Corporate Fraud: Civil and Criminal Consequences of a Decade of Financial Collapses
This course is intended to introduce law students to the real world issues of major civil and criminal corporate fraud. The idea for the course arose out of my work from April 2002-09 as independent counsel for the Regents of the University of California, lead plaintiff or institutional plaintiff in the Enron, WorldCom, AOL Time Warner, and Dynegy federal securities cases, and my work as defense counsel for top executives of IndyMac Bank, Homestore.com, New Century Financial, PFF Bank, Tenet Healthcare, and La Jolla Bank.
The seminar focuses on nine major corporate fraud case studies: (1) Enron/Arthur Andersen criminal trials; (2) IndyMac civil trial (largest jury verdict $169 million of the financial crisis era); (3) Homestore.com (a major internet company) civil and criminal trials; (4) Broadcom backdating trial (and issues of prosecutorial misconduct); (5) Insider trading investigations and trials (KPMG, SAC Capital, Galleon); (6) BP/Transocean civil and criminal litigation re 2010 Deepwater Horizon oil spill; (7) Madoff ponzi scheme civil litigation and criminal investigations; (8) Dole and Chevron plaintiffs’ fraud trials; (9) Jaffe v Household International trial (billion dollar securities fraud jury trial); and (10) select case studies from the financial crisis of 2007-09. We will, of course, compare and contrast these cases with other major corporate fraud cases, such as JP Morgan/Washington Mutual, Goldman Sachs, Bank of America/Countrywide, Barclays, Deutsche Bank, MF Global, New Century, Lehman Brothers, Bear Stearns, AIG, and WorldCom. I also added two years ago a new and different type of speaker to this class–Tony Goldwyn (who plays President Fitzgerald Grant III on ABC’s hit drama Scandal). Tony’s schedule permitting, we will discuss again this year in-depth the intersection of luck, hard work, and success.
The class will also analyze current corporate fraud topics, including: trial tactics in major criminal trials (Enron, Homestore, Broadcom, Arthur Andersen, BP) and civil trials (IndyMac, Fabrice Tourre, BP, Dole, Chevron); the difficulty of bringing criminal prosecutions in recent bank investigations; the difficulty for class action plaintiffs in pursuing securities fraud cases as a result of recent U.S. Supreme Court decisions; Foreign Corrupt Practices Act bribery investigations; recent criminal and civil insider-trading investigations; the defense of parallel criminal and civil cases; government investigations and the waiver of the attorney-client privilege; the government’s use of wiretaps and sting operations in white-collar investigations; director and officer insurance coverage issues; the role of regulators and rating agencies in the 2007-09 financial collapse; issues in corporate internal investigations; and the impact of the sentencing guidelines on white-collar prison terms.
The goal of this course is to examine the “lessons learned” from corporate frauds of the “Enron Era” (2001-06) and the “Financial Crisis Era” (2007-Present) with many of the top practitioners in the field. Guest lecturers will include (schedules permitting): Former US Attorney for the Northern District of California (Melinda Haag); former US Attorney for the Central District of California (Hon. André Birotte); current federal trial judges (Hon. André Birotte, Hon. Mike Wilner); current state trial judges (Hon. Tom Long); former prosecutors (John Hueston, Brad D. Brian, Doug Fuchs, Terry Bird, Richard Marmaro, Hon. Mike Wilner, Nathan Hochman, Luis Li, Daniel Levin, Michael Dowd); former public defenders (Hon. André Birotte, Bob Corbin); current and former SEC counsel (Jessica Puathasnanon, Sam Puathasnanon, Hon. Mike Wilner); criminal and civil defense counsel (Terry Bird, Marshall Grossman, Richard Marmaro, Bob Corbin, Doug Fuchs, Nathan Hochman, Brad D. Brian, Scott Edelman, Luis Li, Mike Doyen, Daniel Levin, Emily Aviad); plaintiff’s counsel (Darren Robbins, Michael Dowd, David Graeler, Patrick Richard); former plaintiffs’ class action lawyer (Bill Lerach); accountant (Rich Corgel); and a former CFO’s (Joe Shew, Bill Ruehle). This impressive speaker list includes outstanding trial lawyers or accountants from the following firms: Gibson Dunn & Crutcher (Fuchs, Edelman); Skadden Arps (Marmaro, Aviad); Hueston Hennigan (Hueston); Munger Tolles & Olson (Brian, Li, Doyen, Levin, Godley); Orrick (Haag, Grossman); Morgan, Lewis & Bockius (Hochman); Bird Marella (Bird); Kendall Brill & Klieger (Corbin); Robbins Geller Rudman & Dowd (Robbins, Dowd); and Nossaman (Graeler, Richard). We have also added one actor/director (Tony Goldwyn).
The ultimate and most exciting part of the seminar is the class project. In teams of four, students will give a group presentation to a hypothetical Board of Directors (the class) on the results of their independent investigation of a major corporate fraud (SAC Capital, Galleon, JP Morgan/Washington Mutual, BofA/Countrywide, Goldman Sachs, Madoff, Barclays, MF Global, New Century, Lehman, AIG, WorldCom, Lincoln Savings & Loan, HealthSouth, or other recent 2007-17 financial fraud cases), which I will randomly assign. Each student will also write an individual research paper on his team’s assigned investigation topic.
I have taught this course on corporate fraud at USC since 2004 and taught a similar joint seminar at Stanford Law and Business Schools in 2007.
For more information and articles about this class see:
- USC Gould School of Law Corporate Fraud and Government Investigations Forum (the website I created for this class): https://corporatefraud.usc.edu/
- http://lawweb.usc.edu/news/assets/docs/FallWinter2006Magazine.pdf (pp. 14-17)