Mail Fraud and Wire Fraud

November 2, 2020

By Collin County Criminal Defense Lawyer Jeremy Rosenthal

jeremy@texasdefensefirm.com

(972) 369-0577

Mail and wire fraud are a frequent allegation in federal prosecutions.  The lynchpin of these charges is the utilization of interstate commerce to further whatever scheme the government is alleging is taking place.  The US Government obviously runs the postal service and heavily regulates other private postal carriers – and they also regulate interstate communications through instruments such as phones, fax machines and computers.

There are basically two components to both: a fraudulent scheme of some sort and then using the mail and/or wire as a furtherance to the scheme.  The Department of Justice has issued the following guidelines for mail fraud in 18 U.S.C. Section 1341 and you can read it here.  You can read the DOJ guidelines for Wire Fraud here, 18 U.S.C. Section 1343.

Why Does the Federal Government Care About the Mail So Much?

Because it gives them jurisdiction and because it allows them to have greater leverage in their prosecutions.

Mail and/or wire fraud prosecutions can often be a means to an end.  Let’s say the government thinks there is an illegal scheme of someone selling fake widgets in a newspaper ad.  It’s obviously a crime – but it may just be a State level offense.  But if that person is receiving payments in the mail, it allows the Federal government to step in and prosecute if they want.

Mail and wire fraud prosecutions also allows the government to potentially charge additional persons as conspirators if they choose if they had a part in the over-all scheme.

What is the Punishment for Mail or Wire Fraud?

The federal sentencing guidelines dictate potential punishment – as with all federal offenses.  The statutory punishment is punishment by fine and up to 20 years confinement, but this range is very deceptive.  Mail and wire fraud are often brought in multiple counts and often along with other charges.  The sentencing calculation will be unique in every case.

Are There Any Defenses?

You can always contest the search or manner in which the government attained the evidence.  If it was an illegal search you may be entitled to utilize the exclusionary rule to throw the evidence out of court.  Often intercepted mail or wire communications need federal authorization such as a search warrant.  The government is pretty good at this sort of stuff – but it’s always worth examining and evaluating.

If you had a good faith belief representations made by another person were true – it can be a defense if you are alleged to be a conspirator in mail or wire fraud.  But you can’t be willfully blind – that is – you can’t heavily suspect something is amiss and cross your fingers hoping what you were doing wasn’t helping do something illegal.

If you’re a minor player in the scheme – and were so minor as to not be “material” to the scheme, then this is a defense too.

You can also provide “substantial assistance” to the government as a way to lessen the potential penalties or avoid prosecution.  Providing assistance to the government isn’t necessarily a defense – but it can help you avoid or lessen charges in any event.

*Jeremy Rosenthal is board certified in criminal law by the Texas Board of Legal Specialization.  He is recognized as a Texas Super Lawyer by Thomson Reuters.

 

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White Collar Crime: Securities Fraud

November 1, 2020

By Criminal Defense Lawyer Jeremy Rosenthal

jeremy@texasdefensefirm.com

(972) 369-0577

Securities fraud has to do with false claims, statements and the inducement of investments in things such as stocks and bonds which then result in loss.  Often times with security fraud there are also claims of issues with improper or absence of appropriate licensing.

What is a Security?

Securities can be confusing and there are different types.  A security is defined generally as a right to own or trade an interest – typically something like a stock, bond or derivative.  The lynchpin of what makes something a security versus simply an investment is with a security, your interest is passive.  In other words, your ownership gives you limited rights and ability to control how the business is run unlike if you were to enter into a partnership for a business or for real estate.

Today we’re not talking about security as in collateral such as a house or car.  That, too can trigger criminal prosecution but that’s another topic.

Types of Criminal Prosecutions Involving Securities

Federal and State authorities both prosecute securities fraud.  The Security and Exchange Commission (“SEC”) is the federal enforcement agency and in Texas, we have the State Securities Board which has a prosecutorial team.  You can read generally about the differences between state and federal prosecutions here.  The SEC and State Securities Board may also sue civilly instead of or in addition to criminal prosecution.

Securities Fraud

Securities fraud happens where someone sells stock or interests in something via fraud.  In those types of prosecutions there is normally a business venture which goes belly-up.  Later, many of the investors complain the statements made to sell them the stock were false.  Perhaps they claim they were guaranteed profits.  Perhaps they claim the investment was based on a non-existent or highly speculative innovation or invention.  The accusers may claim they were otherwise lied to, intimidated, or defrauded into making the investment.

Several issues come to mind in defending securities fraud charges.

First – what types of admonishments, disclosures and warnings were given to investors — and just as importantly – can those warnings be proven?  How prominent were the admonishments relative to everything else?

Second – just because a project failed doesn’t mean it was fraudulent.  Projects and investments fail.  The type of project or business venture needs to be re-examined to see if it failed for other reasons such as poor management, a bad economy, better competitors, etc. The project also needs to be re-constructed based on it’s over-all viability and how realistic it was in the first place?  Was it based on impossible science such as a machine which makes water flow uphill? Or, was it based on wishful thinking like a speculative product?

Third – Even if one person associated with a venture was fibbing and defrauding folks that doesn’t mean everyone else on the project was too.  Were the folks making the fraudulent statements executives and directors or were they sweeping the floors?

Selling Securities Without a License

FINRA, or the Financial Industry Regulation Authority is an independent agency which handles licensing while the SEC is the actual federal arm charged with enforcement.  FINRA issues what is known generally as a Series 7 license common in the securities industry.

A person needs to be licensed to sell securities.  You can read a detailed list of SEC regulations on that here.  Texas State Securities Board has information on dealers and advisors here.

Selling securities without a license commonly accompany charges of securities fraud.

Penalties for Securities Fraud

Penalties for both State and Federal securities fraud typically depend on the amount alleged to have been lost.  Those amounts can often be aggregated.  So the range of potential jail varies widely in any given case but in both State and Federal Court, Securities Fraud is a felony.

*Jeremy Rosenthal is board certified in criminal law by the Texas Board of Legal Specialization.  He is recognized as a Texas Super Lawyer by Thomson Reuters.

 

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White Collar Criminal Defense – State Versus Federal Prosecutions

October 31, 2020

By Criminal Defense Lawyer Jeremy Rosenthal

jeremy@texasdefensefirm.com

(972) 369-0577

“White collar” crime typically refers to allegations about business related wrongdoings – frequently with accounting or other executive level indiscretions.

Both state and federal authorities police white collar cases.

Examples of white collar charges can be:

What is the Difference Between State and Federal Prosecution for White Collar Cases?

Sometimes it’s as simple as jurisdiction.  The federal government has jurisdiction over Medicare fraud and federal income tax evasion.  Other times, the criminal enforcement over-laps and either could prosecute if they wanted though they generally coordinate so as to not waste resources.

Why Does the Federal Government Prosecute Some Cases and Not Others?

The federal government tends to focus more on cases of higher financial value.  They also frequently prosecute cases where there are more potential guilty parties and co-conspirators.  You might see a state level prosecution with 3, 4 or 5 people involved in a white-collar conspiracy.  It’s not uncommon, though, to see the US Attorneys prosecution a crime ring with 20 suspects or more.

Differences in Investigation Resources and Capacity

The federal government is a very well oiled machine in terms of investigation and case work-up on pretty much every level.  The US attorney typically works hand-in-hand with agencies such as the FBI, DEA, ATF, homeland security and any other federal agency you can think of such as the SEC and IRS.

State level investigations can be excellent as well – but there is more of a hit and miss chance.  The state of Texas does have a State Securities prosecution team, for example, as well as the Texas Rangers.  At the same time, a smaller police agency officer or detective with far less training may try to put together a white collar case and not really have the best idea of what they’re doing.  Federal investigators can and often do help out state agencies – but state agencies might not always ask even when they should.

Differences in Trial

It’s far more likely in federal court – if you opt to have a trial – to be on trial with whatever co-defendants have not already plead guilty.  This could mean being on trial at the same time with the same jury as everyone else charged in the same conspiracy.

You can be put on trial with someone else in State Court – but it is less frequent and the rules make it easier for you to split the cases apart.

The rules of trial from State and Federal Court aren’t perfectly and completely aligned, but they are very similar.  The differences are a completely different topic which could probably be the subject of an entire law school class.  The differences, though, are pretty technical and can be somewhat minute.

Differences in White Collar Punishment: State vs. Federal

State level punishment can differ drastically from federal punishment.  Federal punishment tends to be dictated by the federal sentencing guidelines and will ultimately be decided by a judge.  Texas state courts give a defendant the option of having a judge or jury impose sentencing – and the sentencing is encompasses a far broader range of possible jail – and in many instances probation too.

*Jeremy Rosenthal is board certified in Criminal Law by the Texas Board of Legal Specialization.  He has been designated as a Texas Super Lawyer by Thomson Reuters.

 

 

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Mental Illness & Criminal Law: Understanding the Problem

October 15, 2020

By Criminal Defense Lawyer Jeremy Rosenthal

texasdefensefirm.com

(972) 369-0577

It’s hard to over-state the importance the role mental illness plays in criminal law.  There’s little question in my mind it’s far more prevalent people give it credit for.

A recent survey to Texas criminal defense lawyers asked, “What percentage of your clients suffer from some degree of mental illness in your view?” — and the most common answer was between 50% and 75%.

 

What is Mental Illness?

I find many folks – including my clients and their families – struggle with understanding the very concept of having emotional or behavioral problems.

My view is just about everyone wakes up in the morning wanting to be a law abiding citizen.  But many people are driven so far out of their normal range they get in trouble because of things like anxiety, depression, manic states, and on and on.  This is how I define mental illness.

The term “mentally ill” has a much harsher and deeper connotation than what it really means to me.  Many think it only applies to people who hear voices in their heads, talk to themselves, or who must be confined to a straight jacket in a padded room.  In reality, someone going through a really rough patch in their lives can be driven so far by everything going on in their mind – they can often do or say something which hurts another person or gets themselves in a situation they otherwise know is wrong.

Jail

I ask juries what they think of our national mental health system.  They get puzzled – because they can’t really think of what that is.  Then I point out to them the tragic truth — our mental health system is called “jail.”

Jail and mental illness are frequently on a collision course.  We often don’t know someone has cancer until they exhibit physical symptoms.  We often don’t know someone has the flu until they have a fever.  And we often don’t know how much someone is struggling inside until they get into trouble.  It could be assault, theft, drugs, trespassing — the scenarios are endless — but there are very few criminal cases where mental illness doesn’t play a role.

The Enemy of Treatment – the “Tough on Crime” Mindset

Texas is tough on crime.  Many here unfortunately feed into the cops vs. robbers, good guys vs. bad guys dialogue.  Many believe if crime rates are high – we just need to be meaner to people and things will be fine.  Fortunately these voices are fewer and fewer.

Police deal with tons of mental illness on the streets.  Their aim is generally short-term safety for everyone and not necessarily long term treatment.  They also often don’t have the choice but to take someone to jail who has either committed a crime or who poses a danger to others.

I find prosecutors have a tougher time understanding mental illness because they’re somewhat insulated from it.  They talk with the shop-owner who is having a hard time making ends meet but it’s the defense lawyer who deals to the shoplifter describe the sheer degree of anxiety which drove them to do something they knew was wrong as a simple example.

Getting People Help

The million-dollar question is how do we get help to those who need it. That’s an equally difficult problem.  Understanding the problem is the start.

*Jeremy Rosenthal is Board Certified in Criminal Law by the Texas Board of Legal Specialization.  He is a Texas Super Lawyer as designated by Thomson Reuters.

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Hiring Expert Witnesses for Your Case – What You Should Know

October 11, 2020

By Criminal Defense Lawyer Jeremy Rosenthal

texasdefensefirm.com

(972) 369-0577

Expert witnesses are an important part of trial advocacy.

What is an Expert Witness?

A person with specialized knowledge of a particular is allowed to testify provided they comport with other rules surrounding reliability in both Texas and Federal Courts.

Judges have a detailed legal framework they must follow to determine if a particular expert may testify in a particular case.

Experts can testify in applied scientists such as DNA or blood analysis, areas such as computer forensics, cell phone tower triangulation, and in soft sciences such as therapy or domestic violence, and even in areas such as accounting, plumbing, or as in the movie “My Cousin Vinny,” — independent rear suspension cars made in the 1960’s.

Do I Really Need an Expert Witness?

Follow your lawyer’s recommendations here.

The defense can establish their own trial theory either through their own witnesses and experts or through the prosecution’s witnesses and experts.  Prosecution witnesses and experts are predictably uncooperative with us and some of their experts will easily admit to shortcomings in the state’s case and others won’t.  There is no substitute for the clarity and power a good expert witness can provide on your side.

There are risks to proffering an expert witness in your defense.  A good expert witness should be loyal to their discipline – not necessarily to you winning your case.  This helps them be credible.  But this also means your expert may have to admit to facts which can hurt your case when the prosecutor asks… and sometimes those could be facts and analysis the prosecutor was never aware of in the first place.

Ultimately the complexity of certain issues often dictates.  Trial is teaching the jury a theory.  That can be hard with a state’s expert who sees it as their job to make sure you lose.  A good expert witness on your own side is often necessary.

Why is an Expert Witness Paid?

I don’t work for free and neither do you.  I haven’t met anyone who does.

The fact a defense expert witness is paid and how much are typically good fodder for prosecutors on cross examination.  If you think about the fact they’re paid – it’s actually a good thing.  That is because testifying is their livelihood and for that reason they wouldn’t jeopardize it by saying crazy or quack science when a court reporter allows everyone in the State to know how they testify.

The Court Can Pay For Your Expert

The Court can pay for someone’s expert witness in certain instances — even if the lawyer is retained privately.  The expert must be willing to accept the court’s payments which are typically lower than on the private market and the Court will underwrite and evaluate Defendant’s financial status.

Ask your lawyer about Court assistance for experts if money is tight.

*Jeremy Rosenthal is board certified in criminal law by the Texas Board of Legal Specialization.  He is designated as a Texas Super Lawyer by the Texas Board of Legal Specialization.

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