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A N 8 D 8 B 18 AR CE www. NYLJ.com SIN Volume 264—NO. 70 Thursday, October 8, 2020

White-Collar Crime Expert Analysis Implications of a More Conservative Supreme Court for White-Collar Practitioners

ith the selection of The Roberts Court and the Judge Amy Coney ‘White-Collar Paradox’ Barrett as the pro- posed replacement The term “white-collar paradox”— for liberal icon Jus- coined by Prof. J. Kelly Strader to Wtice , a 6-3 con- By And describe justices’ voting in white- Robert J. Richard F. servative majority may shape the Anello Albert collar cases appearing to be at odds future direction of the U.S. Supreme with their tendencies in “blue-collar” Court’s jurisprudence. The generally magnified if Barrett is confirmed. criminal cases—fittingly describes accepted wisdom is that a more lib- A review of recent decisions of the the voting patterns of the Roberts eral court equals a court more protec- Roberts court and of decisions in court, especially when it comes to tive to the rights of a criminal defen- the conservative justices. See J. Kel- dant. But the color of the defendant’s ly Strader, “The Judicial Politics of In the white-collar cases, however, “collar” may make a significant differ- White Collar Crime,” 50 Hastings L.J. the sides tend to flip, and the ence. In recent years, justices of the 1199, 1202-03 (1999). We reviewed the conservative justices oppose pros- Supreme Court have tended to rule Supreme Court’s jurisprudence over ecutors’ efforts in such cases to a differently in white-collar crime cases the last 10 years to try to determine degree not seen in “blue-collar” than how their traditional labels of whether the “white-collar paradox” crime cases. liberal or conservative would suggest continued in the Roberts court. Not in “blue-collar” crime cases. which Barrett participated during surprisingly, we found that in a sig- What one commentator has termed her limited tenure on the U.S. Court nificant majority of the “blue-collar” the “white-collar paradox”—more of Appeals for the Seventh Circuit cases when the court was not unani- conservative justices generally ruling provides some hints regarding how mous, the conservative justices more in a manner advantageous to white- the Supreme Court’s future decisions often supported ruling in favor of the collar criminal defendants—may be may affect the law relevant to white- government, while the liberal justices collar criminal practice, and suggests more often supported ruling in favor Robert J. Anello and Richard F. Albert are that the court will continue to treat of the defendant. This is consistent partners at Morvillo Abramowitz Grand Iason & Anello, PC. Thaddeus R. Kleckley, an associate at the firm, white-collar defendants differently with a Wikipedia analysis of the jus- assisted in the preparation of this article. than their “blue-collar” counterparts. tices’ voting patterns in criminal pro- Thursday, October 8, 2020 cedure cases, which, as of 2017, found viewed as conservative, Scalia, an opinion written by Justice Stephen that justices typically considered Thomas, Alito and Roberts, joined Breyer to affirm the decision of the conservative sparingly supported the opinion of the court rejecting the U.S. Court of Appeals for the Fourth ruling in favor of the defendant: Jus- government’s broad interpretation of Circuit in dismissing criminal tax tice (27.4%); Justice 18 U.S.C. Section 1346, the “honest charges, with Scalia concurring in (33.3%); Justice services” fraud statute, to overturn the judgment. The defendant taxpay- (22.4%); Chief Jus- the former Enron CEO’s conspiracy ers overstated the value of certain tice (31.1%); and Justice conviction. The decision narrowed property they had sold, which caused (18.6%); while justices the scope of the statute, limiting it their gross income from the sale to typically considered liberal more to cover only bribery and kickback be understated by over 25%. Gener- often supported ruling in favor of the schemes. Scalia and Thomas also filed ally, the IRS must assess a deficiency defendant: Justice Ginsburg (62.3%); a concurrence, which Kennedy joined against a taxpayer within three years Justice (55.6%); Jus- in part, stating they would have gone after a return is filed, but that period tice (66.9%); and even further than the court’s hold- can be extended to six years if the Justice (62.5%). See Wiki- ing—as written by Ginsburg—and taxpayers omit an amount in excess pedia, Ideological leanings of United struck down the “honest services” of 25% of gross income. The Supreme States Supreme Court justices, citing fraud statute in its entirety as uncon- Court concluded that the understate- Harold J. Spaeth, Lee Epstein, et al., stitutionally vague. ment of gross income in this case did 2017 Supreme Court Database, (Ver- In McDonnell v. United States, 136 not trigger the extended limitations sion 2017 Release 1). S. Ct. 2355 (2016), Alito, Thomas and period, and affirmed the dismissal. In the white-collar cases, however, Kennedy joined the unanimous opin- In United States v. Lagos, 138 S. the sides tend to flip, and the conser- ion of Chief Justice Roberts, which Ct. 1684 (2018), Justices Kennedy, vative justices oppose prosecutors’ overturned the conviction of the ex- Thomas, Alito, and efforts in such cases to a degree not governor of Virginia, Bob McDonnell. Chief Justice Roberts joined a unan- seen in “blue-collar” crime cases. When the defendant was in office, he imous decision ruling against the Indeed, over the last 10 years, out accepted over $175,000 in loans, gifts government’s interpretation of the of 15 court decisions that would and other benefits from a Virginia busi- Mandatory Victims Restitution Act. typically be considered white-collar nessman. McDonnell was indicted for Petitioner Sergio Lagos pleaded guilty criminal or enforcement cases, at honest services fraud and Hobbs Act to wire fraud and was ordered by fed- least three conservative justices sup- extortion. The Supreme Court inter- eral prosecutors to pay $5 million in ported ruling against the government preted the “official act” requirements restitution to his victim General Elec- in nine of them. That is more than of both statutes narrowly, agreeing tric for their internal investigation of double the rate conservative justices that the defendant’s actions in set- the fraud and for bankruptcy litiga- supported ruling in favor of defen- ting up a meeting, talking to another tion against Lagos. The lower courts dants in typical criminal cases. A full official, or hosting an event—without agreed that the restitution was nec- review of the court’s criminal juris- more—were not enough to amount to essary and proper under the statute prudence is beyond the scope of this be “an official act,” and therefore, his to reimburse GE for its efforts, but article, but the following decisions convictions could not stand. the court reversed, finding that the exemplify the “white-collar paradox.” In United States v. Home Concrete & statute applied only to government Thus in Skilling v. United States, Supply, 566 U.S. 478 (2012), Thomas, investigations based on the statute’s 561 U.S. 358 (2010), justices generally Alito, and Chief Justice Roberts joined plain language. Thursday, October 8, 2020

The foregoing examples illustrate “undisclosed evidence of [the vic- majority opinion indicating a connec- the greater tendencies of conserva- tim’s] hypnosis constitutes a Brady tion between conviction of a non- tive justices on the Roberts court violation,” she nevertheless would violent felony and increased risk of to read criminal statutes narrowly uphold the conviction because the future crime. Barrett found that such in white-collar cases. If the Senate state court concluded that the hyp- studies were not sufficiently tailored confirms President ’s nosis evidence “did not create a to Kanter’s circumstances to be per- nomination of Judge Amy Coney Bar- reasonable probability of a different suasive, and she quoted with approv- rett, white-collar prosecutors might result.” Responding to Barrett’s argu- al a commentator’s remark that “It is find the bench to be even less sup- ment, Judge William Bauer, writing hard to imagine how banning Martha portive in the coming years. for the majority, cited a long line of Stewart or Enron’s Andrew Fastow post-Brady cases that he found to from possessing a gun furthers public Judge demonstrate it “beyond reasonable safety.” Judge Amy Coney Barrett joined the dispute that the prosecutor’s delib- A longer track record would be U.S. Court of Appeals for the Seventh erate concealment of the hypnosis needed to draw any firm conclu- Circuit on Nov. 2, 2017. She has heard evidence [would have] undermined sions, and perhaps Barrett’s dissent a number of criminal appeals, but her confidence in the verdict.” in Kanter is better explained by her record in white-collar cases is rather In Kanter v. Barr, 919 F.3d 437 (7th views about the Second Amendment limited. Nevertheless, a review of her Cir. 2019), a case relating to a white- than about white-collar crime. Never- opinions hints that she may prove collar defendant, Barrett again dis- theless, the views Barrett expresses to be tougher on “blue-collar” crime sented from the majority. The appel- in these dissents suggest that her and more skeptical of the government lant Rickey Kanter, who had pleaded point of view in criminal cases may in white-collar cases. The following guilty to one count of mail fraud, later be impacted by the color of the defen- two dissents are noteworthy in show- brought suit in the Eastern District of dant’s collar. ing both sides of the “white-collar Wisconsin arguing that the applicable Conclusion paradox.” felon gun dispossession statutes, in In the “blue-collar” criminal case of particular 18 U.S.C. Section 922(g) White-collar criminal jurisprudence Sims v. Hyatte, 914 F. 3d 1078 (7th Cir. (1), was unconstitutional as applied will continue to evolve as the Supreme 2019), Barrett dissented from a deci- to him—a nonviolent offender with Court appears likely to swing further sion involving a defendant charged no other criminal record. The dis- into the hands of the conservatives. with the shooting and attempted trict court granted the government’s Based on the prior voting habits of murder of a security guard in Indi- motion to dismiss. Kanter appealed the conservative justices, white-collar ana. At an evidentiary hearing for a and the Seventh Circuit affirmed. In criminal defendants may find the high post-conviction relief petition, Sims her dissent, Barrett wrote that she court receptive to their arguments in learned for the first time that the would have found 18 U.S.C. Section ways that a “blue-collar” defendant deputy prosecuting attorney had 922(g)(1) unconstitutional as applied would not. withheld that the victim in the case to a white-collar nonviolent felon, “identified the defendant ... only after based on a detailed historical analysis hypnotism” was used. The Seventh of the Second Amendment, and her Circuit reversed the conviction in view that such a felon was not “dan- a 2-1 decision. In Barrett’s dissent, gerous.” In doing so, she discounted Reprinted with permission from the October 8, 2020 edition of the NEW YORK LAW JOURNAL © 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 she noted that even though the several statistical studies cited in the or [email protected]. # NYLJ-10072020-462704