White Collar and Federal Criminal Defense

In response to the opioid crisis, the Department of Justice (“DOJ”) has long prioritized prosecution of doctors prescribing opioids in violation of the Controlled Substances Act (“CSA”), 21 U.S.C. § 841.

Passed in 1971, the CSA is an expansive criminal statute originally designed to prosecute people involved with trafficking so-called street drugs—i.e., marijuana, heroine, cocaine, and the like.

Because the CSA was not created to target licensed medical doctors prescribing controlled substances with legitimate medical uses (e.g., opioids)—or to criminalize the provision of socially beneficial medical care more generally—there have long been questions about how to apply the CSA fairly in physician prosecutions.

a binder of files chained with a padlockWhen the government investigates or prosecutes alleged corporate crime, a key question commonly emerges: Will the accused client waive attorney-client privilege and disclose relevant communications to the government?

This issue often arises because lawyers are routinely involved in corporate actions and decisions later subject to government scrutiny.  “The extensiveness and complexity of the laws governing” corporate affairs “have made legal advice a crucial element of [not only] major business decisions,” but also of “more mundane kinds of corporate activity.”  Douglas W. Hawes & Thomas J. Sherrard, Reliance on Advice of Counsel as a Defense in Corporate and Securities Cases, 62 Va. L. Rev. 1, 5 (1976).  As the Supreme Court emphasized in Upjohn Co. v. United States, 449 U.S. 383, 389 (1981), relying on attorneys is especially important “[i]n light of the vast and complicated array of regulatory legislation confronting the modern corporation.”

Ordinarily, the client—and only the client—has the authority to decide whether to waive attorney-client privilege on communications with counsel.  Where an accused-client is cooperating with a government investigation or asserting an advice of counsel defense in response to formal charges, the waiver analysis is generally straightforward: the accused-client waives privilege and discloses relevant communications to the government.  The resulting disclosure often reveals critical information to the government because of the substantial involvement of lawyers in much corporate conduct and decision-making.

Extra Icing on a Cake Already FrostedYou know the Supreme Court of the United States feels strongly about an issue when, in the Court’s parlance, it adds “extra icing on a cake already frosted.”

That is, in effect, what the Court did in Van Buren v. United States (No.19-783), an opinion issued last Thursday in which the Court reversed the Eleventh Circuit Court of Appeals in a prosecution arising under the Computer Fraud and Abuse Act (CFAA).  After considering “the text, context, and structure” of the CFAA, the Court resolved the issue in dispute—i.e., the cake was “frosted.”  But the Court then added “extra icing” and emphasized—again—its profound concerns with federal prosecutors using broad federal criminal laws to target ordinary, seemingly innocent conduct.[1]

Van Buren concerned a “Georgia police sergeant [Van Buren] using his patrol-car computer to access a law enforcement database to retrieve information about a particular license plate number in exchange for money.”  While he “used his own, valid credentials to perform the search, his conduct violated a department policy against obtaining database information for non-law-enforcement purposes.”  The issue was whether Van Buren had “exceed[ed] authorized access” in violation of the CFAA by accessing the database for an improper purpose.

PPP Fraud Prosecution[Law360 published the below article by Finch McCranie partner, David Bouchard, on January 25, 2021.  The article concerns PPP fraud and enforcement.  Our white collar criminal defense team is deeply experienced in helping individuals and businesses navigate government investigations, enforcement actions, and prosecutions.  If you are contacted by a law enforcement or regulatory authority regarding a PPP loan or other business transaction, do not hesitate to contact our capable team.]

By last August, just four months after the first Paycheck Protection Program loans were disbursed, federal prosecutors had filed 41 criminal complaints charging nearly 60 people with PPP fraud in cases involving alleged losses totaling approximately $62 million.[1]

Without skipping a beat, Hannibal Ware, inspector general of the Small Business Administration, cautioned that such prosecutions amounted to “the smallest, tiniest piece of the tip of the iceberg.”[2]

trial penaltyNobody accused of a federal crime should be penalized for exercising their Sixth Amendment right to trial.  And yet, because of the trial penalty, that happens all too often.[1]

The trial penalty refers to “the substantial difference between the sentence offered in a plea offer prior to trial versus the sentence a defendant receives after trial.”[2]  At least in part because of the trial penalty, federal criminal trials are on a steep decline.  Thirty years ago, 20% of federal criminal cases went to trial.[3]  Today, fewer than 3% of federal criminal cases result in a trial, and more than 97% of criminal cases are resolved by plea.[4]  As the National Association for Criminal Defense Lawyers (“NACDL”) has accurately observed: “[t]he Sixth Amendment right to trial [is] on the verge of extinction.”[5]

The trial penalty can be traced back to the sentencing reform push of the 1980s, which led to the creation of mandatory minimum sentencing provisions and the sentencing guidelines, and in turn, more powerful prosecutors and less powerful judges with more limited discretion.  Charge and fact bargaining, excessive guidelines ranges, departure provisions conditioned on pleading guilty, and statutory mandatory minimums, are all key reasons for the emergence of the trial penalty.  For example, rather than reserving mandatory minimum sentencing provisions for the most culpable defendants, prosecutors have at times used them “to strong-arm guilty pleas, and to punish those who have the temerity to exercise their right to trial.”[6]

The-Right-to-Confrontation-in-an-Era-of-VideoconferencesVideoconferencing has skyrocketed in popularity because of the pandemic.  Just check Zoom’s stock.  Seemingly overnight, what used to be an irregular method of business communication has become commonplace.

Courts have embraced the craze, frequently holding hearings and other meetings by video.  But there are limits to what a court can permissibly accomplish by video.  While some observers have suggested videoconferencing is a potential solution to the problem of requiring live, in-person testimony during a pandemic spread by airborne particles, the Supreme Court of Michigan held in a recent criminal appeal that “two-way, interactive video testimony violated the defendant’s Confrontation Clause rights.”[1]

U.S. Supreme Court Precedent on the Confrontation Clause

In the early days of the Coronavirus pandemic, Congress passed relief legislation authorizing unprecedented federal aid to states, businesses, and individuals.  In short order, a torrent of federal spending flowed.  While those days may seem long gone as initial relief dollars have dried up and Congress is now debating additional relief programs, the Department of Justice (“DOJ”) remains focused on investigating and prosecuting fraud schemes arising from relief programs rolled out at the beginning of the pandemic.[1]

One of the relief programs receiving special attention from DOJ is the Paycheck Protection Program (PPP), administered by the Small Business Administration (SBA).  Through the PPP, participating banks lent money to qualifying businesses, which loans the SBA guaranteed.  Subject to certain conditions, the SBA agreed to forgive the loans.  Some of the key loan conditions included, for example: the requested loan was to be used to pay costs eligible for forgiveness (e.g., payroll, mortgage interest, rent and utility costs); payroll was to be capped at $100,000 per employee, annualized; the borrower was not to reduce salaries or hourly wages by more than 25 percent for any employee during the relevant period.[2]  To obtain the loan, the borrower had to sign and certify the PPP loan forgiveness application.

DOJ’s initial investigations of PPP fraud schemes have appeared to focus on the eligibility of borrowers (i.e., whether they had a real business with real employees, whether the size of the payroll matched representations in the loan application, etc.) and the use of the proceeds (i.e., whether the proceeds were spent on permissible items).  Thus far, DOJ’s prosecutions for PPP fraud have involved allegations of egregious misconduct.  As DOJ’s enforcement efforts continue, it is likely that DOJ will start bringing prosecutions concerning conduct that may be closer to the line and that may fall in gray areas.

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