More Dirty Prosection Tricks - Faking Amnesty to Steal Incriminating Information

After taking advantage of a Justice Department's Corporate Leniency Program, the shipping firm Stolt-Nielsen believed that the Feds would honor their end of the bargain. That meant there would be no prosecution of, “the company, its directors, officers, or employees for conduct prior to that date.” Instead, four months after the deal was done the Feds tried to back out and use the information they received during the leniency probe for prosecution.

Read the whole convoluted and sleazy story here.

Fortunately the company ended up “winning” - if you consider spending millions of dollars to get the Feds to follow their own agreement a victory:

But Indiana professor Roberts believes that corporations won an important victory in Stolt: "There are now some minimal standards that the government has to live up to, some expectation of due process and fairness."

Liebenberg, Wingfield's attorney, says the case sends a clear message to prosecutors. "By recognizing major contract and due process rights for any corporation that signs a deal," Liebenberg says, "this decision restores certainty to the program. It makes the government live up to the bargain that it strikes."

My question: why did it take a law suit to get the feds to follow the rules?

The Unindicted Co-conspirator Trick Pt. 2

A prosecutor has many tools in his bag of dirty tricks. One we discussed in relation to Enron and AIG was the "unindicted co-conspirator trick” which allows the prosecution to block unfavorable witnesses from testifying for the defense. At the time we concluded, “The unindicted co-conspirator trick was so successful in the Enron, that we’re sure to see it used more frequently in the future.”

That didn’t take very long.

Today the WSJ Blog has a story about the feds using this tactic without even the pretense of justification:

According to a memo, filed today in Texas district court on behalf of the Islamic Society of North America and the North American Islamic Trust — both of which were named as “unindicted co-conspirators and/or joint venturers” in an appendix that was attached to the brief — the government allegedly violated the Fifth Amendment in providing no explanation for its description of them as unindicted co-conspirators. The organizations, rep’d by ACLU lawyers, argue that, under Fifth Circuit law, “no legitimate governmental interest is served by an official public smear of an individual when that individual has not been provided a forum in which to vindicate his rights.”

The relief? They want a Fifth Amendment violation declared by the court, an order expunging their names from any public document filed that identifies them as unindicted co-conspirators and an order enjoining the government from identifying them as unindicted co-conspirators in another context other than that specifically permitted by the court.

Guilty before proven innocent, thuggish prosecution tactics by the feds

The Kaleys simply want to use their own money to retain counsel of choice to defend them at trial," said one of their attorneys, Howard Srebnick of Black Srebnick Kornspan & Stumpf in Miami. "The government is interfering by freezing their assets, including the equity in the home they purchased more than a decade ago, without giving the Kaleys an opportunity pre-trial to confront witnesses and present evidence to establish they have committed no crime."

The Kaleys set aside about $1 million to pay attorneys by taking out a second home mortgage and cashing certificates of deposit. But prosecutors claimed the money was ill-gotten gains. They charged Kerri Kaley stored the medical equipment in the family's garage. Her husband was indicted after she refused a plea deal. Prosecutors said he knew about the conspiracy and managed the illegal profits.

On the face of it, this charge is absurd. As one commentator at the WSJ law blog asks, “he defendants make a good argument under the 5th and 6th. How can the government freeze assets BEFORE proving they were “ill-gotten”? That’s crazy!” In other words, in these cases, guilt is assumed.

Like many other corruptions of civil liberties, asset seizures got their start in drug cases:

Miami criminal defense lawyer Jane Moscowitz, who’s representing Miami criminal defense lawyer Ben Kuehne against money laundering charges, says that bad rulings in drug cases “eventually come and pollute the prosecution of white-collar cases.”

The linked article also touches on the cost of defending white collar charges. Just for document review alone costs are over one million dollars. We touched on how costs can affect the decision to settle in earlier posts. What chance does an individual stand against the resources of the state? Almost none, which is why no matter what the charge is, the only options for most people, is to cut a deal. Almost no one can afford justice; any win would be a pyrrhic one.

The Fed’s Sleazy Tactics– The unindicted co-conspirator trick

This dirty tactic was on full display during the Enron trial when the prosecution named nearly 100 co-conspirators. Normally, these are people who the prosecution believes are involved with a crime but has not yet charted them. However, during in the Enron trial the prosecution named everyone who might have exonerating evidence as a co-conspirator, which kept the witnesses in limbo and prevented them from testifying for the defense.

The unindicted co-conspirator trick was so successful in the Enron, that we’re sure to see it used more frequently in the future. Most recently it was used in the trail of Robert Graham, formerly of General Re. The charged lawyer says that the one man who can clear him has been named as an unindicted co-conspirator and cannot testify. Unsurprisingly the prosecutors will not give him immunity to get the full story. Something is rotten when the referees have a dog in the fight:

"It is absolutely clear that Rob was acting in good faith, trying to do the right thing, sharing his concern with the No. 1 lawyer in the entire company, a man who Rob had every reason to trust and to respect," Vinegrad told jurors.

McCaffrey, who left Gen Re in 2005, was named by the government as an unindicted co-conspirator. McCaffrey says that he would have testified as a defense witness if he had been granted immunity. But prosecutors denied the request.