LAW638 White Collar Crime

WEEK 1
INTRODUCTION TO FEDERAL WHITE
COLLAR CRIME
Federal White Collar Crime p 1 – 52
A. DEFINITION

Elements of significant white-collar crime cases: White collar violations…involve

the use of a violator‟s position of significant power, influence, or trust in the
legitimate…order for the purpose of illegal gain, or to commit an illegal act for
personal or organisational gain

B. WHITE COLLAR TRIAL PROCESS

Complaint – There is an incredible fraud going on against the State of Illinois! They got
all these money because of political connection!
Evidence gathering – FBI agents out in the field interviewing people and getting
documentary evidence. Tell your clients to tell the truth – an omission can even
be a lie. If you have a target, there is no reason for him to talk to the FBI . You can
always talk to them later – but with the lawyer present.
Parallel investigation to what the government is doing – you are building your
file just as they are building their file
You have to tell your client what they are being charged for, give them an
overview of the processes, plea bargaining, fees
Grand jury convenes – the witnesses who refused to talk to the FBI get called to
the grand jury. They are told by the prosecutors that they are not the targets. If
you are to testify to the grand jury, tell the 100% truth – or else they would use
perjury charges
o Sword and a shield! Proceedings are kept secret
o Disadvantage to D: Defendant‟s office not entitled to pre-indictment
information
Joint Defence and Common Interest Agreement – attorney-client privilege
would be preserved
Detention hearing – confined to the district, not allowed to have any weapons.
Even though there is this presumption of innocence, there isn‟t really such a
presumption! Because of this indictment and the court‟s power to release/detain
you – he is not released as a full member of the society! The only way the court
would let someone out of custody would be to place a bracelet on him! Violating
one of these conditions is a separate federal offence.
Discovery in Federal Court is not exactly that way – required disclosure is
limited. You do have to disclose physical evidence, admission or confession, a list
of witnesses…but you are not required to turnover the statements of the
witnesses who are going to testify in trial, until they have testified! Surprise in
trial! Fortunately, most prosecutors recognise that as a problem.
The judge – in a way to control this – is to grant a recess. But you can imagine
what will happen to the length of trial – time delay, etc.
Discovery request which required the prosecution to disclose any at all, co-
conspirator statements. US v San Diego – not only must the prosecution disclose
the co-conspirator statements, but must establish probable cause – and the co-

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conspirator statements were made in furtherance of the conspiracy. It became so

routine that it became part of the local rules. That would put an agent on the
stand and testify it – and the defence would get to cross-examine the defence on
it
Pre-trial motions – rulings made by the court to dismiss the indictment because
of lack of elements (i.e. mens rea, lack of fraud, etc)
Motions to suppress – suppressed evidence that were taken out of seizures
You can get governmental witnesses to testify and know more about the case, by
having hearings on the motions.
Power to have subpoena as a defence lawyer – significant! You can use that case
to subpoena documents that may be favourable to you!
Motion to eliminate – Pre-trial ruling on the evidence before the judge
Jury instruction – the lawyers prepare those instructions early.
If you can set up a pre-trial hearing where you can get a defence witness under
oath, you should do that. You should try to anticipate the prosecution / defence
theories
The judge would want to know how long is the trial – find out how the judge
handles jury instruction. In state courts, the counsels participate in jury selection.
In federal courts, really rare.
Final trial preparation stage – the first thing you should do is to prepare your
closing arguments. That trial ought to be about getting evidence to address the
themes of the trial, and the closing arguments. We already ought to know the
truth! You have to call witnesses – you need to meet those witnesses in person.
But note that no matter how much you prepare the witnesses, everything goes
out of the head.
Prepare Opening Statements
There is no such thing as one-person case. You need someone to help you to take
notes, remember things.
Opening Statements + go through governmental witnesses (Show time). If you
have done your homework, and the prosecution did not do their proper work –
you can get the case dismissed (though it is really rare)
Into the defendant‟s case – same routine just that the role is reversed. There is an
opportunity for rebuttal – but there is also an opportunity for sur-rebuttal. But it
is very rare that those situations happen – but it could.
Closing arguments – can take up an entire day. Thereafter, the jury is instructed
and goes back to do their deliberation
Post-trial motion
Most of the time in trial is spent on sentencing!
Notice of Appeal
State law and federal law overlap more often than not! The investigator may
more often than not choose to go to the federal court if he has a strong case

C. RECURRING THEMES

(1) Criminalisation (i.e. where should the line be drawn between criminal and
tortious (or simply immoral) conduct?)
(2) Federalisation (i.e. if one is satisfied that the conduct at issue should be pursued
criminally, what principles should control the allocation of cases between federal
and state enforcement authorities?)
(3) Judicial role (i.e. where the content of the criminal prohibition at issue is

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uncertain, how should courts respond?)

(4) Prosecutorial discretion (i.e. what is the value of prosecutorial discretion and
how should it be exercised or, where necessary, constrained?)

(1) Criminalisation

Notwithstanding modern blurring of civil and criminal law, criminal law

retains certain distinguishing core features:
o Sanctions: Criminal law‟s uniqueness derives from its invocation of
society‟s harshest sanctions, including the loss of liberty that results from
incarceration, death, and the moral stigma associated with a criminal
conviction
o Justification: Virtually all of criminal law‟s distinguishing features derive
from the need to identify the circumstances that justify the use of criminal
sanctions – entailing both carefully defining the human behaviour
warranting the sanction, as well as attaching procedural safeguards to the
criminal proceeding to ensure a fair and accurate adjudication of
culpability
o Moral stigma: The moral stigma of the criminal sanction will attach in the
long term only if the public is persuaded both of the moral culpability of
the proscribed conduct and of the reliability of the adjudication of the
defendant‟s guilt.
One of the features that makes criminal law unique – the moral
stigma associated with a criminal conviction – is not self-
executing. It can be lost over time by overreaching
o Moral culpability: The more culpable the state of mind, the harsher the
corresponding punishment ought to be. Culpability in this context turns
on D‟s purpose, the extent of D‟s knowledge of the circumstances
surrounding her conduct, the conduct itself, its results, and the reasons
for D‟s behaviour
o More exacting burden of proof on the government and otherwise
provides D with significant additional procedural guarantees: The govt
must establish D‟s guilt beyond a reasonable doubt and not, as in civil
enforcement actions, by a mere preponderance of the evidence. Moreover,
there are a host of evidentiary and procedural rules applicable only to
criminal proceedings that are intended to enhance the reliability of the
evidence before the factfinder and to preclude consideration of unduly
prejudicial information

(2) Overcriminalisation; Federalisation; Judicial Role; Prosecutorial Function

Failure to have in place even a modestly coherent code makes a mockery of the
United States‟ much-vaunted commitments to justice, the rule of law, and human
rights
An effective and just system of penal laws should be: drafted by elected
representatives to be as clear and explicit as possible so that citizens have fair
notice of that which will subject them to criminal sanction; public; accessible;
comprehensive; internally consistent; reasonably stable; rationally organised to
avoid redundancy and ensure appropriate grading of offence seriousness;
prospective only in application; and capable of uniform, nonarbitrary, and non-
discriminatory enforcement

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Saving grace: US Sentencing Guidelines.

o Classify conduct and offences – apply those characteristics to the nature of
the case. We will end up with a lack of sentencing disparity. But it
violated the separation of power as Congress was telling the courts what
to do – until fairly recently!
o Provided sentencing formulas to be applied to the facts of offenders‟ cases
and required judges to sentence offenders within the narrow sentencing
range (e.g. 15-21 months) dictated by those formulas absent extraordinary
circumstances
o Statutory maximums still operated to cap defendants‟ sentencing
exposure, but in most cases the maximums were sufficiently generous
that they did not impose a significant limitation on Guidelines sentencing
o In 2005, however, the Supreme Court held the mandatory Sentencing
Guideline unconstitutional in Booker v US. It reasoned that augmentation
of a defendant‟s sentence by mandatory judicial determination of the
“real” facts of the case at sentencing violated D‟s jury trial rights. The
Court ruled, however, that augmentation of sentences based on judicial
findings in a discretionary system did not offend the Sixth Amendment
o Once again, judges have enormous sentencing power because their
discretion, though informed by the Guidelines, is limited only by the
applicable statutory maximum(s).
Chaotic mess of laws
o A satisfactory administration of criminal justice must rest ultimately on a
satisfactory criminal law. Without a system of offences, it is impossible to
make a collection of random laws work together to serve the purpose of
punishment identified by Congress: just deserts, crime control, and
(where incarceration is not an option) rehabilitation
o The lack of any system to the code‟s organisation is not only rife with the
possibility of injustice but is also inarguably ineffective in combating
crime
The “Federalisation” and “Overcriminalisation” Phenomena Translate into
Federal Overreaching into Areas of Traditional State Competence and the
Trivialisation of the Criminal Sanction
o Federalisation – With legislation covering virtually any crime they might
plausibly wish to prosecute, federal prosecutors pick their targets and
marshal their resources, not in response to the limitations of the
substantive law but according to their own priorities and agendas
o Federal Overcriminalisation – comprises a number of problems:
Untenable offences
Superfluous statutes
Doctrines that overextend culpability
Crimes without jurisdictional authority
Grossly disproportionate punishments and
Excessive or pretextual enforcement of petty violations
o “Overcriminalisation” of “essentially innocuous conduct has contributed
materially to the trivialization of the concept of criminality – a
trivialisation that erode the respect for, and hence the deterrent impact of,
the criminal law generally”
The Code is Redundantly Repetitive, Thereby Increasing the power of
Prosecutors in Charging, Plea-Bargaining and Determining the Actual Scope of

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Federal Criminal Law

o Prosecutors have the ability to pick and choose among a smorgasbord of
statutes that might apply to given criminal conduct – offering prosecutors
important advantages over others – in terms of such matters as venue,
proof, evidentiary admissibility or sentencing impact
o Often a prosecutor may choose a general statute over a statute that is
more specifically tailored to a particular context – by choosing mail fraud
or the general conspiracy statute, for example, rather than another statute
that has more complicated proof requirements
o The effect of choice is to give prosecutors substantially greater bargaining
power vis-à-vis the defence
o Courts cannot second-guess such choices unless (as is virtually impossible
to prove) they arise out of unconstitutional motives
Much of the “Code” Consists of Vague, Overbroad or Internally Inconsistent
Laws
o Inherent tension between creating statutes sufficiently open-ended to
address new ways of committing the offence and prevent Ds from
evading liability by relying on technical “loopholes” in very specific
prohibitions, and making criminal prohibitions sufficiently specific to
provide citizens fair notice of that which is outlawed, avoid delegation of
law-making power to judges, and constrain the charging discretion of
prosecutors
o Mens Rea: Congressional drafting has been most deficient in specifying
the mental element
The Penal laws of the US May Be Nominally public, But They Are Not
“Accessible”, Do Not Provide “Fair Notice” and Invite Arbitrary or
Discriminatory Enforcement
o Lack of clarity in statutes – “fair notice” and “accessibility” problem.
Without reference to the – often conflicting – federal case law and
sometimes, volume of federal regulations, one cannot know the law
o A lack of precision in statutory drafting fails due process vagueness
standards not only when the statutory provision at issue cannot be said to
provide “fair notice”
The Above Characteristics Have Fundamentally Changed the Traditional
Understanding of the Appropriate Roles of Judges and Prosecutors
o Judges
Given the complete lack of definition in some important federal
statutes, courts are in fact engaging in lawmaking in determining
that such statutes in fact apply to varied fact situations when the
statutes themselves do not in any intelligible terms speak to those
situations. An excellent example is the rules that govern
organisational criminal liability. There is no generally applicable
statute in the federal criminal code that defines when corporations
can be held liable for crimes
Offends separation of power
o Prosecutors
Prosecutors “make law” by exercising their discretion to make
enforcement decisions that functionally determine the real shape
of the federal code and to formulate theories of prosecution that
expand the accepted understandings of the reach of certain

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criminal statutes. In these respects, prosecutors are allied with

judges in determining the true content of federal penal laws
Number of crimes worthy of investigation outstrips the resources
available to pursue them. Prosecutors‟ flexibility in responding to
these constraints is augmented by the availability of alternative
civil and regulatory sanctions
If prosecutors are given undue power to pressure Ds into pleading
because of code irrationalities, the result may be disparate
treatment of similarly situated Ds based on the idiosyncratic
choice of prosecutors
A fundamental concern is that prosecutors, in plea bargaining, can
offer Ds such a stark choice between a lenient plea offer (say a
five-year count) and a threat of harsh charges if the plea is rejected
(the potential for a 20-year sentence after trial) that risk-averse but
innocent Ds will be coerced into a guilty plea.
o Defence Lawyer
You have to be zealous and that means preparation in all respects.
Most of the white collar criminals have money to hire attorneys.
There is however some good to federalisation. Evils that the federal had
legislated may some times be evils that the State courts would never prosecute!
Congress tries to close the loopholes – but the end result is the succession of more
and more federal crimes that permit prosecutors to decide whether it is a crime

E. PRACTICE: SELECTING “PROCEDURAL” TOPICS RELEVANT TO

WHITE-COLLAR CRIME

Complexity, Scope and Magnitude:

o Federal crimes were much more likely than cases involving federal
common crime to spread across county, state and national boundaries, to
involve large dollar losses, to target multiple victims, to involve five or
more coconspirators, to demonstrate a pattern of offending, and to extend
over a substantial period of time
o The subject-matter of these wide-ranging investigations also often
demand more business acumen than the typical street crime
Investigation
o Using investigative methods formerly reserved for street crime
o White-collar cases generally will involve extensive pre-indictment use of
grand jury subpoenas for the production of banking, credit, telephone,
and travel records, computer-maintained information, business, tax,
securities, and accounting documentation, and a variety of other materials
Defence Counsel Role
o It cannot be overemphasized that the battle in many white-collar cases is
perceived to be lost or won at the indictment stage.
o The defence attorney works to keep potential evidence out of government
reach by controlling access to information – “the more information you
control as a defence lawyer, the more effective you are, meaning that the
only weapon you have as a defence lawyer is control of information”
o If despite counsel‟s pre-charge efforts, the government determines to go
forward to indictment, defence counsel is very likely to negotiate some
sort of disposition. Such dispositions may involve a negotiated plea or