Texas Criminal Lawyer Blog

By Brocken Inaglory (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia CommonsAn executive assistant’s personal use of corporate credit accounts resulted in a federal charge of wire fraud. United States v. Coulman, No. 3:14-cr-02424, information (S.D. Cal., Aug. 27, 2014). Prosecutors alleged that the defendant used corporate credit cards to purchase vacations, electronics, clothing, and other goods, as well as attempting to conceal her activities from her employer. Prosecutors got a bit creative, alleging a connection between the defendant’s scheme and interstate commerce in order to establish federal jurisdiction. The defendant waived indictment and entered a guilty plea on the day federal prosecutors filed the information. The court sentenced the defendant in August 2015 to 21 months in prison and ordered her to pay the amount she was accused of misappropriating—nearly $1 million—in restitution.

According to the government’s information, the defendant began working for Hewlett-Packard (HP) in 2000, and she remained there until 2012. She worked as the executive assistant to one of the company’s vice presidents during the last four years of her employment. Part of that job involved “review[ing] monthly credit card statements and submit[ting] the related expense reports, receipts, and supporting documentation to HP program administrators.” Id. at 1-2. She also responded to questions from program administrators about expenditures and expense reports. Prosecutors noted that she had access to the vice president’s email account, “which included the ability to delete emails received by, and send emails from [that] account.” Id. at 2.

Prosecutors described a scheme by which the defendant used corporate credit cards for multiple unauthorized expenses, including over $350,000 for a business operated by her brother, more than $100,000 at a “resort spa,” id. at 3, airfare and hotels for trips to Hawaii and Europe, and purchases at the Apple Store and several high-end department stores. The total amount of fraudulent expenditures, according to the FBI, exceeded $954,000.

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OpenClipartVectors [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayFederal prosecutors announced indictments in what they are calling the “largest known computer hacking and securities fraud scheme” in August 2015. The indictments allege that the nine defendants, who are reportedly based in Ukraine, illegally accessed private computer networks to obtain information for use in insider trading. U.S. v. Korchevsky, et al., No. 15-cr-00381, indictment (E.D.N.Y., Aug. 5, 2015); U.S. v. Turchynov, et al., No. 15:cr-00390, indictment (D.N.J., Aug. 10, 2015). Prosecutors claimed that the defendants made $30 million from the scheme. The Securities and Exchange Commission (SEC) filed a related civil enforcement action against 32 individuals and companies, alleging $100 million in illegal profits. SEC v. Dobovoy, et al, No. 15-cv-06076, am. complaint (D.N.J., Aug. 23, 2015). This appears to be one of the first major cases alleging cybercrime directly related to securities fraud.

The defendants in both criminal cases are accused of hacking computer servers maintained by private companies engaged in the business of “issuing press releases on behalf of publicly-traded companies.” Turchynov, indictment at 4. Publicly traded companies have contracts with these companies, commonly known as “newswires,” under which they provide “confidential press releases…contain[ing] material nonpublic information” that would be of interest to the stock market. Id. at 5. The newswires publish these press releases when authorized to do so by the companies.

According to the indictments, the defendants obtained about 150,000 press releases from newswire servers over a five-year period. They allegedly used material nonpublic information from at least 800 of these press releases to trade stocks ahead of the public release of the information, resulting in alleged profits of around $30 million.

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flosca [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayThe Texas Court of Criminal Appeals recently granted a petition for habeas corpus relief in one of the most infamous Texas criminal cases of the past few decades. Ex parte Keller, No. WR-36,684-02, opinion (Tex. Crim. App., May 20, 2015). The petitioner and her husband owned and operated a daycare center in Austin, Texas, until they were caught up in what has come to be known as the “Satanic ritual abuse” panic of the 1980s. They spent 21 years in jail for child abuse—based on highly questionable evidence—before the state released them in late 2013. The habeas corpus petition asserted that the conviction was based on false testimony from the state’s expert witness and that the petitioner was innocent of any criminal offense. The court granted the petition on the false testimony claim but rejected the “actual innocence” claim. This decision highlights the bizarre legal view of “innocence” once a person has been convicted of a crime.

In our criminal justice system, “guilt” and “innocence” have very specific meanings that non-lawyers may not always understand. At trial, the prosecution has the burden of proving guilt beyond a reasonable doubt. If the finder of fact, which could be the judge or a jury, finds that the state has met this burden, it enters a verdict of “guilty.” Otherwise, it enters a verdict of “not guilty.”

A “not guilty” verdict is not the same as a finding of “innocence.” To most prosecutors and law enforcement officials, a “not guilty” verdict only means that the prosecutor failed to convince the jury of a person’s guilt, not that the person is actually innocent of the offense. The state tends to apply a much broader definition of “guilty,” though—often taking a “guilty” verdict as proof that a person committed the offense, not merely that the state met its burden of proof. “Actual innocence” thus becomes just one possible argument a defendant could raise on appeal or in a habeas petition, which might not even provide sufficient grounds, by itself, to reverse a conviction. See Herrera v. Collins, 506 U.S. 390, 400 (1993).

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By Politikaner (Self-photographed) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia CommonsThe Fourth Amendment’s warrant requirement for searches and seizures by law enforcement officials has multiple exceptions, developed by the U.S. Supreme Court over more than a century of this country’s history. The “border search” exception generally allows officials to detain and search individuals and their belongings at or near the U.S. border and at airports. An American filmmaker’s lawsuit seeks an explanation for, she claims, more than 50 warrantless detentions and searches at airports, both in the U.S. and abroad. Poitras v. Dept. of Homeland Security, et al, No. 1:15-cv-01091, complaint (D.D.C., Jul. 13, 2015). Although the suit is civil in nature, it demonstrates the extent of the power law enforcement officials may attempt to exercise during border searches.

The plaintiff is a documentary filmmaker who frequently travels abroad. She won the Academy Award for Best Documentary Feature in 2015 for Citizenfour. The film covers her meetings in Hong Kong with Edward Snowden, who is currently facing charges of theft of government property and unauthorized communication of classified information. U.S. v. Snowden, No. 1:13-cr-00285, crim. complaint (E.D. Va., Jun. 14, 2013); 18 U.S.C. §§ 641, 793(d), 798(a)(3). She claims that the U.S. government began monitoring her in 2006, after she produced and directed a film about the war in Iraq in 2006 entitled My Country, My Country.

In her complaint, the plaintiff claims that she “was subjected to ‘Secondary Security Screening Selection,’ detained, and questioned at the U.S. Border on every international flight she took to the United States” over a six-year period. Poitras, complaint at 2. The first incident allegedly occurred in July 2006 at the Newark airport when she returned from the Jerusalem Film Festival. She claims that Customs and Border Protection (CBP) agents met her at the gate, escorted her to a holding room, and interrogated her for about two hours before releasing her.

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By Bill Branson (Photographer) [Public domain or Public domain], via Wikimedia CommonsA doctor pleaded guilty to multiple federal counts of health care fraud, money laundering, and conspiracy to pay and receive kickbacks in September 2014, shortly before his case was scheduled to go to trial. This summer, the judge sentenced him to 45 years in prison and ordered him to pay millions of dollars in restitution. The government commenced its case against the doctor with a complaint and indictment filed in August 2013. It filed multiple superseding indictments, culminating in one that listed 23 counts under five sections of Title 18 of the U.S. Code. United States v. Fata, No. 13-cr-20600, 4th sup. indictment (E.D. Mich., Jan. 15, 2014).

A prosecution for health care fraud requires proof beyond a reasonable doubt that a defendant intentionally used fraudulent or deceptive means to obtain something of value from a “health care benefit program” (HCBP), which includes both public and private health plans. 18 U.S.C. §§ 24(b), 1347. The defendant, who worked as an oncologist, was accused of submitting “false and fraudulent claims” to multiple HCBPs “for services that were not medically necessary.” Fata, indictment at 8. The HCBPs included Medicare, Blue Cross Blue Shield, and Aetna.

Prosecutors accused the defendant of ordering treatments and procedures for more than 500 patients, including chemotherapy, that they did not need in order to bill Medicare and private insurance providers. This included expensive medications and treatments for healthy patients falsely diagnosed with cancer and hospice-care patients who would not derive any benefit from further treatment. Many health care fraud cases involve reimbursement claims for treatments that never actually took place. This case, according to prosecutors, directly endangered patients’ health.

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By Yinan Chen (www.goodfreephotos.com (gallery, image)) [Public Domain], via Wikimedia CommonsAs technology develops and expands, so do the methods used by law enforcement to investigate alleged criminal offenses. This summer, the news media reported on a Colorado couple suspected of taking the wife’s children out of the country in violation of a child custody order. Authorities reportedly located the suspects by tracking their use of online music and video streaming services. Based on the internet protocol (IP) address associated with their accounts, investigators pinpointed their location in Mexico. Colorado authorities reportedly had a warrant for the suspects’ accounts, as required by the U.S. Constitution and the Video Privacy Protection Act (VPPA) of 1988, 18 U.S.C. § 2710. This statute prohibits video rental and streaming services from disclosing personal information about customers without their consent, and it prevents law enforcement from accessing such data without a warrant.

According to law enforcement in Larimer County, Colorado, who took the lead on the case, the suspects are a husband and wife. The wife was involved in a custody dispute with her ex-husband over their two daughters. She and her husband allegedly took the two girls out of the county in December 2014, and their location remained unknown for eight months. The sheriff’s office obtained a warrant to track the IP address used by the wife’s accounts on Spotify and Netflix, online music and video streaming services, respectively. Investigators determined that they were located in Cabo San Lucas, in the Mexican state of Baja California Sur. The U.S. State Department reportedly arranged for Mexican officials to take them into custody and return them to the United States.

The case likely does not present Fourth Amendment problems, since the sheriff’s office obtained a warrant to track the IP address. The VPPA applies to this case, since officials accessed the wife’s Netflix account data. The statute prohibits the disclosure of a customer’s “personally identifiable information” (PII), defined to include information indicating “specific video materials or services” requested by the customer. 18 U.S.C. § 2710(a)(3). Streaming video did not exist when Congress enacted the VPPA in 1988, but courts have held that it applies to online video-streaming service providers. See Garvey et al. v. Kissmetrics et al., a/k/a In re Hulu Privacy Litigation, order (N.D. Cal., Aug. 10, 2012).

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By Fred Morledge (Self-photographed) [CC BY-SA 2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia CommonsA jury acquitted a 65-year-old medical marijuana user of possession and possession with intent to distribute in late May 2015. Prosecutors in the Clark County, Nevada case alleged that the defendant had more marijuana than was legally allowed, and they claimed that he intended to sell some or all of it. Police also seized cash and firearms from the defendant’s home. The prosecution unsuccessfully tried to tie these items to their intent-to-distribute claim. More than a month after the verdict, the defendant got the money back from the police, but he is reportedly still trying to get his guns back. Nevada allowed medical marijuana at the time of the defendant’s arrest and expanded its medical marijuana laws while his case was pending. The verdict could be an important milestone for the rights of medical marijuana users.

The defendant, according to news reports, suffered from scoliosis and developed arthritis over years of running a furniture repair business. He was injured in a car accident and reportedly became addicted to prescription painkillers afterwards, but he was able to beat the addiction with the help of medical marijuana. At the time of the defendant’s arrest in 2012, Nevada law permitted medical marijuana with a doctor’s prescription but required licensed users to grow the plants themselves. The defendant had a prescription from his doctor stating that he could have up to 29 plants and between two and four pounds of finished marijuana products, substantially more than the amount allowed by law at the time.

Police officers, claiming they could see marijuana plants through the defendant’s fence, asked to look around his property in October 2012. Prosecutors later claimed that the police were responding to calls from neighbors. The defendant showed the officers the backyard, where they found multiple marijuana plants. After obtaining a warrant, they searched the house and claimed to have found 68 plants, weighing 28 pounds, as well as 24 pounds of finished product. They also seized more than $51,000 in cash and 26 firearms.

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By Psychonaught (talk).Psychonaught at en.wikipedia [Public domain], from Wikimedia CommonsThe legal status of marijuana and related products has undergone significant changes in recent years. Numerous states have enacted legislation permitting the possession and use of small amounts of marijuana for medical purposes with a doctor’s prescription. A handful of states and the District of Columbia have essentially decriminalized marijuana altogether. Many jurisdictions still show little willingness to yield on the issue, however, and marijuana remains a Schedule I controlled substance under federal law. Texas joined the list of states allowing some degree of access to marijuana for medical purposes in June 2015, although the allowance made by the new bill, when compared to the range of potential medical uses for the drug, is tiny. Another positive news story involves the White House’s commutation of the prison sentences of 46 individuals convicted of nonviolent drug offenses, including four people in Texas.

The Texas governor signed SB 339, also known as the “Texas Compassionate-Use Act,” on June 1, 2015. Texas law generally prohibits the possession of delivery of marijuana (or “marihuana,” to use the statute’s archaic spelling) in any amount. Offenses range from a Class B misdemeanor for small amounts up to a first-degree felony with possible life imprisonment for amounts exceeding 2,000 pounds. Tex. Health & Safety Code §§ 481.120, 481.121.

SB 339 only allows the use of cannabidiol (CBD) oil to treat intractable epilepsy. CBD is one of the active components of marijuana. Texas law still prohibits products containing tetrahydrocannabinol (THC). The new bill adds Chapter 487 to the the Texas Health and Safety Code, which authorizes the Texas Department of Public Safety (DPS) to license “dispensing organizations,” register managers and employees of such organizations, and maintain a “compassionate-use registry” of physicians and prescriptions. The bill also adds Chapter 169 to the Texas Occupations Code to establish the permissible circumstances for prescribing CBD oil. It defines “intractable epilepsy” as a “seizure disorder” in which “two or more appropriately chosen and maximally titrated antiepileptic drugs…have failed to control the seizures.” SB 339 at § 2, to be codified at Tex. Occ. Code § 169.001(2).

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By w:United States Navy photo by Mass Communication Specialist 3rd Class Kenneth G. Takada (Cropped and balanced from [1] at [2]) [Public domain], via Wikimedia CommonsThe Federal Bureau of Investigation (FBI) is operating a “small air force” of airplanes and unmanned drones around the country, according to a report published by the Associated Press (AP) earlier this year. The agency, part of the U.S. Department of Justice (DOJ), reportedly uses these aircraft for a variety of surveillance activities, often without a warrant. The U.S. Supreme Court first ruled on warrantless aerial surveillance decades ago, but new technology brings different Fourth Amendment concerns. Rather than mere visual observation by law enforcement officers from helicopters or planes, today’s unmanned aerial drones can possess far greater surveillance capabilities. They can also stay in the air as long as they have enough fuel to stay there, and someone on the ground to control them.

The AP’s June 2015 report identified 13 fictitious companies used by the FBI as fronts for aerial surveillance activities, as well as 100 flights all over the country between April and June. Many of the flights seemed to involve repeated circling of large urban and rural areas. The FBI has stated that it uses drones to support local law enforcement in some situations, such as during the demonstrations in Baltimore earlier this year, but many details of its operations remain hidden from the public.

Much of the concern over aerial surveillance drones stems from the fact that, in addition to cameras allowing visual surveillance, they can carry various types of electronic monitoring technology, including a device known as a cell-site simulator or “Stingray.” This device collects data from cell phones and other mobile devices within a certain radius by pretending to be a cell-phone tower. Mobile devices are programmed to communicate with the nearest cell tower. The practice has garnered a great deal of criticism but has received little attention from high levels of the criminal court system.

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By Florian Boyd (originally posted to Flickr as Don't tread on me) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia CommonsA threat to cause imminent harm to another person could be subject to criminal prosecution in certain circumstances, despite the First Amendment’s free speech protections. Transmitting a threat across state lines could result in federal charges. The “true threat” exception to free speech has been the subject of much litigation and judicial interpretation. In Elonis v. United States, 575 U.S. ___ (2015), the Supreme Court considered the appeal of a defendant convicted of sending threats through interstate commerce, 18 U.S.C. § 875(c). It rejected the government’s argument that a negligence standard, which considers whether a reasonable person would find the defendant’s statements threatening, should govern the case. Instead, the state must prove that the defendant intended to convey a threat.

In general, the First Amendment does not protect statements and other actions made with “intent to intimidate” that are “likely to inspire fear of bodily harm.” Virginia v. Black, 538 U.S. 343, 364 (2003). The state must prove that the defendant intended to threaten someone and was not merely engaging in “hyperbole.” Watts v. United States, 394 U.S. 705, 708 (1969). Determining whether a statement or action meets the “intent to intimidate” standard requires a careful consideration of the “contextual factors” in each individual case. Black, 538 U.S. at 367.

The charges in Elonis originated from posts written by the defendant on the social media site Facebook. According to the Supreme Court’s opinion, after the defendant’s wife left him in 2010, taking their two children with her, he began “‘listening to more violent music’ and posting self-styled ‘rap’ lyrics inspired by the music.” Elonis, slip op. at 1-2. He periodically stated that the lyrics were “fictitious” and were not intended to portray actual people, but people who saw the posts reportedly became concerned.

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