Aaron Elvis is a world-renowned chemist.  His latest paper explaining the chemical origins of life has received unprecedented acclaim in the scientific community.  However, there is a small problem.  Elvis manipulated some of his test results upon which the paper was based, and now one of his graduate students is about to expose Elvis as a fraud.  Rather than suffer through this career-ending humiliation, Elvis plots to fake his own death while on an Alaskan fishing trip.  Later that summer, Elvis “disappears”, and all that is found is a fishing boat floating adrift in the Prince William Sound along with a short suicide note describing his self-inflicted drowning.  Elvis then slips off to parts unknown and is never heard from again.  Has Elvis committed a crime?

What is Illegal About Faking Your Own Death?

While it is likely not a crime for Elvis to commit pseudocide (fake his own death), it would be difficult for him to eventually not run afoul of some law.  Obviously, Elvis’s pseudocide would be unlawful if it were done to collect insurance proceeds, evade a debt (e.g. taxes or a mortgage) or escape criminal prosecution.  Likewise, it would be unlawful for Elvis to process a new fake identity with a governmental agency.  However, so long as he breaks no other law, Elvis is within his rights to vanish without a trace.

Do Insurance Companies Look Out for This?

The Coalition Against Insurance Fraud states that “life insurance companies are on high alert for fake deaths” and that fake deaths happen often enough that insurance companies maintain investigative portfolios to “track down the scammers.”  According to the CAIF, “the effort to screen out potential fraud begins soon after a person seeks a life insurance quote.”

What’s the Worst That Could Happen?

Individuals who fake their own death and later reappear can often be saddled with law enforcement’s search and rescue costs.  Listverse provides an interesting look at the Top 10 cases of faked deaths and conspiracy theorists like to point out that the Lloyd’s of London life insurance policy on Elvis Presley was never cashed.  Those planning a disappearance might consider Doug Richmond’s How to Disappear Completely and Never be Found which describes “planning a disappearance, arranging for new identification, finding work, establishing credit, pseudocide, and more.”

Chuck Ponzi is subpoenaed to testify in a fraud case concerning a complex pyramid scheme.  Ponzi’s deposition testimony is critical to the Plaintiff’s claims that investors were promised a 100% profit within 90 days of their investment.  Having read about Roger Clemens recently avoiding perjury charges because his deposition testimony was not presented in court at a trial, Ponzi chooses to “alter” his testimony about the critical facts upon which the Plaintiff relies.  Can Ponzi’s deposition testimony result in charges of perjury?

The Law in Texas  

Yes.  In Texas, there are two levels of perjury.  If Ponzi makes a false statement, under oath, at a deposition with the intent to deceive, he could be guilty of a Class A misdemeanor, which is punishable by a fine of up to $400 and/or one year in prison.  Ponzi would be guilty of “aggravated” perjury if, in connection with an official proceeding (like a trial), he makes a material false statement with the intent to deceive.  Under this scenario, Ponzi would be facing a third degree felony charge with a fine up to $10,000 and two to ten years in prison.  To find Ponzi guilty of “aggravated” perjury, there is an additional requirement of “materiality.”  In other words, did the statement affect the course or outcome of the official proceeding?  Whether or not a statement is material is for the court, not a jury, to decide.  However, it is not a defense that the person thought that the false statement was not material.  Interestingly, it is a defense to the prosecution of an aggravated perjury charge if a person retracts his false statement before the completion of the testimony at the proceeding and before it becomes evident that the falsity of the statement would be exposed.

Tilting the Scales in Your Favor

Bottom line, unless you are willing to risk fines or jail, don’t lie under oath.  Although Clemens was acquitted of the government’s perjury charges, perjury charges and convictions do occur in Texas.  In May 2011, a man from Tennessee Colony, Texas was sentenced to eight years in prison for aggravated perjury. Authorities claimed that the man had lied during a child custody hearing about his military background stating that he had served in Iraq and Afghanistan and had been awarded the Service Medal, a Bronze Star and three Purple Hearts, all of which were later determined to be lies.

Lou Pole was indicted on charges of first degree murder and pled not guilty to the killing of his three-year-old son. The prosecution sought the death penalty in a six week trial that received intensive national media attention and was a popular topic on television talk shows. Pole did not testify at his trial. To the surprise of many, the jury found Pole not guilty of murder and he was released a free man. Haunted by the notoriety of the trial, Pole had difficulty finding a job. After several months without any income, Pole accepts a substantial advance from a publisher to write a “tell all” book about his ordeal. With much public anticipation, Pole’s book is published and it is immediately apparent that the jury was unaware of many factors that would clearly establish Pole’s guilt, including, Pole’s brazen statement that he got away with murder. Can Pole be charged again based upon the newly discovered evidence?

Not likely. Double jeopardy is a procedural defense that forbids Pole from being tried again in a criminal court on the same or similar charges. The concept of double jeopardy is found in the Fifth Amendment to the U.S. Constitution which maintains that no person shall be “subject for the same offense to be twice put in jeopardy of life or limb.” Accordingly, despite Pole’s confession, he would be immune from further criminal prosecution. However, if evidence were to come to light that Pole committed another crime in connection with the event, e.g. conspired with another person to kill his son, this would be considered a different crime, with distinct facts, which would allow for new charges and a new trial. Moreover, while a “tell all” book might be tempting, it could be very costly. Pole’s admission could and would be used in a civil lawsuit brought against him by his son’s estate.

The recent mistrial that was granted in the Roger Clemens perjury trial raises interesting legal questions as to when jeopardy attaches. In the Clemens case, the judge declared a mistrial almost as soon as the trial began based upon the prosecution’s failure to abide by a pretrial order. The question then becomes, how far must a trial proceed before the prosecution has had their one opportunity to obtain a conviction? While most experts agree that jeopardy attaches when a panel of jurors have been sworn in, whether or not the court will require Clemens to stand for a second trial could ultimately hinge on whether the judge considers the prosecution’s miscue to have been accidental or intentional.

Bjorn Free left Dallas for a 10 day photo safari.  While on his African adventure, Bjorn’s 20-year-old son, recently back from college and in need of a place to stay, agrees to house sit.  Upon his return and after getting rid of some serious jetlag, Bjorn goes through his giant pile of mail.  Hidden among the 73 catalogs and assorted bills, Bjorn opens a letter which contains a traffic citation for $75 for running a red light.  Apparently, the offense was caught by a red light traffic camera, and occurred while Bjorn was in Kenya and while Bjorn’s son was driving dad’s car.  Bjorn contests the ticket on the grounds that a police officer must be present in order to write a ticket and that he wasn’t even driving the car.  Will he win?

Not likely.  Texas has historically ranked very high when it comes to the number of red-light fatality accidents.  Accordingly, legislation was passed establishing procedures permitting municipalities to use cameras to cite owners of vehicles that illegally run red lights.  For the uninitiated, a red light camera system is connected to a traffic signal and to sensors that monitor traffic flow at the intersection.  The system monitors the intersection signal 24/7 and photos are taken of any vehicle entering the intersection after the signal has turned red.  A ticket is then generated and sent to the vehicle’s owner.  The bad news for Bjorn is that no police officer is needed to write the ticket and the owner, not the driver, of the vehicle may be ticketed for not more than $75.  The good news for Bjorn is that this offense is not a moving violation and will not be reported to his insurance company.  More good news – intersections monitored by red light cameras must have signage warning of their use and Texas has, so far, resisted the use of cameras to issue citations for speeding violations.

Titling The Scales In Your Favor

Vehicle owners can contest fines for running red lights in an administrative hearing.  A person found liable at an administrative hearing may then appeal the finding to a municipal court.  Also, exceptions exist if the offending vehicle was being test driven, had been sold or stolen.

Dangers of Online GamblingFor Amarillo Slim, April 15th this year was much more than “Tax Day,” it was Black Friday when the Justice Department charged the owners of his favorite online poker sites PokerStars, Full Tilt, Absolute Poker and Ultimate Bet, with bank fraud and money laundering and shut them down. In addition to shutting down the websites, the US Attorney General froze Slim’s gaming bank accounts and upwards of $500 million in online poker accounts held by other US online poker players. This morning Amarillo realized that the Justice Department would likely get access to his gambling activities representing significant unreported tax dollars. Will the government likely try to go after Amarillo Slim for undeclared gambling winnings? Maybe so.

Gambling in the United States. The 2006 Unlawful Internet Gambling Enforcement Act prohibits gambling businesses from knowingly accepting bets over the Internet and prohibits banks from processing credit card payments and wire transfers related to gambling. Not surprisingly, banks were also a target on Black Friday because they purportedly enabled the gambling sites to launder money and sidestep the federal gambling laws.

What about Amarillo Slim and the IRS? IRS website Topic 419 – Gambling Income and Losses reminds that all gambling winnings must be reported. Moreover, it is likely that any US Attorney plea deal will require a “cooperation” agreement requiring Full Tilt and the other online sites to disclose its player lists with deposits, withdrawals and balances by year so that the IRS can confirm if all winnings were reported. If not, other issues might possibly include civil fraud penalties, willful failure to file, willful failure to pay, criminal tax evasion, civil penalties of up to 75%, plus interest, time in custody, and if Foreign Bank Account Reports were required and not paid, possible civil and criminal penalties under the Bank Secrecy Act.

Gambling in Texas. Online gambling may not be a crime expressly prohibited in Texas under the Texas Penal Code because there is an exception for gambling in a “private place,” like on your computer in the privacy of your home. If you are in an internet bar or other public place in Texas, it may well be a violation of Texas law in addition to the likely federal law violations mentioned above.

Tilting the Scales in Your FavorIf you were an online gambler, you may want to speak with your attorney or tax preparer to determine whether you are at risk and a response appropriate for your circumstances.

Additional Resources:

After downing vodka gimlets at a friend’s Super Bowl bash, Al Coholic gets behind the wheel of his shiny bimmer and carefully winds his way up Central Expressway.  Al travels a few miles before he notices flashing red lights in his rear view mirror and realizes that a police officer is pulling him over.  Al pulls to the side of the road and Officer Miranda Wright approaches his car and asks for his driver’s license and insurance.  After running Al’s information through the computer, Officer Wright returns and asks if Al has been drinking.  Al responds that he has had a “couple.”  Officer Wright then requests Al to take a roadside breathalyzer test.  Al is not sure what to do.  He is not sure if he has had too much to drink.  He is not sure if the breathalyzer test is accurate.  And, he is not sure what will happen if he refuses to blow.  Al asks if he can speak with his attorney and he is told “no.”  What should Al do? 

In Texas, a person is driving while intoxicated (DWI) if they have a blood alcohol content of .08% or higher.  (The term drinking under the influence or DUI is typically reserved for minors.)  The legal definition of intoxication can also be met if alcohol causes the loss of the normal use of one’s mental or physical faculties.  In Al’s situation, he is probably better off refusing to blow.  Al does not have the right to an attorney in deciding whether to take a breath or blood test, but does have the right to refuse the test.  Roadside breathalyzers are notoriously unreliable and inaccurate in measuring alcohol concentration and can provide abnormally high results.  If Al takes the test and it comes back at .08% or higher, the prosecution of his case has been made much easier.  Refusing to blow, however, will have consequences for Al.  Not only will the judge or jury be made aware of the refusal, but Al’s license can be automatically suspended for 180 days.    Under Texas law, Al may contest the automatic suspension within 15 days of his arrest.  If a hearing is requested within this time frame, Al may keep his license until a judge orders that it be suspended.

Tilting the Scales in Your Favor

Although we are not criminal attorneys, we are often asked “what should I do if I get pulled over after having a few beers?”  Obviously the best advice is to not drink and drive.  If you are going to drink, do so responsibly.  If you do get pulled over after drinking, it is probably best to avoid the breathalyzer as well as the physical and mental gymnastics that the officer would have you attempt (e.g. reciting portions of the alphabet backwards or forwards, one-leg stand).  Many of these exercises would be challenging to complete without a drop of alcohol.  Punishment for DWI varies depending on the number of convictions.  If Al is convicted for his first offense, he can expect a fine of up to $2,000, jail time of 3 days to six months and a suspended license for 90 days to 1 year.

Norma Leigh Lucid is a competitor in the 2010 Punkin Chunkin Competition [1]. With just two weeks before the big event, Lucid was still fine tuning her thirty foot, artillery-grade air cannon capable of launching a 9 lb. pumpkin nearly one mile at over 600 mph. Early Sunday morning, Lucid test fired a pumpkin from her Highland Park residence directly east. She anticipated the pumpkin would land harmlessly in the middle of White Rock Lake. Unfortunately for Lucid, her calculations were wrong. The pumpkin struck and killed Bea Minor, a mother of two and accomplished opera singer who was jogging around the lake. Minor’s estate sued Lucid for compensatory damages and exemplary damages. Exactly what are exemplary damages and would they be awarded in this kind of case against Lucid?

Compensatory or actual damages repay a victim’s family for losses suffered because of the victim’s death (like lost wages). Texas is among a handful of states which allow recovery of exemplary damages (sometimes called punitive damages) in cases such as wrongful death. Exemplary damages are essentially a public policy means to punish a defendant and to warn others not to engage in similar reckless conduct. To collect exemplary damages, Norma Leigh Lucid’s conduct must have been either malicious or grossly negligent. Based upon the facts presented, it is highly probable that a jury would determine Lucid’s actions were grossly negligent, In other words, Lucid’s firing her pumpkin canon into a residential neighborhood necessarily involved an extreme degree of risk given the likelihood that serious injury could be inflicted. Moreover, Lucid had actual, subjective awareness of the risk involved in firing her canon but she knowingly proceeded with a conscious indifference to the safety of others. Factors that assist the jury in determining exactly how much Minor’s estate will receive in punitive damages include Lucid’s personal wealth (how much money in punitive damages is necessary to penalize Lucid), the nature of her conduct and any laws that limit the amount of punitive damages that can be awarded.

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[1] For the uninitiated, The Punkin Chunkin Competition is an annual contest held in Delaware in November where participants try to launch a pumpkin as far as possible using various contraptions like catapults, air cannons and trebuchets. Visit http://www.punkinchunkin.com to sign up!

Alice B. (“Babette”) Toklas has a new pastry catering business which she operates from her home. The only delicious delectable pastry, and best seller, that Babette sells is her special, knock you over brownies with their “secret ingredient.” Babette’s husband Douglas is a writer. While Douglas and Babette rely upon the income from Toklas Tasties to cover household expenses between Douglas’s successful writings, Douglas is not much of a cook and lets Babette run the catering business. Douglas’s latest novel made it to the New York Times best seller list. Because of the swings in the Toklas income, Owen Moore, their accountant, assists them in filing their joint income tax return each year. Ignoring Owen’s advice, Babette and Douglas do not report income from the catering business to the Internal Revenue Service. The Toklas just received notice of an audit of their last year’s joint return. If asked by a revenue agent, must Owen disclose the income from Toklas Tasties, or is there an accountant-client privilege? If Babette is ever prosecuted for Toklas Tasties, can she prevent Douglas from disclosing what she told him, including that the “secret ingredient” in her delicious delectable brownies is marijuana?

Accountant-client privilege. Generally, under Texas law a communication made by a client to an accountant or employee of the accountant in connection with services provided to the client is confidential and not discoverable. But, under federal law, no accountant-client privilege is recognized. Therefore, Owen would be forced to disclose his files and knowledge of the source of the income received by Toklas Tasties to agents from the United States Internal Revenue Service.

Husband-wife-communication privilege. The purpose of the husband-wife-communication privilege is to preserve the integrity of the marital relationship. Generally, private communications that are only between spouses and are not intended for disclosure are privileged and are not subject to discovery. If prosecuted for Toklas Tasties, it is likely that Babette can prevent Douglas from disclosing what she told him about her “secret ingredient.”

Tilting the Scales in Your Favor:
Even if the source of the income is arguably a criminal matter, the United States Internal Revenue Service is primarily tasked with, among other things, identifying and collecting taxes upon unreported income. Babette and Douglas would have been better off taking Owen’s advice and reporting the income from Toklas Tasties on their tax return.

Oyle E. Driller’s rig caught fire in the Gulf of Mexico last summer, and he has been scrambling ever since. Almost too late, Oyle allowed his corporate communications department to hire the public relations firm of Frank Lee Madear and his partner Gemma Damm who specializes in crisis management-public relations. To report current information and company stories consistent with the facts as they developed, Madear and Damm had access to the same internal information and analyses as to the cause and extent of the damages as was available to Oyle’s external legal defense team. Much of the information was very sensitive and, as one might expect, reflected an evolving understanding of the cause and solution to the leaking well. Yesterday, Frank and Gemma received subpoenas for all their files on the Oyle E. Driller catastrophe. Are their files privileged from discovery by the plaintiffs’ lawyers?

No. Attorney-client privilege is the right of clients to refuse to disclose confidential communications with their lawyers, or to refuse to allow their lawyers to disclose the confidential communications. Madear was neither the client nor the lawyer. So, information provided to or created by Madear may be reviewed by the plaintiffs’ lawyers. The attorney-client privilege is the bedrock of a client’s constitutionally based right to effective assistance of counsel. Practically speaking, it plays a key role in helping clients, including companies, to act legally by permitting them to seek guidance on what the law allows and requires, and how to conform their conduct to the law. In addition, the privilege allows companies to investigate actions by its corporate officers and employees to identify shortcomings, evaluate and remedy problems, including undertaking accident investigation in anticipation of litigation. A related concept, the work product doctrine protects our adversarial justice system. The work product doctrine allows lawyers to prepare for litigation without risking that their intellectual effort, work product and mental impressions will be revealed to court adversaries, undermining their client’s legal position.

Tilting the Scales in Your Favor.

If you anticipate that a catastrophe or other crisis may end up at the courthouse, retain an outside law firm to hire all outside personnel, including your public relations firm or similar crisis management team. The crisis management team then becomes a part of the team of consulting experts, just like the accident investigation team, the well, fire and ecosystem experts, and the like. Even if your crisis communications are generated in-house, you may be well advised to consider having outside counsel manage the accident investigation for the same reasons.

More on Privileged Communications. In certain circumstances the State of Texas recognizes other communications as being privileged from disclosure in a legal proceeding. More on those next month.

Rapper Chocolate Ice’s new release Golfin’ Wit My Glock is a smash hit with nearly 400,000 digital downloads in its first week.  The success of the song has not escaped the notice of recording artist Bill Board, who believes that Ice has ripped off five notes from his 1980’s country hit single, “Now That We’re Both Miserable, I Hope You’re Happy.”  When confronted about the obvious similarity between the two songs, Ice claims the bassline riff is “different” and, even if they are the same, there’s nothing illegal about copying five notes.  Board disagrees and files a lawsuit alleging a copyright violation.  Who wins?

“Sampling” is using portions of a prior recording and incorporating them into a new song.  The practice has become commonplace in the music industry.  While there is no set number of music notes that one can use without permission, it is believed that if a musician samples four notes or less, they may be protected under what’s known as the “fair use” doctrine.  This speculation is derived from a case in which the Beastie Boys sampled a 6 second segment of jazz flutist James Newton’s composition entitled, “Choir.”  In that case, the appellate court upheld the trial court’s dismissal of Newton’s infringement claim holding that the use of “three notes separated by a half-step over a background C note” was not enough to uphold Newton’s claim.  However, the same court noted that “one note is enough to land you in court where the true test of infringement is whether the sampled portion of the music is substantially similar to the original.  Fair use is merely a defense once you get there.”  Based on the facts above, Ice is likely going to have to share in the riches from his new hit single.

Tilting the Scales in Your Favor: 

Always obtain permission from the copyright owner.  In connection with a music copyright claim that will usually involve obtaining a license from the song writer/publisher as well as the record company/recording artist.  And, in case you’re curious, Vanilla Ice’s sampling of David Bowie and Queen’s song “Under Pressure” resulted in a large out of court settlement.

Newton v. Diamond, 349 F.3d 591 (9th Cir. 2003).