United States: White Collar Roundup - August 2018

Last Updated: August 14 2018
Article by Daniel E. Wenner

Reporting Cybersecurity Threats to the Legal Sector

The National Cyber Security Centre—and yes, it's British—released a report titled "The cyber threat to UK legal sector." As is clear from the title, the report deals with the unique cybersecurity threats facing the legal sector in the UK. To address upfront the question you might be asking yourself, yes, the report's analysis is insightful for law firms in the United States, too. The report details the risks of phishing, data breaches, ransomware and supply chain compromise. Specifically, it notes that "the cyber threat to the UK legal sector is significant and the number of reported incidents has grown substantially over the last few years." Further, there are "significant" financial and reputational impacts from those cyberattacks. The report explains what it is that makes law firms attractive targets for cyberattacks: Law firms "hold sensitive client information, handle significant funds and are a key enabler in commercial and business transactions." It emphasizes the added risks for firms that represent organizations "that engage in work of a controversial nature" either based on their industry, such as life sciences or energy, or on ideology, such as political or ideological. And the report warns that the "move to offer legal services digitally will not only provide new opportunities but also further avenues for malicious cyber exploitation."

Dangling Carrots: DOJ Continues Pushing FCPA Self-Disclosure

In a speech at the American Conference Institute 9th Global Forum on Anti-Corruption Compliance in High Risk Markets, Deputy Assistant Attorney General Matthew S. Miner addressed the mission of the U.S. Department of Justice (DOJ) to "investigate and stamp out global corruption," focusing "on implications for mergers and acquisitions." Miner oversees the Fraud Section at DOJ, which houses that agency's Foreign Corrupt Practices Act (FCPA) unit. Miner couched corruption as "a virus that saps scarce resources and undermines public trust" and that "also harms law-abiding companies by tilting the playing field in favor of companies who are willing to break the rules to get ahead." After describing recent prosecutions and settlements, he detailed the DOJ's recent incorporation of the FCPA self-disclosure program in the U.S. Attorneys Manual as the FCPA Corporate Enforcement Policy. Emphasizing the importance of self-disclosure, Miner described a recent declination against a company that "satisfied the rigorous requirements of the Policy" and ended up receiving "credit for its disgorgement as part of a $9 million payment in a related SEC administrative proceeding." Miner also explained that the DOJ would "like to do better" with "mergers and acquisitions, particularly when such activity relates to high-risk industries and markets." DOJ will "give meaningful credit" to acquiring companies that learn of misconduct during due diligence and disclose it to the government. In short, "[n]ot only can the acquiring company help to uncover wrongdoing, but more importantly the acquiring company is in a position to right the ship by applying strong compliance practices to the acquired company."

Improper Fraud Instructions Upend Conviction

Defendant Jeffrey Spanier emerged victorious in his request for a new trial. In an unpublished opinion, the U.S. Court of Appeals for the Ninth Circuit in United States v. Spanier vacated his conviction and remanded for a new trial. Spanier had been convicted of wire fraud, mail fraud, securities fraud and conspiracy to commit those offenses. The Ninth Circuit held that the district court failed to properly "instruct the jury on the omissions theory of fraud and the duty to disclose." It reasoned that when the prosecution "bases a fraud charge on material non-disclosures, the trial court must instruct the jury that non-disclosure can only support a fraud charge when the defendant has a duty to disclose the omitted information." Of course, even a faulty jury charge doesn't require vacating a conviction if the error was harmless beyond a reasonable doubt. But here, the court found it was not. It recounted that in Spanier's original trial, at which the proper instruction was given, the jury acquitted him on six counts and hung on the rest. But the district court didn't give the same charge on the retrial of the hung counts, and he was convicted. Given the error and this persuasive evidence of the importance of the proper charge, the Ninth Circuit concluded that the verdict must be set aside. So, the case goes back for round three.

Tax Evader Loses Bid to Undo $10 Million Fine

In United States v. Zukerman, the Second Circuit affirmed the judgment entered against Morris Zukerman. He pleaded guilty to tax evasion and corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue Code and was sentenced to a 70-month term of incarceration and a whopping $10 million fine, which was imposed on top of a $37 million restitution order. Zukerman argued that the fine was both substantively and procedurally unreasonable. The Second Circuit bluntly declared, "It was not." It noted that the district court properly calculated the fine range suggested by the U.S. Sentencing Guidelines and that Zukerman had "adequate opportunity to inform the district court of his financial condition and ability to pay a fine." The appeals court concluded that the district court's imposition of that fine was within its discretion, and it affirmed. In doing so, it pointed to the district court's expression of "deserved opprobrium for Zukerman's 'calculated scheme to defraud the government of tens of millions of dollars for the sole purpose of increasing his personal wealth,' executed through efforts that 'spanned fifteen years and involved submitting more than 50 falsified tax forms for at least ten different individuals.'"

Companies Push Congress to Pass Email Privacy Act

A who's-who of technology firms and others submitted a letter to Chairman John McCain (R-Ariz.) and ranking member Jack Reed (D-R.I.) of the Senate Committee on Armed Services and to Chairman Mac Thornberry (R-Texas) and ranking member Adam Smith (D-Wash.) of the House Armed Services Committee to express their support for a bill known as the Email Privacy Act. That bill "sets standards for government access to private internet communications, to reflect internet users' reasonable expectations of privacy with respect to emails, texts, notes, photos, and other sensitive information stored in 'the cloud'" by updating the Electronic Communications Privacy Act (ECPA), which was signed into law in 1986. The signatories to the letter lauded the bill's ending of the ECPA's "arbitrary '180-day rule,' which permits email communications to be obtained without a warrant after 180 days" and its repudiation of the DOJ's "interpretation of the ECPA that the act of opening an email removes it from warrant protection." They also noted that "the changes reflect current practices: DOJ and FBI policies already require law enforcement officials seeking content to obtain a search warrant, and many service providers will not relinquish their users' content without one."

Crunching the Numbers: the Sentencing Guidelines and Healthcare Fraud

In United States v. Mehmood, the Sixth Circuit affirmed the conviction of Zafar Mehmood and Badar Ahmadani but vacated their sentences and remanded for resentencing. The two were tried and convicted for participation in a massive healthcare fraud scheme that entailed paying kickbacks and obtaining payment from Medicare for fictitious patients. At sentencing, the district court determined that "the full amount of billings submitted by Mehmood's companies between 2006 and 2011—$47,219,535.47—constituted loss for sentencing purposes." In doing so, it "determined that none of Mehmood's claims were legitimate—and thus could not be offset against the aggregate billings—because Mehmood obtained access to the Medicare program by certifying that he would not engage in kickbacks," but he had no intention of abiding by that promise. On appeal, the Sixth Circuit rejected the district court's approach because the guidelines require "the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss." U.S.S.G. § 2B1.1, comment. (n.3(F)(viii)) (emphasis added). And because some of Mehmood's patients—and therefore billings—were legitimate, the district court should have deducted those from its calculation of intended loss. Therefore, the sentence was erroneous and remand was appropriate.

Click here to read further Insights from Day Pitney

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Daniel E. Wenner
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions