Monday, December 21, 2009

Heavy Handedness in Charging and Forcing Pleas

I point readers to an excellent article in yesterday's Wall Street Journal, John A. Emshwiller and Nathan Koppel, Plea Bargains Get Renewed Scrutiny (WSJ 12/19/09). I previously blogged here that the Judge had dismissed indictments against some broadcom defendants for prosecutorial abuse. At the same time, the Judge voided a prior guilty plea in the case. Here is the article's intro:
A surprise twist in the criminal case against Broadcom Corp. co-founder Henry Samueli again raises questions about plea bargains, one of the most important and controversial aspects of the justice system.

In a Santa Ana, Calif., court last week, federal Judge Cormac Carney dismissed the criminal complaint charging Mr. Samueli with lying to the Securities and Exchange Commission in its investigation of whether Broadcom misstated its earnings by improperly accounting for executive stock options. Judge Carney's dismissal came even though Mr. Samueli had stood before him in 2008 and pleaded guilty to that very crime.

Mr. Samueli did what lawyers and legal scholars fear a disturbing number of other people have done: pleaded guilty to a crime they didn't commit or at least believed they didn't commit. These defendants often end up choosing that route because they feel trapped in a corner, or fear getting stuck with a long prison sentence if they go to trial and lose.
I have previously blogged on facets of this matter here. The major aspect of the problem is the combination of the Government's virtually unlimited charging decisions permitting the piling or stacking on of counts and the large amounts involved in some white collar crimes. The defendant is at risk of major incarceration if he does not plea and, as in Samueli, may be convinced that he is guilty when he is really not in order to make the required allocation.

I obvserved this phenomenon in the KPMG criminal case. The defendants through their own alleged conduct and Pinkerton conspiracy concepts faced draconian Guidelines calculations driven principally by the alleged tax loss. Pre-Booker that was a major problem that the Government sought to exploit by offering a plea first to two counts and then to one. The Government forced out one guilty plea while sentencing was in flux. Even after Booker, the problem was only mitigated by the discretion given judges, because they started with the Guidelines calculations.

Fortunately, as in the broadcom case, Judges can mitigate that Government's abuse of power in forcing plea agreements. For Samueli, the Judge simply overturned the guilty plea. In KPMG criminal tax case, the Judge sentenced David Rivkin to one year of probation, using the Booker discretion to effectively nullify all but the collateral consequences and stigma of the guilty plea.


  1. Has there been any case history with regard to judges treatment of the financial penalties in criminal tax cases? Or do they simply review the guilty plea and remain uninvolved with respect to whatever financial penalties the government wishes to impose?

  2. Anonymous,

    I know off-hand of no case law on financial penalties in criminal tax cases. There may be some, but I just don't know about it. My anecdotal experience is that the courts impose none other than plea agreement - contractual restitution which might include perhaps an accuracy related penalty (20%). I suppose that, in appropriate cases (plea for tax evasion), the Government might insist upon contractual restitution for the civil fraud penalty (as well as, perhaps, the acknowledgement of the unlimited civil statute of limitations (or a waiver of it).

    Jack Townsend


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