Jennifer Anton | 00:04
Hi, we’re here today with one of Dallas’s leading criminal defense lawyers, John Helms, and he’s going to talk to us about white collar crime, which is an interesting subject in the law. So I wanted to get started with my first question, what exactly is white collar crime in federal law and in state law?
John Helms | 00:30
Well, white collar crime is just a category. There’s not a crime called white collar crime in Texas state law or in federal law. It’s a descriptive category. What it means is economic or financial crime that doesn’t involve violence or drugs. So it could be things like theft, embezzlement or fraud, which means basically tricking somebody out of money. So financial crimes are really what white collar crime is all about.
Jennifer Anton | 01:05
All right, well, that’s helpful. So how do white collar federal crime charges differ from state charges in terms of procedures and in terms of penalties?
John Helms | 01:17
Well, they’re similar, except that in typical white collar federal crimes, you have to have some sort of federal interest involved. Usually that means some involvement of interstate commerce or some use of the interstate telephone system or interstate wires, like sending signals from one computer to another across the state line. Other than that, they’re very similar. They involve things like fraud and theft. And as a practical matter, for the federal government to want to get involved, they’re going to have to believe that the case is big or important enough to justify the use of federal resources. If not, then they’ll leave it to the state system to prosecute. As far as penalties go, I think it’s safe to say that as a general matter, the federal system is going to result in more severe penalties than the state court system.
Jennifer Anton | 02:30
So what are the most common defenses that get used in white collar crime cases?
John Helms | 02:36
Well, the defenses depend on the type of case and the facts of the case. But common defenses would include things like the person who is accused of the crime was not aware of what was going on. The person accused of the crime was telling the truth as best the person knew it, did not intend to deceive someone. And very often in cases like investment fraud or securities fraud or things like that, where you have someone who is promoting an investment opportunity, and it doesn’t work out and people lose money. A very common defense is it’s not a crime to have a business venture that doesn’t succeed. And so despite the best efforts of the people promoting the investment, it just didn’t pan out. But that doesn’t mean there was a crime involved.
So those are very common defenses that you see.
Jennifer Anton | 03:37
So how does intent factor in the white collar crime analysis?
John Helms | 03:43
Intent is usually a very important element of most white collar crimes. And what that means is you have to know that you’re doing something wrong, or at least not care and kind of look the other way. For example, let’s say you’re accused of fraud, and you’re accused of making a false statement about something. In general, the state or the government is going to have to prove that you knew that what you said or what you represented was false, and that you were trying to deceive someone. So without that level of intent, there’s probably not a crime. There might be a civil lawsuit over it, but there’s probably not a crime. So intent can be a really important element of a white collar crime. And that’s why lack of intent is often a successful defense.
Jennifer Anton | 04:39
So what should someone do if they’re under investigation for a white collar crime?
John Helms | 04:44
The first thing you should do is hire a lawyer. And you need to do that right away. You shouldn’t wait around. If you wait around while an investigation is going on, you’re losing time, and you’re losing the opportunity to get ahead of the curve. So first of all, contact a lawyer. Second of all, do not answer questions by a detective or a federal agent or something like that. Don’t talk to them. Tell them that you want your lawyer present for any type of question. That will protect you because you may say something that is very damaging to your defense without even realizing it. So don’t talk to the agent or the detective or the investigator. And one other thing you need to do is, never try to hide or destroy records. If you do, you will probably be caught. And it will make it look like you know that you committed a crime and you’re trying to cover it up. So don’t destroy anything. Don’t hide anything. Contact a lawyer and let the lawyer help you decide how to proceed.
Jennifer Anton | 05:59
So how does… And you touched on this a little bit, but tell us a little bit more about early intervention, how that early intervention can help with the rest of your case?
John Helms | 06:11
Well, many times in white -collar type investigations, the agents have a theory about why there was a crime or why the accused committed a crime, but they may not have a complete understanding of how business works or how the investment program works or the person’s job or something like that. So if a lawyer is involved early, the lawyer can contact the agent or the detective, the investigator, try to find out what it is that they’re investigating, why they think that the client may have committed a crime.
And then the lawyer can help build a defense early on by talking to the client, getting an understanding of the situation. And then you may be able to, the lawyer may be able to contact the agent and talk to the prosecutor and tell your side of the story. And that may convince them that maybe they shouldn’t charge you.
So it’s important to do that early because once a charging decision has been made, the train has left the station and it’s hard to get it back. So if you contact a lawyer early and the lawyer can get to work early, you might be able to cut off the investigation in the early stages, which is what you want.
Jennifer Anton | 07:38
So what kinds of outcomes can there be in a white -collar crime case? What kinds of penalties, for example?
John Helms | 07:46
There can be the same type of penalties as in any other criminal case. You can have someone get prison time. You can have someone get probation, although in the federal system, that’s fairly rare. In the state system, it’s less so. You can have fines in both the federal and the state system if you are found guilty of stealing money from someone, defrauding someone of money, basically causing someone a loss of money. You can be required to pay it back. That’s called restitution. And in both the federal and the state system, restitution to victims of financial crimes is mandatory. So those are the kinds of things that you can see.
Jennifer Anton | 08:34
So how do plea bargains work in white -collar crime cases?
John Helms | 08:39
In white -collar crime cases, plea bargains work the same way as any other type of case. Depending on whether it’s state or federal, plea bargaining is different in the state court system in Texas compared to the federal system. Because in the state court system, we generally try to reach an agreement on the outcome of the case. So an agreement on what the sentence should be.
In the federal system, we don’t normally do that. There’s a complicated explanation, but we don’t normally do that. There are situations in white -collar crime cases where you can plea bargain in a federal case for a specific sentence.
Some judges will reject those. Some will accept those. So you have to know which one of those types of judges you’re dealing with. But in general, you’re trying to come up with an agreement with the prosecutor for a guilty plea on favorable terms.
So that could be limiting what the charges will be. It could be potentially agreeing on a sentence. It could be agreeing to a charge that has a lower maximum penalty. For example, if you have one charge where you’re looking at a term of prison from zero to 20 years, and you have another where you’re looking at zero to 10 years, you might be able to agree with the prosecutor to plead guilty to the zero to 10. So you know you can’t get more than 10 years. So there’s all kinds of things that you can do. That, of course, is why you need a very experienced white -collar criminal defense lawyer. They’re going to know the kinds of things that you might be able to work out a deal on.
Jennifer Anton | 10:27
So is there a difference in state court versus federal court over whether a judge has to accept a plea bargain?
John Helms | 10:35
Well, as far as whether there’s a difference about judges accepting plea bargains, technically in state court in Texas and in federal court, technically the judge always has to approve a plea agreement. However, as a practical matter, in state courts in Texas, judges will almost always approve whatever plea agreement has been reached. And the reason for that is because in our state court system, you can decide, a defendant can decide, whether they want a judge or a jury to decide what their sentence is going to be. What that means is you can take the decision about the sentence out of the judge’s hands. And so if a state court judge in Texas has a plea bargain and has to decide whether to accept it, the judge knows that if the judge doesn’t accept it, you can go to a jury and waste a bunch of time having a jury and a trial. And both the defense and the prosecutor will be asking for the same sentence.
So the jury is going to give that sentence. And you’ve just wasted a whole bunch of time.
So the judge is going to accept the plea bargain because you can take it out of the judge’s hands. It’s very different in federal court. In federal court, only the judge can decide what the sentence is going to be.
So if you have a plea agreement and the judge doesn’t like it, the judge can just say, I’m not going to accept this. I get to decide. And there are certain judges who never accept agreed sentences in federal courts. There are a couple in the Northern District of Texas and Dallas who as a matter of policy just never accept agreed sentences in a plea bargain. And so we know who those are and we don’t send them those.
So you have to know whether a judge might be willing to do that or not. Certain judges are going to be more willing to do it in the federal system than others. But at the end of the day, in the federal system, it really is up to the judge. And that’s why we don’t have agreed sentences in plea bargains very often in federal court. And we pretty much always do in state court.
Jennifer Anton | 13:02
So, John, let’s pivot a little bit and tell me about what role financial documents have in white -collar crime cases, such as records, emails, electronic communications. How do those play into white -collar criminal cases?
John Helms | 13:20
Well, in white -collar cases, documents, emails, and financial records can be extremely important because white -collar crime cases usually involve some sort of financial crime. And if there’s a financial crime, you’re usually going to have to look at financial records to be able to prove that money was stolen, money was lost, the investment opportunity never had a chance. You may need those types of records to prove that the defendant knew what was going on, that the defendant was in charge of the situation that resulted in a financial crime.
So, records like that are very important in white -collar crime cases. And what you will see very often is toward the end of the investigation, there may be a search warrant where agents come and seize the documents of a company or business. Theyseize computers, they seize paper documents, then they subpoena emails from the service provider that is providing the email service.
So, there will be a lot of activity, especially toward the end of an investigation, to gather all the financial records, all the documents, all the emails. And then there can be a pause where nothing seems to be going on because behind the scenes, agents are going through mountains and mountains of documents trying to build their case.
Well, as a defendant and as a defense lawyer, I don’t know exactly where they are in reviewing the documents. So, sometimes you just have to wait for them to finish their review and that can take a long time. But the bottom line is, in white -collar crime cases, business records and documents and electronic information are extremely important.
Jennifer Anton | 15:20
Let’s talk a little bit about witnesses in white -collar crime cases. What ways can a criminal defense lawyer challenge the credibility of a witness in a white -collar criminal case?
John Helms | 15:35
Well, as far as white -collar crime trial witnesses, a defense lawyer, first of all, has to understand what the witness’s role was in the business, the company, the scheme, or whatever it is that the witness is going to testify about. Witnesses will very often want to please the prosecutor. And when they are preparing for their testimony, they might give answers that they think will be helpful to the prosecutor, even though they may not really know exactly what they’re talking about.
For example, they might be asked, did Mr. Smith know what was going on with the well -numbered egg program? And the witness might think, well, I think he did. And so, I’ll just say yes. Yes, he did. Because I think he probably did. And that’s what the agent wants to hear.
So, I’m going to just say, yes, he did. Well, maybe the witness doesn’t really know that. Maybe the witness is assuming something. Maybe the witness is saying what the witness thinks the government wants to hear.
So, I think it’s really important when you’re cross -examining a witness like that to find out what they really know and what they don’t know. And you can often get a witness to agree because it’s true. But really, they’re just assuming that the person knew, and they really don’t know that for a fact. So, that’s the kind of thing that I think that a defense lawyer needs to be aware of and think about.
Jennifer Anton | 17:20
So, on the issue of cooperating with the government, what are the implications for a client, a criminal defendant, cooperating with law enforcement or with federal prosecutors? Or state prosecutors?
John Helms | 17:36
Cooperation can be very beneficial to a criminal defendant in a white collar case. When you cooperate with the government, you are basically joining their team. You are trying to help them to investigate and prosecute other people. And that may include giving them information, helping them understand how the scheme worked, telling them about the involvement of different people and what they did and what their role was. And it may include testimony at trial. All those things can result in a significant benefit to the defendant who’s cooperating. And that is, the prosecutor can ask the judge to reduce the person’s sentence or a state court case can agree to a lower agreed sentence if the person provides valuable cooperation.
So, if a defendant is pretty much easily proven guilty and they’re going to lose a trial, their best option may be to cooperate and get a reduced sentence. So, that’s how cooperation works in white collar cases.
Jennifer Anton | 18:57
And tell us a little bit about how the appeals process works in white collar case
John Helms | 19:02
The appeals process in white collar cases is the same as the appeals process in any criminal case. So, what that means is, in our state court system, if you are found guilty at a trial, for example, you have a right to appeal to the regional court of appeals.
So, in a Dallas case, we have a court of appeals in Dallas and you appeal to them. You can appeal whether you’re guilty or not. You can appeal the sentence. And you’re trying to show the appeals court that there is some sort of legal error that occurred in the trial court that justifies the appeals court giving you some sort of relief, whether it’s a new trial, whether it’s reversing the conviction and entering a judgment of not guilty, whatever it is. You’re trying to convince them to give you some sort of a benefit because of a legal error at the trial court. If you lose at the regional court of appeal in Texas, you don’t have another appeal as a matter of right.
You don’t have a right to appeal. You have to ask the highest court in the state of Texas for criminal cases, which is called the court of criminal appeals. You have to ask them whether they would be willing to review the decision of the court of appeals. And you ask them and most of the time, they say no. But you have to ask them first. And once you ask them, if they decide they do not want to review the court of appeals decision, you’re pretty much out of luck. If they do agree to review it, then it’s another level of appeal.
So that’s the way our state system works. In our federal system, in cases in Texas or Louisiana or Mississippi, you appeal to the U .S. Court of Appeals for the Fifth Circuit. That’s the appeals court for federal cases in Texas, Louisiana, and Mississippi.
It’s the same process. You have a right to an appeal. And if you lose there, the next step is the United States Supreme Court. And again, with the Supreme Court, like the Texas Court of Criminal Appeals, they don’t have to hear an appeal. You have to ask them whether they are interested in your appeal. That’s called a petition for a writ of certiorari or a cert petition. And if they grant a writ of certiorari, that means they’re agreeing to hear the appeal. But in most cases, the U .S. Supreme Court will not agree to hear the appeal. If that happens, then you’re at the end of the line. So that’s how appeals work in white -collar crime cases, and in all criminal cases in the state and federal system.
Jennifer Anton | 21:51
In appeals cases, are they written appeals? Are they oral appeals that you argue to the court? Can you tell us how that works?
John Helms | 22:01
Sure. In an appeal, there is always a set of written arguments that we call briefs. The first thing that you do is you look at the record from the trial court. That’s the transcript of the trial, the documents in the court’s file, and you come up with the arguments that you want to make to the appeals court from the record of the trial court. One thing that a lot of people don’t understand, understandably, is that in an appeal, you cannot present new evidence in an appeal. You are limited to what happened at the trial court.
The court of appeals’ job is to see if there was an error or a mistake made in the trial court, not to have a new trial in the court of appeals. So you’re limited to just what happened in the trial. So you’re looking for errors or mistakes that the trial court made that you think might justify some sort of relief from the court of appeals. You write up an argument in a brief, called an appellate brief, that sets out the specific points of error that you believe justify getting some sort of relief for your client.
So you put that in what’s called an appellant’s brief, and those are the arguments that you’re limited to now and for the rest of the appeal. You can’t make new arguments later. You’re limited to those points that you make in your appellant’s brief. In that brief, one of the things that you’re going to do is you’re going to tell the court in a specific section of the brief whether you want oral argument for your case, and if you want oral arguments you’re going to explain why.
Normally, it’s because you think that the court will benefit from the opportunity to ask the lawyers questions about what happened in the trial court, about the case law that they’re citing,
things like that.
So you’re going to put down oral arguments requested or not. After that, the state is going to file a brief called the state’s brief or the government’s brief that responds to your arguments, and in that, they are going to say whether they think oral argument would be helpful.
And then the last brief that you file is called a reply brief, and that just responds to the arguments that the state has made. You can’t have new arguments. So those are the three briefs that you file with the Board of Appeals. You’re always going to have those.
So your briefs have your argument and all of the case law that you’re citing, and everything’s in there. After the three briefs have been filed, the Court of Appeals is going to decide whether they want to hear an oral argument. And their thinking is going to be, is everything set out in the briefs so that we’ve got everything we need to know? Or would it help us as judges to be able to ask the lawyers about the facts of the case? What happened in the trial court? What do these arguments mean? What are the implications? Would it help us as appeals court judges to be able to ask those questions of the lawyers?
If they think it would, they will grant oral argument, and they will send out a notice saying the court has granted oral argument. It’s going to be at this time on this day, and you’ll usually have a total of about 30 minutes for both sides. So 15 minutes aside to do an oral argument to the court. In those oral arguments, you do not have witnesses because you can’t have any new evidence besides what happened at the trial court. It’s just lawyers and judges talking to each other about the facts and the legal issues. How that relates to an appeal.
So it’s not the type of a closing argument that you might make in a trial. It’s not dramatic. It is pretty technical and academic. But you’re trying to convince the court of appeals that you’re right and the facts support your position. A court of appeals can say we do not need oral arguments.
So they deny oral argument. They send you a notice saying the court has decided to determine the appeal just based on the briefs. There will be no oral argument. And the justices in the state court system or the judges in the federal court system will consider the appeal on this certain date.
So that means you’re not going to have an oral argument. And it doesn’t mean they’re going to decide the case on that date. It means the three judges on the panel are going to get together and talk about how to decide the case on that day. The process of writing the opinion and circulating it to the other judges to see if they agree with it then follows. And that can take a long time. And as a lawyer, I never know when they’re going to decide the appeal. I never know when that opinion is going to come out. Just one day out of the blue in my email inbox, I see an opinion from the court of appeals. It just shows up. And you can’t call them and say, when are you going to decide my appeal? And there’s no time limit. They just get to it when they get to it.
So that’s how the process works. That’s how oral argument fits in.
Jennifer Anton | 28:03
What are the potential civil liabilities associated with a white collar crime case?
John Helms | 28:10
Well, white collar crime cases often involve a financial loss to someone or to a business. And so the same conduct or acts that might be a crime can result in a civil lawsuit.
So if I trick you out of money and a prosecutor wants to charge me with a crime, you can file a civil lawsuit against me saying that I tricked you out of money.
And in the civil lawsuit, you’re asking for the court to give you a judgment making me pay you back. So the result of a civil lawsuit is going to be an order from a court saying the defendant has to pay back the money that they took. In a criminal case, the result can be prison time, fines, and it can be an award requiring the defendant to pay back the victims.
So civil cases result in having to pay money back. Criminal cases can result in that, but of course, jail time. So that’s the difference.
Jennifer Anton | 29:33
So can a criminal defense attorney help his client mitigate some of the reputational damage that comes along with being charged with a white collar crime?
John Helms | 29:44
Well, as far as what a criminal defense lawyer can do to help clients’ reputation when they’re charged with a crime, there are some things that a criminal defense lawyer can do. If there is publicity around the case, for example, then the defense lawyer can give the client’s side of the story to the press. So that’s one way that you can help. In general, you don’t want your criminal defense lawyer to be your media relations person. Criminal defense lawyers specialize in handling the criminal case.
There are other people who specialize in public relations. And if it’s a company that has a presence around the region, or the city, or the country, you’re probably going to want a specialist in public relations to help. If it’s an individual and you’re dealing with just stories in the news, then the defense lawyer may be able to talk to the press and at least give the client side of the story.
Jennifer Anton | 31:13
I’d like to turn now to the issue of mail fraud. What kind of strategies are effective in defending against a case involving mail fraud?
John Helms | 31:23
So cases involving mail fraud are cases where there is fraud and the use of the mail, the interstate mail or the postal system, is involved in the fraud. So the kinds of strategies that you can use would include, first of all, making sure that use of the mail is actually something that had some relevance to the fraud. In order to be a mail fraud case, the federal government has to prove that use of the mail was part of the scheme. If it was too tangential, if it was too minimal a part of the scheme, then that can be a defense.
But even more generally, you want to look at what was the defendant’s intent, what did they know, did they really intend to defraud someone, were they aware of the fraud. So the same kinds of defenses in general fraud cases would apply in mail fraud cases, but you want to make sure that mailing is really an important part of it.
Jennifer Anton | 32:44
So is mail fraud and wire fraud the same thing?
John Helms | 32:49
Mail fraud and wire fraud are not the same thing because one is fraud that involves use of the mail and wire fraud is fraud that involves use of interstate wire facilities. So that would be, for example, sending electronic mail, could be phone calls. So it’s fraud, but one involves use of the mail and one involves use of interstate wires.
Jennifer Anton | 33:21
And so tell us a little bit about what trade secrets means and how that can be a criminal white collar crime.
John Helms | 33:30
Trade secrets are the information, valuable information that a business has that they have developed and put effort and expenses and resources into to develop that have some sort of value. And they have to be a secret so that only the business knows it.
So that might be a secret formula like the formula for coke. It might be a secret business process that they’ve developed that nobody else knows about that makes them more efficient than anyone else.
So a trade secret is valuable information that a business has that they don’t share with other businesses, and it gives them some sort of an advantage and they know it and everybody else doesn’t. So trade secrets can be stolen. You can have someone who works for a company and knows the trade secret, and they leave the company and they bring the trade secret to a competitor. You’re not allowed to do that. You can have situations where people hack into, use a computer to hack into another company’s network and steal information. They may steal trade secrets. Usually those types of cases are civil cases.
Normally trade secrets will involve lawsuits between someone who allegedly took the trade secret, someone who received the trade secret, and then the business that had the trade secret. The business that had the trade secret is suing the other people for stealing it and saying that they believe they’ve been damaged. They’ve lost money. They’ve lost the value of the trade secrets, and they want a court to award them money because of the trade secret that was stolen from them. So that’s a civil case.
In some situations where there’s computer hacking involved or when there’s really a true theft situation involved, it can become criminal. And so then the government has to prove that there was a trade secret, that it was stolen, and that there was criminal intent involved. Or that there was computer hacking, and to prove that the defendant is the one who did it, and that something was stolen as a result of the computer hack. So those are situations where it can become criminal.
Jennifer Anton | 36:17
Can you tell us a little bit about federal sentencing guidelines? What that is and how they’re used?
John Helms | 36:24
Sure. Federal sentencing guidelines are really a set of guidelines that are given to each of the federal judges who are sentencing people. And those guidelines are going to give a recommendation to the judge about what the person’s sentence should be. And it’ll be a range of months. And the recommendation from the guidelines is based on the facts of the case, the type of crime, and the facts of the case on one hand. And on the other hand, the person’s criminal history. So the more serious the crime, the higher the recommended range of months is going to be. And the worse a person’s criminal history is, the higher the recommended range is going to be.
So the reason we have them is because there are about 450 federal judges all around the country, and each one of those judges is sentencing people in criminal cases. So we don’t want someone in New York to get a sentence of one year in prison for a crime, and then someone in Texas who has the same criminal history and committed the same crime to get a sentence of 20 years. We want them to be similar.
We want the sentences all around the country to be uniform.
So these guidelines are going to give a recommendation to all those judges who are sentencing people, and the recommendation is going to be the same for that type of case and for that criminal history. And so it makes sentences more uniform, more similar throughout the country. And what the guidelines are, they’re a book. And the book has a chapter for every federal crime. And so you go to the chapter that applies to your crime, whether it’s securities fraud, or bank robbery, or tax evasion, or whatever it is. You go to the chapter, and it’s going to tell you how to compute a score that tells you how serious the crime is.
The higher the score, and it’s from 1 to 43, the higher the score, the more serious the crime.
And then you’re going to compute someone’s criminal history, and you’re going to go to a table, and you’re going to go down to their score for their crime, and you’re going to go across for their criminal history, and it’s going to give you a range of months. So that’s a recommended range of months that the guidelines recommend to the judge. The judge is not required to sentence you within that range. The judge can go above it or below it. But in most cases, the judge will sentence within that range, because the judges know that’s the whole point of the guidelines, is to make sentences more uniform. So that’s what they are, and that’s how they work.
Jennifer Anton | 39:15
I want to go back to another crime that some people are familiar with, which is called money laundering. Tell us a little bit about what that is, and how the criminal system treats money laundering.
John Helms | 39:32
Money laundering is a crime that involves taking money that somebody made from a crime, and trying to disguise it, so that it looks like it came from something legitimate. So it’s money laundering. It’s basically what it sounds like. You get dirty money that someone made from a crime, and then you launder it, you clean it, and you make it look like it came from something legitimate. The reason people do that is because if they have money, and that money can be traced, they want it to seem like that money came from a legitimate activity. It makes it harder to figure out that they were committing the crime. So money laundering itself is a crime. I’ll give you an example.
Let’s say that you have a drug enterprise, that you are involved in distributing methamphetamine, and you sell methamphetamine, and you get a bunch of money from that, and it’s all cash. So you’ve got a whole bunch of cash. Well, all that cash can raise a red flag, because if you try to deposit it into a bank, or send it overseas to someone, it can be flagged, and the government can start looking into where all that cash comes from.
So what you might want to do is, if you have a business, or you know someone with a business, and you can make it look like you are getting money by selling something to that business, make it look like the money came from selling cards to the business, as opposed to selling methamphetamine, it’s going to make it harder to detect what you did. So that’s what money laundering is.
It’s taking dirty money, making it clean, making it harder for law enforcement to figure out that you were involved in the crimes. So money laundering is a separate crime. The government has to prove that you took the proceeds, money that you got from crime, and you did some sort of financial transaction with the purpose of trying to disguise where the funds came from.
So if they can prove that you did that, you’re guilty of money laundering, which is a separate crime. They don’t have to prove that you were involved in the drug deal. If all your role is to launder the money, that’s a crime. You don’t have to have touched drugs or sold drugs at all. If you’re just helping someone launder the money, that’s a crime. On the other hand, the drug dealer is committing the crime of distributing illegal drugs, they could be involved in money laundering too.
So in that situation, they’re going to get a longer sentence if they’re found guilty of both the drug dealing and the money laundering. And you could have someone who has nothing to do with the actual selling of or handling of the illegal drugs who’s found guilty of money laundering, and they get sentenced to prison too.
Jennifer Anton | 43:01
In cases where you have a civil case going on at the same time as a criminal case about the same subject matter, how does a criminal defense attorney navigate that?
John Helms | 43:16
When you have a person who’s accused of a crime, who’s involved in a civil lawsuit, you have to proceed very carefully in the civil lawsuit. The reason is in civil cases, there is a process called discovery, where whoever is suing you, they can ask that you have to give testimony under oath and answer questions by the lawyer for whoever’s suing you.
That’s called a deposition.
Well, in a deposition, they’re probably going to ask you under oath about things that the government is accusing you of doing as a crime. And so a criminal defense lawyer will probably tell you need to refuse to answer those questions based on the Fifth Amendment to the United States Constitution, which says that you have a right not to have to incriminate yourself.
So that’s called taking the fifth. So in a civil deposition, you may decide you’re not going to testify at all, and you’re just going to take the fifth. You’re going to assert your Fifth Amendment privilege not to testify.
Well, that has consequences in a civil case. If you do that, then in a civil case, the jury at a trial is told that they can assume that your testimony would have been unfavorable.
So you have to understand that that’s a potential consequence of taking the fifth in the civil case. And it may be that there’s nothing you can do about that. Now, one thing that you can try to do is, depending on the type of civil case, if it’s a business or an individual that’s suing you can ask the court to make the civil lawsuit wait until the criminal case is finished.
Most judges may be reluctant to do that. But if it’s the government who’s suing you, so the government is suing you for securities fraud and prosecuting you for criminal securities fraud, then you may be more likely to be able to convince the judge to let the civil case be paused while the criminal case goes on. So it can be very complicated. You need to have a lawyer who understands both the civil system and the criminal system who can advise you on whether or not you need to assert your Fifth Amendment rights and when and how.
Jennifer Anton | 46:10
So, John, I’d like to wrap this up with one last question, which is about securities fraud. How is securities fraud different from any other kind of fraud?
John Helms | 46:21
Well, securities fraud is different from any other kind of fraud. First of all, like it sounds, because it involves securities. So what are securities? Securities are investments that are essentially what we call passive investments. That means that you’re making an investment and you’re not doing something to help the investment succeed yourself. You’re relying on other people to make it succeed. So here are some examples. Stock: when you buy stock in a company, you are not the one who’s running the company. You are not involved in the day -to -day operations of the company, but you’re investing in the company and you get stock in the company, hoping that other people are going to make the company successful and then the stock will be more valuable. So that’s a classic example of a security.
Other types of things that can be a security that many people might think about can be things like limited partnerships, where you’ve got a general partner who’s in charge of running the business and you have limited partners who are basically investors in the business. And if they don’t involve themselves in running the company and they’re just investing money, then their limited partnership can be a security. So that’s what a security is. So securities fraud means some sort of a scheme to trick people into buying or investing in the security in order to take their money.
So if you have a company and you’re selling stock in the company and you tell people that if you buy stock, this company is going to succeed because we have a secret process that allows blood to be tested in a new way. Nobody’s ever thought of this and our blood testing technology is going to make this company really successful. And you think, okay, that sounds great. I’m going to buy some stock in this company.
Well, if it turns out that this blood testing technology didn’t even really exist and hadn’t even been tested or proven or developed, and I’m saying a lot of false things about that technology, then the false things that I’ve said have persuaded you to buy stock in my company. So you’re buying stock in my company based on my false representations.
So that’s classic securities fraud. So one of the most important ways that securities fraud is different from plain old regular old fraud is that what the government has to prove in a securities fraud case is less than what they have to prove in a regular old fraud case. In a securities fraud case, if the government proves that a false statement was made and it was made in connection with selling securities and the false statement was material, that’s the term we use, meaning it was important to the person’s investment decision, then it doesn’t matter whether the person making the false statement meant to deceive someone or not.
It’s like you’re strictly liable if you make a false statement and it’s significant enough, then you can be criminally responsible for securities fraud. In a fraud case, a regular old fraud case, the government has to show that you intended to deceive someone. In a securities fraud case, they don’t have to prove that. And the reason is securities are regulated in this country because there’s so much opportunity for people to commit fraud and we want to protect investors in securities. And to do that, we hold people to a higher legal standard. Whenever you’re dealing with securities, you have to disclose a lot of things as a matter of course to potential investors, to regulators when you’re dealing with securities that you don’t have to disclose when you’re just having a plain business deal or selling a car or whatever.
So securities are highly regulated and investors are heavily protected. And so in a securities fraud case, the government doesn’t have to prove as much to prove someone guilty. That’s really important to understand as a criminal defense lawyer. Because if you’re used to defending fraud cases and you think the government’s going to have to prove that your client intended to deceive someone and your defense is that my client didn’t intend to deceive someone, that’s not going to work because the government doesn’t have to prove it. So in securities fraud cases, you really have to know what you’re doing in order to defend them.
Jennifer Anton | 51:35
John, this has been so informative. Thank you for making the time to come talk to us today. And I want to remind everyone, this is John Helms, who’s a criminal defense lawyer in Dallas, Texas. And he’s been talking to us today about white collar crime. And we really thank you for your time.
John Helms | 51:53
Well, thank you. It’s been a pleasure.