Business Crimes Hotline

CALIFORNIA

Ex-Nixon Peabody Partner's Prison Term Upheld by Ninth Circuit

A federal appeals court has affirmed a former Nixon Peabody partner's prison term of seven years, clarifying for the first time that lawyers convicted of covering up their clients' crimes could face additional enhancements to their sentences.

David Tamman was convicted in a 2012 bench trial of back-dating securities documents for a former client, John Farahi, founder of Newpoint Financial Services Inc. in Beverly Hills, CA, which federal prosecutors claimed was a $22 million Ponzi scheme. He is serving his sentence at a federal prison in Lompoc, CA.

On appeal, Tamman challenged U.S. District Judge Philip Gutierrez's application of two enhancements ' a four-level “broker-dealer” enhancement and a two-level “special skill” enhancement ' as impermissible under general sentencing guidelines against “double counting.”

The U.S. Court of Appeals for the Ninth Circuit disagreed. Taking up an issue of first impression, the panel found that the enhancements dealt with separate conduct.

“As this court has long acknowledged, the sentencing guidelines ' expressly prohibit the dual application of sentencing guidelines that account for the same harm,” wrote U.S. District Judge David Ezra of Hawaii, sitting by designation, in the panel's opinion in April. “However, we hold that this rationale does not apply in cases like the one at hand, where the broker-dealer enhancement reflects the behavior of the principal and the special skill enhancement reflects separate and distinct behavior of the defendant-accessory.”

The ruling is unlikely to have broad impact on criminal cases against lawyers, but it could apply in limited circumstances in which, like Tamman, an attorney is convicted of being an accessory to his or her client's crimes, said Assistant U.S. Attorney Paul Stern in Los Angeles, who prosecuted the case.

“What this case was saying is in that circumstance, this prohibition on double counting is inapplicable because you're dealing with the conduct of two different people,” he said.

Farahi was charged with defrauding investors, primarily from the Iranian-American Jewish population in Los Angeles, by convincing them to purchase corporate bonds purportedly backed by the Troubled Asset Relief Program. Farahi, who used the money to buy a yacht and Beverly Hills mansion, pleaded guilty and is serving 10 years in prison.

The panel also rejected Tamman's arguments that Gutierrez erred in calculating his sentence based on investor losses of more than $20 million and victims totaling more than 50. Tamman also failed to convince the panel that Gutierrez should have probed further when he admitted that he might have been “under the influence” of medication when agreeing to waive a jury trial. ' Amanda Bronstad, National Law Journal

CALIFORNIA

Ex-Nixon Peabody Partner's Prison Term Upheld by Ninth Circuit

A federal appeals court has affirmed a former Nixon Peabody partner's prison term of seven years, clarifying for the first time that lawyers convicted of covering up their clients' crimes could face additional enhancements to their sentences.

David Tamman was convicted in a 2012 bench trial of back-dating securities documents for a former client, John Farahi, founder of Newpoint Financial Services Inc. in Beverly Hills, CA, which federal prosecutors claimed was a $22 million Ponzi scheme. He is serving his sentence at a federal prison in Lompoc, CA.

On appeal, Tamman challenged U.S. District Judge Philip Gutierrez's application of two enhancements ' a four-level “broker-dealer” enhancement and a two-level “special skill” enhancement ' as impermissible under general sentencing guidelines against “double counting.”

The U.S. Court of Appeals for the Ninth Circuit disagreed. Taking up an issue of first impression, the panel found that the enhancements dealt with separate conduct.

“As this court has long acknowledged, the sentencing guidelines ' expressly prohibit the dual application of sentencing guidelines that account for the same harm,” wrote U.S. District Judge David Ezra of Hawaii, sitting by designation, in the panel's opinion in April. “However, we hold that this rationale does not apply in cases like the one at hand, where the broker-dealer enhancement reflects the behavior of the principal and the special skill enhancement reflects separate and distinct behavior of the defendant-accessory.”

The ruling is unlikely to have broad impact on criminal cases against lawyers, but it could apply in limited circumstances in which, like Tamman, an attorney is convicted of being an accessory to his or her client's crimes, said Assistant U.S. Attorney Paul Stern in Los Angeles, who prosecuted the case.

“What this case was saying is in that circumstance, this prohibition on double counting is inapplicable because you're dealing with the conduct of two different people,” he said.

Farahi was charged with defrauding investors, primarily from the Iranian-American Jewish population in Los Angeles, by convincing them to purchase corporate bonds purportedly backed by the Troubled Asset Relief Program. Farahi, who used the money to buy a yacht and Beverly Hills mansion, pleaded guilty and is serving 10 years in prison.

The panel also rejected Tamman's arguments that Gutierrez erred in calculating his sentence based on investor losses of more than $20 million and victims totaling more than 50. Tamman also failed to convince the panel that Gutierrez should have probed further when he admitted that he might have been “under the influence” of medication when agreeing to waive a jury trial. ' Amanda Bronstad, National Law Journal