Author Archives: Tom

The NACDL’s amicus brief in the Skilling appeal

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amicus_briefs2.jpgThe National Association of Criminal Defense Lawyers has requested permission from the Fifth Circuit Court of Appeals to be allowed to file a friend of the court brief (you can download a copy here) in the appeal of former Enron executive Jeff Skilling.
The NACDL brief is excellent and focuses on the controversial decision of U.S. District Judge Sim Lake to grant the Enron Task Force’s request for a “deliberate ignorance” jury instruction against Skilling. Judge Lake’s allowed that instruction despite the fact that the prosecution didn’t allege that Skilling was deliberately ignorant of anything until just before the end of the evidentiary phase of the trial. Moreover, Skilling defended the case on the basis that he was a highly-involved executive of a company where there was no evidence of widespread criminal wrongdoing. Skilling never claimed that he even attempted to turn a blind eye toward alleged wrongdoing.
The NACDL’s brief comes out of the box smoking:

This case highlights a recurring problem in federal criminal cases: the indiscriminate use of the deliberate ignorance instruction. As we describe below, the deliberate ignorance doctrine has grave flaws that raise serious constitutional concerns. Left uncorrected, these defects will undermine the mens rea requirements that distinguish criminal and civil liability and perpetuate the status of deliberate ignorance as the new “darling” ofthe prosecutor’s nursery.
To mitigate the constitutional concerns with the deliberate ignorance instruction, the Court should restrict the instruction to narrow, clearly defined circumstances consistent with its purposes–circumstances that plainly do not exist here. At the first opportunity to consider the instruction en banc, the Court should eliminate it entirely, leaving to Congress the decision whether, and in what circumstances, deliberate ignorance is sufficiently culpable to warrant criminal sanction.

The NACDL notes that the indiscriminate use of the instruction is particularly troubling in corporate fraud cases, where jurors are already predisposed to believe that the defendant has done something wrong:

That danger is particularly great in the context of a fraud charged against an executive of a large corporation. Potential jurors, like the public generally, may hold the view that such executives should be aware of fraud in the organizations they lead, even if they are not. In such cases, therefore, the deliberate ignorance instruction may encourage jurors to indulge their own notions of culpability, in disregard of statutes and instructions requiring that the defendant act “knowingly.” The post-verdict remarks of the jurors in this case suggest that some of them may have blurred the critical line between knowledge and intent on one hand and recklessness or negligence on the other. . . . The deliberate ignorance instruction may well have encouraged that conflation of knowledge with less culpable mental states.
In the context of alleged corporate fraud, the deliberate ignorance instruction also raises the specter of the improper imposition of criminal liability based on the civil doctrine of respondeat superior. Jurors may well view the deliberate ignorance instruction as an appropriate imposition of supervisory responsibility (moral or otherwise), particularly when, as here, they may view the consequences of the alleged fraud to the corporation and its investors as severe and irremediable. [. . .]
If the Court affirms Skilling’s conviction on this record, district courts and prosecutors will rightly view the ruling as the final abandonment of any limit on the use of the deliberate ignorance instruction. Deliberate ignorance will have become the default basis for “knowledge” in corporate criminal prosecutions. In our view, this is the wrong message for the Court to send, at a time when the deliberate ignorance doctrine faces withering criticism and is ripe for reconsideration. The Court should find that the evidence did not warrant a deliberate ignorance instruction, reject any contention that the error was harmless beyond a reasonable doubt,8 and–in accordance with Ojebode and cases from other Circuits–reverse Skilling’s conviction.

And for good measure, the NACDL brief concludes by taking dead aim at Judge Lake’s equally questionable decisions not to transfer venue of the trial and the way in which he empaneled the jury:

In such extraordinary cases, the district court must take strong measures to guarantee the defendant’s Fifth and Sixth Amendment right to a fair and impartial jury. Here, as in the Oklahoma City case, the Constitution required the district court to transfer venue and then conduct a rigorous voir dire of prospective jurors from the new venue. Given the sheer loathing for Skilling and Lay that the collapse of Enron engendered in Houston, only with both of those protections–change of venue and thorough voir dire–could there be any confidence that the defendants would receive the trial to which the Constitution entitled them.
Remarkably, the district court provided neither protection. Faced with overwhelming evidence that Houston was suffused with hostility toward the defendants, the court cursorily rejected Skilling’s motions to transfer venue. The court then declared that voir dire would last no more than a day. It insisted on conducting voir dire itself, with only the most perfunctory follow-up questioning by counsel. It ignored unmistakable indications of bias in the potential jurors’ questionnaires. It persistently asked leading questions of potential jurors-questions designed to mask, rather than expose, bias. Even when grounds to strike potential jurors for cause became apparent, the court often denied them. . . . And the court granted Skilling and Lay a meager two additional peremptory challenges (for a total of twelve combined challenges), and then denied repeated requests for additional peremptories as jury selection unfolded. [record citations deleted].
The district court’s conduct of jury selection–from the denial of the motions to transfer venue without a hearing to the stunningly brief and superficial voir dire to the rulings on challenges for cause to the denial of additional peremptory challenges–represents a shocking triumph of efficiency over fairness. Under these circumstances, the court’s decisions should not be viewed in isolation and examined ruling-by-ruling under the deferential abuse of discretion standard. Such an atomized analysis would ignore the crushing unfairness of the court’s overall approach. Instead, this Court should review the record independently to determine whether the jury selection process violated Skilling’s fundamental right to a fair trial. See, e.g., United States v. Williams, 523 F.2d 1203,1208-09 (5th Cir. 1975) (constitutional claim of community prejudice requires independent review).
Such an independent review mandates reversal of Skilling’s conviction. If the bedrock constitutional right to “indifferent” jurors means anything, it means that Skilling should not have been tried in Houston before jurors selected in less than a day with only cursory examination, a number of whom had unequivocally expressed harshly negative opinions of the defendants on their questionnaires.

Based on the quality of the NACDL brief and the Skilling Appellant’s brief, the Department of Justice has its hands full in preparing its appellee’s brief, which is currently scheduled to be filed with the Fifth Circuit around sometime around mid-November.

Justice Medina’s big problem

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david_medina.jpgWell, you certainly don’t see this everyday:

The June fire that destroyed the Spring home of Texas Supreme Court Justice David Medina was intentionally set, the Harris County Fire Marshal’s Office ruled Wednesday.
Investigators would not comment on a motive for the arson, which destroyed a neighboring house and damaged a third, chief investigator Dan Given said Wednesday afternoon.
“At this time, we’re not going to release any more information,” Given said.
Earlier Wednesday, the office issued a statement saying investigators ruled out an accidental cause and no charges were currently pending. [. . .]
Investigators have identified six “people of interest,” all family members or friends of the judge. Investigators have also said a canine detected an accelerant in the fire.
The three homes are in Olde Oaks subdivision in northwest Harris County. Damage for all three has been estimated at $900,000.
Officials said Wednesday that Medina family members questioned about the June 28 blaze have been cooperative. The judge’s wife, Francisca Medina, and one of their children were home the night of the fire, officials said.
Investigators have subpoenaed cell phone and financial records of family and friends.
If a charge is filed, it would be arson of a habitation, a second-degree felony that carries a punishment ranging from probation to 20 years in prison, lead investigator Nathan Green said Tuesday. [. . .]
While officials would not discuss possible motives, Green has said a “red flag” was a foreclosure filed on the property in June 2006 that apparently was resolved that December.
The Medinas’ insurance policy had lapsed because premiums weren’t paid, Green has said. Medina was surprised to learn the 5,000-square-foot house in the 3500 block of Highfalls wasn’t covered.
The Medina family moved to Austin after the fire, Green said.
They still owe nearly $2,000 in homeowners association fees, according to Pam Bailey, owner of Chaparrel Management, which manages the Olde Oaks Community Improvement Association.
Bailey said the fees are two years past due.

The house wasn’t insured and Justice Medina didn’t realize it? In an earlier Chronicle article on the fire, Justice Medina, who was appointed to the high court by Govenor Perry in 2004, said he was unaware that investigators had identified six people of interest, including family members and friends.

“I was not aware. … That’s quite startling,” Medina said, later adding that he had “no idea” if he knew anyone who might have set the house on fire.
He then said, “I’m not going to comment further.”

That latter comment is a very good idea.
October 15, 2007 Update: Harris County District Attorney Chuck Rosenthal announces that Justice Medina is not a suspect in the arson investigation:

Texas Supreme Court Justice David Medina is not a suspect in a June arson that destroyed his Spring home, Harris County District Attorney Chuck Rosenthal confirmed Thursday.
The revelation came during a telephone conversation in which Rosenthal alerted the judge that he was being called to testify before the grand jurors as they discuss whether to charge anyone in the June 28 blaze.
“Because in Harris County, we don’t sneak up on people. I said: ‘You are not considered a suspect,’ ” Rosenthal said late Thursday.

The genesis of bad regulations

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CellPhones.JPGI’m not an advocate of using cell phones indiscrimately while driving. In fact, I try to avoid it as much as possible. But every few months or so, some media outlet passes along another superficial story (see also here) on the latest study or tragic story that supposedly suggests that use of cell phones while driving leads to accidents and, thus, should be outlawed.
Cell phones are a distraction while driving. No question about that. But so are conversations with passengers. Are we going to outlaw those, too? Granted, much cell phone use is trivial and unnecessary, but cell phones have unquestionably been a tremendous improvement in communications. Wouldn’t it be prudent at least to perform some cost-benefit analysis of the probable impact of outlawing a valuable improvement in communications before foisting yet another regulation on the public?

How to correct what went wrong in subprime

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subprime%20house.jpgClear Thinkers favorite James Hamilton provides this interesting post on Princeton professor Alan Blinder’s NY Times Sunday op-ed in which Blinder makes the common sense observation that we first have to figure out what went wrong in the subprime mortgage mess before we can “even begin to devise policy changes that might protect us from a repeat performance.”
Blinder proceeds to identify six groups who might bear at least some of the responsibility for the financial fallout: (1) homebuyers who took on mortgages they couldn’t repay; (2) mortgage originators, for issuing mortgages that homebuyers couldn’t pay; (3) bank regulators, who may have dropped the ball in failing to slow down the runaway train; (4) the investors who ultimately provided the funds for the mortgages, and (5) securitization, which led to assets that are too complex for anyone truly to understand, and (6) ratings agencies that underestimated the risk.
Professor Hamilton focuses on group 4, the investors, and makes the following observation:

Blinder doesn’t seem to give us a lot to go on with understanding Finger #4, beyond the notion that these instruments were new and complicated and investors were stupid. Stupid, I might add, to the tune of hundreds of billions of dollars.
Perhaps that’s all there will ever prove to be to this story. But I can’t help looking for more, thinking there is likely to be something special that caused the usual incentive structure to break down here, something we might be able to understand with more orthodox economic methodology. In my remarks at Jackson Hole, I suggested an interaction between monetary policy and implicit government guarantees as providing one possible basis for a rational calculation on the part of investors. Jin Cao and Gerhard Illing of the University of Munich have an interesting new research paper spelling out the details of exactly how such an equilibrium might play out. Professor Illing lays out the implications for practical policy-making here.
As I also said in Jackson Hole, I am not sure why investors perceived it to be in their best interests to buy these assets. But I am sure that this is the right question, and would encourage young economic researchers seeking to make a name for themselves to take a swing at it.
Because I basically agree with Blinder– until we know the answer, it’s not clear exactly how to fix the problem.

I agree with Professor Hamilton, although I would point out that the best “fix” of the problem is to allow the market to adjust — with a minimum of regulatory interference — to what happened in the subprime meltdown. Which reminds me of a great line that Arnold Kling passed along the other day while lauding the George Mason economics department:

“I like to put it his way: at [the University of] Chicago, they say “Markets work well. Let’s use markets.” At MIT, they say “Markets fail. Let’s use government.” At GMU, they say “Markets fail. Let’s use markets.”

“We eat what we kill”

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dollar%20roll.jpgBig-time college football is big business. Maybe not as big business as the NFL, but definitely big enough that major universities really ought to dump the obsolescent and hypocritical NCAA regulatory system and form a for-profit system that would pay players market-based compensation similar to minor league baseball.
That such reform makes sense is underscored by the first part of a two part Austin-American Statesman series on the University of Texas athletic department’s finances. Not only has the $100 million UT athletic department budget doubled in the past six years, athletics expenses at UT have grown twice as fast as the universityís overall spending during the same time frame.
Moreover, because of the NCAA’s regulation of player compensation, UT (as with other big-time programs) funnels compensation to players in the form of “resort privileges.” For example, just since UT’s football team won the national title in 2005, the football program has spent more than $200,000 renovating its playersí lounge and $155,000 purchasing a hydrotherapy room to help soothe its playersí sore limbs. That hydrotherapy room probably came in handy for Texas QB Colt McCoy after the licking he took during the Longhorns 41-21 loss to Kansas State last Saturday.
Likewise, the amount of money the university spends per athletehas almost doubled over the past four years, from $113,000 in 2003 to $210,000 this year. Thatís 10 times the average of all Division I and II colleges, and eight times what UT spends educating each of its non-athlete students. When questioned about that discrepancy, the UT athletic department’s CFO replied that the difference is largely meaningless because of the self-supporting nature of the UT athletic program. ìWe eat what we kill,î the CFO told the Statesman.
Which reminds me of the thought that I had when I saw the now popular video of Oklahoma State head coach Mike Gundy going batshit at a newspaper reporter over an article that she had written that was critical of one of his players. Gundy wasn’t wrong in going haywire. He simply went wacko at the wrong target. The target should have the feckless university leaders who perpetuate the facade of intercollegiate football at the expense of the players. It’s high time that the universities engaging in big-time college football start treating it for what it really is — a big business that should pay market compensation to the professional athletes who are responsible for generating most of the income for the enterprise.

Hersh on the plan for Iran

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iran_flag.pngIn this New Yorker article, Seymour Hersh lays out his theory on the Bush Administration’s plans for neutralizing Iran. As with most of Hersh’s work, it is a fascinating read. He concludes with the following story about tensions between Allied forces:

Another recent incident, in Afghanistan, reflects the tension over intelligence. In July, the London Telegraph reported that what appeared to be an SA-7 shoulder-launched missile was fired at an American C-130 Hercules aircraft. The missile missed its mark. Months earlier, British commandos had intercepted a few truckloads of weapons, including one containing a working SA-7 missile, coming across the Iranian border. But there was no way of determining whether the missile fired at the C-130 had come from Iranóespecially since SA-7s are available through black-market arms dealers.
Vincent Cannistraro, a retired C.I.A. officer who has worked closely with his counterparts in Britain, added to the story: ìThe Brits told me that they were afraid at first to tell us about the incidentóin fear that Cheney would use it as a reason to attack Iran.î The intelligence subsequently was forwarded, he said.
The retired four-star general confirmed that British intelligence ìwas worriedî about passing the information along. ìThe Brits donít trust the Iranians,î the retired general said, ìbut they also donít trust Bush and Cheney.î

Oscar Wyatt cops a plea

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Oscar%20Wyatt%20100207.gif83 year old Houston oilman Oscar S. Wyatt, Jr. ended an ordeal that could have resulted in a life prison sentence yesterday when he agreed to plead guilty (Chron stories here and here) to one count of conspiracy to commit wire fraud in the middle of his ongoing trial in New York City. Wyatt was on trial over charges that he corrupted the United Nationís oil-for-food program by paying paying hundreds of thousands of dollars in illegal kickbacks to Saddam Husseinís regime in 2001 (prior posts here).
Wyatt faces a probable prison sentence of between 18 and 24 months on the one count and he also agreed to forfeit $11 million. The four charges that were dropped in exchange for the guilty plea included conducting financial transactions with an enemy nation (Iraq) and violating a United States embargo on Iraq. He is scheduled to be sentenced on Nov. 27.
My sense is that Wyatt cut a reasonably good deal under the circumstances, or at least as good as any deal can be that likely will require a prison sentence. The government had already cut deals with a series of witnesses who had agreed to testify against Wyatt and — let’s face it — it’s hard to think of a less popular criminal defendant in New York City than a wealthy Texas oilman who openly criticized the U.S. State Department’s traditional Middle Eastern policy of supporting Israel. Moreover, although dozens of companies and individuals were cited in the Volcker Report on the scandal-ridden oil-for-food program, it was clear that the Department of Justice was going to make Wyatt the poster boy for the corrupt U.N. program. As Jeff Skilling discovered (see here, here and here), it’s tough enough fighting against the government’s overwhelming prosecutorial power. It’s virtually impossible to defend criminal charges effectively when the government overlays the prosecution with demonization of the defendant.
Ellen Podgor provides insight on the dynamics that may have triggered the deal.

The Tiger Chasm swallows the Texas Open

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VTO.gifThis earlier post noted how the PGA Tour has forsaken the four Texas Tour events that contribute more to charity than virtually any other Tour events. Just to reaffirm that trend, get a load of the following update on the field for this week’s Valero Texas Open at the Westin LaCantera Resort in San Antonio:

By the 5 p.m. deadline for players to officially commit to next week’s PGA Tour event, they saw one of today’s headline attractions, Presidents Cup representative K.J. Choi, withdraw from the field.[. . .]
The exit of Choi, the world’s 10th-ranked player, for undisclosed reasons leaves [Stephen] Ames, the 2006 Players Championship titlist, as the highest-rated player in the field. At No. 42, he will be the only top-50 competitor on hand.

One top-50 player? The venerable Texas Open — one of the oldest Tour events — has been relegated to a glorified Nationwide Tour event.

$1,200 for that?

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franchione%20kneeling%20100207.jpgAs noted in the weekly football report, the water cooler conversation in these psrts over the past several days has inevitably turned to what on earth was embattled Texas A&M head coach Dennis Franchione thinking when he sold a secret newsletter entitled “VIP Connection” to a dozen or so wealthy Aggies for $1,200 a pop (Franchione rakes in over $2 million annually).
The Dallas Morning News’ Brian Davis came up with a few of the newsletters and passes along some of their content:

The Dallas Morning News obtained several “VIP” newsletters written by McKenzie since December 2004. Most have a positive tone. . . . others talk about what plays A&M will run, the team’s travel schedule and generally harmless fluff. [. . .]
Last November, [the newsletter] outlined A&M’s game plan prior to the Texas game. The Aggies wanted to take shots deep, use gadget plays and “hardball running plays.”
“Lane on power, and then [Mike] Goodson on a zone read that goes toward a different place in the defensive set than usual [they’ve never seen it run this way].”

And people wonder why A&M’s offense lacks imagination? ;^)
Update: The DMN provides even more from the newsletters.
And Ray Melick makes a good point at the end of this column:

[W]hen the guys who were once willing to buy everything you were selling, including your secret newsletter at $1,200 a year, begin to turn on you.
It’s usually a pretty good indication that it’s time to start looking for a comfortable place to fall.

2007 Weekly local football review

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Schaub%20with%20towel.jpg(AP Photo/John Amise)(previous weekly summaries here)
Falcons 26 Texans 16

Don’t christen Gary Kubiak as the next great NFL coach just yet.
After a sprightly start of the season, the Texans (2-2) lost to a mediocre Atlanta (1-3) team that is precisely the type of team that the Texans have to be beat in order to become an average NFL team, much less a good one. Although you won’t hear it much from local media that covers the team, the Texans continue to have huge problems, particularly on offense where their best WR (Andre Johnson) is hurt and the “rushing” attack (more like a walking attack) revolves around two over-the-hill and oft-injured RB’s and a mediocre offensive line. Meanwhile, the defense, while improving, still has gaping holes in the secondary and remains inconsistent in putting heat on the opposing team’s QB. The Texans take on a bad Miami Dolphins (0-4) team next Sunday at Reliant Stadium. Don’t be surprised if the Texans serve up the Dolphins’ first victory of the season.

Kansas State 41 Texas Longhorns 21

The shallowness of the Longhorns’ (4-1/0-1) undefeated record was exposed with a bang in Austin as Kansas State (3-1/1-0) took advantage of two kick returns for touchdowns and four interceptions by Colt McCoy to cruise to an easy 41-21 victory. It was the worst home loss for the Horns in 10 years under coach Mack Brown. Texas as the Wildcats pummelled McCoy with multiple blitz packages that the Horns’ offensive line rarely picked up. The Horns — who have been susceptible to blitz packages during the Brown era except for the 2005 National Championship team led by the elusive QB Vince Young — now must figure out quickly how to overcome an even better blitzing team in Oklahoma (4-1/0-1) next weekend in Dallas or else UT will be facing the daunting prospect of an 0-2 start in Big 12 conference play.

Texas Aggies 34 Baylor 10

The Aggie nation heaved a huge sigh of relief as the Ags (4-1/1-0) methodically pounded the Bears (3-2/0-1) into submission at College Station. After last week’s debacle at South Beach and this week’s revelations of Coach Fran’s stupefyingly stupid secret newsletter, a loss against the Bears could well have prompted the type of meltdown in Aggieland not seen since the infamous firing of Aggie head coach Emory Bellard back in 1978. The Ags used their tried and true ball-control offense to overwhelm the Bears, but it remains to be seen whether the Aggies can consistently beat teams with equal or better personnel while playing offense in a phone booth. The Aggies host resurgent Oklahoma State (3-2/1-0) for first place in the Big 12 South (first place in the Big 12 South is on the line next week at Kyle Field, not the Cotton Bowl?!) before their high-anxiety trip to the plains to meet Tech (4-1/0-1) in two weeks.

East Carolina 37 Houston Cougars 35

The Coogs (3-2/1-1) had their annual shoot-self-in-the-foot game when an awful kicking game and poor run defense combined to allow a mediocre East Carolina (2-3/1-0) to pull out the close win at Robertson Stadium. The Coogs now must travel to face a tough game next Saturday at Alabama (3-2) before returning home in two weeks for their annual crosstown rivalry game with Rice (0-4).

The Rice Owls (0-4) were idle this past weekend, but play Southern Miss (2-2) in a rare Wednesday night game this week before returning home to face Houston on October 13.