The Supreme Court strips the SEC of a critical enforcement tool in fraud cases

Court Watch 2024/07/02 10:45   Bookmark and Share
The Supreme Court on Thursday stripped the Securities and Exchange Commission of a major tool in fighting securities fraud in a decision that also could have far-reaching effects on other regulatory agencies.

The justices ruled in a 6-3 vote that people accused of fraud by the SEC, which regulates securities markets, have the right to a jury trial in federal court. The in-house proceedings the SEC has used in some civil fraud complaints, including against Houston hedge fund manager George Jarkesy, violate the Constitution, the court said.

“A defendant facing a fraud suit has the right to be tried by a jury of his peers before a neutral adjudicator,” Chief Justice John Roberts wrote for the court’s conservative majority.

Justice Sonia Sotomayor, who read from her dissent in the courtroom, said that “litigants who seek to dismantle the administrative state” would rejoice in the decision.

Federal agencies that oversee safety in mines and other workplaces are among many that can only impose civil penalties in in-house, administrative proceedings, Sotomayor wrote, joined by Justices Ketanji Brown Jackson and Elena Kagan.

“For those and countless other agencies, all the majority can say is tough luck; get a new statute from Congress,” she wrote.

The case is among several this term in which conservative and business interests are urging the nine-member court to constrict federal regulators. The court’s six conservatives already have done so, including in a decision last year that sharply limited environmental regulators’ ability to police water pollution in wetlands.

Still awaiting decision are cases calling on the court to overturn the 40-year-old ruling colloquially known as Chevron, which has made it easier to sustain regulation of the environment, public, health, worker safety and consumer protection. Some of the same parties that supported Jarkesy at the Supreme Court are calling for Chevron to be overturned.

The SEC was awarded more than $5 billion in civil penalties in the 2023 government spending year that ended Sept. 30, the agency said in a news release. It was unclear how much of that money came through in-house proceedings or lawsuits in federal court.

The agency had already reduced the number of cases it brings in administrative proceedings pending the Supreme Court’s resolution of the case.

The high court rejected arguments advanced by President Joe Biden’s Democratic administration that relied on a 50-year-old decision in which the court ruled that in-house proceedings did not violate the Constitution’s right to a jury trial in civil lawsuits.

The justices ruled in favor of Jarkesy after the SEC appealed a decision in which the New Orleans-based 5th U.S. Circuit Court of Appeals threw out stiff financial penalties against Jarkesy and his Patriot28 investment adviser.

The appeals court found that the SEC’s case against Jarkesy, resulting in a $300,000 civil fine and the repayment of $680,000 in allegedly ill-gotten gains, should have been heard in a federal court instead of before one of the SEC’s administrative law judges.
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Three Americans in alleged coup attempt appear in Congo military court

Court Watch 2024/06/07 15:13   Bookmark and Share
Three Americans accused of being involved in last month’s coup attempt in Congo appeared in a military court in the country’s capital, Kinshasa, on Friday, along with dozens of other defendants who were lined up on plastic chairs before the judge on the first day of the hearing.

The proceedings before the open-air military court were broadcast live on the local television channel.

Six people were killed during the botched coup attempt led by the little-known opposition figure Christian Malanga last month that targeted the presidential palace and a close ally of President Felix Tshisekedi. Malanga was shot and killed soon after live-streaming the attack for resisting arrest, the Congolese army said.

The defendants face a number of charges, many punishable by death, including terrorism, murder and criminal association. The court said there were 53 names on the list, but the names of Malanga and one other person were removed after death certificates were produced.

Alongside Malanga’s 21-year-old son Marcel Malanga — who is a U.S. citizen — two other Americans are on trial for their alleged role in the attack. All three requested an interpreter to translate the proceedings from French to English.

Malanga’s son was the first to be questioned by the judge, who asked him to confirm his name and other personal details. The military official chosen to translate for him was apparently unable to understand English well.

Eventually, a journalist was selected from the media to replace him, but he too had trouble translating numbers and the details of the proceedings.

“He’s not interpreting right. We need a different interpreter who understands English, please,” Marcel Malanga told the judge after the journalist incorrectly translated his zip code.

But no other translator emerged and the defendants had to make do with the journalist, who worked for the national radio. Malanga appeared frustrated and defiant as the interview stumbled ahead.

Tyler Thompson Jr, 21, flew to Africa from Utah with the younger Malanga for what his family believed was a vacation, with all expenses paid by the elder Malanga. The young men had played high school football together in Salt Lake City suburbs. Other teammates accused Marcel of offering up to $100,000 to join him on a “security job” in Congo.

Thompson appeared before the court with a shaved head and sores on his skin, looking nervous and lost as he confirmed his name and other personal details to the judge.

His stepmother, Miranda Thompson, told The Associated Press that the family found out about the hearing too late to arrange travel to Congo but hoped to be present for future court dates. Before this week, the family had no proof he was still alive.

“We’re thrilled with the confirmation,” she said.

Miranda Thompson had worried that her stepson might not even know that his family knew he’d been arrested. On Monday, the U.S. Embassy in Congo told the AP it had yet to gain access to the American prisoners to provide consular services before the trial.
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War crimes prosecutor seeks arrest of Israeli and Hamas leaders

Court Watch 2024/05/21 11:54   Bookmark and Share
The chief prosecutor of the world’s top war crimes court sought arrest warrants Monday for leaders of Israel and Hamas, including Israeli Prime Minister Benjamin Netanyahu, over actions taken during their seven-month war.

While Netanyahu and his defense minister, Yoav Gallant, do not face imminent arrest, the announcement by the International Criminal Court’s chief prosecutor was a symbolic blow that deepened Israel’s isolation over the war in Gaza.

The court’s prosecutor, Karim Khan, accused Netanyahu, Gallant, and three Hamas leaders — Yehya Sinwar, Mohammed Deif and Ismail Haniyeh — of war crimes and crimes against humanity in the Gaza Strip and Israel.

Netanyahu and other Israeli leaders condemned the move as disgraceful and antisemitic. U.S. President Joe Biden also lambasted the prosecutor and supported Israel’s right to defend itself against Hamas.

A panel of three judges will decide whether to issue the arrest warrants and allow a case to proceed. The judges typically take two months to make such decisions.

Israel is not a member of the court, so even if the arrest warrants are issued, Netanyahu and Gallant do not face any immediate risk of prosecution. But the threat of arrest could make it difficult for the Israeli leaders to travel abroad.

Netanyahu called the prosecutor’s accusations against him a “disgrace,” and an attack on the Israeli military and all of Israel. He vowed to press ahead with Israel’s war against Hamas.

Biden said the effort to arrest Netanyahu and Gallant over the war in Gaza was “outrageous,” adding “whatever this prosecutor might imply, there is no equivalence — none — between Israel and Hamas.”

Hamas also denounced the ICC prosecutor’s actions, saying the request to arrest its leaders “equates the victim with the executioner.”

Netanyahu has come under heavy pressure at home to end the war. Thousands of Israelis have joined weekly demonstrations calling on the government to reach a deal to bring home Israeli hostages in Hamas captivity, fearing that time is running out.

In recent days, the two other members of his war Cabinet, Gallant and Benny Gantz, have threatened to resign if Netanyahu does not spell out a clear postwar vision for Gaza.

But on Monday, Netanyahu received wall-to-wall support as politicians across the spectrum condemned the ICC prosecutor’s move. They included Israel’s president, Isaac Herzog, and his two main political rivals, Gantz and opposition leader Yair Lapid.

It is unclear what effect Khan’s move will have on Netanyahu’s public standing. The possibility of an arrest warrant against Netanyahu could give him a boost as Israelis rally behind the flag. But his opponents could also blame him for bringing a diplomatic catastrophe on the country.

Yuval Shany, an expert on international law at Hebrew University and the Israel Democracy Institute, a Jerusalem think tank, said it was far more certain that Netanyahu’s already troubled international standing could be further weakened.
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Retrial of Harvey Weinstein unlikely to occur soon, if ever, experts say

Court Watch 2024/05/01 16:38   Bookmark and Share
A retrial in New York of disgraced former movie mogul Harvey Weinstein won’t be coming to a courtroom anytime soon, if ever, legal experts said on a day when one of two women considered crucial to his rape trial said she wasn’t sure she would testify again.

A ruling Thursday by the New York Court of Appeals voided the 2020 conviction of the onetime Hollywood power broker who prosecutors say forced young actors to submit to his prurient desires by dangling his ability to make or break the their careers.

On Saturday, Weinstein was in custody in a Manhattan hospital where he was undergoing multiple tests, attorney Arthur Aidala said. He was returned Friday to New York City jails from a state prison 100 miles (160 kilometers) northwest of Albany. He remains behind bars because he was also convicted in a similar case in California.

“He’s got a lot of problems. He’s getting all kinds of tests. He’s somewhat of a train wreck health wise,” Aidala said.

The appeals court in a 4-3 decision vacated a 23-year jail sentence and ordered a retrial of Weinstein, saying the trial judge erred by letting three women testify about allegations that were not part of the charges and by permitting questions about Weinstein’s history of “bad behavior” if he testified. He did not. He was convicted of forcibly performing oral sex on a TV and film production assistant and of third-degree rape for an attack on an aspiring actor in 2013.

Several lawyers said in interviews Friday that it would be a long road to reach a new trial for the 72-year-old ailing movie mogul and magnet for the #MeToo movement who remains behind bars, and it was doubtful that one could start before next year, if at all.

“I think there won’t be a trial in the end,” said Joshua Naftalis, a former Manhattan federal prosecutor now in private practice. “I don’t think he wants to go through another trial, and I don’t think the state wants to try him again.”

Naftalis said both sides may seek a resolution such as a plea that will eliminate the need to put his accusers through the trauma of a second trial.

Aidala said Saturday that he plans to tell a judge at a Manhattan court appearance Wednesday that he believes a trial could occur anytime after Labor Day.

With the scaled-down case ordered by the appeals court, Aidala predicted that it could be finished in a week and his client would be exonerated.

Deborah Tuerkheimer, a professor at Northwestern University Pritzker School of Law and former assistant district attorney in Manhattan, said whether there is a second trial will “hinge on the preferences of the women who would have to testify again and endure the ordeal of a retrial.”

“I think ultimately this will come down to whether they feel it’s something they want to do, are able to do,” she said.

Jane Manning, director of the nonprofit Women’s Equal Justice, which provides advocacy services to sexual assault survivors, agreed “the biggest question is whether the two women are willing to testify again.”

If they are, then Manhattan District Attorney Alvin Bragg “will absolutely retry the case,” said Manning, who prosecuted sex crimes when she was in the Queens district attorney’s office in the late 1990s and early 2000s.

Tama Kudman, a West Palm Beach, Florida, criminal defense lawyer who also practices in New Jersey and New York, said prosecutors will likely soon have conversations with key witnesses for a retrial.
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Alabama woman who faked kidnapping pleads guilty to false reporting

Court Watch 2024/03/22 12:05   Bookmark and Share
An Alabama woman who claimed she was abducted after stopping her car to check on a wandering toddler pleaded guilty on Thursday to charges of giving false information to law enforcement.

News outlets reported that Carlee Russell pleaded guilty to misdemeanor charges of false reporting to law enforcement and falsely reporting an incident. She was given a suspended six-month sentence which will allow her to avoid jail. She was ordered to pay more than $17,000 restitution.

Her two-day disappearance, and her story of being abducted alongside an interstate highway, captivated the nation before police called her story a hoax.

Russell, accompanied to court by her family and defense lawyers, apologized for her actions.

“I want to genuinely apologize for my actions. I made a grave mistake while trying to fight through various emotional issues and stress. I’m extremely remorseful for the panic, fear and various range of negative emotions that were experienced across the nation,” Russell said according to WBRC.

Russell disappeared July 13 after calling 911 to report a toddler beside a stretch of Interstate 459 in the Birmingham suburb of Hoover. She returned home two days later and told police she had been abducted and forced into a vehicle.

Police quickly cast doubt on Russell’s story. Her attorney issued a statement through police acknowledging there was no kidnapping and that she never saw a toddler. In the statement, Russell apologized to law enforcement and the volunteers who searched for her.

The Alabama attorney general’s office had argued that Russell should spend time in jail because of the time and energy that law enforcement spent in looking for her.

Jefferson County Circuit Judge David Carpenter told Russell that while her actions caused panic and disruption in the community that it would be a “waste of resources” to put her in jail for misdemeanors, news outlets reported.

Katherine Robertson, Chief Counsel in the Alabama attorney general’s office, said Thursday that they “are disappointed, but not surprised” that Russell did not get the requested jail time.
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Donald Trump appeals $454 million judgment in New York civil fraud case

Court Watch 2024/02/27 10:12   Bookmark and Share
Donald Trump has appealed his $454 million New York civil fraud judgment, challenging a judge’s finding that Trump lied about his wealth as he grew the real estate empire that launched him to stardom and the presidency.

The former president’s lawyers filed notices of appeal Monday asking the state’s mid-level appeals court to overturn Judge Arthur Engoron’s Feb. 16 verdict in Attorney General Letitia James’ lawsuit and reverse staggering penalties that threaten to wipe out Trump’s cash reserves.

Trump’s lawyers wrote in court papers that they’re asking the appeals court to decide whether Engoron “committed errors of law and/or fact” and whether he abused his discretion or “acted in excess” of his jurisdiction.

Trump’s appeal paperwork did not address whether Trump was seeking to pause collection of the judgment while he appeals by putting up money, assets or an appeal bond covering the amount owed to qualify for an automatic stay.

Messages seeking comment were left with Trump’s lawyers and the New York attorney general’s office. Engoron found that Trump, his company and top executives, including his sons Eric and Donald Trump Jr., schemed for years to deceive banks and insurers by inflating his wealth on financial statements used to secure loans and make deals. Among other penalties, the judge put strict limitations on the ability of Trump’s company, the Trump Organization, to do business.

The appeal ensures that the legal fight over Trump’s business practices will persist into the thick of the presidential primary season, and likely beyond, as he tries to clinch the Republican presidential nomination in his quest to retake the White House.

If upheld, Engoron’s ruling will force Trump to give up a sizable chunk of his fortune. Engoron ordered Trump to pay $355 million in penalties, but with interest the total has grown to nearly $454 million. That total will increase by nearly $112,000 per day until he pays.

Trump maintains that he is worth several billion dollars and testified last year that he had about $400 million in cash, in addition to properties and other investments. James, a Democrat, told ABC News that if Trump is unable to pay, she will seek to seize some of his assets.

Trump’s appeal was expected. Trump had vowed to appeal and his lawyers had been laying the groundwork for months by objecting frequently to Engoron’s handling of the trial.

Trump said Engoron’s decision, the costliest consequence of his recent legal troubles, was “election interference” and “weaponization against a political opponent.”

Trump complained he was being punished for “having built a perfect company, great cash, great buildings, great everything.” Trump’s lawyer Christopher Kise said after the verdict that the former president was confident the appeals court “will ultimately correct the innumerable and catastrophic errors made by a trial court untethered to the law or to reality.”

“Given the grave stakes, we trust that the Appellate Division will overturn this egregious verdict and end this relentless persecution against my clients,” Trump lawyer Alina Habba said.
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