“Outside Box, Federal Judges Offer Addicts a Free Path”

May 30, 2013

The New York Times on March 1, 2013 released the following:

By MOSI SECRET

“Federal judges around the country are teaming up with prosecutors to create special treatment programs for drug-addicted defendants who would otherwise face significant prison time, an effort intended to sidestep drug laws widely seen as inflexible and overly punitive.

The Justice Department has tentatively embraced the new approach, allowing United States attorneys to reduce or even dismiss charges in some drug cases.

The effort follows decades of success for “drug courts” at the state level, which legal experts have long cited as a less expensive and more effective alternative to prison for dealing with many low-level repeat offenders.

But it is striking that the model is spreading at the federal level, where judges have increasingly pushed back against rules that restrict their ability to make their own determination of appropriate sentences.

So far, federal judges have instituted programs in California, Connecticut, Illinois, New Hampshire, New York, South Carolina, Virginia and Washington. About 400 defendants have been involved nationwide.

In Federal District Court in Brooklyn on Thursday, Judge John Gleeson issued an opinion praising the new approach as a way to address swelling prison costs and disproportionate sentences for drug trafficking.

“Presentence programs like ours and those in other districts mean that a growing number of courts are no longer reflexively sentencing federal defendants who do not belong in prison to the costly prison terms recommended by the sentencing guidelines,” Judge Gleeson wrote.

The opinion came a year after Judge Gleeson, with the federal agency known as Pretrial Services, started a program that made achieving sobriety an incentive for drug-addicted defendants to avoid prison. The program had its first graduate this year: Emily Leitch, a Brooklyn woman with a long history of substance abuse who was arrested entering the country at Kennedy International Airport with over 13 kilograms of cocaine, about 30 pounds, in her luggage.

“I want to thank the federal government for giving me a chance,” Ms. Leitch said. “I always wanted to stand up as a sober person.”

The new approach is being prompted in part by the Obama administration, which previously supported legislation that scaled back sentences for crimes involving crack cocaine. The Justice Department has supported additional changes to the federal sentencing guidelines to permit the use of drug or mental health treatment as an alternative to incarceration for certain low-level offenders and changed its own policies to make those options more available.

“We recognize that imprisonment alone is not a complete strategy for reducing crime,” James M. Cole, the deputy attorney general, said in a statement. “Drug courts, re-entry courts and other related programs along with enforcement are all part of the solution.”

For nearly 30 years, the United States Sentencing Commission has established guidelines for sentencing, a role it was given in 1984 after studies found that federal judges were giving defendants widely varying sentences for similar crimes. The commission’s recommendations are approved by Congress, causing judges to bristle at what they consider interference with their judicial independence.

“When you impose a sentence that you believe is unjust, it is a very difficult thing to do,” Stefan R. Underhill, a federal judge in Connecticut, said in an interview. “It feels wrong.”

The development of drug courts may meet resistance from some Republicans in Congress.

“It is important that courts give deference to Congressional authority over sentencing,” Representative F. James Sensenbrenner Jr., Republican of Wisconsin, a member and former chairman of the Judiciary Committee, said in a statement. He said sentencing should not depend “on what judge happens to decide the case or what judicial circuit the defendant happens to be in.”

At the state level, pretrial drug courts have benefited from bipartisan support, with liberals supporting the programs as more focused on rehabilitation, and conservatives supporting them as a way to cut spending.

Under the model being used in state and federal courts, defendants must accept responsibility for their crimes and agree to receive drug treatment and other social services and attend regular meetings with judges who monitor their progress. In return for successful participation, they receive a reduced sentence or no jail time at all. If they fail, they are sent to prison.

The drug court option is not available to those facing more serious charges, like people accused of being high-level dealers or traffickers, or accused of a violent crime. (These programs differ from re-entry drug courts, which federal judges have long used to help offenders integrate into society after prison.)

In interviews, the federal judges who run the other programs pointed to a mix of reasons for their involvement.

Judge Ricardo S. Martinez ran a state drug court in Seattle before he was appointed to the federal bench. “People that have a serious addiction, you can put them in custody, but the minute you put them back in the community, they go back to the same thing and lo and behold you see them again,” Judge Martinez said in an interview.

Some of the most pointed criticism of the status quo has come from Judge Gleeson, a former federal prosecutor. The drug court he helped set up is open to defendants who committed a range of nonviolent crimes, like fraud and selling prescription pills, and whose addictions fueled their actions.

In a 35-page opinion he issued this week, he criticized the Justice Department for charging defendants with drug offenses that carry mandatory minimum sentences, urged the Sentencing Commission to reduce the guideline range for many drug offenses and called for more programs that divert defendants from prison time.

The opinion chronicled the case of three graduates of the drug court, including Ms. Leitch, 29. The daughter of two addicted parents, she began smoking marijuana daily and later snorting cocaine at a young age, stealing to pay for her drug habit.

After a visit with her children to Guyana, where her father lives, she was paid over $30,000 to transport drugs back to the United States. Customs agents at Kennedy found the cocaine and charged her with importing and possessing the drug, which carried a three-year sentence under federal guidelines.

Though she showed up high at a court hearing, causing her to be jailed for a time, Magistrate Judge Steven M. Gold offered her a slot a year ago in the district’s new drug court. She later took parenting courses, earned a general equivalency diploma and got a commercial bus driver’s license — with government subsidies for some of those efforts. She now drives a bus in Nassau County.

Loretta E. Lynch, the United States attorney in Brooklyn, said she backed the program because drug courts elsewhere had lowered recidivism rates. “Our overall strategy of law enforcement and crime prevention isn’t just incarceration,” Ms. Lynch said.

At a sentencing hearing for Ms. Leitch last month, a prosecutor vacated her guilty plea and agreed to dismiss the charges if she did not use drugs or get arrested for 18 months. After the hearing, Judge Gleeson offered some encouraging words for the defendant, and then a hug.

“I don’t know them as just the judge,” Ms. Leitch said later. “People see judges as the bad guy. They get deeper. They get to know who you are.””

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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

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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.


Credit Union Manager Victoria Rozanski Charged with Allegedly Embezzling More Than $100,000

May 2, 2013

The Federal Bureau of Investigation (FBI) on May 1, 2013 released the following:

“PITTSBURGH— A Lawrence County woman has been indicted by a federal grand jury in Pittsburgh on a charge of embezzlement from a credit union, United States Attorney David J. Hickton announced today.

The one-count indictment, returned on April 30, named Victoria Rozanski, 59, of 807 Jefferson Ave. in Ellwood City, Pennsylvania, as the sole defendant.

According to the indictment, from in or around January 2003 until in or around May 2009, Rozanski, who was the manager of the Holy Redeemer Parish Federal Credit Union in Ellwood City, embezzled in excess of $100,000 from the credit union.

The law provides for a maximum total sentence of 30 years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

Assistant United States Attorney Lee J. Karl is prosecuting this case on behalf of the government.

The Federal Bureau of Investigation conducted the investigation leading to the indictment in this case.

An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.”

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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.


Leo Joshua Kennedy Indicted by a San Jose Federal Grand Jury for Allegedly Committing Wire Fraud in a $17 Million Fraud Scheme

November 1, 2012

The Federal Bureau of Investigation (FBI) on October 31, 2012 released the following:

“Danville Man Charged in $17 Million Fraud Scheme

SAN JOSE, CA— A federal grand jury in San Jose indicted Leo Joshua Kennedy, of Danville, California, today with 10 counts of wire fraud, United States Attorney Melinda Haag announced.

According to the indictment, Kennedy, 60, is alleged to have stolen $17 million from various beneficiary trust accounts at Backhouse Fiduciary Services. While working as an accountant for Backhouse Fiduciary Services, a San Jose based administrator of beneficiary trust accounts, the defendant allegedly transferred funds from various trust accounts without the account-holders’ permission. Kennedy allegedly used those funds to pay for his personal investments and living expenses.

Kennedy is scheduled to make his initial appearance in federal court in San Jose on November 20, 2012, before Magistrate Judge Grewal.

The maximum statutory penalty for each count of wire fraud in violation of Title 18, United States Code, Section 1343 is 20 years in prison and a fine of $250,000 or twice the gross gain or gross loss from the offense, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Jeff Schenk is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kamille Singh. The prosecution is the result of an investigation by the Federal Bureau of Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Kennedy must be presumed innocent unless and until proven guilty.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.stopfraud.gov.”

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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

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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.


Federal District Court Judge: How Mandatory Minimums Forced Me to Send More Than 1,000 Nonviolent Drug Offenders to Federal Prison

October 26, 2012

The Nation on October 24, 2012 released the following:

Judge Mark W. Bennett

“Reuters/Joshua Lott

Growing up in blue collar Circle Pines, Minnesota, in the 1950s, raised by parents from the “Greatest Generation,” I dreamed only of becoming a civil rights lawyer. My passion for justice was hard-wired into my DNA. Never could I have imagined that by the end of my 50s, after nineteen years as one of 678 federal district court judges in the nation, I would have sent 1,092 of my fellow citizens to federal prison for mandatory minimum sentences ranging from sixty months to life without the possibility of release. The majority of these women, men and young adults are nonviolent drug addicts. Methamphetamine is their drug of choice. Crack cocaine is a distant second. Drug kingpins? Oh yes, I’ve sentenced them, too. But I can count them on one hand. While I’m extremely proud of my father’s service in World War II, I am greatly conflicted about my role in the “war on drugs.”

You might think the Northern District of Iowa—a bucolic area home to just one city with a population above 100,000—is a sleepy place with few federal crimes. You would be wrong. Of the ninety-four district courts across the United States, we have the sixth-heaviest criminal caseload per judge. Here in the heartland, I sentence more drug offenders in a single year than the average federal district court judge in New York City, Washington, Chicago, Minneapolis and San Francisco—combined. While drug cases nationally make up 29 percent of federal judges’ criminal dockets, according to the US Sentencing Commission, they make up more than 56 percent of mine. More startling, while meth cases make up 18 percent of a judge’s drug docket nationally, they account for 78 percent of mine. Add crack cocaine and together they account for 87 percent.

Crack defendants are almost always poor African-Americans. Meth defendants are generally lower-income whites. More than 80 percent of the 4,546 meth defendants sentenced in federal courts in 2010 received a mandatory minimum sentence. These small-time addicts are apprehended not through high-tech wiretaps or sophisticated undercover stings but by common traffic stops for things like nonfunctioning taillights. Or they’re caught in a search of the logs at a local Walmart to see who is buying unusually large amounts of nonprescription cold medicine. They are the low-hanging fruit of the drug war. Other than their crippling meth addiction, they are very much like the folks I grew up with. Virtually all are charged with federal drug trafficking conspiracies—which sounds ominous but is based on something as simple as two people agreeing to purchase pseudoephedrine and cook it into meth. They don’t even have to succeed.

I recently sentenced a group of more than twenty defendants on meth trafficking conspiracy charges. All of them pled guilty. Eighteen were “pill smurfers,” as federal prosecutors put it, meaning their role amounted to regularly buying and delivering cold medicine to meth cookers in exchange for very small, low-grade quantities to feed their severe addictions. Most were unemployed or underemployed. Several were single mothers. They did not sell or directly distribute meth; there were no hoards of cash, guns or countersurveillance equipment. Yet all of them faced mandatory minimum sentences of sixty or 120 months. One meth-addicted mother faced a 240-month sentence because a prior meth conviction in county court doubled her mandatory minimum. She will likely serve all twenty years; in the federal system, there is no parole, and one serves an entire sentence minus a maximum of a 15 percent reduction rewarded for “good time.”

Several years ago, I started visiting inmates I had sentenced in prison. It is deeply inspiring to see the positive changes most have made. Some definitely needed the wake-up call of a prison cell, but very few need more than two or three years behind bars. These men and women need intensive drug treatment, and most of the inmates I visit are working hard to turn their lives around. They are shocked—and glad—to see me, and it’s important to them that people outside prison care about their progress. For far too many, I am their only visitor.

If lengthy mandatory minimum sentences for nonviolent drug addicts actually worked, one might be able to rationalize them. But there is no evidence that they do. I have seen how they leave hundreds of thousands of young children parentless and thousands of aging, infirm and dying parents childless. They destroy families and mightily fuel the cycle of poverty and addiction. In fact, I have been at this so long, I am now sentencing the grown children of people I long ago sent to prison.

For years I have debriefed jurors after their verdicts. Northwest Iowa is one of the most conservative regions in the country, and these are people who, for the most part, think judges are too soft on crime. Yet, for all the times I’ve asked jurors after a drug conviction what they think a fair sentence would be, never has one given a figure even close to the mandatory minimum. It is always far lower. Like people who dislike Congress but like their Congress member, these jurors think the criminal justice system coddles criminals in the abstract—but when confronted by a real live defendant, even a “drug trafficker,” they never find a mandatory minimum sentence to be a just sentence.

Many people across the political spectrum have spoken out against the insanity of mandatory minimums. These include our past three presidents, as well as Supreme Court Justices William Rehnquist, whom nobody could dismiss as “soft on crime,” and Anthony Kennedy, who told the American Bar Association in 2003, “I can accept neither the necessity nor the wisdom of federal mandatory minimum sentences.” In 2005, four former attorneys general, a former FBI director and dozens of former federal prosecutors, judges and Justice Department officials filed an amicus brief in the Supreme Court opposing the use of mandatory minimums in a case involving a marijuana defendant facing a fifty-five-year sentence. In 2008, The Christian Science Monitor reported that 60 percent of Americans opposed mandatory minimums for nonviolent offenders. And in a 2010 survey of federal district court judges, 62 percent said mandatory minimums were too harsh.

Federal judges have a longstanding culture of not speaking out on issues of public concern. I am breaking with this tradition not because I am eager to but because the daily grist of what I do compels me to. In 1999, Judge Robert Pratt of the Southern District of Iowa, a courageous jurist whose brilliant opinion in Gall v. United States led to one of the most important Supreme Court sentencing opinions in my professional life, wrote a guest editorial in The Des Moines Register criticizing federal sentencing guidelines and mandatory minimums. He ended by asking, “If we don’t speak up, who will?” I hope more of my colleagues will speak up, regardless of their position on the fairness of mandatory minimum sentences for nonviolent drug offenders. This is an issue of grave national consequence. Might there be a problem when the United States of America incarcerates a higher percentage of its population than any nation in the world?”

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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.


Termaine Washington was Indicted by a Federal Grand Jury in Pittsburgh Alleging Charges of Violating the Federal Bomb Threat Hoax Laws

October 26, 2012

The Federal Bureau of Investigation (FBI) on October 25, 2012 released the following:

“Local Man Charged with Conveying Hoax Bomb Threats

PITTSBURGH—A resident of Pittsburgh, Pennsylvania has been indicted by a federal grand jury in Pittsburgh on charges of violating federal bomb threat hoax laws, United States Attorney David J. Hickton announced today.

The six-count indictment, returned on October 23, 2012, named Termaine Washington, 22, as the sole defendant.

According to the indictment presented to the court, on September 15, 2012 through September 19, 2012, Washington conveyed several false bomb threats by telephone to the Allegheny County 911 Center, saying that a bomb would go off at Allegheny County Jail, PNC Park, and the T-station.

The law provides for a maximum total sentence of 60 years in prison and a fine of $1.5 million. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Assistant United States Attorney Shardul S. Desai is prosecuting this case on behalf of the government.

The Federal Bureau of Investigation conducted the investigation leading to the indictment in this case.

An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.”

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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.


Gupta to Urge Probation From Judge Who Once Defended Insiders

October 22, 2012

San Francisco Chronicle on October 22, 2012 released the following:

“Patricia Hurtado and David Glovin, ©2012 Bloomberg News

Oct. 22 (Bloomberg) — As a lawyer, Jed Rakoff once persuaded a judge to give probation to a client convicted at an insider-trading trial alongside former Wall Street Journal reporter R. Foster Winans. Now a federal judge himself, Rakoff must weigh Rajat Gupta’s similar request to stay out of prison.

Gupta, a former Goldman Sachs Group Inc. director, will come before Rakoff in Manhattan federal court on Oct. 24 to be sentenced for leaking stock tips to Galleon Group LLC co-founder Raj Rajaratnam. Prosecutors say Gupta, convicted by a jury in June, deserves as long as 10 years in prison. Gupta seeks probation.

Gary Naftalis, a lawyer for Gupta, argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service, suggesting Gupta work with troubled youth in New York or with the poor in Rwanda.

“Good works help, but on their own they are rarely a ‘Get out of jail free card,’” said Gordon Mehler, a former federal prosecutor who’s now in private practice in New York. “So, it seems as if probation, even in Rwanda, is unlikely.”

Gupta, 63, is the most prominent of 70 people convicted since a nationwide insider-trading crackdown by U.S. prosecutors began four years ago. Gupta also served as managing partner of McKinsey & Co. from 1994 to 2003 and on the board of Procter & Gamble Co. from 2007 to March 2011, when he also resigned from the boards of Goldman Sachs, AMR Corp. and two other companies.

Buffett’s Berkshire

After a four-week trial in June, jurors found Gupta guilty of tipping Rajaratnam about dealings at New York-based Goldman Sachs, including a $5 billion investment by Warren Buffett’s Berkshire Hathaway Inc. Rajaratnam, 55, is serving 11 years in prison for trading on tips from Gupta and others.

In his 17 years as a judge, Rakoff has sentenced at least nine defendants for insider trading, including seven who pleaded guilty and two whom he jailed after they were found guilty by juries. Rakoff has a track record of imposing a sentence that is half what the government recommends.

“If there is any judge who’s sensitive to the draconian impact of the sentencing guidelines with respect to white-collar offenders, it’s Judge Rakoff,” said J. Bruce Maffeo, a former federal prosecutor now in private practice. “That being said, he’s equally sensitive to the need to fashion a sentence that takes into account both the defendant’s personal background and the need to deter others in the financial world, where this kind of activity appears to be more prevalent than previously assumed.”

Winning Leniency

Rakoff, a former federal prosecutor in New York who headed the office’s securities-fraud unit, was a white-collar criminal- defense lawyer before taking the bench.

As a defense lawyer, Rakoff won leniency for a client convicted of insider trading who was also facing prison.

Rakofff’s client, David Carpenter, went on trial in 1985 with his lover, journalist R. Foster Winans, and broker Kenneth Felis. Prosecutors said Winans leaked tips to Felis about forthcoming market-moving articles in his “Heard on the Street” column, Felis traded on the news and Carpenter allowed Winans to place trades through his account. All were convicted. Carpenter died in 1991.

Wife, Husband

At the sentencing, Rakoff compared Carpenter’s relationship with Winans to that of wife-and-husband and said Carpenter merely acquiesced to Winans’ trades, according to Winans’s lawyer, Don Buchwald. Carpenter got probation while Winans was given an 18-month prison term.

“He was following Foster,” Buchwald said in a phone interview last week. “Carpenter was a very sympathetic figure.”

This week, Gupta will be seeking sympathy of a different sort from Rakoff. Gupta’s lawyer, Naftalis, said in a court filing that Gupta deserves probation because his crime was an aberration in a life “defined by helping others.”

Naftalis cited Gupta’s work as chairman of the Global Fund, an initiative to fight AIDS, tuberculosis and malaria, as well as his work with the United Nations to improve world health. Naftalis declined to comment on a comparison of the Gupta and Carpenter cases. The defense submitted more than 400 letters to the judge describing Gupta’s accomplishments.

In their pre-sentencing court filings, prosecutors gave a different portrait of Gupta and asked Rakoff to consider the personal relationship between Gupta and Rajaratnam.

‘Very Close Friend’

In asking for a term of 97 months to 121 months, which they say are called for by U.S. sentencing guidelines, prosecutors say Gupta violated confidences and breached his duty as a senior corporate official by leaking news to his “very close friend” and business partner.

“Gupta’s interests often were aligned with those of Rajaratnam and Galleon such that Gupta stood to benefit if Galleon was successful,” prosecutors wrote in a filing, citing Gupta’s investment in Galleon and their partnership in another investment fund.

Richard Holwell, the former federal judge who presided over Rajaratnam’s trial and sentenced the fund manager, said judges consider “general deterrence,” or whether the sentence they impose will deter others from committing similar crimes.

“The nature and circumstances of the crime weigh in the government’s favor, because insider trading is a serious white- collar crime that undermines the integrity of the markets” said Holwell, who is now in private practice.

Deterrence

“The government will lean on general deterrence because insider trading has to be eradicated and one way to do that is by taking highly visible cases and making examples of them,” Holwell said. “That will weigh heavily on Rakoff.”

Other criminal defense lawyers said Gupta’s fall from grace may work in his favor. Kevin O’Brien, a former federal prosecutor in New York, said the judge must weigh Gupta’s achievements against his crimes.

“There is human drama there,” O’Brien said. “You can make the argument that for a guy like this who was on top of the world to have fallen so low and to have been so humiliated and exposed by a lengthy public trial, that is punishment enough.”

“What is smart about the Rwanda option is that it makes vivid Gupta’s commitment to public service and brings out with some clarity his history of good deeds,” he said. “It’s a creative approach.”

‘Mirage’ Guidelines

Federal sentencing guidelines are advisory. Rakoff’s history has been one of imposing sentences well below the recommended federal guidelines, which he has called a “mirage of something that can be obtained with arithmetic certainty.”

Last year, he sentenced James Fleishman, a former executive at expert-networking firm Primary Global Research LLC, to 2 1/2 years in prison for passing tips to fund managers while the guidelines called for more than seven years. He also ordered Primary Global consultant Winifred Jiau to serve 48 months for selling information. Her guidelines suggested a term of 78 months to 97 months in prison.

Still, Rakoff has rarely been silent about the contempt he has for insider traders, often expressing his sentiments in open court. In Fleishman’s case, he said insider prosecutions over “the last 30 or 40 years” have not “done enough to deter this serious and sophisticated crime.”

With Jiau, whose scheme ran for two years, he said the leaks undermined “the integrity of the financial markets” and demanded a “meaningful sentence.”

Maffeo said he believes Rakoff will impose some term of incarceration upon Gupta.

Love Families

Rakoff has demanded prison in cases in which, unlike Gupta, the defendants have admitted trafficking in illicit information. He sentenced ex-SAC Capital Advisors LP manager Donald Longueuil to 30 months instead of the 46 months to 57 months urged by the guidelines. He ordered a former Taiwan Semiconductor Manufacturing Co. manager to spend 18 months behind bars.

“Why is it that defendants always remember how much they love their families after they’ve committed the crimes that place that relationship in jeopardy?” Rakoff said at the sentencing of former Galleon trader Adam Smith, who won probation largely because he cooperated with prosecutors and testified against Rajaratnam.

Rakoff imposed an 18-month prison term on Manosha Karunatilaka, a former Taiwan Semiconductor Manufacturing Co. manager who pleaded guilty to passing nonpublic information about his company’s orders to fund managers as part of an insider-trading scheme. Karunatilaka cooperated with the U.S. and accepted responsibility for his crimes.

Crying Infant

As Karunatilaka’s infant child cried in the courtroom, Rakoff rejected a bid by defense lawyer Brad Bailey to impose a term of six months’ in prison and six months of home confinement.

Gupta, after two days of deliberations by a jury, was found guilty of three counts of securities fraud and one count of conspiracy. The tips came in September and October 2008 and concerned Buffett’s $5 billion investment in Goldman Sachs and the bank’s losses in the fourth quarter of 2008.

Jurors acquitted Gupta of charges that he leaked information that Cincinnati-based P&G’s organic sales growth would fall below estimates and that he tipped Rajaratnam about Goldman Sachs’s earnings in the first quarter of 2007.

In his filing, Naftalis argued that Gupta deserves leniency because his crimes were limited to a two-month period in 2008.

Peter Henning, a professor at Wayne State University Law School in Detroit, said Rakoff will focus on the nature of the crime and Gupta’s background. Henning predicted that the former Goldman Sachs director will get a prison term of two years to three years.

“That’s not a deleterious prison term, but it is prison and it doesn’t mean he will get a free pass,” Henning said in a phone interview. “It has to be a term to get everyone’s attention, and by everyone, I mean Wall Street.”

The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).”

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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.


Ex-EPISD Superintendent Lorenzo García’s victims can tell court of harm

August 29, 2012

El Paso Times on August 29, 2012 released the following:

“By Hayley Kappes \ El Paso Times

Victims of a scheme to fraudulently inflate standardized test scores at the El Paso Independent School District have until Sept. 21 to inform a federal court of the harm they suffered.

Students or employees of the school district between 2006 and 2011 who suffered damages from a plan devised by former Superintendent Lorenzo García can fill out a “declaration of victim losses” through the U.S. Probation Office.

Those who were directly harmed include students classified as “limited English proficient” or special education students whom the district targeted to prevent from taking the 10th-grade Texas Assessment of Knowledge and Skills exams, according to a letter dated Aug. 17 from the probation office to district students, parents and employees.

District faculty and staff members were indirectly harmed by the scheme, according to the letter.

Former state Sen. Eliot Shapleigh, who in 2010 alleged the district was removing students improperly, and members of Kids First! Reform EPISD!, a general-purpose political action committee, are urging victims of García’s crimes to detail their losses to the U.S. Probation Office.

Shapleigh argued that García’s restitution should include the cost of educating each student who was denied an education and the bonuses he earned by fraudulent means.

Under the plea agreement, García faces a prison sentence of just less than four years and is ordered to pay $180,000 in restitution to the school district for his role in the cheating scheme and for steering a $450,000 contract to his mistress.

The restitution money should go toward creating a fund at the district to help students who were improperly pushed out as a result of the scheme, Shapleigh said.

“We’re asking that the return of the money be made to the students for their education, that the students have a fund at EPISD, to go find them, to restore them and get them a high-school degree,” Shapleigh said. “They are the real victims.”

District officials have not identified all the students whose education was impeded because of the scheme, district spokeswoman Renee de Santos wrote in an email.

“The district is continuing its efforts, on its own and as part of its cooperation with federal investigators to identify students who may have been affected by the criminal conduct described in the information filed against Dr. Lorenzo García,” de Santos wrote.

Douglas McNabb, adjunct professor of international criminal law at South Texas College of Law in Houston, said that because there are so many direct and indirect victims, it would have been difficult to assign a restitution amount.

García’s attorneys worked with the U.S. Attorney’s Office to determine the restitution amount, said Jim Darnell, one of the former superintendent’s attorneys.

Darnell disagreed that the restitution should reflect the district’s per student expenditures for students who were pushed out of school and said Shapleigh is not a criminal lawyer.

Daryl Fields, a spokesman for the U.S. Attorney’s Office, said he couldn’t comment on how the restitution amount was reached.

The judge has the authority not to accept the plea agreement and can factor the victims’ statements to determine García’s punishment, said Douglas McNabb, adjunct professor of international criminal law at South Texas College of Law. McNabb has been a federal criminal defense lawyer for 30 years.

For each charge García pleaded guilty to, the punishment range is a maximum of 20 years in prison and a fine of up to $250,000.

Senior U.S. District Judge David Briones in June said he would review the sentencing guidelines to determine whether the punishment should be more or less than the recommended sentence.

García is free on bond and is scheduled to be sentenced on Oct. 5.

“The court could say based upon the stated harm from the victims, ‘I’m going to give the defendant the high end of the guideline range,'” McNabb said. “By allowing the victim to set out a dollar amount in the statement would help perhaps the probation officer in terms of apportioning the amount of the plea-agreed-upon restitution, assuming that the defendant can pay it. Most of them can’t.””

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Douglas McNabb – McNabb Associates, P.C.’s
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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.