Page 12 - White-Collar Crime

S12 | MONDAY, FEBRUARY 8, 2016 | WHITE-COLLAR CRIME
| NYLJ.COM

Jury Charge
relieved of having to prove that any of the since it does not require any concordance of
ied about the dilemma the company faced

beneits received were connected to a spe- 25 intent as between the gift giver and receiver.
in not wanting to do what Skelos asked, but
ciic oficial act. Put another way, the objec- Nevertheless, as the defense argued (unper- not wanting to cross him either.30
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tion that the defense is expected to raise suasively as it turned out) to the Silver jury
for exchange of beneits for oficial action in post-trial motions and later on appeal in in summation, it is a rather “bizarre”26 result Conclusion
has crept into the Government’s charging these two cases is that the jury instructions indeed that a public oficial can be convicted
instruments—and not just in the Southern corresponding to the “in exchange for” ele- of bribery-related charges when the gift giv- What all of this portends in post-trial liti-
District of New York. In the District of New ment of the bribery and Hobbs Act extor- ers—among them, in the Silver case, two of gation, at sentencing31 and on appeal is, of
Jersey, for example, in the pending prosecu- tion related charges pay only lip service to the most prominent and powerful commercial course, anybody’s guess at this point. Proof
tion of U.S. Senator Bob Menendez (D-N.J.) the quid pro quo requirement. While proof real estate developers in New York City, Glen- by circumstantial evidence of an implicit quid

on conspiracy to commit bribery and hon- of an explicit (as distinguished from a spe- wood Management (which also igured in the pro quo in order to prove the “in exchange for
est services fraud charges, the Government ciic) quid pro quo under existing Supreme Skelos case) and the Witkoff Group—not only oficial acts” element of the honest services
likewise has alleged the “as the opportunities Court precedent is required only in honest did not intend to inluence the public oficial, fraud, bribery and Hobbs Act extortion relat-
arose” formulation in attempting to satisfy services/bribery/extortion cases involving they did not even know that they had given ed charges in the Silver, Skelos and other simi-
the “in exchange for oficial acts” element of campaign contributions,21 left open for pros- gifts, or things of value, to the public oficial.27 lar public oficial prosecutions in the Southern
the offenses.19 Although Judge William Walls ecution is the implicit quid pro quo in the While Silver, for one, knew what he was receiv- District of New York and elsewhere appears to
denied a defense pre-trial motion to dismiss “wink and a nod”22 cases presented by the ing in the form referral fees from the law irm be alive and well.32 Whether convictions based
the indictment for failure to suficiently plead Silver and Skelos proceedings.23 In the cur- that represented Glenwood and Witkoff in upon such evidence and corresponding jury

a quid pro quo arrangement, he did sharply rent environment, public sentiment undeni- tax certiorari matters before the New York instructions will be upheld ultimately will be
question the Government’s “stream of ben- ably supports the outcome resulting in guilty City Tax Commission, both Brian Meara and left to the Second Circuit and possibly the U.S.
eits” theory of the case as it relates to what verdicts in these two cases.24
Richard Runes, Glenwood’s lobbyists, as well Supreme Court33 to decide. The juries in these
the jury would have to ind in order to satisfy And yet, both cases present the rather as Steve Witkoff, the Witkoff Group’s principal, two cases evidently concluded that crimes
the “in exchange for” requirement.20
anomalous (and perhaps unsettling) reality testiied that they knew nothing at the time were committed. Whether those crimes, as
Thus, in the Second Circuit, the defense that none of the gift givers—as supported by about kickbacks or referral fees eventually a matter of law, constituted honest services
argument in both Silver and Skelos that these the testimony at trial of representatives of going to Silver.28 What these men did testify fraud, bribery and extortion remains to be
cases seek to criminalize what is otherwise the respective donor entities, most of whom to, in possibly the most damning evidence determined.
generalized goodwill so far has fallen on deaf testiied under grants of immunity or pursu- presented at trial, was that none of them
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ears. And it is not dificult to imagine that ant to non-prosecution agreements—claimed felt free to be perceived as antagonistic to ••••••••••••••••••••••••••
either district judge in those cases will stray to have had any intention to inluence the the whims of Silver’s requests to move their 1. In pertinent part, the district court’s corresponding
far from the Ganim endorsement of a jury oficial actions of the respective New York legal business to the law irm of the Speaker’s charge to the jury in the Silver case relative to the quid pro quo element was as follows:
charge that allows the court to explain to Legislative leader oficials. Once again, the friend.29 Similarly, at the Skelos’ trial, Charles
the jury, in effect, that the Government is
law supports the seemingly counter-intuitive,
Dorego, Glenwood’s general counsel, testi-
The Government must prove, be- »PageS13 yond reasonable doubt, . that Mr.

Parallel Actions
But defendants can try to use the non-par- Among such practices is the increased use the interests of the agencies may deviate at

allel scope of discovery to their advantage. of proffers, a widely-used DOJ mechanism. In some point, and counsel must be attuned to
For example, Javier Martin-Artajo of “London these proceedings, a potential defendant is those instances. For instance, parties that are
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Whale” fame is currently pursuing a similar granted “queen-for-a-day” status where they sometimes viewed by the DOJ as victims of
Unknown Purchasers of Sec. of Global Indus., strategy: By secluding himself in Spain, which speaks with the government under a certain deception in inancial crimes, such as outside
Ltd., No. 11 Civ. 6500(RA), 2014 WL 2158507 refuses to extradite him, he is able to remain level of protection. A law enforcement agent auditors, board directors and other gatekeep-
(S.D.N.Y. May 23, 2014) (“[I]t is well-estab- above criminal prosecution while continuing summarizes the colloquy in a report, which ers, may be the SEC’s focus in an action alleg-
lished that the United States Attorney may to engage in civil discovery disputes. With is kept by DOJ. The witness receives use, but ing negligent or reckless failure to fulill their
intervene in a federal civil action to seek a some clever thinking, therefore, there is some not derivative use, immunity and the state-
oversight duties. MARY JO WHITE, SPEECH,
stay of discovery when there is a parallel room for attorneys and clients to strategize ments may be admissible in court only under ALL-ENCOMPASSING ENFORCEMENT (March
criminal proceeding, which is anticipated between the two discovery regimes.
limited circumstances. During a DOJ proffer 31, 2014), available at http://www.sec.gov/
or already underway, that involves com- Limit Client’s Direct Interactions with the session, the SEC and CFTC are often pres- News/Speech/Detail/Speech/1370541342996.
mon questions of law or fact.” (citing S.E.C. Government. At all times during an inves- ent and ask questions. (Even if they are not In a recent speech, SEC Chair White acknowl-
v. Downe, No. 92 Civ. 4092(PKL), 1993 WL tigation and resulting proceeding, counsel present, the SEC and CFTC may review—but edged that SEC complaints often include more
22126, at *11 (S.D.N.Y. Jan. 26, 1993)). See should strategically limit the number of times may not take custody of—the law enforce-
Salcedo v. Chicago, No. 09-CV-05354, 2010 WL their client provides the same information ment agent’s report.) Proffers give counsel parties than are charged criminally because
2721864, at *1 (N.D. Ill. July 8, 2010) (granting to authorities. The more times a defendant and client an opportunity to read the gov- “it is very important to proceed broadly
a stay of civil discovery pending resolution gives the same information, the greater the ernment—gauge the prosecutor’s reaction to against other participants in a scheme to
ensure that they too are called to account.”
of a criminal trial); Chagolla v. Chicago, 529 possibility of inconsistency. In trying to avoid the story and glean information on the focus Id. In this situation, practitioners should
F. Supp. 2d 941, 947 (N.D. Ill. 2008) (same) the Wells process, for example, one might and scope of investigation. Indeed, a proffer factor in the agency’s distinct concerns in
(“[T]he public has an interest in ensuring that submit a white paper to the Commission. session can be a very important opportunity their strategic decisions. While recognizing
the criminal process can proceed untainted See generally Ronald S. Betman and Scott for a defendant to convince the government
by civil litigation.”); Memorandum of Law in M. Ahmad, “Understanding and Navigating of any mitigation factors.
the signiicant overlap between criminal and
Support of the Government’s Motion to Inter- the Use of Pre-Wells Notice White Papers in Proffer sessions may be conducted in dif- civil proceedings, counsel should be aware of
vene and Partially Stay Discovery, In re Graph- Formal SEC Investigations,” BANKING L. J. ferent ways and with different styles depend- the speciic instances in which the interests
ite Electrodes Antitrust Litig., 97-CV-4182 (E.D. 444 (2014). Where a client makes the decision ing upon the government agency or ofice of the SEC, CFTC, and DOJ do not align and
Pa. March 3, 2000) (seeking a limited stay of to submit a white paper, the client and their conducting it. An enterprising practitioner prepare to address them.
Conclusion. With the current environment
civil proceedings pending an ongoing criminal attorney should consider simultaneously should be aware of these ine distinctions of information sharing, cooperation among
trial “to economize judicial resources, limit providing the same presentation to other before having their client walk into the room
the burden on [the defendant] in defend- agencies targeting one’s client.
with the government.
agencies, and the strong human element
ing multiple actions, and prevent untimely Understand an Enforcer’s Professional There are other examples of action by behind every interaction with the DOJ, SEC,
disclosure of the Government’s case while Background. As proof of the “human element” enforcement authorities that will be informed and CFTC, there are several lash-points for
still allowing the plaintiffs to proceed with of government, consider that although DOJ, by the enforcer’s professional background. attorneys and clients alike. Although this arti-
their action”), available at http://www.justice. SEC, and CFTC have different jurisdictions, The more one knows about such key pieces cle hits on some of the major areas of concern,
gov/atr/case-document/governments-motion- mandates, and enforcement tools, the current of intelligence, the more effective one will there are many nuances to be considered.
Nevertheless, the challenge in facing parallel
intervene-and-partially-stay-discovery#N_1_. SEC Chairperson, SEC Enforcement Director, be in their strategy—in the same way that
And because a criminal conviction may have and CFTC Enforcement Director—Mary Jo knowing one’s judge is an essential practice enforcement actions is not insurmountable
collateral estoppel effect in a civil proceed- White, Andrew Ceresny, and Aitan Goelman, in any litigation.
for those practitioners who tread carefully
ing, it is in the SEC and CFTC’s interest to respectively—are former SDNY prosecutors, Prepare for Divergent Interests Between and consider the above factors.
consent—if not join—the motion, which each and their respective agencies appear to be DOJ, SEC, and CFTC. Despite the increasing
agency will often do.
incorporating SDNY tactics and strategies.
coordination between DOJ, SEC, and CFTC,
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