DOJ Changes Position on False Statements Prosecutions

The federal government will frequently charge individuals with a violation of 18 USC 1001 for giving a False Statement to a Government Agency.  To be convicted under that section, a person must act “willfully” in making false statements to investigators.  Recently, the U.S. Department of Justice (DOJ) has quietly adopted a more defense-friendly position on such prosecutions.  Federal prosecutors are now told that in order to prove a person acted willfully in providing a false statement to a federal agency, they must prove beyond a reasonable doubt that the defendant knew that making the statement was unlawful – not just that the statement was false.  This is a material change in the government’s charging decisions that could affect future white collar investigations and prosecutions under Section 1001.

Such prosecutions have ensnared such high-profile defendants as Martha Stewart and former Illinois Governor Rod Blagojevich.  In short, the government must now prove that the statement was false and the person making the false statement knew that making a false statement was unlawful.

 

Operation Rainmaker: A Tax Fraud Epidemic

Earlier this year, Tampa police detectives realized a decrease in the amount of drug dealers on street corners. Instead of feeling relieved, detectives became worried – this was the first red flag that something was up.

Where was everyone? How were they making money? According to a recent investigation, they were allegedly involved in a money-spinning tax fraud business bringing in $130 million. Instead of putting themselves in danger on street corners, the individuals involved could do this job from the comfort of their own homes; all they needed was a laptop.

As reported by the Seminole Heights Patch, a suspect told Tampa Police Detective Sal Augeri, “Why would I take the risk to sell drugs and get busted when I can put $10,000 on a card and do it all day long from home while the cartoons are on?”

The operation was not sophisticated. The suspects allegedly would log onto sites like Ancestry.com, dig up information on victims (living and deceased) and eventually steal their identity. Another workaround was to buy the information from people who had access to social security numbers (prisons, businesses etc.).

After the information was obtained, the suspect could go to electronic tax filling applications like TurboTax, file a fraudulent claim and have the refund sent somewhere that was untraceable to the individual. Taxpayers soon discovered they could not claim their tax refunds because one had already been filed – this was the second red flag.

The third red flag, and the one that led to the entire investigation, was the fact that police officers were pulling over suspects and finding laptops and Green Dot credit cards.

Making any moves in the investigation was difficult because of the restrictions set by the IRS. The police had to find a way around the obstacles under a federal law that prevents law enforcement from gaining access to tax returns.

Tampa Police Department has joined forces with the Hillsborough County Sheriff’s Office, the Secret Service, the US Postal Inspection Service, the State Attorney’s Office 13th Judicial Circuit and the US Attorney’s Office for the Middle District of Florida. The investigation, named Operation Rainmaker, has resulted “…in $100 million in intercepted taxes, $5 million in recovered taxes and assets, and $25 million in stolen taxes.”

Although we are making progress in the Tampa area, Tampa Police Chief Jane Castor said, “My gut feeling is that this is happening throughout the United States.” This case is a classic example of why citizens must be vigilant in the protection of their personal identification information, especially for the elderly and their children.

Google It, Unless You’re a Juror

The Googling phenomenon is hard to escape; if you’re not sure what a word means, you Google it. If you want to find out who someone is, you Google him/her. When called to serve jury duty, some may find it second nature to look up facts or definitions in relation to the trial they are serving on. In most cases, if anyone on the jury is found to be Googling, a mistrial may be declared and the case could be tossed.

This is not uncommon. In 2009, a mistrial was declared in a largefederal drug trial in Florida when nine jurors admitted to doing research on the Internet. The mistrial resulted in eight weeks of hard work by criminal defense attorneys and federal prosecutors being thrown out.

An article from The Star referenced a first-degree murder trial in Maryland where the jury Googled and discovered two articles referencing body temperature after death. After refusing to declare a mistrial, the murder conviction was later tossed out by an appeals court.

As it may come as second nature to tweet, Google, blog, post or text anything these days, leaving this habit on the steps outside of the courtroom is a good idea. Last week, California Governor Jerry Brownsigned a law making it a misdemeanor for a juror to willfully disobey “a court admonishment related to the prohibition on any form of communication or research about the case, including all forms of electronic or wireless communication or research.”

Over the years, many trials have resulted in what is being called a “Mistrial by Google”, wasting time and money for all parties involved. With California’s recent action, it may not be long until other states adopt similar laws. So next time you are sitting on a jury, think twice before you let your urge to Google takeover, as it could not only result in a mistrial, but could land you in a jail cell as well.

How are you prosecuted for Mortgage Fraud if there is no Federal Statute?

While there is no federal statute that references “mortgage fraud” directly, recent news articles abound on the subject. In four separate cases in South Florida, the U.S. Attorney accuses 27 of mortgage fraud, according to an August 4th article posted on LoanSafe.org. On the same day, an Arizona builder pleads guilty to mortgage fraud, according to KTAR.com and fox news cited that 14 have been charged in a $60 Million mortgage fraud scheme. The list goes on…

Cases involving “mortgage fraud” are typically prosecuted under existing federal statutes involving conspiracy, wire fraud, bank fraud, false statements to an FDIC-Insured Bank and others. Ancillary offenses, including tax fraud and bankruptcy fraud can also be charged following a “mortgage fraud” investigation. Depending on the number of properties involved and the dollar amount of the loss, penalties vary widely and can involve real estate agents, mortgage brokers, real estate attorneys, title closers, appraisers, and straw buyers. Some of the schemes in the news are fairly elaborate, involving fraudulent mortgage applications, fake W-2s and tax stubs, fraudulent short sells and even arson and insurance fraud.

Sometimes innocent consumers unknowingly fall victim to unscrupulous real estate agents, bankers and brokers and may find that they are under investigation by the government for “mortgage fraud”. When this happens, it is critical to contact an experienced federal criminal defense attorney before speaking to the government.

Judge Declares Florida’s Drug Law Unconstitutional

Mary S. Scriven, United States District Judge for the Middle District of Florida, Orlando Division, held Florida Statute 893.13, Florida’s drug statute, unconstitutional in an order filed on July 27, 2011. In accord with Rule 57 of the Federal Rules of Civil Procedure, a Declaratory Judgment shall be entered separately, declaring Florida Statute, 893.13 unconstitutional. In her 43 page order, Judge Scriven granted Petitioner, Mackle Vincent Shelton’s Petition for Writ of Habeas Corpus under 28 U.S.C. Section 2255.

Click for the full text of the opinion.

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