Overzealous prosecution of doctor: divided court of appeals reverses the Hyde Act attorneys fees and sanctions against the prosecutors in the sad case of Dr. Ali Shaygan

August 30, 2011 by Paul Kish

A seemingly overzealous prosecution team went after a medical doctor in a federal criminal prosecution regarding supposed excessive prescriptions for pain medicines. My law partner Carl recently wrote on this same topic. The defense team uncovered the possibly improper prosecution tactics. The jury found the doctor innocent, after which the trial judge ordered that the United States pay the doctor's legal fees. What really took the case to the next level is that the trial judge issued a public reprimand of the prosecutors and referred them for potential disciplinary action. Nothing is as angry as a prosecutor's office that not only loses, but is told that its people are acting improperly. The government appealed the attorney fee ruling and the reprimand of the prosecutors. Yesterday, a divided Panel from the United States Court of Appeals for the Eleventh Circuit agreed with the government. The case is United States v. Hoffman, et. al.

The majority clearly wanted to help the prosecutors, as is shown by the opening lines in the opinion. "The stakes in this appeal are high: they involve the sovereign immunity of the United States, the constitutional separation of powers, and the civil rights and professional reputations of two federal prosecutors." Rarely does the Eleventh Circuit concern itself with "the civil rights and professional reputations" of lawyers other than prosecutors.

When litigating a motion to suppress before trial, the magistrate found (and the trial judge agreed) that the agents were not being truthful about what happened when they interrogated the doctor. Then, in the middle of trial the defense team discovered that the prosecutors had been taping conversations between witnesses and the defense lawyer. It turns out that this taping was done as part of an effort to remove the very qualified defense team. The trial judge was enraged, and allowed the defense to re-call the witnesses to the stand, with an instruction that told the jury this was being done because of the improper prosecutorial tactics.

After the jury found the doctor not guilty, the trial judge used the Hyde Act to make the government reimburse Dr. Shaygan all the legal fees he had to pay to defend against this case that was "brought vexatiously, in bad faith, or so utterly without foundation in law or fact as to be frivolous." Next, the judge held a hearing concerning the prosecutors, and took testimony from 6 witnesses. New prosecutors came in to try and minimize the damage, but the trial judge nevertheless issued an order for disciplinary action against the trial prosecutors.

The government convinced two of the three judges on the Panel to reverse both the order of attorneys fees and the disciplinary rulings against the trial prosecutors. The majority ruled that a defendant who is found not guilty can get back his or her attorney fees only if the entire case was vexatious and in bad faith from the very beginning. Additionally, the majority decided that the trial judge violated the constitutional rights of the trial prosecutors by issuing his disciplinary ruling without telling them ahead of time he was considering just such a course of action. In dissent, Judge Edmonson was also troubled by the whole case, and would have found that the order for payment of attorneys fees was proper because the trial prosecutors clearly acted in "bad faith."

This case is a perfect example of how difficult it is to defend a person against zealous federal prosecutors and agents. Fortunately for Dr. Shaygan, his defense team was up to the task.

Federal Sentencing Law in the Eleventh Circuit: United States Sentencing Commission Issues Summary of Decisions To Assist Federal Practitioners

August 29, 2011 by Carl Lietz

Lawyers that specialize in defending federal criminal cases may be interested to know that the federal sentencing commission recently released a document entitled: "Selected Post-Booker and Guideline Application Decisions for the Eleventh Circuit". According to the Commission, "[t]he document is not a substitute for reading and interpreting the actual Guidelines Manual or researching specific sentencing issues." However, those of you that practice federal criminal law in Georgia, Alabama and Florida will find the document useful, because it does contain helpful "annotations to certain Eleventh Circuit judicial opinions that involve issues related to the federal sentencing guidelines."

I reviewed the document this morning and it is a fairly comprehensive. It not only includes case annotations dealing with many of the more common guideline provisions (including fraud, internet, and immigration offenses), but it also includes several sections that involve general principles of federal sentencing law, such as burden of proof issues, the requirements for sentencing on acquitted conduct, and departures and variances.

The document can be found here and for those of you that practice in other federal circuits, links to similar documents for those other circuits can be found here.

Restitution in Federal Criminal Cases: Prove it or Lose it

August 15, 2011 by Paul Kish

The Eleventh Circuit issued an opinion today on a fraud case out of Florida involving issues related to restitution. The appellate court reversed the restitution order, ruling that the government had not adequately proved the amount of restitution, nor had the district judge calculated restitution based on specific factual findings. The case is United States v. Singletary.

Like many of the federal fraud cases we handle, Singletary involved questions of how much "loss" was involved, along with how much "restitution" could be ordered. Many lawyers forget that these are two very distinct issues. "Loss" is a calculation under the United States Sentencing Guidelines, and this figure is one of the major factors that drives the calculation of the prison sentence in a fraud case. The Guidelines tell a judge to calculate "loss" as the "greater of actual or intended loss". Additionally, the Guidelines also instruct that loss can be "estimated" when the proof is difficult to establish.

Restitution is quite different than "loss." Restitution is based on the loss the victim actually suffered. In other words, "loss" can be much higher than restitution when the defendant tried to get money but was unsuccessful.

While "loss" and restitution are distinct concepts, each figure needs to be adequately proven by the prosecutor. Furthermore, when a defendant objects to either calculation, the sentencing judge must support the ultimate "loss" or restitution number with specific factual findings.

In Singletary, the Court of Appeals confronted a case where the prosecutor used a broad-brush approach to restitution, trying to come up with an estimated figure. The sentencing judge basically agreed with the prosecutor's approach, estimating a loss of $1 million. The Eleventh Circuit reversed because the trial court "failed to carry out the task" of rendering factual findings for each and every specific loss that supported the restitution order.

This case holds lessons for lawyers who handle federal fraud cases. Remember to make the government prove both the "loss" and restitution, and when they do not, appeal the issue. It might help the client in the long run.

Eleventh Circuit Affirms Former Birmingham Mayor's Federal Conviction But Doubts About the Constitutionality of the Honest Services Statute Remain

August 10, 2011 by Carl Lietz

Last week, the Eleventh Circuit Court of Appeals affirmed the convictions of Larry Langford, the former mayor of Birmingham, Alabama who was convicted last year on various federal white collar offenses, including mail and wire fraud, bribery, money laundering, and federal tax offenses.

To me, the most interesting aspect of the opinion is the way in which the Court of Appeals discussed the honest services portion of the federal mail and wire fraud charges. As we discussed in this previous post, last summer, the Supreme Court issued its opinion in United States v. Skilling, a case which, in essence, limited the honest services provision of the federal fraud statutes to bribery and kickback schemes.

Before Skilling was decided, many (if not all) federal circuits made a distinction between honest services prosecutions that involved public officials, as opposed to those working in the private sector. At the risk of simplifying the issue too much, it was far easier for the government to prove an honest services violation against a public official. Skilling itself, however, did not distinguish between public officials and private actors, leading some to believe that after Skilling, the prosecution of both public and private officials would be governed by the same standards.

In its decision in Langford last week, though, the Eleventh Circuit appeared to recognize that the public official/private actor distinction that existed in this Circuit before Skilling still exists. According to the Eleventh Circuit: Public officials inherently owe a fiduciary duty to the public to make governmental decisions in the public’s best interest. . . . [I]n a democracy, citizens elect public officials to act for the common good. When official action is corrupted by secret bribes or kickbacks, the essence of the political contract is violated. Illicit personal gain by a government official deprives the public of its intangible right to the honest services of the official."

Well before Skilling, there was considerable disagreement among judges regarding the reach and meaning of the honest services statute in both the public and private sector. Although Skilling limited the reach of the statute to cases that involve bribery and kickbacks, it did not address the abundance of issues over which this considerable disagreement existed. Given the Eleventh Circuit's apparent decision to return to the pre-Skilling era in which a distinction exists between the standards governing the prosecution of public officials and private actors, there are many issues that should and will be litigated in this amorphous area known as "honest services" fraud. As Justice Scalia himself recognized in Skilling, even with the majority's pairing down of the statute, the honest services statute nonetheless remains unconstitutionally vague.

The full opinion in Langford can be found here.