Introduction

1) Collateral consequences - the stakes like a company going out of business and people losing jobs, or losing the
ability to work with a gov. contract if you had one.
a) Only the department of justice can bring criminal charges the agencies can just recommend. The regulatory
agencies can still do things that are almost as bad like limit their business.
2) Parallel Preceding - you can be charged by various agencies and individuals for the same crime. And one cases
outcome can affect other outcomes.
3) Most white collar cases don’t go to trial because the cases are usually too complicated for a jury.
4) Why do people do it?
a) Professors belief - corporate America are riddled with sociopaths
i) They don’t really do it for the money or the power. They do it because they are sociopaths.
5) Review Terms
a) Prosecutorial discretion
b) Collateral consequences
c) Parallel proceedings
d) "process offenses" - "cover ups"
e) Holder Memo (1999)--> Thompsons Memo --> Filip Memo p. 30 recognizes that there is some balancing and
they are taking a middle approach, they are not taking a harsher approach or give them a pass. They will look at
it on a case by case basis.

Corporate Criminality/Individual Liability

1) Constitutionality – corporations can be punished with a showing that its agents had the knowledge and intent that
the corporation entrusted the authority to act in the subject matter. (New York Central & Hudson River Rail Roads;
violating Elkins Act by charging too little to sugar companies for railroad tickets)
a) The court was trying to say that they are not going to let corporations, which were controlling almost all
interstate commerce, get a free pass. Ancient precedent did not support this conclusion, but the world is
changing.
2) Filip Memo p. 30 recognizes that there is some balancing and they are taking a middle approach, they are not taking
a harsher approach or give them a pass. They will look at it on a case by case basis.
3) Seigel (p. 32) - if you don’t prosecute, it is too easy for the people at the top to insulate themselves or just turning a
blind eye
4) Respondeat Superior Doctrine – there has to be some benefit transferred even if it is small (United v. Singh; (in-
between railroad and oil case); prostitution case with manager keeping most of the money; there was still SOME
benefit though, so they were liable)
a) Exception: Where there is NO benefit to the company, even when the employees act with the mens rea in the
scope of their duties, the corporation is not liable (Standard Oil v. United States; employees working with 3rd
party to steal oil from Standard Oil)
b) Corporation can even be a victim and liable – United States v. Sun Diamond Growers of America (corporation
can still sometimes be a victim); The lobbyist was stealing from the client to give to politicians, but because it
was still done for the benefit of the company, the company was still liable.
c) Almost strict liability (but can still show outside scope) - Liable even if directly contrary to instruction and policy
i) A corporation is responsible for acts and statements of its agents, done or made within the scope of their
employment, even though their conduct may be contrary to their actual instructions or contrary to the
corporations stated policies. United States v. Hilton Hotels Corp. (almost strict liability still can show outside
of scope); Buyer of the corporation violated antitrust law by requiring supplies to pay into a fund to have
their goods at the hotel; The president said it was contrary to the corporate police, and then both the
manager and the assistant manager said that they do not engage in that kind of misconduct. Even the
individual who committed the crime admitted to receiving the instructions.
(1) THIS IS a very influential case. The corporation HAS TO MAKE SURE that the law is not violated it is not
good enough just to have the policy in place.

1
 ii) However, the court in Beusch rejected strict liability and said there could be a little wiggle room if you can
show that you did everything you could (Beusch; jury instructions imposing strict liability were wrong)
5) Overarching theme:
a) Most important legal question:
i) Mens Rea: did they act knowingly
(1) Were they acting to benefit the employer?
(2) The intent standard here is pretty low; knowingly
b) The breadth of company liability from employees are extremely broad.
6) Review:
a) A corporation can be held criminally liable
b) As long as there is some benefit to the corporation, the corporation can still be held liable.
c) A corporation can be held criminally liable even if it had rules and procedures against the conduct, and someone
violated the procedures.
7) Philip Guidelines (current DOJ guidelines)
a) Is there potential liability as a legal matter.
b) And prosecutorial discretion (this discretion is not appealable; these are just guidelines not law)
i) Waiver of attorney client privilege is neither asked for nor expected. (Unlike Holder Memo)
(1) You have to provide facts if you do an internal investigation, but not their own lawyers' legal analysis
ii) Important factors on p. 50
(1) For number 9 see Yates memorandum they are now intertwined
(a) You have to turn over all of the facts, and all the facts related to individuals, you have to throw the
individuals under the bus.
(b) From the very beginning, the prosecutor will look at both prosecuting the corporation and the
individual. (equal weight on both)
8) Problem 2-2 (p.44)
a) There is no benefit for the corporation
b) There could be liability, because there is a benefit.
i) Under Philip guidelines, this is a petty offense, there has been no pattern of this happening (not very
pervasive)the factors seem to weigh in favor of no bringing a charge against the company.
9) Collective Entity Mens Rea
a) United States v. Bank of New England; The bank is being charged with a felony liability for willfully failing to file
Currency transaction Reports for transactions over $100,000; There was no proof that any particular person or
group of persons knew that it totaled over 100,000; None of the human beings were convicted
i) Collective knowledge; The banks knowledge is the totality of what all of the employees know within the
scope of their employment; Even though no employee on their own had the intent, combined they had the
necessary intent.
ii) Conscious avoidance /willful blindness; when an institution or organization consciously avoided learning
about and observing the law.
10) Individual Liability – Basic Principle – you are always liable for your own crime. If you commit the crime yourself and
satisfy the mens rea, because you did it on behalf of the corporation is no excuse. Wise
a) Aiding and Abetting (a) 18 U.S.C. § 2 aiding and abetting (expands the scope of liability for the crime) you need
3 things (1) A crime (2) Knowledge of the crime (3) Substantial assistance
i) Supervisors not only have the responsibility to stop illegal conduct, but they have the obligation to stop
illegal activity under your control; knowledge of wrongdoing might be sufficient. (Brown & Toby; billboard
company’s employees agreed not to outbid each other. Management knew the lower level employees were
doing this, but they did not stop them)
b) United States v. Brown & Meadows; Public Housing in Detroit was a mess; Brown was charged with false
statements (required willful intent) by giving favors; Meadows was a housing investigator that was personal
friends with Brown and having him give family favors; not sufficient evidence of willful intent for Meadows
(she was untrained and outside her job duties).
i) 18 U.S.C. § 2(b) aiding and abetting An individual is criminally culpable for willfully causing an intermediary
to commit a criminal act even though the intermediary has no criminal intent and is innocent of the
2
 substantive Crime. United States v. Walser used witness to lie for her about forms she claimed to send him;
she was charged with the perjury for what the witness said (even though the witness didn’t commit perjury
because they didn’t know they were lying
11) Responsible Corporate Officer Doctrine - Responsible corporate officer doctrine is a rare application of strict liability
in the criminal area. And it is limited to cases involving "public welfare offenses" (Morissette)
a) This deals with what intent is required.
b) Public Welfare offense
i) In order to protect the public, the court essentially imposes criminal strict liability under certain
circumstances
(1) Statute involves a matter of public policy,
(2) The standard imposed by the statute is reasonable
(3) Penalty is small
(4) Conviction would gravely affect the reputation of the individual
(5) The crime was cognizable at common law
(6) The congressional purpose would be supported by the lack of an intent.
i) You have to do everything you possible can to insure the safety of the public. United States v. Dotterwiech;
president of company did not know the drugs were being repackaged and sold under its own label.
Company was found not guilty, but he still was.
(1) In balancing hardships, Congress preferred to place upon the corporate offices the criminal liability
rather than to put the innocent public at risk.
(a) The court said prosecutorial discretion will mean there will not be the overcharging of people
b) Objectively Impossible Defense – defendant was “powerless” to prevent or correct the violation. (United States
v. Park (next step in the evolution of this doctrine)(1) Park is the CEO of Acme and the storage of the food was
contaminated by rats; Park was advised of the conditions 3 different times; Park did tell the VP to investigate
and immediately take corrective action; There were several warnings and the problem still continued. So there
clearly could have been more done than there was.
c) Balint factors to determine if strict liability should be applied (1) penalty was small (2) stigma attached to the
charges is small (3) not reasonable that she should have gotten permission for her actions. United States v.
Freed; camp ground in national forest and employees kept cutting back foliage
(1) This was a little bit of an expansion of strict liability to cases where there is a less serious offense. IT is
pushing toward the outer limits on when strict liability can be imputed.
(2) If it was her employees that did that, she should have had better control over them. She was in charge
of them.
d) United States v. Iverson
i) Facts:
(1) After failing to get a permit to dump his waste. The CEO instructed his employees to dump the waste
down the drain.
(2) The defendant was sometimes present when drums were cleaned and the waste was dumped.
ii) Analysis
(1) Under the statute any corporate officer which is answerable or accountable for the unlawful discharge is
liable under the CWA
(a) There is also a standard that he had to knowingly do the act.
(2) Here this case is one in which the
c) If you are in the position with enough authority to stop the conduct, then you are potentially liable
i) Criminal liability is expanded to people running the corporation in certain instances, even if they do not have
individual knowledge or intent generally required for criminal liability
(1) This general line of cases is the exception not the rule.
Conspiracy
1) 18 USC §371 Conspiracy
a) Text
i) If two or more persons conspire either (1) to commit any offense against the United States, or (2) to defraud
the united states, or any agency thereof in any manner or for any purpose, and one or more of such persons
3
 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.
ii) If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the
punishment of such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.
b) It is known as the darling of the prosecutor's nursery - Learned Hand
c) Has a lot of advantages
i) Pretty easy to charge and prove
2) Basic elements (1) Must be agreement among co conspirators (2) Unlawful object to the agreement. (3) Requisite
intent (knowledge you are committing a crime) (4) The conspiracy doesn’t have to be successful or lead to the
commission of the actual crime (there just has to be an overt act to the crime)
3) Technical and procedural advantages
a) Overcomes most hearsay objections (get in co conspirator statements)
b) You can try defendants together (join defendants together)
c) Venue is proper in any jurisdiction where an act of the conspiracy took place.
d) As long as there are any acts to continue or cover up the conspiracy, then the conspiracy continues.
i) Can extend the statute of limitations.
4) Two primary clauses
a) Offense clause - a crime to conspire to make an offense against the US
i) For felony, punished as a felony for up to 5 years
ii) However, if it is a misdemeanor, you cannot exceed the punishment of that misdemeanor.
b) Defraud Clause - a crime to conspire to defraud the united states.
i) A crime under this clause is ALWAYS a Felony
(1) Can be used by prosecutors to charge a misdemeanor as a felony IF the proof shows the person knew
about the reporting and intended to obstruct it
(a) See Licciardi and Gricco below
5) See U.S. Attorney's Manual § 923.18 U.S.C. §371 (gives guidance to fed prosecutors on which clause to charge
under)
a) To violate the defraud clause it is not necessary to prove a monetary or pecuniary loss to the government.
b) Any conspiracy "calculated to" by obstructing one of its lawful governmental functions by deceit, craft or
trickery, or at least by means that are dishonest.
i) Hammerschmit Case - Vastly expanded the reach of the government under this statute.
c) Pinkerton Rule - makes each member of the conspiracy liable for acts of other members of the conspiracy in
acts to carry out the conspiracy that are REASONABLE foreseeable
d) Wharton's Rule - if you have a crime that by its nature requires more than one person to commit the crime, you
cannot charge those two people with conspiracy
i) Ex: bribery
6) The Plurality Requirement – It takes more than one person to conspire
a) United States v. Steven; If you are the sole owner of a corporation, and you engage through that corporation in
illegal activity, you cannot be charged with conspiring with the corporation (only one person does not meet the
plurality requirement)
i) A little inconsistency with Stevens and Braswell - a man formed a single corporation and corporations do not
have a 5th amendment right. When Braswell formed a corporation he might have forfeited his 5th
amendment privilege as to corporate books, but if you were a sole proprietor, you might.
b) No Intercorporate Conspiracy Doctrine – If you have a situation where different actors of the corporation are
acting together, then you can be charged with conspiracy together. McAndrew v. Lockheed Martin Corp. (1993
before Holder Memo); employee was retaliated against for testifying by 5 senior management employees that
fired him.
i) Exception – For antitrust violations, the employees and the corporation cannot be charged together to
conspire against the antifraud violations
7) Klein Conspiracy – An agreed-upon objective must be to impede or impair the IRS to collect taxes on money they
otherwise would have collected

4
 a) Elements: (1) existence of an agreement (2) an overt act by one of the conspirators in furtherance of the
objective AND (3) intent on the part of the conspirators to agree, as well as to defraud the United States IRS to
collect taxes on money (United States v. Gricco; parking scheme to pocket money and not put it in bank
i) The question is whether the goal was to steal money or was it to pay less taxes. (prof. doesn’t think the
evidence was sufficient to show intent to evade taxes.)
ii) Key point: You can charge a felony conspiracy to defraud the united states where maybe they aren't even
federal crimes so long as you can prove that it was an objective of the conspiracy.
8) Mens Rea - United States v. Licciardi; ∆ was selling less quality grapes as higher quality Zinfandel grapes to make
more money; He shipped them at times where the Bureua of Alcohol, Tabacco and Firearms (BATF) inspector was
not present; this caused caused the winery to claim and report that it was using grapes that it was not. No evidence
that he knew of the reporting process
9) Taking money from private contractor that receives funds from government is not enough for conspiracy Tanner
must show intent to take the money from the government
10) Common Objective Requirement - to prove a single conspiracy the government must prove that each alleged
member agreed to participate in what he knew to be collective venture directed toward a common goal. United
States v. Berger; stealing money from government with a lot of different schemes
i) As a matter of law to charge that the government needed only to prove agreement on one of the objectives
charged in the indictment in order to establish that a conspiracy existed. In order to obtain a conviction, the
government also has to show that each defendant knowingly participated in a scheme to achieve this
particular goal
ii) So long as the evidence shows a common objective.
(1) You don’t have to prove every conspirator knows everything about the conspiracy.
(2) You need to show that they all share a common single objective.
b) Duplicity - Whether the prosecution charged one conspiracy when the evidence showed multiple, different,
conspiracies
c) Multiplicity - The prosecutor has taken one conspiracy and improperly broken it up into separate conspiracy
counts
d) Wheel Conspiracy - One person at the center, and multiple persons who are acting largely separately.
i) To charge this as a conspiracy, you must show that everyone knows the main person in the center
e) Chain Conspiracy - You don’t know everyone in the link and all the details, but you know that there is a chain of
distribution
11) Note 5 on 109 - Can defendant be charged and sentenced on both the offense and the defraud clause on the basis of
the same agreement?
a) The circuits are split
b) Minarik - In some instances, you might not be able to get a twofer. There are some limits to using both clauses.
12) Leaving a Conspiracy - To withdraw from a conspiracy, an individual must take affirmative action, either (1) by
reporting to the authorities or (2) by communicating his intentions to ALL his coconspirators. (this can be difficult in
certain circumstances) (3) Mere cessation of one's participation in a conspiracy is insufficient to demonstrate
withdrawal
a) United States v. Hughes; Money was being stolen from the government by contractors with the government;
Hughes was an attorney who represented a trustee to ARCO Business Service which dropped out of the
conspiracy through a letter; Hughes tried to claim that this was also trying to withdraw him from the conspiracy.
However, he signed this letter in the capacity of a trustee and not in his personal capacity.
i) He should have written a letter on his personal behalf as well.
ii) You have to distinguish between entities and what capacity people are acting in.
13) Impossibility is NOT a Defense – Recio (Supreme Court); Gov finds out about drug conspiracy and intercedes; ∆
didn’t know the drugs have been seized and continued to act in his capacity.
a) No you can still be charged for the conspiracy even after the outcome has become impossible.
b) There has to be affirmative evidence that the person left the conspiracy
c) Conspiracy is not just the act but the agreement, because there are special dangers. There is still the agreement
even though the objective is impossible

5
 Wire and Mail Fraud
1) 18 U.S.C. § 1341Mail Fraud
a) Devised or intending to devise any scheme or artifice to defraud or
b) For obtaining money or property by means of fraud or fraudulent pretenses, representations, or promises to
sell,
2) 18 U.S.C. § 1343 Wire Fraud
a) the scope of the statute and the fact that both of these are 20 year federal felonies makes them very important
3) Important technical differences in terms of how these two statutes work
a) Wire fraud has to cross a state boarder, whereas mail fraud only has to be placed in the mail
i) The person does not have to know the wire crosses state lines however.
ii) Mail fraud is any private or commercial interstate carrier
4) Difference between mail and fraud and conspiracy
a) Conspiracy statute does not require the government to actually lose money or property, the mail and wire fraud
statues do require some sort of money or property it is not enough to impede the government's interest.
5) Elements (1)Mail fraud (1) The existence of a scheme to defraud (2) Intent to defraud (3) The use of mails for the
purpose of executing the scheme
a) The scheme need not be fraudulent on its face but must involve some sort of fraudulent and material
misrepresentations or omissions
i) Hawkey; sheriff (elected local official) and he advertised and sold tickets and advertisments for benefit
concerts for charity; He collected the money through checks in the mail; He then used the money for
personal uses
(1) ∆ argued the people got what they bargained for because the people got to see the concert. So there
was no property loss
(a) Court said no the people expected the money to go to a particular purpose and it did not, so it was a
scheme EVEN though there was not a direct monetary loss
(2) Why weren't the charges based on the defrauding of the charities?
(a) It would have been harder because they were never guaranteed any money, and they just got less
than they expected.
(3) This case shows how broad the courts are willing to extent the scope of a scheme.
b) What must be proved beyond a reasonable doubt is that the defendant, with the intent to defraud, knowingly
and willfully devised, intended to devise, or PARTICISPATED in a scheme to defraud substantially the same as the
one alleged in the indictment
i) Doesn’t have to be a fraud from the outset. United States v. Edwards; payphone Ponzi scheme; kept telling
investors that the business was doing well
6) Materiality (QUESTION; what is materiality under this statute?)
a) United States v. Svete; Selling financial interest in viatical settlements; The agents were misrepresenting the
likely life expectancy of the individuals. The K signed stated not to rely on the statements however; Several of
the investors testified at trial that they did not read or understand that the contracts relied on the statement of
the sales agents
(1) Court Rejected objective standard and argument that anyone reasonably smart would not have been
defrauded.
(2) Proof that a defendant created a scheme to deceive reasonable people is sufficient evidence that the
defendant intended to deceive, but a defendant who intends to deceive the ignorant or gullible by
preying on their infirmities is no less guilty.
b) Hypo Problem 4-1
i) The people would initially lie to get the people to lie and then would tell them the truth about what they
were actually trying to sell.
(1) Is this materiality?
(a) This is right at the edge. This court said no. This is more of puffery. If the deception is in the
introduction and not the substance, this might be material.
7) Protected Interests
a) Intellectual property is property under this statute
6
 i) Carpenter v. United States (broad application of statute); Winans was a writer for the Wall Street Journal
and he had a sway in the stock price of companies based on the article; WSJ said that the contents of the
column were the Journal's confidential information; He then others advance information as the timing and
contents of the "Heard" column.
ii) Analysis
(1) The information belonged to the Wall Street Journal, and the Journal had the right to determine how
the information was used.
(2) The contents of the column, even though intangible, belonged to the Journal, so him using it for other
purposes is defrauding the Journal
b) Mere browsing of the records of people about whom one might have a particular interest, although
reprehensible, is not enough to sustain a wire fraud conviction on a "deprivation of intangible property" theory.
i) United States v. Czubinski (narrow/ hyper technical reading); IRS employee who violated policy by looking
up information he shouldn’t have. He did not share the information with anyone or print it.
(1) Mere browsing of the records of people about whom one might have a particular interest, although
reprehensible, is not enough to sustain a wire fraud conviction on a "deprivation of intangible property"
theory.
c) Carpenter/ Czubinski
i) In carpenter, there was clearly a scheme to defraud, but in Czubinski there was only some circumstantial
evidence that the information was going to be used for a scheme to defraud. There was just a violation work
rules
d) Cleveland/Pasquantino
i) License is not property until it has been issued. HAS to be property in the VICTIM’S Hands - Cleveland
(narrow/hypertechnical reading); The people lied on their application for video poker licenses, and if the
state had known the truth, they would not have issued the licenses; The state made money when a license
was purchased and used; state receives most of its profits when the license is in use (wasn’t property until it
was given to the ∆)
(a) Prof. doesn’t like this. They are still depriving the regulatory value, and if there are a limited number
of license to give out.
(b) Is possible the court could have been worried about the over federalization of criminal law.
ii) However, tax evastion to deprive Canada of tax money was property – Pasquantino (broad application of
statute); Participants were smuggling alcohol into Canada, and were not telling the customs officials; They
were not paying the Canada the proper taxes.
8) Honest Services - McNally - supreme court said that the theft of honest services is not a fraud under the mail and
wire fraud statutes (dealt with bribes and kickbacks) ; Congress then very quickly passed 18 U.S.C. § 1346 to include
the intangible right of honest services
a) Honest Services Statute only extends to Bribes and Kickbacks Skilling; Skilling, CEO, at Enron was artificially
inflating the company’s profits and therefore depriving shareholders of money; He had stock options that he
used to do this; He never accepted 3rd party bribes to inflate the price. He was taking advantage of his position
to inflate the stock price to personally benefit.
i) The vast majority of cases before McNally were about bribes and kickbacks, and Congress made a broad
statement.
b) Limits § 1346 has only 5 limitations (1) Must be a legally enforceable right (2) Deprivation of services the value of
which depend on there being performed honestly (3) The defendant must intend to defraud (4) The scheme
must use fraud (5) The mail must be used to further the scheme
i) No Fiduciary Duty Needed; Milovanovic - there was a fraud to obtain commercial driver's licenses;
contractors for the government were taking bribes to give licenses
(1) This is different from Cleveland, because this is an honest services case. In Cleveland, it was outsiders
defrauding the government.
(2) Here they were dishonest without owing a fiduciary duty, and a fiduciary duty is not a limitation of §
1346.
9) Schmuck/ Bradshaw

7
 a) Use of mail need not be an essential element of the scheme it is sufficient for it to be incidental to an essential
part of the scheme; Schmuck; car dealer rolling back odometers that he knew would lead to the submitting of a
false title application with the Department of Transportation when sold by the dealers; the use of mail was
necessary for the fraud to succeed
i) What makes this case difficult are the 3 case precedent that stated that although mail was used at some part
during the fraud, they were not connected or material to the fraud.
(1) Kann officer cashed a check and received the money and then the bank would mail a receipt. The
person, however, did not care how the accounting took place at the bank.
ii) Conclusion
(1) The relevant question at all times is whether the mailing is part of the execution of the scheme as
conceived by the perpetrator at the time, regardless of whether the mailing later, through hindsight,
may prove to have been counterproductive and return to haunt the perpetrator of the fraud.
(a) See also Bradshaw; There was a fraudulent scheme to steal cash that had been seized as evidence
and falsely reported to the state treasury department (through the mail that there was no
unclaimed property); filing the report was counterproductive to the scheme
Bank Fraud
1) 18 U.S.C. § 1344 - Bank Fraud
a) Whoever knowingly executes, or attempts to execute, a scheme or artifice
i) (1) to defraud a financial institution
ii) (2) to obtain money, funds, credits, assets, securities, or other property owned by, or under the custody or
control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises
2) Robert Mueller, FBI director, testimony
a) Public corruption is the FBI's top criminal priority
b) FinCEN is a joint taskforce which now focuses on money laundering.
c) SARs - suspicious activity report
3) Key terms
a) FinCEN, CTRs, SARs
b) NSF checks
i) E.F. Hutton - "check kiting" scheme - They would use the delay in the time it took to cash the check to use it
as an interest free loan.
c) Nominee loan/ "straw man" loan
d) Nonrecourse loan/ financing
i) A lender will agree to look only to the collateral for the loan, the borrower is not personally liable.
e) EBITDA
4) Bank Fraud: elements of the crime: (1) Defendant KNOWINGLY executed or attempted to execute a scheme to
defraud a financial institution (2) defendant did so with the intent to defraud and (3) the financial institution was
insured by the federal deposit insurance corporation (FDIC)
a) United States v. Ross; Ross was offered by Nigerians to invest money in real estate; They sent him 4 checks, all of
which turned out to be fraudulent checks; he was spending the money on himself not the company
(misapplication of loan funds); He admitted that he was motivated in part by greed, He did check to see if one of
the checks was fraudulent.
i) The court admitted that this case was a close call, but the jury found him guilty
5) Bank as "Victim": intent to defraud
a) Crisci; Crisci worked for a old person home; He was making fake invoices, and having the corporation pay and
then he would deposit the money; He was trying to defraud his employer, but because he used checks, he was
charged with defrauding the bank
(1) ∆ argued that they charged him under a single count of bank fraud, but they incorporated both (1) and
(2) of the statute.
(2) Conclusion: A single count of an indictment may charge bank fraud under both sections (1) and (2) and
that proof of the violation of either subsection is sufficient to support a conviction
b) Intent to defraud the federally insured institution is satisfied where (1) the intent to defraud some entity was
present AND (2) the intended fraud placed a federally insured financial institution at risk of loss; United States v.
8
 Reaume (not supreme ct. case); There was a check scheme, where individuals would open bank accounts with
an alias; They would then write checks to purchase things at retail stores and then return the items for cash; The
retail store would be stuck with the deficit when they tried to cash the checks.
(1) ∆ argued that the intent was not to defraud the bank or for the bank to lose money but rather for the
retail stores. However, had the bank dispersed the funds and did not catch the false checks, they would
have been at risk for the loss
ii) Key takeaway: It is sufficient if the defendant in the course of committing fraud on SOMEONE causes a
federally insured bank to transfer under its possession and control
(1) This broadens the use of this statute a lot.
(a) The court then extends this to be broader by saying as long as there is a possibility that the bank
may transfer the funds.
iii) The mail fraud and wire fraud were used to capture any fraud that used the mail or wires, this statute is
different in that it is to deal with narrow circumstances with a bank, but with this interpretation, it makes
the statute very broad.
6) Participation of Bank Employees
a) Doke; Doke was a large shareholder in the bank, and Bass was on the board; Bass took out the loan to pay for a
building for Doke, and then Doke would make the payments; They did not disclose that the loan was really going
to be paid by Doke; They used a strawman/ nominee loan (ok if disclosed and everyone agrees) this didn’t
happen
i) Why wasn’t collective knowledge like in the bank of New England use
(1) There is no collective knowledge defense argument, it is only for the prosecutors
7) Materiality – you have to show that the misrepresentations are material (have probative weight) to the fraud NOT
just relevant (related to the issue) Rigas
Securities Fraud/Insider Trading
1) Securities act of 1933 ( Securities act/ 33 Act)
a) Passed because there were massive amounts of fraud in the markets.
b) Selling securities to the public and that there is full and fair disclosure
2) Securities Exchange Act of 1934 ("Exchange Act"/ 34 Act)
a) Regulated trades among investors; Largely reporting provisions.
3) Securities Act § 17 (a) (15 U.S.C. § 77q(a))
a) This is the general antifraud provision of the 33 Act
b) Only covers the offer and sale of the security, not the purchasing of the security
c) Can be violated in 3 ways
i) (1) requires the mens rea of intent, while (2) and (3) only require negligence
(1) Not important for this class
4) Exchange Act § 10(b)/ Rule 10b-5
a) General antifraud provision of the 34 act
b) Single most important law. It has generated more litigation and supreme court decisions
c) 15 U.S.C. § 78j(b)
i) "To use or employ, in connection with the purchase or sale of any security registered on a national securities
exchange or any security not so registered, or any securities based swap agreement any manipulative or
deceptive devises or contrivance in contravention of such rules and regulations as the commission may
prescribe as necessary or appropriate in the public interest or for the protection of investors"
(1) Nothing was done with it really until 17 CFR 240.10b-5
(a) They took 17(a) and 10(b)
(b) 10b-5 creates a private right of action for securities fraud.
(i) The mens rea for this is willful intent not just negligence.
(c) Difference in the coverage that 10b creates over 17(a).
(i) 10(b) covers buying and selling.
5) Securities Act § 24 - criminal penalties
6) Exchange Act § 32 - Criminal penalties
7) Sarbanes - Oxley Securities Fraud 18 U.S.C. 1348
9
8) General Antifraud provision
a) 15 U.S. C § 77q - fraudulent interstate transactions
9) Only the Department of Justice can bring criminal prosecutions. So, if a case is going to go criminal it has to be
handed off to the DOJ, the vast majority of the securities cases are civil and they can obtain "civil money penalties"
10) The difference between the civil and criminal liability is whether the individual willfully violated the law.
a) 15 U.S.C Code § 78 ff - penalties (under the 34 Act)
11) Defining "Willfulness" - The government does not have to prove the specific intent to violate the provision. They just
have to prove intentional wrongful conduct that the person knows was wrong. (this was a big deal in broadening
the criminal reach) Peltz; Peltz was short selling stock with inside information; He was short selling stocks that he did
not have and waiting for the information to go public and then when the news was public and he bought the shares;
He was telling the brokers he was long and owned stock when he didn’t; The court said that the person just has to
do the act willfully
a) Test for Willfulness: (1) defendant must know what he was doing (as opposed to acting by mistake or accident)
plus (2) know that what he's doing is wrong United States v. Kaiser
i) It does not require that a defendant knew he was violating the law
(1) Because this standard is so lax, there is no real distinction between making a criminal and civil case
against a person.
12) Willful Blindness/ Conscious Avoidance - If you have instances where the proof cuts out there is evidence all around
them and they just disregarded the evidence, that can satisfy the willfulness requirement. United States v. Weiner;
The auditors who were auditing the books and weren't looking closely to things they should have caught, so they
made false statements to the SEC
i) Important terms footnote 26 on p. 190
(1) GAAP-Generally accepted accounting principals
(2) GAAS - Auditors must check that the books are right; Rule: Its not generally the auditors job to catch
fraud. Audits aren't geared towards checking for fraud, but to check if the accounting principles are
followed.
13) Reliance on Advice of Counsel - ∆ must show: (1) a request for advice of counsel on the legality of a proposed action
(2) full disclosure of the relevant facts (3) receipt of advice from counsel that the action taken will be legal AND (4)
reliance in good faith on counsel’s advice waiver
a) United States v. Wenger; Penny stocks. Guy who had a radio station was pushing stock on the radio that he was
owning. Wenger had an agreement with the SEC that he would fully disclose everything; He went to a lawyer
and got advice on what to do, but he did not inform the lawyer of everything.
i) Idea behind reliance on advice of counsel
(1) If you are acting in good faith, you should not be sent to jail. Still can face civil liability though.
(2) If individual uses attorney advice to cover up illegal activity you could lose attorney client privilege
(crime-fraud exception)
(3) This defense requires waiver of attorney client privilege.
14) Know knowledge proviso - 15 USC § 78ff No person shall be subject to imprisonment under this section for the
violation of any such rule or regulation if he proves that he had no knowledge of such rule or regulation
a) In the right case, it can keep your client from going to jail (very hard in fraud context; more likely when case
involves failure to meet a technical regulatory requirement as opposed to those involving fraud)
b) Applies in the 34 act, but not the 33
c) United States v. Knueppel; They were stealing business week articles to participate in insider trading.
i) This case is just like carpenter, but decided a lot later. In carpenter, the supreme ct was deadlocked, but in
the interim the supreme ct. making insider trading a violation of securities laws
ii) Whether or not the defendants knew that they faced potential prosecution the conduct that is inherently
culpable both because of the theft and because of the harm to which the information was put
iii) Congress did not intent this provision to cover person who knew what they were doing was a violation of
law, but did not happen to know that it was also in violation of a particular SEC rule or regulation
15) Sarbanes-Oxley CEO/CFO Certification 18 USC 1350 (note 1 p. 194)
16) Review:
a) Securities fraud only becomes a crime when DOJ decides to prosecute.
10
 i) Best clue. If it says United States as a party, it is probably a criminal case.
b) Intent and willfulness
i) Willfully does not take very much. You knew what you were doing, and it was in some way wrong. You
weren’t "sleepwalking"
17) Materiality There is a substantial likelihood that the disclosure of the omitted fact would have been viewed by the
reasonable investor as having significantly altered the "total mix" of information available. (Basic)
a) TSC Industries v. Northway dealt with proxy-solicitation Supreme ct. developed a test for materiality to see if
something was important enough; Whether a (1) reasonable shareholder in context would consider it important
in how to vote.
i) Basic v. Levinson; Companies were in secret merger discussions; The supreme ct. applied the same
Northway test to 10b-5
18) Misrepresentation and Concealment
a) To Investors – not all statement to investors will rise to the level of crimilatiy for securities fraud even though
they were false.
i) United States v. Stewart; Martha was investigated for insider trading on selling ImClone stock; Martha then
3 made false statement saying that she did not do it; One in the Wall Street Journal made by her attorney on
her behalf because she lied to her attorney and said she had an agreement that when the price of the stock
dropped, she would sell it. (this lie implicated the crime-fraud exception); Gov. argued that these statements
were made in order to stop her stock price in her company MSLO from tanking; She is the human
embodiment of MSLO and owned 60% of shares worth over $1 billion (huge incentive to lie to stop the
bleeding)
(1) Court did not believe that a reasonable juror could not, without resorting to speculation and surmise,
find beyond a reasonable doubt that Stewart's purpose was to influence the market in MSLO securities.
(2) Takeaway: She lied to her lawyers, and the lawyers let her lie to the SEC. The lie is worse than the crime.
b) Civil versus Criminal Standard
i) Aiding and abetting (not allowed in private civil suits (Bank of Denver).
(1) Central Bank of Denver v. First interstate Bank of Denver; Bonds were sold and a part of the bond said
that the land securing the bond would be at least 160% of the bonds outstanding principal and interest.
(a) The elements of the § 10(b) aiding and abetting cause of action is when
(i) (1) a primary violation of § 10
(ii) Recklessness by the aider and abettor as the existence of the primary violation and
(iii) Substantial assistance given to the primary violator by the aider and abettor
(b) The Supreme ct. held that there is no aiding and abetting liability for private civil actions for section
10b and 10b-5, and overturned the 40 year precedent of allowing it.
(c) Takeaway
(i) No aiding and abetting in private civil suits. However, 18 USC § 2 allows it for criminal cases.
(ii) After this case congress restored aiding and abetting for SEC civil enforcement actions. PSLRA
(d) The most important paragraph was left out of the book
(i) This does not mean that secondary actors in the securities market (accounting, lawyers, ect) are
free from liability always. They can still be charged as a primarily liable, so long as they make a
statement or material omission. Example. If you provide an opinion, and that opinion makes a
fraudulent statement, you could still be liable as a primary actor.
1. What is the right kind of conduct for this liability? Schatz v. Rosenberg; Rosenburg was
buying a company and claimed that he had money, when he was actually in a bad financial
state. The law firm knew that he was making misrepresentations; They had a copy of the
financial statement, and knew it was false. They prepared draft document, but they did not
sign it. The client signed it Still not enough in the courts eye, because they were not lying.
a. Now adays: Sarbanes-Oxley has not changed this and a lawyer must disclose fraud they
learn about. Also bar rules have been tightened. This loophole has now been closed by
Congress

11
19)

20) What is insider trading?

a) "On the basis of" material (Basic) nonpublic information
b) Covers both good news and bad news.
c) 10b and 10b-5 cover both buying and selling. It also applies to privately held companies and non publically
traded stock.
i) ALL securities (registered and unregistered) and ALL transactions (buying and selling)
d) The law of insider trading has evolved under § 10(b) and rule 10b-5
21) Classical Theory - One who fails to disclose material information prior to the consummation of a transaction commits
fraud only when he is under a duty (fiduciary or other similar relation of trust and confidence between them) to do
so.
a) Chiarella v. United States (this is a criminal case); Chiarella worked as a financial printer; He figured out the
companies involved in a merger and traded on that information; The documents did not say the name of the
companies, but he figured it out.
i) He wasn’t speaking, lying or misrepresenting. He did omit and not speak out that he figured out what the
companies were.
(1) The issue is whether or not he had a duty to disclose.
(a) He was buying stock from the target company (they were the ones that were a victim). So
technically that makes Chiarella an outsider to that company.
(i) If Chiarella is an not an insider and has no duty to disclose, then he is not committing fraud.
(ii) Section 10(b) is aptly described as a catchall provision, but what it catches must be fraud. When
an allegation of fraud is based upon nondisclosure, there can be no fraud ABSENT a duty to
speak.
1. A duty to disclose does not arise from mere possession of nonpublic market information.
ii) Absent a fiduciary duty, you have no duty to disclose, and you can trade.
iii) Lecture
(1) Why criminally charge Chiarella?
(a) The civil remedies were not strong enough to deter.
(2) After this case, they did three important things post Chiarella.
(a) Insider trading sanctions act (ITSA) provides for triple penalties. You can be forced to pay up to 3
times the gains you made.
(b) Rule 14e3 - "tender offers"

12
 (i) It shall constitute a fraudulent, deceptive or manipulative act or practice within the meaning of
section 14(e) of the act for any person who is in possession of material information . . .
(ii) Chiarella would have largely been covered by this
(c) They begin to pursue misappropriation theory "cases"
(i) Not applied in Chiarella, because it was not brought to the jury, so he escaped liability.
b) Tippee Liability
i) Dirks (affirmed by recent supreme ct decision not tested on)
(a) Dirks is a securities analyst and he gets tips that a company is operating fraudulently.
(b) He doesn’t own any shares, but he starts investigating and finds out that it is a fraud.
(i) But he tells his firm and they tell their clients and those people sell their shares and avoided
substantial losses
(c) Dirks tries to expose the fraud and calls the Wall Street Journal, and they refuse to print it because it
seemed too crazy.
(2) Analysis
(a) Here there was no breach of duty.
(i) You must look at the purpose of the insider making the statements to dirk.
1. The insider (tipper) was not making a disclosure for personal gain to either himself or Dirks
(tippee)
(ii) There has to be a chain of wrongdoing and purposes of the insiders has to be wrongful
(b) What is the test? (applies for both misappropriation and classic theory)
(i) There is a breach by the insider (tipper)
(ii) The tippee knows the information is wrongfully given.
(iii) Whether the insider personally will benefit, directly or indirectly, from his disclosure
1. It is not necessary that money goes into their profit. It is enough that there is some benefit
even if it is just a gift, that counts
(3) Takeaway
(a) Sets out the law of when a tippee can be held liable for obtaining that information.
(i) Wrongful conduct
(ii) Knowledge
(iii) And motive and purpose to give benefit to the tipper.
(4) Dirks footnote 14 (very important to securities law)
(a) Temporary insider
(i) If you are a lawyer, accountant ect. And you enter into a relationship with a client and the
corporation expects the outside to keep the disclosed nonpublic information confidential, and
the relationship at least must imply such a duty, then the individual has a duty not to disclose
22) Misappropriation Theory
a) O'hagen; He was a lawyer at a firm; A company hired the firm to acquire another firm; O'hagen never worked on
the case but learned of the information and purchases stock options and stock in the target company.
i) Analysis
(1) Under the classical theory, he could not be charged because he is an outsider by purchasing in the target
company
(a) You could say the fraud is on the target company
(i) The fraud is not complete until he buys the stocks and options. SO he is stealing (misapproating)
the information in order to buy stock. So the fraud is on the acquiring company because you
stole information from them to trade on.
(2) This case comes back to the unresolved issue in Carpenter.
(3) This is a violation of rule 14e3 (not in the casebook, but the ct upheld this rule. Not on exam though)
ii) Curious thing about this case.
(1) If you tell the source you are going to trade (disclosure) then there is no fraud and no liability.
(a) If Ohegan had walked into the firm and said that he had taken the information, then he would have
disclosed to them and their would be no fraud. “brazen misappropriator theory”
(2) Or if he had been given the information.
13
 (3) This would still violate 14e3 though
(4) She states that insider trading is on the basis of material nonpublic information.
b) After Ohagen and Smith, the SEC did not like this, because you have to prove beyond a reasonable doubt that
the person traded and was on the basis of the nonpublic material information.
i) This is harder to prove than just the person was in possession of the material.
(1) So the SEC promulgated 2 rules. 10b5-1 That interpret the words "on the basis" of material nonpublic
information if the person was aware of the material nonpublic information. However, if you can show
that before becoming aware of the information, the person had: (1) entered into a binding contract to
purchase or sell the security (2) instructed another person to purchase or sell the security for the
instructing person's account or (3) adopted a written plan for trading securities.
(2) This illustrates how they keep fighting back to prohibit anyone from taking advantage of having
information
c) If you become "aware" of information, because you are lucky and you don’t steal "misappropriate" or because
you are smart, then you can trade on that information.
i) Problem 6-3 p. 242 no Fred is not liable, he is just lucky. What if Fred was the waiter? Is he stealing
information, probably not because it is not his or his employees information. He has not misappropriated or
breached a duty.
23) Situations where you still can have material nonpublic information and still be ok.
a) Newman Case; A group of financial analysts exchanged information they obtained from company insiders.
(1) The analysist then passed the insider information to their portfolio managers, Newman and Chiasson.
(2) Newman and Chiasson were three and four levels removed from the inside tipper.
ii) The tippers were not prosecuted just the tippees. (This seemed to annoy the ct.)
iii) Analysis
(1) No rational jury would find they knew the source and that their was a connection, but they did not know
that there was any personal benefit in exchange for the disclosure.
iv) Rule
(1) Must show
(a) The insider had a fiduciary or other relationship of trust and confidence with their corporations
(b) They breached that duty of trust confidence by disclosing material nonpublic information
(c) They personally benefited in some way from the disclosure
(d) The defendant knew the information he obtained had been disclosed in breach of duty
(e) The defendant used the information to purchase a security
(2) The tippee must know that the information was obtained in a breach of duty And they must know that
there is some personal benefit to the tipper in exchange for the personal benefit.
(3) If this was a civil case, they probably could have applied a should have known standard
(4) Personal benefits - requires evidence of a relationship between the insider and the recipient that
suggests a quid pro quo from the latter or an intention to benefit later. Casual friendship and networking
is not enough
(a) Compare this to Chestman and marriage. There is some inconsistency
v) When you get to the point where the person receiving the information does not know how the information
was obtained they fall out of liability and can trade
24) Closely Feld Corporation and Familial Disclosures.
a) Chestman; Company was being sold and the patriarch of the company tells them to not tell anyone about the
deal; The daughter then tells the husband (who was told not to say anything); The husband then calls his broker,
Chestman, and then the broker started buying for himself and the husband.
(1) Fiduciary duty
(a) This was not a fiduciary duty, because you cannot impose a unilaterally by entrusting a person with
a confidential information (you have to first agree that the information will be kept secret)
(2) Was this a relationship of "trust and confidence" to satisfy misappropriation?
(a) The government can find a relationship and history of sharing information
(3) The court said that a spousal relationship was not enough in and of itself.

14
 ii) In response to this case, the SEC has a Rule 10b-5-2 a duty of "trust or confidence" is defined as for
misappropriation theory of insider trading.
(1) (1) whenever a person agrees to maintain information in confidence
(2) (2) when there is a history, pattern or practice of sharing confidences
(3) (3) whenever information is obtained from a spouse, parent, child or sibling, provided that the person
neither knew or reasonably should have know that the information expected that the person would
keep the information confidential. (kind of still allows Chestman, however, it puts the burden on the
person to prove that the information was not known)
iii) This was still a tender offer so they got him on 14e-3
25) Key Insider trading terms
a) Classical theory - Chiarella
b) Misappropriation theory - O'Hagen
c) Tipper/Tippee Liability - Dirks
d) Remote Tippees limits - Newman (2d Cir.)
e) Misapp. Theory limits - Chestman --> Rule 10b5-2 (tries to override Chestman)
f) Use v. Possession - Smith --> 10b5-1
i) You have to trade because of the information, and that has to be what motivates you.
g) Rule 14e-3 tender offers tried to claw back the terrirory lost in Chiarella and Dirks.
h) STOCK Act (2014) members of congress and staff owe a fiduciary duty to be private and they cannot trade on
that information.
False Statements/False, Fictitious, or Fraudulent Claims
1) 18 U.S. Code § 1001
a) (a) except as otherwise provided in this section, whoever, in any matter within the jursidiction of the exectuvie,
legislative or judicial branch of the government of the United States, knowingly and willfully
i) Falsifies, conceals, or covers up by any trick, scheme or . . .
b) (b) subsection (a) does not apply to a party to a judicial proceeding, or that party's counsel, for statements,
representations, writings or documents submitted by such party or counsel to a judge or magistrate in that
proceeding (there are other statutes that cover this.
2) Unlike the perjury statute, this applies to unsworn statements made in informal situations.
3) This is a process offense but can be brought in addition to substantive offenses.
4) Willfully under the statute (mens rea/intent requirement
a) Hilderbrandt; Hilderbrandt lost his family farm when he could not pay; He then sent an IRS Form 1099 that said
he had $68 million in non wage compensation to people to hurt the tax return form the people who took his
farm.
(1) He argued that there should be a good faith defense instruction.
(a) Cheek v. United States a defendant’s good faith belief that he is not violating the tax laws negates
the statutory willfulness requirement, whether or not that good faith belief is objectively reasonable
(i) Tax laws are so complicated it is a defense if you can demonstrate that you honestrly believed
you were complying with the tax laws.
(2) Good faith DEFENSES and Willfully
(a) Tax law
(i) Good faith I thought I was following the law
(b) Securities
(i) You knew what you were doing was wrong, you didn’t need to know that there was a rule
against it,
1. There is the no knowledge exception that is hard to meet though
(c) False statements
(i) No defense if you engaged in the conduct, if you knew what you were doing and willfully told a
lie and it is a material statement to a federal. Then you have satisfied the mens rea requirement
for intent.
(ii) As a practical matter, there is not much difference in acting knowingly and willfully

15
 b) A promise may amount to a "false, fictitious or fraudulent" statement if it is made without any present intention
of performance and under circumstances such that it plainly represents the present existence of an intent to
perform Shah; There was a bidding with the General Services Administration to have a contract; The bidding
required that there was no information to be shared between bidders; Shah signed a letter saying he wouldn’t
price fix and then sent it in. ∆ argued That on the date he filed the document with the GSA he had not lied,
because nothing had happened yet, and he had not lied
c) The mens rea requirement for §1001 is an intent to deceive not an intent to defraud.
i) What is the distinction
(1) Defraud requires some sort of loss with deceit you do not need some sort of loss
(a) However, in hammerschmidt in the context of conspiracy to defraud the US it is enough to interfere
with lawful government functions.
d) Knowledge of federal jurisdiction is not required; If you know you are making a material false statement, the
court says the way the statute was drafted it doesn’t matter if you had actual knowledge that they were going to
be submitted to the federal government Yermian; contractor did not know his security clearance form would be
sent to government and he lied on it.
i) §1001 requires that the govenrment proves that false statements were made knowingly and willfully, and it
unambiguously dispense with any requirement that the government also prove that those statements were
made with actual knowledge of federal agency jurisdiction.
ii) Compare Feola Case (didn’t have to know they beat up the officer (conspiracy case))
iii) There have been claims brought that lying to the lawyers of a company and you know they will report to the
government, that will violate this statue (current uncertainty in the law)
5) Jurisdiction – statutory language encompasses criminal investigations conducted by the FBI and the Secret Service. It
covers all matters confided to the authority of an agency or department (Rodgers; told FBI his wife was kidnapped
and secret service she was going to kill Reagan (both lies)
a) Note 1 incredibly important from a practical standpoint. You can take a case just about to be investigated, and
there is not a lot of information and then the person lies and now they have committed a felony. It dramatically
increases the likelihood of cooperating and pleading to get these types of charges mitigated or dropped.
6) Yermian and Rodgers together have broadened liability under this statute significantly.
7) Problem 7-1 (p. 281)
a) Can he be liable if he told a lie to his wife who then told it to the government?
i) This might go to a jury. The cases have left enough latitude. Yermian (you don’t have to know that you were
going to lie to the government) (Herring - lied to the state and had no idea that it was to the federal
government was involved. A state receiving of federal funds. Materiality is satisfied even if the government
is not influenced by the statement. The problem is that there is federal government money involved in so
many things.)
8) Look to see if the lie would have been capable of influencing NOT that it did have an influence. Turner Case;
Janitors’ boss lying to FBI for them. FBI already knew the truth when they asked him the questions so his answers
couldn’t persuade the.
a) FBI prepares Form 302 which are their notes of conversations. And they have a lot of control over those notes.
And those get treated as very strong evidence.
9) Problem 7-2 p. 288
a) A federal agency provides funding provided to state agency which uses contractors that use subcontractors, and
the subcontractors lie to each other.
i) Blankenship - this is too tenuous and far removed from the federal government.
10) The Exculpatory No Doctrine; The plain language allows no exception for an exculpatory no, so there is no
"exculpatory no" defense to § 1001
a) Brogan v. United States; Brogan was approached by investigators and asked if he received cash or gifts as bribes.
He said “no” which was a lie
i) Violates the spirit of the 5th amendment because it puts the suspect in a trilemma of saying nothing, they
did it, or lying.
(1) The 5A does not give a privilege to lie.

16
 ii) Prosecutorial abuse; This was Congress's discretion not the court. Also, this will not stop that, because the
prosecutor could just as easily question beyond the simple exculpatory no.
iii) Lecture; This statute basically gives government investigators the power to manufacture crimes. You have to
warn your clients about this.
11) The next cases are interesting, but don’t come up a lot.
a) Judicial Function Exception §1001(b) subsection (a) doesn’t apply to a party to a judicial proceeding must show:
(1) party to a judicial proceeding (2) statements were submitted to a judge, magistrate or agent of judge AND (3)
statements were made in that judicial proceeding; applies to “housekeeping capacity” not administrative
capacity (Manning)
i) Unites States v. McNeil; ∆ filled out a financial affidavit to the court to see if he qualified for appointed
counsel; McNeil omitted some of his real estate and financial accounts. He said he did so on advice of
counsel because it could incriminate him; The form went to a magistrate judge; third element was at issue
and ct said that once he was indicted, the criminal proceeding against him had begun
ii) Probation officers are NOT agents under 1001(b). United States v. Manning; Manning gave a false
statement to a United States Probation Officer who was preparing his presentencing report. Congressional
intent did not encompass allowing a defendant to conceal resources when such evidence is critical to the
final judicial decision. No judicial function exception against probation officers in this case. A probation
officer is not an agent, and is therefore outside the 1001b exemption
(1) Note 2:
(a) Can § 1001 be used to prosecute a witness who lies during a civil deposition?
(i) If it is a civil suit involving the government, maybe.
b) Reconciling the cases
i) Turns on who the representation is made to is it a judge and their agent
12) The Legislative Branch Provision
a) United States v. Pickett: Capitol police officer played a bad joke on another capitol police officer; He put a pile of
white powder on the desk and left a note that said this was a training exercise and to sniff; None of the officers
believed it was anthrax, but still caused a disruption as the other officers tried to determine what it was
i) Indictment must be plain, concise, and definite written statement of the essential facts constituting the
offense charged.
ii) Analysis
(1) Because 1001 (c ) renders unlawful the making of a false statement within the jurisdiction of the
legislative branch only with respect to administrative matters, investigations, or reviews, the charge
against him not stating one of these categories is invalid
(a) Court agreed. Here it should have included investigative matters and review.
(2) Gov Arg
(a) This was a harmless error
(i) The evidence of an "investigation or review" was not so overwhelming that Pickett couldn’t
controvert it
(3) Additionally, the false statement was not made during the investigation, but before it (because the
investigation was about the statement.
(a) Gov argues that it was a false statement made in the anthrax investigations that were going on at
the time.
(i) Ct rejected this. The statute does not apply to statements made concurrently with an
investigation, even if those statements concerned the same or similar subject matter.
iii) Lecture
(1) This is a lot like Rodgers, but Rodgers was under a prior version of the statute. So this limitation on
application to the legislative branch didn’t exist.
13) Review
a) You lie to the government either directly or indirectly it is a felony
i) It gets complicated when you deal with the judicial proceeding or congress it becomes hyper technical
(1) For the exam, recognize that it does not apply in general to judicial proceedings.
14) False Claims Act 18 USC 287
17
 15) Elements and Mens Rea; Doesn’t have to be made directly to the governmentt
a) United States v. Blecker; defendant made fake resumes about the educational requirements to get paid
more. He gave them to an intermediary that then gave them to the government
(a) Hess when private contractors engaged in collusive bidding practices on contracts made with local
government units but for which a large portion of the funding was supplied by the federal Public
Works Administration, that was "causing to be" presented a fraudulent claim
(i) ∆ responded that congress removed this "causes" language from the statue.
1. Congress just moved the cause language to 18 U.S.C § 2(b) so whoever willfully causes an
act to be done which if directly performed by him or another would be an offense against
the United States, is punishable as a principle.
(b) There government got what it paid for, so there was no harm. (quantim meruit argument)
(i) A conviction is based on proof that a claim submitted to the government is either false,
fictitious or fraudulent.
ii) Lecture
(1) If you make a false claim, it doesn’t have to go directly to the government, it can go through the
intermediary
(2) You got what you paid for is not a defense.
16) Counts – can have overall scheme with separate violations every time he filed a false claim, and they can be
sentenced consecutively; Swepston; 5 counts 3 years each all consecutively imposed (15 years) this was ok
17) Civil False Claims: Qui Tam Actions
a) 31 USC § 3729(b)
i) Private third parties who discover fraud against the United States can file a lawsuit on behalf of the
united states and share up to 25% of the proceeds.
b) United States Ex Rel DRC, Inc. v. Custer Battles, LLC
(1) There were going to be new dinars that removed Saddam Hussein's face.
(2) This required subcontractors to fly the cargo planes to exchange the currency.
(a) ∆ was one of these contractors who specialized in risk management.
(i) ∆ was supposed to be reimbursed for its actual expenses plus 25%
(3) ∆ was paid a 3 million dollar advance. They then also submitted their fees to the Coalition Authority
and were paid out of "Iraqi funds"
(4) At a meeting with DRC another subcontractor. A document was also discovered that had a
spreadsheet showing the actual cost to Custer and the invoiced costs were different.
(a) DRC believed Custer was defrauding the government and brought a Qui Tam Action
(5) Jury awarded a $3 million dollar judgment
(a) Ct reversed because they said there was no proof that the invoices were actually presented to
the government
(i) Said that because the money was technically Iraqi money and was just held and distributed
by the government that there was no claim for false and fraudulent claim against the
government
ii) Analysis
(1) The district ct was wrong so long as the US provides any portion of the funds that the grantees or
recipients of US money.
iii) Takeaway
(1) There is a civil aspect to the false claims act. And there are some serious teeth to it.
(2) As a lawyer you have to know the risk is bigger than you think, because you have to worry about
whistleblowers having extra incentives to tell on you.

Perjury
1) General Perjury Statute - 18 U.S.C. § 1621
a) Broader application (any proceeding pursuant to federal law where an oath is issued)
b) "Two Witness Rule" in some instances there is a greater evidentiary showing

18
 c) No recantation defense
d) "literal truth" defense
2) False declarations Statute - 18 U.S.C. § 1623
a) Narrower scope (only proceeding before a grand jury or court)
b) Two witness rule does not apply
c) Ability to recant if you do it in the right way (recantation defense)
d) Irreconcilable statements
3) Immunity -prosecuted for false immunized testimony
4) US attorneys manual §1743 gives an overview. (google for clarification)
5) General Perjury Statute 18 U.S.C. § 1621
a) Literal truth defense
i) Bronston v. United States (unanimous supreme ct. case and still good law)
(1) Facts:
(a) Bronston was opening bank accounts in foreign countries and had a bank account open in
Switzerland for 5 years
(b) He then was under oath at a bankruptcy hearing
(c) He was asked whether he has a bank account in Swiss banks
(i) Said no (because he didn’t at the time)
(d) Asked if he ever did
(i) He said that his company did for 6 months (but never mentioned his previous accounts)
(2) Analysis
(a) The court said this was a nonresponsive answer, because they are asking about him and he
answered about the company. The questioner should have pressed further and clarified he was
taking about him not the company.
(i) One practical takeaway: be careful about having scripted questions, but rather focus on general
questions.
(b) Although he mislead the questioner and deceived the questioner, the burden is on the lawyer that
the witness evades if the question is such that you can give a literally true, but nonresponsive
question.
(3) Lecture – has to be literally true AND nonresponsive
(a) United States v. Dezarn; The question asked about a 1991 Preakness party were funds raised for a
campaign; The person answered no, because they said the date was wrong, which was responsive to
the question.
(i) Stark contrast
1. You would look at the evidence the government was bringing to show that there was not
enough evidence to show that there was not a stark contrast in what was said.
2. Defendant despite the false premise of the question knew exactly what the questions meant
and exactly what they were referring to. (and perjury does not permit this)
(ii) Literal Truth Defense
1. It was literally true, it did not happen at the Preakness party
(b) Two Witness rule.
(i) You shouldn’t put someone in jail in the basis on one person saying x and the other person
saying y and just one person being more credible than the other.
(ii) It could be a document or record that corroborates, you just need any corroborating evidence to
get around this rule.
(iii) Here the two witness rule is inapplicable when the falsity of the statement is uncontested, but
the only question is whether or not there was the necessary state of mind.
ii) The questions and the answers have to be precise enough to show that the lie was willfully untrue; United
States v. Bonds; Bonds was testifying at a grand jury testimony about the use of steroids; He was asked if he
was took steroids in the weeks or months leading up to November 200 and if he had ever taken steroids or
anything like that; Bonds said no to both questions
(a) Bonds argued that both the time period and "anything like that" were indefinite questions
19
 (b) He also put in a lot of qualifiers that he was not sure and could be wrong
(c) Bonds had immunity, but he had to tell the truth to keep it.
(i) The collateral damage of telling the truth was still great though.
(ii) Lying under a grant of the immunity is not covered by the immunity
(2) Analysis
(a) Time period - was not indefinite and fundamentally ambiguous, because he had repeatedly said he
had never took steroids
(b) Anything like steroids - More problematic this is not one which could be used
(c) His statements were so unclear and imprecise that it was impossible parse. The burden was on the
questioner to pin down the witness.
iii) Canvas Bonds appeal on obstruction charge
(1) Bronston casts a long shadow. P. 17-18.
(2) Came down to one statements and a single non-responsive answer to a question is not enough to
support an obstruction of justice charge. (not the law outside of the 9th circuit)
(a) The answer was not sufficient to influence the proceeding.
(3) Also, look at p. 60 for distinction between perjury and obstruction of justice.
6) § 1623 False Declarations
a) If it is the right type of proceeding (ct or grand jury) you can have a conviction on an irreconcilable disparity
i) Two witness rule does not apply
b) Subsection C irreconcilably different (you don’t have to prove which one is false, but just that both statements
cannot be true); United States v. Porter; He was testify for the prosecution and said he falsified information and
would send out the information; He found out that the deal he made wasn’t good so he claimed ineffective
counsel then testified that he did not mail the news letters out
i) This comes down what the meaning of mailing out information and send
(1) Because he did not physically mail the information even though he was the one that directed that he
sent them out.
ii) Vague evasive or unresponsive, yes, but not irreconcilably inconsistent
(1) Under Bronston it has to be clear enough that they are irreconcilably inconsistent.
iii) Note 3
(1) Should the Bronston defense apply to the false statement statute §1001? The courts have been more
liberal in interpretation of §1001, but the law is not settled on this point. The language of perjury is
narrower than false statement. Case on canvas of court applying Bronston rational (but this is not
precedent)
(2) The Porter case shows how the ct. applied Bronston to the other perjury statute.
c) Proceeding ancillary to a federal court or grand jury
i) Dunn v. United States; Dunn was in prison, he got a deal to testify before a grand jury for immunity about an
investigation for another person (His testimony implicated another prison)
(1) After that, he was approached by the other person’s attorney and he recanted his prior statements after
the other person was charged at the attorney's office
(a) The government dropped the charges against the other prisoner and charged Dunn with perjury
(2) Analysis
(a) Gov. arg. He made an irreconcialeable statement
(i) Said one thing under testimony and said the opposite under oath with the attorney on an
affidavit.
1. They needed to charge him under 1623 because then they did not have to prove which
statement was false.
(b) The court stated that the second statement lacked the degree of formality even though there was a
clear link to the other proceeding.
(3) This is important because you might be able to make an argument that because one of the statements
doesn’t fall within the ancillary to the proceeding.
(4) Deposition would count as ancillary dicta in this case
d) The recantation defense
20
 i) Has to be made in the same continuous court or grand jury proceeding
ii) Recantation if at the time the admission is made, the prior false declaration has not substantially affected
the proceeding (you do it quickly), or it has not become manifest that such falsity has been or will be
exposed (for the right reasons)
iii) Does "or" mean "and"
(1) United States v. Moore (this court said it meant and); There was an undercover investigation by internal
affairs. Moore got the information from another officer about the investigation (this was on tape and he
didn’t know) He then denied that he ever had the conversation at a grand jury inquiry; When he found
out the conversation was on tape, his lawyer informed him that he could use the recantation defense if
he went in from of the grand jury again and recanted.
(2) (Eighth Circuit) United States v. Smith (here "or" means "or")
(a) Analysis
(i) Manifest test
1. Whether the fact that the statements have been or will be exposed as false is objectively
manifest to the declarant.
(ii) Although the result is that this makes it easier to lie in court. It is for Congress to change.
1. Or means or so you only have to show that it did not substantially affect the proceeding OR
it has not become manifest
e) U.S. Attorneys' Manual
i) There is no duty to advice the witness that there is a recantation defense.
ii) So, it is your responsibility to know about this defense
f) Immunized Testimony - Essentially, you cannot use later immunized testimony to prosecute ealier perjury
statements, but you can use earlier immunized perjury statements to prosecute the later immunized testimony.
(Desalvo)
i) Intersection of Perjury and Immunity
ii) United States v. Desalvo; He testified before a state grand jury with immunity; Then he testified 3 times
before a federal grand jury about his law firm (He lied each time)
(a) He was then called as a witness to testify at trial. He is immunized again and lies
(b) Even though he wasn’t charged with the other members of the firm, he is charged with 4 counts of
perjury
(i) ∆ argues that the government should not have been able to use all instances of testimony to
prosecute him for perjury at the trial.
1. Ct. Disagrees
(2) Analysis
(a) Ct. Reslies on supreme ct. in Apfelbaum
(i) If you are granted immunity, and the government believes that you have given false testimony,
the immunity statutes says they can use ALL of the immunized testimony against you to
prosecute you for lying under oath.
(ii) IMORTANT: if someone lies after they have been given immunity it voids the immunity grant and
all of their testimony can be used against them.
(b) The harder question is using that testimony for the prosecution for perjury in some other incidence.
(c) They can use the trial testimony to prosecute the perjury at the trial but not at the federal grand
jury, because those happened before.
(d) It is ok to use the state grand jury testimony because it was not unforeseen that he might be
questioned at a federal grand jury.
(i) If one sovereign immunizes the other has to live with the consequences.
g) Why Lie?
i) He was probably looking to keep his law license. "collateral consequences"
7) Problem 8-1
a) What arguments would you make?
i) Literal truth. He loaned money and was being repaid.
ii) Recantation statement
21
 iii) Materiality issue.
8) Conclusion from all the cases
a) All of these cases show the same thing. The importance of precise questioning and that little words matter and
that there is no ambiguity.
b) Immunity can be prosecuted for false immunized testimony.

Obstruction of Justice
1) 18 USC § 1503 obstruction of justice (Omnibus Provision)
a) Drafted with the intent to interfere with justice with any grand or petit juror
b) OR corruptly or be threats or force, obstructs or impedes, or endeavors to influence, obstruct, or impede, the
due administration of justice, shall be punished as provided in subsection (b).
2) Elements: (1) must show that the grand jury is sitting AND (2) the material made its way to the grand jury or was
contemplated to be used in the investigation to get to the jury (The defendant has the right to question whether the
AUSA contemplated presentation of materials obtained from a subpoena to a grand jury, BUT not the right to
question the AUSA him or herself; HAVE TO USE CIRCUMSTANTIAL EVIDENCE) United States v. Nelson; There was a
letter that they fabricated; And they altered the closing statement for the real estate transaction and it was material
to what the grand jury was looking at.
i) These individuals were subpoenaed through a grand jury subpoena.
ii) Important side note: You have right to notice that the government subpoenaed your bank records
HOWEVER, you do not get notice if a grand jury has issued the subpoenaed.
b) Analysis
i) You have to have some sort of judicial proceeding is a necessary prerequisite for a charge under this
(1) The ct said that there was a grand jury subpoena that was proceeding under way so there was no need
for cross examination
(a) This ct. overruled that. They said that a grand jury proceeding is pending for the purposes of this
statute if and Assistant U.S. Attorney has issued a subpoena in furtherance of the grand jury
investigation. The mere fact that a grand jury is sitting is not enough to support a charge under
this statute. You have to have evidence that if you are going to charge obstruction you have to
show there was in fact the potential for there to be actual interference with the proceeding.
(i) Here the AUSA testified that he had not recollection of the records he subpoenaed and how
they were going to be used in the grand jury investigation
c) Conclusion
i) For the obstruction charge Appellants inquiry on cross examination into Weisenbeck's intentions in securing
the subpoenas was unreasonably limited, the trial judges ruling was a reversible erred.
ii) For conspiracy, as long as you have the requisite intent and mindset, the grand jury doesn’t have to be
commenced yet. (this is not uniform in all jurisdictions)
3) The Distinction Between Perjury and Obstruction
a) United States v. Thomas; There was a civil forfeiture proceeding (government was trying to get the crime boss's
property) and the prosecution asked the attorney if he had ever known Callahan by the name Robert Johnson,
because there was property in his name; Thomas the attorney said no;When asked if he ever knew him by that
name, he said no; There were all technically true (so there is question from the court if this was even perjury.
i) Three prongs to the omnibus clause of obstruction of justice
(1) Corruptly or by treats
(a) Corruptly is knowingly and intentionally undertook an action from which an obstruction of justice
was reasonably foreseeable result
(b) You have to intend that your testimony will wrongfully influence the grand jury proceedings.
(2) Endeavored
(3) To influence, obstruct, or impede the due administration of justice.
ii) Analysis
(1) Not all false and evasive testimony is obstruction of justice. Not all perjury is obstruction of justice.
(a) Would it be safe to say all material perjury was obstruction of justice?

22
 (i) No. there is a different mens rea requirement. Willfully in Perjury and Corruptly in obstruction of
justice.
1. You can make a statement that was material but not really the right mental state of
reasonably foreseeing it was material. Perjury but not Obstruction.
(2) There was no natural and probable tendency of impeding the grand jury's investigation
4) Nexus Requirement – the person has to know there is a judicial proceeding that exists and the act must have a
relationship in time, causation, or logic with the judicial proceedings
a) United States v. Aguilar; Judge found out that there was a wiretap on his friend; He then informed the friend
that there was a wiretap; Then the FBI go to question Aguilar and he said that he was not trying to influence the
case or disclose the wiretap. (this was false statements, but he was not charged with that. But if you look at the
totality of what happened what he was doing was obstruction and that was the right thing to charge him with).
It was even tape recorded the conversation where the judge asked about the Grand jury and if he was the
subject of the investigation.
i) We do not believe that uttering false statements to an investigating agent and that seems to be all that was
proved here, who might or might not testify before a grand jury is sufficient to make out a violation of the
catchall provision of § 1503
ii) Takeaway
(1) You have to intend (not necessarily succeed) and not only the mindset but also a strong enough link (not
beyond a reasonable doubt) but some evidence that there is a nexus (time, causation, and logic with the
judicial proceeding) that the person knew and intended the information would get to the grand jury
(2) This case is the Bronston of obstruction of justice.
b) Fassnacht; Here the IRS agents were integrally involved in the investigation, and the ∆ knew that; Civil
investigative agencies cooperate with the prosecution.
(1) They distinguish Aguillar they said there was sufficient evidence for the jury to conclude that Fassnacht
and Malanga were aware that a federal grand jury, and not just the IRS was investigating their tax
affairs.
c) The court is not going to convict on a likelihood or probability of the statements going to the grand jury there
has to be a stronger nexus.
5) Distinction between vigorous defense and obstruction
a) United States v. Cintolo; Attorney was representing LaFreniere who was going to be offered immunity and then
he would uncover the whole scheme of the Angiulo Gang; The attorney was also talking to the Gang and trying
to get LaFreniere not to testify under the immunity; Lawyer was then charged with obstruction of justice
because he was counseling his client to try and not cooperate with the grand jury
i) Where should the line be drawn between zealous advocacy and obstruction of justice?
(1) The core problem in his conduct was that he was talking with the target of the investigation about what
his client was going to say.
(2) It is not at all unusual for corporations to pay for attorneys for employees being investigated. You have
to keep in mind though who your client is and what is their best interest
6) Witness Tampering (§1512)
a) Most interested in 1512(b)
i) Knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or
engage in misleading conduct toward another person
b) You cannot use § 1503 to prosecute witness tampering, because congress reorganized the statute "congress
affirmatively intended to remove witnesses entirely form the scope of § 1503 (Masterpol)
i) Note: the circuits are not all on board with this interpretation.
c) Corruptly Persuades has to have some form of deceit. Arthur Anderson; Arthur Anderson accounting firm was
ordering its employees to follow the Document Retention Policy closely in the Enron case. They stopped as
soon as they were officially served.
i) Actual destruction of the documents
(1) When is it honest to destroy the documents?
(a) If you have a normal procedure, you should follow it.

23
 (b) Not honest when you have pending litigation and receive a subpoena to then destroy the
documents
(c) Where the real lawyering comes to play is in the murky are in between
(i) This is where this case sits, but if there are fact that would lead a reasonable lawyer to seek
information would be sought (Litigation Hold or Document Hold to stop destroying
documents), then you should not destroy the information.
1. If you are under investigation or have reason to believe that you might be under
investigation, then you should stop destroying documents.
ii) Collateral consequences of the conviction, was that they were no longer allowed to audit in front of the SEC.
7) § 1519 (print this statute out) was records and documents destruction that came out of the Enron in Sarbanes Oxley
(this is why preserving evidence is so important now when you think an investigation is on the horizon)
a) Tangible in this context is limited to things like records and documents. Yates case; Fish was caught that was
undersized; he threw the fish overboard to cover it up. Fish wasn’t a tangible object
i) Takeaway: cover up is worse than the crime.
8) Can use someone else to falsely change a document, even if they don’t know the information is false (Tampas);
9) Ho It has to be federal investigations, so just worrying about HR investigations does not mean that you have
committed the federal crime.
a) You have to have a nexus
10) Obstruction of Justice - 18 U.S.C. § 1503
a) Nexus requirement
i) Aguillar
ii) Fassnacht
11) Witness tampering 18 U.S.C. §1512
12) Document/Record Destruction 18 U.S.C § 1519
a) Arthur Andersen
b) Yates
13) Obstruction of Justice (§1503) v. Witness tampering (§ 1512)(look at Masterpol)
a) Masterpol

Bribery and Gratuities

1) 18 USC § 201 prohibits "anything of value" to a present, past or future public official "for or because of any official
act performed or to be performed by such public official"
a) Bribery requires the intent to influence an official act (quid pro quo)
b) Gratuity requires only that the gratuity be given or accepted for or because of an official act performed or to be
performed
2) Nexus Requirement - To violate 18 USC 201(c)(1)(A) the government must prove a link between a thing of value
conferred upon a public official and a specific official act for or because of which it was given
a) United States v. Sun-Diamond Growers of California; ∆ trade association in marketing lobbying gave Epsy
(secretary of agriculture) $5,900 in illegal gratuities.
i) Gifts were given at two times that the ∆ had interests in what Epsy was involved in.
ii) There was no specific you get the luggage in exchange for a specific act. The evidence was a bit murkier they
could show the giving and there were interests in certain things he was doing, but that there was a quid pro
quo thing happening there.
iii) Problem 10-1 p. 405
3) Defining an Official Act
a) Jefferson; ∆ was a congressman solicited bribes from individuals seeking his assistance in African trade matters;
Used congressional letterhead and represented himself as congressman when he was writing to U.S and Foreign
government officials seeking to gain financial and other business development assistance on behalf of those who
had made or promised payments to him
i) Official act.

24
 (1) In exchange for the alleged bribe, defendant (and not some third party, government or otherwise) be
influenced in the performance of a decision or action.
(2) "any public official" mean the charged official.
(3) The activities must be clearly established by "settled practice" as part of a public official's position.
ii) Lecture
(1) What was ∆'s argument?
(a) He didn’t have binding authority to accomplish what he was being bribed to do. He was never paid
to cast votes, just to lobby for them. (Ct didn’t agree with this)
b) Official act encompasses use of governmental computer systems to fraudulently create documents for the
benefit of the employee or third party for compensation, even when the employee's scope of authority does not
formally encompass the act. (may be dictum)
i) Parker; clerk to an Administrative Law Judge; She helped individuals to fraudulently obtain Supplemental
Social Security Income benefits in exchange for money She helped someone get benefits and then
demanded that they pay her for the help and the benefits were suspended until the money was delivered.
(1) ∆ argued that her only authority was to typing and mailing opinions were not in the scope of her
authority and therefore not an "official act" under the statute.
(a) Ct: official act may be a settled practice; and official acts that violate an official's official duty are also
not limited to those within the official's specific authority.
(i) Here she had access to the facilities and equipment to create fictitious letters approving
benefits.
ii) An official act is a decision or act on a question, matter, cause, suit, proceeding or controversy must involve
a formal exercise of governmental power that is similar in nature to a lawsuit before a court. . . But merely
setting up a meeting or appointment without more does not constitute an official act. McDonald
4) Mens Rea
a) Alfisi; paid an USDA produce inspector; Fruit is shipped and given a grade level. If it is a lesser grade, then they
can negotiate. When there is disagreement about the grade, a USDA will inspect for a fee. The USDA was paid
to downgrade the fruit.
i) ∆ also claimed that gratuity should not have been given as a lesser offense to bribery.
ii) Analysis
(1) Corrupt intent necessary for bribery is a quit pro quo requirement (a specific intent to give something of
value in exchange for an official act.
iii) Lecture
(1) Bribery statute includes the word corruptly and gratuities doesn’t.
(2) How is corruptly different here than in obstruction of justice.
(a) The conduct in bribes is inherently corrupt. And gratuities might be a little different. And in Arthur
Anderson and not only is obstruction of justice conduct not inherently corrupt, so there needs to be
a clearer line.
5) Definition of Public Official
a) Dixon
i) City of Peroida received 2 federal grants from the Department of Housing.
(1) City then designated United neighborhoods Inc. a social service organization to be the city's subgrantee
(a) The organization then hired Dixon as the corporations director and Hinton as Housing Rehabilitation
Coordinator.
(i) The received $42,604 in kickbacks
(2) Ct: looked at legislative history and broad language
(a) Levine case. Where ct determined that it was sufficient that duties were critical to the proper
administration of the federally assisted New York Milk Marketing area even though the individual
who was bribed was neither employed by the United States or paid with federal funds
(3) Conclusion:
(a) To be public official must possess some degree of official responsibility for carrying out a federal
program or policy.

25
 (b) And here the ∆s were in charge of allocating federal resources for the purpose of achieving
congressionally established goals and you need to be acting in some capacity congress anticipated
you acting.
(c) Whether a person occupies a position of public trust with official federal responsibilities.
(i) Mere presence of federal assistance is not enough.
b) Evans Outer Limits (compare to Blankenship and Tanner case and think about how far removed you have to be
from being a public official and how far these statutes extend).
i) ∆ was the executive director of Tampa housing authority (created by the city of tampa to operate public
housing units. And received federal money to help provide the housing) and resigned and immediately
became executive of Meridian River Develoment Corp (created by the housing authority as a non profit to
provide and develop affordable housing opportunities; owned and operated several residential properties. ).
ii) ∆ then received money from Chapman who received several contracts
iii) Conclusion:
(1) Meridian was a final recipient of federal funds and no different from any other landlord renting to
eligible low income tenants.
(2) The final recipient of federal funds are usually not public officials.
(3) Evans did not possess some degree of official responsibility for carrying out a federal program or policy.
6) Lecture
a) Illegal Gratuities(2 years) - 18 USC § 201(c ) (both parties commit crime)
i) Only federal officials
b) Bribery (15 years)- 18 USC § 201 (b) (both parties commit crime)
i) Only federal officials
c) Extortion - Hobbs Act - 18 USC § 1951 (victim does not commit crime)
i) Applies only to federal, state, and local officials
7) Distinguishing between bribery and gratuities.
a) Past actions and future actions
i) Future actions
(1) Quid pro quo - then Bribery is I will pay you to do something and you agree to do that in the future.
(2) If you cant show quid pro quo you will be in the area of gratuities and ("nod and a wink relationship")
then you may have gratuities (has to still be the nexus)
ii) Past actions
(1) Gratuity can be rewarded after the fact.
b) You can charge both
8) Federal Program Bribery, Theft, and Fraud
a) 18 USA § 666 (print it out)
i) (a) whoever, if the circumstances described in section (b) of this section exists
(1) (1) being an agent of an organization, or of a State, local, or Indian tribal governmnet, or any agency
thereof
(a) (a) embezzles, steals, obtains by fraud or otherwise without authority knowingly converts to the use
of any person other than the rightful owner or intentionally misapplies property that
(i) Is valued at $5,000 or more AND
(ii) Is owned by or is under the care, custody, or control of such organization, governmnet, or
agency . . . OR
(b) (b) Corruptly solicits or demands for the benefit of any person . . .
ii) The organization, government or agency receive in any one year period, benefits in excess of $10k under a
Federal program involving a grant, contract, subsidy, loan, guarantee, insurance or some other form of
Federal assistance
b) General Requirements
i) Sabri v. United States (§ 666(a)(2))
(1) Sabri was a real estate developer who wanted to build a hotel and bribed 3 council men to get approval.
(a) One was to Herron who was on the Board of Commissioners of Minneapolis Community
Development Agency
26
 (2) The City Counsel of Minneapolis administered about 29 million in federal funds paid to the city and
MCDA received 23 million in federal funds
(3) ∆ argues there should have to be a nexus between the bribe and the federal funds. Doesn’t require a
connection between the federal funds and the bribe
(a) Ct: money is fungible so if you take some from the city, the federal funds will flow in, therefore
there is no need to show that the bribe was for the use of the federal funds. What is important is
that the Fed gov is funding at least $10k.
(4) Takeaway
(a) Extends federal criminal law into a lot of places.
ii) Fischer v. United States
(1) Fischer was president and owner of Quality Medical Consultants which performed billing audits for
health care organizations
(a) Fischer negotiated a $1.2 million loan for West Volusia Hospital Authority which had two hospitals
that received 10 and 15 million in Medicare funds.
(b) QMC used some of its proceeds in a $10k kick back to WVHA's CFO
(2) Analysis
(a) Medicare is a federal assistance program.
(b) ∆ argues that Medicare does not give "benefits" within the meaning of the statute. They benefit the
elderly and people who receive the healthcare not the actual hospital.
(i) Ct: Medicare payments are benefits as he term is used in its ordinary sense and as it is intended
in the statute
1. Just because the patients are beneficiaries doesn’t mean the hospital cant also be.
2. The Medicare system has strict intricate regulatory scheme for the maintaining of quality
care, so some of the funds can be seen to help maintain that level of quality for the hospital.
(c) To determine whether an organization participating in a federal assistance program receives
"benefits" an examination must be undertaken of the program's structure, operation, and
purpose.
(i) Look at the conditions for the organization to receive the funds.
(3) Lecture
(a) In light of sun diamond and McDonnell this is a clever argument by the defense.
iii) You take the two cases together that post the Obama Care is huge and the minimum for $10,000 in other
cases, this statue will become huge and reach places bribery and gratuity statutes can’t reach .
iv) Note 1
(1) Sun diamond was about gratuities which are not inherently corrupt and here bribery is, so that could be
a distinction.
v) Supreme ct has interpreted this statue expansively
c) Does § 666 cover gratuities
i) Covers gratuities as long as the intent to reward is corrupt. Bonito (ct of appeals opinion); Bonito was a
landlord and real estate developer in New Haven; He gave a car bribe to DeMatteo who was the Director of
Real Estate Services for New Haven and a member of the Housing Authority
(1) Lecture Cts. Have had different opinions on this issue and said corrupt means that you have to satisfy
the bribe requirement of the quid pro quo
9) HOBS Extortion under color of official right
a) 18 USC § 1951
i) Anti racketeering statute to has a interstate commerce requirement (which the other statutes don’t have)
here it also extends to local and state officials (so it makes it much broader)
ii) We are focusing on (b)(2) the term extortion means the obtaining of property from another, with his
consent, induced by wrongful use . . . Or under color of official right.
iii) This statue can reach any government official at any level so long as they engage in the conduct prohibited
in the statute.
iv) This statute gives huge prosecutorial discretion.
b) Inducement and Quid Pro Quo Requirements
27
 i) Passive acceptance of a benefit by a public official is sufficient to form the basis of a Hobbs violation if the
official knows that he is being offered the payment in exchange for a specific requested exercise of his
official power Evans v. United States (supreme ct)
(1) Evans was an elected member of the Board of Commissioner of Dekalb County.
(a) Undercover FBI agent gave the petitioner cash of $7000 and $1000 check to his campaign.
(i) It is assumed he receive the cash knowing it was intended to ensure that he would vote in favor
of the rezoning.
1. Evans did not initiate the bribe.
(2) Government need only show that public official has obtained a payment to which he was not entitled,
knowing that the payment was made in return for official acts
(3) GOVERNMENT COULD NOT USE BRIBERY OR GRATUITY OR FEDERAL PROGRAM, BECAUSE THERE IS NOT
A FEDERAL LINK (he was not a federal official or receiving the federal funds)
ii) McCormick (note case that is very important) (supreme ct)
(1) McCormick was a state legislature and there was a temporary rule that foreign doctors not licensed in
West Virginia could practice. Some Doctors wanted to make this permanent
(a) They hired lobbyist to talk to McCormick and McCormick calls the lobbyist and says he is up for
reelection and it is a tough campaign, and the lobbyist delivers campaign contributions. He didn’t
even report the cash a campaign contribution or on his income tax. He then introduced legislation
for the doctors and it passed. And a couple weeks later he gets another cash payment.
(b) Ct said, election officials do things all the time for their constituents and ask for money all the time.
While just taking the money alone is not enough to violate the HOBBS act, it is still possible. If the
payments are made in return for an explicit promise or undertaking by the official to perform or not
to perform an official act.
(i) Very specific quid pro quo. That is the test for campaign contributions.
c) Interstate Commerce Requirement. A de minimis effect and potential impact is sufficient
i) Depletion of Assets Theory sufficient to show that a business that customarily purchases items through
interstate commerce had its assets depleted through the act of extortion, thus limitign its ability to purchase
good through interstate commerce- United States v. Carter; Carter was elected Lake County Recorder and
was getting licenses and forclosed home information in exchange for money; guy (who was working for FBI)
also purchased paint for his company out of the state.
(1) There was sufficient evidence to link the payment to a depletion of Livas's corporate assets.
d) McDonnell
i) He was the governor of VA. He and his wife develop a relationship with Williams.
(1) Williams is pursuing a venture
ii) The governor and his wife received many gifts and in exchange he was setting up meetings. He never
crossed the line to take any official action, which the ct said is a formal
iii) Prosecutor screwed up by p. 9 agreeing that they would define honest services fraud so it is limited to cases
involving bribery.
iv) Williams got transactional immunity to testify. So, anything he testified about, he got off.
v) The issue in this case was the proper interpretation of "official act"
(1) The court concludes the governor’s action was not official because it had to be an official act of
governmental power . . . And not just arranging a meeting or hosting an event is not standing alone and
WITHOUT MORE does not constitute an official act.
(a) But what could this without more mean then??
e) Absent quid pro quo it is really hard to prove the public corruption.
10) Problem 10-3 is a good review problem.
11) His whiteboard
a) Sun Diamond
b) McDonnell
c) McCormic
d) Skilling
e) Citizens United
28
 f) All cases where the conviction was overturned.
Investigating
1) Whistle Blower
2) Sarbanes-Oxley Civil provisions
a) Sarbanes Oxley is a civil provision that allows someone to obtain a civil remedy by going through a complicated
procedural process.
b) AND Public companies only (but they should not be able to avoid liability by using private contractors for
public companies)
c) Mandatory Arbitration agreements are allowed in SOX Whistleblower cases Guyden v. Aetna; Guyden was a
whistleblower and once senior management found out she got a withering performance review and was fired;
There was an arbitration agreement, which she was trying to get around, but the lower court was enforcing.
i) Analysis
(1) She first has to bring the complaint to the department of labor and then if they agree you can go into
federal court.
(2) ∆ argued Arbitration was counter to the two part goal of the SOX whistleblower and one of those was to
make the public aware of the wrongdoing.
3) Sarbanes-Oxley Criminal Provision (18 USC 1513) for anti-retaliation (HE LOVES THIS PROVISION)
a) All companies
b) If you knowingly with the intent to retaliate against a witness or party of the proceeding in a FEDERAL crime can
be punished not more than 10 years.
4) Dodd-Frank Provisions (is a financial reform anti-corporate fraud act)
a) Anti-retaliation for SEC reporting
b) SEC "bounty" program
i) Gave SEC power to pay bounty to whistleblowers who report violations
5) Crime-Fraud Exception to the attorney client privilege (if client uses the attorney to further a crime then there is no
attorney client privilege)
a) Attorney need not know as long as the clients intent is to further the crime by the attorney's help
b) US v.Zolin (monica lewinsky case)
6) Undercover Operations
7) Consensual Monitoring
a) United States v. Cacere; Yee was an agent of the IRS and was auditing Caceres; Caceres offered him $500 for a
favorable resolution; Yee then went and wore a recording device (unknown to Caceres) and got him offering the
bribe; ∆ said that he did not consent, and the IRS did not follow the proper internal guidelines to record the
conversations. ∆ wanted the recording thrown out.
i) Ct. said Internal guidelines don’t confer actual rights in criminal investigations. (VERY IMPORTANT) if no
federal statute or constitutional violation
ii) Two Party Consent issue
(1) In most states, one party consent is sufficient to tape, but in 11 states (including PA and MD) you have to
have both parties consent. (but federal agents do not have to follow the two-party consent, because of
the Supremacy Clause)
b) United States v. Nerber; Feds set up a sting in a hotel room and set up cameras in there; The informants gave
the cocaine to them in them and the exchange was on camera; The informants left and the ∆'s stayed in the
room and did cocaine and flashed guns, but they were still being recorded.
i) Court said that the recording while the informants were in the room was ok, but once the informants left
and they were alone in the hotel room, there was a subjective expectation of privacy and that expectation
was objectively reasonable.
ii) So, the tape while the informants weren't in the room is excluded.
c) Lecture
i) Title III Wiretap
(1) Unlike a grand jury subpoena, wire taps are a little different and there is a very specific procedure you
have to go through including
(a) Specifying the crime
29
 (b) Why communications are relevant
(c) What communications were being sought
(d) Identity of the persons committing the offense
(e) Also, must show that regular police tactics have not worked.
8) Grand Jury
9) The federal grand jury process and as it has evolved is the most powerful fact finding process or tool in the legal
system.
a) Extremely broad subpoena power, even if there is just a suspicion of criminal activity
i) Can subpoena any documents without judicial review
ii) Doesn’t even need to be a vote by the grand jury. Prosecutor just has a blank stack that they can send out.
(1) However, it would be improper to sent them out to avoid an abuse of the grand jury BUT the prosecutor
must have intended it to obtain usable evidence.
10) Grand Jury Secrecy
a) Rule 6(e) of the Federal Rule of Criminal procedure (have a general sense of the basic content of the first
couple subparts)
i) Secrecy Requirement.
(1) Independent Counsel
(a) Independent counsel leaked they were thinking of prosecuting Bill Clinton
(2) Who is covered and who is not covered.
(a) Everyone involved except the witness is covered by secrecy
(b) An attorney for the government is a federal prosecutor.
ii) Many exceptions to the general rule.
(1) Biggest exception is that prosecutors can go to the court and get an order to turn over grand jury
information
(2) Permitted to share information with other prosecutors and investigators WORKING on the case
iii) Grand Juries are not allowed to be used as a discovery tool
(1) Once an indictment is bought prosecutors are not allowed to use the grand jury to get more discovery.
11) Scofield case (3rd Circuit)
a) At a minimum there has to be a showing by affidavit in every case that each item sought was (1) relevant to an
investigation, (2) properly within the grand jury's jurisdiction, and (3) not sought primarily for another purpose.
i) Merely on suspicion that the law is violated or assurance that it is not.
ii) THIS IS THE EXCEPTION NOT THE RULE. Most circuits presume a subpoena to be regular unless the opposing
party can produce evidence to the contrary.
12) Immunity
13) One of the most important areas in white collar crime.
14) 18 USC § 6002 Immunity Generally
a) The testimony or anything directly or indirectly derived from testimony
b) If someone is called to testify, and the procedure for requesting immunity (court order) and if the witness
receives immunity and they refuse to comply they are in contempt. (takes away 5th amendment and gives you
something in return)
i) THE COURT SHALL ISSUE. This means that the court does not have discretion. It is controlled by the
prosecutor not the court. This is a ministerial act.
15) Immunity
a) Procedure - "Proffer" (hypothetically if client is to testify x,y,z will you grant immunity, and then the prosecutor
decides)
b) Transactional vs. "use and derivative use"
i) Transactional. IF you testify about any subject, you cannot be prosecuted for that act period.
ii) Use and Derivative Use - you can still prosecute someone as long as the government carries the burden of
showing that its case was not tainted in any way by the earlier testimony. (Kastigar hearing)
16) Kastigar v. United States
a) The use and derivative use immunity is sufficient to take away the right to invoke the 5th Amendment.

30
 b) Use and derivative use immunity leaves both the witness and the prosecutorial authorities in substantially the
same position as if the witness had claimed the Fifth Amendment privilege.
17) North Case
a) Had to show that not only the Prosecution was not affected by the immunized testimony, but also possible
witnesses (had to go line by line and make sure witness testimony was not affected, which was impossible to do)
i) This was a very publicized case on television, so not generally an issue in average case with grand jury
privacy.
ii) Not all courts take it this far
18) Problem 11-1
a) Shows the smallest thing possible can cause a problem in immunity situations.
19) Targets and Warnings
a) Witnesses - are only there to provide information
b) Targets - are the ones that the grand jury is after. Substantial evidence linking him or her to the commission of a
crime.
i) Experienced criminal lawyers will never let someone who is a target or subject to appear. They will invoke
the 5th Amendment.
c) Subject - is an individual whose conduct has come within the scope of the grand jury's investigation.
d) DOJ requires targets (not subjects) to be notified that they are targets before they have to testify.
20) Artificial entities do not have a 5th Amendment privilege (so businesses have to turn over all of their records.) So,
then the question becomes about the scope of subpoenas for documents.
a) You are not allowed to go on a fishing expedition United States v. R. Enterprises
21) In re Grand Jury and Law firms
a) Giving documents to a lawyer does not make them privileged.
i) Preexisting documents not prepared to are not attorney client privileged.
ii) If an attorney selects documents and organizes them in a certain way or instructs a client to organize them
in a certain way is not privileged, but might be a work product doctrine.
b) It is not proper to use the grand jury to collect information for a civil case.
i) Here there is civil case however, just because there happens to be a civil case the grand jury does not have
to stand down and wait for the private civil litigation to happen.
(1) This is not what normally happens. It is common for civil investigations to have a stay until criminal
proceedings are complete.
(a) In civil cases, if someone asserts their fifth amendment right, the jury can make an adverse
inference.
22) 5th Amendment/ Immunity- Document and Records
a) Fisher (1976); IRS summons for documents; Taxpayer and accountant turned documents over to their attorney
i) Contents of pre existing voluntarily prepared documents are not protected by the fifth amendment.
(1) Because there is no compulsion the contents are not protected
(2) Includes personal documents (?) p. 494
b) Doe 1 (1984)
i) Sole proprietorship business record (not artificial legal entity like a corporation; sole proprietorship is a
person)
ii) "required records exception" (tax/ regulatory records)
(1) Fifth amendment does not protect required records you are obligated to keep
iii) Act of production doctrine (act of producing may be protected if it is communicative)
(1) Although the content is not protected (Fisher) if the turning over the document can be a communicative
it is protected
(2) THE ACT OF PRODUCING THE DOCUMENTS TELLS THE GOVERNMENT A LOT OF INFORMATION
(a) 4 elements it shows
(i) Documents are responsive to the given subpoena exists
(ii) They are in the possession or control of the subpoenaed party
(iii) The documents provided in response to the subpoena are authentic

31
 (iv) The responding party believes that the documents produced are those described in the
subpoena
(b) Not protected unless it communicates something of substance to the government that they didn’t
already know. Surrender without more is not enough
iv) No immunity grant
c) Doe 2 (1988)
i) The government needed the ∆'s signature to identify accounts to the government.
ii) Government didn’t know if the bank accounts even existed or were that the documents were looking for
existed, but they narrowed it down to a couple banks and subpoenaed the ∆ to sign a release form.
(1) Statement was drafted to say "if I have any accounts, please turn them over to the government"
(a) Ct said all they were doing was getting a signature they weren't relying on his actions
(b) Nontestimonial acts are not protected and merely signing your name is not protected
d) Hubbel; Produced the documents under a grant of immunity to testify fully and truthfully; They were suspicious
that his testimony was false; So they subpoenaed his consulting business records to show he was taking hush
money; Instead they found he hadn't been paying taxes on his consulting money (which was not what they were
looking for)
i) Because Hubbles request were broad but specific categories, but in order to meet that Hubble had to go
through all of his personal documents. The assembly of the documents was like telling the prosecutor the
code to a wall safe, so there is a communicative aspect to what Hubble did. Therefore, the act of production
was incriminating
(1) The independent counsel has to prove that in no way they made use of that information (Kastigar)
ii) Takeaway
(1) Business records held by an individual can sometimes be communicative when held by a private person
(2) You cannot treat them as if they appeared by magic if someone has to compile them
(3) Has this exception swallowed the rule?
e) “Collective Entity Doctrine” formation of a collective entity (corp., llc, llp. ect.) waives personal 5 th A privileve
Braswell by forming a corporation, even though he was the only shareholder, you have waived your fifth
amendment privileged to all of your business records. Including the act of production.
i) You have to turn over the documents. Once the documents are turned over, their contents can be used
against you, but your physical act of producing them cannot be used against them.
(1) Can say it was produced by the corporation but cannot say the individual produced them and therefore
knew what they contained.
f) Problem 11-2 p. 506
i) Intended to point out that Hubbell and Braswell together are confusing.
ii) Braswell would control. In Hubbell, there was no collective entity and Hubbell was immunized to produce
the documents. In the real world, Braswell is a really important case
23) Does required records exception also apply you don’t have the defense of the act of production
24) Search Warrants
25) Ford; They got a search warrant for one thing, but they ended up catching another.
a) Ct. said the search was overly broad, in that it allowed them to search for many documents.
i) The 4th Amendment is important, and they don’t want to authorize a general search for anything.
(1) If they wanted the time period and real estate documents, they should have asked for that. They were
looking at documents outside the time period that they were looking for.
b) Takeaway
i) Always compare very carefully what the search warrant authorized and the evidence that was collected.
26) Computers
a) Problem
i) They hold a lot of information and different kinds
ii) Portable
iii) Can be destroyed quickly
b) In Re Search of 3817 W. West End, First Floor and the Stabile Cases
i) First approach you have to have search terms and determine what documents to look at.
32
 ii) The second approach (Stabile Case) said that file names can be changed, and therefore if you are searching
for something and can cover the threshold issue, then you can use what you uncover
(1) This seems to be the prevailing approach
c) Attorney Client Privilege
i) Mark files that are protected by privilege ahead of time
Defending
1) Grand Jury
2) Bank of Nova Scotia, Mechanik, Williams
a) Are these cases the trifecta for prosecutorial misconduct (see e.g. Stevens)
b) Bank of Nova Scotia (when you can show prejudice)
i) Violated grand jury secrecy, disclosed information to IRS working on civil matter, failed to give notice,
disclosed name of targets to witnesses, caused the IRS agents to summarize evidence falsely
(1) Ct. still said this was not a fundamental error.
(a) Two step test or analysis
(i) Step one automatic dismissal if you can show it is something that rises to the level of making the
proceeding fundamentally unfair (racial or gender discrimination)
(ii) Step two if it is not really egregious, then you have to show there is grave doubt that the
decision to indict was driven by the misconduct
1. Even these things didn’t show this however.
a. This case pretty much slammed the door on dismissal or redress for any misconduct in
the grand jury.
c) Williams (most important no duty to present exculpatory evidence, but DOJ policy is that prosecutor should)
i) There was evidence that he reported his financial statements consistently in other contexts
(1) This would negate the mens rea requirement, because it would show that he was not intending to
mislead or defraud.
(a) He said this information should have been brought to the attention of the grand jury before
indictment.
(i) Ct disagreed. This was information that they could use at trial. So the fact that it was not
showed to the grand jury, does not mean
(ii) Williams makes pretty clear that there is no duty to present exculpatory evidence to the grand
jury
1. NOTE: ABA and the DOJ both have said that although there is no requirement to do this, you
should do this and you could be subject to discipline if you don’t.
2. Nothing short of a violation of a statute of constitutional right will cause a court to dismiss
an indictment
d) Mechanik
i) Defense learned at trial on cross examination that two agents had testified together at the grand jury (this
was against the law Rule 6(e) only one witness at a time)
ii) Trial ct. said the violation was harmless and the APP ct said that rule 6 required automatic dismissal
iii) The Supreme Ct. then said that the trial conviction proved that they were guilty, so the process that proved
that there was probable cause was violated
(1) CONVICTION AT TRIAL CURES OVERCOMES ERROR IN GRAND JURY
(a) Note: might not go far enough to cure the constitutional violation
3) Stevens
a) Lead to an enhanced effort on the part of the DOJ to make sure they hand over exculpatory evidence.
b) This was a trial not a grand jury though. Stevens sets forth the trial rules
c) If the only thing the prosecutors had done was fail to present exculpatory evidence to grand jury, they would
have done nothing wrong.
d) All of this came out in the trial phase when his lawyers fought to get as much information as they could
4) Calandra
a) No exclusionary rule in grand jury
5) Grand jury can also consider hearsay to bring an indictment
33
6) Attorney Client Privilege/Work Product Doctrine
7) An area where the law is pro defendant
8) Two important points
a) Attorney Client Privilege is a distinction between communication (which is protected) and the facts (are not
privileged)
b) Distinction between Attorney Client Privilege vs. Work Product Doctrine
9) Two questions to ask
a) Who is the client?
i) Cooperation by corporation (Filip Memo p. 30)
b) How do we balance the need of the government, and the interest protected by attorney client privilege?
10) Corporate privilege - Upjohn
a) Upjohn
i) Government was trying to piggy back off of the work that had already been done by the company. The
company did not want to waive attorney client privilege
ii) Underlying facts are not privileged the privilege only protects communications
b) In a world where cooperation is key, what you want to do is conduct an internal investigation that allows you
separate out the underlying facts with the legal advice. So you can share the facts without waiving attorney
client privilege and work product doctrine.
11) Upjohn warnings/ Joint Defense Agreements
a) Upjohn Warning - You have to inform the employee that you are representing the corporation and not the
employee. And if they think they need a lawyer, they could get one. And the attorney client privilege belongs to
the company and not them.
b) Joint Defense Agreement - you have to have a common legal interest or objective, so you can share information
with each other.
i) They don’t have to be in writing (important because someone might do this instinctively without doing a
bunch of research and without doing research; you may share information and still be able to assert a
common interest)
ii) Parties may drop out of an agreement, but the information still remains privileged.
iii) Schwimmer
(1) Joint defense agreement does not mean you want the clients to meet together without the lawyers. You
want all of the information to flow through the lawyers, because the less filtered the information it
becomes difficult to decipher who knows what from where.
(a) Some courts wont let information shared in the agreement share the information, but other courts
treat it as a waiver.
iv) The law is a mess in this area when people start dropping out and changing allegiances.
12) Crime fraud exception- Zolin case
a) Focus is on the client and the client's intent and the attorney does not have to have knowledge of the crime.
b) Applies to both work product doctrine and attorney client privilege, but application is a little different.
c) Zolin presented to the supreme court whether or not to obtain the application of crime fraud exception the
party seeking the communications can use the communications to prove the client fraud. The court can look at
the communications in camera to determine if the crime fraud exception should apply. (supreme court did not
establish what the burden of proof had to be to determine if the crime fraud exception should be invoked)
d) Two takeaways
i) Attorney does not have to be a part of the crime or fraud.
ii) Applies only to on going and future acts. Not past acts
e) Applies to everything related to the subject matter of the communications
13) "Queen for a Day" immunity
a) When someone wants to cut a deal, who goes first?
b) The lawyer advices the client to share with the prosecutors what they know with the understanding that the
prosecutor wont use it against you unless you later take the stand and testify to something different.
c) Proffer Agreement – once you have a deal
i) There is then a formal proffer agreement (they want to know what they get before they give you)
34
 ii) P. 560 Larson case they wanted to be able to make derivative use of the proffer agreement. (they will listen
to you and if you don’t make a deal they won’t go against you with it, but they will not allow you to lie on
the stand if you contradict what you say); Larson went beyond in that it allowed them to rebut an opening
and closing statement that differed from the facts they were told. YOU SHOULDN’T SIGN A LETTER UNLESS
YOU ARE PRETTY CERTAIN YOU ARE GOING TO HAVE A DEAL. In Larson, she did not have the letter in
advanced and everyone agreed that she did not have the knowledge of how broad the waiver was. So it
lacked voluntariness. So, because the waiver wasn’t valid they could only use it for impeachment.
14) Parallel proceedings – if you assert 5A privilege in civil proceeding adverse inferences can be used against you.
HOWEVER assertion of 5A alone is not sufficient to establish liability SEC in civil proceedings can give info to DOJ for
criminal proceeding (criminal referral) Make sure you look at collateral consequences
a) Information sharing by law enforcement
i) civil to DOJ permitted
ii) SEC Form 1662
b) Stay of Civil Proceedings and let criminal go forward first.
i) Protect government interests (Duty Case; don’t want defendants to use civil discover to get more
information than they could otherwise)
ii) protect defendant’s interest (can assert the 5A in the criminal case)
c) Global Settlements – reach a settlemtn with the government that you are settling the criminal case and other
government actors (not really against private claimse)
d) 3 things to do
15) know who your client is (2) stop destruction of documents (3) send notice to insurance carriers
16) Corporate cooperation (DOJ Filip memo- no a-c priv waiver req and no cutting off of legal funding )
17) Individual Liability/prosecution (DOJ Yates Memo; they are going to prosecute responsible individuals and who they
should prosecute)
a) These two things create pressure from both sides to turn on eachother.
18) Corp. cooperation/ prosecutorial misconduct (Stein case; kpmg was paying legal fees for employees; prosecutors
said they should stop because this could prevent them from cooperating fully and were asserting their 5A privilege.
They said that KPMG should fire them and take away their legal fees (court said prosecution went too far))
Indemnification (statutory or contractual) and advancing legal fees (sign undertaking “if you are found to have acted
in bad faith and outside the best interest of the corp., you will pay it back”) (at issue in Stein)
a) Look at the insurance policies and provide “notice to insurance carriers”
19) Sentencing
a) 2 sets of federal guidelines
i) individual
ii) organizational  if a corporation has in place an effective system to protect and prevent violation of law
“corp. compliance systems” (for example “whistleblower” protection) this reduces sentencing.
b) Both require complex calculations under guidelines
i) However, Booker Federal guidelines no advisory only not mandatory! But they still have to use the
guidelines and the procedure, they just have to justify their departure
c) Probation officer – “presentence report” and that’s what the judge looks at in determining the sentence.
d) The appeal standard looks at the reasonableness of the sentence and abuse of discretion
e) §5K1 if you are representing individuals, you want a 5K1 “substantial assistance” reduction

REVIEW
1. Essay
a. Substantive Law
i. Subpoena – what do they do, testify or assert privilege
1. If in doubt, assert privilege
ii. Attorney client privilege
iii. Personal exposure (immunity) – get a grant of immunity or take the fifth
1. Once immunized she has to tell the truth
35
 iv. Client fraud exception – if she has immunity
b. Process
i. Grand jury has broad powers, they operate in secrecy does not operate in secrecy
ii. Witness has to go in alone without the lawyer
iii.

36