Combatting White-Collar Crime and Fraud

DEPARTMENT OF JUSTICE
JOURNAL OF FEDERAL LAW AND PRACTICE
Volume 70 December 2022 Number 4
Director
Monty Wilkinson
Editor-in-Chief
Christian A. Fisanick
Managing Editor
Tsering Jan van der Kuijp
Associate Editor
Kari Risher
University of South Carolina Law Clerks
Rebekah Griggs Lillian Lawrence
Kyanna Dawson William Pacwa
United States Department The Department of Justice Journal of

of Justice Federal Law and Practice is published
by the Executive Office for United States
Executive Office for United
Attorneys
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The Department of Justice Journal
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70 DOJ J. FED. L. & PRAC., no. 4, 2022.
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The opinions and views contained herein are those of the authors and do not necessarily reflect
the views of the Department of Justice. Further, they should not be considered as an
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Page Intentionally Left Blank
Combatting White-Collar Crime and Fraud
In This Issue
Introduction
Mandy Riedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Water Under the Bridge: Assessing the Effect of

Kelly v. United States
Andrew W. Laing . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Crime–Fraud Litigation in White-Collar Prosecutions

John Kosmidis & Jerrob Duffy . . . . . . . . . . . . . . . . . 17
The Special Matters Unit: Best Practices for Addressing At-

torney–Client Privilege Issues
Lindita V. Ciko Torza & Timothy J. Coley . . . . . . . . . . 29
Prosecutions in the Securities and Commodities Markets

Justin Weitz & Jennifer Farer . . . . . . . . . . . . . . . . . . 43
The Foreign Corrupt Practices Act: Continued Progress in the

Fight Against Corruption
David I. Salem & Derek J. Ettinger . . . . . . . . . . . . . . . 59
Federal Prosecution of Elder Financial Abuse: Combatting Power

of-Attorney Fraud
Timothy L. Vavricek . . . . . . . . . . . . . . . . . . . . . . . 75
The PCSF: A Global Presence for a Global Problem

Philip Andriole & Chris Maietta . . . . . . . . . . . . . . . . . 89
Carpe Crypto: Prosecuting Cases Involving Digital Assets and

Blockchain Technology
Sanjeev Bhasker, Alexandra D. Comolli & Olivia Zhu . . . . 105
Note from the Editor-in-Chief

Christian A. Fisanick . . . . . . . . . . . . . . . . . . . . . . . . 117
Introduction
Mandy Riedel
Assistant United States Attorney
White Collar Crime Coordinator
Executive Office for United States Attorneys
Welcome to this exciting edition of the Department of Justice Journal of

Federal Law and Practice, which focuses on the theories, tools, and tactics
that federal prosecutors can use to combat financial crime. These articles were
drafted in the wake of the Deputy Attorney General’s guidance on corpo-
rate crime enforcement. These revisions reinforced the longstanding view that
white-collar crime, in particular corporate crime, will “always be a core priority
for the Department,” with the “first priority” being “to hold accountable the
individuals who commit and profit from corporate crime.”1. In March 2022, the
Attorney General reiterated this enhanced focus in remarks delivered to the
American Bar Association’s National Institute on White Collar Crime, where
he touted the Department’s efforts to enforce individual accountability and
ensure the impartial application of the law.2. Other core Department priori-
ties have also included health-care fraud, COVID-19 fraud, and elder justice
initiatives, all of which may fall under the umbrella of white-collar crime.
These crimes are frequently, and perhaps inevitably, complex and sweeping
in scope, ranging from global securities and accounting schemes by multination-
als to a singular act of deception against an elder by an individual wrongdoer. A
common thread binding these crimes lies in the often latent or even invisible ef-
fects on the victims; rarely, if ever, is white-collar crime victimless. A company
that engages in overseas corruption by bribing a foreign official or illegally gam-
ing the U.S. procurement process hurts others by engaging in anti-competitive
behavior, lowering the ethical standards by which all U.S. companies should
act, and impairing the efficient functioning of the marketplace. An individual
who illicitly exploits innovations in digital assets and blockchain technology
brings disrepute to genuine innovators who want to use these developments for
the public good and to advance the U.S. economy. As the Attorney General
stated, white-collar crimes “weaken[] our economic institutions by undermin-
ing public trust in the fairness of those institutions,” while failing to prosecute
such crimes “weakens our democratic institutions by undermining public trust
in the rule of law.”3.
1. Lisa O. Monaco, U.S. Dep’t of Just., Further Revisions to Corporate

Criminal Enforcement Policies Following Discussions with Corporate
Crime Advisory Group (2022).
2. Merrick B. Garland, U.S. Att’y Gen., U.S. Dep’t of Just., Remarks to the ABA
Institute on White Collar Crime (Mar. 3, 2022).
3. Id.
December 2022 DOJ Journal of Federal Law and Practice 1

Fortunately, Department prosecutors have the tools and know-how to act
on these priorities. And the articles in this issue not only reflect these abilities
but also provide sound, practical tips for federal prosecutors to consider when
moving on a white-collar case. Despite the factually compelling narratives that
federal prosecutors can employ when making their case in court, equally if not
more important is their skillful use and knowledge of legal tools and tactics.
Knowing how and when the crime–fraud exception applies to attorney–client
privilege and work product protections, how and when to deploy filter teams
as investigations become more sensitive and multi-faceted, and how and when
a fraud scheme has occurred are just a few examples of the tools, tactics, and
concepts that white-collar crime prosecutors must be aware of.
The articles contained in this issue of the Journal provide just this type of
practical guidance for economic crimes prosecutors. Appellate Counsel Andrew
Laing begins by analyzing what constitutes money or property fraud under
the relevant statutes designed to combat white-collar crime. Special Matters
Unit Chief John Kosmidis and Litigation Unit Chief Jerrob Duffy discuss the
circumstances under which the crime–fraud exception to the attorney–client
privilege and work product doctrine may apply in order to discover potentially
relevant communications. Trial Attorney Lindita Ciko Torza and Special Mat-
ters Unit Assistant Chief Timothy Coley then describe the role of filter teams,
in particular the Special Matters Unit, in avoiding complications arising from
legal ethics and various privilege issues. With this essential conceptual and
practical information in mind, we next dive into an assortment of substantive
white-collar crime issues. Former Acting Principal Deputy Chief of the Mar-
ket Integrity and Major Frauds Unit Justin Weitz and Trial Attorney Jennifer
Farer analyze the tools, cases, and theories of liability for securities and com-
modities fraud that can also apply in a civil enforcement context. AUSA David
Salem and FCPA Unit Assistant Chief Derek Ettinger give us insights into and
lessons learned from a Foreign Corrupt Practices Act case that they recently
jointly (and successfully) prosecuted. AUSA Timothy Vavricek sheds light on
an important but less publicized type of white-collar crime involving the use
of power-of-attorney fraud to scheme and abuse the elderly. Trial Attorneys
Philip Andriole and Chris Maietta go global by detailing the work and mis-
sion of a (relatively) new interagency group called the Procurement Collusion
Strike Force that focuses on antitrust and wire/mail fraud schemes. U.S. Dig-
ital Currency Counsel Sanjeev Bhasker, AUSA Alexandra Comolli, and Trial
Attorney Olivia Zhu round up our discussion by taking us into the digital
world, which the criminal underworld is exploiting at an incredibly rapid pace,
and describing how to apply traditional legal tools and tactics to digital asset
investigations and prosecutions.
The authors’ contributions in this issue represent the Department’s com-
mitment to use all the resources and knowledge at its disposal to combat
white-collar crime and fraud. They further signify how the Department adeptly
responds both to evolving older or to entirely new developments in the fraud
and corruption space. I therefore first want to thank our authors not only for
2 DOJ Journal of Federal Law and Practice December 2022

their contributions here but also to the Department and its mission of deliv-
ering justice for the public good. I also want to thank all those who worked
behind the scenes with editing, reviewing, publishing, and disseminating the
incredible wealth of information held in this issue of the Journal. I trust that
you will find this information as interesting and helpful as I have and encourage
all Department attorneys to consider contributing to the Journal.
AUSA Mandy Riedel is currently the White Collar Crimes Coordinator
for the Executive Office for United States Attorneys. In this position, Mandy
is the Department’s subject matter expert for white collar crimes, the na-
tional COVID-19 fraud coordinator, and the national elder justice coordinator.
She oversees nationwide training and policy on financial crimes for the De-
partment. This includes government program fraud, investment and financial
fraud, and money laundering, among other things. Mandy has been a federal
prosecutor for more than 18 years, primarily focusing on prosecuting white-
collar crime. She started her prosecutorial career at the Department’s Criminal
Division, Fraud Section, in Washington, D.C. in 2004. After more than four
years, she joined the U.S. Attorney’s Office for the Middle District of Florida.
She has handled numerous complex investigations, prosecutions, and trials, in-
cluding multi-week trials involving electronic evidence, foreign evidence, and
complex financial evidence. Mandy has developed expertise in prosecuting fi-
nancial fraud, identity theft crimes, and victim-related crimes including child
exploitation, human trafficking, and civil rights. Before working for EOUSA
in her current role, Mandy served the Middle District of Florida in multiple
supervisory capacities including as the Deputy Criminal Chief, Acting Chief
of the Special Victims Section, and Senior Litigation Counsel.


Water Under the Bridge:
Assessing the Effect of
Kelly v. United States
Andrew W. Laing
Appellate Counsel
Fraud Section
Criminal Division
I. Kelly reminds us that “not every corrupt act . . .

is a federal crime”
The Supreme Court’s decision in Kelly v. United States1. is the latest in
a line of cases emphasizing the boundaries of the money or property fraud
statutes. Its ripple effects are being felt in fraud cases across the country—civil
and criminal, large and small. This article seeks to put those effects in per-
spective, beginning with a recapitulation of Kelly’s facts and a discussion of
what the opinion did and did not hold.
A. The facts and holdings of Kelly : a refresher
“Bridgegate,” the facts of which many are by now familiar, remains one of
the most breathtakingly brazen acts of political vengeance in living memory.
In 2013, the Governor of New Jersey was running for re election. In an effort
“to notch a large, bipartisan victory,” his Deputy Chief of Staff “avidly courted
Democratic mayors for their endorsements,” including the Mayor of Fort Lee.2.
After the Mayor informed the Deputy Chief of Staff’s office that he would not
be endorsing the Governor, the Deputy Chief of Staff and two New Jersey-
aligned officials at the Port Authority of New York and New Jersey (Port
Authority) concocted a plan for vengeance. By reducing from three to one
the number of toll lanes on the George Washington Bridge reserved for New
York City-bound Fort Lee traffic, they would “create a traffic jam that would
punish” the Mayor and “send him a message.”3.
The success of this plan depended on using Port Authority resources, which
the conspirators caused to be expended in two ways. First, the three conspir-
ators agreed to spin a cover story to explain the lane change, falsely claiming
that it “was part of a traffic study, intended to assess whether to retain the
dedicated Fort Lee lanes in the future.”4. To make this ruse more persuasive,
1. 140 S. Ct. 1565 (2020).

2. Id. at 1569.
3. Id. (internal quotation marks and brackets omitted).
4. Id.

one of the conspirators directed Port Authority engineers to collect data on
traffic delays resulting from the lane-closure scheme—data collection that re-
quired engineers’ “valuable time” but ultimately “was to no practical effect.”5.
Second, the conspirators agreed to cause the Port Authority to pay for the
extra “on call” toll collectors who would be required to be on standby in order
to implement the plan.6.
The conspirators executed their plan on September 9, 2013—the already
traffic-heavy first day of school—and it was immediately, spectacularly suc-
cessful.7. Fort Lee’s “streets came to a standstill,” and “the traffic rivaled that
of 9/11,” when the George Washington Bridge shut down completely. School
buses stood motionless for hours, and vital emergency services were delayed.8.
The conspirators nonetheless maintained “radio silence,” ignored the Mayor’s
panicked entreaties, and “merrily kept the lane realignment in place.” Three
days later, the Port Authority’s Executive Director found out and immediately
put an end to it.9.
Swift backlash, a New Jersey State Assembly investigation, and a federal
criminal investigation ensued.10. Ultimately, one of the three conspirators be-
came a cooperating witness, while the other two were convicted following a
jury trial of conspiracy to obtain by fraud, knowingly convert, or intentionally
misapply property of an organization receiving federal benefits, in violation
of 18 U.S.C. § 371; the substantive object of that conspiracy, in violation of
18 U.S.C. § 666(a)(1)(A); conspiracy to commit wire fraud, in violation of
18 U.S.C. § 1349; and wire fraud, in violation of 18 U.S.C. § 1343.11.
A unanimous panel of the Third Circuit affirmed in relevant part.12. Before
the district court, the defendants “principally argue[d] they could not have
committed fraud because [the Port Authority official defendant] possessed the
unilateral authority to control traffic patterns at Port Authority facilities and
5. Id. at 1570.
6. Id. at 1570 (“Ordinarily, if a toll collector on a Fort Lee lane has to take a break,
he closes his booth, and drivers use one of the other two lanes. Under the one-lane
plan, of course, that would be impossible. So the Bridge manager told [a conspirator]
that to make the scheme work, an extra toll collector would always have to be on call
to relieve the regular collector when he went on break.” (internal quotation marks
omitted)).
7. Id.
8. Id.
9. Id. (internal quotation marks omitted).
10. United States v. Baroni, 909 F.3d 550, 559 (3d Cir. 2018), rev’d sub nom. Kelly,
140 S. Ct. 1565.
11. Baroni, 909 F.3d at 556 n.2, 560. The defendants were also convicted on conspiracy
and substantive civil rights counts under 18 U.S.C. §§ 241–42, in connection with their
efforts to “interfere with the localized travel rights of the residents of Fort Lee.” Id. at
585. Following a lengthy discussion (fascinating in its own right but beyond the scope
of this article), the Third Circuit concluded that the right to intrastate travel was
not clearly established and reversed those convictions. Id. at 585–88. The civil rights
counts were not at issue before the Supreme Court.
12. Id. at 588–89.

to marshal the resources necessary to implement his decisions.” In other words,
an official cannot defraud an entity of something he possesses the unilateral
authority to control. The court observed that the defendants did not even make
sufficiency arguments regarding the nature of “the property at issue.”13. The
court of appeals nonetheless reached and rejected the defendants’ argument
that “they did not deprive the Port Authority of any tangible property.”14.
First, the court explained that the evidence at trial showed that the defen-
dants obtained, “at a minimum, public employees’ labor” in the form of over-
time toll booth workers and traffic engineers.15. Second, the court held in the
alternative that the defendants had also deprived the Port Authority of its
“right to control” the George Washington Bridge itself, explaining that “[t]he
Port Authority’s physical property—the bridge’s lanes and toll booths—are
revenue-generating assets” and that the Port Authority had “an unquestion-
able property interest in the bridge’s exclusive operation,” which the defen-
dants “usurp[ed].”16.
The Supreme Court disagreed on both fronts. The Court began its dis-
cussion by emphasizing that “[t]he Government in this case needed to prove
property fraud,” explaining that “[t]he wire fraud statute . . . prohibits only
deceptive ‘schemes to deprive [the victim of] money or property’” and that,
“[s]imilarly, the federal-program fraud statute bars ‘obtain[ing] by fraud’ the
‘property’ (including money) of a federally funded program or entity like the
Port Authority.”17. Quoting liberally from its earlier decision in McNally v.
United States, the Court repeated its admonition that the fraud statutes are
“‘limited in scope to the protection of property rights’” and, as such, “leave[]
much public corruption to the States (or their electorates) to rectify.”18.
The Court then addressed and rejected each of the two theories of property
deprivation that the government had advanced and that the Third Circuit had
blessed: first, that the defendants “sought to commandeer part of the Bridge
itself by taking control of its physical lanes”; and second, that the defendants
“aimed to deprive the Port Authority of the costs of compensating the traf-
fic engineers and back-up toll collectors who performed work relating to the
13. Id. at 562–64.

14. Id. (internal quotation marks omitted).
15. Id. at 565–66.
16. Id. at 566–68. The Second Circuit has discussed the “right to control” theory of
property fraud in greater depth on several occasions, including in a case now pending
before the Supreme Court. United States v. Percoco, 13 F.4th 158, 170 (2d Cir. 2021),
cert. granted, 2022 WL 2347617 (2022).
17. Kelly v. United States, 140 S. Ct. 1565, 1571 (2020) (quoting McNally v. United
States, 483 U.S. 350, 356 (1987), and 18 U.S.C. § 666(a)(1)(A)) (brackets in inter-
nal quotations in Kelly). Of course, Section 666 does not only prohibit “obtain[ing
property] by fraud”; it also criminalizes knowingly converting or “intentionally mis-
appl[ying]” property. 18 U.S.C. § 666(a)(1)(A). The Court did not discuss these alter-
native bases for liability.
18. Kelly, 140 S. Ct. at 1571 (quoting McNally, 483 U.S. at 360).

lane realignment.”19. With respect to the first theory—commandeering the
lanes—the Court began its analysis with its decision in Cleveland v. United
States, in which the Court rejected the government’s claim that the defen-
dant’s “fraud aimed to deprive [Louisiana] of property by altering its licensing
decisions” in the form of its allocation of yet-to-be-issued gaming licenses.20.
The Court explained that a government’s “‘intangible rights of allocation, ex-
clusion, and control’—its prerogatives over who should get a benefit and who
should not—do ‘not create a property interest,’” but rather implicate “the
State’s ‘sovereign power to regulate.’”21. The Court applied that rationale to
the allocation of the George Washington Bridge’s toll lanes, reasoning that the
defendants did not “take the lanes from the Government” but rather “exer-
cised the regulatory rights of allocation, exclusion, and control—deciding that
drivers from Fort Lee should get two fewer lanes while drivers from nearby
highways should get two more.”22.
With respect to the second theory—Port Authority employees’ time and
labor—the Court acknowledged that “[a] government’s right to its employees’
time and labor . . . can undergird a property fraud prosecution,” but it stressed
that “that property must play more than some bit part in a scheme: It must be
an ‘object of the fraud.’”23. Again comparing the facts in Cleveland, the Court
explained that, although the frauds in Kelly and in Cleveland both “doubtless
imposed costs calculable in employee time,” “[t]he object of the scheme was
never to get the employees’ labor”; “said another way, the labor costs were
an incidental (even if foreseen) byproduct of [the defendants’] regulatory ob-
ject.”24. Having found no cognizable property interest that was an “object” of
the defendants’ fraud scheme, and emphasizing that “not every corrupt act by
state or local officials is a federal crime,” the Court reversed.25.
B. What Kelly did and did not do
Kelly is another in a line of Supreme Court cases fencing in the money or
property fraud statutes.26. But it is important to emphasize the boundaries
of its holdings. Kelly, by its terms, makes very clear that its exclusive focus
is “property fraud,” not “bribes or kickbacks (not at issue here),” not other
aspects of 18 U.S.C. § 666 (like misapplication of property as opposed to ob-
taining property by fraud), and not similar but differently structured statutes
19. Id. at 1572 (cleaned up).

20. Id. at 1572 (quoting Cleveland v. United States, 531 U.S. 12, 23 (2000)).
21. Id.
22. Id. at 1573 (internal quotation marks omitted).
23. Id. (quoting Pasquantino v. United States, 544 U.S. 349, 355 (2005)).
24. Id. at 1573–74.
25. Id. at 1574.
26. See, e.g., Skilling v. United States, 561 U.S. 358, 405, 410 (2010) (adopting “a
limiting construction” of 18 U.S.C. § 1346, confining honest services fraud to schemes
involving bribes or kickbacks); Cleveland v. United States, 531 U.S. 12, 26 (2000);
McNally v. United States, 483 U.S. 350, 356–58 (1987).

like 18 U.S.C. § 1348, which criminalizes securities fraud.27. Although Kelly
brought the distinction between property and governmental regulatory inter-
ests to a new context—from the intangible yet-to-be-issued gaming licenses in
Cleveland to physical, tangible lanes on a bridge) —it relied exclusively on
existing precedent interpreting the fraud statutes in doing so.28. Kelly also
does not disturb or even mention the Court’s decades-old holding that the
“property” at issue in a fraud case need not be tangible.29.
II. Kelly ’s limited effect

What, then, have been the effects of Kelly on the sprawling universe of
money or property fraud prosecutions? Although Kelly was decided only two
years ago—the blink of an eye in federal white-collar litigation—the case law in-
terpreting Kelly has reinforced the message that the decision, while significant,
is merely a reiteration of settled law. Below, this article examines a selection
of cases that have grappled with the two principles that Kelly rearticulates:
that regulatory power is not property, and that property must be an object of
a money or property fraud scheme.
A. “Regulatory power” is not “property”
Kelly makes plain that a fraud scheme whose object is a government’s “reg-
ulatory power,” without more, cannot undergird a property fraud conviction.
This is so even when the regulatory power at issue pertains to the government’s
rights of “allocation, exclusion, and control” over a piece of physical property
like a bridge.30. Unsurprisingly, defendants in several post-Kelly cases have
sought to use Kelly as a shield. These cases involved property that happens
to be in the hands of governments or involve government regulation that is a
part of, but not the sole (or even an) object of the fraud. Courts have largely
27. Kelly, 140 S. Ct. at 1571–72; see United States v. Ramsey, No. 19-cr-268, 2021 WL
4244284, at *3–4 (E.D. Pa. Sept. 27, 2021) (observing that § 1348 “differs significantly
from the mail and wire fraud statutes,” explaining that § 1348(1) “makes no mention
of money or property” and that “the language that Kelly construed” in § 1343 “simply
does not exist in § 1348(1)”).
28. See, e.g., In re Ranbaxy Generic Drug Application Antitrust Litig., No. 19-md-
2878, 2021 WL 5493675, at *3 (D. Mass. Nov. 22, 2021) (rejecting Kelly-based argu-
ment that the court should “reconsider its determination” that plaintiffs adequately
alleged mail and/or wire fraud as civil RICO predicates, explaining that “Kelly is a
straightforward application of the holding in Cleveland,” which the court had already
determined did not bar claims that defendant’s scheme targeted “not simply the gov-
ernment’s regulatory choice but rather the property rights implicated by that choice”);
United States v. Khoury, No. 20-cr-10177, 2021 WL 2784835, at *3 (D. Mass. July 2,
2021) (explaining that “Kelly merely affirmed the holding and other courts’ reading
of Cleveland ” regarding regulatory interests and “did not alter the Court’s precedent
regarding what constitutes property”).
29. Carpenter v. United States, 484 U.S. 19, 25 (1987) (“[Confidential business infor-
mation’s] intangible nature does not make it any less ‘property’ protected by the mail
and wire fraud statutes.”).
30. Kelly, 140 S. Ct. at 1572–73 (internal quotation marks omitted).

resisted those efforts.
For example, in United States v. Spirito, the Fourth Circuit addressed a
defendant’s section 666(a)(1)(A) misapplication convictions involving property
in the hands of a governmental entity.31. The defendant, an airport executive,
improperly used government funds and airport revenue to provide collateral for
a private bank loan to a startup airline that quickly failed, resulting in the loss
of the collateral.32. Among many other things, the defendant argued on appeal
that his section 666 convictions were infirm because, under Kelly, “he made
a mere regulatory decision regarding the funds and, even if the decision was
bad or made for sinister reasons, it does not amount to the ‘misapplication’
of property.”33. Rather, the defendant contended that he merely “exercise[d]
his right to allocate airport funds among airport uses, even if such allocations
broke the rules.”34. Not so, the court replied: The defendant “did not use
his regulatory power to allocate airport funds ‘among airport uses’”; rather,
“[h]e used his regulatory power to pledge airport funds to a private entity . .
. for the exclusive benefit of another private entity . . . . Unlike Kelly, which
involved the use of regulatory power for political retribution, the object of the
crime here was property and the goal was to misapply property owned by the
airport.”35. In other words, Kelly does not shield a defendant who illegitimately
misapplies government property and cloaks that misapplication in the language
of regulatory power.
Several other post-Kelly cases, including in civil contexts, have grappled
with the more difficult distinction between schemes whose object is regulatory
power on the one hand and schemes that involve regulation but have a valid
money or property object on the other. After all, it is easy to imagine a fraud
scheme that depends on deceiving a regulator to obtain approval for a prod-
uct—approval that is, standing alone, a non-property regulatory interest—but
whose ultimate object is consumers’ money, which is unquestionably a property
interest. For instance, in a civil Racketeer Influenced and Corrupt Organiza-
tions Act (RICO) case involving e-cigarette regulation, a district court distin-
guished the facts of Kelly from the scheme at issue there. The court explained
that, although the defendants “allegedly lull[ed] Congressional legislators and
the regulators at the FDA into inaction, or more limited action, to allow their
products to remain on the market,” the object of the scheme “was to secure
the money and property of the end consumers, in particular the new and youth
users who were not previously addicted to nicotine.”36. In other words, a fraud
scheme whose sole object is “lulling” legislators and regulators targets only
a regulatory interest and cannot be characterized as mail or wire fraud. On
31. 36 F.4th 191 (4th Cir. 2022).

32. Id. at 194–97.
33. Id. at 201.
34. Id. (cleaned up).
35. Id. at 202 (emphases added).
36. In re JUUL Labs, Inc., Mktg., Sales Practices, & Prods. Liab. Litig., 497 F. Supp.
3d 552, 614–15 (N.D. Cal. 2020).

the other hand, a scheme that depends on regulatory manipulation but whose
ultimate object is money can.
More recently decided cases provide additional illustrations of this princi-
ple. A magistrate judge in United States v. Dingle recommended denying a
defendant’s motion to dismiss an indictment charging wire fraud in connection
with an alleged scheme to obtain “small business and veteran-owned business
certifications.”37. The judge agreed with the defendant that “[t]he issuance of
licenses alone . . . does not implicate a property right,” but nonetheless recom-
mended denying the motion.38. The judge reasoned that “the scheme alleged
here involved more than a regulatory crime of defrauding the Government out
of licenses”; instead, “[t]he licenses were just the means to an end,” namely
hundreds of millions of dollars in federal contracts to which the defendants
were not entitled.39.
Most recently, in the context of product liability litigation involving airbags,
a district court addressed and rejected a similar argument that, in light of
Kelly, airbag manufacturers’ statements to a regulator “are ‘nonactionable’
because ‘they were not made to obtain money or property.’”40. The district
court brushed aside the defendants’ reliance on Kelly as “unpersuasive.”41.
It explained that, in the case before it, the defendants “allegedly effected a
scheme to defraud with the object of depriving consumers of money by selling
them defective vehicles worth less than they paid. Although [they] allegedly
furthered this scheme by making fraudulent statements to a regulatory agency,
that was not their primary, alleged purpose.”42.
These cases illustrate that, although Kelly offers additional context for
Cleveland ’s holding that regulatory power by itself is not property, Kelly does
not eliminate liability for fraud schemes that involve regulatory power, either
as an arguable aspect of a government-employee defendant’s job (as in Spirito)
or as a means to consumers’ money or property ends (as in the other cases
discussed above).43.
37. United States v. Dingle, No. 19-cr-215, 2021 WL 1015853, at *1 (W.D. Mo. Feb.
3, 2021).
38. Id. at *1.
39. Id. at *3; see also United States v. Dingle, No. 4:19-cr-215, 2021 WL 982327
(W.D. Mo. Mar. 16, 2021) (adopting report and recommendation and denying motion
to dismiss).
40. In re ZF-TRW Airbag Control Prods. Liab. Litig., No. 2:19-ml-2905, 2022 WL
522484, at *56 (C.D. Cal. Feb. 9, 2022).
41. Id.
42. Id.
43. Note that a scheme involving deception directed solely at a regulator in order to
obtain property solely in the hands of a third party implicates the question whether the
fraud statutes include a so-called “convergence” requirement (that is, a requirement
that the party deceived be the same as the party deprived of property). As the First
Circuit put it in rejecting such a requirement, “[i]f . . . the role of a government
regulator is to protect the monetary interests of others, a scheme to mislead the
regulator in order to get at the protected funds will affect ‘property rights’ as required
in McNally.” United States v. Christopher, 142 F.3d 46, 54 (1st Cir. 1998); see also

B. Property “must be an ‘object of the fraud’”
Kelly also tells us that a fraud scheme must have money or property as an
object: “[A] property fraud conviction cannot stand when the loss to the victim
is only an incidental byproduct of the scheme.”44. As the cases discussed below
vividly illustrate, property need not be the sole object of the fraud—it need
just be an object of the fraud.
The Second Circuit discussed this issue in depth in United States v. Gatto.45.
In that case, several defendants
were convicted of engaging in a scheme to defraud three universi-

ties by paying tens of thousands of dollars to the families of high
school basketball players to induce them to attend the universities,
which were sponsored by Adidas, the sports apparel company, and
covering up the payments so that the recruits could certify to the
universities that they had complied with rules of the National Colle-
giate Athletic Association (the “NCAA”) barring student-athletes
and recruits from being paid.46.
On appeal, they argued that the evidence failed to show that they defrauded the
universities of anything at all—indeed, they argued that their actions helped
the universities by driving top-tier recruits to their basketball teams.47. So
what, if anything, was a valid property object of their fraud? The court con-
cluded that the evidence showed that the universities’ “athletic-based aid,”
undoubtedly a property interest, was an object of the fraud.48. Distinguish-
ing Kelly, the court explained that “the loss of property—the Universities’
funds set aside for financial aid—was at the heart of” the scheme; indeed,
“the scheme depended on the Universities awarding ineligible student-athletes”
(ineligible because of the under-the-table payments they accepted) “athletic-
based aid.”49. “Unlike in Kelly,” the court reasoned, “depriving Universities of
athletic-based aid was at the center of the plan.”50. Significantly, the court ac-
knowledged and did not dispute the defendants’ assertion that another object
of their scheme was to “lur[e] the best basketball players to Adidas-sponsored
schools to better market their brand,” but it emphasized the irrelevance of that
claim: “Defendants may have had multiple objectives, but property need only
be ‘an object’ of their scheme, not the sole or primary goal.”51.
United States v. Greenberg, 835 F.3d 295, 306 n.16 (2d Cir. 2016) (joining “at least
four sister circuits” in rejecting convergence requirement, and collecting cases).
44. Kelly v. United States, 140 S. Ct. 1565, 1573 (2020).
45. United States v. Gatto, 986 F.3d 104 (2d Cir. 2021).
46. Id. at 109–10.
47. Id. at 110.
48. Id. at 115.
49. Id. at 116 (emphasis added).
50. Id.
51. Id. (quoting Kelly v. United States, 140 S. Ct. 1565, 1572 (2020)) (emphasis added
by Gatto) (citation omitted).

The Seventh Circuit came to a similar conclusion in United States v. Shel-
ton.52. There, following a lengthy discussion of complex Fourth Amendment is-
sues that ultimately required vacatur and remand, the court addressed whether
the defendants had properly been prosecuted for conspiracy to commit wire
fraud in connection with a scheme to “use[] public employees and Township
resources (such as computers, printers and storage space) to run campaign
fundraisers and other campaign activities during regular work hours while
paying those employees with Township funds.”53. After reviewing Kelly’s dis-
cussion of the principle that a “government’s right to its employees’ time and
labor . . . can undergird a property fraud prosecution,”54. the Seventh Circuit
concluded that “[t]he scheme charged here fits comfortably into the paradig-
matic cases that the Court described as legitimate money-and-property wire
fraud in Kelly.”55. The court explained, “[i]f the object of the charged scheme
. . . was to obtain the services of on-the-clock government employees to run
political campaigns . . . , then the labor costs of this plan were not a byproduct
of the scheme; they were the object of the scheme.”56. Although the campaign
work “also involved a possible kickback scheme,” that did not matter to the
court’s analysis as to the fraud scheme, which, the court concluded, had a valid
property object.57.
Two district court cases further illustrate the principle that fraud schemes
can (and often do) have multiple objects, but it is enough for money or property
to be at least one of those objects. In United States v. Porat, the district
court denied the defendant’s motion for a judgment of acquittal under Rule
29 of the Federal Rules of Criminal Procedure following his wire fraud trial in
connection with his scheme to boost his business school’s U.S. News & World
Report ranking.58. The court emphasized that Kelly made clear that money or
property need only be an object of a fraud scheme,59. and it concluded that
at least an object of the defendant’s scheme was indeed money. Distinguishing
Kelly, the court explained—
It is not plausible to describe taking money from students, appli-

cants and donors as an incidental byproduct of [the defendant’s]
efforts to secure higher rankings through fraud. [His] efforts did
not end when U.S. News released its rankings. Once he had them
in hand, he worked hard to turn those rankings into money by mar-
keting them . . . . The jury naturally concluded the money higher
52. United States v. Shelton, 997 F.3d 749 (7th Cir. 2021).
53. Id. at 774.
54. Kelly, 140 S. Ct. at 1573.
55. Shelton, 997 F.3d at 774–75.
56. Id. at 775 (emphasis added).
57. Id.
58. United States v. Porat, No. 21-170, 2022 WL 685686, at *1 (E.D. Pa. Mar. 8,
2022).
59. Id. at *25 (rejecting an argument that the jury instruction was erroneous because
“it used the indefinite article ‘an’ rather than the definite article ‘the’”).

rankings could bring to the school, not the ranking[s] themselves,
was [the defendant’s] object.60.
Along similar lines, a district court denied a defendant’s motion to dismiss

the indictment in a wire fraud case in United States v. Sullivan.61. In that
case, the indictment alleged that the defendant, formerly Uber’s Chief Secu-
rity Officer, learned that hackers had gained unauthorized access to Uber’s
data.62. Despite the company’s legal obligation to notify affected drivers of
the breach, the defendant arranged a cover-up.63. In moving to dismiss the in-
dictment, the defendant argued in part “that the wire fraud charges should be
dismissed because they do not adequately allege that obtaining money or prop-
erty (i.e., [drivers’] service fees) from the alleged victims (the Uber drivers) was
more than an incidental byproduct of his alleged efforts to conceal the data
breach.”64. After reviewing Kelly, the district court rejected the defendant’s
argument, concluding that the indictment sufficiently alleged that an object
of the defendant’s “scheme was to obtain the drivers’ service fees.”65. As the
district court and the government acknowledged, “[t]here may have been other
objectives,” such as “to protect [the defendant’s] own professional or personal
reputation,” or “to protect Uber from further scrutiny,” but it was enough that
“an object of the scheme was to deprive Uber drivers of their service fees.”66.
C. Looking ahead
Although Kelly was only decided recently, these cases begin to paint a pic-
ture of its effect. Again, as the opinion itself makes clear, Kelly does not make
new law, but it clarifies the nature and scope of “regulatory power” that cannot
support a fraud conviction. It also clarifies that property must be “an object”
of, and not merely incidental to or an implementation cost of, the fraud.67.
Prosecutors handling cases involving government action must take care to re-
member that governments’ regulatory power, even when it involves control of
physical assets (that may themselves be “property”), cannot undergird prop-
erty fraud standing alone. If the fraudulent manipulation of regulatory power
is a means to a valid money or property end, it can play a part in a properly
charged fraud scheme. And prosecutors must remember that fraud schemes can
and often do have multiple objectives. Defendants seeking to enrich themselves
may also have professional, reputational, or other types of goals all mixed in
their heads at once, but they can still be prosecuted so long as an object is
money or property.
60. Id. at *20.

61. United States v. Sullivan, No. 20-cr-337, 2022 WL 2317441 (N.D. Cal. June 28,
2022).
62. Id. at *2.
63. Id.
64. Id.
65. Id. at *3.
66. Id. at *4 (emphasis added).
67. Kelly v. United States, 140 S. Ct. 1565, 1571–74 (2020).

About the Author
Andrew Laing currently serves as Appellate Counsel within the Litigation
Unit of the Fraud Section of the Criminal Division. He joined the Department of
Justice through the Attorney General’s Honors Program after clerking for the
Honorable Patty Shwartz of the U.S. Court of Appeals for the Third Circuit. He
has previously served in the Criminal Division’s Public Integrity and Appellate
Sections.


Crime–Fraud Litigation in
White-Collar Prosecutions
John Kosmidis
Chief, Special Matters Unit
Fraud Section
Criminal Division
Jerrob Duffy
Chief, Litigation Unit
Fraud Section
Criminal Division
I. Introduction
Anyone who has run a filter review as part of a complex white-collar fraud
investigation can tell you that targets, subjects, and witnesses frequently com-
municate with lawyers. These lawyers may be corporate legal counsel or in
private practice and may be providing legal advice to corporate employees or
specific individuals. The lawyers could be working on matters unrelated to the
fraud at issue, unwittingly furthering the fraud, or directly participating in it.
Communications with lawyers are potentially covered by attorney–client priv-
ilege and attorney work product protections. They are therefore not ordinarily
accessible to prosecutors conducting a criminal investigation. Depending on
the lawyer’s involvement in the fraud, however, these communications could
be highly relevant and discoverable if the crime–fraud exception (CFE) to the
privilege or protection applies.
A common occurrence in health-care fraud is the use of outside counsel
to “whitewash” a fraudulent scheme. Fraudulent actors may design a business
model that, in fact, defrauds a health-care provider like Medicare by providing
illegal kickbacks for patient referrals. The fraudulent actors will go to out-
side counsel and provide a false or materially incomplete factual background
about the business model that omits the illegal kickback part of the scheme.
Based on this false and misleading account, they obtain advice from counsel
that the model is lawful. The fraudulent actors will then take that lawyer’s
stamp of approval and use it to convince business partners, investors, or oth-
ers that the business practice is lawful, allowing the scheme to continue and
grow unabated. The communications with outside counsel are critical for un-
derstanding what the target disclosed to counsel to obtain the purported legal
advice and demonstrating the target’s fraudulent intent.
When applicable, the CFE obviates any privilege that otherwise applies to
the communication. When the elements of the CFE are met, it will apply to
all communications within the same subject matter, including those obtained

via search warrant, from a voluntary production that implicates the rights of
another privilege holder, through an interview with a lawyer or someone with
knowledge of privileged material, or to grand jury or trial testimony.
There are multiple considerations to factor in when litigating a CFE mo-
tion. Should it be pre- or post-indictment? Do you need to use a filter team?
What information should you provide to the court and how? Can and should
a motion to the court be filed ex parte? How should you structure the re-
quested relief? Once these questions are resolved, the CFE is a powerful tool
for obtaining evidence otherwise unavailable to investigators.
II. Obtaining and handling evidence that may be

subject to the CFE
Because the CFE could apply to any potentially privileged material, it can
be applied to any source of information over which privilege could be asserted.
As noted in the introduction, sources of that material are varied and could
include search warrant returns, statements by witnesses, voluntary productions
from non-privilege holders that implicate the privilege of another, or testimony.
The CFE can also apply to material not yet in the government’s possession,
including documents or testimony obtained via subpoena.
While a privilege holder bears the burden of asserting privilege, including
by providing a privilege log with sufficient specificity that allows a court or
a challenging party to understand the nature of the claim asserted, federal
prosecutors and investigators must take reasonable steps to avoid exposure to
privileged information. Prosecutors and agents should promptly cease review
and set aside or return material that they deem to be potentially privileged.
One method of segregating such material is to provide it to a filter team and
remove the prosecution team’s access until the filter review is completed. Filter
teams are widely accepted tools to prevent prosecution teams from accessing
privileged information.
A filter team should be employed to isolate potentially privileged material in
the government’s possession. This process includes having a filter team conduct
the initial review of documents or testimony that the prosecution team has
a reasonable basis to believe may contain otherwise privileged material. As
referred to here, a filter team consists of one or more prosecutors not assigned
to the case team who will have no role in the prosecution of the case. The “filter
prosecutor” should be supported by filter agents and additional personnel as
needed and should be available to document, explain, and defend in court any
steps or decisions the filter team takes. The filter prosecutor should supervise
the segregation of potentially privileged material so that it is unavailable to the
prosecution team, communicate with counsel for the privilege holder(s) when
necessary, and be prepared to negotiate and litigate privilege issues.
The filter team can identify the potentially privileged material within the
data source, segregate it from the prosecution team, release any non-potentially
privileged material (allowing the investigation to continue), and address the

potentially privileged material.
A. Search warrant
In white collar criminal investigations, material seized via search warrant is
the most common source of obtaining attorney communications. Warrants for
stored electronic communications pursuant to 18 U.S.C. § 2703 or obtained via
Rule 41 of the Federal Rules of Criminal Procedure present the possibility that
attorney–client or other legal communications may be included in the data or
materials seized. Collecting such communications is often inadvertent. Prose-
cutors should think carefully about the potential for seizing privileged material
when obtaining such warrants and use a targeted approach and prophylactic
measures when appropriate.
After material is seized and determined by the case team to be within
the scope of the warrant, a filter team can isolate and segregate potentially
privileged material using a variety of techniques, including keyword searches
designed to identify such material. Apart from the material released to the
prosecution team, the filter team can review the withheld material to identify
whether it may be subject to the CFE. It is beneficial if the filter team can
become familiar with the prosecution team’s theory of the fraud, allowing the
filter team to evaluate whether withheld material could be brought to the court
and would be impacted by a finding that the CFE applies. It is notable that
the filter team can obtain information from the prosecution team to conduct
its evaluation but should not disclose potentially privileged material to the
prosecution team absent agreement of the privilege holder or court order.
B. Subpoena for documents
The CFE can also be used to obtain otherwise privileged material not yet
in the government’s possession. For example, if the prosecution team knows
that an attorney was involved in furthering a fraud, even unknowingly, the
prosecution team can issue subpoenas to that attorney requesting relevant
communications subject to applicable approvals.1. If the alleged fraud relates
to a securities offering where the attorney and client are believed to have
conspired to withhold material information from investors, the subpoena can
request all communications from the attorney and client regarding the specific
securities offering. Depending on the possible number of communications at
issue, a more targeted request related to the specific withheld information may
be appropriate, if known.
To avoid unintended production of otherwise privileged material, subpoenas
issued to attorneys or involving persons known to be represented by counsel
should provide specific instructions and detail so that the recipient is aware
of the precise nature of material called for in the subpoena. If the recipient or
other party seeks to assert a privilege for material called for in the subpoena,
the subpoena should also provide directions to the recipient setting out the
1. Subpoenas to attorneys related to representing clients require special authorization.

See Justice Manual 9-13.410.

requirement to provide a privilege log, including:
• This subpoena is not intended to be a call to produce any material
that is subject to a valid claim of attorney–client or other privilege
recognized by the courts of the United States.
• To the extent you or some other party may seek to assert a claim of
privilege, work product protection, or other legal claim to preclude
production of material called for in this subpoena, a privilege log shall
be produced.
• Such a log shall set forth the document title, subject matter, au-
thor(s), recipients(s), date, transmittal detail (if any), location of au-
thor(s) and recipient(s), and an explanation of the claim asserted
against production.
• Failure to produce such a log, with sufficient detail to allow a review-
ing party or court to assess whether such a claim is valid, may result
in waiver of any such claim.
The subpoena recipient, such as a lawyer in the example listed above, will
need to provide a privilege log detailing the material that they are claiming to
be privileged. At that point, the prosecution team can file a motion to compel
compliance with the subpoena, and the CFE litigation can commence.2. This
motions practice can occur during the grand jury stage or post-indictment,
when a trial or hearing subpoena is utilized. As described below, we recom-
mend that these issues be litigated during the grand jury investigation before
indictment when possible.
C. Interviews & testimony
In addition to emails and other documents, the CFE may otherwise apply
to witness statements and testimony when such a statement may contain priv-
ileged information. For example, it can also be used to compel an individual to
provide otherwise privileged testimony to a grand jury that would allow active
questioning on the topics subject to the CFE. This process requires appro-
priate approvals and will frequently follow motions practice where the judge
presiding over the grand jury has ruled as to the applicability and scope of the
CFE to a particular matter.
A filter team can also be employed as a prophylactic measure to conduct
interviews where there is reason to believe that the interviewee may make
2. As discussed below, we recommend that in most cases the prosecution team draft
and file the motion for a finding that the CFE applies to the documents, communica-
tions, or subject matter at issue if the material or information that supports such a
finding is available to the prosecution team. An ex parte filing by the filter team can
then supplement this motion if certain material that would further the claim has been
withheld from the prosecution team. In some circumstances, where the filter team is
uniquely in possession of the material that supports the CFE finding, the filter team
may file the motion.

statements that include potentially privileged material as a means of protect-
ing against inadvertently exposing such information to the prosecution team.
When such a process is contemplated, the filter team should work with the pros-
ecution team to prepare for the interview and should carefully approach topics
related to attorney–client privilege to avoid receiving privileged responses or
information or for which no good-faith basis exists that the CFE will apply.
If the interview is with an attorney or someone who will provide mostly or
all potentially privileged information, the filter team should conduct the full
interview. If the interview is with a non-attorney who will be questioned on
largely non-privileged topics, the filter team can conduct the entire interview,
or the prosecution team can conduct those portions of the interview not likely
to encounter potentially privileged information. If the interview starts to cover
potentially privileged topics, the prosecution team can leave or pause the in-
terview, and the filter team should take over.
Following the interview, the filter agent should create a record of the in-
terview, for example an FBI Form-302 or agency Report of Interview, but
withhold the record from the prosecution team. That report can then provide
support for a motion to authorize disclosing the report to the prosecution team.
The interview memorandum should clearly reflect who conducted the interview
and who was present during the portions that relate to potentially privileged
information.
Like a subpoena for documents, the prosecution team can issue a subpoena
to compel a lawyer or witness with otherwise privileged, relevant information
to testify in front of the grand jury when there is a good-faith basis to believe
that the CFE will apply to the testimony. The testimony should only occur
after a court ruling on the applicability or scope of privilege and the CFE,
unless the privilege holder has consented in writing.
D. Voluntary productions
In most instances, the material potentially subject to the CFE will come
from the privilege holder, either through seizure of communications or a sub-
poena for the communications at issue. Various persons such as corporate em-
ployees or cooperators, however, can possess and produce statements or ma-
terials that impact the privilege of others. These communications may also be
subject to the CFE. For example, a cooperator could allow the government to
image their phone via consent, but the phone might contain communications
over which their employer or another party could claim privilege. Another sce-
nario is a cooperator providing communications that could be subject to a
common interest privilege claim by another party, because the cooperator was
previously part of a joint defense agreement or participated in group meet-
ings involving one or more attorneys. In these scenarios, the cooperator cannot
ordinarily waive privilege on behalf of the other privilege holders.
In these situations, a filter team should be used to segregate the potentially
privileged information and identify any material subject to the CFE, as it
would with search warrant returns. Motions practice or further negotiation

with privilege holders can then follow, and a ruling or clarification can be
obtained before the prosecution team is exposed to the information.
III. Litigating the CFE

A. Legal standard
The CFE is a method for courts to balance the sometimes-competing in-
terests of privilege holders and investigators, and the resulting legal standard
reflects this. InUnited States v. Zolin, the Supreme Court established a stan-
dard for an exception to the attorney–client privilege when otherwise-protected
attorney–client communications were connected to an ongoing
fraud.3.
For privilege holders, the attorney–client privilege is a sacrosanct protec-
tion. It encourages “full and frank communication between attorneys and their
clients and thereby promote[s] broader public interests in the observance of law
and administration of justice.”4. Courts are protective of attorney–client com-
munications absent an exception,5. and government investigators are not enti-
tled to review those communications. If they do so, they are at risk of potential
disqualification or, if the review is egregious, dismissal of an indictment.
In setting out revisions to the Principles of Federal Prosecution of Busi-
ness Organizations, then-Deputy Attorney General Paul McNulty emphasized
that the Department agreed with the importance of protecting attorney–client
communications:
The attorney-client privilege is an important part of the legal frame-
work supporting this compliance and accountability. The privilege
promotes thorough and complete disclosure from a corporate em-
ployee to his attorney and candid advice from legal counsel. It is
one of the oldest and most sacrosanct privileges in American law.6.
These privilege protections, however, come at a cost—they can prevent
government investigators from obtaining information that could be relevant to
their investigation and otherwise prevent the truth-seeking function of the ad-
versarial system.7. Accordingly, when a client abuses the system by consulting
an attorney for the purpose of furthering criminal or fraudulent activity, the
CFE overcomes the application of the attorney–client privilege, and the com-
3. United States v. Zolin, 491 U.S. 554, 561–63 (1989). Additionally, the crime–fraud
exception applies to materials for which the work product privilege would otherwise
apply. See In re Impounded Case (Law Firm), 879 F.2d 1211, 1214 (3d Cir. 1989).
4. Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).
5. In addition to the CFE, other instances where an attorney–client communication
would not garner privilege protection include third-party waiver and that the commu-
nication was business advice and not legal advice.
6. Paul J. McNulty, Deputy Att’y Gen., U.S. Dep’t of Just., Prepared Remarks at
the Lawyers for Civil Justice Membership Conference Regarding the Department’s
Charging Guidelines in Corporate Fraud Prosecutions (Dec. 12, 2006).
7. See, e.g., Zolin, 491 U.S. at 561–63.

munications lose their protected status.8. Otherwise, justice “would be frus-
trated if the client used the lawyer’s services to further a continuing or future
crime.”9.
Zolin established the standard for a successful CFE motion. The party
seeking to apply the CFE to overcome the attorney–client privilege must show
that “(1) the client was committing or intending to commit a fraud or crime,
and (2) the attorney-client communications were in furtherance of that alleged
crime or fraud.”10. In Zolin, the courts have held that the party asserting the
exception must make a prima facie showing of both the above elements.11.
The prima facie showing is not a high burden. The first element may be
satisfied by the allegations of the indictment (a grand jury finding).12. Broadly,
the prima facie showing requires a “reasonable basis” to believe that the client
used the lawyer’s services to foster a crime or fraud.13. The reasonable basis
standard “affords sufficient predictability for attorneys and clients without
providing undue protection to those that seek to abuse the privileges afforded
to them.”14.
The court may examine potentially privileged documents to determine if
the CFE applies. The party seeking to invoke the exception, however, must
make a showing “‘of a factual basis adequate to support a good faith belief by a
reasonable person,’ that in camera review of the materials may reveal evidence
to establish the claim that the crime fraud exception applies.”15. In essence,
the CFE filing must demonstrate, before the court reviewing the underlying
communications, that there was fraudulent activity and that the privileged
communications were used to further that fraud. The showing for a court to
conduct an in camera review is even lower than the prima facie standard for
establishing that the CFE applies.
Importantly, the CFE only applies to fraudulent activity that is forward
looking at the time the communication occurs. The attorney–client privilege
“ceas[es] to operate at a certain point, namely, where the desired advice refers
8. Id.
9. In re Grand Jury Proceeding Impounded, 241 F.3d 308, 316 (3d. Cir. 2001) (citing
In re Grand Jury Proceedings, 604 F.2d 798, 802 (3d. Cir. 1979)).
10. In re Grand Jury Subpoena, 223 F.3d 213, 217 (3d Cir. 2000) (citation omitted).
11. See, e.g., id.
12. United States v. Gorski, 807 F.3d 451 (1st Cir. 2015).
13. In re Grand Jury, 705 F.3d 133, 153 (3d Cir. 2012) (“Where there is a reasonable
basis to suspect that the privilege holder was committing or intending to commit a
crime or fraud and that the attorney-client communications or attorney work product
were used in furtherance of the alleged crime or fraud, this is enough to break the
privilege.”).
14. Id. (explaining that the reasonable basis standard is closest to the Supreme Court’s
pronouncement that “‘there must be something to give colour to the charge’ that the
attorney-client communication was used in furtherance of a crime or fraud” (quoting
Clark v. United States, 289 U.S. 1, 15 (1933))).
15. In re Grand Jury Proceedings #5 Empanelled Jan. 28, 2004, 401 F.3d 247, 253
(4th Cir. 2005) (quoting Zolin, 491 U.S. at 572).

not to prior wrongdoing, but to future wrongdoing.”16. So if a fraudulent actor
consults his attorney about an already committed fraud, those communications
will likely remain privileged. But if the communications relate to an ongoing
or future fraud, the CFE could apply.
The attorney’s knowledge of the fraud is not relevant. In many, and perhaps
most, instances, the lawyers are not intentional participants in the fraud; the
relevant point of view is from the client’s side. Is the client committing a
fraud? “In determining whether the [crime–fraud] exception is applicable, the
client’s intention controls and the privilege may be denied even if the lawyer
is altogether innocent.”17. “[T]he crime-fraud exception applies even when an
attorney is unaware that the client is engaged in or planning a crime.”18.
B. Pre- v. post-indictment considerations
The government has substantial advantages when these issues are litigated
pre-indictment, as the litigation with the privilege holder may not involve the
targets of the investigation, and information lawfully obtained after a CFE
finding may be used in making charging decisions. Further, once a court has
made a CFE determination, other avenues of evidence collection can become
available to investigators. Separately, once a court makes a CFE finding, the
government obtains certainty about allowable areas of inquiry and evidence
likely to be admissible at trial.
CFE litigation can take place ex parte, as opposed to on notice to the priv-
ilege holder. While courts are often reluctant to make a CFE finding without
hearing from the putative privilege holder, in covert matters where a substan-
tial showing can be made to establish the existence of a CFE, courts have
issued ex parte CFE orders.
C. The filings
A CFE argument should be broken down into two sections: (1) a description
of the fraud at issue and (2) a description of how the privileged communications
were used to further that fraud. The mechanics of the filing can vary depending
on the status of the case and the material involved, including if a filter team
is involved and if the filter team, through its review, has identified material
that would support a CFE argument. The prosecution team should handle the
description of the fraud at issue based on its investigation.
If pre-indictment, the filing can be made before a grand jury judge or as a
miscellaneous filing with a magistrate judge. The filing will require the investi-
gation to be at a stage such that there is sufficient evidence to demonstrate a
16. Zolin, 491 U.S. at 562–563 (alteration in original) (citation omitted).

17. In re Grand Jury Proceedings, 604 F.2d 798, 802 (3d Cir. 1979).
18. In re Grand Jury Investigation, 445 F.3d 266, 279 n.4 (3d Cir. 2006); see also
United States v. Chen, 99 F.3d 1495, 1504 (9th Cir. 1996) (“The attorney need know
nothing about the client’s ongoing or planned illicit activity for the [crime–fraud]
exception to apply.” (quoting In re Grand Jury Investigation (The Corporation), 87
F.3d 377, 381–82 (9th Cir. 1996))).

prima facie case that there is an ongoing fraud. This material can come from
non-privileged documents, witness statements, or other sources of evidence ob-
tained during the investigation and can be provided to the court as exhibits. As
the case is pre-indictment, the filing and underlying material should be done
under seal to protect the covert nature of the investigation.
If the investigation is post-indictment, the indictment itself can serve as
prima facie evidence of the fraud, with the motion summarizing the fraud as
described in the indictment, possibly with supporting material attached as
exhibits. That a grand jury has found probable cause for an indictment can be
sufficient evidence for a court to find that a fraud has occurred for purposes of
prong one of the CFE standard.
After the fraud has been laid out, the argument needs to explain how the
privileged relationship was used to further the fraud. The prosecution team can
use facts that it is aware of from non-privileged sources to show the connection
between the privileged material and the ongoing fraud. For example, the pros-
ecution team may be aware that a securities offering disclosure originally had
a provision disclosing a known risk, but after communications with counsel,
that risk was removed in material provided to investors defrauded of their in-
vestment. The standard for demonstrating that the legal advice furthered the
crime is again a prima facie or reasonable basis one and need not be proven
conclusively.
The filter team can provide supplemental filings, under seal and ex parte,
to the investigating team to support how the privileged material furthered the
fraud.
D. Conducting hearings
As with the filings, there is no “right” way to conduct CFE hearings. The
prosecution team can be present for any part of the hearing that does not
discuss the content of potentially privileged material. The prosecution team is
in the best position to describe and argue the merits of the underlying fraud
and, if they have the information from non-privileged sources, explain how the
attorney communications were made in furtherance of that fraud. If the content
of privileged communications is relevant, however, the prosecution team must
step out of the courtroom to avoid any potential taint from exposure to it. The
court may also seal the courtroom to prevent unauthorized release of protected
material.
Additionally, the court may expect testimony in support of the motion and
may convene an evidentiary hearing. If so, the same prescriptions should apply.
The prosecution team can be involved to the extent that it does not expose
them to potentially privileged information. At that point, the filter team should
step in, and the prosecution team should leave the courtroom.
The prosecution and filter teams should prepare together for the hearing.
The filter team needs to be in position to handle any aspect of the hearing
if the prosecution team needs to leave the courtroom. While the filter team
needs to be well-versed in the potentially privileged material, it should also

be prepared to explain in detail how that information fits into the overall
fraud if the prosecution team is absent. During that preparation, of course, the
filter team should not share any potentially privileged information with the
prosecution team.
E. The aftermath
After a court finds that the CFE applies and the communications at issue
are not protected by any privilege or protection, the prosecution team can then
access the material.
If the material is already in the filter team’s possession, the filter team
must carefully apply the order to the withheld material. Filter teams often
segregate communications from multiple attorneys or about multiple topics.
Only the communications at issue in the CFE order can then be provided to
the prosecution team.
If the material at issue were subpoenaed, the subpoenaed party must now
produce the ordered documents. If testimony were subpoenaed, the witness
can be scheduled to appear before the grand jury and respond to questions
within the scope of the CFE order.
IV. Benefits of the CFE

A. Obtaining relevant evidence
The main benefit of a successful CFE motion is access to evidence that
can further an investigation and provide evidence of fraudulent conduct. At
issue in Zolin, for example, were privileged communications on audio tapes
that were relevant to an Internal Revenue Service criminal investigation into
the tax returns of L. Ron Hubbard, the founder of the Church of Scientology.19.
Other recent cases include obtaining email evidence where a lawyer facilitated
a client fraudulently obtaining and expending investment money, including
through the use of an Interest on Lawyers’ Trust Account (IOLTA),20. and
obtaining emails and testimony related to a client using his legal representation
to defraud plaintiffs in a civil action by lying at his deposition.21.
B. Creating a “record of reasonableness”
In our experience, prosecution teams that follow these prophylactic steps
while obtaining such evidence create a host of benefits that contribute to the
success of their case and enhance the credibility of the prosecutors and agents
involved. When prosecution teams obtain court rulings or negotiate with priv-
ilege holders before exposure to potentially privileged material, for example,
they create a “record of reasonableness” that courts can later look to when alle-
gations are made that the prosecution disregarded privilege, was inadvertently
19. Zolin, 491 U.S. at 556.

20. United States v. Liberty, No. 19-cr-30, 2020 U.S. Dist. LEXIS 170941 (D. Me. Feb.
12, 2020).
21. United States v. Hallinan, 290 F. Supp. 3d 355, 367 (E.D. Pa. 2017).

exposed to privileged information, or otherwise made a discovery mistake.
Further, using these steps supports the “document, explain, and defend”
philosophy that we described above and will allow the prosecution team later
to explain and justify to a presiding judge how carefully it respected privilege
while still taking appropriate steps to obtain evidence lawfully.
Separately, advance pretrial findings that the CFE applies will assist with
presenting evidence at trial, for example by laying the foundation that certain
communications are in furtherance of a conspiracy or are agent statements.
Finally, the prosecution team will benefit from alerting the court to these
issues early in an investigation or well before trial, as the court will necessarily
review the evidence and form a view of the evidence.
About the Authors

John Kosmidis is the Chief of the Criminal Division, Fraud Section’s Special
Matters Unit, which handles the Fraud Section’s filter matters and litigates
privilege issues across the country.
Jerrob Duffy is the Chief of the Criminal Division, Fraud Section’s Litigation
Unit, which advises the Fraud Section on all litigation matters, including at
trial and on appeal.


The Special Matters Unit:
Best Practices for Addressing
Attorney–Client Privilege
Issues
Lindita V. Ciko Torza
Trial Attorney
Special Matters Unit
Fraud Section
Timothy J. Coley
Assistant Chief
Special Matters Unit
Fraud Section
I. Introduction
White-collar investigations and prosecutions often involve complex and
overlapping sets of factors, none of which are made simpler by the privileged
material that investigators should not be exposed to. For instance, a typical
white-collar case covers a number of corporate targets, subjects, witnesses,
and document custodians; potentially multi-jurisdictional and international
legal frameworks; sophisticated counsel representing the various parties; po-
tential involvement of the corporate legal function or outside counsel in the
fraud; multiple avenues for obtaining documents including search warrants,
subpoenas, and voluntary productions; parallel investigations by civil enforce-
ment and regulatory agencies; and multiple defendants entitled to extensive
disclosure obligations. Layered on top of these moving parts is an intricate
and ever-changing legal landscape regarding how privileged material should be
handled.
How can investigators and prosecutors possibly untangle this thicket to
avoid serious consequences that may arise when privileged material is not prop-
erly handled? The historical solution that investigators have implemented, and
that courts have broadly approved, has been to use filter teams—attorneys and
support staff separated from the investigators and prosecutors on the mat-
ter—to screen out privileged material. As white-collar matters have grown
more complex and volumes of evidence have increased, the Fraud Section of
the Department of Justice (Department)’s Criminal Division (CRM) decided
to establish the Special Matters Unit (SMU)—an independent, specialized,

in-house filter team.1.
II. The role of filter teams

Filter teams have become necessary in complex white-collar litigation, as
courts and defense counsel have become increasingly attuned to potential taint
where members of investigation or prosecution teams’ access or review po-
tentially privileged material (PPM). Where a prosecutor is deemed to have
improperly accessed PPM, defendants are potentially entitled to significant
remedies, ranging from evidentiary exclusion to disqualifying the prosecution
teams and even dismissing the indictment. Defendants are increasingly launch-
ing such attacks. For example, in United States v. Esformes, the defendants ar-
gued that a prosecutor improperly reviewed privileged material including docu-
ments, communications, interviews, and recordings, providing defense strategy
to the prosecution.2. After lengthy hearings and a negative magistrate judge
report and recommendation, the district judge suppressed certain portions of
evidence, but did not disqualify the prosecution team or dismiss the indict-
ment.3.
Filter teams are designed to prevent exposure to privileged material, avoid-
ing these problems. In general, filter teams can perform the following functions:
• Conduct filter searches on locations that may have potentially
privileged data sources, such as an in-house or co located attorney;
• Conduct document review and segregation of PPM;
• Conduct interviews with witnesses, including lawyers and those

who have been given legal advice, who may disclose potentially priv-
ileged information;
• Review covert recordings, including wiretaps, that may contain

potentially privileged communications;
• Negotiate with defense counsel on identifying and handling PPM;

and
• Litigate privilege-related issues in court pre- and post indict-

ment.4.
The Fraud Section formally created the SMU in 2020 to focus on privi-
lege and legal ethics issues.5. The unit’s role is to preserve defendants’ legal
1. U.S. Dep’t of Just., Fraud Section Year in Review 4 (2020).

2. No. 16-20549, 2018 WL 5919517, at *12 (S.D. Fla. Nov. 13, 2018).
3. Id. at *35; see also United States v. Elbaz, 396 F. Supp. 3d 583 (D. Md. 2019);
United States v. Stewart, 294 F. Supp. 2d 490 (S.D.N.Y. 2003).
4. See generally Esformes, No. 16-20549, 2018 WL 5919517 (discussing role of filter
team).
5. Robert A. Zink, Acting Deputy Assistant Att’y Gen., U.S. Dep’t of Just., Remarks
at Virtual GIR Live Interactive: Regional Spotlight-North America (Dec. 9, 2020). The

privileges and ensure that Fraud Section prosecution teams are not tainted
by exposure to privileged information.6. In addition to the traditional roles of
filter teams described above, the SMU also provides training, guidance, and
thought leadership on privilege and ethics issues to Fraud Section prosecutors.7.
As described in Part IV, the SMU’s privilege review process generally segre-
gates PPM from non-privileged materials in accordance with court-approved
protocols,8. and provides defendants with an opportunity to assert privilege.
III. Types of privilege

Filter teams encounter various and often overlapping privileges and legal
protections. The following is a brief overview of the most commonly encoun-
tered privileges and protections, as well as recent court guidance on these
doctrines’ interpretation.
A. Attorney–client privilege
The attorney–client privilege is the oldest of the testimonial privileges that
protect confidential communications. The “purpose” of the privilege “is to en-
courage full and frank communication between attorneys and their clients and
thereby promote broader public interests in the observance of law and admin-
istration of justice.”9. The privilege “protects only those disclosures necessary
to obtain informed legal advice which might not have been made absent the
privilege.”10. Generally, the attorney–client privilege attaches–
(1) [w]here legal advice of any kind is sought (2) from a profes-
sional legal adviser in his capacity as such, (3) the communications
relating to that purpose, (4) made in confidence (5) by the client,
(6) are at his instance permanently protected (7) from disclosure
by himself or by the legal adviser, (8) unless the protection be
waived.11.
The attorney–client privilege covers individuals and corporate entities. The
latter may assert the attorney–client privilege with respect to its employees’
groundwork for the SMU was laid out in mid-2018 with the Privilege Review Team
(PRT), a group of attorneys carrying out many of the tasks that the SMU currently
undertakes. The PRT was part of the Strategy, Policy, and Training (SPT) section.
6. Id.
7. See U.S. Dep’t of Just., supra note 1, at 4.
8. See e.g., In re Sealed Search Warrant & Application for a Warrant by Tel. or Other
Reliable Elec. Means, 11 F.4th 1235, 1239–42 (11th Cir. 2021), cert. denied sub nom.
Korf v. United States, No. 21-1364, 2022 WL 4651429 (U.S. Oct. 3, 2022) (describing
Attachment B to the search warrant).
9. Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).
10. Matter of Walsh, 623 F.2d 489, 494 (7th Cir. 1980) (quoting Fisher v. United
States, 425 U.S. 391, 403 (1976)).
11. United States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009) (quoting In re Grand
Jury Investigation, 974 F.2d 1068, 1071 n.2 (9th Cir. 1992)); accord In re Grand Jury
Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1036 (2d Cir. 1984).

confidential communications with its attorneys when (1) the employee seeks
legal advice for the entity or provides facts that counsel needs to give the entity
legal advice; (2) the employee is aware that the purpose of the communication
with counsel is to provide legal advice to the entity; and (3) the communication
concerns matters within the scope of the employee’s duties.12.
The attorney–client privilege “is construed narrowly”13. and must be as-
serted on a “document-by-document basis”; a “blanket claim of privilege that
does not specify what information is protected” is insufficient to satisfy a priv-
ilege claim.14.
B. Joint defense agreements and common interest privilege
The joint defense agreement (JDA) or common-interest privilege (CIP)
is not an independent privilege. It is considered an extension of the attor-
ney–client privilege15. or “an exception to the general rule that disclosure of
documents protected by the work product doctrine or attorney client privilege
constitutes a waiver of the protection.”16.
JDAs are verbal or written agreements between two or more defendants
represented by separate attorneys to pool resources. JDAs stipulate that the
communications made by any one or more parties to the agreement, to any
one or more of the attorneys, shall be deemed a confidential attorney–client
communication. Typically, to be protected by a CIP, the law requires that
attorneys for the parties be on the communications. A party asserting a joint-
defense or common-interest privilege must show that the communication was
given in confidence and that the client “reasonably understood” it to be so
given.17. A communication directly among the clients is not privileged unless
it was made for the purpose of communicating with a lawyer.18. In addition,
a party invoking the joint defense privilege must establish that the communi-
cation (1) arose “in the course of a joint-defense effort” and (2) was “designed
to further that effort.”19.
12. See Upjohn Co., 449 U.S. at 394–95; In re Ampicillin Antitrust Litig., 81 F.R.D.
377, 384–86 (D.D.C. 1978).
13. United States v. Naegele, 468 F. Supp. 2d 165, 169 (D.D.C. 2007).
14. United States v. White, 970 F.2d 328, 334 (7th Cir. 1992).
15. Waller v. Fin. Corp. of Am., 828 F.2d 579, 583 n.7 (9th Cir. 1987).
16. Jones v. Tauber & Balser, P.C., 503 B.R. 510, 517 (N.D. Ga. 2013).
17. United States v. Bay State Ambulance & Hosp. Rental Serv., Inc., 874 F.2d 20,
28 (1st Cir. 1989) (citing Kevlik v. Goldstein, 724 F.2d 844, 849 (1st Cir. 1984));
see also Matter of Bevill, Bresler & Shulman Asset Mgmt. Corp., 805 F.2d 120, 126
(3d Cir. 1986); United States v. Moss, 9 F.3d 543, 550 (6th Cir. 1993).
18. See United States v. Evans, 113 F.3d 1457, 1466–67 (7th Cir. 1997) (“The common
interest or joint defense doctrine ‘generally allows a defendant to assert the attorney-
client privilege to protect his statements made in confidence not to his own lawyer,
but to an attorney for a co-defendant for a common purpose related to the defense of
both.’” (quoting United States v. Keplinger, 776 F.2d 678, 701 (7th Cir. 1985))).
19. E.g., In re Grand Jury Proc. v. United States, 156 F.3d 1038, 1042–43
(10th Cir. 1998).

C. Work product doctrine
The work product doctrine protects from disclosure certain materials that
an attorney prepared in anticipation of litigation20. as well as materials contain-
ing an attorney’s deliberative process, legal theories, opinions, impressions, or
conclusions.21. Additionally, an attorney’s selection of some information from
a larger universe of information, such as a compilation of facts, documents, or
witnesses, is protected under the work product doctrine when (1) “[t]he compi-
lation reflects the compiler’s opinion” and (2) “[t]he requesting party has equal
access to the same larger universe of information from which counsel created
the compilation.”22.
D. Marital privilege
Courts recognize two types of marital privilege, both of which are tes-
timonial and non-constitutional.23. The adverse spousal testimony privilege
protects one spouse from being compelled to testify against the other. This
privilege “allows a spouse called as a witness against his or her [own] spouse in
a criminal proceeding to refuse to testify.”24. The other type of spousal commu-
nications privilege “protects from disclosure private communications between
the spouses in the confidence of the marital relationship.”25. For the privilege
to attach, the following prerequisites must be met: “(1) there must have been
a communication; (2) there must have been a valid marriage at the time of the
communication; (3) the communication must have been made in confidence;
and (4) the privilege must not have been waived.”26. Both spouses hold this
privilege, which survives divorce.27.
E. Exceptions to privilege
1. Waiver of the attorney–client privilege
The attorney–client privilege belongs to the client and only the client or
client’s attorney acting on behalf of the client can waive it.28. The privilege
20. See Fed. R. Crim. P. 16(a)(2), 16(b)(2).

21. See Continental Cas. Co. v. Under Armour, Inc., 537 F. Supp. 2d 761, 769 (D.
Md. 2008).
22. Work Product Protection: Overview (Federal) (Prac. L. Litig. W-025-4967),
https://us.practicallaw.thomsonreuters.com/w-025-4967; see Sporck v. Peil, 759 F.2d
312, 316 (3d Cir. 1985).
23. Trammel v. United States, 445 U.S. 40, 53 (1980); United States v. Wilson, 505 F.
Supp. 3d 3, 12 (D. Mass. 2020) (“Both [spousal testimony and marital communications]
privileges are testimonial and not constitutional.”).
24. Sec. & Exch. Comm’n v. Lavin, 111 F.3d 921, 925 (D.C. Cir. 1997).
25. Id.
26. Id. (citations omitted).
27. Marital Privilege, Legal Info. Inst., Cornell L. Sch.,
https://www.law.cornell.edu/wex/marital privilege (last visited Aug. 11, 2022).
28. See United States v. Reyes, 239 F.R.D. 591, 602 (N.D. Cal. 2006) (holding that law
firms “surrendered whatever privileges may have attached to the subpoenaed materials
when they shared their contents with the government”).

is expressly waived when an individual client voluntarily discloses privileged
communications—whether intentionally or unintentionally—to third parties
outside the attorney–client relationship, or JDA or common interest if ap-
plicable.29. A corporate client may waive privilege through counsel, current
management, or employees acting in the corporation’s interest.30. Dissolved
corporate entities cannot assert privilege.31.
A filter team may not be necessary in cases of express, intentional waiver.
A filter team, however, is necessary to litigate the other exceptions to privilege.
A client may waive the attorney–client privilege by implication (implied
waiver) when it relies on that communication in litigation.32. Under certain
circumstances, courts will interpret the failure to produce a privilege log with
sufficient detail to allow a reviewing party or court to assess whether the party’s
privilege claim is valid.33.
2. Crime–fraud exception to the attorney–client privilege
Under the crime–fraud exception to the attorney–client privilege, commu-
nications that the privilege would otherwise protect are not protected if they
further criminal conduct.34.
3. Joint participation exception to the marital communications
privilege
Communications between spouses during a valid marriage are privileged
unless they pertain to the commission of a crime in which both spouses are
participants.35.
IV. Filter process

This Part includes a general overview of the SMU’s filter process. Note,
however, that this process can and should be circuit and district-specific. There
is no uniform, nationwide standard for conducting filter reviews, and there is
no one size-fits-all protocol that a filter team should follow. Because CRM
prosecutes white-collar crime nationwide, the SMU’s procedures were crafted
with an eye toward being acceptable regardless of the district. They were also
designed in response to recent case law regarding filter protocols.
In the search warrant context, the government’s process for identifying,
segregating, and reviewing PPM is outlined in the “Attachment B” template
that the SMU developed for prosecution teams to include in search warrant
29. See, e.g., In re Pac. Pictures Corp., 679 F.3d 1121, 1126–27 (9th Cir. 2012).
30. See Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 348 (1985)
(“[T]he power to waive the corporate attorney-client privilege rests with the corpora-
tion’s management and is normally exercised by its officers and directors.”).
31. See, e.g., TAS Distrib. Co. v. Cummins Inc., No. 07-1141, 2009 WL 3255297, at
*1–2 (C.D. Ill. Oct. 7, 2009).
32. E.g., In re County of Erie, 546 F.3d 222, 228 (2d Cir. 2008).
33. See, e.g., Bittaker v. Woodford, 331 F.3d 715, 719–20 (9th Cir. 2003).
34. In re Antitrust Grand Jury, 805 F.2d 155, 164 (6th Cir. 1986).
35. E.g., United States v. Broome, 732 F.2d 363, 365 (4th Cir. 1984).

applications where they believe PPM may be present.36. This Attachment B
contains detailed procedures for handling PPM encountered in digital and non-
digital evidence. For instance, with respect to digital evidence, the Attachment
B provides the following in relevant part:
• The SMU, in consultation with the search team, will compile a list of
“privilege search terms” to be used to electronically search the dig-
ital devices, including specific names and generic words intended to
identify potentially privileged information. The SMU will conduct an
electronic review of the data on the digital devices using the privi-
lege search terms, and by using search protocols specifically chosen
to identify and segregate documents or data containing potentially
privileged information.
• Documents or data that are identified by this review as not poten-
tially privileged, including documents that do not contain the privi-
lege search terms, may be released to the Search Team without court
intervention. . . . Documents or data identified during the initial priv-
ilege search terms review to be potentially privileged will be segre-
gated. An SMU attorney may thereafter review the segregated docu-
ments to confirm whether or not they contain potentially privileged
information. If the SMU attorney determines the documents or data
are not potentially privileged, they may be given to the Search Team.
• If the SMU attorney determines that documents are potentially priv-
ileged, the SMU attorney may do any of the following: (a) apply ex
parte to the court for a determination whether or not the documents
contain privileged information; (b) defer seeking court intervention
and instead segregate the documents in a manner that makes them
inaccessible to the search team; or (c) disclose the documents to the
potential privilege holder, request a privilege log if the potential privi-
lege holder asserts privilege, and seek a ruling from the court regarding
the documents if the parties cannot reach agreement.37.
Courts in numerous circuits, including the Third, Fourth, Fifth, Sixth, and
Eleventh Circuits, have expressly approved the use of filter teams and privilege
protocols.38. Some courts, however, have criticized or expressed skepticism re-
garding certain filter practices. The leading case criticizing filter practices is In
36. See, e.g., Partially Opposed Motion for Discovery Protocol Governing Dis-
closure of Material Subject to Claims of Privilege at 45 (Ex. C), 52 (Ex. D),
United States v. Carver, No. 22-cr-80022 (S.D. Fla. Oct. 11, 2022), ECF No. 358
[Attachment B].
37. Id. at 48–49.
38. See United States v. Salahaldeen, No. 20-cr-839, 2021 WL 2549197 (D.N.J. May 7,
2021); United States v. Reifler, No. 20-cr-512-1, 2021 WL 2253134 (M.D.N.C. June 2,
2021); Order, United States v. Fluitt, No. 20-cr-196 (W.D. La. Dec. 9, 2020), ECF No.
22; Order Granting Motion for Discovery Protocol Governing Disclosure of Material
Subject to Claims of Privilege, United States v. Young, No. 19-cr-10040 (W.D. Tenn.

re Search Warrant, also known as Baltimore Law Firm.39. In this case, the gov-
ernment seized documents pursuant to a search warrant for a lawyer’s records,
including communications with the lawyer’s other clients that were being inves-
tigated or prosecuted by the same United States Attorney’s Office for unrelated
crimes.40. The Fourth Circuit criticized that filter team’s practices, particularly
because it failed to provide the target law firm with an adversarial opportu-
nity to contest the process, delegated privilege determinations to non-attorney
filter team members, and failed to consider the privilege interests of the law
firm’s other clients whose documents were contained within the search warrant
returns.41. As a result, the Fourth Circuit concluded that the filter process in
that case “improperly delegated judicial functions to the Filter Team. And the
magistrate judge failed to recognize and consider the significant problems with
that delegation, which left the government’s fox in charge of guarding the Law
Firm’s henhouse.”42.
In part due to the guidance offered in Baltimore Law Firm and other sub-
sequent cases,43. the SMU adapted its filter review process to provide notice
and opportunity for input from ostensible privilege holders wherever prac-
ticable and for obtaining court-approved or agreed-upon protocols in many
cases. The search warrant Attachment B and the privilege protocol provisions
described above likewise were created to address the concerns raised in Balti-
more Law Firm and other decisions. They delineate a clear privilege assertion
process supported by objective application of keyword search terms, as well as
a detailed mechanism for resolving any privilege disputes through the courts.
Courts have approved this process even over vociferous objection from defense
counsel who have argued, amongst other things, that no government attor-
Oct. 15, 2020), ECF No. 182; In re Sealed Search Warrant & Application for a Warrant
by Tel. or Other Reliable Elec. Means, 11 F.4th 1235, 1239 (11th Cir. 2021) (Korf ).
39. In re Search Warrant Issued June 13, 2019 (Baltimore Law Firm), 942 F.3d 159
(4th Cir. 2019).
40. Id. at 166–67.
41. Id. at 177–80. The court summarized that, “[i]n approving the Filter Team and its
Protocol, the magistrate judge made several legal errors by, inter alia: (1) assigning
judicial functions to the Filter Team; (2) authorizing the Filter Team and its Protocol
in ex parte proceedings that were conducted prior to the search and seizures at the
Law Firm; and (3) failing to properly weigh the foundational principles that protect
attorney-client relationships.” Id. at 176.
42. Id. at 178.
43. Other significant cases critical in some respects to filter teams include In re Grand
Jury Subpoenas 04-124-03 and 04-124-05 (Winget), 454 F.3d 511 (6th Cir. 2006) and
Korf, 11 F.4th 1235. Nevertheless, both Winget and Korf expressly recognize the
propriety and utility of filter teams. Winget, 454 F.3d at 522–23 (noting that using
a filter team to make initial privilege determinations is “respectful of, rather than
injurious to, the protection of privilege”); Korf, 11 F.4th at 1249–50 (“Second, the
Intervenors cite no cases for the broad remedy they seek: a holding that government
agents ‘should never . . . review documents that are designated by their possessors as
attorney-client or work product privileged’ until after a court has ruled on the privilege
assertion.’ Nor has our research unearthed any.” (emphasis omitted)).

ney—including segregated members of the filter team—should have access to
their clients’ PPM.44.
Indeed, recent high-profile criminal investigations and prosecutions, includ-
ing those of attorneys Michael Avenatti and Rudolph Giuliani, have yielded
favorable language regarding filter teams. In United States v. Avenatti, the
U.S. District Court for the Southern District of New York explained that fil-
ter teams generally may access and review material for privilege: “[S]o long
as the putative privilege holder . . . has notice and the opportunity to raise
objections with the court before [PPM] are disclosed to members of the prose-
cution team, it offends neither the law of privilege nor the Fourth Amendment
to allow the Government to make the first pass.”45. The Giuliani court also
rejected a similar argument that ostensible privilege holders should obtain a
“first cut” review of privileged materials obtained via search warrant before
the filter team may access them:
Giuliani and Toensing argue that the materials seized pursuant
to the April 2021 warrants should be returned to them so that
they may review them in the first instance for responsiveness and
privilege. . . . There is no legal requirement for the Government to
proceed by subpoena, nor is there any basis for the subject of an
investigation to require it to do so.46.
Accordingly, although defendants—and certain courts—remain skeptical of
filter teams’ ability to obtain and review PPM, the landscape post-Baltimore
Law Firm largely supports their role so long as filter teams remain cognizant
of the state of the law and proactively model their processes to reflect court
guidance and anticipate future challenges.
V. Meeting the government’s disclosure obligations

The government’s disclosure obligations under Brady, Giglio, the Jencks
Act, and Rule 16 require production of material to criminal defendants.47.
Complexities arise, however, when privilege protects the material potentially
subject to disclosure.48. As a result, the SMU will often seek court-approved or
privilege holder-agreed protocols governing the handling of PPM. These court-
approved privilege protocols generally set forth a similar process as described
in Attachment B above, including:
• Material not identified as containing PPM following the filter team’s
44. See, e.g., Order on Gov’t’s Motion for Discovery Protocol, United States v. Stein,
No. 21-cr-20321 (S.D. Fla. Oct. 29, 2021), ECF No. 58; United States v. Carver, No.
22-80022-cr, 2022 WL 1681917 (S.D. Fla. May 9, 2022).
45. 559 F. Supp. 3d 274, 284 (S.D.N.Y. 2021).
46. In re Search Warrants Executed on Apr. 28, 2021, No. 21-MC-425, 2021 WL
2188150, at *1 (S.D.N.Y. May 28, 2021).
47. Justice Manual 9-5.002.
48. See Swidler & Berlin v. United States, 524 U.S. 399, 403 (1998);
United States v. W.R. Grace, 439 F. Supp. 2d 1125, 1142–45 (D. Mont. 2006).

application of objective keyword search terms, including after receiv-
ing input from the ostensible holder of the potential privilege(s) or
protection(s) regarding those terms, where identifiable, and the filter
team’s privilege review, may be produced to the prosecution team
and defendant(s) without the need for the court’s approval.
• Before producing PPM to prosecution team, the filter team will pro-
vide written notice to ostensible holders of the potential privilege(s)
or protection(s) and provide a timeframe for the claimant(s)’ writ-
ten objection in the form of a privilege log specifically asserting the
privilege or protection on a document by document basis.
• If the ostensible holder of the potential privilege(s) or protection(s)

fails to object within the specified period, the filter team will provide
the prosecution team and defendant(s) with information regarding
the filter team’s attempts to contact the ostensible holder and move
the court for a finding that the ostensible holder of the potential
privilege(s) or protection(s) has waived any privilege(s), protection(s),
or both over the PPM.
• If the filter team and ostensible holder of the potential privilege(s)

or protection(s) disagree regarding any privilege assertions, they will
meet and confer to try and resolve any disagreements concerning the
objection(s), with notice to any co defendants who may wish to at-
tend. If no resolution is achieved, the filter team, co-defendant(s), or
both will move to compel production of the disputed PPM within the
specified timeframe. Timeframes for opposition and reply briefs are
likewise specified within the protocol.
• The SMU’s privilege protocols also contain protections under Federal

Rule of Evidence 502(d), providing that any PPM that is produced to
the prosecution team, defendant(s), or a non-party under this protocol
or subsequent order in this proceeding, shall not constitute a waiver
or forfeiture of any privilege or protection claim in any other federal
or state judicial or administrative proceeding.
• The privilege protocols also provide that if any prosecution team

member inadvertently reviews PPM, the prosecution team member
shall immediately cease review of the PPM and turn the PPM over
to the filter team for processing in accordance with this protocol.
Inadvertent review of PPM shall not automatically disqualify a pros-
ecution team member from this matter.49.
The goal of these protocols is to have court supervision of a process where

privilege holders, including non-parties, are required to log their assertions and
49. See Attachment B, supra note 36.

where all parties must litigate privilege issues on a set timeframe. The proto-
cols also require court approval of a process that balances disclosure obliga-
tions and privilege holders’ rights so that the government cannot be accused of
withholding material subject to its obligations. To date, the SMU has obtained
numerous protocol orders across the country.50.
VI. Challenges looking forward

Filter teams face immense challenges due to the sheer volume of content
stored in seized hard drives, laptops, tablets, and phones. When the government
seizes a target’s computers or hard drives, it takes custody of thousands, if not
millions, of documents and metadata. For example, Apple’s iCloud, which is
available to all individual iPhone users, provides 5 gigabytes (GB) of free stor-
age.51. One GB is equivalent to approximately 65,000 pages of Microsoft Word
files and approximately 678,000 pages of text files.52. An organization produces
and stores exponentially more data.53. Reviewing these files in a timely manner
is a challenge to both filter teams and, subsequently, prosecutors. Further, de-
fendants or potential targets are sometimes not aware of all privileged materials
seized.
Significant challenges are also posed by using sophisticated encryption tech-
50. See, e.g., Order, United States v. Trotta, No. 21-cr-60260 (S.D. Fla. Jan. 18, 2022),
ECF No. 37; United States v. Murillo Prijic, No. 21-cr-60340, 2021 WL 6111657 (S.D.
Fla. Dec. 27, 2021); Order, United States v. Port, No. 19-cr-20583 (S.D. Fla. Nov. 30,
2021), ECF No. 194; United States v. Letko, No. 19-20652, 2021 WL 3674116 (E.D.
Mich. Aug. 10, 2021); United States v. Stein, No. 21 20321, 2021 WL 3781926 (S.D.
Fla. Aug. 25, 2021); Order, United States v. Murphy, No. 20-cr-291 (N.D. Ala. July
26, 2021), ECF No. 74; United States v. Siefert, No. 21-2, 2021 WL 3076940 (E.D. Ky.
July 19, 2021); United States v. Swiencinski, No. 18-cr-368, 2021 WL 2701265 (S.D.
Tex. May 3, 2021); Order, United States v. Kennedy, No. 19-cr-842 (S.D. Tex. Apr. 21,
2021), ECF No. 32; Order, United States v. Garipoli, No. 19-cr-80196 (S.D. Fla. Mar.
11, 2021), ECF No. 60; Order, United States v. Comu, No. 19-cr-112 (N.D. Tex. Jan.
8, 2021), ECF No. 314; Order, United States v. Fluitt, No. 20-cr-196 (S.D. Fla. Dec.
9, 2020), ECF No. 22; United States v. Satary, 504 F. Supp. 3d 544 (E.D. La. 2020);
Order, United States v. Canchola, No. 19-cr-473 (N.D. Tex. Nov. 25, 2020), ECF No.
65; Order Granting Motion for Discovery Protocol Governing Disclosure of Material
Subject to Claims of Privilege, United States v. Young, No. 19-cr-10040 (W.D. Tenn.
Oct. 15, 2020), ECF No. 182; Order, United States v. Hanley, No. 19-cr-120 (M.D.
La. July 16, 2020), ECF No. 65; United States v. Patel, No. 19-cr-80181, 2020 WL
3118291 (S.D. Fla. June 8, 2020).
51. iCloud+ Plans and Pricing, Apple (June 17, 2022),
https://support.apple.com/en-us/HT201238.
52. LexisNexis, How Many Pages in a Gigabyte 1,
https://www.lexisnexis.com/applieddiscovery/lawlibrary/whitepapers/
adi fs pagesinagigabyte.pdf.
53. See, e.g., Joe Dysart, Ditching Dark Data: Set a Schedule to Dump Useless Info,
A.B.A. J., Apr. 2013, at 32 (“[T]he metric used to gauge the size of corporate databases
these days is now expressed in petabytes. A single petabyte . . . [stores the equivalent
of] about 20 million four-drawer file cabinets filled with text.”).

nologies that may impair proper extraction of data from phones. Ever-changing
communication applications and enhanced privacy features complicate filter
teams’ work because they make it more difficult to identify potentially privi-
leged information and the custodians of such information.
These challenges are not necessarily unique to filter matters. Challenges
continue to be felt acutely due to the dynamic legal landscape facing filter
issues, filter teams generally being under a microscope, voluminous and en-
crypted data, and related resource constraints.
VII. Alternatives to filter reviews

Considering these challenges and defendants’ increasing propensity for con-
testing filter issues, prosecuting units may want to consider the alternatives to
a filter team-staffed filter review, depending on the matter.
• Seek entry of an order under Federal Rule of Evidence 502(d)

with privilege holders’ agreement. Rule 502(d) states: “A federal
court may order that the privilege or protection is not waived by
disclosure connected with the litigation pending before the court—in
which event the disclosure is also not a waiver in any other federal or
state proceeding.”54. In other words, the parties may agree to release
PPM to the prosecution team and effectively defer resolution of any
privilege issues as an evidentiary matter if necessary.
• Obtain an express waiver. If the privilege holder wishes to waive

their privileges and protections, they may provide an express written
waiver. Note, however, that Department policy restricts the govern-
ment’s ability to request waivers from corporations.55. Accordingly,
the privilege holder itself generally must initiate express waivers.
• Seek appointment of a special master. Special masters are inde-

pendent, court-appointed individuals who perform many of the same
functions as filter teams. They are most utilized in complex cases and
typically are very costly. Former Fraud Section Chief Robert Zink,
who oversaw the creation of the SMU, estimated that appointing a
special master to each white-collar case in place of the SMU would
cost the Department approximately $2–3 million per matter.56.
• Issue a document subpoena in lieu of a search warrant. In

many instances, issuing a subpoena for material likely containing
PPM may not require a back-end filter review because the recipient
will have the opportunity to review the material for privilege prior to
production, unlike a search warrant.
54. Fed. R. Evid. 502(d).

56. Adam Dobrik, Rob Zink: Special Masters Would Solve DOJ Privilege Concerns,
Glob. Investigations Rev. (Oct. 28, 2021).

• Narrow collection efforts to prevent a need for filter in the
first place. Perhaps the easiest way to avoid involving filter teams
and large-scale filter reviews is to avoid collecting PPM to the greatest
extent possible. Where a document custodian is known to possess
PPM or otherwise be represented, discuss with your investigation and
prosecution team whether that material is necessary before applying
for a search warrant. The tendency to over-collect can create a number
of discovery related issues in prosecutions, including unnecessary, time
consuming filter reviews.
VIII. Conclusion—best practices

Considering the constantly changing landscape facing privilege issues and
filter reviews, the best practice for prosecutions teams—if they encounter or
reasonably expect to encounter PPM in their investigations or prosecutions—is
to confer with the SMU or affiliated filter team as early as possible.
Pre-Indictment
In the pre-indictment context, prosecution teams should ensure that the
search warrant Attachment B is included in search warrant applications if it
is expected that PPM will be captured. Where executing premises searches,
it is recommended to have a filter agent assigned and have a filter attorney
available—either physically or virtually—to answer any questions regarding
handling PPM during the search. In addition, where appropriate, prosecutors
may wish to request the grand jury court for entry of a privilege protocol to
get a preemptive court sign-off on the filter process, on top of the process set
forth in the search warrant Attachment B.
As noted above, the simplest advice to minimize the likelihood of unnec-
essary privilege disputes is to be intentional about the material collected and,
where possible and appropriate, to avoid collecting material known to contain
PPM. Remember that not everything needs to go through filter; only seized
materials where PPM is reasonably expected to be found.
Post-Indictment
Following indictment, as soon as practicable, prosecutors should seek entry
of the standard privilege protocol (or re entry, if a pre indictment protocol
were entered). If there are certain sets of documents that are higher priority
from a case strategic standpoint, the filter team should be advised to determine
whether rolling reviews and productions are possible. This arrangement enables
the prosecution team to obtain the most important documents first while the
remaining documents are undergoing the full-scale filter review.
Finally, as with any filter matter, it is important that the prosecution team
maximize communication with the filter team and keep them apprised of up-
coming deadlines such as trial extensions, discovery deadlines, or pretrial mo-
tions deadlines; changes in case status; or any privilege issues that the court
or defense flagged.

About the Authors
Lindita V. Ciko Torza serves as Trial Attorney with the Special Matters
Unit. Before joining the SMU, she worked as an Associate Attorney in the New
York office of a national law firm, advising clients on anti-corruption compli-
ance, international trade law, and international arbitration.
Timothy J. Coley serves as Assistant Chief of the Special Matters Unit.

Before joining the SMU, he was counsel in the Washington, D.C., office of a
national law firm, practicing in the areas of white-collar, government enforce-
ment, and complex commercial litigation.

Prosecutions in the Securities
and
Commodities Markets
Justin Weitz
Former Acting Principal Deputy Chief
Market Integrity and Major Frauds Unit
Fraud Section
Criminal Division
Jennifer Farer
Trial Attorney
Market Integrity and Major Frauds Unit
Fraud Section
Criminal Division
I. Introduction1.
The federal securities and commodities laws establish a range of obligations
for participants in the securities and commodities markets. Violations of many
of these provisions can lead to criminal prosecutions, civil enforcement actions
brought either independently or in parallel with a criminal prosecution, and
civil actions brought by private parties.
In this article, we summarize the options available to federal prosecutors
seeking to bring criminal cases involving securities and commodities fraud and
market manipulation. We also discuss general securities and commodities fraud
statutes and certain implementing regulations thereunder, as well as statu-
tory provisions applicable to specific types of misconduct involving securities
and commodities. Finally, we provide examples from recent prosecutions to
illustrate the development of cases and legal theories under these provisions.
Notably, while this article focuses on criminal prosecutions, civil enforcement
actions and private litigation have heavily influenced the body of applicable
case law.
II. General securities and commodities fraud statutes

A. Securities Act of 1933 and Securities Exchange Act of 1934
In the wake of the 1929 stock market crash that precipitated the Great
Depression, Congress passed the Securities Act of 1933 (‘33 Act or Securities
1. The authors are grateful to Vijay Shanker, Deputy Chief, Criminal Division, Ap-
pellate Section, for his assistance with research contained within this article.

Act)2. and the Securities Exchange Act of 1934 (‘34 Act or Exchange Act)3.
to protect investors and establish a securities enforcement regime grounded in
disclosure and transparency. The ‘33 and ‘34 Acts, which were subsequently
amended, contain multiple provisions for which willful misconduct constitutes
criminal activity.
The ‘33 and ‘34 Acts require securities issuers and promoters to provide full
and truthful information to investors and the market. These statutes employ
extraordinarily broad definitions of what constitutes a security.4. Beyond the
disclosure and registration requirements that form the core of securities reg-
ulation in the United States, the ‘33 and ‘34 Acts contain general anti-fraud
provisions.
The ‘33 Act’s anti-fraud provision, section 17(a), is titled “[u]se of interstate
commerce for purpose of fraud or deceit[.]” The statute provides the following:
It shall be unlawful for any person in the offer or sale of any secu-
rities (including security-based swaps) or any security-based swap
agreement . . . by the use of any means or instruments of trans-
portation or communication in interstate commerce or by use of
the mails, directly or indirectly—
(1) to employ any device, scheme, or artifice to defraud,
or
(2) to obtain money or property by means of any untrue
statement of a material fact or any omission to state a
material fact necessary in order to make the statements
made, in light of the circumstances under which they
were made, not misleading; or
(3) to engage in any transaction, practice, or course of
business which operates or would operate as a fraud or
deceit upon the purchaser.5.
Section 10(b) of the ‘34 Act makes it illegal—
To use or employ, in connection with the purchase or sale of any
security registered on a national securities exchange or any security
not so registered, or any securities-based swap agreement[,] any
manipulative or deceptive device or contrivance in contravention
of such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection
of investors.6.
2. Pub. L. No. 73-22, 48 Stat. 74 (1933) (codified as amended at 15 U.S.C. §§ 77(a),

et seq.).
3. Pub. L. No. 73-290, 48 Stat. 881 (1934) (codified as amended at 15 U.S.C §§ 78(a),
et seq.).
4. See 15 U.S.C. §§ 77b(a)(1), 78c(a)(10) (defining “security” for each statutory
scheme).
5. 15 U.S.C. § 77q.
6. 15 U.S.C. § 78j(b).

Section 10(b) is generally read in conjunction with the U.S. Securities and
Exchange Commission’s (SEC) implementing regulation, Rule 10b-5,7. which
incorporates anti-fraud language substantially similar to the ‘33 Act’s general
anti-fraud provision.
For criminal liability to attach under either statute, there must be a showing
of willfulness. Upon such a showing, the statutory maximum penalty for a
violation of the ‘33 Act is 5 years’ imprisonment and a $10,000 fine,8. while the
statutory maximum penalty for an individual’s ‘34 Act violation is 20 years’
imprisonment and a $5 million fine.9.
Courts have interpreted these provisions—especially section 10(b) of the ‘34
Act and Rule 10b-5—to encompass all types of securities fraud. The Supreme Court
has described Rule 10b-5 as “broad” and “inclusive,” and observed that “Congress
intended securities legislation enacted for the purpose of avoiding frauds to be
construed ‘not technically and restrictively, but flexibly to effectuate its re-
medial purposes.’”10. This broad interpretation has allowed prosecutors and
regulators to utilize “Rule 10b-5 to reach a wide range of deceitful securities
trading practices,” including those that might not fall within traditional defi-
nitions of securities fraud.11.
B. Commodity Exchange Act (CEA)
The CEA expressly prohibits manipulation and fraud in multiple sections
and authorizes both civil and criminal enforcement and penalties.12.
First, section 9(a)(2) of the CEA makes it a felony to engage in various
forms of manipulative or fraudulent conduct, which is punishable by a max-
imum fine of $1 million, 10 years’ imprisonment, or both.13. This conduct
includes manipulation, attempted manipulation, or swapping the price of any
commodity in interstate commerce, any commodity for future delivery (com-
monly called a “futures contract”) that is traded on registered exchanges, or
to engage in various forms of false statements or reporting.14.
Second, in the wake of the financial crisis of 2008, with the Dodd–Frank
Wall Street Reform and Consumer Protection Act (Dodd–Frank),15. Congress
amended section 6(c) of the CEA to expand and strengthen the statute’s anti-
fraud and manipulation provisions. As part of the amendments, Dodd–Frank
7. 17 C.F.R. § 240-10b-5.
8. 15 U.S.C. § 77x.
9. 15 U.S.C. § 78ff(a). Courts have generally held that, should an alternative fine under
18 U.S.C. § 3571(d) apply, such a fine can exceed the statutory maximum in the ‘33
or ‘34 Acts.
10. Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 151 (1972) (quoting
SEC v. Cap. Gains Rsch. Bureau, Inc., 375 U.S. 180, 195 (1963)).
11. United States v. Charnay, 537 F.2d 341, 348 (9th Cir. 1976).
12. Pub. L. No. 74-675, 49 Stat. 1491 (1936) (codified as amended at 7 U.S.C. §§ 1, et
seq.).
13. 7 U.S.C. § 9(a)(2).
14. 7 U.S.C. § 13(a).
15. Pub. L. No. 111-203, 124 Stat. 1376 (2010).

added, inter alia, new anti-fraud and manipulation provisions that prohibited
using or employing any manipulative or deceptive device and made it unlawful
to manipulate or attempt to manipulate the price of any swap or commodity.16.
Under these provisions, it is—
unlawful for any person, directly or indirectly, to use or employ, or
attempt to use or employ, in connection with any swap, or a con-
tract of sale of any commodity in interstate commerce, or for future
delivery on or subject to the rules of any registered entity, any ma-
nipulative or deceptive device or contrivance, in contravention of
such rules and regulations as the Commission shall promulgate by
not later than 1 year after July 21, 2010, provided no rule or reg-
ulation promulgated by the Commission shall require any person
to disclose to another person nonpublic information that may be
material to the market price, rate, or level of the commodity trans-
action, except as necessary to make any statement made to the
other person in or in connection with the transaction not mislead-
ing in any material respect.17.
In addition, it is “unlawful for any person, directly or indirectly, to manip-
ulate or attempt to manipulate the price of any swap, or of any commodity in
interstate commerce, or for future delivery on or subject to the rules of any reg-
istered entity.”18. Dodd–Frank also expanded the CEA’s existing prohibition
against false statements made in registration applications or reports filed with
the Commodity Futures Trading Commission (CFTC) to prohibit making any
false or misleading statement of material fact to the CFTC in any context.19.
The CFTC promulgated Rules 180.1 and 180.2 to implement the provi-
sions of the CEA that prohibit the employment, or attempted employment, of
manipulative or deceptive conduct and manipulation of pricing. Promulgated
pursuant to section 6(c)(1), Rule 180.1(a): “Prohibition on the employment,
16. The amendments did not replace but rather added to the existing CEA anti-
fraud and manipulation provisions. The CEA and regulations thereunder specified
that the amendments do not affect the applicability of CEA section 9(a)(2). See
7 U.S.C. § 9(1)(B). In addition, in promulgating the final rule under section 6(c)(1),
the CFTC explained that CEA section 6(c)(1) and final Rule 180.1 do not affect the
applicability of CEA section 4b and “augment the Commission’s existing authority
to prohibit fraud and manipulation.” Prohibition on the Employment, or Attempted
Employment, of Manipulative and Deceptive Devices and Prohibition on Price Manip-
ulation, 76 Fed. Reg. 41,401 (July 14, 2011). As a result, there are multiple provisions
under which prosecutions may be brought for market manipulation and other fraud-
ulent activity.
17. 7 U.S.C. § 9(1). This section also included a “Special provision for manipulation
by false reporting,” stating that unlawful manipulation includes delivering a false or
misleading or inaccurate report concerning crop or market information or conditions
that affect or tend to affect the price of any commodity in interstate commerce, but
also providing for a “Good faith mistakes” exception. 7 U.S.C. § 9(1)(A), (C).
18. 7 U.S.C. § 9(3).
19. 7 U.S.C. § 9(2).

or attempted employment, of manipulative and deceptive devices” provides in
relevant part—
It shall be unlawful for any person, directly or indirectly, in con-
nection with any swap, or contract of sale of any commodity in
interstate commerce, or contract for future delivery on or subject
to the rules of any registered entity, to intentionally or recklessly:
(1) Use or employ, or attempt to use or employ, any ma-
nipulative device, scheme, or artifice to defraud;
(2) Make, or attempt to make, any untrue or misleading
statement of a material fact or to omit to state a material
fact necessary in order to make the statements made not
untrue or misleading;
(3) Engage, or attempt to engage, in any act, practice,
or course of business, which operates or would operate as
a fraud or deceit upon any person; or,
(4) Deliver or cause to be delivered, or attempt to deliver
or cause to be delivered, for transmission through the
mails or interstate commerce, by any means of communi-
cation whatsoever, a false or misleading or inaccurate re-
port concerning crop or market information or conditions
that affect or tend to affect the price of any commodity in
interstate commerce, knowing, or acting in reckless dis-
regard of the fact that such report is false, misleading or
inaccurate. Notwithstanding the foregoing, no violation
of this subsection shall exist where the person mistakenly
transmits, in good faith, false or misleading or inaccurate
information to a price reporting service.20.
Rule 180.2: “Prohibition on price manipulation,” promulgated pursuant
to section 6(c)(3) and the CFTC’s general rulemaking authority, mirrors the
statutory text and provides as follows: “It shall be unlawful for any person,
directly or indirectly, to manipulate or attempt to manipulate the price of any
swap, or of any commodity in interstate commerce, or for future delivery on
or subject to the rules of any registered entity.”21.
Importantly, section 6(c)(1) of the CEA and Rule 180.1 are modeled on
section 10(b) of the Exchange Act22. and the SEC’s Rule 10b-5.23. In pro-
mulgating the rule, the CFTC acknowledged the virtually identical statutory
language and stated the following:
To account for the differences between the securities markets and
the derivatives markets, the Commission will be guided, but not
20. 17 C.F.R. § 180.1.

21. 17 C.F.R. § 180.2.
22. 15 U.S.C. § 78j(b).
23. 17 C.F.R. § 240-10b-5.

controlled, by the substantial body of judicial precedent applying
the comparable language of SEC Rule 10b-5. Such extensive judi-
cial review serves as an important benefit to the Commission and
provides the public with increased certainty because the terms of
Exchange Act Section 10(b) and SEC Rule 10b-5 have withstood
challenges to their constitutionality in both civil and criminal mat-
ters.24.
As with the SEC’s Rule 10b-5, Rule 180.1 is intended to be flexible to
effectuate its purpose, and a violation of Rule 180.1 does not require proof of
a market or price effect.
Thus, while there are a variety of differences between the CEA and secu-
rities laws, driven in part by the differences in the markets and products they
respectively regulate, courts addressing violations of the CEA and the CFTC’s
regulations thereunder have relied heavily on the body of legal precedent in-
terpreting the securities laws. As with the securities statutes discussed above,
the CEA imposes criminal penalties for willful violations of the CEA or the
CFTC’s rules and regulations thereunder.25.
C. 18 U.S.C. § 1348
Congress originally enacted section 1348 in 2002 as part of the Sarbanes–Oxley
Act and subsequently amended it in 2009 to include commodities involving
options or futures contracts. It is generally a straightforward criminal statute,
closely analogous to the bank, mail, and wire fraud statutes, with two subsec-
tions that offer different methods of establishing criminal liability for securities
and commodities fraud. Specifically, the statute provides the following:
Whoever knowingly executes, or attempts to execute, a scheme or
artifice—
(1) to defraud any person in connection with any com-
modity for future delivery, or any option on a commod-
ity for future delivery, or any security of an issuer with a
class of securities registered under section 12 of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78l ) or that is
required to file reports under section 15(d) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78o(d)); or (2) to
obtain, by means of false or fraudulent pretenses, repre-
sentations, or promises, any money or property in con-
nection with the purchase or sale of any commodity for
24. Prohibition on the Employment, or Attempted Employment, of Manipulative and

Deceptive Devices and Prohibition on Price Manipulation, 76 Fed. Reg. 41,398-01,
41,399 (July 14, 2011).
25. 7 U.S.C. § 13(a)(5). This section also provides, however, that “no person shall
be subject to imprisonment under this paragraph for the violation of any rule or
regulation if such person proves that he had no knowledge of such rule or regulation.”
Id.

future delivery, or any option on a commodity for fu-
ture delivery, or any security of an issuer with a class
of securities registered under section 12 of the Securities
Exchange Act of 1934 (15 U.S.C. 78l ) or that is required
to file reports under section 15(d) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o(d));
shall be fined under this title, or imprisoned not more than 25 years,
or both.26.
Importantly, section 1348 is generally understood to require a showing of
an intent to defraud.27. A conspiracy to violate section 1348 may be charged
under 18 U.S.C. § 1349, with no overt act requirement.28.
Found in the federal criminal code, section 1348 lacks a civil parallel and
therefore cannot be used by the SEC, CFTC, other civil enforcement au-
thorities, or private plaintiffs. Criminal prosecutors can utilize section 1348
to combat various types of securities and commodities fraud, including, but
not limited to, insider trading, accounting fraud, and various forms of market
manipulation. Notably, there is a six-year statute of limitations for certain se-
curities fraud offenses, including section 1348.29. Charging under this provision
provides for an additional year as compared to the five-year limitations period
applicable to the CEA and other general fraud provisions, such as wire and
mail fraud.
III. Specific violations of the securities and commodi-

ties laws
A. Market manipulation
While market manipulation cases can often be prosecuted using the general
anti-fraud provisions discussed above, there are also statutory provisions that
proscribe specific types of manipulative trading activity that can be used for
a criminal prosecution.
Both the Exchange Act and the CEA prohibit market manipulation, but
Congress did not define the term in either act. The Supreme Court has ex-
plained that securities manipulation “connotes intentional or willful conduct
designed to deceive or defraud investors by controlling or artificially affecting
the price of securities.”30. This conduct can take several forms, including open
market manipulation as well as specific types of activity, “such as wash sales,
26. 18 U.S.C. § 1348. See Sandra Moser & Justin Weitz, 18 U.S.C. 1348—A Workhorse
Statute for Prosecutors, 66 DOJ J. Fed. L. & Prac., no. 5, 2018, at 111, for a more
extensive discussion of section 1348.
27. See United States v. Coscia, 866 F.3d 782, 796 (7th Cir. 2017) (citing
United States v. Mahaffy, 693 F.3d 113, 125 (2d Cir. 2012)).
28. See United States v. Roy, 783 F.3d 418, 420 (2d Cir. 2015) (citing cases).
29. 18 U.S.C. § 3301.
30. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 199 (1976).

matched orders, or rigged prices, that are intended to mislead investors by ar-
tificially affecting market activity.”31. The courts have applied this precedent
in evaluating the application of the commodities laws to various forms of mar-
ket manipulation.32. As discussed in examples below, many forms of specific
manipulative conduct are expressly prohibited by statute.33.
Because prosecutions under the specific market manipulation provisions of
the Securities Act, Exchange Act, and CEA can take many forms, and there
may be few cases that courts can look to that address the specific type of
fraudulent activity at issue, prosecutors are advised to consider pursuing mar-
ket manipulation cases under the general anti-fraud provisions of these statutes
or other more common types of fraud. Such an approach has several advan-
tages. First, case law in every circuit supports broad interpretations of these
statutes. Second, pattern jury instructions for securities fraud exist in multi-
ple circuits. They do not exist for most of the specific types of manipulative
conduct discussed below. These pattern jury instructions can serve as a guide
for an instruction on commodities fraud, to the extent there is not a pattern
instruction for commodities fraud in a particular circuit. Third, grounding
market manipulation cases in statutory fraud language often provides a more
compelling narrative and allows prosecutors to present evidence of a scheme,
as opposed to what may otherwise be perceived as technical violations. Rather
than situate market manipulation as its own type of misconduct, prosecutors
are advised to rely on the clear precedent that market manipulation is a form
of fraud on the market.34.
Alternatively, or in addition, prosecutors can pursue a manipulation case
under a statutory provision that specifically proscribes the conduct at issue.
For example, section 9(a) of the ‘34 Act describes multiple types of manip-
ulative market activity, which, if performed willfully, constitute independent
violations of the securities laws and carry the same penalties as violations of
section 10(b).35. Similarly, the CEA contains a “[p]rohibited transactions” pro-
vision that identifies various types of prohibited trading activity, which, when
undertaken with the requisite knowledge and intent, can also carry criminal
penalties.36. While these statutes explicitly prohibit the identified type of ma-
31. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 476 (1977).
32. See, e.g., In re Amaranth Natural Gas Commodities Litig., 587 F. Supp. 2d 513,
529 n.96 (S.D.N.Y. 2008) (noting that the Court in Hochfelder, 425 U.S. at 193–94, was
discussing securities fraud but that “its language is equally applicable to commodities
fraud”).
33. In contrast, open market manipulation does not involve trading activity that is
expressly prohibited; instead, the trading at issue seems legitimate on its face. Ac-
cordingly, criminal prosecutions and civil enforcement actions addressing this type of
fraud are usually brought under the general anti-fraud and anti-manipulation provi-
sions discussed above.
34. See, e.g., United States v. Chanu, 40 F.4th 528, 542 (7th Cir. 2022) (endorsing use
of “spoofing” theory in wire fraud case).
35. 15 U.S.C. § 78i(a).
36. 7 U.S.C. § 6c.

nipulative behavior, the body of case law interpreting these provisions is more
limited, particularly in the criminal context. This is often because prosecu-
tors and the civil regulators have preferred to pursue spoofing, match or wash
trading, and other types of manipulation cases using the general anti-fraud
provisions. Because the unit of prosecution for at least some of these specific
statutory violations appears to be pegged to specific trades or orders as op-
posed to scheme liability, it can be easier to demonstrate the requisite criminal
intent by charging manipulation cases as schemes to defraud under the general
anti-fraud provisions. It is important to be aware of these options when making
charging decisions.
Prosecutors may elect to pursue multiple theories simultaneously by charg-
ing broader scheme-based statutes alongside more specific statutes. For in-
stance, in a spoofing case where the conduct spans a multi-year period, a
prosecutor might charge a single count of commodities fraud under section
1348 to cover the entire scheme alongside multiple spoofing counts pegged to
specific illegal transactions. This approach has been used successfully in vari-
ous prosecutions in recent years and can provide juries with multiple paths to
conviction.
While there are many types of manipulation, we choose to highlight two
common forms of manipulative trading that the ‘34 Act and the CEA explicitly
prohibit.
1. Spoofing
“Spoofing is a disruptive trading practice in which a person submits bids or
offers with the intent to cancel the bid or offer before it is executed.”37. These
bids (that is, buy orders) or offers (that is, sell orders), which are quickly
canceled, falsely signal to the market that supply or demand for the traded
product is greater than it actually is.
The CEA expressly criminalizes spoofing by making it unlawful to “engage
in any trading, practice, or conduct on or subject to the rules of a registered
entity that . . . is, is of the character of, or is commonly known to the trade
as ‘spoofing’ (bidding or offering with the intent to cancel the bid or offer
before execution).”38. In recent years, the Department of Justice (Department)
has focused substantial attention on pursuing spoofing in commodities futures
markets.39.
The ‘34 Act criminalizes spoofing as well, although not by name. Section
9(a)(2) of the ‘34 Act makes it unlawful “[t]o effect, alone or with one or more
other persons, a series of transactions in any security . . . creating actual or
apparent active trading in such security or raising or depressing the price of
such security . . . , for the purpose of inducing the purchase or sale of such
37. United States v. Coscia, 4 F.4th 454, 459 n.1 (7th Cir. 2021).
38. 7 U.S.C. § 6c(a)(5)(C); see also 7 U.S.C. § 13(a)(2).
39. See, e.g., United States v. Smith, No. 19-cr-669 (N.D. Ill.); United States v. Vorley,
No. 18-cr-35 (N.D. Ill.); United States v. Coscia, 866 F.3d 782, 786 (7th Cir. 2017).

security by others.”40. This provision is intended to “outlaw every device ‘used
to persuade the public that activity in a security is the reflection of a genuine
demand instead of a mirage.’”41. Canceled orders, which have the effect of
creating apparent active trading, can thus be prosecuted under the ‘34 Act.
2. Wash and match trading
Wash trading refers to traders who trade with themselves, often using
pseudonymous or nominee accounts. There is no change in beneficial ownership
of the security or commodity. Match trading refers to trading by individuals
who trade with a prearranged counterparty. These prearranged orders match
on an exchange, thus broadcasting a false signal of a bona fide transaction.
Wash and match trading can be manipulative, especially in lightly traded se-
curities and commodities, because they may suggest to the public that there
is more demand and trading volume than actually exists.
Section 9(a)(1)(A) of the ‘34 Act prohibits wash trades, that is, “any trans-
action . . . which involves no change in the beneficial ownership thereof,” “for
the purpose of creating a false or misleading appearance of active trading . . .
.”42. Section 9(a)(1)(B)-(C) prohibits match trading.
Under the CEA, section 4c(a)(2) prohibits any “transaction that—(A) (i)
is, of the character of, or is commonly known to the trade as, a ‘wash sale’ or
‘accommodation trade’; or (ii) is a fictitious sale; or (B) is used to cause any
price to be reported, registered, or recorded that is not a true and bona fide
price.”43.
B. Accounting fraud under the securities laws
One of the most prominent white-collar criminal investigations of the 21st
century involved the collapse of Enron, the Texas based energy services com-
pany that disintegrated in the wake of massive accounting fraud allegations.
The Enron scandal contributed to the demise of Arthur Andersen, formerly
one of the world’s largest accounting firms, and prompted the passage of the
Sarbanes–Oxley Act of 2002.
Since before Enron, prosecutors and law enforcement agencies have doggedly
pursued accounting fraud cases involving publicly traded companies. These in-
vestigations focus on one of the most challenging subsets of white-collar crime.
They often involve complex accounting across multiple years and business seg-
ments and can reflect a corporate culture that diffuses responsibility among
culpable actors. While accounting improprieties are usually charged as secu-
rities fraud under the general anti-fraud statutes, three additional statutory
provisions can assist prosecutors in accounting fraud investigations.
Publicly traded companies, often referred to as issuers, have various report-
ing and compliance obligations. These obligations often create responsibility
40. Crane Co. v. Westinghouse Air Brake Co., 419 F.2d 787, 794 (2d Cir. 1969).
41. Id. (quoting 3 Louis Loss, Securities Regulation 1549–55 (2d ed. 1961)).
42. 15 U.S.C. § 78i(a)(1)(A).
43. 7 U.S.C. § 6c(a)(2).

for senior corporate officers, such as the chief executive officer (CEO) and chief
financial officer (CFO). The law requires exchange-traded public companies to
file quarterly financial reports, referred to as Form 10-Qs, which set forth the
company’s financial condition. Such companies are also required to file more
detailed reports, known as Form 10-Ks, on an annual basis.44.
1. Executive certifications
The ‘34 Act and multiple SEC regulations set forth the specific contours of
what public companies must include in their periodic filings. 18 U.S.C. § 1350,
which was added to the federal criminal code in 2002 in the wake of the Enron
scandal, imposes an additional requirement that carries stiff criminal penalties.
The statute requires that each periodic report “shall be accompanied by a
written statement by the chief executive officer and chief financial officer (or
equivalent thereof) of the issuer.”45. This signed, written statement must affirm
that the reports comply with the ‘34 Act and that the information within the
report “fairly presents, in all material respects, the financial condition and
results of operations of the issuer.”46.
Significantly, there are two types of criminal penalties for violating this
section. A willful violation, per 18 U.S.C. § 1350(c)(2), carries a statutory
maximum sentence of 20 years’ imprisonment and a $5 million fine.
18 U.S.C. § 1350(c)(1), which does not require willfulness and only requires
knowledge, imposes a statutory maximum penalty of 10 years’ imprisonment
and a $1 million fine.
Few courts have confronted issues related to section 1350, though prosecu-
tors have charged it on multiple occasions.47. At least one district court has
specifically upheld the statute’s constitutionality.48. Prosecutors are advised to
consider section 1350 charges against senior officers, such as CEOs and CFOs,
in accounting fraud cases. Often, in accounting fraud investigations, senior of-
ficers argue that they were distant from the actual problematic accounting at
issue and relied on subordinate accountants to provide them with an accurate
portrayal of the public company’s books. Under these circumstances, where
prosecutors may find it challenging to demonstrate specific intent, section 1350
may be appealing. Section 1350 counts offer an avenue for prosecution in sit-
44. Certain companies, including some foreign companies that issue in the United
States, and companies whose shares are traded over the counter and not on exchanges,
may be exempt from these reporting requirements.
45. 18 U.S.C. § 1350(a).
46. 18 U.S.C. § 1350(b).
47. See, e.g., United States v. Wilson, 879 F.3d 795 (7th Cir. 2018) (affirming convic-
tion that included section 1350 counts).
48. United States v. Scrushy, No. CR-03-BE-0530-S, 2004 WL 2713262 (N.D. Ala.
Nov. 23, 2004). In United States v. Harra, 985 F.3d 196 (3d Cir. 2021), the Third
Circuit vacated convictions in a complex securities fraud case that included section
1350 charges. The Third Circuit’s opinion in Harra reflected questions about the
falsity of the underlying certifications, but it did not specifically address the viability
of section 1350 charges against culpable executives.

uations where a CEO or CFO has knowledge of the falsity of the books and
records, even if they were not intimately involved in manipulative or fraudulent
conduct.
2. Books and records
Section 13(b)(2) of the ‘34 Act imposes additional requirements on issuers.
Specifically, it requires issuers to “make and keep books, records, and accounts,
which, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the issuer,” and to “devise and maintain a system
of internal accounting controls.”49. The same statute provides that anyone who
“knowingly circumvent[s] or knowingly fail[s] to implement a system of internal
accounting controls or knowingly falsif[ies] any book, record, or account” is
subject to criminal and civil penalties, though a criminal conviction requires a
finding of willfulness.50.
The books and records provision extends widely to almost any account-
ing entry that an issuer has, and each individual falsification constitutes its
own crime. Significantly, a conviction on books and records does not require
a showing of materiality. Individual accounting entries, if knowingly and will-
fully falsified, form the basis for a criminal charge even in the absence of an
overarching scheme.
In United States v. Armbruster, the CFO of a publicly traded transporta-
tion company was convicted of two counts of falsifying an issuer’s books and
records.51. Armbruster offers two lessons to prosecutors. First, Armbruster was
convicted of two books and records counts, which together added up to $1 mil-
lion in falsified assets on the public company’s books. This amount paled in
comparison to the fraud for which Armbruster was also convicted, which the
indictment alleged cost shareholders hundreds of millions of dollars. The fal-
sified entries in the issuer’s books and records thus represented a small, but
easily quantifiable, portion of the scheme. Second, as CFO of a large public
company with multiple subsidiaries, Armbruster was convicted for causing the
falsified entries pursuant to 18 U.S.C. § 2. Given the ambiguity in which em-
ployees often falsify or cause the falsified entries, prosecutors are advised to
charge books and records violations using section 2.
Books and records charges may assist prosecutors in cases where the ac-
counting fraud is difficult to parse fully or in other cases involving criminal con-
duct at issuers. For example, prosecutors often use books and records charges in
Foreign Corrupt Practices Act (FCPA) cases.52. The Criminal Division, Fraud
Section, FCPA Unit, is available to provide guidance and support on such
charges.
49. 15 U.S.C. § 78m(b)(2)(A)–(B).

50. Id. § 78m(b)(4).
51. 48 F.4th 527 (7th Cir. 2022) (affirming conviction).
52. 15 U.S.C. § 78m(b)(2)(A).

3. Misleading external auditors
Securities laws require that an external accounting firm audit all issuers’
financial statements. Indeed, one of the takeaways of the Enron scandal was
that Arthur Andersen had not managed to stop the massive accounting fraud
scheme from unfolding despite its oversight. Because external auditors are usu-
ally unable to examine every line of a company’s books and records, the SEC
has promulgated a rule to penalize certain public company employees who take
actions to manipulate, coerce, or mislead external auditors.
This rule, codified at 17 C.F.R. § 240.13b2–2(b)(1), prohibits an issuer’s
officers, directors, or any other person acting under their direction, from—
directly or indirectly tak[ing] any action to coerce, manipulate, mis-

lead, or fraudulently influence any independent public or certified
public accountant engaged in the performance of an audit or re-
view of the financial statements of that issuer that are required to
be filed with the Commission pursuant to this subpart or otherwise
if that person knew or should have known that such action, if suc-
cessful, could result in rendering the issuer’s financial statements
materially misleading.53.
Any lies or attempts to mislead a company’s external auditors, if they

could result in the issuer’s financial statements being materially misleading, are
usually sufficient to establish liability under this section. Prosecutors should
consider using this charge where the evidence supports it, although this rule
does not apply to junior employees or officers of subsidiaries, unless they are
acting under the direction of a senior company officer.
In charging criminal violations of this rule, we note two points of caution.
First, while paragraph (a) of the rule provides an alternative basis for liabil-
ity—straightforward theories of false statements or omissions—we recommend
charging deception of external auditors under paragraph (b). Paragraph (a)
requires the false statements themselves to be material, whereas paragraph (b)
merely requires that the person “knew or should have known that such action,
if successful, could result in rendering the issuer’s financial statements materi-
ally misleading.”54. This broader conception of materiality allows prosecutors
to zoom out and contextualize the defendant’s deceptive activity, considering
the financial statements presented to shareholders as opposed to focusing on
the materiality of an actual false statement itself.55.
Second, we recommend focusing on the requisite intent. At least one ap-
pellate court has reversed a conviction under this rule where it found that
the government’s generalized evidence of intent was insufficient to support a
53. 17 C.F.R. § 240.13b2–2(b)(1).

54. Id.
55. There is also uncertainty surrounding the unit of prosecution for violations of
paragraph (a). See United States v. Turner, No. CR05-355C, 2007 WL 983124, at *5
(W.D. Wash. Mar. 26, 2007).

conviction.56. The plain and broad reading of this rule invites its use, but the
government is always required to establish proof of willfulness, which can be
challenging in criminal cases.
C. Misappropriation of information and insider trading under
the commodities laws
Before Dodd–Frank, the CEA prohibited insider trading involving the mis-
use of nonpublic information by personnel of the CFTC, exchanges, and self
regulatory organizations, but it did not provide generally applicable authority
prohibiting such misconduct.
In addition, the differences between the securities and commodities mar-
kets, and missions of the SEC and CFTC in overseeing these respective mar-
kets, impact the evaluation of the propriety of the use of nonpublic informa-
tion. The securities markets focus on capital formation, and the laws address
transparency and corporate duties to disclose material information to protect
shareholders. The derivatives markets have operated to allow market partici-
pants to trade based on lawfully obtained material nonpublic information to
facilitate management and transfer of risk, including price discovery and hedg-
ing or protecting against risks in commodity positions.
With the new anti-fraud and manipulation provisions under Dodd–Frank
and the CFTC’s Rule 180.1, the CFTC recognized that, in addition to misuse
of nonpublic information by government personnel,57. there may be a violation
by “trading on the basis of material nonpublic information in breach of a pre-
existing duty (established by another law or rule, or agreement, understanding,
or some other source), or by trading on the basis of material nonpublic infor-
mation that was obtained through fraud or deception.”58.
In recent years, the CFTC has brought civil enforcement actions under
these provisions for improper trading based on the illegal misappropriation of
nonpublic information.59. In doing so, it applied the misappropriation theory
of insider trading that has been applied in the securities context.60.
56. United States v. Goyal, 629 F.3d 912 (9th Cir. 2010).
57. The prior insider trading provision was also expanded under Dodd–Frank. See
7 U.S.C. § 6c(a)(4)(A).
58. Prohibition on the Employment, or Attempted Employment, of Manipulative and
Deceptive Devices and Prohibition on Price Manipulation, 76 Fed. Reg. 41,398, 41,403
(July 14, 2011).
59. In re Motazedi, CFTC No. 16-02 (Dec. 2, 2015); In re Ruggles, CFTC No. 16-34
(Sept. 29, 2016); Memorandum Opinion and Order, CFTC v. EOX Holdings LLC, No.
19-cv-2901 (S.D. Tex. Sept. 26, 2019), ECF No. 74.
60. See CFTC v. EOX Holdings LLC, 405 F. Supp. 3d 697, 710–11 (S.D. Tex. Sept.
26, 2019) (applying the misappropriation theory recognized in the securities context
in United States v. O’Hagan, 521 U.S. 642 (1997)).

In United States v. Marcus Schultz,61. the Department brought the first
criminal case involving insider trading in the commodities markets under these
provisions. In this and related cases, energy traders and brokers illegally misap-
propriated material nonpublic information in breach of their duties of confiden-
tiality, loyalty, and trust for use in prearranged fraudulent and other prohibited
trades for their personal gain. The members of the scheme also engaged in other
illegal conduct to conceal the fraudulent activity and related illicit profits, in-
cluding lying to the CFTC and relevant exchange. In addition, certain members
of the scheme coordinated paying and receiving illegal kickbacks, whereby cer-
tain traders received a portion of the commissions that their employer paid the
brokerage firm executing their trades.
Defendant Schultz pleaded guilty to conspiracy to violate the CEA
(7 U.S.C. §§ 6c(a), 9(1), 13(a)(2), 13(a)(5)) and Rule 180.1 thereunder and
wire fraud (18 U.S.C. § 1343).62. Subsequently, the Department announced
additional charges and guilty pleas by other traders and a broker involved in
the scheme, which included not only commodities fraud, wire fraud, and re-
lated conspiracy charges, but also charges for honest services fraud for those
involved in the illegal kickback activity.63. The CFTC resolved parallel enforce-
ment actions. The case against Defendant Matthew Clark, a trader indicted
in February 2022 for participating in the insider trading scheme and kickback
activity, remains pending as of this article’s date of publication.64.
In these cases, the breach of a recognized duty was established based on
employer–employee or broker–customer relationships and the applicable agree-
ments, policies and procedures, exchange rules, CFTC regulations, and other
applicable laws. The material nonpublic information that was misappropriated
included the following: identity, trade interests, and other terms and conditions
of the trading activity, including prices, purchase or sale, quantity, volume,
source, delivery points, timing, and thresholds or limits to the terms to which
the customer would agree. Notably, in these cases, the Department not only
relied upon the CEA anti-fraud provisions and Rule 180.1, but also upon the
statutory provision prohibiting prearranged trades. Even though the misap-
propriated information was used to coordinate fictitious, prearranged trades
at issue, such violations did not require the government to establish that non-
public information was misappropriated in violation of an established duty. As
discussed above, pursuing multiple charging theories is advisable given the lack
of precedent in this area.
61. Information, United States v. Schultz, No. 4:20-cr-270 (S.D. Tex. June 29, 2020),
ECF No. 1. The case was brought with a CFTC parallel action. See In re Marcus
Schultz, CFTC No. 20-76 (Sept. 30, 2020); see also In re Classic Energy LLC and
Mathew D. Webb, CFTC No. 19-50 (Sept. 30, 2019).
62. Signed Plea Agreement, Schultz, No. 4:20-cr-270, ECF No. 19.
63. See United States v. James, No. 20-cr-695 (S.D. Tex.); United States v. Webb,
No. 21-cr-233 (S.D. Tex.); United States v. Tippett, No. 21-cr-364 (S.D. Tex.);
United States v. Miller, No. 21-cr-570 (S.D. Tex.).
64. Indictment, United States v. Clark, No. 22-cr-55 (S.D. Tex. Feb. 3, 2022), ECF
No. 1.

IV. Conclusion
New types of fraud and manipulation are constantly emerging in the se-
curities and commodities markets, particularly as our financial markets evolve
with developing technology and types of financial products. As a result, pros-
ecutors need flexibility in how to combat and prosecute this illegal activity.
This article provides a helpful resource for prosecutors to rely upon in under-
standing the applicable frameworks and bringing important cases to combat
all types of financial fraud and sophisticated economic crimes and to protect
our markets, investors, and other market participants.
About the Authors

Justin Weitz served as the Acting Principal Assistant Chief of the Market
Integrity and Major Frauds Unit, Criminal Division, Fraud Section, from 2020
to 2022.
Jennifer Farer is a Trial Attorney in the Market Integrity and Major Frauds
Unit of the Fraud Section, Criminal Division, where she focuses on prosecuting
complex securities, commodities, government procurement, and other financial
fraud cases. During her time in the Fraud Section, Jennifer completed a de-
tail at the Financial Crimes Enforcement Network (FinCEN), a bureau of the
U.S. Department of the Treasury, where she served as a Senior Advisor to the
Enforcement Division and then Assistant Chief Counsel for Litigation and En-
forcement. Jennifer was previously in private practice where she represented
companies and individuals in criminal and civil enforcement cases, internal in-
vestigations, and complex litigation and class actions, as well as advised clients
on regulatory compliance.

The Foreign Corrupt Practices
Act: Continued Progress in
the Fight Against Corruption
David I. Salem Derek J. Ettinger
Assistant U.S. Attorney Assistant Chief, FCPA Unit
District of Maryland Criminal Division, Fraud Section
I. History of the FCPA

The Foreign Corrupt Practices Act (FCPA)1. was first enacted in the wake
of the Watergate scandal that led to President Richard Nixon’s resignation
and resulted in a dramatic plunge in Americans’ overall trust in government. In
1976, following certain prosecutions for illegal use of corporate funds arising out
of the Watergate scandal, the U.S. Securities and Exchange Commission (SEC)
issued a Report on Questionable and Illegal Corporate Payments and Practices.
In its report, the SEC determined that U.S. corporations were using secret
“slush funds” for various purposes, including illegal campaign contributions in
the United States and bribes to foreign officials abroad.2.
The FCPA was thus enacted in 1977 for the purpose of making it unlawful
for certain classes of persons and entities to make corrupt payments to foreign
government officials to assist in obtaining or retaining business.
In 1998, Congress amended the FCPA and expanded its scope to (1) include
payments made to secure “any improper advantage”; (2) reach certain foreign
persons who commit an act in furtherance of a foreign bribe while in the United
States; (3) cover public international organizations in the definition of “foreign
official”; (4) add an alternative basis for jurisdiction based on nationality; and
(5) apply criminal penalties to foreign nationals employed by or acting as agents
of U.S. companies.3. The FCPA also contains accounting provisions applicable
1. Foreign Corrupt Practices Act of 1977 (FCPA), Pub. L. No. 95-213, 91

Stat. 1494 (codified as amended at 15 U.S.C. §§ 78dd-1, et seq.).
2. U.S. Sec. & Exch. Comm’n, Report of the Securities and Exchange Com-
mission on Questionable and Illegal Corporate Payments and Practices
2–3 (1976); U.S. Dep’t of Just. & Sec. & Exch. Comm’n, A Resource Guide
to the U.S. Foreign Corrupt Practices Act 2 (2d ed. 2020) [hereinafter FCPA
Resource Guide].
3. See International Anti-Bribery and Fair Competition Act of 1998, Pub. L. No. 105-
366, 112 Stat. 3302 (1998); see also S. Rep. No. 105-277, at 2–3 (1998) (describing
amendments to “the FCPA to conform it to the requirements of and to implement the
OECD Convention”).

to public companies.4.
Congress viewed the FCPA’s passage as critical to stopping corporate
bribery, which had tarnished the image of U.S. businesses, impaired public
confidence in the financial integrity of U.S. companies, and hampered the effi-
cient functioning of the markets.5. Two of the law’s chief purposes, therefore,
were to level the playing field for honest businesses and restore public confi-
dence in the integrity of the marketplace.6.
In the more than 40 years since Congress passed the FCPA, significant
progress has been made in the global fight against corruption. For example,
the United States and other countries are parties to various international anti-
corruption conventions in which the parties undertake commitments to adopt
a range of preventive and criminal law measures to combat corruption.7.
The growing international coalition to fight corruption is also reflected in
a recent trend in FCPA enforcement, namely, the increase in international
4. Section 13(b)(2)(A)–(B) of the Exchange Act (codified at

15 U.S.C. § 78m(b)(2)(A)–(B)). These accounting provisions, which Congress
designed to operate in tandem with the anti-bribery provisions of the FCPA, prohibit
off-the-books accounting. They require companies covered by the provisions to (a)
“make and keep books, records, and accounts, which, in reasonable detail, accurately
and fairly reflect” an issuer’s transactions and dispositions of an issuer’s assets; and
(b) “devise and maintain a system of internal accounting controls sufficient to” assure
management’s control, authority, and responsibility over the firm’s assets. Id.
5. See H.R. Rep. No. 95-640, at 4–5 (1977); S. Rep. No. 95-114, at 3–4 (1977).
6. See FCPA Resource Guide, supra note 2, at 1–2; H.R. Rep. No. 95-640, at
4–5 (1977). The House Report made clear Congress’s concerns:
The payment of bribes to influence the acts or decisions of foreign of-
ficials, foreign political parties or candidates for foreign political office
is unethical. It is counter to the moral expectations and values of the
American public. But not only is it unethical, it is bad business as well.
It erodes public confidence in the integrity of the free market system.
It short-circuits the marketplace by directing business to those compa-
nies too inefficient to compete in terms of price, quality or service, or
too lazy to engage in honest salesmanship, or too intent upon unloading
marginal products. In short, it rewards corruption instead of efficiency
and puts pressure on ethical enterprises to lower their standards or risk
losing business.
Id.
7. FCPA Resource Guide, supra note 2, at 6–7. See, e.g., Organisation for
Econ. Co-operation and Dev., Convention on Combating Bribery of For-
eign Public Officials in International Business Transactions, at art. 1.1
(1997) [hereinafter Anti-Bribery Convention]. The Anti Bribery Convention re-
quires member countries to make it a criminal offense “for any person intentionally
to offer, promise or give any undue pecuniary or other advantage, whether directly or
through intermediaries, to a foreign public official, for that official or for a third party,
in order that the official act or refrain from acting in relation to the performance of
official duties, in order to obtain or retain business or other improper advantage in
the conduct of international business.” Id.

cooperation as well as the coordination of corporate resolutions with other
countries. Such coordination helps avoid imposing duplicative penalties, forfei-
ture, and disgorgement for the same illicit conduct.8. It also allows companies
to obtain resolutions with multiple jurisdictions conducting parallel investiga-
tions pursuant to separate anti-corruption laws. As part of these coordinated
8. Since 2008, the Department has coordinated resolutions with foreign authorities in
more than 10 cases. See FCPA Resource Guide, supra note 2, at 71. See, e.g., Press
Release, U.S. Dep’t of Just., Glencore Entered Guilty Pleas to Foreign Bribery and
Market Manipulation Schemes (May 24, 2022) (United States v. Glencore Interna-
tional AG, Department coordinating with United Kingdom, Brazil, and Switzerland);
Press Release, U.S. Dep’t of Just., Vitol Inc. Agrees to Pay over $135 Million to Re-
solve Foreign Bribery Case (Dec. 3, 2020) (United States v. Vitol Inc., Department
coordinating with Brazil); Press Release, U.S. Dep’t of Just., Airbus Agrees to Pay
over $3.9 Billion in Global Penalties to Resolve Foreign Bribery and ITAR Case (Jan.
31, 2020) (United States v. Airbus, Department coordinating with France and United
Kingdom); Press Release, U.S. Dep’t of Just., TechnipFMC Plc and U.S.-Based Sub-
sidiary Agree to Pay over $296 Million in Global Penalties to Resolve Foreign Bribery
Case (June 25, 2019) (United States v. TechnipFMC, Department coordinating with
Brazil); Press Release, U.S. Dep’t of Just., Société Générale S.A. Agrees to Pay $860
Million in Criminal Penalties for Bribing Gaddafi-Era Libyan Officials and Manipu-
lating LIBOR Rate (June 4, 2018) (United States v. Société Générale, Department
coordinating with France); Press Release, U.S. Dep’t of Just., Keppel Offshore & Ma-
rine Ltd. and U.S. Based Subsidiary Agree to Pay $422 Million in Global Penalties
to Resolve Foreign Bribery Case (Dec. 22, 2017) (United States v. Keppel Offshore
& Marine Ltd., Department coordinating with Brazil and Singapore); Press Release,
U.S. Dep’t of Just., SBM Offshore N.V. and United States-Based Subsidiary Resolve
Foreign Corrupt Practices Act Case Involving Bribes in Five Countries (Nov. 29, 2017)
(United States v. SBM Offshore, Department coordinating with the Netherlands and
Brazil); Press Release, U.S. Dep’t of Just., Telia Company AB and Its Uzbek Sub-
sidiary Enter into a Global Foreign Bribery Resolution of More Than $965 Million for
Corrupt Payments in Uzbekistan (Sept. 21, 2017) (United States v. Telia Company
AB, Department and SEC coordinating with the Netherlands); Press Release, U.S.
Dep’t of Just., Rolls-Royce plc Agrees to Pay $170 Million Criminal Penalty to Resolve
Foreign Corrupt Practices Act Case (Jan. 17, 2017) (United States v. Rolls- Royce plc,
No. 16-cr-247 (S.D. Ohio Jan. 17, 2017), Department coordinating with United King-
dom and Brazil); Press Release, U.S. Dep’t of Just., Odebrecht and Braskem Plead
Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest
Foreign Bribery Case in History (Dec. 21, 2016) (United States v. Odebrecht S.A., No.
16-cr-643, Department coordinating with Brazil and Switzerland); Press Release, U.S.
Dep’t of Just., Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5
Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History (Dec.
21, 2016) (United States v. Braskem S.A., Department and SEC coordinating with
Brazil and Switzerland); Press Release, U.S. Dep’t of Just., VimpelCom Limited and
Unitel LLC Enter into Global Foreign Bribery Resolution of More Than $795 Million;
United States Seeks $850 Million Forfeiture in Corrupt Proceeds of Bribery Scheme
(Feb. 18, 2016) (United States v. VimpelCom Ltd., Department and SEC coordinating
with the Netherlands); Press Release, U.S. Dep’t of Just., Siemens AG and Three Sub-
sidiaries Plead Guilty to Foreign Corrupt Practices Act Violations and Agree to Pay
$450 Million in Combined Criminal Fines (Dec. 15, 2008) (United States v. Siemens
AG, Department and SEC coordinating with Germany).

resolutions, the Department of Justice (Department) has often credited fines,
penalties, forfeiture, and disgorgement that a resolving company pays to for-
eign authorities for overlapping conduct.9.
II. The Prosecution of United States v. Lambert

In part because of their international dimension and financial complexity,
FCPA investigations and trials present some unique challenges. The prosecu-
tion of United States v. Mark Lambert, tried in the District of Maryland in
2019, illustrates some of those challenges.10.
The case centered around bribes paid to a foreign official and national of
the Russian Federation named Vadim Mikerin. From approximately 2004 to
2011, Mikerin was the Director of the Russian company JSC Techsnabexport
(TENEX). TENEX, an agency and instrumentality of the Russian Federation,
supplied uranium and uranium enrichment services to nuclear power compa-
nies throughout the world on behalf of the Russian government. Mikerin later
became President of TENEX’s wholly-owned U.S. subsidiary, TENAM Corpo-
ration (TENAM).11.
In 2014, agents from the Federal Bureau of Investigation and the Depart-
ment of Energy’s (DOE) Office of the Inspector General executed a search
warrant at Mikerin’s office in Bethesda, Maryland. The agents found docu-
ments and laptop computers in a locked safe (and in other locations) that they
were able to access during the search.
In part through executing the search warrant and subsequent investigative
steps, the agents obtained information that helped expose a complex bribery
scheme involving Mikerin and a Maryland based company called Transport
Logistics International (TLI).
In October 2014, agents approached and interviewed Mikerin, who was
then arrested.12. Mikerin ultimately admitted that, among other things, he
had participated in a sophisticated money-laundering conspiracy to promote
a multi-year bribery scheme, whereby he conspired with executives at TLI
to make—and act as intermediaries for—corrupt payments for his benefit to
offshore shell companies around the world.13. In particular, he admitted to a
scheme in which TLI, in order to benefit and influence Mikerin, wired more
9. FCPA Resource Guide, supra note 2, at 71. This practice of coordinating res-
olutions to avoid “piling on” is memorialized in the Justice Manual, which instructs
prosecutors to “endeavor, as appropriate, to coordinate with and consider the amount
of fines, penalties, and/or forfeiture paid to other federal, state, local, or foreign en-
forcement authorities that are seeking to resolve a case with a company for the same
misconduct.” Justice Manual 1-12.100.
10. United States v. Lambert, No. 20-4590, 2022 WL 2871909 (4th Cir. July 21, 2022)
(affirming district court and upholding Lambert’s conviction).
11. See Second Superseding Indictment at 3, United States v. Lambert, No. 18-cr-12
(D. Md. May 22, 2019), ECF No. 79.
12. See, e.g., Defendant’s Motion to Suppress, United States v. Mikerin, No. 14-cr-529
(D. Md. Mar. 13, 2015), ECF No. 46.
13. Superseding Information at 4, Mikerin, No. 14-cr-529, ECF No. 98.

than $1.5 million from its bank account in Maryland to three shell companies
registered in the Seychelles, British Virgin Islands, and the United Kingdom,
with bank accounts in the Republic of Cyprus, the Republic of Latvia, and
Switzerland.14. Mikerin pleaded guilty in the District of Maryland to one count
of conspiracy to commit money laundering regarding the scheme.15. In March
2018, TLI entered into a deferred prosecution agreement with the Fraud Sec-
tion of the Department’s Criminal Division and the U.S. Attorney’s Office for
the District of Maryland, in which TLI admitted to conspiring to violate the
FCPA.16.
As detailed during the trial, executives from TLI made bribe payments for
the benefit of Mikerin in order to enrich themselves corruptly and criminally.
They also understood that the bribes would allow them to win sole-source
contracts with TENEX to transport uranium to and from Russia,17. including
uranium involved in the historic 1993 HEU–LEU Agreement. That agreement,
colloquially known as the United States–Russian “Megatons to Megawatts”
Agreement or the “Swords to Plowshares” Agreement, was designed to de-
crease the number of nuclear weapons that remained in Russia after the fall of
the Soviet Union, while simultaneously creating nuclear energy that could be
used in the United States.18. In essence, Russia agreed to take weapons-grade
uranium—uranium that was in its nuclear weapons—and down-blend it, mak-
ing it less powerful or less concentrated. The United States, in turn, agreed
to buy that uranium from Russia to use for fuel in American nuclear power
plants.19.
The Megatons to Megawatts Agreement accounted for the down blending
of approximately 500 metric tons of weapons grade uranium to low enriched
uranium (LEU).20. That is the equivalent of roughly 20,000 nuclear weapons
taken out of circulation.21. By some estimates, by 2008, approximately 1 in
14. Attachment A: Stipulated Facts, Mikerin, No. 14-cr-529, ECF No. 103-1; Tran-
script of Trial, Nov. 14, 2019, at 105:8–16, 107:2–8, Lambert, No. 18-cr-12, ECF No.
251 [hereinafter Nov. 14 Lambert Trial Transcript].
15. Plea Agreement at 1, Mikerin, No. 14-cr-529, ECF No. 103.
16. See Press Release, U.S. Dep’t of Just., Transport Logistics International Inc. Agrees
to Pay $2 Million Penalty to Resolve Foreign Bribery Case (Mar. 13, 2018); Deferred
Prosecution Agreement, United States v. Transport Logistics Int’l, Inc., No. 18-cr-11
(D. Md. Mar. 12, 2018), ECF No. 6.
17. Transcript of Trial (Morning Session), Nov. 4, 2019, at 145:12–20, Lambert, No.
18-cr-12, ECF No. 246 [hereinafter Nov. 4 Morning Lambert Trial Transcript]; Nov.
14 Lambert Trial Transcript, supra note 14, at 129:8–15.
18. Transcript of Jury Trial P.M. Proceedings, Oct. 30, 2019, at 32:4–32:25, Lambert,
No. 18-cr-12, ECF No. 140 [hereinafter Oct. 30 Afternoon Lambert Trial Transcript].
19. Nov. 4 Morning Lambert Trial Transcript, supra note 17, at 102; Megatons to
Megawatts, U.S. Enrichment Corp.,
https://web.archive.org/web/20140113070126/http://www.usec.com/russian-
contracts/megatons-megawatts (archived Jan. 13, 2014) (last visited Sept. 14,
2022).
20. Oct. 30 Afternoon Lambert Trial Transcript, supra note 18, at 32:18–25.
21. Id.; U.S. Enrichment Corp., supra note 19.

10 “American homes, businesses, schools and hospitals receive[d] electricity
generated by fuel fabricated using LEU from the Megatons to Megawatts pro-
gram.”22.
A program of such immense scale required shipping a massive amount of
uranium. In particular, it required first transporting the uranium out of Russia
and to the United States and then returning another type of low-grade uranium
called “feed” back to Russia. TLI won the contracts to move the uranium from
Russia to the United States.23. As detailed during the trial, through the bribery
scheme, TLI also won the contracts to transport the low grade uranium—the
feed—back to Russia.24. Once the scheme was up and running, the evidence
presented at trial showed that TLI continued to pay bribes to win TENEX
business on subsequent commercial contracts.
The conspirators thus violated the anti-bribery provisions of the FCPA and
corrupted the extraordinarily sensitive process of transporting nuclear fuel to
and from the United States.
Two corporate executives at TLI—Daren Condrey and Mark Lambert—were
charged. Another executive who had been involved in the scheme died be-
fore the case was indicted.25. Condrey pleaded guilty and agreed to cooperate
against Lambert, who went to trial in Greenbelt, Maryland, in the fall of 2019.
Lambert was part-owner and co-president of the corporation. He was charged
with one count of conspiracy to violate the FCPA and to commit wire fraud,
seven counts of substantive FCPA violations, two counts of wire fraud, and one
count of money laundering.26. Following a three-week trial, the jury found Lam-
bert guilty of conspiracy, four counts of violating the FCPA, and two counts
of wire fraud.27. The U.S. District Court sentenced Lambert to four years in
prison, three years supervised release, a $20,000 fine, and a $700 special as-
sessment.
A. Gathering evidence
As the evidence at trial demonstrated, the conspirators were particularly
diligent about disguising the bribe scheme. For example, TLI’s executives
hid the scheme by creating fake invoices that looked like they were coming
from TENEX and by falsely recording the bribe payments in their corporate
books.28. Initially, they falsely recorded the bribes as “commissions,” but real-
ized before long that referencing the payments as “commissions” would raise
22. U.S. Enrichment Corp., supra note 19; see also Oct. 30 Afternoon Lambert
Trial Transcript, supra note 18, at 33:1–4.
23. Nov. 4 Morning Lambert Trial Transcript, supra note 17, at 107:3–10.
24. Id.
25. Id. at 92:24–25, 131:24–25.
26. See generally Second Superseding Indictment, supra note 11.
27. See Press Release, U.S. Dep’t of Just., Former President of Transportation Com-
pany Found Guilty of Violating the Foreign Corrupt Practices Act and Other Crimes
(Nov. 22, 2019).
28. Nov. 4 Morning Lambert Trial Transcript, supra note 17, at 147.

too many questions.29. So they switched to recording the bribes as “remunera-
tion,” a term that referred to legitimate discount programs that TLI used with
certain customers based in Asia.30. As part of the scheme, the TLI conspir-
ators hoped that TLI employees and other individuals conducting oversight
from TLI’s parent company would incorrectly assume that the bribes to Mik-
erin, which were falsely labeled “remuneration,” were simply part of a discount
given to TENEX.31. The co-conspirators also tracked the corrupt and fraudu-
lent payments on internal spreadsheets that they shared with each other.32.
The TLI executives emailed directly with Mikerin at Mikerin’s personal
and pseudonymous email account where he went by the alias “Marvin
Jodel.”33. In those private communications, Mikerin and his co-conspirators
used code words like “lucky figure,” “LF,” and “cake” when discussing and
arranging the bribe payments to Mikerin.34.
As Lambert’s trial demonstrated, emails and other electronic communica-
tions can provide significant evidence demonstrating the guilt of individuals
engaged in a bribery scheme, as well as other criminal conduct, and their par-
ticipation in a complex conspiracy. The evidence at trial included electronic
communications from both personal and corporate email accounts,35. all of
which helped the government reconstruct and understand the full scope of
the conspiracy. Electronic evidence also corroborated the corrupt intent of the
members of the conspiracy, in part because, when discussing bribes, the co-
conspirators generally used Mikerin’s personal email address with the alias
“Marvin Jodel” rather than his TENEX or TENAM email account,36. and
also referred to the so-called “remuneration” (that is, the bribes) by using
code words.37. The trial evidence even included an iMessage between Condrey
and Lambert, in which they discussed who at TENEX besides Mikerin knew
about “LF,” an acronym used to designate “Lucky Figures,” or bribes paid to
Mikerin.38.
As with many criminal trials, having a cooperator who can explain the
manner and means of the conspiracy and the “backroom conversations” of
the conspirators can serve as very valuable evidence. In the Lambert trial,
Daren Condrey testified as a cooperating witness and explained the inter-
nal documents and other evidence that demonstrated the bribery scheme and
29. Id. at 148.

30. Id.; Transcript of Trial (Morning Session), Nov. 5, 2019, at 55–57, Lambert, No.
18-cr-12, ECF No. 247 [hereinafter Nov. 5 Morning Lambert Trial Transcript].
31. See Transcript of Jury Trial Proceedings (Afternoon Session), Nov. 4, 2019, at 10,
Lambert, No. 18-cr-12, ECF No. 183.
32. Id. at 27–29, 123.
33. Nov. 5 Morning Lambert Trial Transcript, supra note 30, at 79–80.
34. Nov. 4 Morning Lambert Trial Transcript, supra note 17, at 148–49.
35. See, e.g., Nov. 5 Morning Lambert Trial Transcript, supra note 30, at 74–75,
79:16–20.
36. Id. at 81.
37. Id. at 93:23–94:7.
38. Id. at 106–10, Ex. 76.

the conspirators’ efforts to conceal the bribe payments to Mikerin.39. Through
Condrey’s testimony and other evidence, the jury learned about the origin and
nature of the scheme, the methods used to conceal it, and the various coded
documents that tracked the bribes and hid them from prying eyes.40.
In addition to electronic evidence and the testimony of cooperators, cases
such as Lambert typically include the use of Mutual Legal Assistance Treaties
(MLATs) or other methods to gather evidence from foreign authorities. Be-
cause obtaining foreign-based evidence can be a valuable component to a suc-
cessful FCPA prosecution and simultaneously extremely time-consuming, pros-
ecutors should consider seeking a tolling order under 18 U.S.C. § 3292 when
appropriate.
In Lambert, besides the bank records from TLI’s Maryland bank showing
that TLI wired payments to the shell companies, the government also intro-
duced evidence obtained pursuant to three separate MLAT requests, which
included the foreign bank records of the accounts into which TLI paid the
bribes.41. At trial, part of Lambert’s defense centered on his counsel’s argu-
ments that the payments he authorized were merely purported discounts for
TENEX.42. The evidence, however, showed that the shell companies that were
paid had nothing to do with TENEX. The evidence obtained through MLAT
requests included, for example, (1) the registration documents of the offshore
companies, revealing that none conducted any obvious nuclear industry related
work;43. (2) evidence that one of the shell companies was involved in, among
other things, electrical appliances, textiles, and clothes;44. and (3) evidence
that another shell company was involved in metal trading.45. There was thus
ample evidence suggesting that, contrary to the defense arguments, none of
the shell companies that Lambert and his co-conspirators paid at Mikerin’s
direction were actually subsidiaries of, or otherwise related to, TENEX.
B. Proving the elements of the offense
In Lambert, the district court instructed the jury that to find the defendant
guilty of violating the FCPA, the government needed to prove the following el-
ements beyond a reasonable doubt: (1) that Lambert was a “domestic concern
or an officer, director, employee or agent of a domestic concern or a stock-
holder thereof acting on behalf of such domestic concern”; (2) that Lambert
“acted corruptly and willfully”; (3) that Lambert “made use of the mails or
any means or instrumentality of interstate commerce in furtherance of conduct
that violates the FCPA”; (4) that Lambert “either paid or offered, promised
39. See, e.g., id. at 42:19–52:25.

40. Id. at 75:12–16.
41. Transcript of Jury Trial A.M. Proceedings, Nov. 7, 2019, at 165:7–167:17, Lambert,
ECF No. 149 [hereinafter Nov. 7 Morning Lambert Trial Transcript].
42. Transcript of Trial (Morning Session), Oct. 30, 2019, at 24–25, Lambert, ECF No.
245.
43. Nov. 7 Morning Lambert Trial Transcript, supra note 41, at 170:7–174:18.
44. Id. at 172:14–17.
45. Id. at 174:17–18.

or authorized the payment of money or of anything of value”; (5) “that the
payment was either to a foreign official or to any person while [Lambert] knew
that all or a portion of the payment would be offered, given or promised di-
rectly or indirectly, to a foreign official”; (6) “that the payment was for one
of four purposes[: (a) t]o influence any act or decision over the foreign official
in his or her official capacity,” (b) “to induce the foreign official to do or omit
to do any act in violation of that official’s lawful duty,” (c) “to induce that
foreign official to use his influence with a foreign government or instrumen-
tality thereof to affect or influence any act or decision of such government or
instrumentality[,] or” (d) “to secure any improper advantage”; and (7) “that
the payment was made to assist [Lambert] in obtaining or retaining business
for or with[,] or directing business to[,] any person.”46.
An analysis of each element of an FCPA violation would take us far beyond
the scope of this article, but some examples of typical issues that arise are
explained below.
1. Element one
The first requirement is to show that the FCPA covers the charged individ-
ual. Lambert was charged under 15 U.S.C. § 78dd-2, which requires, inter alia,
that an individual be a “domestic concern,” or an officer, director, employee,
or agent of a “domestic concern.” The statute defines a “domestic concern” as
(a) “any individual who is a citizen, national or resident of the United States”
or (b) “any corporation, partnership, association, joint stock company, busi-
ness trust, unincorporated organization[,] or sole proprietorship which has its
principal place of business in the United States[,] or which is organized under
the laws of a state of the United States or a territory, possession[,] or common-
wealth of the United States.”47.
Because Lambert was both a U.S. citizen and an officer and employee of a
company with its principal place of business in Maryland (that is, a company
that was itself a domestic concern), this element was not seriously in dispute.
In other circumstances, the analysis of the first element may be more com-
plicated. For example, a bribe-paying intermediary whom a company engages
either officially or unofficially may neither be a domestic concern nor an offi-
cer, director, or employee of a domestic concern (or “issuers” of stock on U.S.
exchanges). The FCPA can, nonetheless, cover such third parties as agents of
a domestic concern or issuer. Moreover, under traditional principles of respon-
deat superior, a company can be liable for the acts of its agents undertaken
within the scope of their employment and intended, at least in part, to benefit
the company.48.
In addition, under 15 U.S.C. § 78dd-3, a foreign national can also be prose-
46. Nov. 14 Lambert Trial Transcript, supra note 14, at 54–55.

47. 15 U.S.C. § 78dd-2(h)(1)(A); Nov. 14 Lambert Trial Transcript, supra note 14, at
55.
48. FCPA Resource Guide, supra note 2, at 28; see, e.g., Standard Oil Co. v. United
States, 307 F.2d 120, 127 (5th Cir. 1962).

cuted under the FCPA if he or she acts in furtherance of a corrupt payment (or
an offer, promise, or authorization to pay) while in the territory of the United
States. For example, assuming the other elements were satisfied, the FCPA
could cover a foreign national with no employment or agency connection to
a domestic concern or issuer if she came to the United States and offered a
bribe to a foreign official or delivered a cash bribe in the United States for the
benefit of a foreign official.49.
A foreign company or individual may also be held liable for aiding and
abetting an FCPA violation or for conspiring to violate the FCPA, even if the
foreign company or individual did not act in furtherance of the scheme while
in the territory of the United States. When prosecuting a conspiracy case, the
United States generally has jurisdiction over all conspirators if at least one of
them is an issuer or a domestic concern, or commits a reasonably foreseeable
overt act within the United States. The same principle applies to aiding and
abetting violations.50.
2. Element four
The fourth element is worth pausing on briefly. The FCPA is explicit that
it is not necessary for a bribe payment to occur to violate the statute. It also
specifically prohibits an offer or promise to pay a bribe as well as authorizing
a bribe payment. In addition to presenting evidence of the bribe payments
themselves, the government in Lambert put on evidence that Lambert and
Condrey offered or promised bribe payments and authorized those payments.
That evidence would have been legally sufficient to secure a guilty verdict even
absent any evidence that the payments had ever been made.51. As a practical
matter, however, the evidence in Lambert established all the above.
3. Element five
To prove an FCPA violation, the government must also prove that the
offer, promise, payment, or authorization of payment was to a foreign offi-
cial, or to any person whom the defendant knew would directly or indirectly
offer, give, or promise all or a portion of that payment to a foreign official
(that is, a third-party intermediary). When a foreign government is organized
49. 15 U.S.C. § 78dd-3.

50. FCPA Resource Guide, supra note 2, at 36. See United States v. MacAllister,
160 F.3d 1304, 1307 (11th Cir. 1998); United States v. Winter, 509 F.2d 975, 982
(5th Cir. 1975).But see United States v. Hoskins, 902 F.3d 69, 76–97 (2d Cir. 2018)
(holding that an individual can be prosecuted criminally for conspiracy to violate
the FCPA anti-bribery provisions or for aiding and abetting an FCPA anti-bribery
violation only if that individual’s conduct and role fall into one of the specifically
enumerated categories expressly listed in the FCPA’s anti-bribery provisions); Memo-
randum Opinion and Order, United States v. Rafoi-Bleuler, No. 17-cr-514 (S.D. Tex.
Nov. 10, 2021), ECF No. 255 (following Hoskins, but currently on appeal in the 5th
Circuit). But cf. United States v. Firtash, 392 F. Supp. 3d 872, 889–92 (N.D. Ill. 2019)
(rejecting the reasoning in the Hoskins decision).
51. Nov. 14 Lambert Trial Transcript, supra note 14, at 58:12–17.

similar to the U.S. system, what constitutes a government official is typically
clear, such as an executive-level official like a president, governor, or min-
ister of energy or transportation. Governments, however, can be organized
in very different ways.52. For example, “[m]any operate through state-owned
and state-controlled entities, particularly in such areas as aerospace and de-
fense manufacturing, banking and finance, healthcare and life sciences, energy
and extractive industries, telecommunications, and transportation.”53. Thus,
in some instances, determining whether the bribe payee was a foreign official
for purposes of the statute requires understanding how the foreign government
is organized and how it functions.
In part to account for this variability in government organization, the FCPA
includes officers or employees of agencies and instrumentalities within the defi-
nition of “foreign official.”54. Specifically, the FCPA defines a “foreign official”
as “any officer or employee of a foreign government or any department, agency,
or instrumentality thereof, or of a public international organization.”55.
The term “instrumentality” is broad and can include state-owned or state-
controlled entities like TENEX and TENAM. Whether a particular entity con-
stitutes an “instrumentality” under the FCPA requires a fact-specific analysis
of an entity’s ownership, control, status, and function.56.
Lambert provides a useful illustration. ROSATOM, the parent company
of TENEX, was essentially the equivalent of the U.S. DOE.57. Mikerin worked
for ROSATOM’s commercial subsidiary TENEX and later TENEX’s American
subsidiary TENAM. As the district court instructed, the government needed
52. See FCPA Resource Guide, supra note 2, at 19–20. Additionally, during the pe-
riod surrounding the FCPA’s adoption, state-owned entities held virtual monopolies
and operated under state-controlled price-setting in many national industries around
the world. See The World Bank Grp., Bureaucrats in Business: The Eco-
nomics and Politics of Government Ownership 78 (1995); Sunita Kikeri
and Aishetu Kolo, The World Bank Grp., State Enterprises (2006).
53. Kikeri & Kolo,supra note 52, at 1 (“[A]fter more than two decades of privati-
zation, government ownership and control remains widespread in many regions—and
in many parts of the world still dominates certain sectors.”); FCPA Resource Guide,
supra note 2, at 20.
54. FCPA Resource Guide, supra note 2, at 20.
55. 15 U.S.C. § 78dd-2(h)(2)(A). Another way to qualify as a “foreign official” under
the statute is to “act[] in an official capacity for or on behalf of any such government
or department, agency, or instrumentality, or for or on behalf of any such public
international organization.” Id.
56. FCPA Resource Guide, supra note 2, at 20. To date, consistent with the Depart-
ment’s approach, all district courts that have considered this issue have concluded that
it is an issue of fact for a jury to decide. See Order, United States v. Carson, No. 09-cr-
77 (C.D. Cal. May 18, 2011), ECF No. 373; United States v. Aguilar, 783 F. Supp. 2d
1108 (C.D. Cal. 2011); Order, United States v. Esquenazi, No. 09-cr-21010 (S.D. Fla.
Aug. 5, 2011), ECF No. 309; see also Management Order, United States v. O’Shea,
No. 09-cr-629 (S.D. Tex. Jan. 3, 2012), ECF No. 142; Order, United States v. Nguyen,
No. 08-cr-522 (E.D. Pa. Dec. 30, 2009), ECF No. 144.
57. Oct. 30 Afternoon Lambert Trial Transcript, supra note 18, at 21:9–11.

to prove that either of these entities was an instrumentality of the Russian
government such that Mikerin qualified as a foreign official.58.
The Eleventh Circuit addressed what qualifies as an “instrumentality” un-
der the FCPA in United States v. Esquenazi, a case involving a state-owned
Haitian telecommunications company.59. The Eleventh Circuit concluded that
an “instrumentality” under the FCPA is “an entity controlled by the govern-
ment of a foreign country that performs a function the controlling government
treats as its own.”60. Although the court noted that this test is a fact-bound
inquiry, it provided a non-exhaustive list of factors to determine (1) whether
the government controls an entity, and another list of non-exhaustive factors
to determine (2) whether the entity performs a function that the government
treats as its own.61.
In addition, several courts in other circuits, including the court in Lambert,
have approved final jury instructions providing a similar non-exclusive list of
factors to be considered.62. It is important for prosecutors to tailor the factors
to their particular case and to urge the court to include them in its instructions.
In drafting this instruction, it is useful to draw on cases from the districts that
have taken FCPA prosecutions to verdict. In the District of Maryland, for
example, the district judge requested that the government offer its version of
the instructions with each sentence footnoted to where that instruction was
previously given, or to such other authority as would justify the language
used.63. In Lambert, the following factors were included in the instructions for
the jury’s consideration:
Control
1. The Russian government’s formal designation of the entity as a
government-owned entity;
2. The circumstances under which the entity was created;
3. Whether the Russian government had a majority or controlling interest in
TENEX or TENAM, including whether it provides financial support such
as subsidies, special tax treatment, loans or revenue from government-
mandated fees;
4. Whether the entity’s key officers and directors are government officials
or were appointed by government officials, and whether the Russian gov-
ernment has the power to fire the officers or directors of the entity;
58. Nov. 14 Lambert Trial Transcript, supra note 14, at 60:2–10.

59. United States v. Esquenazi, 752 F.3d 912, 920–33 (11th Cir. 2014).
60. Id. at 925.
61. Id. at 925–26; FCPA Resource Guide, supra note 2, at 20.
62. See, e.g., Transcript, Lambert, No. 18-cr-12, ECF No. 152; Transcript,
United States v. Pierucci, No. 12-cr-238 (D. Conn. Nov. 6, 2019), No. ECF 601; Or-
ders, Carson, No. 09-cr-77, ECF Nos. 373, 549; United States v. Aguilar, 783 F. Supp.
2d 1108, 1115 (C.D. Cal. 2011).
63. Order at 2, Lambert, No. 18-cr-12, ECF No. 29.

5. The degree to which the entity’s profits, if any, go directly into the gov-
ernment’s treasury and the extent to which the government funds the
entity if it fails to break even;
6. TENEX and TENAM’s obligations and privileges under Russian law

including whether TENEX and TENAM exercise exclusive or controlling
power to administer their functions; and
7. The length of time these indicia have existed.64.
Function
1. Whether TENEX or TENAM has a monopoly over the functions it exists

to carry out;
2. Whether the government subsidizes the costs associated with the entity
providing services;
3. Whether the entity provides services to the public at large in the foreign
country;
4. Whether the public and the government of the foreign country generally
perceive the entity to be performing a government function.65.
The court made clear that the factors are not exhaustive and that no single
factor would determine whether the relevant entity is an instrumentality of the
foreign government.66. Prosecutors should make sure the court also makes clear
in its instructions, as it did in Lambert, that the jury need not find that all the
factors listed above weigh in favor of an entity being an instrumentality.67. The
jury should understand that if it finds that the entity is an instrumentality,
it must find that its employees (or anyone acting in an official capacity for or
on behalf of that instrumentality) are “foreign officials” for purposes of the
FCPA.68.
In elucidating and applying the Esquenazi factors, it can be helpful for
the jury to hear from a witness with competent knowledge of the history and
structure of the foreign government and its laws, or other relevant expertise,
such as the sector in which the relevant instrumentality functions. For that
reason, depending on the facts of the case, it may be helpful to offer expert
testimony to establish this element. In Lambert, for example, the prosecu-
tion team called Anne Harrington, a former U.S. government official with a
remarkable background in national security, arms control, and nuclear non
proliferation matters.69. She had also lived in and traveled regularly to Russia
64. Nov. 14 Lambert Trial Transcript, supra note 14, at 60–61.

65. Id. at 61.
66. Id. at 61–62.
67. Id. at 62:2–5.
68. Id. at 62; 15 U.S.C. § 78dd 2(h)(2)(A).
69. Oct. 30 Afternoon Lambert Trial Transcript, supra note 18, at 9:22–17:21.

and had direct dealings with ROSATOM’s predecessor, the Ministry of Atomic
Energy of the Russian Federation, until that organization’s reincorporation as
ROSATOM.70. Ms. Harrington was also directly involved in the Megatons to
Megawatts Agreement.71.
As an expert, Ms. Harrington was able to provide compelling testimony,
based on her first-hand experiences and knowledge of the Russian government,
that TENEX and TENAM were instrumentalities under the FCPA.72. For
example, she provided testimony that Russia has “always treated uranium
as a national strategic asset,”73. that Russia has “never let uranium out of
government control ever,”74. and that TENEX, TENAM, and ROSATOM were
all “organizations . . . 100 percent controlled by the Russian government.”75.
III. Conclusion
Successfully prosecuting an FCPA case requires judicious attention at both
the investigative and trial stages. Prosecutors should take care not to focus
myopically on the narrative that makes the bribery scheme compelling to a
jury, despite the narrative often being the most interesting part of a case. For
example, before getting too far down the road to indictment, they should take
special care to ensure that the statute properly covers the defendants whom
they expect to charge, and that the officials who were bribed properly qualify
as “foreign officials” under the FCPA.
About the Authors

David I. Salem is a Senior Litigation Counsel in the Greenbelt office in the
District of Maryland. In his more than three decades as a federal prosecutor,
he has tried more than 50 federal felony cases, including complex white-collar
cases such as United States v. Mark Lambert, and has prosecuted cases such
as United States v. Vadim Mikerin and United States v. Transport Logistics
International, Inc. He is an adjunct professor in the Criminal Justice Depart-
ment of the University of Maryland and at Catholic University Law School in
Washington, D.C. He has previously lectured on white-collar prosecutions in
Ashgabat, Turkmenistan; Kiev, Ukraine; and Almaty, Kazakhstan. The suc-
cessful FCPA prosecution of Mark Lambert was the first of its kind in the
district. He received his B.A. in Russian from the State University of New
York at Albany and his J.D.–M.B.A. from the University of Maryland.
Derek J. Ettinger is an Assistant Chief in the FCPA Unit of the Crim-

inal Division’s Fraud Section. In his more than seven years in the FCPA
Unit, he has prosecuted a range of corporate and individual cases, including
70. Id. at 17:17–18:10.

71. Id. at 10:1–16.
72. Id.
73. Id. at 61:24–25.
74. Id. at 62:6–7.
75. Id. at 63:2–3.

United States v. Mark Lambert, United States v. Vadim Mikerin, and United
States. v. Transport Logistics International, Inc. Derek received his B.A. from
the University of Arizona, his M.A. and Ph.D. in Philosophy from Brown Uni-
versity, and his J.D. from Columbia Law School. Before joining the Fraud Sec-
tion, he served as Special Counsel to the Moreland Commission to Investigate
Public Corruption.


Federal Prosecution of Elder
Financial Abuse:
Combatting Power-of-Attorney
Fraud
Timothy L. Vavricek
United States Attorney’s Office
Northern District of Iowa
“Our society must make it right and possible for old people not to
fear the young or be deserted by them, for the test of a civilization
is the way that it cares for its helpless members.”
— Pearl S. Buck, The Good Earth
I. Introduction
Elder financial abuse is a rampant and growing problem throughout the
United States, and the Department of Justice (Department) is committed to
fighting it.1. One of the more pernicious means by which fraudsters victim-
ize the elderly is the familiar and ubiquitous legal instrument known as the
“power of attorney.” When a power of attorney is used in a fraud scheme
against an elder, however, there is an unfortunate tendency among some pros-
ecutors and law enforcement officers to view the fraud as only a civil matter,
such as a breach of fiduciary duty under state law. But the Department has
prosecuted power-of-attorney fraud successfully in district courts across the
country.2. This article discusses pathways and provides guidance for the suc-
cessful federal prosecution of power-of-attorney fraud in elder financial abuse
cases, including considerations under the United States Sentencing Guidelines
(Guidelines).
1. The Elder Justice Initiative’s website demonstrates the Department’s commit-

ment to combatting elder fraud and abuse and was an invaluable resource for writ-
ing this article. See generally Elder Justice Initiative (EJI), U.S. Dep’t of Just.,
https://www.justice.gov/elderjustice (last visited Oct. 3, 2022).
2. See, e.g., Press Release, U.S. Dep’t of Just., Burlington County Man Sentenced
to 42 Months in Prison for Role in $350,000 Fraud Scheme (Dec. 9, 2021); Press
Release, U.S. Dep’t of Just., Raeford Certified Nursing Assistant Sentenced for Elder
Fraud (Oct. 15, 2021); Press Release, U.S. Dep’t of Just., Former Waterloo Medicaid
Provider Sentenced to More than Five Years in Federal Prison for Defrauding Elderly
Victim (June 28, 2021); Press Release, U.S. Dep’t of Just., Lincoln Man Sentenced for
Stealing Funds From His Elderly Father (Aug. 19, 2019).

II. The problem
A. Elder financial abuse
Elder financial abuse is a form of abuse by which the elderly, who are
typically defined as someone at least 60 or 65 years old,3. are exploited for
financial gain.4. As state legislatures have recognized, elder financial abuse may
take many forms, including fraud, deception, intimidation, undue influence,
and countless other means of obtaining money and property from an elderly
person.5.
The available sociological literature is remarkably devoid of statistical anal-
yses of the incidence of elder financial abuse and its costs to our country.6. Elder
abuse is often characterized as a “hidden” problem because the extent and cost
of crime perpetrated against the elderly has proven difficult to calculate.7. The
causes of this opacity include “underreporting, lack of reliable national data
collection methods, and research study limitations.”8. This paucity of informa-
tion is particularly true in the criminal justice system, where “justice system
data on elder abuse are incomplete and unreliable.”9.
The available estimates of the scope and cost of elder financial abuse are
“staggering” and “vary widely.”10. Studies have estimated that as many as one
in five Americans over the age of 65 is a victim of elder financial abuse at an
annual cost of anywhere between $3 billion and $36 billion.11. Due to embar-
rassment, fear, intimidation, and incapacity, one study found that perhaps as
3. See Jesse R. Morton & Scott Rosenbaum, An Analysis of Elder Financial Exploita-
tion: Financial Institutions Shirking Their Legal Obligations to Prevent, Detect, and
Report This “Hidden” Crime, 27 Elder L.J. 261, 265–66 (2019). The Department de-
fines an “elder” as someone 60 years or older. Elder Abuse Prevention and Prosecution
Act (EAPPA), Pub. L. 115-70, § 2, 131 Stat. 1208, 1208 (2017) (adopting definition
at 42 U.S.C. § 1397j(5)).
4. See Shelly L. Jackson & Thomas L. Hafemeister, Nat’l Inst. of Just.,
Financial Abuse of Elderly People vs. Other Forms of Elder Abuse 24–26
(2010).
5. See, e.g., Del. Code Ann. tit. 31, § 3902(12) (2018) (defining “financial exploita-
tion” in civil context); Vt. Stat. Ann. tit. 33, § 6902(6) (2021) (similar).
6. See Thomas L. Hafemeister, Financial Abuse of the Elderly in Domestic Settings,
in Elder Mistreatment: Abuse, Neglect, and Exploitation in an Aging
America 382, 382–83 (Richard J. Bonnie & Robert B. Wallace eds., Nat’l Acads.
Press 2003) (“Little empirical research has been conducted that directly addresses
financial abuse of the elderly, and in general it has received less attention than other
forms of elder abuse. . . . [M]ost commentary rests on a relatively thin empirical base
and draws heavily on anecdotal observations . . . .”).
7. Id. at 389; Brenda K. Uekert & Richard Van Duizend, Resources for Fighting Elder
Abuse—The Hidden Crime, 24 Experience, no. 1, 2014, at 26.
8. Uekert & Van Duizend, supra note 7, at 26.
9. Id. at 27.
10. Morton & Rosenbaum, supra note 3, at 273.
11. Id. at 274.

few as 1 in 44 cases of elder financial abuse are reported to authorities.12.
B. The power of attorney
Based on this author’s experience, one of the primary and most devastating
means by which fraudsters commit elder financial abuse is through a legal in-
strument known as the power of attorney. This situation is especially true when
the perpetrator of elder financial abuse is a family member or acquaintance,
which is often the case.13.
A power of attorney is generally defined as “[a]n instrument in writing
whereby one person, as principal, appoints another as [the principal’s] agent
and confers authority to perform certain specified acts or kinds of acts on
behalf of [the] principal.”14. In many jurisdictions, the agent is referred to as the
principal’s “attorney in fact.”15. A power of attorney may be “durable,” that is,
remain in effect notwithstanding the principal’s subsequent incapacity or other
disability.16. A power of attorney creates a fiduciary relationship between the
principal and the attorney in fact or agent under state agency law.17.
By design, the power of attorney is a private, contractual, and largely un-
regulated financial planning and management tool.18. With a broadly worded
power of attorney, it is possible for the agent to obtain complete and total
access to an elder’s finances, including signatory authority, without oversight
from third-party trustees or the government. Presenting the power of attorney
to a financial institution as prima facie evidence of the agent’s right to control
the principal’s assets, the agent may gain access to the principal’s checking
12. Id. (citing Consumer Reports study).

13. Hafemeister, supra note 6, at 384, 389.
14. Power of Attorney, Black’s Law Dictionary (6th ed. 1991) (citing Complaint
of Bankers Tr. Co. v. Bethlehem Steel Corp., 752 F.2d 874, 881 (3d Cir. 1984)).
15. Comm’n on L. & Aging, Am. Bar Ass’n, Selected Issues in Power of
Attorney Law (2020) (chart detailing various state laws regarding powers of at-
torney); see, e.g., Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1425
(2017) (“At all times relevant to this case, [Respondents] each held a power of attor-
ney, designating her as an ‘attorney-in-fact’ . . . and affording her broad authority to
manage her family member’s affairs.”).
16. Power of Attorney, Black’s Law Dictionary (11th ed. 2019). Durable powers
of attorney were unknown at common law; Virginia enacted the first durable power-
of-attorney statute in 1954. See Carolyn L. Dessin, Acting as Agent Under a Financial
Durable Power of Attorney: An Unscripted Role, 75 Neb. L. Rev. 574, 577–80 (2015)
(outlining evolution of durable powers of attorneys and noting that all fifty states and
the District of Columbia have now enacted durable power-of-attorney statutes).
17. See, e.g., Schock v. Nash, 732 A.2d 217, 224–25 (Del. 1999).
18. See Linda S. Whitton, The Uniform Power of Attorney Act: Striking A Balance
Between Autonomy and Protection, 1 Phoenix L. Rev. 343, 345 (2008) (“In theory,
a durable power of attorney is a far more flexible mechanism for surrogate property
management than either a guardianship or a trust. Unlike a guardianship, where both
the extent of the protected person’s property and the guardian’s actions are subject to
court scrutiny, the power of attorney is a private arrangement between the principal
and the agent.”).

and savings accounts, retirement funds, annuities, and cash-value life insur-
ance policies, for example. The power of attorney may also grant the agent
unfettered ability to dispose of the agent’s real and personal property.
The dangers of self-dealing are well-known, particularly in durable powers of
attorney and principals suffering from an incapacity.19. Self dealing, especially
when committed under the guise of a legitimate transaction for the benefit of
the principal, “is particularly difficult to prevent because the agent is using
a valid power of attorney with sufficient authority for the underlying trans-
action.”20. The general response in the civil law to guard against self-dealing
consists of default state law provisions that require the agent to “act loyally for
the principal’s benefit[,]” avoid conflicts of interest, and maintain records.21.
Owing to its contractual nature, however, the terms of the power of attorney
may override many of these default duties and conceal the agent’s actions from
third parties absent a court order for disclosure.22. By ensuring that the power
of attorney is broadly worded and stripped of provisions that protect the prin-
cipal, the agent may weaponize the power against the principal and cloak the
agent’s self-dealing under the guise of acting on the written authority of the
principal.
III. Prosecuting elder financial abuse

State legislatures across the nation have enacted legislation to combat elder
financial abuse.23. Effective July 1, 2022, the state of Iowa became the last state
to criminalize elder abuse.24. Although the U.S. Code presently lacks a federal
19. Id. at 357.

20. Id. at 358.
21. See Linda S. Whitton, Navigating the Uniform Power of Attorney Act, 3 Nat’l
Acad. Elder L. Att’ys J. 1, 16 (2007).
22. See Unif. Power of Att’y Act § 114 (Nat’l Conf. of Comm’rs on
Unif. State L. 2006) [hereinafter UPOAA] (prefacing duties with the proviso
“[n]otwithstanding provisions in the power of attorney”); id. § 114(h) cmt. (“The
narrow categories of persons that may request an agent to account are consistent
with the premise that a principal with capacity should control to whom the details of
financial transactions are disclosed.”).
23. Heather Morton, Combatting Elder Financial Exploitation, Nat’l Conf. of
State Legislatures: LegisBriefs (May 2018), https://www.ncsl.org/research/
financial-services-and-commerce/combatting-elder-financial-exploitation.aspx (stating
that as of 2018, “[t]he number of bills introduced by state legislators to combat el-
der financial exploitation increased by more than 57% in three years” and “[i]n 41
states, the District of Columbia[,] and the U.S. Virgin Islands, lawmakers have en-
acted tougher criminal penalties to combat financial exploitation of older people and
vulnerable adults”).
24. Tom Barton, Iowa Becomes Last State to Criminalize Elder Abuse: Reynolds
Signs Law That Advocates Have Pressed for Years, Gazette (Cedar Rapids) (June
15, 2022),
https://www.thegazette.com/government-politics/iowa-becomes-last-state-to-
criminalize-elder-abuse/; see Iowa Code §§ 708.2D, 714.2A(2022) (providing
enhanced penalties for crimes of assault and theft committed against persons

criminal statute that specifically targets and punishes the widespread problem
of elder financial abuse, there is a stated congressional sense that elder abuse
is an “affront to America’s older adults” and that “we must do everything
possible to both support victims of elder abuse and prevent the abuse from
occurring in the first place.”25. Federal prosecutors, therefore, should use the
familiar tools of fraud prosecutions when a power of attorney is used to commit
elder financial abuse.
According to the National Center on Elder Abuse, when a power of attorney
is used to commit elder financial abuse, victims and their family members
often indicate that “their attempts to report this abuse to law enforcement
are rebuffed with the following statement: ‘It’s a civil problem. Go talk to a
civil lawyer.’”26. This prevailing attitude accords with the author’s experience.
While the civil law may provide an available, if expensive, time-consuming, and
ultimately ineffectual, remedy for elder financial abuse, it is not an exclusive
remedy. In appropriate cases, an agent who uses the power of attorney as a
“license to steal” may merit criminal prosecution.27.
As indicated above, many state laws specifically target elder financial abuse.
State authorities may bring charges under those statutes or, by further applying
their police powers, under more general statutory provisions against theft and
embezzlement, for example.28. But what, if anything, may federal prosecutors
do when an agent uses a power of attorney for self-dealing with fraudulent
intent? As is often the case where there are vexing fraud schemes that threaten
the national welfare, the answer lies in the mail, wire, and bank fraud statutes,
18 U.S.C. §§ 1341, 1343, and 1344, respectively.
The federal mail, wire, and bank fraud statutes29. remain the most im-
portant “stopgap devices” available to the federal prosecutor, unless Congress
criminalizing assault against persons 60 years of age and older).

25. EAPPA § 301. The EAPPA estimates that “[n]ot less than $2,900,000,000 is taken
from older adults each year due to financial abuse and exploitation.” Id. The EAPPA
provides for increased statutory maximum sentences for email and telemarketing scams
targeting persons over the age of 55. 18 U.S.C. § 2326(2)(B). This sentencing provision
of the EAPPA, however, has and will likely continue to have little effect given that
(1) the statute only applies to telemarketing and email marketing and (2) very few
offenders are sentenced at the statutory maximum violating 18 U.S.C. §§ 1341 (20
years), 1343 (20 years), and 1344 (30 years).
26. Lori A. Stiegel, Am. Bar Ass’n, Durable Power of Attorney Abuse:
It’s a Crime Too 1 (2008).
27. See id. at 2.
28. See Oklahoma v. Castro-Huerta, 142 S. Ct. 2486, 2502–03 (2022); Torres v. Lynch,
578 U.S. 452, 458 (2016).
29. 18 U.S.C. §§ 1341, 1343, 1344. In addition to the so-called “direct” theories of mail,
wire, and bank fraud discussed in this article, some courts had approved prosecuting
power-of-attorney self dealing on an honest services theory under 18 U.S.C. § 1346.
See, e.g., United States v. Williams, 441 F.3d 716, 722–24 (9th Cir. 2006). The honest
services avenue appears closed after Skilling v. United States, 130 S. Ct. 2896, 2932
(2010), which held that section 1346 applies only to “bribery and kickback” schemes
and not to “undisclosed self-dealing by a public official or private employee.”

enacts a federal elder financial abuse statute.30.
The mail fraud statute (18 U.S.C. § 1341) criminalizes the execution of any
scheme to defraud or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises, involving a mailing. Then-
Assistant United States Attorney Jed Rakoff, later Judge Rakoff, famously
referred to the mail fraud statute as “our Stradivarius” and “true love.”31.
The wire fraud statute (18 U.S.C. § 1343) is similarly “broad in scope”
and criminalizes executing such schemes “to defraud, or for obtaining money
or property by means of false or fraudulent pretenses, representations, or
promises” if a wire transmission passes in interstate commerce.32. In our mod-
ern, interconnected world, such interstate wire transmissions are abundant and
include cell phone calls,33. email,34. and the ACH transactions that underlie
most check deposits.35.
The bank fraud statute (18 U.S.C. § 1344) should not be forgotten when,
as is often the case, the elder’s funds were under the custody or control of
a federally insured financial institution,36. such as a bank or credit union. In
two relatively recent cases, Loughrin v. United States 37. and Shaw v. United
States,38. the Supreme Court has made clear that the bank fraud statute is
not limited to schemes in which the financial institution is itself the intended
target of the crime. In Loughrin, the Supreme Court held that intent to defraud
a bank is not necessary to prove bank fraud and upheld applying the bank
fraud statute to a scheme in which the defendant made false statements, in
the form of forged and altered checks, to a merchant that the merchant would
forward to a bank for payment in the ordinary course of business.39. In Shaw,
the Supreme Court held “a scheme fraudulently to obtain funds from a bank
depositor’s account normally is also a scheme fraudulently to obtain property
from a ‘financial institution.’”40.
In cases wherein the principles of federal prosecution are otherwise sat-
30. See United States v. Maze, 414 U.S. 395, 405–06 (1974) (Burger, C.J., dissenting)
(“Section 1341 of Title 18 U.S.C. has traditionally been used against fraudulent activ-
ity as a first line of defense. When a ‘new’ fraud develops—as constantly happens—the
mail fraud statute becomes a stopgap device to deal on a temporary basis with the
new phenomenon, until particularized legislation can be developed and passed to deal
directly with the evil.”).
31. Jed S. Rakoff, The Federal Mail Fraud Statute (Part I), 18 Duquesne L. Rev.
771, 771 (1980).
32. 18 U.S.C. § 1343; see also United States v. Gilbertson, 970 F.3d 939, 947
(8th Cir. 2020).
33. See, e.g., United States v. Radomski, 473 F.3d 728, 729–30 (7th Cir. 2007).
34. See, e.g., United States v. Hoffman, 901 F.3d 523, 546–47 (5th Cir. 2018).
35. See, e.g., United States v. Zander, 794 F.3d 1220, 1231 (10th Cir. 2015).
36. See 18 U.S.C. § 20 (defining “financial institution”).
37. 573 U.S. 351 (2014).
38. 580 U.S. 63 (2016).
39. Loughrin, 573 U.S. at 353, 364–65 (construing 18 U.S.C. § 1344(2)).
40. Shaw, 580 U.S. at 67 (construing 18 U.S.C. § 1344(1)).

isfied,41. the putative defendant’s possession of a power of attorney over the
elderly victim’s finances is no shield to federal prosecution; to the contrary,
both the creation and the use of the power of attorney may be strong evidence
that mail, wire, or bank fraud was committed to perpetuate elder financial
abuse.
A. Fraud in creating the power of attorney
In some cases, the power of attorney is itself the product of fraud. The
paradigm case involves the fraudster who creates a power of attorney by means
of forging the principal’s signature. In these cases, the prosecutor should pro-
ceed on the theory that the power of attorney is itself an instrumentality and
evidence of the fraud, much like any other false or forged document.42. Prose-
cution under the aggravated identity theft statute
(18 U.S.C. § 1028A) may be appropriate in these more straightforward cases.
Interviews of the principal, the agent, and any purported witnesses to the sign-
ing of the power of attorney, such as a notary official, may be appropriate to
establish that the power of attorney is a forgery.
More commonly, however, the agent takes advantage of the elder’s mental
incapacity or physical ailments and convinces the elder to sign a power of attor-
ney without the elder understanding its import. In these cases, the prosecutor
should attack the validity of the power of attorney as void or voidable.43. Again,
the prosecutor may argue that the power of attorney was obtained through
fraud in the inducement, and thus is an instrumentality and evidence of the
fraud. In addition to interviewing the principal, the agent, and any witnesses to
the signing of the power of attorney, investigators should gather evidence, such
as medical records, to establish not only the principal’s incapacity to contract
but also whether the agent knew of that incapacity.44.
In some cases, a lawyer will have drafted or otherwise assisted in procuring
the power of attorney. In these cases, the prosecutor should carefully analyze
whether the attorney’s client was the principal or the agent.45. If the lawyer
41. Justice Manual 9-27.001–9-27.760.

42. See United States v. Louper-Morris, 672 F.3d 539, 556–57 (8th Cir. 2012).
43. Nearly 150 years ago, the Supreme Court held that, as a matter of federal law, “a
power of attorney executed by an insane person, or one of unsound mind, is absolutely
void.” Dexter v. Hall, 82 U.S. 9, 12 (1872). The present majority rule among the states
is that mental incompetence merely renders written agreements voidable, not void. 5
Richard A. Lord, Williston on Contracts § 10:3 (4th ed. 2022) (“The vast
majority of courts more commonly express the view that an incompetent person’s
transactions are voidable.”).
44. Nursing home records may provide a wealth of information in this regard. For
example, nursing homes routinely gauge the mental acuity of their residents through
administering a so-called Brief Interview for Mental Status (BIMS) test and log visitors
to their facilities.
45. Although tracing payment for the attorney’s fees may help to provide the answer
to this question, it is not dispositive. See Model Rules of Pro. Conduct r. 5.4(c)
(Am. Bar Ass’n 1983) (contemplating third-party payment for legal fees so long
as the lawyer does not permit that third party “to direct or regulate the lawyer’s

represented the agent, then it may be appropriate to interview or otherwise ob-
tain evidence from the lawyer about the circumstances surrounding the signing
of the power of attorney, much like any other witness. Care should be taken,
however, to comply with Justice Manual 9-13.410 (Guidelines for Issuing Sub-
poenas to Attorneys for Information Relating to the Representation of Clients).
If the lawyer represented the principal, conflict-of-interest concerns may arise
that may dissuade the lawyer from cooperating in the investigation even though
cooperation ordinarily would be in the principal’s best interests when the agent
is using the power of attorney to exploit the principal financially.46.
B. Fraud in using the power of attorney
The agent’s use of the power of attorney may also provide strong evidence of
fraud. At the outset, the prosecutor should carefully examine the provisions of
the power of attorney to determine whether the agent has violated its terms. As
indicated in Section II.A above, many default state law provisions (reflected in
a model “bar form,” for example) prohibit self-dealing and require the agent to
act loyally for the principal’s benefit, avoid conflicts of interest, and maintain
records.47. If, for example, the power of attorney at issue forbids the agent
from making gifts or other transfers to the agent, and the investigation reveals
that the agent routinely authorized wire transfers from the principal’s financial
accounts to the agent’s own accounts, then both the power of attorney and the
wire transfers may provide intrinsic evidence of a wire fraud scheme.
For example, in United States v. Thomas, the defendants were convicted at
trial of wire fraud and conspiracy to commit mail and wire fraud in conjunction
with their operating a loan brokerage firm.48. On appeal, the Eleventh Circuit
Court of Appeals observed that “the most compelling witness for the prosecu-
tion” was a military officer who had granted one of the defendants a power of
professional judgment in rendering such legal services”).

46. The Model Rules of Professional Conduct (Model Rules) state, “When a client’s
capacity to make adequately considered decisions in connection with a representation
is diminished, whether because of minority, mental impairment or for some other
reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer
relationship with the client.” Id. at r. 1.14(a). The Model Rules, however, authorize
the lawyer to take protective action if “the client has diminished capacity, is at risk of
substantial . . . financial . . . harm unless action is taken and cannot adequately act
in the client’s own interest.” Id. at r. 1.14(b). The commentary to the Model Rules
states that “[t]he normal client-lawyer relationship is based on the assumption that
the client, when properly advised and assisted, is capable of making decisions about
important matters.” Id. at r. 1.14 cmt 1. The commentary attempts to distinguish
between the “severely incapacitated person” who “may have no power to make legally
binding decisions” and “a client with diminished capacity” who “often has the ability
to understand, deliberate upon, and reach conclusions about matters affecting the
client’s own well-being.” Id. It is unclear whether the legal profession is trained to
make these distinctions and, if not, what steps a lawyer should take to ascertain in
which category the client falls.
47. Whitton, supra note 18, at 3, 16 (citing UPOAA § 114).
48. United States v. Thomas, 62 F.3d 1332, 1335 (11th Cir. 1995).

attorney.49. The defendants misused the power of attorney to borrow money
without the officer’s knowledge and failed to repay the loan.50. The Eleventh
Circuit held that evidence of the defendants’ misuse of the power of attorney
was intrinsic to the charged federal fraud offenses.51. Even though the defen-
dants “were not indicted for their actions in borrowing money in [the officer’s]
name without informing him, and without transferring the proceeds to him[,]”
the court found his testimony admissible because “those actions arose out of
a fraudulent activity with which the [defendants] were charged—namely, de-
vising a scheme to fraudulently obtain money from individuals and businesses
who were interested in receiving substantial loans.”52.
Once the prosecutor establishes that the agent used the power of attorney
for the agent’s own benefit, inconsistently with the terms of the power of at-
torney, an inference of fraud arises. Historically, state agency law so frowns
upon an agent’s self-dealing that courts have characterized transactions for
the agent’s own benefit under a power of attorney as “prima facie evidence”
of fraud, shifting the burden to the agent to prove that such transactions were
not fraudulent. One state Supreme Court recently summarized these principles
of agency law as follows:
A cause of action for fraud . . . exists . . . in the context of self-
dealing through the use of a power of attorney. We have held:
[A] prima facie case of fraud is established if the plain-
tiff shows that the defendant held the principal’s power
of attorney and that the defendant, using the power of
attorney, made a gift to himself or herself. . . . The bur-
den of going forward under such circumstances falls upon
the defendant to establish by clear and convincing evi-
dence that the transaction was made pursuant to power
expressly granted in the power of attorney document and
made pursuant to the clear intent of the donor.
Thus, once it is shown that the defendant used the power of at-
torney to make a gift to himself or herself, the burden is upon the
defendant to establish by clear and convincing evidence that the
transaction was made with the clear intent of the donor.53.
49. Id. at 1342.

50. Id.
51. Id.
52. Id.
53. Litherland v. Jurgens, 869 N.W.2d 92, 97–98 (Neb. 2015) (quoting
Crosby v. Luehrs, 669 N.W.2d 635, 645 (Neb. 2003)); see also 37 George Blum
et al., American Jurisprudence: Fraud and Deceit § 461 (2d ed. 2022) (ob-
serving that “a presumption of fraud arises where there is an indication of fraud or
self-dealing by the fiduciary . . . where a duty under the fiduciary or confidential rela-
tionship has been abused or breached or where the superior party or fiduciary profits
or obtains a possible benefit from the relationship[,] [or] when property is transferred
between a fiduciary and his or her principal” and collecting cases (footnotes omitted)).

While the defendant in a criminal prosecution bears no burden, of course,
the foregoing cases make clear that self-dealing under a power of attorney is
not a mere breach of fiduciary duty. Self-dealing may give rise to an inference
of fraud. While the prosecutor bears a heavier burden to prove criminal intent
beyond a reasonable doubt than the plaintiff in a civil fraud action,54. the same
principles that support de jure inference of civil fraud also should give rise to
de facto inferences of criminal fraud in prosecutions for elder financial abuse.
C. Sentencing considerations, including restitution
Perpetrators of elder financial abuse face potentially significant penalties
under the mail, wire, and bank fraud statutes. The statutory maximum sen-
tence for each count of mail and wire fraud is 20 years with a 3-year term of
supervised release.55. The maximum sentence for each count of bank fraud is 30
years with a 5-year term of supervised release.56. Probation is not authorized
upon conviction of bank fraud.57.
Most defendants, of course, will not receive sentences anywhere near the
maximum statutory sentence. The relevant sentencing factors are set forth in
18 U.S.C. § 3553(a) and include “the nature and circumstances of the offense
and the history and characteristics of the defendant”;58. the need for the sen-
tence “to reflect the seriousness of the offense, to promote respect for the law,
and to provide just punishment”;59. the need “to afford adequate deterrence
to criminal conduct[,] to protect the public from further crimes of the defen-
dant[,]” and to provide defendant with needed correctional treatment;60. the
defendant’s guidelines range and the policy statements of the Sentencing Com-
mission;61. “the need to avoid unwarranted sentence disparities”;62. and “the
need to provide restitution to any victims of the offense.”63.
The Guidelines provide for several enhancements that ordinarily will apply
in elder financial abuse cases where the defendant utilizes a power of attorney to
commit the fraud.64. Applying these enhancements should result in a sentence
of imprisonment even if the defendant lacks any criminal history.
Section 2B1.1 of the Guidelines applies in mail, wire, and bank fraud cases
and carries a base offense level of seven.65. If the loss to the victim of elder
financial abuse exceeds $6,500, then a graduated, multi-level enhancement from
54. See Helvering v. Mitchell, 303 U.S. 391, 397–98 (1938).

55. 18 U.S.C. §§ 1341, 1343, 3581, 3583(b)(2).
56. 18 U.S.C. §§ 1344, 3581, 3583(b)(1).
57. See 18 U.S.C. § 3561.
58. 18 U.S.C. § 3553(a)(1).
59. Id. § 3553(a)(2)(A).
60. Id. § 3553(a)(2)(B)–(D).
61. Id. § 3553(a)(4)–(5).
62. Id. § 3553(a)(6).
63. Id. § 3553(a)(7).
64. See generally U.S. Sent’g Guidelines Manual (U.S. Sent’g Comm’n 2021)
[hereinafter U.S.S.G.].
65. U.S.S.G. §§ 2B1.1(a)(1), app. A.

the loss table at section 2B1.1(b)(1) will apply.66.
Three potential enhancements under the Guidelines may apply in cases in
which a power of attorney is used to perpetrate elder financial abuse. First,
a two-level enhancement applies if a victim of the crime suffered a substan-
tial financial hardship.67. The commentary to section 2B1.1 sets forth a list
of non-exhaustive factors to determine whether the offense resulted in a sub-
stantial financial hardship.68. These factors include “suffering substantial loss
of a retirement, education, or other savings or investment fund”; “postponing
. . . retirement plans”; and “making substantial changes to his or her living
arrangements, such as relocating to a less expensive home.”69.
It is the author’s experience that the substantial financial hardship enhance-
ment ordinarily will apply when a power of attorney is used to perpetuate elder
financial abuse. In the hands of a criminal, the power of attorney allows the
perpetrator immediate access to all of the victim’s financial accounts; the de-
fendant may quickly drain a lifetime of savings and wealth in a matter of days.
The attendant sudden loss of all of an elderly person’s assets will have a dev-
asting financial impact upon the elder with little to no prospect of recoupment
in the elder’s lifetime. The elder may be forced to leave a nursing home or
assisted living facility in favor of a lower-cost option, a situation that should
qualify the defendant for the enhancement.70.
66. See U.S.S.G. § 2B1.1(b)(1) (providing for a 2-level increase if the loss exceeds
$6,500, 4-level increase if greater than $15,000, 6-level increase if greater than $40,000,
8-level increase if greater than $95,000, 10-level increase if greater than $150,000,
12-level increase if greater than $250,000, 14-level increase if greater than $550,000,
16-level increase if greater than $1.5 million, and so on).
67. U.S.S.G. § 2B1.1(b)(2)(A)(iii); see also U.S. Sent’g Comm’n, Amendments to
the Sentencing Guidelines 24 (2015) (“Consistent with the Commission’s overall
goal of focusing more on victim harm, the revised victims table ensures that an offense
that results in even one victim suffering substantial financial harm receives increased
punishment . . . .”).
68. See U.S.S.G. § 2B1.1 cmt. n.4(F).
69. U.S.S.G. § 2B1.1 cmt. n.4(F)(iii)–(v).
70. See, e.g., United States v. Kitts, 27 F.4th 777, 790–91 (1st Cir. 2022) (holding
that the victim’s “loss of her savings and the liquidation of her apartment, inescapably
constitutes substantial financial hardship within the ambit of the guidelines”). In one
case the author prosecuted, the victim was not only forced to leave her nursing home,
but then had to move in with relatives that had perpetrated the elder financial abuse.
The focus on substantial financial hardship, however, ignores the mental pain and
anguish that the elder suffers. The Guidelines suggest that an upward departure may
be appropriate if “[t]he offense caused or risked substantial non-monetary harm[,]” such
as “physical harm, psychological harm, or severe emotional trauma.” U.S.S.G. § 2B1.1
cmt. n.21(A)(ii). Needless to say, losing one’s life savings may cause psychological
harm or severe emotional trauma, and to the extent that one must move, “transfer
trauma” is a known physical risk to the elder. See, e.g., Terri D. Keville, Studies of
Transfer Trauma in Nursing Home Patients: How the Legal System Has Failed to See
the Whole Picture, 3 Health Matrix 421, 458 (1993) (concluding that advocates for
the elderly should recognize that, while well-planned moves to superior facilities may
enhance the elder’s quality of life, “poorly planned and executed involuntary moves

Second, a two-level increase applies “[i]f the defendant knew or should have
known that a victim of the offense was a vulnerable victim.”71. The Seventh
Circuit Court of Appeals has observed that elderly victims frequently will qual-
ify as vulnerable victims under the Guidelines, “especially when their financial
investments and financial security are at issue.”72. The Guidelines define a “vul-
nerable victim” to include someone “who is unusually vulnerable due to age,
physical or mental condition, or who is otherwise particularly susceptible to
the criminal conduct.”73. In cases involving a power of attorney, the knowledge
requirement of section 3A1.1 ordinarily will be met because of the necessary
contact between the principal and agent to obtain the power of attorney in the
first place as well as the stated purposes of the power of attorney.74.
Third, a two-level enhancement should apply for an abuse of private trust,
under section 3B1.3, at least in cases in which the power of attorney was not
itself an outright forged instrument. This Guideline applies if the defendant
abused a position of private trust “in a manner that significantly facilitated
the commission or concealment of the offense.”75. Courts have routinely applied
this enhancement when the defendant used a power of attorney to commit the
fraud offense,76. and the result should be no different in cases of elder financial
abuse.
Restitution to the elder abuse victim for the full amount of loss that the
perpetrator caused in the scheme to defraud is mandatory upon conviction of
the mail, wire, and bank fraud statutes.77. If the elder abuse victim predeceases
the restitution judgment, restitution must be made to the victim’s estate.78. If
the perpetrator is a family member or other person who otherwise might inherit
or receive benefits from the victim’s estate, the prosecutor in consultation with
the victim or the victim’s guardian or executor may request that the district
court include a provision in the restitution order to ensure that the perpetrator
does not benefit from restitution.79.
can be extremely harmful to elderly patients”).

71. U.S.S.G. § 3A1.1(b)(1).
72. United States v. Iriri, 825 F.3d 351, 352 (7th Cir. 2016) (quoting
United States v. Sims, 329 F.3d 937, 944 (7th Cir. 2003)).
73. U.S.S.G. § 3A1.1 cmt. n.2(B).
74. It is not double counting to apply the two-level substantial financial hardship and
vulnerable victim enhancements. See U.S.S.G. § 2B1.1 cmt. n.4(D).
75. U.S.S.G. § 3B1.3.
76. See, e.g., United States v. Fiorito, 640 F.3d 338, 351–52 (8th Cir. 2011);
United States v. Johnson, 422 F. App’x 281, 282–83 (4th Cir. 2011) (unpublished).
77. 18 U.S.C. § 3663A(a)(2) (defining the victim and offense to include full restitution
for scheme); id. § 3663A(c)(1)(A)(ii) (mandating restitution for “offense[s] against
property . . . including any offense committed by fraud or deceit”).
78. Id. § 3663A(a)(1). A defendant may not be named as the victim’s representative
for purposes of a mandatory restitution order. Id. § 3663A(a)(2).
79. See id. § 3663(b)(5) (granting district court discretion to order the defendant
to “make restitution to a person or organization designated by the victim or the
estate”); id. § 3664(g)(2) (authorizing victim to designate restitution award to the
Crime Victims Fund).

IV. Conclusion
The financial exploitation of the elderly is not always just a “civil matter”
but also may implicate the criminal law. The federal prosecutor has a role in
combatting elder financial abuse, including frauds perpetrated by means of a
power of attorney. The mail, wire, and bank fraud statutes provide an im-
portant “stopgap” until such time as Congress may pass national legislation
criminalizing this national scourge. Elder financial abuse is an area “most de-
serving of federal attention”80. given its widespread, deleterious effects on our
nation. Federal prosecutors should continue to use the familiar tools of fraud
prosecutions when a power of attorney is used to commit elder financial abuse.
About the Author

Timothy L. Vavricek is an Assistant United States Attorney in the Crim-
inal Division of the U.S. Attorney’s Office for the Northern District of Iowa.
Before joining the U.S. Attorney’s Office, he served as an Assistant Attorney
General at the Iowa Attorney General’s Office and clerked for three judges:
the Honorable William Jay Riley, Chief Judge of United States Court of Ap-
peals for the Eighth Circuit; the Honorable Linda R. Reade, Chief Judge of
the United States District Court for the Northern District of Iowa; and the
Honorable Michael J. Streit, Justice of the Iowa Supreme Court.


The PCSF: A Global Presence
for a Global Problem
Philip Andriole & Chris Maietta
Trial Attorneys
Antitrust Division
New York Office
On October 18, 2021, two Belgian executives entered the U.S. Embassy in
Brussels, nestled next to the historic Parc du Bruxelles. The pair, flanked by
agents from the Defense Criminal Investigative Service (DCIS) and U.S. Army
Criminal Investigation Division (Army CID), settled into a conference room.
Meanwhile, federal prosecutors in their makeshift home offices in New York
flicked on their cameras, along with a smattering of defense attorneys around
the country. Around 9:15 a.m. in Washington, D.C., U.S. District Court Judge
Tanya S. Chutkan brought the parties, spread across the continents, to order
and began plea hearings for the two executives, Robby Van Mele and Bart
VerBeeck. The two admitted their roles in a conspiracy to rig bids on contracts
to provide security services for U.S. Department of Defense (DOD) bases in
Belgium. The “Security Services” investigation that led to these pleas was
a milestone achievement for the Procurement Collusion Strike Force (PCSF)
and announced the PCSF’s ambition to go wherever there is collusion—be it
markets in New York City, San Francisco, or halfway around the world.
Launched in 2019, the PCSF is an interagency strike force comprising fed-
eral prosecutors from the Antitrust Division of the Department of Justice (De-
partment) and 22 U.S. Attorneys’ Offices (USAOs), as well as law enforcement
agents from seven national partner agencies: the Federal Bureau of Investiga-
tion (FBI), two Offices of Inspector General of the DOD (the DCIS and the Air
Force Office of Special Investigations), Department of Homeland Security, De-
partment of Justice, General Services Administration, and Postal Service. The
PCSF’s primary mission is to deter, detect, investigate, and prosecute pub-
lic procurement collusion and fraud cases at all levels of government—federal,
state, and local. The PCSF’s emphasis is on bad actors—both companies and
individuals located in the United States and internationally—who are involved
in antitrust crimes (for example, bid rigging, price fixing, market allocations,
and conspiracies or attempts to monopolize) that violate Title 15 U.S.C. §§ 1–2
(the Sherman Act)1. and other serious crimes such as wire fraud and mail fraud
1. The Sherman Act of 1890, ch. 647, 26 Stat. 209 (1890) (codified as amended
at 15 U.S.C. §§ 1–38) criminalizes bid rigging, price fixing, and market allocation.
Id. §§ 1–2. The Supreme Court has construed the statute to prohibit certain hori-
zontal agreements between competitors as per se unlawful, including price fixing and
bid rigging agreements. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150,

schemes, among other Title 18 offenses. Special focus is placed on schemes that
target the federal procurement process for goods and services, as well as state
and local contracts that receive federal funding.
This article discusses a recent case—the Security Services investigation—
that involved a cross-section of prosecutors and U.S. law enforcement agents
located around the world before describing the broader objectives and capabili-
ties of the PCSF.2. The case highlights the work of the PCSF and demonstrates
that borders are not limits for prosecuting crimes that corrupt the procure-
ment process.3. If bad actors undermine or distort the process in which the
government acquires goods or services, then the PCSF will use all available
tools to hold them accountable.
I. The Security Services investigation

This part will describe the market for security services in Belgium within
the broader procurement context, the conspiring government contractors, their
conspiracy, and the PCSF’s investigation.
Criminal antitrust cases are often named for their markets. For example,
four major banks pleaded guilty and paid a $2.5 billion criminal fine for foreign
exchange market manipulation in the Antitrust Division’s “FX Market” inves-
tigation in 2015,4. with a related trial conviction of an FX trader in 2019.5. In
addition, a high-profile former CEO was convicted and sentenced to 40 months
in prison for fixing the prices of packaged seafood in the “Canned Tuna” inves-
tigation in 2019.6. In 2020, a generic drug manufacturer entered into a deferred
prosecution agreement and agreed to pay a $195 million criminal penalty—the
highest ever for a domestic cartel—for its role in fixing prices, rigging bids,
and allocating customers in the sale of generic drugs in the “Generic Drug”
218 (1940). “A horizontal conspiracy exists when the coconspirators are ‘competitors
at the same level of the market structure’ rather than ‘combinations of persons at
different levels of the market structure, e.g., manufacturers and distributors, which
are termed “vertical” restraints.’” United States v. Aiyer, 470 F. Supp. 3d. 383, 403
(S.D.N.Y. 2020). The Antitrust Division can also bring charges under section 2 of
the Sherman Act for conspiracies or attempts to monopolize, among other things. See
15 U.S.C. § 2.
2. This article discusses only substantive facts available in public filings and press
releases. See, e.g., Information, United States v. G4S Secure Solutions NV, No. 21-cr-
432 (D.D.C. June 25, 2021), ECF No. 1; Indictment, United States v. Seris Sec. NV,
No. 21-cr-443 (D.D.C. June 29, 2021), ECF No. 1 [hereinafter Seris Indictment].
3. See Procurement Collusion Strike Force, U.S. Dep’t of Just.,
https://www.justice.gov/procurement-collusion-strike-force (last visited Sept. 6,
2022), for the latest news, policies, and updates from the PCSF.
4. Press Release, U.S. Dep’t of Just., Five Major Banks Agree to Parent-Level Guilty
Pleas (May 20, 2015).
5. Press Release, U.S. Dep’t of Just., Former Trader for Major Multinational Bank
Convicted for Price Fixing and Bid Rigging in FX Market (Nov. 20, 2019).
6. Press Release, U.S. Dep’t of Just., Former Bumble Bee CEO Sentenced to Prison
for Fixing Prices of Canned Tuna (June 16, 2020).

investigation.7.
Similarly, the Security Services moniker understates a complex, global case
involving a complex, global market. Although the contracts at issue comprised
a small part of the U.S. procurement budget in Belgium, they were critical to
keeping U.S. foreign installations safe. A brief review of the variety of other
procurements in Belgium illustrates the scope of the challenge that officials
face in identifying and preventing procurement misconduct overseas.
A. The market
In 1832, the then-fledgling United States established diplomatic relations
with Belgium following its declaration of independence from the Netherlands.8.
Currently, Belgium hosts three DOD installations: Kleine Brogel Air Base,
U.S. Army Garrison (USAG) BENELUX Brussels, and USAG BENELUX-
SHAPE/Chiev. Since 2002, Belgium has also hosted a North Atlantic Treaty
Organization (NATO) strategic military command called the Supreme Head-
quarters Allied Powers Europe (SHAPE), located near the city of Mons in
southern Belgium. SHAPE houses NATO’s Communications and Information
Agency, technology, and cyber experts.9.
These three U.S. bases are a small part of the DOD’s overseas operations.
It maintains around 65 installations in 24 nations. For the 2021 fiscal year,
the DOD was allocated $140.7 billion of its near $705 billion discretionary
budget authority for procurement. Spending data reflects that $19.7 billion
was designated for performance in foreign countries.10.
Thanks to USAspending.gov, any internet user can review granular data
on U.S. procurement spending. For the 2021 fiscal year, the DOD made over
675 prime awards with Belgium as the place of performance, totaling over
$180 million.11. This amount covered things from sophisticated equipment like
the GAU-21 .50 Cal. Machine Gun System (approximately $2.9 million to FN
Herstal SA)12. to mundane base work like utility modernization at Chievres
(approximately $12.9 million to BB Government Services SPRL).13. Filtering
7. Press Release, U.S. Dep’t of Just., Major Generic Pharmaceutical Co. Admits to
Antitrust Crimes (Mar. 2, 2020).
8. U.S. Relations with Belgium, U.S. Dep’t of State (May 25, 2022),
http://www.state.gov/r/pa/ei/bgn/2874.htm.
9. About Us, NATO Commc’ns & Info. Agency,
https://www.ncia.nato.int/about-us.html (last visited Sept. 6, 2022).
10. U.S. Dep’t of Def., Agency Financial Report 20 (2021).
11. See Federal Awards, USASpending.gov,
usaspending.gov/search/?hash=e68c6987de821b68e2d041efc4187460 (last visited
Sept. 13, 2022) (Filter Time Period: FY 2021; Place of Performance: Belgium;
Awarding Agency: Department of Defense).
12. Contract Summary: Award ID N0001920F0618, USASpending.gov,
https://www.usaspending.gov/award/
CONT AWD N0001920F0618 9700 N0001919D0016 9700 (last visited Sept. 6, 2022).
13. Contract Summary: Award ID W912GB21C0035, USASpending.gov,
https://www.usaspending.gov/award/CONT AWD W912GB21C0035 9700 -NONE-
-NONE-

by the North American Industry Classification System codes for “Investigation
and Security Services” reveals seven awards totaling around $21.3 million for
the 2021 fiscal year.14.
These services are a fraction of the DOD’s procurement spending by any
measure. The Belgium contracts at issue, however, included providing indi-
vidual guards, mobile monitoring of certain locations, and electronic surveil-
lance.15. These services, while not mission-critical, were vital to ensuring the
safety of the installations and those working there. To secure these services
at the best price for the taxpayer, these contracts underwent a competitive
market bidding process.
B. The alleged conspirators
Enter the alleged conspirators. In this case, the key players were three
Belgian security services firms: Seris Security NV (Seris), G4S Secure Solutions
(G4S), and a third, unindicted corporate co conspirator. The two indicted firms
were both parts of large entities with global footprints: Seris and G4S Global.
Seris had more than 40,000 employees and e663 million revenue in 2021,16.
while G4S, an Allied Universal company, has a network of 800,000 employees
and annual revenues of approximately $20 billion.17.
Seris and G4S competed with each other to win local security services con-
tracts. In the last 10 fiscal years, Seris received 16 prime awards from the DOD
totaling just under $59 million for guard services; all but one specified Belgium
as the place of performance.18. G4S was also a regularly winning government
contractor, receiving 46 DOD prime contracts in the same period worth ap-
proximately $11.8 million for logistics, security, and maintenance services at
bases around the world.19.
These corporations, of course, act through agents. G4S allegedly acted
through three executives: CEO Jean Paul Van Avermaet, director of sales
(last visited Sept. 6, 2022).

14. Federal Awards, USASpending.gov, usaspending.gov/search (last visited
Sept. 21, 2022) (Filter Time Period: FY 2021; Place of Performance: Bel-
gium; Awarding Agency: Department of Defense; NAICS Codes 561612 and
561621; IDs W912PA21P0011, HE125421F2107, W912PA21F0010, W912PA21F0003,
W912PA21F0021, W912PA21F0074, and W912PA18P0006).
15. Seris Indictment, supra note 2, at 1.
16. A French Group with an International Dimension, Seris Grp., https://seris-
group.com/en/french-group-international-dimension (last visited Sept. 6, 2022).
17. Who We Are, G4S Glob., https://www.g4s.com/who-we-are (last visited Sept.
6, 2022).
18. Federal Awards, USASpending.gov,
https://www.usaspending.gov/search/?hash=4b4dbf85981f44ca7f93795032954b73
(last visited Sept. 6, 2022) (Filter Time Period: FY 2013–FY 2022; Awarding Agency:
DOD; Recipient: Seris Security NV).
19. Federal Awards, USASpending.gov,
https://www.usaspending.gov/search/?hash=67b122cfb62a435cfead208993a39f17
(last visited Sept. 9, 2022) (Filter Time Period: FY 2013–FY 2022; Awarding Agency:
Department of Defense; Recipient: G4S).

Bart VerBeeck, and director of operations Robby Van Mele. Seris allegedly
acted through two executives: CEO Danny Vandormael and director Peter
Verpoort. All were Belgian nationals with at least a decade of experience in
the security services industry. In 2020, all five were charged in the PCSF’s first
global investigation.
C. The alleged conspiracy
The indictment alleges that, on September 17, 2019, Jean Paul Van Aver-
maet, the CEO of G4S, met Danny Vandormael, the CEO of Seris, for breakfast
at a hotel in Brussels.20. It further alleges that the two were more than friendly
rivals. They were co-conspirators working to rig their bids on DOD contracts
in Belgium.21. As other executives have since admitted in their guilty pleas, the
scheme began a few months earlier in the spring of 2019.22. The arrangement
was much like a classic smoke-filled, back-room, bid-rigging conspiracy, along
with some modern touches—the breakfast in a hotel lobby coupled with incrim-
inating phone calls, emails, and encrypted messages. The goal was simple: win
contracts and receive payments for their services at inflated, anti-competitive
prices.
For instance, the indictment alleges that in March 2020, Danny Vandor-
mael worked with a competitor to ensure the competitor’s company would
bid at an artificially high price that Vandormael suggested.23. What was the
competitor’s incentive to lose? It was what Vandormael allegedly called the
“vice versa”: Seris had allegedly submitted a “comp bid” (short for a “comple-
mentary” bid, one that is intentionally non-competitive and submitted only to
give the appearance of competition) for a prior contract, which the competitor
won, and now the competitor should reciprocate.24. The conspirators allegedly
deployed this arrangement on numerous contracts; the largest contract affected
was valued at $77.36 million.25.
The alleged breakfast-in-Belgium agreement, and the ongoing scheme it
perpetuated, was a classic example of a bid-rigging conspiracy, which is a
felony under federal law. Since its creation in 1919, the Antitrust Division has
prosecuted bid-rigging, price-fixing, and market-allocation conspiracies under
section 1 of the Sherman Act, and the security services conspiracy is an ex-
ample of the type of criminal conduct that the PCSF has pursued since its
inception in 2019.26.
20. Seris Indictment, supra note 2, at 5–6.

21. Id. at 4.
22. See Plea Agreement at 4–5, United States v. VerBeeck, No. 21-cr-574 (D.D.C. Oct.
18, 2021), ECF No. 9.
23. Seris Indictment, supra note 2, at 5–6.
24. Id.
25. Plea Agreement at 4, United States v. G4S Secure Solutions NV, No. 21-cr-432
(D.D.C. July 16, 2021), ECF No. 9.
26. See U.S. Dep’t of Just., An Antitrust Primer for Federal Law En-
forcement Personnel (2022)[hereinafter ATR Primer].

D. The investigation and COVID-19
In March 2020, the world and the ways we live and work rapidly changed.
In the Antitrust Division’s New York office, prosecutors and paralegals had
already been planning to decamp from 26 Federal Plaza—the Jacob K. Jav-
its Federal Building—for much-needed renovations. Prosecutors expected to
spend a few months either working from home or from an awkward collec-
tion of shared desks on a different floor. Their absence would be much longer
and more challenging. On March 11, 2020, the World Health Organization de-
clared COVID-19 a pandemic.27. Two days later, President Trump declared a
National Emergency, and the administration issued a ban on travel from Eu-
rope.28. Offices closed, servers overloaded, and working with a colleague a few
office doors away, let alone on a different continent, presented a range of new
complications. Amidst the worsening catastrophe, the security services team
was ramping up its investigation into the bid rigging taking place across the
globe.
International investigations pose challenges ranging from the
mundane—coordinating time zones, translating documents, etc.—to thornier
issues like extradition, mutual legal assistance, and extraterritorial jurisdiction.
The timing of the security services investigation and the COVID-19 pandemic
heightened these challenges. The team was unable to meet in person and travel
to Belgium was out of the question. Fortunately, the PCSF was prepared.
The cross-governmental strike force had connections with Army CID and
DOD-DCIS agents abroad and domestically. The PCSF quickly staffed a skilled
team with both international agents working in Belgium and FBI partners
stationed a few floors down from the Antitrust Division in 26 Fed. Throughout
the next year, the team conducted numerous interviews while navigating their
way through now-familiar tools like Zoom and pandemic-imposed challenges
like rolling lockdowns. Shortly after the pandemic began, G4S had agreed to
plead guilty and cooperate.29.
The investigation endured COVID surges, prolonged office renovations, and
winter storms while delivering a steady output of guilty pleas and a four-
defendant indictment. The team indicted Seris, two of its former executives,
and one G4S former executive in June 2021. G4S pleaded guilty in July 2021,
agreeing to pay a $15 million criminal fine. Two former G4S executives pleaded
guilty in October 2021. It is a watershed case for the PCSF, but only the
beginning of its efforts to police procurement crimes on the global stage.
27. Tedros Adhanom Ghebreyesus, Director-General, World Health Org., Opening

Remarks at the Media Briefing on COVID-19, (Mar. 11, 2020).
28. Proclamation No. 9994, Declaring a National Emergency Concerning the Novel
Coronavirus Disease (COVID-19) Outbreak, 85 Fed. Reg. 15,337 (Mar. 13, 2020).
29. Press Release, Dep’t of Just., Belgian Security Services Firm Agrees to Plead Guilty
to Criminal Antitrust Conspiracy Affecting Department of Defense Procurement (June
25, 2021).

II. The PCSF & public procurement crimes
The Security Services investigation was PCSF’s first—but certainly not
last—international criminal enforcement action. It demonstrates the abilities
of the virtual strike force and its focus on ensuring the integrity of public pro-
curement. This part will describe the PCSF and its goals, review the conduct
that the PCSF looks to prosecute, highlight the PCSF’s accomplishments in
the three years since its inception, and preview the future of the strike force.
As the security services investigation demonstrates, government procure-
ment contracts often involve a competitive bidding process. Prospective ven-
dors compete against each other to provide the best combination of high-quality
goods or services at the lowest price. Just like any other consumer, the gov-
ernment, as a buyer, wants to pay the lowest price without sacrificing quality.
Competitive bidding means prospective vendors must act independently. The
process is frustrated when bad actors collude behind the scenes and agree on
any number of things: Who will win a contract, by how much, how to meet
non-price elements of a bid solicitation, or simply who will and will not bid.
When competitors decide to cheat instead of compete, the procurement process
is corrupted, the government is defrauded, and taxpayers pay more.
The problem of procurement crime is significant. The federal government
spends billions of dollars each year procuring a range of goods and services. For
the 2020 fiscal year, the federal government expended more than $665 billion
on contracts for goods and services, including expenditures on roads, bridges,
airports, and transit systems, with a substantial portion going to military-
defense related matters.30. The majority of that spending, about $404 billion,
involved competitively bid contracts.31. Because the federal government’s role
in procuring goods and services involves such enormous federal spending, there
is a significant risk that bad actors will attempt to game the system and abuse
the government’s procurement process. It is difficult to say with precision how
much money is lost to anti-competitive or collusive criminal conduct, but by
some estimates, eliminating bid rigging could reduce procurement prices by
20%.32. So what measures can the government take to prevent or limit pro-
curement crimes? One answer is the PCSF.
The PCSF is the Department’s coordinated, nationwide response to col-
lusion, corruption, fraud, and other schemes that target government spending
on goods and services at all levels—federal, state, and local. Moreover, the
PCSF’s mission reflects longstanding Department and Antitrust Division pri-
orities including, among others, to promote competition by fairly and vigor-
ously enforcing antitrust laws by ensuring that procurement and bidding are
30. A Snapshot of Government-Wide Contracting for FY 2020 (infographic),

U.S. Gov’t Accountability Off. (June 22, 2021), https://www.gao.gov/blog/
snapshot-government-wide-contracting-fy-2020-infographic.
31. Id. (comparing competed vs. non-competed).
32. Fighting Bid Rigging in Public Procurement, Org. for Econ. Coop. & Dev.,
https://www.oecd.org/competition/cartels/fightingbidrigginginpublicprocurement.htm
(last visited Sept. 6, 2022).

fair, open, and competitive.33.
A. The PCSF’s objectives
The PCSF has two distinct but related objectives. First: detect, investi-
gate, and prosecute bad actors involved in antitrust and related crimes. When
potential illegal conduct is identified, prosecutors and agents from the PCSF’s
partner agencies jointly investigate and prosecute these crimes. As the security
services investigation demonstrates, the PCSF’s network of skilled agents can
facilitate quick and thorough prosecution of complex, international conspira-
cies.
Second: deter antitrust and related crimes by educating and training gov-
ernment officials. Procurement officials are the front lines of defense against
procurement crimes, and the PCSF aims to arm them with the ability to iden-
tify red flags of collusion and bid rigging and the knowledge of what to do when
they suspect misconduct. To date, the members of the PCSF have conducted
hundreds of outreach meetings and trainings at a range of federal and state
agencies. Outside of the United States, the PCSF Global team has delivered
presentations to enforcement officials from Africa, Asia, and Europe. PCSF
outreach helps enforcers preempt the collusion and fraud and also cements the
PCSF in procurement officials’ minds as the contact for procurement collusion
questions, cases, or ideas.
B. The PCSF’s enforcement tools
With both goals in mind, the PCSF uses a range of statutory tools to
protect and safeguard taxpayer money from bad actors determined to rig the
bidding process and defraud the government. PCSF prosecutors can charge
all relevant federal crimes. They often turn to the Antitrust Division’s most
familiar statute, the Sherman Act, to prosecute procurement crimes involving
agreements among two or more competitors to rig bids, fix prices, or allocate
markets.34.
1. Antitrust crimes
Bid-rigging schemes
Bid rigging is the most prominent antitrust crime in the procurement con-
33. See Exec. Order No. 14,036, 86 Fed. Reg. 36,987 (July 9, 2021); see also U.S.
Dep’t of Just., Department of Justice Strategic Plan FYs 2022–2026 (last
updated July 1, 2022) (Strategic Goal 4: Ensure Economic Opportunity and Fairness
for All).
34. The Antitrust Division has a unique tool for encouraging corporate and individual
cooperation when investigating violations of section 1: the Leniency Policy. A company
or an individual can obtain immunity from prosecution, also known as “leniency,” if
the company or individual self reports participation in a criminal conspiracy in viola-
tion of section 1 of the Sherman Act, 15 U.S.C. § 1, and meets other certain conditions.
The Leniency Policy is set forth in Justice Manual 7-3.300–3.430. More informa-
tion about the Leniency Policy is available at https://www.justice.gov/atr/leniency-
program.

text. It occurs when two or more competing companies or individuals agree to
corrupt the bidding process—before the bids are submitted—by deciding which
company will submit the most attractive bid (normally the lowest price) to win
the contract. The other conspiring companies agree to submit less attractive
bids, typically bids with higher prices. Bid rigging allows the conspirators, who
are supposed to be competing, to decide effectively how much the government
will pay for a contract instead of free-market competition deciding the out-
come. Bid-rigging schemes typically take one of three forms: (1) bid rotation:
a series of rigged contracts in which competitors take turns being the winning
bidder; (2) complementary bidding (or comp bidding): competitors submitting
inflated bids or otherwise unattractive bids with the intention of losing; or (3)
bid suppression: competitors agreeing not to submit a bid to help a conspirator
win. All three schemes generally involve competitors agreeing in advance as to
who will win the contract, what the winning price will be (that is, the artificial
low bidder), and which companies will submit bids at higher prices, if at all.
Long-running schemes often employ a combination of these three forms.
The Security Services investigation, for instance, alleges a bid-rotation
scheme in which the defendants conspired to rig the bidding by agreeing in
advance which company would win certain security services contracts and the
price that each competitor would bid for the contracts.35. The alleged scheme
resulted in the DOD receiving inflated bids at non-competitive prices from the
conspirators and depriving the DOD of a competitive bidding process.36.
Price-fixing schemes
Price-fixing schemes involve competitors agreeing to raise, fix, or otherwise
maintain the price at which their products or services are sold. Price fixing can
take various forms, such as an agreement among manufacturers of a particular
product to charge similar prices or to raise prices, or agreements to establish
minimum floor prices or establish standard pricing formulas. To prove a price-
fixing conspiracy, the government is not required to prove that the conspirators
agreed to charge exactly the same price. For example, an agreement by com-
petitors to raise individual prices by a certain amount or percentage, or to
maintain a certain profit margin, could constitute a price-fixing scheme even if
the resulting prices are not the same. Similarly, agreements either to establish
or adhere to uniform price discounts, eliminate discounts, fix co-payment fees,
or fix credit terms fall under the price-fixing umbrella. In short, a price-fixing
agreement includes any agreement among competitors to affect the price of a
good or service.37.
Market-allocation schemes
Market-allocation schemes involve competitors agreeing to divide up a par-
35. See Seris Indictment, supra note 2, at 5–6.

36. See id. at 6.
37. See ATR Primer, supra note 26, at 3.

ticular market by geographic area, customer, or product. For instance, in cus-
tomer allocation schemes, competing companies may divide specific customers
so only one competitor will be allowed under the conspiratorial agreement
either to sell, buy, or bid on contracts for those customers. In return, the
other competitors will agree not to sell, buy, or bid on contracts for those cus-
tomers.38.
Antitrust crimes and fraud

Common sense tells us that the purpose of bid-rigging, price-fixing, and
market-allocation schemes, like mail or wire fraud, is to “reap the benefit of the
conspiracy: to be awarded public . . . contracts at anti competitively high prices
and to be paid for those contracts.”39. Garnering illicit profits and controlling
prices are the central objectives of any conspiracy to restrain trade—whether
the conduct involves bid-rigging, price-fixing, or market-allocation schemes.40.
Section 1 antitrust crimes share another hallmark with other white collar
crimes: The conduct typically involves indicia of fraud such as concealment,
trickery, and deceit. Indeed, when competitors agree to rig the bidding process,
the bad actors trick and deceive the procurement official into believing that
the corrupted bidding process is legitimate, fair, and competitive by concealing
the fact of their collusion. In this sense, though frequently couched in terms
of anti competitive behavior, section 1 antitrust crimes such as bid rigging are
essentially crimes of fraud.41. Furthermore, many government agencies require
bidders to explicitly certify the non collusive nature of their bidding. Such
certifications can often serve as a material misrepresentation to support a wire
fraud charge.42.
38. Id. at 6.
39. United States v. Northern Improvement Co., 814 F.2d 540, 542 (8th Cir. 1987).
40. United States v. Dynalectric Co., 859 F.2d 1559, 1568 (11th Cir. 1988) (highlighting
“financial self-enrichment” and “garner[ing] illicit profits” as objectives of bid-rigging
schemes).
41. See Fraud, Black’s Law Dictionary (11th ed. 2019).
42. A line of cases also sets out a “pretense” theory of fraud, applicable to almost
all bid-rigging, that does not require an affirmative misrepresentation, but rather is
based on omitting or concealing material facts designed to induce false belief and ac-
tion. See United States v. Weimert, 819 F.3d 351, 355 (7th Cir. 2016). Several courts
have accepted this theory, particularly where the charged scheme involves “breaking
the rules . . . violat[ing] fundamental notions of honesty, fair play and right deal-
ing.” United States v. Martin, 411 F. Supp. 2d 370, 373 (S.D.N.Y. 2006); see also
United States v. Trapilo, 130 F.3d 547 (2d Cir. 1997). Bid-rigging, in the context of a
competitive market, fits neatly into this theory. See, e.g., United States v. Worthen,
No. 17-cr-175, 2018 WL 1784071, at *1–2 (N.D. Cal. Apr. 13, 2018) (rejecting de-
fense argument that “[s]ubmitting a high bid for a construction contract is not an
act of deception” supporting a conspiracy to defraud under section 371 (alteration in
original)); United States v. Anderson, 326 F.3d 1319, 1327 (11th Cir. 2003) (finding
sufficient evidence of a single conspiracy to sustain convictions under 15 U.S.C. § 1
and 18 U.S.C. § 371 as “the common goal of the overarching bid rigging scheme was to
steal from the United States by inflating the winning bids”); United States v. Washita

The government, however, is not required to prove that a defendant used
fraud such as trickery or deceit in a section 1 antitrust prosecution. Rather, in
prosecuting an antitrust bid-rigging conspiracy, the government is only required
to prove three elements: (1) an agreement between two or more competitors
to rig bids,43. (2) the defendant knowingly—that is, voluntarily and inten-
tionally—became a member of the conspiracy knowing its goals and intend-
ing to help accomplish those goals, and (3) the conspiracy involved activities
within the flow of and substantially affected interstate commerce.44. Of course,
antitrust schemes are not accidents, mistakes, or misunderstandings. Rather,
they are calculated decisions by conspirators to conceal, trick, and deceive the
procurement official. Highlighting the fraudulent and deceitful nature of a bid-
rigging scheme at trial, even if a fraud charge is not brought, emphasizes the
criminality, such that an average juror can better appreciate the motivations
and illegality of the charged conduct.
2. Other crimes relating to procurement collusion
Procurement collusion can take many forms. The Antitrust Division’s mis-
sion is to promote and protect competition. Its criminal attorneys prosecute
violations of antitrust and other federal statutes that affect the competitive
process—bid rigging, price fixing, market allocation, and attempts and conspir-
acies to monopolize. The PCSF’s mission zeroes in on conduct that undermines
the procurement process. For instance, a contractor providing a government
procurement official with money or other things of value in exchange for confi-
dential inside information about the estimated costs of a contract, competitors’
bid prices, or how much a contractor must bid to win the contract may con-
stitute evidence of, among other crimes, bribery45. or honest services fraud,46.
on top of a bid-rigging charge. Similarly, a procurement official’s receipt of
bribe money or other things of value could constitute income, which must be
reported on federal and state income tax returns. If the procurement official
filed a federal income tax return (or failed to file an income tax return) that did
Constr. Co., 789 F.2d 809, 818 (10th Cir. 1986) (finding that a collusive bidding scheme
was the valid basis for a mail fraud conviction because it “deprived taxpayers of the
monetary advantage of competitive bidding”).
43. An indictment could allege a conspiracy to achieve two objectives—price fixing and
bid rigging; however, the government need not prove that the conspiracy sought to
achieve both objectives. Rather, the government need only prove that the conspiracy
sought to achieve at least one of these objectives.
44. 15 U.S.C. § 1; see also United States v. Alston, D.M.D., P.C., 974
F.2d 1206, 1210 (9th Cir. 1992) (elements of criminal antitrust conspiracy);
United States v. Coop. Theatres of Ohio, Inc., 845 F.2d 1367, 1373 (6th Cir. 1988)
(same); United States v. Andreas, 216 F.3d 645, 669 (7th Cir. 2000) (discussing intent
and jury instruction).
45. 18 U.S.C. § 201(b) (offering or accepting bribes involving a federal official);
18 U.S.C. § 201(c) (offering or accepting gratuity involving a federal official);
18 U.S.C. § 666 (bribery of a state or local official).
46. 18 U.S.C. §§ 1343, 1346 (honest services fraud).

not report the money (or other things of value), then a prosecutor might con-
sider pursuing a criminal tax charge against the official, such as tax evasion47.
or filing a false tax return.48. Charging a company executive with accepting
bribes or requesting side payments in exchange for favors and not reporting
the income is not unusual.49. If a contractor submits invoices via email or other
electronic means and receives payments for goods that were never delivered or
services that were never performed, then a prosecutor may want to consider a
wire fraud charge.50. Similarly, submitting false certifications that claim, among
other things, that the contractor purportedly met certain guidelines such as
veteran or minority or women-owned business status may constitute a wire
fraud scheme or set-aside fraud scheme.51.
PCSF prosecutors have several statutes to pursue crimes ranging from bid-
swap arrangements to bribery, money laundering, and honest services fraud
involving procurement officials.52. In its short history, the PCSF has deployed
many of these tools in successful prosecutions.
C. The PCSF’s track record
The PCSF staff teams of prosecutors and agents around the United States
to investigate and prosecute matters affecting specific areas. To that end, the
PCSF has formed national partnerships with 22 USAOs, opened more than 60
grand jury investigations since its inception in 2019, and brought a range of
procurement criminals to justice.
• Infrastructure bid rigging and fraud: In United States v. Brew-

baker (E.D.N.C. 2022), a jury convicted a former executive of Contech
Engineered Solutions, LLC for participating in a conspiracy to rig bids
and commit fraud, three counts of mail fraud, and one count of wire
fraud. The defendant had rigged bids and submitted false certifica-
tions of non-collusion for more than 300 aluminum structures that
the state of North Carolina funded between 2009 and 2018. Contech
pleaded guilty to mail fraud and bid rigging and agreed to pay a crim-
inal fine of $7 million and restitution of more than $1.5 million to the
NC Department of Transportation.53.
47. 26 U.S.C. § 7201.

48. 26 U.S.C. § 7206(1).
49. See, e.g., Press Release, U.S. Dep’t of Just., Former Las Vegas Casino Company
Employee Sentenced to Prison (Mar. 27, 2015).
50. 18 U.S.C. § 1343.
51. See, e.g., Press Release, U.S. Dep’t of Just., Construction Company Owner Con-
victed of Fraud in Securing More Than $240 Million in Contracts Intended for Service-
Disabled Veteran-Owned Small Businesses (June 30, 2022).
52. See, e.g., Press Release, U.S. Dep’t of Just., Commercial Flooring Company Pleads
Guilty to Antitrust and Money Laundering Charges (Aug. 30, 2021).
53. Press Release, U.S. Dep’t of Just., Former Engineering Executive Convicted of
Rigging Bids and Defrauding North Carolina Department of Transportation (Feb. 1,
2022).

• Army “swag” sham bids and conspiracy to defraud: In
United States v. O’Brien (M.D. Fla. 2022), three Florida men were
indicted for allegedly conspiring to rig the bidding on customized
promotional products (swag) for the U.S. Army. To carry out the
scheme and secure sales for a pre-arranged winner, the defendants
are alleged to have exchanged their company’s bid templates and
submitted bids on each other’s behalf. Two of the defendants were
charged with conspiring to defraud the federal government by creating
shell companies that gave the false impression of competition.54.
• Caltrans bid rigging and bribery: In United States v. Yong (E.D.
Cal. 2022), a contract manager for the California Department of
Transportation (Caltrans) pleaded guilty to conspiracy and bribery
regarding rigging bids on Caltrans improvement and repair contracts
by ensuring that contracts went to companies controlled by the defen-
dant’s co-conspirators at inflated prices. The scheme, which impacted
contracts worth more than $8 million, also involved bribery and “no-
bid” contracts awarded on an emergency basis without competitive
bidding.55.
• Fraud at DOD installations in South Korea: In United States v.
Kwon (S.D. Tex. 2022), two South Korean nationals were indicted for
conspiring to rig bids on subcontract work at U.S. military bases in
South Korea. The indictment alleges that the defendants were officers
at a construction company in South Korea that did subcontract work
on U.S. military bases in the country. The alleged comp-bid conspiracy
ran from November 2018 to March 2020.56.
• Fraud at the U.S. Bureau of Prisons (BOP), “food for felons”:
In United States v. Porras (C.D. Cal. 2022), a former contractor at
a food supply company pleaded guilty to conspiring to rig more than
100 bids with a person at a competing food company to determine
which supplier would obtain low-bid contracts from the BOP.57.
D. The PCSF’s future
The PCSF is well-positioned to continue bringing successful cases and ad-
vancing the administration’s priority of safeguarding competition.58.
54. Press Release, U.S. Dep’t of Just., Three Florida Men Indicted for Rigging Bids
and Defrauding the U.S. Military (Apr. 12, 2022).
55. Press Release, U.S. Dep’t of Just., Former Caltrans Contract Manager Pleads
Guilty to Bid Rigging and Bribery (Apr. 11, 2022).
56. Press Release, U.S. Dep’t of Just., Contractors Indicted for Rigging Bids on Sub-
contract Work and Defrauding U.S. Military Bases in South Korea (Mar. 17, 2022).
57. Press Release, U.S. Dep’t of Just., Inland Empire Man Agrees to Plead Guilty in
Bid-Rigging Scheme to Obtain Contracts to Provide Food to Federal Prison Facilities
(Apr. 5, 2022).
58. On July 9, 2021, President Biden issued an Executive Order on Promoting Com-
petition in the American Economy, outlining 72 initiatives across a range of federal

The passage of the $1.2 trillion Infrastructure Investment and Jobs Act
(Infrastructure Act) in November 2021 provides fresh urgency to the PCSF
and procurement enforcement.59. This injection of government spending is cer-
tain to attract bad actors, as one circuit court recently reflected: “Like bears
to honey, white collar criminals are drawn to billion-dollar government pro-
grams.”60.
The Infrastructure Act spending is concentrated in industries like construc-
tion and transportation, allocating $110 billion to repair and rebuild roads and
bridges; $89.9 billion to expand and improve public transit; $42 billion to up-
grade and repair U.S. airports, ports, and waterways; and $65 billion to upgrade
power infrastructure.61. It is no secret that bad actors target these industries,
as the PCSF’s recent cases show.
Fraudsters often abuse substantial public spending programs, as seen with
the COVID-19 relief programs like the Paycheck Protection Program (PPP)
(2020–2022),62. the Troubled Asset Relief Program (TARP) (2008),63. and the
Hurricane Katrina relief funds (2004–2006).64. Sadly, with the passage of the
Infrastructure Act, the risk of such fraud is not just speculative, but certain.
In response, the PCSF has expanded its roster of law enforcement partner
agencies aimed at tackling competition problems in specific sectors of the economy.See

Exec. Order No. 14,036, 86 Fed. Reg. 36,987 (July 9, 2021). Reinvigorating antitrust
enforcement and combatting public corruption are also emphasized in the Depart-
ment’s strategic plan for 2022–2026. See U.S. Dep’t of Just., supra note 33 (Ob-
jective 4.1: Reinvigorate Antitrust Enforcement and Protect Consumers as well as
Objective 4.2: Combat Corruption, Financial Crime, and Fraud—Strategy 2: Combat
Public Corruption).
59. Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021);
see also White House, A Guidebook to the Bipartisan Infrastructure
Law for State, Local, Tribal, and Territorial Governments, and Other
Partners (2022).
60. United States v. Howard, 28 F.4th 180, 186 (11th Cir. 2022).
61. White House, Fact Sheet: The Bipartisan Infrastructure Deal (2021).
62. See, e.g., Press Release, U.S. Dep’t of Just., Justice Department Takes Action
Against COVID-19 Fraud (Mar. 26, 2021); Examining Federal Efforts to Prevent, De-
tect, and Prosecute Pandemic Relief Fraud to Safeguard Funds for All Eligible Ameri-
cans: Hearing Before the H. Select Subcomm. on the Coronavirus Crisis, 117th Cong.
(2022).
63. See, e.g., Off. of the Special Inspector Gen. for the Troubled As-
set Relief Program, Semiannual Report to Congress October 1, 2021 –
March 31, 2022, at2 (2022) (“SIGTARP investigations have resulted in the recovery
of more than $11.3 billion while coordinating with the Department of Justice (DOJ)
and other law enforcement agencies to criminally prosecute 467 defendants.”); Press
Release, U.S. Dep’t of Just., United States Settles False Claims Act Action Against
Estate and Trusts of Layton P. Stuart for $4 Million (Oct. 16, 2015).
64. See, e.g., Press Release, U.S. Dep’t of Just., Two Individuals Indicted on Charges
of Conspiracy and Bribery in Connection with a U.S. Army Corps of Engineers New
Orleans Levee Reconstruction Project (May 15 2008); see generally Hurricane Katrina:
Waste, Fraud, and Abuse Worsen the Disaster: Hearing Before the S. Comm. on
Homeland Sec. and Gov’t Affs., 109th Cong. (2006).

agencies around the country and abroad. Additionally, the PCSF is focusing on
outreach and training to a more diverse range of procurement officers, auditors,
and accountants to broadly educate and inform the civil service on the prob-
lem of procurement crimes. Such outreach typically provides a basic overview
of federal antitrust law, introduces classic procurement collusion schemes, dis-
cusses recent cases, and highlights red flags of collusion. PCSF attorneys and
agents frequently partner to provide the perspectives of the prosecutor and in-
vestigator. The PCSF has made hundreds of presentations to more than 20,000
agents and procurement officials over the last two years.
III. Conclusion
Bad actors will always seek ways to defraud the government and steal
taxpayer dollars. Deterring and prosecuting procurement crime is a national
priority given the billions of dollars that the federal government spends on
contracts every year. The PCSF plays a critical role in helping to investigate
and prosecute bad actors and educating and training government procurement
officials. The PCSF has shown that prosecutors and law enforcement agents can
work together on complex criminal investigations involving public procurement
fraud, even when the crimes occur halfway around the world amid a global
pandemic. As the Security Services investigation highlights, there is no market
too foreign or too exotic for procurement crime, and so there is no market the
PCSF will ignore.65.
About the Authors

Philip Andriole is a Trial Attorney in the New York Office of the Antitrust
Division, where he has served since 2019. Mr. Andriole also served as a Special
Assistant U.S. Attorney at the Eastern District of Virginia USAO from March
2020 to November 2020.
Chris Maietta is a Trial Attorney in the New York Office of the Antitrust Di-
vision, where he has served since 2016. From 2002 to 2016, Mr. Maietta served
as a Trial Attorney in the Department’s Tax Division, Criminal Enforcement
Section, in Washington, D.C., where he investigated and prosecuted criminal
tax fraud cases in various districts across the United States from San Diego to
Boston and many locales in between.
The authors thank Antitrust Division Trial Attorney Bryan Serino for sharing
his experience on security services.
65. See Procurement Collusion Strike Force, supra note 3, to learn more about the
PCSF, report suspicions, or request training.


Carpe Crypto:
Prosecuting Cases Involving
Digital Assets and Blockchain
Technology
Sanjeev Bhasker
United States Digital Currency Counsel, Digital Currency Initiative
Money Laundering and Asset Recovery Section
National Cryptocurrency Enforcement Team
Alexandra D. Comolli
Digital Asset Coordinator
Southern District of Florida
Olivia Zhu
Trial Attorney
Money Laundering and Asset Recovery Section
Digital assets and blockchain technology are some of the great innovations
of our time. Criminals, as they have with many great innovations, unsurpris-
ingly co-opt these inventions as tools to achieve their own malicious ends.
Like the gangsters of the early 20th century, today’s criminals exploit these
world-changing technologies to expand or establish their criminal enterprises.
But unlike their 20th century predecessors who employed widely available fast-
moving cars and Thompson submachine guns, criminals today exploit digital
assets and blockchain technology on a mind-boggling level.1. They do so as
the supporting technologies evolve at an incredible rate, leading to even more
creative opportunities for illicit use.2.
As prosecutors face down a tidal wave of criminal activity in this area, our
1. The FBI and Crypto: Cyberattacks, Ransomware and Fighting Crime in the Digi-
tal Age, TRM Labs, Inc. (June 30, 2021), https://www.trmlabs.com/post/register-
now-the-fbi-and-crypto.; see Jonathan Reed, Is Anyone Doing Anything About the
Explosion in Crypto Crime?, Sec. Intelligence (Mar. 9, 2022), https://security
intelligence.com/articles/crypto-crime-solutions/; Crypto Crime Trends for 2022: Il-
licit Transaction Activity Reaches All-Time High in Value, All-Time Low in Share
of All Cryptocurrency Activity, Chainalysis: Chainalysis Rsch. (Jan. 6, 2022),
https://blog.chainalysis.com/reports/2022-crypto-crime-report-introduction/.
2. Janet L. Yellen, U.S. Sec’y of Treasury, Remarks at Am. Univ.’s Kogod Sch. of Bus.
Ctr. for Innovation on Digital Assets (Apr. 7, 2022).

hope is to demystify digital asset investigations. Emerging technologies may
also lead to opportunities for prosecutors to employ tried and true investigative
methods. We provide here a general roadmap that addresses the most common
initial questions asked when considering a prosecution involving digital assets
and encourages prosecutors and investigators to rely on their common sense
and ”traditional” litigation experiences. Each investigation consists of collect-
ing and analyzing evidence, sharing evidence with defense counsel through
discovery, and ultimately admitting evidence at trial and other related hear-
ings. To be sure, our efforts here are not and cannot be exhaustive (fear not,
editors, we will heed our page limit). Our colleagues in this space have provided
significant contributions, and we do not parrot here the issues they so adeptly
addressed. Rather, we provide a starting point for those brave and inquisitive
souls diving into the whirlwind world of digital assets. Buckle up, friends. This
is gonna be a wild ride.
I. The initial S.O.S.—who to call

Let’s start with some very good news—you are not alone. You have many
colleagues willing to share their vast expertise with you. In fact, you might
peek your head out of your office and find the counsel you seek just down the
hall.
Your first lifeline is your office’s Digital Asset Coordinator (DAC), who
serves as the regional subject-matter expert on digital assets and a first line of
information and guidance about legal and technical matters related to these
technologies.3. As questions arise throughout your prosecution, particularly
around applying existing authorities and laws to digital assets (for example,
search and seizure warrants, restraining orders, criminal and civil forfeiture
actions, indictments, and other pleadings), your office’s DAC is there to guide
you through the legal and technical hurdles. As a member of the DAC Net-
work, the DAC engages with other experts in United States Attorney’s Offices
(USAOs) across the country, addressing new developments in the digital asset
space and exchanging training, technical expertise, and guidance about the
investigation and prosecution of digital asset crimes.
Because the technology is rapidly evolving, you may need to seek even
more specialized assistance from other Department of Justice (Department)
components. Here again, you are in expert hands. The Money Laundering
and Asset Recovery Section’s (MLARS) Digital Currency Initiative (DCI)
has long been a go-to resource for those seeking expert advice regarding all
things blockchain and digital assets—including money laundering, seizure, and
forfeiture matters. In 2018, MLARS developed the DCI, which specializes in
cryptocurrency-related prosecutions, including the recovery of cryptocurrency
assets.4. The DCI provides both international and domestic legal guidance and
3. Press Release, U.S. Dep’t of Just., Justice Department Announces Report on Digital
Assets and Launches Nationwide Network (Sept. 16, 2022).
4. U.S. Dep’t of Just., Report of the Attorney General’s Cyber Digital
Task Force 100–01 (July 2018).

support to investigators, prosecutors, and government agencies on cryptocur-
rency prosecutions, seizures, and forfeitures. Additionally, the DCI provides
cryptocurrency-related training and engages in policy dialogue concerning leg-
islation, forfeiture, and prosecution. Building on this Initiative, in October
2020, the Department issued the Attorney General’s Cryptocurrency Enforce-
ment Framework articulating the concerns and challenges associated with this
emerging technology.5.
To assist with the more complex and large-scale prosecutions, the Depart-
ment announced the creation of the National Cryptocurrency Enforcement
Team (NCET) in October 2021, “to tackle complex investigations and pros-
ecutions of criminal misuses of [digital assets], particularly crimes committed
by virtual currency exchanges, mixing and tumbling services, and money laun-
dering infrastructure actors.”6. This team of experienced federal prosecutors
assists with, among other things, developing investigative and prosecutorial
strategies, and providing legal guidance to the field.
Understanding the importance of trial-tested resources, we direct your at-
tention to the Department’s MLARS DCI, Computer Crime and Intellectual
Property Section (CCIPS), and NCET’s websites. Each provides go-bys to
assist with digital asset investigations and trial litigation.
II. Exploring (un)known lands: Has anyone done this

before? And do they have a map?
Like Chuck Noland in Cast Away, attorneys cling to our “Wilson”—legal
precedent.7. When developing the legal theory of a case or an argument, at-
torneys immediately (and rightfully) ask, “Has anyone done this before?” and
begin their legal research through this narrow lens. While the breadth of dig-
ital asset and blockchain-related precedent is growing, there are undoubtedly
many legal questions evolving. These questions often warrant familiar answers.
Rest assured, we still have our trusty “Wilson” at the ready. We simply need
a wider lens. The question is not, “Has anyone done this before,” but instead,
“How do I argue the technology and facts when applied to ‘X,’ ‘Y,’ or ‘Z’
precedent?” To bridge the gap, prosecutors must take special care to under-
stand this new technology and existing precedent. Only then can we make an
informed argument and employ the proper precedent. Remember, digital as-
set or blockchain technology-related precedent is still nascent when compared
with that involving the U.S. dollar or other traditional financial instruments.
What you do here matters. As in any area where a prosecutor or other lawyer
is unfamiliar: Don’t just sit there; ask questions, the hard questions. Mind the
5. See generally U.S. Dep’t of Just., Cryptocurrency: Enforcement Framework (Oct.

2020).
6. Press Release, U.S. Dep’t of Just., Deputy Attorney General Lisa O. Monaco An-
nounces National Cryptocurrency Enforcement Team (Oct. 6, 2021).
7. Cast Away (DreamWorks Pictures 2000) (In the movie, Wilson—a volley-
ball—serves as Chuck Noland’s anthropomorphized buddy during the four years that
Noland is stranded on a deserted island.).

details. As the New England Patriots say, “Do your job.”8.
As has plagued other innovations, digital assets and blockchain technology
are exploited for all manners of criminal conduct, including nation-state9. and
terrorist activity,10. fraud,11.
human trafficking,12. child exploitation,13. and drug trafficking.14. Whatever
the underlying criminal scheme, digital assets are commonly used to move
and store value—and where there is movement of value, there is the potential
for money laundering. Thus, we look to anti-money laundering regulations.
Two notable pillars of U.S. law address this conduct: the Bank Secrecy Act15.
and the Money Laundering Control Act.16. The former focuses on regulating
financial gatekeepers, such as banks and money service businesses, while the
latter criminalizes money laundering itself. For a more extensive overview of
digital asset-enabled money laundering, we recommend turning to “Surfing the
First Wave of Cryptocurrency Money Laundering,” which appeared in the May
2021 edition of this Journal.17.
While inquiring “if anyone has done—or is anyone doing—this,” it is im-
portant to consider our sister litigating components and possible parallel in-
vestigations. The United States Department of Treasury’s Financial Crimes
Enforcement Network (FinCEN), for instance, plays a prominent role in reg-
ulating this space, ensuring gatekeepers register and comply with their anti-
money laundering recordkeeping obligations—and taking action when they do
8. See NFL Network, Do Your Job: Bill Belichick and the 2014 Patriots, YouTube
(Aug. 13, 2015), https://www.youtube.com/watch?v=bwSlEvG0ngo.
9. Verified Complaint for Forfeiture In Rem, United States v. 113 Virtual Currency
Accts., No. 20-cv-606 (D.D.C. Mar. 3, 2020), ECF No. 1; e.g., Press Release, U.S.
Dep’t of Just., Six Russian GRU Officers Charged in Connection with Worldwide
Deployment of Destructive Malware and Other Disruptive Actions in Cyberspace (Oct.
19, 2020).
10. E.g., Press Release, U.S. Dep’t of Just., Global Disruption of Three Terror Finance
Cyber-Enabled Campaigns (Aug. 13, 2020).
11. E.g., Press Release, U.S. Dep’t of Just., Justice Department Announces Enforce-
ment Action Charging Six Individuals with Cryptocurrency Fraud Offenses in Cases
Involving over $100 Million in Intended Losses (June 30, 2022).
12. E.g., Press Release, U.S. Dep’t of Just., Justice Department Leads Effort to Seize
Backpage.Com, the Internet’s Leading Forum for Prostitution Ads, and Obtains 93-
Count Federal Indictment (Apr. 9, 2018).
13. E.g., Press Release, U.S. Dep’t of Just., South Korean National and Hundreds of
Others Charged Worldwide in the Takedown of the Largest Darknet Child Pornogra-
phy Website, Which Was Funded by Bitcoin (Oct. 16, 2019).
14. E.g., Press Release, U.S. Dep’t of Just., AlphaBay, the Largest Online ”Dark
Market,” Shut Down (July 20, 2017).
15. Currency and Foreign Transactions Reporting Act of 1970 (Bank Secrecy Act),
Pub. L. No. 91-508, 84 Stat. 1114.
16. Money Laundering Control Act of 1986, Pub. L. No. 99-570, 100 Stat. 3207,
3207–18.
17. See generally Alexandra D. Comolli & Michele R. Korver, Surfing the First Wave
of Cryptocurrency Money Laundering, 69 DOJ J. Fed. L. & Prac., no. 3, 2021.

not.18. Other components and statutes may also be involved depending on,
inter alia, the functionality, governance, and purpose of the underlying tech-
nology, particularly as digital assets continue to develop and evolve into uses
beyond the movement and storage of value into broader applications such as
decentralized finance or non-fungible tokens (NFTs).19. For example, the Secu-
rities and Exchange Commission has viewed certain digital assets as securities
under the Securities Act of 1933 and Securities and Exchange Act of 1934 for
some time, employing the Howey test20. to make its threshold determination
as to whether the asset qualifies as a security.21. So, too, has the Commodities
and Futures Trading Commission long found that Bitcoin is a commodity un-
der the Commodity Exchange Act.22. Prosecutors should note that a particular
criminal scheme may trigger multiple statutes and components discussed here,
as one could imagine, because a digital asset that is a security or a commodity
could also be used as a vehicle for money laundering. As a result, parallel in-
vestigations between sister components may arise. Notifying your office’s DAC
is a great starting point to recognize and work through case deconflictions.
III. Jumping right in—blockchain analysis and

digital asset investigations
As mentioned above, many of our colleagues have addressed digital asset
investigative strategies and evidence admission in previous editions of this pub-
lication.23. These articles, written by experienced federal prosecutors, describe
18. Press Release, U.S. Dep’t of Treasury, FinCEN Fines BTC-e Virtual Currency
Exchange $110 Million for Facilitating Ransomware, Dark Net Drug Sales (July 26,
2017); U.S. Dep’t of Treasury, Application of FinCEN’s Regulations to Certain Busi-
ness Models Involving Convertible Virtual Currencies (FIN-2019-G001) (May 9, 2019);
U.S. Dep’t of Treasury, Application of FinCEN’s Regulations to Persons Administer-
ing, Exchanging, or Using Virtual Currencies (FIN-2013-G001) (Mar. 18, 2013).
19. Bitcoin is no longer the only game in town and has not represented the majority
of digital asset transaction volume since 2016. In 2022, the overwhelming majority
of transactions have involved stablecoins or cryptocurrencies with the smart contract
functionality that powers decentralized finance and Web3. See Chainalysis, The
Chainalysis State of Web3 Report (2022).
20. Sec. & Exch. Comm’n v. W.J. Howey Co., 328 U.S. 293 (1946).
21. Sec. & Exch. Comm’n, Framework for “Investment Contract” Anal-
ysis of Digital Assets (2019).
22. Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commod-
ity Exchange Act, Making Findings and Imposing Remedial Sanctions, Coinflip, Inc.
& Francisco Riordan, CFTC Docket No. 15-29 (Sept. 17, 2015).
23. See, e.g., Matthew J. Cronin, Hunting in the Dark, a Prosecutor’s Guide to the
Dark Net and Cryptocurrencies, 66 U.S. Att’y Bull. (July 2018); Michele R. Korver,
C. Alden Pelker & Elisabeth Poteat, Attribution in Digital Asset Cases, 67 DOJ J.
Fed. L. & Prac., no. 1, 2019; Neal B. Christiansen & Julia E. Jarrett, Forfeiting
Cryptocurrency: Decrypting the Challenges of a Modern Asset, 67 DOJ J. Fed. L. &
Prac., no. 3, 2019; C. Alden Pelker, Christopher B. Brown & Richard M. Tucker,
Using Blockchain Analysis From Investigation to Trial, 69 DOJ J. Fed. L. & Prac.,
no. 3, 2021; Comolli & Korver, supra note 17.

in detail evidentiary rules and specific strategies for prosecuting such cases.
Our focus here is not to rehash these methods, but rather to encourage their
applications in investigations and trial litigation. A great place for us to start
is blockchain analysis and domestic versus foreign legal process.
A. Blockchain analysis
Much is made of “blockchain analysis” in the digital asset world. Even
its name can sound quite daunting. But recall the original Scooby Doo car-
toons—the Scooby Gang often unmasked the culprit to reveal a familiar face.
While the Scooby Gang’s tactics were not always in line with the rigorous stan-
dards of American jurisprudence, perhaps there is some investigative wisdom
gained from their adventures. For when we unmask the mysterious blockchain
analysis, we find a familiar investigative technique: following the money.24.
Oh, thank goodness! A traditional investigative technique. Yes, many criminal
cases begin and end successfully when investigators “follow the money.” While
effective blockchain analysis requires proficient training and expertise, it need
not be quite so frightening. In fact, this technique can be used both to identify
criminal actors and to build a case against them.25.
The public blockchain enables investigators to trace funds forwards and
backwards from a single address or a single transaction, akin to how investi-
gators trace the movement of funds in fiat currencies.26. Yet, unlike more tra-
ditional bank records, the blockchain does not identify the sender or receiver,
apart from the public addresses. It is here that blockchain analysis brings the
great irony of digital assets front and center: The need to cash out (that is, con-
vert) digital assets into traditional currency remains the reality.27. Some virtual
asset service providers (VASPs), such as cryptocurrency exchanges, provide the
all-important on and off ramps connecting the “real world” and the “virtual
world.” VASPs, which are generally recognized as money service businesses
(MSBs) domestically, are regulated in the United States under the Bank Se-
crecy Act and respond to legal process with valuable attribution evidence—a
result of their anti-money laundering recordkeeping obligations (thank you,
FinCEN!).28.
B. Domestic vs. foreign legal process
At the onset of a case involving digital assets, the investigative team should
discuss basic parameters of collecting and storing evidence, serving legal pro-
cess, and documenting these materials in real time. As in traditional evidence
collection, prosecutors should remain mindful of organizing evidence in an in-
24. Christiansen & Jarrett, supra note 23, at 165.

25. Pelker et al., supra note 23, at 64; Christiansen & Jarrett, supra note 23, at
165–170.
26. Comolli & Korver, supra note 17, at 213.
27. Id. at 213–14.
28. U.S.Treausry Fin. Crimes Enf’t Network, Application of FinCEN’s
Regulations to Certain Business Models Involving Convertible Virtual
Currencies: FinCEN Guidance (2019).

telligible way that can be later shared with defense counsel and the court or
jury.
When gathering evidence, prosecutors must distinguish between domestic
and foreign legal service of process. While most prosecutors are familiar with
domestic evidence collection, given the growing number of internationally lo-
cated digital asset exchanges,29. international record requests are increasingly
more prevalent and require specific procedures. Service of foreign legal process
must involve the Department’s Office of International Affairs (OIA), which
assists as our Central Governing Authority for, among other things, lawfully
obtaining foreign records and property (for example, digital assets).30. Their
guidance at the onset of your investigation will help greatly when sharing evi-
dence and ultimately seeking the court’s permission to admit records at trial.
Among OIA’s benefits, including sound institutional knowledge of diplomatic
and legal relations, they assist with serving U.S. subpoenas and seizure requests
on foreign counterparts as well as serving Mutual Legal Assistance Treaties
(MLATs), which are often necessary when admitting evidence in court. Once a
prosecutor determines that a specific digital asset exchange is located interna-
tionally, and they wish to serve a subpoena or seizure warrant on this exchange
to gather records or digital assets, they should then contact OIA to discuss the
best country-specific procedures before acting. Once this analysis is completed,
we move forward with confidence that the investigation’s evidence should be
admitted in court.
IV. Now presenting . . . the evidence: How would this

work at trial?
While we cannot revisit every trial strategy in this article, we focus on
emerging trends in digital asset litigation. Prosecutors should embrace digital
asset trial preparation with the same diligence required of any criminal case.31.
Once in court, a prosecutor presents their case in an intelligible format to an
impartial jury or judge. This process begins with an overview of the investiga-
tion, a presentation of facts and their application to the law, and an ultimate
advocacy for disposition.32. Generally, a foundational background of digital as-
sets and blockchain analysis, combined with pertinent case facts, helps forecast
29. See CoinMarketCap, https://coinmarketcap.com/rankings/exchanges/ (last

visited Nov. 7, 2022).
30. See Off. of Int’l Affs., U.S. Dep’t of Just.,
https://www.justice.gov/criminal-oia/office-international-
affairs#:∼:text=The%20Office%20of%
20International%20Affairs,U.S.%20criminal%20investigations%20and%20prosecutions
(last updated June 9, 2015).
31. Prosecutors should consider submitting a pre-trial brief to the court discussing
evidentiary issues and allowing the judge to familiarize themselves with more technical
matters before trial.
32. See Off. of U.S. Att’ys, U.S. Dep’t of Just., Justice 101: Trial,
https://www.justice.gov/usao/justice-101/trial (last visited Nov. 7, 2022).

your case-in-chief.
Additionally, one of the many unique characteristics of digital asset evi-
dence is the decentralized and open-source features of blockchain records.33. A
fortunate fact is that most blockchains contain publicly available, immutable
records of digital asset transactions.34. This information is readily verifiable
on a respective blockchain, shareable with defense counsel, and also useful
in reverse proffers when discussing the strengths of a case. Furthermore, law
enforcement’s ability to draft a supplemental report that further explains dig-
ital asset transactions will go a long way to assist a non-digital-asset-literate
defense counsel in case disposition.
Again, like traditional criminal litigation, here a prosecutor is simply intel-
ligibly sharing evidence with opposing counsel for them to advise their client.
Prosecutors are encouraged to use summary charts and other visuals, where
appropriate, to assist counsel and their client.35. A combination of substantive
blockchain records, supplemental reports explaining these records, and visual
summary charts help communicate the strength of one’s case in the discovery
stages and can assist with pre-trial disposition.
It is recommended that the trial team incorporate a digital asset designated
witness, often a lay witness (for example, a case agent or someone familiar with
the technology), to testify about digital assets and blockchain fundamentals at
the onset of your presentation.36. This witness assists the trier of fact with
understanding technology and its application in your case-in-chief. That lay
witness, in addition to other fact witnesses, can also explain the specific ev-
idence in your investigation. Through this testimony, prosecutors admit trial
evidence and establish a record of digital asset transactions (akin to a tradi-
tional financial investigation, but instead with blockchain analysis). Like a drug
chemist testifying about a narcotic’s chemical balance, explaining its chain of
custody and testing procedures and then opining on the narcotic’s identity
and purity levels, a digital asset witness will walk the trier of fact through the
identification, analysis, and applications of digital asset transactions. While
blockchain expert witnesses can be used and qualified as such, they are often
not necessary given the straightforward nature of this immutable evidence. If
the prosecutor desires to discuss the value of a Rule 702 expert, we recommend
consulting with their office’s DAC. Once evidence is admitted, the prosecutor
then advocates for the jury to follow the evidence or digital asset transactions,
leading to the defendant’s attribution.37.
In separate hearings (that is, sentencing or suppression hearings), prosecu-
tors are encouraged to use the same format when addressing the court, to wit
presenting foundational background of a digital asset’s technology, explaining
the contested facts and admitting the evidence, and then advocating why spe-
33. See open-source sites like Blockchain.com and Etherscan.io for more.
34. See, e.g., United States v. Gratkowski, 964 F.3d 307, 311–12 (5th Cir. 2020).
35. See Pelker et al., supra note 23, at 96.
36. See Cronin, supra note 23, at 65; Pelker et al., supra note 23, at 92.
37. See Korver, supra note 23, at 251.

cific records and evidence should be relied on for disposition. Our hope is that
as prosecutors, courts, and juries gain more familiarity with digital asset inves-
tigations, the mystique is lifted and an appreciation for digital asset litigation’s
reliability arises.
Finally, we turn to a brief—albeit important—discussion of seizure and
forfeiture matters.
V. Who holds the private keys?

Seizure and forfeiture-related matters
Seizure and forfeiture are critical aspects to consider when prosecuting dig-
ital asset cases. The events of the last year alone indicate why: In the past 12
months, the Department has seized billions of dollars and forfeited tens of mil-
lions more from just a few digital asset cases.38. Effort is required to trace, seize,
and forfeit digital assets; planning ahead can ultimately pay big dividends, both
figuratively and literally. Beyond the large dollar value recoveries, there are two
important reasons to seize and forfeit digital assets. First, doing so deprives
criminals of their ill-gotten gains.39. Even if the government is unable to sell
or liquidate the seized digital asset, seizure and restraint prevents offenders
from facilitating future crimes through this property or profiting from offense
proceeds; forfeiture operates as punishment for criminal conduct.40. Second,
recovered assets can be used to compensate victims.41. Again, our colleagues
have provided a useful in depth discussion of the seizure and forfeiture of dig-
ital assets in the September 2019 edition of this Journal.42. This Part, then,
will briefly touch on a few key points and new developments.
Who holds the private keys is the driving question behind digital asset
seizures. Because control of the private key(s) provides the ability and author-
ity to transfer funds (akin to account signatory authority or a super-strong
PIN),43. properly identifying their location is paramount to a successful seizure
and forfeiture process. There are two important factors when considering the
location of the private keys: whether the digital asset in question is held by
38. Chris Strohm & Olga Kharif, DOJ Seizes 3.6 Billion in Bitcoin Stolen in Bitfinex
Hack, Bloomberg (Feb. 8, 2022), https://www.bloomberg.com/news/articles/2022-
02-08/doj-seizes-3-6-billion-in-bitcoin-stolen-in-2016-bitfinex-hack; MK Manoylov,
Federal Prosecutors Forfeit $34 Million in Crypto Tied to Illicit Dark Web Activities,
The Block (Apr. 5, 2022),
https://www.theblockcrypto.com/linked/140700/federal-prosecutors-forfeit-34-
million-in-crypto-tied-to-illicit-dark-web-activities; Alexander Mallin & Luke Barr,
DOJ Seizes Millions in Ransom Paid by Colonial Pipeline, ABC News (June7,
2021), https://abcnews.go.com/Politics/doj-seizes-millions-ransom-paid-colonial-
pipeline/story?id=78135821.
39. U.S. Dep’t of Just., Asset Forfeiture Policy Manual § I.A (2021).
40. United States v. Libretti, 516 U.S. 29, 39 (1995).
41. See U.S. Dep’t of Just., supra note 39, at ch. 14.
42. Christiansen & Jarrett, supra note 23, at 159.
43. Id. at 170; U.S. Dep’t of Just., supra note 39, at 27; Cronin, supra note 23, at
67; Christiansen & Jarrett, supra note 23, at 157–58.

a third party (hosted) or held by the individual (unhosted); and whether the
asset is located within the United States or abroad.
Once probable cause for seizure is established, hosted wallets within the
United States can be seized with a seizure warrant served on the third party
(that is, the VASP hosting the cryptocurrency).44. Unhosted wallets, however,
may take various forms: The private keys can be written on slips of paper, or
they can be stored on software or hardware wallets, among other ways. In these
cases, when the unhosted wallet is located within the United States, prosecutors
should keep in mind that a warrant will be served at the wallet’s location. As
such, if the wallet is located within the district, prosecutors may seize the digital
assets either through a standard Rule 41 search warrant45. that authorizes the
search for or seizure of digital assets (in addition to the subsequent transfer
of funds from the wallet to a law enforcement unhosted wallet), or through
a forfeiture seizure warrant.46. If the wallet is located outside the district,
prosecutors can still use a forfeiture seizure warrant but will need to partner
with the local USAO to obtain a Rule 41 search warrant. Finally, either a
hosted or unhosted wallet located abroad should only be seized in consultation
with OIA and via MLAT.47. Tread carefully with international exchanges that
have a U.S. office or point of contact that is willing to accept service. Any
restraint must be voluntary and should occur only after consulting with your
office’s Asset Forfeiture Chief, and any assets should be transferred only after
a seizure warrant is served via MLAT.48. Where questions arise, in addition
to discussing with your office’s DAC and Asset Forfeiture Coordinator, our
colleagues at MLARS DCI and the NCET are just a phone call away and glad
to help.
It is essential to remember that there may be more than one copy of the
private key, so post-seizure precautions must be taken to prevent either tar-
gets or co-conspirators from quickly moving or liquidating digital assets. Once
digital assets are seized, they should be transferred to an agency-controlled
wallet. When doing so, agents should follow their agency’s written policies.
Again, preparation and planning are essential. Agents should prepare wallets
in advance and determine whether the seized digital assets can and should
be transferred to a government-controlled wallet. Later, when ready for liq-
uidation, the assets can be transferred to the custody of the United States
Marshals Service (USMS) for liquidation. Notably, the seizure of NFTs may
present novel issues and should be coordinated with the USMS and MLARS
44. Christiansen & Jarrett, supra note 23, at 175–76.

45. Keep in mind that private keys can be stored in multiple formats (that is, on slips
of paper, cell phones, or small hardware devices). As such, prosecutors and agents
should prepare accordingly and consider search warrants that authorize the search of
a person, electronic device, or both.
46. Christiansen & Jarrett, supra note 23, at 173–75.
47. See Section III.B., supra; see also Christiansen & Jarrett, supra note 23, at 156,
176–77.
48. U.S. Dep’t of Just., supra note 39, at 29.

DCI.49.
Agents and prosecutors should generally avoid liquidating digital assets
before forfeiture.50. Although some exchanges can cash out account contents
in the form of a cashier’s check or wire transfer, digital assets should instead be
held in their original form and transferred to a government-controlled wallet.
Yet digital assets are also notoriously volatile.51. As such, parties may wish
to liquidate seized digital assets before a final order of forfeiture is entered to
preserve its value. In those circumstances, and if all potential claimants to the
property agree, the parties may move for an interlocutory sale order only after
consulting with MLARS.52.
Just like cars, homes, cash, and myriad other properties, digital assets can
be forfeited. Prosecutors should be careful to develop a theory of the underlying
crime and corresponding forfeiture statutes early in the investigation to ensure
successful forfeiture at the conclusion of the case. If known, the amount and
type of digital assets should be listed in the indictment or bill of particulars
as well as the plea agreement. Similarly, the preliminary and final orders of
forfeiture should list digital assets just as they might list any other monetary
asset.53. In some situations, seized digital assets may skyrocket in value dur-
ing the pendency of the investigation and case. The appreciation in value of
the various seized assets may still be forfeited, no matter how substantial the
increase may be.54. For examples of plea language that addresses the issue of
appreciation, please contact MLARS/DCI.
VI. Conclusion
And here we come to the end of our overview. The coming digital asset
tidal wave presents us with two options: resist or flow. The choice is ours, and
preparation is key. If you remember nothing else from these pages, remember
this: You already have the litigation experience, necessary tools, and support
of your expert colleagues to successfully figure out this “new crypto thing.” To
paraphrase one of the great cinematic underdogs, “[You’ve] been ready for this
49. The first known NFT seizure occurred earlier this year, when the U.K. tax authority
seized three NFTs regarding a tax fraud case. See Anita Hawser, UK Law Agents
Seize NFTs, Glob. Fin. (Mar. 3, 2022), https://www.gfmag. com/magazine/march-
2022/uk-law-enforcement-seize-nfts.
51. Jack Denton, Bitcoin Is on a Bumpy Ride. Why Cryptos May Get Even
More Volatile, Barron’s (June 15, 2022), https://www.barrons.com/articles/bitcoin-
cryptos-derivatives-volatile-51655301716.
53. See, e.g., Verified Complaint for Forfeiture In Rem, United States v. Cazes, No.
17-cv-967 (E.D. Cal. July 19, 2017), ECF No. 1.
54. See, e.g., United States v. Hawkey, 148 F.3d 920, 928 (8th Cir. 1998) (if property
is subject to forfeiture as property traceable to the offense, it is forfeitable in full,
including any appreciation in value since the time the property became subject to
forfeiture; the reason for the appreciation does not matter, as the defendant may be
made to pay money judgment or forfeit traceable property, but not both).

[your] whole life.”55.
Carpe crypto.
About the Authors

Sanjeev Bhasker serves as U.S. Digital Currency Counsel with the US De-
partment of Justice’s Digital Currency Initiative (DCI) and National Cryp-
tocurrency Enforcement Team (NCET), providing legal guidance and support
to investigators, prosecutors, and government agencies on cryptocurrency pros-
ecutions, seizures, and forfeitures. He previously served as an Assistant U.S.
Attorney, providing trial and appellate litigation throughout the United States
in the Western District of North Carolina and the Southern District of Texas.
Alexandra D. “Ali” Comolli is an Assistant United States Attorney and

Digital Asset Coordinator for the Southern District of Florida. Previously,
AUSA Comolli served approximately nine years with the Federal Bureau of In-
vestigation, where she specialized in the investigation of virtual currency money
laundering and worked alongside truly excellent case agents and prosecutors
to develop innovative investigative strategy, identify otherwise-anonymous tar-
gets, and seize illicit proceeds. As a founder the FBI’s Virtual Currency Re-
sponse Team, she assembled an elite group of experts assigned to assist the
FBI’s most complex virtual currency investigations. AUSA Comolli is a grad-
uate of Duke University and the Antonin Scalia Law School at George Mason
University and is admitted to the Massachusetts bar.
Olivia Zhu is a Trial Attorney in the Money Laundering and Asset Recovery
Section of the Criminal Division. She joined the Department in 2020 through
the Attorney General’s Honors Program as an Asset Forfeiture Fellow, and she
received her J.D., cum laude, from the New York University School of Law.
55. Rudy (TriStar Pictures 1993).

Note from the Editor-in-Chief
We here at the Office of Legal Education, Publications Unit, hope that
you enjoy this issue of the Department of Justice Journal of Federal Law and
Practice. As Mandy Riedel wrote in the Introduction, prosecuting those who
profit from white-collar crime, particularly corporate crime, is a top priority
for the Department. To that end, this issue spotlights some of the complex
issues in white-collar crime and fraud, including the attorney–client privilege
and the crime–fraud exception, the Foreign Corrupt Practices Act, and the
cutting-edge topic of cryptocurrency.
I’d like to introduce the new team that puts the DOJ Journal together
and makes my job as editor-in-chief easy. Jan van der Kuijp, a member of
the Attorney General’s Honors Program, is our managing editor who oversees
daily operations. He’s assisted by Kari Risher, our University of South Carolina
contractor, who acts as associate editor. They’re joined by University of South
Carolina law clerks Rebekah Griggs, Lillian Lawrence, Kyanna Dawson, and
William Pacwa. And I would be remiss in not mentioning Jim Scheide, the
USC IT wizard behind the scenes, who helps make our publication look great.
Speaking of this law journal’s look, regular readers might notice that this
issue is different. That’s because it’s our first issue published using LATEX, a
computer typesetting system based on a program originally created by Donald
Knuth, a prize-winning mathematics professor at Stanford University. In the
1970s, Knuth, unhappy with the way his publisher typeset his books, spent
years teaching himself the art of typography and designing a state-of-the-art
computer program.1. I’m confident that you’ll agree his efforts were worth it.
This issue, using an expanded version of Knuth’s original program and the
Palatino typeface, has a fresh, modern appearance.2.
We couldn’t have produced this issue without the hard work of our authors,
all subject matter experts on white-collar crime and fraud topics. And we’d
especially like to thank Mandy Riedel and Seth Wood for acting as points
of contact. They recruited our authors and reviewed their articles to ensure
consistency with DOJ policy and guidance. But most of all, thanks to our
readers, both inside and outside of the Department, who inspire us.
As the year draws to a close, our staff hopes that you and yours have a
happy holiday season. We’ll see you in 2023!
Chris Fisanick
Columbia, South Carolina
December 2022
1. Donald Knuth, Wikipedia, https://en.wikipedia.org/wiki/Donald Knuth (last vis-

ited Dec. 5, 2022).
2. My informal survey revealed that the law review published by Case Western Reserve
University Law School is the only other U.S. law review that uses LATEX. Dr. Knuth
received his bachelor’s and master’s degrees from Case Western.

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DEPARTMENT OF JUSTICE

JOURNAL OF FEDERAL LAW AND PRACTICE

Volume 70 December 2022 Number 4

United States Department The Department of Justice Journal of

Water Under the Bridge: Assessing the Eﬀect of

Crime–Fraud Litigation in White-Collar Prosecutions

The Special Matters Unit: Best Practices for Addressing At-

Prosecutions in the Securities and Commodities Markets

The Foreign Corrupt Practices Act: Continued Progress in the

Federal Prosecution of Elder Financial Abuse: Combatting Power

The PCSF: A Global Presence for a Global Problem

Carpe Crypto: Prosecuting Cases Involving Digital Assets and

Note from the Editor-in-Chief

Welcome to this exciting edition of the Department of Justice Journal of

1. Lisa O. Monaco, U.S. Dep’t of Just., Further Revisions to Corporate

December 2022 DOJ Journal of Federal Law and Practice 1

2 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 3

4 DOJ Journal of Federal Law and Practice December 2022

I. Kelly reminds us that “not every corrupt act . . .

1. 140 S. Ct. 1565 (2020).

December 2022 DOJ Journal of Federal Law and Practice 5

6 DOJ Journal of Federal Law and Practice December 2022

13. Id. at 562–64.

December 2022 DOJ Journal of Federal Law and Practice 7

19. Id. at 1572 (cleaned up).

8 DOJ Journal of Federal Law and Practice December 2022

II. Kelly ’s limited eﬀect

December 2022 DOJ Journal of Federal Law and Practice 9

31. 36 F.4th 191 (4th Cir. 2022).

10 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 11

were convicted of engaging in a scheme to defraud three universi-

12 DOJ Journal of Federal Law and Practice December 2022

It is not plausible to describe taking money from students, appli-

December 2022 DOJ Journal of Federal Law and Practice 13

Along similar lines, a district court denied a defendant’s motion to dismiss

60. Id. at *20.

14 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 15

16 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 17

II. Obtaining and handling evidence that may be

18 DOJ Journal of Federal Law and Practice December 2022

1. Subpoenas to attorneys related to representing clients require special authorization.

December 2022 DOJ Journal of Federal Law and Practice 19

20 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 21

III. Litigating the CFE

22 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 23

16. Zolin, 491 U.S. at 562–563 (alteration in original) (citation omitted).

24 DOJ Journal of Federal Law and Practice December 2022

December 2022 DOJ Journal of Federal Law and Practice 25

IV. Beneﬁts of the CFE

19. Zolin, 491 U.S. at 556.

26 DOJ Journal of Federal Law and Practice December 2022

About the Authors