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Articles Posted in Federal Crimes

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The Fourth Amendment of the U.S. Constitution protects against unlawful searches and seizures by the government.  When the government wants to obtain a search warrant, an affidavit must be drafted and application must be made to a U.S. Magistrate judge (in federal matters).  The affidavit can be more than a hundred pages at the minimum in complex cases.  The affidavit will begin with an introduction and the background of the agent (his/her experience).  In this section, statements beginning with “Based on my training and experience” are plentiful.  The next section generally addresses probable cause and sets forth facts that show probable cause has been established to support the issuance of a search warrant and that items listed have a reasonable probability of being found during the search.  Finally, it will detail what needs to be searched and what items the government is seeking.  Law enforcement often request search warrants when seeking documents, electronic devices, money, drugs, paraphernalia, ledgers, photos, receipts etc.  A warrant can be requested for real property, a person, electronically stored information from your phone, iPad, computer, external hard drives, a tracking device on a car, the car itself, and/or other modes of transportation such as a boat.

Once the search warrant is signed by the judge, the search warrant will be executed.  Generally, the government will work to execute the warrant with local law enforcement officials. The search can take hours, and often times, questioning will occur at the same time.  NEVER SPEAK TO LAW ENFORCEMENT at this juncture without a lawyer.  This interview at your home or office is often recorded by body cam, audio, and other video devices.  It can be difficult to get those statements excluded at trial for a variety of reasons.

After the execution of the search warrant, a copy of the search warrant inventory will be left, and it will list out exactly what was seized.  In the case of the execution of the search warrant for Donald Trump, there is a search warrant, sworn affidavit, and application filed, but it is under seal.  Mr. Trump also received a search warrant inventory. Hopefully, these documents will be released to the public sooner than later.

The Residential Drug Abuse Program (RDAP) and the Non-Residential Abuse Program (NRDAP) are offered by the Federal Bureau of Prisons (FBOP) to assist inmates suffering from substance abuse issues.

RDAP consists of 3 intensive phases, totaling over 500-hours of voluntary individual and group treatment, and it is about 9-12 months long. This program offers prisoners to live in a modified prosocial community within the prison, separate from the general population. They split their day in half with vocational, work, or school activities and the other half in treatment/programs. Prisoners must meet specific requirements to be considered for this program, and space is often limited. The prisoner must have at least 24 months remaining in their sentence to complete the program.

Since some inmates may have less than a 24-month sentence, the FBOP also offers a Non-Residential Drug Abuse Program (NRDAP), where prisoners can participate in 12-24 weeks of Cognitive-Behavioral Treatment. This treatment consists of skill-building within communication, rational thinking, and institution adjustment. NRDAP is often offered in a group setting and is more accessible to prisoners because of the less strict qualifications. NRDAP differs from RDAP because offenders may join this program if they have short sentences, are not eligible for RDAP, or awaiting availability.

On April 11, 2022, the Northern District of Georgia in Atlanta announced the creation of a new pretrial diversion court, the Accountability, Treatment, and Leadership Court “ATL Court“. It is formed with the Northern District of Georgia, the U.S. Probation Office, the U.S. Attorney’s Office, and the Federal Defender Program, and  will be run by folks from each of these agencies who will be known as the ATL Court Team.  Please note: The ATL Court is in addition to, and not a replacement of, the Northern District of Georgia’s existing Pretrial Diversion Program.

“THE ATL COURT MISSION:  Our mission is to provide the opportunity to avoid some of the consequences of aberrant criminal conduct to certain individuals charged with non-violent crimes in the Northern District of Georgia who would most greatly benefit from intense supervision, education, or treatment.”

HOW ATL COURT WORKS

Manhattan federal agents arrested Archegos Capital Management founder Sung Kook “Bill” Hwang on April 27, 2022 on fraud charges, roughly one year after the investment firm’s huge losses back in March 2021.  Department of Justice prosecutors are charging both Hwang and Patrick Halligan, the firm’s chief financial officer, with racketeering conspiracy, securities fraud and wire fraud offenses as part of schemes allegedly designed to “unlawfully manipulate” the price of publicly traded securities.

The 59-page indictment, filed in federal court in Manhattan, alleges the men and others at Archegos sometimes timed their trades to drum up the interest of other investors, while borrowing money to make bigger and bigger bets. The Department of Justice states, “Hwang and his co-conspirators invested in stocks mostly through special contracts with banks and brokers called “swaps.” As alleged, these swaps allowed Hwang to cause massive buying of certain stocks, including at carefully selected days and times, to artificially pump up stock prices. Hwang, Halligan, and their co-conspirators lied to banks and used a series of manipulative trading techniques to keep those prices high and prevent them from falling. The lies fed the inflation, and the inflation led to more lies. The scale of this alleged fraud was stunning.  In one year, Hwang turned a $1.5 billion portfolio and fraudulently pumped it up into a $35 billion portfolio.” The effective size of the firm’s stock positions swelled to $160 billion — rivaling some of the biggest hedge funds in the world.  The case marks the biggest financial-crime charges to come out of the Southern District of New York under the leadership of Mr. Damian Williams, who was sworn in October 10, 2021.

The SEC has also filed a civil complaint stating that Mr. Becker, the former chief risk officer at Archegos, and Mr. Tomita, the firm’s former top trader, had led discussions with the banks about the firm’s trading positions but that Mr. Hwang and Mr. Halligan had directed and set the tone for those discussions.

Attorney General Merrick Garland made recent comments about what he considered to be the Department of Justice’s top priorities for 2022.  Since taking office in March 2021, Garland has tried to combat crime in a tumultuous time.  He has been criticized for his handling of January 6 investigation and has stated it’s the most urgent probe in history.

With all of this going on, the US Attorney’s office increased its prosecutions of individuals of white collar crimes in the year 2021.  White collar charges like fraud, theft, corruption, bribery, environmental crime, tax fraud, health care fraud, procurement fraud, money laundering, PPP loan fraud, etc will continue to get more attention from the Department of Justice.

What does this mean?  It means that investigations of any sort need to be taken seriously and that you should contact a lawyer immediately if any wrongdoing is alleged.

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What is a Grand Jury?
The purpose of the grand jury is to determine whether or not there is probable cause to believe that any federal felony has been committed. A typical federal grand jury consists of between 16-23 citizens drawn from the community. 
The jurors meet in a closed courtroom, with no judge, no accused, no press, and no lawyer but the prosecutor present. This means your lawyer will NOT be present in the closed court room.  The grand jurors decide whether or not to indict a person or persons by listening to witnesses and evaluating evidence obtained by grand jury subpoenas. At least 12 grand jurors must find that there is sufficient probable cause in order to return a True Bill,  which when signed by the prosecutor becomes the indictment: the formal criminal charge that the government must prove beyond a reasonable doubt at trial. If the grand jury does not find sufficient probable cause, which almost never occurs, then it returns a No Bill.

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Health Care Qui Tam cases

What does Qui Tam mean? 

Qui tam is short for the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which roughly translates to “he who brings an action for the king as well as for himself.”  

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When the PPP program was first created, it was meant to assist business left struggling by the Covid-19 pandemic.  One of the key provisions of the program, was that the Small Business Administration (SBA) would guarantee the loan which meant that borrowers could secure loans more easily.  As mentioned in a previous blog, the government in the spring of 2020 started to go after the most egregious and problematic PPP loan applications and payments and really ramped up prosecutions.

But now, the DOJ, IRS, SEC etc are shifting their focus to more complex investigations.  We have clients where the government is scrutinizing every aspect of the loan application such as 

-was the box checked stating that you only had one entity

The Department of Justice just announced that U.S. Attorney General Merrick B. Garland created COVID-19 Fraud Enforcement Task Force to enhance enforcement efforts against COVID-19 related fraud.

Cases have included:

  • Offers to purchase COVID-19 vaccination cards

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The IRS has just announced that Operation Hidden Treasure will seek to find taxpayers with unreported income from currency transactions.  Did you notice the new question on page 1 of the Tax Form 1040?  It states, “At any time during 2020 did you receive any financial interest in virtual currency?”  Last year this question was only on Schedule 1.

The IRS Criminal Investigation Division (“CID”) will look for typical “flags” in money transactions.  That may include “structuring” (transactions in increments of less than $10,000 to avoid reporting requirements), “the use of nominees, shell corps” (entities used solely for moving money around) or “getting on and off the chain.” (On chain transactions – blockchain is modified to reflect the transaction on a public ledger. Off chain transactions are those that that go off the blockchain.  They work by swapping private keys to an existing wallet instead of transferring funds.)

The IRS identifies and investigates these tax evasion flags.  Operation Hidden Treasure is “all about finding, tracing, and attributing crypto to U.S. Taxpayers.” Do not be fooled into thinking that since it’s cryptocurrency the government does not have the know how to investigate.   Charges for tax evasion, false information on a tax return or even money laundering or structuring can be forthcoming.  Call Conaway & Strickler, PC if you have had a friendly visit from an IRS CID Agent or if you think you might be facing some issues with the IRS.  Carolyn Schenck, national fraud counsel in the IRS Office of Chief Counsel states, “Operation Hidden Treasure is designed to find, trace and attribute such transactions to taxpayers. These transactions are not anonymous.  We see you.”

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