The United States Court of Appeals for the Eleventh Circuit, which sits several blocks from our offices here in Atlanta, reversed some of the convictions in a federal fraud prosecution that were brought against a defendant in Alabama. The reversal of some of the charges was because the indictment failed to allege the necessary facts for one type of federal fraud. This issue about what is needed in federal fraud indictments arises in many such cases we handle. It is refreshing to see the court make prosecutors indict such cases correctly, or else face the consequences.

The case is United States v. Suzanne Schmitz, and it was published on March 4, 2011. We have gotten a little behind in our blogging here, and over the next couple of weeks we will try to catch up by posting some entries from earlier this year.

In the Schmitz case, the defendant was charged with two varieties of fraud, mail fraud and fraud involving a program that received federal funds. The mail fraud charges were OK, appropriately setting out facts to support what we call the “scheme to defraud.” However, the counts alleging that Ms. Schmitz defrauded a program that got some money from federal funds fared less well. These charges merely alleged that she worked for the program, that she got her salary each year by engaging in fraud, and that such conduct violated the specific law in question.

Michael Diaz was charged with armed robbery and gun offenses nearly seven years ago. Since the age of 13, he has “changed identities” five times and has been diagnosed with schizophrenia and psychosis. He represented himself during a bench trial in 2006, but the Eleventh Circuit vacated his convictions, holding that he had not knowingly waived his right to a jury trial. He refused treatment for his mental illness and was found incompetent to stand re-trial.

In 2003, the Supreme Court addressed involuntarily medicating criminal defendants for the sole purpose of rendering them competent to stand trial in Sell v. U.S. Last week in Diaz, the Eleventh Circuit explained:

Sell laid out these four standards the government must satisfy for involuntary medication to render a defendant competent to stand trial: (1) important government interests must be at stake, (2) involuntary medication must significantly further the state interests in assuring a fair and timely trial, (3) involuntary medication must be necessary to further the state interests, and (4) administration of the medication must be “medically appropriate, i.e., in the patient’s best medical interest in light of his medical condition.”

Last Monday, the Eleventh Circuit Court of Appeals decided United States v. Gowdy, an unbelievable case in which the Eleventh Circuit joined several other circuits in holding that one need not actually be in federal custody to escape from federal custody under 18 U.S.C. § 751(a).

Gowdy was convicted in the Northern District of Alabama for federal drug crimes, and then turned over to the state of Mississippi. Mississippi lost the federal detainer against Gowdy and then turned him over to the state of Alabama to face charges pending there. Alabama, never having received the federal detainer, released Gowdy when he completed his sentence there. When federal authorities discovered the mistake, they issued a warrant for Gowdy’s arrest. He agreed to turn himself in after making arrangements for the care of his daughter, but never did so.

Gowdy was charged with escape from federal custody. He was convicted on the theory of constructive custody – that he was in custody under his federal conviction, despite his mistaken release. The Eleventh Circuit agreed, holding “that the custodial requirement of § 751(a) is satisfied where a lawful judgment of conviction has been issued by a court against the defendant… [T]here is no additional requirement that the defendant be physically confined in an institution at the time of the escape.”

In this post in August, we reported that the Eleventh Circuit had held that a trial court abused its discretion in failing to instruct the jury on good faith reliance. In that opinion, the Court vacated convictions on three counts, but affirmed a conspiracy conviction. Last week, in United States v. Kottwitz, the Court decided on rehearing that the “[d]efendants introduced enough circumstantial evidence to warrant an instruction that — at some pertinent point –[they] may have relied on the accountant’s advice” on the conspiracy count, as well.

Good faith defenses are often significant in white-collar criminal cases. As we have lamented, the government continues to prosecute people on the basis of business decisions that are not intended to break the law. It is imminently important for defense lawyers to convey to the jury that a person acting in good faith cannot be guilty.

To receive a jury instruction in the Eleventh Circuit, a defendant need only show “any foundation in the evidence.” The first Kottwitz opinion, which is still good law inasmuch as it is consistent with this most recent opinion, provides a detailed explanation of when the trial court must instruct the jury on good faith reliance.

Ed. Note: On November 1, the U.S. Sentencing Commission’s 2010 Amendments to the federal Sentencing Guidelines went into effect, along with a temporary, emergency amendment to implement Section 8 of the Fair Sentencing Act. On the whole, the amendments reflect a reduction in federal criminal sentences and provide the sentencing judge with additional discretion. We have been posting analyses of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2010 amendments is available here.

In this post in August, we summarized the impact of the Fair Sentencing Act of 2010, which reduces the disparity between criminal sentences for crack and powder cocaine from 100-to-1 to 18-to-1 and eliminates the mandatory minimum five-year sentence for simple possession of crack cocaine. The Act also provides for higher sentencing guidelines for all drugs in some cases. This amendment brings about the changes made by the Act.

Specifically, the emergency amendment makes the following changes to the Sentencing Guidelines to implement the Fair Sentencing Act:

The Ninth Circuit Court of Appeals issued its opinion in U.S. v. Goyal on December 10th. The case involved the former CFO of Network Associates, Inc., which is better known by its previous name, McAfee. Mr. Goyal was charged in 15 counts with securities fraud, false filings with the SEC, and lying to auditors. The Ninth Circuit held that the government failed to prove materiality on the securities counts and scienter on the lying-to-auditors counts and, thus, reversed the convictions on all counts.

The concurring opinion by Chief Judge Kozinski eloquently describes the reality of many white-collar criminal prosecutions that we see in our federal defense practice. All too often, federal prosecutors go after defendants in prosecutions that would more appropriately be located on the civil docket.

The full opinion in Goyal is available here, but the Chief Judge’s concurrence is worth reprinting in full:

Ed. Note: On November 1, the U.S. Sentencing Commission’s 2010 Amendments to the federal Sentencing Guidelines went into effect, along with a temporary, emergency amendment to implement Section 8 of the Fair Sentencing Act. On the whole, the amendments reflect a reduction in federal criminal sentences and provide the sentencing judge with additional discretion. We have been posting analyses of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2010 amendments is available here.

This amendment clarifies the remediation efforts required for effective compliance and ethics programs used by organizations. The Guidelines now suggest that defendant organizations should provide restitution and other forms of remediation, self-report, and cooperate with authorities. The organization should also ensure the program is effective, perhaps by including the use of an outside professional advisor.

The amendment also creates a limited exception to the general prohibition against applying a 3-level decrease for having a program when high-level personnel are involved in the offense. The organization may receive the decrease if:

Last week, the Eleventh Circuit Court of Appeals decided United States v. Williams. The Court held that the sentencing judge clearly erred in granting a reduction for acceptance of responsibility and denying an enhancement for obstruction of justice because Mr. Williams testified to his factual innocence at trial after withdrawing his guilty plea.

Following a car chase in Atlanta, Georgia that culminated with Mr. Williams receiving a gun shot to an eye, Williams was charged with assaulting three federal marshals. Williams entered a guilty plea, but withdrew it due to the potential sentence. He then testified at trial that he hadn’t known his pursuers in unmarked vehicles were law enforcement officers.

The sentencing judge relied on a presentence report that recommended he receive three points off for acceptance of responsibility. She explained, “I think particularly in this case where he was shot, his ability to have his own trial and tell his story was important. I mean, I consider that an important part of my job, is to provide trials to people who have a story that legitimately needs telling.” Explaining that she would not punish Mr. Williams for exercising his constitutional right to trial, she awarded two points off for acceptance of responsibility. The Eleventh Circuit held that it was “erroneous to award a reduction for acceptance of responsibility when a defendant denies guilt in the face of evidence to the contrary” and Mr. Williams had done exactly that by “admitt[ing] he was guilty initially, but withdr[awing] his plea” and then testifying to his innocence “despite overwhelming evidence to the contrary.”

Ed. Note: On November 1, the U.S. Sentencing Commission’s 2010 Amendments to the federal Sentencing Guidelines went into effect, along with a temporary, emergency amendment to implement Section 8 of the Fair Sentencing Act. On the whole, the amendments reflect a reduction in federal criminal sentences and provide the sentencing judge with additional discretion. We are posting analyses of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2010 amendments is available here.

This amendment responds to the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act. The Act created a new offense at 18 U.S.C. § 249 for injuring any person because of actual or perceived race, color, religion, national origin, gender, sexual orientation, gender identity, or disability. That offense is now referred to §2H1.1 (Offenses Involving Individual Rights). It also broadened the definition of “hate crime” to include crimes motivated by actual or perceived “gender identity.” §3A1.1 (Hate Crime Motivation or Vulnerable Victim) gained an application note to account for the expanded definition.

The Act created a second new offense at 18 U.S.C. § 1389, prohibiting attacks on members of the military, which is now referred to §§2A2.2 (Aggravated Assault), 2A2.3 (Minor Assault), and 2B1.1 (Theft, Property Destruction, and Fraud).

Last week, the Eleventh Circuit Court of Appeals decided United States v. Forey-Quintero. The Court held that Mr. Forey-Quintero, whose mother became a naturalized U.S. citizen while he was a minor, did not obtain derivative citizenship because he was not a lawful permanent resident before he turned 18.

Mr. Forey-Quintero came to the U.S. on a border crossing card when he was three years old. When he was 9, his mother filed a Petition for Alien Relative for him, but he was accidentally placed on the wrong list for obtaining a visa. When he was 16, his mother was naturalized and he applied for a visa. His application was approved 20 days after his 19th birthday. As such, he resided here permanently as a minor, but was not a “lawful permanent resident.”

Mr. Forey-Quintero later was kicked out of the country, and when he returned to be with his family he was charged with being found in the United States after removal. His attorney, Millie Dunn at the Federal Defenders Program for the Northern District of Georgia, argued that he was a citizen under the derivative citizenship statute. Before 2001, derivative citizenship was governed by Section 321(a) of the Immigration and Nationality Act (INA), which provided that a “child born outside of the United States of alien parents” automatically became a citizen upon the naturalization of the parent having legal custody if the child is or “begins to reside permanently in the United States while under the age of eighteen years.”