Bankers Get Indicted: New Crimes still require Old Approaches

February 25, 2013 by Paul Kish

More and more both here in Atlanta and around the country we see news stories about bankers getting indicted, financial professionals being accused of fraud, and other white collar criminal actions brought against people working in the financial sector. Also, in a recent post, I wrote about a federal criminal case where the indictment did not even charge a federal crime, yet none of the lawyers nor judges noticed the problems until the judges on the Court of Appeals brought up the issue after the case was on appeal. The combination of these two stories reminded me of how important it is for lawyers to carefully scrutinize the charging documents when the attorney is defending a person in the financial industry against criminal charges.

This also reminded me about a case we had a couple of years ago where we represented a young banker here in Georgia. Back when the real estate market was flying high, he was a superstar, bringing in millions of dollars in loans to developers who were fueling the Atlanta housing boom. When the market began getting soft, he was dismayed by how his bosses were treating him, so he took his book of business to another local bank. The bosses at the first bank did an "investigation", and turned over to the authorities the dirt they had supposedly uncovered on this young banker. The local District Attorney thought he'd be a star also, and could get his name in the papers by indicting a banker just as the housing market was collapsing. They accused our client of claiming in memos to the loan committee that his developer/clients were putting 10% into the deals, when in fact they were not. The DA then got an indictment that charged our client with making "false entries" in the "books reports or statements" of a financial institution.

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Long-Term Difficulties Faced By Innocent Federal Criminal Defendants, Even After Acquittal

March 24, 2010 by Kish & Lietz

Often in our business, being innocent and acquitted of a crime is not enough to remedy the harms caused by a criminal prosecution. These harms are often emotional, professional, and financial. The federal government has taken inadequate steps to alleviate the burdens that these innocent people must bear.

In 1997 Congress passed the Hyde Amendment.* This law says that when an innocent person wins against criminal charges in federal court, the defendant can sometimes get his legal bills reimbursed by the government. This is important because defending against a federal criminal case is very expensive. Lawyers who do this kind of work are often the finest in their field, and they charge fees that recognize their superior skills. The Hyde Amendment provides for the innocent person to be reimbursed only if the prosecution’s position was “frivolous” or the prosecutors acted in “bad faith.”

The recent case of J. Mark Shelnutt is a perfect example of how even the innocent must pay massive legal bills. Mr. Shelnutt is a criminal defense lawyer. Federal prosecutors love going after lawyers who do such work, and they tried to make a massive federal criminal case against Mr. Shelnutt based on the word of some drug-dealing folks whom Shelnutt had represented in the past. The federal judge threw out some of the charges and the jury acquitted Mr. Shelnutt on the remaining counts against him.

After trial, Mr. Shelnutt wanted the government to pay him back for the legal fees he had to pay to defend his case. While the judge was sympathetic, he would not order the government to do so. A Daily Report article about the judge’s ruling is here.

Mr. Shelnutt’s situation shows how dangerous it is when federal prosecutors decide to focus on someone and bring criminal charges. The truly innocent defendant suffers the toll of years of stress, heartache and damage to their professional reputation. Such an innocent man or woman also is saddled with huge legal bills, and the innocent defendant rarely gets this money back, even under the Hyde Amendment.

Our previous post on Mr. Shelnutt's money laundering case is here.

*The 1997 Hyde Amendment is unrelated to the 1976 Hyde Amendment that has recently been in the news regarding the health care debate.