HOUSTON — R. Allen Stanford’s relationship with the chief regulator of his Antigua bank was closer than most.

At a meeting in 2003, they became blood brothers, cutting their wrists and mixing their blood in a “brotherhood ceremony� that Mr. Stanford’s chief financial officer said promoted an elaborate scheme to hide a multibillion-dollar fraud from American and other regulators.

The assertion that the two took a “blood oath� was laid out in a plea agreement signed by the officer, James M. Davis, and filed Thursday. After the pact, Leroy King, Antigua’s chief banking supervisor, called Mr. Stanford “Big Brother.� He received Super Bowl tickets, valued at thousands of dollars, for himself and his girlfriend. And he accepted regular bribe payments from a secret Swiss bank account that Mr. Davis said he was told to handle by Mr. Stanford.

The unusual twist to the case, in which Mr. Stanford is accused of operating a multibillion-dollar Ponzi scheme, was disclosed by Mr. Davis as he pleaded guilty on Thursday to fraud and conspiracy in Federal District Court in Houston. Mr. Davis, who oversaw the movement of vast sums of money at Stanford International Bank, also said in a plea agreement that Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988, when Mr. Stanford ran an offshore bank on the Caribbean island of Montserrat.

“I did wrong. I’m sorry. I apologize. And I take responsibility for my actions,� Mr. Davis said after the hearing.

Mr. Stanford was also supposed to appear in court on Thursday, but he was hospitalized in the morning after his pulse rate soared, his lawyer said.

While he has repeatedly denied accusations that he ran a Ponzi scheme involving certificates of deposit issued by Stanford International Bank, he has also insisted that if anything illegal did happen, it must have been Mr. Davis’s fault.

Mr. Davis, who had been a friend of Mr. Stanford’s since they were roommates at Baylor University in Waco, Tex., started his own church in Mississippi and led prayers before bank business meetings. His lawyer, David Finn, said Mr. Davis was now working on a family farm in Michigan doing manual labor for $10 an hour as an expression of penance. He now faces up to 30 years in prison.

“He had a very heavy heart,� Mr. Finn said. “He was very contrite, and not all of my clients are.�

The plea agreement and a court presentation on Thursday by prosecutors repeated many facts that were outlined in June in an indictment of Mr. Stanford, several Stanford aides and Mr. King. Mr. Stanford and others are accused of defrauding 30,000 investors of $7 billion, filing false reports to regulators and investors, diverting more than $1.6 billion into undisclosed personal loans to Mr. Stanford, and conspiring to obstruct an investigation by the Securities and Exchange Commission.

But the plea agreement offered an assortment of new details, particularly about the relationship between Mr. Stanford and Mr. King, who ran Antigua’s Financial Services Regulatory Commission for much of the last decade. He has been arrested in Antigua and is awaiting extradition to the United States.

Shortly after their 2003 blood-brother ceremony, which also included a second, unnamed Antiguan regulator, Mr. Stanford complained that two Antiguan regulators who worked for Mr. King were “becoming aggressive and suspicious in their examination� of the Stanford bank on the island, the plea agreement said. Both employees “soon thereafter were reassigned or replaced,� Mr. Davis said in the plea agreement.

To show appreciation for Mr. King’s services, Mr. Stanford paid $8,000 for tickets to the 2004 Super Bowl game in Houston so the regulator could take his girlfriend to the event. The next year, in June, Mr. King showed Mr. Stanford a confidential letter he had received from the S.E.C. seeking information about the Stanford bank’s certificates of deposit investment portfolio, stating that the agency had evidence to suggest the bank was engaged in a “possible Ponzi scheme.� Mr. Stanford and an unnamed aide then drafted “a false and misleading response� to the S.E.C., according to the plea agreement.

In September 2006, Mr. King tipped Mr. Stanford off to another letter from the S.E.C. Mr. Stanford, Mr. Davis and others proposed various responses designed to mislead the American regulators, which Mr. King was expected to transmit back to the S.E.C.

Mr. King also helped mislead regulators of the Eastern Caribbean Central Bank when they began raising questions about Mr. Stanford’s bank, the plea agreement said. He faxed a proposed response to the Caribbean regulators to an unnamed lawyer working for Mr. Stanford. In it, Mr. King joked in a handwritten note: “Please do not bill me (laugh), Thanks a million, Lee.� The note was taken as an oblique reference to bribes already paid, according to the agreement.

Mr. King, who holds American and Antiguan passports, is reviewing legal documents and has not yet publicly responded to the charges against him, according to Attorney General Justin Simon of Antigua and Barbuda. In an interview in February, just after Mr. Stanford’s offices in Houston were raided by federal authorities, Mr. King said, “I am absolutely sure that my banking system is clean.�

Times Topics: Robert Allen StanfordMr. Simon said in an interview that he had become aware of the blood-brotherhood ceremony from his own sources. “It is believable,� he said. “As far as how many people are involved, we are still investigating.�

By the middle of 2008, the agreement asserts, Mr. Stanford, Mr. Davis and others were scrambling “desperately� to hide the details of their fraud by inflating the value of their assets on the books with “bogus real estate.� The conspirators “designed a real estate transaction wherein they would falsely inflate and convert an approximate $65 million real estate transaction in Antigua into a purported $3.2 billion dollar asset,� according to the agreement. But by January the S.E.C. was moving in fast, and when Mr. Davis met with Mr. King, “King appeared very stressed� and wondered if they could still hide their secrets. Mr. Davis tried to reassure him.

In an interview in April, Mr. Stanford said he gave Mr. Davis broad responsibilities to oversee investments. “If bad things were happening, he never brought them to my attention,� Mr. Stanford said. “He did his job and I stayed out of his hair.�

Mr. Finn acknowledged after Thursday’s plea hearing that Mr. Stanford would attempt to discredit his client during a future trial. “The only way he walks is if he can convince a jury that my client is the mastermind,� he said. “Allen Stanford uses people. Did my client allow himself to be used? Absolutely.�

Mr. Finn said it would be strange for his client to have run a fraudulent scheme to pay for Mr. Stanford’s lavish lifestyle when he was getting paid relatively little for his efforts. He said Mr. Davis had earned between $5 million and $6 million after taxes over the last decade, and was now virtually penniless.

Mr. Stanford’s lawyer, Dick DeGuerin, has asked for court permission to quit the case because his client can not assure that he will be paid. Mr. Stanford was supposed to appear in court for a hearing on whether he could retain a new legal team. Mr. Stanford has asked to be represented by two other lawyers, but they also have said they need assurances that they will be paid.

Mr. Stanford’s assets and his companies’ assets have been frozen.

After pleading guilty on Aug. 27 to three criminal charges that could put him in prison for 30 years, James M. Davis, the former chief financial officer for Stanford Financial Group and Stanford International Bank Ltd., expressed remorse for his actions that contributed to the downfall of the bank and began more than a decade ago.

“I did wrong. I’m sorry. I apologize,” the silver-haired, 60-year-old former banker told reporters outside the federal courthouse in Houston following his re-arraignment in U.S. District Judge David Hittner’s court.

David Finn, Davis’ criminal-defense attorney, told reporters that Davis, unlike most of his clients, fessed up to his wrongdoing from the first moment he came to his Dallas office.

“He had a heavy heart the first time I met him. He was very contrite,” Finn, a partner in Milner & Finn in Dallas, recalled from their initial meeting earlier this year. “James Davis came in and said, ‘I know I did wrong.’ ”

The very next day, Davis met with investigators for the U.S. Securities and Exchange Commission, Finn said.

Finn said “greed” may explain Davis’ actions.

“Why does anyone do anything that’s wrong? . . . Frankly, my guy allowed himself to be used by Allen Stanford,” Finn said.

According to the factual basis of Davis’ plea deal, prosecutors allege Davis started making false accounting entries beginning in 1988, when he started a job as controller of a bank owned by R. Allen Stanford in Montserrat, and he continued, while in various executive positions with Antigua-based Stanford International Bank, to create “false books and records” that overestimated the value of the bank’s investments, and helped prepare fictitious investment reports about the bank that were provided to securities regulators in Antigua. By the end of 2008, the prosecutors allege in the factual basis for plea, financial documents put SIB’s assets at more than $7 billion, when they were actually less than $2 billion.

Davis also helped Stanford obtain money from a Swiss bank account that Stanford used to bribe at least two employees of the securities regulation agency in Antigua and an outside auditor, the government alleges in the factual basis of the plea deal.

Davis pleaded guilty to one count of conspiracy to commit mail, wire and securities fraud; one count of mail fraud; and one count of conspiracy to obstruct SEC proceedings. He faces up to five years in prison on the two conspiracy charges and up to 20 years in prison on the mail fraud charge. He also faces a fine of up to $250,000 on each charge.

In the plea agreement Davis signed, he agreed to cooperate with the government in its investigation of the alleged $7 billion conspiracy to defraud. As part of the plea deal, he agreed to a $1 billion forfeiture judgment. The government reserves the right to ask for a “downward departure” from the sentencing guidelines if it determines his cooperation rises to the level of “substantial assistance.”

Finn said Davis expects to receive “stiff punishment.”

The charges against Davis were included in United States v. James M. Davis, an information unsealed on June 19. Also on June 19, several other individuals, including Stanford, chairman of Houston-based Stanford Financial Group, were indicted, and each has pleaded not guilty to the criminal charges.

Stanford, who is being held in a federal prison in Conroe, was supposed to appear in Hittner’s court on Aug. 27 for a hearing on who will represent him, but Hittner announced in court that Stanford was taken by ambulance to a hospital at 5:30 a.m. because of an irregular electrocardiogram and a high pulse rate.

Stanford’s attorney, Dick DeGuerin of DeGuerin & Dickson in Houston, has asked to withdraw as his lawyer because he wants assurance that he will be paid. Hittner said the hearing on whether to allow DeGuerin to withdraw will be reset. Stanford announced earlier this month that his new legal team includes Patton Boggs, but Hittner will not allow DeGuerin to withdraw unless another firm enters the case unconditionally. [ See "Between a Rock and a Hard Case," Texas Lawyer, Aug. 10, 2009, page 6. ]

After Davis’ hearing, DeGuerin said he believed stress may have caused Stanford to have medical problems on Aug. 27. Finn said it’s not serendipitous that Stanford was ill on the day Davis was scheduled to plead guilty to criminal charges.

“It had everything to do with my client and me and the government getting together in this courtroom,” Finn said.

Hittner scheduled Davis’ sentencing for Nov. 20. But Finn said it is doubtful Davis will be sentenced before Stanford’s trial is finished. Finn said Davis has been cooperating with the FBI, the U.S. Department of Justice and the SEC and he will continue to do so. Finn noted that Davis came to Houston on Aug. 26, the day before his re-arraignment, and met with the FBI and federal prosecutors.

Finn says his client’s cooperation is important to the government, but the fraud alleged in the indictment is relatively unsophisticated.

“You can just follow the money,” Finn said.

Finn said Davis’ cooperation has extended to assisting the government with a search for evidence in a pond on his property in Mississippi. Finn would not say what the divers were looking for in the pond. When asked if it was money, Finn replied, “I wish.”

Finn said that because the government has seized Davis’ assets through a civil suit filed by the SEC that is pending in the U.S. District Court for the Northern District of Texas, Davis is living with family in Michigan and is working for $10 an hour on a family farm to raise some money to pay his lawyer.

Finn said there is no way Davis has the money to cover the $1 billion forfeiture order. He said Davis made $5 million to $6 million over the past few years.

DeGuerin said it remains to be seen how Davis’ cooperation will impact the criminal case against Stanford and the other defendants.

“Mr. Davis seems to be the center of their case, and we will have to see what happens,” DeGuerin said.

Finn told reporters that the government’s allegations in the factual basis of the plea deal suggest that others may be indicted. The factual basis mentions but fails to identify by name two attorneys and SIB Executive A.

“Not all shoes have dropped yet,” Finn said.

At the government’s request, Hittner continued the terms of Davis’ bond.

April 9 (Bloomberg) — Stanford Group Co. Chief Financial Officer James M. Davis, accused by federal regulators of helping his boss, R. Allen Stanford, run a multibillion dollar Ponzi scheme, will enter plea negotiations with prosecutors.

Davis was sued by the U.S. Securities and Exchange Commission along with Stanford. Davis will negotiate to resolve potential criminal and civil liability related to a suspected $8 billion Ponzi scheme, his attorney said.

“We anticipate beginning those conversations as early as next week,� David Finn, Davis’s lawyer, said today in a phone interview. “Things are accelerating rapidly. We are starting to shift gears and starting to look forward for a resolution.�

The SEC sued Stanford, Davis, Chief Investment Officer Laura Pendergest-Holt and three affiliated companies, accusing them of running a “massive ongoing fraud’’ selling certificates of deposit through Antigua-based Stanford International Bank.

Davis, 60, began cooperating with federal investigators March 25, Finn said. Until now, discussions focused exclusively on helping to locate Stanford assets around the world, including roughly $105 million in Stanford-linked London bank accounts frozen last week by a U.K. High Court order.

“We’ve not had plea negotiations to this point, but we’re making plans to start going down that road,’’ Finn said today. “Thus far virtually all of the time that we’ve spent with the SEC and DOJ investigators has focused on locating assets and helping them understand what did and did not happen.�

‘Most Pressing’

Neither Stanford nor Davis has been charged with a crime. Finn said insuring that talks resolve any potential criminal charges Davis faces would “obviously be the most pressing concern.�

“We’d love to wrap it all up at once,� Finn said. “Our priority will be on the criminal front. The tail won’t be wagging the dog, and the SEC case would be the tail in this situation�

Stanford, 59, said April 6in an interview with ABC News that he might be criminally indicted within the next two weeks. Dick DeGuerin, the Houston lawyer Stanford hopes to hire if he can access court-frozen funds, has denied Stanford did anything wrong.

Pendergest-Holt was charged with criminal obstruction of the investigation and released on $300,000 bail. Her lawyer said she is innocent. Pendergest-Holt agreed to extend the government’s deadline to formally indict her until April 28.

Ian McCaleb, spokesman for the Justice Department, declined to comment on the investigation.

The SEC case is SEC v. Stanford International Bank, 09- 00298, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

Last Updated: April 9, 2009 14:37 EDT

Native Texan R. Allen Stanford told ABC News that fraud allegations against him and his Stanford Financial Group companies are “baloney,� according to a report aired Monday.

In what the network said was Stanford’s first media interview since the Securities and Exchange Commission filed the civil fraud complaint, Stanford also denied the SEC’s allegation that he and codefendants operated a Ponzi scheme — in which early investors are paid with money from later ones.

“I would die and go to hell if it’s a Ponzi scheme,� Stanford said in what appeared to be an unplanned run-in with the television crew. “It’s not a Ponzi scheme. If it was a Ponzi scheme, why are they finding billions and billions of dollars all over the place?�

In February the SEC filed a civil suit against Houston-based Stanford Financial Group, Antigua-based Stanford International Bank and three top executives including Stanford, alleging an $8 billion fraud. Accounts and assets tied to the brokerage, bank and individuals were frozen by court order throughout the U.S. and overseas.

The separate court-appointed receivers for the Stanford companies in the U.S. and Antigua have said there appears to be less than $1 billion in assets tied to the bank based on the property and bank accounts they’ve recovered so far.

Stanford, who so far only faces a civil complaint, also told the network that he expects to be indicted within the next two weeks, but intends to challenge the allegations. “I’m going to fight this with everything in me,� he said.

‘He lost his temper’

Dick DeGuerin, a Houston criminal defense lawyer Stanford hopes to hire, said he has not seen the ABC interview, which he said occurred at a Houston hotel last week.

“It was a chance encounter, and he lost his temper. He felt bad about that and trying to make up for it, he went on and on,� DeGuerin said.

He said he’s not as sure as Stanford that an indictment is imminent.

“It could go quickly, but if they really examine what happened, there will be no indictment,� DeGuerin said.

DeGuerin said Stanford was emotional in the ABC interview, in which he sometimes was tearful, because of his anger over what’s happened to the business he built up for 20 years.

“The SEC caused a run on his banks, they caused banks to be nationalized in other countries,� DeGuerin said. “The SEC has done more damage to the Stanford companies than the stock market crash did.�

In other action in the case Monday, a London court granted the SEC an extended freeze on U.K.-based assets tied to Stanford Financial Group, including more than $100 million in equities and cash.

A freeze order

The High Court in London signed an order freezing the assets through April 27, which according to court documents include about $105 million in assets held in Credit Suisse accounts and another $5 million in accounts at HSBC.

Court-appointed receivers have been searching all over the world for assets tied to the Stanford bank in Antigua. A lawyer representing Stanford Chief Financial Officer James Davis, who also was named in the SEC suit, says his client has been helping the SEC and the Department of Justice in their dealings with European banks.

“We are hopeful that additional assets, particularly with a Swiss flavor, will be located to help compensate the investors,� attorney David Finn said.

According to court papers, Credit Suisse has Stanford accounts with about $97.5  million in hedge fund investments, $1 million in cash, $5.4 million in Swiss franc shares and other assets.

The HSBC accounts contained another $5 million in euros, English pounds, Swiss francs and U.S. dollars.

Credit Suisse had instructions to liquidate the entire London portfolio in early February, just before the SEC filed its case, according to court papers, and on Feb. 12 received an order to wire $17 million to Stanford International Bank accounts in Houston.

According to the court documents, the bank didn’t carry out the orders.

tom.fowler@chron.commary.flood@chron.com

ROBERT SORICH, TIMOTHY McCARTHY, AND PATRICK SLATTERY
v.
UNITED STATES

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SEVENTH CIRCUIT

No. 08–410. Decided February 23, 2009

The petition for a writ of certiorari is denied.

McNally v. United States, 483 U. S. 350 (1987), this Court held that while “[t]he mail fraud statute clearly protects property rights, . . . [it] does not refer to the intangible right of the citizenry to good government.” Id. , at 356.

 

In 

That holding invalidated the theory that official corruption and misconduct, by depriving citizens of their”intangible right” to the honest and impartial services of government, constituted fraud. Although all of the Federal Courts of Appeals had accepted the theory, see id., at 364 (STEVENS, J., dissenting), we declined to “construe the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in settingstandards of disclosure and good government for local and state officials.” Id., at 360 (majority opinion). “If Congress desires to go further,” we said, “it must speak more clearly than it has.” Ibid.

Congress spoke shortly thereafter. “For the purposes of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” 18 U. S. C. §1346.Whether that terse amendment qualifies as speaking “more clearly” or in any way lessens the vagueness andfederalism concerns that produced this Court’s decision in

 

 

 

 

 

 

 

 

 

 

McNally

Though it consists of only 28 words, the statute has been

 

 

 

 

 

 

 

 

 

 

invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries. Courts have upheld convictions of a local housing official who failed to disclose a conflict of interest, United States v. Hasner, 340 F. 3d 1261, 1271 (CA11 2003) (per curiam); a businessman who attempted to pay a state legislator to exercise “informaland behind-the-scenes influence on legislation,” United States v. Potter, 463 F. 3d 9, 18 (CA1 2006); students who schemed with their professors to turn in plagiarized work, United States v. Frost, 125 F. 3d 346, 369 (CA6 1997); lawyers who made side-payments to insurance adjustersin exchange for the expedited processing of their clients’ pending claims, United States v. Rybicki

If the “honest services” theory—broadly stated, that officeholders and employees owe a duty to act only in the best interests of their constituents and employers—istaken seriously and carried to its logical conclusion, presumably the statute also renders criminal a state legislator’s decision to vote for a bill because he expects it willcurry favor with a small minority essential to his reelection; a mayor’s attempt to use the prestige of his office toobtain a restaurant table without a reservation; a public employee’s recommendation of his incompetent friend for a public contract; and any self-dealing by a corporate officer.Indeed, it would seemingly cover a salaried employee’sphoning in sick to go to a ball game. In many cases, moreover, the maximum penalty for violating this statute willbe added to the maximum penalty for violating 18 U. S. C. §666, a federal bribery statute, since violation of the latter requires the additional factor of the employer’s receipt of 

 

 

 

 

 

 

 

 

 

 

To avoid some of these extreme results, the Courts of Appeals have spent two decades attempting to cabin thebreadth of §1346 through a variety of limiting principles. No consensus has emerged. The Fifth Circuit has held that the statute criminalizes only a deprivation of servicesthat is unlawful under state law,

 

 

 

 

 

 

 

 

 

 

United States v. Brumley, 116 F. 3d 728, 735 (1997) (en banc), but other courtshave not agreed, see United States v. Martin, 195 F. 3d 961, 966 (CA7 1999) (Brumley “is contrary to the law inthis circuit . . . and in the other circuits to have addressed the question”). The Seventh Circuit has construed the statute to prohibit only the abuse of position “for private gain,” United States v. Bloom, 149 F. 3d 649, 655 (1998),but other Circuits maintain that gain is not an element of the crime at all, e.g., United States v. Panarella, 277 F. 3d 678, 692 (CA3 2002). Courts have expressed frustration at the lack of any “simple formula specific enough to giveclear cut answers to borderline problems.” United States v. Urciuoli

It is practically gospel in the lower courts that the statute “does not encompass every instance of official misconduct,”

 

 

 

 

 

 

 

 

 

 

United States v. Sawyer, 85 F. 3d 713, 725 (CA1 1996). The Tenth Circuit has confidently proclaimed that the statute is “not violated by every breach of contract, breach of duty, conflict of interest, or misstatement made in the course of dealing,” United States v. Welch, 327 F. 3d 1081, 1107 (CA10 2003). But why that is so, and whatprinciple it is that separates the criminal breaches, conflicts and misstatements from the obnoxious but lawful ones, remains entirely unspecified. Without some coherent limiting principle to define what “the intangible right of honest services” is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline

In the background of the interpretive venture remainthe two concerns voiced by this Court in

 

 

 

 

 

 

 

 

 

 

McNally. First, the prospect of federal prosecutors’ (or federal courts’)creating ethics codes and setting disclosure requirementsfor local and state officials. Is it the role of the Federal Government to define the fiduciary duties that a townalderman or school board trustee owes to his constituents? It is one thing to enact and enforce clear rules againstcertain types of corrupt behavior, e.g., 18 U. S. C. §666(a) (bribes and gratuities to public officials), but quite another to mandate a freestanding, open-ended duty to provide”honest services”—with the details to be worked out caseby-case. See generally Brown, Should Federalism Shield Corruption?—Mail Fraud, State Law and Post-Lopez

Second and relatedly, this Court has long recognized the”basic principle that a criminal statute must give fairwarning of the conduct that it makes a crime.”

 

 

 

 

 

 

 

 

 

 

Bouie v. City of Columbia, 378 U. S. 347, 350 (1964).

There is a serious argument that §1346 is nothing more than an invitation for federal courts to develop a common-law crime of unethical conduct. But “the notion of a commonlaw crime is utterly anathema today,” Rogers v. Tennessee, 532 U. S. 451, 476 (2001) (SCALIA, J., dissenting), and for good reason. It is simply not fair to prosecute someone for a crime that has not been defined until the judicial decision that sends him to jail. “How can the public be expected to know what the statute means when the judgesand prosecutors themselves do not know, or must make it up as they go along?” Rybicki, supra

The present case in which certiorari is sought implicatestwo of the limiting principles that the Courts of Appeals 

 

 

 

 

 

 

 

 

 

 

have debated—whether the crime of deprivation of “honest services” requires a predicate violation of state law, and whether it requires the defendant’s acquisition of somesort of private gain. The jury was instructed that petitioners, who were employed by the city of Chicago, wereobliged, “[a]s part of the honest services they owed the City and the people of the City of Chicago,” to abide by alaundry list of “laws, decrees, and policies,” including a 1983 civil consent decree entered into by the city whichbarred patronage hiring for some city jobs. App. to Pet. forCert. 137–140. The Seventh Circuit approved the instruction, again rejecting the Fifth Circuit’s violation-of-statelaw principle. “It may well be,” the court said, “thatmerely by virtue of being public officials the defendants inherently owed the public a fiduciary duty to dischargetheir offices in the public’s best interest.” 523 F. 3d, at 712. And though petitioners received no direct personal benefit from the patronage they doled out on behalf oftheir political masters, the Seventh Circuit found it sufficient that the patronage appointees—who were not charged in the scheme—accrued private gain. Id.

Finally, in addition to presenting two of the principaldevices the Courts of Appeals have used in an effort to limit §1346, the case also squarely presents the issue of itsconstitutionality. The Court of Appeals rebuffed petitioners’ argument that if §1346 really criminalizes all conduct that is not “in the public’s best interest” and that benefits

 

 

 

 

 

 

 

 

 

 

someone, it is void for vagueness. The court cited two prior Circuit decisions which, it said, “provided sufficientnotice.” Id.

It may be true that petitioners here, like the defendantsin other “honest services” cases, have acted improperly. But “[b]ad men, like good men, are entitled to be tried and sentenced in accordance with law.”

 

 

 

 

 

 

 

 

 

 

Green v. United States, 365 U. S. 301, 309 (1961) (Black, J., dissenting). In light of the conflicts among the Circuits; the longstanding 

 

 

Holder Should Support Executive Order
On Attorney-Client Privilege

WASHINGTON, DC — The Coalition to Preserve the Attorney-Client Privilege issued the following statement on the Senate Judiciary Committee confirmation proceedings scheduled for January 15, 2009 on the nomination of Eric H. Holder Jr., to be Attorney General of the United States:

“The Coalition to Preserve Attorney-Client Privilege urges Attorney General Nominee Eric Holder to support a Presidential Executive Order requiring all federal agencies to adopt reforms of agency policies on attorney-client privilege similar to those adopted by the Department of Justice last August. The Coalition also encourages Mr. Holder to support the enactment of comprehensive federal legislation like the Attorney-Client Privilege Protection Act (ACPPA) that would stop the ever-widening problem of government-coerced waivers of privilege and employee legal rights.
“The Justice Department’s new corporate charging guidelines, which have been incorporated into the “U.S. Attorney’s Manual� are limited to just the Department’s prosecutors and do not alter the harmful forced waiver polices currently in use at the Securities and Exchange Commission, the Environmental Protection Agency, the Department of Housing and Urban Development and many other agencies.
“A Presidential Executive Order applying reforms similar to those at the Justice Department to other agencies—or new comprehensive federal legislation like ACPPA—will protect fundamental attorney-client privilege, work product doctrine and employees’ constitutional rights during investigations.�

The Coalition to Preserve the Attorney-Client Privilege members include the American Chemistry Council, American Civil Liberties Union, Association of Corporate Counsel, Business Civil Liberties, Inc., Business Roundtable, Financial Services Roundtable, Frontiers of Freedom, Lawyers for Civil Justice, National Association of Criminal Defense Lawyers, National Association of Manufacturers, Retail Industry Leaders Association and the U.S. Chamber of Commerce.
CONTACT: Joan Gartlan
(202) 419-3249
(202) 309-2022
<a href=”http://www.dallascriminallawyer.com”target=”_”>David Finn</a>

Sealing of Juvenile Records-Overview

Texas Family Code Section 58.003 provides for the sealing of juvenile records. An individual with juvenile records available for sealing may file an application for sealing of records in a juvenile court of the county in which the proceeding occurred. Juvenile records ordered sealed by the court are removed from the criminal history database. Individuals attempting to seal juvenile records should seek the advice of a licensed attorney, such as David Finn, to determine if they are eligible for an order sealing records.

Texas Family code Section 58.203 restricts access to certain juvenile records. Records relating to an individual’s juvenile case that meet the criteria established by Section 58.203 are certified by the Department for automatic restriction of access.

Who has a Juvenile File and Record In Texas?
If you have been arrested, taken into custody or charged with a criminal offense (Class A or B misdemeanor or any felony) that was committed when you were at least 10 years old but younger than 17 years old, you probably have a juvenile file and record. You may also have a juvenile record if you were charged with some Class C misdemeanor offenses if the justice or municipal court transferred your case to a juvenile court.

What are Juvenile Justice Files and Records?
Under the record keeping system for juvenile records in Texas, if a juvenile was adjudicated for delinquent conduct (Class A or B misdemeanor or any felony), the juvenile probably has a juvenile record with numerous entities including local law enforcement, the Texas Department of Public Safety (DPS) and the Federal Bureau of Investigation (FBI). That record is a permanent record that is not destroyed or erased unless the record is eligible for sealing and the child or the child’s family hires a lawyer to file a petition in court to have the record sealed.

Who usually has Access to Juvenile Records?
While juvenile files and records are generally confidential, there are some important exceptions. A juvenile record can be accessed by police, sheriff’s officers, prosecutors, probation officers, correctional officers, and other criminal and juvenile justice officials in this state and elsewhere. Also, the record may be available to employers, educational institutions, licensing agencies, and other organizations when the person applies for employment or educational programs. Juvenile treatment records (counseling, placement, drug treatment, etc.) are confidential and accessible only to authorized users.

What is the Automatic Restriction of Access to Records System?
In Texas there now exists a records system that is designed to limit access to your juvenile records after you reach 21 years of age if you do not commit criminal offenses after becoming 17 years of age. The system is called Automatic Restriction of Access to Records. This is in addition to your opportunity to have your records sealed and destroyed under other provisions of the Texas Family Code.

Under automatic restriction of access to records, your records are not destroyed or sealed. They remain in place, but under restricted access. They are available only to criminal justice agencies for criminal justices purposes, such as investigating and prosecuting crimes. For all other inquiries, employment, education, etc. the holder of the records is required to reply that the records not exist and you are legally allowed to deny that you were ever arrested, prosecuted or adjudicated for a crime

How does a Juvenile’s Records become eligible for Restricted Access?
For restricted access to take place, no action is required by the child or the child’s family. You do not have to file a petition or hire a lawyer. The process occurs automatically at age 21 if, since your 17th birthday, you have not
Committed a felony or a Class A or B misdemeanor; or
Received deferred adjudication for or been convicted in adult court of a Class A or B misdemeanor or a felony.

If you meet the requirements set out above you will be given a fresh start when you reach age 21. This allows you to pursue various employment and educational opportunities without your past record in the juvenile system to harm you.
But remember, this opportunity will only happen if you do not commit any criminal offenses. If you commit a crime after turning 21, your records will be removed from restricted access.

What does it mean if records are placed on Restricted Access?
If a juvenile’s record is placed on restricted access when the respondent becomes 21 years of age, access to the record will be denied to employers, educational institutions, and other persons who may want the information. Only criminal justice agencies will have access to these records and only for a criminal justice purpose, which include investigation of crimes and for the screening persons who apply for employment in a criminal justice agency (police officers, etc.)

What records are not eligible for Restricted Access?
The only juvenile records that are not eligible for automatic restricted access are cases that were:

Handled as determinate sentence cases by the juvenile court;
Certified (transferred) to adult criminal court to be handled in the same manner as adult cases; or

Prosecuted in justice or municipal court.

What about Gang Records?
Information about gang activity is maintained by DPS in gang book records as authorized by law. These records are exempt from the new system because the access to these records is already limited to criminal justice agencies for a criminal justice purpose.

What about Sex Offender Records?
Sex offender registration records are exempted from the Restricted Access system because the purpose of registration is to notify the public. If you are a registered juvenile sex offender, you may have a right to have your records sealed once your obligation to register expires. Also, there are other legal proceedings that may allow reconsideration of your obligation to register. Talk to your probation or parole officer about these, or speak to a private attorney.

How does the Restricted Access records system benefit my child?
If a juvenile’s records are placed on restricted access, the juvenile may:
Deny the existence of the juvenile record; and
Deny the arrest, prosecution or adjudication ever happened.
For example, once your juvenile records are on restricted access, you may legally answer in the negative when a job application, educational or occupational licensing application asks, you ever been arrested, convicted or adjudicated of a crime?

It is important to understand that if you commit a crime after turning age 17 and you are convicted of or placed on deferred adjudication for the offense in adult criminal court, your records are not eligible for Restricted Access. You do not have the right to deny the existence of your juvenile record. If you deny in this situation, you could be prosecuted for perjury (failing to tell the truth).

If you commit a crime after turning 21, your records will be removed from restricted access. You would then also lose your right to deny the existence of your juvenile record.

What should I do to make sure my records are placed on Restricted Access?

To be sure your records are eligible for and placed on restricted access you must:
Successfully complete your period of probation or parole with no violations; and
Commit no criminal offense after becoming 17 years of age
The Restricted Access system truly gives juveniles the opportunity for rehabilitation and a fresh start if they do not commit any further criminal offenses.

When did this new system take effect?
The new law went into effect September 1, 2001. It applies to all juvenile records created before, on or after September 1, 2001.

Should I still try to get my records sealed or destroyed?
The sealing and destruction of juvenile records procedures do offer some additional benefits to a juvenile and may be the preferred course of action. To have your record sealed, you must initiate a formal court proceeding and may need an attorney. Also, if you have criminal records in a justice or municipal court, special expungement procedures apply. If you have questions about any of these procedures, discuss them with your attorney or your probation or parole officer.

Texas Family Code Sec. 58.003. SEALING OF RECORDS.
(a) Except as provided by Subsections (b) and (c), on the application of a person who has been found to have engaged in delinquent conduct or conduct indicating a need for supervision, or a person taken into custody to determine whether the person engaged in delinquent conduct or conduct indicating a need for supervision, on the juvenile court’s own motion the court shall order the sealing of the records in the case if the court finds that:
(1) two years have elapsed since final discharge of the person or since the last official action in the person’s case if there was no adjudication; and

(2) since the time specified in Subdivision (1), the person has not been convicted of a felony or a misdemeanor involving moral turpitude or found to have engaged in delinquent conduct or conduct indicating a need for supervision and no proceeding is pending seeking conviction or adjudication.

(b) A court may not order the sealing of the records of a person who has received a determinate sentence for engaging in delinquent conduct that violated a penal law listed in Section 53.045 or engaging in habitual felony conduct as described by Section 51.031.

(c) Subject to Subsection (b), a court may order the sealing of records concerning a person adjudicated as having engaged in delinquent conduct that violated a penal law of the grade of felony only if:
(1) the person is 21 years of age or older;

(2) the person was not transferred by a juvenile court under Section 54.02 to a criminal court for prosecution;

(3) the records have not been used as evidence in the punishment phase of a criminal proceeding under Section 3(a), Article 37.07, Code of Criminal Procedure; and
(4) the person has not been convicted of a penal law of the grade of felony after becoming age 17.

(d) The court may grant the relief authorized in Subsection (a) at any time after final discharge of the person or after the last official action in the case if there was no adjudication. If the child is referred to the juvenile court for conduct constituting any offense and at the adjudication hearing the child is found to be not guilty of each offense alleged, the court shall immediately order the sealing of all files and records relating to the case.
(e) Reasonable notice of the hearing shall be given to:
(1) the person who made the application or who is the subject of the records named in the motion;
(2) the prosecuting attorney for the juvenile court;
(3) the authority granting the discharge if the final discharge was from an institution or from parole;

(4) the public or private agency or institution having custody of records named in the application or motion; and

(5) the law enforcement agency having custody of files or records named in the application or motion.

(f) A copy of the sealing order shall be sent to each agency or official named in the order.

(g) On entry of the order:

(1) all law enforcement, prosecuting attorney, clerk of court, and juvenile court records ordered sealed shall be sent before the 61st day after the date the order is received to the court issuing the order;
(2) all records of a public or private agency or institution ordered sealed shall be sent before the 61st day after the date the order is received to the court issuing the order;
(3) all index references to the records ordered sealed shall be deleted before the 61st day after the date the order is received, and verification of the deletion shall be sent before the 61st day after the date of the deletion to the court issuing the order;
(4) the juvenile court, clerk of court, prosecuting attorney, public or private agency or institution, and law enforcement officers and agencies shall properly reply that no record exists with respect to the person on inquiry in any matter; and
(5) the adjudication shall be vacated and the proceeding dismissed and treated for all purposes other than a subsequent capital prosecution, including the purpose of showing a prior finding of delinquent conduct, as if it had never occurred.

(g-1) Any records collected or maintained by the Texas Juvenile Probation Commission, including statistical data submitted under Section 141.044, Human Resources Code, are not subject to a sealing order issued under this section.

(h) Inspection of the sealed records may be permitted by an order of the juvenile court on the petition of the person who is the subject of the records and only by those persons named in the order.

(i) On the final discharge of a child or on the last official action in the case if there is no adjudication, the child shall be given a written explanation of the child’s rights under this section and a copy of the provisions of this section.

(j) A person whose records have been sealed under this section is not required in any proceeding or in any application for employment, information, or licensing to state that the person has been the subject of a proceeding under this title and any statement that the person has never been found to be a delinquent child shall never be held against the person in any criminal or civil proceeding.

(k) A prosecuting attorney may, on application to the juvenile court, reopen at any time the files and records of a person adjudicated as having engaged in delinquent conduct that violated a penal law of the grade of felony sealed by the court under this section for the purposes of Sections 12.42(a)-(c) and (e), Penal Code.

(l) On the motion of a person in whose name records are kept or on the court’s own motion, the court may order the destruction of records that have been sealed under this section if:
(1) the records relate to conduct that did not violate a penal law of the grade of felony or a misdemeanor punishable by confinement in jail;

(2) five years have elapsed since the person’s 16th birthday; and

(3) the person has not been convicted of a felony.

(m) On request of the Department of Public Safety, a juvenile court shall reopen and allow the department to inspect the files and records of the juvenile court relating to an applicant for a license to carry a concealed handgun under Subchapter H, Chapter 411, Government Code.

(n) A record created or maintained under Chapter 62, Code of Criminal Procedure, may not be sealed under this section if the person who is the subject of the record has a continuing obligation to register under that chapter.

(o) An agency or official named in the order that cannot seal the records because the information required in the order under Subsection (p) is incorrect or insufficient shall notify the court issuing the order before the 61st day after the date the agency or official receives the order. The court shall notify the person who made the application or who is the subject of the records named in the motion, or the attorney for that person, before the 61st day after the date the court receives the notice that the agency or official cannot seal the records because there is incorrect or insufficient information in the order.

(p) A person who is eligible to seal records may file an application for the sealing of records in a juvenile court of the county in which the proceedings occurred. The application and sealing order entered on the application must include the following information or an explanation for why one or more of the following is not included:
(1) the applicant’s:
(A) full name;
(B) sex;
(C) race or ethnicity;
(D) date of birth;
(E) driver’s license or identification card number; and
(F) social security number;
(2) the offense charged against the applicant or for which the applicant was referred to the juvenile justice system;

(3) the date on which and the county where the offense was alleged to have been committed; and

(4) if a petition was filed in the juvenile court, the cause number assigned to the petition and the court and county in which the petition was filed.

Added by Acts 1995, 74th Leg., ch. 262, Sec. 53, eff. Jan. 1, 1996. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 10.05(a), eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1086, Sec. 18, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 19.01(20), eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 147, Sec. 1, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 283, Sec. 26, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 949, Sec. 16, eff. Sept. 1, 2005.

For more information on this subject, please contact Dallas criminal defense lawyer David Finn, at (214) 651.1121, or email Mr. Finn at: judgefinn@davidfinn.com
David Finn