Wall Street Ferry Terminal, South and Governeur streets,
April 4, 2008. CR

“I need a big weekend. Kick up the dust.
Yeah a big weekend. If you don't run, you rust.”

— Tom Petty and the Heartbreakers

What were they thinkin’?

Shortly after 9/11, the DOJ concluded that constitutional protections against unreasonable searches and seizures did not apply to domestic military operations. As reported in yesterday's Wall Street Journal, this “radical interpretation” of the Fourth Amendment was tucked into a footnote in some newly declassified documents released Monday by the ACLU.

As a former military prosecutor who advised military investigators and soldiers on issues relating to the Fourth Amendment, I have to ask myself, what were they thinkin’? First, you have to wonder what domestic operations the military was conducting. This is significant, since the Possee Comitatus Act (codified at 18 U.S.C. § 1385) expressly prohibits the use of the military “to execute the laws.” There is nothing wrong with amending the Act to allow the military to assist local law enforcement officials within the United States (see Hamdi v. Rumsfeld). Congress did just that in 1981 by creating a “drug exception” allowing the military to lend a hand in the war on drugs. But any tweaking of the law is up to Congress, not the Executive. Second, if the DOJ concedes that the Fourth Amendment applies on a dusty military post in West Texas, why shouldn’t it apply during domestic military operations on Main Street USA?

Maybe we all need to heed the words of Justice O’Connor in Hamdi: “It is during our most challenging and uncertain moments that our Nation’s commitment to due process is most surely tested; and it is those times that we must preserve our commitment at home to the principles for which we fight abroad.” CP

One Liberty Plaza, 165 Broadway, April 3, 2008.

Gone away is NASD (National Association of Securities Dealers).

Here to stay is FINRA (Financial Industry Regulatory Authority). CR

Public corruption? Sheeee...!!!

The federal corruption trial of former Newark, New Jersey, mayor Sharpe James and his alleged paramour, Tamika Riley, now in its sixth week, is winding down. In its opening statement, the prosecution claimed that the case was about “fraud, favoritism and concealment.” The defense countered that James was “resurrecting the South Ward from scratch” and “did not take a dime.”

The prosecution finished up its case last week. The defense has called witnesses to bolster their claim that Mr. James did not pressure the City Council for favors on behalf of Ms. Riley to dishonestly enable her to purchase valuable city property. In an 89-page indictment, James, who served as Newark’s mayor for over twenty years, is charged with using city coffers as his personal piggy bank to finance lavish vacations he took with various female companions, and with arranging sweetheart land deals with Reilly. While the prosecution has been focused on a dry, detailed accounting of James’s travel and entertainment expenses, the defense has painted the picture of a beloved, hardworking public servant and native son of Newark. When he elected yesterday not to testify in his own defense, Mr. James said, "I put my faith in the court, your honor."

I’m struck by the life-imitates-art-imitates-life aspect of the Sharpe James trial. In the recently concluded HBO series “The Wire,” the fictional state senator R. Clayton “Clay” Davis, played to virtuoso perfection by Isiah Whitlock Jr., is on trial for public corruption in Baltimore. The beloved man of the people is acquitted despite substantial evidence he laundered money. Could Mayor James follow in Senator Clay’s fictional footsteps? Check out the media coverage of both politicos below. CR

Sharpe James

Clay Davis

Notes on a scandal.

The case of former Enron president Jeffrey Skilling – now serving 25 years for securities fraud, insider trading, and making false statements to auditors – will be argued on appeal before the Fifth Circuit in New Orleans today. Skilling’s conviction after trial stands as the only courtroom victory won by the DOJ’s Enron Task Force.

Skilling has two very compelling issues to present in the hopes of winning a new trial. First, Skilling’s lawyers argue that the government’s failure to turn over the raw notes taken by prosecutors of interviews with one of their key witnesses, former Enron CFO Andrew Fastow, deprived Skilling of a fair trial. The government claims that turning over summaries of the interviews was sufficient. However, not only did the defense specifically request the raw notes, but it is normal in many jurisdictions for prosecutors to turn over such notes. I, for one, believe the law requires it. The Skilling brief claims that by failing to turn over the notes, “the Task Force suppressed vital exculpatory evidence.” If the court rules it was error for the government to fail to provide the notes and they contained exculpatory material, Skilling could get a new trial. Second, Skilling’s lawyers argue that convictions on some of the counts in the indictment should be reversed on the grounds that fraud charges improperly alleged Skilling deprived Enron of the right to the “honest services” of its employees. The convictions in the so-called Enron Barge case were reversed on this basis. In that case the Court ruled that the defendants did not deprive Enron of honest services because employees were acting in the interests of the company.

As a working criminal defense attorney, I can tell you that cross-examination in a criminal trial is extremely challenging. Unlike in civil trials, there are no depositions to give you the opportunity for a “dry run.” Previous statements by a witness in the form of reports or notes are often turned over to defense counsel only shortly before a witness testifies. Most often, the first time you see a witness is when he begins his direct proof. That’s why it infuriates me when I see a government prosecutor, already with the deck stacked in his favor, withhold material that has been specifically requested by the defense and that might have allowed for an effective confrontation. It is my sincere hope that the Fifth Circuit uses this opportunity to send a message to prosecutors that this sort of abuse of the Sixth Amendment’s guarantee of effective confrontation will not be tolerated. I told Associated Press reporter Juan Lozano just that when he called to get my take on this.

For incisive, in-depth coverage of this issue, I highly recommend the blogs of Ellen Podgor and Tom Kirkendall. CR

Trinity Church graveyard, April 1, 2008.

John Watts, the largest effigy in the churchyard next door.

Towering above Alexander Hamilton and Robert Fulton,

the last Royal Recorder of the City of New York presides. CR

“According to your billing records, you're 193 years old.”

On Friday, Samuel A. Fishman, a former partner at Latham & Watkins, pleaded guilty to federal fraud charges brought against him by the U.S. Attorney’s Office for the Southern District of New York. He entered his plea on a one-count information (a charge brought without putting evidence before a grand jury) and admitted he improperly and unlawfully charged clients and the law firm hundreds of thousands of dollars in personal and nonexistent expenses between 1993 and 2005. Fishman was a billing partner on some of the firm’s heavy-hitter institutional clients in the banking, utilities, telecommunications, and entertainment industries. At issue were meals, parking fees, photocopying, express mail, and inflated personal expenses and hotel bills. He is being represented by Jack Litman, a lion of the New York criminal defense bar. Sentencing is scheduled for June.

In her coverage of the case on the White Collar Crime Prof Blog, law professor Ellen Podgor poses the following important question: “Clearly overbilling and fraudulent billing by an attorney is unethical conduct and clearly it should be something subject to disciplinary action. But should the federal government be needing to intervene with criminal actions under the mail fraud statute?”

My answer is no. Federal prosecutors should not be wasting precious enforcement resources prosecuting lawyers for overbilling expenses. Clients and law firms can be reimbursed, such matters can be referred to the state bar disciplinary committee, and lawyers who indulge in such behavior can be terminated, ultimately ruining their careers. There is enough deterrent value in this approach. Citing case law, Podgor also rightly questions the legal basis on which a prosecutor may exercise discretion to criminalize a fee overcharge. Truly, we do not need the specter of a DOJ Law Firm Fraudulent Billing Task Force to send a message to attorneys and law firms that you cannot overbill your clients. CR

115 Broadway, March 31, 2008.

Monsters of the Street

Perched on the wall of the building next door,

a gargoyle keeps watch over my office. CR

Brother, can you spare a nine?

The Department of Justice released a report last week following up on its 2002 audit of the Drug Enforcement Administration’s efforts to deal with the alarming number of laptop computers and weapons that have gone missing on its agents’ watch. While the report noted that agents are losing fewer laptops than they used to, a whopping 230 of them have gone missing in the last five years, and the DEA has no idea what was on them. As the report stated, “The DEA is unable to provide any assurance that the lost or stolen laptops did not contain sensitive information.”

The really bad news is that, despite supposed efforts at improvement, the pace with which weapons are flying out of the hands of the agents who fight the war against drugs is increasing. The count in the past five years is 82 handguns, 5 shotguns, 2 rifles and 2 submachine guns. Most of the guns were swiped right out of agents’ cars, despite a policy prohibiting agents from leaving weapons in their autos. At this rate, the DEA is losing guns faster than alleged arms dealers I’ve represented can supposedly sell them.

In a response to the DOJ’s report, the drug agency said that all laptops containing sensitive information were encrypted. Now that’s really comforting. Next we'll have the FBI computer crimes squad chasing the hackers who have the DEA laptops. The really good news? More business for us criminal defense lawyers! CR