"Appellants with one Harry I. Schwimmer were indicted under an indictment which charged them with conspiring to defraud the [US] government in violation of [18 USC 371]. The single count indictment alleged that the purpose of the conspiracy was to defraud the [US] of the proper administration of the Internal Revenue laws and regulations, of the proper and faithful service of appellants Connelly and Caudle and to commit the offenses of bribery, perjury and knowingly making false statements and entries. ... Matthew J. Connelly was Appointment Secretary to President Truman; appellant T. Lamar Caudle was an Assistant Attorney General in charge of the Tax Division of the Department of Justice; Harry I. Schwimmer was a Kansas City, Missouri, lawyer; Ellis N. Slack was an attorney in the Department of Justice; Irving Sachs was a St. Louis, Missouri, shoe broker, and Shu-Stiles, Inc., was a Missouri corporation of which Sachs was president. The indictment further charged that the purpose of the conspiracy was to protect Irving Sachs from criminal prosecution for Internal Revenue law violations", Connelly v. US, 249 F2d 576, 578 (8th Cir., 1957). Wow, an Assistant Attorney General! "The Internal Revenue agents on investigation reported that Sachs as president of Shu-Stiles, Inc. had fraudulently evaded taxes due the government by the company to the extent of $188,378.32. ... The government's testimony tended to prove certain business transactions between Schwimmer and appellants by which the appellants profited, the payment of large sums of money by Sachs to Schwimmer, entries in books of Schwimmer indicating disbursement of sums of money on behalf of appellants, evidence that Schwimmer had purchased for appellant Connelly two suits of clothes, and evidence of visits by Schwimmer to and consultations with the appellants at various times", 580. I estimate $188,378.32 1949$ are about $2.8 million today; peanuts, 41% of my Blankfein test. "Appellant Caudle was a lawyer with wide experience in criminal prosecutions on behalf of the government", 581. "It appears without dispute that Irving Sachs was guilty of a wilfull and flagrant tax fraud to which there was apparently no defense. ... In this situation, Harry I. Schwimmer, a lawyer of Kansas City, Missouri, was employed for the express purpose of thwarting this threatened criminal prosecution. ... Caudle ... disregarded the recommendation of the Bureau of Internal Revenue and ordered that Sachs not be criminally prosecuted but that the case be treated on the basis of civil liability. ... It appears from the evidence that Schwimmer made frequent calls on Caudle and Connelly. ... Schwimmer received in payment for his services in seeking to thwart the criminal prosecution of Sachs some $46,000, from which apparently he paid to each of the appellants or on behalf substantial sums of money", 585. Substantial? $46,000 1949$ are about $690,000 today. Enron's Jeffrey Skilling might have spent $25-30 million on his legal defense! Would a judge admit as evidence tens of millions in fees paid by a large bank to a "NY Big Law" which regularly hires AUSAs? I doubt it. Sachs was a peanut. These guys were all peanuts. Look at the Aguirre-Mack matter in front of the SEC. Who was indicted over it?
"Gorman was an Economic Crime Specialist and an [AUSA] assigned to the [US] Attorney's Office for the Northern District of Ohio in Toledo. From August of 1982 through February or April of 1983, he was the lead prosecutor investigating a check kiting scheme which involved a bankrupt, James Hartley, and several banks with which Hartley had dealt. ... In the course of his work, Weber [a creditors' representative from Phoenix, Arizona] concluded that Hartley engaged in a massive check kiting and illegal bank stock transfer scheme related to the bankruptcy. If others, including banks, are convicted of participating in criminal activity which harmed the creditors, creditors could seek recovery from such parties. In civil suits, a bank's criminal conviction could be introduced under the doctrine of collateral estoppel, thus making the only remaining issue that of damages", my emphasis, US v. Gorman, 807 F2d 1299, 1301 (6th Cir., 1986). Offensive collateral estoppel is critical to understanding DOJ case selection. "Gorman also kept Weber apprised of grand jury proceedings in the Hartley case, and discussed how to time grand jury subpoenas to put extra pressure on banks to settle, as well as numerous other unsavory tactics", 1302. The DOJ working with unsecured creditors is "unsavory" if the target is a bank! Gorman got loans totalling about $40,000 as a result of Weber's influence, 1302. "Gorman was convicted on one count each of violation of 18 USC S 208 and 18 USC S 201(g)", 1302. "The evidence presented by the government in this case showed Weber had a 10% contingent fee arrangement with Hartley's creditors. Expert testimony indicated that criminal investigations against banks accused of cooperating or conspiring with a criminal bankrupt could prompt their settlement with the bankrupt's creditors at times regardless of the banks' culpability", 1304. Does this mean no bank should ever be investigated for possible criminal activity? What did the Feds do in the KPMG tax shelter case if not bring extralegal pressure on the individual defendants? Disagreeing with the 6th circuit; I would have excluded this opinion testimony as it is on an issue of ultimate fact and should have been made in closing argument, it at all. Further, you can make this argument with respect to any criminal defendant. Could Joe Schmoe in Ohio on trial for bank fraud complain of the bank's potential offensive collateral estoppel use of his criminal conviction? I think the trial judge would laugh him out of court. "The purpose of Section 201(g) is to reach all situations in which a government agent's judgment concerning his official duties may be clouded by the receipt of an item of value given to him by reason of his position", my emphasis, 1304. "A similar analysis applies to the future employment promised the appellant by Weber. ... However, Gorman neglects to indicate that the employment with Weber would have paid him $150,000 per year for two years. This was approximately three times his salary as an [AUSA]", 1305. Can future employment prospects influence an AUSA's judgement? What was Paul Gorman's crime? Working against as opposed to for a bank. How many AUSA's in MG's office now seek better paying "NY Big Law" positions and have each's "judgment clouded" by future employment prospects? Does MG hand each of them a copy of Gorman on day one with the admonition, "thou shalt not indict a bank unless the case was already on page one of the New York Times"? Where are the two AUSA's who handled Uncle Sam's Gorman appeal? James M. Cole is a partner with Bryan Cave (BC), an 800-person firm of attorneys in Washington, DC, Ellyn Marcus Lindsay is an AUSA in Los Angeles. Cole's BC experience includes: "Appointed as the independent consultant for American International Group, Inc., to examine its transactions and oversee the revision of its corporate compliance and financial disclosure policies. ... Counseled Arthur Andersen in its efforts to revamp its document management and compliance procedures after the Enron related events were uncovered. ... Represented chief risk officer of Enron. ... Represented individuals and entities on money laundering investigations", my emphasis. Talk of painting a target on one's back. Anyone for suing AIG and Bryan Cave? Crime-fraud exception anyone? Let's see with a $123 billion recent AIG bailout, if the plaintiffs' bar can even get 1% out of BC, that's $1.23 billion. Not a bad settlement. If the judge awards a 20% fee, that's $246 million. Plaintiffs' bar, start your engines!
F. William Sawyer (FWS), an attorney and lobbyist for John Hancock Mutual Life Insurance (JHMLIC), was found guility of "fifteen counts mail fraud, nine counts of wire fraud, eight counts of interstate travel to commit bribery, and one count of conspiracy", US v Sawyer, 85 F3d 713, 722 (1st. Cir., 1996). FWS spent a few thousand dollars on trips to influence Massachusetts legislators to act favorably on JHMLIC sponsored legislation. "The cases in which a deprivation of an official's honest services is found typically involve either bribery of the official or her failure to disclose a conflict of interest, resulting in personal gain. ... When an official fails to disclose a personal interest in a matter over which she has decision-making power, the public is deprived of its right either to disinterested decision making itself or, as the case may be, to full disclosure as to the official's potential motivation behind an official act", 724. "A person might not, however, give an unlawful gratuity with the intent to effect a specific quid pro quo. Rather, as the government contends here, a person with continuing and long-term interests before an official might engage in a pattern of repeated, intentional gratuity offenses in order to coax ongoing favorable official action in derogation of the public's right to impartial official services", 730. Think about this. Could MG's AUSAs actions be influenced by their looking for seven-figure "NY Big Law" partnerships? Don't even think it.
Wonderful. The Feds prosecute cases over a series of $5-$200 bribes to plumbing inspectors, US v. Urban, 404 F3d 754 (3rd Cir., 2005). The peasants are screaming for today's Marie Antoinettes to be led to the guillotine and the Feds had time for crap like this.
"Courts have interpreted the term 'scheme or artifice to defraud [to] include a scheme or artifice to deprive another of the intangible right of honest services,' ... giving rise to the 'intangible rights doctrine.' This doctrine reaches public and private fraud at the state and local levels, including prosecutions of public officials or employees who have failed to provide honest services to the citizenry they serve", US v. Antico, 275 F3d 245, 261 (3rd Cir., 2001). Does this apply to the Feds too? If not, why not? If you read enough "honest services" cases, you should be disgusted by the paltry cases Feds bring. And appalled at those they fail to bring.