More From Eric Dixon at http://www.NYBusinessCounsel.com

Twitter Rank #35 For Startup Advice May 2014 (#44 June 2014, #50 July 2014 -- now TRENDING UP at #41 for August 2014). Go to my professional site for solutions to your legal, business and strategic problems. Bitcoin Protocol Development -- Among the World's Legal Leaders in New Bitcoin Technology -- Top Strategic Judgment -- When You Need A Fixer -- Explore Information Protection and Cryptographic Security -- MUST-WIN: JUST DON'T LOSE -- SURVIVE!: Under Investigation? Being Sued? Handling Extreme Stress -- Corporate Issues -- Startup Issues -- Investor Issues -- Contracts To Meet Your Needs -- Opposition Research -- Trademark, Patent, Copyright -- Media and Reputation Issues -- Independent, top-notch legal, strategic and personal advice -- Extensive ghostwriting, speechwriting, book writing, issue research, press and crisis management services. Listed among the American Bar Association's Law Bloggers (Blawgers). Contact EDixon@NYBusinessCounsel.com 917-696-2442.

Saturday, July 30, 2011

Convicted Sky Capital Defendants Face Life in Prison

The Sky Capital defendants, Ross Mandell and Adam Harrington, face life sentences as the government is requesting, after being found guilty earlier this week by a Manhattan federal jury.

The government's position on sentencing is contained in its post-trial motion to "remand" both Mandell and Harrington -- meaning to revoke their bail and have them confined pending a sentencing which the government is pushing to have occur as quickly as possible -- on the grounds that they are flight risks. (For the link, a PACER subscription, very inexpensive, is required and is worthwhile.)

The government contends that a sentence to be imposed under the advisory Federal Sentencing Guidelines range would, because of the monetary amount of the claimed fraud ($140 million), approximate a life sentence for the 54-year-old Mandell and 41-year-old Harrington.  Indeed, the government's motion states that the expected sentences will "effectively lead to them spending the majority of the rest of their lives in prison."

Meanwhile, defense motions for a new trial and judgment of acquittal should be forthcoming during August.  These motions are very rarely granted.

 

Friday, July 29, 2011

Tea Party: Most Dominant Political Force in America

America's numerous Tea Party organizations and the representatives in Congress who share its basic fiscal-responsibility principles have shown they are the most dominant political force in America outside the Beltway, forcing House Speaker John Boehner to delay a vote in that chamber on his proposed bill to lift the debt ceiling and stop the risk of the nation defaulting on its obligations. 

Months after some commentators called its demise, the Tea Party movement has had its finest moment since spontaneously arising in the winter and early spring of 2009.   It has demonstrated its potency like the 2010 midterm elections did not, as Tea Party activists and their adherents in Congress pushed the federal government to the brink of a shutdown in order to impose fiscal responsibility and stop the growth of a runaway national debt standing now at approximately $14.3 trillion.  The Tea Party also demonstrated its independence when it confronted, opposed and rankled the Republican establishment, thereby driving the agenda as well as demonstrating that the Republican party label means next to nothing to activists who have long chafed at Republican Party organizations dominated by the RINOs -- Republicans In Name Only.   This independence does not isolate the Tea Party, but enhances its stature and power.  Now the Tea Party will not -- it dare not -- be taken for granted by any politician and certainly not any Republican.  

Eric Dixon is a New York election lawyer, political strategist and crisis management consultant.  Mr. Dixon is legal counsel to several political party organizations and "Tea Party" organizations on ballot access, election vote integrity and other issues. Mr. Dixon can be reached for consultation or comment at edixon@NYBusinessCounsel.com.


  

Thursday, July 28, 2011

Ex-Yankee Hideki Irabu Dead; Suicide Suspected

The New York Post reports (http://www.nypost.com) that former Yankees pitcher Hideki Irabu was found dead in California today.

Police suspect this is a suicide. Irabu was 42.

Irabu pitched for the Yankees between 1997 and 1999 and later for the Montreal Expos. Irabu once was called a "fat pussy toad" by legendary and notorious Yankee owner George Steinbrenner.

More to come...


Eric Dixon
Eric Dixon LLC
World-Class Strategic Analysis
917-696-2442

Wednesday, July 27, 2011

FBI Resisting Recording Witnesses

[Originally published July 27, 2011 and now updated May 23, 2014.]

[Update: The Justice Department announced on May 22, 2014 that it will now require the videotaping of interrogations of suspects in most instances. However, the policy does not close off the prosecutors' easy way to avoid getting evidence which might exonerate or exculpate a witness or make it difficult or impossible to build a case or threaten that witness: just avoid interviewing the witness at all.  That is exactly what Eric Dixon went through several years ago, when in response to prosecutors' threats he offered to answer any questions prosecutors might have had, with only one condition -- that the session be videotaped.  Not surprisingly, the offer to answer questions, to sit for an interview, was declined.  Read Eric Dixon's account here.

If the FBI wants to talk to you, they may be setting a trap for you where you walk into the interview totally innocent, and are totally vulnerable to being charged with a crime afterwards, no matter what you say.

That is the message of an excellent article today by Forbes blogger Harvey Silverglate (author of "Three Felonies a Day: How The Feds Target The Innocent") on the FBI policy AGAINST recording interviews of targets and subjects (that is, potential witnesses and defendants) of investigations.

[See  of federal prosecutors being suspiciously hesitant to ask any questions when the one condition of a videotaped session was imposed.]



One would think that an agency committed to upholding the law and fighting (and deterring) serious federal crime would have the institutional confidence to allow interviews to be tape-recorded or video-recorded.  After all, if the subject of the interview is willing to be recorded, what's the problem, right?  A recording ensures accuracy and minimizes the potential for misunderstanding, misrepresentation and outright misconduct, doesn't it?

The implication of Silverglate's very effective piece is that these functions are exactly the problem, that the FBI very much wants to avoid recordings of interviews in order to compel reliance on written reports, produced by none other than the FBI, as the best -- and only -- documentary evidence of what was and was not said in that interview.

Silverglate effectively points out that a witness who talks unrecorded can be subject to either a perjury or false statements charge. The latter charge, one might recall, tripped up Martha Stewart.

If the person being interviewed has the confidence to be held to what he or she said on tape, what is the government's problem, right?  By extension, if the government is confident in its information, or "case," and in the integrity of both its procedures and personnel, what then remains the problem with a recording?

The message one must recognize is this:  Trust the FBI to accurately portray anything you say, and you do so at the risk of losing your freedom due to the credibility automatically imputed by many if not most jurors towards anyone wearing a uniform or badge. 

For civilians, of course, not talking, or insisting on a recorded interview and declining to talk under any other circumstances, is a safer, more prudent and, in all fairness, essential course of action.  This approach, which should only be considered by those who sincerely believe in both their innocence and the open-mindedness of the investigators to consider the possibility of one's actual, factual innocence (and furthermore, still believe such after relying on the advice of trusted, experienced counsel).


The bottom line:  Any conversation you have with any federal employee -- FBI agent or not -- places you at risk of criminal prosecution.  (You need refer only to the small print sentence about Section 1001 of the United States Code, Title 42 on most federal agency forms and applications.)  Your risk may depend considerably, if not entirely, on the honesty and integrity of the agent or employee you encounter.  If you have someone who's tired, doesn't remember accurately, or is willing to embellish, misrepresent or flat-out lie, you could risk going to jail without having done anything wrong.

Without a tape-recording of what you actually said, it's much easier for the FBI to prosecute you by simply using its 302 to claim you said something -- that you never said.

And this malevolent strategy is useful only when the FBI cannot prove you've done anything wrong -- or when you're totally innocent.  When there's real evidence of wrongdoing, that should remove any temptation to manufacture a crime. 

Think about this the next time you want to report suspected wrongdoing.  The friendly interview you have, when you think you are doing the right thing, may actually be a spider web designed to trap and catch the unwary in arguably false or contradictory statements or omissions.  You walk in innocent and leave guilty.  Now how's that for deterring crime?   

But there's yet another issue to worry about.  Silverglate also warns about the danger of coercing false testimony from cooperating witnesses. The crux of Silverglate's warning is summed up in this passage from his article (linked above from Forbes):


So what happens when the sole arbiter of what a witness says in an FBI interview is the 302 Report written by an FBI agent? If that witness should later be compelled to testify at a grand jury proceeding (leading to an indictment of the target of the investigation) or at the trial itself, he is under tremendous pressure to testify consistently with what the 302 report claims he told the agents when interviewed. Should a witness give testimony that is in conflict with the 302 report, he opens himself up to a felony conviction –either he had lied to the FBI in his initial interview, or he is lying to the grand jury or the court (or the congressional committee) in his testimony. Either way, he remains stuck between the Scylla of perjury and the Charybdis of a false-statements charge. Few question the veracity of the 302 report; after all, who will a jury more likely believe, a single witness or two upstanding FBI agents swearing that what they wrote in their 302 report accurately represents what the witness said when interviewed? When the feds suspect that a witness might tell a tale at the grand jury or at trial that is inconsistent with the prosecution’s favored factual scenario, the prosecutors will usually show him or his lawyer the 302 report. It becomes clear to the witness that he either must stick to the 302 version, or else risk a false statement or perjury charge when he testifies differently under oath.
This little known but quite ubiquitous system is one of the reasons that Harvard Law professor Alan Dershowitz coined his oft-quoted aphorism that federal prosecutors and FBI agents teach witnesses “not only how to sing, but how to compose.”
The article contains several useful links, which I reproduce here for your reference.
1.  Silverglate on the professional ambition fueling prosecutors, and the "revolving door" between the Department of Justice and the private white-collar defense bar.

2.  An internal FBI memo, obtained by the New York Times, on establishing procedures for when to record interviews.

Very worthwhile reading. I actually recommend bookmarking this.

Eric Dixon is a New York lawyer who investigates complex matters in a variety of fields.  He is available for comment or consultation at edixon@NYBusinessCounsel.com.

Deficits, Defaults and the "Tea Party"

There is a provocative commentary this morning by Gary Shapiro of Forbes.com on the problem between choosing to address the exploding deficit and the need to get the economy "back on track.". Link to it at http://blogs.forbes.com/garyshapiro/2011/07/27/why-the-tea-party-is-right-and-wrong.


Eric Dixon
Eric Dixon LLC
World-Class Strategic Analysis
917-696-2442

Urging Yes on Islanders Referendum, With Hesitation

The Nassau County referendum next Monday August 1st to approve bond financing for a new Nassau Coliseum, considered necessary to keep the New York Islanders in Nassau County (or for that matter, in the New York City area altogether) deserves a "yes" vote despite obvious flaws in a yet-to-be-completed agreement.

The current deal puts taxpayers at risk of having to cover revenue shortfalls if the new arena fails to generate the amount of revenue currently anticipated.  I hope that issue can be better resolved -- whether at the negotiating table or through the efforts of the Nassau Interim Finance Agency which still must approve the deal, referendum or no, for the deeply financially distressed Nassau County.  

Vote yes, and here is why.  A "no" vote means the Islanders start preparing to leave Nassau and possibly, the tri-state metropolitan area.  A "yes" vote preserves the options for negotiations and legislative action to finally, ultimately protect taxpayers.

Eric Dixon is a New York lawyer with substantial experience negotiating complex financial transactions.  He is also a former Islanders season-ticket holder.  Mr. Dixon may be reached for consultation or comment at 917-696-2442 and edixon@NYBusinessCounsel.com.

Tuesday, July 26, 2011

Guilty Verdicts in Sky Capital Case

The founder and one stockbroker of the international brokerage firm Sky Capital were found guilty on all counts by a Manhattan federal jury after a little more than two days of deliberations, capping off an arduous five-week trial that was as boring as it was long.

An appeal is a virtual certainty. (Update: Jeffrey Hoffman, attorney for Sky Capital founder and self-proclaimed "bad boy" Ross Mandell, vowed an appeal.  Michael Bachner, attorney for stockbroker Adam Harrington, also indicated an appeal would be at least considered.)  Unlike a trial which examines facts introduced (or allowed to be introduced) into evidence, the appeal can get into thornier, meatier (and more intellectual) questions of the propriety of the trial judge's rulings (both before and during the trial) on evidence, objections and other matters.

The verdict is troubling on several levels. First, it is a victory for some very credibility-challenged witnesses. In addition to some admittedly drug-addled former stockbrokers, this trial featured prosecution witness testimony from a motley crew of curious witnesses including a mulch-farmer--possibly-turned-professional-informant, Mark Halper, with a coincidental knack for getting shaken down by New Jersey politicial fundraisers (as if that were unusual) and shady brokerages (he was a customer of the infamous Stratton Oakmont in the mid 1990s).  The federal government really should make efforts to find and use more credible witnesses, even if they are cooperating and agreed to plead guilty.

Second, portions of this trial advanced government arguments that made fraud indistinguishable from the benign and entirely legal practice of raising capital. A consulting agreement was raised as a sign of nefarious, fraudulent activity to cover up a "crime." The government may be further emboldened by this verdict to "create" new crimes by combining its power to declare an activity -- or document -- as criminal and using its projected credibility as the team with "white hats" and "badges" to make that label stick.

The risk of entirely legal business activities being accused by the government of being, and found by a jury to be, illegal has increased significantly.

This verdict represents an executive branch victory (it contains the Justice Department) in determining what is legal, thus usurping the traditional lawmaking role of Congress. Executive branch rulemaking has thus won another battle today.

Thirdly and finally, the question of whether the government did meet its burden of proof -- proving guilt beyond a reasonable doubt -- should be addressed.  The common mistake of observers is to use the equivalent of the "preponderance of the evidence" -- in other words, it was more likely than not that these men were guilty as charged.  While each side gets to argue the standard, and the judge gives instructions (and boy, will those instructions be scrutinized on appeal!), the task is to impress upon exhausted and bored jurors the need to use the proper, intended standard of proof.  Guilt beyond a reasonable doubt is hardly the same as a "probably" standard.  In fact, in this case where a "smoking gun" was nowhere to be found (and if it was there it was so hot and boring that one may not have noticed), the intellectual (or pseudo-scholarly) outlook was that the government failed to meet its standard of proof. 

Perhaps one holding this opinion was disappointed -- dismayed -- that the government seemed to put on a questionable and somewhat surprisingly weak case (well, to paraphrase Donald Rumsfeld, you work with what you do have, not what you wish you had), yet the jury came back in a relative hurry, reaching verdict in little more than two full days of deliberations. 

What's Next?  After today's verdict, the defendants now address immediate concerns of getting released on bail pending the almost certain appeal. The government may seek civil forfeiture of assets using the verdict. Sentencing now becomes an issue; one critical issue will be the dollar amount of the fraud as this will drive the Probation Department's sentencing recommendations for both men. The battles are not over, but the focus may shift to minimizing the damage.

Finally, both men need to start preparing for life in prison. (If anyone out there is in a similar situation or has a loved one facing jail, I also work with a former-inmate-turned-prison-consultant.). The Sentencing Guidelines are not kind to unsuccessful defendants who dare to assert their innocence and put the government to meet its burden of proof at trial. 

Prison and the specter of near-permanent separation from family awaits Mandell and Harrington unless appeals are successful.  This is a life-altering, catastrophic personal defeat that will profoundly and permanently affect these defendants and their families should the ultimate sentence be more than a few years.  Whatever you think of their culpability, or whether it was in fact proven beyond a reasonable doubt, the personal impact should be recognized as extreme.

Stay tuned to this website (and to Walt Pavlo's excellent blog available at http://www.forbes.com/walterpavlo) for  further analysis.

Eric Dixon is a New York lawyer who comments on various legal, economic and policy matters.

Sunday, July 24, 2011

FBI Keeping Files on Regular Americans

This really isn't news to those of us in the know...but the authorship by Rutgers-Newark Law School professor Frank Askin (whom I met as a young lawyer on behalf of a political client in the late 1990s) caught my eye.

The article raises anew the specter (the reality of which you can be sure) of regular Americans having their activities monitored and becoming, and remaining, subjects of federal law enforcement surveillance.  What is troubling is the common perception that subjects of surveillance have done something to earn that surveillance, and the suspected stigmatization of those among us upon whom "files are kept."  

Perhaps most troubling, as revealed in the opinion piece, is the difficulty in getting routine information about why surveillance, monitoring and other tracking activities were engaged in to begin with.  A Freedom of Information Act request can and often does hit a brick wall, courtesy of the exemptions for "ongoing investigations."  In other words, the FBI -- or other government executive branch agencies -- can preserve secrets on the basis of self-serving declarations invoking the national interest, investigations or other legitimate-sounding purposes.

Eric Dixon is a New York lawyer who merely assumes -- honestly -- that he might be under surveillance.  Mr. Dixon's tongue-in-cheek analysis has previously been found to be less than amusing to its targets.
 

Overcriminalization: Guilty Without Criminal Intent

The march towards making regulatory violations actual "crimes" for which prison sentences are prescribed by Congressional statute continues and is noted in this excellent Wall Street Journal report.

The impact on the average American?  Increasingly, benign everyday activities place people at risk of losing their freedom, their reputation and their savings.  (Maybe it's time for a reprint or revision of Harvey Silverglate's 2009 book Three Felonies a Day.

Sometimes it seems as if the justice system is capricious and scornful of the average American, doling out every so often the opposite of the winning lottery ticket --- and if you lose your freedom and reputation so someone in the local U.S. Attorney's Office can build his resume in order to run for Congress, well, you are acceptable collateral damage.  Just like the hapless troops we've been sending to the Middle East and Near Asia for an entire decade now, on a mission which seems less and less clear by the day.

Eric Dixon is a New York investigative lawyer, strategic analyst and political consultant.  Mr. Dixon can be reached for further consultation or comment at edixon@NYBusinessCounsel.com.


Saturday, July 23, 2011

Singer Amy Whitehouse Found Dead

Breaking...Fox News confirms...

Eric Dixon
Eric Dixon LLC
World-Class Strategic Analysis
917-696-2442

Friday, July 22, 2011

Mandated Free Contraception -- For Others, On Your Dime

A different twist on the meaning of "moral hazard" -- The federal government is considering requiring health insurers provide contraceptives free of charge to all members in order to not discourage contraceptive use. 

Blog supporter Ellen from Manhattan does not like the idea of the mandate. You see, this means that other people get to "do it" free of consequences because they get their contraceptives free...meaning that people like Ellen (and the rest of us) who don't necessarily "do it" get to pay for the pleasure of others.


This reader hilariously asked whether the government mandate includes some other things.  Her venting email rant follows:

Great!  Do they send along a nice man for me to "do it" with as part of my insurance plan?

After all, aren't I entitled to "some action" for the extra cost this will surely add to my health insurance premium?

(This may be the funniest comment this blog has ever received -- a true "LMAO" or "ROFL" moment for those of you conversant in internet-textspeak!)

This is like being invited to dinner, seated but not served, and then told after the meal that you get to wash the dishes, pick up the check and drive everyone else home.

At least the indignity of paying for the pleasure of others, while you may not be availing the same pleasure yourself, pales in comparison to the threat of criminal prosecution for not having health insurance.  

Readers, what do you think?



Eric Dixon, Esq.
Eric Dixon LLC
World-Class Strategic Analysis



The Heat Is Too Damn High

In honor of perennial gubernatorial candidate Jimmy McMillan...

New York City hit 103 degrees today shortly before 1 pm, with a heat index of 115 (courtesy of a 76 degree dewpoint) measured before noon.

Newark: 108 and counting...

Short take: The weather misery has much more to do with the humidity and the very high dewpoint (measuring the ability of moisture to evaporate), than the air temperature. Dry heat is more tolerable.
Eric Dixon
Eric Dixon LLC
World-Class Strategic Analysis
917-696-2442

Thursday, July 21, 2011

Hit and Run Attack on Lawyer's Reputation

Federal prosecutors in the Sky Capital trial Wednesday engaged in a questionable hit-and-run assault on the reputation of a lawyer who did some legal work for the now-defunct brokerage firm.

Assistant United States Attorney Katharine Goldstein declared in no uncertain terms during her closing argument that it was the "job" of this lawyer, whom she named at least three times, to "cover up the fraud."

This lawyer has not been indicted, nor charged civilly by the Securities and Exchange Commission, nor was he even referred to anonymously (or quasi-anonymously) in any court records I have seen in the Sky case.  Therefore, this lawyer's role has gone unexamined by any judge or jury.

None of this has stopped this federal prosecutor from declaring, without hesitation and without the qualifications of "I believe," or "he did this but he didn't know it was a fraud," that this lawyer was somehow complicit in what the government asserts is a major financial fraud.  Goldstein did not need to be this clear, this cavalier with someone's reputation, in order to make her arguments against Ross Mandell and Adam Harrington.  The clear implication is that the lawyer was criminally complicit.

The clear meaning, from Ms. Goldstein's remarks, is that the lawyer is either a crook or pretty darn close to one.  It was an obvious attack, a gratuitous one.

Most troubling is the end result: A lawyer gets smeared, yet lacks the opportunity to clear his name before a judge or jury.  The government's opinion -- stated without qualification as a fact to a jury -- has gone unchallenged, unexamined, and unanswered.  And because the lawyer has not been charged, he does not have standing under the Hyde Amendment to seek damages for a malicious prosecution.

When you attack someone when -- or perhaps because -- he is defenseless, you are being a bully.

Disclosure: In the interests of full disclosure, I must note that I was once in a somewhat similar, yet quite distinct, situation and repeatedly offered to answer any questions that investigators might have had.  However, I had one caveat: Any interview had to be video-recorded.  (I had no interest in trusting the accuracy or honesty of the notetaker, mindful of how Martha Stewart got convicted.)  The investigators' lack of interest thereafter suggested both that there was no legitimate question for me, and that I was possibly set up to be a victim of what is commonly known as a perjury trap.  In such a case, the subject starts the meeting innocent and ends it guilty, as anything that is said -- and that term is defined by the selective recollection of the notetaker -- can be manipulated in order to create a prosecutable "false statement."  Such an approach is completely contrary to the search for truth and the pursuit of justice which are supposed to be the highest organizational objectives of the Department of Justice, and its state and local counterparts.

UPDATE: The paragraph "Disclosure" has led to a more recent 2014 article titled, "When Chris Christie Threatened Me," available also on this blog. 

Eric Dixon is a New York lawyer, political strategist and management consultant.

  

Was Bloomberg's Girlfriend DUI in Accident?

Mayor Mike Bloomberg's girlfriend Cathie Black was involved in an accident over the weekend at a friend's swanky Hamptons cottage.  As this report implies, Black was apparently in little condition to drive.

Wednesday, July 20, 2011

Acquittals Coming in Sky Capital IPO Fraud Case?

A Manhattan federal jury is scheduled to begin deliberations as early as Thursday afternoon in the Sky Capital fraud trial of Ross Mandell and Adam Harrington.

The five-week-long trial was ostensibly on securities fraud charges. However, government witnesses seemed long on tales of adult entertainment and short on hard facts showing actual criminality. In fact, judging from a flaccid government closing argument, the federal government has attempted to criminalize business failure and other capital raising activities which are benign, customary and otherwise legal.

One government argument is that there was a fraud upon investors because, according to certain government witnesses, management of the privately-held company Global Secure Corp. never believed the company would actually go public. The problem is that the company came close to going public, even filing a formal registration statement with the Securities and Exchange Commission to register its stock for sale to the public. (Don't believe me? Here is the company's sixth amendment to its registration statement in 2005.)

A second argument for fraud was the issuance to founders, friends and others of cheap stock in Global Secure after its inception. The argument was that the issuance of shares for little money was criminal. In reality, the law mandates disclosure (and even there, the law talks about "materiality" and lacks a clear "yes or no" rule on what to disclose in private placements to accredited investors). Young companies commonly issue shares for pennies to employees, founders and others. This is one way young companies and small businesses, which often cannot get bank loans, raise capital to go into, and stay in, business.

The government, shamefully, tried to dupe a jury into thinking that giving stock away in a startup company is a crime. Perhaps this is a way for the government to control the economy by discouraging capital raising through fear of prosecution. Will the government next mandate the price of shares? It will need to measure the value of those shares. Would you trust the government -- the same government that didn't catch Bernard Madoff, the same government that has run up a trillion-dollar debt -- to be able to do that?

If and when that happens, the government will be able to run your business...well, it won't be yours anymore.
The existence of our entire system of free enterprise is theoretically at risk with this curious prosecution, which is starting to look like an innovative way to legislate a command-and-control economy (socialism, anyone?) by using the executive branch's prosecutorial power to regulate, discourage and ultimately control who participates in our economy.

One final note...for now.  As pointed out very well by Harrington's lawyer Michael Bachner, the government was very selective in whom it chose as witnesses.  There were dozens of potential Sky Capital employees and others whom the government could have called.  The choice of some seriously credibility-challenged witnesses, many of whom appear to be chronically and comically incapable of telling basic truths about anything, speaks volumes about the potential witnesses whom the government felt it was unable to call.

For example, the government could have called  as a witness -- and chose not to call to the stand -- one informant, the same person who is cited in court documents as having taped Phil Akel talking about something incriminating.  This held-back witness was described at his sentencing (in a separate matter) by a government agent to have been one of the most helpful informants the agent had ever worked with.  Why wasn't this person called, instead of, say, Phil Akel?  Might it be because this person was committing bankruptcy fraud, frauds upon the court, and was sued for mortgage fraud in a civil suit -- all while working for the government and in violation of his cooperation agreement? 

Might it be because this person was trying to bamboozle the sentencing court into granting him leniency for medical reasons related to a back injury, an injury sustained before asking the same court for relief from travel restrictions in order to travel to Colorado to go snowboarding?

Or might it be because this person has used -- or been allowed to use -- at least four different names in official court proceedings in New York and New Jersey, in addition to other distinct iterations of his first and last names in business?

Is the government playing the game, as I wrote two weeks ago and as Harrington's lawyer Bachner said today, of "Catch Me If You Can"?

I mean, if the federal government passed over a man described as one of the best informants in an agent's career in order to put Phil Akel on the witness stand in what can only be described as a painful performance, serious strategic questions have to be raised. 

More to come...updates and another post on the government's attempt to defame a lawyer who was named at trial but was not charged, and thus cannot defend his reputation (he can never have a jury evaluate his credibility, he never gets to erase a cloud over his head), late Wednesday or early Thursday morning.

Eric Dixon is a New York lawyer and investigative analyst who does not represent anyone in the Sky Capital case. 

 

Guilty Plea: Blame My Illness, Don't Blame Me, It Really Wasn't Me!

Today former beauty queen turned insider-trader Danielle Chiesi was sentenced to 30 months in federal prison for her role in a huge insider trading scandal.


The judge cited Chiesi's "borderline personality disorder" as a factor in Chiesi's supposedly aberrant behavior -- that is, her crime. The same long-running crime she engaged in while supposedly controlled by her boyfriend Mark Kurland in a 20-year-long relationship.

One would think that crime, particularly white-collar crime like frauds running a long time, is often an aberrant behavior in itself.


This is another example of someone who admits to a crime but tries to duck ultimate responsibility by citing some other mitigating factor. Sometimes those factors are relevant and legitimate. Other times an admitted felon is trying to game the system, citing false injuries or traumas or pretending to be an alcoholic in order to get "extra credit" for rehab.


With Chiesi, she seemed to say, don't blame me, blame my illness, that's why I did this crime.


In other words, Chiesi isn't guilty. Its her illness which is guilty. It's really not her. Therefore, she really didn't do anything wrong in this rationalized and delusional view.


Fortunately, district judge Richard Holwell had none of it.


This isn't unique. In one egregious case, a felon tried to get probation instead of prison by citing a back injury and need for ongoing medical treatment. Problem was, this felon was going snowboarding AFTER sustaining the injury in question.


Chiesi's plea for leniency today was unsuccessful. Federal district judge Richard Holwell saw the plea for the ploy that it was, another attempt by someone used to special treatment to get more special treatment. This is a victory, not just for society at large, but for the legitimate hardship cases.

Eric Dixon is a New York lawyer, strategic analyst and political consultant.

Tuesday, July 19, 2011

Fed Government Funds Sex Organ Size Study

One has to wonder if someone hacked Fox News...just link to the report.

Remember...we report...you decide.

Sunday, July 17, 2011

Islanders' Referendum May Kill Taxpayers To Save Team

The New York Islanders' future on Long Island depends on a public referendum -- now getting bipartisan opposition --  that would have taxpayers pay the interest (debt service) on public bonds for a new Nassau Coliseum if arena revenue does not cover the interest as projected.

The once-iconic New York Islanders, winners of four Stanley Cups in 1980-83 and remembered across North America for a generation of all-time great players, have sustained serious fan base, sponsorship and television audience deterioration in the last 25 years.  The Islanders have been at or near the bottom of the 30-team National Hockey League in attendance since the mid-1990s, and are now reported to lose in excess of $20 million annually despite being at or near the player salary "floor" (estimated to be about $46 million this upcoming season) as mandated in the player collective bargaining agreement. 

Eric Dixon is a New York investigative lawyer and former New York Islanders season ticket holder.  Mr. Dixon has substantial experience in business deal due diligence -- including finding out how a proposed deal will not work -- and in formulating and drafting the complex agreements necessary in these types of transactions.

Wednesday, July 13, 2011

NYC Forced Abortion Disclosure Blocked By Federal Judge

Free speech and pro-life activists won at least the first exchange in a heating-up legal battle in New York federal court today.

Manhattan federal district court judge William Pauley (a conservative judge hailing from Al D'Amato's Nassau County stomping grounds) has issued a preliminary injunction blocking a new New York City ordinance that would require abortion-alternative centers to disclose information about abortion services.

This ordinance is a blatantly obvious content-based regulation that is equally clearly unconstitutional.  The injunction being issued should be no surprise.

The city ordinance, requiring the abortion alternative centers (promoting adoption and supporting women who are willing to carry the baby to term) to disclose to the public that they do not provide abortions, was scheduled to go into effect Thursday.

The legal fight is just beginning.  Motions in support or against a permanent injunction preventing the ordinanc from being effected will be forthcoming.

Eric Dixon is a New York lawyer who is not connected with this case.



Tuesday, July 12, 2011

Bachmann's Iowa Pledge Mess Opens Door For Chris Christie

A lack of organizational and personal discipline can be fatal to your business, or your political aspirations.

Republican presidential candidates Michele Bachmann and Rick Santorum each signed a 14-point traditional marriage pledge, which contained some questionable and controversial statements on different issues.  Both candidates now are backing off the statements while expressing support for the traditional one man-one woman marriage that was the core of the pledge.

This mistake could be fatal to either candidate.  It shows a recklessness, a lack of due diligence, in eagerly signing onto a document without fully reading it -- an explanation which either defies belief or shows the campaigns to be in such chaos that someone deserves to be fired.

Assuming the candidates actually read the entire pledge document, they are fully responsible for its comments.  The failure to have read it fully -- if that is the case -- is fatal in my opinion, showing a terminal lack of basic organizational judgment.  If the candidates did read it and now backtrack from its controversial statements, that shows either poor judgment in terms of the issues, or a gutlessness.  Admit the statements are wrong and admit the mistake in signing the pledge; in short, be an adult and own up to the mistake.

Even worse would be the explanation that the candidates succumbed to pressure to sign the pledge in order to gain or retain support from some Republican groups.

Part of being presidential timbre is the ability to withstand pressure to do things you do not want or should not do. These amateur hour mistakes show neither Bachmann nor Santorum to be worthy candidates for the highest office in the land.

The mistakes also show why the "window of opportunity" for Chris Christie remains open for 2012.  Despite his denials, all signs point to his eagerness to be tapped.  He is building political equity, despite his home state problems (below 50% approval, a sign of vulnerability for any incumbent) and propensity to make unnecessary enemies with bombastic attacks. 

While Christie can be baited -- a different and also potentially fatal political liability that could quickly doom his presidential aspirations -- it is doubtful he would make the dumb mistake of Bachmann and Santorum.

However, given the lack of a clear-cut Republican consensus candidate and the somewhat plateauing support of frontrunner besides Mitt Romney, who remains unable to "pull away" from the pack, even a glass-jawed Christie could be a formidable primary challenger and even party nominee.

He has his weaknesses in both policy and persona.  However, Barack Obama is no Buster Douglas.  The one killer punch may never come.   On strictly strategic grounds, Christie should be considering a 2012 run.

Eric Dixon is a New York election lawyer, political strategist and crisis management consultant.

Sunday, July 10, 2011

Prosecuting the Innocent: Little White Lies

In an era where the ends often are cited to justify the means, and where the rules often seem to be flexible for those with enough financial or human capital (read: having connections in high places, or damaging information on those same people), we face the issue of whether potentially entirely-innocent people should be investigated, indicted, prosecuted and imprisoned on nothing more than the say-so of purported victims or witnesses whose motives to lie may be strong and whose credibility may be lacking to begin with.

This Monday Wall Street Journal article addresses the credibility issues of the alleged rape victim in the case of former International Monetary Fund executive Dominique Strauss-Kahn.

Prosecutors -- and the press corps -- are urged to remember the fateful words of former Reagan Administration Labor Secretary Raymond Donovan, who said after being acquitted of corruption charges in the Wedtech investigation, "Which office do I go to get my reputation back?"

A habitual liar is not necessarily lying all the time.  However, witnesses who have pleaded guilty and are awaiting a favorable recommendation from prosecutors at sentencing -- the so-called 5K1.1 letter, named for the section of the Federal Sentencing Guidelines covering credit for cooperation with the government -- do have every incentive to lie, embellish, exaggerate and otherwise deceive in their account.

Eric Dixon is a New York lawyer who handles strategic analysis, complex investigations, crisis consulting, litigation stress consulting and political matters.

Why Housing Is Going To Zero: You Can't Get A Mortgage

This Wall Street Journal article reports that the unavailability of mortgages for all but the very best credit risks threatens the housing recovery.

As I have written before, a myriad of factors are combining to threaten any housing recovery, and in fact are more likely to cause a renewed, sustained and sharp decline in housing prices.

The banks are hoarding cash.  This manifests in a reluctance to extend loans, either for mortgages or for small businesses.  The fear of not being repaid on loans strongly indicates that banks will fight tooth and nail not to grant mortgage principal reductions in any but the rare case.  (Although banks have granted more principal reductions than is commonly supposed; this is a bad policy and threatens to encourage a wave of strategic defaults from the homeowners who are most able to pay their mortgages.) 

Read previous Eric Dixon commentary on the housing crisis:

June 2011:  Economists notice that bank tightness prevents prices from stabilizing.

February 2010:  Eric Dixon is among the very first to call Obama's proposed ban on foreclosures a bad policy move that would prevent the housing market from finding a natural bottom. 



 

Will Independence Party Survive Its Founder's Death?

New York's Independence Party -- the proverbial gold-digger of New York politics -- may not survive the death of its founder, the controversial psychotherapist Fred Newman.

Wednesday, July 6, 2011

Felon-Turned-Witness Used Multiple Names: Catch Me If You Can


An admitted felon and former federal prisoner and key confidential informant -- who may be so unreliable that the government refuses to expose him to any cross-examination in any courtroom --  allegedly initiated an investigation leading to an ongoing high-profile Manhattan federal criminal trial used several variations of his legal name, apparently to conceal his criminal past and evade detection by other litigants, creditors and the general public and to secure a federal judge's agreement in August 2007 to dismiss him from a civil lawsuit alleging mortgage fraud.

In the ongoing Ross Mandell / Adam Harrington / Sky Capital federal criminal trial, the entire investigation leading to various criminal charges and some guilty pleas was allegedly initiated by an admitted felon who, it could be argued, may have committed both bankruptcy fraud and a fraud upon the court...the same federal court in which the Mandell case is being heard (different judge)...also while being a government informant/cooperator and under government supervision.

This informant (a) filed a motion on August 7, 2007 to be dismissed as a defendant in a civil lawsuit, one involving suspected mortgage broker fraud, with one judge in the Southern District of New York, on the basis of the automatic stay afforded applicants under bankruptcy law, which on the very same date (b) was lifted when the bankruptcy court in Newark. NJ granted the same informant's very own motion (which had been filed on July 30, 2007) to withdraw his own bankruptcy because an even earlier bankruptcy made him ineligible to file it.

This means, in essence, that the informant lied to a federal district judge in New York in order to get dismissed as a defendant in a civil case, because he relied on a bankruptcy stay that he very much intended to have lifted by his own, prior motion.

If a government informant and witness -- and in this case, someone who had already pleaded guilty to multiple felonies -- would demonstrably lie to a federal district court judge, the question must be asked:  Who wouldn't he lie to?

More interesting, however, is that this cooperator had three (breaking news 7/14: now we've found four versions of names (all on actual public court documents)...all while working for the federal government! One version for the New Jersey federal court (where he pleaded guilty), a second for the New Jersey bankruptcy court, and a third for the New York federal district court in which he was sued civilly in another case involving possible criminal mortgage fraud.   That's not counting a separate federal civil case and a decade-old NASD action, all of which have different permutations of his name.  Of course, the multiple names help evade detection and thwart pre-trial discovery...but not everyone gets thrown off the trail.

Frank Abagnale -- the precocious con man turned FBI advisor, made famous by Leonardo DiCaprio's portrayal in the 2003 movie Catch Me If You Can -- would be proud.

Some of the government's witness handlers/supervisors need to wake up. Perhaps we need more resources to witness supervision. Or perhaps we need to be that much more skeptical of the testimony we are getting from cooperators (a.k.a., admitted felons) whose motives to lie, embellish and exaggerate are clearly tied in to their desire to avoid prison.

PS:  Check out the comment to this post earlier this week.  Care to guess the identity of "Anonymous"?

Eric Dixon is a New York investigative lawyer and is available for consultation by paying clients; inquire at edixon@NYBusinessCounsel.com.

Tuesday, July 5, 2011

Government Witness on Drugs? Oh It's No Big Deal

In an embarrassing oversight that endangers an ongoing criminal prosecution of the "bad boy of Wall Street" Ross Mandell and one associate, federal prosecutors today admitted that they had failed to turn over to the defense in pretrial discovery evidence that a key cooperating witness was using illegal drugs while working for the federal government. Such drug use clearly compromises the credibility (if not the memory and other faculties) of the witness, is a crime, and violates the standard terms of cooperation agreements between the Justice Department and its cooperating witnesses.

(Think the jury might be impressed by that?)

Such an oversight -- alarming given the government's resources -- may be a Brady violation (as pointed out by defense counsel). The underlying issue, of Constitutional dimensions, is the defendant's right to due process under the Fourteenth Amendment.  The violation's name comes from the 1963 U.S. Supreme Court case Brady v. Maryland, which held that the suppression by the prosecution of evidence requested by the defense that is material to the guilt of the accused violated the defendant's Due Process rights.

The sheepish assistant federal prosecutor handling the case gave a one-sentence response asserting that the defense was not prejudiced in its ability to cross-examine a witness. Tough job for the prosecutor, who was not originally on the case.  The issue bears continued watching.

Second Interesting Fact of the Day: In the same Mandell case, there is a potential government witness who, it could be argued, committed bankruptcy fraud and a fraud upon the court...the same federal court in which the Mandell case is being heard (different judge)...also while being a government informant/cooperator and under government supervision. This informant (a) filed a motion on August 7, 2007 to be dismissed as a defendant in a civil lawsuit, one involving suspected mortgage broker fraud, with one judge in the Southern District of New York, on the basis of the automatic stay afforded applicants under bankruptcy law, which on the very same date (b) was lifted when the bankruptcy court in Newark. NJ granted the same informant's very own motion (which had been filed on July 30, 2007) to withdraw his own bankruptcy because an even earlier bankruptcy made him ineligible to file it.

This means, in essence, that the informant lied to a federal district judge in New York in order to get dismissed as a defendant in a civil case, because he relied on a bankruptcy stay that he very much intended to have lifted by his own, prior motion.

If a government informant and witness -- and in this case, someone who had already pleaded guilty to multiple felonies -- would demonstrably lie to a federal district court judge, the question must be posed:  Who wouldn't he lie to?

More interesting, however, is that this cooperator had three versions of names (all on actual public court documents)...all while working for the federal government! One version for the New Jersey federal court (where he pleaded guilty), a second for the New Jersey bankruptcy court, and a third for the New York federal district court in which he was sued civilly in another case involving possible criminal mortgage fraud.   Of course, the multiple names help evade detection and thwart pre-trial discovery...but not everyone gets thrown off the trail.

Some of the government's witness handlers/supervisors need to wake up. Perhaps we need more resources to witness supervision. Or perhaps we need to be that much more skeptical of the testimony we are getting from cooperators (a.k.a., admitted felons) whose motives to lie, embellish and exaggerate are clearly tied in to their desire to avoid prison. 

Eric Dixon is a New York investigative lawyer and is available for consultation at edixon@NYBusinessCounsel.com.

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