The 2011 White Collar Crime Awards

One of the best blogs out there on white-collar crime is the White Collar Crime Prof Blog, and each year they put together an award for White-Collar Crime called “The Collars“.  Here are a few of my favorites for 2011 and a little background on each:

The Collar for the Gun Used Most Often in Corporate Hold-Ups – The Foreign Corrupt Practices Act (FCPA) —-  In a landmark case for the prosecution of the FCPA, U.S. prosecutors accused executives at California based Lindsey Manufacturing of paying over $5 million in bribes to officials in Mexico’s Comision Federal de Electricidad.  In May, a jury found president Keith Lindsey and finance chief Steve Lee guilty of the crime, only to have a U.S. District Judge Howard Matz throw out the decision in November by citing government misconduct including providing false information to get a search warrant, making unauthorized searches and giving incorrect testimony to a grand jury.  Had those prosecutors been mere mortals, they should have been prosecuted….ask Barry Bonds how that works.  Look for more tries on FCPA just so the U.S. can keep up with the U.K. Bribery Act which was enacted in 2011.

The Collar for the Shame on You for Doing That – Prosecutors who asked for 24 years in the Raj Rajaratnam case —- Prosecutors had asked that insider trader Raj Rajaratnam get 19-24 years in prison.  In the end, the 54 year old billionaire got 11 years and paid tens of millions in fines and restitution…not to mention the closing of the firm he co-founded, Galleon Group.  It was the longest sentence ever handed down for insider trading.  The prosecutors, as in many other cases, wanted to send a message of deterrence for those who might consider insider trading in the future.  So for all of those who do not commit a crime in the future, please be sure to send a note of “thanks” to Mr. Rajaratnam…and for those who commit insider trading in the coming year we hope the 20 years in prison you get upon being caught will deter our grandchildren from committing the same crime.

The Collar for the Most Illegitimate Prosecution – To the prosecutors who are proceeding against John Edwards —- The former Senator and presidential candidate is going to stand trial in January for misappropriation of campaign funds.  Edwards fathered a child with Rielle Hunter while he was still married and campaigning for president.  To hide the affair and child, it is alleged that Edwards diverted $1 million from his campaign fund to Hunter.  The whole thing is just ugly and now Edwards is using a defense that he is too ill to stand trial….the story of his illness was reported by the National Enquire, the same tabloid that busted his ass about the love child.  Hopefully Edwards’ prosecution will deter future presidential candidates from using donor funds to hide their illegitimate affairs and will instead encourage them to use legitimate, personal funds.

The Collar for Sentencing Sanity – To Hon. Ellen Huevelle for consistently rejecting DOJ’s draconian sentencing guidelines — If prosecutors were looking to put Rajaratnam away for 24 years, how long would they give a guy for pushing Disney on Ice tickets for political favors?  Try  22 years !  That was the request from U.S. prosecutor Nathaniel Edmonds in the case of Kevin Ring, who was found guilty for crimes associated with lobbying congressmen to get funding certain projects.  The case was before Judge Huevelle who felt the requested punishment amounted to retaliation for Ring defending himself at trial rather than pleading guilty as all of his co-defendants did, including Jack Abramoff.  Prosecutor Edmonds assure the good judge, “It’s not retaliation.”  Judge Huevelle lowered the guideline recommendation to something around 4 years then sentenced Ring to 20 months….and allowed him to remain free pending appeal.  A good runner up to this award would also have been Judge Jed Rakoff who speaks out against the Federal Sentencing Guidelines, but he has other awards he’s working on, like pissing off the SEC and Citigroup.  Look for future challenges to the guidelines, which will be used to curb prison overcrowding.

Here are a few of my own awards for 2011:

Best Excuse for Not Prosecuting – Allen Stanford for his attempt to avoid trial by feigning memory loss from a severe beating he took in prison while awaiting trial.  It was a good try.

Best Prison Sentence Offered That Was Turned Down – Michael Kimelman was offered no prison time if he pled guilty to charges related to insider trading.  Kimelman was at Incremental Capital and had a trader, Zvi Goffer, who was getting hot tips from lawyers at the law firm of Ropes & Gray.  Kimelman claimed he did not know the source of the information and wanted to clear his name at trial….which proved hard to do when codefendant Goffer was sitting at the table with him.  Both were found guilty and Goffer got 10 years, Kimelman got 30 months….both are in prison for the holidays.  Oh to have a mulligan on that one.

We will see what 2012 brings but look for more insider trading arrests, scams related to gold and maybe, just maybe, an arrest related to the MF Global debacle.

Happy New Year!!!

Posted: 12/30/2011
Walter Pavlo