Investment Fraud and Ponzi Schemes

Have you ever heard of Charles Ponzi? No, you youngsters, I am not referring to that cool character, Fonzi, from the 1950's-based t.v. series, "Happy Days!"

Instead, I am talking about the original con artist, Charles Ponzi, who was prosecuted for investment fraud back in the 1920's, and for whom the term "ponzi scheme" is named.

According to Wikipedia, a ponzi scheme refers to any "get rich quick" investment scheme in which the con artist falsely promises a high investment return, which never materializes, and then uses some of the investment money obtained from later investors to repay some of the earlier investors, in order to keep the scheme afloat.

The original Ponzi's crimes pale in comparison to the crimes committed by Bernie Madoff, who was sentenced in June to serve a whopping 150 years in prison. And did you hear the news earlier today that one of Bernie Madoff's assistants, David Friehling, has entered a guilty plea for his role in helping Madoff rip off investors for a record $64.8 billion, according to Wikipedia?

Ponzi may have had the crime named after him, but it appears that Madoff, with help from others, perfected it. Maybe we should re-name it the "Madoff scheme," in his (dis)honor. And trust me, Fonzi wouldn't believe Madoff's crime was cool!

The Importance of Themes in Criminal Trials

Over the years, I have observed that the best trial lawyers have a theme, or theory, of their case, which they utilize thoughout the trial.

For instance, if your theory, or defense, involves accident or mistake, then you will want to help the jury focus on this theme throughout the trial. For example, if accident or mistake is your defense in a Medicare fraudulent billing case, beginning with jury selection, during voire dire, the defense attorney may ask prospective jurors several questions concerning whether they have ever made mistakes while filling out forms. Of course, we all have made such errors! But the answer is not the important point. The important point is that the defense attorney is trying to develop a theme and encouraging the jurors to think about the possibility of making a mistake. You also hope the jury will relate to your client.

Another good theme I have seen used at trial involves the old saying, "bad things happen to good people." Doesn't that theme give you a good image of a person that you can relate to? Again, the point is that you want the jury, from the very beginning and all throughout the trial, to relate to your client and to recognize that a mistake may have occurred, but that your client is not a "bad egg!"

Of course, utilizing a theme can carry you only so far at trial! For instance, if the government has video tape, DNA, and finger print evidence, your goose may be cooked no matter what theme you utilize! And if you were representing Charles Manson, would a theme really matter?! What could your trial theme be for Manson? "Bad things happen to mad, psychotic people?!"

Bad Laws: Zero Tolerance and Mandatory Sentencing

In my opinion, there has been an unfortunate, excessive trend, in the United States, toward rigid, "one-size-fits-all" laws. These bad laws include mandatory sentencing laws and zero tolerance policies.

I have no problem with some mandatory sentencing laws, especially for violent, repeat criminal offenders. For such dangerous, repeat offenders, I believe most of us would generally agree to "lock 'em up and throw away the key." But the mandatory sentencing laws go much further. All around the country, legislatures are deciding to take away sentencing judges' discretion by mandating minimum sentences to be served for various crimes. For example, we have seen some offenders getting mandatory life sentences under some states' "three strikes" laws for simply shoplifting items worth a few dollars. In my opinion, this is going too far. While some mandatory laws are good, sentencing judges still need some discretion to avoid extreme results.

I also take issue with some "zero tolerance" policies that are in vogue around the country. For instance, school boards everywhere have jumped on the bandwagon with their inflexible zero tolerance policies concerning weapons on campus. Just this past week, we have all read about the Delaware first grader who was suspended for innocently taking a cub scout all-purpose utensil to school. And did you hear about the high school eagle scout who was suspended simply because he had a scouting knife carefully tucked away in his car trunk? In my opinion, these suspensions, based upon these rigid zero tolerance policies, are outrageous!

When will state legislatures and school boards get back to using a little more judgment and common sense? One size does not always fit all. What do you think?

Defense Lawyers and Maytag Repairmen

Do you recall this guy, the "Maytag repairman," from the Maytag Company's television commercials? He was depicted as "the loneliest guy in town," because, according to Maytag, their appliances never needed repairs!

Well, as a criminal defense attorney, I sometimes feel like the Maytag repairman, too! Let me explain! As a former federal prosecutor for over 20 years, I often had a team of federal agents at my disposal, while working with me on major fraud and public corruption cases. On one major Medicare fraud case, I supervised a task force of five auditors and six or more agents. If I wanted to subpoena a witness, I simply picked up the telephone and called one of my agents and asked them, (politely, of course!), to go and serve it. And if I wanted some more witnesses, I could send out a team of agents to find them.

But now, as a criminal defense lawyer, I no longer have the full weight and power of the federal government at my disposal. If I need to subpoena a witness, I must either pay a private investigator to do it, or I do it myself. And if I need some more witnesses, I must get on my horse and go find them myself! In many ways, I am all alone, while aggressively defending my clients!

So, don't you see, a criminal defense attorney is sort of like the Maytag repairman, "the loneliest man in town!"

On the Soapbox: The DOJ and Statistics

Okay, I realize that, just two posts ago, I complained about the unreliability of crime rate statistics. But I still have one more rant in mind concerning the topic of crime statistics. This rant concerns the myopic focus of the United States Department of Justice in emphasizing crime statistics too much. In other words, I am back on the soapbox today to complain about how, in my opinion, the DOJ inappropriately pushes each U.S. Attorney's Office around the country to focus more on the quantity of cases, rather than on the quality of cases, which each office prosecutes. In my opinion, DOJ does this in several ways.

For example, in recent years, DOJ, which oversees all 94 U.S. Attorney Offices around the country, has increased the statistical reporting requirements by each office. For instance, each U.S. Attorney's Office is periodically required to submit meticulous records to DOJ in Washington as to the number of hours spent by each Assistant U.S. Attorney, (and each U.S. Attorney's Office), along with the numbers and types of each of the criminal cases prosecuted. Then, DOJ crunches these numbers and they can (and do) "encourage" some of the offices with lower numbers to increase their numbers in certain crime categories, or else the U.S. Attorney's Office may lose funding for prosecutor positions! In other words, in my opinion, as a result, the focus of the federal government is now more on case numbers than on case quality or outcome.

In addition, DOJ periodically sends out evaluation teams to each U.S. Attorney's Office around the country to ensure that each office is complying with DOJ priorities. While, in some ways, such evaluations are a good management tool, the problem is that it promotes each U.S. Attorney's Office to "do what Washington expects," even if local crime problems present different challenges than Washington's "cookie cutter" approach. And the consequences of not following DOJ's directives can be serious: again, DOJ will not only castigate a non-compliant U.S. Attorney's Office in writing, but may also withhold some funding of U.S. Attorney Office positions.

Finally, one of DOJ's real problems, in my opinion, is the fact that, in evaluating its crime statistics, the DOJ also generally rates each criminal case, both large and small, just the same. For example, generally speaking, each small gun trafficking case is considered a "number," just the same, for many statistical purposes, as each large gun trafficking case. And the same is true for every fraud case, drug case, and for criminal cases in every other crime category. As a result, (although presumably each Office will try to do the right thing), there is no incentive from DOJ for the U.S. Attorneys' Offices to devote significant resources to large, complex cases, since DOJ will not give that office any more statistical credit for working on the big federal criminal cases. And if you work on a few large cases, then you may get penalized if you then have less time to boost your small case stats! So, what would you guess the U.S. Attorneys' Offices are going to focus on -- more small cases or a few large cases?

As a former federal prosecutor, (and current criminal defense attorney), I am concerned that, in the future, we will not see many U.S. Attorney's Offices working on very many long, complex federal criminal investigations. They simply can't afford it because DOJ's approach simply doesn't encourage it. Instead, the trend is toward U.S. Attorney's Offices focusing more on small drug cases and other quick, "slam dunk" types of cases, so that they can generate large case numbers to please Washington, and keep their resources!

So, that is why I am on the soapbox today! In my opinion, DOJ's "numbers" policy encourages the prosecution of the "little fishes" and may let the "big fishes" get away! So, after 20 years of working for DOJ, now you can see why I am sick of crime statistics! What do you think?

Prosecutor v. Defense Lawyer: Who Wears the "White Hat?"

As you can plainly see the picture above, this is a white hat. My question for you today is: In a criminal case, who really wears the white hat in court? Is it the crusading prosecutor who, while standing up for his or her crime victim, is fighting to protect society and for "truth, justice, and the American way?" Or is it the criminal defense lawyer who, while defending the accused, is fighting, as the under dog, to make the government do its job properly and ensuring that his client gets their "fair day in court?"

The point of this post is that, in my opinion, BOTH advocates should get to wear the white hat to court! In other words, in order for our criminal justice system to work properly, it requires good, experienced advocates seeking justice on BOTH sides of the courtroom. And even though I was a federal prosecutor for over 20 years, and a defense attorney for only less than 5 years, I am convinced that defense attorneys have just as an important role to play as the government lawyers.

So, please pardon me as I grab my white hat and head to court!

Crime Statistics: How Reliable Are They?

According to Benjamin Disraeli's famous quote: "There are three kinds of lies: lies, damn lies, and statistics." Nowhere is this more true than with crime rate statistics. For example, each year, the F.B.I. issues its Uniform Crime Reports, which is a compilation of crime statistics for certain serious crimes which are compiled by the F.B.I. based upon submissions from law enforcement agencies around the country. These reports may serve as a decent barometer. But, in my opinion, these annual reports are flawed. Or at least they don't give us a complete picture about crime. Here are a couple of reasons why:

1. There have been a number of reports about various state and local law enforcement agencies around the country which have submitted inaccurate information to the F.B.I. about crime stats in their jurisdictions. But there is another more fundamental reason why you shouldn't trust crime rate statistics:

2. Let's assume you are a sheriff who is running for re-election. In order to get re-elected, you might direct your investigators to make fewer street level drug arrests during the months leading up to the election. Then, you could (falsely) claim that you have "cleaned up Dodge City" because the crime statistics (and number of drug arrests) are down. On the other hand, if you have worked hard to make more drug cases, and the number of arrests have gone up, then, ironically, the crime statistics might make it (incorrectly) appear that a new sheriff is needed to deal with the growing drug problem! Don't you see my point? Do you agree?

So, in my opinion, while Disraeli may not have been absolutely correct about statistics, he was pretty close. We should at least take crime rate statistics with a grain of salt. Of course, I'll bet there's one crime statistic about which we can all agree: that is, that the crime rate is always "going up!"

The Mafia and Medicare Fraud

Have you heard the news this week? The mafia is reportedly moving into the Medicare fraud racket! As if Medicare fraud wasn't already bad enough, now organized crime is reportedly trying to get a piece of the action!

Medicare fraud has indeed already been a major problem in this country. Now, it is just going to get worse. While there appear to be no reliable statistics, according to Wikipedia, of the $368 billion spent on Medicare billings, (for the elderly), each year, approximately 20% of the billings are fraudulent! Folks, that's over $73 billion per year in health care fraud in this country!

As a former federal prosecutor, in my opinion, part of the problem lies in the fact that Congress does not appropriate sufficient funds for law enforcement to combat Medicare fraud. According to Wikipedia, right now, the F.B.I. alone has open over 2,400 open health care fraud investigations. There simply are not enough agents and prosecutors solely dedicated to combatting this problem.

Moreover, in my opinion, some of the investigations are ill-conceived and improperly focus on legitimate medical doctors, hospitals, and other health care facilities that simply make billing mistakes. The government's focus should be on the real crooks.

And now, if things weren't already bad enough, the mafia is getting into the action! Wow! Sometimes, such bad news makes you wonder if things aren't just all going to Hell in a handbasket, doesn't it?!

Reasons Why You Need An Experienced Federal Criminal Defense Lawyer For A Federal Criminal Case

There are so many kinds of lawyers "out there!" For example, there are divorce lawyers, real estate lawyers, personal injury attorneys, and bankruptcy lawyers, just to name a few. But did you know that there are also different kinds of criminal lawyers, based upon the types of criminal cases which they are experienced in handling?

So, what should you do if you are a target of a federal grand jury investigation? In other words, what kind of criminal lawyer do you need if you face potential federal criminal charges?

In my opinion, any person facing the possibility of a federal criminal indictment should try to find an experienced federal criminal defense lawyer, and not just any criminal defense attorney will do. Naturally, I will admit I am biased, because I am a former federal prosecutor who has over twenty years of experience in trying all types of criminal cases in federal court. But please also consider the following reasons why, in my opinion, you should look only for an experienced federal criminal lawyer to help you in this situation.

First of all, the federal court procedural rules are different. Most criminal lawyers, (even some outstanding advocates I know), who practice only in the state courts, essentially have no clue about the pretrial rules which apply in federal court. In federal court, the government must comply, for example, with the federal Speedy Trial Act and the Jencks Act. Also, many state criminal lawyers do not know the difference between a "Rule 11" and "Rule 16!"

In addition, an experienced federal criminal lawyer will more likely know the federal agents and prosecutors and how to plea bargain in federal court. Trust me, folks, things are different when you deal with the feds!

Also, jury selection rules and trial procedural rules are often different from the procedures followed by the state courts. While it is not always the case, sometimes federal criminal cases are also a lot more complex than state cases. As a result, federal criminal cases may also require a more sophisticated understanding of the federal charges and what the government must prove at trial. The difference between the two court systems is like the difference between playing checkers and chess!

Finally, sentencing in federal court is vastly different from sentencing in state court. In federal court, a criminal lawyer must be familiar with the infamous federal sentencing guidelines. These guidelines can be very complicated! At times, sentencing in a federal criminal case can resemble a "mini-trial."

So, have I convinced you to look for an experienced federal criminal defense attorney in your area for your federal criminal case?

Another Goolsby "War Story:" The Case of the Perfect Crime!

As a former federal prosecutor in Augusta, Georgia, I once prosecuted a bank executive who had pulled off the "perfect crime." Well, it was almost perfect! After all, she did get caught, or else I wouldn't be telling this story! Here is what happened and how she got caught.

"Miss Moneypacker," the crooked bank executive, was in charge of handling the accounts of the bank's wealthier customers. Her job included opening their accounts, arranging lines of credit, and otherwise providing them with good, personal service. (She was sort of like Mr. Drysdale or Miss Hathaway in the "Beverly Hillbillies!") In other words, if a wealthy bank customer needed something, they knew to always call "Miss Moneypacker" for assistance.

"Miss Moneypacker" was not only very attractive, but also she was very intelligent. She realized, for instance, that, as to her handling of the wealthy customers' accounts, her bank bosses had virtually no checks and balances in place. In other words, other than routine bank audits, there was no one looking closely over her shoulder. So, here is what she did: Occasionally, a wealthy bank customer would contact her and inform her that they were moving out of town. Then, these customers would come in the bank, give her a check, and ask her to help pay off and close their lines of credit. Now, "Miss Moneypacker" was smart enough NOT to steal these checks. She dutifully used the customer's check to pay on their line of credit. However, the wiley "Miss Moneypacker" did NOT close out the customer's line of credit. Thereafter, the customer moved away, believing that they had paid off and closed their accounts. Little did they know that "Miss Moneypacker" had kept their accounts open and continued to borrow thousands of dollars against their line of credit! She did this over and over again. She also submitted paperwork causing the bank to send monthly statements to new bogus addresses established by her. And she always carefully made payments each month on the (still open) lines of credit.

"Miss Moneypacker" also took many other steps to make sure she would never get caught. For instance, she would request the production of new PIN numbers and ATM cards, ostensibly for these customers, and then she would use the ATM debit cards to withdraw thousands of dollars each day at various ATM machines. This "perfect crime" actually continued for several years without any problems! Can you guess how "Miss Moneypacker" got caught?

One day, "Miss Moneypacker" got sick! So, she wasn't there when Harvey Smith, one of her former customers who had moved away, came back into the bank. Harvey had moved back to town and wanted to open a new line of credit! Another bank official had to step in and help Harvey, because "Miss Moneypacker" was out! Just imagine Harvey's (and the bank official's) shock and surprise when they learned that Harvey still owed the bank over $100,00.00 on his (still open) line of credit! The bank called the F.B.I. and all "Miss Moneypacker's" shenanigans were discovered! She was charged with federal bank fraud and bank employee embezzlement. The bank had lost over half a million dollars!

So, the moral to this story might be that, if you want to commit the perfect crime, you should never call in sick! (If "Miss Moneypacker" had been at work that day, she could have finessed the situation with Harvey, and I suspect she would still be the "line of credit queen!") Or maybe the moral should be: Don't do the crime, if you don't want to do the time!

The Goolsby Law Firm and Practicing Law With My Son

The above photo is one of my three sons--and current law partner. (I also have a wonderful daughter). As many of you know, The Goolsby Law Firm, LLC, is a father and son law practice.

My son and I practice law together in Augusta, Georgia. We primarily handle criminal defense, (both state and federal courts), and divorce cases, along with personal injury cases, and other general litigation. I also have a second son who is presently attending law school and a third son who also plans to attend law school when he graduates from the University of Georgia. (Only my wise daughter wants to become a teacher!) Eventually, we hope to be a true "family law firm" with a father and three sons practicing law together, here in Augusta, (and Martinez and Evans), Georgia. I am very proud of all four children! But I also face an interesting challenge! It involves working with family members.

Have any of you ever been in business with a family member? I am confident that you can understand that, while working with family members is a special thing, it also presents real challenges! As a dad, I must diplomatically juggle my "father hat" and my "partner hat!" In other words, I must show respect for my son's opinions and try not to foist my will upon him, simply because I am his father. Likewise, I am sure that my son must walk a tightrope, at times, between wanting respect from me for his opinions, as a partner, while, at the same time, recognizing that I AM his dad and have "been around" a while longer!

Yes, it is a challenge! But I enjoy this challenge and wouldn't trade it for any other! (And now, I must get back to work, so I can address the "other challenge" of building a law practice for myself and three hungry sons!)