, you really have to strategize about how you will respond to civil
charges
o If there is actually a criminal indictment, court more likely to grant a stay and
let the criminal case move forward
 o If you DON’T have an indictment, you’re really in trouble, and may have to
deal with both proceedings at the same time
o Even if adverse inference can be drawn, it still may be worth it to invoke the
fifth to protect yourself in the criminal case

Joint Representation
 Defense counsel has numerous ethical obligations – to preserve the confidences of
clients, to zealously represent each client within the law
 Problem for White Collar Crime is that most of these rules and cases involve
ACTUALLY GOING TO TRIAL, whereas most WCC issues are occurring pre-
indictment

Professional Rules
 ABA Rule of Professional Conduct 1.7 –
o A lawyer shall not represent a client if the representation will be directly
adverse to another client, unless
 The lawyer reasonably believes there will not be an adverse affect
 Each client consents after consultation
o Shall not represent a client if the representation may be materially limited by
the lawyer’s responsibilities to another client, a third person, or the lawyer’s
own interests, unless
 The lawyer reasonably believes there will not be such adverse affect
 The client consents, after an explanation of the implications of the
common representation and the advantages and risks involved
o COMMENT: The potential for conflict of interest is so grave that ordinarily a
lawyer should decline to represent more than one co-defendant
 ABA Model Rule 1.13(e) – a lawyer representing an organization may also represent
any of its directors, officers, employees, etc
 ABA Model Rule 1.8(g) – If you are representing co-defendant’s, you cannot enter an
aggregated agreement as to guilty or nolo contendere, unless clients consent after
consultation
 ABA Model Rule 1.8(f) – A lawyer shall not accept compensation for representing a
client from one other than the client unless
o The client gives informed consent
o There is no interference with lawyer’s independence of professional
judgment or with the client-lawyer relationship
o Information relating to the representation of a client is protected
 ABA Criminal Defense Function Standards are very strict
o Counsel who are associated in practice should not defend more than one
defendant in the same criminal case if the duty to one might conflict
with the duty to another
o Should decline to act for more than one of several codefendants except
in unusual situations when, after careful investigation, it is either clear that
no conflict is likely to develop at trial, sentencing, or at any other time
 in the proceeding, or that common representation will be advantageous to
each of the codefendants represented, and in either case
 The defendants give their informed consent
 The consent of the defendants is made a matter of judicial record,
and the trial court makes appropriate inquiries respecting
potential conflicts and whether the defendants fully comprehend
the difficulties
 ABA Model Rule 1.6
o Lawyer shall not reveal information relating to the representation of a client
unless the client gives informed consent, except for disclosures that are
impliedly authorized in order to carry out the representation
 ABA Model Rule 1.9
o A lawyer who has formerly represented a client in a matter shall not
thereafter represent another person in the same or a substantially related
matter in which that person’s interests are materially adverse to the interests
of the former client unless the former client gives informed consent,
confirmed in writing

Constitutional Issues
 Holloway v. Arkansas (SCOTUS 1978)
o Facts: One lawyer was appointed to represent three codefendants at trial.
The lawyer informed the court of a conflict between his clients, but the court
did not investigate the likelihood of conflict.
o Held: The Sixth Amendment right to assistance of counsel guarantees the
right to conflict-free counsel. Requiring or permitting joint
representation is not a per se violation of the Sixth Amendment, and may
be permitted in some cases
 SO multiple representation can potentially violate the 6th
Amendment right to effective counsel
o When appointed counsel brings conflict to the attention of the court and
asks to be relieved of joint rep, failure to grant violates 6th Am
o But, where there has been no objection by defense counsel and other special
circumstances are not present, judge has no constitutional obligation to
inquire into potential conflicts in joint representation unless the judge knows
or has reason to know of potential conflict – Cuyler v. Sullivan
 But might be Rule violation – Rule 44(c) below
 Glasser v. United States – D is denied effective assistance when a trial court creates
a conflict by appoint counsel for one D to also represent codefendant whose
strategic position differs from that of the Defendant
 Why do defendants want to be represented by the same attorney?
o Why agree? – counsel can maintain greater control over the matter, track the
investigation more efficiently/cheaple, present a common, united defense to
possible prosecution
 Prosecutor’s objection
o Permits defendants to shape testimony and perhaps coordinate perjury
 o In a conspiracy case, can keep innocent or less culpable subordinates in line
(from claiming less culpability) by means of a stonewall defense
o Why would they object to joint representation?
 Preserve the record – avoid appeals based on defective assistance
 Might want to use one of the defendants as a witness against another
 Divide and conquer
 Trim off smaller fish to use as witnesses as the bigger fish
 Might make defense strategy more difficult
 Might have better sense of conflict in pre-indictment period
 Might want to disqualify particularly effective counsel (might not be
ethical)
 Fed R. Crim. Pro. 44(c)
o Requires a court to inquire as to whether a conflict exists whenever
defendants are jointly defended by the same attorney (of two attorney’s
from the same office) and to advise each D of his rights to effective and
separate representation
 But, the right to choice of counsel and right of conflict-free counsel can conflict:
 Wheat v. United States (SCOTUS 1988) – p. 1037
o Facts: Wheat, G-B, and Bravo are all charged with being a part of a huge drug
ring. G-B acquitted on some charges. To avoid a trial on other charges, G-B
offered to plead to some counts, but the Court had not accepted those yet.
Wheat contacted Iredale (G-B’s atty) and asked him to be his lawyer at trial
(5 days before trial). The government objected, arguing that Iredale’s
representation of G-B and Bravo creates a conflict of interest because a) the
court might reject G-B’s plea, and if he went to trial Wheat would probably be
called as a witness, and b) the government wanted Bravo to testify against
Wheat. Bravo and G-B were willing to waive their right to conflict free
counsel. District Court denied motion for Iredale to be counsel.
o Held: No violation of Wheat’s right to counsel of choice.
o There is a presumption in favor of the defendant’s counsel of choice, but
the presumption can been overcome by a demonstration of actual conflict
or a showing of a serious potential for conflict
o The evaluation of facts and circumstances in each case is left to the
discretion of the trial court
o Judges must investigate cases involving joint representation – the
defendant must be advised of his rights to effective assistance of
counsel, including separate representation. Unless there is good cause
to believe that no conflict of interest is likely to arise, the court shall act
appropriately to protect the defendant’s right to counsel
o Here, it required quite a few inferences to determine that there is an
actual conflict, here there was more of a potential for conflict
 Right to counsel of choice may run in to right of “effective assistance” of
counsel when chosen counsel has an actual or potential conflict
o Loyalty issues – choosing one client’s interests over anothers
o Client confidences – can’t share info from one client with another
 o Strategic choices
 Value of Counsel of One’s Choice
o Better attorney-client relationship with chosen counsel
o Some people believe that a privately retained attorney of choice
ensures counsel will fight more aggressively (aka public defenders
suck)
o Some believe if have counsel of choice, Defendant might have greater
participation in structuring his defense
 There are some limits on the right of counsel of choice
o Can’t someone who is not a member of the bar
o Can’t insist on attorney you can’t afford
o Can’t insist on attorney who refuses to represented you
o Can’t insist on an attorney who has a relationship with an adverse party
(ethical conflict)
 If defendant is indigent, and doesn’t like the counsel they’ve been appointed
o Too bad, according to most courts
 Guidelines:
o Actual conflict of interest – can decline a proffer of waiver and insist on
separate representation
o Must recognize presumption in favor of counsel of choice
 Presumption can be overcome by actual conflict or by a showing
of serious potential for conflict
 District courts will be given substantial latitude in refusing waivers where the
potential for conflict exists
o Why? – District court in better position to evaluate
 Likelihood of pleas breaking down
 Importance of witnesses
 Motives of the government
 What if the waiver had been accepted?
o Appeal conviction for ineffective assistance of counsel
o (Even if the prosecutor made the motion to DQ)
o Standard? – See “Whip-sawing” below
 In absence of objection of trial, must show an actual conflict
which adversely affected his representation
 But defendant need not indicate specific prejudice (i.e. that the
result would have been different)
 When codefendants are jointly represented at trial or sentencing, the potential for
prejudicial conflict is greatest – the interests of the defendants could diverge at any
moment, and the lawyer may have to choose which one to serve
o There could be issues about cross-examining a witness that helps one but
hurts the other, or having the defendant testify while the other does not
because one would hurt the other
o There may even be concerns that this is being done as part of trial strategy
 Plea bargaining is also a big issue
 o What if one defendant is less culpable, but if he pleas out for lesser
punishment in exchange for helping the government, that may require
testifying against the more culpable co-defendant
o Plus, where the attorney negotiates immunity for one defendant, an actual
conflict is extremely likely to be found, especially if it involves testifying
against the co-defendant
 The Wheat court was concerned about “whip-sawing” the court into an ineffective
assistance claim
o Strickland v. Washington, 466 U.S. 668 (1984) set up the two-prong test for
ineffective assistance
 Ineffectiveness – the counsel’s representation fell below an objective
standard of reasonableness under prevailing professional norms
 Prejudice – a reasonable probability that, but for counsel’s
unprofessional errors, the result of the proceeding would have been
different
o However, the prejudice prong need not be shown where counsel had an
actual conflict of interest – Cuyler v. Sullivan, 446 U.S. 335 (1980)
 Prejudice will presumed ONLY where
 the defendant demonstrates that counsel actively represented
conflicting interest and
 an actual conflict of interest adversely affected the lawyer’s
performance
 So in these cases, the defendant does not need to prove but-for the
conflict, the result would have been different
o Mickens v. Taylor, 535 U.S. 162 (2002) – when the court fails to inquire into
possible conflicts that it knows or should have known of, the defendant must
show that the conflict of interest adversely affected counsel’s performance
 The court ASSUMED that the same standard of prejudice under Cuyler
must be shown, not the standard in Strickland – Circuits are split

Sixth Amendment Waiver

 Protocol for determining whether waiver is knowing, voluntary, and intelligent –
o The client has been advised of is right to effective representation
o He understands the possible conflict and the potential risk attendant to it
o He has discussed the issue with his attorney
o He voluntarily waived the Sixth Amendment protections

Practical Issues
 Pros and Cons of Joint Representation
o Plenty of defense attorneys say NEVER do it.
o Liberal view – it’s sometimes okay
o Pros
 Coordinate strategy
 May lower the cost of representation
o Cons
  Loyalty – uses confidences of one client against another
 Differing culpability or interests
 Possibility of disqualification
 Government suspicions about obstruction of justice
 Pre-Indictment & Corporate Context
o Hard to forecast conflicts early on
o Sixth Amendment kicks in after initial appearance before a magistrate judge
o SCOTUS has not addressed conflicts pre-indictment
o Some courts use Wheat standards at grand jury stage
 Corporate Counsel
o Can generally represent corporation and employees, as long as employee has
not received GJ subpoena
 If GJ subpoena is received, they need to get their own counsel
 Corporation might pay for the employees counsel to represent their
interest during internal investigations and
 If employee admits something potentially culpable during
investigation, you need to stop interview and get them counsel
o Should corporate counsel represent everyone?
 Low level employees less likely to feel abandoned by corp
 Sends clear signal to prosecutor that company does not believe its
people have engaged in wrongdoing
 Hypos
o Corporate Victim and Officer Target/Subject
 Assume corporate officer has embezzled corporate funds
 Would you represent the corporate officer and the corporation
 No way, there is an actual conflict – corporation is victim
o Corporate officer makes illegal gifts to a government official. Corporation
could technically be considered a victim, but might also be liable to represent
officer
 Should you represent both?
 Pro: Could argue that officer’s interests and corporations are
the same, if corporation doesn’t want to be liable
 Con: Corporation could try to defend itself, throw officer over
the bus and say it was not for the corporations benefit
o Both corporation and officer are targets/subjects of a government
investigation
 It could be fine to represent both, as long as you think the interests
are aligned, if theory of liability if gov is the same for both
 But adversity could arise later down the line if the government
tries to grant immunity, or if the corporation wants to cooperate
and throw the employee under the bus (per the new charging
guidelines)
o Corporation is target of investigation and the employee is a witness
 Might want to keep this person on board, arrange to represent both
  But there is a big potential for problems, because employee is witness,
it might not be in their interest
o