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At the annual CNBC-sponsored Delivering Alpha conference (which is a large
conference geared toward hedge funds), U.S. Attorney for the
Southern District of New York Preet Bharara sat down with
CNBC's Jim Cramer to discuss prosecuting fraud. In the
interview, Bharara warned against "getting as close to the
line [of illegality] as possible," which can cause
"smoke," and "[i]f we see smoke, we have an
obligation to investigate."
Now That's Take-Out
Everyone knows New York City has plenty of options for take-out. But
Southern District of New York Judge Shira A. Scheindlin added an
unexpected one by allowing the jurors in a mortgage-fraud trial to
take home the indictment to read on their own time "after the
beginning of jury deliberations and after receiving various
cautionary instructions." On appeal, the Second Circuit affirmed, but
warned that "district courts should not make a general
practice of sending indictments home with the jury." It's
probably best to limit take-out options to pizza, sushi, Chinese
food and other culinary fare, instead of indictments, jury charges,
evidence and the like.
Where Are You Calling From?
The Constitution,
the Bill of
Rights, the Federal Rules of Criminal Procedure and statutes all
direct that the proper venue for prosecuting crimes is in the
district where the crime took place. But therein lies the rub:
Where does a conspiracy occur? According to a Ninth Circuit opinion, a
conspiracy occurs in any district in which any
participant--including a confidential informant--makes a telephone
call to a conspirator, as long as the content of the call was to
further the conspiracy and even if the conspirator did not know the
confidential informant's location. In its ruling, the court
expressly agreed with the Second Circuit, which came to the same
conclusion.
Winning the Battle but Losing the War
In a summary order, the U.S. Court of Appeals for the Second
Circuit vacated one count
of conviction of former Doral Financial Corporation Senior
Executive Vice President and Treasurer Mario S. Levis. At his trial
for securities and wire fraud, Levis sought to introduce evidence
that the allegedly illegal transactions involved
"hedging," but the district court barred that evidence.
The Second Circuit disagreed about the relevance of this evidence
as to one of the wire-fraud counts and vacated Levis's
conviction on that count. Alas, the court rejected his claims of
error as to other counts, so his conviction on those counts was
affirmed.
Smile! (Or Better Yet, Don't)
What's in a smile? Well in defendant White Twin's case, an
extra six months of incarceration. At his sentencing, Twin smiled
after the district judge sentenced him to a term of imprisonment of
78 months. Upon noticing his smile, the judge asked, "You
think that's humorous, sir?" and promptly added an
additional six months to the term. On appeal, the Eighth Circuit affirmed. The
court noted that the district court is "uniquely situated to
observe [a defendant's] demeanor" and "may consider a
defendant's attitude and demeanor when exercising its
sentencing discretion." The lesson? Be humble and contrite at
sentencing.
Medicaid Fraud
U.S. Attorney Bharara announced the
arrests of 48 people in a $500 million Medicaid fraud scheme. The
"massive fraud scheme" involved the "unlawful
diversion and trafficking" of prescription drugs that had been
dispensed to Medicaid recipients in New York. According to Bharara,
the scheme "worked a fraud on legitimate pharmacies, a fraud
on patients who unwittingly bought second-hand drugs, and
ultimately, a fraud on the entire health care system." And all
of this just weeks after the Supreme Court's historic healthcare ruling.
A Big Departure in the Big Dig
Boston's Big Dig was the most expensive
highway project in history and was replete with cost and scheduling
overruns, leaks, flaws, the use of substandard materials and
criminal prosecutions. A jury found two defendants guilty of fraud
for delivering thousands of truckloads of substandard concrete to
the project. But at sentencing, the district judge sentenced the
defendants to six months of home confinement and 1,000 hours of
community service, even though the Guidelines called for 87 to 108
months of incarceration. The government appealed, and the First
Circuit affirmed
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