Escolar Documentos
Profissional Documentos
Cultura Documentos
Fall 2010
Professor Garvey
Included in this Outline:
I: Short Substantive Outline: Pages 2-21
II: Case Briefs: Pages 22-41
III: Procedural Issues Outline: Pages 42-52
IV: Sentencing Guidelines Outline: Pages 53-56
NOTE: To organize my outline, I inserted the full statute of each crime and the case
briefs corresponding to that crime in between each crime in the short substantive
outline (e.g., Mail Fraud Pages from Short Outline Mail Fraud Statute Case
Briefs about Mail Fraud Bribery/Illegal Gratuities Pages from Short Outline)I.
Mistake of fact: Failure of proof defense: state has not carried its burden of persuasion:
it has not proved that the D possessed the required mental state beyond a reasonable
doubt
Mistake of law may be a defense:
o Failure of proof defense
Same-law mistakes: but generally ignorance of the law is not a defense
Different-law (legal fact) mistakes: like mistakes of fact but the fact
w/respect to which the D is mistaken is a legal fact requires another
body of law to know
o Affirmative Defense:
Estoppel or reliance
Notice
In our case, usually mistakes of fact or legal fact
B. ENTITY LIABILITY
1) Are the individuals of the corporation either individually or collectively guilty of the
crime?
o Collective Knowledge Doctrine (US v. Bank of New England) but may only apply if
the corp. is flagrantly indifferent (doesnt have effective compliance system)
2) If yes, were their actions within the actual or apparent scope of their employment or
authority?
o 1) Would a reasonable person believe the actor is acting w/in his/her authority?
o 2) Was the agent on the job while committing the crime?
o Not a stringent threshold
3) If yes, did the individual actors act with the intent, at least in part, to benefit the
corporation, whether or not the crime actually did benefit the corp. and even if it was
against the express policy of the corp.?
o Even if it actually ends up hurting the corp. (U.S. v. Sun-Diamond)
o Even if contrary to corp. policy (U.S. v. Hilton Hotels) BUT often courts hesitate to
impute liability.
If yes, impute liability.
NOTE: applies to subsidiaries too as well as to low-level employees
C. PERJURY 1621
States or subscribes
o Under Oath before competent tribunal1 (subsection 1) or Under 1746 (subsection
2)
o False (not in statute but read as an element)
Knowledge (not in statutederived from willful)
o Material: if it has the capacity to influence the decision of the decision-making
body to which it is addressed.
Willful = intent to deceive
o Some courts read it as specific intent: knowledge of falsity and intention to
deceive
Two-witness rule: uncorroborated testimony of one witness is insufficient to prove that
Ds statement was false (need independent corroborating source but circumstantial
evidence usually suffices).
Defenses:
o Literal Truth (Bronston)
1 Competency of tribunal issues: not often but sometimes (in congressional hearing w/o a quorum)
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Is there a Primary Duty (generally arising from fiduciary duty or employee duty)?
Is there a Secondary Duty to disclose breach of Primary Duty?
If failure to satisfy secondary duty, then we have non-disclosure fraud
NOTE: Need tangible harm.
NOTE: even w/o written contract, an employee has a fiduciary obligation to protect
confidential info obtained during the court of his employment. Snepp
Right to Control Theory: Denying victim the right to control its assets by depriving it of
info necessary to make a discretionary economic decision
NOTE: What questions remain open after Skilling?
What exactly is covered by the prohibition against bribery and kickbacks?
When does a fiduciary relationship exist such that a bribe or kickback must be
disclosed?
Can conflict-of-interest (self-dealing) cases be characterized as thefts of intangible
property
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Bribe Recipient:
Public official corruptly
Demands, seeks, receives, accepts, or
agrees to receive or accept
Anything of value
In return for being influence din the
performance of any official act or being
induce to do or omit to do any act in
violation of the official duty of such
official or person
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Gratuity Receiver
Public official, former public official, or
person selected to be a public official
Directly or indirectly demands, seeks,
receives, accepts, or agrees to receive or
accept
Anything of value
Personally for or bc of any official act
performed or to be performed
Elements of Gratuity Receiver
Public Official
Demand, seek, receive, accept, agree to
receive/accept
o Anything of value
o Personally
For or bc of any official act performed or
to be performed
o Knowing that the thing is given,
influencing
o
o
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Knowledge (belief) that thing is given, offered, or promised with the intent to
reward a decision already made or committed; or
Knowledge (belief) that the thing is given, offered, or promised w/the hope or
expectation of influencing.
K. INSIDER TRADING
Statutes and Regulations
15 U.S.C. 78j(b) = 10(b) of the 1934 Act (States general rule of liability; requires
promulgation of SEC rule)
17 C.F.R. 240.10b-5 = Rule 10b-5 (Sets forth the SEC rule defining unlawful
conduct)
15 U.S.C. 78ff(a) = 32(a) of 1934 Act (stat. max of 20 years for willful violations
of 10(b) or Rule 10b-5)
o NOTE: Any person who willfully violatesruleshall upon conviction be
imprisonedbut no person shall be subject to imprisonmentif he proves that he
had no knowledge of such rule or regulation
o RULE: Willful requires Govt to prove D realized his actions were wrongful (not
unlawful). If D proves by preponderant evidence he didnt realize his actions
were unlawful, he cant be imprisoned, even if the Govt has proven that he
realized his actions were wrongful. US v. Kaiser (2nd Cir, 2010)
17 C.F.R. 240.14e-3 = Rule 14e-3 (Deals w/insider trading in course of a tender offer)
Rule 10b5-1: A manipulative and deceptive device includes trading on the basis of
material non-public info in breach of duty to the issuer or shareholder of the stock
traded or to the source of information.
o On the basis of: means awareness of the fact that the info was material and nonpublic
o An actor who is aware of the fact that he is trading on material, non-public
information can do so if he committed to the trade before becoming aware of the
information.
Regulation FD: Failure to disclose as required by Regulation FD does not establish a
Rule 10b-5 violation
Insider Trading: Classical Theory (Chiarella)
By the use of any means or instrumentality of interstate commerce, or of the mails or of
nay facility of any natl securities exchange
To employ any device, scheme, or artifice to defraud
o Type of fraud:
Nondisclosure: The fiduciary duty to disclose runs to the shareholders of
the company with respect to which the D is an insider, i.e., the market.
o Information
Material
Nonpublic
o Object of fraud
Money
o Intent to defraud
Intent to deceive
Intent to gain (tipper/tippee)
In connection w/the purchase or sale of any security
Classical: must breach duty to disclose (by trading) that runs to shareholders of the corp. in
which you are an insider
Temporary Insiders: some Ds can be temp. insiders if relationship creates expectation of
confidentiality. Dirks, fn. 14
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Tipper/Tippee Liability: For a tippee to be liable, there must be a tipper. A tipper must
breach a fiduciary duty to corporate shareholders by disclosing for personal benefit (i.e., w/an
intent to gain). If no personal benefit, no breach of fiduciary duty, no tipper. Tippee must
know or should know that tipper breached duty. (Dirks)
Personal benefit (broad): Pecuniary Gain; Reputational Benefit; Reciprocal
Information/Quid Pro Quo; A Gift
Problem of Remote Tippees: Insider tells Tippee (T1) who tells other Tippees (T2) who
trade.
Theory 1: Pull T1 out of picture: ask if T2 knows info is material and non-public and
knows/should know that Insider breached his or her fiduciary duty not to disclose.
Theory 2: Put T1 in as the Insider: T1 intended to benefit from T2s trading; T2 knows
the info is material and non-public; T2 knows or should know that an insider has
breached his/her fiduciary duty not to disclose.
Theory 3: T2 knows the info is material and non-public; T2 knows or should know that
an insider has breached his/her fiduciary duty not to disclose (Broadest theory and
the most prominent)
Insider Trading: Misappropriation Theory (OHagan)
By the use of any means or instrumentality of interstate commerce or one of the mails,
or of any facility of any natl securities exchange
To employ any device, scheme, or artifice to defraud
o Type of fraud
Nondisclosure: The fiduciary duty to disclose runs to the source of the
information
o Information
Material (awareness)
Nonpublic (awareness)
o Object of fraud: Intangible property (information)
o Intent to defraud
In connection w/the purchase or sale of any security
Note on Misappropriation Theory
Gap in Liability: The duty to disclose runs to the owner or source of the information. If
D discloses his intent to trade to those to whom he has a duty to disclose, he would not
be guilty of insider trading (bc he no longer breached duty to disclose) even though the
public is still harmed from the trading.
When does a relationship give rise to a duty to keep information confidential?
Chestman (2d Cir 1991): when relationship involves reliance, and de facto control and
dominance:
o Employer-employeeAttorney-client
Psychiatrist-patient
Rule 10b5-2: Enumerated duties of trust or confidence. For purposes of this section, a
duty of trust or confidence exists in the following circumstances, among others:
o Whenever a person agrees to maintain info in confidence
o Whenever the person communicating the material nonpublic info and the person
to whom it is communicated have a history, pattern, or practice of sharing
confidences, such that the recipient of the info knows or reasonably should know
that the person communicating the material nonpublic info expects that the
recipient will maintain its confidentiality; or
o Whenever a person receives or obtains material nonpublic info from his or her
spouse, parent, child, or sibling; provided, however, that the person receiving or
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obtaining the info may demonstrate that no duty of trust or confidence existed
w/respect to the info, by establishing that he or she neither knew nor reasonably
should have known that the person who was the source of the info expected that
the person would keep the info confidential, bc of the parties history, pattern, or
practice of sharing and maintaining confidences, and bc there was no agreement
or understanding to maintain the confidentiality of the info.
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Classical Theory
Nondisclosure of material, non-public
information
Duty to disclose runs to the market
Object is money
Materiality inquiry focuses on the
behavior of the market (i.e., reasonable
investor)
Victim is the market (members of your
family)
Misappropriation Theory
Nondisclosure of unauthorized use of
material, non-public information
Duty to disclose runs to the company
(the source)
Object is information
Materiality inquiry focuses on the
behavior of the company (source)
Victim is the company (i.e., source of the
information)
L. CONSPIRACY 371
Agreement btw 2+ people
Dual Intent:
o Intent to agree
o Intent that the object of the conspiracy be achieved, that is:
An intent to commit an offense against the US; or
An intent to defraud the US
To cheat govt out of property or money or to obstruct one of its
lawful functions by deceit, craft or trickery, or by means that are
dishonest (dont need damages).
Overt Act (easy: need not be criminal: meeting, phone call)
Agreement: Need proof of purposeful behavior aimed at furthering the goals of the
conspiracy.
Can show by circumstantial evidence or evidence of a tacit understanding.
Not enough: presence at scene of crime, fact that one knows a crime is being
committed.
Intent Govt must show D agreed w/knowledge of the criminal purpose of the scheme and
w/the specific intent to aid in the accomplishment of those lawful ends (May be shown by
circumstantial evidence or willful blindness).
Defraud and Offense Clauses: Often overlap and can sometimes charge under both
Exec order is an offense under 371 when Congress authorizes it and sets up sanctions.
(Arch Trading)
Plurality Requirement
1) A group of conspirators cant escape conspiracy responsibility merely bc they all act
on behalf of a corp.
2) Liability for a conspiracy may be imputed to the corp itself on a respondeat superior
theory.
3) But sole controlling shareholder cant be guilty for conspiring w/corp w/o another
human actor. (Stevens)
Essential Nature Requirement: dont need to know all of the details
Not defeated when, in a money laundering conspiracy, Ds dont know from which SUA
the dirty money cameagreement to launder dirty money is enough (Stavroulakis).
Impossibility and Withdrawal
Impossibility is not a defense to a conspiracy charge (Recio, govt seize drugs before D
agreed to help).
Withdrawal: If an actor withdraws before the commission of any overt act by any of the
conspirators, then she is not guilty of conspiracy, nor of any crime committed in
furtherance of it. If an actor withdraws after the commission of an overt act, then she is
guilty of conspiracy, but not for any crime committed in furtherance of it after her
withdrawal (i.e., no Pinkerton liability).
Evidence of Withdrawal: Affirmative acts inconsistent w/the object of the conspiracy
and communicated in a manner reasonably calculated to reach co-conspirators have
generally been regarded as sufficient to establish withdrawal or abandonment.
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M. RICO 1962
1962(a): It shall be unlawful for any person who has recd income derivedfrom a pattern
of racketeering activityto use or investany part of such incomein acquisition of any
interest in or the establishment or operation of any enterprise
Elements: Pattern of Racketeering Activity INCOME Person INVESTS Enterprise
1962(b) It shall be unlawful for any person through a pattern of racketeering activityto
acquire or maintainany interest in or control of any enterprise.
Elements: Person CONTROLS THROUGH PATTERN OF RACKETEERING ACTIVITY
Enterprise
1962(c): It shall be unlawful for any person employed by or associated with any enterprise
to conduct or participatein the conduct of such enterprises affairs through a pattern of
racketeering activity
Test:
o 1) Do we have a person?
o 2) Do we have an enterprise (sufficiently distinct from person and from
racketeering activity)?
o 3) Is person employed by or associated w/enterprise? (Easily Satisfied)
o 4) Does person conduct or participate in the conduct of the affairs of the
enterprise?
o 5) Do we have pattern of racketeering activity?
NOTE: (a) and (b) are about infiltration of legitimate enterprises through racketeering while (c)
is about using an enterprise to conduct the racketeering activity
SEE 18 U.S.C. 1961: Definitions and SEE 18 U.S.C. 1962: Prohibited Activities
1961(1)(A): Racketeering activity
1961(3): Person: Includes any individual or entity capable of holding a legal or beneficial
interest in property
1961(4): Enterprise: Includes any individual, partnership, corporation, association, or
other legal entity, and any union or group of individuals associated in fact although not a legal
entity
Rule: The enterprise must be sufficiently distinct from the pattern of racketeering
activity but enterprise includes legitimate and illegitimate (association-in-fact)
enterprises (Turkette)
o Association-in-fact enterprise: group of persons associated together for a
common purpose of engaging in a course of conduct
o Person: Individual A AND Enterprise: Individual A, Individual B, Individual C, etc.:
OKAY (Turkette)
Rule: Person must be distinct from the enterprise with which the person is
associated but there is a low threshold (Cedric Kushner, president and corp. okay)
o Person: Corp. A and Enterprise: Corp. B: NO but okay under 1962(a)
o Person: Employee A and Enterprise: Employee A and Corp. B: OKAY
o Person: Corp. B AND Enterprise: Corp. B + Employee A (or Subsidiary Corp A): NO
(Riverwoods, 2d Cir) p. 691 n.4
1961(5): Pattern of racketeering activity: Requires at least 2 acts w/in ten years of the
prior act
Continuity and Relationship Test (H.J. Inc):
o Continuity: [R]efer[s] either to a closed period of repeated conduct [extending
over a substantial period of time], or to past conduct that by its nature projects
into the future with a threat of repetition.
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Temporal, fact-specific test satisfied by showing that the predicate acts are
part of an ongoing entitys regular way of doing business
o Relationship: Criminal conduct forms a pattern if it embraces criminal acts that
have the same or similar purposes, results, participants, victims, or methods of
commission, or otherwise are interrelated by distinguishing characteristics and
are not isolated events
Conduct of Enterprises Affairs: Operation or Management Test (Reves v. Ernst & Young)
The person must have participated in the operation or management of the
enterprises affairs
The person must have some part in directing [the] affairs [of the enterprise]
N. RICO Conspiracy 1962(d): conspiracy to violate (a), (b), or (c)
No Overt Act
20 Year Sentence (v. 5 for 371)
Chain and Wheel Conspiracy Theories Dont Apply
Rule: The key is that each D agreed to participate directly and indirectly in the affairs of
the enterprise by committing two or more predicate crimes.
Elliot: Although Ds must agree to participate directly or indirectly in the affairs of the
enterprise through the commission of a pattern of racketeering activity (2+ predicate
acts), they need not agree to commit the same pattern as long as the Ds pattern
involve the same enterprise.
Antar: Liabilty would be permissible under 1962(d) if an actor conspires to operate an
enterprise, but it would not be permissible if an actor conspires w/someone who is
operating or managing the enterprise.
Salinas: D doesnt have to agree to commit 2 predicate acts, himselfagreeing that one
of the conspirators will commit the object of the agreement suffices.
Element of 1962(c)
Be employed by or
associated w/enterprise
Conduct or participate in
conduct of enterprise
Through a pattern of
racketeering activity
Conventional view
(Quintanilla)
Conventional view (Salinas)
1963: Criminal Penalties; 1964: Civil Penalties (People like RICO bc you get treble damages
and attorneys fees)
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for
1)
2)
3)
4)
1956(a)(2)(A) Promotion
Transports or attempts to transport?
A monetary instrument or funds?
Across the US border?
With the intent to promote the carrying on of SUA?
5) Does D know that monetary funds are proceeds of some unlawful activity?
6) Is transportation designed in whole or in part to conceal the nature, location, source,
ownership, or control of proceeds of SUA?
7) Does D know that transportation is designed in whole or in part to conceal the
nature, location, source, ownership, or control of proceeds of SUA?
C. 1957: Trafficking
Engages or attempt to engage
o Knowledge
In a monetary transaction
o Knowledge
In criminally derived property
o Knowledge
W/value greater than $10,000
o Knowledge
Property was in fact derived from SUA
Test for 1957(a) Trafficking
1) Knowingly engage or attempt to engage in a monetary transaction? (as an
accomplice)
2) Was the monetary transaction in criminally derived property?
3) Did the criminally derived property have a value greater than 10,000?
4) Did criminally derived property derive from SUA?
5) Did D know the property was criminally derived property?
Concealment Prong: D must know a) proceeds come from unlawful activity (but does not
have to know what unlawful activity) and b) that the transaction was designed to conceal (but
doesnt have to act w/purpose of concealing) (Campbell)
Promotion Prong: The promotion sections of 1956 do not require that the promotion is for a
SUA other than the underlying SUA. (Piervinanzi)
1957: Does require that transaction use the criminally derived property (cant come out of the
transaction)
Notes on Money Laundering
1956(a)(3): Authorizes use of govt sting operations
Definitions: 18 U.S.C. 1956(c)
o Conduct ( 1956(c)(2))
o Transaction ( 1956(c)(3))
o Financial Transaction: ( 1956(c)(4)): any transaction which affects interstate
commerce involving the transfer of title to any real property
o Specified Unlawful Activity ( 1956(c)(7)): includes all RICO predicates and others
o Knowing that the property represents proceeds of some form of unlawful activity
(1956(c)(1))
Definitions: 18 U.S.C. 1957(f)
o Monetary Transaction: 1957(f)(1): transaction involving funds or a monetary
instrument (as defined in 1956(c)(5)) and involving a financial institution (as
defined in 1956(c)(6))
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ENTITY LIABILITY
NY Central & Hudson River R.R. Co. v. US, U.S. 1909: Corporations can be criminally liable
for acts of its employees
Facts: Violated Elkins Act by giving rebate to Am. Sugar to get its business. Act says
corp. and actor are liable if w/in scope.
Issue: Is it unconstitutional to impute commission of crimes onto a corp., (D says it hurts
stockholders and that the corp is actually innocent).
Holding: Yes, corporations can be criminally liable for the acts of its employees. We see
no valid objection in law and every reason in public policy (prevent favoritism) why
corp, which profits by the transaction, can only act through its agents and officers, shall
be held punishable by fine bc of the knowledge and intent of its agents to whom it has
entrusted authority to act and whose knowledge and purposes may well be attributed to
the corp. for which the agents act.
U.S. v. Sun-Diamond Growers of CA, D.C. Cir. 1998: Intent to Benefit
Facts: Sun-Diamond employee D gives money to his friend Espy, who was the Secretary
of Agriculture, and an important character in Sun-Diamonds business. D and Lake
(officer at Sun-Diamonds PR firm, RSLM) agrees to get 5 RSLM employees to pay
money to Espy and then D and Lake would arrange for Sun-Diamond to reimburse them.
Charge: S-D is indicted for defrauding RLSM through fraudulent theft of property and
theft of (Lakes) honest services.
Sun-Diamonds Claim: D wasnt acting with intent to benefit Sun-Diamond. Rather, he
defrauded Sun-Diamond.
Holding: Although Sun-Diamond was in fact a victim here, jury had right to find that D
was still trying to benefit corporation by cultivating a relationship with Espy. And we do
not have to impute rules to be the same on both sides.
US v. Hilton Hotels Corp., 9th Cir. 1972: Liability even when act was against corp. policy
Facts: Group of hotel operators agree to give preferential treatment to suppliers who
contributed money to the group and to curtain purchases from those who did not. The
President of Hilton announced that this was contrary to policy and instructed agent not
to follow but agent still did. Company is charged w/Sherman Act violation.
Holding: Corps can be liable for acts of agents even if conduct was contrary to express
instructions (as long as it is still w/in the scope of employment) because it is in the
public interest and bc often it is hard to hold individual agents responsible.
Rationale: Breadth and critical character of the public interests protected by Sherman
and gravity of threat to those interests. Talks about how it was very dramatic legislation
w/an important protective purpose.
United States v. Bank of New England, 1st Cir. 1987: Collective Knowledge Doctrine
Facts: Bank of NE was found guilty of willfully failing to file CFRs on 31 large cash
withdrawals made by McDonough. The banks head tellers, however, were found not
guilty in individually aiding and abetting.
Holding: The Bank is still found guilty under collective knowledgeWillful requires
knowledge (willful ignorance) of the facts and of the law requiring a CFR to be filed.
While individual actors may not have had such knowledge, combined, the corp. does. Bc
bank has compartmentalized structure like most corps, collective knowledge instruction
is necessary.
Knowledge of
Knowledge of Willful
Facts
Law
violation
Head Teller 1
Yes
Maybe
Maybe
Head Teller 2
Yes
Maybe
Maybe
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General Counsel No
Yes
Bank (Total of
Yes
Yes
Above)
PERJURY, FALSE DECLARATIONS, and FALSE STATEMENTS
No
Yes
Bronston v. US, (U.S. 1973): Literal Truth is a Defense Under Perjury (and False
Declarations)
Facts: Ds company opened bank accounts in foreign countries. D wants bankruptcy
arrangement w/creditors: hearing on companys assets. D had personal bank account
for 5 years in Geneva. Testimony:
o Q: Do you have any bank accounts in Swiss banks, Mr. Bronston
o A: No Sir (true: did not have account at time of questioning)
o Q: Have you ever?
o A: The company had an account there for about 6 months, in Zurich (literally true
co. did have account in Zurich)
Issue: whether a witness may be convicted of perjury for an answer, under oath, that is
literally true but not responsive to the question asked and arguably misleading by
negative implication
Holding (Burger): 1621 cannot sustain a conviction based on Ds answer bc the govt did
not prove that the statement was false. Its not enough that it was unresponsive and in
casual conversation, wouldve implied that there was no personal account. This isnt
casual convo and this should have been cured by the lawyer asking questions to stop
witnesss evasion.
NOTE: Result under 1623 would be the same.
U.S. v. Libby: No Faulty Memory Defense
Facts: Scooter Libby tries to say his false testimony is excused because of faulty
memory. D wants to introduce memory expert to show that faulty memory is a valid
defense.
Holding: No, experts theories dont apply and are beyond the understanding of the
average juror.
United States v. Herring (11th Cir. 1990): False Statements: Indirectly Within the
Jurisdiction: Not Good Law
Facts: D falsely claimed unemployment to GA Dept of Labor to get benefits. US DOL
gives money to GA DOL to make sure that it is following procedures. The money covers
admin costs. D claims (a) not w/in jurisdiction of fedl agency (and even if it was, govt
must show I knew that and I didnt) and (b) not material.
Holding: Yes, w/in jurisdiction (and govt doesnt have to prove D knew that) and Yes,
material. 1001 is a proper basis for the prosecution of one who receives GA
Unemployment Insurance benefits as the result of filing false statements in the
application for such benefits.
Problem w/Herring: overbroad (what if a teacher working at a school that gets federal
funding lies and calls in sick?)
Brogan v. US, (U.S. 1998): False Statements: Can be Liable for an Exculpatory No
Facts: D is a union official who has been taking $ from an employer violating labor laws.
Agents come to investigate and ask if hell answer questions. He agrees. They ask if he
recd gifts from employer. Brogan says no. Agents knew he had. On appeal, D says
(a) an exculpatory no doesnt pervert govt functions, which is purpose of 1001, and
therefore is immaterial (b) affirmative defense is needed to protect privilege against
self-incrimination.
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Holding (Scalia): No, there is no exception to liability under 1001 for exculpatory no
statements. Congress intended the statute to be broad and exculpatory no does pervert
govt functionstheir purpose is to find the truth and D lied. The cruel trilemma
doesnt exist here bc D could have remained silentthe 5 th A gives you a right to
remain silent, not to lie.
o D says silence is illusory bc a suspect fears that silence will be used against him
later, or may not know silence is an available option. Just bc this is true, doesnt
mean its okay to lie.
o D says: risk prosecutorial abuse. Courts may not create their own limits on
statutes, even if there are policy arguments for doing so.
Concurrence (Ginsburg): Not for us to change but wake up Congress. Even though
Brogans little denial didnt actually mislead anyone, he is convicted of a federal
offense.
NOTE: In Concurrence, Ginsburg notes that 2 nd Cir. left open the question whether to
violate 1001, a person must know that it is unlawful to make such a false statement.
1st Cir. case mentioned by Garvey answers this in the affirmative
OBSTRUCTION OF JUSTICE
Omnibus Clause of 1503
US v. Aguilar, (U.S. 1995): Not guilty unless there is a Nexus
Facts: Tham files a post-conviction motion and asks C to help him by using their
relationship w/Aguilar, a judge. C meets w/Aguilar who meets w/judge hearing Thams
motion. Meanwhile, Tham is suspect in FBIs racketeering investigation. FBI wiretaps
Thams and Cs phone and discovers meeting btw C and Aguilar. FBI tells a judge who
tells Aguilar that C may be involved w/crime. Aguilar tells nephew to tell C he was being
wiretapped. Grand Jury convenes to investigate conspiracy to interfere w/Thams
motion. FBI speaks w/Aguilar who lies about his participation and knowledge of the
wiretap.
Issue: Does 1503 punish false statements made to potential grand jury witnesses?
Holding (Rehnquist): Uttering false statements to an investigating agent who may/may
not testify before a grand jury is not sufficient for a 1503 omnibus violation. 1) D must
have known/had notice that justice was being administered in a court; 2) Need intent to
influence judicial/grand jury proceedings (not intent to influence an ancillary
proceeding); 3) Nexus: endeavor must have natural and probable effect of interfering
w/due admin of justice (doesnt have to be successful)
Concurrence/Dissent (Scalia): Majoritys reading writes endeavor out of the statute.
Dont think you need to have nexus. It is a subjective crimeimpossible endeavors to
obstruct justice are okay. Acts specifically intended to influence, obstruct, or impede,
the due administration of justice are obviously wrongful, just as they are necessarily
corrupt.
NOTE: Not guilty bc actual nexus does not exist (had FBI said we are working for the
grand jury it would have)
US v. Cueto, (7th Cir. 1998): Corrupt: act w/purpose of obstructing justice; diff from
Intent to Obstruct (lawyer not liable just bc he intends to obstruct/influence but can
be liable if corrupt motive)
Facts: Venezia owned B&H, which supplied video poker games to bars and bar owners
would make gambling payouts to its customers (racketeering). ILCC and FBI
investigate, using Robinson as undercover liquor agent. Robinson tells Venezia that
hed stop investigating for money. Cueto is Venezias lawyer but they had other
business deals arising out of the illegal company. He drafts letter about Robinsons
conduct and files it in court. State court grants injunction against Robinson but then a
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bar owner is arrested. Cueto writes letter to ILCC, States Attorney, and FBI claiming
that Venezia was suffering damage bc of Robinsons interference w/Venezias business.
Venezia/B&H charged w/fedl racketeering. Cueto advised him during investigation and
prior to indictment but not during trial, though Venezia still relied on his advice.
Venezia/B&H convicted. Later, another grand jury returned a 2 nd indictment naming
Cueto, Venezia, and Romanik (public official).
Claim on Appeal: a) omnibus is unconstitutionally vague: much of what lawyers do are
attempts to influence the justice system and 1503 omnibus wasnt meant to cover that,
b) corruptly isnt a clear term and c) insufficient evidence
Holding: Omnibus clause may be used to prosecute a lawyers litigation-related
criminality and neither the omnibus of 1503 nor this courts construction of corruptly
is unconstitutionally vague as applied to Cuetos conduct.
Reasoning: A) Corruptly means to act w/a purpose of obstructing justicerequires that
D should have reasonably seen that the natural and probable consequences of his acts
was the obstruction of justice. B) Even a lawful act may violate 1503 is performed
corruptly. Congress drafted 1503 to be broad enough to cover lawyers even though
courts might hesitate. Cant use lawyer-status to protect yourself: attorney understands
this conduct is wrong. Lawyers who mistakenly obstruct justice wouldnt be guiltymust
have corrupt motive. C) Record supports conviction. Jury was justified in finding that
this his act of filing frivolous appeals and charges against Robinson were motivated by
his interest to safeguard his financial interest.
31
1) Ds defrauded the company out of money that they used for their personal
benefit
o 2) Ds defrauded the company out of money that they used for bribery (payoffs to
union officials)
Charge: scheme to defraud Mego and its stockholders by misappropriating proceeds for
self-enrichment, violating fiduciary duties to act honestly and faithfully in best interest
of the corp. and to account for the sale of all Mego property
Holding (Pratt): When a fiduciary fails to disclose material info to one whom he is under
a duty to disclose and where non-disclosure could/does result in harm to another, this is
enough for mail fraud. Here, there is sufficient evidence to say that D used proceeds for
non-corp. purposes in breach of duties to act in best interest of the corp. and to disclose
material info. This is enough money to constitute material and jury had enough
evidence to infer that Ds used scheme for personal gain. That being said, we
disapprove of this type of prosecution that should have been a derivative suit or state
criminal.
Dissent: Fiduciary duties are contractual obligationswire fraud is not the proper
statute to enforce them. This creates a new area of federal law where juries will now
decide what is in the best interests of a corp.
NOTE: Not embezzlement bc fedl embezzlement requires embezzlement of fedl funds
or embezzlement by fedl officials.
NOTE: Primary Duty is not to use corp. funds for personal gain or for bribery. Secondary
Duty is to disclose a breach of the primary duty. The failure to satisfy secondary duty
(i.e., non-disclosure) is the fraud.
o
US v. Bronston (2nd Cir): Lawyer can be liable under non-disclosure mail fraud for
failing to disclose conflict of interest
Bronston (lawyer) gave assistance to client who was competing for a franchise
w/another client represented by Bronstons firm. Court upheld conviction based on
fraudulent failure to disclose breach of fiduciary duty (actively engaging in efforts
designed to frustrate the precise endeavor which the other client had engaged the firm
to pursue)
McNally v. US, (S. Ct. 1987): Tangible Property
Facts: Hunt (Dem Party Chairman) and Gray (Public Official) have power to select
insurance co for Kentucky. They select Wombwell. Kentucky gives premiums to
Wombwell who gives premiums to insurance underwriters. Insurance Underwriters
provide insurance to Kentucky and give commission to Wombwell. Wombwell keeps
some $ and gives the rest to Seton Insurance (owned by Hunt and Gray), Snodgras
(owned by McNally, private individual) and to other entities. Gray and Hunt had set up
Seton for the sole purpose of getting commissions (before Gray was public official).
Hunt pleaded guilty to mail fraud and Gray and McNally were charged (McNally as
accomplice, Gray as either principal or accomplice).
Charge: Mail fraud (mailing: commission check to Wombwell by insurance co from which
it secured coverage for KT). Govt says Ds defrauded KT citizens + govt of intangible
rights such as right to have KTs affairs conducted honestly
Issue: Does a state officer commit mail fraud if he picks an insurance agent to provide
insurance for the state but requires that agent to share its commissions w/other
insurance agencies, one in which the officer has an ownership interest?
Holding (White): No bc scheme to defraud must have a cognizable object (money or
property). One deemed a public official owes fiduciary duty to public and misuse of his
office for private gain is fraud. Mail Fraud protects property rights but doesnt refer to
the intangible right of the citizenry to good govt. History suggests it was only meant to
protect property rights and we take the less harsh reading when Congress is less than
34
Carpenter v. US, (S. Ct. 1987): Right to confidential Information satisfies object for a
mail/wire fraud conviction
Facts: Winans WSJ column gives info on investing in certain stock. Bc of its reputation,
it had the ability to affect stock price and prior to publication, the info in the column was
confidential. However, Winans agreed to give two brokers advance info about the
column, letting brokers buy/sell based on the column. SEC began investigation
Denials eventually, Winans and Carpenter (Winans aiding/abetting roommate) went
to SEC and revealed scheme Indictment and bench trial.
Holding (White): Winans knowingly breached a duty of confidentiality by
misappropriation WSJs confidential info from the column. This is different type of object
than honest services in McNally bc confidential info is actually (WSJs) property,
although it is intangible. It fits concept of fraud: wronging one in his property rights by
dishonest methods or schemes, usually signify the deprivation of something of value by
trick, deceit, chicane, or overreaching.
NOTE: Non-Disclosure Fraud:
o Defendants violated their duty to WSJ to keep information confidential (primary
duty)
o Ds were obligated to disclose that breach (secondary duty)
o Ds failed to do so.
Right to Control Theory: Denying victim the right to control its assets by depriving it of
info necessary to make a discretionary economic decision
Wallach, 2nd Cir: questionable payments made to people (one a corp. director)
supposedly as payment for assistance in an IPOdisguised so they didnt have to be
disclosed to SEC.
o Holding: Fraudulent deprivation of shareholders right to control how corp.
money was spent
DAmato, 2nd Cir: a D in a right to control case must intend to injure the person misled,
and that person/entity must be the target of the inaccurate or concealed info. Not if
officer in good faith believes his misrep is legal and in best interests of corp. D can
show: 1) Mgmt has made an otherwise lawful decision that concealment or failure to
35
disclose is in corp.s best interests and 2) Mgmt acted in good faith and did not intend
to benefit personally from the deception.
Cleveland v. U.S., S. Ct. 2000: D had tax problems so he concealed the fact the he was a
business-owner in the license application which was mailed to the state.
o Holding: not property in govts hands bc States core concern is regulatory and
whatever financial stake it had in licenses accrues only after theyve been issued.
Rejected right to control argument that D frustrated govts right to control
issuance of licenses: far from composing a recognized property interest, these
intangible rights of allocation, exclusion, and control amount to no more and no
less than LAs sovereign power to regulate
Skilling v. US (S. Ct. 2010): Intangible Non-Property (i.e., honest services) can be an
object only if it involves bribes or kickbacks
Facts: Skilling makes misrepresentations to market about Enrons health, which
increases stock price of Enron. Enron gives him salary bonuses and sale of stock for his
work (where honest services comes in).
Issues/Holding (Scalia):
o Is 18 U.S.C. 1346 unconstitutionally vague (DP violation)
The statute is not unconstitutionally vague (contrary to concurring justices)
o If not, did Skillings conduct fall outside the scope of that statute?
Skillings conduct does not fall within the statute1346 covers only
schemes to deprive another of honest services through bribes or
kickbacks supplied by a 3rd party who has not been deceived, where the D
owes the victim a duty to disclose (based on a fiduciary relationship) the
bribe or kickback
NOTE: What questions remain open after Skilling?
o What exactly is covered by the prohibition against bribery and kickbacks?
o When does a fiduciary relationship exist such that a bribe or kickback must be
disclosed?
o Can conflict-of-interest (self-dealing) cases be characterized as thefts of
intangible property
36
37
Secrist may have had a good motive of exposing fraud but he went about it in a
bad way
39
CONSPIRACY
US v. Arch Trading (4th Cir. 1993): Exec order constitutes an offense under 371 when
Congress authorizes it and sets up sanctions.
Facts: Pres. Bush prohibited US persons from going to Iraq or dealing w/govt of Iraq.
Earlier, AT contracted w/Agricultural of Iraq to ship and install equipment in Iraq.
Shipments were made but installations were not done before Presidents order, of which
AT received copies. Two AT execs attempted to enter Iraq to install the equipment.
That failed so they had a Jordanian company install but an AT exec helped coordinate.
To cover this up, AT submitted backdated docs for money from Kuwaiti bank and asked
Jordanian company to backdate its confirmation of performance. Kuwaiti bank wouldnt
give money until govt office licensed it. AT wrote letter, backdating again. Govt office
wrongly replied that license wasnt needed. AT indicted for conspiracy.
Defense: 371 criminalizes conspiracies to commit an offense against the US and
conspiracies to defraud the US. AT was charged w/the former but said it could only have
been the latter, bc violating exec order doesnt constitute an offense
Holding: When Congress provides criminal sanctions for violations of exec orders that it
empowers the President to issue, such violation constitutes an offense for the
purposes of 371. The two prongs of 371 are not mutually exclusive: can be charged
under both.
US v. Stevens (11th Cir. 1990): A sole controlling stockholder cant be guilty of
conspiracy w/a corp. in absence of another human actor.
Facts: D made 4 corps which entered into a contract w/Navy. D misrepresented that
certain work ahd been performed in several requests for progress payments.
Issue: Can a sole stockholder conspire w/a corp.?
Holding: A sole stockholder who completely controls a corp. and is the sole actor in
performance of corp. activities cant be guilty of conspiracy w/that corp. in absence of
another human actor. We have held that corp may be liable under 371 when conspiring
w/its officers or employees. We rejected the single entity theory bc conspiracy is meant
to deal w/danger posed to society by combinations of individuals acting in concert.
US v. Recio (S. Ct. 2003): Impossiblity is not a defense to conspiracy charge.
Facts: Conspiracy to distribute drugs; govt seizes the drugs and then D joins conspiracy
not knowing that govt has already seized the drugs. D cites Cruz (9th Cir) which held
that conspiracy terminates when there is affirmative evidence of abandonment,
withdrawalor defeat of the object of the conspiracy (i.e., when govt makes goals
impossible).
Issue: Does conspiracy end automatically when the object of the conspiracy becomes
impossible to achieve
Holding (Breyer): No, conspiracy law does not contain any automatic termination rule.
The crime of conspiracy is separate from underlying offense so it doesnt stop when
underlying offense becomes impossible.
US v. Stavroulakis (2d Cir 1992): Essential nature requirement is not defeated when, in
a money laundering conspiracy, Ds dont know from which SUA the dirty money
cameagreement to launder dirty money is enough.
Facts: Govt informant introduced D to undercover FBI agent who said he was
connected w/organized-crime people wanting to launder a lot of money from narcotics.
D took the bait and agreed to introduce FBI agent to his accountant, assuring him that
hed find a way to launder the cash. When Ds accountant wouldnt do it, he got
someone else at NMBG bank but told him it was gambling money, not narcotics money.
D made elaborate scheme for laundering the money: hed open an account at NMBG,
40
money would be deposited there then transferred to Greece, where itd go through a
fake corp, etc. etc. The schemers met to plan a few times.
Defense: no agreement on the essential nature of the plan bc D believed the money
came from narcotics while the bank guy thought it was from gambling.
Holding: Conspiracy doesnt require that co-conspirators believe that the money to be
laundered is derived from the same specified unlawful activity as long as the unlawful
source is proven to be one of the SUAs.
US v. Gatling (D.C. Cir. 1996) In determining whether there is one conspiracy or more,
we look at whether the Ds shared a common goal, any interdependence btw the
alleged participants, and any overlap among alleged participants.
Facts: Gatling and Walker work in Section 8 Div. in DCs Dept of Public Housing. Section
8 gives vouchers to help cover qualified applicants rents. There is a process for
categorizing applicants and putting them on a wait list, w/highest need getting first
dibs. In exchange for bribes, Ds gave subsidiaries to ineligible individuals. There are
two schemes: DC scheme and Chicago Scheme.
o What links Walker to Chicago Scheme?
Bufford says he paid Walker $1,000 and she told him to pay $1,000 to
Gatlingno real evidence of this.
Defense: Walker says she thought he had authority to do this.
o What links Walker to D.C. Scheme?
Knight says: Jackson said Gatling splitting money w/Walker (comes in bc
of hearsay exception as Jackson was co-conspirator)
Johnson says: Jackson said Walker is doing it with Gatling
Knight says: Walker helped Gatling with photo-copying.
$6,000 deposit
Talking to Gatling about the number of rooms and helping her photocopy.
Issue: Is Walker guilty? She says evidence establishes at most the existence of two
conspiracies, one Chicago and one DC.
Holding: No, this is one conspiracy bc the schemes shared a common purpose and
overlaps in time and actors. In determining whether there is one conspiracy or more,
we look at whether the Ds shared a common goal, any interdependence btw the
alleged participants, and any overlap among alleged participants. This may not be
as interdependent as a drug chain conspiracy, but still is sufficient.
NOTE: Matters bc if there were two, there would have been a variance btw indictment
and evidence which could be grounds for reversal if it substantially prejudiced the D.
NOTE: If we take away hearsay statements, we are left with insufficient evidence.
US v. Tilton (5th Cir. 1980): Pinkerton: D is guilty of substantive offense committed by
co-conspirator if it was committed in furtherance of the conspiracy (could
reasonably be foreseen as a natural consequence of the conspiracy), even if D
didnt participate in the acts
Facts: D works for Sea-Land, which starts program to send refurbished chassis to Saudi
Arabia. D selects Streaker (owned by Fiore & Brenner) to do chassis reconditioning.
Fiore tells Brenner that D needs commission for each chassis and to bury the payment
in the books as travel expenses. Brenner do so. D did this w/a different company, UTS
(owned by Cotrone and Gillespie) but UTS inflated invoices in order to make up for the
commission. D indicted for conspiracy to commit mail fraud
Holding: Evidence is sufficient to show that D conspired to commit mail fraud. The
scheme of inflating invoices mailed to Sea-Land in order to generate commissions
defrauded Sea-Land. The mailing was the padded invoices. Bc D was part of a
conspiracy, he can be convicted of the substantive offense based upon acts committed
by a co-conspirator in furtherance of the conspiracy as long as the facts fall w/in the
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RICO
US v. Turkette (U.S. 1981): The enterprise must be sufficiently distinct from the
pattern of racketeering activity
Facts: Enterprise was group of individuals associated for purpose of drug trafficking,
bribery. D allegedly led the enterprise.
Claim on Appeal: No enterprise here because the enterprise is not sufficiently distinct
from the racketeering activity.
Holding (White): No, enterprise encompasses both legitimate and illegitimate
enterprises under RICO. Statute and legislative history suggests that it encompasses
both. We disagree w/lower courts that ejusdem generis should be followed and we
recognize a difference btw the group as an enterprise and the act. We know that the
major purpose was to address infiltration of legitimate business by organized crime but
we dont see anywhere that this was the exclusive purpose.
Ejusdem generis: where general words follow a specific enumeration of persons or
things, the general words should be limited to persons or things similar to those
specifically enumerated (because each enterprise listed is legitimate)
Cedric Kushner Promotions v. King Person must be distinct from the enterprise
with which the person is associated but there is a low threshold
Facts: Don King is president and sole shareholder of Don King Promotions. P says King
has conducted the corporations affairs through illegal racketeering but acted w/in
scope as corp. employee.
Issue: Are there two distinct entities, a person and a separate enterprise?
Holding (Breyer): Yes, person and enterprise are distinct. We agree that there must be
two entities (person and enterprise) and that there must be some distinctness between
them but we dont think it has a very high threshold. Here, a corp. owner is distinct
from the corp. bc they have a different legal status. That is sufficient. We distinguish a
2d Cir case bc there, P alleged that the person was the corp. and the enterprise was the
corp. w/all the employees.
Hypotheticals
Person: Individual A AND Enterprise: Individual A
NO
Person: Corp. B AND Enterprise: Corp B
NO (BUT
okay under 1962(a))
Person: Employee A AND Enterprise: Corp. B
YES (Cedric
Kushner)
Person: Employee A AND Enterprise: Employee A + Corp. B
YES
Person: Individual A AND Enterprise: Individual A, Individual B, Individual C, etc.
YES (Turkette)
Person: Corp. B AND Enterprise: Corp. B + Employee A (or Subsidiary Corp A)
NO
(Riverwoods, 2d. Cir. 1994 p. 691 n.4
H.J. Inc. v. Northwestern Bell Tel. Co. (U.S. 1989): Continuity and Relationship Test
Facts: Ps, customers of D, allege bribery and violations of 1962(a)-(d) by D, employees,
officers, and MPUC members. MPUC: responsible for determining rates that D may
charge. Ps say D sought to influence members of MPUC to give them higher rates than
reasonable, by giving cash/gifts to commissioners.
o 1962(a): got income from the scheme
o 1962(b): came to control MPUC
Holding (Brennan): Pattern of racketeering does not require proof of multiple schemes
just must satisfy continuity and relationship test: showing of (a) a relationship btw at
43
least 2 predicate acts and (b) the threat of continuing activity. Here, over 6 years, Ds
gave five members of MPUC bribes for the common purpose of getting unreasonable
rates. On remand, threat may be demonstrated by showing that alleged bribes were a
regular way of conducting Ds ongoing business.
Concurrence (Scalia, OConnor, Rehnquist, Kennedy): Pattern was meant to import some
requirement beyond multiple acts. Todays opinion hasnt helped. This is bad in the
RICO context bc RIO is validating the federalization of broad areas of state common law
of frauds. Indicating that a constitutional challenge is needed
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RICO CONSPIRACY
US v. Elliot (5th Cir. 1978): Although the Ds must agree to commit a pattern of
racketeering activity, they need not agree to commit the same pattern as long as
the Ds pattern involve the same enterprise.
Facts: 6 Ds convicted under 1962(d) of conspiring to violate 1962(c). Various people
engaging in various illegal acts: stealing cars, meat, and dairy, arson, murder, drugs,
etc. Activities are kind of divided into 2 different depts, both led by one D.
Claim on Appeal: Ds acts arent proscribed by underlying 1962(c) bc they were not
committed in furtherance of the affairs of an enterprise. Ds argue that there was not
one big conspiracy (bc then murder would be linked w/other lesser crimes)
Holding:
o Jury reasonably inferred existence of one enterprise led by one D w/circumstantial
evidence. Discusses wheel and chain conspiracy and finds that if we were
applying these pre-RICO concepts, it would be tough to find a single conspiracy.
Here, Congress intended to authorize prosecution of a multi-faceted diverse
conspiracy by freeing the govt of the multiple conspiracy doctrines and focusing
instead on: enterprise. The key in RICO conspiracy is that each D agreed to
participate directly and indirectly in the affairs of the enterprise by
committing two or more predicate crimes. It is irrelevant that each D
committed different predicate crimes as long as we reasonably infer that each
crime was intended to further the enterprises affairs.
o Constitutional Consideration: Court looks at whether RICO comports w/the
constitutional due process requirement that guilt remain individual and
personal. Finds that govt can use circumstantial evidence to show conspiracy
but Court cannot say it violates due process bc it doesnt authorize that
individuals be tried en masse nor does it punish mere association w/conspirators
and knowledge of illegal activity (focus is still on the conduct).
o An individual, by words or actions, must have objectively manifested an
agreement to participate, directly or indirectly, in the affairs of an
enterprise through the commission of two or more predicate crimes.
Govt doesnt need to show that a D knew all of the details of the conspiracy, just
must know the essential nature of the plan (bc secrecy and concealment are part
of this type of crime) Here: essential nature of plan was to associate for the
purpose of making money from repeated criminal activity.
o We do not lightly dismiss the fact that 4 Ds who didnt commit murder are
standing trial jointly with and as confederates of 2 others who did. We know
prejudice will occur but the Constitution doesnt guarantee a trial free from
prejudice that inevitably accompanies any charge of heinous group crime.
NOTE: w/o RICO, youd have 2 counts of conspiracy. Because 1962(c) is in the picture, it
is an association-in-fact enterprise, leaving us with one conspiracy.
Salinas v. US (U.S. 1997): D doesnt have to agree to commit 2 predicate acts, himself
agreeing that one of the conspirators will commit the object of the agreement
suffices.
Facts: B-A, a prisoner, bribes Sheriff (for money) to get contact visits w/his wife/gf.
When Sheriff wasnt available, Salinas arranged for the contact visits and stood watch
outside the room where they took place. He got a truck and watch. Salinas was
convicted of one 1962(d) count and two 666 bribery counts (acquitted of 1962(c)
charge).
Issue: Does a 1962(d) conspiracy to violate 1962(c) require each conspirator to agree
that he or she will personally commit acts constituting a pattern of racketeering
activity?
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46
Holding (Kennedy): No, bc general conspiracy principles require only an agreement that
one of the conspirators will commit the object of the agreement. Each D is responsible
for the acts of the other. A conspirator must intend to further an endeavor, which, if
completed, would satisfy all elements of the substantive offense, but it suffices that he
adopt the goal of furthering the criminal endeavor. The interplay btw c and d doesnt
permit us to excuse from the reach of conspiracy an actor who does not himself commit
or agree to commit 2+ acts. Here, the Sheriff committed at least 2 acts and Salinas
knew about/agreed to facilitate the scheme. This is sufficient.
NOTE: acquitted of 1962(c) bc 666 isnt a RICO predicate and jury didnt believe that
Salinas was guilty of state law bribery, which were the alleged predicates for 1962(c)
count. But D was guilty of 1962(d) because he agreed that Sheriff would
commit state-law bribery
MONEY LAUNDERING
1956 and 1957
US v. Campbell (4th Cir. 1992): Concealment Prong of (a)(1): D must know a) proceeds
come from unlawful activity (but need not know what unlawful activity) and b) that
transaction was designed to conceal (but it need not be Ds purpose to conceal)
Facts: Real Estate Agent Campbell helps Lawing, a drug dealer, buy a house. Lawing
represented himself as a businessman. He drove Porsche and once showed briefcase w/
$20,000 to Campbell. To pay for house, Lawing took out a mortgage in his parents
name and got the sellers to let him give them $60,000 under the table in cash (in paper
bags) in return for lower contract price (made up a reason for doing this). Lawing tipped
Campbell w/a couple hundred dollars.
Charges: 1956(a)(1)(B)(i) domestic money laundering and 1957(a) engaging in
transaction in criminally derived property
Claim on Appeal: There is insufficient evidence for jury to find that Campbell knew (a)
that funds were the proceeds of illegal activity and (b) that the transaction was
designed to disguise the nature of those proceeds.
Holding: Evidence is sufficientGovt must only show that D possessed the knowledge
that transaction was designed to conceal illegal proceeds and D doesnt have to know
the specific illegal activity from which the money came. Knowledge is shown through
willful blindness here. D does not have to have the purpose to conceal nor does she
have to know the specific unlawful activities involved. Here, there is evidence to show
D a) knew that Lawson was using money from unlawful activity and b) knew that the
transaction was designed to conceal the nature of his proceeds.
1956(a)(1)(B)(i) requires Ds knowledge of 2 separate facts:
o 1) that funds involved in the transaction were the proceeds of illegal activity
o 2) that transaction was designed to conceal the nature of the proceeds
NOTE: Govt can appeal the acquittal here bc the jury convicted. The trial court entered
judgment of acquittal bc weight of the evidence warranted a new trial. The jury verdict
is reinstated, and Campbell gets a new trial.
NOTE: Under 1956(a)(3): not guilty bc it requires intent to conceal
US v. Piervinanzi (2d Cir. 1994): The promotion sections of 1956(a)(2) do not require
that the promotion is for a SUA other than the underlying SUA.
Facts:
o Irving Scheme: DelG (Irving employee) offers to help Marchese and Piervinanzi do
an illegal wire transfer of funds from Irving Trust into an overseas account. Tichio
says he and Rambali can set up account in Cayman Islands. Were to steal $10
million. Piervinanzi to provide security. He asks Robin to make call to Irving to
initiate transfer. DelG was scared so he sabotaged the deal by not providing
Robin w/a correspondent bank so deal would fail.
o Morgan Guaranty Scheme: DelG left Irving and moved to Morgan. He had to
perform audit of banks wire transfer dept. DelG, Marchese, and Pierinanzi began
planning a fraudulent wire transfer from Morgan. Get identity of a correspondent
bank. Robin calls again and directs a wire transfer of $24 million to the selected
account in London w/Bankers Trust as correspondent. Although Robin had all
necessary info, Morgans clerk was suspicious bc Robin didnt sound like the man
he claimed to be (Cicio). The wire transfer was reversed.
Charges: 1956(a)(2), 1957, conspiracy, attempted bank fraud and money laundering
from Irving scheme; actual wire fraud, attempted bank fraud, attempted money
laundering from Morgan scheme
Claims on Appeal:
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Defense Side
Defense generally cannot get a copy of the witnesss testimony (but there are exceptions under
Rule 6) and can get access if witness becomes a witness at trial
Policing and Prosecutorial Misconduct: How to Police Prosecutors:
Defense must gather evidence w/o access.
Defense can gain access once it makes the required showing based on evidence gathered w/o
access (particularized need must be shown)
Court can review minutes in camera.
An indictment will not be dismissed unless the errors were prejudicial, i.e., the errors
substantially influenced the decision to indict (Bank of Nova Scotia)
Federal courts lack supervisory power to promulgate rules to police prosecutorial misconduct
(Williams)
DISCOVERY
Overview
Discovery by the defense in criminal cases is much more limited than discovery by the parties
in civil cases
o No depositions, no interrogatories, etc.
o Why more limited:
Pre-trial discovery would encourage perjury (bc if you know what they have, you
can concoct lies or intimidate witnesses)
Defense shouldnt be permitted to discover the Govts case bc the Govt cannot
discover the Ds defense
Think about it temporally at what time can the govt cite certain rules to get info:
1) Pre-indictment
o Defense
No rule under Const. or fedl law that entitles or actively enables defense to get
anything from 3rd parties
Freedom of Information Act requests
o Government
Grand jury subpoenas
2) Post-indictment, pre-trial
o Defense:
1) Brady v. Maryland: constitutional rule obligating the govt to disclose certain
kinds of info before trial;
2) Rule 16- a limited discovery device;
3) Rule 17 subpoena that the defense can obtain in order to gather info from
third parties
o Government:
51
Rule 16
3) Trial
o Defense:
Jencks Act: statute that imposes an obligation on the govt to disclose witness
statements;
Fed. R. Crim. P. 26.2: a reciprocal rule that imposes a reciprocal obligation on the
defense (they are thought of interchangeably)
o Government:
Rule 26.2
A) Ds oral statements
The substance of any relevant oral statement made by D, before or after arrest, in
response to interrogation by a person the D knew was a govt agent if the govt
intends to use the statement at trial.
o B) Ds written or recorded statements
i) Any relevant written or recorded statement by D if
Statement is w/in govts possession, custody, or control and
Attorney for the govt knows or through due diligence could know that the
statement exists
ii) The portion of any written record containing the substance of any relevant oral
statement made before or after arrest if D made the statement in response to
interrogation by a person D knew was a govt agent
iii) The Ds recorded testimony before a grand jury relating to the charged offense.
o C) Corp. statements
o D) Ds criminal record
o E) Documents and Objects w/in the govts possession, custody, or control IF
i) The item is material to preparing the defense
ii) The govt intends to use the item in its case-in-chief at trial OR
iii) The item was obtained from or belongs to the D
Q arises: how does materiality under Brady compare to materiality under Rule
16??
A: Some courts say they mean the same thing. Other courts say materiality
under Rule 16 can include inculpatory evidence as well as exculpatory
evidence.
A: Evidence is material if there is a strong indication that it will play an
important role in uncovering admissible evidence, aiding witness
preparation, corroborating testimony, or assisting impeachment of
rebuttal OR if it can be used to counter the govts case or bolster a
defense [2d Circuitbroad]
NOTE: For exam, recognize that materiality may be same/diff from Brady
and refer to n. 2 on 844-45 to explain the different standards and apply
them to the issue.
o F) Examination and test reports
o G) Expert witness summaries
(a)(2): Work product privilege applies unless Rule 16(a)(1) provides otherwise; witness
statements discoverable only through Jencks Act.
(b)(1): Disclosure to the Govt
o A) Documents and Objects: If D requests disclosure under 16(a)(1)(E) and govt complies,
then D must permit govt, upon request, to inspect/copy/photograph books, papers, docs,
data, photos, tangible objects, buildings/places, or copies or portions of these items if:
i) The item is w/in Ds possession, custody or control AND
ii) D intends to use the item in Ds case-in-chief
o B) Examinations and Tests: If D requests disclosure under 16(a)(1)(F) and govt complies,
D must permit govt, upon request, to inspect/copy/photograph the results or reports of
any physical or mental exam and of any scientific test/experiment if:
The item is w/in Ds possession, custody, or control AND
D intends to use the item in the Ds case-in-chief at trial, or intends to call the
witness who prepared the report and the report relates to the witnesss testimony
o C) Expert Witnesses: D must, at govts request, give to govt, a written summary (which
includes witnesss opinions, bases, and reasons, and qualifications) of any testimony D
intends to use under FRE 702, 703, or 705 as evidence at trial if:
D requests disclosure under 16(a)(1)(G) and govt complies OR
D has given notice under Rule 12.2(b) of an intent to present expert testimony on
Ds mental condition.
(b)(2): Information NOT subject to Disclosure: Except for scientific/medical reports 16(b)(1)
doesnt authorize:
o
53
o
o
6) Is D entitled to access to the draft reports turned over to govt by McG? YES, under 16(a)(1)
(B)(ii)
7) Assume both govt and D have submitted reports to their own expert doc examiners for
handwriting and those experts have submitted written reports of their findings. Govts report
reaches indeterminate resultmust govt turn over report? YES under Brady, 16(a)(1)(F)(iii)
or 16(a)(1)(E). Assume it does. Ds expert detects fingerprints not noted in govt report but D
fears they are Osmust defense turn it over? NO bc not intending to use it.
Assume McG agreed to plead guilty in a cooperation agreement w/govt. McG completes direct exam.
Defense earlier filed motion for Jencks material.
8) Is D entitled to discover McGs criminal record to impeach him? Must govt turn over McGs
coop agreement? Plea colloquy? Pleadings and depos in McGs civil action?
o Yes under Brady if it is exculpatory and w/in Governments possession.
o Yes under Jencks if it constitutes a statement in the Governments
possession and related to the testimony.
9) Agents met w/McG and took about 25 pages of handwritten notes generally summarizing his
infois D entitled to discover?
o Yes under 16(a)(1)(E)(i) if it is material to Ds case
o Yes under Brady if exculpatory
o Probably not under Jencks bc not a statement
10) Agent dictated 20 page memo describing interviews w/McGuigan using handwritten notes to
prompt his memorymust govt turn over memo? How about dictation tape?
o Yes under 16(a)(1)(E)(i) if it is material to Ds case?
o Yes under Brady if exculpatory
11) In grand jury, agent testified regarding McGs statements to agentsmust grand jury
transcript be produced?
o Turn over under Brady or 16(a)(1)(E)i) if material
o Probably not under Jencks unless agent testified at trial
12) Just before trial, govt gets letter from McG about govts failure to follow through on
promises it had allegedly made to him in terms of protecting him from fall-out. Must govt turn
this over?
o Yes under Jencks Act insofar as it is related to witnesss testimony.
13) After speaking w/McG AUSA prepares draft script summarizing his likely testimony on 6
typed pages.
o No under Jencks (not McGs statement)
o No under Brady bc it is not exculpatory
o No under Rule 16
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FIFTH AMENDMENT
I. Testimony and Immunity
A. Overview of Fifth Amendment Privilege Against Self-Incrimination
What: When questioned by the govt at a grand jury, at a trial, or in other official settings, an
individual has the right not to answer if the response might incriminate the individual in a
criminal case
Immunity: The govt can only compel testimony in such a case by obtaining an order that
grants the defendant immunity
Language: No person shall be compelled to be a witness against himself
No person:
o Only natural persons (and sole proprietorships) possess the privilege
o Corporations do not (collective entity doctrine)
shall be compelled
o Privilege can only be asserted in the face of compulsion
o
In the grand jury or at trial the compulsion is a contempt order
o Outside the grand jury or trial compulsion includes custodial interrogation, which is the
basis for the Miranda warnings
to be a witness
o Privilege protects against being forced to give testimony
o Testimony must be incriminating
o It must form a link in the chain leading to criminal liability
against himself
o Testimony must incriminate the person giving it, not someone else, in order to be
privileged
Remain Silent
Contempt
Remain Silent
NOTHING
Remain Silent
Contempt
Answer
Truthfully
SelfIncrimination
SelfIncrimination
Answer
Truthfully
IMMUNITY from
Incrimination
Lie
Perjury
Answer
Truthfully
Lie
Perjury
Lie
Perjury
WILL IT DISPLACE
5th A?
NO
YES
YES
WHE
RE
WHA
T
Formal Immunity
18 U.S.C. 6001-05
6002 Immunity Generally:
no testimony or other info compelled under
the order (or any info directly/indirectly
derived from such testimony or other info)
may be used against the witness in any
criminal case
Informal Immunity
- Plea bargain agreement
- Cooperation agreement
- Non-prosecution agreement
*The Circuit Split: Must the Govt only show an independent source for the evidence it uses,
OR must it also show that the witnesss/prosecutors exposure to the immunized testimony did
not change his/her testimony/decision-making
Proffer session: The person who is a prospective witness to whom you are thinking about
granting immunity will say things, presumably incriminating things.
Problem: D wont give incriminating testimony w/o immunity and Govt wont grant immunity w/o
incriminating testimony.
Solution: Fed. R. Evid. 410: no use may be made of statements made in proffer sessions, but
allows for the derivative use of such statements.
PROFFERS SUMMARY
IS THE FOLLOWING USE OF STATEMENTS FROM PROFFER SESSIONS PERMITTED OR NOT?
Queen-for-a-Day
Formal Immunity
Rule 410
Agreement
Testimony in a
perjury or false
Yes
Yes
Yes
statement
prosecution
Testimony in case in
chief in another
No
No
No
prosecution
Derivative evidence
No
Yes
Yes
in any prosecution
Testimony for
No
No
Yes (Mezzanatto)
Impeachment
Testimony for
No
No
Yes (Velez)
rebuttal
Rationale: The 5th A protects against compelled self-incrimination and docs were not created
under compulsion.
TEST: Does act of production involve testimonial self-incrimination?
Step 1) Is the act of production testimonial:
o Testimonial: An act is testimonial if it communicates any factual assertions, implicit or
explicit, or conveys any info to the Govt (Doe v. US, U.S. 1988: Grand jury investigation
bc D is believed to have accounts in foreign bank. D is ordered to sign consent form,
allowing Bank to disclose Ds documents)
o An Act of Production can be testimonial with regard to:
1) Existence: The docs you ask for exist
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POSSESSION
Testimonial
Incriminating
No. Possession
was a foregone
conclusion
No
AUTHENTICITY
Testimonial
Incriminating
Not Clear
No
Collective Entity Doctrine: Corporations cannot assert the Fifth Amendment bc they are not
persons
A corp. employee cannot resist a subpoena issued to the corp. based on his own 5 th A act-ofproduction privilege
o Braswell v. US, U.S. 1988, held that a corp. custodian cannot resist a subpoena based on
his own 5th A act of production privilege
BUT: the Govt may make no evidentiary use of the individual act [of production] against the
individual
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Braswell: For example, in a criminal prosecution of the custodian, Govt may not
introduce into evidence before the jury the fact that the subpoena was served upon and
the corp.s docs delivered by one particular individual, the custodian
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POSSESSION
Testimonial
Incriminating
AUTHENTICITY
Testimonial
Incriminating
NOTES:
Base offense level, specific offense characteristics, and Chapter 3 adjustments are
determined on the basis of the following:
1) Acts and omissions of the defendant
2) Reasonably foreseeable acts and omissions of others in furtherance of jointly undertaken
criminal activity (i.e., Acts and Omissions of Accomplices)
3) All Acts and Omissions in reference to the Offense of Conviction from Preparation to Avoidance
4) Acts and omissions describe above if groupable under 3D1.2(d) and part of the same course
of conduct or common scheme or plan.
5) All harm resulting from the acts and omissions of these persons over this period of time and
all harm that was the object of those acts and omissions
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