Slow blogging

Sorry for the slow blogging yesterday.  I was in federal court in Bowling Green, Kentucky.  Back home now and saw that Judge Scola sentenced Anthony Livoti Jr. to 10 years in prison. 


Paula McMahon has the story:

Shackled and dressed in khaki jail scrubs, Livoti showed the emotion of a scared man fighting to save himself from spending the rest of his life in prison — but he also displayed the skills of a tough attorney who fought for his clients in more than 40 years of lawyering.
"I had a life that was always filled with joy. I now have a life that is filled with sadness," Livoti said, speaking of the three months that he has already spent locked up in the Federal Detention Center in Miami since his conviction.

                                                                           

Livoti, 65, of Fort Lauderdale, was best known as a police union lawyer and for his advocacy work for the gay community. He was convicted in December after a three-month trial.
The Ponzi scheme bought out life insurance policies at discount prices from seniors and people who were dying of AIDS, cancer and other terminal conditions. In what became known as the Mutual Benefits Corp. scam, led by Joel Steinger, the policies were sold to investors who expected to make a profit by receiving the full insured value when the beneficiaries died.
Jurors took an extraordinarily long eight days of deliberations to find Livoti guilty of four charges, including conspiring to commit fraud and money laundering, but found him not guilty of 20 related counts.
Livoti, the only defendant who went to trial in the case, finally acknowledged his guilt in court Tuesday after long denying it.
"I lost my way and I wish I could go back and change it," Livoti said, apologizing to the victims for what he called the "terrible wrong" he committed.
Livoti insisted that he had thought he was innocent of the charges until he went to trial and heard all of the evidence against him. He said he had thought that the problems with Mutual Benefits were caused because medical advances were helping people with AIDS live longer than expected and even survive.
Sentencing guidelines suggested a punishment of 80 years. Assistant U.S. Attorney Karen Rochlin recommended a 30-year term and the defense asked for six years in prison – twice the punishment that Livoti would have received if he took the last plea agreement prosecutors offered before he went to trial.
Livoti, the son of a New York state judge, told U.S. District Judge Robert Scola Jr. that he had already lost his reputation, his career and his freedom.
He begged the judge to give him hope, which he said he had lost, that he would not die in prison and could some day be released to spend the rest of his life with his husband, Michael Porter. He said he also wants to try to make amends for his crimes. The felony convictions mean he will lose his law license.
"Judge, I am a life worth saving," Livoti said.

Mutual Benefits Joel Steinger pleads guilty

This was going to be a very long trial with lots of hurdles including a defendant who would have needed lots of medical attention during trial day.  So I'm sure many people are relieved that it's over.  From the DBR:

Joel Steinger, the mastermind behind an $800 million viatical scam run by Fort Lauderdale-based Mutual Benefits Corp., pleaded guilty Friday to fraud conspiracy in two cases pending against him.
Federal prosecutors charged Steinger stole tens of millions of dollars from the company that purchased life insurance policies of seniors and critically ill people. The business plan was to buy discounted policies and make money for investors when the policies matured.
Regulators charged Mutual Benefits faltered when HIV-infected people started living longer because of new medications. Steinger and his brother, Steven Steiner, then turned the enterprise into a Ponzi scheme, prosecutors said.
In a factual proffer signed by Steinger on Friday, he said he made false promises about returns and single-handedly made decisions on life expectancy projections for thousands of policies in a fraud that ran from 1994 to 2004.
"Many investors were falsely told that as many as 80 percent of all MBC policies matured on time or early," according to the proffer.
Mutual Benefits was placed in receivership.
Steiner was sentenced in February to 15 years in prison for his role in the fraud. The company's general counsel, Michael J. McNerney, also pleaded guilty and was sentenced to five years in prison.
Fort Lauderdale attorney Anthony Livoti Jr., who served as the trustee for Mutual Benefits, was convicted at trial last year of multiple counts of fraud and is scheduled to be sentenced Tuesday by U.S. District Judge Robert Scola in Miami.
Steinger once lived in a Fort Lauderdale waterfront mansion but has been held without bond for about 1½ years. He uses a wheelchair because of severe back pain, and prosecutors made arrangements for him to appear at a hearing on his medical condition last week via a video feed from the jail.
Under the plea agreement, the government will drop 24 other fraud counts against Steinger. Prosecutors claimed in the plea agreement filed Friday that there were 250 victims of the fraud.

Is it me or did the first quarter of the year fly by?  Spring break is over and baseball season is here.  It was a pretty quiet 3 months in the District..... Any trials coming up?  Send me your tips, which as always will remain anonymous -- dmarkus@markuslaw.com

Thursday News & Notes (UPDATED)

1. Attorney Anthony Livoti Jr. was convicted in the Mutual Benefits case after a lengthy trial before Judge Scola.  He was also acquitted of 20 counts, but that won't help him much at sentencing.

2.  Judge Mark Bennett is (rightfully) railing on the federal sentencing guidelines.  Via CNN:

 Nearly 30 years ago, Congress embarked on a remarkable and ultimately tragic transformation of criminal law. Through the establishment of mandatory sentences and sentencing guidelines, discretion in sentencing was shifted from judges to prosecutors. 

After the changes, prosecutors largely controlled sentencing because things like mandatory sentences and guideline ranges were determined by decisions they made.

This change ignored the fact that federal judges are chosen from the ranks of experienced members of the bar precisely because their long legal careers have shown the ability to exercise discretion.

It also ignored the contrasting truth that many federal prosecutors are young lawyers in their 20s and 30s who have little experience making decisions as weighty as determining who will be imprisoned and for how long.

The primary reason for the changes was well-intended, though: Members of Congress wanted more uniformity in sentencing. That is, they wanted a term of imprisonment to derive from the crime and the history of the criminal rather than the personality of the person wielding discretion.

After nearly 30 years, we know how Congress' experiment turned out, and the results are not good. Federal judges have been relatively lenient on low-level drug offenders when they have the discretion to go that way. Turning discretion over to prosecutors via mandatory sentences and guidelines not only resulted in a remarkable surge in incarceration, it does not seem to solve the problem of disparities.

3.  Didn't the AG say that he was trying to fix the sentencing problem?  Yes, but apparently, he is saying the right things but not actually doing much.  According to the Atlantic:

When the justices of the United States Supreme Court confer Friday morning to consider new cases they will have the opportunity to accept for review a dispute that tests not just the meaning of their own recent Sixth Amendment precedent but the viability of a major new policy initiative implemented this summer by the Justice Department to bring more fairness to federal sentencing while reducing the terrible costs of prison overcrowding.
In Gomez v. United States, a Massachusetts case, the justices have been asked to determine whether they meant what they wrote about juries and drug sentences in Alleyne v. United States, decided just this past June, and at the same time whether Attorney General Eric Holder meant what he said, in August, when he promised to curb the ways in which his federal prosecutors abuse "mandatory minimum" sentences in drug cases to obtain guilty pleas (or higher sentences).
The justices should accept this case for review. And the Court should affirm the just principle that a man cannot constitutionally be sentenced based upon charges that are not brought or upon facts a jury does not even hear. But even if the justices aren't willing to muster up that level of indignation, they ought to at least take the opportunity to call out federal prosecutors for saying one thing in front of the microphones and another in court papers.

4.  Here's a great story about how a reporter was able to break the Bonds grand jury testimony.  Right place, right time.  If you were the reporter's lawyer, would you have had the guts to tell him to go forward?

5.  Irfan Khan is suing the federal government for malicious prosecution.  Any chance to play this:




6.  Texas Rangers Leonys Martin Tapanes was apparently kidnapped and extorted, leading to federal charges.  The Herald has the details:

Leonys Martin Tapanes seemed like yet another Cuban baseball player with tremendous promise when he signed a $15.5 million contract with the Texas Rangers in 2011.
But there apparently is a darker story behind Martin’s climb from poverty to Major League Baseball success.
The U.S. attorney’s office in Miami on Wednesday charged three people — Eliezer Lazo, 40, formerly of Miami Lakes, Joel Martinez Hernandez, 37, formerly of Miami-Dade, and Yilian Hernandez, 30, of Hialeah — with conspiring to smuggle, kidnap and extort the 25-year-old Rangers outfielder.
The trio are also charged with smuggling 13 other Cuban baseball prospects to the United States — all of them going from Cuba into Mexico and then into the United States.
Yilian Hernandez, arrested Wednesday by Homeland Security and FBI agents, will have her first appearance in Miami federal court Thursday. Lazo and Martinez are currently serving respective prison sentences of five and seven years for 2012 money-laundering convictions related to Medicare fraud.

7. Finally, the blog gets a little shout out in the DBR for breaking the story yesterday on the two new federal judges being vetted:

The White House is vetting Miami-Dade Circuit Judges Beth Bloom and Darrin Gayles for two open positions on the federal bench in Miami, a legal blog reported.

The Southern District of Florida blog, which is associated with the Daily Business Review, said the judges were picked from among four finalists selected by the Florida Federal Judicial Nominating Commission in August. Miami-Dade Judges Peter Lopez and John Thornton rounded out those on the short list.

Both Bloom and Gayles are serving in the civil division.

The openings were created when U.S. District Judge Patricia Seitz took senior status last November and plans by U.S. District Judge Donald Graham to take senior status this month.

Trial for Joel Steinger continued

Who can blame Judge Scola... the dude was in a hospital gown.  From Curt Anderson:

 On the eve of jury selection, a federal judge agreed Monday to delay the trial of the alleged mastermind of an $800 million insurance investment fraud scheme because the man suffers from severe pain and health problems caused by a chronic back ailment.

U.S. District Judge Robert Scola granted the postponement after former Mutual Benefits Corp. chief Joel Steinger, 63, tearfully requested time for spinal surgery. Steinger, who uses a wheelchair and is on strong pain medications, appeared in court in a hospital gown. He frequently wrapped a blanket around his chest.

"You can't do this like this. I don't have the strength to go on. I can't take the pain anymore," Steinger said in a voice breaking with emotion. "You know what I'm thinking about now? Getting back to the hospital so I can get more dope."...

Steinger would have needed frequent breaks if trial had gone forward in his current condition, along with a special chair, oxygen bottle and a nurse standing by to handle his needs - all at taxpayer expense. These conditions, Scola wrote, "make his presence throughout the trial a logistical and hygienic nightmare" that surgery may avoid.

Monday news and notes -- Back to school edition

1.  Judge Huck is trying to tutor young lawyers.  Via the DBR:

Senior U.S. District Judge Paul C. Huck said when he got out of law school in 1965, he didn't need to consult a career counselor.
Freshly minted lawyers simply cracked open the Martin-Hubbell Law Directory and figured out where they wanted to start practicing law. Then they started to make phone calls.
"Back then if a law firm was really busy and they needed a lawyer, they needed them right then," said Huck, who after graduating the University of Florida loaded up his Volkswagen Beetle and headed south to an Orlando firm.
Coming off the Great Recession, it's not so easy for new lawyers these days.
So Huck organized two seminars aimed at making it a little easier. Early last month, he again assembled the Federal Court Observer Program, a mainstay for seven years. He also reached out to young lawyers at his alma matter.

2. Go Dore Go.  Dore Louis' creative motion for NSA records started a new trend.  I think it's hilarious that the Miami Herald refers to Dore Louis not as Mr. Louis or Louis, but as Dore:

One of the first phone-records motions in a criminal case came from Marshall Dore Louis, a Miami defense attorney who represents Terrance Brown, implicated in a federal bank truck robbery conspiracy case. Dore may have started a trend.

After Dore filed his motion in June, he received calls and email messages from dozens of attorneys across the country interested in filing similar motions in their cases.

In addition, many more attorneys in drug-trafficking cases nationwide are said to be preparing motions after Reuters revealed on Aug. 5 that the NSA is a partner in a special Drug Enforcement Administration (DEA) unit that supplies tips to local law-enforcement authorities. Those tips come from a massive phone-records database that the DEA’s Special Operations Division (SOD) taps, Reuters said.

The expected onslaught of demands for NSA records from defense attorneys is an ironic twist for a once-secretive agency whose acronym was often jokingly said to stand for No Such Agency.

3.  Did Steven Steiner learn his lesson.  Judge Williams hands him a 15-year sentence:

Steven Steiner, a former executive for a Fort Lauderdale insurance brokerage business that fleeced hundreds of millions of dollars from investors, was sentenced Friday to 15 years in federal prison.
Steiner, 61, was convicted earlier this year of conspiring to launder the money to support his expensive lifestyle in waterfront homes in Fort Lauderdale and Maine, and a condominium in Manhattan.
His defense lawyer urged U.S. District Judge Kathleen Williams to show mercy and sentence him to about five years, far less punishment than recommended under federal sentencing guidelines.
“Mr. Steiner is admittedly an imperfect soul,” attorney Joaquin Mendez wrote in an objection to the sentencing guidelines. “However, he requests that the court consider his good deeds and sensibilities, which the sentencing guidelines generally ignore, into account in determining the appropriate sentence.”
Federal prosecutors strongly disagreed, arguing that a 22-year prison term under the sentencing guidelines for Steiner’s offense would not be “unreasonable.”
Williams essentially split the difference in determining the punishment for the former vice president of Mutual Benefits Corp., the business that was shuttered by federal regulators almost a decade ago.
Steiner offered no apology for his wrongdoing, and instead penned a rambling, remorseless note to the judge. He described as “draconian” the indictment against him and his former partner, saying they lost everything in forfeiture to the U.S. government.
“There were clearly no real winners at the end of this trial,” Steiner wrote in his 14-page note, saying he was “no doubt one of America’s biggest losers.”
“I was ultimately punished for the greed and arrogance of others,” he concluded.

Read more here: http://www.miamiherald.com/2013/08/16/3566762/convicted-fort-lauderdale-executive.html#storylink=cpy

Who has more power -- a King or a Federal District Judge?

My money is on the district judge.  But Judge Scola had an entertaining exchange with Joel Steinger in the Mutual Benefits case yesterday.  Curt Anderson reports:

The alleged leader of an $800 million South Florida insurance fraud scheme was found competent to stand trial Wednesday despite severe pain from a spinal cord ailment that requires him to take powerful drugs including morphine.

U.S. District Judge Robert Scola issued his ruling at a hearing Wednesday for 63-year-old Joel Steinger. Steinger was the top executive at Mutual Benefits Corp., which prosecutors say was a massive fraud scheme in which some 34,000 investors lost more than $800 million.

Steinger, seated in a wheelchair during the hearing, said he needs surgery to correct the spinal problem and complained loudly it would be unfair if he's forced to stand trial in September without the operation. Steinger said he cannot control his bowel movements or bladder and takes enough morphine "to choke a horse."

"I can't concentrate for five minutes because I'm all hopped up on drugs," Steinger told the judge. "And you're asking me to defend my life in a trial under these conditions? Do you think that's fair, your honor? I don't."

Scola, relying on a report by Bureau of Prisons mental health and drug experts, said there was no evidence to indicate Steinger suffered from mental problems or could not understand and take part in a trial. Assistant U.S. Attorney Karen Rochlin agreed.

"Simply put, the defendant is competent," she said.

The judge also said it's not within his power to order surgery for Steinger at the University of Miami, as he has requested, rather than at another hospital. Steinger is being held without bail until his trial and most of his assets were frozen long ago.

"I wish I were the king of the world, but I'm not," Scola said.

 

Ha! Okay, judge, maybe not the world, but of South Florida! 

Verdict(s) today?

The juries are out in the Pakistani Taliban case and the Steve Steiner Mutual Benefits money laundering case.  If you hear anything, shoot me an email and I will post it.  Thanks!

Judge Zloch sentences Alan Mendelsohn to 4 years (UPDATED)

The prosecutors had asked for 2 years and Mendelsohn's lawyers asked for probation.

From the Herald:

“Most notably, the corruption in this case strikes at the heart of the Florida Legislature,’’ Zloch said. “Dr. Mendelsohn actually facilitated a corrupt democratic process in the Florida Legislature.’’
***
Zloch expressed disgust over the “pay to play" world of Tallahassee politics that Mendelsohn described at his plea hearing in December.

Mendelsohn, initially indicted in September 2009 on 32 fraud charges and later on five tax offenses, had been facing trial in January.

His plea was the ending to a high-profile influence-peddling investigation that stretched from South Florida to Tallahassee. It started when the self-made power broker bragged about his purported connections to then-Gov. Charlie Crist and his inner circle, saying he could get them to kill legislation and investigations that would hurt a Fort Lauderdale viatical insurance business called Mutual Benefits Corp.

UPDATE -- I've mentioned previously that I don't think judges should be permitted to sentence someone above the plea agreement's terms (see, e.g., here, here and here). If the parties in an adversary system agreed that the defendant in this case deserved somewhere between probation and 2 years, a judge should respect that contract or allow the parties to withdraw from it.

It doesn't appear that DOJ really fought for the terms of the agreement. From Curt Anderson's article:

"He isn't accepting responsibility when he says, 'Everybody was doing it,'" Butler said. "That's just not going to cut it."

More from Zloch:

"It is totally inappropriate for the court to give what would amount to a slap on the wrist," Zloch said. "The corruption of public officials, those who took an oath to uphold the law, leads to contempt for the law."
***

Mendelsohn himself apologized profusely, but also said he was proud of health-related state legislation he said he pushed for and noted that since his 2009 indictment "words just can't describe the devastation" suffered by his family and business.

"Who was responsible for this devastation?" Zloch asked.

"I was," Mendelsohn replied. "I am really, really, really, truly sorry."

Quick news and notes

1. One of the Mutual Benefits defendants has pled out, which means that Judge Jordan (or whoever takes over his division after he goes up to the 11th Circuit) will only have one lengthy trial, not two. From Jay Weaver's article:

A prominent attorney whose fortunes rose with a Fort Lauderdale viatical insurance company at the center of a $1.25 billion investment fraud case pleaded guilty Wednesday to a single conspiracy charge, marking a major development in the long-running prosecution of executives and others at Mutual Benefits Corp.

Michael McNerney, 62, of Fort Lauderdale, admitted that as its lawyer, he helped the now-defunct company lure thousands of investors worldwide into buying dubious life insurance policies held mostly in the names of people dying of AIDS.

His role was part of an alleged investment scam lasting from 1995 to 2004 that authorities say rivals the $1.2 billion Ponzi scheme of disbarred Fort Lauderdale lawyer Scott Rothstein, convicted last year of selling fabricated legal settlements in a separate criminal case.

The Mutual Benefits and Rothstein cases rank as Florida’s largest fraud prosecutions.

He got a good deal -- a five year cap under Section 371.

2. The 11th Circuit's en banc decision today in Gilbert v. United States has all kinds of great rhetoric. Carnes wrote for the majority on complicated habeas issues, but he characterizes the issue as: "The primary question, in plainer English, is whether a federal prisoner can use a habeas corpus petition to challenge his sentence. Our answer is “no,” at least where the sentence the prisoner is attacking does notexceed the statutory maximum."

There are 105 pages of opinions, and I haven't read them in depth yet. But I found some good passages, especially from the dissents.

Judge Hill starts his dissent with this:

Ezell Gilbert’s sentence was enhanced by eight and one-half years as the result of his being found by the district court – reluctantly and at the explicit urging of the government – to be a career offender. Ezell Gilbert is not now, nor has he ever been, a career offender. The Supreme Court says so.

Today, this court holds that we may not remedy such a sentencing error. This shocking result – urged by a department of the United States that calls itself, without a trace of irony, the Department of Justice – and accepted by a court that emasculates itself by adopting such a rule of judicial impotency – confirms what I have long feared. The Great Writ is dead in this country.

More:

The government even has the temerity to argue that the Sentencing Guidelines enjoy some sort of legal immunity from claims of error because they are not statutes at all, but mere policy suggestions. And the majority appears not to understand that Gilbert’s imprisonment – no matter how his sentence was calculated – is the act of the Sovereign, who is forbidden by our Constitution to deprive a citizen of his liberty in violation of the laws of the United States.

I recognize that without finality there can be no justice. But it is equally true that, without justice, finality is nothing more than a bureaucratic achievement. Case closed. Move on to the next. Finality with justice is achieved only when the imprisoned has had a meaningful opportunity for a reliable judicial determination of his claim. Gilbert has never had this opportunity.

A judicial system that values finality over justice is morally bankrupt. That is why Congress provided in § 2255 an avenue to relief in circumstances just such as these. For this court to hold that it is without the power to provide relief to a citizen that the Sovereign seeks to confine illegally for eight and one-half years is to adopt a posture of judicial impotency that is shocking in a country that has enshrined the Great Writ in its Constitution. Surely, the Great Writ cannot be so moribund, so shackled by the procedural requirements of rigid gatekeeping, that it does not afford review of Gilbert’s claim.

Much is made of the “floodgates” that will open should the court exercise its authority to remedy the mistake made by us in Gilbert’s sentence. The government hints that there are many others in Gilbert’s position – sitting in prison serving sentences that were illegally imposed. We used to call such systems “gulags.” Now, apparently, we call them the United States.

One last thought. The majority spends an enormous amount of time arguing that Gilbert is not a nice man. Perhaps. But neither, I expect, was Clarence Gideon, the burglar, or Ernesto Miranda, the rapist. The Supreme Court managed to ignore this legal irrelevancy in upholding the constitutional principle under attack in those cases. Would that we could have also.

Wow. Now that's good stuff. I will post more as I wade through it all.

How much does it cost to retrofit a courtroom?

Judge Jordan is in a long securities fraud trial right now. But that's nothing compared to what he has coming up with the Mutual Benefits case, which is expected to last 8 months. Now, the government has asked to retrofit a courtroom to allow for two juries to preside at the same time because of severance issues. I feel for Judge Jordan on this case.

Talented economic crimes prosecutors leaving USAO (UPDATED)

Three of them that I know about:

Jeffrey Neiman (pictured), who is one of the leading tax prosecutors in the country, and was part of the UBS team, is starting his own firm and will be sharing space with Fred Hadaad in Broward.

Ryan Stumphauzer, who is the Deputy Chief of Economic Crimes and the Health Care Fraud Coordinator, and Ryan O'Quinn, who was Senior Counsel at the SEC and is now a securities prosecutor, are forming a partnership and will be practicing in Miami.

Three good guys. I'm sure this is going to be tough on the economic crimes section.

UPDATED -- I forgot to mention Andy Levi who recently left the economics crimes division as well, and is now at Nardello as "head of the Miami office."

Levi and O'Quinn were running the Mutual Benefits case (the expected 8 month trial before Judge Jordan), so it will be interesting to see what happens there.

"I needed a defibrillator."

That was Chief Judge Federico Moreno on how he reacted when he realized that Roberto Martinez was asking for an $11 million bonus, and not $1.1 million. Vanessa Blum has all the details here.

From the intro:

Then Chief U.S. District Judge Federico Moreno first read the final fee request for the Mutual Benefits fraud receivership, he thought lawyers were seeking $1.1 million, not $11 million. Then he realized there was no decimal point, the judge recounted Thursday at a hearing in Miami. “I needed a defibrillator,” he joked. “We’re talking about a lot of money.” It is up to Moreno to resolve a simmering dispute over how richly to compensate lawyers for five years of work on one of the largest scams in South Florida history. Roberto Martinez, the court-appointed receiver, is seeking the $11 million bonus to split between his law firm, Colson Hicks Eidson, and primary counsel Kozyak Tropin & Throckmorton. To date, the two Coral Gables firms have jointly collected about $4 million. Moreno did not say when he would rule on the request. Robert Levenson, regional trial counsel for the Securities and Exchange Commission, argued against any fee enhancement, saying it would reduce payments to bilked investors and award lawyers a windfall equivalent to more than $800 per hour.
Receivers should be viewed as public servants and be paid moderately in fairness to victims, he said. “The investors are only going to recover a fraction of their losses,” Levenson said. “These aren’t corporate, market-rate clients.”

Apprently the investors weren't happy either:

No investors spoke at the hearing. In an Oct. 15 letter to Moreno, one investor said he was “appalled” by the receiver’s request. “Please, let’s get these funds back where they belong — in the hands of the investors — and away from greedy hands,” wrote Ronald Meyers of Sanibel Island.

But there is a strong counter-argument:

But Michael Hanzman, of counsel with West Palm Beach-based Ackerman Link & Sartory, who represented defrauded investors in class action litigation, told Moreno the receivership lawyers “deserve a significant fee enhancement.” He did not specify an amount. “If you want to attract the best and the brightest people to take these cases, you have to pay a reasonable fee,” Hanzman said. “This is not a pro bono case.”

That might be overstating it a bit -- the lawyers made an average of $265/hour. The question is whether they should be paid about $800 hour (which is higher than their typical hourly rates) for what everyone agrees was excellent work or whether receivers should make less than their hourly rates because the goal is to return money to the victims.

What say you dear readers?

News & Notes (UPDATED)

Lots going on today:

1. Another Mutual Benefits arrest: this time it's eye doctor Alan Mendelsohn. From Jay Weaver's article: Dr. Alan Mendelsohn, a Hollywood ophthalmologist who has raised millions for Florida politicians, surrendered to FBI agents on charges linked to his alleged efforts to thwart a 2000-05 state investigation into Mutual Benefits Corp., a Fort Lauderdale life insurance company.
An indictment charges Mendelsohn with 27 counts of wire and mail fraud and five counts of making false statements to federal agents related to a fraudulent fundraising and lobbying scheme, according to prosecutors.
Mendelsohn raised more than a half-million dollars from Mutual Benefits in 2003 to finance the hiring of a dozen lobbyists and make contributions to lawmakers, to stop legislation that would have tightened regulations on the so-called viatical industry. The industry sold life insurance policies of people dying of AIDS and other diseases.
The indictment alleges that Mendelsohn used a variety of false solicitations to raise money, including saying he had brokered illegal agreements with top Florida officials to close state and federal investigations. The indictment says that, in fact, no such agreements existed.
Mendelsohn, 51, is expected to appear in federal court in Fort Lauderdale Wednesday morning. His defense lawyer, John Keker of San Francisco, could not be reached for comment.

UPDATE -- The print version of the article, here, has lots more juicy details:

According to the indictment, Mendelsohn raised the $2 million from Mutual Benefits, an unidentified medical lab, a parimutuel business and a credit-card counseling firm during the past decade. Numerous medical colleagues of Mendelsohn's also contributed.

An unidentified ``accomplice'' assisted Mendelsohn in setting up the three political action committees and three corporations to move and disguise at least $624,000 in campaign funds paid to himself and others, according to the indictment.

Mendelsohn used some of the donations to pay $60,000 a month to his ``mistress'' from April 2003 to February 2005 for her assistance with the fundraising efforts, the indictment says. It also accused him of using $240,000 in PAC funds to buy and paint a residence for them and to buy a car for her.

The mistress is not identified in the indictment. But according to sources familiar with the case and public records, she is Caybre Cothern Ferrari, 39, who once worked as a scrub tech for Mendelsohn's eye surgery clinic.

At Mendelsohn's suggestion, the mistress established a corporation in March 2004 to divert campaign funds to Mendelsohn, herself, Florida politicians and others, the indictment says. It is illegal to divert campaign funds to personal use.

Public records show Ferrari created Broward-based KAC Consulting Inc. in March 2004.

Also in March 2004, records show that Ferrari transferred the deed to a home in Hollywood to her maiden name, Cothern. Mendelsohn is listed as a witness on the deed, records show.

2. The Supreme Court granted cert in 10 cases today, including a bunch of criminal law issues. SCOTUSBlog has all the details. The big one that everyone is talking about is: McDonald, et al. v. City of Chicago -- Whether the Second Amendment is incorporated into the Due Process Clause or the Privileges or Immunities Clause of the Fourteenth Amendment so as to be applicable to the States, thereby invalidating ordinances prohibiting possession of handguns in the home. More interesting to me is the sentencing issue raised in United States v. O’Brien and Burgess: Whether the mandatory minimum sentence enhancement under 18 U.S.C. § 924(c)(1) to a 30-year minimum when the firearm is a machine gun is an element of the offense that must be charged and proved to a jury beyond a reasonable doubt, or instead a sentencing factor that may be found by a judge by the preponderance of the evidence.

"Gov. Charlie Crist and ex-aide George LeMieux cleared in federal probe"

That's the headline from Jay Weaver's story about the Mutual Benefits case, which keeps taking stranger and stranger turns:

Gov. Charlie Crist and former chief of staff George LeMieux -- the subjects of a federal public corruption investigation -- have been cleared of allegations that they tried to thwart a state criminal probe into a Fort Lauderdale insurance company, according to sources familiar with the ongoing case.
Crist's selection of LeMieux to replace U.S. Sen. Mel Martinez would not have been possible had LeMieux still been under scrutiny by federal prosecutors investigating alleged influence-peddling by Mutual Benefits and its former top executive.
LeMieux was in the cross-hairs of the investigation after a major Republican fundraiser working with the FBI made a secretly recorded phone call to LeMieux at the governor's office in 2007, trying to get LeMieux to implicate himself, sources said.


Our prior coverage of the case and all the secrecy and failed snitching and set-ups is here. It's really amazing to me that the government would rely on criminals to try and set up well-respected and law-abiding citizens without real proof. LeMieux did the right thing:

But the phone call backfired: LeMieux immediately reported it to Crist's general counsel, who called the FBI. Still, LeMieux remained under investigation through much of 2008, along with Crist and several other members of his inner circle from his tenure as Florida attorney general and then as governor.

Sealed Mutual Benefits stuff starts to leak

Jay Weaver has the lengthy front page story here. Our prior coverage is here. The bombshell from the article is that Paul Huck Jr. was one of the reasons a number of documents were sealed and a number of judges recused (including Judge Huck). Of course Huck Jr. has been cleared of all wrongdoing -- he is a stand-up and ethical lawyer. But for him to have to go through this is terrible. From the intro to the Herald article:


The U.S. Justice Department is investigating corruption allegations made by an indicted Fort Lauderdale insurance executive who, in a bid for a favorable plea deal, has named lawyers, lobbyists and fundraisers he claims plotted with him to thwart a state crackdown on him and his industry.

Justice officials have convened a federal grand jury to pursue the claims of former Mutual Benefits Corp. chief Joel Steinger. The wealthy businessman contends that he orchestrated a campaign to stifle a 1999-2000 statewide grand jury probe by attempting to improperly influence public officials, three knowledgeable sources have told The Miami Herald.

One of the officials Steinger named was lawyer Paul Huck Jr., a former deputy to state Attorney General Charlie Crist. But Huck confirmed that he was one of six public officials already cleared of any wrongdoing by the Justice Department's Public Integrity Section. Huck said authorities have told him that he was "a reputational victim of statements made by a third party.''

Others who remain under scrutiny: several prosecutors and officials who worked under Florida Attorney General Bob Butterworth and his successor, Crist.

Judge Jordan had this to say:

''Disclosure of those names, and the matters being investigated, could have devastating consequences for those persons who have been cleared of any misconduct, as well as for those still under investigation,'' Jordan wrote, adding that the grand jury probe was ancillary to the Mutual Benefits fraud investigation.

Jordan stressed that, according to the Public Integrity Section, the six exonerated officials "had no knowledge of, or participation in, any of the alleged wrongdoing.''

More on Huck Jr. and his comment about having to go through such an ordeal:

Among them: Huck Jr., who was a deputy attorney general in Fort Lauderdale when Mutual Benefits was being prosecuted in Broward by the statewide prosecutor. The post is part of the attorney general's office. Mutual Benefits pleaded guilty to racketeering charges in 2007. Huck was not the prosecutor on that case.

Huck, who later became Gov. Crist's general counsel and now is in private practice in Miami, confirmed that he is one of the public officials the judge referred to as being cleared. Huck declined to comment further, saying he does not want to interfere with the probe.

''It's a real shame when folks in public service have to deal with that, and it makes it that much harder to attract people to go into public service in the first place,'' Huck told The Miami Herald.

It's a bird, it's a plane, no... it's....

Mary K. Butler, a senior trial attorney with the Public Integrity Section who is now involved in the Mutual Benefits case that has been all secretive...

Jon Burstein from the Sun-Sentinel has more:

The U.S. Department of Justice has called on a tenacious veteran prosecutor to help handle a grand jury investigation into public corruption in Florida — a top-secret inquiry related to a Fort Lauderdale business that authorities suspect was a colossal fraud.Accusations against current and former public officials presented to the grand jury are so explosive that careers could be ruined if they are made public before the investigation is complete, a federal judge said this month.At least six past and present public officials have already been cleared of wrongdoing.The federal grand jury's existence came to light in April when U.S. District Judge Adalberto Jordan, rejecting a request from the Sun Sentinel, ruled he was going to keep about 30 court filings in a criminal case involving Mutual Benefits Corp. hidden from public view.

Here's more on Butler:

Butler's involvement is an indication the grand jury inquiry is an important and complex one. No stranger to high-profile prosecutions, she recently led the federal government's successful case against super-lobbyist Jack Abramoff for influence-peddling on Capitol Hill.Before going to Washington, Butler worked at the U.S. Attorney's Office in Miami, where she won a reputation as a dogged, successful prosecutor with the public corruption section.Notably, she handled Operation Greenpalm, a 1996 bribery scandal that led to the criminal convictions of Miami's city manager, Cesar Odio, and Miami City Commissioner Miller Dawkins.

The Sun-Sentinel *sucks*

I had a lot to post about tonight -- from Paris to dumb associates to heavy Cuban accents -- but instead I'm going to tell you how stupid the Sun-Sentinel is. That paper, which has always given the Herald a run for its money, had one of the young star reporters in South Florida: Vanessa Blum. And it fired her today.

Why?

Well, the Sun-Sentinel let Vanessa go today because it has partnered up with the Herald and decided that it could simply buy the Herald federal court coverage for its paper. The Herald will use some Sun-Sentinel coverage of local school board stuff for its paper. And on and on. Rumpole made the point about the dying newspaper business here when he was covering the Herald's firing of Susannah Nesmith:

Here's the point with the BBC stuff- if these trends keep up, local news will soon be gone. No one to report on County Commissioners doubling dipping into their expense accounts; no one to wander the hallways of the courthouse at 2PM and write about all the Judges missing; no one to write about the cops accused of misconduct and no one to write about the injustice of trying defendants over and over until the government gets a conviction.

We can function without Susannah Nesmith. We cannot function without the Susannah Nesmith's of the world. It's a scary thought that the free press is fading away not with an assault against the first amendment, but because the morons who made the business decisions for newspapers didn't see five years ago Craigslist was about to cripple their classified ad income.

President Obama recently referred to a quote from the nation's third president, Thomas Jefferson: "If he had the choice between government with newspapers or newspapers without government, he'd choose the latter." (Rumpole, I just cited to you, Obama, and Jefferson to make a point. What's wrong with that picture?)

Now, this is no knock on Jay Weaver and Curt Anderson, who are also friends of the blog, but they can't cover the entire District by themselves. And of course we have the DBR, which is committed to covering the federal courts. But while they are covering a big case in Miami, who will be tending the store in Lauderdale? What about Palm Beach and Ft. Pierce? And Vanessa broke her share of Miami stories as well -- the latest being the sealing issues in the Mutual Benefits case, which everyone is now looking in to.

I understand budgets and the crisis facing the newspaper industry. But what's the point of having a paper if you are giving up your local coverage? The whole reason people buy the Sun-Sentinel is because of reporters like Vanessa. Without that local coverage, why do we need a Ft. Lauderdale paper?

Vanessa will land on her feet -- she's smart, personable and a great reporter. I wonder where the Sun-Sentinel will land if it keeps this up.

UPDATE -- Bob Norman has a list of the others who have been laid off.

Only in South Florida...

1. Law firm handling "Chinese dry wall" cases has that same problem in their office. (Palm Beach Post)

2. "Lauderdale Lakes woman stole ID to pay for tummy tuck, feds say." (Sun-Sentinel)

3. Mutual Benefits sealed documents to remain under seal. (Sun-Sentinel)

What's the big secret?

Here's more on the Mutual Benefits recusal from Vanessa Blum...

Our previous coverage here.

From the Blum article:

Over objections from area newspapers, a federal judge today closed a court hearing on secret filings in a case stemming from one of South Florida's biggest frauds.U.S. District Judge Adalberto Jordan said he would consider releasing the secret documents and a transcript of the hearing, in whole or in part, after weighing concerns raised by the South Florida Sun Sentinel and the Miami Herald.The newspapers are trying to break through a wall of secrecy surrounding the latest criminal charges related to Mutual Benefits Corp., a now defunct Fort Lauderdale investment firm.
***
Deanna Shullman, an attorney representing the Sun Sentinel, told Jordan that federal law gives members of the public and media representatives the right to view court records, barring extraordinary circumstances.In a motion, Shullman stated that secrecy in such a high-profile case would create rumors and raise questions about the integrity of the justice system."Greater access is the best medicine to restore the public's faith and confidence in these proceedings," Shullman stated.Following arguments from Shullman and Herald attorney Scott Ponce, Jordan closed the hearing to the public. He said he would rule in the coming weeks."There are a lot of difficult and thorny issues here," Jordan said. "I'm doing my best to navigate my way through."Jordan received the case in January after two other federal judges stepped aside, citing undisclosed conflicts of interest. In addition, two officials in the U.S. Attorney's Office have recused themselves from involvement in the prosecution.The Mutual Benefits case has also drawn interest because the company had deep ties to elected officials in Broward County.

News and Notes

1. Liberty City 6, part 3, starts today. (via Herald)

2. The Cuban Spies are petitioning for cert and have brought in super Supreme Court lawyer, Tom Goldstein (of ScotusBlog fame). They are also trying to work out a political resolution to the case. (via Herald)

3. John Pacenti at the DBR covers the Mutual Benefits lawyers who were indicted.

4. The Congressional delegation from South Florida is being sworn in at the new courthouse this morning. Here's a picture of Ileana Ros-Lehtinen from the proceedings.