White Collar Crime

Fall 2010
Professor Garvey
Included in this Outline:
I: Short Substantive Outline: Pages 2-21
II: Case Briefs: Pages 22-41
III: Procedural Issues Outline: Pages 42-52
IV: Sentencing Guidelines Outline: Pages 53-56

NOTE: To organize my outline, I inserted the full statute of each crime and the case
briefs corresponding to that crime in between each crime in the short substantive
outline (e.g., Mail Fraud Pages from Short Outline Mail Fraud Statute Case
Briefs about Mail Fraud Bribery/Illegal Gratuities Pages from Short Outline)I.

SHORT SUBSTANTIVE OUTLINE

A. MENS REA
How To Interpret Mens Rea
General Summary: court tries to interpret statutes in a way that avoids convicting the
morally innocent.
NOTE: does not have default rules like the MPC
Step One: Congressional Intent:
o Plain Language
o Legislative History
o Other Statutory Provisions
Step Two: Canons of Construction:
o Presumption of mens rea: favors defendant
o Ignorance of the law is no excuse: favors government
o Public Welfare: lower mens rea for dangerous or deleterious devices or products
or obnoxious waste materials: favors govt
o Rule of Lenity: when ambiguous, favor defendant.
o Severity of the Punishment: favors defendant
o Statutory Complexity
o Use of the mental state term willful
Rule of Mandatory Culpability: some propose that the Court actually follow this
interpretation (93, n. 2)
Federal criminal statutes should not be interpreted to permit the conviction of morally
innocent
1) Figure out what the competing interpretations are
2) Ask whether a morally innocent person could be convicted if statute is interpreted
as the govt wants
o Morally Innocent: reasonably ignorant of the fact that he violated the law
3) If yes, find what mens rea would preclude conviction of a morally innocent person,
and read it into statute.
Awareness of Legal Requirements
General Rule: ignorance of the law is no excuse
Exceptions:
o When ignorance disproves an element of the offense (e.g., when statute says
willful) AND
o When the statute deals w/highly complicated issues
Examples:
o Cheeks: tax evasion case in which statute used willful Knowledge Required
o Ratzlaf: anti-structuring laws case in which statute used willful Knowledge
Required
o Bryan v. U.S., 1998: unlicensed use of firearms case in which statute used
willful Knowledge NOT Required; need only know that conduct was unlawful
Mistakes of Fact and Law
2

Mistake of fact: Failure of proof defense: state has not carried its burden of persuasion:
it has not proved that the D possessed the required mental state beyond a reasonable
doubt
Mistake of law may be a defense:
o Failure of proof defense
Same-law mistakes: but generally ignorance of the law is not a defense
Different-law (legal fact) mistakes: like mistakes of fact but the fact
w/respect to which the D is mistaken is a legal fact requires another
body of law to know
o Affirmative Defense:
Estoppel or reliance
Notice
In our case, usually mistakes of fact or legal fact

B. ENTITY LIABILITY
1) Are the individuals of the corporation either individually or collectively guilty of the
crime?
o Collective Knowledge Doctrine (US v. Bank of New England) but may only apply if
the corp. is flagrantly indifferent (doesnt have effective compliance system)
2) If yes, were their actions within the actual or apparent scope of their employment or
authority?
o 1) Would a reasonable person believe the actor is acting w/in his/her authority?
o 2) Was the agent on the job while committing the crime?
o Not a stringent threshold
3) If yes, did the individual actors act with the intent, at least in part, to benefit the
corporation, whether or not the crime actually did benefit the corp. and even if it was
against the express policy of the corp.?
o Even if it actually ends up hurting the corp. (U.S. v. Sun-Diamond)
o Even if contrary to corp. policy (U.S. v. Hilton Hotels) BUT often courts hesitate to
impute liability.
If yes, impute liability.
NOTE: applies to subsidiaries too as well as to low-level employees

C. PERJURY 1621
States or subscribes
o Under Oath before competent tribunal1 (subsection 1) or Under 1746 (subsection
2)
o False (not in statute but read as an element)
Knowledge (not in statutederived from willful)
o Material: if it has the capacity to influence the decision of the decision-making
body to which it is addressed.
Willful = intent to deceive
o Some courts read it as specific intent: knowledge of falsity and intention to
deceive
Two-witness rule: uncorroborated testimony of one witness is insufficient to prove that
Ds statement was false (need independent corroborating source but circumstantial
evidence usually suffices).
Defenses:
o Literal Truth (Bronston)

1 Competency of tribunal issues: not often but sometimes (in congressional hearing w/o a quorum)
5

D. FALSE DECLARATIONS 1623

Makes declaration or uses information
o Under oath before or ancillary to any court or grand jury (or 1746)
o False (subsection a) OR
Knowledge
o Irreconcilably contradictory (subsection (c))
o Material: if it has the capacity to influence the decision of the decision-making
body to which it is addressed.
Defenses:
o Literal truth (Bronston)
o Recantation: Majority: must recant in same continuous proceeding before it has
become manifest that such falsity has or will be exposed and declaration
mustnt have substantially affected proceeding

E. FALSE STATEMENT 1001(a)(2)False Statement

Statement
o Actually False (even an exculpatory no (Brogan))
Knowledge
o Material: Has the capacity to influence the decision of the decision-making body
to which it is addressed
o In a matter w/in the jurisdiction of the Government of the United States
Willful
o [Intent to deceive] OR [Knowledge that one is acting unlawfully1 st Cir.]
Exceptions
o Judicial Function
o Legislative Function
FALSE STATEMENT 1001(a)(1)Concealment Case
Failure to disclose fact (omission)
o Legal duty to disclose
Knowledge
o Material: Has the capacity to influence the decision of the decision-making body
to which it is addressed
o In a matter w/in the jurisdiction of the Govt of the US
Affirmative Act: Falsification, concealment or covering up by trick, scheme, or device
Willful
o [Intent to deceive] OR [Knowledge that one is acting unlawfully]
Exceptions
o Judicial Function
o Legislative Function
Materiality: Dont have to show statement was credible, believed, or relied upon, etc. (just as
capacity to influence)
Jurisdiction: Circuit split btw 9th (Facchini, yes) and 11th (Herring, no) on whether you needed a
direct relationship btw statement and fedl agency. Today, both say yes.
Herring: w/in jurisdiction if statement was made to a state agency that used fedl funds
(now repudiated)
Materiality and Jurisdiction can be related: False statement had no capacity to influence fedl
agency bc it wasnt made in a matter w/in the agencys jurisdiction.
Judicial Function 1001(b): does not apply to a party to a judicial proceeding, or that partys
counsel, for statements, representations, writings, or docs submitted by such party or counsel
to a judge or magistrate in that proceeding
Trial tactics excluded (Bramblet)
Rationale: to avoid chilling advocacy (particularly w/respect to the concealment prong)
Legislative Function 1001(c): 1001 only applies to (1) administrative matters or (2) any
investigation or review conducted pursuant to authority of any committee or office of the
Congress, consistent w/applicable rules of the House or Senate.
Issues relating to the identity of a person before a criminal court were usually deemed
administrative
Rationale: To protect free flow of constituent submissions to Congress
7

F. OBSTRUCTION OF JUSTICE OMNIBUS CLAUSE 1503

Whoever corruptly or by threats of force, or by any threatening letter or communication,
influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due
administration of justice, shall be punished.
OMNIBUS CLAUSE 1503
Endeavoring
Pending Judicial Proceeding
o Knowledge
Nexus (i.e., natural and probable consequence of conduct would be obstruction of
justice) (Aguilar)
o Knowledge
Intent to obstruct
Corrupt Motive: act with purpose of obstructing justice (Cueto)
Nexus Test:
Step 1) Determine whether nexus exists: Given what the D knew, would a reasonable
person believe that the Ds acts would be likely to obstruct the due administration of
justice? (Proof of Nexus)
o Doesnt actually have to obstruct justice for nexus to exist.
Step 2) If yes, then: Did the D know this or was willfully blind? (Knowledge of Nexus)
Prosecution of Lawyers under 1503
1) Lawyers intent to influence a proceeding isnt per se unlawful but when joined w/a
corrupt motive, it can be (Cueto)
2) Safe Harbor of 18 U.S.C. 1515(c): This chapter does not prohibit the providing of
lawful, bona fide, legal representation services in connection w/or in anticipation of an
official proceeding. BUT: Can be construed in a number of ways:
o Does protect lawyers (like Cueto) w/a corrupt motive, bc conduct alone is lawful,
bona fide services.
o Does not protect lawyers w/corrupt motive bc if corrupt motive, not providing
lawful services. This essentially eliminates the safe harbor for lawyers.

G. OBSTRUCTION OF PROCEEDINGS BEFORE CONGRESS OR FEDL AGENCIES 1505:

Endeavoring
Pending proceeding before dept or agency of the US or congressional inquiry
o Knowledge
Nexus
o Knowledge
Intent to obstruct
Corrupt motive: acting w/an improper purpose, personally or by influencing another
(1515(b))*
*Note: 1515(b)s definition of corruptly (applies to 1505 and 1512) was enacted in response to
Poindexter, which held that lying directly to Congress was not a crime under 1505 (needed
transitive nature: D lies to A who lies to Congress)

H. WITNESS TAMPERING 1512(b)

Whoever knowingly:
o corruptly persuades another person or attempts to do so OR
o engages in misleading conduct toward another person
With the intent to
o (1) influence, delay, or prevent testimony of any person in an official proceeding
(official proceeding)
Nexus (Andersen): Knowledge that his action (corrupt persuasion or
misleading conduct) is likely to influence a proceeding that he foresees or
contemplates
o (2)(A)-(D) cause or induce any person to do A, B, C, or D (w/hold, destroy docs,
evade summons etc.) (official proceeding)
Nexus (Andersen): Knowledge that his action (corrupt persuasion or
misleading conduct) is likely to influence a proceeding that he foresees or
contemplates
o (3) hinder, delay, or prevent communication to a law enforcement officer or judge
of info relating to the possible commission of a fedl crime (no official proceeding)
NO Nexus but Bc but seems to require transitive nature (D must corruptly
persuade A to lie to law enforcementcourts have found liability when D
lies directly though)
Witness Tampering Omnibus 1512(c)
Whoever corruptly:
o (1) Alters, destroys, or conceals document w/intent to impair its use in an official
proceeding OR
Nexus? Unclear but must know that info will go to govt (Singleton, Comp.
Associates)
o (2) Otherwise* obstructs, influences, or impedes any official proceeding
Nexus? Unclear but must know that info will go to govt (Singleton, Comp.
Associates)
*Does otherwise mean that 1 and 2 must go in tandem and that 2 requires doc destruction?
Unlikely, but unclear.
LOOK AT DEFINITIONS IN 1515
Knowingly corruptly persuade means D must be conscious of wrongdoing and there is a
nexus requirement btw destroying docs and particular proceeding (which must be foreseen).
(Andersen)
Corruptly persuades: does not include conduct which would be misleading conduct but for
a lack of a state of mind. No one knows what this means. (1515(a)(6))
Corruptly: acting w/an improper purpose, personally or by influencing another (1515(b))
Misleading conduct (1515(a)(3)) SEE DEFINITION
NOTE: misleading conduct has been held to apply to conduct which is intended to
mislead the witness, not to mislead the govt
Official Proceeding: not limited to court proceedings but covers congressional,
administrative action. Broader than 1503 and 1505 bc it encompasses both. (1515(a)(1))
Official proceeding need not be pending or about to be instituted at time of the
offense. (1512(f)(1)).
10

Law Enforcement Officer: (1515(a)(4))

Defense for Lawyers
1512(e): Meant to safeguard lawyers from prosecution for legitimate advocacy: Person
may lawfully engage in prohibited means of influencing testimony or w/holding docs if
conduct consisted solely of lawful conduct and the Ds sole intention was to
encourage, induce, or cause other to testify truthfully

11

I. MAIL FRAUD 1341 and WIRE FRAUD 1343

Scheme to defraud
o Cognizable types
Misrepresentation
Material (Neder)
Non-disclosure
Material (Neder)
o Cognizable objects
Tangible Property: Money or Property (McNally)
Intangible property: Confidential Business Info (Carpenter) OR Businesss
Right to Control its Assets (Wallach, DAmato, but Cleveland)
Intangible non-property (1346 honest services)
Bribery or kickbacks only (Skilling)
o Intent to defraud
2nd Cir: Intent to Deceive and Intent to Harm (Regent Office Supply)
Falsity of rep must be shown to be capable of affecting the
customers understanding of the bargain and of influencing his
assessment of the value of the bargain to him
7th Cir: Intent to Deceive and Intent to harm or gain
1st Cir: Intent to Deceive and Intent to obtain money or other property
A mailing for the purpose of executing the scheme.
o Test: Mailing is part of the Ds scheme as conceived at the outset (i.e., he wants
mail to be used) and Ds action was a but-for and proximate cause of the alleged
mailing. (Schmuck)
Manufactured Jurisdiction: D can be guilty, even if govt sets up a trap (unless it constitutes
entrapmentrare)
Mailing:
By re-categorizing the scheme as an ongoing one, you can change the mailing element
(it becomes a required part of your scheme if you plan to keep doing it) (Schmuck)
Innocent/Routine mailings count if they are essential part of perpetuating the fraudulent
scheme (even if the mailing might lead to the uncovering of the scheme) (Schmuck)
Required Records Exception: if mailings would have been made [and when they were
made] despite the Ds fraud. Test: Pull D out of picture and ask, Would those mailings
have been made? If yes, exception applies.
Lulling Theory: If mailing was in order to lull the victim into a false sense of security, D
can be guilty.
Fraud
Reasonable Reliance and Damages are not elements of mail and wire fraud (Neder).
Moreover, victim need not have relied on the fraud to bring a RICO claim predicated on
mail fraud (Bridge v. Phoenix Bond)
Materiality is an element: Two Definitions in Neder:
o P. 416: Capable of influencing the intended victim.
o P. 415, n. 5 R. of Torts: A reasonable person would attach importance to the
representations existence or non-existence in determining his choice of action in
the transaction OR The maker of the rep should have known that its recipient
regards or is likely to regard the matter as important in determining his choice of
action, although a reasonable man would not so regard it.
Non-Disclosure Fraud Test (Siegal, corp. officers and Bronston, lawyer w/conflict of interest):
12

Is there a Primary Duty (generally arising from fiduciary duty or employee duty)?
Is there a Secondary Duty to disclose breach of Primary Duty?
If failure to satisfy secondary duty, then we have non-disclosure fraud
NOTE: Need tangible harm.
NOTE: even w/o written contract, an employee has a fiduciary obligation to protect
confidential info obtained during the court of his employment. Snepp

Right to Control Theory: Denying victim the right to control its assets by depriving it of
info necessary to make a discretionary economic decision
NOTE: What questions remain open after Skilling?
What exactly is covered by the prohibition against bribery and kickbacks?
When does a fiduciary relationship exist such that a bribe or kickback must be
disclosed?
Can conflict-of-interest (self-dealing) cases be characterized as thefts of intangible
property

13

J. BRIBERY AND ILLEGAL GRATUITIES

Bribery 201(b)
Bribe Giver
Whoever corruptly
Gives, offers, or promises to any public
official, or offers or promises any public
official to give to any person or entity
Anything of value
W/intent to influence any official act or
to induce a public official to do/omit to
do any act in violation of the lawful
duty of such official or person

Bribe Recipient:
Public official corruptly
Demands, seeks, receives, accepts, or
agrees to receive or accept
Anything of value
In return for being influence din the
performance of any official act or being
induce to do or omit to do any act in
violation of the official duty of such
official or person

Elements of Bribe Giver

Corruptly**
Give, offer, promise
o Anything of value
o To public official or to another
person or entity for a public
official
With intent to influence official act or
induce a violation of a lawful duty (quid
pro quo)

Elements of Bribe Recipient

Public Official
Corruptly**
Demand, seek, receive, accept, agree
to receive/accept
o Anything of value
o Personally or for another person
or entity
Knowing that the thing is given,
offered, or promised with intent to
influence official act or to induce
violation of lawful duty*
*Doesnt follow language of statutein return for being influencedbut this is how it is
construed.
**Unlike in 1503, where courts give separate meaning to corrupt v. intent to obstruct, you
dont see that in bribery
Illegal Gratuities 201(c)
Gratuity Giver
Whoever
Directly or indirectly gives, offers, or
promises
Anything of value
To any public official, former public
official, or person selected to be a public
official
For or bc of any official act performed or
to be performed
Elements of Gratuity Giver

14

Give, offer, promise

o Anything of value
o To public official
For or bc of official act performed or to
be performed
o With intent to reward; or
o With hope or expectation of

Gratuity Receiver
Public official, former public official, or
person selected to be a public official
Directly or indirectly demands, seeks,
receives, accepts, or agrees to receive or
accept
Anything of value
Personally for or bc of any official act
performed or to be performed
Elements of Gratuity Receiver
Public Official
Demand, seek, receive, accept, agree to
receive/accept
o Anything of value
o Personally
For or bc of any official act performed or
to be performed
o Knowing that the thing is given,

influencing

offered, or promised w/intent to

reward; or
o Knowing that the thing is given,
offered, or promised with the hope
or expectation of influencing.
Difference: Bribery requires proof of a quid pro quo: specific intent to give/receive something
of value in return for an official act and gratuity does not.
Definitions:
Anything of value: subjective value to the recipient (very broad)
Official Act: any decision or action on any question, matter, cause, suit, proceeding, or
controversy, which may at any time be pending, or which may by law be brought before
any public official, in such officials official capacity, or in such officials place of trust or
profit (201(a))
o Not limited to duties in a written job descriptionduties customarily associated
w/that job too
o TEST: Whether Ds actions involved a matter or issue that could properly, by law,
be brought before him in his official job title?
Muntain: HUD Secretarys Consultant approached by people who wanted
help in marketing group auto insurance to unionsNO
o TEST: Whether Ds action constituted a decision or action on any question,
matter, case, suit, proceeding, or controversy brought or pending before any
public official in such official capacity
Valdes: Police officer who did a fake judge a favor by looking up license
plates on govt databaseNO
Public Official: Persons acting for or on behalf of the US, or any dept, agency, or
branch of Govtin any official function, under or by authority of any such dept,
agency, or branch of Govt
o Appears to be Federal officials only but get state/local/private actors too bc of
Dixson and 666
o Test: whether person occupies a position of public trust w/official fedl
responsibilities (Dixson)
o 18 U.S.C. 666: supplemented 201 to make clear that fedl law prohibits
significant acts of bribery involving fedl monies that are disbursed to private
orgs or state/local govts pursuant to Fedl program
Bribery
Bribery completed when D expresses ability and desire to pay bribejust when offer is
made, even if public official denies it and is not corrupted
As long as $ was offered w/corrupt intent, official does not necessarily even need to be
aware of the bribe
Illegal Gratuities Nexus (Sun-Diamond):
For or bc of any official act performed or to be performed = Nexus Requirement: Govt
must prove a link btw the giftand a specific official act for or bc of which it was given
Giver of gratuity
o Thing given, offered, or promised with intent to reward decision already made or
committed; or
o Thing given, offered, or promised with hope or expectation of influencing
Problem: this sounds a lot like intent to influence, which is bribery
different mental states? Purpose (bribery) v. Knowledge/Reckless
(gratuities)
Recipient of gratuity
15

o
o

16

Knowledge (belief) that thing is given, offered, or promised with the intent to
reward a decision already made or committed; or
Knowledge (belief) that the thing is given, offered, or promised w/the hope or
expectation of influencing.

K. INSIDER TRADING
Statutes and Regulations
15 U.S.C. 78j(b) = 10(b) of the 1934 Act (States general rule of liability; requires
promulgation of SEC rule)
17 C.F.R. 240.10b-5 = Rule 10b-5 (Sets forth the SEC rule defining unlawful
conduct)
15 U.S.C. 78ff(a) = 32(a) of 1934 Act (stat. max of 20 years for willful violations
of 10(b) or Rule 10b-5)
o NOTE: Any person who willfully violatesruleshall upon conviction be
imprisonedbut no person shall be subject to imprisonmentif he proves that he
had no knowledge of such rule or regulation
o RULE: Willful requires Govt to prove D realized his actions were wrongful (not
unlawful). If D proves by preponderant evidence he didnt realize his actions
were unlawful, he cant be imprisoned, even if the Govt has proven that he
realized his actions were wrongful. US v. Kaiser (2nd Cir, 2010)
17 C.F.R. 240.14e-3 = Rule 14e-3 (Deals w/insider trading in course of a tender offer)
Rule 10b5-1: A manipulative and deceptive device includes trading on the basis of
material non-public info in breach of duty to the issuer or shareholder of the stock
traded or to the source of information.
o On the basis of: means awareness of the fact that the info was material and nonpublic
o An actor who is aware of the fact that he is trading on material, non-public
information can do so if he committed to the trade before becoming aware of the
information.
Regulation FD: Failure to disclose as required by Regulation FD does not establish a
Rule 10b-5 violation
Insider Trading: Classical Theory (Chiarella)
By the use of any means or instrumentality of interstate commerce, or of the mails or of
nay facility of any natl securities exchange
To employ any device, scheme, or artifice to defraud
o Type of fraud:
Nondisclosure: The fiduciary duty to disclose runs to the shareholders of
the company with respect to which the D is an insider, i.e., the market.
o Information
Material
Nonpublic
o Object of fraud
Money
o Intent to defraud
Intent to deceive
Intent to gain (tipper/tippee)
In connection w/the purchase or sale of any security
Classical: must breach duty to disclose (by trading) that runs to shareholders of the corp. in
which you are an insider
Temporary Insiders: some Ds can be temp. insiders if relationship creates expectation of
confidentiality. Dirks, fn. 14

17

Tipper/Tippee Liability: For a tippee to be liable, there must be a tipper. A tipper must
breach a fiduciary duty to corporate shareholders by disclosing for personal benefit (i.e., w/an
intent to gain). If no personal benefit, no breach of fiduciary duty, no tipper. Tippee must
know or should know that tipper breached duty. (Dirks)
Personal benefit (broad): Pecuniary Gain; Reputational Benefit; Reciprocal
Information/Quid Pro Quo; A Gift
Problem of Remote Tippees: Insider tells Tippee (T1) who tells other Tippees (T2) who
trade.
Theory 1: Pull T1 out of picture: ask if T2 knows info is material and non-public and
knows/should know that Insider breached his or her fiduciary duty not to disclose.
Theory 2: Put T1 in as the Insider: T1 intended to benefit from T2s trading; T2 knows
the info is material and non-public; T2 knows or should know that an insider has
breached his/her fiduciary duty not to disclose.
Theory 3: T2 knows the info is material and non-public; T2 knows or should know that
an insider has breached his/her fiduciary duty not to disclose (Broadest theory and
the most prominent)
Insider Trading: Misappropriation Theory (OHagan)
By the use of any means or instrumentality of interstate commerce or one of the mails,
or of any facility of any natl securities exchange
To employ any device, scheme, or artifice to defraud
o Type of fraud
Nondisclosure: The fiduciary duty to disclose runs to the source of the
information
o Information
Material (awareness)
Nonpublic (awareness)
o Object of fraud: Intangible property (information)
o Intent to defraud
In connection w/the purchase or sale of any security
Note on Misappropriation Theory
Gap in Liability: The duty to disclose runs to the owner or source of the information. If
D discloses his intent to trade to those to whom he has a duty to disclose, he would not
be guilty of insider trading (bc he no longer breached duty to disclose) even though the
public is still harmed from the trading.
When does a relationship give rise to a duty to keep information confidential?
Chestman (2d Cir 1991): when relationship involves reliance, and de facto control and
dominance:
o Employer-employeeAttorney-client
Psychiatrist-patient
Rule 10b5-2: Enumerated duties of trust or confidence. For purposes of this section, a
duty of trust or confidence exists in the following circumstances, among others:
o Whenever a person agrees to maintain info in confidence
o Whenever the person communicating the material nonpublic info and the person
to whom it is communicated have a history, pattern, or practice of sharing
confidences, such that the recipient of the info knows or reasonably should know
that the person communicating the material nonpublic info expects that the
recipient will maintain its confidentiality; or
o Whenever a person receives or obtains material nonpublic info from his or her
spouse, parent, child, or sibling; provided, however, that the person receiving or
18

obtaining the info may demonstrate that no duty of trust or confidence existed
w/respect to the info, by establishing that he or she neither knew nor reasonably
should have known that the person who was the source of the info expected that
the person would keep the info confidential, bc of the parties history, pattern, or
practice of sharing and maintaining confidences, and bc there was no agreement
or understanding to maintain the confidentiality of the info.

19

Classical Theory
Nondisclosure of material, non-public
information
Duty to disclose runs to the market
Object is money
Materiality inquiry focuses on the
behavior of the market (i.e., reasonable
investor)
Victim is the market (members of your
family)

Misappropriation Theory
Nondisclosure of unauthorized use of
material, non-public information
Duty to disclose runs to the company
(the source)
Object is information
Materiality inquiry focuses on the
behavior of the company (source)
Victim is the company (i.e., source of the
information)

L. CONSPIRACY 371
Agreement btw 2+ people
Dual Intent:
o Intent to agree
o Intent that the object of the conspiracy be achieved, that is:
An intent to commit an offense against the US; or
An intent to defraud the US
To cheat govt out of property or money or to obstruct one of its
lawful functions by deceit, craft or trickery, or by means that are
dishonest (dont need damages).
Overt Act (easy: need not be criminal: meeting, phone call)
Agreement: Need proof of purposeful behavior aimed at furthering the goals of the
conspiracy.
Can show by circumstantial evidence or evidence of a tacit understanding.
Not enough: presence at scene of crime, fact that one knows a crime is being
committed.
Intent Govt must show D agreed w/knowledge of the criminal purpose of the scheme and
w/the specific intent to aid in the accomplishment of those lawful ends (May be shown by
circumstantial evidence or willful blindness).
Defraud and Offense Clauses: Often overlap and can sometimes charge under both
Exec order is an offense under 371 when Congress authorizes it and sets up sanctions.
(Arch Trading)
Plurality Requirement
1) A group of conspirators cant escape conspiracy responsibility merely bc they all act
on behalf of a corp.
2) Liability for a conspiracy may be imputed to the corp itself on a respondeat superior
theory.
3) But sole controlling shareholder cant be guilty for conspiring w/corp w/o another
human actor. (Stevens)
Essential Nature Requirement: dont need to know all of the details
Not defeated when, in a money laundering conspiracy, Ds dont know from which SUA
the dirty money cameagreement to launder dirty money is enough (Stavroulakis).
Impossibility and Withdrawal
Impossibility is not a defense to a conspiracy charge (Recio, govt seize drugs before D
agreed to help).
Withdrawal: If an actor withdraws before the commission of any overt act by any of the
conspirators, then she is not guilty of conspiracy, nor of any crime committed in
furtherance of it. If an actor withdraws after the commission of an overt act, then she is
guilty of conspiracy, but not for any crime committed in furtherance of it after her
withdrawal (i.e., no Pinkerton liability).
Evidence of Withdrawal: Affirmative acts inconsistent w/the object of the conspiracy
and communicated in a manner reasonably calculated to reach co-conspirators have
generally been regarded as sufficient to establish withdrawal or abandonment.

20

Scope of Conspiracy: In determining whether there is one conspiracy or more, we look at

whether the Ds shared a common goal, any interdependence btw the alleged participants,
and any overlap among alleged participants. (Gatling)
Wheel Conspiracy: Kotteakos v. US, U.S. 1946: central player w/other actors involved
o For a single wheel conspiracy, those people who form the spokes must have been
aware of each other and must do something in furtherance of some single, illegal
enterprise (so you have the rim).
o If wheel doesnt exist, proof of multiple conspiracies under an indictment alleging
a single conspiracy constitute a material variance requiring reversal where a Ds
substantial rights had been affected.
o Kotteakos: one guy doing fake loans for many people. Multiple conspiracies bc
Brown was the only common figure and no one elses success in conspiracy was
connected w/anyone elses
Chain Conspiracy: Blumenthal v. US, U.S. 1947
o Essential element is interdependence: scheme must depend on the successful
operation of each link in the chain. Each participant must know that the chain has
a scope and others must be involved, but this may be inferred from the nature of
the enterprise.
o Common purpose test: where there are a number of otherwise diverse activities
performed to achieve a single goal.
o Blumenthal: Whiskey owner conducted complex scheme to conceal true price for
which he was selling whiskey
Pinkerton rule: A conspirator is guilty as an accomplice of any reasonably foreseeable crime
committed by a coconspirator in furtherance of the conspiracy, including any crime that forms
the object of the conspiracy (Tilton, but wrong in this case)
Practical Advantages of Including a Conspiracy Count
Hearsay: Govt can introduce the statements of co-conspirators, which would otherwise
be inadmissible hearsay, provided the statement is made during the course of and in
furtherance of the conspiracy
o Show conspiracy existed and D and the declarant were parties to that conspiracy
o Statement must be made during the course and in furtherance of the conspiracy
Joinder: Govt can join co-conspirators in a single trial
Venue: Govt can bring the case where the agreement was made or where any overt act
was committed.
Statute of Limitations: Govt can bring the case w/in 5 years of the last overt act
Merger Doctrine: If A + B agree to commit crime, and if B commits crime, is B guilty of both
crime and conspiracy to commit crime? What about A?
B is guilty of both bc federal law follows the group-criminality theory
A is guilty of conspiracy as a principal, and guilty of crime Z as an accomplice under
Pinkerton
Other Notes: Conviction of one co-conspirator is valid even if all other co-conspirators are
acquitted (Hughes, 9th Cir.)
One Agreement to Engage in Multiple Crimes: can only have one conspiracy count but D
will be responsible for all actions under that one conspiracy.

21

M. RICO 1962
1962(a): It shall be unlawful for any person who has recd income derivedfrom a pattern
of racketeering activityto use or investany part of such incomein acquisition of any
interest in or the establishment or operation of any enterprise
Elements: Pattern of Racketeering Activity INCOME Person INVESTS Enterprise
1962(b) It shall be unlawful for any person through a pattern of racketeering activityto
acquire or maintainany interest in or control of any enterprise.
Elements: Person CONTROLS THROUGH PATTERN OF RACKETEERING ACTIVITY
Enterprise
1962(c): It shall be unlawful for any person employed by or associated with any enterprise
to conduct or participatein the conduct of such enterprises affairs through a pattern of
racketeering activity
Test:
o 1) Do we have a person?
o 2) Do we have an enterprise (sufficiently distinct from person and from
racketeering activity)?
o 3) Is person employed by or associated w/enterprise? (Easily Satisfied)
o 4) Does person conduct or participate in the conduct of the affairs of the
enterprise?
o 5) Do we have pattern of racketeering activity?
NOTE: (a) and (b) are about infiltration of legitimate enterprises through racketeering while (c)
is about using an enterprise to conduct the racketeering activity
SEE 18 U.S.C. 1961: Definitions and SEE 18 U.S.C. 1962: Prohibited Activities
1961(1)(A): Racketeering activity
1961(3): Person: Includes any individual or entity capable of holding a legal or beneficial
interest in property
1961(4): Enterprise: Includes any individual, partnership, corporation, association, or
other legal entity, and any union or group of individuals associated in fact although not a legal
entity
Rule: The enterprise must be sufficiently distinct from the pattern of racketeering
activity but enterprise includes legitimate and illegitimate (association-in-fact)
enterprises (Turkette)
o Association-in-fact enterprise: group of persons associated together for a
common purpose of engaging in a course of conduct
o Person: Individual A AND Enterprise: Individual A, Individual B, Individual C, etc.:
OKAY (Turkette)
Rule: Person must be distinct from the enterprise with which the person is
associated but there is a low threshold (Cedric Kushner, president and corp. okay)
o Person: Corp. A and Enterprise: Corp. B: NO but okay under 1962(a)
o Person: Employee A and Enterprise: Employee A and Corp. B: OKAY
o Person: Corp. B AND Enterprise: Corp. B + Employee A (or Subsidiary Corp A): NO
(Riverwoods, 2d Cir) p. 691 n.4
1961(5): Pattern of racketeering activity: Requires at least 2 acts w/in ten years of the
prior act
Continuity and Relationship Test (H.J. Inc):
o Continuity: [R]efer[s] either to a closed period of repeated conduct [extending
over a substantial period of time], or to past conduct that by its nature projects
into the future with a threat of repetition.
22

Temporal, fact-specific test satisfied by showing that the predicate acts are
part of an ongoing entitys regular way of doing business
o Relationship: Criminal conduct forms a pattern if it embraces criminal acts that
have the same or similar purposes, results, participants, victims, or methods of
commission, or otherwise are interrelated by distinguishing characteristics and
are not isolated events
Conduct of Enterprises Affairs: Operation or Management Test (Reves v. Ernst & Young)
The person must have participated in the operation or management of the
enterprises affairs
The person must have some part in directing [the] affairs [of the enterprise]
N. RICO Conspiracy 1962(d): conspiracy to violate (a), (b), or (c)

No Overt Act
20 Year Sentence (v. 5 for 371)
Chain and Wheel Conspiracy Theories Dont Apply
Rule: The key is that each D agreed to participate directly and indirectly in the affairs of
the enterprise by committing two or more predicate crimes.
Elliot: Although Ds must agree to participate directly or indirectly in the affairs of the
enterprise through the commission of a pattern of racketeering activity (2+ predicate
acts), they need not agree to commit the same pattern as long as the Ds pattern
involve the same enterprise.
Antar: Liabilty would be permissible under 1962(d) if an actor conspires to operate an
enterprise, but it would not be permissible if an actor conspires w/someone who is
operating or managing the enterprise.
Salinas: D doesnt have to agree to commit 2 predicate acts, himselfagreeing that one
of the conspirators will commit the object of the agreement suffices.
Element of 1962(c)
Be employed by or
associated w/enterprise
Conduct or participate in
conduct of enterprise
Through a pattern of
racketeering activity

1962(d): D must agree that

He or she personally will
He or she personally or his
or her co-conspirator will
Conventional view
Antar
Elliot
Elliot

Conventional view
(Quintanilla)
Conventional view (Salinas)

1963: Criminal Penalties; 1964: Civil Penalties (People like RICO bc you get treble damages
and attorneys fees)

23

O. MONEY LAUNDERING 1956

A. 1956(a)(1): Transaction Offenses: Domestic Money Laundering
Conducts or attempts to conduct a financial transaction
Proceeds are in fact the proceeds of Specified Unlawful Activity (SUA)
Knowledge that Proceeds of some form of unlawful activity (dont have to know that it is
an SUA)
And a Specific Intent Prong:
o Promotion Prong: w/intent to Promote the carrying on of SUA ( 1956(a)(1)(A)(i))
o Transaction Prong: Transaction is designed in whole or in part to conceal the
nature, location, source, ownership, or control of proceeds of SUA ( 1956(a)(1)
(B)(i))
Test

for 1956(a)(1)(A)(i): Promotion

1) Conduct or attempt to conduct a financial transaction?
2) Proceeds in fact the proceeds of SUA?
3) Knowledge that proceeds are some form of unlawful activity (dont have to know it is
an SUA--)
4) With the intent to promote the carrying on of SUA

Test for 1956(a)(1)(B)(i): Concealment

1) 3): Same as above
4) Transaction is designed to conceal nature, location, source, ownership, or control of
proceeds
5) Knowledge that transaction is designed to conceal the nature, location, source,
ownership or control of proceeds?
B. 1956(a)(2): Transportation Offenses: International Money Laundering
Transports or attempts to transport
A monetary instrument or funds
o 1956(c)(5): defines monetary instrument
Across the border of the U.S.
And a Specific Intent Prong:
o Promotion Prong (A): With the intent to promote the carrying on of SUA
o Transportation Prong (B)(i):
Monetary instruments or funds are or are represented to be proceeds of
unlawful activity
Knowledge
Transportation is designed in whole or in part to conceal the nature,
location, source, ownership, or control of proceeds of SUA
Knowledge
Test

for
1)
2)
3)
4)

1956(a)(2)(A) Promotion
Transports or attempts to transport?
A monetary instrument or funds?
Across the US border?
With the intent to promote the carrying on of SUA?

Test for 1956(a)(2)(B)(i) Concealment

1) 3): Same as above
4) Are monetary instruments or funds proceeds of SUA?
24

5) Does D know that monetary funds are proceeds of some unlawful activity?
6) Is transportation designed in whole or in part to conceal the nature, location, source,
ownership, or control of proceeds of SUA?
7) Does D know that transportation is designed in whole or in part to conceal the
nature, location, source, ownership, or control of proceeds of SUA?

C. 1957: Trafficking
Engages or attempt to engage
o Knowledge
In a monetary transaction
o Knowledge
In criminally derived property
o Knowledge
W/value greater than $10,000
o Knowledge
Property was in fact derived from SUA
Test for 1957(a) Trafficking
1) Knowingly engage or attempt to engage in a monetary transaction? (as an
accomplice)
2) Was the monetary transaction in criminally derived property?
3) Did the criminally derived property have a value greater than 10,000?
4) Did criminally derived property derive from SUA?
5) Did D know the property was criminally derived property?
Concealment Prong: D must know a) proceeds come from unlawful activity (but does not
have to know what unlawful activity) and b) that the transaction was designed to conceal (but
doesnt have to act w/purpose of concealing) (Campbell)
Promotion Prong: The promotion sections of 1956 do not require that the promotion is for a
SUA other than the underlying SUA. (Piervinanzi)
1957: Does require that transaction use the criminally derived property (cant come out of the
transaction)
Notes on Money Laundering
1956(a)(3): Authorizes use of govt sting operations
Definitions: 18 U.S.C. 1956(c)
o Conduct ( 1956(c)(2))
o Transaction ( 1956(c)(3))
o Financial Transaction: ( 1956(c)(4)): any transaction which affects interstate
commerce involving the transfer of title to any real property
o Specified Unlawful Activity ( 1956(c)(7)): includes all RICO predicates and others
o Knowing that the property represents proceeds of some form of unlawful activity
(1956(c)(1))
Definitions: 18 U.S.C. 1957(f)
o Monetary Transaction: 1957(f)(1): transaction involving funds or a monetary
instrument (as defined in 1956(c)(5)) and involving a financial institution (as
defined in 1956(c)(6))

25

Financial Institution; A financial institution means, among other things,

persons involved in real estate closings and settlements (31 U.S.C. 53129a)
(2)(U))
o Criminally Derived Property: 1957(f)(2): property constituting, or derived from,
proceeds from a criminal offense
Actual Proceeds of SUA: Dont have to directly trace tainted money when mixed
w/legitimate funds. Govt need only present evidence that D engaged in conduct typical
of criminal activity and had no other legitimate source of funds.
o 1956(a)(3) may be invoked where money laundered doesnt in fact involve
proceeds of illegal activity bc money is govt money used in sting (okay as long
as D believed it was proceeds of illegal activity)
Does Proceeds of SUA refer to the net profits of the SUA or the gross
receipts?
o Split decision (US v. Santos (U.S. 2008)): Four justices said proceeds refers only
to net profits
o Congress responds: proceeds means gross receipts (18 U.S.C. 1956(c)(9))
o

26

II. CASE BRIEFS

MENS REA
US v. Intl Minerals & Chemical Corp. (U.S. 1971): If dangerous/deleterious device
ignorance of law is no defense.
Facts: corp. charged for shipping sulfuric acid in interstate commerce w/o properly
classifying it according to regulation dealing w/hazardous materials. Violation statute
says whoever knowingly violates any [ICC] regulation will be punished.
Issue: does knowingly require knowing the language of the reg or knowing that it was
shipping something hazardous?
Holding: Ignorance of law is no defense when dangerous or deleterious devices or
obnoxious waste materials are involved bc the probability of regulation is so great that
anyone dealing with them must be presumed to be aware of that regulation.
Staples v. US (U.S. 1994): Firearms are not under public welfare: must know it fires
automatically.
Facts: D has a semi-automatic that has been changed to automatic. Statute says it is a
crime to possess a firearm, which includes automatic weapon. D says he did not know
it could fire automatically. Statute is silent on mental state.
o Freed: State didnt have to prove man who knew he had grenades also knew
those grenades were unregistered
o Liparota: Govt must prove D knew that his possession of food stamps was
unauthorized and not merely that he was in possession of food stamps
Issue: Is it enough that D knew he was in possession of a weapon or does Govt have to
show that D also knew that the weapon could fire automatically.
Holding: Statute requires proof that D knew of the characteristics of his weapon that
made it a firearm under the Act bc otherwise the law would punish people who
genuinely believed they were law-abiding.
Dissent: Would rely on public welfare doctrine to say that bc D knew that the gun was
dangerous, this should be enough.
US v. Weitzenhof (9th Cir. 1993) (might want to look at in class notes): Discharging
pollutants falls under public welfare doctrine
Facts: D dumping waste in water exceeding amount allowed by permit. Clean Water Act
says it is a felony to knowingly violate permit (and a misdemeanor to negligently
violate). Ds allege that they thought they were authorized under the permit and did
not knowingly violate it.
Interpretations:
o Charge: It is a felony to knowingly discharge pollutants in violation of any permit
condition or limitation
o Majority: Knowingly modifies only discharge pollutants (only the acts you are
doing)
o Dissent: Knowingly modifies both discharge pollutants and in violation of
any permit condition or limitation
Holding: Govt does not need to prove that Ds knew that their acts violated the permit
bc this is a public welfare issue. Knowing = knowingly engaging in the acts that violate
the law (Intl Minerals).
Dissent: this interpretation punishes morally innocent (even if these Ds are not) will
discourage sewage workers and we need that for public health

27

ENTITY LIABILITY
NY Central & Hudson River R.R. Co. v. US, U.S. 1909: Corporations can be criminally liable
for acts of its employees
Facts: Violated Elkins Act by giving rebate to Am. Sugar to get its business. Act says
corp. and actor are liable if w/in scope.
Issue: Is it unconstitutional to impute commission of crimes onto a corp., (D says it hurts
stockholders and that the corp is actually innocent).
Holding: Yes, corporations can be criminally liable for the acts of its employees. We see
no valid objection in law and every reason in public policy (prevent favoritism) why
corp, which profits by the transaction, can only act through its agents and officers, shall
be held punishable by fine bc of the knowledge and intent of its agents to whom it has
entrusted authority to act and whose knowledge and purposes may well be attributed to
the corp. for which the agents act.
U.S. v. Sun-Diamond Growers of CA, D.C. Cir. 1998: Intent to Benefit
Facts: Sun-Diamond employee D gives money to his friend Espy, who was the Secretary
of Agriculture, and an important character in Sun-Diamonds business. D and Lake
(officer at Sun-Diamonds PR firm, RSLM) agrees to get 5 RSLM employees to pay
money to Espy and then D and Lake would arrange for Sun-Diamond to reimburse them.
Charge: S-D is indicted for defrauding RLSM through fraudulent theft of property and
theft of (Lakes) honest services.
Sun-Diamonds Claim: D wasnt acting with intent to benefit Sun-Diamond. Rather, he
defrauded Sun-Diamond.
Holding: Although Sun-Diamond was in fact a victim here, jury had right to find that D
was still trying to benefit corporation by cultivating a relationship with Espy. And we do
not have to impute rules to be the same on both sides.
US v. Hilton Hotels Corp., 9th Cir. 1972: Liability even when act was against corp. policy
Facts: Group of hotel operators agree to give preferential treatment to suppliers who
contributed money to the group and to curtain purchases from those who did not. The
President of Hilton announced that this was contrary to policy and instructed agent not
to follow but agent still did. Company is charged w/Sherman Act violation.
Holding: Corps can be liable for acts of agents even if conduct was contrary to express
instructions (as long as it is still w/in the scope of employment) because it is in the
public interest and bc often it is hard to hold individual agents responsible.
Rationale: Breadth and critical character of the public interests protected by Sherman
and gravity of threat to those interests. Talks about how it was very dramatic legislation
w/an important protective purpose.
United States v. Bank of New England, 1st Cir. 1987: Collective Knowledge Doctrine
Facts: Bank of NE was found guilty of willfully failing to file CFRs on 31 large cash
withdrawals made by McDonough. The banks head tellers, however, were found not
guilty in individually aiding and abetting.
Holding: The Bank is still found guilty under collective knowledgeWillful requires
knowledge (willful ignorance) of the facts and of the law requiring a CFR to be filed.
While individual actors may not have had such knowledge, combined, the corp. does. Bc
bank has compartmentalized structure like most corps, collective knowledge instruction
is necessary.
Knowledge of
Knowledge of Willful
Facts
Law
violation
Head Teller 1
Yes
Maybe
Maybe
Head Teller 2
Yes
Maybe
Maybe
28

General Counsel No
Yes
Bank (Total of
Yes
Yes
Above)
PERJURY, FALSE DECLARATIONS, and FALSE STATEMENTS

No
Yes

Bronston v. US, (U.S. 1973): Literal Truth is a Defense Under Perjury (and False
Declarations)
Facts: Ds company opened bank accounts in foreign countries. D wants bankruptcy
arrangement w/creditors: hearing on companys assets. D had personal bank account
for 5 years in Geneva. Testimony:
o Q: Do you have any bank accounts in Swiss banks, Mr. Bronston
o A: No Sir (true: did not have account at time of questioning)
o Q: Have you ever?
o A: The company had an account there for about 6 months, in Zurich (literally true
co. did have account in Zurich)
Issue: whether a witness may be convicted of perjury for an answer, under oath, that is
literally true but not responsive to the question asked and arguably misleading by
negative implication
Holding (Burger): 1621 cannot sustain a conviction based on Ds answer bc the govt did
not prove that the statement was false. Its not enough that it was unresponsive and in
casual conversation, wouldve implied that there was no personal account. This isnt
casual convo and this should have been cured by the lawyer asking questions to stop
witnesss evasion.
NOTE: Result under 1623 would be the same.
U.S. v. Libby: No Faulty Memory Defense
Facts: Scooter Libby tries to say his false testimony is excused because of faulty
memory. D wants to introduce memory expert to show that faulty memory is a valid
defense.
Holding: No, experts theories dont apply and are beyond the understanding of the
average juror.
United States v. Herring (11th Cir. 1990): False Statements: Indirectly Within the
Jurisdiction: Not Good Law
Facts: D falsely claimed unemployment to GA Dept of Labor to get benefits. US DOL
gives money to GA DOL to make sure that it is following procedures. The money covers
admin costs. D claims (a) not w/in jurisdiction of fedl agency (and even if it was, govt
must show I knew that and I didnt) and (b) not material.
Holding: Yes, w/in jurisdiction (and govt doesnt have to prove D knew that) and Yes,
material. 1001 is a proper basis for the prosecution of one who receives GA
Unemployment Insurance benefits as the result of filing false statements in the
application for such benefits.
Problem w/Herring: overbroad (what if a teacher working at a school that gets federal
funding lies and calls in sick?)
Brogan v. US, (U.S. 1998): False Statements: Can be Liable for an Exculpatory No
Facts: D is a union official who has been taking $ from an employer violating labor laws.
Agents come to investigate and ask if hell answer questions. He agrees. They ask if he
recd gifts from employer. Brogan says no. Agents knew he had. On appeal, D says
(a) an exculpatory no doesnt pervert govt functions, which is purpose of 1001, and
therefore is immaterial (b) affirmative defense is needed to protect privilege against
self-incrimination.
29

Holding (Scalia): No, there is no exception to liability under 1001 for exculpatory no
statements. Congress intended the statute to be broad and exculpatory no does pervert
govt functionstheir purpose is to find the truth and D lied. The cruel trilemma
doesnt exist here bc D could have remained silentthe 5 th A gives you a right to
remain silent, not to lie.
o D says silence is illusory bc a suspect fears that silence will be used against him
later, or may not know silence is an available option. Just bc this is true, doesnt
mean its okay to lie.
o D says: risk prosecutorial abuse. Courts may not create their own limits on
statutes, even if there are policy arguments for doing so.
Concurrence (Ginsburg): Not for us to change but wake up Congress. Even though
Brogans little denial didnt actually mislead anyone, he is convicted of a federal
offense.
NOTE: In Concurrence, Ginsburg notes that 2 nd Cir. left open the question whether to
violate 1001, a person must know that it is unlawful to make such a false statement.
1st Cir. case mentioned by Garvey answers this in the affirmative
OBSTRUCTION OF JUSTICE
Omnibus Clause of 1503
US v. Aguilar, (U.S. 1995): Not guilty unless there is a Nexus
Facts: Tham files a post-conviction motion and asks C to help him by using their
relationship w/Aguilar, a judge. C meets w/Aguilar who meets w/judge hearing Thams
motion. Meanwhile, Tham is suspect in FBIs racketeering investigation. FBI wiretaps
Thams and Cs phone and discovers meeting btw C and Aguilar. FBI tells a judge who
tells Aguilar that C may be involved w/crime. Aguilar tells nephew to tell C he was being
wiretapped. Grand Jury convenes to investigate conspiracy to interfere w/Thams
motion. FBI speaks w/Aguilar who lies about his participation and knowledge of the
wiretap.
Issue: Does 1503 punish false statements made to potential grand jury witnesses?
Holding (Rehnquist): Uttering false statements to an investigating agent who may/may
not testify before a grand jury is not sufficient for a 1503 omnibus violation. 1) D must
have known/had notice that justice was being administered in a court; 2) Need intent to
influence judicial/grand jury proceedings (not intent to influence an ancillary
proceeding); 3) Nexus: endeavor must have natural and probable effect of interfering
w/due admin of justice (doesnt have to be successful)
Concurrence/Dissent (Scalia): Majoritys reading writes endeavor out of the statute.
Dont think you need to have nexus. It is a subjective crimeimpossible endeavors to
obstruct justice are okay. Acts specifically intended to influence, obstruct, or impede,
the due administration of justice are obviously wrongful, just as they are necessarily
corrupt.
NOTE: Not guilty bc actual nexus does not exist (had FBI said we are working for the
grand jury it would have)
US v. Cueto, (7th Cir. 1998): Corrupt: act w/purpose of obstructing justice; diff from
Intent to Obstruct (lawyer not liable just bc he intends to obstruct/influence but can
be liable if corrupt motive)
Facts: Venezia owned B&H, which supplied video poker games to bars and bar owners
would make gambling payouts to its customers (racketeering). ILCC and FBI
investigate, using Robinson as undercover liquor agent. Robinson tells Venezia that
hed stop investigating for money. Cueto is Venezias lawyer but they had other
business deals arising out of the illegal company. He drafts letter about Robinsons
conduct and files it in court. State court grants injunction against Robinson but then a
30

bar owner is arrested. Cueto writes letter to ILCC, States Attorney, and FBI claiming
that Venezia was suffering damage bc of Robinsons interference w/Venezias business.
Venezia/B&H charged w/fedl racketeering. Cueto advised him during investigation and
prior to indictment but not during trial, though Venezia still relied on his advice.
Venezia/B&H convicted. Later, another grand jury returned a 2 nd indictment naming
Cueto, Venezia, and Romanik (public official).
Claim on Appeal: a) omnibus is unconstitutionally vague: much of what lawyers do are
attempts to influence the justice system and 1503 omnibus wasnt meant to cover that,
b) corruptly isnt a clear term and c) insufficient evidence
Holding: Omnibus clause may be used to prosecute a lawyers litigation-related
criminality and neither the omnibus of 1503 nor this courts construction of corruptly
is unconstitutionally vague as applied to Cuetos conduct.
Reasoning: A) Corruptly means to act w/a purpose of obstructing justicerequires that
D should have reasonably seen that the natural and probable consequences of his acts
was the obstruction of justice. B) Even a lawful act may violate 1503 is performed
corruptly. Congress drafted 1503 to be broad enough to cover lawyers even though
courts might hesitate. Cant use lawyer-status to protect yourself: attorney understands
this conduct is wrong. Lawyers who mistakenly obstruct justice wouldnt be guiltymust
have corrupt motive. C) Record supports conviction. Jury was justified in finding that
this his act of filing frivolous appeals and charges against Robinson were motivated by
his interest to safeguard his financial interest.

WITNESS TAMPERING UNDER 18 U.S.C. 1512

Arthur Andersen LLP v. US, (S. Ct. 2005): Knowingly corruptly persuade means D must
be conscious of wrongdoing and there is a nexus requirement btw destroying docs
and particular proceeding (which must be foreseen).
Facts: Enrons auditor and outside counsel, AA, instructed employees to destroy docs
pursuant to its doc retention policy. SEC starts informal investigation of Enron. AA
aware of the problems. SEC starts formal investigation. Doc destruction continuing
though some at AA were hesitant. Then, no more shreddingweve been officially
served for our docs. Head of Enron (now bankrupt) is fired and pled guilty to witness
tampering. AA indicted for knowingly, intentionally, and corruptly persuad[ing]
other persons, to wit: AAs employees, w/intent to cause them to w/hold docs from and
alter docs for use in official proceedings, namely: regulatory and criminal proceedings
and investigations
Issue: What it means to knowinglycorruptly persuade another person w/intent to
cause that person to withhold documents from, or alter documents for use in, an
official proceeding.
Holding (Rehnquist): Conviction reversed bc of jury instructions did not require enough
culpability for knowingly corruptly persuades. Its not per se corrupt for atty to
persuade client w/intent to cause client to w/hold docs (Upjohn: atty-client privilege).
Here, we need knowinglycorruptly persuades which requires that D be conscious of
wrongdoing (knowledge: awareness/consciousness AND corruptly: w/improper motive).
Also, we need nexus btw persuasion to destroy documents and the particular
proceeding (proceeding need not be pending but must be foreseen)

31

MAIL AND WIRE FRAUD

1341 and 1343
Schmuck v. US, (S. Ct. 1989): Innocent/Routine mailings count if they are essential part
of perpetuating the fraudulent scheme (even if the mailing might lead to the
uncovering of the scheme)
Facts: D buys used cars, rolls back odometers and sells them at higher prices to dealers
who then resell to customers. Dealer submits title-application form to state DMV on
behalf of customer (required for selling to customers).
Issue: Do submission of form count as mailings in furtherance of fraudulent schemes
under 1341 and 1343?
Holding (Blackmun): Yes, although forms may not have contributed directly to the
duping of dealers or customers, they were necessary to the passage of title, which was
essential to the perpetuation of Schmucks scheme. The relevant question is whether
the mailing is part of the execution of the scheme as conceived by the perp at the time,
regardless of whether the mailing later, through hindsight, may prove to have been
counterproductive.
Dissent (Scalia): It is the mail fraud not the mail and fraud that incurs liability. Here,
fraud was complete when D pocketed the dealers moneyit did not matter whether
dealer sold the car. Combining each transaction into one scheme not okayshould
follow precedent.
Precedent in Schmuck
Kann v. US, U.S. 1944:
o Facts: Ds were accused of setting up dummy corp. to divert profits into their own
pockets. Ds caused corp. to issue 2 checks payable to them, which were cashed
at local banks, which were then mailed to drawee banks.
o Holding: No Mail Fraud. Mailing of cashed checks didnt satisfy element bc Ds
scheme had been brought to fruition at that point.
o Was this an ongoing fraud? Yes
Parr v. United States, U.S. 1960:
o Facts: Ds charged w/obtaining gas through unauthorized use of credit card issued
to the school district that employed them. Mailing occurred when oil company
which issued credit card mailed invoices to school district for payment and when
the district mailed payment in form of check.
o Holding: No Mail Fraud. Doesnt satisfy because it was immaterial to Ds how oil
company collected its payments
o Was this an ongoing fraud? Yes
Maze:
o Facts: D stole roommates credit card and got food and lodging at motels.
Mailing occurred when each motel proprietor mailed invoice to bank, which would
mail bill to roommate.
o Holding: No Mail Fraud. Didnt satisfy bc Ds scheme reached fruition when he
checked out of each motel.
o Was this an ongoing fraud? Yes
Reconciling Schmuck w/Precedent
o The question at all is whether the mailing is part of the execution of the scheme
as conceived by the perpetrator at the time
o Under Schmuck, where the jurisdictional mailing or wiring follows the point at
which the D has obtained that which he sought through fraud, prosecutors may
still show that they were done in furtherance by redefining the scheme as an
ongoing one.
32

Neder v. US, S. Ct. 1999: Materiality is an element of 1341 and 1343

Facts: D engaged in real estate transactions financed by fraudulently obtained bank
loans totaling over $40 million.
Issue: whether materiality is an element of a scheme or artifice to defraud under
1341, 1343, and 1344 (bank fraud)
Holding (Rehnquist): Yes it is. Materiality of falsehood is an element of federal mail,
wire, and bank fraud bc it is a critical part of the common law meaning of fraud. Govt
says that bc the statute talks about a scheme to defraud, it is not necessarily to actually
defraud (thus materiality should not be an element). While we dont impute reasonable
reliance and damages bc the statutory language is incompatible with those elements,
we do impute materiality.
Disposition: Remanded to see if jury instructions failure to include materiality was a
harmless-error.
Bridge v. Phoenix Bond & Indemnity Co., S. Ct. 2008: First-party reliance on the
misrepresentation is not required.
Facts: State has annual public auctions to sell tax liens it has on property of delinquent
taxpayers. Bids are in % penaltiesbidder willing to accept lowest penalty wins right to
purchase lien in exchange for paying outstanding taxes on the property. The original
owner can redeem the property by paying the taxes and the penalty set at auction as
the bid. However, many bidders are willing to accept 0% so to avoid ties, State had a
rotational (take turns) basis and a Single, Simultaneous Bidder Rule where each taxbuying entity had to submit bids in its own name and sign a sworn affidavit. D (Sabre
Group) sets up firms and has them bid separately but it is all going to D. Phoenix Bond,
another bidder brings RICO civil suit based on mail fraud. Mailings occurred when Ds
sent property owners various notices required by law.
Issue: Whether P must show that he relied on Ds misrepresentations?
Holding (Thomas): No, first-party reliance is not required. A P asserting a RICO claim
predicated on mail fraud need not show, either as element of its claim or as a
prerequisite to proximate cause that it relied on Ds misrepresentations.
US v. Regent Office Supply Co. (2nd Cir. 1970): Intent to defraud (intent to deceive and
intent to harm) is an element
Facts: Regent sells stationary through agents who solicit orders by telephone. Pursuant
to policy, Regent agents get sales by telling a false story to person on the phone in
order to get to the purchasing agent (e.g., agent was referred by a friend, agent was a
doctor who had stationary to be disposed of, etc.). Regent says false reps were only a
preliminary part of the agents solicitationsimply lies to get past the secretaries to the
purchasing agentand that everything important (price, quality) were always discussed
honestly
Issue: Does solicitation of a purchase by means of false reps not directed to the quality,
adequacy, or price of goods to be sold, or otherwise to the nature of the bargain,
constitute a scheme to defraudw/in the prohibition of 1341?
Holding (Moore): No it does not bc there is no intent to defraud (i.e., intent to injure).
Falsity of representation must be shown to be capable of affecting the customers
understanding of the bargain and of influencing his assessment of the value of the
bargain to him or there is no intent to injure.
US v. Siegel (2nd Cir. 1983): Non-Disclosure Fraud
Facts: D-officers made $100,000 worth of off-the-books cash sales of Mego merchandise
which had been marked down for clearance or returned bc of defect. Ds falsely told
Megos auditors there were no unrecorded assets.
Govt Theories:
33

1) Ds defrauded the company out of money that they used for their personal
benefit
o 2) Ds defrauded the company out of money that they used for bribery (payoffs to
union officials)
Charge: scheme to defraud Mego and its stockholders by misappropriating proceeds for
self-enrichment, violating fiduciary duties to act honestly and faithfully in best interest
of the corp. and to account for the sale of all Mego property
Holding (Pratt): When a fiduciary fails to disclose material info to one whom he is under
a duty to disclose and where non-disclosure could/does result in harm to another, this is
enough for mail fraud. Here, there is sufficient evidence to say that D used proceeds for
non-corp. purposes in breach of duties to act in best interest of the corp. and to disclose
material info. This is enough money to constitute material and jury had enough
evidence to infer that Ds used scheme for personal gain. That being said, we
disapprove of this type of prosecution that should have been a derivative suit or state
criminal.
Dissent: Fiduciary duties are contractual obligationswire fraud is not the proper
statute to enforce them. This creates a new area of federal law where juries will now
decide what is in the best interests of a corp.
NOTE: Not embezzlement bc fedl embezzlement requires embezzlement of fedl funds
or embezzlement by fedl officials.
NOTE: Primary Duty is not to use corp. funds for personal gain or for bribery. Secondary
Duty is to disclose a breach of the primary duty. The failure to satisfy secondary duty
(i.e., non-disclosure) is the fraud.
o

US v. Bronston (2nd Cir): Lawyer can be liable under non-disclosure mail fraud for
failing to disclose conflict of interest
Bronston (lawyer) gave assistance to client who was competing for a franchise
w/another client represented by Bronstons firm. Court upheld conviction based on
fraudulent failure to disclose breach of fiduciary duty (actively engaging in efforts
designed to frustrate the precise endeavor which the other client had engaged the firm
to pursue)
McNally v. US, (S. Ct. 1987): Tangible Property
Facts: Hunt (Dem Party Chairman) and Gray (Public Official) have power to select
insurance co for Kentucky. They select Wombwell. Kentucky gives premiums to
Wombwell who gives premiums to insurance underwriters. Insurance Underwriters
provide insurance to Kentucky and give commission to Wombwell. Wombwell keeps
some $ and gives the rest to Seton Insurance (owned by Hunt and Gray), Snodgras
(owned by McNally, private individual) and to other entities. Gray and Hunt had set up
Seton for the sole purpose of getting commissions (before Gray was public official).
Hunt pleaded guilty to mail fraud and Gray and McNally were charged (McNally as
accomplice, Gray as either principal or accomplice).
Charge: Mail fraud (mailing: commission check to Wombwell by insurance co from which
it secured coverage for KT). Govt says Ds defrauded KT citizens + govt of intangible
rights such as right to have KTs affairs conducted honestly
Issue: Does a state officer commit mail fraud if he picks an insurance agent to provide
insurance for the state but requires that agent to share its commissions w/other
insurance agencies, one in which the officer has an ownership interest?
Holding (White): No bc scheme to defraud must have a cognizable object (money or
property). One deemed a public official owes fiduciary duty to public and misuse of his
office for private gain is fraud. Mail Fraud protects property rights but doesnt refer to
the intangible right of the citizenry to good govt. History suggests it was only meant to
protect property rights and we take the less harsh reading when Congress is less than
34

clear. Here, assuming is okay to make an agency share commissions or to own an

agency benefitting from commissions, Hunt and Gray recd commission but it wasnt
KTs money. No defrauding of property = no conviction under jury charges
Dissent (Stevens): Congress broadly prohibited use of mails to carry out any scheme or
artifice to defraud. The statute should be read to embrace a secret agreement by
state officials to place the states insurance w/a particular agency in exchange for that
companys agreement to share a major portion of its commissions w/a list of agents,
including sham agencies under the officials control. We see defrauding of intangible
rights such as honest services a lot:
o Public officials defrauding right to the honest services of their govt officials
o Officials secretly made govt decisions w/objective of self-benefit instead of
fulfilling commitment to citizens
o Elected officials convicted of mail fraud when using mail to falsify votes,
defrauding right to honest election
NOTE: This would be non-disclosure fraud. Ds here had duty not to make this
agreement w/Wombwell (primary duty). Ds were obligated to disclose the breach of
that duty (secondary duty).
NOTE: Object of the fraud here is honest services, i.e., the intangible right of KTs
citizens to the honest services of the Ds.
NOTE: Courts decision was a total surprise since most lower courts were recognizing
intangible rights theory of mail/wire fraud

Carpenter v. US, (S. Ct. 1987): Right to confidential Information satisfies object for a
mail/wire fraud conviction
Facts: Winans WSJ column gives info on investing in certain stock. Bc of its reputation,
it had the ability to affect stock price and prior to publication, the info in the column was
confidential. However, Winans agreed to give two brokers advance info about the
column, letting brokers buy/sell based on the column. SEC began investigation
Denials eventually, Winans and Carpenter (Winans aiding/abetting roommate) went
to SEC and revealed scheme Indictment and bench trial.
Holding (White): Winans knowingly breached a duty of confidentiality by
misappropriation WSJs confidential info from the column. This is different type of object
than honest services in McNally bc confidential info is actually (WSJs) property,
although it is intangible. It fits concept of fraud: wronging one in his property rights by
dishonest methods or schemes, usually signify the deprivation of something of value by
trick, deceit, chicane, or overreaching.
NOTE: Non-Disclosure Fraud:
o Defendants violated their duty to WSJ to keep information confidential (primary
duty)
o Ds were obligated to disclose that breach (secondary duty)
o Ds failed to do so.
Right to Control Theory: Denying victim the right to control its assets by depriving it of
info necessary to make a discretionary economic decision
Wallach, 2nd Cir: questionable payments made to people (one a corp. director)
supposedly as payment for assistance in an IPOdisguised so they didnt have to be
disclosed to SEC.
o Holding: Fraudulent deprivation of shareholders right to control how corp.
money was spent
DAmato, 2nd Cir: a D in a right to control case must intend to injure the person misled,
and that person/entity must be the target of the inaccurate or concealed info. Not if
officer in good faith believes his misrep is legal and in best interests of corp. D can
show: 1) Mgmt has made an otherwise lawful decision that concealment or failure to
35

disclose is in corp.s best interests and 2) Mgmt acted in good faith and did not intend
to benefit personally from the deception.
Cleveland v. U.S., S. Ct. 2000: D had tax problems so he concealed the fact the he was a
business-owner in the license application which was mailed to the state.
o Holding: not property in govts hands bc States core concern is regulatory and
whatever financial stake it had in licenses accrues only after theyve been issued.
Rejected right to control argument that D frustrated govts right to control
issuance of licenses: far from composing a recognized property interest, these
intangible rights of allocation, exclusion, and control amount to no more and no
less than LAs sovereign power to regulate

Skilling v. US (S. Ct. 2010): Intangible Non-Property (i.e., honest services) can be an
object only if it involves bribes or kickbacks
Facts: Skilling makes misrepresentations to market about Enrons health, which
increases stock price of Enron. Enron gives him salary bonuses and sale of stock for his
work (where honest services comes in).
Issues/Holding (Scalia):
o Is 18 U.S.C. 1346 unconstitutionally vague (DP violation)
The statute is not unconstitutionally vague (contrary to concurring justices)
o If not, did Skillings conduct fall outside the scope of that statute?
Skillings conduct does not fall within the statute1346 covers only
schemes to deprive another of honest services through bribes or
kickbacks supplied by a 3rd party who has not been deceived, where the D
owes the victim a duty to disclose (based on a fiduciary relationship) the
bribe or kickback
NOTE: What questions remain open after Skilling?
o What exactly is covered by the prohibition against bribery and kickbacks?
o When does a fiduciary relationship exist such that a bribe or kickback must be
disclosed?
o Can conflict-of-interest (self-dealing) cases be characterized as thefts of
intangible property

36

BRIBERY AND ILLEGAL GRATUITIES 201(b) and (c)

US v. Sun-Diamond Growers of CA (S. Ct. 1999): Nexus is required btw official act and the
gifts under illegal gratuity.
Facts: SD is a trade association made up of coops. They gave Espy, the Sec. of
Agriculture various gifts. Gifts: money, etc. Interests: Sec. must approve their MPP
funding, Govt regulates a pesticide
Issue: Do you need a nexus between the official act and the gifts under the illegal
gratuity statute
Holding: Yes, the Govt must prove a link btw the thing of valueand a specific official
act for or bc of which it was given bc it is the most natural reading; other statutes
clearly impose status-based ban on giving gifts, and it is a better fit w/other statutes.
o Most Natural Reading: Problem revolves around the definition of any in for or
bc of any official act. Any could mean 1) any as in some particular (I.e., do
you like any composer?) or 2) any as in all (i.e., do you like any composer [no
matter what their names]?) We think 1st is more naturala particular act must be
involved.
o Other Statutes: Our refusal to read it as a prohibition of gifts given by reason of
the donees office is supported by the fact that when Congress wants a broad
statute, it makes it so. Gives examples (499)
o Better Fit: Finally, a narrow prohibition is more compatible w/fact that 201(c) is
one strand of an intricate web of regulations, both administrative and criminal,
governing the acceptance of gifts and other self-enriching actions by public
officials. Plus those statutes all have exceptions which would be unnecessary if
we accepted Govts position bc then everything would fit into 201(c)

37

SECURITIES FRAUD INSIDER TRADING

Chiarella v. US (S. Ct. 1980): Classical Theory: must breach duty to disclose that runs
to the shareholders
Facts: Chiarella, a printer, sees announcements of corporate takeover bids and buys
securities before the final printing. He sells his shares right after disclosure, getting
$30,000. Chiarella agreed to return profits to sellers of shares and was indicted for
violating 10(b). He was convicted and 2nd Cir affirmed.
Holding: Chiarella isnt guilty bc he had no fiduciary duty to disclose to the corp. whose
stock he traded in.
Reasoning (Powell):
o Cady, Roberts (SEC 1961): Insiders in possession of material, non-public info have
a duty to disclose the info or abstain from trading.
o Duty to abstain until disclosure arises from an affirmative duty to disclose
material info, which has been imposed on insiders bc they are in a special
relationship of trust and confidence w/shareholders and it is unfair to let an
insider take advantage of that info.
o But a stock purchaser who has no duty to a prospective seller bc he is neither an
insider nor a fiduciary has no obligation to reveal material facts
o Here: D is not a corp. insider and the market info upon which he relied didnt
concern the earning power or operations of the target company, but only the
plans of the acquiring company. Ds use wasnt a fraud unless he was subject to
an affirmative duty to disclose and we dont want a rule putting a duty to disclose
on everyone.
o The idea of misappropriation was not put to the jury so we arent reaching that.
Dissent (Burger): Raises misappropriation theory
NOTE: The argument that Chiarella is an insider of Corp. A bc he works for Pandec which
works for Corp. A fails to impose liability bc Chiarella traded in Corp. Bs stock.
Dirks v. SEC (S. Ct. 1983): Tipper/Tippee Liability requires that Tipper breach a
fiduciary duty through intent to personally gain.
Facts: Dirks learns from Secrist that a corp. is acting fraudulently. Dirks looks into the
claim (some affirm, some deny) then tells a journalist but he wont publish. SEC sues
and finds D aided/abetted 10(b) violations by repeating fraud allegations to members of
the investment community who later sold their stock.
Holding: Dirks is not guilty of insider trading bc there is no derivative fiduciary liability.
To have a tippee, you need a tipper. A tipper must breach a fiduciary duty and must
make a personal gain.
Reasoning: Powell
o Rule: A tippee assumes a fiduciary duty to the shareholders of a corp. not to
trade on material nonpublic info only when the insider has breached his fiduciary
duty to the shareholders by disclosing the info to the tippee and the tippee knows
or should know that there has been a breach
o Test: whether the insider personally will benefit, directly/indirectly, from his
disclosure. Absent some personal gain, there has been no breach of duty to
stockholders. And w/o a breach by the insider, no derivative breach.
Dissent: Blackmun, Brennan, Marshall
o Secrist intended Dirks to injure the purchasers of EF securities to whom Secrist
had a duty to disclose
o If Dirk knows/has reason to know that info is material and nonpublic and obtained
through a breach of duty, he is liable too. Just bc insider didnt benefit doesnt
eradicate the shareholders injury
38

Secrist may have had a good motive of exposing fraud but he went about it in a
bad way

US v. OHagan (U.S. 1997): Misappropriation Theory

Facts: OHagan, partner in law firm of Dorsey & Whitney, learns of tender offer by Grand
Met (a D&W client) to Pillsbury, though not involved in representing Grand Met. He
buys Pillsbury stock, which doubles in price.
Holding: GuiltyA person who trades in securities for personal profit, using confidential
info misappropriated in breach of a fiduciary duty to the source of the info guilty of
violating 10(b) and 10b-5?
Reasoning (Ginsburg)
o Misappropriation theory: a person commits fraud in connection w/a securities
transaction when he misappropriates confidential info for securities trading
purposes.
o In misappropriation, D breaches a duty owed to the source of the information,
rather than the shareholders.
o Here: D owed a duty of trust/confidence to his law firm and to its client.
o Full disclosure forecloses liability under the misappropriation theory: because the
deception essential to the misappropriation involves feigning fidelity to the
source of info, if the fiduciary discloses to the source that he plans to trade on the
nonpublic info, there is no deceptive device and thus no 10(b) violation.
But if you owe a duty to two entities, must disclose to both.
Dissent/Concurrence (Thomas): agrees about misappropriation idea but doesnt think
the deception was used in connection w/a securities transaction. Undisclosed
misappropriation of confidential info is not necessarily consummated by a securities
transaction. D could have done other thingssell info to a newspaper, given it to
Pillsbury, kept it for his own amusement.

39

CONSPIRACY
US v. Arch Trading (4th Cir. 1993): Exec order constitutes an offense under 371 when
Congress authorizes it and sets up sanctions.
Facts: Pres. Bush prohibited US persons from going to Iraq or dealing w/govt of Iraq.
Earlier, AT contracted w/Agricultural of Iraq to ship and install equipment in Iraq.
Shipments were made but installations were not done before Presidents order, of which
AT received copies. Two AT execs attempted to enter Iraq to install the equipment.
That failed so they had a Jordanian company install but an AT exec helped coordinate.
To cover this up, AT submitted backdated docs for money from Kuwaiti bank and asked
Jordanian company to backdate its confirmation of performance. Kuwaiti bank wouldnt
give money until govt office licensed it. AT wrote letter, backdating again. Govt office
wrongly replied that license wasnt needed. AT indicted for conspiracy.
Defense: 371 criminalizes conspiracies to commit an offense against the US and
conspiracies to defraud the US. AT was charged w/the former but said it could only have
been the latter, bc violating exec order doesnt constitute an offense
Holding: When Congress provides criminal sanctions for violations of exec orders that it
empowers the President to issue, such violation constitutes an offense for the
purposes of 371. The two prongs of 371 are not mutually exclusive: can be charged
under both.
US v. Stevens (11th Cir. 1990): A sole controlling stockholder cant be guilty of
conspiracy w/a corp. in absence of another human actor.
Facts: D made 4 corps which entered into a contract w/Navy. D misrepresented that
certain work ahd been performed in several requests for progress payments.
Issue: Can a sole stockholder conspire w/a corp.?
Holding: A sole stockholder who completely controls a corp. and is the sole actor in
performance of corp. activities cant be guilty of conspiracy w/that corp. in absence of
another human actor. We have held that corp may be liable under 371 when conspiring
w/its officers or employees. We rejected the single entity theory bc conspiracy is meant
to deal w/danger posed to society by combinations of individuals acting in concert.
US v. Recio (S. Ct. 2003): Impossiblity is not a defense to conspiracy charge.
Facts: Conspiracy to distribute drugs; govt seizes the drugs and then D joins conspiracy
not knowing that govt has already seized the drugs. D cites Cruz (9th Cir) which held
that conspiracy terminates when there is affirmative evidence of abandonment,
withdrawalor defeat of the object of the conspiracy (i.e., when govt makes goals
impossible).
Issue: Does conspiracy end automatically when the object of the conspiracy becomes
impossible to achieve
Holding (Breyer): No, conspiracy law does not contain any automatic termination rule.
The crime of conspiracy is separate from underlying offense so it doesnt stop when
underlying offense becomes impossible.
US v. Stavroulakis (2d Cir 1992): Essential nature requirement is not defeated when, in
a money laundering conspiracy, Ds dont know from which SUA the dirty money
cameagreement to launder dirty money is enough.
Facts: Govt informant introduced D to undercover FBI agent who said he was
connected w/organized-crime people wanting to launder a lot of money from narcotics.
D took the bait and agreed to introduce FBI agent to his accountant, assuring him that
hed find a way to launder the cash. When Ds accountant wouldnt do it, he got
someone else at NMBG bank but told him it was gambling money, not narcotics money.
D made elaborate scheme for laundering the money: hed open an account at NMBG,
40

money would be deposited there then transferred to Greece, where itd go through a
fake corp, etc. etc. The schemers met to plan a few times.
Defense: no agreement on the essential nature of the plan bc D believed the money
came from narcotics while the bank guy thought it was from gambling.
Holding: Conspiracy doesnt require that co-conspirators believe that the money to be
laundered is derived from the same specified unlawful activity as long as the unlawful
source is proven to be one of the SUAs.

US v. Gatling (D.C. Cir. 1996) In determining whether there is one conspiracy or more,
we look at whether the Ds shared a common goal, any interdependence btw the
alleged participants, and any overlap among alleged participants.
Facts: Gatling and Walker work in Section 8 Div. in DCs Dept of Public Housing. Section
8 gives vouchers to help cover qualified applicants rents. There is a process for
categorizing applicants and putting them on a wait list, w/highest need getting first
dibs. In exchange for bribes, Ds gave subsidiaries to ineligible individuals. There are
two schemes: DC scheme and Chicago Scheme.
o What links Walker to Chicago Scheme?
Bufford says he paid Walker $1,000 and she told him to pay $1,000 to
Gatlingno real evidence of this.
Defense: Walker says she thought he had authority to do this.
o What links Walker to D.C. Scheme?
Knight says: Jackson said Gatling splitting money w/Walker (comes in bc
of hearsay exception as Jackson was co-conspirator)
Johnson says: Jackson said Walker is doing it with Gatling
Knight says: Walker helped Gatling with photo-copying.
$6,000 deposit
Talking to Gatling about the number of rooms and helping her photocopy.
Issue: Is Walker guilty? She says evidence establishes at most the existence of two
conspiracies, one Chicago and one DC.
Holding: No, this is one conspiracy bc the schemes shared a common purpose and
overlaps in time and actors. In determining whether there is one conspiracy or more,
we look at whether the Ds shared a common goal, any interdependence btw the
alleged participants, and any overlap among alleged participants. This may not be
as interdependent as a drug chain conspiracy, but still is sufficient.
NOTE: Matters bc if there were two, there would have been a variance btw indictment
and evidence which could be grounds for reversal if it substantially prejudiced the D.
NOTE: If we take away hearsay statements, we are left with insufficient evidence.
US v. Tilton (5th Cir. 1980): Pinkerton: D is guilty of substantive offense committed by
co-conspirator if it was committed in furtherance of the conspiracy (could
reasonably be foreseen as a natural consequence of the conspiracy), even if D
didnt participate in the acts
Facts: D works for Sea-Land, which starts program to send refurbished chassis to Saudi
Arabia. D selects Streaker (owned by Fiore & Brenner) to do chassis reconditioning.
Fiore tells Brenner that D needs commission for each chassis and to bury the payment
in the books as travel expenses. Brenner do so. D did this w/a different company, UTS
(owned by Cotrone and Gillespie) but UTS inflated invoices in order to make up for the
commission. D indicted for conspiracy to commit mail fraud
Holding: Evidence is sufficient to show that D conspired to commit mail fraud. The
scheme of inflating invoices mailed to Sea-Land in order to generate commissions
defrauded Sea-Land. The mailing was the padded invoices. Bc D was part of a
conspiracy, he can be convicted of the substantive offense based upon acts committed
by a co-conspirator in furtherance of the conspiracy as long as the facts fall w/in the
41

42

scope of the conspiracy and could reasonably be foreseen as a necessary or natural

consequence of the unlawful agreement. A party to a conspiracy can be held
responsible for substantive offenses committed by co-conspirators if acts were
committed in furtherance of a conspiracy even though D neither participated in the
actual act of committing the crime nor knew it was committed.
NOTE: Problem in this holding: Cotrone and Gillespie committed the mail fraud and
the victim is Sea-Land, but the court finds that Tilton is guilty as an accomplice bc the
mail fraud was a natural and foreseeable consequence of his agreement to get
commissions. However, Tilton did not conspire to commit a crime with Cotrone and
Gillespie.

RICO
US v. Turkette (U.S. 1981): The enterprise must be sufficiently distinct from the
pattern of racketeering activity
Facts: Enterprise was group of individuals associated for purpose of drug trafficking,
bribery. D allegedly led the enterprise.
Claim on Appeal: No enterprise here because the enterprise is not sufficiently distinct
from the racketeering activity.
Holding (White): No, enterprise encompasses both legitimate and illegitimate
enterprises under RICO. Statute and legislative history suggests that it encompasses
both. We disagree w/lower courts that ejusdem generis should be followed and we
recognize a difference btw the group as an enterprise and the act. We know that the
major purpose was to address infiltration of legitimate business by organized crime but
we dont see anywhere that this was the exclusive purpose.
Ejusdem generis: where general words follow a specific enumeration of persons or
things, the general words should be limited to persons or things similar to those
specifically enumerated (because each enterprise listed is legitimate)
Cedric Kushner Promotions v. King Person must be distinct from the enterprise
with which the person is associated but there is a low threshold
Facts: Don King is president and sole shareholder of Don King Promotions. P says King
has conducted the corporations affairs through illegal racketeering but acted w/in
scope as corp. employee.
Issue: Are there two distinct entities, a person and a separate enterprise?
Holding (Breyer): Yes, person and enterprise are distinct. We agree that there must be
two entities (person and enterprise) and that there must be some distinctness between
them but we dont think it has a very high threshold. Here, a corp. owner is distinct
from the corp. bc they have a different legal status. That is sufficient. We distinguish a
2d Cir case bc there, P alleged that the person was the corp. and the enterprise was the
corp. w/all the employees.
Hypotheticals
Person: Individual A AND Enterprise: Individual A
NO
Person: Corp. B AND Enterprise: Corp B
NO (BUT
okay under 1962(a))
Person: Employee A AND Enterprise: Corp. B
YES (Cedric
Kushner)
Person: Employee A AND Enterprise: Employee A + Corp. B
YES
Person: Individual A AND Enterprise: Individual A, Individual B, Individual C, etc.
YES (Turkette)
Person: Corp. B AND Enterprise: Corp. B + Employee A (or Subsidiary Corp A)
NO
(Riverwoods, 2d. Cir. 1994 p. 691 n.4
H.J. Inc. v. Northwestern Bell Tel. Co. (U.S. 1989): Continuity and Relationship Test
Facts: Ps, customers of D, allege bribery and violations of 1962(a)-(d) by D, employees,
officers, and MPUC members. MPUC: responsible for determining rates that D may
charge. Ps say D sought to influence members of MPUC to give them higher rates than
reasonable, by giving cash/gifts to commissioners.
o 1962(a): got income from the scheme
o 1962(b): came to control MPUC
Holding (Brennan): Pattern of racketeering does not require proof of multiple schemes
just must satisfy continuity and relationship test: showing of (a) a relationship btw at
43

least 2 predicate acts and (b) the threat of continuing activity. Here, over 6 years, Ds
gave five members of MPUC bribes for the common purpose of getting unreasonable
rates. On remand, threat may be demonstrated by showing that alleged bribes were a
regular way of conducting Ds ongoing business.
Concurrence (Scalia, OConnor, Rehnquist, Kennedy): Pattern was meant to import some
requirement beyond multiple acts. Todays opinion hasnt helped. This is bad in the
RICO context bc RIO is validating the federalization of broad areas of state common law
of frauds. Indicating that a constitutional challenge is needed

IV. Conduct of Enterprises Affairs

Operation or Management Test
o The person must have participated in the operation or management of the
enterprises affairs
o The person must have some part in directing [the] affairs [of the enterprise]
Reves v. Ernst & Young (U.S. 1993): Operation or Management Test
Facts: White, gen. manager of Farmers Co-op, took money from Co-op for his own
venture, White Flame Fuels. He was convicted of fedl tax fraud. Co-op retained E&Y
who determined that the value of White Flame on Co-ops books depended on when it
was acquired: a) if purchased at inception: $4.5 million or b) if purchased from White:
$1.5 million. E&Y took option (a) bc otherwise Co-op was insolvent but doesnt tell Coop any of this. Co-op went bankrupt. Group sued E&Y on behalf of Co-op under 1962(c).
Issue: Meaning of to conduct or participate, directly or indirectly, in the conduct of such
enterprises affairs.
Holding (Blackmun): Operation or Management test. Bc conduct is used twice, we must
give it directional meaning (lead, run, manage NOT just carry on) in first instance
otherwise it is superfluous. Participate in the conduct of affairs is more than conduct
affairs but less than participate in the affairs. Thus some part in directing the affairs
is required but isnt limited to those w/primary responsibility and isnt limited to those
w/a formal position.
NOTE: the basis for the charge was the failure of E&Y to disclose to Co-ops board its
decision to list White Flame as purchased at inception. It boiled down to the question of
given what E&Y did, does that amount to merely auditing the financial statements (in
which case no liability) or did it amount to creating the financial statements (liability)

44

RICO CONSPIRACY
US v. Elliot (5th Cir. 1978): Although the Ds must agree to commit a pattern of
racketeering activity, they need not agree to commit the same pattern as long as
the Ds pattern involve the same enterprise.
Facts: 6 Ds convicted under 1962(d) of conspiring to violate 1962(c). Various people
engaging in various illegal acts: stealing cars, meat, and dairy, arson, murder, drugs,
etc. Activities are kind of divided into 2 different depts, both led by one D.
Claim on Appeal: Ds acts arent proscribed by underlying 1962(c) bc they were not
committed in furtherance of the affairs of an enterprise. Ds argue that there was not
one big conspiracy (bc then murder would be linked w/other lesser crimes)
Holding:
o Jury reasonably inferred existence of one enterprise led by one D w/circumstantial
evidence. Discusses wheel and chain conspiracy and finds that if we were
applying these pre-RICO concepts, it would be tough to find a single conspiracy.
Here, Congress intended to authorize prosecution of a multi-faceted diverse
conspiracy by freeing the govt of the multiple conspiracy doctrines and focusing
instead on: enterprise. The key in RICO conspiracy is that each D agreed to
participate directly and indirectly in the affairs of the enterprise by
committing two or more predicate crimes. It is irrelevant that each D
committed different predicate crimes as long as we reasonably infer that each
crime was intended to further the enterprises affairs.
o Constitutional Consideration: Court looks at whether RICO comports w/the
constitutional due process requirement that guilt remain individual and
personal. Finds that govt can use circumstantial evidence to show conspiracy
but Court cannot say it violates due process bc it doesnt authorize that
individuals be tried en masse nor does it punish mere association w/conspirators
and knowledge of illegal activity (focus is still on the conduct).
o An individual, by words or actions, must have objectively manifested an
agreement to participate, directly or indirectly, in the affairs of an
enterprise through the commission of two or more predicate crimes.
Govt doesnt need to show that a D knew all of the details of the conspiracy, just
must know the essential nature of the plan (bc secrecy and concealment are part
of this type of crime) Here: essential nature of plan was to associate for the
purpose of making money from repeated criminal activity.
o We do not lightly dismiss the fact that 4 Ds who didnt commit murder are
standing trial jointly with and as confederates of 2 others who did. We know
prejudice will occur but the Constitution doesnt guarantee a trial free from
prejudice that inevitably accompanies any charge of heinous group crime.
NOTE: w/o RICO, youd have 2 counts of conspiracy. Because 1962(c) is in the picture, it
is an association-in-fact enterprise, leaving us with one conspiracy.
Salinas v. US (U.S. 1997): D doesnt have to agree to commit 2 predicate acts, himself
agreeing that one of the conspirators will commit the object of the agreement
suffices.
Facts: B-A, a prisoner, bribes Sheriff (for money) to get contact visits w/his wife/gf.
When Sheriff wasnt available, Salinas arranged for the contact visits and stood watch
outside the room where they took place. He got a truck and watch. Salinas was
convicted of one 1962(d) count and two 666 bribery counts (acquitted of 1962(c)
charge).
Issue: Does a 1962(d) conspiracy to violate 1962(c) require each conspirator to agree
that he or she will personally commit acts constituting a pattern of racketeering
activity?
45

46

Holding (Kennedy): No, bc general conspiracy principles require only an agreement that
one of the conspirators will commit the object of the agreement. Each D is responsible
for the acts of the other. A conspirator must intend to further an endeavor, which, if
completed, would satisfy all elements of the substantive offense, but it suffices that he
adopt the goal of furthering the criminal endeavor. The interplay btw c and d doesnt
permit us to excuse from the reach of conspiracy an actor who does not himself commit
or agree to commit 2+ acts. Here, the Sheriff committed at least 2 acts and Salinas
knew about/agreed to facilitate the scheme. This is sufficient.
NOTE: acquitted of 1962(c) bc 666 isnt a RICO predicate and jury didnt believe that
Salinas was guilty of state law bribery, which were the alleged predicates for 1962(c)
count. But D was guilty of 1962(d) because he agreed that Sheriff would
commit state-law bribery

MONEY LAUNDERING
1956 and 1957
US v. Campbell (4th Cir. 1992): Concealment Prong of (a)(1): D must know a) proceeds
come from unlawful activity (but need not know what unlawful activity) and b) that
transaction was designed to conceal (but it need not be Ds purpose to conceal)
Facts: Real Estate Agent Campbell helps Lawing, a drug dealer, buy a house. Lawing
represented himself as a businessman. He drove Porsche and once showed briefcase w/
$20,000 to Campbell. To pay for house, Lawing took out a mortgage in his parents
name and got the sellers to let him give them $60,000 under the table in cash (in paper
bags) in return for lower contract price (made up a reason for doing this). Lawing tipped
Campbell w/a couple hundred dollars.
Charges: 1956(a)(1)(B)(i) domestic money laundering and 1957(a) engaging in
transaction in criminally derived property
Claim on Appeal: There is insufficient evidence for jury to find that Campbell knew (a)
that funds were the proceeds of illegal activity and (b) that the transaction was
designed to disguise the nature of those proceeds.
Holding: Evidence is sufficientGovt must only show that D possessed the knowledge
that transaction was designed to conceal illegal proceeds and D doesnt have to know
the specific illegal activity from which the money came. Knowledge is shown through
willful blindness here. D does not have to have the purpose to conceal nor does she
have to know the specific unlawful activities involved. Here, there is evidence to show
D a) knew that Lawson was using money from unlawful activity and b) knew that the
transaction was designed to conceal the nature of his proceeds.
1956(a)(1)(B)(i) requires Ds knowledge of 2 separate facts:
o 1) that funds involved in the transaction were the proceeds of illegal activity
o 2) that transaction was designed to conceal the nature of the proceeds
NOTE: Govt can appeal the acquittal here bc the jury convicted. The trial court entered
judgment of acquittal bc weight of the evidence warranted a new trial. The jury verdict
is reinstated, and Campbell gets a new trial.
NOTE: Under 1956(a)(3): not guilty bc it requires intent to conceal
US v. Piervinanzi (2d Cir. 1994): The promotion sections of 1956(a)(2) do not require
that the promotion is for a SUA other than the underlying SUA.
Facts:
o Irving Scheme: DelG (Irving employee) offers to help Marchese and Piervinanzi do
an illegal wire transfer of funds from Irving Trust into an overseas account. Tichio
says he and Rambali can set up account in Cayman Islands. Were to steal $10
million. Piervinanzi to provide security. He asks Robin to make call to Irving to
initiate transfer. DelG was scared so he sabotaged the deal by not providing
Robin w/a correspondent bank so deal would fail.
o Morgan Guaranty Scheme: DelG left Irving and moved to Morgan. He had to
perform audit of banks wire transfer dept. DelG, Marchese, and Pierinanzi began
planning a fraudulent wire transfer from Morgan. Get identity of a correspondent
bank. Robin calls again and directs a wire transfer of $24 million to the selected
account in London w/Bankers Trust as correspondent. Although Robin had all
necessary info, Morgans clerk was suspicious bc Robin didnt sound like the man
he claimed to be (Cicio). The wire transfer was reversed.
Charges: 1956(a)(2), 1957, conspiracy, attempted bank fraud and money laundering
from Irving scheme; actual wire fraud, attempted bank fraud, attempted money
laundering from Morgan scheme
Claims on Appeal:
47

1) The evidence was insufficient to support 1957(a) (Count 7 Morgan

Guaranty)
1957(a) requires that D first obtain criminally derived property then
engage in monetary transaction w/that property. Here, the funds
transferred from Morgan werent yet derived from wife fraud.
I.e., 1957(a) requires a monetary transaction in criminally derived
property, but here the SUA never generated any criminally derived
property, i.e., proceeds.
o 2) Evidence insufficient to support 1956(a)(2)(A) (Count 3 Irving Trust, Count 6
Morgan Guaranty)
1956(a)(2)(A) requires intent to promote the carrying on of some SUA
other than the SUA that generated or wouldve generated the monetary
instrument or funds transported and here the D had no such intent
Holding:
o 1) Reverses 1957(a) conviction bc the SUA did not generate proceeds, and
1957(a) requires actor to engage in a monetary transaction in criminally derived
property, i.e., in property constituting the proceeds of SUA.
Obtained and property suggest possession and although D succeeded
in transferring funds from Morgan, they never came into the possession or
under the control of the conspirators.
o 2) Affirms 1956(a)(2)(A) convictions bc the attempted transportation of the
funds would [have] hamper[ed] official efforts to recover the stolen funds and
thus would have promoted the carrying on of SUA.
Statute requires there be a transmission of funds w/intent to promote
carrying on of SUA. SUA includes bank fraud. The use of overseas
accounts was integral to both schemes. Its clear the attempted transfers
were designed to promote the underlying crime. This reading doesnt
merge the underlying crime and the promotion through laundering
into one. The act of attempting to transfer funds out of banks was distinct
from the attempted transmission of those funds overseas and it was
independently illegal.
1956s structure confirms this:
(a)(1): Domestic money laundering (transactions that involve the proceeds
of SUA). This requires that proceeds first be generated and second that D
knew the proceeds were dirty
(a)(2) in contrast: no requirement that proceeds first be generated
Skinner: although transaction in reality represented only the completion
of the sale of cocaine, we concluded that it were made to facilitate the
sale of cocaine and thus were made w/the intent to promote the carrying
on of SUA.
o

48

III. PROCEDURAL ISSUES OUTLINE

GRAND JURY
Overview of Grand Jury:
Under the Fifth A, a D has a right to be charged by a grand jury in certain cases
Composition:
o Consists of 16-23 jurors and 12 jurors are required to indict (regarding of whether there
are 16 or 23 total)
o Term is 18 months
o Indictments are formal charges based on probable cause
o All felonies must proceed by indictment unless D waives and agrees to proceed by
information (Fed. R. Crim. P. 7(a), (b))
Dual Functions of the Grand Jury
A grand jury serves the dual function of determining if there is probable cause to believe that a
crime has been committed and of protecting citizens against unfounded criminal prosecutions
A grand jury has the power to subpoena witnesses and tangible evidence, and the scope of its
inquiry may be quite broad.
The grand jury is not bound by rules of evidence. DOJ has certain policies regarding evidence
admissibility but it is not mandatory nor enforceable.
1) Investigation:
o Grand juries are usually used as the primary investigative bodies in fedl white collar
cases. Headed by the prosecutor in charge of the investigation, the actual investigative
footwork may be done by law enforcement agencies acting at the grand jurys behest
o NOTE: Courts have held that the govt cannot use the grand jury to gather evidence for
trial after the grand jury has issued its indictment.
2) Screening and Charging: a buffer btw defendant and prosecution
o People I SCREEN I Prosecutor
o Judicial policing and prosecutorial misconduct
Problem: if the grand jury is not really independent of the prosecutor you have a powerful
investigative and charging tool in the hands of the prosecutor BUT If you try to make the grand
jury more independent you end up moving from screening to adjudication, such that the grand
jury process looks more like the trial process.
Grand Jurys Investigative Function: Subpoena Power Fed. R. Crim. P. Rule 17
Subpoenas for testimony (ad testificandum) Fed. R. Crim. P. 17(a)
o Compliance enforced through contempt power
o 4th A doesnt apply (Dionisio): only applies to seizures of persons and dragging you into
jury room for grand jury doesnt constitute seizure.
o 5th A privilege applies: witness can refuse to self-incriminate but he cant refuse to appear
at all.
Witness can be subpoenaed even if the witness has said he intends to invoke the
5th Amendment (a discretionary decision for prosecutormay not be worth it)
Immunity: Prosecutor can get the testimony by granting witness immunity
based on the testimony with forces them to testify but in exchange
forecloses the possibility of incrimination.
Miranda warnings not required (Washington) but DOJ policy is to provide Advice of
Rights that look similar to Miranda (p. 787)
NOTE: It is unclear whether the Advice of Rights is constitutionally or legally
required.
o Hearsay testimony is admissible (Calandra) but DOJ policy is to ensure jurors are not
mislead into believing hearsay based on personal knowledge.
o If you are not subpoenaed, you are NOT entitled to appear before the grand jury if you
want to.
o Witness is NOT entitled to have lawyer with him in the grand jury room.
o Witness can refuse not to answer things that would breach attorney-client privilege.
49

Subpoenas for documents (duces tecum) Fed. R. Crim. P. 17(c)

o Compliance enforced through contempt power
o Need not be based on probable cause (unlike search warrants)
o 4th A requires the seizure pursuant to a subpoena to be reasonable and Rule 17(c)(2)
provides that a subpoena can be quashed if compliance would be unreasonable or
oppressive. (R. Enterprises)
o D can show that a subpoena is unreasonable if
1) The info a grand jury subpoena requests is irrelevant, i.e., if no reasonable
possibility exists that the subpoena will produce info relevant to the general
subject matter of the investigation
2) It is too indefinite OR
3) Compliance would be overly burdensome
NOTE: Relevance is generally not the guidance factor bc before formal charges are
filed, it is impossible to know what evidence will be relevant.
o Corporations have no 5th A rights.
o Individuals can resist subpoenas for docs based on 5th A under the Act of Production
Doctrine, but not based on the content of the documents.
Doctrine: Even if docs are incriminating you must hand them over, unless the act
of turning over the docs itself is incriminating and testimonial bc then you have
the elements for a 5th A claim (compelled + incriminating + testimonial)
Rationale: you were not under compulsion when you made the docs (and 5th A is
meant to protect compelled self-incrimination) but you are compelled to turn over
the documents.
NOTE: difference btw testimonial aspects of producing the docs (by handing over
the doc, you admit you possess the docs) and admitting to info that docs point to
(these docs are mine, and they point to conduct which, if true, would incriminate
me)
o Subpoenas for docs can also be resisted under the attorney-client and work product
privileges
o Illegally seized evidence is permissible but DOJ policy is not to present illegally seized
evidence if the AUSA personally knows that the evidence has been illegally seized.
o Exculpatory Evidence need not be presented but DOJ policy that it will be presented if
prosecutor is personally aware of substantial evidence that directly negates guilt

Overview: How to Resist Subpoena for Docs

Show it is unreasonable or oppressive
o Irrelevant
o Indefinite
o Overly burdensome
Show it is protected under attorney-client or work product privileges
Raise 5th A claim through Act of Production Doctrine
Grand Jurys Secrecy Obligation Fed. R. Crim. P. Rule 6(e)
Fed. R. Crim. P. 6(e)(2): Who may be Present: Jurors; Prosecutor; Witness*; Court reporter;
Interpreter
*The witness is the only one not under an obligation not to disclose a matter occurring
before the grand jury.
o Knowing disclosure violations may be punished as contempt
Disclosure Permissible WITHOUT Court Approval:
o To an attorney for the govt (i.e., another prosecutor involved in the case). Rule 6(e)(3)
(A)(i).
o To govt personnel necessary to assist attorney for the govt in enforcing federal
criminal law. Rule 6(e)(3)(A)(ii).
o To someone under 18 U.S.C. 3322 (an attorney for the govt to enforce the civil
penalties associated w/FIRREA or civil forfeiture). Rule 6(e)(3)(A)(iii).
o To another grand jury. Rule 6(e)(3)(C).
50

Any matter involving foreign intelligence, counterintelligence, or foreign intelligence

information to specified officials. Rule 6(e)(3)(D). (a post-9/11 development)
Disclosure Permissible WITH Court Approval
o Preliminary to or in connection w/a judicial proceeding (particularized need must be
shown) (Douglas Oil). Rule 6(e)(3)(E)(i)
Balance the need to avoid injustice in another judicial proceedging with the need
for grand jury secrecy.
o At a defendants request to a defendant if grounds exist to dismiss. Rule 6(e)(3)(E)(ii).
Defendant typically doesnt know what went on in the grand jury (unless they talk
to the witness)
o At the govts request to a foreign court or prosecutor
o At the govts request to state or foreign officials if the matter discloses a violation of that
jurisdictions criminal law.
o At the govts request to military officials if the matter discloses a violation of military law.
o

Defense Side
Defense generally cannot get a copy of the witnesss testimony (but there are exceptions under
Rule 6) and can get access if witness becomes a witness at trial
Policing and Prosecutorial Misconduct: How to Police Prosecutors:
Defense must gather evidence w/o access.
Defense can gain access once it makes the required showing based on evidence gathered w/o
access (particularized need must be shown)
Court can review minutes in camera.
An indictment will not be dismissed unless the errors were prejudicial, i.e., the errors
substantially influenced the decision to indict (Bank of Nova Scotia)
Federal courts lack supervisory power to promulgate rules to police prosecutorial misconduct
(Williams)

DISCOVERY
Overview
Discovery by the defense in criminal cases is much more limited than discovery by the parties
in civil cases
o No depositions, no interrogatories, etc.
o Why more limited:
Pre-trial discovery would encourage perjury (bc if you know what they have, you
can concoct lies or intimidate witnesses)
Defense shouldnt be permitted to discover the Govts case bc the Govt cannot
discover the Ds defense
Think about it temporally at what time can the govt cite certain rules to get info:
1) Pre-indictment
o Defense
No rule under Const. or fedl law that entitles or actively enables defense to get
anything from 3rd parties
Freedom of Information Act requests
o Government
Grand jury subpoenas
2) Post-indictment, pre-trial
o Defense:
1) Brady v. Maryland: constitutional rule obligating the govt to disclose certain
kinds of info before trial;
2) Rule 16- a limited discovery device;
3) Rule 17 subpoena that the defense can obtain in order to gather info from
third parties
o Government:
51

Rule 16
3) Trial
o Defense:
Jencks Act: statute that imposes an obligation on the govt to disclose witness
statements;
Fed. R. Crim. P. 26.2: a reciprocal rule that imposes a reciprocal obligation on the
defense (they are thought of interchangeably)
o Government:
Rule 26.2

What is the RULE of Brady v. Maryland (U.S. 1963)?

The govt must disclose material, exculpatory evidence to the defense prior to trial bc it is
fundamental to a fair trial.
The Rule (set out in Stricker v. Greene, U.S. 1999): The state/govt must timely disclose
evidence if.
o 1) The evidence is favorable to the accused
o 2) The evidence has been suppressed by the state, either willfully OR inadvertently
AND
o 3) The evidence is Material (i.e., failure to disclose was prejudicial)
1) Evidence must have been favorable to the accused i.e. the evidence must be exculpatory
o Exculpatory with respect to guilt or punishment
o Exculpatory inasmuch as it could have been used for impeachment (Giglio material)
2) Evidence must have been suppressed by the state, either willfully or inadvertently
o States good faith is irrelevant
o Obligation applies to any state actor acting on the states behalf (including civil
enforcement agencies if it was involved in investigation or prosecution)
o State has no obligation to create or otherwise seek out exculpatory evidence
o Obligation exists whether or not the defense makes a request
o Q: Is the obligation contingent on the due diligence of the defense i.e. the govt need
not disclose if the defense couldve discovered the evidence through reasonable
investigation?
A: Probably no if thinking about fairness to the D but circuits are split.
3) Prejudice must have ensued i.e. the suppressed evidence must have been material.
Update in Kyles v. Whitely (1995): one of the few post-Brady cases that found a Brady
violation
o Souter held that materiality is NOT a sufficiency of the evidence test.
o Look at all the evidence at trial, pour all the Brady evidence back in, then (dont) ask
yourself if the evidence is sufficient, bc the answer will inevitably be yes.
o Thus if a Brady error exists, harmless-error analysis is unnecessary bc youve already
determined materiality, w/D bearing the burden of proving materiality.
o Suppressed evidence should be considered as a whole.
Policy Question: Would something else be better than Brady?
o Marshalls dissent in Bagley: prosecutor has an affirmative duty to turn over ALL info
known to the govt that might reasonably be considered favorable to the Ds case. Any
breach of that duty would be subject to harmless error (beyond a reasonable doubt as the
standard) and govt would bear burden of proving harmlessness.
Rule 16
General Philosophy: D should have access to evidence in the possession of the Govt if
o 1) The evidence is likely to be particularly influential on the jury at trial
o 2) Pre-trial access is needed in order to respond effectively at trial
o 3) Not the kind of evidence likely to prompt mischievous acts by D, such as
manipulation/witness intimidation
Rule 16 imposes reciprocal obligations: if the defense requests disclosure and the govt
complies, the defense must comply if the govt requests disclosure (unlike Brady, which is a oneway street)
(a)(1): Upon Ds request, govt must disclose to D:
52

A) Ds oral statements
The substance of any relevant oral statement made by D, before or after arrest, in
response to interrogation by a person the D knew was a govt agent if the govt
intends to use the statement at trial.
o B) Ds written or recorded statements
i) Any relevant written or recorded statement by D if
Statement is w/in govts possession, custody, or control and
Attorney for the govt knows or through due diligence could know that the
statement exists
ii) The portion of any written record containing the substance of any relevant oral
statement made before or after arrest if D made the statement in response to
interrogation by a person D knew was a govt agent
iii) The Ds recorded testimony before a grand jury relating to the charged offense.
o C) Corp. statements
o D) Ds criminal record
o E) Documents and Objects w/in the govts possession, custody, or control IF
i) The item is material to preparing the defense
ii) The govt intends to use the item in its case-in-chief at trial OR
iii) The item was obtained from or belongs to the D
Q arises: how does materiality under Brady compare to materiality under Rule
16??
A: Some courts say they mean the same thing. Other courts say materiality
under Rule 16 can include inculpatory evidence as well as exculpatory
evidence.
A: Evidence is material if there is a strong indication that it will play an
important role in uncovering admissible evidence, aiding witness
preparation, corroborating testimony, or assisting impeachment of
rebuttal OR if it can be used to counter the govts case or bolster a
defense [2d Circuitbroad]
NOTE: For exam, recognize that materiality may be same/diff from Brady
and refer to n. 2 on 844-45 to explain the different standards and apply
them to the issue.
o F) Examination and test reports
o G) Expert witness summaries
(a)(2): Work product privilege applies unless Rule 16(a)(1) provides otherwise; witness
statements discoverable only through Jencks Act.
(b)(1): Disclosure to the Govt
o A) Documents and Objects: If D requests disclosure under 16(a)(1)(E) and govt complies,
then D must permit govt, upon request, to inspect/copy/photograph books, papers, docs,
data, photos, tangible objects, buildings/places, or copies or portions of these items if:
i) The item is w/in Ds possession, custody or control AND
ii) D intends to use the item in Ds case-in-chief

o B) Examinations and Tests: If D requests disclosure under 16(a)(1)(F) and govt complies,
D must permit govt, upon request, to inspect/copy/photograph the results or reports of
any physical or mental exam and of any scientific test/experiment if:
The item is w/in Ds possession, custody, or control AND
D intends to use the item in the Ds case-in-chief at trial, or intends to call the
witness who prepared the report and the report relates to the witnesss testimony
o C) Expert Witnesses: D must, at govts request, give to govt, a written summary (which
includes witnesss opinions, bases, and reasons, and qualifications) of any testimony D
intends to use under FRE 702, 703, or 705 as evidence at trial if:
D requests disclosure under 16(a)(1)(G) and govt complies OR
D has given notice under Rule 12.2(b) of an intent to present expert testimony on
Ds mental condition.
(b)(2): Information NOT subject to Disclosure: Except for scientific/medical reports 16(b)(1)
doesnt authorize:
o

53

o
o

A) Reports, memoranda, or other docs made by D, or Ds attorney/agent during the cases

investigation or defense
B) A statement made to D or Ds atty or agent by:
i) The D
ii) A govt or defense witness; or
iii) A prospective govt or defense witness.

NOTE: Whenever you have Brady, you will have 16(a)(1)(E)(i)

Jencks Act (18 U.S.C. 3500)
Fed. R. Crim. P. 26.2 (imposes reciprocal obligations)
General rule: After a witness other than D has testified, and upon motion, the nonmoving party
must produce any statement in its possession that relates to the subject matter of the witnesss
testimony.
Statement is a term of art defined as:
o 1) A written statement that the witness makes and signs, or otherwise adopts or
approves;
o 2) A substantially verbatim, contemporaneously recorded recital of the witnesss oral
statement that is contained in any recording or any transcription of a recording; OR
o 3) The witnesss statement to a grand jury, however taken or record, or a transcription of
such a statement.
Rationale: providing this AFTER witness has testified is to provide an opportunity to impeach
NOTE: Dont have to turn over Jencks material until after witness testifies; but for Brady,
you turn it over in ADVANCE of trial to provide defense w/sufficient time to digest.
Fed. R. Crim. P. 17(c) (we saw this in talking about grand jury subpoenas)
Can be used by the defense to appear at trial or to secure documents
Under US v. Nixon standard, a Rule 17 subpoena from the defense to a 3rd party can be quashed
as unreasonable or oppressive if
o 1) Evidence is Not Relevant
o 2) Evidence is Not Admissible (e.g., if it is just for impeachment)
o 3) Defense did not specifically describe what its seeking
NOTE: Contrast whats unreasonable for defense subpoenas (3rd parties) vs. grand jury
subpoenas (from prosecutor to whoever, from R. Enterprises): Much more strict and easily
quashed (not easy for defense)
Discovery Hypothetical:
McG, fmr Gen Man of treatment plant tells govt investigators that plant was discharging in excess of
permitted amts. He turns over to the govt drafts of reports required by regulation upon which appear
handwritten directions to alter amt of actual discharges to meet permit req. Docs, McG says, show that
Pres of Plant, O, directed McG to file false reports. FBI agent goes to Os house and O denies any
wrongdoing, informs agent that he was out of town at those times and notes that McG was fired and
thus has it out for O and the plant. O later provides, pursuant to subpoena, handwriting exemplars.
1) Can D interview agent before trial to explore what he recalls about Os statements? ??? Must
govt make a record of agents recollection and turn it over to D? YES under 16(a)(1)(A).
2) Assume after interview, agent wrote out short summary of Os statements on a form 302is D
entitled to this memo? YES under 16(a)(1)(B)(ii)
3) Assume agent taped interview w/Ois recording discoverable? YES under 16(a)(1)(B)(i). If
so, in what form? ??? Assume prosecutor made transcriptis defense entitled to transcript?
4) Assume McG sues O for wrongful termination and O responds to complaint and appears for
depomust govt turn over materials? NO, not w/in govts custody (a separate
proceeding)
5) Assume govt has no criminal record of O but defense knows about a marital battery
conviction in another statedoes defense have to turn it over? NO, not to be used by casein-chief
54

6) Is D entitled to access to the draft reports turned over to govt by McG? YES, under 16(a)(1)
(B)(ii)
7) Assume both govt and D have submitted reports to their own expert doc examiners for
handwriting and those experts have submitted written reports of their findings. Govts report
reaches indeterminate resultmust govt turn over report? YES under Brady, 16(a)(1)(F)(iii)
or 16(a)(1)(E). Assume it does. Ds expert detects fingerprints not noted in govt report but D
fears they are Osmust defense turn it over? NO bc not intending to use it.
Assume McG agreed to plead guilty in a cooperation agreement w/govt. McG completes direct exam.
Defense earlier filed motion for Jencks material.
8) Is D entitled to discover McGs criminal record to impeach him? Must govt turn over McGs
coop agreement? Plea colloquy? Pleadings and depos in McGs civil action?
o Yes under Brady if it is exculpatory and w/in Governments possession.
o Yes under Jencks if it constitutes a statement in the Governments
possession and related to the testimony.
9) Agents met w/McG and took about 25 pages of handwritten notes generally summarizing his
infois D entitled to discover?
o Yes under 16(a)(1)(E)(i) if it is material to Ds case
o Yes under Brady if exculpatory
o Probably not under Jencks bc not a statement
10) Agent dictated 20 page memo describing interviews w/McGuigan using handwritten notes to
prompt his memorymust govt turn over memo? How about dictation tape?
o Yes under 16(a)(1)(E)(i) if it is material to Ds case?
o Yes under Brady if exculpatory
11) In grand jury, agent testified regarding McGs statements to agentsmust grand jury
transcript be produced?
o Turn over under Brady or 16(a)(1)(E)i) if material
o Probably not under Jencks unless agent testified at trial
12) Just before trial, govt gets letter from McG about govts failure to follow through on
promises it had allegedly made to him in terms of protecting him from fall-out. Must govt turn
this over?
o Yes under Jencks Act insofar as it is related to witnesss testimony.
13) After speaking w/McG AUSA prepares draft script summarizing his likely testimony on 6
typed pages.
o No under Jencks (not McGs statement)
o No under Brady bc it is not exculpatory
o No under Rule 16

55

FIFTH AMENDMENT
I. Testimony and Immunity
A. Overview of Fifth Amendment Privilege Against Self-Incrimination

What: When questioned by the govt at a grand jury, at a trial, or in other official settings, an
individual has the right not to answer if the response might incriminate the individual in a
criminal case
Immunity: The govt can only compel testimony in such a case by obtaining an order that
grants the defendant immunity
Language: No person shall be compelled to be a witness against himself
No person:
o Only natural persons (and sole proprietorships) possess the privilege
o Corporations do not (collective entity doctrine)
shall be compelled
o Privilege can only be asserted in the face of compulsion
o
In the grand jury or at trial the compulsion is a contempt order
o Outside the grand jury or trial compulsion includes custodial interrogation, which is the
basis for the Miranda warnings
to be a witness
o Privilege protects against being forced to give testimony
o Testimony must be incriminating
o It must form a link in the chain leading to criminal liability
against himself
o Testimony must incriminate the person giving it, not someone else, in order to be
privileged

THE IMPORTANCE OF THE FIFTH AMENDMENT PRIVILEGE

Without 5th Amendment
(Cruel Trilemma)
Option
Result

With the 5th Amendment

(No Cruel Trilemma)
Option
Result

With Grant of Immunity

(No Cruel Trilemma)
Option
Result

Remain Silent

Contempt

Remain Silent

NOTHING

Remain Silent

Contempt

Answer
Truthfully

SelfIncrimination

SelfIncrimination

Answer
Truthfully

IMMUNITY from
Incrimination

Lie

Perjury

Answer
Truthfully
Lie

Perjury

Lie

Perjury

What Kinds of Immunity will Displace the Fifth Amendment Privilege?

(Kastigar, 1972)
TYPE OF IMMUNITY
Use Immunity
Weakest form, if I say X, then my statement X cant be used against me
alone but if my statement X is used to find more against me, my statement
X can be used against me.
Use-and-Derivative Use Immunity
Transactional Immunity

WILL IT DISPLACE
5th A?
NO
YES
YES

Kastigar v. United States, U.S. 1972

Facts: Kastigar is granted use-and-derivative use immunity under Fedl Immunity Statute (18
U.S.C. 6002) and was held in contempt when he refused to testify. Kastigar says that such
immunity cannot displace privilege against self-incrimination.
Holding: No, use-and-derivate use suffices as does transaction. Use immunity does not.
56

Difference Between Statutory/Formal Immunity ( 6002) and Pocket/Informal

Immunity

WHE
RE

WHA
T

Formal Immunity
18 U.S.C. 6001-05
6002 Immunity Generally:
no testimony or other info compelled under
the order (or any info directly/indirectly
derived from such testimony or other info)
may be used against the witness in any
criminal case

Informal Immunity
- Plea bargain agreement

- Centralized DOJ review

- Governed by contract principles (must be

bargained for)

- Cooperation agreement
- Non-prosecution agreement

- Person is compelled to speak (by contempt

power)

- Person agrees to speak

- Immunity displaces the privilege

- Privilege is waived, not displaced

- Binding on state and fedl authorities

(binding on world)

- Binding only on parties to the agreement

- Prosecution receives only testimony

- Prosecutor can bargain for cooperation and

testimony
-Transactional immunity can be given

B. Kastigar Hearings and Using Immunized Testimony

Kastigar Hearing: The Govts Burden
Govt must show by preponderant evidence that it has not used immunized testimony to
prosecute the person giving the testimony, nor that it has used any evidence derived from that
testimony.
In other words, Govt must show that it has an independent source for the evidence it uses
against the immunized person
In still other words, Govt must show that it has not compelled the person to be a witness against
himself through the use (or derivative use) of the testimony that it compelled him or her to give.
What does it mean to use immunized testimony?
What are some ways in which immunized testimony might be used in prosecution of the person
who gave the testimony?
1) Direct Evidentiary:
o Prohibited, unless Govt satisfies Kastigar burden
2) Impeachment
o Prohibited, unless Govt satisfies Kastigar burden
3) Indirect Evidentiary (e.g., using immunized testimony to refresh a witnesss recollection)
o Prohibited, unless Govt satisfies Kastigar burden BUT circuit split over what showing
Govt must make to satisfy Kastigar*
4) Non-evidentiary (e.g., trial strategy)
o Prohibited, unless Govt satisfies its Kastigar burden BUT circuit split over what showing
the Govt must make to satisfy Kastigar* (p. 869)
57

*The Circuit Split: Must the Govt only show an independent source for the evidence it uses,
OR must it also show that the witnesss/prosecutors exposure to the immunized testimony did
not change his/her testimony/decision-making

C. Taking a Proffer: How AUSA Decides whether to Grant Immunity

Proffer session: The person who is a prospective witness to whom you are thinking about
granting immunity will say things, presumably incriminating things.
Problem: D wont give incriminating testimony w/o immunity and Govt wont grant immunity w/o
incriminating testimony.
Solution: Fed. R. Evid. 410: no use may be made of statements made in proffer sessions, but
allows for the derivative use of such statements.

Queen for A Day Agreements (Waivers in Proffer Sessions)

Velez: waiver allowed Govt to make direct use of statements made during proffer session on
rebuttal, even if D didnt testify.
o Held: Valid (United States v. Velez, 2d Cir. 2004)
Mezzanatto: waiver allowed Govt to make direct use of statements made during proffer
session for impeachment if D testified.
o Held: Valid (United States v. Mezzanatto, U.S. 1995)

PROFFERS SUMMARY
IS THE FOLLOWING USE OF STATEMENTS FROM PROFFER SESSIONS PERMITTED OR NOT?
Queen-for-a-Day
Formal Immunity
Rule 410
Agreement
Testimony in a
perjury or false
Yes
Yes
Yes
statement
prosecution
Testimony in case in
chief in another
No
No
No
prosecution
Derivative evidence
No
Yes
Yes
in any prosecution
Testimony for
No
No
Yes (Mezzanatto)
Impeachment
Testimony for
No
No
Yes (Velez)
rebuttal

II. Documents and Tangible Objects

RULE: One can refuse to produce documents based on the Fifth Amendment if the act of producing
the documents is incriminating. One cannot refuse to produce docs based on the 5 th A just bc the docs
contain incriminating info.

Rationale: The 5th A protects against compelled self-incrimination and docs were not created
under compulsion.
TEST: Does act of production involve testimonial self-incrimination?
Step 1) Is the act of production testimonial:
o Testimonial: An act is testimonial if it communicates any factual assertions, implicit or
explicit, or conveys any info to the Govt (Doe v. US, U.S. 1988: Grand jury investigation
bc D is believed to have accounts in foreign bank. D is ordered to sign consent form,
allowing Bank to disclose Ds documents)
o An Act of Production can be testimonial with regard to:
1) Existence: The docs you ask for exist

58

Existence of business docs will not be a foregone conclusion unless the

Govt describes the docs it seeks with reasonable particularity (4 th A Idea)
(Hubbell)
2) Possession: The docs you ask for are in my possession
3) Authenticity: The docs I am giving you are the docs you ask for
Step 2) Is the Testimony Incriminating?
o Incriminating Testimony: 5th A privilege extends not only to testimony that would in itself
support a conviction but also embraces that which would furnish a link in the chain of
evidence needed to prosecute the person giving the testimony. (Hofman v. US, U.S.
1951)
o It must be perfectly clear that the testimony cannot possibly have a tendency to
incriminate
If yes to 1 and 2, then you can refuse to turn over docs under 5 th A.

Invoking Another Persons 5th A Privilege

The Fifth Amendment is personal and thus cannot be raised on behalf of someone else. However
in privileged relationships (attorney-client), the holder of the docs can resist a subpoena based
on the privilege if the other person if that person could have used the 5 th Amendment privilege
had the docs been in their possession.
(Fisher v. United States, U.S. 1976)
Fisher v. United States, U.S. 1976:
Facts: IRS investigating taxpayers. Accountants create docs. Accountants give docs to Taxpayers
who give docs to Lawyers in order to get legal advice. IRS issues subpoena summons to lawyers
for the Accountants Docs (accountants work papers, copies of income tax returns, and the
accountants copies of correspondence btw accounting firm and taxpayer)
Holding:
o 1) Lawyers cannot assert the taxpayers Fifth Amendment rights, bc the privilege is
personal
o 2) Lawyers cannot assert their own Fifth Amendment privilege, bc the docs do not
incriminate them.
o 3) Lawyers can assert the attorney-client privilege
o 4) Lawyers can resist subpoena based on attorney-client privilege if the taxpayers
couldve resisted it based on their 5th A privilege (act of production) had the docs been in
their possession and the subpoena issued to them.
Application: Act of Production doesnt apply bc existence is not testimonial; possession is not
testimonial bc they are both foregone conclusions
NOTE: 5th Circuit held that lawyers could assert taxpayers 5th A rights bc the 5th A protects
privacy (Boyd v. US, US 1886). Today, Boyd is dead.

Fisher v. United States (U.S. 1976)

EXISTENCE
Testimonial
Incriminating
No. Existence
was a
No
foregone
conclusion

POSSESSION
Testimonial
Incriminating
No. Possession
was a foregone
conclusion

No

AUTHENTICITY
Testimonial
Incriminating
Not Clear

No

Collective Entity Doctrine: Corporations cannot assert the Fifth Amendment bc they are not
persons
A corp. employee cannot resist a subpoena issued to the corp. based on his own 5 th A act-ofproduction privilege
o Braswell v. US, U.S. 1988, held that a corp. custodian cannot resist a subpoena based on
his own 5th A act of production privilege
BUT: the Govt may make no evidentiary use of the individual act [of production] against the
individual
59

Braswell: For example, in a criminal prosecution of the custodian, Govt may not
introduce into evidence before the jury the fact that the subpoena was served upon and
the corp.s docs delivered by one particular individual, the custodian

United States v. Hubbell, U.S. 2000

Claim by Hubbell:
o 1) Hubbell receives subpoena for any and all documents reflecting, referring, or relating
to any direct or indirect sources of money or other things of value recd by or provided to
you or any member of your family
o 2) Formal immunity granted to the extent allowed by law
o 3) Govt cant use any incriminating testimony implicit in Hubbells act of production nor
any evidence derived from that testimony
o 4) Hubbells act of production implicitly testified that the docs existed
o 5) The existence of these docs was a link in the chain to the contents of the docs
themselves
o 6) The content of the docs was directly incriminating; therefore, the testimony as to the
existence of the docs were incriminating
o 7) Therefore, the Govt could not use the contents of the docs against Hubbell unless it
established an independent source for their contents
Court Holding: Govt cannot use the contents of the docs against Hubbell unless it established an
independent source for their contents.
Reasoning: Had Hubbell not been granted immunity, would he have been able to invoke 5 th A?
o 1) Would the act of production be testimonial as to the existence of the documents?
The existence of the docs requested will not be a foregone conclusion unless the
Govt describes the documents it seeks with reasonable particularity (4 th A Idea)
Here: yes it would be testimonial bc it wasnt a foregone conclusion that the docs
existedin other words, Govt didnt describe with reasonable particularity what it
was requesting (its request was too broad and vague)
o 2) Would the testimony as to the existence of the documents be incriminating?
Yes bc the testimony regarding the existence of the docs would be a link in the
chain leading to the contents of the docs, which are incriminating (rejects Govts
manna from heaven theory that govt would only use the contents of the docs
and make no reference to the act of production)
o Thus, the act of production constituted incriminating testimony and he couldve resisted
on the basis of the 5th A.

United States v. Hubbell (U.S. 2000)

EXISTENCE
Testimonial
Incriminating
Yes. Existence
was not a
Yes
foregone
conclusion.

60

POSSESSION
Testimonial
Incriminating

AUTHENTICITY
Testimonial
Incriminating

IV. SENTENCING GUIDELINES OUTLINE

DEPARTMENT OF JUSTICE CHARGING POLICY and SENTENCING UNDER CH. 8 OF
FEDERAL SENTENCING GUIDELINES
Department of Justice Charging Policy
Would you have charged S-D under the DOJ policy? Consider:
1) Harm: Seriousness of the crime
2) Culpability: Pervasiveness of wrongdoing: how many were involved (spread throughout
company or rogue employee?)
o Criminal History
o Effective Ethics and Compliance program
3) Remorse: Disclosure and cooperation and Remedial Actions
4) Proportionality
o Collateral Consequences (think of Arthur Andersen)
o Prosecution of individuals (is prosecuting individuals only sufficient?)
o Adequacy of civil enforcement (is existence and likelihood of civil remedies sufficient on
its own?)
Overview
Two Types of Sentencing Systems
o Real Offense sentencing: based on what one really did. Judge will look past the charge
to the real offense that was committed. Enables judge to gather a lot of information.
Who controls the sentence? The judge
o Charge Sentencing: the charge governs the decisionnow it makes a difference
depending on what punishment is attached to the various offenses.
Who controls the sentence? Legislature and Prosecutor
History of Sentencing
o Before the Guidelines: Real Offense System
Problems: Lack of uniformity; too much discretion in hands of judge; discrimination
o After the Guidelines: Modified Real Offense sentencing w/Charge System
features
Charge Features: Charge determines the applicable guideline
Real Offense Features:
Relevant conduct rules: prosecutor decides to charge only one count and
its associate loss is $1,000this wont give you a break bc relevant
conduct rules will take it all into account
Grouping rules: 100 counts are grouped together so prosecutors decision
of how to charge doesnt have much effect
Who controls sentencing? Prosecutors and guidelines
o After US v. Booker (U.S. 2005): Real Offense System: Guidelines advisory
Why: bc of 6th A right to jury trial problem: jury must decide the facts constituted a
crime beyond a reasonable doubt. There is a conflict btw demands of 6th A and
the way in which the Fedl Sentencing Guidelines operated
Key: To what does a guidelines number refer? For example, U.S.S.G. 8A1.2?
8: Chapter
A: part
1: Subpart
2: Guideline
3553(a), 3572(a):
3553(a): Sentencing factors generally: sufficient, but not greater than necessary (Parsimony
Clause)
o Consider nature and circumstances, need for sentence to reflect seriousness of defense,
deterrence, protection of public, etc
61

3572(a): Sentencing factors specific to fines

3571: Maximum Sentences

Individual Sentencing: Emphasize punishment and retribution

Step 1: Use Appendix to get applicable guideline for Count 1

Step 2: Go to guideline and determine Base Offense Level and applicable Offense-Specific
Adjustments for Count 1
Step 3: Determine any general (non-grouping) Chapter 3 adjustments
o Part A: Victim-Related Adjustments
o Part B: Role in the Offense Adjustments
o Part C: Obstruction and Related Adjustments
This will give you the Offense Level for Count 1
Go through Step 1-3 for all other counts.
o Note: Under conspiracy charges, you charge one count of conspiracy for each count of
the underlying offense.
This will give you the Offense Level for All Counts
Step 4: Grouping: Determine whether or not the counts should be Grouped under 3D1.2
o General Rule: All counts involving substantially the same harm shall be grouped
together in a single group
Step 5: Determine the offense level for the group under 3D1.3
o The subsection of 3D1.3 will be determined by what subsection you used to group the
charges in Step 4
This will give you the offense level for the group
Step 6: Combine Multiple Groups under 3D1.4
o 1) Begin with the offense level that is the highest
o 2) Determine how many Units do we have?
o 3) Look at Table in 3D1.4 to determine the increase to the offense level based on the
number of Units
Step 7: Adjust for any reduction for acceptance of responsibility under Chapter 3
Step 8: Determine Criminal History Category (WE DONT HAVE TO DO THIS)
Step 9: Determine the sentencing range w/an offense level of 27 and criminal history category of
1 by going to the grid
Step 10: Determine the sentence w/in the range
Step 11: The guideline sentence then becomes one factor to be considered in applying 18 U.S.C.
3553(a)

NOTES:
Base offense level, specific offense characteristics, and Chapter 3 adjustments are
determined on the basis of the following:
1) Acts and omissions of the defendant
2) Reasonably foreseeable acts and omissions of others in furtherance of jointly undertaken
criminal activity (i.e., Acts and Omissions of Accomplices)
3) All Acts and Omissions in reference to the Offense of Conviction from Preparation to Avoidance
4) Acts and omissions describe above if groupable under 3D1.2(d) and part of the same course
of conduct or common scheme or plan.
5) All harm resulting from the acts and omissions of these persons over this period of time and
all harm that was the object of those acts and omissions

62

Organizational Sentencing: Chapter 8 (Emphasize restitution and reform)

Part A: General Application Principles

o Road Map: when you want to sentence a corp., here are the steps you should take
Part B: Remedying the Harm from Criminal Conduct and Effective Compliance and Ethics
Program
o Philosophy: Restitution
Part C: Fines
o The fine is generally a function of the seriousness of the offense and the culpability of the
corporation.
Part D: Organizational Probation
o Philosophy: Reform
Effective Ethics and Compliance Program:
Basic Elements: 8B2.1(a)
o Due diligence to prevent and detect criminal conduct
o Promotion of an organizational culture that encourages ethical conduct and commitment
to compliance w/the law
Elaboration: 8B2.1(b)
Monitoring: 8B2.1(c)
Sentencing Under Chapter 8
Step 1: Use Appendix to Get Applicable Guideline for Counts
o When there are two guidelines, look at each and say which fits my facts best?
Step 2: Go to 8C2.1 to Determine Applicability
o If not applicable (ex: RICO), use general factors of 3553(a) and 3572(a)
Step 3: Determine Offense Level for Count 1
o Find Base Offense Level under Chapter 2 Guideline
o Make Specific Offense Adjustments
o NOTE: Do not apply Chapter 3 adjustments
o Get Final Base Offense Level
Step 4: Determine Offense Level for Other Counts (by repeating Step 3)
Step 5: Group Counts under Chapter 3, Part D
Step 6: Determine Base Fine under 8C2.4
o a) Greatest of the following under 8C2.4(a):
1) Table Amount
2) Pecuniary Gain
3) Pecuniary Loss
o b) 8C2.4(b): But apply any special instruction in lieu of above if an instruction exists
under the specific Guideline for that offense
Going back to Guideline: Special Instruction
o Get Base Fine
Step 7: Determine Culpability Score Under 8C2.5
o 8C2.5(a): Begin with score of 5
o Make adjustments under 8C2.5(b)-(g) (+ = add points; - = subtract points):
+ Involvement or tolerance
+ Prior history
+ Violation of order
+ Obstruction of justice
- Effective compliance and ethics program
- Self-reporting, cooperation
- Acceptance of Responsibility
Step 8: Determine Multiplier Under 8C2.6
Step 9: Determine Fine Range Under 8C2.7
Step 10: Select Fine w/in the Range 8C2.8 (Factors to consider in selecting fine w/in range)
Step 11: Take Fine and Consider other Factors in Statute
Step 12: Check Statutory Maximum: 3571(c), (d): Greatest of:
63

1) Greatest of amt specified in statute under which defendant-organization was convicted

(If convicted you will be sentenced to no more than X years and no more than X dollars)
o 2) Greater of twice gross gain or loss
o 3) $500,000 for felony
Step 13: Choose Final Fine
o

64