Sidebars Five Year Anniversary: The Top Ten Posts

Five years ago today I published my first post on this blog, a piece about a New York Times reporter at risk of being held in contempt for refusing to identify a source. Sidebars has grown a lot since then and has been fortunate enough to gain some accolades along the way (including my favorite shout-out from the D.C. Bar Magazine: “Come for the ongoing smackdown with Alan Dershowitz, stay for the trenchant commentary on the rule of law”) . To mark this anniversary,  I thought it would be fun to take a look back at the Sidebars “Top Ten”: my ten most-read posts over the past five years.

During those five years I’ve written more than 120 posts on Sidebars, an average of about one every two weeks. My pace of posting on the blog has definitely slowed down over the past couple of years as I’ve been writing more as a contributing columnist for the Washington Post and working on an upcoming video lecture course on white collar crime for The Great Courses. But the blog continues to be a great vehicle for deeper dives on selected topics; at about 2500-3000 words, my average post on Sidebars is more than three times the length of a typical op-ed in the Post. Brevity may be the soul of wit, but it’s rarely a lawyer’s strong suit — and some of these subjects really do call for a more in-depth analysis.

As readers know, my focus on Sidebars is on white collar crime. The investigation by special counsel Robert Mueller was the most consequential white collar case in a generation, so it’s probably not surprising that a majority of my top posts related to that investigation. Other major white collar cases, such as the prosecutions of Virginia governor Bob McDonnell and New Jersey Senator Bob Menendez, also have been bountiful sources of material. But whatever else you might think of them, you can’t top the Mueller investigation and the Trump administration when it comes to providing material for commentators on white collar crime. These results definitely reflect that.

And with that – here are the Sidebars Top Ten.

#10: Fake News and the National Review

Andrew McCarthy of the National Review is a former federal prosecutor for the Southern District of New York. As a columnist, he’s been a vociferous critic of the Mueller probe and booster of president Trump. During the Mueller investigation he regularly wrote columns attacking the investigation that were so factually and legally off-base that it’s hard to believe he was once an Assistant U.S. Attorney. Now that Mueller is done, McCarthy is still at it, peddling pro-Trump conspiracy theories about Ukrainian interference with the election and the “Deep State” efforts to take down the president. In what became my tenth most popular post, I collected a number of the arguments from McCarthy’s columns about Mueller and showed how he was misleading his readers. I sent the post to the National Review, and I along with some other law professors on Twitter encouraged McCarthy and the National Review to respond, but they never did.

10) What Andrew McCarthy Gets Wrong about the Mueller Investigation – 3/22/18

 

#9: When is Lying a Federal Crime?

The False Statements statute, 18 U.S.C. 1001, is a workhorse in the white collar prosecutor’s stable. It broadly criminalizes material false statements made to the federal government, even if not under oath. A number of witnesses in the Mueller investigation, including Michael Flynn and George Papadopoulos, pleaded guilty to false statements for lying to the FBI during interviews. The statute applies to written false statements as well, and early in the Mueller investigation there was speculation that individuals including Jared Kushner and Jeff Sessions might be liable for concealing various foreign contacts when they filled out paperwork to apply for a security clearance. In this post I explained the scope and requirements of the false statements statute and how it potentially could apply in such a case.

9) Lying on a Security Clearance Form: The Crime of False Statements – 6/5/17

#8: The Dershowitz “Smackdown”

Harvard Law Professor Alan Dershowitz was a vocal critic of the Mueller investigation. For two years Professor Dershowitz was all over conservative media attacking the investigation and making sweeping arguments about executive power and presidential immunity from prosecution that frankly seemed increasingly unhinged.  I’ve written several different posts and articles rebutting Dershowitz’s claims.  The most popular blog post has been this one from June 2017,  taking on Dersh’s argument that the president can’t be charged with obstruction of justice because, well, he’s the president.

8) Trump and Obstruction: What Alan Dershowitz Gets Wrong – 6/19/17

#7: A RICO Review

The Mueller probe offered me several opportunities to write posts explaining the elements of leading white collar statutes and then illustrating them by discussing their potential application to the Mueller investigation. The False Statements post, number nine above, was one such example. Another one ended up as number seven on the list. It provides a primer on the Racketeer Influenced and Corrupt Organizations act (RICO) and then discusses how it potentially could apply to the matters that Mueller was investigating. Mueller, of course, did not end up pursing RICO charges against anyone, Russian or American. But we may not have heard the last of RICO and president Trump. Prosecutors in the Southern District of New York may be looking at possible RICO charges involving the Trump Organization. The SDNY is notoriously fond of RICO, and regardless of whether the other elements of the crime could be established, the Trump Organization is a classic RICO “enterprise.”

7) RICO and the Mueller Investigation – 1/16/18

#6: Fraud and the Sentencing Guidelines

My sixth most popular post is completely unrelated to Mueller. In 2015 the Federal Sentencing Commission revised the guideline used to calculate the sentence in federal fraud cases. That guideline is key to white collar practice because so many white collar cases involve fraud charges. The old guideline had come under a lot of criticism for the way it calculated white collar sentences, and reform was thought to be long overdue. In this post I discussed the changes made by the new fraud guideline and explained why those amendments really amounted to little more than tinkering around the edges.

6) The New Sentencing Guideline for Fraud Cases – 5/4/2015

#5: What’s This Blog About, Anyway?

I’m particularly pleased this post made it into the Top Ten. It deals with what seems like it should be a fairly simple and foundational question: what is white collar crime? If you look in the federal criminal code you won’t find a definition, or a section titled “white collar offenses.” In fact, there is no universally accepted definition of white collar crime, even though it clearly is recognized as a distinct practice area — not to mention as the subject of my law school class. This post, way back from only the second month of the blog, is my take on the definition and characteristics of white collar crime. One key takeaway?   — the name itself is something of a misnomer.

5) The Definition of White Collar Crime – 11/26/14

 

#4: Who Isn’t Guilty of That?

I wrote this post on Contempt of Congress back during the Obama administration, when the Republican Congress held the IRS Commissioner, Lois Lerner, in contempt. Prosecutors declined to pursue the case and that was the end of it, and the post lay largely dormant for a couple of years. But recently there has been renewed interest in Congress’s contempt power, in light of the apparent stonewalling of Congressional investigations by the Trump administration. And that has led to a lot of renewed interest in this post, catapulting it to number four on the list. Will Congress dust off its inherent contempt power and start locking up recalcitrant witnesses in that  rumored jail cell in the basement of the Capitol? We may soon see.

4) Contempt of Congress – 4/20/15

#3: Bribery and the Emoluments Clause

Since before president Trump even took office, there has been controversy about his extensive business holdings and whether he might profit from the presidency in violation of the Constitution’s emoluments clause. This relatively obscure Constitutional prohibition is now the subject of several ongoing lawsuits. My third most popular post, written after the election but before Trump was inaugurated, explained the foreign emoluments clause, how it relates to federal bribery law, and whether Trump was at risk of violating it.

3) The Emoluments Clause, Bribery, and President Trump – 11/29/16

#2: It’s Conspiracy, Not Collusion

In the early days of the Mueller investigation, a frequent refrain from the president and his supporters was that collusion with the Russians, even if it did take place, would not be a crime. I wrote this post early on in the Mueller investigation. It explained how, for criminal law purposes, the proper term is conspiracy, not collusion. It also described how allegations that the Trump campaign colluded with the Russians to influence the election, if true, could in fact constitute a conspiracy to defraud the United States — even if the conduct did not directly violate another criminal statute.

2) Yes, Colluding with Russians to Interfere with the Election is a Crime – 7/5/17

#1: “Collusion” is a Crime

My most popular post of all time — by quite a large margin — also dealt with the question of “collusion.” In February 2018 Mueller indicted thirteen Russian individuals and three Russian companies for engaging in a social media campaign to influence the 2016 presidential election. The lead charge in that indictment was a conspiracy to defraud the United States by impairing, obstructing, and defeating the lawful government functions of the Federal Election Commission, State Department, and Justice Department. This was the same legal theory I had outlined about six months earlier in my second most popular post, described above. One of the indicted Russian companies appeared in court and challenged that conspiracy charge. In November 2018 the federal judge in the case denied that challenge and upheld the conspiracy theory that effectively can make “collusion” a crime. My post describing that judge’s ruling, and the possible implications for the Trump campaign, because my most popular post of all time.

1) Judge in Mueller Case Upholds Legal Theory that Makes Collusion a Crime – 11/23/18

Thanks for indulging me in this look back.  Whatever the next years bring, I suspect there will continue to be no shortage of material. Thank you for reading!

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When Is Cheating a Crime? The College Admissions Case

On Tuesday, March 12, the U.S. Attorney for the District of Massachusetts announced his office had filed criminal charges against fifty people in a massive college admissions scandal. Several dozen wealthy parents were charged with paying college admissions counselor William “Rick” Singer a total of about $25 million to fraudulently gain admission for their children to some of the country’s most elite universities, including Yale, Stanford, USC, and Georgetown.  Along with Singer and the parents, a number of university athletic coaches, test administrators, and other participants in the scheme were charged.

This prosecution involves some interesting legal questions and a number of issues that fall into the classic white collar crime “gray area” of conduct that may be reprehensible but not necessarily criminal. Singer and the coaches who accepted personal bribes do not have much of a defense, and Singer and a couple of coaches have already pleaded guilty. But when it comes to the parents, I expect a number of them will mount a vigorous defense and some may well prevail. For the parents, the evidence of immorality and a sense of entitlement is overwhelming. The evidence of criminality – maybe not so much.

The Two Schemes

 Singer was at the center of two schemes, which allegedly went on from 2011 to 2018. He is the founder of The Edge College & Career Network, also known as The Key, a for-profit college counseling and preparation service. In 2012 Singer also founded the Key Worldwide Foundation as a non-profit, tax exempt organization.

In the first scheme, parents allegedly paid Singer to help their children cheat on the ACT and SAT college admissions exams. Singer would have the parents change their child’s test location to one of two testing centers where Singer had relationships with test administrators who would accept bribes to facilitate the cheating. Singer would then usually arrange for Mark Riddell, a counselor at a private school in Florida, to travel to the test center, purportedly to “proctor” the students taking the exam. Riddell would either coach the students on the proper answers or change their answers after they were done in order to obtain the test score desired by the parents. Parents typically paid Singer between $15,000 and $75,000 for each such exam, and Singer typically paid Riddell $10,000 per student.

The second scheme involved Singer bribing college coaches to designate students as recruited athletes (thus facilitating their admission) even though the students in question were not qualified. This scheme frequently involved parents and associates of Singer creating phony application materials and profiles that falsely portrayed the students as star high school athletes. Parents made payments either to Singer’s foundation or, in some cases, directly to athletic programs at the universities. Singer would then either pay the coaches directly or make payments to university athletic departments or private sports clubs controlled by the coaches in exchange for the coach’s agreement to sponsor the student for admission.

The Charging Documents

 The cases against the fifty defendants are somewhat oddly broken down into eight different charging documents. Twelve defendants, including most of the coaches involved and the test administrators who accepted bribes from Singer to facilitate the cheating scheme, are charged in one grand jury indictment with a single count of participating in a racketeering conspiracy.

Thirty-two parents who participated with Singer in either the entrance exam cheating scheme, the sports recruitment scheme, or both, were charged in a 200-plus page criminal complaint with a single count each of conspiracy to commit honest services mail fraud. The fact that prosecutors charged the parents by complaint rather than by indictment may indicate they hope to secure a quick guilty plea from some of them. Absent that, under the Speedy Trial Act prosecutors would need to indict the parents within 30 days of their arrest, which would be sometime in mid-April.

The remaining six defendants are charged in their own individual indictments or criminal informations (charges filed by prosecutors rather than by the grand jury, usually when there is going to be a guilty plea). Singer, the man at the center of the scheme, has been cooperating with the investigation since last September and has already pleaded guilty to the charges against him. Riddell, the man Singer paid to help students cheat on the entrance exams, began cooperating with investigators this past February. He is also charged individually and likely will plead guilty soon.

Two coaches were charged separately and have already pleaded guilty: John Vandemoer, the former sailing coach at Stanford, and Rudy Meredith, the former head women’s soccer coach at Yale.

Michael Center, the former head tennis coach at UT-Austin, was also charged in his own separate complaint based on a single incident where he allegedly accepted a $100,000 bribe to admit as a tennis player a student who did not play competitive tennis. It’s not clear right now why Center was charged individually instead of as part of the larger indictment, but prosecutors may expect him to plead guilty as well.

Finally, one parent, David Sidoo, a resident of Canada, was charged in a separate indictment for conspiring with Singer and Riddell to have Riddell take the exams for two of Sidoo’s children. Sidoo’s case may have been carved out because it relies on a different mail fraud theory and a different kind of scheme: Riddell allegedly created a fake ID and actually posed as Sidoo’s son to take the exam, rather than helping the son cheat. The case may also face statute of limitations issues, since most of the conduct took place more than five years ago.

The Criminal Charges

Here are the leading criminal statutes and theories used in the case:

Honest services fraud: The leading charge overall is conspiracy to commit honest services mail fraud. This is the charge in the massive complaint against the parents, and honest services fraud forms part of the charges in almost all the other cases as well.

In a typical mail fraud case, the defendant is charged with depriving the victim of money or property. But in honest services fraud, the defendant is charged with depriving the victim of the “intangible right of honest services” that someone else owes that victim.  In the 2010 case of Skilling v. United Statesthe Supreme Court held that honest services fraud is limited to cases involving bribery or kickbacks. The theory applies not only to public officials who accept bribes but also to private individuals who violate a special duty of trust and responsibility, such as the duty owed by an employee to an employer, by accepting bribes or kickbacks.

When it comes to the college recruitment scheme, the honest services fraud theory is straightforward. Singer bribed the coaches to admit unqualified students, which deprived the universities of their rights to the fair and honest services of those coaches. As for the entrance exam cheating scheme, the theory is that by bribing the test administrators at the two test locations, Singer deprived the companies that administer the ACT and SAT of their right to the fair and honest services of those individuals.

RICO Conspiracy: The charge in the twelve-person indictment, as well as in a number of the individual cases, is a conspiracy under the Racketeer Influenced and Corrupt Organizations Act, or RICO. The RICO “enterprise” alleged in the indictment is Singer’s two organizations, The Key and the Key Worldwide Foundation, working together. The RICO charges essentially allege that Singer conducted the affairs of this enterprise through a pattern of racketeering activity, and that the other defendants conspired to help him do that.

“Pattern of racketeering activity” is a term of art in RICO that refers to a series of specified criminal acts. In this case, the acts of racketeering alleged include honest services fraud and money laundering. (For more detail on RICO and how the charge works, see my post here.)

Tax Fraud Conspiracy: Singer is also charged with a conspiracy to defraud the United States through tax fraud. The government charges that he conspired with various parents to disguise their payments to Singer as tax-deductible contributions to the Key Worldwide Foundation, when the money was actually used to pay bribes and to enrich Singer personally,  As part of the conspiracy, Singer allegedly sent receipts to the parents thanking them for their “donations” and falsely stating that no goods or services were provided in return.

At this point only Singer is charged with tax fraud, but a number of the parents could also end up liable for either criminal or civil tax violations if they took a charitable deduction on their taxes for payments to Singer.

Money Laundering Conspiracy: So far, only Singer and Riddell are charged with a money laundering conspiracy. The allegation is similar to the tax fraud scheme: the claim is that Singer had parents make payments to his tax-exempt foundation and then made the bribe payments from that foundation in order to conceal the actual origin, source, and ownership of the money.

Singer and Riddell are pleading guilty, so the money laundering theory won’t be contested by them. But if, as has been suggested, some parents also end up facing money laundering charges, I think the charge will be subject to challenge. The issue is that the payments by the parents and Singer likely are not unlawful “proceeds” of criminal activity, as required for money laundering. The money parents sent to Singer is “clean” money from lawful sources, and the payments made by Singer are the bribes themselves. That money doesn’t become “proceeds” of bribery until it is in the hands of the bribe recipients.

Simply running money through an account with a different name to disguise where it came from is not money laundering unless that money itself represents criminal proceeds from an unlawful activity. As I noted in this post, prosecutors made a similar error when they first charged the defendants in the NCAA basketball corruption case. When the defendants were arrested the charges included money laundering, based on a similar theory, but by the time the cases were indicted that charge had been dropped. The lack of criminal proceeds is also why, for example, the hush money payments to Stormy Daniels by former Trump attorney Micheal Cohen likely do not constitute money laundering, even though he used a shell corporation to disguise where the payments were coming from.

Obstruction of Justice: Singer alone is also charged with one count of obstruction of justice, because after he was first confronted by the FBI he allegedly tipped off several parents about the investigation.

Possible Defenses and Legal Issues

For those who were paying and accepting bribes directly – the coaches and the test administrators – I don’t see much of a defense. The honest services fraud theory squarely applies, and if the facts are as the government alleges, the defendants would not have much room to argue they did not know their conduct was unlawful.

For the parents, on the other hand, it’s going to be very case-by-case. I can see a number of potential defenses. First, recall that all of the parents are currently charged with conspiracy to commit honest services fraud. That basically means a conspiracy to participate in a bribery scheme. Singer was bribing the coaches to admit the students and was bribing the test administrators for ACT and SAT. But it’s not at all clear from the complaint that the parents knew these bribes were being paid, which would be necessary for them to be guilty of a conspiracy to pay them.

Whenever the parents wrote a check, it was either to Singer’s foundation or to an athletic account at the school, such as the USC Athletic Board. There are no instances of a parent paying a bribe directly to a coach. During the recorded conversations, Singer frequently says things like the money is going to the school or to the athletic program, or is for a “contribution.” He doesn’t spell out that he is actually bribing anyone.

Bear in mind that, before he was caught and began cooperating with the government, Singer’s incentive would have been to assure the parents that what he was doing was legal. Parents would be more likely to participate if they thought the scheme was just shady but not criminal. And it would be risky for Singer to admit criminal conduct to third parties if he didn’t have to. It’s far more likely that Singer led parents to believe he had special connections with the schools and coaches that allowed him to leverage the donations, without telling them the details of any bribes.

There’s an interesting aspect of the case revealed in the lengthy criminal complaint against the parents, where agents tried to close this potential loophole. After Singer began cooperating with the government, the FBI had him make recorded phone calls to a number of the parents with whom he allegedly had carried out the schemes before the FBI was onto him. During the calls, Singer told the parents his foundation was being audited by the IRS. He tried to get the parents to admit their knowledge of past misconduct and said he wanted to make sure they were on the “same page”. Singer would say something like, “Of course, I’m not going to tell the IRS that we actually used the money to get your son accepted for football when he didn’t really play football. I’ll just tell them it was a donation to benefit underprivileged kids.” The parents, who must have thought this was an extremely odd phone call, frequently respond with just “OK,” “yeah,” or “uh-huh.” Some of the calls are not particularly incriminating. They might leave room for parents to argue they didn’t really understand what Singer was rambling on about.

Again, a great deal of the alleged bribe money actually went to the schools, not the coaches directly. For example, in the case against Vandemoer, all of the money is alleged to have been paid to the Stanford sailing program, not to Vandemoer himself. A number of parents wrote checks to entities like the USC Athletics Board. If parents are writing checks made out to the schools and athletic programs, they might have had reason to believe the school knew about and approved what was happening. They could claim they saw little difference between what Singer was able to achieve and situations where wealthy parents give a substantial donation to a university, or pay for a new building, and their child then gets admitted. Parents will claim Singer convinced them that, through his connections, he could achieve the same thing for them with a smaller donation by fudging the system for testing or admitting athletes, and that the schools were willing to look the other way in exchange for the money.

Willful blindness is sometimes called the “ostrich doctrine”

Willful Blindness

If a parent tries to claim he or she didn’t know what Singer was really doing, how credible that will be will depend on the facts and evidence in each case. A doctrine called “willful blindness” might come into play, where the government can prove knowledge by showing a defendant deliberately closed his eyes to what was going on around him in an effort to avoid learning the truth. A prime example of this could be one point in a call recorded between Singer and parent Gordon Caplan, when Caplan says, “I don’t even want to know what you guys do.”

Of course, parents who were involved in creating phony athletic profiles for their students knew they were doing something wrong. But not everything that’s wrong is a crime. They may argue that Singer convinced them the school was willing to go along with it in exchange for the substantial donation they were making. There’s no evidence the schools were directly harmed financially – in many cases the school athletic program received a donation, and once admitted the students paid tuition.

Similarly, parents involved in helping their students cheat on the ACT or SAT clearly knew they were doing something wrong. But they may argue that cheating on a test, although wrong, should not be a federal felony. The schools and testing agencies may have been deceived, but the law generally draws a distinction between being deceived and being defrauded. If as a result of the scheme the schools received not only tuition payments but substantial cash contributions, a parent may argue they were not really defrauded at all. Perhaps the appropriate remedy is disgrace, expulsion, and loss of tuition money already paid, but not a criminal prosecution.

One could argue that the schools were deprived of valuable slots on the athletic teams or in the freshman class that could have gone to deserving students, and that deprivation amounted to fraud. But that’s not how the government has charged the case, at least at this point. Prosecutors have relied on the honest services fraud conspiracy. That will require proof that the parents knowingly participated in the bribery schemes – and based on what is in the charging documents so far, that may be difficult to prove.

Parents may actually be more vulnerable on tax charges, if they wrote off their payments to Singer’s foundation as a charitable deduction. Those could be criminal charges or merely civil penalties, depending on the facts of each case. And prosecutors may seek to add money laundering charges against some parents, but those charges will be vulnerable to the “proceeds” defense I discussed above.

Many of the parents are hiring high-powered defense attorneys – they can afford the best, of course. There may be some quick guilty pleas, but I suspect a number of the parents will fight the charges and may well prevail. Their conduct was clearly reprehensible. It’s less clear, at least at this point, that it was criminal.

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