Category: Criminal Law

New USCIS Policy Guidance Alters Criminal Sentence Evaluation, Clarifies Definition of “Good Moral Character”

U.S. Citizenship and Immigration Services (USCIS) recently adopted new policy guidance altering the way immigration officers evaluate criminal sentences and make good moral character determinations. These changes may impact a foreign national’s eligibility for certain immigration benefits, including admissibility as a visa holder, permanent resident, or naturalized citizen.

USCIS’s recent policy guidance changes include the following:

Post-Sentencing Charges

What changed?

USCIS incorporated into policy Attorney General William Barr’s recent decision in Matter of Thomas and Thompson that, for immigration purposes, the relevant term of imprisonment or sentence for a criminal act will generally be the original sentence imposed by a state court.

What’s the impact?

Where a state court order subsequently modifies, clarifies, or vacates the original sentence, the new term of imprisonment or sentence will only be relevant for immigration purposes if the change was due to a procedural or substantive defect in the underlying criminal proceeding. If such a change was based on other considerations—such as rehabilitation or the avoidance of immigration consequences—the original sentence will still be considered for purposes of immigration decisions.

DUI Convictions

What changed?

USCIS also incorporated into policy the attorney general’s decision in Matter of Castillo-Perez that two or more convictions for driving under the influence (DUI) during the relevant lookback period may affect a foreign national’s good moral character determination.

What’s the impact?

Convictions for multiple DUIs will likely prompt an assessment by USCIS to determine whether the foreign national is a “habitual drunkard,” which would statutorily preclude him or her from possessing good moral character under the immigration regulations. Further, evidence of rehabilitation subsequent to two or more DUI convictions is insufficient on its own to rebut the presumption that a foreign national lacks the required showing of good moral character. Rather, the foreign national must provide evidence that good moral character was sustained for the entire lookback period, even at the time of the DUI convictions.

Conditional Bars for Unlawful Acts

What changed?

USCIS expanded its policy guidance to provide examples of unlawful acts that may prevent a foreign national from meeting the good moral character requirement for certain immigration benefits. The agency also emphasized the discretion of immigration officers to determine if the commission of an unlawful act reflects negatively on a foreign national’s moral character, and whether there were any extenuating circumstances involved.

What’s the impact?

Immigration officers may look to an expanded list of unlawful acts recognized as a bar to good moral character, including but not limited to:

  • failure to pay or file taxes;
  • false claim to U.S. citizenship;
  • falsification of records;
  • unlawful registration to vote; and
  • unlawful voting.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

For more USCIS policy guidance, see the National Law Review Immigration Law page.

Who Must Protect the Ukraine-Trump Whistleblower?

Op-Ed From Stephen M. Kohn of the National Whistleblower Center

As the impeachment proceedings heat-up, and calls for the Ukraine whistleblower to be identified increase, there remains a fundamental question:  Who has the legal responsibility to protect this whistleblower?  The answer will surprise you!

There are very few laws mandating what the President, as part of his required and mandatory job duties, must perform.   Guaranteeing that employees who make protected disclosures under the  Intelligence Community Whistleblower Protection Act (“ICWPA”) are fully protected is one of them.  The Ukraine whistleblower is a a federal employee covered under the ICWPA.  He or she made a protected disclosure under the ICWPA.  Thus, it is up to President Trump to fully and completely protect this individual.  Here’s why:  The ICWPA directs that “[t]he President shall provide for the enforcement of the [Act].” It is as clear and simple as that.  The President “shall” “enforce” the whistleblower law that makes it illegal to retaliate against intelligence community whistleblowers.

Every intelligence community whistleblower, whether they be a Democrat, Republican or Independent, is entitled to the same protection from the President.  In the case of the Ukraine whistleblower, the law does not permit the political implications of the whistleblower’s disclosure to have any impact on the mandatory duty of President Trump to fully “enforce” that whistleblower’s right to be free from any retaliation.  The President is required to put his biases or self-interest aside and defend the right of intelligence community whistleblowers to report abuses of authority.  This includes wherever those abuses are committed, including the Oval Office. Under the ICWPA the buck stops with President Trump, impeached or not.

Unlike other whistleblower laws which give the federal courts or independent agencies, like the Merit Systems Protection Board or the Department of Labor, the authority to protect whistleblowers, the ICWPA places that solemn duty directly on the shoulders of the President.  It is the unique legal responsibility of the President.  The President must ensure that the identity of the intelligence community whistleblowers who file  complaints with the Inspector General pursuant to the Inspector General Act, are fully protected.  It is the President who must ensure that every person within the executive branch of government protect the job security of ICWPA whistleblowers.  It is the obligation of the President to punish those who fail to do so.

The ICWPA anti-retaliation law is not limited simply to preventing whistleblowers from being fired.  The law defines the types of “adverse action” the President must shield whistleblowers from, including  “any change in working conditions.”   In the case of the Ukrainian “quid pro quo” whistleblower, the catastrophic impact on the whistleblower’s ability to perform his or her job duties that would be triggered by violating his right to confidentiality is obvious.  This would include undermining his or her ability to work oversees, be promoted to a covert agent (if not one already), or effectively interact with employees in the White House.

Furthermore, breaching the confidentiality of whistleblowers is well established as an “adverse action” under whistleblower law.  Federal courts and administrative agencies as divergent as the SEC and Department of Labor have ruled that revealing the name of a whistleblower is an adverse action.  Anyone with experience working with whistleblowers knows that once their identity is revealed, their working conditions will never be the same, and they will have a target on their back for the rest of their careers.

The procedures applicable to the Ukraine whistleblower actually informed the whistleblower, in writing, that he or she could file a confidential complaint to the Inspector General.   The actual form submitted guaranteed this right.  Once the complaint was filed and accepted by the Inspector General, the whistleblower protections afforded under the ICWPA kicked in.  As a matter of law, it became President Trump’s obligation to “enforce” the ICWPA and ensure that the Ukraine whistleblower suffer no retaliation. It became the President’s non-discretionary duty to ensure the whistleblower suffered no harm.   This may be hard to believe, but the law is the law.

Given the highly public attacks on the whistleblower emanating from the White House it is now incumbent upon President Trump to instruct all employees within the federal government to comply with the ICWPA.  He must take steps to have his Congressional supporters, “stand down” and stop their continued drum beat to “out” the whistleblower.  Regardless of where you stand on impeachment, the President must enforce the requirements of the ICWPA and protect the whistleblower.

When Donald Trump signed onto the job of President, protecting intelligence community whistleblowers became one of his few mandatory job duties.  Like other employees who work for the taxpayers, he many not like all of his required jobs.  Like other employees he may find some parts of his job difficult or distasteful.  But he has no discretion in this matter.  It is a requirement.  He must ensure that the whistleblower is not retaliated against, that the whistleblower’s identity remains confidential, and that the whistleblower can continue in his or her career, free from stigma.    He must hold those who retaliate accountable.  That is part of the job he wanted.  That is the job he must perform.

Copyright Kohn, Kohn & Colapinto, LLP 2019. All Rights Reserved.

British Member of “The Dark Overlord” Hacking Organization Extradited to Face Conspiracy and Identify Theft Charges in the United States

Beginning in 2016, the computer hacking organization known as “The Dark Overlord,” began to target victims in the St. Louis, Missouri area, including various health care providers, several accounting firms, and a medical records company.  By remotely accessing these victims’ computer networks without authorization, The Dark Overlord was able to obtain sensitive records and information, which it then threatened to release unless the companies paid a ransom in bitcoin.

Following a lengthy investigation conducted by the Federal Bureau of Investigation and British authorities, United Kingdom national Nathan Wyatt was extradited to the United States and appeared before a federal district court in eastern Missouri on Wednesday, December 18, 2019, to face charges of aggravated identity theft, threatening damage to a protected computer, and conspiracy.  While Wyatt is the first member of The Dark Overlord to face prosecution, government officials have expressed a hope that this will signal to other cyber hackers targeting American companies that they will not be able to use territorial borders to evade justice and prosecution by the United States.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.

A Week of Surreal Headlines: A Charging Bull Smashed by Man Wielding Banjo, A Stolen 18-Karat Gold Toilet, and a $20 Million Consignment Decided by a Game of Rock, Paper, Scissors

UNITED STATES

Mercedes-Benz Suit Against Street Artists Allowed to Proceed

Mercedes-Benz brought a declaratory judgment action against four street artists who saw their work prominently displayed on social media as background for the automaker’s G-Class track ads. Mercedes is seeking a declaration that its use of the artworks was not a copyright infringement as it was either fair use or because the claim is precluded by the Architectural Works Copyright Protection Act (1990).

After a hearing last week, a Detroit court denied the artists’ motions to dismiss Mercedes’s claims. The artists contended, among other things, that Mercedes’s claim was not ripe as the artists have not yet registered their copyrights. Distinguishing the U.S. Supreme Court’s recent decision in Fourth Estate v. Wall-Street.com, this court concluded that copyright registration is not a prerequisite for an action seeking a declaration of non-infringement.

Los Angeles Police Department Seeks to Reunite Recently Discovered Artworks with Their Owners

The LAPD has uncovered a trove of more than 100 antiques and artworks that have been missing since a spree of thefts in 1993, including works by Pablo Picasso and Joan Miró. Two individuals involved in the thefts were captured in 1993, but it was not until this summer that an auctioneer’s tip led to the discoveries.

Charging Bull, a Symbol of Wall Street Power, Damaged by a Man with a Banjo

A man armed with a metal banjo bashed the famous Charging Bull on Wall Street, leaving it with a six-inch gash and several scratches. The attacker, who was arraigned and released without bail, gave no motive for his actions. He is due back in court on October 16. The artwork was installed in December 1989 by sculptor Arturo Di Modica, intended as a symbol of optimism after the Black Monday stock market crash in 1987.

EUROPE

Works of Art from the Collection of Nazi Collaborator Hildebrand Gurlitt to Be Exhibited in Israeli Museum

Artworks amassed by Hildebrand Gurlitt, noted Nazi collaborator, will go on view for the first time at the Israel Museum later this month. The collection includes works by Pierre-Auguste Renoir, Édouard Manet, Otto Dix and Max Ernst, among others. The show will include works declared “degenerate” by the Nazis and acquired by Gurlitt during the war, as well as works that have no red flags that might indicate ties to the Nazis. The exhibition, called “Fateful Choices: Art from the Gurlitt Trove,” reveals the historical circumstances behind the fate of art during the Third Reich and is intended to generate discussion about art and ethics.

Extreme Weather Leads to the Reemergence of a “Spanish Stonehenge”

This summer, an extreme drought in the Extremadura area of Spain has revealed the “Dolmen de Guadalperal,” a series of megalithic stones that were previously submerged. The Dolmen are 7,000 years old and are located in the Valdecañas Reservoir. They were last seen in 1963. A local group is working to move the Dolmen before they submerge again.

Police on the Hunt for Maurizio Cattelan’s 18-Carat Gold Toilet

Maurizio Cattelan’s America (2016), a fully functioning 18-carat gold toilet, was stolen from an exhibition at Blenheim Palace in Oxfordshire, UK. Blenheim Palace is the 18th Century home and ancestral seat of the Duke of Marlborough. The burglars caused significant damage and flooding while removing the toilet.

Gagosian Gallery Adds Estate of Simon Hantaï to Its Roster

Gagosian Gallery added the estate of postwar abstractionist Simon Hantaï. Gagosian will host its first Hantaï show in October at its gallery in France. Hantaï, who is well known for his surrealist and abstract expressionist works, died in 2008. He is beloved in France and represented the country at the Venice Biennale in 1982.

Arrests Made in Connection with a String of Forgeries of High-Profile Old Master Paintings

An arrest was made and an additional warrant issued in connection with a high-profile string of suspected forgeries of Old Master paintings uncovered in 2016. The scandal has involved such institutions at the Louvre, London’s National Gallery and the Metropolitan Museum. The forgery ring may have been involved in as much as $255 million in sales of fake Old Masters.

Banksy Gallerist Calls It Quits

Steve Lazarides, who started out as the driver, photographer and later dealer for street artist Banksy, is leaving gallery life. Lazarides said that he entered the art world to “promote a subculture that was being overlooked, and that’s gone now.” His first project post-gallery life is to sort through the 12,000 photographs he took over 11 years with Banksy and publishing a book titled Banksy Captured.

ASIA

Art Recovery International Calls for the Return of a Painting They Allege Was Stolen from a UK Residence in 1984

Art Recovery International seeks intervention from the International Council of Museums (ICOM) in the return on a painting, The Portrait of Miss Mathew, later Lady Elizabeth Mathew, sitting with her dog before a landscape, which was allegedly stolen from the home of Sir Henry and Lady Price in East Sussex in 1984. The painting is currently located at Tokyo’s Fuji Art Museum, an ICOM member. The museum is contesting the claim.

The Pushkin State Museum of Fine Arts Will Soon Take Over Russia’s National Centre for Contemporary Arts

Russia’s National Centre for Contemporary Arts (NCCA), which consists of nine branches, has begun merging with the Pushkin State Museum of Fine Arts in Moscow as part of Pushkin’s ambition to open a “Pushkin Modern.” Vladimir Medinsky, Russia’s minister of culture, announced the merger in July, saying that NCCA staff had requested the merger after a series of ideological and financial scandals.

How a $20 Million Consignment Was Decided by a Game of Rock, Paper, Scissors

In the spring of 2005, a Japanese electronics giant decided to auction off works from its art collection worth about $20 million. The collection included works by Paul Cézanne, Camille Picasso, Vincent Van Gogh, Paul Gauguin and others. Unable to choose whether to consign with Sotheby’s or Christie’s, the company president decided that representatives from each company would meet at the Tokyo office and compete in a game of rock, paper, scissors. Christie’s chose scissors and Sotheby’s chose paper, and we all know scissors cut paper

© 2019 Wilson Elser

Not So Fast And Furious – Executive Indicted for Stealing Self-Driving Car Trade Secrets

Back in March, 2017, we posted about a civil lawsuit against Anthony Levandowski, who allegedly sped off with a trove of trade secrets after resigning from Waymo LLC, Google’s self-driving technology company. Waymo not only sued Levandowski, but also his new employer, Uber, and another co-conspirator, Lior Ron. Since our initial post, things have gotten progressively worse for the Not So Fast and Furious trio: (1) Levandowski was fired in May, 2017; (2) Uber settled, giving up 5% of its stock, which totaled $245 million dollar;  and (3) the case against Levandowski and Ron was sent to arbitration, where the arbitration panel reportedly issued a $128 million interim award to Waymo.

Just when things couldn’t seem to get any worse, they did.

On August 15, 2019, a federal grand jury indicted Levandowski on 33 counts relating to trade secret theft. Levandowski has pled not guilty, has been released on $2 million dollars bail, and  is currently wearing an ankle monitor.

This legal saga is a reminder that trade secret theft is serious… it not only has civil consequences, but also criminal ones.  Unfortunately, trade secret theft happens every day.  And regardless of whether your company has trade secrets regarding self-driving car technology, worth hundreds of millions of dollars, or customer information worth less than a hundred thousand dollars, it’s important to make sure your company’s information is protected.

Equally important is knowing how to investigate potential trade secret theft. Some helpful tips as you launch your investigation:

1. Secure and preserve all relevant computing devices and email/file-sharing accounts.

2. Consider enlisting the help of outside computer forensic experts.

3. Analyze the employee’s computing activities on company computers and accounts.

4. Determine whether there is any abnormal file access, including during non-business hours.

5. Examine the employee’s use of external storage devices and whether those devices have been returned.

6. Review text message and call history from the employee’s company issued cell phone (and never instruct anyone to factory reset cell phones).

7. Enlist the help of outside counsel to set the parameters of the investigation.

© 2019 Jones Walker LLP
For more on trade secret law, see the National Law Review Intellectual Property law page.

New York’s New Child Victims Act Expands Opportunity for Filing Abuse Claims and The Path for Victims’ Justice

This week, a one-year “revival” period of statute of limitations began for individuals who assert civil claims of child abuse to file claims against institutions and individuals pursuant to New York’s Child Victims Act, even if those claims had already expired and/or were dismissed because they were filed late. The premise behind the Child Victims Act is that children are often prevented from disclosing abuse due to the social, psychological and emotional trauma they experience.

Additionally, the  Child Victims Act, also expands the statute of limitations for bringing criminal claims against alleged perpetrators of child sexual abuse, and  permits alleged victims of these crimes to file civil lawsuits up until they reach age 55. This aspect of the legislation will have a significant impact on the volume of criminal cases, and even more so civil lawsuits, 385 of which were filed in the first hours of the revival period, with hundreds more geared up for filing in the upcoming weeks and months. Indeed, the New York State court system has set aside 45 judges specifically to handle the expected crush of cases.

Institutional Changes Following the New Child Victim’s Act

Religious, educational and other institutions that are committed to providing a safe environment for children should be thinking about how they can implement safeguards against child abuse within their institutions. An important step is keeping internal lines of communication with staff and families open, as well as educating staff and leadership as to their reporting obligations under New York law and on how to provide appropriate support if child abuse is suspected.

The Child Victims Act joins the Sex Harassment Bill also signed into law by Gov. Cuomo as significant changes by New York Legislators involving sexual abuse and harassment in New York State.

©2019 Epstein Becker & Green, P.C. All rights reserved.

Heavy Metal Murder Machines and the People Who Love Them

What is the heaviest computer you own?  Chances are, you are driving it.

And with all of the hacking news flying past us day after day, our imaginations have not even begun to grasp what could happen if a hostile person decided to hack our automotive computers – individually or en masse. What better way to attack the American way of life but disable and crash armies of cars, stranding them on the road, killing tens of thousands, shutting down functionality of every city? Set every Ford F-150 to accelerated to 80 miles an hour at the same time on the same day and don’t stick around to clean up the mess.

We learned the cyberwarfare could turn corporal with the US/Israeli STUXNET bug forcing Iran’s nuclear centrifuges to overwork and physically break themselves (along with a few stray Indian centrifuges caught in the crossfire). This seems like a classic solution for terror attacks – slip malicious code into machines that will actually kill people. Imagine if the World Trade Center attack was carried out from a distance by simply taking over the airplanes’ computer operations and programing them to fly into public buildings.  Spectacular mission achieved and no terrorist would be at risk.

This would be easy to do with automobiles. For example, buy a recent year used car on credit at most U.S. lots and the car comes with a remote operation tool that allows the lender to shut off the car, to keep it from starting up, and to home in on its location so the car can either be “bricked” or grabbed by agents of the lender due to non-payment. We know that a luxury car includes more than 100 million lines of code, where a Boeing 787 Dreamliner contains merely 6.5 million lines of code and a U.S. Airforce F-22 Raptor Jet holds only 1.7 million lines of code.  Such complexity leads to further vulnerability.

The diaphanous separation between the real and electronic worlds is thinning every day, and not enough people are concentrating on the problem of keeping enormous, powerful machines from being hijacked from afar. We are a society that loves its freedom machines, but that love may lead to our downfall.

An organization called Consumer Watchdog has issued a report subtly titled KILL SWITCH: WHY CONNECTED CARS CAN BE KILLING MACHINES AND HOW TO TURN THEM OFF, which urges auto manufacturers to install physical kill switches in cars and trucks that would allow the vehicles to be disconnected from the internet. The switch would cost about fifty cents and could prevent an apocalyptic loss of control for nearly every vehicle on the road at the same time. (The IoT definition of a bad day)

“Experts agree that connecting safety-critical components to the internet through a complex information and entertainment device is a security flaw. This design allows hackers to control a vehicle’s operations and take it over from across the internet. . . . By 2022, no less than two-thirds of new cars on American roads will have online connections to the cars’ safety-critical system, putting them at risk of deadly hacks.”

And if that isn’t frightening enough, the report continued,

“Millions of cars on the internet running the same software means a single exploit can affect millions of vehicles simultaneously. A hacker with only modest resources could launch a massive attack against our automotive infrastructure, potentially causing thousands of fatalities and disrupting our most critical form of transportation,”

If the government dictates seat belts and auto emissions standards, why on earth wouldn’t the Transportation Department require a certain level of security of connectivity and software invulnerability from the auto industry.  We send millions of multi-ton killing machines capable of blinding speeds out on our roads every day, and there seems to be no standard for securing the hackability of these machines.  Why not?

And why not require the 50 cent kill switch that can isolate each vehicle from the internet?

50 years ago, when Ralph Nader’s Unsafe at Any Speed demonstrated the need for government regulation of the auto industry so that car companies’ raw greed would not override customer safety concerns.  Soon after, Lee Iacocca led a Ford design team that calculated it was worth the horrific flaming deaths of 180 Ford customers each year in 2,100 vehicle explosions due to flawed gas tank design that was eventually fixed with a tool costing less than one dollar per car.

Granted that safety is a much more important issue for auto manufacturers now than in the 1970s, but if so, why have we not seen industry teams meeting to devise safety standards in auto electronics the same way standards have been accepted in auto mechanics? If the industry won’t take this standard-setting task seriously, then the government should force them to do so.

And the government should be providing help in this space anyway. Vehicle manufacturers have only a commercially reasonable amount of money to spend addressing this electronic safety problem.  The Russian and Iranian governments have a commercially unreasonable amount of money to spend attacking us. Who makes up the difference in this crital infrastructure space? Recognizing our current state of cyber warfare – hostile government sponsored hackers are already attacking our banking and power systems on a regular basis, not to mention attempting to manipulate our electorate – our government should be rushing in to bolster electronic and software security for the automotive and trucking sectors. Why doesn’t the TSB regulate the area and provide professional assistance to build better protections based on military grade standards?

Nothing in our daily lives is more dangerous than our vehicles out of control. Nearly 1.25 million people die in road crashes each year, on average 3,287 deaths a day. An additional 20-50 million per year are injured or disabled. A terrorist or hostile government attack on the electronic infrastructure controlling our cars would easily multiply this number as well as shutting down the US roads, economy and health care system for all practical purposes.

We are not addressing the issue now with nearly the seriousness that it demands.

How many true car–mageddons will need to occur before we all take electric security seriously?

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

This article was written by Theodore F. Claypoole of Womble Bond Dickinson (US) LLP.
For more on vehicle security, please see the National Law Review Consumer Protection law page.

The Federal Grand Jury: Ten Tips If You Receive a Subpoena

Other than having to respect testimonial and constitutional privileges of the people called to appear before it, a federal grand jury can pretty much do what it wants in questioning witnesses and compelling the production of documents. Federal grand jury subpoenas are almost never quashed on grounds that they call for irrelevant information or go beyond the grand jury’s authority. Federal grand juries have a maximum of 23 members, 16 of whom must be present to form a quorum. Indictments are returned by a vote of 12 or more members. Federal grand juries typically sit for a term of 18 months and meet at regular intervals. As a practical matter, a grand jury will almost always return an indictment presented to it by a prosecutor. This is the basis for Judge Sol Wachtler’s famous saying that a prosecutor can get a grand jury to “indict a ham sandwich.” Testifying or providing documents to such a powerful body entails grave risks. You should never attempt to face these risks without the help of an experienced white collar criminal defense attorney. Here you will find 10 tips for responding to federal grand jury subpoenas that call for your testimony or documents. Of course, every case is different and you should always develop a strategy in consultation with your attorney.

1. Keep Your Attorney Close at Hand. 

Your lawyer can’t be with you in the grand jury room, but he or she can be right outside the room and you have the right to consult with him or her after each and every question. In fact, you can spend as much time as you need conferring with your lawyer, as long as you are not attempting to disrupt the grand jury process. You can also leave the grand jury room in order to brief your attorney about the questions being asked and your responses. In most federal jurisdictions you can also take notes of any questions asked during the grand jury session. These can later be shared with your attorney.

2. Beware of Agreeing to Pre-Grand Jury Interviews 

You are under no obligation to talk to government agents before the grand jury process begins. Some Assistant United States Attorneys trick unrepresented persons into interviewing with federal agents prior to the beginning of the grand jury session. The letter accompanying the witness’ subpoena may ask or direct the witness to appear an hour or two early at the grand jury room or the U.S. Attorney’s Office. These pre-grand jury interviews are dangerous and ill-advised and the government has no authority to compel them. You may make a harmful admission during one of these interviews. In addition, you may be accused of lying to a government agent during the interview. Lying to government agents during an interview, like lying to the grand jury, is a federal crime. At the grand jury session, however, there will be an official recording and/or transcript of the proceedings, so there will be no dispute about what you say. The pre-grand jury agent interview will not be recorded. Two federal agents will take notes of what you say and it will be their word against yours in the event of a dispute.

3. Don’t be Bullied or Misled About Grand Jury Secrecy. 

Federal grand jurors, grand jury court reporters and the prosecutors running the grand jury are under a strict duty to keep any “matter occurring before the grand jury” a secret. This duty is codified in Rule 6(e) of the Federal Rules of Criminal Procedure. Violations of this rule can result in sanctions or criminal contempt charges against a prosecutor. But the rule of secrecy does not apply to federal grand jury witnesses. If you are a grand jury witness, you have the right to tell the whole world about your grand jury testimony. Of course, it may not be in your interest to do this.  You may want to keep your appearance before the grand jury under close wraps. You need to understand, however, that it is your call-not the government’s. But some federal prosecutors attach cover letters to grand jury subpoenas, informing the witness that revealing the contents, or even the existence, of the subpoena “may impede” a criminal investigation. These cover letters then “request” non-disclosure of the subpoena (and/or the documents requested in the subpoena) and ask the witness to notify the prosecutor if the witness has any “problems” with non-disclosure. You should by no means put up with this nonsense. If you receive a cover letter like this, you should consider having your attorney write a polite response to the prosecutor or the case agent including the following language: “Your cover letter requests non-disclosure of the subpoena (and/or the documents requested in the subpoena) and asks to be notified if there are problems with such non-disclosure. I am reluctant to have my client take on a formal affirmative obligation, regarding either non-disclosure of the subpoena or notification of problems with such non-disclosure, beyond the requirements, if any, found in Fed. R. Crim. P. 6(e) or in some other statutory or court authority you can point me to. Rest assured, however, that my client has absolutely no desire to compromise your investigation or to publicize the existence of either the subpoena or your investigation.”

4. Insist on Grand Jury Secrecy from the Government. 

As mentioned, Rule 6(e) prohibits the government from revealing “a matter occurring before the grand jury.” This prohibition, of course, covers the content of grand jury testimony. But it goes much further. The government cannot even reveal that you appeared before the grand jury or that you have been subpoenaed or scheduled to appear. Many prosecutors and agents get sloppy about this and reveal that a person or company has been subpoenaed. In addition, some grand juries have waiting rooms where multiple witnesses are invited to wait until they are called. In these situations, each witness is told, in effect, that the other witnesses waiting with him have been summoned to appear “before the grand jury.” On other occasions, members of the press, who know what day the federal grand jurors meet, have been tipped off to be at the courthouse entrance, so that they can see a grand jury witness enter and draw the obvious conclusion. Your white collar criminal defense attorney should be vigilant in guarding against these abuses and should put the federal prosecutors handling your appearance on notice not to violate grand jury secrecy with such maneuvers.

5. Let Your Attorney Accept Service of the Subpoena. 

Your attorney should arrange with the prosecutor to accept service of the grand jury subpoena on your behalf. This spares you the embarrassment of being personally served by FBI agents at your home or in the workplace. What if the agents don’t know or care that you have an attorney, and decide to serve you personally anyway? You should politely accept service, tell the agents that you have an attorney, and decline to answer any and all substantive questions about the case. Refer all questions to your attorney. What if you don’t yet have an attorney when you are personally served with the grand jury subpoena? Politely accept service and tell the agents that you will decline to answer any substantive questions until you have had the opportunity to obtain an attorney. You are under no obligation to do anything other than accept service of the subpoena. If you say anything at all about the case to the agent you could be making dangerous admissions that may be used against you at a later time. For example, let’s say that you are being investigated in connection with an alleged tax fraud scheme involving foreign trust accounts. Assume that there are no documents which on their face tie you to any such trust accounts. Then an FBI Special Agent (or an IRS Criminal Investigation Division Special Agent) serves you with a grand jury subpoena for all records related to those foreign trust accounts. When she serves the subpoena, the agent asks: “Are you going to cooperate?” You respond: “Yes, I’ll cooperate. You’ll get the documents.” What have you done? You have just admitted to the government that you possess or have access to the foreign trust account documents. You have in effect acknowledged a connection between yourself and the foreign trusts. If you instead respond to the agent as follows: “I’m sorry, but I have an attorney and she will be contacting you,” you have admitted nothing.

6. Learn the Difference Between Types of Grand Jury Subpoenas. 

Federal grand jury subpoenas are for: (a) testimony (ad testificandum); (b) documents or objects (duces tecum); or (c) both. The face of the subpoena will inform you which type of subpoena you received. You will be subpoenaed as an individual or as a custodian of records for a business entity. In many instances, individuals have the right to refuse to answer grand jury questions by invoking the Fifth Amendment’s Privilege against Self-Incrimination. Corporations and other business entities, however, cannot invoke this privilege. But since a corporation operates through human agents, it must designate a custodian of records when subpoenaed by the federal grand jury. Under Supreme Court case law the corporate custodian is only required to answer a narrow category of questions, related to how the subpoenaed documents were searched for and gathered. If you are properly subpoenaed as a business custodian, it is very important that you limit your answers to this narrow category of questions. Prosecutors love to get corporate custodians into the grand jury room and ask extra questions. These questions might seem innocuous, but they are often very dangerous. You need to have your white collar criminal lawyer with you for consultation, right outside of the grand jury room, to ensure that you are not tricked into answering one question too many. Some federal prosecutors have recently started the practice of issuing one subpoena to a person in that person’s individual capacity and his custodial capacity. This tactic is dangerous, confusing, and, in my view, unauthorized. It is tantamount to issuing one subpoena to two persons or companies. Your attorney should insist on two separate subpoenas-one for you as an individual and one to the company’s custodian of records.

7. Don’t Testify if You Have Exposure. 

As mentioned above, if you are subpoenaed for testimony in your individual capacity, you may be able to avoid answering substantive questions by invoking the Fifth Amendment’s Privilege against Self-Incrimination. This is true even if you are not a target of the investigation. Keep in mind that even if a prosecutor designates you a witness or subject, rather than a target, this designation provides you with no rights or protection and can be changed at any time. The right to invoke the Privilege against Self-Incrimination is much broader than most witnesses and attorneys realize.  If a truthful answer to a grand jury question would even tend to incriminate you, you can invoke the privilege and refuse to answer. How can an answer tend to incriminate you? If it furnishes a link in the chain that might lead to your conviction. Can a person who is totally innocent of wrongdoing invoke the privilege? Absolutely! The Supreme Court has ruled that the privilege protects the innocent as well as the guilty. Why would an innocent person want to invoke the privilege? To keep from being ensnared by a mistaken, incompetent, or unscrupulous prosecutor. Take the following example. The federal grand jury is investigating a corporation for accounting fraud. You work in the corporation’s accounting department. The prosecutor believes that any accounting department employee who reviewed Document X and later booked entries related to Document X is guilty of fraud. You looked at Document X and later booked entries related to Document X, but don’t believe you defrauded or intended to defraud anyone. No record shows that you reviewed Document X and no other person knows that you reviewed Document X, but several documents and co-workers can establish that you booked entries related to Document X. If you testify at the grand jury and truthfully admit that you reviewed Document X, you will tend to incriminate yourself, even though you don’t believe that you are guilty, because you will furnish a link in the chain that the prosecutor may use to indict and convict you.   You also may be able to invoke the Privilege Against Self-Incrimination to avoid producing certain documents. Although documents created prior to receipt of a grand jury subpoena are typically not covered by the Privilege, this is not always the case. If the very act of producing a document would tend to incriminate you, the Privilege will often apply. For example, if you are under investigation for receiving classified documents, and you are subpoenaed for those documents, the very act of producing the classified documents to the grand jury is in itself incriminating.

8. Review Your Prior Testimony. 

Some federal prosecutors like to call witnesses back to the grand jury to testify on multiple occasions. This is dangerous because it can cause you to inadvertently give inconsistent testimony under oath. Under §1623(c) of the federal criminal code, the government can prosecute you for testifying to two irreconcilably contradictory statements under oath, and the government does not even have to prove that either of the statements in question was false. When you are called back to the grand jury to testify for a second time, your attorney should insist on your right to review ahead of time the official transcript of your first session. In this way, you can refresh your recollection as to your earlier testimony, correct any mistakes, and prepare yourself for the upcoming session. The United States Court of Appeals for the District of Columbia Circuit recently ruled that grand jury witnesses, even if they have not been called back to testify for a second time, have an inherent right to review a transcript of their earlier testimony.

9. Conduct a Shadow Grand Jury. 

If you have the money, your attorney can often conduct what is known as a shadow grand jury. Friendly witnesses will sometimes inform you if they have been subpoenaed to the grand jury and you and your defense team can often figure out who else the government may call. Grand jury witnesses are then interviewed, before or after they testify, giving you valuable information on where the investigation is heading. Of course, grand jury witnesses are under no obligation to cooperate with your defense team, and the use of shadow grand juries often infuriates prosecutors. You should proceed with great caution and make sure that all interviews are carefully documented so that your defense team is not accused of witness tampering or obstructing justice. And it should go without saying that your attorney and his staff should conduct and arrange all interviews-not you.

10. Don’t Wait Until the Last Minute. 

Do NOT wait until one day or one week before your grand jury appearance date to contact a federal criminal defense attorney. Any decent attorney will need time to discuss the facts of your case with you in detail and talk to the Assistant U.S. Attorney who is running the grand jury. In other words, your attorney needs time to assess your level of exposure and develop a game plan. This can’t be done overnight. On rare occasions, prosecutors issue “forthwith subpoenas” requiring witnesses to appear before the grand on very short notice. Even in these situations, you should immediately consult an attorney who can advise you on how to proceed. At the end of the day, you may be nothing more than a routine witness, asked to provide routine documents. But federal grand juries exist to investigate, and prosecute, serious crimes. You could be stepping into a mine field. Don’t go it alone and don’t wait until the last minute to seek professional help.

Copyright ©2019 Solomon L. Wisenberg
This article was written by Solomon L. Wisenberg of Nelson Mullins.
For more on appearing in court & litigation, please see the National Law Review pages on Civil Procedure or Litigation & Trial Practice.

Japanese Toyobo Pays $66 Million to Settle False Claims Act Allegations Over Selling Defective Fiber to Government for Use in Bullet Proof Vests

The Department of Justice recently announced the settlement of a qui tam lawsuit against Toyobo, the sole manufacturer of Zylon fiber used in bulletproof vests, in relation to their violation of the False Claims Act (FCA). According to the allegations of the case, between 2001 and 2005, Toyobo actively marketed and sold defective Zylon fiber for bullet proof vests, knowing that Zylon degraded quickly in normal heat and humidity, which makes the material unfit for use in bullet proof vests. It is further alleged in the whistleblower lawsuit, that Toyobo published misleading degradation data, that underestimated the degradation issue and started a public campaign to influence body armor manufacturers to keep selling bullet proof vests made with Zylon fiber.

Within the Complaint that the United States filed following their decision to intervene in the case, the U.S. alleged that Toyobo’s actions delayed the government’s efforts to determine the defect in Zylon fiber by several years. After a study of the National Institute of Justice (NIJ) in August 2005 found out, that more than 50 percent of Zylon-containing vests could not stop bullets that they had been certified to stop, NIJ decertified all Zylon-containing vests.

The qui tam lawsuit is brought to Government’s attention by relator Aaron Westrick, Ph.D., who is a law enforcement officer, formerly employed as the Director of Research and Marketing at Second Chance Body Armor (SCBA), which used to be the largest bullet proof vest company in the United States. In the lawsuit, whistleblower Westrick alleged, that Toyobo knew the strength of Zylon fibers sold to the bullet resistant vest makers would degrade quickly under certain environment, and nevertheless Toyobo did not disclose such fact or made misleading disclosures, resulting in the United States’ payment for the defective bullet resistant vests.

The relator Westrick brought the qui tam lawsuit under the FCA, which allowed him to act on behalf of the U.S. government in exposing the government programs fraud. Under the FCA, relators receive a portion of the money that has been recovered by the government, which is known as the relator’s share. For his participation as a relator, or whistleblower, within the case Dr. Westrick will receive $5,775,000, as a reward for exposing the government fraud scheme. Such high rewards are not uncommon for individuals who file qui tam lawsuits on behalf of the federal government. If and when a case settles, whistleblowers can receive between 15% and 30% of the amount recovered by the government.

 

© 2018 by Tycko & Zavareei LLP.

New Sheriff In Town As Rolls-Royce Pays Record Penalty For Foreign Bribery And Corruption

Rolls-RoyceOn 17 January 2017, the UK Serious Fraud Office (“SFO”),[1] the US Department of Justice (“DOJ”),[2] and the Brazilian Ministério Público Federal (“MPF”) announced an $800 million global settlement with Rolls-Royce plc and Rolls-Royce Energy Systems Inc., (together, “Rolls-Royce”) resolving allegations of a long-running scheme to bribe foreign officials in South America, the Middle East, Eastern Europe, and Asia in exchange for assistance in obtaining government contracts. In addition to the payment of disgorgements and fines – the largest ever imposed under the UK’s Bribery Act 2010 (“UK Bribery Act”) – Rolls-Royce has agreed to implement a number of compliance measures and reporting requirements pursuant to deferred prosecution agreements (“DPAs”) with UK, US, and Brazilian authorities. The joint settlement, which was spearheaded by the SFO, heralds a new era in global cooperation and coordination in the enforcement of bribery and corruption laws.

Unprecedented simultaneous tripartite global penalty

Under its DPA with the SFO, Rolls-Royce will pay a penalty of over £497 million (US $612 million), comprising disgorgement of profits of £258 million and a financial penalty of £239 million (US $294 million), plus interest. In addition, Rolls-Royce will pay approximately £13 million (US $16 million) to reimburse the SFO’s full investigation and litigation costs.

In the US, Rolls-Royce has agreed to pay a criminal penalty of nearly $170 million (UK £138 million) for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) by having paid bribes in excess of $35 million between 2000 and 2013. The penalty reflects a 25-percent reduction from the bottom of the US Sentencing Guidelines fine range and a credit of more than $25 million (UK £20 million) in recognition of the fine paid in Brazil. The settlement with the DOJ falls within the top fifteen largest FCPA settlements of all time.

In Brazil, Rolls-Royce has agreed to a fine of approximately $25 million, reflecting $12 million in profits received from contracts with Brazil’s state-run oil company, Petrobras, $6 million paid in kickbacks paid to intermediaries, and a fine equal to the amount of kickbacks.

DPAs – more than just a fine

In the UK, DPAs are voluntary agreements which result in the suspension of a prosecution in return for the offending company meeting certain obligations including that the company must account for its conduct before a criminal court. The terms of the DPA must be approved by a judge as fair, reasonable, proportionate, and in the interests of justice. A DPA is not available to individuals. Upon review, on 17 January 2017, Sir Brian Leveson, sitting as a judge in the Crown Court, approved the Rolls-Royce DPA noting that the financial penalty was “broadly comparable to a fine that a court would have imposed on conviction following a guilty plea.”[3]

In addition to payment of the fine, under the UK DPA, Rolls-Royce is required to continue the independent compliance review of its approach to anti-bribery and anti-corruption which commenced in January 2013 when Rolls Royce appointed independent lawyer, Lord Gold, to conduct the review. Lord Gold has already produced two interim reports and is due to produce a third report by the end of March 2017. Rolls-Royce has agreed to provide the SFO with Lord Gold’s third report and produce a written Implementation Plan setting out how it will give effect to the third report’s recommendations and any other outstanding recommendations not yet implemented in the first and second reports. Rolls-Royce must implement or have sustainment plans to execute the Implementation Plan to the satisfaction of Lord Gold within 2 years of its commencement. Once the Implementation Plan is complete, Rolls-Royce must obtain a final report from Lord Gold and provide it to the SFO.

In addition to these compliance measures, Rolls Royce has agreed to continue its cooperation with the SFO including the disclosure of all relevant information and material in its possession, custody or control, which is not protected by legal professional privilege, in respect of its activities and those of its present and former directors, employees, agents, consultants, contractors and sub-contractors. It must also use its best efforts to make available for interview, as requested by the SFO, present or former officers, directors, employees, agents and consultants of Rolls-Royce.

Much like in the UK, DPAs in the US set the terms by which prosecutors will decline to pursue a case against the offending company. The DOJ agreed that it will not pursue a criminal or civil case against Rolls-Royce, provided that, within three years, the company pays the $170 million penalty, cooperates fully with US and foreign authorities in all matters related to corrupt payments, implements a compliance program that meets the elements identified in the DPA, and annually reports to the DOJ regarding remediation and implementation of its compliance program. Among other requirements, Rolls-Royce must develop and maintain policies and procedures addressing particular risk areas (e.g., gifts, entertainment, travel, political contributions and charitable donations) through periodic risk-based review, assign one or more senior corporate executives for implementation and oversight of the policies and procedures, implement periodic training and compliance certifications, establish an effective system for internal reporting and investigation, and institute risk-based due diligence and compliance requirements for all agents and business partners. The DPA does not provide any protection against the prosecution of individuals.

Brazilian law empowers the relevant authorities to enter into agreements (“leniency agreements”) with entities that have cooperated with the authorities’ investigations. By satisfying the conditions of the agreements, companies may face lower fines or lesser sanctions. Rolls-Royce reportedly provided the MPF with the results of an internal investigation in early 2015 and agreed to cooperate with Brazilian authorities. The terms of its agreement with the MPF also impose measures designed to ensure that the company enhances its existing compliance programs.

Cooperation can be a mitigating factor

Rolls-Royce’s cooperation with and accountability to regulators appears to have factored into the global settlement. In the UK, the court acknowledged that, despite not initially self-reporting its conduct, Rolls-Royce cooperated extensively with the SFO since 2012, and “[c]ould not have done more to expose its own misconduct.”[4] This extensive cooperation was one of the primary reasons the court concluded that the DPA was in the interests of justice and a relevant factor in mitigation when assessing the value of the agreed penalty. However, the UK settlement does not conclude the matter in its entirety. As noted by the court, the SFO will continue to investigate the conduct of current and former Rolls-Royce employees. These individuals are afforded no protection from prosecution under the DPA and, given the wide-ranging allegations documented in the DPA’s statement of facts, more charges seem likely.

The US also acknowledged Rolls-Royce’s cooperation throughout the government investigation, including its thorough internal investigation, numerous factual presentations, and producing witnesses for interviews. Going forward, Rolls-Royce must continue to cooperate for three years under the terms of its settlement with the DOJ, and must promptly report any evidence or allegations of past or new FCPA violations, truthfully disclose all factual information, provide documents or evidence requested by the DOJ, and use its best efforts to make current and former officer, directors, employees and agents available for interviews or testimony.

SFO led investigation – A new trend?

To date, the US has irrefutably been the global leader in investigating and enforcing anti-bribery and anti-corruption offences. In 2016, twenty-seven companies paid approximately $2.48 billion to resolve criminal and civil FCPA enforcement matters with the DOJ and the Securities and Exchange Commission. In contrast, the SFO has been criticised for failing to undertake comprehensive investigations capable of securing high-profile convictions under the UK Bribery Act. This has led many commentators to conclude that the UK Bribery Act is less effective than the FCPA, despite the fact it is more extensive than the FCPA in terms of its jurisdictional reach and the conduct it prohibits.

Rolls-Royce’s DPA with the SFO is only the third of its kind endorsed by English courts. In each instance, courts have emphasized the importance of self-reporting. Indeed, Sir Brian Leveson noted in his judgment endorsing the Rolls-Royce settlement that a “DPA will likely incentivise the exposure and self-reporting of wrong doing by organisations in similar situations to Rolls-Royce. This is of vital importance in the context of the investigation and prosecution of complex corruption cases in bringing more information to the attention of law enforcement agencies so that crimes can be properly investigated, and prosecuted effectively. Furthermore, the effect of the DPA is to require the company concerned to become a flagship of good practice and an example to others demonstrating what can be done to ensure ethical good practice in the business world.”[5]

The Rolls-Royce settlement may also signal a new trend in global anti-bribery and anti-corruption enforcement. It is the single largest individual investigation the SFO has conducted to date, spanning a four year period, with over 30 million documents reviewed, and numerous arrests and interviews of current and former Rolls-Royce employees (taken both voluntarily and under compulsion). Additionally, the settlement follows in the footsteps of VimpleCom’s $795 million resolution with US and Dutch authorities in 2016, having been reached with the assistance of law enforcement officials in several jurisdictions, including Austria, Germany, the Netherlands, Singapore and Turkey. The scope of the SFO’s investigation and its cooperation with other global law enforcement agencies, together with the resulting penalty, should be a warning to businesses operating internationally that they may face scrutiny from several global regulators simultaneously and expect intense scrutiny of world-wide conduct.

Gone are the days of US authorities being the lone sheriff in town, policing foreign companies that have contacts in the US but consoling themselves to non-intervention by the home countries. Rather, companies must be aware that there are now consequences for non-compliance on their home turf as well. As the SFO and other foreign authorities demonstrate the will to pursue bribery and corruption cases, the US may allow the countries in which corrupt companies are domiciled to police those practices at home.

ARTICLE BY Jodi L. Avergun, Steven Baker, Bret A. Campbell, Joseph V. Moreno, Jenna Rennie & Janaki Tampi of Cadwalader, Wickersham & Taft LLP
© Copyright 2017 Cadwalader, Wickersham & Taft LLP

[1]   See SFO Case Information, Rolls-Royce PLC (17 January 2017), available athttps://www.sfo.gov.uk/cases/rolls-royce-plc/.

[2]   See Press Release, Rolls-Royce plc Agrees to Pay $170 Million Criminal Penalty to Resolve Foreign Corrupt Practices Act Case (17 January 2017), available athttps://www.justice.gov/opa/pr/rolls-royce-plc-agrees-pay-170-million-criminal-penalty-resolve-foreign-corrupt-practices-act.

[3]   See Serious Fraud Office v Rolls Royce PLC Rolls-Royce Energy Systems Inc [2017] at paragraph 63, available at https://www.judiciary.gov.uk/wp-content/uploads/2017/01/sfo-v-rolls-royce.pdf 

[4]   See Serious Fraud Office v Rolls Royce PLC Rolls-Royce Energy Systems Inc [2017] at paragraph  38, available at https://www.judiciary.gov.uk/wp-content/uploads/2017/01/sfo-v-rolls-royce.pdf. 

[5] See Serious Fraud Office v Rolls Royce PLC Rolls-Royce Energy Systems Inc [2017] at paragraph  60, available at https://www.judiciary.gov.uk/wp-content/uploads/2017/01/sfo-v-rolls-royce.pdf.