In Heien v. North Carolina, the Supreme Court held that where a police officer makes a stop based upon a reasonable mistake about a law, the stop is justified.

In this case, an officer stopped a vehicle because one of its two brake lights was out, based on a misunderstanding that the North Carolina law permitted only one working brake light. The officer stopped Heinen’s vehicle because one light was not working and then proceeded to a consensual search of the car. The search turned up a bag of cocaine located in a duffle bag in the trunk. Heinz was arrested and convicted of attempted drug trafficking. The question presented to the Court was whether a police officer’s reasonable mistake of law can give rise to the reasonable suspicion necessary to uphold a seizure of an automobile and the occupants in it under the Fourth Amendment.

The North Carolina statute reads that a car must be:

equipped with a stop lamp on the rear of the vehicle. The stop lamp shall display a red or amber light visible from a distance of not less than 100 feet to the rear in normal sunlight, and shall be actuated upon application of the service (foot) brake. The stop lamp may be incorporated into a unit with one or more other rear lamps. N. C. Gen. Stat. Ann. §20–129(g) (2007).

The Court concluded that the statute required only one stop lamp to be working. However, the officer was under a different impression of the law at the time. A nearby statute requires that “all originally equipped rear lamps” be functional. N. C. Gen. Stat. Ann. §20–129(d). The officer made the stop under a mistake in law. Nevertheless, the Court held that even if an officer reasonably misunderstood the law, as long as the officer conducts a search or seizure reasonably under the Fourth Amendment he is acting justifiably.

“To be reasonable is not to be perfect, and so the Fourth Amendment allows for some mistakes on the part of government officials, giving them ‘fair leeway for enforcing the law in the community’s protection.’” Reasonable mistakes of fact are permissible. For example, when someone consents to the search of a home, the search will be considered valid even if the officer mistakenly believes that the person consenting is the owner.

Reasonable mistakes of law are also permissible. “Reasonable suspicion arises from the combination of an officer’s understanding of the facts and his understanding of the relevant law. The officer may be reasonably mistaken on either ground.” Even laws that police enforce that are later declared unconstitutional by a court does not rebut an officer’s reasonable assumption that the laws were valid at the time.

Heinen argued that there is no margin of error for an officer’s mistake of law. He argued the legal maxim: “Ignorance of the law is no excuse.” If persons cannot get out of trouble by claiming they were mistaken about the law, then neither can the police.

But the Court concluded the law protects against only “reasonable mistakes,” and therefore, “an officer can gain no Fourth Amendment advantage through a sloppy study of the laws he is duty-bound to enforce.” The Court further concluded Heinen’s reliance on the legal maxim is misplaced. A person cannot escape criminal liability by claiming he did not know the law, but neither can the government impose criminal liability by a mistaken understanding of the law. The Court explained:

If the law required two working brake lights, Heien could not escape a ticket by claiming he reasonably thought he needed only one; if the law required only one, Sergeant Darisse could not issue a valid ticket by claiming he reasonably thought drivers needed two. But just because mistakes of law cannot justify either the imposition or the avoidance of criminal liability, it does not follow that they cannot justify an investigatory stop.

In this case, Heien did not appeal his brake-light ticket. Instead, he appealed a cocaine-trafficking conviction, as to which he did not claim the police made either a mistake of fact or law.

The United States Supreme Court granted certiorari in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc.  Abercrombie allegedly denied a muslim woman a job at a Tulsa, Oklahoma store during an interview.  She was wearing a headscarf, which Abercrombie determined violated its “look policy.”  The “look policy” at the time was classic East Coast collegiate style.

The 10th Circuit Court of Appeals sided with Abercrombie ruling the muslim woman never indicated she needed a religious accommodation as required under federal law.  The EEOC argued Abercrombie was on notice that an accommodation was warranted because the woman was wearing the headscarf at the interview.

Under Title VII of the Civil Rights Act of 1964, a business operating with less than 15 employees (religious institutions exempted) must provide an accommodation for an employee’s religious observances, unless doing so is an undue burden for the company.  Examples of undue burdens could include, but are not limited to, costing the company more than ordinary administrative costs; workplace efficiency diminished in other areas of the business; infringing upon another employee’s job rights or benefits; impairing workplace safety; adding burdens on co-workers by forcing them to carry on the accommodated employee’s share of potentially hazardous or burdensome work; or conflicts with another law or regulation.

The High Court will decide the case next year.

Posted by Ola Mohammed Alghasham.

The world encounters cases where frauds are committed by white collar criminals. Executives whom fight against fraud are beneficial for the company. Although the board and management make strong efforts in composing fraud preventing policies, there are several behavioral, environmental, and fraud assessment elements which are ignored during the composition of such policies and their absence provides shelter to the fraudsters. White collar criminals often attain confidence from their role in the organization. This confidence gets transformed into arrogance which prohibits the criminal from applying organizational policies and rules on himself, as an employee of the company.

There is no doubt that the top management always looks for the creative and clever individuals as employees. They forget, however, this creativity and cleverness can be used against the company instead of in its favor. Employees with these traits can cunningly commit frauds by practicing unnoticeable unethical behavior. Companies should execute proper controls with the recruitment of talented people. The tone of top management can either promote or discourage the ethical behavior because it is supposed to set an example for the rest of the organization. The whistle-blowing attitude is shaped by the organizational culture. Moreover, an illogical increase in pay, without any improvement in the performance, allows the fraudsters to continue their unethical activities.

Board members and executives should identify the fraud tactics and fraud hidden strategies of these individuals to compose a fool-proof risk assessment process. Major warnings can appear from the financial data (e.g. unusual, frequent or large transactions), documents with missing or incomplete information or suspicious signatures, poor controls (e.g. lack of monitoring, poor reconciliation of accounts, lack of position to manage conflicts of interest), behavior (e.g. unstable behaviors, mismatched lifestyle with income, high expectations family, and job dissatisfaction). Management must implement strong controls in the day-to-day business operations to avoid fraudulent activities. The board must adopt a proactive behavior in the elimination or early detection of fraud by establishing an audit committee with full authority, monitoring transactions, promoting and maintaining an ethical environment, and composing a procedure for the reporting of fraudulent activities. The board must compose and enforce certain strategies to cope up with the frauds. The executives must develop an ethical environment for keeping the employees loyal with the company and directing the human talent towards the betterment of the company.

Ola is an graduate accounting major with a certification in forensic accounting at the Feliciano School of Business, Montclair State University.

Source:

Marks, J., (2012), A Matter of Ethics: Understanding the Mind of a White-Collar Criminal, Financial Executive, pp. 31-34. Retrieved from www.financial executives.org.

Posted by Yuanda Xu.

In 2003, Lucent Technologies decided to fire the CEO, COO, Financial Executive and marketing manager in China. Lucent did this because company in China bribed the Chinese officials to get more benefits. As expected, Lucent fired these four people, and paid $2.5 million to settle charges. The company paid a $1 million fine to the Justice Department and $1.5 million to the Securities and Exchange Commission.

In 1977, America enacted the “Foreign Corrupt Practices Act” to prohibit companies from bribing officials in other countries to get more benefits. What Lucent Technologies did violate the Act, because Lucent Technologies bribed the Chinese officials to get more benefits and reduced business opportunities for other companies. That violates the FCPA.

Yuanda is a business management major at Montclair State University, Class of 2017.

Posted by Shanice Cooper.

In an article by Forbes Magazine entitled, Fake IRS Agent Scam Targets Public, Even Feds, while Identity Theft Tax Fraud is Rampant, Robert Wood outlines the seemingly growing issue of identity theft. This particular article takes a close look at how horrible identity thieves are especially during the inevitable tax season.

Identity theft according to Wikipedia, occurs when someone uses another’s personal identifying information, like their name, social security number, address or credit card number, without their permission or knowledge, to commit fraud or other injurious crimes. Identity thieves use the tax season to their advantage and flourish in it by secretly getting individuals’ personal information. How do they do this? One way is by simply calling an unsuspecting person and asking for their social security number, and bank account data: “The plan is frighteningly simple. Steal Social Security numbers, file tax returns showing false refund claims, and have the refunds electronically deposited.” The person doing the crime would call an individual and impersonate a government official; they would intimidate the person into giving up their personal information. “There is also a massive phone scam in which an impostor claiming to work for the IRS calls and intimidates you. You need to pay right away, and many do.” The article gave two popular ways in which identity thieves often steal information, but there are other ways.

In most cases, the taxpayer finds out that their social security number has been tampered with once they attempt to file a real tax return. However, by the time most people realize that they have been dealing with an imposter, the thief is long gone and often times untraceable. This tax season alone has had over 100,000 people affected by tax scams and is going down as the worst year for scams. “[T]he Treasury inspector general has already received more than 366,000 complaints, more than 3,000 people have been conned out of a total of $15.5 million.” These are outstanding numbers of innocent people who are being victimized by identity theft and tax scamming.

In conclusion, I think identity theft is horrible and no one should have to worry about having their information tampered. I personally know of individuals who have been affected by identity theft and have had to go through incredibly long processes to recover their credit. “In January 2015, a Maryland woman and former bank employee, was sentenced to 87 months in prison for her role in a massive and sophisticated identity theft . . . seeking refunds of at least $40 million.” Once the fraudster is caught they are faced with a number of felonies. In the end, committing the crime is not worth it.

Shanice is a business administration major at Montclair State University, Class of 2016.

Posted by Patrick Osadebe 

Do you think the lawyers in America get paid as much as they deserve? How much do you think a lawyer makes in a year? According to a survey conducted in 2014 by the Association of Law Placement, the highest starting salary of one of the largest firm in the US with about 700 plus employee is $160,000. This number may seem to be high based on our present economy situations but the results are accurate.

From the survey, only 27% of firms actually responded and one third actually start their employees with $160,000. According to James Leiplod who is the current NALP executive director, he stated that “it is fair to say that law firm starting salaries are flat.” In contrast to that statement, the starting salaries was much higher before the economic recession and the figure is basically a reflection of changes in large firm market.

Different firms may have different starting salaries based on size and experience but according to the survey, the median starting salary is about $125,000, which has been unchanged since 2012.

Patrick is a business administration major with a concentration in finance at Montclair State University, Class of 2016.

One of the causes of action a plaintiff can bring in a product’s liability lawsuit is a defective design claim. General Motors is facing multiple lawsuits over faulty ignition switches installed in the following vehicles: Chevy Cobalt (2005-2010) and HHR (2006-2011); Pontiac G5 (2007-2010) and Solstice (2006-2010); Saturn Ion (2003-2007) and Sky (2007-2010). More than 2.6 million have been recalled.

A Georgia couple who settled a lawsuit with GM for their daughter’s death is suing again on the grounds that GM’s lead design engineer lied when he testified he had no knowledge of any design “changes” to the switches. Their daughter was killed when her 2005 Cobalt slipped into accessory mode, cutting off the engine and causing her to collide with another vehicle. Her family settled based on this information.

But in recent disclosures to the National Highway Traffic Safety Administration and Congress that testimony appears to be false. The company apparently knew about the problem for years. Now, the family has filed another lawsuit claiming they would not have settled if they had known that evidence was concealed. GM denies the accusation.Settlements are contractual, and therefore, considered final once the parties agree to the terms.  Like all contracts, there are certain situations where a settlement agreement would be deemed void.  In this case, plaintiffs would have to convince a judge that they were somehow misled or defrauded by what GM did or said in order for the settlement to be void and the case to proceed.

Posted by Anas Khalil.

A former executive at a New York investment bank who admitted defrauding investors of more than $38 million was sentenced to four years in prison by a judge who cited his gambling addiction as reason for leniency.

Caspersen is a gambler and an alcoholic who put his family members and friends in a situation of losing millions of dollars through an elaborate scheme involving a make-up of a private equity ventures, with a fake mail addresses, and a fake fictional financier. Caspersen had a gambling illness that once he hit a high of over $100 million one day and bet it all the next on whether the market would go up or down. Thus, he was left with nearly nothing at the end of the trading day.

I think Caspersen’s family members and friends who lost millions of dollars should’ve know that an alcoholic gambler should never have an access to big chunks of dollars. A person who is addicted to gambling will not take a consideration that the money he is using does not belong to his pocket and that he is responsible to turn back the money to who it belongs. However, Caspersen will just gamble with all the money he will have an access to thinking he will earn back the money he lost.

When you have big money, you should be more aware of how you invest your money and to whom you lent it. Caspersen’s family members and friends should have never lent Caspersen any money the minute they knew that he was an alcoholic and a gambler, but unfortunately it is too late to say this.

In conclusion, Caspersen imposed a prison term that fell well short of the 15 years called for by sentencing guidelines or the 7 ½ years recommended by the court’s Probation Department. Caspersen is now going to face jail time which is the lesson for every criminal that breaks the law and put other people in impasses.

Anas is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2018.

Posted by Johanna Ortiz.

An ex-executive Andrew Caspersen at New York investment bank was declared guilty to securities and wire fraud. He admitted defrauding investors of more than $38 million, and the judge gave him four years in prison because the defendant’s attorney asked him for leniency for gambling addiction.

Caspersen was a good worker. He graduated from Princeton University and Harvard Law School. Unfortunately, for his addictions, he defrauded investors’ money including his family and friends. “I lost their money” he said “I abused their friendship. I destroyed my family’s name” (news.findlaw.com).

He used to go to an organization which helped him with his alcohol and gambling addictions; however, he never finished his treatment. He always quit. His attorney used this as an excuse to let the judge know that he is not under control and he is unable to think or act as a normal person. The judge declared him with a very real gambling disorder and for that reason he gave him short-term prison sentence. He said to the judge that he learned from this and he is going to retake the treatment.

His defense attorney said his client was very ill with his addictions that he did not care about money, and he just wanted to play. At the end of the day, he lost over $100 million. He had hope that no matter how many times he lost, he would win and take the money back.

In my opinion, Caspersen acted without values, morals, and respect to investors. He knew his addictions and he was irresponsible and quit the treatments. All his irresponsibility were not investors’ fault and he had to pay for his mistakes.

Johanna is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by Justin Cohen.

For years now, daily fantasy sports has been slowly growing but recently, it has been huge. Over the last two years, if you have watched a single sporting event, I cannot imagine you not seeing one of their ads. “Fanduel packs the thrill of a whole season into just one week” (Fanduel). They are everywhere.

According to Wired, DraftKings or Fanduel aired an ad on television every 90 seconds. “You only need to remind people of something that often if your target market is sports loving goldfish” (John Oliver). Daily fantasy sports combines everything guys love, sports and money. Although the multi-billion dollar industry is made up of thousands of companies, the two main sites, DraftKings and Fanduel are the main ones making significant profit. They were recently under investigation for being unfair and there were reports of people within the sites going in and changing their entries so they would be able to win every time.

Just the other day however, attorney general Schneiderman stated, “As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it.” So now, in New York and some other areas, people will not be able to play daily fantasy sports. Is this fair? Isn’t there more important things that he should be worrying about? These are questions I ask myself. Although fantasy sports used to be a game where you played with your coworkers and eventually lost to Janice in accounting, I like the path fantasy sports is headed with more interaction and more overall fun than just regular old fantasy sports.

I believe fantasy sport sites should be legal, but if it goes down that path, they need to declare themselves as a gambling site. In all interviews and ads regarding what the site is, they state it is an entertainment site, not a gambling site, which is why the general can make it illegal in New York. For the future, I can see this going two ways. In one scenario, I can see daily fantasy sports making a comeback, and becoming legal again. In the other scenario, the more likely scenario in my opinion, I can see it becoming illegal everywhere, which I am not looking forward to.

Justin is a sports management major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Emily Nichols.

On November 5, 2015, six men were convicted on felony charges of fraud and conspiracy in the sale of vending machine business opportunities. All six of these men were from New York, and they were just six of the 22 individuals convicted with this vending machine scheme. Two of the men were convicted with conspiracy and six counts of fraud and one count of false statement to federal agents. The third man was convicted on conspiracy and mail fraud. Two of the men were convicted of conspiracy and wire fraud and the final man was convicted of conspiracy and two counts of wire fraud.

They were convicted following the six week trial where some of the men will be in jail for 40 years according to their maximum sentence for conspiracy, fraud counts and false statements. These six men, were the last of the 22 convicted for the entire Vendstar scheme.

The company not only advertised nationwide on the internet and in newspapers, but they also promised to have the full package for the customer, saying that they would provide everything to operate the vending machine including the initial supply of candy for the machine. Once the machines were ordered, they dropped the machine off to the businesses wherever and however they could, not placing the machine in any certain place, and many businesses requested immediate removal of the machine. The men attempted to sell vending machines to businesses and promised them that they would make loads of money off of the machines and the customers would pay tens of thousands of dollars to invest in the machines. Between the five years of the operation of the scheme, it cost consumers a total of around $60 Million. If the customer paid an average of $10,000, then there were about 6,000 victims of this scheme once it was all said and done.

These men, I feel, were convicted correctly of their crimes and deserve to be in jail for what will most likely be the rest of their lives as the men were all above the age of 40, three of them being over the ae of 55. In the entirety, just 22 people cause a loss of $60 Million to consumers and businesses.

Emily is an accounting and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Alexander Sayour.

Mergers are very common for both small and large companies. New York based company Pfizer just attempted merging with Allergan because of the incentive of moving corporate headquarters to Ireland, which in return could reduce its tax bill. This would’ve been a $150 billion merger, the second largest in history, except Obama called it off due to a new crack down from the administration on corporate tax avoidance. The attempted takeover was an example of an inversion which is in simple terms a U.S. Multinational merging with a foreign company to change its legal tax residence for lower rates. Because of these new rules for cracking down on this. many expected the merger would not go through.

Pfizer has said since being denied from merging they would look at other methods to boost their share prices. An example listed being separating the company up which will be decided on by the end. Obama went on to discuss the problem with these loopholes claiming that the laws are poorly designed. Additionally he goes on to say that loopholes “Come at the expense of middle class families because that lost revenue has to be made up somewhere. It means that we’re not investing as much as we should in schools, in making college more affordable, in putting people back to work, in rebuilding our roads, our bridges, our infrastructure, creating more opportunities for our children.”

Loopholes are definitely a pivotal issue at hand for our country and during our presidential debates–something that we are finally addressing now.

Alexander is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.

Posted by Charles Batikha.

Tamira Fonville was a Mesa Airlines employee and part time recruiter for a hair show, but these were both false lives that Fonville was leading. Fonville spent her time along the east coast from New York to Washington D.C. trying to lure women to expose their financial information by fraudulently posing as a hair show recruiter wanting to hire young women. Unfortunately, there was no show and Fonville was not a recruiter, nor an airline employee. By the end, she caught herself in an addiction she could not stop, between signing off bouncing checks and scamming women; she was bound to get caught.

Ricardo Falana was Fonville’s assistant.  Before the banks would know what was happening, they both would wipe accounts clean. Foneville would ask the girls for their bank account information, lying, saying she wanted to deposit checks into their account. Once the checks were deposited, the account would be emptied before the banks could be any wiser. For individuals that were too smart to be scammed, Tamira would offer them a piece of the pie. These individuals were even “coached” to lie to bank employees, telling them their credit cards had been stolen. The problem was the piece of the pie that they were waiting for never came. After some time, these women came forward as victims.

Young women were not the only ones that Fonville scammed. She applied for a car loan under the impression of being an employee of Mesa Airlines with a $65,000 salary. Tamira used $30,000 to pay for her Chevy Camero, plastic surgery and her New York apartment. While she was living this lavish life, Fonville also was living off food stamps, while having her student loans, totaling up to $100,000, deferred.

Tamira was arrested in August 2014, said to have profited over $200,000 from the scams. She was sentenced 15 months for conspiracy to commit bank fraud as well as 3 cases of bank fraud. Falana, Tamira’s assistant, was sentenced to 80 months after pleading guilty to similar bank fraud charges.

Charles is a graduate accounting student with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University.

Posted by Nikolina Stojkovic.

Insider trading just got a little easier, if you can use the right defense.  Based on the case United States v. Newman, insider trading charges were dropped based on what was considered wrong jury instruction and failure to show sufficient evidence for conviction. The case was tried in a New York district court. New York has joined the cavalry in trying to take down Wall Street crimes.  US Attorney General Preet Bharara took office about six years ago and arrested 100 people for insider trading, of whom 87 have been convicted¹.

A little background of the case will help demonstrate what defense attorneys were able to accomplish in appeals. In January 2012, hedge fund portfolio managers Todd Newman and Anthony Chiasson were charged with securities fraud. In December 2012, they were convicted and, in May 2013, sentenced to lengthy terms: 54 months for Newman and 78 months for Chiasson¹ for using information tipped to them about Dell and Nvidia via an intermediary. Newman earned $4 million and Chiasson earned $68 million as a result of the information received.²  The charges were overturned because the prosecution never linked a personal benefit received by the original tipper, not because Newman/Chiasson denied receiving the information.

According to the defense, their clients did not commit any crime because the tipper received no known benefit of relaying the information, nor did the intermediaries that passed along the information to Newman and Chiasson.  Rather, their actions were part of a business transaction based on information received.  It sure sounds like insider trading without the benefit requirement.

Nonetheless, the appeals court decided otherwise.  Their decision spurred a flurry of review on pending and previously decided cases, where guilty verdicts were found and admissions of guilt were allowed on insider trading matters. Based on the defense attorney’s argument, insider trading cases will become more challenging for the US Attorney General’s office.  In this matter, based on the charges, the defendants are not guilty.  However, had the tipper received quid pro quo in exchange for the information, Newman and the like, would be guilty of insider trading. Quid pro quo seems trivial in the matter, either you acted upon the information or you didn’t.

 Nikolina is a graduate student in accounting with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University.

Sources:

¹ http://fortune.com/2015/09/23/supreme-court-insider-trading-newman

² http://www.bloomberg.com/news/articles/2015-10-05/insider-trading-cases-imperiled-as-top-u-s-court-spurns-appeal

Posted by Bridget Uribe.

During the month of March of 2014, the Securities and Exchange Commission (SEC) charged three executives: Chairman Steven Davis, Executive Director Stephen DiCarmine, and Chief Financial Officer Joel Sanders of Dewey & LeBoeuf, the international law firm, with facilitating a $150 million fraudulent bond offerings. The SEC alleged that the three charged turned to accounting fraud when the firm needed money during the economic recession and steep costs from a recent merger.  They were afraid that their declining revenues might cause the bank lenders to cut off access to the firm’s credit lines. Thus, leading Dewey & LeBoeuf’s financial professionals came up with ways to artificially inflate income and distort financial performance.

The fraud didn’t stop there. Dewey & LeBoeuf then resorted to the bond markets to raise significant amounts of cash through a private offering that seized on fake financial numbers. Dewey & LeBoeuf since have officially went out of business, and the Manhattan District Attorney’s Office charged criminal charges against Davis, DiCarmine, and Sanders. According to the SEC’s complaint, the roots of the fraud dated back to late 2008 when senior financial officers began to come up with fake revenues by manipulating various entries in Dewey & LeBoeuf’s internal accounting system. The firm’s profitability was inflated by approximately $36 million (15%) at the end of the 2008 financial results. “The improper accounting also reversed millions of dollars of uncollectible disbursements, mischaracterized millions of dollars of credit card debt owed by the firm as bogus disbursements owed by clients, and inaccurately accounted for significant lease obligations held by the firm”(SEC Press Release).

Fast forward to the present, a New York judge declared a mistrial Monday bringing an end to the trial for the biggest law firm failure in U.S. history! The decision comes on the 22nd day of deliberations by a 12-member jury, which acquitted the ex-law firm leaders on several dozen counts of falsifying business records. The jury couldn’t reach a verdict on grand larceny and remained deadlocked on more than 90 counts charges facing Steven Davis, Joel Sanders, and Stephen DiCarmine. The three could have faced up to 25 years in prison if convicted of grand larceny, the most serious of the roughly 50 counts each brought against them. The defendants also faced related civil charges brought by the Securities and Exchange Commission and a private lawsuit brought by former Dewey investors who say, “They were duped into buying debt in a 2010 bond offering.” Both of those proceedings had been on hold pending the outcome of the criminal trial. Some highlights of the trial are: prosecutors had likened Mr. Davis to a drug kingpin, overseeing a criminal enterprise. Also, the defense side thought prosecutors didn’t present enough evidence to prove their case, thus choosing not to call any witnesses. Instead, the lawyers relied on the cross-examination of government witnesses to try to distance their clients from the actions taking place in the accounting department. At times, such questioning also prompted praise for the defendants from those on the stand. Where does this lead us now? How the Department of Justice completely lost the case or can a retrial give a favorable outcome in the future? It’s too early to tell, but what I do know is that the long deliberations and mistrial will raise questions about whether the case was too complex.

Bridget is a graduate forensic accounting student at the Feliciano School of Business, Montclair State University, Class of 2016.

Posted by Daniel Lamas.

After the release of Chris Kyle’s 2013 memoir, Jesse Ventura was very displeased to find out that Kyle was making claims about punching him in the face in 2006. Kyle did not use Ventura’s name in the book, but only referred to the incident by saying he “knocked out a celebrity.” Only in later interviews did Kyle publicly acknowledge the mystery celebrity as Ventura.

This angered Ventura especially due to the fact that he claimed that Kyle was making the story up. Ventura who was also a Navy veteran was even more displeased to find out that Kyle’s reason for hitting him, as depicted in the book, was due to Ventura making disrespectful remarks about the military. Ventura immediately took the matter to the courts. Not too long after, Kyle was killed at a shooting range and left behind a loving family and many adoring admirers.

Ventura still went ahead with the lawsuit and ended up suing New York publishing company HarperCollins over the book, claiming defamation. He was then awarded 1.8 million dollars from Chris Kyle’s estate. The aftermath of the lawsuit angered many people and soiled Ventura’s name even more. Ventura has said many times that he has no regrets over what he did and meant no harm or disrespect towards Kyle’s family and widow. Although many people across the country are now holding a grudge against the former Minnesota governor, he still won the battle of legal games.

Daniel is a business management and merchandising major at Montclair State University, Class of 2017.

A New Jersey appellate court recently ruled in James v. Ruiz that testifying experts cannot bolster their opinions by piggybacking or “bootstrapping” the written conclusions of other experts who are not testifying in court.

The Sixth Amendment of the U.S. Constitution protects the right of the accused to confront witnesses against him, thereby excluding hearsay from a case. Hearsay is testimony from a witness who relays information to a jury from a second-hand witness. Hearsay is considered unreliable because the witness who supposedly said the statement is not present in court to be subject to cross-examination.

To illustrate how this works, imagine a case where counsel is trying to prove that Peter was in New York at the time of a robbery. Counsel asks a witness on the stand whether Patrick told him that Peter was in New York in order to place Peter in New York at that time. This is an out-of-court statement made to prove the truth of the matter asserted (that Peter was in New York), and therefore, cannot be cross-examined by opposing counsel because Patrick is not in court. As a result of scenarios like this, rules of court have been crafted to prevent juries from considering hearsay statements in both criminal and civil cases.

Under Federal Rule 703, “an expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.” New Jersey has adopted Rule 703 and takes a strict view on what constitutes personal observance. For example, while certain medical records can be admitted under the business records exception to the hearsay rule, if those records contain medical opinions regarding a complex medical condition, then under the recent decision in James, they cannot be referenced by a testifying witnesses as a consistent (or non-consistent) opinion to his opinion, unless the testifying expert relied on those opinions for his or her own “personal” findings. The witnesses relied upon must be testifying as well. Therefore, simply rubber-stamping one’s own opinion based on a non-testifying expert’s opinion, is bootstrapping and violative of Rule 703.

Together with the business records exception and Rule 703, New Jersey also has Rule 808, which has no federal analog. Under N.J.R.E. 808:

Expert opinion which is included in an admissible hearsay statement shall be excluded if the declarant has not been produced as a witness unless the trial judge finds that the circumstances involved in rendering the opinion, including the motive, duty, and interest of the declarant, whether litigation was contemplated by the declarant, the complexity of the subject matter, and the likelihood of accuracy of the opinion, tend to establish its trustworthiness.

Thus, there are times when a non-testifying expert’s opinion can be permitted, but the trial judge must evaluate the expert’s motives, duty, and interest in giving the opinion; whether they had litigation in mind at the time of the opinion; the complexity of the subject matter; and whether the opinion is accurate. If the opinion regards something that is complex and contested in the lawsuit, the opinion will not be permitted under Rule 808. If it is an uncontested opinion or something insignificant, then it will more than likely be admitted.

There is a line drawn between facts and data, which any expert can discuss, provided that they are relied upon by other experts in the field, and expert opinions. And again, non-testifying expert opinions cannot be admitted unless the testifying expert relied upon those opinions in his analysis of the case and will be testifying. According to the court, “[i]f the requirements of Rule 808 are met, and a testifying expert has reasonably relied upon the non-testifying expert’s opinions, then the testifying expert may be permitted to refer to that absent expert’s opinions in the course of explaining his or her own opinions in court.”  The court continued: “However, this pathway should not be used as a ‘subterfuge to allow an expert to bolster the expert testimony by reference to other opinions of experts not testifying.’”

The bottom line is testifying experts cannot be used as a conduit to admit non-testifying expert testimony. This applies especially to bootstrapping “net opinions” in this manner. In addition to the constitutional issues raised here, doing so is simply unfair. If a plaintiff has an expert who is testifying against the defendant’s expert with an opposite opinion, then permitting the bootstrapping of a non-expert’s opinion is like having two experts against one in front of the jury for the price of one.

Los Angeles will pay 24 million dollars to two men who spent decades in prison for crimes they did not commit. In one case, lawyers and a team of students from Loyola Law School challenged a key witness’s testimony. In 1979, Kash Delano Register was charged with the armed robbery and murder of Jack Sasson, 78, after eyewitness testimony placed him at the scene at the time of the shooting. The witness told police she heard gunshots and she saw Register fleeing the scene. The witness selected Register out of a photo lineup, but her sisters told police that her story was untrue. No murder weapon was recovered and no fingerprints were found. Based solely on this witness’s testimony, a jury found Register guilty and he spent 34 years in prison.

The witness’s sister testified she tried to tell a detective that her sister had lied, but in response, the investigator allegedly put a finger to his lips indicating she should keep quiet about it. Her other sister told the police that she was lying, but even her pleas were ignored. Register’s attorneys claimed that the witness selected him under the threat of being prosecuted for credit card forgery and a recent theft if she failed to choose someone out of the lineup.

In the other case, Bruce Lisker was accused of murdering his mother. “At the time of the murder, Lisker, who had a reputation for fighting with his mother and a history of drug abuse, told police he saw her lying in the foyer and broke into the home to help her. They did not believe him.” During a hearing challenging the conviction, lawyers undermined or disproved key elements of the prosecution’s case, including that a bloody shoe print that could not have been made by Lisker’s shoes. His attorneys claimed “that the lead detective ignored evidence that Lisker’s friend may have been a possible suspect.”

In every arrest and criminal prosecution, someone’s liberty is at stake, and these cases illustrate the importance that prosecutors and police get it right. Money can always be replaced. But no one can ever get back all those years lost in prison, as a result of being falsely accused.

Posted by Matthew Rachek.

One of the biggest issues that industries of all kinds deal with constantly is being able to filter out counterfeits from their marketplace. Counterfeits and other forms of knock-offs are not good for the market because they drive profits away from those that deserve the reward and often times fund criminal organizations.

The music industry has dealt with counterfeits since its existence. With the continued growth of technology and new ways for consumers to listen to their favorite artists, it has become harder and harder for the in the industry to regulate how the money is coming in. In fact often times, counterfeit CDs or knock-off streaming services do not compensate the artist at all.

In an article published in the Wall Street Journal on October 30, 2016, it explained how these music “pirates” have been flooding online retailers such as Amazon.com, “with counterfeit CDs that often cost nearly as much as the official versions and increasingly are difficult to distinguish from the real goods.”

The good news is that Amazon.com has recognized the problem an is making the right ethical decision by making sure that their stakeholders all receive the product they are expecting to receive at checkout. By doing this they are also trying to ensure that the artist and producer of the music receive proper compensation for their work so that the money does not make its way into the hands of the music pirates.

In a statement released by Amazon.com they wrote, “We are constantly innovating….to improve the ways we detect and prevent counterfeit products from reaching our marketplace. We work hard on this issue every day….” One of the ways they ensure that customers, a stakeholder, is satisfied with their product is by offering refunds for any product that is not as advertised. While this may initially hurt Amazon.com’s bottom line this is an essential moral decision because in the long-run consumers will be more likely to trust Amazon.com and buy other products off the site.

As technology continues to find new innovations it is almost certain that counterfeits and pirates will new be completely taken out of the market place, especially in the music industry. However it is very reassuring for a large company like Amazon to take nope of the issue and try to take steps to solve the issue.

Matthew is an accounting student at the Stillman School of Business, Seton Hall University, Class of 2018.

Sources:

http://www.cbsnews.com/news/amazon-struggling-to-keep-counterfeits-off-market-retailer-says/

http://www.wsj.com/articles/boost-in-online-pirated-cd-sales-deal-another-blow-to-music-industry-1477867243

Posted by Deane Franco.

In a recent article posted in the Wall Street Journal, I read about General Motors being charged with punitive damages due to a defective part causing multiple deaths. General motors had been in the process of recalling millions of vehicles, when a defective ignition switch caused 100 or so deaths.

The punitive damages will be limited to the extent of a lawsuit based on claims and knowledge that GM had of a new company auto maker’s 2009 restructuring. GM attempted to prevent plaintiffs for bringing punitive damages based on personal injury or wrongful death. Unfortunately for GM, Robert Hilliard who is representing all those injured by GM feels that punitive damages “are the only way to properly compensate victims who have been harmed by defect.” This is because punitive damages are meant to be a large enough punishment to the corporation to send a notable message with the intent of assuring the corporation understands its wrong doing.

Although GM tried to fight the punitive damages, the plaintiffs won outright. What this means for GM is that punitive damages could reach millions or even billions of dollars awarded to those affected, depending on the ruling, previous defective GM part cases may also be included.

GM has already paid $935 million in damages and has also agreed to $625 million in compensation for the victims. But we will see if the court will stop there. Moreover, GM is being considered for additional charges because they had acknowledged that they mislead regulators about the defective car parts and still put them into production. The hairy part, however, comes in when GM addresses their bankruptcy filing, because technically, “Old GM” filed for bankruptcy and would be responsible for all these defective parts liabilities and, “New GM,” the product of the bankruptcy reorganization, is a new company separate from the actions of the old.

This article relates to the discussion post this week in class where we discussed the hot coffee spill in Liebeck vs. McDonalds. In that situation, punitive damages were used not necessarily as a fair compensation to the victim, but to ensure McDonald’s knew of its intentional wrong doing and would be more likely to halt such procedures.

The pricing of the punitive damages was said to be very important for Mr. Hillard because he knows that those damages tend to run very high and would lead to fair compensation for the victim’s losses. This is a little different from the Liebeck case, because in that case, there appeared to be dual responsibility as to   both the temperature and the spilling of coffee; in this GM case, all responsibility falls on the manufacturer for selling a defective car which caused death to numerous victims. It does not matter that GM has rebranded itself after going through bankruptcy filings.  At this point in time, there may be products on the market that have not been recalled, which caused injury and or death to numerous victims. For these reasons, the punitive damages should be high to balance out the victim’s loss and GM’s punishment.

Deane is a member of the The Gerald P. Buccino ’63 Center for Leadership Development at the Stillman School of Business, Seton Hall University, and a finance and information technology management major, Class of 2018.

Posted by Deane Franco.

While reading the Wall Street Journal, I found an article that deals with insider trading and why certain charges were being dropped. A year ago, SAC agreed to plead guilty to securities fraud and wire fraud and pay a $1.8 billion penalty and take responsibility for the actions of their employees, including Mr. Steinberg. Mr. Steinberg is a senior employee at SAC Capital Advisors LP who was charged with insider trading, along with 6 other analysts. The charges has since been dropped because Prosecutor Mr. Bharara said holding the accused any longer would be a form of injustice, since no information can be found incriminating the accused on their chargers. Before this came to light there were a few preceding facts. First, SAC’s founder Mr. Cohen has been on the radar of the SEC for years, as they try and gather proof that he used insider trading to boost his success. Also, Mr. Steinberg is a confidant to SAC founder Mr. Cohen, so this might have been the prosecutor’s way into discovering information about Mr. Cohen. Whatever the reason may be, after the public attention SAC Capital Advisors LP has now rebranded itself to be Point72 Asset Management LP. With all these facts being known, Mr. Bharara has still dismissed the charges against Mr. Steinberg and the case is currently in the process of being assessed by the SEC to see if they will accept the dismissal.

This case raises huge ethical flags to me because although prosecutors have not found any evidence to charge SAC capital Advisors with penalties, I think all its actions to this point have proven him guilty. A company has a moral duty to take responsibility for the actions of its employees as its own wrong doing. For that reason, employees conducting insider trading means the company also conducts insider trading and should be penalized for such. SAC Capital Advisors felt the heat of the media and SEC pressure to the point where they “rebranded” themselves as a new company, and now only manage Mr. Cohen’s fortune and no outside clients. An innocent company has no reason to hide behind the act of rebranding if their company truly acted in an ethical way. I would be curious to see if the SEC turns up any wire fraud charges or some procedural error in the way SAC Capital Advisors conducted their insider trading business.

The reason why I think insider trading and other illegal investment activities like this should be penalized harshly is because the educated few, take nonpublic information to give themselves an advantage that will take advantage of those who know less about the markets. When it comes to investing, investors should feel safe that they have received adequate information to make an informed decision that could eventually lead to a return on their investment. These dishonest acts in trading tip the scale to make investors not feel secure and confident that their money will not be consumed by a cheating wealthy party; and then who really loses when investors stop investing? I understand that so far, no evidence has risen to provide factual evidence of wrong doing, but there must be some leadership member of SAC who will own up to SAC’s ethical responsibility to society.

Deane is a finance and information technology management major at the Stillman School of Business, Seton Hall University, Class of 2018.

Healthcare providers, small business, and individuals have filed antitrust lawsuits against Blue Cross and Blue Shield. They allege the 37 independently-owned companies that make up the Blue Cross Blue Shield Association are colluding to avoid competition, raise prices on premiums, and clamp down on payments to providers. Plaintiffs are seeking class action status.

Blue Cross and Blue Shield covers about a third of the nation. In the 1930s, doctors provided insurance under the Blue Shield name and hospitals used Blue Cross. Eventually, the names were trademarked and now companies that use the names operate within an exclusive territory–many in a single state.

According to a Wall Street Journal article, defendant says “its licensing deals simply codify trademark rights that date back decades and ‘do not constitute an agreement to do anything unlawful.’” They claim their model has been around for long time and has withstood government scrutiny. But plaintiffs contend this is cartel-like behavior. The model stifles competition and leads to inflated premiums.

The case will pit antitrust law against trademark rights. Plaintiffs may have a point, especially since at least in one area, California, Blue Cross and Blue Shield plans “compete directly against one another . . . where Anthem Blue Cross battles Blue Shield of California.” That fact appears to cut against defendants’ contention that the deals among licensees are only made to protect trademarks.

A district court judge has declined to dismiss the case, ruling plaintiffs “‘have alleged a viable market-allocation scheme.’”

Posted by Ovais Ahmed.

An article posted by the Wall Street Journal talks about the time it takes for high courts to actually hear a case. The average time runs around 6 years, and since 2009 that time period has been extended. There has been a case involving two businesses that are battling about who gets trademarks rights to screws they use. The article states,

The Supreme Court on Tuesday will consider a business battle over trademark rights for screws that has been in the courts for more than 16 years, an extreme example of how cases headed for the high court can be matters of endurance. . . . The average age for a high court case is nearly six years, but 37% of cases have taken longer since 2009. In most circumstances a case can spend at least three to four years in the courts before resulting in a high-court ruling.

The process to get a case heard at the high court is a true test of endurance, and the willingness to wait the time period in order to get the issue resolved in these courts.

The cost of legal fees overtime can add up to high numbers, and is one of the reasons people involved in the case can get emotional. The article states, “ Given the time and money litigants put into cases, emotions can run high by the time the Supreme Court gets involved. That is true in the long-running trademark case before the court this week.” There isn’t a specific reason that cases take so long to be heard in the Supreme Court, but it’s just that some rulings for appeals happen to take a while. Criminal cases are considered more important, and so if a civil case arises during the same time as a criminal matter, the civil case will have to wait.

The Supreme Court only sits 9 times out of the year, and if a case lands on the right timing of when the court sits, that case is likely to be heard quicker than if it landed during off season. If one needs a case to be heard in Supreme Court, I suggest he or she has the time, money, and endurance to wait his or her turn.

Ovais is a business administration major with a concentration in management at Montclair State University, Class of 2015.

Posted by Nicholas Andreula.

Three major U.S firms along with one German company are currently being investigated for possible price manipulation. “Goldman Sachs Group Inc., HSBC Holdings PLC, Standard Bank Group Ltd. and a German chemical maker” are being accused of working together in “manipulating platinum and palladium prices.” It is believed that this price manipulation has been going on for many years and has had a considerable impact on investors and individuals within the industry.

“Modern Settings filed the suit as a class action on Tuesday,” with what the firm believes to be substantial evidence in support of the case. This incident has caused a great deal of speculation regarding “price rigging” both within and in other unrelated industries. Companies such as Modern Settings are requesting the implementation of regulations to prevent similar incidences from happening in the future.

The firms involved have “refused to comment on the lawsuit when contacted by the Wall Street Journal.” Although the case has initiated the investigation of price manipulation within the industry, many believe that the “the changes have come too late.”

Nicholas is a business administration major with a concentration in finance at Montclair State University, Class of 2016.

Members of organized crime, drug dealers, and terrorists transact their “business” in cash to hide their tracks. As part of a scheme to launder money (make it look it was earned legitimately), criminals will deposit their ill-earned cash in bank accounts. In response, Congress passed the Bank Secrecy Act, requiring banks to assist the government in catching money launderers.

Under the Act, banks are required to report any cash transaction or combination of cash transactions in excess of $10,000 to the IRS.  Knowing this, criminals resort to structuring. Structuring is the deliberate parcelling of a large cash deposit into a series of smaller transactions in order to avoid detection by regulators. When bank officials suspect structuring is occurring, they are required to file a suspicious activity report, or SAR, and notify regulators of what they believe is happening.

In Ratzlaf v. United States, 510 U.S. 135 (1994), the Supreme Court found that government had to prove that defendant acted with knowledge that structuring is unlawful. As a result, Congress removed the “willfulness” requirement making it easier for the government tor prosecute structuring cases. The IRS, however, has been seizing assets of legitimate businesses and individuals without any proof or any charges filed. Small business and individuals can be a target. In one case, the IRS seized $66,000 from an Army sergeant’s college savings account, even though the sergeant was told by the bank teller to make smaller deposits in order to avoid taxes. Removing the “willfulness” requirement makes structuring a strict liability crime.

In a written statement, Richard Weber, the chief of Criminal Investigation at the IRS, said, “After a thorough review of our structuring cases over the last year . . . IRS-CI will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level.”