white-collar crime

Arthur Andersen LLP v. United States

 

Arthur Andersen LLP was convicted of witness tampering under 18 U.S.C. § 1512(b). The 5th Circuit upheld the conviction, despite Andersen's claims that prosecution did not enter evidence about the numerous documents Andersen did not destroy, that the judge allowed improper evidence of past SEC investigations of Andersen, and that the judge misrepresented the offense in the jury instructions with regards to actual knowledge that certain actions constituted a crime under the circumstances and timing of the commission of the actions. Andersen again challenges the conviction, this time before the U.S. Supreme Court.

Questions as Framed for the Court by the Parties

Whether Arthur Andersen LLP's conviction for witness tampering under 18 U.S.C. § 1512(b) must be reversed because the jury instructions upheld by the Fifth Circuit misinterpreted the elements of the offense, in conflict with decisions of the Supreme Court and the Courts of Appeals for the First, Third, and D.C. Circuits.

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Black v. United States

Issues

Whether honest services fraud requires a showing of economic harm, and whether a preservation requirement enables an honest services fraud conviction to be upheld without analyzing jury instructions for error.

 

The United States convicted Petitioners Conrad Black, John Boultbee, and Mark Kipnis of mail and wire fraud under 18 U.S.C. § 1341. The Seventh Circuit affirmed the convictions, rejecting arguments that the trial judge erred in failing to instruct the jury that a violation of 18 U.S.C. § 1346 requires contemplation of economic harm to the party to whom one owes “honest services.” The Seventh Circuit further held that objection to the prosecution’s request for a special verdict constituted waiver of the right to challenge the trial judge’s instruction in light of the fact that a special verdict would have clarified whether the trial judge’s instruction regarding honest services fraud was the basis for the convictions. The Supreme Court’s decision will determine the limits of the honest services provision and the means by which to preserve instructional error.

Questions as Framed for the Court by the Parties

1. Whether 18 U.S.C. § 1346 applies to the conduct of a private individual whose alleged "scheme to defraud" did not contemplate economic or other property harm to the private party to whom honest services were owed.

2. Whether a court of appeals may avoid review of prejudicial instructional error by retroactively imposing an onerous preservation requirement not found in the federal rules.

Hollinger International, Inc. (“Hollinger”), owner of the Chicago Sun-Times, came under governmental suspicion in 1998 when it began executing non-competition agreements in connection with the sale of most of its smaller newspapers. See United States v. Black, 530 F.3d 596, 599 (7th Cir.

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Additional Resources

• New York Times, Adam Liptak: A Question of When Dishonesty Becomes Criminal (Oct. 12, 2009)

• Wall Street Journal Law Blog: Conrad Black, the Supreme Court, and Honest Services Fraud (May 23, 2009)

• Wall Street Journal Law Blog: It’s Not Just the Skilling Case: High Court Tackles Honest Services Fraud (Oct. 13, 2009)

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Ciminelli v. United States

Issues

Are schemes that deprive a person of information regarding an economic decision punishable under the federal wire fraud statute?

This case asks the Supreme Court to decide whether the “right to control” theory of fraud creates a cause of action under the federal wire fraud statute. Under the “right to control” theory, the federal wire fraud statute may be used to punish schemes which intend to deprive a victim of valuable information regarding an economic decision. Ciminelli claims that the “right to control” theory improperly expands rights considered in the fraud statutes and improperly eases the government’s burden of proof. United States maintains that the “right to control” is properly limited to specifically target information deprivation schemes with tangible economic harms and that Ciminelli’s conviction holds even without the “right to control” theory. This case has significant implications for the construction industry, concerns of overcriminalization, and the limit of federal jurisdiction.

Questions as Framed for the Court by the Parties

Whether the US. Court of Appeals for the 2nd Circuit’s “right to control” theory of fraud ­­– which treats the deprivation of complete and accurate information bearing on a person’s economic decision as a species of property fraud – states a valid basis for liability under the federal wire fraud statute.

In 2012, Andrew Cuomo, New York Governor at the time, launched the “Buffalo Billion” initiative to develop the Buffalo area with $1 billion in taxpayer funds. United States v.

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entity liability

Pinkerton liability

Pinkerton liability allows an actor to be held liable for substantive crimes committed by his coconspirators in certain circumstances. A defendant can be held vicariously liable for a substantive offense committed by another member of a conspiracy if: (1) the defendant was a party to the conspiracy; (2) the offense was “within the scope of the unlawful project“; (3) the offense was committed in furtherance of the conspiracy; and (4) the defendant could have reasonable foreseen the offense as a “necessary or natural consequence of the unlawful agreement.”

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Shaw v. United States

Issues

Does the term “defraud” in 18 U.S.C. § 1344(1) require proof of a specific intent to target the financial institution’s property, in addition to intent to deceive a financial institution?

This case presents the Supreme Court with an opportunity to decide whether the plain language of the federal bank fraud statute requires proof of, in addition to intent to deceive a financial institution, a specific intent to target the financial institution’s property. See Brief for Petitioner, Lawrence Eugene Shaw at 15. The case arises out of Lawrence Eugene Shaw’s conviction of bank fraud under 18 U.S.C. § 1344(1), after Shaw withdrew funds from a Taiwanese businessman’s Bank of America account, albeit without any harm to Bank of America. See United States v. Shaw, 781 F.3d 1130, 1133 (9th Cir. 2015). Shaw argues the plain language of § 1344(1) requires proof of intent to deprive that institution of its own property. See Brief for Petitioner at 15. The government responds that because the Congressional intent behind the statute was to target all forms of bank fraud, the statute must be interpreted broadly: without concern for schemers’ mental states as to whose property they sought to defraud. See Brief for Respondent, United States at 44–45. Potentially at stake is the balance between federal and state police power, with federal police power increasing the broader the Supreme Court interprets a statute. See Brief for Amicus Curiae National Association of Criminal Defense Lawyers ("NACDL"), in Support of Petitioner at 5.

Questions as Framed for the Court by the Parties

Does the bank-fraud statute, 18 U.S.C. § 1344, subsection (1)’s “scheme to defraud a financial institution” require proof of a specific intent not only to deceive, but also to cheat, a bank, as nine circuits have held?

Lawrence Eugene Shaw was convicted under 18 U.S.C. § 1344(1) for executing a scheme to obtain funds from a Bank of America (“BoA”) account belonging to Stanley Hsu, a Taiwanese businessman. See United States v. Shaw, 781 F.3d 1130, 1133 (9th Cir. 2015). Hsu, while working in the United States, opened an account with BoA.

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Acknowledgments

The authors would like to thank Professor Stephen P. Garvey for his insight into this case.

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