Money, Art and Crime

Crime often pays, and sometimes pays very well. Both the drug dealer with a pile of cash in the basement and the insider trader with a huge portfolio in an off-shore account face a common problem: How to use the cash without being targeted by law enforcement or tax collectors. The solution is “money laundering,” a banal phrase that accurately conveys how illegitimate wealth is cleaned and pressed to appear lawful – and hence useable.

On September 5, 2012 the Law School hosted a packed lecture, “Money Laundering Perfected by Art,” presented by the Hon. Fausto Martin De Sanctis, a leading federal judge from Brazil, and Karine Moreno-Taxman, an assistant United States Attorney in the Eastern District of Wisconsin. Currently a fellow at the Federal Judicial Center in Washington D.C., Judge De Sanctis has been in the forefront of Brazil’s efforts to crackdown on international and domestic money laundering. Judge De Sanctis described the myriad forms that money laundering can assume, especially through the use of museum-quality art. Paintings and sculptures, for example, leave no money trails. Art dealers jealously guard the confidentiality of their patrons, which only facilitates stealth transactions. Judge De Sanctis talked about the legal battles involving Jean Michel Basquiat’s “Hannibal” (see image), an $8 million painting smuggled from Brazil to the U.S. by persons implicated in the Banco Santos financial scandal (Brazil’s answer to Bernie Madoff). 

Attorney Moreno-Taxman, who translated for Judge De Sanctis, also talked about gaps in domestic (U.S.) and international law which make these crimes hard to detect and complicate the recovery of tainted art, like “Hannibal.” An interesting subtheme was Brazil’s efforts to implement the rule of law since 1988, when it abandoned its military dictatorship and adopted a written constitution.

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Federal Criminal Cases, 1928-1930: Surprisingly Similar to Today, But Also Very Different

In anticipation of the conference here next month on the Wickersham Commission, I’ve been reviewing the thirteen voluminous reports the Commission issued in 1931 on various aspects of the criminal-justice system.  One that holds some interesting surprises is the “Progress Report on the Study of the Federal Courts.”  The heart of this report is a fascinating, detailed statistical analysis of the criminal cases in the District of Connecticut for fiscal years 1928-1930.

One thing that strikes me as remarkable is the almost complete absence of trials — the system was dominated then, as now, by guilty pleas.  Old-timers today will sometimes tell you about a golden age of trials in the federal system in the 1970′s.  In that decade, guilty plea rates hovered between 77% and 82%.  After 1981, the rate climbed steadily, reaching more than 96% of adjudicated cases in 2009.  But this, apparently, is not a new phenomenon.  Among 740 criminal cases filed in the District of Connecticut between 1928 and 1931, only nine went to trial.  That’s right, only nine trials in three years, or 1.5 criminal trials per judge per year.  (Eight of these trials, by the way, took less than one full day to try.)  The guilty plea rate in adjudicated cases was over 98%.

After doing some digging for national data, I discovered that the guilty plea rate rose steadily between 1916 and 1933, reaching a peak of 91%.  (See Ron Wright’s helpful data compilation here.)  So, Connecticut seems not to have been terribly atypical.

The Connecticut data are, in fact, quite reminiscent of a modern“fast-track” plea-bargaining system.  

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Effective Assistance of Counsel and Tribal Courts—A Different Standard?

Virtually none of the U.S. Constitution’s guarantees or prohibitions applies to the actions of Indian tribal governments when those governments are exercising their inherent or retained powers. For this reason, among others, Congress in 1968 passed the Indian Civil Rights Act (ICRA), 25 U.S.C. §§ 1301-1303, which imposes on tribal governments most though not all of the guarantees found in the Bill of Rights and 14th Amendment. After almost 45 years, however, it remains uncertain whether or to what extent ICRA’s statutory guarantees must parallel the interpretations given to the respective constitutional guarantees on which they are based.

Among ICRA’s original provisions is a command that “[n]o Indian tribe in exercising powers of self-government shall . . . deny to any person in a criminal proceeding the right . . . at his own expense to have the assistance of counsel for his defense . . . .” This, of course, is an analog to the 6th Amendment guarantee that “[i]n all criminal prosecutions, the accused shall enjoy the right . . . to have the Assistance of Counsel for his defence,” which the U.S. Supreme Court has interpreted as requiring “reasonably effective assistance,” Strickland v. Washington, 466 U.S. 668, 687 (1984), by “an advocate who is . . . a member of the bar,” i.e., a licensed attorney. Wheat v. United States, 486 U.S. 153, 159 (1988).

In the recent case of Jackson v. Tracy, No. CV 11–00448–PHX–FJM, 2012 WL 3704698 (D. Ariz. Aug. 28, 2012), a federal district court has held that ICRA’s assistance-of-counsel guarantee requires neither that one’s advocate be a licensed attorney nor that the advocate be held to the standard of a reasonably effective attorney.

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