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Developer Convicted of Fraud Despite Lender's Supportive Trial Testimony

Christmas was not so good for James Sandlin. On December 22, 2009, the Court of Appeals for the Fifth Circuit affirmed his bank fraud conviction in what seems to me a highly unusual case. U.S. v. Sandlin, No. 08-41277 (5th Cir.) (Op. filed December 22, 2009).

Read more: Developer Convicted of Fraud Despite Lender's Supportive Trial Testimony

Inspector General Slaps SEC's Wrists in Madoff Matter

Please find a link below to the executive summary of the Inspector General's report on the SEC's alleged failure to discover the Madoff Ponzi scheme earlier than it did. The report discusses but quickly dismisses the romantic relationship between SEC Assistant Director Eric Swanson and Bernard Madoff's niece, Shana Madoff, as a factor in the misfeasance, but does fault, appropriately, the SEC for failing to recognize multiple, obvious signs of the Ponzi scheme. It also sadly notes that even when the SEC decided to take action, it failed to do so for no apparent reason. One has to wonder how many millions of dollars and hundreds of victims would have been spared if the process had worked like it is supposed to. The ultimate irony is that Madoff used the SEC's failures to take any action against him as marketing materials to convince equivocal investors of the safety of investing with him.

Read more: Inspector General Slaps SEC's Wrists in Madoff Matter

SEC Ramping Up Efforts

In a recent address to the New York City Bar Association, Robert Khuzami, Director of the SEC's Division of Enforcement, gave clear warning of the aggressive response the SEC is taking to the current financial downturn. Mr. Khuzami announced the creation of specialized enforcement units in the following areas of securities law:

Read more: SEC Ramping Up Efforts

Intentional Sixth Amendment violation offers no protection to defendant

We all remember Massiah v. U.S. from law school. That is the 1964 case where the Supreme Court ruled that the police may not plant an informant in a cell with a represented defendant because it violates the Sixth Amendment. Apparently that landmark decision was excluded from some police manuals in Kansas, because after Donnie Ray Ventris was arrested for murder, an informant was placed into the cell with him and instructed to obtain evidence. After Ventris took the stand at trial and denied involvement in the crime, the prosecution, although conceding the police had "probably violated" the Sixth Amendment by placing the informant in the cell, sought to use the informant as a witness to rebut Ventris' current denials of criminality. The trial court allowed the evidence and Ventris was convicted.

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Client's Silence in Child Custody hearing leads to Years In Prison

In a disturbing opinion, a U.S. Court of Appeals has over-turned a writ of habeas corpus in a case where a prosecutor repeatedly made improper references during trial to the defendant's failure to testify in a prior child custody hearing. For example, the prosecutor asked the defendant on cross examination why he chose not to defend his position and "sat there like a bump on a log" during the custody hearing involving his minor daughter. Later, during closing arguments, the prosecutor referred to the defendant as "the guilty man in (family) Court being whispered to by his lawyer saying don't get involved in this, they might find something out". As the crime being tried was a sexual offense against the same child who was the subject of the custody hearing, a federal district judge later issued a writ of habeas corpus freeing the defendant after finding the prosecutor violated his Fifth Amendment right against self incrimination and his due process right to a fair trial. The judge also found trial counsel ineffective for failing to object to the State's conduct.

Read more: Client's Silence in Child Custody hearing leads to Years In Prison

Supreme Court search and seizure decision overrules 28 years of precedent

Earlier this week, the U.S. Supreme Court, in Arizona v. Gant, ruled that police "may only search a vehicle incident to a recent occupant's arrest if the arrestee is within reaching distance of the passenger compartment at the time of the search, or it is reasonable to believe the vehicle contains evidence of the offense of arrest." This effectively over-rules New York v. Belton, decided in 1981, which permitted unrestricted searches of vehicles so long as the search was contemporaneous to the arrest of the driver. Belton justified such searches as being incident to arrest and necessary to prevent destruction of evidence and for officer safety.

Read more: Supreme Court search and seizure decision overrules 28 years of precedent

IRS offers limited amnesty

In a recent memo, the IRS establishes a procedure offering partial amnesty for taxpayers with undisclosed foreign bank accounts. The deadline to apply for the amnesty is September, 23, 2009. Particular attention should be paid to this offer in view of recent disclosures that Swiss Bank UBS holds about 52,000 secret accounts for U.S. persons worth an estimated $14.8 billion, and the IRS is seeking disclosure of this information. To date, UBS has refused to disclose, claiming to do so violates Swiss law and would subject it to criminal and civil penalties. A federal district judge in Miami is yet to rule on the enforceability of the IRS' summons, but my guess, based on other things happening with UBS, is that the IRS will get the information and come calling on those who failed to report the accounts or take advantage of the amnesty.

Read more: IRS offers limited amnesty

When does a campaign contribution cross the line into criminality?

On March 6, 2008, the U. S. Court of Appeals for the Eleventh Circuit unanimously affirmed the bribery and mail fraud convictions of HCA founder Richard Scrushy. In the same opinion, the court reversed the mail fraud convictions of co-defendant and former Alabama Governor Don Siegelman, although Siegelman's bribery and obstruction of justice convictions were affirmed. Siegelman's case was remanded for re-sentencing where the sentencing court will reconsider his seven-year sentence. Scrushy's sentence of more than six years imprisonment stands. U.S. v. Siegelman and Scrushy (No. 07-13163, Op. filed March 6, 2009).

Read more: When does a campaign contribution cross the line into criminality?

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