The BLT: The Blog of Legal Times

Michael Jackson's Former Manager Pleads Guilty in Tax Case

The former general manager for the late pop idol Michael Jackson pleaded guilty in Washington federal district court today to charges she failed to file federal and District income tax returns.

Raymone Bain, a resident of the District, faces a maximum of a year in prison and a $100,000 fine for the federal charge, six months in prison, and a $5,000 fine for the D.C. criminal violation, the U.S. Justice Department said. U.S. Magistrate Alan Kay scheduled sentencing for Aug. 31.

Bain of Washington’s Davis, Bain & Associates, a public relations firm, became the personal general manager for Jackson in 2006. DOJ officials said Bain was responsible for the daily operations of the Michael Jackson Company, including financial, public relations and marketing tasks. She received $30,000 monthly as general manager and president.

Bain received a law degree from Georgetown University Law Center in 1984 but was not a licensed attorney, according to court records.

Prosecutors alleged Bain did not pay income tax from 2006 to 2008. The government estimated the tax loss between $200,000 and $400,000. In 2007 and in 2008, Bain, according to court records, requested an extension to file U.S. income tax returns.

Assistant U.S. Attorney Susan Menzer and DOJ Tax Division trial attorney Karen Kelly were not immediately reached for comment this morning on the plea deal. Kelly is the assistant chief for the division’s Northern Criminal Enforcement Section.

“Bain well knew, and was fully aware that the law required she file federal tax returns and DC tax returns each year, but nevertheless failed to file,” prosecutors said in court papers. A copy of the plea agreement is here.

Bain’s attorney, Frederick Cooke Jr. of Washington’s Rubin, Winston, Diercks, Harris & Cooke, was not immediately reached for comment. Bain also was not reached for comment.

The Washington Post in 2006 wrote this profile of Bain, describing her as a "master of the care and coddling of famous folk, especially those who happen to find themselves in exceedingly hot water."

The death of Jackson in June 2009 left behind multiple lawsuits involving the pop music star. In one suit filed before Jackson's death, Bain demanded $44 million she claimed under a contract with Jackson. A trial judge in May 2010 sided with the Jackson estate. Bain's lawyers are fighting to get the judgment set aside.

Agencies Fight Immigration Legal Service Fraud

Senior Obama administration officials today announced a new effort to combat the unauthorized practice of immigration law.

Justice and Homeland Security department officials unveiled the program today in Washington with representatives from the Federal Trade Commission. The initiative has three tiers—outreach, education and enforcement, DOJ officials said.

“This coordinated initiative targets those who prey on immigrant communities by making promises they do not keep and charging for services they are not qualified to provide,” Assistant Attorney General Tony West of the Civil Division said in a prepared statement.

DOJ officials said the government is investigating and prosecuting dozens of cases involving the unauthorized practice of immigration law. Last year, the federal government collected $1.8 million in restitution, not including state and local prosecutions against individuals and businesses involved in legal services scams.

In a recent case, prosecutors in South Florida last month filed charges against a 34-year-old man in West Palm Beach who allegedly misrepresented himself as an immigration attorney. The authorities said the man was in possession of more than 3,000 immigration applications.

West, in his remarks, described one victim's plight, a U.S. citizen whose father needed an immigration lawyer. A man with a business card, a contract and a demand for a $500 fee had stolen the identity of a California attorney, West said. The victim did not know the man was not a lawyer.

"When the day came for Aaron’s father to appear in court, the so-called lawyer was nowhere to be found," West said. "It was only after his father lost his case that Aaron learned the truth about the man who promised to help."

The man, Levy Crespo, is accused of filing false paperwork to U.S. Citizenship and Immigration Services indicating he was an attorney. Prosecutors allege the man submitted a Florida bar identification card—using another lawyer’s bar number—as part of the scheme. Crespo allegedly attended court hearings under the assumed identity of an attorney who is a member in good standing of the Florida bar.

The new initiative announced today includes a new Immigration Services code on the FTC online consumer complaint database to facilitate public reports about legal services scams. The database of complaints is shared among thousands of law enforcement agents. Officials today unveiled a brochure, poster and public service announcement campaign and a web resource center.

“Through a combination of efforts, including reporting fraud, educating the public and dedicated outreach, we are bolstering our efforts toward growing a force of legitimate legal services providers and getting rid of fraudsters,” Juan Osuna, director of the Executive Office of Immigration Review, said in a statement.

The American Immigration Lawyers Association issued a statement this afternoon in praise of the government initiative. "As the immigration bar association, we are eager to provide pro bono legal services to the immigrants who have been scammed out of money and whose cases have been muddled by faulty practices,” AILA president David Leopold said.

DOJ's Public Integrity Section Takes on John Edwards

Updated 4:28 p.m.

A team of three Justice Department public integrity prosecutors, working with federal prosecutors in North Carolina, make up the government's prosecution team against former U.S. Senator and president candidate John Edwards.

DOJ announced today that a grand jury indicted Edwards for his alleged role in a scheme to violate federal campaign finance laws. Edwards, 57, represented by Skadden, Arps, Slate, Meagher & Flom partner Gregory Craig and local counsel, was charged in U.S. District Court for the Middle District of North Carolina with conspiracy, false statements and accepting illegal campaign contributions. A copy of the indictment is here.

“Mr. Edwards is alleged to have accepted more than $900,000 in an effort to conceal from the public facts that he believed would harm his candidacy,” Assistant Attorney General Lanny Breuer said in a statement. “As this indictment shows, we will not permit candidates for high office to abuse their special ability to access the coffers of their political supporters to circumvent our election laws.”

Prosecutors allege Edwards, during his presidential candidacy, conspired to accept and receive campaign contributions to “protect and advance his candidacy from disclosure of an ongoing extra-marital affair and the resulting pregnancy.” The government contends Edwards used the funds to pay for the living and medical expenses of Rielle Hunter, with whom Edwards had an affair.

In a statement, Craig said today: “John Edwards will tell the court he is innocent of all charges, and will plead not guilty. He did not break the law and will mount a vigorous defense.”

Outside the Hiram H. Ward federal building in Winston-Salem this afternoon, Craig told reporters: “No one has ever been charged, either civilly or criminally, with the claims that have been brought against Sen Edwards today. This is an unprecedented prosecution. Craig said "no one would have known, or should have known, or could have been expected to know, that these payments would be treated or should be considered as campaign contributions. And there was no way Senator Edwards knew that fact either.”

One key figure in the indictment is the late Fred Baron, prominent Democrat and plaintiffs' personal injury lawyer in Dallas. Baron is "Person D" in the Edwards indictment, our sibling publication Tex Parte noted today. Baron was Edwards' finance chairman for his 2008 presidential run.

The Edwards prosecution puts DOJ’s Public Integrity Section back in the national spotlight. Lawyers in the unit came under fire in 2008 and 2009 for the botched prosecution of former Sen. Ted Stevens of Alaska. Three former members of the section, former chief William Welch II, Brenda Morris and Edward Sullivan, remain under criminal investigation for their roles in the failed prosecution.

Public Integrity trial attorneys David Harbach II and Jeffrey Tsai are assigned to the Edwards prosecution, in addition to the section’s deputy chief, Justin Shur. Assistant U.S. Attorneys Robert Higdon Jr. and Brian Meyers in North Carolina are working with the Main Justice team. Higdon is the criminal division chief for the U.S. Attorney's Office for the Eastern District of North Carolina, in Raleigh.

'Fabricated' Evidence At Center of Mistrial in D.C. Drug Case

In the fall of 2008, Washington-area defense lawyer Charles Daum set out to convince a federal jury that his client was not guilty in a crack cocaine case in which police seized tens of thousands of dollars worth of drugs.

Daum's client was not home when the authorities said they found crack cocaine in his grandmother's one-bedroom apartment in Northeast Washington in February 2008. In this constructive possession case, Daum pinned the blame on one of his client's brothers.

Daum submitted a series of photographs into evidence—including one image that purportedly showed one of Delante White’s brothers bagging up crack cocaine. Daum also presented jurors a lease that he used to argue his client was not living in the apartment where the police said they found drugs, $2,000 cash and other items.

The jury initially voted 7 to 5 in favor of finding White guilty, the jury foreperson said in a recent interview. As the panel continued reviewing the evidence, more jurors joined the guilty camp. The foreperson described the government's evidence as comprehensive, leaving jurors no doubt that White was guilty.

But there was one hold out, and the jury deadlocked 11 to 1 in favor of conviction. U.S. District Judge Paul Friedman declared a mistrial.

Prosecutors now contend much of the evidence in the drug case was fabricated—staged in an attempt to dupe jurors about which brother had control of the crack cocaine. Two of White’s brothers were charged in 2009 with participating in a conspiracy to obstruct the trial. One brother acknowledged photos were fabricated as part of the scheme, court records show.

Government lawyers Robert Spelke and Donnell Turner of the Justice Department's narcotics section also contend the lease agreement was a fake.

Daum, 64, was indicted last month in Washington federal district court on charges he orchestrated the conspiracy. Two defense investigators, Daaiyah Pasha and Iman Pasha, were also charged in the conspiracy.

Daum’s attorney, David Schertler of Washington’s Schertler & Onorato, said Daum denies the allegations and will fight the case at trial. Schertler said in April he is "anxious for the opportunity to defend Mr. Daum in the same criminal justice system which he has served so long to vindicate both his personal and professional reputation.”

The jury foreperson said in an interview the totality of the evidence pointed to White’s guilt. The photo showing one of White’s brothers bagging up rock cocaine was odd, the foreperson said, but it was not so convincing to lead the panel to believe the police had the wrong man.

But the one man on the panel who did not find White guilty said the evidence in the trial in September 2008 was “too circumstantial” to hold White accountable. "Nothing really seemed concrete,” the juror said in an interview.

Appeals Court Upholds Safavian Public Corruption Conviction

A federal appeals court in Washington today affirmed the conviction of Jack Abramoff friend David Safavian, the former chief of staff for the General Services Administration who was charged with obstruction of justice and false statements in a public corruption case.

Safavian's trip to the U.S. Court of Appeals for the D.C. Circuit was his second in recent years. In the earlier appeal, the court tossed the case back to the district court for a retrial, which was held in late 2008. Today a three-judge panel--Judges Douglas Ginsburg and Janice Rogers Brown, with Senior Judge Harry Edwards--unanimously upheld the jury’s verdict in the second trial.

The charges against Safavian stem from a golfing trip in Scotland he took with Abramoff and others in August 2002. Prosecutors alleged Safavian lied to government officials and agents about the extent of his professional relationship with Abramoff and about details surrounding the trip. A grand jury in Washington federal district court first indicted Safavian in October 2005.

After the D.C. Circuit in June 2008 remanded the case to the trial court, plea negotiations failed. Prosecutors tacked on two additional counts--including false statements to the FBI--that were not in the original case. Safavian’s trial attorneys, who included Lawrence Robbins of Washington’s Robbins, Russell, Englert, Orseck, Untereiner & Sauber, called the government’s action vindictive.

The D.C. Circuit said in a per curiam ruling that the prosecutors were “objectively reasonable” to change trial strategy in response to the appeals court’s initial adverse ruling that remanded the case for a second trial.

An appellate lawyer for Safavian, Steptoe & Johnson partner Shannen Coffin, said today: “We are obviously disappointed with the result. We are studying the opinion and considering any further options that Mr. Safavian might have.”

Justice Department Sangita Rao argued the case for the government in the D.C. Circuit in October.

The Justice Department did not provide immediate comment on the ruling. Safavian, sentenced to about a year in prison, has been free pending the outcome of his appeal. The government opposed Safavian’s release on bond.

Former U.S. Marshals Employee Sentenced to 21 Months in Prison

A former U.S. Marshals Service employee who created a fake person on the agency's payroll in a scheme that netted more than $100,000 has been sentenced to 21 months in federal prison.

The former employee, Sno Rush, was ordered to pay back $104,000, according to the Justice Department. Judge Colleen Kollar-Kotelly also ordered Rush to serve three years of supervised release after she gets out of prison.

Rush, 40, pleaded guilty in October in U.S. District Court for the District of Columbia to one count of theft of government property. A former marshals service administrative officer in D.C. Superior Court from 1998 to 2008, Rush was responsible for authorizing payment for marshals service employees.

Prosecutors, led by Eric Olshan of the Justice Department’s Public Integrity Section, said Rush admitted to creating a fake employee and submitting attendance records.

Rush, according to prosecutors, also acknowledged issuing more than $50,000 in Treasury checks to pay down the balance on a personal credit card. Justice officials said Rush tried to make the payments appear legitimate through fraudulent business invoices.

Rush’s attorney, Washington solo practitioner Kenneth Robinson, was not immediately reached for comment this afternoon.

DOJ Antitrust Presses NCAA On BCS v. Playoffs

Updated 5:07 p.m.

The Justice Department Antitrust Division has asked NCAA officials to provide information about why college football does not use a playoff system to determine a national champion.

Assistant Attorney General Christine Varney, the department’s antitrust division leader, yesterday sent a two-page letter (PDF) to NCAA president Mark Emmert that asked for the association’s views on several topics associated with the Bowl Championship Series.

“Serious questions continue to arise suggesting that the current Bowl Championship Series (BCS) system may not be conducted consistent with the competition principles expressed in federal antitrust laws,” Varney said.

Varney noted in the letter that the Utah state attorney general, Mark Shurtleff, has announced an intention to file suit against the BCS, established 13 years ago. DOJ recently received a letter from 21 professors requesting the government open an antitrust investigation. Shurtleff posted Varney's letter on the Utah Office of the Attorney General web page.

Varney’s letter to Emmert quoted from a March 2 article in The New York Times in which the NCAA said it “was willing to help create a playoff format to decide a national championship for the top level of college football.”

In the letter, Varney said “it would be helpful to understand your views” about what steps the NCAA has taken to create a playoff system. Varney also asked whether the NCAA has determined that there are “aspects of the BCS system that do not serve the interests of fans, colleges, universities and players.”

Sen. Orrin Hatch (R-Utah), a critic of the BCS system, today urged Attorney General Eric Holder Jr. to investigate antitrust claims. Hatch called the BCS system a “mess” and said “privileged” conferences having an unfair advantage.

In his testimony at today's Senate Judiciary Committee oversight hearing, Holder noted the letter Varney sent to the NCAA. The attorney general said he did not disagree with Hatch.

NCAA spokesman Bob Williams said in a statement this afternoon: “When we actually receive the letter from the Department of Justice we will respond to its questions directly. It should be noted that President Emmert consistently has said, including in the New York Times article, that the NCAA is willing to help create a playoff format for Football Bowl Subdivision football if the FBS membership makes that decision.”

The Morning Wrap

Killed: President Barack Obama, in an address to the nation late Sunday from the White House, said U.S. forces in Pakistan killed Sept. 11 mastermind Osama bin Laden. Thousands of people gathered outside the White House, Times Square and at ground zero in lower Manhattan. Investigative work on a courier led the authorities to the $1 million compound that harbored bin Laden, who was killed in firefight.

Stop!: Missouri state officials have asked the U.S. Supreme Court to stop a U.S. Army Corps of Engineers plan to blow up a levee that would flood 130,000 acres of farmland to ease flooding at the confluence of the Ohio and Mississippi Rivers, The Wall Street Journal reports. Missouri officials argue the plan violates the state's clean-water laws.

Slashed Support: Faced with substantial budget cuts, the New York state courts system has eliminated funding for a program that supports lawyers who are coping with drug and alcohol abuse, The New York Law Journal reports. The program, established in 2001, brought statewide resources to the prevention and treatment of alcohol and substance abuse among lawyers, judges and law students.

Associates in Demand: The recent rebound of M&A and IPO activity in Silicon Valley has contributed to new demand for midlevel associates, particularly in corporate departments, The Recorder reports. Cooley and Wilson Sonsini Goodrich & Rosati are bumping associate salaries up. Litigation, licensing and patent prosecution attorneys are also in high demand.

Striking Out: A judge has thrown out a Mets fan's suit over a broken bat that flew into his face. The suit said the Mets and Major League Baseball should have done more to protect fans against shatter-prone maple bats.

Apologies: Sony executives are apologizing for a security breach in the company's PlayStation Network that exposed personal data of 77 million accounts. Sony is vowing to increase security measures. The FBI is investigating what Sony officials described as a "criminal cyber attack" on the company's data center in San Diego.

D.C. Defense Lawyer Charged in Scheme to Fabricate Evidence

Prosecutors on Thursday unsealed an indictment charging a 64-year-old criminal defense attorney in Washington for his alleged participation in a scheme to fabricate evidence to benefit a client charged in a drug trafficking case.

The attorney, Charles Daum, a solo practitioner in the District, was charged in a seven-count indictment along with two private investigators.

The indictment said Daum was part of a plan to produce evidence to convince jurors that the drugs police seized from a client actually belonged to another person. Daum was charged with, among other crimes, three counts of influencing a juror and two counts of inducing perjury. Click here for a copy of the 16-page indictment.

Daum did not return messages seeking comment at his law office or by e-mail. His lawyer, David Schertler of Washington’s Schertler & Onorato, said in a statement that Daum is "shocked by the allegations made in the indictment and adamantly denies the charges" that government brought against him.

"These charges threaten to chill the important work done by all criminal defense attorneys in our ethical obligation to zealously defend our clients," Schertler said. "We are anxious for the opportunity to defend Mr. Daum in the same criminal justice system which he has served so long to vindicate both his personal and professional reputation.”

Daum, a member of the D.C. bar since 1978, has a history of attorney discipline actions in the District, Maryland and Virginia. He has been admonished for, among other ethical violations, revealing client secrets.

Justice Department prosecutors said earlier this month that the government is examining other cases that may have been compromised.

“The allegations are extremely serious and the consequences far reaching as this case goes to the very essence and integrity of the judicial system,” Criminal Division trial attorney Donnell Turner of the narcotics section said in court papers filed on April 12. Turner is prosecuting the case with DOJ trial attorney Robert Spelke.

Poker Issue Separates Goldstein and Akin Gump

Supreme Court litigator Thomas Goldstein created a mystery three months ago when he left his perch at Akin Gump Strauss Hauer & Feld with little explanation. Now, Goldstein and his former firm find themselves on opposite sides of the besieged Internet poker industry.

On Friday, the Justice Department unveiled criminal indictments and a civil complaint targeting online poker company PokerStars, among others. The Web site of Goldstein’s firm, Goldstein, Howe & Russell, lists PokerStars as a representative client.

On another side of the industry are the established, land-based casinos, which could stand to benefit from the prosecution of online poker companies. Akin Gump has counted one of these casino companies, Caesars Entertainment Corp., as a lobbying client since 2009, and the firm reported $480,000 in fees in 2010.

It’s not clear that the potential for a poker-related conflict was the reason Goldstein (pictured above) left Akin Gump in January. At the time, he said one of his largest clients had asked him to take on additional work, and that the client has a “love-hate relationship” with another Akin Gump client.

But if Goldstein had stayed, Akin Gump would be in the position of representing the largest online company in the U.S. market, PokerStars, and the world’s largest casino company, Caesars, at a time when those companies’ interests are in conflict. Goldstein did not respond to a request for comment today, and on Monday he declined to speak about the Justice Department’s enforcement action against the online poker industry. An Akin Gump spokeswoman declined to comment.

Goldstein, the founder of SCOTUSblog, has not entered an appearance in the government’s case against the online companies. The Am Law Daily reported on Monday that those companies have been looking for criminal defense counsel.

Legal Times described Goldstein as a longtime poker aficionado in 2008, as he prepared to play in that year’s World Series of Poker in Las Vegas. (He won a seat in the main event while playing at a fundraiser for the Prevent Cancer Foundation.) At the time, he also represented the Poker Players Alliance, a nonprofit that’s aligned with the online poker companies.

“It has great analytical benefits,” Goldstein said of the game then. "You learn a lot about people, too. It’s very social.”

By David Ingram and Mike Scarcella. National Law Journal photo by Diego M. Radzinschi.