Out of court

Thursday, February 25, 2010

Why don't more bankers get indicted?

In the previous blog I discussed identity theft cases. I will now discuss bank fraud and why it is so hard to charge the very greediest bankers at the top. Although such identity theft cases can involve hundreds of thousands of dollars, they are small beans compared to bank fraud, specifically fraud surrounding real estate loans--called mortgages.. To begin with, the average single mortgage here in Seattle is nearly a half million dollars.. If a house is flipped, that is sold quickly over and over, millions can mount up in no time..

In the last 10 years, during the housing bubble, this crime was rampant.. Since banks or lenders assumed that real estate values would continue to go up, they got lazy and failed to scrutinize the ability of the borrower to pay back the loan.. The stupid assumption was that if the loan was below the inflated 'market value' of the house, and even if the buyer could not afford it, the bank could recoup its loss by foreclosing and selling at that ever-increasing market value..

So in the frenzy to earn those fees and points, lenders, banks and mortgage companies failed to perform any due diligence in examining the borrower's assets and income.. In a fraudulent mortgage loan, the borrower's assets and income would be fictional, or confirmed by a confederate.. Instead of really examining the borrower's ability to repay the loan, too many lenders were in a rush to sell and close the loan, and then move on to the next one.. And anyway, the lender never held the paper, i.e., kept the loan to collect the monthly payments; someone else bought that as an investment (one type known as a "derivative..") And lo and behold, we are in the Great Recession of 2008-now!.

The question is then, why haven't the people at the top been charged more for making these loans or selling these terrible investments? Previously I talked about how high the proof standards are for federal charges. In most cases, at least here in Seattle, federal prosecutors do not indict people unless they have a lot of proof of wrongdoing.

Bankers who made reckless loans, stupid investments or overpaid themselves have not necessarily committed a crime. They may have been negligent or reckless with other people's money and certainly overpaid themselves. But it takes fraud to commit a crime. Fraud typically involves intentional lies that other people rely on in parting with their money. Or intentional misstatements about the health of a company or intentional omissions to investors or stockholders. The latter is what got the Enron execs in trouble..

In mortgage fraud cases, the perpetrators typically lie about the borrower's assets and income on the loan application form. That makes for an easy case. Frequently, there are many people involved in these cases and only the top people who run the scam and tell a lot of easily proven lies are charged. I know of cases where only 3 or 4 people are charged, but there may be 20 or 30 who told lies along the way but don't get charged because the proof is not strong enough..

And if you think about the top people--those who earn 10's of millions of dollars--they tend to be smart and careful. They have lawyers review what they say and write to avoid misleading statements. Right now there are investigations involving former top people at Bank of America and the now defunct Washington Mutual. Whether they are charged will depend on how much evidence there is. I constantly shake my head at the fact that many people at these companies made tons of money, even though their companies later went bankrupt or begged for government aid. But that is a flaw of our economic system since greed alone has never been a crime..

Monday, February 22, 2010

How a Federal Indictment can spoil your day

Here in Seattle, federal prosecutors have a conviction rate that easily exceeds 90%.. In simple terms if you are indicted here in federal court, don't buy bulk at Costco.. Having defended people charged in federal court for the last 20 years, which means over 200 cases, I can count on two hands the number of people who have totally walked away from a federal indictment..

By that I mean cases that were dismissed outright such as through suppression of key evidence under the Fourth Amendment, or where a jury acquitted of all charges, or where the prosecution was convinced to dismiss a case.. In the latter category, the defendant typically had to go in, tell the prosecutors her story, and hope they believe her.. I use "her" deliberately, as the usual dismissed case is the spouse or girlfriend who lives with someone who may be growing large amounts of marijuana (say 150 plants) in their basement.. Their way out was to explain exactly how they had nothing to do with the grow operation..

This is not to say I have not gotten good results in many other cases.. I have worked out very favorable plea bargains, even down to misdemeanors with no time, in many cases.. It's just hard..

This 90%+ conviction rate is as it should be.. For when the federal government uses its bottomless resources to go after someone, they don't do it lightly or cheaply.. Federal prosecutors are well trained, highly qualified and make fearsome opponents.. They work hand in glove with federal agencies such as the FBI, DEA and ICE (Immigration and Customs Enforcement) BEFORE deciding to charge someone..

And they are generally circumspect about their awesome power. In other words, they don't indict people on thin evidence--very often.. I have seen bank robbery cases (usually federal cases, as banks are federally insured) sent to state prosecutors if there was a flaw in the case.. Given the powerful party (the U.S. government!)behind an indictment, it is a good thing they are loathe to indict on anything but very strong cases.. If not, a lot more people's days (if not lives) would be spoiled..

To be indicted for a felony in federal court, the prosecutor has to take the case to the grand jury.. A grand jury is composed of 23 people who hear witnesses who testify about the case.. Their standard is "probable cause" (explained in an earlier blog entry) and only a majority, 12 or more votes, are needed to indict.. The grand jurors, the prosecutor, and any other government agents present are sworn to secrecy.. The defendant is rarely asked to testify and even in fewer cases, will take up the offer.. The defendant's lawyer cannot appear before the grand jury.. This is the Constitutional check on the federal prosecutor's power..

Fraud cases are a growing area of federal prosecution.. In the 1980's a new crime evolved: "identity theft..." Sophisticated use of computers, skimmers (electronic devices that g lean the data from the magnetic strip on a credit or debit card) and just blatant theft of key numbers to bank accounts, credit cards, and the like aided this crime.. Basically the thief would gain access to this critical data, create new cards or bank accounts, and use it to withdraw money or to buy merchandise... Very often the thief would adopt the actual identity by using the victim's real name to get the money.. Early on, banks and credit card companies were quite naive--by mailing out information that could be stolen or not checking for picture id.. To this day, banks and credit card companies are still victimized by their own liberal policies regarding access to credit and cash.. I guess it's just a cost of doing business..

Identify theft cases tend to be overwhelming in the amount of evidence garnered against the perpetrators... Such evidence includes videotape from banks and stores (such as Walmart); seized computers with evidence of card making or confidential data; all the paper from these transactions; possession of id's, credit cards, ATM cards or skimmers; and eyewitnesses, including confederates who have become 'cooperating defendants..'

If people only knew how easy they were to prosecute, they might think twice about doing it..

But then I guess the 'easy money' is too tempting..

Thursday, February 18, 2010


What is a ‘domestic violence’ case? Legally it involves a variety of crimes, such as assault, harassment, or malicious mischief (destruction of property), between spouses, family members, people in dating relationships, and household members..

Since 1984, state law (RCW 10.31.100(2)(c))has required the police to arrest anyone over 16 for a domestic assault if there is probable cause to believe it has occurred recently. Reasons for requiring an arrest include: prevention of immediate, future harm; a cooling off period; and an expeditious appearance before a judge so that a ‘no contact order’ can be entered..

Often the accused is the male breadwinner who is jailed, which threatens the entire family’s economic welfare. In some cases, the alleged victim feels as if the ‘system’ is victimizing her and the children by continued incarceration. Entry of a ‘no contact order’ is one of the most painful aspects of these cases, since by their nature they occur between people who know each other. Upon release under a no contact order, the defendant cannot live with the alleged victim, which may cause further economic harm, as well as separating loved ones. Due to these problems, the alleged victim often tries to convince the court to lift the no contact order and more often than not, such a request is denied. I have had cases where the alleged victim is an educated professional woman, who is familiar with the ‘battered wife’ syndrome and articulates good reasons for dropping the no contact order. Yet the judges still deny such requests..

Why do courts deny these requests? To begin with, the law requires no contact orders to be entered at the first appearance. Secondly, domestic violence cases are unpredictable. No judge can see the future. In a small number of cases, the defendant is violent again. Courts try to prevent renewed violence. In the back of many judges’ minds are cases such as the Tacoma police chief who was accused of domestic violence, and then later murdered his wife and killed himself. Other than continued incarceration, the courts only other recourse is to order no contact. Since no one can really predict which defendant might be violent again, it is easier to keep all no contact orders in place than to lift them prematurely. Short of dismissal or acquittal of the charges, one way to lift the no contact order is to have the defendant enter a treatment program. On the other hand, if the defendant fights the case and loses, or pleads guilty, the no contact order often persists throughout the probationary period, or until the defendant is doing well in treatment..

The ‘treatment’ of domestic violence offenders lasts a full year. It must be done with a state certified agency. Whether such treatment programs actually prevent future violence has not been scientifically proven. Nonetheless, prosecutors and judges
rely on them in sentencing domestic violence (d.v.) defendants. It is, after all, an alternative to jail, and the defendant has to pay for it. This one size fits all approach can be vexing. Many defendants are not ‘batterers’ or ‘wife-beaters,’ yet the course of treatment seems geared toward that type of defendant. Some prosecutors view a single incident of domestic violence as proof of a power abusing relationship and therefore believe that qualifies the defendant for d.v. treatment. Of course this ignores the fact that people are individuals and should be treated as such. Alternative treatments with professional psychologists are not easily substituted—few prosecutors will agree to them. And forget about ‘anger management’ courses. These are now disfavored by prosecutors..

As for the alleged victims, sometimes they refuse to cooperate and don’t show up to court. If they have been properly subpoenaed, the prosecutor can get a material witness warrant, have them arrested and brought to court in custody. They could be jailed until they testify. This is not the typical outcome. The other option is to have an officer visit the last known residence of the alleged victim and offer a ride. However, in many, many cases, if the victim does not show up and cannot be contacted on the phone, the case is dismissed. A victim no-show in a domestic violence case is probably the most common no-show of any type of case. This happens for a variety of reasons—recantation of the original accusation; economic interest; family loyalty; fear; intimidation; and so on..

In my many years as a public defender and a Seattle defense attorney, these cases are common. They require patience and tenacity. They are universal, too. When I was touring in Southern Africa, Botswana, to be specific, one of my guides, when he discovered what I did for a living, pulled me aside and asked me about his d.v. case! I told him not to talk to anyone about it and not to violate the no contact order. That is all I could do there, but I can do a lot more here..

Tuesday, February 9, 2010

Do lawyers need to believe their CLIENTS ARE INNOCENT?

In over 30 years as a Seattle defense attorney, I have defended people accused of all sorts of crimes from DUI to murder, clients occasionally ask me: "do you believe I am innocent?" Typically the defendant who asks that tends to be experienced--perhaps in the wrong way. That is, they've been here before. So it is a delicate question usually asked by an indelicate sort. But they believe that their lawyer must believe in their innocence to do a good job.

Why is it a delicate question? Our criminal justice system would be utterly corrupt and unable to function if most accused people were totally innocent, as opposed to most accused having done something, as is the case. The police and the prosecutors are, by and large, honest, hard working people. They would not last in their jobs long if most people they arrested and prosecuted had not done something. Nor could their budgets sustain that..!

The system may presume defendants innocent, but to hold someone to answer to a charge, there must be probable cause. That is, there must be witnesses, evidence, forensics and so on that establish the case. Probable cause is not a high standard--are there specific facts and circumstances to support a reasonable probability that the accused committed the crime? Even with that low standard, most honest prosecutors will not file a charge unless they believe they can prove it beyond a reasonable doubt to a jury. Given that background, I would be dishonest if I told most criminal defendants that I believed they were innocent..

Yet if a lawyer tells a client, "I don't believe you're innocent," the client is likely to lose faith in their lawyer. So how is this answered? One simple answer is "my belief is irrelevant." I am here to defend you, to analyze all the evidence in your case, to see if there are legal or constitutional issues, and to determine if the case can be proved beyond a reasonable doubt. If I find some defense or legal issue, my job is to pursue that as far as I can to either mitigate the punishment or beat the charge. So my belief is irrelevant. It is up to a jury or a judge to 'believe' if you are innocent or guilty. If my beliefs intruded, I might not zealously defend you. You don't want my beliefs--my personal prejudices or preferences--to motivate me, do you? No, you want an advocate who looks under every rock in the case to find a flaw, to push the envelope, and to work until every possibility is explored, not a lawyer who works on 'belief.' If lawyers had to 'believe' their clients were innocent to defend them, few people would be defended very well..

This leads to the inevitable cocktail party question: "how can you defend those people?" In some ways it is easier to defend guilty people. If a person is truly innocent, it makes me worry a lot more since there is always a possibility that an innocent person can be convicted. I would hate to have that on my conscience: I let an innocent person go to prison. No, if all my clients were innocent, I would never sleep..

As for the rest, it is not my job to determine if they are guilty or to punish them. My job, as our adversarial system requires, is to defend them to the best of my abilities. It is the police and prosecutor's job to try to prove they are guilty. It is the jury's job to determine if it is proven. And it is the judge's job to punish in the event guilt is proven. If our system is to function fairly, and if I am to contribute in any way to the rule of law, then everyone, including drug dealers or sex offenders, not just the rich and powerful, deserves their day in court and the best possible defense. Aren't tobacco companies just well funded, age old drug dealers? Crack cocaine dealers are less insidious in a way--they don't fund dubious research to show how safe crack is. No, as long as tobacco corporations and their ilk can litigate their interests in court to defend their assets and interests, I have no problem defending "those [guilty] people.."

If "those people" don't feel that they had the best possible defense, then what will they think when they are in prison? Won't they blame their lawyers for not doing the job? Won't they be bitter and believe only the rich, or the OJ's, can beat the system? What kind of people will they be upon release from prison? They won't blame themselves. But if they did get the best possible defense, and they know it, then the blame for going to prison may be directed elsewhere. And perhaps rehabilitation will follow..

First and foremost: TAKE CARE OF YOUR CLIENTS

A high school girl was interviewing me for a class last week, wanting to know what did I like best about defending the accused. It only took a moment as my gaze fell on some thank you cards from former clients. The joy of helping someone who later appreciates it. I showed her the thank you cards and an annual Christmas card I get from one client I represented when he was in high school like her. This is what makes it worthwhile. A few former clients have even mentioned the possibility of going to law school to do what I do. I don't know if any ever did yet. . . But those notions are a good antidote to all the lawyer jokes about greedy, slimy sharks that everyone, including myself, love to tell..

Lawyer jokes are popular because lawyers cost a lot of money and then treat witnesses rudely or prolong insurance claims to pad the bill or argue over the meaning of words such as "intent" or "any." One way to counter this is to work hard for your money by taking care of the client who hires you..

At the start, before I am even hired, I level with people who are charged with crimes. I never promise I can 'get them off.' Generally, and this is well known in the criminal justice system, people who are charged with crimes did something. It is actually rare to get a case where the accused had absolutely nothing to do with the crime charged. True, there are many 'innocent' defendants--factully innocent in the sense that 'some other dude did it;' legally innocent in that they used lawful force to defend themselves; or constitutionally protected in that the police violated the 4th Amendment rules on search to obtain evidence. But, to be sure, those are the exceptions and not the rule..

The run of the mill driving under the influence case invariably involves someone stopped for a traffic infraction who admittedly had some alcohol to drink. The only question is was it too much or not? That is a narrow margin to work with. So when a DUI case comes in my door I don't say I can beat the rap. Instead I listen to the story, promise to do my best and explain the available options. I try to relieve their anxiety. I tell my new DUI client what he or she should do before our next court date and to let me do the worrying about the rest. So often these words alone lift some of the burden of being accused off of their shoulders. And when I do beat the rap or get a deal they can't refuse, the client may not recall whether I was cautious at first or not . . . and they certainly don't care..

Truth is my ally. No guarantees or false promises. I know of lawyers barely out of law school who post clever, fancy ads that are totally false, as they claim experience or success that doesn't exist. Of course they do it because they need business and are just starting out. Some eventually become what they advertise. As a lawyer of 32 years, the old referral system--one lawyer to another or referrals from former clients--is preferred. (Would you hire a doctor based on an internet or yellow pages ad?) For my own part, I don't want people to hire me thinking I am something I am not. When I tell a client I will do something for them, I do it. When a client calls, I return the call. When I am hired and a client owes me money, I still do the job as well as I can. I have former clients, whose cases I won, who still owe me money, . . . and probably won't pay..

In my court appointed cases, I tell my clients I will work as hard for them as for my privately retained clients. Many find this hard to believe. A lawyer who is not motivated by money is not a lawyer many people believe will really work for them. (After all, don't lawyers = money?)Perhaps there is a kernal of truth in that, but more likely it reflects more on the person who believes that..

When I was a public defender in the 80's, I always laughed at the pseudo-sophisticates who shouted: 'I want a real lawyer, not a public defender.' Of course the ones who shouted loudest never earned enough to afford a private lawyer and if any of them did, they would hire a showy lawyer who was more inept and less experienced than most public defenders. Usually the problem with public defenders is too many cases, not enough time, and sometimes not enough experience. But it is not the case that they care less about their clients than private lawyers. Experienced defenders are often more competent than many private lawyers. I was proud of being a public defender and now despite my shift to the private sector, I still take pride in doing my best--no matter who pays my bill. If people don't believe that, it's their problem..

My job only exists to help my client. That is the adversarial system. I live with it every day. Just remember that . . ..

Monday, February 8, 2010

What happens at my first court appearance?

What happens at the first court appearance (intake) for misdemeanors?
If the crime is a DUI or domestic violence misdemeanor, you must appear for the arraignment. That is the court appearance at which the charge is formally presented or read and invariably the plea is not guilty. Bail may also be argued at the hearing. Do not waive any rights, including your right to a jury trial, at arraignment. A waiver of any rights should only be done after consulting a lawyer. If the charge is a different misdemeanor, the arraignment may be waived by a lawyer, if you have one in advance of the arraignment date. A person arrested and booked in the jail for a misdemeanor will usually appear on the next business day for arraignment and bail hearing.

What happens during a felony arrest?
If you are arrested and booked for a felony in a state case, the first appearance is usually at what is called an “investigation calendar.” The purpose of that court appearance is for a judge to determine if there is probable cause to hold you in jail or require bail, and if so, to set bail. In most courts, the judge makes the probable cause determination based upon a sworn police statement which summarizes the charges. It is a very low threshold and the court assumes the allegations are true. In a small number of cases, a court will find no probable cause. After probable cause is determined, then the lawyers can argue for bail or for a personal recognizance (PR) release. A PR release is a simple, signed promise by the arrested person to return to court.
Whether the arrested person is released or not, the court will then set a second appearance date, which will be within 72 hours of the booking time in the jail. (Weekends and holidays do not count in the 72 hour rule.) Arrested people who are not released from jail must have a charge filed by the prosecutor by 4:30 p.m. of the second appearance date, or be released from jail that day.
In King County, people who have not been released following the first court appearance are usually not brought back to court for the second appearance. However, people who are released must return to court for the second appearance. At that second hearing, they are either informed that charges have been filed and they must come back to court for arraignment, or they are released outright. For those still in jail, the court frequently reads a list of those who will be released later that day and those who will stay to face filed charges.
NOTE: an outright release DOES NOT MEAN THE CASE IS OVER. All it means is the prosecutor did not file the charge within 72 hours of booking. The prosecutor can still file charges within the statute of limitations, which can be a few years or without limit, depending on the crime.

What happens if I am arrested for federal charges?
If you are arrested for federal charges, you will be brought to federal court the next business day for your first appearance. At that hearing, the court decides if the complaint containing the allegations establishes probable cause. If so, bail may be argued. However, in many federal cases (e.g., drugs, firearms, bank robbery) the prosecutor can move for detention, and no bail hearing is held for at least 3 days. The arrested person is then held at the Federal Detention Center at SeaTac until that time.
Most federal charges are based on indictments handed down by a 23 person grand jury. The accused and/or lawyer for the accused normally has no opportunity to appear before that grand jury. If a person is arrested and held on a complaint, a preliminary hearing is set. However, they rarely occur since they are cancelled when the government obtains an indictment. Thereafter, an arraignment occurs. That is when the charge is formally presented or read and invariably the plea is not guilty.

What happens at a bail hearing?
Whether a person is in city, state or federal court, bail issues are very similar. All Courts look at: the criminal record, if any; the record a person has of showing up to court in the past (e.g., “FTA’s,” failures to appear are bad); ties to the community—including family, job, education, and length of residence; and the nature of the criminal charges. It never hurts to have family, friends, references and other material in court to support bail reduction or a personal recognizance release.

What do you do when arrested?

What should I do if I am arrested for a crime?
1. Remain calm.
2. Ask for a lawyer.
3. Provide your name and identification only.
4. Do not answer any questions about the case.
5. Ask for a lawyer at every opportunity.

What should I do if I'm arrested for driving under the influence?
1. Remain calm.
2. Ask for a lawyer.
3. Provide your name and identification only.
4. Do not answer any questions about the case.
5. You are not required to perform any tests at the scene, athough the fact that you refused to do 'field tests' is admissible at trial.
6. Ask for a lawyer upon arrival at the station.
7. Speak to a lawyer before deciding about the breath test.
8. If no lawyer available before breath test at station, take the breath test if you have a valid license anywhere.