Articles Posted in White Collar Crime

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Federal law enforcement agents from the DEA routinely seize quantities of cash that they suspect to be tied to or derived from narcotics trafficking. Frequently, these seizures happen in conjuncture with the arrests of those in possession of the cash, or pursuant to indictments. But most of the time, agents seize cash – even huge sums of it – without arresting anyone. In those cases, the owners or possessors of that seized cash have some difficult decisions to make.

In these cases, federal law generally requires the agents to send a notice to the person from whom the cash was seized. The person who receives the notice is typically given the opportunity to make a claim for the cash, which includes an explanation as to the source of the cash. This response must be made under penalty of perjury, and can include supplemental documentation from a related business (such as tax returns or bank statements), or sworn statements from other people, among other things. Every once in awhile, the agents return the cash to the claimant based upon the representations made by the claimant, or based upon the evidence demonstrated to the agency. Our attorneys have successfully assisted clients in getting cash returned by federal agents this way.

If, however, the agency refuses to return the money based upon these representations, then they must commence a civil forfeiture action in federal court. The precise procedures for doing so are outlined in 18 U.S.C. § 983. Ultimately, in a civil court proceeding, the federal agency (DEA) must prove by a preponderance of the evidence that the seized cash represents proceeds of illegal activity. This is the civil standard for proof and it is much lower (easier) than the “beyond a reasonable doubt” standard necessary to prove a person’s guilt of a crime.

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Proffers are a big and important part of federal criminal defense practice. Basically, it involves a defendant, a witness, a person of interest, or a person with information having a face-to-face meeting with a prosecutor and law enforcement agents while accompanied by an attorney. (Attorneys can also have “attorney proffers” whereby the attorney tells the prosecutor what his client would say if the client were to hypothetically have a proffer with them).

Proffers can be done for many reasons: to initiate cooperation agreements, to attempt to persuade a prosecutor of one’s innocence, to offer information for an investigation, or to seek leniency at sentencing. Regardless of the reason, however, they should never be undertaken lightly.

First and foremost, a person proffering to federal law enforcement cannot lie. Obviously, if law enforcement discovers that the person has lied during a proffer, then that person’s credibility will be destroyed. Thus, any hope for a cooperation agreement or mitigation at sentencing will be eliminated. There are two other equally important reasons, however. First, a lie during a proffer can be prosecuted potentially as a violation of 18 U.S.C. § 1001, which makes it a federal crime to lie to a law enforcement officer. This is typically why prosecutors bring law enforcement agents (FBI, Homeland Security, etc.) to the proffers. Similarly, a lie during a proffer session can result in an enhanced sentence for any related convictions, under the theory that the lie “obstructed justice.” Finally, a lie during a proffer session could invalidate the proffer agreement, which otherwise protects a person from having those statements during the proffer session used against them.

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The criminal defense attorneys at Galluzzo & Arnone LLP have successfully represented many people charged with wire fraud in federal court. This serious accusation can result in very significant penalties, including huge fines and lengthy prison sentences. However, these charges are also frequently quite defensible, too. As such, if you or a loved one have been accused by federal prosecutors of money laundering, you should strongly consider contacting Galluzzo & Arnone’s team of former prosecutors.

The crime of wire fraud occurs when someone voluntarily and intentionally uses an interstate communications device (such as a telephone) as a part of any scheme to defraud another of property, or anything else of value.

The main criminal statutes that apply to wire fraud are 18 U.S.C. §§ 1343 and 1349. Those statues refer to fraud by wire, radio, or television.

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A federal law enforcement investigation codenamed “Operation Varsity Blues” recently resulted in the arrests of dozens of people for allegedly conspiring to fraudulently obtain admissions into selective universities. Fifty people have been accused of working together to bribe university athletic coaches, submit fraudulent college applications, cheat on college entrance exams, and otherwise bribe college officials into admitting otherwise undeserving applicants. The accused individuals include two former Hollywood actresses – Felicity Huffman and Lori McLaughlin (who famously portrayed “Aunt Becky” on the TV show “Full House”) – as well as wealthy hedge fund managers and the chair of international law firm Wilkie Farr & Gallagher, among others. Wealthy parents paid as much as $6.5 million in bribes and fraudulent payments to get their children into the universities of their choice, including Stanford, Yale, USC and others. The case has seized the national attention as an example of the privileged elite abusing their power and influence, and the Department of Justice states that this is the largest college admissions scandal that it has ever prosecuted.

The case began as many federal investigations do – with an undercover cooperator. Somehow, law enforcement investigators with the FBI identified William Rick Singer, the founder and chief executive officer of a nonprofit “college placement organization” called the Key, as a person engaged in unlawful activity.  Though the precise details have not yet been shared, it is clear that they ultimately confronted him with the evidence of his illegal activity and made a deal with him: cooperate against the people who had enlisted his help in order to minimize his eventual punishment.

Mr. Singer then started recording his telephone calls and conversations with his criminal clients. Those calls apparently revealed a wide-ranging series of scams designed to get students into the schools of their choice. For example, Singer arranged for students who had struggled on the college entrance exams to get favorable disability diagnosis from an enlisted medical professional so as to get more time to take their tests. Then, he also arranged for the prospective students to take their college placement tests under the supervision of a paid-for proctor who either corrected their answers or permitted someone else to take their tests for them. Singer made arrangements to have students appear to be successful athletes when they were not, or flat-out bribed college athletic coaches into agreeing to tell the admissions office that they needed the students for their college sports teams. Some of the college coaches were allegedly paid hundreds of thousands of dollars to fraudulently accept students onto their teams (and therefore, into the school) without the relevant athletic credentials.

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Today, a federal jury in Virginia found President Trump’s former campaign manager, Paul Manafort, guilty of eight of the eighteen crimes contained in an indictment filed against him. Specifically, Manafort was found guilty of five tax fraud charges, one charge of hiding foreign bank accounts and two counts of bank fraud. The question now is how much jail time he will receive from the sentencing judge.

As a preliminary matter, for the purposes of this analysis, we assume that Mr. Manafort will not be pardoned by the President. Also, we assume that Mr. Manafort will not be convicted of any other charges. The judge in this trial declared a mistrial as to ten of the eighteen counts in the indictment on account of the jury’s inability to decide guilt or innocence on those charges, but that does not mean that Manafort is clear of those charges. Indeed, prosecutors could attempt to convict him again with a new jury. However, I expect that will not happen, as the prosecutors are likely satisfied by the result, and convicting Manafort on the remaining charges would not really change things very much.

Federal sentencing can be extraordinarily complex and is often very uncertain. By statute, a sentencing court must impose a sentence “sufficient, but not greater than necessary,” to serve the ends of justice. 18 U.S.C. § 3553(a). A sentencing judge is obviously constrained by the statutory maximums and minimums for the crimes of conviction, but oftentimes, the crimes have enormously wide sentencing possibilities (for example, the bank fraud charge for which Manafort was convicted has a potential statutory sentence of between zero and thirty years in prison, 18 U.S.C. 1344). So, federal judges look to the U.S. Sentencing Guidelines, promulgated by the federal government.