David Deitch: What Distinguishes a Lawyer in the Courtroom
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Attorney David Deitch on Government Enforcement Actions Against Internet Businesses to Look for in 2013
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What should I do when I receive a letter from a prosecutor?
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Building on his experiences as a prosecutor, David has spent his career in private practice representing prominent men and women under investigation by the government for alleged business crimes and in commercial litigation, and assisting companies in conducting internal investigations into allegations of wrongdoing.
While many lawyers never see the inside of a courtroom, David has tried well over a hundred felony jury cases on behalf of federal and state law enforcement agencies, including the United States Attorney’s Office for the District of Columbia, the Counterterrorism Section of the National Security Division of the United States Department of Justice, and the Manhattan District Attorney’s Office in New York City. These trials included two of the Department of Justice’s complex and high-profile cases against supporters of international terrorism.
In private practice, David has continued to ply his trade in the courtroom, with recent successes securing a jury verdict rejecting fraud claims against a client facing civil enforcement proceedings by the SEC, and a jury verdict awarding millions to a client wrongfully cut out of a business deal he helped to create.
David has proven a formidable advocate for his clients at Ifrah Law and several other highly regarded law firms, including Covington & Burling and Janis, Schuelke & Wechsler, representing clients facing investigations and prosecutions involving a wide variety of federal crimes, including wire fraud, bribery, export control violations, and violations of the Foreign Corrupt Practices Act. David’s experiences enable him to recognize what strategy is likely to be most effective for a particular client’s case, and give him the kind of respect and credibility that make him an effective advocate in dealing with government agencies.
David has also been active in professional legal organizations since leaving government. In June 2007, he was elected to the steering committee of the Criminal Law and Individual Rights Section of the DC Bar, and he served as the co-chair of the steering committee from 2009 to 2011. David also served as a member of the steering committee of the Committee on National Security Law, Policy & Practice of the Bar Association of the District of Columbia from 2010 to 2011.
Awards + Recognition
- Assistant Attorney General’s Award for Advancing National Security, Nov 2004
- Alvin J. Feldman Award for Outstanding Scholarship in the Area of Corporate and Commercial Law, June 1988
Professional + Community
- Member, ABA Criminal Justice Section
- Member, National Association of Criminal Defense Lawyers
Obtaining a Winning Verdict After a Business Relationship Dissolves
Our client, Learning Annex, is a national leader in the post-secondary education industry. In three decades of business success, it has established many professional relationships. After Learning Annex created a unique strategy to promote the business of a financial self-help guru through free preview seminars and found a perfect partner for the execution of that strategy, those parties then cut Learning Annex out of the deal. Ifrah Law was part of the legal team that helped Learning Annex vindicate its rights.
David Deitch of Ifrah Law was co-counsel in a lengthy jury trial in the United States District Court for the Southern District of New York in which Learning Annex sought to recover the value of the services it had provided under theories of quantum meruit and unjust enrichment. The jury found in favor of Learning Annex and awarded damages of over $14 million, which together with pre-judgment interest totaled over $20 million. The court upheld the verdict on liability, but ordered a new trial on damages. After a retrial of damages in April 2012, a second jury awarded Learning Annex even more: $15.8 million plus interest.
(Learning Annex Holdings, LLC v. Whitney Education Group, Inc., No. 09- Civ-4432 (SAS) (S.D.N.Y.))
Obtaining Dismissal of Fraud Claims Against Online Gambling
In the first class action suit brought by former U.S. poker players, Ifrah Law went all in and won a big pot on behalf of an online poker company and individual poker pros that were defendants.
The suit involved complex fraud issues arising out of claims of Racketeer Influenced and Corrupt Organizations Act (RICO) violations. These issues resulted from the plaintiff’s demand for return of U.S. player funds held in online gambler accounts after Black Friday. On that day in 2011, the U.S. government shut down the three most popular online poker sites. More than two million citizens were playing our national card game online, and they were confronted by the seals of the FBI and Department of Justice and a notice of domain name seizure as well as blocked access to each player’s account balance.
The lawsuit demanded return of plaintiff’s money under a conversion claim, and also accused the defendants of racketeering, which would have entitled the plaintiffs to three times the damages owed.
In a closely watched argument in the U.S. District Court for the Southern District of New York, Ifrah Law held all the right cards and won a dismissal of all claims against the poker pro defendants, as well as all RICO claims against the corporate defendants. The
judge’s order was a big win for the individual defendants in this case, but also a victory
for individual defendants in other class action cases pending in New York.
(Segal et al v Bitar et al. 1:11-cv-04521-LBS (S.D.N.Y.))
Clearing SEC Charges Against a Former Securities Broker
When the U.S. government pushed Frederick O’Meally, the former Prudential Securities Inc. broker pushed back – and won.
Ifrah Law partner David Deitch acted as co-lead counsel in obtaining a jury verdict, rejecting claims by the U.S. Securities and Exchange Commission that O’Meally defrauded 60 mutual fund companies. The jury also rejected the SEC’s negligence claims with respect to 54 of the funds and found only that O’Meally was negligent in his conduct with respect to six of the funds.
Mr. O’Meally had fought the SEC for eight years, claiming his innocence and sticking up for his rights. The SEC asserted that the mutual fund companies had tried to prevent O’Meally from market timing on behalf of his clients, and that he had continued doing so through deception involving multiple account numbers and numerous financial advisor identifying numbers used in trades. But after a four-week trial, the jury found that the defendant did not commit any intentional fraud against the mutual fund companies. Evidence at trial showed that O’Meally had not misused these tools and that, in fact, all of his trading practices had been approved multiple times by his supervisors, by Prudential Securities lawyers and compliance personnel, and even by outside regulators.
The O’Meally case was one of the very small number of SEC compliance cases that go to trial each year, and one of an even smaller number of cases in which a jury has completely rejected SEC claims of fraud. While Prudential Securities and a number of other brokers targeted by the SEC negotiated settlements, Ifrah Law was part of the team that helped Frederick O’Meally vindicate his claims that he was innocent of the SEC’s fraud accusations.
(Securities and Exchange Commission v. O’Meally, No. 06-Civ-6483 (LTS) (S.D.N.Y.), No. 13-1116 (2d Cir.) )
Photo: “LAX-International-checkin” by TimBray at en.wikipedia.
Developments in law are sluggish compared to the rapid rate of technological advancement, and courts must constantly apply old legal principles to technologies which were not contemplated at the time the laws were enacted. Recently, technology has been at the forefront of privacy rights debates, in light of revelations that the government has access to online communications, personal data storage and extensive monitoring via technology. The Fourth Amendment of the United States Constitution establishes a privacy right by prohibiting unreasonable search and seizure, but the extent to which that applies to technology is largely untested. Last week, a federal judge upheld this fundamental right as she ruled that our client’s rights had indeed been violated by an unreasonable search and seizure of a laptop computer conducted by the government.
U.S. District Court Judge Amy Berman Jackson granted a motion which we filed on behalf of our client, South Korean businessman Jae Shik Kim, to suppress evidence seized from his laptop as he departed the country from Los Angeles International Airport in October 2012. The decision severely cripples the government’s case alleging that Kim conspired to sell aircraft technology illegally to Iran, in United States of America vs. Jae Shik Kim, Karham Eng. Corp. (Crim. Action No. 13-0100 in the U.S. District Court for the District of Columbia).
The seizure of Mr. Kim’s laptop presents a unique challenge in an undeveloped area of law. The government claimed that because Mr. Kim’s laptop was seized at the border, it was free to search the computer without having any suspicion that he was presently engaged in criminal activity, the same way the government is free to search a piece of luggage or a cargo container. Yet anyone who owns a laptop, smartphone, tablet, or any other personal mobile device, knows that the breadth and depth of private information stored within these gadgets are intimately tied to our identities and should be entitled to a heightened level of privacy.
Judge Jackson, who understood this aspect of modern mobile devices, wisely rejected the government’s argument that a computer is simply a ‘container’ and that the government has an ‘unfettered right’ to search. In her memorandum opinion and order, she wrote, “…given the vast storage capacity of even the most basic laptops, and the capacity of computers to retain metadata and even deleted material, one cannot treat an electronic storage device like a handbag simply because you can put things in it and then carry it onto a plane.”
In her decision, Judge Jackson also repeatedly referred to “reasonableness” as the “touchstone for a warrantless search.” She keenly balanced the government’s imperative to protect our borders with individuals’ privacy rights. Judge Jackson found that the nature of the search — including that the government conducted the search as Kim departed the country (and not as he entered) to gather evidence in a pre-existing investigation, and that it made a copy of the entire contents of Kim’s laptop for an “unlimited duration and an examination of unlimited scope” — amounted to an invasion of privacy and an unreasonable search and seizure.
While the search of Mr. Kim was technically a border search, his laptop was not searched at the airport. Instead, it was transported 150 miles to San Diego and held until government agents were able to find and secure information they deemed valuable to their case. In fact, Mr. Kim was deemed so little of a threat to national security that he was permitted to board his flight. Judge Jackson noted that if the government’s asserted justification for the search were to stand, it “would mean that the border search doctrine has no borders.”
In this case, unfortunately, the government overstepped the boundaries established by Fourth Amendment of the Constitution, however the checks and balances imposed by the same foundational document proved to correct this error, and rightly so, as our laws continuously strive to adjust to the reality of rapidly evolving technology.
The post Laptops, Border Checks and The Fourth Amendment appeared first on Crime In The Suites.
A recent decision of the U.S. Court of Appeals for the Fifth Circuit Court serves as a good reminder that criminal statutes say only what they say, and that it is up to the legislature to revise statutes to expand their scope if the legislature cares to do so.
The opinion, United States v. Kaluza, arose from the April 20, 2010, blowout of oil, natural gas and mud at the Macondo well, located on the Outer Continental Shelf in the waters of the Gulf of Mexico. The blowout resulted in explosions and fires on the Deepwater Horizon, a drilling rig chartered by the BP petroleum company, that led to the death of eleven men.
Robert Kaluza and Donald Vidrine were “well site leaders” – the highest ranking BP employees working on the rig. Kaluza and Vidrine were indicted in the Eastern District of Louisiana on 23 counts, including 11 counts of “seaman’s manslaughter” or “ship officer manslaughter” in violation of 18 U.S.C. § 1115. Section 1115 is titled “Misconduct or neglect of ship officers” and provides, in part, that:
Every captain, engineer, pilot, or other person employed on any steamboat or vessel, by whose misconduct, negligence, or inattention to his duties on such vessel the life of any person is destroyed, and every owner, charterer, inspector, or other public officer, through whose fraud, neglect, connivance, misconduct, or violation of law the life any person is destroyed, shall be fined under this title or imprisoned not more than ten years, or both.
On the one hand, unlike the common law definition of manslaughter and the companion statutory definition for general manslaughter found in Section 1112, Section 1115 only requires proof of negligence. On the other hand, the portion of the statute quoted above specifically states that it applies only to two groups of individuals: (1) every captain, engineer, pilot, or other person employed on any steamboat or vessel; and (2) every owner, charterer, inspector, or other public official. The second of these categories clearly did not apply to the two individual defendants, and the Fifth Circuit upheld the district court’s dismissal of the Section 1115 charges on the ground that neither of the defendants fit in the first.
Because neither of the defendants was a “captain, engineer [or] pilot” of a vessel, the issue was whether the men fell within the scope of “[e]very . . . other person employed on any . . . vessel.” In making this assessment, the Court of Appeals literally walked through this phrase word by word, indicating the dictionary definition for each one. Having done so, the Court rejected the government’s argument that the plain text of the statute was unambiguous, and encompassed every person employed on the Deepwater Horizon. The Court noted that such a conclusion would make the inclusion of “captain,” “engineer,” and “pilot” superfluous; instead, invoking the principle of ejusdem generis, the Court held that these terms limit the scope of the otherwise open-ended “every . . . other person.”
The Court emphasized that the limiting principle of ejusdem generis has particular force with respect to criminal statutes, so that unsuspecting persons are not ensnared by ambiguous statutory language. Finding that the common attribute of these specific positions was that all are involved in positions of authority responsible for the success of a vessel as a means of transportation on water. Because the defendants were responsible for drilling operations, and not the marine transportation functions of the Deepwater Horizon, they did not fall within this category, and therefore could not be held liable for seaman’s manslaughter.
The Kaluza case is a textbook example of how courts can and should carefully interpret ambiguous statutes so that they may be applied only to those persons and acts to which Congress intended them to apply. The case is certain to provide guidance to trial judges in the Fifth Circuit and elsewhere when similar circumstances arise in other cases.
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The law of unintended consequences – a distant cousin of Murphy’s Law – states that the actions of human beings will always have effects that are unanticipated and unintended. The law could prove a perfect fit for recent efforts by class action counsel to rely upon the Federal Wiretap Act in lawsuits arising from adware installed on personal home computers.
Take, for example, the recently filed case of Bennett v. Lenovo (United States), Inc. In that case, the plaintiff seeks to represent a class of purchasers of Lenovo laptop computers complaining that “Superfish” software that was preloaded on the laptops directed them to preferred advertisements based on their internet browsing behavior. The most interesting claim included in the complaint is the assertion that Lenovo and Superfish violated the Federal Wiretap Act.
Wiretap? What wiretap?
The Federal Wiretap Act was originally passed as Title III of the Omnibus Crime Control and Safe Streets Act of 1968. These provisions were included, at least in part, as a result of concerns about investigative techniques used by the FBI and other law enforcement agencies that threatened the privacy rights of individuals. In passing the Wiretap Act, Congress was clearly focused on the need to protect communications between individuals by telephone, telegraph and the like. The Electronic Communications Privacy Act of 1986 (ECPA) broadened the application of the statute by expanding the kinds of communications to which the statute applied. But the focus was still on communications between individuals.
As is often the case, technology is testing the boundaries of this nearly 50-year-old law. The Bennett case is not the first case in which a plaintiff has argued that software on his or her computer that reads the user’s behavior violates the Wire Act. In some cases, the software in question has been so-called “keylogging” software that captures every one of a user’s keystrokes. Cases considering such claims (or similar claims under state statutes modeled after the federal Act) have been split – some based on the specifics of when and how the software actually captured the information, and others based possibly on differences in the law in different parts of the country.
One of the more interesting cases, Klumb v. Gloan, 2-09-CV 115 (ED Tenn 2012), involved a husband who sued his estranged wife when he discovered that she had placed spyware on his computer. At trial, the husband demonstrated that during his marriage, his wife installed eBlaster, a program capable of not only recording key strokes, but also intercepting emails and monitoring websites visited. The husband alleged that once intercepted, the wife altered the emails and other legal documents to make it appear as if the husband was having an affair. The motive? Money, of course. Adultery was a basis to void the pre-nuptial agreement that the parties had executed prior to their ill-fated marriage. The wife – who was a law school graduate – argued that the installation was consensual. Although consent is a recognized defense to a claim of violating the Federal Wiretap Act, for a variety of reasons, the court discredited the wife’s testimony regarding the purported consent and awarded damages and attorney’s fees to the husband plaintiff.
The Bennett plaintiffs may or may not succeed in showing the facts and arguing the law sufficient to prevail in their claim, and we know too little about the facts in that case to express a prediction of the result in that case. But we can state with confidence that the continued expansion of how the Wiretap Act is applied will, at some point, require that Congress step in and update the statute to make clear how it applies in the new internet-based world in which we now live.
This week, the United States Supreme Court resolved some fishy matters on which prosecutors sought to base a federal felony conviction.
The case, Yates v. United States, arose from a offshore inspection of a commercial fishing vessel in the Gulf of Mexico. During the inspection, a federal agent found that the ship’s catch contained undersized red grouper, in violation of federal conservation regulations. The agent instructed the ship’s captain, Mr. Yates, to keep the undersized fish segregated from the rest of the catch until the ship returned to port. But after the officer left, Yates instead told a crew member to throw the undersized fish overboard. Yates was subsequently charged with destroying, concealing and covering up undersized fish, in violation of Title 18, United States Code, section 1519. That section provides that a person may be fined or imprisoned for up to 20 years if he “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation.
At trial, Yates moved for a judgment of acquittal on this charge, noting that the provision was part of the Sarbanes-Oxley Act of 2002. That law was designed to protect investors and restore trust in financial markets after the collapse of Enron Corporation. Yates argued that the reference to “tangible object” was meant to refer to objects that store information, such as computer hard drives, and did not refer to fish. The Court denied the motion and the jury convicted Yates, and the Eleventh Circuit Court of Appeals affirmed the conviction, finding that fish are objects having physical form, and therefore fall within the dictionary definition of a “tangible object.”
In a majority opinion authored by Justice Ginsburg (and joined by the Chief Justice, Justice Breyer and Justice Sotomayor), the Court relied upon “[f]amiliar interpretive guides” in ruling that the “tangible object” to which section 1519 referred was indeed used to record or preserve information. In so ruling, the Court placed significant emphasis on context – in particular, the other parts of Title 18, Chapter 73. The Court noted Congress placed section 1519 at the end of that chapter immediately after pre-existing specialized provisions expressly aimed at corporate fraud and financial audits. The Court also noted the contemporaneous passage of section 1512(c)(1), which prohibits a person from “alter[ing], destroy[ing], mutilat[ing], or conceal[ing] a record, document or other object . . . with the intent to impair the object’s integrity or availability for use in an official proceeding” – a provision that would be unnecessary if section 1519’s reference to “tangible object” already included all physical objects. The Court also applied the statutory interpretation canons of noscitur a scoiis (“it is known from its associates”) and ejusdem generis(“of the same kind”), noting that beginning the provision with “any record [or] document” directs that the “tangible object” later referenced must be one used to record or preserve information. The Court also noted that the rule of lenity required that it resolve the dispute against finding criminal liability here. Justice Alito filed a concurring opinion relying on a narrower basis, while Justices Kagan, Scalia, Kennedy and Thomas dissented from the Court’s ruling.
The Court’s opinion in Yates makes for good reading for aficionados of classic statutory interpretation, and the Court’s decision to find that the scope of the statute was narrower than suggested by the government is a welcome respite from the seemingly ever-increasing scope of crimes in the U.S. Code. Congress could certainly pass legislation to make clear if it intended to include other tangible objects in the scope of this provision. But for now, tossing back the little ones does not constitute a SOX crime.
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Photo Credit: Steve Helber, AP
This afternoon, the long-running saga of Robert McDonnell came to what may be the end (not counting appeals) when the former Virginia Governor was sentenced to serve two years in prison after a jury convicted him of bribery while in office. As with many cases, this one has lessons to teach for those of us who carefully follow sentencing advocacy in federal criminal cases.
One lesson that we have observed before – but is worth repeating – is how powerful it can be to present a sentencing judge with written or spoken testimonials about the otherwise good character of the defendant. In the presentence report, the Probation Department had recommended an advisory sentencing range under the U.S. Sentencing Guidelines of more than ten years, though the judge concluded that the proper advisory range was 6-1/2 to 8 years. But the defense presented some 440 letters in support of the former Governor, as well as live testimony from a number of witnesses. Even the Assistant United States Attorney, who asked for a harsh sentence to be imposed on Mr. McDonnell, conceded that the letters and testimony were moving.
That, of course, is the point: When a criminal defendant – especially one convicted by a jury that rejected his testimony – comes before a judge for sentencing, all that the judge knows about him is that he has committed a crime. Letters and testimony help the defense to present the judge with a three dimensional human being, and facilitate the judge’s fuller consideration of the imposition of a fair and just sentence. In the case of Rajat Gupta, Judge Jed Rakoff was moved by the letters of hundreds of supporters to sentence him to a two-year sentence despite prosecutors’ calls for a sentence of ten years in prison. Here, Judge James Spencer was likewise motivated by evidence of Mr. McDonnell’s character to find that a sentence of eight years “would be unfair, it would be ridiculous, under these facts.”
But there is also a second lesson to be learned from Mr. McDonnell’s sentencing, and it is also one that is often repeated: No one is above the law, and indeed, we may hold our public officials to a higher moral standard in their conduct. Judge Spencer’s comments at sentencing reflected this view: “A price must be paid,” he said. “Unlike Pontius Pilate, I can’t wash my hands of it all. A meaningful sentence must be imposed.” For that reason, among others, Judge Spencer rejected defense lawyers’ calls for a non-incarceration sentence that they had suggested, which could have included thousands of hours of community service.
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