The Criminal Lawyer

Three major flat-screen TV and monitor manufacturers have pled guilty to price fixing, in a case brought by the DOJ’s Antitrust Division.

Sharp, LG Display and Chunghwa will pay $585 million in fines, pursuant to their plea. The DOJ alleged that, as a result of the price-fixing conspiracies, consumers paid inflated prices for products with LCD screens. Affected products ranged from flat-screen TVs to computer monitors, laptops, iPods and cell phones.

Division chief Thomas O. Barnett stated that these were international conspiracies that “affected millions of American consumers who use computers, cell phones and numerous other household electronics every day.” Without calculating how much extra the consumers wound up paying, he predicted that this plea would now result in lower prices.

The Wall Street Journal reports that the world’s largest LCD maker, Samsung, had cooperated with the Antitrust Division and was not named in the plea announcement. AAG Barnett declined to comment on whether Samsung had received legal immunity. Federal law provides that the first company to give evidence of a criminal conspiracy can receive immunity. When the investigation first became public in 2006, Samsung stated that it had “pledged its full and continuing cooperation” with law enforcement.

Yesterday, the Federal Reserve and the U.S. Treasury promulgated new rules that prohibit the processing of payments related to Internet gambling. By forbidding financial institutions from processing the payments, the government has essentially outlawed online gambling.

What constitutes “online gambling” is left up to state law. A few kinds of betting are still allowed, including government lotteries, horse racing and fantasy sport leagues. College and pro sports books, however, are no longer allowed. The same goes for online poker, roulette, craps, slots and other casino-type gaming.

Internet gambling is believed by many in law enforcement to be important to organized crime. It is a profitable source of revenue in its own right, and is difficult to police. “Street level” bookmakers are also believed to use online sports gambling to facilitate their activities, and to hedge or shift the risks of the street wagers they accept.

The new rule has been opposed by Democratic lawmakers and gambling businesses, as well as by financial institutions that would bear the burden of implementing the rule.

“The nation’s top white-collar criminal defense practices are receiving a steady flow of inquiries from clients embroiled in the ongoing credit crisis,” reports the National Law Journal. This is consistent with reports we have heard within the white-collar defense community.

With the economy continuing to take hits from the financial sector, there seems to be a growing demand for blame. Billions of dollars in pensions and retirement funds have disappeared, the money supply is crippled by banks refusing to extend credit, and jobs and tax revenue are at stake.

As the public and its elected officials call for punishment, state and federal prosecutors are launching investigations to see whether anyone broke the law. Anyone involved with complex debt instruments, which appear to have been responsible for much of the vanished wealth, ought not to be surprised to find themselves part of a criminal or regulatory investigation.

As we previously reported, Lehman Brothers executives are already being looked at. And of course the Eastern District of New York has already indicted two managers of the Bear Stearns subprime mortgage hedge funds. But that, our sources tell us, is only the tip of the iceberg.

Credit-default swaps, which enabled much of the subprime hedge fund investments, are now the focus of a joint investigation being brought by the New York Attorney General and the Southern District of New York.

The SEC has also begun taking action in investigations that had appeared to be dormant. Of particular interest to the SEC would be whether executives made misleading statements to investors or analysts about the financial health of their funds or institutions.

“Attorneys report hearing from clients,” reports the NLJ, “who are either already in receipt of subpoenas from federal and state investigators, or who are worried about what the mail will bring. Every lawyer interviewed agreed that their clients — including those confident they kept within the law — would be wise to anticipate that the government will cast a very wide net.”

The New York Times reports on a trend of public defenders refusing to take on new cases, on the grounds that their workload is so high that they cannot effectively defend their clients. With budget cuts coming at the same time as caseloads are rising, government-appointed lawyers claim to be reaching “the breaking point.”

Right now, a lot of public defenders are starting to stand up and say, “No more: We can’t ethically handle this many cases,’ ” said David J. Carroll, director of research for the National Legal Aid and Defender Association.

Similarly, many capable attorneys decline to volunteer for indigent-defense panels (representing those for whom the public defender’s office might have a conflict of interest), because the government-funded compensation is too low — in New York only a quarter or less of typical private rates. Fewer volunteers means more work for each.

There may be something to the argument that much of this work is routine, and not particularly time-consuming. But there are only so many hours in the day, and once you get past a certain volume of cases, things are going to have to slide.

For these public defenders, time is a valuable commodity. Most of it goes to priorities like trials, hearings and court appearances, which are huge time sinks. What is left mostly goes to cranking out canned suppression motions and picking up new cases. There isn’t much time for original research, much less a thorough investigation of any given case. Potential witnesses go unidentified, or uninterviewed. Evidence goes undiscovered or unexamined.

Plea bargains, the usual result for most cases, also suffer. Prosecutors make their offers based on what they think a case is worth, which in turn is based on what the prosecutor knows about the case. Unless a defense attorney can present new evidence, or a new way of looking at the evidence, the defense attorney is going to have a hard time changing the prosecutor’s mind. But without time to develop such evidence or new ways of looking at it, the public defender can be left with few tools beyond whining and begging, which are rarely effective. The upshot is that a defendant must settle for a worse deal, because there wasn’t time to negotiate a better one.

It’s not as though prosecutors don’t share the same high caseload, and suffer the same budgetary constraints. Prosecutors also have much more work to do for a given case, as they must investigate and assess the evidence, prepare and present witnesses to grand juries, and prepare and present witnesses at hearings and trial, in addition to making the necessary court appearances, responding to the motions, etc. If both sides are under similar burdens, perhaps the injustices balance out. Or perhaps the injustices are magnified, as time-starved prosecutors similarly miss out on the chance to develop evidence or insights that would better serve the defendant.

The underlying concern is whether defendants’ interests can be adequately protected by public defenders with barely sufficient resources to go through the motions for most cases. Perhaps, and perhaps not.

It is difficult to see, however, how refusing to represent defendants at all can possibly help them. This ploy seems intended to serve nobody’s interests but those of the public defenders themselves.

Milberg LLP partners David Bershad and Steven Schulman were sentenced in federal court yesterday afternoon, each receiving 6 months in prison. Along with two other partners, they had been convicted for offenses arising our of the payment of kickbacks to lead plaintiffs in securities and shareholder class actions, which netted the firm more than a quarter of a Billion dollars in attorney fees.

These 6-month sentences were far less than what the other two partners were given earlier this year: William Lerach got 24 months, and Melvyn Weiss got 30.

At Bershad’s sentencing hearing, U.S. District Judge John Walter intitially indicated that he thought Bershad ought to get the same sentence as Lerach, as they had pled to the same conduct. Bershad’s lawyers sought probation, and the prosecution asked for 3 months in prison plus 3 months of community confinement. Apparently swayed by Bershad’s statement of remorse, letters of support, and the fact that Bershad’s plea was the first domino that led to the other pleas, the judge came down to the six-month jail term.

At Schulman’s sentencing hearing, the prosecution asked for a year in prison, as Schulman had taken longer to plea than Bershad, and so had provided less assistance. Schulman’s lawyer argued that the sentence should be no longer than Bershad’s, and that the delay in pleading guilty was due to attempts to work out a plea that would let Schulman keep his law license — notwithstanding the fact that there was no way he could conceivably keep that license given what had happened. Judge Walter wasn’t impressed with those arguments, but ultimately gave him the same 6-month sentence, taking into consideration the letters in support and the fact that Schulman had three young children who would be affected by a longer sentence.

Bershad had pled to conspiracy to obstruct justice, and to making false statements under oath. Schulman had pled to a racketeering charge. In addition to jail terms, each was sentenced to pay a $250,000 fine, on top of forfeitures of $7.75 million and $1.85 million, respectively.

Milberg LLP was formerly known as Milberg Weiss LLC, and as Milberg Weiss Bershad & Schulman LLP. At one time, it accounted for half of all securities class action settlements. The firm engaged in “strike suits,” wherein a corporation whose share price had fallen would be sued in a shareholder class action, with an individual shareholder identified as the class representative. The suits were brought for the purpose of settlement for nuisance value. Individual shareholders did not approach the firm, but rather the firm monitored the stock market and manufactured its own cases. To get individuals to to take the role of lead plaintiff, the firm would share its fees with them. The firm also paid kickbacks to stockbrokers who referred clients. At least one expert witness, specializing in estimating damages, was paid on a contingency-fee basis. Bershad and Schulman were indicted, along with the firm, in 2006 on various counts, including racketeering, mail fraud and bribery.

The Wall Street Journal today reports on a developing issue in sentencing law: are child porn consumers being sentenced disproportionately high?

Justice Department data, referred to somewhat inaptly by the Journal, lumps viewers of child porn with those who distribute it. In the group of those convicted of possessing, receiving or distributing child porn, the average sentence now is 80 months in prison. In 1997, the average sentence was about 25 months.

The rise in sentences has been matched by a huge increase in the number of child porn and other child-exploitation cases. Internet crime itself has vastly grown as the Internet has become more ubiquitous worldwide, and so has awareness of the crimes being committed. Child porn itself has only been a crime since 1990.

Some see an unfair disparity in the U.S. Sentencing Guidelines recommended sentences for those who view child porn and online predators who seek to engage in sex with children encountered in chat rooms. Of course, these are commonly the same people. But those who have not engaged in predatory behavior routinely receive enhanced sentences because of the sheer quantity of child porn materials they possess — it is commonplace for defendants to have huge collections of images and videos depicting sex acts being performed on children.

Sharing and receiving child porn is easier to catch, of course, than predatory behavior. Predators are typically caught after they try to go after a victim who turns out to have been an undercover agent. Not every chat room has an undercover, and not every predator picks out the undercover in the room. Subpoenas and data analysis, however, can lead to web sites and fserve locations where vast collections of child porn are stored and distributed. Monitoring the traffic of those sites can provide the IP addresses of those who downloaded or uploaded files. That leads to search warrants on homes, offices and computers, turning up the usually sizeable collections ultimately charged.

Not all images are going to be slam-dunk child porn. The prosecution must prove that an image really is pornographic, that it is a real photo or video and not simply PhotoShopped, and that it really depicts a child as opposed to someone who merely looks young. So prosecutors tend to bring cases against offenders with large quantities of photos, to make it easier to cull out a number of clear examples of child porn. Those with fewer photos, who thus don’t merit a sentence enhancement, are less likely to be charged in the first place, as prosecutors focus their resources on the strongest cases.

So it is unclear that there is an unfair disparity in sentencing. Mere possession may only have a base sentence of 5 years, as opposed to 10 years for the predator. But those most likely to be caught, and those most likely to be prosecuted, are the ones who are beyond the pale and for whom the Guidelines require enhanced sentences.

Readers are invited to comment.

Richard Dieter, executive director of the Death Penalty Information Center, has suggested to the Washington Post that the Supreme Court may be getting ready to review “whether the death penalty is applied in a discriminatory discriminatory way, an issue the Court has not taken up for two decades.”

Dieter drew this conclusion from the Supreme Court’s denial of cert. yesterday in the capital punishment case Walker v. Georgia. As we pointed out recently, the Supreme Court has taken to using denials of cert. for raising questions on capital punishment.

The issue here is how thorough a court’s proportionality review must be, to ensure that a death sentence is not based on arbitrariness or discrimination. Justices Stevens and Thomas concurred with the denial of cert., but gave strongly opposed written opinions.

Stevens, the more liberal of the two, stated that Walker’s case was “troubling,” because it involved a black killer and a white victim. Numerous studies over the years have shown that black defendants are much more likely than whites to be charged with capital crimes, regardless of the race of the victim, but that capital crimes are also much more likely to be charged when the victim is white, regardless of the race of the killer.

Stevens felt that the Georgia Supreme Court wholly ignored its job, and only performed a perfunctory review of proportionality. It merely cited 21 similar death sentences and said that was good enough. The court didn’t describe or compare the facts of those cases, which differed in heinousness.

Thomas, on the other hand, said that Stevens was “simply wrong.” “There is nothing constitutionally defective about the Georgia Supreme Court’s determination. Proportionality review is not constitutionally required in any form.” Georgia has chosen to do some kind of proportionality review, and that’s fine, but the Supreme Court has never required that it do so. If Georgia wants to administer its own additional rule in its own way, that’s up to Georgia.

Thomas, the more conservative of the two, pointed out that the Court already looked at all of the arguments Stevens raised, and rejected them in McCleskey v. Kemp, 481 U.S. 279 (1987).

The fact that these arguments are being raised in written cert. opinions, however, is certainly giving some folks reason to believe that the Court may be interested in looking at them again, should the right case come its way.

Guilt or innocence, one might say, is all in the mind. After all, there are very few crimes that can be committed without the requisite mens rea, or mental state. If we’re going to punish someone, their acts cannot have been mere accident. We want to know that they had some knowledge that their actions could cause harm, and we want that awareness to be sufficiently high as to require punishment.

The standard criminal levels of mens rea are “negligence” (you ought to have known bad things could happen), “recklessness” (you had good reason to believe that bad things would probably happen), “knowledge” (bad things were probably going to happen), and “intent” or “purpose” (you wanted bad things to happen). If your foot kicks someone in the ribs while you’re falling downstairs, you’re not a criminal. But if you kick someone in the ribs because you don’t like them, then society probably wants to punish you.

We cannot know what anyone was thinking when they did something, however. So we rely on jurors to use their common sense to figure out what an accused must have been thinking at the time.

In recent years, however, there have been enormous advances in neuroscience. Brain scans, the software that processes the data, and good science have approached levels that would have been considered science fiction as recently as the Clinton years. Experts in the field can see not only how the brain is put together, but also what an individual brain is doing in real time. Experimental data show which parts of the brain are active when people are thinking certain things, with good detail.

Functional magnetic resonance imaging (fMRI), in particular, can act as a super lie-detector. Instead of measuring someone’s perspiration and heart rate while they answer questions during a polygraph exam, fMRI looks at actual real-time brain activity in areas having to do with logic, making decisions, perhaps even lying. Experimental data of large groups is pretty good at identifying what parts of the brain are associated with different kinds of thinking.

Every brain is slightly different, of course. Brain surgeons have to learn the individual brain they’re operating on before they start cutting. So general group data don’t translate to an individual person 100%. So any lie-detector use for fMRI would have to require some baseline analysis before proceeding to the important questions.

The issue is whether it will be admissible in court. Polygraph tests generally aren’t admissible, because they’re more an art than a science. But fMRI is all science. In addition, brain scans are already widely admissible for the purpose of reducing a sentence because the defendant had damage to his brain. As forensic neuroscience expert Daniell Martell told the New York Times in 2007, brain scans are now de rigeur in capital cases. In Roper v. Simmons, the Supreme Court, ruling that adolescents cannot be executed, allowed brain scan evidence for the purpose of showing adolescent brains really are different.

Outside the United States, brain scans have already begun to be used by the prosecution to show guilt. In India, a woman was recently convicted of murdering her ex-boyfriend with the admission of brainwave-based lie detection. There was other evidence of guilt as well, including the fact that she admitted buying the poison that killed him. But the brainwave analysis was admitted.

There are deeper policy issues here. Is reading someone’s brain activity more like taking a blood sample, or more like taking a statement? The Miranda rule is there, at heart, because we do not want the government to override people’s free will, and force them to incriminate themselves out of their own mouths against their will. That’s why the fruits of a custodial interrogation are presumed inadmissible, unless the defendant first knowingly waives his rights against self-incrimination. And because the DNA in your blood isn’t something you make of your own free will, by taking a blood sample against your will the government has not forced you to incriminate yourself against your will.

So is a brain scan more like a blood sample? Is it simply taking evidence of what is there, without you consciously providing testimony against yourself? Or will it require the knowing waiver of your Fifth and Sixth Amendment rights before it can be applied?

We’re interested in your thoughts. Feel free to comment.