Texas Criminal Lawyer Blog

businessmen-42691_640The Department of Justice (DOJ) investigates and prosecutes various matters categorized as “white-collar crimes.” In addition to offenses committed by individuals, this term also applies to a wide range of corporate misconduct, in which an entire business organization might be liable for illegal activity. In response to criticisms that the DOJ is focusing on corporate-level prosecutions to the exclusion of individual officers, directors, or employees, the DOJ issued a memorandum in September 2015, entitled “Individual Accountability for Corporate Wrongdoing” (the “Memo”), which sets forth new policies for the investigation and prosecution of individuals. In November, it announced changes to its written policies regarding prosecutions against corporations and other business entities.

“White-collar crime” is not a formal legal term. Instead, it refers broadly to non-violent offenses that are typically financial in nature and that often involve businesses or government officials. The federal government has jurisdiction over crimes that directly affect matters placed under federal control by the Constitution. This includes bankruptcy fraud, 18 U.S.C. § 151 et seq.; and immigration fraud, 18 U.S.C. § 1546. It also has jurisdiction over offenses affecting interstate commerce under the Commerce Clause. U.S. Const. Art. I, § 8, cl. 3. This includes mail fraud, 18 U.S.C. § 1341; wire fraud, 18 U.S.C. § 1343; offenses related to organized crime, 18 U.S.C. § 1961 et seq.; and securities fraud, 15 U.S.C. § 78j.

Federal law generally includes business entities like corporations and partnerships in its definition of the word “person.” 1 U.S.C. § 1. This enables federal prosecutors to pursue both individuals and business entities. The prosecution of an individual, according to the DOJ, has several advantages over prosecuting an organization. The Memo identifies several, including “ensur[ing] that the proper parties are held responsible for their actions” and “promot[ing] the public’s confidence in our justice system.” The public might find it more satisfying to see a picture or footage of an individual in handcuffs for some financial crime, but we must be careful to consider how much involvement in an alleged crime should lead to criminal liability. Some white-collar offenses occur on an organizational level, where few individuals have enough involvement to meet the legal requirements for guilt.

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ClkerFreeVectorImages [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayAs more states allow the purchase, sale, possession, and use of marijuana for medical purposes, law enforcement officials must balance patients’ rights with the enforcement of the remaining marijuana laws. In situations in which medical marijuana patients reside with people who do not have valid prescriptions, they must carefully assess whether a person is violating the law or not. Unfortunately, law enforcement does not always make a correct assessment, as in the case of a Michigan woman whose husband was a registered patient under state law. Prosecutors charged her with drug paraphernalia-related offenses, and she appealed the case to the state supreme court, which reversed the trial court’s and appellate court’s judgments against her. Michigan v. Mazur (“Mazur I”), No. 149290, slip op. (Mich., Jun. 11, 2015); see also Michigan v. Mazur (“Mazur II”), No. 317447, slip op. (Mich. App., Apr. 1, 2014).

Under the Michigan Medical Marijuana Act (MMMA), Mich. Comp. L. § 333.26421 et seq., registered marijuana patients may possess limited amounts of marijuana for use in accordance with a doctor’s prescription. Section 4 of the statute permits possession of up to 2.5 ounces of “usable marihuana” and, in some circumstances, up to 12 plants “kept in an enclosed, locked facility.” Mich. Comp. L. § 333.26424(a).

The MMMA grants immunity from prosecution to individuals associated with a registered patient for certain acts or situations. Providing “marihuana paraphernalia for purposes of a qualifying patient’s medical use of marihuana,” for example, is not subject to prosecution under § 4(g). Id. at § 333.26424(g). Similarly, § 4(i) protects a person from prosecution if they were “solely…in the presence or vicinity of the medical use of marihuana in accordance with this act.” Id. at § 333.26424(i).

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By groupuscule (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia CommonsA man facing almost 20 years in prison after pleading guilty to a minor marijuana offense won his motion seeking to vacate the plea. This unusual story involves overlapping areas of law, one judge who understood that a charge for possession of less than six grams of marijuana is a very minor offense, and another judge who saw the situation very differently. At the time of his guilty plea, the defendant was on probation for another case, in lieu of a 20-year sentence. Unbeknownst to the defendant, the plea he entered constituted a violation of the terms of his probation. This resulted in the imposition of the full sentence, until another judge ruled in the defendant’s favor last June. Prosecutors may decide to re-file in the marijuana case but evidently have not done so yet.

Jurisdictions all over the country are loosening restrictions on marijuana possession and use, and a handful of states have decriminalized it almost entirely. It remains a controlled substance under federal law, however, and Texas is not one of the states to take more than the tiniest of steps towards decriminalization. The case in question took place in a Baltimore City Circuit Court in Maryland, where possession of less than 10 grams of marijuana has not been a criminal offense since October 2014. That is not the same as saying that it is “legal,” however. It may still be subject to a civil fine, and possession of drug paraphernalia remains illegal.

The lengthy prison sentence in this case was due to an earlier case involving the defendant, for which he received probation. When a court accepts a guilty plea or finds a defendant guilty, it has the option in many cases of probating the sentence for a defined period of time. It imposes conditions that the defendant must meet during the probation term, which might include counseling or community service. It also requires staying out of criminal trouble. If a defendant violates the terms of probation, the court can revoke the probation and impose the original sentence in full.

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McLac2000 [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayThe body of statutes and regulations encompassing federal criminal law has grown considerably in the past few decades, and federal law can affect people in unusual and unexpected ways. In a case that made headlines in 2015, federal prosecutors used a confluence of two areas of criminal law, financial fraud and terrorism, to charge a man in connection with the April 2013 Boston Marathon bombing. United States v. Matanov, No. 1:14-cr-10159, indictment (D. Mass., May 29, 2014). Prosecutors conceded that the defendant, who knew the two bombers, was not involved in the bombing and had no advance knowledge of it. Instead, they charged him with offenses related to false statements and destruction of evidence because he deleted his browser history.

The charges against the defendant were based on a law, known as the Sarbanes-Oxley Act, passed in the wake of the Enron scandal in 2002. Pub. L. 107-204, 116 Stat. 745. The law added a section to the chapter of the federal criminal code dealing with obstruction of justice, making it an offense to “destroy[]…any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation…of any matter within the jurisdiction of any department or agency of the United States…or in relation to or contemplation of any such matter or case…” Pub. L. 107-204 § 802(a), 116 Stat. 800; 18 U.S.C. § 1519. Interpreted broadly, this could allow a prosecution for disposing of records that could be used in a hypothetical future federal investigation. In the defendant’s case, prosecutors accused him of destroying evidence needed in the investigation of the Boston Marathon bombing.

The bombing occurred on April 15, 2013 along the route of the Boston Marathon. Two bombs exploded, killing three people and wounding hundreds. The suspects killed a police officer on April 18, and a massive manhunt led to the death of one bombing suspect in the early morning of April 19 and the arrest of the other later that day. The surviving suspect was convicted of all charged offenses in April 2015, and a jury sentenced him to death in May.

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By Daniel Schwen (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia CommonsThe U.S. Supreme Court reached an important decision last summer in a challenge to a state constitutional amendment barring certain individuals from obtaining bail. The decision did not receive much media attention because the court simply declined to hear the case. This allowed the appellate court ruling, which struck down the amendment, to stand. Lopez-Valenzuela v. Arpaio, 770 F.3d 772 (9th Cir. 2014). The constitutional amendment in question was from Arizona, and therefore it had no direct impact on Texas. It raised important issues, however, regarding bail and due process that apply nationwide. The Supreme Court’s denial of certiorari drew a written dissent from three of the court’s conservative justices, Justices Alito, Scalia, and Thomas. County of Maricopa v. Lopez-Valenzuela, 575 U.S. ___, 135 S.Ct. 2046 (2015).

The amendment to Arizona’s constitution, Proposition 100, prohibited “granting undocumented immigrants arrested for a wide range of felony offenses any form of bail or pretrial release.” Lopez-Valenzuela, 770 F.3d at 775. Courts are given broad discretion in determining whether, and in what amount, to grant bail. The Eighth Amendment to the U.S. Constitution prohibits “excessive bail,” but it does not require courts to grant bail in all cases. Bail itself was not the issue in this case, but rather the limitation of bail to a specific group of people based on their actual or perceived national origin.

The Fifth and Fourteenth Amendments state that a person may not “be deprived of life, liberty, or property, without due process of law.” U.S. Const. amend. V; see also U.S. Const. amend. XIV, § 1. While the Fifth Amendment was generally understood to apply only to the federal government, the Fourteenth Amendment expressly extended this protection of individual rights to the states.

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No machine-readable author provided. Ishwar~commonswiki assumed (based on copyright claims). [GFDL (http://www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/) or CC BY-SA 2.5-2.0-1.0 (http://creativecommons.org/licenses/by-sa/2.5-2.0-1.0)], via Wikimedia CommonsAs more and more states pass legislation removing legal prohibitions on medical marijuana use, or decriminalizing marijuana altogether, the federal government has, to put it bluntly, struggled to keep up. Marijuana remains a Schedule I controlled substance under federal law, as well as a controlled substance under Texas law. The Department of Justice (DOJ) has, on several recent occasions, revised its enforcement guidelines for jurisdictions that have, to various extents, legalized marijuana. In late 2014, the DOJ addressed the enforcement of federal marijuana laws on Indian land. At the time, the memorandum was taken to mean that the federal government would not interfere with Indian tribes that chose to legalize marijuana. Subsequent actions, however, have shown that the legal landscape remains as murky as it has been for some time.

The U.S. federal government shares sovereignty with state governments, other subnational entities like Puerto Rico, and the country’s 567 federally recognized Indian tribes. 80 Fed. Reg. 1942 (Jan. 14, 2015), 80 Fed. Reg. 39144 (Jul. 8, 2015). Federally recognized Indian tribes, defined to include Native Americans within the continental U.S. and Alaska, are considered “domestic dependent nations” within the U.S. 25 C.F.R. § 83.1; Cherokee Nation v. Georgia, 30 U.S. 1, 2 (1831); Worcester v. Georgia, 31 U.S. 515, 583 (1832).

Indian tribes have sovereignty over their members and their land. United States v. Mazurie, 419 U.S. 544 (1975). They are considered subordinate to the federal government but parallel to the state governments in terms of sovereignty. Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134 (1980). The U.S. Department of the Interior oversees the tribes through the Bureau of Indian Affairs. Texas is home to three federally recognized Indian tribes:  the Alabama-Coushatta, the Kickapoo, and the Ysleta del Sur Pueblo.

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If a person crosses state lines or leaves the country while under indictment for, or after conviction of, a criminal offense, a process known as extradition allows authorities in another jurisdiction to take the person into custody and return them. Between states, extradition is governed by the U.S. Constitution. At the international level, extradition involves treaties with individual nations, which can produce unexpected results. Earlier this year, for example, an Irish court refused a request to extradite a person to the U.S., finding that the person would likely face “inhuman and degrading treatment” in the U.S. prison system.

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The Extradition Clause, U.S. Const. Art. IV, § 2, cl. 2, states that a person charged “with Treason, Felony, or other Crime,” if they leave the state where the charges are pending, must be returned to that state if they “flee from Justice” to another state. For most of the nation’s history, this was not viewed as a binding obligation on a state government. In Puerto Rico v. Branstad, 483 U.S. 219 (1987), however, the Supreme Court held that federal courts have the authority to enforce interstate extradition requests. This effectively made extradition mandatory by state governments, since one state’s refusal to extradite a defendant simply meant the other state could go to federal court.

State and federal statutes direct law enforcement to comply with interstate extradition requests. See, e.g. 18 U.S.C. § 3182, Tex. Code Crim. P. Art. 51.01 et seq. Under Texas law, a request from the governor of another state obligates law enforcement officers to assist in apprehending a person who has fled to Texas. Magistrates are authorized to issue arrest warrants upon receipt of a complaint stating the person’s name, the state seeking extradition, the alleged offense, the fact that the person has fled to Texas, and the fact that the offense violates the laws of the requesting state. Texas law enforcement officials are not obligated to detain a person or hold them to bail on behalf of the other state for more than 90 days. Under federal law, the limit is 30 days.

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In May 2015, federal prosecutors announced the arrest of multiple officials of the International Federation of Association Football, commonly known by the acronym FIFA, and associated organizations. The charges in United States v. Webb, et al., No. 1:15-cr-00252, indictment (E.D.N.Y., May 20, 2015), include fraud, bribery, and conspiracy under the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1961 et seq. The arrests took place in Switzerland, and only two of the 14 defendants are U.S. citizens. The allegations in the case are truly international in scope (”FIFA” stands for “Fédération Internationale de Football Association”), so they raise questions about how federal prosecutors assert jurisdiction.italy-1253760

FIFA organizes many of the world’s major international soccer tournaments, including the quadrennial World Cup tournament. It is headquartered in Zürich, Switzerland, and consists of 209 national soccer associations. Members are divided into six confederations, which may be further divided into regional groups. The United States Soccer Federation (USSF) is a FIFA member and is part of the Confederation of North, Central American, and Caribbean Association Football (CONCACAF), and the regional group, the North American Football Union (NAFU).

The allegations in the government’s 161-page indictment describe a range of allegedly corrupt acts, including alleged bribery during the selection of the site for the 2010 World Cup. FIFA’s executive committee was charged in 2004 with choosing among Egypt, Morocco, and South Africa to host the tournament. The indictment claims that one committee member, who is now a defendant, was offered $1 million by Morocco’s soccer committee and $10 million by the equivalent organization in South Africa. The committee member voted for South Africa, and the 2010 World Cup was held in Johannesburg.

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By U.S. Government [Public domain], via Wikimedia CommonsThe Securities and Exchange Commission (SEC) affirmed a ruling by an administrative law judge (ALJ) in early September. Part of the opinion denied the respondents’ challenge to the ALJ’s authority to rule in their case. In re Raymond J. Lucia Companies, Inc., et al., Admin. Proc. File No. 3-15006, opinion (SEC, Sep. 3, 2015). The respondents claimed that the ALJ lacked authority because his appointment to that position did not comport with the Appointments Clause, U.S. Const. Art II, § 2, cl. 2. Proceedings before the SEC and its ALJs are not criminal in nature, meaning that they cannot directly result in jail time. They are closely related to criminal enforcement of securities laws, however, and can play a major part in the “white collar” side of the practice of criminal law.

The respondents are an investment adviser, formerly registered with the SEC, and the corporation he used for his business activities. The SEC initiated cease-and-desist proceedings against the respondents with an order filed in September 2012. According to that order, the respondent touted a “proprietary wealth management strategy” called “Buckets of Money” (BOM) on a nationally syndicated radio show and a simultaneous podcast. He also promoted the strategy at seminars hosted by his company all over the country, as a commentator on television, and in several published books on investing.

The SEC alleged that the respondent made repeated references to “backtesting” the BOM strategy, which refers to evaluating a financial investment strategy against historical data. The overall allegation of the SEC’s case is that the respondent conducted little, if any, backtesting, but he falsely claimed that the BOM strategy was supported by extensive backtesting. It alleged securities fraud in violation of the Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-6(1)-(2), (4).

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By Dean (leu) . from Penrhyncoch, Aberystwyth, Wales (Reality TV - Graffiti) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia CommonsThe bankruptcy system provides individuals and families who are in financial distress with the opportunity to restructure their debts or substantially pay them down by liquidating assets, possibly followed by a discharge of many remaining debts. Since bankruptcy is such a far-reaching remedy, federal prosecutors deal quite harshly with fraud and other deceptive acts, such as concealing assets or income. A single count of bankruptcy fraud can result in up to five years in prison. In October 2015, a federal grand jury indicted a reality television star for bankruptcy fraud, based on prosecutors’ allegations that she hid more than $775,000 in income during a Chapter 11 bankruptcy case. United States v. Miller, No. 2:15-cr-00212, indictment (M.D. Pa., Oct. 13, 2015).

When a person files for bankruptcy, typically under Chapter 7 or Chapter 13, they essentially open up their financial life to scrutiny by a court-appointed trustee and the court. Upon the filing of a bankruptcy petition, all of a debtor’s non-exempt assets immediately become the property of a fictitious entity known as the bankruptcy estate. The bankruptcy trustee has the authority to manage and, in some cases, dispose of estate assets, pay debts, and make other major decisions. The debtor must make a full disclosure on schedules attached to the bankruptcy petition of all assets, liabilities, and income, including anything that might be exempt under federal or state laws.

The goal of any bankruptcy case, from the trustee’s point of view, is to pay down the debtor’s liabilities to the greatest extent possible. Creditors want to recover the money they are owed, but the trustee’s job is to make the most efficient and effective use of estate assets. At the end of the bankruptcy case, the court may discharge debts that are not specifically excepted from discharge by law. It is a federal criminal offense for a debtor to conceal assets or income from the trustee or the court, to make false statements or claims, or to commit a wide variety of other deceptive acts. 18 U.S.C. § 152. The government may prosecute any “scheme or artifice to defraud” in connection with a bankruptcy case as bankruptcy fraud. 18 U.S.C. § 157.

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