Contact information:. I will be available after class for meetings and before class on request.

Transcription

1 Room M200, Tuesdays 7:55-9:55 P.M. General Information: WHITE COLLAR CRIME AND SECURITIES FRAUD Spring 2015 Syllabus Georgetown University Law Center Professor Lieberman Course objectives and expectations: The Criminal Fraud Section of the Department of Justice and United States Attorneys in the field play an important and increasingly significant role in the enforcement of the anti-fraud provisions of the federal securities laws. This course will examine the largest securities and financial frauds of this century including Enron s multi-faceted scam (and the consequential demise of accounting giant, Arthur Andersen); Worldcom (the nation s largest corporate bankruptcy in its time); the schemes that led to the 2008 financial meltdown; Madoff s $50 billion Ponzi scheme; and, the marquee criminal insider trading prosecutions recently in the headlines, among others. Students will gain a practical understanding of the statutes and investigative tools used to combat corporate and Wall Street fraud, and the working relationship between the Department of Justice and the SEC Division of Enforcement. Case studies will serve to assess the successes, the failures and the future of securities regulation and enforcement through criminal prosecution. Required Texts: (1) Chapter Excerpts from Professor O Sullivan s Federal White Collar Crime casebook; (2) chapter excerpts from Profit Without Honor, S. Rosoff (Pearson, 6 th ed.) will be scanned and available through Williams Library ; (3) A Resource Guide to the U.S. Foreign Corrupt Practices Act Your grade for the course will be based on attendance, class participation and a final exam. The final will be a take-home, open book exam. Three unexcused absences will result in a 3/4 grade reduction (e.g., an A will be reduced to a B+). You will have the opportunity during the semester to submit several short (in the range of 500 words) essays on selected topics. These essays are not mandatory. They will be considered in arriving at your final grade as extra credit. There will be no negative impact on your final grade based on the quality of your essay or not submitting one. Assigned and optional readings will be available on the TWEN site for this course (password: WCCSF2015). Cases having Westlaw or official citations will not be posted. Optional Readings are intended to enhance the student s understanding of the issues. I will from time-to-time make additional brief materials available on TWEN drawn from current developments in our area of study. Please check TWEN regularly for additional materials. Contact information:. I will be available after class for meetings and before class on request.

2 Classes 1 and 2: January 13 and 20 How Investigations Begin Whistleblowers Informants Disgruntled Employee Articles in national press (WSJ/NYT) Public Filings with the SEC The Principal Tools of Investigation Electronic surveillance and consensual monitoring 18 U.S.C.2510 et seq. Search warrants (Standing to challenge corporate searches) Grand Jury Fed. R. Crim. P. 6 Subpoena power: documents and testimony Use Immunity 18 U.S.C et seq. Plea bargaining up the food chain (Fed. R. Crim. P. 11) Principal Federal Criminal Statues Used to Prosecute Securities Fraud Mail/Wire Fraud 18 U.S.C. 1341/43 RICO 18 U.S.C et seq. Securities Fraud 18 U.S.C. 1348, 1350 (failure to certify financial reports) Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq. Perjury, subornation 18 U.S.C. 1621/22 Obstruction of Justice 18 U.S.C False statements to law enforcement official (the Martha Stewart crime) 18 U.S.C Assigned Reading: (1) Rosoff, Ch. 1 pp 3-18; (2) Fed. R. Crim. P. 6; (3) Fed. R. Crim. P. 11 (Pleas); (4) 18 U.S.C et seq.; (5) 18 U.S.C.2510 et seq.; (6) Section 32 The Exchange Act, 15 U.S.C. 78ff.;(7) Civil or Criminal Fraud A Blurry Line; (8) Standing to Challenge Corporate Searches; (9) The USAO, The SEC and Stays: Enforcing the Law Fairly, T. Gorman (Oct. 28, 2009) Classes 3: January 27 DOJ and SEC Concurrent Investigations State Actor Doctrine: SEC v. Finazzo, 543 F. Supp.2d 224 (S.D.N.Y. 2008) Cooperation between SEC and DOJ: United States v. Stringer, 521 F.3d 1189 (9 th Cir. 2008); 408 F. Supp.2d 1083 (D. Or. 2006); United States v. Scrushy, 366 F. Supp.2d 1134 (N.D. Ala. 2005) Joint proffers/ Queen for a Day Stays (case examples) Federal Grand Jury Practice: The handmaiden of the prosecutor. Power to subpoena witnesses to testify and to subpoena documents Immunity and the Fifth Amendment Privilege against self-incrimination Role of witness s counsel Grand jury secrecy

3 FBI Field Investigation Interaction between FBI Special Agent and Assistant United States Attorney Informants and consensual monitors Field interviews and FD 302s (memorandum of interview) FBI case agent presentation to the grand jury Assigned Reading: (1) Practice Tips: Dealing with Parallel Investigations, P. Rao, ABA Criminal Justice Newsletter, Vol. 17, Issue 1 (Fall 2008); (2) United States v. Stringer, 535 F.3d 929 (9 th Cir. 2008); (3) Govt s Opp. Brief to Skilling Scrushy motion; (4) Skilling Bench Order; (5) SEC v. Finazzo, 543 F. Supp.2d 224 (S.D.N.Y. 2008) Classes 4: February 3 Chevron Deference and the Rule of Lenity Assigned Reading: (1) Chevron, U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984); (2) Whitman v. United States, cert. denied, No (Nov. 10, 2014); (3) U.S. v. Whitman Case No (2d Cir. Feb. 19, 2014); (4) U.S. v. Whitman, 904 F. Supp.2d 363 (S.D.N.Y. 2012); (5) U. S. v. Newman, Case No (2d Cir. Dec. 10, 2014) Classes 5: February 10 U.S. v. Newman and SEC Insider Trading Cases Assigned Reading: (1) Section 10(b), Rules 10b-5, 10b5-1, 10b5-2; (2) In re Cady Roberts & Co., 40 S.E.C. 907 (1961); (3) S.E.C. v. Texas Gulf Sulphur, Inc., 401 F.2d 833 (2d Cir. 1968); (4) Dirks v.s.e.c., 463 U.S. 646 (1983); (5) Chiarella v. United States, 445 U.S. 222 (1980); (6) United States v. Royer, 549 F.3d 886 (2d 2008); (7) Rosoff, Chapter 6; (8) O Sullivan pp ; (9) U.S. v. Matthew Martoma Indictment; (10) U. S. V. Rajarengan Rajaratnam Indictment; (11) It s Hard to Catch A Shadow, NYT Feb.9, 2014 February 17: NO CLASS Class 6: February 24 DOJ Securities Enforcement Initiative; Financial Crimes Enforcement Network ( FinCEN ), The USA Patriot Act, Section 314(b) Assigned Reading: (1) The 314(b) Program by FinCEN s Office Special Programs Development, pp ; (2) FinCen B-D Anti-Money Laundering speech; (3) Bank Money Laundering article (4) McNulty Memo; (5) Revised DOJ Guidelines

4 Class 7: March 3 Sarbanes-Oxley Act: Selected Provisions Assigned Reading: Sarbanes-Oxley Act: Title VIII--Corporate and Criminal Fraud Accountability ; Title IX--White-Collar Crime Penalty Enhancements ; Title XI Corporate Fraud and Accountability March 10: NO CLASS Class 8: March 17 Selected Issues on Representing Entities and Individuals in a Criminal Securities Investigation Assigned Reading: (1) US v. Ruehle, 606 F. Supp.2d 1109 (C.D. Cal. 2009); (2) 583 F.3d.600 (9 th Cir. 2009); (3) In re Grand Jury Subpoena, 415 F 3d 333 (4th Cir 2005); (4) Government Privileges. Class 9: March 24 Corporate Fraud and Charging Decisions: Enron, Arthur Andersen Assigned Reading: (1) O Sullivan, Chapter 4 Entity Liability pp (2) Rosoff Ch. 7 pp ; (3) U.S v. Lay et.al indictment; (4) Fastow plea agreement; (5) Arthur Andersen: The destruction of an 89 year old accounting firm and its 28,000 employees, Executive Summary article. Class 10: March 31 Accounting Fraud: WorldCom, Adelphia, Tyco, Refco, HealthSouth Assigned Reading: (1) O Sullivan, Ch. 9; (2) Rosoff Ch. 7, pp (3) U. S. v. Scrushy Indictment t; (4); (5) Class 11: April 7 FCPA I Assigned Reading: (1) A Resource Guide to the U.S. Foreign Corrupt Practices Act; (2) U. S. v. Sharef, et.al indictment; (3) FCPA Trends From The Last 6 Months; (4) FCPA Crackdown; (5) FCPA C-Suite; Title 15 U.S.C. 78-dd-1 et seq.

5 Class 12: April 14 FCPA II (Guest Lecturer: Bob Dodge, Ass t Chief litigation Counsel, SEC Division of Enforcement) Assigned Reading: S.E.C. v. Elek Straub, et al. No. 11 Civ (S. D. N. Y. Feb.8, 2013) (Memorandum and Order denying motion to dismiss) Class 13: April 21 Sentencing the Securities Fraudster and Application of Federal Sentencing Guidelines Review for Final Exam Assigned Reading; (1) Daniel Richman, Federal White Collar Sentencing in the United States: A Work in Progress, 76 Law and Contemporary Problems (2013); (2) Rosoff Ch. 4, pp ; (3) Rosoff Ch. 13, pp ; (4) Section 32 of the Exchange Act; Sentencing Guidelines in White Collar Fraud Cases