Honest Services Fraud Back in the Spotlight with “Operation Varsity Blues”

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with Stanley L. Garnett, a Shareholder in the firm’s Denver, CO office.

The charges federal prosecutors have filed in the “Operation Varsity Blues” college-admissions corruption scandal have thrust the federal crime of honest services fraud back into the spotlight.  Over the past two or three decades, this section of the federal criminal code has been the subject of much controversy.  Although the facts alleged in the various Operation Varsity Blues charging documents are unseemly, at best, and the evidence seems overwhelming, the government’s reliance on the honest services fraud statute is likely to renew the debate in white collar defense circles about what exactly the statute means and whether it is appropriately applied to private-sector actors. Continue reading “Honest Services Fraud Back in the Spotlight with “Operation Varsity Blues””

Update: Pre-Approval Requirements Announced for Federal Wire Act Prosecutions

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office.

We recently posted about the Department of Justice’s new take on what the federal Wire Act says and does not say, and noted the Deputy Attorney General’s issuance of a memorandum instructing Department prosecutors to refrain from applying OLC’s new interpretation in criminal or civil actions until April 15, 2019.  As a next step toward clarifying its Wire Act enforcement policy going forward, DOJ has announced an update to the Justice Manual (formerly known as the U.S. Attorneys Manual) to include a new provision requiring federal prosecutors in the 93 U.S. Attorneys offices to obtain Main Justice approval before initiating any criminal prosecution under the Wire Act (18 U.S.C. § 1984).  The new requirement is found in the Justice Manual at new § 9-110.901, and provides as follows:

No criminal prosecution under 18 U.S.C. § 1084 shall be initiated by indictment, information, or complaint without the prior approval of the Organized Crime and Gang Section (OCGS). All requests for approval must be submitted at least 7 days in advance and accompanied by a prosecution memorandum and final proposed indictment, information, or complaint.

This new policy suggests an intent on the part of DOJ leadership to take a measured, deliberate, and consistent approach to Wire Act prosecutions.

Moreover, it is likely that before the Department approves any such prosecutions, it will wait to see the outcome of two federal lawsuits now pending in New Hampshire.  In one of those cases, the company that provides New Hampshire’s state lottery platform is seeking a declaration from the federal district court that the Wire Act prohibits only sports-betting-related activities.  The complaint in that case alleges that the reasoning of the new OLC opinion is “deeply flawed” and contradicts the holdings of two separate federal courts of appeals.  Specifically, the complaint argues that OLC “ignored key structural features of the statute, all of which indicate a limited scope,” and “neglected the substantial legislative history of the Wire Act, all of which points to a narrow understanding and purpose of the Act.”

This all makes for a fascinating case study in the intersection of legislative intent, statutory interpretation, and prosecutorial discretion.  Stay tuned.

Justice Department Revisits the Wire Act but Stays Enforcement, for Now

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office.

On January 14, 2019, the Department of Justice quietly released a new Office of Legal Counsel (OLC) opinion that sent shockwaves through the internet gambling industry. The opinion purports to reverse OLC’s longstanding interpretation of the federal Wire Act, clarifying that the law applies to all forms of wagering activity that crosses state lines, not just sports betting. The Deputy Attorney General quickly followed up this surprising development with a memorandum directing federal prosecutors to refrain from applying this new interpretation in criminal or civil actions for a period of 90 days. Continue reading “Justice Department Revisits the Wire Act but Stays Enforcement, for Now”

DOJ Updates Justice Manual to Formalize Guidance about Guidance

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office.

Back in November 2017, then Attorney General Jeff Sessions issued a memorandum entitled “Prohibition on Improper Guidance Documents.”  This Sessions Memo included guidance concerning DOJ’s issuance of guidance that has not gone through the formal rulemaking process.  The Sessions Memo essentially provided that DOJ components may not use guidance documents to create legally binding requirements.  The point was to prohibit agencies from, in effect, creating de facto regulations outside of the formal rulemaking process.

Subsequently, in January 2018, then Associate Attorney General Rachel Brand issued a memorandum acknowledging the Sessions Memo as a “Guidance Policy,” and more specifically directing that Department litigators follow this Guidance Policy in determining the legal relevance of both DOJ and other agencies’ guidance documents in affirmative civil enforcement matters. Continue reading “DOJ Updates Justice Manual to Formalize Guidance about Guidance”

Congressional Investigations and the Attorney-Client Privilege

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with Emily R. Garnett, an Associate in the firm’s Denver, CO office.

As Democrats assume control over the U.S. House of Representatives for the next Congress, many insiders anticipate an increase in congressional oversight investigations. Although much of the focus will be directed at the Trump administration itself, certain industries are also likely to be targeted, including health care, energy, financial services, pharmaceuticals, technology, and for-profit higher education, to name just a few. For many targets of this oversight activity, this will be their first foray into the unique world of congressional investigations where some of the usual rules don’t really apply.

Although it may look a lot like discovery in civil litigation, there are significant differences between litigating a lawsuit and responding to a congressional investigation. Unlike ordinary civil litigation, in a congressional investigation, the rules of evidence, the rules of procedure, and even common-law privileges don’t really apply, meaning that Congress does not even necessarily recognize an otherwise valid assertion of the attorney-client privilege in response to a request for documents or witness testimony. This reality can be of critical importance to a company that finds itself on the receiving end of a congressional subpoena. Continue reading “Congressional Investigations and the Attorney-Client Privilege”

DOJ Modifies Policy on Credit for Cooperation by Corporate Employees

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office.

Following an internal review of the Department of Justice’s policy concerning individual accountability in corporate cases, Deputy Attorney General Rod Rosenstein recently announced significant changes to the policy. Under the new policy, DOJ will treat civil cases differently than criminal cases when evaluating a corporation’s cooperation in an investigation. This change is a modification of the 2015 policy memo issued by then-Deputy Attorney General Sally Yates that required DOJ lawyers to investigate any individuals responsible for illegal corporate conduct before settling a case. The modified policy restores the discretion of DOJ attorneys in civil cases to approve settlements without investigating every individual corporate employee who might potentially be responsible for the illegal conduct. Continue reading “DOJ Modifies Policy on Credit for Cooperation by Corporate Employees”

DOJ Expands FCPA-Violation Self-Disclosure Incentive to the Health Care Industry

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with Erin M. Eiselein, a Shareholder in the firm’s Denver, CO office.

It has been a busy few months for the Fraud Section of the Department of Justice (“DOJ”) as the section continues its road show to educate the health care community on its recent Foreign Corrupt Practices Act (“FCPA”) guidance. As has been widely reported, DOJ announced a new policy (which took effect immediately) of applying its FCPA Corporate Enforcement Policy to health care companies. DOJ has focused considerable enforcement resources lately on health care companies’ alleged payment of bribes to foreign officials. Continue reading “DOJ Expands FCPA-Violation Self-Disclosure Incentive to the Health Care Industry”