Failing to Report Suspicious Activity
Recent criminal investigations of banks show that prosecutors are increasingly taking a hard look at financial institutions that allow themselves to be used by wrongdoers, from scam artists to terrorists. Banks, and myriad other entities deemed "financial institutions" under federal law, have an obligation to report suspicious activity to law enforcement. In what some consider a dramatic change in policy, prosecutors are increasingly willing to investigate and prosecute financial institutions for failing to meet this obligation -- even where the institution did not participate in the wrongdoing.
Supreme Court Gives the Defense a Boost in Plea Bargaining
The Supreme Court's Jan.12 decision in <i>U.S. v. Booker</i>, which made the federal Sentencing Guidelines advisory rather than mandatory, is likely to: 1) prove modest in its impact on sentences in the short run; 2) alter a bit the balance of power among prosecutors, defense attorneys and judges; and 3) spur Congress to make federal sentencing even more Draconian than it was for 2 decades under the mandatory Guidelines.
The TAP Pharmaceutical Acquittals
In 2001, the U.S. Attorney in Boston charged TAP Pharmaceutical Products Inc. (TAP) with conspiring to provide urologists with thousands of free samples of Lupron', for which the doctors billed Medicare and their patients. In order to survive and continue selling its blockbuster product for advanced prostate cancer, TAP made a reasoned decision to pay the government $885 million to resolve both civil and criminal charges. With this resolution, Boston's talented federal prosecutors continued their remarkable success in bringing major pharmaceuticals to their knees and reaching landmark settlements.
In The Courts
Recent rulings of importance to you and your practice.
Identity Theft: The Next Corporate Liability Wave?
The FTC estimates that over 24 million people in the United States have had their identity stolen. Using the $11,000 damage figure per case developed above, that represents over $26 billion of potential liability if fault can be ascribed to the data holder. Customer and employee databases are prime targets for identity thieves because a single vulnerability in a company's information security can yield access to personal data on thousands of persons. In addition to the growing threat of class-action lawsuits, new laws are coming into effect to hold organizations responsible for securing personal data. Companies should evaluate this risk and consider taking action to reduce their potential liability.
New Steps for an Effective Company Compliance Program
U.S. Sentencing Commission statistics indicate that companies charged with federal crimes have been doing an awful job of creating effective programs to detect and deter employees' criminal acts. According to the Commission, of the more than 850 companies convicted of crimes from 1995 through 2002, only two had a compliance program that a federal judge recognized as effective. In one respect, this is not surprising, as federal prosecutors routinely argue that if a company had an effective compliance program, the company wouldn't have committed the crime in the first place, and the court wouldn't be spending its time in a sentencing hearing.
In The Courts
Recent rulings of importance to you and your practice.
Supreme Court's Sentencing Guidelines Decision
On Jan. 12, the Supreme Court, in <i>United States v. Booker</i>, found portions of the Federal Sentencing Guidelines unconstitutional. For the last few years, corporate officers and directors have been forced to take a personal interest in criminal justice and in the Sentencing Guidelines. This has been especially true after the United States Sentencing Commission raised the guideline's penalties for white-collar crime in response to the Sarbanes Oxley Act of 2002.
State Enforcement: An Interview with Eliot Spitzer
The corporate scandals of the past several years have shaken the investing public. In response, state attorneys general like New York's Eliot Spitzer have shown what state regulators can accomplish with an ambitious agenda, talented personnel, and the right statutory tools. With Attorney General Spitzer leading the charge, state attorneys general have played an increasingly active role in matters traditionally handled without state intrusion by the SEC and other federal regulators. This increased state activism has not been free of controversy. In a recent interview, we asked Spitzer about the causes and consequences of that activism and what the future holds. His answers, and the recent activities of his counterparts in other states, confirm that state attorneys general are in no hurry to return to the status quo ante. Like it or not, the states are here to stay.
