“High-profile cases show a pattern of misuse of prosecutorial powers”

September 23, 2013

The Washington Times on September 22, 2013 released the following:

By Jeffrey Scott Shapiro

“It’s hard to imagine the U.S. as a place where citizens have to fear overzealous prosecution, but last week’s reversals in the cases of former House Majority Leader Tom DeLay and five New Orleans police officers are part of a troubling pattern reminiscent of the Soviet criminal justice system — a system in which the state is always right, even when it is wrong.

In both cases, the judges who overturned the original trial-court verdicts cited instances of prosecutorial overzealousness and abuse of power, making the two cases the latest high-profile trials to run aground on the basis of misconduct by the state’s attorneys.

The high-profile cases in recent years run the gamut from the ancient offenses of murder and rape to increasingly esoteric details of campaign finance and contractor law.

In 2008, Sen. Ted Stevens of Alaska, the longest-serving Republican in the U.S. Senate, was charged by federal prosecutors with failing to report gifts. During the campaign season, Barack Obama said Stevens needed to resign “to put an end to the corruption and influence-peddling in Washington,” and Senate Majority Leader Harry Reid, Nevada Democrat, moved to have Stevens expelled.

Stevens lost the election, but three months later, FBI agents accused prosecutors of withholding exculpatory evidence that could have resulted in the senator’s acquittal. Newly appointed U.S. Attorney General Eric H. Holder Jr. asked the court to vacate Stevens‘ conviction, but the damage already had been done.

The prosecutors’ misconduct destroyed Stevens‘ reputation and political career and affected the balance of power in the U.S. Senate in favor of Democrats.

Circumstances were not entirely different in the prosecution of former U.S. House Majority Leader Tom DeLay, who was accused by local Democratic prosecutor Ronnie Earle to influence state elections with corporate money.

Mr. DeLay was convicted in 2010, but the Texas 3rd Court of Appeals overturned his conviction last week, saying the charges were based on “insufficient evidence.” Mr. DeLay called the indictment “an outrageous criminalization of politics,” but again, a Republican had been run out of politics. Mr. DeLay said he would “probably not” run for political office again.

Washington lobbyist and power broker Jack Abramoff is not as sympathetic a figure as Stevens or Mr. DeLay, but some reports indicate that the Justice Department intimidated Mr. Abramoff into a confession, and his case also revealed how the “honest services fraud” law gives federal prosecutors almost unchallengeable power.

Technically, the law lets prosecutors charge people when they “deprive another of honest services,” but it has been used as a catchall charge when the state is looking to secure an indictment from a grand jury but has exhausted all other options.

The U.S. Supreme Court eventually had to narrow the statutory meaning of the honest services fraud law, enacted in 1988, to avoid striking it down for unconstitutional vagueness.

William L. Anderson, an economics professor at Frostburg State University, once wrote of the law, “Have you ever taken a longer lunch break than what you are supposed to do? Have you made a personal phone call at work or done personal business on your employer’s computer? Have you ever had a contract dispute with an employer or client? All of those things can be criminalized by an enterprising federal prosecutor.”

In another case, five police officers were accused of murder in the fatal shootings of two men on a New Orleans bridge amid the chaos after Hurricane Katrina.

The officers were white and the victims black, and racial tensions were running high. Federal prosecutors turned to civil rights charges in accusing the officers.

Despite the Fifth Amendment’s double jeopardy prohibition, federal civil rights statutes enable U.S. prosecutors to pursue felony charges against a defendant in limited instances even if they have been acquitted of underlying state crimes.

Evidence in the New Orleans case was compelling, and the officers were convicted, but U.S. District Court Judge Kurt Engelhardt ordered a new trial last week, saying the government “engaged in a secret public relations campaign” by anonymously making extrajudicial statements against the defendants on a New Orleans news site.

“This case started as one featuring allegations of brazen abuse of authority, violation of the law and corruption of the criminal justice system,” he wrote in his order.

“Unfortunately the focus has switched from the accused to the accusers. The government’s actions, and initial lack of candor and credibility thereafter, is like scar tissue that will long evidence infidelity to the principles of ethics, professionalism and basic fairness and common sense necessary to every criminal prosecutor, wherever it should occur in this country.”

The Duke University lacrosse players’ case is one of the most notorious of selective prosecution designed for political gain. North Carolina prosecutor Michael Nifong made numerous public statements incriminating the team and turning the media against the defendants.

Despite the accuser’s history of falsely reporting incidents and lack of evidence, Mr. Nifong pushed the politically popular case in the midst of his re-election campaign. State officials took over the case, dismissing all charges, taking the unusual step of declaring the defendants innocent — not merely “not guilty” — and Mr. Nifong was ultimately disbarred.

Russian author Fyodor Dostoyevsky once said that “you can judge a society by how well it treats its prisoners.” The same could be said of how fairly a judicial system prosecutes its accused defendants. Arrogance, not ethics, is emerging as criteria for prosecutorial discretion, and the result is a society based on fear, not freedom.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


“Prosecutors Expect More Arrests in Art-Fraud Scheme”

August 19, 2013

The New York Times on August 19, 2013 released the following:

By WILLIAM K. RASHBAUM

“Federal prosecutors handling the case against an obscure art dealer charged in one of the most audacious art frauds in recent memory told a judge on Monday that they expected more arrests in the continuing investigation. They also said they expected the case against the art dealer to be resolved soon.

The disclosures came at the arraignment of the dealer, Glafira Rosales, in United States District Court in Manhattan.

Ms. Rosales was arrested on money laundering and tax charges in connection with the scheme in May. She was arraigned Monday before Judge Katherine P. Failla on new charges contained in a superseding indictment that was handed up last week by a grand jury. She pleaded not guilty during the five-minute proceeding.

During the arraignment, Judge Failla asked one of the prosecutors, Jason P. Hernandez, an assistant United States attorney, if more arrests were expected.

“Yes,” he said.

Mr. Hernandez also said that the case against Ms. Rosales, which was the result of a lengthy F.B.I. investigation, was to be resolved in the coming weeks. He did not elaborate.

A lawyer for Ms. Rosales, Steven R. Kartagener, declined to comment on the new charges.

The charges issued last week revealed for the first time that all of the 63 phony art works at the heart of what prosecutors have described as a sweeping fraud scheme stretching over more than a decade were created by a single painter. The indictment identified him only as a painter who lives in Queens and said he had produced the canvases — purported to be by the hands of Modernist masters like Willem de Koonig, Jackson Pollock, Mark Rothko, Robert Motherwell and others — in his house and garage.

People briefed on the matter said he was Pei-Shen Qian, a struggling 73-year-old Chinese artist who came to the United States in 1981.

While he was paid a few thousand dollars for the canvases, they were later sold as works by Modernist masters for more than $80 million.

The indictment and other court papers said the painter who created the fake canvases was discovered selling his own art on the streets of Lower Manhattan in the early 1990s by Ms. Rosales’s boyfriend and business partner, an art dealer named Jose Carlos Bergantiños Diaz, who recruited him to make paintings in the style of celebrated Abstract Expressionists. The indictment does not name Mr. Bergantiños Diaz, but his identity is confirmed by other court records.

It is unclear whether Ms. Rosales has begun cooperating with the federal authorities since her arrest in May. But while the prosecutors handling her case initially argued then that she posed “a substantial flight risk” and that no bail conditions could assure her return to court, convincing a judge to detain her without bail, last week, after the new indictment was handed up, the prosecutors did not oppose her release on a $2.5 million bond.

Julie Bolcer, a spokeswoman for the office of Preet Bharara, the United States attorney in Manhattan, and an F.B.I. spokesman, James M. Margolin, declined to comment. Mr. Kartagener has refused to characterize his discussions with the prosecutors on the case, Mr. Hernandez and Daniel W. Levy.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


“Feds: Bulger at center of murder, mayhem in Boston”

June 12, 2013

KSL.com on June 12, 2013 released the following press release:

By Denise Lavoie, Associated Press

“BOSTON (AP) – A federal prosecutor said in opening statements Wednesday at James “Whitey” Bulger’s racketeering trial that the reputed mobster was at the center of “murder and mayhem” in Boston for almost 30 years, while the defense attacked the credibility of the government’s star witnesses.

Prosecutor Brian Kelly told jurors that Bulger headed the violent Winter Hill Gang that “ran amok” in Boston for nearly three decades, killing 19 people, extorting millions from drug dealers and other criminals, and corrupting police and FBI agents.

“At the center of all this murder and mayhem is one man – the defendant in this case, James Bulger,” Kelly said.

Bulger’s lead attorney, J. W. Carney Jr., went after the prosecution’s star witnesses, including hit man John Martorano, who admitted killing 20 people and has agreed to testify against Bulger.

Martorano served 12 years in prison for his crimes, in what Carney called an “extraordinary benefit” for his cooperation with prosecutors.

“The federal government was so desperate to have John Martorano testify … they basically put their hands up in the air and said take anything you want,” Carney said.

Other once-loyal Bulger cohorts who will likely testify against him include Stephen “The Rifleman” Flemmi, Bulger’s former partner, and Kevin Weeks, a former Bulger lieutenant who led authorities to six bodies.

The government plans to show the jury a 700-page file they say shows that Bulger, while committing a long list of crimes, was also working as an FBI informant, providing information on the New England Mob – his gang’s main rivals – and corrupting FBI agents who ignored his crimes.

Kelly says Bulger’s gang succeeded by instilling fear in other criminals and corrupting law enforcement officials who tipped them off when they were being investigated.

“It was part of a strategy they had, and it worked for them,” Kelly said.

Carney denied that the FBI ever tipped off Bulger.

“James Bulger never ever – the evidence will show – was an informant,” Carney said.

Carney acknowledged that Bulger was involved in illegal gambling and drugs but told the jury that Bulger paid law enforcement to protect him from prosecution.

Bulger, now 83, was one of the nation’s most wanted fugitives when he fled Boston in 1994 after receiving a tip from his former FBI handler, John Connolly, that he was about to be indicted. He was finally captured in 2011 in Santa Monica, Calif., where he had been living with his longtime girlfriend in a rent-controlled apartment.

Connolly was convicted of racketeering for warning Bulger and later of second-degree murder for giving information to Bulger that led to the slaying of a Boston businessman in Miami.

Bulger’s lawyers have indicated that they will argue that Connolly fabricated informant reports in Bulger’s lengthy FBI file.

The defense may also present another side of Bulger seen by some residents of South Boston, where he was known for years as a kind of harmless tough guy who gave Thanksgiving dinners to his working-class neighbors.

Prosecutors, however, plan to call one family member of each of the 19 people prosecutors allege were killed by Bulger and his gang. Among the victims were two 26-year-old women who Bulger is accused of strangling.

The trial is expected to last three to four months.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


“Judge in Bulger case refuses to step aside”

October 29, 2012

The Boston Globe on October 29, 2012 released the following:

“Lawyer says he will be called as witness

By Travis Andersen

For the second time in less than four months, the federal judge slated to preside over James “Whitey” Bulger’s criminal trial has denied a request from Bulger’s lawyer to recuse himself from the case.

In a three-page ruling issued on Sunday, US District Court Judge Richard G. Stearns wrote that the latest motion for recusal, which Bulger’s lead attorney filed last week, “raises no new issues of material fact or law.”

“When [Bulger’s] case was randomly assigned to me in 1999, it became my duty to see it through fairly and expeditiously, and that is the duty I will faithfully execute,” Stearns wrote.

Bulger’s lead attorney, J.W. Carney Jr., declined to comment on Sunday.

Carney had written in last week’s motion that Stearns, a former federal prosecutor in Boston, must step aside from the case in part because the lawyer intends to call him as a witness at trial.

In the same motion, Carney argued that Bulger was granted immunity to commit crimes by the late Jeremiah O’Sullivan, a former federal prosecutor who led the New England Organized Crime Strike Force before being appointed interim US attorney in Boston in 1989.

In testimony to Congress in 2002, O’Sullivan, who died in 2009, denied ever protecting Bulger from prosecution for serious crimes.

Carney wrote that Stearns and current FBI director Robert Mueller, both former high-ranking federal prosecutors in the Boston office, did not target Bulger during their tenures, which Carney said presents circumstantial evidence of an immunity agreement.

The FBI has declined to comment on the case.

In Sunday’s ruling, Stearns wrote that there is no connection between the Organized Crime Strike Force and his tenure as chief of the Criminal Division in the US attorney’s office.

“Nor is the court persuaded by defendant’s declaration that he might attempt to summons the undersigned judge” as a witness, Stearns wrote. “As the court has previously pointed out to counsel, a witness is only properly summoned to testify if he or she has something of relevance to say on a material issue.”

The judge also took a swipe at Bulger’s efforts to delay his long-awaited trial, which is currently slated for March. He is charged in a sweeping indictment with participating in 19 murders, among other crimes.

“Defendant undoubtedly prefers not to be tried on the schedule set by the court, or not to be tried at all,” Stearns wrote. “But like [former associates] Kevin Weeks, Kevin O’Neil, Stephen Flemmi, and Michael Flemmi, all of whom have appeared as defendants before me in this case, James Bulger’s case will be adjudicated by the rules of the court, and not the contrary wishes of defendant or defendant’s counsel.”

A hearing on Carney’s separate motion to delay the trial until November is scheduled for Thursday in federal court in Boston.

He has argued that prosecutors have not met their obligation to turn over reams of evidence to the defense team in an organized fashion, which the government lawyers have adamantly denied.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


“Madoff Has Met His Match: Mortgage Fraud Crime of the Century”

October 26, 2012

Forbes on October 26, 2012 released the following:

John Wasik, Contributor

“With less than 88 years left in this century, it’s awful tough to say what the crime of this century will be.

Will it be the $60 billion Madoff Ponzi scam? The Dot-Com bubble? My candidate is a slam dunk so far: Mortgage fraud.

Mortgage fraud took place on so many levels for so many years that it eclipses Madoff by a factor of 100. That’s my humble estimate because nobody really knows how pervasive it was. Prosecutors are still issuing indictments more than six years after the real estate market peaked.

The recent $1 billion suit against Bank of America/Countrywide alleging that the bank sold defective loans to Fannie Mae and Freddie Mac is but a small piece of this unraveling series of financial flim-flams, which rival most scams because of its pervasive nature and involvement of thousands of financial institutions and intermediaries. The bank says the government’s claims are “simply false.”

Why is mortgage fraud such a Tyrannosaurus Rex in the world of scamdom? Because it combined easy money, greed and securitizing that avarice all over the world. It was based on the myth that home prices don’t decline and quick profits could be had by nearly anyone. You, too, could become an investment banker! More importantly, it may prove to be the mother of all swindles because it nearly took down the world’s largest financial system. And we’re not out of the woods yet.

We have some idea of how many mortgage crimes were out there thanks to the suspicious activity reports supplied to the FBI by banks, starting in the first quarter of 2006. These weren’t necessarily fraud cases that resulted in prosecution. In fact, very few ended up as court cases in which people went to jail, which has been a widespread problem in mortgage fraud.

Starting in 2006, the FBI got wind of some 7,500 suspicious mortgage activities. By 2008, that figure doubled and peaked in the second quarter of last year at nearly 30,000, according to the Financial Crimes Enforcement Network or FinCen. The number of fraud filings dropped 41 percent from the second quarter of last year through this year’s second quarter.

What do these numbers mean? That bankers suspected foul play in the origination or refinancing of mortgages. And these reports were the proverbial tip of the iceberg, because they only looked at the problem from one step in the process. Here’s what else was going on, although we don’t have any hard numbers:

  • Mortgage Foreclosure “Rescues.” Companies would set up shop to promise defaulting homeowners that they could halt the foreclosure process. They’d fleece the hapless homeowner for a steep fee, then move on.
  • Appraisal Scams. Individuals would hire crooked appraisers to under-appraise a home, obtain a mortgage, then sell it at a much-higher price.
  • Securitization Swindles. This may be the biggest scam of all. Junk mortgages were bundled, given the highest credit ratings, then sold to investors in vehicles like collateralized mortgage obligations. These “sub-prime loans” are still on the books of some of our largest banks, Fannie Mae and Freddie Mac.
  • Robo-Signing. Banks eager to sell loans to Wall Street hurried the process along by creating automated, illegitimate pipelines. State attorneys general settled with the banks on this issue, although no one seems to have been prosecuted for these crimes and it’s done little to stem the foreclosure wave.
  • Predatory Lending. Low-income areas were targeted by rapacious brokers and bankers to sell mortgages and home-equity loans with high rates and fees to people who couldn’t afford them.

How much did all of this cost Americans? Again, there’s no reliable estimate, but when this massive house of cards came tumbling down at the end of 2008, trillions were lost. Wall Street and AIG insurance got a $700-billion-plus bailout and American homeowners are still down some $7 trillion in terms of lost equity, according to Robert Reich, an economist and former labor secretary.

While a handful of hedge fund gurus and contrarian investors won big on betting against this mammoth mortgage swindle, “Wall Street’s excesses almost ruined the economy,” Reich said. If the Federal Reserve, U.S. Treasury, Congress, George W. Bush and President Obama hadn’t teamed up to bail out the banks, this year would’ve been worse than 1932, instead of a sluggish 2012.

And the beat goes on as prosecutors dig through layers of the mortgage fraud. Here’s just a typical sampling of some recent activity from the FBI and federal prosecutors:

“A federal indictment charged 17 defendants in Charlotte, North Carolina, and elsewhere with racketeering, investment fraud, mortgage fraud, bank bribery, and money laundering. The government alleges a criminal enterprise engaged in an extensive pattern of racketeering activities, consisting of investment fraud, mortgage fraud, bank fraud, money laundering, and distribution of illegal drugs. Members of the enterprise also bribed bank officials and committed perjury before the grand jury. The co-conspirators stole more than $27 million from more than 50 investor victims. Rather than investing victims’ money as promised, the enterprise diverted victims’ money to finance its mortgage fraud operations and to support its members’ lifestyles.”

I wouldn’t be exaggerating if I predicted that there are hundreds more mortgage frauds yet to be discovered and prosecuted. The states are finding them all the time, some four years after the collapse of Lehman Brothers.

The larger problem is that the perpetrators are still at large and the system that allowed huge derivative gambles on mortgages is still in place. The mega-banks behind this devilish casino got larger, and still need to be broken up. Fannie Mae and Freddie Mac, the two quasi-public mortgage insurers that bought warehouses of bad mortgages, are still wards of the state. And foreclosures continue to ravage communities from California to Florida.

After what will certainly be one of the closest and contentious elections in decades, Congress needs to get to work to bust up hobbled giants like Bank and America and Citigroup. Then it needs to institute the Volcker rule to isolate speculation from federally insured banking activities or bring back Glass-Steagall, which completely separated trading from regulated lending as part of New Deal reforms.

A tax on speculative trading would also reduce systemic risk. I don’t care if banks gamble on their trading desks, but they shouldn’t do it expecting a big bailout on the taxpayers’ backs.

What can you do? You can report suspicious activity to your state attorney general or the Department of Justice, through its financial crimes site stopfraud.gov. You may not help the government land a big crook — they all seem to be enjoying their fat compensation packages in the Hamptons — but you could give prosecutors a leg up on shutting down an ongoing scam.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Bulger defense says prosecutor gave immunity

October 25, 2012

The Boston Globe on October 25, 2012 released the following:

“Alleged deal was made decades ago

By Travis Andersen and Milton J. Valencia

Lawyers for James “Whitey” Bulger have identified the late federal prosecutor Jeremiah O’Sullivan as the federal agent who allegedly gave the notorious gangster immunity to commit his reign of terror.

Attorney J.W. Carney Jr. of Boston made the bombshell allegation in a court filing late Wednesday in which he again called for a US District Court judge to recuse himself from presiding over the case. He said the judge has an apparent conflict of interest as a former prosecutor who worked at the same time as O’Sullivan, a former US attorney who died in 2009 at age 66.

Carney said he may call US District Court Judge Richard G. Stearns and other former prosecutors as witnesses to testify about the leeway that the leadership within the US attorney’s office gave Bulger and about their failure for years to charge him with any crimes, which he said would speak to the immunity agreement that Bulger alleges that he had.

Stearns was a former federal prosecutor and chief of the criminal division during part of Bulger’s alleged reign of terror in the 1970s and 1980s. But the judge was not part of the New England Organized Crime Strike Force that had an apparent relationship with Bulger at the time and he has maintained he did not know Bulger was the target of any investigation.

Carney argued there was no line dividing work between the Strike Force and the US attorney’s office, and so prosecutors from both units shared and were aware of investigations.

The judge refused an initial request to recuse himself in ­July, citing the high standards that must be met for a judge to have to recuse himself for conflict of interest concerns.

“I have no doubt whatsoever about my ability to remain impartial at all times while presiding over the case,” Stearns said in his ruling, maintaining he had no knowledge “of any case or investigation” in which Bulger was “a subject or a target.”

But Carney said Bulger’s reputation was well known, or should have been, particularly among leaders in the US attorney’s office.

He also said that the notorious gangster, now 83, will testify to support his assertion. He said Bulger will provide “a detailed account of his receipt of immunity by O’Sullivan,” who was a member of the strike force and at one point its chief.

In one example, Carney said, Bulger will discuss a time when O’Sullivan allegedly ordered Bulger be removed from a list of targets in a horse race-fixing scheme in the early ’80s.

Brian T. Kelly, one of the prosecutors in the case, wrote a letter to Carney on Friday in which he said the government has given defense counsel ample materials pertaining to O’Sullivan, as requested, calling it typical procedure in the case.

He offered on his own, however, that “the First Circuit has already held that O’Sullivan was unaware of any promise of immunity.”

He added, “O’Sullivan himself testified under oath before Congress that he never extended immunity to either James Bulger or Stephen Flemmi.”

Carney added that, in addition to Stearns, he would call other Department of Justice leaders to testify as to why Bulger was never charged by the federal government. Those leaders would include FBI director Robert Mueller, who served as a federal prosecutor and chief of the criminal division in Massachusetts in the early 1980s, and with whom Stearns has a close relationship.

Carney said he will introduce evidence from a courthouse ceremony where Mueller characterized Stearns as a “friend and mentor,” and in which Stearns called the FBI director’s speech “the greatest tribute that a friend could pay.”

Bulger’s lead lawyer questioned whether Stearns could remain impartial in deciding whether he and Mueller could be called as a credible witness to testify about the immunity agreement, which has emerged as Bulger’s main point of defense in a trial that could trigger the death sentence.

“Federal law mandates in this situation that Judge Stearns recuse himself from this case,” Carney said in a 24-page motion filed late Wednesday. “The law — and common sense — says that a person cannot be both judge and witness. . . . To do so otherwise will put an irreparable taint on the public’s view of the fairness of the defendant’s trial, and allow citizens to believe that the infamous cover-up of misconduct by past members of the Department of Justice, the United State’s attorney’s office, and the FBI is continuing.”

Carney said Bulger wasn’t accused of any crimes in a US indictment until after Stearns, Mueller, and O’Sullivan left office, and he argued their testimony will focus on why that didn’t happen. That should be up to a jury to decide, he said.

Bulger was one of America’s Most Wanted until his arrest in June 2011 after 16 years on the lam. He is accused in a federal racketeering indictment of participating in 19 murders.

He is also the notorious gangster at the center of one of the most scandalous periods in the history of the FBI. A series of hearings in Boston in the ’90s exposed a corrupt relationship between him and his FBI handlers. During that time, he was allegedly allowed to carry out crimes including murders in exchange for working as a cooperating witness against the New England Mafia.

Carney has said that Bulger was granted immunity in exchange for his cooperation, though legal analysts have questioned whether anyone could have had a right to kill, as Bulger asserts.

US prosecutors, who have argued Stearns does not have to recuse himself, also deny Bulger had any claim of immunity.

O’Sullivan suffered a heart attack and several strokes in 1998 when he was slated to testify about Bulger and Flemmi before US District Court Judge Mark L. Wolf. O’Sullivan was in a coma for a month.

In 2002, O’Sullivan was called before Congress during the Government Reform Committee’s investigation of the Boston FBI. He denied ever protecting Bulger and Flemmi from prosecution for serious crimes.

O’Sullivan acknowledged dropping the pair from a 1978 race-fixing case against the Winter Hill Gang, of Somerville, because he said he considered them small-time players and was focused on gang leader Howie Winter.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Appeal in Insider Trading Case Centers on Wiretap

October 24, 2012

The New York Times on October 23, 2012 released the following:

“BY PETER LATTMAN

In March 2008, the Justice Department made an extraordinary request: It asked a judge for permission to record secretly the phone conversations of Raj Rajaratnam, a billionaire hedge fund manager.

The request, which was granted, was the first time the government had asked for a wiretap to investigate insider trading. Federal agents eavesdropped on Mr. Rajaratnam for nine months, leading to his indictment — along with charges against 22 others — and the biggest insider trading case in a generation.

On Thursday, lawyers for Mr. Rajaratnam, who is serving an 11-year prison term after being found guilty at trial, will ask a federal appeals court to reverse his conviction. They contend that the government improperly obtained a wiretap in violation of Mr. Rajaratnam’s constitutional privacy rights and federal laws governing electronic surveillance.

Such a ruling is considered a long shot, but a reversal would have broad implications. Not only would it upend Mr. Rajaratnam’s conviction but also affect the prosecution of Rajat K. Gupta, the former Goldman Sachs director who was convicted of leaking boardroom secrets to Mr. Rajaratnam. Mr. Gupta is scheduled to be sentenced on Wednesday.

A decision curbing the use of wiretaps would also affect the government’s ability to police Wall Street trading floors, as insider trading cases and other securities fraud crimes are notoriously difficult to build without direct evidence like incriminating telephone conversations.

“Wiretaps traditionally have been used in narcotics and organized crime cases,” said Harlan J. Protass, a criminal defense lawyer in New York who is not involved in the Rajaratnam case. “Their use today in insider trading investigations indicates that the government thinks there may be no bounds to the types of white-collar cases in which they can be used.”

More broadly, Mr. Rajaratnam’s appeal is being closely watched for its effect on the privacy protections of defendants regarding wiretap use. Three parties have filed “friend-of-the-court” briefs siding with Mr. Rajaratnam. Eight former federal judges warned that allowing the court’s ruling to stand “would pose a grave threat to the integrity of the warrant process.” A group of defense lawyers said that upholding the use of wiretaps in this case would “eviscerate the integrity of the criminal justice system.”

To safeguard privacy protections, federal law permits the government’s use of wiretaps only under narrowly prescribed conditions. Among the conditions are that a judge, before authorizing a wiretap, must find that conventional investigative techniques have been tried and failed. Mr. Rajaratnam’s lawyers said the government misled the judge who authorized the wiretap, Gerard E. Lynch, in this regard.

They say that the government omitted that the Securities and Exchange Commission had already been building its case against Mr. Rajaratnam for more than a year using typical investigative means like interviewing witnesses and reviewing trading records. Had the judge known about the S.E.C.’s investigation, he would not have allowed the government to use a wiretap, Mr. Rajaratnam’s lawyers argue.

Before Mr. Rajaratnam’s trial, the presiding judge, Richard J. Holwell, held a four-day hearing on the legality of the wiretaps. Judge Holwell criticized the government, calling its decision to leave out information about its more conventional investigation a “glaring omission” that demonstrated “a reckless disregard for the truth.”

Nevertheless, Judge Holwell refused to suppress the wiretaps, in part, he said, because they were necessary to uncover Mr. Rajartanam’s insider trading scheme. “It appears that the S.E.C., and by inference the criminal authorities, had hit a wall of sorts,” Judge Holwell wrote.

On appeal, Mr. Rajaratnam lawyers argued that the government’s lack of candor should not be tolerated. They described the government’s wiretap application as full of “misleading assertions” and “outright falsity” that made it impossible for Judge Lynch to do his job.

“The government’s self-chosen reckless disregard of the truth and of the critical role of independent judicial review breached that trust and desolated the warrant’s basis,” wrote Mr. Rajaratnam’s lawyers at the law firm Akin Gump Strauss Hauer & Feld.

In their brief to the appeals court, federal prosecutors dispute that they acted with a “reckless disregard for the truth.” Instead, they argue that omitting details of the S.E.C.’s investigation was at most “an innocent mistake rising to the level of negligence.” In addition, they said that the S.E.C.’s inquiry failed to yield sufficient evidence for a criminal case, necessitating the use of a wiretap.

Once Judge Lynch signed off on the wiretap application, the government’s investigation into Mr. Rajaratnam accelerated. The wiretapping of Mr. Rajaratnam’s phone, along with the subsequent recording of his supposed accomplices, yielded about 2,400 conversations. In many of them, Mr. Rajaratnam could be heard exchanging confidential information about technology stocks like Google and Advanced Micro Devices.

Three years ago this month, federal authorities arrested Mr. Rajaratnam and charged him with orchestrating a seven-year insider trading conspiracy. The sprawling case has produced 23 arrests of traders and tipsters, many of them caught swapping secrets with Mr. Rajaratnam about publicly traded companies.

Among the thousands of calls were four that implicated Mr. Gupta, a former head of the consulting firm McKinsey & Company who served as a director at Goldman Sachs and Procter & Gamble. On one call in July 2008, the only wiretapped conversation between the two men, Mr. Gupta freely shared Goldman’s confidential board discussions with Mr. Rajaratnam. On another, Mr. Rajaratnam told a colleague at his hedge fund, the Galleon Group, “I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share.”

Those conversations set off an investigation of Mr. Gupta. He was arrested in October 2011 and charged with leaking boardroom secrets about Goldman and P.& G. to Mr. Rajaratnam. A jury convicted him in May after a monthlong trial.

On Wednesday at Federal District Court in Manhattan, Judge Jed S. Rakoff will sentence Mr. Gupta. Federal prosecutors are seeking a prison term of up to 10 years. Mr. Gupta’s lawyers have asked Judge Rakoff for a nonprison sentence of probation and community service. One proposal by the defense would have Mr. Gupta living in Rwanda and working on global health issues.

Regardless of his sentence, Mr. Gupta plans to appeal. And because prosecutors used wiretap evidence in his trial, Mr. Gupta would benefit from a reversal of Mr. Rajaratnam’s conviction.

Yet a reversal would not affect the convictions of the defendants in the conspiracy who have pleaded guilty. As part of their pleas, those defendants waived their rights to an appeal.”

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Douglas McNabb – McNabb Associates, P.C.’s
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Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.