For Bankruptcy Fraud, It's Not Material
Misstatements in bankruptcy filings need not be material to run
afoul of
18 U.S.C. 1519, according to this
opinion from the U.S. Court of Appeals for the Fourth Circuit.
Section 1519 makes it a crime to knowingly make a false entry in
any record with the intent to "impede, obstruct, or
influence" the administration of a bankruptcy filing. In the
case, the trial court refused to instruct the jury that materiality
was an element of a violation of § 1519. After he was
convicted of violating that statute, the defendant appealed,
claiming the trial court had erred by refusing to give the
instruction. The Fourth Circuit affirmed, holding that the plain
language of the statute did not include any element of
materiality.
Just the "Cost of Doing Business"
At a hearing before the House Financial Services
Committee, several representatives expressed concerns about the
Securities and Exchange Commission's (SEC) practice of entering
settlements with accused violators of its regulations without any
admission or denial of liability. Representative Carolyn Maloney,
D-New York, said these settlements risked becoming simply the
"cost of doing business," which would eviscerate the
function of the SEC. While Rep. Maloney was joined by other
Democratic lawmakers in criticizing the SEC, several Republican
committee members rebuffed any effort to second-guess the SEC's
discretion to settle cases. To watch the hearing, dim the lights
and click
here.
The Benefits of 20/20 Vision
Chairman Mary L. Schapiro of the SEC spoke at a meeting of
over-the-counter (OTC) derivatives regulators to push for
transparency in the derivatives market. Chairman Schapiro focused
the discussion "on the benefits and costs of post-trade
transparency requirements for all OTC derivatives transactions,
whether or not execution occurs on an exchange or electronic
trading platform." For an outline of her talking points, click
here.
To the Cloud
The
International Working Group on Data Protection in
Telecommunications has issued a
working paper on cloud computing to address some pitfalls and
to make some recommendations regarding privacy, data protection and
other legal issues facing companies moving to leverage cloud
computing. The paper outlines six general recommendations and 44
best practices for moving data to the cloud.
A Different Kind of Healthcare Debate
A provision of the Health Insurance Portability and Accountability
Act of 1996 (HIPAA) makes it a misdemeanor to "knowingly"
and in violation of HIPAA obtain "individually identifiable
health information."
42 U.S.C. 1320d-6(a)(2). The Ninth Circuit
held that this provision is violated when an individual
knowingly obtains the information, regardless of whether he did so
knowing his conduct violated HIPAA. The court rejected the
defendant's contention that knowledge of the illegality of his
actions was required.
And Speaking of Healthcare...
U.S. Attorney General Eric Holder and Health and Human Services
Secretary Kathleen Sebelius announced that 107 people were charged
in a series of Medicare-fraud schemes totaling about $452 million
in false claims. Clearly, a lot of people—from doctors to
nurses to other licensed healthcare providers—were
involved in these schemes. And a lot of high-ranking government
officials had something to say about it. For various people's
comments, click
here,
here,
here and
here.
Would a Tax Count by Any Other Name Be
Misjoined?*
The government has to be very careful about joining tax counts and
nontax counts in criminal prosecutions as set forth in this Second
Circuit
opinion. There, the government charged the defendant with
various mail-fraud and tax-evasion counts. The defendant moved to
sever those counts pursuant to
Federal Rule of Criminal Procedure 8(a). The district court
denied the motion, and the jury convicted the defendant. On appeal,
the Second Circuit reiterated that "[t]ax counts may be joined
with non-tax counts where it is shown that the tax offenses arose
directly from the other offenses charged." Finding
"no link, let alone a direct one" between the
tax and nontax counts as well as prejudice from the improper
joinder, the court vacated the judgment and remanded for separate
retrials on the counts of conviction.
*Cribbed from
this.
The Tricky Interplay Between Mistrials and Double
Jeopardy
The U.S. Supreme Court
held that a jury's unanimous agreement against guilt as to
charged offenses but deadlock on lesser-included offenses does not
preclude retrial of the charged offenses absent a clear verdict of
not guilty as to those offenses. While the case dealt with capital
murder, first-degree murder, manslaughter and negligent homicide,
it may have applicability in the white-collar context if a charged
offense includes a lesser-included one (such as
26 U.S.C. 7203). The takeaway: Make sure the court takes a
verdict on the charged offense before declaring a mistrial on a
lesser-included one.
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