During the coronavirus pandemic, the federal government has taken significant actions to try and cushion the hard impacts of the economic crisis.  With over 11 trillion dollars available through a variety of federal assistance programs, federal investigators and prosecutors have identified several cases where these funds have been fraudulently obtained.

One way the federal government has responded to the economic challenges of the COVID crisis is through the Paycheck Protection Plan. The purpose of the PPP loan program is to allow small businesses to stay open during this unprecedented financial crisis and continue paying wages to employees. An Arkansas woman was indicted by a grand jury for allegedly requesting fraudulent PPP loans.³ She obtained nearly $2 million in PPP loans for two of her companies that were no longer in good standing with the Arkansas Secretary of State. Two days after receiving PPP funds, she made an $8,000 payment on her student loan debt.

A Los Angeles man has also been reported misappropriating PPP loans totaling $9 million. Andrew Marnell allegedly transferred millions of obtained funds to his brokerage account in order to engage in stock trading. Additionally, Marnell also spent hundreds of thousands of dollars at the Bellagio Hotel & Casino in Las Vegas. Marnell was charged with bank fraud and faces up to 30 years in prison.⁴

Besides attempting to spot and stop abuse of the federal programs connected to the crisis, federal investigators have also been active in attempting to identify and curtail crimes where consumer fears about COVID have been exploited. A federal grand jury indicted Huu Tieu for alleged mail fraud for introducing a misbranded drug into interstate commerce with the intent to defraud.⁵ Tieu is the CEO of Golden Sunrise Pharmaceutical Inc., which since April had been selling a package of herbal mixtures that he claimed could treat COVID-19. On his website and Facebook pages, Tieu falsely claimed his dietary supplement was the first in the country to have been approved by the FDA to treat COVID-19.

The U.S. Attorney’s Office in Kentucky filed a lawsuit to shut down six websites and a Facebook page that were attempting to “pre-register” consumers for a then-nonexistent COVID-19 vaccine in exchange for $100 worth of Bitcoin.⁶ Luke John Flint, the man responsible for running the sites, has not yet been criminally charged, but agreed to sign a civil injunction shutting down those sites. At the time, there was no known vaccine. Flint is not a licensed medical professional, nor is he registered with the FDA to distribute the currently available vaccines for COVID-19.

In an attempt to keep the economy afloat and businesses solvent during the COVID health crisis, the government fast-tracked its economic aid. This made it easier for people to misrepresent intentionally and unintentionally to receive government assistance.  Others have used this public health crisis and the fears associated with it to scam people and businesses. If you have been a victim of a COVID-related scam, you should contact the National Center for Disaster Fraud Hotline at 866-720-5721 or Justice.gov/DisasterComplaintForm. If you are approached by law enforcement or others about disaster assistance you have obtained, you should consult an experienced criminal defense lawyer about the ramifications of cooperating with officials under your unique circumstances.

__________

¹https://www.justice.gov/usao-nj/press-release/file/1263416/download

²https://www.cnbc.com/2020/03/30/coronavirus-man-charged-with-with-billing-for-fraudulent-test-claims.html

³https://www.justice.gov/usao-edar/pr/little-rock-woman-charged-covid-relief-fraud

⁴https://www.justice.gov/usao-cdca/pr/west-la-man-charged-fraudulently-obtaining-about-9-million-covid-relief-loans-some#:~:text=LOS%20ANGELES%20%E2%80%93%20A%20resident%20of,excursions%20to%20Las%20Vegas%20and

⁵https://www.justice.gov/usao-edca/pr/tulare-county-man-indicted-falsely-marketing-herbal-mixtures-fda-approved-treatment

⁶https://www.justice.gov/usao-wdky/pr/us-attorney-s-office-shuts-down-multiple-websites-claiming-offer-preorders-covid-19

⁷https://www.cdc.gov/vaccines/acip/recs/grade/covid-19-pfizer-biontech-etr.html#:~:text=On%20December%2011%2C%202020,of%20COVID%2D19.

⁸https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/moderna-covid-19-vaccine

A “Proffer agreement,” more informally known as “queen-for-a-day” agreement, is a routine tool used in federal criminal practice.^[1] However, before you decide to enter into a proffer agreement with the government, you should take a careful look at some of the hidden pitfalls and perils associated with these agreements and weigh your options carefully.

What exactly is a proffer agreement?

A proffer agreement is a written agreement between federal prosecutors and an individual (usually the target of an investigation or a defendant), in which the individual agrees to provide information to the prosecution at an informal debriefing (also known as a “proffer session”). In return, the government promises not to use the proffer statements against the individual at any subsequent trial.^[2] However, if the individual lies during a proffer session, the government may offer those statements against him or her. More about this “impeachment” catch is discussed below. Often times, the government also reserves the right to use the information to further its investigation.

Typically, it’s understood that one enters into a proffer agreement with the hope that it will later lead to an immunity agreement or plea bargain if the government is satisfied with the information provided.

What are the risks associated with proffer agreements?

Proffer agreements carry with them unique and inherent risks that require serious consideration. Because proffer agreements are not formal immunity agreements or plea bargains, they do not offer the same protections if the government decides to act on the information turned over to them. While the government may not use proffer session statements against the individual in its case-in-chief, the government can use the information provided to follow leads and conduct further investigation. If those leads and further investigations lead to new evidence, the new evidence can be used to indict and convict the individual who gave the information in the proffer session^[3]—a particularly dangerous pitfall.

Additionally, as previously mentioned, nearly all proffer agreements contain clauses that allow the government to use false or misleading statements made during proffer sessions for impeachment purposes (that is, to discredit the witness’s testimony). Thus, if any part of the testimony or information provided during a proffer session is deemed to be misleading or outright untruthful, the entire proffer agreement can be admitted against you at trial. This can put you and your defense in an uncomfortably compromised position, all in an effort to keep the damaging proffer statements away from the ears and eyes of the jury.

What factors should you consider before entering into a proffer agreement?

Whether you should ultimately enter into a proffer agreement is not a light decision. However, some factors to consider in making the decision include:

• Likelihood of indictment;
• Strength of defense;
• Willingness to disclose the whole truth;
• Timing;
• Financial ability; and
• Effect of an indictment.^[4]

Ultimately, the decision to proffer or not is up to you, but it should not be made without the assistance of a qualified and experienced white collar criminal defense attorney. If you have been contacted by a law enforcement agency about an interview, a qualified white collar criminal defense attorney can help you decide if entering into a proffer agreement is a good option.

^[1] Richard B. Zabel, James J. Benjamin Jr., ‘Queen for A Day’ or ‘Courtesan for A Day’: The Sixth Amendment Limits to Proffer Agreements, 15 White-Collar Crime Rep. 1 (2001).

^[2] Id.

^[3] Proffer Agreement Law and Legal Definition, USLegal, Inc., https://definitions.uslegal.com/p/proffer-agreement/.

^[4] Kenneth C. Picking, The Risks and Benefits of Proffer Agreements in Parallel Proceedings, A.B.A., April 4, 2012, http://apps.americanbar.org/litigation/committees/criminal/email/winter2012/winter2012-0402-risks-benefits-proffer-agreements-parallel-proceedings.html.

Deputy Attorney General Sally Yates sent out a memorandum to all U.S. Attorneys last September issuing guidelines for how to investigate cases against corporate entities. Corporations oftentimes are able to evade being held accountable for crimes because it can be challenging to find an individual to try.

However, the contents of the memo might encourage corporations to behave in a more guarded manner during investigations. This is because it requires attorneys to build cases against individuals in corporations as soon as an investigation is opened rather than after a great deal of information has been gathered. The idea is that lower-level employees should provide the government with information about higher ups who make decisions to violate laws. This means a corporation’s internal investigation might be compromised, as people will be less likely to bring up wrongdoing for fear of being blamed or prosecuted. It can also create issues of infighting within corporate employees.

In an article posted on businessreport.com, the Cazayoux Ewing Law Firm‘s own Don Cazayoux explains how this shift in policy may make it more challenging to receive cooperation from corporations who are facing criminal charges. He says that defining “full cooperation” in these investigations can already be difficult. Generally, corporations want to provide just enough information to say they’ve cooperated with an investigation, but they are likely to hold back more damaging facts about their actions.

Ideally, these guidelines will help deter corporate wrongdoing. However, their effect remains to be seen.

A woman who allegedly received oil-spill recovery money of $150,000 faces trial. She claimed she lost wages as a Holiday Inn manager in Biloxi, but federal indictment says she did not work for Holiday Inn before the 2010 oil spill in the Gulf of Mexico.

The second indictment against Vanna Ly, formerly of Biloxi, alleges falsified bankruptcy petition and concealed her assets. She now lives in New Orleans and is set for trial on a court calendar starting September 6^th. The Sun Herald reports she pleaded not guilty to all charges. Ly is charged with attempt and conspiracy to commit wire fraud in the oil spill case and concealment of assets and four counts of making false declarations in a bankruptcy proceeding.

If you have been charged with committing wire fraud, you should speak with a wire fraud defense attorney at Cazayoux Ewing Law Firm as early on in the legal process as you can. Please call our offices in Baton Rouge at (225) 650-7400 today.

A recent article in The Washington Post details the alarming process by which prosecutors and court officials redefined a legal term in order to penalize a politician for engaging in previously non-criminal activities normally associated with politics.

Robert F. McDonnell, former governor of Virginia, has been sentenced to two years in prison after a court found him guilty of accepting gifts from one Richmond businessman in exchange for political favors and acts. While the Supreme Court has officially defined an “official act” of a government official as “the actual exercise of government power,” prosecutors submitted a new definition that considers “official acts” to be any type of “behavior that could have some attenuated connection to a potential government decision later.”

This new definition was held up by an appellate court and endorsed by the judge presiding over McDonnell’s trial, who told jury members to consider the new definition when making their decision.

As was pointed out by the author of the Post piece as well as briefs written by “31 current governors; 60 former state attorneys general (six from Virginia filed their own); 13 former federal officials, including two former U.S. attorneys general and former legal counsels to every president starting with Ronald Reagan; and three law professors, from Harvard University and the University of Virginia,” the steps taken in this trial represent massive contortion of “the understanding of quid pro quo corruption.”