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Last Wednesday, the Eleventh Circuit Court of Appeals, which hears appeals from Georgia, Alabama, and Florida federal cases, voted to rehear Childers v. Floyd en banc. The Court vacated a panel opinion holding that Childers’s Confrontation Clause rights had been violated when the trial court refused to allow certain credibility evidence regarding the prosecution’s star witness.

This June, an Eleventh Circuit panel majority granted Mr. Childers § 2254 habeas relief. In a previous case stemming from the same activities, in which another defendant was acquitted, the star witness gave confusing and inconsistent testimony. The trial court refused to allow the jury to hear evidence that the prosecution had unsuccessfully tried to revoke the witness’s plea deal due to those inconsistencies. The Eleventh Circuit held that this refusal was a violation of the defendant’s sixth amendment right to confront witnesses against him.

This case is an important reminder of the value of effective cross-examination and the necessity to continue litigating on behalf of clients. We will watch for the en banc decision in Childers. The vacated panel opinion is available here.

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Bruce Karatz, former CEO of KB Homes, was sentenced last Wednesday for fraud and false statements in connection with underlying stock-options backdating charges (of which he was acquitted.) He received eight months of house arrest, five years probation, $1 million in fines, and 2,000 hours of community service, the sentence recommended in the probation office’s presentence investigation report (PSR). Judge Otis D. Wright II admonished the prosecutors for their “mean-spirited” sentencing memorandum.

This New York Times article explains the backdating scandal and its results, quoting one professor who analogized it to a “corporate crime lottery.” Although backdating was a widespread practice, relatively few corporate executives have been prosecuted, and then with mixed results. The longest prison sentence given to a backdating defendant has been 2 years.

In this case, the government requested 6 years incarceration and $7.5 million in fines. In their sentencing memorandum, prosecutors argued that sentencing Mr. Karatz to home detention in his “24-room Bel-Air mansion” would suggest “a two-tiered criminal justice system, one for the affluent … and a second for ordinary citizens.” “To promote respect for the law, the public must be assured that a wealthy, well-connected individual, regardless of his station, array of prominent friends and associates, history of private success or acts of public largess, will be subject to the same standard of criminal justice as those less fortunate,” prosecutors wrote.

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As we discussed in this post last year, federal judges have increasingly spoken out against the unreasonable sentencing guidelines regarding child pornography. In the last week, the Third Circuit Court of Appeals issued its opinion in U.S. v. Grober, upholding a dramatic downward departure in a child pornography case, and a district judge in the Middle District of Florida issued an opinion in U.S. v. Irey reacting to the Eleventh Circuit’s reversal of his initial sentence in the case.

In Grober, the Court affirmed a 60-month sentence where the applicable guidelines range was 235 to 293 months. District Judge Katharine Hayden held hearings over 12 days to explore how the sentencing guidelines for child pornography offenses had gotten so harsh, eventually concluding that they are unworkable and unfair. This Tuesday, the Third Circuit held, 2-1, that the imposed sentence was not an abuse of discretion. That opinion is discussed extensively in this Legal Intelligencer article.

In recent years, the Eleventh Circuit affirmed below-guidelines sentences in child porn cases in both U.S. v. McBride and U.S. v. Gray. However, this July the Court decided Irey, an unfortunate case with incredibly disturbing underlying facts. We discussed Irey in this post, lamenting that hard facts often lead to bad law. In that case, the Eleventh Circuit reversed a 17 ½ year sentence, ordering that the defendant be sentenced to the guidelines range on remand, which was 30 years. This week, District Judge Gregory Presnell issued a lengthy opinion with his postponement of resentencing pending Supreme Court review, questioning the circuit court’s usurpation of his discretion. As Professor Berman of the Sentencing Law & Policy Blog notes here, this opinion seems to serve as a de facto amicus brief in support of an as-yet-unfiled petition for certiorari.

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Last week the Eleventh Circuit Court of Appeals issued its decision in United States v. Mateos, a Medicare fraud case in which the Court held that exclusion of an exculpatory videotape was harmless error. This case is an important reminder to all trial lawyers to remain as well-versed as possible in the law of evidence to best represent our clients.

The defendants were employees of a clinic that purported to treat HIV patients. The clinic’s two doctors saw 70 patients per week, each of which was paid to complain about bleeding disorders. Every patient received either saline or a diluted dose of an expensive and medically unnecessary drug, and then the clinic billed Medicare for full treatments. The clinic received more than $8 million from Medicare during the five months that it was open.

Doctor Alvarez’s defense at trial was that she had not known about the fraud. She tried to introduce a video in which a member of the conspiracy assured her that the clinic was not involved in fraud to show that she had not been aware, but the video was excluded as inadmissible hearsay. The Eleventh Circuit held that the video was not hearsay because it was offered for a purpose other than the truth of the matter asserted. However, the Court held that the error was harmless because the defense had elicited the exculpatory content of the video through testimony.

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Last week, the Eleventh Circuit Court of Appeals issued its opinion in U.S. v. Ranier. In contrast to many recent cases in which the Court held that certain crimes were not “violent felonies” for the purposes of the Armed Career Criminal Act (ACCA,) the Court held in Ranier that the defendant’s prior conviction in Alabama for third degree felony burglary qualified as a predicate offense.

In the wake of Begay v. U.S., in which the Supreme Court held that “violent felonies” for the purposes of the ACCA must be similar in kind and degree to the crimes expressly listed in the statute, the courts have been hammering out which crimes do and do not qualify. We have discussed several of these cases in the following posts:

Harris (second degree felony eluding police with wanton disregard for safety is a violent felony, although third degree felony willful fleeing is not – 11th Cir.)

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On Friday, the Eleventh Circuit Court of Appeals, where lawyers go when appealing a federal civil or criminal case that comes out of Georgia, Florida, or Alabama, issued its opinion in United States v. Di Pietro. Linsy Di Pietro was convicted of arranging marriages between illegal immigrants and U.S. citizens to help the immigrants obtain permanent legal status. The Court affirmed the district court’s refusal to dismiss the indictment on vagueness and preemption grounds.

Vagueness Ms. Di Pietro was convicted of aiding and abetting violations of 8 U.S.C. § 1325(c). That federal statute prohibits marriage fraud: knowingly entering “into a marriage for the purpose of evading any provision of the immigration laws.” She argued that, although the statute clearly prohibited her conduct, it is void for vagueness as applied to others. She further argued that the statute implicates the right to marry, and hence the First Amendment, requiring a heightened vagueness standard. The Court rejected her vagueness challenge because “a plaintiff who engages in some conduct that is clearly proscribed cannot complain of the vagueness of the law as applied to others.” There is no exception for vagueness challenges implicating the First Amendment.

Preemption In what the Court called a “novel” argument, Ms. Di Pietro also asserted that Florida’s marriage laws, which she said allow such marriages of convenience, preempted the federal statute. Preemption is based upon the Supremacy Clause, providing a basis for invalidating state or local laws when they conflict with laws of the United States. Ms. Di Pietro’s argument “turn[ed] the Supremacy Clause on its head.” State laws cannot trump federal laws, so preemption “does Ms. Di Pietro no good.”

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Last week, the Eleventh Circuit Court of Appeals issued its opinion in United States v. Kottwitz. This opinion is important because it explains in detail when a trial court must instruct the jury on good faith reliance on the advice of his advisor. The Court also addressed the sufficiency of the evidence on defendants’ Klein conspiracy and tax fraud and evasion charges.

In holding that the trial court had abused its discretion in refusing to give the good faith reliance instruction, the Court thoroughly reviewed the law regarding such instructions. The instruction is designed to refute the government’s proof of the defendant’s intent. “The defendant bears an ‘extremely low’ threshold to justify the good faith reliance instruction and does not need to prove good faith.”

White-collar criminal defense attorneys often deal with good faith reliance issues and should keep Kottwitz in mind when arguing for such an instruction. The “good faith” defense is often the single most important issue when prosecutors go after a person based on what he or she did in the business context. A person who acts in good faith cannot be guilty where he or she did not intend to break the law. The lawyers in this case struggled to get this concept across to the jury, but were thwarted in their efforts when the trial judge took a different view of the appropriate instruction for the jury.

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Last week, the Eleventh Circuit Court of Appeals, which sits here in Atlanta, Georgia, issued its opinion in U.S. v. Garcia-Cordero. The Court held that the federal immigration law that requires persons transporting international passengers to “bring and present” those passengers to immigration officers does not violate the Fifth Amendment privilege against self-incrimination as applied to criminal defendants who smuggle aliens into the United States.

The federal immigration statute at 8 U.S.C. § 1324 criminalizes bringing illegal immigrants to the United States and provides an increased penalty for failure to “bring and present” the alien to an immigration officer at a designated port of entry. The Court held that, because the immigration laws are more regulatory than criminal, and because the statute applies to all persons transporting all aliens (rather than only those without prior authorization to enter,) the statute “does not target a highly selective group inherently suspect of criminal activities.” Thus, the statute is a part of a regulatory regime, against which the Fifth Amendment privilege may not be asserted.

The Court’s opinion is available here.

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In this post last week, we announced the Supreme Court’s decision in Skilling v. U.S. The Court held that 18 U.S.C. § 1346, the honest services law that the government has been using to prosecute nearly everything as a federal crime, applies only to bribery and kickback schemes.

The honest services fraud statute simply defines “scheme or artifice to defraud” as used in the mail- and wire fraud statutes to “include a scheme or artifice to deprive another of the intangible right of honest services.” Congress enacted this statute quickly after the Supreme Court, in McNally, held that the fraud statutes were “limited in scope to the protection of property rights.” Congress intended to incorporate pre-McNally case law that had recognized fiduciary duties as intangible rights to honest services and a breach of those duties as fraud.

The majority’s rationale for limiting the honest services fraud statute to only bribes and kickbacks was that such cases constituted the “core” of pre-McNally honest services fraud cases and that statutes should be construed, where possible, rather than invalidated. Because, the Court said, circuit conflicts and disagreements regarding honest services fraud cases were primarily outside the bribery and kickback scheme cases, limiting the application of the statute to those cases would avoid vagueness troubles.

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Last week, the Department of Justice announced a new nationwide mortgage fraud initiative named “Operation Stolen Dreams.” Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia here in Atlanta, issued an immediate press release to show local federal law enforcement’s commitment to investigating and prosecuting mortgage fraud.

So far, the U.S. Attorney’s Office in this district has brought the following types of criminal charges in mortgage fraud cases:

In relation to the collapse of banks:

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